<PAGE>
As filed with the Securities and Exchange Commission on March 15, 2000.
Registration No. 333-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
BETTER MINERALS & AGGREGATES COMPANY
AFFILIATE GUARANTORS LISTED ON SCHEDULE ATTACHED HERETO
(Exact name of Registrant as specified in its charter)
DELAWARE 1446-1 55-0749125
(State of Registrant's (Primary Standard (I.R.S. Employer
Incorporation) Industrial Identification Number)
Classification Code
Number)
ROUTE 522 NORTH, P.O. BOX 187 GARY E. BOCKRATH
BERKELEY SPRINGS, WEST VIRGINIA 25411 Vice President and Chief Financial
(304) 258-2500 Officer
(Address, Including Zip Code, and Better Minerals & Aggregates Company
Telephone Number, Including Area Code, Route 522 North, P.O. Box 187
of Registrant's Principal Executive Berkeley Springs, West Virginia 25411
Office) (304) 258-2500
(Name, Address, Including Zip Code,
and Telephone Number, Including Area
Code, of Agent for Service of Process)
With A Copy To:
DAVID P. FALCK, ESQ.
Winthrop, Stimson, Putnam & Roberts
One Battery Park Plaza
New York, NY 10004
(212) 858-1000
---------------
Approximate Date of Commencement of Proposed Sale to the Public: As soon as
practicable after this registration statement becomes effective.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
---------------
CALCULATION OF REGISTRATION FEE
<TABLE>
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- ---------------------------------------------------------------------------------------------------
<CAPTION>
Proposed Proposed
Maximum Maximum
Offering Aggregate
Title of Each Class Amount to be Price Offering Amount of
of Securities to be Registered Registered (1) Per Unit Price (1) Registration Fee
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
13% Senior Subordinated Notes due 2009...... $150,000,000 100% $150,000,000 $39,600
- ---------------------------------------------------------------------------------------------------
Guarantees of 13% Senior Subordinated Notes
due 2009................................... (2) (2) (2) (2)
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- ---------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) U.S. Silica Company, Better Materials Corporation, BMC Trucking, Inc.,
Bucks County Crushed Stone Company, Chippewa Farms Corporation, Shore
Stone Company, Inc., Pennsylvania Glass Sand Corporation, George F.
Pettinos, Inc., Ottawa Silica Company, The Fulton Land and Timber Company,
Ellen Jay, Inc., Stone Materials Company, LLC, Commercial Stone Co., Inc.
and Commercial Aggregates Transportation and Sales, LLC will guarantee,
jointly and severally, the obligations of Better Minerals & Aggregates
Company under the 13% Senior Subordinated Notes due 2009. Pursuant to Rule
457(n), no additional registration fee is being paid in respect of the
guarantees.
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- -------------------------------------------------------------------------------
<PAGE>
SCHEDULE OF ADDITIONAL REGISTRANT GUARANTORS
<TABLE>
<CAPTION>
Primary
Standard I.R.S.
Exact Name Of Guarantor Registrants Industrial Employer
As Specified State Of Classification Identification
In Their Respective Charters Formation Number Number
----------------------------------- ------------ -------------- --------------
<S> <C> <C> <C>
U.S. Silica Company Delaware 1446 23-0958670
Better Materials Corporation Pennsylvania 1429 23-1542403
BMC Trucking, Inc. Delaware 4212 23-2986246
Bucks County Crushed Stone Company Pennsylvania 1429 23-1468333
Chippewa Farms Corporation Pennsylvania 9999 23-2160463
Shore Stone Company, Inc. New Jersey 1442 23-2243672
Pennsylvania Glass Sand Corporation Delaware 1446 94-3024593
George F. Pettinos, Inc. Delaware 1442 23-0966840
Ottawa Silica Company Delaware 1446 94-3093543
The Fulton Land and Timber Company Pennsylvania 1446 23-1622540
Ellen Jay, Inc. New Jersey 1442 22-2033676
Stone Materials Company, LLC Delaware 1422-1 52-2205266
Commercial Stone Co., Inc. Pennsylvania 1422 25-1225764
Commercial Aggregates
Transportation and Sales, LLC Delaware 4212 25-1846125
</TABLE>
----------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(A), MAY DETERMINE.
<PAGE>
EXPLANATORY NOTE
This registration statement covers the registration of $150,000,000
aggregate principal amount of 13% Senior Subordinated Notes due 2009 of Better
Minerals & Aggregates Company, guaranteed by U.S. Silica Company, Better
Materials Corporation, BMC Trucking, Inc., Bucks County Crushed Stone Company,
Chippewa Farms Corporation, Shore Stone Company, Inc., Pennsylvania Glass Sand
Corporation, George F. Pettinos, Inc., Ottawa Silica Company, The Fulton Land
and Timber Company, Ellen Jay, Inc., Stone Materials Company, LLC, Commercial
Stone Co., Inc. and Commercial Aggregates Transportation and Sales, LLC, that
may be exchanged for an equal aggregate principal amount of the issuer's
outstanding 13% Senior Subordinated Notes due 2009, also guaranteed by the
listed note guarantors. This registration statement also covers the
registration of new notes for resale by Chase Securities Inc. in market-making
transactions. The complete prospectus relating to the exchange offer follows
this explanatory note. Following the exchange offer prospectus are certain
pages of the prospectus relating solely to those market-making transactions,
including alternate front and back cover pages and alternate sections entitled
"Risk Factors--You Cannot Be Sure that an Active Trading Market Will Develop
for the New Notes," "Use of Proceeds" and "Plan of Distribution." In addition,
the market-making prospectus will not include the following captions (or the
information set forth under those captions) in the exchange offer prospectus:
"Summary--Summary of the Terms of the Exchange Offer," "Risk Factors--Failure
To Exchange Old Notes," "The Exchange Offer," "Exchange and Registration
Rights Agreement" and "Certain United States Federal Tax Consequences." All
other sections of the exchange offer prospectus will be included in the
market-making prospectus.
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell these securities and it is not soliciting an offer to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED MARCH 15, 2000
Prospectus
Better Minerals & Aggregates Company
Offer To Exchange All Outstanding
13% Senior Subordinated Notes due 2009 for
13% Senior Subordinated Notes due 2009, Which Have Been Registered Under the
Securities Act of 1933
The Exchange Offer
--We will exchange all old notes that are validly tendered and not validly
withdrawn for an equal principal amount of new notes that are freely
tradable.
--You may withdraw tenders of old notes at any time prior to the expiration
of the exchange offer.
--The exchange offer expires at 5:00 p.m., New York City time, on ,
2000, unless we extend the offer.
--The exchange will not be a taxable event for U.S. federal income tax
purposes.
The New Notes
--The terms of the new notes to be issued in the exchange offer are
substantially identical to the old notes issued on October 1, 1999, except
that the new notes will be freely tradeable.
--No public market currently exists for the old notes. We do not intend to
list the new notes on any securities exchange and, therefore, no active
public market is anticipated.
-----------------------------------------
YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS BEGINNING ON PAGE 16 OF THIS
PROSPECTUS BEFORE PARTICIPATING IN THE EXCHANGE OFFER.
-----------------------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is
a criminal offense.
-----------------------------------------
The date of this prospectus is , 2000.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Where You Can Find More Information...................................... ii
Forward-Looking Statements............................................... ii
Industry Data............................................................ iii
Measurements............................................................. iii
Summary.................................................................. 1
Risk Factors............................................................. 16
The Exchange Offer....................................................... 25
Use of Proceeds.......................................................... 36
Capitalization........................................................... 36
Unaudited Pro Forma Financial Data....................................... 37
Selected Financial Data.................................................. 41
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 42
Industry Overview........................................................ 52
Business................................................................. 54
Management............................................................... 65
Certain Relationships and Related Transactions........................... 69
Security Ownership of Certain Beneficial Owners and Management........... 71
Description of the New Credit Facilities................................. 76
Description of the New Notes............................................. 79
Exchange and Registration Rights Agreement............................... 121
Certain United States Federal Tax Consequences........................... 124
Book-Entry; Delivery and Form............................................ 128
Plan of Distribution..................................................... 131
Legal Matters............................................................ 131
Experts.................................................................. 132
Index to Consolidated Financial Statements............................... F-1
</TABLE>
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
Upon effectiveness of the registration statement of which this prospectus is
a part, we will file annual and quarterly reports and other information with
the Securities and Exchange Commission. You may read and copy any reports,
documents and other information we file at the Securities and Exchange
Commission's public reference rooms in Washington, D.C., New York, New York,
and Chicago, Illinois. Please call 1-800-SEC-0330 for further information on
the public reference rooms. Our filings will also be available to the public
from commercial document retrieval services and at the web site maintained by
the Securities and Exchange Commission at http://www.sec.gov.
We have filed a registration statement on Form S-4 to register with the
Securities and Exchange Commission the new notes to be issued in exchange for
the old notes. This prospectus is part of that registration statement. As
allowed by the Securities and Exchange Commission's rules, this prospectus does
not contain all of the information you can find in the registration statement
and the exhibits to the registration statement.
We have not authorized anyone to give you any information or to make any
representations about us or the transactions we discuss in this prospectus
other than those contained in this prospectus. If you are given any information
or representations about these matters that is not discussed in this
prospectus, you must not rely on that information. This prospectus is not an
offer to sell or a solicitation of an offer to buy securities anywhere or to
anyone where or to whom we are not permitted to offer or sell securities under
applicable law. The delivery of this prospectus does not, under any
circumstances, mean that there has not been a change in our affairs since the
date of this prospectus. It also does not mean that the information in this
prospectus is correct after this date.
FORWARD-LOOKING STATEMENTS
This prospectus includes "forward-looking statements" including, in
particular, the statements about our plans, strategies and prospects under the
headings "Summary," "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Business." We have based these
forward-looking statements on our current expectations and projections about
future events. Although we believe that our plans, intentions and expectations
reflected in or suggested by those forward-looking statements are reasonable,
we can give no assurance that our plans, intentions or expectations will be
achieved. Important factors that could cause actual results to differ
materially from those expressed or implied by the forward-looking statements we
make in this prospectus are set forth in this prospectus, including factors
disclosed under "Risk Factors." We believe that the following factors, among
others, could affect our future performance and cause actual results to differ
materially from those expressed or implied by forward-looking statements made
in this prospectus:
-- general and regional economic conditions, including the economy in the
states in which we have production facilities and in which we sell our
products;
-- demand for residential and commercial construction;
-- demand for automobiles and other vehicles;
-- levels of government spending on road and other infrastructure
construction;
-- the competitive nature of the industrial minerals and aggregates
industries;
-- operating risks typical of the industrial minerals and aggregates
industries;
-- difficulties in, and unanticipated expense of, assimilating newly-
acquired businesses;
-- fluctuations in prices for, and availability of, transportation and
power;
ii
<PAGE>
-- unfavorable weather conditions;
-- regulatory compliance, including compliance with environmental and
silica exposure regulations, by us and our customers;
-- litigation affecting us and our customers;
-- changes in the demand for our products due to the availability of
substitutes for products of our customers; and
-- labor unrest.
We undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
In light of these risks, uncertainties and assumptions, our future performance
may differ materially from that expressed or implied by the forward-looking
statements discussed in this prospectus.
INDUSTRY DATA
Information contained in this prospectus concerning the industrial minerals
and aggregates industries, our general expectations concerning these industries
and our market position and market share within these industries and the end
use markets we serve are based on estimates prepared by us using data from
various sources (primarily the U.S. Geological Survey, including its web site
at www.usgs.gov, the Committee on Environment and Public Works of the United
States Senate and data from our internal research) and on assumptions made by
us, based on that data and our knowledge of these industries, which we believe
to be reasonable. We believe data regarding the industrial minerals and
aggregates industries and our market position and market share within those
industries and the end use markets we serve are inherently imprecise, but are
generally indicative of their size and our market position and market share
within those industries and end use markets. While we are not aware of any
misstatements regarding any industry data presented in this prospectus, our
estimates, particularly as they relate to our general expectations concerning
the industrial minerals and aggregates industries, involve risks and
uncertainties and are subject to change based on various factors, including
those discussed under the caption "Risk Factors" in this prospectus.
Information contained in this prospectus relating to the Transportation Equity
Act for the 21st Century comes primarily from the United States Department of
Transportation's web site located at www.fhwa.dot.gov.
MEASUREMENTS
When used in this prospectus:
-- data in tons or tonnage is measured in "short" tons (2,000 pounds);
-- mesh refers to size measured in sieve openings per square inch and thus
as mesh size increases, particle size decreases; and
-- microns refer to size (1 micron is equal to 0.00004 of an inch).
iii
<PAGE>
SUMMARY
This summary highlights information contained elsewhere in this prospectus.
This prospectus includes information about the exchange offer, as well as
information regarding our business, certain recent transactions entered into by
us and detailed financial data. You should read this entire prospectus
carefully, including the "Risk Factors" section and the financial statements
and the notes thereto. Unless otherwise indicated or the context otherwise
requires, all references in this prospectus to "we," "us," "our" and similar
terms, as well as references to "Better Minerals & Aggregates," refer to Better
Minerals & Aggregates Company (formerly known as USS Intermediate Holdco, Inc.)
and its direct and indirect subsidiaries, including Commercial Stone Co., Inc.
("Commercial Stone Co.") and Commercial Aggregates Transportation and Sales,
L.P. ("CATS"), which we acquired on October 1, 1999, and all references to the
"issuer" refer to Better Minerals & Aggregates Company only and not to any of
its subsidiaries. In addition, all references in this prospectus to "USS
Holdings" refer to USS Holdings, Inc., our indirect parent, all references to
"BMAC Holdings" refer to BMAC Holdings, Inc., our direct parent, and all
references to "U.S. Silica" refer to U.S. Silica Company, one of our
subsidiaries. Unless otherwise indicated, when we set forth financial or other
information in this prospectus on a pro forma basis for the year ended
December 31, 1999, that information gives effect to the Transactions (as
defined below) and the acquisition of certain operating assets in southern New
Jersey from Unimin Corporation (the "Morie Assets") on April 9, 1999 as if they
had occurred on January 1, 1999. When we refer to our aggregates business in
this prospectus, it includes our hot mixed asphalt business. Any reference to
"notes" in this prospectus refers to both "old notes" and "new notes," unless
the context otherwise requires.
Better Minerals & Aggregates Company
We mine, process and market industrial minerals, principally silica, in the
eastern and midwestern United States. We also mine, process and market
aggregates and produce and market hot mixed asphalt in certain geographic areas
in Pennsylvania and New Jersey. We are the second leading producer of silica in
the United States, accounting for approximately 23% of industry volume in 1999.
We believe that we have leading positions in most of our key end use markets
for our silica products, typically occupying the number one or two position by
sales. These end use markets include container glass, fiberglass, specialty
glass, flat glass, fillers and extenders (primarily used in paints and
coatings), chemicals and ceramics. We also supply our silica products to the
foundry, building materials and other end use markets. Our customers use our
aggregates, which consist of high quality crushed stone, construction sand and
gravel, for road construction and maintenance, other infrastructure projects
and residential and commercial construction and to produce hot mixed asphalt
and concrete products. We also use our aggregates to produce hot mixed asphalt.
We operate a network of 25 production facilities in 14 states. Many of our
production facilities are located near major modes of transportation and our
significant customers, which reduces transportation costs and enhances customer
service. Our principal industrial minerals and aggregates properties each have
deposits that we believe will support production in excess of 15 years. On a
pro forma basis, our industrial minerals business (substantially all the net
sales of which consist of silica products) and our aggregates business
accounted for 65.2% and 34.8% of our net sales, respectively, for the year
ended December 31, 1999. On a pro forma basis, we had net sales of $248.1
million for the year ended December 31, 1999.
Industry Overview
In 1998, consumption of silica in the United States was approximately 29.0
million tons, generating sales of approximately $491 million. The distinct
characteristics of silica--size, purity, color, inertness, hardness and
resistance to high temperatures--make it difficult to substitute in a
1
<PAGE>
variety of applications. From 1988 to 1998, sales of silica in the United
States grew at a compound annual growth rate of approximately 2.7%. This growth
resulted from increased demand across a wide variety of end use markets.
In 1998, consumption of aggregates (not including hot mixed asphalt) in the
United States was approximately 2.8 billion tons, generating sales of
approximately $13.5 billion. Aggregates consist of crushed stone, construction
sand and gravel. From 1988 to 1998, sales of aggregates in the United States
grew at a compound annual growth rate of approximately 4.4%. This growth
resulted from increased demand for road construction and maintenance, other
infrastructure projects and residential and commercial construction. We believe
demand for aggregates will increase due to the passage by Congress in 1998 of
the Transportation Equity Act for the 21st Century ("TEA-21"). TEA-21
establishes a $218 billion transportation program that provides for increased
federal funding for highways and related infrastructure improvements through
2003. TEA-21 authorizes average annual federal spending on highways and related
infrastructure improvements of approximately $26 billion, approximately 44%
higher than the average annual federal spending of $18 billion under the
predecessor program. In Pennsylvania and New Jersey, our primary aggregates
markets, average annual federal spending on highways and related infrastructure
improvements under TEA-21 is projected to be approximately 47% and 30% higher,
respectively, than under the predecessor program.
Transportation costs are a significant portion of the total cost of
industrial minerals and aggregates to customers, typically representing up to
50% of that cost. As a result, the industrial minerals and aggregates markets
are typically local, and competition from beyond the local area is limited.
Industrial minerals and aggregates are usually shipped within 200 miles and 75
miles of the plant, respectively, while hot mixed asphalt is usually shipped
within 30 miles. However, certain high margin industrial minerals products,
such as fine ground silica, may be distributed nationally and, in some cases,
internationally due to the high value of these products relative to
transportation costs.
Competitive Strengths
Leading Positions in Attractive End Use Markets and Geographic Areas. We are
the second leading producer of silica in the United States, accounting for
approximately 23% of industry volume in 1999. We believe that we have leading
positions in most of our key end use markets for our silica products, typically
occupying the number one or two position by sales. These end use markets
include container glass, fiberglass, specialty glass, flat glass, fillers and
extenders, chemicals and ceramics. In addition, we believe that our aggregates
business maintains leading positions in the key geographic areas we serve,
including the Pittsburgh and Philadelphia metropolitan areas. Both the
industrial minerals and aggregates industries in the United States have been
characterized by stable historical growth. For the period between 1988 and
1998, sales of silica and aggregates in the United States have increased at a
compound annual growth rate of approximately 2.7% and 4.4%, respectively. We
believe the growth in sales for silica will continue at this stable rate.
Furthermore, we believe demand for aggregates will grow due to the passage of
TEA-21, which will increase average annual federal spending on highways and
related infrastructure improvements through 2003 by approximately 44% over the
predecessor program.
Low Cost Supplier. We believe that we are a low cost supplier of industrial
minerals and aggregates in the end use markets and geographic areas in which we
compete. Our largest industrial minerals facilities are located on major
railroad routes and near our significant customers. In addition, we utilize
multiple modes of transportation such as trucks, rail and rail-truck transfer
facilities to obtain competitive freight rates. Our western Pennsylvania
aggregates business is positioned closer
2
<PAGE>
to the interstate highway system surrounding the Pittsburgh metropolitan area
than the operations of many of our competitors, providing us with a cost
advantage. In addition, our investments in technology have improved
efficiencies and have also contributed to our position as a low cost supplier.
Diverse Revenue Base. We provide a wide range of products to a diverse
customer base, serving numerous end use markets. We believe that this diversity
mitigates the impact of adverse economic conditions in any end use market that
we serve. For example, on a pro forma basis for the year ended December 31,
1999, we exceeded $10 million in net sales in each of 10 distinct end use
markets and no single customer accounted for more than 5% of our net sales.
Strong Customer Relationships. We are a key supplier of silica to leaders in
many of the end use markets that we serve. We have had relationships with many
of our major customers for more than 20 years, including Corning Incorporated,
Owens Corning, Owens-Illinois, Inc., PPG Industries, Inc., PQ Corporation and
The Sherwin-Williams Company. We have also developed strong relationships with
government contractors and others in our aggregates business that provide us
with a diverse base of approximately 5,000 aggregates customers, primarily
consisting of local contractors.
Experienced Management Team. Our senior management team has an average of
approximately 21 years of related industry experience. This experience has
allowed us to improve productivity, reduce costs and enhance customer
relationships in competitive markets. For example, during the period from the
beginning of 1994 to the end of 1999, excluding the effect of acquisitions, we
increased net sales in our industrial minerals business at a compound annual
growth rate of approximately 4.0%. During the same period, excluding the effect
of acquisitions, we reduced total operating costs per ton by 0.5%.
Strong Financial Sponsors. D. George Harris & Associates, LLC ("DGHA") and
Chase Capital Partners ("CCP") provide us with expertise in identifying and
financing industrial minerals and aggregates acquisition opportunities. Since
1987, our chairman, D. George Harris, has overseen 30 acquisitions in the
worldwide chemical and extractive minerals industries. DGHA is an independent
private leveraged buyout group formed in 1987 whose principal business is to
form investor groups to acquire and manage industrial businesses. DGHA has
substantial experience in acquiring, operating and expanding chemical,
industrial minerals and aggregates businesses, including Harris Chemical Group,
Inc. and Harris Specialty Chemicals, Inc. CCP is the private equity group of
The Chase Manhattan Corporation, one of the largest bank holding companies in
the United States, and is one of the nation's largest private equity
organizations, with over $15 billion under management. Through its affiliates,
CCP invests in leveraged buyouts, recapitalizations and venture capital
opportunities by providing equity and mezzanine debt capital. Since its
inception in 1984, CCP has made over 950 direct investments in a variety of
industries, including investments in over 30 industrial minerals and chemicals
companies.
Strategy
Our goals are to build on our leading market positions by continuing to
improve our existing operations and by pursuing acquisition opportunities.
For our current operations, we intend to:
--expand our aggregates and hot mixed asphalt production capacity by
investing in additional plant and equipment;
3
<PAGE>
--continue to focus on cost reductions by investing in technology,
improving production processes and sharing manufacturing best practices
throughout our organization as we integrate our acquisitions; and
--introduce, at select locations, new products such as water filtration
sand, golf course sands and a variety of other specialty products
developed through new processing techniques and market knowledge gained
through our recent acquisitions.
In addition, we have grown through acquisitions and we will continue to
pursue acquisitions that we believe will create value and enhance cash flow. We
target opportunities that provide us with:
--access to new geographic areas in close proximity to our existing
operations;
--an ability to market other industrial minerals in existing end use
markets; and
--additional technological, production and marketing expertise.
The Transactions
Commercial Stone Acquisition. On October 1, 1999 (the "closing date"),
through two of our subsidiaries, we acquired Commercial Stone Co., CATS and
related quarry properties (the "Commercial Stone acquisition"). The acquired
companies and properties are collectively referred to in this prospectus as
"Commercial Stone." The Commercial Stone acquisition substantially increased
our aggregates business and expanded our presence in Pennsylvania to the
Pittsburgh metropolitan area, where Commercial Stone is a leading producer of
crushed stone and hot mixed asphalt. For its fiscal year ended March 31, 1999,
Commercial Stone sold 3.2 million tons of crushed stone and 1.1 million tons of
hot mixed asphalt. For the same period, Commercial Stone had net sales of $42.0
million.
The total consideration for Commercial Stone was $139.0 million in cash,
$8.0 million of which was placed in escrow to satisfy any future indemnity
claims we may have against the sellers. The Commercial Stone acquisition was
consummated simultaneously with the consummation of the other Transactions
described below, including the offering of the old notes.
New Credit Facilities. On the closing date, we entered into new senior
secured credit facilities (the "new credit facilities") with Chase Securities
Inc. ("CSI"), as syndication agent, book manager, lead arranger and
documentation agent, and Banque Nationale de Paris, as administrative agent and
collateral agent, and other lenders. The new credit facilities consisted of a
$50.0 million revolving credit facility, a $45.0 million tranche A term loan
facility, a $95.0 million tranche B term loan facility and a $40.0 million
delayed draw term loan acquisition facility. Borrowings under the delayed draw
term loan acquisition facility are conditioned on, among other things, meeting
a specific leverage ratio. On the closing date, we borrowed the full amount of
the term loans. See "Description of the New Credit Facilities."
Cash Equity Contribution. On the closing date, USS Holdings issued and sold
shares of common and preferred stock and warrants to purchase common stock of
USS Holdings for $35.0 million (the "cash equity contribution"), which proceeds
were contributed to us on the closing date. See "Security Ownership of Certain
Beneficial Owners and Management."
4
<PAGE>
The Commercial Stone acquisition, the repayment of certain debt, the
borrowings under the new credit facilities, the cash equity contribution and
the offering of the old notes are collectively referred to in this prospectus
as the "Transactions." The sources and uses of funds for the Transactions are
presented in the following table:
<TABLE>
<CAPTION>
Amount
---------------------
(Dollars in Millions)
<S> <C>
Sources:
Tranche A term loan facility...................... $ 45.0
Tranche B term loan facility...................... 95.0
Old notes......................................... 150.0
Cash equity contribution.......................... 35.0
------
Total sources................................... $325.0
======
Uses:
Purchase price of Commercial Stone................ $139.0
Repayment of certain debt......................... 167.2
Fees and expenses(1).............................. 18.8
------
Total uses...................................... $325.0
======
</TABLE>
- --------
(1) Fees and expenses include the initial purchasers' discounts and other
expenses in connection with the offering of the old notes, fees and
expenses associated with the Commercial Stone acquisition and the new
credit facilities and $1.3 million in bonuses paid to the management of
Commercial Stone upon the consummation of the Commercial Stone acquisition.
----------------
The issuer is incorporated in Delaware with principal executive offices
located at Route 522 North, P.O. Box 187, Berkeley Springs, West Virginia
25411. Its telephone number is (304) 258-2500.
5
<PAGE>
The Exchange Offer
On October 1, 1999, we completed the private offering of our 13% Senior
Subordinated Notes due 2009. We entered into an exchange and registration
rights agreement with the initial purchasers in the private placement in which
we agreed to deliver to you this prospectus and we agreed to complete the
exchange offer within 240 days after the date of original issuance of the old
notes. You are entitled to exchange in the exchange offer your old notes for
new notes which are identical in all material respects to the old notes except
that:
--the new notes have been registered under the Securities Act of 1933;
--the new notes are not entitled to certain rights which are applicable to
the old notes under the exchange and registration rights agreement; and
--certain liquidated damages provisions are no longer applicable.
The Exchange Offer.......... We are offering to exchange up to $150.0 million
aggregate principal amount of 13% Senior
Subordinated Notes due 2009 which have been
registered under the Securities Act of 1933 for
up to $150.0 million aggregate principal amount
of 13% Senior Subordinated Notes due 2009 which
were issued on October 1, 1999 in the private
offering. Old notes may be exchanged only in
integral multiples of $1,000. We will issue the
new notes promptly after the expiration of the
exchange offer.
Resales..................... Based on an interpretation by the staff of the
Securities and Exchange Commission set forth in
no-action letters issued to third parties, we
believe that the new notes issued pursuant to the
exchange offer in exchange for old notes may be
offered for resale, resold and otherwise
transferred by you (unless you are our
"affiliate" within the meaning of Rule 405 under
the Securities Act of 1933) without compliance
with the registration and prospectus delivery
provisions of the Securities Act of 1933,
provided that you are acquiring the new notes in
the ordinary course of business and that you have
not engaged in, do not intend to engage in, and
have no arrangement or understanding with any
person to participate in, a distribution of the
new notes.
Each participating broker-dealer that receives
new notes for its own account pursuant to the
exchange offer in exchange for old notes that
were acquired as a result of market-making or
other trading activity must acknowledge that it
will deliver a prospectus in connection with any
resale of the new notes. These broker-dealers may
use this prospectus for this purpose. See "Plan
of Distribution."
Any holder of old notes who
--is our affiliate,
--does not acquire new notes in the ordinary
course of its business, or
6
<PAGE>
--tenders in the exchange offer with the
intention to participate, or for the purpose
of participating, in a distribution of new
notes,
cannot rely on the position of the staff of the
Securities and Exchange Commission enunciated in
Exxon Capital Holdings Corporation, Morgan
Stanley & Co. Incorporated or similar no-action
letters and, in the absence of an exemption, must
comply with the registration and prospectus
delivery requirements of the Securities Act of
1933 in connection with the resale of the new
notes.
Expiration Date; Withdrawal
of Tenders.................. The exchange offer will expire at 5:00 p.m., New
York City time, on , 2000, unless we decide to
extend the exchange offer. We do not currently
intend to extend the expiration date, although we
reserve the right to do so. A tender of old notes
pursuant to the exchange offer may be withdrawn
at any time prior to the expiration date, subject
to compliance with the procedures for withdrawal
described in "The Exchange Offer" section of this
prospectus under the heading "Withdrawal of
Tenders." Any old notes not accepted for exchange
for any reason will be returned without expense
to the tendering holder promptly after the
expiration or termination of the exchange offer.
Conditions to the Exchange The exchange offer is subject to customary
Offer....................... conditions, any of which we may waive. The
exchange offer is not conditioned upon any
minimum aggregate principal amount of old notes
being tendered for exchange. See "The Exchange
Offer--Conditions to Exchange Offer."
Procedures for Tendering
Old Notes................... If you wish to accept the exchange offer, you
must complete, sign and date the accompanying
letter of transmittal, or a copy of the letter of
transmittal, according to the instructions
contained in this prospectus and the letter of
transmittal. You must also mail or otherwise
deliver the letter of transmittal, or the copy,
together with the old notes and any other
required documents, to the exchange agent at the
address set forth on the cover of the letter of
transmittal on or prior to the expiration date.
If you hold old notes through The Depository
Trust Company ("DTC") and wish to participate in
the exchange offer, you must comply with the
Automated Tender Offer Program procedures of DTC,
by which you will agree to be bound by the letter
of transmittal. By signing or agreeing to be
bound by the letter of transmittal, you will
represent to us that, among other things:
--any new notes that you receive will be
acquired in the ordinary course of your
business;
7
<PAGE>
--you have no arrangement or understanding
with any person or entity to participate in
the distribution of the new notes;
--if you are a broker-dealer that will
receive new notes for your own account in
exchange for old notes that were acquired as
a result of market-making activities, that
you will deliver a prospectus, as required
by law, in connection with any resale of the
new notes; and
--you are not our "affiliate" as defined in
Rule 405 under the Securities Act of 1933,
or, if you are an affiliate, you will comply
with any applicable registration and
prospectus delivery requirements of the
Securities Act of 1933.
Special Procedures for
Beneficial Owners........... If you are a beneficial owner of old notes that
are registered in the name of a broker, dealer,
commercial bank, trust company or other nominee
and you wish to tender those old notes for
exchange, you should contact the registered
holder promptly and instruct it to tender those
notes on your behalf. If you wish to tender those
notes yourself, you must either make appropriate
arrangements to re-register ownership of those
notes in your own name or obtain a properly
completed bond power from the registered holder.
The transfer of registered ownership to your own
name may take considerable time and you may not
be able to complete the transfer prior to the
expiration date.
Guaranteed Delivery If you wish to tender your old notes and your old
Procedures.................. notes are not immediately available or you cannot
deliver your old notes, the letter of transmittal
or any other documents required by the letter of
transmittal or comply with the applicable
procedures under DTC's Automated Tender Offer
Program on or prior to the expiration date, you
must tender your old notes according to the
guaranteed delivery procedures described in "The
Exchange Offer" section of this prospectus under
the heading "Guaranteed Delivery Procedures."
Effect on Holders of Old As a result of the making of, and upon acceptance
Notes....................... for exchange of all validly tendered old notes
pursuant to the terms of, the exchange offer, we
will have fulfilled a covenant contained in the
exchange and registration rights agreement and,
accordingly, we will not be obligated to pay
liquidated damages as described in the exchange
and registration rights agreement. If you are a
holder of old notes and do not tender your old
notes in the exchange offer, you will continue to
hold the old notes and you will be entitled to
all the rights and limitations applicable to the
old notes in the indenture,
8
<PAGE>
except for any rights under the exchange and
registration rights agreement that by their terms
terminate upon the consummation of the exchange
offer.
Consequences of Failure to
Exchange.................... All untendered old notes will continue to be
subject to the restrictions on transfer provided
for in the old notes and in the indenture. In
general, the old notes may not be offered or sold
unless registered under the Securities Act of
1933, except pursuant to an exemption from, or in
a transaction not subject to, the Securities Act
of 1933 and applicable state securities laws.
Other than in connection with the exchange offer,
we do not currently anticipate that we will
register the old notes under the Securities Act
of 1933.
Certain United States
Federal Income Tax The exchange of old notes for new notes in the
Consequences................ exchange offer will not be a taxable event for
U.S. federal income tax purposes. See "Certain
United States Federal Tax Consequences."
Use of Proceeds............. We will not receive any proceeds from the
issuance of the new notes in the exchange offer.
Exchange Agent.............. The Bank of New York, the trustee under the
indenture governing the notes, is the exchange
agent for the exchange offer. The address and
telephone number of the exchange agent are set
forth in the "The Exchange Offer" section of this
prospectus under the heading "Exchange Agent."
Exchange Offer,
Registration Rights......... Subject to the applicable federal and state
securities laws, we agreed to file on or prior to
135 days after the date of original issuance of
the old notes, and to use our reasonable best
efforts to cause to be declared effective within
195 days after the date of original issuance of
the old notes, a registration statement with
respect to an offer to exchange the old notes for
new notes.
We also agreed, under certain circumstances, to
file and to use our reasonable best efforts to
cause to become effective a shelf registration
statement with respect to the resale of the old
notes. As described in the exchange and
registration rights agreement, liquidated damages
with respect to the old notes are payable if we
do not comply with certain of our registration
obligations. The filing of the registration
statement of which this prospectus is a part is
intended to satisfy the requirement to file the
exchange offer registration statement.
The registration statement of which this
prospectus is a part was not filed with the
Securities and Exchange Commission
9
<PAGE>
within 135 days after the date of original
issuance of the old notes and, as a result,
pursuant to the terms of the exchange and
registration rights agreement, we have made a
payment of liquidated damages on the old notes on
March 15, 2000 in the amount of $123,428.
The New Notes
The following summary contains basic information about the new notes. It
does not contain all the information that may be important to you. For a more
complete description of the new notes, please refer to the section of this
prospectus entitled "Description of the New Notes."
Issuer...................... Better Minerals & Aggregates Company.
New Notes Offered........... $150,000,000 aggregate principal amount of 13%
Senior Subordinated Notes due 2009.
Maturity.................... September 15, 2009.
Interest.................... Annual rate: 13%.
Payment frequency: every six months on March 15
and September 15.
Holders of old notes whose old notes are accepted
for exchange in the exchange offer will be deemed
to have waived the right to receive any payment
in respect of interest on the old notes accrued
from March 15, 2000 (the first interest payment
date of the old notes) to the date of issuance of
the new notes. Consequently, holders who exchange
their old notes for new notes will receive the
same interest payment on September 15, 2000 (the
next interest payment date with respect to the
old notes and the new notes following
consummation of the exchange offer) that they
would have received had they not accepted the
exchange offer.
Optional Redemption......... After September 15, 2004, the issuer may redeem
some or all of the new notes at the redemption
prices listed in the "Description of the New
Notes" section of this prospectus under the
heading "Optional Redemption." Prior to that
date, the issuer may not redeem the new notes,
except as described in the following paragraph.
At any time prior to September 15, 2002, the
issuer may redeem up to 35% of the original
aggregate principal amount of the new notes with
the net cash proceeds of certain equity offerings
at a redemption price equal to 113% of the
principal amount thereof plus accrued and unpaid
interest, so long as (a) at least 65% of the
original aggregate amount of the new notes remain
outstanding after each such redemption and (b)
10
<PAGE>
any such redemption by the issuer is made within
90 days of that equity offering. See "Description
of the New Notes--Optional Redemption."
Change of Control........... Upon the occurrence of a transaction meeting the
definition of a change of control, unless the
issuer has exercised its right to redeem all of
the new notes as described above, you will have
the right to require the issuer to purchase all
or a portion of your new notes at a purchase
price in cash equal to 101% of the principal
amount thereof plus accrued and unpaid interest
to the date of purchase. See "Description of the
New Notes--Change of Control."
Note Guarantees............. The new notes will be fully and unconditionally
guaranteed by an unsecured note guarantee made by
each of the issuer's existing and future Domestic
Subsidiaries (as defined in "Description of the
New Notes--Certain Definitions"). The new notes
will also be fully and unconditionally guaranteed
by an unsecured note guarantee made by each
existing and future Foreign Subsidiary (as
defined in "Description of the New Notes--Certain
Definitions") that guarantees any debt (other
than debt of a Restricted Subsidiary (as defined)
that is not a note guarantor) (collectively, the
"note guarantors"). The new notes will be
guaranteed by all of the issuer's subsidiaries
except its Canadian subsidiary. This Canadian
subsidiary is an inactive company that has an
immaterial amount of assets and liabilities. The
note guarantees will be subordinated to the
guarantees of senior debt of the issuer issued by
the note guarantors under the new credit
facilities. See "Description of the New Notes--
Note Guarantees."
Ranking..................... The new notes will be unsecured and:
--will be subordinated in right of payment to
all of the existing and future senior debt
of the issuer;
--will rank equally in right of payment with
any of the issuer's future senior
subordinated debt;
--will rank senior in right of payment to any
of the issuer's future subordinated debt;
--will be effectively subordinated to any
secured debt of the issuer and its
subsidiaries to the extent of the value of
the assets securing that debt; and
--will be effectively subordinated to all
liabilities (including trade payables) and
preferred stock of each subsidiary of the
issuer that is not a note guarantor.
The issuer is a holding company that derives all
of its operating income and cash flow from its
subsidiaries.
11
<PAGE>
Similarly, the note guarantees of each note
guarantor will be unsecured and:
--will be subordinated in right of payment to
all of that note guarantor's existing and
future senior debt;
--will rank equally in right of payment with
any of that note guarantor's future senior
subordinated debt;
--will rank senior in right of payment to any
of that note guarantor's future subordinated
debt; and
--will be effectively subordinated to any
secured debt of that note guarantor and its
subsidiaries to the extent of the value of
the assets securing that debt. See
"Description of the New Notes--Ranking."
As of December 31, 1999:
--the issuer had $135.9 million of senior
debt (excluding unused commitments under the
new credit facilities), all of which was
secured debt;
--the issuer did not have any senior
subordinated debt other than the old notes
or any debt that was subordinate in right of
payment to the old notes;
--the note guarantors had $1.6 million of
senior debt (excluding their guarantees of
the issuer's debt under the new credit
facilities);
--the note guarantors did not have any senior
subordinated debt other than their note
guarantees or any debt that was subordinate
in right of payment to the note guarantees;
and
--the issuer's Canadian subsidiary had an
immaterial amount of liabilities.
The indenture governing the new notes permits us
to incur a significant amount of additional
senior debt.
Certain Covenants........... The indenture will, among other things, restrict
the issuer's ability and the ability of its
Restricted Subsidiaries to:
--incur debt;
--guarantee other debt;
--make distributions, redeem equity interests
or redeem subordinated debt;
--make investments;
--sell assets;
--enter into agreements that restrict
dividends from subsidiaries;
--merge or consolidate;
--enter into transactions with affiliates;
and
--sell capital stock of subsidiaries.
12
<PAGE>
These covenants will be subject to a number of
important exceptions and qualifications. See
"Description of the New Notes--Certain
Covenants" and "Description of the New Notes--
Merger and Consolidation."
----------------
Risk Factors
Prospective investors in the new notes should carefully consider all of the
information in this prospectus and, in particular, should evaluate the specific
factors under "Risk Factors" beginning on page 16 for risks involved with an
investment in the new notes.
13
<PAGE>
Summary Condensed Historical and Unaudited Pro Forma Financial Data
The following table sets forth our summary condensed historical and
unaudited pro forma financial data. The summary condensed historical financial
data as of and for the years ended December 31, 1997, 1998 and 1999 have been
derived from our audited consolidated financial statements and the notes
thereto included elsewhere in this prospectus. The summary condensed unaudited
pro forma financial data is derived from the unaudited pro forma statement of
operations contained under "Unaudited Pro Forma Consolidated Financial Data."
The unaudited pro forma statement of operations data for the year ended
December 31, 1999 gives effect to the Transactions and the acquisition of the
Morie Assets as if they had occurred on January 1, 1999.
The pro forma adjustments, as described in the notes to the unaudited pro
forma statement of operations contained under "Unaudited Pro Forma Consolidated
Financial Data," are estimates based on currently available information and
certain adjustments that management believes are reasonable. The unaudited pro
forma financial data is presented for informational purposes only and is not
necessarily indicative of the operating results that would have occurred had
the Transactions or the acquisition of the Morie Assets been consummated on or
as of the date indicated nor is it necessarily indicative of future operating
results. The unaudited pro forma financial data should be read in conjunction
with "Selected Financial Data," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the consolidated financial
statements and the notes thereto included elsewhere in this prospectus.
<TABLE>
<CAPTION>
Pro Forma Year
Ended December
Year Ended December 31, 31,
1997 1998(1) 1999(2) 1999
-------- -------- -------- --------------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Statement of Operations Data:
Net sales.................... $128,512 $142,294 $209,075 $248,053
Cost of goods sold........... 88,097 98,478 140,244 166,091
Depreciation, depletion and
amortization................ 17,886 19,888 28,481 34,206
Selling, general and
administrative.............. 14,345 16,930 21,843 23,437
Incentive stock compensation
expense(3).................. -- 14,227 -- --
-------- -------- -------- --------
Operating income (loss)...... 8,184 (7,229) 18,507 24,319
Interest expense............. 10,513 10,269 19,590 34,705
Accretion of preferred stock
warrants(4)................. 1,374 1,254 56 56
Other income net, including
interest income............. (1,742) (1,881) (2,171) (2,665)
-------- -------- -------- --------
(Loss) income before income
taxes....................... (1,961) (16,871) 1,032 (7,777)
Provision (Benefit) for
income taxes................ (2,239) (2,204) (2,714) (6,754)
-------- -------- -------- --------
Net income (loss) before
extraordinary loss.......... 278 (14,667) 3,746 (1,023)
Extraordinary loss(5)........ -- (2,102) (2,747) (2,747)
-------- -------- -------- --------
Net income (loss)............ $ 278 $(16,769) $ 999 $ (3,770)
======== ======== ======== ========
Other Financial Data:
Capital expenditures......... $ 5,537 $ 9,399 $ 14,572 $ 17,879
Cash interest expense........ 8,731 9,269 10,925 32,617
Ratio of earnings to fixed
charges(6).................. -- (7) -- (7) 1.1 -- (7)
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
As of
December 31,
1999
------------
<S> <C> <C> <C> <C>
Balance Sheet Data:
Cash.................................... $ 13,573
Working capital......................... 45,715
Total assets............................ 551,603
Total debt.............................. 287,505
Stockholder's equity.................... 64,335
</TABLE>
- --------
(1) Includes (i) the results of the Nicks Silica Assets from January 16, 1998,
the date of acquisition, (ii) with respect to the year ended December 31,
1998, the results of Pettinos from July 25, 1998, the date of acquisition,
and (iii) with respect to the year ended December 31, 1998, the results of
Better Materials from December 14, 1998, the date of acquisition, in each
case, as further described in "Management's Discussion and Analysis of
Financial Condition and Results of Operations".
(2) Includes the results of the Morie Assets from April 9, 1999, the date of
acquisition, and the results of Commercial Stone from October 1, 1999, the
date of acquisition.
(3) Represents non-cash compensation expense recorded in the second half of the
year ended December 31, 1998 due to the waiver by USS Holdings of its right
to repurchase certain capital stock held by our management.
(4) Represents the non-cash accretion in value of certain warrants granted with
respect to preferred stock of USS Holdings. Better Minerals & Aggregates
recognizes this charge as part of push down accounting because the warrants
were issued in connection with debt issued by U.S. Silica. The obligation
to satisfy any payment due in connection with these warrants was forgiven
by USS Holdings during 1999.
(5) Represents non-cash charges and write-offs recorded in connection with the
1998 early retirement of certain subordinated debt and the 1999 early
retirement of certain senior debt by Better Minerals & Aggregates.
(6) Under Item 503 of Regulation S-K, "earnings" for purposes of this
calculation have been computed by adding to "income before extraordinary
items" all taxes based on income or profits, total interest charges and the
estimated interest element of rentals charged to income. "Fixed charges"
include total interest charges and the estimated interest element of
rentals charged to income.
(7) Earnings were insufficient to cover fixed charges by $2.0 million, $16.9
million and $7.8 million for the years ended December 31, 1997 and 1998 and
on a pro forma basis for the year ended December 31, 1999, respectively.
15
<PAGE>
RISK FACTORS
Prospective investors should carefully consider the following factors in
addition to the other information set forth in this prospectus before
participating in the exchange offer.
Our High Level of Debt May Adversely Affect Our Ability To Repay the Notes
As a result of the Transactions, we have a substantial amount of debt. As of
December 31, 1999, we had total debt of $287.5 million (excluding unused
commitments) and total stockholder's equity of $64.4 million, giving us total
debt representing 81.7% of total capitalization. Assuming that the Transactions
and the acquisition of the Morie Assets had taken place on January 1, 1999, our
interest expense for the year ended December 31, 1999 would have been $34.7
million. In addition, subject to restrictions in the new credit facilities and
in the indenture, we may borrow more money for working capital, capital
expenditures, acquisitions or other purposes.
Our high level of debt could have important consequences for you, including
the following:
--we will need to use a large portion of the cash earned by our
subsidiaries to pay principal and interest on the new credit facilities,
the notes and other debt, which will reduce the amount of cash available
to us to finance our operations, to invest in additional plant and
equipment, to make improvements to existing plant and equipment and to
improve our technology capabilities;
--our debt level makes us more vulnerable to economic downturns and adverse
developments in our business;
--we may have a much higher level of debt than certain of our competitors,
which may put us at a competitive disadvantage;
--we may have difficulty borrowing money in the future for working capital,
capital expenditures, acquisitions or other purposes; and
--some of our debt has a variable rate of interest, which exposes us to the
risk of increased interest rates.
To Service Our Indebtedness, We Will Require a Significant Amount of Cash. Our
Ability to Generate Cash Depends on Many Factors Beyond Our Control
We expect to obtain the cash to pay our expenses and to pay the principal
and interest on the notes, the new credit facilities and other debt from the
operations of our subsidiaries. Availability under the revolving credit
facility will be important for us to maintain liquidity to pay obligations as
they become due. Our ability to meet our expenses and debt service obligations
depends on the future performance of our subsidiaries, which will be affected
by financial, business, economic and other factors. We will not be able to
control many of these factors, such as economic conditions and pressure from
competitors. We cannot be certain that the cash earned by our subsidiaries will
be sufficient to allow us to pay principal and interest on our debt (including
the notes) and meet our other obligations. If we do not have enough cash, we
may be required to refinance all or part of our existing debt, including the
notes, sell assets, borrow more money or raise equity. We cannot guarantee that
we will be able to refinance our debt, sell assets, borrow more money or raise
equity on terms acceptable to us, or at all. For example, neither CCP nor DGHA
is obligated to make any additional equity investments in USS Holdings. In
addition, the terms of existing or future debt agreements, including the new
credit facilities and the indenture, may restrict us from adopting any of these
alternatives.
The indenture contains certain limitations on our operating flexibility. See
"Description of the New Notes--Certain Covenants." In addition, the new credit
facilities contain many similar and more
16
<PAGE>
stringent limitations and will prohibit us from prepaying certain of our other
debt (including the notes) while debt under the new credit facilities is
outstanding. In addition, under the new credit facilities, we must also comply
with certain specified financial ratios and tests. If we do not comply with
these or other covenants and restrictions contained in the new credit
facilities, we could default under the new credit facilities. Upon the
occurrence of an event of default under the new credit facilities, the lenders
could declare all amounts outstanding under the new credit facilities, together
with accrued interest, to be immediately due and payable, which could cause all
or a portion of our other debt, including the notes, to become immediately due
and payable. If we were unable to repay those amounts, the lenders could
proceed against the collateral granted to them to secure that debt. If the
lenders under the new credit facilities accelerate the payment of the debt, we
cannot assure you that our assets would be sufficient to repay in full that
debt and our other debt, including the notes. Furthermore, our ability to
comply with the provisions of the new credit facilities may be affected by
events beyond our control. See "Description of the New Credit Facilities."
Demand for Our Products Is Affected by External Factors
Demand in the markets served by the industrial minerals and aggregates
industries is affected by many external factors, including the following:
--general and regional economic conditions, including the economy in the
states in which we have production facilities and in which we sell our
products;
--demand for automobiles and other vehicles;
--the substitution of plastic or other materials for glass, a significant
end use market for the industrial minerals business;
--levels of government spending on road and other infrastructure
construction; and
--demand for residential and commercial construction.
General or localized economic downturns in areas where we sell products, or
other external factors adversely affecting demand in the markets we serve, such
as the factors noted above, could result in a decrease in net sales and
operating income and, therefore, could have a material adverse effect on us.
For example, because our aggregates business is more geographically
concentrated than the businesses of some of our competitors, we may be more
vulnerable to local economic conditions in Pennsylvania and New Jersey.
Demand for Our Aggregates May Be Affected by Weather
Poor weather during the peak season of our aggregates business from April
through November could result in lower sales of aggregates by reducing or
delaying road construction and maintenance, other infrastructure projects and
residential and commercial construction. In the past, significant changes in
weather conditions during this period have caused variations in demand for
aggregates. In addition, because we are not as geographically diverse as some
of our aggregates competitors, we may be more vulnerable than these competitors
to poor weather conditions in the geographic areas in which we operate.
Our Business Is Subject to Operating Risks
All of our revenue is and will be derived from our industrial minerals and
aggregates businesses. The mining, processing and related infrastructure
facilities of these businesses are subject to risks normally encountered in the
industrial minerals and aggregates industries. These risks include
environmental hazards, industrial accidents, technical difficulties or
failures, late delivery of supplies, the price and availability of power, the
price and availability of transportation, unusual or unexpected
17
<PAGE>
geological formations or pressures, cave-ins, pit wall failures, rock falls,
unanticipated ground, grade or water conditions, flooding and periodic or
extended interruptions due to the unavailability of materials and equipment,
inclement or hazardous weather conditions, fires, explosions or other accidents
or acts of force majeure. In addition, the price or availability of oil, a raw
material of hot mixed asphalt, could adversely affect operating costs, which
could in turn adversely affect our operating results if we cannot pass these
increased costs through to our customers. Any of these risks could result in
damage to, or destruction of, our mining properties or production facilities,
personal injury, environmental damage, delays in mining or processing, losses
or possible legal liability. Any prolonged downtime or shutdowns at our mining
properties or production facilities could have a material adverse effect on us.
We Rely Heavily on Third Party Transportation
We rely heavily on railroads and trucking companies to ship our industrial
minerals and aggregates products to our customers. Because freight costs
represent a significant portion of the total cost to the customer, fluctuations
in freight rates can change the relative competitive position of our production
facilities. Rail and trucking operations are subject to various hazards,
including extreme weather conditions, work stoppages, operating hazards and
year 2000 computer problems. If we are unable to ship our products as a result
of the railroads or trucking companies failing to operate or if there are
material changes in the cost or availability of railroad or trucking services,
we may not be able to arrange alternative and timely means to ship our
products, which could lead to interruptions or slowdowns in our businesses and,
therefore, have a material adverse effect on us.
Our Future Performance Will Depend on Our Ability To Succeed in Competitive
Markets
We compete in highly competitive industries. Due to the high cost of
transportation relative to the value of our industrial minerals and aggregates
products, competition tends to be limited to producers in proximity to our
production facilities. The silica industry is a competitive market that is
characterized by a small number of large, national producers and a larger
number of small, regional producers. We are the second leading producer of
silica in the United States, accounting for approximately 23% of industry
volume in 1999. We compete with, among others, Unimin Corporation, Fairmount
Minerals Ltd., Oglebay Norton Industrial Sands Inc. and Badger Mining
Corporation. Competition in the industrial minerals industry is based on price,
consistency and quality of product, site location, distribution capability,
customer service, reliability of supply, breadth of product offering and
technical support. In addition, there is significant unutilized capacity in the
industrial minerals industry that could adversely affect the pricing of our
industrial minerals products.
In recent years, the aggregates industry has seen increasing consolidation,
although competition remains primarily local. Competition in the aggregates
industry is based primarily on price, quality of product, site location,
distribution capability and customer service. In Pennsylvania and New Jersey we
compete primarily with local or regional operations. In addition, slag, a
residue from steel processing, also competes with our aggregates products.
Many of our competitors are large companies that have greater financial
resources than we do, may develop technology superior to ours and have
production facilities that are located closer to key customers. There can be no
assurance that we will be able to compete successfully against our competitors
in the future or that competition will not have a material adverse effect on
us.
Silica Health Issues and Litigation Could Have a Material Adverse Effect on Our
Business
The exposure of persons to silica and the accompanying health risks have
been, and will continue to be, a significant issue confronting the industrial
minerals industry. Concerns over silicosis
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and other potential adverse health effects, as well as concerns regarding
potential liability from the use of silica, may have the effect of discouraging
our customers' use of our silica products. The actual or perceived health risks
of mining, processing and handling silica could materially and adversely affect
silica producers, including us, through reduced use of silica products, the
threat of product liability or employee lawsuits, increased levels of scrutiny
by federal and state regulatory authorities of us and our customers (see "--Our
Business Is Subject to Extensive Environmental, Health and Safety Regulations")
or reduced financing sources available to the silica industry.
The inhalation of respirable crystalline silica is associated with
silicosis. There is recent evidence of an association between crystalline
silica exposure or silicosis and lung cancer and a possible association with
other diseases, such as immune system disorders like scleroderma. Since 1975,
U.S. Silica has been named as a defendant in numerous products liability
lawsuits brought by alleged employees or former employees of our customers
alleging damages caused by silica exposure. As of March 1, 2000, there were an
estimated 984 silica-related products liability claims pending in which U.S.
Silica is a defendant. Almost all of the claims pending against U.S. Silica
arise out of the alleged use of U.S. Silica products in foundries or as an
abrasive blast media and have been filed in the states of Texas and
Mississippi.
We currently have certain limited sources of recovery for silica-related
products liability claims, including an indemnity for those claims (including
litigation expenses) from ITT Industries, Inc., successor to the former owner
of U.S. Silica, and insurance coverage. The ITT Industries indemnity expires in
2005, only covers alleged exposure to U.S. Silica products for the period prior
to September 12, 1985 and contains other limitations. Existing and potential
insurance coverage only applies to occurrences of alleged silica exposure prior
to certain dates in 1985 and 1986, respectively. We have no insurance or
indemnity for claims relating to silica exposure after these dates. The silica-
related litigation brought against us to date has not resulted in material
liability to us. However, it is likely that we will continue to have silica-
related products liability claims filed against us, including claims that
allege silica exposure for periods after 1986. Any such claims or inadequacies
of the ITT Industries indemnity or insurance coverage could have a material
adverse effect on us. See "Business--Product Liability."
Our Business Is Subject to Extensive Environmental, Health and Safety
Regulations
Environmental and Silica Exposure Regulations. We are subject to a variety
of governmental regulatory requirements relating to the environment, including
those relating to our handling of hazardous materials and air and wastewater
emissions. Some environmental laws impose substantial penalties for
noncompliance, and others, such as the federal Comprehensive Environmental
Response, Compensation, and Liability Act, impose strict, retroactive and joint
and several liability upon persons responsible for releases of hazardous
substances. If we fail to comply with present and future environmental laws and
regulations, we could be subject to liabilities or our operations could be
interrupted. In addition, future environmental laws and regulations could
restrict our ability to expand our facilities or extract our mineral deposits
or could require us to acquire costly equipment or to incur other significant
expenses in connection with our business. Although we believe we have made
sufficient capital expenditures to achieve substantial compliance with existing
environmental laws and regulations, future events, including changes in
environmental requirements and the costs associated with complying with any
such requirements, could have a material adverse effect on us. See "Business--
Government Regulation--Environmental Matters."
In addition to environmental regulation, we are also subject to laws
relating to human exposure to crystalline silica. We believe that we materially
comply with governmental requirements for crystalline silica exposure and
emissions and other regulations relating to silica and plan to continue to
comply with these regulations. Several federal and state regulatory
authorities, including the Occupational Safety and Health Administration and
the Mining Safety and Health Administration,
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have indicated that they will propose changes in their regulations regarding
workplace exposure to crystalline silica. We cannot assure you that we will be
able to comply with any new standards that are adopted or that these new
standards will not have a material adverse effect on us by requiring us to
modify our operations or equipment or shut down some of our plants.
Additionally, we cannot assure you that our customers will be able to comply
with any new standards or that any of these new standards will not have a
material adverse effect on our customers by requiring them to shut down old
plants or to relocate plants to locations with less stringent regulations that
are further away from us. Accordingly, we cannot at this time reasonably
estimate our costs of compliance or the timing of any costs associated with any
new standards, or any material adverse effects that any new standards will have
on our customers and, consequently, on us. See "Business--Government
Regulation--Regulation of Silica."
Other Regulations Affecting Mining Activity. In addition to the regulatory
matters described above, the industrial minerals and aggregates industries are
subject to extensive governmental regulation on matters such as permitting and
licensing requirements, plant and wildlife protection, wetlands protection,
reclamation and restoration of mining properties after mining is completed, the
discharge of materials into the environment, surface subsidence from
underground mining and the effects that mining has on groundwater quality and
availability. Our future success depends upon the quantity of our industrial
minerals and aggregates deposits and our ability to extract these deposits
profitably. It is difficult for us to estimate quantities of recoverable
deposits, in part due to future permitting and licensing requirements. We
believe we have obtained all material permits and licenses required to conduct
our present mining operations. However, we will need additional permits and
renewals of permits in the future. We may be required to prepare and present to
governmental authorities data pertaining to the impact that any proposed
exploration or production activities may have upon the environment. New site
approval procedures may require the preparation of archaeological surveys,
endangered species studies and other studies to assess the environmental impact
of new sites. Compliance with these regulatory requirements is expensive,
requires an investment of funds well before the potential producer knows if its
operation will be economically successful and significantly lengthens the time
needed to develop a new site. Furthermore, obtaining or renewing required
permits is sometimes delayed or prevented due to community opposition and other
factors beyond our control. New legal requirements, including those related to
the protection of the environment, could be adopted that could materially
adversely affect our mining operations (including the ability to extract
mineral deposits), our cost structure or our customers' ability to use our
industrial minerals or aggregates products. Finally, we could be adversely
affected if our current provisions for mine reclamation and closure costs were
later determined to be insufficient, or if future costs associated with
reclamation are significantly greater than our current estimates. Accordingly,
there can be no assurance that current or future mining regulation will not
have a material adverse effect on our business or that we will be able to
obtain or renew permits in the future.
The Notes and Note Guarantees Are Contractually Subordinated to Senior Debt
The notes are contractually subordinated in right of payment to all senior
debt of the issuer and the note guarantees are contractually subordinated in
right of payment to all senior debt of the applicable note guarantor. As of
December 31, 1999, the issuer had approximately $135.9 million of senior debt
(excluding unused commitments under the new credit facilities), all of which
was secured debt, and the note guarantors had approximately $1.6 million of
senior debt (excluding their guarantees of the issuer's debt under the new
credit facilities). The indenture permits us to borrow certain additional debt,
which may be senior debt, subject to certain restrictions.
The issuer or the applicable note guarantor may not pay principal, premium
(if any), interest or other amounts on account of the notes or a note guarantee
in the event of a payment default or certain other defaults in respect of
certain senior debt (including debt under the new credit facilities)
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unless that senior debt has been paid in full or the default has been cured or
waived. In addition, in the event of certain other defaults with respect to
that senior debt, the issuer or the applicable note guarantor may not be
permitted to pay any amount on account of the notes or the note guarantees for
a designated period of time. If the issuer or a note guarantor is declared
bankrupt or insolvent, or if there is a payment default under, or an
acceleration of, any senior debt, the assets of the issuer or the applicable
note guarantor, as the case may be, will be available to pay obligations on the
notes or that note guarantor's note guarantee, as applicable, only after the
senior debt of the issuer or the note guarantor has been paid in full. In such
a case, there can be no assurance that there will be sufficient assets
remaining to pay amounts due on all or any of the notes or any note guarantee.
Further, the new credit facilities prohibit us, and our future senior debt
may prohibit us, from purchasing any notes prior to maturity, even though the
indenture requires the issuer to offer to purchase notes in certain
circumstances. If the issuer or a note guarantor makes certain asset sales or
if a change of control occurs when we are prohibited from purchasing notes, the
issuer could ask the lenders under the new credit facilities (or such future
senior debt) for permission to purchase the notes or the issuer could attempt
to refinance the borrowings that contain those prohibitions. If the issuer does
not obtain such a consent to repay those borrowings or is unable to refinance
those borrowings, it would be unable to purchase the notes. The failure to
purchase tendered notes at a time when their purchase is required by the
indenture would constitute an event of default under the indenture, which, in
turn, would constitute a default under the new credit facilities and may
constitute an event of default under our future senior debt. In those
circumstances, the subordination provisions in the indenture restrict payments
to you.
Our Holding Company Structure Causes Us To Rely on Funds from Our Subsidiaries
The issuer is a holding company and as such it conducts substantially all
its operations through its subsidiaries. As a holding company, the issuer is
dependent upon dividends or other intercompany transfers of funds from its
subsidiaries to meet its debt service and other obligations. Generally,
creditors of a subsidiary will have a superior claim to the assets and earnings
of that subsidiary than the claims of creditors of its parent company, except
to the extent the claims of the parent's creditors are guaranteed by the
subsidiary.
Although the note guarantees provide the holders of the notes with a direct
claim against the assets of the note guarantors, enforcement of the note
guarantees against any note guarantor may be subject to legal challenge in a
bankruptcy or reorganization case or a lawsuit by or on behalf of creditors of
that note guarantor, and would be subject to certain defenses available to
guarantors generally. See "--The Notes and the Note Guarantees Are Subject to
Fraudulent Conveyance and Preferential Transfer Laws." To the extent that a
note guarantee is not enforceable, the notes would be effectively subordinated
to all liabilities (including trade payables) and preferred stock of the
relevant note guarantor. In any event, the notes will be effectively
subordinated to all liabilities (including trade payables) and preferred stock
of the issuer's Canadian subsidiary, which will not be a guarantor of the notes
unless it guarantees any indebtedness (other than indebtedness of a Restricted
Subsidiary that is not a note guarantor) in the future. This Canadian
subsidiary is an inactive company that has an immaterial amount of assets and
liabilities. As of December 31, 1999, the note guarantors had total liabilities
of $483.4 million (excluding the note guarantees and liabilities owed to the
issuer).
In addition, the payment of dividends and other payments to the issuer by
its subsidiaries may be restricted by, among other things, applicable corporate
and other laws and regulations and agreements of the subsidiaries. Although the
indenture will limit the ability of those subsidiaries to enter into consensual
restrictions on their ability to pay dividends and make other payments, those
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limitations are subject to a number of significant qualifications and
exceptions. See "Description of the New Notes--Certain Covenants--Limitations
on Restrictions on Distributions from Restricted Subsidiaries."
The Notes Are Unsecured Obligations, While the New Credit Facilities Are
Secured
In addition to being contractually subordinated to all existing and future
senior debt, our obligations under the notes are unsecured while our
obligations under the new credit facilities are secured by a security interest
in substantially all the tangible and intangible assets of BMAC Holdings, the
issuer and each existing and subsequently acquired or organized domestic
subsidiary of the issuer, including a pledge of (a) all the capital stock of
the issuer, and (b) all the capital stock held by BMAC Holdings, the issuer and
any domestic subsidiary of the issuer in each of the issuer's existing or
subsequently acquired or organized domestic subsidiaries and 65% of the capital
stock held by those entities in each of the issuer's existing or subsequently
acquired or organized foreign subsidiaries. If we are declared bankrupt or
insolvent or if we default under the new credit facilities, the lenders could
declare all of the funds borrowed thereunder, together with accrued interest,
immediately due and payable. If we were unable to repay that debt, the lenders
could foreclose on the pledged stock of our subsidiaries and on the assets in
which they have been granted a security interest, in each case to your
exclusion, even if an event of default exists under the indenture at that time.
Furthermore, under the note guarantees, if all shares of any note guarantor are
sold to persons pursuant to an enforcement of the pledge of shares in that note
guarantor for the benefit of the lenders under the new credit facilities, then
the applicable note guarantor will be released from its note guarantee
automatically and immediately upon such sale. See "Description of the New
Credit Facilities."
Our Aggregates Business Depends Heavily on Government Funding of Highways
Many of our aggregates customers depend substantially on government funding
of highway construction and maintenance and other infrastructure projects.
Although the recently adopted TEA-21 program provides for increased federal
funding for highways and related infrastructure improvements through 2003,
there can be no assurance that any successor program adopted by Congress, if
one is adopted at all, will provide for equivalent or increased government
funding. Furthermore, although TEA-21 provides for federal funding through
2003, state and municipal governmental entities need to provide for matching
funds in order to obtain federal funding under TEA-21, and state and municipal
governmental entities have separate approval processes relating to the matching
of any federal funding for highways that have not been completed. Accordingly,
a decrease in federal funding of highways and related infrastructure
improvements after the expiration of the TEA-21 program, or a failure of states
or municipalities to match the federal funding to be provided by TEA-21, could
adversely affect our revenue and profits in our aggregates business. In
addition, unlike some of our competitors, we currently sell our aggregates
products almost entirely in only two states, Pennsylvania and New Jersey. As a
result, we are more vulnerable than our more geographically diverse competitors
to decreases in state government highway spending in those states.
We Depend on Good Labor Relations
As of March 1, 2000, we had approximately 1,048 employees, of which
approximately 527 were represented by 12 local unions under 12 union contracts.
These union contracts have remaining durations ranging from one to five years.
Over the last 10 years, we have been involved in numerous labor negotiations,
only two of which have resulted in a work disruption at two of our 25
facilities. During these disruptions, the operations of the facilities and the
ability to serve our customers were not materially affected. Although we
consider our current relations with our employees to be good, if
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we do not maintain these good relations, or if a work disruption were to occur,
we could suffer a material adverse effect.
Our Expansion Strategy May Adversely Affect Our Operations
We intend to actively pursue acquisition opportunities, some of which could
be material. We may finance future acquisitions through internally generated
funds, bank borrowings, public offerings or private placements of equity or
debt securities, or a combination of these sources. We might not be able to
make acquisitions on terms that are favorable to us, or at all. If we do
complete any future acquisitions, we will face many risks, including the
possible inability to integrate an acquired business into our operations,
diversion of our management's attention, failure to retain key acquired
personnel and unanticipated problems or liabilities, some or all of which could
have a material adverse effect on us. Acquisitions could place a significant
strain on management, operating, financial and other resources and increased
demands on our systems and controls.
Control of USS Holdings; Stockholders Agreement
The holders of all of the capital stock of USS Holdings are party to a
stockholders agreement. Subject to certain exceptions, the stockholders
agreement provides that the holders of USS Holdings' capital stock will elect a
board of directors comprised of two directors designated by D. George Harris, a
principal of DGHA, one director designated by Anthony J. Petrocelli, a
principal of DGHA, three directors designated by an affiliate of CCP, and the
President of USS Holdings (currently Richard E. Goodell (who is not affiliated
with DGHA or CCP)). In addition, upon the occurrence of certain "trigger
events" described in the stockholders agreement, the CCP affiliate will have
the right to appoint two additional directors to the board of USS Holdings,
thus giving it the right to appoint five of the nine directors of USS Holdings.
The interests of these stockholders may conflict with your interests as a
holder of the notes. See "Security Ownership of Certain Beneficial Owners and
Management--The Stockholders Agreement."
We May Be Unable To Purchase Your Notes upon a Change in Control
Upon a change of control, the issuer will be required to offer to purchase
all of the notes then outstanding at 101% of the principal amount thereof plus
accrued and unpaid interest to the date of purchase. If a change of control
were to occur, the issuer may not have sufficient funds to pay the purchase
price for the outstanding notes tendered, and the issuer expects that it would
require third-party financing; however, the issuer may not be able to obtain
financing on favorable terms, if at all. In addition, the new credit facilities
restrict our ability to purchase the notes, including pursuant to an offer in
connection with a change of control. A change of control under the indenture
may also result in an event of default under the new credit facilities and may
cause the acceleration of other senior debt, if any, in which case the
subordination provisions of the notes would require payment in full of the new
credit facilities and any other senior debt before purchase of the notes. Our
future debt may also contain restrictions on our ability to repay the notes
upon certain events or transactions that could constitute a change of control
under the indenture. The inability to repay senior debt upon a change of
control or to purchase all of the tendered notes would each constitute an event
of default under the indenture. See "--The Notes and the Note Guarantees Are
Contractually Subordinated to Senior Debt," "Description of the New Notes--
Change of Control" and "Description of the New Credit Facilities."
The change of control provisions in the indenture will not necessarily
afford you protection in the event of a highly leveraged transaction, including
a reorganization, restructuring, merger or other similar transaction involving
us, that may adversely affect you. This type of transaction may not involve a
change in voting power or beneficial ownership, or, even if it does, may not
involve a change of the magnitude required under the definition of change of
control in the indenture to trigger
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those provisions. Except as described under "Description of the New Notes--
Change of Control," the indenture does not contain provisions that permit the
holders of the notes to require us to purchase or redeem the notes in the event
of a takeover, recapitalization or similar transaction.
The Notes and the Note Guarantees Are Subject to Fraudulent Conveyance and
Preferential Transfer Laws
The incurrence of debt by the issuer or the note guarantors, such as the
notes or the note guarantees, may be subject to review under federal bankruptcy
law or relevant state fraudulent conveyance laws if a bankruptcy case or
lawsuit is commenced by or on behalf of unpaid creditors. Under these laws, if
in such case or lawsuit a court were to find that, at the time the issuer or
any note guarantor incurred debt (including debt under the notes or the note
guarantees):
--the issuer or any note guarantor, as applicable, incurred that debt with
the intent of hindering, delaying or defrauding current or future
creditors; or
--the issuer or any note guarantor, as applicable, received less than
reasonably equivalent value or fair consideration for incurring that debt,
and
--was insolvent or was rendered insolvent by reason of any of the
transactions,
--was engaged, or about to engage, in a business or transaction for which
the assets remaining with the issuer or that note guarantor constituted
unreasonably small capital to carry on our or its business,
--intended to incur, or believed that the issuer or that note guarantor
would incur, debts beyond its ability to pay as those debts matured (as
all of the foregoing terms are defined in or interpreted under the
relevant fraudulent transfer or conveyance statutes), or
--was a defendant in an action for money damages, or had a judgment for
money damages docketed against the issuer or that note guarantor (in
either case, if, after final judgment, the judgment is unsatisfied),
then that court could avoid or subordinate the amounts owing under the notes or
the note guarantees to the issuer's or that note guarantor's existing and
future debt and take other actions detrimental to you.
The measure of insolvency for purposes of the foregoing considerations will
vary depending upon the law of the jurisdiction that is being applied in any
such proceeding. Generally, however, a debtor would be considered insolvent if,
at the time that debtor incurred the debt, either (a) the sum of its debts
(including contingent liabilities) is greater than its assets, at fair
valuation, or (b) the present fair saleable value of its assets is less than
the amount required to pay the probable liability on its total existing debts
and liabilities (including contingent liabilities) as they become absolute and
matured. There can be no assurance as to what standards a court would use to
determine whether the issuer or any note guarantor were solvent at the relevant
time, or whether, whatever standard was used, the notes would not be avoided or
further subordinated on another of the grounds set forth above. In rendering
their opinions in connection with the Transactions, our counsel will not
express any opinion as to the applicability of federal or state fraudulent
transfer and conveyance laws.
If You Do Not Properly Tender Your Old Notes, You Will Continue To Hold
Unregistered Old Notes and Your Ability To Transfer Old Notes Will Be Adversely
Affected
We will only issue new notes in exchange for old notes that are timely
received by the exchange agent together with all required documents, including
a properly completed and signed letter of transmittal, as described in this
prospectus. Therefore, you should allow sufficient time to ensure timely
delivery of the old notes and you should carefully follow the instructions on
how to tender your
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old notes. Neither we nor the exchange agent are required to inform you of any
defects or irregularities with respect to your tender of the old notes. If you
do not tender your old notes or if we do not accept your old notes because you
did not tender your old notes properly, then, after we consummate the exchange
offer, you will continue to hold old notes that are subject to the existing
transfer restrictions and, except in certain limited circumstances, you will no
longer have any registration rights or be entitled to any liquidated damages
with respect to the old notes. In addition:
--if you tender your old notes for the purpose of participating in a
distribution of the new notes, you will be required to comply with the
registration and prospectus delivery requirements of the Securities Act of
1933 in connection with any secondary resale of the new notes, and
--if you are a broker-dealer that receives new notes for your own account
in exchange for old notes that you acquired as a result of market-making
activities or any other trading activities, you will be required to
acknowledge that you will deliver a prospectus in connection with any
resale of those new notes.
We have agreed that, for a period of up to 180 days after the exchange offer is
consummated, we will make this prospectus available to any broker-dealer for
use in connection with any such resale.
After the exchange offer is consummated, if you continue to hold any old
notes, you may have difficulty selling them because there will be less old
notes outstanding. In addition, if a large amount of old notes are not tendered
or are tendered improperly, the limited amount of new notes that would be
issued and outstanding after we consummate the exchange offer could lower the
market price of those new notes.
You Cannot Be Sure that an Active Trading Market Will Develop for the New Notes
The new notes are a new issue of securities with no established trading
market and will not be listed on any securities exchange. The liquidity of the
trading market in the new notes, and the market price quoted for the new notes,
may be adversely affected by changes in the overall market for high yield
securities and by changes in our financial performance or prospects or in the
prospects for companies in our industry generally. As a result, you cannot be
sure that an active trading market will develop for the new notes.
THE EXCHANGE OFFER
Purpose and Effect of the Exchange Offer
We have entered into an exchange and registration rights agreement with the
initial purchasers of the old notes in which we agreed, under certain
circumstances, to file a registration statement relating to an offer to
exchange the old notes for the new notes. The registration statement of which
this prospectus forms a part was filed in compliance with this obligation. We
also agreed to use our reasonable best efforts to cause the exchange offer to
be consummated within 240 days following the original issuance of the old
notes. The new notes will have terms substantially identical to the old notes
except that the new notes will not contain terms with respect to transfer
restrictions, registration rights and liquidated damages for failure to observe
certain obligations in the exchange and registration rights agreement. The old
notes were issued on October 1, 1999.
Under the circumstances set forth below, we will use our reasonable best
efforts to cause the Securities and Exchange Commission to declare effective a
shelf registration statement with respect
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to the resale of the old notes and keep the shelf registration statement
effective for up to two years after the effective date of the shelf
registration statement. These circumstances include:
--if pursuant to any changes in law, Securities and Exchange Commission
rules or regulations or applicable interpretations thereof by the staff of
the Securities and Exchange Commission do not permit us to effect the
exchange offer as contemplated by the exchange and registration rights
agreement;
--if any old notes validly tendered in the exchange offer are not exchanged
for new notes within 240 days after the original issue of the old notes;
--if the initial purchaser of the old notes so requests (but only with
respect to any old notes not eligible to be exchanged for new notes in the
exchange offer); or
--if any holder of the old notes notifies us that it is not permitted to
participate in the exchange offer or would not receive fully tradable new
notes pursuant to the exchange offer.
Each holder of old notes that wishes to exchange old notes for transferable
new notes in the exchange offer will be required to make the following
representations:
--any new notes will be acquired in the ordinary course of its business;
--that holder has no arrangement or understanding with any person to
participate in the distribution of the new notes; and
--that holder is not our "affiliate," as defined in Rule 405 of the
Securities Act of 1933, or, if it is an affiliate, that it will comply
with the applicable registration and prospectus delivery requirements of
the Securities Act of 1933.
Resale of New Notes
Based on interpretations of the Securities and Exchange Commission staff set
forth in no-action letters issued to unrelated third parties, we believe that
new notes issued in the exchange offer in exchange for old notes may be offered
for resale, resold and otherwise transferred by any new note holder without
compliance with the registration and prospectus delivery provisions of the
Securities Act of 1933, if:
--that holder is not an "affiliate" of ours within the meaning of Rule 405
under the Securities Act of 1933;
--that new notes are acquired in the ordinary course of the holder's
business; and
--the holder does not intend to participate in the distribution of those
new notes.
Any holder who tenders in the exchange offer with the intention of
participating in any manner in a distribution of the new notes:
--cannot rely on the position of the staff of the Securities and Exchange
Commission enunciated in Exxon Capital Holdings Corporation, Morgan
Stanley & Co. Incorporated or similar no-action letters; and
--must, in the absence of an exemption, comply with the registration and
prospectus delivery requirements of the Securities Act of 1933 in
connection with a secondary resale transaction of the new notes.
This prospectus may be used for an offer to resell, for the resale or for
other re-transfer of new notes only as specifically set forth in this
prospectus. With regard to broker-dealers, only broker-dealers that acquired
the old notes as a result of market-making activities or other trading
activities
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may participate in the exchange offer. Each broker-dealer that receives new
notes for its own account in exchange for old notes, where those old notes were
acquired by that broker-dealer as a result of market-making activities or other
trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of the new notes. These broker-dealers may use this
prospectus for this purpose. Please read the "Plan of Distribution" section of
this prospectus for more details regarding the transfer of new notes.
Terms of the Exchange Offer
Upon the terms and subject to the conditions set forth in this prospectus
and in the letter of transmittal, we will accept for exchange any old notes
properly tendered and not properly withdrawn on or prior to the expiration
date. We will issue $1,000 principal amount of new notes in exchange for each
$1,000 principal amount of old notes surrendered under the exchange offer. Old
notes may be tendered only in integral multiples of $1,000.
The form and terms of the new notes will be substantially identical to the
form and terms of the old notes except the new notes will be registered under
the Securities Act of 1933, will not bear legends restricting their transfer
and will not provide for any liquidated damages upon failure of the issuer to
fulfill its obligations under the exchange and registration rights agreement to
file, and cause to be effective, a registration statement. The new notes will
evidence the same debt as the old notes. The new notes will be issued under and
entitled to the benefits of the same indenture that authorized the issuance of
the old notes. Consequently, both series will be treated as a single class of
debt securities under that indenture.
As of the date of this prospectus, $150.0 million aggregate principal amount
of the old notes are outstanding. This prospectus and the letter of transmittal
are being sent to all registered holders of old notes. There will be no fixed
record date for determining registered holders of old notes entitled to
participate in the exchange offer.
We intend to conduct the exchange offer in accordance with the provisions of
the exchange and registration rights agreement, the applicable requirements of
the Securities Act of 1933 and the Securities Exchange Act of 1934 and the
rules and regulations of the Securities and Exchange Commission. Old notes that
are not tendered for exchange in the exchange offer will remain outstanding and
continue to accrue interest and will be entitled to the rights and benefits
those holders have under the indenture relating to the old notes.
We will be deemed to have accepted for exchange properly tendered old notes
when we have given oral or written notice of the acceptance to the exchange
agent. The exchange agent will act as agent for the tendering holders for the
purposes of receiving the new notes from the issuer and delivering exchange
notes to those holders. Subject to the terms of the exchange and registration
rights agreement, we expressly reserve the right to amend or terminate the
exchange offer, and not to accept for exchange any old notes not previously
accepted for exchange, upon the occurrence of any of the conditions specified
below under the caption "--Certain Conditions to the Exchange Offer."
Holders who tender old notes in the exchange offer will not be required to
pay brokerage commissions or fees, or, subject to the instructions in the
letter of transmittal, transfer taxes with respect to the exchange of old
notes. We will pay all charges and expenses, other than certain applicable
taxes described below, in connection with the exchange offer. It is important
that you read the section labeled "--Fees and Expenses" below for more details
regarding fees and expenses incurred in the exchange offer.
27
<PAGE>
Expiration Date; Extensions; Amendments
The exchange offer will expire at 5:00 p.m., New York City time on ,
2000, unless we extend it in our sole discretion.
In order to extend the exchange offer, we will notify the exchange agent
orally or in writing of any extension. We will notify the registered holders of
old notes of the extension no later than 9:00 a.m., New York City time, on the
business day after the previously scheduled expiration date.
We reserve the right, in our sole discretion:
--to delay accepting for exchange any old notes;
--to extend the exchange offer or to terminate the exchange offer and to
refuse to accept old notes not previously accepted if any of the
conditions set forth below under "--Certain Conditions to the Exchange
Offer" have not been satisfied, by giving oral or written notice of such
delay, extension or termination to the exchange agent; or
--subject to the terms of the exchange and registration rights agreement,
to amend the terms of the exchange offer in any manner.
Any such delay in acceptance, extension, termination or amendment will be
followed as promptly as practicable by oral or written notice thereof to the
registered holders of old notes. If we amend the exchange offer in a manner
that we determine to constitute a material change, we will promptly disclose
that amendment in a manner reasonably calculated to inform the holders of old
notes of the amendment.
Without limiting the manner in which we may choose to make public
announcements of any delay in acceptance, extension, termination or amendment
of the exchange offer, we will have no obligation to publish, advertise, or
otherwise communicate any such public announcement, other than by making a
timely release to a financial news service.
Certain Conditions to the Exchange Offer
Despite any other term of the exchange offer, we will not be required to
accept for exchange, or exchange any new notes for, any old notes, and we may
terminate the exchange offer as provided in this prospectus before accepting
any old notes for exchange if in our reasonable judgment:
--the new notes to be received will not be tradable by the holder without
restriction under the Securities Act of 1933 and without material
restrictions under the blue sky or securities laws of substantially all of
the states of the United States;
--the exchange offer, or the making of any exchange by a holder of old
notes, would violate applicable law or any applicable interpretation of
the staff of the SEC; or
--any action or proceeding has been instituted or threatened in any court
or by or before any governmental agency with respect to the exchange offer
that, in our judgment, would reasonably be expected to impair our ability
to proceed with the exchange offer.
In addition, we will not be obligated to accept for exchange the old notes
of any holder that has not made:
--the representations described under "--Purpose and Effect of the Exchange
Offer", "--Procedures for Tendering" and "Plan of Distribution", and
--such other representations as may be reasonably necessary under
applicable Securities and Exchange Commission rules, regulations or
interpretations to make available to us an appropriate form for
registration of the new notes under the Securities Act of 1933.
28
<PAGE>
The exchange offer is not conditioned upon any minimum aggregate principal
amount of old notes being tendered for exchange.
We expressly reserve the right, at any time or at various times, to extend
the period of time during which the exchange offer is open. Consequently, we
may delay acceptance of any old notes by giving oral or written notice of the
extension to the registered holders of the old notes. During any such
extensions, all old notes previously tendered will remain subject to the
exchange offer, and we may accept them for exchange unless they have been
previously withdrawn. We will return any old notes that we do not accept for
exchange for any reason without expense to their tendering holder as promptly
as practicable after the expiration or termination of the exchange offer.
We expressly reserve the right to amend or terminate the exchange offer, and
to reject for exchange any old notes not previously accepted for exchange, upon
the occurrence of any of the conditions of the exchange offer specified above.
We will give oral or written notice of any extension, amendment, non-acceptance
or termination to the registered holders of the old notes as promptly as
practicable. In the case of any extension, notice will be issued no later than
9:00 a.m., New York City time, on the business day after the previously
scheduled expiration date.
These conditions are for our sole benefit and we may assert them regardless
of the circumstances that may give rise to them or waive them in whole or in
part at any or at various times in our sole discretion. If we fail at any time
to exercise any of the foregoing rights, that failure will not constitute a
waiver of that right. Each such right will be deemed an ongoing right that we
may assert at any time or at various times.
In addition, we will not accept for exchange any old notes tendered, and
will not issue new notes in exchange for any of those old notes, if at that
time any stop order is threatened or in effect with respect to the registration
statement of which this prospectus constitutes a part or the qualification of
the indenture under the Trust Indenture Act of 1939.
Procedures for Tendering
Only a holder of old notes may tender those old notes in the exchange offer.
To tender in the exchange offer, a holder must:
--complete, sign and date the letter of transmittal, or a facsimile of the
letter of transmittal; have the signature on the letter of transmittal
guaranteed if the letter of transmittal so requires; and mail or deliver
the letter of transmittal or facsimile to the exchange agent on or prior
to the expiration date;
--comply with DTC's Automated Tender Offer Program procedures described
below; or
--comply with the guaranteed delivery procedures described below.
In addition, unless the holder complies with the guaranteed delivery
procedures described below, either:
--the exchange agent must receive old notes along with the letter of
transmittal; or
--the exchange agent must receive, on or prior to the expiration date, a
timely confirmation of book-entry transfer of those old notes into the
exchange agent's account at DTC according to the procedures for book-entry
transfer described below or a properly transmitted agent's message.
To be tendered effectively, the exchange agent must receive any physical
delivery of the letter of transmittal and other required documents at the
address set forth below under "--Exchange Agent" on or prior to the expiration
date.
29
<PAGE>
The tender by a holder that is not withdrawn on or prior to the expiration
date will constitute an agreement between that holder and us in accordance with
the terms and subject to the conditions set forth in this prospectus and in the
letter of transmittal.
The method of delivery of old notes, the letter of transmittal and all other
required documents to the exchange agent is at the holder's election and risk.
Rather than mail these items, we recommend that holders use an overnight or
hand delivery service. In all cases, holders should allow sufficient time to
assure delivery to the exchange agent on or prior to the expiration date.
Holders should not send the letter of transmittal or old notes to us. Holders
may request their respective brokers, dealers, commercial banks, trust
companies or other nominees to effect the above transactions for them.
Any beneficial owner whose old notes are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee and who wishes to
tender should contact the registered holder promptly and instruct it to tender
on the owners' behalf. If that beneficial owner wishes to tender on its own
behalf, it must, prior to completing and executing the letter of transmittal
and delivering its old notes; either:
--make appropriate arrangements to register ownership of the old notes in
that owner's name; or
--obtain a properly completed bond power from the registered holder of old
notes.
The transfer of registered ownership may take considerable time and may not
be completed prior to the expiration date.
Signatures on a letter of transmittal or a notice of withdrawal described
below must be guaranteed by a member firm of a registered national securities
exchange or of the National Association of Securities Dealers, Inc., a
commercial bank or trust company having an office or correspondent in the
United States or another "eligible institution" within the meaning of Rule
17Ad-15 under the Securities Exchange Act of 1934, as amended, unless the old
note tendered pursuant thereto are tendered:
--by a registered holder who has not completed the box entitled "Special
Exchange Instructions" or "Special Delivery Instructions" on the letter of
transmittal; or
--for the account of an eligible institution.
If the letter of transmittal is signed by a person other than the registered
holder of any old notes listed on the old notes, those old notes must be
endorsed or accompanied by a properly completed bond power. The bond power must
be signed by the registered holder as the registered holder's name appears on
the old notes and an eligible institution must guarantee the signature on the
bond power.
If the letter of transmittal or any old notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, those
persons should so indicate when signing. Unless waived by us, they should also
submit evidence satisfactory to us of their authority to deliver the letter of
transmittal.
The exchange agent and DTC have confirmed that any financial institution
that is a participant in DTC's system may use DTC's Automated Tender Offer
Program to tender. Participants in the program may, instead of physically
completing and signing the letter of transmittal and delivering it to the
exchange agent, transmit their acceptance of the exchange offer electronically.
They may do so by causing DTC to transfer the old notes to the exchange agent
in accordance with its procedures for transfer. DTC will then send an agent's
message to the exchange agent. The term "agent's
30
<PAGE>
message" means a message transmitted by DTC, received by the exchange agent and
forming part of the book-entry confirmation, to the effect that:
--DTC has received an express acknowledgment from a participant in its
Automated Tender Offer Program that is tendering old notes that are the
subject of such book-entry confirmation;
--the participant has received and agrees to be bound by the terms of the
letter of transmittal (or, in the case of an agent's message relating to
guaranteed delivery, that the participant has received and agrees to be
bound by the applicable notice of guaranteed delivery); and
--the agreement may be enforced against that participant.
We will determine in our sole discretion all questions as to the validity,
form, eligibility (including time of receipt), acceptance of tendered old notes
and withdrawal of tendered old notes. Our determination will be final and
binding. We reserve the absolute right to reject any old notes not properly
tendered or any old notes the acceptance of which would, in the opinion of our
counsel, be unlawful. We also reserve the right to waive any defects,
irregularities or conditions of tender as to particular old notes. Our
interpretation of the terms and conditions of the exchange offer (including the
instructions in the letter of transmittal) will be final and binding on all
parties. Unless waived, any defects or irregularities in connection with
tenders of old notes must be cured within such time as we shall determine.
Although we intend to notify holders of defects or irregularities with respect
to tenders of old notes, neither we, the exchange agent nor any other person
will incur any liability for failure to give that notification. Tenders of old
notes will not be deemed made until those defects or irregularities have been
cured or waived. Any old notes received by the exchange agent that are not
properly tendered and as to which the defects or irregularities have not been
cured or waived will be returned to the exchange agent without cost to the
tendering holder, unless otherwise provided in the letter of transmittal, as
soon as practicable following the expiration date.
In all cases, we will issue new notes for old notes that we have accepted
for exchange under the exchange offer only after the exchange agent timely
receives:
--old notes or a timely book-entry confirmation of those old notes into the
exchange agent's account at DTC; and
--a properly completed and duly executed letter of transmittal and all
other required documents or a properly transmitted agent's message.
By signing the letter of transmittal or transmitting an acceptance of the
exchange offer electronically through DTC, each tendering holder of old notes
will represent to us that, among other things:
--any new notes that the holder receives will be acquired in the ordinary
course of its business;
--the holder has no arrangement or understanding with any person or entity
to participate in the distribution of the new notes;
--if the holder is not a broker-dealer, that it is not engaged in and does
not intend to engage in the distribution of the new notes;
--if the holder is a broker-dealer that will receive new notes for its own
account in exchange for old notes that were acquired as a result of
market-making activities, that it will deliver a prospectus, as required
by law, in connection with any resale of those new notes; and
--the holder is not an "affiliate", as defined in Rule 405 of the
Securities Act of 1933, of the issuer or, if the holder is an affiliate,
it will comply with any applicable registration and prospectus delivery
requirements of the Securities Act of 1933.
31
<PAGE>
Book-Entry Transfer
The exchange agent will establish an account with respect to the old notes
at DTC for purposes of the exchange offer promptly after the date of this
prospectus. Any financial institution participant in DTC's system may make
book-entry delivery of old notes by causing DTC to transfer those old notes
into the exchange agent's account at DTC in accordance with DTC's procedures
for transfer. Holders of old notes who are unable to deliver confirmation of
the book-entry tender of their old notes into the exchange agent's account at
DTC or all other documents of transmittal to the exchange agent on or prior to
the expiration date must tender their old notes according to the guaranteed
delivery procedures described below.
Guaranteed Delivery Procedures
Holders wishing to tender their old notes but whose old notes are not
immediately available or who cannot deliver their old notes, the letter of
transmittal or any other required documents to the exchange agent or comply
with the applicable procedures under DTC's Automated Tender Offer Program on or
prior to the expiration date may tender if:
--the tender is made through an eligible institution;
--on or prior to the expiration date, the exchange agent receives from the
eligible institution either a properly completed and duly executed notice
of guaranteed delivery (by facsimile transmission, mail or hand delivery)
or a properly transmitted agent's message and notice of guaranteed
delivery:
--setting forth the name and address of the holder, the registered
number(s) of those old notes and the principal amount of old notes
tendered;
--stating that the tender is being made thereby; and
--guaranteeing that, within three New York Stock Exchange trading days
after the expiration date, the letter of transmittal (or facsimile
thereof), together with the old notes or a book-entry confirmation, and
any other documents required by the letter of transmittal will be
deposited by the eligible institution with the exchange agent; and
--the exchange agent receives the properly completed and executed letter of
transmittal (or facsimile thereof), as well as all tendered old notes in
proper form for transfer or a book-entry confirmation, and all other
documents required by the letter of transmittal, within three New York
Stock Exchange trading days after the expiration date.
Upon request to the exchange agent, a notice of guaranteed delivery will be
sent to holders who wish to tender their old notes according to the guaranteed
delivery procedures set forth above.
Withdrawal of Tenders
Except as otherwise provided in this prospectus, holders of old notes may
withdraw their tenders at any time on or prior to the expiration date.
For your withdrawal to be effective:
--the exchange agent must receive a written notice (which may be by
telegram, telex, facsimile transmission or letter) of withdrawal at one of
the addresses set forth below under "--Exchange Agent," or
--holders must comply with the appropriate procedures of DTC's Automated
Tender Offer Program system.
32
<PAGE>
Any such notice of withdrawal must:
--specify the name of the person who tendered the old notes to be
withdrawn;
--identify the old notes to be withdrawn (including the principal amount of
those old notes); and
--where certificates for old notes have been transmitted, specify the name
in which those old notes were registered, if different from that of the
withdrawing holder.
If certificates for old notes have been delivered or otherwise identified to
the exchange agent, then, prior to the release of those certificates, the
withdrawing holder must also submit:
--the serial numbers of the particular certificates to be withdrawn; and
--a signed notice of withdrawal with signatures guaranteed by an eligible
institution unless the holder is an eligible institution.
If old notes have been tendered pursuant to the procedure for book-entry
transfer described above, any notice of withdrawal must specify the name and
number of the account at DTC to be credited with the withdrawn old notes and
otherwise comply with the procedures of DTC. We will determine all questions as
to the validity, form and eligibility (including time of receipt) of those
notices, and our determination shall be final and binding on all parties. We
will deem any old notes so withdrawn not to have been validly tendered for
exchange for purposes of the exchange offer. Any old notes that have been
tendered for exchange but that are not exchanged for any reason will be
returned to their holder without cost to the holder (or, in the case of old
notes tendered by book-entry transfer into the exchange agent's account at DTC
according to the procedures described above, those old notes will be credited
to an account maintained with DTC for old notes specified by the holder) as
soon as practicable after withdrawal, rejection of tender or termination of the
exchange offer. Properly withdrawn old notes may be re-tendered by following
one of the procedures described under "--Procedures for Tendering" above at any
time on or prior to the expiration date.
Exchange Agent
The Bank of New York has been appointed as exchange agent for the exchange
offer. You should direct questions and requests for assistance, requests for
additional copies of this prospectus or of the letter of transmittal and
requests for the notice of guaranteed delivery to the exchange agent addressed
as follows:
For Overnight Delivery, Delivery by Hand or Delivery by Registered or
Certified Mail:
Bank of New York
101 Barclay Street
New York, NY 10286
Attn: Kim Lau, Reorg--7 east
By Facsimile Transmission (for eligible institutions only):
(212) 815-6339
Confirm facsimile by telephone only:
(212) 815-3750
DELIVERY OF THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE DOES NOT
CONSTITUTE A VALID DELIVERY OF THE LETTER OF TRANSMITTAL.
33
<PAGE>
Fees and Expenses
We will bear the expenses of soliciting tenders. The principal solicitation
is being made by mail; however, we may make additional solicitations by
telegraph, telephone or in person by our officers and regular employees and
those of our affiliates.
We have not retained any dealer-manager in connection with the exchange
offer and will not make any payments to broker-dealers or others soliciting
acceptances of the exchange offer. We will, however, pay the exchange agent
reasonable and customary fees for its services and reimburse it for its related
reasonable out-of-pocket expenses.
Our expenses in connection with the exchange offer include:
-- Securities and Exchange Commission registration fees;
-- fees and expenses of the exchange agent and the trustee;
-- accounting and legal fees and printing costs; and
-- related fees and expenses.
Transfer Taxes
We will pay all transfer taxes, if any, applicable to the exchange of old
notes under the exchange offer. The tendering holder, however, will be required
to pay any transfer taxes (whether imposed on the registered holder or any
other person) if:
-- certificates representing old notes for principal amounts not tendered
or accepted for exchange are to be delivered to, or are to be issued in
the name of, any person other than the registered holder of old notes
tendered;
-- tendered old notes are registered in the name of any person other than
the person signing the letter of transmittal; or
-- a transfer tax is imposed for any reason other than the exchange of old
notes under the exchange offer.
If satisfactory evidence of payment of those taxes is not submitted with the
letter of transmittal, the amount of those transfer taxes will be billed to
that tendering holder.
Holders who tender their old notes for exchange will not be required to pay
any transfer taxes. However, holders who instruct the issuer to register new
notes in the name of, or request that old notes not tendered or not accepted in
the exchange offer be returned to, a person other than the registered tendering
holder will be required to pay any applicable transfer tax.
Consequences of Failure to Exchange
Holders of old notes who do not exchange their old notes for new notes under
the exchange offer will remain subject to the restrictions on transfer
applicable to the old notes:
-- as set forth in the legend printed on the old notes as a consequence of
the issuance of the old notes pursuant to the exemptions from, or in
transactions not subject to, the registration requirements of the
Securities Act of 1933 and applicable state securities laws; and
-- otherwise as set forth in the offering memorandum distributed in
connection with the private offering of the old notes.
In general, you may not offer or sell the old notes unless they are
registered under the Securities Act of 1933, or if the offer or sale is exempt
from registration under, or not subject to, the Securities
34
<PAGE>
Act of 1933 and applicable state securities laws. Except as required by the
exchange and registration rights agreement, we do not intend to register
resales of the old notes under the Securities Act of 1933. Based on
interpretations of the Securities and Exchange Commission staff, new notes
issued pursuant to the exchange offer may be offered for resale, resold or
otherwise transferred by their holders (other than any holder that is our
"affiliate" within the meaning of Rule 405 under the Securities Act of 1933)
without compliance with the registration and prospectus delivery provisions of
the Securities Act of 1933, provided that the holders acquired the new notes in
the ordinary course of the holders' business and the holders have no
arrangement or understanding with respect to the distribution of the new notes
to be acquired in the exchange offer. Any holder who tenders in the exchange
offer for the purpose of participating in a distribution of the new notes:
-- could not rely on the applicable interpretations of the Securities and
Exchange Commission; and
-- in the absence of an exemption, must comply with the registration and
prospectus delivery requirements of the Securities Act of 1933 in
connection with any secondary resale of the new notes.
After the exchange offer is consummated, if you continue to hold any old
notes, you may have difficulty selling them because there will be less old
notes outstanding. In addition, if a large amount of old notes are not tendered
or are tendered improperly, the limited amount of new notes that would be
issued and outstanding after we consummate the exchange offer could lower the
market price of those new notes.
Accounting Treatment
We will record the new notes in our accounting records at the same carrying
value as the old notes, as reflected in our accounting records on the date of
exchange. Accordingly, we will not recognize any gain or loss for accounting
purposes in connection with the exchange offer. We will amortize the expenses
of the exchange offer over the life of the notes.
Other
Participation in the exchange offer is voluntary, and you should carefully
consider whether to accept. You are urged to consult your financial and tax
advisors in making your own decision on what action to take.
We may in the future seek to acquire untendered old notes in open market or
privately negotiated transactions, through subsequent exchange offers or
otherwise. We have no present plans to acquire any old notes that are not
tendered in the exchange offer or to file a registration statement to permit
resales of any untendered old notes.
35
<PAGE>
USE OF PROCEEDS
We will not receive any proceeds from the issuance of the new notes. In
consideration for issuing the new notes as contemplated in this prospectus, we
will receive in exchange old notes in like principal amount, which will be
cancelled and as such will not result in any increase in our indebtedness. The
proceeds from the sale of the old notes were approximately $150.0 million. We
used these proceeds, together with borrowings under the new credit facilities
($140.0 million) and proceeds from the cash equity contribution ($35.0
million), to finance the Commercial Stone acquisition ($139.0 million), repay
certain debt ($167.2 million) and pay related fees and expenses ($18.8
million).
CAPITALIZATION
The following table sets forth our capitalization as of December 31, 1999.
This information should be read in conjunction with "Selected Financial Data,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the consolidated financial statements and the notes thereto
included elsewhere in this prospectus.
<TABLE>
<CAPTION>
At December 31, 1999
--------------------
(Dollars in
Millions)
<S> <C>
Cash................................................ $ 13.6
======
Debt (including current maturities):
New credit facilities(1):
Tranche A term loan facility.................... $ 41.1
Tranche B term loan facility.................... 94.8
Other debt........................................ 1.6
Notes offered hereby.............................. 150.0
------
Total debt...................................... 287.5
Stockholder's equity:
Common stock...................................... --
Additional paid-in capital........................ 81.4
Retained earnings (deficit)....................... (17.0)
------
Total stockholder's equity...................... 64.4
------
Total capitalization.......................... $351.9
======
</TABLE>
- --------
(1) The tranche A term loan facility provided for a tranche of loans
denominated in Canadian dollars in an amount equal to $2.0 million, which
was borrowed on the closing date by George F. Pettinos (Canada) Limited. In
connection with the sale by us of George F. Pettinos (Canada) Limited on
February 29, 2000, we repaid this portion of the tranche A term loan
facility. In addition, the revolving credit facility provides for
borrowings of up to $50.0 million with a sublimit of $12.0 million for
letters of credit and a sublimit of $3.0 million for swingline loans. We
also have availability under the acquisition term loan facility of up to
$40.0 million, subject to, among other things, meeting a leverage ratio
test. See "Description of the New Credit Facilities."
36
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA
The following unaudited pro forma consolidated financial data has been
prepared by applying pro forma adjustments to our consolidated financial
statements included elsewhere in this prospectus. The unaudited pro forma
consolidated statement of operations for the year ended December 31, 1999 gives
effect to the Transactions and the acquisition of the Morie Assets as if they
had occurred on January 1, 1999.
The Commercial Stone acquisition was accounted for using the purchase method
of accounting. The purchase price was allocated to the assets acquired and
liabilities assumed based on their fair values. The excess of the purchase
price over the adjusted book value of the net assets of Commercial Stone was
allocated to mineral deposits and goodwill.
The historical financial data for the acquisition of the Morie Assets was
derived from unaudited financial statements. The acquisition of the Morie
Assets was accounted for using the purchase method of accounting pursuant to
which the purchase price of the acquisition was allocated to the assets
acquired and liabilities assumed based on their estimated fair values. The
excess of the purchase price over the adjusted book value of the net assets of
the Morie Assets was allocated to goodwill.
The pro forma adjustments, as described in the notes to the unaudited pro
forma consolidated statement of operations, are estimates based on currently
available information and certain adjustments that management believes are
reasonable. The unaudited pro forma consolidated financial data is presented
for informational purposes only and is not necessarily indicative of the
operating results or financial position that would have occurred had the
Transactions or the acquisition of the Morie Assets been consummated on or as
of the date indicated nor is it necessarily indicative of future operating
results or financial position. The unaudited pro forma consolidated financial
data should be read in conjunction with "Selected Financial Data,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the consolidated financial statements and the notes thereto
included elsewhere in this prospectus.
37
<PAGE>
BETTER MINERALS & AGGREGATES COMPANY
(formerly USS Intermediate Holdco, Inc.)
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1999
(Dollars in Thousands)
<TABLE>
<CAPTION>
Historical
Better Pro Forma
Minerals & Historical Historical Adjustments
Aggregates Morie Commercial for the Pro
Company (1) Assets (1) Stone (1) Transactions Forma
----------- ---------- ---------- ------------ --------
<S> <C> <C> <C> <C> <C>
Net sales............... $209,075 $3,548 $35,430 $ -- $248,053
Cost of goods sold...... 140,244 2,820 23,490 (463)(2) 166,091
Depreciation, depletion
and amortization....... 28,481 441 2,444 2,840 (3) 34,206
Selling, general and
administrative......... 21,843 -- 2,741 (1,147)(4) 23,437
-------- ------ ------- ------- --------
Operating income
(loss)............... 18,507 287 6,755 (1,230) 24,319
Interest expense........ 19,590 -- 185 14,930 (5) 34,705
Accretion of preferred
stock warrants......... 56 -- -- -- 56
Other income, net of
interest income........ (2,171) (5) (489) -- (2,665)
-------- ------ ------- ------- --------
(Loss) income before
income taxes......... 1,032 292 7,059 (16,160) (7,777)
Benefit for income
taxes.................. (2,714) 120 2,466 (6,626)(6) (6,754)
-------- ------ ------- ------- --------
Net income (loss)
before extraordinary
loss................. $ 3,746 $ 172 $ 4,593 $(9,534) $ (1,023)
======== ====== ======= ======= ========
</TABLE>
See Notes to the Unaudited Pro Forma Consolidated Statement of Operations.
38
<PAGE>
NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(Dollars in Thousands)
(1) The historical statement of operations of the Company and the businesses
acquired for the year ended December 31, 1999 and the respective periods
prior to the date of acquisition by the Company were derived from the
consolidated audited financial statements of the Company that are included
elsewhere in this prospectus, the unaudited interim financial statements of
the Morie Assets for the period January 1, 1999 to April 8, 1999 and the
unaudited combined financial statements of Commercial Stone and CATS for
the nine months ended September 30, 1999.
(2) Commercial Stone historically paid a family trust of the shareholders of
Commercial Stone an annual royalty fee equal to 6% of the average selling
price of the total stone mined from the 1,000 acre property owned by the
trust. The annual royalty fee will not continue following the Commercial
Stone acquisition as the Company will own the property.
(3) The adjustment reflects the estimated increase in depreciation, depletion
and amortization expense after giving effect to the purchase accounting
adjustments for the difference between historical cost and estimated fair
value and useful lives of property, plant and equipment and other
intangible assets for the Morie Assets and the Commercial Stone acquisition
as follows:
<TABLE>
<S> <C>
Depreciation and depletion of property, plant and equipment
(a)............................................................ $2,373
Amortization of other intangible assets (b)..................... 467
------
Net adjustment.................................................. $2,840
======
</TABLE>
--------
(a) Depreciation of plant and equipment is computed using the straight-line
method over the estimated useful lives of the assets, ranging from 3 to
15 years. Depletion is computed based on units of production for the
properties. The adjustment is the result of purchase accounting
adjustments made in connection with the acquisition of the Morie Assets
and Commercial Stone.
(b) Represents the amortization of goodwill over 15 years associated with
the Morie Assets and Commercial Stone.
(4) The adjustment represents the reduction of salary expenses paid to former
principal owners of Commercial Stone and CATS, which expenses were reduced
to the level in effect subsequent to the acquisition by the Company. Also,
prior to the consummation of the Transactions, DGHA conducted certain of
its operations as a subsidiary of the Company. As a result, the acquisition
fees payable to DGHA under the Management Services Agreement were expensed.
Upon consummation of the Transactions, DGHA became an unconsolidated
entity. The adjustment eliminates the acquisition fees paid (which would
have been capitalized and not expensed had DGHA not conducted operations as
one of our subsidiaries), net of increased management fees expected to be
paid upon consummation of the Transactions. See "Certain Relationships and
Related Transactions--Management Services Agreement."
<TABLE>
<S> <C>
Commercial Stone salary expense and employee bonuses............ $ (520)
DGHA fees....................................................... (627)
-------
Total adjustment................................................ $(1,147)
=======
</TABLE>
39
<PAGE>
(5) The adjustment reflects (i) interest expense associated with borrowings
under the new credit facilities and the notes, (ii) amortization of the
related deferred financing fees and (iii) the elimination of the Company's
historical interest expense and related deferred financing fees after
giving effect to the $35.0 million equity contribution made on October 1,
1999.
<TABLE>
<CAPTION>
Principal
Amount Adjustment
--------- ----------
<S> <C> <C>
New Credit Facilities:
Term Loan A (a).................................. $ 45,000 $ 3,852
Term Loan B (a).................................. 95,000 8,607
Notes (a)........................................ 150,000 19,500
Other debt....................................... 1,446 140
Amortization of deferred financing fees (b)...... 1,924
Non-cash accretion of liabilities recorded at
fair market value............................... 164
Interest rate protection......................... 210
Other, including commitment fees................. 308
--------
34,705
Elimination of historical interest expense....... (19,775)
--------
Net adjustment (a)............................... $ 14,930
========
</TABLE>
--------
(a) At assumed variable rates of 8.56% and 9.06% for the new credit
facilities and an actual rate of 13.0% for the new notes. The effect of
a 1/8% increase or decrease in interest rates on variable rate debt
would increase or decrease total interest expense by approximately $0.2
million for the year ended December 31, 1999.
(b) Adjustment reflects the amortization of incremental deferred financing
fees associated with the new credit facilities. Deferred financing fees
are amortized using the straight-line method over the term of the
related debt.
(6) The adjustment represents the income tax benefit at an effective rate of
41.0% for the effects of the aforementioned adjustments (2) through (5).
40
<PAGE>
SELECTED FINANCIAL DATA
The following table sets forth selected historical consolidated financial
and other data of U.S. Silica (Predecessor) and the Company (Successor) as of
the end of and for the periods presented. The Company acquired U.S. Silica on
February 9, 1996. U.S. Silica is therefore the Predecessor for financial
reporting purposes.
The selected historical consolidated financial data as of and for the year
December 31, 1995 is derived from the unaudited consolidated financial
statements of the Predecessor that are not included in this prospectus. The
selected historical consolidated financial data as of and for the year ended
December 31, 1996 is presented as two separate periods, January 1, 1996 through
February 9, 1996 (Predecessor) and February 10, 1996 through December 31, 1996
(Successor), and are derived from the audited consolidated financial statements
of the Predecessor and the Successor, respectively, that are not included in
this prospectus. The selected historical consolidated financial data as of and
for the years ended December 31, 1997, 1998 and 1999 have been derived from the
audited consolidated financial statements of the Company and the notes thereto
included elsewhere in this prospectus. This information should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the consolidated financial statements and the
notes thereto included elsewhere in this prospectus.
<TABLE>
<CAPTION>
Predecessor Successor
------------------------- --------------------------------------------------
January 1, February 10,
Year Ended 1996 through 1996 through
December 31, February 9, December 31, Year Ended December 31,
------------ ------------ ------------ ------------------------------------
1995 1996 1996 1997 1998(1) 1999(2)
------------ ------------ ------------ ----------- ------------ --------
(unaudited) (Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Net sales............... $115,446 $ 11,827 $106,782 $ 128,512 $ 142,294 $209,075
Cost of goods sold...... 83,976 9,394 73,625 88,097 98,478 140,244
Depreciation, depletion
and amortization....... 11,659 1,033 15,225 17,886 19,888 28,481
Selling, general and
administrative......... 12,561 1,404 12,077 14,345 16,930 21,843
Incentive stock
compensation
expense(3)............. -- -- -- -- 14,227 --
Operating income
(loss)................. 7,250 (4) 5,855 8,184 (7,229) 18,507
Interest expense........ 162 13 10,074 10,513 10,269 19,590
Accretion of preferred
stock warrants(4)...... -- -- -- 1,374 1,254 56
Other income net,
including interest
income................. (4,327) (534) (598) (1,742) (1,881) (2,171)
(Loss) income before
income taxes........... 11,415 517 (3,621) (1,961) (16,871) 1,032
Provision (Benefit) for
income taxes........... 2,722 963 (2,101) (2,239) (2,204) (2,714)
Net income (loss) before
extraordinary loss..... 8,693 (446) (1,520) 278 (14,667) 3,746
Extraordinary loss(5)... -- -- -- -- (2,102) (2,747)
Net income (loss)....... $ 8,693 $ (446) $ (1,520) $ 278 $ (16,769) $ 999
Balance Sheet Data:
Cash.................... $ 1,361 $ 748 $ 954 $ 402 $ 2,222 $ 13,573
Working capital......... 23,932 16,573 11,724 12,277 19,508 45,715
Total assets............ 105,958 104,112 195,787 183,647 274,678 551,603
Total debt.............. -- -- 89,154 83,163 137,448 287,505
Stockholder's equity.... 60,066 54,984 22,755 26,022 23,396 64,335
Other Financial Data:
Capital expenditures.... $ 6,312 $ 567 $ 7,216 $ 5,537 $ 9,399 $ 14,572
Cash interest expense... -- -- 6,609 8,731 9,269 10,925
Ratio of earnings to
fixed charges(6)....... 46.3 25.6 -- (7) -- (7) -- (7) 1.1
</TABLE>
- -------
(1) Includes (i) the results of the Nicks Silica Assets from January 16, 1998,
the date of acquisition, (ii) with respect to the year ended December 31,
1998, the results of Pettinos from July 25, 1998, the date of acquisition,
and (iii) with respect to the year ended December 31, 1998, the results of
Better Materials from December 14, 1998, the date of acquisition, in each
case, as further described in "Management's Discussion and Analysis of
Financial Condition and Results of Operations".
(2) Includes the results of the Morie Assets from April 9, 1999, the date of
acquisition, and the results of Commercial Stone from October 1, 1999, the
date of acquisition.
(3) Represents non-cash compensation expense recorded in the second half of the
year ended December 31, 1998 due to the waiver by USS Holdings of its right
to repurchase certain capital stock held by our management.
(4) Represents the non-cash accretion in value of certain warrants granted with
respect to preferred stock of USS Holdings. The Company recognizes this
charge as part of push down accounting because the warrants were issued in
connection with debt issued by U.S. Silica. The obligation to satisfy any
payments due in connection with these warrants was forgiven by USS Holdings
during 1999.
(5) Represents non-cash charges and write-offs recorded in connection with the
Company's early retirement of certain subordinated debt in 1998, and the
early retirement of certain senior debt in 1999.
(6) Under Item 503 of Regulation S-K, "earnings" for purposes of this
calculation have been computed by adding to "income before extraordinary
items" all taxes based on income or profits, total interest charges and the
estimated interest element of rentals charged to income. "Fixed charges"
include total interest charges and the estimated interest element of
rentals charged to income.
(7) Earnings were insufficient to cover fixed charges by $3.6 million, $2.0
million and $16.9 million for the period February 10, 1996 through December
31, 1996, the years ended December 31, 1997 and 1998, respectively.
41
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
General
We mine, process and market industrial minerals, principally silica, in the
eastern and midwestern United States. We also mine, process and market
aggregates and produce and market hot mixed asphalt in certain geographic areas
in Pennsylvania and New Jersey. We are the second leading producer of silica in
the United States, accounting for approximately 23% of industry volume in 1999.
We believe that we have leading positions in most of our key end use markets
for our silica products, typically occupying the number one or two position by
sales. These end use markets include container glass, fiberglass, specialty
glass, flat glass, fillers and extenders, chemicals and ceramics. We also
supply our silica products to the foundry, building materials and other end use
markets. Our customers use our aggregates, which consist of high quality
crushed stone, construction sand and gravel, for road construction and
maintenance, other infrastructure projects and residential and commercial
construction and to produce hot mixed asphalt and concrete products. We also
use our aggregates to produce hot mixed asphalt. We operate a network of 25
production facilities in 14 states. Many of our production facilities are
located near major modes of transportation and our significant customers, which
reduces transportation costs and enhances customer service. Our principal
industrial minerals and aggregates properties each have deposits that we
believe will support production in excess of 15 years. On a pro forma basis,
our industrial minerals business (substantially all the net sales of which
consist of silica products) and our aggregates business accounted for 65.2% and
34.8% of our net sales, respectively, for the year ended December 31, 1999.
We recognize net sales at the time product is shipped to our customers and
title passes (generally when the product leaves our facility). Except for
certain limited instances in our aggregates business where we ship our products
in trucks that we own, net sales do not include the costs of transportation
borne by our customers. Generally, either our customers pay freight costs
directly, or we pay the costs on their behalf and are reimbursed (in which case
we record a liability and an accounts receivable on our balance sheet).
Cost of goods sold includes the ongoing mining and processing costs of our
operations (primarily labor costs, power costs, repair and maintenance costs,
costs of hiring third party subcontractors to drill and blast in our mining
operations, as well as lease royalty payments, where applicable) and non-cash
charges associated with estimated net future costs of restoring and reclaiming
operating mine sites. This provision is made at each operating location based
on units of production and engineering estimates of total deposits. Selling,
general and administrative expenses are the costs of operating our business,
including corporate overhead and associated fees and expenses related to
acquisitions. Management fees to our acquisition advisors and due diligence
costs for any acquisitions that we are unable to complete are also included in
this category.
Acquired property and mineral deposits are recorded at cost. The purchase
price of business acquisitions is allocated based on the fair values of assets
acquired and liabilities assumed at that time. Depreciation is computed using
the straight line method over the estimated useful lives of the assets, which
ranges from 3 to 15 years. Depletion of mineral deposits is accounted for as
the minerals are extracted, based on units of production and engineering
estimates of total deposits. Accordingly, depletion expense will increase or
decrease with changes in the volumes of minerals or aggregates extracted.
Amortization of various non-current assets such as non-competition agreements
are made on a straight line basis over the life of the related agreement.
Goodwill related to purchased acquisitions is amortized over 15 years.
42
<PAGE>
History and Recent Acquisitions
U.S. Silica was organized in 1927 as the Pennsylvania Glass Sand
Corporation. Pennsylvania Glass Sand Corporation was acquired by the
International Telephone and Telegraph Corporation in 1968, which in turn sold
it to U.S. Borax (formerly Pacific Coast Resources) in 1985. In 1986, the U.S.
Silica name was adopted and U.S. Borax acquired Ottawa Silica Company. In 1987,
Ottawa Silica Company was merged into U.S. Silica.
In February 1996, we purchased U.S. Silica from U.S. Borax. We subsequently
completed the following acquisitions:
--In January 1998, we acquired certain silica-producing assets (the "Nicks
Silica Assets") from Nicks Silica Company, a silica producer in Jackson,
Tennessee. These assets generated $4.3 million in revenues during 1996.
--In July 1998, we acquired George F. Pettinos, Inc. ("Pettinos"), a
producer of aggregates with operations in Berlin, New Jersey, and a
processor of silica with operations in Ontario, Canada. Pettinos had $14.9
million in revenues during 1997.
--In December 1998, we acquired Better Materials Corporation ("Better
Materials"), an aggregates producer in southeastern Pennsylvania. Better
Materials had $24.7 million in revenues during 1997.
--In April 1999, we acquired the Morie Assets from Unimin Corporation,
which are used in the production and sale of silica and aggregates. The
Morie Assets generated $17.8 million in revenues during 1998.
--In October 1999, we acquired Commercial Stone, a crushed stone and hot
mixed asphalt producer in southwestern Pennsylvania. Commercial Stone had
$42.0 million in revenues for its fiscal year ended March 31, 1999.
We paid $233.7 million in total consideration for the acquisition of these
businesses and assets.
43
<PAGE>
Results of Operations--Better Minerals & Aggregates Company
The following table sets forth Better Minerals & Aggregates' (including its
direct and indirect subsidiaries) statement of operations data for the three
years ended December 31, 1997, 1998 and 1999, and the percentage of net sales
of each line item for the periods presented. This statement of operations data
is derived from the consolidated financial statements of Better Minerals &
Aggregates and the notes thereto included elsewhere in this prospectus.
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------
1997 1998 1999
--------------- --------------- ---------------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Net sales:
Industrial minerals....... $128,512 100.0% $138,797 97.5% $159,168 76.1%
Aggregates................ -- -- 3,497 2.5 49,907 23.9
-------- -------- --------
Total net sales........... 128,512 100.0 142,294 100.0 209,075 100.0
Cost of goods sold........ 88,097 68.6 98,478 69.2 140,244 67.1
Depreciation, depletion
and amortization......... 17,886 13.9 19,888 14.0 28,481 13.6
Selling, general and
administrative........... 14,345 11.2 16,930 11.9 21,843 10.4
Incentive stock
compensation expense..... -- -- 14,227 10.0 -- --
-------- -------- --------
Operating income (loss)... 8,184 6.4 (7,229) (5.1) 18,507 8.9
Interest expense.......... 10,513 8.2 10,269 7.2 19,590 9.4
Accretion of preferred
stock warrants........... 1,374 1.1 1,254 0.9 56 --
Other income net,
including interest
income................... (1,742) (1.4) (1,881) (1.3) (2,171) (1.0)
-------- -------- --------
(Loss) income before
income taxes............. (1,961) (1.5) (16,871) (11.9) 1,032 0.5
Provision (Benefit) for
income taxes............. (2,239) (1.7) (2,204) 1.5 (2,714) (1.3)
-------- -------- --------
Net income (loss) before
extraordinary loss....... 278 0.2 (14,667) (10.3) 3,746 1.8
Extraordinary loss........ -- -- (2,102) (1.5) (2,747) (1.3)
-------- -------- --------
Net income (loss)......... $ 278 0.2% $(16,769) (11.8)% $ 999 0.5%
======== ======== ========
</TABLE>
Year Ended December 31, 1999 Compared with Year Ended December 31, 1998
Net Sales. Net sales increased $66.8 million, or 46.9%, to $209.1 million in
the year ended December 31, 1999 from $142.3 million in the year ended December
31, 1998.
Net sales of industrial minerals increased $20.4 million, or 14.7%, to
$159.2 million in the year ended December 31, 1999 from $138.8 million in the
year ended December 31, 1998. The increase was primarily due to the acquisition
of the Morie Assets, which resulted in the inclusion of $8.7 million for the
period of April 8, 1999 through December 31, 1999, and the full year results of
the Pettinos acquisition, which resulted in an increase of $5.3 million in the
year ended December 31, 1999 from the year ended December 31, 1998. Excluding
the acquisitions, net sales of industrial minerals increased $6.3 million, or
4.6%, to $141.6 million in the year ended December 31, 1999 from $135.3 million
in the year ended December 31, 1998, primarily from $4.1 million of increased
silica sales to the glass container, flat glass, specialty glass and filler
extender and use markets.
Net sales of aggregates increased $46.4 million to $49.9 million in the year
ended December 31, 1999 from $3.5 million in the year ended December 31, 1998.
The increase was primarily due to the full year results from the 1998
acquisitions of Better Materials and Pettinos, which resulted in the inclusion
of additional net sales of $27.9 million in the year ended December 31, 1999,
the acquisition of the Morie Assets, which resulted in the inclusion of net
sales of $6.1 million for the period of April 8, 1999 through December 31, 1999
and the acquisition of Commercial Stone, which resulted in the inclusion of net
sales of $12.4 million for the period of October 1, 1999 through December 31,
1999.
44
<PAGE>
Cost of Goods Sold. Cost of goods sold increased $41.7 million, or 42.3%, to
$140.2 million in the year ended December 31, 1999 from $98.5 million in the
year ended December 31, 1998.
Cost of goods sold of industrial minerals increased $12.0 million, or 12.5%,
to $107.7 million in the year ended December 31, 1999 from $95.7 million in the
year ended December 31, 1998. The increase was primarily due to the acquisition
of the Morie Assets and the full year results from the Pettinos acquisition,
which resulted in the inclusion of $9.7 million in cost of goods sold.
Excluding acquisitions, cost of goods sold increased $2.3 million, or 2.5%, on
a volume increase of 4.6% in the year ended December 31, 1999 compared to the
year ended December 31, 1998.
Cost of goods sold of aggregates increased $29.7 million to $32.5 million in
the year ended December 31, 1999 from $2.8 million in the year ended December
31, 1998. The increase was due to the inclusion of the full year results from
the 1998 acquisitions of Better Materials and Pettinos, and the 1999
acquisition of the Morie Assets and Commercial Stone, which resulted in the
inclusion of $29.7 million in additional cost of goods sold in the year ended
December 31, 1999.
Depreciation, Depletion and Amortization. Depreciation, depletion and
amortization increased $8.6 million, or 43.2%, to $28.5 million in the year
ended December 31, 1999 from $19.9 million in the year ended December 31, 1998.
The increase was primarily due to the acquisitions of Better Materials, the
Morie Assets and Commercial Stone.
Selling, General and Administrative. Selling, general and administrative
expenses increased $4.9 million, or 29.0%, to $21.8 million in the year ended
December 31, 1999 from $16.9 million in the year ended December 31, 1998. The
increase was primarily due to the acquisitions of Pettinos, Better Materials,
the Morie Assets and Commercial Stone, which resulted in the inclusion of $4.3
million in additional expense in the year ended December 31, 1999. Excluding
these items, selling, general and administrative expenses increased $0.6
million, or 3.6%, to $17.5 million in the year ended December 31, 1999 from
$16.9 million in the year ended December 31, 1998 due to normal annual
increases.
Operating Income. Operating income increased $25.7 million to $18.5 million
in the year ended December 31, 1999 from a $7.2 million operating loss in the
year ended December 31, 1998.
Operating income of industrial minerals increased $19.8 million to $12.5
million in the year ended December 31, 1999 from an operating loss of $7.3
million in the year ended December 31, 1998. The increase is primarily due to
the non-recurring incentive stock compensation expense recognized in 1998, as
well as the results from the acquisitions and other factors noted earlier.
Operating income of aggregates increased $6.9 million to $6.6 million in the
year ended December 31, 1999 from an operating loss of $0.3 million in the year
ended December 31, 1998 as a result of the acquisitions noted earlier.
Corporate expenses not allocated to the business segments increased $0.9
million to $0.6 million in the year ended December 31, 1999.
Interest (Income) Expense. Interest expense increased $9.3 million, or
90.3%, to $19.6 million in the year ended December 31, 1999 from $10.3 million
in the year ended December 31, 1998. The increase was primarily due to
increased borrowings related to acquisitions and increased interest rates.
Net Income (Loss). Net income (loss) increased $17.8 million to $1.0 million
in the year ended December 31, 1999 from a $16.8 million net loss in the year
ended December 31, 1998. The increase in net income is primarily due to the
factors noted above, especially the incentive stock
45
<PAGE>
compensation expense recognized in 1998. This is partially offset by an
increase of $0.6 million in extraordinary losses to $2.7 million in the year
ended December 31, 1999 from $2.1 million in the year ended December 31, 1998.
The 1999 loss reflects the after-tax charge recognized to write off debt
issuance fees that were previously capitalized in connection with our 1998
financing. The 1998 extraordinary loss reflects the after-tax charge to write
off capitalized debt issuance fees for subordinated debt first issued in 1996
and retired in 1998.
Year Ended December 31, 1998 Compared with Year Ended December 31, 1997
Net Sales. Net sales increased $13.8 million, or 10.7%, to $142.3 million in
the year ended December 31, 1998 from $128.5 million in the year ended December
31, 1997.
Net sales of industrial minerals increased $10.3 million, or 8.0%, to $138.8
million in the year ended December 31, 1998 from $128.5 million in the year
ended December 31, 1997. The increase was primarily due to the acquisition of
Pettinos, which resulted in the inclusion of net sales of $3.6 million for the
period of July 25, 1998 to December 31, 1998, and the acquisition of Nicks
Silica Assets, which resulted in the inclusion of net sales of $1.5 million for
the period of January 17, 1998 to December 31, 1998. Excluding these
acquisitions, net sales of industrial minerals increased $5.2 million, or 4.0%,
to $133.7 million in the year ended December 31, 1998 from $128.5 million in
the year ended December 31, 1997. Excluding these acquisitions, net sales of
silica increased $5.2 million. The increase was due primarily to new accounts
obtained in the glass container and flat glass end use markets and demand for
silica in the fiberglass end use market.
Net sales of aggregates in the year ended December 31, 1998 were $3.5
million, due to the acquisition of Pettinos, which resulted in the inclusion of
net sales of $2.7 million for the period of July 25, 1998 to December 31, 1998,
and the acquisition of Better Materials, which resulted in the inclusion of net
sales of $0.8 million for the period of December 15, 1998 to December 31, 1998.
There were no sales of aggregates in the year ended December 31, 1997.
Cost of Goods Sold. Cost of goods sold increased $10.4 million, or 11.8%, to
$98.5 million in the year ended December 31, 1998 from $88.1 million in the
year ended December 31, 1997. The increase was primarily due to the acquisition
of the Nicks Silica Assets, Pettinos and Better Materials, which resulted in
the inclusion of $9.5 million of operating expenses, including expenses of $0.6
million incurred to improve the safety and operating standards of the
operations of the Nicks Silica Assets. Excluding acquisitions, cost of goods
sold increased $0.8 million, or 0.9% on a volume increase of 2.6%, in the year
ended December 31, 1998 compared to the year ended December 31, 1997.
Depreciation, Depletion and Amortization. Depreciation, depletion and
amortization increased $2.0 million, or 11.2%, to $19.9 million in the year
ended December 31, 1998 from $17.9 million in the year ended December 31, 1997.
The increase was primarily due to the acquisition of the Nicks Silica Assets,
Pettinos and Better Materials, increased production and an increase in the
amortization of non-competition agreements with the former owner of the Nicks
Silica Assets.
Selling, General and Administrative. Selling, general and administrative
expenses increased $2.6 million, or 18.2%, to $16.9 million in the year ended
December 31, 1998 from $14.3 million in the year ended December 31, 1997. The
increase was primarily due to $1.1 million of costs associated with the
acquisition of the Nicks Silica Assets, Pettinos and Better Materials and non-
recurring professional fees of $1.0 million incurred in connection with the
refinancing of our indebtedness in July 1998. Excluding these items, selling,
general and administrative expenses increased $0.5 million, or 3.6%, to $14.3
million in the year ended December 31, 1998 from $13.8 million in the year
ended December 31, 1997 due to normal annual increases and one-time expenses
associated with a reorganization of our sales and marketing departments.
46
<PAGE>
Incentive Stock Compensation Expense. In 1998, we recognized non-cash
compensation expense due to the fact that USS Holdings waived its right to
repurchase certain outstanding shares of its capital stock held by our
management.
Operating Loss. Operating loss increased $15.4 million to $7.2 million in
the year ended December 31, 1998 from operating income of $8.2 million in the
year ended December 31, 1997. The change was primarily due to the incentive
stock compensation expense recorded in this period.
Interest (Income) Expense. Interest expense decreased $0.2 million, or 1.9%,
to $10.3 million in the year ended December 31, 1998 from $10.5 million in the
year ended December 31, 1997. The decrease was primarily due to reduced
interest rates on borrowings under our existing credit facilities.
Other Income (Expense). Other income increased $0.1 million to $1.9 million
in the year ended December 31, 1998 from $1.8 million in the year ended
December 31, 1997.
Net (Loss) Income. Net income decreased $17.1 million to a net loss of $16.8
million in the year ended December 31, 1998. The decrease in net income was
primarily due to the factors previously noted and an extraordinary after tax
charge of $2.1 million recognized in 1998 to write off debt issuance fees that
were previously capitalized in connection with our 1996 financing. The charge
represents the write-off of the components that were related to the
subordinated debt that was repaid in connection with the refinancing in July
1998.
Liquidity and Capital Resources
Our principal liquidity requirements have historically been to service our
debt and meet our working capital, capital expenditure and mine development
expenditure needs and to finance acquisitions. We have historically met our
liquidity and capital investment needs with internally generated funds while
acquisitions have required borrowings and equity investments. Our total long-
term debt as of December 31, 1999 was $287.5 million.
Net cash provided by operating activities was $16.0 million for the year
ended December 31, 1997, $15.4 million for the year ended December 31, 1998 and
$29.5 for the year ended December 31, 1999. Cash provided from operating
activities decreased $0.6 million from 1997 to 1998 due to net changes in
working capital, partially offset by increases in depreciation. For the year
ended December 31, 1999, cash flow from operating activities was $14.1 million
more than in 1998 due to increased operating income, partially offset by
increased interest expense.
Cash used for investing activities was $5.2 million for the year ended
December 31, 1997, $66.6 million for the year ended December 31, 1998 and
$185.6 million for the year ended December 31, 1999. Cash used in investing for
the year ended December 31, 1997 represented investments in capital
expenditures. For the year ended December 31, 1998, $57.5 million was used to
purchase the Nicks Silica Assets, Pettinos and Better Materials as well as $9.4
million in capital expenditures. For the year ended December 31, 1999, cash
used in investing activities increased $119.0 million due primarily to the
acquisitions of the Morie Assets completed in April 1999 and Commercial Stone
completed in October 1999, which aggregated $172.4 million inclusive of
transaction costs, as well as a $5.2 million increase in capital expenditures.
Cash flow from (used for) financing activities was ($11.3) million for the
year ended December 31, 1997, $53.1 million for the year ended December 31,
1998 and $167.5 million for the year ended December 31, 1999. For the year
ended December 31, 1997, there was a $7.0 million reduction in long-term debt
as well as a $5.0 million redemption of preferred stock from the former parent
of U.S. Silica. For the year ended December 31, 1998, long-term debt was
increased in a
47
<PAGE>
refinancing to complete the acquisitions of Pettinos and Better Materials as
well as to retire approximately $15.7 million in subordinated debt and pay fees
and prepayment penalties. For the year ended December 31, 1999, long-term debt
increased due to the issuance of $150.0 million of the subordinated notes,
which was used to complete the acquisition of Commercial Stone. In addition, we
received a $35.0 million equity contribution from USS Holdings. Net cash
provided by financing activities was partially offset by $15.8 million in
financing fees.
Interest payments on the notes, senior debt service under the new credit
facilities, working capital, capital expenditures and mine development
expenditures incurred in the normal course of business as current deposits are
depleted represent the significant liquidity requirements of Better Minerals &
Aggregates (including its direct and indirect subsidiaries). Future, but as yet
unidentified, acquisition opportunities will also represent potentially
significant liquidity requirements.
On October 1, 1999, the new credit facilities provided us with (i) a $50.0
million revolving credit facility, (ii) a fully drawn $45.0 million tranche A
term loan facility (including a tranche of loans denominated in Canadian
dollars in an amount equal to $2.0 million borrowed on the closing date by
George F. Pettinos (Canada) Limited), (iii) a fully drawn $95.0 million tranche
B term loan facility and (iv) an undrawn $40.0 million acquisition term loan
facility. The revolving credit facility is available for general corporate
purposes, including working capital and capital expenditures, but excluding
acquisitions, and includes sublimits of $12.0 million and $3.0 million,
respectively, for letters of credit and swingline loans. The acquisition term
loan facility is available for three years after the closing date, during which
time we may make no more than three borrowings, each borrowing being subject to
achieving a pro forma leverage ratio as defined not exceeding 5.00 to 1.00. For
a description of the amortization and interest rates with respect to the new
credit facilities, see "Description of the New Credit Facilities."
Simultaneously with the issuance of the new credit facilities on October 1,
1999, we retired in full $167.2 million in senior debt under a credit agreement
that was entered into on July 21, 1998 and later amended on April 8, 1999.
We repaid $3.9 million of the tranche A term loan facility and $200,000 of
the tranche B facility in the fourth quarter of 1999. On February 29, 2000, we
completed the sale of one of our two Canadian subsidiaries, George F. Pettinos
(Canada) Limited, for $3.2 million. We used the proceeds of this sale to repay
$2.0 million of the tranche A term loan facility, which had been borrowed on
the closing date by this former subsidiary, and for general corporate purposes.
The new credit facilities and the indenture impose certain restrictions on
us, including restrictions on our ability to incur indebtedness, pay dividends,
make investments, grant liens, sell our assets and engage in certain other
activities. In addition, the new credit facilities require us to maintain
certain financial ratios. Debt under the new credit facilities is secured by
substantially all of our assets, including our real and personal property,
inventory, accounts receivable and other intangibles. See "Description of the
New Credit Facilities."
We incurred fees and expenses of approximately $18.8 million in connection
with the acquisition of Commercial Stone, the issuance of the notes and the
borrowings under the new credit facilities. Financing fees were approximately
$15.0 million and will be amortized over the life of the debt. Fees totaling
$2.5 million were capitalized as a cost of the Commercial Stone acquisition.
The remaining $1.3 million in fees and expenses were bonuses paid to certain
Commercial Stone employees as a loyalty bonus.
Our expected capital expenditure requirements for 2000 and 2001 are $26.1
million and $21.7 million, excluding possible acquisitions, respectively.
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Our ability to satisfy our debt obligations and to pay principal and
interest on our debt, including the notes, fund working capital, mine
development and acquisition requirements and make anticipated capital
expenditures will depend on our future performance, which is subject to general
economic, financial and other factors, some of which are beyond our control. We
believe that based on current levels of operations and anticipated growth, cash
flow from operations, together with borrowings under the revolving credit
facility and, if available, the acquisition term loan facility, will be
adequate for the foreseeable future to make required payments of principal and
interest on our debt, including the notes, fund working capital, mine
development and capital expenditure requirements and pursue acquisitions. There
can be no assurance, however, that our business will generate sufficient cash
flow from operations or that future borrowings will be available under the
revolving credit facility and the acquisition term loan facility in an amount
sufficient to enable us to service our debt, including the notes, or to fund
our other liquidity needs.
Inflation
We do not believe that inflation has had a material impact on our financial
position or results of operations during the periods covered by the financial
statements included in this prospectus.
Seasonality
Our aggregates business is seasonal, due primarily to the effect of weather
conditions in winter months on construction activity in our Pennsylvania and
New Jersey markets. Due to this, peak sales of aggregates occur primarily in
the months of April through November. Accordingly, our results of operations in
any individual quarter may not be indicative of our results of operations for
the full year.
Year 2000 Compliance
Background
The year 2000 issue refers to the inability of certain computer programs to
recognize a date ending in "00" as the year 2000 as a result of being written
using two digits, rather than four, to define the applicable year. Systems that
have time-sensitive hardware or software may recognize a date using "00" as the
year 1900 rather than the year 2000. If not corrected, many computer
applications could have failed or produced erroneous data on or about January
1, 2000. As part of an overall company program that began in 1994 to upgrade
all of our hardware and software systems, the issue of year 2000 compliance was
reviewed as each of our major systems was evaluated and changed. Replacement
systems were installed, and confirmation letters were received from software
and hardware suppliers attesting to the compliance of the systems installed. We
also made efforts to determine the year 2000 compliance status of the
significant third parties with whom we do business. In 1998, questionnaires
were sent to our most significant service providers and material suppliers. No
unsatisfactory responses regarding year 2000 compliance were received.
Costs
In 1998 and 1999, we spent $252,600 and $286,000, respectively, to upgrade
several major systems to year 2000-compliant system releases. Additionally,
plant automation control software was upgraded at two facilities at a cost of
$62,000 and $239,000, respectively, in 1998 and 1999. There can be no assurance
that we will not incur further costs as a result of the discovery of unexpected
need for additional remediation work.
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Results
The results of the year 2000 program are now documented. During the rollover
to 2000, neither we, nor any of our major customers or vendors, experienced
service interruptions due to computer hardware, software or embedded chips that
adversely affected our business.
Qualitative and Quantitative Disclosures About Market Risk
We do not expect to enter into financial instruments for trading purposes.
We anticipate periodically entering into interest rate swap agreements to
effectively convert all or a portion of our floating-rate debt to fixed-rate
debt in order to reduce our exposure to movements in interest rates. Such
agreements would involve the exchange of fixed and floating interest rate
payments over the life of the agreement without the exchange of the underlying
principal amounts. The impact of fluctuations in interest rates on the interest
rate swap agreements is expected to be offset by the opposite impact on the
related debt. We record the payments or receipts on the agreements as
adjustments to interest expense. Swap agreements will only be entered into with
syndicate banks. In addition, we may enter into interest rate cap agreements,
which limit our variable rate interest to a specified level. In the future, we
may enter into natural gas and other energy related hedge arrangements in order
to reduce our exposure to changes in commodity energy prices. At this time, we
have no energy hedge agreements outstanding.
We are exposed to various market risks, including changes in interest rates.
Market risk related to interest rates is the potential loss arising from
adverse changes in interest rates.
At December 31, 1999, we had outstanding interest rate swap agreements
maturing in 2001 with an aggregate notional principal amount of $30.0 million.
At December 31, 1998, we had outstanding interest rate swap agreements maturing
in 1999 and 2001 with an aggregate notional principal amount of $85.0 million.
These swaps effectively convert the variable interest rates on the notional
principal amounts to a fixed interest rate. In addition, we had interest rate
cap agreements at December 31, 1999 and 1998 with aggregate notional principal
amounts of $51.0 million and $30.0 million, respectively. These agreements
effectively limit the variable portion of the interest rate on the notional
principal amount of variable rate debt to 6.5%.
The fair value of interest rate swap and cap agreements represents the
estimated receipts or payments that we would make to terminate the agreements.
At December 31, 1999, we would have received $0.4 million to terminate the
interest rate swap agreements and $0.3 million to terminate the interest rate
cap agreements.
The fair market value of our long-term fixed interest rate debt is subject
to interest rate risk. Generally, the fair market value of the fixed interest
rate debt will increase as the interest rates fall and decrease as interest
rates rise. At December 31, 1999, the estimated fair value of our fixed
interest rate long-term debt (including current portion) approximated its
carrying value of $150.0 million due to its recent issuance. If the prevailing
interest rates at December 31, 1999 increased by 1.0%, the fair value of our
total long-term debt would decrease by approximately $6.2 million.
Environmental and Related Matters
See "Business--Government Regulation" for a discussion of certain
environmental matters relating to our various production and other facilities,
certain regulatory requirements relating to human exposure to crystalline
silica and our mining activity and how such matters may affect our business in
the future.
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Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities ("FAS 133"), which is required to be adopted in years
beginning after June 15, 2000. Because of our minimal use of derivatives, we do
not anticipate that the adoption of FAS 133 will have a significant impact on
our results of operations or financial condition.
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INDUSTRY OVERVIEW
Set forth below is information about the key industries in which we operate:
Silica Industry
Silica, often termed "industrial sand," "silica sand" and "quartz sand,"
includes sands with high silicon dioxide content. Silica is a naturally
occurring mineral that has a broad range of distinct characteristics, such as
size, purity, color, inertness, hardness and resistance to high temperatures,
which make it difficult to substitute in a variety of applications. Silica is
used in a wide range of end use markets, including the container glass,
fiberglass, specialty glass, flat glass, chemicals, foundry, fillers and
extenders, and ceramics end use markets.
In 1998, consumption of silica in the United States was approximately 29.0
million tons, generating sales of approximately $491 million. The United States
silica industry has been characterized by stable growth. From 1988 to 1998,
sales of silica in the United States grew at a compound annual growth rate of
approximately 2.7%. This growth resulted from increased demand across a wide
variety of end use markets.
Silica producers are typically either large, national producers that produce
many grades of silica or smaller, regional companies that produce silica for
limited uses. According to the U.S. Geological Survey, the five leading United
States producers of silica in 1998, in descending order, were Unimin
Corporation, U.S. Silica, Fairmount Minerals Ltd., Oglebay Norton Industrial
Sands Co. and Badger Mining Corporation. Competition generally occurs among
participants in geographic proximity to each other because transportation cost
represents a significant portion of the overall cost of silica to customers.
Therefore, competition within any given geographic area is distinct, as
transportation costs generally limit the market to within 200 miles of a
producer's facilities. However, certain high margin industrial minerals
products, such as fine ground silica, may be distributed nationally and, in
some cases, internationally due to the high value of these products relative to
transportation costs.
Aggregates Industry
Aggregates consist of crushed stone, construction sand and gravel and are a
basic raw material used in a wide variety of applications including asphalt,
concrete, road construction and residential and commercial construction. In
1998, consumption of aggregates (not including hot mixed asphalt) in the United
States was approximately 2.8 billion tons, generating sales of approximately
$13.5 billion.
The United States aggregates industry is characterized by stable growth.
From 1988 to 1998, sales of aggregates in the United States grew at a compound
annual growth rate of approximately 4.4%. This growth resulted from increased
demand for road construction and maintenance, other infrastructure projects and
residential and commercial construction. According to the U.S. Geological
Survey, aggregates prices range from approximately $2 per ton for construction
sand and gravel fill to approximately $35 per ton for special whiting crushed
stone.
Due to the high cost of transportation relative to the value of the product,
competition within the aggregates industry favors producers with aggregate
production facilities in close proximity to transportation modes and customers.
As a result, competition is generally limited to a 75 mile area. The United
States aggregates industry is currently experiencing consolidation. According
to the U.S. Geological Survey, in 1997 there were 3,362 active crushed stone
quarries and 7,658 active construction sand and gravel operations in the United
States. The U.S. Geological Survey states that the five leading aggregates
producers in 1998, in descending order, were Vulcan Materials Company, Martin
Marietta Aggregates, a division of Martin Marietta Materials, Inc., Cornerstone
Construction &
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Material, Inc., Lafarge Corporation and Oldcastle, Inc./Materials Group.
According to the U.S. Geological Survey, these producers accounted for
approximately 18.7% of total United States aggregates production in 1998.
We believe demand for aggregates will increase due to the passage by
Congress in 1998 of TEA-21. TEA-21 establishes a $218 billion transportation
program that provides for increased federal funding for highways and related
infrastructure improvements through 2003. TEA-21 authorizes average annual
federal spending on highways and related infrastructure improvements of
approximately $26 billion, approximately 44% higher than the average annual
federal spending of $18 billion under the predecessor program. In Pennsylvania
and New Jersey, our primary aggregates markets, average annual federal spending
on highways and related infrastructure improvements under TEA-21 is projected
to be approximately 47% and 30% higher, respectively, than under the
predecessor program.
Another trend expected to impact the aggregates market is the adoption of
the Superpave system. Superpave is a new approach to asphalt mix design, which
provides designers with standards for customizing roadway mixes for specific
weather and traffic conditions. This new set of standards generally requires
high quality aggregates that conform to a variety of specific characteristics,
including hardness, absorption, size and shape. We believe our aggregates
comply with the high Superpave standards. Many state governments have elected
to require their roadways to conform to the Superpave standards. For example,
the Pennsylvania Department of Transportation has stated that it will require,
as of September 2000, all roadway contracts to include the use of the Superpave
standards.
Hot mixed asphalt is a densely packed combination of approximately 95%
crushed stone, sand or gravel bound together by asphalt oil. A major component
of the road system in the United States, hot mixed asphalt covers approximately
95% of the paved roads in the United States. The United States hot mixed
asphalt industry generates over $10 billion in sales annually. Market growth is
primarily driven by road construction and population growth.
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BUSINESS
General
We mine, process and market industrial minerals, principally silica, in the
eastern and midwestern United States. We also mine, process and market
aggregates and produce and market hot mixed asphalt in certain geographic areas
in Pennsylvania and New Jersey. We are the second leading producer of silica in
the United States, accounting for approximately 23% of industry volume in 1999.
We believe that we have leading positions in most of our key end use markets
for our silica products, typically occupying the number one or two position by
sales. These end use markets include container glass, fiberglass, specialty
glass, flat glass, fillers and extenders, chemicals and ceramics. We also
supply our silica products to the foundry, building materials and other end use
markets. Our customers use our aggregates, which consist of high quality
crushed stone, construction sand and gravel, for road construction and
maintenance, other infrastructure projects and residential and commercial
construction and to produce hot mixed asphalt and concrete products. We also
use our aggregates to produce hot mixed asphalt. We operate a network of 25
production facilities in 14 states. Many of our production facilities are
located near major modes of transportation and our significant customers, which
reduces transportation costs and enhances customer service. Our principal
industrial minerals and aggregates properties each have deposits that we
believe will support production in excess of 15 years. On a pro forma basis,
our industrial minerals business (substantially all the net sales of which
consists of silica products) and our aggregates business accounted for 65.2%
and 34.8% of our net sales, respectively, for the year ended December 31, 1999.
On a pro forma basis, we had net sales of $248.1 million for the year ended
December 31, 1999.
Products
We produce a variety of industrial minerals and aggregates that are designed
to meet a broad range of customer needs.
Industrial Minerals. Our industrial minerals products are processed to meet
a broad range of chemical purity, particle shape and sizing specifications. Our
key industrial minerals products are known as unground silica, ground silica,
fine ground silica, kaolin and aplite. Our unground silica products consist of
silica of various size grades ranging from 120 to 20 mesh. For the year ended
December 31, 1999 we sold 5.4 million tons of unground silica. Our ground
silica products consist of unground silica that is further processed into sizes
of 40 to 125 microns and are marketed under the Sil-Co-Sil(R) brand name. For
the year ended December 31, 1999 we sold 610,000 tons of ground silica. The
average selling price for ground silica is approximately $30 per ton more than
for unground silica. Our fine ground silica products consist of ground silica
which we have further processed with highly engineered equipment into size
grades of 5 to 40 microns and are marketed under the Min-U-Sil(R) brand name.
We believe that no other producer in the United States currently produces a 5
micron product with the consistent quality and size of our 5 micron product.
For the year ended December 31, 1999 we sold 59,000 tons of fine ground silica.
The average selling price for fine ground silica is approximately $170 per ton
more than for ground silica. In addition to our silica products we also produce
a limited amount of kaolin and aplite. Kaolin is a mineral co-product in our
production of silica in Kosse, Texas that we sell primarily as a filler and
extender to the paints and coatings industry. Aplite is an alumina source
produced at our Montpelier, Virginia facility that we sell primarily to the
glass industry.
Aggregates. Our aggregates products include high quality crushed stone,
construction sand and gravel, which we provide in various sizes, and hot mixed
asphalt. On a pro forma basis, we sold 7.4 million tons of our aggregates
products (excluding sales of hot mixed asphalt) for the year ended December 31,
1999. On a pro forma basis, we sold 1.8 million tons of our hot mixed asphalt
for the
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year ended December 31, 1999. We produce a high quality, anti-skid asphalt
using the Superpave system. The Pennsylvania Department of Transportation has
stated that it will require, as of September 2000, all roadway contracts to
include the use of the Superpave standards. We are competitively positioned to
benefit from this new requirement due to our ability both to supply our
customers with the quality of aggregates required by the Superpave system as
well as to manufacture Superpave-compliant asphalt from our own aggregates. See
"Industry Overview--Aggregates Industry."
End Use Markets and Customers
We sell our products to a wide variety of customers within numerous end use
markets. The following table sets forth the net sales, products, primary
applications and representative customers by end use market served by our
industrial minerals and aggregates businesses.
<TABLE>
<CAPTION>
Pro Forma Year Ended
December 31, 1999 Primary Representative
End Use Markets Net Sales Products Applications Customers
- --------------- -------------------- ---------------- ---------------- --------------------------------
(Dollars in
Millions)
<S> <C> <C> <C> <C>
Industrial Minerals
Container glass.......... $ 27.2 Unground silica, Food, beverage Ball-Foster, Inc.,
aplite and liquor Owens-Illinois, Inc.
bottles
Fiberglass............... 15.9 Unground silica, Roofing Owens Corning, PPG Industries,
ground silica, products, Inc.
aplite automotive
parts, sports
equipment,
boats,
insulation
Specialty glass.......... 14.5 Unground silica, Television Anchor Hocking, Inc.,
ground silica, tubes, lights, Corning Asahi
aplite tableware, Video,Corning Incorporated,
optical lenses Libbey Inc., General Electric
Flat glass............... 10.6 Unground silica Automobile AFG Industries, Inc.,
glass, windows Guardian Industries
Corp.,Pilkington plc,
PPG Industries, Inc.
Foundry.................. 23.7 Unground silica, Automotive, Caterpillar Inc.,
ground silica heavy equipment Citation Corporation
and machine tool
castings
Fillers and extenders.... 22.7 Unground silica, Industrial and Behr Process Corporation, Delphi
ground silica, traffic paints, Packard Electric, Dow Corning
fine ground epoxy molded Corporation,Sherwin-Williams
silica, kaolin countertops,
silicone rubber
Building materials....... 18.3 Unground silica, Bricks, stucco, CertainTeed Corporation, Owens
ground silica, concrete, Corning
fine ground asphalt shingles
silica, kaolin
Chemicals................ 10.3 Unground silica, Detergents, J.M. Huber Corp.,
ground silica paper textile Occidental Chemical Corporation,
finishing, PQ Corporation
dental products
Ceramics................. 5.1 Unground silica, Ceramic American Marazzi Tile, Cooper
ground silica, whiteware, floor Power Systems, Ideal-Standard,
fine ground tiles, glaze The Pfaltzgraff Co.
silica, kaolin formulations
Other.................... 13.4 Unground silica, Fracturing Toys 'R Us Inc., various country
ground silica, sands, sand clubs
fine ground boxes,
silica, kaolin, playgrounds,
aplite athletic fields,
racetracks, golf
courses
Aggregates
Paving and construction.. 86.4 Crushed stone, Pavement, Various local contractors
construction outside
sand, gravel, recreational
hot mixed facilities,
asphalt sport stadiums,
residential and
commercial
construction
Total.................... $248.1
</TABLE>
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We generate net sales from a diversified base of customers and end use
markets. On a pro forma basis for the year ended December 31, 1999, 65.2% of
our net sales was derived from our industrial minerals business and 34.8% of
our net sales was derived from our aggregates business. During that same
period, we exceeded $10 million in net sales in each of 10 distinct end use
markets and no single customer accounted for more than 5% of our net sales.
Industrial Minerals. Our industrial mineral products are sold into a variety
of end use markets, as described below.
Container Glass. We supply unground silica and aplite to the container glass
end use market for use in the production of food, beverage and liquor bottles.
Fiberglass. We supply unground and ground silica and aplite to the textile
and insulation fiberglass end use markets. Textile fiberglass is used in the
production of roofing products and composites for automotive parts, sports
equipment and boats. Insulation fiberglass is used to maximize energy
efficiency in buildings by insulating heating and cooling ducts, attics,
basements and exterior walls.
Specialty Glass. We supply unground and ground silica and aplite to the
specialty glass end use market for use in the production of television tubes,
lights, tableware and optical lenses. These end use markets have enjoyed steady
growth due to the development of innovative and sophisticated new specialty
glass products. Because of the higher quality standards in this market, certain
of our industrial minerals for specialty glass are shipped nationally as well
as regionally.
Flat Glass. We supply unground silica to the flat glass end use market for
use in the production of automotive glass and windows. Windows are primarily
used in commercial and residential construction and remodeling.
We estimate that in 1999 our shipments of industrial silica to the container
glass, fiberglass, specialty glass and flat glass end use markets accounted for
approximately 30% of the total volume of industrial silica shipped to the glass
end use markets in the United States.
Foundry. We supply unground and ground silica to the foundry end use market
for use in the production of automotive, heavy equipment and machine tool
castings. We estimate that in 1999 we accounted for approximately 20% of the
silica volume shipped to the foundry end use market in the United States.
Fillers and Extenders. We supply unground, ground and fine ground silica and
kaolin to the paints and coatings end use market as fillers and extenders in
the production of architectural, industrial and traffic paints, and to the
rubber and plastic end use market for use in the production of epoxy molded
countertops and silicone rubber. We estimate that in 1999 we accounted for
approximately 60% of the silica volume shipped to the fillers and extenders end
use market in the United States. This is our highest value end use market, as a
premium is placed on the particle size and whiteness of our silica. As a result
of the high margin products we sell in this market, we are able to ship certain
of these products to customers nationally as well as regionally. In addition,
we are also able to compete internationally with some of these products.
Building Materials. We supply unground, ground and fine ground silica and
kaolin to the building materials end use market for use in the production of
bricks, stucco, concrete and asphalt shingles. We estimate that in 1999 we
accounted for approximately 20% of the silica volume shipped to the building
materials end use market in the United States.
Chemicals. We supply unground and ground silica to the chemicals end use
market where it is used in the manufacture of sodium silicate, which is used in
products such as detergents, paper
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textile, finishing and dental products. We estimate that in 1999 we accounted
for approximately 80% of the silica volume shipped to the chemicals end use
market in the United States.
Ceramics. We supply unground, ground and fine ground silica and kaolin to
the ceramics end use market for use in the production of ceramic whiteware,
floor tiles and glaze formulations. We estimate that in 1999 we accounted for
approximately 50% of the silica volume shipped to the ceramics end use market
in the United States.
Other. We also supply our unground, ground and fine ground silica and our
kaolin and aplite to a variety of additional markets. For example, our silica
is used as fracturing sand in the oil and gas end use market and in athletic
fields, race tracks, sand boxes, playgrounds and golf courses.
Aggregates
Paving and Construction. We supply our aggregates products primarily to the
paving and construction end use market in southern New Jersey and southeastern
and western Pennsylvania for use in pavements. Most of our aggregates
production is sold directly to local contractors. We also supply our aggregates
for use in outside recreational facilities, sport stadiums and residential and
commercial construction. We use the remainder of our aggregates to produce hot
mixed asphalt, which we also sell to local contractors.
Sales and Marketing
We market our industrial minerals products primarily on a local basis. Our
local sales and marketing efforts are divided among 10 regions, each managed by
a regional sales person, and are directed to meet our local customers' specific
needs. Our technical and customer service personnel support our local sales and
marketing personnel. Certain of our smaller local customers are primarily
serviced by customer service representatives located at our facilities. We also
sell to distributors for resale outside our 10 sales regions or to customers
who desire to purchase a combination of our industrial minerals and other
products which the distributor supplies.
In the case of our customers that have facilities in multiple states, we
also direct our sales and marketing efforts at the corporate headquarters
level. While competition for these customers generally remains at the local
level, the terms of certain of our agreements are negotiated with the customer
at the corporate level. Our national account managers also coordinate multi-
disciplinary teams that work with these customers and their technical and
engineering departments to jointly develop specifications for industrial
minerals to meet their local product and application needs. In addition, we
provide technical and customer service to these customers' individual facility
locations at the local level.
We market our aggregates products, including our hot mixed asphalt, directly
through our local sales force, which calls on our customers at their
facilities.
Competition
Due to the high cost of transportation relative to the value of our
industrial minerals and aggregates products, competition tends to be limited to
producers in proximity to our production facilities. Although we experience
competition in all of our markets, we believe that we are a leading producer in
the key end use markets and geographic areas that we serve.
The silica industry is a competitive market that is characterized by a small
number of large, national producers and a larger number of small, regional
producers. We are the second leading producer of silica in the United States,
accounting for approximately 23% of industry volume in 1999. We compete with,
among others, Unimin Corporation, Fairmount Minerals Ltd., Oglebay Norton
Industrial Sands Inc. and Badger Mining Corporation. Competition in the
industrial minerals industry is based on price, consistency and quality of
product, site location, distribution capability, customer service, reliability
of supply, breadth of product offering and technical support. In addition,
there is
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significant unutilized capacity in the industrial minerals industry that could
adversely affect the pricing of our industrial minerals products.
In recent years, the aggregates industry has seen increasing consolidation,
although competition remains primarily local. Competition in the aggregates
industry is based primarily on price, quality of product, site location,
distribution capability and customer service. In Pennsylvania and New Jersey we
compete primarily with local or regional operations. In addition, in western
Pennsylvania, slag, a residue from steel processing, also competes with our
aggregates products.
Production and Distribution
Our production process for our industrial minerals generally consists of
mining mineral ore followed by a number of processing steps. All of our
industrial minerals mining operations involve surface mining. As is customary
in our industry, some of our mining operations, particularly drilling and
blasting, are outsourced to third parties. After the mineral ore is mined we
crush it into various sizes, depending on the specific customer application. We
then remove impurities from the materials in a washing process and remove
oversized particles by screening. Moisture is removed through a drying process
and the product is loaded into trucks or rail cars for shipment or is bagged
before shipping.
We ship our industrial mineral products direct to our customers by either
truck or rail. Bagged product is generally distributed by truck. We sometimes
utilize rail-truck transfer stations to deliver our products if we can thereby
achieve lower delivery costs to a given customer or region. Almost all our
truck shipments of industrial minerals are carried out by third parties. Our
rail shipments are generally made by railcar equipment owned by the railroad,
although for some customers and regions we lease our own railcars. Given the
value to weight ratio of most of our industrial mineral products, the cost-
effective distribution range is approximately 200 miles. For some of our high
margin fine ground silica and other specialty products such as kaolin, we can
effectively distribute our products nationally and, in some cases,
internationally.
Our production process for our aggregates consists of mining mineral ore and
then crushing it into various sizes based on customer specifications. All of
our aggregates mining operations involve surface mining, except for one which
involves underground mining. Generally, surface mining is subject to less
operational risk than underground mining. We either ship our aggregates
products product directly to our customers by truck, or store it at our
facility to meet future customer demand. In certain instances we deliver large
orders by rail. Our hot mixed asphalt is produced by mixing our aggregates with
asphalt oil, blending to customer specifications and then delivering by truck.
The Commercial Stone acquisition provided us with CATS, a subsidiary that
runs a cooperative fleet of dump trucks owned by independent contractors. CATS
hires these trucks for hauling of aggregates and other bulk materials. In
return, the independent trucking contractors benefit from a steady source of
work and bulk discounts on fuel, tires and other services. CATS enables us to
secure reliable access to a fleet of approximately 200 dump trucks on a cost-
effective basis.
Technical Support
We operate a laboratory to monitor the quality of our products, plants and
services. The laboratory has four principal functions. The technical service
function provides support to both current and prospective customers and
performs controlled tests for a variety of applications. The lab also assists
foundries in their quality control programs through periodic testing of their
sand and equipment, a service that has enabled us to increase our business by
acquiring several large foundries as customers. The application function
evaluates the chemical, physical and performance characteristics of our
products and those of our competitors. These evaluations assist us in
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<PAGE>
developing new products and applications and enable us to provide our customers
with technical support and recommendations. The analytical function both
provides support for plants lacking the ability to provide certain technical
information to customers, and analyzes drill core samples to provide data for
short- and long-term mine planning. The mineral processing function is designed
to simulate all plant processes, primarily preparing and analyzing drill core
samples for mine planning purposes and providing expertise in plant problem
troubleshooting. We are ISO 9002 registered at eight plants.
Employees
As of March 1, 2000, we had approximately 1,048 employees, of which
approximately 527 were represented by 12 local unions under 12 union contracts.
These union contracts have remaining durations ranging from one to five years.
Over the last 10 years, we have been involved in numerous labor negotiations,
only two of which have resulted in a work disruption at two of our 25
facilities. During these disruptions, the operations of the facilities and the
ability to serve our customers were not materially affected. We believe that
our current relations with our employees are good.
Properties and Mineral Deposits
We own or lease a number of properties located in the eastern and midwestern
United States. Our headquarters is in Berkeley Springs, West Virginia. Set
forth below are the locations and a description of our principal properties:
<TABLE>
<CAPTION>
Location Use Status
-------- --- ------
<S> <C> <C>
Berkeley
Springs, WV Corporate offices Owned
Industrial
Minerals
Berkeley
Springs, WV Silica mining and processing Owned
Cedar Lake, NJ Silica mining and processing Owned
Columbia, SC Silica mining and processing Leased
Dubberly, LA Silica mining and processing Owned/Leased
Dundee, OH Silica mining and processing Owned
Hurtsboro, AL Silica mining and processing Owned/Leased
Jackson, TN Silica mining and processing Owned
Kosse, TX Silica and kaolin mining and processing Owned/Leased
Mapleton Depot,
PA Silica mining and processing Owned/Leased
Mauricetown, NJ Silica processing Owned
Mill Creek, OK Silica mining and processing Owned/Leased
Millville, NJ Silica mining and processing Owned/Leased
Montpelier, VA Aplite mining and processing Owned/Leased
Ottawa, IL Silica mining and processing Owned
Pacific, MO Silica mining and processing Owned
Port Elizabeth,
NJ Silica mining and processing Owned
Rockwood, MI Silica processing Owned
Aggregates
Adamsburg, PA Hot mixed asphalt plant Owned
Berlin, NJ Construction sand mining and processing Owned
Ottsville, PA Stone quarry; hot mixed asphalt plant Owned
Penns Park, PA Stone quarry; hot mixed asphalt plant Owned
Rich Hill, PA Stone quarry; sand plant Owned/Leased
Springfield
Pike, PA Stone quarry; hot mixed asphalt plant; offices Owned
Upper Township,
NJ Construction sand mining and processing Owned/Leased
Washington, PA Hot mixed asphalt plant Owned
</TABLE>
59
<PAGE>
With respect to each operation at which we mine industrial minerals and
aggregates, we obtain permits from various governmental authorities prior to
the commencement of mining. The current permitted deposits on our properties
are sufficient to support production, based on historical rates of production,
for an average of approximately 10 years, ranging from approximately four years
to approximately 50 years. We obtain permits to mine deposits as needed in the
normal course of business based on our mine plans and state and local
regulatory provisions regarding mine permitting and licensing. Based on our
historical permitting experience, we expect to be able to continue to obtain
necessary mining permits to support historical rates of production. Industrial
minerals and aggregates properties which have deposits (which include both
permitted and unpermitted deposits) that we believe are sufficient to support
production for over 15 years accounted for approximately 95% of our net sales
on a pro forma basis for the year ended December 31, 1999. Additionally, to
further assure sufficient deposits and adequate facilities to meet future
demand, we plan to obtain new deposits through expansion of existing sites,
where feasible, and acquisitions of industrial minerals and aggregates
businesses.
Some of our mining leases can be indefinitely renewed by us on an annual
basis while others have terms ranging from two to 50 years (including
unilateral renewal rights). These leases generally provide for royalty payments
to the lessor based on a specific amount per ton or a percentage of revenue. In
addition, we have a number of non-mining leases that relate to the above
properties that permit us to perform activities that are ancillary to the
mining of industrial minerals or aggregates such as surface use leases that
allow haul trucks to transport material from the mine to the plant site.
Legal Proceedings
We are a defendant in various lawsuits related to our businesses. These
matters include lawsuits relating to the exposure of persons to silica as
discussed in detail under "--Product Liability" below. Although we do not
believe that these lawsuits are likely to have a material adverse effect upon
our business, we cannot predict what the full impact of these or other lawsuits
will be. We currently believe, however, that these claims and proceedings in
the aggregate are unlikely to have a material adverse effect on us.
Product Liability
The inhalation of respirable crystalline silica is associated with several
adverse health effects. First, it has been known since at least the 1930s that
prolonged inhalation of respirable crystalline silica can cause silicosis, an
occupational disease characterized by fibrosis, or scarring, of the lungs.
Second, since the mid-1980s, the carcinogenicity of crystalline silica has been
at issue and the subject of much debate and research. In 1987, the
International Agency for Research on Cancer ("IARC"), an agency of the World
Health Organization, classified crystalline silica as a probable human
carcinogen. In 1996, a working group of IARC voted to reclassify crystalline
silica as a known human carcinogen. The National Toxicology Program ("NTP"),
part of the United States Department of Health and Human Services, has recently
proposed upgrading crystalline silica from its current NTP classification as "a
reasonably anticipated carcinogen" to "a known human carcinogen." Third, the
disease silicosis is associated with an increased risk of tuberculosis.
Finally, there is evidence of a possible association between crystalline silica
exposure or silicosis and other diseases such as immune system disorders, like
scleroderma, and end-stage renal disease.
U.S. Silica has been named as a defendant in an estimated 70 product
liability claims alleging silica exposure filed in the period January 1, 2000
to March 1, 2000. U.S. Silica was named as a defendant in 89 similar claims
filed in 1997, 154 filed in 1998 and 497 filed in 1999. U.S. Silica has been
named as a defendant in similar suits since 1975; in each of the years 1983,
1987, 1995 and 1996, more than 100 claims were filed against U.S. Silica. The
plaintiffs, who allege that they are employees or former employees of our
customers, claim that our silica products were defective or
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<PAGE>
that we acted negligently in selling our silica products without a warning, or
with an inadequate warning. The plaintiffs further claim that these alleged
defects or negligent actions caused them to suffer injuries and sustain damages
as a result of exposure to our products. In almost all cases, the injuries
alleged by the plaintiffs are silicosis or "mixed dust disease," a claim which
allows the plaintiffs to pursue litigation against the sellers of both
crystalline silica and other minerals. There are no pending claims of this
nature against any of our other subsidiaries.
As of March 1, 2000, there were an estimated 984 silica-related products
liability claims pending in which U.S. Silica is a defendant. Almost all of the
claims pending against U.S. Silica arise out of the alleged use of U.S. Silica
products in foundries or as an abrasive blast media and have been filed in the
states of Texas and Mississippi. Our financial liability to date for all
silica-related claims has not been material.
ITT Industries, successor to a former owner of U.S. Silica, has agreed to
indemnify U.S. Silica for third party silicosis claims (including litigation
expenses) filed against it prior to September 12, 2005 alleging exposure to
U.S. Silica products for the period prior to September 12, 1985, to the extent
of the alleged exposure prior to that date. This indemnity is subject to an
annual deductible of $275,000, which is cumulative and subject to carry-forward
adjustments. Pennsylvania Glass Sand Corporation, as a predecessor to U.S.
Silica, was a named insured on insurance policies issued to ITT Industries for
the period April 1, 1974 to September 12, 1985 and to U.S. Borax (another
former owner) for the period September 12, 1985 to December 31, 1985. We have
not sought coverage under these policies. Although we cannot provide any
assurance, coverage under these policies may be available to us. Ottawa Silica
Company (a predecessor that merged into U.S. Silica in 1987) had insurance
coverage on an occurrence basis prior to July 1, 1985.
Except as set forth above, U.S. Silica currently is not insured or
indemnified for product liability claims related to alleged silica exposure,
including for any exposure after January 1, 1986.
The silica-related litigation brought against us to date has not resulted in
any material liability to us. However, it is likely that we will continue to
have silica-related product liability claims filed against us, including claims
that allege silica exposure for periods after January 1, 1986. We cannot
guarantee or assure you that our current indemnity agreement with ITT
Industries (which currently expires in 2005 and in any event only covers
alleged exposure to U.S. Silica products for the period prior to September 12,
1985), or potential insurance coverage (which, in any event, only covers
periods prior to January 1, 1986) will be adequate to cover any amount for
which we may be found liable in such suits. Any such claims or inadequacies of
the ITT Industries indemnity or insurance coverage could have a material
adverse effect on us.
Government Regulation
Environmental Matters. We are subject to a variety of governmental
regulatory requirements relating to the environment, including those relating
to our handling of hazardous materials and air and wastewater emissions. Some
environmental laws impose substantial penalties for noncompliance, and others,
such as the federal Comprehensive Environmental Response, Compensation, and
Liability Act, impose strict, retroactive and joint and several liability upon
persons responsible for releases of hazardous substances.
We believe that we have all material environmental permits, that our
operations are in substantial compliance with applicable laws and that any
noncompliance is not likely to have a material adverse effect on us. Through
periodic self-audits, we continually evaluate whether we must take additional
steps to ensure compliance with existing environmental laws. However, if we
fail to comply with present and future environmental laws and regulations, we
could be subject to liabilities or our operations could be interrupted. In
addition, future environmental laws and regulations could
61
<PAGE>
restrict our ability to expand our facilities or extract our mineral deposits
or could require us to acquire costly equipment or to incur other significant
expenses in connection with our business. Although we believe we have made
sufficient capital expenditures to achieve substantial compliance with existing
environmental laws and regulations, future events, including changes in
environmental requirements and the costs associated with complying with any
such requirements, could have a material adverse effect on us.
We have taken a number of steps to minimize potential environmental
liabilities and address environmental activities in a pro-active manner,
including:
--performing regular environmental audits;
--performing Phase 1 environmental assessments on all of our properties in
1995, and prior to acquisition on all properties acquired after that time;
--removing all known underground storage tanks;
--replacing PCB-containing transformers with non-PCB transformers;
--entering into a national waste disposal contract that limits our waste
disposal liability; and
--developing and implementing an "environmental information management
system" to allow us to better track permits and compliance matters.
Some of our facilities have a long history of industrial operations. As
such, we may have liability for cleanup of contamination from historical
discharges of hazardous materials. For example, we may be required to remediate
groundwater contamination at our Rockwood, Michigan facility. Although the
contamination has not moved off of our site and has not affected drinking water
supplies, further action may be required by state authorities. Our Ottawa,
Illinois facility has trace levels of arsenic contamination in the groundwater
beneath the quarries. Studies show that there is no health risk to workers and
that the product is not contaminated. We believe that we have claims against
responsible third parties or have insurance coverage for these matters. We also
believe that, even assuming third-party or insurance recoveries are not
successful, all such remediation matters, individually or in the aggregate,
will not have a material adverse effect on us. We have identified other areas
of historic waste disposal on our properties. Historically, the waste, pallets,
bags, scrap metal and other wastes from the plant sites were dumped on certain
of our lands. The presence of the disposal areas has not materially impacted,
and is not expected to materially impact, our operations or otherwise have a
material adverse effect on us.
Regulation of Silica. The Occupational Safety and Health Administration
regulates work place exposure to crystalline silica at our customer locations
through a "permissible exposure level," commonly referred to as a PEL. OSHA has
designated crystalline silica as a priority for rulemaking and announced that
it will publish a Notice of Proposed Rule Making, or NPRM, on crystalline
silica in 2000. The NPRM is expected to propose a lower PEL for crystalline
silica. Although we are uncertain as to what OSHA will ultimately propose, it
is probable that a significantly lower PEL will be proposed for quartz, the
form of silica mined, processed and sold by us. However, we do not expect any
final OSHA rule on crystalline silica to be adopted until several years after
the NPRM is published.
The Mining Safety and Health Administration regulates occupational health
and safety matters for mining. Accordingly, MSHA regulates our quarries,
underground mines and industrial mineral processing facilities. The MSHA
"threshold limit value," or TLV, for crystalline silica as quartz is the same
as the current OSHA PEL. MSHA is expected to follow OSHA's actions regarding
the permissible limits of exposure to crystalline silica for mining.
The United States Environmental Protection Agency recently announced that it
would begin its review of crystalline silica in 1999 under its Integrated Risk
Information System ("IRIS") program.
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<PAGE>
Essentially, the EPA will conduct a risk assessment regarding the cancer and
non-cancer health effects of crystalline silica and possibly develop reference
concentrations for non-cancer health effects and unit risk factors for cancer
health effects. These reference concentrations and unit risk factors, if
developed, will be entered into the EPA IRIS database. In addition, several
states have considered, and a few have promulgated, regulations regarding
crystalline silica air emissions. For example, in Oklahoma and Texas,
crystalline silica is considered a toxic air contaminant. As such, these states
have established maximum allowable ambient concentrations, or MAACs, for
crystalline silica (quartz). Generally, these MAACs establish limits for
facility crystalline silica emissions, measured at the facility property line.
The IRIS initiative and state MAAC standards could result in lower permit
limits requiring costly equipment upgrades or operational restrictions.
In 1999, Massachusetts proposed that crystalline silica be defined as a
toxic for purposes of the state's toxic use reduction act program. The toxic
use reduction act program imposes fees on the use of toxic substances and
requires certain users of toxic substances to develop plans to reduce the use
of the toxic substance. California requires that a warning accompany any
chemical that the state has published as being known to cause cancer. "Silica,
crystalline (airborne particles of respirable size)" has been included as a
carcinogen under these criteria since 1988. These state programs may have the
effect of reducing our customers' demand for silica products.
We believe that we materially comply with governmental requirements for
crystalline silica exposure and emissions and other regulations relating to
silica and plan to continue to comply with these regulations. However, we
cannot assure you that we will be able to comply with any new standards that
are adopted or that these new standards will not have a material adverse effect
on us by requiring us to modify our operations or equipment or shut down some
of our plants. Additionally, we cannot assure you that our customers will be
able to comply with any new standards or that any of these new standards will
not have a material adverse effect on our customers by requiring them to shut
down old plants and to relocate plants to locations with less stringent
regulations that are further away from us. Accordingly, we cannot at this time
reasonably estimate our costs of compliance or the timing of any costs
associated with any new standards, or any material adverse effects that any new
standards will have on our customers and, consequently, on us.
Mining and Processing of Minerals. In addition to the regulatory matters
described above, the industrial minerals and aggregates industries are subject
to extensive governmental regulation on matters such as permitting and
licensing requirements, plant and wildlife protection, wetlands protection,
reclamation and restoration of mining properties after mining is completed, the
discharge of materials into the environment, surface subsidence from
underground mining and the effects that mining has on groundwater quality and
availability. Our future success depends upon the quantity of our industrial
minerals and aggregates deposits and our ability to extract these deposits
profitably. It is difficult for us to estimate quantities of recoverable
deposits, in part due to future permitting and licensing requirements. We
believe we have obtained all material permits and licenses required to conduct
our present mining operations. However, we will need additional permits and
renewals of permits in the future. We may be required to prepare and present to
governmental authorities data pertaining to the impact that any proposed
exploration or production activities may have upon the environment. New site
approval procedures may require the preparation of archaeological surveys,
endangered species studies and other studies to assess the environmental impact
of new sites. Compliance with these regulatory requirements is expensive,
requires an investment of funds well before the potential producer knows if its
operation will be economically successful and significantly lengthens the time
needed to develop a new site. Furthermore, obtaining or renewing required
permits is sometimes delayed or prevented due to community opposition and other
factors beyond our control. New legal requirements, including those related to
the protection of the environment, could be adopted that could materially
adversely affect our mining operations (including the ability to
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<PAGE>
extract mineral deposits), our cost structure or our customers' ability to use
our industrial minerals or aggregates products.
For most of our operations, state statutes and regulations or local
ordinances require that mine property be restored in accordance with specific
standards and an approved reclamation plan. We believe that we are making
adequate provisions for all expected reclamation and other costs relating to
expected mine closures in the reasonably foreseeable future. We believe that
future costs associated with reclamation provisions and mine closures will not
have a material adverse effect on us. Nevertheless, we could be adversely
affected if these provisions were later determined to be insufficient, or if
future costs associated with reclamation are significantly greater than our
current estimates.
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<PAGE>
MANAGEMENT
Directors and Executive Officers
The following table identifies members of the Board of Directors and the
executive officers of the issuer and USS Holdings, the issuer's indirect
parent.
<TABLE>
<CAPTION>
Name Age Title
- ---- --- -----
<S> <C> <C>
D. George Harris.......... 66 Chairman and Director
Anthony J. Petrocelli..... 62 Vice Chairman and Director
Richard E. Goodell........ 55 President, Chief Executive Officer and Director
Gary E. Bockrath.......... 47 Vice President and Chief Financial Officer
Craig S. Cinalli.......... 41 President of Better Materials Corporation
Richard J. Donahue........ 56 Vice President, Assistant Treasurer,
Assistant Secretary and Director
Donald G. Kilpatrick...... 45 Vice President and Secretary
Richard J. Nick........... 56 Vice President, Treasurer and Assistant Secretary
Richard J. Shearer........ 49 President of U.S. Silica Company
John A. Ulizio............ 44 Vice President and General Counsel
Arnold Chavkin............ 48 Director
Ruth Dreessen............. 44 Director
Timothy J. Walsh.......... 36 Director
</TABLE>
D. George Harris has been the Chairman and a director since 1996. Mr. Harris
has also been Chairman and a director of DGHA since 1989 and has served as an
officer or director of various affiliated companies, including Harris Chemical
Group, Inc., Harris Specialty Chemicals, Inc. and Penrice Pty Ltd. Mr. Harris
also serves as Chairman of the Shareholders Committee of Vestolit GmbH & Co.,
KG, a German manufacturer of polyvinylchloride and other chemicals. From 1987
through 1988, Mr. Harris was a Senior Advisor in the Investment Banking
Department of Robert Fleming & Co., Ltd. where he was involved in global
investment banking activities covering Europe, the Far East and the United
States. From 1981 through 1986, Mr. Harris was President of SCM Chemicals
(1981-1985) and SCM Corporation (1985-1986), a major producer of consumer and
industrial products. From 1975 through 1981, Mr. Harris was President of Rhone-
Poulenc Inc., Rhone-Poulenc's United States subsidiary. Mr. Harris is also a
director of McWhorter Technologies, Inc.
Anthony J. Petrocelli has been the Vice Chairman and a director since 1996.
Mr. Petrocelli was a co-founder of DGHA and has served as Vice Chairman of DGHA
since 1989. Mr. Petrocelli has served as an officer of various affiliated
companies, including Harris Chemical Group, Inc., Harris Specialty Chemicals,
Inc. and Penrice Pty Ltd. Mr. Petrocelli also serves as Vice Chairman of the
Shareholders Committee of Vestolit GmbH & Co., KG, a German manufacturer of
polyvinylchloride and other chemicals. From 1984 through 1986, Mr. Petrocelli
was the President of Crystal Greeting, Inc., a manufacturer and distributor of
greeting cards.
Richard E. Goodell has been the President and a director since 1996 and was
named Chief Executive Officer in 1999. He was appointed President of
Pennsylvania Glass Sand Corporation in 1985 and continued as President when
Pennsylvania Glass Sand was re-named U.S. Silica Company in 1986. Before
joining Pennsylvania Glass Sand in 1983 as Senior Vice President of Operations,
he worked in the mineral division of Pfizer (1971-1983) in various operating
and technical management positions and as an engineer at Sikorsky Aircraft
(1966-1971).
Gary E. Bockrath has been Senior Vice President of Finance of U.S. Silica
since 1993 and was named Vice President and Chief Financial Officer in 1999.
Previously, Mr. Bockrath was Vice
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<PAGE>
President and Assistant Treasurer from 1996 to 1999. Mr. Bockrath was group
controller at Libbey-Owens-Ford Company prior to joining U.S. Silica in 1993.
He served in several finance positions at Guardian Industries, Inc. from 1984
to 1990, Peabody International Corporation from 1976 to 1984 and GTE Service
Corporation from 1974 to 1976.
Craig S. Cinalli has been President and Chief Operating Officer of Better
Materials since 1989. Prior to that, Mr. Cinalli held various positions at
Better Materials since 1980.
Richard J. Donahue has been Vice President, Assistant Treasurer and
Assistant Secretary and a director since 1996. Mr. Donahue was a co-founder of
DGHA and has served as Managing Director since 1989. Mr. Donahue has also
served as an officer of various affiliated companies, including Harris Chemical
Group, Inc. and Harris Specialty Chemicals, Inc. Prior to joining DGHA, Mr.
Donahue was Vice President in the Corporate Finance Department of Robert
Fleming & Co., Ltd. from 1987 through 1988. From 1978 through 1986, he held a
series of financial and corporate development positions at SCM Corporation.
Donald G. Kilpatrick has been Vice President and Secretary since 1996. Since
1992, Mr. Kilpatrick has also been a Managing Director and General Counsel of
DGHA and has served as an officer of various affiliated companies, including
Harris Chemical Group, Inc. and Harris Specialty Chemicals, Inc. From 1981 to
1992, Mr. Kilpatrick was an attorney with Winthrop, Stimson, Putnam & Roberts,
where he was made a member of the firm in 1990. Mr. Kilpatrick is currently on
a leave of absence from Winthrop. Winthrop provides legal services to us on an
ongoing basis.
Richard J. Nick has been Vice President, Treasurer and Assistant Secretary
since 1996. Mr. Nick has also been a Managing Director of DGHA since 1989. From
1989 to 1998 Mr. Nick was an officer of various affiliated companies including
Harris Chemical Group, Inc. and Harris Specialty Chemicals, Inc. From 1987 to
1989, Mr. Nick was Vice President--Finance & Administration of Baltimore Spice,
Inc., a subsidiary of Hanson, plc.
Richard J. Shearer was named President of U.S. Silica in 1999. Previously,
Mr. Shearer was Executive Vice President of U.S. Silica from 1997 to 1999.
Before joining U.S. Silica in 1997, he held the position of Vice President,
General Manager at North American Chemical Company. Mr. Shearer previously held
various positions in sales, market management and operations for 16 years at
Union Carbide Corporation, rising to the position of Vice President--Unison
Division.
John A. Ulizio has been Vice President and General Counsel since 1996. Mr.
Ulizio joined U.S. Silica in 1991 as Associate General Counsel, was named
Secretary in 1994 and assumed the management of environmental, health and
safety matters in 1994. Prior to joining U.S. Silica, Mr. Ulizio was in private
practice in western Pennsylvania, concentrating in litigation, including the
defense of products liability cases asserted against sellers of silica-
containing materials.
Arnold Chavkin has been a director since 1996. He has been a General Partner
of CCP since 1992. Prior to joining CCP in 1992, Mr. Chavkin was a member of
Chemical Bank's merchant banking group and a generalist in its corporate
finance group specializing in mergers and acquisitions and private placements
for the energy industry.
Ruth Dreessen has been a director since 1996. She is also a Managing
Director of CSI. Ms. Dreessen joined The Chase Manhattan Corporation in 1980 in
its international department. Since 1987, Ms. Dreessen has primarily focused on
structuring leveraged chemical industry transactions. In 1994, Ms. Dreessen
opened the Houston office of Chase's Global Chemicals Group.
Timothy J. Walsh has been a director since 1998. He is also a partner with
CCP. Prior to joining CCP in 1996, Mr. Walsh worked for The Chase Manhattan
Corporation where he held positions in various industry-focused client teams in
North America. Mr. Walsh currently also serves on the board of directors of
MetoKote Holdings, Inc.
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Executive and Director Compensation
Executive Compensation. The following table sets forth information regarding
the annual compensation for services rendered to us during the fiscal years
ended December 31, 1999, 1998 and 1997 by our (i) chief executive officer and
(ii) four other most highly compensated executive officers (collectively, the
"Named Executive Officers").
Summary Compensation Table
<TABLE>
<CAPTION>
Long-term
Compensation
Annual Compensation Awards
--------------------------------- ----------------
All Other
Other Annual Compensation
Name and Principal Compensation Restricted Stock ($) (3) (4)
Position Year Salary ($) Bonus ($) ($) Award(s) ($) (2) (5)
- ------------------------ ---- ---------- --------- ------------ ---------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Richard E. Goodell...... 1999 $238,125 $196,685 -- $61,350 8,569
Chief Executive Officer 1998 215,700 94,512 -- -- 8,929
1997 271,250 149,188 -- -- 8,947
Richard J. Shearer...... 1999 $219,675 $123,018 -- $69,530 $ 19,244(6)
President 1998 196,200 78,480 $ 40,825(1) -- 14,479
(U.S. Silica Company) 1997 77,083 38,542 20,000(1) -- --
Craig S. Cinalli........ 1999 $175,000 $138,600 -- $24,540 $ 10,536(7)
President 1998 8,000 -- -- -- 165,000(8)
(Better Materials
Corporation) 1997 -- -- -- -- --
Lewis McM. Pettinos..... 1999 $186,624 $114,960 -- -- $ 720
Vice President 1998 76,958 55,241 -- -- --
(George F. Pettinos,
Inc.) 1997 -- -- -- -- --
Brian Hessenthaler...... 1999 $175,000 $123,200 -- $24,540 $ 1,051
Senior Vice President 1998 8,000 -- -- -- 165,000(8)
(Better Materials
Corporation) 1997 -- -- -- -- --
</TABLE>
- --------
(1) Reflects payment by Better Minerals & Aggregates of expenses for
relocation.
(2) As of December 31, 1999, outstanding shares of restricted stock held by the
Named Executive Officers were as follows: Mr. Goodell, 15,000 shares; Mr.
Shearer, 17,000 shares; Mr. Cinalli, 6,000 shares; and Mr. Hessenthaler,
6,000 shares.
(3) Includes Life Insurance premiums paid by us on behalf of the Named
Executive Officers for 1999 as follows: Mr. Goodell, $1,770; Mr. Shearer,
$660; Mr. Cinalli, $60; and Mr. Hessenthaler, $57.
(4) Includes matching contributions by Better Minerals & Aggregates to the U.S.
Silica Company Retirement Savings and Investment Plan for Salaried
Employees on behalf of the Named Executive Officers for 1999 as follows:
Mr. Goodell, $6,799; and Mr. Shearer, $9,292.
(5) Includes imputed income from the personal use of a company-owned vehicle in
1999 for each of the Named Executive Officers as follows: Mr. Cinalli,
$876; Mr. Hessenthaler, $994; and Mr. Pettinos, $720.
(6) Includes maximum annual contributions by Better Minerals & Aggregates for
1999 in the amount of $6,400 to the U.S. Silica Company Retirement Savings
and Investment Plan for Salaried Employees on behalf of Mr. Shearer. In
addition, includes a contribution by Better Minerals & Aggregates in the
amount of $2,892 under the U.S. Silica Company Deferred Compensation Plan
for 1999 (which is designed to make up for benefits not payable under the
U.S. Silica Company Retirement Savings and Investment Plan for Salaried
Employees due to Internal Revenue Code limitations) on behalf of Mr.
Shearer.
(7) Includes imputed income from the personal use of a company-owned residence
in 1999 by Mr. Cinalli in the amount of $9,600.
(8) In December 1998, Mr. Cinalli and Mr. Hessenthaler each entered into an
employment agreement with the Company that provided for a one-time signing
bonus of $165,000.
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U.S. Silica Company Retirement Plan for Salaried Employees
<TABLE>
<CAPTION>
Years of Service
-------------------------------------------------------------------
Remuneration 15 20 25 30 35
- ------------ ------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$125,000 $29,100 $ 38,800 $ 48,400 $ 58,100 $ 67,800
150,000 35,400 47,200 59,000 70,700 82,500
175,000 41,700 55,600 69,500 83,400 97,200
200,000 48,000 64,000 80,000 96,000 112,000
225,000 54,300 72,400 90,500 108,600 126,700
250,000 60,600 80,800 101,000 121,200 141,400
300,000 73,200 97,600 122,000 146,400 170,800
400,000 98,400 131,300 164,100 196,900 229,700
</TABLE>
At December 31, 1999, credited Years of Service under the U.S. Silica
Company Retirement Plan for Salaried Employees (the "Retirement Plan") for Mr.
Goodell, the only Named Executive Officer who participates, were 18 years. The
compensation covered by the Retirement Plan includes the amount listed in the
salary column of the Summary Compensation Table only. The estimated annual
retirement benefit indicated in the Retirement Plan table includes enhanced
pension provisions under the U.S. Silica Company Pension Restoration Plan,
which is an unfunded plan providing benefits to participants in the Retirement
Plan that are not payable under the Retirement Plan because of the limitations
stipulated by the Internal Revenue Code. Estimated benefits set forth in the
Retirement Plan table were calculated on the basis of a single life annuity.
Annual benefits payable under the Retirement Plan are not offset by any amount.
Better Materials Corporation Pension Plan
<TABLE>
<CAPTION>
Years of Service
-----------------------------------------------------------------------
Remuneration 15 20 25 30 35
- ------------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
$125,000 $18,710 $24,947 $31,183 $37,420 $43,657
150,000 23,142 30,857 38,571 46,285 53,999
175,000 27,120 36,160 45,199 54,239 63,279
200,000 27,749 36,998 46,248 55,497 64,747
</TABLE>
At December 31, 1999, credited Years of Service under the Better Materials
Corporation Pension Plan ("BMC Plan") for Mr. Cinalli was 19 years and Mr.
Hessenthaler was 15 years. The compensation covered under the BMC Plan includes
total cash remuneration paid to the Named Executive Officer. Estimated benefits
set forth in the BMC Plan table were calculated on the basis of a single life
annuity, and are not offset by any amount.
Employment Agreements. In December 1998, Better Materials Corporation
entered into substantially similar employment agreements with each of Messrs.
Cinalli and Hessenthaler. The employment agreements each provide for a two-year
term at a base salary of $175,000 per year, plus a performance-based bonus, a
signing bonus of $165,000, eligibility for a grant of restricted stock, and the
use of a company-owned vehicle. Under his agreement, Mr. Cinalli is also
entitled to live in a company-owned residence. These agreements provide for
termination of employment upon disability, death or cause, as defined in the
agreements. Better Materials Corporation may terminate the executive's
employment for any reason other than "cause" with thirty days' prior written
notice. If Better Materials Corporation terminates the executive without cause,
the executive is entitled to severance in the amount of two years'
compensation. The executives are subject to confidentiality and non-compete
covenants contained in their agreements.
Director Compensation. Members of our Board of Directors are not compensated
for their services as directors, but may be reimbursed for actual expenses
incurred in attending meetings of the Board of Directors or committees thereof.
68
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Loans to Stockholders to Purchase Series B Preferred Stock
In 1996, our indirect parent, USS Holdings, made loans to certain of its
management stockholders in order to finance their purchase of USS Holdings'
Series B preferred stock. The loans are evidenced by promissory notes that
accrue interest at 7% per annum payable quarterly, and are collateralized by
the stock. Loans outstanding as of December 31, 1999 were approximately
$449,000.
New Credit Facilities and Old Notes
CSI is syndication agent, book manager, lead arranger and documentation
agent under the new credit facilities, and The Chase Manhattan Bank, an
affiliate of CSI, is a lender under the new credit facilities. CSI was an
initial purchaser of the old notes and both CSI and The Chase Manhattan Bank
are affiliates of CCP. Certain other affiliates of CCP that own a majority of
the outstanding preferred stock of USS Holdings have the right under the
stockholders agreement to appoint three directors of USS Holdings. See
"Security Ownership of Certain Beneficial Owners and Management." Arnold
Chavkin, one of our directors, is also a general partner of CCP. Ruth Dreessen,
one of our directors, is also a managing director of CSI. Timothy J. Walsh, one
of our directors, is also a partner with CCP.
Management Services Agreement
Pursuant to an agreement among the issuer, USS Holdings, BMAC Holdings and
DGHA, DGHA (the principals of which are stockholders of USS Holdings) provides
management advisory services to us from time to time. In consideration of these
management services, we have agreed to pay an annual management fee to DGHA.
The base annual fee is $500,000 but is adjusted based on the amount that our
actual EBITDA (as defined in the agreement) for a fiscal year exceeds or falls
short of a budgeted EBITDA for that fiscal year. Pursuant to the agreement, the
budgeted EBITDA for a fiscal year and the amount of the fee are adjusted for
acquisitions approved by the stockholders as provided in the stockholders
agreement or any disposition of stock or assets. We estimate that we will pay
approximately $955,000 to DGHA as the annual management fee in 2000. The
agreement provides that in the event of a business acquisition by us, we will
pay DGHA an acquisition fee equal to 1% of the total purchase price of the
acquisition, including all third party indebtedness assumed by us in connection
with the acquisition.
The agreement also provides that, at DGHA's request, U.S. Silica is
obligated to provide DGHA with one or more interest-free loans not exceeding an
aggregate of $1.0 million in any calendar year. As of the date of this
prospectus, a loan of $1.0 million is currently outstanding. This loan is
guaranteed by D. George Harris, Anthony J. Petrocelli, Richard J. Donahue,
Donald G. Kilpatrick and Richard J. Nick. Finally, pursuant to the agreement,
the other companies party to the agreement will reimburse DGHA for all
transaction expenses incurred in relation to completed acquisitions; those
companies will also reimburse DGHA for other expenses incurred relating to
company business up to $100,000 in any calendar year. The agreement initially
terminates on December 31, 2000, but shall be automatically extended unless
terminated (i) by USS Holdings or DGHA upon nine months' prior written notice,
(ii) upon certain events of sale, merger, change of stock ownership or
appointment of additional directors or (iii) at the option of USS Holdings if
neither Messrs. Harris or Petrocelli is actively involved in the management of
DGHA.
We paid approximately $877,000 in management fees and $672,000 in
acquisition fees for the year ended December 31, 1999 under this agreement.
Additionally, $1,040,000 in accrued acquisition fees relating to Commercial
Stone were unpaid as of December 31, 1999.
69
<PAGE>
Tax Sharing Agreement
Pursuant to a tax sharing agreement, USS Holdings has agreed to file
consolidated federal income tax returns (and in certain circumstances, state
and local income tax returns) with the issuer and its domestic subsidiaries.
Under this agreement, the issuer has agreed to pay USS Holdings amounts
designed to approximate the amount of income tax that the issuer and its
domestic subsidiaries would have paid had the issuer filed consolidated federal
income tax returns (and, if applicable, state and local income tax returns)
separate from USS Holdings.
70
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership
All of our outstanding capital stock is owned by BMAC Holdings, which in
turn is wholly owned by USS Holdings. On the closing date, in connection with
the initial portion of the cash equity contribution, USS Holdings issued 15,000
shares of Series D preferred stock, 135,350 shares of Class A common stock,
365,903 shares of Class B common stock, warrants to purchase 97,480 shares of
Class B common stock and warrants to purchase 14,298 shares of Class C common
stock, for an aggregate purchase price of $35.0 million principally to certain
existing stockholders consisting of an affiliate of CCP, affiliates of
Massachusetts Mutual Life Insurance Company and certain principals of DGHA.
In connection with the initial portion of the cash equity contribution, the
right of first refusal set forth in the stockholders agreement was waived by
the necessary holders of USS Holdings' capital stock under the stockholders
agreement. However, USS Holdings offered to those stockholders who were not
offered the opportunity to purchase additional equity on the closing date the
right to purchase, pro rata based on each such stockholder's equity ownership
immediately prior to the closing date, up to an aggregate of 89,737 shares of
Class A common stock, 2,685 shares of Series D preferred stock, warrants to
purchase up to 17,452 shares of Class B common stock and warrants to purchase
up to 2,551 shares of Class C common stock after the closing date. Depending on
the results of the additional offering, stockholders who purchased Series D
preferred stock on the closing date will receive on a pro rata basis additional
warrants to purchase Class B common stock. Any shares not purchased in the
additional offering will not be issued or reoffered. All purchasers of common
and preferred stock and warrants to purchase common stock pursuant to the cash
equity contribution are subject to the terms of the stockholders agreement.
The following table sets forth, to the best of our knowledge, certain
information regarding the ownership of the capital stock of USS Holdings as of
March 1, 2000 after giving effect to the cash equity contribution with respect
to the following: (i) each person known by us to own beneficially more than 5%
of the outstanding shares of any class of capital stock of USS Holdings; (ii)
each of our directors; (iii) each of the named executive officers set forth in
the table under "Management--Executive and Director Compensation--Executive
Compensation"; and (iv) all of our directors and executive officers as a group.
71
<PAGE>
Except as otherwise indicated, each person listed in the following table has
sole voting and investment power with respect to the shares listed opposite
that person's name.
<TABLE>
<CAPTION>
Percentage of
Beneficial Owners(1) Shares of Common Stock Common Stock(2)*
-------------------- -------------------------------- -----------------------
Class A(3) Class B(4) Class C(5) Class A Class B Class C
---------- ---------- ---------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Chase Manhattan Capital,
L.P.(9)(10)............ 0 340,069 8,800 ** 79.8% 2.3%
Massachusetts Mutual
Life Insurance
Company(11)............ 0 104,211 2,697 ** 27.1% **
D. George Harris(12).... 124,653 8,186 42,291 24.9% 2.2% 11.1%
Anthony J.
Petrocelli(13)(15)..... 73,222 5,184 41,850 14.6% 1.4% 11.0%
Richard E. Goodell...... 6,640 0 15,000 1.3% ** 3.9%
Richard J. Donahue...... 65,972 1,950 41,376 13.7% ** 10.8%
Richard J. Shearer...... 1,059 0 17,000 ** ** 4.5%
Craig S. Cinalli........ 2000 0 6,000 0.4% ** 1.6%
Brian Hessenthaler...... 2000 0 6,000 0.4% ** 1.6%
Lewis McM. Pettinos..... 0 0 0 ** ** **
Richard J. Nick(15)..... 34,161 1,744 41,346 6.8% ** 10.8%
Donald G.
Kilpatrick(13)......... 50,962 0 41,090 10.2% ** 10.8%
Arnold Chavkin(10)(14).. 0 0 0 ** ** **
Ruth Dreessen........... 0 0 0 ** ** **
Timothy J.
Walsh(10)(14).......... 0 0 0 ** ** **
All directors and
officers as a group (13
persons) (10)(12)(14).. 386,317 17,064 269,748 77.2% 4.5% 70.3%
</TABLE>
<TABLE>
<CAPTION>
Percentage of
Beneficial Owners(1) Shares of Preferred Stock Preferred Stock(2)*
-------------------- ----------------------------------- --------------------------
Series A(6) Series B(7) Series D(8) Series A Series B Series D
----------- ----------- ----------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Chase Manhattan Capital,
L.P.(9)(10)............ 678,035 1,356,070 9,232 74.2% 66.9% 61.5%
Massachusetts Mutual
Life Insurance
Company(11)............ 207,778 415,556 2,829 22.4% 20.2% 18.9%
D. George Harris(12).... 15,268 57,495 1,260 1.7% 2.9% 8.4%
Anthony J.
Petrocelli(13)......... 9,035 27,070 780 1.0% 1.4% 5.2%
Richard E. Goodell...... 0 20,000 0 ** 1.0% **
Richard J. Donahue...... 1,104 16,291 300 ** ** 2.0%
Richard J. Shearer...... 596 1,775 0 ** ** **
Craig S. Cinalli........ 0 0 0 ** ** **
Brian Hessenthaler...... 0 0 0 ** ** **
Lewis McM. Pettinos..... 0 0 0 ** ** **
Richard J. Nick......... 3,312 16,874 268 ** ** 1.8%
Donald G.
Kilpatrick(13)......... 1,534 9,422 0 ** ** **
Arnold Chavkin(10)(14).. 0 0 0 ** ** **
Ruth Dreessen........... 0 0 0 ** ** **
Timothy J.
Walsh(10)(14).......... 0 0 0 ** ** **
All directors and
officers as a group (13
persons)
(10)(12)(14)........... 30,849 168,927 2,608 3.4% 8.4% 17.4%
</TABLE>
- --------
* All share percentages assume that each respective beneficial owner, and
only that owner, has exercised its warrants to purchase shares of preferred
stock or common stock, as the case may be, of USS Holdings, if any. The
preferred stock warrants were issued in connection with the issuance of
subordinated debt in February 1996. The common stock warrants were issued
in connection with the cash equity contribution in October 1999.
** Less than 1%.
(1) The address of Chase Manhattan Capital, L.P. and its affiliates referred
to in note (9) below is c/o Chase Capital Partners, 380 Madison Avenue,
12th Floor, New York, New York 10017. The address of Massachusetts Mutual
Life Insurance Company and its affiliates is 1295 State Street,
Springfield, Massachusetts 01111. The address of each other person is c/o
D. George Harris & Associates, Inc., 399 Park Avenue, 32nd Floor, New
York, New York 10022.
(2) Notwithstanding the enumerated percentage shares of beneficial ownership
of common and preferred stock, a stockholders agreement dated as of
February 9, 1996, as amended (the "stockholders agreement"), among all of
the stockholders of USS Holdings (the "Stockholders") governs the
Stockholders' exercise of their voting rights with respect to election of
directors and certain other material events. The parties to the
stockholders agreement have agreed to vote their shares of USS Holdings to
elect the Board of Directors as set forth therein. See "--The Stockholders
Agreement."
72
<PAGE>
(3) Holders of Class A common stock are entitled to one vote with respect to
all matters to be voted on by USS Holdings' Stockholders for each share of
Class A common stock held, subject to the stockholders agreement.
(4) Holders of Class B common stock, except as otherwise required by law, have
no voting rights. The Class B common stock will automatically be converted
into shares of Class A common stock on a one-for-one basis at the time of
a trigger event or an event of conversion. A "trigger event" is defined in
the stockholders agreement as (i) a default under certain debt documents
or a failure to achieve a designated level of EBITDA (as defined in the
stockholders agreement), (ii) after February 9, 2000, the passage of 180
days after CMCLP (as defined in note (9)) has exercised its right to
demand a sale of USS Holdings and the failure of the principals of DGHA to
sell USS Holdings or purchase the shares of the Institutional Stockholders
(as defined below) or (iii) both D. George Harris and Anthony J.
Petrocelli no longer serving on the USS Holdings' Board of Directors due
to death, disability or resignation. An "event of conversion" is defined
in the stockholders agreement as (i) the consummation of an initial public
offering resulting in net proceeds to USS Holdings and/or any selling
stockholders of not less than $30 million or (ii) the conversion of more
than 50% of the Series B preferred stock originally issued. CB Capital (as
defined in note 9) and certain DGHA principals, so long as they hold at
least 50% of the then outstanding shares of the Class B common stock and
Class C common stock issued or issuable upon exercise of the Class B and
Class C common stock purchase warrants and Mass Mutual, so long as it
holds at least 50% of the then outstanding Class B common stock and Class
C common stock issued or issuable upon exercise of the Class B and Class C
common stock purchase warrants held by Mass Mutual, have the right to
require USS Holdings to purchase all (but not less than all) of the Class
B and Class C common stock purchase warrants and shares issued upon
exercise of such warrants held by such holder or holders at any time after
October 1, 2004 and prior to a sale, public offering of common stock or
liquidation of USS Holdings. Upon the exercise of those put rights, if USS
Holdings cannot obtain the consents from third parties necessary to
purchase those shares after using reasonable efforts, USS Holdings will be
released from its obligation to purchase the warrants. At any time after
October 1, 2005, USS Holdings has the right to purchase all (but not less
than all) of the warrants to purchase shares of Class B common stock held
by CB Capital, Mass Mutual and certain DGHA principals.
(5) Holders of Class C common stock are entitled to one vote with respect to
all matters to be voted on by USS Holdings' stockholders for each share of
Class C common stock held, subject to the stockholders agreement. Those
shares are subject to repurchase by USS Holdings in certain circumstances
upon the occurrence of certain liquidity events, including the sale of all
or substantially all of the assets of USS Holdings and its subsidiaries, a
merger of USS Holdings or any subsidiary and a sale of USS Holdings and
upon the occurrence of certain termination events, including death,
disability, retirement or termination of employment. The total number of
shares of Class C common stock issuable under the warrants will be reduced
by the number of shares of Class C common stock which did not vest and/or
which are repurchased in accordance with the terms of the restricted stock
purchase agreements pursuant to which the shares of Class C common stock
are issued. CB Capital (as defined in note 9) and certain DGHA principals,
so long as they hold at least 50% of the then outstanding shares of the
Class B common stock and Class C common stock issued or issuable upon
exercise of the Class B and Class C common stock purchase warrants and
Mass Mutual, so long as it holds at least 50% of the then outstanding
Class B common stock and Class C common stock issued or issuable upon
exercise of the Class B and Class C common stock purchase warrants held by
Mass Mutual, have the right to require USS Holdings to purchase all (but
not less than all) of the Class B and Class C common stock purchase
warrants and shares issued upon exercise of such warrants held by such
holder or holders at any time after October 1, 2004 and prior to a sale,
public offering of common stock or liquidation of USS Holdings. Upon the
exercise of those put rights, if USS Holdings cannot obtain the consents
from third parties necessary to purchase those shares after using
reasonable efforts, USS Holdings will be released from its obligation to
purchase the warrants. At any time after October 1, 2005, USS Holdings has
the right to purchase all (but not less than all) of the warrants to
purchase shares of Class C common stock held by CB Capital, Mass Mutual
and certain DGHA principals.
(6) Holders of Series A preferred stock, except as otherwise required by law,
have no voting rights, except in the event that there is a proposal to
amend the terms of the Series A preferred stock so as to affect it
adversely or a proposal to authorize or issue (i) any equity or
convertible debt securities or (ii) certain rights to purchase equity or
convertible debt securities, in either case ranking equal or superior to
the Series A preferred stock (with certain exceptions), which shall then
require the consent of the holders of two-thirds of the outstanding shares
of Series A preferred stock. Holders of more than 50% of the Series B
preferred stock originally issued have the right to require USS Holdings
to purchase all (but not less than all) of the shares of Series A
preferred stock and warrants to purchase Series A preferred stock held by
CVCA (as defined in note (9)) and Mass Mutual (as defined in note (11)) at
any time after October 1, 2004 and prior to a sale, public offering of
common stock or liquidation of USS Holdings. Upon the exercise of those
put rights, if USS Holdings cannot obtain the consents from third parties
necessary to purchase those shares and warrants after using reasonable
efforts, USS Holdings will be released from its obligation to purchase the
shares and warrants. At any time after October 1, 2005, USS Holdings has
the right to purchase all (but not less than all) of the Series A
preferred stock held by CVCA and Mass Mutual.
(7) Holders of Series B preferred stock shall not, prior to the occurrence of
a "trigger event" (as defined in note (4) above), have any voting rights,
except as otherwise required by law and except in the event of a proposal
to authorize or issue additional shares of Series B preferred stock or
change the preferences, rights or powers of the Series B preferred stock
so as to affect it adversely, which shall then require the consent of the
holders of a majority of the outstanding shares of Series B preferred
stock. After a trigger event, the holders of Series B preferred stock
shall vote, together with the
73
<PAGE>
holders of Class A common stock, as one class, with each share of Series B
preferred stock entitling its holder to that number of votes equal to the
number of shares of common stock issuable upon conversion thereof (currently
one share of Class B common stock for each share of Series B preferred stock
(subject to adjustment)) on the date of any such vote, subject to the
Stockholders Agreement. Holders of more than 50% of the Series B preferred
stock originally issued have the right to require USS Holdings to purchase all
(but not less than all) of the shares of Series B preferred stock and warrants
to purchase Series B preferred stock held by CVCA (as defined in note (9)) and
Mass Mutual (as defined in note (11)) at any time after October 1, 2004 and
prior to a sale, public offering of common stock or liquidation of USS
Holdings. Upon the exercise of those put rights, if USS Holdings cannot obtain
the consents from third parties necessary to purchase those shares and
warrants after using reasonable efforts, USS Holdings will be released from
its obligation to purchase the shares and warrants. At any time after October
1, 2005, USS Holdings has the right to purchase all (but not less than all) of
the Series B preferred stock held by CVCA and Mass Mutual. The Series B
preferred stock will automatically be converted into an equal number of shares
of Class B common stock (before a trigger event) or Class A common stock
(after a trigger event) upon an event of conversion (as defined in note (4)
above). Moreover, any holder of the Series B preferred stock can at any time
and from time to time convert all or a portion of his Series B preferred stock
into an equal number of shares of Class B common stock (before a trigger
event) or Class A common stock (after a trigger event).
(8) Holders of Series D preferred stock, except as otherwise required by law,
have no voting rights, except in the event there is a proposal to amend
the terms of the Series D preferred stock so as to affect it adversely or
a proposal to authorize or issue (i) any equity or convertible debt
securities or (ii) certain rights to purchase equity or convertible debt
securities, in either case ranking equal or superior to the Series D
preferred stock, which shall then require the consent of the holders of a
majority of the outstanding shares of Series D preferred stock.
(9) Includes (i) 664,146 shares of Series A preferred stock and 1,328,292
shares of Series B preferred stock owned by Chase Manhattan Capital, L.P.
("CMCLP"), a Delaware limited partnership, the general partner of which
is Chase Manhattan Capital Corporation ("CMCC"), (ii) 13,889 shares of
Series A preferred stock and 27,778 shares of Series B preferred stock
issuable upon exercise of preferred stock warrants owned by Chase Venture
Capital Associates, L.P. ("CVCA"), a California limited partnership, the
general partner of which is CCP and (iii) 9,232 shares of Series D
preferred stock, 280,076 shares of Class B common stock and 59,993 shares
of Class B common stock issuable upon the exercise of common stock
warrants and 8,800 shares of Class C Common Stock issuable upon exercise
of common stock purchase warrants owned by CB Capital Investors, L.P.
("CB Capital"), an affiliate of CMCLP and CVCA. Each of CMCLP, CMCC,
CVCA, CB Capital and CCP may be deemed the beneficial owner of the
foregoing shares. CMCLP, CVCA and CB Capital are licensed small business
investment companies (an "SBIC") and as such are subject to certain
restrictions imposed upon SBICs by the regulations established and
enforced by the United States Small Business Administration. Among these
restrictions are certain limitations on the extent to which an SBIC may
exercise control over companies in which it invests.
(10) Messrs. Chavkin and Walsh may be deemed the beneficial owners of the
shares of common stock and preferred stock and warrants to purchase
preferred and common stock referred to in note (9) above given their
positions as a general partner and partner, respectively, of CCP.
(11) Includes (i) 180,000 shares of Series A preferred stock and warrants to
purchase 27,778 shares of Series A preferred stock, (ii) 360,000 shares
of Series B preferred stock and warrants to purchase 55,556 shares of
Series B preferred stock (iii) 2,829 shares of Series D preferred stock,
(iv) 85,827 shares of Class B common stock, (v) warrants to purchase
18,384 shares of Class B common stock issuable upon exercise of common
stock purchase warrants and (vi) 2,697 shares of Class C common stock
issuable upon exercise of common stock purchase warrants owned by
Massachusetts Mutual Life Insurance Company, MassMutual Participation
Investors, MassMutual Corporate Investors and Gerlach & Co (collectively,
"Mass Mutual").
(12) Does not include 18,092 shares of Class A common stock, 938 shares of
Series A preferred stock, 20,647 shares of Series B preferred stock, 219
shares of Series D preferred stock, 1,421 shares of Class B common stock
issuable upon exercise of common stock purchase warrants and 208 shares
of Class C common stock issuable upon exercise of common stock purchase
warrants held in two trusts over which Mr. Harris, as co-trustee, shares
voting control and investment control.
(13) Does not include 22,025 shares of Class A common stock, 13,500 shares of
Series B preferred stock, 95 shares of Series D preferred stock, 619
shares of Class B common stock issuable upon exercise of common stock
purchase warrants and 91 shares of Class C common stock issuable upon
exercise of common stock purchase warrants held in fourteen trusts over
which Messrs. Petrocelli and Kilpatrick, as co-trustees, share voting
control and investment control.
(14) Does not include the shares of common stock and preferred stock and
warrants to purchase preferred and common stock referred to in note (9)
above.
(15) Does not include 750 shares of Class A Common held in two trusts over
which Messrs. Nick and Petrocelli as co-trustees share voting control and
investment control.
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<PAGE>
The Stockholders Agreement
The stockholders agreement governs the holders' exercise of their voting
rights with respect to election of directors and certain other material events.
The parties to the agreement have agreed to vote their shares of USS Holdings
to elect (i) for as long as Mr. Harris owns 50% or more of the securities of
USS Holdings (subject to certain exceptions set forth in the agreement) held by
him on February 9, 1996 (the date of the U.S. Silica acquisition), two
directors designated by Mr. Harris, including himself; (ii) for as long as Mr.
Petrocelli owns 50% or more of the securities of USS Holdings (subject to
certain exceptions set forth in the agreement) held by him on February 9, 1996,
one director designated by Mr. Petrocelli, and (iii) three directors designated
by a majority of the institutional stockholders party to the stockholders
agreement (the "Institutional Stockholders"). CMCLP currently owns 76.5% of the
stock owned by the Institutional Stockholders. For so long as each shall be a
director, Mr. Harris will always be elected as Chairman of the board, and Mr.
Petrocelli will always be elected as the Vice Chairman of the board. The
President of USS Holdings is also a director. Upon a trigger event, a majority
of the Institutional Stockholders have the right to designate two additional
directors, thus enabling them to choose the majority of directors serving on
the board.
The provisions of the stockholders agreement also govern:
--restrictions on certain actions by USS Holdings and its subsidiaries
without the consent of (i) prior to the occurrence of a trigger event, a
majority of the Institutional Stockholders and the DGHA Stockholders (as
defined in the stockholders agreement), and (ii) after the occurrence of a
trigger event, a majority of the Institutional Stockholders only,
including, among other things: the consummation of a public offering; the
issuance of certain equity securities; the merger or consolidation with or
into another entity; the acquisition of another entity; certain sales of
assets; the liquidation or reorganization of USS Holdings; and the
incurrence of certain debt;
--stockholder rights of first refusal to purchase certain capital stock or
equity securities to be issued by USS Holdings;
--USS Holdings' and stockholder rights of first offer to purchase certain
shares of USS Holdings to be sold by stockholders;
--USS Holdings' and stockholder rights to purchase, and stockholder rights
to sell, certain shares of USS Holdings held by stockholders in certain
instances (including a person's termination of employment);
--rights of certain stockholders to cause all of the other stockholders to
sell stock in connection with the sale of USS Holdings; and
--rights of certain stockholders to participate in certain sales of the
shares of USS Holdings by other stockholders.
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<PAGE>
DESCRIPTION OF THE NEW CREDIT FACILITIES
The following summary of the new credit facilities is qualified in its
entirety by reference to the complete text of the facilities themselves and all
ancillary documents, copies of which will be available upon request.
General
On the closing date we entered into the new credit facilities, consisting of
the $45.0 million tranche A term loan facility, the $95.0 million tranche B
term loan facility, the $50.0 million revolving credit facility and the $40.0
million acquisition term loan facility. CSI, one of the initial purchasers of
the old notes, is syndication agent, book manager, lead arranger and
documentation agent. Banque Nationale de Paris, an affiliate of the other
initial purchaser of the old notes, is administrative agent, collateral agent
and a lender. The Chase Manhattan Bank, an affiliate of CSI, is also a lender.
On the closing date, we borrowed the full amount of the term loans
(including a portion of the tranche A term loan facility denominated in
Canadian dollars in an amount equal to $2.0 million borrowed by George F.
Pettinos (Canada) Limited). Our borrowings under the new credit facilities were
used, together with the proceeds of the offering of the old notes and the cash
equity contribution, to (i) finance the Commercial Stone acquisition, (ii)
repay certain debt and (iii) pay related fees and expenses. The Canadian
tranche of the tranche A term loan facility was repaid in connection with our
sale of George F. Pettinos (Canada) Limited on February 29, 2000.
Availability under the new credit facilities is subject to various
conditions precedent typical of bank loans, and the commitment of the lenders
to provide financing under the new credit facilities is also subject to, among
other things, the absence of any event, condition or circumstance that has had
or is reasonably expected to have a material adverse effect on our business
operations, properties, assets or financial condition, taken as a whole.
Term Loans
Excluding the Canadian tranche, which was retired on February 29, 2000, the
tranche A term loan facility will mature six years after the closing date and
amortize as follows: $1.20 million per quarter for the first two quarters
commencing with the quarter ending June 30, 2000, $1.55 million per quarter for
the following four quarters and $2.15 million per quarter for the last sixteen
quarters.
The tranche B term loan facility will mature eight years after the closing
date and amortize as follows: $0.25 million per quarter for the first four
quarters commencing with the quarter ending December 31, 1999, $0.5 million per
quarter for the following twenty quarters, $9.0 million per quarter for the
following four quarters and $12.0 million per quarter for the last four
quarters.
Amounts repaid or prepaid under the term loans will not be permitted to be
reborrowed.
Revolving Credit Facility
The revolving credit facility will mature six years after the closing date
and include sublimits of $12.0 million and $3.0 million, respectively, for
letters of credit and swingline loans. Amounts repaid under the revolving
credit facility may be reborrowed. We are using the proceeds of the revolving
credit facility for general corporate purposes, including working capital and
capital expenditures, but excluding acquisitions.
Acquisition Term Loan Facility
The acquisition term loan facility will mature six years after the closing
date and amortize in quarterly installments after the third anniversary of the
closing date.
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The acquisition term loan facility is available for three years after the
closing date, during which we may make no more than three borrowings. Each
borrowing is conditioned on, among other things, our leverage ratio (after
giving effect to that borrowing and the relevant acquisition) not exceeding
5.00 to 1.00. Amounts repaid under the acquisition term loan facility will not
be permitted to be reborrowed.
Guarantees and Security
Our obligations under the new credit facilities are unconditionally and
irrevocably guaranteed, jointly and severally, by BMAC Holdings and each of the
issuer's existing and subsequently acquired or organized domestic subsidiaries.
The new credit facilities are secured by liens on substantially all the assets
of BMAC Holdings, the issuer and each of the issuer's existing and subsequently
acquired or organized domestic subsidiaries, including but not limited to, and
subject to customary exceptions, the following:
--a first priority pledge of all the capital stock of the issuer;
--a first priority pledge of all the capital stock held by BMAC Holdings,
the issuer and each existing or subsequently acquired or organized
domestic subsidiary of the issuer in each existing or subsequently
acquired or organized domestic subsidiary of the issuer and 65% of the
capital stock held by those entities in that existing or subsequently
acquired or organized foreign subsidiary of the issuer; and
--perfected first-priority security interests in substantially all of the
tangible and intangible assets (including, but not limited to, accounts
receivable, inventory, trademarks, other intellectual property, licensing
agreements, real property, leasehold mortgages, cash and proceeds of the
foregoing) held by BMAC Holdings, the issuer and each of the issuer's
existing or subsequently acquired or organized domestic subsidiaries.
Interest Rates
Indebtedness under the tranche A term loan facility, the acquisition term
loan facility and the revolving credit facility bears interest at an adjusted
London inter-bank offered rate ("LIBOR") plus 3.00% or the higher of Banque
Nationale de Paris' prime rate and the Federal Funds effective rate plus 0.50%
("ABR") plus 2.00%, to be selected at our option and subject to increase or
reduction based on our leverage ratio.
Indebtedness under the tranche B term loan facility bears interest at LIBOR
plus 3.50% or ABR plus 2.50%, to be selected at our option.
Amounts outstanding under the new credit facilities not paid when due bear
interest at a default rate equal to 2.00% above the rates otherwise applicable
to the loans under the new credit facilities.
Fees
We have paid or are currently paying (i) commitment fees of 0.75% and 0.50%
per annum on the undrawn portion of the commitments in respect of the
acquisition term loan facility and the revolving credit facility, respectively,
subject to reduction based on our leverage ratio; (ii) letter of credit fees on
the aggregate face amount of outstanding letters of credit equal to the then
applicable borrowing margin for LIBOR loans under the revolving credit facility
and a 0.25% per annum issuing bank fee for the issuing bank; (iii) annual
administration fees; and (iv) agent, arrangement and other similar fees.
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Optional and Mandatory Prepayment
We have the right to prepay borrowings under the new credit facilities,
subject to paying certain costs and expenses in certain circumstances. In
addition, the term loans are subject to mandatory prepayments in an amount
equal to (i) 100% of the net cash proceeds of certain equity issuances by BMAC
Holdings or any of its subsidiaries, (ii) 100% of the net cash proceeds of
certain debt issuances by BMAC Holdings or any of its subsidiaries, (iii) 75%
of the excess cash flow of the issuer and its subsidiaries (subject to decrease
to 50% upon satisfaction of certain financial criteria) and (iv) 100% of the
net cash proceeds of certain asset sales or other dispositions of property by
BMAC Holdings or any of its subsidiaries, in each case subject to certain
exceptions.
Certain Covenants
The new credit facilities contain customary covenants, including:
--restrictions on our ability to pay dividends or other distributions;
--redeem or repurchase capital stock;
--dispose of assets;
--prepay other debt or amend other debt instruments (including the
indenture);
--create liens on assets;
--make investments, loans or advances;
--change the business conducted by us;
--make capital expenditures;
--engage in certain transactions with affiliates;
--incur lease obligations;
--incur other debt and enter into other credit facilities; and
--merge with and acquire other entities.
The new credit facilities also require us to comply with certain maintenance
covenants, including a maximum leverage ratio and a minimum interest coverage
ratio.
Events of Default
The new credit facilities contain customary events of default, including,
but not limited to:
--nonpayment of principal, interest or fees;
--violation of covenants;
--incorrectness of representations or warranties in any material respect;
--cross-default to other debt;
--ERISA events;
--material judgments and liabilities;
--invalidity of security interests;
--bankruptcy; and
--change in control.
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DESCRIPTION OF THE NEW NOTES
Definitions of certain terms used in this description of the new notes may
be found under the heading "--Certain Definitions." For purposes of this
section, the term (i) "Company" refers only to Better Minerals & Aggregates
Company and not any of its subsidiaries, (ii) "Parent" refers only to BMAC
Holdings, Inc. and not any of its subsidiaries and (iii) "Holdings" refers only
to USS Holdings, Inc. and not any of its subsidiaries, in each case until a
successor replaces it, and thereafter, means the successor. All of the
Company's Domestic Subsidiaries guarantee the notes and therefore are subject
to many of the provisions contained in this description of the new notes. Each
company which guarantees the notes is referred to in this section as a "Note
Guarantor." Each such guarantee is termed a "Note Guarantee."
The Company issued the old notes and will issue the new notes under the
indenture, dated as of October 1, 1999, among the Company, the Note Guarantors
and The Bank of New York, as trustee (the "Trustee"), a copy of which has been
filed as an exhibit to the registration statement of which this prospectus is a
part. The indenture contains provisions which define your rights under the
notes. In addition, the indenture governs the obligations of the Company and of
each Note Guarantor under the notes. The terms of the notes include those
stated in the indenture and those made part of the indenture by reference to
the TIA.
On October 1, 1999, the Company issued $150.0 million aggregate principal
amount of old notes under the indenture. The terms of the new notes are
identical in all material respects to the old notes, except the new notes will
not contain transfer restrictions and holders of new notes will no longer have
any registration rights or be entitled to any liquidated damages. The Trustee
will authenticate and deliver new notes for original issue only in exchange for
a like principal amount of old notes. Any old notes that remain outstanding
after the consummation of the exchange offer, together with the new notes, will
be treated as a single class of securities under the indenture. Accordingly,
all references in this section to specified percentages in aggregate principal
amount of the outstanding notes shall be deemed to mean, at any time after the
exchange offer is consummated, such percentage in aggregate principal amount of
the old notes and the new notes then outstanding.
The following description is meant to be only a summary of certain
provisions of the indenture. It does not restate the terms of the indenture in
their entirety. We urge that you carefully read the indenture as it, and not
this description, governs your rights as Holders.
Overview of the New Notes and the Note Guarantees
The New Notes
The new notes:
--are general unsecured obligations of the Company;
--rank equally in right of payment with all existing and future Senior
Subordinated Indebtedness of the Company;
--are subordinated in right of payment to all existing and future Senior
Indebtedness of the Company;
--re senior in right of payment to all existing and future Subordinated
Obligations of the Company;
--are effectively subordinated to any Secured Indebtedness of the Company
and its Subsidiaries to the extent of the value of the assets securing
such Indebtedness; and
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--are effectively subordinated to all liabilities (including Trade
Payables) and Preferred Stock of each Subsidiary of the Company that is
not a Note Guarantor.
The Note Guarantees
The old notes are, and the new notes will be, initially guaranteed by each
of the Company's Domestic Subsidiaries existing on the Closing Date.
The Note Guarantee of each Note Guarantor, and all Note Guarantees, if any,
made by future subsidiaries of the Company:
--is a general unsecured obligation of such Note Guarantor;
--ranks equally in right of payment with all existing and future Senior
Subordinated Indebtedness of such Note Guarantor;
--is subordinated in right of payment to all existing and future Senior
Indebtedness of such Note Guarantor;
--is senior in right of payment to all existing and future Subordinated
Obligations of such Note Guarantor; and
--is effectively subordinated to any Secured Indebtedness of that Note
Guarantor and its Subsidiaries to the extent of the value of the assets
securing that Indebtedness.
The notes will not be guaranteed by the Company's Canadian Subsidiary unless
such Subsidiary Guarantees any Indebtedness (other than Indebtedness of a
Restricted Subsidiary that is not a Note Guarantor). This Canadian Subsidiary
is an inactive company that has an immaterial amount of assets and liabilities.
Principal, Maturity and Interest
We issued the old notes in an aggregate principal amount of $150.0 million.
The notes are limited to $150,000,000 in aggregate principal amount and will
mature on September 15, 2009. The old notes are, and the new notes will be, in
fully registered form, without coupons, in denominations of $1,000 and any
integral multiple of $1,000.
Each note bears interest at a rate of 13% per annum from the Closing Date,
or from the most recent date to which interest has been paid or provided for.
We will pay interest semiannually on March 15 and September 15 of each year, to
Holders of record at the close of business on the March 1 or September 1
immediately preceding the interest payment date. We will pay interest on
overdue principal and, to the extent lawful, overdue installments of interest
at the rate borne by the notes.
Holders of old notes whose old notes are accepted for exchange in the
exchange offer will be deemed to have waived the right to receive any payment
in respect of interest on the old notes accrued from March 15, 2000 (the first
interest payment date of the old notes) to the date of issuance of the new
notes. Consequently, Holders who exchange their old notes for new notes will
receive the same interest payment on September 15, 2000 (the next interest
payment date with respect to the old notes and the new notes following
consummation of the exchange offer) that they would have received had they not
accepted the exchange offer.
Paying Agent and Registrar
We will pay the principal of, premium, if any, and interest on the notes at
any office of ours or any agency designated by us which is located in the
Borough of Manhattan, The City of New York. We have initially designated the
corporate trust office of the Trustee to act as the agent of the Company in
such matters. The location of the corporate trust office is 101 Barclay Street,
Floor 21
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West, New York, New York 10286. We, however, reserve the right to pay interest
to Holders by check mailed directly to Holders at their registered addresses.
Holders may exchange or transfer their notes at the same location given in
the preceding paragraph. No service charge will be made for any registration of
transfer or exchange of notes. We, however, may require Holders to pay any
transfer tax or other similar governmental charge payable in connection with
any such transfer or exchange.
Optional Redemption
Except as set forth in the following paragraph, we may not redeem the notes
prior to September 15, 2004. After this date, we may redeem the notes, in whole
or in part, on not less than 30 nor more than 60 days' prior notice, at the
following redemption prices (expressed as percentages of principal amount),
plus accrued and unpaid interest and liquidated damages thereon, if any, to the
redemption date (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date), if
redeemed during the 12-month period commencing on September 15 of the years set
forth below:
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
2004.................................. 106.500%
2005.................................. 104.333%
2006.................................. 102.167%
2007 and thereafter................... 100.000%
</TABLE>
Prior to September 15, 2002, we may, on one or more occasions, also redeem
up to a maximum of 35% of the original aggregate principal amount of the notes
with the Net Cash Proceeds of one or more Public Equity Offerings (1) by the
Company or (2) by Parent or Holdings to the extent the Net Cash Proceeds
thereof are contributed to the Company or used to purchase Capital Stock (other
than Disqualified Stock) of the Company from the Company following which there
is a Public Market, at a redemption price equal to 113% of the principal amount
thereof, plus accrued and unpaid interest and liquidated damages thereon, if
any, to the redemption date (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date); provided, however, that after giving effect to any such redemption:
(1) at least 65% of the original aggregate principal amount of the notes
remains outstanding; and
(2) any such redemption by the Company must be made within 90 days of
such Public Equity Offering and must be made in accordance with certain
procedures set forth in the indenture.
Selection
If we partially redeem notes, the Trustee will select the notes to be
redeemed on a pro rata basis, by lot or by such other method as the Trustee
shall deem to be fair and appropriate, although no note of $1,000 in original
principal amount or less will be redeemed in part. If we redeem any note in
part only, the notice of redemption relating to such note shall state the
portion of the principal amount thereof to be redeemed. A new note in principal
amount equal to the unredeemed portion thereof will be issued in the name of
the Holder thereof upon cancellation of the original note. On and after the
redemption date, interest will cease to accrue on notes or portions thereof
called for redemption so long as we have deposited with the Paying Agent funds
sufficient to pay the principal of, plus accrued and unpaid interest and
liquidated damages, if any, on the notes to be redeemed.
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Ranking
The notes are unsecured Senior Subordinated Indebtedness of the Company, are
subordinated in right of payment to all existing and future Senior Indebtedness
of the Company, rank equally in right of payment with all existing and future
Senior Subordinated Indebtedness of the Company and are senior in right of
payment to all existing and future Subordinated Obligations of the Company. The
notes also are effectively subordinated to any Secured Indebtedness of the
Company and its Subsidiaries to the extent of the value of the assets securing
such Indebtedness. However, payment from the money or the proceeds of U.S.
Government Obligations held in any defeasance trust described below under the
caption "--Defeasance" will not be subordinated to any Senior Indebtedness or
subject to the restrictions described herein.
The Note Guarantees are unsecured Senior Subordinated Indebtedness of the
applicable Note Guarantor, are subordinated in right of payment to all existing
and future Senior Indebtedness of such Note Guarantor, rank equally in right of
payment with all existing and future Senior Subordinated Indebtedness of such
Note Guarantor and are senior in right of payment to all existing and future
Subordinated Obligations of such Note Guarantor. The Note Guarantees also are
effectively subordinated to any Secured Indebtedness of the applicable Note
Guarantor and its Subsidiaries to the extent of the value of the assets
securing such Secured Indebtedness. As of December 31, 1999, our subsidiaries
had total liabilities, including trade payables, of approximately $487.3
million.
The Company currently conducts all of its operations through its
Subsidiaries. To the extent such Subsidiaries are not Guarantors, creditors of
such Subsidiaries, including trade creditors, and preferred stockholders, if
any, of such Subsidiaries generally will have priority with respect to the
assets and earnings of such Subsidiaries over the claims of creditors of the
Company, including Holders. The notes, therefore, are effectively subordinated
to the claims of creditors, including trade creditors, and preferred
stockholders, if any, of Subsidiaries of the Company that are not Note
Guarantors. This Canadian subsidiary is an inactive company that has an
immaterial amount of assets and liabilities.
As of December 31, 1999, there was outstanding:
(1) $135.9 million of Senior Indebtedness of the Company (exclusive of
unused commitments under the Credit Agreement), all which was Secured
Indebtedness;
(2) no Senior Subordinated Indebtedness of the Company (other than the
notes) and no indebtedness of the Company that is subordinate in right of
repayment to the notes;
(3) $1.6 million of Senior Indebtedness of the Note Guarantors
(exclusive of guarantees of Indebtedness under the Credit Agreement); and
(4) no Senior Subordinated Indebtedness of the Note Guarantors (other
than the Note Guarantees) and no Indebtedness of the Note Guarantors that
is subordinate or junior in right of payment to the Note Guarantees.
Although the indenture limits the Incurrence of Indebtedness by the Company
and the Restricted Subsidiaries and the issuance of Preferred Stock by the
Restricted Subsidiaries, such limitation is subject to a number of significant
qualifications. The Company and its Subsidiaries may be able to Incur
substantial amounts of Indebtedness in certain circumstances. Such Indebtedness
may be Senior Indebtedness.
"Senior Indebtedness" of the Company or any Note Guarantor means the
principal of, premium (if any) and accrued and unpaid interest on (including
interest accruing on or after the filing of any petition in bankruptcy or for
reorganization of the Company or any Note Guarantor, regardless of whether or
not a claim for post-filing interest is allowed in such proceedings), and fees
and other amounts owing in respect of, Bank Indebtedness and all other
Indebtedness of the Company or any
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Note Guarantor, as applicable, whether outstanding on the Closing Date or
thereafter Incurred, unless in the instrument creating or evidencing the same
or pursuant to which the same is outstanding it is provided that such
obligations are not superior in right of payment to the notes or such Note
Guarantor's Note Guarantee, as applicable; provided, however, that Senior
Indebtedness of the Company or any Note Guarantor shall not include:
(1) any obligation of the Company to Parent, Holdings or any Subsidiary
of the Company or of such Note Guarantor to Parent, Holdings, the Company
or any other Subsidiary of the Company;
(2) any liability for federal, state, local or other taxes owed or owing
by the Company or such Note Guarantor, as applicable;
(3) any accounts payable or other liability to trade creditors arising
in the ordinary course of business (including Guarantees thereof or
instruments evidencing such liabilities but excluding liabilities of the
Company or a Note Guarantor, as applicable, with respect to performance or
surety bonds or similar obligations, in each case entered into in the
ordinary course of business);
(4) any Indebtedness or obligation of the Company or such Note
Guarantor, as applicable (and any accrued and unpaid interest in respect
thereof) that by its terms is subordinate or junior in right of payment to
any other Indebtedness or obligation of the Company or such Note Guarantor,
as applicable, including any Senior Subordinated Indebtedness and any
Subordinated Obligations of the Company or such Note Guarantor, as
applicable;
(5) any obligations with respect to any Capital Stock; or
(6) any Indebtedness Incurred in violation of the indenture.
Only Indebtedness of the Company that is Senior Indebtedness will rank
senior to the notes. The notes will rank equally in right of payment with all
other Senior Subordinated Indebtedness of the Company. The Company will not
Incur, directly or indirectly, any Indebtedness which is subordinate or junior
in ranking in any respect to Senior Indebtedness unless such Indebtedness is
Senior Subordinated Indebtedness or is expressly subordinated in right of
payment to Senior Subordinated Indebtedness. Unsecured Indebtedness is not
deemed to be subordinate or junior to Secured Indebtedness merely because it is
unsecured.
The Company may not pay principal of, premium (if any) or interest on the
notes, or make any deposit pursuant to the provisions described under
"Defeasance" below, and may not otherwise repurchase, redeem or otherwise
acquire or retire for value any notes (collectively, "pay the notes") if:
(1) any Designated Senior Indebtedness of the Company is not paid when
due, or
(2) any other default on any Designated Senior Indebtedness of the
Company occurs and the maturity of such Designated Senior Indebtedness is
accelerated in accordance with its terms
unless, in either case,
(x) the default has been cured or waived and any such acceleration
has been rescinded, or
(y) such Designated Senior Indebtedness has been paid in full;
provided, however, that the Company may pay the notes without regard to the
foregoing if the Company and the Trustee receive written notice approving such
payment from the Representative of the Designated Senior Indebtedness with
respect to which either of the events set forth in clause (1) or (2) above has
occurred and is continuing.
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During the continuance of any default (other than a default described in
clause (1) or (2) of the immediately preceding paragraph) with respect to any
Designated Senior Indebtedness of the Company pursuant to which the maturity
thereof may be accelerated immediately without further notice (except such
notice as may be required to effect such acceleration) or the expiration of any
applicable grace periods, we may not pay the notes for a period (a "Payment
Blockage Period") commencing upon the receipt by a Responsible Officer of the
Trustee (with a copy to us) of written notice (a "Blockage Notice") of such
default from the Representative of such Designated Senior Indebtedness
specifying an election to effect a Payment Blockage Period and ending 179 days
thereafter (or earlier if such Payment Blockage Period is terminated:
(1) by written notice to the Trustee and the Company from the person or
persons who gave such Blockage Notice,
(2) by repayment in full of such Designated Senior Indebtedness, or
(3) because the default giving rise to such Blockage Notice is no longer
continuing).
Notwithstanding the provisions described in the immediately preceding
paragraph (but subject to the provisions contained in the second preceding and
in the immediately succeeding paragraph), unless the holders of such Designated
Senior Indebtedness or the Representative of such holders have accelerated the
maturity of such Designated Senior Indebtedness, the Company may resume
payments on the notes after the end of such Payment Blockage Period, including
any missed payments.
Not more than one Blockage Notice may be given in any consecutive 360-day
period, irrespective of the number of defaults with respect to Designated
Senior Indebtedness during such period. However, if any Blockage Notice within
such 360-day period is given by or on behalf of any holders of Designated
Senior Indebtedness other than the Bank Indebtedness, the Representative of the
Bank Indebtedness may give another Blockage Notice within such period. In no
event, however, may the total number of days during which any Payment Blockage
Period or Periods is in effect exceed 179 days in the aggregate during any 360
consecutive day period. For purposes of this paragraph, no default or event of
default that existed or was continuing on the date of the commencement of any
Payment Blockage Period with respect to the Designated Senior Indebtedness
initiating such Payment Blockage Period shall be, or be made, the basis of the
commencement of a subsequent Payment Blockage Period by the Representative of
such Designated Senior Indebtedness, whether or not within a period of 360
consecutive days, unless such default or event of default shall have been cured
or waived for a period of not less than 90 consecutive days.
Upon any payment or distribution of the assets of the Company to creditors
upon a liquidation or a dissolution of the Company or in a bankruptcy,
reorganization, insolvency, receivership or similar proceeding relating to the
Company or its property:
(1) the holders of Senior Indebtedness of the Company will be entitled
to receive payment in full of such Senior Indebtedness before the Holders
are entitled to receive any payment of principal of or interest on the
notes; and
(2) until such Senior Indebtedness is paid in full any payment or
distribution to which Holders would be entitled but for the subordination
provisions of the indenture will be made to holders of such Senior
Indebtedness as their interests may appear, except that Holders may
receive:
(x) shares of stock; and
(y) any debt securities that are subordinated to such Senior
Indebtedness to at least the same extent as the notes.
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If a payment or distribution is made to Holders that due to the note
subordination provisions of the indenture should not have been made to them,
such Holders will be required to hold it in trust for the holders of Senior
Indebtedness of the Company and pay it over to them as their interests may
appear.
If payment of the notes is accelerated because of an Event of Default, the
Company or the Trustee (provided that the Trustee shall have received written
notice from the Company, on which notice the Trustee shall be entitled to
conclusively rely) shall promptly notify the holders of the Designated Senior
Indebtedness of the Company (or their Representative) of the acceleration. If
any Designated Senior Indebtedness of the Company is outstanding, the Company
may not pay the notes until five Business Days after such holders or the
Representative of such Designated Senior Indebtedness receive notice of such
acceleration and, thereafter, may pay the notes only if the note subordination
provisions of the indenture otherwise permit payment at that time.
By reason of the subordination provisions of the indenture, in the event of
insolvency, creditors of the Company who are holders of Senior Indebtedness of
the Company may recover more, ratably, than the Holders, and creditors of the
Company who are not holders of Senior Indebtedness of the Company or of Senior
Subordinated Indebtedness of the Company (including the notes) may recover
less, ratably, than holders of Senior Indebtedness of the Company and may
recover more, ratably, than the holders of Senior Subordinated Indebtedness of
the Company.
The indenture contains substantially identical subordination provisions
relating to each Guarantor's obligations under its Note Guarantee.
Note Guarantees
The Note Guarantors, and certain future subsidiaries of the Company (as
described below), as primary obligors and not merely as sureties, jointly and
severally irrevocably and unconditionally Guarantee on an unsecured senior
subordinated basis the performance and full and punctual payment when due,
whether at Stated Maturity, by acceleration or otherwise, of all obligations of
the Company under the indenture (including obligations to the Trustee) and the
notes, whether for payment of principal of or interest on or liquidated damages
in respect of the old notes, expenses, indemnification or otherwise (all such
obligations guaranteed by such Note Guarantors being herein called the
"Guaranteed Obligations"). Such Note Guarantors agree or will agree to pay, in
addition to the amount stated above, any and all costs and expenses (including
reasonable counsel fees and expenses) incurred by the Trustee or the Holders in
enforcing any rights under the Note Guarantees. Each Note Guarantee is or will
be limited in amount to an amount not to exceed the maximum amount that can be
Guaranteed by the applicable Note Guarantor without rendering the Note
Guarantee, as it relates to such Note Guarantor, voidable under applicable law
relating to fraudulent conveyance or fraudulent transfer or similar laws
affecting the rights of creditors generally. The Company has agreed to cause
(a) each newly formed or acquired Domestic Subsidiary and (b) each existing,
newly formed or acquired Foreign Subsidiary that Guarantees any Indebtedness
(other than Indebtedness of a Restricted Subsidiary that is not a Note
Guarantor), to execute and deliver to the Trustee a supplemental indenture
pursuant to which such Subsidiary will Guarantee payment of the notes. See
"Certain Covenants--Future Note Guarantors" below.
The obligations of a Note Guarantor under its Note Guarantee are senior
subordinated obligations. As such, the rights of Holders to receive payment by
a Note Guarantor pursuant to its Note Guarantee will be subordinated in right
of payment to the rights of holders of Senior Indebtedness of such Note
Guarantor. The terms of the subordination provisions described above with
respect to the Company's obligations under the notes apply equally to a Note
Guarantor and the obligations of such Note Guarantor under its Note Guarantee.
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Each Note Guarantee is a continuing guarantee and shall
--remain in full force and effect until payment in full of all the
Guaranteed Obligations,
--be binding upon each Note Guarantor and its successors and
--inure to the benefit of, and be enforceable by, the Trustee, the Holders
and their successors, transferees and assigns.
Any Guarantee by a Subsidiary of the Company will be automatically released
upon the sale or other disposition (including through merger or consolidation)
of the Capital Stock, or all or substantially all the assets, of the applicable
Subsidiary if such sale or other disposition is made in compliance with the
covenant described under the caption "Certain Covenants--Limitation on Sales of
Assets and Subsidiary Stock".
Change of Control
Upon the occurrence of any of the following events (each a "Change of
Control"), each Holder will have the right to require the Company to repurchase
all or any part of such Holder's notes at a purchase price in cash equal to
101% of the principal amount thereof plus accrued and unpaid interest (and, in
the case of the old notes, liquidated damages, if any), to the date of
repurchase (subject to the right of Holders of record on the relevant record
date to receive interest due on the relevant interest payment date); provided,
however, that notwithstanding the occurrence of a Change of Control, the
Company shall not be obligated to repurchase notes pursuant to this section in
the event that it has exercised its right to redeem all the notes under the
terms of the section titled "Optional Redemption":
(1) prior to the earliest to occur of
(A) the first public offering of common stock of Parent,
(B) the first public offering of common stock of Holdings or
(C) the first public offering of common stock of the Company (each,
a "Public Market Offering"), the Permitted Holders cease to be the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act), directly or indirectly, of a majority in the aggregate
of the total voting power of the Voting Stock of Parent, Holdings or
the Company, whether as a result of issuance of securities of Parent,
Holdings or the Company, any merger, consolidation, liquidation or
dissolution of Parent, Holdings or the Company, any direct or indirect
transfer of securities by any Permitted Holder or otherwise (for
purposes of this clause (1) and clause (2) below, the Permitted Holders
shall be deemed to beneficially own any Voting Stock of an entity (the
"specified entity") held by any other entity (the "parent entity") so
long as the Permitted Holders beneficially own (as so defined),
directly or indirectly, in the aggregate a majority of the voting power
of the Voting Stock of the parent entity);
(2) after a Public Market Offering has occurred,
(A) any "person" (as such term is used in Sections 13(d) and 14(d)
of the Exchange Act), other than one or more Permitted Holders, is or
becomes the beneficial owner (as defined in clause (1) above), whether
by merger, consolidation, other business combination or otherwise,
directly or indirectly, of more than 35% of the total voting power of
the Voting Stock of the Company, Holdings or Parent and
(B) the Permitted Holders "beneficially own" (as defined in clause
(1) above), directly or indirectly, in the aggregate a lesser
percentage of the total voting power of the Voting Stock of the
Company, Holdings or Parent than such other person and do not have the
right or ability by voting power, contract or otherwise to elect or
designate for election a majority of the board of directors of the
Company, Holdings or Parent, as the case may be (for the
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purposes of this clause (2), such other person shall be deemed to
beneficially own any Voting Stock of a specified entity held by a
parent entity, if such other person is the beneficial owner (as defined
in clause (1) above), directly or indirectly, of more than 35% of the
voting power of the Voting Stock of such parent entity and the
Permitted Holders "beneficially own" (as defined in clause (1) above),
directly or indirectly, in the aggregate a lesser percentage of the
voting power of the Voting Stock of such parent entity and do not have
the right or ability by voting power, contract or otherwise to elect or
designate for election a majority of the board of directors of such
parent entity); or
(3) during any period of two consecutive years, individuals who at the
beginning of that period constituted the board of directors of the Company,
Holdings or Parent, as the case may be (together with any new directors
whose election by such board of directors of the Company, Holdings or
Parent, as the case may be, or whose nomination for election by the
shareholders of the Company, Holdings or Parent, as the case may be, was
approved by a vote of 662/3% of the directors of the Company, Holdings or
Parent, as the case may be, then still in office who were either directors
at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the board of directors of the Company, Holdings or Parent, as
the case may be, then in office; or
(4) the adoption of a plan relating to the liquidation or dissolution of
the Company, Holdings or Parent.
In the event that at the time of such Change of Control the terms of the
Bank Indebtedness restrict or prohibit the repurchase of notes pursuant to this
covenant, then prior to the mailing of the notice to Holders provided for in
the immediately following paragraph but in any event within 45 days following
any Change of Control, the Company shall:
(1) repay in full all Bank Indebtedness or, if doing so will allow the
purchase of notes, offer to repay in full all Bank Indebtedness and repay
the Bank Indebtedness of each lender who has accepted such offer, or
(2) obtain the requisite consent under the agreements governing the Bank
Indebtedness to permit the repurchase of the notes as provided for in the
immediately following paragraph.
Within 45 days following any Change of Control, the Company shall mail a
notice to each Holder with a copy to the Trustee (the "Change of Control
Offer") stating:
(1) that a Change of Control has occurred and that such Holder has the
right to require the Company to purchase all or a portion of such Holder's
notes at a purchase price in cash equal to 101% of the principal amount
thereof, plus accrued and unpaid interest and liquidated damages, if any,
to the date of purchase (subject to the right of Holders of record on the
relevant record date to receive interest on the relevant interest payment
date);
(2) the circumstances and relevant facts and financial information
regarding such Change of Control;
(3) the purchase date (which shall be no earlier than 30 days nor later
than 60 days from the date such notice is mailed); and
(4) the instructions determined by the Company, consistent with this
covenant, that a Holder must follow in order to have its notes purchased.
The Company will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set
forth in the indenture applicable to a Change of Control Offer made by the
Company and purchases all notes validly tendered and not withdrawn under such
Change of Control Offer.
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The Company will comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act and any other securities laws or regulations
in connection with the purchase of notes pursuant to this covenant. To the
extent that the provisions of any securities laws or regulations conflict with
provisions of this covenant, the Company will comply with the applicable
securities laws and regulations and will not be deemed to have breached its
obligations under this covenant by virtue thereof.
The Change of Control purchase feature is a result of negotiations between
the Company and the initial purchasers of the old notes in the private
offering. Management has no present intention to engage in a transaction
involving a Change of Control, although it is possible that the Company would
decide to do so in the future. Subject to the limitations discussed below, the
Company could, in the future, enter into certain transactions, including
acquisitions, refinancings or recapitalizations, that would not constitute a
Change of Control under the indenture, but that could increase the amount of
indebtedness outstanding at such time or otherwise affect the Company's capital
structure or credit ratings. Restrictions on the ability of the Company to
Incur additional Indebtedness are contained in the covenants described under
"Certain Covenants--Limitation on Indebtedness." Such restrictions can only be
waived with the consent of the Holders of a majority in principal amount of the
notes then outstanding. Except for the limitations contained in such covenants,
however, the indenture will not contain any covenants or provisions that may
afford Holders protection in the event of a highly leveraged transaction.
The occurrence of certain of the events which would constitute a Change of
Control would constitute a default under the Credit Agreement. Future Senior
Indebtedness of the Company may contain prohibitions of certain events which
would constitute a Change of Control or require such Senior Indebtedness to be
repurchased or repaid upon a Change of Control. Moreover, the exercise by the
Holders of their right to require the Company to purchase the notes could cause
a default under such Senior Indebtedness, even if the Change of Control itself
does not, due to the financial effect of such repurchase on the Company.
Finally, the Company's ability to pay cash to the Holders upon a purchase may
be limited by the Company's then existing financial resources. There can be no
assurance that sufficient funds will be available when necessary to make any
required purchases. The provisions under the indenture relative to the
Company's obligation to make an offer to purchase the notes as a result of a
Change of Control may be waived or modified with the written consent of the
Holders of a majority in principal amount of the notes.
Certain Covenants
The indenture contains covenants including, among others, the following:
Limitation on Indebtedness. (a) The Company will not, and will not permit
any Restricted Subsidiary to, Incur, directly or indirectly, any Indebtedness;
provided, however, that the Company and the Note Guarantors may Incur
Indebtedness if on the date of such Incurrence and after giving effect thereto
the Consolidated Coverage Ratio would be greater than 2.00:1 if such
Indebtedness is Incurred on or prior to December 31, 2001 and 2.25:1 if such
Indebtedness is Incurred thereafter.
(b) Notwithstanding the foregoing paragraph (a), the Company and its
Restricted Subsidiaries may Incur the following Indebtedness:
(1) (A) Bank Indebtedness in an aggregate principal amount not to exceed
$190.0 million less the aggregate amount of all prepayments of principal
applied to permanently reduce any such Indebtedness pursuant to the
covenant described under "--Limitation on Sales of Assets and Subsidiary
Stock" and
(B) (i) Indebtedness under the acquisition term loan facility in an
aggregate principal amount not to exceed $40.0 million less the aggregate
amount of all prepayments applied to
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permanently reduce any principal of such Indebtedness pursuant to the
covenant described under "--Limitation on Sales of Assets and Subsidiary
Stock"; provided, however, that at the time the Company or any Restricted
Subsidiary Incurs any Indebtedness under this clause (b)(1)(B), the Company
has a Consolidated Leverage Ratio of 5.00:1 or less; and (ii) any
Refinancing Indebtedness in respect thereof;
(2) Indebtedness of the Company owed to and held by any Wholly Owned
Subsidiary or Indebtedness of a Restricted Subsidiary owed to and held by
the Company or any Wholly Owned Subsidiary; provided, however, that
(A) any subsequent issuance or transfer of any Capital Stock or any
other event that results in any such Wholly Owned Subsidiary ceasing to
be a Wholly Owned Subsidiary or any subsequent transfer of any such
Indebtedness (except to the Company or a Wholly Owned Subsidiary) shall
be deemed, in each case, to constitute the Incurrence of such
Indebtedness by the issuer thereof,
(B) if the Company is the obligor on such Indebtedness, such
Indebtedness is made subordinate and junior in right of payment to the
notes and
(C) if a Restricted Subsidiary that is a Note Guarantor is the
obligor on such Indebtedness and such Indebtedness is owed to and held
by a Wholly Owned Subsidiary that is not a Note Guarantor, such
Indebtedness is expressly subordinated to the prior payment in full in
cash of all obligations of such Restricted Subsidiary with respect to
its Note Guarantee;
(3) Indebtedness
(A) represented by the notes and the Note Guarantees,
(B) outstanding on the Closing Date (other than the Indebtedness
described in clauses (1) and (2) above),
(C) consisting of Refinancing Indebtedness Incurred in respect of
any Indebtedness described in this clause (3) (including Indebtedness
that is Refinancing Indebtedness) or the foregoing paragraph (a),
(D) consisting of Guarantees of any Indebtedness permitted under
clauses (1) and (2) of this paragraph (b) and
(E) consisting of (i) Guarantees by the Company of Indebtedness or
other obligations of any of its Restricted Subsidiaries or (ii)
Guarantees by any Note Guarantor of Indebtedness of the Company or a
Restricted Subsidiary, in each case so long as the Incurrence of the
Indebtedness being Guaranteed is permitted under the terms of the
indenture; provided that if such Guaranteed Indebtedness is by its
express terms subordinated in right of payment to the notes or the Note
Guarantee of such Restricted Subsidiary, as applicable, any such
Guarantee of the Company or such Note Guarantor with respect to such
Indebtedness shall be subordinated in right of payment to the notes or
such Note Guarantor's Note Guarantee with respect to the notes
substantially to the same extent as such Indebtedness is subordinated
to the notes or the Note Guarantee of such Restricted Subsidiary, as
applicable;
(4) (A) Indebtedness of a Restricted Subsidiary Incurred and outstanding
on or prior to the date on which such Restricted Subsidiary was acquired
(including by way of merger) by the Company or any Restricted Subsidiary
(other than Indebtedness Incurred as consideration in, or to provide all or
any portion of the funds or credit support utilized to consummate, the
transaction or series of related transactions pursuant to which such
Restricted Subsidiary became a Subsidiary of or was otherwise acquired by
the Company); provided, however, that on the date
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that such Restricted Subsidiary is acquired, the Company or such Restricted
Subsidiary would have been able to Incur such Indebtedness under this
covenant and
(B) Refinancing Indebtedness Incurred by a Restricted Subsidiary in
respect of Indebtedness Incurred by such Restricted Subsidiary pursuant to
this clause (4);
(5) Indebtedness
(A) in respect of performance bonds, bankers' acceptances, letters
of credit and surety or appeal bonds provided by the Company or the
Restricted Subsidiaries in the ordinary course of their business, and
(B) under Currency Agreements, Interest Rate Agreements and
Commodity Agreements entered into for bona fide hedging purposes of the
Company or a Restricted Subsidiary in the ordinary course of business;
provided, however, that such agreements do not increase the
Indebtedness of the Company or the Restricted Subsidiaries outstanding
at any time other than as a result of fluctuations in interest rates,
currency exchange rates or commodity prices or by reason of fees,
indemnities and compensation payable thereunder;
(6) Indebtedness (including Capitalized Lease Obligations and
Attributable Debt) incurred by the Company or any of the Restricted
Subsidiaries to finance the purchase, lease or improvements of property
(real or personal) or equipment (whether through the direct purchase of
assets or the Capital Stock of any Person owning such assets) in an
aggregate principal amount which, when aggregated with the principal amount
of all other Indebtedness then outstanding and incurred pursuant to this
clause (6) and all Refinancing Indebtedness incurred to refund, refinance
or replace any Indebtedness incurred pursuant to this clause (6), does not
exceed the greater of $25.0 million or 5.0% of Total Assets;
(7) Indebtedness of Foreign Subsidiaries in an aggregate principal
amount not to exceed $15.0 million outstanding at any one time; or
(8) Indebtedness (other than Indebtedness permitted to be Incurred
pursuant to the foregoing paragraph (a) or any other clause of this
paragraph (b)) in an aggregate principal amount on the date of Incurrence
that, when added to all other Indebtedness Incurred pursuant to this clause
(8) and then outstanding, shall not exceed $30.0 million.
(c) Notwithstanding the foregoing, the Company may not Incur any
Indebtedness pursuant to paragraph (b) above if the proceeds thereof are used,
directly or indirectly, to repay, prepay, redeem, defease, retire, refund or
refinance any Subordinated Obligations unless such Indebtedness will be
subordinated to the notes to at least the same extent as such Subordinated
Obligations. The Company may not Incur any Indebtedness if such Indebtedness is
subordinate or junior in ranking in any respect to any Senior Indebtedness
unless such Indebtedness is Senior Subordinated Indebtedness or is expressly
subordinated in right of payment to Senior Subordinated Indebtedness. In
addition, the Company may not Incur any Secured Indebtedness which is not
Senior Indebtedness unless contemporaneously therewith effective provision is
made to secure the notes equally and ratably with (or on a senior basis to, in
the case of Indebtedness subordinated in right of payment to the notes) such
Secured Indebtedness for so long as such Secured Indebtedness is secured by a
Lien. A Note Guarantor may not Incur any Indebtedness if such Indebtedness is
by its terms expressly subordinate or junior in ranking in any respect to any
Senior Indebtedness of such Note Guarantor unless such Indebtedness is Senior
Subordinated Indebtedness of such Note Guarantor or is expressly subordinated
in right of payment to Senior Subordinated Indebtedness of such Note Guarantor.
In addition, a Note Guarantor shall not Incur any Secured Indebtedness that is
not Senior Indebtedness of such Note Guarantor unless contemporaneously
therewith effective provision is made to secure the Note Guarantee of such Note
Guarantor equally and ratably with (or on a senior basis to, in the case of
Indebtedness subordinated in right of payment to such Note Guarantee) such
Secured Indebtedness for as long as such Secured Indebtedness is secured by a
Lien.
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(d) Notwithstanding any other provision of this covenant, the maximum amount
of Indebtedness that the Company or any Restricted Subsidiary may Incur
pursuant to this covenant shall not be deemed to be exceeded solely as a result
of fluctuations in the exchange rates of currencies. For purposes of
determining the outstanding principal amount of any particular Indebtedness
Incurred pursuant to this covenant:
(1) Indebtedness Incurred pursuant to the Credit Agreement prior to or
on the Closing Date shall be treated as Incurred pursuant to clause (1) of
paragraph (b) above,
(2) Indebtedness permitted by this covenant need not be permitted solely
by reference to one provision permitting such Indebtedness but may be
permitted in part by one such provision and in part by one or more other
provisions of this covenant permitting such Indebtedness, and
(3) in the event that Indebtedness meets the criteria of more than one
of the types of Indebtedness described in this covenant, the Company, in
its sole discretion, shall classify such Indebtedness and only be required
to include the amount of such Indebtedness in one of such clauses, and may
from time to time reclassify Indebtedness permitted under paragraph (b) of
this covenant among the different clauses thereof.
Limitation on Restricted Payments. (a) The Company will not, and will not
permit any Restricted Subsidiary, directly or indirectly, to:
(1) declare or pay any dividend, make any distribution on or in respect
of its Capital Stock or make any similar payment (including any payment in
connection with any merger or consolidation involving the Company or any
Subsidiary of the Company) to the direct or indirect holders of its Capital
Stock, except (x) dividends or distributions payable solely in its Capital
Stock (other than Disqualified Stock) and (y) dividends or distributions
payable to the Company or a Restricted Subsidiary (and, if such Restricted
Subsidiary has shareholders other than the Company or other Restricted
Subsidiaries, to its other shareholders on a pro rata basis),
(2) purchase, repurchase, redeem, retire or otherwise acquire for value
any Capital Stock of (i) Parent, Holdings or the Company held by Persons
other than the Company or a Restricted Subsidiary or (ii) any Restricted
Subsidiary (other than Preferred Stock that is not Voting Stock) held by
any Affiliate of the Company (other than a Restricted Subsidiary),
(3) purchase, repurchase, redeem, retire, defease or otherwise acquire
for value, prior to scheduled maturity, scheduled repayment or scheduled
sinking fund payment any Subordinated Obligations of the Company or any
Note Guarantor (other than the purchase, repurchase redemption, retirement,
defeasance or other acquisition for value of Subordinated Obligations
acquired in anticipation of satisfying a sinking fund obligation, principal
installment or final maturity, in each case due within one year of the date
of acquisition), or
(4) make any Investment (other than a Permitted Investment) in any
Person (any such dividend, distribution, payment, purchase, redemption,
repurchase, defeasance, retirement, or other acquisition or Investment
being herein referred to as a "Restricted Payment") if at the time the
Company or such Restricted Subsidiary makes such Restricted Payment:
(A) a Default will have occurred and be continuing (or would result
therefrom);
(B) the Company could not Incur at least $1.00 of additional
Indebtedness under paragraph (a) of the covenant described under "--
Limitation on Indebtedness"; or
(C) the aggregate amount of such Restricted Payment and all other
Restricted Payments (the amount so expended, if other than in cash, to
be determined in good faith by the Board of Directors, whose
determination will be conclusive and evidenced by a
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resolution of the Board of Directors) declared or made subsequent to
the Closing Date would exceed the sum, without duplication, of:
(i) 50% of the Consolidated Net Income accrued during the period
(treated as one accounting period) from the beginning of the fiscal
quarter immediately following the fiscal quarter during which the
Closing Date occurs to the end of the most recent fiscal quarter
ending at least 45 days prior to the date of such Restricted Payment
(or, in case such Consolidated Net Income will be a deficit, minus
100% of such deficit);
(ii) the aggregate Net Cash Proceeds received by the Company from
the issue or sale of its Capital Stock (other than Disqualified
Stock) subsequent to the Closing Date (other than an issuance or
sale to
(x) a Subsidiary of the Company or
(y) an employee stock ownership plan or other trust
established by the Company or any of its Subsidiaries);
(iii) the amount by which Indebtedness of the Company or its
Restricted Subsidiaries is reduced on the Company's balance sheet
upon the conversion or exchange (other than by or with a Subsidiary
of the Company) subsequent to the Closing Date of any Indebtedness
of the Company or its Restricted Subsidiaries issued after the
Closing Date which is convertible or exchangeable for Capital Stock
(other than Disqualified Stock) of the Company or a Note Guarantor
(less the amount of any cash or the Fair Market Value of other
property distributed by the Company or any Restricted Subsidiary
upon such conversion or exchange);
(iv) the amount equal to the net reduction in Investments in
Unrestricted Subsidiaries resulting from
(x) payments of dividends, repayments of the principal of
loans or advances or other transfers of assets to the Company or
any Restricted Subsidiary from Unrestricted Subsidiaries or
(y) the redesignation of Unrestricted Subsidiaries as
Restricted Subsidiaries (valued in each case as provided in the
definition of "Investment") not to exceed, in the case of any
Unrestricted Subsidiary, the amount of Investments previously
made by the Company or any Restricted Subsidiary in such
Unrestricted Subsidiary; and
(v) $5.0 million.
(b) The provisions of the foregoing paragraph (a) will not prohibit:
(1) any purchase, repurchase, redemption, retirement or other
acquisition for value of Capital Stock of the Company or Subordinated
Obligations of the Company or any Note Guarantor made by exchange for, or
out of the proceeds of the substantially concurrent sale of, Capital Stock
of the Company (other than Disqualified Stock and other than Capital Stock
issued or sold to a Subsidiary of the Company or an employee stock
ownership plan or other trust established by the Company or any of its
Subsidiaries); provided, however, that:
(A) such purchase, repurchase, redemption, retirement or other
acquisition for value will be excluded in the calculation of the amount
of Restricted Payments, and
(B) the Net Cash Proceeds from such sale applied in the manner set
forth in this clause (1) will be excluded from the calculation of
amounts under clause (4)(C)(ii) of paragraph (a) above;
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(2) any prepayment, repayment, retirement, purchase, repurchase,
redemption, retirement, defeasance or other acquisition for value of
Subordinated Obligations of the Company or a Note Guarantor made by
exchange for, or out of the proceeds of the substantially concurrent sale
of, Indebtedness of the Company or a Note Guarantor that is permitted to be
Incurred pursuant to the covenant described under "--Limitation on
Indebtedness"; provided, however, that such prepayment, repayment,
purchase, repurchase, redemption, retirement, defeasance or other
acquisition for value will be excluded in the calculation of the amount of
Restricted Payments;
(3) any prepayment, repayment, purchase, repurchase, redemption,
retirement, defeasance or other acquisition for value of Subordinated
Obligations from Net Available Cash to the extent permitted by the covenant
described under "--Limitation on Sales of Assets and Subsidiary Stock";
provided, however, that such prepayment, repayment, purchase, repurchase,
redemption, retirement, defeasance or other acquisition for value will be
excluded in the calculation of the amount of Restricted Payments;
(4) dividends paid within 60 days after the date of declaration thereof
if at such date of declaration such dividends would have complied with this
covenant; provided, however, that such dividends will be included in the
calculation of the amount of Restricted Payments;
(5) any purchase, repurchase, redemption, retirement or other
acquisition for value of shares of, or options to purchase shares of,
Capital Stock (other than Disqualified Stock) of Holdings, Parent, the
Company or any of its Subsidiaries from employees, former employees,
officers, former officers, directors or former directors of the Company or
any of its Subsidiaries (or permitted transferees of such employees, former
employees, officers, former officers, directors or former directors),
pursuant to the terms of agreements (including employment agreements) or
plans (or amendments thereto) approved by the board of directors of the
Company, Parent or Holdings under which such individuals purchase or sell
or are granted the option to purchase or sell, shares of such Capital
Stock; provided, however, that the aggregate amount of such purchases,
repurchases, redemptions, retirements and other acquisitions for value,
together with the aggregate amount of payments made under clause (6)(C) of
this paragraph (b), shall not exceed in any calendar year the sum of
(x) $2.0 million and
(y) the cash proceeds received in such calendar year by the Company
or any Restricted Subsidiary from the sale of Capital Stock (other than
Disqualified Stock) of Holdings, Parent or the Company to employees,
officers or directors of the Company, provided that such cash proceeds
will not increase the amounts available for Restricted Payments under
clause (4)(C)(ii) of paragraph (a) above; provided further, however,
that such purchases, repurchases, redemptions, retirements and other
acquisitions for value shall be excluded in the calculation of the
amount of Restricted Payments; or
(6) any payment of dividends, other distributions or other amounts
(including in the form of loans or advances) by the Company for the
purposes set forth in clauses (A) through (C) below; provided, however,
that such dividends, distributions or other amounts set forth in clauses
(A) through (C) shall be excluded in the calculation of the amount of
Restricted Payments for the purposes of paragraph (a) above:
(A) to Parent or Holdings in amounts equal to the amounts required
for Parent or Holdings to pay franchise taxes and other fees required
to maintain its corporate existence and provide for other operating
costs in an aggregate amount of up to $350,000 per fiscal year;
(B) to Parent or Holdings in amounts equal to amounts required for
Parent or Holdings to pay federal, state and local income taxes to the
extent such income taxes are attributable to the income of the Company
and its Restricted Subsidiaries (and, to the extent of amounts actually
received from its Unrestricted Subsidiaries, in amounts required to pay
such taxes to the extent attributable to the income of such
Unrestricted Subsidiaries); and
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(C) to Parent or Holdings in amounts equal to amounts expended by
Parent or Holdings for any purchase, repurchase, redemption, retirement
or other acquisition for value of shares of, or options to purchase
shares of, Capital Stock (other than Disqualified Stock) of Parent or
Holdings from employees, former employees, officers, former officers,
directors or former directors of the Company or any of its Subsidiaries
(or permitted transferees of such employees, former employees,
officers, former officers, directors or former directors), pursuant to
the terms of agreements (including employment agreements) or plans (or
amendments thereto) approved by the board of directors of Parent or
Holdings under which such individuals purchase or sell or are granted
the option to purchase or sell, shares of such Capital Stock; provided,
however, that the aggregate amount of such purchases, repurchases,
redemptions, retirements and other acquisitions for value, together
with the aggregate amount of payments made under clause (5) of this
paragraph (b), shall not exceed in any calendar year the sum of
(x) $2.0 million and
(y) the cash proceeds received in such calendar year by the
Company or any Restricted Subsidiary from the sale of Capital Stock
(other than Disqualified Stock) of Holdings, Parent or the Company
to employees, officers or directors of the Company (provided that
such cash proceeds will not increase the amounts available for
Restricted Payments under clause (4)(C)(ii) of paragraph (a) above).
Limitation on Restrictions on Distributions from Restricted
Subsidiaries. The Company will not, and will not permit any Restricted
Subsidiary to, create or otherwise cause or permit to exist or become effective
any consensual encumbrance or restriction on the ability of any Restricted
Subsidiary to:
(1) pay dividends or make any other distributions on its Capital Stock
or pay any Indebtedness or other obligations owed to the Company;
(2) make any loans or advances to the Company; or
(3) transfer any of its property or assets to the Company, except:
(A) any encumbrance or restriction pursuant to applicable law or an
agreement in effect at or entered into on the Closing Date;
(B) any encumbrance or restriction with respect to a Restricted
Subsidiary pursuant to an agreement relating to any Indebtedness
Incurred by such Restricted Subsidiary prior to the date on which such
Restricted Subsidiary was acquired by the Company or a Restricted
Subsidiary (other than Indebtedness Incurred as consideration in, in
contemplation of, or to provide all or any portion of the funds or
credit support utilized to consummate the transaction or series of
related transactions pursuant to which such Restricted Subsidiary
became a Restricted Subsidiary or was otherwise acquired by the Company
or a Restricted Subsidiary) and outstanding on such date;
(C) any encumbrance or restriction pursuant to an agreement
effecting a Refinancing of Indebtedness Incurred pursuant to an
agreement referred to in clause (A) or (B) of this covenant or this
clause (3)(C) or contained in any amendment to an agreement referred to
in clause (A) or (B) of this covenant or this clause (3)(C); provided,
however, that the encumbrances and restrictions contained in any such
Refinancing agreement or amendment are no less favorable to the Holders
in any material respect than the encumbrances and restrictions
contained in such predecessor agreements;
(D) in the case of clause (3), any encumbrance or restriction
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(i) that restricts in a customary manner the subletting,
assignment or transfer of any property or asset that is subject to a
lease, license or similar contract, or
(ii) contained in security agreements securing Indebtedness of
the Company or a Restricted Subsidiary to the extent such
encumbrance or restriction restricts the transfer of the property
subject to such security agreements;
(E) with respect to a Restricted Subsidiary, any restriction imposed
pursuant to an agreement entered into for the sale or disposition of
all or substantially all the Capital Stock or assets of such Restricted
Subsidiary pending the closing of such sale or disposition; and
(F) any encumbrance or restriction existing or created pursuant to
Indebtedness permitted to be Incurred by a Restricted Subsidiary
subsequent to the Closing Date pursuant to the covenant described under
"--Limitations on Indebtedness"; provided, however, that any such
encumbrance or restrictions are reasonable and customary with respect
to the type of Indebtedness being Incurred (under the relevant
circumstances).
Limitation on Sales of Assets and Subsidiary Stock. (a) The Company will
not, and will not permit any Restricted Subsidiary to, make any Asset
Disposition unless:
(1) the Company or such Restricted Subsidiary receives consideration
(including by way of relief from, or by any other Person assuming sole
responsibility for, any liabilities, contingent or otherwise) at the time
of such Asset Disposition at least equal to the Fair Market Value of the
shares and assets subject to such Asset Disposition,
(2) except in the case of a Permitted Asset Swap, at least 75% of the
consideration thereof received by the Company or such Restricted Subsidiary
is in the form of cash, and
(3) an amount equal to 100% of the Net Available Cash from such Asset
Disposition is applied by the Company (or such Restricted Subsidiary, as
the case may be)
(A) first, to the extent the Company elects (or is required by the
terms of any Indebtedness), to prepay, repay, purchase, repurchase,
redeem, retire, defease or otherwise acquire for value Senior
Indebtedness of the Company or Indebtedness of a Restricted Subsidiary
(in each case other than Indebtedness owed to the Company or an
Affiliate of the Company (other than an Affiliate of CCP which is a
lender in the ordinary course of business) and other than obligations
in respect of Disqualified Stock) within 180 days after the later of
the date of such Asset Disposition or the receipt of such Net Available
Cash;
(B) second, to the extent of the balance of Net Available Cash after
application in accordance with clause (A), to the extent the Company or
such Restricted Subsidiary elects, to reinvest in Additional Assets
(including by means of an Investment in Additional Assets by a
Restricted Subsidiary with Net Available Cash received by the Company
or another Restricted Subsidiary) within 180 days from the later of
such Asset Disposition or the receipt of such Net Available Cash;
(C) third, to the extent of the balance of such Net Available Cash
after application in accordance with clauses (A) and (B), to make an
Offer (as defined in paragraph (b) of this covenant below) to purchase
notes pursuant to and subject to the conditions set forth in paragraph
(b) of this covenant; provided, however, that if the Company elects (or
is required by the terms of any other Senior Subordinated
Indebtedness), such Offer may be made ratably to purchase the notes and
other Senior Subordinated Indebtedness of the Company; and
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(D) fourth, to the extent of the balance of such Net Available Cash
after application in accordance with clauses (A), (B) and (C), for any
general corporate purpose permitted by the terms of the indenture;
provided, however, that in connection with any final prepayment, repayment,
purchase, repurchase, redemption, retirement, defeasance or other
acquisition for value of Indebtedness pursuant to clause (A), (C) or (D)
above, the Company or such Restricted Subsidiary will retire such
Indebtedness and will cause the related loan commitment (if any) to be
permanently reduced in an amount equal to the principal amount so prepaid,
repaid, purchased, repurchased, redeemed, retired, defeased or otherwise
acquired for value. Pending final application of any Net Available Cash in
accordance with the foregoing, the Company or a Restricted Subsidiary may
use such Net Available Cash to temporarily reduce (and, within such 180-day
period, reborrow) Indebtedness or invest such Net Available Cash in
Temporary Cash Equivalents.
Notwithstanding the foregoing provisions of this covenant, the Company and
the Restricted Subsidiaries will not be required to apply any Net Available
Cash in accordance with this covenant except to the extent that the aggregate
Net Available Cash from all Asset Dispositions that is not applied in
accordance with this covenant exceeds $7.5 million.
For the purposes of this covenant, the following are deemed to be cash:
-- the assumption of Indebtedness of the Company (other than obligations in
respect of Disqualified Stock of the Company) or any Restricted
Subsidiary (other than obligations in respect of Disqualified Stock and
Preferred Stock of a Restricted Subsidiary that is not a Note Guarantor)
and the release of the Company or such Restricted Subsidiary from all
liability on such Indebtedness in connection with such Asset Disposition,
and
-- securities received by the Company or any Restricted Subsidiary from the
transferee that are promptly converted by the Company or such Restricted
Subsidiary into cash.
(b) In the event of an Asset Disposition that requires the purchase of notes
pursuant to clause (a)(3)(C) of this covenant, the Company will be required (i)
to purchase notes tendered pursuant to an offer by the Company for the notes
(the "Offer") at a purchase price of 100% of their principal amount plus
accrued and unpaid interest and liquidated damages thereon, if any, to the date
of purchase (subject to the right of Holders of record on the relevant date to
receive interest due on the relevant interest payment date) in accordance with
the procedures (including prorating in the event of oversubscription), set
forth in the indenture and (ii) to purchase other Senior Subordinated
Indebtedness of the Company on the terms and to the extent contemplated thereby
(provided that in no event shall the Company offer to purchase such other
Senior Subordinated Indebtedness of the Company at a purchase price in excess
of 100% of its principal amount (without premium), plus accrued and unpaid
interest thereon, unless an equal premium is offered to Holders in the Offer).
If the aggregate purchase price of notes (and other Senior Subordinated
Indebtedness) tendered pursuant to the Offer is less than the Net Available
Cash allotted to the purchase of the notes (and other Senior Subordinated
Indebtedness), the Company will apply the remaining Net Available Cash in
accordance with clause (a)(3)(D) of this covenant. The Company will not be
required to make an Offer for notes (and other Senior Subordinated
Indebtedness) pursuant to this covenant if the Net Available Cash available
therefor (after application of the proceeds as provided in clauses (a)(3)(A)
and (B)) is less than $5.0 million for any particular Asset Disposition (which
lesser amount will be carried forward for purposes of determining whether an
Offer is required with respect to the Net Available Cash from any subsequent
Asset Disposition).
(c) The Company will comply, to the extent applicable, with the requirements
of Section 14(e) of the Exchange Act and any other securities laws or
regulations in connection with the repurchase of
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notes pursuant to this covenant. To the extent that the provisions of any
securities laws or regulations conflict with provisions of this covenant, the
Company will comply with the applicable securities laws and regulations and
will not be deemed to have breached its obligations under this covenant by
virtue thereof.
Limitation on Transactions with Affiliates. (a) The Company will not, and
will not permit any Restricted Subsidiary to, directly or indirectly, enter
into or conduct any transaction or series of related transactions (including
the purchase, sale, lease or exchange of any property or the rendering of any
service) with any Affiliate of the Company (an "Affiliate Transaction") unless
such Affiliate Transaction is on terms:
(1) that are no less favorable to the Company or such Restricted
Subsidiary, as the case may be, than those that could be obtained at the
time of such transaction in arm's-length dealings with a Person who is not
such an Affiliate,
(2) that, in the event such Affiliate Transaction involves an aggregate
amount in excess of $1.0 million,
(A) are set forth in writing, and
(B) have been approved by a majority of the members of the Board of
Directors having no personal stake in such Affiliate Transaction and,
(3) that, in the event such Affiliate Transaction involves an amount in
excess of $10.0 million, have been determined by a nationally recognized
appraisal or investment banking firm to be fair, from a financial
standpoint, to the Company and its Restricted Subsidiaries.
(b) The provisions of the foregoing paragraph (a) will not prohibit:
(1) any Restricted Payment permitted to be paid pursuant to the covenant
described under "Limitation on Restricted Payments,"
(2) any issuance of securities, or other payments, awards or grants in
cash, securities or otherwise pursuant to, or the funding of, employment
arrangements, stock options and stock ownership plans approved by the Board
of Directors,
(3) the grant of stock options or similar rights to employees and
directors of the Company pursuant to plans approved by the Board of
Directors,
(4) loans or advances to employees in the ordinary course of business in
accordance with past practices of the Company or any Restricted Subsidiary,
but in any event not to exceed $2.0 million in the aggregate outstanding at
any one time,
(5) the payment of reasonable fees to directors of the Company and its
Subsidiaries who are not employees of the Company or its Subsidiaries,
(6) any transaction between the Company and a Wholly Owned Subsidiary or
between Wholly Owned Subsidiaries, or
(7) the performance of any agreement as in effect as of the Closing Date
(including the Tax Sharing Agreement, dated July 21, 1998, and the Amended
and Restated Management Services Agreement, dated October 1, 1998) or any
amendment or replacement thereto so long as any such amendment or
replacement agreement is not more disadvantageous to the Holders of the
notes in any material respect than the original agreement as in effect as
of the Closing Date.
Limitation on the Sale or Issuance of Capital Stock of Restricted
Subsidiaries. The Company will not sell or otherwise dispose of any shares of
Capital Stock (other than Preferred Stock that is not Voting Stock) of a
Restricted Subsidiary, and will not permit any Restricted Subsidiary, directly
or
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indirectly, to issue or sell or otherwise dispose of any shares of its Capital
Stock (other than Preferred Stock that is not Voting Stock) except:
(1) to the Company or a Wholly Owned Subsidiary;
(2) if, immediately after giving effect to such issuance, sale or other
disposition, neither the Company nor any of its Subsidiaries own any
Capital Stock of such Restricted Subsidiary, or
(3) if, immediately after giving effect to such issuance or sale, such
Restricted Subsidiary would no longer constitute a Restricted Subsidiary
and any Investment in such Person remaining after giving effect thereto
would have been permitted to be made under the covenant described under
"Limitation on Restricted Payments" if made on the date of such issuance,
sale or other disposition ( and such Investment shall be deemed to be an
Investment made for purposes of such covenant).
The proceeds of any sale of such Capital Stock subject to and permitted
hereby will be treated as Net Available Cash from an Asset Disposition and must
be applied in accordance with the terms of the covenant described under
"Limitation on Sales of Assets and Subsidiary Stock."
SEC Reports. Notwithstanding that the Company may not be subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company
will file with the SEC (if it will accept such filing) and provide the Trustee
and Holders and prospective Holders (upon request) within 15 days after it
files them with the SEC, copies of its annual report and the information,
documents and other reports that are specified in Sections 13 and 15(d) of the
Exchange Act. In addition, following a Public Equity Offering, the Company
shall furnish to the Trustee and the Holders, promptly upon their becoming
available, copies of the annual report to shareholders and any other
information provided by the Company, Holdings or Parent to its public
shareholders generally. The Company also will comply with the other provisions
of Section 314(a) of the TIA.
Future Note Guarantors. The Company will cause (1) each Domestic Subsidiary
and (2) each Foreign Subsidiary that Guarantees any Indebtedness (other than
Indebtedness of a Restricted Subsidiary that is not a Note Guarantor) to become
a Note Guarantor, and if applicable, execute and deliver to the Trustee a
supplemental indenture in the form set forth in the indenture pursuant to which
such Subsidiary will Guarantee payment of the notes. Each Note Guarantee will
be limited to an amount not to exceed the maximum amount that can be Guaranteed
by that Note Guarantor, without rendering the Note Guarantee, as it relates to
such Note Guarantor voidable under applicable law relating to fraudulent
conveyance or fraudulent transfer or similar laws affecting the rights of
creditors generally.
Limitation on Lines of Business. The Company will not, and will not permit
any Restricted Subsidiary to, engage in any business, other than a Permitted
Business.
Merger and Consolidation
The Company will not consolidate with or merge with or into, or convey,
transfer or lease all or substantially all its assets to, any Person, unless:
(1) the resulting, surviving or transferee Person (the "Successor
Company") will be a corporation organized and existing under the laws of
the United States of America, any State thereof or the District of Columbia
and the Successor Company (if not the Company) will expressly assume, by a
supplemental indenture, executed and delivered to the Trustee, in form
satisfactory to the Trustee, all the obligations of the Company under the
notes and the indenture;
(2) immediately after giving effect to such transaction (and treating
any Indebtedness which becomes an obligation of the Successor Company or
any Restricted Subsidiary as a result of
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such transaction as having been Incurred by the Successor Company or such
Restricted Subsidiary at the time of such transaction), no Default shall
have occurred and be continuing;
(3) immediately after giving effect to such transaction, the Successor
Company would be able to Incur an additional $1.00 of Indebtedness under
paragraph (a) of the covenant described under "Limitation on Indebtedness";
(4) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if any)
comply with the indenture; and
(5) the Company shall have delivered to the Trustee an Opinion of
Counsel reasonably acceptable to the Trustee to the effect that the Holders
will not recognize income, gain or loss for federal income tax purposes as
a result of such transaction and will be subject to federal income tax on
the same amounts, in the same manner and at the same times as would have
been the case if such transaction had not occurred.
The Successor Company will succeed to, and be substituted for, and may
exercise every right and power of, the Company under the indenture, but the
predecessor Company in the case of a conveyance, transfer or lease of all or
substantially all its assets will not be released from the obligation to pay
the principal of and interest on the notes.
In addition, subject to certain exceptions, the Company will not permit any
Note Guarantor to consolidate with or merge with or into, or convey, transfer
or lease all or substantially all of its assets to any Person unless:
(1) the resulting, surviving or transferee Person (the "Successor
Guarantor") will be a corporation organized and existing under the laws of
the United States of America, any State thereof or the District of Columbia
(unless the Successor Guarantor is a Foreign Subsidiary), and such Person
(if not a Note Guarantor) will expressly assume, by a supplemental
indenture, executed and delivered to the Trustee, in form satisfactory to
the Trustee, all the obligations of such Note Guarantor under its Note
Guarantee;
(2) immediately after giving effect to such transaction (and treating
any Indebtedness which becomes an obligation of the Successor Guarantor or
any Restricted Subsidiary as a result of such transaction as having been
Incurred by the Successor Guarantor or such Restricted Subsidiary at the
time of such transaction), no Default shall have occurred and be
continuing; and
(3) the Company will have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if any)
comply with the indenture.
Notwithstanding the foregoing:
(A) any Restricted Subsidiary may consolidate with, merge into or
transfer all or part of its properties and assets to the Company and
(B) the Company may merge with an Affiliate incorporated solely for
the purpose of reincorporating the Company in another jurisdiction to
realize tax or other benefits.
Defaults
Each of the following is an Event of Default:
(1) a default in any payment of interest on any note when due and
payable or in any payment of liquidated damages whether or not prohibited
by the provisions described under "Ranking" above, continued for 30 days;
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(2) a default in the payment of principal of any note when due and
payable at its Stated Maturity, upon required redemption or repurchase,
upon declaration or otherwise, whether or not such payment is prohibited by
the provisions described under "Ranking" above;
(3) the failure by the Company or any Subsidiary to comply with its
obligations under the covenant described under "Merger and Consolidation"
above;
(4) the failure by the Company or any Subsidiary to comply for 30 days
after receipt of notice with any of its obligations under the covenants
described under "Change of Control" or "Certain Covenants" above (in each
case, other than a failure to purchase notes);
(5) the failure by the Company or any Subsidiary to comply for 60 days
after receipt of notice with its other agreements contained in the notes or
the indenture;
(6) the failure by the Company or any Restricted Subsidiary to pay any
Indebtedness within any applicable grace period after final maturity (which
has not subsequently been paid) or the acceleration (which has not been
rescinded) of any such Indebtedness by the holders thereof because of a
default if the total amount of such Indebtedness unpaid or accelerated
exceeds $10.0 million or its foreign currency equivalent (the "cross
acceleration provision") and such failure continues for 10 days after
receipt of the notice specified in the indenture;
(7) certain events of bankruptcy, insolvency or reorganization of the
Company or a Significant Subsidiary (the "bankruptcy provisions");
(8) the rendering of any judgment or decree for the payment of money
(other than judgments or decrees which are covered by enforceable insurance
policies or indemnifications issued by or entered into with solvent
Persons) in excess of $10.0 million or its foreign currency equivalent is
rendered against the Company or a Restricted Subsidiary if:
(A) an enforcement proceeding thereon is commenced by any creditor
and is not stayed or dismissed within 10 days, or
(B) such judgment or decree remains outstanding for a period of 60
days following such judgment and is not discharged, waived or stayed
(the "judgment default provision"); or
(9) any Note Guarantee ceases to be in full force and effect (except as
contemplated by the terms thereof) or any Note Guarantor or Person acting
by or on behalf of such Note Guarantor denies or disaffirms such Note
Guarantor's obligations under the indenture or any Note Guarantee and such
Default continues for 10 days after receipt of the notice specified in the
indenture.
The foregoing will constitute Events of Default whatever the reason for any
such Event of Default and whether it is voluntary or involuntary or is effected
by operation of law or pursuant to any judgment, decree or order of any court
or any order, rule or regulation of any administrative or governmental body.
However, a default under clauses (4), (5), (6) or (9) will not constitute an
Event of Default until the Trustee notifies the Company or the Holders of at
least 25% in principal amount of the outstanding notes notify the Company and
the Trustee of the default and the Company or the Note Guarantor, as
applicable, does not cure such default within the time specified in clauses
(4), (5), (6) or (9) hereof after receipt of such notice.
If an Event of Default (other than an Event of Default relating to certain
events of bankruptcy, insolvency or reorganization of the Company) occurs and
is continuing, the Trustee by notice to the Company, or the Holders of at least
25% in principal amount of the outstanding notes by notice to the Company and
the Trustee, may declare the principal of and accrued but unpaid interest on
all the
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notes to be due and payable. Upon such a declaration, such principal and
interest will be due and payable immediately. If an Event of Default relating
to certain events of bankruptcy, insolvency or reorganization of the Company
occurs, the principal of and interest on all the notes will become immediately
due and payable without any declaration or other act on the part of the Trustee
or any Holders. Under certain circumstances, the Holders of a majority in
principal amount of the outstanding notes may rescind any such acceleration
with respect to the notes and its consequences.
Subject to the provisions of the indenture relating to the duties of the
Trustee, in case an Event of Default occurs and is continuing, the Trustee will
be under no obligation to exercise any of the rights or powers under the
indenture at the request or direction of any of the Holders unless such Holders
have offered to the Trustee reasonable indemnity or security against any loss,
liability or expense. Except to enforce the right to receive payment of
principal, premium (if any) or interest when due, no Holder may pursue any
remedy with respect to the indenture or the notes unless:
(1) such Holder has previously given the Trustee notice that an Event of
Default is continuing;
(2) Holders of at least 25% in principal amount of the outstanding notes
have requested the Trustee in writing to pursue the remedy;
(3) such Holders have offered the Trustee reasonable security or
indemnity against any loss, liability or expense;
(4) the Trustee has not complied with such request within 60 days after
the receipt of the request and the offer of security or indemnity; and
(5) the Holders of a majority in principal amount of the outstanding
notes have not given the Trustee a direction inconsistent with such request
within such 60-day period.
Subject to certain restrictions, the Holders of a majority in principal
amount of the outstanding notes will be given the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee or of exercising any trust or power conferred on the Trustee. The
Trustee, however, may refuse to follow any direction that conflicts with law or
the indenture or that the Trustee determines is unduly prejudicial to the
rights of any other Holder or that would involve the Trustee in personal
liability. Prior to taking any action under the indenture, the Trustee will be
entitled to indemnification satisfactory to it in its sole discretion against
all losses and expenses caused by taking or not taking such action.
If a Default occurs and is continuing and is known to a Responsible Officer
of the Trustee, the Trustee must mail to each Holder notice of the Default
within the earlier of 90 days after it occurs or 30 days after it is known to a
Trust Officer or written notice of it is received by the Trustee. Except in the
case of a Default in the payment of principal of, premium (if any) or interest
on any note (including payments pursuant to the redemption provisions of such
note), the Trustee may withhold notice if and so long as a committee of its
Trust Officers in good faith determines that withholding notice is in the
interests of the Holders. In addition, the Company will be required to deliver
to the Trustee, within 120 days after the end of each fiscal year, a
certificate indicating whether the signers thereof know of any Default that
occurred during the previous year. The Company will also be required to deliver
to a Responsible Officer of the Trustee, within 30 days after the occurrence
thereof, written notice of any event which would constitute certain Events of
Default, their status and what action the Company is taking or proposes to take
in respect thereof.
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Amendments and Waivers
Subject to certain exceptions, the indenture or the notes may be amended
with the written consent of the Holders of a majority in principal amount of
the notes then outstanding and any past default or compliance with any
provisions may be waived with the consent of the Holders of a majority in
principal amount of the notes then outstanding. However, without the consent
of each Holder of an outstanding note affected, no amendment may, among other
things:
(1) reduce the amount of notes whose Holders must consent to an
amendment;
(2) reduce the rate of or extend the time for payment of interest or any
liquidated damages on any note;
(3) reduce the principal of or extend the Stated Maturity of any note;
(4) reduce the premium payable upon the redemption of any note or
accelerate the time at which any note may be redeemed as described under
"Optional Redemption" above;
(5) make any note payable in money other than that stated in the note;
(6) make any change to the subordination provisions of the indenture
that adversely affects the rights of any Holder;
(7) impair the right of any Holder to receive payment of principal of,
and interest or any liquidated damages on, such Holder's notes on or after
the due dates therefor or to institute suit for the enforcement of any
payment on or with respect to such Holder's notes;
(8) make any change in the amendment provisions which require each
Holder's consent or in the waiver provisions; or
(9) modify the Note Guarantees in any manner adverse to the Holders in a
material respect.
Without the consent of any Holder, the Company and Trustee may amend the
indenture to:
-- cure any ambiguity, omission, defect or inconsistency;
-- provide for the assumption by a successor corporation of the obligations
of the Company under the indenture;
-- provide for uncertificated notes in addition to or in place of
certificated notes (provided, however, that the uncertificated notes are
issued in registered form for purposes of Section 163(f) of the Code, or
in a manner such that the uncertificated notes are described in Section
163(f)(2)(B) of the Code);
-- make any change in the subordination provisions of the indenture that
would limit or terminate the benefits available to any holder of Senior
Indebtedness of the Company (or any representative thereof) under such
subordination provisions;
-- add additional Guarantees with respect to the notes;
-- secure the notes;
-- add to the covenants of the Company for the benefit of the Holders or to
surrender any right or power conferred upon the Company;
-- make any change that does not adversely affect the rights of any Holder
in a material respect, subject to the provisions of the indenture;
-- provide for the issuance of the new notes; or
-- comply with any requirement of the SEC in connection with the
qualification of the indenture under the TIA.
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However, no amendment may be made to the subordination provisions of the
indenture that adversely affects the rights of any holder of Senior
Indebtedness of the Company then outstanding unless the holders of such Senior
Indebtedness (or any group or representative thereof authorized to give a
consent) consent to such change.
The consent of the Holders will not be necessary to approve the particular
form of any proposed amendment. It will be sufficient if such consent approves
the substance of the proposed amendment.
After an amendment becomes effective, the Company is required to mail to
Holders a notice briefly describing such amendment. However, the failure to
give such notice to all Holders, or any defect therein, will not impair or
affect the validity of the amendment.
Transfer and Exchange
A Holder will be able to transfer or exchange notes. Upon any transfer or
exchange, the registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company may require a Holder to pay any taxes required by law or permitted by
the indenture. The Company will not be required to transfer or exchange any
note selected for redemption or to transfer or exchange any note for a period
of 15 days prior to a selection of notes to be redeemed. The notes will be
issued in registered form and the Holder will be treated as the owner of such
note for all purposes.
Defeasance
The Company may at any time terminate all its obligations under the notes
and the indenture ("legal defeasance"), except for certain obligations,
including those respecting the defeasance trust and obligations to register the
transfer or exchange of the notes, to replace mutilated, destroyed, lost or
stolen notes and to maintain a registrar and paying agent in respect of the
notes.
In addition, the Company may at any time terminate:
(1) its obligations under the covenants described under "Certain
Covenants" and "Change of Control"; and
(2) the operation of the cross acceleration provision, the bankruptcy
provisions with respect to Significant Subsidiaries and the judgment
default provision described under "Defaults" above and the limitations
contained in clause (3) under the first paragraph of "Merger and
Consolidation" above ("covenant defeasance").
In the event that the Company exercises its legal defeasance option or its
covenant defeasance option, each Note Guarantor will be released from all of
its obligations with respect to its Note Guarantee.
The Company may exercise its legal defeasance option notwithstanding its
prior exercise of its covenant defeasance option. If the Company exercises its
legal defeasance option, payment of the notes may not be accelerated because of
an Event of Default with respect thereto. If the Company exercises its covenant
defeasance option, payment of the notes may not be accelerated because of an
Event of Default specified in clause (4), (6), (7) (with respect only to
Significant Subsidiaries) or (8) under "Defaults" above or because of the
failure of the Company to comply with clause (3) under the first paragraph of
"Merger and Consolidation" above.
In order to exercise either defeasance option, the Company must irrevocably
deposit in trust (the "defeasance trust") with the Trustee money in an amount
sufficient or U.S. Government Obligations, the principal of and interest on
which will be sufficient, or a combination thereof sufficient, to pay the
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of principal, premium (if any) and interest on, and liquidated damages, if any,
in respect of the notes to redemption or maturity, as the case may be, and must
comply with certain other conditions, including delivery to the Trustee of an
Opinion of Counsel reasonably acceptable to the Trustee to the effect that
Holders will not recognize income, gain or loss for federal income tax purposes
as a result of such deposit and defeasance and will be subject to federal
income tax on the same amounts and in the same manner and at the same times as
would have been the case if such deposit and defeasance had not occurred (and,
in the case of legal defeasance only, such Opinion of Counsel must be based on
a ruling of the Internal Revenue Service or other change in applicable federal
income tax law).
Concerning the Trustee
The Bank of New York is the Trustee under the indenture and has been
appointed by the Company as Registrar and Paying Agent with regard to the
notes.
Governing Law
The indenture and the notes will be governed by, and construed in accordance
with, the laws of the State of New York without giving effect to applicable
principles of conflicts of law to the extent that the application of the law of
another jurisdiction would be required thereby.
Certain Definitions
"Acquisition Term Loan Facility" means the facility referred to as the
Acquisition Facility in the Credit Agreement.
"Additional Assets" means:
(1) any property or assets (other than Indebtedness and Capital Stock)
to be used by the Company or a Restricted Subsidiary in a Permitted
Business;
(2) the Capital Stock of a Person that becomes a Restricted Subsidiary
as a result of the acquisition of such Capital Stock by the Company or
another Restricted Subsidiary; or
(3) Capital Stock constituting a minority interest in any Person that at
such time is a Restricted Subsidiary; provided, however, that: any such
Restricted Subsidiary described in clauses (2) or (3) above is primarily
engaged in a Permitted Business.
"Affiliate" of any specified Person means any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing. For
purposes of the provisions described under "--Certain Covenants--Limitation on
Transactions with Affiliates" and "--Certain Covenants--Limitation on Sales of
Assets and Subsidiary Stock" only, "Affiliate" shall also mean any beneficial
owner of shares representing 10% or more of the total voting power of the
Voting Stock (on a fully diluted basis) of Parent, Holdings or the Company or
of rights or warrants to purchase such Voting Stock (whether or not currently
exercisable) and any Person who would be an Affiliate of any such beneficial
owner pursuant to the first sentence hereof.
"Asset Disposition" means any sale, lease, transfer or other disposition (or
series of related sales, leases, transfers or dispositions) by the Company or
any Restricted Subsidiary, including any disposition by means of a merger,
consolidation, or similar transaction (each referred to for the purposes of
this definition as a "disposition"), of:
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(1) any shares of Capital Stock of a Restricted Subsidiary (other than
directors' qualifying shares or shares required by applicable law to be
held by a Person other than the Company or a Restricted Subsidiary);
(2) all or substantially all the assets of any division or line of
business of the Company or any Restricted Subsidiary; or
(3) any other assets of the Company or any Restricted Subsidiary outside
of the ordinary course of business of the Company or such Restricted
Subsidiary
other than, in the case of (1), (2) and (3) above,
(A) disposition by a Restricted Subsidiary to the Company or by the
Company or a Restricted Subsidiary to a Wholly Owned Subsidiary,
(B) for purposes of the provisions described under "Certain
Covenants--Limitation on Sales of Assets and Subsidiary Stock" only, a
disposition subject to the covenant described under "Certain
Covenants--Limitation on Restricted Payments,"
(C) a disposition of assets with a Fair Market Value of less than
$500,000, and
(D) a transfer of real property to a state, county, local or
municipal governmental agency in exchange for the granting of a permit
or the taking of other regulatory action by such governmental agency
that enhances the value of mining properties owned by the Company or a
Restricted Subsidiary, provided that the Board of Directors has
determined in good faith that such exchange is in the best interest of
the Company.
"Attributable Debt" in respect of a Sale/Leaseback Transaction means, as at
the time of determination, the present value (discounted at the interest rate
borne by the notes, compounded annually) of the total obligations of the lessee
for rental payments during the remaining term of the lease included in such
Sale/Leaseback Transaction (including any period for which such lease has been
extended).
"Average Life" means, as of the date of determination, with respect to any
Indebtedness or Preferred Stock, the quotient obtained by dividing:
(1) the sum of the products of the numbers of years from the date of
determination to the dates of each successive scheduled principal payment
of such Indebtedness or scheduled redemption or similar payment with
respect to such Preferred Stock multiplied by the amount of such payment by
(2) the sum of all such payments.
"Bank Indebtedness" means any and all amounts payable under or in respect of
the Credit Agreement and any Refinancing Indebtedness with respect thereto, as
amended from time to time, including principal, premium (if any), interest
(including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company whether or not a claim
for post-filing interest is allowed in such proceedings), fees, charges,
expenses, reimbursement obligations, guarantees and all other amounts payable
thereunder or in respect thereof.
"Board of Directors" means the Board of Directors of the Company or any
committee thereof duly authorized to act on behalf of the Board of Directors of
the Company.
"Business Day" means each day which is not a Legal Holiday.
"Capital Stock" of any Person means any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any
Preferred Stock, but excluding any debt securities convertible into such
equity.
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"Capitalized Lease Obligations" means an obligation that is required to be
classified and accounted for as a capitalized lease for financial reporting
purposes in accordance with GAAP, and the amount of Indebtedness represented by
such obligation shall be the capitalized amount of such obligation determined
in accordance with GAAP; and the Stated Maturity thereof shall be the date of
the last payment of rent or any other amount due under such lease prior to the
first date upon which such lease may be prepaid by the lessee without payment
of a penalty.
"Closing Date" means October 1, 1999.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commodity Agreement" means any agreement designed to hedge against
fluctuations in commodity prices, including natural gas prices, entered into in
the ordinary course of business.
"Consolidated Coverage Ratio" as of any date of determination means the
ratio of
(1) the aggregate amount of EBITDA for the period of the most recent
four consecutive fiscal quarters ending at least 45 days prior to the date
of such determination to
(2) Consolidated Interest Expense for such four fiscal quarters;
provided, however, that:
(A) if the Company or any Restricted Subsidiary has Incurred any
Indebtedness since the beginning of such period that remains
outstanding on such date of determination or if the transaction giving
rise to the need to calculate the Consolidated Coverage Ratio is an
Incurrence of Indebtedness, EBITDA and Consolidated Interest Expense
for such period shall be calculated after giving effect on a pro forma
basis to such Indebtedness as if such Indebtedness had been Incurred on
the first day of such period and the discharge of any other
Indebtedness repaid, repurchased, defeased or otherwise discharged with
the proceeds of such new Indebtedness as if such discharge had occurred
on the first day of such period;
(B) if the Company or any Restricted Subsidiary has repaid,
repurchased, defeased or otherwise discharged any Indebtedness since
the beginning of such period or if any Indebtedness is to be repaid,
repurchased, defeased or otherwise discharged (in each case other than
Indebtedness Incurred under any revolving credit facility unless such
Indebtedness has been permanently repaid and has not been replaced) on
the date of the transaction giving rise to the need to calculate the
Consolidated Coverage Ratio, EBITDA and Consolidated Interest Expense
for such period shall be calculated on a pro forma basis as if such
discharge had occurred on the first day of such period and as if the
Company or such Restricted Subsidiary has not earned the interest
income actually earned during such period in respect of cash or
Temporary Cash Investments used to repay, repurchase, defease or
otherwise discharge such Indebtedness;
(C) if since the beginning of such period the Company or any
Restricted Subsidiary shall have made any Asset Disposition, the EBITDA
for such period shall be reduced by an amount equal to the EBITDA (if
positive) directly attributable to the assets that are the subject of
such Asset Disposition for such period or increased by an amount equal
to the EBITDA (if negative) directly attributable thereto for such
period and Consolidated Interest Expense for such period shall be
reduced by an amount equal to the Consolidated Interest Expense
directly attributable to any Indebtedness of the Company or any
Restricted Subsidiary repaid, repurchased, defeased or otherwise
discharged with respect to the Company and its continuing Restricted
Subsidiaries in connection with such Asset Disposition for such period
(or, if the Capital Stock of any Restricted Subsidiary is sold, the
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Consolidated Interest Expense for such period directly attributable to
the Indebtedness of such Restricted Subsidiary to the extent the
Company and its continuing Restricted Subsidiaries are no longer liable
for such Indebtedness after such sale);
(D) if since the beginning of such period the Company or any
Restricted Subsidiary (by merger or otherwise) shall have made an
Investment in any Restricted Subsidiary (or any Person that becomes a
Restricted Subsidiary) or an acquisition of assets, including any
acquisition of assets occurring in connection with a transaction
causing a calculation to be made hereunder, which constitutes all or
substantially all of an operating unit of a business, EBITDA and
Consolidated Interest Expense for such period shall be calculated after
giving pro forma effect thereto (including the Incurrence of any
Indebtedness) as if such Investment or acquisition occurred on the
first day of such period; and
(E) if since the beginning of such period any Person (that
subsequently became a Restricted Subsidiary or was merged with or into
the Company or any Restricted Subsidiary since the beginning of such
period) shall have made any Asset Disposition or any Investment or
acquisition of assets that would have required an adjustment pursuant
to clause (C) or (D) above if made by the Company or a Restricted
Subsidiary during such period, EBITDA and Consolidated Interest Expense
for such period shall be calculated after giving pro forma effect
thereto as if such Asset Disposition, Investment or acquisition of
assets occurred on the first day of such period.
For purposes of this definition, whenever pro forma effect is to be given to
an acquisition of assets or other Investment, the amount of income or earnings
relating thereto and the amount of Consolidated Interest Expense associated
with any Indebtedness Incurred in connection therewith, the pro forma
calculations shall be determined in good faith by a responsible financial or
accounting Officer of the Company and shall comply with the requirements of
Rule 11-02 of Regulation S-X promulgated by the SEC.
If any Indebtedness bears a floating rate of interest and is being given pro
forma effect, the interest expense on such Indebtedness shall be calculated as
if the rate in effect on the date of determination had been the applicable rate
for the entire period (taking into account any Interest Rate Agreement
applicable to such Indebtedness if such Interest Rate Agreement has a remaining
term as at the date of determination in excess of 12 months).
"Consolidated Interest Expense" means, for any period, the total interest
expense of the Company and its Consolidated Restricted Subsidiaries, plus, to
the extent Incurred by the Company and its Consolidated Restricted Subsidiaries
in such period but not included in such interest expense, without duplication:
(1) interest expense attributable to Capitalized Lease Obligations and
the interest expense attributable to leases constituting part of a
Sale/Leaseback Transaction;
(2) amortization of debt discount (but not debt issuance costs);
(3) capitalized interest;
(4) non-cash interest expense;
(5) commissions, discounts and other fees and charges attributable to
letters of credit and bankers' acceptance financing;
(6) interest accruing on any Indebtedness of any other Person to the
extent such Indebtedness is Guaranteed by the Company or any Restricted
Subsidiary;
(7) net costs associated with Hedging Obligations;
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(8) dividends in respect of all Disqualified Stock of the Company and
all Preferred Stock of any Restricted Subsidiary, to the extent held by
Persons other than the Company or another Restricted Subsidiary;
(9) interest Incurred in connection with investments in discontinued
operations; and
(10) the cash contributions to any employee stock ownership plan or
similar trust to the extent such contributions are used by such plan or
trust to pay interest or fees to any Person (other than the Company) in
connection with Indebtedness Incurred by such plan or trust.
"Consolidated Leverage Ratio" as of any date of determination means the
ratio of
(1) Indebtedness of the Company and its Consolidated Restricted
Subsidiaries as of the end of the most recent fiscal quarter ending at
least 45 days prior to the date of such determination to
(2) the aggregate amount of EBITDA for the period of the most recent
four consecutive fiscal quarters ending at least 45 days prior to the date
of such determination;
provided, however, that:
(A) if the Company or any Restricted Subsidiary has Incurred any
Indebtedness since the beginning of such period that remains
outstanding on such date of determination, Indebtedness and EBITDA for
such period shall be calculated after giving effect on a pro forma
basis to such Indebtedness as if such Indebtedness had been Incurred on
the first day of such period and the discharge of any other
Indebtedness repaid, repurchased, defeased or otherwise discharged with
the proceeds of such new Indebtedness as if such discharge had occurred
on the first day of such period;
(B) if the Company or any Restricted Subsidiary has repaid,
repurchased, defeased or otherwise discharged any Indebtedness since
the beginning of such period or if any Indebtedness is to be repaid,
repurchased, defeased or otherwise discharged (in each case other than
Indebtedness Incurred under any revolving credit facility unless such
Indebtedness has been permanently repaid and has not been replaced) on
the date of the transaction giving rise to the need to calculate the
Consolidated Leverage Ratio, Indebtedness and EBITDA for such period
shall be calculated on a pro forma basis as if such discharge had
occurred on the first day of such period and as if the Company or such
Restricted Subsidiary has not earned the interest income actually
earned during such period in respect of cash or Temporary Cash
Investments used to repay, repurchase, defease or otherwise discharge
such Indebtedness;
(C) if since the beginning of such period the Company or any
Restricted Subsidiary shall have made any Asset Disposition, the EBITDA
for such period shall be reduced by an amount equal to the EBITDA (if
positive) directly attributable to the assets that are the subject of
such Asset Disposition for such period or increased by an amount equal
to the EBITDA (if negative) directly attributable thereto for such
period and Indebtedness shall be reduced by any Indebtedness of the
Company or any Restricted Subsidiary repaid, repurchased, defeased or
otherwise discharged with respect to the Company and its continuing
Restricted Subsidiaries in connection with such Asset Disposition (or,
if the Capital Stock of any Restricted Subsidiary is sold, the
Indebtedness of such Restricted Subsidiary to the extent the Company
and its continuing Restricted Subsidiaries are no longer liable for
such Indebtedness after such sale);
(D) if since the beginning of such period the Company or any
Restricted Subsidiary (by merger or otherwise) shall have made an
Investment in any Restricted Subsidiary (or any Person that becomes a
Restricted Subsidiary) or an acquisition of assets, including any
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acquisition of assets occurring in connection with a transaction
causing a calculation to be made hereunder, which constitutes all or
substantially all of an operating unit of a business, Indebtedness and
EBITDA for such period shall be calculated after giving pro forma
effect thereto (including the Incurrence of any Indebtedness) as if
such Investment or acquisition occurred on the first day of such
period; and
(E) if since the beginning of such period any Person (that
subsequently became a Restricted Subsidiary or was merged with or into
the Company or any Restricted Subsidiary since the beginning of such
period) shall have made any Asset Disposition or any Investment or
acquisition of assets that would have required an adjustment pursuant
to clause (C) or (D) above if made by the Company or a Restricted
Subsidiary during such period, Indebtedness and EBITDA for such period
shall be calculated after giving pro forma effect thereto as if such
Asset Disposition, Investment or acquisition of assets occurred on the
first day of such period.
For purposes of this definition, whenever pro forma effect is to be given to
an acquisition of assets or other Investment, the amount of income or earnings
relating thereto and the amount of any Indebtedness Incurred in connection
therewith, the pro forma calculations shall be determined in good faith by a
responsible financial or accounting Officer of the Company and shall comply
with the requirements of Rule 11-02 of Regulation S-X promulgated by the SEC.
If any Indebtedness bears a floating rate of interest and is being given pro
forma effect, the interest expense on such Indebtedness shall be calculated as
if the rate in effect on the date of determination had been the applicable rate
for the entire period (taking into account any Interest Rate Agreement
applicable to such Indebtedness if such Interest Rate Agreement has a remaining
term as at the date of determination in excess of 12 months).
"Consolidated Net Income" means, for any period, the net income of the
Company and its Consolidated Subsidiaries for such period; provided, however,
that there shall not be included in such Consolidated Net Income:
(1) any net income of any Person (other than the Company) if such Person
is not a Restricted Subsidiary, except that
(A) subject to the limitations contained in clause (4) below, the
Company's equity in the net income of any such Person for such period
shall be included in such Consolidated Net Income up to the aggregate
amount of cash actually distributed by such Person during such period
to the Company or a Restricted Subsidiary as a dividend or other
distribution (subject, in the case of a dividend or other distribution
made to a Restricted Subsidiary, to the limitations contained in clause
(3) below), and
(B) the Company's equity in a net loss of any such Person for such
period shall be included in determining such Consolidated Net Income;
(2) any net income (or loss) of any Person acquired by the Company or a
Subsidiary in a pooling of interests transaction for any period prior to
the date of such acquisition;
(3) any net income (or loss) of any Restricted Subsidiary to the extent
such Restricted Subsidiary is subject to restrictions, directly or
indirectly, on the payment of dividends or the making of distributions by
such Restricted Subsidiary, directly or indirectly, to the Company, except
that the Company's equity in a net loss of any such Restricted Subsidiary
for such period shall be included in determining such Consolidated Net
Income;
(4) any gain or loss realized upon the sale or other disposition of any
asset of the Company or its Consolidated Subsidiaries (including pursuant
to any Sale/Leaseback Transaction) that is not sold or otherwise disposed
of in the ordinary course of business and any gain or loss realized upon
the sale or other disposition of any Capital Stock of any Person;
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(5) any extraordinary gain or loss; and
(6) the cumulative effect of a change in accounting principles.
Notwithstanding the foregoing, for the purpose of the covenant described
under "Certain Covenants--Limitation on Restricted Payments" only, there shall
be excluded from Consolidated Net Income any dividends, repayments of loans or
advances or other transfers of assets from Unrestricted Subsidiaries to the
Company or a Restricted Subsidiary to the extent such dividends, repayments or
transfers increase the amount of Restricted Payments permitted under such
covenant pursuant to clause (a)(4)(C)(iv) thereof.
"Consolidation" means the consolidation of the amounts of each of the
Restricted Subsidiaries with those of the Company in accordance with GAAP
consistently applied; provided, however, that "Consolidation" will not include
consolidation of the accounts of any Unrestricted Subsidiary, but the interest
of the Company or any Restricted Subsidiary in an Unrestricted Subsidiary will
be accounted for as an investment. The term "Consolidated" has a correlative
meaning.
"Credit Agreement" means the credit agreement dated as of the Closing Date
among the Company, as borrower, Parent, as parent guarantor, George F.
Pettinos (Canada) Limited, as Canadian borrower, Banque Nationale de Paris, as
agent, and the financial institutions and other institutional lenders named
therein, as the same may be amended, restated, supplemented, waived, replaced,
refinanced, restructured or otherwise modified from time to time, in each
case, whether or not upon termination, whether with the original financial
institutions, other institutional lenders or agents, and whether with one or
more credit agreements with the Company or one or more Restricted Subsidiaries
as borrowers.
"Currency Agreement" means with respect to any Person any foreign exchange
contract, currency swap agreements or other similar agreement or arrangement
to which such Person is a party or of which it is a beneficiary.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Designated Senior Indebtedness" of the Company means
(1) the Bank Indebtedness and Indebtedness in respect of Hedging
Obligations, and
(2) any other Senior Indebtedness of the Company that, at the date of
determination, has an aggregate principal amount outstanding of, or under
which, at the date of determination, the holders thereof are committed to
lend up to at least $25 million and is specifically designated by the
Company in the instrument evidencing or governing such Senior Indebtedness
as "Designated Senior Indebtedness" for purposes of the indenture.
"Designated Senior Indebtedness" of a Note Guarantor has a correlative
meaning.
"Disqualified Stock" means, with respect to any Person, any Capital Stock
which by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable or exercisable) or upon the
happening of any event:
(1) matures or is mandatorily redeemable pursuant to a sinking fund
obligation or otherwise;
(2) is convertible or exchangeable for Indebtedness or Disqualified
Stock (excluding Capital Stock convertible or exchangeable solely at the
option of the Company or a Restricted Subsidiary; provided, however, that
any such conversion or exchange shall be deemed an Incurrence of
Indebtedness or Disqualified Stock, as applicable); or
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(3) is redeemable at the option of the holder thereof, in whole or in
part, in the case of each of clauses (1), (2) and (3), on or prior to the
first anniversary of the Stated Maturity of the notes; provided, however,
that any Capital Stock that would not constitute Disqualified Stock but for
provisions thereof giving holders thereof the right to require such Person
to repurchase or redeem such Capital Stock upon the occurrence of an "asset
sale" or "change of control" occurring prior to the Stated Maturity of the
notes shall not constitute Disqualified Stock if the "asset sale" or
"change of control" provisions applicable to such Capital Stock are not
more favorable in a material respect to the holders of such Capital Stock
than the provisions of the covenants described under "Change of Control"
and "Limitation on Sales of Assets and Subsidiary Stock."
"Domestic Subsidiary" means any Restricted Subsidiary of the Company other
than a Foreign Subsidiary.
"EBITDA" for any period means the Consolidated Net Income for such period,
plus, without duplication, the following to the extent deducted in calculating
such Consolidated Net Income:
(1) income tax expense of the Company and its Consolidated Restricted
Subsidiaries;
(2) Consolidated Interest Expense;
(3) depreciation expense of the Company and its Consolidated Restricted
Subsidiaries;
(4) amortization expense of the Company and its Consolidated Restricted
Subsidiaries (excluding amortization expense attributable to a prepaid cash
item that was paid in a prior period);
(5) depletion expense of the Company and its Consolidated Restricted
Subsidiaries; and
(6) all other non-cash charges of the Company and its Consolidated
Restricted Subsidiaries (excluding any such non-cash charge to the extent
it represents an accrual of or reserve for cash expenditures in any future
period) less all non-cash items of income of the Company and its Restricted
Subsidiary,
in each case for such period.
Notwithstanding the foregoing, the provision for taxes based on the income
or profits of, and the depreciation, amortization and depletion and non-cash
charges of, a Restricted Subsidiary of the Company shall be added to
Consolidated Net Income to compute EBITDA only to the extent (and in the same
proportion) that the net income of such Restricted Subsidiary was included in
calculating Consolidated Net Income and only if a corresponding amount would be
permitted at the date of determination to be dividended to the Company by such
Restricted Subsidiary without prior approval (that has not been obtained),
pursuant to the terms of its charter and all agreements, instruments,
judgments, decrees, orders, statutes, rules and governmental regulations
applicable to such Restricted Subsidiary or its stockholders.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" means, with respect to any asset or property, the price
which could be negotiated in an arm's length, free market transaction, for
cash, between a willing seller and a willing and able buyer, neither of whom is
under undue pressure or compulsion to complete the transaction. For purposes of
the indenture, Fair Market Value will be determined in good faith by the Board
of Directors, whose determination will be conclusive and evidenced by a
resolution of the Board of Directors.
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"Foreign Subsidiary" means any Restricted Subsidiary of the Company that is
not organized under the laws of the United States of America or any State
thereof or the District of Columbia.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect as of the Closing Date, including those set forth in:
(1) the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants;
(2) statements and pronouncements of the Financial Accounting Standards
Board;
(3) such other statements by such other entities as are approved by a
significant segment of the accounting profession; and
(4) the rules and regulations of the SEC governing the inclusion of
financial statements (including pro forma financial statements) in periodic
reports required to be filed pursuant to Section 13 of the Exchange Act,
including opinions and pronouncements in staff accounting bulletins and
similar written statements from the accounting staff of the SEC.
All ratios and computations based on GAAP contained in the indenture shall
be computed in conformity with GAAP.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness or other obligation of any
other Person and any obligation, direct or indirect, contingent or otherwise,
of such Person:
(1) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obligation of such other Person
(whether arising by virtue of partnership arrangements, or by agreement to
keep-well, to purchase assets, goods, securities or services, to take-or-
pay, or to maintain financial statement conditions or otherwise); or
(2) entered into for purposes of assuring in any other manner the
obligee of such Indebtedness or other obligation of the payment thereof or
to protect such obligee against loss in respect thereof (in whole or in
part);
provided, however, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning. The term "Guarantor" shall mean any
Person Guaranteeing any obligation.
"Hedging Obligations" of any Person means the obligations of such Person
pursuant to any Interest Rate Agreement, Currency Agreement or Commodity
Agreement.
"Holder" means the Person in whose name a note is registered on the
Registrar's books.
"Incur" means issue, assume, Guarantee, incur or otherwise become liable
for; provided, however, that any Indebtedness or redemption, repayment or
repurchase obligation in respect of Preferred Stock or Disqualified Stock of a
Person existing at the time such Person becomes a Subsidiary (whether by
merger, consolidation, acquisition or otherwise) shall be deemed to be Incurred
by such Person at the time it becomes a Subsidiary. The term "Incurrence" when
used as a noun shall have a correlative meaning. The accretion of principal of
a non-interest bearing or other discount security shall not be deemed the
Incurrence of Indebtedness.
"Indebtedness" means, with respect to any Person on any date of
determination, without duplication:
(1) the principal of and premium (if any) in respect of indebtedness of
such Person for borrowed money;
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(2) the principal of and premium (if any) in respect of obligations of
such Person evidenced by bonds, debentures, notes or other similar
instruments;
(3) all obligations of such Person in respect of letters of credit or
other similar instruments (including reimbursement obligations with respect
thereto);
(4) all obligations of such Person to pay the deferred and unpaid
purchase price of property or services (except Trade Payables), which
purchase price is due more than twelve months after the date of placing
such property in service or taking delivery and title thereto or the
completion of such services;
(5) all Capitalized Lease Obligations and all Attributable Debt of such
Person;
(6) the amount of all obligations of such Person with respect to the
redemption, repayment or other repurchase of any Disqualified Stock or,
with respect to any Subsidiary of such Person, any Preferred Stock (but
excluding, in each case, any accrued dividends);
(7) all Indebtedness of other Persons secured by a Lien on any asset of
such Person, whether or not such Indebtedness is assumed by such Person;
provided, however, that the amount of Indebtedness of such Person shall be
the lesser of
(A) the Fair Market Value of such asset at such date of
determination, and
(B) the amount of such Indebtedness of such other Persons;
(8) Hedging Obligations of such Person; and
(9) all obligations of the type referred to in clauses (1) through (8)
of other Persons and all dividends of other Persons for the payment of
which, in either case, such Person is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise, including by means of any
Guarantee.
The amount of Indebtedness (other than Hedging Obligations) of any Person at
any date shall be the outstanding balance at such date of all unconditional
obligations as described above and the maximum liability, upon the occurrence
of the contingency giving rise to the obligation, of any contingent obligations
at such date. The amount of Indebtedness in respect of Hedging Obligations
shall be determined in accordance with GAAP.
Notwithstanding the foregoing, for the purposes of the definition of
Consolidated Leverage Ratio, Indebtedness shall not include any obligations in
respect of undrawn letters of credit or any Hedging Obligations.
"Interest Rate Agreement" means with respect to any Person any interest rate
protection agreement, interest rate future agreement, interest rate option
agreement, interest rate swap agreement, interest rate cap agreement, interest
rate collar agreement, interest rate hedge agreement or other similar agreement
or arrangement as to which such Person is party or a beneficiary.
"Investment" in any Person means any direct or indirect advance, loan (other
than advances to customers in the ordinary course of business that are recorded
as accounts receivable on the balance sheet of the lender) or other extension
of credit (including by way of Guarantee or similar arrangement) or capital
contribution to (by means of any transfer of cash or other property to others
or any payment for property or services for the account or use of others), or
any purchase or acquisition of Capital Stock, Indebtedness or other similar
instruments issued by such Person. For
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purposes of the definition of "Unrestricted Subsidiary" and the covenant
described under "Certain Covenants--Limitation on Restricted Payments":
(1) "Investment" shall include the portion (proportionate to the
Company's equity interest in such Subsidiary) of the Fair Market Value of
the net assets of any Subsidiary of the Company at the time that such
Subsidiary is designated an Unrestricted Subsidiary; provided, however,
that upon a redesignation of such Subsidiary as a Restricted Subsidiary,
the Company shall be deemed to continue to have a permanent "Investment" in
an Unrestricted Subsidiary in an amount (if positive) equal to:
(A) the Company's "Investment" in such Subsidiary at the time of
such redesignation less
(B) the portion (proportionate to the Company's equity interest in
such Subsidiary) of the Fair Market Value of the net assets of such
Subsidiary at the time of such redesignation; and
(2) any property transferred to or from an Unrestricted Subsidiary shall
be valued at its Fair Market Value at the time of such transfer.
"Legal Holiday" means a Saturday, Sunday or other day on which banking
institutions are not required by law or regulation to be open in the State of
New York.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).
"Net Available Cash" from an Asset Disposition means cash payments received
(including any cash payments received by way of deferred payment of principal
pursuant to a note or installment receivable or otherwise and proceeds from the
sale or other disposition of any securities received as consideration, but only
as and when received, but excluding any other consideration received in the
form of assumption by the acquiring Person of Indebtedness or other obligations
relating to the properties or assets that are the subject of such Asset
Disposition or received in any other non-cash form) therefrom, in each case net
of:
(1) all legal, title and recording tax expenses, commissions and other
fees and expenses incurred, and all federal, state, provincial, foreign and
local taxes required to be paid or accrued as a liability under GAAP, as a
consequence of such Asset Disposition;
(2) all payments made on any Indebtedness which is secured by any assets
subject to such Asset Disposition, in accordance with the terms of any Lien
upon or other security agreement of any kind with respect to such assets,
or which must by its terms, or in order to obtain a necessary consent to
such Asset Disposition, or by applicable law be repaid out of the proceeds
from such Asset Disposition;
(3) all distributions and other payments required to be made to minority
interest holders in Subsidiaries or joint ventures as a result of such
Asset Disposition; and
(4) appropriate amounts to be provided by the seller as a reserve, in
accordance with GAAP, against any liabilities associated with the property
or other assets disposed of in such Asset Disposition and retained by the
Company or any Restricted Subsidiary after such Asset Disposition.
"Net Cash Proceeds", with respect to any issuance or sale of Capital Stock,
means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof.
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"Note Guarantee" means each Guarantee of the obligations with respect to
the notes issued by a Person pursuant to the terms of the indenture.
"Note Guarantor" means any Person that has issued a Note Guarantee.
"Officer" means the Chairman of the Board, the Chief Executive Officer, the
Chief Financial Officer, the President, any Vice President, the Treasurer or
the Secretary of the Company. "Officer" of a Note Guarantor has a correlative
meaning.
"Officers' Certificate" means a certificate signed by two Officers.
"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to the
Company, a Note Guarantor or the Trustee.
"Permitted Asset Swap" means any one or more transactions in which the
Company or any Restricted Subsidiary exchanges assets for consideration
consisting of (i) Capital Stock in or assets of a Person engaged in a
Permitted Business and (ii) any cash, provided that such cash will be
considered Net Available Cash from an Asset Disposition.
"Permitted Business" means any business engaged in by the Company or any
Restricted Subsidiary on the Closing Date and any Related Business.
"Permitted Holders" means (i) Chase Capital Partners, its Affiliates and
their respective directors and officers, (ii) D. George Harris & Associates,
LLC and individuals who are equity owners, directors or employees of DGHA, the
Company, Holdings or Parent (or the estate or any beneficiary of any such
individual or any immediate family member of any such individual or any trust
established for the benefit of any such immediate family member) and (iii) any
Person acting in the capacity of an underwriter in connection with a public or
private offering of the Company's, Parent's or Holdings' Capital Stock.
"Permitted Investment" means an Investment by the Company or any Restricted
Subsidiary in:
(1) the Company, a Restricted Subsidiary or a Person that will, upon the
making of such Investment, become a Restricted Subsidiary; provided,
however, that the primary business of such Restricted Subsidiary is a
Permitted Business;
(2) another Person if as a result of such Investment such other Person
is merged or consolidated with or into, or transfers or conveys all or
substantially all its assets to, the Company or a Restricted Subsidiary;
provided, however, that such Person's primary business is a Permitted
Business;
(3) Temporary Cash Investments;
(4) receivables owing to the Company or any Restricted Subsidiary if
created or acquired in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms; provided, however,
that such trade terms may include such concessionary trade terms as the
Company or any such Restricted Subsidiary deems reasonable under the
circumstances;
(5) payroll, travel and similar advances to cover matters that are
expected at the time of such advances ultimately to be treated as expenses
for accounting purposes and that are made in the ordinary course of
business;
(6) loans or advances to employees made in the ordinary course of
business consistent with past practices of the Company or such Restricted
Subsidiary and not exceeding $1.0 million in the aggregate outstanding at
any one time;
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(7) stock, obligations or securities received in settlement of debts
created in the ordinary course of business and owing to the Company or any
Restricted Subsidiary or in satisfaction of judgments;
(8) any Person to the extent such Investment represents the non-cash
portion of the consideration received for an Asset Disposition that was
made pursuant to and in compliance with the covenant described under
"Certain Covenants--Limitation on Sales of Assets and Subsidiary Stock";
(9) Investments the payment for which consists of (i) Capital Stock
(other than Disqualified Stock) or the cash proceeds from the sale of
Capital Stock (other than Disqualified Stock), in each case of the Company
or (ii) the proceeds of cash capital contributions to the Company;
provided, however, that such cash proceeds from sales of Capital Stock or
cash capital contributions will not increase the amount available for
Restricted Payments under clause (4)(C) of the first paragraph of the "--
Limitation on Restricted Payments" covenant;
(10) Loans to DGHA pursuant to the Amended and Restated Management
Services Agreement, dated October 1, 1998, or any amendment or replacement
thereto so long as any such amendment or replacement agreement is not more
disadvantageous to the Holders of the notes in any material respect than
the agreement as in effect as of the Closing Date;
(11) Investments in the ordinary course of business in an insurer
required as a condition to the provision by such insurer of insurance
coverage; and
(12) any Person having an aggregate Fair Market Value, taken together
with all other Investments made pursuant to this clause (12) that are at
the time outstanding, not to exceed the greater of 3.0% of Total Assets or
$15.0 million at the time of such Investment (with the Fair Market Value of
each Investment being measured at the time made and without giving effect
to subsequent changes in value).
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof or any
other entity.
"Preferred Stock", as applied to the Capital Stock of any Person, means
Capital Stock of any class or classes (however designated) that is preferred as
to the payment of dividends, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such Person, over shares
of Capital Stock of any other class of such Person.
"principal" of a note means the principal of the note plus the premium, if
any, payable on the note which is due or overdue or is to become due at the
relevant time.
"Public Equity Offering" means an underwritten primary public offering of
common stock of the Company, Parent or Holdings, as applicable, pursuant to an
effective registration statement under the Securities Act.
"Public Market" means any time after:
(1) a Public Equity Offering has been consummated; and
(2) at least 15% of the total issued and outstanding common stock of the
Company, Parent or Holdings (as applicable) has been distributed by means
of an effective registration statement under the Securities Act.
"Refinance" means, in respect of any Indebtedness, to refinance, extend,
renew, refund, repay, prepay, redeem, defease or retire, or to issue other
Indebtedness in exchange or replacement for, such Indebtedness. "Refinanced"
and "Refinancing" shall have correlative meanings.
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"Refinancing Indebtedness" means Indebtedness that is Incurred to refund,
refinance, replace, renew, repay or extend (including pursuant to any
defeasance or discharge mechanism) any Indebtedness of the Company or any
Restricted Subsidiary existing on the Closing Date or Incurred in compliance
with the indenture (including Indebtedness of the Company or any Restricted
Subsidiary that Refinances Refinancing Indebtedness); provided, however, that:
(1) the Refinancing Indebtedness has a Stated Maturity no earlier than
the Stated Maturity of the Indebtedness being Refinanced;
(2) the Refinancing Indebtedness has an Average Life at the time such
Refinancing Indebtedness is Incurred that is equal to or greater than the
Average Life of the Indebtedness being refinanced;
(3) such Refinancing Indebtedness is Incurred in an aggregate principal
amount (or if issued with original issue discount, an aggregate issue
price) that is equal to or less than the aggregate principal amount (or if
issued with original issue discount, the aggregate accreted value) then
outstanding of the Indebtedness being Refinanced plus any reasonable
premiums required to be paid with respect to the Indebtedness being
Refinanced; and
(4) if the Indebtedness being Refinanced is subordinated in right of
payment to the notes, such Refinancing Indebtedness is subordinated in
right of payment to the notes at least to the same extent as the
Indebtedness being Refinanced;
provided further, however, that (x) Refinancing Indebtedness shall not include:
(A) Indebtedness of a Restricted Subsidiary that is not a Note Guarantor that
Refinances Indebtedness of the Company or (B) Indebtedness of the Company or a
Restricted Subsidiary that Refinances Indebtedness of an Unrestricted
Subsidiary, and (y) Refinancing Indebtedness referred to in the definition of
"Bank Indebtedness" or in respect of the Acquisition Term Loan Facility shall
not be subject to clauses (1), (2) or (3) of this definition.
"Related Business" means any business related, ancillary or complementary to
the businesses of the Company and the Restricted Subsidiaries on the Closing
Date.
"Representative" means the trustee, agent or representative (if any) for an
issue of Senior Indebtedness.
"Responsible Officer" shall mean, when used with respect to the Trustee, any
officer within the corporate trust department of the Trustee, including any
vice president, assistant vice president, assistant secretary, assistant
treasurer, trust officer or any other officer of the Trustee who customarily
performs functions similar to those performed by the Persons who at the time
shall be such officers, respectively, or to whom any corporate trust matter is
referred because of such person's knowledge of and familiarity with the
particular subject and who shall have direct responsibility for the
administration of the indenture.
"Restricted Subsidiary" means any Subsidiary of the Company other than an
Unrestricted Subsidiary.
"Sale/Leaseback Transaction" means an arrangement relating to property now
owned or hereafter acquired by the Company or a Restricted Subsidiary whereby
the Company or a Restricted Subsidiary transfers such property to a Person and
the Company or such Restricted Subsidiary leases it from such Person, other
than leases between the Company and a Wholly Owned Subsidiary or between Wholly
Owned Subsidiaries.
"SEC" means the Securities and Exchange Commission.
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"Secured Indebtedness" means any Indebtedness of the Company secured by a
Lien. Secured Indebtedness" of a Note Guarantor has a correlative meaning.
"Senior Subordinated Indebtedness" of the Company means the notes and any
other Indebtedness of the Company that specifically provides that such
Indebtedness is to rank equally with the notes in right of payment and is not
subordinated by its terms in right of payment to any Indebtedness or other
obligation of the Company which is not Senior Indebtedness. "Senior
Subordinated Indebtedness" of a Note Guarantor has a correlative meaning.
"Significant Subsidiary" means any Restricted Subsidiary that would be a
"Significant Subsidiary" of the Company within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC.
"Stated Maturity" means, with respect to any security, the date specified in
such security as the fixed date on which the final payment of principal of such
security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening of any
contingency beyond the control of the issuer unless such contingency has
occurred).
"Subordinated Obligation" means any Indebtedness of the Company (whether
outstanding on the Closing Date or thereafter Incurred) that is subordinate or
junior in right of payment to the notes pursuant to a written agreement.
"Subordinated Obligation" of a Note Guarantor has a correlative meaning.
"Subsidiary" of any Person means any corporation, association, partnership
or other business entity of which more than 50% of the total voting power of
shares of Capital Stock or other interests (including partnership interests)
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by:
(1) such Person;
(2) such Person and one or more Subsidiaries of such Person; or
(3) one or more Subsidiaries of such Person.
"Temporary Cash Investments" means any of the following:
(1) any investment in direct obligations of the United States of America
or any agency thereof or obligations Guaranteed by the United States of
America or any agency thereof;
(2) investments in time deposit accounts, certificates of deposit and
money market deposits maturing within 180 days of the date of acquisition
thereof issued by a bank or trust company that is organized under the laws
of the United States of America, any state thereof or any foreign country
recognized by the United States of America having capital, surplus and
undivided profits aggregating in excess of $250,000,000 (or the foreign
currency equivalent thereof) and whose long-term debt is rated "A" (or such
similar equivalent rating) or higher by at least one nationally recognized
statistical rating organization (as defined in Rule 436 under the
Securities Act);
(3) repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clause (1) above entered
into with a bank meeting the qualifications described in clause (2) above;
(4) investments in commercial paper, maturing not more than 90 days
after the date of acquisition, issued by a corporation (other than an
Affiliate of the Company) organized and in existence under the laws of the
United States of America or any foreign country recognized by
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the United States of America with a rating at the time as of which any
investment therein is made of "P-1" (or higher) according to Moody's
Investors Service, Inc. or "A-1" (or higher) according to Standard and
Poor's Ratings Service, a division of The McGraw-Hill Companies, Inc.
("S&P"); and
(5) investments in securities with maturities of six months or less from
the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States of America, or by any
political subdivision or taxing authority thereof, and rated at least "A"
by S&P or "A" by Moody's Investors Service, Inc.
"TIA" means the Trust indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-77bbbb)
as in effect on the Closing Date.
"Total Assets" means the total consolidated assets of the Company and its
Restricted Subsidiaries, as shown on the most recent balance sheet of the
Company.
"Trade Payables" means, with respect to any Person, any accounts payable or
any indebtedness or monetary obligation to trade creditors created, assumed or
Guaranteed by such Person arising in the ordinary course of business in
connection with the acquisition of goods or services.
"Trustee" means the party named as such in the indenture until a successor
replaces it and, thereafter, means the successor.
"Unrestricted Subsidiary" means:
(1) any Subsidiary of the Company that at the time of determination
shall be designated an Unrestricted Subsidiary by the Board of Directors in
the manner provided below; and
(2) any Subsidiary of an Unrestricted Subsidiary.
The Board of Directors may designate any Subsidiary of the Company
(including any newly acquired or newly formed Subsidiary of the Company) to be
an Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries
owns any Capital Stock or Indebtedness of, or owns or holds any Lien on any
property of, the Company or any Restricted Subsidiary of the Company that is
not a Subsidiary of the Subsidiary to be so designated; provided, however, that
either:
(A) the Subsidiary to be so designated has total Consolidated assets
of $1,000 or less; or
(B) if such Subsidiary has Consolidated assets greater than $1,000,
then such designation would be permitted under the covenant entitled
"Limitation on Restricted Payments."
The Board of Directors may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided, however, that
(x) immediately after giving effect to such designation no
Default shall have occurred and be continuing and
(y) at the time of such designation the Company or a Restricted
Subsidiary could have Incurred all of the outstanding Indebtedness
of such Subsidiary and its Subsidiaries under the covenant described
under "--Certain Covenants--Limitation on Indebtedness."
Any such designation of a Subsidiary as a Restricted Subsidiary or
Unrestricted Subsidiary by the Board of Directors shall be evidenced to the
Trustee by promptly filing with the Trustee a copy of
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the resolution of the Board of Directors giving effect to such designation and
an Officers' Certificate certifying that such designation complied with the
foregoing provisions.
"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable or redeemable at the issuer's option.
"Voting Stock" of a Person means all classes of Capital Stock or other
interests (including partnership interests) of such Person then outstanding and
normally entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees of the related corporation,
partnership or Person.
"Wholly Owned Subsidiary" means a Restricted Subsidiary of the Company all
the Voting Stock of which (other than directors' qualifying shares) is owned by
the Company and/or another Wholly Owned Subsidiary.
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EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
The issuer, the initial purchasers of the old notes and the note guarantors
entered into the exchange and registration rights agreement on October 1, 1999.
Pursuant to the exchange and registration rights agreement, the issuer and the
note guarantors agreed to:
--file with the Securities and Exchange Commission on or prior to 135 days
after the date of issuance of the old notes a registration statement on
Form S-1 or Form S-4, if the use of that form is then available, relating
to a registered exchange offer for the old notes under the Securities Act
of 1933 and
--use their reasonable best efforts to cause the exchange offer
registration statement to be declared effective under the Securities Act
of 1933 within 195 days after the date of issuance of the old notes.
As soon as practicable after the effectiveness of the exchange offer
registration statement, the issuer will offer to the holders of transfer
restricted securities (as defined below) who are not prohibited by any law or
policy of the Securities and Exchange Commission from participating in the
exchange offer the opportunity to exchange their transfer restricted securities
for a second series of notes, the new notes, that are identical in all material
respects to the old notes (except that the new notes will not contain any
transfer restrictions) and that would be registered under the Securities Act of
1933. The issuer and the note guarantors will keep the exchange offer open for
not less than 30 days (or longer, if required by applicable law) after the date
on which notice of the exchange offer is mailed to the holders of the old
notes.
If
--because of any change in law or applicable interpretations thereof by the
staff of the Securities and Exchange Commission, the issuer is not
permitted to effect the exchange offer as contemplated hereby,
--any old notes validly tendered pursuant to the exchange offer are not
exchanged for new notes within 240 days after the date of issuance of the
old notes,
--the initial purchasers so request with respect to old notes not eligible
to be exchanged for new notes in the exchange offer,
--any applicable law or interpretations do not permit any holder of old
notes to participate in the exchange offer,
--any holder of old notes that participates in the exchange offer does not
receive freely transferable exchange notes in exchange for tendered old
notes or
--the issuer so elects,
then the issuer and the note guarantors will file with the Securities and
Exchange Commission a shelf registration statement to cover resales of transfer
restricted securities by those holders who satisfy certain conditions relating
to the provision of information in connection with the shelf registration
statement. For purposes of the foregoing, "transfer restricted securities"
means each old note until
(1) the date on which that old note has been exchanged for a freely
transferable new note in the exchange offer,
(2) the date on which that old note has been effectively registered
under the Securities Act of 1933 and disposed of in accordance with the
shelf registration statement or
(3) the date on which that old note is distributed to the public
pursuant to Rule 144 under the Securities Act of 1933 or is salable
pursuant to Rule 144(k) under the Securities Act of 1933.
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The issuer and the note guarantors will use their reasonable best efforts to
have the exchange offer registration statement or, if applicable, the shelf
registration statement declared effective by the Securities and Exchange
Commission as promptly as practicable after the filing thereof. Unless the
exchange offer would not be permitted by a policy of the Securities and
Exchange Commission, the issuer will commence the exchange offer and will use
its reasonable best efforts to consummate the exchange offer as promptly as
practicable, but in any event prior to 240 days after the date of issuance of
the old notes. If applicable, the issuer and the note guarantors will use their
reasonable best efforts to keep the shelf registration statement effective for
a period ending the earlier of two years after the date of issuance of the old
notes and the date all transfer restricted securities become eligible for
resale without volume restrictions pursuant to Rule 144 under the Securities
Act of 1933.
If
(1) the applicable registration statement is not filed with the
Securities and Exchange Commission on or prior to 135 days after the date
of issuance of the old notes (or in the case of a shelf registration
statement required to be filed in response to
--the request of an initial purchaser made with respect to old notes
not eligible to be exchanged for new notes in the exchange offer and
received later than 120 days after the date of issuance of the old
notes (a "Late IP Request"), on or prior to 165 days after the date of
issuance of the old notes, or
--a change in law or the applicable interpretations of the Securities
and Exchange Commission's staff, if later, within 45 days after
publication of the change in law or interpretations);
(2) the exchange offer registration statement or the shelf registration
statement, as the case may be, is not declared effective within 195 days
after the date of issuance of the old notes (or in the case of a shelf
registration statement required to be filed in response to
--a Late IP Request, within 240 days after the date of issuance of the
old notes, or
--a change in law or the applicable interpretations of the Securities
and Exchange Commission's staff, if later, within 45 days after
publication of the change in law or interpretations);
(3) the exchange offer is not consummated on or prior to 240 days after
the date of issuance of the old notes; or
(4) any required shelf registration statement is filed and declared
effective within 195 days after the date of issuance of the old notes (or
in the case of a shelf registration statement required to be filed in
response to
--a Late IP Request, within 240 days after the date of issuance of the
old notes, or
--a change in law or the applicable interpretations of the Securities
and Exchange Commission's staff, if later, within 45 days after
publication of the change in law or interpretations)
but shall thereafter cease to be effective (at any time that the issuer and
the note guarantors are obligated to maintain the effectiveness thereof)
without being succeeded within 45 days by an additional registration
statement (or post-effective amendment to the shelf registration statement)
filed and declared effective (each such event referred to in clauses (1)
through (4), a "registration default"),
the issuer and the note guarantors will be obligated to pay liquidated damages
to each holder of transfer restricted securities, during the period of one or
more such registration defaults, in an
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amount equal to $0.192 per week per $1,000 principal amount of the old notes
constituting transfer restricted securities held by that holder until the
applicable registration statement is filed, the exchange offer registration
statement is declared effective and the exchange offer is consummated or the
shelf registration statement is declared effective or again becomes effective,
as the case may be. All accrued liquidated damages shall be paid to holders in
the same manner as interest payments on the old notes on semi-annual payment
dates which correspond to interest payment dates for the old notes. Following
the cure of all registration defaults, the accrual of liquidated damages will
cease.
The exchange and registration rights agreement also provides that the issuer
and the note guarantors
--shall make available for a period of up to 180 days after the
consummation of the exchange offer a prospectus meeting the requirements
of the Securities Act of 1933 to any broker-dealer for use in connection
with any resale of any those exchange notes and
--shall pay all expenses incident to the exchange offer and will jointly
and severally indemnify certain holders of the notes (including any
broker-dealer) against certain liabilities, including liabilities under
the Securities Act of 1933.
A broker-dealer which delivers such a prospectus to purchasers in connection
with those resales will be subject to certain of the civil liability provisions
under the Securities Act of 1933 and will be bound by the provisions of the
exchange and registration rights agreement (including certain indemnification
rights and obligations).
The foregoing description of the exchange and registration rights agreement
is a summary only, does not purport to be complete and is qualified in its
entirety by reference to all provisions of the exchange and registration rights
agreement, a copy of which is filed as an exhibit to the registration statement
of which this prospectus is a part.
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CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES
The following is a discussion of the material United States federal income
and estate tax consequences of participating in the exchange offer and owning
and disposing of new notes and, insofar as it relates to matters of law or
legal conclusions, constitutes the opinion of Winthrop, Stimson, Putnam &
Roberts. Except where noted, this discussion deals only with old notes acquired
upon original issuance, and new notes issued in exchange therefor, in each case
held as capital assets. It does not address all aspects of United States
federal income or estate taxation that may be relevant to particular holders in
light of their circumstances or status, nor does it address any United States
tax consequences to holders that may be subject to special tax rules, such as
financial institutions, insurance companies, dealers in securities or
currencies, tax-exempt organizations, holders of 10% or more of our voting
stock, persons that hold old notes, or that will hold new notes, as part of a
straddle, hedge, conversion or constructive sale transaction, persons who mark
to market their securities, or persons who have a functional currency other
than the United States dollar. In addition, this discussion does not address
any aspect of state, local or foreign taxation. This discussion is based upon
current law. Changes in the law may change the tax treatment of the old notes
or the new notes.
As used in this discussion, the term "United States Holder" means a
beneficial owner of an old note or a new note that is, for United States
federal income tax purposes:
. a citizen or resident of the United States,
. a corporation, or other entity treated as a corporation for United
States federal income tax purposes, created or organized in or under the
laws of the United States or any State of the United States or the
District of Columbia,
. an estate the income of which is subject to United States federal income
tax regardless of its source, or
. a trust the administration of which is subject to the primary
supervision of a court in the United States and for which one or more
United States persons have the authority to control all substantial
decisions.
If a partnership holds old notes or new notes, the tax treatment of a
partner will generally depend upon the status of the partner and the activities
of the partnership. Partners of partnerships holding old notes or new notes
should consult their tax advisors. As used in this discussion, the term "Non-
United States Holder" means a beneficial owner of an old note or a new note
that is not a United States Holder.
You should consult with your own tax advisor concerning the United States
federal, state and local, as well as foreign, tax consequences to you, in light
of your particular situation, of participating in the exchange offer and owning
and disposing of new notes.
The Exchange Offer
An exchange of old notes for new notes pursuant to the exchange offer will
not be a taxable event for United States federal income tax purposes.
Accordingly, a holder will not recognize gain or loss upon receipt of a new
note in exchange for an old note, the new note will have the same issue price
as the old note in exchange for which it was issued, and a holder will have the
same adjusted tax basis and holding period in the new note as it had in the old
note immediately before the exchange.
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Payments of Interest
Stated interest on a new note will be taxable to a United States Holder as
ordinary income at the time it is received or accrued in accordance with the
United States Holder's regular method of accounting for United States federal
income tax purposes.
A Non-United States Holder generally will not be subject to United States
federal income or withholding tax on interest paid on a new note, provided that
the Non-United States Holder:
. is not a controlled foreign corporation related to us through stock
ownership,
. does not conduct a trade or business in the United States with respect
to which the interest is effectively connected, and
. provides the correct certification of Non-United States Holder status,
which may generally be satisfied by providing an IRS Form W-8 or W-8BEN
certifying that the beneficial owner is not a United States person and
providing the name and address of the beneficial owner.
Market Discount
If a United States Holder purchased an old note for less than its stated
redemption price at maturity, the difference will be treated as "market
discount" for United States federal income tax purposes, unless the difference
is less than a specified de minimis amount. Under the market discount rules,
the United States Holder will be required to treat any gain on the sale,
exchange, redemption or other disposition of the new note received in exchange
for the old note as ordinary income to the extent of the market discount that
has not previously been included in income and that is treated as having
accrued on the old note or the new note at the time of the disposition. In
addition, the United States Holder may be required to defer, until the maturity
or earlier disposition of the new note, the deduction of all or a portion of
the interest expense on any indebtedness incurred or continued to purchase or
carry the old note or new note.
Any market discount will be considered to accrue ratably during the period
from the date of acquisition of the old note to the maturity date of the new
note unless the United States Holder elects to accrue under a constant yield
method. A United States Holder may elect to include market discount in income
currently as it accrues (either ratably or under a constant yield method), in
which case the rule described above regarding deferral of interest deductions
will not apply. This election to include market discount in income currently,
once made, applies to all market discount obligations held or subsequently
acquired by the United States Holder on or after the first day of the first
taxable year to which the election applies and may not be revoked without the
consent of the Internal Revenue Service ("IRS").
Amortizable Bond Premium
A United States Holder that purchased an old note for an amount greater than
its stated redemption price at maturity will be considered to have purchased
the old note at a "premium." A United States Holder generally may elect to
amortize the premium over the remaining term of the new note received in
exchange for the old note under a constant yield method. The amount amortized
in any year will be treated as a reduction of the United States Holder's
interest income from the new note. Bond premium on a new note held by a United
States Holder that does not make such an election will decrease the gain or
increase the loss otherwise recognized on disposition of the new note. The
election to amortize premium on a constant yield method, once made, applies to
all debt obligations held or subsequently acquired by the United States Holder
on or after the first day of the first taxable year to which the election
applies and may not be revoked without the consent of the IRS.
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<PAGE>
Sale, Exchange or Other Disposition of a New Note
Upon the sale, exchange, retirement or other taxable disposition of a new
note, a United States Holder will recognize gain or loss equal to the
difference between the amount realized on such disposition (less any accrued
but unpaid interest, which will be taxable as ordinary income) and the United
States Holder's adjusted tax basis in the new note. Except as described above
with respect to market discount, such gain or loss will be capital gain or loss
and will be long-term capital gain or loss if the old note and the new note
have, in the aggregate, been held for more than one year. Generally, for
noncorporate United States Holders, long-term capital gains are subject to
United States federal income taxation at reduced rates. The deductibility of
capital losses is subject to limitations. A United States Holders' adjusted tax
basis in a new note received in exchange for an old note will, in general, be
the cost of the old note to the United States Holder, increased by any market
discount previously included in income and reduced by any amortized premium.
A Non-United States Holder generally will not be subject to United States
federal income or withholding tax with respect to gain realized from a sale,
exchange, redemption or other taxable disposition of a new note. Under certain
circumstances, a Non-United States Holder may be subject to United States
federal income tax on gain realized with respect to a new note, even if no
withholding of taxes is required. This may occur, for example, if the Non-
United States Holder is:
. engaged in a trade or business in the United States and the gain on a
new note is effectively connected with the conduct of that trade or
business, or
. an individual present in the United States for 183 or more days in the
taxable year of the disposition and certain other conditions are met.
Estate Taxes
If interest on a new note is exempt from United States federal withholding
tax under the rules described above under "Payments of Interest," the new note
will not be included, for United States federal estate tax purposes, in the
estate of a deceased individual holder of a new note who is not a United States
citizen or resident for United States federal estate tax purposes.
Information Reporting and Backup Withholding
A United States Holder may be subject to backup withholding at a rate of 31%
on, and to information reporting requirements with respect to, payments of
principal of and interest on, and the proceeds of disposition of, a new note.
Backup withholding will apply if (i) the United States Holder fails to furnish
its taxpayer identification number ("TIN"), which, for an individual, is the
individual's social security number, (ii) the United States Holder furnishes an
incorrect TIN, (iii) the Company is notified by the IRS that the United States
Holder has failed properly to report payments of interest or dividends or (iv)
under certain circumstances, the United States Holder fails to certify, under
penalty of perjury, that it has furnished a correct TIN and has not been
notified by the IRS that it is subject to backup withholding for failure to
report interest and dividend payments. Backup withholding and information
reporting will not apply with respect to payments made to certain exempt
recipients, such as corporations and tax-exempt organizations. The amount of
any backup withholding from a payment to a United States Holder will be allowed
as a credit against the holder's United States federal income tax liability and
may entitle the holder to a refund, provided the required information is
furnished to the IRS. United States Holders should consult their tax advisors
regarding their qualification for exemption from backup withholding and the
procedure for obtaining an exemption, if applicable.
Information reporting and backup withholding generally do not apply to
payments of interest to a Non-United States Holder if the certification
described above under "Payments of Interest" is received, provided the payor
does not have actual knowledge that the holder is a United States person.
Payments of principal and interest made to the beneficial owner of a new note
by or through
126
<PAGE>
the foreign office of a custodian, nominee or other agent acting on behalf of
the beneficial owner, and payment of the proceeds of a sale, exchange or other
disposition of a new note by the foreign office of a broker, generally will not
be subject to backup withholding. However, if the custodian, nominee, other
agent or broker is a United States person, a controlled foreign corporation for
United States federal income tax purposes, or a foreign person 50% or more of
whose gross income is effectively connected with a United States trade or
business for a specified three-year period, information reporting will be
required with respect to these payments unless the custodian, nominee, other
agent or broker has in its records documentary evidence that the beneficial
owner is not a United States person and certain conditions are met or the
beneficial owner otherwise establishes an exemption. Payments by a United
States office of a custodian, nominee, other agent or broker are subject to
both backup withholding and information reporting unless the beneficial owner
certifies as to its Non-United States Holder status under penalties of perjury
or otherwise establishes an exemption.
Income tax regulations that are generally effective for payments made after
December 31, 2000, subject to certain transition rules, modify in some respects
the backup withholding and information reporting rules. In general, these
regulations do not significantly alter the substantive requirements of these
rules, but unify current procedures and forms and clarify reliance standards.
You should consult your own tax advisor regarding these regulations.
127
<PAGE>
BOOK-ENTRY; DELIVERY AND FORM
The new notes will initially be represented by one permanent global note in
definitive, fully registered book-entry form, without interest coupons that
will be deposited with, or on behalf of, DTC and registered in the name of DTC
or its nominee, on behalf of the acquirers of new notes represented thereby for
credit to the respective accounts of the acquirers, or to such other accounts
as they may direct, at DTC, or Morgan Guaranty Trust Company of New York,
Brussels Office, as operator of the Euroclear System, or Clearstream Banking,
societe anonyme. See "The Exchange Offer--Book-Entry Transfer."
Except as set forth below, the global notes may be transferred, in whole and
not in part, solely to another nominee of DTC or to a successor of DTC or its
nominee. Beneficial interests in the global notes may not be exchanged for
notes in physical, certificated form except in the limited circumstances
described below.
All interests in the global notes, including those held through Euroclear or
Clearstream, may be subject to the procedures and requirements of DTC. Those
interests held through Euroclear or Clearstream may also be subject to the
procedures and requirements of those systems.
Certain Book-Entry Procedures for the Global Notes
The descriptions of the operations and procedures of DTC, Euroclear and
Clearstream set forth below are provided solely as a matter of convenience.
These operations and procedures are solely within the control of the respective
settlement systems and are subject to change by them from time to time. We do
not take any responsibility for these operations or procedures, and investors
are urged to contact the relevant system or its participants directly to
discuss these matters.
DTC has advised us that it is
(1) a limited purpose trust company organized under the laws of the
State of New York,
(2) a "banking organization" within the meaning of the New York Banking
Law,
(3) a member of the Federal Reserve System,
(4) a "clearing corporation" within the meaning of the Uniform
Commercial Code, as amended, and
(5) a "clearing agency" registered pursuant to Section 17A of the
Exchange Act.
DTC was created to hold securities for its participants and facilitates the
clearance and settlement of securities transactions between participants
through electronic book-entry changes to the accounts of its participants,
thereby eliminating the need for physical transfer and delivery of
certificates. DTC's participants include securities brokers and dealers, banks
and trust companies, clearing corporations and certain other organizations.
Indirect access to DTC's system is also available to other entities such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly.
Investors who are not participants may beneficially own securities held by or
on behalf of DTC only through participants or indirect participants.
We expect that pursuant to procedures established by DTC ownership of the
new notes will be shown on, and the transfer of ownership thereof will be
effected only through, records maintained by DTC (with respect to the interests
of participants) and the records of participants and the indirect participants
(with respect to the interests of persons other than participants).
The laws of some jurisdictions may require that certain purchasers of
securities take physical delivery of those securities in definitive form.
Accordingly, the ability to transfer interests in the new
128
<PAGE>
notes represented by a global note to those persons may be limited. In
addition, because DTC can act only on behalf of its participants, who in turn
act on behalf of persons who hold interests through participants, the ability
of a person having an interest in new notes represented by a global note to
pledge or transfer that interest to persons or entities that do not participate
in DTC's system, or to otherwise take actions in respect of that interest, may
be affected by the lack of a physical definitive security in respect of that
interest.
So long as DTC or its nominee is the registered owner of a global note, DTC
or such nominee, as the case may be, will be considered the sole owner or
holder of the new notes represented by the global note for all purposes under
the indenture. Except as provided below, owners of beneficial interests in a
global note:
--will not be entitled to have new notes represented by that global note
registered in their names,
--will not receive or be entitled to receive physical delivery of
certificated new notes, and
--will not be considered the owners or holders thereof under the indenture
for any purpose, including with respect to the giving of any direction,
instruction or approval to the trustee thereunder.
Accordingly, each holder owning a beneficial interest in a global note must
rely on the procedures of DTC and, if that holder is not a participant or an
indirect participant, on the procedures of the participant through which that
holder owns its interest, to exercise any rights of a holder of notes under the
indenture or that global note. We understand that under existing industry
practice, in the event that we request any action of holders of notes, or a
holder that is an owner of a beneficial interest in a global note desires to
take any action that DTC, as the holder of that global note, is entitled to
take, DTC would authorize the participants to take such action and the
participants would authorize holders owning through those participants to take
such action or would otherwise act upon the instruction of those holders.
Neither we nor the trustee will have any responsibility or liability for any
aspect of the records relating to or payments made on account of notes by DTC,
or for maintaining, supervising or reviewing any records of DTC relating to
those new notes.
Payments with respect to the principal of, and premium, if any, and interest
on, any new notes represented by a global note registered in the name of DTC or
its nominee on the applicable record date will be payable by the trustee to or
at the direction of DTC or its nominee in its capacity as the registered holder
of the global note representing the new notes under the indenture. Under the
terms of the indenture, we and the trustee may treat the persons in whose names
the new notes, including the global notes, are registered as the owners thereof
for the purpose of receiving payment thereon and for any and all other purposes
whatsoever. Accordingly, neither we nor the trustee has or will have any
responsibility or liability for the payment of those amounts to owners of
beneficial interests in a global note (including principal, premium, if any,
liquidated damages, if any, and interest). Payments by the participants and the
indirect participants to the owners of beneficial interests in a global note
will be governed by standing instructions and customary industry practice and
will be the responsibility of the participants or the indirect participants and
DTC.
Transfers between participants in DTC will be effected in accordance with
DTC's procedures, and will be settled in same-day funds. Transfers between
participants in Euroclear or Clearstream will be effected in the ordinary way
in accordance with their respective rules and operating procedures.
Cross-market transfers between the participants in DTC, on the one hand, and
Euroclear or Clearstream participants, on the other hand, will be effected
through DTC in accordance with DTC's rules on behalf of Euroclear or
Clearstream, as the case may be, by its respective depositary; however, such
cross-market transactions will require delivery of instructions to Euroclear or
129
<PAGE>
Clearstream, as the case may be, by the counterpart in such system in
accordance with the rules and procedures and within the established deadlines
(Brussels time) of such system. Euroclear or Clearstream, as the case may be,
will, if the transaction meets its settlement requirements, deliver
instructions to its respective depositary to take action to effect final
settlement on its behalf by delivering or receiving interests in the relevant
global notes in DTC, and making or receiving payment in accordance with normal
procedures for same-day funds settlement applicable to DTC. Euroclear
participants and Clearstream participants may not deliver instructions directly
to the depositaries for Euroclear or Clearstream.
Because of time zone differences, the securities account of a Euroclear or
Clearstream participant purchasing an interest in a global note from a
participant in DTC will be credited, and any such crediting will be reported to
the relevant Euroclear or Clearstream participant, during the securities
settlement processing day (which must be a business day for Euroclear and
Clearstream) immediately following the settlement date of DTC. Cash received in
Euroclear or Clearstream as a result of sales of interests in a global note by
or through a Euroclear or Clearstream participant to a participant in DTC will
be received with value on the settlement date of DTC but will be available in
the relevant Euroclear or Clearstream cash account only as of the business day
for Euroclear or Clearstream following DTC's settlement date.
Although DTC, Euroclear and Clearstream have agreed to the foregoing
procedures to facilitate transfers of interests in the global notes among
participants in DTC, Euroclear and Clearstream, they are under no obligation to
perform or to continue to perform these procedures, and the procedures may be
discontinued at any time. Neither we nor the trustee will have any
responsibility for the performance by DTC, Euroclear or Clearstream or their
respective participants or indirect participants of their respective
obligations under the rules and procedures governing their operations.
Certificated Notes
If:
--we notify the trustee in writing that DTC is no longer willing or able to
act as a depositary or DTC ceases to be registered as a clearing agency
under the Securities Exchange Act of 1934 and a successor depositary is
not appointed within 90 days of that notice or cessation;
--an Event of Default has occurred and is continuing; or
--we, at our option, notify the trustee in writing that we elect to cause
the issuance of notes in definitive form under the indenture,
then, upon surrender by DTC of the global notes, certificated notes will be
issued to each person that DTC identifies as the beneficial owner of the notes
represented by the global notes. Upon any such issuance, the trustee is
required to register those certificated notes in the name of that person or
those persons (or the nominee of any thereof) and cause the same to be
delivered thereto.
Neither we nor the trustee shall be liable for any delay by DTC or any
participant or indirect participant in identifying the beneficial owners of the
related notes and each such person may conclusively rely on, and shall be
protected in relying on, instructions from DTC for all purposes (including with
respect to the registration and delivery, and the respective principal amounts,
of the notes to be issued).
130
<PAGE>
PLAN OF DISTRIBUTION
Each broker-dealer that receives new notes for its own account pursuant to
the exchange offer must acknowledge that it will deliver a prospectus meeting
the requirements of the Securities Act of 1933 in connection with any resale of
those new notes. This prospectus, as it may be amended or supplemented from
time to time, may be used by a broker-dealer in connection with resales of new
notes received in exchange for old notes only where those old notes were
acquired as a result of market-making or other trading activities. The issuer
and the note guarantors have agreed that, for a period of 180 days from the
date on which the exchange offer is consummated, they will make this
prospectus, as amended or supplemented, available to any broker-dealer for use
in connection with those resales.
The issuer will not receive any proceeds from any sales of new notes by
broker-dealers. New notes received by broker-dealers for their own account
pursuant to the exchange offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the new notes or a combination of such
methods of resale, at prices related to such prevailing market prices or at
negotiated prices. Those resales may be made directly to purchasers or to or
through brokers or dealers who may receive compensation in the form of
commissions or concessions from any such broker-dealer or the purchasers of
those new notes. Any broker-dealer that resells new notes that were received by
it for its own account pursuant to the exchange offer and any broker or dealer
that participates in a distribution of those new notes may be deemed to be an
"underwriter" within the meaning of the Securities Act of 1933 and any profit
on any such resale of new notes and any commissions or concessions received by
any such persons may be deemed to be underwriting compensation under the
Securities Act of 1933. The letter of transmittal states that by acknowledging
that it will deliver and by delivering a prospectus, a broker-dealer will not
be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act of 1933.
For a period of up to 180 days from the date on which the exchange offer is
consummated, the issuer and the note guarantors will promptly send additional
copies of this prospectus and any amendment or supplement to this prospectus to
any broker-dealer that requests those documents in the letter of transmittal.
The issuer and the note guarantors have agreed to pay all expenses incident to
the exchange offer (including the expenses of one counsel for holders of the
notes) other than commissions or concessions of any broker-dealers and will
indemnify the holders of the notes (including any broker-dealers) against
certain liabilities, including liabilities under the Securities Act of 1933.
LEGAL MATTERS
The validity of the new notes will be passed upon for us by Winthrop,
Stimson, Putnam & Roberts, New York, New York.
131
<PAGE>
EXPERTS
The consolidated financial statements for the Company at December 31, 1998
and 1999 and for each of the three years in the period ended December 31, 1999
included in this prospectus have been so included in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting. The consolidated financial
statements for Better Materials at December 13, 1998 and January 3, 1998 and
for the period ended December 13, 1998 and for the fiscal years ended January
3, 1998 and December 28, 1996 included in this prospectus have been so included
in reliance on the report of PricewaterhouseCoopers LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting. The combined financial statements for Commercial Stone Company and
CATS as of March 31, 1999 and 1998 and for each of the three years in the
period ended March 31, 1999 included in this prospectus have been so included
in reliance on the report of Schneider Downs & Co., Inc., independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
132
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Better Minerals & Aggregates
Company and Subsidiaries
(formerly USS Intermediate Holdco, Inc.)
Consolidated Financial Statements
At December 31, 1998 and 1999 and for
each of the three years in the period ended
December 31, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
BETTER MINERALS & AGGREGATES COMPANY AND SUBSIDIARIES
(formerly USS Intermediate Holdco, Inc.)
Report of Independent Accountants....................................... F-2
Consolidated Balance Sheets at December 31, 1998 and 1999............... F-3
Consolidated Statement of Operations for the years ended December 31,
1997, 1998 and 1999.................................................... F-4
Consolidated Statement of Stockholder's Equity for the years ended
December 31, 1997, 1998 and 1999....................................... F-5
Consolidated Statement of Cash Flows for the years ended December 31,
1997, 1998 and 1999.................................................... F-6
Notes to Consolidated Financial Statements.............................. F-7
BETTER MATERIALS CORPORATION
Report of Independent Accountants....................................... F-29
Consolidated Balance Sheets at December 13, 1998 and January 3, 1998.... F-30
Consolidated Statements of Income for the period ended December 13, 1998
and
for the fiscal years ended January 3, 1998 and December 28, 1996....... F-31
Consolidated Statements of Shareholders' Equity for the period ended
December 13, 1998 and for the fiscal years ended January 3, 1998 and
December 28, 1996...................................................... F-32
Consolidated Statements of Cash Flows for the period ended December 13,
1998, and
for the fiscal years ended January 3, 1998 and December 28, 1996....... F-33
Notes to Consolidated Financial Statements.............................. F-34
COMMERCIAL STONE CO., INC. AND COMMERCIAL AGGREGATES
TRANSPORTATION & SALES, L.P. (COMBINED)
Independent Auditors' Report............................................ F-42
Combined Statement of Operations for the years ended March 31, 1999,
1998 and 1997.......................................................... F-43
Combined Balance Sheets as of March 31, 1999 and 1998................... F-44
Combined Statement of Changes in Owners' Equity for the years ended
March 31, 1999, 1998 and 1997.......................................... F-45
Combined Statements of Cash Flow for the years ended March 31, 1999,
1998 and 1997.......................................................... F-46
Notes to Combined Financial Statements.................................. F-47
Condensed Combined Balance Sheets as of September 30, 1999 (unaudited).. F-54
Condensed Combined Statements of Operations for the (unaudited) six
months ended September 30, 1999 and 1998............................... F-55
Condensed Combined Statements of Changes in Owners' Equity for the
(unaudited) six months ended September 30, 1999 and 1998............... F-56
Condensed Combined Statements of Cash Flow for the (unaudited) six
months ended September 30, 1999 and 1998............................... F-57
Notes to Condensed Combined Financial Statements for the (unaudited) six
months ended September 30, 1999 and 1998............................... F-58
</TABLE>
F-1
<PAGE>
Report of Independent Accountants
To the Board of Directors and Stockholder of
Better Minerals & Aggregates Company:
(formerly USS Intermediate Holdco, Inc.)
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, stockholder's equity and cash flows
present fairly, in all material respects, the financial position of Better
Minerals & Aggregates Company (formerly USS Intermediate Holdco, Inc.) (the
"Company") at December 31, 1998 and 1999, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1999 in conformity with accounting principles generally accepted in the
United States. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the
United States, which 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, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
March 9, 2000
New York, New York
F-2
<PAGE>
BETTER MINERALS & AGGREGATES COMPANY AND SUBSIDIARIES
(formerly USS Intermediate Holdco, Inc.)
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
December 31,
------------------
1998 1999
-------- --------
<S> <C> <C>
ASSETS
Current:
Cash and cash equivalents................................ $ 2,222 $ 13,573
Accounts receivable:
Trade, less allowance for doubtful accounts of $1,060
and $1,278............................................ 28,964 41,658
Other.................................................. 1,382 1,060
Due from parent........................................ -- 834
Inventories.............................................. 15,844 23,058
Prepaid expenses and other current assets................ 1,378 2,018
Income tax deposit....................................... 486 1,056
Deferred income taxes.................................... 6,167 8,148
-------- --------
Total current assets................................. 56,443 91,405
Property, plant and equipment:
Mining property.......................................... 81,890 263,083
Land..................................................... 22,475 28,086
Land improvements........................................ 3,501 5,005
Buildings................................................ 33,961 37,143
Machinery and equipment.................................. 88,833 143,082
Furniture and fixtures................................... 645 1,331
Construction-in-progress................................. 3,770 4,387
-------- --------
235,075 482,117
Accumulated depletion, depreciation and amortization...... (37,198) (59,248)
-------- --------
Property, plant and equipment, net................... 197,877 422,869
Other noncurrent: --
Goodwill and non compete agreements, net................. 12,725 19,907
Debt issuance costs...................................... 4,355 14,601
Other noncurrent assets.................................. 3,278 2,821
-------- --------
Total other noncurrent............................... 20,358 37,329
-------- --------
Total assets......................................... $274,678 $551,603
======== ========
LIABILITIES
Current:
Book overdraft........................................... $ 6,254 $ 5,026
Accounts payable......................................... 13,772 16,845
Accrued liabilities...................................... 9,649 13,053
Due to parent............................................ 1,054 --
Payable to related party................................. -- 898
Accrued interest......................................... 676 7,829
Current portion of long-term debt........................ 5,530 2,039
-------- --------
Total current liabilities............................ 36,935 45,690
Noncurrent liabilities:
USS Holdings, Inc. Series A warrants outstanding......... 455 --
USS Holdings, Inc. Series B warrants outstanding......... 3,325 --
Deferred income taxes.................................... 42,792 117,637
Long-term debt, net of current portion................... 131,918 285,466
Other noncurrent liabilities............................. 35,857 38,475
-------- --------
Total noncurrent liabilities......................... 214,347 441,578
Commitments and contingencies
STOCKHOLDER'S EQUITY
Common stock, par value $.01, authorized 5,000 shares,
issued 100 shares........................................ -- --
Additional paid-in capital................................ 41,491 81,377
Retained deficit.......................................... (18,011) (17,012)
Accumulated other comprehensive (loss).................... (84) (30)
-------- --------
Total stockholder's equity........................... 23,396 64,335
-------- --------
Total liabilities and stockholder's equity........... $274,678 $551,603
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
BETTER MINERALS & AGGREGATES COMPANY AND SUBSIDIARIES
(formerly USS Intermediate Holdco, Inc.)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands)
<TABLE>
<CAPTION>
Years Ended December 31,
-----------------------------
1997 1998 1999
-------- --------- --------
<S> <C> <C> <C>
Net sales...................................... $128,512 $ 142,294 $209,075
Cost of goods sold............................. 88,097 98,478 140,244
Depreciation, depletion and amortization....... 17,886 19,888 28,481
Selling, general and administrative............ 14,345 16,930 21,843
Incentive stock compensation expense (Note
15)........................................... -- 14,227 --
-------- --------- --------
Operating income (loss)...................... 8,184 (7,229) 18,507
Interest expense............................... 10,513 10,269 19,590
Accretion of preferred stock warrants.......... 1,374 1,254 56
Other income net, including interest income.... (1,742) (1,881) (2,171)
-------- --------- --------
(Loss) income before income taxes............ (1,961) (16,871) 1,032
Provision (Benefit) for income taxes........... (2,239) (2,204) (2,714)
-------- --------- --------
Net income (loss) before extraordinary loss.. 278 (14,667) 3,746
Extraordinary loss (less applicable income
taxes of $0, $713 and $1,752) (Note 7)........ -- (2,102) (2,747)
-------- --------- --------
Net income (loss)............................ $ 278 $ (16,769) $ 999
======== ========= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
BETTER MINERALS & AGGREGATES COMPANY AND SUBSIDIARIES
(formerly USS Intermediate Holdco, Inc.)
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
(Dollars in thousands)
<TABLE>
<CAPTION>
Accumulated Other
Comprehensive Income
---------------------------
Additional Foreign Minimum Total
Common Paid-In Retained Currency Pension Stockholder's
Stock Capital Deficit Translation Liability Total Equity
------ ---------- -------- ----------- --------- ----- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31,
1996................... $ $24,275 $ (1,520) $ $ $ $ 22,755
Net income.............. 278 278
Accretion of mandatory
redeemable preferred
stock.................. (847) (847)
Retirement of mandatory
redeemable preferred
stock.................. 3,836 3,836
---- ------- -------- ----- ---- ---- --------
Balance, December 31,
1997................... 27,264 (1,242) 26,022
Comprehensive income,
net of income taxes:
Net (loss)............. (16,769) (16,769)
Foreign currency
translation........... (44) (44) (44)
Minimum pension
liability............. (40) (40) (40)
--------
Total comprehensive
(loss).............. (16,853)
Issuance of incentive
stock.................. 14,227 14,227
---- ------- -------- ----- ---- ---- --------
Balance, December 31,
1998................... 41,491 (18,011) (44) (40) (84) 23,396
Comprehensive income,
net of income taxes:
Net income............. 999 999
Foreign currency
translation........... 14 14 14
Minimum pension
liability............. 40 40 40
--------
Total comprehensive
income.............. 1,053
Capital contributed by
parent................. 39,886 39,886
---- ------- -------- ----- ---- ---- --------
Balance, December 31,
1999................... $ $81,377 $(17,012) $ (30) $-- $(30) $ 64,335
==== ======= ======== ===== ==== ==== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
BETTER MINERALS & AGGREGATES COMPANY AND SUBSIDIARIES
(formerly USS Intermediate Holdco, Inc.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------------
1997 1998 1999
-------- --------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)............................. $ 278 $ (16,769) $ 999
Adjustments to reconcile net income (loss) to
cash flows from operations:
Depreciation.................................. 11,688 13,012 17,950
Depletion..................................... 929 1,108 4,111
Non compete agreements amortization........... 5,000 5,593 5,713
Accretion of preferred stock warrants......... 1,374 1,254 56
Debt issuance amortization.................... 1,540 1,237 1,148
Extraordinary loss............................ -- 2,815 4,499
Incentive stock compensation.................. -- 14,227 --
Deferred income taxes......................... (3,363) (3,380) (6,962)
Disposal of property, plant and equipment
loss (gain).................................. 10 (208) (165)
Other......................................... 2,634 1,712 1,806
Changes in current assets and liabilities,
net of the effects from acquired companies:
Trade receivables............................ (3,136) 1,429 (360)
Non-trade receivables........................ 548 (949) 563
Receivable from parent....................... 218 922 (838)
Payable to related party..................... -- -- 898
Inventories.................................. 348 (256) (1,250)
Prepaid expenses and other current assets.... 161 (103) (668)
Accounts payable and accrued liabilities..... (2,075) (3,618) (4,565)
Accrued interest............................. (153) (753) 7,153
Income taxes................................. -- (1,921) (569)
-------- --------- ---------
Net cash provided by operating activities... 16,001 15,352 29,519
Cash flows from investing activities:
Capital expenditures.......................... (5,537) (9,399) (14,572)
Proceeds from sale of property, plant and
equipment.................................... 289 362 1,310
Purchase of non compete agreements............ -- (2,796) --
Purchases of businesses, net of cash ac-
quired....................................... -- (54,752) (172,379)
-------- --------- ---------
Net cash used for investing activities...... (5,248) (66,585) (185,641)
Cash flows from financing activities:
Change in book overdraft...................... 682 3,930 (1,402)
Issuance of long-term debt.................... -- 136,382 325,006
Repayment of long-term debt................... (6,987) (84,370) (169,205)
Change in Working Capital Facility............ -- -- (6,100)
Principal payments on capital lease obliga-
tions........................................ -- (24) (44)
Prepayment penalties.......................... -- (1,255) --
Financing fees................................ -- (1,550) (15,796)
Redemption of mandatory redeemable preferred
stock........................................ (5,000) -- --
Capital contributed by parent................. -- -- 35,000
-------- --------- ---------
Net cash (used for) provided by financing
activities................................. (11,305) 53,113 167,459
Effect of exchange rate on cash................ -- (60) 14
-------- --------- ---------
Net (decrease) increase in cash............. (552) 1,820 11,351
Cash and cash equivalents, beginning of peri-
od............................................ 954 402 2,222
-------- --------- ---------
Cash and cash equivalents, ending of period.... $ 402 $ 2,222 $ 13,573
======== ========= =========
Schedule of noncash investing and financing ac-
tivities:
Redemption of Mandatory Redeemable Series C
Preferred Stock of Holdings.................. $ 3,836 $ -- $ --
======== ========= =========
Assets acquired by assuming notes payable and
capital lease obligations.................... $ 1,111 $ 1,058 $ --
======== ========= =========
Forgiveness of Series A and B Preferred Stock
warrants of Holdings......................... $ -- $ -- $ 3,836
======== ========= =========
Forgiveness of payable to parent.............. $ -- $ -- $ 1,050
======== ========= =========
Cash paid during the year for:
Interest...................................... $ 8,731 $ 9,269 $ 10,925
======== ========= =========
Income taxes.................................. $ 1,175 $ 2,393 $ 3,232
======== ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
BETTER MINERALS & AGGREGATES COMPANY AND SUBSIDIARIES
(formerly USS Intermediate Holdco, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization
Better Minerals & Aggregates Company (formerly USS Intermediate Holdco,
Inc.) (the "Company"), an indirect wholly owned subsidiary of USS Holdings,
Inc. ("Holdings") was organized in January 1996. BMAC Holdings, Inc. ("BMAC
Holdings"), a wholly owned subsidiary of Holdings, is the direct parent of the
Company. On February 9, 1996, the Company purchased from U.S. Borax Inc.
("Borax"), an indirect wholly owned subsidiary of the RTZ Corporation PLC, 100%
of the common stock of U.S. Silica Company ("U.S. Silica").
On December 14, 1998 and July 24, 1998, U.S. Silica acquired Better
Materials Corporation and George F. Pettinos, Inc., respectively (Note 3). On
April 8, 1999, U.S. Silica acquired the assets of five New Jersey-based
operations owned by Unimin Corporation (Note 3). On October 1, 1999, the
Company acquired Commercial Stone Co., Inc. and Commercial Aggregates
Transportation and Sales, L.P. and their related quarry properties (Note 3).
Commercial Stone Co., Inc. and Commercial Aggregates Transportation and Sales,
L.P. and their related quarry properties are collectively referred to in the
notes to the financial statements as "Commercial Stone."
The Company and its subsidiaries are collectively referred to as the
"Company" in the accompanying financial statements and footnotes.
2. Summary of Significant Accounting Policies
a. Principles of Consolidation
The consolidated financial statements include the accounts of the Company
and its direct and indirect wholly owned subsidiaries. All significant
intercompany balances and transactions have been eliminated in consolidation.
b. Reclassifications
Certain prior years' amounts have been reclassified to conform with the
current year's presentation.
c. Use of Estimates and Assumptions
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the dates of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from those estimates.
d. Cash and Cash Equivalents
All highly liquid investments with a maturity of three months or less are
considered cash equivalents.
e. Inventories
Inventories are stated at the lower of cost or market. Cost is determined
using the first-in, first-out and average cost methods.
F-7
<PAGE>
BETTER MINERALS & AGGREGATES COMPANY AND SUBSIDIARIES
(formerly USS Intermediate Holdco, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
f. Revenue Recognition
Revenue is recorded when legal title passes at the time of shipment to the
customer.
g. Deferred Financing Costs
Deferred financing costs consist of loan origination costs, which are being
amortized over the term of the related debt principal. Amortization included in
interest expense for each of the three years ended December 31, 1997, 1998 and
1999 totaled approximately $1.3 million, $1.0 million and $1.1 million,
respectively.
h. Depreciable Properties
Depreciable properties, mining properties and mineral deposits acquired in
connection with the acquisitions of U.S. Silica, George F. Pettinos, Inc.,
Better Materials Corporation, the Morie Assets and Commercial Stone are
recorded at fair market value as of the date of acquisition. Additions and
improvements occuring through the normal course of business are capitalized at
cost.
Upon retirement or disposal of assets, other than those of U.S. Silica
acquired on February 9, 1996, the cost and accumulated depreciation or
amortization are eliminated from the accounts and any gain or loss is reflected
in the statement of operations. Group asset accounting is utilized for the U.S.
Silica assets acquired on February 9, 1996. Gains and losses on normal
retirements or dispositions of these assets are excluded from net income and
proceeds for dispositions are recorded as a reduction of the acquired cost.
Expenditures for normal repairs and maintenance are expensed as incurred.
Construction-in-progress is primarily comprised of machinery and equipment
which has not yet been placed in service.
Depreciation is computed using the straight-line method over the estimated
useful lives of the assets, ranging from 3 to 15 years.
Depletion and amortization of mineral deposits are provided as the minerals
are extracted, based on units of production and engineering estimates of total
reserves.
i. Mine Exploration and Development
Costs to develop new mining properties are deferred and amortized based on
units of production.
j. Mine Reclamation Costs
The estimated net future costs of dismantling, restoring and reclaiming
operating mines and related mine sites, in accordance with federal, state and
local regulatory requirements, are accrued during operations. The provision is
made based upon units of production and estimatable minable reserves as of the
balance sheet date. The effect of changes in estimated costs, production, and
minable reserves is recognized on a prospective basis.
k. Intangible Assets
The Company's intangible assets include goodwill and non-compete agreements.
At December 31, 1999, the net book value of goodwill associated with the
acquisitions of Commercial Stone and
F-8
<PAGE>
BETTER MINERALS & AGGREGATES COMPANY AND SUBSIDIARIES
(formerly USS Intermediate Holdco, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
the Morie Assets approximated $12.8 million. Goodwill is amortized on a
straight-line basis over fifteen years. On February 9, 1996, U.S. Silica signed
a five-year non-compete agreement with RTZ America, Inc., an affiliate of
Borax. During 1998, U.S. Silica entered into additional non-compete agreements
with the sellers of Nicks Silica Company and George F. Pettinos, Inc. At
December 31, 1998 and 1999, the aggregate net book value of these non-compete
agreements approximated $12.7 million and $7.1 million, respectively. The costs
of these agreements are being amortized on a straight-line basis over the terms
of the agreements, which range from three to five years.
The Company periodically evaluates the recoverability of its goodwill and
measures any impairment by comparison to estimated undiscounted cash flows from
future operations.
l. Income Taxes
The Company accounts for income taxes pursuant to the provisions under
Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting for
Income Taxes", which requires recognition of deferred tax liabilities and
assets for the expected future tax consequences of events that have been
included in the financial statements or tax returns. Under this method,
deferred tax liabilities and assets are determined based upon the difference
between the financial statement and tax basis of assets and liabilities using
enacted tax rates in effect for the year in which the expenses are expected to
reverse. The Company is included in the consolidated federal tax return of
Holdings. The tax provision (benefit) included in the accompanying financial
statements has been computed on a separate return basis.
m. Concentration of Credit Risk
The five largest customers accounted for approximately 30% of net product
sales and one customer accounted for more than 10% of net product sales of the
Company for each of the two years in the period ended December 31, 1998. The
Company's five largest customers accounted for approximately 20% of net product
sales for the year ended December 31, 1999. Management believes it maintains
adequate reserves for potential credit losses; ongoing credit evaluations are
performed and collateral is generally not required.
n. Financial Instruments
The Company uses interest rate swap and cap agreements to manage interest
costs and the risk associated with changing interest rates. Amounts to be paid
or received under interest rate swap agreements are accrued as interest rates
change and are recognized over the life of the swap agreements as an adjustment
to interest expense. The Company's practice is to not hold or issue derivative
financial instruments for trading or speculative purposes. When entered into,
these financial instruments are designated as hedges of underlying exposures,
associated with the Company's long-term debt, and are monitored to determine if
they remain effective hedges. The fair value of the interest rate agreements
and changes in these fair values as a result of changes in market interest
rates are not recognized in the consolidated financial statements.
o. Environmental Costs
Environmental costs, other than qualifying capital expenditures, are accrued
at the time the exposure becomes known and costs can be reasonably estimated.
Costs are accrued based upon
F-9
<PAGE>
BETTER MINERALS & AGGREGATES COMPANY AND SUBSIDIARIES
(formerly USS Intermediate Holdco, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
management's estimates of all direct costs, after taking into account expected
reimbursement by third parties (primarily the sellers of acquired businesses),
and are reviewed by outside consultants. Environmental costs are charged to
expense unless a settlement with an indemnifying party has been reached.
p. Comprehensive Income
The Company adopted SFAS No. 130 "Reporting of Comprehensive Income" in
1998. Comprehensive income is defined as the change in equity from transactions
and other events from nonowner sources and consists of net income and other
comprehensive income. SFAS No. 130 requires foreign currency translation
adjustments and minimum pension liability adjustments to be included in other
comprehensive income. The Company had no items of other comprehensive income in
periods prior to January 1, 1998.
q. Impact of Recent Accounting Standards
In June 1998, SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities", was issued. SFAS No. 133 requires that all derivatives be
recognized as either assets or liabilities in the statement of financial
position and measured at fair value. SFAS No. 133, as amended by SFAS No. 137,
"Accounting for Derivative Instruments and Hedging Activities--Deferral of the
Effective Date of FASB Statement No. 133, an amendment of FASB Statement No.
133", is effective for fiscal years beginning after June 15, 2000. The Company
has not yet determined the impact that adoption or subsequent application of
SFAS No. 133 will have on its financial position or results of operations.
3. Acquisitions
On October 1, 1999, the Company acquired Commercial Stone for total
consideration of $139.0 million in cash, $8.0 million of which was placed in
escrow to satisfy any future indemnity claims the Company may have against the
sellers. The Company financed the acquisition through the issuance of $150.0
million Senior Subordinated Notes and the refinancing of its existing Senior
Debt by entering into new Senior Secured Credit Facilities (Note 6). The
acquisition was accounted for as a purchase and the purchase price was
allocated to the assets acquired and liabilities assumed based on fair values
at the date of acquisition. Approximately $175.9 million, inclusive of deferred
income taxes of $76.0 million, has been allocated to mineral reserves and is
being amortized based on production. The allocation of the purchase price was
as follows:
<TABLE>
<CAPTION>
(In thousands)
--------------
<S> <C>
Working capital, other than cash........................... $ 7,443
Property, plant and equipment.............................. 27,207
Goodwill................................................... 7,403
Mineral reserves........................................... 175,856
Other assets............................................... 1,739
Other liabilities.......................................... (818)
Deferred income taxes...................................... (79,830)
--------
Purchase price, net of cash received..................... $139,000
========
</TABLE>
F-10
<PAGE>
BETTER MINERALS & AGGREGATES COMPANY AND SUBSIDIARIES
(formerly USS Intermediate Holdco, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
On April 8, 1999, U.S. Silica acquired the assets of five New Jersey-based
operations formerly owned by the Morie Company and owned at the time by Unimin
Corporation (the "Morie Assets") for total consideration of $33.4 million. Also
on April 8, 1999, U.S. Silica amended its $155.0 million Credit Agreement to
add a $35.0 million dollar Senior Term C Facility (Note 6). The purchase price
was financed with proceeds from the addition of the Senior Term C Facility. The
acquisition was accounted for as a purchase and the purchase price was
allocated to the assets acquired and liabilities assumed based on their fair
values at the date of acquisition. Approximately $11.1 million has been
allocated to mineral reserves and is being amortized based on production. The
allocation of the purchase price was as follows:
<TABLE>
<CAPTION>
(In thousands)
--------------
<S> <C>
Working capital, other than cash........................... $ 1,569
Property, plant and equipment.............................. 15,102
Goodwill................................................... 5,844
Mineral reserves........................................... 11,053
Other liabilities.......................................... (308)
Deferred income taxes...................................... 120
-------
Purchase price, net of cash received..................... $33,380
=======
</TABLE>
On December 14, 1998, BMC Acquisition Company, a wholly owned subsidiary of
U.S. Silica, acquired the stock of Better Materials Corporation, for total
consideration of $40.6 million. Immediately upon closing, BMC Acquisition
Corporation merged with and into Better Materials Corporation, with Better
Materials Corporation as the surviving corporation. The purchase price was
financed with cash and available borrowings under U.S. Silica's $155.0 million
Credit Agreement's Acquisition and Working Capital Facilities (Note 6). The
acquisition was accounted for as a purchase and the purchase price was
allocated to the assets acquired and liabilities assumed based on their fair
values at the date of acquisition. The excess of the purchase price over the
fair value of the net assets acquired of approximately $43.3 million, inclusive
of deferred income taxes of $20.1 million, has been allocated to mineral
reserves and is being amortized based on production. The allocation of the
purchase price was as follows:
<TABLE>
<CAPTION>
(In thousands)
--------------
<S> <C>
Working capital, other than cash........................... $ 708
Property, plant and equipment.............................. 17,206
Mineral reserves........................................... 43,266
Other liabilities.......................................... (2,445)
Deferred income taxes...................................... (20,331)
--------
Purchase price, net of cash received..................... $ 38,404
========
</TABLE>
On July 24, 1998, GFP Acquisition Corp., a wholly owned subsidiary of U.S.
Silica, acquired George F. Pettinos, Inc. for total consideration of $14.9
million including a covenant not to compete for $1.1 million. Immediately upon
closing, GFP Acquisition Corp. merged with and into George F. Pettinos, Inc.,
with George F. Pettinos, Inc. as the surviving corporation. The purchase price
was financed with proceeds from U.S. Silica's $155.0 million Credit Agreement
(Note 6). The acquisition was accounted for as a purchase and the purchase
price was allocated to the assets acquired and liabilities assumed based on
their fair values at the date of acquisition. The excess of the purchase
F-11
<PAGE>
BETTER MINERALS & AGGREGATES COMPANY AND SUBSIDIARIES
(formerly USS Intermediate Holdco, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
price over the fair value of the net assets acquired of approximately $14.5
million, inclusive of deferred income taxes of $5.3 million, has been allocated
to mineral reserves and is being amortized based on production. The allocation
of the purchase price was as follows:
<TABLE>
<CAPTION>
(In thousands)
--------------
<S> <C>
Working capital, other than cash........................... $ 1,162
Property, plant and equipment.............................. 3,234
Mineral reserves........................................... 14,531
Other assets............................................... 601
Other liabilities.......................................... (1,252)
Deferred income taxes...................................... (5,490)
-------
Purchase price, net of cash received..................... $12,786
=======
</TABLE>
On January 16, 1998, U.S. Silica acquired certain assets of Nicks Silica
Company for total consideration of approximately $5.8 million including a
covenant not to compete for $1.3 million and a consulting agreement for
$417,000. The purchase price was financed with both cash and notes payable to
the sellers. The excess of the purchase price over the fair value of the assets
acquired of $607,000 has been allocated to mineral reserves and is being
amortized based on production.
The following unaudited proforma consolidated results of operations have
been prepared as if the acquisitions of Better Materials Corporation and George
F. Pettinos, Inc. had occurred as of the beginning of 1997, and reflect
proforma adjustments for the excess of the purchase price over the fair value
of the net assets acquired, interest expense and tax expense:
<TABLE>
<CAPTION>
For the Year Ended December
31, 1997
------------------------------
Company Acquisitions Total
-------- ------------ --------
(In thousands)
<S> <C> <C> <C>
Net sales.................................. $128,512 $ 39,602 $168,114
======== ======== ========
Net income (loss) before extraordinary
loss...................................... $ 278 $ (1,388) $ (1,110)
======== ======== ========
Net income (loss).......................... $ 278 $ (1,388) $ (1,110)
======== ======== ========
</TABLE>
The following unaudited proforma consolidated results of operations have
been prepared as if the acquisitions of Commercial Stone, the Morie Assets,
Better Materials Corporation and George F. Pettinos, Inc. had occurred as of
the beginning of the periods presented, and reflect proforma adjustments for
the excess of the purchase price over the fair value of the net assets
acquired, salaries, mining royalties, interest expense and tax expense (the
proforma effects of the acquisition of Nicks Silica Company has been excluded
due to immateriality):
<TABLE>
<CAPTION>
For the Year Ended December 31, 1998
------------------------------------------------
Commercial
Company Stone Acquisitions (2) Total
--------- ---------- ---------------- ---------
(In thousands)
<S> <C> <C> <C> <C>
Net sales................... $ 142,294 $ 41,953 $52,240 $ 236,487
========= ======== ======= =========
Net income (loss) before
extraordinary loss......... $ (14,667) $ (6,016) $ 512 $ (20,171)
========= ======== ======= =========
Net income (loss) (1)....... $ (16,769) $ (6,016) $ 512 $ (22,273)
========= ======== ======= =========
</TABLE>
F-12
<PAGE>
BETTER MINERALS & AGGREGATES COMPANY AND SUBSIDIARIES
(formerly USS Intermediate Holdco, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
<TABLE>
<CAPTION>
For the Year Ended December 31,
1999
------------------------------------
Commercial Morie
Company Stone Assets Total
-------- ---------- ------ --------
(In thousands)
<S> <C> <C> <C> <C>
Net sales............................... $209,075 $ 35,430 $3,548 $248,053
======== ======== ====== ========
Net income (loss) before extraordinary
loss................................... $ 3,746 $ (4,212) $ (557) $ (1,023)
======== ======== ====== ========
Net income (loss) (1)................... $ 999 $ (4,212) $ (557) $ (3,770)
======== ======== ====== ========
</TABLE>
- --------
(1) The Company recorded after-tax charges of $2.1 million and $2.7 million
associated with the early extinguishment of U.S. Silica's Senior and
Subordinated Debt during 1998 and 1999, respectively. These after-tax
charges are reflected within the Company's historical results of
operations.
(2) Amounts include the Morie Assets, Better Materials Corporation and George
F. Pettinos, Inc.
The proforma consolidated results do not purport to be indicative of results
that would have occurred had the acquisitions been in effect for the periods
presented, nor do they purport to be indicative of the results that will be
obtained in the future.
4. Inventories
At December 31, 1998 and 1999, inventory consisted of the following:
<TABLE>
<CAPTION>
1998 1999
------- -------
(In thousands)
<S> <C> <C>
Supplies (net of $222 and $38 obsolescence reserve)..... $ 8,112 $11,171
Raw materials and work in process....................... 2,804 6,165
Finished goods.......................................... 4,928 5,722
------- -------
$15,844 $23,058
======= =======
</TABLE>
5. Lease Commitments
The Company is obligated under certain operating leases for railroad cars
(which principally expire during 2000), mining property, mining/processing
equipment, office space and transportation and other equipment. Certain of
these agreements include options to purchase the equipment for fair market
value at the end of the original lease term. Future minimum annual commitments
under such leases at December 31, 1999 are as follows:
<TABLE>
<CAPTION>
Year Ending December 31,
------------------------ (In thousands)
<S> <C>
2000.................................... $1,913
2001.................................... 1,266
2002.................................... 452
2003.................................... 233
2004.................................... 136
Thereafter.............................. 132
------
$4,132
======
</TABLE>
F-13
<PAGE>
BETTER MINERALS & AGGREGATES COMPANY AND SUBSIDIARIES
(formerly USS Intermediate Holdco, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Rental expense for operating leases for each of the three years ended December
31, 1997, 1998 and 1999 totaled approximately $461,000, $942,000 and $2.0
million, respectfully.
In general, the above leases include renewal options and provide that the
Company pay for all utilities, insurance, taxes and maintenance.
6. Long-Term Debt
At December 31, 1998 and 1999, long-term debt consisted of the following:
<TABLE>
<CAPTION>
1998 1999
(In thousands) -------- --------
<S> <C> <C>
Senior Secured Credit Facilities
Tranche A Term Loan Facility (final maturity September 30,
2005)..................................................... $ -- $ 39,057
Tranche B Term Loan Facility (final maturity September 30,
2007)..................................................... -- 94,750
Canadian Term Facility (final maturity September 30,
2005)..................................................... -- 2,043
Senior Subordinated Notes (final maturity September 15,
2009)....................................................... -- 150,000
Senior Debt
Senior Term A Facility (final maturity June 30, 2004)...... 30,000 --
Senior Term B Facility (final maturity June 30, 2006)...... 66,800 --
Canadian Facility (final maturity June 30, 2006)........... 3,134 --
Acquisition Facility (final maturity June 30, 2004)........ 30,000 --
Working Capital Facility (final maturity June 30, 2004).... 6,100 --
Secured Note (due December 31, 2001)......................... 203 141
Mortgage Notes
0% Note, imputed at 9.75% (due June 30, 1999).............. 143 --
0% Note, imputed at 10.0% (due January 16, 2008)........... 1,068 1,162
8.5% Note (due July 1, 2003)............................... -- 65
7.0% Note (due July 31, 2004).............................. -- 287
-------- --------
137,448 287,505
Less, current portion...................................... 5,530 2,039
-------- --------
$131,918 $285,466
======== ========
</TABLE>
At December 31, 1999, contractual maturities of long-term debt are as
follows:
<TABLE>
<CAPTION>
(In thousands)
--------------
<S> <C>
2000.................................................... $ 2,039
2001.................................................... 9,389
2002.................................................... 11,038
2003.................................................... 11,039
2004.................................................... 11,185
Thereafter.............................................. 242,815
--------
$287,505
========
</TABLE>
F-14
<PAGE>
BETTER MINERALS & AGGREGATES COMPANY AND SUBSIDIARIES
(formerly USS Intermediate Holdco, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Debt Agreements
On September 30, 1999, the Company entered into a new $230.0 million Credit
Agreement (the "Agreement"), which consists of a $50.0 million revolving credit
facility (the "Revolving Credit Facility"), a $45.0 million Tranche A Term Loan
Facility ("Term A Loan"), a $95.0 million Tranche B Term Loan Facility ("Term B
Loan") and a $40.0 million term loan acquisition facility (the "Acquisition
Term Loan Facility"). The Term A Loan included a tranche of loans denominated
in Canadian dollars ("Canadian Term Facility") equal to $2.0 million, which was
borrowed by George F. Pettinos (Canada) Limited, an indirect wholly owned
subsidiary of the Company. The Revolving Credit Facility, Term A Loan, Term B
Loan, Acquisition Term Loan Facility and the Canadian Term Facility are
collectively referred to in the notes to the financial statements as the
"Senior Secured Credit Facilities." In addition, on October 1, 1999 the Company
issued $150.0 million of Senior Subordinated Notes. Pursuant to an Exchange and
Registration Rights Agreement, the Company has agreed to file with the
Securities and Exchange Commission a registration statement which would allow
for the exchange of the Company's Senior Subordinated Notes for registered
notes having substantially the same terms. The proceeds from the Senior Secured
Credit Facilities and the Senior Subordinated Notes were primarily used to pay
off the outstanding Senior Debt and to finance the acquisition of Commercial
Stone.
Under the Agreement, the Company has available, until September 30, 2005,
the Revolving Credit Facility, which provides for the borrowings of up to $50.0
million with a sublimit of $12.0 million for letters of credit and a sublimit
of $3.0 million for swingline loans. The borrowing capacity of the Revolving
Credit Facility is reduced by outstanding letters of credit and swingline
loans. At December 31, 1999, outstanding letters of credit totaled $9.2
million. There were no borrowings under the Revolving Credit Facility or the
swingline loans at December 31, 1999. In addition, there were no borrowings
under the Acquisition Term Loan Facility at December 31, 1999.
Except for the Canadian Term Facility, borrowings under the Senior Secured
Credit Facilities bear variable interest at the Company's option at either (1)
the bank's base rate plus a margin percentage, ranging from 1.00% to 2.50% or
(2) the London Interbank Offered Rate ("LIBOR") plus a margin percentage,
ranging from 2.00% to 3.50%. Borrowings under the Canadian Term Facility bear
interest at a bank's base rate plus a margin percentage ranging from 1.50% to
2.50%. Commitment fees, ranging from .375% to .75%, on the average daily unused
Revolving Credit Facility and the unused Acquisition Term Loan Facility are
payable quarterly. Letter of credit fees are also payable quarterly based upon
the average daily balance of all letters of credit outstanding. The Senior
Subordinated Notes bear interest at a rate of 13% per annum, payable semi-
annually.
The obligations of the Company under the Senior Secured Credit Facilities
are unconditionally and irrevocably guaranteed, jointly and severally, by BMAC
Holdings and each of the Company's direct or indirect domestic subsidiaries.
BMAC Holdings has no operations or assets other than its investment in its
subsidiaries. In addition, the Senior Secured Credit Facilities are secured by
a first priority pledge of (i) all the capital stock of BMAC Holdings, the
Company, each of the Company's direct or indirect domestic subsidiaries and 65%
of the capital stock of each direct foreign subsidiary of the Company or any of
its domestic subsidiaries and (ii) substantially all of the tangible and
intangible assets held by BMAC Holdings, the Company and each of the Company's
direct or indirect domestic subsidiaries. The Canadian Term Facility is
collateralized by substantially all of the assets of George F. Pettinos
(Canada) Limited.
F-15
<PAGE>
BETTER MINERALS & AGGREGATES COMPANY AND SUBSIDIARIES
(formerly USS Intermediate Holdco, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The Agreement described above contains various restrictive covenants that,
among other things, limits the ability of BMAC Holdings to engage in certain
transactions with affiliates, incur additional indebtedness, repay other
indebtedness or amend other debt instruments, create liens on assets, make
investments or acquisitions, engage in mergers or consolidations, dispose of
assets, or pay dividends. In addition, the Agreement requires BMAC Holdings to
maintain certain financial convenants, including a leverage ratio, an interest
coverage ratio and a capital expenditures covenant. Covenants associated with
the Senior Subordinated Notes are generally less restrictive than those of the
Senior Secured Credit Facilities. BMAC Holdings and the Company were in
compliance with all financial covenants at December 31, 1999.
The obligation of the Company under the Senior Subordinated Notes is
unconditionally and irrevocably guaranteed, jointly and severally, on an
unsecured senior subordinated basis to the Company's Senior Secured Credit
Facilities, by each of the Company's domestic subsidiaries. The Senior
Subordinated Notes are not guaranteed by the Company's two Canadian
subsidiaries.
On July 21, 1998, U.S. Silica entered into a $155.0 million Credit
Agreement, which consisted of a $30.0 million Senior Secured Term Loan ("Senior
Term A"), a $66.8 million Senior Secured Term Loan ("Senior Term B"), a $30.0
million Acquisition Facility, a $25.0 million Working Capital Facility and a
$3.2 million Canadian Facility. The proceeds from this agreement were primarily
used to satisfy the existing Senior and Subordinated Debt and to finance the
acquisition of George F. Pettinos, Inc. Outstanding letters of credit and
borrowings under the Working Capital Facility approximated $5.4 million and
$6.1 million, respectively, at December 31, 1998.
On April 8, 1999, U.S. Silica amended the $155.0 million Credit Agreement to
add a $35.0 million Senior Secured Term Loan ("Senior Term C"). The proceeds
from the Senior Term C Facility were primarily used to finance the acquisition
of the Morie Assets during April 1999.
At December 31, 1998 and 1999, the carrying value approximated the fair
value of the Company's long-term debt.
Warrants
Warrants to purchase 41,667 shares of Series A Preferred Stock ("Series A
warrants") and 83,334 shares of Series B Preferred Stock ("Series B warrants")
of the Company's ultimate parent, Holdings, were issued to holders of
Subordinated Debt as part of a Note Purchase Agreement dated February 9, 1996.
The Series A warrants and Series B warrants are exercisable at any time
until December 19, 2005 at an exercise price of $.01 per share or less as
defined by the warrant issuance agreement. The holder of the warrants has the
right to require Holdings to purchase any and all of the warrants and shares
subject to the warrants at fair value in cash after December 19, 2001 and prior
to a "liquidity event" which is defined as the sale or liquidation of Holdings
or the consummation of a public offering. Holdings may call all of the
outstanding warrants and shares subject to warrants after December 19, 2002,
subject to approval of the holders of the senior debt. Fair value is defined as
the liquidation preference value of $7.78 per share (plus all accrued and
unpaid dividends thereon) for the Series A warrants and the common equity value
per share as determined by the Board of Directors for the Series B warrants.
The accretion of the Series A warrants and the Series B warrants to fair value
is accounted for by charges to earnings. The holders of the Series A warrants
and the
F-16
<PAGE>
BETTER MINERALS & AGGREGATES COMPANY AND SUBSIDIARIES
(formerly USS Intermediate Holdco, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Series B warrants are entitled to dividends as if they had held underlying
shares from February 9, 1996.
Effective December 31, 1999, Holdings agreed to forgive the Company and its
subsidiaries for the obligation associated with the Series A warrants and the
Series B warrants. The forgiveness of the obligation resulted in a credit to
additional paid-in capital of approximately $3.8 million during the year ended
December 31, 1999.
7. Extraordinary Items
The Company recorded an extraordinary after-tax charge of $2.1 million
during the year ended December 31, 1998 in connection with the early
extinguishment of U.S. Silica's Subordinated Debt. The extraordinary loss of
$2.8 million (before an income tax benefit of $713,000) consisted of the
Subordinated Debt's discount, prepayment penalties and the write-off of related
unamortized debt issuance costs of approximately $983,000, $1.3 million and
$577,000, respectively.
During the year ended December 31, 1999, the Company recorded an
extraordinary after-tax charge of $2.7 million in connection with the early
extinguishment of U.S. Silica's outstanding Senior Debt under its $155.0
million Credit Agreement. The extraordinary loss of $4.5 million (before an
income tax benefit of $1.8 million) consisted of the write-off of related
unamortized debt issuance costs.
8. Financial Instruments
Interest rate swap and cap agreements are utilized in the normal course of
business to manage the Company's interest costs and the risk associated with
changing interest rates. Interest rate swap agreements are used to exchange the
difference between fixed and variable-rate interest amounts calculated by
reference to an agreed-upon notional principal amount. In addition, the Company
utilizes interest rate cap agreements to limit the impact of increases in
interest rates on its floating rate debt. Interest rate cap agreements entitle
the Company to receive from the counterparties the amounts, if any, by which
the selected market interest rates exceed the strike rates stated per the
agreements. The Company does not use derivative financial instruments for
trading or speculative purposes. By their nature, all such instruments involve
risk, including the possibility that a loss may occur from the failure of
another party to perform according to the terms of a contract (credit risk) or
the possibility that future changes in market price may make a financial
instrument less valuable or more onerous (market risk). As is customary for
these types of instruments, the Company does not require collateral or other
security from other parties to these instruments. In management's opinion there
is no significant risk of loss in the event of nonperformance of the
counterparties to these financial instruments.
The fair value of the interest rate agreements represents the estimated
receipts or payments that would be required to settle the agreements at year-
end. Quoted market prices were used to estimate the fair values of the interest
rate swap and cap agreements. The notional amount represents agreed upon
amounts on which calculations of dollars to be exchanged are based. They do not
represent amounts exchanged by the parties and, therefore, are not a measure of
the Company's exposure. The Company's credit exposure is limited to the fair
value of the contracts with a positive fair value plus interest receivable, if
any, at the reporting date.
F-17
<PAGE>
BETTER MINERALS & AGGREGATES COMPANY AND SUBSIDIARIES
(formerly USS Intermediate Holdco, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
<TABLE>
<CAPTION>
December 31, 1998 December 31, 1999
--------------------------- --------------------------
Contract/ Contract/
Maturity Notional Carrying Fair Notional Carrying Fair
Date Amount Amount Value Amount Amount Value
-------- --------- -------- ------ --------- -------- -----
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Derivatives
Interest rate swap agreements.. 1999 $55,000 $ 11 $ (32)
2001 $30,000(1) $ -- $ (509) $30,000(1) $ -- $389
Interest rate cap agreements... 2001 $30,000(2) $ -- $ (49) $30,000(2) $ -- $ 83
2002 $21,000(2) $ 99 $256
</TABLE>
- --------
(1) Agreement effectively exchanges the LIBOR floating interest rate for a
fixed interest rate of 5.74%.
(2) Agreement limits the LIBOR floating interest rate to 6.50%.
9. Mandatory Redeemable Preferred Stock
At December 31, 1998 and 1999, there were no shares of Preferred Stock
authorized, issued or outstanding.
In connection with the acquisition of U.S. Silica, Mandatory Redeemable
Series C Preferred Stock of Holdings was issued to Borax. The Company issued
Mandatory Redeemable Preferred Stock in exchange for Holdings' Mandatory
Redeemable Preferred Stock, the terms of which were identical. The Preferred
Stock was mandatorily redeemable at $1,000.00 per share on February 9, 2006 and
had an optional redemption value of $500.00 per share at issuance which
accreted at a rate of 7.18% per annum. The Preferred Stock issued by the
Company was accounted for at its fair market value at the time of issuance
which was determined to be $7.3 million. The difference between the fair market
value and the mandatory redemption value of $10.0 million was accreted ratably
over a ten year period by charges to additional paid-in capital for the period
beginning February 9, 1996.
On December 18, 1997, the Company redeemed the Preferred Stock for $5.0
million. As consideration, the Company agreed to release Borax from certain
indemnifications pursuant to the Stock Purchase Agreement between Borax and the
Company by waiving all claims and releasing Borax from all obligations arising
out of certain environmental and product liability matters (each, as defined)
and indemnifying and holding harmless Borax in respect of all claims arising
out of such products liability matters. The excess of the carrying value of the
Preferred Stock over the redemption payment was credited to additional paid-in
capital.
10. Commitments and Contingencies
The Company and its subsidiaries are involved in legal proceedings, claims
and litigation arising in the ordinary course of business. Management believes,
through discussions with counsel that its liability arising from or the
resolution of these legal proceedings, claims and litigation, in the aggregate
will not have a material adverse effect on the consolidated financial position,
results of operations or cash flows of the Company.
U.S. Silica is self-insured for product liability insurance as it relates to
occupational disease. In addition, U.S. Silica is self-insured for health care
costs and, in some states, workers' compensation. The Company provides for
estimated future losses based on reported cases and past claim history.
Management believes that the provision for estimated future losses is adequate.
F-18
<PAGE>
BETTER MINERALS & AGGREGATES COMPANY AND SUBSIDIARIES
(formerly USS Intermediate Holdco, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Certain product liability claims related to occupational disease are
indemnified by ITT Corporation under an agreement whereby claims presented with
an exposure period prior to September 12, 1985 are shared ratably based on the
claimant's total exposure period. The indemnity is subject to a cumulative
annual deductible and expires September 12, 2005.
11. Income Taxes
The provision (benefit) for income taxes consisted of the following for each
of the three years in the period ended December 31, 1999:
<TABLE>
<CAPTION>
1997 1998 1999
(In thousands) -------- -------- --------
<S> <C> <C> <C>
Current:
Federal..................................... $ 1,730 $ 375 $ --
State....................................... 6 39 378
Foreign..................................... -- 23 180
-------- -------- --------
1,736 437 558
Deferred:
Federal..................................... (3,638) (2,819) (4,307)
State....................................... (337) (439) (642)
Foreign..................................... -- (96) (75)
-------- -------- --------
(3,975) (3,354) (5,024)
-------- -------- --------
Tax effect of extraordinary items............. -- 713 1,752
-------- -------- --------
Benefit for income taxes.................... $ (2,239) $ (2,204) $ (2,714)
======== ======== ========
</TABLE>
F-19
<PAGE>
BETTER MINERALS & AGGREGATES COMPANY AND SUBSIDIARIES
(formerly USS Intermediate Holdco, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Under SFAS No. 109, deferred tax assets and liabilities are recognized for
the estimated future tax effects, based on enacted tax laws, of temporary
differences between the values of assets and liabilities recorded for financial
reporting and for tax purposes and of net operating loss and other
carryforwards. The tax effects of the types of temporary differences and
carryforwards that gave rise to deferred tax assets and liabilities at December
31, 1998 and 1999, consisted of the following:
<TABLE>
<CAPTION>
1998 1999
-------- ---------
(In thousands)
<S> <C> <C>
Gross deferred tax liabilities
Land and mineral property basis difference.............. $(36,927) $(116,743)
Fixed assets and depreciation........................... (26,969) (31,971)
Restricted stock vesting................................ (371) (525)
Debt fee amortization................................... (815) --
Other................................................... (3,280) (7,025)
-------- ---------
Total deferred tax liabilities...................... (68,362) (156,264)
-------- ---------
Gross deferred tax assets
Royalty................................................. -- 2,025
Post retirement benefit costs........................... 8,208 8,100
Reserves for self-insurance............................. 2,729 2,652
Plant closure liability................................. 2,334 2,762
State deferred tax...................................... 2,832 9,369
Covenants not to compete................................ 4,087 5,618
Alternative minimum tax................................. 3,397 5,483
Reserves for vacation................................... 790 910
Pensions................................................ 1,695 2,100
Inventories............................................. 422 535
Net operating loss carryforward......................... 2,695 4,605
Bad debts............................................... 450 496
Reclamation............................................. 851 1,032
Other................................................... 1,247 1,088
-------- ---------
Total deferred tax assets........................... 31,737 46,775
-------- ---------
Net deferred tax liabilities........................ (36,625) (109,489)
Less net current deferred tax assets.................. (6,167) (8,148)
-------- ---------
Net long-term deferred tax liabilities.................. $(42,792) $(117,637)
======== =========
</TABLE>
At December 31, 1998 and 1999, the Company had a federal net operating loss
carryforward ("NOL") of $5.9 million and $11.1 million, respectively, which
begins to expire in 2011.
The Company believes that it is more likely than not that the NOL
carryforward will be utilized prior to its expiration. The NOL carryforward and
existing deductible temporary differences are offset by existing taxable
temporary differences reversing within the carryforward period.
In addition, the Company has an alternative minimum tax credit carryforward
at December 31, 1998 and 1999, of approximately $3.4 million and $5.5 million,
respectively. The credit carryforward may be carried forward indefinitely to
offset any excess of regular tax liability over alternative minimum tax
liability subject to certain limitations. This alternative minimum tax credit
carryforward has been reflected as a reduction of net noncurrent deferred
income tax liabilities for financial reporting purposes.
F-20
<PAGE>
BETTER MINERALS & AGGREGATES COMPANY AND SUBSIDIARIES
(formerly USS Intermediate Holdco, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The effective income tax rate on pretax earnings before extraordinary items
differed from the U.S. federal statutory rate for each of the three years in
the period ended December 31, 1999 for the following reasons:
<TABLE>
<CAPTION>
1997 1998 1999
----- ----- ------
<S> <C> <C> <C>
Provision computed at U.S. federal statutory rate.... 35.0% 35.0% 35.0%
Increase (decrease) resulting from:
Percentage depletion............................... 77.7 9.6 (253.7)
Disallowed interest expense........................ (6.5) (.4) --
Restricted stock vesting........................... -- (29.5) --
Accretion of preferred stock warrants.............. (24.5) (2.6) 1.9
Prior year tax return reconciliation............... 27.1 -- (61.2)
State income taxes, net of federal benefit......... 8.3 1.2 5.4
Other, net......................................... (2.9) (.2) 9.6
----- ----- ------
Provision for income taxes....................... 114.2% 13.1% (263.0)%
===== ===== ======
</TABLE>
12. Pension and Postretirement Benefits
The Company maintains a number of single-employer noncontributory defined
benefit pension plans covering substantially all employees. The plans provide
benefits based on each covered employee's years of qualifying service. The
Company's funding policy is to contribute amounts within the range of the
minimum required and maximum deductible contributions for each plan consistent
with a goal of appropriate minimization of the unfunded projected benefit
obligation. The majority of the Company's pension plans use a benefit level per
year of service (hourly) with one plan using final average pay method
(salaried). All Company plans use the projected unit credit cost method to
determine the actuarial valuation.
In addition, the Company provides defined benefit postretirement healthcare
and life insurance benefits to substantially all employees. Covered employees
become eligible for these benefits at retirement after meeting minimum age and
service requirements. The projected future cost of providing postretirement
benefits, such as healthcare and life insurance, is recognized as an expense as
employees render services.
The Company contributes to a Voluntary Employees' Beneficiary Association
trust that will be used to partially fund health care benefits for future
retirees. Benefits are funded to the extent contributions are tax deductible,
which under current legislation is limited. In general, retiree health benefits
are paid as covered expenses are incurred.
F-21
<PAGE>
BETTER MINERALS & AGGREGATES COMPANY AND SUBSIDIARIES
(formerly USS Intermediate Holdco, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Net pension and postretirement cost consisted of the following for each of
the three years in the period ended December 31, 1999:
<TABLE>
<CAPTION>
Pension Benefits Postretirement Benefits
------------------------- --------------------------
1997 1998 1999 1997 1998 1999
------- ------- ------- -------- ------- -------
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
Service cost--benefits
earned
during the period...... $ 961 $ 920 $ 1,040 $ 162 $ 128 $ 144
Interest cost........... 3,636 3,791 3,886 1,073 958 946
Expected return on plan
assets................. (3,548) (3,585) (3,739) (15) (18) (19)
Net amortization and
deferral............... 8 109 235 (447) (551) (449)
------- ------- ------- -------- ------- -------
Net pension and
postretirement cost.. $ 1,057 $ 1,235 $ 1,422 $ 773 $ 517 $ 622
======= ======= ======= ======== ======= =======
</TABLE>
The changes in benefit obligations and plan assets, as well as the funded
status of the Company's pension and postretirement plans at December 31, 1998
and 1999 were as follows:
<TABLE>
<CAPTION>
Pension Benefits Postretirement Benefits
------------------ ------------------------
1998 1999 1998 1999
-------- -------- ----------- -----------
(In thousands)
<S> <C> <C> <C> <C>
Benefit obligation at January
1.............................. $ 51,857 $ 56,697 $ 15,280 $ 14,683
Service cost.................. 800 1,040 128 144
Interest cost................. 3,654 3,886 958 946
Actuarial..................... 2,877 (5,664) (1,016) (1,716)
Acquisitions.................. 2,231 3,039 -- --
Benefits paid................. (4,722) (3,636) (859) (1,097)
Other......................... -- 278 192 213
-------- -------- ----------- -----------
Benefit obligation at December
31............................. 56,697 55,640 14,683 13,173
-------- -------- ----------- -----------
Fair value of plan assets at
January 1...................... 53,618 56,078 235 236
Actual return on plan assets.. 5,807 8,991 1 (38)
Acquisitions.................. 1,335 4,871 -- --
Employer contributions........ 40 407 667 884
Benefits paid................. (4,722) (3,636) (859) (1,097)
Other......................... -- -- 192 213
-------- -------- ----------- -----------
Fair value of plan assets at
December 31.................... 56,078 66,711 236 198
-------- -------- ----------- -----------
Plan assets in excess (less
than)
benefit obligations at December
31............................. (619) 11,071 (14,447) (12,975)
Unrecognized net loss (gain).. (3,393) (14,486) (5,575) (6,785)
Unrecognized prior service
cost......................... 536 763 -- --
-------- -------- ----------- -----------
Accrued benefit cost recognized
in the
Company's consolidated
balance sheet
before additional pension
liability.................... (3,476) (2,652) (20,022) (19,760)
-------- -------- ----------- -----------
Adjustment to recognize minimum
pension liability.............. (212) -- -- --
-------- -------- ----------- -----------
Net accrued benefit cost
recognized in the Company's
consolidated balance
sheet...................... $ (3,688) $ (2,652) $ (20,022) $ (19,760)
======== ======== =========== ===========
</TABLE>
F-22
<PAGE>
BETTER MINERALS & AGGREGATES COMPANY AND SUBSIDIARIES
(formerly USS Intermediate Holdco, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
In prior years, certain of the Company's pension plans were underfunded. At
December 31, 1998, the projected benefit obligation of the underfunded plans
was $17.9 million, the total fair value of assets was $14.7 million, and the
accumulated benefit obligation was $17.3 million. At December 31, 1998, the
accrued benefit cost recognized in the Company's consolidated balance sheet for
these plans was $3.4 million. Effective December 31, 1999, the Company merged a
number of these plans which eliminated their underfunded status.
The adjustment to recognize the minimum pension liability on the Company's
consolidated balance sheet of $212,000 at December 31, 1998 provides financial
statement recognition to the unfunded status of the pension plans. The pension
liability adjustment has been recorded as a long-term liability offset by an
intangible asset, reduction to stockholder's equity and deferred taxes of
$146,000, $40,000 and $26,000, respectively, at December 31, 1998.
The following weighted-average assumptions were used to determine the
Company's obligations under the plans:
<TABLE>
<CAPTION>
Pension Postretirement
Benefits Benefits
---------- ----------------
1998 1999 1998 1999
---- ---- ------- -------
<S> <C> <C> <C> <C>
Discount rate..................................... 6.75% 7.75% 6.75% 7.75%
Long-term rate of compensation increase........... 3.50% 3.50% -- --
Long-term rate of return on plan assets........... 8.00% 8.00% 8.00% 8.00%
Health care cost trend rate....................... -- -- 6.50% 6.00%
</TABLE>
The assumed health care cost trend rate used in measuring the accumulated
postretirement benefit obligation was 6.50% in 1998, 6.00% in 1999 and 6.00% in
2000, gradually declining to 3.00% by the year 2014 and remaining at that level
thereafter.
A one-percentage-point increase in the assumed health care cost trend rates
for each year would increase the accumulated postretirement benefit obligation
at December 31, 1999 and net postretirement health care cost (service cost and
interest cost) for the year then ended by approximately $1.4 million and
$134,000, respectively. A one-percentage-point decrease in the assumed health
care cost trend rates for each year would decrease the accumulated
postretirement benefit obligation at December 31, 1999 and net postretirement
health care cost (service cost and interest cost) for the year then ended by
approximately $1.1 million and $111,000, respectively.
Certain hourly employees are covered under a multi-employer defined benefit
pension plan. The pension cost recognized for these plans for each of the three
years ended December 31, 1997, 1998 and 1999 totaled approximately $142,000,
$147,000, and $176,000, respectively.
The Company also sponsors a defined contribution plan covering certain
employees. The Company contributes to the plan in two ways. For certain
employees not covered by the defined benefit plan, the Company makes a
contribution equal to 4% of their salary. The Company also contributes an
employee match which can range from 25 to 100 cents, based on financial
performance, for each dollar contributed by an employee, up to 8% of their
earnings. Contributions for each of the three years ended December 31, 1997,
1998 and 1999 totaled approximately $470,000, $678,000 and $746,000,
respectively. The Company also sponsors a defined contribution thrift plan for
hourly employees to which employees may contribute up to 15% of their earnings.
There is no contributing match for the thrift plan.
F-23
<PAGE>
BETTER MINERALS & AGGREGATES COMPANY AND SUBSIDIARIES
(formerly USS Intermediate Holdco, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
13. Related Party Transactions
Pursuant to an agreement between the Company and principals of D. George
Harris & Associates, LLC ("DGH&A"), who are also stockholders of the Company's
ultimate parent, DGH&A provides certain management advisory services to the
Company. The Company paid approximately $500,000, $583,000 and $877,000 to
DGH&A for each of the three years ended December 31, 1997, 1998 and 1999,
respectively, associated with these management services. The agreement also
provides that the Company will pay DGH&A an acquisition fee in the event of a
business acquisition by the Company. The Company paid approximately $325,000
for services in connection with the acquisition of the Morie Assets during
1999. In addition, approximately $600,000 was paid to DGH&A during 1998
associated with the Better Materials Corporation and George F. Pettinos, Inc.
acquisitions. The management advisory services and acquisition fees have been
charged to selling, general and administrative expense during each of the
respective periods noted above.
Prior to the acquisition of Commercial Stone, certain operations of DGH&A
were conducted as a subsidiary of the Company. Subsequent to the acquisition,
the DGH&A operations have been handled separately from the Company. The Company
does not have an ownership interest in DGH&A. Consequently, the DGH&A
acquisition fee of approximately $1,387,000 associated with the acquisition of
Commercial Stone was capitalized and allocated to mineral reserves as part of
the purchase price.
The agreement also provides that, at DGH&A's request, U.S. Silica provide
DGH&A with an interest-free loan not to exceed $1.0 million annually. At
December 31, 1999, a loan receivable to DGH&A of $1.0 million is currently
outstanding. The loan is guaranteed by certain principals of DGH&A. In
addition, a payable of approximately $898,000 to DGH&A, principally related to
the Company's unpaid portion of the acquisition fee, existed at December 31,
1999.
On occasion, the Company and its parent make non-interest bearing cash
advances to each other. At December 31, 1998, the Company had a payable to its
parent of approximately $1.1 million. At December 31, 1999, the Company had a
receivable from its parent of approximately $834,000.
14. Silica Mining Lease
On July 18, 1997, the Company settled a dispute concerning royalties related
to a silica-mining lease. The terms in the agreement provided that U.S. Silica
pay the lessor approximately $1.1 million in cash and property for retroactive
royalties and legal fees. This amount was charged to cost of goods sold in
1997. The agreement further stipulates that future royalties be determined as a
percentage of gross sales from the leased property. The lease, along with
renewals, covers a period of thirty-six years.
15. Incentive Stock Compensation
Under the terms of a repurchase agreement between Holdings and holders of
Holdings' Class A Common Stock (the "Class A Holders"), the Class A Holders
were required to sell some or all of their Class A Common Stock to Holdings at
par value if the holders of Holdings' Series A and Series B Preferred Stock did
not achieve a specified internal rate of return upon the occurrence of certain
liquidity events as described in the Stockholders Agreement. In 1998, Holdings
agreed to waive the repurchase requirements associated with the Class A Common
Stock, which effectively gave the Class A Holders the right to put the Class A
Common Stock back to Holdings for fair value
F-24
<PAGE>
BETTER MINERALS & AGGREGATES COMPANY AND SUBSIDIARIES
(formerly USS Intermediate Holdco, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
consideration subject to certain conditions. This resulted in a $14.2 million
one time, non-cash charge to the Company's operations, which was the difference
between the fair market value of the Class A Common Stock and its par value at
the time the repurchase agreement was waived.
16. Segment Information
The Company operates in the industrial minerals and aggregates business
segments, principally in the United States, and conducts limited operations in
Canada. Industrial minerals includes the mining, processing and marketing of
industrial minerals, principally silica, to a wide variety of end use markets,
including foundry, glass, chemicals, fillers and extenders (primarily used in
paints and coatings), building materials, ceramics, and oil and gas. Aggregates
includes the mining, processing and marketing of high quality crushed stone,
construction sand and gravel. The Company's customers use its aggregates for
road construction and maintenance, other infrastructure projects and
residential and commercial construction and to produce hot mixed asphalt and
concrete products. The Company also uses its aggregate to produce hot mixed
asphalt at production facilities the Company owns or operates. The industrial
minerals and aggregates business segments constitute the reportable segments of
the Company.
The Company's management reviews operating company income to evaluate
segment performance and allocate resources. General corporate expense (income),
interest expense, the accretion of preferred stock warrants, other income (net
of interest income) and the provision (benefit) for income taxes are not
included in segment operating income since they are excluded from the measure
of segment profitability reviewed by the Company's management. The Company's
assets are managed based on segment and accordingly, asset information is
reported for the commercial aggregates and industrial minerals segments.
Corporate assets consist primarily of cash and cash equivalents, debt issuance
costs and equipment. The accounting policies of the segments are the same as
those described in the Summary of Significant Accounting Policies.
F-25
<PAGE>
BETTER MINERALS & AGGREGATES COMPANY AND SUBSIDIARIES
(formerly USS Intermediate Holdco, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Reportable segment information for each of the two years in the period ended
December 31, 1999 was as follows:
<TABLE>
<CAPTION>
1998 1999
-------- --------
(In thousands)
<S> <C> <C>
Net sales:
Aggregates................ $ 3,497 $ 49,907
Industrial Minerals....... 138,797 159,168
-------- --------
Total net sales......... $142,294 $209,075
======== ========
Operating company income
(loss):
Aggregates................ $ (288) $ 6,610
Industrial Minerals....... (7,287) 12,476
-------- --------
Total operating company
income (loss).......... (7,575) 19,086
General corporate (ex-
pense) income............ 346 (579)
-------- --------
Total operating income
(loss)................. $ (7,229) $ 18,507
======== ========
Depreciation, depletion and
amortization expense:
Aggregates................ $ 309 $ 6,328
Industrial Minerals....... 19,579 22,152
Corporate................. -- 1
-------- --------
Total depreciation, de-
pletion and amortiza-
tion expense........... $ 19,888 $ 28,481
======== ========
Capital expenditures:
Aggregates................ $ 517 $ 3,282
Industrial Minerals....... 8,882 11,120
Corporate................. -- 170
-------- --------
Total capital expendi-
tures.................. $ 9,399 $ 14,572
======== ========
</TABLE>
Reportable segment information at December 31, 1998 and 1999 was as follows:
<TABLE>
<CAPTION>
1998 1999
-------- --------
(In thousands)
<S> <C> <C>
Assets:
Aggregates................................................. $ 86,928 $323,470
Industrial Minerals........................................ 187,574 201,390
Corporate.................................................. 176 29,169
Elimination of intersegment receivables.................... -- (2,426)
-------- --------
Total assets............................................. $274,678 $551,603
======== ========
</TABLE>
In December 1998, U.S. Silica acquired Better Materials Corporation. Prior
to this acquisition, the Company conducted business solely in the "Industrial
Minerals" segment. Accordingly, reportable segment information at December 31,
1997 and for the year then ended has not been presented.
F-26
<PAGE>
BETTER MINERALS & AGGREGATES COMPANY AND SUBSIDIARIES
(formerly USS Intermediate Holdco, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
17. Guarantor Financial Data
Except for the Company's two Canadian subsidiaries, each of the Company's
subsidiaries have fully and unconditionally guaranteed the Company's Senior
Subordinated Notes and Senior Secured Credit Facilities on a joint and several
basis. Presented below is summarized combined financial information of the
Company (on a stand-alone basis), the guarantor subsidiaries and nonguarantor
subsidiaries at December 31, 1998 and 1999 and for the two years then ended.
<TABLE>
<CAPTION>
Company Combined Combined
Stand- Guarantor Nonguarantor Consolidation
alone Subsidiaries Subsidiaries Adjustments Total
-------- ------------ ------------ ------------- --------
(In thousands)
<S> <C> <C> <C> <C> <C>
At December 31, 1998
Current assets.......... $ 1 $ 50,412 $6,030 $ -- $ 56,443
Non-current assets...... -- 215,542 2,693 -- 218,235
Current liabilities..... 3 35,191 1,741 -- 36,935
Non-current
liabilities............ -- 210,880 3,467 -- 214,347
Investments in
subsidiaries........... 23,398 3,515 -- (26,913) --
<CAPTION>
Company Combined Combined
Stand- Guarantor Nonguarantor Consolidation
alone Subsidiaries Subsidiaries Adjustments Total
-------- ------------ ------------ ------------- --------
(In thousands)
<S> <C> <C> <C> <C> <C>
At December 31, 1999
Current assets.......... $ 13,773 $ 89,538 $4,992 $ (16,898) $ 91,405
Non-current assets...... 115,116 444,314 2,468 (101,700) 460,198
Current liabilities..... 25,995 34,702 1,891 (16,898) 45,690
Non-current
liabilities............ 282,604 258,656 2,018 (101,700) 441,578
Investments in
subsidiaries........... 248,799 3,551 -- (252,350) --
<CAPTION>
Company Combined Combined
Stand- Guarantor Nonguarantor Consolidation
alone Subsidiaries Subsidiaries Adjustments Total
-------- ------------ ------------ ------------- --------
(In thousands)
<S> <C> <C> <C> <C> <C>
For the Year Ended
December 31, 1998
Net sales............... $ -- $138,758 $3,617 $ (81) $142,294
Cost of goods sold...... -- 95,461 3,098 (81) 98,478
Operating (loss)
income................. (1) (7,110) (118) -- (7,229)
Net (loss) income before
extraordinary loss..... (14,667) (14,666) (17) 14,683 (14,667)
Net (loss) income....... (16,769) (16,768) (17) 16,785 (16,769)
<CAPTION>
Company Combined Combined
Stand- Guarantor Nonguarantor Consolidation
alone Subsidiaries Subsidiaries Adjustments Total
-------- ------------ ------------ ------------- --------
(In thousands)
<S> <C> <C> <C> <C> <C>
For the Year Ended
December 31, 1999
Net sales............... $ -- $200,460 $8,927 $ (312) $209,075
Cost of goods sold...... -- 133,138 7,418 (312) 140,244
Operating (loss)
income................. (110) 23,277 94 (4,754) 18,507
Net income (loss) before
extraordinary loss..... 5,753 14,315 48 (16,370) 3,746
Net income (loss)....... 5,753 11,568 22 (16,344) 999
</TABLE>
Amounts are not intended to report results as if the subsidiaries were
separate stand-alone entities. Comparative information for the year ended
December 31, 1997 has not been presented because the nonguarantor subsidiary in
that year was nonoperating and the assets and results of operations were
immaterial.
F-27
<PAGE>
BETTER MINERALS & AGGREGATES COMPANY AND SUBSIDIARIES
(formerly USS Intermediate Holdco, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
18. Subsequent Event
On February 29, 2000, the Company completed the sale of the stock of its
Canadian subsidiary, George F. Pettinos (Canada) Limited for $3.2 million. The
proceeds from the sale were used to retire the Canadian Term Facility (Note 6)
and for general corporate uses.
F-28
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
Better Materials Corporation
Penns Park, Pennsylvania
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income, of shareholders' equity and of cash flows
present fairly, in all material respects, the financial position of Better
Materials Corporation and Subsidiaries at December 13, 1998 and January 3,
1998, and the results of their operations and their cash flows for the period
ended December 13, 1998 and fiscal years ended January 3, 1998 and December 28,
1996, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform
the audits 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, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for the
opinion expressed above.
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
August 25, 1999
F-29
<PAGE>
BETTER MATERIALS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
at December 13, 1998 and January 3, 1998
<TABLE>
<CAPTION>
December January 3,
13, 1998 1998
----------- -----------
<S> <C> <C>
ASSETS
Cash and cash equivalents............................. $ 2,185,967 $ 803,366
Accounts receivable, less allowance for doubtful
accounts of approximately $489,000 and $300,000,
respectively......................................... 5,419,458 3,589,049
Other receivables..................................... 87,807 37,817
Inventories:
Stone............................................... 897,671 979,224
Parts............................................... 408,092 409,512
Refundable income taxes............................... -- 286,157
Prepaid expenses...................................... 243,546 79,639
Deferred income taxes................................. 780,089 135,860
----------- -----------
Total current assets.............................. 10,022,630 6,320,624
Property, plant and equipment, net of accumulated
depreciation, depletion and amortization............. 10,609,154 9,124,424
Assets held for sale.................................. 800,000 800,000
Deferred income taxes................................. 138,439 64,140
Notes receivable...................................... -- 69,338
----------- -----------
Total assets...................................... $21,570,223 $16,378,526
=========== ===========
LIABILITIES
Current installments of long-term debt................ $ 1,073,099 $ 1,149,289
Accounts payable...................................... 1,814,325 1,375,020
Other accrued expenses................................ 1,445,917 1,270,846
Income taxes payable.................................. 658,563 --
Accrued pension cost.................................. 214,330 235,561
----------- -----------
Total current liabilities......................... 5,206,234 4,030,716
Accrued pension cost, net of current portion.......... 807,423 799,943
Long-term debt, net of current portion................ 3,637,231 3,357,809
----------- -----------
Total liabilities................................. 9,650,888 8,188,468
----------- -----------
Contingencies (Note 7)
SHAREHOLDERS' EQUITY
Class A common stock--voting; $.10 par value;
authorized 100,000 shares; issued 44,024 shares...... 4,403 4,403
Class B common stock--nonvoting; $.10 par value;
authorized 300,000 shares; issued 116,308 shares..... 11,631 11,631
Capital in excess of par.............................. 5,986 5,986
Retained earnings..................................... 12,430,733 8,701,456
----------- -----------
12,452,753 8,723,476
----------- -----------
Less treasury stock at cost:
Class A common stock--1,200 shares.................. 45,980 45,980
Class B common stock--13,498 shares................. 487,438 487,438
----------- -----------
533,418 533,418
----------- -----------
Total shareholders' equity........................ 11,919,335 8,190,058
----------- -----------
Total liabilities and shareholders' equity........ $21,570,223 $16,378,526
=========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-30
<PAGE>
BETTER MATERIALS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
for the period ended December 13, 1998, and for the fiscal years ended
January 3, 1998 and December 28, 1996
<TABLE>
<CAPTION>
December December
13, January 3, 28,
1998 1998 1996
----------- ----------- -----------
<S> <C> <C> <C>
Sales of crushed stone and asphalt...... $26,255,889 $24,692,001 $21,617,034
----------- ----------- -----------
Costs and expenses:
Cost of sales and operating expenses.. 17,326,039 17,499,281 14,712,929
Depreciation, depletion and
amortization......................... 1,148,284 1,046,207 1,056,549
Selling, general and administrative
expenses............................. 3,286,985 4,394,304 4,136,824
----------- ----------- -----------
21,761,308 22,939,792 19,906,302
----------- ----------- -----------
Income before interest expense, other
(income) expense, net and income
taxes.................................. 4,494,581 1,752,209 1,710,732
Interest expense........................ 629,955 514,862 464,984
Other (income) expense, net............. (51,288) 10,963 30,296
----------- ----------- -----------
Income before income taxes.............. 3,915,914 1,226,384 1,215,452
Income tax provision (benefit).......... 186,637 267,971 (343,400)
----------- ----------- -----------
Net income.............................. $ 3,729,277 $ 958,413 $ 1,558,852
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-31
<PAGE>
BETTER MATERIALS CORPORATION AND SUBSCRIBERS
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
for the period ended December 13, 1998 and fiscal years ended
January 3, 1998 and December 28, 1996
<TABLE>
<CAPTION>
Common Stock Treasury Stock
----------------------------- ------------------------------------
Capital in
Excess of Retained Class B
Class A Class B Par Value Earnings Class A -------
Shares Amount Shares Amount Shares Amount Shares Amount
------ ------ ------- ------- ---------- ----------- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balances, December 30,
1995................... 44,024 $4,403 116,308 $11,631 $5,986 $ 6,184,191 (1,200) $(45,980) (13,498) $(487,438)
Net income.............. 1,558,852
-----------
Balances, December 28,
1996................... 44,024 4,403 116,308 11,631 5,986 7,743,043 (1,200) (45,980) (13,498) (487, 438)
Net income.............. 958,413
-----------
Balances, January 3,
1998................... 44,024 4,403 116,308 11,631 5,986 8,701,456 (1,200) (45,980) (13,498) (487, 438)
Net income.............. 3,729,277
-----------
Balances, December 13,
1998................... 44,024 $4,403 116,308 $11,631 $5,986 $12,430,733 (1,200) $(45,980) (13,498) $(487,438)
====== ====== ======= ======= ====== =========== ====== ======== ======= =========
</TABLE>
The accompanying notes are integral part of the consolidated financial
statements.
F-32
<PAGE>
BETTER MATERIALS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the period ended December 13, 1998, and for the fiscal years ended
January 3, 1998 and December 28, 1996
<TABLE>
<CAPTION>
December 13, January 3, December 28,
1998 1998 1996
------------ ----------- ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income............................. $ 3,729,277 $ 958,413 $ 1,558,852
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation, depletion and
amortization......................... 1,148,284 1,046,207 1,085,582
Provision for bad debts on accounts
receivable........................... 90,000 169,160 79,400
Deferred income taxes................. (718,528) 200,000 (400,000)
(Gain) loss on fixed assets........... (98,344) 14,602 (188,563)
Changes in operating assets and
liabilities:
Accounts receivable.................. (1,920,409) 488,517 (1,841,903)
Inventories.......................... 82,973 1,135,726 287,744
Prepaid expenses and refundable
income taxes........................ 122,250 (2,271) 10,273
Accounts payable..................... 439,305 (150,113) (52,550)
Income taxes payable................. 658,563 (884,277) 601,014
Other accrued expenses and accrued
pension costs....................... 161,320 (235,089) 387,554
----------- ----------- -----------
Net cash provided by operating
activities......................... 3,694,691 2,740,875 1,527,403
----------- ----------- -----------
Cash flows from investing activities:
Purchase of property, plant and
equipment............................. (2,725,420) (4,393,316) (691,244)
Proceeds from sales of property, plant
and equipment......................... 190,750 56,634 377,300
Payments received on notes and other
receivable............................ 19,348 52,490 152,178
----------- ----------- -----------
Net cash used in investing
activities......................... (2,515,322) (4,284,192) (161,766)
----------- ----------- -----------
Cash flows from financing activities:
Proceeds from term loan................ 1,300,000 1,800,000 --
Payments on long-term debt and term
loans................................. (1,096,768) (1,232,763) (960,445)
----------- ----------- -----------
Net cash provided by (used in)
financing activities............... 203,232 567,237 (960,445)
----------- ----------- -----------
Net increase (decrease) in cash......... 1,382,601 (976,080) 405,192
Cash at beginning of year............... 803,366 1,779,446 1,374,254
----------- ----------- -----------
Cash at end of year..................... $ 2,185,967 $ 803,366 $ 1,779,446
=========== =========== ===========
Supplemental disclosure of cash flow
information:
Cash paid for the year:
Income taxes, net..................... $ 273 $ 410,629 $ 90,641
=========== =========== ===========
Interest.............................. $ 482,298 $ 486,500 $ 464,110
=========== =========== ===========
Nonmonetary transactions:
Exchange of similar assets............ -- -- $ 26,465
=========== =========== ===========
Property, plant and equipment
acquisitions remaining in
accounts payable...................... -- $ 453,373 --
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-33
<PAGE>
BETTER MATERIALS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Description of Operations and Summary of Significant Accounting Policies
Description of Operations
The Company produces crushed stone and bituminous asphalt material, used in
the production of concrete and asphalt products, construction and maintenance
of highways and other infrastructure projects, and for commercial and
residential construction. Sales of the Company's materials are limited up to a
100 mile area due to inherently high transportation costs associated with the
industry.
Principles of Consolidation
The consolidated financial statements include the accounts of Better
Materials Corporation (Company) and its wholly-owned subsidiaries, Bucks County
Crushed Stone Co., Inc. (BCCS), BMC Trucking Company (BMCT), Industrial
Trucking Service Corporation (ITSC), Chippewa Farms Corporation (CFC), Quarry
Food, Inc., Shore Fast Line, Inc. (SFL) and Shore Stone Company, Inc. (SSC). In
addition, Hi-Way Maintenance & Supply Co., Inc. (HMS) is a subsidiary of BCCS.
All significant intercompany accounts and transactions have been eliminated in
consolidation.
Fiscal Year and Sale of the Business
The Company's fiscal year ends on the Saturday nearest to December 31.
Fiscal year 1997 ended January 3, 1998 and was comprised of 53 weeks; fiscal
year 1996 ended December 28, 1996 and was comprised of 52 weeks. On December
14, 1998, all of the common stock of the Company and its wholly-owned
subsidiaries, BCCS, BMCT, CFC and SSC was sold to U.S. Silica Company; such
stock comprised principally all of the assets of the Company, accordingly, the
Company's financial position and results of operations for 1998 are presented
for the period January 4, 1998 through December 13, 1998.
The stock of ITSC, Quarry Food, Inc., SFL and HMS was sold to a former
shareholder. Accordingly, all liabilities and any contingent liabilities were
assumed by the former shareholder.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. The most
significant estimates relate primarily to assets held for sale, allowance for
uncollectable accounts receivable, valuation allowance on net deferred tax
assets and depreciation, depletion and amortization.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all
highly liquid investments purchased with an initial maturity of three months or
less to be cash equivalents.
Inventories
Inventories are valued at the lower of cost or market. Cost of parts is
determined by the first-in, first-out method. Cost of stone inventory is
determined principally by the average-cost method.
F-34
<PAGE>
BETTER MATERIALS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Property, Plant and Equipment
Property, plant and equipment is carried at cost. Maintenance and repairs
are charged to expense as incurred. When assets are sold or otherwise disposed
of, any gain or loss is recognized currently.
Depreciation, Amortization and Depletion
Provisions for depreciation and amortization are being made over the
estimated lives of the respective assets or lease terms, if shorter, using the
straight-line method for financial statement purposes and accelerated methods
for income tax purposes. Depletion of stone deposits is provided based upon the
tonnage of rock quarried in relation to the estimated total tonnage available.
Income Taxes
The Company and its subsidiaries file a consolidated federal income tax
return. The Company provides for income taxes under Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS No. 109)
which requires the recognition of deferred tax liabilities and assets for the
expected future tax consequences of temporary differences between tax bases and
financial reporting bases of assets and liabilities. Under SFAS No. 109,
deferred tax assets and liabilities are based on the tax rates and laws enacted
as of the balance sheet date. The effects of future changes in tax laws or
rates are not anticipated.
Pension Plan
The Company and its wholly-owned subsidiaries sponsor two noncontributory
defined benefit pension plans. The Industrial Trucking Service Corporation Plan
(ITSC Plan) covers union employees, and the Better Materials Corporation
Pension Plan (BMC Plan) covers substantially all employees other than those
covered by the ITSC Plan. Under the BMC Plan pension expense is determined and
funded on the basis of accepted actuarial methods. Under the ITSC Plan,
contributions are based on hours worked by, or gross wages paid to, covered
employees. The Company has no prior service liability under the ITSC Plan.
Concentration of Credit Risk
The Company grants credit to its customers which are primarily construction
companies located in Pennsylvania and New Jersey. The Company performs ongoing
credit evaluations of its customers and generally does not require collateral.
The Company maintains reserves for potential credit losses, which, when
realized, have been within the range of management's expectations.
The Company primarily invests its excess cash in interest bearing
instruments with a major commercial bank. Cash available in these accounts may
at times exceed FDIC levels. The Company performs periodic evaluations of the
relative credit standing of the financial institution.
F-35
<PAGE>
BETTER MATERIALS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
2. Property, Plant and Equipment
Property, plant and equipment consisted of the following categories:
<TABLE>
<CAPTION>
December 13, January 3,
1998 1998
------------ ------------
<S> <C> <C>
Buildings................................... $ 2,499,083 $ 2,499,082
Quarry equipment............................ 16,099,322 10,190,701
Construction-in-progress.................... -- 3,593,285
Transportation and garage equipment......... 1,078,586 1,427,376
Furniture, fixtures and other equipment..... 569,879 557,329
Land improvements........................... 1,406,099 1,342,835
------------ ------------
21,652,969 19,610,608
Less accumulated depreciation and
amortization............................... (13,173,979) (12,655,162)
------------ ------------
8,478,990 6,955,446
Land, including stone deposits, net of
depletion.................................. 2,130,164 2,168,978
------------ ------------
$ 10,609,154 $ 9,124,424
============ ============
</TABLE>
3. Debt
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
December 13, January 3,
1998 1998
------------ ----------
<S> <C> <C>
Term loan(a).................................... $1,481,758 $1,889,242
Bullet term loan(a)............................. 497,620 667,856
Loan payable to former shareholder for non-
compete agreement(b)........................... -- 150,000
Equipment term loan(c).......................... 2,730,952 1,800,000
---------- ----------
4,710,330 4,507,098
Less installments due within one year........... 1,073,099 1,149,289
---------- ----------
$3,637,231 $3,357,809
========== ==========
</TABLE>
- --------
(a) On March 1, 1998, the Company entered into a third amended loan and
security agreement with a bank, which includes a revolving credit facility,
a term loan, a bullet term loan and a line of credit facility.
The revolving credit loan expired on February 28, 1999 and provides for
maximum borrowing of $3,500,000, less any outstanding letter of credit
commitments (at December 13, 1998, the Company was contingently liable, in
the amount of $242,840, under standby letters of credit) with interest at
the prime rate or at prime minus 1/4% to plus 1/2% depending on the
Company's leverage ratio at the end of each quarter. In addition, the
Company may otherwise elect to pay interest at adjusted LIBOR plus 2 1/2%.
The choice of interest rates is determined by whether the Borrower has made
an option to make an election to change to LIBOR. Borrowings are limited to
an amount equal to the sum of 85% of eligible accounts receivable plus the
lesser of $1,000,000 or 50% of finished stone inventory for eligible
months. There were no amounts outstanding under the revolving credit loan
at December 13, 1998 and January 3, 1998.
F-36
<PAGE>
BETTER MATERIALS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The term loan is repayable in equal monthly installments of $37,044 until
maturity on March 31, 2002. At December 13, 1998, the outstanding principal
balance bears interest at a fixed rate of 8.35%.
The bullet term loan, or second term loan, is repayable from the net
proceeds from asset sales of the Company's discontinued operations. This
loan bears interest at a fixed rate of 8.35%. Pending receipts of net
proceeds from asset sales, the unpaid balance of the bullet term loan is
payable as a term loan with a seven-year amortization period, repayable in
equal monthly installments of $15,476, starting November 1, 1996, with a
balloon payment on November 1, 2001. The principal balance outstanding as
of December 13, 1998 was $497,620.
The line of credit facility allows the Company to borrow up to $500,000 for
capitalized expenditures. Each borrowing is payable in equal monthly
installments not to exceed sixty months from the funding date. Each advance
under the line bears interest at a fixed rate or a floating rate based on
the bank's prime rate plus 0% to 3/4% depending upon the Company's leverage
ratio at the end of each quarter. There were no amounts outstanding under
the line of credit facility at December 13, 1998 and January 3, 1998.
The borrowings under the agreement are collateralized by substantially all
assets of the Company. In addition, the agreement contains, among other
provisions, requirements for maintaining and meeting certain financial
covenants. The two most restrictive covenants require the ratio of total
liabilities to tangible net worth not to exceed 2.00 to 1; secondly, the
ratio of cash flow to the sum of fixed obligations cannot be less than 1.20
to 1 measured quarterly based upon a rolling four-quarter basis.
(b) On April 22, 1991, a payment in respect to a covenant not to compete was
made for $150,000 with the balance of $750,000 payable over the next five
years in equal installments. A revised agreement was entered into in 1994
which called for the remaining payments to be paid annually beginning April
22, 1996.
(c) In May 1997, the Company entered into an equipment loan agreement which
provides for borrowings up to $4,000,000, at an interest rate equal to the
bank's prime rate or at prime plus 0% to 3/4% depending on the Company's
leverage ratio at the end of each calendar quarter (7.75% and 8.5% at
December 13, 1998 and January 3, 1998, respectively). On March 1, 1998, the
Company converted the amount outstanding on the equipment loan to a term
loan with a seven-year amortization period, repayable in equal monthly
installments of $36,905, starting on March 1, 1998, with a balloon payment
on March 1, 2003.
Amounts payable on the long-term debt under renegotiated terms during each
of the five years 1999 through 2003 are $1,073,099, $1,073,098, $1,013,580,
$591,031 and $959,522, respectively.
All bank debt, except the outstanding letter of credit commitments, was paid
off on December 14, 1998 with proceeds from the sale of the Company and
subsidiaries (see Note 10).
4. Leases
The Company leases certain quarry equipment and office equipment under
operating lease arrangements which expire between 1999 and 2002. Certain of the
agreements include options to purchase the equipment for the fair market value
at the end of the original lease terms. Total rent expense under these leases
was $549,831 for the period ended December 13, 1998, and $585,408 and $656,897
for fiscal years ended January 3, 1998 and December 26, 1996, respectively.
F-37
<PAGE>
BETTER MATERIALS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
At December 13, 1998, annual future minimum lease payments under operating
leases were as follows:
<TABLE>
<CAPTION>
Operating
Minimum lease payments Leases
---------------------- ---------
<S> <C>
December 14, 1998 through December 31, 1998..................... $ 24,460
1999.......................................................... 268,917
2000.......................................................... 60,933
2001.......................................................... 36,420
2002.......................................................... 30,161
--------
Total minimum lease payments.................................... $420,891
========
</TABLE>
5. Income Taxes
The components of the net deferred tax asset at December 13, 1998 and
January 3, 1998 are as follows:
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Deferred tax asset:
Current:
Allowance for doubtful accounts.................. $ 197,390 $ 170,686
Inventory........................................ 80,804 127,818
Accrued expenses................................. 490,069 590,734
Net operating loss carryforwards................. 11,826 76,957
--------- ---------
780,089 966,195
Valuation allowance.............................. -- (830,335)
--------- ---------
Net current deferred tax assets................ $ 780,089 $ 135,860
========= =========
Long-term:
Pension costs.................................... 326,199 392,506
Alternative minimum tax credits.................. 270,215 134,918
Net operating loss carryforwards, net of current
portion......................................... 14,451 208,257
Depreciable and depletable assets................ (469,426) (279,576)
--------- ---------
141,439 456,105
Valuation allowance.............................. (3,000) (391,965)
--------- ---------
Net long-term deferred tax assets.............. $ 138,439 $ 64,140
========= =========
</TABLE>
Realization of the net deferred tax asset is dependent on generating
sufficient taxable income prior to expiration of net operating loss
carryforwards. Based on estimated future taxable income, management has
estimated the net deferred tax assets that are more likely than not to be
realized. The change in the valuation allowance in 1998 is primarily the result
of the realization of deferred tax assets in 1998 and the change in the
anticipated utilization of net operating loss carryforwards to offset future
estimated taxable income.
F-38
<PAGE>
BETTER MATERIALS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The components of the provision (benefit) for income taxes are as follows:
<TABLE>
<CAPTION>
January
December 13, 3, December 28,
1998 1998 1996
------------ -------- ------------
<S> <C> <C> <C>
Current provision (benefit):
Federal.............................. $ 698,897 $ 98,314 $ 18,100
State................................ 206,268 (30,343) 38,500
Deferred expense (benefit)............. (718,528) 200,000 (400,000)
--------- -------- ---------
$ 186,637 $267,971 $(343,400)
========= ======== =========
</TABLE>
Reconciliation of the provision (benefit) for income taxes at the U.S.
Federal statutory rate to the effective rate are as follows:
<TABLE>
<CAPTION>
December 13, January 3, December 28,
1998 1998 1996
------------ ---------- ------------
<S> <C> <C> <C>
Federal statutory tax rate.......... 34.0% 34.0% 34.0%
Percentage depletion................ (6.3) (14.7) (13.4)
State income taxes, net of federal
tax benefit........................ 3.5 (1.3) 1.6
Adjustment to valuation allowance... (31.5) 5.5 (42.0)
Nondeductible items and other....... 5.1 (0.3) 2.9
----- ----- -----
Effective tax rate.................. 4.8% 23.2% (16.9)%
===== ===== =====
</TABLE>
At December 13, 1998, the Company has approximately $270,000 of alternative
minimum tax credits. The Company has net operating loss carryforwards for New
Jersey income tax purposes of approximately $437,950 which are available to
offset future taxable income through 2003.
6. Pension Plan Costs
The following items are the components of the net pension cost:
<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- --------
<S> <C> <C> <C>
Service cost............................... $ 111,472 $ 85,859 $ 95,119
Interest cost.............................. 117,170 103,890 121,826
Actual return on plan assets............... (134,924) (108,382) (64,861)
Net amortization and deferral.............. 125,683 96,466 29,587
--------- --------- --------
Net pension cost........................... $ 219,401 $ 177,833 $181,671
========= ========= ========
</TABLE>
F-39
<PAGE>
BETTER MATERIALS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The funded status of the plans at December 13, 1998 and January 3, 1998 is
shown in the table below:
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
Actuarial present value of benefit obligation:
Vested....................................... $(1,604,047) $(1,400,057)
Nonvested.................................... (9,639) (8,005)
----------- -----------
Accumulated benefit obligation................. (1,613,686) (1,408,062)
Projected future salary increases.............. (617,181) (553,400)
----------- -----------
Projected benefit obligation................... (2,230,867) (1,961,462)
Fair value of plan assets...................... 1,335,212 1,069,178
----------- -----------
Plan assets less than projected benefit
obligation.................................... (895,655) (892,284)
Unrecognized transition amount................. 362,538 434,846
Unrecognized net gain.......................... (488,636) (578,066)
----------- -----------
Accrued pension cost....................... $(1,021,753) $(1,035,504)
=========== ===========
</TABLE>
Assets of the plans are primarily invested in money funds, bonds,
certificates of deposit and stocks. Assumptions used in calculating the
actuarial present value of the projected benefit obligations as of December 13,
1998 and January 3, 1998 and the net periodic pension costs for the period
ended December 13, 1998 and fiscal years ended January 3, 1998 and December 28,
1996 were as follows:
<TABLE>
<CAPTION>
1998 1997 1996
--------- ---- ----
<S> <C> <C> <C>
Discount rate....................................... 6.50-6.75% 7.0% 7.0%
Rate of increase in future compensation levels...... 3.50 5.0 5.0
Expected long-term rate of return on assets......... 7.50-8.00 8.0 8.0
</TABLE>
In addition to the defined benefit plan described above, the Company also
sponsors a qualified defined contribution 401(k) plan to all full-time nonunion
employees. Participants may make voluntary contributions to the plan up to 15%
of their compensation. The Company's contribution is determined by the
Executive Committee based upon assessment of the Company's fiscal year's
profitability as related to pre-established financial objectives. There were no
Company contributions made to the plan in 1998, 1997 and 1996.
7. Contingencies
On March 4, 1985, the Company and a subsidiary company received two
Directives and Notices of Violation (Directives) from the State of New Jersey
relating to two former waste disposal sites in Woodland Township, New Jersey.
The Directives indicate that the Company and its subsidiary and other
respondents were in violation of the Spill Compensation and Control Act.
In connection with this matter, certain companies filed a complaint against
the Company, its subsidiary and at least 50 unnamed defendants. The complaint
alleges that plaintiffs have incurred substantial costs in connection with the
remediation or cleanup of the sites and seeks damages equal to past response
costs and all future response costs to be incurred by plaintiffs.
This lawsuit has been settled pursuant to a Settlement Agreement dated as of
December 21, 1994. As part of the Settlement Agreement, plaintiffs released the
Company and its subsidiaries, with
F-40
<PAGE>
BETTER MATERIALS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
the sole exception of ITSC, from all claims which were or could have been
asserted by plaintiffs in this lawsuit.
Pursuant to the Settlement Agreement, ITSC entered into a Consent Judgment
on January 11, 1995 in favor of plaintiffs for approximately $20 million plus
40% of any amounts that plaintiffs may incur from and after July 24, 1994 for
response costs or other damages related to or in connection with the Woodland
Sites. However, with respect to such Consent Judgment, plaintiffs agreed not
to seek to recover against any assets, properties or rights of ITSC other than
against amounts, if any, recovered by ITSC as indemnity in litigation filed by
it and the Company against certain of their insurance carriers. ITSC is
required to vigorously prosecute the litigation against the insurance carriers
and ITSC, first, and the Company, secondarily, are required to pay all
attorneys' fees and costs in this litigation up to an aggregate total not to
exceed $1.5 million. The Company and ITSC have spent and charged to expense
$1,275,399 towards the $1.5 million aggregate cap through 1998. In addition,
the Company has estimated additional costs of $224,601 and has accrued that
amount as of December 13, 1998 ($401,268 as of January 3, 1998). The ultimate
cost, however, will depend on how the litigation progresses. The Company and
ITSC are also seeking recovery from the insurance carriers of past and future
legal costs associated with this case. To date, the Company and ITSC have
settled with two insurance carriers for $4,371,000. Of this amount $3,786,900
was remitted to the plaintiffs and $584,100 was retained by the Company and
its subsidiary for past legal costs as well as any potential future costs or
claims. Management believes, based in part on discussions with legal counsel,
that the ultimate outcome will not have a material adverse impact on the
Company's financial condition or future results of operations or cash flows.
8. Receivables From Related Parties
Included in other receivables are receivables from shareholder in the
amount of $57,067 in 1998.
Included in notes receivable are receivables from shareholders in the
amount of $69,338 in 1997. The notes are uncollateralized and are payable on
demand.
9. Subsequent Event
On December 14, 1998 all of the common stock of the Company was sold to
U.S. Silica Company, which included the following wholly-owned subsidiaries:
Bucks County Crushed Stone Company; BMC Trucking Company; Chippewa Farms
Corporation and Shore Stone Company.
Also, on the same date the stock of Industrial Trucking Service
Corporation; Quarry Food, Inc.; Shore Fast Line, Inc.; and Hi-Way Maintenance
& Supply Company, Inc. was sold to a former shareholder. Accordingly, all
liabilities and any contingent liabilities were assumed by the former
shareholder.
F-41
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
Commercial Stone Co., Inc.
Connellsville, Pennsylvania
We have audited the accompanying combined balance sheets of Commercial Stone
Co., Inc. and Commercial Aggregates Transportation & Sales, L.P. (the
Companies) as of March 31, 1999 and 1998, and the related combined statements
of operations, changes in owners' equity and cash flows for the years ended
March 31, 1999, 1998 and 1997 that appear in this Registration Statement. These
financial statements are the responsibility of the Companies' 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. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the combined financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the combined financial position of Commercial
Stone Co., Inc. and Commercial Aggregates Transportation & Sales, L.P. as of
March 31, 1999 and 1998 and the results of their operations and their cash
flows for the years ended March 31, 1999, 1998 and 1997 in conformity with
generally accepted accounting principles.
/s/ Schneider Downs & Co., Inc.
Pittsburgh, Pennsylvania
September 8, 1999
F-42
<PAGE>
COMMERCIAL STONE CO., INC. AND
COMMERCIAL AGGREGATES TRANSPORTATION & SALES, L.P.
COMBINED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Years Ended March 31
-------------------------------------
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
SALES................................... $41,953,242 $37,753,036 $26,718,926
COSTS AND EXPENSES
Costs of goods sold and operating
expenses............................. 25,500,999 24,909,817 17,965,563
Depreciation, depletion and
amortization......................... 3,220,522 2,817,324 2,598,544
General and administrative expenses... 3,239,303 2,838,887 2,273,349
----------- ----------- -----------
31,960,824 30,566,028 22,837,456
----------- ----------- -----------
Income From Operations................ 9,992,418 7,187,008 3,881,470
OTHER INCOME, NET....................... 474,543 587,247 493,300
INTEREST EXPENSE........................ (247,172) (248,342) (256,147)
----------- ----------- -----------
227,371 338,905 237,153
----------- ----------- -----------
Net Income............................ $10,219,789 $ 7,525,913 $ 4,118,623
=========== =========== ===========
</TABLE>
See notes to the combined financial statements.
F-43
<PAGE>
COMMERCIAL STONE CO., INC. AND
COMMERCIAL AGGREGATES TRANSPORTATION & SALES, L.P.
COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31
------------------------
1999 1998
------------ -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents........................... $ 9,038,795 $ 5,259,985
Accounts receivable................................. 3,545,356 3,467,325
Inventory........................................... 2,659,150 2,626,731
Prepaid expenses.................................... 202,869 258,041
------------ -----------
Total Current Assets.............................. 15,446,170 11,612,082
OTHER ASSETS.......................................... 3,764,586 1,532,851
PROPERTY, PLANT AND EQUIPMENT, NET.................... 18,353,306 19,072,992
------------ -----------
$ 37,564,062 $32,217,925
============ ===========
LIABILITIES
CURRENT LIABILITIES
Payments due within one year on long-term debt...... $ 15,609 $ 14,341
Accounts payable.................................... 1,840,494 3,352,773
Accrued liabilities:
Federal tax deposit payable....................... 1,216,108 --
Other............................................. 464,348 600,673
------------ -----------
1,680,456 600,673
------------ -----------
Total Current Liabilities......................... 3,536,559 3,967,787
LONG-TERM DEBT........................................ 4,060,902 4,076,510
ACCRUED RECLAMATION COSTS............................. 508,866 485,527
COMMITMENTS AND CONTINGENCIES......................... -- --
OWNERS' EQUITY
COMMON STOCK
Class A Voting--Par value $5 per share, authorized,
issued and outstanding 1,200 shares................ 6,000 6,000
Class B Nonvoting--Par value $5 per share,
authorized, issued and outstanding 22,800 shares... 114,000 114,000
------------ -----------
120,000 120,000
RETAINED EARNINGS AND PARTNERS' CAPITAL............... 29,337,735 23,568,101
------------ -----------
29,457,735 23,688,101
------------ -----------
$37,564,062 $32,217,925
============ ===========
</TABLE>
See notes to the combined financial statements.
F-44
<PAGE>
COMMERCIAL STONE CO., INC. AND
COMMERCIAL AGGREGATES TRANSPORTATION & SALES, L.P.
COMBINED STATEMENTS OF CHANGES IN OWNERS' EQUITY
FOR THE YEARS ENDED MARCH 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
Retained
Earnings
Common CATS and Combined
Stock Common Retained Partners' Partners' Owners'
Shares(1) Stock(1) Earnings(1) Capital(2) Capital Equity
--------- -------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE--March 31,
1996................... 24,000 $120,000 $24,608,152 $ 369,614 $24,977,766 $25,097,766
Shareholder and partner
distributions......... -- -- (4,793,364) (777,153) (5,570,517) (5,570,517)
Net income............. -- -- 3,567,830 550,793 4,118,623 4,118,623
------ -------- ----------- --------- ----------- -----------
BALANCE--March 31,
1997................... 24,000 120,000 23,382,618 143,254 23,525,872 23,645,872
Shareholder and partner
distributions......... -- -- (7,047,592) (436,092) (7,483,684) (7,483,684)
Net income............. -- -- 6,870,744 655,169 7,525,913 7,525,913
------ -------- ----------- --------- ----------- -----------
BALANCE--March 31,
1998................... 24,000 120,000 23,205,770 362,331 23,568,101 23,688,101
Shareholder and partner
distributions......... -- -- (3,788,192) (661,963) (4,450,155) (4,450,155)
Net income............. -- -- 9,480,076 739,713 10,219,789 10,219,789
------ -------- ----------- --------- ----------- -----------
BALANCE--March 31,
1999................... 24,000 $120,000 $28,897,654 $ 440,081 $29,337,735 $29,457,735
====== ======== =========== ========= =========== ===========
</TABLE>
- --------
(1) Commercial Stone Co., Inc.
(2) Commercial Aggregates Transportation & Sales, L.P.
See notes to the combined financial statements.
F-45
<PAGE>
COMMERCIAL STONE CO., INC. AND
COMMERCIAL AGGREGATES TRANSPORTATION & SALES, L.P.
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years Ended March 31
-------------------------------------
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income............................ $10,219,789 $ 7,525,913 $ 4,118,623
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation, depletion and
amortization....................... 3,220,522 2,817,324 2,598,544
Changes in assets and liabilities:
Accounts receivable................. 181,613 1,054,624 1,174,456
Inventory........................... (32,419) 7,822 381,343
Prepaid expenses and other assets... (1,475,829) (141,832) (235,362)
Accounts payable.................... (305,279) 201,682 (11,969)
Accrued liabilities................. 829,184 133,840 (130,113)
Other............................... 9,000 1,000 --
----------- ----------- -----------
Net Cash Provided By Operating
Activities....................... 12,646,581 11,600,373 7,895,522
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and
equipment, net....................... (3,703,276) (4,341,631) (3,315,802)
Issuance of notes receivable.......... (700,000) (925,000) --
----------- ----------- -----------
Net Cash Used In Investing
Activities....................... (4,403,276) (5,266,631) (3,315,802)
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions to stockholders and
partners............................. (4,450,155) (7,483,684) (5,570,517)
Payments on long-term debt............ (14,340) (13,176) (12,104)
----------- ----------- -----------
Net Cash Used In Financing
Activities....................... (4,464,495) (7,496,860) (5,582,621)
----------- ----------- -----------
Net Increase (Decrease) In Cash
and Cash Equivalents............. 3,778,810 (1,163,118) (1,002,901)
CASH AND CASH EQUIVALENTS
Beginning of year..................... 5,259,985 6,423,103 7,426,004
----------- ----------- -----------
End of year........................... $ 9,038,795 $ 5,259,985 $ 6,423,103
=========== =========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
Cash paid during the year for
interest............................. $ 247,172 $ 248,342 $ 256,147
=========== =========== ===========
</TABLE>
SUPPLEMENTAL DISCLOSURE OF NONCASH INFORMATION
Included in accounts payable at March 31, 1999, 1998 and 1997 are amounts for
the purchase of property, plant and equipment paid in the subsequent period.
These balances are $642,000, $1,849,000 and $886,000, respectively.
See notes to the combined financial statements.
F-46
<PAGE>
COMMERCIAL STONE CO., INC. AND
COMMERCIAL AGGREGATES TRANSPORTATION & SALES, L.P.
NOTES TO COMBINED FINANCIAL STATEMENTS
MARCH 31, 1999, 1998 AND 1997
1. Organization
The combined financial statements consist of Commercial Stone Co., Inc.
(CSC) and Commercial Aggregates Transportation & Sales, L.P. (CATS)
(collectively referred to as "the Companies"). These two companies are
affiliated through ownership. The combined financial statements are being
prepared pursuant to a purchase agreement dated August 26, 1999 by and among
U.S. Silica Company as buyer and the owners of the Companies as sellers.
CSC operates two stone quarries (mines) and three asphalt plants in
Southwestern Pennsylvania. The asphalt plants operate under the trade name of
Commercial Asphalt Products.
CATS is a transportation and sales company whose revenues are generated
through contracts with independent haulers of aggregates. CATS contracts for a
portion of CSC's hauling services between CSC's quarries and asphalt plants as
well as for certain CSC customer shipments.
2. Summary of Significant Accounting Policies
A summary of significant accounting policies applied by management in the
preparation of the accompanying financial statements follows.
Principles of Combination--The combined financial statements include the
results of operations and financial position of CSC and CATS. The CATS results
of operations and financial position are presented on a calendar year basis and
include the twelve months ended December 31, 1998, 1997 and 1996. No
significant transactions have occurred with CATS during the three-month period
ended March 31, 1999 that would require disclosure within these combined
financial statements. All intercompany transactions have been eliminated.
Management Estimates--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents--The Companies consider all highly liquid debt
instruments with purchased maturities of three months or less to be cash
equivalents. The Companies maintain, at several financial institutions, cash
and cash equivalents that exceed federally insured amounts at times.
Inventory--Inventory is stated at the lower of cost, determined on the
first-in, first-out (FIFO) method, or market.
Property, Plant and Equipment--Property, plant and equipment are stated at
cost. Depreciation is provided on the straight-line method over the estimated
useful lives of the assets. Depletion is provided for mineral deposits on the
units-of-production method. Repairs and maintenance, which do not extend the
lives of the applicable assets, are charged to expense as incurred. Profit or
loss resulting from the retirement or other disposition of assets is included
in income.
Accrued Reclamation Costs--Reclamation costs are expensed over the
productive life of the mines on the units-of-production method.
F-47
<PAGE>
COMMERCIAL STONE CO., INC. AND
COMMERCIAL AGGREGATES TRANSPORTATION & SALES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
MARCH 31, 1999, 1998 AND 1997
Revenue Recognition--The Companies generally recognize revenue upon shipment
of aggregates to customers or performance of services.
Income Taxes--CSC has elected to be taxed as an S Corporation for federal
and state tax purposes under the provisions of the Internal Revenue Code and
the Commonwealth of Pennsylvania, respectively. CATS is taxed as a limited
partnership. Under both of these provisions, the Companies do not pay corporate
net income taxes on their taxable income. Instead, the stockholders and
partners of each company reflect their proportionate share of the taxable
income on their personal income tax returns. It is the Companies' policy to
make stockholder and partnership distributions necessary to satisfy the
stockholders' and partners' income tax obligations in relation to their
proportionate share of the Companies' taxable income. In order to retain the
CSC's fiscal year-end of March 31, CSC makes federal tax deposits as required
by Section 444 of the Internal Revenue Code. At March 31, 1999 and 1998, other
assets included approximately $1,792,000 and $576,000 in connection with these
deposits. The Companies combined book basis of assets and liabilities exceeds
the tax basis by approximately $5,460,000 and $5,146,000 at March 31, 1999 and
1998, respectively.
3. Inventory
Inventory consists of the following:
<TABLE>
<CAPTION>
March 31
---------------------
1999 1998
---------- ----------
<S> <C> <C>
Mining division stone............................. $1,715,432 $1,957,177
Asphalt division stone............................ 763,936 634,979
Materials brokerage............................... 108,181 --
Cold patch asphalt................................ 71,601 34,575
---------- ----------
$2,659,150 $2,626,731
========== ==========
</TABLE>
4. Property, Plant and Equipment
Property, plant and equipment consists of the following:
<TABLE>
<CAPTION>
March 31
-----------------------
1999 1998
----------- -----------
<S> <C> <C>
Machinery and equipment......................... $36,046,837 $34,566,360
Office equipment................................ 611,081 568,084
Light trucks and automobiles.................... 626,390 602,662
Buildings and improvements...................... 2,771,627 2,451,368
Land and mineral deposits....................... 1,713,365 1,638,782
----------- -----------
41,769,300 39,827,256
Less--Accumulated depreciation, amortization and
depletion...................................... 23,568,722 21,367,396
----------- -----------
18,200,578 18,459,860
Construction in progress........................ 152,728 613,132
----------- -----------
$18,353,306 $19,072,992
=========== ===========
</TABLE>
F-48
<PAGE>
COMMERCIAL STONE CO., INC. AND
COMMERCIAL AGGREGATES TRANSPORTATION & SALES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
MARCH 31, 1999, 1998 AND 1997
5. Long-Term Debt
Long-term debt consists of the following:
<TABLE>
<CAPTION>
March 31
---------------------
1999 1998
---------- ----------
<S> <C> <C>
Note payable to Dell H. Shearer Marital Trust, due
August 15, 2001 (see Note 6)...................... $4,000,000 $4,000,000
Mortgage payable to an individual, payable in
monthly installments of $1,793, including interest
at 8.5%, collateralized by real property in
Washington County, Pennsylvania................... 76,511 90,851
---------- ----------
4,076,511 4,090,851
Less--Payments due within one year................. 15,609 14,341
---------- ----------
$4,060,902 $4,076,510
========== ==========
</TABLE>
6. Related Party Transactions
All of the parties mentioned below are related through common ownership.
Related party transactions arise between the various entities in the ordinary
course of business and are summarized as follows:
CSC has a note receivable from Three Rivers Marine & Rail Terminals, L.P.
(TRM & RT). The balance outstanding is $1,625,000 and $925,000 at March 31,
1999 and 1998, respectively. There are no fixed repayment terms until maturity
in June 2000. Interest at 6% is payable monthly and aggregated $81,000 and
$14,000 for the years ended March 31, 1999 and 1998, respectively. There was no
balance outstanding during the year ended March 31, 1997.
CSC has a note payable to Dell H. Shearer Marital Trust, which has no fixed
repayment terms until maturity in August 2001. Interest at 6% is payable
monthly and aggregated $240,000 for the three years ended March 31, 1999, 1998
and 1997, respectively.
CSC leases the right to mine certain mineral deposits from a related Trust
and pays royalties based on units of production. CSC paid royalties of
approximately $462,000, $484,000 and $316,000 to the Trust for the three years
ended March 31, 1999, 1998 and 1997, respectively.
7. Employee Benefit Plans
CSC provides retirement benefits to its union employees under a multi-
employer pension plan. Contributions are based on an amount for each hour
worked. During the three years ended March 31, 1999, 1998 and 1997, CSC
contributed approximately $304,000, $244,000 and $185,000, respectively.
CSC also maintains a noncontributory, defined benefit pension plan covering
all eligible nonunion employees. Benefits under the Plan are actuarially
computed and include a provision for past service costs. CSC makes
contributions to the Plan equal to the amounts accrued for pension expense when
F-49
<PAGE>
COMMERCIAL STONE CO., INC. AND
COMMERCIAL AGGREGATES TRANSPORTATION & SALES, L.P.
NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
MARCH 31, 1999, 1998 AND 1997
required. Plan assets consist of corporate equity securities and various
corporate and government debt obligations. The Plan was overfunded for the
three years ended March 31, 1999, 1998 and 1997; thus, CSC did not make any
contribution to the Plan.
The following sets forth the change in benefit obligation, change in plan
assets, funded status, combined Balance Sheets presentation, net periodic
pension benefit cost and the relevant assumptions for the Company's defined
benefit pension plan at March 31:
<TABLE>
<CAPTION>
March 31
------------------------
1999 1998
----------- -----------
<S> <C> <C>
Change in Benefit Obligation:
Benefit obligation at beginning of year...... $ 1,784,449 $ 1,600,900
Service cost................................. 200,515 147,095
Interest cost................................ 144,941 114,708
Liability loss (gain)........................ 307,100 (50,887)
Benefits paid................................ (25,491) (27,367)
----------- -----------
Benefit Obligation at End of Year............ $ 2,411,514 $ 1,784,449
=========== ===========
Change in Plan Assets:
Fair value of plan assets at beginning of
year........................................ $ 3,661,318 $ 2,910,207
Benefits paid................................ (25,491) (27,367)
Investment return............................ 524,822 778,478
----------- -----------
Fair Value of Plan Assets at End of Year..... $ 4,160,649 $ 3,661,318
=========== ===========
Funded Status:
Funded status................................ $ 1,749,135 $ 1,876,868
Unrecognized gain............................ (1,067,535) (1,135,035)
Prior service costs not yet recognized....... (275,279) (293,631)
Unrecognized net transition obligation....... (301,525) (322,509)
----------- -----------
Prepaid Pension Cost......................... $ 104,796 $ 125,693
=========== ===========
Amounts Recognized in Combined Balance Sheets:
Prepaid Benefit Cost......................... $ 104,796 $ 125,693
=========== ===========
</TABLE>
F-50
<PAGE>
COMMERCIAL STONE CO., INC. AND
COMMERCIAL AGGREGATES TRANSPORTATION & SALES, L.P.
NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
MARCH 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
March 31
-------------------------------
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Net periodic pension benefit cost:
Service cost............................ $ 200,515 $ 147,095 $ 142,730
Interest cost........................... 144,941 114,708 102,400
Expected return on assets............... (255,602) (217,155) (195,825)
Transition asset recognition............ (20,983) (20,983) (20,983)
Prior service cost amortization......... (18,352) (18,352) (18,352)
Net gain recognition.................... (29,622) (16,822) (8,483)
--------- --------- ---------
Net periodic pension cost (income)........ $ 20,897 $ (11,509) $ 1,487
========= ========= =========
Weighted-average assumptions:
Discount rate........................... 7.0% 7.5% 7.5%
Expected return on plan assets.......... 7.0% 7.5% 7.5%
Rate of compensation increase........... 5.0% 5.0% 5.0%
</TABLE>
F-51
<PAGE>
COMMERCIAL STONE CO., INC. AND
COMMERCIAL AGGREGATES TRANSPORTATION & SALES, L.P.
NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
MARCH 31, 1999, 1998 AND 1997
8. Segment Information
The Companies have defined their segments into two main areas: quarries and
asphalt. These segments are organized under the supervision of the Companies'
executive management team and are evaluated based on the following information
presented: customer sales, inter-segment sales, depreciation, depletion and
amortization expense and gross profit. All inter-segment transactions are
eliminated to arrive at the combined Companies' total.
The quarries segment operates two stone quarries that mine stone used in the
asphalt and construction businesses. The asphalt segment operates three asphalt
plants in Southwestern Pennsylvania under the trade name of Commercial Asphalt
Products. The asphalt segment purchases the majority of its stone from the
quarries segment. The Companies grant credit to their customers, the majority
of whom are in the construction industry in Southwestern Pennsylvania. Credit
is generally granted on open account. As permitted by Statement of Financial
Accounting Standards No. 131 "Disclosure About Segments of an Enterprise and
Related Information," certain information not routinely used in the management
of these segments by executive management has been excluded.
<TABLE>
<CAPTION>
Quarries Asphalt Other Eliminations Total
----------- ----------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C>
1999 Segment Information
By Group Customer
sales.................. $22,254,871 $23,338,127 $1,771,174 $(5,410,930) $41,953,242
Inter-segment sales..... 5,068,815 -- 342,115 (5,410,930) --
Depreciation, depletion
and amortization
expense................ 2,188,858 1,009,745 21,919 -- 3,220,522
Gross profit............ 6,948,878 5,197,318 1,129,688 (39,603) 13,236,281
1998 Segment Information
by Group Customer
sales.................. $19,966,871 $22,149,911 $ 973,305 $(5,337,051) $37,753,036
Inter-segment sales..... 4,957,859 -- 379,192 (5,337,051) --
Depreciation, depletion
and amortization
expense................ 2,389,335 423,429 4,560 -- 2,817,324
Gross profit............ 5,522,104 3,728,662 783,563 (3,874) 10,030,455
1997 Segment Information
by Group Customer
sales.................. $16,767,307 $13,265,181 $ 783,057 $(4,096,619) $26,718,926
Inter-segment sales..... 3,784,403 -- 312,216 (4,096,619) --
Depreciation, depletion
and amortization
expense................ 1,966,319 627,665 4,560 -- 2,598,544
Gross profit............ 4,636,516 844,879 663,427 14,557 6,159,379
</TABLE>
9. Commitments
Subsequent to March 31, 1999, CSC purchased approximately 228 acres of land
and related mineral deposits for approximately $1,645,000.
In September 1998, CSC entered into a 25-year lease for the right to mine
certain mineral deposits. The guaranteed minimum annual rent is $20,000 and is
payable on July 1 of each year. The lease requires CSC to pay a royalty on the
average selling price of all extracted minerals from the leased property. The
guaranteed minimum rent shall be credited and applied to any royalties due
under this agreement. CSC incurred expenses of $10,000 relating to this lease
for the year ended March 31, 1999.
F-52
<PAGE>
COMMERCIAL STONE CO., INC. AND
COMMERCIAL AGGREGATES TRANSPORTATION & SALES, L.P.
NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
MARCH 31, 1999, 1998 AND 1997
In November 1998, CSC entered into a contract totaling $509,000 for
expansion of an asphalt plant. CSC has paid a $100,000 deposit on the contract,
which was classified as construction in progress. Management anticipates
completion of the contract during the fiscal year ending March 31, 2000.
10. Contingency
In November 1998, CSC filed petitions with the Pennsylvania Commonwealth
Court seeking review of a Board of Finance and Revenue decision denying CSC's
refund of capital stock tax paid for the years ended March 31, 1993, 1994 and
1995. It is CSC's position that it was entitled to claim a manufacturing
exemption from Pennsylvania capital stock tax for each of these years. In
addition, the Commonwealth of Pennsylvania has issued a settlement notice for
the years ended March 31, 1996 and 1997, claiming that CSC is not entitled to
the manufacturing exemption claimed for these tax years. CSC is contesting
these settlement notices. The capital stock tax issue for the years ended March
31, 1998 and 1999 remains unsettled. In connection with the petitions filed in
November 1998, CSC is claiming refunds of previously paid taxes approximating
$536,000. CSC intends to vigorously pursue its position with the Commonwealth
of Pennsylvania. However, were CSC's position not to be upheld, CSC would not
receive any refund and would be required to pay to the Commonwealth of
Pennsylvania an additional $623,000 of capital stock tax for the years ended
March 31, 1996, 1997, 1998 and 1999 plus any accrued interest. None of these
amounts have been recorded in the financial statements, as it is management's
position that CSC's claim for a manufacturing exemption will be upheld.
F-53
<PAGE>
COMMERCIAL STONE CO., INC. AND
COMMERCIAL AGGREGATES TRANSPORTATION & SALES, L.P.
CONDENSED COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30,
1999
-------------
<S> <C>
ASSETS (Unaudited)
CURRENT ASSETS
Cash and cash equivalents...................................... $ 598,459
Accounts receivable............................................ 12,396,068
Inventory...................................................... 1,836,231
Prepaid expenses............................................... 161,481
-----------
Total Current Assets......................................... 14,992,239
OTHER ASSETS..................................................... 1,808,275
PROPERTY, PLANT AND EQUIPMENT, NET............................... 19,835,798
-----------
$36,636,312
===========
LIABILITIES
CURRENT LIABILITIES
Payments due within one year on long-term debt................. $ 66,154
Accounts payable............................................... 3,233,418
Accrued liabilities............................................ 1,823,735
-----------
Total Current Liabilities.................................... 5,123,307
LONG-TERM DEBT................................................... 289,717
ACCRUED RECLAMATION COSTS........................................ 528,666
COMMITMENTS AND CONTINGENCIES.................................... --
OWNERS' EQUITY
COMMON STOCK
Class A Voting--Par value $5 per share, authorized, issued
and outstanding 1,200 shares.................................. 6,000
Class B Nonvoting--Par value $5 per share, authorized, issued
and outstanding 22,800 shares................................. 114,000
-----------
RETAINED EARNINGS AND PARTNERS' CAPITAL.......................... 30,574,622
-----------
30,694,622
-----------
$36,636,312
===========
</TABLE>
See notes to the condensed combined financial statements.
F-54
<PAGE>
COMMERCIAL STONE CO., INC. AND
COMMERCIAL AGGREGATES TRANSPORTATION & SALES, L.P.
CONDENSED COMBINED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Six Months Ended June
30
------------------------
1999 1998
----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C>
SALES................................................. $32,326,503 $27,161,450
COSTS AND EXPENSES
Costs of goods sold and operating expenses.......... 19,204,294 14,352,208
Depreciation, depletion and amortization............ 1,563,574 1,575,748
General and administrative expenses................. 2,141,127 1,604,589
----------- -----------
22,908,995 17,532,545
----------- -----------
Income From Operations................................ 9,417,508 9,628,905
OTHER INCOME, NET..................................... 332,060 194,097
INTEREST EXPENSE...................................... (123,118) (123,738)
----------- -----------
208,942 70,359
----------- -----------
Net Income............................................ $ 9,626,450 $ 9,699,264
=========== ===========
</TABLE>
See notes to the condensed combined financial statements.
F-55
<PAGE>
COMMERCIAL STONE CO., INC. AND
COMMERCIAL AGGREGATES TRANSPORTATION & SALES, L.P.
CONDENSED COMBINED STATEMENTS OF CHANGES IN OWNERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
Retained
Common Earnings and Combined
Stock Common Retained Partners' Partners' Owners'
Shares(1) Stock(1) Earnings(1) Capital(2) Capital Equity
--------- -------- ----------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE--March 31,
1999................... 24,000 $120,000 $28,897,654 $ 440,081 $29,337,735 $29,457,735
Shareholder and partner
distributions.......... -- -- (8,131,439) (258,124) (8,389,563) (8,389,563)
Net income.............. -- -- 9,322,712 303,738 9,626,450 9,626,450
------ -------- ----------- --------- ----------- -----------
BALANCE--September 30,
1999................... 24,000 $120,000 $30,088,927 $ 485,695 $30,574,622 $30,694,622
====== ======== =========== ========= =========== ===========
BALANCE--March 31,
1998................... 24,000 $120,000 $23,205,770 $ 362,331 $23,568,101 $23,688,101
Shareholder and partner
distributions.......... -- -- (1,559,196) (218,675) (1,777,871) (1,777,871)
Net income.............. -- -- 9,391,828 307,436 9,699,264 9,699,264
------ -------- ----------- --------- ----------- -----------
BALANCE--September 30,
1998................... 24,000 $120,000 $31,038,402 $ 451,092 $31,489,494 $31,609,494
====== ======== =========== ========= =========== ===========
</TABLE>
- --------
(1) Commercial Stone Co., Inc.
(2) Commercial Aggregates Transportation & Sales, L.P.
See notes to the condensed combined financial statements.
F-56
<PAGE>
COMMERCIAL STONE CO., INC. AND
COMMERCIAL AGGREGATES TRANSPORTATION & SALES, L.P.
CONDENSED COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended
September 30
-------------------------
1999 1998
------------ -----------
(Unaudited) (Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income........................................ $ 9,626,450 $ 9,699,264
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation, amortization and depletion.......... 1,563,574 1,575,748
Changes in assets and liabilities:
Receivables..................................... (8,850,712) (7,108,996)
Inventory....................................... 822,919 31,090
Prepaid expenses and other assets............... 1,997,699 (298,900)
Accounts payable................................ 1,392,924 (365,605)
Accrued expenses................................ (344,921) 420,412
------------ -----------
Net Cash Provided By Operating Activities..... 6,207,933 3,953,013
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment, net.... (2,766,066) (1,634,482)
------------ -----------
Net Cash Used In Investing Activities......... (2,766,066) (1,634,482)
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions to stockholders..................... (7,881,563) (1,777,871)
Payments on long-term debt........................ (4,000,640) (7,019)
------------ -----------
Net Cash Used In Financing Activities......... (11,882,203) (1,784,890)
------------ -----------
Net (Decrease) Increase In Cash and Cash
Equivalents.................................. (8,440,336) 533,641
CASH AND CASH EQUIVALENTS
Beginning of period............................... 9,038,795 5,259,985
------------ -----------
End of period..................................... $ 598,459 $ 5,793,626
============ ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for interest............ $ 123,000 $ 124,000
============ ===========
</TABLE>
Supplemental disclosures of noncash information included in accrued liabilities
at September 30, 1999 are shareholder distributions of $508,000.
The Company purchased land and incurred debt of approximately $280,000 during
the six months ended September 30, 1999.
See notes to the condensed combined financial statements.
F-57
<PAGE>
COMMERCIAL STONE CO., INC. AND
COMMERCIAL AGGREGATES TRANSPORTATION & SALES, L.P.
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(Unaudited)
1. Summary of Significant Accounting Policies
A summary of significant accounting policies applied by management in the
preparation of the accompanying condensed combined financial statements
follows.
Interim Accounting--Commercial Stone Co., Inc. (CSC) and Commercial
Aggregates Transportation & Sales, L.P. (the Companies) combined financial
statements for the fiscal year ended March 31, 1999 includes additional
information about the Companies, their operations and their combined financial
statements, and contains a summary of significant accounting polices followed
by the Companies in preparation of their combined financial statements and
should be read in conjunction with these condensed combined financial
statements. These policies were also followed in preparing these condensed
combined financial statements.
In the opinion of management, all adjustments which are of a normal and
recurring nature necessary for a fair statement of the results of operations of
these interim periods have been included. Net income for the six months ended
September 30, 1999 is not necessarily indicative of the results to be expected
for the full fiscal year.
2. Related Party Transactions
During the six months ended September 30, 1999, CSC repaid a $4.0 million
note payable to Dell H. Shearer Marital Trust.
Additionally, during the six months ended September 30, 1999, Three Rivers
Marine & Rail Terminals, L.P. paid a note receivable of $1,625,000 in full to
CSC.
3. Inventory
Inventory consists of the following:
<TABLE>
<CAPTION>
September 30,
1999
-------------
<S> <C>
Mining division stone.................................... $1,207,332
Asphalt division stone................................... 494,446
Materials brokerage...................................... 72,494
Cild patch asphalt....................................... 61,959
----------
$1,836,231
==========
</TABLE>
4. Property, Plant and Equipment
Property, plant and equipment consists of the following:
<TABLE>
<CAPTION>
September
30, 1999
-----------
<S> <C>
Machinery and equipment..................................... $36,534,528
Office equipment............................................ 585,288
Light trucks and automobiles................................ 455,796
Buildings and improvements.................................. 2,796,505
Land and mineral deposits................................... 3,458,741
Construction in progress.................................... 60,000
</TABLE>
F-58
<PAGE>
COMMERCIAL STONE CO., INC. AND
COMMERCIAL AGGREGATES TRANSPORTATION & SALES, L.P.
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS--(Continued)
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(Unaudited)
<TABLE>
<CAPTION>
September
30, 1999
-----------
<S> <C>
43,890,858
Less--Accumulated depreciation, amortization and
deletion................................................ 24,055,060
-----------
$19,835,798
===========
</TABLE>
5. Contingency
In November 1998, CSC filed petitions with the Pennsylvania Commonwealth
Court seeking review of a Board of Finance and Revenue decision denying CSC's
refund of capital stock tax paid for the years ended March 31, 1993, 1994 and
1995. It is CSC's position that it was entitled to claim a manufacturing
exemption from Pennsylvania capital stock tax for each of these years. In
addition, the Commonwealth of Pennsylvania has issued a settlement notice for
the years ended March 31, 1996 and 1997, claiming that CSC is not entitled to
the manufacturing exemption claimed for these tax years. CSC is contesting
these settlement notices. The capital stock tax issue for the years ended March
31, 1998 and 1999 remains unsettled. In connection with the petitions filed in
November 1998, CSC is claiming refunds of previously paid taxes approximating
$536,000. CSC intends to vigorously pursue its position with the Commonwealth
of Pennsylvania. However, were CSC's position not to be upheld, CSC would not
receive any refund and would be required to pay to the Commonwealth of
Pennsylvania an additional $623,000 of capital stock tax for the years ended
March 31, 1996, 1997, 1998 and 1999 plus any accrued interest. None of these
amounts have been recorded in the financial statements, as it is management's
position that CSC's claim for a manufacturing exemption will be upheld.
6. Subsequent Events
On October 1, 1999, the Companies were purchased, along with a related party
that owned the mineral rights, by Better Minerals & Aggregates Company.
Pursuant to the acquisition, the mineral rights were recorded as assets by
Better Minerals & Aggregates Company and property, plant and equipment were
adjusted to their fair value. Additionally, the Companies' tax statuses of
S Corporation and limited partnership, respectively, were changed to a C
Corporation.
F-59
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell these securities and it is not soliciting an offer to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
[ALTERNATIVE FRONT COVER FOR MARKET-MAKING PROSPECTUS]
SUBJECT TO COMPLETION, DATED MARCH 15, 2000
Prospectus
Better Minerals & Aggregates Company
13% Senior Subordinated Notes due 2009
We issued the 13% Senior Subordinated Notes due 2009, which have been
registered under the Securities Act of 1933, in exchange for our 13% Senior
Subordinated Notes due 2009 in our exchange offer.
Maturity
Change of Control
- --The new notes will mature
on September 15, 2009. --If we experience a change
of control, we must offer
to purchase the new notes
at 101% of the principal
amount, plus accrued and
unpaid interest.
Interest
- --Interest on the new notes
will be payable on March 15
and September 15 of each
year.
Security and Ranking
Redemption --The new notes will not be
secured by any collateral.
- --We may redeem some or all --The new notes will be
of the new notes at any subordinated to all of our
time after September 15, senior debt, will rank
2004. equally with all of our
- --We may also redeem up to other senior subordinated
35% of the new notes prior debt and will rank senior
to September 15, 2002 with to all of our subordinated
the net proceeds of certain debt.
equity issuances.
- --The redemption prices are Guarantees
described on page 74.
--If we fail to make
payments on the new notes,
our guarantor subsidiaries
must make them instead.
These guarantees will be
senior subordinated
obligations of our
guarantor subsidiaries. Not
all of our subsidiaries
will be guaranteeing the
new notes.
-----------------------------------------
We prepared this prospectus for use by Chase Securities Inc. ("CSI") in
connection with offers and sales related to market-making transactions in the
new notes. CSI may act as principal or agent in these transactions. These sales
will be made at prices related to prevailing market prices at the time of sale
at prices related thereto or at negotiated prices. We will not receive any of
the proceeds of these sales.
-----------------------------------------
YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS BEGINNING ON PAGE 16 OF THIS
PROSPECTUS IN EVALUATING AN INVESTMENT IN THE NEW NOTES.
-----------------------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is
a criminal offense.
-----------------------------------------
Chase Securities Inc.
-----------------------------------------
The date of this prospectus is , 2000.
<PAGE>
$150,000,000
Better Minerals & Aggregates Company
Offer To Exchange All Outstanding
13% Senior Subordinated Notes due 2009
for 13% Senior Subordinated Notes due 2009,
Which Have Been Registered Under
the Securities Act of 1933
<PAGE>
[ALTERNATIVE SECTION FOR MARKET-MAKING PROSPECTUS]
You Cannot Be Sure that an Active Trading Market Will Develop for the New Notes
We do not intend to apply for a listing of the new notes on a securities
exchange of any automated dealer quotation system. We have been advised by CSI
that as of the date of this prospectus CSI intends to make a market in the new
notes. CSI is not obligated to do so, however, and any market-making activities
with respect to the new notes may be discontinued at any time without notice.
In addition, such market-making activity will be subject to limits imposed by
the Securities Act and the Exchange Act. Because CSI is our affiliate, CSI is
required to deliver a current "market-making" prospectus and otherwise comply
with the registration requirements of the Securities Act in any secondary
market sale of the new notes. Accordingly, the ability of CSI to make a market
in the new notes may, in part, depend on our ability to maintain a current
market-making prospectus.
The liquidity of the trading market in the new notes, and the market price
quoted for the new notes, may be adversely affected by changes in the overall
market for high yield securities and by changes in our financial performance or
prospects or in the prospects for companies in our industry generally. As a
result, you cannot be sure that an active trading market will develop for the
new notes.
[ALTERNATIVE SECTION FOR MARKET-MAKING PROSPECTUS]
USE OF PROCEEDS
This prospectus is delivered in connection with the sale of the new notes by
CSI in market-making transactions. We will not receive any of the proceeds from
these transactions.
[ALTERNATIVE SECTION FOR MARKET-MAKING PROSPECTUS]
PLAN OF DISTRIBUTION
This prospectus has been prepared for use by CSI in connection with offers
and sales of the new notes in market-making transactions effected from time to
time. CSI may act as a principal or agent in these transactions, including as
agent for the counterparty when acting as principal or as agent for both
parties, and may receive compensation in the form of discounts and commissions,
including from both counterparties when it acts as agent for both. These sales
will be made at prevailing market prices at the time of sale, at prices related
thereto or at negotiated prices. The issuer will not receive any of the
proceeds of these sales. The issuer has agreed to indemnify CSI against certain
liabilities, including liabilities under the Securities Act, and to contribute
payments which CSI might be required to make in respect thereof.
See "Security Ownership of Certain Beneficial Owners and Management" for the
ownership percentages of certain classes of securities of USS Holdings, of
affiliates of CSI and for a summary of the stockholders agreement governing the
exercise of voting rights with respect to election of directors and certain
other material events. CSI has informed the issuer that it does not intend to
confirm sales of the new notes to any accounts over which it exercises
discretionary authority without the prior specific written approval of these
transactions by the customer
The issuer has been advised by CSI that, subject to applicable laws and
regulations, CSI currently intends to make a market in the new notes following
completion of the exchange offer. However, CSI is not obligated to do so and
any such market-making may be interrupted or discontinued at any time without
notice. In addition, such market-making activity will be subject to the limits
imposed by the Securities Act and the Exchange Act. There can be no assurance
that an active trading market will develop or be sustained. See "Risk Factors--
Trading Market for the New Notes."
A-2
<PAGE>
[Alternative back cover for market-making prospectus]
$150,000,000
Better Minerals & Aggregates Company
13% Senior Subordinated Notes due 2009
Chase Securities Inc.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Our Amended and Restated Certificate of Incorporation provides for
indemnification of our directors, officers, employees and agents to the full
extent authorized or permitted by law.
Section 145 of the Delaware General Corporation Law ("DGCL") empowers a
Delaware corporation to indemnify any person who was or is, or is threatened to
be made, a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other
than an action by or in the right of such corporation) by reason of the fact
that such person is or was a director, officer, employee or agent of such
corporation, or is or was serving at the request of such corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise. The indemnity may include expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such action,
suit or proceeding, provided that such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, such person had no reasonable cause to believe his conduct was
unlawful. A Delaware corporation may indemnify such persons against expenses
(including attorneys' fees) in actions brought by or in the right of the
corporation to procure a judgment in its favor under the same conditions,
except that no indemnification is permitted in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent the Court of Chancery of the State of
Delaware or the court in which such action or suit was brought shall determine
upon application that, in view of all circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses as the Court of
Chancery or other such court shall deem proper. To the extent such person has
been successful on the merits or otherwise in defense of any action referred to
above, or in defense of any claim, issue or matter therein, the corporation
must indemnify such person against expenses (including attorneys' fees)
actually and reasonably incurred by such person in connection therewith. The
indemnification and advancement of expenses provided for in, or granted
pursuant to, Section 145 is not exclusive of any other rights to which those
seeking indemnification or advancement of expenses may be entitled under any
by-law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in such person's official capacity and as to
action in another capacity while holding such office.
Section 145 also provides that a corporation may maintain insurance against
liabilities for which indemnification is not expressly provided by the statute.
In addition, Article Sixth of our Amended and Restated Certificate of
Incorporation, as permitted by Section 102(b)(7) of the DGCL, states:
"The Corporation shall indemnify any person who was or is a party, or is
threatened to be made a party, to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, including an action by or in the right of the Corporation,
by reason of the fact that he, or the person whose legal representative he
is, (1) is or was a stockholder, director, officer, employee or agent of
the Corporation (including the incorporator thereof), or (2) is or was
serving at the request of the Corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, or (3) is or was a director, officer or employee of the
Corporation serving at the request of the Corporation as a fiduciary of an
employee benefit plan or trust maintained for the benefit of employees of
the
II-1
<PAGE>
Corporation or employees of any such other enterprise, partnership, joint
venture, trust, or other enterprise, against judgments, fines, penalties,
amounts paid in settlement, and expenses, including attorneys' fees,
actually and reasonably incurred by him and the person whose legal
representative he is, in connection with such action, suit or proceeding,
or any appeal therein, to the fullest extent permitted by law.
Expenses which may be indemnifiable under this Article SIXTH in
defending an action, suit or proceeding may be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding as
authorized by the Board of Directors upon agreement by or on behalf of the
stockholder, director, officer, employee or agent, or his legal
representative, to repay such amount if he is later found not entitled to
be indemnified by the Corporation as authorized in this Article SIXTH.
The Corporation shall not indemnify any stockholder, director, officer,
employee or agent against judgments, fines, amounts paid in settlement and
expenses, including attorneys' fees, to an extent greater than that
authorized by this Article SIXTH, but the Corporation may procure insurance
providing greater indemnification and may share the premium cost with any
stockholder, director, officer, employee or agent on such basis as may be
agreed upon."
As limited by Section 102(b)(7) of the DGCL, this provision cannot, however,
have the effect of indemnifying any of our directors in the case of liability
(i) for a breach of the director's duty of loyalty, (ii) for acts of omissions
not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) for unlawful payments of dividends or unlawful stock
purchases or redemptions as provided in Section 174 of the DGCL or (iv) for any
transactions for which the director derived an improper personal benefit.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description
-------- -----------
<C> <S>
2.1 Purchase Agreement dated as of August 26, 1999 by and among U.S.
Silica Company and Joseph H. Shearer, R. Scott Shearer, CATS, Inc.,
JHS Partnership, RSS Partnership and The Dell H. Shearer
Grandchildren's Trust.
2.1.1 Amendment No. 1 to Purchase Agreement dated as of October 1, 1999
among U.S. Silica Company and Joseph H. Shearer, R. Scott Shearer,
CATS, Inc., JHS Partnership, RSS Partnership and The Dell H. Shearer
Grandchildren's Trust.
3.1 Amended and Restated Certificate of Incorporation of Better Minerals
and Aggregates Company (formerly USS Intermediate Holdco, Inc.) dated
as of February 9, 1996.
3.1.1 Certificate of Amendment of The Restated Certificate of Incorporation
of Better Minerals and Aggregates Company (formerly USS Intermediate
Holdco, Inc.) dated September 30, 1999.
3.2 By-laws of Better Minerals and Aggregates Company (formerly USS
Intermediate Holdco, Inc.).
3.3 Certificate of Incorporation of U.S. Silica Company (formerly ITT-
PGS, Inc.) dated June 3, 1968.
3.3.1 Certificate of Amendment of Certificate of Incorporation of U.S.
Silica Company (formerly ITT-PGS, Inc.) dated June 20, 1968.
3.3.2 Certificate of Amendment of Certificate of Incorporation of U.S.
Silica Company (formerly ITT-PGS, Inc.) dated December 15, 1986.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
-------- -----------
<C> <S>
3.3.3 Certificate of Ownership and Merger Merging U.S. Silica Company (OSC)
into U.S. Silica Company dated December 17, 1987.
3.3.4 Certificate of Ownership and Merger Merging Each of Louisiana
Industrial Sand Transportation Company, Texas Industrial Minerals
Transportation Company, U.S. Silica Co. of California, U.S. Silica
Co. of Connecticut, U.S. Silica Co. of Illinois, U.S. Silica Co. of
Louisiana, U.S. Silica Co. of Michigan and U.S. Silica Co. of Texas
into U.S. Silica Company dated December 17, 1987.
3.3.5 Certificate of Ownership and Merger Merging Warrior Sand and Gravel
Company, Inc. into U.S. Silica Company dated December 9, 1988.
3.3.6 Certificate of Ownership and Merger Merging USS Acquisitions, Inc.
into U.S. Silica Company dated February 9, 1996.
3.4 By-laws of U.S. Silica Company (formerly ITT-PGS, Inc.).
3.5 Restated Articles of Incorporation and Articles of Amendment of
Better Materials Corporation dated December 3, 1990.
3.5.1 Articles of Merger of Better Materials Corporation dated December 14,
1998.
3.6 Amended and Restated By-laws of Better Materials Corporation.
3.7 Certificate of Incorporation of BMC Trucking, Inc. dated November 30,
1998.
3.8 By-laws of BMC Trucking, Inc.
3.9 Restated Articles of Incorporation and Articles of Amendment of Bucks
County Crushed Stone Company dated December 21, 1990.
3.10 Amended and Restated By-laws of Bucks County Crushed Stone Company.
3.11 Certificate of Incorporation of Chippewa Farms Corporation dated
January 16, 1981.
3.12 Amended and Restated By-laws of Chippewa Farms Corporation.
3.13 Certificate of Incorporation of Shore Stone Company, Inc. dated May
6, 1983.
3.13.1 Certificate of Amendment to the Certificate of Incorporation of Shore
Stone Company, Inc. dated November 28, 1990.
3.14 Amended and Restated By-laws of Shore Stone Company, Inc.
3.15 Certificate of Incorporation of Pennsylvania Glass Sand Corporation
(formerly Morgan National Silica Co.) dated October 24, 1986.
3.15.1 Certificate of Amendment of Certificate of Incorporation of
Pennsylvania Glass Sand Corporation (formerly Morgan National Silica
Co.) dated December 15, 1986.
3.16 By-laws of Pennsylvania Glass Sand Corporation (formerly Morgan
National Silica Co.).
3.17 Amended and Restated Certificate of Incorporation of George F.
Pettinos, Inc. dated July 31, 1998.
3.18 By-laws of George F. Pettinos, Inc.
3.19 Certificate of Incorporation of Ottawa Silica Company (formerly
LaSalle National Silica Co.) dated October 24, 1986.
3.19.1 Certificate of Amendment of Certificate of Incorporation of Ottawa
Silica Company (formerly LaSalle National Silica Co.) dated December
15, 1986.
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
-------- -----------
<C> <S>
3.20 By-laws of Ottawa Silica Company (formerly LaSalle National Silica
Co.).
3.21 Articles of Incorporation of The Fulton Land and Timber Company dated
April 13, 1942.
3.22 Amended and Restated By-laws of Fulton Land and Timber Company.
3.23 Certificate of Incorporation of Ellen Jay, Inc. dated March 1, 1974.
3.24 Amended and Restated By-laws of Ellen Jay, Inc.
3.25 Certificate of Formation of Stone Materials Company, LLC dated
September 24, 1999.
3.26 Limited Liability Company Operating Agreement of Stone Materials
Company, LLC dated as of September 30, 1999.
3.27 Articles of Incorporation of Commercial Stone Co., Inc. dated January
27, 1972.
3.27.1 Certificate of Amendment of Commercial Stone Co., Inc. dated December
29, 1983.
3.27.2 Statement of Change of Registered Office of Commercial Stone Co.,
Inc. dated February 9, 1984.
3.27.3 Certificate of Amendment of Commercial Stone Co., Inc. dated December
24, 1986.
3.28 By-laws of Commercial Stone Co., Inc.
3.29 Certificate of Formation of Commercial Aggregates Transportation and
Sales, LLC dated September 27, 1999.
3.29.1 Contribution Agreement dated as of October 1, 1999 between Stone
Materials Company, LLC and Commercial Stone Co., Inc.
3.30 Limited Liability Company Operating Agreement of Commercial
Aggregates Transportation and Sales, LLC dated as of September 30,
1999.
4.1 Indenture, dated as of October 1, 1999, among the Better Minerals and
Aggregates Company, the subsidiary guarantors named therein and The
Bank of New York, as trustee (including the forms of the Better
Minerals and Aggregates Company's 13% Senior Subordinated Notes due
2009 attached thereto as exhibits).
4.2 Exchange and Registration Rights Agreement, dated October 1, 1999,
among the Better Minerals and Aggregates Company, the subsidiary
guarantors named therein, Chase Securities Inc. and BNP Capital
Markets, LLC.
5.1 Opinion of Winthrop, Stimson, Putnam & Roberts regarding the legality
of the securities.
8.1 Opinion of Winthrop, Stimson, Putnam & Roberts regarding tax matters.
10.1 The Stockholders Agreement, dated as of February 9, 1996, among USS
Holdings, Inc. and the stockholders of the USS Holdings, Inc.
10.1.1 Amendment No. 1 to Stockholders Agreement dated as of October 15,
1996.
10.1.2 Amendment No. 2 to Stockholders Agreement dated as of October 6,
1998.
10.2 Amended and Restated Management Services Agreement, dated October 1,
1998, among USS Intermediate Holdco, Inc. (now Better Minerals and
Aggregates Company), USS Holdings, Inc., BMAC Holdings and DGHA.
10.2.1 Assignment and Assumption Agreement dated as of September 30, 1999.
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
-------- -----------
<C> <S>
10.3 Amended and Restated Tax Sharing Agreement, dated as of October 1,
1999, among USS Intermediate Holdco, Inc. (now Better Minerals and
Aggregates Company), its domestic subsidiaries, and USS Holdings,
Inc.
10.4 Credit Agreement, dated as of September 30, 1999, among Better
Minerals and Aggregates Company, BMAC Holdings, Inc., George F.
Pettinos (Canada) Limited, Banque Nationale de Paris, and the
financial institutions and other institutional lenders named therein.
10.5 Security Agreement, dated September 30, 1999, among Better Minerals
and Aggregates Company, the subsidiary guarantors named therein and
Banque Nationale de Paris.
10.6 Intellectual Property Security Agreement, dated September 30, 1999,
among Better Minerals and Aggregates Company, the subsidiary
guarantors named therein and Banque Nationale de Paris.
10.7 Parent Guarantor Security Agreement, dated September 30, 1999,
between BMAC Holdings, Inc. and Banque Nationale de Paris.
10.8 Canadian Security Agreement, dated September 30, 1999, between George
F. Pettinos (Canada) Limited and Banque Nationale de Paris.
10.9 Parent Guaranty, dated September 30, 1999, between BMAC Holdings,
Inc. and Banque Nationale de Paris.
10.10* Subsidiary Guaranty, dated September 30, 1999, between each of the
subsidiary guarantors named therein and Banque Nationale de Paris.
10.11* Equity Rights Agreement, dated as of October 1, 1999, between USS
Holdings, Inc., and the purchasers listed on Schedule I thereto.
10.12 Equity Rights Agreement, dated as of December 19, 1996, between USS
Holdings, Inc., and the investors listed on Schedule I thereto.
12.1 Statement regarding ratio of earnings to fixed charges.
21.1 Subsidiaries of Better Minerals and Aggregates Company.
23.1 Consent of Winthrop, Stimson, Putnam & Roberts (included in Exhibits
5.1 and 8.1 to this Registration Statement).
23.2 Consent of PricewaterhouseCoopers LLP.
23.3 Consent of Schneider Downs & Co., Inc.
Powers-of-Attorney (contained on the signature page of this
24.1 Registration Statement).
Statement of Eligibility and Qualification on Form T-1 of The Bank of
25.1 New York, as Trustee under the Indenture.
27.1 Financial Data Schedule.
99.1 Form of Letter of Transmittal.
99.2 Form of Letter to Clients.
99.3 Form of Letter to Registered Holders and DTC Participants.
99.4 Form of Notice of Guaranteed Delivery.
</TABLE>
- --------
* To be filed by amendment.
(b)Financial Statement Schedules
REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE
To the Board of Directors of Better Minerals & Aggregates Company (formerly
USS Intermediate Holdco, Inc.):
Our audits of the consolidated financial statements referred to in our
report dated March 9, 2000 appearing in the Registration Statement on Form S-4
also included an audit of the financial
II-5
<PAGE>
statement schedule listed in [Item 21(b)] of this Registration Statement on
Form S-4. In our opinion, this financial statement schedule presents fairly, in
all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.
PricewaterhouseCoopers LLP
New York, New York
March 9, 2000
Schedule II--Valuation and Qualifying Accounts
BETTER MINERALS & AGGREGATES COMPANY (formerly USS Intermediate Holdings, Inc.)
VALUATION AND QUALIFYING ACCOUNTS
For The Years December 31, 1997, 1998 and 1999
(In Thousands)
<TABLE>
<CAPTION>
Additions
--------------------
Balance at Charged to Charge to Balance at
Beginning Costs and Other End of
Description of Period Expenses Accounts Deductions Period
- ----------- ---------- ---------- --------- ---------- ----------
Allowance for Doubtful Accounts
<S> <C> <C> <C> <C> <C>
1997...................... $ 629 $170 -- $(377) $ 422
1998...................... $ 422 $151 $515 $ (28) $1,060
1999...................... $1,060 $224 $100 $(106) $1,278
</TABLE>
ITEM 22. UNDERTAKINGS.
(a) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrants pursuant to the Corporation Law, the Certificate of
Incorporation and By-laws, or otherwise, the Registrants have been advised that
in the opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrants of expenses
incurred or paid by a director, officer or controlling person of the
Registrants in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, the Registrants will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of that issue.
(b) The undersigned Registrants hereby undertake to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
(c) The undersigned Registrants hereby undertake to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, on the day of March, 2000.
Better Minerals & Aggregates
Company
/s/ John A. Ulizio
By: ________________________________
Name: John A. Ulizio
Title: Vice President, General
Counsel and Assistant
Secretary
POWER OF ATTORNEY
We, the undersigned members of the Board of Directors and officers of
BETTER MINERALS & AGGREGATES COMPANY, do hereby constitute and appoint John A.
Ulizio and Donald G. Kilpatrick, or either of them, our true and lawful
attorneys and agents, to do any and all acts and things in our name and on our
behalf in our capacities as directors and officers and to execute any and all
instruments for us and in our names in the capacities indicated below, which
said attorneys and agents, or either of them, may deem necessary or advisable
to enable BETTER MINERALS & AGGREGATES COMPANY to comply with the Securities
Act of 1933 and any rules, regulations and requirements of the Securities and
Exchange Commission, in connection with this Registration Statement, including
specifically, but without limitation, power and authority to sign for us or
any of us in our names in the capacities indicated below, any and all
amendments (including post-effective amendments) hereto; and we do hereby
ratify and confirm all that said attorneys and agents, or either of them,
shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on behalf of
the registrant and in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Richard E. Goodell Chief Executive Officer
___________________________________________ (Principal Executive
Richard E. Goodell Officer) and Director
/s/ Gary E. Bockrath Chief Financial Officer
___________________________________________ (Principal Financial
Gary E. Bockrath Officer and Principal
Accounting Officer)
Director
___________________________________________
D. George Harris
</TABLE>
II-7
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Anthony J. Petrocelli Director
___________________________________________
Anthony J. Petrocelli
/s/ Richard J. Donahue Director
___________________________________________
Richard J. Donahue
/s/ Arnold Chavkin Director
___________________________________________
Arnold Chavkin
Director
___________________________________________
Ruth Dreessen
/s/ Timothy J. Walsh Director
___________________________________________
Timothy J. Walsh
</TABLE>
II-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, on the day of March, 2000.
U.S. SILICA COMPANY
By: /s/ John A. Ulizio
----------------------------------
Name: John A. Ulizio
Title: Senior Vice President,
General
Counsel and Assistant
Secretary
POWER OF ATTORNEY
We, the undersigned members of the Board of Directors and officers of U.S.
SILICA COMPANY, do hereby constitute and appoint John A. Ulizio and Donald G.
Kilpatrick, or either of them, our true and lawful attorneys and agents, to do
any and all acts and things in our name and on our behalf in our capacities as
directors and officers and to execute any and all instruments for us and in our
names in the capacities indicated below, which said attorneys and agents, or
either of them, may deem necessary or advisable to enable U.S. SILICA COMPANY
to comply with the Securities Act of 1933 and any rules, regulations and
requirements of the Securities and Exchange Commission, in connection with this
Registration Statement, including specifically, but without limitation, power
and authority to sign for us or any of us in our names in the capacities
indicated below, any and all amendments (including post-effective amendments)
hereto; and we do hereby ratify and confirm all that said attorneys and agents,
or either of them, shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on behalf of
the registrant and in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Gary E. Bockrath Senior Vice President
___________________________________________ (Principal Financial
Gary E. Bockrath Officer and Principal
Accounting Officer) and
Director
/s/ Richard J. Donahue Director
___________________________________________
Richard J. Donahue
/s/ Richard E. Goodell Director
___________________________________________
Richard E. Goodell
/s/ John A. Ulizio Director
___________________________________________
John A. Ulizio
</TABLE>
II-9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, on the 9th day of March, 2000.
Better Materials Corporation
/s/ John A. Ulizio
By:
----------------------------------
Name:John A. Ulizio
Title:Vice President and
Assistant
Secretary
POWER OF ATTORNEY
We, the undersigned members of the Board of Directors and officers of BETTER
MATERIALS CORPORATION, do hereby constitute and appoint John A. Ulizio and
Donald G. Kilpatrick, or either of them, our true and lawful attorneys and
agents, to do any and all acts and things in our name and on our behalf in our
capacities as directors and officers and to execute any and all instruments for
us and in our names in the capacities indicated below, which said attorneys and
agents, or either of them, may deem necessary or advisable to enable BETTER
MATERIALS CORPORATION to comply with the Securities Act of 1933 and any rules,
regulations and requirements of the Securities and Exchange Commission, in
connection with this Registration Statement, including specifically, but
without limitation, power and authority to sign for us or any of us in our
names in the capacities indicated below, any and all amendments (including
post-effective amendments) hereto; and we do hereby ratify and confirm all that
said attorneys and agents, or either of them, shall do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on behalf of
the registrant and in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Brian Hessenthaler Senior Vice President and Chief March 9, 2000
___________________________________________ Financial Officer (Principal
Brian Hessenthaler Accounting Officer)
/s/ Gary E. Bockrath Vice President and Assistant
___________________________________________ Treasurer (Principal Financial
Gary E. Bockrath Officer)
/s/ Richard E. Goodell Director
___________________________________________
Richard E. Goodell
/s/ Richard J. Donahue Director
___________________________________________
Richard J. Donahue
/s/ John A. Ulizio Director
___________________________________________
John A. Ulizio
/s/ Craig S. Cinalli Director March 9, 2000
___________________________________________
Craig S. Cinalli
</TABLE>
II-10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, on the 9th day of March, 2000.
BMC Trucking, Inc.
/s/ John A. Ulizio
By:
----------------------------------
Name:John A. Ulizio
Title:Vice President and
Assistant
Secretary
POWER OF ATTORNEY
We, the undersigned members of the Board of Directors and officers of BMC
TRUCKING, INC., do hereby constitute and appoint John A. Ulizio and Donald G.
Kilpatrick, or either of them, our true and lawful attorneys and agents, to do
any and all acts and things in our name and on our behalf in our capacities as
directors and officers and to execute any and all instruments for us and in our
names in the capacities indicated below, which said attorneys and agents, or
either of them, may deem necessary or advisable to enable BMC TRUCKING, INC. to
comply with the Securities Act of 1933 and any rules, regulations and
requirements of the Securities and Exchange Commission, in connection with this
Registration Statement, including specifically, but without limitation, power
and authority to sign for us or any of us in our names in the capacities
indicated below, any and all amendments (including post-effective amendments)
hereto; and we do hereby ratify and confirm all that said attorneys and agents,
or either of them, shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on behalf of
the registrant and in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Brian Hessenthaler Senior Vice President and Chief March 9, 2000
___________________________________________ Financial Officer (Principal
Brian Hessenthaler Accounting Officer)
/s/ Gary E. Bockrath Vice President and Assistant
___________________________________________ Treasurer (Principal Financial
Gary E. Bockrath Officer)
/s/ Richard E. Goodell Director
___________________________________________
Richard E. Goodell
/s/ Richard J. Donahue Director
___________________________________________
Richard J. Donahue
/s/ John A. Ulizio Director
___________________________________________
John A. Ulizio
/s/ Craig S. Cinalli Director March 9, 2000
___________________________________________
Craig S. Cinalli
</TABLE>
II-11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, on the 9th day of March, 2000.
Bucks County Crushed Stone Company
/s/ John A. Ulizio
By:
----------------------------------
Name:John A. Ulizio
Title:Vice President and
Assistant
Secretary
POWER OF ATTORNEY
We, the undersigned members of the Board of Directors and officers of BUCKS
COUNTY CRUSHED STONE COMPANY, do hereby constitute and appoint John A. Ulizio
and Donald G. Kilpatrick, or either of them, our true and lawful attorneys and
agents, to do any and all acts and things in our name and on our behalf in our
capacities as directors and officers and to execute any and all instruments for
us and in our names in the capacities indicated below, which said attorneys and
agents, or either of them, may deem necessary or advisable to enable BUCKS
COUNTY CRUSHED STONE COMPANY to comply with the Securities Act of 1933 and any
rules, regulations and requirements of the Securities and Exchange Commission,
in connection with this Registration Statement, including specifically, but
without limitation, power and authority to sign for us or any of us in our
names in the capacities indicated below, any and all amendments (including
post-effective amendments) hereto; and we do hereby ratify and confirm all that
said attorneys and agents, or either of them, shall do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on behalf of
the registrant and in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Brian Hessenthaler Vice President of Finance March 9, 2000
___________________________________________ and Treasurer (Principal
Brian Hessenthaler Accounting Officer)
/s/ Gary E. Bockrath Vice President and
___________________________________________ Assistant Treasurer
Gary E. Bockrath (Principal Financial
Officer)
/s/ Richard E. Goodell Director
___________________________________________
Richard E. Goodell
/s/ Richard J. Donahue Director
___________________________________________
Richard J. Donahue
/s/ Craig S. Cinalli Director March 9, 2000
___________________________________________
Craig S. Cinalli
/s/ John A. Ulizio Director
___________________________________________
John A. Ulizio
</TABLE>
II-12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, on the 9th day of March, 2000.
Chippewa Farms Corporation
/s/ John A. Ulizio
By:
----------------------------------
Name:John A. Ulizio
Title:Vice President and
Assistant
Secretary
POWER OF ATTORNEY
We, the undersigned members of the Board of Directors and officers of
CHIPPEWA FARMS CORPORATION, do hereby constitute and appoint John A. Ulizio and
Donald G. Kilpatrick, or either of them, our true and lawful attorneys and
agents, to do any and all acts and things in our name and on our behalf in our
capacities as directors and officers and to execute any and all instruments for
us and in our names in the capacities indicated below, which said attorneys and
agents, or either of them, may deem necessary or advisable to enable CHIPPEWA
FARMS CORPORATION to comply with the Securities Act of 1933 and any rules,
regulations and requirements of the Securities and Exchange Commission, in
connection with this Registration Statement, including specifically, but
without limitation, power and authority to sign for us or any of us in our
names in the capacities indicated below, any and all amendments (including
post-effective amendments) hereto; and we do hereby ratify and confirm all that
said attorneys and agents, or either of them, shall do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on behalf of
the registrant and in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Brian Hessenthaler Vice President of Finance March 9, 2000
___________________________________________ and Treasurer (Principal
Brian Hessenthaler Accounting Officer)
/s/ Gary E. Bockrath Vice President and
___________________________________________ Assistant Treasurer
Gary E. Bockrath (Principal Financial
Officer)
/s/ Richard E. Goodell Director
___________________________________________
Richard E. Goodell
/s/ Richard J. Donahue Director
___________________________________________
Richard J. Donahue
/s/ John A. Ulizio Director
___________________________________________
John A. Ulizio
/s/ Craig S. Cinalli Director March 9, 2000
___________________________________________
Craig S. Cinalli
</TABLE>
II-13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, on the day of March, 2000.
Commercial Aggregates Transportation
and Sales, LLC
By: Commercial Stone Co., Inc., as
Sole
Member and Sole Manager
/s/ John A. Ulizio
By:
----------------------------------
Name:John A. Ulizio
Title: Vice President and
Assistant
Secretary
II-14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, on the day of March, 2000.
Commercial Stone Co., Inc.
/s/ John A. Ulizio
By:
----------------------------------
Name: John A. Ulizio
Title:Secretary
POWER OF ATTORNEY
We, the undersigned members of the Board of Directors and officers of
COMMERCIAL STONE CO., INC., do hereby constitute and appoint John A. Ulizio and
Donald G. Kilpatrick, or either of them, our true and lawful attorneys and
agents, to do any and all acts and things in our name and on our behalf in our
capacities as directors and officers and to execute any and all instruments for
us and in our names in the capacities indicated below, which said attorneys and
agents, or either of them, may deem necessary or advisable to enable COMMERCIAL
STONE CO., INC. to comply with the Securities Act of 1933 and any rules,
regulations and requirements of the Securities and Exchange Commission, in
connection with this Registration Statement, including specifically, but
without limitation, power and authority to sign for us or any of us in our
names in the capacities indicated below, any and all amendments (including
post-effective amendments) hereto; and we do hereby ratify and confirm all that
said attorneys and agents, or either of them, shall do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on behalf of
the registrant and in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Richard E. Goodell Chief Executive Officer
___________________________________________ (Principal Executive
Richard E. Goodell Officer) and Director
/s/ Gary E. Bockrath Executive Vice President,
___________________________________________ Treasurer (Principal
Gary E. Bockrath Financial Officer and
Principal Accounting
Officer) and Director
/s/ Richard J. Donahue Director
___________________________________________
Richard J. Donahue
/s/ John A. Ulizio Director
___________________________________________
John A. Ulizio
</TABLE>
II-15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, on the day of March, 2000.
Ellen Jay, Inc.
/s/ John A. Ulizio
By: _________________________________
Name: John A. Ulizio
Title: Vice President and
Secretary
POWER OF ATTORNEY
We, the undersigned members of the Board of Directors and officers of ELLEN
JAY, INC., do hereby constitute and appoint John A. Ulizio and Donald G.
Kilpatrick, or either of them, our true and lawful attorneys and agents, to do
any and all acts and things in our name and on our behalf in our capacities as
directors and officers and to execute any and all instruments for us and in our
names in the capacities indicated below, which said attorneys and agents, or
either of them, may deem necessary or advisable to enable ELLEN JAY, INC. to
comply with the Securities Act of 1933 and any rules, regulations and
requirements of the Securities and Exchange Commission, in connection with this
Registration Statement, including specifically, but without limitation, power
and authority to sign for us or any of us in our names in the capacities
indicated below, any and all amendments (including post-effective amendments)
hereto; and we do hereby ratify and confirm all that said attorneys and agents,
or either of them, shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on behalf of
the registrant and in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Richard J. Donahue President (Principal
___________________________________________ Executive Officer)
Richard J. Donahue
/s/ Richard J. Nick Treasurer (Principal
___________________________________________ Financial Officer and
Richard J. Nick Principal Accounting
Officer)
/s/ Gary E. Bockrath Director
___________________________________________
Gary E. Bockrath
/s/ Richard E. Goodell Director
___________________________________________
Richard E. Goodell
/s/ John A. Ulizio Director
___________________________________________
John A. Ulizio
</TABLE>
II-16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, on the day of March, 2000.
The Fulton Land and Timber Company
/s/ John A. Ulizio
By: _________________________________
Name: John A. Ulizio
Title: Secretary
POWER OF ATTORNEY
We, the undersigned members of the Board of Directors and officers of THE
FULTON LAND AND TIMBER COMPANY, do hereby constitute and appoint John A. Ulizio
and Donald G. Kilpatrick, or either of them, our true and lawful attorneys and
agents, to do any and all acts and things in our name and on our behalf in our
capacities as directors and officers and to execute any and all instruments for
us and in our names in the capacities indicated below, which said attorneys and
agents, or either of them, may deem necessary or advisable to enable THE FULTON
LAND AND TIMBER COMPANY to comply with the Securities Act of 1933 and any
rules, regulations and requirements of the Securities and Exchange Commission,
in connection with this Registration Statement, including specifically, but
without limitation, power and authority to sign for us or any of us in our
names in the capacities indicated below, any and all amendments (including
post-effective amendments) hereto; and we do hereby ratify and confirm all that
said attorneys and agents, or either of them, shall do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on behalf of
the registrant and in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Richard E. Goodell President (Principal
___________________________________________ Executive Officer) and
Richard E. Goodell Director
/s/ Gary E. Bockrath Treasurer (Principal
___________________________________________ Financial Officer and
Gary E. Bockrath Principal Accounting
Officer) and Director
/s/ John A. Ulizio Director
___________________________________________
John A. Ulizio
</TABLE>
II-17
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, on the day of March, 2000.
George F. Pettinos, Inc.
/s/ John A. Ulizio
By:__________________________________
Name: John A. Ulizio
Title: Vice President and
Secretary
POWER OF ATTORNEY
We, the undersigned members of the Board of Directors and officers of GEORGE
F. PETTINOS, INC., do hereby constitute and appoint John A. Ulizio and Donald
G. Kilpatrick, or either of them, our true and lawful attorneys and agents, to
do any and all acts and things in our name and on our behalf in our capacities
as directors and officers and to execute any and all instruments for us and in
our names in the capacities indicated below, which said attorneys and agents,
or either of them, may deem necessary or advisable to enable GEORGE F.
PETTINOS, INC. to comply with the Securities Act of 1933 and any rules,
regulations and requirements of the Securities and Exchange Commission, in
connection with this Registration Statement, including specifically, but
without limitation, power and authority to sign for us or any of us in our
names in the capacities indicated below, any and all amendments (including
post-effective amendments) hereto; and we do hereby ratify and confirm all that
said attorneys and agents, or either of them, shall do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on behalf of
the registrant and in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Richard E. Goodell President (Principal
___________________________________________ Executive Officer) and
Richard E. Goodell Director
/s/ Gary E. Bockrath Vice President and
___________________________________________ Treasurer (Principal
Gary E. Bockrath Financial Officer and
Principal Accounting
Officer)
/s/ Richard J. Nick Director
___________________________________________
Richard J. Nick
/s/ John A. Ulizio Director
___________________________________________
John A. Ulizio
</TABLE>
II-18
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, on the day of March, 2000.
Ottawa Silica Company
/s/ John A. Ulizio
By:
----------------------------------
Name: John A. Ulizio
Title:Secretary
POWER OF ATTORNEY
We, the undersigned members of the Board of Directors and officers of OTTAWA
SILICA COMPANY, do hereby constitute and appoint John A. Ulizio and Donald G.
Kilpatrick, or either of them, our true and lawful attorneys and agents, to do
any and all acts and things in our name and on our behalf in our capacities as
directors and officers and to execute any and all instruments for us and in our
names in the capacities indicated below, which said attorneys and agents, or
either of them, may deem necessary or advisable to enable OTTAWA SILICA COMPANY
to comply with the Securities Act of 1933 and any rules, regulations and
requirements of the Securities and Exchange Commission, in connection with this
Registration Statement, including specifically, but without limitation, power
and authority to sign for us or any of us in our names in the capacities
indicated below, any and all amendments (including post-effective amendments)
hereto; and we do hereby ratify and confirm all that said attorneys and agents,
or either of them, shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on behalf of
the registrant and in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Richard E. Goodell President (Principal Executive
___________________________________________ Officer) and Director
Richard E. Goodell
/s/ Gary E. Bockrath Treasurer (Principal Financial
___________________________________________ Officer and Principal Accounting
Gary E. Bockrath Officer) and Director
/s/ John A. Ulizio Director
___________________________________________
John A. Ulizio
</TABLE>
II-19
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, on the day of March, 2000.
Pennsylvania Glass Sand Corporation
/s/ John A. Ulizio
By:
----------------------------------
Name: John A. Ulizio
Title:Secretary
POWER OF ATTORNEY
We, the undersigned members of the Board of Directors and officers of
PENNSYLVANIA GLASS SAND CORPORATION, do hereby constitute and appoint John A.
Ulizio and Donald G. Kilpatrick, or either of them, our true and lawful
attorneys and agents, to do any and all acts and things in our name and on our
behalf in our capacities as directors and officers and to execute any and all
instruments for us and in our names in the capacities indicated below, which
said attorneys and agents, or either of them, may deem necessary or advisable
to enable PENNSYLVANIA GLASS SAND CORPORATION to comply with the Securities Act
of 1933 and any rules, regulations and requirements of the Securities and
Exchange Commission, in connection with this Registration Statement, including
specifically, but without limitation, power and authority to sign for us or any
of us in our names in the capacities indicated below, any and all amendments
(including post-effective amendments) hereto; and we do hereby ratify and
confirm all that said attorneys and agents, or either of them, shall do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on behalf of
the registrant and in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
President (Principal Executive
___________________________________________ Officer)
D. George Harris
/s/ Richard J. Nick Treasurer (Principal Financial
___________________________________________ Officer and Principal Accounting
Richard J. Nick Officer)
/s/ Richard E. Goodell Director
___________________________________________
Richard E. Goodell
/s/ Gary E. Bockrath Director
___________________________________________
Gary E. Bockrath
/s/ John A. Ulizio Director
___________________________________________
John A. Ulizio
</TABLE>
II-20
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, on the day of March, 2000.
Shore Stone Company, Inc.
/s/ John A. Ulizio
By:
----------------------------------
Name: John A. Ulizio
Title:Vice President and
Assistant
Secretary
POWER OF ATTORNEY
We, the undersigned members of the Board of Directors and officers of SHORE
STONE COMPANY, INC., do hereby constitute and appoint John A. Ulizio and Donald
G. Kilpatrick, or either of them, our true and lawful attorneys and agents, to
do any and all acts and things in our name and on our behalf in our capacities
as directors and officers and to execute any and all instruments for us and in
our names in the capacities indicated below, which said attorneys and agents,
or either of them, may deem necessary or advisable to enable SHORE STONE
COMPANY, INC. to comply with the Securities Act of 1933 and any rules,
regulations and requirements of the Securities and Exchange Commission, in
connection with this Registration Statement, including specifically, but
without limitation, power and authority to sign for us or any of us in our
names in the capacities indicated below, any and all amendments (including
post-effective amendments) hereto; and we do hereby ratify and confirm all that
said attorneys and agents, or either of them, shall do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on behalf of
the registrant and in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Brian Hessenthaler Vice President of Finance March 9, 2000
___________________________________________ and Treasurer (Principal
Brian Hessenthaler Accounting Officer)
/s/ Gary E. Bockrath Vice President and
___________________________________________ Assistant Treasurer
Gary E. Bockrath (Principal Financial
Officer)
/s/ Craig S. Cinalli Director March 9, 2000
___________________________________________
Craig S. Cinalli
/s/ Richard E. Goodell Director
___________________________________________
Richard E. Goodell
/s/ Richard J. Donahue Director
___________________________________________
Richard J. Donahue
/s/ John A. Ulizio Director
___________________________________________
John A. Ulizio
</TABLE>
II-21
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, on the day of March, 2000.
Stone Materials Company, LLC
By: Better Minerals & Aggregates
Company,
as Sole Member and Sole Manager
/s/ John A. Ulizio
By:
----------------------------------
Name: John A. Ulizio
Title: Vice President, General
Counsel and Assistant
Secretary
II-22
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
-------- -----------
<C> <S>
2.1 Purchase Agreement dated as of August 26, 1999 by and among U.S.
Silica Company and Joseph H. Shearer, R. Scott Shearer, CATS, Inc.,
JHS Partnership, RSS Partnership and The Dell H. Shearer
Grandchildren's Trust.
2.1.1 Amendment No. 1 to Purchase Agreement dated as of October 1, 1999
among U.S. Silica Company and Joseph H. Shearer, R. Scott Shearer,
CATS, Inc., JHS Partnership, RSS Partnership and The Dell H. Shearer
Grandchildren's Trust.
3.1 Amended and Restated Certificate of Incorporation of Better Minerals
and Aggregates Company (formerly USS Intermediate Holdco, Inc.) dated
as of February 9, 1996.
3.1.1 Certificate of Amendment of The Restated Certificate of Incorporation
of Better Minerals and Aggregates Company (formerly USS Intermediate
Holdco, Inc.) dated September 30, 1999.
3.2 By-laws of Better Minerals and Aggregates Company (formerly USS
Intermediate Holdco, Inc.).
3.3 Certificate of Incorporation of U.S. Silica Company (formerly ITT-
PGS, Inc.) dated June 3, 1968.
3.3.1 Certificate of Amendment of Certificate of Incorporation of U.S.
Silica Company (formerly ITT-PGS, Inc.) dated June 20, 1968.
3.3.2 Certificate of Amendment of Certificate of Incorporation of U.S.
Silica Company (formerly ITT-PGS, Inc.) dated December 15, 1986.
3.3.3 Certificate of Ownership and Merger Merging U.S. Silica Company (OSC)
into U.S. Silica Company dated December 17, 1987.
3.3.4 Certificate of Ownership and Merger Merging Each of Louisiana
Industrial Sand Transportation Company, Texas Industrial Minerals
Transportation Company, U.S. Silica Co. of California, U.S. Silica
Co. of Connecticut, U.S. Silica Co. of Illinois, U.S. Silica Co. of
Louisiana, U.S. Silica Co. of Michigan and U.S. Silica Co. of Texas
into U.S. Silica Company dated December 17, 1987.
3.3.5 Certificate of Ownership and Merger Merging Warrior Sand and Gravel
Company, Inc. into U.S. Silica Company dated December 9, 1988.
3.3.6 Certificate of Ownership and Merger Merging USS Acquisitions, Inc.
into U.S. Silica Company dated February 9, 1996.
3.4 By-laws of U.S. Silica Company (formerly ITT-PGS, Inc.).
3.5 Restated Articles of Incorporation and Articles of Amendment of
Better Materials Corporation dated December 3, 1990.
3.5.1 Articles of Merger of Better Materials Corporation dated December 14,
1998.
3.6 Amended and Restated By-laws of Better Materials Corporation.
3.7 Certificate of Incorporation of BMC Trucking, Inc. dated November 30,
1998.
3.8 By-laws of BMC Trucking, Inc.
3.9 Restated Articles of Incorporation and Articles of Amendment of Bucks
County Crushed Stone Company dated December 21, 1990.
3.10 Amended and Restated By-laws of Bucks County Crushed Stone Company.
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
-------- -----------
<C> <S>
3.11 Certificate of Incorporation of Chippewa Farms Corporation dated
January 16, 1981.
3.12 Amended and Restated By-laws of Chippewa Farms Corporation.
3.13 Certificate of Incorporation of Shore Stone Company, Inc. dated May
6, 1983.
3.13.1 Certificate of Amendment to the Certificate of Incorporation of Shore
Stone Company, Inc. dated November 28, 1990.
3.14 Amended and Restated By-laws of Shore Stone Company, Inc.
3.15 Certificate of Incorporation of Pennsylvania Glass Sand Corporation
(formerly Morgan National Silica Co.) dated October 24, 1986.
3.15.1 Certificate of Amendment of Certificate of Incorporation of
Pennsylvania Glass Sand Corporation (formerly Morgan National Silica
Co.) dated December 15, 1986.
3.16 By-laws of Pennsylvania Glass Sand Corporation (formerly Morgan
National Silica Co.).
3.17 Amended and Restated Certificate of Incorporation of George F.
Pettinos, Inc. dated July 31, 1998.
3.18 By-laws of George F. Pettinos, Inc.
3.19 Certificate of Incorporation of Ottawa Silica Company (formerly
LaSalle National Silica Co.) dated October 24, 1986.
3.19.1 Certificate of Amendment of Certificate of Incorporation of Ottawa
Silica Company (formerly LaSalle National Silica Co.) dated December
15, 1986.
3.20 By-laws of Ottawa Silica Company (formerly LaSalle National Silica
Co.).
3.21 Articles of Incorporation of The Fulton Land and Timber Company dated
April 13, 1942.
3.22 Amended and Restated By-laws of Fulton Land and Timber Company.
3.23 Certificate of Incorporation of Ellen Jay, Inc. dated March 1, 1974.
3.24 Amended and Restated By-laws of Ellen Jay, Inc.
3.25 Certificate of Formation of Stone Materials Company, LLC dated
September 24, 1999.
3.26 Limited Liability Company Operating Agreement of Stone Materials
Company, LLC dated as of September 30, 1999.
3.27 Articles of Incorporation of Commercial Stone Co., Inc. dated January
27, 1972.
3.27.1 Certificate of Amendment of Commercial Stone Co., Inc. dated December
29, 1983.
3.27.2 Statement of Change of Registered Office of Commercial Stone Co.,
Inc. dated February 9, 1984.
3.27.3 Certificate of Amendment of Commercial Stone Co., Inc. dated December
24, 1986.
3.28 By-laws of Commercial Stone Co., Inc.
3.29 Certificate of Formation of Commercial Aggregates Transportation and
Sales, LLC dated September 27, 1999.
3.29.1 Contribution Agreement dated as of October 1, 1999 between Stone
Materials Company, LLC and Commercial Stone Co., Inc.
3.30 Limited Liability Company Operating Agreement of Commercial
Aggregates Transportation and Sales, LLC dated as of September 30,
1999.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
-------- -----------
<C> <S>
4.1 Indenture, dated as of October 1, 1999, among the Better Minerals and
Aggregates Company, the subsidiary guarantors named therein and The
Bank of New York, as trustee (including the forms of the Better
Minerals and Aggregates Company's 13% Senior Subordinated Notes due
2009 attached thereto as exhibits).
4.2 Exchange and Registration Rights Agreement, dated October 1, 1999,
among the Better Minerals and Aggregates Company, the subsidiary
guarantors named therein, Chase Securities Inc. and BNP Capital
Markets, LLC.
5.1 Opinion of Winthrop, Stimson, Putnam & Roberts regarding the legality
of the securities.
8.1 Opinion of Winthrop, Stimson, Putnam & Roberts regarding tax matters.
10.1 The Stockholders Agreement, dated as of February 9, 1996, among USS
Holdings, Inc. and the stockholders of the USS Holdings, Inc.
10.1.1 Amendment No. 1 to Stockholders Agreement dated as of October 15,
1996.
10.1.2 Amendment No. 2 to Stockholders Agreement dated as of October 6,
1998.
10.2 Amended and Restated Management Services Agreement, dated October 1,
1998, among USS Intermediate Holdco, Inc. (now Better Minerals and
Aggregates Company), USS Holdings, Inc., BMAC Holdings and DGHA.
10.2.1 Assignment and Assumption Agreement dated as of September 30, 1999.
10.3 Amended and Restated Tax Sharing Agreement, dated as of October 1,
1999, among USS Intermediate Holdco, Inc. (now Better Minerals and
Aggregates Company), its domestic subsidiaries, and USS Holdings,
Inc.
10.4 Credit Agreement, dated as of September 30, 1999, among Better
Minerals and Aggregates Company, BMAC Holdings, Inc., George F.
Pettinos (Canada) Limited, Banque Nationale de Paris, and the
financial institutions and other institutional lenders named therein.
10.5 Security Agreement, dated September 30, 1999, among Better Minerals
and Aggregates Company, the subsidiary guarantors named therein and
Banque Nationale de Paris.
10.6 Intellectual Property Security Agreement, dated September 30, 1999,
among Better Minerals and Aggregates Company, the subsidiary
guarantors named therein and Banque Nationale de Paris.
10.7 Parent Guarantor Security Agreement, dated September 30, 1999,
between BMAC Holdings, Inc. and Banque Nationale de Paris.
10.8 Canadian Security Agreement, dated September 30, 1999, between George
F. Pettinos (Canada) Limited and Banque Nationale de Paris.
10.9 Parent Guaranty, dated September 30, 1999, between BMAC Holdings,
Inc. and Banque Nationale de Paris.
10.10 Subsidiary Guaranty, dated September 30, 1999, between each of the
subsidiary guarantors named therein and Banque Nationale de Paris.
10.11* Equity Rights Agreement, dated as of October 1, 1999, between USS
Holdings, Inc., and the purchasers listed on the Schedule I thereto.
10.12* Equity Rights Agreement, dated as of December 19, 1996, between USS
Holdings, Inc. and the investors listed on the Schedule I thereto.
12.1 Statement regarding ratio of earnings to fixed charges.
21.1 Subsidiaries of Better Minerals and Aggregates Company.
23.1 Consent of Winthrop, Stimson, Putnam & Roberts (included in Exhibits
5.1 and 8.1 to this Registration Statement).
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
-------- -----------
<C> <S>
23.2 Consent of PricewaterhouseCoopers LLP.
23.3 Consent of Schneider Downs & Co., Inc.
24.1 Powers-of-Attorney (contained on the signature page of this
Registration Statement).
25.1 Statement of Eligibility and Qualification on Form T-1 of The Bank of
New York, as Trustee under the Indenture.
27.1 Financial Data Schedule.
99.1 Form of Letter of Transmittal.
99.2 Form of Letter to Clients.
99.3 Form of Letter to Registered Holders and DTC Participants.
99.4 Form of Notice of Guaranteed Delivery.
</TABLE>
- --------
* To be filed by amendment.
4
<PAGE>
EXHIBIT 2.1
EXECUTION COPY
PURCHASE AGREEMENT
dated as of August 26, 1999
by and among
U.S. SILICA COMPANY
as Buyer,
and
JOSEPH H. SHEARER, R. SCOTT SHEARER,
CATS, INC., JHS PARTNERSHIP, RSS PARTNERSHIP and
THE DELL H. SHEARER GRANDCHILDREN'S TRUST
as Sellers.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
ARTICLE I
DEFINITIONS................................................................. 1
ARTICLE II
SALE AND TRANSFER OF SHARES AND PARTNERSHIP INTERESTS; CLOSING
2.1 Acquisition.......................................................................................... 4
2.2 Payment of Purchase Price............................................................................ 5
2.3 Closing.............................................................................................. 6
2.4 Closing Obligations.................................................................................. 6
2.5 Letters of Credit.................................................................................... 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
3.1 Organization and Good Standing....................................................................... 8
3.2 Authority; No Conflict............................................................................... 8
3.3 Capitalization....................................................................................... 9
3.4 Financial Statements................................................................................. 9
3.5 Personal Property.................................................................................... 10
3.6 Real Property Interests.............................................................................. 10
3.7 Taxes................................................................................................ 12
3.8 Employee Benefits.................................................................................... 13
3.9 Compliance with Law.................................................................................. 15
3.10 Legal Proceedings; Orders............................................................................ 15
3.11 Absence of Certain Changes and Events................................................................ 16
3.12 Contracts............................................................................................ 17
3.13 Insurance............................................................................................ 18
3.14 Environmental Matters................................................................................ 18
3.15 Labor Relations...................................................................................... 20
3.16 Intellectual Property................................................................................ 21
3.17 Year 2000 Compliance................................................................................. 21
3.18 Absence of Undisclosed Liabilities................................................................... 21
3.19 Accounts Receivable.................................................................................. 22
3.20 Reserves............................................................................................. 22
3.21 Operating Permits.................................................................................... 22
3.22 Directors and Officers............................................................................... 22
</TABLE>
i
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<TABLE>
<S> <C>
3.23 Customers and Suppliers.............................................................................. 22
3.24 Qualification of Product............................................................................. 23
3.25 Rich Hill Quarry..................................................................................... 23
3.26 Belle Vernon Quarry.................................................................................. 23
3.27 Silicosis............................................................................................ 23
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
4.1 Organization and Good Standing....................................................................... 24
4.2 Authority; No Conflict............................................................................... 24
4.3 Investment Intent.................................................................................... 24
4.4 Certain Proceedings.................................................................................. 24
4.5 Financing............................................................................................ 24
ARTICLE V
COVENANTS OF SELLERS PRIOR TO CLOSING DATE
5.1 Access and Investigations............................................................................ 25
5.2 Operation of the Businesses of the Acquired Companies................................................ 25
5.3 Negative Covenants................................................................................... 26
5.4 Required Approvals................................................................................... 27
5.5 No Negotiation....................................................................................... 27
5.6 Reasonable Efforts................................................................................... 27
5.7 Bonuses.............................................................................................. 27
5.8 Guarantees........................................................................................... 27
ARTICLE VI
COVENANTS OF BUYER PRIOR TO CLOSING DATE
6.1 Approvals of Governmental Bodies..................................................................... 28
6.2 Request for Early Termination........................................................................ 28
6.3 Reasonable Efforts................................................................................... 28
6.4 Buyer Surveys........................................................................................ 28
ARTICLE VII
CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
7.1 Accuracy of Representations.......................................................................... 28
7.2 Sellers' Performance................................................................................. 29
7.3 Opinion of Counsel................................................................................... 29
7.4 No Proceedings....................................................................................... 29
</TABLE>
ii
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<TABLE>
<S> <C>
7.5 Payment of Indebtedness; Releases.................................................................... 29
7.6 HSR Act Approval..................................................................................... 29
7.7 Delivery of Documents................................................................................ 29
7.8 Agreement Regarding Three Rivers..................................................................... 30
7.9 Agreement Regarding Molly Slag Operations............................................................ 30
7.10 Financial Markets.................................................................................... 30
7.11 Audited Financial Statements......................................................................... 30
7.12 Real Estate Matters.................................................................................. 30
ARTICLE VIII
CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE
8.1 Accuracy of Representations.......................................................................... 31
8.2 Buyer's Performance.................................................................................. 31
8.3 Opinion of Counsel................................................................................... 31
8.4 No Injunction........................................................................................ 31
8.5 HSR Act Approval..................................................................................... 31
8.6 Agreement Regarding Three Rivers..................................................................... 31
8.7 Agreement Regarding Molly Slag Operations............................................................ 32
8.8 Delivery of Documents................................................................................ 32
ARTICLE IX
CERTAIN POST-CLOSING COVENANTS
9.1 Non-competition...................................................................................... 32
9.2 Confidentiality...................................................................................... 33
9.3 Termination of Commercial's S Corporation Status and Taxable Year.................................... 33
9.4 Certain Tax Assets and Liabilities................................................................... 33
ARTICLE X
TERMINATION
10.1 Termination Events................................................................................... 34
10.2 Effect of Termination................................................................................ 35
ARTICLE XI
INDEMNIFICATION; REMEDIES
11.1 Survival............................................................................................. 35
11.2 Indemnification and Payment of Damages by Sellers.................................................... 35
11.3 Indemnification and Payment of Damages by Buyer...................................................... 36
11.4 Time Limitations..................................................................................... 37
</TABLE>
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<S> <C>
11.5 Limitations on Indemnification....................................................................... 37
11.6 Investigation; Waiver................................................................................ 38
11.7 Procedures for Indemnification -- Third Party Claims................................................. 39
11.8 Procedure for Indemnification -- Other Claims........................................................ 39
11.9 Cooperation in Connection with Proceedings........................................................... 39
11.10 Closing Escrow Amount................................................................................ 40
ARTICLE XII
GENERAL PROVISIONS
12.1 Public Announcements................................................................................. 40
12.2 Confidentiality...................................................................................... 40
12.3 Notices.............................................................................................. 40
12.4 Jurisdiction; Service of Process..................................................................... 42
12.5 Further Assurances; Tax Returns...................................................................... 42
12.6 Waiver............................................................................................... 42
12.7 Entire Agreement and Modification.................................................................... 42
12.8 Assignments, Successors, and No Third-Party Rights................................................... 43
12.9 Severability......................................................................................... 43
12.10 Article and Section Headings; Construction........................................................... 43
12.11 Time of Essence...................................................................................... 43
12.12 Governing Law........................................................................................ 44
12.13 Counterparts......................................................................................... 44
12.14 Sellers' Knowledge................................................................................... 44
12.15 Retention of Records and Access to Information....................................................... 44
12.16 Transaction Fees and Expenses........................................................................ 44
</TABLE>
EXHIBITS
2.1(a) Form of Closing Escrow Agreement
2.4(a)(iv) Form of Consultant Agreement
2.4(b)(i) Seller's Accounts
2.5 Form of Letter of Credit
4.5 Letter Regarding Financing
7.3 Opinion of Sellers' Counsel
7.8 Summary of River Transport Agreement
7.9 Summary of Molybdenum Slag Agreement
8.3 Opinion of Buyer's Counsel
10.1(e) Form Extension Deposit Escrow Agreement
SCHEDULES
2.1(f), Part I Distributed Assets
2.1(f), Part II Indebtedness
3.1 Organization and Good Standing
iv
<PAGE>
3.3 Capitalization
3.5 Personal Property
3.6(a) Properties
3.6(c)(ii) Real Estate Permits
3.6(c)(iv) Conditions of Properties
3.6(d) Restrictions on Properties
3.7 Taxes
3.8 Employee Benefits
3.10 Legal Proceedings
3.11 Absence of Certain Changes
3.12 Contracts
3.13 Insurance
3.14 Environmental Matters
3.15 Labor Relations
3.16 Intellectual Property
3.18 Undisclosed Liabilities
3.20 Reserves
3.21 Operating Permits
3.22 Warranties
3.23 Directors and Officers
3.24 Customers and Suppliers
5.7 Bonuses
5.8 Guarantees
9.1 Counties
v
<PAGE>
PURCHASE AGREEMENT
This PURCHASE AGREEMENT (this "Agreement") is made as of the 26/th/ day of
---------
August, 1999, by and among U.S. SILICA COMPANY, a Delaware corporation
("Buyer"), and JOSEPH H. SHEARER and R. SCOTT SHEARER (collectively, the
-----
("Shareholders"), and CATS, INC., a Pennsylvania corporation, the JHS FAMILY
-------------
PARTNERSHIP, a Pennsylvania limited partnership, and the RSS FAMILY PARTNERSHIP,
a Pennsylvania limited partnership (collectively, the "Partnership Sellers") and
-------------------
THE DELL H. SHEARER GRANDCHILDREN'S TRUST, a Pennsylvania trust (the "Trust
-----
Seller").
- ------
The Shareholders, the Partnership Sellers and the Trust Seller are
hereinafter referred to collectively as the "Sellers."
-------
RECITALS
The Shareholders desire to sell, and Buyer desires to purchase, all of the
shares of the capital stock ("Capital Stock") of Commercial Stone Co., Inc., a
-------------
Pennsylvania corporation ("Commercial"), for the consideration and on the terms
----------
set forth in this Agreement.
The Partnership Sellers desire to sell, and Buyer desires to purchase, all
of the partnership interests ("Partnership Interests") of Commercial Aggregates
---------------------
Transportation and Sales, L.P., a Pennsylvania limited partnership ("CATS"), for
----
the consideration and on the terms set forth in this Agreement.
The Trust Seller desires to sell, and Buyer desires to purchase, all of the
Properties (as defined herein) and other interests (including without
limitation, all Real Estate Permits and Environmental Permits, if any, held by
the Trust Seller in relation to such Properties) that are owned by the Trust
Seller and used in the operation of the businesses of the Acquired Companies
(the "Trust Property").
--------------
The parties, intending to be legally bound, agree as follows:
ARTICLE I
DEFINITIONS
-----------
In addition to words and terms defined elsewhere in this Agreement, for
purposes of this Agreement, the following terms have the meanings specified or
referred to in this Article 1:
"Acquired Companies" -- Commercial Stone Co., Inc., a Pennsylvania
------------------
corporation, and Commercial Aggregates Transportation and Sales, L.P., a
Pennsylvania limited partnership, collectively.
"Business Day" -- any day other than a Saturday, Sunday, or public holiday
------------
under the laws of the Commonwealth of Pennsylvania.
"Buyer" -- U.S. Silica Company.
-----
<PAGE>
"Buyer's Advisors" -- as defined in Section 5.1.
----------------
"Cap" -- as defined in Section 11.5(a).
---
"Closing" -- as defined in Section 2.3.
-------
"Closing Date" -- the date and time as of which the Closing actually takes
------------
place.
"Code" -- the United States Internal Revenue Code of 1986, as amended.
----
"Consent" -- any approval, consent, ratification, waiver, notice or other
-------
authorization.
"Contemplated Transactions" -- as defined in Section 2.1(e).
-------------------------
"Damages" -- as defined in Section 11.2.
-------
"Encumbrance" -- any mortgage, easement, right of way, charge, claim,
-----------
community property interest, condition, equitable interest, lien, option,
pledge, security interest, right of first refusal, or restriction or adverse
claim of any kind, including any restriction on use, voting, transfer, receipt
of income, or exercise of any other attribute of ownership, or any other
encumbrance or exception to title of any kind.
"Environmental Laws" -- shall mean, without limitation, the Comprehensive
------------------
Environmental Response, Compensation and Liability Act, 42 U.S.C. Sections 9601
et seq., the Emergency Planning and Community Right-to-Know Act of 1986, 46
- -- ---
U.S.C. Sections 11001 et seq., the Resource Conservation and Recovery Act, 42
------
U.S.C. Sections 6901 et seq., the Toxic Substances Control Act, 15 U.S.C.
------
Sections 2601 et seq., the Federal Insecticide, Fungicide, and Rodenticide Act,
------
7 U.S.C. Sections 136 et seq., the Clean Air Act, 42 U.S.C. Sections 7401 et
-- --- --
seq., the Clean Water Act (Federal Water Pollution Control Act), 33 U.S.C.
- ---
Sections 1251 et seq., the Safe Drinking Water Act, 42 U.S.C. Sections 300f et
------ --
seq., the Occupational Safety and Health Act, 29 U.S.C. Sections 641 et seq.,
- --- ------
the Hazardous Materials Transportation Act, 49 U.S.C. Sections 1801 et seq., as
------
any of the above statutes have been from time to time in effect, all rules and
regulations promulgated pursuant to any of the above statutes, and any other
current foreign, federal, state or local law, statute, ordinance, rule or
regulation governing environmental matters, as the same have been from time to
time in effect, including any common law cause of action providing any right or
remedy relating to environmental matters, and all applicable judicial and
administrative decisions, orders, and decrees relating to environmental matters.
"ERISA" -- the Employee Retirement Income Security Act of 1974 or any
-----
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"ERISA Affiliate" -- each business or entity which is a member of a
---------------
"controlled group of corporations," under "common control" or an "affiliated
service group" with an Acquired Company within the meaning of Section 414(b),
(c) or (m) of the Code or required to be aggregated with an Acquired Company
under Section 414(o) of the Code, or is under "common control" with an Acquired
Company within the meaning of Section 4001(a)(14) of ERISA.
2
<PAGE>
"GAAP" -- generally accepted United States accounting principles, as in
----
effect from time to time.
"Governmental Body" -- any:
-----------------
(a) nation, state, county, city, town, village, district, or other
jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other government;
(c) governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official, or entity
and any court or other tribunal); or
(d) body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or taxing authority
or power of any nature.
"HSR Act" -- the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
-------
amended, or any successor law, and regulations and rules issued pursuant to that
Act or any successor law.
"Indebtedness" -- all indebtedness of the Acquired Companies other than
------------
ordinary course payables and wages and salaries.
"Indemnified Person" -- either a Buyer Indemnified Person or a Seller
------------------
Indemnified Person.
"Intellectual Property Assets" -- as defined in Section 3.16.
----------------------------
"IRS" -- the Internal Revenue Service.
---
"Legal Requirement" -- any federal, state, local, municipal, foreign,
-----------------
international, multinational, or other administrative order, constitution, law,
ordinance, principle of common law, court order, consent, decree, regulation,
license, permit, statute, or treaty.
"Material Adverse Effect" -- an event, circumstance or condition which is
-----------------------
reasonably likely to have an adverse effect on (a) the assets, business,
financial condition, results of operations or prospects of the Acquired
Companies taken as a whole, or (b) the ability of any Seller to perform any of
its material obligations under this Agreement or which threatens materially or
is reasonably likely to impede any Seller's ability to consummate the
Contemplated Transactions.
"Multiemployer Plan" -- a multiemployer plan within the meaning of Section
------------------
4001(a)(3) of ERISA.
"Order" -- any award, decision, injunction, judgment, order, ruling,
-----
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other governmental body or by any arbitrator.
3
<PAGE>
"Organizational Documents" -- (a) the articles or certificate of
------------------------
incorporation and the bylaws of a corporation; (b) the partnership agreement and
any statement of partnership of a general partnership; (c) the limited
partnership agreement and the certificate of limited partnership of a limited
partnership; (d) the certificate of organization and limited liability company
agreement of a limited liability company; (e) the trust agreement or similar
document of a trust; and (f) any amendment to any of the foregoing.
"PBGC" -- the Pension Benefit Guaranty Corporation.
----
"Person" -- any individual, corporation (including any non-profit
------
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body.
"Plan" -- as defined in Section 3.8.
----
"Representative" -- with respect to a particular Person, any director,
--------------
officer, employee, agent, consultant, advisor, or other representative of such
Person, including legal counsel, accountants and financial advisors.
"Regulated Materials" -- any pollutants, contaminants, toxic or hazardous
-------------------
or extremely hazardous substances, materials, wastes, constituents, compounds,
chemicals, natural or man-made elements or forces (including, without
limitation, petroleum or any by-products or fractions thereof, any form of
natural gas, Bevill Amendment materials, lead, asbestos and asbestos-containing
materials, building construction materials and debris, polychlorinated biphenyls
("PCBs") and PCB-containing equipment, radon and other radioactive elements,
ionizing radiation, electromagnetic field radiation and other non-ionizing
radiation, sonic forces and other natural forces, infectious, carcinogenic,
mutagenic, or etiologic agents, pesticides, defoliants, explosives, flammables,
corrosives and urea formaldehyde foam insulation) that are regulated by any
Environmental Laws.
"S Corp Tax Deposit" -- means the amount of $1,792,432 deposited with the
------------------
Internal Revenue Service in connection with the adoption by Commercial of a non-
standard fiscal year.
"Securities Act" -- the Securities Act of 1933 or any successor law, and
--------------
regulations and rules issued pursuant to that Act or any successor law.
"Taxes" -- as defined in Section 3.7.
-----
"Year-End Balance Sheets" -- defined in Section 3.4.
-----------------------
ARTICLE II
SALE AND TRANSFER OF SHARES AND PARTNERSHIP INTERESTS; CLOSING
--------------------------------------------------------------
2.1 Acquisition.
-----------
Subject to the terms and conditions of this Agreement, at the Closing:
4
<PAGE>
(a) The Buyer shall deliver to Sellers the aggregate amount of $138,700,000
(as adjusted pursuant to Section 2.2 below, the "Purchase Price"), less the
--------------
amount of $8,000,000 (the "Closing Escrow Amount"), which shall be deposited by
---------------------
the Buyer with an escrow agent (the "Closing Escrow Agent") to be held in escrow
--------------------
by such agent pursuant to the terms of an escrow agreement, substantially in the
form of Exhibit 2.1(a) attached hereto (the "Closing Escrow Agreement"). The
------------------------
Closing Escrow Amount shall be used to satisfy claims for Damages to which any
Buyer Indemnified Person shall be entitled pursuant to Article XI of this
Agreement.
(b) The Shareholders shall issue, sell and deliver to Buyer, and Buyer
shall purchase and accept from the Shareholders, all of the shares of Capital
Stock (the "Acquired Shares"), free and clear of all Encumbrances.
---------------
(c) The Partnership Sellers shall issue, sell and deliver to Buyer, and
Buyer shall purchase and accept from the Partnership Sellers, all of the
Partnership Interests (the "Acquired Interests"), free and clear of all
------------------
Encumbrances. The Trust Seller shall sell and transfer to the Buyer the Trust
Property.
(d) Collectively, the sale and delivery of the Acquired Shares and Acquired
Interests are referred to as the "Acquisition."
-----------
(e) The Acquisition and the other transactions contemplated hereby
(including, without limitation, the transfer of the Trust Property by the Trust
Seller) are collectively referred to herein as the "Contemplated Transactions."
-------------------------
(f) Prior to the Closing Date, Sellers will cause the assets listed on Part
I of Schedule 2.1(f) to be distributed by Commercial to the Sellers. Sellers
shall be responsible for satisfying all Indebtedness of the Acquired Companies
outstanding at the time of Closing, other than the Indebtedness listed on Part
II of Schedule 2.1(f). If at any time Buyer ceases to use the name "Commercial
Stone" in connection with its business, it shall convey to Sellers, for the sum
of $10.00, the right to use such name as a corporate name solely so that Sellers
may continue to purchase Pennsylvania State University football tickets in such
name.
(g) The Sellers and the Buyer agree that, subject to adjustment under
Section 2.2(b) of this Agreement (which shall be ratable as between the Acquired
Shares and the Acquired Interests), the Aggregate Purchase Price shall be
allocated $121,200,000 to the Acquired Shares, $7,500,000 to the Acquired
Interests and $10,000,000 to the Trust Property being transferred hereunder by
the Trust Seller.
(h) Real estate transfer taxes payable in connection with the transfer of
the Trust Property by the Trust Seller will be split equally by the Trust Seller
and Buyer. Real estate transfer taxes, if any, with respect to the remaining
Properties will be split equally by the Shareholders and Buyer.
2.2 Payment of Purchase Price. (a) The Purchase Price, less the Closing
-------------------------
Escrow Amount, will be payable at the Closing by wire transfer as specified in
Section 2.4(b). Prior to the Closing, the parties hereto shall provide all
necessary information as to the accounts to which such payments shall be made.
The Closing Escrow Amount shall be deposited with the Closing Escrow Agent
pursuant to the Closing Escrow Agreement.
5
<PAGE>
(b) Not later than 30 Business Days after the Closing Date, Buyer shall
deliver to the Sellers unaudited statements of Commercial's Closing Date Net
Working Capital (as herein defined) prepared by Buyer (which date of such
delivery is hereinafter referred to as the "Delivery Date"). The statement of
-------------
Closing Date Net Working Capital shall be prepared from the books and records of
Commercial in accordance with GAAP applied on a basis consistent with the
Commercial Year-End Balance Sheets referred to in Section 3.4 hereof (except for
the omission of certain footnotes and other presentation items required by GAAP
with respect to annual financial statements or annual accounts and subject to
other normal year-end adjustments). The statement of Closing Date Net Working
Capital shall be subject to verification by Sellers not later than 20 Business
Days after the Delivery Date. In the event that the Closing Date Net Working
Capital is less than the Benchmark Net Working Capital (as hereinafter defined),
Sellers shall pay to Buyer in cash or other immediately available funds the
amount by which the Closing Date Net Working Capital is less than the Benchmark
Net Working Capital. In the event the Closing Date Net Working Capital is
greater than the Benchmark Net Working Capital, Buyer shall pay to Sellers in
cash or other immediately available funds the amount by which the Closing Date
Net Working Capital exceeds the Benchmark Net Working Capital. As used herein,
"Closing Date Net Working Capital" means the (i) sum of Commercial's current
--------------------------------
assets (excluding cash and cash equivalents) less (ii) the sum of Commercial's
----
current liabilities (excluding short term debt and the current portion of long
term debt), each as determined as of the Closing Date in accordance with GAAP
applied on a basis consistent with the Commercial Year End Balance Sheets
referred to in Section 3.4 hereof. "Benchmark Net Working Capital" means
-----------------------------
$9,250,000. In the event that Buyer and Sellers cannot agree as to the amount
of the Closing Date Net Working Capital within 10 days following the
verification period, either party may refer the matter to the Pittsburgh office
of Ernst and Young L.L.P., and such firm shall be responsible for determining
the amounts of the Closing Date Net Working Capital for purposes of this Section
2.2; provided, however, that the amount not in dispute, if any, shall be paid in
cash or other immediately available funds as set forth above. The cost of such
determination by such independent certified public accountants shall be borne
one-half by Buyer and one-half by Sellers. Any adjustments to the Purchase
Price required by this Section 2.2(b) will be allocated to the Shareholders pro
rata in accordance with their respective ownership interests.
2.3 Closing. The consummation of the Contemplated Transactions (the
-------
"Closing") will take place at such location as the parties may agree. It is the
-------
intent of the parties to close the Contemplated Transactions as promptly as
possible; accordingly, the parties will use all commercially reasonable and
diligent best efforts to satisfy the conditions of this Agreement on or before
September 30, 1999. Consistent with the foregoing and subject to the provisions
of Section 10.1, the parties shall cause the Closing to occur on the earlier of
(i) the date that is three (3) business days following the satisfaction of all
of the conditions set forth in Articles VII and VIII, and (ii) September 30,
1999 (the "Deadline Date").
-------------
2.4 Closing Obligations. At the Closing:
-------------------
(a) Sellers will deliver to Buyer:
(i) certificates representing the Acquired Shares, duly endorsed
(or accompanied by duly executed stock powers), for transfer to Buyer;
6
<PAGE>
(ii) certificates representing the Acquired Interests, duly
endorsed, for transfer to Buyer;
(iii) certificates executed by Sellers to the effect that that
each of the conditions precedent to the obligation of Buyer to close set
forth in Sections 7.1 and 7.2 hereof have been fulfilled;
(iv) consultant agreements with Commercial in the form of
Exhibit 2.4(a)(iv), executed by Joseph H. Shearer and R. Scott Shearer;
(v) a certificate from each landlord under a Real Property
Lease (as defined herein) who is unaffiliated with the Acquired Companies
and the Sellers, dated no earlier than September 1, 1999, certifying (i)
that the applicable lease with respect to each of the leased Properties is
in good standing and full force and effect in accordance with its terms and
has not been modified (except for modifications set forth therein), amended
or assigned, (ii) the date(s) to which rent and other charges thereunder
have been paid, (iii) that there is no default thereunder by either party
thereto, (iv) that all work required to be done under the applicable lease
on the part of the tenant has been completed to the satisfaction of the
landlord, and (v) such further matters as may be reasonably requested by
the Buyer; provided, however, that Sellers may elect, instead of furnishing
-------- -------
such certificates at Closing, to indemnify Buyer for any Damages (subject
to the Cap) resulting from Sellers' failure to furnish such certificates,
such indemnity to continue until such certificates are provided ; and
(vi) all such documentation as is necessary to transfer
ownership of the Trust Property being transferred hereunder by the Trust
Seller, as the Buyer shall reasonably request.
(b) Buyer will deliver to Sellers:
(i) by wire transfer to an account specified by each Seller the
amounts listed on Exhibit 2.4(b)(i); and
(ii) a certificate executed by Buyer to the effect that each of
the conditions precedent to the obligation of Sellers to close set forth in
Sections 8.1 and 8.2 hereof have been fulfilled.
2.5 Letters of Credit. (a) Not later than 5:00 p.m., Pittsburgh time, on
-----------------
August 31, 1999, Buyer shall deliver to Sellers a letter of credit from Banque
Nationale de Paris, New York Branch, in the face amount of $7,000,000. The
letter of credit shall be substantially in the form attached hereto as Exhibit
2.5 and shall provide for payment of the full face amount thereof to Lion
Abstract Limited Partnership, as escrow agent, in the event that (i) Buyer does
not consummate the Acquisition due only to failure of the condition set forth in
Section 7.10 hereof, or (ii) the Acquisition does not occur due to a breach by
Buyer of its obligations under this Agreement. If Sellers elect to draw on the
letter of credit and receive the proceeds thereof pursuant to the foregoing
clause (ii), they covenant that they will not sue Buyer to recover damages for
such breach nor in connection with any other matter in relation to this
Agreement or the Contemplated Transactions. In the event of a dispute as to
whether Sellers are entitled to be
7
<PAGE>
paid the proceeds of the letter of credit, Buyer shall bear the burden of proof,
i.e., Buyer must establish by a preponderance of evidence that its failure to
- ---
consummate the Acquisition was not due to an event described in clause (i) or
(ii) of the immediately preceding sentence.
(b) At the Closing, Buyer shall deliver to Sellers a letter of credit from
Banque Nationale De Paris, New York Branch, in the face amount of the S Corp Tax
Deposit. The letter of credit shall be in form and substance reasonably
satisfactory to Sellers and shall provide for payment to Lion Abstract Limited
Partnership, as escrow agent, in the event that Sellers certify that they have a
reasonable good faith belief that the S Corp Tax Deposit has been received by
Buyer or offset by the Internal Revenue Service to satisfy federal tax
liabilities of Commercial for periods commencing on or after the Closing Date,
and that in either case Buyer has not paid to Sellers the full amount of the S
Corp Tax Deposit.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
-----------------------------------------
Sellers severally (and not jointly) make the following representations and
warranties to Buyer, as of the date hereof and as of the Closing Date:
3.1 Organization and Good Standing. (a) Schedule 3.1 contains a complete
------------------------------
and accurate list for each Acquired Company of its name, its jurisdiction of
incorporation or formation, other jurisdictions in which it is authorized to do
business, and its capitalization (including the identity of each stockholder or
partner and the number of shares or interests held by each). Each Acquired
Company is duly organized, validly existing, and in good standing under the laws
of its jurisdiction of incorporation or formation, with full power and authority
to conduct its business as it is now being conducted and to own or use the
properties and assets that it purports to own or use. Each Acquired Company is
in good standing in each foreign jurisdiction listed on Schedule 3.1 in which
such Acquired Company is authorized to do business as a foreign corporation and
such jurisdictions are the only jurisdictions where the nature of each such
Acquired Company's business and assets require such authorization.
(b) Sellers have delivered to Buyer copies of the Organizational
Documents of each Acquired Company and each Seller, as currently in effect.
3.2 Authority; No Conflict. (a) Each Seller has full capacity, right,
----------------------
power and authority to execute and deliver this Agreement and to consummate the
Contemplated Transactions. This Agreement constitutes the legal, valid, and
binding obligation of Sellers, enforceable against Sellers in accordance with
its terms.
(b) The execution, delivery and performance of this Agreement by
Sellers and the consummation of the Contemplated Transactions (i) have been
authorized by all necessary corporate, partnership and other action on the part
of Sellers, and (ii) will not (w) conflict with the terms, conditions or
provisions of the Organizational Documents of any Seller or any Acquired Company
(x) violate any provision of law or any Order to which any Seller or any
Acquired Company or any of their respective assets is subject or require the
consent of any Person, (y) result in a breach or violation of any of the terms
of, or constitute a default by any
8
<PAGE>
Seller or Acquired Company under, any indenture, mortgage, loan agreement, lease
or other agreement or instrument to which any Seller or any Acquired Company is
a party or by which it or any of its assets is bound, or (z) result in the
creation or imposition of any Encumbrance upon the Acquired Shares or the
Acquired Interests or the assets of any Acquired Company or the Properties,
except to the extent such conflict, violation, breach or creation would not have
a Material Adverse Effect.
3.3 Capitalization. (a) The authorized equity securities of Commercial
--------------
consist of two classes of common stock. There are 1200 shares of Class A voting
stock, $5.00 par value, all of which are issued and outstanding. There are
22,800 shares of Class B non-voting stock, $5.00 par value, all of which are
issued and outstanding. All of the outstanding stock of Commercial is owned by
the Shareholders as set forth on Schedule 3.3, free and clear of all
Encumbrances, other than restrictions imposed by the buy/sell agreement between
the Shareholders. All such stock has been duly authorized and validly issued and
is fully paid and nonassessable. Neither Acquired Company owns, or has any
contract or other arrangement to acquire, any equity securities or other
securities of any Person (other than another Acquired Company) or any direct or
indirect equity or ownership interest in any other business.
(b) The entire partnership ownership of CATS consists of a 1% general
partner interest held by CATS, Inc., a Pennsylvania corporation, a 49.5% limited
partner interest held by the JHS Family Partnership, and a 49.5% limited partner
interest held by the RSS Family Partnership.
(c) There are no preemptive rights, whether at law or otherwise, to
purchase any of the securities of either Acquired Company and there are no
outstanding options, warrants, "phantom" stock plans, subscriptions, agreements,
plans or other commitments pursuant to which either Acquired Company is or may
become obligated to sell or issue any shares of its capital stock or partnership
interests (as the case may be) or any other debt or equity security, and there
are no outstanding securities convertible into shares of such capital stock or
partnership interests (as the case may be) or any other debt or equity security,
except rights of the Shareholders under their buy/sell agreement.
3.4 Financial Statements. Sellers have delivered to Buyer: (a) the audited
--------------------
balance sheets of Commercial as of March 31, 1999 and unaudited balance sheets
as of March 31, 1998 and 1997, (including the notes thereto, the "Commercial
----------
Year-End Balance Sheets"), together with the related statements of operations
- -----------------------
and retained earnings and statements of cash flows for the year then ended, and
(b) the unaudited balance sheet of CATS as of December 31, 1998, 1997 and 1996
(the "CATS Year-End Balance Sheets"), together with the related statements of
----------------------------
operations and statements of changes in partners' capital for the year then
ended, accompanied in the case of the March 31, 1999 financial statements of
Commercial, by the opinion of Schneider Downs, certified public accountants (the
Commercial Year-End Balance Sheets and the CATS Year-End Balance Sheets shall be
referred to collectively herein as the "Year-End Balance Sheets"). Sellers have
-----------------------
also delivered the balance sheets of the Acquired Companies as at June 30, 1999,
together with the related statements of operations and retained earnings for the
three months (in the case of Commercial), and six months (in the case of CATS)
then ended (the "Interim Financial Statements"). All of the financial statements
----------------------------
of the Acquired Companies referred to above (i) are in accordance with the books
and records of the Acquired Companies,
9
<PAGE>
(ii) are true correct and complete, and (iii) fairly present in all material
respects the financial condition and the results of operations, changes in
stockholders' equity, partnership accounts and cash flow of the Acquired
Companies, as the case may be, as of the respective dates of and for the periods
referred to therein, all in conformity with GAAP (except in the case of the
Interim Financial Statements for the omission of certain footnotes and other
presentation items required by GAAP with respect to annual financial statements
or annual accounts and subject to other normal year-end adjustments). Such
financial statements reflect the consistent application of such accounting
principles throughout the periods involved, except as disclosed in the notes to
such financial statements.
3.5 Personal Property. Except as set forth on Schedule 3.5 and except for
-----------------
liens for Taxes not yet due and payable, with respect to the material tangible
personal property used by the Acquired Companies in the operation of their
respective businesses (collectively, the "Personal Property"), the Acquired
-----------------
Companies, have good and valid title to all of their items of owned Personal
Property, and valid leasehold interests in all of their items of leased Personal
Property. The Personal Property is in the possession or control of the Acquired
Companies and no other Person has a right to possession or claims possession of
all or any part of such Personal Property, except for the rights of lessors of
leased assets under their respective contracts and leases.
3.6 Real Property Interests. (a) Schedule 3.6(a) contains a true and
-----------------------
complete list of each and every parcel of real property now owned ("Owned
-----
Property"), each and every parcel of real property, or interest therein, now
- --------
held under lease (including without limitation the Trust Property and all
mineral leases) ("Leased Property"), every parcel of real property used by or
---------------
necessary for the conduct of the business of the Acquired Companies, or held
under option or agreement to purchase, by any of the Acquired Companies
(individually, a "Property" and collectively, the "Properties"), the record
-------- ----------
title holder thereof and the legal description and location thereof. The
Acquired Companies neither own nor lease any real property or interest therein
other than the Properties. Sellers have furnished or made available to Buyer
true, correct and complete copies of all (i) title reports, (ii) surveys, (iii)
deeds, title holding or trust agreements under which any of the Properties have
been conveyed to the Acquired Companies or the Trust Seller, and (iv) all
leases, subleases or other agreements under which the Acquired Companies use or
occupy or have the right to use or occupy, any Properties, including all
amendments and assignments thereof (collectively, "Real Property Leases"), in
--------------------
the possession of Sellers or the Acquired Companies with respect to each of the
Properties. Except as set forth on Schedule 3.6(a), each of the Acquired
Companies or the Trust Seller, respectively, (a) owns and has good and
marketable fee simple title to the Owned Properties, together with all
buildings, improvements, appurtenant rights, privileges and easements located
thereon or appurtenant thereto, and (b) has good and valid title to, and is
lawfully seized and possessed of, the leasehold estates in all Leased
Properties, in each case free and clear of all Encumbrances which would
materially interfere with the present use of the Properties or which would have
a Material Adverse Effect, except general and special real estate taxes and
assessments which may be a lien but are not yet due and payable.
(b) Each Real Property Lease is valid and binding in all material respects
upon the Acquired Companies and the Trust Seller, and, to the knowledge of the
Sellers, each other party thereto, and is in full force and effect. All rent
and other sums and charges payable by the
10
<PAGE>
Acquired Companies as tenant thereunder are current. The Acquired Companies and
the Trust Seller have complied in all material respects with the terms of each
Real Property Lease and no termination event or condition or uncured default
exists under any Real Property Lease. No event has occurred and no condition
exists which, with the giving of notice or the lapse of time or both, would
constitute such a default or termination event or condition.
(c) With respect to each of the Properties and the buildings, structures,
improvements and fixtures thereon:
(i) Sellers and the Acquired Companies are in compliance with all
zoning laws, deed restrictions and building codes applicable to the
Properties, non-compliance with which would materially interfere with the
present use of the Properties or which would have a Material Adverse
Effect;
(ii) Sellers have all permits, licenses and approvals with respect to
the ownership and the current use and occupancy of its respective
Properties the lack of which would materially interfere with the present
use of the Properties or which would have a Material Adverse Effect
(individually, "Real Estate Permit" and collectively, "Real Estate
------------------ -----------
Permits"). All Real Estate Permits are set forth on Schedule 3.6(c)(ii)
and are in full force and effect. The current use and occupancy of each of
the Properties do not Violate any of such Real Estate Permits, and no
proceeding is pending or, to the knowledge of Sellers, threatened, to
revoke, suspend, modify or limit any of the Real Estate Permits. No Permit
will be subject to revocation, suspension, modification or limitation as a
result of this Agreement or the consummation of the Contemplated
Transactions;
(iii) neither Sellers nor the Acquired Companies have received any
notice of any federal, state or local plans to restrict or change access
from any highway or road system in the vicinity of any of the Properties to
any of the Properties, or of any pending or threatened condemnation of any
of the Properties or any part thereof, or of any plans for improvements
which might result in a special assessment against any of the Properties;
(iv) Except as disclosed on Schedule 3.6(c)(iv,) there are no defects
with respect to any of the buildings, structures, improvements and fixtures
at any of the Properties which would impair the day-to-day use of any such
buildings, structures, improvements or fixtures or which would subject the
Acquired Companies or the Sellers to any material liability under
applicable law;
(v) Sellers and the Acquired Companies have good and valid rights of
ingress and egress to and from all Properties from and to the public street
systems for all usual street, road and utility purposes and other purposes
necessary or incidental to the business of the Acquired Companies; and
(vi) All facilities located on the Properties are supplied with
utilities and other services necessary for the operation of such facilities
as presently operated.
11
<PAGE>
(d) Except as disclosed on Schedule 3.6(d), there are no restrictions
of any nature on the ability of Sellers or the Acquired Companies to assign and
transfer its interest in the Properties or Real Property Leases, as the case may
be, to the Buyer (or its nominee) either by the terms of each of such Real
Property Leases or by operation of law and there are no consents of third
parties necessary for such assignment or transfer.
(e) Each Seller is a "United States person" as that term is defined
--------------------
in Section 7701(a)(30) of the Code.
3.7 Taxes. (a) Except as set forth on Schedule 3.7(a), (i) the Acquired
-----
Companies and the Trust Seller have timely filed, in accordance with applicable
law, all material reports and returns relating to all taxes (including, without
limitation, all income, excise, property, sales and franchise taxes) and similar
assessments, customs, duties, charges and fees (including interest, penalties
and additions to such taxes, assessments, customs, duties, charges and fees and
any interest in respect of such penalties and additions) imposed by the United
States or any state, local or foreign government or taxing authority ("Taxes")
-----
required to be filed by them, which returns and reports are true, correct and
complete in all material respects, and have paid all Taxes that have become due,
whether or not shown as due on such returns and reports, (ii) all Taxes that
either of the Acquired Companies or the Trust Seller is required to withhold or
deduct and pay over to a government or taxing authority have been so withheld or
deducted and paid over to the extent due and payable, (iii) no notices
respecting asserted or assessed and unresolved material deficiencies for any Tax
have been received by any Acquired Company or the Trust Seller for any tax
periods, (iv) there is no investigation by any tax agency or authority presently
pending or, to the knowledge of Sellers, threatened with respect to an Acquired
Company or the Trust Seller or the Properties, and neither any Acquired Company
nor the Trust Seller is a party to any action or proceeding by any Governmental
Body for the assessment or collection of Taxes, nor has any such event been
asserted or threatened. Neither any Seller nor Commercial has filed any consent
of the type described under Section 341(f) of the Code. The federal income tax
returns of Commercial and CATS as required for the taxable years ending March
31, 1999, and December 31, 1998, respectively, have been timely filed and
Sellers have furnished or made available to Buyer a true and complete copy
thereof of each such return. The unpaid Taxes of each Acquired Company did not,
as of the dates of the Year-End Balance Sheets, exceed the respective accruals
and reserves (other than accruals and reserves for deferred Taxes) for such
Taxes set forth on the Year-End Balance Sheets. There are no liens in respect
of unpaid Taxes on any of the assets of either of the Acquired Companies or the
Properties except for Taxes not yet due.
(b) Except as set forth in Schedule 3.7(b), neither of the Acquired
Companies is currently pursuing an appeal of any Tax imposed against an Acquired
Company.
(c) Commercial is, and has been at all times since April 1987 an "S
-
corporation" within the meaning of Code Section 1361(a). A valid election under
- -----------
Code Section 1362 (and a comparable election under state or local law in each
jurisdiction in which Commercial is required to file Tax returns and reports
that provides for such an election) has been in effect with respect to
Commercial at all times since April 1987. Each Shareholder has filed in a
timely fashion with each of the IRS and any other applicable state taxing
authority a consent to such S corporation elections with respect to Commercial.
Commercial has not been, and will not be, subject to Tax
12
<PAGE>
under Code Section 1374 or 1375 (or any comparable provision of state or local
law) for any period prior to Closing.
3.8 Employee Benefits. (a) Except as set forth in Schedule 3.8, no
-----------------
Acquired Company has with respect to its current or former employees sponsored,
maintained or contributed to any "employee benefit plan" within the meaning of
---------------------
Section 3(3) of ERISA, or any bonus, deferred compensation, incentive
compensation, severance or termination pay, change in control, stock purchase or
stock option plan, agreement or arrangement, or any other material employee
benefit or fringe benefit arrangement, whether formal or informal, and whether
legally binding or not, other than a Multiemployer Plan (collectively, "Plans"
-----
and individually, a "Plan").
----
(b) Except as otherwise set forth in Schedule 3.8, Sellers have
delivered to Buyer: (i) complete copies of all plan documents which set forth
the terms of each of the Plans and where applicable, complete copies of any
related trusts and insurance contracts; (ii) a general description of any of the
Plans with respect to which no formal plan document has been adopted; (iii)
where applicable, the most recent Form 5500, as filed with the IRS together with
all attachments thereto, relating to the Plans; and (iv) where applicable, the
most recent IRS determination letter with respect to each Plan.
(c) Each of the Plans which is intended to conform to the
requirements of the Code and ERISA has been administered in compliance in all
material respects with the applicable requirements of the Code and ERISA and
with the Plan terms. There is no accrued liability, contingent or otherwise,
relating to any Plan that would have a Material Adverse Effect, other than as
reflected in the most recent Year-End Balance Sheets, and there are no actions,
suits, arbitrations, or proceedings pending (or to the best knowledge of
Sellers, threatened) against any Plan, against the assets of any of the trusts
under any Plan or the plan sponsor or the plan administrator, or against any
fiduciary of any Plan with respect to the operation of such plans which would
have a Material Adverse Effect (other than routine benefit claims). Except as
set forth on Schedule 3.8, each Plan intended to qualify under the Code has,
since 1993, received at least one favorable determination letter as to its
qualification under the Code, and nothing has occurred, whether by action or
failure to act, that would cause the loss of such qualification or result in
material costs to any Acquired Company under the IRS' Employee Plans Compliance
Resolution System. Neither Sellers, the Acquired Companies nor, to the best
knowledge of Sellers, any other party has, with respect to any Plan, engaged in
a non-exempt prohibited transaction within the meaning of Section 4975 of the
Code or Section 406 of ERISA. No event has occurred and no condition exists that
would subject any Acquired Company to any material fine under Section 502(c) of
ERISA.
(d) Except as set forth on Schedule 3.8, no Acquired Company
maintains or contributes to any plan which provides, or has any liability to
provide, life insurance, medical, severance or other employee welfare benefits
to any employee upon his retirement or termination of employment, except as may
be required by Section 4980B of the Code.
(e) Except as set forth in Schedule 3.8, the execution of, and
performance of the transactions contemplated in, this Agreement will not (either
alone or upon the occurrence of any additional or subsequent events) (i)
constitute an event under any plan or other employee benefit
13
<PAGE>
arrangement or any employee agreement, trust or loan that will or may result in
any payment (whether of severance pay or otherwise), acceleration, forgiveness
of indebtedness, vesting, distribution, increase in benefits or obligation to
fund benefits with respect to any employee, or (ii) result in the triggering or
imposition of any restrictions or limitations on the right of any Acquired
Company or the Buyer to amend or terminate any plan and receive the full amount
of any excess assets remaining or resulting from such amendment or termination,
subject to applicable taxes, and no payment or benefit which will or may be made
by any Acquired Company, the Buyer or any of their respective affiliates with
respect to any employee will be characterized as an "excess parachute payment,"
------------------------
within the meaning of Section 280G(b)(1) of the Code.
(f) With respect to each Plan that is subject to Title IV of ERISA or to
the minimum funding requirements of Section 412 of the Code, the following is
true: (i) all contributions required to be made under Code Section 412 (whether
or not waived) have been made when due, and all premium payments to the PBGC
have been made when due; (ii) there is no event or condition existing (other
than the Contemplated Transactions) which could be deemed a "reportable event"
----------------
within the meaning of Section 4043 of ERISA with respect to which the notice
requirement has not been waived, and no condition exists which would subject the
Company or any Subsidiary to a fine under Section 4071 of ERISA; (iii) no
amendment has occurred which has required or could require any Acquired Company
to provide security to such Plan under Section 401(a)(29) of the Code; (iv) no
documentation or other information has been or is currently required to be
provided to the PBGC pursuant to Section 4010 of ERISA, and no participant
notices have been or are currently required pursuant to Section 4011 of ERISA;
(v) as of the most recent valuation date, the fair market value of The Plan's
assets exceeded the "projected benefit obligation" for such plan within the
----------------------------
meaning of Paragraph 17 of FASB 87; (vi) there are no contributing sponsors of
such Plan who are not ERISA Affiliates of an Acquired Company; and (vii) no
transaction has occurred and no condition exists with respect to such Plan that
has subjected or will likely subject any Acquired Company to liability under
Section 4069 of ERISA.
(g) Except as set forth in Schedule 3.8, no Acquired Company has ever been
a party to, or been required to contribute to, a Multiemployer Plan. With
respect to any Multiemployer Plan disclosed in Schedule 3.8, (i) all
contributions required by the terms of such Multiemployer Plan or any collective
bargaining agreement have been made when due; (ii) to the knowledge of Sellers,
no Acquired Company would be subject to any withdrawal liability under Part 1 of
Subtitle E of Title IV of ERISA if, as of the date hereof, the Acquired Company
were to engage in a "complete withdrawal" (as defined in ERISA Section 4203) or
-------------------
a "partial withdrawal" (as defined in ERISA Section 4205) from such
------------------
Multiemployer Plan, (iii) no Acquired Company has received notice that such
Multiemployer Plan is in reorganization (as defined in Section 4242 of ERISA) or
is insolvent (as defined in Section 4245 of ERISA), and (iv) no transaction has
occurred and no condition exists that has subjected or will likely subject any
Acquired Company to liability under Section 4212(c) of ERISA. Except as set
forth on Schedule 3.8, for each such Multiemployer Plan, Sellers have delivered
to Buyer (i) complete copies of the plan document and trust agreement, (ii) the
most recent Form 5500, as filed with the IRS, together with all attachments
thereto, and (iii) the most recent estimate of withdrawal liability that would
be incurred by any Acquired Company if it were to completely withdraw from the
Multiemployer Plan in 1998.
14
<PAGE>
(h) Other than the Plans and Multiemployer Plans set forth in
Schedule 3.8, no ERISA Affiliate of an Acquired Company has ever sponsored,
maintained or contributed to a plan subject to Title IV of ERISA or to Section
412 of the Code.
3.9 Compliance with Law. Except as set forth on Schedule 3.9, for matters
-------------------
pertaining to employee benefits (which are provided for in Section 3.8) and for
environmental matters (which are provided for in Section 3.14), the operations
of each of the Acquired Companies are and have been conducted in accordance with
all applicable laws, regulations and other requirements of all U.S. and foreign
national Governmental Bodies, and of all states, municipalities and other
political subdivisions and agencies thereof, having jurisdiction over the
business of the Acquired Companies, except for deviations from such laws arising
from the operations of the Acquired Companies which, individually or in the
aggregate would not have a Material Adverse Effect.
3.10 Legal Proceedings; Orders. Except as set forth in Schedule 3.10
-------------------------
hereto, there are no claims, actions, suits, proceedings or investigations
pending or, to the knowledge of Sellers, threatened against any Seller, any
Acquired Company or with respect to the Contemplated Transactions or as to which
any such Person is a party or their properties are subject. To the knowledge of
the Sellers, there exist no set of facts or circumstances that could reasonably
give rise to any such claims, actions, suits, proceedings or investigations. No
Acquired Company is in violation of any term of any Order outstanding against
it, except where such violation would not have a Material Adverse Effect.
3.11 Absence of Certain Changes and Events. Except as set forth in
-------------------------------------
Schedule 3.11, since the dates of the respective most recent Year-End Balance
Sheets, the Acquired Companies have conducted their businesses only in the
ordinary course of business and there has not been any:
(a) change in Commercial's authorized or issued capital stock; grant of
any stock option or right to purchase shares of capital stock; issuance of any
security convertible into such capital stock; grant of any registration rights;
purchase, redemption, retirement, or other acquisition of any shares of any such
capital stock; or declaration or payment of any dividend or other distribution
or payment in respect of shares of capital stack;
(b) amendment to the Organizational Documents of any Acquired Company;
(c) payment or increase by any Acquired Company of any bonuses, salaries,
or other compensation to any stockholder, partner, trustee, director, officer,
or manager or entry into any employment, severance, or similar contract or
agreement with any director, officer, or manager;
(d) adoption of, or increase in the payments to or benefits under, any
profit sharing, bonus, deferred compensation, savings, insurance, pension,
retirement, or other employee benefit plan for or with any officer or manager of
any Acquired Company;
(e) change in the accounting methods used by any Acquired Company;
(f) Material Adverse Effect;
15
<PAGE>
(g) making of or changes to any material Tax election, or compromise of
any material liability for Taxes;
(h) sale, transfer, pledge or other disposition of any of the assets of
either Acquired Company having an aggregate value of $200,000 or more (except
sales of inventory in the ordinary course of business) and the assets listed on
Part I of Schedule 2.1(f);
(i) entering into, amendment, termination, waiver or cancellation of any
agreement requiring the expenditure of $250,000 or more per year, or any
termination, amendment, waiver or cancellation of any material right or claim of
any Acquired Company under any such agreement;
(j) material change in policies, operations or practices of either
Acquired Company with respect to selling methods, returns, discounts or other
non-price terms of sale;
(k) any commitment to purchase or pay for equipment after the date hereof,
(l) any capital appropriation or expenditure or commitment therefor on
behalf of either Acquired Company in excess of $1,500,000 individually or
$2,000,000 in the aggregate or any write-down or write-up of the value of any
inventory or equipment of either of the Acquired Companies;
(m) any purchase contracts or commitments which are in excess of the
requirements of the respective businesses of the Acquired Companies or at prices
higher than current market prices; or
(n) any commitment, whether legally binding or otherwise, to do any of the
foregoing.
3.12 Contracts. (a) Schedule 3.12 contains a complete and accurate list,
---------
and Sellers have delivered to Buyer true and complete copies, of:
(i) each contract or agreement that involves performance of
services or delivery of goods or materials by one or more Acquired Company
of an amount or value in excess of $250,000, or purchase orders with an
amount or value in excess of $250,000;
(ii) each contract or agreement that involves performance of
services or delivery of goods or materials to one or more Acquired Company
of an amount or value in excess of $250,000 with respect to fixed
obligations and $500,000 with respect to purchase orders;
(iii) each lease, rental or occupancy agreement, license,
installment and conditional sale agreement, and other contract or agreement
affecting the ownership of, leasing of, title to, use of, or any leasehold
or other interest in, any Personal Property (except personal property
leases and installment and conditional sales agreements having a value per
item or aggregate payments of less than $50,000 per annum) or Properties;
16
<PAGE>
(iv) each material licensing agreement or other contract or
agreement with respect to patents, trademarks, copyrights, or other
intellectual property;
(v) each joint venture, partnership, and other contract or
agreement (however named) involving a sharing of profits, losses, costs, or
liabilities by any Acquired Company with any other Person and each
agreement with respect to guarantees of the obligations of a third party
and agreements to indemnify third parties;
(vi) each agreement containing non-competition or other
limitations restricting the conduct of the business of any Acquired
Company;
(vii) each agreement between any Acquired Company and any of
their respective affiliates;
(viii) indentures, mortgages, deeds of trust, promissory notes,
loan agreements, capital leases, security agreements or other agreements or
commitments for the borrowing of money, or the deferred purchase price of
assets, or which otherwise evidence Indebtedness of either Acquired Company
or which create an Encumbrance on any of its assets or the Trust Property;
and
(ix) each other agreement not of the type referred to above
that is otherwise material to the Acquired Companies, other than contracts
with individual truckers (none of which represents more than ten percent
(10%) of the total truck units of CATS).
(b) Each Acquired Company has in all material respects performed all
of its obligations required to be performed by it to the date hereof, and is not
in default or alleged to be in default in any material respect, under any
agreement listed on Schedule 3.12, and there exists no event, condition or
occurrence which, after notice or lapse of time or both, would constitute such a
default. To the knowledge of the Sellers, no other party to any such agreement
is in default in any respect of any of its obligations thereunder. Each of the
agreements listed on Schedule 3.12 is valid and in full force and effect and
enforceable against the parties thereto in accordance with their respective
terms.
3.13 Insurance. Schedule 3.13 hereto sets forth a complete and accurate
---------
list and description, including but not limited to deductibles thereunder, of
all policies of fire, liability, product liability, workmen's compensation,
health and other forms of insurance in effect with respect to the Acquired
Companies. Sellers have furnished to Buyer true and correct copies of all such
policies. No Acquired Company has received notice of default under or
cancellation of any such policies and all such policies are valid and in full
force and effect. All premiums due thereon covering all periods up to and
including the Closing Date have been paid. Schedule 3.13 sets forth a list of
all claims in excess of $200,000 individually against either Acquired Company
(including, without limitation, products liability claims) and whether or not
covered by insurance that have been asserted in writing since January 1, 1994.
3.14 Environmental Matters. Except as set forth in Schedule 3.14:
---------------------
(a) Each Acquired Company and the Trust Seller has obtained, and has
made all appropriate filings for issuance or renewal of, all registrations,
permits, licenses and other
17
<PAGE>
authorizations ("Environmental Permits") which: (i) are required to be obtained
---------------------
by any such Acquired Company or the Trust Seller under all Environmental Laws or
(ii) relate to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling of Regulated Materials, except for
those Environmental Permits, the absence of which will not have a Material
Adverse Effect.
(b) Except for such non-compliance which would not have a Material
Adverse Effect, and to the knowledge of Sellers, each Acquired Company and the
Trust Seller (and each property owned, leased or operated by any of the Acquired
Companies) at all times has been and is in compliance with: (i) all
Environmental Permits; (ii) all other, limitations, restrictions, conditions,
standards, prohibitions, requirements and obligations contained in any of the
Environmental Laws as applicable to such Acquired Company or the Trust Seller
(or each property owned, leased or operated by any of the Acquired Companies);
and (iii) all plans, orders, decrees, judgments, injunctions, notices or demand
letters applicable to such Acquired Company or the Trust Seller (or each
property owned, leased or operated by any of the Acquired Companies) and issued,
entered, promulgated or approved under any of the Environmental Laws.
(c) No Acquired Company has, and the Trust Seller has not, received
any notice that any past or present conditions, circumstances, activities,
practices, incidents or actions of any Acquired Company or the Trust Seller
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of any Regulated Material or relating to any
emission, discharge, release or threatened release into the environment of any
Regulated Material: (i) may interfere with or prevent compliance or continued
compliance by any Acquired Company or any Seller with any of the Environmental
Laws or any regulation, code, plan, order, decree, judgment, injunction, notice
or demand letter issued, entered, promulgated or approved thereunder; (ii) may
give rise to any common law or legal liability; or (iii) may otherwise form the
basis of any claim, action, demand, suit, proceeding, hearing, study or
investigation, unless the alleged violation or noncompliance with any
Environmental Laws which forms the basis of any notice described above in this
Section 3.14, if uncured or unsettled, would have a Material Adverse Effect.
(d) There is no civil, criminal or administrative action, suit,
demand, claim, hearing, notice or demand letter, notice of violation,
investigation or proceeding pending or, to the knowledge of the Sellers,
threatened against any Acquired Company or any Seller relating in any way to the
disposal of any Regulated Material at any location or to any violation of any of
the Environmental Laws or any regulation, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered, promulgated or approved
thereunder.
(e) To the knowledge of the Sellers, there has been no release,
spill, discharge, deposit, storage, burial or dumping (collectively "Release")
-------
of any Regulated Material in or on any properties currently or formerly owned,
leased or operated by any Acquired Company which would have a Material Adverse
Effect. All underground and above-ground storage tanks located on any property
now or formerly owned, leased or operated by each Acquired Company have been
used, maintained and, if applicable, removed, in material compliance with all
applicable Legal Requirements.
18
<PAGE>
(f) To the knowledge of the Sellers, no property now or previously
owned, operated or leased by any Acquired Company is listed or is proposed for
listing on the National Priorities List pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, or the
Comprehensive Environmental Response, Compensation and Liability Information
System List or on any similar state or foreign list of sites requiring
investigation or cleanup; no clean-up of Regulated Material has occurred on any
such property which could result in the creation of any lien on such property,
and no lien has been filed against any Personal Property or any Properties under
any Environmental Law.
(g) Each Acquired Company and each Seller has heretofore delivered to
Buyer true and complete copies of all environmental studies made in the last
five years relating to any Acquired Company or the Properties or any other
property or facility previously owned, operated or leased by any Acquired
Company and all environmental studies in Sellers' possession with respect to
asphalt plants owned, operated or leased by any Acquired Company.
(h) No Acquired Company and no Seller has entered into any agreement
that may require it to pay to, reimburse, guarantee, pledge, defend, indemnify
or hold harmless any person for or against any environmental liability or costs.
(i) Neither the Property nor any other current or former real
property interest of any Acquired Company contains any: (a) underground storage
tanks; (b) asbestos; (c) equipment using PCBs; (d) underground injection wells;
or (e) septic tanks in which process wastewater or any Regulated Materials have
been disposed.
3.15 Labor Relations. (a) No Acquired Company has experienced any material
---------------
labor disputes, or any material work stoppage due to labor disagreements and, to
the knowledge of the Sellers, no material labor disputes or material work
stoppages are threatened. No Acquired Company has received a notice that there
is any unfair labor practice, charge or complaint against any Acquired Company
pending or threatened before the National Labor Relations Board or any
comparable state agency or authority. There is no labor strike, dispute,
slowdown or stoppage actually pending or, to Sellers' knowledge, threatened
against or affecting an Acquired Company. No question concerning representation
has been raised or, to Sellers' knowledge, is threatened respecting the
employees of the Acquired Companies. No material labor grievance is pending or,
to Sellers' knowledge, threatened against any Acquired Company.
(b) Except as otherwise set forth in Schedule 3.15, Sellers have
delivered to Buyer complete copies of all collective bargaining agreements or
similar agreements with any labor organization, or any work rules or practices
agreed to with any labor organization or employee association applicable to the
employees of the Acquired Companies. To the knowledge of the Sellers, there are
no current union organizing activities among the employees of the Acquired
Companies. The execution of this Agreement and the consummation of the
transaction contemplated hereby shall not result in a breach or other violation
of any collective bargaining agreement to which either Acquired Company is a
party.
(c) Sellers have provided to Buyer the names, titles and current
rates of compensation (whether in the form of salaries, bonuses, commissions or
other supplemental compensation now or hereafter payable) of the ten most
highly-compensated non-unionized
19
<PAGE>
employees of the Acquired Companies, together with a list of any employment,
severance or other compensation contracts and agreements relating to any such
employees. Sellers have also provided to Buyer true, correct and complete copies
of all written personnel policies, rules or procedures applicable to employees
of the Acquired Companies. There are no material complaints, charges,
arbitrations, controversies, grievances, lawsuits or other proceedings pending
or, to the knowledge of Sellers, threatened in any forum against any Acquired
Company alleging breach of any express or implied contract of employment, any
law or regulation governing employment or the termination thereof or other
discriminatory, wrongful or tortuous, conduct in connection with the employment
relationship. Since the enactment of the Worker Adjustment and Retraining
Notification Act of 1988 (the "WARN Act"), neither Acquired Company has
--------
effectuated (A) a "plant closing" (as defined in the WARN Act) affecting any
-------------
site of employment or one or more facilities or operating units within any site
of employment or facility of any Acquired Company, or (B) a "mass layoff" (as
-----------
defined in the WARN Act) affecting any site of employment or facility of any
Acquired Company; nor has either Acquired Company engaged in layoffs or
employment terminations sufficient in number to trigger application of any
similar state or local law. Except as set forth on Schedule 3.15, none of the
employees of either Acquired Company have suffered an "Employment Loss" as
---------------
defined in the Warn Act since July 1, 1999.
3.16 Intellectual Property. Schedule 3.16 contains a complete and accurate
---------------------
list and summary description of all material patents, trademarks, tradenames,
service marks, copyrights, software, trade secrets, and know-how, owned, used or
licensed by any Acquired Company (the "Intellectual Property Assets"). Except as
----------------------------
set forth on Schedule 3.16, the Intellectual Property Assets are owned free and
clear of all material Encumbrances. No Acquired Company unlawfully or wrongfully
uses any Intellectual Property Asset, or infringes upon the rights of third
parties through its use of the Intellectual Property Assets. No Acquired Company
is in default under, or has received any notice of any claim of infringement or
any other claim or proceeding relating to any Intellectual Property Asset.
3.17 Year 2000 Compliance. All of the material computer systems of the
--------------------
Acquired Companies are in the final stages of the process to make such systems
Year 2000 Compliant and such systems are scheduled and will be Year 2000
Compliant by October 1999 in all material respects. Each of the Acquired
Companies has inquired of, or been advised by, its principal suppliers of their
Year 2000 compliant status. The Sellers have not received notice that any
customers or suppliers expect that their business with the Acquired Companies
will be materially adversely effected by the failure of such suppliers to be
Year 2000 Compliant on a timely basis.
The term "Year 2000 Compliant," with respect to a computer system or
-------------------
software program, means that such computer system or program: (i) is capable of
recognizing, processing, managing, representing, interpreting and manipulating
correctly date-related data for dates earlier and later than January 1, 2000;
(ii) has the ability to provide date recognition for any data element without
limitation; (iii) has the ability to function automatically into and beyond the
year 2000 without human intervention and without any change in operations
associated with the advent of the year 2000; (iv) has the ability to interpret
data, dates and time correctly into and beyond the year 2000; (v) has the
ability not to produce noncompliance in existing data, nor otherwise corrupt
such data, into and beyond the year 2000; (vi) has the ability to process
20
<PAGE>
correctly after January 1, 2000, data containing dates before that date; and
(vii) has the ability to recognize all "leap year" dates, including February 29,
2000.
3.18 Absence of Undisclosed Liabilities. Except as disclosed on Schedule
----------------------------------
3.18, or elsewhere in this Agreement or any schedule hereto, to the knowledge of
the Sellers, neither Acquired Company has any liabilities or obligations of any
nature, known or unknown, fixed or contingent, matured or unmatured, other than
those (a) reflected in the Interim Financial Statements, or (b) incurred in the
ordinary course of business since the date of the Interim Financial Statements,
consistent (in amount and kind) with past practice or (c) liabilities which
would not individually or in the aggregate have a Material Adverse Effect.
3.19 Accounts Receivable. The Sellers have delivered to the Buyer a true
-------------------
and correct list and aging of all unpaid accounts receivable owing to each
Acquired Company as of June 30, 1999. All accounts receivable of the Acquired
Companies constitute legal, valid, binding and enforceable claims with respect
to which the rendition of services or the sale of goods has been completed in
bona fide transactions in the ordinary course of business. An adequate reserve
for doubtful accounts for the each Acquired Company has been established and
such reserve is consistent with both the operation of the Acquired Company in
the ordinary course of business and past practice.
3.20 Reserves. To the knowledge of the Sellers, the description of the
--------
aggregate reserves detailed in Schedule 3.20, including the location of the
reserves with respect to the Properties, is accurate in all material respects.
Schedule 3.20 also indicates for which reserves the Acquired Companies have
obtained the governmental licenses, permits, approvals and other authorizations
necessary for mining. The Sellers have no knowledge of any facts or
circumstances that would contradict or otherwise raise doubt as to the accuracy
of the information contained in Schedule 3.20 in any material respect.
3.21 Operating Permits. Set forth on Schedule 3.21 hereto is a list of all
-----------------
governmental licenses, permits, approvals, certificates of inspection and other
authorizations, filings and registrations that are necessary for the Acquired
Companies to own and operate their respective businesses as presently conducted
or presently proposed to be conducted (collectively, the "Operating Permits").
-----------------
Except as set forth on Schedule 3.21 hereto, all such Operating Permits have
been duly and lawfully secured or made by the Acquired Companies and are in full
force and effect. There is no proceeding pending, or, to the Sellers' knowledge,
threatened or probable of assertion, to revoke or limit any such Operating
Permit. None of the Contemplated Transactions will terminate, violate or limit
the effectiveness of any such Operating Permit. With respect to renewal of
Operating Permits, each Acquired Company has made, in a timely manner, all
filings, reports, notices and other communications with the appropriate
governmental body, and has otherwise taken, in a timely manner, all other
action, known or anticipated to be required to be taken by each such Acquired
Company, reasonably necessary to secure the renewal of the respective Operating
Permits prior to the date of their respective expirations. The Acquired
Companies are in compliance with the Operating Permits except where
noncompliance would not have a Material Adverse Effect.
3.22 Directors and Officers. Set forth on Schedule 3.22 is a true and
----------------------
correct list of the names and titles of each director and officer of each
Acquired Company.
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3.23 Customers and Suppliers. Set forth on Schedule 3.23 hereto contains,
-----------------------
with respect to the calendar years ended December 31, 1998 and 1997, a true and
complete list of (i) the twenty (20) largest customers (in dollar volume) of
each Acquired Company, and (ii) the five (5) largest suppliers (in dollar
volume) to each Acquired Company. To the knowledge of the Sellers, no such
supplier, customer or creditor indicated on Schedule 3.23 hereto has or intends
or has threatened, or reasonably could be expected, to terminate or modify any
of its relationships with either Acquired Company.
3.24 Qualification of Product. To the Sellers' knowledge, the asphalt,
------------------------
stone and other products currently produced by Commercial meet the
specifications and qualifications established by the Strategic Highway Research
Program for use in "Superpave" in the regions where the Acquired Companies
currently operate. To the Sellers' knowledge, the aggregate mined and produced
by Commercial meets the specifications established by Penn DOT-Bulletin 14 as
"Class E Aggregate."
3.25 Rich Hill Quarry. To the Sellers' knowledge, the building of an
----------------
underground mine at the Rich Hill Quarry will not materially interrupt, or
otherwise have a material adverse effect on, the operations of the Rich Hill
Quarry, as such operations are currently being, and are currently contemplated
to be, conducted.
3.26 Belle Vernon Quarry. Sellers have provided to the Buyer a true and
-------------------
correct copy of the lease (the "Belle Lease") for the land upon which the Belle
-----------
Vernon Quarry (the "Belle Quarry") is located and a true and correct copy of the
------------
reclamation plan (the "Reclamation Plan") concerning the Belle Quarry (the Belle
----------------
Lease together with the Reclamation Plan to be hereinafter referred to as the
"Belle Quarry Documents"). The Sellers have performed in all material respects
----------------------
all of their obligations required to be performed by them to the date hereof
under the Belle Quarry Documents, and are not in default or alleged to be in
default in any material respect, under the Belle Quarry Documents, and there
exists no event, condition or occurrence which, after notice or lapse of time or
both, would constitute such a default. To the knowledge of the Sellers, no other
party to the Belle Quarry Documents is in default in any respect of any of its
obligations thereunder. There exist no liabilities or obligations of any nature
with respect to the Belle Lease, other than those disclosed and reflected in the
Interim Financial Statements and there exist no liabilities or obligations of
any nature with respect to the Reclamation Plan, which liabilities or
obligations are to be fulfilled or performed subsequent to the Closing Date. The
operations of the Acquired Companies that were and that are currently being
conducted at the Belle Quarry were and are currently being conducted in
accordance with all applicable Legal Requirements.
3.27 Silicosis. In the most recent chest x-rays performed on the employees
---------
of the Acquired Companies pursuant to the Acquired Companies' medical
surveillance program, no employee of the Acquired Companies (i) had a chest x-
ray read by a NIOSH certified "B" reader as a profusion of greater than or equal
to 1/0, or (ii) was diagnosed with silicosis.
22
<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer represents and warrants to Sellers, as of the date hereof and as of
the Closing Date, as follows:
4.1 Organization and Good Standing. Buyer is a corporation duly organized,
------------------------------
validly existing, and in good standing under the laws of the State of Delaware.
4.2 Authority; No Conflict. (a) The Buyer has full corporate power and
----------------------
authority to execute and deliver this Agreement and to consummate the
Contemplated Transactions. This Agreement constitutes the legal, valid, and
binding obligation of Buyer, enforceable against Buyer in accordance with its
terms.
(b) The execution, delivery and performance of this Agreement by
Buyer and the consummation of the Contemplated Transactions (i) have been
authorized by all necessary corporate action on the part of Buyer, and (ii) will
not (w) conflict with the terms, conditions or provisions of the Organizational
Documents of Buyer, (x) violate any provision of law or any Order to which Buyer
is subject, (y) result in a breach or violation of any of the terms of, or
constitute a default by Buyer under, any material indenture, mortgage, loan
agreement, lease or other agreement or instrument to which Buyer is a party or
by which it is bound. Except as set forth on Schedule 4.2, Buyer will not be
required to obtain any Consent from any Person in connection with the execution
and delivery of this Agreement or the consummation or performance of any of the
Contemplated Transactions.
4.3 Investment Intent. Buyer is acquiring the Acquired Shares for its own
-----------------
account and not with a view to their distribution within the meaning of Section
2(11) of the Securities Act.
4.4 Certain Proceedings. There is no Proceeding pending that has been
-------------------
commenced against Buyer and that challenges, or may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
Contemplated Transactions. To Buyer's knowledge, no such proceeding has been
threatened.
4.5 Financing. Attached hereto as Exhibit 4.5 is a true and correct copy
---------
of the Buyer's commitment letter from The Chase Manhattan Bank and Chase
Securities Inc. with respect to the Buyer's financing in connection with the
Contemplated Transactions. As of the date hereof, such letter has not been
withdrawn.
ARTICLE V
COVENANTS OF SELLERS PRIOR TO CLOSING DATE
------------------------------------------
5.1 Access and Investigations. Between the date of this Agreement and the
-------------------------
Closing Date, Sellers will (a) afford Buyer and its Representatives
(collectively, "Buyer's Advisors") access, during normal business hours and with
----------------
reasonable prior notice, to each Acquired
23
<PAGE>
Company's personnel, properties, contracts, books and records, and other
documents and data, (b) furnish Buyer and Buyer's Advisors with copies of all
such contracts, books and records, and other existing documents and data as
Buyer may reasonably request, and (c) furnish Buyer and Buyer's Advisors with
such additional financial, operating, and other data and information as Buyer
may reasonably request.
5.2 Operation of the Businesses of the Acquired Companies. Between the
-----------------------------------------------------
date of this Agreement and the Closing Date, Sellers will cause each Acquired
Company to:
(a) conduct its business only in the ordinary course of business,
consistent with past practice;
(b) use reasonable efforts to preserve intact its current business
organization, keep available the services of its current officers and employees,
and maintain its relations and good will with its suppliers, customers,
landlords, creditors, employees, agents, and others having business
relationships with it;
(c) maintain its corporate or partnership existence in good standing;
(d) comply in all respects with all applicable Legal Requirements;
(e) maintain its insurance coverages;
(f) pay all Taxes, charges and assessments when due, subject to any valid
objection or contest of such amounts asserted in good faith and adequately
reserved against;
(g) make all debt service payments when contractually due and payable;
(h) pay all accounts payable and other current liabilities when due;
(i) maintain the Plans;
(j) maintain its property, plant and equipment in good operating condition
in accordance with industry standards taking into account the age thereof;
(k) make capital expenditures in the ordinary course and consistent with
past practice; and
(l) maintain its books and records of account in the usual, regular and
ordinary manner.
5.3 Negative Covenants. Except as otherwise expressly permitted by this
------------------
Agreement, between the date of this Agreement and the Closing Date, Sellers will
not, without the prior consent of Buyer, permit any Acquired Company to:
(a) take any affirmative action, or fail to take any reasonable action
within their reasonable control, as a result of which any of the changes or
events listed in Section 3.11 is likely to occur;
24
<PAGE>
(b) acquire, sell, lease or dispose of any assets (except necessary
equipment, raw materials and inventory in the ordinary course of business) which
are material to the Acquired Company or enter into any commitment to do any of
the foregoing or enter into any material commitment or transaction;
(c) except in the ordinary course of business consistent with past
practice (i) create, incur, assume or prepay any indebtedness for borrowed money
(including obligations in respect of capital leases) except for short-term debt
in the ordinary course of business consistent with past practice, (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other Person or (iii) make
any loans, advances or capital contributions to, or investments in, or enter
into any "keep well" arrangements or other agreement to maintain the financial
condition of, any other Person;
(d) acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial portion of the stock or assets of, or by any other
manner, any business or any corporation, partnership, joint venture, association
or other business organization or division thereof,
(e) institute, settle or compromise any claim, action, suit, or proceeding
pending or threatened by or against it involving amounts in excess of $200,000,
at law or in equity or before any Governmental Body;
(f) knowingly take any action that would knowingly render any
representation, warranty, covenant or agreement of any Acquired Company in this
Agreement inaccurate or breached as of the Closing Date;
(g) take any action, or permit any Acquired Company to take any action, to
encourage any of the personnel of either Acquired Company to leave their
positions with the Acquired Companies, other than Scott Turer and Rick Young if
such individuals are not offered satisfactory employment by Buyer;
(h) agree, whether in writing or otherwise, to do any of the foregoing; or
(i) effectuate either a "plant closing" or a "mass layoff" (each as
------------- -----------
defined in the WARN Act), or any similar action under applicable state or local
law requiring notice to employees in the event of a plant closing or layoff.
5.4 Required Approvals. As promptly as practicable after the date of this
------------------
Agreement, Sellers will make all filings required by Legal Requirements to be
made by them in order to consummate the Contemplated Transactions, including any
HSR filings. Between the date of this Agreement and the Closing Date, Sellers
will cooperate with Buyer with respect to all filings that Buyer elects to make
or is required by Legal Requirements to make in connection with the Contemplated
Transactions.
5.5 No Negotiation. Until such time, if any, as this Agreement is
--------------
terminated pursuant to Article X, Sellers will not directly or indirectly
solicit, initiate, or encourage any inquiries or proposals from, discuss or
negotiate with, provide any non-public information to, or consider the merits of
any unsolicited inquiries or proposals from, any Person (other than Buyer)
relating to
25
<PAGE>
any transaction involving the sale of the business or all or substantially all
the assets of any Acquired Company, any of the capital stock of Commercial, any
of the partnership interests of CATS, or any merger, consolidation, business
combination, or similar transaction involving any Acquired Company.
5.6 Reasonable Efforts. Between the date of this Agreement and the Closing
------------------
Date, Sellers will use all reasonable efforts to cause the conditions in Article
VII and Article VIII to be satisfied (including, without limitation, providing
such information and access to employees and properties as Buyer shall
reasonably request with respect to the consummation of the financing
contemplated by Section 4.5 hereof and the delivery of the financial statements
referred to in Section 7.13 hereof).
5.7 Bonuses. Buyer will pay or will cause Commercial to pay at Closing
-------
bonuses to employees of Commercial Stone in an aggregate amount of $1,320,000.
Schedule 5.7 identifies such employees and the amount to be paid to each. Buyer
may condition such bonuses on the employees' willingness to continue his or her
employment with Commercial Stone for up to six months after the Closing Date.
5.8 Guarantees. Buyer shall use its commercially reasonable efforts to
----------
effect the release of Sellers at Closing or as promptly thereafter as
practicable from all guarantees, indemnities, suretyships, and similar
arrangements issued or made by Sellers to third parties for the benefit of the
Acquired Companies or the Properties being conveyed by the Trust Sellers, a
partial listing of which is listed on Schedule 5.8 hereto (the "Guarantees"). To
----------
the knowledge of Sellers, no facts or circumstances exist under which any of the
Sellers is presently or, with the passage of time will be, obligated to perform
under any such Guarantees.
ARTICLE VI
COVENANTS OF BUYER PRIOR TO CLOSING DATE
----------------------------------------
6.1 Approvals of Governmental Bodies. As promptly as practicable after
--------------------------------
the date of this Agreement, Buyer will make all filings required by Legal
Requirements to be made by Buyer to consummate the transactions contemplated by
the Transaction Documents, including all filings under the HSR Act. All
applicable filing or transaction fees under such Legal Requirements, including
HSR filings shall be paid by Buyer. Between the date of this Agreement and the
Closing Date, Buyer will cooperate with Sellers with respect to all filings that
Sellers are required by Legal Requirements to make in connection with the
Contemplated Transactions, and cooperate with Sellers in obtaining all consents
that may be required in connection with the consummation of the Contemplated
Transactions.
6.2 Request for Early Termination. Upon the execution of definitive
-----------------------------
purchase agreement, the Buyer will promptly prepare and file a request for early
termination in accordance with the HSR Act.
6.3 Reasonable Efforts. Buyer will use all reasonable efforts to cause the
------------------
conditions in Articles VIII to be satisfied.
26
<PAGE>
6.4 Buyer Surveys. Buyer shall use its commercial best efforts to obtain
-------------
a survey of each of the four sites commonly referred to as Rich Hill,
Springfield Pike, Dunningsville Asphalt and Adamsburg Asphalt, as deemed
reasonably necessary or advisable by the Buyer (collectively, "Buyer Surveys"),
-------------
certified to the Buyer, the Acquired Companies, Buyer's lender and Lawyer's
Title Insurance Corporation (the "Title Company").
-------------
The Sellers shall and shall cause the Trust Seller and the Acquired
Companies to assist Buyer as Buyer shall reasonably request in obtaining the
Buyer Surveys, including, without limitation, involving all documentation and
information reasonably requested and providing full access to the Properties to
Buyer and its agents for such purpose.
ARTICLE VII
CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
---------------------------------------------------
Buyer's obligation to consummate the Contemplated Transactions is subject
to the satisfaction, at or prior to the Closing, of each of the following
conditions (any of which may be waived by Buyer, in whole or in part):
7.1 Accuracy of Representations. All of Sellers' representations and
---------------------------
warranties in this Agreement (considered collectively), and each of these
representations and warranties (considered individually), must have been true
and correct in all material respects as of the date of this Agreement, and must
be true and correct in all material respects as of the Closing Date as if made
on the Closing Date.
7.2 Sellers' Performance. All of the covenants and obligations that
--------------------
Sellers are required to perform or to comply with pursuant to this Agreement at
or prior to the Closing (considered collectively), and each of these covenants
and obligations (considered individually), must have been duly performed and
complied with in all material respects.
7.3 Opinion of Counsel. There shall have been delivered to Buyer an
------------------
an opinion, dated the Closing Date, of Reed Smith Shaw & McClay, counsel to
Sellers, in the form of Exhibit 7.3 hereto.
7.4 No Proceedings. No suit, action, proceeding or investigation shall
--------------
have been commenced or threatened by any Governmental Body on any grounds to
restrain, enjoin or hinder the Contemplated Transactions, to obtain substantial
damages in respect thereof, or involving a claim that consummation thereof would
result in the violation of any law or Order, or which would otherwise have a
Material Adverse Effect if adversely decided. No suit or proceeding shall have
been commenced by any other Person, (a) that could reasonably be expected to
have the effect of preventing or materially diminishing the value to Buyer of
the Contemplated Transactions, (b) that would prevent or materially delay the
Contemplated Transactions, or (c) that could reasonably be expected to have the
effect, if adversely decided, of materially restricting or interfering with the
business or operations of either of the Acquired Companies after Closing or
would otherwise have a Material Adverse Effect.
27
<PAGE>
7.5 Payment of Indebtedness; Releases. The Indebtedness of the Acquired
---------------------------------
Companies (other than the Indebtedness listed on Part 11 of Schedule 2.1(f))
shall have been repaid and the Buyer shall have received satisfactory evidence
thereof and there shall have been executed and delivered all required releases
of liens, termination statements and satisfaction pieces with respect to
Indebtedness of any Acquired Company being repaid on the Closing Date.
7.6 HSR Act Approval. The waiting periods applicable to the consummation
----------------
of the Contemplated Transactions under the HSR Act shall have expired or been
terminated.
7.7 Delivery of Documents. The Sellers shall have delivered to the Buyer
---------------------
Buyer the documents referenced in Section 2.4(a).
7.8 Agreement Regarding Three Rivers. Commercial shall have entered into
--------------------------------
an agreement with an affiliate of Seller regarding trucking services
substantially on the terms set forth on Exhibit 7.8 hereto.
7.9 Agreement Regarding Molly Slag Operations. Commercial shall have
-----------------------------------------
entered into an agreement with an affiliate of Seller regarding the disposal of
molybdenum slag substantially on the terms set forth on Exhibit 7.9 hereto.
7.10 Financial Markets. Buyer shall not have received from The Chase
-----------------
Manhattan Bank and Chase Securities, Inc. written notice to the effect that in
their reasonable judgment there has occurred and there was continuing a material
disruption of or a material adverse change in financial, banking or capital
market (including, without limitation, high-yield market) conditions such that
the funding contemplated by the commitment letter and term sheet attached hereto
as Exhibit 4.5 was not made available to the Buyer.
7.11 Audited Financial Statements. On or prior to September 10, 1999, Buyer
----------------------------
shall have received (a) audited balance sheets and related statements of income,
stockholders' equity and cash flows of each of the Acquired Companies for the
three fiscal years ended prior to the Closing Date and (b) unaudited balance
sheets and related statements of income, stockholders' equity and cash flows of
each of the Acquired Companies for the fiscal quarters ending after the most
recent fiscal year that precedes the Closing Date up to the latest fiscal
quarter ending at least 30 days prior to the Closing Date (and, to the extent
available, for each month preceding the Closing Date since the last such
quarter), which audited and unaudited financial statements shall be in form and
scope reasonably satisfactory to Buyer. Should the condition set forth in this
Section 7.11 not be satisfied on or before September 10, 1999 and Buyer shall
have failed to terminate this Agreement as provided in Section 10.1(c)(iii),
then such condition shall be deemed waived by Buyer.
7.12 Real Estate Matters. (a) Seller shall have executed and delivered to
-------------------
Buyer standard affidavits (and applicable supporting documentation) and/or
indemnification agreements, as the Title Company may reasonably require in order
to, with respect to each of the owner's and lender's title insurance policies on
each of the parcels of Owned Real Property and Leased Property that (a) omit all
exceptions with regard to (x) claims of mechanics, materialmen or laborers and
others entitled to claim a lien for work, services or materials furnished, (y)
rights of parties in possession, and (z) the nonpayment of corporate taxes, (b)
issue non-imputation
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endorsements, and (c) confirm that the owner of record of each parcel of Owned
Property is Commercial.
(b) The Buyer Surveys shall not disclose any easements, discrepancies
or conflicts in boundary lines, shortages in area or encroachments that would
have a Material Adverse Effect.
(c) Notwithstanding anything in this Agreement to the contrary, Buyer
agrees as follows with respect to Sections 7.12(a) and (b) above: (i) Buyer will
use its best efforts to complete such matters prior to September 30, 1999 and
(ii) Buyer will not seek to impose any obligation on the part of Seller to pay
any money or enter into any guaranty or other noncustomary indemnification
obligation.
ARTICLE VIII
CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE
----------------------------------------------------
Sellers' obligation to consummate the Contemplated Transactions is subject
to the satisfaction, at or prior to the Closing, of each of the following
conditions (any of which may be waived by Sellers, in whole or in part):
8.1 Accuracy of Representations. All of Buyer's representations and
---------------------------
warranties in this Agreement (considered collectively), and each of these
representations and warranties (considered individually), must have been true
and correct in all material respects as of the date of this Agreement, and must
be true and correct in all material respects as of the Closing Date as if made
on the Closing Date.
8.2 Buyer's Performance. All of the covenants and obligations that Buyer
-------------------
is required to perform or to comply with pursuant to this Agreement at or prior
to the Closing (considered collectively), and each of these covenants and
obligations (considered individually), must have been duly performed and
complied with in all material respects.
8.3 Opinion of Counsel. There shall have been delivered to Sellers an
------------------
opinion, dated the Closing Date, of Winthrop, Stimson, Putnam & Roberts counsel
to Buyer, in the form of Exhibit 8.3 hereto.
8.4 No Injunction. There must not be in effect any Legal Requirement or
-------------
any injunction or other Order that (a) prohibits the sale of the Shares or
Partnership Interests by Sellers to Buyer, and (b) has been adopted or issued,
or has otherwise become effective, since the date of this Agreement.
8.5 HSR Act Approval. The waiting periods applicable to the consummation
----------------
of the Contemplated Transactions under the HSR Act shall have expired or been
terminated.
8.6 Agreement Regarding Three Rivers. Commercial shall have entered into
--------------------------------
an agreement with an affiliate of Seller regarding trucking services
substantially on the terms set forth on Exhibit 7.8 hereto.
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<PAGE>
8.7 Agreement Regarding Molly Slag Operations. Commercial shall have
-----------------------------------------
entered into an agreement with an affiliate of Seller regarding the disposal of
molybdenum slag substantially on the terms set forth on Exhibit 7.9 hereto.
8.8 Delivery of Documents. The Buyer shall have delivered to the Sellers
---------------------
the documents referenced in Section 2.4(b).
ARTICLE IX
CERTAIN POST-CLOSING COVENANTS
------------------------------
9.1 Non-competition. As an inducement for Buyer to enter into the Purchase
---------------
Agreement, Sellers agree that, for a period of four (4) years after the Closing:
(a) Sellers will not, nor shall they permit the Dell Shearer Marital
Trust to, directly or indirectly, engage or invest in, own, manage, operate,
finance, control, or participate in the ownership, management, operation, or
control of, be employed by or associated with any business whose products or
activities compete in whole or in part with the current products or activities
of the Acquired Companies, in any of the counties listed on Schedule 9.1 within
the states of Pennsylvania, Ohio, West Virginia, New York and Maryland;
provided, that Sellers may purchase or otherwise acquire up to (but not more
than) five percent of any class of securities of any enterprise (but without
otherwise participating in the activities of such enterprise) if such securities
are listed on any national or regional securities exchange or have been
registered under Section 12(g) of the Securities Exchange Act of 1934. Sellers
agree that this covenant is reasonable with respect to its duration,
geographical area, and scope.
(b) Sellers will not, directly or indirectly, either for themselves
or any other Person, (i) induce or attempt to induce any employee of an Acquired
Company to leave the employ of such Acquired Company, (ii) employ, or otherwise
engage as an employee, independent contractor, or otherwise, any employee of an
Acquired Company, (iii) employ, or otherwise engage as an employee either of
Scott Turer or Rick Young for six months following the Closing or, if earlier,
until such time as the employment of Scott Turer or Rick Young, as the case may
be, has been terminated by the Acquired Companies, or (iv) induce or attempt to
induce any customer, supplier, licensee, or business relation of an Acquired
Company to cease doing business with such Acquired Company. This covenant shall
not prohibit Sellers from hiring any former employees of an Acquired Company
(except for Scott Turer and Rick Young) sixty (60) days following termination of
employment with such Acquired Company for any reason so long as Sellers did not
induce such employee to quit. A general solicitation of employment, such as a
newspaper advertisement, that is not directed towards employees of the Acquired
Companies will not be deemed to be a violation of this covenant.
(c) Sellers will not, directly or indirectly, either for themselves
or any other Person, solicit the business of any Person known to Sellers to be a
customer of an Acquired Company, whether or not Sellers had personal contact
with such Person, with respect to products or activities which compete with the
products or activities of an Acquired Company.
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(d) The activities described in Exhibits 7.8 and 7.9 will not be
violative of Sellers' non-compete obligations.
9.2 Confidentiality. Each of Sellers agrees for itself and their
---------------
respective Representatives and affiliates (and all such parties' respective
successors, assigns and Representatives) that from and after the Closing Date,
all Confidential or Proprietary Business Information (as defined below) which is
known to such parties shall be kept confidential by such parties. Each Seller
further agrees for itself and their respective Representatives and affiliates
(and all such parties' respective successors, assigns and Representatives) that
no such party will use (whether or not for monetary gain) or disclose to any
other party such Confidential or Proprietary Business Information. As used
herein, "Confidential or Proprietary Business Information" means all information
related to the businesses of the Acquired Companies which is known by any
Seller, or any of their affiliates or Representatives, other than such
information which (A) is, or becomes, generally available to the public other
than as a result of a breach of this Section 9.2 by any Seller, or any of or
Representative thereof, (B) is hereafter available on a non-confidential basis
to the party to whom such information was disclosed from a source that was, to
the knowledge of the receiving party, entitled to disclose the same or (C) is
compelled by law or a court order or decree to be disclosed by the party to whom
such information was disclosed; provided that, in the case of clause (C) the
receiving party shall use their reasonable efforts (at the expense of the Buyer)
to obtain a protective order or other reliable assurance that confidential
treatment will be accorded any such Confidential or Proprietary Business
Information which is compelled to be disclosed.
9.3 Termination of Commercial's S Corporation Status and Taxable Year. The
-----------------------------------------------------------------
Contemplated Transactions will cause Commercial to terminate its status as an S
corporation. Pursuant to Code Section 1362(e)(1), Commercial shall have two
short taxable years for the year that includes the Closing Date: an "S short
year" beginning April 1 of such year and ending the day before the Closing Date
and a "C short year" beginning on the Closing Date and ending on the next
succeeding close of Buyer's consolidated return taxable year. Accordingly, Buyer
shall allocate Tax items to Commercial's S short year and C short year pursuant
to normal Tax accounting rules (the "closing of the books method") on a basis
consistent with past accounting practice.
9.4 Certain Tax Assets and Liabilities. Notwithstanding anything to the
----------------------------------
contrary contained or implied in this Agreement, the Buyer and the Sellers agree
that: (i) Buyer shall cause Commercial to promptly pay to Joseph H. Shearer and
R. Scott Shearer, on behalf of the Sellers, an amount equal to any refund
received after the Closing by Commercial as a refund of capital stock Taxes
previously paid by Commercial for the years ended March 31, 1993, 1994 and 1995
as a result of the petition filed by Commercial with the Pennsylvania
Commonwealth Court seeking review of a Board of Finance and Revenue Decision
denying Commercial's claim for such refund, net of any tax cost incurred by
Commercial as a result of the receipt thereof; (ii) Sellers shall promptly pay
in full when due, and shall indemnify and hold the Buyer Indemnified Parties
harmless from and against any and all Damages (determined as provided in Section
11.5(c)) incurred by the Buyer Indemnified Parties in connection with, all
capital stock Taxes determined by the Commonwealth of Pennsylvania to be owed by
Commercial for the years ended March 31, 1996, 1997, 1998 and 1999 (including,
without limitation, all interest thereon and penalties with respect thereto or
subsequently refunded for the years ended March 31, 1996,
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1997, 1998 and 1999); and (iii) Buyer also shall cause Commercial to promptly
pay to Joseph H. Shearer and R. Scott Shearer, on behalf of the Shareholders, an
amount equal to any refund received after the Closing by Commercial of the real
estate taxes imposed upon certain of Commercial's properties located in Fayette
County, Pennsylvania (Tax Parcel 04-38-0001-368.18 acres in Bullskin Township;
Tax Parcel 04-36-0102-106.4 acres in Bullskin Township; and Tax Parcel 06-15-
0064-278.7 acres in Connellsville Township) as a result of appeals previously
filed by Commercial, net of any tax cost incurred by Commercial as a result of
the receipt thereof.
ARTICLE X
TERMINATION
-----------
10.1 Termination Events. This Agreement may, by notice given prior to or at
------------------
the Closing, be terminated:
(a) by Buyer if a material breach of any provision of this Agreement
has been committed by Sellers and such breach has not been waived by Buyer or
cured by Sellers;
(b) by Sellers if a material breach of any provision of this
Agreement has been committed by Buyer and such breach has not been waived by
Sellers or cured by Buyer;
(c) (i) by Buyer if any of the conditions in Article VII has not been
satisfied as of the Closing Date or if satisfaction of such a condition is or
becomes impossible (other than through the failure of Buyer to comply with its
obligations under this Agreement) and Buyer has not waived such condition on or
before the Closing Date; (ii) by Sellers, if any of the conditions in Article
VIII has not been satisfied of the Closing Date or if satisfaction of such a
condition is or becomes impossible (other than through the failure of Sellers to
comply with their obligations under this Agreement) and Sellers have not waived
such condition on or before the Closing Date; or (iii) on September 10, 1999, by
Buyer if the condition set forth in Section 7.11 has not been satisfied (other
than through the failure of Buyer to comply with its obligations under this
Agreement);
(d) by mutual consent of Buyer and Sellers;
(e) by either Buyer or Sellers if the Closing has not occurred (other
than through the failure of any party seeking to terminate this Agreement to
comply fully with its obligations under this Agreement) on or before the
Deadline Date. However, Buyer may, at its election, on or after September 25,
1999, extend the Deadline Date to not later than November 1, 1999 (the
"Extension") by delivering notice thereof at any time to the Sellers; provided,
however, that upon the later to occur of (i) September 30, 1999 and (ii) the
date upon which all of the conditions precedent to the Buyer's obligation to
close set forth in Article VII hereof (disregarding Section 7.10)
(collectively, the "Buyer's Conditions") have been fulfilled (or Sellers are
able and willing to fulfill them and have tendered performance on their part to
Buyer), the Extension shall terminate unless, within five (5) business days
thereafter, Buyer either deposits $7 million (the "Extension Deposit") into
escrow with an escrow agent reasonably satisfactory to Sellers and Buyer
pursuant to an escrow agreement in the form of Exhibit 10.1(e) attached hereto,
or
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delivers a letter of credit (the "Extension LOC") to the Sellers in the face
amount of $7 million payable to the Sellers as provided in (f) below. The
Sellers may, at their option, cause the Extension of the Deadline Date by
delivering notice thereof at any time to the Buyer; or
(f) by either Buyer or Sellers if the Closing has not occurred by
November 15, 1999.
(g) If (i) the Extension Deposit has been paid or the Extension LOC
has been delivered by the Buyer, (ii) the Closing does not occur on or prior to
the last day of the Extension, and (iii) as of the last day of the Extension all
of the Buyer's Conditions remain fulfilled, then the Sellers shall be entitled
to payment of the Extension Deposit or payment under the Extension LOC and to
retain such amount. In all other events, the Buyer shall be entitled to payment
of and to retain the Extension Deposit or to cancel the Extension LOC.
10.2 Effect of Termination. Each party's right of termination under
---------------------
Section 10.1 is in addition to any other rights it may have under this Agreement
or otherwise, and the exercise of a right of termination will not be an election
of remedies. If this Agreement is terminated pursuant to Section 10.1, all
further obligations of the parties under this Agreement will terminate, except
that the obligations in Article XI and Sections 12.1, 12.2 and 12.3 will
survive.
ARTICLE XI
INDEMNIFICATION; REMEDIES
-------------------------
11.1 Survival. Subject to Section 11.4, all representations, warranties,
--------
covenants, and obligations in this Agreement (including the Schedules hereto),
and any other certificate or document delivered pursuant to this Agreement will
survive the Closing.
11.2 Indemnification and Payment of Damages by Sellers. Subject to Sections
-------------------------------------------------
11.4-11.10 hereof, Sellers, jointly and severally with respect to Damages to the
extent of the Closing Escrow Amount, and severally with respect to all other
Damages, will indemnify and hold harmless Buyer, and Buyer's Representatives,
stockholders, controlling Persons, and affiliates (including, without
limitation, the Acquired Companies) (collectively, the "Buyer Indemnified
Persons") for, and will pay to such Buyer Indemnified Persons the amount of, any
loss, liability, claim, damage or expense (including costs of investigation and
defense and reasonable attorneys' fees), whether or not involving a third-party
claim (collectively, "Damages"), arising, directly or indirectly, from or in
connection with:
(a) any breach of any representation or warranty made by any Seller
in this Agreement or in any certificate or other document delivered by any such
Seller to Buyer pursuant to this Agreement;
(b) any breach by any Seller of any covenant or obligation of any
such Seller in this Agreement or in any certificate or other document delivered
by any such Seller to Buyer pursuant to this Agreement; and
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<PAGE>
(c) any and all Taxes measured or measurable, in whole or in part, by
income (net or gross), revenue, profit or other similar basis imposed on any
Seller or any affiliate of any Seller (including, without limitation, either of
the Acquired Companies ) for, or relating to, all periods ending on or before
the Closing Date, including, without limitation, any Taxes resulting from any
distribution by Commercial contemplated in Section 2.1(f) of this Agreement and
any liability to any third party under any Tax sharing or similar agreement or
arrangement, whether or not written; and
(d) the Release on or prior to the Closing Date of Regulated
Materials on, beneath or adjacent to the William/Walker Property and the
Wilson/Walker Property referred to on Schedule 3.14 hereto (together, the
"Walker Property"), including, without limitation, with respect to the
remediation thereof and the installation of pollution control equipment or other
equipment to bring such Property into compliance with Environmental Law;
provided that any such remediation or installation must be performed under the
direction and control of Sellers, subject to Buyer's approval which will not be
unreasonably withheld or delayed.
Notwithstanding anything in this Agreement to the contrary, the Trust
Seller shall be solely liable for Damages to the Buyer Indemnified Persons
resulting from any (i) breach of representation or warranty by the Trust Seller,
(ii) breach of any covenant or obligation by the Trust Seller, or (iii) any Tax
referred to in Section 11.2(c) relating to the Trust Seller. The Shareholders
and the Partnership Sellers hereby guaranty and act as sureties for any such
Damages. The Buyer Indemnified Persons shall not be required to exhaust their
remedies against the Trust Seller prior to collecting pursuant to such guaranty
and suretyship. The Trust Seller shall not be liable for (w) breach of
representation or warranty by the other Sellers, (x) breach of any covenant or
obligation by the other Sellers, (y) any Tax referred to in Section 11.2(c)
relating to the other Sellers, or (z) the matters referred to in Section
11.2(d).
For the avoidance of doubt, any obligations or liabilities of Sellers which
are several, rather than joint, pursuant to the terms of this Agreement shall be
apportioned among the Sellers pro rata in accordance with their respective
shares of the Purchase Price.
11.3 Indemnification and Payment of Damages by Buyer. Buyer will indemnify
-----------------------------------------------
and hold harmless Sellers and Sellers' Representatives (collectively, the
"Seller Indemnified Persons") and will pay to such Seller Indemnified Persons
the amount of any Damages arising, directly or indirectly, from or in connection
with:
(a) any breach of any representation or warranty made by Buyer in
this Agreement or in any certificate or other document delivered by Buyer to the
Sellers pursuant to this Agreement;
(b) any breach by Buyer of any covenant or obligation of Buyer in
this Agreement or in any certificate or other document delivered by Buyer to the
Sellers pursuant to this Agreement; and
(c) the Guarantees.
11.4 Time Limitations. (a) If the Closing occurs, Sellers will not have any
----------------
liability (for indemnification or otherwise) with respect to any representation
or warranty made by Sellers
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<PAGE>
hereunder, unless within 18 months of the Closing Date Buyer notifies Sellers of
a claim specifying the factual basis of that claim in reasonable detail to the
extent then known by Buyer; provided, however, that Sellers shall continue to
have liability (for indemnification and otherwise) indefinitely, with respect to
the representations and warranties of the Sellers contained in Sections 3.1, 3.2
and 3.3 of this Agreement.
(b) If the Closing occurs, Buyer will have no liability (for
indemnification or otherwise) with respect to any representation or warranty
made by Buyer hereunder, unless within 18 months of the Closing Date Sellers
notify Buyer of a claim specifying the factual basis of that claim in reasonable
detail to the extent then known by Sellers.
(c) If the Closing occurs, Sellers will have no liability (for
indemnification or otherwise) with respect to the matters referenced in Section
11.2(d) unless within five years of the Closing Date Buyer notifies Sellers of a
claim specifying the factual basis of that claim in reasonable detail to the
extent then known by Buyer.
11.5 Limitations on Indemnification. (a) Sellers will have no liability
------------------------------
(for indemnification or otherwise) with respect to matters described in Section
11.2(a) for the first $2,000,000 of Damages in the aggregate, which amount shall
constitute a deductible (the "General Deductible"). In addition, if a
representation or warranty is not breached due to the presence therein of the
phrase "Material Adverse Effect", such representation and warranty shall be
deemed to be breached, but Damages to the Buyer Indemnified Persons resulting
from such deemed breaches shall also be subject to an additional deductible of
$3,000,000 in the aggregate (the "MAE Deductible", and together with the General
Deductible, the "Deductibles"). Accordingly:
(i) Damages resulting from breaches of representations that are
not qualified by "Material Adverse Effect" or from breaches of
representations, which breaches have a Material Adverse Effect shall not be
recoverable by Buyer Indemnified Persons until, and then only to the extent
(subject to the Cap), the General Deductible is exceeded; and
(ii) Damages as to which the MAE Deductible applies shall count
first against the MAE Deductible and then against the General Deductible
(to the extent remaining), and shall then be recoverable to the extent in
excess of the combined amount of the General Deductible and the MAE
Deductible (i.e., a maximum of $5,000,000), subject to the Cap.
In no event shall Sellers collectively be liable hereunder for Damages
described in Section 11.2(a) in an aggregate amount more than $8,000,000 (the
"Cap") after giving effect to the Deductibles; provided, that, neither the
Deductibles nor the Cap shall apply with respect to claims made pursuant to
Section 11.2(a) that relate to breaches of Sections 3.1, 3.2, and 3.3.
(b) Sellers will have no liability (for indemnification or otherwise)
with respect to matters described in Section 11.2(d) for the first $250,000 of
Damages in the aggregate, which amount shall constitute a deductible with
respect to such matters. Sellers shall be responsible for the next $250,000 of
such Damages. Thereafter, Buyer shall have the option of retaining the
35
<PAGE>
Walker Property and releasing Sellers from any further indemnification liability
with respect thereto. If Buyer does not elect such option, then Sellers can
elect to (i) purchase the Walker Property from Buyer for an amount equal to the
price for which it was originally purchased by Commercial, or (ii) continue to
control and be responsible for the environmental remediation of the Walker
Property at Sellers' expense.
(c) The amount of any payment or reimbursement of Damages by the
indemnifying party shall be: (i) net of the present value of any tax benefits to
the Indemnified Person by reason of the facts and circumstances giving rise to
the indemnifying party's liability (after taking into consideration the tax
effect of the receipt by the Indemnified Person of the indemnification payment);
and (ii) net of any insurance proceeds actually received by the Indemnified
Person in connection with the facts giving rise to the right of indemnification
(after giving effect to an increase in the Indemnified Person's cost of
insurance as a result thereof). The parties agree to use commercially
reasonable efforts to make claims on and pursue recovery with respect to all
insurance on account of such matters.
(d) No indemnifying party hereunder shall be liable for the payment
of special or consequential Damages or Damages for lost profits that have been
suffered directly by an Indemnified Person; however, if special or consequential
Damages or Damages for lost profits have been asserted by a third party against
an Indemnified Person, the indemnifying party shall otherwise be liable
therefore under the provisions of this Article XI.
(e) Buyer hereby waives any right it may have to file a claim for
reimbursement or indemnity against Sellers under the terms of this Agreement
concerning any matter to which it is ultimately determined that Buyer (i) had
actual knowledge prior to the Closing of facts which clearly and obviously
constitute a breach by Sellers of a representation or warranty made under this
Agreement, (ii) has an actual understanding prior to the Closing that such facts
constitute a breach of representation or warranty and (iii) fails to disclose
such knowledge to Sellers prior to Closing.
11.6 Investigation; Waiver. Buyer acknowledges that, except for the
---------------------
representations and warranties of Sellers contained in or made pursuant to
Article III hereof, or in any certificate or schedule delivered pursuant to this
Agreement, neither the Sellers nor their respective Representatives: (i) will be
deemed to have made any representations, warranties or assurances of any kind,
and (ii) will have any liability or obligation to Buyer in respect of any oral
or written statement or assurance made to Buyer in connection with the
Contemplated Transactions including, but not limited to, any information
provided in any offering material prepared by Sellers' Representatives.
11.7 Procedures for Indemnification -- Third Party Claims. (a) Promptly
----------------------------------------------------
after receipt by an Indemnified Person under Section 11.2 or 11.3 of notice of
the commencement of any claim, action or proceeding (including, without
limitation, any notice relating to a tax audit) against it, or the assertion of
any claim by a third Person which the Indemnified Person has reason to believe
may result in a claim for indemnification hereunder (collectively,
"Proceedings"), such Indemnified Person will give notice to the indemnifying
party of such Proceeding, but the failure to notify the indemnifying party will
not relieve the indemnifying party of any liability that it may have to any
Indemnified Person, except to the extent that the
36
<PAGE>
indemnifying party demonstrates that the defense of such action is prejudiced by
the Indemnified Person's failure to give such notice.
(b) Subject to the immediately succeeding sentence, the indemnifying
party will be entitled to control any Proceeding for which indemnification is
sought hereunder. If the indemnifying party, within a reasonable time after
notice of any claim (but in no event to exceed twenty days), fails to take
control of such Proceeding, the Indemnified Person will (upon further notice to
the indemnifying party) have the right to undertake the defense, compromise or
settlement in connection with such Proceeding on behalf of and for the account
and risk of the indemnifying party. The party who is not undertaking the defense
in connection with a Proceeding, may, at its sole expense, participate in (but
not control) such defense.
(c) Anything in this Section 11.7 to the contrary notwithstanding,
the party who is undertaking the defense in connection with a Proceeding shall
not, without the written consent of the other party, which consent shall not be
unreasonably withheld or delayed, settle or compromise any claim or consent to
the entry of any judgment which does not include as an unconditional term
thereof the giving by the claimant or the plaintiff of an unconditional release
from liability of the non-controlling party in respect of such claim.
11.8 Procedure for Indemnification -- Other Claims. A claim for
---------------------------------------------
indemnification for any matter not involving a third-party claim may be asserted
by notice to the party from whom indemnification is sought.
11.9 Cooperation in Connection with Proceedings. The parties hereto agree
------------------------------------------
to cooperate with each other and to provide each other with all information and
documentation reasonably necessary to permit the defense in connection with any
and all Proceedings (including, without limitation tax audits) and to promptly
provide each other party with any and all notices that may be received by any of
them that could reasonably be expected to result in a claim for indemnification
under this Article XI.
11.10 Closing Escrow Amount. Buyer acknowledges and agrees that it shall be
---------------------
obligated to satisfy any Damages to which it is entitled under this Article XI
from the Closing Escrow Amount prior to proceeding against any other assets of
the Sellers; provided, however, that with respect to any Damages as to which the
Cap and the Deductibles do not apply, the Buyer shall not be obligated to first
satisfy such Damages from the Closing Escrow Amount and, with respect to such
Damages, in no way shall Buyer's recourse against the Sellers be limited by the
existence or amount of the Closing Escrow Amount.
ARTICLE XII
GENERAL PROVISIONS
------------------
12.1 Public Announcements. Any public announcement or similar publicity
--------------------
with respect to this Agreement or the Contemplated Transactions will be issued,
if at all, at such time and in such manner as Buyer and Sellers mutually shall
determine, other than customary post-Closing "tombstone" and similar
announcements. Unless consented to by Buyer or Sellers, as the case may be, in
advance or required by Legal Requirements, prior to the Closing Sellers and
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Buyer shall keep this Agreement strictly confidential and may not make any
disclosure of this Agreement to any third party. For the avoidance of doubt, the
parties acknowledge and agree that this Agreement and the Contemplated
Transactions shall be described and disclosed in a publicly available document
in connection with the offering of securities by the Buyer, provided that with
respect to any such offering prior to Closing, Buyer shall use reasonable
commercial efforts to keep information concerning Commercial, or CATS or the
Contemplated Transactions from being disseminated other than to a limited number
of "qualified institutional buyers" (as defined in Rule 144A under the
Securities Act of 1933, as amended).
12.2 Confidentiality. Until such time as a closing shall have occurred
---------------
hereunder, Buyer and Sellers shall comply with all of the terms and conditions
of that certain Confidentiality Agreement dated May 11, 1999 by and among US
Bancorp Piper Jaffray and the Buyer. From and after the Closing Date, the
provisions of Section 9.2 shall govern the obligations of the parties hereto
with respect to confidentiality.
12.3 Notices. All notices, consents, waivers, and other communications
-------
under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand (with written confirmation of receipt), (b)
sent by telecopier (with written confirmation of receipt), provided that a copy
is mailed by registered or certified mail, return receipt requested,-or (c) when
received by the addressee, if sent by a nationally recognized overnight delivery
service (receipt requested), in each case to the appropriate addresses and
telecopier numbers set forth below (or to such other addresses and telecopier
numbers as a party may designate by notice to the other parties):
Sellers:
Commercial Stone Co. Inc.
Attn: Scott Turer
2200 Springfield Pike
Connellsville, PA 15425
Joseph H. Shearer
c/o Commercial Stone
2200 Springfield Pike
Connellsville, PA 15425
R. Scott Shearer
c/o Commercial Stone
2200 Springfield Pike
Connellsville, PA 15425
With a copy to:
Reed Smith Shaw & McClay LLP
435 Sixth Avenue
Pittsburgh, PA 15219
Attention: David L. DeNinno
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Buyer:
U.S. Silica Company
P.O. Box 187
Berkeley Springs, WV 25411
Attention: President
With a copy to:
D. George Harris & Associates, Inc.
399 Park Avenue, Thirty-second Floor
New York, New York 10022
Attention: Donald G. Kilpatrick
With a copy to:
Winthrop, Stimson, Putnam & Roberts
One Battery Park Plaza
New York, New York 10004-1490
Attention: Kenneth E. Adelsberg
12.4 Jurisdiction; Service of Process. Each party irrevocably submits to
--------------------------------
the exclusive jurisdiction of (a) the Court of Common Pleas of Westmoreland
County, Pennsylvania, and (b) the United States District Court for the Western
District of Pennsylvania, for the purposes of any suit, action or other
proceeding arising out of this Agreement, any Ancillary Agreement or any
transaction contemplated hereby or thereby. Each party agrees to commence any
such action, suit or proceeding either in the United States District Court for
the Western District of Pennsylvania or if such suit, action or other proceeding
may not be brought in such court for jurisdictional reasons, in the Court of
Common Pleas of Westmoreland County, Pennsylvania. Each party further agrees
that service of any process, summons, notice or document by U.S. registered mail
to such party's respective address set forth above shall be effective service of
process for any action, suit or proceeding in Pennsylvania with respect to any
matters to which it has submitted to jurisdiction in this Section 12.4. Each
party irrevocably and unconditionally waives any objection to the laying of
venue of any action, suit or proceeding arising out of this Agreement, any
Ancillary Agreement or the Contemplated Transactions and thereby in (i) the
Court of Common Pleas of Westmoreland County, Pennsylvania, or (ii) the United
States District Court for the Western District of Pennsylvania, and hereby and
thereby further irrevocably and unconditionally waives and agrees not to plead
or claim in any such court that any such action, suit or proceeding brought in
any such court has been brought in an inconvenient forum.
12.5 Further Assurances; Tax Returns. The parties agree (a) to furnish upon
-------------------------------
request to each other such further information, (b) to execute and deliver to
each other such other documents, and (c) to do such other acts and things, all
as the other party may reasonably request for the purpose of carrying out the
intent of this Agreement and the documents referred to in this Agreement. The
parties further agree to cooperate with each other and to provide each other
with all information and documentation reasonably necessary (i) to permit the
preparation and
39
<PAGE>
filing of all federal, state, local, and other Tax returns and Tax elections
with respect to the Acquired Companies and (ii) to facilitate the timely refund
of the S-Corp Tax Deposit.
12.6 Waiver. The rights and remedies of the parties to this Agreement are
------
cumulative and not alternative. Neither the failure nor any delay by any party
in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege.
12.7 Entire Agreement and Modification. This Agreement supersedes all
---------------------------------
prior agreements, understandings, negotiations and discussions, whether oral or
written, between the parties with respect to its subject matter and constitutes
(along with the documents referred to in this Agreement) a complete and
exclusive statement of the terms of the agreement between the parties with
respect to its subject matter. This Agreement may not be modified except by a
written agreement executed by the party to be charged with the modification.
12.8 Assignments, Successors, and No Third-Party Rights. Neither party may
--------------------------------------------------
assign any of its rights or obligations under this Agreement without the prior
written consent of the other parties, except that Buyer may assign its rights
and obligations under this Agreement to one or more of its affiliates, for so
long as such entity remains an affiliate thereof, and Buyer or such affiliate(s)
may assign or grant a security interest in, all of its rights and/or obligations
under this Agreement (i) for collateral security purposes, to the Buyer's
lenders and/or investors as security for Buyer's or any such affiliate's
obligations to such lenders or investors (and such lenders or investors may
exercise remedies with respect to such assignment or security interest), and
(ii) at any time after the Closing, to a purchaser in connection with a sale of
the Acquired Companies or a sale of a substantial component of the Acquired
Companies. Notwithstanding the assignment of rights and obligations under this
Agreement pursuant to the provisions stated hereinabove, it is understood and
agreed that the assignor shall remain responsible for its obligations under this
Agreement and, in the case of a partial assignment, shall be the only party
entitled to enforce the rights and remedies which would otherwise be available
to an assignee of the Agreement. No such assignment shall in any way limit or
restrict the assignor's rights and remedies. Subject to the preceding sentence,
this Agreement will apply to, be binding in all respects upon, and inure to the
benefit of the successors and permitted assigns of the parties. Nothing
expressed or referred to in this Agreement will be construed to give any Person
other than the parties to this Agreement any legal or equitable right, remedy,
or claim under or with respect to this Agreement or any provision of this
Agreement. This Agreement and all of its provisions and conditions are for the
sole and exclusive benefit of the parties to this Agreement and their successors
and permitted assigns.
12.9 Severability. If any provision of this Agreement is held invalid or
------------
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
12.10 Article and Section Headings; Construction. The headings of Sections
------------------------------------------
in this Agreement are provided for convenience only and will not affect its
construction or
40
<PAGE>
interpretation. All references to "Article," "Articles,", "Section" or
"Sections" refer to the corresponding Article, Articles, Section or Sections of
this Agreement. All words used in this Agreement will be construed to be of such
gender or number as the circumstances require. Unless otherwise expressly
provided, the word "including" does not limit the preceding words or terms.
12.11 Time of Essence. With regard to all dates and time periods set forth
---------------
or referred to in this Agreement, time is of the essence.
12.12 Governing Law. This Agreement will be governed by the laws of the
-------------
Commonwealth of Pennsylvania without regard to conflicts of laws principles.
12.13 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
12.14 Sellers' Knowledge. As used in this Agreement, the term, "knowledge
------------------
of Sellers" or words of similar import mean the actual knowledge by Joseph H.
Shearer, R. Scott Shearer or Scott Turer of a fact, or the knowledge that Joseph
H. Shearer or R. Scott Shearer could reasonably be expected to have based upon
reasonable investigation and inquiry.
12.15 Retention of Records and Access to Information. For a period of ten
----------------------------------------------
(10) years after the Closing Date, the Buyer shall retain and preserve all
business, accounting, tax and other records of the Acquired Companies. Prior to
the destruction of any such records, Buyer shall notify Sellers, in writing, of
Buyer's intention to destroy the records and deliver to Sellers, at Sellers'
expense, all such records requested by Sellers. From and after the Closing date,
Buyer shall afford to Sellers access to said records. Any such access shall be
(i) scheduled and provided on a reasonable basis taking into account the
business requirements of the Buyer; and (ii) for any legal purpose, including,
without limitation, obtaining information necessary in conjunction with the
preparation of tax returns, preparing for a tax audit or other government
investigation or defending against a claim, complaint or action by Buyer or a
third party against Sellers.
12.16 Transaction Fees and Expenses. Each of the parties to this Agreement
-----------------------------
shall bear the fees and expenses incurred by it in connection with the
Contemplated Transactions, including, without limitation, brokers and finders
fees and expenses.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first written above.
Buyer:
US SILICA COMPANY Sellers:
By:/s/ SHAREHOLDERS:
---------------------
/s/ Joseph H. Shearer
-----------------------------------------
Joseph H. Shearer
41
<PAGE>
/s/ R. Scott Shearer
-----------------------------------------
R. Scott Shearer
COMMERCIAL AGGREGATES TRANSPORTATION
AND SALES, L.P.
By: CATS, Inc., General Partner:
By: /s/
---------------------------------------
Title: Pres.
-----------------------------------
By: JHS Family Partnership
By: /s/
--------------------------------------
General Partner
By: RSS Family Partnership
By: /s/
-------------------------------------
General Partner
By: The Dell H. Shearer Granchildren's Trust
By: /s/
-------------------------------------
Co-Trustee
By: /s/
-------------------------------------
Co-Trustee
42
<PAGE>
Exhibit 2.1(a)
FORM OF CLOSING ESCROW AGREEMENT
--------------------------------
This ESCROW AGREEMENT (this "Agreement"), dated as of this ____ day of
---------
__________ 1999 is made and entered into by and among MELLON BANK, N.A. (the
"Escrow Agent"), U.S. SILICA COMPANY, a Delaware corporation ("Buyer"), and
-----
JOSEPH H. SHEARER and R. SCOTT SHEARER (collectively, the "Shareholders"), and
------------
CATS, INC., a Pennsylvania corporation, the JHS FAMILY PARTNERSHIP, a
Pennsylvania limited partnership, and the RSS FAMILY PARTNERSHIP, a Pennsylvania
limited partnership (collectively, the "Partnership Sellers") and THE DELL H.
-------------------
SHEARER GRANDCHILDREN'S TRUST, a Pennsylvania trust (the "Trust Seller"; the
------------
Shareholders, the Partnership Sellers and the Trust Sellers being hereinafter
collectively referred to as the "Sellers" and each, individually, as a "Seller")
------- ------
pursuant to the terms of that certain Purchase Agreement dated as of the date
hereof (the "Purchase Agreement") by and among the Buyer and the Sellers.
------------------
In consideration of the mutual premises, obligations and agreements
contained herein, the parties, intending to be legally bound, do hereby agree as
follows:
1. The Escrow Agent acknowledges receipt of the sum of Eight Million
Dollars ($8,000,000.00) deposited by the Buyer (together with any interest
earned thereon and any interest earned on any reinvested funds, the "Closing
-------
Escrow Amount") and hereby accepts its appointment and agrees to act as Escrow
- -------------
Agent and to hold the Closing Escrow Amount and to disburse the Closing Escrow
Amount under the terms and conditions of this Agreement. The Escrow Agent
undertakes to perform only such duties as are expressly set forth herein.
2. (a) If, on the Release Date (as hereinafter defined), the Escrow
Agent shall not, have received a Buyer Demand (as hereinafter defined), the
Escrow Agent shall disburse to [NAME], as agent for the Sellers (the "Seller
------
Agent"), the Closing Escrow Amount on the Release Date. For purposes of this
- -----
Agreement, the term "Release Date" shall mean the [second business day following
------------
the eighteenth (18th) month from the date hereof].
(b) If, at any time after the date hereof up to and including the
Release Date, the Buyer shall file with the Escrow Agent a written and dated
demand (the "Buyer Demand") for the payment to the Buyer of all or a portion of
------------
the Closing Escrow Amount stating (i) that the Buyer is entitled to all or a
portion of such Closing Escrow Amount in satisfaction of a claim for
indemnification pursuant to Article 11 of the Purchase Agreement, which claim
shall be deemed to be against each of the Sellers, jointly and severally, unless
specifically stated otherwise, and (ii) that the Buyer has contemporaneously
delivered a copy of the Buyer Demand to the Seller Agent, the Escrow Agent shall
disburse to the Buyer the requested funds from the Closing Escrow Amount on the
fifteenth (15th) business day following the date of the Buyer Demand unless the
Seller Agent delivers an objection in writing (the "Seller Objection") to the
----------------
Escrow Agent (with a copy to the Buyer) prior to the close of business on the
tenth (10th) business day following the date of the Buyer Demand to the effect
that the Buyer is not so entitled, in which case no disbursement shall be made
by the Escrow Agent from the Closing Escrow Amount pursuant to the Buyer Demand
except in accordance with the terms and conditions hereof. The Escrow Agent
agrees to provide the Seller Agent with a copy of any Buyer Demand and to
<PAGE>
provide the Buyer with a copy of any Seller Objection, in each case within two
business days after receipt by the Escrow Agent thereof.
(c) At any time after the date of the Closing, the Escrow Agent may be
advised in writing by the Buyer and the Seller Agent to pay all or a portion of
the Closing Escrow Amount pursuant to a joint written instruction (the "Joint
-----
Instruction"), in which case the Escrow Agent shall pay the Closing Escrow
- -----------
Amount, or portion thereof, in accordance with the terms and in the manner set
forth in such Joint Instruction.
(d) If the Buyer and the Seller Agent are unable to resolve any
disagreement with respect to their rights to the payment of all or a portion of
the Closing Escrow Amount pursuant to this Section 2 within twenty (20) business
days after the date of a Seller Objection, the dispute shall be settled as
provided in Section 4 hereof.
(e) The Escrow Agent shall hold the Closing Escrow Amount until it is
required to disburse it pursuant to this Section 2 or as provided in Sections
3(c) or 4 hereof. Upon delivery of the entire Closing Escrow Amount by the
Escrow Agent pursuant to this Section 2 or as provided in Sections 3(c) or 4
hereof, this Escrow Agreement shall terminate. The date upon which such
termination occurs shall be the "Termination Date."
----------------
(f) The Seller Agent and the Buyer each agree that they will give to
each other the copies of any Buyer Demand or Seller Objection, as the case may
be, concurrently with the delivery thereof to the Escrow Agent.
(g) If any of the Closing Escrow Amount is withheld pursuant to the
terms of paragraph (b) of this Section 2, the parties agree to provide the
Escrow Agent with a Joint Instruction upon the resolution of any claim which
caused the withholding of funds and upon receipt of such Joint Instruction, the
Escrow Agent shall release such funds in accordance with such Joint Instruction.
3. (a) Pending disbursement of funds held by it hereunder, the Escrow
Agent shall keep the Closing Escrow Amount invested in FDIC insured certificates
of deposit, obligations of the United States federal government (or any agency
thereof) or money market accounts of the Escrow Agent at market rates, maturing
in each case in ninety (90) days or less (each a "Permitted Investment"). The
--------------------
Seller Agent shall direct the Escrow Agent as to which Permitted Investment(s)
the Escrowed Amount shall be invested.
(b) Any interest earned on the originally deposited Closing Escrow
Amount, as well as any interest earned on any reinvested funds, shall be held by
the Escrow Agent as, and shall be deemed to be, part of the Closing Escrow
Amount and shall be disbursed pursuant to the terms of Sections 2, 3(c) and 4
hereof.
(c) Except as provided below in this subparagraph (c), the [Buyer]
shall be responsible for any federal, state or local taxes and any other
assessments which may be imposed and payable with respect to the earnings on the
Closing Escrow Amount (collectively, "Taxes"). To cover the payment by [Buyer]
-----
of such Taxes, the Escrow Agent shall, not later than 30 days after the end of
each calendar year during the term of this Agreement, disburse to the [Buyer] an
amount of cash equal to (i) the earnings on the Closing Escrow Amount for such
calendar year
2
<PAGE>
multiplied by (ii) 45%. With respect to any earnings on the Closing Escrow
Amount as to which Taxes have not yet been paid as of the Termination Date, such
earnings shall be treated as taxable income to the party or parties to whom such
amounts are distributed and such party or parties shall be solely responsible
for any Taxes which may be imposed on such amounts. The Escrow Agent shall
deliver to the Buyer and each of the Sellers such forms as may be required by
law reporting such earnings as income of the Buyer or the Sellers, as the case
may be.
4. (a) Any controversy or claim arising out of or relating to this
Agreement or the rights of the Buyer or the Sellers to the payment of all or a
portion of the Closing Escrow Amount shall be settled in accordance with Section
12.4 of the Purchase Agreement. The Escrow Agent shall not be a party to any
such proceedings.
(b) Any portion of the Closing Escrow Amount being held pending
resolution of controversies or claims may also be disbursed in accordance with
the terms of a Joint Instruction.
5. (a) This Agreement expressly sets forth all the duties of the Escrow
Agent with respect to any and all matters pertinent hereto. No implied duties
or obligations shall be read into this Agreement against the Escrow Agent. The
Escrow Agent shall not be bound by the provisions of any agreement among the
other parties hereto except this Agreement.
(b) The Escrow Agent shall not be liable, except for its own gross
negligence or willful misconduct. The Sellers and the Buyer, jointly and
severally, shall indemnify and hold harmless the Escrow Agent (and any successor
Escrow Agent) from and against any and all losses, liabilities, claims, actions,
damages and expenses, including reasonable attorneys' fees and disbursements,
actually and reasonably incurred without gross negligence or bad faith on the
part of the Escrow Agent, arising out of and in connection with this Agreement.
Without limiting the foregoing, the Escrow Agent shall in no event be liable in
connection with its investment or reinvestment of any cash held by it hereunder
in good faith, in accordance with the terms hereof, including, without
limitation, any liability for any delays (not resulting from its own gross
negligence or willful misconduct) in the investment or reinvestment of the
Closing Escrow Amount, or any loss of interest incident to any such delays.
(c) The Escrow Agent shall be entitled to rely in good faith upon any
order, judgment, certification, demand, notice, instrument, arbitration award or
other writing delivered to it hereunder without being required to determine the
authenticity or the correctness of any fact stated therein or the propriety or
validity of the service thereof. The Escrow Agent may act in reliance upon any
instrument or signature believed by it in good faith to be genuine and may
assume that any person purporting to give notice or receipt or advice or make
any statement or execute any document in connection with the provisions hereof
has been duly authorized to do so.
(d) The Escrow Agent may act pursuant to the advice of counsel with
respect to any matter relating to this Agreement and shall not be liable for any
action taken or omitted in good faith in accordance with such advice.
3
<PAGE>
(e) The Escrow Agent does not have any interest in the Closing Escrow
Amount but is serving as escrow holder only and having only possession thereof.
Any payments of income from the Closing Escrow Amount shall be subject to
applicable withholding regulations then in force with respect to United States
taxes. The Sellers and the Buyer will provide the Escrow Agent with appropriate
W-9 forms for tax identification number certification. This paragraph and
paragraph (b) of this Section 5 shall survive notwithstanding termination of
this Agreement or the resignation of the Escrow Agent.
(f) The Escrow Agent shall not be called upon to advise any party as
to the wisdom in taking or refraining from taking any action with respect to any
amounts deposited hereunder.
(g) The Escrow Agent (and any successor Escrow Agent) may at any time
resign as such by delivering the Closing Escrow Amount to any successor Escrow
Agent jointly designated by the Seller Agent and the Buyer in writing, or to any
court of competent jurisdiction, whereupon the Escrow Agent shall be discharged
of and from any and all further obligations arising in connection with this
Agreement. The resignation of the Escrow Agent will take effect on the earlier
of (i) the appointment of a successor (including by a court of competent
jurisdiction) or (ii) the day which is thirty (30) days after the date of
delivery of its written notice of resignation to the other parties hereto. If
at that time the Escrow Agent has not received a designation of a successor
Escrow Agent, the Escrow Agent's sole responsibility after that time shall be to
safekeep the Closing Escrow Amount until receipt of a designation of successor
Escrow Agent pursuant to a Joint Instruction or a final order of a court of
competent jurisdiction.
(h) The Escrow Agent shall have no responsibility for the contents of
any writing of any third party contemplated herein as a means to resolve
disputes and may rely in good faith without any liability upon the contents
thereof.
(i) In the event of any disagreement between the Sellers and the
Buyer resulting in adverse claims or demands being made in connection with the
Closing Escrow Amount, or in the event that the Escrow Agent in good faith is in
doubt as to what action it should take hereunder, the Escrow Agent shall be
entitled to retain the Closing Escrow Amount until the Escrow Agent shall have
received (i) a Joint Instruction directing delivery of the Closing Escrow
Amount; or (ii) a final non-appealable order of a court of competent
jurisdiction directing the delivery of the Closing Escrow Amount.
(j) [The Escrow Agent to be paid from interest in account.]
6. Each Seller hereby appoints [NAME] as the Seller Agent, and [NAME]
hereby accepts such appointment, to act as such Seller's exclusive agent and
attorney-in-fact to act on its behalf in connection with, and to facilitate the
consummation of, the transactions contemplated by this Agreement. The Seller
Agent shall take, and each Seller agrees that the Seller Agent is irrevocably
authorized and empowered in the name and on behalf of each Seller to take, any
and all actions which the Seller Agent deems necessary or appropriate under this
Agreement to be taken for and on behalf of each Seller, as fully as if such
party was acting on his own behalf, which shall include, without limitation, the
power and authority to (i) accept notices hereunder on behalf of the Sellers, to
issue or determine not to issue, as the case may be, Seller Objections
4
<PAGE>
in response to Buyer Demands, (ii) agree to such amendments or modifications to
this Agreement as the Seller Agent, in his sole discretion, determines to be
desirable, (iii) execute and deliver such waivers and consents in connection
with this Agreement as the Seller Agent, in his sole discretion, may deem
necessary or desirable, (iii) collect and receive all moneys and other proceeds
and property payable to the Sellers pursuant to the terms of this Agreement;
(iv) enforce and protect the rights and interests of the Sellers or to refrain
from enforcing any right of the Seller, as the case may be, (v) settle or
compromise any claims asserted under this Agreement; and (vi) file and prosecute
appeals from any decision, judgment or award rendered in any such action,
proceeding or investigation as the Seller Agent, in his sole discretion, may
deem necessary or desirable.
7. Neither party may assign any of its rights or obligations under this
Agreement without the prior written consent of the other parties, except as
provided in Section 5 with respect to a resignation by the Escrow Agent and
except that Buyer may assign its rights and obligations under this Agreement to
one or more of its affiliates, for so long as such entity remains an affiliate
thereof, and Buyer or such affiliate(s) may assign or grant a security interest
in, all of its rights and/or obligations under this Agreement (i) for collateral
security purposes, to the Buyer's lenders and/or investors as security for
Buyer's or any such affiliate's obligations to such lenders or investors (and
such lenders or investors may exercise remedies with respect to such assignment
or security interest), and (ii) to a purchaser in connection with a sale of the
Acquired Companies (as defined in the Purchase Agreement) or a sale of a
substantial component of the Acquired Companies. Notwithstanding the assignment
of rights and obligations under this Agreement pursuant to the provisions stated
hereinabove, it is understood and agreed that the assignor shall remain
responsible for its obligations under this Agreement and, in the case of a
partial assignment, shall be the only party entitled to enforce the rights and
remedies which would otherwise be available to an assignee of the Agreement. No
such assignment shall in any way limit or restrict the assignor's rights and
remedies. Subject to the preceding sentence, this Agreement will apply to, be
binding in all respects upon, and inure to the benefit of the successors and
permitted assigns of the parties. Nothing expressed or referred to in this
Agreement will be construed to give any person other than the parties to this
Agreement any legal or equitable right, remedy, or claim under or with respect
to this Agreement or any provision of this Agreement. This Agreement and all of
its provisions and conditions are for the sole and exclusive benefit of the
parties to this Agreement and their successors and permitted assigns. This
Agreement will be governed by the laws of the Commonwealth of Pennsylvania
without regard to conflicts of laws principles.
8. This Agreement may not be modified except by a written agreement
executed by the party to be charged with the modification.
9. All notices, consents, waivers, and other communications under this
Agreement must be in writing and will be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt), (b) sent by telecopier
(with written confirmation of receipt), provided that a copy is mailed by
registered or certified mail, return receipt requested, or (c) when received by
the addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):
5
<PAGE>
To the Escrow Agent:
[To be provided]
To the Sellers or the Seller Agent:
[To be provided]
With a copy to:
Reed Smith Shaw & McClay LLP
435 Sixth Avenue
Pittsburgh, PA 15219
Attention: David L. DeNinno
Telecopier No.: 412-288-3063
To the Buyer:
U.S. Silica Company
P.O. Box 187
Berkeley Springs WV 25411
Attention: President
Telecopier No.: 304-258-3500
With a copy to:
D. George Harris & Associates, Inc.
399 Park Avenue, Thirty-second Floor
New York, New York 10022
Attention: Donald G. Kilpatrick
Telecopier No.: 212-207-6470
With a copy to:
Winthrop, Stimson, Putnam & Roberts
One Battery Park Plaza
New York, New York 10004-1490
Attention: Kenneth E. Adelsberg
Telecopier No.: 212-858-1500
10. This Agreement may be executed in one or more counterparts, each of
which will be deemed to be an original copy of this Agreement and all of which,
when taken together, will be deemed to constitute one and the same agreement.
11. The term "business day" as used in this Agreement shall mean any day
other than a Saturday, Sunday, or public holiday under the laws of the
Commonwealth of Pennsylvania.
6
<PAGE>
12. THE BUYER, THE SELLERS AND THE ESCROW AGENT SPECIFICALLY WAIVE THE
RIGHT TO TRIAL BY JURY IN RESOLVING ANY CLAIM OR COUNTERCLAIM RELATED TO THIS
AGREEMENT. The Buyer and the Sellers agree that any legal action or proceeding
brought against the Escrow Agent, or to which the Escrow Agent is joined,
relating to this Agreement or the Escrow Agent's performance hereunder, shall be
brought exclusively in any state or federal court sitting in Pennsylvania, and
the Buyer and the Sellers each waive, to the fullest extent permitted by law,
(a) any objection that any of them may respectively, now or hereafter, have to
the laying of the venue of any such action or proceeding brought in any such
court, and (b) any claim that any such action or proceeding brought in any such
court has been brought in an inconvenient forum.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
[THE ESCROW AGENT]
By:_____________________________________
Name:
Title:
U.S. SILICA COMPANY
By:_____________________________________
Name:
Title:
Sellers:
SHAREHOLDERS:
________________________________________
Joseph H. Shearer
________________________________________
R. Scott Shearer
7
<PAGE>
COMMERCIAL AGGREGATES
TRANSPORTATION AND SALES, L.P.
By: CATS, Inc., General Partner:
By:_____________________________________
Title:
By: JHS Family Partnership
By:_____________________________________
General Partner
By: RSS Family Partnership
By:_____________________________________
General Partner
By: The Dell H. Shearer Granchildren's
Trust
By:_____________________________________
Co-Trustee
By:_____________________________________
Co-Trustee
SELLER AGENT:
________________________________________
[NAME]
8
<PAGE>
Exhibit 2.4(a)(iv)
FORM OF CONSULTING AGREEMENT
THIS AGREEMENT is entered into as of ____________, 1999, between Commercial
Stone Co., Inc., a Pennsylvania corporation (the "Company"), and [Joseph H.
Shearer/R. Scott Shearer], a resident of the State of Pennsylvania ("Shearer").
WHEREAS, pursuant to a Purchase Agreement (the "Purchase Agreement") dated
as of ___________, 1999, U.S. Silica Company, a Delaware corporation ("U.S.
Silica"), has purchased all of the issued and outstanding shares of common stock
of the Company, including, without limitation, those owned by Shearer; and
WHEREAS, Shearer has extensive contacts, relationships and expertise in the
aggregates and asphalt businesses, which relationships and expertise are of
significant benefit to the Company in both the transition of the business to the
ownership of U.S. Silica and in the continued success of the aggregates and
asphalt businesses of the Company; and
WHEREAS, each of U.S. Silica and Shearer desires that Shearer continue his
involvement with the business of the Company and to contribute to its continued
success; and
WHEREAS, U.S. Silica and the Company desire that the Company engage Shearer
in a consulting role to advise the Company in his areas of expertise, and
Shearer desires to perform certain services as requested by the Company.
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein contained, the parties, intending to be legally bound, agree as follows:
1. Consulting Services. Subject to the terms and conditions stated
-------------------
herein, the Company agrees to engage Shearer during the Term (as defined herein)
to perform, as a consultant of the Company, such services as may be reasonably
requested of Shearer from time to time by the Board of Directors (the "Board")
or the President of the Company (the "President"), as the Board's designee, and
Shearer accepts such engagement. Such consulting services will be primarily
related to facilitating the transition of the ownership of the business of the
Company to U.S. Silica, in maintaining and acquiring business relationships and
in assisting with the day-today operations of the Company. Shearer agrees to
perform his duties in a diligent, trustworthy and efficient manner. Shearer
shall provide consulting services to the Company on a full time basis during the
Term, consistent with past practice (including vacation practices).
2. Term. The term of Shearer's engagement by the Company hereunder shall
----
commence as of the date hereof and shall continue through the close of business
on May 1, 2000, unless his engagement is sooner terminated as provided herein
(the "Term").
3. Compensation. (a) During the Term, the Company shall compensate
------------
Shearer at the rate of [CURRENT ANNUAL SALARY] per year, payable monthly in
arrears commencing on _____________, 1999 and thereafter on the first day of
each month during the Term, for the
<PAGE>
performance of consulting services hereunder (the "Consulting Fee"). The payment
of the Consulting Fee and the provision to Shearer the medical and life
insurance benefits as provided in paragraph 5 below shall be the only
compensation paid by the Company to Shearer for the performance of services
hereunder.
(b) If this Agreement is terminated by the Company without Cause (as
defined below) or by Shearer for Good Reason (as defined below), the Company
shall continue to pay Shearer, his legal representative, or his estate, for the
remainder of the Term, in accordance with subsection (a) above.
(c) If this Agreement is terminated by the Company for Cause, by
Shearer without Good Reason or as a result of the death or disability of
Shearer, the Company shall pay to Shearer and Shearer shall be entitled only to
that amount of the Consulting Fee that has been earned but not yet paid as of
the date of such termination as well as any unpaid business expenses owed to
Shearer pursuant to paragraph four (4) of this Agreement. For purposes hereof
"disability" shall mean any mental or physical disability of Shearer, which, in
the reasonable judgment of the Company, prevents Shearer from performing his
duties hereunder for an aggregate of two (2) months during the Term.
4. Business Expenses. The Company will reimburse Shearer for all
-----------------
reasonable out-of-pocket business expenses (including travel expenses incurred
travelling to and from Connellsville or other locations requested by the
Company, in each case, while on vacation) incurred by Shearer in performing his
duties hereunder during the Term; provided, that, Shearer shall promptly submit
such documentation therefor as may be requested by the Company, all in
accordance with the reimbursement policies of the Company then in effect.
5. Health and Life Insurance. During the Term hereof, the Company will
-------------------------
maintain, at the Company's expense, the existing health insurance coverage for
Shearer and Shearer's dependents and the existing life insurance coverage on
Shearer, all under the Company's existing plans.
6. Termination. (a) This Agreement may be terminated by either party,
-----------
with or without Cause, effective upon contemporaneous written or oral notice to
the other party.
(b) For purposes of this Agreement: "Cause" shall mean (i) any act of
personal dishonesty of Shearer at the expense of the Company; (ii) willful and
continued refusal to carry out a lawful and express directive from the Board or
the President after having had a reasonable time to do so; (iii) conviction of a
felony involving moral turpitude; (iv) failure by Shearer to perform specific
duties requested hereunder, which failure is not remedied in a reasonable period
of time after receipt of written notice from the Board or the President or (v)
material breach by Shearer of any provision of this Agreement; and "Good Reason"
shall mean a material breach by the Company of any provision of this Agreement.
7. Nondisclosure of Confidential Information. The provisions of Section
-----------------------------------------
9.2 of the Purchase Agreement are incorporated by reference herein as though
fully set forth herein and Shearer hereby agrees to comply with the obligations
of the Sellers as set forth therein.
2
<PAGE>
8. Independent Contractor. (a) In the performance of the services to be
----------------------
provided hereunder, Shearer shall act solely as an independent contractor, and
nothing herein contained or implied will at any time be construed so as to
create the relationship of employer and employee, partnership, principal and
agent, or joint venturer as between the Company and/or any of its affiliates, on
the one hand, and Shearer, on the other. Shearer shall have no authority to
bind the Company and/or any of its affiliates in any way and shall not represent
to any person that he has such authority.
(b) All taxes applicable to any amounts paid by the Company to Shearer
under this Agreement shall be paid by Shearer, and the Company shall not
withhold or pay any amount for federal, state or municipal income tax, social
security, unemployment or worker's compensation. Upon request by the Company,
Shearer will provide documentation evidencing compliance with all applicable
federal, state and municipal income tax and/or self-employment tax laws in
regard to amounts received under this Agreement.
9. Severability, Invalidity or Unenforceability. If any provision of
--------------------------------------------
this Agreement is held invalid or unenforceable by any court of competent
jurisdiction, the other provisions of this Agreement will remain in full force
and effect. Any provision of this Agreement held invalid or unenforceable only
in part or degree will remain in full force and effect to the extent not held
invalid or unenforceable.
10. Notices. All notices, consents, waivers, and other communications
-------
under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand (with written confirmation of receipt), (b)
sent by telecopier (with written confirmation of receipt), provided that a copy
is mailed by registered or certified mail, return receipt requested, or (c) when
received by the addressee, if sent by a nationally recognized overnight delivery
service (receipt requested), in each case to the appropriate addresses and
telecopier numbers set forth below (or to such other addresses and telecopier
numbers as a party may designate by notice to the other parties):
If to Shearer:
[Joseph H./R. Scott] Shearer
____________________________
____________________________
____________________________
Telecopier No.:
If to the Company:
c/o U.S. Silica Company
P.O. Box 187
Berkeley Springs WV 25411
Attention: President
Telecopier No.: 304-258-3500
With a copy to:
3
<PAGE>
D. George Harris & Associates, Inc.
399 Park Avenue, Thirty-second Floor
New York, New York 10022
Attention: Donald G. Kilpatrick
Telecopier No.: 212-207-6426
With a copy to:
Winthrop, Stimson, Putnam & Roberts
One Battery Park Plaza
New York, New York 10004-1490
Attention: Kenneth E. Adelsberg
Telecopier No.: 212-858-1500
11. Miscellaneous. (a) The rights and remedies of the parties to this
-------------
Agreement are cumulative and not alternative. Neither the failure nor any delay
by any party in exercising any right, power, or privilege under this Agreement
or the documents referred to in this Agreement will operate as a waiver of such
right, power, or privilege, and no single or partial exercise of any such right,
power, or privilege will preclude any other or further exercise of such right,
power, or privilege or the exercise of any other right, power, or privilege.
(b) The parties hereto agree that the obligations of Sections 7
through 11, inclusive, will survive the termination of this Agreement for any
reason.
(c) Buyer may assign its rights and obligations under this Agreement
to one or more of its affiliates, for so long as such entity remains an
affiliate thereof. Notwithstanding the assignment of rights and obligations
under this Agreement pursuant to the provisions stated hereinabove, it is
understood and agreed that the assignor shall remain responsible for its
obligations under this Agreement and, in the case of a partial assignment, shall
be the only party entitled to enforce the rights and remedies which would
otherwise be available to an assignee of the Agreement. No such assignment
shall in any way limit or restrict the assignor's rights and remedies and no
such assignment shall materially change the nature or scope of Shearer's duties
from those reasonably expected to be performed for the Company as it exists at
the time of this Agreement. The consulting services to be performed by Shearer
under this Agreement are personal in nature to the Company, and, therefore,
Shearer may not assign his rights under this Agreement. Any attempted
assignment by Shearer will be void and of no force or effect. Subject to the
preceding sentences, this Agreement will apply to, be binding in all respects
upon, and inure to the benefit of the successors and permitted assigns of the
parties. Nothing expressed or referred to in this Agreement will be construed
to give any Person other than the parties to this Agreement any legal or
equitable right, remedy, or claim under or with respect to this Agreement or any
provision of this Agreement. This Agreement and all of its provisions and
conditions are for the sole and exclusive benefit of the parties to this
Agreement and their successors and permitted assigns.
(d) This Agreement may not be modified except by a written agreement
executed by the party to be charged with the modification.
4
<PAGE>
(e) This Agreement may be executed in one or more counterparts, each
of which will be deemed to be an original copy of this Agreement and all of
which, when taken together, will be deemed to constitute one and the same
agreement.
(f) This Agreement supersedes all prior agreements, understandings,
negotiations and discussions, whether oral or written, between the parties with
respect to its subject matter and constitutes (along with the documents referred
to in this Agreement) a complete and exclusive statement of the terms of the
agreement between the parties with respect to its subject matter.
(g) This Agreement will be governed by the laws of the Commonwealth of
Pennsylvania without regard to conflicts of laws principles. Section 12.4 of
the Purchase Agreement with respect to jurisdiction and service of process is
incorporated herein by reference as though fully set forth in its entirety
herein. IN ANY ACTION OR PROCEEDING BROUGHT BEFORE ANY COURT RELATING TO THIS
AGREEMENT, THE COMPANY AND SHEARER SPECIFICALLY WAIVE ANY RIGHT TO A TRIAL BY
JURY.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the day and year first above written.
COMMERCIAL STONE CO., INC.
By:____________________________
Name:
Title:
_______________________________
[JOSEPH H./R. SCOTT] SHEARER
5
<PAGE>
Exhibit 2.4(b)(i)
AMOUNTS
See wire transfer instructions (to be provided).
<PAGE>
Exhibit 3.20
AGGREGATE RESERVES
See Schedule 3.20.
<PAGE>
Exhibit _____
August 11, 1999
U.S. Silica Company
Route 522 North
P.O. Box 187
Berkeley Springs, WV 25411
Attention of Richard E. Goodell
Gary E. Bockrath
Project Rock
$250,000,000 Senior Secured Credit Facilities
$150,000,000 Senior Subordinated Facility
Commitment Letter
-----------------------------------------------
Ladies and Gentlemen:
You have advised The Chase Manhattan Bank ("Chase"), Chase Securities Inc.
-----
("CSI"), Banque Nationale de Paris ("BNP") and BNP Capital Markets, LLC
--- ---
("BNPCM") that (a) pursuant to a Purchase Agreement to be entered into among (i)
-----
U.S. Silica Company, a Delaware corporation (the "Borrower"), in which Chase
--------
Capital Partners and D. George Harris & Associates Company, Inc. (together, the
"Sponsors") together own a majority indirect equity interest, and (ii) CATS,
--------
Inc., a Pennsylvania corporation, JHS Family Partnership, a Pennsylvania limited
partnership, RSS Family Partnership, a Pennsylvania limited Partnership, the
Dell H. Shearer Grandchildren's Trust, Joseph H. Shearer and R. Scott Shearer
(collectively, the "Sellers"), the Borrower will effect the Acquisitions (such
-------
term and each other capitalized term used but not defined herein having the
meanings assigned to them in the Term Sheets (as defined below)) and (b) the
Borrower will repay the Existing Indebtedness. You have further advised Chase,
CSI, BNPCM and BNP that, in connection with the Transactions, (a) the Borrower
will obtain the Senior Facilities (as defined in the Summary of Principal Terms
and Conditions attached hereto as Exhibit A (the "Senior Facilities Term
----------------------
Sheet")) and (b) the Borrower will either (i) issue not less than $150,000,000
- -----
in aggregate principal amount of its senior subordinated notes (the "Senior
------
Subordinated Notes") in a public offering or in a Rule 144A or other private
- ------------------
placement or (ii) if the Borrower is unable to issue the Senior Subordinated
Notes on or prior to the Closing Date, borrow not less than $150,000,000 in
senior subordinated loans from one or more lenders under the Senior Subordinated
Facility (as defined in the Summary of Principal Terms and Conditions attached
hereto as Exhibit B (the "Senior Subordinated Facility Term Sheet" and, together
---------------------------------------
with the Senior Facilities Term Sheet, the
<PAGE>
"Term Sheets")). The Senior Facilities and the Senior Subordinated Facility are
-----------
collectively referred to herein as the "Facilities".
----------
In connection with the Transactions, (a) Chase is pleased to advise you of
(i) its commitment to provide $150,000,000 of the Senior Facilities, upon the
terms and subject to the conditions set forth or referred to in this Commitment
Letter and in the Senior Facilities Term Sheet, and (ii) its commitment to
provide $100,000,000 of the Senior Subordinated Facility, upon the terms and
subject to the conditions set forth or referred to in this Commitment Letter and
the Senior Subordinated Facility Term Sheet, and (b) BNP is pleased to advise
you of (i) its commitment to provide $100,000,000 of the Senior Facilities, upon
the terms and subject to the conditions set forth or referred to in this
Commitment Letter and in the Senior Facilities Term Sheet, and (ii) its
commitment to provide $50,000,000 of the Senior Subordinated Facility, upon the
terms and subject to the conditions set forth or referred to in this Commitment
Letter and in the Senior Subordinated Facility Term Sheet. You hereby appoint
CSI to act, and CSI hereby agrees to act, as sole and exclusive advisor, book
manager, lead arranger, syndication agent and documentation agent for the Senior
Facilities and the Senior Subordinated Facility, on the terms and subject to the
conditions set forth or referred to in this Commitment Letter and in the Term
Sheets.
It is understood and agreed that (a) BNP will act as sole and exclusive
administrative agent and collateral agent for the Facilities and after the
Closing Date will, in such capacities, perform the duties customarily associated
with such roles and (b) no additional agents, co-agents, book managers,
arrangers or co-arrangers will be appointed and no other titles awarded in
connection with the Facilities without the approval of Chase and CSI.
Chase and BNP reserve the right, prior to or after the execution of
definitive documentation for the Facilities, to syndicate all or a portion of
their commitments hereunder to one or more financial institutions, reasonably
acceptable to you and CSI, that will become parties to such definitive
documentation pursuant to syndication to be managed by CSI (the financial
institutions becoming parties to such definitive documentation being
collectively referred to as the "Lenders"). It is understood and agreed that
-------
pursuant to the syndication of the Senior Facilities, (a) until the amount of
Chase's commitment in respect of the Senior Facilities has been reduced to
$100,000,000 all commitments to the Senior Facilities received from other
Lenders will reduce Chase's commitment in respect of the Senior Facilities and
(b) after the amount of Chase's commitment in respect of the Senior Facilities
has been reduced to $100,000,000, all commitments to the Senior Facilities
received from other Lenders will reduce Chase's and BNP's commitments in respect
of the Senior Facilities in equal amounts. It is further understood and agreed
that pursuant to the syndication of the Senior Subordinated Facility, (a) until
the amount of Chase's commitment in respect of the Senior Subordinated Facility
has been reduced to $50,000,000, all commitments to the Senior Subordinated
Facility received from other Lenders will reduce Chase's commitment in respect
of the Senior Subordinated Facility and (b) after the amount of Chase's
commitment in respect of the Senior Subordinated Facility has been reduced to
$50,000,000, all commitments to the Senior Subordinated Facility received from
other Lenders will reduce Chase's and BNP's commitments in respect of the Senior
Subordinated Facility in equal amounts. It is also understood and agreed that,
until CSI notifies BNP that the syndications of the Facilities have been
completed, BNP will not assign any portion of its commitments or loans in
respect of the Facilities other than pursuant
2
<PAGE>
to the syndications to be managed by CSI pursuant to this Commitment Letter. You
understand that CSI intends to commence syndication efforts promptly, and you
agree actively to assist CSI in completing timely and orderly syndications
satisfactory to CSI. Such assistance shall include (a) your using commercially
reasonable efforts to ensure that the syndication efforts benefit materially
from your existing lending relationships and the existing lending relationships
of the Sponsors, Holdings and the Targets, (b) direct contact during the
syndication between senior management, representatives and advisors of the
Sponsors, Holdings, the Targets and you, on the one hand, and the proposed
Lenders, on the other hand, (c) assistance (including the use of commercially
reasonable efforts to cause the Sponsors, Holdings, the Targets, the Sellers and
your and their respective affiliates and advisors to assist) in the preparation
of a Confidential Information Memorandum for each of the Facilities and other
marketing materials to be used in connection with the syndications and (d) the
hosting, with CSI, of one or more meetings of prospective Lenders.
Chase and CSI shall be entitled, after consultation with you, to change the
pricing, terms and structure of the Facilities if the syndications have not been
completed and if Chase and CSI determine that such changes are advisable in
order to ensure a successful syndication of any of the Facilities, provided that
--------
(a) the aggregate amount of the Facilities remains unchanged and (b) the
interest rate on each of the Facilities and the commitment fees will not
increase by more than 75 basis points per annum.
It is understood and agreed that CSI will, after consultation with you,
manage all aspects of the syndications, including selection of Lenders from a
list of Lenders reasonably acceptable to you, determination of when CSI will
approach potential Lenders and the time of acceptance of the Lenders, any naming
rights and the final allocations of the commitments among the Lenders. It is
also understood and agreed that the amount and distribution of fees among the
Lenders will be at CSI's discretion. To assist CSI in its syndication efforts,
you agree promptly to prepare and provide (and to use commercially reasonable
efforts to cause the Sellers and the Targets to provide) to CSI and Chase all
information with respect to Holdings and its subsidiaries, the Acquired
Businesses and their subsidiaries, the Transactions and the other transactions
contemplated hereby, including all financial information and projections (the
"Projections"), as CSI or Chase may reasonably request in connection with the
- ------------
arrangement and syndication of the Facilities. You hereby represent and
covenant that (a) all information other than the Projections (the "Information")
-----------
that has been or will be made available to Chase or CSI by or on behalf of you
or any of your authorized representatives, when taken as a whole, is or will be,
when furnished, complete and correct in all material respects and does not or
will not, when furnished, contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
contained therein not materially misleading in light of the circumstances under
which such statements are made and (b) the Projections that have been or will be
made available to Chase or CSI by or on behalf of you or any of your authorized
representatives have been or will be prepared in good faith based upon
assumptions that are believed by you to be reasonable at the time made and at
the time the related Projections are made available to Chase or CSI, it being
understood the Projections do not constitute a guarantee of actual performance.
You agree that if, at any time from and including the date hereof until the
closing of the Facilities, any of the representations in the preceding sentence
would be incorrect if the Information and Projections were being furnished, and
such representations were being made, at such time, then you will promptly
supplement the Information and the Projections, to the extent
3
<PAGE>
of information known to you, so that such representations will be correct under
those circumstances. In arranging the Facilities, including the syndication of
the Facilities, Chase and CSI will be entitled to use and rely primarily on the
Information and the Projections without responsibility for independent
verification thereof.
As consideration for Chase's and BNP's commitments hereunder and CSI's
agreement to structure, arrange and syndicate the Facilities and to provide
advisory services in connection therewith, you agree to pay to Chase and BNP,
the fees as set forth in the Terms Sheets and in the Fee Letter dated the date
hereof and delivered herewith with respect to the Facilities (the "Fee Letter").
----------
Once paid, such fees shall not be refundable under any circumstances.
Chase's and BNP's commitments hereunder are subject to (a) Chase's
completion of, and satisfaction in all respects with, its ongoing due diligence
investigation of the Acquired Businesses and their subsidiaries with respect to
legal matters (including but not limited to tax, environmental and employee
benefit matters), (b) Chase's not having discovered or otherwise becoming aware
of information not previously disclosed to Chase that is materially inconsistent
with information provided to Chase prior to the date hereof with respect to the
business, results of operations, assets, financial condition or prospects of
Holdings and its subsidiaries or the Acquired Businesses and their subsidiaries,
(c) there not having occurred any event, condition or circumstance that has had
or is reasonably likely to have a material adverse effect on the business,
results of operations, assets or financial condition of (i) Holdings and its
subsidiaries since December 31, 1998, or (ii) the Acquired Businesses and their
subsidiaries since March 31, 1999, in each case taken as a whole, (d) there not
having occurred and being continuing a material disruption of or material
adverse change in financial, banking or capital market (including, without
limitation, high-yield market) conditions that, in Chase's reasonable judgment,
could materially impair the syndication of any Facility or the issuance of the
Senior Subordinated Notes, (e) the negotiation, execution and delivery of
definitive documentation (similar to the Existing Credit Agreement and documents
related thereto (subject to such additions, deletions and other modifications as
are reasonably requested by Chase and CSI, including to reflect the Transactions
and the changes in the credit profile and capital structure of Holdings and its
subsidiaries after giving effect to the Transactions), and not inconsistent with
the terms set forth herein, including but not limited to the terms set forth in
the Term Sheets) with respect to the Facilities satisfactory to Chase and its
counsel and (f) the other conditions set forth in the Term Sheets. Those
matters that are not covered by or made clear under the provisions hereof and of
the Term Sheets are subject to the approval and agreement of Chase, CSI and you.
You agree that, in the event loans are made under the Senior Subordinated
Facility, you will cause to be deposited into escrow on the Closing Date the
Warrants referred to in the Warrant Letter of even date herewith among Chase,
BNP, BNPCM, CSI and you (the "Warrant Letter").
--------------
You agree to engage one or more investment banks (collectively, the
"Investment Bank") reasonably satisfactory to the Lenders to publicly sell or
- ----------------
privately place unsecured debt securities of the Borrower (the "Securities")
----------
that will provide gross proceeds in an amount equal to the proposed amount of
the Senior Subordinated Facility or, once the Senior Subordinated Facility has
been funded, in an amount sufficient to repay all or any portion of the
principal amount then
4
<PAGE>
outstanding under the Senior Subordinated Facility. You further agree, subject
to the remainder of this paragraph, to take actions reasonably necessary or
desirable so that the Investment Bank can publicly sell or privately place the
Securities. Upon notice by the Investment Bank (a "Securities Demand") that in
-----------------
its opinion market conditions are such that the conditions specified in clauses
(i) and (iii) of the following proviso can be satisfied, at any time and from
time to time prior to the first anniversary of the Closing Date if all loans
under the Senior Subordinated Facility shall not have been made or repaid in
full, the Borrower will cause the issuance and sale of Securities upon such
terms and conditions as specified in the Securities Demand (it being understood
that there may be more than one Securities Demand), provided that (i) the
--------
interest rate (whether floating or fixed) shall be determined by the Investment
Bank in light of the then-prevailing market conditions but in no event shall the
effective yield (excluding any effective yield on the Warrants) on the
Securities exceed the greater of (x) 15.0% per annum and (y) the Treasury Rate
(as such term is defined in the Senior Subordinated Facility Term Sheet) plus
900 basis points; (ii) the Investment Bank and the Borrower shall determine
whether the Securities shall be issued through a public offering or a private
placement; (iii) the maturity of any Securities shall not be earlier than the
date that is ten years after the Closing Date; (iv) the Securities shall be
issued pursuant to an indenture or other governing document in the form
negotiated by the Borrower and the Investment Bank, which shall contain such
terms, conditions and covenants as are typical and customary for similar
financings and as are reasonably satisfactory in all respects to the Investment
Bank and its counsel and the Borrower and its counsel; and (v) all other
arrangements with respect to the Securities shall be reasonably satisfactory in
all respects to the Investment Bank and the Borrower in light of the then-
prevailing market conditions.
By executing this Commitment Letter, you agree (a) to indemnify and hold
harmless CSI, Chase, BNP, BNPCM and their respective officers, directors,
employees, affiliates, agents and controlling persons from and against any and
all losses, claims, damages, liabilities and expenses, joint or several, to
which any such persons may become subject arising out of or in connection with
any claim, litigation, investigation or proceeding relating to this Commitment
Letter, the Fee Letter, the Warrant Letter, the Term Sheets, the Transactions,
the Facilities or any related transaction, regardless of whether any of such
indemnified parties is a party thereto, and to reimburse each of such
indemnified parties upon demand for any reasonable legal or other expenses
incurred in connection with investigating or defending any of the foregoing,
provided that the foregoing indemnity will not, as to any indemnified party,
- --------
apply to losses, claims, damages, liabilities or related expenses to the extent
they are found in a final judgment of a court to have resulted from the willful
misconduct or gross negligence of such indemnified party, and (b) to reimburse
CSI, Chase, BNPCM and BNP from time to time, upon presentation of a summary
statement, for all reasonable out-of-pocket expenses (including but not limited
to reasonable out-of-pocket expenses of Chase's due diligence investigation,
reasonable consultants' fees, syndication expenses, travel expenses and
reasonable fees, disbursements and other charges of counsel) incurred in
connection with the Facilities and the preparation of this Commitment Letter,
the Term Sheets, the Fee Letter, the Warrant Letter, the definitive
documentation for the Facilities and any security arrangements in connection
therewith. Notwithstanding any other provision of this Commitment Letter, no
indemnified party shall be liable for any damages arising from the use by others
of information or other materials obtained through electronic,
telecommunications or other information transmission systems (other than damages
to the extent they are found in a final judgment of a court to have resulted
from the
5
<PAGE>
willful misconduct or gross negligence of such indemnified party) or for any
special, indirect, consequential or punitive damages in connection with its
activities related to the Facilities. Your indemnification and reimbursement
obligations under this paragraph with respect to any of the Facilities shall be
superseded by your indemnification and reimbursement obligations under the
definitive documentation for such Facility upon execution of such documentation.
You acknowledge that Chase, BNP, BNPCM and CSI may be providing debt
financing, equity capital or other services (including financial advisory
services) to other companies in respect of which you may have conflicting
interests regarding the transactions described herein and otherwise. Neither
Chase, BNP, BNPCM nor CSI will use confidential information obtained from you by
virtue of the transactions contemplated by this Commitment Letter or its other
relationships with you in connection with the performance by Chase, BNP, BNPCM
or CSI of services for other companies, and neither Chase, BNP, BNPCM nor CSI
will furnish any such information to other companies. You also acknowledge that
neither Chase, BNP, BNPCM nor CSI has any obligation to use in connection with
the transactions contemplated by this Commitment Letter, or to furnish to you,
confidential information obtained by Chase, BNP, BNPCM or CSI from other
companies.
This Commitment Letter and Chase's and BNP's commitments hereunder shall
not be assignable by you without the prior written consent of Chase and BNP, and
any attempted assignment without such consent shall be void. This Commitment
Letter may not be amended or any provisions hereof waived or modified except by
an instrument in writing signed by Chase, BNP, BNPCM, CSI and you. This
Commitment Letter may be executed in any number of counterparts, each of which
shall be an original and all of which, when taken together, shall constitute one
agreement. Delivery of an executed counterpart of a signature page of this
Commitment Letter by facsimile transmission shall be effective as delivery of a
manually executed counterpart of this Commitment Letter. This Commitment Letter
is intended to be solely for the benefit of the parties hereto and is not
intended to confer any benefits upon, or create any rights in favor of, any
person other than the parties hereto. This Commitment Letter shall be governed
by, and construed in accordance with, the laws of the State of New York.
You agree that you will not disclose this Commitment Letter, the Term
Sheets, the Fee Letter, the Warrant Letter, the contents of any of the foregoing
or the activities of Chase, BNP, BNPCM or CSI pursuant hereto or thereto to any
person without the prior written approval of Chase, except that you may disclose
(a) this Commitment Letter, the Term Sheets, the Fee Letter, the Warrant Letter
and the contents hereof and thereof (i) to the Sponsors and your and their
respective officers, employees, attorneys, accountants and advisors on a
confidential and need-to-know basis and (ii) as required by applicable law or
compulsory legal process and (b) this Commitment Letter, the Term Sheets, the
Warrant Letter and the contents hereof and thereof (but not the Fee Letter or
the contents thereof) to the Sellers, the Targets and their respective
attorneys, accountants and advisors, in each case in connection with the
Transactions and on a confidential and need-to-know basis.
Please indicate your acceptance of the terms hereof and of the Fee Letter,
the Advisory and Arrangement Letter dated the date hereof and delivered
herewith, the Warrant Letter, the Sponsor Letter dated the date hereof among the
Sponsors, CSI and Chase and the Engagement Letter dated the date hereof between
CSI, BNPCM and you (collectively, the "Financing
---------
6
<PAGE>
Documents") by signing in the appropriate space below and in each other
- ---------
Financing Document and returning to Chase the enclosed duplicate originals (or
facsimiles) of each Financing Document not later than 2:00 p.m., New York City
time, on August 12, 1999. Chase's and BNP's commitments hereunder will expire at
such time in the event that Chase has not received such executed duplicate
originals (or facsimiles) in accordance with the immediately preceding sentence.
In the event that the initial borrowing in respect of the Senior Facilities does
not occur on or before October 31, 1999, then this Commitment Letter and Chase's
and BNP's commitments hereunder shall automatically terminate unless Chase, BNP,
BNPCM and CSI shall, in their reasonable discretion, agree to an extension. The
compensation, reimbursement, indemnification and confidentiality provisions
contained herein and in the Fee Letter shall remain in full force and effect
regardless of whether definitive financing documentation shall be executed and
delivered and notwithstanding the termination of this Commitment Letter or
Chase's and BNP's commitments hereunder.
Chase, BNP, BNPCM and CSI are pleased to have been given the opportunity to
assist you in connection with the financing for the Transactions.
Very truly yours,
THE CHASE MANHATTAN BANK
By /s/ D. Davey
-----------------------
Name: D. Davey
Title: V.P.
CHASE SECURITIES INC.
By /s/ J. Blumin
-----------------------
Name: J. Blumin
Title: Vice President
BANQUE NATIONALE DE PARIS
By_______________________
Name:
Title:
By_______________________
Name:
Title:
7
<PAGE>
BNP CAPITAL MARKETS, LLC
By_______________________
Name:
Title:
By_______________________
Name:
Title:
8
<PAGE>
Chase, BNP, BNPCM and CSI are pleased to have been given the opportunity to
assist you in connection with the financing for the Transactions.
Very truly yours,
THE CHASE MANHATTAN BANK
By_______________________
Name:
Title:
CHASE SECURITIES INC.
By_______________________
Name:
Title:
BANQUE NATIONALE DE PARIS
By /s/ Richard Cushing
-----------------------
Name:
Title: Director
By /s/ Paul Barnes
-----------------------
Name: Paul Barnes
Title: AVP
BNP CAPITAL MARKETS, LLC
By /s/ Richard Cushing
-----------------------
Name:
Title: Director
By /s/ Paul Barnes
-----------------------
Name: Paul Barnes
Title: AVP
9
<PAGE>
Accepted and agreed to as of
the date first above written.
U.S. SILICA COMPANY
By /s/
-------------------------
Name:
Title:
10
<PAGE>
CONFIDENTIAL EXHIBIT A
August 11, 1999
Project Rock
$250,000,000 Senior Secured Credit Facilities
Summary of Principal Terms and Conditions
-----------------------------------------
Borrower: U.S. Silica Company, a Delaware corporation (the
- -------- "Borrower") that is a direct, wholly owned
--------
subsidiary of USS Intermediate Holdco, Inc., a
Delaware corporation ("Holdings"), in which Chase
--------
Capital Partners and D. George Harris & Associates
Company, Inc. (together, the "Sponsors") together
--------
own a majority indirect equity interest.
Acquisitions and Other Pursuant to a Purchase Agreement (the "Purchase
- ---------------------- --------
Transactions: Agreement") to be entered into among (a) CATS,
- ------------ ---------
Inc., a Pennsylvania corporation, JHS Family
Partnership, a Pennsylvania limited partnership,
RSS Family Partnership, a Pennsylvania limited
partnership, the Dell H. Shearer Grandchildren's
Trust, Joseph H. Shearer and R. Scott Shearer
(collectively, the "Sellers") and (b) the
-------
Borrower, the Borrower will acquire (the
"Acquisitions") from the Sellers (i) all the
------------
outstanding capital stock of Commercial Stone Co.
Inc., a Pennsylvania corporation ("CSC"), (ii) all
---
the outstanding partnership interests in
Commercial Aggregates Transportation and Sales,
L.P., a Pennsylvania limited partnership ("CATS"),
----
and (iii) certain real property (collectively with
CSC and CATS, the "Acquired Businesses") specified
-------------------
in the Purchase Agreement, for cash consideration
payable to the Sellers (the "Purchase Price") in
--------------
the aggregate amount of $140,000,000 (subject to
adjustment as provided in the Purchase Agreement).
In connection with the Acquisitions, (a) the
Borrower will obtain the senior secured credit
facilities (collectively, the "Senior Facilities")
-----------------
described below under the caption "Senior
------
Facilities", (b) the Borrower will either (i)
----------
issue not less than $150,000,000 in aggregate
principal amount of its senior subordinated notes
(the "Senior Subordinated Notes") in a public
-------------------------
offering or in a Rule 144A or other private
placement or (ii) if the Borrower is
<PAGE>
unable to issue the Senior Subordinated Notes
prior to the date on which the Acquisitions are
consummated (the "Closing Date"), borrow not less
------------
than $150,000,000 in senior subordinated loans
from one or more lenders under a new senior
subordinated credit facility (the "Senior
------
Subordinated Facility" and, collectively with the
---------------------
Senior Facilities, the "Facilities"), (c) all
----------
existing indebtedness of the Borrower and its
subsidiaries (other than (i) certain indebtedness
of the Borrower incurred in connection with the
acquisition of certain assets of Nicks Silica
Company in an aggregate principal amount not to
exceed $1,600,000, (i) certain capital leases in
an aggregate principal amount not to exceed
$200,000 (together, the "Rolled Debt") and (iii)
-----------
certain other limited indebtedness to be agreed
upon) in an aggregate principal amount not to
exceed $167,200,000 (the "Existing Indebtedness")
---------------------
will be repaid in full and (d) fees and expenses
incurred in connection with the Transactions (as
defined below) in the aggregate amount not to
exceed $13,700,000 will be paid (the "Transaction
-----------
Costs"). The transactions described in this
-----
paragraph, together with the Acquisitions, are
collectively referred to herein as the
"Transactions."
------------
Book Manager, Syndication Chase Securities Inc. will act as sole and
- ------------------------- exclusive book manager, syndication agent, lead
Agent and Lead Arranger: documentation agent for the Senior Facilities (the
- ----------------------- "Arranger"), will perform the duties customarily
--------
associated with such roles and will manage the
syndication of the Senior Facilities to a
syndicate of financial institutions reasonably
satisfactory to the Arranger and the Borrower (the
"Lenders").
-------
Administrative Agent: Banque Nationale de Paris ("BNP") will act as sole
- -------------------- ---
and exclusive administrative agent and collateral
agent (collectively, the "Agent") for the Lender,
-----
and after the Closing Date will perform the duties
customarily associated with such roles.
Senior Facilities: (A) Three Senior Secured Term Loan Facilities in an
- ----------------- aggregate principal amount of up to $200,000,000
consisting of (a) a Tranche A Term Loan Facility
in an aggregate principal amount of up to
$50,000,000 (the "Tranche A Facility"), (b) a
------------------
Tranche B Term Loan Facility in an aggregate
principal amount of up
2
<PAGE>
to $110,000,000 (the "Tranche B Facility") and (c)
------------------
a Delayed Draw Term Loan Acquisition Facility in
an aggregate principal amount of up to $40,000,000
(the "Acquisition Facility" and, collectively with
--------------------
the Tranche A Facility and the Tranche B Facility,
the "Term Facilities").
---------------
(B) A Senior Secured Revolving Credit Facility in an
aggregate principal amount of up to $50,000,000
(the "Revolving Facility"), of which an amount to
------------------
be agreed upon will be available in the form of
letters of credit.
In connection with the Revolving Facility, BNP
will make available to the Borrower a swingline
facility under which the Borrower may make short-
term borrowings of up to an amount to be agreed
upon. Any such swingline loans will reduce
availability under the Revolving Facility on a
dollar-for-dollar basis. Each Lender under the
Revolving Facility will, promptly upon request by
BNP, fund to BNP its pro rata share of any
swingline borrowings.
Purpose: (A) The proceeds of the Tranche A Facility and the
- ------- Tranche B Facility will be used, together with (a)
the net proceeds of the issuance of the Senior
Subordinated Notes or the borrowings under the
Senior Subordinated Facility, as applicable, and
(b) a portion of the Closing Date Loan (as defined
below) in an amount equal to approximately
$10,900,000, solely (I) to pay the Purchase Price
to the Sellers in accordance with the Purchase
Agreement, (ii) to repay the Existing Indebtedness
and (iii) to pay the Transactions Costs. The
estimated sources and uses of the funds necessary
to consummate the Transactions and the other
transactions contemplated hereby are set forth on
Annex II hereto.
(B) The proceeds of loans under the Acquisition
Facility will be used by the Borrower for
Permitted Acquisitions (to be defined).
(C) The proceeds of loans under the Revolving Facility
(other than a portion of the Closing Date Loan in
an amount equal to approximately $10,900,000) will
be used by the Borrower for general corporate
purposes, including, without limitation, working
capital and
3
<PAGE>
capital expenditures, but excluding Permitted
Acquisitions.
(D) Letters of credit will be used by the Borrower
for general corporate purposes.
Availability: (A) The full amount of the Tranche A Facility and the
- ------------ Tranche B Facility must be drawn in a single
drawing on the Closing Date. Amounts borrowed
under the Tranche A Facility and the Tranche B
Facility that are repaid or prepaid may not be
reborrowed.
(B) Loans under the Acquisition Facility will be
available after the Closing Date and prior to the
date that is three years after the Closing Date
(the "Acquisition Facility Availability Period"),
----------------------------------------
the minimum principal amounts to be agreed upon,
subject to conditions to be agreed upon and
pursuant to procedures to be agreed upon,
provided that the Borrower will not be permitted
--------
to make more than three borrowings under the
Acquisition Facility after the Closing Date, and
provided further, that no borrowing under the
-------- -------
Acquisition Facility will be permitted if at the
time of such borrowing the Borrower's Leverage
Ratio (to be defined) calculated on a pro forma
basis to give effect to such borrowing and the
Permitted Acquisition for which such borrowing is
made would be greater than 5.25 to 1.0. Amounts
repaid under the Acquisition Facility may not be
reborrowed. No loans will be made under the
Acquisition Facility on the Closing Date.
(C) Loans under the Revolving Facility will be
available after the Closing Date and at any time
prior to the final maturity of the Revolving
Facility, in minimum principal amounts to be
agreed upon. Amounts repaid under the Revolving
Facility may be reborrowed. A loan of up to
$11,900,000 (the "Closing Date Loan") will be
-----------------
made under the Revolving Facility on the Closing
Date.
Interest Rates and Fees: As set forth on Annex I hereto.
- -----------------------
Default Rate: The applicable interest rate plus 2% per annum.
- ------------
Letters of Credit: Letters of credit under the Revolving Facility
- ----------------- will be issued by BNP or one of its affiliates
(the "Issuing
-------
4
<PAGE>
Bank"). Each letter of credit shall expire not
----
later than the earlier of (a) 12 months after its
date of issuance and (b) the fifth business day
prior to the final maturity of the Revolving
Facility.
Drawings under any letter of credit shall be
reimbursed by the Borrower on the same business
day. To the extent that the Borrower does not
reimburse the Issuing Bank on the same business
day, the Lenders under the Revolving Facility
shall be irrevocably obliged to reimburse the
Issuing Bank pro rata based upon their respective
Revolving Facility commitments.
The issuance of all letters of credit shall be
subject to the customary procedures of the
Issuing Bank.
Final Maturity: (A) The Tranche A Facility will mature on the date
- -------------- that is six years after the Closing Date. Loans
under the Tranche A Facility will amortize in
quarterly installments under a schedule to be
agreed upon.
(B) The Tranche B Facility will mature on the date
that is eight years after the Closing Date. Loans
under the Tranche B Facility will amortize under
a schedule to be agreed upon providing for
nominal quarterly installments for the first six
years of the Tranche B Facility and quarterly
installments in amounts to be agreed upon during
the remaining term of the Tranche B Facility.
(C) The Acquisition Facility will mature on the date
that is six years after the Closing Date. Loans
under the Acquisition Facility will amortize in
quarterly installments under a schedule to be
agreed upon. The first such installment will be
payable on the last day of the first fiscal
quarter after the last day of the Acquisition
Facility Availability Period.
(D) The Revolving Facility will mature on the date
that is six years after the Closing Date.
Guarantees: All obligations of the Borrower under the Senior
- ---------- Facilities and under any interest protection or
other hedging arrangements entered into with a
Lender (or any affiliate thereof) will be
unconditionally guaranteed (the "Guarantees")
----------
by Holdings and each
5
<PAGE>
existing and subsequently acquired or organized
domestic (and, to the extent no adverse tax
consequences to the Borrower would result
therefrom, foreign) subsidiary of the Borrower.
Any guarantees to be issued in respect of the
Senior Subordinated Notes or the Senior
Subordinated Facility shall be junior to the
obligations under the Guarantees.
Security: The Senior Facilities, the Guarantees and any
- -------- interest protection and other hedging
arrangements entered into with a Lender (or any
affiliate thereof) will be secured by all the
assets (subject to customary exceptions to be
agreed upon) of Holdings, the Borrower and each
existing and subsequently acquired or organized
domestic (and, to the extent no adverse tax
consequences to the Borrower would result
therefrom, foreign) subsidiary of the Borrower
(collectively, the "Collateral"), including but
----------
not limited to (a) a first-priority pledge of all
the capital stock of the Borrower, (b) a first-
priority pledge of all the capital stock,
membership interests and partnership interests
held by Holdings, the Borrower or any domestic
(or, subject to the foregoing limitation,
foreign) subsidiary of the Borrower of each
existing and subsequently acquired or organized
subsidiary of the Borrower (which pledge, in the
case of any foreign subsidiary, shall be limited
to 65% of the capital stock, membership interests
or partnership interests of such foreign
subsidiary to the extent the pledge of any
greater percentage would result in adverse tax
consequences to the Borrower) and (c) perfected
first-priority security interests in, and
mortgages on, substantially all tangible and
intangible assets of Holdings, the Borrower and
each existing or subsequently acquired or
organized domestic (or, subject to the foregoing
limitation, foreign) subsidiary of the Borrower
(including but not limited to accounts
receivable, inventory, trademarks, other
intellectual property, licensing agreements, real
property, leasehold mortgages (to be agreed
upon), cash and proceeds of the foregoing),
subject in each case to customary exceptions to
be agreed upon. On or prior to the Closing Date,
the Agent shall have received reasonably
satisfactory title insurance policies, current
certified surveys, evidence of zoning and other
legal compliance,
6
<PAGE>
certificates of occupancy and other permits
(including such endorsements as the Agent may
require), legal opinions and other customary
documentation, in each case reasonably required
by the Agent with respect to all real property of
Holdings and its subsidiaries subject to
mortgages.
All the above-described pledges, security
interests and mortgages shall be created on
terms, and pursuant to documentation, reasonably
satisfactory to the Lenders, and none of the
Collateral shall be subject to any other pledges,
security interests or mortgages (subject to
limited exceptions to be agreed upon.)
Mandatory Prepayments: Loans under the Term Facilities shall be prepaid
- --------------------- with (a) 75% of Excess Cash Flow (to be defined),
provided that such percentage shall be reduced to
--------
50% upon satisfaction of certain financial
criteria to be agreed upon, (b) 100% of the net
cash proceeds of all asset sales or other
dispositions of property by Holdings and its
subsidiaries (including insurance and
condemnation proceeds in excess of an agreed-upon
amount), subject to limited exceptions to be
agreed upon, (c) 100% of the net cash proceeds of
issuances of debt obligations of Holdings and its
subsidiaries (other than (i) the proceeds of any
Senior Subordinated Notes issued after the
Closing Date to the extent that such proceeds are
applied to the payment of loans under the Senior
Subordinated Facility and (ii) the proceeds from
the issuance of any debt permitted to be incurred
under the covenant limiting the incurrence of
debt by Holdings or its subsidiaries) and (d)
100% of the net cash proceeds of issuances of
equity of Holdings and its subsidiaries, subject
to limited exceptions to be agreed upon
(including issuances in connection with capital
contributions applied to finance Permitted
Acquisitions or to repay the Senior Subordinated
Facility).
The above-described mandatory prepayments shall
be allocated among the Term Facilities pro rata
(based on the then-outstanding principal amount
of the loans under each Term Facility), subject
to the provisions set forth below under the
caption "Special Application Provisions". Within
------------------------------
each Term Facility,
7
<PAGE>
mandatory prepayments shall be applied pro rata
to the remaining amortization payments under such
Term Facility.
Special Application Holders of loans under the Tranche B Facility
- ------------------- may, so long as loans are outstanding under the
Provisions: Tranche A Facility or the Acquisition Facility,
- ---------- decline to accept any mandatory prepayment
described above and, under such circumstances,
all amounts that would otherwise be used to
prepay loans under the Tranche B Facility shall
be used to prepay loans under the Tranche A
Facility and the Acquisition Facility. Such
mandatory prepayments shall be allocated between
the Tranche A Facility and the Acquisition
Facility pro rata (based on the then-outstanding
principal amount of the loans under each such
Term Facility) and applied with respect to each
such Term Facility in the manner described above
under the caption "Mandatory Prepayments".
---------------------
Voluntary Prepayments/ Voluntary prepayments of borrowings under the
- ---------------------- Senior Facilities, and voluntary reductions of
Reductions in Commitments: the unutilized portion of the Acquisition
- ------------------------- Facility and Revolving Facility commitments, will
be permitted at any time, in minimum principal
amounts to be agreed upon, without premium or
penalty, subject to reimbursement of the Lenders'
redeployment costs in the case of a prepayment of
Adjusted LIBOR borrowings other than on the last
day of the relevant interest period.
All voluntary prepayments of loans under the Term
Facilities shall be allocated pro rata among the
Term Facilities (based on the then-outstanding
principal amount of the loans under each Term
Facility). Within each Term Facility, voluntary
prepayments shall be applied pro rata to the
remaining amortization payments under such Term
Facility.
Representations and Usual for facilities and transactions of this
- ------------------- type (including customary exceptions and
Warranties: "materiality" thresholds) and similar to the
- ---------- representations and warranties contained in the
Credit Agreement dated as of July 21, 1998, among
the Borrower, George F. Pettinos (Canada)
Limited, the lenders party thereto and Banque
Nationale de Paris (as amended, the "Existing
--------
Credit Agreement", subject to such
----------------
8
<PAGE>
additions, deletions and other modifications as
are reasonably requested by the Arranger,
including to reflect the Transactions and the
changes in the credit profile and capital
structure of Holdings and its subsidiaries after
giving effect to the Transactions, and others to
be reasonably specified by the Arranger,
including, without limitation, accuracy of
financial statements; no material adverse change,
absence of litigation, administrative proceedings
or governmental or judicial action; no violation
of agreements or instruments; compliance with
laws, rules and regulations (including ERISA,
margin regulations and environmental laws);
payment of taxes; ownership of properties;
inapplicability of the Investment Company Act;
solvency; effectiveness of regulatory and third-
party approvals; labor matters; environmental
matters; accuracy of information; "year 2000"
matters; and validity, priority and perfection of
security interests in the Collateral.
Conditions Precedent to Usual for facilities and transactions of this
- ----------------------- type and similar to the conditions precedent in
Initial Borrowing: the Existing Credit Agreement (subject to such
- ----------------- additions, deletions and other modifications as
are reasonably requested by the Arranger,
including to reflect the Transactions and the
changes in the credit profile and capital
structure of Holdings and its subsidiaries after
giving effect to the Transactions), including
delivery of satisfactory legal opinions; evidence
of authority; absence of any event, condition or
circumstance that has had or is reasonably likely
to have a material adverse effect on the
business, operations, properties, assets,
liabilities or financial condition of Holdings
and its subsidiaries since December 31, 1998, or
the Acquired Businesses and their subsidiaries
since March 31, 1999, in each case taken as a
whole; payment of fees and expenses; and
obtaining of reasonably satisfactory insurance.
The initial borrowing under the Senior Facilities
will also be subject to the applicable conditions
precedent set forth on Annex III hereto.
Affirmative Covenants: Usual for facilities and transactions of this
- --------------------- type (including customary exceptions and
"materiality" thresholds) and similar to the
affirmative covenants in the Existing Credit
Agreement (subject to such
9
<PAGE>
additions, deletions and other modifications as are
reasonably requested by the Arranger, including to
reflect the Transactions and the changes in the
credit profile and capital structure of Holdings
and its subsidiaries after giving effect to the
Transactions) and others to be reasonably specified
by the Arranger (to be applicable to Holdings and
its subsidiaries), including, without limitation,
maintenance of corporate existence and rights;
performance of obligations, delivery of audited
annual consolidated financial statements for
Holdings and unaudited quarterly and monthly
consolidated financial statements for Holdings and
other financial information, delivery of notices of
default, litigation and material adverse change;
maintenance of properties in good working order;
maintenance of satisfactory insurance; compliance
with laws; inspection of books and properties;
further assurances; and payment of taxes.
The Borrower will also be required to maintain
appropriate interest protection hedging
arrangements with one or more Lenders (or
affiliates thereof) on terms reasonably
satisfactory to the Arranger.
Negative Covenants: Usual for facilities and transactions of this type
- ------------------ (including customary exceptions and "materiality"
thresholds) and similar to the negative covenants
in the Existing Credit Agreement (subject to such
additions, deletions and other modifications as are
reasonably requested by the Arranger, including to
reflect the Transactions and the changes in the
credit profile and capital structure of Holdings
and its subsidiaries after giving effect to the
Transactions) and others to be reasonably specified
by the Arranger (to be applicable to Holdings and
its subsidiaries), including, without limitation,
limitations on dividends and distributions;
limitations on redemptions and repurchases of
membership and partnership interests and capital
stock (subject to limited exceptions to be agreed
upon); prohibition of prepayments, redemptions and
repurchases of debt (other than loans under the
Senior Facilities and other than the prepayment of
loans under the Senior Subordinated Facility with
the proceeds of any Senior Subordinated Notes
issued after the Closing Date, which Senior
Subordinated Notes shall have terms
10
<PAGE>
and conditions reasonably satisfactory to the
Lenders); limitations on liens and sale-leaseback
transactions; limitations on loans and investments;
limitations on debt, including limitations on
hedging arrangements; limitations on capital
expenditures; limitations on mergers, acquisitions
and asset sales; limitations on transactions with
affiliates; limitations on changes in business
conducted by Holdings and its subsidiaries; and
limitations on amendments of debt and certain other
material agreements to be agreed upon.
The Borrower and its subsidiaries will be permitted
to consummate Permitted Acquisitions. Each
Permitted Acquisition will satisfy criteria to be
agreed upon by the Arranger and the Borrower and
set forth in the definitive credit agreement with
respect to the Senior Facilities (the "Credit
------
Agreement").
---------
Selected Financial Usual for facilities and transactions of this type,
- ------------------ including, without limitation, (a) a minimum
Covenants: interest coverage ratio and (b) a maximum leverage
- --------- ratio, in each case with definitions and levels to
be agreed upon.
Events of Default: Usual for facilities and transactions of this type
- ----------------- (including customary grace periods and
"materiality" thresholds) and similar to the Events
of Default in the Existing Credit Agreement
(subject to such additions, deletions and other
modifications as are reasonably requested by the
Arranger, including to reflect the Transactions and
the changes in the credit profile and capital
structure of Holdings and its subsidiaries after
giving effect to the Transactions) and others to be
reasonably specified by the Arranger, including,
without limitation, nonpayment of principal or
interest, violation of covenants, incorrectness of
representations and warranties in any material
respect, cross default and cross acceleration,
bankruptcy, material judgments, ERISA, actual or
asserted invalidity of security documents and
Change in Control (to be defined).
Voting: Amendments and waivers of the Credit Agreement and
- ------ the other definitive credit documentation will
require the approval of Lenders holding more than
11
<PAGE>
50% of the aggregate amount of the loans and
commitments under the Senior Facilities, except
that (a) the consent of each Lender adversely
affected thereby shall be required with respect to,
among other things, (i) increases in commitments,
(ii) reductions of principal, interest or fees,
(iii) extensions of final maturity and (iv)
releases of all or substantially all the Collateral
(other than in connection with any sale of
Collateral permitted by the Credit Agreement) and
(b) the consent of Lenders holding more than 50% of
the aggregate amount of the loans and commitments
of each adversely affected tranche of the Term
Facilities shall be required with respect to any
amendment that changes the effective allocation
among the Term Facilities of any voluntary or
mandatory prepayments of loans under the Term
Facilities (or the application of such prepayments
to the remaining amortization payments under the
Term Facilities).
Cost and Yield Protection: Usual for facilities and transactions of this type.
- --------------------------
Assignments and The Lenders will be permitted to assign loans and
- --------------- commitments to other Lenders (or their affiliates)
Participations: or to any Federal Reserve Bank without restriction,
- -------------- or to other financial institutions with the consent
of the Borrower and the Agent, in each case not to
be unreasonably withheld. Each assignment (except
to other Lenders or their affiliates) will be in an
amount not less than the lesser of (a) $5,000,000
and (b) the entire remaining principal amount of
loans or commitments, as applicable, of the
assigning Lender. The Agent will receive a
processing and recordation fee to be agreed upon,
payable by the assignor and/or the assignee, with
each assignment. Assignments will be by novation
and will not be required to be pro rata among the
Senior Facilities.
The Lenders will be permitted to participate in
loans and commitments without restriction to other
financial institutions. Voting rights of
participants shall be limited to matters in respect
of (a) increases in commitments, (b) reductions of
principal, interest or fees, (c) extensions of
final maturity and (d) releases of all or
substantially all the Collateral (other than in
connection with any sale of Collateral permitted by
the Credit Agreement).
12
<PAGE>
Expenses and All reasonable out-of-pocket expenses (including,
- ------------ without limitation, reasonable expenses incurred in
Indemnification: connection with due diligence) of the Arranger and
- --------------- the Agent associated with the syndication of the
Senior Facilities and with the preparation,
execution and delivery, administration, waiver or
modification and enforcement of the Credit
Agreement and the other documentation contemplated
hereby and thereby (including the reasonable fees,
disbursements and other charges of counsel) are to
be paid by the Borrower. In addition, all
reasonable out-of-pocket expenses of the Lenders
for enforcement costs and documentary taxes
associated with the Senior Facilities are to be
paid by the Borrower.
The Borrower will indemnify the Arranger, the Agent
and the other Lenders and hold them harmless from
and against all costs, expenses (including
reasonable fees, disbursements and other charges of
counsel) and liabilities of the Arranger, the Agent
and the other Lenders arising out of or relating to
any claim or any litigation or other proceedings
(regardless of whether the Arranger, the Agent or
any other Lender is a party thereto) that relate to
the proposed transactions, including the financing
contemplated hereby, the Acquisitions and the other
Transactions, provided that none of the Arranger,
the Agent or any other Lender will be indemnified
for its gross negligence or willful misconduct. The
indemnities in this paragraph will be subject to
modifications to be agreed upon.
Governing Law and Forum: New York.
- -----------------------
Counsel to Arranger: Cravath, Swaine & Moore.
- -------------------
13
<PAGE>
ANNEX I
Interest Rates: The interest rates under the Senior Facilities
- -------------- will be, at the option of the Borrower, as follows:
Tranche A Facility
------------------
Adjusted LIBOR plus 3.00% or ABR plus 2.00%, in
each case subject to one or more step-downs to be
agreed upon based on the Borrower's Consolidated
Leverage Ratio (to be defined).
Tranche B Facility
------------------
Adjust LIBOR plus 3.50% or ABR plus 2.50%.
Acquisition Facility
--------------------
Adjust LIBOR plus 3.00% or ABR plus 2.00%, in each
case subject to step-downs to be agreed upon based
on the Borrower's Consolidated Leverage Ratio.
Revolving Facility
------------------
Adjusted LIBOR plus 3.00% or ABR plus 2.00%, in
each case subject to step-downs to be agreed upon
based on the Borrower's Consolidated Leverage
Ratio.
All Senior Facilities
---------------------
The Borrower may elect interest periods of 1, 2, 3
or 6 months for Adjusted LIBOR borrowings.
Calculation of interest shall be on the basis of
accrual days elapsed in a year of 360 days (or 365
or 366 days, as the case may be, in the case of ABR
loans based on the Prime Rate) and interest shall
be payable at the end of each interest period and,
in any event, at least every 3 months or 90 days,
as the case may be.
ABR is the Alternate Base Rate, which is the
highest of The Chase Manhattan Bank's Prime Rate
and the Federal Funds Effective Rate plus 1/2 of
1%.
Adjusted LIBOR will at all times include statutory
reserves.
Letter of Credit Fee: A per annum fee equal to the spread over Adjusted
- -------------------- LIBOR under the Revolving Facility will accrue on
the aggregate face amount of outstanding letters of
credit under the
<PAGE>
Revolving Facility, payable in arrears at the end
of each quarter and upon the termination of the
Revolving Facility, in each case for the actual
number of days elapsed over a 360-day year. Such
fees shall be distributed to the Lenders
participating in the Revolving Facility pro rata in
accordance with the amount of each such Lender's
Revolving Facility commitment. In addition, the
Borrower shall pay to the Issuing Bank, for its own
account, (a) a fronting fee of 1/4 of 1% per annum
on the aggregate face amount of outstanding letters
of credit, payable in arrears at the end of each
quarter and upon the termination of the Revolving
Facility, in each case for the actual number of
days elapsed over a 360-day year, and (b) customary
issuance and administration fees.
Acquisition Facility 3/4 of 1% per annum on the undrawn portion of the
- -------------------- commitments in respect of the Acquisition Facility
Commitment Fees: (a) commencing to accrue with respect to each
- --------------- Lender's commitment on the Closing Date, payable
quarterly in arrears after the Closing Date and (b)
subject to step-downs to be agreed upon based on
the Borrower's Consolidated Leverage Ratio.
Revolving Facility 1/2 of 1% per annum on the undrawn portion of the
- ------------------ commitments in respect of the Revolving Facility
Commitment Fees: (a) commencing to accrue with respect to each
- --------------- Lender's commitment on the Closing Date, payable
quarterly in arrears after the Closing Date, and
(b) subject to step-downs to be agreed upon based
on the Borrower's Consolidated Leverage Ratio.
Other: The annual interest rates in effect in respect of
- ----- each of the Senior Facilities will be permanently
reduced by 25 basis points if prior to the Closing
Date the Senior Facilities shall be rated Ba3 by
Moody's Investors Service, Inc. and BB- by Standard
and Poor's Ratings Group.
2
<PAGE>
ANNEX II
Estimated Sources and Uses of Funds
(in millions of dollars)
For Consolidated Entity
<TABLE>
<CAPTION>
Uses of Funds Sources of Funds
- ------------- ----------------
<S> <C> <C> <C>
Purchase Price $140.0 Closing Date Loan $ 11.9*
Repay Existing Indebtedness 167.2 Tranche A Facility 50.0
Cash 1.0 Tranche B Facility 110.0
Acquisition Facility 0.0**
Rolled Debt 1.8 Rolled Debt 1.8
Transaction Costs 13.7 Senior Subordinated
------
Notes/Facility 150.0
-------
Total Uses $323.7 Total Sources $ 323.7
====== =======
</TABLE>
______________________
* Represents drawn portion of $50,000,000 Revolving Facility.
** Represents drawn portion of $40,000,000 Acquisition Facility.
<PAGE>
ANNEX III
Project Rock
$250,000,000 Senior Secured Credit Facilities and
$150,000,000 Senior Subordinated Credit Facility
Summary of Additional Conditions Precedent
------------------------------------------
Except as otherwise set forth below, the initial borrowing under each of
the Facilities shall be subject to the following conditions precedent:
1. The terms of the Purchase Agreements shall be satisfactory in all
material respects to the Arranger, and the Acquisitions and the other
Transactions shall be consummated simultaneously with the closing under the
Senior Facilities in accordance with applicable law, the Purchase Agreements
(including all Exhibits thereto) and all other related documentation (in each
case without giving effect to any amendment or waiver not approved by the
Arranger) and on terms substantially consistent with those set forth in this
Summary of Principal Terms and Conditions, and the Arranger shall be satisfied
that the Transaction Costs shall not exceed $13,700,000.
2. With respect to the Senior Facilities, the Borrower shall have
received not less than $150,000,000 in gross cash proceeds from either (a) the
issuance of the Senior Subordinated Notes in a public offering or in a Rule 144A
or other private placement to one or more holders satisfactory to the Arranger
or (b) the borrowings under the Senior Subordinated Facility. The terms and
conditions of the Senior Subordinated Notes or the Senior Subordinated Facility,
as applicable (in each case including but not limited to terms and conditions
relating to the interest rate, fees, amortization, maturity, subordination,
covenants, events of default and remedies) shall be satisfactory in all respects
to the Arranger (it being agreed that such terms of the Senior Subordinated
Facility to the extent described in Exhibit B to the Commitment Letter to which
this Annex III is attached (the "Commitment Letter") are satisfactory).
-----------------
3. After giving effect to the Transactions and the other transactions
contemplated hereby, Holdings and its subsidiaries shall have outstanding no
indebtedness or preferred membership or partnership interests or preferred stock
other than (a) the loans and other extensions of credit under the Senior
Facilities, (b) the Senior Subordinated Notes or loans under the Senior
Subordinated Facility, (c) the Rolled Debt (the terms of which shall be
reasonably satisfactory to the Arranger) and (d) other limited indebtedness to
be agreed upon.
4. The Lenders shall be reasonably satisfied as to the amount and nature
of any environmental and employee health and safety exposures to which the
Acquired Businesses may be subject after giving effect to the Transactions, and
with the plans of Holdings and its subsidiaries with respect thereto, and the
Lenders shall have received environmental assessments (including Phase I
reports) with respect to the properties of the Acquired Businesses satisfactory
to the Arranger from an environmental consulting firm satisfactory to the
Arranger.
5. The Lenders shall have received a certificate of a financial officer
of the Borrower with respect to the pro forma Consolidated EBITDA (to be
defined) of the Borrower (after
<PAGE>
giving effect to the Acquisitions) for the twelve month period ending June 30,
1999, and such pro forma Consolidated EBITDA shall not be less than $60,300,000.
6. The Lenders shall have received a certificate of a financial officer
of the Borrower with respect to the ratio of Total Debt (to be defined) as of
June 30, 1999, to the pro forma Consolidated EBITDA (to be defined) of the
Borrower (after giving effect to the Acquisitions) for the twelve month period
ending on such date, and such ratio shall not exceed 5.5 to 1.0.
7. The Lenders shall have received (a) a consolidated pro forma balance
sheet and related statements of income, stockholders' equity and cash flows of
Holdings and its subsidiaries as of and for each fiscal quarter of Holdings
ending after December 31, 1998, and prior to the Closing Date for which internal
financial statements are available (and, to the extent available, for each month
preceding the Closing Date since the last such quarter), after giving effect to
the Transactions and (b) an analysis of the adjustments necessary to reconcile
the entries in such pro forma financial statements to those unaudited financial
statements delivered for Holdings and its subsidiaries for each such fiscal
quarter and month pursuant to paragraph 12 below.
8. CSI shall have received (a) audited consolidated and consolidating
balance sheets and related statements of income, stockholders' equity and cash
flows of each of the Borrower and its subsidiaries and the Acquired Businesses
and their subsidiaries for the three fiscal years ended prior to the Closing
Date and (b) unaudited consolidated and consolidating balance sheets and related
statements of income, stockholders' equity and cash flows of each of the
Borrower and its subsidiaries and the Acquired Businesses and their subsidiaries
for the fiscal quarters, if any, ending after the most recent fiscal year that
precedes the Closing Date (and, to the extent available, for each month
preceding the Closing Date since the last such quarter), which audited and
unaudited financial statements (i) shall be in form and scope satisfactory to
CSI and (ii) shall not be materially inconsistent with the financial statements
previously provided to CSI or the projections provided to CSI pursuant to
paragraph 9 below.
9. CSI shall have received management's consolidated and consolidating
financial projections for the Borrower and its subsidiaries for the period of
ten years following the Closing Date, detailed on a quarter-by-quarter basis for
fiscal years 1999 and 2000, which projections shall reflect the Transactions and
the other transactions contemplated hereby and include the written assumptions
upon which such projections are based, and such projections shall be reasonably
satisfactory in all respects to CSI. Such projections shall be substantially
similar in form to the projections received by CSI prior to the date of the
Commitment Letter.
10. With respect to the Senior Subordinated Facility, the Borrower shall
have received not less than $171,900,000 (excluding undrawn commitments) in
gross cash proceeds from borrowings under the Senior Facilities. The terms and
conditions of the Senior Facilities (including but not limited to terms and
conditions relating to interest rates, fees, amortization, maturity, covenants,
events of default and remedies) shall be reasonably satisfactory in all respects
to the agent under the Senior Subordinated Facility (it being agreed that such
terms of the Senior Facilities to the extent described in Exhibit A to the
Commitment Letter are satisfactory).
2
<PAGE>
11. With respect to the Senior Subordinated Facility, CSI shall have
received, not later than 30 days prior to the Closing Date, a complete printed
preliminary prospectus or preliminary offering memorandum or preliminary private
placement memorandum that is suitable for use in a customary "high-yield road
show" relating to the Senior Subordinated Notes and contains all financial
statements and other data to be included therein (including all audited
financial statements, all unaudited financial statements (which shall have been
reviewed by the independent accountants for the Borrower as provided in
Statement on Auditing Standards No. 71) and all appropriate pro forma financial
statements prepared in accordance with, or reconciled to, generally accepted
accounting principles in the United States and prepared in accordance with
Regulation S-X under the Securities Act of 1933, as amended) and all other data
(including selected financial data) that the Securities and Exchange Commission
would require in a registered offering of the Senior Subordinated Notes or that
would be necessary for CSI to receive a customary "comfort" (including "negative
assurance" comfort) from independent accountants in connection with the offering
of the Senior Subordinated Notes.
12. With respect to the Senior Subordinated Facility, CSI shall have been
afforded a period of at least 30 days following receipt of the material
described in the immediately preceding paragraph to seek to place the Senior
Subordinated Notes with qualified purchasers thereof an CSI shall have marketed
the Senior Subordinated Notes in a manner customary for high-yield offerings of
this type (including completing a traditional "high-yield road show") for at
least 15 days (or such shorter period if acceptable to CSI) following September
6, 1999, and prior to the Closing Date.
3
<PAGE>
CONFIDENTIAL EXHIBIT B
August 11, 1999
Project Rock
$150,000,000 Senior Subordinated Facility
Summary of Principal Terms and Conditions
-----------------------------------------
Initial Borrower Loans: The Lenders (as defined below) will make
- -----------------------
loans (the "Initial Borrower Loans") to
----------------------
the Borrower (as defined below) on the
Closing Date (as defined below) in an
aggregate principal amount not to exceed
$150,000,000. The Chase Manhattan Bank
("Chase"), Banque Nationale de Paris
-----
("BNP") and each assignee of any portion
---
of the Initial Borrower Loans or of
Chase's or BNP's commitments to make the
Initial Borrower Loans are collectively
referred to herein as the "Lenders".
-------
Borrower: U.S. Silica Company, a Delaware
- --------
corporation (the "Borrower") that is a
--------
direct, wholly owned subsidiary of USS
Intermediate Holdco, Inc., a Delaware
corporation ("Holdings"), in which Chase
--------
Capital Partners and D. George Harris &
Associates Company, Inc. (together, the
"Sponsors") together own a majority
--------
indirect equity interest.
Guarantees: The obligations of the Borrower in
- ----------
respect of the Initial Borrower Loans will
be unconditionally and irrevocably
guaranteed on a senior subordinated basis
by each guarantor, if any, of the Senior
Facilities (as defined below). Guarantees
will be released in a manner consistent
with the Senior Facilities.
Agents: Chase will act as sole and exclusive
- ------
syndication agent and documentation agent
(the "Syndication Agent"). BNP will act as
-----------------
sole and exclusive administrative agent
for the Lenders (the "Administrative
--------------
Agent" and, together with the Syndication
-----
Agent, the "Agents"), and after the
------
Closing Date (as defined below) will
perform the duties customarily associated
with such roles.
Arranger: Chase Securities Inc. ("CSI")
- -------- ---
Lenders: A syndicate of banking and financial
- -------
institutions arranged by CSI and
reasonably acceptable to the Borrower and
CSI.
Acquisition and Other Transactions: Pursuant to a Purchase Agreement (the
- ----------------------------------
"Purchase Agreement") to be entered into
------------------
among (a) CATS, Inc., a
<PAGE>
Pennsylvania corporation, JHS Family
Partnership, a Pennsylvania limited
partnership, RSS Family Partnership, a
Pennsylvania limited partnership, the Dell
H. Shearer Grandchildren's Trust, Joseph
H. Shearer and R. Scott Shearer
(collectively, the "Sellers") and (b) the
-------
Borrower, the Borrower will acquire (the
"Acquisitions") from the Sellers (i) all
------------
the outstanding capital stock of
Commercial Stone Co. Inc., a Pennsylvania
corporation ("CSC"), (ii) all the
---
outstanding partnership interests in
Commercial Aggregates Transportation and
Sales, L.P., a property (collectively with
CSC and CATS, the "Acquired Businesses")
-------------------
specified in the Purchase Agreement, for
cash consideration payable to the Sellers
(the "Purchase Price") in the aggregate
--------------
amount of $140,000,000 (subject to
adjustment as provided in the Purchase
Agreement).
In connection with the Acquisitions, (a)
the Borrower will obtain the senior
secured credit facilities (collectively,
the "Senior Facilities") described below
-----------------
under the caption "Senior Facilities", (b)
the Borrower will either (i) issue of less
than $150,000,000 in aggregate principal
amount of its senior subordinated notes
(the "Senior Subordinated Notes") in a
-------------------------
public offering or in a Rule 144A or other
private placement or (ii) if the Borrower
is unable to issue the Senior Subordinated
Notes prior to the date on which the
Acquisitions are consummated (the "Closing
-------
Date"), borrow not less than $150,000,000
----
in senior subordinated loans from one or
more lenders under a new senior
subordinated credit facility (the "Senior
------
Subordinated Facility") and, collectively
---------------------
with the Senior Facilities, the
"Facilities"), (c) all existing
----------
indebtedness of the Borrower and its
subsidiaries (other than (i) certain
indebtedness of the Borrower incurred in
connection with the acquisition of certain
assets of Nicks Silica Company in an
aggregate amount not to exceed $1,600,000,
(ii) certain capital leases in an
aggregate principal amount not to exceed
$200,000 and (iii) certain other limited
indebtedness to be agreed upon) in an
aggregate principal amount not to exceed
$167,300,000 (the "Existing Indebtedness")
---------------------
will be repaid in full and (d) fees and
expenses incurred in connection with the
Transactions (as defined below) in an
aggregate amount not to exceed $13,700,000
will be paid (the "Transaction Costs").
-----------------
The transactions described in this
paragraph, together with the Acquisitions,
are collectively referred to herein as the
"Transactions".
------------
2
<PAGE>
Use of Proceeds: The proceeds of the Initial Borrower
- ---------------
Loans will be used, together with the net
proceeds of the Tranche A Facility, the
Tranche B Facility (as each such term is
defined in Exhibit A to the Commitment
Letter to which this Exhibit B is
attached) and a portion of the Closing
Date Loan (as such term is defined in
Exhibit A to the Commitment Letter to
which this Exhibit B is attached) in an
amount equal to approximately $10,900,000,
solely (i) to pay the Purchase Price to
the Sellers in accordance with the
Purchase Agreement, (ii) to repay the
Existing Indebtedness and (iii) to pay the
Transaction Costs. The estimated sources
and uses of the funds necessary to
consummate the Transactions and the other
transactions contemplated hereby are set
forth in Annex II of Exhibit A to the
Commitment Letter to which this Exhibit B
is attached.
Funding: The Lenders will make the Initial
- -------
Borrower Loans simultaneously with (a) the
consummation of the Transactions and (b)
the initial funding under the Senior
Facilities.
Maturity/Exchange: All the Initial Borrower Loans will
- -----------------
mature on the date that is one year
following the Closing Date (the "Maturity
--------
Date"). If any Initial Borrower Loan has
----
not been previously repaid in full on or
prior to the Maturity Date, the Lender in
respect of such Initial Borrower Loan
thereafter will have the option at any
time or from time to time to receive
Borrower Exchange Notes (the "Borrower
--------
Exchange Notes") in exchange for such
--------------
Initial Borrower Loan having the terms set
forth in the term sheet attached hereto as
Annex I; provided, however, that a Lender
-------- -------
may not elect to exchange only a portion
of its outstanding Initial Borrower Loans
for Borrower Exchange Notes unless such
Lender intends at the time of such partial
exchange of Initial Borrower Loans
promptly to sell the Borrower Exchange
Notes received in such exchange. If any
Lender does not exchange its Initial
Borrower Loans for Borrower Exchange Notes
on the Maturity Date, such Lender shall be
required to extend the maturity of such
Initial Borrower Loans to another date
selected by such Lender. If, at such
extended maturity, such Lender does not
exchange its Initial Borrower Loans, such
Lender shall be required again to extend
the maturity of such Initial Borrower
Loans to another date selected by such
Lender (provided that such Lender shall
not be required to extend the maturity of
such Initial Borrower Loans beyond the
3
<PAGE>
tenth anniversary of the Closing Date (the
"Final Maturity Date")), and this sentence
-------------------
shall apply to each extended maturity of
such Initial Borrower Loans prior to the
Final Maturity Date.
The Initial Borrower Loans and the
Borrower Exchange Notes shall be pari
----
passu for all purposes.
-----
Interest: Prior to the Maturity Date, the Initial
- --------
Borrower Loans will accrue interest at a
rate per annum equal to three-month
Adjusted LIBOR ("Adjusted LIBOR") plus a
--------------
spread (the "Spread"). The Spread will
------
initially be 600 basis points. If the
Initial Borrower Loans are not repaid in
whole within six months following the
Closing Date, the Spread will increase by
100 basis points at the end of such six-
month period and shall increase by an
additional 50 basis points at the end of
each three-month period thereafter until
the Maturity Date.
Notwithstanding the foregoing, (a) the
interest rate in effect at any time prior
to the Maturity Date shall not exceed
18.0% per annum, (b) the interest rate in
effect at any time prior to the Maturity
Date shall not be less than 11.0% per
annum and (c) to the extent the interest
payable prior to the Maturity Date on any
Initial Borrower Loan exceeds a rate of
15.0% per annum, the Borrower may, at its
option, cause such excess interest to be
paid by adding such excess interest to the
principal amount of such Initial Borrower
Loan. In no event shall the interest rate
on the Initial Borrower Loans exceed the
highest lawful rate permitted under
applicable law.
Following the Maturity Date, all
outstanding Initial Borrower Loans will
accrue interest at the rate provided for
the Borrower Exchange Notes in Annex I
hereto, subject to the absolute and cash
caps applicable to the Borrower Exchange
Notes.
Calculation of interest shall be on the
basis of actual days elapsed in a year of
360 days (or 365 days or 366 days, as the
case may be, in the case of Initial
Borrower Loans based on the Prime Rate (as
defined below)).
Adjusted LIBOR will at all times include
statutory reserves.
In the event that Adjusted LIBOR cannot be
determined, or any Lender is unable to
maintain a loan accruing interest at
4
<PAGE>
Adjusted LIBOR, the affected Initial
Borrower Loans will accrue interest until
the Maturity Date, or until such earlier
time as Adjusted LIBOR can be determined,
at the "Alternate Base Rate", which will
-------------------
be the higher of (a) Chase's Prime Rate
(the "Prime Rate") and (b) the Federal
----------
Funds Effective Rate plus 1/2 of 1%, plus
in each case the Spread less 100 basis
points.
Interest will be payable in arrears (a)
for Initial Borrower Loans accruing
interest at a rate based on Adjusted
LIBOR, at the end of each Adjusted LIBOR
Period and on the Maturity Date, (b) for
Initial Borrower Loans accruing interest
at the Alternate Base Rate, at the end of
each fiscal quarter of the Borrower
following the Closing Date and on the
Maturity Date and (c) the Initial Borrower
Loans outstanding after the Maturity Date,
at the end of each fiscal quarter of the
Borrower following the Maturity Date.
Senior Facilities: The Borrower will obtain the $250,000,000
- -----------------
senior secured credit facilities (the
"Senior Facilities") as described in
-----------------
Exhibit A to the Commitment Letter to
which this Exhibit B is attached.
Subordination: The Initial Borrower Loans will be
- -------------
subordinated to the Senior Facilities and
other senior indebtedness of the Borrower
on terms customary for senior subordinated
facilities and transactions of this type.
Mandatory Redemption: The Borrower will be required to prepay
- --------------------
Initial Borrower Loans (and, if issued,
Borrower Exchange Notes, to the extend
required by the terms of such Borrower
Exchange Notes) on a pro rata basis
--- ----
subject, in certain circumstances, to the
call protection provisions of any Fixed
Rate Borrower Exchange Notes (as described
in Annex I hereto), at par plus accrued
and unpaid interest (or, in the case of
Fixed Rate Borrower Exchange Notes, at par
plus accrued and unpaid interest plus any
applicable premiums), from the net
proceeds (after deduction of, among other
things, amounts required to repay the
Senior Facilities) from the incurrence of
any debt or the issuance of any equity or
from certain asset sales, subject in each
case, to limited exceptions to be agreed
upon.
Optional Prepayment: The Initial Borrower Loans may be
- -------------------
prepaid, in whole or in part, at the
option of the Borrower, at any time upon
ten days' prior notice, at par plus
accrued and unpaid interest, subject to
reimbursement of the Lenders' actual
redeployment costs in the case of a
prepayment of Adjusted
5
<PAGE>
LIBOR borrowings other than on the last
day of the relevant interest period.
Documentation: Usual for facilities and transactions of
- -------------
this type and satisfactory to CSI.
Representations and Warranties: Usual for facilities and transactions of
- ------------------------------
this type (including customary exceptions
and "materiality" thresholds) and others
to be reasonably specified by CSI,
including, without limitation, accuracy of
financial statements; no material adverse
change; absence of litigation; no
violation of agreements or instruments;
compliance with laws (including ERISA,
margin regulations and environmental
laws); payment of taxes; ownership of
properties; inapplicability of the
Investment Company Act; solvency;
effectiveness of regulatory approvals;
labor matters; environmental matters;
"year 2000" matters; and accuracy of
information.
Conditions Precedent: Usual for facilities and transactions of
- --------------------
this type, including delivery of
satisfactory legal opinions; evidence of
authority; absence of any event, condition
or circumstance that has had or is
reasonably likely to have a material
adverse effect on the business,
operations, properties, assets,
liabilities or financial condition of
Holdings and its subsidiaries since
December 31, 1998, or the Acquired
Businesses and their subsidiaries since
March 31, 1999, in each case taken as a
whole; payment of fees and expenses; and
obtaining of reasonably satisfactory
insurance.
Borrowings under the Senior Subordinated
Facility will also be subject to the
applicable conditions precedent set forth
on Annex III to Exhibit A to the
Commitment Letter to which this Exhibit B
is attached.
Notes: The Borrower will use commercially
- -----
reasonable efforts to refinance the
Initial Borrower Loans as promptly as
practicable after the Closing Date with an
issue of approximately $150,000,000
aggregate principal amount of senior
subordinated notes.
Covenants: Usual for facilities and transactions of
- ---------
its type (including customary exceptions
and "materiality" thresholds) and others
to be reasonably specified by CSI,
including (should CSI reasonably deem it
necessary) certain financial covenants,
including maintenance covenants, to be
mutually agreed upon by the Borrower and
CSI.
6
<PAGE>
The affirmative covenants shall in any
vent include delivery of financial
projections of the Borrower and its
subsidiaries updated quarterly in a form
substantially similar to that described in
Annex III to Exhibit A to the Commitment
Letter to which this Exhibit B is
attached. Following the Maturity Date, all
covenants in respect of any outstanding
Initial Borrower Loans will be
substantially identical to the covenants
in respect of the Borrower Exchange Notes.
Events of Default: Usual for facilities and transactions of
- -----------------
this type (including customary grace
periods and "materiality" thresholds) and
others to be reasonably specified by CSI.
Following the Maturity Date, the events of
default relevant to the Initial Borrower
Loans will be substantially identical to
the events of default in respect of the
Borrower Exchange Notes.
Cost and Yield Usual for facilities and transactions of
- --------------
Protection: this type.
- -----------
Assignment and Participation: The Lender will have the absolute and
- ----------------------------
unconditional right to assign Initial
Borrower Loans and commitments without the
consent of the Borrower, after
consultation with the Borrower. Each
assignment (except to other Lenders or
their affiliates) will be in an amount
such that the gross proceeds to the
assigning lender shall not be less than
$250,000. The Administrative Agent will
receive a processing and recordation fee
to be agreed upon, payable by the assignor
and/or the assignee, with each assignment.
Assignments will be by novation which will
release the obligation of the assigning
Lender. BNP will act as Administrative
Agent for all assignees (if any) holding
the Initial Borrower Loans from time to
time.
Lenders will be permitted to participate
their Initial Borrower Loans, to other
financial institutions without
restriction, other than customary voting
limitations. Participations will have the
same benefits as the selling Lenders would
have (and will be limited to the amount of
such benefits) with regard to yield
protection and increased costs.
Voting: Amendments and waivers of the
- ------
documentation for the Initial Borrower
Loans and the other definitive credit
documentation related thereto will require
the approval of
7
<PAGE>
Lenders holding more than 50% of the
outstanding Initial Borrower Loans, except
that the consent of each affected Lender
will be required for (a) reductions of
principal, interest rates or Spread, (b)
except as provided under the caption
"Maturity/Exchange", extensions of the
Maturity Date, (c) additional restrictions
on the right to exchange Initial Borrower
Loans for Borrower Exchange Notes or any
amendment of the rate of such exchange or
(d) any amendment to the Borrower Exchange
Notes that requires (or would, if any
Borrower Exchange Notes were outstanding,
require) the approval of all holders of
Borrower Exchange Notes.
Expenses and Indemnification: All reasonable out-of-pocket expenses
- ----------------------------
(including but not limited to reasonable
expenses incurred in connection with due
diligence) of the Agents and CSI
associated with the preparation, execution
and delivery, administration, waiver or
modification and enforcement of the Senior
Subordinated Facility and the other
documentation contemplated hereby and
thereby (including the reasonable fees,
disbursements and other charges of
counsel) are to be paid by the Borrower.
In addition, all reasonable out-of-pocket
expenses of the Lenders for enforcement
costs and documentary taxes associated
with the facility are to be paid by the
Borrower.
The Borrower will indemnify the Lenders
and CSI, and their respective officers,
directors, employees, affiliates, agents
and controlling persons, and hold them
harmless from and against all costs,
expenses (including but not limited to
reasonable fees and out-of-pocket charges
and disbursements of counsel) and
liabilities of any such Lender or CSI
arising out of or relating to any claim or
any litigation or other proceeding
(regardless of whether any such Lender or
CSI is a party thereto) that relate to the
proposed transactions, including but not
limited to the Transactions or any
transactions connected therewith;
provided, however, that no such person
will be indemnified for costs, expenses or
liabilities arising from such person's
gross negligence or wilful misconduct. The
indemnities in this paragraph will be
subject to modifications to be agreed
upon.
Governing Law and Forum: New York.
- -----------------------
Counsel for CSI and the Lenders: Cravath, Swaine & Moore.
- -------------------------------
8
<PAGE>
Exhibit 7.4
Form of Opinion of Seller's Counsel
1. Each Acquired Company is validly existing, and in good standing under
the laws of its jurisdiction of incorporation or formation, with full power and
authority to conduct its business as it is now being conducted and to own or use
the properties and assets that it purports to own or use.
2. Each Seller has full capacity, right, power and authority to execute
and deliver the Purchase Agreement and to consummate the Contemplated
Transactions. The Purchase Agreement constitutes the legal, valid and binding
obligation of Sellers, enforceable against Sellers in accordance with its terms
[INSERT BANKRUPTCY EXCEPTION].
3. The execution, delivery and performance of the Purchase Agreement by
Sellers and the consummation of the Contemplated Transactions (i) have been
authorized by all necessary corporate, partnership, trust and other action on
the part of Sellers and (ii) will not (w) conflict with the terms, conditions or
provisions of the Organizational Documents of any Seller or any Acquired Company
(x) violate any provision of law or any Order to which any Seller or any
Acquired Company or any of their respective assets is subject or require the
consent of any Person, (y) to our knowledge, result in a breach or violation of
any of the terms of, or constitute a default by any Seller or Acquired Company
under any indenture, mortgage, loan agreement, lease or other agreement or
instrument to which any Seller or any Acquired Company is a party or by which it
or any of its assets is bound, or (z) to our knowledge, result in the creation
or imposition of any Encumbrance upon the Acquired Shares or the Acquired
Interests or the assets of any Acquired Company or the Properties, except to the
extent such conflict, violation, breach or creation would not have a Material
Adverse Effect.
**Allow Buyer's lenders to rely on opinion.
<PAGE>
Exhibit 7.9
1. Three Rivers Marine and Rail Terminals, L.P. ("Three Rivers") shall
------------
have the right to purchase from Commercial, for internal consumption or resale
of up to 3,000 tons per month (or such greater amount as the parties may agree)
crushed stone products (1B, 2B, 1A, 3's, 4's, 2A, 2RC Pocono and 3's Pocono and
4's Pocono) for a price of $[4.00] per ton [IS THIS THE CURRENT PRICE?] for the
first year after closing, increased by 3% in each year thereafter and actual
costs of hauling services for a period of four (4) years from the Closing Date.
The hauling charge contemplates delivery to the site of Three Rivers at
Gibsonton, Rostraver Township, Pennsylvania. The sales conducted by Three
Rivers, if any, shall not be construed to be in violation of any covenant not to
compete made in connection with the transaction contemplated by the Purchase
Agreement.
2. Three Rivers shall have the right to purchase from Commercial, for
internal consumption, asphalt products from any of the existing asphalt plants
(Adamsburg, Springfield Pike or Dunningsville), at a price that shall not exceed
the actual cost of the asphalt products (actual costs to include overhead) and
the actual costs of hauling services. The actual costs of asphalt products
shall be as set forth on the cost records of Commercial and the costs of hauling
services shall be the actual costs incurred by Commercial for hauling services.
Three Rivers shall attempt to order such asphalt products in non-peak time
periods. Commercial shall make reasonable efforts to accommodate Three Rivers
preferred delivery schedule. The right shall continue for a period of four (4)
years from the Closing Date.
3. Commercial shall continue to provide accounting, bookkeeping, payroll
and administrative services to Three Rivers in continuation of the services
presently provided and for the charges that are presently in effect; that is, a
charge of 2% of gross revenue up to a maximum charge of $[3,000.00] a month [IS
THIS THE CURRENT ARRANGEMENT?]. This obligation shall continue for a period of
two (2) years following the Closing Date.
4. Three Rivers shall provide CATS with the first call to provide
trucking services for the business of Three Rivers. The rates for such services
shall be the standard rates charged by CATS to its prime customers and the
obligation to make first call shall continue so long as CATS provides adequate
and complete service to Three Rivers. If service is not acceptable, Three
Rivers will provide written notice thereof to a designated executive in
Connellsville with a copy to the CEO of USS Holdings, Inc. If the problem is
not promptly remedied or if three such notices are delivered in any period of
three consecutive months, Three Rivers reserves the right to purchase and
operate its own trucks and trailers. The term of the Agreement shall be four
(4) years from the date of closing. CATS shall consent to Three Rivers
providing hauling services to Commercial under the Agreement contemplated herein
on terms substantially similar to those of independent truckers for Commercial
in the year before the date of closing (e.g., Mikel, Rathway Trucking,
Arsenberger Trucking).
5. In the event that Three Rivers exercises its right to purchase its own
trucks and trailers pursuant to Paragraph 4, Commercial shall use, on a first
call basis on each working day as its business requires, tri-axle dump trucks
and trailers supplied by Three Rivers or supplied on
<PAGE>
behalf of Three Rivers. The dispatchers of trucks for Commercial shall exhaust
up to twenty (20) tri-axle dump trucks or trailers that may be available from
Three Rivers before securing the services of other truckers. However, Commercial
shall not be required to use Three Rivers' trucks and trailers in January and
February of each year. Three Rivers shall not be obligated to supply tri-axle
dump trucks or trailers if those tri-axle dump trucks or trailers are otherwise
obligated for the business of Three Rivers and shall promptly notify Commercial
if any trucks are not available to be scheduled for use on any given day. The
price to be paid for the services shall be the price charged for similar
services by CATS. This Agreement shall be in force and effect for a period of
four (4) years from the date of closing.
6. Commercial and Three Rivers shall agree to the designation of the
Gibsonton facility of Three Rivers, located at Gibsonton, Rostraver Township,
Pennsylvania, as the exclusive transloading facility for imported aggregates
(aggregates that are not produced at the quarries of Commercial) that are
transported by barge or rail for unloading and all other products for use at the
facilities of Commercial transported by barge or rail and Three Rivers shall
agree to provide the services necessary therefor. In the event that Commercial
produces products for shipment by barge, it shall ship such products exclusively
from the Gibsonton Facility of Three Rivers. The prices to be charged to
Commercial by Three Rivers shall be the lowest regularly established charges for
the applicable function as determined from time to time by Three Rivers. This
exclusive transloading facility designation shall be in effect for a period of
five (5) years from the date of closing.
7. The waiver with respect to any covenant not to compete shall be
effective regardless of whether same is referenced in the covenant not to
compete and the provisions of this Agreement shall prevail in the event of a
conflict with any covenant not to compete executed in connection with the
transaction contemplated by the Purchase Agreement.
8. The owners of Three Rivers shall give Commercial a right of first
refusal should they elect to sell Three Rivers or if Three Rivers decides to
sell its terminal property. The right of first refusal shall apply to the whole
business or a part thereof, whichever is being sold by Three Rivers. The right
of first refusal shall not apply to transfers by the existing owners to members
of their immediate families or to corporations or other entities controlled by
the existing owners or members of their immediate families or to trusts. This
agreement shall be in force and effect for a period of four (4) years from the
date of closing.
9. If Three Rivers expands its terminal or acquires one or more
additional terminals, the parties will negotiate in good faith to adjust the
foregoing provisions appropriately.
2
<PAGE>
Exhibit 7.10
1. With respect to the slag produced as a result of the molybdenum
recovery process conducted by Gibsonton Industries, L.P. ("Gibsonton") at the
---------
Langeloth facility under existing contract with Langeloth, Commercial shall have
exclusive rights to market slag and to purchase the slag for its internal use or
resale. Commercial shall have no rights with respect to molybdenum recoverable
from the slag. Commercial shall pay the price provided in the prevailing
agreement with Gibsonton. Gibsonton shall have the right to sell the slag not
marketed by Commercial, it being understood that the owner requires the
depletion of the slag piles at the Langeloth site and that those sales shall not
be construed to be in violation of any covenant not to compete made in
connection with the transaction contemplated by the Purchase Agreement. For
those sales conducted by Commercial, the sales shall take into account and shall
incorporate the limitations of use for those products and shall inform any of
its customers by appropriate notice of those limitations. The rights shall
continue for a period equal to the shorter of four (4) years from the Closing
Date or the termination of Gibsonton's rights with Langeloth.
2. The waiver with respect to any covenant not to compete shall be
effective regardless of whether same is referenced in the covenant not to
compete and the provisions of this Agreement shall prevail in the event of a
conflict with any covenant not to compete executed in connection with the
transaction contemplated by the Purchase Agreement.
<PAGE>
Exhibit 8.3
Form of Opinion of Buyer's Counsel
1. Buyer is a corporation validly existing and in good standing under the
laws of the State of Delaware.
2. The Buyer has full corporate power and authority to execute and
deliver the Purchase Agreement and to consummate the Contemplated Transactions.
The Purchase Agreement constitutes the legal, valid and binding obligation of
Buyer, enforceable against Buyer in accordance with its terms [INSERT BANKRUPTCY
EXCEPTION].
3. The execution, delivery and performance of the Purchase Agreement by
Buyer and the consummation of the Contemplated Transactions (i) have been
authorized by all necessary corporate action on the part of Buyer and (ii) will
not (w) conflict with the terms, conditions or provisions of the Organizational
Documents of Buyer, (x) violate any provision of law or, to our knowledge, any
Order to which Buyer is subject, (y) to our knowledge, result in a breach or
violation of any of the terms of, or constitute a default by Buyer under, any
material indenture, mortgage, loan agreement, lease or other agreement or
instrument to which Buyer is a party or by which it is bound.
<PAGE>
Exhibit 7.13
BARGAIN AND SALE DEED
<PAGE>
Exhibit 10.1(e)
FORM OF EXTENSION ESCROW AGREEMENT
This ESCROW AGREEMENT (this "Agreement"), dated as of this _____ day of
---------
_____________, 1999 is made and entered into by and among MELLON BANK, N.A. (the
"Escrow Agent"), U.S. SILICA COMPANY, a Delaware corporation ("Buyer"), and
------------ -----
JOSEPH H. SHEARER and R. SCOTT SHEARER (collectively, the "Shareholders"), and
------------
CATS, INC., a Pennsylvania corporation, the JHS FAMILY PARTNERSHIP, a
Pennsylvania limited partnership, and the RSS FAMILY PARTNERSHIP, a Pennsylvania
limited partnership (collectively, the "Partnership Sellers") and THE DELL H.
-------------------
SHEARER GRANDCHILDREN'S TRUST, a Pennsylvania trust (the "Trust Seller"; the
------------
Shareholders, the Partnership Sellers and the Trust Sellers being hereinafter
collectively referred to as the "Sellers" and each, individually, as a "Seller")
------- ------
pursuant to the terms of that certain Purchase Agreement dated as of
_____________, 1999 (the "Purchase Agreement") by and among the Buyer and the
------------------
Sellers.
In consideration of the mutual premises, obligations and agreements
contained herein, the parties, intending to be legally bound, do hereby agree as
follows:
1. The Escrow Agent acknowledges receipt of the sum of Seven Million
Dollars ($7,000,000.00) deposited by the Buyer (together with any interest
earned thereon and any interest earned on any reinvested funds, the "Extension
---------
Escrow Amount") and hereby accepts its appointment and agrees to act as Escrow
- -------------
Agent and to hold the Extension Escrow Amount and to disburse the Extension
Escrow Amount under the terms and conditions of this Agreement. The Escrow
Agent undertakes to perform only such duties as are expressly set forth herein.
2. (a) If, on or prior to the Release Date (as hereinafter defined), the
Escrow Agent shall not have received a Seller Demand (as hereinafter defined),
the Escrow Agent shall
<PAGE>
disburse to the Buyer the Extension Escrow Amount five business days following
the Release Date. For purposes of this Agreement, the term "Release Date" shall
------------
mean the earlier of the date of the closing under the Purchase Agreement (of
which the Escrow Agent shall be notified in writing by the Buyer and the Seller
Agent as provided below), or [____________, 1999] [THREE DAYS AFTER THE LAST DAY
OF THE EXTENSION] (the "Extension Date"). The Buyer and the Seller Agent agree,
--------------
no later than the day immediately following the date of the closing under the
Purchase Agreement, to notify the Escrow Agent in writing of such closing date.
(b) If, after the Extension Date, the Seller Agent shall file with the
Escrow Agent a written and dated demand (the "Seller Demand") for the payment to
-------------
the Seller Agent of all or a portion of the Extension Escrow Amount stating (i)
that the Sellers are entitled to all or a portion of such Extension Escrow
Amount pursuant to Article X of the Purchase Agreement and (ii) that the Seller
Agent has contemporaneously delivered a copy of the Seller Demand to the Buyer,
the Escrow Agent shall disburse to the Seller Agent the requested funds from the
Extension Escrow Amount on the tenth (10th) business day following the date of
the Seller Demand unless the Buyer delivers an objection in writing (the "Buyer
-----
Objection") to the Escrow Agent (with a copy to the Seller Agent) prior to the
- ---------
close of business on the tenth (10th) business day following the date of the
Seller Demand to the effect that the Seller Agent is not so entitled, in which
case no disbursement shall be made by the Escrow Agent from the Extension Escrow
Amount pursuant to the Seller Demand except in accordance with the terms and
conditions hereof. The Escrow Agent agrees to provide the Buyer with a copy of
any Seller Demand and to provide the Seller Agent with a copy of any Buyer
Objection, in each case within two business days after receipt by the Escrow
Agent thereof.
2
<PAGE>
(c) At any time after the date hereof, the Escrow Agent may be advised in
writing by the Buyer and the Seller Agent to pay all or a portion of the
Extension Escrow Amount pursuant to a joint written instruction (the "Joint
-----
Instruction"), in which case the Escrow Agent shall pay the Extension Escrow
- -----------
Amount, or portion thereof, in accordance with the terms and in the manner set
forth in such Joint Instruction.
(d) If the Buyer and the Seller Agent are unable to resolve any
disagreement with respect to their rights to the payment of all or a portion of
the Extension Escrow Amount pursuant to this Section 2 within twenty (20)
business days after the date of a Buyer Objection, the dispute shall be settled
as provided in Section 4 hereof.
(e) The Escrow Agent shall hold the Extension Escrow Amount until it is
required to disburse it pursuant to this Section 2 or as provided in Section
3(c) or 4 hereof. Upon delivery of the entire Extension Escrow Amount by the
Escrow Agent pursuant to this Section 2 or as provided in Section 3(c) or 4
hereof, this Escrow Agreement shall terminate. The date upon which such
termination occurs shall be the "Termination Date."
----------------
(f) The Seller Agent and the Buyer each agree that they will give to each
other the copies of any Seller Demand or Buyer Objection, as the case may be,
concurrently with the delivery thereof to the Escrow Agent.
(g) If any of the Extension Escrow Amount is withheld pursuant to the
terms of paragraph (b) of this Section 2, the parties agree to provide the
Escrow Agent with a Joint Instruction upon the resolution of any claim which
caused the withholding of funds and upon receipt of such Joint Instruction, the
Escrow Agent shall release such funds in accordance with such Joint Instruction.
3
<PAGE>
3. (a) Pending disbursement of funds held by it hereunder, the Escrow
Agent shall keep the Extension Escrow Amount invested in FDIC insured
certificates of deposit, obligations of the United States federal government (or
any agency thereof) or money market accounts of the Escrow Agent at market
rates, maturing in each case in ninety (90) days or less (each a "Permitted
---------
Investment"). The Buyer shall direct the Escrow Agent as to which Permitted
- ----------
Investment(s) the Escrowed Amount shall be invested.
(b) Any interest earned on the originally deposited Extension Escrow
Amount, as well as any interest earned on any reinvested funds, shall be held by
the Escrow Agent as, and shall be deemed to be, part of the Extension Escrow
Amount and shall be disbursed pursuant to the terms of Sections 2, 3(c) and 4
hereof.
(c) Except as provided below in this subparagraph (c), the [Buyer]
shall be responsible for any federal, state or local taxes and any other
assessments which may be imposed and payable with respect to the earnings on the
Extension Escrow Amount (collectively, "Taxes"). To cover the payment by [Buyer]
-----
of such Taxes, the Escrow Agent shall, not later than 30 days after the end of
each calendar year during the term of this Agreement, if applicable, disburse to
the [Buyer] an amount of cash equal to (i) the earnings on the Extension Escrow
Amount for such calendar year multiplied by (ii) 45%. With respect to any
earnings on the Extension Escrow Amount as to which Taxes have not yet been paid
as of the Termination Date, such earnings shall be treated as taxable income to
the party or parties to whom such amounts are distributed and such party or
parties shall be solely responsible for any Taxes which may be imposed on such
amounts. The Escrow Agent shall deliver to the Buyer and each of the Sellers
such forms as may be required by law reporting such earnings as income of the
Buyer or the Sellers, as the case may be.
4
<PAGE>
4. (a) Any controversy or claim arising out of or relating to this
Agreement or the rights of the Buyer or the Sellers to the payment of all or a
portion of the Extension Escrow Amount shall be settled in accordance with
Section 12.4 of the Purchase Agreement. The Escrow Agent shall not be a party
to any such proceedings.
(b) Any portion of the Extension Escrow Amount being held pending
resolution of controversies or claims may also be disbursed in accordance with
the terms of a Joint Instruction.
5. (a) This Agreement expressly sets forth all the duties of the Escrow
Agent with respect to any and all matters pertinent hereto. No implied duties
or obligations shall be read into this Agreement against the Escrow Agent. The
Escrow Agent shall not be bound by the provisions of any agreement among the
other parties hereto except this Agreement.
(b) The Escrow Agent shall not be liable, except for its own gross
negligence or willful misconduct. The Sellers and the Buyer, jointly and
severally, shall indemnify and hold harmless the Escrow Agent (and any successor
Escrow Agent) from and against any and all losses, liabilities, claims, actions,
damages and expenses, including reasonable attorneys' fees and disbursements,
actually and reasonably incurred without gross negligence or bad faith on the
part of the Escrow Agent, arising out of and in connection with this Agreement.
Without limiting the foregoing, the Escrow Agent shall in no event be liable in
connection with its investment or reinvestment of any cash held by it hereunder
in good faith, in accordance with the terms hereof, including, without
limitation, any liability for any delays (not resulting from its own gross
negligence or willful misconduct) in the investment or reinvestment of the
Extension Escrow Amount, or any loss of interest incident to any such delays.
5
<PAGE>
(c) The Escrow Agent shall be entitled to rely in good faith upon any
order, judgment, certification, demand, notice, instrument, arbitration award or
other writing delivered to it hereunder without being required to determine the
authenticity or the correctness of any fact stated therein or the propriety or
validity of the service thereof. The Escrow Agent may act in reliance upon any
instrument or signature believed by it in good faith to be genuine and may
assume that any person purporting to give notice or receipt or advice or make
any statement or execute any document in connection with the provisions hereof
has been duly authorized to do so.
(d) The Escrow Agent may act pursuant to the advice of counsel with
respect to any matter relating to this Agreement and shall not be liable for any
action taken or omitted in good faith in accordance with such advice.
(e) The Escrow Agent does not have any interest in the Extension
Escrow Amount but is serving as escrow holder only and having only possession
thereof. Any payments of income from the Extension Escrow Amount shall be
subject to applicable withholding regulations then in force with respect to
United States taxes. The Sellers and the Buyer will provide the Escrow Agent
with appropriate W-9 forms for tax identification number certification. This
paragraph and paragraph (b) of this Section 5 shall survive notwithstanding
termination of this Agreement or the resignation of the Escrow Agent.
(f) The Escrow Agent shall not be called upon to advise any party as
to the wisdom in taking or refraining from taking any action with respect to any
amounts deposited hereunder.
(g) The Escrow Agent (and any successor Escrow Agent) may at any time
resign as such by delivering the Extension Escrow Amount to any successor Escrow
Agent jointly
6
<PAGE>
designated by the Seller Agent and the Buyer in writing, or to any court of
competent jurisdiction, whereupon the Escrow Agent shall be discharged of and
from any and all further obligations arising in connection with this Agreement.
The resignation of the Escrow Agent will take effect on the earlier of (i) the
appointment of a successor (including by a court of competent jurisdiction) or
(ii) the day which is thirty (30) days after the date of delivery of its written
notice of resignation to the other parties hereto. If at that time the Escrow
Agent has not received a designation of a successor Escrow Agent, the Escrow
Agent's sole responsibility after that time shall be to safekeep the Extension
Escrow Amount until receipt of a designation of successor Escrow Agent pursuant
to a Joint Instruction or a final order of a court of competent jurisdiction.
(h) The Escrow Agent shall have no responsibility for the contents of
any writing of any third party contemplated herein as a means to resolve
disputes and may rely in good faith without any liability upon the contents
thereof.
(i) In the event of any disagreement between the Sellers and the Buyer
resulting in adverse claims or demands being made in connection with the
Extension Escrow Amount, or in the event that the Escrow Agent in good faith is
in doubt as to what action it should take hereunder, the Escrow Agent shall be
entitled to retain the Extension Escrow Amount until the Escrow Agent shall have
received (i) a Joint Instruction directing delivery of the Extension Escrow
Amount; or (ii) a final non-appealable order of a court of competent
jurisdiction directing the delivery of the Extension Escrow Amount.
(j) [Escrow Agent to be paid from interest earned in account.]
6. Each Seller hereby appoints [NAME] as the Seller Agent, and [NAME]
hereby accepts such appointment, to act as such Seller's exclusive agent and
attorney-in-fact to act on its behalf in connection with, and to facilitate the
consummation of, the transactions contemplated
<PAGE>
by this Agreement. The Seller Agent shall take, and each Seller agrees that the
Seller Agent is irrevocably authorized and empowered in the name and on behalf
of each Seller to take, any and all actions which the Seller Agent deems
necessary or appropriate under this Agreement to be taken for and on behalf of
each Seller, as fully as if such party was acting on his own behalf, which shall
include, without limitation, the power and authority to (i) accept notices
hereunder on behalf of the Sellers, to issue or determine not to issue, as the
case may be, Seller Demands, (ii) agree to such amendments or modifications to
this Agreement as the Seller Agent, in his sole discretion, determines to be
desirable, (iii) execute and deliver such waivers and consents in connection
with this Agreement as the Seller Agent, in his sole discretion, may deem
necessary or desirable, (iii) collect and receive all moneys and other proceeds
and property payable to the Sellers pursuant to the terms of this Agreement;
(iv) enforce and protect the rights and interests of the Sellers or to refrain
from enforcing any right of the Seller, as the case may be, (v) settle or
compromise any claims asserted under this Agreement; and (vi) file and prosecute
appeals from any decision, judgment or award rendered in any such action,
proceeding or investigation as the Seller Agent, in his sole discretion, may
deem necessary or desirable.
7. Neither party may assign any of its rights or obligations under this
Agreement without the prior written consent of the other parties, except as
provided in Section 5 with respect to a resignation by the Escrow Agent and
except that Buyer may assign its rights and obligations under this Agreement to
one or more of its affiliates, for so long as such entity remains an affiliate
thereof, and Buyer or such affiliate(s) may assign or grant a security interest
in, all of its rights and/or obligations under this Agreement (i) for collateral
security purposes, to the Buyer's lenders and/or investors as security for
Buyer's or any such affiliate's obligations to such lenders or investors (and
such lenders or investors may exercise remedies with respect to
8
<PAGE>
such assignment or security interest), and (ii) to a purchaser in connection
with a sale of the Acquired Companies (as defined in the Purchase Agreement) or
a sale of a substantial component of the Acquired Companies. Notwithstanding the
assignment of rights and obligations under this Agreement pursuant to the
provisions stated hereinabove, it is understood and agreed that the assignor
shall remain responsible for its obligations under this Agreement and, in the
case of a partial assignment, shall be the only party entitled to enforce the
rights and remedies which would otherwise be available to an assignee of the
Agreement. No such assignment shall in any way limit or restrict the assignor's
rights and remedies. Subject to the preceding sentence, this Agreement will
apply to, be binding in all respects upon, and inure to the benefit of the
successors and permitted assigns of the parties. Nothing expressed or referred
to in this Agreement will be construed to give any person other than the parties
to this Agreement any legal or equitable right, remedy, or claim under or with
respect to this Agreement or any provision of this Agreement. This Agreement and
all of its provisions and conditions are for the sole and exclusive benefit of
the parties to this Agreement and their successors and permitted assigns. This
Agreement will be governed by the laws of the Commonwealth of Pennsylvania
without regard to conflicts of laws principles.
8. This Agreement may not be modified except by a written agreement
executed by the party to be charged with the modification.
9. All notices, consents, waivers, and other communications under this
Agreement must be in writing and will be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt), (b) sent by telecopier
(with written confirmation of receipt), provided that a copy is mailed by
--------
registered or certified mail, return receipt requested, or (c) when received by
the addressee, if sent by a nationally recognized overnight delivery service
9
<PAGE>
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):
To the Escrow Agent:
[To be provided]
To the Sellers or the Seller Agent:
[To be provided]
With a copy to:
Reed Smith Shaw & McClay LLP
435 Sixth Avenue
Pittsburgh, PA 15219
Attention: David L. DeNinno
Telecopier No.: 412-288-3063
To the Buyer:
U.S. Silica Company
P.O. Box 187
Berkeley Springs VN 25411
Attention: President
Telecopier No.: 304-258-3500
With a copy to:
D. George Harris & Associates, Inc.
399 Park Avenue, Thirty-second Floor
New York, New York 10022
Attention: Donald G. Kilpatrick
Telecopier No.: 212-207-6470
With a copy to:
Winthrop, Stimson, Putnam & Roberts
One Battery Park Plaza
New York, New York 10004-1490
Attention: Kenneth E. Adelsberg
Telecopier No.: 212-858-1500
10
<PAGE>
10. This Agreement may be executed in one or more counterparts, each of
which will be deemed to be an original copy of this Agreement and all of which,
when taken together, will be deemed to constitute one and the same agreement.
11. The term "business day" as used in this Agreement shall mean any day
------------
other than a Saturday, Sunday, or public holiday under the laws of the
Commonwealth of Pennsylvania.
12. THE BUYER, THE SELLERS AND THE ESCROW AGENT SPECIFICALLY WAIVE THE
RIGHT TO TRIAL BY JURY IN RESOLVING ANY CLAIM OR COUNTERCLAIM RELATED TO THIS
AGREEMENT. The Buyer and the Sellers agree that any legal action or proceeding
brought against the Escrow Agent, or to which the Escrow Agent is joined,
relating to this Agreement or the Escrow Agent's performance hereunder, shall be
brought exclusively in any state or federal court sitting in Pennsylvania, and
the Buyer and the Sellers each waive, to the fullest extent permitted by law,
(a) any objection that any of them may respectively, now or hereafter, have to
the laying of the venue of any such action or proceeding brought in any such
court, and (b) any claim that any such action or proceeding brought in any such
court has been brought in an inconvenient forum.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
[THE ESCROW AGENT]
By: _______________________________
Name:
Title:
U.S. SILICA COMPANY
By: _______________________________
Name:
Title:
11
<PAGE>
Sellers:
SHAREHOLDERS:
_______________________________________
Joseph H. Shearer
_______________________________________
R. Scott Shearer
COMMERCIAL AGGREGATES
TRANSPORTATION AND SALES, L.P.
By: CATS, Inc., General Partner:
By: __________________________________
Title:
By: JHS Family Partnership
By: __________________________________
General Partner
By: RSS Family Partnership
By: __________________________________
General Partner
By: The Dell H. Shearer Granchildren's Trust
By: __________________________________
Co-Trustee
By: __________________________________
Co-Trustee
SELLER AGENT:
____________
[NAME]
12
<PAGE>
EXHIBIT 2.1.1
AMENDMENT NO. 1 TO PURCHASE AGREEMENT
THIS AMENDMENT NO. 1 TO THE PURCHASE AGREEMENT is made as of this 1st day
of October, 1999, among U.S. Silica Company, a Delaware Corporation; Joseph H.
Shearer; R. Scott Shearer; CATS, Inc., a Pennsylvania corporation; the JHS
Family Partnership, a Pennsylvania limited partnership; the RSS Family
Partnership, a Pennsylvania limited partnership; and the Dell H. Shearer
Grandchildren's Trust, a Pennsylvania Trust.
WHEREAS, the parties previously entered into a Purchase Agreement dated as
of August 26, 1999 ("Purchase Agreement") and now desire to amend the Purchase
Agreement in certain respects as set forth herein;
NOW THEREFORE, in consideration of this premise and intending to be legally
bound hereby, the parties hereto agree as follows:
1. The term "Sellers" shall be deleted and replaced with the term
"Shareholders" in Section 2.5(b) of the Purchase Agreement.
2. The following two new paragraphs shall be added to Section 2.5(b) of
the Purchase Agreement:
Buyer agrees that if and when Commercial or Buyer receives all or any
portion of the S Corp Tax Deposit, Buyer shall or shall cause
Commercial to pay to the Shareholders the full amount so received
within three business days after receipt thereof. If (i) Commercial or
Buyer receives notification that the IRS has offset the full amount of
the S Corp Tax Deposit, or (ii) the amount so received by Commercial
or the Buyer and paid to the Shareholders is not equal to the full
amount of the S Corp Tax Deposit, because such full amount has been
offset by the IRS, and, in either case, such offset is in respect of
Tax Liabilities of Commercial or the Buyer related to any period
beginning on or after the Closing Date (a "Buyer Caused Offset"), then
the Buyer shall also pay to the Shareholders the amount of such Buyer
Caused Offset. If, however, any such offset is in respect of Tax
liabilities of Commercial or the Shareholders related to any period
occurring prior to the Closing Date, then the Buyer shall only be
responsible for paying to the Shareholders such amount that has been
actually received by Commercial or Buyer (plus the amount of any Buyer
Caused Offset, if any).
Upon payment by the Buyer or Commercial to the Shareholders of the
amounts required by this Section 2.5(b), the Buyer and the
Shareholders shall (i) execute and deliver to Lion Abstract Limited
Partnership a joint written instruction stating that the Escrow
Agreement for the S Corp Tax Deposit is terminated, effective
immediately and (ii) execute and deliver a joint written instruction
to Banque Nationale De Paris, New York Branch instructing Banque
Nationale De Paris, New York Branch to immediately cancel the letter
of credit for the S Corp Tax Deposit, provided the letter of credit in
respect of the S Corp Tax Deposit has not terminated in accordance
with its terms.
<PAGE>
3. The parties agree that the information and documents referenced in
clauses (a) and (b) of the first sentence of Section 12.5 of the
Purchase Agreement shall include, without limitation, all that
necessary or desirable in determining the boundaries of the Property.
4. The Sellers agree that $4,000,000 of the Aggregate Purchase Price owed
to Joseph H. Shearer as a Seller of the Acquired Shares and $4,000,000
of the Aggregate Purchase Price owed to R. Scott Shearer a Seller of
the Acquired Shares shall be used to fund the Closing Escrow Amount.
5. This Amendment may be executed in one or more counterparts, all of
which together shall be deemed to be one and the same instrument
binding upon the parties hereto.
6. This Amendment shall be governed by and construed and interpreted in
accordance with the laws of the Commonwealth of Pennsylvania.
7. This Amendment shall be binding upon the parties hereto and their
respective heirs, personal representatives, successors and assigns.
8. Except as specifically amended by this Amendment, the Purchase
Agreement and the provisions thereof shall continue in full force and
effect without modification.
9. Capitalized terms not defined herein shall have the meaning assigned
to them in the Purchase Agreement.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first written above.
Buyer:
US SILICA COMPANY Sellers:
By: /s/ SHAREHOLDERS:
------------------
/s/ Joseph H. Shearer
---------------------------
Joseph H. Shearer
/s/ R. Scott Shearer
---------------------------
R. Scott Shearer
2
<PAGE>
COMMERCIAL AGGREGATES TRANSPORTATION
AND SALES, L.P.
By: CATS, Inc., General Partner
By: /s/
---------------------------------
Title: Pres.
------------------------------
By: JHS Family Partnership
By: /s/
---------------------------------
General Partner
By: RSS Family Partnership
By: /s/
---------------------------------
General Partner
By: The Dell H. Shearer Grandchildren's
Trust
By: /s/
---------------------------------
Co-Trustee
By: /s/
---------------------------------
Co-Trustee
3
<PAGE>
EXHIBIT 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
-of-
USS INTERMEDIATE HOLDCO, INC.
_______________________________
Pursuant to Sections 242 and 245 of the General
Corporation Law of the State of Delaware
_______________________________
USS Intermediate Holdco, Inc., hereinafter called the "Corporation", a
corporation organized and existing under the General Corporation Law of the
State of Delaware, does hereby certify that:
FIRST: The Corporation's original Certificate of Incorporation was
filed with the Secretary of State of the State of Delaware on January 9, 1996.
SECOND: This Amended and Restated Certificate of Incorporation
restates, integrates and amends the Certificate of Incorporation and has been
duly adopted in accordance with Sections 242 and 245 of the General Corporation
Law of the State of Delaware.
THIRD: The text of the Certificate of Incorporation of the Corporation
is hereby amended and restated to read in its entirety as follows:
ARTICLE FIRST
-------------
The name of the Corporation is USS INTERMEDIATE HOLDCO, INC.
(hereinafter sometimes called the "Corporation").
ARTICLE SECOND
--------------
<PAGE>
The address of the Corporation's registered office in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, City of Wilmington,
County of New Castle, State of Delaware 19801. The name of its registered agent
at such address is The Corporation Trust Company.
ARTICLE THIRD
-------------
The nature of the business or purposes to be conducted or promoted are
to engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware.
ARTICLE FOURTH
--------------
The total number of shares of stock which the Corporation shall have
authority to issue is 25,000 shares, consisting of (i) 20,000 shares of
preferred stock, par value $.01 per share ("Preferred Stock") and (ii) 5,000
shares of common stock, par value $.01 per share ("Common Stock").
A. PREFERRED STOCK
Part 1. Ranking. The Preferred Stock shall, with respect to amounts
-------
payable on redemption and distributions upon the liquidation, winding-up and
dissolution of the Corporation, rank senior to all classes of common stock of
the Corporation and to each other class of capital stock or series of preferred
stock of the Corporation (the "Junior Securities"). The Corporation may not
issue any new class or series of preferred securities or other capital stock
ranking senior to or on a parity with the Preferred Stock as to dividends,
distributions,
2
<PAGE>
amounts payable on redemption and distributions upon the liquidation, winding-up
and dissolution of the Corporation without the approval of the holders of at
least 66% of the shares of the Preferred Stock then outstanding, voting or
consenting, as the case may be, separately as one class, except that without the
approval of the holders of the Preferred Stock, the Corporation may issue shares
of preferred securities or other capital stock the proceeds of which are used to
redeem or repurchase all shares of the Preferred Stock then outstanding.
Part 2. Dividends. The Preferred Stock shall not accrue dividends
---------
prior to the Mandatory Redemption Date, following which they shall accrue
dividends at the rate of nine percent (9%) of their liquidation preference per
annum, from the Mandatory Redemption Date until the date sufficient funds are
made available for their redemption. Such dividends, if any, shall be payable in
cash on redemption.
Part 3. Mandatory Redemption. The Preferred Stock shall be subject
---------------------
to mandatory redemption (subject to the legal availability of funds therefor) in
whole or in part at such time as USS Holdings, Inc. ("Holdings") redeems any or
all of the outstanding shares of the Series C Preferred Stock, par value $.01
per share, of Holdings ("Holdings Preferred Stock"). Upon any such redemption of
shares of Holdings Preferred Stock, the Corporation shall be required to redeem
the number of shares of Preferred Stock equal to the number of shares of
Holdings Preferred Stock so redeemed at a redemption price equal to the
redemption price paid by Holdings with respect to such redemption of Holdings
Preferred Stock (after giving effect to all applicable provisions of the Stock
Purchase Agreement). The Corporation shall be obligated to redeem Preferred
Stock only to the extent permitted under the General Corporation Law of the
State of Delaware.
3
<PAGE>
Part 4. Liquidation. Upon any voluntary or involuntary liquidation,
-----------
dissolution or winding-up of the Corporation, the holders of the Preferred Stock
shall be entitled to be paid out of the assets of the Corporation available for
distribution, $1,000.00 plus all accumulated and unpaid dividends from the
Mandatory Redemption Date to the dates sufficient funds are made available for
redemption (or if such event occurs prior to the Mandatory Redemption Date, the
Discounted Liquidation Preference) per share before any distribution is made on
any Junior Securities, including, without limitation, common stock of the
Corporation. After payment of the full amount of the liquidation preference to
which they are entitled, the holders of the Preferred Stock will not be entitled
to any further participation in any distribution of assets of the Corporation.
However, neither the sale, conveyance, exchange or transfer (for cash, shares of
stock, securities or other consideration) of all or substantially all of the
property or assets of the Corporation nor the consolidation or merger of the
Corporation with or into one or more corporations shall be deemed to be a
liquidation, dissolution or winding-up of the Corporation.
B. COMMON STOCK
Part 1. Voting Rights.
-------------
1A. Generally. Except as specifically required under the General
---------
Corporation Law of the State of Delaware, the holders of Common Stock will be
entitled to one vote per share and shall vote as one class on all matters to be
voted on by the Corporation's stockholders.
1B. Election of Directors. The number of directors which shall
---------------------
constitute the Board of Directors shall not be less than three nor more than
nine which exact number shall be established in the By-laws of the Corporation
and shall initially be three.
4
<PAGE>
Part 2. Dividends. When and as dividends are declared thereon, the
---------
holders of Common Stock then outstanding shall be entitled to share equally and
ratably, on a share for share basis, in such dividends.
Part 3. Liquidation. After any payments required to be made to the
-----------
holders of the Preferred Stock then outstanding, the holders of Common Stock
then outstanding shall be entitled to receive equally and ratably, on a share-
for-share basis, all assets of the Corporation to be distributed upon any
liquidation, dissolution or winding up of the Corporation.
C. ISSUANCE OF STOCK
Except as otherwise provided in this Certificate of Incorporation, the
Board of Directors shall have authority to authorize the issuance, from time to
time, without any vote or other action by the stockholders, of any or all shares
of stock of the Corporation of any class or series at any time authorized, and
any securities convertible into or exchangeable for any such shares, and any
options, rights or warrants to purchase or acquire any such shares, in each case
to such persons and on such terms (including as a dividend or distribution on or
with respect to, or in connection with a split or combination of, the
outstanding shares of stock of the same or any other class or series) as the
Board of Directors from time to time in its discretion lawfully may determine.
Shares so issued shall be fully paid stock, and the holders of such stock shall
not be liable to any further call or assessment thereon.
D. DEFINITIONS
For purposes of this Amended and Restated Certificate of Incorporation:
"Closing" has the meaning ascribed thereto in the Stock Purchase
Agreement.
5
<PAGE>
"Discounted Liquidation Preference" means the liquidation preference
discounted from the Mandatory Redemption Date to the date of determination at
the rate of 7.18% compounded annually.
"Mandatory Redemption Date" means the tenth anniversary of the
Closing.
"Stock Purchase Agreement" means the Stock Purchase Agreement dated as
of October 23, 1995 and amended as of January 29, 1996 between U.S. Borax Inc.
and USS Holdings, Inc., as the same may be amended from time to time.
ARTICLE FIFTH
-------------
The following additional provisions are inserted for the management of
the business and for the conduct of the affairs of the Corporation, and for the
creation, definition, limitation and regulation of the powers of the
Corporation, the directors and the stockholders:
1. Election of directors need not be by written ballot. The Board of
Directors shall have power to make, alter, amend and repeal the By-Laws of the
Corporation and to fix the compensation of directors for services in any
capacity.
2. Any corporate action, with respect to which the vote of the
stockholders at a meeting thereof is required or permitted by any provision of
the General Corporation Law of the State of Delaware or of the Certificate of
Incorporation or the By-Laws of the Corporation, is authorized to be taken and
may be taken without that vote and meeting, and that vote and meeting may be
dispensed with, with the written consent of the holders of a majority (or, if
with respect to a particular corporate action where the General Corporation Law
of the State of Delaware or the Certificate of Incorporation or the By-Laws of
the Corporation specifies a greater percentage, by the holders of that greater
percentage) of the stock that would have been
6
<PAGE>
entitled to vote upon that action if a meeting were held. Prompt notice shall be
given to all stockholders of the taking of any corporate action pursuant to the
provisions of this paragraph 2 unless that action has been consented to in
writing by the holders of all of the stock that would have been entitled to vote
upon that action if a meeting were held.
3. A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived an improper
personal benefit.
Any repeal or amendment of this Article, insofar as it would in any
way enlarge the liability of any director of the Corporation, shall be
ineffective with respect to any acts or omissions occurring prior to the date of
such repeal or amendment.
ARTICLE SIXTH
-------------
The Corporation shall indemnify any person who was or is a party, or
is threatened to be made a party, to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, including an action by or in the right of the Corporation, by
reason of the fact that he, or the person whose legal representative he is, (1)
is or was a stockholder, director, officer, employee or agent of the Corporation
(including the incorporator thereof), or (2) is or was serving at the request of
the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, or (3) is or
was a director, officer or employee of the
7
<PAGE>
Corporation serving at the request of the Corporation as a fiduciary of an
employee benefit plan or trust maintained for the benefit of employees of the
Corporation or employees of any such other enterprise, partnership, joint
venture, trust, or other enterprise, against judgments, fines, penalties,
amounts paid in settlement, and expenses, including attorneys' fees, actually
and reasonably incurred by him and the person whose legal representative he is,
in connection with such action, suit or proceeding, or any appeal therein, to
the fullest extent permitted by law.
Expenses which may be indemnifiable under this Article SIXTH in
defending an action, suit or proceeding may be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding as
authorized by the Board of Directors upon agreement by or on behalf of the
stockholder, director, officer, employee or agent, or his legal representative,
to repay such amount if he is later found not entitled to be indemnified by the
Corporation as authorized in this Article SIXTH.
The Corporation shall not indemnify any stockholder, director,
officer, employee or agent against judgments, fines, amounts paid in settlement
and expenses, including attorneys' fees, to an extent greater than that
authorized by this Article SIXTH, but the Corporation may procure insurance
providing greater indemnification and may share the premium cost with any
stockholder, director, officer, employee or agent on such basis as may be agreed
upon.
8
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Amended and
Restated Certificate of Incorporation to be signed by Anthony J. Petrocelli, its
Vice Chairman, and attested by Donald G. Kilpatrick, its Secretary, as of the
9th day of February, 1996.
USS INTERMEDIATE HOLDCO, INC.
By: /s/ Richard J. Nick
-------------------
Richard J. Nick
Vice President
ATTEST:
By: /s/ Donald G. Kilpatrick
------------------------
Donald G. Kilpatrick
Secretary
9
<PAGE>
EXHIBIT 3.1.1
CERTIFICATE OF AMENDMENT
OF
THE RESTATED CERTIFICATE OF INCORPORATION
OF
USS INTERMEDIATE HOLDCO, INC.
Pursuant to Section 242 of the
General Corporation Law of the
State of Delaware
USS Intermediate Holdco, Inc., a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), does hereby certify as follows:
FIRST: The name of the Corporation is USS Intermediate Holdco, Inc.
SECOND: The Certificate of Incorporation was filed with the Secretary of
State of the State of Delaware on January 9, 1996.
THIRD: Resolutions setting forth a proposed amendment to the Certificate
of Incorporation of the Corporation, declaring said amendment to be advisable
and directing that said amendment be considered by the stockholders of the
Corporation entitled to vote thereon were duly adopted by the Board of Directors
of the Corporation.
FOURTH: Thereafter, said amendment was approved in accordance with Section
228 of the General Corporation Law of the State of Delaware by written consent
of all the stockholders of the Corporation entitled to vote thereon.
FIFTH: The Certificate of Incorporation is hereby amended to change the
name of the Corporation.
Article "FIRST" of the Certificate of Incorporation shall be deleted, and
substituting in lieu thereof the following new Article "FIRST":
"FIRST: The name of the corporation is Better Minerals & Aggregates
Company (hereinafter sometimes called the "Corporation")."
SIXTH: Said amendment was duly adopted in accordance with the provisions
of Section 242 and of Section 245 of the General Corporation Law of the State of
Delaware.
<PAGE>
IN WITNESS WHEREOF, this certificate has been subscribed by the undersigned
who affirms that the statements made herein are true under the penalties of
perjury.
Dated: _________ ___, 1999
________________________
Name:
Title:
2
<PAGE>
EXHIBIT 3.2
BY-LAWS
of
USS INTERMEDIATE HOLDCO, INC.
(herein called the "Corporation")
________________________
ARTICLE I
STOCKHOLDERS
------------
Section 1.01 Annual Meeting. The Board of Directors by resolution shall
--------------
designate the time, place and date (which shall be, in the case of the first
annual meeting, not more than 13 months after the organization of the
Corporation and, in the case of all other annual meetings, not more than 13
months after the date of the last annual meeting) of the annual meeting of the
stockholders for the election of directors and the transaction of such other
business as may come before it.
Section 1.02 Special Meeting. Special meetings of the stockholders, for
---------------
any purpose or purposes, may be called at any time by the Chairman, the Vice-
Chairman, the President, any Vice-President, the Treasurer, the Secretary or the
Assistant Secretary by resolution of the Board of Directors. Special meetings of
stockholders shall be held at such place, within or without the State of
Delaware, as shall be fixed by the person or persons calling the meeting and
stated in the notice or waiver of notice of the meeting.
Section 1.03 Notice of Meetings of Stockholders. Whenever stockholders are
----------------------------------
required or permitted to take any action at a meeting, written notice of the
meeting shall be given
<PAGE>
(unless that notice shall be waived or unless the meeting is to be dispensed
with in accordance with the provisions of the General Corporation Law of the
State of Delaware and Article FIFTH of the Certificate of Incorporation of the
Corporation) which shall state the place, date and hour of the meeting and, in
the case of a special meeting, the purpose or purposes for which the meeting is
called. The written notice of any meeting shall be given, personally or by mail,
not less than ten nor more than sixty days before the date of the meeting to
each stockholder entitled to vote at such meeting. If mailed, such notice is
given when deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the Corporation.
When a meeting is adjourned to another time or place, notice need not be
given of the adjourned meeting if the time and place thereof are announced at
the meeting at which the adjournment is taken. At the adjourned meeting the
Corporation may transact any business which might have been transacted at the
original meeting. If the adjournment is for more than thirty days, or if after
the adjournment a new record date is fixed for the adjourned meeting, a notice
of the adjourned meeting shall be given to each stockholder of record entitled
to vote at the meeting.
Section 1.04 Quorum. At all meetings of the stockholders, the holders of
------
one-third of the stock issued and outstanding and entitled to vote thereat,
present in person or by proxy, shall constitute a quorum for the transaction of
any business.
When a quorum is once present to organize a meeting, it is not broken by
the subsequent withdrawal of any stockholders.
The stockholders present may adjourn the meeting despite the absence of a
quorum and at any such adjourned meeting at which the requisite amount of voting
stock shall be represented,
2
<PAGE>
the Corporation may transact any business which might have been transacted at
the original meeting had a quorum been there present.
Section 1.05 Method of Voting. The vote upon any question before the
----------------
meeting need not be by ballot. All elections and all other questions shall be
decided by a plurality of the votes cast, at a meeting at which a quorum is
present, except as expressly provided otherwise by the General Corporation Law
of the State of Delaware or the Certificate of Incorporation.
Section 1.06 Voting Rights of Stockholders and Proxies. Each stockholder
-----------------------------------------
of record entitled to vote in accordance with the laws of the State of Delaware,
the Certificate of Incorporation or these By-Laws, shall at every meeting of the
stockholders be entitled to one vote in person or by proxy for each share of
stock entitled to vote standing in his name on the books of the Corporation, but
no proxy shall be voted on after three years from its date, unless the proxy
provides for a longer period.
Section 1.07 Ownership of Its Own Stock. Shares of its own capital stock
--------------------------
belonging to the Corporation or to another corporation, if a majority of the
shares entitled to vote in the election of directors of such other corporation
is held, directly or indirectly, by the Corporation, shall neither be entitled
to vote nor be counted for quorum purposes. Nothing in this section shall be
construed as limiting the right of any corporation to vote stock, including but
not limited to its own stock, held by it in a fiduciary capacity.
Section 1.08 Voting by Fiduciaries and Pledgors. Persons holding stock in
----------------------------------
a fiduciary capacity shall be entitled to vote the shares so held. Persons whose
stock is pledged shall be entitled to vote, unless in the transfer by the
pledgor on the books of the Corporation he has expressly empowered the pledgee
to vote thereon, in which case only the pledgee, or his proxy, may represent
such stock and vote thereon.
3
<PAGE>
If shares or other securities having voting power stand of record in the
names of two or more persons, whether fiduciaries, members of a partnership,
joint tenants, tenants in common, tenants by the entirety or otherwise, or if
two or more persons have the same fiduciary relationship respecting the same
shares, unless the Secretary of the Corporation is given written notice to the
contrary and is furnished with a copy of the instrument or other appointing them
or creating the relationship wherein it is so provided, their acts with respect
to voting shall have the following effect:
(1) If only one votes, his act binds all;
(2) If more than one vote, the act of the majority so voting binds all;
(3) If more than one vote, but the vote is evenly split on any particular
matter, each faction may vote the securities in question proportionally, or any
person voting the shares, or a beneficiary, if any, may apply to the Court of
Chancery or such other court as may have jurisdiction to appoint an additional
person to act with the persons so voting the shares, which shall then be voted
as determined by a majority of such persons and the person appointed by the
Court. If the instrument so filed shows that any such tenancy is held in
unequal interests, a majority or even-split for the purpose of this subsection
shall be a majority or even-split in interest.
Section 1.09 Fixing Date for Determination of Stockholders of Record. In
-------------------------------------------------------
order to determine the stockholders (i) entitled to notice of or to vote at any
meeting of stockholders or any adjournment thereof, or (ii) entitled to express
consent to corporate action in writing without a meeting, or (iii) entitled to
receive payment of any dividend or other distribution or allotment of any
rights, or (iv) entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or (v) for the purpose of any other lawful
action, the Board of Directors may
4
<PAGE>
fix, in advance, a record date, which shall not be more than sixty nor less than
ten days before the date of such meeting, nor more than sixty days prior to any
other action. If no record date is fixed by the Board of Directors, the record
date shall be determined in accordance with the provisions of the General
Corporation Law of the State of Delaware.
Section 1.10 List of Stockholders. The officer who has charge of the stock
--------------------
ledger of the Corporation shall prepare and make, at least ten days before every
meeting of the stockholders, a complete list of the stockholders entitled to
vote at the meeting, arranged in alphabetical order, and showing the address of
each stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder, for
any purpose germane to the meeting, during ordinary business hours, for a period
of at least ten days prior to the meeting, either at a place within the city
where the meeting is to be held (which place shall be specified in the notice of
the meeting or, if not so specified, at the place where said meeting is to be
held), and the list shall be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any stockholder
who may be present. Upon the willful neglect or refusal of the directors to
produce such a list at any meeting for the election of directors, they shall be
ineligible for election to any office at such meeting.
Section 1.11 Stockholder's Right of Inspection. Stockholders of record, in
---------------------------------
person or by attorney or other agent, shall have the right, upon written demand
under oath stating the purpose thereof, during the usual hours for business to
inspect for any proper purpose the Corporation's stock ledger, a list of its
stockholders, and its other books and records, and to make copies or extracts
therefrom. A proper purpose shall mean a purpose reasonably related to such
person's interest as a stockholder. In every instance where an attorney or other
agent shall
5
<PAGE>
be the person who seeks the right to inspection, the demand under oath shall be
accompanied by a power of attorney or such other writing which authorizes the
attorney or other agent to so act on behalf of the stockholder. The demand under
oath shall be directed to the Corporation at its registered office in this State
or at its principal place of business.
The stock ledger shall be the only evidence as to who are the stockholders
entitled to examine the stock ledger, the list required by Section 1.10 or the
books of the Corporation, or to vote in person or by proxy at any meeting of the
stockholders.
Section 1.12 Consent in Lieu of Meeting. Any corporate action, with
--------------------------
respect to which the vote of the stockholders at a meeting thereof is required
or permitted by any provision of the General Corporation Law of the State of
Delaware, the Certificate of Incorporation of the Company, or these By-Laws, may
be taken without that vote and meeting, and that vote and meeting may be
dispensed with, if that corporate action has been consented to in writing by the
holders of a majority (or, if with respect to a particular corporate action the
General Corporation Law of the State of Delaware, the Certificate of
Incorporation of the Company or these By-Laws specifies a greater percentage, by
the holders of that percentage) of the stock that would have been entitled to
vote upon that action if a meeting were held. Prompt notice shall be given to
all stockholders of the taking of any corporate action pursuant to the
provisions of that paragraph unless that action has been consented to in writing
by the holders of all of the stock that would have been entitled to vote upon
that action if a meeting were held.
6
<PAGE>
ARTICLE II
DIRECTORS
---------
Section 2.01 Management of Business. The business of the Corporation shall
----------------------
be managed by its Board of Directors.
The Board of Directors, in addition to the powers and authority expressly
conferred upon it herein, by statute, by the Certificate of Incorporation of the
Corporation or otherwise, is hereby empowered to exercise all such powers as may
be exercised by the Corporation, except as expressly provided otherwise by the
statutes of the State of Delaware, by the Certificate of Incorporation of the
Corporation or by these By-Laws.
Without prejudice to the generality of the foregoing, the Board of
Directors, by resolution or resolutions, may create and issue, whether or not in
connection with the issue and sale of any shares of stock or other securities of
the Corporation, rights or options entitling the holders thereof to purchase
from the Corporation any shares of its capital stock of any class or classes or
any other securities of the Corporation, such rights or options to be evidenced
by or in such instrument or instruments as shall be approved by the Board of
Directors. The terms upon which, including the time or times, which may be
limited or unlimited in duration, at or within which, and the price or prices at
which, any such rights or options may be issued and any such shares or other
securities may be purchased from the Corporation upon the exercise of any such
right or option shall be such as shall be fixed and stated in the resolution or
resolutions adopted by the Board of Directors providing for the creation and
issue of such rights or options, and, in every case, set forth or incorporated
by reference in the instrument or instruments evidencing such rights or options.
In the absence of actual fraud in the transaction, the judgment of the directors
as to the consideration for the issuance of such rights or options and the
sufficiency
7
<PAGE>
thereof shall be conclusive. In case the shares of stock of the Corporation to
be issued upon the exercise of such rights or options shall be shares having a
par value, the price or prices so to be received therefor shall not be less than
the par value thereof. In case the shares of stock so to be issued shall be
shares of stock without par value, the consideration therefor shall be
determined in the manner provided in Section 153 of the General Corporation Law
of the State of Delaware.
Section 2.02 Qualifications and Number of Directors. Directors need not be
--------------------------------------
stockholders. The number of directors which shall constitute the whole Board
shall be not less than three nor more than eleven.
Section 2.03 Election and Term. The directors shall be elected at the
-----------------
annual meeting of the stockholders, and each director shall be elected to hold
office until his successor shall be elected and qualified, or until his earlier
resignation or removal.
Section 2.04 Resignations. Any director of the Corporation may resign at
------------
any time by giving written notice to the Corporation. Such resignation shall
take effect at the time specified therein, if any, or if no time is specified
therein, then upon receipt of such notice by the Corporation; and, unless
otherwise provided therein, the acceptance of such resignation shall not be
necessary to make it effective.
Section 2.05 Vacancies and Newly Created Directorships. Vacancies and
-----------------------------------------
newly created directorships resulting from any increase in the authorized number
of directors may be filled by a majority of the directors then in office, though
less than a quorum, or by a sole remaining director, and the directors so chosen
shall hold office until their successors shall be elected and qualified, or
until their earlier resignation or removal. When one or more directors shall
resign from the Board, effective at a future date, a majority of the directors
then in office, including those who have so resigned, shall have power to fill
such vacancy or vacancies, the
8
<PAGE>
vote thereon to take effect when such resignation or resignations shall become
effective, and each director so chosen shall hold office as herein provided in
the filling of other vacancies.
Section 2.06 Quorum of Directors. At all meetings of the Board of
-------------------
Directors, a majority of the entire Board shall constitute a quorum for the
transaction of business and the act of a majority of the directors present at
any meeting at which there is a quorum shall be the act of the Board of
Directors, except as provided in Section 2.05 hereof.
A majority of the directors present, whether or not a quorum is present,
may adjourn any meeting of the directors to another time and place. Notice of
any adjournment need not be given if such time and place are announced at the
meeting.
Section 2.07 Annual Meeting. The newly elected Board of Directors shall
--------------
meet immediately following the adjournment of the annual meeting of stockholders
in each year at the same place, within or without the State of Delaware, and no
notice of such meeting shall be necessary.
Section 2.08 Regular Meetings. Regular meetings of the Board of Directors
----------------
may be held at such time and place, within or without the State of Delaware, as
shall from time to time be fixed by the Board and no notice thereof shall be
necessary.
Section 2.09 Special Meetings. Special meetings may be called at any time
----------------
by the Chairman or by any two members of the Board of Directors. Special
meetings shall be held at such place, within or without the State of Delaware,
as shall be fixed by the person or persons calling the meeting and stated in the
notice or waiver of notice of the meeting.
Special meetings of the Board of Directors shall be held upon notice to the
directors or waiver thereof.
9
<PAGE>
Unless waived, notice of each special meeting of the directors, stating the
time and place of the meeting, shall be given to each director by delivered
letter, by telegram or by personal communication either over the telephone or
otherwise, in each such case not later than the second day prior to the meeting,
or by mailed letter deposited in the United States mail with postage thereon
prepaid not later than the seventh day prior to the meeting. Notices of special
meetings of the Board of Directors and waivers thereof need not state the
purpose or purposes of the meeting.
Section 2.10 Action Without a Meeting. Any action required or permitted to
------------------------
be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting if all members of the Board or committee, as the
case may be, consent thereto in a writing or writings and the writing or
writings are filed with the minutes of proceedings of the Board or committee.
Section 2.11 Compensation. Directors shall receive such fixed sums and
------------
expenses of attendance for attendance at each meeting of the Board or of any
committee and/or such salary as may be determined from time to time by the Board
of Directors; provided that nothing herein contained shall be construed to
preclude any director from serving the Corporation in any other capacity and
receiving compensation therefor.
ARTICLE III
OFFICERS
--------
Section 3.01 Number. The officers of the Corporation shall be chosen by
------
the Board of Directors. The officers shall be a Chairman, a Vice-Chairman, a
President, a Secretary and a Treasurer, and such number of Vice-Presidents,
Assistant Secretaries and Assistant Treasurers,
10
<PAGE>
and such other officers, if any, as the Board may from time to time determine.
The Board may choose such other agents as it shall deem necessary. Any number of
offices may be held by the same person.
Section 3.02 Terms of Office. Each officer shall hold his office until his
---------------
successor is chosen and qualified or until his earlier resignation or removal.
Any officer may resign at any time upon written notice to the Corporation.
Section 3.03 Removal. Any officer may be removed from office at any time
-------
by the Board of Directors with or without cause.
Section 3.04 Authority. The Secretary shall record all of the proceedings
---------
of the meetings of the stockholders and directors in a book to be kept for that
purpose, and shall have the authority, perform the duties and exercise the
powers in the management of the Corporation usually incident to the office held
by him, and/or such other authority, duties and powers as may be assigned to him
from time to time by the Board of Directors, the Chairman, the Vice-Chairman or
the President. The other officers, and agents, if any, shall have the authority,
perform the duties and exercise the powers in the management of the Corporation
usually incident to the offices held by them, respectively, and/or such other
authority, duties and powers as may be assigned to them from time to time by the
Board of Directors or (except in the case of the Chairman, the Vice-Chairman or
the President, as appropriate) by the Chairman, the Vice-Chairman or the
President.
Section 3.05 Voting Securities Owned by the Corporation. Powers of
------------------------------------------
attorney, proxies, waivers of notice of meeting, consents and other instruments
relating to securities owned by the Corporation may be executed in the name of
and on behalf of the Corporation by the Chairman, the Vice-Chairman, the
President or any Vice-President and any such officer may,
11
<PAGE>
in the name of and on behalf of the Corporation, take all such action as any
such officer may deem advisable to vote in person or by proxy at any meeting of
security holders of any corporation in which the Corporation may own securities
and at any such meeting shall possess and may exercise any and all rights and
powers incident to the ownership of such securities and which, as the owner
thereof, the Corporation might have exercised and possessed if present. The
Board of Directors may, by resolution, from time to time confer like powers upon
any other person or persons.
ARTICLE IV
CAPITAL STOCK
-------------
Section 4.01 Stock Certificates. Every holder of stock in the Corporation
------------------
shall be entitled to have a certificate signed by, or in the name of the
Corporation by, the Chairman or Vice-Chairman of the Board of Directors, or the
President or a Vice-President, and by the Treasurer or an Assistant Treasurer,
or the Secretary or an Assistant Secretary, of the Corporation, certifying the
number of shares owned by him in the Corporation. Where such certificate is
signed (1) by a transfer agent other than the Corporation or its employee, or
(2) by a registrar other than the Corporation or its employee, the signatures of
the officers of the Corporation may be facsimiles. In case any officer who has
signed or whose facsimile signature has been placed upon a certificate shall
have ceased to be such officer before such certificate is issued, it may be
issued by the Corporation with the same effect as if he were such officer at the
date of issue.
Section 4.02 Transfers. Stock of the Corporation shall be transferable in
---------
the manner prescribed by the laws of the State of Delaware.
12
<PAGE>
Section 4.03 Registered Holders. Prior to due presentment for registration
------------------
of transfer of any security of the Corporation in registered form, the
Corporation shall treat the registered owner as the person exclusively entitled
to vote, to receive notifications and to otherwise exercise all the rights and
powers of an owner, and shall not be bound to recognize any equitable or other
claim to, or interest in, any security, whether or not the Corporation shall
have notice thereof, except as otherwise provided by the laws of the State of
Delaware.
Section 4.04 New Certificates. The Corporation shall issue a new
----------------
certificate of stock in the place of any certificate theretofore issued by it,
alleged to have been lost, stolen or destroyed, if the owner: (1) so requests
before the Corporation has notice that the shares of stock represented by that
certificate have been acquired by a bona fide purchaser; (2) files with the
Corporation a bond sufficient (in the judgment of the directors) to indemnify
the Corporation against any claim that may be made against it on account of the
alleged loss or theft of that certificate or the issuance of a new certificate;
and (3) satisfies any other requirements imposed by the directors that are
reasonable under the circumstances. A new certificate may be issued without
requiring any bond when, in the judgment of the directors, it is proper so to
do.
ARTICLE V
INDEMNIFICATION
---------------
Section 5.01 The Corporation shall indemnify its officers, directors,
employees and agents to the fullest extent permitted by the General Corporation
Law of Delaware and Article SEVEN of the Certificate of Incorporation of the
Corporation.
13
<PAGE>
ARTICLE VI
MISCELLANEOUS
-------------
Section 6.01 Offices. The registered office of the Corporation in the
-------
State of Delaware shall be at Corporation Trust Center, 1209 Orange Street,
Wilmington, Delaware 19801. The Corporation may also have offices at other
places within and/or without the State of Delaware.
Section 6.02 Seal. The corporate seal shall have inscribed thereon the
----
name of the Corporation, the year of its incorporation, and the words "Corporate
Seal Delaware."
Section 6.03 Checks. All checks or demands for money shall be signed by
------
such person or persons as the Board of Directors may from time to time
determine.
Section 6.04 Fiscal Year. The fiscal year shall begin on the first day of
-----------
January in each year and shall end on the thirty-first day of December of each
year.
Section 6.05 Waivers of Notice; Dispensing with Notice. Whenever any
-----------------------------------------
notice whatever is required to be given under the provisions of the General
Corporation Law of the State of Delaware, of the Certificate of Incorporation of
the Corporation, or of these By-Laws, a waiver thereof in writing, signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent thereto. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
stockholders need be specified in any written waiver of notice.
Attendance of a person at a meeting of stockholders shall constitute a
waiver of notice of such meeting, except when the stockholder attends a meeting
for the express purpose of
14
<PAGE>
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened.
Whenever any notice whatever is required to be given under the provisions
of the General Corporation Law of the State of Delaware, of the Certificate of
Incorporation of the Corporation, or of these By-Laws, to any person with whom
communication is made unlawful by any law of the United States of America, or by
any rule, regulation, proclamation or executive order issued under any such law,
then the giving of such notice to such person shall not be required and there
shall be no duty to apply to any governmental authority or agency for a license
or permit to give such notice to such person; and any action or meeting which
shall be taken or held without notice to any such person or without giving or
without applying for a license or permit to give any such notice to any such
person with whom communication is made unlawful as aforesaid, shall have the
same force and effect as if such notice had been given as provided under the
provisions of the General Corporation Law of the State of Delaware, or under the
provisions of the Certificate of Incorporation of the Corporation or of these
By-Laws. In the event that the action taken by the Corporation is such as to
require the filing of a certificate under any of the other sections of this
title, the certificate shall state, if such is the fact and if notice is
required, that notice was given to all persons entitled to receive notice except
such persons with whom communication is unlawful.
Section 6.06 Loans to and Guarantees of Obligations of Employees and
-------------------------------------------------------
Officers. The Corporation may lend money to or guaranty any obligation of, or
- --------
otherwise assist any officer or other employee of the Corporation or of a
subsidiary, including any officer or employee who is a director of the
Corporation or a subsidiary, whenever, in the judgment of the Board of
Directors, such loan, guaranty or assistance may reasonably be expected to
benefit the Corporation. The loan, guaranty or other assistance may be with or
without interest, and may be unsecured, or
15
<PAGE>
secured in such manner as the Board of Directors shall approve, including,
without limitation, a pledge of shares of stock of the Corporation. Nothing in
this Section contained shall be deemed to deny, limit or restrict the powers of
guaranty or warranty of the Corporation at common law or under any other
statute.
Section 6.07 Amendment of By-Laws. These By-Laws may be altered, amended
--------------------
or repealed at any meeting of the Board of Directors.
Section 6.08 Section Headings. The headings of the Articles and Sections
----------------
of these By-Laws, have been inserted for convenience of reference only and shall
not be deemed to be a part of these By-Laws.
16
<PAGE>
EXHIBIT 3.3
CERTIFICATE OF INCORPORATION
OF
ITT - PGS, INC.
I, the undersigned, in order to form a corporation for the purposes
hereinafter stated, under and pursuant to the provisions of the General
Corporation Law of the State of Delaware, being Title 8 Chapter 1 of the
Delaware Code of 1953, and the Acts amendatory thereof and supplementary
thereto, do hereby certify an follows:
FIRST: The name or the corporation Is ITT - PGS, INC. (hereinafter called
-----
the "Corporation").
SECOND: The location of the registered office or the Corporation in the
------
State of Delaware is 100 West Tenth Street, in the City or Wilmington, County of
New Castle. The name of its registered agent at that address is The Corporation
Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
-----
activity for which corporations may be organized under the General Corporation
Law of Delaware.
FOURTH: The total number of shares of stock which the Corporation shall
------
have authority to issue is one hundred shares or common stock of the par value
or $100 per share.
FIFTH: The name and address of the Incorporator is as follows:
-----
Name Address
---- -------
Thomas Motley, Jr. 425 East 86th Street
New York, New York 10028
SIXTH: The powers of the incorporator shall terminate upon the filing of
-----
this Certificate of Incorporation. The names and addresses of the persons who
are to serve as directors of the Corporation until the first annual meeting or
stockholders or until their successors are elected and
<PAGE>
qualify are set forth below in accordance with Section 102(a)(6) of the General
Corporation Law of Delaware:
Name Address
---- -------
Thomas Motley, Jr. 425 East 86th Street
New York, New York 10028
Edwin C. Cohen 132 State Street
Brooklyn Heights, New York 11201
John I. Brokaw 150 East 61st Street
New York, New York 10022
SEVENTH: In furtherance and not in limitation of the powers conferred by
-------
law, the Board of Directors of the Corporation is expressly authorized:
(a) To make, alter, amend or repeal the By-Laws of the Corporation.
(b) To direct and determine the use and disposition of net profits or
net assets in excess of capital; to set apart out of any of the funds or
the Corporation available for dividends a reserve or reserves for any
proper purpose; and to abolish any such reserve in the manner in which it
was created.
(c) To establish bonus, profit-sharing, stock option, retirement or
other types of incentive or compensation plans for the employees (including
officers and directors) of the Corporation and to fix the amount of the
profits to be distributed or shared and to determine the persons to
participate in any such plans and the amounts of their respective
participations.
(d) From time to time to determine whether and to what extent, and at
what time find places and under what conditions and regulations, the
accounts and books of the Corporation (other than the stock ledger), or any
of them, shall be open to the inspection of the stockholders; and no
stockholder shall have any right to inspect any account or book or document
or the Corporation, except as conferred by statute or authorized by the
Board of Directors or by a resolution or the stockholders.
(e) To authorize, and cause to be executed, mortgages and liens upon
the real and personal property of the Corporation.
EIGHTH: Whenever the vote of stockholders at a meeting thereof is required
------
or permitted to be taken for or in connection with any corporate action by any
provision of the General Corporation Law of Delaware, the meeting and vote of
stockholders may be dispensed
2
<PAGE>
with if the holders of stock having not less than the minimum percentage of the
vote required by statute for the proposed corporate action shall consent in
writing to such corporate action being taken, provided that prompt notice must
be given to all stockholders of the taking of such corporate action without a
meeting and by less than unanimous written consent.
NINTH: The Corporation reserves the right to amend, alter, change or
-----
repeal any provision contained In this Certificate of Incorporation in the
manner now or hereafter prescribed by law, and all rights and powers conferred
herein on stockholders and directors are subject to this reserved power.
IN WITNESS WHEREOF, I have hereunto set my hand and seal, the 29th day of
May, 1968.
/s/ Thomas Motley Jr. (SEAL)
----------------------
3
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 29th day of May, 1968, there personally came before me Thomas
Motley, Jr., the person who executed the foregoing certificate, known to me
personally to be such, and he duly executed said certificate before me and
acknowledged that it was his act and deed and that the facts stated therein are
true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal of office the day
and year aforesaid.
/s/ Herbert W. Brauer
--------------------------------
(Notary Seal)
<PAGE>
Exhibit 3.3.1
ITT-PGS, INC.
_____________________________
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
_____________________________
ITT-PGS, INC., a Delaware corporation (the "Corporation"), the Certificate
of Incorporation of which was filed in the office of the Secretary of State of
Delaware on June 3, 1968 and recorded on June 3, 1968 in the office of the
Recorder of Deeds, County of New Castle, State of Delaware, DOES HEREBY CERTIFY:
FIRST: Each of the members of the Board of Directors of the Corporation
duly consented on June 19, 1968 to the adoption of resolutions declaring
advisable the adoption of an amendment, as hereinafter set forth, to the
Certificate of Incorporation of the Corporation and providing for obtaining the
consent of the holder of all of the issued and outstanding capital stock of the
Corporation to the adoption of such amendment.
SECOND: Pursuant to such resolutions of the Board of Directors of the
Corporation, and in lieu of a meeting and vote of the stockholders of the
Corporation, the holder of all of the issued and outstanding capital stock of
the Corporation duly consented on June 19, 1968 to the adoption of such
amendment.
THIRD: There has been duly adopted in accordance with the provisions of
Section 242 of the General Corporation Law of the State of Delaware an amendment
to the Certificate of Incorporation of the Corporation amending Article First
thereof to read as follows:
<PAGE>
`FIRST: The name of the corporation is
-----
PENNSYLVANIA GLASS SAND CORPORATION
(hereinafter called the "Corporation").'
IN WITNESS WHEREOF, ITT-PGS, INC. has caused its corporate seal to be
hereunto affixed and this certificate to be signed by John I. Brokaw, its
President, and attested by Thomas Motley, Jr., its Secretary, this 19th day of
June, 1968.
ITT-PGS, INC.
By: /s/ John I. Brokaw
----------------------------
John I. Brokaw, President
ATTEST:
/s/ Thomas Motley, Jr.
- -----------------------------------
Thomas Motley, Jr., Secretary
2
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED that on this 19/th/ day of June, 1968, personally came
before me, a Notary Public in and for the County and State aforesaid, JOHN I.
BROKAW, President of ITT-PGS, INC., a corporation of the State of Delaware, the
corporation described in and which executed the foregoing certificate, known to
me personally to be such, and be duly executed said certificate before me and
acknowledged the said certificate to be his act and deed and the act and deed of
said corporation, and that the facts stated therein are true and that the seal
affixed to said certificate and attested by the Secretary of said corporation is
the corporate seal of said corporation.
IN WITNESS WHEREOF I have hereunto set my hand and seal of office the day
and year aforesaid.
/s/ Herbert W. Brauer
--------------------------
(Notary Seal)
<PAGE>
Exhibit 3.3.2
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
****************************
Pennsylvania Glass Sand Corporation, a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation, at a meeting duly
held, adopted a resolution proposing and declaring advisable the following
amendment to the Certificate of Incorporation of said corporation:
RESOLVED, that the Certificate of Incorporation of
PENNSYLVANIA GLASS SAND CORPORATION be
amended by changing Article First thereof to read as follows:
"FIRST: The name of the Corporation is U.S.
SILICA COMPANY (hereinafter called the
Corporation)."
SECOND: That in lieu of a meeting and vote of stockholders, the
stockholders have given unanimous written consent to said amendment in
accordance with the provisions of section 228 of the General Corporation Law of
the State of Delaware.
THIRD: That the aforesaid amendment was duly adopted in accordance with
the applicable provisions of sections 242 and 228, of the General Corporation
Law of the State of Delaware.
FOURTH: That this Certificate of Amendment of the Certificate of
Incorporation shall be effective on December 31, 1986.
<PAGE>
IN WITNESS WHEREOF, said Pennsylvania Glass Sand Corporation has caused
this certificate to be signed by Richard E. Goodell, its President, and attested
by Charles V. Bush, its Secretary this 20/th/ day of October, 1986.
PENNSYLVANIA GLASS SAND
CORPORATION
By /s/ Richard E. Goodell
-----------------------------
President
(Corporate Seal)
ATTEST:
By: /s/ Charles V. Bush
--------------------------
Secretary
2
<PAGE>
STATE OF WEST VIRGINIA )
) ss.:
COUNTY OF MORGAN )
BE IT REMEMBERED that on this 21/st/ day of October, 1986, personally came
before me, a Notary Public in and for the County and State aforesaid, Richard E.
Goodell, President of Pennsylvania Glass Sand Corporation, a corporation of the
State of Delaware, the corporation described in and which executed the foregoing
certificate, known to me personally to be such, and he duly executed said
certificate before me and acknowledged the said certificate to be his act and
deed and the act and deed of said corporation, and that the facts stated therein
are true and that the seal affixed to said certificate and attested by the
Secretary of said corporation is the corporate seal of said corporation.
IN WITNESS WHEREOF I have hereunto set my hand and seal of office the day
and year aforesaid.
/s/ Mary E. Phillips
----------------------------
(Notary Seal)
<PAGE>
Exhibit 3.3.3
CERTIFICATE OF OWNERSHIP AND MERGER
MERGING
U.S. SILICA COMPANY (OSC) INTO U.S. SILICA COMPANY
(Pursuant to Section 253 of the General Corporation
Law of the State of Delaware)
U.S. Silica Company, a Delaware corporation (the "Corporation"), does
hereby certify:
FIRST: That the Corporation is incorporated pursuant to the General
Corporation Law of the State of Delaware.
SECOND: That the Corporation owns all of the outstanding shares of each
class of the capital stock of U.S. Silica Company (OSC), a Delaware corporation.
THIRD: That the Corporation, by the following resolutions of its Board of
Directors, duly adopted on the 10/th/ day of December, 1987, determined to merge
into itself U.S. Silica Company (OSC) on the conditions set forth in such
resolutions:
NOW, THEREFORE, BE IT RESOLVED, that this corporation merge U.S. Silica
Company (OSC), its wholly-owned subsidiary corporation, into itself and assume
all of U.S. Silica Company (OSC)'s obligations and liabilities pursuant to
Section 253 and 259 of the Delaware General Corporation Law;
RESOLVED FURTHER, that the merger of U.S. Silica Company (OSC) with and
into this corporation is intended to qualify as a complete liquidation of U.S.
Silica (OSC) under Section 332 of the Internal Revenue Code of 1986, as amended;
RESOLVED FURTHER, that the merger, this corporation's participation therein
and the manner of carrying such merger into effect, including, without
limitation, the Certificate of Ownership and Merger (the "Certificate") and the
terms and conditions contained therein, be, and hereby are, approved;
RESOLVED FURTHER, that the officers of this corporation be, and each of
them hereby is, authorized and directed to execute the Certificate for, and in
the name and on behalf of, this corporation substantially in the form presented
at this meeting with such change(s) as the officer or officers executing the
Certificate deem necessary or appropriate, the execution thereof by such officer
or officers to be conclusive evidence of the due approval thereof on the part of
this corporation; and
RESOLVED FURTHER, that the merger of U.S. Silica Company (OSC) with and
into this corporation shall become effective as of 10:00 P.M., Eastern Standard
Time on December 31, 1987.
FOURTH: That this certificate and the merger of U.S. Silica Company (OSC)
with and into Corporation shall become effective as of 10:00 P.M. Eastern
Standard Time on December 31, 1987.
<PAGE>
IN WITNESS WHEREOF, said U.S. Silica Company has caused its corporate seal
to be affixed hereon and this certificate to be signed by Richard E. Goodell,
its President, and Charles V. Bush, its Secretary, this 14/th/ day of December,
1987.
U.S. SILICA COMPANY
By: /s/ Richard E. Goodell
---------------------------
Richard E. Goodell,
President
ATTEST: [SEAL]
By: /s/ Charles V. Bush
--------------------------
Charles V. Bush,
Secretary
2
<PAGE>
Exhibit 3.3.4
CERTIFICATE OF OWNERSHIP AND MERGER
MERGING EACH OF
LOUISIANA INDUSTRIAL SAND TRANSPORTATION COMPANY,
TEXAS INDUSTRIAL MINERALS TRANSPORTATION COMPANY,
U.S. SILICA CO. OF CALIFORNIA,
U.S. SILICA CO. OF CONNECTICUT,
U.S. SILICA CO. OF ILLINOIS,
U.S. SILICA CO. OF LOUISIANA,
U.S. SILICA CO. OF MICHIGAN AND
U.S. SILICA CO. OF TEXAS
INTO
U.S. SILICA COMPANY
(Pursuant To Section 253 Of The General
Corporation Law of the State of Delaware)
U.S. Silica Company, a Delaware corporation (the "Corporation"), does
hereby certify:
FIRST: That the Corporation is incorporated pursuant to the General
Corporation Law of the State of Delaware.
SECOND: That the Corporation owns all of the outstanding shares of each
class of the capital stock of each of Louisiana Industrial Sand Transportation
Company, a Louisiana corporation, Texas Industrial Minerals Transportation
Company, a Texas corporation, U.S. Silica Co. of California, a California
corporation, U.S. Silica Co. of Connecticut, a Connecticut corporation, U.S.
Silica Co. of Illinois, an Illinois corporation, U.S. Silica Co. of Louisiana, a
Louisiana Corporation, U.S. Silica Co. of Michigan, a Michigan corporation, and
U.S. Silica Co. of Texas, a Texas corporation.
THIRD: That the Corporation, by the following resolutions of its Board of
Directors, duly adopted on the 10/th/ day of December, 1987, determined to merge
------
into itself each of Louisiana Industrial Sand Transportation Company, Texas
Industrial Minerals Transportation Company, U.S. Silica Co. of California, U.S.
Silica Co. of Illinois, U.S. Silica Co. of Connecticut, U.S. Silica Co. of
Michigan and U.S. Silica Co. of Texas on the conditions set forth in such
resolutions:
NOW, THEREFORE, BE IT, RESOLVED, that this corporation merge each of
Louisiana Industrial Sand Transportation Company, Texas Industrial Minerals
Transportation Company, U.S. Silica Co. of California, U.S. Silica Co. of
Connecticut, U.S. Silica Co. of Illinois, U.S. Silica Co. of Louisiana, U.S.
Silica Co. of Michigan, and U.S. Silica Co. of Texas, (collectively "the wholly-
owned subsidiaries") with and into itself and assume all the liabilities and
obligations of each of the wholly-owned subsidiaries pursuant to Sections 253
and 259 of the Delaware General Corporation Law;
RESOLVED FURTHER, that the mergers of each of the wholly-owned subsidiaries
with and into this corporation is intended to qualify as a complete liquidation
of each of the wholly-owned subsidiaries under Section 332 of the Internal
Revenue Code of 1986, as amended;
<PAGE>
RESOLVED FURTHER, that the mergers, this corporation's participation
therein and the manner of carrying such mergers into effect, including, without
limitation, the Certificate of Ownership and Merger (the "Certificate") and the
terms and conditions contained therein, be, and hereby are, approved;
RESOLVED FURTHER, that the officers of this corporation be, and each of
them hereby is, authorized and directed to execute the Certificate for, and in
the name and on behalf of, this corporation substantially in the form presented
at this meeting with such change(s) as the officer or officers executing this
Certificate deem necessary or appropriate, the execution thereof by such officer
or officers to be conclusive evidence of the due approval thereof on the part of
this corporation; and
RESOLVED FURTHER, that the mergers of each of the wholly-owned subsidiaries
with and into this corporation shall become effective as of 10:30 p.m. Eastern
Standard Time on December 31, 1987.
FOURTH: That this certificate and the mergers of each of Louisiana
Industrial Sand Transportation Company, Texas Industrial Minerals Transportation
Company, U.S. Silica Co. of California, U.S. Silica Co. of Connecticut, U.S.
Silica Co. of Michigan, and U.S. Silica Co. of Texas with and into the
Corporation shall become effective as of 10:30 P.M., Eastern Standard Time on
December 31, 1987.
IN WITNESS WHEREOF, said U.S. Silica Company has caused its corporate seal
to be affixed hereon and this certificate to be signed by Richard E. Goodell,
its President, and Charles V. Bush, its Secretary, this 14/th/ day of December,
1987.
U.S. SILICA COMPANY
By: /s/ Richard E. Goodell
---------------------------
Richard E. Goodell,
President
ATTEST: [SEAL]
By: /s/ Charles V. Bush
-------------------------
Charles V. Bush,
Secretary
2
<PAGE>
Exhibit 3.3.5
CERTIFICATE OF OWNERSHIP AND MERGER
MERGING
WARRIOR SAND AND GRAVEL COMPANY, INC.
INTO
U.S. SILICA COMPANY
(PURSUANT TO SECTION 253 OF THE GENERAL CORPORATION
LAW OF THE STATE OF DELAWARE AND SECTIONS 86 AND 88 OF
THE ALABAMA BUSINESS CORPORATION ACT)
U.S. Silica Company, a Delaware corporation ("the Corporation"), does
hereby certify:
FIRST: That the Corporation is incorporated pursuant to the General
Corporation Law of the State of Delaware.
SECOND: That the Corporation owns all of the outstanding shares of each
class of the capital stock of Warrior Sand and Gravel Company, Inc., an Alabama
corporation.
THIRD: That Warrior Sand and Gravel Company, Inc. is incorporated pursuant
to the Business Corporation Act of the State of Alabama.
FOURTH: That the Corporation, by the following resolutions of its Board of
Directors, duly approved on the fourth day of October, 1988, determined to merge
into itself Warrior Sand and Gravel Company, Inc. on the conditions set forth it
such resolutions:
NOW, THEREFORE, BE IT RESOLVED, that this Corporation merge Warrior Sand
and Gravel Company, Inc., an Alabama corporation ("the wholly-owned
subsidiary"), with and into itself thereby to be vested with all the assets
and to assume all the liabilities and obligations of the wholly-owned
subsidiary pursuant to Sections 253 and 259 of the Delaware General
Corporation Law;
RESOLVED FURTHER, that the merger of the wholly-owned subsidiary with and
into this Corporation is intended to qualify as a complete liquidation of
the wholly-owned subsidiary under Section 332 of the Internal Revenue Code
of 1986, as amended;
RESOLVED FURTHER, that the merger, this Corporation's participation
therein, and the manner of carrying such merger into effect, including,
without limitation, the Certificate of Ownership and Merger (the
"Certificate") and the terms and conditions contained therein, be, and
hereby are, approved;
RESOLVED FURTHER, that the officers of this Corporation be, and each of
them hereby is, authorized and directed to execute the Certificate for, and
in the name and on behalf of, this Corporation substantially in the form
presented at this meeting with such change(s) as the officer or officers
executing this Certificate deem necessary or appropriate, the execution
thereof by such officer or officers to be conclusive evidence of the due
approval thereof on the part of this Corporation;
<PAGE>
RESOLVED FURTHER, that the merger of the wholly owned subsidiary with and
into this Corporation, shall become effective as of 11:59 p.m. Eastern
Standard Time on December 31, 1988.
FIFTH: That Warrior Sand and Gravel Company, Inc., by the following
resolutions of its Board of Directors, duly approved on the 17th day of October,
1988, approve the merger of Warrior Sand and Gravel Company, Inc. with and into
the Corporation on the conditions set forth in such resolutions:
NOW, THEREFORE, BE IT RESOLVED, that this Corporation merge with and into
U. S. Silica Company, pursuant to Sections 86 and 88 of the Alabama
Business Corporation Act and Sections 253 and 259 of the Delaware General
Corporation Law;
RESOLVED FURTHER, that the merger of this Corporation with and into U. S.
Silica Company is intended to qualify as a complete liquidation of the
wholly-owned subsidiary under Section 332 of the Internal Revenue Code of
1986, as amended;
RESOLVED FURTHER, that the merger, this Corporation's participation therein
and the manner of carrying such merger into effect, including, without
limitation, the Certificate of Ownership and Merger, (the "Certificate")
and the terms and conditions contained therein, be, and hereby are,
approved;
RESOLVED FURTHER, that the officers of this Corporation be, and each of
them hereby is, authorized and directed to execute the Certificate for, and
in the name and on behalf of, this Corporation substantially in the form
presented at this meeting with such change(s) as the officer or officers
executing the Certificate deem necessary or appropriate, the execution
thereof by such officer of officers to be conclusive evidence of the due
approval thereof on the part of this Corporation.
SIXTH: That this merger has been approved by the Board of Directors of the
Corporation and the Board of Directors of Warrior Sand and Gravel Company, Inc.,
in compliance with the applicable law of the States of Delaware and Alabama.
SEVENTH: That the merger of Warrior Sand and Gravel Company, Inc. with and
into U. S. Silica Company is permitted by Section 253 of the General Corporation
Law of the State of Delaware and Sections 86 and 88 of the Alabama Business
Corporation Act.
EIGHTH: That this certificate and the merger of Warrior Sand and Gravel
Company, Inc. with and into the Corporation shall become effective as of 11:59
p.m. Eastern Standard Time on December 31, 1988.
NINTH: That upon this certificate and the merger becoming effective, the
Corporation shall be the surviving Corporation of the merger and the name of the
Corporation shall remain U. S. Silica Company.
TENTH: That to comply with Section 119 of the Alabama Business Corporation
Act, the name of the Corporation for use in the State of Alabama shall be "U. S.
Silica Company, Inc."
2
<PAGE>
ELEVENTH: That this certificate shall remain on file at the office of the
Corporation at Route 522 North, Berkeley Springs, WV 25411, telephone: (304)
258-2500, and a copy hereof may be obtained on written or oral request of any
shareholder of Warrior Sand and Gravel Company, Inc. without cost.
TWELFTH: That the Corporation agrees that it may be served with process in
the State of Alabama in any proceeding for enforcement of any obligation of
Warrior Sand and Gravel Company, Inc., and that the Corporation irrevocably
appoints the Secretary of State of Alabama as its agent to accept service of
process in an action for the enforcement of payment of any such obligation, and
in any proceedings for the enforcement of the rights of a dissenting stockholder
of Warrior Sand and Gravel Company, Inc. against the Corporation.
THIRTEENTH: That the address to which a copy of the process may be mailed
by the Secretary of State of Alabama is as follows:
U. S. Silica Company
Route 522 North
P. O. Box 187
Berkeley Springs, WV 25411
Attention: Corporate Secretary
3
<PAGE>
IN WITNESS WHEREOF, said U. S. Silica Company has caused its corporate seal
to be impressed hereon and this certificate to be signed by its duly authorized
officers on this 1st day of December, 1988.
U.S. SILICA COMPANY
By: /s/ Richard E. Goodell
---------------------------
Richard E. Goodell
President
(Corporate Seal)
Attest: /s/ Charles V. Bush
-----------------------
Charles V. Bush
Secretary
IN ACKNOWLEDGEMENT WHEREOF, the said Warrior Sand and Gravel Company, Inc.
has caused its corporate seal to be impressed hereon and this certificate to be
signed by its duly authorized officers on this 1st, day of December 1988.
WARRIOR SAND AND GRAVEL
COMPANY, INC.
By: /s/ Richard E. Goodell
---------------------------
Richard E. Goodell
President
(Corporate Seal)
Attest: /s/ Charles V. Bush
------------------------
Charles V. Bush
Secretary
4
<PAGE>
Exhibit 3.3.6
CERTIFICATE OF OWNERSHIP AND MERGER
MERGING
USS ACQUISITION, INC.
INTO
U. S. SILICA COMPANY
Pursuant to Section 253 of the
General Corporation Law of the State of Delaware
* * * * *
USS ACQUISITION, INC., a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Corporation"),
DOES HEREBY CERTIFY:
FIRST: That the Corporation was incorporated on the 27th day of April,
1994 as Sol Sal, Inc., pursuant to the General Corporation Law of the State of
Delaware.
SECOND: That the Corporation owns all of the outstanding shares of common
stock of U. S. SILICA COMPANY, a corporation incorporated on the 3rd day of
June, 1968, as ITT - PGS, INC., pursuant to the General Corporation Law of the
State of Delaware (the "Subsidiary").
THIRD: That the Board of Directors of the Corporation, by resolutions duly
adopted by the unanimous written consent of the Board of Directors pursuant to
Section 141(f) of the General Corporation Law of the State of Delaware on
February 9, 1996, and attached hereto as Exhibit A, determined to merge the
---------
Corporation with and into the Subsidiary.
<PAGE>
FOURTH: That the sole stockholder of the Corporation did on February 9,
1996, by unanimous written consent pursuant to Section 228 of the General
Corporation Law of the State of Delaware, approve the merger of the Corporation
with and into the Subsidiary.
FIFTH: That the Subsidiary is to be the surviving corporation of the
merger (the "Surviving Corporation").
SIXTH: That the Certificate of Incorporation of the Surviving Corporation
shall be amended to be and read in its entirety as set forth on Exhibit B
---------
attached hereto.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed by its Vice Chairman and attested by its Secretary, this 9th day of
February, 1996.
USS ACQUISITION, INC.
By: /s/ Richard J. Nick
------------------------
Richard J. Nick
Vice President
ATTEST:
By: /s/ Donald G. Kilpatrick
-----------------------------
Donald G. Kilpatrick
Secretary
2
<PAGE>
Exhibit A to the
Certificate of Ownership and Merger
-----------------------------------
Resolutions of the Board of Directors
adopted as of February 9, 1996
------------------------------
RESOLVED, that upon consummation of the purchase by the Corporation of all
of the issued and outstanding shares of capital stock of Silica, the Corporation
shall merge (the "Merger") with and into Silica, with Silica as the surviving
corporation of the Merger (the "Surviving Corporation"), as contemplated by the
Certificate of Ownership and Merger of the Corporation; and be it further
RESOLVED, that upon the effectiveness of the Merger, each issued and
outstanding share of Common Stock, par value $.01 per share, of the Corporation
shall, automatically and without any further action, be converted into and
become (i) one (1) fully paid and nonassessable share of Common Stock, par value
$.01 per share, of the Surviving Corporation and (ii) two hundred (200) fully
paid and nonassessable shares of Preferred Stock, par value $.01 per share, of
the Surviving Corporation;
<PAGE>
Exhibit B to the
Certificate of Ownership and Merger
-----------------------------------
CERTIFICATE OF INCORPORATION
-of-
U. S. SILICA COMPANY
-oo0oo-
FIRST: The name of the Corporation is U. S. SILICA COMPANY (hereinafter
sometimes called the "Corporation").
SECOND: The address of the Corporation's registered office in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, City of Wilmington,
County of New Castle, State of Delaware 19801. The name of its registered agent
at such address is The Corporation Trust Company.
THIRD: The nature of the business or purposes to be conducted or promoted
are to engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of the State of Delaware.
FOURTH: The total number of shares of stock which the Corporation shall
have authority to issue is 25,000 shares, consisting of (i) 20,000 shares of
preferred stock, par value $.01 per share ("Preferred Stock") and (ii) 5,000
shares of common stock, par value $.01 per share ("Common Stock").
A. PREFERRED STOCK
Part 1. Ranking. The Preferred Stock shall, with respect to amounts
-------
payable on redemption and distributions upon the liquidation, winding-up and
dissolution of the
<PAGE>
Corporation, rank senior to all classes of common stock of the Corporation and
to each other class of capital stock or series of preferred stock of the
Corporation (the "Junior Securities"). The Corporation may not issue any new
class or series of preferred securities or other capital stock ranking senior to
or on a parity with the Preferred Stock as to dividends, distributions, amounts
payable on redemption and distributions upon the liquidation, winding-up and
dissolution of the Corporation without the approval of the holders of at least
66K% of the shares of the Preferred Stock then outstanding, voting or
consenting, as the case may be, separately as one class, except that without the
approval of the holders of the Preferred Stock, the Corporation may issue shares
of preferred securities or other capital stock the proceeds of which are used to
redeem or repurchase all shares of the Preferred Stock then outstanding.
Part 2. Dividends. The Preferred Stock shall not accrue dividends prior
---------
to the Mandatory Redemption Date, following which they shall accrue dividends at
the rate of nine percent (9%) of their liquidation preference per annum, from
the Mandatory Redemption Date until the date sufficient funds are made available
for their redemption. Such dividends, if any, shall be payable in cash on
redemption.
Part 3. Mandatory Redemption. The Preferred Stock shall be subject to
---------------------
mandatory redemption (subject to the legal availability of funds therefor) in
whole or in part at such time as USS Intermediate Holdco, Inc. ("Holdco")
redeems any or all of the outstanding shares of the Preferred Stock, par value
$.01 per share, of Holdco ("Holdco Preferred Stock"). Upon any such redemption
of shares of Holdco Preferred Stock, the Corporation shall be required to redeem
the number of shares of Preferred Stock equal to the number of shares of Holdco
Preferred Stock so redeemed at a redemption price equal to the redemption price
paid by Holdco with respect to such redemption of Holdco Preferred Stock (after
giving effect to all applicable provisions of the
2
<PAGE>
Stock Purchase Agreement). The Corporation shall be obligated to redeem
Preferred Stock only to the extent permitted under the General Corporation Law
of the State of Delaware.
Part 4. Liquidation. Upon any voluntary or involuntary liquidation,
-----------
dissolution or winding-up of the Corporation, the holders of the Preferred Stock
shall be entitled to be paid out of the assets of the Corporation available for
distribution, $1,000.00 plus all accumulated and unpaid dividends from the
Mandatory Redemption Date to the dates sufficient funds are made available for
redemption (or if such event occurs prior to the Mandatory Redemption Date, the
Discounted Liquidation Preference) per share before any distribution is made on
any Junior Securities, including, without limitation, common stock of the
Corporation. After payment of the full amount of the liquidation preference to
which they are entitled, the holders of the Preferred Stock will not be entitled
to any further participation in any distribution of assets of the Corporation.
However, neither the sale, conveyance, exchange or transfer (for cash, shares of
stock, securities or other consideration) of all or substantially all of the
property or assets of the Corporation nor the consolidation or merger of the
Corporation with or into one or more corporations shall be deemed to be a
liquidation, dissolution or winding-up of the Corporation.
B. COMMON STOCK
Part 1. Voting Rights.
-------------
1A. Generally. Except as specifically required under the General
---------
Corporation Law of the State of Delaware, the holders of Common Stock will be
entitled to one vote per share and shall vote as one class on all matters to be
voted on by the Corporation's stockholders.
1B. Election of Directors. The number of directors which shall constitute
---------------------
the Board of Directors shall not be less than three nor more than nine which
exact number shall be established in the By-laws of the Corporation and shall
initially be three.
3
<PAGE>
Part 2. Dividends. When and as dividends are declared thereon, the
---------
holders of Common Stock then outstanding shall be entitled to share equally and
ratably, on a share for share basis, in such dividends.
Part 3. Liquidation. After any payments required to be made to the
-----------
holders of the Preferred Stock then outstanding, the holders of Common Stock
then outstanding shall be entitled to receive equally and ratably, on a share-
for-share basis, all assets of the Corporation to be distributed upon any
liquidation, dissolution or winding up of the Corporation.
C. ISSUANCE OF STOCK
Except as otherwise provided in this Certificate of Incorporation, the
Board of Directors shall have authority to authorize the issuance, from time to
time, without any vote or other action by the stockholders, of any or all shares
of stock of the Corporation of any class or series at any time authorized, and
any securities convertible into or exchangeable for any such shares, and any
options, rights or warrants to purchase or acquire any such shares, in each case
to such persons and on such terms (including as a dividend or distribution on or
with respect to, or in connection with a split or combination of, the
outstanding shares of stock of the same or any other class or series) as the
Board of Directors from time to time in its discretion lawfully may determine.
Shares so issued shall be fully paid stock, and the holders of such stock shall
not be liable to any further call or assessment thereon.
D. DEFINITIONS
For purposes of this Certificate of Incorporation:
"Closing" has the meaning ascribed thereto in the Stock Purchase Agreement.
4
<PAGE>
"Discounted Liquidation Preference" means the liquidation preference
discounted from the Mandatory Redemption Date to the date of determination at
the rate of 7.18% compounded annually.
"Mandatory Redemption Date" means the tenth anniversary of the Closing.
"Stock Purchase Agreement" means the Stock Purchase Agreement dated as of
October 23, 1995 and amended as of January 29, 1996 between U.S. Borax Inc. and
USS Holdings, Inc., as the same may be amended from time to time.
FIFTH: The following additional provisions are inserted for the management
of the business and for the conduct of the affairs of the Corporation, and for
the creation, definition, limitation and regulation of the powers of the
Corporation, the directors and the stockholders:
1. Election of directors need not be by written ballot. The Board of
Directors shall have power to make, alter, amend and repeal the By-Laws of the
Corporation and to fix the compensation of directors for services in any
capacity.
2. Any corporate action, with respect to which the vote of the
stockholders at a meeting thereof is required or permitted by any provision of
the General Corporation Law of the State of Delaware or of the Certificate of
Incorporation or the By-Laws of the Corporation, is authorized to be taken and
may be taken without that vote and meeting, and that vote and meeting may be
dispensed with, with the written consent of the holders of a majority (or, if
with respect to a particular corporate action where the General Corporation Law
of the State of Delaware or the Certificate of Incorporation or the By-Laws of
the Corporation specifies a greater percentage, by the holders of that greater
percentage) of the stock that would have been entitled to vote upon that action
if a meeting were held. Prompt notice shall be given to all stockholders of the
taking of any corporate action pursuant to the provisions of this paragraph 2
unless that action has been
5
<PAGE>
consented to in writing by the holders of all of the stock that would have been
entitled to vote upon that action if a meeting were held.
3. A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived an improper
personal benefit.
Any repeal or amendment of this Article, insofar as it would in any way
enlarge the liability of any director of the Corporation, shall be ineffective
with respect to any acts or omissions occurring prior to the date of such repeal
or amendment.
SIXTH: The Corporation shall indemnify any person who was or is a party,
or is threatened to be made a party, to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, including an action by or in the right of the Corporation, by
reason of the fact that he, or the person whose legal representative he is, (1)
is or was a stockholder, director, officer, employee or agent of the Corporation
(including the incorporator thereof), or (2) is or was serving at the request of
the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, or (3) is or
was a director, officer or employee of the Corporation serving at the request of
the Corporation as a fiduciary of an employee benefit plan or trust maintained
for the benefit of employees of the Corporation or employees of any such other
enterprise, partnership, joint venture, trust, or other enterprise, against
judgments, fines, penalties, amounts paid in settlement, and expenses, including
attorneys' fees, actually and
6
<PAGE>
reasonably incurred by him and the person whose legal representative he is, in
connection with such action, suit or proceeding, or any appeal therein, to the
fullest extent permitted by law.
Expenses which may be indemnifiable under this Article SIXTH in defending
an action, suit or proceeding may be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding as authorized by the Board
of Directors upon agreement by or on behalf of the stockholder, director,
officer, employee or agent, or his legal representative, to repay such amount if
he is later found not entitled to be indemnified by the Corporation as
authorized in this Article SIXTH.
The Corporation shall not indemnify any stockholder, director, officer,
employee or agent against judgments, fines, amounts paid in settlement and
expenses, including attorneys' fees, to an extent greater than that authorized
by this Article SIXTH, but the Corporation may procure insurance providing
greater indemnification and may share the premium cost with any stockholder,
director, officer, employee or agent on such basis as may be agreed upon.
7
<PAGE>
EXHIBIT 3.4
BY-LAWS
of
U. S. SILICA COMPANY
(herein called the "Corporation")
------------------------------
ARTICLE I
STOCKHOLDERS
------------
Section 1.01 Annual Meeting. The Board of Directors by resolution shall
--------------
designate the time, place and date (which shall be, in the case of the first
annual meeting, not more than 13 months after the organization of the
Corporation and, in the case of all other annual meetings, not more than 13
months after the date of the last annual meeting) of the annual meeting of the
stockholders for the election of directors and the transaction of such other
business as may come before it.
Section 1.02 Special Meeting. Special meetings of the stockholders, for
---------------
any purpose or purposes, may be called at any time by the Chairman, the Vice-
Chairman, the President, any Vice-President, the Treasurer, the Secretary or the
Assistant Secretary by resolution of the Board of Directors. Special meetings of
stockholders shall be held at such place, within or without the State of
Delaware, as shall be fixed by the person or persons calling the meeting and
stated in the notice or waiver of notice of the meeting.
Section 1.03 Notice of Meetings of Stockholders. Whenever stockholders are
----------------------------------
required or permitted to take any action at a meeting, written notice of the
meeting shall be given
<PAGE>
(unless that notice shall be waived or unless the meeting is to be dispensed
with in accordance with the provisions of the General Corporation Law of the
State of Delaware and Article FIFTH of the Certificate of Incorporation of the
Corporation) which shall state the place, date and hour of the meeting and, in
the case of a special meeting, the purpose or purposes for which the meeting is
called. The written notice of any meeting shall be given, personally or by mail,
not less than ten nor more than sixty days before the date of the meeting to
each stockholder entitled to vote at such meeting. If mailed, such notice is
given when deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the Corporation.
When a meeting is adjourned to another time or place, notice need not be
given of the adjourned meeting if the time and place thereof are announced at
the meeting at which the adjournment is taken. At the adjourned meeting the
Corporation may transact any business which might have been transacted at the
original meeting. If the adjournment is for more than thirty days, or if after
the adjournment a new record date is fixed for the adjourned meeting, a notice
of the adjourned meeting shall be given to each stockholder of record entitled
to vote at the meeting.
Section 1.04 Quorum. At all meetings of the stockholders, the holders of
------
one-third of the stock issued and outstanding and entitled to vote thereat,
present in person or by proxy, shall constitute a quorum for the transaction of
any business.
When a quorum is once present to organize a meeting, it is not broken by
the subsequent withdrawal of any stockholders.
The stockholders present may adjourn the meeting despite the absence of a
quorum and at any such adjourned meeting at which the requisite amount of voting
stock shall be represented,
2
<PAGE>
the Corporation may transact any business which might have been transacted at
the original meeting had a quorum been there present.
Section 1.05 Method of Voting. The vote upon any question before the
----------------
meeting need not be by ballot. All elections and all other questions shall be
decided by a plurality of the votes cast, at a meeting at which a quorum is
present, except as expressly provided otherwise by the General Corporation Law
of the State of Delaware or the Certificate of Incorporation.
Section 1.06 Voting Rights of Stockholders and Proxies. Each stockholder
-----------------------------------------
of record entitled to vote in accordance with the laws of the State of Delaware,
the Certificate of Incorporation or these By-Laws, shall at every meeting of the
stockholders be entitled to one vote in person or by proxy for each share of
stock entitled to vote standing in his name on the books of the Corporation, but
no proxy shall be voted on after three years from its date, unless the proxy
provides for a longer period.
Section 1.07 Ownership of Its Own Stock. Shares of its own capital stock
--------------------------
belonging to the Corporation or to another corporation, if a majority of the
shares entitled to vote in the election of directors of such other corporation
is held, directly or indirectly, by the Corporation, shall neither be entitled
to vote nor be counted as limiting the right of any corporation to vote stock,
including but not limited to its own stock, held by it in a fiduciary capacity.
Section 1.08 Voting by Fiduciaries and Pledgors. Persons holding stock in
----------------------------------
a fiduciary capacity shall be entitled to vote the shares so held. Persons whose
stock is pledged shall be entitled to vote, unless in the transfer by the
pledgor on the books of the Corporation he has expressly empowered the pledgee
to vote thereon, in which case only the pledgee, or his proxy, may represent
such stock and vote thereon.
3
<PAGE>
If shares or other securities having voting power stand of record in the
names of two or more persons, whether fiduciaries, members of a partnership,
joint tenants, tenants in common, tenants by the entirety or otherwise, or if
two or more persons have the same fiduciary relationship respecting the same
shares, unless the Secretary of the Corporation is given written notice to the
contrary and is furnished with a copy of the instrument or other appointing them
or creating the relationship wherein it is so provided, their acts with respect
to voting shall have the following effect:
(1) If only one votes, his act binds all;
(2) If more than one vote, the act of the majority so voting binds all;
(3) If more than one vote, but the vote is evenly split on any particular
matter, each faction may vote the securities in question proportionally, or any
person voting the shares, or a beneficiary, if any, may apply to the Court of
Chancery or such other court as may have jurisdiction to appoint an additional
person to act with the persons so voting the shares, which shall then be voted
as determined by a majority of such persons and the person appointed by the
Court. If the instrument so filed shows that any such tenancy is held in unequal
interests, a majority or even-split for the purpose of this subsection shall be
a majority or even-split in interest.
Section 1.09 Fixing Date for Determination of Stockholders of Record. In
-------------------------------------------------------
order to determine the stockholders (i) entitled to notice of or to vote at any
meeting of stockholders or any adjournment thereof, or (ii) entitled to express
consent to corporate action in writing without a meeting, or (iii) entitled to
receive payment of any dividend or other distribution or allotment of any
rights, or (iv) entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or (v) for the purpose of any other lawful
action, the Board of Directors may
4
<PAGE>
fix, in advance, a record date, which shall not be more than sixty nor less than
ten days before the date of such meeting, nor more than sixty days prior to any
other action. If no record date is fixed by the Board of Directors, the record
date shall be determined in accordance with the provisions of the General
Corporation Law of the State of Delaware.
Section 1.10 List of Stockholders. The officer who has charge of the stock
--------------------
ledger of the Corporation shall prepare and make, at least ten days before every
meeting of the stockholders, a complete list of the stockholders entitled to
vote at the meeting, arranged in alphabetical order, and showing the address of
each stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder, for
any purpose germane to the meeting, during ordinary business hours, for a period
of at least ten days prior to the meeting, either at a place within the city
where the meeting is to be held (which place shall be specified in the notice of
the meeting or, if not so specified, at the place where said meeting is to be
held), and the list shall be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any stockholder
who may be present. Upon the willful neglect or refusal of the directors to
produce such a list at any meeting for the election of directors, they shall be
ineligible for election to any office at such meeting.
Section 1.11 Stockholder's Right of Inspection. Stockholders of record, in
---------------------------------
person or by attorney or other agent, shall have the right, upon written demand
under oath stating the purpose thereof, during the usual hours for business to
inspect for any proper purpose the Corporation's stock ledger, a list of its
stockholders, and its other books and records, and to make copies or extracts
therefrom. A proper purpose shall mean a purpose reasonably related to such
person's interest as a stockholder. In every instance where an attorney or other
agent shall
5
<PAGE>
be the person who seeks the right to inspection, the demand under oath shall be
accompanied by a power of attorney or such other writing which authorizes the
attorney or other agent to so act on behalf of the stockholder. The demand under
oath shall be directed to the Corporation at its registered office in this State
or at its principal place of business.
The stock ledger shall be the only evidence as to who are the stockholders
entitled to examine the stock ledger, the list required by Section 1.10 or the
books of the Corporation, or to vote in person or by proxy at any meeting of the
stockholders.
Section 1.12 Consent in Lieu of Meeting. Any corporate action, with
--------------------------
respect to which the vote of the stockholders at a meeting thereof is required
or permitted by any provision of the General Corporation Law of the State of
Delaware, the Certificate of Incorporation of the Company, or these By-Laws, may
be taken without that vote and meeting, and that vote and meeting may be
dispensed with, if that corporate action has been consented to in writing by the
holders of a majority (or, if with respect to a particular corporate action the
General Corporation Law of the State of Delaware, the Certificate of
Incorporation of the Company or these By-Laws specifies a greater percentage, by
the holders of that percentage) of the stock that would have been entitled to
vote upon that action if a meeting were held. Prompt notice shall be given to
all stockholders of the taking of any corporate action pursuant to the
provisions of that paragraph unless that action has been consented to in writing
by the holders of all of the stock that would have been entitled to vote upon
that action if a meeting were held.
6
<PAGE>
ARTICLE II
DIRECTORS
---------
Section 2.01 Management of Business. The business of the Corporation shall
----------------------
be managed by its Board of Directors.
The Board of Directors, in addition to the powers and authority expressly
conferred upon it herein, by statute, by the Certificate of Incorporation of the
Corporation or otherwise, is hereby empowered to exercise all such powers as may
be exercised by the Corporation, except as expressly provided otherwise by the
statutes of the State of Delaware, by the Certificate of Incorporation of the
Corporation or by these By-Laws.
Without prejudice to the generality of the foregoing, the Board of
Directors, by resolution or resolutions, may create and issue, whether or not in
connection with the issue and sale of any shares of stock or other securities of
the Corporation, rights or options entitling the holders thereof to purchase
from the Corporation any shares of its capital stock of any class or classes or
any other securities of the Corporation, such rights or options to be evidenced
by or in such instrument or instruments as shall be approved by the Board of
Directors. The terms upon which, including the time or times, which may be
limited or unlimited in duration, at or within which, and the price or prices at
which, any such rights or options may be issued and any such shares or other
securities may be purchased from the Corporation upon the exercise of any such
right or option shall be such as shall be fixed and stated in the resolution or
resolutions adopted by the Board of Directors providing for the creation and
issue of such rights or options, and, in every case, set forth or incorporated
by reference in the instrument or instruments evidencing such rights or options.
In the absence of actual fraud in the transaction, the judgment of the directors
as to the consideration for the issuance of such rights or options and the
sufficiency
7
<PAGE>
thereof shall be conclusive. In case the shares of stock of the Corporation to
be issued upon the exercise of such rights or options shall be shares having a
par value, the price or prices so to be received therefor shall not be less than
the par value thereof. In case the shares of stock so to be issued shall be
shares of stock without par value, the consideration therefor shall be
determined in the manner provided in Section 153 of the General Corporation Law
of the State of Delaware.
Section 2.02 Qualifications and Number of Directors. Directors need not be
--------------------------------------
stockholders. The number of directors which shall constitute the whole Board
shall be not less than three nor more than eleven.
Section 2.03 Election and Term. The directors shall be elected at the
-----------------
annual meeting of the stockholders, and each director shall be elected to hold
office until his successor shall be elected and qualified, or until his earlier
resignation or removal.
Section 2.04 Resignations. Any director of the Corporation may resign at
------------
any time by giving written notice to the Corporation. Such resignation shall
take effect at the time specified therein, if any, or if no time is specified
therein, then upon receipt of such notice by the Corporation; and, unless
otherwise provided therein, the acceptance of such resignation shall not be
necessary to make it effective.
Section 2.05 Vacancies and Newly Created Directorships. Vacancies and
-----------------------------------------
newly created directorships resulting from any increase in the authorized number
of directors may be filled by a majority of the directors then in office, though
less than a quorum, or by a sole remaining director, and the directors so chosen
shall hold office until their successors shall be elected and qualified, or
until their earlier resignation or removal. When one or more directors shall
resign from the Board, effective at a future date, a majority of the directors
then in office, including those who have so resigned, shall have power to fill
such vacancy or vacancies, the
8
<PAGE>
vote thereon to take effect when such resignation or resignations shall become
effective, and each director so chosen shall hold office as herein provided in
the filling of other vacancies.
Section 2.06 Quorum of Directors. At all meetings of the Board of
-------------------
Directors, a majority of the entire Board shall constitute a quorum for the
transaction of business and the act of a majority of the directors present at
any meeting at which there is a quorum shall be the act of the Board of
Directors, except as provided in Section 2.05 hereof.
A majority of the directors present, whether or not a quorum is present,
may adjourn any meeting of the directors to another time and place. Notice of
any adjournment need not be given if such time and place are announced at the
meeting.
Section 2.07 Annual Meeting. The newly elected Board of Directors
--------------
shall meet immediately following the adjournment of the annual meeting of
stockholders in each year at the same place, within or without the State of
Delaware, and no notice of such meeting shall be necessary.
Section 2.08 Regular Meetings. Regular meetings of the Board of
----------------
Directors may be held at such time and place, within or without the State of
Delaware, as shall from time to time be fixed by the Board and no notice thereof
shall be necessary.
Section 2.09 Special Meetings. Special meetings may be called at any time
----------------
by the Chairman or by any two members of the Board of Directors. Special
meetings shall be held at such place, within or without the State of Delaware,
as shall be fixed by the person or persons calling the meeting and stated in the
notice or waiver of notice of the meeting.
Special meetings of the Board of Directors shall be held upon notice to the
directors or waiver thereof.
9
<PAGE>
Unless waived, notice of each special meeting of the directors, stating the
time and place of the meeting, shall be given to each director by delivered
letter, by telegram or by personal communication either over the telephone or
otherwise, in each such case not later than the second day prior to the meeting,
or by mailed letter deposited in the United States mail with postage thereon
prepaid not later than the seventh day prior to the meeting. Notices of special
meetings of the Board of Directors and waivers thereof need not state the
purpose or purposes of the meeting.
Section 2.10 Action Without a Meeting. Any action required or permitted to
------------------------
be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting if all members of the Board or committee, as the
case may be, consent thereto in a writing or writings and the writing or
writings are filed with the minutes of proceedings of the Board or committee.
Section 2.11 Compensation. Directors shall receive such fixed sums and
------------
expenses of attendance for attendance at each meeting of the Board or of any
committee and/or such salary as may be determined from time to time by the Board
of Directors; provided that nothing herein contained shall be construed to
preclude any director from serving the Corporation in any other capacity and
receiving compensation therefor.
ARTICLE III
OFFICERS
--------
Section 3.01 Number. The officers of the Corporation shall be chosen
------
by the Board of Directors. The officers shall be a Chairman, a Vice-Chairman, a
President, a Secretary and a Treasurer, and such number of Vice-Presidents,
Assistant Secretaries and Assistant Treasurers,
10
<PAGE>
and such other officers, if any, as the Board may from time to time determine.
The Board may choose such other agents as it shall deem necessary. Any number of
offices may be held by the same person.
Section 3.02 Terms of Office. Each officer shall hold his office
---------------
until his successor is chosen and qualified or until his earlier resignation or
removal. Any officer may resign at any time upon written notice to the
Corporation.
Section 3.03 Removal. Any officer may be removed from office at any
-------
time by the Board of Directors with or without cause.
Section 3.04 Authority. The Secretary shall record all of the
---------
proceedings of the meetings of the stockholders and directors in a book to be
kept for that purpose, and shall have the authority, perform the duties and
exercise the powers in the management of the Corporation usually incident to the
office held by him, and/or such other authority, duties and powers as may be
assigned to him from time to time by the Board of Directors, the Chairman, the
Vice-Chairman or the President. The other officers, and agents, if any, shall
have the authority, perform the duties and exercise the powers in the management
of the Corporation usually incident to the offices held by them, respectively,
and/or such other authority, duties and powers as may be assigned to them from
time to time by the Board of Directors or (except in the case of the Chairman,
the Vice-Chairman or the President, as appropriate) by the Chairman, the Vice-
Chairman or the President.
Section 3.05 Voting Securities Owned by the Corporation. Powers of
------------------------------------------
attorney, proxies, waivers of notice of meeting, consents and other instruments
relating to securities owned by the Corporation may be executed in the name of
and on behalf of the Corporation by the Chairman, the Vice-Chairman, the
President or any Vice-President and any such officer may,
11
<PAGE>
in the name of and on behalf of the Corporation, take all such action as any
such officer may deem advisable to vote in person or by proxy at any meeting of
security holders of any corporation in which the Corporation may own securities
and at any such meeting shall possess and may exercise any and all rights and
powers incident to the ownership of such securities and which, as the owner
thereof, the Corporation might have exercised and possessed if present. The
Board of Directors may, by resolution, from time to time confer like powers upon
any other person or persons.
ARTICLE IV
CAPITAL STOCK
-------------
Section 4.01 Stock Certificates. Every holder of stock in the Corporation
------------------
shall be entitled to have a certificate signed by, or in the name of the
Corporation by, the Chairman or Vice-Chairman of the Board of Directors, or the
President or a Vice-President, and by the Treasurer or an Assistant Treasurer,
or the Secretary or an Assistant Secretary, of the Corporation, certifying the
number of shares owned by him in the Corporation. Where such certificate is
signed (1) by a transfer agent other than the Corporation or its employee, or
(2) by a registrar other than the Corporation or its employee, the signatures of
the officers of the Corporation may be facsimiles. In case any officer who has
signed or whose facsimile signature has been placed upon a certificate shall
have ceased to be such officer before such certificate is issued, it may be
issued by the Corporation with the same effect as if he were such officer at the
date of issue.
Section 4.02 Transfers. Stock of the Corporation shall be transferable
---------
in the manner prescribed by the laws of the State of Delaware.
12
<PAGE>
Section 4.03 Registered Holders. Prior to due presentment for registration
------------------
of transfer of any security of the Corporation in registered form, the
Corporation shall treat the registered owner as the person exclusively entitled
to vote, to receive notifications and to otherwise exercise all the rights and
powers of an owner, and shall not be bound to recognize any equitable or other
claim to, or interest in, any security, whether or not the Corporation shall
have notice thereof, except as otherwise provided by the laws of the State of
Delaware.
Section 4.04 New Certificates. The Corporation shall issue a new
----------------
certificate of stock in the place of any certificate theretofore issued by it,
alleged to have been lost, stolen or destroyed, if the owner: (1) so requests
before the Corporation has notice that the shares of stock represented by that
certificate have been acquired by a bona fide purchaser; (2) files with the
Corporation a bond sufficient (in the judgment of the directors) to indemnify
the Corporation against any claim that may be made against it on account of the
alleged loss or theft of that certificate or the issuance of a new certificate;
and (3) satisfies any other requirements imposed by the directors that are
reasonable under the circumstances. A new certificate may be issued without
requiring any bond when, in the judgment of the directors, it is proper so to
do.
ARTICLE V
INDEMNIFICATION
---------------
Section 5.01 The Corporation shall indemnify its officers, directors,
employees and agents to the fullest extent permitted by the General Corporation
Law of Delaware and Article SEVEN of the Certificate of Incorporation of the
Corporation.
13
<PAGE>
ARTICLE VI
MISCELLANEOUS
-------------
Section 6.01 Offices. The registered office of the Corporation in
-------
the State of Delaware shall be at Corporation Trust Center, 1209 Orange Street,
Wilmington, Delaware 19801. The Corporation may also have offices at other
places within and/or without the State of Delaware.
Section 6.02 Seal. The corporate seal shall have inscribed thereon the
----
name of the Corporation, the year of its incorporation, and the words "Corporate
Seal Delaware."
Section 6.03 Checks. All checks or demands for money shall be signed by
------
such person or persons as the Board of Directors may from time to time
determine.
Section 6.04 Fiscal Year. The fiscal year shall begin on the first day
-----------
of January in each year and shall end on the thirty-first day of December of
each year.
Section 6.05 Waivers of Notice; Dispensing with Notice. Whenever any
-----------------------------------------
notice whatever is required to be given under the provisions of the General
Corporation Law of the State of Delaware, of the Certificate of Incorporation of
the Corporation, or of these By-Laws, a waiver thereof in writing, signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent thereto. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
stockholders need be specified in any written waiver of notice.
Attendance of a person at a meeting of stockholders shall constitute a
waiver of notice of such meeting, except when the stockholder attends a meeting
for the express purpose of
14
<PAGE>
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened.
Whenever any notice whatever is required to be given under the provisions
of the General Corporation Law of the State of Delaware, of the Certificate of
Incorporation of the Corporation, or of these By-Laws, to any person with whom
communication is made unlawful by any law of the United States of America, or by
any rule, regulation, proclamation or executive order issued under any such law,
then the giving of such notice to such person shall not be required and there
shall be no duty to apply to any governmental authority or agency for a license
or permit to give such notice to such person; and any action or meeting which
shall be taken or held without notice to any such person or without giving or
without applying for a license or permit to give any such notice to any such
person with whom communication is made unlawful as aforesaid, shall have the
same force and effect as if such notice had been given as provided under the
provisions of the General Corporation Law of the State of Delaware, or under the
provisions of the Certificate of Incorporation of the Corporation or of these
By-Laws. In the event that the action taken by the Corporation is such as to
require the filing of a certificate under any of the other sections of this
title, the certificate shall state, if such is the fact and if notice is
required, that notice was given to all persons entitled to receive notice except
such persons with whom communication is unlawful.
Section 6.06 Loans to and Guarantees of Obligations of Employees and
-------------------------------------------------------
Officers. The Corporation may lend money to or guaranty any obligation of,
- --------
or otherwise assist any officer or other employee of the Corporation or of a
subsidiary, including any officer or employee who is a director of the
Corporation or a subsidiary, whenever, in the judgment of the Board of
Directors, such loan, guaranty or assistance may reasonably be expected to
benefit the Corporation. The loan, guaranty or other assistance may be with or
without interest, and may be unsecured, or
15
<PAGE>
secured in such manner as the Board of Directors shall approve, including,
without limitation, a pledge of shares of stock of the Corporation. Nothing in
this Section contained shall be deemed to deny, limit or restrict the powers of
guaranty or warranty of the Corporation at common law or under any other
statute.
Section 6.07 Amendment of By-Laws. These By-Laws may be altered, amended
--------------------
or repealed at any meeting of the Board of Directors.
Section 6.08 Section Headings. The headings of the Articles and Sections
----------------
of these By-Laws, have been inserted for convenience of reference only and shall
not be deemed to be a part of these By-Laws.
16
<PAGE>
EXHIBIT 3.5
Microfilm Number 9062 589 Filed with the Department of State on
-------------- ----------
Entry Number /s/ Christopher A. Lewis
------------------ -----------------------------------------------
Secretary of the Commonwealth
ARTICLES OF AMENDMENT-DOMESTIC BUSINESS CORPORATION
DSCB: 15-1915 (Rev 89)
In compliance with the requirements of 15 Pa.C.S. (ss) 1915 (relating to
articles of amendment), the undersigned business corporation, desiring to amend
its Articles, hereby states that:
1. The name of the corporation is: Better Materials Corporation
--------------------------------------
---------------------------------------------------------------------
2. The (a) address of this corporation's current registered office in
this Commonwealth or (b) name of its commercial registered office
provider and the county of venue is (the Department is hereby
authorized to correct the following information to conform to the
records of the Department):
(a) Swamp Road Penns Park PA 18943 Bucks
---------------------------------------------------------------------
Number and Street City State Zip County
(b) c/o:
-----------------------------------------------------------------
Name of Commercial Registered Office Provider County
For a corporation represented by a commercial registered office
provider, the county in (b) shall be deemed the county in which the
corporation is located for venue and official publication purposes.
3. The statute by or under which it was incorporated is: Act of May 5,
----------------
1933 (P.L. 364, No. 106)
------------------------
4. The original date of its incorporation is: January 6, 1959
---------------------------
5. (Check, and if appropriate complete, one of the following):
X The amendment shall be effective upon filing these Articles of
---
Amendment in the Department of State.
The amendment shall be effective on: at
--- ------------ --------------
Date Hour
6. (Check one of the following):
The amendment was adopted by the shareholders pursuant to 15
---
Pa.C.S. (ss) 1914(a) and (b).
X The amendment was adopted by the board of directors pursuant to
---
15 Pa.C.S. (ss) 1914(c).
7. (Check, and if appropriate complete, one of the following):
The amendment adopted by the corporation, set forth in full, is
---
as follows:
X The amendment adopted by the corporation is set forth in full in
---
Exhibit A, attached hereto and made a part hereof.
<PAGE>
8. (Check if the amendment restated the Articles):
X The restated Articles of Incorporation supersede the original
---
Articles and all amendments thereto.
IN TESTIMONY WHEREOF, the undersigned corporation has caused these
Articles of Amendment to be signed by a duly authorized officer thereof this
29 day of November , 1990
- ---- ----------------------------------- --
BETTER MATERIALS CORPORATION
----------------------------------------------------------
(Name of Corporation)
BY: /s/
-------------------------------------------------------
(Signature)
TITLE: Chairman of the Board and Chief Executive Officer
----------------------------------------------------
2
<PAGE>
Exhibit A
---------
RESOLVED, that the Articles of Incorporation of the
corporation be and they are hereby restated as set forth in full
below:
RESTATED ARTICLES OF INCORPORATION
OF
BETTER MATERIALS CORPORATION
1. The name of the corporation is Better Materials Corporation.
2. The address of this corporation's registered office in this
Commonwealth is Swamp Road, Penns Park, Bucks County, Pennsylvania 18943.
3. The corporation is incorporated under the provisions of the
Business Corporation Law of 1988.
4. The aggregate number of shares which the corporation shall have
authority to issue is 400,000 shares, consisting of 100,000 shares of Class A
(Voting) Common Stock, par value $.10 per share, and 300,000 shares of Class B
(Non-Voting) Common Stock, par value $.10 per share. All voting rights in the
corporation shall be vested exclusively in the holders of the Class A (Voting)
Common Stock and, except as otherwise required by law, no holder of Class B
(Non-Voting) Common Stock shall have any right by reason thereof to notice of,
or to vote at, any meeting of shareholders of the corporation called for the
election of directors or for any other purpose, or to express consent or dissent
in writing to any plan, proposal, act, transaction or other corporate action to
be approved, effected or validated by the shareholders of the corporation.
5. The shareholders of the corporation shall not have the right to
cumulate their votes for the election of directors of the corporation.
6. These Articles of Incorporation may be amended in the manner at
the time prescribed by statute, and all rights conferred upon the shareholders
herein are granted subject to this reservation.
<PAGE>
Exhibit 3.5.1
Microfilm Number Filed with the Department of State on Dec. 14, 1998
----------- --------------
Entry Number /s/
--------------- ---------------------------------------------------
Acting Secretary of the Commonwealth
Secretary of the Commonwealth
ARTICLES OF MERGER-DOMESTIC BUSINESS CORPORATION
DSCB: 15-1926 (Rev 90)
In compliance with the requirements of 15 Pa.C.S. (ss) 1926 (relating to
articles of merger or consolidation), the undersigned business corporations,
desiring to effect a merger, hereby state that:
1. The name of the corporation surviving the merger is: Better Materials
-----------------
Corporation
--------------------
2. (Check and complete one of the following):
X The surviving corporation is a domestic business corporation
---
and the (a) address of its current registered office in this
Commonwealth or (b) name of its commercial registered office
provider and the county of venue is (the Department is hereby
authorized to correct the following information to conform to
the records of the Department):
(a) Swamp Road Penns Park PA 18943 Bucks
-----------------------------------------------------------------
Number and Street City State Zip County
(b) c/o:
-------------------------------------------------------------
Name of Commercial Registered Office Provider County
For a corporation represented by a commercial registered office
provider, the county in (b) shall be deemed the county in which the
corporation is located for venue and official publication purposes.
The surviving corporation is a qualified foreign business
------
corporation incorporated under the laws of and the (a)
----------
address of its current registered office in this Commonwealth or (b)
name of its commercial registered office provider and the county of
venue is (the Department is hereby authorized to correct the
following information to conform to the records of the Department):
(a)
------------------------------------------------------------------
Number and Street City State Zip County
(b)c/o:
--------------------------------------------------------------
Name of Commercial Registered Office Provider County
For a corporation represented by a commercial registered office
provider, the county in (b) shall be deemed the county in which the
corporation is located for venue and official publication purposes.
The surviving corporation is a nonqualified foreign business
-----
corporation incorporated under the laws of and the address
----------
of its principal office under the laws of such domiciliary
jurisdiction is:
---------------------------------------------------------------------
Number and Street City State Zip County
3. The name and address of the registered office in this Commonwealth or
name of its commercial registered office provider and the county of
venue of each other domestic business corporation and qualified
foreign business corporation which is a party to the plan of merger
are as follows:
<PAGE>
<TABLE>
<CAPTION>
Name of Corporation Address of Registered Office or County
Name of Commercial Registered Office Provider
<S> <C>
BMC Acquisition Company N. Front and Market Streets, P.O. Box 1181, Harrisburg, PA 17108
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
</TABLE>
4. (Check, and if appropriate complete, one of the following):
X The plan of merger shall be effective upon filing these Articles
---
of Merger in the Department of State.
The plan of merger shall be effective on: at
--- ----------- ----------
Date Hour
5. The manner in which the plan of merger was adopted by each domestic
corporation is as follows:
<TABLE>
<CAPTION>
Name of Corporation Manner of Adoption
<S> <C>
Better Materials Corporation Adopted by the shareholders and approved by the directors pursuant to 15 Pa.C.S. (ss) 1924(a)
--------------------------------------------------------------------------------------------------------------------------
BMC Acquisition Company Adopted by the shareholders and approved by the directors pursuant to 15 Pa.C.S. (ss) 1924(a)
--------------------------------------------------------------------------------------------------------------------------
</TABLE>
6. [SECTION STRUCK OUT]
7. (Check, and if appropriate complete, one of the following):
The plan of merger is set forth in full in Exhibit A attached
---
hereto and made a part hereof.
X Pursuant to 15 Pa.C.S. (ss) 1901 (relating to omission of
---
certain provisions from filed plans) the provisions, if any, of
the plan of merger that amend or constitute the operative
Articles of Incorporation of the surviving corporation as in
effect subsequent to the effective date of the plan are set
forth in full in Exhibit A attached hereto and made a part
hereof.
The full text of the plan of merger is on file at the principal place
of business of the surviving corporation, the address of which is:
Swamp Road Penns Park Pennsylvania 18943 Bucks
-----------------------------------------------------------------------
Number and Street City State Zip County
IN TESTIMONY WHEREOF, the undersigned corporation or each undersigned
corporation has caused these Articles of Merger to be signed by a duly
authorized officer thereof this 14th day of December, 1998.
- --------------------------------- ----------------------------------
BMC Acquisition Company Better Materials Corporation
BY: /s/ BY:
------------------------------ ------------------------------
(Signature) (Signature)
TITLE: Vice President TITLE: President
------------------------ --------------
2
<PAGE>
EXHIBIT 3.6
AMENDED AND RESTATED
BY-LAWS
OF
BETTER MATERIALS CORPORATION
________________
(A PENNSYLVANIA CORPORATION)
ARTICLE I
OFFICES AND FISCAL YEAR
-----------------------
Section 1.01 Registered Office. The registered office of the corporation
-----------------
in the Commonwealth of Pennsylvania shall be as stated in the Articles of
Incorporation (the "articles") or at such other location to which the registered
office shall be changed by action of the board of directors.
Section 1.02 Other Offices. The corporation may also have offices at such
-------------
other places within or without the Commonwealth of Pennsylvania as the board of
directors may from time to time appoint or the business of the corporation may
require.
Section 1.03 Fiscal Year. The fiscal year of the corporation shall end on
-----------
the Saturday in December or January that is closest to December 31 in each year
unless otherwise fixed by the board of directors.
ARTICLE II
NOTICE--WAIVERS--MEETINGS GENERALLY
-----------------------------------
Section 2.01 Manner of Giving Notice. (a) General Rule. Whenever written
----------------------- ------------
notice is required to be given to any person under the provisions of the
Business Corporation Law or by the articles or these bylaws, it may be given to
the person either personally or by sending a copy thereof by first class or
express mail, postage prepaid, or by telegram (with messenger service
specified), telex or TWX (with answerback received) or courier service, charges
prepaid, or by facsimile transmission to the address (or to the telex, TWX,
facsimile or telephone number) of the person appearing on the books of the
corporation or, in the case of directors, supplied by the director to the
corporation for the purpose of notice. If the notice is sent by mail, telegraph
or courier service, it shall be deemed to have been given to the person entitled
thereto when deposited in the United States mail or with a telegraph office or
courier service for delivery to that person or, in the case of telex or TWX,
when dispatched or, in the case of facsimile transmission when received. A
notice of meeting shall specify the place, day and hour of the meeting and any
other information required by any other provision of the Business Corporation
Law, the articles or these bylaws.
(b) Adjourned Shareholder Meetings. When a meeting of shareholders is
------------------------------
adjourned, it shall not be necessary to give any notice of the adjourned meeting
or of the business
<PAGE>
to be transacted at an adjourned meeting, other than by announcement at the
meeting at which the adjournment is taken, unless the board fixes a new record
date for the adjourned meeting in which event notice shall be given in
accordance with Section 2.03.
Section 2.02 Notice of Meetings of Board of Directors. Notice of a regular
----------------------------------------
meeting of the board of directors need not be given. Notice of every special
meeting of the board of directors shall be given to each director by telephone
or in writing at least 24 hours (in the case of notice by telephone, telex, TWX
or facsimile transmission) or 48 hours (in the case of notice by telegraph,
courier service or express mail) or five days (in the case of notice by first
class mail) before the time at which the meeting is to be held. Every such
notice shall state the time and place of the meeting. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the board
need be specified in a notice of the meeting.
Section 2.03 Notice of Meetings of Shareholders. (a) General Rule. Written
---------------------------------- ------------
notice of every meeting of the shareholders shall be given by, or at the
direction of, the secretary or other authorized person to each shareholder of
record entitled to vote at the meeting at least (1) ten days prior to the day
named for a meeting (and, in case of a meeting called to consider a merger,
consolidation, share exchange or division, to each shareholder of record not
entitled to vote at the meeting) called to consider a fundamental change under
15 Pa.C.S. Chapter 19 or (2) five days prior to the day named for the meeting in
any other case. If the secretary neglects or refuses to give notice of a
meeting, the person or persons calling the meeting may do so. In the case of a
special meeting of shareholders, the notice shall specify the general nature of
the business to be transacted.
(b) Notice of Action by Shareholders an Bylaws. In the case of a
------------------------------------------
meeting of shareholders that has as one of its purposes action on the bylaws,
written notice shall be given to each shareholder that the purpose, or one of
the purposes, of the meeting is to consider the adoption, amendment or repeal of
the bylaws. There shall be included in, or enclosed with, the notice a copy of
the proposed amendment or a summary of the changes to be effected thereby.
Section 2.04 Waiver of Notice. (a) Written Waiver. Whenever any written
---------------- --------------
notice is required to be given under the provisions of the Business Corporation
Law, the articles or these by-laws, a waiver thereof in writing, signed by the
person or persons entitled to the notice, whether before or after the time
stated therein, shall be deemed equivalent to the giving of the notice. Except
as provided in the next sentence, neither the business to be transacted at, nor
the purpose of, a meeting need be specified in the waiver of notice of the
meeting. In the case of a special meeting of shareholders, the waiver of notice
shall specify the general nature of the business to be transacted at such
meeting.
(b) Waiver by Attendance. Attendance of a person at any meeting shall
--------------------
constitute a waiver of notice of the meeting except where a person attends a
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting was not lawfully called
or convened.
Section 2.05 Modification of Proposal Contained in Notice. Whenever the
--------------------------------------------
language of a proposed resolution is included in a written notice of a meeting
required to be given under the provisions of the Business Corporation Law or the
articles or these bylaws, the meeting
2
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considering the resolution may without further notice adopt it with such
clarifying or other amendments as do not enlarge its original purpose.
Section 2.06 Exception to Requirement of Notice. (a) General Rule.
---------------------------------- ------------
Whenever any notice or communication is required to be given to any person under
the provisions of the Business Corporation Law or by the articles or these
bylaws or by the terms of any agreement or other instrument or as a condition
precedent to taking any corporate action and communication with that person is
then unlawful, the giving of the notice or communication to that person shall
not be required.
(b) Shareholders Without Forwarding Addresses. Notice or other
-----------------------------------------
communications need not be sent to any shareholder with whom the corporation has
been unable to communicate for more than 24 consecutive months because
communications to the shareholder are returned unclaimed or the shareholder has
otherwise failed to provide the corporation with a current address. Whenever the
shareholder provides the corporation with a current address, the corporation
shall commence sending notices and other communications to the shareholder in
the same manner as to other shareholders.
Section 2.07 Use of Conference Telephone and Similar Equipment. Any
-------------------------------------------------
director may participate in any meeting of the board of directors, and the board
of directors may provide by resolution with respect to a specific meeting or
with respect to a class of meetings that one or more persons may participate in
a meeting of the shareholders of the corporation by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other. Participation in a meeting
pursuant to this section shall constitute presence in person at the meeting.
ARTICLE III
SHAREHOLDERS
------------
Section 3.01 Place of Meeting. All meetings of the shareholders of the
----------------
corporation shall be held at the registered office of the corporation or such
other place as may be designated by the board of directors in the notice of a
meeting.
Section 3.02 Annual Meeting. The board of directors may fix and designate
--------------
the date and time of the annual meeting of the shareholders, but if no such date
and time is fixed and designated by the board, the meeting for any calendar year
shall be held on the second Monday of May in such year, if not a legal holiday
under the laws of Pennsylvania, and, if a legal holiday, then on the next
succeeding business day, not a Saturday, at 10:00 o'clock A.M., and at said
meeting the shareholders then entitled to vote shall elect directors and shall
transact such other business as may properly be brought before the meeting. If
the annual meeting shall not have been called and held within six months after
the designated time, any shareholder may call the meeting at any time
thereafter.
Section 3.03 Special Meetings. (a) Call of Special Meetings. Special
----------------
meetings of the shareholders may be called at any time:
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(i) by the chairman of the board;
(ii) by the board of directors; or
(iii) unless otherwise provided in the articles, by shareholders
entitled to cast at least 20% of the votes that all shareholders are
entitled to cast at the particular meeting.
(b) Fixing of Time for Meeting. At any time, upon written request, of
--------------------------
any person who has called a special meeting, it shall be the duty of the
secretary to fix the time of the meeting which shall be held not more than 60
days after the receipt of the request. If the secretary neglects or refuses to
fix the time of the meeting, the person or persons calling the meeting may do
so.
Section 3.04 Quorum and Adjournment. (a) General Rule. A meeting of
---------------------- ------------
shareholders of the corporation duly called shall not be organized for the
transaction of business unless a quorum is present. The presence of shareholders
entitled to cast at least a majority of the votes that all shareholders are
entitled to cast on a particular matter to be acted, upon at the meeting shall
constitute a quorum, for the purposes of consideration and action on the matter.
Shares of the corporation owned, directly or indirectly, by it and controlled,
directly or indirectly, by the board of directors of this corporation, as such,
shall not be counted in determining the total number of outstanding shares for
quorum purposes at any given time.
(b) Withdrawal of a Quorum. The shareholders present at a duly
----------------------
organized meeting can continue to do business until adjournment notwithstanding
the withdrawal of enough shareholders to leave less than a quorum.
(c) Adjournments Generally. Any regular or special meeting of the
----------------------
shareholders, including one at which directors are to be elected and one which
cannot be organized because a quorum has not attended may be adjourned for such
period and to such place as the shareholders present and entitled to vote shall
direct.
(d) Electing Directors at Adjourned Meeting. Those shareholders
---------------------------------------
entitled to vote who attend a meeting called for the election of directors that
has been previously adjourned for lack of a quorum, although less than a quorum
as fixed in this section, shall nevertheless constitute a quorum for the purpose
of electing directors.
(e) Other Action in Absence of Quorum. Those shareholders entitled to
---------------------------------
vote who attend a meeting of shareholders that has been previously adjourned for
one or more periods aggregating at least 15 days because of an absence of a
quorum, although less than a quorum as fixed in this section, shall nevertheless
constitute a quorum for the purpose of acting upon any matter set forth in the
notice of the meeting if the notice states that those shareholders who attend
the adjourned meeting shall nevertheless constitute a quorum for the purpose of
acting upon the matter.
Section 3.05 Action by Shareholders. Except as otherwise provided in the
----------------------
Business Corporation Law or the articles or these bylaws, whenever any corporate
action is to be taken by vote of the shareholders of the corporation, it shall
be authorized by a majority of the votes cast at a duly organized meeting of
shareholders by the holders of shares entitled to vote thereon.
4
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Section 3.06 Organization. At every meeting of the shareholders, the
------------
chairman of the board, if there be one, or, in the case of vacancy in office or
absence of the chairman of the board, one of the following persons present in
the order stated: the president, the vice presidents in their order of rank and
seniority, or a person chosen by vote of the shareholders present, shall act as
chairman of the meeting. The secretary or, in the absence of the secretary, an
assistant secretary, or, in the absence of both the secretary and assistant
secretaries, a person appointed by the chairman of the meeting, shall act as
secretary of the meeting.
Section 3.07 Voting Rights of Shareholders. Unless otherwise provided in
-----------------------------
the articles, every shareholder of the corporation shall be entitled to one vote
for every share standing in the name of the shareholder on the books of the
corporation.
Section 3.08 Voting and Other Action by Proxy. (a) General Rule. (i) Every
-------------------------------- ------------
shareholder entitled to vote at a meeting of shareholders or to express
consent or dissent to corporate action in writing without a meeting may
authorize another person to act for the shareholder by proxy.
(ii) The presence of, or vote or other action at a meeting of
shareholders, or the expression of consent or dissent to corporate action
in writing, by a proxy of a shareholder shall constitute the presence of,
or vote or action by, or written consent or dissent of, the shareholder.
(iii) Where two or more proxies of a shareholder are present,
the corporation shall, unless otherwise expressly provided in the proxy,
accept as the vote of all shares represented thereby the vote cast by a
majority of them and, if a majority of the proxies cannot agree whether the
shares represented shall be voted or upon the manner of voting the shares,
the voting of the shares shall be divided equally among those persons.
(b) Minimum Requirements. Every proxy shall be executed in writing by
--------------------
the shareholder or by the duly authorized attorney-in-fact of the shareholder
and filed with the secretary of the corporation. A proxy, unless coupled with an
interest, shall be revocable at will, notwithstanding any other agreement or any
provision in the proxy to the contrary, but the revocation of a proxy shall not
be effective until written notice thereof has been given to the secretary of the
corporation. An unrevoked proxy shall not be valid after three years from the
date of its execution unless a longer time is expressly provided therein. A
proxy shall not be revoked by the death or incapacity of the maker unless,
before the vote is counted or the authority is exercised, written notice of the
death or incapacity is given to the secretary of the corporation.
(c) Expenses. The corporation shall pay the reasonable expenses of
--------
solicitation of votes, proxies or consents of shareholders by or on behalf of
the board of directors or its nominees for election to the board, including
solicitation by professional proxy solicitors and otherwise.
Section 3.09 Voting by Fiduciaries and Pledgees. Shares of the corporation
----------------------------------
standing in the name of a trustee or other fiduciary and shares held by an
assignee for the benefit of creditors or by a receiver may be voted by the
trustee, fiduciary, assignee or receiver. A
5
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shareholder whose shares are pledged shall be entitled to vote the shares until
the shares have been transferred into the name of the pledgee, or a nominee of
the pledgee, but nothing in this section shall affect the validity of a proxy
given to a pledgee or nominee.
Section 3.10 Voting by Joint Holders of Shares. (a) General Rule. Where
--------------------------------- ------------
shares of the corporation are held jointly or as tenants in common by two or
more persons, as fiduciaries or otherwise:
(i) if only one or more of such persons is present in person or
by proxy, all of the shares standing in the names of such persons shall be
deemed to be represented for the purpose of determining a quorum and the
corporation shall accept as the vote of all the shares the vote cast by a
joint owner or a majority of them; and
(ii) if the persons are equally divided upon whether the shares
held by them shall be voted or upon the manner of voting the shares, the
voting of the shares shall be divided equally among the persons without
prejudice to the rights of the joint owners or the beneficial owners
thereof among themselves.
(b) Exception. If there has been filed with the secretary of the
---------
corporation a copy, certified by an attorney at law to be correct, of the
relevant portions of the agreement under which the shares are held or the
instrument by which the trust or estate was created or the order of court
appointing them or of an order of court directing the voting of the shares, the
persons specified as having such voting power in the document latest in date of
operative effect so filed, and only these persons, shall be entitled to vote the
shares but only in accordance therewith.
Section 3.11 Voting by Corporations. (a) Voting by Corporate Shareholders.
---------------------- --------------------------------
Any corporation that is a shareholder of this corporation may vote at meetings
of shareholders of this corporation, or consent or dissent to corporate action
in writing, by any of its officers or agents, or by proxy appointed by any
officer or agent, unless some other person, by resolution of the board of
directors of the other corporation or a provision of its articles or bylaws, a
copy of which resolution or provision certified to be correct by one of its
officers has been filed with the secretary of this corporation, is appointed its
general or special proxy in which case that person shall be entitled to vote the
shares.
(b) Controlled Shares. Shares of this corporation owned, directly or
-----------------
indirectly, by it and controlled, directly or indirectly, by the board of
directors of this corporation, as such, shall not be voted at any meeting and
shall not be counted in determining the total number of outstanding shares for
voting purposes at any given time.
Section 3.12 Determination of Shareholders of Record. (a) Fixing Record
--------------------------------------- -------------
Date. The board of directors may fix a time prior to the date of any meeting of
- ----
shareholders as a record date for the determination of the shareholders entitled
to notice of, or to vote at, the meeting, which time, except in the case of an
adjourned meeting, shall be not more than 90 days prior to the date of the
meeting of shareholders. Only shareholders of record an the date fixed shall be
so entitled notwithstanding any transfer of shares on the books of the
corporation after any record date fixed as provided in this subsection. The
board of directors may similarly fix a record date for the determination of
shareholders of record for any other purpose. When a determination of
6
<PAGE>
shareholders of record has been made as provided in this section for purposes of
a meeting, the determination shall apply to any adjournment thereof unless the
board fixes a new record date for the adjourned meeting.
(b) Determination When a Record Date is Not Fixed. If a record date
---------------------------------------------
is not fixed:
(i) The record date for determining shareholders entitled to
notice of or to vote at a meeting of shareholders shall be at the close of
business on the day next preceding the day an which notice is given or, if
notice is waived, at the close of business an the day immediately preceding
the day on which the meeting is held.
(ii) The record date for determining shareholders entitled to
express consent or dissent to corporate action in writing without a
meeting, when prior action by the board of directors is not necessary,
shall be the close of business on the day on which the first written
consent or dissent is filed with the secretary of the corporation.
(iii) The record date for determining shareholders for any other
purpose shall be at the close of business on the day on which the board of
directors adopts the resolution relating thereto.
(c) Certification by Nominee. The board of directors may adopt a
------------------------
procedure whereby a shareholder of the corporation may certify in writing to the
corporation that all or a portion of the shares registered in the name of the
shareholder are held for the account of a specified person or persons. Upon
receipt by the corporation of a certification complying with the procedure the
persons specified in the certification shall be deemed, for the purposes set
forth in the certification, to be the holders of record of the number of shares
specified in place of the shareholder making the certification.
Section 3.13 Voting Lists. (a) General Rule. The officer or agent having
------------ ------------
charge of the transfer books for shares of the corporation shall make a complete
list of the shareholders entitled to vote at any meeting of shareholders,
arranged in alphabetical order, with the address of and the number of shares
held by each. The list shall be produced and kept open at the time and place of
the meeting and shall be subject to the inspection of any shareholder during the
whole time of the meeting for the purposes thereof.
(b) Effect of List. Failure to comply with the requirements of this
--------------
section shall not affect the validity of any action taken at a meeting prior to
a demand at the meeting by any shareholder entitled to vote thereat to examine
the list. The original share register or transfer book, or a duplicate thereof
kept in the Commonwealth of Pennsylvania, shall be prima facie evidence as to
who are the shareholders entitled to examine the list or share register or
transfer book or to vote at any meeting of shareholders.
Section 3.14 Judges of Election. (a) Appointment. In advance of any
------------------ -----------
meeting of shareholders of the corporation, the board of directors may appoint
judges of election, who need not be shareholders, to act at the meeting or any
adjournment thereof. If judges of election are not so appointed, the presiding
officer of the meeting may, and on the request of any shareholder
7
<PAGE>
shall, appoint judges of election at the meeting. The number of judges shall be
one or three. A person who is a candidate for an office to be filled at the
meeting shall not act as a judge.
(b) Vacancies. In case any person appointed as a judge fails to
---------
appear or fails or refuses to act, the vacancy may be filled by appointment made
by the board of directors in advance of the convening of the meeting or at the
meeting by the presiding officer thereof.
(c) Duties. The judges of election shall determine the number of
------
shares outstanding and the voting power of each, the shares represented at the
meeting, the existence of a quorum, and the authenticity, validity and effect of
proxies, receive votes or ballots, hear and determine all challenges and
questions in any way arising in connection with nominations by shareholders or
the right to vote, count and tabulate all votes, determine the result and do
such acts as may be proper to conduct the election or vote with fairness to all
shareholders. The judges of election shall perform their duties impartially, in
good faith, to the best of their ability and as expeditiously as is practical.
if there are three judges of election, the decision, act or certificate of a
majority shall be effective in all respects as the decision, act or certificate
of all.
(d) Report. On request of the presiding officer of the meeting or of
------
any shareholder, the judges shall make a report in writing of any challenge or
question or matter determined by them, and execute a certificate of any fact
found by them. Any report or certificate made by them shall be prima facie
evidence of the facts stated therein.
Section 3.15 Consent of Shareholders in Lieu of Meeting. (a) Unanimous
------------------------------------------ ---------
Written Consent. Any action require or permitted to be taken at a meeting of the
- ---------------
shareholders or of a class of shareholders may be taken without a meeting if,
prior or subsequent to the action, a consent or consents thereto by all of the
shareholders who would be entitled to vote at a meeting for such purpose shall
be filed with the secretary of the corporation.
(b) Partial Written Consent. Any action required or permitted to be
-----------------------
taken at a meeting of the shareholders or of a class of shareholders may be
taken without a meeting upon the written consent of shareholders who would have
been entitled to cast the minimum number of votes that would be necessary to
authorize the action at a meeting at which all shareholders entitled to vote
thereon were present and voting. The consents shall be filed with the secretary
of the corporation. The action shall not become effective until after at least
ten days' written notice of the action has been given to each shareholder
entitled to vote thereon who has not consented thereto.
Section 3.16 Minors as Securityholders. The corporation may treat a minor
-------------------------
who holds shares or obligations of the corporation as having capacity to receive
and to empower others to receive dividends, interest, principal and other
payments or distributions, to vote or express consent or dissent, and to make
elections and exercise rights relating to such shares or obligations unless, in
the case of payments or distributions on shares, the corporate officer
responsible for maintaining the list of shareholders or the transfer agent of
the corporation or, in the case of payments or distributions on obligations, the
treasurer or paying officer or agent has received written notice that the holder
is a minor.
8
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ARTICLE IV
BOARD OF DIRECTORS
------------------
Section 4.01 Powers; Personal Liability. (a) General Rule. Unless
-------------------------- ------------
otherwise provided by statute, all powers vested by law in the corporation shall
be exercised by or under the authority of, and the business and affairs of the
corporation shall be managed under the direction of, the board of directors.
(b) Personal Liability of Directors. (i) A director shall not be
-------------------------------
personally liable, as such, for monetary damages for any action taken, or
any failure to take any action, unless:
(A) the director has breached or failed to perform the
duties of his or her office under Section 1721 of the Business
Corporation Law (or any successor provision); and
(B) the breach or failure to perform constitutes self
dealing, willful misconduct or recklessness.
(ii) The provisions of paragraph (1) shall not apply to the
responsibility or liability of a director pursuant to any criminal statute,
or the liability of a director for the payment of taxes pursuant to local,
state or federal law.
(c) Notation of Dissent. A director who is present at a meeting of
-------------------
the board of directors, or of a committee of the board, at which action on any
corporate matter is taken shall be presumed to have assented to the action taken
unless his or her dissent is entered in the minutes of the meeting or unless the
director files a written dissent to the action with the secretary of the meeting
before the adjournment thereof or transmits the dissent in writing to the
secretary of the corporation immediately after the adjournment of the meeting.
The right to dissent shall not apply to a director who voted in favor of the
action. Nothing in this section shall bar a director from asserting that minutes
of the meeting incorrectly omitted his or her dissent if, promptly upon receipt
of a copy of such minutes, the director notifies the secretary, in writing, of
the asserted omission or inaccuracy.
Section 4.02 Qualifications and Selection of Directors. (a)
------------------------------------------
Qualifications. Each director of the corporation shall be a natural person of
- --------------
full age who need not be a resident of the Commonwealth of Pennsylvania or a
shareholder of the corporation.
(b) Power to Select Directors. Except as otherwise provided in these
-------------------------
bylaws, directors of the corporation shall be elected by the shareholders.
(c) Nomination of Candidates. Upon the demand of any shareholder at
------------------------
any meeting of shareholders for the election of directors the chairman of the
meeting shall call for and shall afford a reasonable opportunity for the making
of nominations for the office of director. If the board of directors is
classified with respect to the power to elect directors or with respect to the
terms of directors and if, due to a vacancy or vacancies, or otherwise,
directors of than one class are to be elected, each class of directors to be
elected at the meeting shall be nominated and
9
<PAGE>
elected separately. Any shareholder may nominate as many persons for the office
of director as there are positions to be filled. If nominations for the office
of director have been called for as provided in this section only candidates who
have been so nominated shall be eligible for election.
(d) Election of Directors. In elections for directors, voting need
---------------------
not be by ballot, except upon demand made by a shareholder entitled to vote at
the election and before the voting begins. The candidates receiving the highest
number of votes from each class or group of classes, if any, entitled to elect
directors separately up to the number of directors to be elected by the class or
group of classes shall be elected. If at any meeting of shareholders, directors
of more than one class are to be elected, each class of directors shall be
elected in a separate election.
(e) Cumulative Voting. Unless the articles provide for straight
-----------------
voting, in each election of directors every shareholder entitled to vote shall
have the right to multiply the number of votes to which the shareholder may be
entitled by the total number of directors to be elected in the same election by
the holders of the class or classes of shares of which his or her shares are a
part and the shareholder may cast the whole number of his or her votes for one
candidate or may distribute them among too or more candidates. If cumulative
voting is applicable to the election, the chairman of the meeting may, and upon
the request of any shareholder shall, instruct the judges of election that, if a
ballot cast in the election of directors so directs, the judges shall cumulate
the total votes cast by such ballot in such manner as may be required in order
to elect the maximum number of nominees for which such ballot casts votes in the
order of priority specified in such ballot, taking into account the total votes
cast in the election of directors by each other ballot.
Section 4.03 Number and Term of Office. (a) Number. The board of directors
-------------------------
shall consist of such number of directors, not less than three nor more than
eleven.
(b) Term of Office. Each director shall hold office until his
--------------
successor shall have been elected and qualified or until his or her earlier
death, resignation or removal. A decrease in the number of directors shall not
have the effect of shortening the term of any incumbent director.
(c) Resignation. Any director may resign at any time upon written
-----------
notice to the corporation. The resignation shall be effective upon receipt
thereof by the corporation or at such subsequent time as shall be specified in
the notice of resignation.
Section 4.04 Vacancies. (a) General Rule. Vacancies in the board of
--------- ------------
directors, including vacancies resulting from an increase in the number of
directors, may be filled by a majority vote of the remaining members of the
board though less than a quorum, or by a sole remaining director, and each
person so selected shall be a director to serve until the next selection of the
class for which such director has been chosen, and until a successor has been
selected and qualified or until his or her earlier death, resignation or
removal.
(b) Action by Resigned Directors. When one or more directors resign
----------------------------
from the board effective at a future date, the directors then in office,
including those who have so
10
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resigned, shall have power by the applicable vote to fill the vacancies, the
vote thereon to take effect when the resignations become effective.
Section 4.05 Removal of Directors. (a) Removal by the Shareholders. The
-------------------- ---------------------------
entire board of directors, or any class of the board, or any individual director
may be removed from office by vote of the shareholders entitled to vote thereon
without assigning any cause. In case the board or a class of the board or any
one or more directors are so removed, new directors may be elected at the same
meeting.
(b) Removal by the Board. The board of directors may declare vacant
--------------------
the office of a director who has been judicially declared of unsound mind or who
has been convicted of an offense punishable by imprisonment for a term of more
than one year or if, within 60 days after notice of his or her selection, the
director does not accept the office either in writing or by attending a meeting
of the board of directors.
Section 4.06 Place of Meetings. Meetings of the board of directors may be
-----------------
held at such place within or without the Commonwealth of Pennsylvania as the
board of directors may from time to time appoint or as may be designated in the
notice of the meeting.
Section 4.07 Organization of Meetings. At every meeting of the board of
------------------------
directors, the chairman of the board, if there be one, or, in the case of a
vacancy in the office or absence of the chairman of the board, one of the
following officers present in the order stated: the president, the vice
presidents in their order of rank and seniority, or a person chosen by a
majority of the directors present, shall act as chairman of the meeting. The
secretary or, in the absence of the secretary, an assistant secretary, or, in
the absence of the secretary and the assistant secretaries, any person appointed
by the chairman of the meeting, shall act as secretary of the meeting.
Section 4.08 Regular Meetings. Regular meetings of the board of directors
----------------
shall be held at such time and place as shall be designated from time to time by
resolution of the board of directors.
Section 4.09 Special Meetings. Special meetings of the board of directors
----------------
shall be held whenever called by the chairman or by two or more of the
directors.
Section 4.10 Quorum of and Action by Directors. (a) General Rule. A
--------------------------------- ------------
majority of the directors in office of the corporation shall be necessary to
constitute a quorum for the transaction of business and the acts of a majority
of the directors present and voting at a meeting at which a quorum is present
shall be the acts of the board of directors.
(b) Action by Written Consent. Any action required or permitted to be
-------------------------
taken at a meeting of the directors may be taken without a meeting if, prior or
subsequent to the action, a consent or consents thereto by all of the directors
in office is filed with the secretary of the corporation.
Section 4.11 Executive and Other Committees. (a) Establishment and Powers.
------------------------------ ------------------------
The board of directors may, by resolution adopted by a majority of the directors
in office, establish one or more committees to consist of one or more directors
of the corporation. Any committee, to the extent provided in the resolution of
the board of directors, shall have and may exercise all
11
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of the powers and authority of the board of directors except that a committee
shall not have any power or authority as to the following:
(i) The submission to shareholders of any action requiring
approval of shareholders under the Business corporation Law.
(ii) The creation or filling of vacancies in the board of
directors.
(iii) The adoption, amendment or repeal of these bylaws.
(iv) The amendment or repeal of any resolution of the board
that by its terms is amendable or repealable only by the board.
(v) Action on matters committed by a resolution of the board
of directors to another committee of the board.
(b) Alternate Committee Members. The board may designate one or more
---------------------------
directors as alternate members of any committee who may replace any absent or
disqualified member at any meeting of the committee or for the purposes of any
written action by the committee. In the absence or disqualification of a member
and alternate member or members of a committee the member or members thereof
present at any meeting and not disqualified from voting, whether or not
constituting a quorum, may unanimously appoint another director to act at the
meeting in the place of the absent or disqualified member.
(c) Term. Each committee of the board shall serve at the pleasure of
----
the board.
(d) Committee Procedures. The term "board of directors" or "board,"
--------------------
when used in any provision of these bylaws relating to the organization or
procedures of or the manner of taking action by the board of directors, shall be
construed to include and refer to any executive or other committee of the board.
Section 4.12 Compensation. The board of directors shall have the authority
------------
to fix the compensation of directors for their services as directors and a
director may be a salaried officer of the corporation.
ARTICLE V
OFFICERS
--------
Section 5.01 Officers Generally. (a) Number, Qualifications and
------------------ --------------------------
Designation. The officers of the corporation shall be a chairman of the board, a
- ------------
president, one or more vice presidents, a secretary, a treasurer, and such other
officers as may be elected in accordance with the provisions of Section 5.03.
Officers may but need not be directors or shareholders of the corporation. The
president and secretary shall be natural persons of full age. The treasurer may
be a corporation, but if a natural person shall be of full age. Any number of
offices may be held by the same person.
12
<PAGE>
(b) Bonding. The corporation may secure the fidelity of any or all of
-------
its officers by bond or otherwise.
(c) Standard of Care. Except as otherwise provided in the articles,
----------------
an officer shall perform his or her duties as an officer in good faith, in a
manner he or she reasonably believes to be in the best interests of the
corporation and with such care, including reasonable inquiry, skill and
diligence, as a person of ordinary prudence would use under similar
circumstances. A person who so perform his or her duties shall not be liable by
reason of having been an officer of the corporation.
Section 5.02 Election, Term of Office and Resignations. (a) Election and
----------------------------------------- ------------
Term of Office. The officers of the corporation, except those elected by
- ---------------
delegated authority pursuant to Section 5.03, shall be elected annually by the
board of directors, and each such officer shall hold office for a term of one
year and until a successor has been selected and qualified or until his or her
earlier death, resignation or removal.
(b) Resignations. Any officer may resign at any time upon written
------------
notice to the corporation. The resignation shall be effective upon receipt
thereof by the corporation or at such subsequent time as may be specified in the
notice of resignation.
Section 5.03 Subordinate Officers, Committees and Agents. The board of
-------------------------------------------
directors may from time to time elect such other officers and appoint such
committees, employees or other agents as the business of the corporation may
require, including one or more assistant secretaries, and one or more assistant
treasurers, each of whom shall hold office for such periods have such authority,
and perform such duties as are provided in these bylaws, or as the board of
directors may from time to time determine. The board of directors may delegate
to any officer or committee the power to elect subordinate officers and to
retain or appoint employees or other agents, or committees thereof, and to
prescribe the authority and duties of such subordinate officers, committees,
employees or other agents.
Section 5.04 Removal of Officers and Agents. Any officer or agent of the
------------------------------
corporation may be removed by the board of directors with or without cause. The
removal shall be without prejudice to the contract rights, if any, of any person
so removed. Election or appointment of an officer or agent shall not of itself
create contract rights.
Section 5.05 Vacancies. A vacancy in any office because of death,
---------
resignation, removal, disqualification, or any other cause, may be filled by the
board of directors or by the officer or committee to which the power to fill
such office has been delegated pursuant to Section 5.03, as the case may be, and
if the office is one for which these bylaws prescribe a term, shall be filled
for the unexpired portion of the term.
Section 5.06 Authority. All officers of the corporation, as between
---------
themselves and the corporation, shall have such authority and perform such
duties in the management of the corporation as may be provided by or pursuant to
resolutions or orders of the board of directors or, in the absence of
controlling provisions in the resolutions or orders of the board of directors,
as may be determined by or pursuant to these bylaws.
13
<PAGE>
Section 5.07 The Chairman of the Board. The chairman of the board shall be
-------------------------
the chief executive officer of the corporation and, subject to the control of
the board of directors, shall have general charge and control of all its
business and affairs and shall have all powers and shall perform all duties
incident to the office of chairman of the board. The chairman of the board, or,
in the absence of the chairman, the president, shall preside at all meetings of
the shareholders and (if a director) of the board of directors.
Section 5.08 The President. The president shall be the chief operating
-------------
officer of the corporation and shall have general supervision over the
operations of the corporation, subject however, to the control of the board of
directors and the chairman of the board. In the absence of the chairman of the
board, the president shall preside at all meetings of the shareholders and (if a
director) of the board of directors, and shall perform such other duties as from
time to time may be assigned by the board of directors or the chairman of the
board.
Section 5.09 The Vice Presidents. The vice presidents shall perform the
-------------------
duties of the President in the absence of the president and such other duties as
may from time to time be assigned to them by the board of directors or the
chairman of the board.
Section 5.10 The Secretary. The secretary or an assistant secretary shall
-------------
attend all meetings of the shareholders and of the board of directors and all
committees thereof and shall record all the votes of the shareholders and of the
directors and the minutes of the meetings of the shareholders and of the board
of directors and of committees of the board in a book or books to be kept for
that purpose; shall see that notices are given and records and reports properly
kept and filed by the corporation as required by law; shall be the custodian of
the seal of the corporation and see that it is affixed to all documents to be
executed on behalf of the corporation under its seal; and, in general, shall
perform all duties incident to the office of secretary, and such other duties as
may from time to time be assigned by the board of directors or the chairman of
the board.
Section 5.11 The Treasurer. The treasurer or an assistant treasurer shall
-------------
have or provide for the custody of the funds or other property of the
corporation; shall collect and receive or provide for the collection and receipt
of moneys earned by or in any manner due to or received by the corporation;
shall deposit all funds in his or her custody as treasurer in such banks or
other places of deposit as the board of directors may from time to time
designate; shall, whenever so required by the board of directors, render an
account showing all transactions as treasurer, and the financial condition of
the corporation; and, in general, shall discharge such other duties as may from
time to time be assigned by the board of directors or the chairman of the board.
Section 5.12 Salaries. The salaries of the officers elected by the board
--------
of directors shall be fixed from time to time by the board of directors or by
such officer as may be designated by resolution of the board. The salaries or
other compensation of any other officers, employees and other agents shall be
fixed from time to time by the officer or committee to which the power to elect
such officers or to retain or appoint such employees or other agents has been
delegated pursuant to Section 5.03. No officer shall be prevented from receiving
such salary or other compensation by reason of the fact that the officer is also
a director of the corporation.
14
<PAGE>
ARTICLE VI
CERTIFICATES OF STOCK, TRANSFER, ETC.
-------------------------------------
Section 6.01 Share Certificates. (a) Form of Certificates. Certificates
------------------ --------------------
for shares of the corporation shall be in such form as approved by the board of
directors, and shall state that the corporation is incorporated under the laws
of the Commonwealth of Pennsylvania, the name of the person to whom issued, and
the number and class of shares and the designation of the series (if any) that
the certificate represents. If the corporation is authorized to issue shares of
more than one class or series, certificates for shares of the corporation shall
set forth upon the face or back of the certificate (or shall state on the face
or back of the certificate that the corporation will furnish to any shareholder
upon request and without charge), a full or summary statement of the
designations, voting rights, preferences, limitations and special rights of the
shares of each class or series authorized to be issued so far as they have been
fixed and determined and the authority of the board of directors to fix and
determine the designations, voting rights, preferences, limitations and special
rights of the classes and series of shares of the corporation.
(b) Share Register. The share register or transfer books and blank
--------------
share certificates shall be kept by the secretary or by any transfer agent or
registrar designated by the board of directors for that purpose.
Section 6.02 Issuance. The share certificates of the corporation shall be
--------
numbered and registered in the share register or transfer books of the
corporation as they are issued. They shall be executed in such manner as the
board of directors shall determine.
Section 6.03 Transfer. Transfers of shares shall be made an the share
--------
register or transfer books of the corporation upon surrender of the certificate
therefor, endorsed by the person named in the certificate or by an attorney
lawfully constituted in writing. No transfer shall be made inconsistent with the
provisions of the Uniform Commercial Code, 13 Pa.C.S. (S)(S) 8101 et seq., and
-- ---
its amendments and supplements.
Section 6.04 Record Holder of Shares. The corporation shall be entitled to
-----------------------
treat the person in whose name any share or shares of the corporation stand on
the books of the corporation as the absolute owner thereof, and shall not be
bound to recognize any equitable or other claim to, or interest in, such share
or shares on the part of any other person.
Section 6.05 Lost, Destroyed or Mutilated Certificates. The holder of any
-----------------------------------------
shares of the corporation shall immediately notify the corporation of any loss,
destruction or mutilation of the certificate therefor, and the board of
directors may, in its discretion, cause a new certificate or certificates to be
issued to such holder, in case of mutilation of the certificate, upon the
surrender of the mutilated certificate or, in case of loss or destruction of the
certificate, upon satisfactory proof of such loss or destruction and, if the
board of directors shall so determine, the deposit of a bond in such form and in
such sum, and with such surety or sureties, as it may direct.
ARTICLE VII
15
<PAGE>
INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHER AUTHORIZED REPRESENTATIVES
---------------------------------------------------------------------------
Section 7.01 Scope of Indemnification. (a) General Rule. The corporation
------------------------ ------------
shall indemnify an indemnified representative against any liability incurred in
connection with any proceeding in which the indemnified representative may be
involved as a party or otherwise by reason of the fact that such person is or
was serving in an indemnified capacity, including, without limitation,
liabilities resulting from any actual or alleged breach or neglect of duty,
error, misstatement or misleading statement, negligence, gross negligence or act
giving rise to strict or products liability, except:
(i) where such indemnification is expressly prohibited by
applicable law;
(ii) where the conduct of the indemnified representative has
been finally determined pursuant to Section 7.06 or otherwise:
(A) to constitute willful misconduct or recklessness
within the meaning of 15 Pa.C.S. (S)(S) 513(b) and 1746(b) and 42
Pa.C.S. (S) 8365(b) or any superseding provision of law sufficient in
the circumstances to bar indemnification against liabilities arising
from the conduct; or
(B) to be based upon or attributable to the receipt by
the indemnified representative from the corporation of a personal
benefit to which the indemnified representative is not legally
entitled; or
(iii) to the extent such indemnification has been finally
determined in a final adjudication pursuant to Section 7.06 to be otherwise
unlawful.
(b) Partial Payment. If an indemnified representative is entitled to
---------------
indemnification in respect of a portion, but not all, of any liabilities to
which such person may be subject, the corporation shall indemnify such
indemnified representative to the maximum extent for such portion of the
liabilities.
(c) Presumption. The termination of a proceeding by judgment, order,
-----------
settlement or conviction or upon a plea of nolo contendere or its equivalent
---- ----------
shall not of itself create a presumption that the indemnified representative is
not entitled to indemnification.
(d) Definitions. For purposes of this Article:
-----------
(i) "indemnified capacity" means any and all past, present and
future service by an indemnified representative in one or more capacities
as a director, officer, employee or agent of the corporation, or, at the
request of the corporation, as a director, officer, employee, agent,
fiduciary or trustee of another corporation, partnership, joint venture,
trust, employee benefit plan or other entity or enterprise;
(ii) "indemnified representative" means any and all directors
and officers of the corporation and any other person designated as an
indemnified representative by the board of directors of the corporation
(which may, but need not, include any person
16
<PAGE>
serving at the request of the corporation, as a director, officer,
employee, agent, fiduciary or trustee of another corporation, partnership,
joint venture, trust, employee benefit plan or other entity or enterprise);
(iii) "liability" means any damage, judgment, amount paid in
settlement, fine, penalty, punitive damages, excise tax assessed with
respect to an employee benefit plan, or cost or expense of any nature
(including, without limitation, attorneys' fees and disbursements); and
(iv) "proceeding" means any threatened, pending or completed
action, suit, appeal or other proceeding of any nature, whether civil,
criminal, administrative or investigative, whether formal or informal, and
whether brought by or in the right of the corporation, a class of its
security holders or otherwise.
Section 7.02 Proceedings Initiated by Indemnified Representatives.
----------------------------------------------------
Notwithstanding any other provision of this Article, the corporation shall not
indemnify under this Article an indemnified representative for any liability
incurred in a proceeding initiated (which shall not be deemed to include counter
claims or affirmative defenses) or participated in as an intervenor or amicus
------
curiae by the person seeking indemnification unless such initiation of or
- ------
participation in the proceeding is authorized, either before or after its
commencement, by the affirmative vote of a majority of the directors in office.
This section does not apply to reimbursement of expenses incurred in
successfully prosecuting or defending an arbitration under Section 7.06 or
otherwise successfully prosecuting or defending the rights of an indemnified
representative granted by or pursuant to this Article.
Section 7.03 Advancing Expenses. The corporation shall pay the expenses
------------------
(including attorneys' fees and disbursements) incurred in good faith by an
indemnified representative in advance of the final disposition of a proceeding
described in Section 7.01 or the initiation of or participation in which is
authorized pursuant to Section 7.02 upon receipt of an undertaking by or on
behalf of the indemnified representative to repay the amount if it is ultimately
determined pursuant to Section 7.06 that such person is not entitled to be
indemnified by the corporation pursuant to this Article. The financial ability
of an indemnified representative to repay an advance shall not be a prerequisite
to the making of such advance.
Section 7.04 Securing of Indemnification Obligations. To further effect,
---------------------------------------
satisfy or secure the indemnification obligations provided herein or otherwise,
the corporation may maintain insurance, obtain a letter of credit, act as self-
insurer, create a reserve, trust, escrow, cash collateral or other fund or
account, enter into indemnification agreements, pledge or grant a security
interest in any assets or properties of the corporation, or use any other
mechanism or arrangement whatsoever in such amounts, at such costs, and upon
such other terms and conditions as the board of directors shall deem
appropriate. Absent fraud, the determination of the board of directors with
respect to such amounts, costs, terms and conditions shall be conclusive against
all security holders, officers and directors and shall not be subject to
voidability.
17
<PAGE>
Section 7.05 Payment of Indemnification. An indemnified representative
--------------------------
shall be entitled to indemnification within 30 days after a written request for
indemnification has been delivered to the secretary of the corporation.
Section 7.06 Arbitration. (a) General Rule. Any dispute related to the
----------- ------------
right to indemnification, contribution or advancement of expenses as provided
under this Article, except with respect to indemnification for liabilities
arising under the Securities Act of 1933 that the corporation has undertaken to
submit to a court for adjudication, shall be decided only by arbitration in the
metropolitan area in which the principal executive offices of the corporation
are located at the time, in accordance with the commercial arbitration rules
then in effect of the American Arbitration Association, before a panel of three
arbitrators, one of whom shall be selected by the corporation, the second of
whom shall be selected by the indemnified representative and the third of whom
shall be selected by the other two arbitrators. In the absence of the American
Arbitration Association, or if for any reason arbitration under the arbitration
rules of the American Arbitration Association cannot be initiated, and if one of
the parties fails or refuses to select an arbitrator or the arbitrators selected
by the corporation and the indemnified representative cannot agree on the
selection of the third arbitrator within 30 days after such time as the
corporation and the indemnified representative have each been notified of the
selection of the other's arbitrator, the necessary arbitrator or arbitrators
shall be selected by the presiding judge of the court of general jurisdiction in
such metropolitan area.
(b) Burden of Proof. The party or parties challenging the right of an
---------------
indemnified representative to the benefits of this Article shall have the burden
of proof.
(c) Expenses. The corporation shall reimburse an indemnified
--------
representative for the expenses (including attorneys' fees and disbursements)
incurred in successfully prosecuting or defending such arbitration.
(d) Effect. Any award entered by the arbitrators shall be final,
------
binding and nonappealable and judgment may be entered thereon by any party in
accordance with applicable law in any court of competent. jurisdiction, except
that the corporation shall be entitled to interpose as a defense in any such
judicial enforcement proceeding any prior final judicial determination adverse
to the indemnified representative under Section 7.01(a)(2) in a proceeding not
directly involving indemnification under this Article. This arbitration
provision shall be specifically enforceable.
Section 7.07 Contribution. If the indemnification provided for in this
------------
Article or otherwise is unavailable for any reason in respect of any liability
or portion thereof, the corporation shall contribute to the liabilities to which
the indemnified representative may be subject in such proportion as is
appropriate to reflect the intent of this Article or otherwise.
Section 7.08 Mandatory Indemnification of Directors, Officers, etc. To the
-----------------------------------------------------
extent that an authorized representative of the corporation has been successful
on the merits or otherwise in defense of any action, suit or proceeding referred
to in Section 1741 or 1742 of the Business Corporation Law or in defense of any
claim, issue or matter therein, such person shall be indemnified against
expenses (including attorneys' fees and disbursements) actually and reasonably
incurred by such person in connection therewith.
18
<PAGE>
Section 7.09 Contract Rights; Amendment or Reveal. All rights under this
------------------------------------
Article shall be deemed a contract between the corporation and the indemnified
representative pursuant to which the corporation and each indemnified
representative intend to be legally bound. Any repeal, amendment or modification
hereof shall be prospective only and shall not affect any rights or obligations
then existing.
Section 7.10 Scope of Article. The rights granted by this Article shall
----------------
not be deemed exclusive of any other rights to which those seeking
indemnification, contribution or advancement of expenses may be entitled under
any statute, agreement, vote of shareholders or disinterested directors or
otherwise, both as to action in an indemnified capacity and as to action in any
other capacity. The indemnification, contribution and advancement of expenses
provided by or granted pursuant to this Article shall continue as to a person
who has ceased to be an indemnified representative in respect of matters arising
prior to such time, and shall inure to the benefit of the heirs, executors,
administrators and personal representatives of such a person.
Section 7.11 Reliance on Provisions. Each person who shall act as an
----------------------
indemnified representative of the corporation shall be deemed to be doing so in
reliance upon the rights of indemnification, contribution and advancement of
expenses provided by this Article.
Section 7.12 Interpretation. The provisions of this Article are intended
--------------
to constitute bylaws authorized by 15 Pa.C.S. (S)(S) 513 and 1746 and 42 Pa.C.S.
(S) 8365.
ARTICLE VIII
MISCELLANEOUS
-------------
Section 8.01 Corporate Seal. The corporation shall have a corporate seal
--------------
in the form of a circle containing the name of the corporation, the year of
incorporation and such other details as may be approved by the board of
directors. The affixation of the corporate seal shall not be necessary to the
valid execution, assignment or endorsement by the corporation of any instrument
or other document.
Section 8.02 Checks. All checks, notes, bills of exchange or other similar
------
orders in writing shall be signed by such one or more officers or employees as
the board of directors or any person authorized by resolution of the board of
directors may from time to time designate.
Section 8.03 Contracts. Except as otherwise provided in the Business
---------
Corporation Law in the case of transactions that require action by the
shareholders, the board of directors may authorize any officer or agent to enter
into any contract or to execute or deliver any instrument on behalf of the
corporation, and such authority may be general or confined to specific
instances.
Section 8.04 Interested Directors or Officers; Quorum. (a) General Rule. A
---------------------------------------- ------------
contract or transaction between the corporation and one or more of its directors
or officers or between the corporation and another corporation, partnership,
joint venture, trust or other enterprise in which one or more of its directors
or officers are directors or officers or have a financial or other interest,
shall not be void or voidable solely for that reason, or solely because the
director or
19
<PAGE>
officer is present at or participates in the meeting of the board of directors
that authorizes the contract or transaction, or solely because his, her or their
votes are counted for that purpose, if:
(i) the material facts as to the relationship or interest and
as to the contract or transaction are disclosed or are known to the board
of directors and the board authorizes the contract or transaction by the
affirmative votes of a majority of the disinterested directors even though
the disinterested directors are less than a quorum:
(ii) the material facts as to his or her relationship or
interest and as to the contract or transaction are disclosed or are known
to the shareholders entitled to vote thereon and the contract or
transaction is specifically approved in good faith by vote of those
shareholders; or
(iii) the contract or transaction is fair as to the corporation
as of the time it is authorized, approved or ratified by the board of
directors or the shareholders.
(b) Quorum. Common or interested directors may be counted in
------
determining the presence of a quorum at a meeting of the board which authorizes
a contract or transaction specified in subsection (a).
Section 8.05 Deposits. All funds of the corporation shall be deposited
--------
from time to time to the credit of the corporation in such banks, trust
companies or other depositories as the board of directors may approve or
designate, and all such funds shall be withdrawn only upon checks signed by such
one or more officers or employees as the board of directors shall from time to
time determine.
Section 8.06 Corporate Records. (a) Required Records. The corporation
----------------- ----------------
shall keep complete and accurate books and records of account, minutes of the
proceedings of the incorporators, shareholders and directors and a share
register giving the names and addresses of all shareholders and the number and
class of shares held by each. The share register shall be kept at either the
registered office of the corporation in the Commonwealth of Pennsylvania or at
its principal place of business wherever situated or at the office of its
registrar or transfer agent. Any books, minutes or other records may be in
written form or any other form capable of being converted into written form
within a reasonable time.
(b) Right of Inspection. Every shareholder shall, upon written
-------------------
verified demand stating the purpose thereof, have a right to examine, in person
or by agent or attorney, during the usual hours for business for any proper
purpose, the share register, books and records of account, and records of the
proceedings of the incorporators, shareholders and directors to make copies or
extracts therefrom. A proper purpose shall mean a purpose reasonably related to
the interest of the person as a shareholder. In every instance where an attorney
or other agent is the person who seeks the right of inspection, the demand shall
be accompanied by a verified power of attorney or other writing that authorizes
the attorney or other agent to so act on behalf of the shareholder. The demand
shall be directed to the corporation at its registered office in the
Commonwealth of Pennsylvania or at its principal place of business wherever
situated.
Section 8.07 Financial Reports. Unless otherwise agreed between the
-----------------
corporation and a shareholder, the corporation shall furnish to its shareholders
annual financial statements,
20
<PAGE>
including at least a balance sheet as of the end of each fiscal year and a
statement of income and expenses for the fiscal year. The financial statements
shall be prepared an the basis of generally accepted accounting principles, if
the corporation prepares financial statements for the fiscal year on that basis
for any purposes and may be consolidated statements of the corporation and one
or more of its subsidiaries. The financial statements shall be mailed by the
corporation to each of its shareholders entitled thereto within 120 days after
the close of each fiscal year and, after the mailing and upon written request,
shall be mailed by the corporation to any shareholder or beneficial owner
entitled thereto to whom a copy of the most recent annual financial statements
has not previously been mailed. Statements that are audited or reviewed by a
public accountant shall be accompanied by the report of the accountant; in other
cases, each copy shall be accompanied by a statement of the person in charge of
the financial records of the corporation:
(i) Stating his or her reasonable belief as to whether or not
the financial statements were prepared in accordance with generally
accepted accounting principles and, if not, describing the basis of
presentation.
(ii) Describing any material respects in which the financial
statements were not prepared on a basis consistent with those prepared for
the previous year.
Section 8.08 Amendment of Bylaws. These bylaws may be amended or repealed,
-------------------
or new bylaws may be adopted, either (i) by vote of the shareholders at any duly
organized annual or special meeting of shareholders, or (ii) with respect to
those matters that are not by statute committed expressly to the shareholders
and regardless of whether the shareholders have previously adopted or approved
the bylaw being amended or repealed, by vote of a majority of the board of
directors of the corporation in office at any regular or special meeting of
directors. Any change in these bylaws shall take effect when adopted unless
otherwise provided in the resolution effecting the change. See Section 2.03 (b)
(relating to notice of action by shareholders on bylaws).
21
<PAGE>
EXHIBIT 3.7
CERTIFICATE OF INCORPORATION
-of-
BMC TRUCKING, INC.
-oo0oo-
First: The name of the Corporation is BMC Trucking, Inc. (hereinafter
sometimes called the "Corporation").
Second: The address of the Corporation's registered office in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, City of Wilmington,
County of New Castle, State of Delaware 19801. The name of its registered agent
at such address is The Corporation Trust Company.
Third: The nature of the business or purposes to be conducted or promoted
are to engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of the State of Delaware.
Fourth: The total number of shares of stock which the Corporation shall
have authority to issue is 1,000 and the par value of each of such shares is
$0.01.
Fifth: The name and mailing address of the incorporator is as follows:
Tanya R. Sripanich
Winthrop, Stimson, Putnam & Roberts
One Battery Park Plaza
New York, New York 10004-1490
<PAGE>
Sixth: The following additional provisions are inserted for the management
of the business and for the conduct of the affairs of the Corporation, and for
the creation, definition, limitation and regulation of the powers of the
Corporation, the directors and the stockholders:
1. Election of directors need not be by written ballot. The Board of
Directors shall have power to make, alter, amend and repeal the By-Laws of the
Corporation and to fix the compensation of directors for services in any
capacity.
2. Any director may be removed at any time, with or without cause,
upon the affirmative vote of the holders of a majority of the stock of the
Corporation at that time having voting power for the election of directors;
provided, however, that no director who shall have been elected by the holders
of a separate class of stock shall be removed under the provisions of this
subdivision except upon the affirmative vote of the holders of a majority of the
class whose holders elected him, if such holders are then entitled to vote for
the election of directors.
3. Any corporate action, with respect to which the vote of the
stockholders at a meeting thereof is required or permitted by any provision of
the General Corporation Law of the State of Delaware or of the Certificate of
Incorporation or the By-Laws of the Corporation, is authorized to be taken and
may be taken without that vote and meeting, and that vote and meeting may be
dispensed with, with the written consent of the holders of a majority (or, if
with respect to a particular corporate action where the General Corporation Law
of the State of Delaware or the Certificate of Incorporation or the By-Laws of
the Corporation specifies a greater percentage, by the holders of that greater
percentage) of the stock that would have been entitled to vote upon that action
if a meeting were held. Prompt notice shall be given to all stockholders of the
taking of any corporate action pursuant to the provisions of this paragraph 3
2
<PAGE>
unless that action has been consented to in writing by the holders of all of the
stock that would have been entitled to vote upon that action if a meeting were
held.
4. A director of the Corporation shall not be personally liable to
the Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived an improper
personal benefit.
Seventh: Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
(S)291 of Title 8 of the Delaware Code or on the application of trustees in
dissolution or of any receiver or receivers appointed for this Corporation under
(S)279 of Title 8 of the Delaware Code order a meeting of the creditors or class
of creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, to be summoned in such manner as the said court
directs. If a majority in number representing three fourths in value of the
creditors or class of creditors, and/or of the stockholders or class of
stockholders of this Corporation, as the case may be, agree to any compromise or
arrangement and to any reorganization of this Corporation as consequence of such
compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said application
has been made, be
3
<PAGE>
binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this Corporation, as the case may be,
and also on this Corporation.
IN WITNESS WHEREOF, I, the undersigned, being the incorporator named above,
have hereunto set my hand and seal this 30/th/ day of November 1998.
/s/
-----------------------------
Sole Incorporator
4
<PAGE>
EXHIBIT 3.8
BY-LAWS
of
BMC TRUCKING, INC.
_____________________
(herein called the "Company")
ARTICLE I
---------
Stockholders
------------
Section 1.01. Annual Meeting. The Board of Directors by resolution shall
------------ --------------
designate the time, place and date (which shall be, in the case of the first
annual meeting, not more than 13 months after the organization of the Company
and, in the case of all other annual meetings, not more than 13 months after the
date of the last annual meeting) of the annual meeting of the stockholders for
the election of directors and the transaction of such other business as may come
before it.
Section 1.02. Special Meetings. Special meetings of the stockholders, for
------------ ----------------
any purpose or purposes, may be called at any time by the Chairman, the Vice-
Chairman, the President, any Vice-President, the Treasurer, the Secretary or the
Assistant Secretary, by resolution of the Board of Directors or upon written
request by the holders of one-third of the outstanding shares. Special meetings
of stockholders shall be held at such place, within or without the State of
Delaware, as shall be fixed by the person or persons calling the meeting and
stated in the notice or waiver of notice of the meeting.
<PAGE>
Section 1.03. Notice of Meetings of Stockholders. Whenever stockholders
------------ -----------------------------------
are required or permitted to take any action at a meeting, written notice of the
meeting shall be given (unless that notice shall be waived or unless the meeting
is to be dispensed with in accordance with the provisions of the General
Corporation Law of the State of Delaware and the Certificate of Incorporation of
the Company and Section 1.12 hereof) which shall state the place, date and hour
of the meeting and, in the case of a special meeting, the purpose or purposes
for which the meeting is called. The written notice of any meeting shall be
given, personally or by mail, not less than ten nor more than sixty days before
the date of the meeting to each stockholder entitled to vote at such meeting.
If mailed, such notice is given when deposited in the United States mail,
postage prepaid, directed to the stockholder at his address as it appears on the
records of the Company.
When a meeting is adjourned to another time or place, notice need not
be given of the adjourned meeting if the time and place thereof are announced at
the meeting at which the adjournment is taken. At the adjourned meeting the
Company may transact any business which might have been transacted at the
original meeting. If the adjournment is for more than thirty days, or if after
the adjournment a new record date is fixed for the adjourned meeting, a notice
of the adjourned meeting shall be given to each stockholder of record entitled
to vote at the meeting.
Section 1.04. Quorum. At all meetings of the stockholders, the holders of
------------ ------
one-third of the stock issued and outstanding and entitled to vote thereat,
present in person or by proxy, shall constitute a quorum for the transaction of
any business.
When a quorum is once present to organize a meeting, it is not broken by
the subsequent withdrawal of any stockholders.
2
<PAGE>
The stockholders present may adjourn the meeting despite the absence of a
quorum and at any such adjourned meeting at which the requisite amount of voting
stock shall be represented, the Company may transact any business which might
have been transacted at the original meeting had a quorum been there present.
Section 1.05. Method of Voting. The vote upon any question before the
------------ ----------------
meeting need not be by ballot. All elections and all other questions shall be
decided by a plurality of the votes cast, at a meeting at which a quorum is
present, except as expressly provided otherwise by the General Corporation Law
of the State of Delaware or the Certificate of Incorporation.
Section 1.06. Voting Rights of Stockholders and Proxies. Each stockholder
------------ -----------------------------------------
of record entitled to vote in accordance with the laws of the State of Delaware,
the Certificate of Incorporation or these By-Laws, shall at every meeting of the
stockholders be entitled to one vote in person or by proxy for each share of
stock entitled to vote standing in his name on the books of the Company, but no
proxy shall be voted on after three years from its date, unless the proxy
provides for a longer period.
Section 1.07. Ownership of its Own Stock. Shares of its own capital stock
------------ --------------------------
belonging to the Company or to another corporation, if a majority of the shares
entitled to vote in the election of directors of such other corporation is held,
directly or indirectly, by the Company, shall neither be entitled to vote nor be
counted for quorum purposes. Nothing in this section shall be construed as
limiting the right of any corporation to vote stock, including but not limited
to its own stock, held by it in a fiduciary capacity.
Section 1.08. Voting by Fiduciaries and Pledgors. Persons holding stock
------------ ----------------------------------
in a fiduciary capacity shall be entitled to vote the shares so held. Persons
whose stock is pledged shall be
3
<PAGE>
entitled to vote, unless in the transfer by the pledgor on the books of the
Company he has expressly empowered the pledgee to vote thereon, in which case
only the pledgee, or his proxy, may represent such stock and vote thereon.
Section 1.09. Fixing Date for Determination of Stockholders of Record. In
------------ -------------------------------------------------------
order to determine the stockholders entitled to notice of or to vote at any
meeting of stockholders or any adjournment thereof, or to express consent to
corporate action in writing without a meeting, or entitled to receive payment of
any dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock,
or for the purpose of any other lawful action, the Board of Directors may fix,
in advance, a record date, which shall not be more than sixty nor less than ten
days before the date of such meeting, nor more than sixty days prior to any
other action. If no record date is fixed by the Board of Directors, the record
date shall be determined in accordance with the provisions of the General
Corporation Law of the State of Delaware.
Section 1.10. List of Stockholders. The officer who has charge of the
------------ --------------------
stock ledger of the Company shall prepare and make, at least ten days before
every meeting of the stockholders, a complete list of the stockholders entitled
to vote at the meeting, arranged in alphabetical order, and showing the address
of each stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder, for
any purpose germane to the meeting, during ordinary business hours, for a period
of at least ten days prior to the meeting, either at a place within the city
where the meeting is to be held (which place shall be specified in the notice of
the meeting or, if not so specified, at the place where said meeting is to be
held), and the list shall be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any stockholder
who may be present. Upon the
4
<PAGE>
willful neglect or refusal of the directors to produce such a list at any
meeting for the election of directors, they shall be ineligible for election to
any office at such meeting.
Section 1.11. Stockholder's Right of Inspection. Stockholders of record,
------------ ---------------------------------
in person or by attorney or other agent, shall have the right, upon written
demand under oath stating the purpose thereof, during the usual hours for
business to inspect for any proper purpose the Company's stock ledger, a list of
its stockholders, and its other books and records, and to make copies or
extracts therefrom. A proper purpose shall mean a purpose reasonably related to
such person's interest as a stockholder. In every instance where an attorney or
other agent shall be the person who seeks the right to inspection, the demand
under oath shall be accompanied by a power of attorney or such other writing
which authorizes the attorney or other agent to so act on behalf of the
stockholder. The demand under oath shall be directed to the Company at its
registered office in this State or at its principal place of business.
The stock ledger shall be the only evidence as to who are the stockholders
entitled to examine the stock ledger, the list required by Section 1.10 or the
books of the Company, or to vote in person or by proxy at any meeting of the
stockholders.
Section 1.12. Consent in Lieu of Meeting. Any corporate action, with
------------ --------------------------
respect to which the vote of the stockholders at a meeting thereof is required
or permitted by any provision of the General Corporation Law of the State of
Delaware, the Certificate of Incorporation of the Company, or these By-Laws, may
be taken without that vote and meeting, and that vote and meeting may be
dispensed with, if that corporate action has been consented to in writing by the
holders of a majority (or, if with respect to a particular corporate action the
General Corporation Law of the State of Delaware, the Certificate of
Incorporation of the Company or these By-Laws
5
<PAGE>
specifies a greater percentage, by the holders of that percentage) of the stock
that would have been entitled to vote upon that action if a meeting were held.
Prompt notice shall be given to all stockholders of the taking of any corporate
action pursuant to the provisions of that paragraph unless that action has been
consented to in writing by the holders of all of the stock that would have been
entitled to vote upon that action if a meeting were held.
ARTICLE II
----------
Directors
---------
Section 2.01. Management of Business. The business of the Company shall
------------ ----------------------
be managed by its Board of Directors.
The Board of Directors, in addition to the powers and authority expressly
conferred upon it herein, by statute, by the Certificate of Incorporation of the
Company or otherwise, is hereby empowered to exercise all such powers as may be
exercised by the Company, except as expressly provided otherwise by the statutes
of the State of Delaware, by the Certificate of Incorporation of the Company or
by these By-Laws.
Without prejudice to the generality of the foregoing, the Board of
Directors, by resolution or resolutions, may create and issue, whether or not in
connection with the issue and sale of any shares of stock or other securities of
the Company, rights or options entitling the holders thereof to purchase from
the Company any shares of its capital stock of any class or classes or any other
securities of the Company, such rights or options to be evidenced by or in such
instrument or instruments as shall be approved by the Board of Directors. The
terms upon which, including the
6
<PAGE>
time or times, which may be limited or unlimited in duration, at or within
which, and the price or prices at which, any such rights or options may be
issued and any such shares or other securities may be purchased from the Company
upon the exercise of any such right or option shall be such as shall be fixed
and stated in the resolution or resolutions adopted by the Board of Directors
providing for the creation and issue of such rights or options, and, in every
case, set forth or incorporated by reference in the instrument or instruments
evidencing such rights or options. In the absence of actual fraud in the
transaction, the judgment of the directors as to the consideration for the
issuance of such rights or options and the sufficiency thereof shall be
conclusive. In case the shares of stock of the Company to be issued upon the
exercise of such rights or options shall be shares having a par value, the price
or prices so to be received therefor shall not be less than the par value
thereof. In case the shares of stock so to be issued shall be shares of stock
without par value, the consideration therefor shall be determined in the manner
provided in Section 153 of the General Corporation Law of the State of Delaware.
Section 2.02. Qualifications and Number of Directors. Directors need not
------------ --------------------------------------
be stockholders. The number of directors which shall constitute the whole Board
shall be not less than three nor more than eleven.
Section 2.03. Election and Term. The directors shall be elected at the
------------ -----------------
annual meeting of the stockholders, and each director shall be elected to hold
office until his successor shall be elected and qualified, or until his earlier
resignation or removal.
Section 2.04. Resignations. Any director of the Company may resign at any
------------ ------------
time by giving written notice to the Company. Such resignation shall take
effect at the time specified therein, if any, or if no time is specified
therein, then upon receipt of such notice by the
7
<PAGE>
Company; and, unless otherwise provided therein, the acceptance of such
resignation shall not be necessary to make it effective.
Section 2.05. Vacancies and Newly Created Directorships. Vacancies and
------------ -----------------------------------------
newly created directorships resulting from any increase in the authorized number
of directors may be filled by a majority of the directors then in office, though
less than a quorum, or by a sole remaining director, and the directors so chosen
shall hold office until their successors shall be elected and qualified, or
until their earlier resignation or removal. When one or more directors shall
resign from the Board, effective at a future date, a majority of the directors
then in office, including those who have so resigned, shall have power to fill
such vacancy or vacancies, the vote thereon to take effect when such resignation
or resignations shall become effective, and each director so chosen shall hold
office as herein provided in the filling of other vacancies.
Section 2.06. Quorum of Directors. At all meetings of the Board of
------------ -------------------
Directors, one-third of the entire Board shall constitute a quorum for the
transaction of business and the act of a majority of the directors present at
any meeting at which there is a quorum shall be the act of the Board of
Directors, except as provided in Sections 2.05 and 2.12 hereof.
A majority of the directors present, whether or not a quorum is present,
may adjourn any meeting of the directors to another time and place. Notice of
any adjournment need not be given if such time and place are announced at the
meeting.
Section 2.07. Annual Meeting. The newly elected Board of Directors shall
------------ --------------
meet immediately following the adjournment of the annual meeting of stockholders
in each year at the same place, within or without the State of Delaware, and no
notice of such meeting shall be necessary.
8
<PAGE>
Section 2.08. Regular Meetings. Regular meetings of the Board of
------------ ----------------
Directors may be held at such time and place, within or without the State of
Delaware, as shall from time to time be fixed by the Board and no notice thereof
shall be necessary.
Section 2.09. Special Meetings. Special meetings may be called at any
------------ ----------------
time by the President, the Secretary or by resolution of any two Directors.
Special meetings shall be held at such place, within or without the State of
Delaware, as shall be fixed by the person or persons calling the meeting and
stated in the notice or waiver of notice of the meeting.
Special meetings of the Board of Directors shall be held upon notice to the
directors or waiver thereof.
Unless waived, notice of each special meeting of the directors, stating the
time and place of the meeting, shall be given to each director by delivered
letter, by telegram or by personal communication either over the telephone or
otherwise, in each such case not later than the second day prior to the meeting,
or by mailed letter deposited in the United States mail with postage thereon
prepaid not later than the seventh day prior to the meeting. Notices of special
meetings of the Board of Directors and waivers thereof need not state the
purpose or purposes of the meeting.
Section 2.10. Action Without a Meeting. Any action required or permitted
------------ ------------------------
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting if all members of the Board or committee, as the
case may be, consent thereto in a writing or writings and the writing or
writings are filed with the minutes of proceedings of the Board or committee.
9
<PAGE>
Section 2.11. Compensation. Directors shall receive any such fixed sums
------------ ------------
and expenses of attendance for attendance at each meeting of the Board or of any
committee and/or any such salary as may be determined from time to time by the
Board of Directors; provided that nothing herein contained shall be construed to
preclude any director from serving the Company in any other capacity and
receiving compensation therefor.
Section 2.12. Executive Committee. The Board of Directors may, by
------------ -------------------
resolution or resolutions, passed by a majority of the whole Board, designate an
Executive Committee (and may discontinue the same at any time) to consist of
three or more of the directors of the Company. The members shall be appointed
by the Board and shall hold office at the pleasure of the Board. The Board may
designate one or more directors as alternate members of the Committee, who may
replace an absent or disqualified member at any meeting of the Committee. The
Executive Committee shall have and may exercise all the powers of the Board of
Directors (when the Board is not in session) in the management of the business
and affairs of the Company (and may authorize the seal of the Company to be
affixed to all papers which may require it), except that the Executive Committee
shall have no power (a) to elect directors; (b) to alter, amend or repeal these
By-Laws or any resolution or resolutions of the directors designating an
Executive Committee; (c) to declare any dividend or make any other distribution
to the stockholders of the Company; or (d) to appoint any member of the
Executive Committee. Regular meetings of the Executive Committee may be held at
such time and place, within or without the State of Delaware, as shall from time
to time be fixed by the Executive Committee and no notice thereof shall be
necessary. Special meetings may be called at any time by any officer of the
Company or any member of the Committee. Special meetings shall be held at such
place, within or without the State of Delaware, as shall be fixed by the person
calling the meeting
10
<PAGE>
and stated in the notice or waiver of the meeting. A majority of the members of
the Executive Committee shall constitute a quorum for the transaction of
business and the act of a majority present at which there is a quorum shall be
the act of the Executive Committee. Notice of each special meeting of the
Executive Committee shall be given (or waived) in the same manner as notice of a
directors' meeting.
ARTICLE III
-----------
Officers
--------
Section 3.01. Number. The officers of the Company shall be chosen by the
------------ ------
Board of Directors. The officers shall be a President and/or Chairman, a
Secretary and a Treasurer, and such number of Vice-Presidents, Assistant
Secretaries and Assistant Treasurers, and such other officers, if any, as the
Board may from time to time determine. The Board may choose such other agents
as it shall deem necessary. Any number of offices may be held by the same
person.
Section 3.02. Terms of Office. Each officer shall hold his office until
------------ ---------------
his successor is chosen and qualified or until his earlier resignation or
removal. Any officer may resign at any time upon written notice to the Company.
Section 3.03. Removal. Any officer may be removed from office at any time
------------ -------
by the Board of Directors with or without cause.
Section 3.04. Authority. The Secretary shall record all of the
------------ ---------
proceedings of the meetings of the stockholders and directors in a book to be
kept for that purpose, and shall have the authority, perform the duties and
exercise the powers in the management of the Company
11
<PAGE>
usually incident to the office held by him, and/or such other authority, duties
and powers as may be assigned to him from time to time by the Board of
Directors, the Chairman, the Vice-Chairman or the President. The other officers,
and agents, if any, shall have the authority, perform the duties and exercise
the powers in the management of the Company usually incident to the offices held
by them, respectively, and/or such other authority, duties and powers as may be
assigned to them from time to time by the Board of Directors or (except in the
case of the Chairman, the Vice-Chairman or the President) by the Chairman, the
Vice President or the President.
Section 3.05. Voting Securities Owned by the Company. Powers of attorney,
------------ --------------------------------------
proxies, waivers of notice of meeting, consents and other instruments relating
to securities owned by the Company may be executed in the name of and on behalf
of the Company by the Chairman, the Vice Chairman, the President or any Vice-
President and any such officer may, in the name of and on behalf of the Company,
take all such action as any such officer may deem advisable to vote in person or
by proxy at any meeting of security holders of any corporation in which the
Company may own securities and at any such meeting shall possess and may
exercise any and all rights and powers incident to the ownership of such
securities and which, as the owner thereof, the Company might have exercised and
possessed if present. The Board of Directors may, by resolution, from time to
time confer like powers upon any other person or persons.
ARTICLE IV
----------
Capital Stock
-------------
Section 4.01. Stock Certificates. Every holder of stock in the Company
------------ ------------------
shall be entitled to have a certificate signed by, or in the name of the Company
by, the Chairman, or Vice
12
<PAGE>
Chairman of the Board of Directors or the President or a Vice-President, and by
the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant
Secretary, of the Company, certifying the number of shares owned by him in the
Company. Where such certificate is signed (1) by a transfer agent other than the
Company or its employee, or (2) by a registrar other than the Company or its
employee, the signatures of the officers of the Company may be facsimiles. In
case any officer who has signed or whose facsimile signature has been placed
upon a certificate shall have ceased to be such officer before such certificate
is issued, it may be issued by the Company with the same effect as if he were
such officer at the date of issue.
Section 4.02. Transfers. Stock of the Company shall be transferable in
------------ ---------
the manner prescribed by the laws of the State of Delaware.
Section 4.03. Registered Holders. Prior to due presentment for
------------ ------------------
registration of transfer of any security of the Company in registered form, the
Company shall treat the registered owner as the person exclusively entitled to
vote, to receive notifications and to otherwise exercise all the rights and
powers of an owner, and shall not be bound to recognize any equitable or other
claim to, or interest in, any security, whether or not the Company shall have
notice thereof, except as otherwise provided by the laws of the State of
Delaware.
13
<PAGE>
Section 4.04. New Certificates. The Company shall issue a new certificate
------------ ----------------
of stock in the place of any certificate theretofore issued by it, alleged to
have been lost, stolen or destroyed, if the owner: (1) so requests before the
Company has notice that the shares of stock represented by that certificate have
been acquired by a bona fide purchaser; (2) files with the Company a bond
sufficient (in the judgment of the directors) to indemnify the Company against
any claim that may be made against it on account of the alleged loss or theft of
that certificate or the issuance of a new certificate; and (3) satisfies any
other requirements imposed by the directors that are reasonable under the
circumstances. A new certificate may be issued without requiring any bond when,
in the judgment of the directors, it is proper so to do.
ARTICLE V
---------
INDEMNIFICATION
---------------
Section 5.01. The Company shall indemnify its officers, directors,
------------
employees and agents to the fullest extent permitted by the General Corporation
Law of Delaware and the relevant provision in the Certificate of Incorporation
of the Corporation, if applicable.
ARTICLE VI
----------
Miscellaneous
-------------
Section 6.01. Offices. The registered office of the Company in the State
------------ -------
of Delaware shall be as stated in the Certificate of Incorporation or at such
other location to which the registered office shall be changed by action of the
board of directors The Company may also have offices at other places within
and/or without the State of Delaware.
14
<PAGE>
Section 6.02. Seal. The corporate seal shall have inscribed thereon the
------------ ----
name of the Company, the year of its incorporation and the words "Corporate Seal
Delaware."
Section 6.03. Checks. All checks or demands for money shall be signed by
------------ ------
such person or persons as the Board of Directors may from time to time
determine.
Section 6.04. Fiscal Year. The fiscal year shall begin the first day of
------------ -----------
January in each year and shall end on the thirty-first day of December of such
year.
Section 6.05. Waivers of Notice; Dispensing with Notice. Whenever any
------------ -----------------------------------------
notice whatever is required to be given under the provisions of the General
Corporation Law of the State of Delaware, of the Certificate of Incorporation of
the Corporation, or of these By-Laws, a waiver thereof in writing, signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent thereto. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
stockholders need be specified in any written waiver of notice.
Attendance of a person at a meeting of stockholders shall constitute a
waiver of notice of such meeting, except when the stockholder attends a meeting
for the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened.
Whenever any notice whatever is required to be given under the provisions
of the General Corporation Law of the State of Delaware, of the Certificate of
Incorporation of the Company, or of these By-Laws, to any person with whom
communication is made unlawful by any law of the United States of America, or by
any rule, regulation, proclamation or executive order issued
15
<PAGE>
under any such law, then the giving of such notice to such person shall not be
required and there shall be no duty to apply to any governmental authority or
agency for a license or permit to give such notice to such person; and any
action or meeting which shall be taken or held without notice to any such person
or without giving or without applying for a license or permit to give any such
notice to any such person with whom communication is made unlawful as aforesaid,
shall have the same force and effect as if such notice had been given as
provided under the provisions of the General Corporation Law of the State of
Delaware, or under the provisions of the Certificate of Incorporation of the
Company or of these By-Laws. In the event that the action taken by the Company
is such as to require the filing of a certificate under any of the other
sections of this title, the certificate shall state, if such is the fact and if
notice is required, that notice was given to all persons entitled to receive
notice except such persons with whom communication is unlawful.
Section 6.06. Loans to and Guarantees of Obligations of Employees and
------------ -------------------------------------------------------
Officers. The Company may lend money to or guaranty any obligation of, or
- --------
otherwise assist any officer or other employee of the Company or of a
subsidiary, including any officer or employee who is a director of the Company
or a subsidiary, whenever, in the judgment of the Board of Directors, such loan,
guaranty or assistance may reasonably be expected to benefit the Company. The
loan, guaranty or other assistance may be with or without interest, and may be
unsecured, or secured in such manner as the Board of Directors shall approve,
including, without limitation, a pledge of shares of stock of the Company.
Nothing in this Section contained shall be deemed to deny, limit or restrict the
powers of guaranty or warranty of the Company at common law or under any other
statute.
Section 6.07. Amendment of By-Laws. These By-Laws may be altered, amended
------------ --------------------
or repealed at any meeting of the Board of Directors.
16
<PAGE>
Section 6.08. Section Headings and Statutory References. The headings of
------------ -----------------------------------------
the Articles and Sections of these By-Laws, have been inserted for convenience
of reference only and shall not be deemed to be a part of these By-Laws.
17
<PAGE>
EXHIBIT 3.9
ARTICLES OF AMENDMENT - DOMESTIC BUSINESS CORPORATION
DSCB:15-1915 (Rev 89)
In compliance with the requirements of 15 Pa.C.S. (S) 1915 (relating to
articles of amendment), the undersigned business corporation, desiring to amend
its Articles, hereby states that:
1. The name of the corporation is: Bucks County Crushed Stone Company
--------------------------------------------
___________________________________________________________________________
2. The (a) address of this corporation's current registered office in this
Commonwealth or (b) the name of its commercial registered office provider
and the county of venue is (the Department is hereby authorized to correct
the following information to conform to the records of the Department):
(a) Ottsville R.D. Ottsville PA 18942 Bucks
---------------------------------------------------------------------------
Number and Street City State Zip County
(b) c/c:_______________________________________________________________________
Name of Commercial Registered Office Provider County
For a corporation represented by a commercial registered office provider,
the county in (b) shall be deemed the county in which the corporation is
located for venue and official publication purposes.
3. The statute by or under which it was incorporated is: Act of May 5, 1933
----------------------
(P.L. 364, No. 106)
-------------------
4. The original date of its incorporation is: February 25, 1955
--------------------------------
5. (Check, and if appropriate complete, one of the following):
X The amendment shall be effective upon filing these Articles of
-----
Amendment in the Department of State.
_____ The amendment shall be effective on: _____________ at _____ _________
Date Hour
6. (Check one of the following):
_____ The amendment was adopted by the shareholders pursuant to 15 Pa.C.S.
(S) 1914(a) and (b).
X The amendment was adopted by the board of directors pursuant to 15
-----
Pa.C.S. (S) 1914 (c).
7. (Check, and if appropriate complete, one of the following):
_____ The amendment adopted by the corporation, set forth in full, is
as follows:
X The amendment adopted by corporation is set forth in full in Exhibit
-----
A, attached hereto and made a part hereof.
<PAGE>
8. (Check if the amendment restates the Articles):
X The restated Articles of Incorporation supersede the original
-----
Articles and all amendments thereto.
IN TESTIMONY WHEREOF, the undersigned corporation has caused these Articles
of Amendment to be signed by a duly authorized officer thereof this ________ day
of ______________________, 19____.
BUCKS COUNTY CRUSHED STONE COMPANY
--------------------------------------------------------
(Name of Corporation)
BY: /s/
----------------------------------------------------
(Signature)
TITLE: Chairman of the Board and Chief Executive Officer
--------------------------------------------------
<PAGE>
Exhibit A
---------
RESOLVED, that the Articles of Incorporation of the corporation be and they
are hereby restated as set forth in full below
RESTATED ARTICLES OF INCORPORATION
OF
BUCKS COUNTY CRUSHED STONE COMPANY
1. The name of the corporation is Bucks County Crushed Stone Company.
2. The address of this corporation's registered office in this
Commonwealth is Ottsville R.D., County of Bucks.
3. The corporation is incorporated under the provisions of the Business
Corporation Law of 1988.
4. The aggregate number of shares which the corporation shall have
authority to issue is 300 Common shares and the par value of each Common share
is $100.
5. These Articles of Incorporation may be amended in the manner at the
time prescribed by statute, and all rights conferred upon the shareholders
herein are granted subject to this reservation.
<PAGE>
EXHIBIT 3.10
AMENDED AND RESTATED
BY-LAWS
OF
BUCKS COUNTY CRUSHED STONE COMPANY, INC.
________________
(A PENNSYLVANIA CORPORATION)
ARTICLE I
OFFICES AND FISCAL YEAR
-----------------------
Section 1.01 Registered Office. The registered office of the corporation
-----------------
in the Commonwealth of Pennsylvania shall be as stated in the Articles of
Incorporation (the "articles") or at such other location to which the registered
office shall be changed by action of the board of directors.
Section 1.02 Other Offices. The corporation may also have offices at such
-------------
other places within or without the Commonwealth of Pennsylvania as the board of
directors may from time to time appoint or the business of the corporation may
require.
Section 1.03 Fiscal Year. The fiscal year of the corporation shall end on
-----------
the Saturday in December or January that is closest to December 31 in each year
unless otherwise fixed by the board of directors.
ARTICLE II
NOTICE--WAIVERS--MEETINGS GENERALLY
-----------------------------------
Section 2.01 Manner of Giving Notice. (a) General Rule. Whenever
----------------------- ------------
written notice is required to be given to any person under the provisions of the
Business Corporation Law or by the articles or these bylaws, it may be given to
the person either personally or by sending a copy thereof by first class or
express mail, postage prepaid, or by telegram (with messenger service
specified), telex or TWX (with answerback received) or courier service, charges
prepaid, or by facsimile transmission to the address (or to the telex, TWX,
facsimile or telephone number) of the person appearing on the books of the
corporation or, in the case of directors, supplied by the director to the
corporation for the purpose of notice. If the notice is sent by mail, telegraph
or courier service, it shall be deemed to have been given to the person entitled
thereto when deposited in the United States mail or with a telegraph office or
courier service for delivery to that person or, in the case of telex or TWX,
when dispatched or, in the case of facsimile transmission when received. A
notice of meeting shall specify the place, day and hour of the meeting and any
other information required by any other provision of the Business Corporation
Law, the articles or these bylaws.
(b) Adjourned Shareholder Meetings. When a meeting of shareholders is
------------------------------
adjourned, it shall not be necessary to give any notice of the adjourned meeting
or of the business
<PAGE>
to be transacted at an adjourned meeting, other than by announcement at the
meeting at which the adjournment is taken, unless the board fixes a new record
date for the adjourned meeting in which event notice shall be given in
accordance with Section 2.03.
Section 2.02 Notice of Meetings of Board of Directors. Notice of a
----------------------------------------
regular meeting of the board of directors need not be given. Notice of every
special meeting of the board of directors shall be given to each director by
telephone or in writing at least 24 hours (in the case of notice by telephone,
telex, TWX or facsimile transmission) or 48 hours (in the case of notice by
telegraph, courier service or express mail) or five days (in the case of notice
by first class mail) before the time at which the meeting is to be held. Every
such notice shall state the time and place of the meeting. Neither the business
to be transacted at, nor the purpose of, any regular or special meeting of the
board need be specified in a notice of the meeting.
Section 2.03 Notice of Meetings of Shareholders. (a) General Rule.
---------------------------------- ------------
Written notice of every meeting of the shareholders shall be given by, or at the
direction of, the secretary or other authorized person to each shareholder of
record entitled to vote at the meeting at least (1) ten days prior to the day
named for a meeting (and, in case of a meeting called to consider a merger,
consolidation, share exchange or division, to each shareholder of record not
entitled to vote at the meeting) called to consider a fundamental change under
15 Pa.C.S. Chapter 19 or (2) five days prior to the day named for the meeting in
any other case. If the secretary neglects or refuses to give notice of a
meeting, the person or persons calling the meeting may do so. In the case of a
special meeting of shareholders, the notice shall specify the general nature of
the business to be transacted.
(b) Notice of Action by Shareholders an Bylaws. In the case of a
------------------------------------------
meeting of shareholders that has as one of its purposes action on the bylaws,
written notice shall be given to each shareholder that the purpose, or one of
the purposes, of the meeting is to consider the adoption, amendment or repeal of
the bylaws. There shall be included in, or enclosed with, the notice a copy of
the proposed amendment or a summary of the changes to be effected thereby.
Section 2.04 Waiver of Notice. (a) Written Waiver. Whenever any written
---------------- --------------
notice is required to be given under the provisions of the Business Corporation
Law, the articles or these by-laws, a waiver thereof in writing, signed by the
person or persons entitled to the notice, whether before or after the time
stated therein, shall be deemed equivalent to the giving of the notice. Except
as provided in the next sentence, neither the business to be transacted at, nor
the purpose of, a meeting need be specified in the waiver of notice of the
meeting. In the case of a special meeting of shareholders, the waiver of notice
shall specify the general nature of the business to be transacted at such
meeting.
(b) Waiver by Attendance. Attendance of a person at any meeting
--------------------
shall constitute a waiver of notice of the meeting except where a person attends
a meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting was not lawfully called
or convened.
Section 2.05 Modification of Proposal Contained in Notice. Whenever the
--------------------------------------------
language of a proposed resolution is included in a written notice of a meeting
required to be given under the provisions of the Business Corporation Law or the
articles or these bylaws, the meeting
2
<PAGE>
considering the resolution may without further notice adopt it with such
clarifying or other amendments as do not enlarge its original purpose.
Section 2.06 Exception to Requirement of Notice. (a) General Rule.
---------------------------------- ------------
Whenever any notice or communication is required to be given to any person under
the provisions of the Business Corporation Law or by the articles or these
bylaws or by the terms of any agreement or other instrument or as a condition
precedent to taking any corporate action and communication with that person is
then unlawful, the giving of the notice or communication to that person shall
not be required.
(b) Shareholders Without Forwarding Addresses. Notice or other
-----------------------------------------
communications need not be sent to any shareholder with whom the corporation has
been unable to communicate for more than 24 consecutive months because
communications to the shareholder are returned unclaimed or the shareholder has
otherwise failed to provide the corporation with a current address. Whenever the
shareholder provides the corporation with a current address, the corporation
shall commence sending notices and other communications to the shareholder in
the same manner as to other shareholders.
Section 2.07 Use of Conference Telephone and Similar Equipment. Any
-------------------------------------------------
director may participate in any meeting of the board of directors, and the board
of directors may provide by resolution with respect to a specific meeting or
with respect to a class of meetings that one or more persons may participate in
a meeting of the shareholders of the corporation by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other. Participation in a meeting
pursuant to this section shall constitute presence in person at the meeting.
ARTICLE III
SHAREHOLDERS
------------
Section 3.01 Place of Meeting. All meetings of the shareholders of the
----------------
corporation shall be held at the registered office of the corporation or such
other place as may be designated by the board of directors in the notice of a
meeting.
Section 3.02 Annual Meeting. The board of directors may fix and designate
--------------
the date and time of the annual meeting of the shareholders, but if no such date
and time is fixed and designated by the board, the meeting for any calendar year
shall be held on the second Monday of May in such year, if not a legal holiday
under the laws of Pennsylvania, and, if a legal holiday, then on the next
succeeding business day, not a Saturday, at 10:00 o'clock A.M., and at said
meeting the shareholders then entitled to vote shall elect directors and shall
transact such other business as may properly be brought before the meeting. If
the annual meeting shall not have been called and held within six months after
the designated time, any shareholder may call the meeting at any time
thereafter.
Section 3.03 Special Meetings. (a) Call of Special Meetings. Special
---------------- ------------------------
meetings of the shareholders may be called at any time:
3
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(i) by the chairman of the board;
(ii) by the board of directors; or
(iii) unless otherwise provided in the articles, by shareholders
entitled to cast at least 20% of the votes that all shareholders are
entitled to cast at the particular meeting.
(b) Fixing of Time for Meeting. At any time, upon written request,
--------------------------
of any person who has called a special meeting, it shall be the duty of the
secretary to fix the time of the meeting which shall be held not more than 60
days after the receipt of the request. If the secretary neglects or refuses to
fix the time of the meeting, the person or persons calling the meeting may do
so.
Section 3.04 Quorum and Adjournment. (a) General Rule. A meeting of
---------------------- ------------
shareholders of the corporation duly called shall not be organized for the
transaction of business unless a quorum is present. The presence of shareholders
entitled to cast at least a majority of the votes that all shareholders are
entitled to cast on a particular matter to be acted, upon at the meeting shall
constitute a quorum, for the purposes of consideration and action on the matter.
Shares of the corporation owned, directly or indirectly, by it and controlled,
directly or indirectly, by the board of directors of this corporation, as such,
shall not be counted in determining the total number of outstanding shares for
quorum purposes at any given time.
(b) Withdrawal of a Quorum. The shareholders present at a duly
----------------------
organized meeting can continue to do business until adjournment notwithstanding
the withdrawal of enough shareholders to leave less than a quorum.
(c) Adjournments Generally. Any regular or special meeting of the
----------------------
shareholders, including one at which directors are to be elected and one which
cannot be organized because a quorum has not attended may be adjourned for such
period and to such place as the shareholders present and entitled to vote shall
direct.
(d) Electing Directors at Adjourned Meeting. Those shareholders
---------------------------------------
entitled to vote who attend a meeting called for the election of directors that
has been previously adjourned for lack of a quorum, although less than a quorum
as fixed in this section, shall nevertheless constitute a quorum for the purpose
of electing directors.
(e) Other Action in Absence of Quorum. Those shareholders entitled to
---------------------------------
vote who attend a meeting of shareholders that has been previously adjourned for
one or more periods aggregating at least 15 days because of an absence of a
quorum, although less than a quorum as fixed in this section, shall nevertheless
constitute a quorum for the purpose of acting upon any matter set forth in the
notice of the meeting if the notice states that those shareholders who attend
the adjourned meeting shall nevertheless constitute a quorum for the purpose of
acting upon the matter.
Section 3.05 Action by Shareholders. Except as otherwise provided in the
----------------------
Business Corporation Law or the articles or these bylaws, whenever any corporate
action is to be taken by vote of the shareholders of the corporation, it shall
be authorized by a majority of the votes cast at a duly organized meeting of
shareholders by the holders of shares entitled to vote thereon.
4
<PAGE>
Section 3.06 Organization. At every meeting of the shareholders, the
------------
chairman of the board, if there be one, or, in the case of vacancy in office or
absence of the chairman of the board, one of the following persons present in
the order stated: the president, the vice presidents in their order of rank and
seniority, or a person chosen by vote of the shareholders present, shall act as
chairman of the meeting. The secretary or, in the absence of the secretary, an
assistant secretary, or, in the absence of both the secretary and assistant
secretaries, a person appointed by the chairman of the meeting, shall act as
secretary of the meeting.
Section 3.07 Voting Rights of Shareholders. Unless otherwise provided in
-----------------------------
the articles, every shareholder of the corporation shall be entitled to one vote
for every share standing in the name of the shareholder on the books of the
corporation.
Section 3.08 Voting and Other Action by Proxy. (a) General Rule. (i)
-------------------------------- ------------
Every shareholder entitled to vote at a meeting of shareholders or to
express consent or dissent to corporate action in writing without a meeting
may authorize another person to act for the shareholder by proxy.
(ii) The presence of, or vote or other action at a meeting of
shareholders, or the expression of consent or dissent to corporate action
in writing, by a proxy of a shareholder shall constitute the presence of,
or vote or action by, or written consent or dissent of, the shareholder.
(iii) Where two or more proxies of a shareholder are present,
the corporation shall, unless otherwise expressly provided in the proxy,
accept as the vote of all shares represented thereby the vote cast by a
majority of them and, if a majority of the proxies cannot agree whether the
shares represented shall be voted or upon the manner of voting the shares,
the voting of the shares shall be divided equally among those persons.
(b) Minimum Requirements. Every proxy shall be executed in writing
--------------------
by the shareholder or by the duly authorized attorney-in-fact of the shareholder
and filed with the secretary of the corporation. A proxy, unless coupled with an
interest, shall be revocable at will, notwithstanding any other agreement or any
provision in the proxy to the contrary, but the revocation of a proxy shall not
be effective until written notice thereof has been given to the secretary of the
corporation. An unrevoked proxy shall not be valid after three years from the
date of its execution unless a longer time is expressly provided therein. A
proxy shall not be revoked by the death or incapacity of the maker unless,
before the vote is counted or the authority is exercised, written notice of the
death or incapacity is given to the secretary of the corporation.
(c) Expenses. The corporation shall pay the reasonable expenses of
--------
solicitation of votes, proxies or consents of shareholders by or on behalf of
the board of directors or its nominees for election to the board, including
solicitation by professional proxy solicitors and otherwise.
Section 3.09 Voting by Fiduciaries and Pledgees. Shares of the corporation
----------------------------------
standing in the name of a trustee or other fiduciary and shares held by an
assignee for the benefit of creditors or by a receiver may be voted by the
trustee, fiduciary, assignee or receiver. A
5
<PAGE>
shareholder whose shares are pledged shall be entitled to vote the shares until
the shares have been transferred into the name of the pledgee, or a nominee of
the pledgee, but nothing in this section shall affect the validity of a proxy
given to a pledgee or nominee.
Section 3.10 Voting by Joint Holders of Shares. (a) General Rule. Where
--------------------------------- ------------
shares of the corporation are held jointly or as tenants in common by two or
more persons, as fiduciaries or otherwise:
(i) if only one or more of such persons is present in person or
by proxy, all of the shares standing in the names of such persons shall be
deemed to be represented for the purpose of determining a quorum and the
corporation shall accept as the vote of all the shares the vote cast by a
joint owner or a majority of them; and
(ii) if the persons are equally divided upon whether the shares
held by them shall be voted or upon the manner of voting the shares, the
voting of the shares shall be divided equally among the persons without
prejudice to the rights of the joint owners or the beneficial owners
thereof among themselves.
(b) Exception. If there has been filed with the secretary of the
---------
corporation a copy, certified by an attorney at law to be correct, of the
relevant portions of the agreement under which the shares are held or the
instrument by which the trust or estate was created or the order of court
appointing them or of an order of court directing the voting of the shares, the
persons specified as having such voting power in the document latest in date of
operative effect so filed, and only these persons, shall be entitled to vote the
shares but only in accordance therewith.
Section 3.11 Voting by Corporations. (a) Voting by Corporate
---------------------- -------------------
Shareholders. Any corporation that is a shareholder of this corporation may
- ------------
vote at meetings of shareholders of this corporation, or consent or dissent to
corporate action in writing, by any of its officers or agents, or by proxy
appointed by any officer or agent, unless some other person, by resolution of
the board of directors of the other corporation or a provision of its articles
or bylaws, a copy of which resolution or provision certified to be correct by
one of its officers has been filed with the secretary of this corporation, is
appointed its general or special proxy in which case that person shall be
entitled to vote the shares.
(b) Controlled Shares. Shares of this corporation owned, directly or
-----------------
indirectly, by it and controlled, directly or indirectly, by the board of
directors of this corporation, as such, shall not be voted at any meeting and
shall not be counted in determining the total number of outstanding shares for
voting purposes at any given time.
Section 3.12 Determination of Shareholders of Record. (a) Fixing Record
--------------------------------------- -------------
Date. The board of directors may fix a time prior to the date of any meeting
- ----
of shareholders as a record date for the determination of the shareholders
entitled to notice of, or to vote at, the meeting, which time, except in the
case of an adjourned meeting, shall be not more than 90 days prior to the date
of the meeting of shareholders. Only shareholders of record an the date fixed
shall be so entitled notwithstanding any transfer of shares on the books of the
corporation after any record date fixed as provided in this subsection. The
board of directors may similarly fix a record date for the determination of
shareholders of record for any other purpose. When a determination of
6
<PAGE>
shareholders of record has been made as provided in this section for purposes of
a meeting, the determination shall apply to any adjournment thereof unless the
board fixes a new record date for the adjourned meeting.
(b) Determination When a Record Date is Not Fixed. If a record date
---------------------------------------------
is not fixed:
(i) The record date for determining shareholders entitled to
notice of or to vote at a meeting of shareholders shall be at the close of
business on the day next preceding the day an which notice is given or, if
notice is waived, at the close of business an the day immediately preceding
the day on which the meeting is held.
(ii) The record date for determining shareholders entitled to
express consent or dissent to corporate action in writing without a
meeting, when prior action by the board of directors is not necessary,
shall be the close of business on the day on which the first written
consent or dissent is filed with the secretary of the corporation.
(iii) The record date for determining shareholders for any other
purpose shall be at the close of business on the day on which the board of
directors adopts the resolution relating thereto.
(c) Certification by Nominee. The board of directors may adopt a
------------------------
procedure whereby a shareholder of the corporation may certify in writing to the
corporation that all or a portion of the shares registered in the name of the
shareholder are held for the account of a specified person or persons. Upon
receipt by the corporation of a certification complying with the procedure the
persons specified in the certification shall be deemed, for the purposes set
forth in the certification, to be the holders of record of the number of shares
specified in place of the shareholder making the certification.
Section 3.13 Voting Lists. (a) General Rule. The officer or agent having
------------ ------------
charge of the transfer books for shares of the corporation shall make a complete
list of the shareholders entitled to vote at any meeting of shareholders,
arranged in alphabetical order, with the address of and the number of shares
held by each. The list shall be produced and kept open at the time and place of
the meeting and shall be subject to the inspection of any shareholder during the
whole time of the meeting for the purposes thereof.
(b) Effect of List. Failure to comply with the requirements of this
--------------
section shall not affect the validity of any action taken at a meeting prior to
a demand at the meeting by any shareholder entitled to vote thereat to examine
the list. The original share register or transfer book, or a duplicate thereof
kept in the Commonwealth of Pennsylvania, shall be prima facie evidence as to
who are the shareholders entitled to examine the list or share register or
transfer book or to vote at any meeting of shareholders.
Section 3.14 Judges of Election. (a) Appointment. In advance of any
------------------ -----------
meeting of shareholders of the corporation, the board of directors may appoint
judges of election, who need not be shareholders, to act at the meeting or any
adjournment thereof. If judges of election are not so appointed, the presiding
officer of the meeting may, and on the request of any shareholder
7
<PAGE>
shall, appoint judges of election at the meeting. The number of judges shall be
one or three. A person who is a candidate for an office to be filled at the
meeting shall not act as a judge.
(b) Vacancies. In case any person appointed as a judge fails to
---------
appear or fails or refuses to act, the vacancy may be filled by appointment made
by the board of directors in advance of the convening of the meeting or at the
meeting by the presiding officer thereof.
(c) Duties. The judges of election shall determine the number of
------
shares outstanding and the voting power of each, the shares represented at the
meeting, the existence of a quorum, and the authenticity, validity and effect of
proxies, receive votes or ballots, hear and determine all challenges and
questions in any way arising in connection with nominations by shareholders or
the right to vote, count and tabulate all votes, determine the result and do
such acts as may be proper to conduct the election or vote with fairness to all
shareholders. The judges of election shall perform their duties impartially, in
good faith, to the best of their ability and as expeditiously as is practical.
if there are three judges of election, the decision, act or certificate of a
majority shall be effective in all respects as the decision, act or certificate
of all.
(d) Report. On request of the presiding officer of the meeting or of
------
any shareholder, the judges shall make a report in writing of any challenge or
question or matter determined by them, and execute a certificate of any fact
found by them. Any report or certificate made by them shall be prima facie
evidence of the facts stated therein.
Section 3.15 Consent of Shareholders in Lieu of Meeting. (a) Unanimous
------------------------------------------ ---------
Written Consent. Any action require or permitted to be taken at a meeting of the
- ---------------
shareholders or of a class of shareholders may be taken without a meeting if,
prior or subsequent to the action, a consent or consents thereto by all of the
shareholders who would be entitled to vote at a meeting for such purpose shall
be filed with the secretary of the corporation.
(b) Partial Written Consent. Any action required or permitted to be
-----------------------
taken at a meeting of the shareholders or of a class of shareholders may be
taken without a meeting upon the written consent of shareholders who would have
been entitled to cast the minimum number of votes that would be necessary to
authorize the action at a meeting at which all shareholders entitled to vote
thereon were present and voting. The consents shall be filed with the secretary
of the corporation. The action shall not become effective until after at least
ten days' written notice of the action has been given to each shareholder
entitled to vote thereon who has not consented thereto.
Section 3.16 Minors as Securityholders. The corporation may treat a minor
-------------------------
who holds shares or obligations of the corporation as having capacity to receive
and to empower others to receive dividends, interest, principal and other
payments or distributions, to vote or express consent or dissent, and to make
elections and exercise rights relating to such shares or obligations unless, in
the case of payments or distributions on shares, the corporate officer
responsible for maintaining the list of shareholders or the transfer agent of
the corporation or, in the case of payments or distributions on obligations, the
treasurer or paying officer or agent has received written notice that the holder
is a minor.
8
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ARTICLE IV
BOARD OF DIRECTORS
------------------
Section 4.01 Powers; Personal Liability. (a) General Rule. Unless
-------------------------- ------------
otherwise provided by statute, all powers vested by law in the corporation shall
be exercised by or under the authority of, and the business and affairs of the
corporation shall be managed under the direction of, the board of directors.
(b) Personal Liability of Directors. (i) A director shall not be
-------------------------------
personally liable, as such, for monetary damages for any action taken, or
any failure to take any action, unless:
(A) the director has breached or failed to perform the
duties of his or her office under Section 1721 of the Business
Corporation Law (or any successor provision); and
(B) the breach or failure to perform constitutes self
dealing, willful misconduct or recklessness.
(ii) The provisions of paragraph (1) shall not apply to the
responsibility or liability of a director pursuant to any criminal statute,
or the liability of a director for the payment of taxes pursuant to local,
state or federal law.
(c) Notation of Dissent. A director who is present at a meeting of
-------------------
the board of directors, or of a committee of the board, at which action on any
corporate matter is taken shall be presumed to have assented to the action taken
unless his or her dissent is entered in the minutes of the meeting or unless the
director files a written dissent to the action with the secretary of the meeting
before the adjournment thereof or transmits the dissent in writing to the
secretary of the corporation immediately after the adjournment of the meeting.
The right to dissent shall not apply to a director who voted in favor of the
action. Nothing in this section shall bar a director from asserting that minutes
of the meeting incorrectly omitted his or her dissent if, promptly upon receipt
of a copy of such minutes, the director notifies the secretary, in writing, of
the asserted omission or inaccuracy.
Section 4.02 Qualifications and Selection of Directors. (a)
-----------------------------------------
Qualifications. Each director of the corporation shall be a natural person of
- --------------
full age who need not be a resident of the Commonwealth of Pennsylvania or a
shareholder of the corporation.
(b) Power to Select Directors. Except as otherwise provided in these
-------------------------
bylaws, directors of the corporation shall be elected by the shareholders.
(c) Nomination of Candidates. Upon the demand of any shareholder at
------------------------
any meeting of shareholders for the election of directors the chairman of the
meeting shall call for and shall afford a reasonable opportunity for the making
of nominations for the office of director. If the board of directors is
classified with respect to the power to elect directors or with respect to the
terms of directors and if, due to a vacancy or vacancies, or otherwise,
directors of than one class are to be elected, each class of directors to be
elected at the meeting shall be nominated and
9
<PAGE>
elected separately. Any shareholder may nominate as many persons for the office
of director as there are positions to be filled. If nominations for the office
of director have been called for as provided in this section only candidates who
have been so nominated shall be eligible for election.
(d) Election of Directors. In elections for directors, voting need
---------------------
not be by ballot, except upon demand made by a shareholder entitled to vote at
the election and before the voting begins. The candidates receiving the highest
number of votes from each class or group of classes, if any, entitled to elect
directors separately up to the number of directors to be elected by the class or
group of classes shall be elected. If at any meeting of shareholders, directors
of more than one class are to be elected, each class of directors shall be
elected in a separate election.
(e) Cumulative Voting. Unless the articles provide for straight
-----------------
voting, in each election of directors every shareholder entitled to vote shall
have the right to multiply the number of votes to which the shareholder may be
entitled by the total number of directors to be elected in the same election by
the holders of the class or classes of shares of which his or her shares are a
part and the shareholder may cast the whole number of his or her votes for one
candidate or may distribute them among too or more candidates. If cumulative
voting is applicable to the election, the chairman of the meeting may, and upon
the request of any shareholder shall, instruct the judges of election that, if a
ballot cast in the election of directors so directs, the judges shall cumulate
the total votes cast by such ballot in such manner as may be required in order
to elect the maximum number of nominees for which such ballot casts votes in the
order of priority specified in such ballot, taking into account the total votes
cast in the election of directors by each other ballot.
Section 4.03 Number and Term of Office. (a) Number. The board of
------------------------- ------
directors shall consist of such number of directors, not less than three nor
more than eleven.
(b) Term of Office. Each director shall hold office until his
--------------
successor shall have been elected and qualified or until his or her earlier
death, resignation or removal. A decrease in the number of directors shall not
have the effect of shortening the term of any incumbent director.
(c) Resignation. Any director may resign at any time upon written
-----------
notice to the corporation. The resignation shall be effective upon receipt
thereof by the corporation or at such subsequent time as shall be specified in
the notice of resignation.
Section 4.04 Vacancies. (a) General Rule. Vacancies in the board of
--------- ------------
directors, including vacancies resulting from an increase in the number of
directors, may be filled by a majority vote of the remaining members of the
board though less than a quorum, or by a sole remaining director, and each
person so selected shall be a director to serve until the next selection of the
class for which such director has been chosen, and until a successor has been
selected and qualified or until his or her earlier death, resignation or
removal.
(b) Action by Resigned Directors. When one or more directors resign
----------------------------
from the board effective at a future date, the directors then in office,
including those who have so
10
<PAGE>
resigned, shall have power by the applicable vote to fill the vacancies, the
vote thereon to take effect when the resignations become effective.
Section 4.05 Removal of Directors. (a) Removal by the Shareholders.
-------------------- ---------------------------
The entire board of directors, or any class of the board, or any individual
director may be removed from office by vote of the shareholders entitled to vote
thereon without assigning any cause. In case the board or a class of the board
or any one or more directors are so removed, new directors may be elected at the
same meeting.
(b) Removal by the Board. The board of directors may declare vacant
--------------------
the office of a director who has been judicially declared of unsound mind or who
has been convicted of an offense punishable by imprisonment for a term of more
than one year or if, within 60 days after notice of his or her selection, the
director does not accept the office either in writing or by attending a meeting
of the board of directors.
Section 4.06 Place of Meetings. Meetings of the board of directors may
-----------------
be held at such place within or without the Commonwealth of Pennsylvania as the
board of directors may from time to time appoint or as may be designated in the
notice of the meeting.
Section 4.07 Organization of Meetings. At every meeting of the board of
------------------------
directors, the chairman of the board, if there be one, or, in the case of a
vacancy in the office or absence of the chairman of the board, one of the
following officers present in the order stated: the president, the vice
presidents in their order of rank and seniority, or a person chosen by a
majority of the directors present, shall act as chairman of the meeting. The
secretary or, in the absence of the secretary, an assistant secretary, or, in
the absence of the secretary and the assistant secretaries, any person appointed
by the chairman of the meeting, shall act as secretary of the meeting.
Section 4.08 Regular Meetings. Regular meetings of the board of directors
----------------
shall be held at such time and place as shall be designated from time to time by
resolution of the board of directors.
Section 4.09 Special Meetings. Special meetings of the board of directors
----------------
shall be held whenever called by the chairman or by two or more of the
directors.
Section 4.10 Quorum of and Action by Directors. (a) General Rule. A
--------------------------------- ------------
majority of the directors in office of the corporation shall be necessary to
constitute a quorum for the transaction of business and the acts of a majority
of the directors present and voting at a meeting at which a quorum is present
shall be the acts of the board of directors.
(b) Action by Written Consent. Any action required or permitted to
-------------------------
be taken at a meeting of the directors may be taken without a meeting if, prior
or subsequent to the action, a consent or consents thereto by all of the
directors in office is filed with the secretary of the corporation.
Section 4.11 Executive and Other Committees. (a) Establishment and Powers.
------------------------------ ------------------------
The board of directors may, by resolution adopted by a majority of the directors
in office, establish one or more committees to consist of one or more directors
of the corporation. Any committee, to the extent provided in the resolution of
the board of directors, shall have and may exercise all
11
<PAGE>
of the powers and authority of the board of directors except that a committee
shall not have any power or authority as to the following:
(i) The submission to shareholders of any action requiring
approval of shareholders under the Business corporation Law.
(ii) The creation or filling of vacancies in the board of
directors.
(iii) The adoption, amendment or repeal of these bylaws.
(iv) The amendment or repeal of any resolution of the board that
by its terms is amendable or repealable only by the board.
(v) Action on matters committed by a resolution of the board of
directors to another committee of the board.
(b) Alternate Committee Members. The board may designate one or more
---------------------------
directors as alternate members of any committee who may replace any absent or
disqualified member at any meeting of the committee or for the purposes of any
written action by the committee. In the absence or disqualification of a member
and alternate member or members of a committee the member or members thereof
present at any meeting and not disqualified from voting, whether or not
constituting a quorum, may unanimously appoint another director to act at the
meeting in the place of the absent or disqualified member.
(c) Term. Each committee of the board shall serve at the pleasure
----
of the board.
(d) Committee Procedures. The term "board of directors" or "board,"
--------------------
when used in any provision of these bylaws relating to the organization or
procedures of or the manner of taking action by the board of directors, shall be
construed to include and refer to any executive or other committee of the board.
Section 4.12 Compensation. The board of directors shall have the authority
------------
to fix the compensation of directors for their services as directors and a
director may be a salaried officer of the corporation.
ARTICLE V
OFFICERS
--------
Section 5.01 Officers Generally. (a) Number, Qualifications and
------------------ --------------------------
Designation. The officers of the corporation shall be a chairman of the board, a
- -----------
president, one or more vice presidents, a secretary, a treasurer, and such other
officers as may be elected in accordance with the provisions of Section 5.03.
Officers may but need not be directors or shareholders of the corporation. The
president and secretary shall be natural persons of full age. The treasurer may
be a corporation, but if a natural person shall be of full age. Any number of
offices may be held by the same person.
12
<PAGE>
(b) Bonding. The corporation may secure the fidelity of any or all of
-------
its officers by bond or otherwise.
(c) Standard of Care. Except as otherwise provided in the articles,
----------------
an officer shall perform his or her duties as an officer in good faith, in a
manner he or she reasonably believes to be in the best interests of the
corporation and with such care, including reasonable inquiry, skill and
diligence, as a person of ordinary prudence would use under similar
circumstances. A person who so perform his or her duties shall not be liable by
reason of having been an officer of the corporation.
Section 5.02 Election, Term of Office and Resignations. (a) Election and
----------------------------------------- ------------
Term of Office. The officers of the corporation, except those elected by
- --------------
delegated authority pursuant to Section 5.03, shall be elected annually by the
board of directors, and each such officer shall hold office for a term of one
year and until a successor has been selected and qualified or until his or her
earlier death, resignation or removal.
(b) Resignations. Any officer may resign at any time upon written
------------
notice to the corporation. The resignation shall be effective upon receipt
thereof by the corporation or at such subsequent time as may be specified in the
notice of resignation.
Section 5.03 Subordinate Officers, Committees and Agents. The board of
-------------------------------------------
directors may from time to time elect such other officers and appoint such
committees, employees or other agents as the business of the corporation may
require, including one or more assistant secretaries, and one or more assistant
treasurers, each of whom shall hold office for such periods have such authority,
and perform such duties as are provided in these bylaws, or as the board of
directors may from time to time determine. The board of directors may delegate
to any officer or committee the power to elect subordinate officers and to
retain or appoint employees or other agents, or committees thereof, and to
prescribe the authority and duties of such subordinate officers, committees,
employees or other agents.
Section 5.04 Removal of Officers and Agents. Any officer or agent of the
------------------------------
corporation may be removed by the board of directors with or without cause. The
removal shall be without prejudice to the contract rights, if any, of any person
so removed. Election or appointment of an officer or agent shall not of itself
create contract rights.
Section 5.05 Vacancies. A vacancy in any office because of death,
---------
resignation, removal, disqualification, or any other cause, may be filled by the
board of directors or by the officer or committee to which the power to fill
such office has been delegated pursuant to Section 5.03, as the case may be, and
if the office is one for which these bylaws prescribe a term, shall be filled
for the unexpired portion of the term.
Section 5.06 Authority. All officers of the corporation, as between
---------
themselves and the corporation, shall have such authority and perform such
duties in the management of the corporation as may be provided by or pursuant to
resolutions or orders of the board of directors or, in the absence of
controlling provisions in the resolutions or orders of the board of directors,
as may be determined by or pursuant to these bylaws.
13
<PAGE>
Section 5.07 The Chairman of the Board. The chairman of the board shall
-------------------------
be the chief executive officer of the corporation and, subject to the control of
the board of directors, shall have general charge and control of all its
business and affairs and shall have all powers and shall perform all duties
incident to the office of chairman of the board. The chairman of the board, or,
in the absence of the chairman, the president, shall preside at all meetings of
the shareholders and (if a director) of the board of directors.
Section 5.08 The President. The president shall be the chief operating
-------------
officer of the corporation and shall have general supervision over the
operations of the corporation, subject however, to the control of the board of
directors and the chairman of the board. In the absence of the chairman of the
board, the president shall preside at all meetings of the shareholders and (if a
director) of the board of directors, and shall perform such other duties as from
time to time may be assigned by the board of directors or the chairman of the
board.
Section 5.09 The Vice Presidents. The vice presidents shall perform the
-------------------
duties of the President in the absence of the president and such other duties as
may from time to time be assigned to them by the board of directors or the
chairman of the board.
Section 5.10 The Secretary. The secretary or an assistant secretary shall
-------------
attend all meetings of the shareholders and of the board of directors and all
committees thereof and shall record all the votes of the shareholders and of the
directors and the minutes of the meetings of the shareholders and of the board
of directors and of committees of the board in a book or books to be kept for
that purpose; shall see that notices are given and records and reports properly
kept and filed by the corporation as required by law; shall be the custodian of
the seal of the corporation and see that it is affixed to all documents to be
executed on behalf of the corporation under its seal; and, in general, shall
perform all duties incident to the office of secretary, and such other duties as
may from time to time be assigned by the board of directors or the chairman of
the board.
Section 5.11 The Treasurer. The treasurer or an assistant treasurer shall
-------------
have or provide for the custody of the funds or other property of the
corporation; shall collect and receive or provide for the collection and receipt
of moneys earned by or in any manner due to or received by the corporation;
shall deposit all funds in his or her custody as treasurer in such banks or
other places of deposit as the board of directors may from time to time
designate; shall, whenever so required by the board of directors, render an
account showing all transactions as treasurer, and the financial condition of
the corporation; and, in general, shall discharge such other duties as may from
time to time be assigned by the board of directors or the chairman of the board.
Section 5.12 Salaries. The salaries of the officers elected by the board
--------
of directors shall be fixed from time to time by the board of directors or by
such officer as may be designated by resolution of the board. The salaries or
other compensation of any other officers, employees and other agents shall be
fixed from time to time by the officer or committee to which the power to elect
such officers or to retain or appoint such employees or other agents has been
delegated pursuant to Section 5.03. No officer shall be prevented from receiving
such salary or other compensation by reason of the fact that the officer is also
a director of the corporation.
14
<PAGE>
ARTICLE VI
CERTIFICATES OF STOCK, TRANSFER, ETC.
-------------------------------------
Section 6.01 Share Certificates. (a) Form of Certificates. Certificates
------------------ --------------------
for shares of the corporation shall be in such form as approved by the board of
directors, and shall state that the corporation is incorporated under the laws
of the Commonwealth of Pennsylvania, the name of the person to whom issued, and
the number and class of shares and the designation of the series (if any) that
the certificate represents. If the corporation is authorized to issue shares of
more than one class or series, certificates for shares of the corporation shall
set forth upon the face or back of the certificate (or shall state on the face
or back of the certificate that the corporation will furnish to any shareholder
upon request and without charge), a full or summary statement of the
designations, voting rights, preferences, limitations and special rights of the
shares of each class or series authorized to be issued so far as they have been
fixed and determined and the authority of the board of directors to fix and
determine the designations, voting rights, preferences, limitations and special
rights of the classes and series of shares of the corporation.
(b) Share Register. The share register or transfer books and blank
--------------
share certificates shall be kept by the secretary or by any transfer agent or
registrar designated by the board of directors for that purpose.
Section 6.02 Issuance. The share certificates of the corporation shall be
--------
numbered and registered in the share register or transfer books of the
corporation as they are issued. They shall be executed in such manner as the
board of directors shall determine.
Section 6.03 Transfer. Transfers of shares shall be made an the share
--------
register or transfer books of the corporation upon surrender of the certificate
therefor, endorsed by the person named in the certificate or by an attorney
lawfully constituted in writing. No transfer shall be made inconsistent with the
provisions of the Uniform Commercial Code, 13 Pa.C.S. (S)(S) 8101 et seq., and
-- ---
its amendments and supplements.
Section 6.04 Record Holder of Shares. The corporation shall be entitled to
-----------------------
treat the person in whose name any share or shares of the corporation stand on
the books of the corporation as the absolute owner thereof, and shall not be
bound to recognize any equitable or other claim to, or interest in, such share
or shares on the part of any other person.
Section 6.05 Lost, Destroyed or Mutilated Certificates. The holder of any
-----------------------------------------
shares of the corporation shall immediately notify the corporation of any loss,
destruction or mutilation of the certificate therefor, and the board of
directors may, in its discretion, cause a new certificate or certificates to be
issued to such holder, in case of mutilation of the certificate, upon the
surrender of the mutilated certificate or, in case of loss or destruction of the
certificate, upon satisfactory proof of such loss or destruction and, if the
board of directors shall so determine, the deposit of a bond in such form and in
such sum, and with such surety or sureties, as it may direct.
ARTICLE VII
15
<PAGE>
INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHER AUTHORIZED REPRESENTATIVES
---------------------------------------------------------------------------
Section 7.01 Scope of Indemnification. (a) General Rule. The corporation
------------------------ ------------
shall indemnify an indemnified representative against any liability incurred in
connection with any proceeding in which the indemnified representative may be
involved as a party or otherwise by reason of the fact that such person is or
was serving in an indemnified capacity, including, without limitation,
liabilities resulting from any actual or alleged breach or neglect of duty,
error, misstatement or misleading statement, negligence, gross negligence or act
giving rise to strict or products liability, except:
(i) where such indemnification is expressly prohibited by
applicable law;
(ii) where the conduct of the indemnified representative has
been finally determined pursuant to Section 7.06 or otherwise:
(A) to constitute willful misconduct or recklessness
within the meaning of 15 Pa.C.S. (S)(S) 513(b) and 1746(b) and 42
Pa.C.S. (S) 8365(b) or any superseding provision of law sufficient in
the circumstances to bar indemnification against liabilities arising
from the conduct; or
(B) to be based upon or attributable to the receipt by
the indemnified representative from the corporation of a personal
benefit to which the indemnified representative is not legally
entitled; or
(iii) to the extent such indemnification has been finally
determined in a final adjudication pursuant to Section 7.06 to be otherwise
unlawful.
(b) Partial Payment. If an indemnified representative is entitled to
---------------
indemnification in respect of a portion, but not all, of any liabilities to
which such person may be subject, the corporation shall indemnify such
indemnified representative to the maximum extent for such portion of the
liabilities.
(c) Presumption. The termination of a proceeding by judgment, order,
-----------
settlement or conviction or upon a plea of nolo contendere or its equivalent
---- ----------
shall not of itself create a presumption that the indemnified representative is
not entitled to indemnification.
(d) Definitions. For purposes of this Article:
-----------
(i) "indemnified capacity" means any and all past, present and
future service by an indemnified representative in one or more capacities
as a director, officer, employee or agent of the corporation, or, at the
request of the corporation, as a director, officer, employee, agent,
fiduciary or trustee of another corporation, partnership, joint venture,
trust, employee benefit plan or other entity or enterprise;
(ii) "indemnified representative" means any and all directors and
officers of the corporation and any other person designated as an
indemnified representative by the board of directors of the corporation
(which may, but need not, include any person
16
<PAGE>
serving at the request of the corporation, as a director, officer,
employee, agent, fiduciary or trustee of another corporation, partnership,
joint venture, trust, employee benefit plan or other entity or enterprise);
(iii) "liability" means any damage, judgment, amount paid in
settlement, fine, penalty, punitive damages, excise tax assessed with
respect to an employee benefit plan, or cost or expense of any nature
(including, without limitation, attorneys' fees and disbursements); and
(iv) "proceeding" means any threatened, pending or completed
action, suit, appeal or other proceeding of any nature, whether civil,
criminal, administrative or investigative, whether formal or informal, and
whether brought by or in the right of the corporation, a class of its
security holders or otherwise.
Section 7.02 Proceedings Initiated by Indemnified Representatives.
----------------------------------------------------
Notwithstanding any other provision of this Article, the corporation shall not
indemnify under this Article an indemnified representative for any liability
incurred in a proceeding initiated (which shall not be deemed to include counter
claims or affirmative defenses) or participated in as an intervenor or amicus
------
curiae by the person seeking indemnification unless such initiation of or
- ------
participation in the proceeding is authorized, either before or after its
commencement, by the affirmative vote of a majority of the directors in office.
This section does not apply to reimbursement of expenses incurred in
successfully prosecuting or defending an arbitration under Section 7.06 or
otherwise successfully prosecuting or defending the rights of an indemnified
representative granted by or pursuant to this Article.
Section 7.03 Advancing Expenses. The corporation shall pay the expenses
------------------
(including attorneys' fees and disbursements) incurred in good faith by an
indemnified representative in advance of the final disposition of a proceeding
described in Section 7.01 or the initiation of or participation in which is
authorized pursuant to Section 7.02 upon receipt of an undertaking by or on
behalf of the indemnified representative to repay the amount if it is ultimately
determined pursuant to Section 7.06 that such person is not entitled to be
indemnified by the corporation pursuant to this Article. The financial ability
of an indemnified representative to repay an advance shall not be a prerequisite
to the making of such advance.
Section 7.04 Securing of Indemnification Obligations. To further effect,
---------------------------------------
satisfy or secure the indemnification obligations provided herein or otherwise,
the corporation may maintain insurance, obtain a letter of credit, act as self-
insurer, create a reserve, trust, escrow, cash collateral or other fund or
account, enter into indemnification agreements, pledge or grant a security
interest in any assets or properties of the corporation, or use any other
mechanism or arrangement whatsoever in such amounts, at such costs, and upon
such other terms and conditions as the board of directors shall deem
appropriate. Absent fraud, the determination of the board of directors with
respect to such amounts, costs, terms and conditions shall be conclusive against
all security holders, officers and directors and shall not be subject to
voidability.
17
<PAGE>
Section 7.05 Payment of Indemnification. An indemnified representative
--------------------------
shall be entitled to indemnification within 30 days after a written request for
indemnification has been delivered to the secretary of the corporation.
Section 7.06 Arbitration. (a) General Rule. Any dispute related to the
----------- ------------
right to indemnification, contribution or advancement of expenses as provided
under this Article, except with respect to indemnification for liabilities
arising under the Securities Act of 1933 that the corporation has undertaken to
submit to a court for adjudication, shall be decided only by arbitration in the
metropolitan area in which the principal executive offices of the corporation
are located at the time, in accordance with the commercial arbitration rules
then in effect of the American Arbitration Association, before a panel of three
arbitrators, one of whom shall be selected by the corporation, the second of
whom shall be selected by the indemnified representative and the third of whom
shall be selected by the other two arbitrators. In the absence of the American
Arbitration Association, or if for any reason arbitration under the arbitration
rules of the American Arbitration Association cannot be initiated, and if one of
the parties fails or refuses to select an arbitrator or the arbitrators selected
by the corporation and the indemnified representative cannot agree on the
selection of the third arbitrator within 30 days after such time as the
corporation and the indemnified representative have each been notified of the
selection of the other's arbitrator, the necessary arbitrator or arbitrators
shall be selected by the presiding judge of the court of general jurisdiction in
such metropolitan area.
(b) Burden of Proof. The party or parties challenging the right of an
---------------
indemnified representative to the benefits of this Article shall have the burden
of proof.
(c) Expenses. The corporation shall reimburse an indemnified
--------
representative for the expenses (including attorneys' fees and disbursements)
incurred in successfully prosecuting or defending such arbitration.
(d) Effect. Any award entered by the arbitrators shall be final,
--------
binding and nonappealable and judgment may be entered thereon by any party in
accordance with applicable law in any court of competent. jurisdiction, except
that the corporation shall be entitled to interpose as a defense in any such
judicial enforcement proceeding any prior final judicial determination adverse
to the indemnified representative under Section 7.01(a)(2) in a proceeding not
directly involving indemnification under this Article. This arbitration
provision shall be specifically enforceable.
Section 7.07 Contribution. If the indemnification provided for in this
------------
Article or otherwise is unavailable for any reason in respect of any liability
or portion thereof, the corporation shall contribute to the liabilities to which
the indemnified representative may be subject in such proportion as is
appropriate to reflect the intent of this Article or otherwise.
Section 7.08 Mandatory Indemnification of Directors, Officers, etc. To the
-----------------------------------------------------
extent that an authorized representative of the corporation has been successful
on the merits or otherwise in defense of any action, suit or proceeding referred
to in Section 1741 or 1742 of the Business Corporation Law or in defense of any
claim, issue or matter therein, such person shall be indemnified against
expenses (including attorneys' fees and disbursements) actually and reasonably
incurred by such person in connection therewith.
18
<PAGE>
Section 7.09 Contract Rights; Amendment or Reveal. All rights under this
------------------------------------
Article shall be deemed a contract between the corporation and the indemnified
representative pursuant to which the corporation and each indemnified
representative intend to be legally bound. Any repeal, amendment or modification
hereof shall be prospective only and shall not affect any rights or obligations
then existing.
Section 7.10 Scope of Article. The rights granted by this Article shall
----------------
not be deemed exclusive of any other rights to which those seeking
indemnification, contribution or advancement of expenses may be entitled under
any statute, agreement, vote of shareholders or disinterested directors or
otherwise, both as to action in an indemnified capacity and as to action in any
other capacity. The indemnification, contribution and advancement of expenses
provided by or granted pursuant to this Article shall continue as to a person
who has ceased to be an indemnified representative in respect of matters arising
prior to such time, and shall inure to the benefit of the heirs, executors,
administrators and personal representatives of such a person.
Section 7.11 Reliance on Provisions. Each person who shall act as an
----------------------
indemnified representative of the corporation shall be deemed to be doing so in
reliance upon the rights of indemnification, contribution and advancement of
expenses provided by this Article.
Section 7.12 Interpretation. The provisions of this Article are intended
--------------
to constitute bylaws authorized by 15 Pa.C.S. (S)(S) 513 and 1746 and 42 Pa.C.S.
(S) 8365.
ARTICLE VIII
MISCELLANEOUS
-------------
Section 8.01 Corporate Seal. The corporation shall have a corporate seal
--------------
in the form of a circle containing the name of the corporation, the year of
incorporation and such other details as may be approved by the board of
directors. The affixation of the corporate seal shall not be necessary to the
valid execution, assignment or endorsement by the corporation of any instrument
or other document.
Section 8.02 Checks. All checks, notes, bills of exchange or other similar
------
orders in writing shall be signed by such one or more officers or employees as
the board of directors or any person authorized by resolution of the board of
directors may from time to time designate .
Section 8.03 Contracts. Except as otherwise provided in the Business
---------
Corporation Law in the case of transactions that require action by the
shareholders, the board of directors may authorize any officer or agent to enter
into any contract or to execute or deliver any instrument on behalf of the
corporation, and such authority may be general or confined to specific
instances.
Section 8.04 Interested Directors or Officers; Quorum. (a) General Rule.
---------------------------------------- ------------
A contract or transaction between the corporation and one or more of its
directors or officers or between the corporation and another corporation,
partnership, joint venture, trust or other enterprise in which one or more of
its directors or officers are directors or officers or have a financial or other
interest, shall not be void or voidable solely for that reason, or solely
because the director or
19
<PAGE>
officer is present at or participates in the meeting of the board of directors
that authorizes the contract or transaction, or solely because his, her or their
votes are counted for that purpose, if:
(i) the material facts as to the relationship or interest and as
to the contract or transaction are disclosed or are known to the board of
directors and the board authorizes the contract or transaction by the
affirmative votes of a majority of the disinterested directors even though
the disinterested directors are less than a quorum:
(ii) the material facts as to his or her relationship or interest
and as to the contract or transaction are disclosed or are known to the
shareholders entitled to vote thereon and the contract or transaction is
specifically approved in good faith by vote of those shareholders; or
(iii) the contract or transaction is fair as to the corporation
as of the time it is authorized, approved or ratified by the board of
directors or the shareholders.
(b) Quorum. Common or interested directors may be counted in
------
determining the presence of a quorum at a meeting of the board which authorizes
a contract or transaction specified in subsection (a).
Section 8.05 Deposits. All funds of the corporation shall be deposited
--------
from time to time to the credit of the corporation in such banks, trust
companies or other depositories as the board of directors may approve or
designate, and all such funds shall be withdrawn only upon checks signed by such
one or more officers or employees as the board of directors shall from time to
time determine.
Section 8.06 Corporate Records. (a) Required Records. The corporation
----------------- ----------------
shall keep complete and accurate books and records of account, minutes of the
proceedings of the incorporators, shareholders and directors and a share
register giving the names and addresses of all shareholders and the number and
class of shares held by each. The share register shall be kept at either the
registered office of the corporation in the Commonwealth of Pennsylvania or at
its principal place of business wherever situated or at the office of its
registrar or transfer agent. Any books, minutes or other records may be in
written form or any other form capable of being converted into written form
within a reasonable time.
(b) Right of Inspection. Every shareholder shall, upon written
-------------------
verified demand stating the purpose thereof, have a right to examine, in person
or by agent or attorney, during the usual hours for business for any proper
purpose, the share register, books and records of account, and records of the
proceedings of the incorporators, shareholders and directors to make copies or
extracts therefrom. A proper purpose shall mean a purpose reasonably related to
the interest of the person as a shareholder. In every instance where an attorney
or other agent is the person who seeks the right of inspection, the demand shall
be accompanied by a verified power of attorney or other writing that authorizes
the attorney or other agent to so act on behalf of the shareholder. The demand
shall be directed to the corporation at its registered office in the
Commonwealth of Pennsylvania or at its principal place of business wherever
situated.
Section 8.07 Financial Reports. Unless otherwise agreed between the
-----------------
corporation and a shareholder, the corporation shall furnish to its shareholders
annual financial statements,
20
<PAGE>
including at least a balance sheet as of the end of each fiscal year and a
statement of income and expenses for the fiscal year. The financial statements
shall be prepared an the basis of generally accepted accounting principles, if
the corporation prepares financial statements for the fiscal year on that basis
for any purposes and may be consolidated statements of the corporation and one
or more of its subsidiaries. The financial statements shall be mailed by the
corporation to each of its shareholders entitled thereto within 120 days after
the close of each fiscal year and, after the mailing and upon written request,
shall be mailed by the corporation to any shareholder or beneficial owner
entitled thereto to whom a copy of the most recent annual financial statements
has not previously been mailed. Statements that are audited or reviewed by a
public accountant shall be accompanied by the report of the accountant; in other
cases, each copy shall be accompanied by a statement of the person in charge of
the financial records of the corporation:
(i) Stating his or her reasonable belief as to whether or not the
financial statements were prepared in accordance with generally accepted
accounting principles and, if not, describing the basis of presentation.
(ii) Describing any material respects in which the financial
statements were not prepared on a basis consistent with those prepared for
the previous year.
Section 8.08 Amendment of Bylaws. These bylaws may be amended or repealed,
-------------------
or new bylaws may be adopted, either (i) by vote of the shareholders at any duly
organized annual or special meeting of shareholders, or (ii) with respect to
those matters that are not by statute committed expressly to the shareholders
and regardless of whether the shareholders have previously adopted or approved
the bylaw being amended or repealed, by vote of a majority of the board of
directors of the corporation in office at any regular or special meeting of
directors. Any change in these bylaws shall take effect when adopted unless
otherwise provided in the resolution effecting the change. See Section 2.03 (b)
(relating to notice of action by shareholders on bylaws).
21
<PAGE>
EXHIBIT 3.11
8107 668
--------
(Line for Numbering)
723963
COMMONWEALTH OF PENNSYLVANIA
DEPARTMENT OF STATE
CORPORATION BUREAU
In compliance with the requirements of section 204 of the Business
Corporation Law, act of May 5, 1933 (P.L. 364) (15 P.S. (S)1204) the
undersigned, desiring to be incorporated as a business corporation, hereby
certifies (certify) that:
1. The name of the corporation is:
CHIPPEWA FARMS CORPORATION
- --------------------------------------------------------------------------------
2. The location and post office address of the initial registered office of
the corporation in this Commonwealth is:
Second Street Pike,
- --------------------------------------------------------------------------------
(NUMBER) (STREET)
Penns Park Pennsylvania 18943
- --------------------------------------------------------------------------------
(CITY) (ZIP CODE)
3. The corporation is incorporated under the Business Corporation Law of the
Commonwealth of Pennsylvania for the following purpose or purposes:
To own and lease agricultural land, to raise feed grains and other crops and
also livestock and any other agricultural animals and to engage in and do any
lawful act concerning any lawful business for which corporations may be
incorporated under the said Pennsylvania Business Corporation Law, as amended.
4. The term for which the corporation is to exist is: Perpetual
-----------------------
5. The aggregate number of shares which the corporation shall have authority
to issue is:
1,000 shares of common stock having no par value and having a stated value
applicable thereto of $1.00 per share.
6. The name(s) and post office address(es) of each incorporator(s) and the
numbers and class of shares subscribed by such incorporation (is) (are)
<TABLE>
<CAPTION>
NAME ADDRESS NUMBER AND CLASS OF SHARES
<S> <C> <C>
Better Materials Corporation 1,000
- ------------------------------ ------------------------------ ---------------------------
Second Street Pike
- ------------------------------ ------------------------------ ---------------------------
Penns Park, Pa. 18943
- ------------------------------ ------------------------------ ---------------------------
</TABLE>
<PAGE>
IN TESTIMONY WHEREOF, the incorporator(s) has (have) signed and sealed
these Articles of Incorporation this 9th day of January, 1981.
Attest: /s/ (SEAL) Better Materials Corporation (SEAL)
------------- -----------------------------
(SEAL) By: /s/ (SEAL)
--------------------------
Vice President
INSTRUCTIONS FOR COMPLETION OF FORM:
A. For general instructions relating to the incorporation of business
corporations see 19 Pa. Code Ch. 35 (relating to business corporations
generally). These instructions relate to such matters as corporate name,
stated purposes, term of existence, authorized share structure and related
authority of the board of directors, inclusion of names of first directors
in the Articles of Incorporation, optional provisions on cumulative voting
for election of directors, etc.
B. One of more corporations or natural persons of full age may incorporate a
business corporation.
C. Optional provisions required or authorized by law may be added as
paragraphs 7, 8, 9 . . . etc.
D. The following shall accompany this form:
(1) Three copies of Form DSCB:BCL-206 (Registry Statement Domestic or
Foreign Business Corporation).
(2) Any necessary copies of Form DSCB:17.2 (Consent to Appropriation of
Name) or Form DSCB:17.3 (Consent to Use of Similar Name).
(3) Any necessary governmental approvals.
E. BCL (S) 205 (15 Pa. (S) 1205) requires that the incorporators shall
advertise their intention to file or the corporation shall advertise the
filing of articles of incorporation. Proofs of publication of such
advertising should not be delivered to the Department, but should be filed
with the minutes of the corporation.
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Commonwealth of Pennsylvania
Department of State
CERTIFICATE OF INCORPORATION
Office of the Secretary of the Commonwealth
To All to Whom These Presents Shall Come, Greeting:
Whereas, under the provisions of the Law of the Commonwealth, the Secretary
of the Commonwealth is authorized and required to issue a "Certificate of
Incorporation" evidencing the incorporation of an entity.
Whereas, the stipulations and conditions of the Law have been fully
complied with by
CHIPPEWA FARMS CORPORATION
Therefore, know ye, that subject to the Constitution of this Commonwealth,
and under the authority of the Laws thereof, I do by these presents, which I
have caused to be sealed with the Great Seal of the Commonwealth, declare and
certify the creation, erection and incorporation of the above in deed and in law
by the name chosen hereinbefore specified.
Such corporation shall have and enjoy and shall be subject to all the
powers, duties, requirements and restrictions, specified and enjoined in and by
the applicable laws of this Commonwealth.
Given under my Hand and the Great Seal of the Commonwealth, at the City of
Harrisburg, this 16th day of January, in the year of our Lord one thousand nine
hundred and eighty-one and of the Commonwealth the two hundred fifth.
/s/ William R. Davis
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Secretary of the Commonwealth
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EXHIBIT 3.12
------------
AMENDED AND RESTATED
BY-LAWS
OF
CHIPPEWA FARMS CORPORATION
________________
(A PENNSYLVANIA CORPORATION)
ARTICLE I
OFFICES AND FISCAL YEAR
-----------------------
Section 1.01 Registered Office. The registered office of the corporation
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in the Commonwealth of Pennsylvania shall be as stated in the Articles of
Incorporation (the "articles") or at such other location to which the registered
office shall be changed by action of the board of directors.
Section 1.02 Other Offices. The corporation may also have offices at such
-------------
other places within or without the Commonwealth of Pennsylvania as the board of
directors may from time to time appoint or the business of the corporation may
require.
Section 1.03 Fiscal Year. The fiscal year of the corporation shall end on
-----------
the Saturday in December or January that is closest to December 31 in each year
unless otherwise fixed by the board of directors.
ARTICLE II
NOTICE--WAIVERS--MEETINGS GENERALLY
-----------------------------------
Section 2.01 Manner of Giving Notice. (a) General Rule. Whenever written
----------------------- ------------
notice is required to be given to any person under the provisions of the
Business Corporation Law or by the articles or these bylaws, it may be given to
the person either personally or by sending a copy thereof by first class or
express mail, postage prepaid, or by telegram (with messenger service
specified), telex or TWX (with answerback received) or courier service, charges
prepaid, or by facsimile transmission to the address (or to the telex, TWX,
facsimile or telephone number) of the person appearing on the books of the
corporation or, in the case of directors, supplied by the director to the
corporation for the purpose of notice. If the notice is sent by mail, telegraph
or courier service, it shall be deemed to have been given to the person entitled
thereto when deposited in the United States mail or with a telegraph office or
courier service for delivery to that person or, in the case of telex or TWX,
when dispatched or, in the case of facsimile transmission when received. A
notice of meeting shall specify the place, day and hour of the meeting and any
other information required by any other provision of the Business Corporation
Law, the articles or these bylaws.
(b) Adjourned Shareholder Meetings. When a meeting of shareholders is
------------------------------
adjourned, it shall not be necessary to give any notice of the adjourned meeting
or of the business
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to be transacted at an adjourned meeting, other than by announcement at the
meeting at which the adjournment is taken, unless the board fixes a new record
date for the adjourned meeting in which event notice shall be given in
accordance with Section 2.03.
Section 2.02 Notice of Meetings of Board of Directors. Notice of a
----------------------------------------
regular meeting of the board of directors need not be given. Notice of every
special meeting of the board of directors shall be given to each director by
telephone or in writing at least 24 hours (in the case of notice by telephone,
telex, TWX or facsimile transmission) or 48 hours (in the case of notice by
telegraph, courier service or express mail) or five days (in the case of notice
by first class mail) before the time at which the meeting is to be held. Every
such notice shall state the time and place of the meeting. Neither the business
to be transacted at, nor the purpose of, any regular or special meeting of the
board need be specified in a notice of the meeting.
Section 2.03 Notice of Meetings of Shareholders. (a) General Rule.
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Written notice of every meeting of the shareholders shall be given by, or at the
direction of, the secretary or other authorized person to each shareholder of
record entitled to vote at the meeting at least (1) ten days prior to the day
named for a meeting (and, in case of a meeting called to consider a merger,
consolidation, share exchange or division, to each shareholder of record not
entitled to vote at the meeting) called to consider a fundamental change under
15 Pa.C.S. Chapter 19 or (2) five days prior to the day named for the meeting in
any other case. If the secretary neglects or refuses to give notice of a
meeting, the person or persons calling the meeting may do so. In the case of a
special meeting of shareholders, the notice shall specify the general nature of
the business to be transacted.
(b) Notice of Action by Shareholders an Bylaws. In the case of a
------------------------------------------
meeting of shareholders that has as one of its purposes action on the bylaws,
written notice shall be given to each shareholder that the purpose, or one of
the purposes, of the meeting is to consider the adoption, amendment or repeal of
the bylaws. There shall be included in, or enclosed with, the notice a copy of
the proposed amendment or a summary of the changes to be effected thereby.
Section 2.04 Waiver of Notice. (a) Written Waiver. Whenever any written
---------------- --------------
notice is required to be given under the provisions of the Business Corporation
Law, the articles or these by-laws, a waiver thereof in writing, signed by the
person or persons entitled to the notice, whether before or after the time
stated therein, shall be deemed equivalent to the giving of the notice. Except
as provided in the next sentence, neither the business to be transacted at, nor
the purpose of, a meeting need be specified in the waiver of notice of the
meeting. In the case of a special meeting of shareholders, the waiver of notice
shall specify the general nature of the business to be transacted at such
meeting.
(b) Waiver by Attendance. Attendance of a person at any meeting shall
--------------------
constitute a waiver of notice of the meeting except where a person attends a
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting was not lawfully called
or convened.
Section 2.05 Modification of Proposal Contained in Notice. Whenever the
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language of a proposed resolution is included in a written notice of a meeting
required to be given under the provisions of the Business Corporation Law or the
articles or these bylaws, the meeting
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considering the resolution may without further notice adopt it with such
clarifying or other amendments as do not enlarge its original purpose.
Section 2.06 Exception to Requirement of Notice. (a) General Rule.
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Whenever any notice or communication is required to be given to any person under
the provisions of the Business Corporation Law or by the articles or these
bylaws or by the terms of any agreement or other instrument or as a condition
precedent to taking any corporate action and communication with that person is
then unlawful, the giving of the notice or communication to that person shall
not be required.
(b) Shareholders Without Forwarding Addresses. Notice or other
-----------------------------------------
communications need not be sent to any shareholder with whom the corporation has
been unable to communicate for more than 24 consecutive months because
communications to the shareholder are returned unclaimed or the shareholder has
otherwise failed to provide the corporation with a current address. Whenever the
shareholder provides the corporation with a current address, the corporation
shall commence sending notices and other communications to the shareholder in
the same manner as to other shareholders.
Section 2.07 Use of Conference Telephone and Similar Equipment. Any
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director may participate in any meeting of the board of directors, and the board
of directors may provide by resolution with respect to a specific meeting or
with respect to a class of meetings that one or more persons may participate in
a meeting of the shareholders of the corporation by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other. Participation in a meeting
pursuant to this section shall constitute presence in person at the meeting.
ARTICLE III
SHAREHOLDERS
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Section 3.01 Place of Meeting. All meetings of the shareholders of the
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corporation shall be held at the registered office of the corporation or such
other place as may be designated by the board of directors in the notice of a
meeting.
Section 3.02 Annual Meeting. The board of directors may fix and designate
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the date and time of the annual meeting of the shareholders, but if no such date
and time is fixed and designated by the board, the meeting for any calendar year
shall be held on the second Monday of May in such year, if not a legal holiday
under the laws of Pennsylvania, and, if a legal holiday, then on the next
succeeding business day, not a Saturday, at 10:00 o'clock A.M., and at said
meeting the shareholders then entitled to vote shall elect directors and shall
transact such other business as may properly be brought before the meeting. If
the annual meeting shall not have been called and held within six months after
the designated time, any shareholder may call the meeting at any time
thereafter.
Section 3.03 Special Meetings. (a) Call of Special Meetings. Special
---------------- ------------------------
meetings of the shareholders may be called at any time:
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(i) by the chairman of the board;
(ii) by the board of directors; or
(iii) unless otherwise provided in the articles, by shareholders
entitled to cast at least 20% of the votes that all shareholders are
entitled to cast at the particular meeting.
(b) Fixing of Time for Meeting. At any time, upon written request, of
--------------------------
any person who has called a special meeting, it shall be the duty of the
secretary to fix the time of the meeting which shall be held not more than 60
days after the receipt of the request. If the secretary neglects or refuses to
fix the time of the meeting, the person or persons calling the meeting may do
so.
Section 3.04 Quorum and Adjournment. (a) General Rule. A meeting of
---------------------- ------------
shareholders of the corporation duly called shall not be organized for the
transaction of business unless a quorum is present. The presence of shareholders
entitled to cast at least a majority of the votes that all shareholders are
entitled to cast on a particular matter to be acted, upon at the meeting shall
constitute a quorum, for the purposes of consideration and action on the matter.
Shares of the corporation owned, directly or indirectly, by it and controlled,
directly or indirectly, by the board of directors of this corporation, as such,
shall not be counted in determining the total number of outstanding shares for
quorum purposes at any given time.
(b) Withdrawal of a Quorum. The shareholders present at a duly
----------------------
organized meeting can continue to do business until adjournment notwithstanding
the withdrawal of enough shareholders to leave less than a quorum.
(c) Adjournments Generally. Any regular or special meeting of the
----------------------
shareholders, including one at which directors are to be elected and one which
cannot be organized because a quorum has not attended may be adjourned for such
period and to such place as the shareholders present and entitled to vote shall
direct.
(d) Electing Directors at Adjourned Meeting. Those shareholders
---------------------------------------
entitled to vote who attend a meeting called for the election of directors that
has been previously adjourned for lack of a quorum, although less than a quorum
as fixed in this section, shall nevertheless constitute a quorum for the purpose
of electing directors.
(e) Other Action in Absence of Quorum. Those shareholders entitled to
---------------------------------
vote who attend a meeting of shareholders that has been previously adjourned for
one or more periods aggregating at least 15 days because of an absence of a
quorum, although less than a quorum as fixed in this section, shall nevertheless
constitute a quorum for the purpose of acting upon any matter set forth in the
notice of the meeting if the notice states that those shareholders who attend
the adjourned meeting shall nevertheless constitute a quorum for the purpose of
acting upon the matter.
Section 3.05 Action by Shareholders. Except as otherwise provided in the
----------------------
Business Corporation Law or the articles or these bylaws, whenever any corporate
action is to be taken by vote of the shareholders of the corporation, it shall
be authorized by a majority of the votes cast at a duly organized meeting of
shareholders by the holders of shares entitled to vote thereon.
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Section 3.06 Organization. At every meeting of the shareholders, the
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chairman of the board, if there be one, or, in the case of vacancy in office or
absence of the chairman of the board, one of the following persons present in
the order stated: the president, the vice presidents in their order of rank and
seniority, or a person chosen by vote of the shareholders present, shall act as
chairman of the meeting. The secretary or, in the absence of the secretary, an
assistant secretary, or, in the absence of both the secretary and assistant
secretaries, a person appointed by the chairman of the meeting, shall act as
secretary of the meeting.
Section 3.07 Voting Rights of Shareholders. Unless otherwise provided in
-----------------------------
the articles, every shareholder of the corporation shall be entitled to one vote
for every share standing in the name of the shareholder on the books of the
corporation.
Section 3.08 Voting and Other Action by Proxy. (a) General Rule. (i)
-------------------------------- ------------
Every shareholder entitled to vote at a meeting of shareholders or to
express consent or dissent to corporate action in writing without a meeting
may authorize another person to act for the shareholder by proxy.
(ii) The presence of, or vote or other action at a meeting of
shareholders, or the expression of consent or dissent to corporate action
in writing, by a proxy of a shareholder shall constitute the presence of,
or vote or action by, or written consent or dissent of, the shareholder.
(iii) Where two or more proxies of a shareholder are present,
the corporation shall, unless otherwise expressly provided in the proxy,
accept as the vote of all shares represented thereby the vote cast by a
majority of them and, if a majority of the proxies cannot agree whether the
shares represented shall be voted or upon the manner of voting the shares,
the voting of the shares shall be divided equally among those persons.
(b) Minimum Requirements. Every proxy shall be executed in writing by
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the shareholder or by the duly authorized attorney-in-fact of the shareholder
and filed with the secretary of the corporation. A proxy, unless coupled with an
interest, shall be revocable at will, notwithstanding any other agreement or any
provision in the proxy to the contrary, but the revocation of a proxy shall not
be effective until written notice thereof has been given to the secretary of the
corporation. An unrevoked proxy shall not be valid after three years from the
date of its execution unless a longer time is expressly provided therein. A
proxy shall not be revoked by the death or incapacity of the maker unless,
before the vote is counted or the authority is exercised, written notice of the
death or incapacity is given to the secretary of the corporation.
(c) Expenses. The corporation shall pay the reasonable expenses of
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solicitation of votes, proxies or consents of shareholders by or on behalf of
the board of directors or its nominees for election to the board, including
solicitation by professional proxy solicitors and otherwise.
Section 3.09 Voting by Fiduciaries and Pledgees. Shares of the
----------------------------------
corporation standing in the name of a trustee or other fiduciary and shares held
by an assignee for the benefit of creditors or by a receiver may be voted by the
trustee, fiduciary, assignee or receiver. A
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shareholder whose shares are pledged shall be entitled to vote the shares until
the shares have been transferred into the name of the pledgee, or a nominee of
the pledgee, but nothing in this section shall affect the validity of a proxy
given to a pledgee or nominee.
Section 3.10 Voting by Joint Holders of Shares. (a) General Rule. Where
--------------------------------- ------------
shares of the corporation are held jointly or as tenants in common by two or
more persons, as fiduciaries or otherwise:
(i) if only one or more of such persons is present in person or
by proxy, all of the shares standing in the names of such persons shall be
deemed to be represented for the purpose of determining a quorum and the
corporation shall accept as the vote of all the shares the vote cast by a
joint owner or a majority of them; and
(ii) if the persons are equally divided upon whether the shares
held by them shall be voted or upon the manner of voting the shares, the
voting of the shares shall be divided equally among the persons without
prejudice to the rights of the joint owners or the beneficial owners
thereof among themselves.
(b) Exception. If there has been filed with the secretary of the
---------
corporation a copy, certified by an attorney at law to be correct, of the
relevant portions of the agreement under which the shares are held or the
instrument by which the trust or estate was created or the order of court
appointing them or of an order of court directing the voting of the shares, the
persons specified as having such voting power in the document latest in date of
operative effect so filed, and only these persons, shall be entitled to vote the
shares but only in accordance therewith.
Section 3.11 Voting by Corporations. (a) Voting by Corporate
---------------------- -------------------
Shareholders. Any corporation that is a shareholder of this corporation may
- ------------
vote at meetings of shareholders of this corporation, or consent or dissent to
corporate action in writing, by any of its officers or agents, or by proxy
appointed by any officer or agent, unless some other person, by resolution of
the board of directors of the other corporation or a provision of its articles
or bylaws, a copy of which resolution or provision certified to be correct by
one of its officers has been filed with the secretary of this corporation, is
appointed its general or special proxy in which case that person shall be
entitled to vote the shares.
(b) Controlled Shares. Shares of this corporation owned, directly or
-----------------
indirectly, by it and controlled, directly or indirectly, by the board of
directors of this corporation, as such, shall not be voted at any meeting and
shall not be counted in determining the total number of outstanding shares for
voting purposes at any given time.
Section 3.12 Determination of Shareholders of Record. (a) Fixing
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Record Date. The board of directors may fix a time prior to the date of any
- -----------
meeting of shareholders as a record date for the determination of the
shareholders entitled to notice of, or to vote at, the meeting, which time,
except in the case of an adjourned meeting, shall be not more than 90 days prior
to the date of the meeting of shareholders. Only shareholders of record an the
date fixed shall be so entitled notwithstanding any transfer of shares on the
books of the corporation after any record date fixed as provided in this
subsection. The board of directors may similarly fix a record date for the
determination of shareholders of record for any other purpose. When a
determination of
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shareholders of record has been made as provided in this section for purposes of
a meeting, the determination shall apply to any adjournment thereof unless the
board fixes a new record date for the adjourned meeting.
(b) Determination When a Record Date is Not Fixed. If a record date
---------------------------------------------
is not fixed:
(i) The record date for determining shareholders entitled to
notice of or to vote at a meeting of shareholders shall be at the close of
business on the day next preceding the day an which notice is given or, if
notice is waived, at the close of business an the day immediately preceding
the day on which the meeting is held.
(ii) The record date for determining shareholders entitled to
express consent or dissent to corporate action in writing without a
meeting, when prior action by the board of directors is not necessary,
shall be the close of business on the day on which the first written
consent or dissent is filed with the secretary of the corporation.
(iii) The record date for determining shareholders for any other
purpose shall be at the close of business on the day on which the board of
directors adopts the resolution relating thereto.
(c) Certification by Nominee. The board of directors may adopt a
------------------------
procedure whereby a shareholder of the corporation may certify in writing to the
corporation that all or a portion of the shares registered in the name of the
shareholder are held for the account of a specified person or persons.. Upon
receipt by the corporation of a certification complying with the procedure the
persons specified in the certification shall be deemed, for the purposes set
forth in the certification, to be the holders of record of the number of shares
specified in place of the shareholder making the certification.
Section 3.13 Voting Lists. (a) General Rule. The officer or agent having
------------ ------------
charge of the transfer books for shares of the corporation shall make a complete
list of the shareholders entitled to vote at any meeting of shareholders,
arranged in alphabetical order, with the address of and the number of shares
held by each. The list shall be produced and kept open at the time and place of
the meeting and shall be subject to the inspection of any shareholder during the
whole time of the meeting for the purposes thereof.
(b) Effect of List. Failure to comply with the requirements of this
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section shall not affect the validity of any action taken at a meeting prior to
a demand at the meeting by any shareholder entitled to vote thereat to examine
the list. The original share register or transfer book, or a duplicate thereof
kept in the Commonwealth of Pennsylvania, shall be prima facie evidence as to
who are the shareholders entitled to examine the list or share register or
transfer book or to vote at any meeting of shareholders.
Section 3.14 Judges of Election. (a) Appointment. In advance of any
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meeting of shareholders of the corporation, the board of directors may appoint
judges of election, who need not be shareholders, to act at the meeting or any
adjournment thereof. If judges of election are not so appointed, the presiding
officer of the meeting may, and on the request of any shareholder
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shall, appoint judges of election at the meeting. The number of judges shall be
one or three. A person who is a candidate for an office to be filled at the
meeting shall not act as a judge.
(b) Vacancies. In case any person appointed as a judge fails to
---------
appear or fails or refuses to act, the vacancy may be filled by appointment made
by the board of directors in advance of the convening of the meeting or at the
meeting by the presiding officer thereof.
(c) Duties. The judges of election shall determine the number of
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shares outstanding and the voting power of each, the shares represented at the
meeting, the existence of a quorum, and the authenticity, validity and effect of
proxies, receive votes or ballots, hear and determine all challenges and
questions in any way arising in connection with nominations by shareholders or
the right to vote, count and tabulate all votes, determine the result and do
such acts as may be proper to conduct the election or vote with fairness to all
shareholders. The judges of election shall perform their duties impartially, in
good faith, to the best of their ability and as expeditiously as is practical.
if there are three judges of election, the decision, act or certificate of a
majority shall be effective in all respects as the decision, act or certificate
of all.
(d) Report. On request of the presiding officer of the meeting or of
------
any shareholder, the judges shall make a report in writing of any challenge or
question or matter determined by them, and execute a certificate of any fact
found by them. Any report or certificate made by them shall be prima facie
evidence of the facts stated therein.
Section 3.15 Consent of Shareholders in Lieu of Meeting. (a) Unanimous
------------------------------------------ ---------
Written Consent. Any action require or permitted to be taken at a meeting of the
- ---------------
shareholders or of a class of shareholders may be taken without a meeting if,
prior or subsequent to the action, a consent or consents thereto by all of the
shareholders who would be entitled to vote at a meeting for such purpose shall
be filed with the secretary of the corporation.
(b) Partial Written Consent. Any action required or permitted to be
-----------------------
taken at a meeting of the shareholders or of a class of shareholders may be
taken without a meeting upon the written consent of shareholders who would have
been entitled to cast the minimum number of votes that would be necessary to
authorize the action at a meeting at which all shareholders entitled to vote
thereon were present and voting. The consents shall be filed with the secretary
of the corporation. The action shall not become effective until after at least
ten days' written notice of the action has been given to each shareholder
entitled to vote thereon who has not consented thereto.
Section 3.16 Minors as Securityholders. The corporation may treat a minor
-------------------------
who holds shares or obligations of the corporation as having capacity to receive
and to empower others to receive dividends, interest, principal and other
payments or distributions, to vote or express consent or dissent, and to make
elections and exercise rights relating to such shares or obligations unless, in
the case of payments or distributions on shares, the corporate officer
responsible for maintaining the list of shareholders or the transfer agent of
the corporation or, in the case of payments or distributions on obligations, the
treasurer or paying officer or agent has received written notice that the holder
is a minor.
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ARTICLE IV
BOARD OF DIRECTORS
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Section 4.01 Powers; Personal Liability. (a) General Rule. Unless
-------------------------- ------------
otherwise provided by statute, all powers vested by law in the corporation shall
be exercised by or under the authority of, and the business and affairs of the
corporation shall be managed under the direction of, the board of directors.
(b) Personal Liability of Directors. (i) A director shall not be
-------------------------------
personally liable, as such, for monetary damages for any action taken, or
any failure to take any action, unless:
(A) the director has breached or failed to perform the
duties of his or her office under Section 1721 of the Business
Corporation Law (or any successor provision); and
(B) the breach or failure to perform constitutes self
dealing, willful misconduct or recklessness.
(ii) The provisions of paragraph (1) shall not apply to the
responsibility or liability of a director pursuant to any criminal statute,
or the liability of a director for the payment of taxes pursuant to local,
state or federal law.
(c) Notation of Dissent. A director who is present at a meeting of
-------------------
the board of directors, or of a committee of the board, at which action on any
corporate matter is taken shall be presumed to have assented to the action taken
unless his or her dissent is entered in the minutes of the meeting or unless the
director files a written dissent to the action with the secretary of the meeting
before the adjournment thereof or transmits the dissent in writing to the
secretary of the corporation immediately after the adjournment of the meeting.
The right to dissent shall not apply to a director who voted in favor of the
action. Nothing in this section shall bar a director from asserting that minutes
of the meeting incorrectly omitted his or her dissent if, promptly upon receipt
of a copy of such minutes, the director notifies the secretary, in writing, of
the asserted omission or inaccuracy.
Section 4.02 Qualifications and Selection of Directors. (a)
-----------------------------------------
Qualifications. Each director of the corporation shall be a natural person of
- --------------
full age who need not be a resident of the Commonwealth of Pennsylvania or a
shareholder of the corporation.
(b) Power to Select Directors. Except as otherwise provided in these
-------------------------
bylaws, directors of the corporation shall be elected by the shareholders.
(c) Nomination of Candidates. Upon the demand of any shareholder at
------------------------
any meeting of shareholders for the election of directors the chairman of the
meeting shall call for and shall afford a reasonable opportunity for the making
of nominations for the office of director. If the board of directors is
classified with respect to the power to elect directors or with respect to the
terms of directors and if, due to a vacancy or vacancies, or otherwise,
directors of than one class are to be elected, each class of directors to be
elected at the meeting shall be nominated and
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elected separately. Any shareholder may nominate as many persons for the office
of director as there are positions to be filled. If nominations for the office
of director have been called for as provided in this section only candidates who
have been so nominated shall be eligible for election.
(d) Election of Directors. In elections for directors, voting need
---------------------
not be by ballot, except upon demand made by a shareholder entitled to vote at
the election and before the voting begins. The candidates receiving the highest
number of votes from each class or group of classes, if any, entitled to elect
directors separately up to the number of directors to be elected by the class or
group of classes shall be elected. If at any meeting of shareholders, directors
of more than one class are to be elected, each class of directors shall be
elected in a separate election.
(e) Cumulative Voting. Unless the articles provide for straight
-----------------
voting, in each election of directors every shareholder entitled to vote shall
have the right to multiply the number of votes to which the shareholder may be
entitled by the total number of directors to be elected in the same election by
the holders of the class or classes of shares of which his or her shares are a
part and the shareholder may cast the whole number of his or her votes for one
candidate or may distribute them among too or more candidates. If cumulative
voting is applicable to the election, the chairman of the meeting may, and upon
the request of any shareholder shall, instruct the judges of election that, if a
ballot cast in the election of directors so directs, the judges shall cumulate
the total votes cast by such ballot in such manner as may be required in order
to elect the maximum number of nominees for which such ballot casts votes in the
order of priority specified in such ballot, taking into account the total votes
cast in the election of directors by each other ballot.
Section 4.03 Number and Term of Office. (a) Number. The board of
------------------------- ------
directors shall consist of such number of directors, not less than three nor
more than eleven.
(b) Term of Office. Each director shall hold office until his
--------------
successor shall have been elected and qualified or until his or her earlier
death, resignation or removal. A decrease in the number of directors shall not
have the effect of shortening the term of any incumbent director.
(c) Resignation. Any director may resign at any time upon written
-----------
notice to the corporation. The resignation shall be effective upon receipt
thereof by the corporation or at such subsequent time as shall be specified in
the notice of resignation.
Section 4.04 Vacancies. (a) General Rule. Vacancies in the board of
--------- ------------
directors, including vacancies resulting from an increase in the number of
directors, may be filled by a majority vote of the remaining members of the
board though less than a quorum, or by a sole remaining director, and each
person so selected shall be a director to serve until the next selection of the
class for which such director has been chosen, and until a successor has been
selected and qualified or until his or her earlier death, resignation or
removal.
(b) Action by Resigned Directors. When one or more directors resign
----------------------------
from the board effective at a future date, the directors then in office,
including those who have so
10
<PAGE>
resigned, shall have power by the applicable vote to fill the vacancies, the
vote thereon to take effect when the resignations become effective.
Section 4.05 Removal of Directors. (a) Removal by the Shareholders. The
-------------------- ---------------------------
entire board of directors, or any class of the board, or any individual director
may be removed from office by vote of the shareholders entitled to vote thereon
without assigning any cause. In case the board or a class of the board or any
one or more directors are so removed, new directors may be elected at the same
meeting.
(b) Removal by the Board. The board of directors may declare vacant
--------------------
the office of a director who has been judicially declared of unsound mind or who
has been convicted of an offense punishable by imprisonment for a term of more
than one year or if, within 60 days after notice of his or her selection, the
director does not accept the office either in writing or by attending a meeting
of the board of directors.
Section 4.06 Place of Meetings. Meetings of the board of directors may be
-----------------
held at such place within or without the Commonwealth of Pennsylvania as the
board of directors may from time to time appoint or as may be designated in the
notice of the meeting.
Section 4.07 Organization of Meetings. At every meeting of the board of
------------------------
directors, the chairman of the board, if there be one, or, in the case of a
vacancy in the office or absence of the chairman of the board, one of the
following officers present in the order stated: the president, the vice
presidents in their order of rank and seniority, or a person chosen by a
majority of the directors present, shall act as chairman of the meeting. The
secretary or, in the absence of the secretary, an assistant secretary, or, in
the absence of the secretary and the assistant secretaries, any person appointed
by the chairman of the meeting, shall act as secretary of the meeting.
Section 4.08 Regular Meetings. Regular meetings of the board of directors
----------------
shall be held at such time and place as shall be designated from time to time by
resolution of the board of directors.
Section 4.09 Special Meetings. Special meetings of the board of directors
----------------
shall be held whenever called by the chairman or by two or more of the
directors.
Section 4.10 Quorum of and Action by Directors. (a) General Rule. A
--------------------------------- ------------
majority of the directors in office of the corporation shall be necessary to
constitute a quorum for the transaction of business and the acts of a majority
of the directors present and voting at a meeting at which a quorum is present
shall be the acts of the board of directors.
(b) Action by Written Consent. Any action required or permitted to be
-------------------------
taken at a meeting of the directors may be taken without a meeting if, prior or
subsequent to the action, a consent or consents thereto by all of the directors
in office is filed with the secretary of the corporation.
Section 4.11 Executive and Other Committees. (a) Establishment and Powers.
------------------------------
The board of directors may, by resolution adopted by a majority of the directors
in office, establish one or more committees to consist of one or more directors
of the corporation. Any committee, to the extent provided in the resolution of
the board of directors, shall have and may exercise all
11
<PAGE>
of the powers and authority of the board of directors except that a committee
shall not have any power or authority as to the following:
(i) The submission to shareholders of any action requiring
approval of shareholders under the Business corporation Law.
(ii) The creation or filling of vacancies in the board of
directors.
(iii) The adoption, amendment or repeal of these bylaws.
(iv) The amendment or repeal of any resolution of the board that
by its terms is amendable or repealable only by the board.
(v) Action on matters committed by a resolution of the board of
directors to another committee of the board.
(b) Alternate Committee Members. The board may designate one or more
---------------------------
directors as alternate members of any committee who may replace any absent or
disqualified member at any meeting of the committee or for the purposes of any
written action by the committee. In the absence or disqualification of a member
and alternate member or members of a committee the member or members thereof
present at any meeting and not disqualified from voting, whether or not
constituting a quorum, may unanimously appoint another director to act at the
meeting in the place of the absent or disqualified member.
(c) Term. Each committee of the board shall serve at the pleasure of
----
the board.
(d) Committee Procedures. The term "board of directors" or "board,"
--------------------
when used in any provision of these bylaws relating to the organization or
procedures of or the manner of taking action by the board of directors, shall be
construed to include and refer to any executive or other committee of the board.
Section 4.12 Compensation. The board of directors shall have the authority
------------
to fix the compensation of directors for their services as directors and a
director may be a salaried officer of the corporation.
ARTICLE V
OFFICERS
--------
Section 5.01 Officers Generally. (a) Number, Qualifications and
------------------ --------------------------
Designation. The officers of the corporation shall be a chairman of the board, a
- -----------
president, one or more vice presidents, a secretary, a treasurer, and such other
officers as may be elected in accordance with the provisions of Section 5.03.
Officers may but need not be directors or shareholders of the corporation. The
president and secretary shall be natural persons of full age. The treasurer may
be a corporation, but if a natural person shall be of full age. Any number of
offices may be held by the same person.
12
<PAGE>
(b) Bonding. The corporation may secure the fidelity of any or all of
-------
its officers by bond or otherwise.
(c) Standard of Care. Except as otherwise provided in the articles,
----------------
an officer shall perform his or her duties as an officer in good faith, in a
manner he or she reasonably believes to be in the best interests of the
corporation and with such care, including reasonable inquiry, skill and
diligence, as a person of ordinary prudence would use under similar
circumstances. A person who so perform his or her duties shall not be liable by
reason of having been an officer of the corporation.
Section 5.02 Election, Term of Office and Resignations. (a) Election and
----------------------------------------- ------------
Term of Office. The officers of the corporation, except those elected by
- --------------
delegated authority pursuant to Section 5.03, shall be elected annually by the
board of directors, and each such officer shall hold office for a term of one
year and until a successor has been selected and qualified or until his or her
earlier death, resignation or removal.
(b) Resignations. Any officer may resign at any time upon written
------------
notice to the corporation. The resignation shall be effective upon receipt
thereof by the corporation or at such subsequent time as may be specified in the
notice of resignation.
Section 5.03 Subordinate Officers, Committees and Agents. The board of
-------------------------------------------
directors may from time to time elect such other officers and appoint such
committees, employees or other agents as the business of the corporation may
require, including one or more assistant secretaries, and one or more assistant
treasurers, each of whom shall hold office for such periods have such authority,
and perform such duties as are provided in these bylaws, or as the board of
directors may from time to time determine. The board of directors may delegate
to any officer or committee the power to elect subordinate officers and to
retain or appoint employees or other agents, or committees thereof, and to
prescribe the authority and duties of such subordinate officers, committees,
employees or other agents.
Section 5.04 Removal of Officers and Agents. Any officer or agent of the
------------------------------
corporation may be removed by the board of directors with or without cause. The
removal shall be without prejudice to the contract rights, if any, of any person
so removed. Election or appointment of an officer or agent shall not of itself
create contract rights.
Section 5.05 Vacancies. A vacancy in any office because of death,
---------
resignation, removal, disqualification, or any other cause, may be filled by the
board of directors or by the officer or committee to which the power to fill
such office has been delegated pursuant to Section 5.03, as the case may be, and
if the office is one for which these bylaws prescribe a term, shall be filled
for the unexpired portion of the term.
Section 5.06 Authority. All officers of the corporation, as between
---------
themselves and the corporation, shall have such authority and perform such
duties in the management of the corporation as may be provided by or pursuant to
resolutions or orders of the board of directors or, in the absence of
controlling provisions in the resolutions or orders of the board of directors,
as may be determined by or pursuant to these bylaws.
13
<PAGE>
Section 5.07 The Chairman of the Board. The chairman of the board shall be
-------------------------
the chief executive officer of the corporation and, subject to the control of
the board of directors, shall have general charge and control of all its
business and affairs and shall have all powers and shall perform all duties
incident to the office of chairman of the board. The chairman of the board, or,
in the absence of the chairman, the president, shall preside at all meetings of
the shareholders and (if a director) of the board of directors.
Section 5.08 The President. The president shall be the chief operating
-------------
officer of the corporation and shall have general supervision over the
operations of the corporation, subject however, to the control of the board of
directors and the chairman of the board. In the absence of the chairman of the
board, the president shall preside at all meetings of the shareholders and (if a
director) of the board of directors, and shall perform such other duties as from
time to time may be assigned by the board of directors or the chairman of the
board.
Section 5.09 The Vice Presidents. The vice presidents shall perform the
-------------------
duties of the President in the absence of the president and such other duties as
may from time to time be assigned to them by the board of directors or the
chairman of the board.
Section 5.10 The Secretary. The secretary or an assistant secretary shall
-------------
attend all meetings of the shareholders and of the board of directors and all
committees thereof and shall record all the votes of the shareholders and of the
directors and the minutes of the meetings of the shareholders and of the board
of directors and of committees of the board in a book or books to be kept for
that purpose; shall see that notices are given and records and reports properly
kept and filed by the corporation as required by law; shall be the custodian of
the seal of the corporation and see that it is affixed to all documents to be
executed on behalf of the corporation under its seal; and, in general, shall
perform all duties incident to the office of secretary, and such other duties as
may from time to time be assigned by the board of directors or the chairman of
the board.
Section 5.11 The Treasurer. The treasurer or an assistant treasurer shall
-------------
have or provide for the custody of the funds or other property of the
corporation; shall collect and receive or provide for the collection and receipt
of moneys earned by or in any manner due to or received by the corporation;
shall deposit all funds in his or her custody as treasurer in such banks or
other places of deposit as the board of directors may from time to time
designate; shall, whenever so required by the board of directors, render an
account showing all transactions as treasurer, and the financial condition of
the corporation; and, in general, shall discharge such other duties as may from
time to time be assigned by the board of directors or the chairman of the board.
Section 5.12 Salaries. The salaries of the officers elected by the board
--------
of directors shall be fixed from time to time by the board of directors or by
such officer as may be designated by resolution of the board. The salaries or
other compensation of any other officers, employees and other agents shall be
fixed from time to time by the officer or committee to which the power to elect
such officers or to retain or appoint such employees or other agents has been
delegated pursuant to Section 5.03. No officer shall be prevented from receiving
such salary or other compensation by reason of the fact that the officer is also
a director of the corporation.
14
<PAGE>
ARTICLE VI
CERTIFICATES OF STOCK, TRANSFER, ETC.
-------------------------------------
Section 6.01 Share Certificates. (a) Form of Certificates. Certificates
------------------ --------------------
for shares of the corporation shall be in such form as approved by the board of
directors, and shall state that the corporation is incorporated under the laws
of the Commonwealth of Pennsylvania, the name of the person to whom issued, and
the number and class of shares and the designation of the series (if any) that
the certificate represents. If the corporation is authorized to issue shares of
more than one class or series, certificates for shares of the corporation shall
set forth upon the face or back of the certificate (or shall state on the face
or back of the certificate that the corporation will furnish to any shareholder
upon request and without charge), a full or summary statement of the
designations, voting rights, preferences, limitations and special rights of the
shares of each class or series authorized to be issued so far as they have been
fixed and determined and the authority of the board of directors to fix and
determine the designations, voting rights, preferences, limitations and special
rights of the classes and series of shares of the corporation.
(b) Share Register. The share register or transfer books and blank
--------------
share certificates shall be kept by the secretary or by any transfer agent or
registrar designated by the board of directors for that purpose.
Section 6.02 Issuance. The share certificates of the corporation shall be
--------
numbered and registered in the share register or transfer books of the
corporation as they are issued. They shall be executed in such manner as the
board of directors shall determine.
Section 6.03 Transfer. Transfers of shares shall be made an the share
--------
register or transfer books of the corporation under surrender of the certificate
therefor, endorsed by the person named in the certificate or by an attorney
lawfully constituted in writing. No transfer shall be made inconsistent with the
provisions of the Uniform Commercial Code, 13 Pa.C.S. (S)(S) 8101 et seq., and
-- ---
its amendments and supplements.
Section 6.04 Record Holder of Shares. The corporation shall be entitled to
-----------------------
treat the person in whose name any share or shares of the corporation stand on
the books of the corporation as the absolute owner thereof, and shall not be
bound to recognize any equitable or other claim to, or interest in, such share
or shares on the part of any other person.
Section 6.05 Lost, Destroyed or Mutilated Certificates. The holder of any
-----------------------------------------
shares of the corporation shall immediately notify the corporation of any loss,
destruction or mutilation of the certificate therefor, and the board of
directors may, in its discretion, cause a new certificate or certificates to be
issued to such holder, in case of mutilation of the certificate, upon the
surrender of the mutilated certificate or, in case of loss or destruction of the
certificate, upon satisfactory proof of such loss or destruction and, if the
board of directors shall so determine, the deposit of a bond in such form and in
such sum, and with such surety or sureties, as it may direct.
ARTICLE VII
15
<PAGE>
INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHER AUTHORIZED REPRESENTATIVES
---------------------------------------------------------------------------
Section 7.01 Scope of Indemnification. (a) General Rule. The corporation
------------------------ ------------
shall indemnify an indemnified representative against any liability incurred in
connection with any proceeding in which the indemnified representative may be
involved as a party or otherwise by reason of the fact that such person is or
was serving in an indemnified capacity, including, without limitation,
liabilities resulting from any actual or alleged breach or neglect of duty,
error, misstatement or misleading statement, negligence, gross negligence or act
giving rise to strict or products liability, except:
(i) where such indemnification is expressly prohibited by
applicable law;
(ii) where the conduct of the indemnified representative has
been finally determined pursuant to Section 7.06 or otherwise:
(A) to constitute willful misconduct or recklessness
within the meaning of 15 Pa.C.S. (S)(S) 513(b) and 1746(b) and 42
Pa.C.S. (S) 8365(b) or any superseding provision of law sufficient in
the circumstances to bar indemnification against liabilities arising
from the conduct; or
(B) to be based upon or attributable to the receipt by
the indemnified representative from the corporation of a personal
benefit to which the indemnified representative is not legally
entitled; or
(iii) to the extent such indemnification has been finally
determined in a final adjudication pursuant to Section 7.06 to be otherwise
unlawful.
(b) Partial Payment. If an indemnified representative is entitled to
---------------
indemnification in respect of a portion, but not all, of any liabilities to
which such person may be subject, the corporation shall indemnify such
indemnified representative to the maximum extent for such portion of the
liabilities.
(c) Presumption. The termination of a proceeding by judgment, order,
-----------
settlement or conviction or upon a plea of nolo contendere or its equivalent
---- ----------
shall not of itself create a presumption that the indemnified representative is
not entitled to indemnification.
(d) Definitions. For purposes of this Article:
-----------
(i) "indemnified capacity" means any and all past, present and
future service by an indemnified representative in one or more capacities
as a director, officer, employee or agent of the corporation, or, at the
request of the corporation, as a director, officer, employee, agent,
fiduciary or trustee of another corporation, partnership, joint venture,
trust, employee benefit plan or other entity or enterprise;
(ii) "indemnified representative" means any and all directors
and officers of the corporation and any other person designated as an
indemnified representative by the board of directors of the corporation
(which may, but need not, include any person
16
<PAGE>
serving at the request of the corporation, as a director, officer,
employee, agent, fiduciary or trustee of another corporation, partnership,
joint venture, trust, employee benefit plan or other entity or enterprise);
(iii) "liability" means any damage, judgment, amount paid in
settlement, fine, penalty, punitive damages, excise tax assessed with
respect to an employee benefit plan, or cost or expense of any nature
(including, without limitation, attorneys' fees and disbursements); and
(iv) "proceeding" means any threatened, pending or completed
action, suit, appeal or other proceeding of any nature, whether civil,
criminal, administrative or investigative, whether formal or informal, and
whether brought by or in the right of the corporation, a class of its
security holders or otherwise.
Section 7.02 Proceedings Initiated by Indemnified Representatives.
----------------------------------------------------
Notwithstanding any other provision of this Article, the corporation shall
not indemnify under this Article an indemnified representative for any liability
incurred in a proceeding initiated (which shall not be deemed to include counter
claims or affirmative defenses) or participated in as an intervenor or amicus
------
curiae by the person seeking indemnification unless such initiation of or
- ------
participation in the proceeding is authorized, either before or after its
commencement, by the affirmative vote of a majority of the directors in office.
This section does not apply to reimbursement of expenses incurred in
successfully prosecuting or defending an arbitration under Section 7.06 or
otherwise successfully prosecuting or defending the rights of an indemnified
representative granted by or pursuant to this Article.
Section 7.03 Advancing Expenses. The corporation shall pay the expenses
------------------
(including attorneys' fees and disbursements) incurred in good faith by an
indemnified representative in advance of the final disposition of a proceeding
described in Section 7.01 or the initiation of or participation in which is
authorized pursuant to Section 7.02 upon receipt of an undertaking by or on
behalf of the indemnified representative to repay the amount if it is ultimately
determined pursuant to Section 7.06 that such person is not entitled to be
indemnified by the corporation pursuant to this Article. The financial ability
of an indemnified representative to repay an advance shall not be a prerequisite
to the making of such advance.
Section 7.04 Securing of Indemnification Obligations. To further effect,
---------------------------------------
satisfy or secure the indemnification obligations provided herein or otherwise,
the corporation may maintain insurance, obtain a letter of credit, act as self-
insurer, create a reserve, trust, escrow, cash collateral or other fund or
account, enter into indemnification agreements, pledge or grant a security
interest in any assets or properties of the corporation, or use any other
mechanism or arrangement whatsoever in such amounts, at such costs, and upon
such other terms and conditions as the board of directors shall deem
appropriate. Absent fraud, the determination of the board of directors with
respect to such amounts, costs, terms and conditions shall be conclusive against
all security holders, officers and directors and shall not be subject to
voidability.
17
<PAGE>
Section 7.05 Payment of Indemnification. An indemnified representative
--------------------------
shall be entitled to indemnification within 30 days after a written request for
indemnification has been delivered to the secretary of the corporation.
Section 7.06 Arbitration. (a) General Rule. Any dispute related to the
----------- ------------
right to indemnification, contribution or advancement of expenses as provided
under this Article, except with respect to indemnification for liabilities
arising under the Securities Act of 1933 that the corporation has undertaken to
submit to a court for adjudication, shall be decided only by arbitration in the
metropolitan area in which the principal executive offices of the corporation
are located at the time, in accordance with the commercial arbitration rules
then in effect of the American Arbitration Association, before a panel of three
arbitrators, one of whom shall be selected by the corporation, the second of
whom shall be selected by the indemnified representative and the third of whom
shall be selected by the other two arbitrators. In the absence of the American
Arbitration Association, or if for any reason arbitration under the arbitration
rules of the American Arbitration Association cannot be initiated, and if one of
the parties fails or refuses to select an arbitrator or the arbitrators selected
by the corporation and the indemnified representative cannot agree on the
selection of the third arbitrator within 30 days after such time as the
corporation and the indemnified representative have each been notified of the
selection of the other's arbitrator, the necessary arbitrator or arbitrators
shall be selected by the presiding judge of the court of general jurisdiction in
such metropolitan area.
(b) Burden of Proof. The party or parties challenging the right of an
---------------
indemnified representative to the benefits of this Article shall have the burden
of proof.
(c) Expenses. The corporation shall reimburse an indemnified
--------
representative for the expenses (including attorneys' fees and disbursements)
incurred in successfully prosecuting or defending such arbitration.
(d) Effect. Any award entered by the arbitrators shall be final,
------
binding and nonappealable and judgment may be entered thereon by any party in
accordance with applicable law in any court of competent. jurisdiction, except
that the corporation shall be entitled to interpose as a defense in any such
judicial enforcement proceeding any prior final judicial determination adverse
to the indemnified representative under Section 7.01(a)(2) in a proceeding not
directly involving indemnification under this Article. This arbitration
provision shall be specifically enforceable.
Section 7.07 Contribution. If the indemnification provided for in this
------------
Article or otherwise is unavailable for any reason in respect of any liability
or portion thereof, the corporation shall contribute to the liabilities to which
the indemnified representative may be subject in such proportion as is
appropriate to reflect the intent of this Article or otherwise.
Section 7.08 Mandatory Indemnification of Directors, Officers, etc. To the
-----------------------------------------------------
extent that an authorized representative of the corporation has been successful
on the merits or otherwise in defense of any action, suit or proceeding referred
to in Section 1741 or 1742 of the Business Corporation Law or in defense of any
claim, issue or matter therein, such person shall be indemnified against
expenses (including attorneys' fees and disbursements) actually and reasonably
incurred by such person in connection therewith.
18
<PAGE>
Section 7.09 Contract Rights; Amendment or Reveal. All rights under this
------------------------------------
Article shall be deemed a contract between the corporation and the indemnified
representative pursuant to which the corporation and each indemnified
representative intend to be legally bound. Any repeal, amendment or modification
hereof shall be prospective only and shall not affect any rights or obligations
then existing.
Section 7.10 Scope of Article. The rights granted by this Article shall
----------------
not be deemed exclusive of any other rights to which those seeking
indemnification, contribution or advancement of expenses may be entitled under
any statute, agreement, vote of shareholders or disinterested directors or
otherwise, both as to action in an indemnified capacity and as to action in any
other capacity. The indemnification, contribution and advancement of expenses
provided by or granted pursuant to this Article shall continue as to a person
who has ceased to be an indemnified representative in respect of matters arising
prior to such time, and shall inure to the benefit of the heirs, executors,
administrators and personal representatives of such a person.
Section 7.11 Reliance on Provisions. Each person who shall act as an
----------------------
indemnified representative of the corporation shall be deemed to be doing so in
reliance upon the rights of indemnification, contribution and advancement of
expenses provided by this Article.
Section 7.12 Interpretation. The provisions of this Article are intended
--------------
to constitute bylaws authorized by 15 Pa.C.S. (S)(S) 513 and 1746 and 42 Pa.C.S.
(S) 8365.
ARTICLE VIII
MISCELLANEOUS
-------------
Section 8.01 Corporate Seal. The corporation shall have a corporate seal
--------------
in the form of a circle containing the name of the corporation, the year of
incorporation and such other details as may be approved by the board of
directors. The affixation of the corporate seal shall not be necessary to the
valid execution, assignment or endorsement by the corporation of any instrument
or other document.
Section 8.02 Checks. All checks, notes, bills of exchange or other similar
------
orders in writing shall be signed by such one or more officers or employees as
the board of directors or any person authorized by resolution of the board of
directors may from time to time designate.
Section 8.03 Contracts. Except as otherwise provided in the Business
---------
Corporation Law in the case of transactions that require action by the
shareholders, the board of directors may authorize any officer or agent to enter
into any contract or to execute or deliver any instrument on behalf of the
corporation, and such authority may be general or confined to specific
instances.
Section 8.04 Interested Directors or Officers; Quorum. (a) General Rule. A
---------------------------------------- ------------
contract or transaction between the corporation and one or more of its directors
or officers or between the corporation and another corporation, partnership,
joint venture, trust or other enterprise in which one or more of its directors
or officers are directors or officers or have a financial or other interest,
shall not be void or voidable solely for that reason, or solely because the
director or
19
<PAGE>
officer is present at or participates in the meeting of the board of directors
that authorizes the contract or transaction, or solely because his, her or their
votes are counted for that purpose, if:
(i) the material facts as to the relationship or interest and
as to the contract or transaction are disclosed or are known to the board
of directors and the board authorizes the contract or transaction by the
affirmative votes of a majority of the disinterested directors even though
the disinterested directors are less than a quorum:
(ii) the material facts as to his or her relationship or
interest and as to the contract or transaction are disclosed or are known
to the shareholders entitled to vote thereon and the contract or
transaction is specifically approved in good faith by vote of those
shareholders; or
(iii) the contract or transaction is fair as to the corporation
as of the time it is authorized, approved or ratified by the board of
directors or the shareholders.
(b) Quorum. Common or interested directors may be counted in
------
determining the presence of a quorum at a meeting of the board which authorizes
a contract or transaction specified in subsection (a).
Section 8.05 Deposits. All funds of the corporation shall be deposited
--------
from time to time to the credit of the corporation in such banks, trust
companies or other depositories as the board of directors may approve or
designate, and all such funds shall be withdrawn only upon checks signed by such
one or more officers or employees as the board of directors shall from time to
time determine.
Section 8.06 Corporate Records. (a) Required Records. The corporation
----------------- ----------------
shall keep complete and accurate books and records of account, minutes of the
proceedings of the incorporators, shareholders and directors and a share
register giving the names and addresses of all shareholders and the number and
class of shares held by each. The share register shall be kept at either the
registered office of the corporation in the Commonwealth of Pennsylvania or at
its principal place of business wherever situated or at the office of its
registrar or transfer agent. Any books, minutes or other records may be in
written form or any other form capable of being converted into written form
within a reasonable time.
(b) Right of Inspection. Every shareholder shall, upon written
-------------------
verified demand stating the purpose thereof, have a right to examine, in person
or by agent or attorney, during the usual hours for business for any proper
purpose, the share register, books and records of account, and records of the
proceedings of the incorporators, shareholders and directors to make copies or
extracts therefrom. A proper purpose shall mean a purpose reasonably related to
the interest of the person as a shareholder. In every instance where an attorney
or other agent is the person who seeks the right of inspection, the demand shall
be accompanied by a verified power of attorney or other writing that authorizes
the attorney or other agent to so act on behalf of the shareholder. The demand
shall be directed to the corporation at its registered office in the
Commonwealth of Pennsylvania or at its principal place of business wherever
situated.
Section 8.07 Financial Reports. Unless otherwise agreed between the
-----------------
corporation and a shareholder, the corporation shall furnish to its shareholders
annual financial statements,
20
<PAGE>
including at least a balance sheet as of the end of each fiscal year and a
statement of income and expenses for the fiscal year. The financial statements
shall be prepared an the basis of generally accepted accounting principles, if
the corporation prepares financial statements for the fiscal year on that basis
for any purposes and may be consolidated statements of the corporation and one
or more of its subsidiaries. The financial statements shall be mailed by the
corporation to each of its shareholders entitled thereto within 120 days after
the close of each fiscal year and, after the mailing and upon written request,
shall be mailed by the corporation to any shareholder or beneficial owner
entitled thereto to whom a copy of the most recent annual financial statements
has not previously been mailed. Statements that are audited or reviewed by a
public accountant shall be accompanied by the report of the accountant; in other
cases, each copy shall be accompanied by a statement of the person in charge of
the financial records of the corporation:
(i) Stating his or her reasonable belief as to whether or not
the financial statements were prepared in accordance with generally
accepted accounting principles and, if not, describing the basis of
presentation.
(ii) Describing any material respects in which the financial
statements were not prepared on a basis consistent with those prepared for
the previous year.
Section 8.08 Amendment of Bylaws. These bylaws may be amended or repealed,
-------------------
or new bylaws may be adopted, either (i) by vote of the shareholders at any duly
organized annual or special meeting of shareholders, or (ii) with respect to
those matters that are not by statute committed expressly to the shareholders
and regardless of whether the shareholders have previously adopted or approved
the bylaw being amended or repealed, by vote of a majority of the board of
directors of the corporation in office at any regular or special meeting of
directors. Any change in these bylaws shall take effect when adopted unless
otherwise provided in the resolution effecting the change. See Section 2.03 (b)
(relating to notice of action by shareholders on bylaws).
21
<PAGE>
EXHIBIT 3.13
Certificate of Incorporation
of
SHORE STONE COMPANY, INC.
This is to certify that, there is hereby organized a corporation under and
by virtue of N.J.S. 14 A:1-1 et seq., the "New Jersey Business Corporation Act."
1. The name of the corporation is Shore Stone Company, Inc.
2. The address (and zip code) of this corporation's initial registered
office is
3131 Princeton Pike
Lawrenceville, NJ 08648
and the name of this corporation's initial registered agent at such address
is
Michael A. Zindler, Esquire
3. The purposes for which this corporation is organized are:
To engage in any activity within the purposes for which corporations
may be organized under the "New Jersey Business Corporation Act." N.J.S.
14A :1-1 et seq.
4. The aggregate number of shares which the corporation shall have
authority to issue is
2,500 no par value.
5. The first Board of Directors of this corporation shall consist of
Director(s) and the name and address of each person who is to serve as such
Director is:
Name Address Zip Code
Arlene Kraus Penns Park, Pennsylvania 18943
Robert Kraus Penns Park, Pennsylvania 18943
Richard Keough Penns Park, Pennsylvania 18943
6. The name and address of each incorporator is:
Name Address Zip Code
Richard Keough Penns Park, Pennsylvania 18943
<PAGE>
In Witness Whereof, each individual incorporator, each being over the age
of eighteen years, has signed this Certificate; or if the incorporator be a
corporation, has caused this Certificate to be signed by its authorized
officers, this 6th day of May, 1983.
/s/ /s/ Richard Keough
- --------------------------- --------------------------------
Secretary Richard Keough
2
<PAGE>
Exhibit 3.13.1
CERTIFICATE OF AMENDMENT TO THE
CERTIFICATE OF INCORPORATION OF
SHORE STONE COMPANY, INC.
(For Use by Domestic Corporations Only)
To: The Secretary of State
State of New Jersey
Pursuant to the provisions of Section 14A:9-2(4) and Section 14A:9-4(3),
Corporations, General, of the New Jersey Statutes, the undersigned corporation
executes the following Certificate of Amendment to its Certificate of
Incorporation:
1. The name of the corporation is Shore Stone Company, Inc.
2. The following amendment to the Certificate of Incorporation was
approved by the directors and thereafter duly adopted by the shareholders of the
corporation on the 28th day of November, 1990:
RESOLVED, that Article 7 of the Certificate of Incorporation be added to
read as follows:
7. Personal Liability of Directors and Officers. A director or
--------------------------------------------
officer shall not be personally liable to the Corporation or its
shareholders for damages for breach of any duty owed to the Corporation or
its shareholders, except that this provision shall not relieve a director
or officer from liability for any breach of duty based upon an act or
omission (i) in breach of such person's duty of loyalty to the Corporation
or its shareholders, (ii) not in good faith or involving a knowing
violation of law or (iii) resulting in receipt by such person of an
improper personal benefit. As used in this section, an act or omission in
breach of a person's duty of loyalty means an act or omission which that
person knows or believes to be contrary to the best interests of the
Corporation or its shareholders in connection with a matter in which he has
a material conflict of interest.
3. The number of shares entitled to vote upon the amendment was 100.
4. That in lieu of a meeting and vote of the shareholders and in
accordance with the provisions of Section 14A:5-6, the amendment was adopted by
the shareholders without a
<PAGE>
meeting pursuant to the written consents of the shareholders and the number of
shares represented by such consents is 100 shares.
Dated this 28/th/ day of November, 1990.
SHORE STONE COMPANY, INC.
By: /s/ Arlene E. Kraus
-----------------------------------
Arlene E. Kraus, as its Chairman
of the Board and Chief Executive Officer
----------------------------------------
(Type or Print Name and Title)
2
<PAGE>
I, The Secretary of State of the State of New Jersey, DO HEREBY CERTIFY
that the foregoing is a true copy of CERTIFICATE OF AMENDMENT and the
endorsements thereon, as the same is taken from and compared with the original
filed in my office on the 30th day of Nov., A.D. 1990 and now remaining on file
and of record therein.
IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my Official
Seal at Trenton, this day 30th of Nov., A.D. 1990.
/s/ Joan Haberle
---------------------------------------------
SECRETARY OF STATE
(Seal)
<PAGE>
EXHIBIT 3.14
------------
AMENDED AND RESTATED
BY-LAWS
OF
SHORE STONE COMPANY, INC.
_____________________________
(A NEW JERSEY CORPORATION)
ARTICLE I
---------
OFFICES
-------
Section 1.01 Registered Office and Agent. The registered office of the
---------------------------
corporation in the State of New Jersey shall be as stated in the Certificate of
Incorporation or at such other location to which the registered office shall be
changed by action of the board of directors. The registered agent of the
corporation at such office shall be as stated in the Certificate of
Incorporation or such other agent as may be determined from time to time by the
board of directors.
Section 1.02 Other Offices. The corporation may also have offices at such
-------------
other places within or without the State of New Jersey as the board of directors
may from time to time appoint or the business of the corporation may require.
ARTICLE II
SHAREHOLDERS
------------
Section 2.01 Annual Meeting of Shareholders. An annual meeting of
------------------------------
shareholders shall be held in every calendar year at such time as the board of
directors may fix. At the annual meeting, the shareholders shall elect directors
and transact such other business as may come before the meeting.
Section 2.02 Special Meetings. A special meeting of shareholders may be
----------------
called for any purpose by the chairman of the board or by a majority of the
board of directors.
Section 2.03 Action Without Meeting. Any action required or permitted to
----------------------
be taken at a meeting of shareholders may be taken without a meeting if all the
shareholders consent in writing to such action. Such written consents shall be
filed with the minutes of proceedings of shareholders.
Section 2.04 Quorum. The presence at a meeting in person or by proxy of
------
the holders of shares entitled to cast a majority of the votes shall constitute
a quorum.
<PAGE>
Section 2.05 Place of Meetings. Meetings of the shareholders shall be held
-----------------
at the principal office of the corporation or at such other place within or
without the State of New Jersey as shall be specified in the notice of meeting.
Section 2.06 Notice of Meeting. Written notice of the time, place and
-----------------
purposes of any annual or special meeting of shareholders shall be given not
less than ten nor more than sixty days before the date of the meeting either
personally or by mail to each shareholder of record entitled to vote at the
meeting, except it shall not be necessary to give notice in cases of meetings
adjourned in accordance with N.J.S.A. 14A:5-4.
Section 2.07 Waiver of Notice. (a) Written Waiver. Whenever any written
---------------- --------------
notice is required to be given under the provisions of the Business Corporation
Act, the Certificate of Incorporation or these bylaws, a waiver thereof in
writing, signed by the person or persons entitled to the notice, whether before
or after the time stated therein, shall be deemed equivalent to the giving of
the notice. Neither the business to be transacted at, nor the purpose of, a
meeting need be specified in the waiver of notice of the meeting.
(b) Waiver by Attendance. The attendance of any shareholder at a
--------------------
meeting, without protesting prior to the conclusion of the meeting the lack of
notice of such meeting, shall constitute a waiver by him of notice of the
meeting.
ARTICLE III
BOARD OF DIRECTORS
------------------
Section 3.01 Number and Term of Office. The management and control of the
-------------------------
affairs, business and property of the corporation shall be vested in the board
of directors which shall consist of such number of directors, not less than
three nor more than eleven. Each director shall be elected by the shareholders
at either an annual or special meeting and shall hold office until the
director's successor shall have been elected and qualified.
Section 3.02 Regular Meetings. A regular meeting of the board of directors
----------------
shall be held without notice immediately following and at the same place as the
annual meeting of shareholders for the purposes of electing officers and
conducting such other business as may come before the meeting. The board of
directors, by resolution, may provide for additional regular meetings which may
be held without notice, except to members not present at the time of the
adoption of the resolution.
Section 3.03 Special Meetings. A special meeting of the board of directors
----------------
may be called at any time by the chairman of the board or by a majority of the
directors for any purpose. Such meeting shall be held upon two days' notice if
given orally, either by telephone or in person, or by telegraph or facsimile
transmission, or by four days' notice if given by depositing the notice in the
United States mail, postage prepaid. Such notice shall specify the time and
place of the meeting.
Section 3.04 Meetings by Conference Telephone, etc. Any or all directors
-------------------------------------
may participate in a meeting of the board of directors or a committee of the
board of directors by
2
<PAGE>
means of conference telephone or any means of communication by which all persons
participating in the meeting are able to hear each other.
Section 3.05 Action Without Meeting. Any action required or permitted to
----------------------
be taken pursuant to authorization voted at a meeting of the board of directors
or any committee thereof may be taken without a meeting if, prior or subsequent
to such action, all members of the board of directors or such committee shall
consent in writing to such action and such written consents are filed with the
minutes of the proceedings of the board of directors or committee.
Section 3.06 Quorum. A majority of the entire board of directors shall
------
constitute a quorum for the transaction of business.
Section 3.07 Vacancies in the Board of Directors. Any vacancy in the board
-----------------------------------
of directors, including a vacancy caused by an increase in the number of
directors, may be filled by the affirmative vote of a majority of the remaining
directors, even though less than a quorum of the board of directors, or by a
sole remaining director.
Section 3.08 Personal Liability of Directors. A director shall not be
-------------------------------
personally liable to the corporation or its shareholders for damages for breach
of any duty owed to the corporation or its shareholders, except that this
provision shall not relieve a director from liability for any breach of duty
based upon an act or omission (i) in breach of such person's duty of loyalty to
the corporation or its shareholders, (ii) not in good faith or involving a
knowing violation of law or (iii) resulting in receipt by such person of an
improper personal benefit. As used in this section, an act or omission in breach
of a person's duty of loyalty means an act or omission which that person knows
or believes to be contrary to the best interests of the corporation or its
shareholders in connection with a matter in which he has a material conflict of
interest.
ARTICLE IV
WAIVER OF NOTICE
----------------
Any notice required by these by-laws, the Certificate of Incorporation, or
by the New Jersey Business Corporation Act may be waived by a writing signed by
the person or persons entitled to such notice either before or after the action
with respect to which notice is waived. Any director or shareholder attending a
meeting without protesting, prior to its conclusion, a lack of proper notice
shall be deemed to have waived notice of such meeting.
ARTICLE V
FISCAL YEAR
-----------
The fiscal year of the corporation shall end on the Saturday in December or
January that is closest to December 31 in each year unless otherwise fixed by
the board of directors.
3
<PAGE>
ARTICLE VI
OFFICERS
--------
Section 6.01 Election. At its regular meeting following the annual meeting
--------
of shareholders, the board of directors shall elect a chairman of the board, a
president, a treasurer, and a secretary, and it may elect such other officers,
including one or more vice presidents, assistant secretaries or assistant
treasurers, as it shall deem necessary. One person may hold any two or more
offices.
Section 6.02 Duties and Authority of Chairman of the Board. The chairman
---------------------------------------------
of the board shall be the chief executive officer of the corporation and,
subject to the control of the board of directors, shall have general charge and
control of all its business and affairs and shall have all powers and shall
perform all duties incident to the office of chairman of the board. The chairman
of the board, or, in the absence of the chairman, the president, shall preside
at all meetings of the shareholders and (if a director) of the board of
directors.
Section 6.03 Duties and Authority of President. The president shall be the
---------------------------------
chief operating officer of the corporation and shall have general supervision
over the operations of the corporation, subject however, to the control of the
board of directors and the chairman of the board. In the absence of the chairman
of the board, the president shall preside at all meetings of the shareholders
and (if a director) of the board of directors, and shall perform such other
duties as from time to time may be assigned by the board of directors or the
chairman of the board.
Section 6.04 Duties and Authority of Vice President. The vice president,
--------------------------------------
if any, shall perform such duties and have such authority as from time to time
may be delegated to him by the chairman of the board or by the board of
directors.
Section 6.05 Duties and Authority of Treasurer. The treasurer shall have
---------------------------------
the custody of the funds and securities of the corporation and shall keep or
cause to be kept regular books of account for the corporation. The treasurer
shall perform such other duties and possess such other powers as are incident to
that office or as shall be assigned by the chairman of the board or the board of
directors.
Section 6.06 Duties and Authority of Secretary. The secretary shall cause
---------------------------------
notices of all meetings to be served as prescribed in these by-laws and shall
keep or cause to be kept the minutes of all meetings of the shareholders and the
board of directors. The secretary shall have charge of the seal of the
corporation. The secretary shall perform such other duties and possess such
other powers as are incident to that office or as are assigned by the chairman
of the board or the board of directors
Section 6.07 Duties and Authority of Assistant Secretary or Assistant
--------------------------------------------------------
Treasurer. The assistant secretary or secretaries and assistant treasurer or
- ---------
treasurers shall act under the direction of the secretary or treasurer,
respectively, and in the absence or disability of the secretary or treasurer,
shall perform the respective duties and exercise the respective powers of the
secretary or treasurer. Any assistant secretary or assistant treasurer shall be
authorized to execute, attest, acknowledge, receive and/or certify any corporate
document which the secretary or treasurer,
4
<PAGE>
respectively, could execute, attest, acknowledge, receive and/or certify,
irrespective of the absence or disability of the secretary or treasurer, unless
the board of directors shall otherwise determine.
Section 6.08 Personal Liability of Officers. An officer shall not be
------------------------------
personally liable to the corporation or its shareholders for damages for breach
of any duty owed to the corporation or its shareholders, except that this
provision shall not relieve an officer from liability for any breach of duty
based upon an act or omission (i) in breach of such person's duty of loyalty to
the corporation or its shareholders, (ii) not in good faith or involving a
knowing violation of law or (iii) resulting in receipt by such person of an
improper personal benefit. As used in this section, an act or omission in breach
of a person's duty of loyalty means an act or omission which that person knows
or believes to be contrary to the best interests of the corporation or its
shareholders in connection with a matter in which he has a material conflict of
interest.
ARTICLE VII
INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHER AUTHORIZED REPRESENTATIVES
---------------------------------------------------------------------------
Section 7.01 Scope of Indemnification. (a) General Rule. The corporation
------------------------ ------------
shall indemnify an indemnified representative against any liability incurred in
connection with any proceeding in which the indemnified representative may be
involved as a party or otherwise by reason of the fact that such person is or
was serving in an indemnified capacity, including, without limitation,
liabilities resulting from any actual or alleged breach or neglect of duty,
error, misstatement or misleading statement, negligence, gross negligence or act
giving rise to strict or products liability, except:
(i) where such indemnification is expressly prohibited by
applicable law;
(ii) where the conduct of the indemnified representative has been
finally determined pursuant to Section 6 or otherwise:
(A) to constitute a breach of his duty of loyalty to
the corporation or its shareholders;
(B) to be not in good faith or to involve a knowing
violation of law; or
(C) to be based upon or attributable to the receipt by
the indemnified representative from the corporation of an improper
personal benefit to which the indemnified representative is not
legally entitled; or
(iii) to the extent such indemnification has been finally
determined in a final adjudication pursuant to Section 6 to be otherwise
unlawful.
(b) Partial Payment. If an indemnified representative is entitled to
---------------
indemnification in respect of a portion, but not all, of any liabilities to
which such person may be
5
<PAGE>
subject, the corporation shall indemnify such indemnified representative to the
maximum extent for such portion of the liabilities.
(c) Presumption. The termination of a proceeding by judgment, order,
-----------
settlement or conviction or upon a plea of nolo contendere or its equivalent
---------------
shall not of itself create a presumption that the indemnified representative is
not entitled to indemnification.
(d) Definitions. For purposes of this Article:
-----------
(i) "indemnified capacity" means any and all past, present and
future service by an indemnified representative in one or more capacities
as a director, officer, employee or agent of the corporation, or, at the
request of the corporation, as a director, officer, employee, agent,
fiduciary or trustee of another corporation, partnership, joint venture,
trust, employee benefit plan or other entity or enterprise;
(ii) "indemnified representative" means any and all directors
and officers of the corporation and any other person designated as an
indemnified representative by the board of directors of the corporation
(which may, but need not, include any person serving at the request of the
corporation, as a director, officer, employee, agent, fiduciary or trustee
of another corporation, partnership, joint venture, trust, employee benefit
plan or other entity or enterprise);
(iii) "liability" means any damage, judgment, amount paid in
settlement, fine, penalty, punitive damages, excise tax assessed with
respect to an employee benefit plan, or cost or expense of any nature
(including, without limitation, attorneys' fees and disbursements); and
(iv) "proceeding" means any threatened, pending or completed
action, suit, appeal or other proceeding of any nature, whether civil,
criminal, administrative or investigative, whether formal or informal, and
whether brought by or in the right of the corporation, a class of its
security holders or otherwise.
Section 7.02 Proceedings Initiated by Indemnified Representatives.
----------------------------------------------------
Notwithstanding any other provision of this Article, the corporation shall not
indemnify under this Article an indemnified representative for any liability
incurred in a proceeding initiated (which shall not be deemed to include
counter-claims or affirmative defenses) or participated in as an intervenor or
amicus curiae by the person seeking indemnification unless such initiation of or
- ------ ------
participation in the proceeding is authorized, either before or after its
commencement, by the affirmative vote of a majority of the directors in office.
This section does not apply to reimbursement of expenses incurred in
successfully prosecuting or defending an arbitration under Section 6 or
otherwise successfully prosecuting or defending the rights of an indemnified
representative granted by or pursuant to this Article.
Section 7.03 Advancing Expenses. The corporation shall pay the expenses
------------------
(including attorneys' fees and disbursements) incurred in good faith by an
indemnified representative in advance of the final disposition of a proceeding
described in Section 1 or the initiation of or participation in which is
authorized pursuant to Section 2 upon receipt of an undertaking by or on behalf
of the indemnified representative to repay the amount if it is ultimately
determined
6
<PAGE>
pursuant to Section 6 that such person is not entitled to be indemnified by the
corporation pursuant to this Article. The financial ability of an indemnified
representative to repay an advance shall not be a prerequisite to the making of
such advance.
Section 7.04 Securing of Indemnification Obligations. To further effect,
---------------------------------------
satisfy or secure the indemnification obligations provided herein or otherwise,
the corporation may maintain insurance, obtain a letter of credit, act as self-
insurer, create a reserve, trust, escrow, cash collateral or other fund or
account, enter into indemnification agreements, pledge or grant a security
interest in any assets or properties of the corporation, or use any other
mechanism or arrangement whatsoever in such amounts, at such costs, and upon
such other terms and conditions as the board of directors shall deem
appropriate. Absent fraud, the determination of the board of directors with
respect to such amounts, costs, terms and conditions shall be conclusive against
all security holders, officers and directors and shall not be subject to
voidability.
Section 7.05 Payment of Indemnification. An indemnified representative
--------------------------
shall be entitled to indemnification within 30 days after a written request for
indemnification has been delivered to the secretary of the corporation.
Section 7.06 Arbitration. (a) General Rule. Any dispute related to the
----------- ------------
right to indemnification, contribution or advancement of expenses as provided
under this Article, except with respect to indemnification for liabilities
arising under the Securities Act of 1933 that the corporation has undertaken to
submit to a court for adjudication, shall be decided only by arbitration in the
metropolitan area in which the principal executive offices of the corporation
are located at the time, in accordance with the commercial arbitration rules
then in effect of the American Arbitration Association, before a panel of three
arbitrators, one of whom shall be selected by the corporation, the second of
whom shall be selected by the indemnified representative and the third of whom
shall be selected by the other two arbitrators. In the absence of the American
Arbitration Association, or if for any reason arbitration under the arbitration
rules of the American Arbitration Association cannot be initiated, and if one of
the parties fails or refuses to select an arbitrator or the arbitrators selected
by the corporation and the indemnified representative cannot agree on the
selection of the third arbitrator within 30 days after such time as the
corporation and the indemnified representative have each been notified of the
selection of the other's arbitrator, the necessary arbitrator or arbitrators
shall be selected by the presiding judge of the court of general jurisdiction in
such metropolitan area.
(b) Burden of Proof. The party or parties challenging the right of an
---------------
indemnified representative to the benefits of this Article shall have the burden
of proof.
(c) Expenses. The corporation shall reimburse an indemnified
--------
representative for the expenses (including attorneys' fees and disbursements)
incurred in successfully prosecuting or defending such arbitration.
(d) Effect. Any award entered by the arbitrators shall be final,
------
binding and nonappealable and judgment may be entered thereon by any party in
accordance with applicable law in any court of competent jurisdiction, except
that the corporation shall be entitled to interpose as a defense in any such
judicial enforcement proceeding any prior final judicial
7
<PAGE>
determination adverse to the indemnified representative under Section l (a)(2)
in a proceeding not directly involving indemnification under this Article. This
arbitration provision shall be specifically enforceable.
Section 7.07 Contribution. If the indemnification provided for in this
------------
Article or otherwise is unavailable for any reason in respect of any liability
or portion thereof, the corporation shall contribute to the liabilities to which
the indemnified representative may be subject in such proportion as is
appropriate to reflect the intent of this Article or otherwise.
Section 7.08 Mandatory Indemnification of Directors, Officers, etc. To the
-----------------------------------------------------
extent that an authorized representative of the corporation has been successful
on the merits or otherwise in defense of any action, suit or proceeding referred
to in N.J.S.A. 14A:3-5(4) of the Business Corporation Act or in defense of any
claim, issue or matter therein, such person shall be indemnified against
expenses (including attorneys' fees and disbursements) actually and reasonably
incurred by such person in connection therewith.
Section 7.09 Contract Rights; Amendment or Repeal. All rights under this
------------------------------------
Article shall be deemed a contract between the corporation and the indemnified
representative pursuant to which the corporation and each indemnified
representative intend to be legally bound. Any repeal, amendment or modification
hereof shall be prospective only and shall not affect any rights or obligations
then existing.
Section 7.10 Scope of Article. The rights granted by this Article shall
----------------
not be deemed exclusive of any other rights to which those seeking
indemnification, contribution or advancement of expenses may be entitled under
any statute, agreement, vote of shareholders or disinterested directors or
otherwise, both as to action in an indemnified capacity and as to action in any
other capacity. The indemnification, contribution and advancement of expenses
provided by or granted pursuant to this Article shall continue as to a person
who has ceased to be an indemnified representative in respect of matters arising
prior to such time, and shall inure to the benefit of the heirs, executors,
administrators and personal representatives of such a person.
Section 7.11 Reliance on Provisions. Each person who shall act as an
----------------------
indemnified representative of the corporation shall be deemed to be doing so in
reliance upon the rights provided by this Article.
Section 7.12 Interpretation. The provisions of this Article are intended
--------------
to constitute by-laws authorized by N.J.S.A. 14A:3-5(8).
ARTICLE VIII
LOANS, GUARANTEES AND OTHER ASSISTANCE TO DIRECTORS
---------------------------------------------------
The corporation may lend money to, or guarantee any obligation of, or
otherwise assist, any director, officer or employee of the corporation or of any
subsidiary, whenever, in the judgment of the directors, such loan, guarantee or
assistance may reasonably be expected to benefit the corporation. The loan,
guarantee or other assistance may be made with or without interest, and may be
unsecured, or secured in such a manner as the board shall approve,
8
<PAGE>
including, without limitation, a pledge of shares of the corporation, and may be
made upon such other terms and conditions as the board may determine.
ARTICLE IX
AMENDMENT OF BY-LAWS
--------------------
These by-laws may be altered, amended or repealed by the shareholders or
the board of directors. Any by-law adopted, amended or repealed by the
shareholders may be amended or repealed by the board of directors, unless the
resolution of the shareholders adopting such by-law expressly reserves the right
to amend or repeal it to the shareholders.
9
<PAGE>
EXHIBIT 3.15
CERTIFICATE OF INCORPORATION
OF
MORGAN NATIONAL SILICA CO.
I, the undersigned, in order to form a corporation for the purposes
hereinafter stated, under and pursuant to the provisions of the General
Corporation Law of the State of Delaware, being Title 8 Chapter 1 of the
Delaware Code (1974 Revision), and the Acts amendatory thereof and supplementary
thereto, do hereby certify as follows:
FIRST: The name of the corporation is Morgan National Silica Co.
-----
(hereinafter called the "Corporation").
SECOND: The location of the registered office of the Corporation in the
------
State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City
of Wilmington, County of New Castle. The name of its registered agent at that
address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
-----
activity for which corporations may be organized under the General Corporation
Law of Delaware.
FOURTH: The total number of shares of stock which the Corporation shall
------
have authority to issue is one hundred shares of common stock of the par value
of $10 per share.
FIFTH: The name and address of the incorporator is as follows:
-----
Name Address
---- -------
Charles V. Bush 1115 Fairfax Street
Berkeley Springs, WV 25411
SIXTH: The powers of the incorporator shall terminate upon the filing of
-----
this Certificate of Incorporation. The names and addresses of the persons who
are to serve as directors of the
<PAGE>
Corporation until the first annual meeting of stockholders or until their
successors are elected and qualify are set forth below in accordance with
Section 102(a)(6) of the General Corporation Law of Delaware:
Name Address
---- -------
Richard E. Goodell Route 5, Box 250
Hedgesville, WV 25427
L. John Renshaw 1800 Blue Ridge Road
Hagerstown, MD 21740
Richard E. Day Route 4, Box 468
Berkeley Springs, WV 25411
SEVENTH: In furtherance and not in limitation of the powers conferred by
-------
law, the Board of Directors of the Corporation is expressly authorized:
(a) To make, alter, amend or repeal the By-Laws of the Corporation.
(b) To direct and determine the use and disposition of net profits or
net assets in excess of capital; to set apart out of any of the funds of
the Corporation available for dividends a reserve or reserves for any
proper purpose; and to abolish any such reserve in the manner in which it
was created.
(c) To establish bonus, profit-sharing, stock option, retirement or
other types of incentive or compensation plans for the employees (including
officers and directors) of the Corporation and to fix the amount of the
profits to be distributed or shared and to determine the persons to
participate in any such plans and the amounts of their respective
participations.
(d) From time to time to determine whether and to what extent, and at
what time and places and under what conditions and regulations, the
accounts and books of the Corporation (other than the stock ledger), or any
of them, shall be open to the inspection of the stockholders; and no
stockholder shall have any right to inspect any account or book or document
of the Corporation, except as conferred by statute or authorized by the
Board of Directors or by a resolution of the stockholders.
(e) To authorize, and cause to be executed, mortgages and liens upon
the real and personal property of the Corporation.
EIGHTH: Meetings of stockholders may be held within or without the State
------
of Delaware, as the By-Laws may provide. The books of the Corporation may be
kept (subject to
2
<PAGE>
any provision contained in the statutes) outside the State of Delaware at such
place or places as may be designated from time to time by the Board of Directors
or in the By-Laws of the Corporation.
NINTH: Whenever the vote of stockholders at a meeting thereof is required
-----
or permitted to be taken for or in connection with any corporate action by any
provision of the General Corporation Law of Delaware, the meeting and vote of
stockholders may be dispensed with if the holders of stock having not less than
the minimum percentage of the vote required by statute for the proposed
corporate action shall consent in writing to such corporate action being taken,
provided that prompt notice must be given to all stockholders of the taking of
such corporate action without a meeting and by less than unanimous written
consent.
TENTH: Stockholders may at any time, at a meeting expressly called for
-----
that purpose, remove any or all of the directors, with or without cause, by a
vote of the holders of a majority of the shares then entitled to vote at an
election of directors.
ELEVENTH: The Corporation reserves the right to amend, alter, change or
--------
repeal any provision contained in this Certificate of Incorporation in the
manner now or hereafter prescribed by law, and all rights and powers conferred
herein on stockholders and directors are subject to this reserved power.
3
<PAGE>
IN WITNESS WHEREOF, I have hereunto set my hand and seal the 20th day of
October, 1986.
/s/ Charles V. Bush (SEAL)
--------------------------------
STATE OF WEST VIRGINIA )
: ss.:
COUNTY OF MORGAN )
On this 20th day of October, 1986, there personally came before me Charles
V. Bush, the person who executed the foregoing certificate, known to me
personally to be such, and he duly executed said certificate before me and
acknowledged that it was his act and deed and that the facts therein are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal of office the day
and year aforesaid.
/s/ Mary E. Phillips
--------------------------------
(Notary Seal)
4
<PAGE>
Exhibit 3.15.1
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
Morgan National Silica Co., a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors, of said corporation, by unanimous
written consent, adopted a resolution proposing and declaring advisable the
following amendment to the Certificate of Incorporation of said corporation:
RESOLVED, that the Certificate of Incorporation of MORGAN
NATIONAL SILICA CO. be amended by changing Article First thereof
to read as follows:
"FIRST: The name of the corporation is PENNSYLVANIA
GLASS SAND CORPORATION (hereinafter called the "Corporation")."
SECOND: That in lieu of a meeting and vote of stockholders, the
stockholders have given unanimous written consent to said amendment in
accordance with the provisions of section 228 of the General Corporation Law of
the State of Delaware.
THIRD: That the aforesaid amendment was duly adopted in accordance with
the applicable provisions of sections 242 and 228 of the General Corporation Law
of the State of Delaware.
FOURTH: That this Certificate of Amendment of the Certificate of
Incorporation shall be effective on December 31, 1986.
<PAGE>
IN WITNESS WHEREOF, said Morgan National Silica Co. has caused this
certificate to be signed by Richard E. Goodell, its President, and attested by
Charles V. Bush, its Secretary, this 2nd day of December, 1986.
--------
MORGAN NATIONAL SILICA CO.
(Corporate Seal)
By /s/ Richard E. Goodell
--------------------------------
President
ATTEST:
By /s/ Charles V. Bush
--------------------------
Secretary
2
<PAGE>
STATE OF WEST VIRGINIA )
: ss.:
COUNTY OF MORGAN )
BE IT REMEMBERED that on this 2nd day of December, 1986, personally came
before me, a Notary Public in and for the County and State aforesaid, Richard E.
Goodell, President of Morgan National Silica Co., a corporation of the State of
Delaware, the corporation described in and which executed the foregoing
certificate, known to me personally to be such, and he duly executed said
certificate before me and acknowledged the said certificate to be his act and
deed and the act and deed of said corporation, and that the facts stated therein
are true and that the seal affixed to said certificate and attested by the
Secretary of said corporation is the corporate seal of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and seal of office the day
and year aforesaid.
/s/ Mary E. Phillips
----------------------------------------
Notary Public
My Commission Expires: Sept. 10, 1996
----------------
<PAGE>
EXHIBIT 3.16
BY-LAWS
of
PENNSYLVANIA GLASS SAND CORPORATION
_____________________
(herein called the "Company")
ARTICLE I
---------
Stockholders
------------
Section 1.01. Annual Meeting. The Board of Directors by resolution shall
------------ --------------
designate the time, place and date (which shall be, in the case of the first
annual meeting, not more than 13 months after the organization of the Company
and, in the case of all other annual meetings, not more than 13 months after the
date of the last annual meeting) of the annual meeting of the stockholders for
the election of directors and the transaction of such other business as may come
before it.
Section 1.02. Special Meetings. Special meetings of the stockholders, for
------------ ----------------
any purpose or purposes, may be called at any time by the Chairman, the Vice-
Chairman, the President, any Vice-President, the Treasurer, the Secretary or the
Assistant Secretary, by resolution of the Board of Directors or upon written
request by the holders of one-third of the outstanding shares. Special meetings
of stockholders shall be held at such place, within or without the State of
Delaware, as shall be fixed by the person or persons calling the meeting and
stated in the notice or waiver of notice of the meeting.
<PAGE>
Section 1.03. Notice of Meetings of Stockholders. Whenever stockholders
------------ -----------------------------------
are required or permitted to take any action at a meeting, written notice of the
meeting shall be given (unless that notice shall be waived or unless the meeting
is to be dispensed with in accordance with the provisions of the General
Corporation Law of the State of Delaware and the Certificate of Incorporation of
the Company and Section 1.12 hereof) which shall state the place, date and hour
of the meeting and, in the case of a special meeting, the purpose or purposes
for which the meeting is called. The written notice of any meeting shall be
given, personally or by mail, not less than ten nor more than sixty days before
the date of the meeting to each stockholder entitled to vote at such meeting.
If mailed, such notice is given when deposited in the United States mail,
postage prepaid, directed to the stockholder at his address as it appears on the
records of the Company.
When a meeting is adjourned to another time or place, notice need not
be given of the adjourned meeting if the time and place thereof are announced at
the meeting at which the adjournment is taken. At the adjourned meeting the
Company may transact any business which might have been transacted at the
original meeting. If the adjournment is for more than thirty days, or if after
the adjournment a new record date is fixed for the adjourned meeting, a notice
of the adjourned meeting shall be given to each stockholder of record entitled
to vote at the meeting.
Section 1.04. Quorum. At all meetings of the stockholders, the holders of
------------ ------
one-third of the stock issued and outstanding and entitled to vote thereat,
present in person or by proxy, shall constitute a quorum for the transaction of
any business.
When a quorum is once present to organize a meeting, it is not broken by
the subsequent withdrawal of any stockholders.
2
<PAGE>
The stockholders present may adjourn the meeting despite the absence of a
quorum and at any such adjourned meeting at which the requisite amount of voting
stock shall be represented, the Company may transact any business which might
have been transacted at the original meeting had a quorum been there present.
Section 1.05. Method of Voting. The vote upon any question before the
------------ ----------------
meeting need not be by ballot. All elections and all other questions shall be
decided by a plurality of the votes cast, at a meeting at which a quorum is
present, except as expressly provided otherwise by the General Corporation Law
of the State of Delaware or the Certificate of Incorporation.
Section 1.06. Voting Rights of Stockholders and Proxies. Each stockholder
------------ -----------------------------------------
of record entitled to vote in accordance with the laws of the State of Delaware,
the Certificate of Incorporation or these By-Laws, shall at every meeting of the
stockholders be entitled to one vote in person or by proxy for each share of
stock entitled to vote standing in his name on the books of the Company, but no
proxy shall be voted on after three years from its date, unless the proxy
provides for a longer period.
Section 1.07. Ownership of its Own Stock. Shares of its own capital stock
------------ --------------------------
belonging to the Company or to another corporation, if a majority of the shares
entitled to vote in the election of directors of such other corporation is held,
directly or indirectly, by the Company, shall neither be entitled to vote nor be
counted for quorum purposes. Nothing in this section shall be construed as
limiting the right of any corporation to vote stock, including but not limited
to its own stock, held by it in a fiduciary capacity.
Section 1.08. Voting by Fiduciaries and Pledgors. Persons holding stock
------------ ----------------------------------
in a fiduciary capacity shall be entitled to vote the shares so held. Persons
whose stock is pledged shall be
3
<PAGE>
entitled to vote, unless in the transfer by the pledgor on the books of the
Company he has expressly empowered the pledgee to vote thereon, in which case
only the pledgee, or his proxy, may represent such stock and vote thereon.
Section 1.09. Fixing Date for Determination of Stockholders of Record. In
------------ -------------------------------------------------------
order to determine the stockholders entitled to notice of or to vote at any
meeting of stockholders or any adjournment thereof, or to express consent to
corporate action in writing without a meeting, or entitled to receive payment of
any dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock,
or for the purpose of any other lawful action, the Board of Directors may fix,
in advance, a record date, which shall not be more than sixty nor less than ten
days before the date of such meeting, nor more than sixty days prior to any
other action. If no record date is fixed by the Board of Directors, the record
date shall be determined in accordance with the provisions of the General
Corporation Law of the State of Delaware.
Section 1.10. List of Stockholders. The officer who has charge of the
------------ --------------------
stock ledger of the Company shall prepare and make, at least ten days before
every meeting of the stockholders, a complete list of the stockholders entitled
to vote at the meeting, arranged in alphabetical order, and showing the address
of each stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder, for
any purpose germane to the meeting, during ordinary business hours, for a period
of at least ten days prior to the meeting, either at a place within the city
where the meeting is to be held (which place shall be specified in the notice of
the meeting or, if not so specified, at the place where said meeting is to be
held), and the list shall be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any stockholder
who may be present. Upon the
4
<PAGE>
willful neglect or refusal of the directors to produce such a list at any
meeting for the election of directors, they shall be ineligible for election to
any office at such meeting.
Section 1.11. Stockholder's Right of Inspection. Stockholders of record,
------------ ---------------------------------
in person or by attorney or other agent, shall have the right, upon written
demand under oath stating the purpose thereof, during the usual hours for
business to inspect for any proper purpose the Company's stock ledger, a list of
its stockholders, and its other books and records, and to make copies or
extracts therefrom. A proper purpose shall mean a purpose reasonably related to
such person's interest as a stockholder. In every instance where an attorney or
other agent shall be the person who seeks the right to inspection, the demand
under oath shall be accompanied by a power of attorney or such other writing
which authorizes the attorney or other agent to so act on behalf of the
stockholder. The demand under oath shall be directed to the Company at its
registered office in this State or at its principal place of business.
The stock ledger shall be the only evidence as to who are the stockholders
entitled to examine the stock ledger, the list required by Section 1.10 or the
books of the Company, or to vote in person or by proxy at any meeting of the
stockholders.
Section 1.12. Consent in Lieu of Meeting. Any corporate action, with
------------ --------------------------
respect to which the vote of the stockholders at a meeting thereof is required
or permitted by any provision of the General Corporation Law of the State of
Delaware, the Certificate of Incorporation of the Company, or these By-Laws, may
be taken without that vote and meeting, and that vote and meeting may be
dispensed with, if that corporate action has been consented to in writing by the
holders of a majority (or, if with respect to a particular corporate action the
General Corporation Law of the State of Delaware, the Certificate of
Incorporation of the Company or these By-Laws
5
<PAGE>
specifies a greater percentage, by the holders of that percentage) of the stock
that would have been entitled to vote upon that action if a meeting were held.
Prompt notice shall be given to all stockholders of the taking of any corporate
action pursuant to the provisions of that paragraph unless that action has been
consented to in writing by the holders of all of the stock that would have been
entitled to vote upon that action if a meeting were held.
ARTICLE II
----------
Directors
---------
Section 2.01. Management of Business. The business of the Company shall
------------ ----------------------
be managed by its Board of Directors.
The Board of Directors, in addition to the powers and authority expressly
conferred upon it herein, by statute, by the Certificate of Incorporation of the
Company or otherwise, is hereby empowered to exercise all such powers as may be
exercised by the Company, except as expressly provided otherwise by the statutes
of the State of Delaware, by the Certificate of Incorporation of the Company or
by these By-Laws.
Without prejudice to the generality of the foregoing, the Board of
Directors, by resolution or resolutions, may create and issue, whether or not in
connection with the issue and sale of any shares of stock or other securities of
the Company, rights or options entitling the holders thereof to purchase from
the Company any shares of its capital stock of any class or classes or any other
securities of the Company, such rights or options to be evidenced by or in such
instrument or instruments as shall be approved by the Board of Directors. The
terms upon which, including the
6
<PAGE>
time or times, which may be limited or unlimited in duration, at or within
which, and the price or prices at which, any such rights or options may be
issued and any such shares or other securities may be purchased from the Company
upon the exercise of any such right or option shall be such as shall be fixed
and stated in the resolution or resolutions adopted by the Board of Directors
providing for the creation and issue of such rights or options, and, in every
case, set forth or incorporated by reference in the instrument or instruments
evidencing such rights or options. In the absence of actual fraud in the
transaction, the judgment of the directors as to the consideration for the
issuance of such rights or options and the sufficiency thereof shall be
conclusive. In case the shares of stock of the Company to be issued upon the
exercise of such rights or options shall be shares having a par value, the price
or prices so to be received therefor shall not be less than the par value
thereof. In case the shares of stock so to be issued shall be shares of stock
without par value, the consideration therefor shall be determined in the manner
provided in Section 153 of the General Corporation Law of the State of Delaware.
Section 2.02. Qualifications and Number of Directors. Directors need not
------------ --------------------------------------
be stockholders. The number of directors which shall constitute the whole Board
shall be not less than three nor more than eleven.
Section 2.03. Election and Term. The directors shall be elected at the
------------ -----------------
annual meeting of the stockholders, and each director shall be elected to hold
office until his successor shall be elected and qualified, or until his earlier
resignation or removal.
Section 2.04. Resignations. Any director of the Company may resign at any
------------ ------------
time by giving written notice to the Company. Such resignation shall take
effect at the time specified therein, if any, or if no time is specified
therein, then upon receipt of such notice by the
7
<PAGE>
Company; and, unless otherwise provided therein, the acceptance of such
resignation shall not be necessary to make it effective.
Section 2.05. Vacancies and Newly Created Directorships. Vacancies and
------------ -----------------------------------------
newly created directorships resulting from any increase in the authorized number
of directors may be filled by a majority of the directors then in office, though
less than a quorum, or by a sole remaining director, and the directors so chosen
shall hold office until their successors shall be elected and qualified, or
until their earlier resignation or removal. When one or more directors shall
resign from the Board, effective at a future date, a majority of the directors
then in office, including those who have so resigned, shall have power to fill
such vacancy or vacancies, the vote thereon to take effect when such resignation
or resignations shall become effective, and each director so chosen shall hold
office as herein provided in the filling of other vacancies.
Section 2.06. Quorum of Directors. At all meetings of the Board of
------------ -------------------
Directors, one-third of the entire Board shall constitute a quorum for the
transaction of business and the act of a majority of the directors present at
any meeting at which there is a quorum shall be the act of the Board of
Directors, except as provided in Sections 2.05 and 2.12 hereof.
A majority of the directors present, whether or not a quorum is present,
may adjourn any meeting of the directors to another time and place. Notice of
any adjournment need not be given if such time and place are announced at the
meeting.
Section 2.07. Annual Meeting. The newly elected Board of Directors shall
------------ --------------
meet immediately following the adjournment of the annual meeting of stockholders
in each year at the same place, within or without the State of Delaware, and no
notice of such meeting shall be necessary.
8
<PAGE>
Section 2.08. Regular Meetings. Regular meetings of the Board of
------------ ----------------
Directors may be held at such time and place, within or without the State of
Delaware, as shall from time to time be fixed by the Board and no notice thereof
shall be necessary.
Section 2.09. Special Meetings. Special meetings may be called at any
------------ ----------------
time by the President, the Secretary or by resolution of any two Directors.
Special meetings shall be held at such place, within or without the State of
Delaware, as shall be fixed by the person or persons calling the meeting and
stated in the notice or waiver of notice of the meeting.
Special meetings of the Board of Directors shall be held upon notice to the
directors or waiver thereof.
Unless waived, notice of each special meeting of the directors, stating the
time and place of the meeting, shall be given to each director by delivered
letter, by telegram or by personal communication either over the telephone or
otherwise, in each such case not later than the second day prior to the meeting,
or by mailed letter deposited in the United States mail with postage thereon
prepaid not later than the seventh day prior to the meeting. Notices of special
meetings of the Board of Directors and waivers thereof need not state the
purpose or purposes of the meeting.
Section 2.10. Action Without a Meeting. Any action required or permitted
------------ ------------------------
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting if all members of the Board or committee, as the
case may be, consent thereto in a writing or writings and the writing or
writings are filed with the minutes of proceedings of the Board or committee.
9
<PAGE>
Section 2.11. Compensation. Directors shall receive any such fixed sums
------------ ------------
and expenses of attendance for attendance at each meeting of the Board or of any
committee and/or any such salary as may be determined from time to time by the
Board of Directors; provided that nothing herein contained shall be construed to
preclude any director from serving the Company in any other capacity and
receiving compensation therefor.
Section 2.12. Executive Committee. The Board of Directors may, by
------------ -------------------
resolution or resolutions, passed by a majority of the whole Board, designate an
Executive Committee (and may discontinue the same at any time) to consist of
three or more of the directors of the Company. The members shall be appointed
by the Board and shall hold office at the pleasure of the Board. The Board may
designate one or more directors as alternate members of the Committee, who may
replace an absent or disqualified member at any meeting of the Committee. The
Executive Committee shall have and may exercise all the powers of the Board of
Directors (when the Board is not in session) in the management of the business
and affairs of the Company (and may authorize the seal of the Company to be
affixed to all papers which may require it), except that the Executive Committee
shall have no power (a) to elect directors; (b) to alter, amend or repeal these
By-Laws or any resolution or resolutions of the directors designating an
Executive Committee; (c) to declare any dividend or make any other distribution
to the stockholders of the Company; or (d) to appoint any member of the
Executive Committee. Regular meetings of the Executive Committee may be held at
such time and place, within or without the State of Delaware, as shall from time
to time be fixed by the Executive Committee and no notice thereof shall be
necessary. Special meetings may be called at any time by any officer of the
Company or any member of the Committee. Special meetings shall be held at such
place, within or without the State of Delaware, as shall be fixed by the person
calling the meeting
10
<PAGE>
and stated in the notice or waiver of the meeting. A majority of the members of
the Executive Committee shall constitute a quorum for the transaction of
business and the act of a majority present at which there is a quorum shall be
the act of the Executive Committee. Notice of each special meeting of the
Executive Committee shall be given (or waived) in the same manner as notice of a
directors' meeting.
ARTICLE III
-----------
Officers
--------
Section 3.01. Number. The officers of the Company shall be chosen by the
------------ ------
Board of Directors. The officers shall be a President and/or Chairman, a
Secretary and a Treasurer, and such number of Vice-Presidents, Assistant
Secretaries and Assistant Treasurers, and such other officers, if any, as the
Board may from time to time determine. The Board may choose such other agents
as it shall deem necessary. Any number of offices may be held by the same
person.
Section 3.02. Terms of Office. Each officer shall hold his office until
------------ ---------------
his successor is chosen and qualified or until his earlier resignation or
removal. Any officer may resign at any time upon written notice to the Company.
Section 3.03. Removal. Any officer may be removed from office at any time
------------ -------
by the Board of Directors with or without cause.
Section 3.04. Authority. The Secretary shall record all of the
------------ ---------
proceedings of the meetings of the stockholders and directors in a book to be
kept for that purpose, and shall have the authority, perform the duties and
exercise the powers in the management of the Company
11
<PAGE>
usually incident to the office held by him, and/or such other authority, duties
and powers as may be assigned to him from time to time by the Board of
Directors, the Chairman, the Vice-Chairman or the President. The other officers,
and agents, if any, shall have the authority, perform the duties and exercise
the powers in the management of the Company usually incident to the offices held
by them, respectively, and/or such other authority, duties and powers as may be
assigned to them from time to time by the Board of Directors or (except in the
case of the Chairman, the Vice-Chairman or the President) by the Chairman, the
Vice President or the President.
Section 3.05. Voting Securities Owned by the Company. Powers of attorney,
------------ --------------------------------------
proxies, waivers of notice of meeting, consents and other instruments relating
to securities owned by the Company may be executed in the name of and on behalf
of the Company by the Chairman, the Vice Chairman, the President or any Vice-
President and any such officer may, in the name of and on behalf of the Company,
take all such action as any such officer may deem advisable to vote in person or
by proxy at any meeting of security holders of any corporation in which the
Company may own securities and at any such meeting shall possess and may
exercise any and all rights and powers incident to the ownership of such
securities and which, as the owner thereof, the Company might have exercised and
possessed if present. The Board of Directors may, by resolution, from time to
time confer like powers upon any other person or persons.
ARTICLE IV
----------
Capital Stock
-------------
Section 4.01. Stock Certificates. Every holder of stock in the Company
------------ ------------------
shall be entitled to have a certificate signed by, or in the name of the Company
by, the Chairman, or Vice
12
<PAGE>
Chairman of the Board of Directors or the President or a Vice-President, and by
the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant
Secretary, of the Company, certifying the number of shares owned by him in the
Company. Where such certificate is signed (1) by a transfer agent other than the
Company or its employee, or (2) by a registrar other than the Company or its
employee, the signatures of the officers of the Company may be facsimiles. In
case any officer who has signed or whose facsimile signature has been placed
upon a certificate shall have ceased to be such officer before such certificate
is issued, it may be issued by the Company with the same effect as if he were
such officer at the date of issue.
Section 4.02. Transfers. Stock of the Company shall be transferable in
------------ ---------
the manner prescribed by the laws of the State of Delaware.
Section 4.03. Registered Holders. Prior to due presentment for
------------ ------------------
registration of transfer of any security of the Company in registered form, the
Company shall treat the registered owner as the person exclusively entitled to
vote, to receive notifications and to otherwise exercise all the rights and
powers of an owner, and shall not be bound to recognize any equitable or other
claim to, or interest in, any security, whether or not the Company shall have
notice thereof, except as otherwise provided by the laws of the State of
Delaware.
13
<PAGE>
Section 4.04. New Certificates. The Company shall issue a new certificate
------------ ----------------
of stock in the place of any certificate theretofore issued by it, alleged to
have been lost, stolen or destroyed, if the owner: (1) so requests before the
Company has notice that the shares of stock represented by that certificate have
been acquired by a bona fide purchaser; (2) files with the Company a bond
sufficient (in the judgment of the directors) to indemnify the Company against
any claim that may be made against it on account of the alleged loss or theft of
that certificate or the issuance of a new certificate; and (3) satisfies any
other requirements imposed by the directors that are reasonable under the
circumstances. A new certificate may be issued without requiring any bond when,
in the judgment of the directors, it is proper so to do.
ARTICLE V
---------
INDEMNIFICATION
---------------
Section 5.01. The Company shall indemnify its officers, directors,
------------
employees and agents to the fullest extent permitted by the General Corporation
Law of Delaware and the relevant provision in the Certificate of Incorporation
of the Corporation, if applicable.
ARTICLE VI
----------
Miscellaneous
-------------
Section 6.01. Offices. The registered office of the Company in the State
------------ -------
of Delaware shall be as stated in the Certificate of Incorporation or at such
other location to which the registered office shall be changed by action of the
board of directors The Company may also have offices at other places within
and/or without the State of Delaware.
14
<PAGE>
Section 6.02. Seal. The corporate seal shall have inscribed thereon the
------------ ----
name of the Company, the year of its incorporation and the words "Corporate Seal
Delaware."
Section 6.03. Checks. All checks or demands for money shall be signed by
------------ ------
such person or persons as the Board of Directors may from time to time
determine.
Section 6.04. Fiscal Year. The fiscal year shall begin the first day of
------------ -----------
January in each year and shall end on the thirty-first day of December of such
year.
Section 6.05. Waivers of Notice; Dispensing with Notice. Whenever any
------------ -----------------------------------------
notice whatever is required to be given under the provisions of the General
Corporation Law of the State of Delaware, of the Certificate of Incorporation of
the Corporation, or of these By-Laws, a waiver thereof in writing, signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent thereto. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
stockholders need be specified in any written waiver of notice.
Attendance of a person at a meeting of stockholders shall constitute a
waiver of notice of such meeting, except when the stockholder attends a meeting
for the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened.
Whenever any notice whatever is required to be given under the provisions
of the General Corporation Law of the State of Delaware, of the Certificate of
Incorporation of the Company, or of these By-Laws, to any person with whom
communication is made unlawful by any law of the United States of America, or by
any rule, regulation, proclamation or executive order issued
15
<PAGE>
under any such law, then the giving of such notice to such person shall not be
required and there shall be no duty to apply to any governmental authority or
agency for a license or permit to give such notice to such person; and any
action or meeting which shall be taken or held without notice to any such person
or without giving or without applying for a license or permit to give any such
notice to any such person with whom communication is made unlawful as aforesaid,
shall have the same force and effect as if such notice had been given as
provided under the provisions of the General Corporation Law of the State of
Delaware, or under the provisions of the Certificate of Incorporation of the
Company or of these By-Laws. In the event that the action taken by the Company
is such as to require the filing of a certificate under any of the other
sections of this title, the certificate shall state, if such is the fact and if
notice is required, that notice was given to all persons entitled to receive
notice except such persons with whom communication is unlawful.
Section 6.06. Loans to and Guarantees of Obligations of Employees and
------------ -------------------------------------------------------
Officers. The Company may lend money to or guaranty any obligation of, or
- --------
otherwise assist any officer or other employee of the Company or of a
subsidiary, including any officer or employee who is a director of the Company
or a subsidiary, whenever, in the judgment of the Board of Directors, such loan,
guaranty or assistance may reasonably be expected to benefit the Company. The
loan, guaranty or other assistance may be with or without interest, and may be
unsecured, or secured in such manner as the Board of Directors shall approve,
including, without limitation, a pledge of shares of stock of the Company.
Nothing in this Section contained shall be deemed to deny, limit or restrict the
powers of guaranty or warranty of the Company at common law or under any other
statute.
Section 6.07. Amendment of By-Laws. These By-Laws may be altered, amended
------------ --------------------
or repealed at any meeting of the Board of Directors.
16
<PAGE>
Section 6.08. Section Headings and Statutory References. The headings of
------------ -----------------------------------------
the Articles and Sections of these By-Laws, have been inserted for convenience
of reference only and shall not be deemed to be a part of these By-Laws.
17
<PAGE>
EXHIBIT 3.17
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
GEORGE F. PETTINOS, INC.
Adopted in accordance with Sections 242 and 245
of the General Corporation Law
of the State of Delaware
FIRST: The name of the Corporation is George F. Pettinos, Inc.
(hereinafter sometimes called the "Corporation").
SECOND: The address of the Corporation's registered office in the
State of Delaware is Corporation Trust Center, 1209 Orange Street, City of
Wilmington, County of New Castle, State of Delaware 19801. The name of its
registered agent at such address is The Corporation Trust Company.
THIRD: The nature of the business or purposes to be conducted or
promoted are to engage in any lawful act or activity for which corporations may
be organized under the General Corporation Law of the State of Delaware.
FOURTH: The total number of shares of stock which the Corporation
shall have authority to issue is 100 and the par value of each of such shares is
$0.01.
FIFTH: The following additional provisions are inserted for the
management of the business and for the conduct of the affairs of the
Corporation, and for the creation, definition, limitation and regulation of the
powers of the Corporation, the directors and the stockholders:
1. Election of directors need not be by written ballot. The Board of
Directors shall have power to make, alter, amend and repeal the By-Laws of the
Corporation and to fix the compensation of directors for services in any
capacity.
2. Any director may be removed at any time, with or without cause,
upon the affirmative vote of the holders of a majority of the stock of the
Corporation at that time having voting power for the election of directors;
provided, however, that no director who shall have been elected by the holders
of a separate class of stock shall be removed under the provisions of this
subdivision except upon the affirmative vote of the holders of a majority of the
class whose holders elected him, if such holders are then entitled to vote for
the election of directors.
3. Any corporate action, with respect to which the vote of the
stockholders at a meeting thereof is required or permitted by any provision of
the General Corporation Law of the State of Delaware or of the Certificate of
Incorporation or the By-Laws of the Corporation, is authorized to be taken and
may be taken without that vote and meeting, and that vote and meeting may be
dispensed with, with the written consent of the holders of a majority (or, if
with respect to a particular corporate action where the General Corporation Law
of the State of
<PAGE>
Delaware or the Certificate of Incorporation or the By-Laws of the Corporation
specifies a greater percentage, by the holders of that greater percentage) of
the stock that would have been entitled to vote upon that action if a meeting
were held. Prompt notice shall be given to all stockholders of the taking of any
corporate action pursuant to the provisions of this paragraph 3 unless that
action has been consented to in writing by the holders of all of the stock that
would have been entitled to vote upon that action if a meeting were held.
4. A director of the Corporation shall not be personally liable to
the Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived an improper
personal benefit.
5. The Corporation shall indemnify any person who was or is a party,
or is threatened to be made a party, to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, including an action by or in the right of the Corporation, by
reason of the fact that he, or the person whose legal representative he is, (i)
is or was a stockholder, director, officer, employee or agent of the Corporation
(including the incorporator thereof), or (ii) is or was serving at the request
of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, or (iii) is
or was a director, officer or employee of the Corporation serving at the request
of the Corporation as a fiduciary of an employee benefit plan or trust
maintained for the benefit of employees of the Corporation or employees of any
such corporation, partnership, joint venture, trust, or other enterprise,
against judgments, fines, penalties, amounts paid in settlement, and expenses,
including attorneys' fees, actually and reasonably incurred by him and the
person whose legal representative he is, in connection with such action, suit or
proceeding, or any appeal therein, to the fullest extent permitted by law.
Expenses which may be indemnifiable under this paragraph 5 incurred in
defending an action, suit or proceeding shall be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding as
authorized by the Board of Directors upon agreement by or on behalf of the
stockholder, director, officer, employee or agent, or his legal representative,
to repay such amount if he is later found not entitled to be indemnified by the
Corporation as authorized in this paragraph 5.
The Corporation shall not indemnify any stockholder, director,
officer, employee or agent against judgments, fines, amounts paid in settlement
and expenses, including attorneys' fees, to an extent greater than that
authorized by this paragraph 5, but the Corporation may procure and maintain
insurance providing greater indemnification and may share the premium cost with
any stockholder, director, officer, employee or agent on such basis as may be
agreed upon.
-2-
<PAGE>
IN WITNESS WHEREOF, I, the undersigned, being an officer of the
Corporation, have hereto set my hand this 30/th/ day of July, 1998.
/s/ John A. Ulizio
-----------------------------
John A. Ulizio
Vice President and Secretary
-3-
<PAGE>
EXHIBIT 3.18
BY-LAWS
of
GEORGE F. PETTINOS, INC.
_____________________
(herein called the "Company")
ARTICLE I
---------
Stockholders
------------
Section 1.01. Annual Meeting. The Board of Directors by resolution shall
------------ --------------
designate the time, place and date (which shall be, in the case of the first
annual meeting, not more than 13 months after the organization of the Company
and, in the case of all other annual meetings, not more than 13 months after the
date of the last annual meeting) of the annual meeting of the stockholders for
the election of directors and the transaction of such other business as may come
before it.
Section 1.02. Special Meetings. Special meetings of the stockholders, for
------------ ----------------
any purpose or purposes, may be called at any time by the Chairman, the Vice-
Chairman, the President, any Vice-President, the Treasurer, the Secretary or the
Assistant Secretary, by resolution of the Board of Directors or upon written
request by the holders of one-third of the outstanding shares. Special meetings
of stockholders shall be held at such place, within or without the State of
Delaware, as shall be fixed by the person or persons calling the meeting and
stated in the notice or waiver of notice of the meeting.
<PAGE>
Section 1.03. Notice of Meetings of Stockholders. Whenever stockholders
------------ -----------------------------------
are required or permitted to take any action at a meeting, written notice of the
meeting shall be given (unless that notice shall be waived or unless the meeting
is to be dispensed with in accordance with the provisions of the General
Corporation Law of the State of Delaware and the Certificate of Incorporation of
the Company and Section 1.12 hereof) which shall state the place, date and hour
of the meeting and, in the case of a special meeting, the purpose or purposes
for which the meeting is called. The written notice of any meeting shall be
given, personally or by mail, not less than ten nor more than sixty days before
the date of the meeting to each stockholder entitled to vote at such meeting.
If mailed, such notice is given when deposited in the United States mail,
postage prepaid, directed to the stockholder at his address as it appears on the
records of the Company.
When a meeting is adjourned to another time or place, notice need not
be given of the adjourned meeting if the time and place thereof are announced at
the meeting at which the adjournment is taken. At the adjourned meeting the
Company may transact any business which might have been transacted at the
original meeting. If the adjournment is for more than thirty days, or if after
the adjournment a new record date is fixed for the adjourned meeting, a notice
of the adjourned meeting shall be given to each stockholder of record entitled
to vote at the meeting.
Section 1.04. Quorum. At all meetings of the stockholders, the holders of
------------ ------
one-third of the stock issued and outstanding and entitled to vote thereat,
present in person or by proxy, shall constitute a quorum for the transaction of
any business.
When a quorum is once present to organize a meeting, it is not broken by
the subsequent withdrawal of any stockholders.
2
<PAGE>
The stockholders present may adjourn the meeting despite the absence of a
quorum and at any such adjourned meeting at which the requisite amount of voting
stock shall be represented, the Company may transact any business which might
have been transacted at the original meeting had a quorum been there present.
Section 1.05. Method of Voting. The vote upon any question before the
------------ ----------------
meeting need not be by ballot. All elections and all other questions shall be
decided by a plurality of the votes cast, at a meeting at which a quorum is
present, except as expressly provided otherwise by the General Corporation Law
of the State of Delaware or the Certificate of Incorporation.
Section 1.06. Voting Rights of Stockholders and Proxies. Each stockholder
------------ -----------------------------------------
of record entitled to vote in accordance with the laws of the State of Delaware,
the Certificate of Incorporation or these By-Laws, shall at every meeting of the
stockholders be entitled to one vote in person or by proxy for each share of
stock entitled to vote standing in his name on the books of the Company, but no
proxy shall be voted on after three years from its date, unless the proxy
provides for a longer period.
Section 1.07. Ownership of its Own Stock. Shares of its own capital stock
------------ --------------------------
belonging to the Company or to another corporation, if a majority of the shares
entitled to vote in the election of directors of such other corporation is held,
directly or indirectly, by the Company, shall neither be entitled to vote nor be
counted for quorum purposes. Nothing in this section shall be construed as
limiting the right of any corporation to vote stock, including but not limited
to its own stock, held by it in a fiduciary capacity.
Section 1.08. Voting by Fiduciaries and Pledgors. Persons holding stock
------------ ----------------------------------
in a fiduciary capacity shall be entitled to vote the shares so held. Persons
whose stock is pledged shall be
3
<PAGE>
entitled to vote, unless in the transfer by the pledgor on the books of the
Company he has expressly empowered the pledgee to vote thereon, in which case
only the pledgee, or his proxy, may represent such stock and vote thereon.
Section 1.09. Fixing Date for Determination of Stockholders of Record. In
------------ -------------------------------------------------------
order to determine the stockholders entitled to notice of or to vote at any
meeting of stockholders or any adjournment thereof, or to express consent to
corporate action in writing without a meeting, or entitled to receive payment of
any dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock,
or for the purpose of any other lawful action, the Board of Directors may fix,
in advance, a record date, which shall not be more than sixty nor less than ten
days before the date of such meeting, nor more than sixty days prior to any
other action. If no record date is fixed by the Board of Directors, the record
date shall be determined in accordance with the provisions of the General
Corporation Law of the State of Delaware.
Section 1.10. List of Stockholders. The officer who has charge of the
------------ --------------------
stock ledger of the Company shall prepare and make, at least ten days before
every meeting of the stockholders, a complete list of the stockholders entitled
to vote at the meeting, arranged in alphabetical order, and showing the address
of each stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder, for
any purpose germane to the meeting, during ordinary business hours, for a period
of at least ten days prior to the meeting, either at a place within the city
where the meeting is to be held (which place shall be specified in the notice of
the meeting or, if not so specified, at the place where said meeting is to be
held), and the list shall be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any stockholder
who may be present. Upon the
4
<PAGE>
willful neglect or refusal of the directors to produce such a list at any
meeting for the election of directors, they shall be ineligible for election to
any office at such meeting.
Section 1.11. Stockholder's Right of Inspection. Stockholders of record,
------------ ---------------------------------
in person or by attorney or other agent, shall have the right, upon written
demand under oath stating the purpose thereof, during the usual hours for
business to inspect for any proper purpose the Company's stock ledger, a list of
its stockholders, and its other books and records, and to make copies or
extracts therefrom. A proper purpose shall mean a purpose reasonably related to
such person's interest as a stockholder. In every instance where an attorney or
other agent shall be the person who seeks the right to inspection, the demand
under oath shall be accompanied by a power of attorney or such other writing
which authorizes the attorney or other agent to so act on behalf of the
stockholder. The demand under oath shall be directed to the Company at its
registered office in this State or at its principal place of business.
The stock ledger shall be the only evidence as to who are the stockholders
entitled to examine the stock ledger, the list required by Section 1.10 or the
books of the Company, or to vote in person or by proxy at any meeting of the
stockholders.
Section 1.12. Consent in Lieu of Meeting. Any corporate action, with
------------ --------------------------
respect to which the vote of the stockholders at a meeting thereof is required
or permitted by any provision of the General Corporation Law of the State of
Delaware, the Certificate of Incorporation of the Company, or these By-Laws, may
be taken without that vote and meeting, and that vote and meeting may be
dispensed with, if that corporate action has been consented to in writing by the
holders of a majority (or, if with respect to a particular corporate action the
General Corporation Law of the State of Delaware, the Certificate of
Incorporation of the Company or these By-Laws
5
<PAGE>
specifies a greater percentage, by the holders of that percentage) of the stock
that would have been entitled to vote upon that action if a meeting were held.
Prompt notice shall be given to all stockholders of the taking of any corporate
action pursuant to the provisions of that paragraph unless that action has been
consented to in writing by the holders of all of the stock that would have been
entitled to vote upon that action if a meeting were held.
ARTICLE II
----------
Directors
---------
Section 2.01. Management of Business. The business of the Company shall
------------ ----------------------
be managed by its Board of Directors.
The Board of Directors, in addition to the powers and authority expressly
conferred upon it herein, by statute, by the Certificate of Incorporation of the
Company or otherwise, is hereby empowered to exercise all such powers as may be
exercised by the Company, except as expressly provided otherwise by the statutes
of the State of Delaware, by the Certificate of Incorporation of the Company or
by these By-Laws.
Without prejudice to the generality of the foregoing, the Board of
Directors, by resolution or resolutions, may create and issue, whether or not in
connection with the issue and sale of any shares of stock or other securities of
the Company, rights or options entitling the holders thereof to purchase from
the Company any shares of its capital stock of any class or classes or any other
securities of the Company, such rights or options to be evidenced by or in such
instrument or instruments as shall be approved by the Board of Directors. The
terms upon which, including the
6
<PAGE>
time or times, which may be limited or unlimited in duration, at or within
which, and the price or prices at which, any such rights or options may be
issued and any such shares or other securities may be purchased from the Company
upon the exercise of any such right or option shall be such as shall be fixed
and stated in the resolution or resolutions adopted by the Board of Directors
providing for the creation and issue of such rights or options, and, in every
case, set forth or incorporated by reference in the instrument or instruments
evidencing such rights or options. In the absence of actual fraud in the
transaction, the judgment of the directors as to the consideration for the
issuance of such rights or options and the sufficiency thereof shall be
conclusive. In case the shares of stock of the Company to be issued upon the
exercise of such rights or options shall be shares having a par value, the price
or prices so to be received therefor shall not be less than the par value
thereof. In case the shares of stock so to be issued shall be shares of stock
without par value, the consideration therefor shall be determined in the manner
provided in Section 153 of the General Corporation Law of the State of Delaware.
Section 2.02. Qualifications and Number of Directors. Directors need not
------------ --------------------------------------
be stockholders. The number of directors which shall constitute the whole Board
shall be not less than three nor more than eleven.
Section 2.03. Election and Term. The directors shall be elected at the
------------ -----------------
annual meeting of the stockholders, and each director shall be elected to hold
office until his successor shall be elected and qualified, or until his earlier
resignation or removal.
Section 2.04. Resignations. Any director of the Company may resign at any
------------ ------------
time by giving written notice to the Company. Such resignation shall take
effect at the time specified therein, if any, or if no time is specified
therein, then upon receipt of such notice by the
7
<PAGE>
Company; and, unless otherwise provided therein, the acceptance of such
resignation shall not be necessary to make it effective.
Section 2.05. Vacancies and Newly Created Directorships. Vacancies and
------------ -----------------------------------------
newly created directorships resulting from any increase in the authorized number
of directors may be filled by a majority of the directors then in office, though
less than a quorum, or by a sole remaining director, and the directors so chosen
shall hold office until their successors shall be elected and qualified, or
until their earlier resignation or removal. When one or more directors shall
resign from the Board, effective at a future date, a majority of the directors
then in office, including those who have so resigned, shall have power to fill
such vacancy or vacancies, the vote thereon to take effect when such resignation
or resignations shall become effective, and each director so chosen shall hold
office as herein provided in the filling of other vacancies.
Section 2.06. Quorum of Directors. At all meetings of the Board of
------------ -------------------
Directors, one-third of the entire Board shall constitute a quorum for the
transaction of business and the act of a majority of the directors present at
any meeting at which there is a quorum shall be the act of the Board of
Directors, except as provided in Sections 2.05 and 2.12 hereof.
A majority of the directors present, whether or not a quorum is present,
may adjourn any meeting of the directors to another time and place. Notice of
any adjournment need not be given if such time and place are announced at the
meeting.
Section 2.07. Annual Meeting. The newly elected Board of Directors shall
------------ --------------
meet immediately following the adjournment of the annual meeting of stockholders
in each year at the same place, within or without the State of Delaware, and no
notice of such meeting shall be necessary.
8
<PAGE>
Section 2.08. Regular Meetings. Regular meetings of the Board of
------------ ----------------
Directors may be held at such time and place, within or without the State of
Delaware, as shall from time to time be fixed by the Board and no notice thereof
shall be necessary.
Section 2.09. Special Meetings. Special meetings may be called at any
------------ ----------------
time by the President, the Secretary or by resolution of any two Directors.
Special meetings shall be held at such place, within or without the State of
Delaware, as shall be fixed by the person or persons calling the meeting and
stated in the notice or waiver of notice of the meeting.
Special meetings of the Board of Directors shall be held upon notice to the
directors or waiver thereof.
Unless waived, notice of each special meeting of the directors, stating the
time and place of the meeting, shall be given to each director by delivered
letter, by telegram or by personal communication either over the telephone or
otherwise, in each such case not later than the second day prior to the meeting,
or by mailed letter deposited in the United States mail with postage thereon
prepaid not later than the seventh day prior to the meeting. Notices of special
meetings of the Board of Directors and waivers thereof need not state the
purpose or purposes of the meeting.
Section 2.10. Action Without a Meeting. Any action required or permitted
------------ ------------------------
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting if all members of the Board or committee, as the
case may be, consent thereto in a writing or writings and the writing or
writings are filed with the minutes of proceedings of the Board or committee.
9
<PAGE>
Section 2.11. Compensation. Directors shall receive any such fixed sums
------------ ------------
and expenses of attendance for attendance at each meeting of the Board or of any
committee and/or any such salary as may be determined from time to time by the
Board of Directors; provided that nothing herein contained shall be construed to
preclude any director from serving the Company in any other capacity and
receiving compensation therefor.
Section 2.12. Executive Committee. The Board of Directors may, by
------------ -------------------
resolution or resolutions, passed by a majority of the whole Board, designate an
Executive Committee (and may discontinue the same at any time) to consist of
three or more of the directors of the Company. The members shall be appointed
by the Board and shall hold office at the pleasure of the Board. The Board may
designate one or more directors as alternate members of the Committee, who may
replace an absent or disqualified member at any meeting of the Committee. The
Executive Committee shall have and may exercise all the powers of the Board of
Directors (when the Board is not in session) in the management of the business
and affairs of the Company (and may authorize the seal of the Company to be
affixed to all papers which may require it), except that the Executive Committee
shall have no power (a) to elect directors; (b) to alter, amend or repeal these
By-Laws or any resolution or resolutions of the directors designating an
Executive Committee; (c) to declare any dividend or make any other distribution
to the stockholders of the Company; or (d) to appoint any member of the
Executive Committee. Regular meetings of the Executive Committee may be held at
such time and place, within or without the State of Delaware, as shall from time
to time be fixed by the Executive Committee and no notice thereof shall be
necessary. Special meetings may be called at any time by any officer of the
Company or any member of the Committee. Special meetings shall be held at such
place, within or without the State of Delaware, as shall be fixed by the person
calling the meeting
10
<PAGE>
and stated in the notice or waiver of the meeting. A majority of the members of
the Executive Committee shall constitute a quorum for the transaction of
business and the act of a majority present at which there is a quorum shall be
the act of the Executive Committee. Notice of each special meeting of the
Executive Committee shall be given (or waived) in the same manner as notice of a
directors' meeting.
ARTICLE III
-----------
Officers
--------
Section 3.01. Number. The officers of the Company shall be chosen by the
------------ ------
Board of Directors. The officers shall be a President and/or Chairman, a
Secretary and a Treasurer, and such number of Vice-Presidents, Assistant
Secretaries and Assistant Treasurers, and such other officers, if any, as the
Board may from time to time determine. The Board may choose such other agents
as it shall deem necessary. Any number of offices may be held by the same
person.
Section 3.02. Terms of Office. Each officer shall hold his office until
------------ ---------------
his successor is chosen and qualified or until his earlier resignation or
removal. Any officer may resign at any time upon written notice to the Company.
Section 3.03. Removal. Any officer may be removed from office at any time
------------ -------
by the Board of Directors with or without cause.
Section 3.04. Authority. The Secretary shall record all of the
------------ ---------
proceedings of the meetings of the stockholders and directors in a book to be
kept for that purpose, and shall have the authority, perform the duties and
exercise the powers in the management of the Company
11
<PAGE>
usually incident to the office held by him, and/or such other authority, duties
and powers as may be assigned to him from time to time by the Board of
Directors, the Chairman, the Vice-Chairman or the President. The other officers,
and agents, if any, shall have the authority, perform the duties and exercise
the powers in the management of the Company usually incident to the offices held
by them, respectively, and/or such other authority, duties and powers as may be
assigned to them from time to time by the Board of Directors or (except in the
case of the Chairman, the Vice-Chairman or the President) by the Chairman, the
Vice President or the President.
Section 3.05. Voting Securities Owned by the Company. Powers of attorney,
------------ --------------------------------------
proxies, waivers of notice of meeting, consents and other instruments relating
to securities owned by the Company may be executed in the name of and on behalf
of the Company by the Chairman, the Vice Chairman, the President or any Vice-
President and any such officer may, in the name of and on behalf of the Company,
take all such action as any such officer may deem advisable to vote in person or
by proxy at any meeting of security holders of any corporation in which the
Company may own securities and at any such meeting shall possess and may
exercise any and all rights and powers incident to the ownership of such
securities and which, as the owner thereof, the Company might have exercised and
possessed if present. The Board of Directors may, by resolution, from time to
time confer like powers upon any other person or persons.
ARTICLE IV
----------
Capital Stock
-------------
Section 4.01. Stock Certificates. Every holder of stock in the Company
------------ ------------------
shall be entitled to have a certificate signed by, or in the name of the Company
by, the Chairman, or Vice
12
<PAGE>
Chairman of the Board of Directors or the President or a Vice-President, and by
the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant
Secretary, of the Company, certifying the number of shares owned by him in the
Company. Where such certificate is signed (1) by a transfer agent other than the
Company or its employee, or (2) by a registrar other than the Company or its
employee, the signatures of the officers of the Company may be facsimiles. In
case any officer who has signed or whose facsimile signature has been placed
upon a certificate shall have ceased to be such officer before such certificate
is issued, it may be issued by the Company with the same effect as if he were
such officer at the date of issue.
Section 4.02. Transfers. Stock of the Company shall be transferable in
------------ ---------
the manner prescribed by the laws of the State of Delaware.
Section 4.03. Registered Holders. Prior to due presentment for
------------ ------------------
registration of transfer of any security of the Company in registered form, the
Company shall treat the registered owner as the person exclusively entitled to
vote, to receive notifications and to otherwise exercise all the rights and
powers of an owner, and shall not be bound to recognize any equitable or other
claim to, or interest in, any security, whether or not the Company shall have
notice thereof, except as otherwise provided by the laws of the State of
Delaware.
13
<PAGE>
Section 4.04. New Certificates. The Company shall issue a new certificate
------------ ----------------
of stock in the place of any certificate theretofore issued by it, alleged to
have been lost, stolen or destroyed, if the owner: (1) so requests before the
Company has notice that the shares of stock represented by that certificate have
been acquired by a bona fide purchaser; (2) files with the Company a bond
sufficient (in the judgment of the directors) to indemnify the Company against
any claim that may be made against it on account of the alleged loss or theft of
that certificate or the issuance of a new certificate; and (3) satisfies any
other requirements imposed by the directors that are reasonable under the
circumstances. A new certificate may be issued without requiring any bond when,
in the judgment of the directors, it is proper so to do.
ARTICLE V
---------
INDEMNIFICATION
---------------
Section 5.01. The Company shall indemnify its officers, directors,
------------
employees and agents to the fullest extent permitted by the General Corporation
Law of Delaware and the relevant provision in the Certificate of Incorporation
of the Corporation, if applicable.
ARTICLE VI
----------
Miscellaneous
-------------
Section 6.01. Offices. The registered office of the Company in the State
------------ -------
of Delaware shall be as stated in the Certificate of Incorporation or at such
other location to which the registered office shall be changed by action of the
board of directors The Company may also have offices at other places within
and/or without the State of Delaware.
14
<PAGE>
Section 6.02. Seal. The corporate seal shall have inscribed thereon the
------------ ----
name of the Company, the year of its incorporation and the words "Corporate Seal
Delaware."
Section 6.03. Checks. All checks or demands for money shall be signed by
------------ ------
such person or persons as the Board of Directors may from time to time
determine.
Section 6.04. Fiscal Year. The fiscal year shall begin the first day of
------------ -----------
January in each year and shall end on the thirty-first day of December of such
year.
Section 6.05. Waivers of Notice; Dispensing with Notice. Whenever any
------------ -----------------------------------------
notice whatever is required to be given under the provisions of the General
Corporation Law of the State of Delaware, of the Certificate of Incorporation of
the Corporation, or of these By-Laws, a waiver thereof in writing, signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent thereto. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
stockholders need be specified in any written waiver of notice.
Attendance of a person at a meeting of stockholders shall constitute a
waiver of notice of such meeting, except when the stockholder attends a meeting
for the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened.
Whenever any notice whatever is required to be given under the provisions
of the General Corporation Law of the State of Delaware, of the Certificate of
Incorporation of the Company, or of these By-Laws, to any person with whom
communication is made unlawful by any law of the United States of America, or by
any rule, regulation, proclamation or executive order issued
15
<PAGE>
under any such law, then the giving of such notice to such person shall not be
required and there shall be no duty to apply to any governmental authority or
agency for a license or permit to give such notice to such person; and any
action or meeting which shall be taken or held without notice to any such person
or without giving or without applying for a license or permit to give any such
notice to any such person with whom communication is made unlawful as aforesaid,
shall have the same force and effect as if such notice had been given as
provided under the provisions of the General Corporation Law of the State of
Delaware, or under the provisions of the Certificate of Incorporation of the
Company or of these By-Laws. In the event that the action taken by the Company
is such as to require the filing of a certificate under any of the other
sections of this title, the certificate shall state, if such is the fact and if
notice is required, that notice was given to all persons entitled to receive
notice except such persons with whom communication is unlawful.
Section 6.06. Loans to and Guarantees of Obligations of Employees and
------------ -------------------------------------------------------
Officers. The Company may lend money to or guaranty any obligation of, or
- --------
otherwise assist any officer or other employee of the Company or of a
subsidiary, including any officer or employee who is a director of the Company
or a subsidiary, whenever, in the judgment of the Board of Directors, such loan,
guaranty or assistance may reasonably be expected to benefit the Company. The
loan, guaranty or other assistance may be with or without interest, and may be
unsecured, or secured in such manner as the Board of Directors shall approve,
including, without limitation, a pledge of shares of stock of the Company.
Nothing in this Section contained shall be deemed to deny, limit or restrict the
powers of guaranty or warranty of the Company at common law or under any other
statute.
Section 6.07. Amendment of By-Laws. These By-Laws may be altered, amended
------------ --------------------
or repealed at any meeting of the Board of Directors.
16
<PAGE>
Section 6.08. Section Headings and Statutory References. The headings of
------------ -----------------------------------------
the Articles and Sections of these By-Laws, have been inserted for convenience
of reference only and shall not be deemed to be a part of these By-Laws.
17
<PAGE>
EXHIBIT 3.19
CERTIFICATE OF INCORPORATION
OF
LaSALLE NATIONAL SILICA CO.
I, the undersigned, in order to form a corporation for the purposes
hereinafter stated, under and pursuant to the provisions of the General
Corporation Law of the State of Delaware, being Title 8 Chapter 1 of the
Delaware Code (1974 Revision), and the Acts amendatory thereof and supplementary
thereto, do hereby certify as follows:
FIRST: The name of the corporation is LaSalle National Silica Co.,
-----
(hereinafter called the "Corporation").
SECOND: The location of the registered office of the Corporation in the
------
State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City
of Wilmington, County of New Castle. The name of its registered agent at that
address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
-----
activity for which corporations may be organized under the General Corporation
Law of Delaware.
FOURTH: The total number of shares of stock which the Corporation shall
------
have authority to issue is one hundred shares of common stock of the par value
of $10 per share.
FIFTH: The name and address of the incorporator is as follows:
-----
Name Address
---- -------
Charles V. Bush 1115 Fairfax Street
Berkeley Springs, WV 25411
<PAGE>
SIXTH: The powers of the incorporator shall terminate upon the filing of
-----
this Certificate of Incorporation. The names and addresses of the persons who
are to serve as directors of the Corporation until the first annual meeting of
stockholders or until their successors are elected and qualify are set forth
below in accordance with Section 102(a) (6) of the General Corporation Law of
Delaware:
Name Address
---- -------
Lawrence F. Bellotti Route 4
Ottawa, IL 61350
William F. Penfield 206 Forest Park Place, Ottawa, IL 61350
Walter R. Hoambrecker 104 Leland Lane, Ottawa, IL 61350
SEVENTH: In furtherance and not in limitation of the powers conferred
-------
by law, the Board of Directors of the Corporation is expressly authorized:
(a) To make, alter, amend or repeal the By-Laws of the Corporation.
(b) To direct and determine the use and disposition of net profits or net
assets in excess of capital; to set apart out of any of the funds of the
Corporation available for dividends a reserve or reserves for any proper
purpose; and to abolish any such reserve in the manner in which it was
created.
(c) To establish bonus, profit-sharing, stock option, retirement or other
types of incentive or compensation plans for the employees (including
officers and directors) of the Corporation and to fix the amount of the
profits to be distributed or shared and to determine the persons to
participate in any such plans and the amounts of their respective
participations.
(d) From time to time to determine whether and to what extent, and at
what time and places and under what conditions and regulations the accounts
and books of the Corporation (other than the stock ledger), or any of them,
shall be open to the inspection of the stockholders; and no stockholder
shall have any right to inspect any account or book or document of the
Corporation, except as conferred by statute or authorized by the Board of
Directors or by a resolution of the stockholders.
(e) To authorize, and cause to be executed, mortgages and liens upon the
real and personal property of the Corporation.
2
<PAGE>
EIGHTH: Meetings of stockholders may be held within or without the State
------
of Delaware, as the By-Laws may provide. The books of the Corporation may be
kept (subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the By-Laws of the Corporation.
NINTH: Whenever the vote of stockholders at a meeting thereof is
-----
required or permitted to be taken for or in connection with any corporate action
by any provision of the General Corporation Law of Delaware, the meeting and
vote of stockholders may be dispensed with if the holders of stock having not
less than the minimum percentage of the vote required by statute for the
proposed corporate action shall consent in writing to such corporate action
being taken, provided that prompt notice must be given to all stockholders of
the taking of such corporate action without a meeting and by less than unanimous
written consent.
TENTH: Stockholders may at any time, at a meeting expressly called for
-----
that purpose, remove any or all of the directors, with or without cause, by a
vote of the holders of a majority of the shares then entitled to vote at an
election of directors.
ELEVENTH: The Corporation reserves the right to amend, alter, change or
--------
repeal any provision contained in this Certificate of Incorporation in the
manner now or hereafter prescribed by law, and all rights and powers conferred
herein on stockholders and directors are subject to this reserved power.
3
<PAGE>
IN WITNESS WHEREOF, I have hereunto set my hand and seal the 20th day of
October, 1986.
/s/ Charles V. Bush (SEAL)
--------------------
4
<PAGE>
STATE OF WEST VIRGINIA )
: ss.:
COUNTY OF MORGAN )
On this 20th day of October, 1986, there personally came before me Charles
V. Bush, the person who executed the foregoing certificate, known to me
personally to be such, and he duly executed said certificate before me and
acknowledged that it was his act and deed and that the facts therein are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal of office the day
and year aforesaid.
/s/ Mary E. Phillips
--------------------
(Notary Seal)
5
<PAGE>
EXHIBIT 3.19.1
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
LaSalle National Silica Co., a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation, by unanimous
written consent, adopted a resolution proposing and declaring advisable the
following amendment to the Certificate of Incorporation of said corporation:
RESOLVED, that the Certificate of Incorporation of LaSALLE NATIONAL SILICA
CO. be amended by changing Article First thereof to read as follows:
"FIRST: The name of the Corporation is OTTAWA SILICA COMPANY thereinafter
called the "Corporation")".
SECOND: That in lieu of a meeting and vote of stockholders, the
stockholders have given unanimous written consent to said amendment in
accordance with the provisions of section 228 of the General Corporation Law of
the State of Delaware.
THIRD: That the aforesaid amendment was duly adopted in accordance
with the applicable provisions of sections 242 and 228 of the General
Corporation Law of the State of Delaware.
FOURTH: That this Certificate of Amendment of the Certificate of
Incorporation shall be effective on December 31, 1986.
<PAGE>
IN WITNESS WHEREOF, said LaSalle National Silica Co., has caused this
certificate to be signed by Lawrence F. Bellotti, its President, and attested by
Charles V. Bush, its Secretary, this 2nd day of December, 1986.
LaSALLE NATIONAL SILICA CO.
(Corporate Seal)
By /s/ L. F. Bellotti
------------------
President
ATTEST:
By /s/ Charles V. Bush
-------------------
Secretary
2
<PAGE>
STATE OF ILLINOIS )
: ss.:
COUNTY OF LaSALLE )
BE IT REMEMBERED that on this 2/nd/ day of December, 1986, personally came
before me, a Notary Public in and for the County and State aforesaid, Lawrence
P. Bellotti, President of LaSalle National Silica Co., a corporation of the
State of Delaware, the corporation described in and which executed the foregoing
certificate, known to me personally to be such, and he duly executed said
certificate before me and acknowledged the said certificate to be his act and
deed and the act and deed of said corporation, and that the facts stated therein
are true and that the seal affixed to said certificate and attested by the
Secretary of said corporation is the corporate seal of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and seal of office the day
and year aforesaid.
/s/
--------------------------------------
Notary Public
My Commission Expires: Mar. 26, 1990
------------------
3
<PAGE>
EXHIBIT 3.20
BY-LAWS
of
OTTAWA SILICA COMPANY
_____________________
(herein called the "Company")
ARTICLE I
---------
Stockholders
------------
Section 1.01. Annual Meeting. The Board of Directors by resolution shall
------------ --------------
designate the time, place and date (which shall be, in the case of the first
annual meeting, not more than 13 months after the organization of the Company
and, in the case of all other annual meetings, not more than 13 months after the
date of the last annual meeting) of the annual meeting of the stockholders for
the election of directors and the transaction of such other business as may come
before it.
Section 1.02. Special Meetings. Special meetings of the stockholders, for
------------ ----------------
any purpose or purposes, may be called at any time by the Chairman, the Vice-
Chairman, the President, any Vice-President, the Treasurer, the Secretary or the
Assistant Secretary, by resolution of the Board of Directors or upon written
request by the holders of one-third of the outstanding shares. Special meetings
of stockholders shall be held at such place, within or without the State of
Delaware, as shall be fixed by the person or persons calling the meeting and
stated in the notice or waiver of notice of the meeting.
<PAGE>
Section 1.03. Notice of Meetings of Stockholders. Whenever stockholders
------------ -----------------------------------
are required or permitted to take any action at a meeting, written notice of the
meeting shall be given (unless that notice shall be waived or unless the meeting
is to be dispensed with in accordance with the provisions of the General
Corporation Law of the State of Delaware and the Certificate of Incorporation of
the Company and Section 1.12 hereof) which shall state the place, date and hour
of the meeting and, in the case of a special meeting, the purpose or purposes
for which the meeting is called. The written notice of any meeting shall be
given, personally or by mail, not less than ten nor more than sixty days before
the date of the meeting to each stockholder entitled to vote at such meeting.
If mailed, such notice is given when deposited in the United States mail,
postage prepaid, directed to the stockholder at his address as it appears on the
records of the Company.
When a meeting is adjourned to another time or place, notice need not
be given of the adjourned meeting if the time and place thereof are announced at
the meeting at which the adjournment is taken. At the adjourned meeting the
Company may transact any business which might have been transacted at the
original meeting. If the adjournment is for more than thirty days, or if after
the adjournment a new record date is fixed for the adjourned meeting, a notice
of the adjourned meeting shall be given to each stockholder of record entitled
to vote at the meeting.
Section 1.04. Quorum. At all meetings of the stockholders, the holders of
------------ ------
one-third of the stock issued and outstanding and entitled to vote thereat,
present in person or by proxy, shall constitute a quorum for the transaction of
any business.
When a quorum is once present to organize a meeting, it is not broken by
the subsequent withdrawal of any stockholders.
2
<PAGE>
The stockholders present may adjourn the meeting despite the absence of a
quorum and at any such adjourned meeting at which the requisite amount of voting
stock shall be represented, the Company may transact any business which might
have been transacted at the original meeting had a quorum been there present.
Section 1.05. Method of Voting. The vote upon any question before the
------------ ----------------
meeting need not be by ballot. All elections and all other questions shall be
decided by a plurality of the votes cast, at a meeting at which a quorum is
present, except as expressly provided otherwise by the General Corporation Law
of the State of Delaware or the Certificate of Incorporation.
Section 1.06. Voting Rights of Stockholders and Proxies. Each stockholder
------------ -----------------------------------------
of record entitled to vote in accordance with the laws of the State of Delaware,
the Certificate of Incorporation or these By-Laws, shall at every meeting of the
stockholders be entitled to one vote in person or by proxy for each share of
stock entitled to vote standing in his name on the books of the Company, but no
proxy shall be voted on after three years from its date, unless the proxy
provides for a longer period.
Section 1.07. Ownership of its Own Stock. Shares of its own capital stock
------------ --------------------------
belonging to the Company or to another corporation, if a majority of the shares
entitled to vote in the election of directors of such other corporation is held,
directly or indirectly, by the Company, shall neither be entitled to vote nor be
counted for quorum purposes. Nothing in this section shall be construed as
limiting the right of any corporation to vote stock, including but not limited
to its own stock, held by it in a fiduciary capacity.
Section 1.08. Voting by Fiduciaries and Pledgors. Persons holding stock
------------ ----------------------------------
in a fiduciary capacity shall be entitled to vote the shares so held. Persons
whose stock is pledged shall be
3
<PAGE>
entitled to vote, unless in the transfer by the pledgor on the books of the
Company he has expressly empowered the pledgee to vote thereon, in which case
only the pledgee, or his proxy, may represent such stock and vote thereon.
Section 1.09. Fixing Date for Determination of Stockholders of Record. In
------------ -------------------------------------------------------
order to determine the stockholders entitled to notice of or to vote at any
meeting of stockholders or any adjournment thereof, or to express consent to
corporate action in writing without a meeting, or entitled to receive payment of
any dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock,
or for the purpose of any other lawful action, the Board of Directors may fix,
in advance, a record date, which shall not be more than sixty nor less than ten
days before the date of such meeting, nor more than sixty days prior to any
other action. If no record date is fixed by the Board of Directors, the record
date shall be determined in accordance with the provisions of the General
Corporation Law of the State of Delaware.
Section 1.10. List of Stockholders. The officer who has charge of the
------------ --------------------
stock ledger of the Company shall prepare and make, at least ten days before
every meeting of the stockholders, a complete list of the stockholders entitled
to vote at the meeting, arranged in alphabetical order, and showing the address
of each stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder, for
any purpose germane to the meeting, during ordinary business hours, for a period
of at least ten days prior to the meeting, either at a place within the city
where the meeting is to be held (which place shall be specified in the notice of
the meeting or, if not so specified, at the place where said meeting is to be
held), and the list shall be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any stockholder
who may be present. Upon the
4
<PAGE>
willful neglect or refusal of the directors to produce such a list at any
meeting for the election of directors, they shall be ineligible for election to
any office at such meeting.
Section 1.11. Stockholder's Right of Inspection. Stockholders of record,
------------ ---------------------------------
in person or by attorney or other agent, shall have the right, upon written
demand under oath stating the purpose thereof, during the usual hours for
business to inspect for any proper purpose the Company's stock ledger, a list of
its stockholders, and its other books and records, and to make copies or
extracts therefrom. A proper purpose shall mean a purpose reasonably related to
such person's interest as a stockholder. In every instance where an attorney or
other agent shall be the person who seeks the right to inspection, the demand
under oath shall be accompanied by a power of attorney or such other writing
which authorizes the attorney or other agent to so act on behalf of the
stockholder. The demand under oath shall be directed to the Company at its
registered office in this State or at its principal place of business.
The stock ledger shall be the only evidence as to who are the stockholders
entitled to examine the stock ledger, the list required by Section 1.10 or the
books of the Company, or to vote in person or by proxy at any meeting of the
stockholders.
Section 1.12. Consent in Lieu of Meeting. Any corporate action, with
------------ --------------------------
respect to which the vote of the stockholders at a meeting thereof is required
or permitted by any provision of the General Corporation Law of the State of
Delaware, the Certificate of Incorporation of the Company, or these By-Laws, may
be taken without that vote and meeting, and that vote and meeting may be
dispensed with, if that corporate action has been consented to in writing by the
holders of a majority (or, if with respect to a particular corporate action the
General Corporation Law of the State of Delaware, the Certificate of
Incorporation of the Company or these By-Laws
5
<PAGE>
specifies a greater percentage, by the holders of that percentage) of the stock
that would have been entitled to vote upon that action if a meeting were held.
Prompt notice shall be given to all stockholders of the taking of any corporate
action pursuant to the provisions of that paragraph unless that action has been
consented to in writing by the holders of all of the stock that would have been
entitled to vote upon that action if a meeting were held.
ARTICLE II
----------
Directors
---------
Section 2.01. Management of Business. The business of the Company shall
------------ ----------------------
be managed by its Board of Directors.
The Board of Directors, in addition to the powers and authority expressly
conferred upon it herein, by statute, by the Certificate of Incorporation of the
Company or otherwise, is hereby empowered to exercise all such powers as may be
exercised by the Company, except as expressly provided otherwise by the statutes
of the State of Delaware, by the Certificate of Incorporation of the Company or
by these By-Laws.
Without prejudice to the generality of the foregoing, the Board of
Directors, by resolution or resolutions, may create and issue, whether or not in
connection with the issue and sale of any shares of stock or other securities of
the Company, rights or options entitling the holders thereof to purchase from
the Company any shares of its capital stock of any class or classes or any other
securities of the Company, such rights or options to be evidenced by or in such
instrument or instruments as shall be approved by the Board of Directors. The
terms upon which, including the
6
<PAGE>
time or times, which may be limited or unlimited in duration, at or within
which, and the price or prices at which, any such rights or options may be
issued and any such shares or other securities may be purchased from the Company
upon the exercise of any such right or option shall be such as shall be fixed
and stated in the resolution or resolutions adopted by the Board of Directors
providing for the creation and issue of such rights or options, and, in every
case, set forth or incorporated by reference in the instrument or instruments
evidencing such rights or options. In the absence of actual fraud in the
transaction, the judgment of the directors as to the consideration for the
issuance of such rights or options and the sufficiency thereof shall be
conclusive. In case the shares of stock of the Company to be issued upon the
exercise of such rights or options shall be shares having a par value, the price
or prices so to be received therefor shall not be less than the par value
thereof. In case the shares of stock so to be issued shall be shares of stock
without par value, the consideration therefor shall be determined in the manner
provided in Section 153 of the General Corporation Law of the State of Delaware.
Section 2.02. Qualifications and Number of Directors. Directors need not
------------ --------------------------------------
be stockholders. The number of directors which shall constitute the whole Board
shall be not less than three nor more than eleven.
Section 2.03. Election and Term. The directors shall be elected at the
------------ -----------------
annual meeting of the stockholders, and each director shall be elected to hold
office until his successor shall be elected and qualified, or until his earlier
resignation or removal.
Section 2.04. Resignations. Any director of the Company may resign at any
------------ ------------
time by giving written notice to the Company. Such resignation shall take
effect at the time specified therein, if any, or if no time is specified
therein, then upon receipt of such notice by the
7
<PAGE>
Company; and, unless otherwise provided therein, the acceptance of such
resignation shall not be necessary to make it effective.
Section 2.05. Vacancies and Newly Created Directorships. Vacancies and
------------ -----------------------------------------
newly created directorships resulting from any increase in the authorized number
of directors may be filled by a majority of the directors then in office, though
less than a quorum, or by a sole remaining director, and the directors so chosen
shall hold office until their successors shall be elected and qualified, or
until their earlier resignation or removal. When one or more directors shall
resign from the Board, effective at a future date, a majority of the directors
then in office, including those who have so resigned, shall have power to fill
such vacancy or vacancies, the vote thereon to take effect when such resignation
or resignations shall become effective, and each director so chosen shall hold
office as herein provided in the filling of other vacancies.
Section 2.06. Quorum of Directors. At all meetings of the Board of
------------ -------------------
Directors, one-third of the entire Board shall constitute a quorum for the
transaction of business and the act of a majority of the directors present at
any meeting at which there is a quorum shall be the act of the Board of
Directors, except as provided in Sections 2.05 and 2.12 hereof.
A majority of the directors present, whether or not a quorum is present,
may adjourn any meeting of the directors to another time and place. Notice of
any adjournment need not be given if such time and place are announced at the
meeting.
Section 2.07. Annual Meeting. The newly elected Board of Directors shall
------------ --------------
meet immediately following the adjournment of the annual meeting of stockholders
in each year at the same place, within or without the State of Delaware, and no
notice of such meeting shall be necessary.
8
<PAGE>
Section 2.08. Regular Meetings. Regular meetings of the Board of
------------ ----------------
Directors may be held at such time and place, within or without the State of
Delaware, as shall from time to time be fixed by the Board and no notice thereof
shall be necessary.
Section 2.09. Special Meetings. Special meetings may be called at any
------------ ----------------
time by the President, the Secretary or by resolution of any two Directors.
Special meetings shall be held at such place, within or without the State of
Delaware, as shall be fixed by the person or persons calling the meeting and
stated in the notice or waiver of notice of the meeting.
Special meetings of the Board of Directors shall be held upon notice to the
directors or waiver thereof.
Unless waived, notice of each special meeting of the directors, stating the
time and place of the meeting, shall be given to each director by delivered
letter, by telegram or by personal communication either over the telephone or
otherwise, in each such case not later than the second day prior to the meeting,
or by mailed letter deposited in the United States mail with postage thereon
prepaid not later than the seventh day prior to the meeting. Notices of special
meetings of the Board of Directors and waivers thereof need not state the
purpose or purposes of the meeting.
Section 2.10. Action Without a Meeting. Any action required or permitted
------------ ------------------------
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting if all members of the Board or committee, as the
case may be, consent thereto in a writing or writings and the writing or
writings are filed with the minutes of proceedings of the Board or committee.
9
<PAGE>
Section 2.11. Compensation. Directors shall receive any such fixed sums
------------ ------------
and expenses of attendance for attendance at each meeting of the Board or of any
committee and/or any such salary as may be determined from time to time by the
Board of Directors; provided that nothing herein contained shall be construed to
preclude any director from serving the Company in any other capacity and
receiving compensation therefor.
Section 2.12. Executive Committee. The Board of Directors may, by
------------ -------------------
resolution or resolutions, passed by a majority of the whole Board, designate an
Executive Committee (and may discontinue the same at any time) to consist of
three or more of the directors of the Company. The members shall be appointed
by the Board and shall hold office at the pleasure of the Board. The Board may
designate one or more directors as alternate members of the Committee, who may
replace an absent or disqualified member at any meeting of the Committee. The
Executive Committee shall have and may exercise all the powers of the Board of
Directors (when the Board is not in session) in the management of the business
and affairs of the Company (and may authorize the seal of the Company to be
affixed to all papers which may require it), except that the Executive Committee
shall have no power (a) to elect directors; (b) to alter, amend or repeal these
By-Laws or any resolution or resolutions of the directors designating an
Executive Committee; (c) to declare any dividend or make any other distribution
to the stockholders of the Company; or (d) to appoint any member of the
Executive Committee. Regular meetings of the Executive Committee may be held at
such time and place, within or without the State of Delaware, as shall from time
to time be fixed by the Executive Committee and no notice thereof shall be
necessary. Special meetings may be called at any time by any officer of the
Company or any member of the Committee. Special meetings shall be held at such
place, within or without the State of Delaware, as shall be fixed by the person
calling the meeting
10
<PAGE>
and stated in the notice or waiver of the meeting. A majority of the members of
the Executive Committee shall constitute a quorum for the transaction of
business and the act of a majority present at which there is a quorum shall be
the act of the Executive Committee. Notice of each special meeting of the
Executive Committee shall be given (or waived) in the same manner as notice of a
directors' meeting.
ARTICLE III
-----------
Officers
--------
Section 3.01. Number. The officers of the Company shall be chosen by the
------------ ------
Board of Directors. The officers shall be a President and/or Chairman, a
Secretary and a Treasurer, and such number of Vice-Presidents, Assistant
Secretaries and Assistant Treasurers, and such other officers, if any, as the
Board may from time to time determine. The Board may choose such other agents
as it shall deem necessary. Any number of offices may be held by the same
person.
Section 3.02. Terms of Office. Each officer shall hold his office until
------------ ---------------
his successor is chosen and qualified or until his earlier resignation or
removal. Any officer may resign at any time upon written notice to the Company.
Section 3.03. Removal. Any officer may be removed from office at any time
------------ -------
by the Board of Directors with or without cause.
Section 3.04. Authority. The Secretary shall record all of the
------------ ---------
proceedings of the meetings of the stockholders and directors in a book to be
kept for that purpose, and shall have the authority, perform the duties and
exercise the powers in the management of the Company
11
<PAGE>
usually incident to the office held by him, and/or such other authority, duties
and powers as may be assigned to him from time to time by the Board of
Directors, the Chairman, the Vice-Chairman or the President. The other officers,
and agents, if any, shall have the authority, perform the duties and exercise
the powers in the management of the Company usually incident to the offices held
by them, respectively, and/or such other authority, duties and powers as may be
assigned to them from time to time by the Board of Directors or (except in the
case of the Chairman, the Vice-Chairman or the President) by the Chairman, the
Vice President or the President.
Section 3.05. Voting Securities Owned by the Company. Powers of attorney,
------------ --------------------------------------
proxies, waivers of notice of meeting, consents and other instruments relating
to securities owned by the Company may be executed in the name of and on behalf
of the Company by the Chairman, the Vice Chairman, the President or any Vice-
President and any such officer may, in the name of and on behalf of the Company,
take all such action as any such officer may deem advisable to vote in person or
by proxy at any meeting of security holders of any corporation in which the
Company may own securities and at any such meeting shall possess and may
exercise any and all rights and powers incident to the ownership of such
securities and which, as the owner thereof, the Company might have exercised and
possessed if present. The Board of Directors may, by resolution, from time to
time confer like powers upon any other person or persons.
ARTICLE IV
----------
Capital Stock
-------------
Section 4.01. Stock Certificates. Every holder of stock in the Company
------------ ------------------
shall be entitled to have a certificate signed by, or in the name of the Company
by, the Chairman, or Vice
12
<PAGE>
Chairman of the Board of Directors or the President or a Vice-President, and by
the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant
Secretary, of the Company, certifying the number of shares owned by him in the
Company. Where such certificate is signed (1) by a transfer agent other than the
Company or its employee, or (2) by a registrar other than the Company or its
employee, the signatures of the officers of the Company may be facsimiles. In
case any officer who has signed or whose facsimile signature has been placed
upon a certificate shall have ceased to be such officer before such certificate
is issued, it may be issued by the Company with the same effect as if he were
such officer at the date of issue.
Section 4.02. Transfers. Stock of the Company shall be transferable in
------------ ---------
the manner prescribed by the laws of the State of Delaware.
Section 4.03. Registered Holders. Prior to due presentment for
------------ ------------------
registration of transfer of any security of the Company in registered form, the
Company shall treat the registered owner as the person exclusively entitled to
vote, to receive notifications and to otherwise exercise all the rights and
powers of an owner, and shall not be bound to recognize any equitable or other
claim to, or interest in, any security, whether or not the Company shall have
notice thereof, except as otherwise provided by the laws of the State of
Delaware.
13
<PAGE>
Section 4.04. New Certificates. The Company shall issue a new certificate
------------ ----------------
of stock in the place of any certificate theretofore issued by it, alleged to
have been lost, stolen or destroyed, if the owner: (1) so requests before the
Company has notice that the shares of stock represented by that certificate have
been acquired by a bona fide purchaser; (2) files with the Company a bond
sufficient (in the judgment of the directors) to indemnify the Company against
any claim that may be made against it on account of the alleged loss or theft of
that certificate or the issuance of a new certificate; and (3) satisfies any
other requirements imposed by the directors that are reasonable under the
circumstances. A new certificate may be issued without requiring any bond when,
in the judgment of the directors, it is proper so to do.
ARTICLE V
---------
INDEMNIFICATION
---------------
Section 5.01. The Company shall indemnify its officers, directors,
------------
employees and agents to the fullest extent permitted by the General Corporation
Law of Delaware and the relevant provision in the Certificate of Incorporation
of the Corporation, if applicable.
ARTICLE VI
----------
Miscellaneous
-------------
Section 6.01. Offices. The registered office of the Company in the State
------------ -------
of Delaware shall be as stated in the Certificate of Incorporation or at such
other location to which the registered office shall be changed by action of the
board of directors The Company may also have offices at other places within
and/or without the State of Delaware.
14
<PAGE>
Section 6.02. Seal. The corporate seal shall have inscribed thereon the
------------ ----
name of the Company, the year of its incorporation and the words "Corporate Seal
Delaware."
Section 6.03. Checks. All checks or demands for money shall be signed by
------------ ------
such person or persons as the Board of Directors may from time to time
determine.
Section 6.04. Fiscal Year. The fiscal year shall begin the first day of
------------ -----------
January in each year and shall end on the thirty-first day of December of such
year.
Section 6.05. Waivers of Notice; Dispensing with Notice. Whenever any
------------ -----------------------------------------
notice whatever is required to be given under the provisions of the General
Corporation Law of the State of Delaware, of the Certificate of Incorporation of
the Corporation, or of these By-Laws, a waiver thereof in writing, signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent thereto. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
stockholders need be specified in any written waiver of notice.
Attendance of a person at a meeting of stockholders shall constitute a
waiver of notice of such meeting, except when the stockholder attends a meeting
for the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened.
Whenever any notice whatever is required to be given under the provisions
of the General Corporation Law of the State of Delaware, of the Certificate of
Incorporation of the Company, or of these By-Laws, to any person with whom
communication is made unlawful by any law of the United States of America, or by
any rule, regulation, proclamation or executive order issued
15
<PAGE>
under any such law, then the giving of such notice to such person shall not be
required and there shall be no duty to apply to any governmental authority or
agency for a license or permit to give such notice to such person; and any
action or meeting which shall be taken or held without notice to any such person
or without giving or without applying for a license or permit to give any such
notice to any such person with whom communication is made unlawful as aforesaid,
shall have the same force and effect as if such notice had been given as
provided under the provisions of the General Corporation Law of the State of
Delaware, or under the provisions of the Certificate of Incorporation of the
Company or of these By-Laws. In the event that the action taken by the Company
is such as to require the filing of a certificate under any of the other
sections of this title, the certificate shall state, if such is the fact and if
notice is required, that notice was given to all persons entitled to receive
notice except such persons with whom communication is unlawful.
Section 6.06. Loans to and Guarantees of Obligations of Employees and
------------ -------------------------------------------------------
Officers. The Company may lend money to or guaranty any obligation of, or
- --------
otherwise assist any officer or other employee of the Company or of a
subsidiary, including any officer or employee who is a director of the Company
or a subsidiary, whenever, in the judgment of the Board of Directors, such loan,
guaranty or assistance may reasonably be expected to benefit the Company. The
loan, guaranty or other assistance may be with or without interest, and may be
unsecured, or secured in such manner as the Board of Directors shall approve,
including, without limitation, a pledge of shares of stock of the Company.
Nothing in this Section contained shall be deemed to deny, limit or restrict the
powers of guaranty or warranty of the Company at common law or under any other
statute.
Section 6.07. Amendment of By-Laws. These By-Laws may be altered, amended
------------ --------------------
or repealed at any meeting of the Board of Directors.
16
<PAGE>
Section 6.08. Section Headings and Statutory References. The headings of
------------ -----------------------------------------
the Articles and Sections of these By-Laws, have been inserted for convenience
of reference only and shall not be deemed to be a part of these By-Laws.
17
<PAGE>
EXHIBIT 3.21
ARTICLES OF INCORPORATION
TO THE DEPARTMENT OF STATE;
COMMONWEALTH OF PENNSYLVANIA:
In compliance with the requirements of the "Business Corporation Law," (Act
No. 106), approved the 5th day of May, A. D. 1933, the undersigned, all of whom
are citizens of the United States, desiring that they may be incorporated as a
business corporation, do hereby certify:
1st. The name of the corporation is
THE FULTON LAND AND TIMBER COMPANY.
2nd. The location and post office address of its initial registered
office in this Commonwealth is 123 S. Broad St., c/o C T Corporation System,
Philadelphia, Philadelphia County.
3rd. The purpose or purposes of the corporation are:
To acquire and hold by purchase, lease or otherwise, and to use,
improve, manage, lease, mortgage or otherwise encumber and lands, tenements and
real property of every description and tenure, and dispose of same or any or all
thereof in any manner whatsoever; to engage in the general lumber, timber and
milling business.
4th. The term of its existence is perpetual.
5th. The authorized capital stock of the corporation is 50 shares of
the par value of $100.00 per share.
6th. The amount of paid in capital with which the corporation will
begin business is $500.00.
<PAGE>
7th. The names and addresses of the first directors and their terms
of office are:
NAME ADDRESS TERM OF OFFICE
---- ------- --------------
Frederick C. Elkins 248 W. Johnson Street, 1 year
Philadelphia, PA
Robert C. Willis, Jr. 26 South Street, 1 year
Baltimore, MD
Harold A. MacConney 4404 Chatham Road, 1 year
Baltimore, MD
8th. The names and addresses of the incorporators and the number and
class of shares subscribed by each are:
NO. AND CLASS
NAME ADDRESS OF SHARES
---- ------- --------------
F. Stanley Saurman Southampton, PA 1
Robert E. Boyd 100 Schoolhouse Lane, 1
Ardmore, PA
Thomas J. Cauley 933 Marlyn Road, 1
Philadelphia, PA
9th. In furtherance, and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, alter, amend
and repeal by-laws, subject to the power of the shareholders to change or repeal
such by-laws; and to set apart out of any of the funds of the corporation
available for dividends a reserve or reserves for any proper purpose or to
abolish any such reserve in the manner in which it was created.
The corporation may in its by-laws confer powers upon its Board of
Directors in addition to the foregoing, and in addition to the powers and
authorities expressly conferred upon it by statute, but not in conflict with the
laws of the Commonwealth of Pennsylvania.
2
<PAGE>
10th. The corporation reserves the right to amend, alter, change or
repeal any provision contained in these Articles of Incorporation, in the manner
now or hereafter prescribed by statute, and all rights conferred upon
shareholders herein are granted subject to this reservation.
F. STANLEY SAURMAN (SEAL)
------------------
ROBERT E. BOYD (SEAL)
------------------
THOMAS J. CAULEY (SEAL)
------------------
3
<PAGE>
COMMONWEALTH OF PENNSYLVANIA :
: ss.:
COUNTY OF PHILADELPHIA :
Before me, a Notary Public in and for the county aforesaid, personally came
the above named, F. Stanley Saurman, Robert E. Boyd, Thomas J. Cauley who, in
due form of law, acknowledged the foregoing instrument to be their act and deed
for the purposes therein specified.
Witness my hand and seal of office the 9th day of April, 1942.
EDNA H. GERDINE
------------------------------------
(SEAL) Notary Public
My Commission Expires March 6, 1945.
Approved and filed in the Department of State, this 13th day of April,
1942.
Charter Book No. 407, Page 555.
GENE D. SMITH
------------------------------------
Deputy Secretary of the Commonwealth
<PAGE>
COMMONWEALTH OF PENNSYLVANIA
DEPARTMENT OF STATE
--- 0000000---
TO ALL TO WHOM THESE PRESENTS SHALL COME, GREETING:
WHEREAS, In and by the Business Corporation Law (Act No. 106), approved the
5th day of May, Anno Domini, One Thousand Nine Hundred and Thirty-three, the
Department of State is authorized and required to issue a
CERTIFICATE OF INCORPORATION
evidencing the incorporation of a business corporation organized under the
provisions of that law.
AND WHEREAS, The stipulations and conditions of that law have been fully
complied with by the persons desiring to incorporate as
THE FULTON LAND AND TIMBER COMPANY.
THEREFORE, KNOW YE, That subject to the Constitution of this Commonwealth
and, under the authority of the Business Corporation Law, I do by these
presents, which I have caused to be sealed with the Great Seal of the
Commonwealth, create, erect, and incorporate the incorporators of and the
subscribers to the shares of the proposed corporation named above, their
associates and successors, and also those who may thereafter become subscribers
or holders of the shares of such corporation, into a body politic and corporate
in deed and in law by the name chosen and hereinbefore specified, which shall
exist PERPETUALLY and shall be invested with, and have and enjoy all the powers,
privileges, and franchises incident to a business corporation
<PAGE>
and be subject to all the duties, requirements, and restrictions specified and
enjoined in and by the Business Corporation Law and all other applicable laws of
this Commonwealth.
GIVEN under my Hand and the Great Seal of the
Commonwealth, at the City of Harrisburg, this 13th
day of April, in the year of our Lord One Thousand
(SEAL) Nine Hundred and Forty-two and of
the Commonwealth the one hundred and sixty-sixth.
GENE D. SMITH
----------------------------------------
Deputy Secretary of the Commonwealth
2
<PAGE>
EXHIBIT 3.22
AMENDED AND RESTATED
BY-LAWS
OF
FULTON LAND AND TIMBER COMPANY
________________
(a Pennsylvania Corporation)
ARTICLE I
OFFICES AND FISCAL YEAR
-----------------------
Section 1.01 Registered Office. The registered office of the corporation
-----------------
in the Commonwealth of Pennsylvania shall be as stated in the Articles of
Incorporation (the "articles") or at such other location to which the registered
office shall be changed by action of the board of directors.
Section 1.02 Other Offices. The corporation may also have offices at such
-------------
other places within or without the Commonwealth of Pennsylvania as the board of
directors may from time to time appoint or the business of the corporation may
require.
Section 1.03 Fiscal Year. The fiscal year of the corporation shall end on
-----------
the Saturday in December or January that is closest to December 31 in each year
unless otherwise fixed by the board of directors.
ARTICLE II
NOTICE--WAIVERS--MEETINGS GENERALLY
-----------------------------------
Section 2.01 Manner of Giving Notice. (a) General Rule. Whenever
----------------------- ------------
written notice is required to be given to any person under the provisions of the
Business Corporation Law or by the articles or these bylaws, it may be given to
the person either personally or by sending a copy thereof by first class or
express mail, postage prepaid, or by telegram (with messenger service
specified), telex or TWX (with answerback received) or courier service, charges
prepaid, or by facsimile transmission to the address (or to the telex, TWX,
facsimile or telephone number) of the person appearing on the books of the
corporation or, in the case of directors, supplied by the director to the
corporation for the purpose of notice. If the notice is sent by mail, telegraph
or courier service, it shall be deemed to have been given to the person entitled
thereto when deposited in the United States mail or with a telegraph office or
courier service for delivery to that person or, in the case of telex or TWX,
when dispatched or, in the case of facsimile transmission when received. A
notice of meeting shall specify the place, day and hour of the meeting and any
other information required by any other provision of the Business Corporation
Law, the articles or these bylaws.
(b) Adjourned Shareholder Meetings. When a meeting of shareholders is
------------------------------
adjourned, it shall not be necessary to give any notice of the adjourned meeting
or of the business
<PAGE>
to be transacted at an adjourned meeting, other than by announcement at the
meeting at which the adjournment is taken, unless the board fixes a new record
date for the adjourned meeting in which event notice shall be given in
accordance with Section 2.03.
Section 2.02 Notice of Meetings of Board of Directors. Notice of a
----------------------------------------
regular meeting of the board of directors need not be given. Notice of every
special meeting of the board of directors shall be given to each director by
telephone or in writing at least 24 hours (in the case of notice by telephone,
telex, TWX or facsimile transmission) or 48 hours (in the case of notice by
telegraph, courier service or express mail) or five days (in the case of notice
by first class mail) before the time at which the meeting is to be held. Every
such notice shall state the time and place of the meeting. Neither the business
to be transacted at, nor the purpose of, any regular or special meeting of the
board need be specified in a notice of the meeting.
Section 2.03 Notice of Meetings of Shareholders. (a) General Rule.
---------------------------------- ------------
Written notice of every meeting of the shareholders shall be given by, or at the
direction of, the secretary or other authorized person to each shareholder of
record entitled to vote at the meeting at least (1) ten days prior to the day
named for a meeting (and, in case of a meeting called to consider a merger,
consolidation, share exchange or division, to each shareholder of record not
entitled to vote at the meeting) called to consider a fundamental change under
15 Pa.C.S. Chapter 19 or (2) five days prior to the day named for the meeting in
any other case. If the secretary neglects or refuses to give notice of a
meeting, the person or persons calling the meeting may do so. In the case of a
special meeting of shareholders, the notice shall specify the general nature of
the business to be transacted.
(b) Notice of Action by Shareholders an Bylaws. In the case of a
------------------------------------------
meeting of shareholders that has as one of its purposes action on the bylaws,
written notice shall be given to each shareholder that the purpose, or one of
the purposes, of the meeting is to consider the adoption, amendment or repeal of
the bylaws. There shall be included in, or enclosed with, the notice a copy of
the proposed amendment or a summary of the changes to be effected thereby.
Section 2.04 Waiver of Notice. (a) Written Waiver. Whenever any written
---------------- --------------
notice is required to be given under the provisions of the Business Corporation
Law, the articles or these by-laws, a waiver thereof in writing, signed by the
person or persons entitled to the notice, whether before or after the time
stated therein, shall be deemed equivalent to the giving of the notice. Except
as provided in the next sentence, neither the business to be transacted at, nor
the purpose of, a meeting need be specified in the waiver of notice of the
meeting. In the case of a special meeting of shareholders, the waiver of notice
shall specify the general nature of the business to be transacted at such
meeting.
(b) Waiver by Attendance. Attendance of a person at any meeting
--------------------
shall constitute a waiver of notice of the meeting except where a person attends
a meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting was not lawfully called
or convened.
Section 2.05 Modification of Proposal Contained in Notice. Whenever the
--------------------------------------------
language of a proposed resolution is included in a written notice of a meeting
required to be given under the provisions of the Business Corporation Law or the
articles or these bylaws, the meeting
2
<PAGE>
considering the resolution may without further notice adopt it with such
clarifying or other amendments as do not enlarge its original purpose.
Section 2.06 Exception to Requirement of Notice. (a) General Rule.
---------------------------------- ------------
Whenever any notice or communication is required to be given to any person under
the provisions of the Business Corporation Law or by the articles or these
bylaws or by the terms of any agreement or other instrument or as a condition
precedent to taking any corporate action and communication with that person is
then unlawful, the giving of the notice or communication to that person shall
not be required.
(b) Shareholders Without Forwarding Addresses. Notice or other
-----------------------------------------
communications need not be sent to any shareholder with whom the corporation has
been unable to communicate for more than 24 consecutive months because
communications to the shareholder are returned unclaimed or the shareholder has
otherwise failed to provide the corporation with a current address. Whenever the
shareholder provides the corporation with a current address, the corporation
shall commence sending notices and other communications to the shareholder in
the same manner as to other shareholders.
Section 2.07 Use of Conference Telephone and Similar Equipment. Any
-------------------------------------------------
director may participate in any meeting of the board of directors, and the board
of directors may provide by resolution with respect to a specific meeting or
with respect to a class of meetings that one or more persons may participate in
a meeting of the shareholders of the corporation by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other. Participation in a meeting
pursuant to this section shall constitute presence in person at the meeting.
ARTICLE III
SHAREHOLDERS
------------
Section 3.01 Place of Meeting. All meetings of the shareholders of the
----------------
corporation shall be held at the registered office of the corporation or such
other place as may be designated by the board of directors in the notice of a
meeting.
Section 3.02 Annual Meeting. The board of directors may fix and designate
--------------
the date and time of the annual meeting of the shareholders, but if no such date
and time is fixed and designated by the board, the meeting for any calendar year
shall be held on the second Monday of May in such year, if not a legal holiday
under the laws of Pennsylvania, and, if a legal holiday, then on the next
succeeding business day, not a Saturday, at 10:00 o'clock A.M., and at said
meeting the shareholders then entitled to vote shall elect directors and shall
transact such other business as may properly be brought before the meeting. If
the annual meeting shall not have been called and held within six months after
the designated time, any shareholder may call the meeting at any time
thereafter.
Section 3.03 Special Meetings. (a) Call of Special Meetings. Special
---------------- ------------------------
meetings of the shareholders may be called at any time:
3
<PAGE>
(1) by the chairman of the board;
(2) by the board of directors; or
(3) unless otherwise provided in the articles, by shareholders
entitled to cast at least 20% of the votes that all shareholders are
entitled to cast at the particular meeting.
(b) Fixing of Time for Meeting. At any time, upon written request,
--------------------------
of any person who has called a special meeting, it shall be the duty of the
secretary to fix the time of the meeting which shall be held not more than 60
days after the receipt of the request. If the secretary neglects or refuses to
fix the time of the meeting, the person or persons calling the meeting may do
so.
Section 3.04 Quorum and Adjournment. (a) General Rule. A meeting of
---------------------- ------------
shareholders of the corporation duly called shall not be organized for the
transaction of business unless a quorum is present. The presence of shareholders
entitled to cast at least a majority of the votes that all shareholders are
entitled to cast on a particular matter to be acted, upon at the meeting shall
constitute a quorum, for the purposes of consideration and action on the matter.
Shares of the corporation owned, directly or indirectly, by it and controlled,
directly or indirectly, by the board of directors of this corporation, as such,
shall not be counted in determining the total number of outstanding shares for
quorum purposes at any given time.
(b) Withdrawal of a Quorum. The shareholders present at a duly
----------------------
organized meeting can continue to do business until adjournment notwithstanding
the withdrawal of enough shareholders to leave less than a quorum.
(c) Adjournments Generally. Any regular or special meeting of the
----------------------
shareholders, including one at which directors are to be elected and one which
cannot be organized because a quorum has not attended may be adjourned for such
period and to such place as the shareholders present and entitled to vote shall
direct.
(d) Electing Directors at Adjourned Meeting. Those shareholders
---------------------------------------
entitled to vote who attend a meeting called for the election of directors that
has been previously adjourned for lack of a quorum, although less than a quorum
as fixed in this section, shall nevertheless constitute a quorum for the purpose
of electing directors.
(e) Other Action in Absence of Quorum. Those shareholders entitled
---------------------------------
to vote who attend a meeting of shareholders that has been previously adjourned
for one or more periods aggregating at least 15 days because of an absence of a
quorum, although less than a quorum as fixed in this section, shall nevertheless
constitute a quorum for the purpose of acting upon any matter set forth in the
notice of the meeting if the notice states that those shareholders who attend
the adjourned meeting shall nevertheless constitute a quorum for the purpose of
acting upon the matter.
Section 3.05 Action by Shareholders. Except as otherwise provided in the
----------------------
Business Corporation Law or the articles or these bylaws, whenever any corporate
action is to be taken by vote of the shareholders of the corporation, it shall
be authorized by a majority of the votes cast at a duly organized meeting of
shareholders by the holders of shares entitled to vote thereon.
4
<PAGE>
Section 3.06 Organization. At every meeting of the shareholders, the
------------
chairman of the board, if there be one, or, in the case of vacancy in office or
absence of the chairman of the board, one of the following persons present in
the order stated: the president, the vice presidents in their order of rank and
seniority, or a person chosen by vote of the shareholders present, shall act as
chairman of the meeting. The secretary or, in the absence of the secretary, an
assistant secretary, or, in the absence of both the secretary and assistant
secretaries, a person appointed by the chairman of the meeting, shall act as
secretary of the meeting.
Section 3.07 Voting Rights of Shareholders. Unless otherwise provided in
-----------------------------
the articles, every shareholder of the corporation shall be entitled to one vote
for every share standing in the name of the shareholder on the books of the
corporation.
Section 3.08 Voting and Other Action by Proxy. (a) General Rule. (1)
-------------------------------- ------------
Every shareholder entitled to vote at a meeting of shareholders or to express
consent or dissent to corporate action in writing without a meeting may
authorize another person to act for the shareholder by proxy.
(2) The presence of, or vote or other action at a meeting of
shareholders, or the expression of consent or dissent to corporate action
in writing, by a proxy of a shareholder shall constitute the presence of,
or vote or action by, or written consent or dissent of, the shareholder.
(3) Where two or more proxies of a shareholder are present, the
corporation shall, unless otherwise expressly provided in the proxy, accept
as the vote of all shares represented thereby the vote cast by a majority
of them and, if a majority of the proxies cannot agree whether the shares
represented shall be voted or upon the manner of voting the shares, the
voting of the shares shall be divided equally among those persons.
(b) Minimum Requirements. Every proxy shall be executed in writing
--------------------
by the shareholder or by the duly authorized attorney-in-fact of the shareholder
and filed with the secretary of the corporation. A proxy, unless coupled with an
interest, shall be revocable at will, notwithstanding any other agreement or any
provision in the proxy to the contrary, but the revocation of a proxy shall not
be effective until written notice thereof has been given to the secretary of the
corporation. An unrevoked proxy shall not be valid after three years from the
date of its execution unless a longer time is expressly provided therein. A
proxy shall not be revoked by the death or incapacity of the maker unless,
before the vote is counted or the authority is exercised, written notice of the
death or incapacity is given to the secretary of the corporation.
(c) Expenses. The corporation shall pay the reasonable expenses of
--------
solicitation of votes, proxies or consents of shareholders by or on behalf of
the board of directors or its nominees for election to the board, including
solicitation by professional proxy solicitors and otherwise.
Section 3.09 Voting by Fiduciaries and Pledgees. Shares of the
----------------------------------
corporation standing in the name of a trustee or other fiduciary and shares held
by an assignee for the benefit of creditors or by a receiver may be voted by the
trustee, fiduciary, assignee or receiver. A
5
<PAGE>
shareholder whose shares are pledged shall be entitled to vote the shares until
the shares have been transferred into the name of the pledgee, or a nominee of
the pledgee, but nothing in this section shall affect the validity of a proxy
given to a pledgee or nominee.
Section 3.10 Voting by Joint Holders of Shares. (a) General Rule. Where
--------------------------------- ------------
shares of the corporation are held jointly or as tenants in common by two or
more persons, as fiduciaries or otherwise:
(1) if only one or more of such persons is present in person or
by proxy, all of the shares standing in the names of such persons shall be
deemed to be represented for the purpose of determining a quorum and the
corporation shall accept as the vote of all the shares the vote cast by a
joint owner or a majority of them; and
(2) if the persons are equally divided upon whether the shares
held by them shall be voted or upon the manner of voting the shares, the
voting of the shares shall be divided equally among the persons without
prejudice to the rights of the joint owners or the beneficial owners
thereof among themselves.
(b) Exception. If there has been filed with the secretary of the
---------
corporation a copy, certified by an attorney at law to be correct, of the
relevant portions of the agreement under which the shares are held or the
instrument by which the trust or estate was created or the order of court
appointing them or of an order of court directing the voting of the shares, the
persons specified as having such voting power in the document latest in date of
operative effect so filed, and only these persons, shall be entitled to vote the
shares but only in accordance therewith.
Section 3.11 Voting by Corporations. (a) Voting by Corporate Shareholders.
---------------------- --------------------------------
Any corporation that is a shareholder of this corporation may vote at meetings
of shareholders of this corporation, or consent or dissent to corporate action
in writing, by any of its officers or agents, or by proxy appointed by any
officer or agent, unless some other person, by resolution of the board of
directors of the other corporation or a provision of its articles or bylaws, a
copy of which resolution or provision certified to be correct by one of its
officers has been filed with the secretary of this corporation, is appointed its
general or special proxy in which case that person shall be entitled to vote the
shares.
(b) Controlled Shares. Shares of this corporation owned, directly or
-----------------
indirectly, by it and controlled, directly or indirectly, by the board of
directors of this corporation, as such, shall not be voted at any meeting and
shall not be counted in determining the total number of outstanding shares for
voting purposes at any given time.
Section 3.12 Determination of Shareholders of Record. (a) Fixing Record
--------------------------------------- -------------
Date. The board of directors may fix a time prior to the date of any meeting of
- ----
shareholders as a record date for the determination of the shareholders entitled
to notice of, or to vote at, the meeting, which time, except in the case of an
adjourned meeting, shall be not more than 90 days prior to the date of the
meeting of shareholders. Only shareholders of record an the date fixed shall be
so entitled notwithstanding any transfer of shares on the books of the
corporation after any record date fixed as provided in this subsection. The
board of directors may similarly fix a record date for the determination of
shareholders of record for any other purpose. When a determination of
6
<PAGE>
shareholders of record has been made as provided in this section for purposes of
a meeting, the determination shall apply to any adjournment thereof unless the
board fixes a new record date for the adjourned meeting.
(b) Determination When a Record Date is Not Fixed. If a record date
---------------------------------------------
is not fixed:
(1) The record date for determining shareholders entitled to
notice of or to vote at a meeting of shareholders shall be at the close of
business on the day next preceding the day an which notice is given or, if
notice is waived, at the close of business an the day immediately preceding
the day on which the meeting is held.
(2) The record date for determining shareholders entitled to
express consent or dissent to corporate action in writing without a
meeting, when prior action by the board of directors is not necessary,
shall be the close of business on the day on which the first written
consent or dissent is filed with the secretary of the corporation.
(3) The record date for determining shareholders for any other
purpose shall be at the close of business on the day on which the board of
directors adopts the resolution relating thereto.
(c) Certification by Nominee. The board of directors may adopt a
------------------------
procedure whereby a shareholder of the corporation may certify in writing to the
corporation that all or a portion of the shares registered in the name of the
shareholder are held for the account of a specified person or persons.. Upon
receipt by the corporation of a certification complying with the procedure the
persons specified in the certification shall be deemed, for the purposes set
forth in the certification, to be the holders of record of the number of shares
specified in place of the shareholder making the certification.
Section 3.13 Voting Lists. (a) General Rule. The officer or agent having
------------ ------------
charge of the transfer books for shares of the corporation shall make a complete
list of the shareholders entitled to vote at any meeting of shareholders,
arranged in alphabetical order, with the address of and the number of shares
held by each. The list shall be produced and kept open at the time and place of
the meeting and shall be subject to the inspection of any shareholder during the
whole time of the meeting for the purposes thereof.
(b) Effect of List. Failure to comply with the requirements of this
--------------
section shall not affect the validity of any action taken at a meeting prior to
a demand at the meeting by any shareholder entitled to vote thereat to examine
the list. The original share register or transfer book, or a duplicate thereof
kept in the Commonwealth of Pennsylvania, shall be prima facie evidence as to
who are the shareholders entitled to examine the list or share register or
transfer book or to vote at any meeting of shareholders.
Section 3.14 Judges of Election. (a) Appointment. In advance of any
------------------ -----------
meeting of shareholders of the corporation, the board of directors may appoint
judges of election, who need not be shareholders, to act at the meeting or any
adjournment thereof. If judges of election are not so appointed, the presiding
officer of the meeting may, and on the request of any shareholder
7
<PAGE>
shall, appoint judges of election at the meeting. The number of judges shall be
one or three. A person who is a candidate for an office to be filled at the
meeting shall not act as a judge.
(b) Vacancies. In case any person appointed as a judge fails to
---------
appear or fails or refuses to act, the vacancy may be filled by appointment made
by the board of directors in advance of the convening of the meeting or at the
meeting by the presiding officer thereof.
(c) Duties. The judges of election shall determine the number of
------
shares outstanding and the voting power of each, the shares represented at the
meeting, the existence of a quorum, and the authenticity, validity and effect of
proxies, receive votes or ballots, hear and determine all challenges and
questions in any way arising in connection with nominations by shareholders or
the right to vote, count and tabulate all votes, determine the result and do
such acts as may be proper to conduct the election or vote with fairness to all
shareholders. The judges of election shall perform their duties impartially, in
good faith, to the best of their ability and as expeditiously as is practical.
if there are three judges of election, the decision, act or certificate of a
majority shall be effective in all respects as the decision, act or certificate
of all.
(d) Report. On request of the presiding officer of the meeting or of
------
any shareholder, the judges shall make a report in writing of any challenge or
question or matter determined by them, and execute a certificate of any fact
found by them. Any report or certificate made by them shall be prima facie
evidence of the facts stated therein.
Section 3.15 Consent of Shareholders in Lieu of Meeting. (a) Unanimous
------------------------------------------ ---------
Written Consent. Any action require or permitted to be taken at a meeting of the
- ---------------
shareholders or of a class of shareholders may be taken without a meeting if,
prior or subsequent to the action, a consent or consents thereto by all of the
shareholders who would be entitled to vote at a meeting for such purpose shall
be filed with the secretary of the corporation.
(b) Partial Written Consent. Any action required or permitted to be
-----------------------
taken at a meeting of the shareholders or of a class of shareholders may be
taken without a meeting upon the written consent of shareholders who would have
been entitled to cast the minimum number of votes that would be necessary to
authorize the action at a meeting at which all shareholders entitled to vote
thereon were present and voting. The consents shall be filed with the secretary
of the corporation. The action shall not become effective until after at least
ten days' written notice of the action has been given to each shareholder
entitled to vote thereon who has not consented thereto.
Section 3.16 Minors as Securityholders. The corporation may treat a minor
-------------------------
who holds shares or obligations of the corporation as having capacity to receive
and to empower others to receive dividends, interest, principal and other
payments or distributions, to vote or express consent or dissent, and to make
elections and exercise rights relating to such shares or obligations unless, in
the case of payments or distributions on shares, the corporate officer
responsible for maintaining the list of shareholders or the transfer agent of
the corporation or, in the case of payments or distributions on obligations, the
treasurer or paying officer or agent has received written notice that the holder
is a minor.
8
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ARTICLE IV
BOARD OF DIRECTORS
------------------
Section 4.01 Powers; Personal Liability. (a) General Rule. Unless
-------------------------- ------------
otherwise provided by statute, all powers vested by law in the corporation shall
be exercised by or under the authority of, and the business and affairs of the
corporation shall be managed under the direction of, the board of directors.
(b) Personal Liability of Directors. (1) A director shall not be
-------------------------------
personally liable, as such, for monetary damages for any action taken, or
any failure to take any action, unless:
(i) the director has breached or failed to perform the
duties of his or her office under Section 1721 of the Business
Corporation Law (or any successor provision); and
(ii) the breach or failure to perform constitutes self
dealing, willful misconduct or recklessness.
(2) The provisions of paragraph (1) shall not apply to the
responsibility or liability of a director pursuant to any criminal statute,
or the liability of a director for the payment of taxes pursuant to local,
state or federal law.
(c) Notation of Dissent. A director who is present at a meeting of
-------------------
the board of directors, or of a committee of the board, at which action on any
corporate matter is taken shall be presumed to have assented to the action taken
unless his or her dissent is entered in the minutes of the meeting or unless the
director files a written dissent to the action with the secretary of the meeting
before the adjournment thereof or transmits the dissent in writing to the
secretary of the corporation immediately after the adjournment of the meeting.
The right to dissent shall not apply to a director who voted in favor of the
action. Nothing in this section shall bar a director from asserting that minutes
of the meeting incorrectly omitted his or her dissent if, promptly upon receipt
of a copy of such minutes, the director notifies the secretary, in writing, of
the asserted omission or inaccuracy.
Section 4.02 Qualifications and Selection of Directors. (a)
-----------------------------------------
Qualifications. Each director of the corporation shall be a natural person of
- --------------
full age who need not be a resident of the Commonwealth of Pennsylvania or a
shareholder of the corporation.
(b) Power to Select Directors. Except as otherwise provided in these
-------------------------
bylaws, directors of the corporation shall be elected by the shareholders.
(c) Nomination of Candidates. Upon the demand of any shareholder at
------------------------
any meeting of shareholders for the election of directors the chairman of the
meeting shall call for and shall afford a reasonable opportunity for the making
of nominations for the office of director. If the board of directors is
classified with respect to the power to elect directors or with respect to the
terms of directors and if, due to a vacancy or vacancies, or otherwise,
directors of than one class are to be elected, each class of directors to be
elected at the meeting shall be nominated and
9
<PAGE>
elected separately. Any shareholder may nominate as many persons for the office
of director as there are positions to be filled. If nominations for the office
of director have been called for as provided in this section only candidates who
have been so nominated shall be eligible for election.
(d) Election of Directors. In elections for directors, voting need
---------------------
not be by ballot, except upon demand made by a shareholder entitled to vote at
the election and before the voting begins. The candidates receiving the highest
number of votes from each class or group of classes, if any, entitled to elect
directors separately up to the number of directors to be elected by the class or
group of classes shall be elected. If at any meeting of shareholders, directors
of more than one class are to be elected, each class of directors shall be
elected in a separate election.
(e) Cumulative Voting. Unless the articles provide for straight
-----------------
voting, in each election of directors every shareholder entitled to vote shall
have the right to multiply the number of votes to which the shareholder may be
entitled by the total number of directors to be elected in the same election by
the holders of the class or classes of shares of which his or her shares are a
part and the shareholder may cast the whole number of his or her votes for one
candidate or may distribute them among too or more candidates. If cumulative
voting is applicable to the election, the chairman of the meeting may, and upon
the request of any shareholder shall, instruct the judges of election that, if a
ballot cast in the election of directors so directs, the judges shall cumulate
the total votes cast by such ballot in such manner as may be required in order
to elect the maximum number of nominees for which such ballot casts votes in the
order of priority specified in such ballot, taking into account the total votes
cast in the election of directors by each other ballot.
Section 4.03 Number and Term of Office. (a) Number. The board of
------------------------- ------
directors shall consist of such number of directors, not less than three nor
more than eleven.
(b) Term of Office. Each director shall hold office until his
--------------
successor shall have been elected and qualified or until his or her earlier
death, resignation or removal. A decrease in the number of directors shall not
have the effect of shortening the term of any incumbent director.
(c) Resignation. Any director may resign at any time upon written
-----------
notice to the corporation. The resignation shall be effective upon receipt
thereof by the corporation or at such subsequent time as shall be specified in
the notice of resignation.
Section 4.04 Vacancies. (a) General Rule. Vacancies in the board of
--------- ------------
directors, including vacancies resulting from an increase in the number of
directors, may be filled by a majority vote of the remaining members of the
board though less than a quorum, or by a sole remaining director, and each
person so selected shall be a director to serve until the next selection of the
class for which such director has been chosen, and until a successor has been
selected and qualified or until his or her earlier death, resignation or
removal.
(b) Action by Resigned Directors. When one or more directors resign
----------------------------
from the board effective at a future date, the directors then in office,
including those who have so
10
<PAGE>
resigned, shall have power by the applicable vote to fill the vacancies, the
vote thereon to take effect when the resignations become effective.
Section 4.05 Removal of Directors. (a) Removal by the Shareholders. The
-------------------- ---------------------------
entire board of directors, or any class of the board, or any individual director
may be removed from office by vote of the shareholders entitled to vote thereon
without assigning any cause. In case the board or a class of the board or any
one or more directors are so removed, new directors may be elected at the same
meeting.
(b) Removal by the Board. The board of directors may declare vacant
--------------------
the office of a director who has been judicially declared of unsound mind or who
has been convicted of an offense punishable by imprisonment for a term of more
than one year or if, within 60 days after notice of his or her selection, the
director does not accept the office either in writing or by attending a meeting
of the board of directors.
Section 4.06 Place of Meetings. Meetings of the board of directors may be
-----------------
held at such place within or without the Commonwealth of Pennsylvania as the
board of directors may from time to time appoint or as may be designated in the
notice of the meeting.
Section 4.07 Organization of Meetings. At every meeting of the board of
------------------------
directors, the chairman of the board, if there be one, or, in the case of a
vacancy in the office or absence of the chairman of the board, one of the
following officers present in the order stated: the president, the vice
presidents in their order of rank and seniority, or a person chosen by a
majority of the directors present, shall act as chairman of the meeting. The
secretary or, in the absence of the secretary, an assistant secretary, or, in
the absence of the secretary and the assistant secretaries, any person appointed
by the chairman of the meeting, shall act as secretary of the meeting.
Section 4.08 Regular Meetings. Regular meetings of the board of directors
----------------
shall be held at such time and place as shall be designated from time to time by
resolution of the board of directors.
Section 4.09 Special Meetings. Special meetings of the board of directors
----------------
shall be held whenever called by the chairman or by two or more of the
directors.
Section 4.10 Quorum of and Action by Directors. (a) General Rule. A
--------------------------------- ------------
majority of the directors in office of the corporation shall be necessary to
constitute a quorum for the transaction of business and the acts of a majority
of the directors present and voting at a meeting at which a quorum is present
shall be the acts of the board of directors.
(b) Action by Written Consent. Any action required or permitted to
-------------------------
be taken at a meeting of the directors may be taken without a meeting if, prior
or subsequent to the action, a consent or consents thereto by all of the
directors in office is filed with the secretary of the corporation.
Section 4.11 Executive and Other Committees. (a) Establishment and Powers.
------------------------------ ------------------------
The board of directors may, by resolution adopted by a majority of the directors
in office, establish one or more committees to consist of one or more directors
of the corporation. Any committee, to the extent provided in the resolution of
the board of directors, shall have and may exercise all
11
<PAGE>
of the powers and authority of the board of directors except that a committee
shall not have any power or authority as to the following:
(1) The submission to shareholders of any action requiring
approval of shareholders under the Business corporation Law.
(2) The creation or filling of vacancies in the board of
directors.
(3) The adoption, amendment or repeal of these bylaws.
(4) The amendment or repeal of any resolution of the board that
by its terms is amendable or repealable only by the board.
(5) Action on matters committed by a resolution of the board of
directors to another committee of the board.
(b) Alternate Committee Members. The board may designate one or more
---------------------------
directors as alternate members of any committee who may replace any absent or
disqualified member at any meeting of the committee or for the purposes of any
written action by the committee. In the absence or disqualification of a member
and alternate member or members of a committee the member or members thereof
present at any meeting and not disqualified from voting, whether or not
constituting a quorum, may unanimously appoint another director to act at the
meeting in the place of the absent or disqualified member.
(c) Term. Each committee of the board shall serve at the pleasure of
----
the board.
(d) Committee Procedures. The term "board of directors" or "board,"
--------------------
when used in any provision of these bylaws relating to the organization or
procedures of or the manner of taking action by the board of directors, shall be
construed to include and refer to any executive or other committee of the board.
Section 4.12 Compensation. The board of directors shall have the authority
------------
to fix the compensation of directors for their services as directors and a
director may be a salaried officer of the corporation.
ARTICLE V
OFFICERS
--------
Section 5.01 Officers Generally. (a) Number, Qualifications and
------------------ --------------------------
Designation. The officers of the corporation shall be a chairman of the board, a
- -----------
president, one or more vice presidents, a secretary, a treasurer, and such other
officers as may be elected in accordance with the provisions of Section 5.03.
Officers may but need not be directors or shareholders of the corporation. The
president and secretary shall be natural persons of full age. The treasurer may
be a corporation, but if a natural person shall be of full age. Any number of
offices may be held by the same person.
12
<PAGE>
(b) Bonding. The corporation may secure the fidelity of any or all of
-------
its officers by bond or otherwise.
(c) Standard of Care. Except as otherwise provided in the articles,
----------------
an officer shall perform his or her duties as an officer in good faith, in a
manner he or she reasonably believes to be in the best interests of the
corporation and with such care, including reasonable inquiry, skill and
diligence, as a person of ordinary prudence would use under similar
circumstances. A person who so perform his or her duties shall not be liable by
reason of having been an officer of the corporation.
Section 5.02 Election, Term of Office and Resignations. (a) Election and
----------------------------------------- ------------
Term of Office. The officers of the corporation, except those elected by
- --------------
delegated authority pursuant to Section 5.03, shall be elected annually by the
board of directors, and each such officer shall hold office for a term of one
year and until a successor has been selected and qualified or until his or her
earlier death, resignation or removal.
(b) Resignations. Any officer may resign at any time upon written
------------
notice to the corporation. The resignation shall be effective upon receipt
thereof by the corporation or at such subsequent time as may be specified in the
notice of resignation.
Section 5.03 Subordinate Officers, Committees and Agents. The board of
-------------------------------------------
directors may from time to time elect such other officers and appoint such
committees, employees or other agents as the business of the corporation may
require, including one or more assistant secretaries, and one or more assistant
treasurers, each of whom shall hold office for such periods have such authority,
and perform such duties as are provided in these bylaws, or as the board of
directors may from time to time determine. The board of directors may delegate
to any officer or committee the power to elect subordinate officers and to
retain or appoint employees or other agents, or committees thereof, and to
prescribe the authority and duties of such subordinate officers, committees,
employees or other agents.
Section 5.04 Removal of Officers and Agents. Any officer or agent of the
------------------------------
corporation may be removed by the board of directors with or without cause. The
removal shall be without prejudice to the contract rights, if any, of any person
so removed. Election or appointment of an officer or agent shall not of itself
create contract rights.
Section 5.05 Vacancies. A vacancy in any office because of death,
---------
resignation, removal, disqualification, or any other cause, may be filled by the
board of directors or by the officer or committee to which the power to fill
such office has been delegated pursuant to Section 5.03, as the case may be, and
if the office is one for which these bylaws prescribe a term, shall be filled
for the unexpired portion of the term.
Section 5.06 Authority. All officers of the corporation, as between
---------
themselves and the corporation, shall have such authority and perform such
duties in the management of the corporation as may be provided by or pursuant to
resolutions or orders of the board of directors or, in the absence of
controlling provisions in the resolutions or orders of the board of directors,
as may be determined by or pursuant to these bylaws.
13
<PAGE>
Section 5.07 The Chairman of the Board. The chairman of the board shall be
-------------------------
the chief executive officer of the corporation and, subject to the control of
the board of directors, shall have general charge and control of all its
business and affairs and shall have all powers and shall perform all duties
incident to the office of chairman of the board. The chairman of the board, or,
in the absence of the chairman, the president, shall preside at all meetings of
the shareholders and (if a director) of the board of directors.
Section 5.08 The President. The president shall be the chief operating
-------------
officer of the corporation and shall have general supervision over the
operations of the corporation, subject however, to the control of the board of
directors and the chairman of the board. In the absence of the chairman of the
board, the president shall preside at all meetings of the shareholders and (if a
director) of the board of directors, and shall perform such other duties as from
time to time may be assigned by the board of directors or the chairman of the
board.
Section 5.09 The Vice Presidents. The vice presidents shall perform the
-------------------
duties of the President in the absence of the president and such other duties as
may from time to time be assigned to them by the board of directors or the
chairman of the board.
Section 5.10 The Secretary. The secretary or an assistant secretary shall
-------------
attend all meetings of the shareholders and of the board of directors and all
committees thereof and shall record all the votes of the shareholders and of the
directors and the minutes of the meetings of the shareholders and of the board
of directors and of committees of the board in a book or books to be kept for
that purpose; shall see that notices are given and records and reports properly
kept and filed by the corporation as required by law; shall be the custodian of
the seal of the corporation and see that it is affixed to all documents to be
executed on behalf of the corporation under its seal; and, in general, shall
perform all duties incident to the office of secretary, and such other duties as
may from time to time be assigned by the board of directors or the chairman of
the board.
Section 5.11 The Treasurer. The treasurer or an assistant treasurer shall
-------------
have or provide for the custody of the funds or other property of the
corporation; shall collect and receive or provide for the collection and receipt
of moneys earned by or in any manner due to or received by the corporation;
shall deposit all funds in his or her custody as treasurer in such banks or
other places of deposit as the board of directors may from time to time
designate; shall, whenever so required by the board of directors, render an
account showing all transactions as treasurer, and the financial condition of
the corporation; and, in general, shall discharge such other duties as may from
time to time be assigned by the board of directors or the chairman of the board.
Section 5.12 Salaries. The salaries of the officers elected by the board
--------
of directors shall be fixed from time to time by the board of directors or by
such officer as may be designated by resolution of the board. The salaries or
other compensation of any other officers, employees and other agents shall be
fixed from time to time by the officer or committee to which the power to elect
such officers or to retain or appoint such employees or other agents has been
delegated pursuant to Section 5.03. No officer shall be prevented from receiving
such salary or other compensation by reason of the fact that the officer is also
a director of the corporation.
14
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ARTICLE VI
CERTIFICATES OF STOCK, TRANSFER, ETC.
-------------------------------------
Section 6.01 Share Certificates. (a) Form of Certificates. Certificates
------------------ --------------------
for shares of the corporation shall be in such form as approved by the board of
directors, and shall state that the corporation is incorporated under the laws
of the Commonwealth of Pennsylvania, the name of the person to whom issued, and
the number and class of shares and the designation of the series (if any) that
the certificate represents. If the corporation is authorized to issue shares of
more than one class or series, certificates for shares of the corporation shall
set forth upon the face or back of the certificate (or shall state on the face
or back of the certificate that the corporation will furnish to any shareholder
upon request and without charge), a full or summary statement of the
designations, voting rights, preferences, limitations and special rights of the
shares of each class or series authorized to be issued so far as they have been
fixed and determined and the authority of the board of directors to fix and
determine the designations, voting rights, preferences, limitations and special
rights of the classes and series of shares of the corporation.
(b) Share Register. The share register or transfer books and blank
--------------
share certificates shall be kept by the secretary or by any transfer agent or
registrar designated by the board of directors for that purpose.
Section 6.02 Issuance. The share certificates of the corporation shall be
--------
numbered and registered in the share register or transfer books of the
corporation as they are issued. They shall be executed in such manner as the
board of directors shall determine.
Section 6.03 Transfer. Transfers of shares shall be made an the share
--------
register or transfer books of the corporation upon surrender of the certificate
therefor, endorsed by the person named in the certificate or by an attorney
lawfully constituted in writing. No transfer shall be made inconsistent with the
provisions of the Uniform Commercial Code, 13 Pa.C.S. (S)(S) 8101 et seq., and
-- ---
its amendments and supplements.
Section 6.04 Record Holder of Shares. The corporation shall be entitled to
-----------------------
treat the person in whose name any share or shares of the corporation stand on
the books of the corporation as the absolute owner thereof, and shall not be
bound to recognize any equitable or other claim to, or interest in, such share
or shares on the part of any other person.
Section 6.05 Lost, Destroyed or Mutilated Certificates. The holder of any
-----------------------------------------
shares of the corporation shall immediately notify the corporation of any loss,
destruction or mutilation of the certificate therefor, and the board of
directors may, in its discretion, cause a new certificate or certificates to be
issued to such holder, in case of mutilation of the certificate, upon the
surrender of the mutilated certificate or, in case of loss or destruction of the
certificate, upon satisfactory proof of such loss or destruction and, if the
board of directors shall so determine, the deposit of a bond in such form and in
such sum, and with such surety or sureties, as it may direct.
ARTICLE VII
15
<PAGE>
INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHER AUTHORIZED REPRESENTATIVES
---------------------------------------------------------------------------
Section 7.01 Scope of Indemnification. (a) General Rule. The corporation
------------------------ ------------
shall indemnify an indemnified representative against any liability incurred in
connection with any proceeding in which the indemnified representative may be
involved as a party or otherwise by reason of the fact that such person is or
was serving in an indemnified capacity, including, without limitation,
liabilities resulting from any actual or alleged breach or neglect of duty,
error, misstatement or misleading statement, negligence, gross negligence or act
giving rise to strict or products liability, except:
(1) where such indemnification is expressly prohibited by
applicable law;
(2) where the conduct of the indemnified representative has been
finally determined pursuant to Section 7.06 or otherwise:
(i) to constitute willful misconduct or recklessness within
the meaning of 15 Pa.C.S. (S)(S) 513(b) and 1746(b) and 42 Pa.C.S. (S)
8365(b) or any superseding provision of law sufficient in the
circumstances to bar indemnification against liabilities arising from
the conduct; or
(ii) to be based upon or attributable to the receipt by the
indemnified representative from the corporation of a personal benefit
to which the indemnified representative is not legally entitled; or
(3) to the extent such indemnification has been finally
determined in a final adjudication pursuant to Section 7.06 to be otherwise
unlawful.
(b) Partial Payment. If an indemnified representative is entitled to
---------------
indemnification in respect of a portion, but not all, of any liabilities to
which such person may be subject, the corporation shall indemnify such
indemnified representative to the maximum extent for such portion of the
liabilities.
(c) Presumption. The termination of a proceeding by judgment, order,
-----------
settlement or conviction or upon a plea of nolo contendere or its equivalent
---- ----------
shall not of itself create a presumption that the indemnified representative is
not entitled to indemnification.
(d) Definitions. For purposes of this Article:
-----------
(1) "indemnified capacity" means any and all past, present and
future service by an indemnified representative in one or more capacities
as a director, officer, employee or agent of the corporation, or, at the
request of the corporation, as a director, officer, employee, agent,
fiduciary or trustee of another corporation, partnership, joint venture,
trust, employee benefit plan or other entity or enterprise;
(2) "indemnified representative" means any and all directors and
officers of the corporation and any other person designated as an
indemnified representative by the board of directors of the corporation
(which may, but need not, include any person
16
<PAGE>
serving at the request of the corporation, as a director, officer,
employee, agent, fiduciary or trustee of another corporation, partnership,
joint venture, trust, employee benefit plan or other entity or enterprise);
(3) "liability" means any damage, judgment, amount paid in
settlement, fine, penalty, punitive damages, excise tax assessed with
respect to an employee benefit plan, or cost or expense of any nature
(including, without limitation, attorneys' fees and disbursements); and
(4) "proceeding" means any threatened, pending or completed
action, suit, appeal or other proceeding of any nature, whether civil,
criminal, administrative or investigative, whether formal or informal, and
whether brought by or in the right of the corporation, a class of its
security holders or otherwise.
Section 7.02 Proceedings Initiated by Indemnified Representatives.
----------------------------------------------------
Notwithstanding any other provision of this Article, the corporation shall not
indemnify under this Article an indemnified representative for any liability
incurred in a proceeding initiated (which shall not be deemed to include counter
claims or affirmative defenses) or participated in as an intervenor or amicus
------
curiae by the person seeking indemnification unless such initiation of or
- ------
participation in the proceeding is authorized, either before or after its
commencement, by the affirmative vote of a majority of the directors in office.
This section does not apply to reimbursement of expenses incurred in
successfully prosecuting or defending an arbitration under Section 7.06 or
otherwise successfully prosecuting or defending the rights of an indemnified
representative granted by or pursuant to this Article.
Section 7.03 Advancing Expenses. The corporation shall pay the expenses
------------------
(including attorneys' fees and disbursements) incurred in good faith by an
indemnified representative in advance of the final disposition of a proceeding
described in Section 7.01 or the initiation of or participation in which is
authorized pursuant to Section 7.02 upon receipt of an undertaking by or on
behalf of the indemnified representative to repay the amount if it is ultimately
determined pursuant to Section 7.06 that such person is not entitled to be
indemnified by the corporation pursuant to this Article. The financial ability
of an indemnified representative to repay an advance shall not be a prerequisite
to the making of such advance.
Section 7.04 Securing of Indemnification Obligations. To further effect,
---------------------------------------
satisfy or secure the indemnification obligations provided herein or otherwise,
the corporation may maintain insurance, obtain a letter of credit, act as self-
insurer, create a reserve, trust, escrow, cash collateral or other fund or
account, enter into indemnification agreements, pledge or grant a security
interest in any assets or properties of the corporation, or use any other
mechanism or arrangement whatsoever in such amounts, at such costs, and upon
such other terms and conditions as the board of directors shall deem
appropriate. Absent fraud, the determination of the board of directors with
respect to such amounts, costs, terms and conditions shall be conclusive against
all security holders, officers and directors and shall not be subject to
voidability.
17
<PAGE>
Section 7.05 Payment of Indemnification. An indemnified representative
--------------------------
shall be entitled to indemnification within 30 days after a written request for
indemnification has been delivered to the secretary of the corporation.
Section 7.06 Arbitration. (a) General Rule. Any dispute related to the
----------- ------------
right to indemnification, contribution or advancement of expenses as provided
under this Article, except with respect to indemnification for liabilities
arising under the Securities Act of 1933 that the corporation has undertaken to
submit to a court for adjudication, shall be decided only by arbitration in the
metropolitan area in which the principal executive offices of the corporation
are located at the time, in accordance with the commercial arbitration rules
then in effect of the American Arbitration Association, before a panel of three
arbitrators, one of whom shall be selected by the corporation, the second of
whom shall be selected by the indemnified representative and the third of whom
shall be selected by the other two arbitrators. In the absence of the American
Arbitration Association, or if for any reason arbitration under the arbitration
rules of the American Arbitration Association cannot be initiated, and if one of
the parties fails or refuses to select an arbitrator or the arbitrators selected
by the corporation and the indemnified representative cannot agree on the
selection of the third arbitrator within 30 days after such time as the
corporation and the indemnified representative have each been notified of the
selection of the other's arbitrator, the necessary arbitrator or arbitrators
shall be selected by the presiding judge of the court of general jurisdiction in
such metropolitan area.
(b) Burden of Proof. The party or parties challenging the right of an
---------------
indemnified representative to the benefits of this Article shall have the burden
of proof.
(c) Expenses. The corporation shall reimburse an indemnified
--------
representative for the expenses (including attorneys' fees and disbursements)
incurred in successfully prosecuting or defending such arbitration.
(d) Effect. Any award entered by the arbitrators shall be final,
------
binding and nonappealable and judgment may be entered thereon by any party in
accordance with applicable law in any court of competent. jurisdiction, except
that the corporation shall be entitled to interpose as a defense in any such
judicial enforcement proceeding any prior final judicial determination adverse
to the indemnified representative under Section 7.01(a)(2) in a proceeding not
directly involving indemnification under this Article. This arbitration
provision shall be specifically enforceable.
Section 7.07 Contribution. If the indemnification provided for in this
------------
Article or otherwise is unavailable for any reason in respect of any liability
or portion thereof, the corporation shall contribute to the liabilities to which
the indemnified representative may be subject in such proportion as is
appropriate to reflect the intent of this Article or otherwise.
Section 7.08 Mandatory Indemnification of Directors, Officers, etc. To the
-----------------------------------------------------
extent that an authorized representative of the corporation has been successful
on the merits or otherwise in defense of any action, suit or proceeding referred
to in Section 1741 or 1742 of the Business Corporation Law or in defense of any
claim, issue or matter therein, such person shall be indemnified against
expenses (including attorneys' fees and disbursements) actually and reasonably
incurred by such person in connection therewith.
18
<PAGE>
Section 7.09 Contract Rights; Amendment or Reveal. All rights under this
------------------------------------
Article shall be deemed a contract between the corporation and the indemnified
representative pursuant to which the corporation and each indemnified
representative intend to be legally bound. Any repeal, amendment or modification
hereof shall be prospective only and shall not affect any rights or obligations
then existing.
Section 7.10 Scope of Article. The rights granted by this Article shall
----------------
not be deemed exclusive of any other rights to which those seeking
indemnification, contribution or advancement of expenses may be entitled under
any statute, agreement, vote of shareholders or disinterested directors or
otherwise, both as to action in an indemnified capacity and as to action in any
other capacity. The indemnification, contribution and advancement of expenses
provided by or granted pursuant to this Article shall continue as to a person
who has ceased to be an indemnified representative in respect of matters arising
prior to such time, and shall inure to the benefit of the heirs, executors,
administrators and personal representatives of such a person.
Section 7.11 Reliance on Provisions. Each person who shall act as an
----------------------
indemnified representative of the corporation shall be deemed to be doing so in
reliance upon the rights of indemnification, contribution and advancement of
expenses provided by this Article.
Section 7.12 Interpretation. The provisions of this Article are intended
--------------
to constitute bylaws authorized by 15 Pa.C.S. (S)(S) 513 and 1746 and 42 Pa.C.S.
(S) 8365.
ARTICLE VIII
MISCELLANEOUS
-------------
Section 8.01 Corporate Seal. The corporation shall have a corporate seal
--------------
in the form of a circle containing the name of the corporation, the year of
incorporation and such other details as may be approved by the board of
directors. The affixation of the corporate seal shall not be necessary to the
valid execution, assignment or endorsement by the corporation of any instrument
or other document.
Section 8.02 Checks. All checks, notes, bills of exchange or other similar
------
orders in writing shall be signed by such one or more officers or employees as
the board of directors or any person authorized by resolution of the board of
directors may from time to time designate.
Section 8.03 Contracts. Except as otherwise provided in the Business
---------
Corporation Law in the case of transactions that require action by the
shareholders, the board of directors may authorize any officer or agent to enter
into any contract or to execute or deliver any instrument on behalf of the
corporation, and such authority may be general or confined to specific
instances.
Section 8.04 Interested Directors or Officers; Quorum. (a) General Rule.
---------------------------------------- ------------
A contract or transaction between the corporation and one or more of its
directors or officers or between the corporation and another corporation,
partnership, joint venture, trust or other enterprise in which one or more of
its directors or officers are directors or officers or have a financial or other
interest, shall not be void or voidable solely for that reason, or solely
because the director or
19
<PAGE>
officer is present at or participates in the meeting of the board of directors
that authorizes the contract or transaction, or solely because his, her or their
votes are counted for that purpose, if:
(1) the material facts as to the relationship or interest and as
to the contract or transaction are disclosed or are known to the board of
directors and the board authorizes the contract or transaction by the
affirmative votes of a majority of the disinterested directors even though
the disinterested directors are less than a quorum:
(2) the material facts as to his or her relationship or interest
and as to the contract or transaction are disclosed or are known to the
shareholders entitled to vote thereon and the contract or transaction is
specifically approved in good faith by vote of those shareholders; or
(3) the contract or transaction is fair as to the corporation as
of the time it is authorized, approved or ratified by the board of
directors or the shareholders.
(b) Quorum. Common or interested directors may be counted in
------
determining the presence of a quorum at a meeting of the board which authorizes
a contract or transaction specified in subsection (a).
Section 8.05 Deposits. All funds of the corporation shall be deposited
--------
from time to time to the credit of the corporation in such banks, trust
companies or other depositories as the board of directors may approve or
designate, and all such funds shall be withdrawn only upon checks signed by such
one or more officers or employees as the board of directors shall from time to
time determine.
Section 8.06 Corporate Records. (a) Required Records. The corporation
----------------- -----------------
shall keep complete and accurate books and records of account, minutes of the
proceedings of the incorporators, shareholders and directors and a share
register giving the names and addresses of all shareholders and the number and
class of shares held by each. The share register shall be kept at either the
registered office of the corporation in the Commonwealth of Pennsylvania or at
its principal place of business wherever situated or at the office of its
registrar or transfer agent. Any books, minutes or other records may be in
written form or any other form capable of being converted into written form
within a reasonable time.
(b) Right of Inspection. Every shareholder shall, upon written
-------------------
verified demand stating the purpose thereof, have a right to examine, in person
or by agent or attorney, during the usual hours for business for any proper
purpose, the share register, books and records of account, and records of the
proceedings of the incorporators, shareholders and directors to make copies or
extracts therefrom. A proper purpose shall mean a purpose reasonably related to
the interest of the person as a shareholder. In every instance where an attorney
or other agent is the person who seeks the right of inspection, the demand shall
be accompanied by a verified power of attorney or other writing that authorizes
the attorney or other agent to so act on behalf of the shareholder. The demand
shall be directed to the corporation at its registered office in the
Commonwealth of Pennsylvania or at its principal place of business wherever
situated.
Section 8.07 Financial Reports. Unless otherwise agreed between the
-----------------
corporation and a shareholder, the corporation shall furnish to its shareholders
annual financial statements,
20
<PAGE>
including at least a balance sheet as of the end of each fiscal year and a
statement of income and expenses for the fiscal year. The financial statements
shall be prepared an the basis of generally accepted accounting principles, if
the corporation prepares financial statements for the fiscal year on that basis
for any purposes and may be consolidated statements of the corporation and one
or more of its subsidiaries. The financial statements shall be mailed by the
corporation to each of its shareholders entitled thereto within 120 days after
the close of each fiscal year and, after the mailing and upon written request,
shall be mailed by the corporation to any shareholder or beneficial owner
entitled thereto to whom a copy of the most recent annual financial statements
has not previously been mailed. Statements that are audited or reviewed by a
public accountant shall be accompanied by the report of the accountant; in other
cases, each copy shall be accompanied by a statement of the person in charge of
the financial records of the corporation:
(1) Stating his or her reasonable belief as to whether or not the
financial statements were prepared in accordance with generally accepted
accounting principles and, if not, describing the basis of presentation.
(2) Describing any material respects in which the financial
statements were not prepared on a basis consistent with those prepared for
the previous year.
Section 8.08 Amendment of Bylaws. These bylaws may be amended or repealed,
-------------------
or new bylaws may be adopted, either (i) by vote of the shareholders at any duly
organized annual or special meeting of shareholders, or (ii) with respect to
those matters that are not by statute committed expressly to the shareholders
and regardless of whether the shareholders have previously adopted or approved
the bylaw being amended or repealed, by vote of a majority of the board of
directors of the corporation in office at any regular or special meeting of
directors. Any change in these bylaws shall take effect when adopted unless
otherwise provided in the resolution effecting the change. See Section 2.03 (b)
(relating to notice of action by shareholders on bylaws).
21
<PAGE>
EXHIBIT 3.23
CERTIFICATE OF INCORPORATION
OF
ELLEN JAY INC.
_______
THE UNDERSIGNED, of the age of twenty-one years or over, for the
purpose of forming a corporation pursuant to the provisions of Title 14A,
Corporations, General, of the New Jersey Statutes, does hereby execute the
following Certificate of Incorporation -
FIRST: The name of the Corporation is ELLEN JAY INC.
SECOND: The address of the corporation's registered office is 30
Washington Avenue, Haddonfield, New Jersey 08033, and the name of the
corporation's registered agent at such address is New Jersey Corporation
Guarantee and Trust Company.
THIRD: The purpose or purposes for which the corporation is organized are:
The corporation may engage in any activity within the purposes for which
corporations may be organized under Title 14A, Corporations, General.
FOURTH: The aggregate number of shares which the corporation shall have
authority to issue is Two Thousand Five Hundred (2,500) without par value.
FIFTH: The Board of Directors is authorized and empowered to make, alter,
amend and rescind the By-Laws of the corporation.
SIXTH: The name and address of the initial Director is as follows:
Name Address
---- -------
Deborah Lawler 200 East Montgomery Ave.
Ardmore, PA 19003
SEVENTH: The name and address of the Incorporator is as follows:
Name Address
---- -------
Ira S. Pimm, Jr. 2225 Land Title Bldg.
Philadelphia, PA 19110
SIGNED this 25th day of February, 1974
Ira S. Pimm, Jr.
---------------------------
<PAGE>
STATE OF NEW JERSEY
Department of State
I, the Secretary of State of the State of New Jersey, do hereby
Certify that the foregoing is a true copy of the Certificate of Incorporation
----------------
of ELLEN JAY INC.
------------------------------------------------------------------------------
and the endorsements thereon, as the same is taken from and compared with the
original filed in my office on the 1/st/ day of March A.D. 1974,
------------- ----------- ---------
and now remaining on file and of record therein.
In Testimony Whereof, I have hereunto set my hand
and affixed my Official Seal at Trenton, this
(SEAL) 1/st/ day of March A.D. 1974.
------- --------
/s/_____________________________________
Secretary of State
<PAGE>
EXHIBIT 3.24
AMENDED AND RESTATED
BY-LAWS
OF
ELLEN JAY, INC.
_____________________________
(A NEW JERSEY CORPORATION)
ARTICLE I
OFFICES
-------
Section 1.01 Registered Office and Agent. The registered office of the
---------------------------
corporation in the State of New Jersey shall be as stated in the Certificate of
Incorporation or at such other location to which the registered office shall be
changed by action of the board of directors. The registered agent of the
corporation at such office shall be as stated in the Certificate of
Incorporation or such other agent as may be determined from time to time by the
board of directors.
Section 1.02 Other Offices. The corporation may also have offices at such
-------------
other places within or without the State of New Jersey as the board of directors
may from time to time appoint or the business of the corporation may require.
ARTICLE II
SHAREHOLDERS
------------
Section 2.01 Annual Meeting of Shareholders. An annual meeting of
------------------------------
shareholders shall be held in every calendar year at such time as the board of
directors may fix. At the annual meeting, the shareholders shall elect directors
and transact such other business as may come before the meeting.
Section 2.02 Special Meetings. A special meeting of shareholders may be
----------------
called for any purpose by the chairman of the board or by a majority of the
board of directors.
Section 2.03 Action Without Meeting. Any action required or permitted to
----------------------
be taken at a meeting of shareholders may be taken without a meeting if all the
shareholders consent in writing to such action. Such written consents shall be
filed with the minutes of proceedings of shareholders.
Section 2.04 Quorum. The presence at a meeting in person or by proxy of
------
the holders of shares entitled to cast a majority of the votes shall constitute
a quorum.
Section 2.05 Place of Meetings. Meetings of the shareholders shall be held
-----------------
at the principal office of the corporation or at such other place within or
without the State of New Jersey as shall be specified in the notice of meeting.
<PAGE>
Section 2.06 Notice of Meeting. Written notice of the time, place and
-----------------
purposes of any annual or special meeting of shareholders shall be given not
less than ten nor more than sixty days before the date of the meeting either
personally or by mail to each shareholder of record entitled to vote at the
meeting, except it shall not be necessary to give notice in cases of meetings
adjourned in accordance with N.J.S.A. 14A:5-4.
Section 2.07 Waiver of Notice. (a) Written Waiver. Whenever any written
---------------- --------------
notice is required to be given under the provisions of the Business Corporation
Act, the Certificate of Incorporation or these bylaws, a waiver thereof in
writing, signed by the person or persons entitled to the notice, whether before
or after the time stated therein, shall be deemed equivalent to the giving of
the notice. Neither the business to be transacted at, nor the purpose of, a
meeting need be specified in the waiver of notice of the meeting.
(b) Waiver by Attendance. The attendance of any shareholder at a
--------------------
meeting, without protesting prior to the conclusion of the meeting the lack of
notice of such meeting, shall constitute a waiver by him of notice of the
meeting.
ARTICLE III
BOARD OF DIRECTORS
------------------
Section 3.01 Number and Term of Office. The management and control of the
-------------------------
affairs, business and property of the corporation shall be vested in the board
of directors which shall consist of such number of directors, not less than
three nor more than eleven. Each director shall be elected by the shareholders
at either an annual or special meeting and shall hold office until the
director's successor shall have been elected and qualified.
Section 3.02 Regular Meetings. A regular meeting of the board of directors
----------------
shall be held without notice immediately following and at the same place as the
annual meeting of shareholders for the purposes of electing officers and
conducting such other business as may come before the meeting. The board of
directors, by resolution, may provide for additional regular meetings which may
be held without notice, except to members not present at the time of the
adoption of the resolution.
Section 3.03 Special Meetings. A special meeting of the board of directors
----------------
may be called at any time by the chairman of the board or by a majority of the
directors for any purpose. Such meeting shall be held upon two days' notice if
given orally, either by telephone or in person, or by telegraph or facsimile
transmission, or by four days' notice if given by depositing the notice in the
United States mail, postage prepaid. Such notice shall specify the time and
place of the meeting.
Section 3.04 Meetings by Conference Telephone, etc. Any or all directors
-------------------------------------
may participate in a meeting of the board of directors or a committee of the
board of directors by means of conference telephone or any means of
communication by which all persons participating in the meeting are able to hear
each other.
2
<PAGE>
Section 3.05 Action Without Meeting. Any action required or permitted to
----------------------
be taken pursuant to authorization voted at a meeting of the board of directors
or any committee thereof may be taken without a meeting if, prior or subsequent
to such action, all members of the board of directors or such committee shall
consent in writing to such action and such written consents are filed with the
minutes of the proceedings of the board of directors or committee.
Section 3.06 Quorum. A majority of the entire board of directors shall
------
constitute a quorum for the transaction of business.
Section 3.07 Vacancies in the Board of Directors. Any vacancy in the board
-----------------------------------
of directors, including a vacancy caused by an increase in the number of
directors, may be filled by the affirmative vote of a majority of the remaining
directors, even though less than a quorum of the board of directors, or by a
sole remaining director.
Section 3.08 Personal Liability of Directors. A director shall not be
-------------------------------
personally liable to the corporation or its shareholders for damages for breach
of any duty owed to the corporation or its shareholders, except that this
provision shall not relieve a director from liability for any breach of duty
based upon an act or omission (i) in breach of such person's duty of loyalty to
the corporation or its shareholders, (ii) not in good faith or involving a
knowing violation of law or (iii) resulting in receipt by such person of an
improper personal benefit. As used in this section, an act or omission in breach
of a person's duty of loyalty means an act or omission which that person knows
or believes to be contrary to the best interests of the corporation or its
shareholders in connection with a matter in which he has a material conflict of
interest.
ARTICLE IV
WAIVER OF NOTICE
----------------
Any notice required by these by-laws, the Certificate of Incorporation, or
by the New Jersey Business Corporation Act may be waived by a writing signed by
the person or persons entitled to such notice either before or after the action
with respect to which notice is waived. Any director or shareholder attending a
meeting without protesting, prior to its conclusion, a lack of proper notice
shall be deemed to have waived notice of such meeting.
ARTICLE V
FISCAL YEAR
-----------
The fiscal year of the corporation shall end on the Saturday in December or
January that is closest to December 31 in each year unless otherwise fixed by
the board of directors.
3
<PAGE>
ARTICLE VI
OFFICERS
--------
Section 6.01 Election. At its regular meeting following the annual meeting
--------
of shareholders, the board of directors shall elect a chairman of the board, a
president, a treasurer, and a secretary, and it may elect such other officers,
including one or more vice presidents, assistant secretaries or assistant
treasurers, as it shall deem necessary. One person may hold any two or more
offices.
Section 6.02 Duties and Authority of Chairman of the Board. The chairman
---------------------------------------------
of the board shall be the chief executive officer of the corporation and,
subject to the control of the board of directors, shall have general charge and
control of all its business and affairs and shall have all powers and shall
perform all duties incident to the office of chairman of the board. The chairman
of the board, or, in the absence of the chairman, the president, shall preside
at all meetings of the shareholders and (if a director) of the board of
directors.
Section 6.03 Duties and Authority of President. The president shall be the
---------------------------------
chief operating officer of the corporation and shall have general supervision
over the operations of the corporation, subject however, to the control of the
board of directors and the chairman of the board. In the absence of the chairman
of the board, the president shall preside at all meetings of the shareholders
and (if a director) of the board of directors, and shall perform such other
duties as from time to time may be assigned by the board of directors or the
chairman of the board.
Section 6.04 Duties and Authority of Vice President. The vice president,
--------------------------------------
if any, shall perform such duties and have such authority as from time to time
may be delegated to him by the chairman of the board or by the board of
directors.
Section 6.05 Duties and Authority of Treasurer. The treasurer shall have
---------------------------------
the custody of the funds and securities of the corporation and shall keep or
cause to be kept regular books of account for the corporation. The treasurer
shall perform such other duties and possess such other powers as are incident to
that office or as shall be assigned by the chairman of the board or the board of
directors.
Section 6.06 Duties and Authority of Secretary. The secretary shall cause
---------------------------------
notices of all meetings to be served as prescribed in these by-laws and shall
keep or cause to be kept the minutes of all meetings of the shareholders and the
board of directors. The secretary shall have charge of the seal of the
corporation. The secretary shall perform such other duties and possess such
other powers as are incident to that office or as are assigned by the chairman
of the board or the board of directors
Section 6.07 Duties and Authority of Assistant Secretary or Assistant
--------------------------------------------------------
Treasurer. The assistant secretary or secretaries and assistant treasurer or
- ---------
treasurers shall act under the direction of the secretary or treasurer,
respectively, and in the absence or disability of the secretary or treasurer,
shall perform the respective duties and exercise the respective powers of the
secretary or treasurer. Any assistant secretary or assistant treasurer shall be
authorized to execute, attest, acknowledge, receive and/or certify any corporate
document which the secretary or treasurer,
4
<PAGE>
respectively, could execute, attest, acknowledge, receive and/or certify,
irrespective of the absence or disability of the secretary or treasurer, unless
the board of directors shall otherwise determine.
Section 6.08 Personal Liability of Officers. An officer shall not be
------------------------------
personally liable to the corporation or its shareholders for damages for breach
of any duty owed to the corporation or its shareholders, except that this
provision shall not relieve an officer from liability for any breach of duty
based upon an act or omission (i) in breach of such person's duty of loyalty to
the corporation or its shareholders, (ii) not in good faith or involving a
knowing violation of law or (iii) resulting in receipt by such person of an
improper personal benefit. As used in this section, an act or omission in breach
of a person's duty of loyalty means an act or omission which that person knows
or believes to be contrary to the best interests of the corporation or its
shareholders in connection with a matter in which he has a material conflict of
interest.
ARTICLE VII
INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHER AUTHORIZED REPRESENTATIVES
---------------------------------------------------------------------------
Section 7.01 Scope of Indemnification. (a) General Rule. The corporation
------------------------ ------------
shall indemnify an indemnified representative against any liability incurred in
connection with any proceeding in which the indemnified representative may be
involved as a party or otherwise by reason of the fact that such person is or
was serving in an indemnified capacity, including, without limitation,
liabilities resulting from any actual or alleged breach or neglect of duty,
error, misstatement or misleading statement, negligence, gross negligence or act
giving rise to strict or products liability, except:
(i) where such indemnification is expressly prohibited by
applicable law;
(ii) where the conduct of the indemnified representative has
been finally determined pursuant to Section 6 or otherwise:
(A) to constitute a breach of his duty of loyalty to the
corporation or its shareholders;
(B) to be not in good faith or to involve a knowing
violation of law; or
(C) to be based upon or attributable to the receipt by the
indemnified representative from the corporation of an improper
personal benefit to which the indemnified representative is not
legally entitled; or
(iii) to the extent such indemnification has been finally
determined in a final adjudication pursuant to Section 6 to be otherwise
unlawful.
(b) Partial Payment. If an indemnified representative is entitled to
---------------
indemnification in respect of a portion, but not all, of any liabilities to
which such person may be
5
<PAGE>
subject, the corporation shall indemnify such indemnified representative to the
maximum extent for such portion of the liabilities.
(c) Presumption. The termination of a proceeding by judgment, order,
-----------
settlement or conviction or upon a plea of nolo contendere or its equivalent
---- ----------
shall not of itself create a presumption that the indemnified representative is
not entitled to indemnification.
(d) Definitions. For purposes of this Article:
-----------
(i) "indemnified capacity" means any and all past, present and
future service by an indemnified representative in one or more capacities
as a director, officer, employee or agent of the corporation, or, at the
request of the corporation, as a director, officer, employee, agent,
fiduciary or trustee of another corporation, partnership, joint venture,
trust, employee benefit plan or other entity or enterprise;
(ii) "indemnified representative" means any and all directors
and officers of the corporation and any other person designated as an
indemnified representative by the board of directors of the corporation
(which may, but need not, include any person serving at the request of the
corporation, as a director, officer, employee, agent, fiduciary or trustee
of another corporation, partnership, joint venture, trust, employee benefit
plan or other entity or enterprise);
(iii) "liability" means any damage, judgment, amount paid in
settlement, fine, penalty, punitive damages, excise tax assessed with
respect to an employee benefit plan, or cost or expense of any nature
(including, without limitation, attorneys' fees and disbursements); and
(iv) "proceeding" means any threatened, pending or completed
action, suit, appeal or other proceeding of any nature, whether civil,
criminal, administrative or investigative, whether formal or informal, and
whether brought by or in the right of the corporation, a class of its
security holders or otherwise.
Section 7.02 Proceedings Initiated by Indemnified Representatives.
----------------------------------------------------
Notwithstanding any other provision of this Article, the corporation shall not
indemnify under this Article an indemnified representative for any liability
incurred in a proceeding initiated (which shall not be deemed to include
counter-claims or affirmative defenses) or participated in as an intervenor or
amicus curiae by the person seeking indemnification unless such initiation of or
- ------ ------
participation in the proceeding is authorized, either before or after its
commencement, by the affirmative vote of a majority of the directors in office.
This section does not apply to reimbursement of expenses incurred in
successfully prosecuting or defending an arbitration under Section 6 or
otherwise successfully prosecuting or defending the rights of an indemnified
representative granted by or pursuant to this Article.
Section 7.03 Advancing Expenses. The corporation shall pay the expenses
------------------
(including attorneys' fees and disbursements) incurred in good faith by an
indemnified representative in advance of the final disposition of a proceeding
described in Section 1 or the initiation of or participation in which is
authorized pursuant to Section 2 upon receipt of an undertaking by or on behalf
of the indemnified representative to repay the amount if it is ultimately
determined
6
<PAGE>
pursuant to Section 6 that such person is not entitled to be indemnified by the
corporation pursuant to this Article. The financial ability of an indemnified
representative to repay an advance shall not be a prerequisite to the making of
such advance.
Section 7.04 Securing of Indemnification Obligations. To further effect,
---------------------------------------
satisfy or secure the indemnification obligations provided herein or otherwise,
the corporation may maintain insurance, obtain a letter of credit, act as self-
insurer, create a reserve, trust, escrow, cash collateral or other fund or
account, enter into indemnification agreements, pledge or grant a security
interest in any assets or properties of the corporation, or use any other
mechanism or arrangement whatsoever in such amounts, at such costs, and upon
such other terms and conditions as the board of directors shall deem
appropriate. Absent fraud, the determination of the board of directors with
respect to such amounts, costs, terms and conditions shall be conclusive against
all security holders, officers and directors and shall not be subject to
voidability.
Section 7.05 Payment of Indemnification. An indemnified representative
--------------------------
shall be entitled to indemnification within 30 days after a written request for
indemnification has been delivered to the secretary of the corporation.
Section 7.06 Arbitration. (a) General Rule. Any dispute related to the
----------- ------------
right to indemnification, contribution or advancement of expenses as provided
under this Article, except with respect to indemnification for liabilities
arising under the Securities Act of 1933 that the corporation has undertaken to
submit to a court for adjudication, shall be decided only by arbitration in the
metropolitan area in which the principal executive offices of the corporation
are located at the time, in accordance with the commercial arbitration rules
then in effect of the American Arbitration Association, before a panel of three
arbitrators, one of whom shall be selected by the corporation, the second of
whom shall be selected by the indemnified representative and the third of whom
shall be selected by the other two arbitrators. In the absence of the American
Arbitration Association, or if for any reason arbitration under the arbitration
rules of the American Arbitration Association cannot be initiated, and if one of
the parties fails or refuses to select an arbitrator or the arbitrators selected
by the corporation and the indemnified representative cannot agree on the
selection of the third arbitrator within 30 days after such time as the
corporation and the indemnified representative have each been notified of the
selection of the other's arbitrator, the necessary arbitrator or arbitrators
shall be selected by the presiding judge of the court of general jurisdiction in
such metropolitan area.
(b) Burden of Proof. The party or parties challenging the right of an
---------------
indemnified representative to the benefits of this Article shall have the burden
of proof.
(c) Expenses. The corporation shall reimburse an indemnified
--------
representative for the expenses (including attorneys' fees and disbursements)
incurred in successfully prosecuting or defending such arbitration.
(d) Effect. Any award entered by the arbitrators shall be final,
------
binding and nonappealable and judgment may be entered thereon by any party in
accordance with applicable law in any court of competent jurisdiction, except
that the corporation shall be entitled to interpose as a defense in any such
judicial enforcement proceeding any prior final judicial
7
<PAGE>
determination adverse to the indemnified representative under Section 1 (a)(2)
in a proceeding not directly involving indemnification under this Article. This
arbitration provision shall be specifically enforceable.
Section 7.07 Contribution. If the indemnification provided for in this
------------
Article or otherwise is unavailable for any reason in respect of any liability
or portion thereof, the corporation shall contribute to the liabilities to which
the indemnified representative may be subject in such proportion as is
appropriate to reflect the intent of this Article or otherwise.
Section 7.08 Mandatory Indemnification of Directors, Officers, etc. To the
-----------------------------------------------------
extent that an authorized representative of the corporation has been successful
on the merits or otherwise in defense of any action, suit or proceeding referred
to in N.J.S.A. 14A:3-5(4) of the Business Corporation Act or in defense of any
claim, issue or matter therein, such person shall be indemnified against
expenses (including attorneys' fees and disbursements) actually and reasonably
incurred by such person in connection therewith.
Section 7.09 Contract Rights; Amendment or Repeal. All rights under this
------------------------------------
Article shall be deemed a contract between the corporation and the indemnified
representative pursuant to which the corporation and each indemnified
representative intend to be legally bound. Any repeal, amendment or modification
hereof shall be prospective only and shall not affect any rights or obligations
then existing.
Section 7.10 Scope of Article. The rights granted by this Article shall
----------------
not be deemed exclusive of any other rights to which those seeking
indemnification, contribution or advancement of expenses may be entitled under
any statute, agreement, vote of shareholders or disinterested directors or
otherwise, both as to action in an indemnified capacity and as to action in any
other capacity. The indemnification, contribution and advancement of expenses
provided by or granted pursuant to this Article shall continue as to a person
who has ceased to be an indemnified representative in respect of matters arising
prior to such time, and shall inure to the benefit of the heirs, executors,
administrators and personal representatives of such a person.
Section 7.11 Reliance on Provisions. Each person who shall act as an
----------------------
indemnified representative of the corporation shall be deemed to be doing so in
reliance upon the rights provided by this Article.
Section 7.12 Interpretation. The provisions of this Article are intended
--------------
to constitute by-laws authorized by N.J.S.A. 14A:3-5(8).
ARTICLE VIII
LOANS, GUARANTEES AND OTHER ASSISTANCE TO DIRECTORS
---------------------------------------------------
The corporation may lend money to, or guarantee any obligation of, or
otherwise assist, any director, officer or employee of the corporation or of any
subsidiary, whenever, in the judgment of the directors, such loan, guarantee or
assistance may reasonably be expected to benefit the corporation. The loan,
guarantee or other assistance may be made with or without interest, and may be
unsecured, or secured in such a manner as the board shall approve,
8
<PAGE>
including, without limitation, a pledge of shares of the corporation, and may be
made upon such other terms and conditions as the board may determine.
ARTICLE IX
AMENDMENT OF BY-LAWS
--------------------
These by-laws may be altered, amended or repealed by the shareholders or
the board of directors. Any by-law adopted, amended or repealed by the
shareholders may be amended or repealed by the board of directors, unless the
resolution of the shareholders adopting such by-law expressly reserves the right
to amend or repeal it to the shareholders.
9
<PAGE>
EXHIBIT 3.25
CERTIFICATE OF FORMATION
OF
STONE MATERIALS COMPANY, LLC
The undersigned, desiring to form a limited liability company
pursuant to the Delaware Limited Liability Company Act, does hereby
certify as follows:
1. The name of the limited liability company is:
Stone Materials Company, LLC
2. The address of its registered office in the State
of Delaware is 9 East Loockerman Street, in the City of
Dover, County of Kent, State of Delaware 19901. The name
of its registered agent at such address is National
Registered Agents, Inc.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Formation of Stone Materials Company, LLC this 24th day of September,
1999.
/s/ Melissa Freidenreich
-----------------------------------------
Melissa Freidenreich
<PAGE>
EXHIBIT 3.26
EXECUTION COPY
================================================================================
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
OF
STONE MATERIALS COMPANY, LLC
DATED AS OF SEPTEMBER 30, 1999
================================================================================
<PAGE>
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
of
STONE MATERIALS COMPANY, LLC
This Limited Liability Company Operating Agreement (the
"Agreement"), dated as of September 30, 1999 is entered
---------
into solely by Better Minerals & Aggregates Company (the "Member").
------
WHEREAS, a certificate of formation of Stone Materials
Company, LLC (the "Company") has been filed by an authorized person with the
-------
Office of the Secretary of State of Delaware, causing the formation of a limited
liability company in accordance with the Delaware Limited Liability Company Act
(6 Del. C.(ss)18-101 et seq.) (hereinafter referred to as the "Act"), and the
-- --- ---
Member intends by the execution hereof to become the sole Member thereof as of
the date of such execution; and
WHEREAS, the Member desires to provide for the operation and
management of the Company for the purposes stated herein;
NOW, THEREFORE, in consideration of the mutual covenants,
promises and agreements contained herein, the Member hereby agrees as follows:
ARTICLE I
FORMATION OF THE COMPANY
------------------------
Section 1.01 Formation. The Member acknowledges that the
---------
certificate of formation for the Company has been filed, with the Office of the
Secretary of State of Delaware on September 24, 1999. The Member agrees to be
bound by and comply with the provisions thereof and hereof.
Section 1.02 Registered Office. The registered office in the
-----------------
State of Delaware shall be: 9 East Loockerman Street, Dover, DE 19901.
Section 1.03 Registered Agent. The registered agent of the
----------------
Company in the State of Delaware shall be National Registered Agents, Inc.
Section 1.04 Purpose and Character of Business. The general
---------------------------------
purpose of the Company is to engage in any lawful act or activity for which
limited liability companies may be organized under the Act.
Section 1.05 Duration.
--------
The Company shall continue in existence until it is
dissolved pursuant to Section 8.1.
1
<PAGE>
Section 1.06 Filings, Reports and Formalities. The Member
--------------------------------
shall cause the Company to make all filings and to submit all reports required
to be filed or submitted under the Act with respect to the Company, and shall
cause the Company to make such filings or take such other actions required under
the laws of any jurisdiction where the Company conducts business. Throughout the
term of the Company, the Company shall comply with all requirements necessary to
maintain the limited liability status of the Company and the limited liability
of the Member under the laws of the State of Delaware and of each other
jurisdiction in which the Company does business.
ARTICLE II
CAPITAL CONTRIBUTIONS
---------------------
Section 2.01 Initial Capital Contribution. The Member will
----------------------------
make an initial Capital Contribution of $1,000, payable simultaneously with the
execution hereof. The Member's acquisition of its Membership Units in the
Company shall be effective upon the payment in full in cash of such initial
Capital Contribution. "Membership Units" or "Units" means the Member's aggregate
rights in the Company, including, without limitation, the Member's right to a
share of the profits and losses of the Company, the Member's right to receive
distributions from the Company and the right to vote and participate in the
management of the Company. Membership Units shall be represented by a
certificate.
Section 2.02 Article 8 Election. All Membership Units shall
------------------
be governed by and determined to be a security under Article 8 of the Uniform
Commercial Code as adopted in the State of Delaware and in the State of New
York.
Section 2.03 Return of Contributions. No interest shall
-----------------------
accrue on any contributions to the capital of the Company. The Member shall not
have the right to withdraw or to be repaid any Capital Contribution made by the
Member except as otherwise provided herein or in the Act.
Section 2.04 Liability of Member. (a) The Member shall not
-------------------
be personally liable for the debts, obligations or liabilities of the Company
solely by reason of being the Member of the Company. Notwithstanding any
provision herein to the contrary, in no event shall the liability of the Member
for the debts, obligations or liabilities of the Company exceed the Member's
Capital Contribution.
(b) The Member's Units in the Company shall be personal
property for all purposes. All property owned by the Company shall be deemed to
be owned by the Company as an entity and the Member shall not be deemed to own
any such property or any portion thereof.
(c) The Company shall defend, indemnify and hold harmless
the Member and its directors, officers, members, managers, employees and
representatives and its successors, assigns and affiliates from and against any
and all losses, claims, expenses or damages suffered or sustained by any of them
(including, but not limited to, any judgment, award, settlement, reasonable
2
<PAGE>
attorney's fees and other costs or expenses incurred in connection with the
investigation and defense or prosecution of any actual or threatened action,
proceeding or claim) (1) related to, or arising out of, any claim that the
Member is liable for any debt, obligation or liability of the Company or is
directly or indirectly required to make any payments in respect thereof or in
connection therewith, and (2) by reason of any act, omission, or alleged act or
omission, arising out of the Member's activities or alleged activities on behalf
of the Company or in furtherance of the interests of the Company; provided,
--------
however, that this Section 2.04(c) shall be of no force or effect if the act,
- -------
omission, or alleged act or omission upon which such actual or threatened
action, proceeding or claim is based was performed or omitted as a result of
willful misconduct or a knowing and material breach of this Agreement by the
Member.
(d) The Company shall pay in advance any legal or other
expenses incurred in investigating or defending against any loss, claim, expense
or damage that may be subject to indemnification under Section 2.04(c) hereof,
upon receipt of an undertaking from the person on whose behalf such expenses are
paid to repay such amount if it shall ultimately be determined that such person
is not entitled to be indemnified by the Company. The Company may purchase
insurance, to the extent available at reasonable cost, to cover losses, claims,
expenses or damages subject to indemnification under Section 2.04(c) hereof.
ARTICLE III
MANAGEMENT OF THE COMPANY
-------------------------
Section 3.01 Management by the Member. The Member,
------------------------
exclusively in its capacity as such, shall manage the business of the Company.
Section 3.02 The Member Has No Exclusive Duty to the
---------------------------------------
Company. This Agreement shall not prohibit the Member from having other business
- -------
interests and engaging in other activities in addition to those relating to the
Company. The Company shall not have any right, by virtue of this Agreement, to
share or participate in such other activities of the Member or to the income or
proceeds derived therefrom. The Member shall not incur any liability to the
Company as a result of engaging in any other business or venture.
ARTICLE IV
TAX TREATMENT
-------------
Section 4.01 Tax Treatment. The Member intends that, for tax
-------------
purposes, the Company will be treated as a disregarded entity and not as a
partnership.
ARTICLE V
ALLOCATIONS AND DISTRIBUTIONS
-----------------------------
Section 5.01 Allocation of Profits and Losses.
--------------------------------
3
<PAGE>
For each fiscal year (or portion thereof), all items of
income, gain, loss and deduction of the Company shall be allocated to the
Member.
Section 5.02 Distributions of Cash Flow. Except as provided
--------------------------
in Section 8.02 hereof, cash flow, the availability of which shall be determined
by the Member, shall be distributed to the Member, at such times and in such
amounts as the Member shall determine.
Section 5.03 Net Proceeds Upon Liquidation. Upon the
-----------------------------
liquidation of the Company, after payment of, or adequate provision for, the
debts and obligations of the Company, the remaining assets of the Company shall
be distributed to the Member.
ARTICLE VI
INSPECTION, RECORDS, CONFIDENTIALITY
------------------------------------
Section 6.01 Access to Properties. The Member, and each of
--------------------
its duly authorized employees and representatives, at the Member's own risk and
expense, and subject to the provisions of any third party management agreement,
shall at all reasonable times have access to all Company assets, activities,
operations and records.
Section 6.02 Books of Account. Books of account shall at all
----------------
times be open to inspection, audit and copying by the Member or its duly
authorized representative.
Section 6.03 Confidentiality. All such records and accounts
---------------
including reports shall be treated as confidential and the Member shall take or
cause to be taken such reasonable precautions as may be necessary to prevent the
disclosure thereof to any unauthorized Person, firm or corporation for a period
ending two (2) years following the termination of the Company.
ARTICLE VII
TRANSFER
--------
Section 7.01 Transfer. The Member may sell, transfer,
--------
pledge, make a gift of, or otherwise dispose of or assign all of its Membership
Units in the Company. Upon a sale, transfer, pledge, gift, disposal or
assignment, the transferee thereof shall become a Member of the Company;
provided that, if the Membership Units are pledged, or otherwise assigned as a
- --------
security interest, the transferee shall become a Member of the Company only the
manner event and to the extent expressly provided in the agreement effecting
such pledge or assignment or by operation of law.
ARTICLE VIII
DISSOLUTION, LIQUIDATION AND TERMINATION
----------------------------------------
Section 8.01 Events of Dissolution. The Company shall be
---------------------
dissolved, and its affairs shall be wound up, upon the first to occur of the
following:
(a) the date that the Member consents to its dissolution;
4
<PAGE>
(b) the sale, exchange, involuntary conversion, or other
disposition or transfer of all or substantially all of the assets of the
Company;
(c) the dissolution, bankruptcy or withdrawal of the Member;
and
(d) the entry of a decree of judicial dissolution under the
Act.
Section 8.02 Procedures Upon Dissolution. Upon dissolution
---------------------------
of the Company, the Member shall wind up the affairs of the Company, sell its
assets to the extent necessary to pay its liabilities, and after payment of all
liabilities of the Company (including liabilities to the Member or Affiliate of
the Member, if it is a creditor), shall distribute the remaining assets of the
Company in accordance with Sections 5.02 and 5.03 hereof. Any distribution made
pursuant to this Section 8.02 shall be made within a reasonable time period.
Section 8.03 Termination. Upon the dissolution and the
-----------
completion of winding up of the Company, the Member shall file a certificate of
cancellation with the Office of the Secretary of State of the State of Delaware
in accordance with the Act.
ARTICLE IX
MISCELLANEOUS
-------------
Section 9.01 Partial Invalidity. In case any one or more
------------------
of the covenants, agreements, or provisions hereof shall be invalid, illegal, or
unenforceable in any respect, the validity of the remaining covenants,
agreements, or provisions hereof shall be in no way affected, prejudiced, or
disturbed thereby.
Section 9.02 Notices. All notices or other communications
-------
required or permitted to be given hereunder shall be in writing, shall be given
by mail, return receipt requested, postage prepaid, prepaid telegram with
confirmation of delivery obtained, nationally recognized overnight delivery
service, telecopy with evidence of transmission, or personally delivered with
confirmation of delivery obtained, to the address of such Person as set forth in
the records of the Company.
Section 9.03 Amendment. This Agreement may be modified or
---------
amended at any time only upon the consent of the Member, which shall be
evidenced by the Member executing a writing effecting such amendment.
Section 9.04 No Waiver. The failure of the Member to insist
---------
upon strict performance of any provision hereof shall not constitute a waiver
of, or estoppel against asserting, the right to require such performance in the
future, nor shall a waiver or estoppel in any one instance constitute a waiver
or estoppel with respect to a later breach of a similar nature or otherwise.
5
<PAGE>
Section 9.05 Binding Effect; Assignment. This Agreement
--------------------------
shall be binding upon and inure to the benefit of the Company and the Member and
the Member's permitted transferees.
Section 9.06 Choice of Law. The rights and duties of the
-------------
Member and the Company under this Agreement shall be governed by the law of the
State of Delaware.
Section 9.07 Entire Agreement.
----------------
This Agreement constitutes the entire agreement with respect
to the subject matter contained herein and supersedes all other prior
understandings or agreements, both written and oral, with respect to the matters
contained herein.
IN WITNESS WHEREOF, the Member has executed this Agreement
with effect on the date set forth in the first
paragraph hereof.
MEMBER:
BETTER MINERALS & AGGREGATES COMPANY
By: /s/ John A. Ulizio
-------------------------------------
Name:
Title:
6
<PAGE>
EXHIBIT 3.27
3-1-72.05 473
----
Commonwealth of Pennsylvania
Department of State
Corporation Bureau
ARTICLES OF INCORPORATION
In compliance with the requirements of the Business Corporation Law,
approved the 5th day of May, A.D. 1933, P.L. 364, as amended, the undersigned,
all of whom are of full age/*/ desiring that they may be incorporated as a
business corporation, do hereby certify:
1. The name of the corporation is:
COMMERCIAL STONE CO., INC.
- --------------------------------------------------------------------------------
2. The location and post office address of its initial registered office in
this Commonwealth is:
46 East Main Street, Uniontown, Fayette County, Pennsylvania
- --------------------------------------------------------------------------------
Number Street City County
3. The purpose or purposes of the corporation which shall be organized under
this Act are as follows:/**/
The corporation shall have unlimited power to engage in and to do any
lawful act concerning any or all lawful business for which corporations may
be incorporated under the Business Corporation Law of 1933, as amended.
Without limiting the generality of the foregoing, the corporation shall
have the power to quarry, mine, manufacture and otherwise produce and
prepare various types and qualities of stone and other building material
for market; to buy, and sell, various types and qualities of stone and
other building material; to own and operate mills and other machinery in
the conduct of said business; and also, to buy, sell, lease, own and hold
such real estate as may be necessary, desirable, and convenient for
carrying out the object of its incorporation.
4. The term of its existence is: Perpetual.
____________________________
/*/ One or more corporations or natural persons of full age may incorporate a
business corporation under the provisions of this Act.
/**/ It shall not be permissible or necessary to set forth any powers enumerated
in Section 302 of the Act.
FILING FEE--$40.00
NOTE: Exercise Tax at the rate of 1/5th of 1% ($2.00 per $1,000) will be due and
payable at the time of filing of the Articles, computed by multiplying the
number of authorized shares having par value by their par value, or if shares of
no par stock are authorized, then on the stated capital applicable thereto as
well.
ONLY A CLEARLY LEGIBLE ORIGINAL SHOULD BE SUBMITTED, SIGNATURES SHOULD BE IN
BLACK INK.
<PAGE>
5. The aggregate number of shares which the corporation shall have authority
to issue is:/***/
Three hundred (300) shares of stock (common) having a par value of One
Thousand ($1,000.00) Dollars per share.
The holders of shares of stock in this corporation shall have pre-emptive
rights.
6. The names and addresses of each of the first directors, who shall serve
until the first annual meeting, are:
NAME ADDRESS
(Including street and number, if any)
7. The names and addresses of each of the incorporators and the number and
class of shares subscribed by each are:
<TABLE>
NAME ADDRESS NUMBER AND CLASS OF SHARES
<S> <C> <C>
(Including street and number, if any)
Gerald R. Solomon 511 North Water Street 1 share of common stock
Masontown, Pennsylvania
</TABLE>
IN TESTIMONY WHEREOF, the incorporators have signed and sealed these
Articles of Incorporation this 24th day of January, 1972.
/s/ Gerald R. Solomon (SEAL) _________________________(SEAL)
- ---------------------------
Gerald R. Solomon
___________________________(SEAL) _________________________(SEAL)
___________________________(SEAL) _________________________(SEAL)
Approved and filed in the Department of State on the 27th day of January A.D.
1972
/s/
------------------------------------------
Secretary of the Commonwealth
_______________________
/***/ There should be set forth the number and par value of all shares having
par value; the number of shares without par value; and the stated capital
applicable thereto. If the shares are to be divided into classes, a
description of each class and a statement of the preferences,
qualifications, limitations, restrictions, and the special or relative
rights granted to, or imposed upon, the shares of each class.
NOTE: The Articles must be accompanied with registry statement, executed in
triplicate, in the form prescribed by Section 206-B of the Act--all of which
should be signed by an incorporator, as such.
2
<PAGE>
Commonwealth of Pennsylvania
Department of State
Office of the
Secretary of the Commonwealth
To all whom these Presents shall come, Greeting:
WHEREAS, Under the provisions of the Business Corporation Law, approved the
5th day of May, Anno Domini one thousand nine hundred and thirty-three, P.L.
364, as amended, the Department of State is authorized and required to issue a
CERTIFICATE OF INCORPORATION
evidencing the incorporation of a business corporation organized under the terms
of that law.
AND WHEREAS, The stipulations and conditions of that law have been fully
complied with by the persons desiring to incorporate as
COMMERCIAL STONE CO., INC.
THEREFORE,, KNOW YE, That subject to the Constitution of this Commonwealth
and under the authority of the Business Corporation Law, I do by these presents,
which I have caused to be sealed with the Great Seal of the Commonwealth,
create, erect, and incorporate the incorporators of and the subscribers to the
shares of the proposed corporation named above, their associates and successors,
and also those who may thereafter become subscribers or holders of the shares of
such corporation, into a body politic and corporate in deed and in law by the
name chosen hereinbefore specified, which shall exist perpetually and shall be
invested with and have and enjoy all the powers, privileges, and franchises
incident to a business corporation and be subject to all the duties,
requirements, and restrictions specified and enjoined in and by the Business
Corporation Law and all other applicable laws of this Commonwealth.
GIVEN under my Hand the Great Seal of the
Commonwealth, at the City of Harrisburg,
this 27th day of January in the year of our
Lord one thousand nine hundred and seventy-
two and of the Commonwealth the one hundred
and ninety-sixth
/s/ C. D. Tucker
--------------------------------------
Secretary of the Commonwealth
<PAGE>
Exhibit 3.27.1
Filed on _______ 84021500
Secretary of the Commonwealth
ARTICLES OF AMENDMENT
---------------------
74776
To the Department of State
Corporation Bureau
Commonwealth of Pennsylvania:
In compliance with the requirements of Article VIII of the Business
Corporation Law approved the 5th day of May, 1933, P.L. 364, as amended, the
applicant, COMMERCIAL STONE CO., INC., desiring to amend its Articles of
Incorporation, hereby certifies under its corporate seal that:
1. The name of the Corporation is Commercial Stone Co., Inc. and its
registered office is located at 46 East Main Street, Uniontown, Fayette County,
Pennsylvania, 15401.
2. The Corporation was incorporated on January 27, 1972, under the
Business Corporation Law, Act of May 5, 1933, P.L. 364, as amended.
3. The Amendment was adopted on the 23rd day of December, 1982 by a
Consent in writing, setting forth the action to be taken, signed by all the
shareholders entitled to vote thereon and filed with the Secretary of the
Corporation.
4. At the time of such action of the shareholders, the total number of
shares of the Corporation outstanding and entitled to vote was 120 shares of
Common Stock, $1,000 par value per share.
5. In such action taken by the shareholders, all the 120 outstanding
shares of Common Stock of the Corporation were voted in favor of the Amendment.
6. The Amendment adopted by the shareholders, set forth in full, provides
as follows:
RESOLVED, that Article 5 of the Articles of Incorporation of
Commercial Stone Co., Inc. be amended to read in full as follows:
<PAGE>
"5. The aggregate number of shares which the Corporation shall have
authority to issue shall be:
a) 1,200 shares of Class A voting Common Stock, $5.00 par value
per share; and
b) 22,800 shares of Class B non-voting Common Stock, $5.00 par
value per share.
The qualifications, privileges, limitations, restrictions and the special
or relative rights in respect to the capital stock of the Corporation are
as follows:
(1) Except as otherwise expressly required by the statutes of the
Commonwealth of Pennsylvania, or as herein otherwise provided, the holders
of the Class A Common Stock shall exclusively possess voting power for the
election of directors and for all other purposes, and the holders of Class
B Common Stock shall have no voting powers or rights whatsoever. The
holders of Class A Common Stock shall have the right of cumulative voting
in the election of directors. No holder of Class B Common Stock shall be
entitled as such to any notice of any annual or special meeting of the
stockholders or to be present thereat, unless he shall be entitled to vote
thereat.
(2) The holders of shares of Class A Common Stock shall have
preemptive rights with respect to any shares of Class A or Class B Common
Stock which may be issued by the Corporation or which may be sold or
transferred out of the treasury of the Corporation, as well as all
securities convertible into shares of Class A or Class B Common Stock,
whether such shares or convertible securities are issued or sold for cash,
services or property or in exchange for other securities or otherwise. No
employee share purchase or option plan shall be adopted with respect to
shares of Class A or Class B Common Stock except with the approval of at
least 85% of the outstanding shares of Class A Common Stock. The holders
of shares of Class B Common Stock shall have no preemptive rights.
(3) No amendment to the Articles of Incorporation shall be adopted
unless approved by at least 85% of the outstanding shares of Class A Common
Stock.
(4) The relative rights, privileges and limitations of the Class A
Common Stock and the Class B Common Stock shall be in all respects
identical, share for share, except as provided in paragraphs (1), (2) and
(3) above; and in the event of any dividend or any liquidation, dissolution
or winding up of the affairs of the Corporation, whether voluntary or
involuntary, partial or otherwise, the amount paid or distributed in
respect of each share of Class A Common Stock shall be the same as the
amount paid or distributed in respect of each share of Class B Common
Stock."
RESOLVED FURTHER, that effective upon the filing of Articles of
Amendment to effectuate the foregoing amendment to Article 5, each share of
the Corporation's Common Stock, $1,000 par value per share, then
outstanding shall be changed into and shall become:
2
<PAGE>
10 shares of Class A voting Common Stock $5.00 par value per
share; and
190 shares of Class B non-voting Common Stock, $5.00 par value
per share.
IN TESTIMONY WHEREOF, the applicant, Commercial Stone Co., Inc. has caused
these Articles of Amendment to be signed by its President and its Corporate
Seal, duly attested by its Secretary, to be hereunder affixed this 28th day of
December, 1983.
ATTEST: COMMERCIAL STONE CO., INC.
By: /s/ By: /s/
----------------------- ---------------------------
Secretary President
(Corporate Seal)
The foregoing Articles of Amendment are approved by and filed with the
Department of State on the _____ day of December, 1983.
-------------------------------------------
Secretary of the Commonwealth
3
<PAGE>
84021504
COMMERCIAL STONE CO., INC.
Consent of Shareholders and Directors
-------------------------------------
The undersigned, being all the Directors and Shareholders of Commercial
Stone Co., Inc., a Pennsylvania corporation (the "Corporation") by unanimous
written consent as permitted by Sections 402(7) and 513 of the Business
Corporation Law of the Commonwealth of Pennsylvania, hereby adopt the following
preambles and resolutions and consent to any and all action taken by virtue of
such preambles and resolutions as though they had been adopted at a duly
convened joint meeting of the Directors and Shareholders.
I. APPROVAL OF PLAN OF RECAPITALIZATION
------------------------------------
WHEREAS, the aggregate number of shares which the Corporation has authority
to issue is presently 300 shares of voting Common Stock, $1,000 par value per
share, 120 shares of which are issued, fully paid and outstanding; and
WHEREAS, the Board of Directors and the Shareholders have determined it to
be in the best interests of the Corporation to revise the capital structure of
the Corporation in order to assure continued unity of ownership and management.
NOW, THEREFORE, BE IT RESOLVED, that the following Plan of Recapitalization
is hereby adopted:
1. As promptly as possible, the Corporation shall file Articles of
Amendment to its Articles of Incorporation effecting the amendments referred to
in Part II below, which amendments provide for, among other things, a capital
structure consisting of:
(a) 1,200 shares of Class A voting Common Stock, $5.00 par value per
share, authorized, issued and outstanding; and
<PAGE>
(b) 22,800 shares of Class B non-voting Common Stock, $5.00 par value
per share, authorized, issued and outstanding.
2. Effective upon the filing of said Articles of Amendment, each share of
the Corporation's presently existing Common Stock, $1,000 par value per share,
then outstanding shall be changed into and shall become:
10 shares of Class A voting Common Stock, $5.00 par value per share;
and
190 shares of Class B non-voting Common Stock, $5.00 par value per
share.
Certificates representing the aforesaid shares will be issued upon surrender of
and in exchange for certificates representing shares of the existing Common
Stock, $1,000 par value per share.
3. The expenses incurred in carrying out this Plan of Recapitalization
will be paid by the Corporation.
II. APPROVAL OF AMENDMENT TO ARTICLES OF INCORPORATION
--------------------------------------------------
WHEREAS, in order to implement the plan of Recapitalization referred to in
Part I above, it is necessary that Article 5 of the Corporation's Articles of
Incorporation be amended.
RESOLVED, that Article 5 of the Articles of Incorporation of
Commercial Stone Co., Inc. be amended to read in full as follows;
"5. The aggregate number of shares which the Corporation shall have
authority to issue shall be:
a) 1,200 shares of Class A voting Common Stock, $5.00 par value
per share;
b) 22,800 shares of Class B non-voting Common Stock, $5.00 par
value per share.
The qualifications, privileges, limitations, restrictions and the special
or relative rights in respect to the capital stock of the Corporation are
as follows:
(1) Except as otherwise expressly required by the statutes of the
Commonwealth of Pennsylvania, or as herein otherwise provided, the holders
of the Class A Common Stock shall exclusively possess voting power for the
election of directors and for all other
2
<PAGE>
purposes, and the holders of Class B Common Stock shall have no voting
powers or rights whatsoever. The holders of Class A Common Stock shall have
the right of cumulative voting in the election of directors. No holder of
Class B Common Stock shall be entitled as such to any notice of any annual
or special meeting of the stockholders or to be present thereat, unless he
shall be entitled to vote thereat.
(2) The holders of shares of Class A Common Stock shall have
preemptive rights with respect to any shares of Class A or Class B Common
Stock which may be issued by the Corporation or which may be sold or
transferred out of the treasury of the Corporation, as well as all
securities convertible into shares of Class A or Class B Common Stock,
whether such shares or convertible securities are issued or sold for cash,
services or property or in exchange for other securities or otherwise. No
employee share purchase or option plan shall be adopted with respect to
shares of Class A or Class B Common Stock except with the approval of at
least 85% of the outstanding shares of Class A Common Stock. The holders
of shares of Class B Common Stock shall have no preemptive rights.
(3) No amendment to the Articles of Incorporation shall be adopted
unless approved by at least 85% of the outstanding shares of Class A Common
Stock.
(4) The relative rights, privileges and limitations of the Class A
Common Stock and the Class B Common Stock shall be in all respects
identical, share for share, except as provided in paragraphs (1), (2) and
(3) above; and in the event of any dividend or any liquidation, dissolution
or winding up of the affairs of the Corporation, whether voluntary or
involuntary, partial or otherwise, the amount paid or distributed in
respect of each share of Class A Common Stock shall be the same as the
amount paid or distributed in respect of each share of Class B Common
Stock."
RESOLVED FURTHER, that effective upon the filing of Articles of
Amendment to effectuate the foregoing amendment to Article 5, each share of
the Corporation's Common Stock, $1,000 par value per share, then
outstanding shall be changed into and shall become:
10 shares of Class A voting Common Stock, $5.00 par value per
share;
190 shares of Class B non-voting Common Stock, $5.00 par value
per share.
RESOLVED, FURTHER, that the President or the Vice President and the
Secretary of the Corporation be, and they hereby are, authorized and
directed to execute and cause to be filed in the Office of the Secretary of
State of the Commonwealth of Pennsylvania appropriate Articles of Amendment
in order to effect the amendment to the Corporation's Articles of
Incorporation set forth in the preceding resolution and that the proper
officers of the Corporation be, and hereby each of them is, authorized and
directed, on behalf of the Corporation, to execute and deliver any and all
such certificates and other documents and to take any and all such action
as may be necessary or desirable
3
<PAGE>
to implement the resolutions herein set forth and to accomplish the
corporate action reflected thereby.
WITNESS, the due execution hereof of the foregoing preambles and
resolutions relating to the Approval of the Plan of Recapitalization and the
Amendment to Articles of Incorporation of the Corporation this 23/rd/ day of
December, 1983.
DIRECTORS: SHAREHOLDERS:
/s/ Dell H. Shearer /s/ Dell H. Shearer
- ------------------------------- -----------------------------
Dell H. Shearer Dell H. Shearer
/s/ Joseph H. Shearer /s/ Joseph H. Shearer
- ------------------------------- -----------------------------
Joseph H. Shearer Joseph H. Shearer
/s/ R. Scott Shearer /s/ R. Scott Shearer
- ------------------------------- -----------------------------
R. Scott Shearer R. Scott Shearer
4
<PAGE>
84021504
84021509
74775
COMMONWEALTH OF PENNSYLVANIA
[LOGO]
DEPARTMENT OF STATE
To All to Whom These Presents Shall Come, Greeting:
WHEREAS, In and by Article VIII of the Business Corporation Law, approved
the fifth day of May, Anno Domini one thousand nine hundred and thirty-three,
P.L. 364, as amended, the Department of State is authorized and required to
issue a
CERTIFICATE OF AMENDMENT
evidencing the amendment of the Articles of Incorporation of a business
corporation organized under or subject to the provisions of that Law, and
WHEREAS, The stipulation and conditions of that Law pertaining to the
amendment of Articles of Incorporation have been fully complied with by
COMMERCIAL STONE CO., INC.
THEREFORE, KNOW YE, That subject to the Constitution of this Commonwealth
and under the authority of the Business Corporation Law, I do by these presents,
which I have caused to be sealed with the Great Seal of the Commonwealth, extend
the rights and powers of the corporation named above, in accordance with the
terms and provisions of the Articles of Amendment presented by it to the
Department of State, with full power and authority to use and enjoy such rights
and powers, subject to all the provisions and restrictions of the Business
Corporation Law and all other applicable laws of this Commonwealth.
GIVEN under my Hand the Great Seal of the
Commonwealth, at the City of Harrisburg, this 29th
day of December in the year of our Lord one
thousand nine hundred and eighty-three and of the
Commonwealth the two hundred and eighth.
/s/ William R. Davis
-----------------------------------------
Secretary of the Commonwealth
<PAGE>
Exhibit 3.27.2
<TABLE>
<CAPTION>
<S> <C>
Applicant's Account No. ________ Filed this _______________________ day of
DSCB: BCL-207 (Rev. B-72) FEB. 09 1984, A.D. 19
--------------------
Filing Fee: $40
Commonwealth of Pennsylvania
AB-2 Department of State
84111465
----------------------------
Statement of
Change of Registered COMMONWEALTH OF PENNSYLVANIA
Office-Domestic DEPARTMENT OF STATE
Business Corporation CORPORATION BUREAU
74776 Secretary of the Commonwealth
- --------------------------------------------------------------------------------------------------------
</TABLE>
In compliance with the requirements of section 307 of the Business
Corporation Law, act of May 5, 1933 (T.L. 374), [___________] that it
[___________________________]:
1. The name of the corporation is:
Commercial Stone Co., Inc.
- --------------------------------------------------------------------------------
2. The address of its present registered office in this Commonwealth is (the
Department of State is hereby authorized to correct the following statement to
conform to the records of the Department):
46 East Main Street
- --------------------------------------------------------------------------------
(NUMBER) (STREET)
Uniontown Pennsylvania 15401
- --------------------------------------------------------------------------------
(CITY) (ZIP CODE)
3. The address to which the registered office in this Commonwealth is to be
changed is:
850 Weldon Street
- --------------------------------------------------------------------------------
(NUMBER) (STREET)
Latrobe Pennsylvania 15650
- --------------------------------------------------------------------------------
(CITY) (ZIP CODE)
4. Such change was authorized by resolution duly adopted by at least a
majority of the members of the board of directors of the corporation.
IN TESTIMONY WHEREOF, the undersigned corporation has caused this statement
to be signed by a duly authorized officer, and its corporate seal, duly attested
by another such officer, to be hereunto affixed, this 24th day of January, 1984.
Commercial Stone Co., Inc.
------------------------------------
(NAME OF CORPORATION)
By: /s/ Joseph H. Shearer
---------------------------------
(SIGNATURE)
Joseph H. Shearer, President
-------------------------------------
(TITLE: PRESIDENT, VICE PRESIDENT, ETC.)
Attest:
/s/ R. Scott Shearer
- ---------------------------
(SIGNATURE)
R. Scott Shearer, Secretary
- ---------------------------
(TITLE: SECRETARY, ASSISTANT SECRETARY, ETC.)
(CORPORATE SEAL)
<PAGE>
Exhibit 3.27.3
AMENDMENT TO ARTICLES OF INCORPORATION
--------------------------------------
74776
To the Department of State
Corporation Bureau
Commonwealth of Pennsylvania:
In compliance with the requirements of Article VIII of the Business
Corporation Law approved the 5th day of May, 1933, P.L. 364, as amended, the
applicant, COMMERCIAL STONE CO., INC., desiring to amend its Articles of
Incorporation, hereby certifies under its corporate seal that:
1. The name of the Corporation is Commercial Stone Co., Inc. and its
registered office is located at 850 Weldon Street, Latrobe, Westmoreland County,
Pennsylvania, 15650.
2. The Corporation was incorporated on January 27, 1972, under the
Business Corporation Law, Act of May 5, 1933, P.L. 364, as amended.
3. The Amendment was adopted on the 17th day of December, 1986 by a
Consent in writing, setting forth the action so taken, signed by all the
shareholders entitled to vote thereon and filed with the Secretary of the
Corporation.
<PAGE>
4. At the time of such action of the shareholders, the total number of
shares of the Corporation outstanding and entitled to vote was 1,200 shares of
Common Stock, $5.00 par value per share.
5. In such action taken by the shareholders, all the 1,200 outstanding
shares of Common Stock of the Corporation were voted in favor of the Amendment.
6. The Amendment adopted by the shareholders, set forth in full, provides
as follows:
RESOLVED, that Article 5 of the Articles of Incorporation of
Commercial Stone Co., Inc. be amended to read in full as follows:
"5. The aggregate number of shares which the Corporation shall have
authority to issue shall be:
a) 1,200 shares of Class A voting Common Stock, $5.00 par value
per share; and
b) 22,800 shares of Class B non-voting Common Stock, $5.00 par
value per share.
The qualifications, privileges, limitations, restrictions and the special
or relative rights in respect to the capital stock of the Corporation are
as follows:
(1) Except as otherwise expressly required by the statutes of the
Commonwealth of Pennsylvania, or as herein otherwise provided, the holders
of the Class A Common Stock shall exclusively possess voting power for the
election or directors and for all other purposes, and the holders of Class
B Common Stock shall have no voting powers or rights whatsoever. The
holders of Class A Common Stock shall have the right of cumulative voting
in the election of directors. No holder of Class B Common Stock shall be
entitled as such to any notice of any annual or special meeting of the
stockholders or to be present thereat, unless he shall be entitled to vote
thereat.
(2) No amendment to the Articles of Incorporation shall be adopted
unless approved by at least 85% of the outstanding shares of Class A Common
Stock.
2
<PAGE>
(3) The relative rights, privileges and limitations of the Class A
Common Stock and the Class B Common Stock shall be in all respects
identical, share for share, except as provided in paragraphs (1) and (2)
above; and in the event of any dividend or any liquidation, dissolution or
winding up of the affairs of the Corporation, whether voluntary or
involuntary, partial or otherwise, the amount paid or distributed in
respect of each share of Class A Common Stock shall be the same as the
amount paid or distributed in respect of each share of Class B Common
Stock."
IN TESTIMONY WHEREOF, the applicant, Commercial Stone Co., Inc. has caused
these Articles of Amendment to be signed by its President and its Corporate
Seal, duly attested by its Secretary, to be hereunder affixed this 17th day of
December, 1986.
ATTEST: COMMERCIAL STONE CO., INC.
By: /s/ By: /s/ Joseph H. Shearer
------------------------- --------------------------
Secretary President
[Corporate Seal]
The foregoing Amendment to Articles of Amendment are approved by and filed
with the Department of State on the 24th day of December, 1986.
________________________________________
Secretary of the Commonwealth
3
<PAGE>
COMMONWEALTH OF PENNSYLVANIA
[LOGO]
DEPARTMENT OF STATE
To All to Whom These Presents Shall Come, Greeting:
WHEREAS, In and by Article VIII of the Business Corporation Law, approved
the fifth day of May, Anno Domini one thousand nine hundred and thirty-three,
P.L. 364, as amended, the Department of State is authorized and required to
issue a
CERTIFICATE OF AMENDMENT
evidencing the amendment of the Articles of Incorporation of a business
corporation organized under or subject to the provisions of that Law, and
WHEREAS, The stipulations and conditions of that Law pertaining to the
amendment of Articles of Incorporation have been fully complied with by
COMMERCIAL STONE CO., INC.
THEREFORE, KNOW YE, That subject to the Constitution of this Commonwealth
and under the authority of the Business Corporation Law, I do by these presents,
which I have caused to be sealed with the Great Seal of the Commonwealth, extend
the rights and powers of the corporation named above, in accordance with the
terms and provisions of the Articles of Amendment presented by it to the
Department of State, with full power and authority to use and enjoy such rights
and powers, subject to all the provisions and restrictions of the Business
Corporation Law and all other applicable laws of this Commonwealth.
GIVEN under my Hand the Great Seal of the
Commonwealth, at the City of Harrisburg,
this 24th day of December in the year of
our Lord one thousand nine hundred and
eighty-six and of the Commonwealth the
two hundred eleventh.
/s/
-------------------------------------
Secretary of the Commonwealth
<PAGE>
EXHIBIT 3.28
BY-LAWS
of
COMMERCIAL STONE CO., INC.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
OFFICES
Section 1.01 Offices....................................................... 1
ARTICLE II
SEAL
Section 2.01 Seal.......................................................... 1
ARTICLE III
SHAREHOLDER'S MEETING
Section 3.01 Place of Meeting.............................................. 1
Section 3.02 Annual Meeting................................................ 1
Section 3.03 Quorum........................................................ 1
Section 3.04 Voting........................................................ 2
Section 3.05 Notice of Meeting............................................. 2
Section 3.06 Judges of Election............................................ 2
Section 3.07 Special Meetings.............................................. 2
Section 3.08 Voting List................................................... 3
ARTICLE IV
DIRECTORS
Section 4.01 Board of Directors............................................ 3
Section 4.02 Powers........................................................ 3
Section 4.03 Meetings of the Board......................................... 3
Section 4.04 Special Meetings.............................................. 4
Section 4.05 Quorum........................................................ 4
Section 4.06 Vacancies..................................................... 4
Section 4.07 Compensation of Directors..................................... 4
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
ARTICLE V
OFFICERS
Section 5.01 Office, Elections, Term, etc................................. 4
Section 5.02 Chairman of the Board........................................ 4
Section 5.03 President.................................................... 5
Section 5.04 Executive Vice President..................................... 5
Section 5.05 Secretary.................................................... 5
Section 5.06 Treasurer.................................................... 5
Section 5.07 Vacancies.................................................... 5
Section 5.08 Signing Checks, Notes, etc................................... 5
ARTICLE VI
ACTIONS BY CONSENT AND TELECOMMUNICATION
Section 6.01 Action by Consent............................................ 6
Section 6.02 Telephone Participation in Meetings.......................... 6
ARTICLE VII
CORPORATE RECORDS
Section 7.01 Records Required............................................. 6
Section 7.02 Inspection................................................... 6
ARTICLE VIII
SHARES
Section 8.01 Certificates................................................. 7
Section 8.02 Transfers of Shares.......................................... 7
Section 8.03 Closing Share Transfer Books or Fixing Record Date........... 7
Section 8.04 Lost Certificates............................................ 7
ARTICLE IX
CORPORATE FINANCE
Section 9.01 Dividends.................................................... 7
Section 9.02 Reserves..................................................... 8
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
Section 9.03 Annual Statement............................................. 8
Section 9.04 Fiscal Year.................................................. 8
ARTICLE X
INDEMNIFICATION
Section 10.01 Directors and Officers...................................... 8
Section 10.02 Basis of Rights; Other Rights............................... 8
Section 10.03 Insurance................................................... 9
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01 Notices..................................................... 9
ARTICLE XII
AMENDMENTS
Section 12.01 Amendment of By-Laws........................................ 9
</TABLE>
iii
<PAGE>
Exhibit B
BY-LAWS OF COMMERCIAL STONE CO., INC.
ARTICLE I
OFFICES
-------
Section 1.01 Offices. The registered office shall be at 2200 Springfield
-------
Pike, Connellsville, Pennsylvania 15425. The corporation may also have offices
at such other places as the Board of Directors may from time to time appoint or
the business of the corporation may require.
ARTICLE II
SEAL
----
Section 2.01 Seal. The corporate seal shall have inscribed thereon the
----
name of the corporation, the year of its organization and the words "Corporate
Seal, Pennsylvania - 1972."
ARTICLE III
SHAREHOLDERS' MEETING
---------------------
Section 3.01 Place of Meeting. All meetings of the shareholders shall be
----------------
held at 2200 Springfield Pike, Connellsville, Pennsylvania 15425, or such other
place or places, either within or without the Commonwealth of Pennsylvania, as
may from time to time be selected.
Section 3.02 Annual Meeting. The annual meeting of the shareholders shall
--------------
be held on the 1st Monday of June in each year if not a legal holiday, and if a
legal holiday, then on the next secular day following at 11:00 o'clock A.M. when
they shall elect a Board of Directors, and transact such other business as may
properly be brought before the meeting. If the annual meeting shall not be
called and held within six months after the designated time, any shareholder may
call such meeting.
Section 3.03 Quorum. A Shareholders' meeting duly called shall not be
------
organized for the transaction of business unless a quorum is present. The
presence in person or by proxy, of shareholders entitled to cast at least a
majority of the votes which all shareholders are entitled to cast on the
particular matter shall constitute a quorum for the purpose of considering such
matter. The Shareholders present at a duly organized meeting can continue to do
business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a
<PAGE>
quorum. Adjournment or adjournments of any annual or special meeting may be
taken, but any meeting at which directors are to be elected shall be adjourned
only from day to day, or for such longer periods not exceeding fifteen days
each, as may be directed by shareholders who are present in person or by proxy
and who are entitled to cast at least a majority of the votes which all such
shareholders would be entitled to cast at any election of directors until such
directors have been elected. If a meeting cannot be organized because a quorum
has not attended, those present may, except as otherwise provided by statute,
adjourn the meeting to such time and place as they may determine, but in the
case of any meeting called for the election of directors, those who attend the
second of such adjourned meetings, although less than a quorum, shall
nevertheless constitute a quorum for the purpose of electing directors.
Section 3.04 Voting. At each meeting of the shareholders, every
------
shareholder having the right to vote shall be entitled to vote in person or by
proxy executed in writing by such shareholder or by his duly authorized attorney
in fact, and filed with the secretary of the corporation. No unrevoked proxy
shall be valid after eleven months from the date of its execution, unless a
longer time is expressly provided therein, but in no event shall a proxy, unless
coupled with an interest, be voted on after three years from the date of its
execution. Elections for directors shall be by cumulative voting. Upon demand
made by a shareholder at any election for the directors before the voting
begins, the election shall be by ballot. No share shall be voted at any meeting
upon which any installment is due and unpaid. The original share transfer book,
or a duplicate thereof kept in this Commonwealth shall be prima facie evidence
of the right of the person named therein to vote thereon.
Section 3.05 Notice of Meeting. Written notice of the annual meeting
-----------------
shall be mailed to each shareholder entitled to vote thereat, at such address as
appears on the books of the corporation, at least ten days prior to the meeting.
Section 3.06 Judges of Election. In advance of any meeting of
------------------
shareholders, the Board of Directors may appoint judges of election, who need
not be shareholders, to act at such meeting or any adjournment thereof. If
judges of election be not so appointed, the Chairman of any such meeting may,
and on the request of any shareholder or his proxy shall make such appointment
at the meeting. The number of judges shall be one or three. If appointed at a
meeting on the request of one or more shareholders or proxies, the majority of
shares present and entitled to vote shall determine whether one or three judges
are to be appointed. On request of the Chairman of the meeting, or of any
shareholder or his proxy, the judge(s) shall make a report in writing of any
challenge or question or matter determined by them, and execute a certificate of
any fact found by them. No person who is a candidate for office shall act as a
judge.
Section 3.07 Special Meetings. Special meetings of the shareholders may
----------------
be called at any time by the President, or the Board of Directors, or the
holders of not less than one-fifth of the votes which all shareholders are
entitled to cast at the particular meeting. At any time, upon written request of
any person or persons who have duly called a special meeting, it shall be the
duty of the Secretary to fix the date of the meeting to be held not less than
ten nor more than sixty days after receipt of the request, and to give due
notice thereof. If the Secretary shall neglect or refuse to fix the date of the
meeting and give notice thereof, the person or persons calling the meeting may
do so.
2
<PAGE>
Business transacted at all special meetings shall be confined to the
objects stated in the call and matters germane thereto, unless all shareholders
entitled to vote consent thereto.
Written notice of a special meeting of shareholders, stating the time,
place, and object thereof, shall be given to each shareholder entitle to vote
thereat at least five days before such meeting, unless a greater period of
notice is required by statute in a particular case.
Section 3.08 Voting List. The office or agent having charge of the share
-----------
transfer book shall make, at least five days before each meeting of
shareholders, a complete list of the shareholders entitled to vote at the
meeting, arranged in alphabetical order, with the address of an the number of
shares held by each. The list shall be kept on file at the registered office of
the corporation, and shall be subject to inspection by any shareholder at any
time during usual business hours, and shall also be produced and kept open at
the time and place of the meeting, and shall be subject to the inspection of any
shareholder during the whole time of the meeting. The original share ledger or
transfer book, or a duplicate thereof kept in this Commonwealth, shall be prima
facie evidence as to who are the shareholders entitled to examine such list or
share transfer book, or to vote, in person or by proxy, at any meeting of
shareholders.
ARTICLE IV
DIRECTORS
---------
Section 4.01 Board of Directors. The business of the corporation shall be
------------------
managed by its Board of Directors, two in number, who shall be natural persons
of full age and need not be resident(s) of this Commonwealth or shareholders in
the corporation. They shall be elected by the shareholders, at the annual
meeting of shareholders of the corporation, and each director shall be elected
for the term of at least one year, and until his successor shall be elected and
shall qualify.
Section 4.02 Powers. In addition to the powers and authorities by these
------
By-Laws expressly conferred upon them, the Board may exercise all such powers of
the corporation and do all such lawful acts and things as are not by statute or
by the Articles of Incorporation or by these By-Laws directed or required to be
exercised or done by the shareholders.
Section 4.03 Meetings of the Board. The meetings of the Board of
---------------------
Directors may be held at such place within this Commonwealth, or elsewhere, as a
majority of the directors may from time to time appoint, or as may be designated
in the notice calling the meeting.
Each newly elected Board of Directors may meet at such place and time as
shall be fixed by the shareholders at the meeting at which such directors are
elected and no notice shall be necessary to the necessary to the newly elected
directors in order legally to constitute the meeting, or they may meet at such
place and time as may be fixed by the consent in writing of all the directors.
Regular meetings of the Board shall be held without notice at the
registered office of the corporation, or at such other time and place as shall
be determined by the Board.
3
<PAGE>
Section 4.04 Special Meetings. Special meetings of the Board of Directors
----------------
may be called by the President on five days' notice to each director, either
personally or by telegram; special meetings shall be called by the President or
Secretary in a like manner and on like notice on the written request of a
director.
Section 4.05 Quorum. A majority of the directors in office shall be
------
necessary to constitute a quorum for the transaction of business, and the acts
of a majority of the directors present at a meeting at which a quorum is present
shall be the acts of the Board of Directors.
Section 4.06 Vacancies. Vacancies in the Board of Directors, including
---------
vacancies resulting from an increase in the number of directors, shall be filled
by a majority of the remaining members of the Board though less than a quorum
and each person so elected shall be a director until his successor is elected by
the shareholders, who may make such election at the next annual meeting of the
shareholders or at any special meeting duly called for that purpose and held
prior thereto.
Section 4.07 Compensation of Directors. Directors as such, shall not
-------------------------
receive any stated salary for their services, but by resolution of the Board of
Directors, a fixed sum and expenses of attendance, if any, may be allowed for
attendance at each regular or special meeting of the Board provided, that
nothing herein contained shall be construed to preclude any director from
serving the corporation in any other capacity and receiving compensation
therefor.
ARTICLE V
OFFICERS
--------
Section 5.01 Office, Elections, Term, etc. The executive officers of the
----------------------------
corporation shall be chosen by the directors and shall be a Chairman, President,
Executive Vice President, Secretary, and Treasurer. The Board of Directors may
also choose such other officers and agents as it shall deem necessary, who shall
hold their offices for such duties as from time to time shall be prescribed by
the Board of Directors. Any two or more offices may be held by the same person.
It shall not be necessary for the officers to be directors.
The salaries of all officers and agents of the corporation shall be fixed
by the Board of Directors.
The officers of the corporation shall hold office for one year and until
their successors are chosen and have qualified. Any officer elected or appointed
by the Board of Directors may be removed by the Board of Directors whenever in
their judgment the best interests of the corporation will be served thereby.
Section 5.02 Chairman of the Board. The Chairman of the Board of
---------------------
Directors shall preside at all meetings of the shareholders and of the directors
at which he is present, and shall have such authority and perform such duties as
the Board of Directors may from time to time designate. The Chairman of the
Board of Directors shall be the chief executive officer of the corporation and
as such shall have general and active executive management of all of the
business, property, and affairs of the corporation and shall see that all orders
and resolutions of
4
<PAGE>
the Board of Directors and its committees are carried into effect. In the event
of the absence, incapacity, inability, or refusal of the Chairman of the Board
to act, the President shall assume the authority and perform the duties of the
Chairman of the Board.
Section 5.03 President. The President shall, in the absence of the
---------
Chairman of the Board, preside at all meetings of the shareholders and of the
directors at which he is present, and shall be the chief operating officer of
the corporation. Subject to the control of the Board of Directors, the President
shall have general and active management of the operations of the corporation,
shall see that all orders and resolutions of the Board of Directors are carried
into effect, subject, however, to the right of the directors to delegate any
specific power, except such as may be by statute exclusively conferred on the
President, to any other officer or officers of the corporation. He shall execute
bonds, mortgages, and other contracts requiring a seal, under the seal of the
corporation. He shall be ex-officio a member of all committees, and shall have
the general powers and duties of supervision and management usually vested in
the office of President of a corporation that are not vested by these bylaws in
the Chairman of the Board.
Section 5.04 Executive Vice President. The Executive Vice President shall
------------------------
serve under the direction of the President. In the absence, incapacity, or
inability or refusal of the President to act, the Executive Vice President shall
assume the authority and perform the duties of the President. The Board of
Directors may appoint additional Vice Presidents, in which event the Vice
Presidents shall be subordinate to the Executive Vice President.
Section 5.05 Secretary. The Secretary shall attend all sessions of the
---------
Board and all meetings of the shareholders and act as clerk thereof, record all
the votes of the corporation and the minutes of all its transactions in a book
to be kept for that purpose; and shall perform like duties for all committees of
the Board of Directors when required. He shall give, or cause to be given,
notice of all meetings of the shareholders and of the Board of Directors, and
shall perform such other duties as may be prescribed by the Board of Directors,
or President, and under whose supervision he shall be. He shall keep in safe
custody the corporate seal of the corporation, and when authorized by the Board,
affix the same to any instrument requiring it.
Section 5.06 Treasurer. The Treasurer shall have custody of the corporate
---------
funds and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation, and shall keep the moneys
of the corporation in a separate account to the credit of the corporation. He
shall disburse the funds of the corporation as may be ordered by the Board,
taking proper vouchers for such disbursements, and shall render to the Chairman,
President and directors, at the regular meetings of the Board, or whenever they
may require it, an account of all his transactions as Treasurer and of the
financial condition of the corporation.
Section 5.07 Vacancies. If the office of any officers or agent, one or
---------
more, becomes vacant for any reason, the Board of Directors may choose a
successor or successors, who shall hold office for the unexpired term in respect
of which such vacancy occurred.
Section 5.08 Signing Checks, Notes, etc. Unless otherwise provided by
--------------------------
resolution of the Board of Directors, all checks, notes, or other obligations
for the payment of money by the corporation shall be signed by any one of the
following officers of the corporation: Chairman, President, or Treasurer. Any
such officer shall have power in the name and on behalf of the
5
<PAGE>
corporation to endorse for collection and deposit in any account maintained with
any banking institution by the corporation, all checks or other negotiable
instruments payable to the order of the corporation. The Board of Directors may,
however, authorize any one of such officers to sign any such instruments for,
and on behalf of, the corporation without the necessity of counter-signature;
may designate officers or employees of the corporation, other than those named
above, who may, in the name of the corporation, sign such instruments; and may
authorize the use of facsimile signatures of any of such persons.
ARTICLE VI
ACTIONS BY CONSENT AND TELECOMMUNICATION
----------------------------------------
Section 6.01 Action by Consent. Any action which may be taken at a
-----------------
meeting of the shareholders, or at a meeting of the directors or members of the
executive committee, may be taken without a meeting, if a consent or consents in
writing setting forth the action so taken shall be signed by all of the
shareholders who would be entitled to vote at a meeting for such purpose, or by
all of the directors or the members of the executive committee, as the case may
be, and shall be filed with the Secretary of the corporation.
Section 6.02 Telephone Participation in Meetings. One or more
-----------------------------------
shareholders or directors may participate in a meeting of the shareholders or
Board of Directors, of a committee thereof, by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other.
ARTICLE VII
CORPORATE RECORDS
-----------------
Section 7.01 Records Required. There shall be kept at the registered
----------------
office of the corporation an original or duplicate record of the proceedings of
the shareholders and of the directors, and the original or a copy of its By-
Laws, including all amendments or alterations thereof to date, certified by the
Secretary of the corporation. An original or duplicate share transfer book shall
also be kept at the registered office, or at the office of a transfer agent or
registrar within this Commonwealth, giving the names of the shareholders in
alphabetical order, and showing their respective addresses, the number and
classes of shares held by each, the number and date of certificates issued for
the shares, and the number and date of cancellation of every certificate
surrendered for cancellation.
Section 7.02 Inspection. Every shareholder s hall have a right to
----------
examine, in person or by his agent or attorney, at any reasonable time or times
for any reasonable purpose, the share transfer book, books or records of
account, and records of the proceedings of the shareholders and directors, and
make extracts therefrom.
6
<PAGE>
ARTICLE VIII
SHARES
------
Section 8.01 Certificates. The share certificates of the corporation
------------
shall be numbered and registered in the share transfer books of the corporation,
as they are issued. They shall be signed by the President and Secretary and
shall bear the corporate seal.
Section 8.02 Transfers of Shares. Transfers of shares of the corporation
-------------------
shall be made only on stock transfer records of the corporation (which may be
kept in written or computer form). Transfers shall be made by the corporation or
its duly authorized agent as required by law. The corporation shall be entitled
to treat the person in whose name shares stand on the books of the corporation
as the owner thereof for all purposes.
Section 8.03 Closing Share Transfer Books or Fixing Record Date. The
--------------------------------------------------
Board of Directors may fix a time, not more than fifty days prior to the date
fixed for the payment of any dividend or distribution, or the date fixed for the
allotment of rights, or the date when any change or conversion or exchange of
shares will be made or go into effect, as a record date for the determination of
the shareholders entitled to notice of, and to vote at, any such meeting, or
entitled to receive payment of any such dividend or distribution or to receive
any such allotment or rights, or to exercise the rights in respect to any
change, conversion, or exchange of shares. In such cases, only such shareholders
as shall be shareholders of record on the date so fixed shall be entitled to
notice of, and to vote at, such meeting, or to receive payment of such dividend,
or to receive such allotment or rights, or to exercise such rights, as the case
may be, notwithstanding any transfer of any shares on the books of the
corporation after any record date fixed as aforesaid. The Board of Directors may
close the books of the corporation against transfers of shares during the whole
or any part of such period, and in such case written or printed notice thereof
shall be mailed at least ten days before the closing thereof to each shareholder
of record at the address appearing on the records of the corporation or supplied
by him to the corporation for the purpose of notice. While the share transfer
books of the corporation are closed, no transfer of shares shall be made
thereon. If no record date is fixed for the determination of shareholders
entitled to receive notice of and vote at, a shareholders' meeting, transferees
of shares which are transferred on the books of the corporation within ten days
next preceding the date of such meeting shall not be entitled to notice of and
vote at such meeting.
Section 8.04 Lost Certificates. Any person claiming the loss, destruction
-----------------
or mutilation of a share certificate may have a new certificate issued therefor
upon such terms and indemnity to the corporation as the Board of Directors may
prescribe.
ARTICLE IX
CORPORATE FINANCE
-----------------
Section 9.01 Dividends. Subject to the provisions of the statutes and the
---------
Articles of Incorporation, the Board of Directors may declare and pay dividends
upon the outstanding shares of the corporation from time to time and to such
extent as it deems advisable.
7
<PAGE>
Section 9.02 Reserves. Before payment of any dividend there may be set
--------
aside out of the net profits of the corporation such sum or sums as the
directors, from time to time, in their absolute discretion, think proper as a
reserve fund to meet contingencies, or for equalizing dividends, or for such
other purpose as the directors shall think conducive to the interests of the
corporation, and the directors may abolish any such reserve in the manner in
which it was created.
Section 9.03 Annual Statement. The Chairman, President, and Board of
----------------
Directors shall present at each annual meeting a full and complete statement of
the business and affairs of the corporation for the preceding year. Such
statement shall be prepared and presented in whatever manner the Board of
Directors shall deem advisable and need not be verified by a certified public
accountant.
Section 9.04 Fiscal Year. The fiscal year of the corporation shall begin
-----------
on the 1st day of April in each year.
ARTICLE X
INDEMNIFICATION
---------------
Section 10.01 Directors and Officers. The corporation shall indemnify
----------------------
each director or officer (including each former director or officer) and may, by
action of the Board of Directors, indemnify any other authorized representative
(including any former authorized representative) of the corporation to the
fullest extent now or hereafter permitted by law against all expenses (including
attorneys' fees and disbursements), judgments, fines, and amounts paid in
settlement actually and reasonably incurred by such person in connection with
any threatened, pending or completed action, suit, or proceeding, whether civil,
criminal, administrative, or investigative, to which such person was, is or is
threatened to be made a party or a witness by reason of the fact that such
person is or was an authorized representative of the corporation. For the
purposes of this Article, "authorized representative" shall mean a director,
officer, employee, or agent of the corporation or of any subsidiary of the
corporation, or a trustee, custodian, administrator, committeeman, or fiduciary
of any employee benefit plan established and maintained by the corporation or by
any subsidiary of the corporation, or a person who is or was serving another
corporation, partnership, joint venture, trust or other enterprise in any such
capacity at the request of the corporation.
Section 10.02 Basis of Rights; Other Rights. Each person who shall act as
-----------------------------
an authorized representative of the corporation shall be deemed to be doing so
in reliance upon such rights of indemnification as are provided in this Article.
The indemnification provided by this Article shall not be deemed exclusive of
any other rights to which any person seeking indemnification may be entitled
under any agreement, vote of shareholders or disinterested directors, statute,
or otherwise, both as to action in such person's official capacity and as to
action in another capacity while holding such office or position, and shall
continue as to a person who has ceased to be an authorized representative of the
corporation and shall inure to the benefit of the heirs, executors, and
administrators of such a person.
8
<PAGE>
Section 10.03 Insurance. The corporation may purchase and maintain
---------
insurance on behalf of any person who is or was a director or officer of the
corporation, or is or was an authorized representative of the corporation,
against any liability asserted against or incurred by such person in any such
capacity, or arising out of the status of such person as such, whether or not
the corporation would have the power to indemnify such person against such
liability under the provisions of this Article.
ARTICLE XI
MISCELLANEOUS PROVISIONS
------------------------
Section 11.01 Notices. Whenever written notice is required to be given to
-------
any person, it may be given to such person, either personally or by sending a
copy thereof through the mail, or by telegram, charges prepaid, to his address
appearing on the books of the corporation, or supplied by him to the corporation
for the purpose of notice. If the notice is sent by mail or telegraph, it shall
be deemed to have been given to the person entitled thereto when deposited in
the United States mail or with a telegraph office for transmission to such
person. Such notice shall specify the place, day and hour of the meeting and, in
the case of a special meeting, the general nature of the business to be
transacted.
Any shareholder or director may waive in writing and at any time, any
notice required to be given under the By-Laws. Attendance of a person, either in
person or by proxy, at any meeting shall constitute a waiver of notice of such
meeting, except where the express purpose of such attendance is to object to the
transaction of any business because the meeting was not lawfully called or
convened.
ARTICLE XII
AMENDMENTS
----------
Section 12.01 Amendment of By-Laws. These By-Laws may be altered, amended
--------------------
or repealed by the affirmative vote of a majority of the shares issued and
outstanding and entitled to vote thereat at any regular or special meeting of
the shareholders, if notice of the proposed alteration, amendment or repeal be
contained in the notice of the meeting.
9
<PAGE>
EXHIBIT 3.29
CERTIFICATE OF FORMATION
OF
Commercial Aggregates Transportation & Sales, LLC
The undersigned, desiring to form a limited liability company pursuant to
the Delaware Limited Liability Company Act, does hereby certify as follows:
1. The name of the limited liability company is:
Commercial Aggregates Transportation & Sales, LLC
2. The address of its registered office in the State of Delaware is 9
East Loockerman Street, in the City of Dover, County of Kent, State of
Delaware 19901. The name of its registered agent at such address is
National Registered Agents, Inc.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Formation of Commercial Aggregates Transportation & Sales, LLC this 27/th/
day of September, 1999.
/s/ Melissa Freidenreich
--------------------------------------
Melissa Freidenreich
<PAGE>
EXHIBIT 3.29.1
CONTRIBUTION AGREEMENT
----------------------
THIS CONTRIBUTION AGREEMENT (this "Agreement") dated as of the 1st day
of October, 1999 between Stone Materials Company, LLC, a Delaware limited
liability company ("Stone Materials"), and Commercial Stone Co., Inc, a
Pennsylvania corporation ("Commercial").
W I T N E S S E T H:
-------------------
WHEREAS, Stone Materials is the sole owner of CATS, LLC, a Delaware
limited liability company ("CATS"); and
WHEREAS, the parties hereto desire to effectuate the transactions
contemplated hereby in furtherance of the reorganization of the business and
operations of the companies of USS Holdings, Inc., a Delaware corporation, and
the ultimate parent company of Stone Materials, Commercial and CATS pursuant to
a plan of reorganization substantially in the form of the draft presented to the
Board of Directors for its review (the "Reorganization"); and
WHEREAS, in furtherance of the Reorganization, Stone Materials has
authorized the contribution to Commercial of the entire right, title and
interest of Stone Materials in CATS (the "LLC Interest"); and
WHEREAS, Commercial desires to accept such contribution.
<PAGE>
NOW, THEREFORE, the parties hereto, intending to be legally bound, in
consideration of the agreements herein contained and other valuable
consideration, hereby agree as follows:
1. Contribution. Stone Materials hereby contributes, transfers and
------------
conveys the LLC Interest to Commercial for the account and for the benefit of
Commercial, and Commercial hereby accepts such contribution, transfer and
conveyance from Stone Materials for the benefit of Commercial.
2 Delivery of Certificate; Further Assurances. To the extent the LLC
-------------------------------------------
Interest is represented by a certificate, upon execution of this Agreement,
Stone Materials shall deliver to CATS a certificate representing such LLC
Interest, duly endorsed in blank or with a fully executed transfer power
attached, all in proper form for transfer. Each of the parties hereto covenants
and agrees that, from and after the date hereof, it will execute and deliver to
the appropriate party such additional instruments and documents and take such
further action as may be necessary in order to more fully vest, record and/or
perfect Commercial's title to, or interest in, the LLC Interest being conveyed
hereunder.
3. Effective Date. The parties hereto agree that the transactions
--------------
contemplated hereby shall, upon satisfaction of the terms and conditions set
forth herein, be deemed effective as of the date of this Agreement.
4. Entire Agreement. This Agreement constitutes the entire agreement
----------------
between the parties hereto with respect to the subject matter of this Agreement
and supersedes all prior discussions, agreements and understandings, whether
written or oral, with respect to the subject matter hereof.
2
<PAGE>
5. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Delaware without giving effect to its
conflict of law rules.
6. Counterparts. This Agreement may be signed in any number of
------------
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
STONE MATERIALS COMPANY, LLC
By: Better Minerals & Aggregates Company, as
Manager
By: /s/ John A. Ulizio
-----------------------------------------------
Name: John A. Ulizio
Title:: Vice President
COMMERCIAL STONE CO., INC.
By: /s/ John A. Ulizio
-----------------------------------------------
Name: John A. Ulizio
Title:: Secretary
4
<PAGE>
EXHIBIT 3.30
EXECUTION COPY
================================================================================
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
OF
COMMERCIAL AGGREGATES TRANSPORTATION AND SALES, LLC
DATED AS OF SEPTEMBER 30, 1999
================================================================================
<PAGE>
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
of
COMMERCIAL AGGREGATES TRANSPORTATION AND SALES, LLC
This Limited Liability Company Operating Agreement (the "Agreement"),
---------
dated as of September 30, 1999 is entered into solely by Stone Materials
Company, LLC (the "Member").
------
WHEREAS, a certificate of formation of Commercial Aggregates
Transportation and Sales, LLC (the "Company") has been filed by an authorized
-------
person with the Office of the Secretary of State of Delaware, causing the
formation of a limited liability company in accordance with the Delaware Limited
Liability Company Act (6 Del. C. (S)18-101 et seq.) (hereinafter referred to as
-- ---
the "Act"), and the Member intends by the execution hereof to become the sole
---
Member thereof as of the date of such execution; and
WHEREAS, the Member desires to provide for the operation and
management of the Company for the purposes stated herein;
NOW, THEREFORE, in consideration of the mutual covenants, promises and
agreements contained herein, the Member hereby agrees as follows:
ARTICLE I
FORMATION OF THE COMPANY
------------------------
Section 1.01 Formation. The Member acknowledges that the certificate
---------
of formation for the Company has been filed, with the Office of the Secretary of
State of Delaware on September 27, 1999. The Member agrees to be bound by and
comply with the provisions thereof and hereof.
Section 1.02 Registered Office. The registered office in the State of
-----------------
Delaware shall be: 9 East Loockerman Street, Dover, DE 19901.
Section 1.03 Registered Agent. The registered agent of the Company in
----------------
the State of Delaware shall be National Registered Agents, Inc.
Section 1.04 Purpose and Character of Business. The general purpose
---------------------------------
of the Company is to engage in any lawful act or activity for which limited
liability companies may be organized under the Act.
Section 1.05 Duration.
--------
The Company shall continue in existence until it is dissolved pursuant
to Section 8.1.
1
<PAGE>
Section 1.06 Filings, Reports and Formalities. The Member shall cause the
--------------------------------
Company to make all filings and to submit all reports required to be filed or
submitted under the Act with respect to the Company, and shall cause the Company
to make such filings or take such other actions required under the laws of any
jurisdiction where the Company conducts business. Throughout the term of the
Company, the Company shall comply with all requirements necessary to maintain
the limited liability status of the Company and the limited liability of the
Member under the laws of the State of Delaware and of each other jurisdiction in
which the Company does business.
ARTICLE II
CAPITAL CONTRIBUTIONS
---------------------
Section 2.01 Initial Capital Contribution. The Member will make an initial
----------------------------
Capital Contribution of $1,000, payable simultaneously with the execution
hereof. The Member's acquisition of its Membership Units in the Company shall be
effective upon the payment in full in cash of such initial Capital Contribution.
"Membership Units" or "Units" means the Member's aggregate rights in the
Company, including, without limitation, the Member's right to a share of the
profits and losses of the Company, the Member's right to receive distributions
from the Company and the right to vote and participate in the management of the
Company. Membership Units shall be represented by a certificate.
Section 2.02 Article 8 Election. All Membership Units shall be governed by
------------------
and determined to be a security under Article 8 of the Uniform Commercial Code
as adopted in the State of Delaware and in the State of New York.
Section 2.03 Return of Contributions. No interest shall accrue on any
-----------------------
contributions to the capital of the Company. The Member shall not have the right
to withdraw or to be repaid any Capital Contribution made by the Member except
as otherwise provided herein or in the Act.
Section 2.04 Liability of Member. The Member shall not be personally
-------------------
liable for the debts, obligations or liabilities of the Company solely by reason
of being the Member of the Company. Notwithstanding any provision herein to the
contrary, in no event shall the liability of the Member for the debts,
obligations or liabilities of the Company exceed the Member's Capital
Contribution.
(b) The Member's Units in the Company shall be personal property for all
purposes. All property owned by the Company shall be deemed to be owned by the
Company as an entity and the Member shall not be deemed to own any such property
or any portion thereof.
(c) The Company shall defend, indemnify and hold harmless the Member and
its directors, officers, members, managers, employees and representatives and
its successors, assigns and affiliates from and against any and all losses,
claims, expenses or damages suffered or sustained by any of them (including, but
not limited to, any judgment, award, settlement, reasonable
2
<PAGE>
attorney's fees and other costs or expenses incurred in connection with the
investigation and defense or prosecution of any actual or threatened action,
proceeding or claim) (1) related to, or arising out of, any claim that the
Member is liable for any debt, obligation or liability of the Company or is
directly or indirectly required to make any payments in respect thereof or in
connection therewith, and (2) by reason of any act, omission, or alleged act or
omission, arising out of the Member's activities or alleged activities on behalf
of the Company or in furtherance of the interests of the Company; provided,
--------
however, that this Section 2.04(c) shall be of no force or effect if the act,
- -------
omission, or alleged act or omission upon which such actual or threatened
action, proceeding or claim is based was performed or omitted as a result of
willful misconduct or a knowing and material breach of this Agreement by the
Member.
(d) The Company shall pay in advance any legal or other expenses
incurred in investigating or defending against any loss, claim, expense or
damage that may be subject to indemnification under Section 2.04(c) hereof, upon
receipt of an undertaking from the person on whose behalf such expenses are paid
to repay such amount if it shall ultimately be determined that such person is
not entitled to be indemnified by the Company. The Company may purchase
insurance, to the extent available at reasonable cost, to cover losses, claims,
expenses or damages subject to indemnification under Section 2.04(c) hereof.
ARTICLE III
MANAGEMENT OF THE COMPANY
-------------------------
Section 3.01 Management by the Member. The Member, exclusively in its
------------------------
capacity as such, shall manage the business of the Company.
Section 3.02 The Member Has No Exclusive Duty to the Company. This
-----------------------------------------------
Agreement shall not prohibit the Member from having other business interests and
engaging in other activities in addition to those relating to the Company. The
Company shall not have any right, by virtue of this Agreement, to share or
participate in such other activities of the Member or to the income or proceeds
derived therefrom. The Member shall not incur any liability to the Company as a
result of engaging in any other business or venture.
ARTICLE IV
TAX TREATMENT
-------------
Section 4.01 Tax Treatment. The Member intends that, for tax
-------------
purposes, the Company will be treated as a disregarded entity and not as a
partnership.
ARTICLE V
ALLOCATIONS AND DISTRIBUTIONS
-----------------------------
Section 5.01 Allocation of Profits and Losses.
--------------------------------
3
<PAGE>
For each fiscal year (or portion thereof), all items of income, gain,
loss and deduction of the Company shall be allocated to the Member.
Section 5.02 Distributions of Cash Flow. Except as provided in
--------------------------
Section 8.02 hereof, cash flow, the availability of which shall be determined by
the Member, shall be distributed to the Member, at such times and in such
amounts as the Member shall determine.
Section 5.03 Net Proceeds Upon Liquidation. Upon the liquidation of
-----------------------------
the Company, after payment of, or adequate provision for, the debts and
obligations of the Company, the remaining assets of the Company shall be
distributed to the Member.
ARTICLE VI
INSPECTION, RECORDS, CONFIDENTIALITY
------------------------------------
Section 6.01 Access to Properties. The Member, and each of its duly
--------------------
authorized employees and representatives, at the Member's own risk and expense,
and subject to the provisions of any third party management agreement, shall at
all reasonable times have access to all Company assets, activities, operations
and records.
Section 6.02 Books of Account. Books of account shall at all times be
----------------
open to inspection, audit and copying by the Member or its duly authorized
representative.
Section 6.03 Confidentiality. All such records and accounts including
---------------
reports shall be treated as confidential and the Member shall take or cause to
be taken such reasonable precautions as may be necessary to prevent the
disclosure thereof to any unauthorized Person, firm or corporation for a period
ending two (2) years following the termination of the Company.
ARTICLE VII
TRANSFER
--------
Section 7.01 Transfer. The Member may sell, transfer, pledge, make a gift
--------
of, or otherwise dispose of or assign all of its Membership Units in the
Company. Upon a sale, transfer, pledge, gift, disposal or assignment, the
transferee thereof shall become a Member of the Company; provided that, if the
--------
Membership Units are pledged, or otherwise assigned as a security interest, the
transferee shall become a Member of the Company only in the manner and to the
extent expressly provided in the agreement effecting such pledge or assignment
or by operation of law.
ARTICLE VIII
DISSOLUTION, LIQUIDATION AND TERMINATION
----------------------------------------
Section 8.01 Events of Dissolution. The Company shall be dissolved,
---------------------
and its affairs shall be wound up, upon the first to occur of the following:
(a) the date that the Member consents to its dissolution;
4
<PAGE>
(b) the sale, exchange, involuntary conversion, or other disposition
or transfer of all or substantially all of the assets of the Company;
(c) the dissolution, bankruptcy or withdrawal of the Member; and
(d) the entry of a decree of judicial dissolution under the Act.
Section 8.02 Procedures Upon Dissolution. Upon dissolution of the
---------------------------
Company, the Member shall wind up the affairs of the Company, sell its assets to
the extent necessary to pay its liabilities, and after payment of all
liabilities of the Company (including liabilities to the Member or Affiliate of
the Member, if it is a creditor), shall distribute the remaining assets of the
Company in accordance with Sections 5.02 and 5.03 hereof. Any distribution made
pursuant to this Section 8.02 shall be made within a reasonable time period.
Section 8.03 Termination. Upon the dissolution and the completion of
-----------
winding up of the Company, the Member shall file a certificate of cancellation
with the Office of the Secretary of State of the State of Delaware in accordance
with the Act.
ARTICLE IX
MISCELLANEOUS
-------------
Section 9.01 Partial Invalidity. In case any one or more of the
------------------
covenants, agreements, or provisions hereof shall be invalid, illegal, or
unenforceable in any respect, the validity of the remaining covenants,
agreements, or provisions hereof shall be in no way affected, prejudiced, or
disturbed thereby.
Section 9.02 Notices. All notices or other communications required or
-------
permitted to be given hereunder shall be in writing, shall be given by mail,
return receipt requested, postage prepaid, prepaid telegram with confirmation of
delivery obtained, nationally recognized overnight delivery service, telecopy
with evidence of transmission, or personally delivered with confirmation of
delivery obtained, to the address of such Person as set forth in the records of
the Company.
Section 9.03 Amendment. This Agreement may be modified or amended at
---------
any time only upon the consent of the Member, which shall be evidenced by the
Member executing a writing effecting such amendment.
Section 9.04 No Waiver. The failure of the Member to insist upon
---------
strict performance of any provision hereof shall not constitute a waiver of, or
estoppel against asserting, the right to require such performance in the future,
nor shall a waiver or estoppel in any one instance constitute a waiver or
estoppel with respect to a later breach of a similar nature or otherwise.
Section 9.05 Binding Effect; Assignment. This Agreement shall be
--------------------------
binding upon and inure to the benefit of the Company and the Member and the
Member's permitted transferees.
5
<PAGE>
Section 9.06 Choice of Law. The rights and duties of the Member and
-------------
the Company under this Agreement shall be governed by the law of the State of
Delaware.
Section 9.07 Entire Agreement.
----------------
This Agreement constitutes the entire agreement with respect to the
subject matter contained herein and supersedes all other prior understandings or
agreements, both written and oral, with respect to the matters contained herein.
6
<PAGE>
IN WITNESS WHEREOF, the Member has executed this Agreement with effect
on the date set forth in the first paragraph hereof.
MEMBER:
STONE MATERIALS COMPANY, LLC
By: Better Minerals & Aggregates Company,
-------------------------------------
as Manager
By: /s/ John A. Ulizio
-------------------------------------
Name:
Title:
7
<PAGE>
EXHIBIT 4.1
================================================================================
BETTER MINERALS & AGGREGATES COMPANY
13% Senior Subordinated Notes due 2009
__________
INDENTURE
Dated as of October 1, 1999
__________
THE BANK OF NEW YORK,
as Trustee
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1
Definitions and Incorporation by Reference
------------------------------------------
SECTION 1.01. Definitions............................................................ 1
SECTION 1.02. Other Definitions...................................................... 21
SECTION 1.03. Incorporation by Reference of Trust Indenture Act...................... 22
SECTION 1.04. Rules of Construction.................................................. 22
ARTICLE 2
The Securities
--------------
SECTION 2.01. Form and Dating........................................................ 23
SECTION 2.02. Execution and Authentication........................................... 23
SECTION 2.03. Registrar and Paying Agent............................................. 24
SECTION 2.04. Paying Agent to Hold Money in Trust.................................... 25
SECTION 2.05. Holder Lists........................................................... 25
SECTION 2.06. Transfer and Exchange.................................................. 25
SECTION 2.07. Replacement Securities................................................. 26
SECTION 2.08. Outstanding Securities................................................. 27
SECTION 2.09. Temporary Securities................................................... 27
SECTION 2.10. Cancellation........................................................... 27
SECTION 2.11. Defaulted Interest..................................................... 27
SECTION 2.12. CUSIP and "ISIN" Numbers............................................... 28
ARTICLE 3
Redemption
----------
SECTION 3.01. Notices to Trustee..................................................... 28
SECTION 3.02. Selection of Securities To Be Redeemed................................. 28
SECTION 3.03. Notice of Redemption................................................... 28
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 3.04. Effect of Notice of Redemption......................................... 29
SECTION 3.05. Deposit of Redemption Price............................................ 29
SECTION 3.06. Securities Redeemed in Part............................................ 30
ARTICLE 4
Covenants
---------
SECTION 4.01. Payment of Securities.................................................. 30
SECTION 4.02. SEC Reports............................................................ 30
SECTION 4.03. Limitation of Indebtedness............................................. 31
SECTION 4.04. Limitation on Restricted Payments...................................... 34
SECTION 4.05. Limitation on Restrictions on Distributions from
Restricted Subsidiaries.............................................. 37
SECTION 4.06. Limitation on Sales of Assets and Subsidiary Stock..................... 38
SECTION 4.07. Limitation on Transactions with Affiliates............................. 41
SECTION 4.08. Change of Control...................................................... 42
SECTION 4.09. Compliance Certificate................................................. 44
SECTION 4.10. Further Instruments and Acts........................................... 44
SECTION 4.11. Future Note Guarantors................................................. 44
SECTION 4.12. Limitation on Lines of Business........................................ 44
SECTION 4.13. Limitation on the Sale or Issuance of Capital Stock of
Restricted Subsidiaries.............................................. 44
ARTICLE 5
Successor Company
-----------------
SECTION 5.01. When Company May Merge or Transfer Assets.............................. 45
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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ARTICLE 6
Defaults and Remedies
---------------------
SECTION 6.01. Events of Default...................................................... 46
SECTION 6.02. Acceleration........................................................... 48
SECTION 6.03. Other Remedies......................................................... 49
SECTION 6.04. Waiver of Past Defaults................................................ 49
SECTION 6.05. Control by Majority.................................................... 49
SECTION 6.06. Limitation on Suits.................................................... 50
SECTION 6.07. Rights of Holders to Receive Payment................................... 50
SECTION 6.08. Collection Suit by Trustee............................................. 50
SECTION 6.09. Trustee May File Proofs of Claim....................................... 50
SECTION 6.10. Priorities............................................................. 51
SECTION 6.11. Undertaking for Costs.................................................. 51
SECTION 6.12. Waiver of Stay or Extension Laws....................................... 51
ARTICLE 7
Trustee
-------
SECTION 7.01. Duties of Trustee...................................................... 52
SECTION 7.02. Rights of Trustee...................................................... 53
SECTION 7.03. Individual Rights of Trustee........................................... 53
SECTION 7.04. Trustee's Disclaimer................................................... 54
SECTION 7.05. Notice of Defaults..................................................... 54
SECTION 7.06. Reports by Trustee to Holders.......................................... 54
SECTION 7.07. Compensation and Indemnity............................................. 54
SECTION 7.08. Replacement of Trustee................................................. 55
SECTION 7.09. Successor Trustee by Merger............................................ 56
SECTION 7.10. Eligibility; Disqualification.......................................... 57
SECTION 7.11. Preferential Collection of Claims Against Company...................... 57
SECTION 7.12. Investment of Funds.................................................... 57
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ARTICLE 8
Discharge of Indenture, Defeasance
----------------------------------
SECTION 8.01. Discharge of Liability on Securities; Defeasance....................... 57
SECTION 8.02. Conditions to Defeasance............................................... 58
SECTION 8.03. Application of Trust Money............................................. 59
SECTION 8.04. Repayment to Company................................................... 59
SECTION 8.05. Indemnity for Government Obligations................................... 60
SECTION 8.06. Reinstatement.......................................................... 60
ARTICLE 9
Amendments
----------
SECTION 9.01. Without Consent of Holders............................................. 60
SECTION 9.02. With Consent of Holders................................................ 61
SECTION 9.03. Compliance with Trust Indenture Act.................................... 62
SECTION 9.04. Revocation and Effect of Consents and Waivers.......................... 62
SECTION 9.05. Notation on or Exchange of Securities.................................. 63
SECTION 9.06. Trustee to Sign Amendments............................................. 63
ARTICLE 10
Subordination
-------------
SECTION 10.01. Agreement to Subordinate............................................... 63
SECTION 10.02. Liquidation, Dissolution, Bankruptcy................................... 64
SECTION 10.03. Default on Senior Indebtedness......................................... 64
SECTION 10.04. Acceleration of Payment of Securities.................................. 65
SECTION 10.05. When Distribution Must Be Paid Over.................................... 65
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SECTION 10.06. Subrogation............................................................ 65
SECTION 10.07. Relative Rights........................................................ 65
SECTION 10.08. Subrogation May Not Be Impaired by Company............................. 66
SECTION 10.09. Rights of Trustee and Payment Agent.................................... 66
SECTION 10.10. Distribution or Notice to Representative............................... 66
SECTION 10.11. Article 10 Not To Prevent Events of Default or Limit Right
to Accelerate........................................................ 66
SECTION 10.12. Trust Monies Not Subordinated.......................................... 66
SECTION 10.13. Trustee Entitled to Rely............................................... 67
SECTION 10.14. Trustee to Effectuate Subordination.................................... 67
SECTION 10.15. Trustee Not Fiduciary for Holders of Senior
Indebtedness......................................................... 67
SECTION 10.16. Reliance by Holders of Senior Indebtedness on
Subordination Provisions............................................. 67
ARTICLE 11
Note Guarantees
---------------
SECTION 11.01. Note Guarantees........................................................ 68
SECTION 11.02. Limitation on Liability................................................ 70
SECTION 11.03. Successors and Assigns................................................. 70
SECTION 11.04. No Waiver.............................................................. 71
SECTION 11.05. Modification........................................................... 71
SECTION 11.06. Execution of Supplemental Indenture for Future Note
Guarantors........................................................... 71
SECTION 11.07. Non-Impairment......................................................... 71
ARTICLE 12
Subordination of the Note Guarantees
------------------------------------
SECTION 12.01. Agreement to Subordinate............................................... 71
SECTION 12.02. Liquidation, Dissolution, Bankruptcy................................... 72
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SECTION 12.03. Default on Designated Senior Indebtedness of a Note
Guarantor............................................................ 72
SECTION 12.04. Demand for Payment..................................................... 73
SECTION 12.05. When Distribution Must Be Paid Over.................................... 73
SECTION 12.06. Subrogation............................................................ 74
SECTION 12.07. Relative Rights........................................................ 74
SECTION 12.08. Subordination May Not Be Impaired by a Note Guarantor.................. 74
SECTION 12.09. Rights of Trustee and Paying Agent..................................... 74
SECTION 12.10. Distribution or Notice to Representative............................... 75
SECTION 12.11. Article 12 Not To Prevent Events of Default or Limit Right 75
To Accelerate..............................................
SECTION 12.12. Trustee Entitled to Rely............................................... 75
SECTION 12.13. Trustee To Effectuate Subordination.................................... 75
SECTION 12.14. Trustee Not Fiduciary for Holders of Senior Indebtedness
of a Note Guarantor.................................................. 75
SECTION 12.15. Reliance by Holders of Senior Indebtedness of a Note
Guarantor on Subordination Provisions................................ 76
SECTION 12.16. Defeasance............................................................. 76
ARTICLE 13
Miscellaneous
-------------
SECTION 13.01. Trust Indenture Act Controls........................................... 76
SECTION 13.02. Notices................................................................ 76
SECTION 13.03. Communication by Holders with Other Holders............................ 77
SECTION 13.04. Certificate and Opinion as to Conditions Precedent..................... 77
SECTION 13.05. Statements Required in Certificate or Opinion.......................... 77
SECTION 13.06. When Securities Disregarded............................................ 78
SECTION 13.07. Rules by Trustee, Paying Agent and Registrar........................... 78
SECTION 13.08. Legal Holidays......................................................... 78
SECTION 13.09. GOVERNING LAW.......................................................... 78
SECTION 13.10. No Recourse Against Others............................................. 78
SECTION 13.11. Successors............................................................. 78
SECTION 13.12. Multiple Originals..................................................... 78
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SECTION 13.13. Table of Contents; Headings............................................ 79
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Appendix A - Provisions Relating to Initial Securities,
Private Exchange Securities and Exchange Securities
Exhibit A - Form of Initial Security and Private Exchange Security
Exhibit B - Form of Exchange Security
Exhibit C - Form of Supplemental Indenture
Exhibit D - Form of Transferee Letter of Representation
<PAGE>
INDENTURE dated as of October 1, 1999, among BETTER MINERALS
& AGGREGATES COMPANY, a Delaware corporation (the "Company"),
U.S. SILICA COMPANY, a Delaware corporation, BETTER MATERIALS
CORPORATION, a Pennsylvania corporation, GEORGE F. PETTINOS,
INC., a Delaware corporation, OTTAWA SILICA COMPANY, a Delaware
corporation, THE FULTON LAND AND TIMBER COMPANY, a Pennsylvania
corporation, PENNSYLVANIA GLASS SAND CORPORATION, a Delaware
corporation, BUCKS COUNTY CRUSHED STONE COMPANY, a Pennsylvania
corporation, CHIPPEWA FARMS CORPORATION, a Pennsylvania
corporation, SHORE STONE COMPANY, INC., a New Jersey corporation,
BMC TRUCKING, INC., a Delaware corporation, ELLEN JAY, INC., a
New Jersey corporation, STONE MATERIALS COMPANY, LLC, a Delaware
limited liability company, COMMERCIAL STONE CO., INC., a
Pennsylvania corporation, COMMERCIAL AGGREGATES TRANSPORTATION
AND SALES, LLC, a Delaware limited liability company
(collectively, the "Note Guarantors") and THE BANK OF NEW YORK, a
New York banking corporation, as trustee (the "Trustee").
Each party agrees as follows for the benefit of the other parties and
for the equal and ratable benefit of the Holders of (a) the Company's 13% Senior
Subordinated Notes due 2009 issued on the date hereof (the "Initial
Securities"), (b) if and when issued as provided in the Registration Agreement
(as defined in Appendix A hereto (the "Appendix")), the Company's 13% Senior
Subordinated Notes due 2009 issued in the Registered Exchange Offer in exchange
for any Initial Securities (the "Exchange Securities") and (c) if and when
issued as provided in the Registration Agreement, the Private Exchange
Securities (together with the Initial Securities and any Exchange Securities
issued hereunder, the "Securities") issued in the Private Exchange. Except as
otherwise provided herein, the Securities will be limited to $150,000,000 in
aggregate principal amount outstanding.
ARTICLE 1
Definitions and Incorporation by Reference
------------------------------------------
SECTION 1.01. Definitions.
------------
"Acquisition Term Loan Facility" means the facility referred to as the
Acquisition Facility in the Credit Agreement.
"Additional Assets" means (a) any property or assets (other than
Indebtedness and Capital Stock) to be used by the Company or a Restricted
Subsidiary in a Permitted Business; (b) the Capital Stock of a Person that
becomes a Restricted Subsidiary as a result of the
<PAGE>
2
acquisition of such Capital Stock by the Company or another Restricted
Subsidiary; or (c) Capital Stock constituting a minority interest in any Person
that at such time is a Restricted Subsidiary; provided, however, that any such
-------- -------
Restricted Subsidiary described in clauses (b) or (c) above is primarily engaged
in a Permitted Business.
"Affiliate" of any specified Person means any other Person, directly
or indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing. For
purposes of Sections 4.06 and 4.07 only, "Affiliate" shall also mean any
beneficial owner of shares representing 10% or more of the total voting power of
the Voting Stock (on a fully diluted basis) of Parent, Holdings or the Company
or of rights or warrants to purchase such Voting Stock (whether or not currently
exercisable) and any Person who would be an Affiliate of any such beneficial
owner pursuant to the first sentence hereof.
"Asset Disposition" means any sale, lease, transfer or other
disposition (or series of related sales, leases, transfers or dispositions) by
the Company or any Restricted Subsidiary, including any disposition by means of
a merger, consolidation or similar transaction (each referred to for the
purposes of this definition as a "disposition"), of (a) any shares of Capital
Stock of a Restricted Subsidiary (other than directors' qualifying shares or
shares required by applicable law to be held by a Person other than the Company
or a Restricted Subsidiary), (b) all or substantially all the assets of any
division or line of business of the Company or any Restricted Subsidiary or (c)
any other assets of the Company or any Restricted Subsidiary outside of the
ordinary course of business of the Company or such Restricted Subsidiary other
than, in the case of (a), (b) and (c) above, (i) a disposition by a Restricted
Subsidiary to the Company or by the Company or a Restricted Subsidiary to a
Wholly Owned Subsidiary, (ii) for purposes of Section 4.06 only, a disposition
that constitutes a Restricted Payment permitted by Section 4.04, (iii) a
disposition of assets with a Fair Market Value of less than $500,000 and (iv) a
transfer of real property to a state, county, local or municipal governmental
agency in exchange for the granting of a permit or the taking of other
regulatory action by such governmental agency that enhances the value of mining
properties owned by the Company or a Restricted Subsidiary, provided that the
Board of Directors has determined in good faith that such exchange is in the
best interest of the Company.
"Attributable Debt" in respect of a Sale/Leaseback Transaction means,
as at the time of determination, the present value (discounted at the interest
rate borne by the Securities, compounded annually) of the total obligations of
the lessee for rental payments during the remaining term of the lease included
in such Sale/Leaseback Transaction (including any period for which such lease
has been extended).
"Average Life" means, as of the date of determination, with respect to
any Indebtedness or Preferred Stock, the quotient obtained by dividing (a) the
sum of the products of the numbers of years from the date of determination to
the dates of each successive scheduled
<PAGE>
3
principal payment of such Indebtedness or scheduled redemption or similar
payment with respect to such Preferred Stock multiplied by the amount of such
payment by (b) the sum of all such payments.
"Bank Indebtedness" means any and all amounts payable under or in
respect of the Credit Agreement and any Refinancing Indebtedness with respect
thereto, as amended from time to time, including principal, premium (if any),
interest (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company whether or not a claim
for post-filing interest is allowed in such proceedings), fees, charges,
expenses, reimbursement obligations, guarantees and all other amounts payable
thereunder or in respect thereof.
"Board of Directors" means the Board of Directors of the Company or
any committee thereof duly authorized to act on behalf of the Board of Directors
of the Company.
"Business Day" means each day which is not a Legal Holiday.
"Capital Stock" of any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.
"Capitalized Lease Obligations" means an obligation that is required
to be classified and accounted for as a capitalized lease for financial
reporting purposes in accordance with GAAP, and the amount of Indebtedness
represented by such obligation shall be the capitalized amount of such
obligation determined in accordance with GAAP; and the Stated Maturity thereof
shall be the date of the last payment of rent or any other amount due under such
lease prior to the first date upon which such lease may be prepaid by the lessee
without payment of a penalty.
"Change of Control" means the occurrence of any of the following
events:
(a) prior to the earliest to occur of (i) the first public offering of
common stock of Parent, (ii) the first public offering of common stock of
Holdings or (iii) the first public offering of common stock of the Company
(each, a "Public Market Offering"), the Permitted Holders cease to be the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act), directly or indirectly, of a majority in the aggregate of the total
voting power of the Voting Stock of Parent, Holdings or the Company,
whether as a result of issuance of securities of Parent, Holdings or the
Company, any merger, consolidation, liquidation or dissolution of Parent,
Holdings or the Company, any direct or indirect transfer of securities by
any Permitted Holder or otherwise (for purposes of this clause (a) and
clause (b) below, the Permitted Holders shall be deemed to beneficially own
any Voting Stock of an entity (the "specified entity") held by any other
entity (the "parent entity") so long as the Permitted Holders beneficially
own (as so
<PAGE>
4
defined), directly or indirectly, in the aggregate a majority of the voting
power of the Voting Stock of the parent entity);
(b) after a Public Market Offering has occurred, (i) any "person" (as
such term is used in Sections 13(d) and 14(d) of the Exchange Act), other
than one or more Permitted Holders, is or becomes the beneficial owner (as
defined in clause (a) above), whether by merger, consolidation, other
business combination or otherwise, directly or indirectly, of more than 35%
of the total voting power of the Voting Stock of the Company, Holdings or
Parent and (ii) the Permitted Holders "beneficially own" (as defined in
clause (a) above), directly or indirectly, in the aggregate a lesser
percentage of the total voting power of the Voting Stock of the Company,
Holdings or Parent than such other person and do not have the right or
ability by voting power, contract or otherwise to elect or designate for
election a majority of the board of directors of the Company, Holdings or
Parent, as the case may be (for the purposes of this clause (b), such other
person shall be deemed to beneficially own any Voting Stock of a specified
entity held by a parent entity, if such other person is the beneficial
owner (as defined in clause (a) above), directly or indirectly, of more
than 35% of the voting power of the Voting Stock of such parent entity and
the Permitted Holders "beneficially own" (as defined in clause (a) above),
directly or indirectly, in the aggregate a lesser percentage of the voting
power of the Voting Stock of such parent entity and do not have the right
or ability by voting power, contract or otherwise to elect or designate for
election a majority of the board of directors of such parent entity);
(c) during any period of two consecutive years, individuals who at the
beginning of such period constituted the board of directors of the Company,
Holdings or Parent, as the case may be (together with any new directors
whose election by such board of directors of the Company, Holdings or
Parent, as the case may be, or whose nomination for election by the
shareholders of the Company, Holdings or Parent, as the case may be, was
approved by a vote of 66-2/3% of the directors of the Company, Holdings or
Parent, as the case may be, then still in office who were either directors
at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the board of directors of the Company, Holdings or Parent, as
the case may be, then in office; or
(d) the adoption of a plan relating to the liquidation or dissolution
of the Company, Holdings or Parent.
"Closing Date" means the date of this Indenture.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commodity Agreement" means any agreement designed to hedge against
fluctuations in commodity prices, including natural gas prices, entered into in
the ordinary course of business.
<PAGE>
5
"Company" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor and, solely for
purposes of any provision contained herein and required by the TIA, each other
obligor on the indenture securities.
"Consolidated Coverage Ratio" as of any date of determination means
the ratio of (a) the aggregate amount of EBITDA for the period of the most
recent four consecutive fiscal quarters ending at least 45 days prior to the
date of such determination to (b) Consolidated Interest Expense for such four
fiscal quarters; provided, however, that (i) if the Company or any Restricted
-------- -------
Subsidiary has Incurred any Indebtedness since the beginning of such period that
remains outstanding on such date of determination or if the transaction giving
rise to the need to calculate the Consolidated Coverage Ratio is an Incurrence
of Indebtedness, EBITDA and Consolidated Interest Expense for such period shall
be calculated after giving effect on a pro forma basis to such Indebtedness as
if such Indebtedness had been Incurred on the first day of such period and the
discharge of any other Indebtedness repaid, repurchased, defeased or otherwise
discharged with the proceeds of such new Indebtedness as if such discharge had
occurred on the first day of such period, (ii) if the Company or any Restricted
Subsidiary has repaid, repurchased, defeased or otherwise discharged any
Indebtedness since the beginning of such period or if any Indebtedness is to be
repaid, repurchased, defeased or otherwise discharged (in each case other than
Indebtedness Incurred under any revolving credit facility unless such
Indebtedness has been permanently repaid and has not been replaced) on the date
of the transaction giving rise to the need to calculate the Consolidated
Coverage Ratio, EBITDA and Consolidated Interest Expense for such period shall
be calculated on a pro forma basis as if such discharge had occurred on the
first day of such period and as if the Company or such Restricted Subsidiary has
not earned the interest income actually earned during such period in respect of
cash or Temporary Cash Investments used to repay, repurchase, defease or
otherwise discharge such Indebtedness, (iii) if since the beginning of such
period the Company or any Restricted Subsidiary shall have made any Asset
Disposition, the EBITDA for such period shall be reduced by an amount equal to
the EBITDA (if positive) directly attributable to the assets that are the
subject of such Asset Disposition for such period or increased by an amount
equal to the EBITDA (if negative) directly attributable thereto for such period
and Consolidated Interest Expense for such period shall be reduced by an amount
equal to the Consolidated Interest Expense directly attributable to any
Indebtedness of the Company or any Restricted Subsidiary repaid, repurchased,
defeased or otherwise discharged with respect to the Company and its continuing
Restricted Subsidiaries in connection with such Asset Disposition for such
period (or, if the Capital Stock of any Restricted Subsidiary is sold, the
Consolidated Interest Expense for such period directly attributable to the
Indebtedness of such Restricted Subsidiary to the extent the Company and its
continuing Restricted Subsidiaries are no longer liable for such Indebtedness
after such sale), (iv) if since the beginning of such period the Company or any
Restricted Subsidiary (by merger or otherwise) shall have made an Investment in
any Restricted Subsidiary (or any Person that becomes a Restricted Subsidiary)
or an acquisition of assets, including any acquisition of assets occurring in
connection with a transaction causing a calculation to be made hereunder, which
constitutes all or substantially all of an operating unit of a business, EBITDA
and Consolidated Interest Expense for such period shall be calculated after
giving pro forma effect thereto (including the Incurrence of any Indebtedness)
as if such Investment or acquisition occurred on the first day of such period
and (v) if since the beginning
<PAGE>
6
of such period any Person (that subsequently became a Restricted Subsidiary or
was merged with or into the Company or any Restricted Subsidiary since the
beginning of such period) shall have made any Asset Disposition or any
Investment or acquisition of assets that would have required an adjustment
pursuant to clause (iii) or (iv) above if made by the Company or a Restricted
Subsidiary during such period, EBITDA and Consolidated Interest Expense for such
period shall be calculated after giving pro forma effect thereto as if such
Asset Disposition, Investment or acquisition of assets occurred on the first day
of such period. For purposes of this definition, whenever pro forma effect is to
be given to an acquisition of assets or other Investment, the amount of income
or earnings relating thereto and the amount of Consolidated Interest Expense
associated with any Indebtedness Incurred in connection therewith, the pro forma
calculations shall be determined in good faith by a responsible financial or
accounting Officer of the Company and shall comply with the requirements of Rule
11-02 of Regulation S-X promulgated by the SEC. If any Indebtedness bears a
floating rate of interest and is being given pro forma effect, the interest
expense on such Indebtedness shall be calculated as if the rate in effect on the
date of determination had been the applicable rate for the entire period (taking
into account any Interest Rate Agreement applicable to such Indebtedness if such
Interest Rate Agreement has a remaining term as at the date of determination in
excess of 12 months).
"Consolidated Interest Expense" means, for any period, the total
interest expense of the Company and its Consolidated Restricted Subsidiaries,
plus, to the extent Incurred by the Company and its Consolidated Restricted
Subsidiaries in such period but not included in such interest expense, without
duplication (a) interest expense attributable to Capitalized Lease Obligations
and the interest expense attributable to leases constituting part of a
Sale/Leaseback Transaction, (b) amortization of debt discount (but not debt
issuance costs), (c) capitalized interest, (d) noncash interest expense, (e)
commissions, discounts and other fees and charges attributable to letters of
credit and bankers' acceptance financing, (f) interest accruing on any
Indebtedness of any other Person to the extent such Indebtedness is Guaranteed
by the Company or any Restricted Subsidiary; (g) net costs associated with
Hedging Obligations, (h) dividends in respect of all Disqualified Stock of the
Company and all Preferred Stock of any Restricted Subsidiary, to the extent held
by Persons other than the Company or another Restricted Subsidiary, (i) interest
Incurred in connection with investments in discontinued operations and (j) the
cash contributions to any employee stock ownership plan or similar trust to the
extent such contributions are used by such plan or trust to pay interest or fees
to any Person (other than the Company) in connection with Indebtedness Incurred
by such plan or trust.
"Consolidated Leverage Ratio" as of any date of determination means
the ratio of:
(a) Indebtedness of the Company and its Consolidated Restricted
Subsidiaries as of the end of the most recent fiscal quarter ending at
least 45 days prior to the date of such determination;
(b) the aggregate amount of EBITDA for the period of the most recent
four consecutive fiscal quarters ending at least 45 days prior to the date
of such determination; provided, however, that:
-------- -------
<PAGE>
7
(i) if the Company or any Restricted Subsidiary has incurred
any Indebtedness since the beginning of such period that remains
outstanding on such date of determination, Indebtedness and EBITDA for
such period shall be calculated after giving effect on a pro forma
basis to such Indebtedness as if such Indebtedness had been Incurred
on the first day of such period and the discharge of any other
Indebtedness repaid, repurchased, defeased or otherwise discharged
with the proceeds of such new Indebtedness as if such discharge had
occurred on the first day of such period,
(ii) if the Company or any Restricted Subsidiary has repaid,
repurchased, defeased or otherwise discharged any Indebtedness since
the beginning of such period or if any Indebtedness is to be repaid,
repurchased, defeased or otherwise discharged (in each case other than
Indebtedness Incurred under any revolving credit facility unless such
Indebtedness has been permanently repaid and has not been replaced) on
the date of the transaction giving rise to the need to calculate the
Consolidated Leverage Ratio, Indebtedness and EBITDA for such period
shall be calculated on a pro forma basis as if such discharge had
occurred on the first day of such period and as if the Company or such
Restricted Subsidiary has not earned the interest income actually
earned during such period in respect of cash or Temporary Cash
Investments used to repay, repurchase, defease or otherwise discharge
such Indebtedness,
(iii) if since the beginning of such period the Company or any
Restricted Subsidiary shall have made any Asset Disposition, the
EBITDA for such period shall be reduced by an amount equal to the
EBITDA (if positive) directly attributable to the assets that are the
subject of such Asset Disposition for such period or increased by an
amount equal to the EBITDA (if negative) directly attributable thereto
for such period and Indebtedness shall be reduced by any Indebtedness
of the Company or any Restricted Subsidiary repaid, repurchased,
defeased or otherwise discharged with respect to the Company and its
continuing Restricted Subsidiary is sold, the Indebtedness of such
Restricted Subsidiary to the extent the Company and its continuing
Restricted Subsidiaries are no longer liable for such Indebtedness
after such sale),
(iv) if since the beginning of such period the Company or any
Restricted Subsidiary (by merger or otherwise) shall have made an
Investment in any Restricted Subsidiary (or any Person that becomes a
Restricted Subsidiary) or an acquisition of assets, including any
acquisition of assets occurring in connection with a transaction
causing a calculation to be made hereunder, which constitutes all or
substantially all of an operating unit of a business, Indebtedness and
EBITDA for such period shall be calculated after giving pro forma
effect thereto (including the Incurrence of any Indebtedness) as if
such Investment or acquisition occurred on the first day of such
period, and
<PAGE>
8
(v) if since the beginning of such period any Person (that
subsequently became a Restricted Subsidiary or was merged with or into
the Company or any Restricted Subsidiary since the beginning of such
period) shall have made any Asset Disposition or any Investment or
acquisition of assets that would have required an adjustment pursuant
to clause (iii) or (iv) above if made by the Company or a Restricted
Subsidiary during such period, Indebtedness and EBITDA for such period
shall be calculated after giving pro forma effect thereto as if such
Asset Disposition, Investment or acquisition of assets occurred on the
first day of such period.
For purposes of this definition, whenever pro forma effect is to be
given to an acquisition of assets or other Investment, the amount of income or
earnings relating thereto and the amount of any Indebtedness Incurred in
connection therewith, the pro forma calculations shall be determined in good
faith by a responsible financial or accounting Officer of the Company and shall
comply with the requirements of Rule 11-02 or Regulation S-X promulgated by the
SEC.
If any Indebtedness bears a floating rate of interest and is being
given to pro forma effect, the interest expense on such Indebtedness shall be
calculated as if the rate in effect on the date of determination had been the
applicable rate for the entire period (taking into account any Interest Rate
Agreement applicable to such Indebtedness if such Interest Rate Agreement has a
remaining term as at the date of determination in excess of 12 months).
"Consolidated Net Income" means, for any period, the net income of the
Company and its Consolidated Subsidiaries for such period; provided, however,
-------- -------
that there shall not be included in such Consolidated Net Income:
(a) any net income of any Person (other than the Company) if such
Person is not a Restricted Subsidiary, except that (i) subject to the
limitations contained in clause (d) below, the Company's equity in the net
income of any such Person for such period shall be included in such
Consolidated Net Income up to the aggregate amount of cash actually
distributed by such Person during such period to the Company or a
Restricted Subsidiary as a dividend or other distribution (subject, in the
case of a dividend or other distribution made to a Restricted Subsidiary,
to the limitations contained in clause (c) below) and (ii) the Company's
equity in a net loss of any such Person for such period shall be included
in determining such Consolidated Net Income;
(b) any net income (or loss) of any Person acquired by the Company or
a Subsidiary in a pooling of interests transaction for any period prior to
the date of such acquisition;
(c) any net income (or loss) of any Restricted Subsidiary to the
extent such Restricted Subsidiary is subject to restrictions, directly or
indirectly, on the payment of dividends or the making of distributions by
such Restricted Subsidiary, directly or indirectly, to the Company, except
that the Company's equity in a net loss of any such
<PAGE>
9
Restricted Subsidiary for such period shall be included in determining such
Consolidated Net Income;
(d) any gain or loss realized upon the sale or other disposition of
any asset of the Company or its Consolidated Subsidiaries (including
pursuant to any Sale/Leaseback Transaction) that is not sold or otherwise
disposed of in the ordinary course of business and any gain or loss
realized upon the sale or other disposition of any Capital Stock of any
Person;
(e) any extraordinary gain or loss; and
(f) the cumulative effect of a change in accounting principles.
Notwithstanding the foregoing, for the purpose of Section 4.04 only, there shall
be excluded from Consolidated Net Income any dividends, repayments of loans or
advances or other transfers of assets from Unrestricted Subsidiaries to the
Company or a Restricted Subsidiary to the extent such dividends, repayments or
transfers increase the amount of Restricted Payments permitted under such
Section pursuant to clause (a) (iv)(3)(D) thereof.
"Consolidation" means the consolidation of the amounts of each of the
Restricted Subsidiaries with those of the Company in accordance with GAAP
consistently applied; provided, however, that "Consolidation" shall not include
-------- -------
consolidation of the accounts of any Unrestricted Subsidiary, but the interest
of the Company or any Restricted Subsidiary in an Unrestricted Subsidiary shall
be accounted for as an investment. The term "Consolidated" has a correlative
meaning.
"Credit Agreement" means the credit agreement dated as of the
Closing Date among the Company, as borrower, Parent, as parent guarantor, George
F. Pettinos (Canada) Limited, as Canadian borrower, Banque Nationale de Paris,
as agent, and the financial institutions and other institutional lenders named
therein, as the same may be amended, restated, supplemented, waived, replaced,
refinanced, restructured or otherwise modified from time to time, in each case,
whether or not upon termination, whether with the original financial
institutions, other institutional lenders or agents, and whether with one or
more credit agreements with the Company or one or more Restricted Subsidiaries
as borrowers.
"Currency Agreement" means with respect to any Person any foreign
exchange contract, currency swap agreements or other similar agreement or
arrangement to which such Person is a party or of which it is a beneficiary.
"Default" means any event which is, or after notice or passage of time
or both would be, an Event of Default.
"Designated Senior Indebtedness" of the Company means (a) the Bank
Indebtedness and Indebtedness in respect of Hedging Obligations, and (b) any
other Senior Indebtedness of the Company that, at the date of determination, has
an aggregate principal
<PAGE>
10
amount outstanding of, or under which, at the date of determination, the holders
thereof are committed to lend up to at least $25.0 million and is specifically
designated by the Company in the instrument evidencing or governing such Senior
Indebtedness as "Designated Senior Indebtedness" for purposes of this Indenture.
"Designated Senior Indebtedness" of a Note Guarantor has a correlative meaning.
"Disqualified Stock" means, with respect to any Person, any Capital
Stock which by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable or exercisable) or upon the
happening of any event (a) matures or is mandatorily redeemable pursuant to a
sinking fund obligation or otherwise, (b) is convertible or exchangeable for
Indebtedness or Disqualified Stock (excluding Capital Stock convertible or
exchangeable solely at the option of the Company or a Restricted Subsidiary;
provided, however, that any such conversion or exchange shall be deemed an
- -------- -------
Incurrence of Indebtedness or Disqualified Stock, as applicable) or (c) is
redeemable at the option of the holder thereof, in whole or in part, in the case
of each of clauses (a), (b) and (c), on or prior to the first anniversary of the
Stated Maturity of the Securities; provided, however, that any Capital Stock
-------- -------
that would not constitute Disqualified Stock but for provisions thereof giving
holders thereof the right to require such Person to repurchase or redeem such
Capital Stock upon the occurrence of an "asset sale" or "change of control"
occurring prior to the Stated Maturity of the Securities shall not constitute
Disqualified Stock if the "asset sale" or "change of control" provisions
applicable to such Capital Stock are not more favorable in a material respect to
the holders of such Capital Stock than the provisions of Sections 4.06 and 4.08.
"Domestic Subsidiary" means any Restricted Subsidiary of the Company
other than a Foreign Subsidiary.
"EBITDA" for any period means the Consolidated Net Income for such
period, plus, without duplication, the following to the extent deducted in
calculating such Consolidated Net Income: (a) income tax expense of the Company
and its Consolidated Restricted Subsidiaries, (b) Consolidated Interest Expense,
(c) depreciation expense of the Company and its Consolidated Restricted
Subsidiaries, (d) amortization expense of the Company and its Consolidated
Restricted Subsidiaries (excluding amortization expense attributable to a
prepaid cash item that was paid in a prior period), (e) depletion expense of the
Company and its Consolidated Restricted Subsidiaries, and (f) all other noncash
charges of the Company and its Consolidated Restricted Subsidiaries (excluding
any such noncash charge to the extent it represents an accrual of or reserve for
cash expenditures in any future period) less all non-cash items of income of the
Company and its Restricted Subsidiaries, in each case for such period.
Notwithstanding the foregoing, the provision for taxes based on the income or
profits of, and the depreciation, amortization and depletion and noncash charges
of, a Restricted Subsidiary of the Company shall be added to Consolidated Net
Income to compute EBITDA only to the extent (and in the same proportion) that
the net income of such Restricted Subsidiary was included in calculating
Consolidated Net Income and only if a corresponding amount would be permitted at
the date of determination to be dividended to the Company by such Restricted
Subsidiary without prior approval (that has not been obtained), pursuant to the
terms of its charter and all
<PAGE>
11
agreements, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to such Restricted Subsidiary or its
stockholders.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" means, with respect to any asset or property, the
price which could be negotiated in an arm's-length, free market transaction, for
cash, between a willing seller and a willing and able buyer, neither of whom is
under undue pressure or compulsion to complete the transaction. For purposes of
this Indenture, Fair Market Value will be determined in good faith by the Board
of Directors, whose determination will be conclusive and evidenced by a
resolution of the Board of Directors.
"Foreign Subsidiary" means any Restricted Subsidiary of the Company
that is not organized under the laws of the United States of America or any
State thereof or the District of Columbia.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect as of the Closing Date, including those set forth
in (a) the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants, (b) statements and
pronouncements of the Financial Accounting Standards Board, (c) such other
statements by such other entities as approved by a significant segment of the
accounting profession, and (d) the rules and regulations of the SEC governing
the inclusion of financial statements (including pro forma financial statements)
in periodic reports required to be filed pursuant to Section 13 of the Exchange
Act, including opinions and pronouncements in staff accounting bulletins and
similar written statements from the accounting staff of the SEC. All ratios and
computations based on GAAP contained in this Indenture shall be computed in
conformity with GAAP.
"Guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness or other obligation
of any other Person and any obligation, direct or indirect, contingent or
otherwise, of such Person (a) to purchase or pay (or advance or supply funds for
the purchase or payment of) such Indebtedness or other obligation of such other
Person (whether arising by virtue of partnership arrangements, or by agreement
to keep-well, to purchase assets, goods, securities or services, to take-or-pay,
or to maintain financial statement conditions or otherwise) or (b) entered into
for purposes of assuring in any other manner the obligee of such Indebtedness or
other obligation of the payment thereof or to protect such obligee against loss
in respect thereof (in whole or in part); provided, however, that the term
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"Guarantee" shall not include endorsements for collection or deposit in the
ordinary course of business. The term "Guarantee" used as a verb has a
corresponding meaning. The term "Guarantor" shall mean any Person Guaranteeing
any obligation.
"Hedging Obligations" of any Person means the obligations of such
Person pursuant to any Interest Rate Agreement, Currency Agreement or Commodity
Agreement.
<PAGE>
12
"Holder" means the Person in whose name a Security is registered on
the Registrar's books.
"Holdings" means USS Holdings, Inc., a Delaware corporation, until a
successor replaces it, and, thereafter, means the successor.
"Incur" means issue, assume, Guarantee, incur or otherwise become
liable for; provided, however, that any Indebtedness or redemption, repayment or
-------- -------
repurchase obligation in respect of Preferred Stock or Disqualified Stock of a
Person existing at the time such Person becomes a Subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be Incurred by such
Person at the time it becomes a Subsidiary. The term "Incurrence" when used as
a noun shall have a correlative meaning. The accretion of principal of a non-
interest bearing or other discount security shall not be deemed the Incurrence
of Indebtedness.
"Indebtedness" means, with respect to any Person on any date of
determination, without duplication:
(a) the principal of and premium (if any) in respect of indebtedness
of such Person for borrowed money;
(b) the principal of and premium (if any) in respect of obligations of
such Person evidenced by bonds, debentures, notes or other similar
instruments;
(c) all obligations of such Person in respect of letters of credit or
other similar instruments (including reimbursement obligations with respect
thereto);
(d) all obligations of such Person to pay the deferred and unpaid
purchase price of property or services (except Trade Payables), which
purchase price is due more than twelve months after the date of placing
such property in service or taking delivery and title thereto or the
completion of such services;
(e) all Capitalized Lease Obligations and all Attributable Debt of
such Person;
(f) the amount of all obligations of such Person with respect to the
redemption, repayment or other repurchase of any Disqualified Stock or,
with respect to any Subsidiary of such Person, any Preferred Stock (but
excluding, in each case, any accrued dividends);
(g) all Indebtedness of other Persons secured by a Lien on any asset
of such Person, whether or not such Indebtedness is assumed by such Person;
provided, however, that the amount of Indebtedness of such Person shall be
-------- -------
the lesser of (i) the Fair Market Value of such asset at such date of
determination and (ii) the amount of such Indebtedness of such other
Persons;
<PAGE>
13
(h) Hedging Obligations of such Person; and
(i) all obligations of the type referred to in clauses (a) through (h)
of other Persons and all dividends of other Persons for the payment of
which, in either case, such Person is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise, including by means of any
Guarantee.
The amount of Indebtedness (other than Hedging Obligations) of any Person at any
date shall be the outstanding balance at such date of all unconditional
obligations as described above and the maximum liability, upon the occurrence of
the contingency giving rise to the obligation, of any contingent obligations at
such date. The amount of Indebtedness in respect of Hedging Obligations shall
be determined in accordance with GAAP.
Notwithstanding the foregoing, for the purposes of the definition of
Consolidated Leverage Ratio, Indebtedness shall not include any obligations in
respect of undrawn letters of credit or any Hedging Obligations.
"Indenture" means this Indenture as amended or supplemented from time
to time.
"Interest Rate Agreement" means with respect to any Person any
interest rate protection agreement, interest rate future agreement, interest
rate option agreement, interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate hedge agreement or
other similar agreement or arrangement as to which such Person is party or a
beneficiary.
"Investment" in any Person means any direct or indirect advance, loan
(other than advances to customers in the ordinary course of business that are
recorded as accounts receivable on the balance sheet of the lender) or other
extension of credit (including by way of Guarantee or similar arrangement) or
capital contribution to (by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of
others), or any purchase or acquisition of Capital Stock, Indebtedness or other
similar instruments issued by such Person. For purposes of the definition of
"Unrestricted Subsidiary" and Section 4.04, (a) "Investment" shall include the
portion (proportionate to the Company's equity interest in such Subsidiary) of
the Fair Market Value of the net assets of any Subsidiary of the Company at the
time that such Subsidiary is designated an Unrestricted Subsidiary; provided,
--------
however, that upon a redesignation of such Subsidiary as a Restricted
- -------
Subsidiary, the Company shall be deemed to continue to have a permanent
"Investment" in an Unrestricted Subsidiary in an amount (if positive) equal to
(i) the Company's "Investment" in such Subsidiary at the time of such
redesignation less (ii) the portion (proportionate to the Company's equity
interest in such Subsidiary) of the Fair Market Value of the net assets of such
Subsidiary at the time of such redesignation; and (b) any property transferred
to or from an Unrestricted Subsidiary shall be valued at its Fair Market Value
at the time of such transfer.
"Issue Date" means the date on which the Initial Securities are
originally issued.
<PAGE>
14
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any conditional sale or other title
retention agreement or lease in the nature thereof).
"liquidated damages" means any liquidated damages payable under the
Registration Agreement.
"Net Available Cash" from an Asset Disposition means cash payments
received (including any cash payments received by way of deferred payment of
principal pursuant to a note or installment receivable or otherwise and proceeds
from the sale or other disposition of any securities received as consideration,
but only as and when received, but excluding any other consideration received in
the form of assumption by the acquiring Person of Indebtedness or other
obligations relating to the properties or assets that are the subject of such
Asset Disposition or received in any other non-cash form) therefrom, in each
case net of (a) all legal, title and recording tax expenses, commissions and
other fees and expenses incurred, and all Federal, state, provincial, foreign
and local taxes required to be paid or accrued as a liability under GAAP, as a
consequence of such Asset Disposition, (b) all payments made on any Indebtedness
which is secured by any assets subject to such Asset Disposition, in accordance
with the terms of any Lien upon or other security agreement of any kind with
respect to such assets, or which must by its terms, or in order to obtain a
necessary consent to such Asset Disposition, or by applicable law be repaid out
of the proceeds from such Asset Disposition, (c) all distributions and other
payments required to be made to minority interest holders in Subsidiaries or
joint ventures as a result of such Asset Disposition and (d) appropriate amounts
to be provided by the seller as a reserve, in accordance with GAAP, against any
liabilities associated with the property or other assets disposed of in such
Asset Disposition and retained by the Company or any Restricted Subsidiary after
such Asset Disposition.
"Net Cash Proceeds", with respect to any issuance or sale of Capital
Stock, means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof.
"Note Guarantee" means each Guarantee of the obligations with respect
to the Securities issued by a Person pursuant to the terms of this Indenture.
"Note Guarantor" means any Person that has issued a Note Guarantee.
"Offering Memorandum" means the Offering Memorandum dated September
28, 1999 for the Company's 13% Senior Subordinated Notes due 2009.
"Officer" means the Chairman of the Board, the Chief Executive
Officer, the Chief Financial Officer, the President, any Vice President, the
Treasurer or the Secretary of the Company. "Officer" of a Note Guarantor has a
correlative meaning.
<PAGE>
15
"Officers' Certificate" means a certificate signed by two Officers.
"Opinion of Counsel" means a written opinion from legal counsel. The
counsel may be an employee of or counsel to the Company or a Note Guarantor.
"Parent" means BMAC Holdings, Inc., a Delaware corporation, until a
successor replaces it and, thereafter, means the successor.
"Permitted Asset Swap" means any one or more transactions in which
the Company or any Restricted Subsidiary exchanges assets for consideration
consisting of (a) Capital Stock in or assets of a Person engaged in a Permitted
Business and (b) any cash, provided that such cash will be considered Net
Available Cash from an Asset Disposition.
"Permitted Business" means any business engaged in by the Company or
any Restricted Subsidiary on the Closing Date and any Related Business.
"Permitted Holders" means (a) Chase Capital Partners, its Affiliates
and their respective directors and officers, (b) D. George Harris & Associates,
LLC ("DGHA") and individuals who are equity owners, directors or employees of
DGHA, the Company, Holdings or Parent (or the estate or any beneficiary of any
such individual or any immediate family member of any such individual or any
trust established for the benefit of any such immediate family member) and (c)
any Person acting in the capacity of an underwriter in connection with a public
or private offering of the Company's, Parent's or Holdings' Capital Stock.
"Permitted Investment" means an Investment by the Company or any
Restricted Subsidiary in (a) the Company, a Restricted Subsidiary or a Person
that will, upon the making of such Investment, become a Restricted Subsidiary;
provided, however, that the primary business of such Restricted Subsidiary is a
- -------- -------
Permitted Business; (b) another Person if as a result of such Investment such
other Person is merged or consolidated with or into, or transfers or conveys all
or substantially all its assets to, the Company or a Restricted Subsidiary;
provided, however, that such Person's primary business is a Permitted Business;
- -------- -------
(c) Temporary Cash Investments; (d) receivables owing to the Company or any
Restricted Subsidiary if created or acquired in the ordinary course of business
and payable or dischargeable in accordance with customary trade terms; provided,
--------
however, that such trade terms may include such concessionary trade terms as the
- -------
Company or any such Restricted Subsidiary deems reasonable under the
circumstances; (e) payroll, travel and similar advances to cover matters that
are expected at the time of such advances ultimately to be treated as expenses
for accounting purposes and that are made in the ordinary course of business;
(f) loans or advances to employees made in the ordinary course of business
consistent with past practices of the Company or such Restricted Subsidiary and
not exceeding $1.0 million in the aggregate outstanding at any one time; (g)
stock, obligations or securities received in settlement of debts created in the
ordinary course of business and owing to the Company or any Restricted
Subsidiary or in satisfaction of judgments; (h) any Person to the extent such
Investment represents the non-cash portion of the consideration received for an
Asset Disposition that was made pursuant to and in compliance with Section 4.06;
(i) Investments the payment for which consists of (A) Capital Stock (other than
Disqualified Stock) or the cash
<PAGE>
16
proceeds from the sale of Capital Stock (other than Disqualified Stock), in each
case of the Company or (B) the proceeds of cash capital contributions to the
Company; provided, however, that such cash proceeds from sales of Capital Stock
-------- -------
or cash capital contributions will not increase the amount available for
Restricted Payments under Section 4.04(a)(iv)(3); (j) Loans to DGHA pursuant to
the Amended and Restated Management Services Agreement, dated October 6, 1998 or
any amendment or replacement thereto so long as any such amendment or
replacement agreement is not more disadvantageous to the Holders of the Notes in
any material respect than the agreement as in effect as of the Closing Date; (k)
Investments in the ordinary course of business in an insurer required as a
condition to the provision by such insurer of insurance coverage; and (l) any
Person having an aggregate Fair Market Value, taken together with all other
Investments made pursuant to this clause (l) that are at the time outstanding,
not to exceed the greater of 3.0% of Total Assets or $15.0 million at the time
of such Investment (with the Fair Market Value of each Investment being measured
at the time made and without giving effect to subsequent changes in value).
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Preferred Stock", as applied to the Capital Stock of any Person,
means Capital Stock of any class or classes (however designated) that is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such Person,
over shares of Capital Stock of any other class of such Person.
"principal" of a Security means the principal of the Security plus the
premium, if any, payable on the Security which is due or overdue or is to become
due at the relevant time.
"Public Equity Offering" means an underwritten primary public offering
of common stock of the Company, Parent or Holdings, as applicable, pursuant to
an effective registration statement under the Securities Act.
"Public Market" means any time after (a) a Public Equity Offering has
been consummated and (b) at least 15% of the total issued and outstanding common
stock of the Company, Parent or Holdings (as applicable) has been distributed by
means of an effective registration statement under the Securities Act.
"Refinance" means, in respect of any Indebtedness, to refinance,
extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue
other Indebtedness in exchange or replacement for, such Indebtedness.
"Refinanced" and "Refinancing" shall have correlative meanings.
"Refinancing Indebtedness" means Indebtedness that is Incurred to
refund, refinance, replace, renew, repay or extend (including pursuant to any
defeasance or discharge mechanism) any Indebtedness of the Company or any
Restricted Subsidiary existing on the Closing Date or Incurred in compliance
with this Indenture (including Indebtedness of the
<PAGE>
17
Company or any Restricted Subsidiary that Refinances Refinancing Indebtedness);
provided, however, that (a) the Refinancing Indebtedness has a Stated Maturity
- -------- -------
no earlier than the Stated Maturity of the Indebtedness being Refinanced, (b)
the Refinancing Indebtedness has an Average Life at the time such Refinancing
Indebtedness is Incurred that is equal to or greater than the Average Life of
the Indebtedness being refinanced, (c) such Refinancing Indebtedness is Incurred
in an aggregate principal amount (or if issued with original issue discount, an
aggregate issue price) that is equal to or less than the aggregate principal
amount (or if issued with original issue discount, the aggregate accreted value)
then outstanding of the Indebtedness being Refinanced plus any reasonable
premiums required to be paid with respect to the Indebtedness being Refinanced,
and (d) if the Indebtedness being Refinanced is subordinated in right of payment
to the Securities, such Refinancing Indebtedness is subordinated in right of
payment to the Securities at least to the same extent as the Indebtedness being
Refinanced; provided further, however, that (x) Refinancing Indebtedness shall
-------- ------- -------
not include (i) Indebtedness of a Restricted Subsidiary that is not a Note
Guarantor that Refinances Indebtedness of the Company or (ii) Indebtedness of
the Company or a Restricted Subsidiary that Refinances Indebtedness of an
Unrestricted Subsidiary and (y) Refinancing Indebtedness referred to in the
definition of "Bank Indebtedness" or in respect of the Acquisition Term Loan
Facility shall not be subject to clauses (a), (b) or (c) of this definition.
"Related Business" means any business related, ancillary or
complementary to the businesses of the Company and the Restricted Subsidiaries
on the Closing Date.
"Representative" means the trustee, agent or representative (if any)
for an issue of Senior Indebtedness.
"Responsible Officer" shall mean, when used with respect to the
Trustee, any officer within the corporate trust department of the Trustee,
including any vice president, assistant vice president, assistant secretary,
assistant treasurer, trust officer or any other officer of the Trustee who
customarily performs functions similar to those performed by the Persons who at
the time shall be such officers, respectively, or to whom any corporate trust
matter is referred because of such person's knowledge of and familiarity with
the particular subject and who shall have direct responsibility for the
administration of this Indenture.
"Restricted Subsidiary" means any Subsidiary of the Company other than
an Unrestricted Subsidiary.
"Sale/Leaseback Transaction" means an arrangement relating to property
now owned or hereafter acquired by the Company or a Restricted Subsidiary
whereby the Company or a Restricted Subsidiary transfers such property to a
Person and the Company or such Restricted Subsidiary leases it from such Person,
other than leases between the Company and a Wholly Owned Subsidiary or between
Wholly Owned Subsidiaries.
"SEC" means the Securities and Exchange Commission.
<PAGE>
18
"Secured Indebtedness" means any Indebtedness of the Company secured
by a Lien. "Secured Indebtedness" of a Note Guarantor has a correlative
meaning.
"Securities" means the Securities issued under this Indenture.
"Securities Act" means the Securities Act of 1933.
"Senior Indebtedness" of the Company or any Note Guarantor means the
principal of, premium (if any) and accrued and unpaid interest on (including
interest accruing on or after the filing of any petition in bankruptcy or for
reorganization of the Company or any Note Guarantor, regardless of whether or
not a claim for post-filing interest is allowed in such proceedings) and fees
and other amounts owing in respect of, Bank Indebtedness and all other
Indebtedness of the Company or any Note Guarantor, as applicable, whether
outstanding on the Closing Date or thereafter Incurred, unless in the instrument
creating or evidencing the same or pursuant to which the same is outstanding it
is provided that such obligations are not superior in right of payment to the
Securities or such Note Guarantor's Note Guarantee; provided, however, that
-------- -------
Senior Indebtedness of the Company or any Note Guarantor shall not include (a)
any obligation of the Company to Parent, Holdings or any Subsidiary of the
Company or of such Note Guarantor to Parent, Holdings or the Company or any
other Subsidiary of the Company, (b) any liability for Federal, state, local or
other taxes owed or owing by the Company or such Note Guarantor, as applicable,
(c) any accounts payable or other liability to trade creditors arising in the
ordinary course of business (including Guarantees thereof or instruments
evidencing such liabilities but excluding liabilities of the Company or a Note
Guarantor, as applicable, with respect to performance or surety bonds or similar
obligations, in each case entered into in the ordinary course of business), as
applicable, (d) any Indebtedness or obligation of the Company or such Note
Guarantor (and any accrued and unpaid interest in respect thereof) that by its
terms is subordinate or junior in right of payment to any other Indebtedness or
obligation of the Company or such Note Guarantor, as applicable, including any
Senior Subordinated Indebtedness and any Subordinated Obligations of the Company
or such Note Guarantor, as applicable, (e) any obligations with respect to any
Capital Stock or (f) any Indebtedness Incurred in violation of this Indenture.
"Senior Subordinated Indebtedness" of the Company means the Securities
and any other Indebtedness of the Company that specifically provides that such
Indebtedness is to rank equally with the Securities in right of payment and is
not subordinated by its terms in right of payment to any Indebtedness or other
obligation of the Company which is not Senior Indebtedness. "Senior Subordinated
Indebtedness" of a Note Guarantor has a correlative meaning.
"Significant Subsidiary" means any Restricted Subsidiary that would be
a "Significant Subsidiary" of the Company within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC.
"Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which the final payment of
principal of such security is due and
<PAGE>
19
payable, including pursuant to any mandatory redemption provision (but excluding
any provision providing for the repurchase of such security at the option of the
holder thereof upon the happening of any contingency beyond the control of the
issuer unless such contingency has occurred).
"Subordinated Obligation" means any Indebtedness of the Company
(whether outstanding on the Closing Date or thereafter Incurred) that is
subordinate or junior in right of payment to the Securities pursuant to a
written agreement. "Subordinated Obligation" of a Note Guarantor has a
correlative meaning.
"Subsidiary" of any Person means any corporation, association,
partnership or other business entity of which more than 50% of the total voting
power of shares of Capital Stock or other interests (including partnership
interests) entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by (a) such Person, (b) such Person
and one or more Subsidiaries of such Person or (c) one or more Subsidiaries of
such Person.
"Temporary Cash Investments" means any of the following: (a) any
investment in direct obligations of the United States of America or any agency
thereof or obligations Guaranteed by the United States of America or any agency
thereof, (b) investments in time deposit accounts, certificates of deposit and
money market deposits maturing within 180 days of the date of acquisition
thereof issued by a bank or trust company that is organized under the laws of
the United States of America, any state thereof or any foreign country
recognized by the United States of America having capital, surplus and undivided
profits aggregating in excess of $250,000,000 (or the foreign currency
equivalent thereof) and whose long-term debt is rated "A" (or such similar
equivalent rating) or higher by at least one nationally recognized statistical
rating organization (as defined in Rule 436 under the Securities Act), (c)
repurchase obligations with a term of not more than 30 days for underlying
securities of the types described in clause (a) above entered into with a bank
meeting the qualifications described in clause (b) above, (d) investments in
commercial paper, maturing not more than 90 days after the date of acquisition,
issued by a corporation (other than an Affiliate of the Company) organized and
in existence under the laws of the United States of America or any foreign
country recognized by the United States of America with a rating at the time as
of which any investment therein is made of "P-1" (or higher) according to
Moody's Investors Service, Inc. or "A-1" (or higher) according to Standard and
Poor's Ratings Service, a division of The McGraw-Hill Companies, Inc. ("S&P"),
and (e) investments in securities with maturities of six months or less from the
date of acquisition issued or fully guaranteed by any state, commonwealth or
territory of the United States of America, or by any political subdivision or
taxing authority thereof, and rated at least "A" by S&P or "A" by Moody's
Investors Service, Inc.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. " 77aaa-
------
77bbbb) as in effect on the Closing Date.
"Total Assets" means the total consolidated assets of the Company
and its Restricted Subsidiaries, as shown on the most recent balance sheet of
the Company.
<PAGE>
20
"Trade Payables" means, with respect to any Person, any accounts
payable or any indebtedness or monetary obligation to trade creditors created,
assumed or Guaranteed by such Person arising in the ordinary course of business
in connection with the acquisition of goods or services.
"Trustee" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor.
"Uniform Commercial Code" means the New York Uniform Commercial Code
as in effect from time to time.
"Unrestricted Subsidiary" means (a) any Subsidiary of the Company that
at the time of determination shall be designated an Unrestricted Subsidiary by
the Board of Directors in the manner provided below and (b) any Subsidiary of an
Unrestricted Subsidiary. The Board of Directors may designate any Subsidiary of
the Company (including any newly acquired or newly formed Subsidiary of the
Company) to be an Unrestricted Subsidiary unless such Subsidiary or any of its
Subsidiaries owns any Capital Stock or Indebtedness of, or owns or holds any
Lien on any property of, the Company or any Restricted Subsidiary of the Company
that is not a Subsidiary of the Subsidiary to be so designated; provided,
--------
however, that either (i) the Subsidiary to be so designated has total
- -------
Consolidated assets of $1,000 or less or (ii) if such Subsidiary has
Consolidated assets greater than $1,000, then such designation would be
permitted under Section 4.04. The Board of Directors may designate any
Unrestricted Subsidiary to be a Restricted Subsidiary; provided, however, that
-------- -------
(a) immediately after giving effect to such designation no Default shall have
occurred and be continuing and (b) at the time of such designation, the Company
or a Restricted Subsidiary could have Incurred all of the outstanding
Indebtedness of such Subsidiary and its Subsidiaries under Section 4.03. Any
such designation of a Subsidiary as a Restricted Subsidiary or Unrestricted
Subsidiary by the Board of Directors shall be evidenced to the Trustee by
promptly filing with the Trustee a copy of the resolution of the Board of
Directors giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing provisions.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable or redeemable at the issuer's option.
"Voting Stock" of a Person means all classes of Capital Stock or other
interests (including partnership interests) of such Person then outstanding and
normally entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof.
<PAGE>
21
"Wholly Owned Subsidiary" means a Restricted Subsidiary of the Company
all the Voting Stock of which (other than directors' qualifying shares) is owned
by the Company and/or another Wholly Owned Subsidiary.
SECTION 1.02. Other Definitions.
------------------
<TABLE>
<CAPTION>
Defined in
Term Section
- ---- ----------
<S> <C>
"Affiliate Transaction"................................................ 4.07(a)
"Appendix"............................................................. Preamble
"Bankruptcy Law"....................................................... 6.01
"beneficially own"..................................................... 1.01
"Blockage Notice"...................................................... 10.03
"Change of Control Offer".............................................. 4.08(b)
"covenant defeasance option"........................................... 8.01(b)
"Custodian"............................................................ 6.01
"Definitive Securities"................................................ Appendix A
"Event of Default"..................................................... 6.01
"Exchange Securities".................................................. Preamble
"Global Securities".................................................... Appendix A
"Guarantee Blockage Notice"............................................ 12.03
"Guaranteed Obligations"............................................... 11.01
"Guaranteed Payment Blockage Period"................................... 12.03
"incorporated provision"............................................... 13.01
"Initial Securities"................................................... Preamble
"legal defeasance option".............................................. 8.01(b)
"Legal Holiday"........................................................ 13.08
"Notice of Default".................................................... 6.01
"Offer"................................................................ 4.06(b)
"Offer Amount"......................................................... 4.06(c)(ii)
"Offer Period"......................................................... 4.06(c)(ii)
"pay its Guarantee".................................................... 12.03
"pay the Securities"................................................... 10.03
"Paying Agent"......................................................... 2.03
"Payment Blockage Period".............................................. 10.03
"Private Exchange Securities".......................................... Appendix A
"protected purchaser".................................................. 2.07
"Purchase Date"........................................................ 4.06(c)(i)
"Registered Exchange Offer"............................................ Appendix A
"Registrar"............................................................ 2.03
"Restricted Payment"................................................... 4.04(a)
"Successor Company".................................................... 5.01(a)
</TABLE>
<PAGE>
22
SECTION 1.03. Incorporation by Reference of Trust Indenture Act.
--------------------------------------------------
This Indenture is subject to the mandatory provisions of the TIA, which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities and the Note Guarantees.
"indenture security holder" means a Holder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company, the Note
Guarantors and any other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule have the
meanings assigned to them by such definitions.
SECTION 1.04. Rules of Construction. Unless the context otherwise
----------------------
requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(c) "or" is not exclusive;
(d) "including" means including without limitation;
(e) words in the singular include the plural and words in the plural
include the singular;
(f) unsecured Indebtedness shall not be deemed to be subordinate or
junior to Secured Indebtedness merely by virtue of its nature as unsecured
Indebtedness;
(g) the principal amount of any non interest bearing or other discount
security at any date shall be the principal amount thereof that would be
shown on a balance sheet of the issuer dated such date prepared in
accordance with GAAP; and
<PAGE>
23
(h) the principal amount of any Preferred Stock shall be (i) the
maximum liquidation value of such Preferred Stock or (ii) the maximum
mandatory redemption or mandatory repurchase price with respect to such
Preferred Stock, whichever is greater.
ARTICLE 2
The Securities
--------------
SECTION 2.01. Form and Dating. Provisions relating to the Initial
---------------
Securities, the Private Exchange Securities and the Exchange Securities are set
forth in the Appendix, which is hereby incorporated in and expressly made a part
of this Indenture. The (a) Initial Securities and the Trustee's certificate of
authentication and (b) Private Exchange Securities and the Trustee's certificate
of authentication shall each be substantially in the form of Exhibit A hereto,
which is hereby incorporated in and expressly made a part of this Indenture.
The Exchange Securities and the Trustee's certificate of authentication shall
each be substantially in the form of Exhibit B hereto, which is hereby
incorporated in and expressly made a part of this Indenture. The Securities may
have notations, legends or endorsements required by law, stock exchange rule,
agreements to which the Company or any Note Guarantor is subject, if any, or
usage (provided that any such notation, legend or endorsement is in a form
acceptable to the Company). Each Security shall be dated the date of its
authentication. The Securities shall be issuable only in registered form
without interest coupons and only in denominations of $1,000 and integral
multiples thereof.
SECTION 2.02. Execution and Authentication. One Officer shall sign
-----------------------------
the Securities for the Company by manual or facsimile signature.
If an Officer whose signature is on a Security no longer holds that
office at the time the Trustee authenticates the Security, the Security shall be
valid nevertheless.
A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security. The
signature shall be conclusive evidence that the Security has been authenticated
under this Indenture.
The Trustee shall authenticate and make available for delivery
Securities as set forth in the Appendix.
In authenticating the Securities and accepting the additional
responsibilities under this Indenture in relation to such Securities, the
Trustee shall be entitled to receive, and shall be fully protected in relying
upon:
(a) A copy of the resolution or resolutions of the Board of Directors
in or pursuant to which the terms and form of the Securities were established,
certified by the secretary or an assistant secretary of the Company to have been
duly adopted by the Board of Directors and to be in full force and effect as of
the date of such certificate, and if the terms and form of such
<PAGE>
24
Securities are established by an Officers' Certificate pursuant to general
authorization of the Board of Directors, such Officers' Certificate;
(b) an Opinion of Counsel which shall state:
(i) that the form of such Securities has been established by or
pursuant to a resolution of the Board of Directors in conformity with the
provisions of this Indenture;
(ii) that the terms of such Securities have been established in
conformity with the other provisions of this Indenture;
(iii) that such Securities, when authenticated and delivered by the
Trustee and issued by the Company in the manner and subject to any
conditions specified in such Opinion of Counsel, will constitute valid and
legally binding obligations of the Company, enforceable in accordance with
their terms, subject to bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or affecting the enforcement of
creditors' rights and to general equity principles.
The Trustee shall have the right to decline to authenticate and
deliver any Securities under this Section 2.02 if the Trustee, being advised by
counsel, determines that such action may not lawfully be taken or if the Trustee
in good faith shall determine that such action would expose the Trustee to
personal liability to existing Holders.
The Trustee may appoint an authenticating agent reasonably acceptable
to the Company to authenticate the Securities. Any such appointment shall be
evidenced by an instrument signed by a Responsible Officer, a copy of which
shall be furnished to the Company. Unless limited by the terms of such
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as any Registrar, Paying Agent or agent for service of notices and
demands.
SECTION 2.03. Registrar and Paying Agent. (a) The Company shall
---------------------------
maintain an office or agency where Securities may be presented for registration
of transfer or for exchange (the "Registrar") and an office or agency where
Securities may be presented for payment (the "Paying Agent"). The Registrar
shall keep a register of the Securities and of their transfer and exchange. The
Company may have one or more co-registrars and one or more additional paying
agents. The term "Paying Agent" includes any additional paying agent, and the
term "Registrar" includes any co-registrars. The Company initially appoints the
Trustee as (i) Registrar and Paying Agent in connection with the Securities and
(ii) the Securities Custodian with respect to the Global Securities.
(b) The Company shall enter into an appropriate agency agreement with
any Registrar or Paying Agent not a party to this Indenture, which shall
incorporate the terms of the TIA. The agreement shall implement the provisions
of this Indenture that relate to such agent. The Company shall notify the
Trustee of the name and address of any such agent. If the
<PAGE>
25
Company fails to maintain a Registrar or Paying Agent, the Trustee shall act as
such and shall be entitled to appropriate compensation therefor pursuant to
Section 7.07. The Company or any of its domestically organized Wholly Owned
Subsidiaries may act as Paying Agent or Registrar.
(c) The Company may remove any Registrar or Paying Agent upon written
notice to such Registrar or Paying Agent and to the Trustee; provided, however,
-------- -------
that no such removal shall become effective until (i) acceptance of an
appointment by a successor as evidenced by an appropriate agreement entered into
by the Company and such successor Registrar or Paying Agent, as the case may be,
and delivered to the Trustee or (ii) notification to the Trustee that the
Trustee shall serve as Registrar or Paying Agent until the appointment of a
successor in accordance with clause (i) above. The Registrar or Paying Agent
may resign at any time upon written notice to the Company and the Trustee.
SECTION 2.04. Paying Agent to Hold Money in Trust. Subject to
------------------------------------
Section 13.08, prior to each due date of the principal and interest on any
Security, the Company shall deposit with the Paying Agent (or if the Company or
a Subsidiary is acting as Paying Agent, segregate and hold in trust for the
benefit of the Persons entitled thereto) a sum sufficient to pay such principal
and interest when so becoming due. The Company shall require each Paying Agent
(other than the Trustee) to agree in writing that the Paying Agent shall hold in
trust for the benefit of Holders or the Trustee all money held by the Paying
Agent for the payment of principal of or interest on the Securities, shall
notify the Trustee of any default by the Company in making any such payment. If
the Company or a Subsidiary of the Company acts as Paying Agent, it shall
segregate the money held by it as Paying Agent and hold it as a separate trust
fund. The Company at any time may require a Paying Agent to pay all money held
by it to the Trustee and to account for any funds disbursed by the Paying Agent.
Upon complying with this Section, the Paying Agent shall have no further
liability for the money delivered to the Trustee.
SECTION 2.05. Holder Lists. The Trustee shall preserve in as current
-------------
a form as is reasonably practicable the most recent list available to it of the
names and addresses of Holders. If the Trustee is not the Registrar, the
Company shall furnish, or cause the Registrar to furnish, to the Trustee, in
writing at least five Business Days before each interest payment date and at
such other times as the Trustee may request in writing, a list in such form and
as of such date as the Trustee may reasonably require of the names and addresses
of Holders.
SECTION 2.06. Transfer and Exchange. The Securities shall be issued
----------------------
in registered form and shall be transferable only upon the surrender of a
Security for registration of transfer and in compliance with the Appendix. When
a Security is presented to the Registrar with a request to register a transfer,
the Registrar shall register the transfer as requested if its requirements
therefor are met. When Securities are presented to the Registrar with a request
to exchange them for an equal principal amount of Securities of other
denominations, the Registrar shall make the exchange as requested if the same
requirements are met. To permit registration of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Securities at the
Registrar's request. The Company may require payment of a sum sufficient to pay
all taxes, assessments or other governmental charges in connection with any
transfer or exchange pursuant to this Section. The Company shall not be
required to make and the Registrar need not
<PAGE>
26
register transfers or exchanges of Securities selected for redemption (except,
in the case of Securities to be redeemed in part, the portion thereof not to be
redeemed) or to transfer or exchange any Securities for a period of 15 days
before a selection of Securities to be redeemed.
Prior to the due presentation for registration of transfer of any
Security, the Company, the Note Guarantors, the Trustee, the Paying Agent, and
the Registrar may deem and treat the Person in whose name a Security is
registered as the absolute owner of such Security for the purpose of receiving
payment of principal of and (subject to paragraph 2 of the Securities) interest,
if any, on such Security and for all other purposes whatsoever, whether or not
such Security is overdue, and none of the Company, any Note Guarantor, the
Trustee, the Paying Agent, or the Registrar shall be affected by notice to the
contrary.
Any Holder of a Global Security shall, by acceptance of such Global
Security, agree that transfers of beneficial interest in such Global Security
may be effected only through a book-entry system maintained by (a) the Holder of
such Global Security (or its agent) or (b) any Holder of a beneficial interest
in such Global Security, and that ownership of a beneficial interest in such
Global Security shall be required to be reflected in a book entry.
All Securities issued upon any transfer or exchange pursuant to the
terms of this Indenture will evidence the same debt and will be entitled to the
same benefits under this Indenture as the Securities surrendered upon such
transfer or exchange.
SECTION 2.07. Replacement Securities. If a mutilated Security is
-----------------------
surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, the Company shall issue
and the Trustee shall authenticate a replacement Security if the requirements of
Section 8-405 of the Uniform Commercial Code are met, such that the Holder (a)
satisfies the Company or the Trustee within a reasonable time after he has
notice of such loss, destruction or wrongful taking and the Registrar does not
register a transfer prior to receiving such notification, (b) makes such request
to the Company or the Trustee prior to the Security being acquired by a
protected purchaser as defined in Section 8-303 of the Uniform Commercial Code
(a "protected purchaser") and (c) satisfies any other reasonable requirements of
the Trustee (including, without limitation, obtaining from the Company an
Officers' Certificate stating that the requirements of Section 8-405 of the UCC
have been met). If required by the Trustee or the Company, such Holder shall
furnish an indemnity bond sufficient in the judgment of the Trustee to protect
the Company, the Trustee, the Paying Agent and the Registrar from any loss that
any of them may suffer if a Security is replaced. The Company and the Trustee
may charge the Holder for their expenses in replacing a Security. In the event
any such mutilated, lost, destroyed or wrongfully taken Security has become or
is about to become due and payable, the Company in its discretion may pay such
Security instead of issuing a new Security in replacement thereof.
Every replacement Security is an additional obligation of the Company.
<PAGE>
27
The provisions of this Section 2.07 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, lost, destroyed or wrongfully taken
Securities.
SECTION 2.08. Outstanding Securities. Securities outstanding at any
-----------------------
time are all Securities authenticated by the Trustee except for those canceled
by it, those delivered to it for cancelation and those described in this Section
as not outstanding. Subject to Section 13.06, a Security does not cease to be
outstanding because the Company or an Affiliate of the Company holds the
Security.
If a Security is replaced pursuant to Section 2.07, it ceases to be
outstanding unless the Trustee and the Company receive proof satisfactory to
them that the replaced Security is held by a protected purchaser.
If the Paying Agent segregates and holds in trust, in accordance with
this Indenture, on a redemption date or maturity date money sufficient to pay
all principal and interest and liquidated damages, if any, payable on that date
with respect to the Securities (or portions thereof) to be redeemed or maturing,
as the case may be, and the Paying Agent is not prohibited from paying such
money to the Holders on that date pursuant to the terms of this Indenture, then
on and after that date such Securities (or portions thereof) cease to be
outstanding and interest on them ceases to accrue.
SECTION 2.09. Temporary Securities. In the event that Definitive
---------------------
Securities are to be issued under the terms of this Indenture, until such
Definitive Securities are ready for delivery, the Company may prepare and the
Trustee shall authenticate temporary Securities. Temporary Securities shall be
substantially in the form of Definitive Securities but may have variations that
the Company considers appropriate for temporary Securities. Without
unreasonable delay, the Company shall prepare and the Trustee shall authenticate
Definitive Securities and deliver them in exchange for temporary Securities upon
surrender of such temporary Securities at the office or agency of the Company,
without charge to the Holder.
SECTION 2.10. Cancelation. The Company at any time may deliver
------------
Securities to the Trustee for cancelation. The Registrar and the Paying Agent
shall forward to the Trustee any Securities surrendered to them for registration
of transfer, exchange or payment. The Trustee and no one else shall cancel all
Securities surrendered for registration of transfer, exchange, payment or
cancelation and shall dispose of canceled Securities in accordance with its
customary procedures or deliver canceled Securities to the Company pursuant to
written direction by an Officer, provided, however, that the Trustee shall not
-------- -------
be required to destroy Securities. The Company may not issue new Securities to
replace Securities it has redeemed, paid or delivered to the Trustee for
cancelation. The Trustee shall not authenticate Securities in place of canceled
Securities other than pursuant to the terms of this Indenture.
SECTION 2.11. Defaulted Interest. If the Company defaults in a
-------------------
payment of interest on the Securities, the Company shall pay the defaulted
interest (plus interest on such defaulted interest to the extent lawful) in any
lawful manner. The Company may pay the
<PAGE>
28
defaulted interest to the Persons who are Holders on a subsequent special record
date. The Company shall fix or cause to be fixed any such special record date
and payment date to the reasonable satisfaction of the Trustee and shall
promptly mail or cause to be mailed to each Holder a notice that states the
special record date, the payment date and the amount of defaulted interest to be
paid.
SECTION 2.12. CUSIP and "ISIN" Numbers. The Company in issuing the
-------------------------
Securities may use "CUSIP" and "ISIN" numbers (if then generally in use) and, if
so, the Trustee shall use "CUSIP" and "ISIN" numbers in notices of redemption as
a convenience to Holders; provided, however, that any such notice may state that
-------- -------
no representation is made as to the correctness of such numbers either as
printed on the Securities or as contained in any notice of a redemption and that
reliance may be placed only on the other identification numbers printed on the
Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers.
ARTICLE 3
Redemption
----------
SECTION 3.01. Notices to Trustee. If the Company elects to redeem
-------------------
Securities pursuant to paragraph 5 of the Securities, it shall notify the
Trustee in writing of the redemption date and the principal amount of Securities
to be redeemed.
The Company shall give each notice to the Trustee provided for in this
Section at least 60 days before the redemption date unless the Trustee consents
to a shorter period. Such notice shall be accompanied by an Officers'
Certificate and an Opinion of Counsel from the Company to the effect that such
redemption will comply with the conditions herein. Any such notice may be
canceled at any time prior to notice of such redemption being mailed to any
Holder by written notice thereof to the Trustee and shall thereby be void and of
no effect.
SECTION 3.02. Selection of Securities To Be Redeemed. If fewer than
---------------------------------------
all the Securities are to be redeemed, the Trustee shall select the Securities
to be redeemed pro rata or by lot or by such other method that the Trustee shall
deem to be fair and appropriate. The Trustee shall make the selection from
outstanding Securities not previously called for redemption. The Trustee may
select for redemption portions of the principal of Securities that have
denominations larger than $1,000. Securities and portions of them the Trustee
selects shall be in amounts of $1,000 or a whole multiple of $1,000. Provisions
of this Indenture that apply to Securities called for redemption also apply to
portions of Securities called for redemption. The Trustee shall notify the
Company promptly of the Securities or portions of Securities to be redeemed.
SECTION 3.03. Notice of Redemption. (a) At least 30 days but not
---------------------
more than 60 days before a date for redemption of Securities, the Company shall
mail a notice of redemption
<PAGE>
29
by first-class mail to each Holder of Securities to be redeemed at such Holder's
registered address.
The notice shall identify the Securities to be redeemed and shall
state:
(i) the redemption date;
(ii) the redemption price and the amount of accrued interest to the
redemption date;
(iii) the name and address of the Paying Agent;
(iv) that Securities called for redemption must be surrendered to
the Paying Agent to collect the redemption price;
(v) if fewer than all the outstanding Securities are to be
redeemed, the certificate numbers and principal amounts of the particular
Securities to be redeemed;
(vi) that, unless the Company defaults in making such redemption
payment or the Paying Agent is prohibited from making such payment pursuant
to the terms of this Indenture, interest on Securities (or portion thereof)
called for redemption ceases to accrue on and after the redemption date;
(vii) the CUSIP or ISIN number, if any, printed on the Securities
being redeemed; and
(viii) that no representation is made as to the correctness or
accuracy of the CUSIP or ISIN number, if any, listed in such notice or
printed on the Securities.
(b) At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. In such event,
the Company shall provide the Trustee with the information required by this
Section.
SECTION 3.04. Effect of Notice of Redemption. Once notice of
-------------------------------
redemption is mailed, Securities called for redemption become due and payable on
the redemption date and at the redemption price stated in the notice. Upon
surrender to the Paying Agent, such Securities shall be paid at the redemption
price stated in the notice, plus accrued interest and liquidated damages, if
any, to the redemption date; provided, however, that if the redemption date is
-------- -------
after a regular record date and on or prior to the interest payment date, the
accrued interest and liquidated damages, if any, shall be payable to the Holder
of the redeemed Securities registered on the relevant record date. Failure to
give notice or any defect in the notice to any Holder shall not affect the
validity of the notice to any other Holder.
SECTION 3.05. Deposit of Redemption Price. Prior to 10:00 a.m. on
----------------------------
the redemption date, the Company shall deposit with the Paying Agent (or, if the
Company or a
<PAGE>
30
Subsidiary is the Paying Agent, shall segregate and hold in trust) money
sufficient to pay the redemption price of and accrued interest and liquidated
damages, if any, on all Securities to be redeemed on that date other than
Securities or portions of Securities called for redemption that have been
delivered by the Company to the Trustee for cancelation. On and after the
redemption date, interest will cease to accrue on Securities or portions thereof
called for redemption so long as the Company has deposited with the Paying Agent
funds sufficient to pay the principal of, plus accrued and unpaid interest and
liquidated damages, if any, on, the Securities to be redeemed, unless the Paying
Agent is prohibited from making such payment pursuant to the terms of this
Indenture.
SECTION 3.06. Securities Redeemed in Part. Upon surrender of a
----------------------------
Security that is redeemed in part, the Company shall execute and the Trustee
shall authenticate for the Holder (at the Company's expense) a new Security
equal in principal amount to the unredeemed portion of the Security surrendered.
ARTICLE 4
Covenants
---------
SECTION 4.01. Payment of Securities. The Company shall promptly pay
----------------------
the principal of and interest on the Securities on the dates and in the manner
provided in the Securities and in this Indenture. Principal and interest shall
be considered paid on the date due if on such date the Trustee or the Paying
Agent holds in accordance with this Indenture money sufficient to pay all
principal and interest then due and the Trustee or the Paying Agent, as the case
may be, is not prohibited from paying such money to the Holders on that date
pursuant to the terms of this Indenture.
The Company shall pay interest on overdue principal at the rate
specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
SECTION 4.02. SEC Reports. Notwithstanding that the Company may not
------------
be subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, the Company shall file with the SEC (if it will accept such filing), and
provide the Trustee and Holders and prospective Holders (upon request) within 15
days after it files them with the SEC, copies of its annual report and the
information, documents and other reports that are specified in Sections 13 and
15(d) of the Exchange Act. In addition, following a Public Equity Offering, the
Company shall furnish to the Trustee and the Holders, promptly upon their
becoming available, copies of the annual report to shareholders and any other
information provided by the Company, Holdings or Parent to its public
shareholders generally. The Company also shall comply with the other provisions
of TIA ' 314(a).
Delivery of such reports, information and documents to the Trustee is
for informational purposes only and the Trustee's receipt of such shall not
constitute constructive
<PAGE>
31
notice of any information contained therein, including the Company's compliance
with any of its covenants hereunder (as to which the Trustee is entitled to rely
exclusively on Officers' Certificates).
SECTION 4.03. Limitation on Indebtedness. (a) The Company shall
---------------------------
not, and shall not permit any Restricted Subsidiary to, Incur, directly or
indirectly, any Indebtedness; provided, however, that the Company and the Note
-------- -------
Guarantors may Incur Indebtedness if on the date of such Incurrence and after
giving effect thereto, the Consolidated Coverage Ratio would be greater than
2.00 to 1 if such Indebtedness is Incurred on or prior to December 31, 2001 and
2.25 to 1 if such Indebtedness is Incurred thereafter.
(b) Notwithstanding Section 4.03(a), the Company and its Restricted
Subsidiaries may Incur the following Indebtedness:
(i) (1) Bank Indebtedness in an aggregate principal amount not to
exceed $250.0 million less the aggregate amount of all prepayments of
principal applied to permanently reduce any such Indebtedness pursuant to
Section 4.06 and (2) (A) Indebtedness under the Acquisition Term Loan
Facility in an aggregate principal amount not to exceed $40.0 million less
the aggregate amount of all prepayments applied to permanently reduce any
principal of such Indebtedness pursuant to Section 4.06; provided, however,
-------- -------
that at the time the Company or any Restricted Subsidiary Incurs any
Indebtedness under this Section 4.06(b)(i)(2), the Company has a
Consolidated Leverage Ratio of 5.00:1 or less, and (B) any Refinancing
Indebtedness in respect thereof;
(ii) Indebtedness of the Company owed to and held by any Wholly Owned
Subsidiary or Indebtedness of a Restricted Subsidiary owed to and held by
the Company or any Wholly Owned Subsidiary; provided, however, that (1) any
-------- -------
subsequent issuance or transfer of any Capital Stock or any other event
that results in any such Wholly Owned Subsidiary ceasing to be a Wholly
Owned Subsidiary or any subsequent transfer of any such Indebtedness
(except to the Company or a Wholly Owned Subsidiary) shall be deemed, in
each case, to constitute the Incurrence of such Indebtedness by the issuer
thereof, (2) if the Company is the obligor on such Indebtedness, such
Indebtedness is made subordinate and junior in right of payment to the
Securities and (3) if a Restricted Subsidiary that is a Note Guarantor is
the obligor on such Indebtedness and such Indebtedness is owed to and held
by a Wholly Owned Subsidiary that is not a Note Guarantor, such
Indebtedness is expressly subordinated to the prior payment in full in cash
of all obligations of such Restricted Subsidiary with respect to its Note
Guarantee;
(iii) Indebtedness (1) represented by the Securities and the Note
Guarantees, (2) outstanding on the Closing Date (other than the
Indebtedness described in clauses (i) and (ii) above), (3) consisting of
Refinancing Indebtedness Incurred in respect of any Indebtedness described
in this clause (iii) (including Indebtedness that is Refinancing
Indebtedness) or Section 4.03(a), (4) consisting of Guarantees of any
Indebtedness permitted under clauses (i) and (ii) of this paragraph (b) and
(5) consisting of (i) Guarantees by the Company of Indebtedness or other
obligations of any of its
<PAGE>
32
Restricted Subsidiaries or (ii) Guarantees by any Note Guarantor of
Indebtedness of the Company or a Restricted Subsidiary, in each case so
long as the Incurrence of the Indebtedness being Guaranteed is permitted
under the terms of this Indenture; provided that if such Guaranteed
--------
Indebtedness is by its express terms subordinated in right of payment to
the Securities or the Note Guarantee of such Restricted Subsidiary, as
applicable, any such Guarantee of the Company or such Note Guarantor with
respect to such Indebtedness shall be subordinated in right of payment to
the Securities or such Note Guarantor's Note Guarantee with respect to the
Securities substantially to the same extent as such Indebtedness is
subordinated to the Securities or the Note Guarantee of such Restricted
Subsidiary, as applicable;
(iv) (1) Indebtedness of a Restricted Subsidiary Incurred and
outstanding on or prior to the date on which such Restricted Subsidiary was
acquired (including by way of merger) by the Company or any Restricted
Subsidiary (other than Indebtedness Incurred as consideration in, or to
provide all or any portion of the funds or credit support utilized to
consummate, the transaction or series of related transactions pursuant to
which such Restricted Subsidiary became a Subsidiary of or was otherwise
acquired by the Company); provided, however, that on the date that such
-------- -------
Restricted Subsidiary is acquired, the Company or such Restricted
Subsidiary would have been able to Incur such Indebtedness under this
Section 4.03 and (2) Refinancing Indebtedness Incurred by a Restricted
Subsidiary in respect of Indebtedness Incurred by such Restricted
Subsidiary pursuant to this clause (iv);
(v) Indebtedness (1) in respect of performance bonds, bankers'
acceptances, letters of credit and surety or appeal bonds provided by the
Company or the Restricted Subsidiaries in the ordinary course of their
business, and (2) under Currency Agreements, Interest Rate Agreements and
Commodity Agreements entered into for bona fide hedging purposes of the
Company or a Restricted Subsidiary in the ordinary course of business;
provided, however, that such agreements do not increase the Indebtedness of
-------- -------
the Company or the Restricted Subsidiaries outstanding at any time other
than as a result of fluctuations in interest rates, currency exchange rates
or commodity prices or by reason of fees, indemnities and compensation
payable thereunder;
(vi) Indebtedness (including Capitalized Lease Obligations and
Attributable Debt) incurred by the Company or any of the Restricted
Subsidiaries to finance the purchase, lease or improvements of property
(real or personal) or equipment (whether through the direct purchase of
assets or the Capital Stock of any Person owning such assets) in an
aggregate principal amount which, when aggregated with the principal amount
of all other Indebtedness then outstanding and incurred pursuant to this
clause (vi) and all Refinancing Indebtedness incurred to refund, refinance
or replace any Indebtedness incurred pursuant to this clause (vi), does not
exceed the greater of $25.0 million or 5.0% of Total Assets;
(vii) Indebtedness of Foreign Subsidiaries in an aggregate principal
amount not to exceed $15.0 million outstanding at any one time; or
<PAGE>
33
(viii) Indebtedness (other than Indebtedness permitted to be Incurred
pursuant to Section 4.03(a) or any other clause of this paragraph (b)) in
an aggregate principal amount on the date of Incurrence that, when added to
all other Indebtedness Incurred pursuant to this clause (viii) and then
outstanding, shall not exceed $30.0 million.
(c) Notwithstanding the foregoing, the Company shall not Incur any
Indebtedness pursuant to Section 4.03(b) above if the proceeds thereof are used,
directly or indirectly, to repay, prepay, redeem, defease, retire, refund or
refinance any Subordinated Obligations unless such Indebtedness shall be
subordinated to the Securities to at least the same extent as such Subordinated
Obligations. The Company shall not Incur any Indebtedness if such Indebtedness
is subordinate or junior in ranking in any respect to any Senior Indebtedness
unless such Indebtedness is Senior Subordinated Indebtedness or is expressly
subordinated in right of payment to Senior Subordinated Indebtedness. In
addition, the Company shall not Incur any Secured Indebtedness which is not
Senior Indebtedness unless contemporaneously therewith effective provision is
made to secure the Securities equally and ratably with (or on a senior basis to,
in the case of Indebtedness subordinated in right of payment to the Securities)
such Secured Indebtedness for so long as such Secured Indebtedness is secured by
a Lien. A Note Guarantor shall not Incur any Indebtedness if such Indebtedness
is by its terms expressly subordinate or junior in ranking in any respect to any
Senior Indebtedness of such Note Guarantor unless such Indebtedness is Senior
Subordinated Indebtedness of such Note Guarantor or is expressly subordinated in
right of payment to Senior Subordinated Indebtedness of such Note Guarantor. In
addition, a Note Guarantor shall not Incur any Secured Indebtedness that is not
Senior Indebtedness of such Note Guarantor unless contemporaneously therewith
effective provision is made to secure the Note Guarantee of such Note Guarantor
equally and ratably with (or on a senior basis to, in the case of Indebtedness
subordinated in right of payment to such Note Guarantee) such Secured
Indebtedness for as long as such Secured Indebtedness is secured by a Lien.
(d) Notwithstanding any other provision of this Section 4.03, the
maximum amount of Indebtedness that the Company or any Restricted Subsidiary may
Incur pursuant to this Section shall not be deemed to be exceeded solely as a
result of fluctuations in the exchange rates of currencies. For purposes of
determining the outstanding principal amount of any particular Indebtedness
Incurred pursuant to this Section 4.03, (i) Indebtedness Incurred pursuant to
the Credit Agreement prior to or on the Closing Date shall be treated as
Incurred pursuant to Section 4.03(b)(i), (ii) Indebtedness permitted by this
Section 4.03 need not be permitted solely by reference to one provision
permitting such Indebtedness but may be permitted in part by one such provision
and in part by one or more other provisions of this Section permitting such
Indebtedness, and (iii) in the event that Indebtedness meets the criteria of
more than one of the types of Indebtedness described in this Section 4.03, the
Company, in its sole discretion, shall classify such Indebtedness and only be
required to include the amount of such Indebtedness in one of such clauses, and
may from time to time reclassify Indebtedness permitted under Section 4.03(b)
among the different clauses thereof.
<PAGE>
34
SECTION 4.04. Limitation on Restricted Payments. (a) The Company
----------------------------------
shall not, and shall not permit any Restricted Subsidiary, directly or
indirectly, to (i) declare or pay any dividend or make any distribution on or in
respect of its Capital Stock or make any similar payment (including any payment
in connection with any merger or consolidation involving the Company or any
Subsidiary of the Company) to the direct or indirect holders of its Capital
Stock except (A) dividends or distributions payable solely in its Capital Stock
(other than Disqualified Stock) and (B) dividends or distributions payable to
the Company or a Restricted Subsidiary (and, if such Restricted Subsidiary has
shareholders other than the Company or other Restricted Subsidiaries, to its
other shareholders on a pro rata basis), (ii) purchase, repurchase, redeem,
retire or otherwise acquire for value any Capital Stock of (A) Parent, Holdings
or the Company held by Persons other than the Company or a Restricted Subsidiary
or (B) any Restricted Subsidiary (other than Preferred Stock that is not Voting
Stock) held by any Affiliate of the Company (other than Restricted Subsidiary),
(iii) purchase, repurchase, redeem, retire, defease or otherwise acquire for
value, prior to scheduled maturity, scheduled repayment or scheduled sinking
fund payment any Subordinated Obligations of the Company or any Note Guarantor
(other than the purchase, repurchase, redemption, retirement, defeasance or
other acquisition for value of Subordinated Obligations acquired in anticipation
of satisfying a sinking fund obligation, principal installment or final
maturity, in each case due within one year of the date of acquisition) or (iv)
make any Investment (other than a Permitted Investment) in any Person (any such
dividend, distribution, payment, purchase, redemption, repurchase, defeasance,
retirement or other acquisition or Investment being herein referred to as a
"Restricted Payment") if at the time the Company or such Restricted Subsidiary
makes such Restricted Payment:
(1) a Default shall have occurred and be continuing (or would result
therefrom);
(2) the Company could not Incur at least $1.00 of additional
Indebtedness under Section 4.03(a); or
(3) the aggregate amount of such Restricted Payment and all other
Restricted Payments (the amount so expended, if other than in cash, to be
determined in good faith by the Board of Directors, whose determination
shall be conclusive and evidenced by a resolution of the Board of
Directors) declared or made subsequent to the Closing Date would exceed the
sum, without duplication, of:
(A) 50% of the Consolidated Net Income accrued during the period
(treated as one accounting period) from the beginning of the fiscal
quarter immediately following the fiscal quarter during which the
Closing Date occurs to the end of the most recent fiscal quarter
ending at least 45 days prior to the date of such Restricted Payment
(or, in case such Consolidated Net Income shall be a deficit, minus
100% of such deficit);
(B) the aggregate Net Cash Proceeds received by the Company from
the issue or sale of its Capital Stock (other than Disqualified Stock)
subsequent to the Closing Date (other than an issuance or sale to (x)
a Subsidiary of the Company
<PAGE>
35
or (y) an employee stock ownership plan or other trust established by
the Company or any of its Subsidiaries);
(C) the amount by which Indebtedness of the Company or its
Restricted Subsidiaries is reduced on the Company's balance sheet upon
the conversion or exchange (other than by or with a Subsidiary of the
Company) subsequent to the Closing Date of any Indebtedness of the
Company or its Restricted Subsidiaries issued after the Closing Date
which is convertible or exchangeable for Capital Stock (other than
Disqualified Stock) of the Company or a Note Guarantor (less the
amount of any cash or the Fair Market Value of other property
distributed by the Company or any Restricted Subsidiary upon such
conversion or exchange);
(D) the amount equal to the net reduction in Investments in
Unrestricted Subsidiaries resulting from (x) payments of dividends,
repayments of the principal of loans or advances or other transfers of
assets to the Company or any Restricted Subsidiary from Unrestricted
Subsidiaries or (y) the redesignation of Unrestricted Subsidiaries as
Restricted Subsidiaries (valued in each case as provided in the
definition of "Investment") not to exceed, in the case of any
Unrestricted Subsidiary, the amount of Investments previously made by
the Company or any Restricted Subsidiary in such Unrestricted
Subsidiary; and
(E) $5.0 million.
(b) The provisions of Section 4.04(a) shall not prohibit:
(i) any purchase, repurchase, redemption, retirement or other
acquisition for value of Capital Stock of the Company or Subordinated
Obligations of the Company or any Note Guarantor made by exchange for, or
out of the proceeds of the substantially concurrent sale of, Capital Stock
of the Company (other than Disqualified Stock and other than Capital Stock
issued or sold to a Subsidiary of the Company or an employee stock
ownership plan or other trust established by the Company or any of its
Subsidiaries); provided, however, that (1) such purchase, repurchase,
-------- -------
redemption, retirement or other acquisition for value shall be excluded in
the calculation of the amount of Restricted Payments, and (2) the Net Cash
Proceeds from such sale applied in the manner set forth in this clause (i)
shall be excluded from the calculation of amounts under Section
4.04(a)(iv)(3)(B);
(ii) any prepayment, repayment, purchase, repurchase, redemption,
retirement, defeasance or other acquisition for value of Subordinated
Obligations of the Company or a Note Guarantor made by exchange for, or out
of the proceeds of the substantially concurrent sale of, Indebtedness of
the Company or a Note Guarantor that is permitted to be Incurred pursuant
to Section 4.03; provided, however, that such prepayment, repayment,
-------- -------
purchase, repurchase, redemption, retirement, defeasance or other
acquisition for value shall be excluded in the calculation of the amount of
Restricted Payments;
<PAGE>
36
(iii) any prepayment, repayment, purchase, repurchase, redemption,
retirement, defeasance or other acquisition for value of Subordinated
Obligations from Net Available Cash to the extent permitted by Section
4.06; provided, however, that such prepayment, repayment, purchase,
-------- -------
repurchase, redemption, retirement, defeasance or other acquisition for
value shall be excluded in the calculation of the amount of Restricted
Payments;
(iv) dividends paid within 60 days after the date of declaration
thereof if at such date of declaration such dividends would have complied
with this Section 4.04; provided, however, that such dividends shall be
-------- -------
included in the calculation of the amount of Restricted Payments;
(v) any purchase, repurchase, redemption, retirement or other
acquisition for value of shares of, or options to purchase shares of,
Capital Stock (other than Disqualified Stock) of Holdings, Parent, the
Company or any of its Subsidiaries from employees, former employees,
officers, former officers, directors or former directors of the Company or
any of its Subsidiaries (or permitted transferees of such employees, former
employees, officers, former officers, directors or former directors),
pursuant to the terms of agreements (including employment agreements) or
plans (or amendments thereto) approved by the board of directors of the
Company, Parent or Holdings under which such individuals purchase or sell
or are granted the option to purchase or sell, shares of such Capital
Stock; provided, however, that the aggregate amount of such purchases,
-------- -------
repurchases, redemptions, retirements and other acquisitions for value,
together with the aggregate amount of payments made under Section
4.04(b)(vi)(3), shall not exceed in any calendar year the sum of (x) $2.0
million and (y) the cash proceeds received in such calendar year by the
Company or any Restricted Subsidiary from the sale of Capital Stock (other
than Disqualified Stock) of Holdings, Parent or the Company to employees,
officers or directors of the Company (provided that such cash proceeds will
not increase the amounts available for Restricted Payments under Section
4.04(a)(3)(B)); provided further, however, that such purchases,
---------------- -------
repurchases, redemptions, retirements and other acquisitions for value
shall be excluded in the calculation of the amount of Restricted Payments;
or
(vi) any payment of dividends, other distributions or other amounts
(including in the form of loans or advances) by the Company for the
purposes set forth in clauses (1) through (3) below; provided, however,
-------- -------
that such dividends, distributions or other amounts set forth in clauses
(1) through (3) shall be excluded in the calculation of the amount of
Restricted Payments for the purposes of Section 4.04(a):
(1) to Parent or Holdings in amounts equal to the amounts required
for Parent or Holdings to pay franchise taxes and other fees
required to maintain its corporate existence and provide for
other operating costs in an aggregate amount of up to $350,000
per fiscal year;
(2) to Parent or Holdings in amounts equal to amounts required for
Parent or Holdings to pay Federal, state and local income taxes
to the extent such
<PAGE>
37
income taxes are attributable to the income of the Company and
its Restricted Subsidiaries (and, to the extent of amounts
actually received from its Unrestricted Subsidiaries, in
amounts required to pay such taxes to the extent attributable
to the income of such Unrestricted Subsidiaries);
(3) to Parent or Holdings in amounts equal to amounts expended by
Parent or Holdings for any purchase, repurchase, redemption,
retirement or other acquisition for value of shares of, or
options to purchase shares of, Capital Stock (other than
Disqualified Stock) of Parent or Holdings from employees,
former employees, officers, former officers, directors or
former directors of the Company or any of its Subsidiaries (or
permitted transferees of such employees, former employees,
officers, former officers, directors or former directors),
pursuant to the terms of agreements (including employment
agreements) or plans (or amendments thereto) approved by the
board of directors of the Company, Parent or Holdings under
which such individuals purchase or sell or are granted the
option to purchase or sell, shares of such Capital Stock;
provided, however, that the aggregate amount of such purchases,
-------- -------
repurchases, redemptions, retirements and other acquisitions
for value, together with the aggregate amount of payments made
under Section 4.04(b)(v), shall not exceed in any calendar year
the sum of (x) $2.0 million and (y) the cash proceeds received
in such calendar year by the Company or any Restricted
Subsidiary from the sale of Capital Stock (other than
Disqualified Stock) of Holdings, Parent or the Company to
employees, officers or directors of the Company (provided that
such cash proceeds will not increase the amounts available for
Restricted Payments under Section 4.04(a)(3)(B)).
SECTION 4.05. Limitation on Restrictions on Distributions from
------------------------------------------------
Restricted Subsidiaries. The Company shall not, and shall not permit any
- ------------------------
Restricted Subsidiary to, create or otherwise cause or permit to exist or become
effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary to (a) pay dividends or make any other distributions on
its Capital Stock or pay any Indebtedness or other obligations owed to the
Company, (b) make any loans or advances to the Company or (c) transfer any of
its property or assets to the Company, except:
(i) any encumbrance or restriction pursuant to applicable law or an
agreement in effect at or entered into on the Closing Date;
(ii) any encumbrance or restriction with respect to a Restricted
Subsidiary pursuant to an agreement relating to any Indebtedness Incurred
by such Restricted Subsidiary prior to the date on which such Restricted
Subsidiary was acquired by the Company or a Restricted Subsidiary (other
than Indebtedness Incurred as consideration in, in contemplation of, or to
provide all or any portion of the funds or credit support utilized to
consummate the transaction or series of related transactions pursuant to
which
<PAGE>
38
such Restricted Subsidiary became a Restricted Subsidiary or was otherwise
acquired by the Company or a Restricted Subsidiary) and outstanding on such
date;
(iii) any encumbrance or restriction pursuant to an agreement
effecting a Refinancing of Indebtedness Incurred pursuant to an agreement
referred to in clause (c) (i) or (c) (ii) of this Section 4.05 or this
clause (c)(iii) or contained in any amendment to an agreement referred to
in clause (c)(i) or (c)(ii) of this Section 4.05 or this clause (c)(iii);
provided, however, that the encumbrances and restrictions contained in any
-------- -------
such Refinancing agreement or amendment are no less favorable to the
Holders in any material respect than the encumbrances and restrictions
contained in such predecessor agreements;
(iv) in the case of clause (c), any encumbrance or restriction (1)
that restricts in a customary manner the subletting, assignment or transfer
of any property or asset that is subject to a lease, license or similar
contract, or (2) contained in security agreements securing Indebtedness of
the Company or a Restricted Subsidiary to the extent such encumbrance or
restriction restricts the transfer of the property subject to such security
agreements;
(v) with respect to a Restricted Subsidiary, any restriction
imposed pursuant to an agreement entered into for the sale or disposition
of all or substantially all the Capital Stock or assets of such Restricted
Subsidiary pending the closing of such sale or disposition; and
(vi) any encumbrance or restriction existing or created pursuant to
Indebtedness permitted to be Incurred by a Restricted Subsidiary subsequent
to the Closing Date pursuant to Section 4.03; provided, however, that any
such encumbrance or restrictions are reasonable and customary with respect
to the type of Indebtedness being Incurred (under the relevant
circumstances).
SECTION 4.06. Limitation on Sales of Assets and Subsidiary Stock.
---------------------------------------------------
(a) The Company shall not, and shall not permit any Restricted Subsidiary to,
make any Asset Disposition unless (i) the Company or such Restricted Subsidiary
receives consideration (including by way of relief from, or by any other Person
assuming sole responsibility for, any liabilities, contingent or otherwise) at
the time of such Asset Disposition at least equal to the Fair Market Value of
the shares and assets subject to such Asset Disposition, (ii) except in the case
of a Permitted Asset Swap, at least 75% of the consideration thereof received by
the Company or such Restricted Subsidiary is in the form of cash and (iii) an
amount equal to 100% of the Net Available Cash from such Asset Disposition is
applied by the Company (or such Restricted Subsidiary, as the case may be) (1)
first, to the extent the Company elects (or is required by the terms of any
- -----
Indebtedness), to prepay, repay, purchase, repurchase, redeem, retire, defease
or otherwise acquire for value Senior Indebtedness of the Company or
Indebtedness of a Restricted Subsidiary (in each case other than Indebtedness
owed to the Company or an Affiliate of the Company (other than an Affiliate of
Chase Capital Partners which is a lender in the ordinary course of business) and
other than obligations in respect of Disqualified Stock) within 180 days
<PAGE>
39
after the later of the date of such Asset Disposition or the receipt of such Net
Available Cash; (2) second, to the extent of the balance of Net Available Cash
------
after application in accordance with clause (1), to the extent the Company or
such Restricted Subsidiary elects, to reinvest in Additional Assets (including
by means of an Investment in Additional Assets by a Restricted Subsidiary with
Net Available Cash received by the Company or another Restricted Subsidiary)
within 180 days from the later of such Asset Disposition or the receipt of such
Net Available Cash; (3) third, to the extent of the balance of such Net
-----
Available Cash after application in accordance with clauses (1) and (2), to make
an Offer (as defined in Section 4.06(b)) to purchase Securities pursuant to and
subject to the conditions of Section 4.06(b); provided, however, that if the
-------- -------
Company elects (or is required by the terms of any Senior Subordinated
Indebtedness), such Offer may be made ratably to purchase the Securities and
other Senior Subordinated Indebtedness of the Company, and (4) fourth, to the
------
extent of the balance of such Net Available Cash after application in accordance
with clauses (1), (2) and (3), for any general corporate purpose permitted by
the terms of this Indenture; provided, however, that in connection with any
-------- -------
final prepayment, repayment, purchase, repurchase, redemption, retirement,
defeasance or other acquisition for value of Indebtedness pursuant to clause
(1), (2) or (4) above, the Company or such Restricted Subsidiary shall retire
such Indebtedness and shall cause the related loan commitment (if any) to be
permanently reduced in an amount equal to the principal amount so prepaid,
repaid, purchased, repurchased, redeemed, retired, defeased or otherwise
acquired for value. Pending final application of any Net Available Cash in
accordance with the foregoing, the Company or a Restricted Subsidiary may use
such Net Available Cash to temporarily reduce (and, within such 180-day period,
reborrow) Indebtedness or invest such Net Available Cash in Temporary Cash
Equivalents. Notwithstanding the foregoing provisions of this Section 4.06, the
Company and the Restricted Subsidiaries shall not be required to apply any Net
Available Cash in accordance with this Section 4.06(a) except to the extent that
the aggregate Net Available Cash from all Asset Dispositions that is not applied
in accordance with this Section 4.06(a) exceeds $7.5 million.
For the purposes of this Section 4.06, the following are deemed to be
cash: (A) the assumption of Indebtedness of the Company (other than obligations
in respect of Disqualified Stock of the Company) or any Restricted Subsidiary
(other than obligations in respect of Disqualified Stock and Preferred Stock of
a Restricted Subsidiary that is not a Note Guarantor) and the release of the
Company or such Restricted Subsidiary from all liability on such Indebtedness in
connection with such Asset Disposition and (B) securities received by the
Company or any Restricted Subsidiary from the transferee that are promptly
converted by the Company or such Restricted Subsidiary into cash.
(b) In the event of an Asset Disposition that requires the purchase
of Securities pursuant to Section 4.06(a)(iii)(3), the Company shall be required
(i) to purchase Securities tendered pursuant to an offer by the Company for the
Securities (the "Offer") at a purchase price of 100% of their principal amount
plus accrued and unpaid interest and liquidated damages thereon, if any, to the
date of purchase (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date) in
accordance with the procedures (including prorating in the event of
oversubscription) set forth in Section 4.06(c) and (ii) to purchase other Senior
Subordinated Indebtedness of the Company on the terms and to the
<PAGE>
40
extent contemplated thereby (provided that in no event shall the Company offer
to purchase such other Senior Subordinated Indebtedness of the Company at a
purchase price in excess of 100% of its principal amount (without premium), plus
accrued and unpaid interest thereon, unless an equal premium is offered to
Holders in the Offer). If the aggregate purchase price of Securities (and other
Senior Subordinated Indebtedness) tendered pursuant to the Offer is less than
the Net Available Cash allotted to the purchase of the Securities (and other
Senior Subordinated Indebtedness), the Company shall apply the remaining Net
Available Cash in accordance with Section 4.06(a)(iii)(4). The Company shall not
be required to make an Offer for Securities (and other Senior Subordinated
Indebtedness) pursuant to this Section 4.06 if the Net Available Cash available
therefor (after application of the proceeds as provided in clauses (1) and (2)
of Section 4.06(a)(iii)) is less than $5.0 million for any particular Asset
Disposition (which lesser amount shall be carried forward for purposes of
determining whether an Offer is required with respect to the Net Available Cash
from any subsequent Asset Disposition).
(c) (i) Promptly, and in any event within 15 days after the Company
becomes obligated to make an Offer, the Company shall be obligated to deliver to
the Trustee and send, by first-class mail to each Holder, a written notice
stating that the Holder may elect to have his Securities purchased by the
Company either in whole or in part (subject to prorating as hereinafter
described in the event the Offer is oversubscribed) in integral multiples of
$1,000 of principal amount, at the applicable purchase price. The notice shall
specify a purchase date not less than 30 days nor more than 60 days after the
date of such notice (the "Purchase Date") and shall contain such information
concerning the business of the Company which the Company in good faith believes
will enable such Holders to make an informed decision (which at a minimum shall
include (1) the most recently filed Annual Report on Form 10-K (including
audited consolidated financial statements) of the Company, the most recent
subsequently filed Quarterly Report on Form 10-Q and any Current Report on Form
8-K of the Company filed subsequent to such Quarterly Report, other than Current
Reports describing Asset Dispositions otherwise described in the offering
materials (or corresponding successor reports), (2) a description of material
developments in the Company's business subsequent to the date of the latest of
such reports, and (3) if material, appropriate pro forma financial information)
and all instructions and materials necessary to tender Securities pursuant to
the Offer, together with the address referred to in clause (iii).
(ii) Not later than the date upon which written notice of an Offer is
delivered to the Trustee as provided above, the Company shall deliver to the
Trustee an Officers' Certificate as to (1) the amount of the Offer (the "Offer
Amount"), (2) the allocation of the Net Available Cash from the Asset
Dispositions pursuant to which such Offer is being made and (3) the compliance
of such allocation with the provisions of Section 4.06(a). On such date, the
Company shall also irrevocably deposit with the Trustee or with a paying agent
(or, if the Company is acting as its own paying agent, segregate and hold in
trust) an amount equal to the Offer Amount to be invested in Temporary Cash
Investments (which Temporary Cash Investments will be made only pursuant to
written instructions of an officer of the Company) and to be held for payment in
accordance with the provisions of this Section. Upon the expiration of the
period for which the Offer remains open (the "Offer Period"), the Company shall
deliver to the Trustee for cancelation the Securities or portions thereof that
have been properly tendered to
<PAGE>
41
and are to be accepted by the Company. The Trustee (or the Paying Agent, if not
the Trustee) shall, on the date of purchase, mail or deliver payment to each
tendering Holder in the amount of the purchase price. In the event that the
Offer Amount delivered by the Company to the Trustee is greater than the
purchase price of the Securities (and other Senior Subordinated Indebtedness)
tendered, the Trustee shall deliver the excess to the Company immediately after
the expiration of the Offer Period for application in accordance with this
Section 4.06.
(iii) Holders electing to have a Security purchased shall be required
to surrender the Security, with an appropriate form duly completed (which form
shall include certain information concerning the Holder and the Security), to
the Company at the address specified in the notice at least three Business Days
prior to the Purchase Date. Holders shall be entitled to withdraw their election
if the Trustee or the Company receives not later than one Business Day prior to
the Purchase Date, a facsimile transmission or letter setting forth the name of
the Holder, the principal amount of the Security which was delivered by the
Holder for purchase and a duly signed statement that such Holder is withdrawing
his election to have such Security purchased. If at the expiration of the Offer
Period the aggregate principal amount of Securities and any other Senior
Subordinated Indebtedness included in the Offer surrendered by holders thereof
exceeds the Offer Amount, the Company shall select the Securities and other
Senior Subordinated Indebtedness to be purchased on a pro rata basis (with such
adjustments as may be deemed appropriate by the Company so that only Securities
and other Senior Subordinated Indebtedness in denominations of $1,000, or
integral multiples thereof, shall be purchased). Holders whose Securities are
purchased only in part will be issued new Securities equal in principal amount
to the unpurchased portion of the Securities surrendered.
(iv) At the time the Company delivers Securities to the Trustee which
are to be accepted for purchase, the Company shall also deliver an Officers'
Certificate stating that such Securities are to be accepted by the Company
pursuant to and in accordance with the terms of this Section. A Security shall
be deemed to have been accepted for purchase at the time the Trustee, directly
or through an agent, mails or delivers payment therefor to the surrendering
Holder.
(v) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
Section 4.06. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section 4.06, the Company shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under this Section 4.06 by virtue
thereof.
SECTION 4.07. Limitation on Transactions with Affiliates. (a) The
-------------------------------------------
Company shall not, and shall not permit any Restricted Subsidiary to, directly
or indirectly, enter into or conduct any transaction or series of related
transactions (including the purchase, sale, lease or exchange of any property or
the rendering of any service) with any Affiliate of the Company (an "Affiliate
Transaction") unless such Affiliate Transaction is on terms (i) that are no less
favorable to the Company or such Restricted Subsidiary, as the case may be, than
those that could be obtained at the time of such transaction in arm's-length
dealings with a Person who is
<PAGE>
42
not such an Affiliate, (ii) that, in the event that such Affiliate Transaction
involves an aggregate amount in excess of $1.0 million, (1) are set forth in
writing and (2) have been approved by a majority of the members of the Board of
Directors having no personal stake in such Affiliate Transaction and (iii) that,
in the event that such Affiliate Transaction involves an amount in excess of
$10.0 million, have been determined by a nationally recognized appraisal or
investment banking firm to be fair, from a financial standpoint, to the Company
and its Restricted Subsidiaries.
(b) The provisions of Section 4.07(a) shall not prohibit (i) any
Restricted Payment permitted to be paid pursuant to Section 4.04, (ii) any
issuance of securities, or other payments, awards or grants in cash, securities
or otherwise pursuant to, or the funding of, employment arrangements, stock
options and stock ownership plans approved by the Board of Directors, (iii) the
grant of stock options or similar rights to employees and directors of the
Company pursuant to plans approved by the Board of Directors, (iv) loans or
advances to employees in the ordinary course of business in accordance with past
practices of the Company or any Restricted Subsidiary, but in any event not to
exceed $2.0 million in the aggregate outstanding at any one time, (v) the
payment of reasonable fees to directors of the Company and its Subsidiaries who
are not employees of the Company or its Subsidiaries, (vi) any transaction
between the Company and a Wholly Owned Subsidiary or between Wholly Owned
Subsidiaries or (vii) the performance of any agreement as in effect as of the
Closing Date (including the Tax Sharing Agreement, dated July 21, 1998, and the
Amended and Restated Management Services Agreement, dated October 6, 1998 (as
each is defined in the Offering Memorandum)) or any amendment or replacement
thereto so long as any such amendment or replacement agreement is not more
disadvantageous to the Holders of the Securities in any material respect than
the original agreement as in effect as of the Closing Date.
SECTION 4.08. Change of Control. (a) Upon the occurrence of a
------------------
Change of Control, each Holder shall have the right to require that the Company
repurchase all or any part of such Holder's Securities at a purchase price in
cash equal to 101% of the principal amount thereof plus accrued and unpaid
interest and liquidated damages, if any, to the date of repurchase (subject to
the right of Holders of record on the relevant record date to receive interest
due on the relevant interest payment date), in accordance with the terms
contemplated in Section 4.08(b); provided, however, that notwithstanding the
-------- -------
occurrence of a Change of Control, the Company shall not be obligated to
repurchase the Securities pursuant to this Section 4.08 in the event that it has
exercised its right to redeem all the Securities under paragraph 5 of the
Securities. In the event that at the time of such Change of Control the terms of
the Bank Indebtedness restrict or prohibit the repurchase of Securities pursuant
to this Section 4.08, then prior to the mailing of the notice to Holders
provided for in Section 4.08(b) below but in any event within 45 days following
any Change of Control, the Company shall (i) repay in full all Bank Indebtedness
or, if doing so will allow the repurchase of Securities, offer to repay in full
all Bank Indebtedness and repay the Bank Indebtedness of each lender who has
accepted such offer or (ii) obtain the requisite consent under the agreements
governing the Bank Indebtedness to permit the repurchase of the Securities as
provided for in Section 4.08(b).
<PAGE>
43
(b) Within 45 days following any Change of Control (except as
provided in the proviso to the first sentence of Section 4.08(a)), the Company
shall mail a notice to each Holder with a copy to the Trustee (the "Change of
Control Offer") stating:
(i) that a Change of Control has occurred and that such Holder has
the right to require the Company to purchase all or a portion of such
Holder's Securities at a purchase price in cash equal to 101% of the
principal amount thereof, plus accrued and unpaid interest and liquidated
damages, if any, to the date of purchase (subject to the right of Holders
of record on the relevant record date to receive interest due on the
relevant interest payment date);
(ii) the circumstances and relevant facts and financial information
regarding such Change of Control;
(iii) the repurchase date (which shall be no earlier than 30 days nor
later than 60 days from the date such notice is mailed); and
(iv) the instructions determined by the Company, consistent with this
Section, that a Holder must follow in order to have its Securities
purchased.
(c) Holders electing to have a Security purchased shall be required
to surrender the Security, with an appropriate form duly completed, to the
Company at the address specified in the notice at least three Business Days
prior to the purchase date. Holders shall be entitled to withdraw their election
if the Trustee or the Company receives not later than one Business Day prior to
the purchase date a facsimile transmission or letter setting forth the name of
the Holder, the principal amount of the Security which was delivered for
purchase by the Holder and a statement that such Holder is withdrawing his
election to have such Security purchased. Holders whose Securities are purchased
only in part will be issued new Securities equal in principal amount to the
unpurchased portion of the Securities surrendered.
(d) On the purchase date, all Securities purchased by the Company
under this Section shall be delivered to the Trustee for cancelation, and the
Company shall pay the purchase price plus accrued and unpaid interest, if any,
to the Holders entitled thereto.
(e) Notwithstanding the foregoing provisions of this Section, the
Company will not be required to make a Change of Control Offer upon a Change of
Control if a third party makes the Change of Control Offer in the manner, at the
times and otherwise in compliance with the requirements set forth in this
Section 4.08 applicable to a Change of Control Offer made by the Company and
purchases all Securities validly tendered and not withdrawn under such Change of
Control Offer.
(f) At the time the Company delivers Securities to the Trustee which
are to be accepted for purchase, the Company shall also deliver an Officers'
Certificate stating that such Securities are to be accepted by the Company
pursuant to and in accordance with the terms of this Section 4.08. A Security
shall be deemed to have been accepted for purchase at the time the
<PAGE>
44
Trustee, directly or through an agent, mails or delivers payment therefor to the
surrendering Holder.
(g) Prior to any Change of Control Offer, the Company shall deliver
to the Trustee an Officers' Certificate stating that all conditions precedent
contained herein to the right of the Company to make such offer have been
complied with.
(h) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
Section 4.08. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section 4.08, the Company shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under this Section 4.08 by virtue
thereof.
SECTION 4.09. Compliance Certificate. The Company shall deliver to
-----------------------
the Trustee within 120 days after the end of each fiscal year of the Company an
Officers' Certificate stating that in the course of the performance by the
signers of their duties as Officers of the Company they would normally have
knowledge of any Default and whether or not the signers know of any Default that
occurred during such period. If they do, the certificate shall describe the
Default, its status and what action the Company is taking or proposes to take
with respect thereto. The Company also shall comply with Section 314(a)(4) of
the TIA.
SECTION 4.10. Further Instruments and Acts. Upon request of the
-----------------------------
Trustee, the Company shall execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
SECTION 4.11. Future Note Guarantors. The Company shall cause (a)
-----------------------
each Domestic Subsidiary and (b) each Foreign Subsidiary that Guarantees any
Indebtedness (other than Indebtedness of a Restricted Subsidiary that is not a
Note Guarantor), to become a Note Guarantor, and if applicable, execute and
deliver to the Trustee a supplemental indenture substantially in the form of
Exhibit C pursuant to which such Subsidiary will Guarantee payment of the
Securities.
SECTION 4.12. Limitation on Lines of Business. The Company shall
--------------------------------
not, and shall not permit any Restricted Subsidiary to, engage in any business,
other than a Permitted Business.
SECTION 4.13. Limitation on the Sale or Issuance of Capital Stock of
------------------------------------------------------
Restricted Subsidiaries. The Company shall not sell or otherwise dispose of any
- ------------------------
shares of Capital Stock (other than Preferred Stock that is not Voting Stock) of
a Restricted Subsidiary, and shall not permit any Restricted Subsidiary,
directly or indirectly, to issue or sell or otherwise dispose of any shares of
its Capital Stock (other than Preferred Stock that is not Voting Stock) except:
(a) to the Company or a Wholly Owned Subsidiary; (b) if, immediately after
giving effect to such issuance, sale or other disposition, neither the Company
nor any of its Subsidiaries own any Capital Stock of such Restricted Subsidiary
or (c) if, immediately after giving effect to such
<PAGE>
45
issuance or sale, such Restricted Subsidiary would no longer constitute a
Restricted Subsidiary and any Investment in such Person remaining after giving
effect thereto would have been permitted to be made under Section 4.04 if made
on the date of such issuance, sale or other disposition (and such Investment
shall be deemed to be an Investment made for purposes of such Section 4.04). The
proceeds of any sale of such Capital Stock subject to and permitted by this
Section 4.13 shall be treated as Net Available Cash from an Asset Disposition
and shall be applied in accordance with Section 4.06.
ARTICLE 5
Successor Company
-----------------
SECTION 5.01. (a) When Company May Merge or Transfer Assets. The
------------------------------------------
Company shall not consolidate with or merge with or into, or convey, transfer or
lease all or substantially all its assets to, any Person, unless:
(i) the resulting, surviving or transferee Person (the "Successor
Company") shall be a corporation organized and existing under the laws of
the United States of America, any State thereof or the District of Columbia
and the Successor Company (if not the Company) shall expressly assume, by a
supplemental indenture hereto, executed and delivered to the Trustee, in
form satisfactory to the Trustee, all the obligations of the Company under
the Securities and this Indenture;
(ii) immediately after giving effect to such transaction (and
treating any Indebtedness which becomes an obligation of the Successor
Company or any Restricted Subsidiary as a result of such transaction as
having been Incurred by the Successor Company or such Restricted Subsidiary
at the time of such transaction), no Default shall have occurred and be
continuing;
(iii) immediately after giving effect to such transaction, the
Successor Company would be able to Incur an additional $1.00 of
Indebtedness pursuant to Section 4.03(a);
(iv) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if any)
comply with this Indenture; and
(v) the Company shall have delivered to the Trustee an Opinion of
Counsel reasonably acceptable to the Trustee to the effect that the Holders
will not recognize income, gain or loss for Federal income tax purposes as
a result of such transaction and will be subject to Federal income tax on
the same amounts, in the same manner and at the same times as would have
been the case if such transaction had not occurred.
The Successor Company shall succeed to, and be substituted for, and
may exercise every right and power of, the Company under this Indenture, but the
predecessor
<PAGE>
46
Company in the case of a conveyance, transfer or lease of all or substantially
all its assets shall not be released from the obligation to pay the principal of
and interest on the Securities.
(b) Subject to Sections 4.06 and 11.02(b), the Company shall not
permit any Note Guarantor to consolidate with or merge with or into, or convey,
transfer or lease all or substantially all of its assets to any Person unless:
(i) the resulting, surviving or transferee Person (the "Successor
Guarantor") will be a corporation organized and existing under the laws of
the United States of America, any State thereof or the District of Columbia
(unless the Successor Guarantor is a Foreign Subsidiary), and such Person
(if not a Note Guarantor) shall expressly assume, by a supplemental
indenture, executed and delivered to the Trustee, in form satisfactory to
the Trustee, all the obligations of such Note Guarantor under its Note
Guarantee;
(ii) immediately after giving effect to such transaction (and
treating any Indebtedness which becomes an obligation of the Successor
Guarantor or any Restricted Subsidiary as a result of such transaction as
having been Incurred by the Successor Guarantor or such Restricted
Subsidiary at the time of such transaction), no Default shall have occurred
and be continuing; and
(iii) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if any)
comply with this Indenture.
(c) Notwithstanding the foregoing, (i) any Restricted Subsidiary may
consolidate with, merge into or transfer all or part of its properties and
assets to the Company and (ii) the Company may merge with an Affiliate
incorporated solely for the purpose of reincorporating the Company in another
jurisdiction to realize tax or other benefits.
ARTICLE 6
Defaults and Remedies
---------------------
SECTION 6.01. Events of Default. An "Event of Default" occurs if:
------------------
(a) the Company defaults in any payment of interest on any Security
when the same becomes due and payable or in any payment of liquidated
damages, whether or not such payment shall be prohibited by Article 10, and
such default continues for a period of 30 days;
(b) the Company (i) defaults in the payment of the principal of any
Security when the same becomes due and payable at its Stated Maturity, upon
required redemption or repurchase, upon declaration or otherwise, whether
or not such payment shall be prohibited by Article 10 or (ii) fails to
redeem or purchase Securities when required
<PAGE>
47
pursuant to this Indenture or the Securities, whether or not such
redemption or purchase shall be prohibited by Article 10;
(c) the Company fails to comply with Section 5.01;
(d) the Company fails to comply with Section 4.02, 4.03, 4.04, 4.05,
4.06, 4.07, 4.08, 4.11, 4.12 or 4.13 (other than a failure to purchase
Securities when required under Section 4.06 or 4.08) and such failure
continues for 30 days after receipt of the notice specified below;
(e) the Company or any Note Guarantor fails to comply with any of its
agreements in the Securities or this Indenture (other than those referred
to in (a), (b), (c) or (d) above) and such failure continues for 60 days
after receipt of the notice specified below;
(f) Indebtedness of the Company or any Restricted Subsidiary is not
paid within any applicable grace period after final maturity (and has not
subsequently been paid) or the acceleration (which has not been rescinded)
by the holders thereof because of a default and the total amount of such
Indebtedness unpaid or accelerated exceeds $10.0 million or its foreign
currency equivalent at the time and such failure continues for 10 days
after receipt of the notice specified below;
(g) the Company or any Significant Subsidiary pursuant to or within
the meaning of any Bankruptcy Law:
(i) commences a voluntary case;
(ii) consents to the entry of an order for relief against it in
an involuntary case;
(iii) consents to the appointment of a Custodian of it or for any
substantial part of its property; or
(iv) makes a general assignment for the benefit of its
creditors;
or takes any comparable action under any foreign laws relating to
insolvency;
(h) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(i) is for relief against the Company or any Significant
Subsidiary in an involuntary case;
(ii) appoints a Custodian of the Company or any Significant
Subsidiary or for any substantial part of its property; or
<PAGE>
48
(iii) orders the winding up or liquidation of the Company or any
Significant Subsidiary;
or any similar relief is granted under any foreign laws and the order or
decree remains unstayed and in effect for 60 days;
(i) any judgment or decree for the payment of money (other than
judgments or decrees which are covered by enforceable insurance policies or
indemnifications issued by or entered into with solvent Persons) in excess
of $10.0 million or its foreign currency equivalent is rendered against the
Company or any Restricted Subsidiary and either (i) an enforcement
proceeding has been commenced by any creditor upon such judgment or decree
and is not stayed or dismissed within 10 days or (ii) there is a period of
60 days following the entry of such judgment or decree during which such
judgment or decree is not discharged, waived or the execution thereof
stayed; or
(j) any Note Guarantee ceases to be in full force and effect (except
as contemplated by the terms hereof) or any Note Guarantor or Person acting
by or on behalf of such Note Guarantor denies or disaffirms its obligations
under this Indenture or any Note Guarantee and such Default continues for
10 days after receipt of the notice specified below.
The foregoing shall constitute Events of Default whatever the reason
for any such Event of Default and whether it is voluntary or involuntary or is
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body.
The term "Bankruptcy Law" means Title 11, United States Code, or any
------------------
similar Federal or state law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator, custodian or similar official
under any Bankruptcy Law.
A Default under clause (d), (e), (f) or (j) above is not an Event of
Default until the Trustee notifies the Company or Holders of at least 25% in
principal amount of the outstanding Securities notify the Company and the
Trustee of the Default and the Company or the Note Guarantor, as applicable,
does not cure such Default within the time specified after receipt of such
notice. Such notice must specify the Default, demand that it be remedied and
state that such notice is a "Notice of Default".
The Company shall deliver to a Responsible Officer of the Trustee,
within 30 days after the occurrence thereof, written notice in the form of an
Officers' Certificate of any event which with the giving of notice or the lapse
of time would become an Event of Default, its status and what action the Company
is taking or proposes to take with respect thereto.
SECTION 6.02. Acceleration. If an Event of Default (other than an
-------------
Event of Default specified in Section 6.01(g) or (h) with respect to the
Company) occurs and is
<PAGE>
49
continuing, the Trustee by notice to the Company or the Holders of at least 25%
in principal amount of the outstanding Securities by notice to the Company and
the Trustee, may declare the principal of and accrued but unpaid interest on all
the Securities to be due and payable. Upon such a declaration, such principal
and interest shall be due and payable immediately. If an Event of Default
specified in Section 6.01(g) or (h) with respect to the Company occurs, the
principal of and interest on all the Securities shall ipso facto become and be
---- -----
immediately due and payable without any declaration or other act on the part of
the Trustee or any Holders. The Holders of a majority in principal amount of the
Securities by notice to the Trustee may rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because of
acceleration. No such rescission shall affect any subsequent Default or impair
any right consequent thereto.
SECTION 6.03. Other Remedies. If an Event of Default occurs and is
---------------
continuing, the Trustee may pursue any available remedy to collect the payment
of principal of or interest on the Securities or to enforce the performance of
any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder in exercising any right or remedy accruing
upon an Event of Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Event of Default. No remedy is exclusive of
any other remedy. All available remedies are cumulative.
SECTION 6.04. Waiver of Past Defaults. The Holders of a majority in
------------------------
principal amount of the Securities by notice to the Trustee may waive an
existing Default and its consequences except (a) a Default in the payment of the
principal of or interest on a Security, (b) a Default arising from the failure
to redeem or purchase any Security when required pursuant to the terms of this
Indenture or (c) a Default in respect of a provision that under Section 9.02
cannot be amended without the consent of each Holder affected. When a Default
is waived, it is deemed cured, but no such waiver shall extend to any subsequent
or other Default or impair any consequent right.
SECTION 6.05. Control by Majority. The Holders of a majority in
--------------------
principal amount of the Securities may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However, the Trustee
may refuse to follow any direction that conflicts with law or this Indenture or,
subject to Section 7.01, that the Trustee determines is unduly prejudicial to
the rights of other Holders or would involve the Trustee in personal liability;
provided, however, that the Trustee may take any other action deemed proper by
- -------- -------
the Trustee that is not inconsistent with such direction. Prior to taking any
action hereunder, the Trustee shall be entitled to indemnification satisfactory
to it in its sole discretion against all losses and expenses caused by taking or
not taking such action.
<PAGE>
50
SECTION 6.06. Limitation on Suits. (a) Except to enforce the right
--------------------
to receive payment of principal, premium (if any) or interest when due, no
Holder may pursue any remedy with respect to this Indenture or the Securities
unless:
(i) the Holder gives to a Responsible Officer of the Trustee written
notice stating that an Event of Default is continuing;
(ii) the Holders of at least 25% in principal amount of the
Securities make a written request to the Trustee to pursue the remedy;
(iii) such Holder or Holders offer to the Trustee reasonable security
or indemnity reasonably satisfactory to the Trustee against any loss,
liability or expense;
(iv) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer of security or indemnity; and
(v) the Holders of a majority in principal amount of the Securities
do not give the Trustee a direction inconsistent with the request during
such 60-day period.
(b) A Holder may not use this Indenture to prejudice the rights of
another Holder or to obtain a preference or priority over another Holder.
SECTION 6.07. Rights of Holders to Receive Payment. Notwithstanding
-------------------------------------
any other provision of this Indenture, the right of any Holder to receive
payment of principal of and liquidated damages and interest on the Securities
held by such Holder, on or after the respective due dates expressed or provided
for in the Securities, or to bring suit for the enforcement of any such payment
on or after such respective dates, shall not be impaired or affected without the
consent of such Holder.
SECTION 6.08. Collection Suit by Trustee. If an Event of Default
---------------------------
specified in Section 6.01(a) or (b) occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company or any other obligor on the Securities for the whole amount then due and
owing (together with interest on overdue principal and (to the extent lawful) on
any unpaid interest at the rate provided for in the Securities) and the amounts
provided for in Section 7.07.
SECTION 6.09. Trustee May File Proofs of Claim. The Trustee may file
---------------------------------
such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee and the Holders allowed in
any judicial proceedings relative to the Company, any Subsidiary or Note
Guarantor, their creditors or their property and, unless prohibited by law or
applicable regulations, may vote on behalf of the Holders in any election of a
trustee in bankruptcy or other Person performing similar functions, and any
Custodian in any such judicial proceeding is hereby authorized by each Holder to
make payments to the Trustee and, in the event that the Trustee shall consent to
the making of such payments directly to the Holders, to pay to the Trustee any
amount due it for the reasonable compensation, expenses,
<PAGE>
51
disbursements and advances of the Trustee, its agents and its counsel, and any
other amounts due the Trustee under Section 7.07.
SECTION 6.10. Priorities. If the Trustee collects any money or
-----------
property pursuant to this Article 6, it shall pay out the money or property in
the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to holders of Senior Indebtedness of the Company to the
extent required by Article 10 and to holders of Senior Indebtedness of the
Note Guarantors to the extent required by Article 12;
THIRD: to Holders for amounts due and unpaid on the Securities for
principal and interest, ratably, and any liquidated damages without
preference or priority of any kind, according to the amounts due and
payable on the Securities for principal, any liquidated damages and
interest, respectively; and
FOURTH: to the Company.
The Trustee may fix a record date and payment date for any payment to
Holders pursuant to this Section. At least 15 days before such record date, the
Trustee shall mail to each Holder and the Company a notice that states the
record date, the payment date and amount to be paid.
SECTION 6.11. Undertaking for Costs. In any suit for the enforcement
----------------------
of any right or remedy under this Indenture or in any suit against the Trustee
for any action taken or omitted by it as Trustee, a court in its discretion may
require the filing by any party litigant in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees, against any party litigant in the
suit, having due regard to the merits and good faith of the claims or defenses
made by the party litigant. This Section does not apply to a suit by the
Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by Holders of
more than 10% in principal amount of the Securities.
SECTION 6.12. Waiver of Stay or Extension Laws. Neither the Company
---------------------------------
nor any Note Guarantor (to the extent it may lawfully do so) shall at any time
insist upon, or plead, or in any manner whatsoever claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, which may affect the covenants or the performance of this
Indenture; and the Company and each Note Guarantor (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and shall not hinder, delay or impede the execution of any power herein
granted to the Trustee, but shall suffer and permit the execution of every such
power as though no such law had been enacted.
<PAGE>
52
ARTICLE 7
Trustee
-------
SECTION 7.01. Duties of Trustee. (a) If an Event of Default has
------------------
occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in
their exercise as a prudent person would exercise or use under the circumstances
in the conduct of such person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
the Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture (but need
not confirm or investigate the accuracy of mathematical or other facts
stated therein).
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own wilful misconduct,
except that:
(i) this paragraph does not limit the effect of paragraph (b) of
this Section;
(ii) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer unless it shall be conclusively
determined by a court of competent jurisdiction that it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05.
(iv) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that
repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section.
<PAGE>
53
(e) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
(f) Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law.
(g) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
SECTION 7.02. Rights of Trustee. (a) The Trustee may conclusively
------------------
rely on any document believed by it to be genuine and to have been signed or
presented by the proper person. The Trustee need not investigate any fact or
matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on the
Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents, attorneys, custodians or
nominees and shall not be responsible for the misconduct or negligence of any
agent, attorney, custodian or nominee appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights or
powers; provided, however, that the Trustee's conduct does not constitute wilful
-------- -------
misconduct or negligence.
(e) The Trustee may consult with counsel of its selection, and the
advice or opinion of counsel with respect to legal matters relating to this
Indenture and the Securities shall be full and complete authorization and
protection from liability in respect to any action taken, omitted or suffered by
it hereunder in good faith and in accordance with the advice or opinion of such
counsel.
(f) The Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond,
debenture, note or other paper or document unless requested in writing to do so
by the Holders of not less than a majority in principal amount of the Securities
at the time outstanding, but the Trustee may make such further inquiry or
investigation into such facts or matters as it may see fit, and, if the Trustee
shall determine to make such further inquiry or investigation, it shall be
entitled to examine the books, records and premises of the Company, personally
or by agent or attorney.
SECTION 7.03. Individual Rights of Trustee. The Trustee in its
-----------------------------
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company or its Affiliates with the same rights
it would have if it were not Trustee. Any
<PAGE>
54
Paying Agent, Registrar or co-paying agent may do the same with like rights.
However, the Trustee must comply with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer. The Trustee shall not be
---------------------
responsible for and makes no representation as to the validity or adequacy of
this Indenture, any Note Guarantee or the Securities, it shall not be
accountable for the Company's use of the proceeds from the Securities, and it
shall not be responsible for any statement of the Company or any Note Guarantor
in this Indenture or in any document issued in connection with the sale of the
Securities or in the Securities other than the Trustee's certificate of
authentication. The Trustee shall not be charged with knowledge of any Default
or Event of Default under Sections 6.01(c), (d), (e), (f), (i) or (j) or of the
identity of any Significant Subsidiary unless either (a) a Responsible Officer
shall have actual knowledge thereof or (b) a Responsible Officer of the Trustee
shall have received notice thereof in accordance with Section 13.02 hereof from
the Company, any Note Guarantor or any Holder.
SECTION 7.05. Notice of Defaults. If a Default occurs and is
-------------------
continuing and, subject to Section 7.04 hereof, if it is actually known to a
Responsible Officer of the Trustee, the Trustee shall mail to each Holder notice
of the Default within the earlier of 90 days after it occurs or 30 days after it
is known to a Responsible Officer. Except in the case of a Default in payment
of principal of or interest on any Security (including payments pursuant to the
redemption provisions of such Security, if any), the Trustee may withhold the
notice if and so long as a committee of its Responsible Officers in good faith
determines that withholding the notice is in the interests of Holders.
SECTION 7.06. Reports by Trustee to Holders. As promptly as
------------------------------
practicable after each May 15 beginning with the May 15 following the date of
this Indenture, and in any event prior to July 15 in each year, the Trustee
shall mail to each Holder a brief report dated as of such May 15 that complies
with Section 313(a) of the TIA if and to the extent required thereby. The
Trustee shall also comply with Section 313(b) of the TIA.
A copy of each report at the time of its mailing to Holders shall be
filed with the SEC and each stock exchange (if any) on which the Securities are
listed. The Company agrees to notify promptly the Trustee whenever the
Securities become listed on any stock exchange and of any delisting thereof.
SECTION 7.07. Compensation and Indemnity. The Company shall pay to
---------------------------
the Trustee from time to time such compensation as shall be agreed to in writing
by the Company and the Trustee from time to time for its services. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee upon
request for all reasonable out-of-pocket expenses incurred or made by it,
including costs of collection, in addition to the compensation for its services.
Such expenses shall include the reasonable compensation and expenses,
disbursements and advances of the Trustee's agents, counsel, accountants and
experts. The Company and each Note Guarantor, jointly and severally shall
indemnify the Trustee against any and all loss, liability or expense (including
reasonable attorneys' fees and expenses) including taxes (other than taxes
<PAGE>
55
based upon, measured by or determined by the income of the Trustee) incurred by
or in connection with the administration of this trust and the performance of
its duties hereunder. The Trustee shall notify the Company of any claim for
which it may seek indemnity promptly upon obtaining actual knowledge thereof;
provided, however, that any failure so to notify the Company shall not relieve
- -------- -------
the Company or any Note Guarantor of its indemnity obligations hereunder. The
Company shall defend the claim and the indemnified party shall provide
reasonable cooperation at the Company's expense in the defense. Such indemnified
parties may have separate counsel and the Company and the Note Guarantors, as
applicable shall pay the fees and expenses of such counsel; provided, however,
-------- -------
that the Company shall not be required to pay such fees and expenses if it
assumes such indemnified parties' defense and, in such indemnified parties'
reasonable judgment, there is no conflict of interest between the Company and
the Note Guarantors, as applicable, and such parties in connection with such
defense. The Company need not reimburse any expense or indemnify against any
loss, liability or expense incurred by an indemnified party through such party's
own wilful misconduct, negligence or bad faith.
To secure the Company's payment obligations in this Section, the
Trustee shall have a lien prior to the Securities on all money or property held
or collected by the Trustee other than money or property held in trust to pay
principal of and interest and liquidated damages, if any, on particular
Securities.
The Company's payment obligations pursuant to this Section shall
survive the satisfaction or discharge of this Indenture, any rejection or
termination of this Indenture under any bankruptcy law or the resignation or
removal of the Trustee. Without prejudice to any other rights available to the
Trustee under applicable law, when the Trustee incurs expenses after the
occurrence of a Default specified in Section 6.01(g) or (h) with respect to the
Company, the expenses are intended to constitute expenses of administration
under the Bankruptcy Law.
SECTION 7.08. Replacement of Trustee. (a) The Trustee may resign at
-----------------------
any time by so notifying the Company. The Holders of a majority in principal
amount of the Securities may remove the Trustee by so notifying the Trustee and
may appoint a successor Trustee. The Company shall remove the Trustee if:
(i) the Trustee fails to comply with Section 7.10;
(ii) the Trustee is adjudged bankrupt or insolvent;
(iii) a receiver or other public officer takes charge of the Trustee
or its property; or
(iv) the Trustee otherwise becomes incapable of acting.
(b) If the Trustee resigns, is removed by the Company or by the
Holders of a majority in principal amount of the Securities and such Holders do
not reasonably promptly appoint a successor Trustee, or if a vacancy exists in
the office of Trustee for any reason (the
<PAGE>
56
Trustee in such event being referred to herein as the retiring Trustee), the
Company shall promptly appoint a successor Trustee.
(c) A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective only upon
receipt of charges due to the Resigning Trustee, and the successor Trustee shall
have all the rights, powers and duties of the Trustee under this Indenture. The
successor Trustee shall mail a notice of its succession to Holders. The retiring
Trustee shall promptly transfer all property held by it as Trustee to the
successor Trustee, subject to the lien provided for in Section 7.07.
(d) If a successor Trustee does not take office within 60 days after
the retiring Trustee resigns or is removed, the retiring Trustee or the Holders
of 10% in principal amount of the Securities may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(e) If the Trustee fails to comply with Section 7.10, unless the
Trustee's duty to resign is stayed as provided in TIA '310(b), any Holder who
has been a bona fide holder of a Security for at least six months may petition
any court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.
(f) Notwithstanding the replacement of the Trustee pursuant to this
Section, the Company's obligations under Section 7.07 shall continue for the
benefit of the retiring Trustee.
(g) If an instrument of acceptance by a successor Trustee shall not
have been delivered to the Trustee within 60 days after the giving of such
notice of resignation or removal, the resigning or removed Trustee, as the case
may be, may petition, at the expense of the Company, any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the
Securities.
SECTION 7.09. Successor Trustee by Merger. If the Trustee
----------------------------
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
In case at the time such successor or successors by merger, conversion
or consolidation to the Trustee shall succeed to the trusts created by this
Indenture any of the Securities shall have been authenticated but not delivered,
any such successor to the Trustee may adopt the certificate of authentication of
any predecessor trustee, and deliver such Securities so authenticated; and in
case at that time any of the Securities shall not have been authenticated, any
successor to the Trustee may authenticate such Securities either in the name of
any predecessor hereunder or in the name of the successor to the Trustee; and in
all such cases such certificates shall have the full force which it is anywhere
in the Securities or in this Indenture provided that the certificate of the
Trustee shall have.
<PAGE>
57
SECTION 7.10. Eligibility; Disqualification. The Trustee shall at
------------------------------
all times satisfy the requirements of TIA ' 310(a). The Trustee shall have a
combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition. The Trustee shall comply with TIA
' 310(b), subject to its right to apply for a stay of its duty to resign under
the penultimate paragraph of TIA '310(b); provided, however, that there shall be
-------- -------
excluded from the operation of TIA ' 310(b)(1) any indenture or indentures under
which other securities or certificates of interest or participation in other
securities of the Company are outstanding if the requirements for such exclusion
set forth in TIA ' 310(b)(1) are met.
SECTION 7.11. Preferential Collection of Claims Against Company. The
--------------------------------------------------
Trustee shall comply with TIA ' 311(a), excluding any creditor relationship
listed in TIA ' 311(b). A Trustee who has resigned or been removed shall be
subject to TIA ' 311(a) to the extent indicated.
SECTION 7.12. Investment of Funds. In the event of a loss on the
--------------------
sale of any Temporary Cash Investments purchased at the direction of the Company
(after giving effect to any interest or other income thereon except to the
extent theretofore paid to the Company), the Trustee shall have no
responsibility in respect of such loss except that the Trustee shall notify the
Company of the amount of such loss and the Company shall promptly pay such
amount to the Trustee to be credited as part of the moneys originally invested.
ARTICLE 8
Discharge of Indenture; Defeasance
----------------------------------
SECTION 8.01. Discharge of Liability on Securities; Defeasance. (a)
-------------------------------------------------
When (i) all outstanding Securities (other than Securities replaced or paid
pursuant to Section 2.07) have been canceled or delivered to the Trustee for
cancelation or (ii) all outstanding Securities have become due and payable,
whether at maturity or as a result of the mailing of a notice of redemption
pursuant to Article 3 hereof, and the Company irrevocably deposits with the
Trustee funds in an amount sufficient or U.S. Government Obligations, the
principal of and interest on which will be sufficient, or a combination thereof
sufficient, in the written opinion of a nationally recognized firm of
independent public accountants delivered to the Trustee (which delivery shall
only be required if U.S. Government Obligations have been so deposited) to pay
the principal of and interest on the outstanding Securities when due at maturity
or upon redemption of, including interest thereon to maturity or such redemption
date (other than Securities replaced or paid pursuant to Section 2.07) and
liquidated damages, if any, and if in either case the Company pays all other
sums payable hereunder by the Company, then this Indenture shall, subject to
Section 8.01(c), cease to be of further effect. The Trustee shall acknowledge
satisfaction and discharge of this Indenture on demand of the Company
accompanied by an Officers' Certificate and an Opinion of Counsel and at the
cost and expense of the Company.
<PAGE>
58
(b) Subject to Sections 8.01(c) and 8.02, the Company at any time may
terminate (i) all of its obligations under the Securities and this Indenture
("legal defeasance option") or (ii) its obligations under Sections 4.02, 4.03,
4.04, 4.05, 4.06, 4.07, 4.08, 4.11, 4.12 and 4.13, and the operation of Section
5.01(a)(iii), 6.01(d), 6.01(f), 6.01(g) (with respect to Significant
Subsidiaries of the Company only), 6.01(h) (with respect to Significant
Subsidiaries of the Company only) and 6.01(i) ("covenant defeasance option").
The Company may exercise its legal defeasance option notwithstanding its prior
exercise of its covenant defeasance option. In the event that the Company
terminates all of its obligations under the Securities and this Indenture by
exercising its legal defeasance option or its covenant defeasance option, the
obligations under the Note Guarantees shall each be terminated simultaneously
with the termination of such obligations.
If the Company exercises its legal defeasance option, payment of the
Securities may not be accelerated because of an Event of Default. If the
Company exercises its covenant defeasance option, payment of the Securities may
not be accelerated because of an Event of Default specified in Section 6.01(d),
6.01(f), 6.01(g), (with respect to Significant Subsidiaries of the Company
only), 6.01(h) (with respect to Significant Subsidiaries of the Company only) or
6.01(i) or because of the failure of the Company to comply with clause (iii) of
Section 5.01(a).
Upon satisfaction of the conditions set forth herein and upon request
of the Company, the Trustee shall acknowledge in writing the discharge of those
obligations that the Company terminates.
(c) Notwithstanding clauses (a) and (b) above, the Company's
obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 7.07, 7.08 and in
this Article 8 shall survive until the Securities have been paid in full.
Thereafter, the Company's obligations in Sections 7.07, 8.04 and 8.05 shall
survive.
SECTION 8.02. (a) Conditions to Defeasance. The Company may
-------------------------
exercise its legal defeasance option or its covenant defeasance option only if:
(i) the Company irrevocably deposits in trust with the Trustee money
in an amount sufficient or U.S. Government Obligations, the principal of
and interest on which will be sufficient, or a combination thereof
sufficient, to pay the principal, premium (if any) and interest on the
Securities when due at maturity or redemption, as the case may be,
including interest thereon to maturity or such redemption date and
liquidated damages, if any;
(ii) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and without
reinvestment on the deposited U.S. Government Obligations plus any
deposited money without investment will provide cash at such times and in
such amounts as will be sufficient to pay principal and interest when due
on all the Securities to maturity or redemption, as the case may be;
<PAGE>
59
(iii) 123 days pass after the deposit is made and during the 123-day
period no Default specified in Section 6.01(g) or (h) with respect to the
Company occurs which is continuing at the end of the period;
(iv) the deposit does not constitute a default under any other
agreement binding on the Company and is not prohibited by Article 10;
(v) the Company delivers to the Trustee an Opinion of Counsel
reasonably acceptable to the Trustee to the effect that the trust resulting
from the deposit does not constitute, or is qualified as, a regulated
investment company under the Investment Company Act of 1940;
(vi) in the case of the legal defeasance option, the Company shall
have delivered to the Trustee an Opinion of Counsel reasonably acceptable
to the Trustee stating that (1) the Company has received from, or there has
been published by, the Internal Revenue Service a ruling, or (2) since the
date of this Indenture there has been a change in the applicable Federal
income tax law, in either case to the effect that, and based thereon such
Opinion of Counsel shall confirm that, the Holders will not recognize
income, gain or loss for Federal income tax purposes as a result of such
defeasance and will be subject to Federal income tax on the same amounts,
in the same manner and at the same times as would have been the case if
such defeasance had not occurred;
(vii) in the case of the covenant defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel reasonably
acceptable to the Trustee to the effect that the Holders will not recognize
income, gain or loss for Federal income tax purposes as a result of such
covenant defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been the
case if such covenant defeasance had not occurred; and
(viii) the Company delivers to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent to
the defeasance and discharge of the Securities as contemplated by this
Article 8 have been complied with.
(b) Before or after a deposit, the Company may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date in
accordance with Article 3.
SECTION 8.03. Application of Trust Money. The Trustee shall hold in
---------------------------
trust money or U.S. Government Obligations deposited with it pursuant to this
Article 8. It shall apply the deposited money and the money from U.S. Government
Obligations through the Paying Agent and in accordance with this Indenture to
the payment of principal of and interest on the Securities. Money and securities
so held in trust are not subject to Article 10 or 12.
SECTION 8.04. Repayment to Company. The Trustee and the Paying Agent
---------------------
shall promptly turn over to the Company upon request any money or U.S.
Government Obligations held by it as provided in this Article which, in the
written opinion of nationally
<PAGE>
60
recognized firm of independent public accountants delivered to the Trustee
(which delivery shall only be required if U.S. Government Obligations have been
so deposited), are in excess of the amount thereof which would then be required
to be deposited to effect an equivalent discharge or defeasance in accordance
with this Article.
Subject to any applicable abandoned property law, the Trustee and the
Paying Agent shall pay to the Company upon written request any money held by
them for the payment of principal or interest that remains unclaimed for two
years, and, thereafter, Holders entitled to the money must look to the Company
for payment as general creditors and the Trustee, and the Paying Agent shall
have no further liability with respect to such monies.
SECTION 8.05. Indemnity for Government Obligations. The Company
-------------------------------------
shall pay and shall indemnify the Trustee against any tax, fee or other charge
imposed on or assessed against deposited U.S. Government Obligations or the
principal and interest received on such U.S. Government Obligations.
SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is
--------------
unable to apply any money or U.S. Government Obligations in accordance with this
Article 8 by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article 8 until such time as the Trustee
or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with this Article 8; provided, however, that, if the
--------- -------
Company has made any payment of interest on or principal of any Securities
because of the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Securities to receive such payment from the
money or U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE 9
Amendments
----------
SECTION 9.01. (a) Without Consent of Holders. The Company, the Note
---------------------------
Guarantors and the Trustee may amend this Indenture or the Securities without
notice to or consent of any Holder:
(i) to cure any ambiguity, omission, defect or inconsistency;
(ii) to comply with Article 5;
(iii) to provide for uncertificated Securities in addition to or in
place of certificated Securities; provided, however, that the
-------- -------
uncertificated Securities are issued in registered form for purposes of
Section 163(f) of the Code or in a manner such that the uncertificated
Securities are described in Section 163(f)(2)(B) of the Code;
<PAGE>
61
(iv) to make any change in Article 10 or Article 12 that would
limit or terminate the benefits available to any holder of Senior
Indebtedness (or representatives thereof) under Article 10 or Article 12;
(v) to add additional Guarantees with respect to the Securities or
to secure the Securities;
(vi) to add to the covenants of the Company for the benefit of the
Holders or to surrender any right or power herein conferred upon the
Company;
(vii) to comply with any requirement of the SEC in connection with
qualifying, or maintaining the qualification of, this Indenture under the
TIA;
(viii) to make any change that does not adversely affect the rights
of any Holder in a material respect; or
(ix) to provide for the issuance of the Exchange Securities or
Private Exchange Securities, which shall have terms substantially identical
in all material respects to the Initial Securities (except that the
transfer restrictions contained in the Initial Securities shall be modified
or eliminated, as appropriate), and which shall be treated, together with
any outstanding Initial Securities, as a single issue of securities.
(b) An amendment under this Section 9.01 may not make any change to
Article 10 or Article 12 that adversely affects the rights under Article 10 or
Article 12 of any holder of Senior Indebtedness then outstanding unless the
holders of such Senior Indebtedness (or any group or representative thereof
authorized to give a consent) consent to such change.
After an amendment under this Section 9.01 becomes effective, the
Company shall mail to Holders a notice briefly describing such amendment. The
failure to give such notice to all Holders, or any defect therein, shall not
impair or affect the validity of an amendment under this Section.
SECTION 9.02. With Consent of Holders. (a) The Company, the Note
------------------------
Guarantors and the Trustee may amend this Indenture or the Securities without
notice to any Holder but with the written consent of the Holders of at least a
majority in principal amount of the Securities then outstanding (including
consents obtained in connection with a tender offer or exchange for the
Securities). However, without the consent of each Holder affected, an amendment
may not:
(i) reduce the amount of Securities whose Holders must consent to
an amendment;
(ii) reduce the rate of or extend the time for payment of interest
or any liquidated damages on any Security;
<PAGE>
62
(iii) reduce the principal of or extend the Stated Maturity of any
Security;
(iv) reduce the premium payable upon the redemption of any Security
or accelerate the time at which any Security may be redeemed;
(v) make any Security payable in money other than that stated in
the Security;
(vi) make any change in Article 10 or Article 12 that adversely
affects the rights of any Holder under Article 10 or Article 12;
(vii) make any change in Section 6.04 or 6.07 or the second sentence
of this Section 9.02; or
(viii) modify the Note Guarantees in any manner adverse to the Holders
in a material respect.
It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent approves the substance thereof.
An amendment under this Section 9.02 may not make any change that
adversely affects the rights under Article 10 or Article 12 of any holder of
Senior Indebtedness then outstanding unless the holders of such Senior
Indebtedness (or any group or representative thereof authorized to give a
consent) consent to such change.
After an amendment under this Section 9.02 becomes effective, the
Company shall mail to Holders a notice briefly describing such amendment. The
failure to give such notice to all Holders, or any defect therein, shall not
impair or affect the validity of an amendment under this Section 9.02.
SECTION 9.03. Compliance with Trust Indenture Act. Every amendment
------------------------------------
to this Indenture or the Securities shall comply with the TIA as then in effect.
SECTION 9.04. Revocation and Effect of Consents and Waivers. (a) A
----------------------------------------------
consent to an amendment or a waiver by a Holder of a Security shall bind the
Holder and every subsequent Holder of that Security or portion of the Security
that evidences the same debt as the consenting Holder's Security, even if
notation of the consent or waiver is not made on the Security. However, any
such Holder or subsequent Holder may revoke the consent or waiver as to such
Holder's Security or portion of the Security if the Trustee receives the notice
of revocation before the date on which the Trustee receives an Officers'
Certificate from the Company certifying that the requisite number of consents
have been received. After an amendment or waiver becomes effective, it shall
bind every Holder. An amendment or waiver becomes effective upon the (i)
receipt by the Company or the Trustee of the requisite number of consents, (ii)
satisfaction of conditions to effectiveness as set forth in this Indenture and
any
<PAGE>
63
indenture supplemental hereto containing such amendment or waiver and (iii)
execution of such amendment or waiver (or supplemental indenture) by the Company
and the Trustee.
(b) The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Holders entitled to give their consent or
take any other action described above or required or permitted to be taken
pursuant to this Indenture. If a record date is fixed, then notwithstanding the
immediately preceding paragraph, those Persons who were Holders at such record
date (or their duly designated proxies), and only those Persons, shall be
entitled to give such consent or to revoke any consent previously given or to
take any such action, whether or not such Persons continue to be Holders after
such record date. No such consent shall be valid or effective for more than 120
days after such record date.
SECTION 9.05. Notation on or Exchange of Securities. If an amendment
--------------------------------------
changes the terms of a Security, the Trustee may require the Holder of the
Security to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Security regarding the changed terms and return it to the
Holder. Alternatively, if the Company or the Trustee so determines, the Company
in exchange for the Security shall issue and the Trustee shall authenticate a
new Security that reflects the changed terms. Failure to make the appropriate
notation or to issue a new Security shall not affect the validity of such
amendment.
SECTION 9.06. Trustee to Sign Amendments. The Trustee shall sign any
---------------------------
amendment authorized pursuant to this Article 9 if the amendment does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may but need not sign it. In signing such amendment the
Trustee shall receive indemnity reasonably satisfactory to it and to receive,
and (subject to Section 7.01) shall be fully protected in relying upon, an
Officers' Certificate and an Opinion of Counsel stating that such amendment is
authorized or permitted by this Indenture and that such amendment is the legal,
valid and binding obligation of the Company and the Note Guarantors enforceable
against them in accordance with its terms, subject to customary exceptions, and
complies with the provisions hereof (including Section 9.03).
ARTICLE 10
Subordination
-------------
SECTION 10.01. Agreement To Subordinate. The Company agrees, and
-------------------------
each Holder by accepting a Security agrees, that the Indebtedness evidenced by
the Securities is subordinated in right of payment, to the extent and in the
manner provided in this Article 10, to the prior payment in full of all Senior
Indebtedness of the Company and that the subordination is for the benefit of and
enforceable by the holders of such Senior Indebtedness. The Securities shall in
all respects rank pari passu with all other Senior Subordinated Indebtedness of
---- -----
the Company and only Indebtedness of the Company that is Senior Indebtedness of
the Company shall rank senior to the Securities in accordance with the
provisions set forth herein. For purposes of this Article 10, the Indebtedness
evidenced by the Securities shall be deemed to
<PAGE>
64
include any liquidated damages payable pursuant to the provisions set forth in
the Securities and the Registration Agreement. All provisions of this Article 10
shall be subject to Section 10.12.
SECTION 10.02. Liquidation, Dissolution, Bankruptcy. Upon any
-------------------------------------
payment or distribution of the assets of the Company to creditors upon a
liquidation or a dissolution of the Company or in a bankruptcy, reorganization,
insolvency, receivership or similar proceeding relating to the Company or its
property:
(a) holders of Senior Indebtedness of the Company shall be entitled to
receive payment in full of such Senior Indebtedness before Holders shall
be entitled to receive any payment of principal of or interest on the
Securities; and
(b) until the Senior Indebtedness of the Company is paid in full , any
payment or distribution to which Holders would be entitled but for this
Article 10 shall be made to holders of such Senior Indebtedness as their
interests may appear, except that Holders may receive shares of stock and
any debt securities that are subordinated to such Senior Indebtedness to at
least the same extent as the Securities.
SECTION 10.03. Default on Senior Indebtedness. The Company may not
-------------------------------
pay the principal of, premium (if any) or interest on the Securities or make any
deposit pursuant to Section 8.01 and may not otherwise repurchase, redeem or
otherwise acquire or retire for value any Securities (collectively, "pay the
Securities") if (a) any Designated Senior Indebtedness of the Company is not
paid when due or (b) any other default on any Designated Senior Indebtedness of
the Company occurs and the maturity of such Designated Senior Indebtedness is
accelerated in accordance with its terms unless, in either case, (i) the default
has been cured or waived and any such acceleration has been rescinded or (ii)
such Designated Senior Indebtedness has been paid in full; provided, however,
-------- -------
that the Company may pay the Securities without regard to the foregoing if the
Company and a Responsible Officer of the Trustee receive written notice
approving such payment from the Representative of such Designated Senior
Indebtedness with respect to which either of the events set forth in clause (a)
or (b) of this sentence has occurred and is continuing. During the continuance
of any default (other than a default described in clause (a) or (b) of the
preceding sentence) with respect to any Designated Senior Indebtedness of the
Company pursuant to which the maturity thereof may be accelerated immediately
without further notice (except such notice as may be required to effect such
acceleration) or the expiration of any applicable grace periods, the Company may
not pay the Securities for a period (a "Payment Blockage Period") commencing
upon the receipt by a Responsible Officer of the Trustee (with a copy to the
Company) of written notice (a "Blockage Notice") of such default from the
Representative of such Designated Senior Indebtedness specifying an election to
effect a Payment Blockage Period and ending 179 days thereafter (or earlier if
such Payment Blockage Period is terminated (a) by written notice to the Trustee
and the Company from the Person or Persons who gave such Blockage Notice, (b) by
repayment in full of such Designated Senior Indebtedness or (c) because the
default giving rise to such Blockage Notice is no longer continuing).
Notwithstanding the provisions described in the immediately preceding sentence
(but subject to the provisions contained in the second preceding and in the
immediately succeeding sentence), unless the holders of such Designated Senior
Indebtedness or
<PAGE>
65
the Representative of such holders shall have accelerated the maturity of such
Designated Senior Indebtedness, the Company may resume payments on the
Securities after the end of such Payment Blockage Period, including any missed
payments. Not more than one Blockage Notice may be given in any consecutive 360-
day period, irrespective of the number of defaults with respect to Designated
Senior Indebtedness during such period; provided, however, that if any Blockage
-------- -------
Notice within such 360-day period is given by or on behalf of any holders of
Designated Senior Indebtedness other than the Bank Indebtedness, the
Representative of the Bank Indebtedness may give another Blockage Notice within
such period; provided further, however, that in no event may the total number of
---------------- -------
days during which any Payment Blockage Period or Periods is in effect exceed 179
days in the aggregate during any 360 consecutive day period. For purposes of
this Section 10.03, no default or event of default that existed or was
continuing on the date of the commencement of any Payment Blockage Period with
respect to the Designated Senior Indebtedness initiating such Payment Blockage
Period shall be, or be made, the basis of the commencement of a subsequent
Payment Blockage Period by the Representative of such Designated Senior
Indebtedness, whether or not within a period of 360 consecutive days, unless
such default or event of default shall have been cured or waived for a period of
not less than 90 consecutive days.
SECTION 10.04. Acceleration of Payment of Securities. If payment of
--------------------------------------
the Securities is accelerated because of an Event of Default, the Company or the
Trustee (provided, that the Trustee shall have received written notice from the
--------
Company, on which notice the Trustee shall be entitled to conclusively rely)
shall promptly notify the holders of the Designated Senior Indebtedness of the
Company (or their Representative) of the acceleration. If any Designated Senior
Indebtedness of the Company is outstanding, the Company may not pay the
Securities until five Business Days after such holders or the Representative of
such Designated Senior Indebtedness receive notice of such acceleration and,
thereafter, may pay the Securities only if this Article 10 otherwise permits
payment at that time.
SECTION 10.05. When Distribution Must Be Paid Over. If a payment or
------------------------------------
distribution is made to Holders that because of this Article 10 should not have
been made to them, the Holders who receive the payment or distribution shall
hold it in trust for holders of Senior Indebtedness of the Company and pay it
over to them as their interests may appear.
SECTION 10.06. Subrogation. After all Senior Indebtedness of the
------------
Company is paid in full and until the Securities are paid in full, Holders shall
be subrogated to the rights of holders of such Senior Indebtedness to receive
distributions applicable to Senior Indebtedness. A distribution made under this
Article 10 to holders of such Senior Indebtedness which otherwise would have
been made to Holders is not, as between the Company and Holders, a payment by
the Company on such Senior Indebtedness.
SECTION 10.07. Relative Rights. This Article 10 defines the relative
----------------
rights of Holders and holders of Senior Indebtedness of the Company. Nothing in
this Indenture shall:
<PAGE>
66
(a) impair, as between the Company and Holders, the obligation of the
Company, which is absolute and unconditional, to pay principal of and
interest on and liquidated damages, if any, in respect of, the Securities
in accordance with their terms; or
(b) prevent the Trustee or any Holder from exercising its available
remedies upon a Default, subject to the rights of holders of Senior
Indebtedness of the Company to receive distributions otherwise payable to
Holders.
SECTION 10.08. Subordination May Not Be Impaired by Company. No
---------------------------------------------
right of any holder of Senior Indebtedness of the Company to enforce the
subordination of the Indebtedness evidenced by the Securities shall be impaired
by any act or failure to act by the Company or by its failure to comply with
this Indenture.
SECTION 10.09. Rights of Trustee and Paying Agent. Notwithstanding
-----------------------------------
Section 10.03, the Trustee or Paying Agent may continue to make payments on the
Securities and shall not be charged with knowledge of the existence of facts
that would prohibit the making of any such payments unless, not less than two
Business Days prior to the date of such payment, a Responsible Officer of the
Trustee receives notice satisfactory to it that payments may not be made under
this Article 10. The Company, the Registrar, the Paying Agent, a Representative
or a holder of Senior Indebtedness of the Company may give the notice; provided,
--------
however, that, if an issue of Senior Indebtedness of the Company has a
- -------
Representative, only the Representative may give the notice.
The Trustee in its individual or any other capacity may hold Senior
Indebtedness of the Company with the same rights it would have if it were not
Trustee. The Registrar and the Paying Agent may do the same with like rights.
The Trustee shall be entitled to all the rights set forth in this Article 10
with respect to any Senior Indebtedness of the Company which may at any time be
held by it, to the same extent as any other holder of such Senior Indebtedness;
and nothing in Article 7 shall deprive the Trustee of any of its rights as such
holder. Nothing in this Article 10 shall apply to claims of, or payments to,
the Trustee under or pursuant to Section 7.07 or any other Section of this
Indenture.
SECTION 10.10. Distribution or Notice to Representative. Whenever a
-----------------------------------------
distribution is to be made or a notice given to holders of Senior Indebtedness
of the Company, the distribution may be made and the notice given to their
Representative (if any).
SECTION 10.11. Article 10 Not To Prevent Events of Default or Limit
----------------------------------------------------
Right To Accelerate. The failure to make a payment pursuant to the Securities
- --------------------
by reason of any provision in this Article 10 shall not be construed as
preventing the occurrence of a Default. Nothing in this Article 10 shall have
any effect on the right of the Holders or the Trustee to accelerate the maturity
of the Securities.
SECTION 10.12. Trust Monies Not Subordinated. Notwithstanding
------------------------------
anything contained herein to the contrary, payments from money or the proceeds
of U.S. Government Obligations held in trust under Article 8 by the Trustee for
the payment of principal of and
<PAGE>
67
interest on the Securities and liquidated damages, if any, shall not be
subordinated to the prior payment of any Senior Indebtedness of the Company or
subject to the restrictions set forth in this Article 10, and none of the
Holders shall be obligated to pay over any such amount to the Company or any
holder of Senior Indebtedness of the Company or any other creditor of the
Company.
SECTION 10.13. Trustee Entitled To Rely. Upon any payment or
-------------------------
distribution pursuant to this Article 10, the Trustee and the Holders shall be
entitled to rely conclusively (a) upon any order or decree of a court of
competent jurisdiction in which any proceedings of the nature referred to in
Section 10.02 are pending, (b) upon a certificate of the liquidating trustee or
agent or other Person making such payment or distribution to the Trustee or to
the Holders or (c) upon the Representatives for the holders of Senior
Indebtedness of the Company for the purpose of ascertaining the Persons entitled
to participate in such payment or distribution, the holders of such Senior
Indebtedness and other Indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article 10. In the event that the Trustee
determines, in good faith, that evidence is required with respect to the right
of any Person as a holder of Senior Indebtedness of the Company to participate
in any payment or distribution pursuant to this Article 10, the Trustee may
request such Person to furnish evidence to the reasonable satisfaction of the
Trustee as to the amount of such Senior Indebtedness held by such Person, the
extent to which such Person is entitled to participate in such payment or
distribution and other facts pertinent to the rights of such Person under this
Article 10, and, if such evidence is not furnished, the Trustee may defer any
payment to such Person pending judicial determination as to the right of such
Person to receive such payment. The provisions of Sections 7.01 and 7.02 shall
be applicable to all actions or omissions of actions by the Trustee pursuant to
this Article 10.
SECTION 10.14. Trustee To Effectuate Subordination. Each Holder by
------------------------------------
accepting a Security authorizes and directs the Trustee on his behalf to take
such action as may be necessary or appropriate to acknowledge or effectuate the
subordination between the Holders and the holders of Senior Indebtedness of the
Company as provided in this Article 10 and appoints the Trustee as attorney-in-
fact for any and all such purposes.
SECTION 10.15. Trustee Not Fiduciary for Holders of Senior
-------------------------------------------
Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to the
- -------------
holders of Senior Indebtedness of the Company and shall not be liable to any
such holders if it shall mistakenly pay over or distribute to Holders or the
Company or any other Person, money or assets to which any holders of Senior
Indebtedness of the Company shall be entitled by virtue of this Article 10 or
otherwise.
SECTION 10.16. Reliance by Holders of Senior Indebtedness on
---------------------------------------------
Subordination Provisions. Each Holder by accepting a Security acknowledges and
- -------------------------
agrees that the foregoing subordination provisions are, and are intended to be,
an inducement and a consideration to each holder of any Senior Indebtedness of
the Company, whether such Senior Indebtedness was created or acquired before or
after the issuance of the Securities, to acquire and continue to hold, or to
continue to hold, such Senior Indebtedness and such holder of such Senior
Indebtedness
<PAGE>
68
shall be deemed conclusively to have relied on such subordination provisions in
acquiring and continuing to hold, or in continuing to hold, such Senior
Indebtedness.
ARTICLE 11
Note Guarantees
---------------
SECTION 11.01. (a) Note Guarantees. Each Note Guarantor hereby
----------------
jointly and severally irrevocably and unconditionally guarantees, as a primary
obligor and not merely as a surety, to each Holder and to the Trustee and its
successors and assigns (i) the full and punctual payment when due, whether at
Stated Maturity, by acceleration, by redemption or otherwise, of all obligations
of the Company under this Indenture (including obligations to the Trustee) and
the Securities, whether for payment of principal of, interest on or liquidated
damages, if any, in respect of the Securities and all other monetary obligations
of the Company under this Indenture and the Securities and (ii) the full and
punctual performance within applicable grace periods of all other monetary
obligations of the Company whether for fees, expenses, indemnification or
otherwise under this Indenture and the Securities (all the foregoing being
hereinafter collectively called the "Guaranteed Obligations"). Each Note
Guarantor further agrees that the Guaranteed Obligations may be extended or
renewed, in whole or in part, without notice or further assent from each such
Note Guarantor, and that each such Note Guarantor shall remain bound under this
Article 11 notwithstanding any extension or renewal of any Guaranteed
Obligation.
(b) Each Note Guarantor waives presentation to, demand of payment
from and protest to the Company of any of the Guaranteed Obligations and also
waives notice of protest for nonpayment. Each Note Guarantor waives notice of
any default under the Securities or the Guaranteed Obligations. The obligations
of each Note Guarantor hereunder shall not be affected by (i) the failure of any
Holder or the Trustee to assert any claim or demand or to enforce any right or
remedy against the Company or any other Person under this Indenture, the
Securities or any other agreement or otherwise; (ii) any extension or renewal of
any thereof; (iii) any rescission, waiver, amendment or modification of any of
the terms or provisions of this Indenture, the Securities or any other agreement
except to the extent such rescission, waiver, amendment or modification
explicitly relates to such Note Guarantor's obligations hereunder; (iv) the
release of any security held by any Holder or the Trustee for the Guaranteed
Obligations or any of them; (v) the failure of any Holder or Trustee to exercise
any right or remedy against any other guarantor of the Guaranteed Obligations;
or (vi) any change in the ownership of such Note Guarantor, except as provided
in Section 11.02(b).
(c) Each Note Guarantor hereby waives any right to which it may be
entitled to have its obligations hereunder divided among the Note Guarantors,
such that such Note Guarantor's obligations would be less than the full amount
claimed. Each Note Guarantor hereby waives any right to which it may be
entitled to have the assets of the Company first be used and depleted as payment
of the Company's or such Note Guarantor's obligations hereunder prior to any
amounts being claimed from or paid by such Note Guarantor hereunder. Each Note
<PAGE>
69
Guarantor hereby waives any right to which it may be entitled to require that
the Company be sued prior to an action being initiated against such Note
Guarantor.
(d) Each Note Guarantor further agrees that its Note Guarantee herein
constitutes a guarantee of payment, performance and compliance when due (and not
a guarantee of collection) and waives any right to require that any resort be
had by any Holder or the Trustee to any security held for payment of the
Guaranteed Obligations.
(e) The Note Guarantee of each Note Guarantor is, to the extent and
in the manner set forth in Article 12, subordinated and subject in right of
payment to the prior payment in full of the principal of and premium, if any,
and interest on all Senior Indebtedness of the relevant Note Guarantor and is
made subject to such provisions of this Indenture.
(f) Except as expressly set forth in Sections 8.01(b), 11.02 and
11.06, the obligations of each Note Guarantor hereunder shall not be subject to
any reduction, limitation, impairment or termination for any reason, including
any claim of waiver, release, surrender, alteration or compromise, and shall not
be subject to any defense of setoff, counterclaim, recoupment or termination
whatsoever or by reason of the invalidity, illegality or unenforceability of the
Guaranteed Obligations or otherwise. Without limiting the generality of the
foregoing, the obligations of each Note Guarantor herein shall not be discharged
or impaired or otherwise affected by the failure of any Holder or the Trustee to
assert any claim or demand or to enforce any remedy under this Indenture, the
Securities or any other agreement, by any waiver or modification of any thereof,
by any default, failure or delay, wilful or otherwise, in the performance of the
obligations, or by any other act or thing or omission or delay to do any other
act or thing which may or might in any manner or to any extent vary the risk of
any Note Guarantor or would otherwise operate as a discharge of any Note
Guarantor as a matter of law or equity.
(g) Each Note Guarantor agrees that its Note Guarantee shall remain
in full force and effect until payment in full of all the Guaranteed
Obligations. Each Note Guarantor further agrees that its Note Guarantee herein
shall continue to be effective or be reinstated, as the case may be, if at any
time payment, or any part thereof, of principal of or interest on any Guaranteed
Obligation is rescinded or must otherwise be restored by any Holder or the
Trustee upon the bankruptcy or reorganization of the Company or otherwise.
(h) In furtherance of the foregoing and not in limitation of any
other right which any Holder or the Trustee has at law or in equity against any
Note Guarantor by virtue hereof, upon the failure of the Company to pay the
principal of or interest on any Guaranteed Obligation when and as the same shall
become due, whether at maturity, by acceleration, by redemption or otherwise, or
to perform or comply with any other Guaranteed Obligation, each Note Guarantor
hereby promises to and shall, upon receipt of written demand by the Trustee,
forthwith pay, or cause to be paid, in cash, to the Holders or the Trustee an
amount equal to the sum of (i) the unpaid principal amount of such Guaranteed
Obligations, (ii) accrued and unpaid interest on such Guaranteed Obligations
(but only to the extent not prohibited by law) and (iii) all other monetary
obligations of the Company to the Holders and the Trustee.
<PAGE>
70
(i) Each Note Guarantor agrees that it shall not be entitled to any
right of subrogation in relation to the Holders in respect of any Guaranteed
Obligations guaranteed hereby until payment in full of all Guaranteed
Obligations and all obligations to which the Guaranteed Obligations are
subordinated as provided in Article 12. Each Note Guarantor further agrees
that, as between it, on the one hand, and the Holders and the Trustee, on the
other hand, (i) the maturity of the Guaranteed Obligations guaranteed hereby may
be accelerated as provided in Article 6 for the purposes of any Note Guarantee
herein, notwithstanding any stay, injunction or other prohibition preventing
such acceleration in respect of the Guaranteed Obligations guaranteed hereby,
and (ii) in the event of any declaration of acceleration of such Guaranteed
Obligations as provided in Article 6, such Guaranteed Obligations (whether or
not due and payable) shall forthwith become due and payable by such Note
Guarantor for the purposes of this Section 11.01.
(j) Upon request of the Trustee, each Note Guarantor shall execute
and deliver such further instruments and do such further acts as may be
reasonably necessary or proper to carry out more effectively the purpose of this
Indenture.
SECTION 11.02. Limitation on Liability. (a) Any term or provision
------------------------
of this Indenture to the contrary notwithstanding, the maximum aggregate amount
of the Guaranteed Obligations guaranteed hereunder by any Note Guarantor shall
not exceed the maximum amount that can be hereby guaranteed without rendering
this Indenture, as it relates to such Note Guarantor, voidable under applicable
law relating to fraudulent conveyance or fraudulent transfer or similar laws
affecting the rights of creditors generally.
(b) A Note Guarantee as to any Note Guarantor shall terminate and be
of no further force or effect and such Note Guarantor shall be deemed to be
released from all obligations under this Article 11 upon (i) the merger or
consolidation of such Note Guarantor with or into any Person other than the
Company or a Subsidiary of the Company where such Note Guarantor is not the
surviving entity of such consolidation or merger or (ii) the sale by the Company
or any Subsidiary of the Company (or any pledgee of the Company) of the Capital
Stock of such Note Guarantor, where, after such sale, such Note Guarantor is no
longer a Subsidiary of the Company; provided, however, that each such merger,
-------- -------
consolidation or sale (or, in the case of a sale by such a pledgee, the
disposition of the proceeds of such sale) shall comply with Section 4.06 and
Section 5.01(b). At the request of the Company, the Trustee shall execute and
deliver an appropriate instrument evidencing such release (in the form provided
by the Company).
SECTION 11.03. Successors and Assigns. This Article 11 shall be
-----------------------
binding upon each Note Guarantor and (subject to the provisions hereof) its
successors and assigns and shall inure to the benefit of the successors and
assigns of the Trustee and the Holders and, in the event of any transfer or
assignment of rights by any Holder or the Trustee, the rights and privileges
conferred upon that party in this Indenture and in the Securities shall
automatically extend to and be vested in such transferee or assignee, all
subject to the terms and conditions of this Indenture.
<PAGE>
71
SECTION 11.04. No Waiver. Neither a failure nor a delay on the part
----------
of either the Trustee or the Holders in exercising any right, power or privilege
under this Article 11 shall operate as a waiver thereof, nor shall a single or
partial exercise thereof preclude any other or further exercise of any right,
power or privilege. The rights, remedies and benefits of the Trustee and the
Holders herein expressly specified are cumulative and not exclusive of any other
rights, remedies or benefits which either may have under this Article 11 at law,
in equity, by statute or otherwise.
SECTION 11.05. Modification. No modification, amendment or waiver of
-------------
any provision of this Article 11, nor the consent to any departure by any Note
Guarantor therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Trustee, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice to or demand on any Note Guarantor in any case shall entitle such Note
Guarantor to any other or further notice or demand in the same, similar or other
circumstances.
SECTION 11.06. Execution of Supplemental Indenture for Future Note
---------------------------------------------------
Guarantors. Each Subsidiary which is required to become a Note Guarantor
- -----------
pursuant to Section 4.11 shall promptly execute and deliver to the Trustee a
supplemental indenture in the form of Exhibit C hereto pursuant to which such
Subsidiary shall become a Note Guarantor under this Article 11 and shall
guarantee the Guaranteed Obligations. Concurrently with the execution and
delivery of such supplemental indenture, the Company shall deliver to the
Trustee an Opinion of Counsel and an Officers' Certificate to the effect that
such supplemental indenture has been duly authorized, executed and delivered by
such Subsidiary and that, subject to the application of bankruptcy, insolvency,
moratorium, fraudulent conveyance or transfer and other similar laws relating to
creditors' rights generally and to the principles of equity, whether considered
in a proceeding at law or in equity, the Note Guarantee of such Note Guarantor
is a legal, valid and binding obligation of such Note Guarantor, enforceable
against such Note Guarantor in accordance with its terms and or to such other
matters as the Trustee may reasonably request.
SECTION 11.07. Non-Impairment. The failure to endorse a Note Guarantee
---------------
on any Security shall not affect or impair the validity thereof.
ARTICLE 12
Subordination of the Note Guarantees
------------------------------------
SECTION 12.01. Agreement To Subordinate. Each Note Guarantor agrees,
-------------------------
and each Holder by accepting a Security agrees, that the obligations of a Note
Guarantor hereunder are subordinated in right of payment, to the extent and in
the manner provided in this Article 12, to the prior payment in full of all
Senior Indebtedness of such Note Guarantor and that the subordination is for the
benefit of and enforceable by the holders of such Senior Indebtedness of such
Note Guarantor. The obligations hereunder with respect to a Note Guarantor
shall in all
<PAGE>
72
respects rank pari passu with all other Senior Subordinated Indebtedness of such
---- -----
Note Guarantor and shall rank senior to all existing and future Subordinated
Obligations of such Note Guarantor; and only Indebtedness of such Note Guarantor
that is Senior Indebtedness of such Note Guarantor shall rank senior to the
obligations of such Note Guarantor in accordance with the provisions set forth
herein.
SECTION 12.02. Liquidation, Dissolution, Bankruptcy. Upon any
-------------------------------------
payment or distribution of the assets of a Note Guarantor to creditors upon a
liquidation or a dissolution of such Note Guarantor or in a bankruptcy,
reorganization, insolvency, receivership or similar proceeding relating to such
Note Guarantor and its properties:
(a) holders of Senior Indebtedness of such Note Guarantor shall be
entitled to receive payment in full of such Senior Indebtedness before
Holders shall be entitled to receive any payment pursuant to any Guaranteed
Obligations from such Note Guarantor; and
(b) until the Senior Indebtedness of such Note Guarantor is paid in
full, any payment or distribution to which Holders would be entitled but
for this Article 12 shall be made to holders of such Senior Indebtedness as
their respective interests may appear, except that Holders may receive
shares of stock and any debt securities that are subordinated to such
Senior Indebtedness to at least the same extent as the Note Guarantees.
SECTION 12.03. Default on Designated Senior Indebtedness of a Note
---------------------------------------------------
Guarantor. A Note Guarantor may not make any payment pursuant to any of the
- ----------
Guaranteed Obligations or repurchase, redeem or otherwise retire any Securities
(collectively, "pay its Guarantee") if (a) any Designated Senior Indebtedness of
such Note Guarantor is not paid when due or (b) any other default on any
Designated Senior Indebtedness of such Note Guarantor occurs and the maturity of
such Designated Senior Indebtedness is accelerated in accordance with its terms
unless, in either case, (i) the default has been cured or waived and any such
acceleration has been rescinded or (ii) such Designated Senior Indebtedness has
been paid in full; provided, however, that such Note Guarantor may pay its
-------- -------
Guarantee without regard to the foregoing if such Note Guarantor and a
Responsible Officer of the Trustee receive written notice approving such payment
from the Representative of the holders of such Designated Senior Indebtedness
with respect to which either of the events in clause (a) or (b) of this sentence
has occurred and is continuing. During the continuance of any default (other
than a default described in clause (a) or (b) of the preceding sentence) with
respect to any Designated Senior Indebtedness of a Note Guarantor pursuant to
which the maturity thereof may be accelerated immediately without further notice
(except such notice as may be required to effect such acceleration) or the
expiration of any applicable grace periods, such Note Guarantor may not pay its
Guarantee for a period (a "Guarantee Payment Blockage Period") commencing upon
the receipt by a Responsible Officer of the Trustee (with a copy to such Note
Guarantor and the Company) of written notice (a "Guarantee Blockage Notice") of
such default from the Representative of such Designated Senior Indebtedness of
such Note Guarantor specifying an election to effect a Guarantee Payment
Blockage Period and ending 179 days thereafter (or
<PAGE>
73
earlier if such Guarantee Payment Blockage Period is terminated (a) by written
notice to a Responsible Officer of the Trustee (with a copy to such Note
Guarantor and the Company) from the Person or Persons who gave such Guarantee
Blockage Notice, (b) because such Designated Senior Indebtedness has been repaid
in full or (c) because the default giving rise to such Guarantee Blockage Notice
is no longer continuing). Notwithstanding the provisions described in the
immediately preceding sentence (but subject to the provisions contained in the
second preceding and in the immediately succeeding sentence), unless the holders
of such Designated Senior Indebtedness or the Representative of such holders
shall have accelerated the maturity of such Designated Senior Indebtedness, such
Note Guarantor may resume to paying its Note Guarantee after such Guarantee
Payment Blockage Period, including any missed payments. Not more than one
Guarantee Blockage Notice may be given with respect to a Note Guarantor in any
consecutive 360-day period, irrespective of the number of defaults with respect
to Designated Senior Indebtedness of such Note Guarantor during such period;
provided, however, that if any Guarantee Blockage Notice within such 360-day
- -------- -------
period is given by or on behalf of any holders of Designated Senior Indebtedness
of such Note Guarantor other than the Bank Indebtedness, the Representative of
the Bank Indebtedness may give another Guarantee Blockage Notice within such
period; provided further,however, that in no event may the total number of days
---------------- -------
during which any Guarantee Payment Blockage Period or Periods is in effect
exceed 179 days in the aggregate during any 360 consecutive day period. For
purposes of this Section 12.03, no default or event of default that existed or
was continuing on the date of the commencement of any Guarantee Payment Blockage
Period with respect to the Designated Senior Indebtedness initiating such
Guarantee Payment Blockage Period shall be, or be made, the basis of the
commencement of a subsequent Guarantee Payment Blockage Period by the
Representative of such Designated Senior Indebtedness, whether or not within a
period of 360 consecutive days, unless such default or event of default shall
have been cured or waived for a period of not less than 90 consecutive days.
SECTION 12.04. Demand for Payment. If payment of the Securities is
-------------------
accelerated because of an Event of Default and a demand for payment is made on a
Note Guarantor pursuant to Article 11, the Trustee (provided that the Trustee
--------
shall have received written notice from the Company or such Note Guarantor, on
which notice the Trustee shall be entitled to conclusively rely) shall promptly
notify the holders of the Designated Senior Indebtedness of such Note Guarantor
(or the Representative of such holders) of such demand. If any Designated
Senior Indebtedness of such Note Guarantor is outstanding, such Note Guarantor
may not pay its Guarantee until five Business Days after such holders or the
Representative of the holders of the Designated Senior Indebtedness of such Note
Guarantor receive notice of such demand and, thereafter, may pay its Guarantee
only if this Article 12 otherwise permits payment at that time.
SECTION 12.05. When Distribution Must Be Paid Over. If a payment or
------------------------------------
distribution is made to Holders that because of this Article 12 should not have
been made to them, the Holders who receive the payment or distribution shall
hold such payment or distribution in trust for holders of the Senior
Indebtedness of the relevant Note Guarantor and pay it over to them as their
respective interests may appear.
<PAGE>
74
SECTION 12.06. Subrogation. After all Senior Indebtedness of a Note
------------
Guarantor is paid in full and until the Securities are paid in full in cash,
Holders shall be subrogated to the rights of holders of Senior Indebtedness of
such Note Guarantor to receive distributions applicable to Designated Senior
Indebtedness of such Note Guarantor. A distribution made under this Article 12
to holders of Senior Indebtedness of such Note Guarantor which otherwise would
have been made to Holders is not, as between such Note Guarantor and Holders, a
payment by such Note Guarantor on Senior Indebtedness of such Note Guarantor.
SECTION 12.07. Relative Rights. This Article 12 defines the relative
----------------
rights of Holders and holders of Senior Indebtedness of a Note Guarantor.
Nothing in this Indenture shall:
(a) impair, as between a Note Guarantor and Holders, the obligation of
a Note Guarantor which is absolute and unconditional, to make payments with
respect to the Guaranteed Obligations to the extent set forth in Article
11; or
(b) prevent the Trustee or any Holder from exercising its available
remedies upon a default by a Note Guarantor under its obligations with
respect to the Guaranteed Obligations, subject to the rights of holders of
Senior Indebtedness of such Note Guarantor to receive distributions
otherwise payable to Holders.
SECTION 12.08. Subordination May Not Be Impaired by a Note
--------------------------------------------
Guarantor. No right of any holder of Senior Indebtedness of a Note Guarantor to
- ----------
enforce the subordination of the obligations of such Note Guarantor hereunder
shall be impaired by any act or failure to act by such Note Guarantor or by its
failure to comply with this Indenture.
SECTION 12.09. Rights of Trustee and Paying Agent. Notwithstanding
-----------------------------------
Section 12.03, the Trustee or the Paying Agent may continue to make payments on
the Securities and shall not be charged with knowledge of the existence of facts
that would prohibit the making of any such payments unless, not less than two
Business Days prior to the date of such payment, a Responsible Officer of the
Trustee receives notice satisfactory to it that payments may not be made under
this Article 12. A Note Guarantor, the Registrar or co-registrar, the Paying
Agent, a Representative or a holder of Senior Indebtedness of a Note Guarantor
may give the notice; provided, however, that if an issue of Senior Indebtedness
-------- -------
of a Note Guarantor has a Representative, only the Representative may give the
notice.
The Trustee in its individual or any other capacity may hold Senior
Indebtedness of a Note Guarantor with the same rights it would have if it were
not Trustee. The Registrar and co-registrar and the Paying Agent may do the
same with like rights. The Trustee shall be entitled to all the rights set
forth in this Article 12 with respect to any Senior Indebtedness of a Note
Guarantor which may at any time be held by it, to the same extent as any other
holder of Senior Indebtedness of such Note Guarantor; and nothing in Article 7
shall deprive the Trustee of any of its rights as such holder. Nothing in this
Article 12 shall apply to claims of, or payments to, the Trustee under or
pursuant to Section 7.07 or any other Section of this Indenture.
<PAGE>
75
SECTION 12.10. Distribution or Notice to Representative. Whenever a
-----------------------------------------
distribution is to be made or a notice given to holders of Senior Indebtedness
of a Note Guarantor, the distribution may be made and the notice given to their
Representative (if any).
SECTION 12.11. Article 12 Not To Prevent Events of Default or Limit
----------------------------------------------------
Right To Accelerate. The failure of a Note Guarantor to make a payment on any
- --------------------
of its obligations by reason of any provision in this Article 12 shall not be
construed as preventing the occurrence of a default by such Note Guarantor under
such obligations. Nothing in this Article 12 shall have any effect on the right
of the Holders or the Trustee to make a demand for payment on a Note Guarantor
pursuant to Article 11.
SECTION 12.12. Trustee Entitled To Rely. Upon any payment or
-------------------------
distribution pursuant to this Article 12, the Trustee and the Holders shall be
entitled to rely (a) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 12.02
are pending, (b) upon a certificate of the liquidating trustee or agent or other
Person making such payment or distribution to the Trustee or to the Holders or
(c) upon the Representatives for the holders of Senior Indebtedness of a Note
Guarantor for the purpose of ascertaining the Persons entitled to participate in
such payment or distribution, the holders of the Senior Indebtedness of a Note
Guarantor and other Indebtedness of a Note Guarantor, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article 12. In the event that the Trustee
determines, in good faith, that evidence is required with respect to the right
of any Person as a holder of Senior Indebtedness of a Note Guarantor to
participate in any payment or distribution pursuant to this Article 12, the
Trustee may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of Senior Indebtedness of such Note
Guarantor held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and other facts pertinent to the
rights of such Person under this Article 12, and, if such evidence is not
furnished, the Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment. The
provisions of Sections 7.01 and 7.02 shall be applicable to all actions or
omissions of actions by the Trustee pursuant to this Article 12.
SECTION 12.13. Trustee To Effectuate Subordination. Each Holder by
------------------------------------
accepting a Security authorizes and directs the Trustee on his or her behalf to
take such action as may be necessary or appropriate to acknowledge or effectuate
the subordination between the Holders and the holders of Senior Indebtedness of
each of the Note Guarantors as provided in this Article 12 and appoints the
Trustee as attorney-in-fact for any and all such purposes.
SECTION 12.14. Trustee Not Fiduciary for Holders of Senior
-------------------------------------------
Indebtedness of a Note Guarantor. The Trustee shall not be deemed to owe any
- ---------------------------------
fiduciary duty to the holders of Senior Indebtedness of a Note Guarantor and
shall not be liable to any such holders if it shall mistakenly pay over or
distribute to Holders or the relevant Note Guarantor or any other Person, money
or assets to which any holders of Senior Indebtedness of such Note Guarantor
shall be entitled by virtue of this Article 12 or otherwise.
<PAGE>
76
SECTION 12.15. Reliance by Holders of Senior Indebtedness of a Note
----------------------------------------------------
Guarantor on Subordination Provisions. Each Holder by accepting a Security
- --------------------------------------
acknowledges and agrees that the foregoing subordination provisions are, and are
intended to be, an inducement and a consideration to each holder of any Senior
Indebtedness of a Note Guarantor, whether such Senior Indebtedness was created
or acquired before or after the issuance of the Securities, to acquire and
continue to hold, or to continue to hold, such Senior Indebtedness and such
holder of Senior Indebtedness shall be deemed conclusively to have relied on
such subordination provisions in acquiring and continuing to hold, or in
continuing to hold, such Senior Indebtedness.
SECTION 12.16. Defeasance. The terms of this Article 12 shall not
-----------
apply to payments from money or the proceeds of U.S. Government Obligations held
in trust by the Trustee for the payment of principal of and interest on the
Securities pursuant to the provisions described in Section 8.03.
ARTICLE 13
Miscellaneous
-------------
SECTION 13.01. Trust Indenture Act Controls. If and to the extent
-----------------------------
that any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by, or with another provision (an "incorporated provision")
included in this Indenture by operation of, TIA" 310 to 318, inclusive, such
imposed duties or incorporated provision shall control.
SECTION 13.02. Notices. Any notice or communication shall be in
--------
writing and delivered in person or mailed by first-class mail addressed as
follows:
if to the Company:
c/o USS Holdings, Inc.
Route 522 North
P.O. Box 187
Berkeley Springs, West Virginia 25411
Attention of:
Chief Financial Officer
if to the Trustee:
The Bank of New York
101 Barclay Street, Floor 21 West
Floor 21 West
New York, NY 10286
Telephone: (212) 815-5939
<PAGE>
77
Facsimile: (212) 815-5915
Attention of:
Corporate Trust Administration
The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Holder shall be mailed, first
class mail, to the Holder at the Holder's address as it appears on the
registration books of the Registrar and shall be sufficiently given if so mailed
within the time prescribed.
Failure to mail a notice or communication to a Holder or any defect in
it shall not affect its sufficiency with respect to other Holders. If a notice
or communication is mailed in the manner provided above, it is duly given,
whether or not the addressee receives it.
SECTION 13.03. Communication by Holders with Other Holders. Holders
--------------------------------------------
may communicate pursuant to TIA ' 312(b) with other Holders with respect to
their rights under this Indenture or the Securities. The Company, the Trustee,
the Registrar and anyone else shall have the protection of TIA ' 312(c).
SECTION 13.04. Certificate and Opinion as to Conditions Precedent.
---------------------------------------------------
Upon any request or application by the Company to the Trustee to take or refrain
from taking any action under this Indenture, the Company shall furnish to the
Trustee:
(a) an Officers' Certificate in form reasonably satisfactory to the
Trustee stating that, in the opinion of the signers, all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with; and
(b) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
SECTION 13.05. Statements Required in Certificate or Opinion. Each
----------------------------------------------
certificate or opinion with respect to compliance with a covenant or condition
provided for in this Indenture (other than pursuant to Section 4.09) shall
include:
(a) a statement that the individual making such certificate or opinion
has read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such individual, he has made
such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has
been complied with; and
<PAGE>
78
(d) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
SECTION 13.06. When Securities Disregarded. In determining whether
----------------------------
the Holders of the required principal amount of Securities have concurred in any
direction, waiver or consent, Securities owned by the Company, any Note
Guarantor or by any Person directly or indirectly controlling or controlled by
or under direct or indirect common control with the Company or any Note
Guarantor shall be disregarded and deemed not to be outstanding, except that,
for the purpose of determining whether the Trustee shall be protected in relying
on any such direction, waiver or consent, only Securities which a Responsible
Officer of the Trustee actually knows are so owned shall be so disregarded.
Subject to the foregoing, only Securities outstanding at the time shall be
considered in any such determination.
SECTION 13.07. Rules by Trustee, Paying Agent and Registrar. The
---------------------------------------------
Trustee may make reasonable rules for action by or a meeting of Holders. The
Registrar and the Paying Agent may make reasonable rules for their functions.
SECTION 13.08. Legal Holidays. A "Legal Holiday" is a Saturday, a
---------------
Sunday or other day on which banking institutions are not required by law or
regulation to be open in the State of New York. If a payment date is a Legal
Holiday, payment shall be made on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period. If a regular
record date is a Legal Holiday, the record date shall not be affected.
SECTION 13.09. GOVERNING LAW. THIS INDENTURE AND THE SECURITIES
--------------
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW
TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.
SECTION 13.10. No Recourse Against Others. A director, officer,
---------------------------
employee or stockholder, as such, of the Company or any of the Note Guarantors,
shall not have any liability for any obligations of the Company or any of the
Note Guarantors under the Securities or this Indenture or for any claim based
on, in respect of or by reason of such obligations or their creation. By
accepting a Security, each Holder shall waive and release all such liability.
The waiver and release shall be part of the consideration for the issue of the
Securities.
SECTION 13.11. Successors. All agreements of the Company and each
-----------
Note Guarantor in this Indenture and the Securities shall bind its successors.
All agreements of the Trustee in this Indenture shall bind its successors.
SECTION 13.12. Multiple Originals. The parties may sign any number
-------------------
of copies of this Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement. One signed copy is enough to prove
this Indenture.
<PAGE>
79
SECTION 13.13. Table of Contents; Headings. The table of contents,
----------------------------
cross-reference sheet and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not intended
to be considered a part hereof and shall not modify or restrict any of the terms
or provisions hereof.
<PAGE>
80
IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed as of the date first written above.
BETTER MINERALS & AGGREGATES
COMPANY,
by /s/ John A. Ulizio
---------------------------------------------
Name: John A. Ulizio
Title: Vice President, General Counsel and
Assistant Secretary
U.S. SILICA COMPANY,
by /s/ John A. Ulizio
---------------------------------------------
Name: John A. Ulizio
Title: Senior Vice President, General Counsel
and Assistant Secretary
BETTER MATERIALS CORPORATION,
by /s/ John A. Ulizio
----------------------------------------------
Name: John A. Ulizio
Title: Vice President and Assistant Secretary
GEORGE F. PETTINOS, INC.,
by /s/ John A. Ulizio
----------------------------------------------
Name: John A. Ulizio
Title: Vice President and Secretary
OTTAWA SILICA COMPANY,
by /s/ John A. Ulizio
----------------------------------------------
Name: John A. Ulizio
Title: Secretary
<PAGE>
81
THE FULTON LAND AND TIMBER
COMPANY,
by /s/ John A. Ulizio
----------------------------------------------
Name: John A. Ulizio
Title: Secretary
PENNSYLVANIA GLASS SAND
CORPORATION,
by /s/ John A. Ulizio
----------------------------------------------
Name: John A. Ulizio
Title: Secretary
BUCKS COUNTY CRUSHED STONE COMPANY
by /s/ John A. Ulizio
----------------------------------------------
Name: John A. Ulizio
Title: Vice President and Assistant Secretary
CHIPPEWA FARMS CORPORATION,
by /s/ John A. Ulizio
----------------------------------------------
Name: John A. Ulizio
Title: Vice President and Assistant Secretary
SHORE STONE COMPANY, INC.,
by /s/ John A. Ulizio
----------------------------------------------
Name: John A. Ulizio
Title: Vice President and Assistant Secretary
<PAGE>
82
BMC TRUCKING, INC.,
by /s/ John A. Ulizio
----------------------------------------------
Name: John A. Ulizio
Title: Vice President and Assistant Secretary
ELLEN JAY, INC.,
by /s/ John A. Ulizio
----------------------------------------------
Name: John A. Ulizio
Title: Vice President and Secretary
STONE MATERIALS COMPANY, LLC
by: Better Minerals and Aggregates Company,
as Manager
by /s/ John A. Ulizio
----------------------------------------------
Name: John A. Ulizio
Title: Vice President, General Counsel and
Assistant Secretary
of Better Minerals & Aggregates Company
COMMERCIAL STONE CO., INC.
by /s/ John A. Ulizio
----------------------------------------------
Name: John A. Ulizio
Title: Secretary
<PAGE>
83
COMMERCIAL AGGREGATES
TRANSPORTATON AND SALES, LLC
by: Stone Materials Company, LLC, as Manager
by /s/ John A. Ulizio
----------------------------------------------
Name: John A. Ulizio
Title: Vice President, General Counsel and
Assistant Secretary
of Better Minerals & Aggregates Company,
Manager of Stone Materials Company, LLC, as
Manager
THE BANK OF NEW YORK, as Trustee
by /s/ Mary Beth Lewicki
-------------------------------
Name: Mary Beth Lewicki
Title: Vice President
<PAGE>
APPENDIX A
PROVISIONS RELATING TO INITIAL SECURITIES,
------------------------------------------
PRIVATE EXCHANGE SECURITIES
---------------------------
AND EXCHANGE SECURITIES
-----------------------
1. Definitions
-----------
1.1 Definitions
-----------
For the purposes of this Appendix A the following terms shall have the
meanings indicated below:
"Applicable Procedures" means, with respect to any transfer or
transaction involving a Regulation S Global Security or beneficial interest
therein, the rules and procedures of the Depositary for such Global Security,
Euroclear and Cedel, in each case to the extent applicable to such transaction
and as in effect from time to time.
"Cedel" means Cedel Bank, S.A., or any successor securities clearing
agency.
"Definitive Security" means a certificated Initial Security, Private
Exchange Security or Exchange Security (bearing the Restricted Securities Legend
if the transfer of such Security is restricted by applicable law) that does not
include the Global Securities Legend.
"Depositary" means The Depository Trust Company, its nominees and
their respective successors.
"Euroclear" means the Euroclear Clearance System or any successor
securities clearing agency.
"Global Securities Legend" means the legend set forth under that
caption in Exhibit A to this Indenture.
"IAI" means an institutional "accredited investor" as described in
Rule 501(a)(1), (2), (3) or (7) under the Securities Act.
"Initial Purchasers" means Chase Securities Inc. and BNP Capital
Markets, LLC.
"Private Exchange" means an offer by the Company, pursuant to the
Registration Agreement, to issue and deliver to certain purchasers, in exchange
for the Initial Securities held by such purchasers as part of their initial
distribution, a like aggregate principal amount of Private Exchange Securities.
<PAGE>
2
"Private Exchange Securities" means the Securities of the Company
issued in exchange for Initial Securities pursuant to this Indenture in
connection with the Private Exchange pursuant to the Registration Agreement.
"Purchase Agreement" means the Purchase Agreement dated September 28,
1999, among the Company, the Existing Guarantors (as defined therein) and the
Initial Purchasers, as amended by the Purchase Agreement Amendment dated October
1, 1999, among the Company, the Note Guarantors and the Initial Purchasers.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Registered Exchange Offer" means the offer by the Company, pursuant
to the Registration Agreement, to certain Holders of Initial Securities, to
issue and deliver to such Holders, in exchange for their Initial Securities, a
like aggregate principal amount of Exchange Securities registered under the
Securities Act.
"Registration Agreement" means the Exchange and Registration Rights
Agreement dated October 1, 1999, among the Company, the Note Guarantors and the
Initial Purchasers.
"Regulation S" means Regulation S under the Securities Act.
"Regulation S Securities" means all Initial Securities offered and
sold outside the United States in reliance on Regulation S.
"Restricted Period", with respect to any Securities, means the period
of 40 consecutive days beginning on and including the later of (a) the day on
which such Securities are first offered to persons other than distributors (as
defined in Regulation S under the Securities Act) in reliance on Regulation S,
notice of which day shall be promptly given by the Company to the Trustee, and
(b) the Issue Date with respect to such Securities.
"Restricted Securities Legend" means the legend set forth in Section
2.3(e)(i) herein.
"Rule 501" means Rule 501(a)(1), (2), (3) or (7) under the Securities
Act.
"Rule 144A" means Rule 144A under the Securities Act.
"Rule 144A Securities" means all Initial Securities offered and sold
to QIBs in reliance on Rule 144A.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Custodian" means the custodian with respect to a Global
Security (as appointed by the Depositary) or any successor person thereto, who
shall initially be the Trustee.
<PAGE>
3
"Shelf Registration Statement" means a registration statement filed by
the Company in connection with the offer and sale of Initial Securities pursuant
to the Registration Agreement.
"Transfer Restricted Securities" means Definitive Securities and any
other Securities that bear or are required to bear the Restricted Securities
Legend.
1.2 Other Definitions
-----------------
Term: Defined in Section:
---- ------------------
"Agent Members"....................................... 2.1(c)
"IAI Global Security"................................. 2.1(b)
"Global Security"..................................... 2.1(b)
"Regulation S Global Security"........................ 2.1(b)
"Rule 144A Global Security"........................... 2.1(b)
2. The Securities
--------------
2.1 Form and Dating
---------------
(a) The Initial Securities issued on the date hereof will be (i)
offered and sold by the Company pursuant to the Purchase Agreement and (ii)
resold, initially only to (1) QIBs in reliance on Rule 144A and (2) Persons
other than U.S. Persons (as defined in Regulation S) in reliance on Regulation
S. Such Initial Securities may thereafter be transferred to, among others,
QIBs, purchasers in reliance on Regulation S and, except as set forth below,
IAIs in accordance with Rule 501.
(b) Global Securities. Rule 144A Securities shall be issued
------------------
initially in the form of one or more permanent global Securities in definitive,
fully registered form (collectively, the "Rule 144A Global Security") and
Regulation S Securities shall be issued initially in the form of one or more
global Securities (collectively, the "Regulation S Global Security"), in each
case without interest coupons and bearing the Global Securities Legend and
Restricted Securities Legend, which shall be deposited on behalf of the
purchasers of the Securities represented thereby with the Securities Custodian,
and registered in the name of the Depositary or a nominee of the Depositary,
duly executed by the Company and authenticated by the Trustee as provided in
this Indenture. One or more global securities in definitive, fully registered
form without interest coupons and bearing the Global Securities Legend and the
Restricted Securities Legend (collectively, the "IAI Global Security") shall
also be issued on the Closing Date, deposited with the Securities Custodian, and
registered in the name of the Depositary or a nominee of the Depositary, duly
executed by the Company and authenticated by the Trustee as provided in this
Indenture to accommodate transfers of beneficial interests in the Securities to
IAIs subsequent to the initial distribution. Beneficial ownership interests in
the Regulation S Global Security shall not be exchangeable for interests in the
Rule 144A Global Security, the IAI Global Security or
<PAGE>
4
any other Security without a Restricted Securities Legend until the expiration
of the Restricted Period. The Rule 144A Global Security, the IAI Global Security
and the Regulation S Global Security are each referred to herein as a "Global
Security" and are collectively referred to herein as "Global Securities",
provided, that the term "Global Security" when used in Sections 2.1(b)(third
- --------
paragraph), 2.1(c), 2.3(g)(i), 2.3(h)(i) and 2.4 shall also include any Security
in global form issued in connection with a Registered Exchange Offer or Private
Exchange. The aggregate principal amount of the Global Securities may from time
to time be increased or decreased by adjustments made on the records of the
Trustee and the Depositary or its nominee and on the schedules thereto as
hereinafter provided.
(c) Book-Entry Provisions. This Section 2.1(c) shall apply only to a
----------------------
Global Security deposited with or on behalf of the Depositary.
The Company shall execute and the Trustee shall, in accordance with
this Section 2.1(c) and Section 2.2 and pursuant to an order of the Company
signed by two Officers, authenticate and deliver initially one or more Global
Securities that (i) shall be registered in the name of the Depositary for such
Global Security or Global Securities or the nominee of such Depositary and (ii)
shall be delivered by the Trustee to such Depositary or pursuant to such
Depositary's instructions or held by the Trustee as Securities Custodian.
Members of, or participants in, the Depositary ("Agent Members") shall
have no rights under this Indenture with respect to any Global Security held on
their behalf by the Depositary or by the Trustee as Securities Custodian or
under such Global Security, and the Depositary may be treated by the Company,
the Trustee and any agent of the Company or the Trustee as the absolute owner of
such Global Security for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall prevent the Company, the Trustee or any agent of
the Company or the Trustee from giving effect to any written certification,
proxy or other authorization furnished by the Depositary or impair, as between
the Depositary and its Agent Members, the operation of customary practices of
such Depositary governing the exercise of the rights of a holder of a beneficial
interest in any Global Security.
(d) Definitive Securities. Except as provided in Section 2.3 or 2.4,
----------------------
owners of beneficial interests in Global Securities will not be entitled to
receive physical delivery of certificated Securities.
2.2 Authentication. The Trustee shall authenticate and make available for
---------------
delivery upon a written order of the Company signed by two Officers (a) Initial
Securities for original issue on the date hereof in an aggregate principal
amount of $150,000,000 and (b) the (i) Exchange Securities for issue only in a
Registered Exchange Offer and (ii) Private Exchange Securities for issue only in
the Private Exchange, in the case of each of (i) and (ii) pursuant to the
Registration Agreement and for a like principal amount of Initial Securities
exchanged pursuant thereto. Such order shall specify the amount of the
Securities to be authenticated, the date on which the original issue of
Securities is to be authenticated and whether the Securities are to be Initial
Securities, Exchange Securities or Private Exchange Securities. The aggregate
principal amount
<PAGE>
5
of Securities outstanding at any time may not exceed $150,000,000 except as
provided in Sections 2.07 and 2.08 of this Indenture.
2.3 Transfer and Exchange. (a) Transfer and Exchange of Definitive
---------------------- -----------------------------------
Securities. When Definitive Securities are presented to the Registrar with a
- -----------
request:
(i) to register the transfer of such Definitive Securities; or
(ii) to exchange such Definitive Securities for an equal
principal amount of Definitive Securities of other authorized
denominations, the Registrar shall register the transfer or make the
exchange as requested if its reasonable requirements for such transaction
are met; provided, however, that the Definitive Securities surrendered for
-------- -------
transfer or exchange:
(1) shall be duly endorsed or accompanied by a written
instrument of transfer in form reasonably satisfactory to the Company and
the Registrar, duly executed by the Holder thereof or his attorney duly
authorized in writing; and
(2) in the case of Transfer Restricted Securities, are
accompanied by the following additional information and documents, as
applicable:
(A) if such Definitive Securities are being delivered to
the Registrar by a Holder for registration in the name of such Holder,
without transfer, a certification from such Holder to that effect (in
the form set forth on the reverse side of the Initial Security); or
(B) if such Definitive Securities are being transferred to
the Company, a certification to that effect (in the form set forth on
the reverse side of the Initial Security); or
(C) if such Definitive Securities are being transferred
pursuant to an exemption from registration in accordance with Rule 144
under the Securities Act or in reliance upon another exemption from
the registration requirements of the Securities Act, (x) a
certification to that effect (in the form set forth on the reverse
side of the Initial Security) and (y) if the Company so requests, an
opinion of counsel or other evidence reasonably satisfactory to it as
to the compliance with the restrictions set forth in the legend set
forth in Section 2.3(e)(i).
(b) Restrictions on Transfer of a Definitive Security for a
-------------------------------------------------------
Beneficial Interest in a Global Security. A Definitive Security may not be
- -----------------------------------------
exchanged for a beneficial interest in a Global Security except upon
satisfaction of the requirements set forth below. Upon receipt by the Trustee
of a Definitive Security, duly endorsed or accompanied by a written instrument
of transfer in form reasonably satisfactory to the Company and the Registrar,
together with:
<PAGE>
6
(i) certification (in the form set forth on the reverse side of the
Initial Security) that such Definitive Security is being transferred (1) to
a QIB in accordance with Rule 144A, (2) to an IAI that has furnished to the
Trustee a signed letter substantially in the form of Exhibit D or (3)
outside the United States in an offshore transaction within the meaning of
Regulation S and in compliance with Rule 904 under the Securities Act; and
(ii) written instructions directing the Trustee to make, or to direct
the Securities Custodian to make, an adjustment on its books and records
with respect to such Global Security to reflect an increase in the
aggregate principal amount of the Securities represented by the Global
Security, such instructions to contain information regarding the Depositary
account to be credited with such increase, then the Trustee shall cancel
such Definitive Security and cause, or direct the Securities Custodian to
cause, in accordance with the standing instructions and procedures existing
between the Depositary and the Securities Custodian, the aggregate
principal amount of Securities represented by the Global Security to be
increased by the aggregate principal amount of the Definitive Security to
be exchanged and shall credit or cause to be credited to the account of the
Person specified in such instructions a beneficial interest in the Global
Security equal to the principal amount of the Definitive Security so
canceled. If no Global Securities are then outstanding and the Global
Security has not been previously exchanged for certificated securities
pursuant to Section 2.4, the Company shall issue and the Trustee shall
authenticate, upon written order of the Company in the form of an Officers'
Certificate, a new Global Security in the appropriate principal amount.
(c) Transfer and Exchange of Global Securities. (i) The transfer
-------------------------------------------
and exchange of Global Securities or beneficial interests therein shall be
effected through the Depositary, in accordance with this Indenture (including
applicable restrictions on transfer set forth herein, if any) and the procedures
of the Depositary therefor. A transferor of a beneficial interest in a Global
Security shall deliver a written order given in accordance with the Depositary's
procedures containing information regarding the participant account of the
Depositary to be credited with a beneficial interest in such Global Security or
another Global Security and such account shall be credited in accordance with
such order with a beneficial interest in the applicable Global Security and the
account of the Person making the transfer shall be debited by an amount equal to
the beneficial interest in the Global Security being transferred. Transfers by
an owner of a beneficial interest in the Rule 144A Global Security or the IAI
Global Security to a transferee who takes delivery of such interest through the
Regulation S Global Security, whether before or after the expiration of the
Restricted Period, shall be made only upon receipt by the Trustee of a
certification in the form provided on the reverse of the Initial Securities from
the transferor to the effect that such transfer is being made in accordance with
Regulation S or (if available) Rule 144 under the Securities Act and that, if
such transfer is being made prior to the expiration of the Restricted Period,
the interest transferred shall be held immediately thereafter through Euroclear
or Cedel. In the case of a transfer of a beneficial interest in either the
Regulation S Global Security or the Rule 144A Global Security for an interest in
the IAI Global Security, the transferee must furnish a signed letter
substantially in the form of Exhibit D to the Trustee.
<PAGE>
7
(ii) If the proposed transfer is a transfer of a beneficial interest
in one Global Security to a beneficial interest in another Global Security,
the Registrar shall reflect on its books and records the date and an
increase in the principal amount of the Global Security to which such
interest is being transferred in an amount equal to the principal amount of
the interest to be so transferred, and the Registrar shall reflect on its
books and records the date and a corresponding decrease in the principal
amount of Global Security from which such interest is being transferred.
(iii) Notwithstanding any other provisions of this Appendix (other
than the provisions set forth in Section 2.4), a Global Security may not be
transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
(iv) In the event that a Global Security is exchanged for Definitive
Securities pursuant to Section 2.4 prior to the consummation of the
Registered Exchange Offer or the effectiveness of the Shelf Registration
Statement with respect to such Securities, such Securities may be exchanged
only in accordance with such procedures as are substantially consistent
with the provisions of this Section 2.3 (including the certification
requirements set forth on the reverse of the Initial Securities intended to
ensure that such transfers comply with Rule 144A, Regulation S or such
other applicable exemption from registration under the Securities Act, as
the case may be) and such other procedures as may from time to time be
adopted by the Company.
(d) Restrictions on Transfer of Regulation S Global Security. (i)
---------------------------------------------------------
Prior to the expiration of the Restricted Period, interests in the Regulation S
Global Security may only be held through Euroclear or Cedel. During the
Restricted Period, beneficial ownership interests in the Regulation S Global
Security may only be sold, pledged or transferred through Euroclear or Cedel in
accordance with the Applicable Procedures and only (1) to the Company, (2) so
long as such security is eligible for resale pursuant to Rule 144A, to a person
whom the selling holder reasonably believes is a QIB that purchases for its own
account or for the account of a QIB to whom notice is given that the resale,
pledge or transfer is being made in reliance on Rule 144A, (3) in an offshore
transaction in accordance with Regulation S, (4) pursuant to an exemption from
registration under the Securities Act provided by Rule 144 (if applicable) under
the Securities Act, (5) to an IAI purchasing for its own account, or for the
account of such an IAI, in a minimum principal amount of Securities of $250,000
or (6) pursuant to an effective registration statement under the Securities Act,
in each case in accordance with any applicable securities laws of any state of
the United States. Prior to the expiration of the Restricted Period, transfers
by an owner of a beneficial interest in the Regulation S Global Security to a
transferee who takes delivery of such interest through the Rule 144A Global
Security or the IAI Global Security shall be made only in accordance with
Applicable Procedures and upon receipt by the Trustee of a written certification
from the transferor of the beneficial interest in the form provided on the
reverse of the Initial Security to the effect that such transfer is being made
to (1) a QIB within the meaning of Rule 144A in a transaction meeting the
requirements of Rule 144A or (2) an IAI
<PAGE>
8
purchasing for its own account, or for the account of such an IAI, in a minimum
principal amount of the Securities of $250,000. Such written certification shall
no longer be required after the expiration of the Restricted Period. In the case
of a transfer of a beneficial interest in the Regulation S Global Security for
an interest in the IAI Global Security, the transferee must furnish a signed
letter substantially in the form of Exhibit D to the Trustee.
(ii) Upon the expiration of the Restricted Period, beneficial
ownership interests in the Regulation S Global Security shall be
transferable in accordance with applicable law and the other terms of this
Indenture.
(e) Legend.
------
(i) Except as permitted by the following paragraphs (ii), (iii) or
(iv), each Security certificate evidencing the Global Securities and the
Definitive Securities (and all Securities issued in exchange therefor or in
substitution thereof) shall bear a legend in substantially the following
form (each defined term in the legend being defined as such for purposes of
the legend only):
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR
OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
SUCH REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER,
SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR
OF SUCH SECURITY), ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION
STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C)
FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A
UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES
IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES
FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER
TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES
WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN
"ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE
<PAGE>
9
501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS AN
INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING THE SECURITY FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN
EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE SECURITIES OF $250,000, FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN
CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (F)
PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE
TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO
CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS
LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE
RESTRICTION TERMINATION DATE."
Each Definitive Security shall bear the following additional legend:
"IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR
AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER
AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE
FOREGOING RESTRICTIONS."
(ii) Upon any sale or transfer of a Transfer Restricted Security that
is a Definitive Security, the Registrar shall permit the Holder thereof to
exchange such Transfer Restricted Security for a Definitive Security that
does not bear the legends set forth above and rescind any restriction on
the transfer of such Transfer Restricted Security if the Holder certifies
in writing to the Registrar that its request for such exchange was made in
reliance on Rule 144 (such certification to be in the form set forth on the
reverse of the Initial Security).
(iii) After a transfer of any Initial Securities or Private Exchange
Securities during the period of the effectiveness of a Shelf Registration
Statement with respect to such Initial Securities or Private Exchange
Securities, as the case may be, all requirements pertaining to the
Restricted Securities Legend on such Initial Securities or such Private
Exchange Securities shall cease to apply and the requirements that any such
Initial Securities or such Private Exchange Securities be issued in global
form shall continue to apply.
(iv) Upon the consummation of a Registered Exchange Offer with
respect to the Initial Securities pursuant to which Holders of such Initial
Securities are offered Exchange Securities in exchange for their Initial
Securities, all requirements pertaining to Initial Securities that Initial
Securities be issued in global form shall continue to apply, and Exchange
Securities in global form without the Restricted Securities Legend shall
be
<PAGE>
10
available to Holders that exchange such Initial Securities in such
Registered Exchange Offer.
(v) Upon the consummation of a Private Exchange with respect to the
Initial Securities pursuant to which Holders of such Initial Securities are
offered Private Exchange Securities in exchange for their Initial
Securities, all requirements pertaining to such Initial Securities that
Initial Securities be issued in global form shall continue to apply, and
Private Exchange Securities in global form with the Restricted Securities
Legend shall be available to Holders that exchange such Initial Securities
in such Private Exchange.
(vi) Upon a sale or transfer after the expiration of the Restricted
Period of any Initial Security acquired pursuant to Regulation S, all
requirements that such Initial Security bear the Restricted Securities
Legend shall cease to apply and the requirements requiring any such Initial
Security be issued in global form shall continue to apply.
(f) Cancelation or Adjustment of Global Security. At such time as
---------------------------------------------
all beneficial interests in a Global Security have either been exchanged for
Definitive Securities, transferred, redeemed, repurchased or canceled, such
Global Security shall be returned by the Depositary to the Trustee for
cancelation or retained and canceled by the Trustee. At any time prior to such
cancelation, if any beneficial interest in a Global Security is exchanged for
Definitive Securities, transferred in exchange for an interest in another Global
Security, redeemed, repurchased or canceled, the principal amount of Securities
represented by such Global Security shall be reduced and an adjustment shall be
made on the books and records of the Trustee (if it is then the Securities
Custodian for such Global Security) with respect to such Global Security, by the
Trustee or the Securities Custodian, to reflect such reduction.
(g) Obligations with Respect to Transfers and Exchanges of
------------------------------------------------------
Securities.
- -----------
(i) To permit registrations of transfers and exchanges, the Company
shall execute and the Trustee shall authenticate, Definitive Securities and
Global Securities at the Registrar's request.
(ii) No service charge shall be made for any registration of transfer
or exchange, but the Company may require payment of a sum sufficient to
cover any transfer tax, assessments, or similar governmental charge payable
in connection therewith (other than any such transfer taxes, assessments or
similar governmental charge payable upon exchanges pursuant to Sections
2.06, 3.06, 4.06, 4.08 and 9.05 of this Indenture).
(iii) Prior to the due presentation for registration of transfer of
any Security, the Company, the Trustee, the Paying Agent or the Registrar
may deem and treat the person in whose name a Security is registered as the
absolute owner of such Security for the purpose of receiving payment of
principal of and interest on such Security and for all other purposes
whatsoever, whether or not such Security is overdue, and none of the
<PAGE>
11
Company, the Trustee, the Paying Agent or the Registrar shall be affected
by notice to the contrary.
(iv) All Securities issued upon any transfer or exchange pursuant to
the terms of this Indenture shall evidence the same debt and shall be
entitled to the same benefits under this Indenture as the Securities
surrendered upon such transfer or exchange.
(h) No Obligation of the Trustee.
-----------------------------
(i) The Trustee shall have no responsibility or obligation to any
beneficial owner of a Global Security, a member of, or a participant in the
Depositary or any other Person with respect to the accuracy of the records
of the Depositary or its nominee or of any participant or member thereof,
with respect to any ownership interest in the Securities or with respect to
the delivery to any participant, member, beneficial owner or other Person
(other than the Depositary) of any notice (including any notice of
redemption or repurchase) or the payment of any amount, under or with
respect to such Securities. All notices and communications to be given to
the Holders and all payments to be made to Holders under the Securities
shall be given or made only to the registered Holders (which shall be the
Depositary or its nominee in the case of a Global Security). The rights of
beneficial owners in any Global Security shall be exercised only through
the Depositary subject to the applicable rules and procedures of the
Depositary. The Trustee may rely and shall be fully protected in relying
upon information furnished by the Depositary with respect to its members,
participants and any beneficial owners.
(ii) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer
imposed under this Indenture or under applicable law with respect to any
transfer of any interest in any Security (including any transfers between
or among Depositary participants, members or beneficial owners in any
Global Security) other than to require delivery of such certificates and
other documentation or evidence as are expressly required by, and to do so
if and when expressly required by, the terms of this Indenture, and to
examine the same to determine substantial compliance as to form with the
express requirements hereof.
2.4 Definitive Securities
---------------------
(a) A Global Security deposited with the Depositary or with the
Trustee as Securities Custodian pursuant to Section 2.1 or issued in connection
with a Registered Exchange Offer or Private Exchange shall be transferred to the
beneficial owners thereof in the form of Definitive Securities in an aggregate
principal amount equal to the principal amount of such Global Security, in
exchange for such Global Security, only if such transfer complies with Section
2.3 and (i) the Depositary notifies the Company that it is unwilling or unable
to continue as a Depositary for such Global Security or if at any time the
Depositary ceases to be a "clearing agency" registered under the Exchange Act,
and a successor depositary is not appointed by the Company within 90 days of
such notice or after the Company becomes aware of such cessation, or (ii) an
Event of Default has occurred and is continuing or (iii) the Company, in its
sole
<PAGE>
12
discretion, notifies the Trustee in writing that it elects to cause the issuance
of certificated Securities under this Indenture.
(b) Any Global Security that is transferable to the beneficial owners
thereof pursuant to this Section 2.4 shall be surrendered by the Depositary to
the Trustee, to be so transferred, in whole or from time to time in part,
without charge, and the Trustee shall authenticate and deliver, upon such
transfer of each portion of such Global Security, an equal aggregate principal
amount of Definitive Securities of authorized denominations. Any portion of a
Global Security transferred pursuant to this Section shall be executed,
authenticated and delivered only in denominations of $1,000 and any integral
multiple thereof and registered in such names as the Depositary shall direct.
Any certificated Initial Security in the form of a Definitive Security delivered
in exchange for an interest in the Global Security shall, except as otherwise
provided by Section 2.3(e), bear the Restricted Securities Legend.
(c) Subject to the provisions of Section 2.4(b), the registered
Holder of a Global Security may grant proxies and otherwise authorize any
Person, including Agent Members and Persons that may hold interests through
Agent Members, to take any action which a Holder is entitled to take under this
Indenture or the Securities.
(d) In the event of the occurrence of any of the events specified in
Section 2.4(a)(i), (ii) or (iii), the Company will promptly make available to
the Trustee a reasonable supply of Definitive Securities in fully registered
form without interest coupons.
<PAGE>
EXHIBIT A
[FORM OF FACE OF INITIAL SECURITY]
[Global Securities Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW
YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO DTC, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL
BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.
[Restricted Securities Legend]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR
OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER,
SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF
SUCH SECURITY), ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION
STATEMENT THAT
<PAGE>
2
HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE
SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES
ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS
AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION
S UNDER THE SECURITIES ACT, (E) TO AN "ACCREDITED INVESTOR" WITHIN THE MEANING
OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS AN
INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT OR
FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A
MINIMUM PRINCIPAL AMOUNT OF THE SECURITIES OF $250,000, FOR INVESTMENT PURPOSES
AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION
IN VIOLATION OF THE SECURITIES ACT OR (F) PURSUANT TO ANY OTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO
THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF
COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM.
THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE
RESTRICTION TERMINATION DATE.
Each Definitive Security shall bear the following additional legend:
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND
TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT
MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING
RESTRICTIONS.
<PAGE>
No. $__________
13% Senior Subordinated Note due 2009
CUSIP No. ______
[ISIN No. _______]
BETTER MINERALS & AGGREGATES COMPANY, a Delaware corporation, promises
to pay to [Cede & Co.], or registered assigns, the principal sum [of Dollars]
[listed on the Schedule of Increases or Decreases in Global Security attached
hereto] on [ ], [ ].
Interest Payment Dates: March 15 and September 15.
Record Dates: March 1 and September 1.
<PAGE>
2
Additional provisions of this Security are set forth on the other side
of this Security.
IN WITNESS WHEREOF, the parties have caused this instrument to be duly
executed.
BETTER MINERALS & AGGREGATES COMPANY,
by
_________________________________
Name:
Title:
Dated:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
THE BANK OF NEW YORK,
as Trustee, certifies
that this is one of the
Securities referred to in the
within-mentioned Indenture.
By:___________________________
Authorized Signatory
* If the Security is to be issued in global form, add the Global Securities
Legend and the attachment from Exhibit A captioned "TO BE ATTACHED TO GLOBAL
SECURITIES B SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY".
<PAGE>
[FORM OF REVERSE SIDE OF INITIAL SECURITY
AND PRIVATE EXCHANGE SECURITY]
13% Senior Subordinated Note due 2009
1. Interest
--------
(a) BETTER MINERALS & AGGREGATES COMPANY, a Delaware corporation
(such corporation, and its successors and assigns under the Indenture
hereinafter referred to, being herein called the "Company"), promises to pay
interest on the principal amount of this Security at the rate per annum shown
above. The Company shall pay interest semiannually on March 15 and September 15
of each year. Interest on the Securities shall accrue from the most recent date
to which interest has been paid or duly provided for or, if no interest has been
paid or duly provided for, from October 1, 1999 until the principal hereof is
due. Interest shall be computed on the basis of a 360-day year of twelve 30-day
months. The Company shall pay interest on overdue principal at the rate borne by
the Securities plus 1% per annum, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
(b) Liquidated Damages. The holder of this Security is entitled to
------------------
the benefits of an Exchange and Registration Rights Agreement, dated as of
October 1, 1999, among the Company, U.S. SILICA COMPANY, BETTER MATERIALS
CORPORATION, GEORGE F. PETTINOS, INC., OTTAWA SILICA COMPANY, THE FULTON LAND
AND TIMBER COMPANY, PENNSYLVANIA GLASS SAND CORPORATION, BUCKS COUNTY CRUSHED
STONE COMPANY, CHIPPEWA FARMS CORPORATION, SHORE STONE COMPANY, INC., BMC
TRUCKING, INC., ELLEN JAY, INC., STONE MATERIALS COMPANY, LLC, COMMERCIAL STONE
CO., INC. and COMMERCIAL AGGREGATES TRANSPORTATION AND SALES, LLC (the "Note
Guarantors") and the Initial Purchasers named therein (the "Registration
Agreement"). Capitalized terms used in this paragraph (b) but not defined
herein have the meanings assigned to them in the Registration Agreement. If (i)
the Shelf Registration Statement or Exchange Offer Registration Statement, as
applicable under the Registration Agreement, is not filed with the Commission on
or prior to 135 days after the Issue Date, (ii) the Exchange Offer Registration
Statement or the Shelf Registration Statement, as the case may be, is not
declared effective within 195 days after the Issue Date, (iii) the Registered
Exchange Offer is not consummated on or prior to 240 days after the Issue Date,
or (iv) the Shelf Registration Statement is filed and declared effective within
195 days after the Issue Date but shall thereafter cease to be effective (at any
time that the Company is obligated to maintain the effectiveness thereof)
without being succeeded within 45 days by an additional Registration Statement
filed and declared effective (each such event referred to in clauses (i) through
(iv), a "Registration Default"), the Company shall pay liquidated damages to
each holder of Transfer Restricted Securities, during the period of such
Registration Default, in an amount equal to $0.192 per week per $1,000 principal
amount of the Securities constituting Transfer Restricted Securities held by
such holder until the applicable Registration Statement is filed or declared
effective, the Registered Exchange Offer is consummated or the Shelf
Registration Statement again becomes effective, as the case may be. All accrued
liquidated damages shall be paid to
<PAGE>
2
holders in the same manner as interest payments on the Securities on semi-annual
payment dates which correspond to interest payment dates for the Securities.
Following the cure of all Registration Defaults, the accrual of liquidated
damages shall cease. The Trustee shall have no responsibility with respect to
the determination of the amount of any such liquidated damages. For purposes of
the foregoing, "Transfer Restricted Securities" means (i) each Initial Security
until the date on which such Initial Security has been exchanged for a freely
transferable Exchange Security in the Registered Exchange Offer, (ii) each
Initial Security or Private Exchange Security until the date on which such
Initial Security or Private Exchange Security has been effectively registered
under the Securities Act and disposed of in accordance with a Shelf Registration
Statement or (iii) each Initial Security or Private Exchange Security until the
date on which such Initial Security or Private Exchange Security is distributed
to the public pursuant to Rule 144 under the Securities Act or is saleable
pursuant to Rule 144(k) under the Securities Act.
2. Method of Payment
-----------------
The Company shall pay interest on the Securities (except defaulted
interest) to the Persons who are registered holders of Securities at the close
of business on the March 1 or September 1 next preceding the interest payment
date even if Securities are canceled after the record date and on or before the
interest payment date. Holders must surrender Securities to a Paying Agent to
collect principal payments. The Company shall pay principal, premium,
liquidated damages, if any, and interest in money of the United States of
America that at the time of payment is legal tender for payment of public and
private debts. Payments in respect of the Securities represented by a Global
Security (including principal, premium, liquidated damages, if any, and
interest) shall be made by wire transfer of immediately available funds to the
accounts specified by The Depository Trust Company. The Company will make all
payments in respect of a certificated Security (including principal, premium and
interest), and the Securities may be exchanged or transferred, at the office or
agency of the Company in the Borough of Manhattan, The City of New York (which
initially shall be the Corporate Trust Office of the Trustee, at 101 Barclay
Street, New York, New York 10286), except that, at the option of the Company,
payment of interest may be made by check mailed directly to Holders at their
registered addresses; provided, however, that payments on the Securities may
-------- -------
also be made, in the case of a Holder of at least $1,000,000 aggregate principal
amount of Securities, by wire transfer to a U.S. dollar account maintained by
the payee with a bank in the United States if such Holder elects payment by wire
transfer by giving written notice to the Trustee or the Paying Agent to such
effect designating such account no later than 30 days immediately preceding the
relevant due date for payment (or such other date as the Trustee may accept in
its discretion).
3. Paying Agent and Registrar
--------------------------
Initially, THE BANK OF NEW YORK, a New York banking corporation (the
"Trustee"), will act as Paying Agent and Registrar. The Company may appoint and
change any Paying Agent, Registrar or co-registrar without notice. The Company
or any of its domestically incorporated Wholly Owned Subsidiaries may act as
Paying Agent, Registrar or co-registrar.
<PAGE>
3
4. Indenture
---------
The Company issued the Securities under an Indenture dated as of
October 1, 1999 (the "Indenture"), among the Company, the Note Guarantors and
the Trustee. The terms of the Securities include those stated in the Indenture
and those made part of the Indenture by reference to the Trust Indenture Act of
1939 (15 U.S.C. " 77aaa-77bbbb) as in effect on the date of the Indenture (the
------
"TIA"). Terms defined in the Indenture and not defined herein have the meanings
ascribed thereto in the Indenture. The Securities are subject to all terms and
provisions of the Indenture, and Holders (as defined in the Indenture) are
referred to the Indenture and the TIA for a statement of such terms and
provisions.
The Securities are senior subordinated unsecured obligations of the
Company limited to $150,000,000 aggregate principal amount at any one time
outstanding (subject to Section 2.07 of the Indenture). This Security is one of
the [Initial] [Private Exchange] Securities referred to in the Indenture issued
in an aggregate principal amount of $150,000,000. The Securities include the
Initial Securities and any Exchange Securities and Private Exchange Securities
issued in exchange for Initial Securities. The Initial Securities, the Exchange
Securities and the Private Exchange Securities are treated as a single class of
securities under the Indenture. The Indenture imposes certain limitations on
the ability of the Company and its Restricted Subsidiaries to, among other
things, make certain Investments and other Restricted Payments, pay dividends
and other distributions, incur Indebtedness, enter into consensual restrictions
upon the payment of certain dividends and distributions by such Restricted
Subsidiaries, issue or sell shares of capital stock of such Restricted
Subsidiaries, enter into or permit certain transactions with Affiliates, and
make asset sales. The Indenture also imposes limitations on the ability of the
Company to consolidate or merge with or into any other Person or convey,
transfer or lease all or substantially all of the property of the Company.
To guarantee the due and punctual payment of the principal and
interest on the Securities and all other amounts payable by the Company under
the Indenture and the Securities when and as the same shall be due and payable,
whether at maturity, by acceleration or otherwise, according to the terms of the
Securities and the Indenture, the Note Guarantors have jointly and severally
unconditionally guaranteed the Guaranteed Obligations on a senior subordinated
basis pursuant to the terms of the Indenture.
5. Optional Redemption
-------------------
Except as set forth in the following paragraph, the Securities shall
not be redeemable at the option of the Company prior to September 15, 2004.
Thereafter, the Securities shall be redeemable at the option of the Company, in
whole or in part, on not less than 30 nor more than 60 days prior notice, at the
following redemption prices (expressed as percentages of principal amount), plus
accrued and unpaid interest and liquidated damages, if any, to the redemption
date (subject to the right of holders of record on the relevant record date to
receive interest due on the relevant interest payment date), if redeemed during
the 12-month period commencing on September 15 of the years set forth below:
<PAGE>
4
Year Redemption
Price
--------------------------------------------------------
2004 106.500%
2005 104.333%
2006 102.167%
2007 and thereafter 100.000%
In addition, prior to September 15, 2002, the Company may redeem up to
a maximum of 35% of the original aggregate principal amount of the Securities
with the Net Cash Proceeds of one or more Public Equity Offerings (i) by the
Company or (ii) by Parent or Holdings to the extent the Net Cash Proceeds
thereof are contributed to the Company or used to purchase Capital Stock (other
than Disqualified Stock) of the Company from the Company following which there
is a Public Market, at a redemption price equal to 113% of the principal amount
thereof, plus accrued and unpaid interest and liquidated damages thereon, if
any, to the redemption date (subject to the right of holders of record on the
relevant record date to receive interest due on the relevant interest payment
date); provided, however, that after giving effect to any such redemption, at
-------- -------
least 65% of the original aggregate principal amount of the Securities remains
outstanding. Any such redemption shall be made within 90 days of such Public
Equity Offering upon not less than 30 nor more than 60 days notice mailed to
each holder of Securities being redeemed and otherwise in accordance with the
procedures set forth in the Indenture.
6. Sinking Fund
------------
The Securities are not subject to any sinking fund.
7. Notice of Redemption
--------------------
Notice of redemption will be mailed by first-class mail at least 30
days but not more than 60 days before the redemption date to each Holder of
Securities to be redeemed at his or her registered address. Securities in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000. If money sufficient to pay the redemption price of and
accrued and unpaid interest and liquidated damages, if any, on all Securities
(or portions thereof) to be redeemed on the redemption date is deposited with
the Paying Agent on or before the redemption date and certain other conditions
are satisfied, on and after such date interest ceases to accrue on such
Securities (or such portions thereof) called for redemption.
8. Repurchase of Securities at the Option of Holders upon Change of Control
------------------------------------------------------------------------
Upon a Change of Control, any Holder of Securities will have the
right, subject to certain conditions specified in the Indenture, to cause the
Company to repurchase all or any part of the Securities of such Holder at a
purchase price equal to 101% of the principal amount of the Securities to be
repurchased plus accrued and unpaid interest and liquidated damages, if any, to
<PAGE>
5
the date of repurchase (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date that is on or prior to the date of purchase) as provided in, and subject to
the terms of, the Indenture.
In accordance with Section 4.06 of the Indenture, the Company will be
required to offer to purchase Securities upon the occurrence of certain events.
9. Subordination
-------------
The Securities are subordinated to Senior Indebtedness, as defined in
the Indenture. To the extent provided in the Indenture, Senior Indebtedness
must be paid before the Securities may be paid. The Company and each Note
Guarantor agrees, and each Holder by accepting a Security agrees, to the
subordination provisions contained in the Indenture and authorizes the Trustee
to give it effect and appoints the Trustee as attorney-in-fact for such purpose.
10. Denominations; Transfer; Exchange
---------------------------------
The Securities are in registered form without coupons in denominations
of $1,000 and whole multiples of $1,000. A Holder may transfer or exchange
Securities in accordance with the Indenture. Upon any transfer or exchange, the
Registrar and the Trustee may require a Holder, among other things, to furnish
appropriate endorsements or transfer documents and to pay any taxes required by
law or permitted by the Indenture. The Registrar need not register the transfer
of or exchange any Securities selected for redemption (except, in the case of a
Security to be redeemed in part, the portion of the Security not to be redeemed)
or to transfer or exchange any Securities for a period of 15 days prior to a
selection of Securities to be redeemed.
11. Persons Deemed Owners
---------------------
Except as provided in paragraph 2 hereof, the registered Holder of
this Security may be treated as the owner of it for all purposes.
12. Unclaimed Money
---------------
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee or Paying Agent shall pay the money back to the
Company at its written request unless an abandoned property law designates
another Person. After any such payment, Holders entitled to the money must look
only to the Company and not to the Trustee for payment.
13. Discharge and Defeasance
------------------------
Subject to certain conditions, the Company at any time may terminate
some of or all its obligations under the Securities and the Indenture if the
Company deposits with the
<PAGE>
6
Trustee money or U.S. Government Obligations for the payment of principal and
interest on the Securities to redemption or maturity, as the case may be.
14. Amendment, Waiver
-----------------
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended without prior notice to any Holder
but with the written consent of the Holders of at least a majority in aggregate
principal amount of the outstanding Securities and (ii) any default may be
waived with the written consent of the Holders of at least a majority in
principal amount of the outstanding Securities. Subject to certain exceptions
set forth in the Indenture, without the consent of any Holder of Securities, the
Company and the Trustee may amend the Indenture or the Securities (i) to cure
any ambiguity, omission, defect or inconsistency; (ii) to comply with Article 5
of the Indenture; (iii) to provide for uncertificated Securities in addition to
or in place of certificated Securities; (iv) to add Note Guarantees with respect
to the Securities; (v) to secure the Securities; (vi) to add additional
covenants or to surrender rights and powers conferred on the Company; (vii) to
comply with the requirements of the SEC in order to effect or maintain the
qualification of the Indenture under the TIA; (viii) to make any change that
does not adversely affect the rights of any Holder; (ix) to make any change in
the subordination provisions of the Indenture that would limit or terminate the
benefits available to any holder of Senior Indebtedness of the Company (or any
representative thereof) under such subordination provisions; or (x) to provide
for the issuance of the Exchange Securities or Private Exchange Securities.
15. Defaults and Remedies
---------------------
If an Event of Default occurs (other than an Event of Default relating
to certain events of bankruptcy, insolvency or reorganization of the Company)
and is continuing, the Trustee or the Holders of at least 25% in principal
amount of the outstanding Securities may declare the principal of and accrued
but unpaid interest on all the Securities to be due and payable. If an Event of
Default relating to certain events of bankruptcy, insolvency or reorganization
of the Company occurs, the principal of and interest on all the Securities shall
become immediately due and payable without any declaration or other act on the
part of the Trustee or any Holders. Under certain circumstances, the Holders of
a majority in principal amount of the outstanding Securities may rescind any
such acceleration with respect to the Securities and its consequences.
If an Event of Default occurs and is continuing, the Trustee shall be
under no obligation to exercise any of the rights or powers under the Indenture
at the request or direction of any of the Holders unless such Holders have
offered to a Responsible Officer of the Trustee reasonable indemnity or security
reasonably satisfactory to the Trustee against any loss, liability or expense
and certain other conditions are complied with. Except to enforce the right to
receive payment of principal, premium (if any) or interest when due, no Holder
may pursue any remedy with respect to the Indenture or the Securities unless (i)
such Holder has previously given the Trustee notice that an Event of Default is
continuing, (ii) Holders of at least 25% in principal
<PAGE>
7
amount of the outstanding Securities have requested the Trustee in writing to
pursue the remedy, (iii) such Holders have offered the Trustee reasonable
security or indemnity reasonably satisfactory to the Trustee against any loss,
liability or expense, (iv) the Trustee has not complied with such request within
60 days after the receipt of the request and the offer of security or indemnity
and (v) the Holders of a majority in principal amount of the outstanding
Securities have not given the Trustee a direction inconsistent with such request
within such 60-day period. Subject to certain restrictions, the Holders of a
majority in principal amount of the outstanding Securities are given the right
to direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or of exercising any trust or power conferred on the
Trustee. The Trustee, however, may refuse to follow any direction that conflicts
with law or the Indenture or that the Trustee determines is unduly prejudicial
to the rights of any other Holder or that would involve the Trustee in personal
liability. Prior to taking any action under the Indenture, the Trustee shall be
entitled to indemnification satisfactory to it in its sole discretion against
all losses and expenses caused by taking or not taking such action.
16. Trustee Dealings with the Company
---------------------------------
Subject to certain limitations imposed by the TIA, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its Affiliates and may otherwise deal with the Company
or its Affiliates with the same rights it would have if it were not Trustee.
17. No Recourse Against Others
--------------------------
A director, officer, employee or stockholder, as such, of the Company
or any Note Guarantor shall not have any liability for any obligations of the
Company under the Securities or the Indenture or for any claim based on, in
respect of or by reason of such obligations or their creation. By accepting a
Security, each Holder waives and releases all such liability. The waiver and
release are part of the consideration for the issue of the Securities.
18. Authentication
--------------
This Security shall not be valid until an authorized signatory of the
Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
19. Abbreviations
-------------
Customary abbreviations may be used in the name of a Holder or an
assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
<PAGE>
8
20. Governing Law
-------------
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
21. CUSIP and ISIN Numbers
----------------------
The Company has caused CUSIP [and ISIN] numbers to be printed on the
Securities and has directed the Trustee to use CUSIP [and ISIN] numbers in
notices of redemption as a convenience to Holders. No representation is made as
to the accuracy of such numbers either as printed on the Securities or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Holder of Securities upon written
request and without charge to the Holder a copy of the Indenture which has in it
the text of this Security.
<PAGE>
9
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this Security on the books of the
Company. The agent may substitute another to act for him.
____________________________________________________________
Date: ________________ Your Signature: _____________________
____________________________________________________________
Sign exactly as your name appears on the other side of this Security.
<PAGE>
10
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER
RESTRICTED SECURITIES
This certificate relates to $_________ principal amount of Securities held in
(check applicable space) ____ book-entry or _____ definitive form by the
undersigned.
The undersigned (check one box below):
[_] has requested the Trustee by written order to deliver in exchange for its
beneficial interest in the Global Security held by the Depositary a
Security or Securities in definitive, registered form of authorized
denominations and an aggregate principal amount equal to its beneficial
interest in such Global Security (or the portion thereof indicated above);
[_] has requested the Trustee by written order to exchange or register the
transfer of a Security or Securities.
In connection with any transfer of any of the Securities evidenced by this
certificate occurring prior to the expiration of the period referred to in Rule
144(k) under the Securities Act, the undersigned confirms that such Securities
are being transferred in accordance with its terms:
CHECK ONE BOX BELOW
(1) [_] to the Company; or
(2) [_] to the Registrar for registration in the name of the Holder,
without transfer; or
(3) [_] pursuant to an effective registration statement under the
Securities Act of 1933; or
(4) [_] inside the United States to a "qualified institutional buyer" (as
defined in Rule 144A under the Securities Act of 1933) that
purchases for its own account or for the account of a qualified
institutional buyer to whom notice is given that such transfer is
being made in reliance on Rule 144A, in each case pursuant to and
in compliance with Rule 144A under the Securities Act of 1933; or
(5) [_] outside the United States in an offshore transaction within the
meaning of Regulation S under the Securities Act in compliance
with Rule 904 under the Securities Act of 1933 and such Security
shall be held immediately after the transfer through Euroclear
and Cedel until the expiration of the Restricted Period (as
defined in the Indenture); or
<PAGE>
11
(6) [_] to an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933) that
has furnished to the Trustee a signed letter containing certain
representations and agreements; or
(7) [_] pursuant to another available exemption from registration
provided by Rule 144 under the Securities Act of 1933.
Unless one of the boxes is checked, the Trustee will refuse to register any
of the Securities evidenced by this certificate in the name of any Person
other than the registered holder thereof; provided, however, that if box
-------- -------
(5), (6) or (7) is checked, the Trustee may require, prior to registering
any such transfer of the Securities, such legal opinions, certifications
and other information as the Company has reasonably requested to confirm
that such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities
Act of 1933.
________________________
Your Signature
Signature Guarantee:
Date: __________________________ __________________________
Signature must be guaranteed Signature of Signature
by a participant in a Guarantee
recognized signature guaranty
medallion program or other
signature guarantor acceptable
to the Trustee
____________________________________________________________
TO BE COMPLETED BY PURCHASER IF (4) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this
Security for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, and is aware that the sale to it is being made in reliance on Rule 144A
and acknowledges that it has received such information regarding the Company as
<PAGE>
12
the undersigned has requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the transferor is relying
upon the undersigned's foregoing representations in order to claim the exemption
from registration provided by Rule 144A.
Dated: ____________________ ______________________________
NOTICE: To be executed by
an executive officer
<PAGE>
13
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The initial principal amount of this Global Security is $[ ].
The following increases or decreases in this Global Security have been made:
<TABLE>
<S> <C> <C> <C> <C>
Date of Amount of decrease in Amount of increase in Principal amount of this Signature of
Exchange Principal Amount of Principal Amount of this Global Security authorized signatory
this Global Security Global Security following such decrease of Trustee or
or increase Securities Custodian
</TABLE>
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.06 (Asset Disposition) or 4.08 (Change of Control) of the
Indenture, check the box:
Asset Disposition [_] Change of Control [_]
If you want to elect to have only part of this Security purchased by
the Company pursuant to Section 4.06 or 4.08 of the Indenture, state the amount
($1,000 or an integral multiple thereof):
$
Date: __________________ Your Signature: __________________________________
(Sign exactly as your name appears
on the other side of the Security)
Signature Guarantee:_______________________________________________
Signature must be guaranteed by a participant
in a recognized signature guaranty medallion
program or other signature guarantor acceptable
to the Trustee.
<PAGE>
EXHIBIT B
[FORM OF FACE OF EXCHANGE SECURITY]
[Global Securities Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW
YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO DTC, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL
BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.
<PAGE>
2
No. $__________
13% Senior Subordinated Note due 2009
CUSIP No. ______
[ISIN No. ______ ]
BETTER MINERALS & AGGREGATES COMPANY, a Delaware corporation, promises
to pay to [Cede & Co.], or registered assigns, the principal sum [of
Dollars] [listed on the Schedule of Increases or Decreases in Global Security
attached hereto] on [ ], [ ].
Interest Payment Dates: March 15 and September 15.
Record Dates: March 1 and September 1.
<PAGE>
3
Additional provisions of this Security are set forth on the other side
of this Security.
IN WITNESS WHEREOF, the parties have caused this instrument to be duly
executed.
BETTER MINERALS & AGGREGATES COMPANY,
by
_____________________________________
Name:
Title:
Dated:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
THE BANK OF NEW YORK,
as Trustee, certifies
that this is one of the
Securities referred to in the
within-mentioned Indenture.
by
_____________________________
Authorized Signatory
* If the Security is to be issued in global form, add the Global Securities
Legend and the attachment from Exhibit A captioned "TO BE ATTACHED TO GLOBAL
SECURITIES B SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY".
<PAGE>
4
[FORM OF REVERSE SIDE OF EXCHANGE SECURITY]
13% Senior Subordinated Note due 2009
1. Interest.
--------
BETTER MINERALS & AGGREGATES COMPANY, a Delaware corporation (such
corporation, and its successors and assigns under the Indenture hereinafter
referred to, being herein called the "Company"), promises to pay interest on the
principal amount of this Security at the rate per annum shown above. The Company
shall pay interest semiannually on March 15 and September 15 of each year.
Interest on the Securities shall accrue from the most recent date to which
interest has been paid or duly provided for or, if no interest has been paid or
duly provided for, from October 1, 1999 until the principal hereof is due.
Interest shall be computed on the basis of a 360-day year of twelve 30-day
months. The Company shall pay interest on overdue principal at the rate borne by
the Securities plus 1% per annum, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
2. Method of Payment
-----------------
The Company shall pay interest on the Securities (except defaulted
interest) to the Persons who are registered holders of Securities at the close
of business on the March 1 or September 1 next preceding the interest payment
date even if Securities are canceled after the record date and on or before the
interest payment date. Holders must surrender Securities to a Paying Agent to
collect principal payments. The Company shall pay principal, premium and
interest in money of the United States of America that at the time of payment is
legal tender for payment of public and private debts. Payments in respect of the
Securities represented by a Global Security (including principal, premium and
interest) shall be made by wire transfer of immediately available funds to the
accounts specified by The Depository Trust Company. The Company will make all
payments in respect of a certificated Security (including principal, premium and
interest), by mailing a check to the registered address of each Holder thereof;
provided, however, that payments on the Securities may also be made, in the case
- -------- -------
of a Holder of at least $1,000,000 aggregate principal amount of Securities, by
wire transfer to a U.S. dollar account maintained by the payee with a bank in
the United States if such Holder elects payment by wire transfer by giving
written notice to the Trustee or the Paying Agent to such effect designating
such account no later than 30 days immediately preceding the relevant due date
for payment (or such other date as the Trustee may accept in its discretion).
3. Paying Agent and Registrar
--------------------------
Initially, THE BANK OF NEW YORK, a New York banking corporation (the
"Trustee"), will act as Paying Agent and Registrar. The Company may appoint and
change any Paying Agent, Registrar or co-registrar without notice. The Company
or any of its domestically incorporated Wholly Owned Subsidiaries may act as
Paying Agent, Registrar or co-registrar.
<PAGE>
5
4. Indenture
---------
The Company issued the Securities under an Indenture dated as of
October 1, 1999 (the "Indenture"), among the Company, the Note Guarantors and
the Trustee. The terms of the Securities include those stated in the Indenture
and those made part of the Indenture by reference to the Trust Indenture Act of
1939 (15 U.S.C." 77aaa-77bbbb) as in effect on the date of the Indenture (the
------
"TIA"). Terms defined in the Indenture and not defined herein have the meanings
ascribed thereto in the Indenture. The Securities are subject to all terms and
provisions of the Indenture, and Holders (as defined in the Indenture) are
referred to the Indenture and the TIA for a statement of such terms and
provisions.
The Securities are senior subordinated unsecured obligations of the
Company limited to $150,000,000 aggregate principal amount at any one time
outstanding, of which $150,000,000 in aggregate principal amount will be
initially issued on the Closing Date. This Security is one of the Exchange
Securities referred to in the Indenture. The Securities include the Initial
Securities and any Exchange Securities and Private Exchange Securities issued in
exchange for the Initial Securities pursuant to the Indenture. The Initial
Securities, the Exchange Securities and the Private Exchange Securities are
treated as a single class of securities under the Indenture. The Indenture
imposes certain limitations on the ability of the Company and its Restricted
Subsidiaries to, among other things, make certain Investments and other
Restricted Payments, pay dividends and other distributions, incur Indebtedness,
enter into consensual restrictions upon the payment of certain dividends and
distributions by such Restricted Subsidiaries, issue or sell shares of capital
stock of such Restricted Subsidiaries, enter into or permit certain transactions
with Affiliates and make Asset Sales. The Indenture also imposes limitations on
the ability of the Company to consolidate or merge with or into any other Person
or convey, transfer or lease all or substantially all of the property of the
Company.
To guarantee the due and punctual payment of the principal and
interest, if any, on the Securities and all other amounts payable by the Company
under the Indenture and the Securities when and as the same shall be due and
payable, whether at maturity, by acceleration or otherwise, according to the
terms of the Securities and the Indenture, the Note Guarantors have, jointly and
severally, unconditionally guaranteed the Guaranteed Obligations on a senior
basis subordinated basis pursuant to the terms of the Indenture.
5. Optional Redemption
-------------------
Except as set forth in the following paragraph, the Securities shall
not be redeemable at the option of the Company prior to September 15, 2004.
Thereafter, the Securities shall be redeemable at the option of the Company, in
whole or in part, on not less than 30 nor more than 60 days prior notice, at the
following redemption prices (expressed as percentages of principal amount), plus
accrued and unpaid interest and liquidated damages, if any, to the redemption
date (subject to the right of holders of record on the relevant record date to
receive
<PAGE>
6
interest due on the relevant interest payment date), if redeemed during the 12-
month period commencing on September 15, of the years set forth below:
Year Redemption
Price
----------------------------------------------------------
2004 106.500%
2005 104.333%
2006 102.167%
2007 and thereafter 100.000%
In addition, prior to September 15, 2002, the Company may redeem up to
a maximum of 35% of the original aggregate principal amount of the Securities
with the Net Cash Proceeds of one or more Public Equity Offerings (i) by the
Company or (ii) by Parent or Holdings to the extent the Net Cash Proceeds
thereof are contributed to the Company or used to purchase Capital Stock (other
than Disqualified Stock) of the Company from the Company following which there
is a Public Market, at a redemption price equal to 113% of the principal amount
thereof, plus accrued and unpaid interest and liquidated damages thereon, if
any, to the redemption date (subject to the right of holders of record on the
relevant record date to receive interest due on the relevant interest payment
date); provided, however, that after giving effect to any such redemption, at
-------- -------
least 65% of the original aggregate principal amount of the Securities remains
outstanding. Any such redemption shall be made within 90 days of such Public
Equity Offering upon not less than 30 nor more than 60 days notice mailed to
each holder of Securities being redeemed and otherwise in accordance with the
procedures set forth in the Indenture.
6. Sinking Fund
------------
The Securities are not subject to any sinking fund.
7. Notice of Redemption
--------------------
Notice of redemption will be mailed by first-class mail at least 30
days but not more than 60 days before the redemption date to each Holder of
Securities to be redeemed at his or her registered address. Securities in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000. If money sufficient to pay the redemption price of and
accrued and unpaid interest and liquidated damages, if any, on all Securities
(or portions thereof) to be redeemed on the redemption date is deposited with
the Paying Agent on or before the redemption date and certain other conditions
are satisfied, on and after such date interest ceases to accrue on such
Securities (or such portions thereof) called for redemption.
8. Repurchase of Securities at the Option of Holders upon Change of Control
------------------------------------------------------------------------
Upon a Change of Control, any Holder of Securities will have the
right, subject to certain conditions specified in the Indenture, to cause the
Company to repurchase all or any part
<PAGE>
7
of the Securities of such Holder at a purchase price equal to 101% of the
principal amount of the Securities to be repurchased plus accrued and unpaid
interest and liquidated damages, if any, to the date of repurchase (subject to
the right of Holders of record on the relevant record date to receive interest
due on the relevant interest payment date that is on or prior to the date of
purchase) as provided in, and subject to the terms of, the Indenture.
In accordance with Section 4.06 of the Indenture, the Company will be
required to offer to purchase Securities upon the occurrence of certain events.
9. Subordination
-------------
The Securities are subordinated to Senior Indebtedness, as defined in
the Indenture. To the extent provided in the Indenture, Senior Indebtedness must
be paid before the Securities may be paid. The Company and each Note Guarantor
agrees, and each Holder by accepting a Security agrees, to the subordination
provisions contained in the Indenture and authorizes the Trustee to give it
effect and appoints the Trustee as attorney-in-fact for such purpose.
10. Denominations; Transfer; Exchange
---------------------------------
The Securities are in registered form without coupons in denominations
of $1,000 and whole multiples of $1,000. A Holder may transfer or exchange
Securities in accordance with the Indenture. Upon any transfer or exchange, the
Registrar and the Trustee may require a Holder, among other things, to furnish
appropriate endorsements or transfer documents and to pay any taxes required by
law or permitted by the Indenture. The Registrar need not register the transfer
of or exchange any Securities selected for redemption (except, in the case of a
Security to be redeemed in part, the portion of the Security not to be redeemed)
or to transfer or exchange any Securities for a period of 15 days prior to a
selection of Securities to be redeemed or 15 days before an interest payment
date.
11. Persons Deemed Owners
---------------------
Except as provided in paragraph 2 hereof, the registered Holder of
this Security may be treated as the owner of it for all purposes.
12. Unclaimed Money
---------------
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee or Paying Agent shall pay the money back to the
Company at its written request unless an abandoned property law designates
another Person. After any such payment, Holders entitled to the money must look
only to the Company and not to the Trustee for payment.
<PAGE>
8
13. Discharge and Defeasance
------------------------
Subject to certain conditions, the Company at any time may terminate
some of or all its obligations under the Securities and the Indenture if the
Company deposits with the Trustee money or U.S. Government Obligations for the
payment of principal and interest on the Securities to redemption or maturity,
as the case may be.
14. Amendment, Waiver
-----------------
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended without prior notice to any Holder
but with the written consent of the Holders of at least a majority in aggregate
principal amount of the outstanding Securities and (ii) any default may be
waived with the written consent of the Holders of at least a majority in
principal amount of the outstanding Securities. Subject to certain exceptions
set forth in the Indenture, without the consent of any Holder of Securities, the
Company and the Trustee may amend the Indenture or the Securities (i) to cure
any ambiguity, omission, defect or inconsistency; (ii) to comply with Article 5
of the Indenture; (iii) to provide for uncertificated Securities in addition to
or in place of certificated Securities; (iv) to add Note Guarantees with respect
to the Securities; (v) to secure the Securities; (vi) to add additional
covenants or to surrender rights and powers conferred on the Company; (vii) to
comply with the requirements of the SEC in order to effect or maintain the
qualification of the Indenture under the TIA; (viii) to make any change that
does not adversely affect the rights of any Holder; (ix) to make any change in
the subordination provisions of the Indenture that would limit or terminate the
benefits available to any holder of Senior Indebtedness of the Company (or any
representative thereof) under such subordination provisions; or (x) to provide
for the issuance of the Exchange Securities or Private Exchange Securities.
15. Defaults and Remedies
---------------------
If an Event of Default occurs (other than an Event of Default relating
to certain events of bankruptcy, insolvency or reorganization of the Company)
and is continuing, the Trustee or the Holders of at least 25% in principal
amount of the outstanding Securities may declare the principal of and accrued
but unpaid interest on all the Securities to be due and payable. If an Event of
Default relating to certain events of bankruptcy, insolvency or reorganization
of the Company occurs, the principal of and interest on all the Securities shall
become immediately due and payable without any declaration or other act on the
part of the Trustee or any Holders. Under certain circumstances, the Holders of
a majority in principal amount of the outstanding Securities may rescind any
such acceleration with respect to the Securities and its consequences.
If an Event of Default occurs and is continuing, the Trustee shall be
under no obligation to exercise any of the rights or powers under the Indenture
at the request or direction of any of the Holders unless such Holders have
offered to the Trustee reasonable indemnity or security against any loss,
liability or expense and certain other conditions are complied with.
<PAGE>
9
Except to enforce the right to receive payment of principal, premium (if any) or
interest when due, no Holder may pursue any remedy with respect to the Indenture
or the Securities unless (i) such Holder has previously given the Trustee notice
that an Event of Default is continuing, (ii) Holders of at least 25% in
principal amount of the outstanding Securities have requested the Trustee in
writing to pursue the remedy, (iii) such Holders have offered the Trustee
reasonable security or indemnity reasonably satisfactory to the Trustee against
any loss, liability or expense, (iv) the Trustee has not complied with such
request within 60 days after the receipt of the request and the offer of
security or indemnity and (v) the Holders of a majority in principal amount of
the outstanding Securities have not given the Trustee a direction inconsistent
with such request within such 60-day period. Subject to certain restrictions,
the Holders of a majority in principal amount of the outstanding Securities are
given the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or of exercising any trust or
power conferred on the Trustee. The Trustee, however, may refuse to follow any
direction that conflicts with law or the Indenture or that the Trustee
determines is unduly prejudicial to the rights of any other Holder or that would
involve the Trustee in personal liability. Prior to taking any action under the
Indenture, the Trustee shall be entitled to indemnification satisfactory to it
in its sole discretion against all losses and expenses caused by taking or not
taking such action.
16. Trustee Dealings with the Company
---------------------------------
Subject to certain limitations imposed by the TIA, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its Affiliates and may otherwise deal with the Company
or its Affiliates with the same rights it would have if it were not Trustee.
17. No Recourse Against Others
--------------------------
A director, officer, employee or stockholder, as such, of the Company
or any Note Guarantor shall not have any liability for any obligations of the
Company under the Securities or the Indenture or for any claim based on, in
respect of or by reason of such obligations or their creation. By accepting a
Security, each Holder waives and releases all such liability. The waiver and
release are part of the consideration for the issue of the Securities.
18. Authentication
--------------
This Security shall not be valid until an authorized signatory of the
Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
19. Abbreviations
-------------
Customary abbreviations may be used in the name of a Holder or an
assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint
<PAGE>
10
tenants with rights of survivorship and not as tenants in common), CUST
(=custodian), and U/G/M/A (=Uniform Gift to Minors Act).
20. Governing Law
-------------
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
21. CUSIP and ISIN Numbers
----------------------
The Company has caused CUSIP [and ISIN] numbers to be printed on the
Securities and has directed the Trustee to use CUSIP [and ISIN] numbers in
notices of redemption as a convenience to Holders. No representation is made as
to the accuracy of such numbers either as printed on the Securities or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Holder of Securities upon written
request and without charge to the Holder a copy of the Indenture which has in it
the text of this Security.
<PAGE>
11
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this
Security on the books of the Company. The agent may substitute another to act
for him.
____________________________________________________________
Date: ________________ Your Signature: _____________________
____________________________________________________________
Sign exactly as your name appears on the other side of this Security. Signature
must be guaranteed by a participant in a recognized signature guaranty medallion
program or other signature guarantor acceptable to the Trustee.
<PAGE>
12
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.06 (Asset Disposition) or 4.08 (Change of Control) of the
Indenture, check the box:
Asset Disposition [_] Change of Control [_]
If you want to elect to have only part of this Security purchased by
the Company pursuant to Section 4.06 or 4.08 of the Indenture, state the amount
($1,000 or an integral multiple thereof):
$
Date: __________________ Your Signature: ___________________________________
(Sign exactly as your name appears
on the other side of the Security)
Signature Guarantee:_______________________________________________
Signature must be guaranteed by a participant
in a recognized signature guaranty medallion
program or other signature guarantor acceptable
to the Trustee.
<PAGE>
13
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The initial principal amount of this Global Security is $[ ].
The following increases or decreases in this Global Security have been made:
<TABLE>
<CAPTION>
Date of Amount of decrease in Amount of increase in Principal amount of this Signature of
Exchange Principal Amount of Principal Amount of this Global Security authorized signatory
this Global Security Global Security following such decrease of Trustee or
or increase Securities Custodian
<S> <C> <C> <C> <C>
</TABLE>
<PAGE>
EXHIBIT C
FORM OF SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture") dated
as of , among [GUARANTOR] (the "New
Guarantor"), a subsidiary of BETTER MINERALS & AGGREGATES COMPANY
(or its successor), a Delaware corporation (the "Company"),
[EXISTING GUARANTORS] and THE BANK OF NEW YORK, a New York
banking corporation, as trustee under the indenture referred to
below (the "Trustee").
W I T N E S S E T H :
WHEREAS the Company and [OLD GUARANTORS] (the "Existing Guarantors")
has heretofore executed and delivered to the Trustee an Indenture (the
"Indenture") dated as of October 1, 1999, providing for the issuance of an
aggregate principal amount of up to $150,000,000 of 113% Senior Subordinated
Notes due 2009 (the "Securities");
WHEREAS Section 4.11 of the Indenture provides that under certain
circumstances the Company is required to cause the New Guarantor to execute and
deliver to the Trustee a supplemental indenture pursuant to which the New
Guarantor shall unconditionally guarantee all the Company's obligations under
the Securities pursuant to a Note Guarantee on the terms and conditions set
forth herein; and
WHEREAS pursuant to Section 9.01 of the Indenture, the Trustee, the
Company and the Existing Guarantors are authorized to execute and deliver this
Supplemental Indenture;
NOW THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the New
Guarantor, the Company, the Existing Guarantors and the Trustee mutually
covenant and agree for the equal and ratable benefit of the holders of the
Securities as follows:
1. Agreement to Guarantee. The New Guarantor hereby agrees, jointly
----------------------
and severally with all the Existing Guarantors, to unconditionally guarantee the
Company's obligations under the Securities on the terms and subject to the
conditions set forth in Articles 11 and 12 of the Indenture and to be bound by
all other applicable provisions of the Indenture and the Securities.
2. Ratification of Indenture; Supplemental Indentures Part of
----------------------------------------------------------
Indenture. Except as expressly amended hereby, the Indenture is in all respects
- ---------
ratified and confirmed and all the terms, conditions and provisions thereof
shall remain in full force and effect. This Supplemental
<PAGE>
2
Indenture shall form a part of the Indenture for all purposes, and every holder
of Securities heretofore or hereafter authenticated and delivered shall be bound
hereby.
3. Governing Law. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY,
-------------
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT
GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
4. Trustee Makes No Representation. The Trustee makes no
-------------------------------
representation as to the validity or sufficiency of this Supplemental Indenture.
5. Counterparts. The parties may sign any number of copies of this
------------
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
6. Effect of Headings. The Section headings herein are for
------------------
convenience only and shall not effect the construction thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the date first above written.
[NEW GUARANTOR],
by
__________________________________________
Name:
Title:
BETTER MINERALS & AGGREGATES COMPANY,
by
__________________________________________
Name:
Title:
<PAGE>
3
[EXISTING GUARANTORS],
by_____________________________
Name:
Title:
THE BANK OF NEW YORK, as Trustee,
by
_________________________________
Name:
Title:
<PAGE>
EXHIBIT D
Form of
Transferee Letter of Representation
Better Minerals & Aggregates Company
In care of
The Bank of New York
101 Barclay Street
New York, New York 10286
Ladies and Gentlemen:
This certificate is delivered to request a transfer of $[ ] principal
amount of the 13% Senior Subordinated Notes due 2009 (the "Securities") of
Better Minerals & Aggregates Company (the "Company").
Upon transfer, the Securities would be registered in the name of the new
beneficial owner as follows:
Name:________________________
Address:_____________________
Taxpayer ID Number:__________
The undersigned represents and warrants to you that:
1. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended (the
"Securities Act")), purchasing for our own account or for the account of such an
institutional "accredited investor" at least $250,000 principal amount of the
Securities, and we are acquiring the Securities not with a view to, or for offer
or sale in connection with, any distribution in violation of the Securities Act.
We have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the Securities,
and we invest in or purchase securities similar to the Securities in the normal
course of our business. We, and any accounts for which we are acting, are each
able to bear the economic risk of our or its investment.
2. We understand that the Securities have not been registered under the
Securities Act and, unless so registered, may not be sold except as permitted in
the following sentence. We agree on our own behalf and on behalf of any
investor account for which we are purchasing Securities to offer, sell or
otherwise transfer such Securities prior to the date that is two years
<PAGE>
2
after the later of the date of original issue and the last date on which the
Company or any affiliate of the Company was the owner of such Securities (or any
predecessor thereto) (the "Resale Restriction Termination Date") only (a) to the
Company, (b) pursuant to a registration statement that has been declared
effective under the Securities Act, (c) in a transaction complying with the
requirements of Rule 144A under the Securities Act ("Rule 144A"), to a person we
reasonably believe is a qualified institutional buyer under Rule 144A (a "QIB")
that is purchasing for its own account or for the account of a QIB and to whom
notice is given that the transfer is being made in reliance on Rule 144A, (d)
pursuant to offers and sales that occur outside the United States within the
meaning of Regulation S under the Securities Act, (e) to an institutional
"accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or (7)
under the Securities Act that is purchasing for its own account or for the
account of such an institutional "accredited investor," in each case in a
minimum principal amount of Securities of $250,000, or (f) pursuant to any other
available exemption from the registration requirements of the Securities Act,
subject in each of the foregoing cases to any requirement of law that the
disposition of our property or the property of such investor account or accounts
be at all times within our or their control and in compliance with any
applicable state securities laws. The foregoing restrictions on resale will not
apply subsequent to the Resale Restriction Termination Date. If any resale or
other transfer of the Securities is proposed to be made pursuant to clause (e)
above prior to the Resale Restriction Termination Date, the transferor shall
deliver a letter from the transferee substantially in the form of this letter to
the Company and the Trustee, which shall provide, among other things, that the
transferee is an institutional "accredited investor" within the meaning of Rule
501(a)(1), (2), (3) or (7) under the Securities Act and that it is acquiring
such Securities for investment purposes and not for distribution in violation of
the Securities Act. Each purchaser acknowledges that the Company and the Trustee
reserve the right prior to the offer, sale or other transfer prior to the Resale
Restriction Termination Date of the Securities pursuant to clause (d), (e) or
(f) above to require the delivery of an opinion of counsel, certifications or
other information satisfactory to the Company and the Trustee.
TRANSFEREE:_________________,
by:________________________
<PAGE>
EXHIBIT 4.2
EXECUTION COPY
BETTER MINERALS & AGGREGATES COMPANY
(formerly named USS INTERMEDIATE HOLDCO, INC.)
$150,000,000
13% Senior Subordinated Notes due 2009
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
------------------------------------------
October 1, 1999
CHASE SECURITIES INC.
BNP CAPITAL MARKETS, LLC
c/o Chase Securities Inc.
270 Park Avenue, 4th floor
New York, New York 10017
Ladies and Gentlemen:
Better Minerals & Aggregates Company (formerly named USS Intermediate
Holdco, Inc.), a Delaware corporation (the "Company"), proposes to issue and
-------
sell to Chase Securities Inc. and BNP Capital Markets, LLC (together with Chase
Securities Inc., the "Initial Purchasers"), upon the terms and subject to the
------------------
conditions set forth in a purchase agreement dated September 28, 1999 (the
"Purchase Agreement"), $150,000,000 aggregate principal amount of its 13%
------------------
Senior Subordinated Notes due 2009 (the "Securities") to be jointly and
----------
severally guaranteed on a senior subordinated basis by certain subsidiaries of
the Company signatory hereto (collectively, the "Subsidiary Guarantors").
---------------------
Capitalized terms used but not defined herein shall have the meanings given to
such terms in the Purchase Agreement.
As an inducement to the Initial Purchasers to enter into the Purchase
Agreement and in satisfaction of a condition to the obligations of the Initial
Purchasers thereunder, the Company and the Subsidiary Guarantors agree with the
Initial Purchasers, for the benefit of the holders (including the Initial
Purchasers and the Market-Maker (as defined herein)) of the Securities, the
Exchange Securities (as defined herein) and the Private Exchange Securities (as
defined herein) (collectively, the "Holders"), as follows:
-------
1. Registered Exchange Offer. The Company and the Subsidiary
Guarantors shall (i) prepare and, not later than 135 days following the date of
original issuance of the Securities (the "Issue Date"), file with the Commission
----------
a registration statement (the "Exchange Offer Registration Statement") on an
-------------------------------------
appropriate form under the Securities Act with respect to a proposed offer to
the Holders of the Securities (the
<PAGE>
2
"Registered Exchange Offer") to issue and deliver to such Holders, in exchange
-------------------------
for the Securities, a like aggregate principal amount of debt securities of the
Company (the "Exchange Securities") that are identical in all material respects
-------------------
to the Securities, except for the transfer restrictions relating to the
Securities, (ii) use their reasonable best efforts to cause the Exchange Offer
Registration Statement to become effective under the Securities Act no later
than 195 days after the Issue Date and the Registered Exchange Offer to be
consummated no later than 240 days after the Issue Date and (iii) keep the
Exchange Offer Registration Statement effective for not less than 30 days (or
longer, if required by applicable law) after the date on which notice of the
Registered Exchange Offer is mailed to the Holders (such period being called the
"Exchange Offer Registration Period"). The Exchange Securities will be issued
----------------------------------
under the Indenture or an indenture (the "Exchange Securities Indenture") among
-----------------------------
the Company, the Subsidiary Guarantors and the Trustee or such other bank or
trust company that is reasonably satisfactory to the Initial Purchasers, as
trustee (the "Exchange Securities Trustee"), such indenture to be identical in
---------------------------
all material respects to the Indenture, except for the transfer restrictions
relating to the Securities. All references in this exchange and registration
rights agreement (this "Agreement") to "prospectus" shall, except where the
---------
context otherwise requires, include any prospectus (or amendment or supplement
thereto) filed with the Commission pursuant to Section 6 of this Agreement.
Upon the effectiveness of the Exchange Offer Registration Statement,
the Company shall promptly commence the Registered Exchange Offer, it being the
objective of such Registered Exchange Offer to enable each Holder electing to
exchange Securities for Exchange Securities (assuming that such Holder (a) is
not an affiliate of the Company or an Exchanging Dealer (as defined herein) not
complying with the requirements of the next sentence, (b) is not an Initial
Purchaser holding Securities that have, or that are reasonably likely to have,
the status of an unsold allotment in an initial distribution, (c) acquires the
Exchange Securities in the ordinary course of such Holder's business and (d) has
no arrangements or understandings with any person to participate in the
distribution of the Exchange Securities) and to trade such Exchange Securities
from and after their receipt without any limitations or restrictions under the
Securities Act and without material restrictions under the securities laws of
the several states of the United States. The Company, the Subsidiary Guarantors,
the Initial Purchasers and each Exchanging Dealer acknowledge that, pursuant to
current interpretations by the Commission's staff of Section 5 of the Securities
Act, each Holder that is a broker-dealer electing to exchange Securities,
acquired for its own account as a result of market-making activities or other
trading activities, for Exchange Securities (an "Exchanging Dealer"), is
-----------------
required to deliver a prospectus containing substantially the information set
forth in Annex A hereto on the cover, in Annex B hereto in the "Exchange Offer
Procedures" section and the "Purpose of the Exchange Offer" section and in Annex
C hereto in the "Plan of Distribution" section of such prospectus in connection
with a sale of any such Exchange Securities received by such Exchanging Dealer
pursuant to the Registered Exchange Offer.
<PAGE>
3
If, prior to the consummation of the Registered Exchange Offer, any
Holder holds any Securities acquired by it that have, or that are reasonably
likely to be determined to have, the status of an unsold allotment in an initial
distribution, or any Holder is not entitled to participate in the Registered
Exchange Offer, the Company shall, upon the request of any such Holder,
simultaneously with the delivery of the Exchange Securities in the Registered
Exchange Offer, issue and deliver to any such Holder, in exchange for the
Securities held by such Holder (the "Private Exchange"), a like aggregate
----------------
principal amount of debt securities of the Company (the "Private Exchange
----------------
Securities") that are identical in all material respects to the Exchange
- ----------
Securities, except for the transfer restrictions relating to such Private
Exchange Securities. The Private Exchange Securities will be issued under the
same indenture as the Exchange Securities, and the Company shall use its
reasonable best efforts to cause the Private Exchange Securities to bear the
same CUSIP number as the Exchange Securities.
In connection with the Registered Exchange Offer, the Company shall:
(a) mail to each Holder a copy of the prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate letter
of transmittal and related documents;
(b) keep the Registered Exchange Offer open for not less than 30 days
(or longer, if required by applicable law) after the date on which notice
of the Registered Exchange Offer is mailed to the Holders;
(c) utilize the services of a depositary for the Registered Exchange
Offer with an address in the Borough of Manhattan, The City of New York;
(d) permit Holders to withdraw tendered Securities at any time prior
to the close of business, New York City time, on the last business day on
which the Registered Exchange Offer shall remain open; and
(e) otherwise comply in all respects with all laws that are applicable
to the Registered Exchange Offer.
As soon as practicable after the close of the Registered Exchange
Offer and any Private Exchange, as the case may be, the Company shall:
(a) accept for exchange all Securities tendered and not validly
withdrawn pursuant to the Registered Exchange Offer and the Private
Exchange;
(b) deliver to the Trustee for cancelation all Securities so accepted
for exchange; and
<PAGE>
4
(c) cause the Trustee or the Exchange Securities Trustee, as the case
may be, promptly to authenticate and deliver to each Holder, Exchange
Securities or Private Exchange Securities, as the case may be, equal in
principal amount to the Securities of such Holder so accepted for exchange.
The Company and the Subsidiary Guarantors shall use their reasonable
best efforts to keep the Exchange Offer Registration Statement effective and to
amend and supplement the prospectus contained therein in order to permit such
prospectus to be used by all persons subject to the prospectus delivery
requirements of the Securities Act for such period of time as such persons must
comply with such requirements in order to resell the Exchange Securities;
provided that (i) in the case where such prospectus and any amendment or
- --------
supplement thereto must be delivered by an Exchanging Dealer, such period shall
be the lesser of 180 days and the date on which all Exchanging Dealers have sold
all Exchange Securities held by them and (ii) if required by rule, regulation or
interpretation of the Commission's staff, the Company shall make such prospectus
and any amendment or supplement thereto available to any broker-dealer for use
in connection with any resale of any Exchange Securities for a period of not
less than 90 days after the consummation of the Registered Exchange Offer.
The Indenture or the Exchange Securities Indenture, as the case may
be, shall provide that the Securities, the Exchange Securities and the Private
Exchange Securities shall vote and consent together on all matters as one class
and that none of the Securities, the Exchange Securities or the Private Exchange
Securities will have the right to vote or consent as a separate class on any
matter.
Interest on each Exchange Security and Private Exchange Security
issued pursuant to the Registered Exchange Offer and in the Private Exchange
will accrue from the last interest payment date on which interest was paid on
the Securities surrendered in exchange therefor or, if no interest has been paid
on the Securities, from the Issue Date.
Each Holder participating in the Registered Exchange Offer shall be
required to represent to the Company that at the time of the consummation of the
Registered Exchange Offer (i) any Exchange Securities received by such Holder
will be acquired in the ordinary course of business, (ii) such Holder will have
no arrangements or understanding with any person to participate in the
distribution of the Securities or the Exchange Securities within the meaning of
the Securities Act and (iii) such Holder is not an affiliate of the Company or,
if it is such an affiliate, such Holder will comply with the registration and
prospectus delivery requirements of the Securities Act to the extent applicable.
Notwithstanding any other provisions hereof, the Company and the
Subsidiary Guarantors shall ensure that (i) any Exchange Offer Registration
Statement and any amendment thereto, when it becomes effective, and any
prospectus forming part thereof and any supplement thereto as of the
consummation of the Registered Exchange Offer, complies in all material respects
with the Securities Act and the rules and
<PAGE>
5
regulations of the Commission thereunder, (ii) any Exchange Offer Registration
Statement and any amendment thereto does not, when it becomes effective, contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
and (iii) any prospectus forming part of any Exchange Offer Registration
Statement, and any supplement to such prospectus, does not, as of the
consummation of the Registered Exchange Offer, include an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
2. Shelf Registration. If (i) because of any change in law or
applicable interpretations thereof by the Commission's staff the Company is not
permitted to effect the Registered Exchange Offer as contemplated by Section 1
hereof, or (ii) any Securities validly tendered pursuant to the Registered
Exchange Offer are not exchanged for Exchange Securities within 240 days after
the Issue Date, or (iii) any Initial Purchaser so requests with respect to
Securities or Private Exchange Securities not eligible to be exchanged for
Exchange Securities in the Registered Exchange Offer and held by it following
the consummation of the Registered Exchange Offer, or (iv) any applicable law or
interpretations do not permit any Holder to participate in the Registered
Exchange Offer, or (v) any Holder that participates in the Registered Exchange
Offer does not receive freely transferable Exchange Securities in exchange for
tendered Securities, or (vi) the Company so elects, then the following
provisions shall apply:
(a) The Company and the Subsidiary Guarantors shall use their
reasonable best efforts to file as promptly as practicable (but in no event
more than 45 days after so required or requested pursuant to this Section
2) with the Commission, and thereafter shall use their reasonable best
efforts to cause to be declared effective, a shelf registration statement
on an appropriate form under the Securities Act relating to the offer and
sale of the Transfer Restricted Securities (as defined below) by the
Holders thereof from time to time in accordance with the methods of
distribution set forth in such registration statement (hereafter, a "Shelf
-----
Registration Statement" and, together with any Exchange Offer Registration
----------------------
Statement, a "Registration Statement").
----------------------
(b) The Company and the Subsidiary Guarantors shall use their
reasonable best efforts to keep the Shelf Registration Statement
continuously effective in order to permit the prospectus forming part
thereof to be used by Holders of Transfer Restricted Securities for a
period ending on the earlier of (i) two years from the Issue Date or such
shorter period that will terminate when all the Transfer Restricted
Securities covered by the Shelf Registration Statement have been sold
pursuant thereto and (ii) the date on which the Securities become eligible
for resale without volume restrictions pursuant to Rule 144 under the
Securities Act (in any such case, such period being called the "Shelf
-----
Registration Period"). The Company and the Subsidiary Guarantors shall be
-------------------
deemed not to
<PAGE>
6
have used their reasonable best efforts to keep the Shelf Registration
Statement effective during the requisite period if either of them
voluntarily take any action that would result in Holders of Transfer
Restricted Securities covered thereby not being able to offer and sell such
Transfer Restricted Securities during that period, unless such action is
required by applicable law.
(c) Notwithstanding any other provisions hereof, the Company and the
Subsidiary Guarantors shall ensure that (i) any Shelf Registration
Statement and any amendment thereto and any prospectus forming part thereof
and any supplement thereto complies in all material respects with the
Securities Act and the rules and regulations of the Commission thereunder,
(ii) any Shelf Registration Statement and any amendment thereto (in either
case, other than with respect to information included therein in reliance
upon or in conformity with written information furnished to the Company by
or on behalf of any Holder specifically for use therein (the "Holders'
--------
Information")) does not contain an untrue statement of a material fact or
-----------
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading and (iii) any prospectus forming
part of any Shelf Registration Statement, and any supplement to such
prospectus (in either case, other than with respect to Holders'
Information), does not include an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
3. Liquidated Damages. (a) The parties hereto agree that the
Holders of Transfer Restricted Securities (as defined below) will suffer damages
if the Company or the Subsidiary Guarantors fail to fulfill their obligations
under Section 1 or Section 2, as applicable, and that it would not be feasible
to ascertain the extent of such damages. Accordingly, if (i) the applicable
Registration Statement is not filed with the Commission on or prior to 135 days
after the Issue Date (or in the case of a Shelf Registration Statement required
to be filed in response to (x) the request of an Initial Purchaser made pursuant
to clause (iii) of the first paragraph of Section 2 and received later than 120
days after the Issue Date, (a "Late IP Request"), on or prior to 165 days after
the Issue Date, or (y) a change in law or the applicable interpretations of the
Commission's staff, if later, within 45 days after publication of the law or
interpretations), (ii) the Exchange Offer Registration Statement or the Shelf
Registration Statement, as the case may be, is not declared effective within 195
days after the Issue Date (or in the case of a Shelf Registration Statement
required to be filed in response to (x) a Late IP Request, within 240 days after
the Issue Date, or (y) a change in law or the applicable interpretations of
Commission's staff, if later, within 45 days after publication of the change in
law or interpretations), (iii) the Registered Exchange Offer is not consummated
on or prior to 240 days after the Issue Date, or (iv) any required Shelf
Registration Statement is filed and declared effective within 195 days after the
Issue Date (or in the case of a Shelf Registration Statement required to be
filed in response to (x) a late IP Request, within 240 days after the Issue
Date, or (y) a change in law or the applicable interpretations of
<PAGE>
7
Commission's staff, if later, within 45 days after publication of the change in
law or interpretations) but shall thereafter cease to be effective (at any time
that the Company and the Subsidiary Guarantors are obligated to maintain the
effectiveness thereof) without being succeeded within 45 days by an additional
Registration Statement (or post-effective amendment to the Shelf Registration
Statement) filed and declared effective (each such event referred to in clauses
(i) through (iv), a "Registration Default"), the Company and the Subsidiary
--------------------
Guarantors will be jointly and severally obligated to pay liquidated damages to
each Holder of Transfer Restricted Securities, during the period of one or more
such Registration Defaults, in an amount equal to $ 0.192 per week per $1,000
principal amount of Transfer Restricted Securities held by such Holder until (i)
the applicable Registration Statement is filed, (ii) the Exchange Offer
Registration Statement is declared effective and the Registered Exchange Offer
is consummated, (iii) the Shelf Registration Statement is declared effective or
(iv) the Shelf Registration Statement again becomes effective, as the case may
be. Following the cure of all Registration Defaults, the accrual of liquidated
damages will cease. As used herein, the term "Transfer Restricted Securities"
------------------------------
means (i) each Security until the date on which such Security has been exchanged
for a freely transferable Exchange Security in the Registered Exchange Offer,
(ii) each Security or Private Exchange Security until the date on which it has
been effectively registered under the Securities Act and disposed of in
accordance with the Shelf Registration Statement or (iii) each Security or
Private Exchange Security until the date on which it is distributed to the
public pursuant to Rule 144 under the Securities Act or is saleable pursuant to
Rule 144(k) under the Securities Act. Notwithstanding anything to the contrary
in this Section 3(a), the Company shall not be required to pay liquidated
damages to a Holder of Transfer Restricted Securities if such Holder failed to
comply with its obligations to make the representations set forth in the second
to last paragraph of Section 1 or failed to provide the information required to
be provided by it, if any, pursuant to Section 4(m).
(b) The Company shall notify the Trustee and the paying agent (the
"Paying Agent") under the Indenture immediately upon the happening of each and
- -------------
every Registration Default. The Company and the Subsidiary Guarantors shall pay
the liquidated damages due on the Transfer Restricted Securities by depositing
with the Paying Agent (which may not be the Company for these purposes), in
trust, for the benefit of the Holders thereof, prior to 10:00 a.m., New York
City time, on the next interest payment date specified by the Indenture and the
Securities, sums sufficient to pay the liquidated damages then due. The
liquidated damages due shall be payable on each interest payment date specified
by the Indenture and the Securities to the record holder entitled to receive the
interest payment to be made on such date. Each obligation to pay liquidated
damages shall be deemed to accrue from and include the date of the applicable
Registration Default.
(c) The parties hereto agree that the liquidated damages provided for
in this Section 3 constitute a reasonable estimate of and are intended to
constitute the sole damages that will be suffered by Holders of Transfer
Restricted Securities by reason of
<PAGE>
8
the failure of (i) the Shelf Registration Statement or the Exchange Offer
Registration Statement to be filed, (ii) the Shelf Registration Statement to
remain effective or (iii) the Exchange Offer Registration Statement to be
declared effective and the Registered Exchange Offer to be consummated, in each
case to the extent required by this Agreement.
4. Registration Procedures. In connection with any Registration
Statement, the following provisions shall apply:
(a) The Company shall (i) furnish to each Initial Purchaser, prior to
the filing thereof with the Commission, a copy of the Registration
Statement and each amendment thereof and each supplement, if any, to the
prospectus included therein and shall use its reasonable best efforts to
reflect in each such document, when so filed with the Commission, such
comments as any Initial Purchaser may reasonably propose; (ii) include the
information set forth in Annex A hereto on the cover, in Annex B hereto in
the "Exchange Offer Procedures" section and the "Purpose of the Exchange
Offer" section and in Annex C hereto in the "Plan of Distribution" section
of the prospectus forming a part of the Exchange Offer Registration
Statement, and include the information set forth in Annex D hereto in the
Letter of Transmittal delivered pursuant to the Registered Exchange Offer;
and (iii) if requested by any Initial Purchaser and if in compliance with
applicable law, include the information required by Items 507 or 508 of
Regulation S-K, as applicable, in the prospectus forming a part of the
Exchange Offer Registration Statement.
(b) The Company shall advise each Initial Purchaser, each Exchanging
Dealer known to the Company and, in the case of a Shelf Registration
Statement, the Holders named therein (or their counsel) and, if requested
by any such person, confirm such advice in writing (which advice pursuant
to clauses (ii)-(v) hereof shall be accompanied by an instruction to
suspend the use of the prospectus until the requisite changes have been
made):
(i) when any Registration Statement and any amendment thereto
has been filed with the Commission and when such Registration
Statement or any post-effective amendment thereto has become
effective;
(ii) of any request by the Commission for amendments or
supplements to any Registration Statement or the prospectus included
therein or for additional information;
(iii) of the issuance by the Commission of any stop order
suspending the effectiveness of any Registration Statement or the
initiation of any proceedings for that purpose;
<PAGE>
9
(iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Securities, the
Exchange Securities or the Private Exchange Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for
such purpose; and
(v) of the happening of any event that requires the making of
any changes in any Registration Statement or the prospectus included
therein in order that the statements therein are not misleading and do
not omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.
(c) If any event contemplated by Section 4(b)(ii) through (v) occurs
during the period for which the Company and the Subsidiary Guarantors are
required to maintain an effective Registration Statement, the Company and the
Subsidiary Guarantors will promptly prepare and file with the Commission a post-
effective amendment to the Registration Statement or a supplement to the related
prospectus or file any other required document so that, as thereafter delivered
to purchasers of the Securities, Exchange Securities or Private Exchange
Securities from a Holder, the prospectus will not include an untrue statement of
a material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(d) The Company and the Subsidiary Guarantors will make every
reasonable effort to obtain the withdrawal at the earliest possible time of any
order suspending the effectiveness of any Registration Statement.
(e) The Company will furnish to each Holder of Transfer Restricted
Securities included within the coverage of any Shelf Registration Statement,
without charge, at least one conformed copy of such Shelf Registration Statement
and any post-effective amendment thereto, including financial statements and
schedules and, if any such Holder so requests in writing, all exhibits thereto
(including those, if any, incorporated by reference).
(f) The Company will, during the Shelf Registration Period, promptly
deliver to each Holder of Transfer Restricted Securities included within the
coverage of any Shelf Registration Statement, without charge, as many copies of
the prospectus included in such Shelf Registration Statement and any amendment
or supplement thereto as such Holder may reasonably request; and the Company and
the Subsidiary Guarantors consent to the use of such prospectus or any amendment
or supplement thereto by each of the selling Holders of Transfer Restricted
Securities in connection with the offer and sale of the Transfer Restricted
Securities covered by such prospectus or any amendment or supplement thereto.
<PAGE>
10
(g) The Company will furnish to each Initial Purchaser and each
Exchanging Dealer known to the Company, and to any other Holder who so requests,
without charge, at least one conformed copy of the Exchange Offer Registration
Statement and any post-effective amendment thereto, including financial
statements and schedules and, if any Initial Purchaser or Exchanging Dealer or
any such Holder so requests in writing, all exhibits thereto (including those,
if any, incorporated by reference).
(h) The Company will, during the Exchange Offer Registration Period
or the Shelf Registration Period, as applicable, promptly deliver to each
Initial Purchaser, each Exchanging Dealer and such other persons that are
required to deliver a prospectus following the Registered Exchange Offer,
without charge, as many copies of the final prospectus included in the Exchange
Offer Registration Statement or the Shelf Registration Statement and any
amendment or supplement thereto as such Initial Purchaser, Exchanging Dealer or
other persons may reasonably request; and the Company and the Subsidiary
Guarantors consent to the use of such prospectus or any amendment or supplement
thereto by any such Initial Purchaser, Exchanging Dealer or other persons, as
applicable, as aforesaid.
(i) Prior to the effective date of any Registration Statement, the
Company and the Subsidiary Guarantors will use their reasonable best efforts to
register or qualify, or cooperate with the Holders of Securities, Exchange
Securities or Private Exchange Securities included therein and their respective
counsel in connection with the registration or qualification of, such
Securities, Exchange Securities or Private Exchange Securities for offer and
sale under the securities or blue sky laws of such jurisdictions as any such
Holder reasonably requests in writing and do any and all other acts or things
necessary or advisable to enable the offer and sale in such jurisdictions of the
Securities, Exchange Securities or Private Exchange Securities covered by such
Registration Statement; provided that the Company and the Subsidiary Guarantors
--------
will not be required to qualify generally to do business in any jurisdiction
where they are not then so qualified or to take any action which would subject
them to general service of process or to taxation in any such jurisdiction where
they are not then so subject. Upon request of the Company, the Initial
Purchasers shall furnish to the Company a list of jurisdictions where, to its
knowledge, beneficial owners of the Securities reside, but the Initial
Purchasers will not be responsible for any mistakes or inaccuracies in such
list.
(j) Not later than the effective date of the applicable Registration
Statement, the Company will provide a CUSIP number for the Securities, the
Exchange Securities and the Private Exchange Securities, as the case may be, and
provide the applicable trustee with certificates for the Securities, the
Exchange Securities or the Private Exchange Securities, as the case may be, in a
form eligible for deposit with The Depository Trust Company.
<PAGE>
11
(k) The Company and the Subsidiary Guarantors will comply with all
applicable rules and regulations of the Commission and the Company will make
generally available to the Holders as soon as practicable after the effective
date of the applicable Registration Statement an earning statement satisfying
the provisions of Section 11(a) of the Securities Act; provided that in no event
--------
shall such earning statement be delivered later than 45 days after the end of a
12-month period (or 90 days, if such period is a fiscal year) beginning with the
first month of the Company's first fiscal quarter commencing after the effective
date of the applicable Registration Statement, which statement shall cover such
12-month period.
(l) The Company and the Subsidiary Guarantors will cause the
Indenture or the Exchange Securities Indenture, as the case may be, to be
qualified under the Trust Indenture Act as required by applicable law in a
timely manner.
(m) The Company may require each Holder of Transfer Restricted
Securities to be registered pursuant to any Shelf Registration Statement to
furnish to the Company such information concerning the Holder and the
distribution of such Transfer Restricted Securities as the Company may from time
to time reasonably require for inclusion in such Shelf Registration Statement
and to execute and deliver such questionnaires, powers of attorney, underwriting
agreement and other documents reasonably required in connection with such Shelf
Registration or pursuant to Section 10 hereof, and the Company may exclude from
such registration the Transfer Restricted Securities of any Holder that fails to
furnish such information or documents within a reasonable time after receiving
such request.
(n) In the case of a Shelf Registration Statement, each Holder of
Transfer Restricted Securities to be registered pursuant thereto agrees by
acquisition of such Transfer Restricted Securities that, upon receipt of any
notice from the Company pursuant to Section 4(b)(ii) through (v), such Holder
will discontinue disposition of such Transfer Restricted Securities until such
Holder's receipt of copies of the supplemental or amended prospectus
contemplated by Section 4(c) or until advised in writing (the "Advice") by the
------
Company that the use of the applicable prospectus may be resumed. If the
Company shall give any notice under Section 4(b)(ii) through (v) during the
period that the Company is required to maintain an effective Registration
Statement (the "Effectiveness Period"), such Effectiveness Period shall be
--------------------
extended by the number of days during such period from and including the date of
the giving of such notice to and including the date when each seller of Transfer
Restricted Securities covered by such Registration Statement shall have received
(x) the copies of the supplemental or amended prospectus contemplated by Section
4(c) (if an amended or supplemental prospectus is required) or (y) the Advice
(if no amended or supplemental prospectus is required).
(o) In the case of a Shelf Registration Statement, the Company and
the Subsidiary Guarantors shall enter into such customary agreements (including,
if requested, an underwriting agreement in customary form) and take all such
other action, if any, as Holders of a majority in aggregate principal amount of
the Securities, Exchange
<PAGE>
12
Securities and Private Exchange Securities being sold or the managing
underwriters (if any) shall reasonably request in order to facilitate any
disposition of Securities, Exchange Securities or Private Exchange Securities
pursuant to such Shelf Registration Statement.
(p) In the case of a Shelf Registration Statement, the Company shall
(i) make reasonably available for inspection by a representative of, and Special
Counsel (as defined below) acting for, Holders of a majority in aggregate
principal amount of the Securities, Exchange Securities and Private Exchange
Securities being sold and any underwriter participating in any disposition of
Securities, Exchange Securities or Private Exchange Securities pursuant to such
Shelf Registration Statement, all relevant financial and other records,
pertinent corporate documents and properties of the Company and its subsidiaries
and (ii) use its reasonable best efforts to have its officers, directors,
employees, accountants and counsel supply all relevant information reasonably
requested by such representative, Special Counsel or any such underwriter in
connection with such Shelf Registration Statement.
(q) In the case of a Shelf Registration Statement, the Company shall,
if requested by Holders of a majority in aggregate principal amount of the
Securities, Exchange Securities and Private Exchange Securities being sold,
their Special Counsel or the managing underwriters (if any) in connection with
such Shelf Registration Statement, use its reasonable best efforts to cause (i)
its counsel to deliver an opinion relating to the Shelf Registration Statement
and the Securities, Exchange Securities or Private Exchange Securities, as
applicable, in customary form, (ii) its officers to execute and deliver all
customary documents and certificates requested by Holders of a majority in
aggregate principal amount of the Securities, Exchange Securities and Private
Exchange Securities being sold, their Special Counsel or the managing
underwriters (if any) and (iii) its independent public accountants to provide a
comfort letter or letters in customary form, subject to receipt of appropriate
documentation as contemplated, and only if permitted, by Statement of Auditing
Standards No. 72.
5. Registration Expenses. The Company and the Subsidiary Guarantors
shall jointly and severally bear all expenses incurred in connection with the
performance of its obligations under Sections 1, 2, 3 and 4 and the Company will
reimburse the Holders for the reasonable fees and disbursements, as such are
negotiated between the Company and the Holders, of one firm of attorneys chosen
by the Holders of a majority in aggregate principal amount of the Securities,
and the Private Exchange Securities to be sold pursuant to each Registration
Statement other than the Exchange Offer Registration Statement (the "Special
-------
Counsel") acting for the Holders in connection therewith.
- -------
6. Market-Making. (a) For so long as any of the Securities, Exchange
Securities or Private Exchange Securities are outstanding and Chase Securities
Inc. (the "Market-Maker") or any of its affiliates is an affiliate of USS
------------
Holdings, Inc., the Company or any of its affiliates (as defined in the rules
and regulations of the Commission) and proposes to make a market in the
Securities, Exchange Securities or
<PAGE>
13
Private Exchange Securities as part of its business in the ordinary course,
then, to the extent that, in the opinion of the Market-Maker's counsel (which
may be an employee of the Market-Maker), the Market-Maker is obligated under the
Securities Act to deliver a prospectus in connection with its market-making
activities, the following provisions shall apply for the sole benefit of the
Market Maker:
(i) The Company and the Subsidiary Guarantors shall (A) on the date
that the Exchange Offer Registration Statement is filed with the
Commission, file a registration statement (the "Market-Making Registration
--------------------------
Statement") (which may be the Exchange Offer Registration Statement or the
---------
Shelf Registration Statement if permitted by the rules, regulations or
interpretations of the Commission) and use their best efforts to cause such
Market-Making Registration Statement to be declared effective by the
Commission on or prior to the consummation of the Exchange Offer; (B)
periodically amend such Market-Making Registration Statement so that the
information contained therein complies with the requirements of Section
10(a) under the Securities Act; (C) within 45 days following the end of
each of the Company's first three fiscal quarters in each fiscal year, file
a supplement (which may consist of a periodic report of the Company under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
------------
which is filed by the Company as a prospectus supplement under the
Securities Act) (hereinafter, an "Exchange Act Supplement") to the
-----------------------
prospectus contained in the Market-Making Registration Statement that sets
forth the financial results of the Company for such quarter; (D) within 90
days following the end of each of the Company's fiscal years, file a
supplement (which may be an Exchange Act Supplement) to the prospectus
contained in the Market-Making Registration Statement that sets forth the
financial results of the Company for such fiscal year; and (E) amend the
Market-Making Registration Statement or supplement the related prospectus
when necessary to reflect any material changes in the information provided
therein; provided, however, that (1) prior to filing the Market-Making
-------- -------
Registration Statement, any amendment thereto or any supplement to the
related prospectus (other than an Exchange Act Supplement), the Company
will furnish to the Market-Maker copies of all such documents proposed to
be filed, which documents will be subject to the review of the Market-Maker
and its counsel, (2) the Company and the Subsidiary Guarantors will not
file the Market-Making Registration Statement, any amendment thereto or any
supplement to the related prospectus (other than an Exchange Act
Supplement) to which the Market-Maker and its counsel shall reasonably
object unless the Company is advised by counsel that such Market-Making
Registration Statement, amendment or supplement is required to be filed,
(3) the Company will provide the Market-Maker and its counsel with copies
of the Market-Making Registration Statement and each amendment and
supplement filed and (4) the 45-day and 90-day period referred to in clause
(C) and (D), respectively, above shall be extended to the extent that the
Company utilizes Rule 12b-25 under the Exchange Act.
<PAGE>
14
(ii) Promptly upon the Company satisfying the eligibility criteria
for use of Form S-3 under the Securities Act, the Company and the
Subsidiary Guarantors shall file a post-effective amendment to the Market-
Making Registration Statement to convert it to a Form S-3 registration
statement.
(iii) The Company shall notify the Market-Maker and, if requested by
the Market-Maker, confirm such advice in writing, (A) when any post-
effective amendment to the Market-Making Registration Statement or any
amendment or supplement to the related prospectus (other than an Exchange
Act Supplement) has been filed, and, with respect to any post-effective
amendment, when the same has become effective; (B) of any request by the
Commission for any post-effective amendment to the Market-Making
Registration Statement, any supplement or amendment to the related
prospectus or for additional information; (C) the issuance by the
Commission of any stop order suspending the effectiveness of the Market-
Making Registration Statement or the initiation of any proceedings for that
purpose; (D) of the receipt by the Company of any notification with respect
to the suspension of the qualification of the Securities for sale in any
jurisdiction or the initiation or threatening of any proceedings for such
purpose; (E) of the happening of any event that makes any material
statement made in the Market-Making Registration Statement, the related
prospectus or any amendment or supplement thereto untrue or that, under
applicable law, requires the making of any changes in the Market-Making
Registration Statement, such prospectus or any amendment or supplement
thereto, in order to make the statements therein not misleading under the
circumstances under which they were made; and (F) of any advice from a
nationally recognized statistical rating organization that such
organization has placed the Company under surveillance or review with
negative implications or has determined to downgrade the rating of the
Securities, Exchange Securities or Private Exchange Securities or any other
debt obligation of the Company.
(iv) If any event contemplated by Section 6(a)(iii)(B) through (E)
occurs during the period for which the Company and the Subsidiary
Guarantors are required to maintain an effective Market-Making Registration
Statement, the Company and the Subsidiary Guarantors shall promptly prepare
and file with the Commission a post-effective amendment to the Market-
Making Registration Statement or a supplement to the related prospectus or
file any other required document so that the prospectus will not include an
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(v) In the event of the issuance of any stop order suspending the
effectiveness of the Market-Making Registration Statement or of any order
<PAGE>
15
suspending the qualification of the Securities, Exchange Securities or
Private Exchange Securities for sale in any jurisdiction, the Company and
the Subsidiary Guarantors shall use promptly its best efforts to obtain its
withdrawal.
(vi) The Company shall furnish to the Market-Maker, without charge,
(A) at least one conformed copy of the Market-Making Registration Statement
and any post-effective amendment thereto; and (B) as many copies of the
related prospectus and any amendment or supplement thereto as the Market-
Maker may reasonably request.
(vii) The Company and the Subsidiary Guarantors shall consent to the
use of the prospectus contained in the Market-Making Registration Statement
or any amendment or supplement thereto by the Market-Maker in connection
with the offering and sale of the Securities, Exchange Securities or
Private Exchange Securities.
(viii) For so long as the Securities, Exchange Securities or Private
Exchange Securities shall be outstanding, the Company shall furnish to the
Market-Maker (A) as soon as practicable after the end of each of the
Company's fiscal years, the number of copies reasonably requested by the
Market-Maker of the Company's annual report for such year, (B) as soon as
available, the number of copies reasonably requested by the Market-Maker of
each report (including, without limitation, reports on Forms 10-K, 10-Q and
8-K) or definitive proxy statements of the Company filed under the Exchange
Act or mailed to stockholders and (C) to the extent not required to be
furnished under clause (A) or (B), all material public reports and all
reports and financial statements furnished by the Company to the Nasdaq
National Market System or any U.S. national securities exchange or
quotation service upon which the Securities or Exchange Securities may be
listed pursuant to requirements of or agreements with such exchange or
quotation service or to the Commission pursuant to the Exchange Act or any
rule or regulation of the Commission thereunder.
(b) In the case of the Market-Making Registration Statement, the
Market-Maker agrees that, upon receipt of any notice from the Company pursuant
to Section 6(a)(iii)(B) through (E), the Market-Maker will discontinue
disposition of such Securities, Exchange Securities or Private Exchange
Securities until the Market-Maker's receipt of copies of the supplemental or
amended prospectus contemplated by Section 6(a)(iv) or until advised in writing
by the Company that the use of the applicable prospectus may be resumed.
(c) If, in connection with the Market-Making Registration Statement,
counsel for the Market-Maker (which may be an employee of the Market-Maker)
advises the Market-Maker in writing that any of the following is necessary or
desirable in order for the Market-Maker to comply with applicable law, the
Company shall make
<PAGE>
16
reasonably available for inspection by a representative of, and counsel acting
for, the Market-Maker all relevant financial and other records, pertinent
corporate documents and properties of the Company and its subsidiaries and (ii)
use its reasonable best efforts to have its officers, directors, employees,
accountants and counsel supply all relevant information reasonably requested by
such representative or counsel or the Market-Maker.
(d) Prior to the effective date of the Market-Making Registration
Statement, the Company and the Subsidiary Guarantors will use their reasonable
best efforts to register or qualify, or cooperate with the Market-Maker and its
respective counsel in connection with the registration or qualification of, such
Securities, Exchange Securities or Private Exchange Securities for offer and
sale under the securities or blue sky laws of such jurisdictions as the Market-
Maker reasonably requests in writing and do any and all other acts or things
necessary or advisable to enable the offer and sale in such jurisdictions of the
Securities, Exchange Securities or Private Exchange Securities covered by the
Market-Making Registration Statement; provided that the Company and the
--------
Subsidiary Guarantors will not be required to qualify generally to do business
in any jurisdiction where they are not then so qualified or to take any action
which would subject them to general service of process or to taxation in any
such jurisdiction where they are not then so subject.
(e) The Company represents that the Market-Making Registration
Statement, any post-effective amendments thereto, any amendments or supplements
to the related prospectus and any documents filed by them under the Exchange Act
will, when they become effective or are filed with the Commission, as the case
may be, conform in all material respects to the requirements of the Securities
Act and the Exchange Act and the rules and regulations of the Commission
thereunder and will not, as of the effective date of such Market-Making
Registration Statement or post-effective amendments and as of the filing date of
amendments or supplements to such prospectus or filings under the Exchange Act,
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein in the
light of the circumstances under which they were made not misleading; provided
--------
that no representation or warranty is made as to information contained in or
omitted from the Market-Making Registration Statement or the related prospectus
in reliance upon and in conformity with written information furnished to the
Company by the Market-Maker specifically for inclusion therein, which
information the parties hereto agree will be limited to the statements
concerning the Market-Making activities of the Market-Maker to be set forth on
the cover page and in the "Plan of Distribution" section of the prospectus (the
"Market-Maker's Information.")
--------------------------
(f) At the time of effectiveness of the Market-Making Registration
Statement and concurrently with each time the Market-Making Registration
Statement or the related prospectus shall be amended or such prospectus shall be
supplemented, the Company shall (if requested by the Market-Maker) furnish the
Market-Maker and its
<PAGE>
17
counsel with a certificate of its Chairman of the Board of Directors or
President and Chief Financial Officer to the effect that:
(i) the Market-Making Registration Statement has been declared
effective; (ii) in the case of an amendment or supplement, such amendment
has become effective under the Securities Act as of the date and time
specified in such certificate, if applicable; such amendment or supplement
to the prospectus was filed with the Commission pursuant to the
subparagraph of Rule 424(b) under the Securities Act specified in such
certificate on the date specified therein; (iii) to the knowledge of such
officers, no stop order suspending the effectiveness of the Market-Making
Registration Statement has been issued and no proceeding for that purpose
is pending or threatened by the Commission; (iv) such officers have
carefully examined the Market-Making Registration Statement and the
prospectus (and, in the case of an amendment or supplement, such amendment
or supplement) and as of the date of such Market-Making Registration
Statement, amendment or supplement, as applicable, the Market-Making
Registration Statement and the prospectus, as amended or supplemented, if
applicable, did not include any untrue statement of a material fact and did
not omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.
(g) At the time of effectiveness of the Market-Making Registration
Statement and concurrently with each time the Market-Making Registration
Statement or the related prospectus shall be amended or such prospectus shall be
supplemented (other than by means of an Exchange Act Supplement), the Company
shall (if requested by the Market-Maker) furnish the Market-Maker and its
counsel with the written opinion of counsel for the Company reasonably
satisfactory to the Market-Maker to the effect that:
(i) the Market-Making Registration Statement has been declared
effective; (ii) in the case of an amendment or supplement, such amendment
has become effective under the Securities Act as of the date and time
specified in such opinion, if applicable; (iii) to the knowledge of such
counsel, such amendment or supplement to the prospectus was filed with the
Commission pursuant to the subparagraph of Rule 424(b) under the Securities
Act specified in such opinion on the date specified therein, and no stop
order suspending the effectiveness of the Market-Making Registration
Statement has been issued and no proceeding for that purpose is pending or
threatened by the Commission; and (iv) such counsel has reviewed the
Market-Making Registration Statement and the prospectus (and, in the case
of an amendment or supplement, such amendment or supplement) and
participated with officers of the Company and independent public
accountants for the Company in the preparation of such Market-Making
Registration Statement and prospectus (and, in the case of an amendment or
supplement, such amendment or supplement) and has no reason to believe that
as of the date of such Market-Making Registration Statement, amendment or
supplement, as applicable,
<PAGE>
18
the Market-Making Registration Statement and the prospectus, as amended or
supplemented, if applicable (in each case excluding all financial
statements, financial and statistical data and Market-Maker's Information),
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading.
(h) At the time of effectiveness of the Market-Making Registration
Statement and concurrently with each time the Market-Making Registration
Statement or the related prospectus shall be amended or such prospectus shall be
supplemented to include audited annual financial information, the Company shall
(if requested by the Market-Maker) furnish the Market-Maker and its counsel with
a letter of PricewaterhouseCoopers LLP (or other independent public accountants
for the Company of nationally recognized standing), in form satisfactory to the
Market-Maker, addressed to the Market-Maker and dated the date of delivery of
such letter, (i) confirming that they are independent public accountants within
the meaning of the Securities Act and are in compliance with the applicable
requirements relating to the qualification of accountants under Rule 2-01 of
Regulation S-X of the Commission and, (ii) in all other respects, substantially
in the form of the letter delivered to the Initial Purchasers pursuant to
Section 5(f) of the Purchase Agreement, with, in the case of an amendment or
supplement to include audited financial information, such changes as may be
necessary to reflect the amended or supplemented financial information.
(i) The Company hereby agrees to indemnify the Market-Maker, and, if
applicable, contribute to the Market-Maker, in accordance with Section 7 and 8
of this Agreement.
(j) The Company will comply with the provisions of this Section 6 at
its own expense and will reimburse the Market-Maker for its reasonable expenses
associated with this Section 6 (including fees of outside counsel).
(k) The agreements contained in this Section 6 and the
representations, warranties and agreements contained in this Agreement shall
survive all offers and sales of the Securities and shall remain in full force
and effect, regardless of any termination or cancelation of this Agreement or
any investigation made by or on behalf of any indemnified party.
(l) For purposes of this Section 6, any reference to the terms
"amend", "amendment" or "supplement" with respect to the Market-Making
Registration Statement or the prospectus contained therein shall be deemed to
refer to and include the filing under the Exchange Act of any document deemed to
be incorporated therein by reference.
7. Indemnification. (a) In the event of a Shelf Registration
Statement or in connection with any prospectus delivery pursuant to an Exchange
Offer Registration Statement by an Initial Purchaser or Exchanging Dealer, as
applicable, or in connection with any prospectus delivery by the Market-Maker,
the Company and the Subsidiary
<PAGE>
19
Guarantors shall jointly and severally indemnify and hold harmless each Holder
(including, without limitation, any such Initial Purchaser, the Market-Maker or
any such Exchanging Dealer), its affiliates, their respective officers,
directors, employees, representatives and agents, and each person, if any, who
controls such Holder within the meaning of the Securities Act or the Exchange
Act (collectively referred to for purposes of this Section 7 and Section 8 as a
Holder) from and against any loss, claim, damage or liability, joint or several,
or any action in respect thereof (including, without limitation, any loss,
claim, damage, liability or action relating to purchases and sales of
Securities, Exchange Securities or Private Exchange Securities), to which that
Holder may become subject, whether commenced or threatened, under the Securities
Act, the Exchange Act, any other federal or state statutory law or regulation,
at common law or otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained in any such Registration Statement
or Market-Making Registration Statement or any prospectus forming part thereof
or in any amendment or supplement thereto, (ii) the omission or alleged omission
to state therein a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading or (iii) in the case of the Market-Maker,
any violation of the Securities Act resulting from any breach by the Company of
its representations, warranties and agreements contained in Section 6, and shall
reimburse each Holder promptly upon demand for any legal or other expenses
reasonably incurred by that Holder in connection with investigating or defending
or preparing to defend against or appearing as a third party witness in
connection with any such loss, claim, damage, liability or action as such
expenses are incurred; provided, however, that the Company and the Subisidiary
-------- -------
Guarantors shall not be liable in any such case to the extent that any such
loss, claim, damage, liability or action arises out of, or is based upon, an
untrue statement or alleged untrue statement in or omission or alleged omission
from any of such documents in reliance upon and in conformity with any Holders'
Information or Market-Maker's Information; and provided, further, that with
-------- -------
respect to any such untrue statement in or omission from any related preliminary
prospectus or final prospectus, the indemnity agreement contained in this
Section 7(a) shall not inure to the benefit of any Holder from whom the person
asserting any such loss, claim, damage, liability or action received Securities,
Exchange Securities or Private Exchange Securities to the extent that such loss,
claim, damage, liability or action of or with respect to such Holder results
from the fact that both (A) a copy of the final prospectus or an amendment or
supplement thereto was not sent or given to such person at or prior to the
written confirmation of the sale of such Securities, Exchange Securities or
Private Exchange Securities to such person and (B) the untrue statement in or
omission from the related preliminary prospectus or final prospectus was
corrected in the final prospectus or such amendment or supplement, as the case
may be, unless, in either case, such failure to deliver the final prospectus or
such amendment or supplement was a result of non-compliance by the Company with
Section 4(e), 4(f), 4(g), 4(h) or 6(a)(vi)(B), as applicable.
<PAGE>
20
(b) In the event of a Shelf Registration Statement or in connection
with any prospectus delivery by the Market-Maker, each Holder (including, if
applicable, the Market- Maker), shall indemnify and hold harmless the Company,
its affiliates, their respective officers, directors, employees, representatives
and agents, and each person, if any, who controls the Company within the meaning
of the Securities Act or the Exchange Act (collectively referred to for purposes
of this Section 7(b) and Section 8 as the Company), from and against any loss,
claim, damage or liability, joint or several, or any action in respect thereof,
to which the Company may become subject, whether commenced or threatened, under
the Securities Act, the Exchange Act, any other federal or state statutory law
or regulation, at common law or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained in any such Registration
Statement or Market-Making Registration Statement or any prospectus forming part
thereof or in any amendment or supplement thereto or (ii) the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, but in each case only
to the extent that the untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with any
Holders' Information or Market-Maker's Information furnished to the Company by
such Holder, and shall reimburse the Company for any legal or other expenses
reasonably incurred by the Company in connection with investigating or defending
or preparing to defend against or appearing as a third party witness in
connection with any such loss, claim, damage, liability or action as such
expenses are incurred; provided, however, that no such Holder shall be liable
-------- -------
for any indemnity claims hereunder in excess of the amount of net proceeds
received by such Holder from the sale of Securities, Exchange Securities or
Private Exchange Securities pursuant to such Shelf Registration Statement or
prospectus.
(c) Promptly after receipt by an indemnified party under this Section
7 of notice of any claim or the commencement of any action, the indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party pursuant to Section 7(a) or 7(b), notify the indemnifying
party in writing of the claim or the commencement of that action; provided,
--------
however, that the failure to notify the indemnifying party shall not relieve it
- -------
from any liability which it may have under this Section 7 except to the extent
that it has been materially prejudiced (through the forfeiture of substantive
rights or defenses) by such failure; and provided, further, that the failure to
-------- -------
notify the indemnifying party shall not relieve it from any liability which it
may have to an indemnified party otherwise than under this Section 7. If any
such claim or action shall be brought against an indemnified party, and it shall
notify the indemnifying party thereof, the indemnifying party shall be entitled
to participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
<PAGE>
21
the indemnified party under this Section 7 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than the reasonable costs of investigation; provided, however,
-------- -------
that an indemnified party shall have the right to employ its own counsel in any
such action, but the fees, expenses and other charges of such counsel for the
indemnified party will be at the expense of such indemnified party unless (1)
the employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (2) the indemnified party has reasonably
concluded (based upon advice of counsel to the indemnified party) that there may
be legal defenses available to it or other indemnified parties that are
different from or in addition to those available to the indemnifying party, (3)
the Indemnified Party has reasonably concluded that a conflict or potential
conflict exists (based upon advice of counsel to the indemnified party) between
the indemnified party and the indemnifying party (in which case the indemnifying
party will not have the right to direct the defense of such action on behalf of
the indemnified party) or (4) the indemnifying party has not in fact employed
counsel reasonably satisfactory to the indemnified party to assume the defense
of such action within a reasonable time after receiving notice of the
commencement of the action, in each of which cases the reasonable fees,
disbursements and other charges of counsel will be at the expense of the
indemnifying party or parties. It is understood that the indemnifying party or
parties shall not, in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for the reasonable fees, disbursements and
other charges of more than one separate firm of attorneys (in addition to any
local counsel) at any one time for all such indemnified party or parties. Each
indemnified party, as a condition of the indemnity agreements contained in
Sections 7(a) and 7(b), shall use all reasonable efforts to cooperate with the
indemnifying party in the defense or settlement of any such action or claim. No
indemnifying party shall be liable for any settlement of any such action
effected without its written consent (which consent shall not be unreasonably
withheld), but if settled with its written consent or if there be a final
judgment for the plaintiff in any such action, the indemnifying party agrees to
indemnify and hold harmless any indemnified party from and against any loss or
liability by reason of such settlement or judgment. No indemnifying party
shall, without the prior written consent of the indemnified party (which consent
shall not be unreasonably withheld), effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such proceeding.
8. Contribution. If the indemnification provided for in Section 7 is
unavailable or insufficient to hold harmless an indemnified party under Section
7(a) or 7(b), then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such indemnified
party as a result of such loss, claim, damage or liability, or action in respect
thereof, (a) in such proportion as shall be appropriate to reflect the relative
benefits received by the Company from the initial offering and sale of the
Securities, on the one hand, and by a Holder from receiving
<PAGE>
22
Securities, Exchange Securities or Private Exchange Securities, as applicable,
registered under the Securities Act, on the other, or (b) if the allocation
provided by clause (a) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (a) above but also the relative fault of the Company and the
Subsidiary Guarantors, on the one hand, and such Holder, on the other, with
respect to the statements or omissions that resulted in such loss, claim, damage
or liability, or action in respect thereof, as well as any other relevant
equitable considerations. The relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to the Company and the Subsidiary Guarantors or information supplied by
the Company and the Subsidiary Guarantors, on the one hand, or to any Holders?
Information or Market-Maker's Information supplied by such Holder, on the other,
the intent of the parties and their relative knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The
parties hereto agree that it would not be just and equitable if contributions
pursuant to this Section 8 were to be determined by pro rata allocation or by
--------
any other method of allocation that does not take into account the equitable
considerations referred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, damage or liability, or action in respect
thereof, referred to above in this Section 8 shall be deemed to include, for
purposes of this Section 8, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending or
preparing to defend any such action or claim. Notwithstanding the provisions of
this Section 8, an indemnifying party that is a Holder of Securities, Exchange
Securities or Private Exchange Securities shall not be required to contribute
any amount in excess of the amount by which the total price at which the
Securities, Exchange Securities or Private Exchange Securities sold by such
indemnifying party to any purchaser exceeds the amount of any damages which such
indemnifying party has otherwise paid or become liable to pay by reason of any
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
9. Rules 144 and 144A. The Company shall use its reasonable best
efforts to file the reports required to be filed by it under the Securities Act
and the Exchange Act in a timely manner and, if at any time the Company is not
required to file such reports, it will, upon the written request of any Holder
of Transfer Restricted Securities or the Market-Maker, make publicly available
other information so long as necessary to permit sales of such Holder's or the
Market-Maker's securities pursuant to Rules 144 and 144A. The Company and the
Subsidiary Guarantors covenant that they will take such further action as any
Holder of Transfer Restricted Securities or the Market-Maker may reasonably
request, all to the extent required from time to time to enable such Holder or
the Market-Maker to sell Transfer Restricted Securities without registration
under the Securities Act within the limitations of the exemptions provided by
Rules 144 and 144A (including, without limitation, the requirements of Rule
<PAGE>
23
144A(d)(4)). Upon the written request of any Holder of Transfer Restricted
Securities or the Market-Maker, the Company and the Subsidiary Guarantors shall
deliver to such Holder or the Market-Maker a written statement as to whether
they have complied with such requirements. Notwithstanding the foregoing,
nothing in this Section 9 shall be deemed to require the Company to register any
of its securities pursuant to the Exchange Act.
10. Underwritten Registrations. If any of the Transfer Restricted
Securities covered by any Shelf Registration Statement are to be sold in an
underwritten offering, the investment banker or investment bankers and manager
or managers that will administer the offering will be selected by the Holders of
a majority in aggregate principal amount of such Transfer Restricted Securities
included in such offering, subject to the consent of the Company (which shall
not be unreasonably withheld or delayed), and such Holders shall be responsible
for all underwriting commissions and discounts in connection therewith.
No person may participate in any underwritten registration hereunder
unless such person (i) agrees to sell such person's Transfer Restricted
Securities on the basis reasonably provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements and (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements.
11. Miscellaneous. (a) Amendments and Waivers. The provisions of
this Agreement may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given, unless the
Company has obtained the written consent of Holders of a majority in aggregate
principal amount of the Securities, the Exchange Securities and the Private
Exchange Securities, taken as a single class (and, with respect to the
provisions of Section 6, the written consent of the Market-Maker).
Notwithstanding the foregoing, a waiver or consent to depart from the provisions
hereof with respect to a matter that relates exclusively to the rights of
Holders whose Securities, Exchange Securities or Private Exchange Securities are
being sold pursuant to a Registration Statement and that does not directly or
indirectly affect the rights of other Holders may be given by Holders of a
majority in aggregate principal amount of the Securities, the Exchange
Securities and the Private Exchange Securities being sold by such Holders
pursuant to such Registration Statement.
(b) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail,
telecopier or air courier guaranteeing next-day delivery:
(i) if to a Holder, at the most current address given by such Holder
to the Company in accordance with the provisions of this Section 11(b),
which address initially is, with respect to each Holder, the address of
such Holder maintained by
<PAGE>
24
the registrar under the Indenture, with a copy in like manner to Chase
Securities Inc. and BNP Capital Markets, LLC;
(ii) if to an Initial Purchaser, initially at its address set forth
in the Purchase Agreement; and
(iii) if to the Company, initially at the address of the Company set
forth in the Purchase Agreement.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; one business day after
being delivered to a next-day air courier; five business days after being
deposited in the mail; and when receipt is acknowledged by the recipient's
telecopier machine, if sent by telecopier.
(c) Successors and Assigns. This Agreement shall be binding upon the
Company and its successors and assigns.
(d) Counterparts. This Agreement may be executed in any number of
counterparts (which may be delivered in original form or by telecopier) and by
the parties hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
(e) Definition of Terms. For purposes of this Agreement, (a) the
term "business day" means any day on which the New York Stock Exchange, Inc. is
open for trading, (b) the term "subsidiary" has the meaning set forth in Rule
405 under the Securities Act and (c) except where otherwise expressly provided,
the term "affiliate" has the meaning set forth in Rule 405 under the Securities
Act.
(f) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(h) Remedies. In the event of a breach by the Company, the
Subsidiary Guarantors or any Holder of any of their obligations under this
Agreement, each Holder, the Company or the Subsidiary Guarantors, as the case
may be, in addition to being entitled to exercise all rights granted by law,
including recovery of damages (other than the recovery of damages for a breach
by the Company or the Subsidiary Guarantors of its obligations under Sections 1
or 2 hereof for which liquidated damages have been paid pursuant to Section 3
hereof), will be entitled to specific performance of its rights under this
Agreement. The Company, the Subsidiary Guarantors and each Holder agree that
<PAGE>
25
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by each such person of any of the provisions of this
Agreement and hereby further agree that, in the event of any action for specific
performance in respect of such breach, each such person shall waive the defense
that a remedy at law would be adequate.
(i) No Inconsistent Agreements. Each of the Company and the
Subsidiary Guarantors represents, warrants to and agrees with the Initial
Purchasers that (i) it has not entered into, and shall not, on or after the date
of this Agreement, enter into any agreement that is inconsistent in a material
respect with the rights granted to the Holders in this Agreement or otherwise
conflicts in a material respect with the provisions hereof, (ii) it has not
previously entered into any agreement which remains in effect granting any
registration rights with respect to any of its debt securities to any person and
(iii) (with respect to the Company) without limiting the generality of the
foregoing, without the written consent of the Holders of a majority in aggregate
principal amount of the then outstanding Transfer Restricted Securities and the
Market-Maker, it shall not grant to any person the right to request the Company
to register any debt securities of the Company under the Securities Act unless
the rights so granted are not in conflict or inconsistent in a material respect
with the provisions of this Agreement.
(j) No Piggyback on Registrations. Neither the Company nor any of
its security holders (other than the Holders of Transfer Restricted Securities
in such capacity) shall have the right to include any securities of the Company
in any Shelf Registration or Registered Exchange Offer other than Transfer
Restricted Securities.
(k) Severability. The remedies provided herein are cumulative and not
exclusive of any remedies provided by law. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their reasonable best efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or unenforceable.
Please confirm that the foregoing correctly sets forth the agreement
among the Company, the Subsidiary Guarantors and the Initial Purchasers.
Very truly yours,
<PAGE>
BETTER MINERALS & AGGREGATES COMPANY
by /s/ John A. Ulizio
------------------------------------------
Name: John A. Ulizio
Title: Vice President, General Counsel and
Assistant Secretary
U.S. SILICA COMPANY
by /s/ John A. Ulizio
------------------------------------------
Name: John A. Ulizio
Title: Senior Vice President, General Counsel
and Assistant Secretary
BETTER MATERIALS CORPORATION
by /s/ John A. Ulizio
------------------------------------------
Name: John A. Ulizio
Title: Vice President and Assistant Secretary
GEORGE F. PETTINOS, INC.
by /s/ John A. Ulizio
------------------------------------------
Name: John A. Ulizio
Title: Vice President and Secretary
OTTAWA SILICA COMPANY
by /s/ John A. Ulizio
------------------------------------------
Name: John A. Ulizio
<PAGE>
Title: Secretary
THE FULTON LAND AND TIMBER COMPANY
by /s/ John A. Ulizio
------------------------------------------
Name: John A. Ulizio
Title: Secretary
PENNSYLVANIA GLASS SAND CORPORATION
by /s/ John A. Ulizio
------------------------------------------
Name: John A. Ulizio
Title: Secretary
BUCKS COUNTY CRUSHED STONE COMPANY,
by /s/ John A. Ulizio
------------------------------------------
Name: John A. Ulizio
Title: Vice President and Assistant Secretary
CHIPPEWA FARMS CORPORATION
by /s/ John A. Ulizio
------------------------------------------
Name: John A. Ulizio
Title: Vice President and Assistant Secretary
SHORE STONE COMPANY, INC.
<PAGE>
by /s/ John A. Ulizio
------------------------------------------
Name: John A. Ulizio
Title: Vice President and Assistant Secretary
BMC TRUCKING, INC.
by /s/ John A. Ulizio
------------------------------------------
Name: John A. Ulizio
Title: Vice President and Assistant Secretary
ELLEN JAY, INC.
by /s/ John A. Ulizio
------------------------------------------
Name: John A. Ulizio
Title: Vice President and Secretary
STONE MATERIALS COMPANY, LLC
by: Better Minerals & Aggregates Company,
as Manager
by /s/ John A. Ulizio
------------------------------------------
Name: John A. Ulizio
Title: Vice President, General Counsel and
Assistant Secretary
of Better Minerals & Aggregates Company
COMMERCIAL STONE CO., INC.
by /s/ John A. Ulizio
------------------------------------------
Name: John A. Ulizio
Title: Secretary
<PAGE>
COMMERCIAL AGGREGATES TRANSPORTATION AND SALES, LLC
by: Stone Materials Company, LLC
as Manager
by /s/ John A. Ulizio
------------------------------------------
Name: John A. Ulizio
Title: Vice President, General Counsel and
Assistant Secretary
of Better Minerals & Aggregates Company,
Manager of Stone Materials Company, LLC
Accepted:
CHASE SECURITIES INC.
by
/s/
- ------------------------------
Authorized Signatory
BNP CAPITAL MARKETS, LLC
by
------------------------------
Authorized Signatory
<PAGE>
ANNEX A
Each broker-dealer that receives Exchange Securities for its own account
pursuant to the Registered Exchange Offer must acknowledge that it will deliver
a prospectus in connection with any resale of such Exchange Securities. The
Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This Prospectus, as it
may be amended or supplemented from time to time, may be used by a broker-dealer
in connection with resales of Exchange Securities received in exchange for
Securities where such Securities were acquired by such broker-dealer as a result
of market-making activities or other trading activities. The Company has agreed
that, for a period of 180 days after the Expiration Date (as defined herein), it
will make this Prospectus available to any broker-dealer for use in connection
with any such resale. See "Plan of Distribution".
<PAGE>
ANNEX B
Each broker-dealer that receives Exchange Securities for its own account
in exchange for Securities, where such Securities were acquired by such broker-
dealer as a result of market-making activities or other trading activities, must
acknowledge that it will deliver a prospectus in connection with any resale of
such Exchange Securities. See "Plan of Distribution".
<PAGE>
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Securities for its own account
pursuant to the Registered Exchange Offer must acknowledge that it will deliver
a prospectus in connection with any resale of such Exchange Securities. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Securities received in
exchange for Securities where such Securities were acquired as a result of
market-making activities or other trading activities. The Company has agreed
that, for a period of 180 days after the Expiration Date, it will make this
prospectus, as amended or supplemented, available to any broker-dealer for use
in connection with any such resale. In addition, until [ ] 199[ ],
all dealers effecting transactions in the Exchange Securities may be required to
deliver a prospectus.
The Company will not receive any proceeds from any sale of Exchange
Securities by broker-dealers. Exchange Securities received by broker-dealers
for their own account pursuant to the Registered Exchange Offer may be sold from
time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the Exchange
Securities or a combination of such methods of resale, at market prices
prevailing at the time of resale, at prices related to such prevailing market
prices or at negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such broker-dealer or the
purchasers of any such Exchange Securities. Any broker-dealer that resells
Exchange Securities that were received by it for its own account pursuant to the
Registered Exchange Offer and any broker or dealer that participates in a
distribution of such Exchange Securities may be deemed to be an "underwriter"
within the meaning of the Securities Act and any profit on any such resale of
Exchange Securities and any commission or concessions received by any such
persons may be deemed to be underwriting compensation under the Securities Act.
The Letter of Transmittal states that, by acknowledging that it will deliver and
by delivering a prospectus, a broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act.
For a period of 180 days after the Expiration Date the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Registered Exchange Offer other than commissions or concessions
of any broker-dealers and will indemnify the Holders of the Securities
(including any broker-dealers) against certain liabilities, including
liabilities under the Securities Act.
<PAGE>
ANNEX D
[_] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR
SUPPLEMENTS THERETO.
Name:
Address:
If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of Exchange
Securities. If the undersigned is a broker-dealer that will receive Exchange
Securities for its own account in exchange for Securities that were acquired as
a result of market-making activities or other trading activities, it
acknowledges that it will deliver a prospectus in connection with any resale of
such Exchange Securities; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
<PAGE>
Exhibit 5.1
-----------
[Letterhead of Winthrop, Stimson, Putnam & Roberts]
March 13, 2000
Better Minerals & Aggregates Company
U.S. Silica Company
Better Materials Corporation
BMC Trucking, Inc.
Bucks County Crushed Stone Company
Chippewa Farms Corporation
Shore Stone Company, Inc.
Pennsylvania Glass Sand Corporation
George F. Pettinos, Inc.
Ottawa Silica Company
The Fulton Land and Timber Company
Ellen Jay, Inc.
Stone Materials Company, LLC
Commercial Stone Co., Inc.
Commercial Aggregates Transportation and Sales, LLC
c/o Better Minerals & Aggregates Company
Route 522 North, P.O. Box 187
Berkeley Springs, West Virginia 25411
Ladies and Gentlemen:
We have acted as counsel to Better Minerals & Aggregates Company, a
Delaware corporation (the "Company"), U.S. Silica Company, BMC Trucking, Inc.,
Pennsylvania Glass Sand Corporation, George F. Pettinos, Inc. and Ottawa Silica
Company, each a Delaware corporation, Better Materials Corporation, Bucks County
Crushed Stone Company, Chippewa Farms Corporation, The Fulton Land and Timber
Company and Commercial Stone Co., Inc., each a Pennsylvania corporation, Shore
Stone Company, Inc. and Ellen Jay, Inc., each a New Jersey corporation, and
Stone Materials Company, LLC and Commercial Aggregates Transportation and Sales,
LLC, each a Delaware limited liability company (individually, a "Guarantor" and,
collectively, the "Guarantors") in
<PAGE>
connection with the Registration Statement on Form S-4 (the "Registration
Statement") filed by the Company and the Guarantors with the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933 relating
to the Company's proposed offer to exchange (the "Exchange Offer") up to
$150,000,000 aggregate principal amount of its new 13% Senior Subordinated Notes
due 2009 (the "New Notes") for an equal principal amount of its outstanding 13%
Senior Subordinated Notes due 2009 (the "Old Notes") and the related guarantees
of the New Notes by the Guarantors (individually, a "Guarantee" and,
collectively, the "Guarantees"). The Old Notes and the Guarantees have been, and
the New Notes will be, issued pursuant to an Indenture dated as of October 1,
1999 (the "Indenture") among the Company, the Guarantors and The Bank of New
York, as trustee (the "Trustee").
In our capacity as such counsel, we have reviewed the Indenture, the form
of the New Notes, the Registration Statement and such other corporate records,
agreements, documents and other instruments of the Company and the Guarantors as
in effect on the date hereof, and satisfied ourselves as to such other matters,
as we have deemed necessary or appropriate as a basis for this opinion. In such
review, we have assumed the genuineness of all signatures, the legal capacity of
natural persons, the authenticity of all documents submitted to us as originals,
the conformity to the originals of all documents submitted to us as certified,
conformed or photostatic copies or forms and the authenticity of the originals
of such latter documents. We have assumed that each of the Company and the
Guarantors are validly existing and in good standing under the laws of their
respective jurisdiction of organization and that each has the corporate power
and authority to issue the New Notes and the Guarantees, respectively.
Based on the foregoing, and subject to the qualifications, assumptions and
limitations stated herein, we are of the opinion that, when the New Notes are
duly executed by the Company and authenticated by the Trustee in accordance with
the provisions of the Indenture and have been duly issued and delivered in
exchange for an equal principal amount of the Old Notes in accordance with the
Exchange Offer as described in the Registration Statement, which shall have been
declared effective by the Commission, (i) the New Notes will constitute the
valid and legally binding obligations of the Company enforceable against the
Company in accordance with their terms and (ii) the Guarantees will constitute
the valid and legally binding obligations of the Guarantors enforceable against
each Guarantor in accordance with their terms, in each case, except as limited
by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance or
other laws affecting creditors' rights generally, general equitable principles
(regardless of whether considered in a proceeding in equity or at law) and
requirements of reasonableness, good faith and fair dealing.
We are members of the Bar of the State of New York and, for purposes of
this opinion, do not hold ourselves out as experts on the law of any
jurisdiction other than the law of the State of New York and the Delaware
General Corporation Law. This opinion is limited to matters governed by the law
of the State of New York and the Delaware General Corporation Law.
2
<PAGE>
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this firm under the heading
"Legal Matters" in the prospectus that is a part of the Registration Statement.
In giving this consent, we do not thereby admit that we are within the category
of persons whose consent is required under Section 7 of the Act or the rules and
regulations of the Commission thereunder.
Very truly yours,
Winthrop, Stimson, Putnam & Roberts
3
<PAGE>
Exhibit 8.1
-----------
[Letterhead of Winthrop, Stimson, Putnam & Roberts]
March 13, 2000
Better Minerals & Aggregates Company
Route 522 North, P.O. Box 187
Berkeley Springs, West Virginia 25411
Ladies and Gentlemen:
We have acted as counsel to Better Minerals & Aggregates Company, a
Delaware corporation (the "Company"), in connection with the Company's offer to
issue up to $150 million aggregate principal amount of 13% Senior Subordinated
Notes that have been registered under the Securities Act of 1933 (the "Act"), in
exchange for an equal principal amount of its outstanding 13% Senior
Subordinated Notes due 2009, including the preparation of the prospectus (the
"Prospectus") contained in the Registration Statement on Form S-4 (the
"Registration Statement") filed with the Securities and Exchange Commission (the
"Commission") by the Company for the purpose of such registration.
In our capacity as such counsel, we have reviewed the Registration
Statement and such other records, agreements, documents and other instruments of
the Company as in effect on the date hereof, and satisfied ourselves as to such
other matters, as we have deemed necessary or appropriate as a basis for this
opinion.
Based on the foregoing and upon consideration of applicable law, and
subject to the qualifications, assumptions and limitations stated herein, the
discussions of United States federal tax considerations set forth under the
captions "Summary--The Exchange Offer--Certain United States Federal Income Tax
Consequences" and "Certain United States Federal Tax Consequences" in the
Prospectus, insofar as they relate to provisions of United States federal income
or estate tax law, are, taken as a whole, accurate in all material respects.
This opinion is limited to the federal income and estate tax laws of the
United States and does not consider the effects of any foreign, state or local
laws or any federal law of the United States other than those pertaining to
income or estate taxation.
<PAGE>
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this firm under the heading
"Certain United States Federal Tax Consequences" in the Prospectus. In giving
this consent, we do not thereby admit that we are within the category of persons
whose consent is required under Section 7 of the Act or the rules and
regulations of the Commission thereunder.
Very truly yours,
Winthrop, Stimson, Putnam & Roberts
2
<PAGE>
EXHIBIT 10.1
- --------------------------------------------------------------------------------
USS HOLDINGS, INC.
---------------------------------------------------
STOCKHOLDERS AGREEMENT
---------------------------------------------------
Dated as of February 9, 1996
- --------------------------------------------------------------------------------
<PAGE>
STOCKHOLDERS AGREEMENT dated as of
February 9, 1996, among USS HOLDINGS, INC.,
a Delaware corporation (the "Corporation"),
and the stockholders of' the Corporation
listed on Schedule 1 (each, a "Stockholder"
and collectively the "Stockholders").
Each Stockholder owns that number of Securities (as hereinafter
defined) set forth opposite such Stockholder's name on Schedule 1 hereto. It is
deemed to be in the best interest of the Corporation and the Stockholders that
provision be made for the continuity and stability of the business and policies
of the Corporation, and, to that end, the Corporation and the Stockholders
hereby set forth their agreement with respect to the Securities owned by them.
ACCORDINGLY, in consideration of the mutual covenants and agreements
contained in this Agreement, the parties agree as follows:
1. Definitions; Rules of Construction.
----------------------------------
(a) Capitalized terms used in this Agreement have the meanings
ascribed to them below:
"Accounting Period" has the meaning ascribed to it in Section 3(a)(i).
-----------------
"Acquisition" means USS Acquisition, Inc., a Delaware corporation, and
-----------
any successors thereto (including U.S. Silica after the Merger).
"Actual EBITDA" shall be calculated at the end of each Accounting
-------------
Period of the Corporation, beginning with the Accounting Period ending
February 28, 1998, and shall mean the EBITDA of the Corporation for the twelve-
month period ended on the last day of such Accounting Period.
"Additional Institutional Director" shall have the meaning ascribed to
---------------------------------
it in Section 2(b).
"Additional Retiring Purchase" has the meaning ascribed to it in
----------------------------
Section 14(a).
"Adjusted Proportionate Percentage" shall mean, with respect to any
---------------------------------
Stockholder, the Proportionate Percentage of such Stockholder, calculated as if
the Retiring Shares were not issued and outstanding at the time of calculation.
"Affiliate" means (i) with respect to any individual, (A) a spouse or
---------
descendant of such individual and (B) any trust or family partnership whose
primary beneficiary shall be such individual and/or such individual's spouse
and/or any Person related by blood or adoption to such individual or such
individual's spouse, (ii) with respect to any Person which is not an individual,
any other Person that, directly or indirectly through one or more intermediaries
Controls, is Controlled by, or is under common Control with, such Person and/or
one or more Affiliates thereof, and, without limiting the generality of the
---
foregoing, with respect to CMCC
<PAGE>
includes (x) the ultimate parent corporation of CMCC, upon the completion of the
merger of Chemical Banking Corporation and Chase Manhattan Corporation, and all
the Affiliates of the aforementioned ultimate parent and (y) a corporation, a
general partnership, a limited partnership or limited liability corporation, in
which all the beneficial interests of any of the foregoing entities is owned
directly or indirectly by one or more present or former employees or executives
of CMCC or their respective Affiliates.
"Approved Sale" has the meaning ascribed to it in Section 13.
-------------
"Board" means the Board of Directors of the Corporation.
-----
"Bylaws" means the Bylaws of the Corporation as amended from time to
------
time.
"Budgeted EBITDA" shall mean, for the twelve-month period ending on
---------------
the last day of each Accounting Period, beginning with the Accounting Period
ending February 28, 1998, the EBITDA set forth opposite such Accounting Period
on Schedule 2.
"Cause" shall mean the commission by a Promoter Stockholder of a
-----
felony or other crime involving moral turpitude, or the commission by a Promoter
Stockholder of any other act which is a breach of his fiduciary duty of loyalty
to his employer or the repeated failure of a Promoter Stockholder to otherwise
perform his duties to his employer as determined in good faith by such
employer's Board of Directors.
"Certificate" means the Amended and Restated Certificate of
-----------
Incorporation of the Corporation as filed with the Secretary of State of
Delaware on February 9, 1996, as supplemented by all Certificates of
Designations filed through the date hereof, copies of which are attached as
Schedule 3, as the same may hereafter be amended, modified, supplemented and
restated from time to time.
"Class A Restricted Shares" means, collectively, the DGHA Restricted
-------------------------
Shares and the Manager Restricted Shares.
"CMCC" means Chase Manhattan Capital Corporation, a New York
----
corporation.
"Code" means the Internal Revenue Code of 1986, as amended.
----
"Common Stock" means the Class A Common Stock, $. 01 par value, of the
------------
Corporation, and the Class B Common Stock, $0.01 par value, of the Corporation.
"Common Equivalents" means, at any point in time, (i) as to any
------------------
Stockholder, the number of shares of Common Stock held by such Stockholder at
such time, plus the number of shares of Common Stock which are issuable (at such
time or thereafter) upon the exercise or conversion of any option, warrant or
convertible security held at such time by such Stockholder and (ii) as to all
Stockholders, collectively, the aggregate number of shares of Common Stock
outstanding at such time plus the aggregate number of shares of Common Stock
issuable (at such time or thereafter) upon the exercise or conversion of all
outstanding options, warrants and convertible securities.
2
<PAGE>
"Company" means, collectively, the Corporation and its Subsidiaries
-------
and, individually, the Corporation and each Subsidiary of the Corporation.
"Compensation Committee" shall mean the Compensation Committee of the
----------------------
Board, as constituted from time to time in accordance with Section 2(c).
"Competitor" means any Person who directly or indirectly, owns,
----------
manages, operates, joins, controls or participates in the ownership, management,
operation or control of, or is connected as a director, officer, employee,
partner, consultant or otherwise with, any profit or non-profit business or
organization in any part of the United States or any other jurisdiction in which
the Company sells products or provides services, which, directly or indirectly,
Competes (as hereinafter defined) with the Company. A profit or non-profit
business or organization shall be deemed to "Compete" with the Company if such
business or organization (i) competes with the business of the Company as it is
conducted as of the date hereof or at any time while this Agreement is in
effect, or (ii) engages in the development, production or sale of products, or
the rendering of services, which are the same as, similar to or competitive
with, the products or services being developed, provided, sold or rendered by
the Company as of the date hereof or at any time while this Agreement is in
effect.
"Control" means the possession, directly or indirectly, of the power,
-------
by stock ownership, contract right, proxy or otherwise, to direct the management
and policies of a Person.
"Corporation" has the meaning ascribed to it in the Preamble.
-----------
"Credit Agreement" means the Credit Agreement dated as of February 9,
----------------
1996, as amended from time to time, among Acquisition and the lenders named
therein.
"Credit Event" means (i) the existence of an event of default under
------------
any Debt Document, or (ii) the existence of a default, which is not waived or
cured within any applicable grace period provided for therein, under any other
document or agreement to which any Company is a party or an obligor, which
evidences indebtedness of any Company individually or in the aggregate of more
than $1,000,000.
"Debt Documents" shall mean the Credit Agreement and the Note Purchase
--------------
Agreement, the documents attached as exhibits thereto and any other loan
agreement pursuant to which the debt under such agreements is refinanced in
whole or in part.
"Deferral Date" has the meaning ascribed to it in Section 14(f ).
-------------
"Deferral Election" has the meaning ascribed to it in Section 14(f ).
-----------------
"DGHA" shall mean D. George Harris & Associates, Inc.
----
"DGHA Fee Letter" means the letter agreement dated the date hereof
---------------
among the Corporation, certain Subsidiaries thereof and DGHA, as amended from
time to time.
"DGHA Original Shares" shall mean the 100,000 shares of Series B
--------------------
Preferred Stock issued to certain of the Promoter Stockholders pursuant to the
Subscription Agreement.
3
<PAGE>
"DGHA Repurchase Agreement" means the DGHA Repurchase Agreement dated
-------------------------
the date hereof, among the Corporation and the DGHA Stockholders named therein.
"DGHA Restricted Shares" means the 276,814 (as adjusted pursuant to
----------------------
Section 7(d) and as further adjusted to reflect any stock splits, stock
dividends, reverse stock splits or reclassifications of the Class A Common
Stock) shares of Class A Common Stock issued or issuable to the DGHA
Stockholders party to the DGHA Repurchase Agreement (and any Securities issued
in respect thereof), which shares are subject to repurchase by the Corporation
upon an IRR Event pursuant to the DGHA Repurchase Agreement, for so long as such
shares of Class A Common Stock are subject to the DGHA Repurchase Agreement.
"DGHA Stockholders" shall mean any Person listed on the Schedule of
-----------------
DGHA Stockholders attached hereto as Schedule 4 and any other employee of DGHA
or an Affiliate of DGHA who is designated as such by the Chairman of DGHA.
"EBITDA" has the meaning, for any period, ascribed to such term in the
------
Credit Agreement.
"EBITDA Event" shall mean and occur if, at the end of any Accounting
------------
Period commencing with the twelve-month period ending February 28, 1998, the
Actual EBITDA for the twelve-month period ending on the last day of such
Accounting Period is less than 75% of the Budgeted EBITDA for the twelve-month
period ending on the last day of the corresponding Accounting Period.
"Eligible Stockholders" has the meaning ascribed to it in
---------------------
Section 14(a).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"ERISA Affiliate" means any Person that for purposes of Title IV of
---------------
ERISA is a member of the controlled group of any Obligor, or under common
control with any Obligor, within the meaning of Section 414 of the Code.
"ERISA Event" means (a) (i) the occurrence of a reportable event,
-----------
within the meaning of Section 4043 of ERISA, with respect to any Plan unless the
30-day notice requirement with respect to such event (or the penalty for failure
to provide such notice) has been waived by the PBGC; or (ii) the requirements of
subsection (1) of Section 4043(b) of ERISA (without regard to subsection (2) of
such Section) are met with a contributing sponsor, as defined in Section
4001(a)(13) of ERISA, of a Plan, and an event described in paragraph (9), (10),
(11), (12) or (13) of Section 4043(c) of ERISA is reasonably expected to occur
with respect to such Plan within the following 30 days; (b) the application for
a minimum funding waiver with respect to a Plan; (c) the provision by the
administrator of any Plan of a notice of intent to terminate such Plan, pursuant
to Section 4041(a)(2) of ERISA (including any such notice with respect to a plan
amendment referred to in Section 4041(e) of ERISA); (d) the cessation of
operations at a facility of any Obligor or any ERISA Affiliate in the
circumstances described in Section 4062(e) of ERISA; (e) the withdrawal by any
Obligor or any ERISA Affiliate from a Multiple Employer Plan during a plan year
for which it was a substantial employer, as defined in Section 4001(a)(2) of
ERISA; (f) the conditions for imposition of a lien under Section 302(f) of
4
<PAGE>
ERISA shall have been met with respect to any Plan; (g) the adoption of an
amendment to a Plan requiring the provision of security to such Plan, pursuant
to Section 307 of ERISA; or (h) the institution by the PBGC of proceedings to
terminate a Plan pursuant to Section 4042 of ERISA, or the occurrence of any
event or condition described in Section 4042 of ERISA that could reasonably be
expected to constitute grounds for the termination of, or the appointment of a
trustee to administer, such Plan.
"Excess Attributable to the First Priority Additional Retiring
-------------------------------------------------------------
Purchases" shall mean the lesser of (x) the number of Remaining Retiring Shares
- ---------
to be purchased in the aggregate by the First Priority Eligible Stockholders
pursuant to their Additional Retiring Purchases and (y) the excess Remaining
Retiring Shares remaining after the Second Retirement Reduction.
"Excess Attributable to the Second Priority Additional Retiring
--------------------------------------------------------------
Purchases" shall mean the lesser of (x) the number of Remaining Retiring Shares
- ---------
to be purchased in the aggregate by the Second Priority Eligible Stockholders
pursuant to their Additional Retiring Purchases and (y) the excess Remaining
Retiring Shares remaining prior to the First Retirement Reduction.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
------------
or any similar federal law then in force.
"Exclusive Period" has the meaning ascribed to it in Section 15.
----------------
"Exempt Issuance" shall mean (i) the issuance of shares of Class A
---------------
Common Stock or Class B Common Stock upon the conversion of shares of Series B
Preferred Stock and the issuance of shares of Class A Common Stock upon the
conversion of shares of Class B Common Stock, (ii) the issuance of Securities to
a DGHA Stockholder pursuant to Section 3 of the DGHA Repurchase Agreement and
Section 7(b), (iii) the issuance of Securities to a Manager Stockholder pursuant
to Section 3 of the Manager Repurchase Agreement and Section 7(a), (iv) the
issuance of Securities to a Manager Stockholder pursuant to Section 7(c), (v)
the issuance of the Warrants pursuant to the Warrant Issuance Agreement and the
issuance of Securities pursuant to the exercise of the Warrants, (vi) the
issuance of Securities, or any securities convertible into or exercisable for
Securities, pursuant to a Public Offering and (vii) the issuance of Securities
to a DGHA Stockholder or a Manager Stockholder after repurchase by the
Corporation pursuant to the DGHA Repurchase Agreement, the Manager Repurchase
Agreement or pursuant to Section 14, of an equivalent or greater number of
Securities from one or more DGHA Stockholders, Manager Stockholders or HCG/HSC
Stockholders.
"Fair Value" has the meaning ascribed to it in Section 15(a).
----------
"First Priority Eligible Stockholders" shall mean (i) with respect to
------------------------------------
any Transfer to be made by a DGHA Stockholder, the other DGHA Stockholders, (ii)
with respect to any Transfer to be made by a Manager Stockholder, the other
Manager Stockholders and (iii) with respect to any Transfer to be made by an
HCG/HSC Stockholder, the other HCG/HSC Stockholders.
"First Refusal Amount" has the meaning ascribed to it in Section 5(a).
--------------------
"First Refusal Securities" has the meaning ascribed to it in
------------------------
Section 5(a).
5
<PAGE>
"GAAP" means United States generally accepted accounting principles,
----
consistently applied.
"HCG" shall mean Harris Chemical Group, Inc.
---
"HCG/HSC Stockholder" shall mean any Person listed on the Schedule of
-------------------
HCG/HSC Stockholders attached hereto as Schedule 5 and any other full-time
employee of HCG or HSC or any Subsidiary thereof who is designated as such by
the Chairman of HCG or HSC, as the case may be, but specifically excluding the
DGHA Stockholders.
"HSC" shall mean Harris Specialty Chemicals, Inc.
---
"Harris Securities" shall mean at the time in question the Securities
-----------------
(excluding the Securities comprising the Class A Restricted Shares) owned by the
Promoter Stockholders.
"Individual Investor Put Shares" has the meaning ascribed to it in
------------------------------
Section 14(c).
"Initial Institutional Director" shall have the meaning ascribed to it
------------------------------
in Section 2(a)(iii).
"Initial Public Offering" means the initial Public offering of equity
-----------------------
securities of the Corporation.
"Initial Retiring Purchase" has the meaning ascribed to it in
-------------------------
Section 14(a).
"Institutional Directors" has the meaning ascribed to it in
-----------------------
Section 2(b).
"Institutional Securities" means all Securities owned by the
------------------------
Institutional Stockholders.
"Institutional Stockholders" means any Person listed on the Schedule
--------------------------
of Institutional Stockholders attached hereto as Schedule 6 and any successor
to, or Permitted Transferee (excluding any transferee who purchases
Institutional Securities pursuant to Section 6) of, any such Person who or which
agrees in writing to be treated as an Institutional Stockholder hereunder and to
be bound by the terms and comply with all applicable provisions hereof.
"IRR Event" means the occurrence of any of the following:
---------
(i) the sale of all or substantially all of the assets of the
Corporation and its Subsidiaries (in each case after assumption of all the
liabilities of the Corporation or the Subsidiary), on a consolidated basis;
(ii) the sale of all or substantially all of the Securities;
(iii) a merger of the Corporation or any Subsidiary, provided that
the merger comprises all or substantially all of the assets of the
Corporation and its Subsidiaries,
6
<PAGE>
with another Person if the stockholders of the Corporation immediately
prior to such merger do not own more than 80% of the corporation surviving
such merger;
(iv) the consummation of a Qualified Public Offering; or
(v) a sale made pursuant to Section 15.
"Majority of the Institutional Stockholders" means those Institutional
------------------------------------------
Stockholders who at the time in question hold a majority of the Common
Equivalents then held by all Institutional Stockholders.
"Majority of the DGHA Stockholders" means those DGHA Stockholders who
---------------------------------
at the time in question hold a majority of the Common Equivalents then held by
all DGHA Stockholders.
"Management Services Agreement" means the Management Services
-----------------------------
Agreement dated as of the date hereof among the Corporation, certain
subsidiaries thereof and DGHA, as amended or modified from time to time.
"Manager Repurchase Agreement" means the Manager Repurchase Agreement,
----------------------------
attached hereto and forming Schedule 7, to be entered into among the Corporation
and each Manager Stockholder who purchases Manager Restricted Shares.
"Manager Restricted Shares" means the 138,411 (as adjusted pursuant to
-------------------------
Section 7(d) and as further adjusted to reflect any stock splits, stock
dividends, reverse stock splits or reclassifications of the Class A Common
Stock) shares of Class A Common Stock issued or issuable to the Manager
Stockholders party to the Manager Repurchase Agreement (and any Securities
issued in respect thereof), which shares are subject to repurchase by the
Corporation upon an IRR Event pursuant to the Manager Repurchase Agreement, for
so long as such shares of Class A Common Stock are subject to the Manager
Repurchase Agreement.
"Manager Stockholder" shall mean any Person listed on the Schedule of
-------------------
Manager Stockholders attached hereto as Schedule 8 and any Stockholder who
purchases Securities who is a full-time employee of the Corporation or of any
Subsidiary and is designated as such by the Board, but specifically excluding
the DGHA Stockholders.
"Manager Shares" shall have the meaning ascribed to it in
--------------
Section 7(c).
"Merger" means the consummation of the merger between Acquisition and
------
U.S. Silica, with U.S. Silica as the surviving corporation.
"Multiple Employer Plan" means a single employer plan, as defined in
----------------------
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of any
Obligor or any ERISA Affiliate and at least one Person other than the Obligors
and the ERISA Affiliates or (b) was so maintained and in respect of which any
Obligor or any ERISA Affiliate could have liability under Section 4064 or 4069
of ERISA in the event such plan has been or were to be terminated.
7
<PAGE>
"Note Purchase Agreement" means the Note Purchase Agreement dated as
-----------------------
of February 9, 1996, as amended from time to time, among Acquisition and the
lenders named therein.
"Notice Date" has the meaning ascribed to it in Section 14(b).
-----------
"Notice of Offer" has the meaning ascribed to it in Section 11(a).
---------------
"Obligor" means Acquisition and U.S. Silica.
-------
"Offer" has the meaning ascribed to it in Section 11(a).
-----
"Offeree" has the meaning ascribed to it in Section 11(a).
-------
"Offeror" shall have the meaning ascribed to it in Section 11(a).
-------
"Officer's Report" has the meaning ascribed to it in Section 3(a)(ii).
----------------
"Option" has the meaning ascribed to it in Section 6(a)(i).
------
"Option Notice" has the meaning ascribed to it in Section 6(a)(iv).
-------------
"Option Term" has the meaning ascribed to it in Section 6(a)(ii).
-----------
"Original Per Unit Cost" shall mean $27.78 (subject to adjustments for
----------------------
stock splits, stock dividends, stock combinations, stock subdivisions and the
like with respect to the Units).
"Other Stockholders" has the meaning ascribed to it in Section 12(a).
------------------
"PBGC" means the Pension Benefit Guaranty Corporation.
----
"Permitted Transferees" has the meaning ascribed to such term in
---------------------
Section 8(d).
"Person" shall be construed broadly and shall include an individual, a
------
partnership, a corporation, an association, a joint stock company, a limited
liability company, a trust, a joint venture, an unincorporated organization and
a governmental entity or any department, agency or political subdivision
thereof.
"Plan" means a Single Employer Plan or a Multiple Employer Plan.
----
"Preferred Stock" means (i) the Series A Preferred Stock, the Series B
---------------
Preferred Stock and the Seller Preferred Stock and (ii) any shares of any series
of Preferred Stock of the Corporation issued to the Stockholders on or after the
date hereof.
"Primary Retirement Notice" has the meaning ascribed to it in
-------------------------
Section 14(a).
"Promoter Stockholders" means, collectively, the DGHA Stockholders,
---------------------
the Manager Stockholders and the HCG/HSC Stockholders.
8
<PAGE>
"Proportionate Percentage" means, with respect to a Stockholder, a
------------------------
fraction (expressed as a percentage) the numerator of which is the number of
Common Equivalents held by such Stockholder and the denominator of which is (i)
in a situation where the Proportionate Percentage is being calculated with
respect to all Stockholders, the total number of Common Equivalents outstanding
at the time in question and (ii) in a situation where the Proportionate
Percentage is being calculated with respect to a group of Stockholders, the
total number of Common Equivalents held by the members of such group.
"Public Offering" means the closing of a public offering of Common
---------------
Stock pursuant to a registration statement declared effective under the
Securities Act, except that a Public Offering shall not include an offering made
in connection with an employee benefit plan.
"Public Sale" means any sale, occurring simultaneously with or after a
-----------
Public Offering, of Securities to the public pursuant to an offering registered
under the Securities Act or to the public through a broker, dealer or market
maker pursuant to the provisions of Rule 144.
"Qualified Public Offering" means the sale by the Corporation and/or
-------------------------
one or more stockholders of the Corporation in an underwritten Public Offering
registered under the Securities Act of Common Stock which results in aggregate
net cash proceeds (net of underwriters' discounts and commissions and estimated
offering expenses) to the Corporation and/or any selling stockholders of not
less than $30 million.
"Reference Date" has the meaning ascribed to it in Section 7(c).
--------------
"Registration Rights Agreement" means the Registration Rights
-----------------------------
Agreement dated as of February 9, 1996, as amended from time to time, among the
Corporation and the parties named therein.
"Regulatory Problem" means (i) any set of facts or circumstance
------------------
wherein it has been asserted by any governmental regulatory agency, or a
Stockholder believes based on advice of counsel that there is a substantial risk
of such assertion, that such Stockholder is not legally permitted to hold, or
exercise any significant right with respect to, the securities (including any
Securities or debt securities) of the Corporation which it holds or (ii) a
Voting Regulatory Problem.
"Remaining Retiring Shares" has the meaning ascribed to it in
-------------------------
Section 14(a).
"Requisite Stockholders" means a Majority of the Institutional
----------------------
Stockholders and a Majority of the DGHA Stockholders; provided, however, that if
the Majority of the Institutional Stockholders have designated the Additional
Institutional Directors pursuant to Section 2(b) hereof, "Requisite
---------
Stockholders" means, solely for purposes of Section 4(a) (other than subsection
- ------------
4(a)(vii) and subsection 4(a)(xi) only with respect to any transactions between
the Corporation or any of its Subsidiaries and any Institutional Stockholder),
Section 4(b) and Section 13, a Majority of the Institutional Stockholders.
"Requisite Stockholder Approval" is the approval of the terms and
------------------------------
vesting of the Class A Restricted Shares, by vote or written consent in lieu
thereof, of the holders of more than 75% of the voting power of all outstanding
stock of the Corporation entitled to vote as of the
9
<PAGE>
consummation of an IRR Event. There shall be excluded, for purposes of the
preceding calculation, stock of the Corporation that would not be counted as
outstanding stock under Code Section 280G(b)(5) or applicable Treasury
Regulations thereunder (whether proposed, temporary or final).
"Restricted Securities" means, at any point in time, any Securities
---------------------
which have not theretofore been transferred in a Public Sale.
"Retiring Participation Shares" has the meaning ascribed to it in
-----------------------------
Section 14(a).
"Retiring Shares" has the meaning ascribed to it in Section 14(a).
---------------
"Retiring Stockholder" has the meaning ascribed to it in
--------------------
Section 14(a).
"Rule 144" means Rule 144 promulgated by the Securities and Exchange
--------
Commission under the Securities Act as such rule may be amended from time to
time, or any similar rule then in force.
"Sale of the Company" has the meaning ascribed to it in Section 13(a).
-------------------
"Sale Notice" has the meaning ascribed to it in Section 13(a).
-----------
"Secondary Retirement Notice" has the meaning ascribed to it in
---------------------------
Section 14(a).
"Second Priority Eligible Stockholders" of shall mean (i) with respect
-------------------------------------
to any Transfer to be made by a DGHA Stockholder, the Stockholders other than
the DGHA Stockholders, (ii) with respect to any Transfer to be made by a Manager
Stockholder, the Stockholders other than the Manager Stockholders, and (iii)
with respect to any Transfer to be made by an HCG/HSC Stockholder, the
Stockholders other than the HCG/HSC Stockholders.
"Second Retirement Notice" has the meaning ascribed to it in
------------------------
Section 14(b).
"Section 12 Acceptance" shall have the meaning ascribed to it in
---------------------
Section 12(a).
"Section 12 Notice" shall have the meaning ascribed to it in
-----------------
Section 12(a).
"Section 12 Offer" shall have the meaning ascribed to it in
----------------
Section 12(a).
"Section 12 Offeree" shall have the meaning ascribed to it in
------------------
Section 12(a).
"Section 12 Offeror" shall have the meaning ascribed to it in
------------------
Section 12(a).
"Securities" means the Common Stock, the Preferred Stock, and any and
----------
all other Common Stock, Preferred Stock or other capital stock or equity
securities (including the Warrants and other derivative securities therefor) of
the Corporation.
"Securities Act" means the Securities Act of 1933, as amended, or any
--------------
similar federal law then in force.
10
<PAGE>
"Securities and Exchange Commission" includes any governmental body or
----------------------------------
agency succeeding to the functions thereof.
"Seller Preferred Stock" means the Series C Preferred Stock, $.01 par
----------------------
value, of the Corporation issued to U.S. Borax Inc. upon the closing of the
Stock Purchase Agreement.
"Series A Preferred Stock" means the Series A Preferred Stock, $.01
------------------------
par value, of the Corporation.
"Series B Preferred Stock" means the Series B Preferred Stock, $0.01
------------------------
par value, of the Corporation.
"Single Employer Plan" means a single employer plan, as defined in
--------------------
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of any
Obligor or any ERISA Affiliate and no Person other than the Obligors and the
ERISA Affiliates or (b) was so maintained, and in respect of which any Obligor
or any ERISA Affiliate could have liability under Section 4069 of ERISA in the
event such plan has been or were to be terminated.
"Stock Purchase Agreement" means the Stock Purchase Agreement between
------------------------
U.S. Borax Inc. and the Corporation dated October 23, 1995, as amended or
modified from time to time.
"Stock Purchase Loan Note" shall mean the Secured Promissory Note
------------------------
substantially in the form of Schedule 9 attached hereto.
"Subscription Agreement" shall mean the Stock Subscription and
----------------------
Exchange Agreement dated the date hereof, among the Corporation and the
Stockholders which are parties thereto.
"Subsidiary" means with respect to any Person, any corporation or
----------
other entity of which the shares of stock having a majority of the general
voting power in electing the board of directors of such corporation or other
entity are, at the time as of which any determination is being made, owned by
such Person either directly or indirectly through Subsidiaries.
"Tax Sharing Agreement" means the Tax Sharing Agreement dated as of
---------------------
February 9, 1996 between the Corporation and the parties named therein.
"Termination Event" has the meaning ascribed to it in Section 14(d).
-----------------
"Transfer" shall be construed broadly and shall include any transfer
--------
(whether voluntary, involuntary or by operation of law) of securities or any
interest therein, including without limitation, by way of issuance, sale,
participation, pledge, gift, bequeath, intestate transfer, distribution,
liquidation, merger or consolidation.
"Transfer Date" has the meaning ascribed to it in Section 14(e).
-------------
"Trigger Event" shall mean (a) the existence of a Credit Event or the
-------------
occurrence of an EBITDA Event, (b) the termination of the Exclusive Period or
(c) both of Mr. D. George
11
<PAGE>
Harris and Mr. Anthony J. Petrocelli shall have ceased to serve on the Board due
to death, disability or resignation.
"Unit" means 1 share of Series A Preferred Stock and 2 shares of
----
Series B Preferred Stock.
"Unit Price" has the meaning ascribed to it in Section 6(a)(iii).
----------
"U.S. Silica" means U.S. Silica Company, a Delaware corporation.
-----------
"Valuation Price per Share" means, with respect to any Security, the
-------------------------
amount distributable to such Security, if the Company is sold at Fair Value and
the proceeds are distributed by the Corporation in complete liquidation pursuant
to the rights and preferences set forth in the Certificate immediately prior to
the Notice Date.
"Voting Regulation Problem" shall exist when a Person and such
-------------------------
Person's Affiliates would own, control or have power over a greater quantity of
securities (including any Securities or debt securities) of any kind issued by
the Corporation or any successor than are permitted under any requirement of any
governmental authority having jurisdiction over such Person.
"Voting Securities" means the Class A Common Stock, the Series B
-----------------
Preferred Stock (from and after a Trigger Event in accordance with the terms of
the Certificate) and any other Securities of the Corporation which shall at the
time in question be entitled to vote on each matter as to which stockholders of
the Corporation are entitled to vote.
"Warrants" means the warrants to purchase shares of Series A Preferred
--------
Stock and Series B Preferred Stock granted from time to time pursuant to the
Warrant Issuance Agreement.
"Warrant Issuance Agreement" means a Warrant Issuance Agreement or
--------------------------
similar document to be entered into by the Corporation and the Persons who
shall, from time to time, purchase Warrants.
"Withdrawal Liability" has the meaning assigned to such term in Part I
--------------------
of Subtitle E of Title IV of ERISA.
(b) The use in this Agreement of the term "including" means "including,
without limitation." The words "herein," "hereof," "hereunder" and other words
of similar import refer to this Agreement as a whole, including the schedules
and exhibits, as the same may from time to time be amended or supplemented, and
not to any particular subparagraph or clause contained in this Agreement. All
references to schedules and exhibits mean the schedules and exhibits attached to
this Agreement.
(c) Unless otherwise expressly set forth herein, whenever the term "best
efforts" is used, such efforts shall not include any obligation to incur
substantial expenses or liabilities.
12
<PAGE>
(d) The title of and the section and paragraph headings in this Agreement
are for convenience of reference only and shall not govern the interpretation of
any of the terms or provisions of this Agreement.
(e) The use herein of the masculine, feminine or neuter forms shall also
denote the other forms, as in each case the context may require.
(f) Where specific language is used to clarify by example a general
statement contained herein, such specific language shall not be deemed to
modify, limit or restrict in any manner the construction of the general
statement to which it relates. The language used in this Agreement has been
chosen by the parties to express their mutual intent, and no rule of strict
construction shall be applied against any party.
2. Board of Directors; Adjustment EBITDA Targets.
---------------------------------------------
(a) Election of Directors Generally. Each Stockholder shall from
-------------------------------
time to time take such action, in his capacity as a stockholder of the
Corporation, including the voting of all Securities owned or controlled by such
Stockholder, as may be necessary to cause the Corporation to be managed at all
times by a Board, consisting of seven members to be designated as follows:
(i) for so long as D. George Harris and his Affiliates own 50% or
more of the Securities (other than DGHA Restricted Shares) held by them on
the date hereof, two directors shall be designated by D. George Harris, one
of which designated directors shall be D. George Harris (each a "George
Harris Director" and together the "George Harris Directors");
(ii) for so long as Anthony J. Petrocelli and his Affiliates own 50%
or more of the Securities (other than the DGHA Restricted Shares) held by
them on the date hereof, two directors shall be designated by Anthony J.
Petrocelli, one of which designated directors shall be Anthony J.
Petrocelli (each a "Petrocelli Director" and together the "Petrocelli
Directors");
(iii) three directors shall be designated by a Majority of the
Institutional Stockholders (each an "Initial Institutional Director" and
together the "Initial Institutional Directors");
(iv) for so long as D. George Harris shall be elected as a director
he shall also be elected as the Chairman of the Board and Chief Executive
Officer of the Corporation, and for so long as Anthony J. Petrocelli shall
be elected as a director he shall also be elected as the Vice-Chairman of
the Board;
Notwithstanding the forgoing, in the event of a Termination Event with
respect to D. George Harris or Anthony J. Petrocelli, the DGHA Stockholder with
respect to which such Termination Event has occurred shall not be entitled to
designate any directors and the Harris Directors or the Petrocelli Directors, as
applicable, shall thereafter be designated by the Majority of the DGHA
Stockholders.
13
<PAGE>
(b) Election of Additional Institutional Directors. In addition to
----------------------------------------------
the directors designated pursuant to Section 2(a), upon the occurrence of a
Trigger Event, the Majority of the Institutional Stockholders shall have the
right to designate two additional directors (each an "Additional Institutional
Director" and together the "Additional Institutional Directors") so as to cause
the directors designated by the Institutional Stockholders to constitute a
majority of the directors on the Board; provided, however, that such right
-------- -------
shall be exercisable by the Majority of the Institutional Stockholders only upon
the delivery to the Corporation, during the continuance of the Trigger Event, of
a written notice by a representative of the Majority of the Institutional
Stockholders of their desire to designate the Additional Institutional
Directors. The Initial Institutional Directors and the Additional Institutional
Directors are referred to herein collectively as the "Institutional Directors"
and each, individually, an "Institutional Director". Each Stockholder shall, at
such times as the Majority of the Institutional Stockholders are entitled to
designate the Additional Institutional Directors and upon written notice from
the Corporation or take such action, in his capacity as a stockholder of the
Corporation, including the voting of all Securities owned or controlled by such
Stockholder, as may be necessary to cause the Additional Institutional Directors
to be elected to the Board.
(c) Compensation Committee. Each Stockholder shall from time to
----------------------
time take such action, in his capacity as a stockholder of the Corporation,
including the voting of all Securities owned or controlled by such Stockholder,
as may be necessary to cause a Compensation Committee of the Board to be
constituted and to consist of three directors, two of which shall be
Institutional Directors and one of which shall be a George Harris Director.
(d) Expenses. The Corporation shall pay the reasonable out-of-pocket
--------
expenses incurred by each Board member designated pursuant to Section 2(a) or
2(b) in connection with attending the meetings of the Board and any committees
thereof.
(e) Covenant to Vote. Each of the Stockholders agrees to vote, in
----------------
person or by proxy, all of the Securities owned by such Stockholder and entitled
to vote at any annual or special meeting of the stockholders of the Corporation
called for the purpose of voting on the election of directors, or to execute a
written consent in lieu thereof, in favor of the election of the directors
selected in accordance with Section 2(a) or 2(b).
(f) Removal of Directors.
--------------------
(i) At all times (A) a Majority of the Institutional Stockholders
shall have the right to recommend the removal, without cause, of any or all
of the Institutional Directors, (B) D. George Harris (or, if the George
Harris Directors are at such time designated by the Majority of the DGHA
Stockholders, the Majority of the DGHA Stockholders) shall have the right
to recommend the removal, without cause, of any or all of the George Harris
Directors, and (C) Anthony J. Petrocelli (or, if the Petrocelli Directors
are at such time designated by the Majority of the DGHA Stockholders, the
Majority of the DGHA Stockholders) shall have the right to recommend the
removal, without cause, of any or all of the Petrocelli Directors.
(ii) In the event that any Stockholder acting as described in
Section 2(f)(i) shall, in accordance with their rights specified herein,
recommend the removal of any director
14
<PAGE>
or directors with respect to whom they have such right, then each of the
other Stockholders hereby agrees to join with such acting Stockholder in
recommending such removal as described above, and in causing the
Corporation either to promptly hold a special meeting of stockholders and
to vote, in person or by proxy, all of the Securities owned by such
Stockholder and entitled to vote at such meeting or to execute a written
consent in lieu thereof, as the case may be, in favor of such removal.
(g) Vacancies. In the event a vacancy is created on the Board by
---------
reason of the death, removal or resignation of any director, (i) such vacancy
may be filled by the remaining directors in accordance with Sections 2(a) or
2(b), as applicable, (ii) if not so filled, each of the Stockholders hereby
agrees, in its capacity as a stockholder of the Corporation, to elect a director
to fill such vacancy in accordance with the selection procedures set forth in
Sections 2(a) and 2(b) as applicable. Such election shall occur within thirty
days after such vacancy occurs. Each of the Stockholders hereby agrees, in his
capacity as a stockholder of the Corporation, to use his best efforts to cause
the Corporation either to promptly hold a special meeting of stockholders or to
execute a written consent in lieu thereof, and each of the Stockholders hereby
agrees to vote all of the Securities owned by such Stockholder and entitled to
vote at such meeting, in person or by proxy, or pursuant to such written consent
of stockholders, in favor of the person or persons selected in accordance with
Sections 2(a) or 2(b) to fill such vacancy and, if necessary, in favor of
removing any director elected to fill such vacancy other than in accordance with
the selection procedures of Section 2(a) or 2(b).
(h) No Inconsistent Agreements. Each Stockholder represents that he
--------------------------
has not granted and is not a party to any proxy, voting trust or other agreement
which is inconsistent with or conflicts with the provisions of this Agreement,
and no Stockholder shall grant any proxy or become party to any voting trust or
other agreement which is inconsistent with or conflicts with the provisions of
this Agreement.
(i) Budgeted EBITDA. In the event the Corporation or any
---------------
Subsidiary makes any capital expenditures not contemplated by the projections
upon which the Budgeted EBITDA targets are based, or the Corporation or any
Subsidiary consummates any mergers, acquisitions or dispositions (whether of
assets or stock or other interests) or other extraordinary transactions, the
Board will determine in good faith appropriate adjustments to the Budgeted
EBITDA targets, which adjustments shall be final and binding.
3. Financial Statements and Other Information, Inspections and Board
-----------------------------------------------------------------
Meetings.
- --------
(a) Prior to the consummation of an Initial Public Offering, the
Corporation will deliver to each Stockholder having a Proportionate Percentage
of at least 5%:
(i) as soon as available but in any event within 30 days after the
end of each four-week or five-week accounting period (the "Accounting
Periods") in each fiscal year, unaudited consolidated and consolidating
statements of income and cash flows of the Corporation and its Subsidiaries
for such Accounting Period and for the period from the beginning of the
fiscal year to the end of such Accounting Period, which statements shall
also include the EBITDA of the Corporation and its Subsidiaries for such
Accounting Period, and commencing on and after the first anniversary of
this Agreement, for the
15
<PAGE>
twelve-month period ending on the last day of such Accounting Period and
consolidated and consolidating balance sheets of the Corporation and its
Subsidiaries as of the end of such Accounting Period, setting forth in each
case comparisons to the corresponding period in the annual budget and to
the corresponding period in the preceding fiscal year with variances
delineated, and all such statements will be prepared in accordance with
generally accepted accounting principles, consistently applied;
(ii) as soon as available but in any event within 45 days after the
end of each fiscal quarter of the Corporation unaudited consolidated and
consolidating statements of income and cash flows of the Corporation and
its Subsidiaries for such fiscal quarter, setting forth in each case
comparisons to the corresponding period in the annual budget and to the
corresponding period in the preceding fiscal year with variances
delineated, and accompanied by a written report of the Corporation's Chief
Executive Officer, Chief Operating Officer or Chief Financial Officer with
respect to (a) such Officer's lack of actual knowledge after due
investigation of any condition or event which constitutes an event of
default under the terms of this Agreement, a Credit Event or an EBITDA
Event; (b) the operations, problems and achievements of the Corporation
during such period and (c) the calculation of the financial tests required
under the Credit Agreement for such period (such written report being
referred to herein as the "Officer's Report");
(iii) as soon as available but in any event within 90 days after the
end of each fiscal year of the Corporation, audited consolidated and
consolidating statements of income and cash flows of the Corporation and
its Subsidiaries for such year, and the related balance sheets of the
Corporation and its Subsidiaries as of the end of such year, setting forth
in each case in comparative form the corresponding figures for the
preceding fiscal year and for the annual budget for such year, and
accompanied by (a) an opinion thereon of independent certified public
accountants reasonably acceptable to a majority in interest of all
Stockholders (it being agreed that Coopers & Lybrand is presumptively
acceptable), which opinion shall state that said financial statements
(other than the annual budget) fairly present the financial condition and
results of operations of the Corporation and its Subsidiaries as at the end
of, and for, such fiscal year, (b) a letter from such accounting firm
stating that in the course of its examination they obtained no knowledge,
except as specifically stated, that there was a default in existence by the
Corporation or any Subsidiary under this Agreement or any other material
agreement to which the Corporation or any Subsidiary is a party, (c) a copy
of such firm's annual management letter to the Board and (d) an Officer's
Report;
(iv) promptly upon receipt thereof, any additional reports,
management letters or other detailed information concerning significant
aspects of the Corporation's and its Subsidiaries' operations and financial
affairs given to the Corporation by its independent accountants (and not
otherwise contained in other materials provided hereunder);
(v) no later than 30 days prior to the end of each fiscal year, a
consolidated and consolidating annual budget prepared on a monthly basis
for the Corporation and its Subsidiaries for the succeeding fiscal year
(displaying anticipated statements of income and cash flows and balance
sheets);
16
<PAGE>
(vi) promptly (but in any event within ten (10) business days) after
the discovery or receipt of notice of (a) any default under the terms of
any material agreement to which the Corporation or any Subsidiary is a
party (including without limitation, this Agreement) or, without limitation
to the generality of the foregoing, a Trigger Event or any other adverse
event or circumstance affecting the Corporation or any Subsidiary which is
material to the Corporation and its Subsidiaries taken as a whole
(including the filing of any material litigation against the Corporation or
any Subsidiary or the existence of a dispute that may reasonably be
expected to lead to material litigation) or (b) any noncompliance by the
Corporation or any Subsidiary with applicable laws, rules and regulations
of all governmental authorities, the violation of which might reasonably be
expected to have a material adverse effect upon the financial condition of
the Corporation and its Subsidiaries taken as a whole, an Officer's
Certificate specifying the nature and a period of existence thereof and
what actions the Corporation and its Subsidiaries have taken and propose to
take with respect thereto;
(vii) within ten (10) days after transmission thereof, copies of all
registration statements which the Corporation files with the Securities and
Exchange Commission, and copies of all press releases and other statements
made available generally by the Corporation to the public concerning
material developments in the Corporation's business;
(viii) immediately upon receipt thereof, copies of all environmental
reports or other communications concerning environmental matters of the
Corporation or its Subsidiaries which might reasonably be expected to have
a material adverse effect upon the financial condition of the Corporation
and its Subsidiaries taken as a whole; and
(ix) with reasonable promptness, such other information and
financial data concerning the Corporation and its Subsidiaries as any
Stockholder having a Proportionate Percentage of at least 5% may reasonably
request.
To the best of the Corporation's knowledge, each of the financial
statements referred to in subparagraphs (i), (ii) and (iii) will be true
and correct in all material respects as of the dates and for the periods
stated therein, subject in the case of the unaudited financial statements
to footnotes and changes resulting from normal year-end audit adjustments.
The Corporation will provide to all Stockholders, when available,
audited consolidated and consolidating statements of income and cash flows
of the Corporation and its Subsidiaries and the related consolidated and
consolidating balance sheet of the Corporation and its Subsidiaries,
accompanied by an opinion thereon of the Corporation's independent
certified public accountant.
(b) Except as consented to in writing by the Corporation or as otherwise
required by law or judicial order or decree or by any governmental agency or
authority, each Person which obtains information regarding the Corporation and
its Subsidiaries under this Section 3 will use its best efforts to maintain the
confidentiality of all nonpublic information obtained by it hereunder which the
Corporation has reasonably designated as proprietary or confidential in
17
<PAGE>
nature; provided that each such Person may disclose such information to a
Permitted Transferee in connection with the sale or transfer of any Securities
if such Permitted Transferee agrees in writing to be bound by the provisions
hereof.
(c) Prior to the consummation of an Initial Public Offering, the
Corporation will permit each representative designated by any Stockholder having
a Proportionate Percentage of at least 5%, upon reasonable notice to the Chief
Executive Officer of the Corporation, during normal business hours or such other
times as any such holder may reasonably request and in such manner so as not to
unreasonably interfere with the business and operations of the Corporation or
any Subsidiary, to, at such holder's expense, (i) visit and inspect any of the
properties of the Corporation and its Subsidiaries, (ii) examine the corporate
and financial records of the Corporation and its Subsidiaries and make copies
thereof or extracts therefrom and (iii) discuss the affairs, finances and
accounts of any such corporations with the directors, officers, key employees
and independent accountants of the Corporation and its Subsidiaries.
4. Additional Voting Agreements; Required Sale.
-------------------------------------------
(a) The Corporation shall not, and shall ensure that each Subsidiary shall
not, without the affirmative vote or written consent of the Requisite
Stockholders:
(i) consummate a Public Offering;
(ii) except as contemplated by this Agreement, the Subscription
Agreement or the Warrant Issuance Agreement, after it shall have been
executed, issue any Securities other than to the Corporation or to a
wholly-owned Subsidiary;
(iii) merge or consolidate with or into another entity (other than
mergers of wholly-owned Subsidiaries and mergers of a wholly-owned
Subsidiary with and into the Corporation where the Corporation is the
surviving corporation);
(iv) acquire any business from, or capital stock of, any Person;
(v) redeem the Seller Preferred Stock, otherwise than as required
pursuant to the Certificate;
(vi) amend its Certificate of Incorporation, except for the
certificate of designations with respect to the Seller Preferred Stock,
attached hereto as Schedule 3, which the Stockholders hereby agree shall be
adopted by the Corporation on the date hereof;
(vii) amend its Bylaws;
(viii) increase the compensation of any of its officers, directors
or management employees, above the levels in existence as of the date
hereof, or pay any fees to directors unless approved by the Compensation
Committee;
(ix) sell, lease, exchange, convey, license or otherwise dispose of
in any 12-month period in excess of 10% (or, in the aggregate during the
term of this Agreement, in
18
<PAGE>
excess of 25%) of its consolidated assets or assets which contributed 10%
(or, in the aggregate during the term of this Agreement, in excess of 25%),
or more of its average annual EBITDA over the last 12 fiscal months, in any
transaction or series of related transactions (other than sales in the
ordinary course of business);
(x) liquidate, dissolve or effect a recapitalization or
reorganization in any form of transaction;
(xi) enter into, revise or amend any contract, agreement or
transaction with any of its officers, directors, management employees or
Affiliates, except for (a) the entering into of the Management Services
Agreement, the DGHA Fee Letter, the Warrant Issuance Agreement, the Note
Purchase Agreement, the Registration Rights Agreement, the Tax Sharing
Agreement, the DGHA Repurchase Agreement and the Manager Repurchase
Agreement, and the amendment of the Management Services Agreement
contemplated by Section 5(d) thereof and (b) employment related
transactions on customary terms, bonus plans approved by the Compensation
Committee and for normal employment arrangements and benefit programs on
reasonable terms and except as otherwise contemplated by this Agreement;
(xii) incur or create, any indebtedness for borrowed money in
excess of the amounts permitted by the Debt Documents;
(xiii) make any loans or advances to, guarantees for the benefit
of, or investments in any Person (other than a wholly-owned Subsidiary),
except as permitted by the Debt Documents and except for (a) reasonable
advances to employees in the ordinary course of business, (b) investments
having a stated maturity no greater than one year from the date the
Corporation makes such investment in (1) obligations of the United States
government or any agency thereof or obligations guaranteed by the United
States government, (2) certificates of deposit of commercial banks having
combined capital and surplus of at least $50 million or (3) commercial
paper with a rating of at least "Prime-1" by Moody's Investors Service,
Inc. or "A-l" by Standard & Poor's Corporation and (c) repurchase
obligations with a term of not more than seven days for underlying
securities of the types described in clause (b)(1) of this subparagraph
(xiii) entered into with any bank meeting the qualifications specified in
clause (b)(2) of this subparagraph (xiii);
(xiv) declare or pay any dividends upon the Securities (other than
the Series A Preferred Stock and the Seller Preferred Stock); or
(xv) take any action that would cause the Corporation or any
Subsidiary to incur a material liability to any Plan or the PBGC or
substantially increase the rate of annual contributions to any Plan.
(b) At all times during the term of this Agreement the Corporation will,
and will cause each Subsidiary to unless consent is obtained from the Requisite
Stockholders:
(i) cause to be done all things necessary to maintain, preserve and
renew its corporate existence and all material licenses, authorizations and
permits necessary to the conduct of its businesses;
19
<PAGE>
(ii) maintain and keep its properties in good repair, working order
and condition, and from time to time make all necessary or desirable
repairs, renewals and replacements, so that its businesses may be properly
and advantageously conducted at all times;
(iii) pay and discharge when payable all taxes, assessments and
governmental charges imposed upon its properties or upon the income or
profits therefrom (in each case before the same becomes delinquent and
before penalties accrue thereon) and all claims for labor, materials or
supplies which if unpaid might by law become a lien upon any of its
property, unless and to the extent that the same are being contested in
good faith and by appropriate proceedings and adequate reserves (as
determined in accordance with generally accepted accounting principles,
consistently applied) have been established on its books with respect
thereto;
(iv) comply with all other material obligations which it incurs
pursuant to any contract or agreement, whether oral or written, express or
implied, as such obligations become due, unless and to the extent that the
same are being contested in good faith and by appropriate proceedings and
adequate reserves (as determined in accordance with generally accepted
accounting principles, consistently applied) have been established on its
books with respect thereto;
(v) comply with all applicable laws, rules and regulations of all
governmental authorities, the violation of which might reasonably be
expected to have a material adverse effect upon the financial condition,
operating results or business prospects of the Corporation and its
Subsidiaries taken as a whole;
(vi) maintain proper books of record and account which fairly
present its financial condition and results of operations and make
provisions on its financial statements for all such proper reserves as in
each case are required in accordance with generally accepted accounting
principles, consistently applied;
(vii) comply with all environmental regulations and orders with
respect to such regulations, provided that this subparagraph shall not
limit the ability of the Corporation or any Subsidiary thereof to contest
in good faith any such order or regulation;
(viii) apply for and continue in force with good and responsible
insurance companies adequate insurance covering risks of such types and in
such amounts as are customary for well-insured corporations of similar size
engaged in similar lines of business, all as determined by the Board;
(ix) (A) promptly and in any event within 10 days after Acquisition
or any ERISA Affiliate knows or has reason to know that any ERISA Event has
occurred, furnish to CMCC a statement of the chief financial officer or
treasurer of Acquisition describing such ERISA Event and the action, if
any, that Acquisition or such ERISA Affiliate has taken and proposes to
take with respect thereto and (B) on the date any records, documents or
other information must be furnished to the PBGC with respect to
20
<PAGE>
any Plan pursuant to Section 4010 of ERISA, furnish to CMCC a copy of such
records, documents and information;
(x) promptly and in any event within five days after receipt thereof
by Acquisition or any ERISA Affiliate, furnish to CMCC copies of each
notice from the PBGC stating its intention to terminate any Plan or to have
a trustee appointed to administer any Plan;
(xi) furnish to CMCC promptly upon receipt thereof by the Company or
any ERISA Affiliate, a copy of the annual actuarial valuation report of
each Plan; and
(xii) promptly and in any event within ten days after receipt
thereof by Acquisition or any ERISA Affiliate from the sponsor of a
Multiemployer Plan, furnish to CMCC copies of each notice concerning (i)
the imposition of Withdrawal Liability by any such Multiemployer Plan, (ii)
the reorganization or termination, within the meaning of Title IV of ERISA,
of any such Multiemployer Plan or (iii) the amount of liability incurred,
or that may be incurred, by Acquisition or any ERISA Affiliate in
connection with any event described in clause (i) or (ii).
(c) Each Stockholder shall in his capacity as a stockholder of the
Corporation, cause that the Corporation observe and perform its obligations
under Section 4(a) and Section 4(b).
5. First Refusal Rights for Securities Issued by the Corporation.
-------------------------------------------------------------
(a) Except for the issuance of Securities in connection with an Exempt
Issuance, if the Corporation authorizes the issuance and sale to any other
Person of any Securities or any securities containing options or rights to
acquire any Securities (the "First Refusal Securities"), the Corporation will
first offer to sell to each Stockholder a portion of the First Refusal
Securities in an amount equal to such Stockholder's Proportionate Percentage of
the First Refusal Securities (the "First Refusal Amount"). Each Stockholder will
be entitled to purchase the First Refusal Securities at the same price per share
and on the same terms as the First Refusal Securities are to be offered to such
other Person.
(b) Each Stockholder must exercise its purchase rights hereunder within 20
days after receipt of written notice from the Corporation describing in
reasonable detail the First Refusal Securities being offered, the purchase price
per share, the payment terms and such Stockholder's Proportionate Percentage and
First Refusal Amount. If all of the First Refusal Securities offered to the
Stockholders are not fully subscribed by such Stockholders, the remaining First
Refusal Securities will be reoffered to the Stockholders purchasing their entire
First Refusal Amount upon the terms set forth in this Section until all such
First Refusal Securities are fully subscribed or until all such Stockholders
have subscribed for all such First Refusal Securities which they desire to
purchase, except that such Stockholders must exercise their purchase rights
within 5 days after receipt of all such reoffers.
(c) Upon the expiration of the offering periods described above, the
Corporation will be free to sell such First Refusal Securities which such
Stockholders have not elected to purchase during the 60 days following such
expiration, on terms and conditions no more favorable to the purchasers thereof
than those offered to such Stockholders. Any First Refusal Securities offered
21
<PAGE>
or sold by the Corporation after such 60-day period must be reoffered to the
Stockholders pursuant to the terms of this Section.
(d) Payment for First Refusal Securities which a Stockholder has elected
to purchase shall be made against delivery of (i) the certificates representing
the First Refusal Securities at the principal office of the Corporation not
earlier than 10 days nor later than 20 days after expiration of the 20 days or 5
days referred to in Section 5(b), as the case may be, and (ii) of the entire
price, by cash, certified or bank cashier's check, or such other consideration
specified in the Corporation's offer.
6. CMCC Option to DGHA Stockholders and Purchase and Sale of Units to
------------------------------------------------------------------
HCG/HSC Stockholders.
- --------------------
(a)
(i) CMCC hereby grants to each DGHA Stockholder named on Schedule 11
attached hereto an option (the "Option") during the Option Term to purchase
in the aggregate up to the number of Units set forth opposite such DGHA
Stockholder's name on such Schedule for the purchase price per Unit set out
in Section 6(a)(iii). Each Option shall be non-transferable, except that if
any Units are not purchased by any DGHA Stockholder pursuant to an Option
prior to January 15, 1997, such Units may be purchased by such other DGHA
Stockholders, and in such other amounts, as may be determined by the
Chairman of the Corporation.
(ii) The Option may be exercised at any time in the period
commencing on the date hereof and expiring on the first anniversary of the
date hereof ("Option Term").
(iii) The per unit purchase price for each Option Unit (the "Unit
Price") shall be:
(x) if such Unit is purchased on or before August 15, 1996,
the per Unit purchase price shall be the Original Per Unit Cost;
and
(y) if such Unit is purchased between August 15, 1996 and
the expiry of the Option Term, the per Unit purchase price shall
be an amount equal to the Original Per Unit Cost plus interest
on such amount at a rate of 12% per annum from the date hereof
to the date of closing of the purchase.
(iv) The Option may be exercised by a DGHA Stockholder, by delivery
of a written notice (the "Option Notice") to the Corporation with a copy to
CMCC which notice shall set out the number of Units such DGHA Stockholder
requests to purchase in accordance with the foregoing provisions of this
Section 6(a).
(v) Transfers of Units under the terms of this Section 6(a) shall be
made at the offices of the Corporation on a mutually satisfactory business
day within 15 days after the delivery of an Option Notice. Delivery of
certificates or other instruments evidencing the Units, duly endorsed for
transfer and free and clear of all liens and encumbrances, shall be made on
such date against payment of the Unit Price therefor.
22
<PAGE>
(b)
(i) As an accommodation to the HCG/HSC Stockholders and for the
purposes of facilitating their investment in the Corporation, 50,000 Units
are being held by CMCC for the possible resale of such Units to the HCG/HSC
Stockholders, in such amounts (which, in the aggregate, shall not exceed
50,000) as shall be determined by the Chairman of the Corporation. Any
HCG/HSC Stockholder desiring to purchase Units pursuant to this Section
6(b) must deliver a written notice to CMCC, signed by such HCG/HSC
Stockholder and the Chairman of the Corporation, specifying the number of
Units to be purchased by such HCG/HSC Stockholder within 90 days after the
date hereof, accompanied by (i) a duly executed purchase agreement in the
form of Schedule 11 attached hereto and (ii) a check payable to CMCC in the
amount of the Original Per Unit Cost for each Unit to be purchased. Upon
delivery of such documents and payment of the purchase price for the Units
purchased, CMCC will transfer and assign such Units to each such HCG/HSC
Stockholder, free and clear of all liens and encumbrances, by delivery to
such HCG/HSC Stockholder of stock certificates representing such Units.
The Corporation will issue to CMCC such number of stock certificates as
CMCC shall reasonably request to effect the foregoing sales.
(ii) As a condition precedent to the sale described in
Section 6(b)(i), each HCG/HSC Stockholder shall have executed and delivered
to the Corporation a counterpart signature page to this Agreement and an
undertaking pursuant to which such HCG/HSC Stockholder agrees to be bound
by the terms of and to comply with the provisions of this Agreement.
7. Issuance of Additional Securities to DGHA Stockholders and Manager
------------------------------------------------------------------
Stockholders.
- ------------
(a) The Corporation shall have the right, but not the obligation, to issue
to the Manager Stockholders from time to time, at the discretion of the Chairman
of the Corporation, the Manager Restricted Shares at a purchase price of $.01
per share; provided, however, that it shall be a condition precedent of the
-------- -------
issue of any Manager Restricted Shares that each Manager Stockholder to whom any
Manager Restricted Shares are issued shall have executed and delivered to the
Corporation a counterpart signature page to this Agreement and the Manager
Repurchase Agreement, pursuant to which such Manager Stockholder agrees to be
bound by the provisions of this Agreement and the Manager Repurchase Agreement.
(b) The Corporation shall have the right, but not the obligation, to issue
to the DGHA Stockholders from time to time, at the discretion of the Chairman of
the Corporation, any portion of the DGHA Restricted Shares that are not issued
and outstanding on or after the date hereof, at a purchase price of $.01 per
share; provided, however, that it shall be a condition precedent of the issue of
-------- -------
any DGHA Restricted Shares that each DGHA Stockholder to whom any DGHA
Restricted Shares are issued shall have executed and delivered to the
Corporation a counterpart signature page of this Agreement and the DGHA
Repurchase Agreement, pursuant to which such DGHA Stockholder agrees to be bound
by the provisions of this Agreement and the DGHA Repurchase Agreement.
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<PAGE>
(c) In the period commencing on the date hereof and expiring on July 31,
1996 (the "Reference Date"), the Corporation shall have the right, but not the
obligation, to issue to the Manager Stockholders up to 100,000 shares of Series
B Preferred Stock at a purchase price of $10 per share of Series B Preferred
Stock. Upon written request therefor delivered to the Corporation not less than
three (3) business days prior to any proposed purchase of shares of Series B
Preferred Stock pursuant to this Section, any Manager Stockholder shall have the
right to borrow from the Corporation up to 80% of the cash purchase price to be
paid by such Manager Stockholder. All loans to be made by the Corporation
pursuant to this Section shall be evidenced by a Stock Purchase Loan Note duly
executed and delivered by the borrowing Manager Stockholder. It shall be a
condition precedent to the issuance of shares of Series B Preferred Stock
hereunder that each Manager Stockholder who purchases shares of Series B
Preferred Stock pursuant to this Section shall have executed and delivered to
the Corporation a counterpart of this Agreement pursuant to which such Manager
Stockholder agrees to be bound by the provisions of this Agreement. The shares
of Series B Preferred Stock sold to the Manager Stockholders pursuant to this
Section 7(c) are referred to herein as the "Manager Shares".
(d) In the event that on the Reference Date, the aggregate number of
Manager Shares that were sold by the Corporation to the Manager Stockholders
pursuant to Section 7(c) shall be less than 100,000, the DGHA Stockholders and
the Manager Stockholders shall, as soon as practicable thereafter, surrender to
the Corporation for cancellation (without any payment from the Corporation to
such Stockholders) the number of DGHA Original Shares, DGHA Restricted Shares
and Manager Restricted Shares calculated as provided below.
(1) The aggregate number of DGHA Original Shares to be
surrendered for cancellation shall be equal to 100,000 minus the
result obtained from the following calculation (where "X" is equal to
the number of Manager Shares sold pursuant to Section 7(c) above):
((1,800,000 + X) / .95) - (1,800,000 + X)
(2) The aggregate number of DGHA Restricted Shares and
Manager Restricted Shares to be surrendered for cancellation shall be
equal to 415,225 minus the result obtained from the following
calculation (where "XI" is equal to the number of Manager Shares sold
pursuant to Section 7(c) above and "Y" is equal to the number of DGHA
Original Shares outstanding after giving effect to the surrender of
DGHA Original Shares as provided in Section 7(d)(1)):
((2,152,941 + X + Y) / .85) - (2,152,941 + X + Y)
If on the Reference Date: (A) less than all of the Manager Restricted
Shares shall have been issued pursuant to Section 7(a), the
Corporation shall determine the maximum number of Manager Restricted
Shares permitted to be outstanding by subtracting from 138,411 the
number of Manager Restricted Shares that would have been required to
be surrendered as provided herein if all Manager Restricted Shares had
been issued prior to the Reference Date, or (B) less than all of the
DGHA Restricted Shares shall have been issued pursuant to Section
7(b), the Corporation shall determine the maximum number of DGHA
Restricted Shares
24
<PAGE>
permitted to be outstanding by subtracting from 276,814 the number of
DGHA Restricted Shares that would have been required to be surrendered
herein if all DGHA Restricted Shares had been issued prior to the
Reference Date; and shall then effect the surrender of Manager
Restricted Shares and DGHA Restricted Shares only to the extent the
outstanding number of Manager Restricted Shares and DGHA Restricted
Shares in each case exceeds such maximum permitted amounts (in which
event the definition herein of Manager Restricted Shares shall be
deemed amended to replace the number 138,411 with such maximum
permitted amount of Manager Restricted Shares and the definition
herein of DGHA Restricted Shares shall be deemed amended to replace
the number 276,814 with such permitted amount of DGHA Restricted
Shares).
(3) Any DGHA Original Shares, DGHA Restricted Shares and
Manager Restricted Shares required to be surrendered hereunder shall
be surrendered by the holders pro rata based upon the number of such
--- ----
shares held.
(e) No later than August 10, 1996, the Corporation shall notify CMCC in
writing of (i) the number of Manager Shares that were sold by the Corporation to
the Manager Stockholders as of the Reference Date pursuant to Section 7(c) and
(ii) if applicable, the number of DGHA Original Shares, DGHA Restricted Shares
and Manager Restricted Shares that are required to be surrendered pursuant to
Section 7(d) and the Corporation's calculations in determining such numbers.
8. Limitations on Transfers of Stock - General.
-------------------------------------------
(a) The provisions regarding Transfers of Securities contained herein
shall apply to all Securities now owned or hereafter acquired by a Stockholder,
including Securities acquired by reason of any dividend distribution, exchange
or conversion, additional issuances of Securities, and acquisitions of
outstanding Securities from another Person, and such provisions shall apply to
any Securities obtained by a Stockholder upon the exercise, exchange or
conversion of any option, warrant or other Security.
(b) No Stockholder shall Transfer any Security to a Person not already a
party to this Agreement as a Stockholder unless and until such Person executes
and delivers to the Corporation a written agreement in form and substance
reasonably acceptable to the Corporation pursuant to which such Person shall
agree to become a party to, and to be bound by and to comply with the provisions
of, this Agreement in the same capacity and to the same extent as the
Stockholder Transferring such Security. In the event of any Transfer to an
Affiliate contemplated by clauses (i) (A) or (i)(B) of the definition thereof,
the Transferee shall grant an irrevocable proxy, which shall be deemed to be
coupled with an interest, with respect to voting rights of such Securities to D.
George Harris (or, if D. George Harris is no longer a Stockholder or if the
transferor is D. George Harris, to Anthony J. Petrocelli and if
Anthony J. Petrocelli is no longer a Stockholder, to an individual elected by a
majority of the Board), which proxy shall expire upon an Initial Public
Offering. Any Transfer of Securities that is not made in compliance with the
provisions hereof shall be void ab initio.
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<PAGE>
(c) Any provision of this Agreement to the contrary notwithstanding, no
Stockholder shall (i) Transfer any Security to a Person which is a Competitor or
to any Affiliates of a Competitor, (ii) effect any Transfer which would subject
the Corporation to the reporting requirements of the Exchange Act or (iii)
Transfer any Security to any Person if such Transfer would result in an event of
default under any Debt Document.
(d) The restrictions on Transfer contained in Sections 9, 10, 11 and 12
shall not apply with respect to any Transfer of Securities by any Stockholder to
its Affiliates, nor shall they apply to any Transfers made pursuant to Section 6
(collectively referred to herein as "Permitted Transferees").
9. Limitations on Transfers of Restricted Shares.
---------------------------------------------
Except as permitted by Section 8(d) or pursuant to Section 13, no
Stockholder shall Transfer any Class A Restricted Shares at any time that the
Class A Restricted Shares shall be subject to the restrictions contained in the
DGHA Repurchase Agreement or the Manager Repurchase Agreement.
10. Limitations on Transfers prior to Third Anniversary.
---------------------------------------------------
Except as permitted by Section 8(d) or pursuant to Section 13 or
Section 14, no Stockholder shall Transfer any Securities prior to the third
anniversary of the date hereof, except on or before the first anniversary of
the date hereof CMCC shall have the right to Transfer any number of the Units it
owns, as it determines in its absolute discretion, if following such Transfer
or Transfer(s) CMCC and its Affiliates shall continue to own at least 50% of the
Units owned by CMCC on the date hereof.
11. Rights of First Refusal after Third Anniversary.
-----------------------------------------------
Except for Transfers permitted by Section 8(d) or Section 13, on or
after the third anniversary of the date hereof the Stockholders shall comply
with the following procedures in connection with any Transfer of Securities:
(a) The Stockholder ("Offeror") shall first deliver to the Corporation a
written notice (hereinafter in this Section 11 called the "Notice of Offer"),
which shall be irrevocable for a period of 60 days after delivery thereof,
offering (the "Offer") to the Corporation and the other Stockholders (the
"Offerees") all of the Securities proposed to be Transferred by the Offeror at
the purchase price and on the terms specified therein (which Notice of Offer
shall include all relevant terms of the proposed Transfer). The Offeror shall
also furnish to the Corporation such additional information relating to the
Offer as may reasonably be requested by the Corporation. The Corporation shall
have the right and option, for a period of 30 days after delivery of the Notice
of Offer by the Offeror, to accept all or any portion of the Securities so
offered at the purchase price and on the terms stated in the Notice of Offer.
The Corporation shall, if it does not elect to purchase all of the offered
Securities, deliver a copy of the Notice of Offer to the Offerees. Each Offeree
shall have the right and option, for a period of 30 days after delivery of the
Notice of Offer by the Corporation, by delivery of written notice to the
Corporation (x) to accept all or any of its Proportionate Percentage of the
Securities so offered at the purchase price and on the terms stated in the
Notice of Offer and (y) to offer to purchase any Securities not accepted by the
other Offerees, in which case the Securities not
26
<PAGE>
accepted by the other Offerees, shall be deemed to have been offered to and
accepted by the Offerees, which exercised their option under this clause (y)
pro rata in accordance with their respective Proportionate Percentages (computed
- --- ----
without including the Offerees, who have not exercised their option to purchase
Securities under this clause (y)), on the above-described terms and conditions,
and if all of the offered Securities shall not have been fully subscribed by
such Offerees, the remaining offered Securities will be reofferred to the
Offerees who agreed to purchase their entire entitlement of offered Securities
under clause (x) upon the terms set forth in this Section until all such
Securities are fully subscribed or until all such Offerees have subscribed for
all such offered Securities which they desire to purchase, except that such
Offerees must exercise their purchase rights within five (5) business days after
receipt of all such reoffers. Notwithstanding the foregoing provisions of this
Section 11(a), if the Offeror is a DGHA Stockholder, a Manager Stockholder, a
HCG/HSC Stockholder or an Institutional Stockholder, the other DGHA
Stockholders, Manager Stockholders, HCG/HSC Stockholders or Institutional
Stockholders, as the case may be, shall have the right to purchase, on a pro
---
rata basis among such Stockholders, all of the Securities so offered prior to
- ----
any purchases by any other Stockholders.
(b) Transfers of Securities under the terms of this Section 11 shall be
made at the offices of the Corporation on a mutually satisfactory business day
within 15 days after the expiration of the applicable time periods. Delivery of
certificates or other instruments evidencing such Securities, duly endorsed for
transfer and free and clear of all liens and encumbrances, shall be made on such
date against payment of the purchase price therefor.
(c) If the Corporation and the Offerees shall not have accepted to
purchase all the Securities offered for sale pursuant to the aforesaid Notice of
Offer, then the Offeror may Transfer to a third party that number of the
Securities not accepted by the Corporation and the Offerees at the price and on
substantially equivalent terms stated in the original Notice of Offer, at any
time within 180 days after the expiration of the offers required by Section
11(a). In the event the Securities are not Transferred by the Offeror on such
terms during such 180-day period, the restrictions of this Section 11 shall
again become applicable to any Transfer of Securities by the Offeror unless
within such 180-day period the Offeror shall deliver to the Corporation a Notice
of Offer with respect to an Offer of the same Securities at a purchase price
which is less than the purchase price set forth in the previous Offer, in which
case the 30-day period specified in Section 11(a) shall be reduced to 15 days
and a new 180-day period shall begin. Nothing in this Section 11 shall preclude
any Stockholder from engaging in discussions with any investment banker,
potential transferee of Securities or other Person with respect to a possible
purchase of Securities from it, so long as the provisions of this Section 11 are
complied with prior to the consummation of any Transfer to which this applies.
(d) The Offeror may specify in the Notice of Offer that all Securities
mentioned therein must be Transferred, in which case any acceptance received
pursuant to Section 11(a) shall be deemed conditioned upon (x) receipt of
written notices of binding acceptance with respect to all Securities mentioned
in such Notice of Offer or (y) the Transfer of the remaining Securities pursuant
to Section 11(c).
27
<PAGE>
12. Right of Co-Sale.
----------------
(a) Subject to the provisions of Section 12(c), in the event that on or
after the third anniversary of the date hereof a Stockholder or group of
Stockholders (hereinafter, a "Section 12 Offeree") receives a bona fide offer
---- ----
(the "Section 12 Offer") from a third party which is not an Affiliate of the
Section 12 Offeree (the "Section 12 Offeror") to purchase from such Section 12
Offeree Securities, for a specified price payable in cash or otherwise and on
specified terms and conditions, such Section 12 Offeree shall promptly forward a
notice (the "Section 12 Notice") complying with Section 12(b) to the Corporation
and to the other Stockholders (the Stockholders receiving a Section 12 Notice
collectively referred to herein as the "Other Stockholders"). The Section 12
Offeree shall not Transfer any Securities prior to the expiration of the 15-day
period referred to below to the Section 12 Offeror unless the terms of the
Section 12 Offer are extended to each Other Stockholders with respect to its
Proportionate Percentage of the aggregate number and classes of Securities to
which the Section 12 Offer relates, whereupon each Other Stockholder shall be
entitled to Transfer such Other Stockholder's Proportionate Percentage of the
aggregate number of Securities to which the Section 12 Offer relates. Each Other
Stockholder shall have a period of 15 days to deliver a written notice (the
"Section 12 Acceptance") to the Section 12 Offeree evidencing its acceptance of
the Section 12 Offer.
(b) The Section 12 Notice shall set forth (i) the number of Securities to
which the Section 12 Offer relates and the name of the Section 12 Offeree, (ii)
the name and address of the Section 12 Offeror, (iii) the proposed amount and
type of consideration (including, if the consideration consists in whole or in
part of non-cash consideration, such information to the Section 12 Offeree as
may be reasonably necessary for the Other Stockholders to properly analyze the
economic value and investment risk of such non-cash consideration) and the terms
and conditions of payment offered by the Section 12 Offeror and (iv) that the
Section 12 Offeror has been informed of the co-sale rights provided for in this
Section 12, and has agreed to purchase Securities held by the Other Stockholders
in accordance with the terms of this Section 12 (which agreement may contain the
Section 12 Offeror's obligation to purchase all of the Securities held by the
Other Stockholders subject to the Section 12 Offer from the Section 12 Offeree
so long as such Section 12 Offeree agrees to purchase simultaneously with such
sale from the Other Stockholders if they deliver a Section 12 Acceptance the
Securities held by the Other Stockholders subject to such Section 12 Notice of
Acceptance).
(c) The foregoing provisions of this Section 12 shall not apply to a
Transfer or Transfer(s) by a Stockholder or group of Stockholders of up to the
greater of (i) 0.50% of the Common Equivalents outstanding at such time, and
(ii) 10% of the Securities held by such Stockholder or group of Stockholders at
such time.
13. Drag-Along Rights.
-----------------
(a) If the Requisite Stockholders approve a sale of all or substantially
all of the capital stock or assets of the Company to a Person which is not an
Affiliate of any Stockholder (other than an Affiliate of a DGHA Stockholder) (an
"Approved Sale"), whether by way of merger, consolidation, sale of stock or
assets, or otherwise (each, a "Sale of the Company"), all Stockholders shall
consent to and raise no objections against the Approved Sale, and if the
Approved Sale is structured as (A) a merger or consolidation of the Corporation
or a Subsidiary,
28
<PAGE>
or a sale of all or substantially all of the assets of the Corporation or a
Subsidiary, each Stockholder shall waive any dissenters rights, appraisal rights
or similar rights in connection with such merger, consolidation or asset sale,
or (B) a sale of all the capital stock of the Corporation or a Subsidiary, the
Stockholders shall agree to sell their Securities on the terms and conditions
approved by the Requisite Stockholders. The Stockholders shall take all
necessary and desirable actions approved by the Requisite Stockholders, in
connection with the consummation of the Approved Sale, including the execution
of such agreements and such instruments and other actions reasonably necessary
to (1) provide the representations, warranties, indemnities, covenants,
conditions, non-compete agreements, escrow agreements and other provisions and
agreements relating to such Approved Sale and (2) effectuate the allocation and
distribution of the aggregate consideration upon the Approved Sale as set forth
below. The Stockholders shall be permitted to sell their Securities pursuant to
an Approved Sale without complying with the provisions of Sections 8, 9, 10, 11
or 12 of this Agreement.
(b) The obligations of the Stockholders pursuant to this Section 13 are
subject to the satisfaction of the following conditions:
(i) subject to Section 13(b)(iii), upon the consummation of the
Approved Sale, all of the Stockholders shall receive the same proportion of
the aggregate consideration from such Approved Sale that such holder would
have received if such aggregate consideration had been distributed by the
Corporation in complete liquidation pursuant to the rights and preferences
set forth in the Certificate as in effect immediately prior to such
Approved Sale (giving effect to applicable orders of priority) and after
giving effect to the purchase rights (if any) set forth in the DGHA
Repurchase Agreement and the Manager Repurchase Agreement;
(ii) if any Stockholders of a class are given an option as to the
form and amount of consideration to be received, all holders of such class
will be given the same option;
(iii) all holders of then-currently exercisable Common Equivalents
will be given an opportunity to either (A) exercise such rights prior to
the consummation of the Approved Sale (but only to the extent such Common
Equivalents are then vested) and participate in such sale as Stockholders
or (B) upon the consummation of the Approved Sale, receive in exchange for
such Common Equivalents consideration equal to the amount determined by
multiplying (x) the same amount of consideration per share of Common Stock
(of the same class as that for which the Common Equivalent is exercisable)
received by the holders of such class of Common Stock in connection with
the Approved Sale less the exercise price per Common Equivalent by (y) the
number of Common Equivalents;
(iv) no Stockholder shall be-obligated to make any out-of-pocket
expenditure prior to the consummation of the Approved Sale (excluding
modest expenditures for postage, copies, etc.) and no Stockholder shall be
obligated to pay more than his pro rata share (based upon the amount of
consideration received) of reasonable expenses incurred in connection with
a consummated Approved Sale to the extent such costs are incurred for the
benefit of all Stockholders and are not otherwise paid by the Corporation
or the acquiring party (costs incurred by or on behalf of a Stockholder for
its or his sole benefit
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will not be considered costs of the transaction hereunder), provided that a
Stockholder's liability for such expenses shall be capped at the total
purchase price received by such Stockholder for his Securities (including
the exercise price thereof); and
(v) in the event that the Stockholders are required to provide any
representations or indemnities in connection with the Approved Sale (other
than representations and indemnities concerning each Stockholder's valid
ownership of his Securities, free of all liens and encumbrances (other than
those arising under applicable securities laws), and each Stockholder's
authority, power, and right to enter into and consummate such purchase or
merger agreement without violating any other agreement), then each
Stockholder shall not be liable for more than his pro rata share (based
upon the number of Securities held and not the amount of consideration
received) of any liability for misrepresentation or indemnity and such
liability shall not exceed the total purchase price received by such
Stockholder for his Securities (including the exercise price thereof),
after taxes (after giving effect to all potential amendments of tax returns
arising in connection with any indemnification claim) and expenses, and
such liability shall be satisfied solely out of any funds escrowed for such
purpose.
(c) If the Corporation and any of the Stockholders or their
representatives, enter into any negotiation or transaction for which Rule 506
under the Securities Act (or any similar rule then in effect) may be available
with respect to such negotiation or transaction (including a merger,
consolidation or other reorganization), each Stockholder who is not an
accredited investor (as such term is defined in Rule 501 under the Securities
Act) will, at the request of the Corporation or the institutional Stockholders,
appoint a purchaser representative (as such term is defined in Rule 501 under
the Securities Act) reasonably acceptable to the Corporation or such
Stockholders.
14. Options Upon Termination Event.
------------------------------
(a) Upon the occurrence of a Termination Event with respect to a
Stockholder who is a Manager Stockholder, an HCG/HSC Stockholder or a DGHA
Stockholder (except a Termination Event described in Section 14(d)(ii)(1) or (2)
with respect to a Stockholder who is a DGHA Stockholder), in each case occurring
on or prior to the fifth anniversary of the date hereof (or at any time with
respect to a Termination Event described in Section 14(d)(i)(1) or (2) with
respect to a Stockholder who is a Manager Stockholder or Section 14(d)(ii)(1) or
(2) with respect to a Stockholder who is an HCG/HSC Stockholder), subject to
Section 14(c), the Corporation shall have the right but not the obligation to
purchase any or all of such Stockholder's (the "Retiring Stockholder")
Securities (other than Class A Restricted Shares) (the "Retiring Shares"). The
Corporation shall have 20 days after the occurrence of any Termination Event
described above in which to give notice (the "Primary Retirement Notice") to the
Retiring Stockholder of its election to purchase all of the Retiring Shares. The
Primary Retirement Notice will disclose in reasonable detail the Corporation's
election to purchase all of the Retiring Shares and the terms and conditions of
the sale including the price per share of the Retiring Shares. In the event that
the Corporation does not elect to purchase all of the Retiring Shares, the
Corporation shall, within 20 days after the occurrence of any Termination Event
described above, deliver, on behalf of the Retiring Stockholder but at the
expense of the Corporation, a written notice (the "Secondary Retirement Notice")
to the remaining Stockholders (the "Eligible
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Stockholders") and the Retiring Stockholder, which Secondary Retirement Notice
will disclose in reasonable detail the terms and conditions of the sale
including the total number of Retiring Shares and the number of Retiring Shares,
if any, to be purchased by the Corporation and the price per share of the
Retiring Shares. Upon receipt of the Secondary Retirement Notice, each Eligible
Stockholder shall have a right to purchase the Retiring Shares which will not be
purchased by the Corporation (the "Remaining Retiring Shares"), in the case of
each Eligible Stockholder, up to that number of the Retiring Shares equal to
such Eligible Stockholder's Adjusted Proportionate Percentage of the Remaining
Retiring Shares (such number of shares hereinafter referred to as the "Retiring
Participation Shares") with respect to such Eligible Stockholder. The Eligible
Stockholders shall have 20 days after the Secondary Retirement Notice is
received in which to give counter-notice of such Eligible Stockholder's election
to purchase such Remaining Retiring Shares (such election by an Eligible
Stockholder being referred to as an "Initial Retiring Purchase"). An Initial
Retiring Purchase by an Eligible Stockholder may be of all or part of his or its
Retiring Participation Shares. Any Eligible Stockholder may at any time elect in
his or its counter-notice to purchase, in addition to his or its Retiring
Participation Shares, the balance (or the balance up to a maximum stated number)
of any Remaining Retiring Shares being offered to other Eligible Stockholders
which are not accepted by such other Eligible Stockholders (such acceptance
being hereinafter referred to as an "Additional Retiring Purchase"). If the
number of Remaining Retiring Shares that the Eligible Stockholders elect to
purchase in their Initial Retiring Purchases and Additional Retiring Purchases
exceeds the number of Remaining Retiring Shares, the number of Remaining
Retiring Shares to be purchased in the aggregate by all Second Priority Eligible
Stockholders shall be reduced to the extent of the Excess Attributable to the
second Priority Additional Retiring Purchases with such reduction in the number
of Remaining Retiring Shares to be purchased in the aggregate by all Second
Priority Eligible Stockholders to be allocated among such Second Priority
Eligible Stockholders in proportion to the number of Remaining Retiring Shares
each Second Priority Eligible Stockholder has agreed to purchase in such Second
Priority Eligible Stockholder's Additional Retiring Purchase (the "First
Retirement Reduction"). If any excess remains after the First Retirement
Reduction, the number of Remaining Retiring Shares to be purchased in the
aggregate by all Second Priority Eligible Stockholders shall be further reduced
to the extent of the Excess Attributable to the Second Priority Initial Retiring
Purchases with such reduction in the number of Remaining Retiring Shares to be
purchased in the aggregate by all Second Priority Eligible Stockholders to be
allocated among such Second Priority Eligible Stockholders in proportion to the
number of Remaining Retiring Shares each Second Priority Eligible Stockholder
has agreed to purchase in such Second Priority Eligible Stockholder's Initial
Retiring Purchase (the "Second Retirement Reduction"). If any excess remains
after the Second Retirement Reduction, the number of Remaining Retiring Shares
to be purchased in the aggregate by all First Priority Eligible Stockholders
shall be reduced to the extent of the Excess Attributable to the First Priority
Additional Retiring Purchases with such reduction in the number of Remaining
Retiring Shares to be purchased in the aggregate by all First Priority Eligible
Stockholders to be allocated among such First Priority Eligible Stockholders in
proportion to the number of Remaining Retiring Shares each First Priority
Eligible Stockholder has agreed to purchase in such First Priority Eligible
Stockholder's Additional Retiring Purchase. To the extent possible, any
mechanical problems shall be solved in any equitable manner determined by the
Board to be consistent with the intent of the parties hereto.
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(b) The price per share for Retiring Shares shall be the valuation Price
per Share as in effect on the date of the Primary Retirement Notice or, in the
event that the Corporation does not deliver a Primary Retirement Notice, as in
effect on the date of the Secondary Retirement Notice (the "Notice Date");
provided, however, that in the case of a Termination Event described in Section
14(d)(i)(5) with respect to a Manager Stockholder, the price per share shall be
the price paid for such Securities, with interest thereon at the rate of 6% per
annum from the date of purchase of such Securities by such Stockholder.
(c) Upon the occurrence of any Termination Event (except for a Termination
Event described in Section 14(d)(i)(5) or Section 14(d)(ii)(5) with respect to a
Stockholder who is a Manager Stockholder, an HCG/HSC Stockholder or a DGHA
Stockholder, in each case occurring on or prior to the fifth anniversary of the
date hereof (or at any time with respect to a Termination Event described in
Section 14(d)(i)(1) or (2) or Section 14(d)(ii)(1) or (2)), such Stockholder or
his or her designated beneficiaries, as the case may be, shall be entitled to
require, subject to the provisions of the next sentence, by written notice
delivered to the Corporation within 60 days of such Termination Event, that the
Corporation (or, at the election of the Corporation, the Corporation's designee)
repurchase for cash not less than all Securities (other than Class A Restricted
Shares) then held by such Stockholder prior to such Termination Event (the
"Individual Investor Put Shares") at a price per share equal to the Valuation
Price per Share as of the date of such Termination Event. The Corporation's
repurchase obligation described in the foregoing sentence shall be in all cases
subject to any applicable restrictions provided by the Delaware General
Corporation Law, the Certificate and any applicable restrictions and conditions
set out in the Debt Documents.
(d) As used in this Section 14, a "Termination Event" shall have occurred
if:
(i) a Manager Stockholder's employment with the Corporation or any
Subsidiary thereof is terminated (and not continued, or substantially
simultaneously resumed, with the Corporation or any Subsidiary thereof) as
a result of:
(1) the death of such Manager Stockholder;
(2) the permanent disability (as determined by the Board or
the Board of Directors or such Subsidiary, as the case may be, in good
faith) of such Manager Stockholder;
(3) the retirement at age 65 (or such other age as may be
determined by the Compensation Committee) of such Manager Stockholder;
(4) termination by the Corporation or any such Subsidiary
of such Manager Stockholder for any reason other than for Cause; or
(5) such Manager Stockholder notifies the Corporation or
any such Subsidiary that he is terminating his employment, or the
Corporation or any such Subsidiary notifies such Manager Stockholder
that the employment of such Manager Stockholder is being terminated
for Cause; or
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(ii) an HCG/HSC Stockholder's or DGHA Stockholder's employment with
HCG, HSC or any Affiliate thereof is terminated (and not continued, or
substantially simultaneously resumed, with HCG, HSC or any Affiliate
thereof or of DGHA) as a result of:
(1) the death of such HCG/HSC Stockholder or DGHA
Stockholder;
(2) the permanent disability (as determined by the Board or
Board of Directors of HCG, HSC or such Affiliates thereof, as the case
may be, in good faith) of such HCG/HSC Stockholder or DGHA
Stockholder;
(3) the retirement at age 70 (or such other age as may be
determined by the Compensation Committee) of such DGHA Stockholder or
the retirement at age 65 (or such other age as may be determined by
the Compensation Committee) of such HCG/HSC Stockholder;
(4) termination by HCG, HSC or any Affiliate thereof of
such HCG/HSC Stockholder or DGHA Stockholder for any reason other than
for Cause; or
(5) such HCG/HSC Stockholder or DGHA Stockholder notifies
HCG, HSC or any Affiliate thereof that he is terminating his
employment, or HCG, HSC or any Affiliate thereof notifies such HCG/HSC
Stockholder or DGHA Stockholder that the employment of such HCG/HSC
Stockholder or DGHA Stockholder is being terminated for Cause.
(e) Any repurchase by the Corporation or purchase by an Eligible
Stockholder of the Individual Investor Put Shares or the Retiring Shares, as the
case may be, pursuant to this Section 14 shall be effected by delivery by the
Stockholder or his beneficiaries, as the case may be, of the certificate(s) for
all such Retiring Shares or Individual Investor Put Shares (properly endorsed
for transfer) to the appropriate transferee(s) on a date five (5) business days
after the requisite notice or notices pursuant to this Section 14 requiring the
repurchase or purchase of all such Retiring Shares or Individual Investor Put
Shares, as the case may be, have been given (the "Transfer Date"). As of the
Transfer Date, title to such Retiring Shares or Individual Investor Put Shares
shall be deemed transferred to the respective transferee(s) upon tender by such
transferee(s) of the purchase price for such Retiring Shares or Individual
Investor Put Shares to the Stockholder or his designated beneficiaries by a
check or checks in New York Clearing House funds or by a wire transfer to the
account of the Stockholder or his designated beneficiaries.
(f) Notwithstanding anything to the contrary contained in this Section 14,
the Corporation and the Retiring Stockholder (in the case of a repurchase
contemplated by Section 14(a)) or the Corporation and the Manager Stockholder,
HCG/HSC Stockholder or DGHA Stockholder or his or her designated beneficiaries
(in the case of a repurchase contemplated by (Section 14(c)), as the case may
be, shall have the right and option to elect (the "Deferral Election"), pursuant
to a written agreement duly executed by such persons, to deem the date of the
relevant Termination Event to be deferred for purposes of this Section 14 until
a date (the
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<PAGE>
"Deferral Date") not more than six years following the date of the Deferral
Election. A Deferral Election must be made within 90 days of the occurrence of
the relevant Termination Event.. A Deferral Election shall be effective solely
to defer for purposes of this Section 14 the date of a Termination Event until
the Deferral Date specified in, or determined pursuant to, such Deferral
Election (at which time Sections 14(a) and 14(c) shall be applicable according
to their respective terms) and such Deferral Election shall not otherwise affect
the rights or obligations of any party hereto.
15. Required Sale.
-------------
Notwithstanding anything contained herein to the contrary if, at any
time on or after the fourth anniversary of the date hereof, an IRR Event shall
not have occurred, the Majority of the Institutional Stockholders shall have the
right, at any time, to serve written notice on the Corporation of the desire of
the Majority of the Institutional Stockholders to effect a Sale of the Company.
The DGHA Stockholders shall have the exclusive right for a period of 180 days
(the "Exclusive Period"), commencing on the date of the determination of "Fair
Value" (as hereinafter defined) to consummate either a Sale of the Company at
Fair Value or the acquisition of the Institutional Securities, at a price equal
to what the Institutional Stockholders would receive for the Institutional
Securities if a Sale of the Company was consummated at Fair Value after giving
affect to the provisions of the DGHA Repurchase Agreement and the Manager
Repurchase Agreement. "Fair Value" means the highest price that would be paid
for all or substantially all of (i) the Securities, (ii) the capital stock of a
Subsidiary, (iii) the assets of the Corporation (after the assumption of all of
the liabilities of the Corporation), or (v) the assets of a Subsidiary (after
the assumption of all the liabilities of such Subsidiary), as the case may be,
and in each case, on a going-concern basis in a single arm's-length transaction
between a willing buyer and a willing seller in an orderly process, using
valuation techniques then prevailing in the securities industry and assuming
full disclosure of all relevant information and a reasonable period of time for
effectuating such sale, as determined jointly by the Majority of the
Institutional Stockholders and the Majority of the DGHA Stockholders. If such
parties are unable to reach agreement within 30 days, such Fair Value shall be
determined by an independent nationally recognized investment bank experienced
in valuing companies or assets jointly selected by the Majority of the
Institutional Stockholders and the Majority of the DGHA Stockholders. If the
parties cannot agree on the selection of an investment bank within 30 days, the
investment bank will be selected by an independent arbitrator appointed in
accordance with the rules of the American Arbitration Association. The
determination of such investment bank shall be final and binding upon the
parties, and the Corporation shall pay the fees and expenses of such investment
bank.
16. Regulatory Matters.
------------------
(a) Regulatory Compliance Cooperation.
(i) If a Stockholder determines that it has a Regulatory Problem, the
Corporation agrees to take all such actions as are reasonably requested by
such Stockholder (x) to effectuate and facilitate any Transfer by such
Stockholder of any Securities (as defined below) of the Corporation then
held by such Stockholder to any Person designated by such Stockholder, (y)
to permit such stockholder (or any Affiliate
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<PAGE>
of such Stockholder) to exchange all or any portion of the voting
Securities then held by such Person on a share-for-share basis for shares
of a class of nonvoting Securities of the Corporation, which nonvoting
Securities shall be identical in all respects to such voting Securities,
except that such new Securities shall be nonvoting and shall be convertible
into voting Securities on such terms as are requested by such Stockholder
in light of regulatory considerations then prevailing, and (z) to continue
and preserve the respective allocation of the voting interests with respect
to the Corporation provided for in the Certificate and this Agreement and
with respect to such Stockholder's ownership of the Corporation's voting
Securities. Such actions may include, without limitation, (x) entering into
such additional agreements as are reasonably requested by such Stockholder
to permit any Person(s) designated by such Stockholder to exercise any
voting power which is relinquished by such Stockholder upon any exchange of
voting Securities for nonvoting Securities of the Corporation; and (y)
entering into such additional agreements, adopting such amendments to this
Agreement, the Certificate and the Bylaws of the Corporation and taking
such additional actions as are reasonably requested by such Stockholder in
order to effectuate the intent of the foregoing; provided, however that
such actions will not change materially any of the agreements, rights or
obligations of the parties reflected herein or in the Certificate or the
Bylaws.
(ii) Before the Corporation redeems, purchases or otherwise acquires,
directly or indirectly, or converts or takes any action with respect to the
voting rights of, any Securities, the Corporation shall give written notice
of such pending action to each Stockholder. Upon the written request of any
Stockholder made within 10 days after its receipt of such notice stating
that after giving effect to such action such Stockholder would have a
Voting Regulatory Problem, the Corporation shall defer taking such action
for such period (not to extend beyond 45 days after such Stockholder's
receipt of the Corporation's original notice) as such Stockholder requests
to permit it and its Affiliates to reduce the quantity of Securities they
own or take other appropriate action in order to avoid the Voting
Regulatory Problem. In addition, in the event that the Corporation shall be
a party to any merger, consolidation, recapitalization or other transaction
pursuant to which any Stockholder would be required to take any voting
Securities, or any Securities convertible into, or exchangeable or
exercisable for, voting Securities, which might reasonably be expected to
cause such Stockholder to have a Voting Regulatory Problem, then the
Corporation shall not be a party to such transaction unless such
Stockholder shall receive non-voting Securities.
(b) Cooperation of Other Stockholders. Each Stockholder agrees to
cooperate with the Corporation in complying with Section 16(a) above, including
without limitation, voting to approve amending the Certificate, this Agreement
or the Bylaws in a manner reasonably requested by the Stockholder requesting
such amendment.
(c) Covenant Not to Amend. The Corporation and each Stockholder agree not
to amend or waive the voting or other provisions of the Certificate, this
Agreement or the Bylaws if such amendment or waiver would cause any Stockholder
to have a Voting Regulatory Problem, provided that any such Stockholder notifies
the Corporation that it would have a Voting Regulatory Problem promptly after it
has notice of such amendment or waiver.
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17. Requisite Shareholder Approval.
------------------------------
(a) At the Closing, each Stockholder, in addition to any Disclosure
Statement and Consent or Consent and Irrevocable Proxy executed by such
Stockholder, hereby votes and consents to approve the terms of the DGHA
Repurchase Agreement and the Manager Repurchase Agreement.
(b) Each Stockholder, by acceptance and receipt of any Securities, in
addition to any Disclosure Statement and Consent or Consent and Irrevocable
Proxy executed by such Stockholder, hereby grants an irrevocable proxy, which
shall be deemed to be coupled with an interest, with respect to voting rights of
such shares to the Chairman of the Corporation to vote in favor of each proposal
intended by the Corporation to achieve the Requisite Stockholder Approval. If
for any reason any such proxy is terminated, each Stockholder, in addition to
any Disclosure Statement and Consent or Consent and Irrevocable Proxy executed
by such Stockholder, hereby agrees to vote (or to provide written consent in
lieu thereof) in favor of each proposal intended by the Corporation to achieve
the Requisite Stockholder Approval.
(c) If a Stockholder is not an individual and if under the circumstances
Code Section 280G(b)(5) or applicable Treasury Regulations thereunder (whether
proposed, temporary or final) would require a separate vote of holders of the
voting power of such entity, then in addition to the Stockholder's vote (or
written consent in lieu thereof) as described in Section 14 the Stockholder
shall obtain the separate vote or votes (or shall obtain written consent or
consents in lieu thereof) in favor of any proposal intended by the Corporation
to achieve the Requisite Stockholder Approval of or from the holder or holders
of voting power of the Stockholder necessary to satisfy Code Section 280G(b)(5)
or applicable Treasury Regulations thereunder (whether proposed, temporary or
final).
(d) Each Stockholder acknowledges that such Stockholder has received and
reviewed the Disclosure Statement and Consent. In connection with any proposal
intended by the Corporation to achieve the Requisite Stockholder Approval, the
Corporation agrees to provide information to the Stockholders as required by
Code Section 280G(b)(5)(B)(ii).
18. Amendment And Waiver.
--------------------
(a) Except as expressly set forth herein, the provisions of this Agreement
may only be amended or waived with the prior written consent of the Corporation,
a Majority of the Institutional Stockholders and a Majority of the DGHA
Stockholders; provided, however, that Schedule 1 to this Agreement shall be
deemed to be automatically amended from time to time to reflect issuances and
Transfers of Securities made in accordance with the terms hereof without
requiring the consent of any party, and the Corporation will, upon request,
distribute to any Stockholder a revised Schedule 1 to reflect any such changes.
(b) No course of dealing between the Corporation, its Subsidiaries and the
Stockholders (or any of them) or any delay in exercising any rights hereunder
will operate as a waiver of any rights of any party to this Agreement.
(c) For purposes of this Agreement shares of capital stock held by the
Corporation or any Subsidiaries will not be deemed to be outstanding.
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<PAGE>
(d) The failure of any party to enforce any of the provisions of this
Agreement will in no way be construed as a waiver of such provisions and will
not affect the right of such party thereafter to enforce each and every
provision of this Agreement in accordance with its terms.
19. Securities Law Compliance; Legends.
----------------------------------
(a) Restriction on Transfer. No Stockholder shall Transfer Restricted
Securities except in compliance with the conditions specified in this Agreement
or pursuant to a Public Sale.
(b) Restrictive Legends. Each certificate for the Restricted Securities
shall (unless otherwise provided by the provisions of Section 19(d)) be stamped
or otherwise imprinted with a legend in substantially the following terms:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933 OR ANY STATE SECURITIES OR BLUE SKY
LAWS. THESE SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID
ACT OR LAWS.
(c) Notice of Transfer. The holder of any Restricted Securities, by its
acceptance or purchase thereof, agrees, prior to any Transfer of any such
Restricted Securities (except pursuant to an effective registration statement),
to give written notice to the Corporation of such holder's intention to effect
such Transfer and agrees to comply in all other respects with the provisions of
this Section 19. Each such notice shall describe the manner and circumstances of
the proposed Transfer and, unless waived by the Corporation, shall be
accompanied by the written opinion, addressed to the Corporation, of counsel for
the holder of such Restricted Securities (which counsel shall be reasonably
satisfactory to the Corporation), stating that in the opinion of such counsel
(which opinion shall be reasonably satisfactory to the Corporation) such
proposed Transfer does not involve a transaction requiring registration or
qualification of such Restricted Securities under the Securities Act or the
securities laws of any state of the United States. Subject to complying with the
other applicable provisions hereof, such holder of Restricted Securities shall
be entitled to consummate such Transfer in accordance with the terms of the
notice delivered by it to the Corporation if the Corporation does not object (on
the basis that such Transfer violates the provisions of this Section 19) to such
Transfer within five days after the delivery of such notice. Each certificate or
other instrument evidencing the securities issued upon the Transfer of any
Restricted Securities (and each certificate or other instrument evidencing any
untransferred balance of such Securities) shall bear the legend set forth in
Section 19(b) unless (i) in such opinion of such counsel registration of future
Transfer is not required by the applicable provisions of the Securities Act or
the securities laws of any state of the United States or (ii) the Corporation
shall have waived the requirement of such legend.
(d) Removal of Legends, Etc. Notwithstanding the foregoing provisions of
this Section 19, the restriction imposed by Sections 19(a), (b) and (c) upon the
transferability of any Restricted Securities shall cease and terminate when (i)
any such Restricted Securities are sold or otherwise disposed of in accordance
with the intended method of disposition by the seller or
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sellers thereof set forth in a registration statement or are sold or otherwise
disposed of in a transaction contemplated by Section 19(c) which does not
require that the securities transferred bear the legend set forth in Section
19(b), or (ii) the holder of such Restricted Securities has met the requirement
of transfer of such Restricted Securities pursuant to subparagraph (k) of Rule
144. Whenever the restrictions imposed by Sections 19(a), (b) and (c) shall
terminate, as herein provided, the holder of any Restricted Securities shall be
entitled to receive from the Corporation, without expense, a new certificate not
bearing the restrictive legend set forth in Section 19(b) and not containing any
other reference to the restrictions imposed by Sections 19(a), (b) and (c).
(e) Additional Legend. Each certificate evidencing Securities and each
certificate issued in exchange for or upon the Transfer of any Securities (if
such shares remain Securities as defined herein after such Transfer) shall be
stamped or otherwise imprinted with a legend in substantially the following
form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT
TO A STOCKHOLDERS AGREEMENT DATED AS OF FEBRUARY 9, 1996 AMONG
THE ISSUER OF SUCH SECURITIES (THE "COMPANY") AND CERTAIN OF THE
COMPANY'S STOCKHOLDERS. THE TERMS OF SUCH STOCKHOLDERS AGREEMENT
INCLUDE, AMONG OTHER THINGS, VOTING AGREEMENTS, REPURCHASE
AGREEMENTS AND RESTRICTIONS ON TRANSFERS. A COPY OF SUCH
STOCKHOLDERS AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE
COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST."
The Corporation shall imprint such legends on certificates evidencing shares
outstanding prior to the date hereof. The legend set forth above shall be
removed from the certificates evidencing any shares which cease to be Securities
in accordance with the terms of this Agreement.
20. Duration of Agreement.
---------------------
The rights and obligations of each Stockholder under this Agreement
shall terminate as to such Stockholder upon the earliest to occur of (a) the
Transfer of all Securities owned by such Stockholder and (b) the consummation of
an IRR Event.
21. Severability.
------------
Whenever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, and such invalid, void or
otherwise unenforceable provisions shall be null and void. It is the intent of
the parties, however, that any invalid, void or otherwise unenforceable
provisions be automatically replaced by other provisions which are as similar as
possible in terms to such invalid, void or otherwise unenforceable provisions
but are valid and enforceable to the fullest extent permitted by law.
38
<PAGE>
22. Entire Agreement.
----------------
This document embodies the complete agreement and understanding among
the parties hereto with respect to the subject matter hereof and supersedes and
preempts any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof in
any way.
23. Certain Stockholders.
--------------------
If any Stockholder is an entity that was formed for the purpose of
acquiring Securities or that has no substantial assets other than Securities or
interests in Securities, such Stockholder agrees that (a) shares of its common
stock or other instruments reflecting equity interests in such entity (and the
shares of common stock or other equity interests in any similar entities
controlling such entity) will note the restrictions contained in this Agreement
on the transfer of Securities as if such common stock or other equity interests
were Securities and (b) no shares of such common stock or other equity interests
may be transferred to any Person other than in accordance with the terms and
provisions of this Agreement as if such common stock or other equity interests
were Securities.
24. Successors and Assigns.
----------------------
Except as otherwise provided herein, this Agreement will bind and
inure to the benefit of and be enforceable by the Corporation and its successors
and assigns and the Stockholders and any subsequent holders of Securities and
the respective successors and permitted assigns of each of them, so long as they
hold Securities. None of the provisions hereof shall create, or be construed or
deemed to create, any right to employment in favor of any Person by the
Corporation or any of its Subsidiaries. This Agreement is not intended to create
any third party beneficiaries.
25. Counterparts.
------------
This Agreement may be executed simultaneously in two or more
counterparts, any one of which need not contain the signatures of more than one
party, but all such counterparts taken together will constitute one and the same
agreement. It shall not be necessary in making proof of this Agreement to
produce or account for more than one such counterpart.
26. Remedies.
--------
(a) Each Stockholder shall have all rights and remedies reserved for such
Stockholder pursuant to this Agreement, the Subscription Agreement dated the
date hereof, the Certificate and Bylaws and all rights and remedies which such
holder has been granted at any time under any other agreement or contract and
all of the rights which such holder has under any law or equity. Any Person
having any rights under any provision of this Agreement will be entitled to
enforce such rights specifically, to recover damages by reason of any breach of
any provision of this Agreement and to exercise all other rights granted by law
or equity.
(b) The parties hereto agree that if any parties seek to resolve any
dispute arising under this Agreement pursuant to a legal proceeding, the
prevailing parties to such proceeding
39
<PAGE>
shall be entitled to receive reasonable fees and expenses (including reasonable
attorneys' fees and expenses) incurred in connection with such proceedings.
(c) It is acknowledged that it will be impossible to measure in money the
damages that would be suffered if the parties fail to comply with any of the
obligations herein imposed on them and that in the event of any such failure, an
aggrieved Person will be irreparably damaged and will not have an adequate
remedy at law. Any such person shall, therefore, be entitled to injunctive
relief, including specific performance, to enforce such obligations, and if any
action should be brought in equity to enforce any of the provisions of this
Agreement, none of the parties hereto shall raise the defense that there is an
adequate remedy at law.
27. Notices.
-------
All notices, demands or other communications to be given or delivered
under or by reason of the provisions of this Agreement shall be in writing and
shall be deemed to have been given (a) when delivered personally to the
recipient, (b) one business day after being sent by reputable overnight courier
(charges prepaid) (regardless of whether the recipient refuses to accept
delivery), (c) five business days after being sent to the recipient by certified
or registered mail, return receipt requested and postage prepaid regardless of
whether the recipient refuses to accept delivery) or (d) when sent to the
recipient by facsimile (followed promptly by personal, courier or certified or
registered mail delivery). The Corporation's address is:
USS Holdings, Inc.
c/o D. George Harris & Associates, Inc.
399 Park Avenue
32nd Floor
New York, New York 10022
Telephone: (212) 207-6400
Telecopier: (212) 207-6470
Attention: Donald G. Kilpatrick
With a copy to:
Winthrop, Stimson, Putnam & Roberts
One Battery Park Plaza
New York, New York 10004
Telephone: (212) 858-1000
Telecopier: (212) 858-1500
Attention: Kenneth E. Adelsberg, Esq.
The address for each Stockholder is set forth on Schedule 1 hereto;
and if to CMCC, with a copy to:
40
<PAGE>
O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza
New York, New York 10112
Telephone: (212) 408-2400
Telecopier: (212) 408-2420
Attention: John J. Suydam, Esq.
27. Governing Law.
-------------
All questions concerning the construction, interpretation and validity
of this Agreement shall be governed by and construed in accordance with the
domestic laws of the State of New York without giving effect to any choice or
conflict of law provision or rule (whether in the State of New York or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of New York.
28. Further Assurances.
------------------
Each party hereto shall do and perform or cause to be done and
performed all such further acts and things and shall execute and deliver all
such other agreements, certificates, instruments, and documents as any other
party hereto reasonably may request in order to carry out the provisions of this
Agreement and the consummation of the transactions contemplated hereby.
29. Jurisdiction; Venue; Process.
----------------------------
The parties to this Agreement agree that jurisdiction and venue in any
action brought by any party hereto pursuant to this Agreement shall properly
(but not exclusively) lie in any federal or state court located in the State of
New York. By execution and delivery of this Agreement, the parties hereto
irrevocably submit to the jurisdiction of such courts for himself and in respect
of his property with respect to such action. The parties hereto irrevocably
agree that venue would be proper in such court, and hereby waive any objection
that such court is an improper or inconvenient forum for the resolution of such
action. The parties further agree that the mailing by certified or registered
mail, return receipt requested, of any process required by any such court shall
constitute valid and lawful service of process against them, without necessity
for service by any other means provided by statute or rule of court.
30. Representation and Warranties of the Stockholders.
-------------------------------------------------
Each Stockholder (as to himself or itself only) represents and
warrants to the Corporation and the other Stockholders that, as of the time such
Stockholder becomes a party to this Agreement:
(a) this Agreement has been duly and validly executed and delivered by
such Stockholder and this Agreement constitutes a legal and binding obligation
of such Stockholder, enforceable against such Stockholder in accordance with its
terms;
(b) the execution, delivery and performance by such Stockholder of this
Agreement and the consummation by such Stockholder of the transactions
contemplated hereby will not,
41
<PAGE>
with or without the giving of notice or lapse of time, or both (i) violate any
provision of law, statute, rule or regulation to which the Stockholder is
subject, (ii) violate any order, judgment or decree applicable to such
Stockholder, or (iii) conflict with, or result in a breach or default under, any
term or condition of any agreement or other instrument to which such Stockholder
is a party or by which such Stockholder is bound, except for such violations,
conflicts, breaches or defaults that would not, in the aggregate, materially
affect the Stockholder's ability to perform its obligations hereunder;
(c) the Stockholder purchased the Securities owned by it for its own
account, for investment and not with a view to the distribution thereof within
the meaning of the Securities Act;
(d) the Stockholder understands that (i) the Securities have not been
registered under the Securities Act or registered or qualified under applicable
state securities laws by reason of their issuance by the Corporation in a
transaction exempt from the registration and qualification requirements of the
Securities Act and applicable state securities laws, and (ii) the Securities
must be held by the Stockholder indefinitely unless a subsequent disposition
thereof is registered or qualified under the Securities Act and applicable state
securities laws or is exempt from such registration or qualification. The
Stockholder understands that the certificates for the Securities will bear the
legends described in Section 19(b) and (e);
(e) the Stockholder further understands that, with respect to the
Securities, the exemption from registration afforded by Rule 144 (the provisions
of which are known to the Stockholder) depends on the satisfaction of various
conditions, and that, if applicable, Rule 144 may only afford the basis for
sales only in limited amounts;
(f) the Stockholder has not employed any broker or finder or similar
person in connection with its purchase of the Securities;
(g) except as disclosed in writing to the Corporation prior to the
acquisition of Securities by such Stockholder, the Stockholder is an "accredited
investor" (as defined in Rule 501(a) of Regulation D promulgated under the
Securities Act). The Corporation has made available to the Stockholder or its
representatives all agreements, documents, records and books that the
Stockholder has requested relating to an investment in the Securities. The
Stockholder has had an opportunity to ask questions of, and receive answers
from, Persons acting on behalf of the Corporation concerning the terms and
conditions of this investment, and answers have been provided to all of such
questions to the full satisfaction of the Stockholder. No oral representations
have been made or furnished to, or relied on by, the Stockholder or its
representatives in connection with its investment in the Securities. The
Stockholder has such knowledge and experience in financial and business matters
that it is capable of evaluating the risks and merits of its investment in the
Securities;
(h) the Stockholder has no need for liquidity in its investment in the
Securities and is able to bear the economic risk of its investment in the
Securities and the complete loss of all of such investment;
42
<PAGE>
(i) the Stockholder further understands that this Agreement is made with
the Stockholder in reliance upon the Stockholder's representations to the
Corporation contained in this Section 31; and
(j) the Stockholder and its representatives have conducted a due diligence
investigation and have had the opportunity to review all documents and
information which the Stockholder and its representatives have requested
concerning Silica, the Corporation, the Subsidiaries and the Stockholder's
investment. In reaching its decision to invest in the Corporation, the
Stockholder has relied on the foregoing investigation and information, on the
representations and warranties in the Stock Purchase Agreement and on the
representations and warranties set forth herein.
31. Conflicting Agreements.
----------------------
No Stockholder shall enter into any stockholder agreements or
arrangements of any kind with any Person with respect to any Securities on terms
inconsistent with the provisions of this Agreement (whether or not such
agreements or arrangements are with other Stockholders or with Persons that are
not parties to this Agreement), including but not limited to, agreements or
arrangements with respect to the acquisition or disposition of Securities of the
Corporation in a manner which is inconsistent with this Agreement.
32. Mutual Waiver of Jury Trial.
---------------------------
BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL
TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND
EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY
(RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE
RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE
BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE
PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR
PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER THIS
AGREEMENT OR ANY DOCUMENTS RELATED HERETO.
* * * * *
43
<PAGE>
IN WITNESS WHEREOF, the undersigned have duly executed this
Stockholders Agreement as of the date first written above.
USS HOLDINGS, INC.
By: /s/ Richard J. Nick
----------------------------------------
Name: Richard J. Nick
Title: Vice President
CHASE MANHATTAN CAPITAL CORPORATION
By: /s/ Robert R. Ruggiero, Jr.
----------------------------------------
Name: Robert R. Ruggiero, Jr.
Title: Vice President
[SUB-DEBT HOLDER]
By: ________________________________________
Name:
Title:
_____________________________________________
D. George Harris
_____________________________________________
Anthony J. Petrocelli
/s/ Richard J. Donahue
---------------------------------------------
Richard J. Donahue
/s/ Donald G. Kilpatrick
---------------------------------------------
Donald G. Kilpatrick
_____________________________________________
David Willetts
/s/ Richard J. Nick
---------------------------------------------
Richard J. Nick
/s/ William J. Sichko
---------------------------------------------
William J. Sichko
<PAGE>
/s/ Emanuel J. Di Teresi
---------------------------------------------
Emanuel J. Di Teresi
_____________________________________________
Michael R. Boyce
/s/ Matthew J. Dowd
---------------------------------------------
Matthew J. Dowd
Trust under Agreement of D. George Harris
dated November 18, 1994
F/B/O Robert Harris
By ________________________________________
Anthony J. Petrocelli, Trustee
By: /s/ Donald G. Kilpatrick
----------------------------------------
Donald G. Kilpatrick, Trustee
Trust under Agreement of D. George Harris
dated November 18, 1994
F/B/O Margaret Harris
By ________________________________________
Anthony J. Petrocelli, Trustee
By: /s/ Donald G. Kilpatrick
----------------------------------------
Donald G. Kilpatrick, Trustee
<PAGE>
Trust under Agreement of D. George Harris
dated November 18, 1994
F/B/O Keith Coleman
By ________________________________________
Anthony J. Petrocelli, Trustee
By: /s/ Donald G. Kilpatrick
----------------------------------------
Donald G. Kilpatrick, Trustee
Trust under Agreement of D. George Harris
dated November 18, 1994
F/B/O Augustus Northridge
By ________________________________________
Anthony J. Petrocelli, Trustee
By: /s/ Donald G. Kilpatrick
----------------------------------------
Donald G. Kilpatrick, Trustee
Trust under Agreement of D. George Harris
dated January 31, 1995
F/B/O P.G.F. Scurr
By ________________________________________
Anthony J. Petrocelli, Trustee
By: /s/ Donald G. Kilpatrick
----------------------------------------
Donald G. Kilpatrick, Trustee
Trust under Agreement of Anthony J.
Petrocelli
dated October 29, 1990
By ________________________________________
D. George Harris, Trustee
By: /s/ Donald G. Kilpatrick
----------------------------------------
Donald G. Kilpatrick, Trustee
46
<PAGE>
Trust under Agreement of Donald G. Kilpatrick
dated December 16, 1993
F/B/O Daniel G. Kilpatrick
By: /s/ Donald G. Kilpatrick
----------------------------------------
Donald G. Kilpatrick, Trustee
By: /s/ Anthony J. Petrocelli
----------------------------------------
Anthony J. Petrocelli, Trustee
Trust under Agreement of Donald G. Kilpatrick
dated December 16, 1993
F/B/O Eleanor P. Kilpatrick
By: /s/ Donald G. Kilpatrick
----------------------------------------
Donald G. Kilpatrick, Trustee
By: /s/ Anthony J. Petrocelli
----------------------------------------
Anthony J. Petrocelli, Trustee
Trust under Agreement of Donald G. Kilpatrick
dated December 16, 1993
F/B/O Jennifer C. Kilpatrick
By: /s/ Donald G. Kilpatrick
----------------------------------------
Donald G. Kilpatrick, Trustee
By: /s/ Anthony J. Petrocelli
----------------------------------------
Anthony J. Petrocelli, Trustee
Trust under Agreement of Donald G. Kilpatrick
dated December 16, 1993
F/B/O Douglas A. Kilpatrick
By: /s/ Donald G. Kilpatrick
----------------------------------------
Donald G. Kilpatrick, Trustee
By: /s/ Anthony J. Petrocelli
----------------------------------------
Anthony J. Petrocelli, Trustee
47
<PAGE>
SCHEDULE 1
----------
Stockholders/Address
--------------------
Chase Manhattan Capital Corporation
1 Chase Manhattan Plaza
New York, NY 10081
D. George Harris*
Anthony J. Petrocelli*
Richard J. Donahue*
Donald G. Kilpatrick*
David Willetts*
Richard J. Nick*
William J. Sichko*
Emanuel J. Di Teresi*
Michael R. Boyce*
Matthew J. Dowd*
Trust under Agreement of D. George Harris dated November 18, 1994
F/B/O Robert Harris*
Trust under Agreement of D. George Harris dated November 18, 1994
F/B/O Margaret Harris*
Trust under Agreement of D. George Harris dated November 18, 1994
F/B/O Paige Coleman*
Trust under Agreement of D. George Harris dated November 18, 1994
F/B/O Keith Coleman*
Trust under Agreement of D. George Harris dated November 18, 1994
F/B/O Augustus Northridge*
Trust under Agreement of D. George Harris dated January 31, 1995
F/B/O P.G.F. Scurr*
Trust under Agreement of Anthony J. Petrocelli dated October 29, 1990*
Trust under Agreement of Donald G. Kilpatrick dated December 16, 1993
F/B/O Daniel G. Kilpatrick*
Trust under Agreement of Donald G. Kilpatrick dated December 16, 1993
F/B/O Eleanor P. Kilpatrick*
Trust under Agreement of Donald G. Kilpatrick dated December 16, 1993
F/B/O Jennifer C. Kilpatrick*
Trust under Agreement of Donald G. Kilpatrick dated December 16, 1993
F/B/O Douglas A. Kilpatrick*
* c/o D. George Harris & Associates, Inc.
399 Park Avenue
32nd Floor.
New York, NY 10022
<PAGE>
SCHEDULE 2
----------
The Budgeted EBITDA numbers attached hereto as Annex 1 have been
agreed between the parties and shall be used by Chase Manhattan Capital
Corporation to calculate the Budgeted EBITDA monthly numbers for the purposes of
this Agreement by apportioning with respect to each calendar year number
attached hereto for each month the percentages set out below:
%
-----
January 7.1
February 7.0
March 7.5
April 9.3
May 10.8
June 8.5
July 8.6
August 9.4
September 9.0
October 11.8
November 8.1
December 2.9
-----
100.0
=====
For example, the Budgeted EBITDA for the twelve month period ending
June 30, 1999 shall equal
30,119 x 49.8 = 14,999.27
----
100
31,010 x 50.2 = 15,567.02
---- ---------
100
30,566.29
=========
<PAGE>
ANNEX 1
Calendar Year 000's
------------- -----
1996 26,790
1997 29,503
1998 30,119
1999 31,010
2000 31,927
2001 32,272
2002 33,246
2003 34,249
2004 35,283
2005 36,348
<PAGE>
WORKSHEET
---------
Management Agreement EBITDA Trigger Formula (Schedule 2)
<TABLE>
<CAPTION>
Months
January February March April May June July August September October November December
------- -------- ----- ----- --- ---- ---- ------ --------- ------- -------- --------
Annual EBITDA
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997 29,503 7.100% 7.000% 7.500% 9.300% 10.800% 8.500% 8.600% 9.400% 9.000% 11.800% 8.100% 2.900%
1998 30,119 7.100% 7.000% 7.500% 9.300% 10.800% 8.500% 8.600% 9.400% 9.000% 11.800% 8.100% 2.900%
1999 31,010 7.100% 7.000% 7.500% 9.300% 10.800% 8.500% 8.600% 9.400% 9.000% 11.800% 8.100% 2.900%
2000 31,927 7.100% 7.000% 7.500% 9.300% 10.800% 8.500% 8.600% 9.400% 9.000% 11.800% 8.100% 2.900%
2001 32,272 7.100% 7.000% 7.500% 9.300% 10.800% 8.500% 8.600% 9.400% 9.000% 11.800% 8.100% 2.900%
2002 33,248 7.100% 7.000% 7.500% 9.300% 10.800% 8.500% 8.600% 9.400% 9.000% 11.800% 8.100% 2.900%
2003 34,249 7.100% 7.000% 7.500% 9.300% 10.800% 8.500% 8.600% 9.400% 9.000% 11.800% 8.100% 2.900%
2004 35,283 7.100% 7.000% 7.500% 9.300% 10.800% 8.500% 8.600% 9.400% 9.000% 11.800% 8.100% 2.900%
2005 36,348 7.100% 7.000% 7.500% 9.300% 10.800% 8.500% 8.600% 9.400% 9.000% 11.800% 8.100% 2.900%
<CAPTION>
Rolling 12 Month
Calculation
January February March April May June July August September October November December
------- -------- ----- ----- --- ---- ---- ------ --------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1998 29,590 29,638 29,893 29,760 29,812 29,865 29,023 29,970 30,051 30,101 30,119
1999 30,182 30,245 30,311 30,394 30,491 30,568 30,643 30,727 30,807 30,912 30,964 31,010
2000 31,075 31,139 31,208 31,293 31,392 31,470 31,549 31,635 31,718 31,628 31,900 31,927
2001 31,051 31,976 32,002 32,034 32,071 32,100 32,130 32,162 32,193 32,234 32,262 32,272
2002 32,341 32,409 32,482 32,573 32,678 32,761 32,845 32,936 33,024 33,139 33,218 33,248
2003 33,317 33,387 33,463 35,536 33,664 33,760 33,836 33,930 34,020 34,139 34,220 34,249
2004 34,322 34,395 34,472 34,589 34,680 34,768 34,857 34,954 35,047 35,169 35,253 35,283
2005 35,359 35,433 35,513 35,612 35,727 35,818 35,909 36,009 38,105 38,231 36,317 36,248
</TABLE>
<PAGE>
SCHEDULE 3
----------
[Form of Restated Certificate]
<PAGE>
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
USS HOLDINGS, INC.
___________________________
Pursuant to Sections 242 and 245 of the General
Corporation Law of the State of Delaware
___________________________
USS Holdings, Inc., hereinafter called the "Corporation," a
corporation organized and existing under the General Corporation Law of the
State of Delaware, does hereby certify that:
FIRST: The Corporation's original Certificate of Incorporation was
filed with the Secretary of State of the State of Delaware on September 19,
1995.
SECOND: This Amended and Restated Certificate of Incorporation
restates, integrates and amends the Certificate of Incorporation and has been
duly adopted in accordance with Sections 242 and 245 of the General Corporation
Law of the State of Delaware.
THIRD: The text of the Certificate of Incorporation of the
Corporation is hereby amended and restated to read in its entirety as follows:
ARTICLE FIRST
-------------
The name of the Corporation is USS Holdings, Inc.
ARTICLE SECOND
--------------
The address of the registered office of the Corporation in the State
of Delaware is The Corporation Trust Center, 1209 Orange Street, Wilmington, New
Castle County, Delaware. The name of the registered agent of the Corporation at
such address is The Corporation Trust Company.
ARTICLE THIRD
-------------
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware (the "Delaware Statute").
<PAGE>
ARTICLE FOURTH
--------------
The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 11,300,000 shares, consisting of
(a) 3,800,000 shares of preferred stock, $.01 par value (the "Preferred Stock"),
of which 1,200,000 shares are designated Series A Redeemable Preferred Stock
(the "Series A Preferred Stock") and 2,500,000 are designated Series B
Convertible Preferred Stock (the "Series B Preferred Stock") and (b) 7,500,000
shares of common stock, $.01 par value (the "Common Stock"), of which 5,000,000
shares are designated Class A Common Stock (the "Class A Common Stock") and
2,500,000 shares are designated Class B Common Stock (the "Class B Common
Stock").
Preferred Stock may be issued from time to time in one or more series,
each of such series to have such terms as are stated herein and in the
resolution or resolutions providing for the establishment of such series adopted
by the Board of Directors as hereinafter provided. Except as otherwise
expressly stated herein or in the resolution or resolutions providing for the
establishment of any series of Preferred Stock, any shares of Preferred Stock
which may be redeemed, purchased or acquired by the Corporation may be reissued
except as otherwise provided by law.
Authority is hereby expressly granted to the Board of Directors to
issue, from time to time, shares of Preferred Stock in one or more series, and,
in connection with the establishment of any such series by resolution or
resolutions, to determine and fix such designations, preferences and relative,
participating, optional or other special rights, and qualifications, limitations
or restrictions thereof, including, without limitation, dividend rights,
conversion rights, redemption privileges, preemptive rights and liquidation
preferences, as shall be stated in such resolution or resolutions, all to the
full extent permitted by the Delaware Statute; provided, however, that no such
-------- -------
Preferred Stock established by resolution or resolutions shall possess any
voting rights, except to the extent expressly provided in the resolution or
resolutions establishing such Preferred Stock or as otherwise required by the
Delaware Statute. Without limiting the generality of the foregoing, the
resolution or resolutions providing for the establishment of any series of
Preferred Stock may, to the extent permitted by law, provide that such series
shall be superior or rank equally or be junior to any other series. Except as
may otherwise be provided in this Certificate of Incorporation with respect to
the Series A Preferred Stock and Series B Preferred Stock and except as may be
provided in the resolutions providing for the establishment of any series of
Preferred Stock issued after the date hereof, no vote of the holders of
Preferred Stock or Common Stock shall be a prerequisite to the establishment of
any series of Preferred Stock or the issuance of any shares of any series of the
Preferred Stock authorized by and complying with the conditions of this
Certificate of Incorporation.
The designations, powers, preferences and relative, participating,
optional or other special rights, and the qualifications, limitations and
restrictions thereof in respect of the Series A Preferred Stock, Series B
Preferred Stock, Class A Common Stock and Class B Common Stock are as follows:
2
<PAGE>
A. SERIES A PREFERRED STOCK
------------------------
1. Dividends.
---------
(a) The Corporation shall accrue dividends on each share of Series A
Preferred Stock on each Dividend Accrual Date, at an amount per share equal to
the Series A Dividend Rate times the average balance of the Series A Liquidation
Preference from the last Dividend Accrual Date (or, in the case of the first
Dividend Accrual Date, the Original Issuance Date) to the Dividend Accrual Date
in question. Dividends on the Series A Preferred Stock for any period other
than a full dividend period, shall be computed on the basis of a 360-day year
consisting of twelve 30-day months. All unpaid dividends hereunder shall accrue
and cumulate and shall increase the Series A Liquidation Preference from the
applicable Dividend Accrual Date.
(b) Except for dividends on Junior Stock payable solely in additional
shares of Junior Stock, unless all accrued dividends on all outstanding shares
of the Series A Preferred Stock shall have been paid or declared and set aside
for payment, no dividend shall be declared, paid or set apart for payment or any
other distribution (whether in cash or obligations of the Corporation or other
properties) upon any Junior Stock, nor shall any Junior Stock be redeemed,
purchased or otherwise acquired for any consideration (or any moneys be paid to
or made available for a sinking fund for the redemption of any shares of any
such stock) by the Corporation.
(c) Dividends shall accrue in accordance with this Section A.1 to the
holders of record of Series A Preferred Stock as they appear on the stock ledger
of the Corporation on the Dividend Accrual Date.
(d) Accrued dividends on the Series A Preferred Stock shall be paid
when, as and if declared by the Board or otherwise as provided herein.
2. Rights on Liquidation.
---------------------
(a) In the event of any Liquidation, the holders of shares of Series
A Preferred Stock then outstanding shall be entitled to receive out of the
assets of the Corporation legally available for distribution to its
stockholders, whether from capital, surplus or earnings, before any payment
shall be made to the holders of any Junior Stock, an amount per share equal to
the Series A Liquidation Preference. After payment of such liquidating
distributions, the holders of shares of Series A Preferred Stock will not be
entitled to any further participation in any distribution of assets by the
Corporation.
(b) The merger or consolidation of the Corporation into or with any
other corporation or the merger or consolidation or any other corporation into
or with the Corporation shall not be deemed a Liquidation within the meaning of
this Section A.2.
3. Redemption of Series A Preferred Stock.
--------------------------------------
(a) The Corporation shall redeem all of the shares of Series A
Preferred Stock then outstanding on the Redemption Date.
3
<PAGE>
(b) The Corporation may redeem (pro rata as to each holder based upon
--- ----
the number of shares of Series A Preferred Stock held by such holder), at any
time and at its option, any or all of the shares of Series A Preferred Stock
then outstanding.
(c) The per share redemption price at which shares of Series A
Preferred Stock are to be redeemed pursuant to this Section A.3 shall be equal
to the Series A Liquidation Preference. If less than all of the outstanding
shares of the Series A Preferred Stock are to be redeemed pursuant to Section
A.3(b), the shares shall be redeemed from the holders thereof pro rata based
--- ----
upon the number of shares of Series A Preferred Stock held by each such holder.
(d) At least 30 days but not more than 60 days prior to the date fixed
for any redemption (each, a "Series A Redemption Date") of shares of the Series
A Preferred Stock, a written notice (the "Series A Redemption Notice") shall be
given to each holder of record of shares of the Series A Preferred Stock to be
redeemed. Such notice shall specify (1) the number of shares being redeemed
from such holder, (2) the Series A Redemption Date and (3) the amount to be paid
for each share of Series A Preferred Stock to be redeemed. The Series A
Redemption Notice shall call upon such holder to surrender to the Corporation on
the Series A Redemption Date, at the place or places designated in the Series A
Redemption Notice, the certificate or certificates representing the number of
shares of the Series A Preferred Stock to be redeemed from such holder as
specified in the Series A Redemption Notice. On and after the Series A
Redemption Date, each holder of shares of the Series A Preferred Stock to be
redeemed shall be entitled to receive the redemption price for such shares upon
the presentation and surrender of the certificate or certificates representing
such shares at the place designated in the Series A Redemption Notice. Each
surrendered certificate shall be canceled. If less than all of the shares
represented by any certificate are redeemed, a new certificate shall be issued
representing the shares not redeemed. From and after the Series A Redemption
Date (unless default shall be made by the Corporation in payment of the
redemption price), or from and after the date the Series A Redemption Notice has
been sent as aforesaid and a sum sufficient to redeem the shares of the Series A
Preferred Stock called for redemption shall have been irrevocably deposited or
set aside, all dividends on the shares of the Series A Preferred Stock
designated for redemption in the Series A Redemption Notice shall cease to
accrue, all rights to the holders thereof as stockholders of the Corporation,
except the right to receive the redemption price thereof upon the surrender of
certificates representing such shares, shall cease and terminate, such shares
shall not thereafter be transferred on the books of the Corporation, and such
shares shall not be deemed to be outstanding for any purpose whatsoever.
4. Voting Rights.
-------------
(a) The holders of the Series A Preferred Stock shall not, except as
otherwise required by law or as set forth herein, have any right or power to
vote on any matter or in any proceeding or to be represented on any matter or in
any proceeding or to be represented at, or to receive notice of, any meeting of
stockholders. The holders of the Series A Preferred Stock shall be entitled to
one vote for each share held on any matter as to which they shall be entitled to
vote.
(b) So long as any shares of the Series A Preferred Stock are
outstanding, the Corporation shall not, without the affirmative vote, or the
written consent as provided by law, of
4
<PAGE>
the holders of at least two-thirds of the shares of the Series A Preferred Stock
then outstanding, voting as a class:
(i) change the preferences, rights or powers with respect to
the Series A Preferred Stock so as to affect such stock adversely; or
(ii) authorize, create or issue any (i) equity securities of the
Corporation having rights (other than as to voting), preferences or priorities
(including dividend and liquidation preferences) equal to or superior to the
Series A Preferred Stock, other than the Seller Preferred Stock, and additional
shares of the Series A Preferred Stock, or (ii) any bonds, debentures, notes or
other obligations convertible into or exchangeable for, or having option rights
to purchase, any shares of stock of the Corporation (other than shares of Series
A Preferred Stock) having rights, preferences or priorities (including dividend
and liquidation preferences) equal to or superior to the Series A Preferred
Stock.
5. Retired Shares.
--------------
Shares of Series A Preferred Stock redeemed, purchased or otherwise
acquired by the Corporation shall be deemed retired and may not thereafter be
reissued or otherwise disposed of by the Corporation.
B. SERIES B PREFERRED STOCK
------------------------
1. Dividends.
---------
(a) The Corporation shall accrue dividends on each share of Series B
Preferred Stock on each Dividend Accrual Date, at an amount per share equal to
the Series B Dividend Rate times the average balance of the Series B Liquidation
Preference from the last Dividend Accrual Date (or, in the case of the first
Dividend Accrual Date, the Original Issuance Date) to the Dividend Accrual Date
in question. Dividends on the Series B Preferred Stock for any period other
than a full dividend period, shall be computed on the basis of a 360-day year
consisting of twelve 30-day months. All unpaid dividends hereunder shall accrue
and cumulate and shall increase the Series B Liquidation Preference from the
applicable Dividend Accrual Date.
(b) Unless all accrued dividends on all outstanding shares of the
Series B Preferred Stock shall have been paid or declared and set aside for
payment, no dividend shall be declared, paid or set apart for payment or any
other distribution (whether in cash or obligations of the Corporation or other
properties) upon any Junior Stock, nor shall any Junior Stock be redeemed,
purchased or otherwise acquired for any consideration (or any moneys be paid to
or made available for a sinking fund for the redemption of any shares of any
such stock) by the Corporation, other than dividends on Junior Stock payable
solely in additional shares of Junior Stock.
(c) Dividends shall accrue in accordance with this Section B.1 to the
holders of record of Series B Preferred Stock as they appear on the stock ledger
of the Corporation on the Dividend Accrual Date.
5
<PAGE>
(d) In addition to the dividends set forth in paragraph (a) above, in
the event that the Corporation shall pay a cash dividend on shares of Common
Stock, the holder of each share of Series B Preferred Stock shall be entitled to
receive a cash dividend, simultaneously with and in an amount equal to the
amounts paid to the holder of each share of Common Stock; provided, however,
-------- -------
that for the purpose of calculating the amounts due per share of Series B
Preferred Stock under this paragraph (d), each share of Series B Preferred Stock
shall be deemed to be that number of shares of Common Stock into which such
share of Series B Preferred Stock was convertible as of the record date fixed
for the determination of the holders of Common Stock entitled to receive such
dividends.
(e) In addition to the dividends set forth in paragraphs (a) and (d)
above, in the event that the Corporation shall pay a non-cash dividend or
distribution upon its Common Stock including, without limitation, any
distribution of capital stock of the Corporation, stock or other securities of
other persons, evidences of indebtedness issued by the Corporation or other
persons, other assets or options or rights, the holders of Series B Preferred
Stock shall be entitled to a proportionate share of any such distribution as
though they were the holders of the number of shares of Common Stock into which
their shares of Series B Preferred Stock were convertible as of the record date
fixed for the determination of the holders of Common Stock entitled to receive
such distribution.
2. Rights on Liquidation.
---------------------
(a) In the event of any Liquidation, the holders of shares of Series B
Preferred Stock then outstanding shall be entitled to receive out of the assets
of the Corporation legally available for distribution to its stockholders,
whether from capital, surplus or earnings, before any payment shall be made to
the holders of any Junior Stock, an amount per share equal to the Series B
Liquidation Preference. After payment of such liquidating distributions, the
holders of shares of Series B Preferred Stock will not be entitled to any
further participation in any distribution of assets by the Corporation.
(b) The merger or consolidation of the Corporation into or with any
other corporation or the merger or consolidation of any other corporation into
or with the Corporation shall not be deemed a Liquidation within the meaning of
this Section B.2.
3. Voting Rights.
-------------
(a) Except as otherwise required by law, holders of Series B Preferred
Stock shall not, prior to the occurrence of a Trigger Event, be entitled to vote
on any matter to be voted on by the stockholders of the Corporation. From and
after the occurrence of a Trigger Event, each share of Series B Preferred Stock
shall entitle the holder thereof to vote on all matters as to which holders of
Class A Common Stock shall be entitled to vote (with the number of votes
specified in this Section B.3), together with such holders of Class A Common
Stock as one class and in the same manner and with the same effect as such
holders of Class A Common Stock, with each share of Series B Preferred Stock
entitling the holder thereof to a number of votes equal to the number of shares
of Common Stock issuable upon conversion of such share of Series B Preferred
Stock on the date of such vote.
6
<PAGE>
(b) The Corporation shall not, without the affirmative consent or
approval of a majority of the shares of Series B Preferred Stock outstanding at
such time, given by written consent in lieu of a meeting or by vote at a meeting
called for such purpose for which notice shall have been given to the holders of
Series B Preferred Stock in the manner provided by law:
(A) authorize or designate or issue any additional shares of
Series B Preferred Stock; or
(B) change the preferences, rights or powers with respect to the
Series B Preferred Stock so as to affect such stock adversely.
4. Conversion.
----------
(a) Optional Conversion. At any time and from time to time, any
-------------------
holder of Series B Preferred Stock may convert all or any portion of such Series
B Preferred Stock (including any fraction of a share) held by such holder into
an equal number of fully paid and nonassessable Conversion Shares.
(b) Automatic Conversion. All of the outstanding shares of Series B
--------------------
Preferred Stock (including any fractional shares) shall automatically be
converted, without any further act of the Corporation or its stockholders, into
an equal number of fully paid and nonassessable Conversion Shares upon an Event
of Conversion. The date on which an Event of Conversion occurs shall be
referred to herein as the "Series B Conversion Date" in respect to shares
converted pursuant to this Section B.4(b).
(c) Conversion Procedure.
--------------------
(i) Each conversion of Series B Preferred Stock shall be deemed
to have been effected on (A) the Series B Conversion Date in the case of
conversion pursuant to Section B.4(b) or (B) the close of business on the date
on which the certificate or certificates representing the shares of Series B
Preferred Stock to be converted have been surrendered at the principal office of
the Corporation in the case of conversion pursuant to Section B.4(a). At such
time as such conversion has been effected, the rights of the holder of the
shares of Series B Preferred Stock being converted, shall cease and the Person
or Persons in whose name or names any certificate or certificates for Conversion
Shares are to be issued upon such conversion shall be deemed to have become the
holder or holders of record of the Conversion Shares represented thereby.
(ii) As soon as possible after a conversion has been effected
the Corporation shall deliver to the holder so converting shares of Series B
Preferred Stock:
(A) a certificate or certificates representing the number of
Conversion Shares issuable by reason of such conversion in such name or
names and such denomination or denominations as the holder has specified;
and
(B) a certificate representing any shares of Series B Preferred
Stock, if any, which were represented by the certificate or certificates
delivered to the Corporation in connection with such conversion but which
were not converted.
7
<PAGE>
(iii) The issuance of certificates for Conversion Shares upon
conversion of shares of Series B Preferred Stock shall be made without charge to
the holders of such shares of Series B Preferred Stock for any issuance tax in
respect thereof or other cost incurred by the Corporation in connection with
such conversion and the related issuance of Conversion Shares; provided,
--------
however, that the holders shall pay any tax in respect of any transfer involved
- -------
in the issuance of Conversion Shares in a name other than that in which the
shares of Series B Preferred Stock were registered. Upon conversion of each
share of Series B Preferred Stock, the Corporation shall take all such actions
as are necessary in order to insure that the Conversion Shares issuable with
respect to such conversion shall be validly issued, fully paid and
nonassessable.
(iv) The Corporation shall not close its books against the
transfer of shares of Series B Preferred Stock or of Conversion Shares in any
manner which interferes with the timely conversion of shares of Series B
Preferred Stock. The Corporation shall assist and cooperate with any holder of
shares required to make any governmental filings or obtain any governmental
approval prior to or in connection with any conversion of shares hereunder
(including, without limitation, making any filings required to be made by the
Corporation).
(v) The Corporation shall at all times reserve and keep
available out of its authorized but unissued shares of Conversion Shares, solely
for the purpose of issuance upon the conversion of the Series B Preferred Stock,
such number of Conversion Shares issuable upon the conversion of all outstanding
Series B Preferred Stock. All Conversion Shares which are so issuable shall,
when issued, be duly and validly issued, fully paid and nonassessable and free
from all taxes, liens and charges. The Corporation shall take all such actions
as may be necessary to assure that all such Conversion Shares may be so issued
without violation of any applicable law or governmental regulation or any
requirements of any domestic securities exchange upon which Conversion Shares
may be listed (except for official notice of issuance which shall be immediately
delivered by the Corporation upon each such issuance).
(d) Adjustments. If, at any time, the number of Conversion Shares
-----------
outstanding is increased by a stock dividend payable in shares of Class A Common
Stock or Class B Common Stock or by a subdivision or split-up of shares of Class
A Common Stock or Class B Common Stock, then, in each such case, following the
record date for such event, the number of shares of Class A Common Stock or
Class B Common Stock into which each share of the Series B Preferred Stock is
then, or at any time may be convertible, shall be increased in proportion to
such increase in outstanding shares. If, at any time, the number of shares of
Class A Common Stock or Class B Common Stock outstanding is decreased by a
combination of the outstanding shares of Class A Common Stock or Class B Common
Stock, then, following the record date for such combination, the number of
shares of Class A Common Stock or Class B Common Stock into which each share of
Series B Preferred Stock is then, or at any time may be convertible, shall be
decreased in proportion to such decrease in outstanding shares. In case, at any
time, of any capital reorganization, or any reclassification of the capital
stock of the Corporation (other than a change in par value or from par value to
no par value or from no par value to par value or as a result of a stock
dividend or subdivision, split-up or combination of shares) or the consolidation
or merger of the Corporation with or into another person (other than a
consolidation or merger in which the Corporation is the continuing corporation
and which does not result in any change in the Conversion Shares) or of the sale
or other disposition of all or
8
<PAGE>
substantially all the properties and assets of the Corporation as an entirety to
any other Person, each share of Series B Preferred Stock shall after such
reorganization, reclassification, consolidation, merger, sale or other
disposition be convertible into the kind and number of shares of stock or other
securities or property of the Corporation or of the corporation resulting from
such consolidation or surviving such merger or to which such properties and
assets shall have been sold or otherwise disposed to which the holder of the
number of Conversion Shares deliverable (immediately prior to the time of such
reorganization, reclassification, consolidation, merger, sale or other
disposition) upon conversion of such share of Series B Preferred Stock would
have been entitled upon such reorganization, reclassification, consolidation,
merger, sale or other disposition. The provisions of this paragraph shall
similarly apply to successive reorganizations, reclassifications,
consolidations, mergers, sales or other dispositions.
C. COMMON STOCK
------------
1. General. Except as otherwise provided in this Article Fourth,
-------
all shares of Class A Common Stock and Class B Common Stock will be identical
and will entitle the holders thereof to the same powers, preferences and
relative participating, optional and other special rights, subject to the same
qualifications and restrictions thereof.
2. Voting. Each holder of Class A Common Stock shall be entitled to
------
one vote per share of Class A Common Stock held by such holder on all matters to
be voted on by the stockholders of the Corporation. Except as otherwise
required by law, holders of Class B Common Stock shall not be entitled to vote
on any matter to be voted on by the stockholders of the Corporation.
3. Rights. Except for and subject to those rights expressly granted
------
to the holders of the Preferred Stock, or except as may be provided by the laws
of the State of Delaware, the holders of Common Stock shall have exclusively all
other rights of stockholders.
4. Conversion.
----------
(a) Optional Conversion. Shares of Class A Common Stock may not be
-------------------
converted into shares of Class B Common Stock. Shares of Class B Common Stock
may not be converted into shares of Class A Common Stock except as provided in
Section C.4(b).
(b) Automatic Conversion. All of the outstanding shares of Class B
--------------------
Common Stock (including any fractional shares) shall automatically be converted,
without any further act of the Corporation or its stockholders, into an equal
number of fully paid and nonassessable shares of Class A Common Stock upon a
Trigger Event or Event of Conversion. The date on which a Trigger Event or an
Event of Conversion occurs shall be referred to herein as the "Class B
Conversion Date" in respect to shares converted pursuant to this Section C.4(b).
(c) Conversion Procedure.
--------------------
(i) The conversion of Class B Common Stock shall be deemed to
have been effected on the Class B Conversion Date. At such time as such
conversion has been effected, the rights of the holder of the shares of Class B
Common Stock being converted shall cease and the Person or Persons in whose name
or names any certificate or certificates for shares
9
<PAGE>
of Class A Common Stock are to be issued upon such conversion shall be deemed to
have become the holder or holders of record of the shares of Class A Common
Stock represented thereby.
(ii) As soon as possible after a conversion has been effected
the Corporation shall deliver to each holder of Class B Common Stock a
certificate or certificates representing the number of shares of Class A Common
Stock issuable by reason of such conversion in such name or names and such
denomination or denominations as the holder has specified.
(iii) The issuance of certificates for shares of Class A Common
Stock upon conversion of shares of Class B Common Stock shall be made without
charge to the holders of such shares for any issuance tax in respect thereof or
other cost incurred by the Corporation in connection with such conversion and
the related issuance of shares of Class A Common Stock; provided, however, that
-------- -------
the holders shall pay any tax in respect of any transfer involved in the
issuance of shares of Class A Common Stock in a name other than that in which
the shares of Class B Common Stock were registered. Upon conversion of each
share of Class B Common Stock, the Corporation shall take all such actions as
are necessary in order to insure that the shares of Class A Common Stock
issuable with respect to such conversion shall be validly issued, fully paid and
nonassessable.
(iv) The Corporation shall not close its books against the
transfer of shares of Class B Common Stock or of shares of Class A Common Stock
in any manner which interferes with the timely conversion shares of Class B
Common Stock. The Corporation shall assist and cooperate with any holder of
shares required to make any governmental filings or obtain any governmental
approval prior to or in connection with any conversion of shares hereunder
(including, without limitation, making any filings required to be made by the
Corporation).
(v) The Corporation shall at all times reserve and keep
available out of its authorized but unissued shares of Class A Common Stock,
solely for the purpose of issuance upon the conversion of the Class B Common
Stock, such number of shares of Class A Common Stock issuable upon the
conversion of all outstanding Class B Common Stock. All shares of Class A Common
Stock which are so issuable shall, when issued, be duly and validly issued,
fully paid and nonassessable and free from all taxes, liens and charges. The
Corporation shall take all such actions as may be necessary to assure that all
such shares of Class A Common Stock may be so issued without violation of any
applicable law or governmental regulation or any requirements of any domestic
securities exchange upon which shares of Class A Common Stock may be listed
(except for official notice of issuance which shall be immediately delivered by
the Corporation upon each such issuance).
(d) Adjustments.
-----------
If, at any time, the number of shares of Class A Common Stock
outstanding is increased by a stock dividend payable in shares of Class A Common
Stock or by a subdivision or split-up of shares of Class A Common Stock, or the
number of shares of Class B Common Stock is decreased by a combination of the
outstanding shares of Class B Common Stock, then, and in
10
<PAGE>
each such case, following the record date for such event, the number of shares
of Class A Common Stock into which each share of the Class B Common Stock is
convertible shall be increased in proportion to such increase in outstanding
shares of Class A Common Stock or decrease in outstanding shares of Class B
Common Stock, as the case may be. If, at any time, the number of shares of Class
B Common Stock is increased by a stock dividend payable in shares of Class B
Common Stock or by a subdivision or split-up of shares of Class B Common Stock
or the number of shares of Class A Common Stock outstanding is decreased by a
combination of the outstanding shares of Class A Common Stock, then, in each
such case, following the record date for such event, the number of shares of
Class A Common Stock into which each share of Class B Common Stock is
convertible shall be decreased in proportion to such increase in outstanding
shares of Class B Common Stock or decrease in outstanding shares of Class A
Common Stock, as the case may be. In case, at any time, of any capital
reorganization, or any reclassification of the capital stock of the Corporation
(other than a change in par value or from par value to no par value or from no
par value to par value or as a result of a stock dividend or subdivision, split-
up or combination of shares) or the consolidation or merger of the Corporation
with or into another person (other than a consolidation or merger in which the
Corporation is the continuing corporation and which does not result in any
change in the Class A Common Stock) or of the sale or other disposition of all
or substantially all the properties and assets of the Corporation as an entirety
to any other Person, each share of Class B Common Stock shall after such
reorganization, reclassification, consolidation, merger, sale or other
disposition be convertible into the kind and number of shares of stock or other
securities or property of the Corporation or of the corporation resulting from
such consolidation or surviving such merger or to which such properties and
assets shall have been sold or otherwise disposed to which the holder of the
number of shares of Class A Common Stock deliverable (immediately prior to the
time of such reorganization, reclassification, consolidation, merger, sale or
other disposition) upon conversion of such share of Class B Common Stock would
have been entitled upon such reorganization, reclassification, consolidation,
merger, sale or other disposition. The provisions of this paragraph shall
similarly apply to successive reorganizations, reclassifications,
consolidations, mergers, sales or other dispositions.
D. DEFINITIONS
-----------
"Acquisition Debt" shall mean the indebtedness incurred by the
----------------
Corporation or its Subsidiaries under the Credit Agreement and the Securities
Purchase Agreement and any indebtedness incurred to refinance such indebtedness.
"Class B Conversion Date" has the meaning ascribed to it in Section
-----------------------
C.4(b).
"Common Stock" means, collectively, the Corporation's Class A Common
------------
Stock and Class B Common Stock and any capital stock of any class of the
Corporation (other than the Series A Preferred Stock, the Series B Preferred
Stock and the Seller Preferred Stock) hereafter authorized which is not limited
to a fixed sum or percentage of par or stated value in respect of the rights of
the holders thereof to participate in dividends or in the distribution of assets
upon any Liquidation.
11
<PAGE>
"Conversion Shares" shall mean (i) prior to the occurrence of a
-----------------
Trigger Event, shares of Class B Common Stock and (ii) from and after the
occurrence of a Trigger Event, shares of Class A Common Stock.
"Credit Agreement" has the meaning ascribed to it in the Stockholders
----------------
Agreement.
"Designated Offering" means an IPO which results in aggregate net cash
-------------------
proceeds (net of underwriter discounts and commissions and estimated offering
expenses) to the Corporation and/or any selling stockholders of not less than
$30,000,000.
"Dividend Accrual Date" means June 30 and December 31 of each year,
---------------------
commencing June 30, 1996, and any other date upon which any payment on
Liquidation or by way of a redemption is made on the Series A Preferred Stock or
Series B Preferred Stock, as applicable.
"Event of Conversion" means the first to occur of:
-------------------
(i) the consummation of a Designated Offering; or
(ii) the conversion by the holders thereof of more than 50% of
the shares of Series B Preferred Stock issued on the Original Issuance
Date.
"IPO" means the initial public offering of the Common Stock registered
---
pursuant to the Securities Act.
"IRR Event" shall have the meaning ascribed to it in the Stockholders
---------
Agreement.
"Junior Stock" means (i) with respect to the Series A Preferred Stock,
------------
all other classes and series of equity securities of the Corporation now
existing or hereafter created, including the Common Stock and any class or
series of Preferred Stock other than the Seller Preferred Stock, and (ii) with
respect to the Series B Preferred Stock, all other classes and series of equity
securities of the Corporation now existing or hereafter created, including the
Common Stock and any class or series of Preferred Stock other than Series A
Preferred Stock and the Seller Preferred Stock.
"Liquidation" means any liquidation, dissolution or winding-up of the
-----------
Corporation, whether voluntary or involuntary.
"Original Issuance Date" means, with respect to each share of Series A
----------------------
Preferred Stock and Series B Preferred Stock, the date upon which such share of
Series A Preferred Stock or Series B Preferred Stock was issued.
"Person" means an individual, a partnership, a corporation, an
------
association, a joint stock company, a trust, a joint venture, an unincorporated
organization and a governmental entity or any department, agency or political
subdivision thereof.
12
<PAGE>
"Redemption Date" means the first to occur of (i) the date which is 90
---------------
days after the repayment of all Acquisition Debt, (ii) February __, 2008 or
(iii) the date on which an IRR Event shall occur.
"Securities Act" means the Securities Act of 1933, as amended.
--------------
"Securities Purchase Agreement" has the meaning ascribed to it in the
-----------------------------
Stockholders Agreement.
"Seller Preferred Stock" shall have the meaning ascribed thereto in
----------------------
the Stockholders Agreement.
"Series A Accrued Dividends" means (whether or not there shall have
--------------------------
been net profits or net assets of the Corporation legally available for the
payment of dividends) that amount which shall be equal to the dividends on the
Series A Preferred Stock that have accrued in accordance with Section A.1 for
the period from the Original Issuance Date to the date in question but have not
been paid.
"Series A Dividend Rate" means 12% per annum.
----------------------
"Series A Liquidation Preference" means, at any point in time, an
-------------------------------
amount per share equal to the Series A Original Liquidation Preference, plus the
amount of any Series A Accrued Dividends, if any, through the date in question.
"Series A Original Liquidation Preference" means, with respect to each
----------------------------------------
share of Series A Preferred Stock, $7.78.
"Series A Redemption Date" has the meaning ascribed to it in Section
------------------------
A.3(d).
"Series A Redemption Notice" has the meaning ascribed to it in Section
--------------------------
A.3(d).
"Series B Accrued Dividends" means (whether or not there have been net
--------------------------
profits or net assets of the Corporation legally available for the payment of
dividends) that amount which shall be equal to the dividends on the Series B
Preferred Stock that have accrued in accordance with Section B.1 for the period
from the Original Issuance Date to the date for the period from the Original
Issuance Date to the date in question but have not been paid, plus any other
dividends or distributions declared or required to be paid on the Series B
Preferred Stock and which remain unpaid at such time.
"Series B Conversation Date" has the meaning ascribed to it in Section
--------------------------
B.4(b).
"Series B Dividend Rate" means 9% per annum.
----------------------
"Series B Liquidation Preference" means, at any point in time, an
-------------------------------
amount per share equal to the Series B Original Liquidation Preference, plus the
amount of any Series B Accrued Dividends, if any, through the date in question.
13
<PAGE>
"Series B Original Liquidation Preference" means with respect to each
----------------------------------------
share of Series B Preferred Stock, $10.
"Stockholders Agreement" means the Stockholders Agreement dated as of
----------------------
February __, 1996, among the Corporation and the other parties thereto, as the
same may be amended from time to time.
"Subsidiary" means any corporation of which the shares of outstanding
----------
capital stock possessing the voting power (under ordinary circumstances) in
electing the board of directors of such corporation are, at the time as of which
any determination is being made, owned by the Corporation either directly or
indirectly through one or more Subsidiaries.
"Trigger Event" shall have the meaning ascribed thereto in the
-------------
Stockholders Agreement.
ARTICLE FIFTH
-------------
The number of directors of the Corporation shall be such as from time
to time shall be fixed in the manner provided in the By-laws of the Corporation.
The election of directors of the Corporation need not be by ballot unless the
By-laws so require.
ARTICLE SIXTH
-------------
A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware Statute, or (iv) for
any transaction from which the director derived any improper personal benefit.
If the Delaware Statute is amended after the date of incorporation of the
Corporation to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director of the
Corporation shall be eliminated or limited to the fullest extent permitted by
the Delaware Statute, as so amended. Any repeal or modification of the
foregoing paragraph by the stockholders of the Corporation shall not adversely
affect any right or protection of a director of the Corporation existing at the
time of such repeal or modification.
The Corporation shall, to the fullest extent permitted by Section 145
of the Delaware Statute, as the same may be amended and supplemented, or by any
successor thereto, indemnify any and all officers and directors of the
Corporation from and against any and all of the expenses, liabilities or other
matters referred to in or covered by said Section. Such right to
indemnification shall continue as to any person who has ceased to be a director
or officer and shall inure to the benefit of the heirs, executors and
administrators of such person. The indemnification provided for herein shall not
be deemed exclusive of any other rights to which those seeking indemnification
may be entitled under any by-law, agreement, vote of stockholders or
disinterested directors or otherwise.
14
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed by Richard J. Nick, its Vice President, and attested by Donald G.
Kilpatrick, its Secretary, as of the _____ day of February, 1996.
USS HOLDINGS, INC.
By:___________________________________
Name: Richard J. Nick
Title: Vice President
ATTEST:
By:_______________________
Name: Donald G. Kilpatrick
Title: Secretary
15
<PAGE>
State of Delaware
Office of the Secretary of State
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
DESIGNATION OF "USS HOLDINGS, INC.", FILED IN THIS OFFICE ON THE NINTH DAY OF
FEBRUARY, A.D. 1996, AT 2:22 O'CLOCK P.M.
[SEAL] ____________________________________
Edward J. Freel, Secretary of State
AUTHENTICATION:
2543882 8100 7822799
DATE:
960039654 02-09-96
<PAGE>
Certificate of Designations by the Board of Directors
as to the Designations, Preferences and Rights
of the Series C Preferred Stock
of
USS HOLDINGS, INC.
USS Holdings, Inc., a corporation organized and existing under the laws of
the State of Delaware (the "Corporation"), the Amended and Restated Certificate
of Incorporation of which was filed in the office of the Secretary of State of
Delaware on February 9, 1996, does by its Vice Chairman and its Secretary, and
under its corporate seal, hereby certify as follows:
First: That by the Amended and Restated Certificate of Incorporation duly
-----
filed in the above office as above stated, the total number of shares which the
Corporation may issue is stated therein to be as follows:
"The total number of shares of all classes of stock which the Corporation
shall have authority to issue is 11,300,000 shares, consisting of (a)
3,800,000 shares of preferred stock, $.01 par value (the "Preferred
Stock"), of which 1,200,000 shares are designated Series A Redeemable
Preferred Stock (the "Series A Preferred Stock") and 2,500,000 shares are
designated Series B Convertible Preferred Stock (the "Series B Preferred
Stock") and (b) 7,500,000 shares of common stock, $.01 par value (the
"Common Stock"), of which 5,000,000 shares are designated Class A Common
Stock (the "Class A Common Stock") and 2,500,000 shares are designated
Class B Common Stock (the "Class B Common Stock")."
Second: That by said Amended and Restated Certificate of Incorporation,
------
the Board of Directors of the Corporation is expressly authorized to issue, as
determined by resolution or resolutions of the Board of Directors before
issuance, the Preferred Stock from time to time, in one or more series, and, in
connection with the establishment of any such series by resolution or
resolutions, to determine and fix such designations, preferences and relative,
participating, optional or other special rights, and qualifications, limitations
or restrictions thereof, including, without limitation, dividend rights,
conversion rights, redemption privileges, preemptive rights and liquidation
preferences, as shall be stated in such resolution or resolutions, all to the
full
<PAGE>
extent permitted by the General Corporation Law of the State of Delaware;
provided, however, that no such Preferred Stock established by resolution or
resolutions shall possess any voting rights, except to the extent expressly
provided in the resolution or resolutions establishing such Preferred Stock or
as otherwise required by the General Corporation Law of the State of Delaware.
Third: That pursuant to the authority so vested in the Board of
-----
Directors, the Board of Directors duly adopted the following Resolutions:
"RESOLVED, that there be created a series of preferred stock, par
value $.01 per share, of the Corporation, bearing the designation "Series C
Preferred Stock" (the "Series C Preferred Stock"); the number of shares of
Series C Preferred Stock which the Corporation may issue shall be 20,000
shares (the "Shares"); and the Series C Preferred Stock shall have the
following powers, preferences, relative rights and qualifications,
limitations, restrictions, and other distinguishing characteristics:
Section 1. Ranking and Voting Rights.
-------------------------
(a) Ranking. The Series C Preferred Stock shall, with respect to
-------
amounts payable on redemption and distributions upon the liquidation,
winding-up and dissolution of the Corporation, rank senior to all classes
of common stock of the Corporation and to each other class of Capital Stock
or series of preferred stock of the Corporation (collectively "Junior
Securities"). The Corporation may not issue any new class or series of
preferred securities or other Capital Stock ranking senior to or on a
parity with the Series C Preferred Stock as to dividends distributions,
amounts payable on redemption and distributions upon the liquidation,
winding-up and dissolution of the Corporation without the approval of the
holders of at least 66 2/3% the shares of the Series C Preferred Stock then
outstanding, voting or consenting, as the case may be, separately as one
class, except that without the approval of the holders of the Series C
Preferred Stock, the Corporation may issue shares of preferred securities
or other Capital Stock the proceeds of which are used to redeem or
repurchase all shares of the Series C Preferred Stock then outstanding.
(b) Voting Rights. Each share of Series C Preferred Stock shall
-------------
entitle the holder thereof to vote on all matters as to which holders of
Class A Common Stock shall be entitled to vote, together with such holders
of Class A Common Stock as one class and in the same manner and with the
same effect as such holders of Class A Common Stock, with each share of
Series C Preferred Stock entitling the holder thereof to five votes;
provided, however, that in no event shall the holders of the Series C
Preferred Stock have more than 28% of all of the votes
2
<PAGE>
cast on any matter as to which the holders of Series C Preferred Stock
shall be entitled to vote.
Section 2. Dividends. The Series C Preferred Stock shall not accrue
---------
dividends prior to the Mandatory Redemption Date, following which they
shall accrue dividends at the rate of nine percent (9%) of their
liquidation preference per annum, from the Mandatory Redemption Date until
the date sufficient funds are made available for their redemption. Such
dividends, if any, shall be payable in cash on redemption.
Section 3. Redemptions.
-----------
(a) Optional Redemption. The Series C Preferred Stock shall be
-------------------
redeemable, in whole or in part, at any time prior to the Mandatory
Redemption Date at the option of the Corporation in accordance with the
Stock Purchase Agreement or upon not less than 30 nor more than 60 days'
notice, at a redemption price per share equal to the Discounted Liquidation
Preference.
(b) Mandatory Redemption. The Series C Preferred Stock shall be
--------------------
subject to mandatory redemption (subject to the legal availability of funds
therefor) in whole on the Mandatory Redemption Date at a redemption price
per share equal to the liquidation preference, plus all accumulated and
unpaid dividends from the Mandatory Redemption Date to the date sufficient
funds are made available for redemption. The Corporation is required to
redeem all the outstanding Series C Preferred Stock at a purchase price
equal to their Discounted Liquidation Preference, plus all accumulated and
unpaid dividends from the Mandatory Redemption Date to the date sufficient
funds are made available for redemption, following the breach of any
covenant contained in Section 5 hereof on the 180th day after the giving of
notice to the Corporation by the holders of at least 51% of the Series C
Preferred Stock requesting redemption of the Series C Preferred Stock as a
result of such breach. In addition following a Change of Control and each
reduction in the amount of Capital Stock held by Harris Stockholders
thereafter, on the 60th day (or such later date, up to the 180th day, on
which any security of the Corporation senior to the Series C Preferred
Stock may be entitled to be purchased or redeemed upon such event) after
the giving of notice to the Corporation by the holders of at least 51% of
the Series C Preferred Stock requesting redemption as a result of such
Change of Control or reduction, as the case may be, the Corporation shall
be required to redeem at a purchase price equal to their Discounted
Liquidation Preference, plus all accumulated and unpaid dividends from the
Mandatory Redemption Date to the date sufficient funds are made available
for redemption, Series C Preferred Stock in such an amount so that the
percentage of the Shares outstanding after giving effect to such redemption
shall not be greater than the percentage then held by Harris Stockholders
of Capital Stock of the Corporation held by Harris Stockholders at the
Closing. The Corporation shall be obligated to redeem Series C Preferred
Stock only to the extent permitted under the General Corporation Law of
Delaware.
3
<PAGE>
(c) Procedure for Redemption. On and after a redemption date,
------------------------
unless the Corporation defaults in the payment of the applicable redemption
price, all rights of the holders of Shares subject to redemption on such
date shall terminate except for the right to receive the redemption price,
without interest. Except as set forth in the Stock Purchase Agreement, the
Corporation shall send a written notice of redemption by first class mail
to each holder of record of the Series C Preferred Stock at its registered
address, not fewer than 30 days nor more than 60 days prior to the date
fixed for such redemption. Shares of the Series C Preferred Stock issued
and reacquired shall, upon compliance with the applicable requirements of
Delaware law, have the status of authorized but unissued shares of
preferred stock of the Corporation undesignated as to series and may with
any and all other authorized but unissued shares of preferred stock of the
Corporation be designated or redesignated and issued or reissued, as the
case may be, as part of any series of preferred stock of the Corporation,
subject to the provisions of the Corporation's certificate of incorporation
(the "Certificate of Incorporation") and the terms of the Series C
Preferred Stock remaining outstanding.
Section 4. Liquidation Preference. Upon any voluntary or involuntary
----------------------
liquidation, dissolution or winding-up of the Corporation, the holders of
the Series C Preferred Stock shall be entitled to be paid, out of the
assets of the Corporation available for distribution, $1,000.00 plus all
accumulated and unpaid dividends from the Mandatory Redemption Date to the
dates sufficient funds are made available for redemption (or if such event
occurs prior to the Mandatory Redemption Date, the Discounted Liquidation
Preference) per share before any distribution is made on any Junior
Securities, including, without limitation, common stock of the Corporation.
After payment of the full amount of the liquidation preference to which
they are entitled, the holders of the Series C Preferred Stock shall not be
entitled to any further participation in any distribution of assets of the
Corporation. However, neither the sale, conveyance, exchange or transfer
(for cash, shares of stock, securities or other consideration) of all or
substantially all of the property or assets of the Corporation nor the
consolidation or merger of the Corporation with or into one or more
corporations shall be deemed to be a liquidation, dissolution or winding-up
of the Corporation.
Section 5. Certain Covenants.
-----------------
(a) Limitation on Restricted Payments: Without the approval of the
---------------------------------
holders of 66 2/3% of the shares of Series C Preferred Stock then
outstanding, the Corporation (i) shall not, directly or indirectly, declare
or pay any dividend, or make any distribution, in respect of its Capital
Stock or to the holders thereof (including pursuant to a merger or
consolidation of the Corporation, but excluding any dividends or
distributions payable solely in shares of Junior Securities (other than
Disqualified Stock) or in options, warrants or other rights to acquire
Junior Securities (other than Disqualified Stock)), and (ii) shall not, and
shall not permit any Subsidiary of the Corporation to, directly or
indirectly, purchase, redeem or otherwise acquire or retire for value (a)
any Capital Stock of the Corporation or (b) any options, warrants, or
rights to acquire shares of Capital Stock of the
4
<PAGE>
Corporation, (each of Clause (i) and (ii) being a "Restricted Payment"),
unless: (1) no breach of a covenant contained in Section 3 hereof or this
Section 5, and no event that with the lapse of time or the giving of
notice, or both, would constitute a breach of a covenant contained in
Section 3 hereof or this Section 5, shall have occurred and be continuing
and (2) upon giving effect to such Restricted Payment, the aggregate of all
Restricted Payments (other than Restricted Payments referred to in items
(i), (iii) and (v) of the next sentence) following the Closing, does not
exceed the sum of (a) 50% of the cumulative Consolidated Net Income of the
Corporation (or if negative, 100% of the cumulative deficit) from the
Closing through the last day of the last full fiscal quarter for which
quarterly or annual financial statements of the Corporation are available,
and (b) 100% of the aggregate net proceeds, including the fair value of
property, to the Corporation from the issuance of Capital Stock (other than
Disqualified Stock) of the Corporation and options, warrants or other
rights to acquire Capital Stock (other than Disqualified Stock) of the
Corporation (other than to a Subsidiary of the Corporation) and the
principal amount (or accreted value) of Debt of the Corporation that has
been converted into Capital Stock (other than Disqualified Stock) of the
Corporation (other than Debt held, prior to such conversion, by a
Subsidiary of the Corporation) after the Closing. Notwithstanding the
foregoing, the Corporation and any of its Subsidiaries (i) may declare or
pay any dividend, or make any distribution, in respect of the Series C
Preferred Stock or to the holders thereof and may purchase, redeem or
otherwise acquire or retire for value any Series C Preferred Stock, (ii)
may purchase, redeem, acquire or retire Junior Securities in exchange for,
or out of the proceeds of, the substantially concurrent issue of Junior
Securities, except in each case to the extent that cash or any other
property is to be paid or distributed by or on behalf of the Corporation in
connection with such transaction, (iii) may make payments of up to $100,000
in any fiscal year to the extent necessary to pay the operating expenses of
the parent entity of the Corporation, (iv) may purchase, redeem or
otherwise acquire or retire for value shares of the Corporation's Capital
Stock or options on such shares from officers or employees or former
officers or employees of the Corporation or any Subsidiary thereof (or
their estates or beneficiaries under their estates) upon death, disability,
retirement or termination of employment of any such Person pursuant to the
terms of any agreement under which such shares or options were issued, in
an amount not in excess of $1,000,000 in any twelve-month period, (v) may
purchase, redeem or otherwise acquire or retire for value shares of the
Corporation's Capital Stock provided that the Corporation shall
substantially concurrently redeem outstanding Series C Preferred Stock in
the same proportion as Capital Stock held by Harris Stockholders is so
purchased, redeemed or otherwise acquired or retired for value at such
time. The foregoing provision shall not be violated by reason of the
payment of any dividend within 60 days after declaration thereof if at the
declaration date such payment would have complied with the foregoing
provision.
(b) Transactions with Affiliates: Without the approval of the
----------------------------
holders of 66 2/3% of the shares of Series C Preferred Stock then
outstanding, the Corporation, except as permitted in the following
paragraph, shall not, and shall
5
<PAGE>
not permit any Subsidiary to, enter into any transaction with an Affiliate
of the Corporation including any loan, advance or investment, either
directly or indirectly, unless such transaction is on terms which are at
least as favorable as those available from a Person which is not an
Affiliate. Any such transaction (or series of related transactions) that
involves in excess of $250,000 shall be prohibited unless (i) the Board of
Directors of the Corporation determines, as evidenced by a resolution of
the Board of Directors, that such transaction is on terms no less favorable
to the Corporation or such Subsidiary than those that could be obtained in
a comparable arm's-length transaction with an entity that is not an
Affiliate and (ii) in the case of transactions that involve in excess of
$5,000,000, the Board of Directors also obtains the opinion of a nationally
recognized valuation firm to the same effect. The Corporation and any
Subsidiary shall be permitted to enter into any transaction with an
Affiliate of the Corporation if the Board of Directors obtains the opinion
of an independent nationally recognized valuation firm to the effect that
such transaction is on terms no less favorable to the Corporation than
those that could be obtained in a comparable arm's-length transaction with
an entity that is not an Affiliate.
The above requirements shall not be applicable to (i) any transaction among
the Corporation and its Subsidiaries, (ii) any transaction with any
Institutional Investor for the purpose of the making of any loan or advance
to, investment in, or financing or refinancing for the benefit of, the
Corporation or any Subsidiary by such Institutional Investor, (iii) any
transaction permitted by Sections 5(a) or 5(d) hereof and (iv) any
transaction contemplated by the Registration Rights Agreement, the
Management Services Agreement or the DGHA Fee Letter. "Institutional
Investor" shall mean any financial institution that enters into such
transactions in the ordinary course of its business.
(c) Limitation on Certain Asset Dispositions: Without the approval
----------------------------------------
of the holders of 66 2/3% of the shares of Series C Preferred Stock then
outstanding, the Corporation shall not, and shall not permit any Subsidiary
to, make any Asset Disposition in one or more related transactions unless
(i) the Corporation (or such Subsidiary) receives consideration at the time
of such disposition at least equal to the fair market value of the shares
or assets disposed of (as determined in good faith by (x) a designated
officer of the Corporation if such consideration is less than $1 million or
(y) the Corporation's Board of Directors if such consideration is greater
than or equal to $1 million), and (ii) the Net Proceeds, less any amounts
invested within 180 days of such disposition in assets related to the
business of the Corporation and its Subsidiaries on the date of the Closing
and related businesses, are applied (A) first, within 180 days of such
disposition, to repay Debt then outstanding; and (B) second, to purchase
outstanding Series C Preferred Stock at a purchase price equal to their
Discounted Liquidation Preference.
"Asset Disposition" means any transfer, conveyance, sale, lease or other
disposition by the Corporation or any of its Subsidiaries (including by way
of consolidation or merger), resulting in proceeds in excess of $500,000,
of (i) shares of Capital Stock or other ownership interest of a Subsidiary
of the Corporation,
6
<PAGE>
(ii) substantially all of the assets of the Corporation or any Subsidiary
representing a division or line of business, or (iii) other assets or
rights outside of the ordinary course of business.
(d) Mergers, Consolidations and Certain Sales of Assets: Without the
---------------------------------------------------
approval of the holders of 66 2/3% of the shares of Series C Preferred
Stock then outstanding, the Corporation shall not, in a single transaction
or through a series of related transactions, consolidate with or merge with
or into any other Person or sell, assign, convey, transfer or lease or
otherwise dispose of all or substantially all of its properties and assets
to any Person or group of Affiliates, or permit any of its Subsidiaries to
enter into any such transaction or transactions if such transaction or
transactions, in the aggregate, would result in a sale, assignment,
transfer, lease or disposal of all or substantially all of the properties
and assets of the Corporation and its Subsidiaries on a consolidated basis
to any other Person which is not a Subsidiary of the Corporation or to a
group of Affiliates which are not Subsidiaries of the Corporation, unless:
(1) in a transaction in which the Corporation does not survive or in which
the Corporation sells, leases or otherwise disposes of all or substantially
all of its assets, the successor entity to the Corporation is organized
under the laws of the United States of America or any State thereof or the
District of Columbia and shall issue preferred securities that are
substantially identical to the Series C Preferred Stock; and (2)
immediately before and after giving effect to such transaction, no breach
of a covenant contained in Section 3 hereof or this Section 5 shall have
occurred and be continuing.
Notwithstanding the foregoing requirements, in the event that the successor
entity is a Subsidiary of HCG, the preferred securities to be issued by
such successor entity may, at the option of the successor entity, be issued
by HCNA or HCG instead of being issued by the successor entity; provided
that (1) if HCNA is the issuer of the preferred securities, such securities
shall have covenants substantially identical to Section 1011 "Limitation on
Restricted Payments" and Section 1016 "Limitation on Transactions with
Affiliates and Related Persons" in the HCNA Indenture dated as of October
15, 1993, as the same may be amended, relating to HCNA's 10 3/4% Senior
Subordinated Notes due October 15, 2003 and this Section 5(d) and shall
omit the covenants contained in Sections 5(a), 5(b) and 5(c) hereof; and
(2) if HCG is the issuer of the preferred securities, such securities shall
have covenants substantially identical to the covenants contained in this
Section 5 except that the covenant contained in Section 5(c) shall be
omitted and the covenant contained in Section 5(a) shall contain an
exception equivalent to clause (iii) of the second sentence thereof but
without an annual limitation for obligations for operating expenses with
respect to HCG's Capital Stock existing at the issuance of such securities
and with an annual limitation for obligations to be assumed thereafter
reasonably designed to permit practices of HCG existing at the time of the
issuance of such preferred securities. Whether or not the successor entity
is a Subsidiary of HCG, the preferred securities to be issued may, at the
option of the successor entity, omit the covenants contained in Sections
5(a), 5(b) and 5(c) hereof, so long as HCG issues a guarantee containing
covenants
7
<PAGE>
substantially identical to the covenants referred to in clause (2) of the
preceding sentence and guaranteeing the obligation of such successor entity
to make mandatory redemptions of such preferred securities in the event of
any breach of such covenants and as otherwise provided in such preferred
securities. In the case of any new preferred securities issued in any of
the cases referred to in this paragraph, the provision for "Change of
Control" shall refer to a change of control of HCG and to definitions of
"Harris Stockholders" and "Permitted Holders" substantially identical to
the definitions contained herein except that the "Harris Stockholders"
shall include such holders of HCG Capital Stock at the time of the issuance
of such new preferred securities as the Chairman of D. George Harris &
Associates, Inc. shall designate and "Permitted Holders" shall include all
other holders of Capital Stock of HCG at the time of the issuance of such
new preferred securities and the definition "Closing" shall mean the date
of issuance of such new preferred securities.
(e) Information: So long as any of the Series C Preferred Stock
-----------
are outstanding, the Corporation shall provide the holders of the Series C
Preferred Stock and prospective holders of the Series C Preferred Stock
upon request with copies of the annual audited and quarterly financial
statements of the Corporation. The (i) quarterly financial statements shall
be accompanied by a certificate of the Corporation's chief financial
officer and (ii) audited annual financial statements shall be accompanied
by a certificate of the Corporation's chief financial officer, in each case
certifying that the Corporation is in compliance with the covenants
contained in this Section 5.
(f) Definitions: "Affiliate" of any Person means any other
-----------
Person directly or indirectly controlling or controlled by or under direct
or indirect common control with such Person.
For the purposes of this definition, "control" when used with respect to
any Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Attributable Value" means, as to a Capital Lease Obligation under which
any Person is at the time liable and at any date as of which the amount
thereof is to be determined, the capitalized amount thereof that would
appear on the face of a balance sheet of such Person in accordance with
generally accepted accounting principles.
"Capital Lease Obligation", of any Person means the obligation to pay rent
or other payment amounts under a lease of (or other Debt arrangements
conveying the right to use) real or personal property of such Person that
is required to be classified and accounted for as a capital lease or a
liability on the face of the balance sheet of such Person in accordance
with generally accepted accounting principles. The stated maturity of such
obligation shall be the date of the last
8
<PAGE>
payment of rent or any other amount due under such lease prior to the first
date upon which such lease may be terminated by the lessee without payment
of a penalty.
"Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents (however designated) or corporate stock
of such Person.
"Change of Control" is defined to mean when the Permitted Holders cease (i)
to be the beneficial owners (as defined in Rule 13(d)(3) under the
Securities Exchange Act of 1934), of at least 51% of the total voting power
of all classes of Voting Stock of the Corporation or (ii) to have a
sufficient number of their nominees elected to the Board of Directors of
the Corporation such that such nominees constitute less than a majority of
the Board of Directors of the Corporation.
"Closing" shall have the meaning set forth in the Stock Purchase Agreement.
"Consolidated Net Income" means for any period the consolidated net income
(or loss) of the Corporation and its consolidated subsidiaries for such
period determined in accordance with generally accepted accounting
principles.
"Debt" means (without duplication), with respect to any Person, whether
recourse is to all or a portion of the assets of such Person, (i) every
obligation of such Person for money borrowed; (ii) every obligation of such
Person evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of
property, assets or businesses, (iii) every reimbursement obligation of
such Person with respect to letters of credit, bankers' acceptances or
similar facilities issued for the account of such Person, (iv) every
obligation of such Person issued or assumed as the deferred purchase price
of property or services (but excluding trade accounts payable or accrued
liabilities arising in the ordinary course of business), (v) every Capital
Lease Obligation of such Person to the extent of its Attributable Value,
(vi) the maximum fixed redemption or repurchase price of Redeemable Stock
of such Person at the time of determination, (vii) every net obligation
under any interest rate swap or similar agreement or foreign currency
hedge, exchange or similar agreements of such Person and (viii) every
obligation of the type referred to in Clauses (i) through (vii) of another
Person and all dividends of another Person the payment of which, in either
case, such Person has guaranteed or is responsible or liable for, directly
or indirectly, as obligor, guarantor or otherwise.
"DGHA Fee Letter" means the letter agreement, dated the date of the
Closing, among the Corporation, certain Subsidiaries thereof and D. George
Harris Associates, Inc., as in effect on the date of the Closing.
"Discounted Liquidation Preference" means the liquidation preference of a
share of Series C Preferred Stock, discounted from the Mandatory Redemption
Date to the date of determination at the rate of 7.18% compounded annually.
9
<PAGE>
"Disqualified Stock" means any Capital Stock of the Corporation or any
Subsidiary which, by its terms (or by the terms of any security into which
it is convertible or for which it is exchangeable), or upon the happening
of any event, matures or is mandatorily redeemable, pursuant to a sinking
fund obligation or otherwise, or is redeemable at the option of the holder
thereof, in whole or in part, on or prior to the Mandatory Redemption Date.
"Family Group" shall mean, with respect to any transferor of Capital Stock,
such transferor's spouse and descendants (whether natural or adopted), and
any trust or family partnership whose primary beneficiary shall be such
transferor and/or such transferor's spouse and/or any individual related by
blood or adoption to such transferor, such transferor's spouse or another
member of such transferor's Family Group.
"Harris Stockholders" shall mean at any time any employee of D. George
Harris & Associates, Inc. or an Affiliate thereof, and any member of such
person's Family Group.
"HCNA" means Harris Chemical North America, Inc., a Delaware corporation
and its successors.
"HCG" means Harris Chemical Group, Inc., a Delaware corporation and its
successors.
"Management Services Agreement" means the Management Services Agreement,
dated as of the date of the Closing, among the Corporation, certain
Subsidiaries thereof and D. George Harris & Associates, Inc., as in effect
on the date of the Closing and with such amendments and modifications
thereto as are provided by Section 3 and Section 5(d) thereof.
"Mandatory Redemption Date" means the tenth anniversary of the Closing.
"Net Proceeds" from any Asset Disposition by any Person means cash and
readily marketable cash equivalents (including by way of sale or
discounting of a note, instalment receivable or other receivable, but
excluding any other consideration received in the form of assumption by the
acquiree of Debt or other obligations relating to such properties or assets
or received in any other noncash form), net of all legal, title and
recording tax expenses, commissions and other fees and expenses incurred
and all federal, state, foreign and local taxes required to be accrued as a
liability as a consequence of such Asset Disposition.
"Permitted Holders" means Harris Stockholders from time to time and other
holders of Capital Stock of the Corporation at the Closing, other than
holders of the Series C Preferred Stock, and their respective Affiliates.
"Person" means any individual, corporation, partnership, trust,
unincorporated organization or any governmental agency.
10
<PAGE>
"Redeemable Stock" of any Person means any equity security of such Person
that by its terms or otherwise (i) is required to be redeemed prior to the
Mandatory Redemption Date (ii) is redeemable at the option of the holder
thereof at any time prior to the Mandatory Redemption Date or (iii) is
convertible or exchangeable into any equity security described in clause
(i) or (ii).
"Registration Rights Agreement" means the Registration Rights Agreement,
dated as of the date of the Closing, among the Corporation and the
stockholders of the Corporation party thereto, as in effect on the date of
the Closing.
"Stock Purchase Agreement" means the Stock Purchase Agreement, dated as of
October 23, 1995 and amended as of January 29, 1996, between U.S. Borax
Inc. and the Corporation.
"Subsidiary" of any Person means (i) a corporation more than 50% of the
outstanding Voting Stock of which is owned, directly or indirectly, by such
Person or by one or more Subsidiaries of such Person or by such Person and
one or more Subsidiaries thereof or (ii) any other Person (other than a
corporation) in which such Person, or one or more other Subsidiaries of
such Person or such Person and one or more other Subsidiaries thereof,
directly or indirectly, has at least a majority ownership and power to
direct the policies, management and affairs thereof.
"Voting Stock" of any Person means Capital Stock of such Person which
ordinarily has voting power for the election of directors (or persons
performing similar functions) of such Person, whether at all times or only
so long as no senior class of securities has such voting power by reason of
any contingency.
Section 6. Amendment and Waiver. No amendment, modification or
--------------------
waiver shall be binding or effective with respect to any provision of this
Certificate of Designation without the prior written consent of the holders
of at least a majority of the Series C Preferred Stock outstanding at the
time such action is taken.
Section 7. Notices. Except as otherwise expressly provided herein,
-------
all notices referred to herein shall be in writing and shall be delivered
by registered or certified mail, return receipt requested, postage prepaid
and shall be deemed to have been given when so mailed (i) to the
Corporation, at its principal executive offices and (ii) to any
stockholder, at such holder's address as it appears in the stock records of
the Corporation (unless otherwise indicated by any such holder).
RESOLVED, that the statements contained in the foregoing Resolution
creating and designating the Series C Preferred Stock and fixing the number,
powers, preferences, relative rights and qualifications, limitations,
restrictions, and other distinguishing characteristics thereof shall, upon the
issuance date of such Series C Preferred Stock, be deemed to be included in and
be a part of the
11
<PAGE>
Certificate of Incorporation of the Corporation pursuant to the provisions
of Section 104 and 151 of the General Corporation Law of the State of
Delaware."
Fourth: That the said Resolutions of the Board of Directors, and the
------
creation and authorization of issuance thereby of said Series C Preferred Stock
and determination thereby of the provisions applicable to such series as
described in the Resolutions contained in the Third article hereof, were duly
made by the Board of Directors pursuant to authority as aforesaid in accordance
with Section 151 of the General Corporation Law of the State of Delaware.
12
<PAGE>
IN WITNESS WHEREOF, the Corporation has made under its corporate seal and
the hands of its Vice Chairman and Secretary, respectively, the foregoing
certificate, and said Vice Chairman and Secretary have hereunto set their hands
and caused the corporate seal of the Corporation to be hereunto affixed as of
the 9th day of February, 1996.
USS HOLDINGS, INC.
By: /s/ Richard J. Nick
-------------------------------------
Richard J. Nick
Vice President
(Corporate Seal)
Attest:
By: /s/ Donald G. Kilpatrick
-------------------------
Donald G. Kilpatrick
Secretary
13
<PAGE>
Schedule 4
DGHA Stockholders
D. George Harris
Anthony J. Petrocelli
Richard J Donahue
Donald G. Kilpatrick
David Willitts
Richard J. Nick
Emanuel J. Di Teresi
Matthew J. Dowd
<PAGE>
Schedule 5
HCG/HSC Stockholders
Michael R. Boyce
William J. Sichko
<PAGE>
Schedule 6
Institutional Stockholders
Chase Manhattan Capital Corporation
<PAGE>
Schedule 7
Form of Manager Repurchase Agreement
<PAGE>
MANAGER REPURCHASE AGREEMENT dated as
of ________, 1996, among USS HOLDINGS, INC.,
a Delaware corporation (the "Corporation")
and the stockholders of the Corporation
listed on Schedule 1(each a "Manager
Stockholder" and collectively the "Manager
Stockholders").
Each Manager Stockholder owns that number of Manager Restricted Shares
(as defined in the Stockholders Agreement) set forth opposite such Manager
Stockholder's name on Schedule 1.
ACCORDINGLY, in consideration of the mutual covenants and agreements
contained in this Agreement, the parties agree as follows:
1. Definitions; Rules of Construction.
----------------------------------
(a) Unless otherwise defined herein, capitalized terms used in this
Agreement shall have the meanings ascribed to them in the Stockholders
Agreement.
(b) The following capitalized terms have the meanings ascribed to
them below:
"Corporation" has the meaning ascribed to it in the Preamble.
-----------
"Fair Market Value" for any Marketable Securities shall mean the
-----------------
average of the closing prices of sales of Marketable Securities on all national
domestic exchanges on the date in question, or, if there shall have been no
sales on any such exchange on any such day, the average of the bid and asked
prices at the end of such day on such exchange or, if such Marketable Securities
are not listed on any national domestic exchange, the average of the high and
low bid prices on such day as quoted in the NASDAQ system, in each case averaged
over a period of 20 consecutive business days prior to the date as of which
"Fair Market Value" is being determined.
"Fair Value" means, with respect to any Non-Cash Proceeds, the value
----------
of such Non-Cash Proceeds, as determined jointly by the majority of the
Institutional Stockholders and the Majority of the DGHA Stockholders. If such
parties are unable to reach agreement within 30 days, such Fair Value shall be
determined by an independent nationally recognized investment bank experienced
in valuing companies or assets jointly selected by the Majority of the
Institutional Stockholders and the Majority of the DGHA stockholders. If the
parties cannot agree on the selection of an investment bank, within 30 days, the
investment bank will be selected by an independent arbitrator appointed in
accordance with the rules of the American Arbitration Association. The
determination of such investment bank shall be final and binding upon the
parties, and the Corporation shall pay the fees and expenses of such investment
bank.
<PAGE>
"Initial Public Offering" means the initial Public Offering of equity
-----------------------
securities of the Corporation.
"Marketable Securities" means securities which (i) are listed for
---------------------
trading on a national domestic securities exchange or quoted in the NASDAQ
system, (ii) may be sold free from restrictions under the Securities Act or
otherwise and (iii) are not subject to forfeiture or return by the holder
---
thereof, provided that no securities will be Marketable Securities unless
securities of the same class with a Fair Market Value of at least $10 million
are held by Persons other than Affiliates of the issuer of such securities.
"Non-Cash Proceeds" means any property, notes, stock or other
-----------------
securities other than cash and Marketable Securities.
"Original Issuance Date" means February 9, 1996.
----------------------
"Stockholders Agreement" means the Stockholders Agreement as of
----------------------
February 9, 1996 between the Corporation and the parties named therein as
amended or modified from time to time.
(c) The use in this Agreement of the term "including" means
"including, without limitation." The words "herein," "hereof," "hereunder" and
other words of similar import refer to this Agreement as a whole, including the
schedules and exhibits, as the same may from time to time be amended or
supplemented, and not to any particular section, subsection, paragraph,
subparagraph or clause contained in this Agreement. All references to sections,
schedules and exhibits mean the sections of this Agreement and the schedules and
exhibits attached to this Agreement.
(d) The title of and the section and paragraph headings in this
Agreement are for convenience of reference only and shall not govern the
interpretation of any of the terms or provisions of this Agreement.
(e) The use herein of the masculine, feminine or neuter forms shall
also denote the other forms, as in each case the context may require.
(f) Where specific language is used to clarify by example a general
statement contained herein, such specific language shall not be deemed to
modify, limit or restrict in any manner the construction of the general
statement to which it relates. The language used in this Agreement has been
chosen by the parties to express their mutual intent, and no rule of strict
construction shall be applied against any party.
2. Corporation Obligation to Purchase Manager Restricted Shares;
-------------------------------------------------------------
Dividends on Manager Restricted Shares.
- --------------------------------------
(a) If, upon the consummation of an IRR Event, the IRR realized on a
Unit is less than 30%, then the Corporation shall purchase from the Manager
Stockholders hereunder, and from the DGHA Stockholders under the DGHA Repurchase
Agreement, that number of Manager Restricted Shares and DGHA Restricted Shares
(purchased from the holders thereof pro rata based upon the number of such
--------
shares held) as shall be required to cause the IRR on a Unit
2
<PAGE>
purchased on the Original Issuance Date and held through the date of such IRR
Event to equal 30%.
(b) If, upon the consummation of an IRR Event, the IRR realized on a
Unit is less than 35% but greater than 30%, then the Corporation shall purchase
from the Manager Stockholders hereunder, and from the DGHA Stockholders under
the DGHA Repurchase Agreement, that number of Manager Restricted Shares and DGHA
Restricted Shares (purchased from the holders thereof pro rata based upon the
--------
number of such shares held), up to a maximum of 50% of the aggregate number of
Manager Restricted shares and DGHA Restricted Shares outstanding on the date of
the consummation of an IRR Event, as shall be required to cause the IRR on a
Unit purchased on the Original Issuance Date and held through the date of such
IRR Event to equal 35%.
(c) The IRR on the Unit shall be calculated assuming such Unit was
purchased by a single holder on the Original Issuance Date at a price of $27.78
and held by such Person until the time of an IRR Event and the "IRR" on such
Unit shall mean the pre-tax, compounded annual internal rate of return realized
thereon, calculated on a pro forma basis, using the following assumptions: (i)
---------
any Non-Cash Proceeds received with respect to such Unit in connection with an
IRR Event will be deemed for purposes of this definition to have a value equal
to the Fair Value of such Non-Cash Proceeds, (ii) any cash proceeds or dividends
received with respect to such Unit prior to the consummation of the IRR Event
will be included in the calculation of the IRR as of the date of receipt, (iii)
upon the consummation of an Initial Public Offering, the holder of such Unit
will be deemed to have sold all Common Equivalents issued in respect of such
Unit in such offering at a price per Common Equivalent equal to (A) 85% of the
issue price in the Initial Public Offering if such Initial Public Offering was
not initiated by the Institutional Investors pursuant to Section 2 of the
Registration Rights Agreement and the Institutional Investors shall not have
sold more than 50% of the Common Equivalents then held by them in such Initial
Public Offering pursuant to Section 3 of the Registration Rights Agreement, or
(B) 100% of the issue price if such Initial Public Offering was initiated by the
Institutional Investors pursuant to Section 2 of the Registration Rights
Agreement or the Institutional Investors shall have sold more than 50% of the
Common Equivalents then held by them in such Initial Public Offering pursuant to
Section 3 of the Registration Rights Agreement and (iv) the holder of such Unit
will be deemed to have received Cash in an amount equal to the Fair Market Value
of Marketable Securities received with respect to such Unit (which cash proceeds
will be deemed to have been received on the date on which the securities
constituting Marketable Securities are actually received by the holders of such
Unit, or, if later, on the date such securities first meet all of the
requirements of Marketable Securities contained in the definition thereof).
(d) For the avoidance of doubt, the Corporation acknowledges that if,
upon the consummation of an IRR Event, the IRR realized on a Unit is less than
30% after giving effect to the provisions of this Section 2, the obligations of
the Manager Stockholders with respect thereto shall be limited solely to the
sale of the Manager Restricted Shares described in subparagraph (a) above.
(e) All the Manager Restricted Shares to be purchased pursuant to
subparagraphs (a) or (b) above will be purchased by the Corporation for $.01 per
share
3
<PAGE>
immediately prior to the occurrence of an IRR Event. The Manager Restricted
Shares to be purchased by the Corporation shall be purchased from the Manager
Stockholders pro rata based upon the number of Manager Restricted Shares owned.
--------
Each Manager Stockholder shall cause the transfer of the shares representing the
Manager Restricted Shares to the Corporation to be consummated automatically
without any action by the Corporation and the Corporation will pay the purchase
price therefor within 30 days after written demand therefor.
(f) Any and all dividends declared and paid, if any, with respect to
the Manager Restricted Shares shall be held by an escrow agent to be appointed
pursuant to the terms of an escrow agreement in a form to be agreed in good
faith by the parties hereto.
3. Repurchase of Manager Restricted Shares From Terminating
--------------------------------------------------------
Stockholders.
- ------------
(a) In the event of a Termination Event described in Section
14(d)(i)(1), (2), (3) or (4) of the Stockholders Agreement with respect to a
Manager Stockholder prior to the date of the occurrence of an IRR Event, unless
such Termination Event occurs on or after the third anniversary of the later of
(i) the date hereof and (ii) the date of such Manager Stockholder's initial
employment with the Corporation or any Subsidiary thereof, the Corporation shall
purchase from such Manager Stockholder hereunder all of the Manager Restricted
Shares held by such Manager Stockholder.
(b) In the event of a Termination Event described in Section
14(d)(i)(5) with respect to a Manager Stockholder prior to the date of the
occurrence of an IRR Event, the Corporation shall purchase from such Manager
Stockholder hereunder all of the Manager Restricted Shares held by such Manager
Stockholder.
(c) Any Manager Restricted Shares repurchased by the Corporation
pursuant to Section 3(a) or (b) shall be repurchased at a price of $0.01 per
share and may be reissued by the Corporation to other Manager Stockholders as
directed by the Chairman of the Board in accordance with the Stockholders
Agreement.
4. Duration of Agreement and Legend.
--------------------------------
(a) The rights and obligations of each of the parties hereto under
this Agreement shall terminate after the occurrence of an IRR Event and, if
applicable, the repurchase of Manager Restricted Shares as contemplated herein.
(b) The form of stock certificate issued by the Corporation with
respect to the Manager Restricted Shares shall be stamped or otherwise imprinted
with a legend which shall state, inter alia, that the Manager Restricted Shares
are subject to the restrictions contained in this Agreement.
5. Severability.
------------
Whenever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in
4
<PAGE>
any jurisdiction, such invalidity, illegality or unenforceability will not
affect any other provision or any other jurisdiction, and such invalid, void or
otherwise unenforceable provisions shall be null and void. It is the intent of
the parties, however, that any invalid, void or otherwise unenforceable
provisions be automatically replaced by other provisions which are as similar as
possible in terms to such invalid, void or otherwise unenforceable provisions
but are valid and enforceable to the fullest extent permitted by law.
6. Entire Agreement.
----------------
This document embodies the complete agreement and understanding among
the parties hereto with respect to the subject matter hereof and supersedes and
preempts any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof in
any way.
7. Successors and Assigns.
----------------------
Except as otherwise provided herein, this Agreement will bind and
inure to the benefit of and be enforceable by the Corporation and its successors
and assigns, and the Manager Stockholders and any subsequent holders of Manager
Restricted Shares and the respective successors and permitted assigns of each of
them (including a Permitted Transferee pursuant to the Stockholders Agreement
and any executor, administrator, legatee or distributee of the estate of a
deceased Manager Stockholder), so long as they hold Manager Restricted Shares.
None of the provisions hereof shall create, or be construed or deemed to create,
any right to employment in favor of any Person by the Corporation or any of its
subsidiaries. This Agreement is not intended to create any third party
beneficiaries.
8. Counterparts.
------------
This Agreement may be executed simultaneously in two or more
counterparts, any one of which need not contain the signatures of more than one
party, but all such counterparts taken together will constitute one and the same
agreement. It shall not be necessary in making proof of this Agreement to
produce or account for more than one such counterpart.
9. Remedies.
--------
It is acknowledged that it will be impossible to measure in money the
damages that would be suffered if the parties fail to comply with any of the
obligations herein imposed on them and that in the event of any such failure, an
aggrieved Person will be irreparably damaged and will not have an adequate
remedy at law. Any such person shall, therefore, be entitled to injunctive
relief, including specific performance, to enforce such obligations, and if any
action should be brought in equity to enforce any of the provisions of this
Agreement, none of the parties hereto shall raise the defense that there is an
adequate remedy at law.
10. Notices.
-------
All notices, demands or other communications to be given or delivered
under or by reason of the provisions of this Agreement shall be in writing and
shall be deemed to have been given (a) when delivered personally to the
recipient, (b) one business day after being sent
5
<PAGE>
by reputable overnight courier charges prepaid) (regardless of whether the
recipient refuses to accept delivery), (c) five business days after being sent
to the recipient by certified or registered mail, return receipt requested and
postage prepaid (regardless of whether the recipient refuses to accept delivery)
or (d) when sent to the recipient by facsimile (followed promptly by personal,
courier or certified or registered mail delivery). The Corporation's address is:
USS Holdings, Inc.
c/o D. George Harris & Associates, Inc.
399 Park Avenue
32nd Floor
New York, New York 10022
Telephone: (212) 207-6400
Telecopier: (212) 207-6470
Attention: Donald G. Kilpatrick
With a copy to:
Winthrop, Stimson, Putnam & Roberts
One Battery Park Plaza
New York, New York 10004
Telephone: (212) 858-1000
Telecopier: (212) 858-1500
Attention: Kenneth E. Adelsberg, Esq.
The address for each Manager Stockholder is set forth on Schedule I
hereto.
11. Governing Law.
-------------
All questions concerning the construction, interpretation and validity
of this Agreement shall be governed by and construed in accordance with the
domestic laws of the State of New York without giving effect to any choice or
conflict of law provision or rule (whether in the State of New York or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of New York.
12. Further Assurances.
------------------
Each party hereto shall do and perform or cause to be done and
performed all such further acts and things and shall execute and deliver all
such other agreements, certificates, instruments, and documents as any other
party hereto reasonably may request in order to carry out the provisions of this
Agreement and the consummation of the transactions contemplated hereby.
13. Amendment.
---------
The provisions of this Agreement may only be amended or waived with
the prior written consent of the Corporation, a Majority of the Institutional
Stockholders and a Majority of the Manager Stockholders; provided, however, that
-------- -------
Schedule I to this Agreement shall be deemed to be automatically amended from
time to time to reflect issuances of Manager
6
<PAGE>
Restricted Shares made in accordance with the terms of the Stockholders
Agreement without requiring the consent of any party hereto, and the Corporation
will, upon request, distribute to any Manager Stockholder a revised Schedule I
to reflect any such changes.
14. Jurisdiction; Venue; Process.
----------------------------
The parties to this Agreement agree that jurisdiction and venue in any
action brought by any party hereto pursuant to this Agreement shall properly
(but not exclusively) lie in any federal or state court located in the State of
New York. By execution and delivery of this Agreement, the parties hereto
irrevocably submit to the jurisdiction of such courts for himself and in respect
of his property with respect to such action. The parties hereto irrevocably
agree that venue would be proper in such court, and hereby waive any objection
that such court is an improper or inconvenient forum for the resolution of such
action. The parties further agree that the mailing by certified or registered
mail, return receipt requested, of any process required by any such court shall
constitute valid and lawful service of process against them, without necessity
for service by any other means provided by statute or rule of court.
15. Mutual Waiver of Jury Trial.
---------------------------
BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL
TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND
EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY
(RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE
RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE
BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE
PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR
PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER THIS
AGREEMENT OR ANY DOCUMENTS RELATED HERETO.
* * * * *
7
<PAGE>
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement
as of the date first written above.
THE CORPORATION
---------------
USS HOLDINGS, INC.
By:_____________________________________
Name:
Title:
[HOLDERS OF Manager Restricted Shares]
8
<PAGE>
Schedule 8
Manager Stockholders
<PAGE>
Schedule 9
SECURED PROMISSORY NOTE
$_______________ _______________, 199_
FOR VALUE RECEIVED, _______________________ of _______________________
("Maker"), hereby promises to pay to USS HOLDINGS, INC., a Delaware corporation
("Payee"), or order, on the fifth anniversary of the date hereof, to the extent
not sooner paid in accordance with the provisions hereof, the principal sum of
______________________ Dollars ($___________) in legal tender of the United
States of America, together with interest thereon as herein provided, at the
office of Payee at 399 Park Avenue, 32nd Floor, New York, New York 10022, or any
other place which may be specified in writing by the holder of this Note.
1. The unpaid principal of this Note shall bear interest at the rate of
seven percent (7%) per annum, and shall be calculated based upon a year of 365
days (or 366 in the case of any leap year) and the actual number of days
elapsed. Accrued interest on the unpaid principal amount of this Note shall be
payable, in arrears, on each Interest Payment Date (as defined below).
2. The unpaid principal of this Note shall be payable on each Principal
Payment Date (as defined below) in an amount equal to 50% of Maker's Bonus (as
defined below) received on such Principal Payment Date.
3. If Maker fails to make any payment of principal or interest when due
(whether at maturity, upon acceleration or otherwise), unless otherwise required
by law, interest shall accrue on all unpaid principal and such overdue amount at
the rate of nine percent (9%) per annum from five days after the due date until
payments are current.
4. Maker shall have the right to prepay the unpaid principal of this Note
in whole or in part, together with interest accrued on the amount prepaid, at
any time without premium or penalty.
<PAGE>
5. Upon the occurrence of any Event of Default (as hereinafter defined)
hereunder, Payee may, at its option, declare the entire unpaid principal balance
of this Note, together with interest accrued thereon, to be immediately due and
payable, without presentation, demand or notice of any kind, all of which Maker
and all other parties who may at any time be liable on this Note in any capacity
hereby expressly waive. The following are Events of Default:
(A) default shall occur in the payment of the principal of, or
interest on, this Note when due (whether at maturity, upon acceleration or
otherwise), and such default shall continue unremedied for sixty (60) days;
or
(B) Maker shall (i) apply for or consent to the appointment of a
receiver, trustee or liquidator for any substantial part of his property,
(ii) admit in writing his inability to pay his debts as they mature, (iii)
make a general assignment for the benefit of creditors, (iv) be the subject
of any involuntary petition seeking relief under the Bankruptcy Code, which
petition is not dismissed within thirty (30) days, or Maker does not within
the first five (5) days of such period interpose valid and good faith
defenses to the grant of relief under such petition, or with respect to
which petition an order for relief is entered, or (v) file a voluntary
petition in bankruptcy, or a petition or an answer seeking reorganization
or seeking to take advantage of any bankruptcy, reorganization or
insolvency statute, or an answer admitting the material allegations of a
petition filed against it in any proceeding under any such law; or
(C) A Termination Event specified in Section 14(d)(i)(5) of the
Stockholders Agreement (as defined below) shall have occurred with respect
to Maker; or
(D) Other than a transfer to a Permitted Transferee (as defined in the
Stockholders Agreement) made with the prior approval of Payee's Board of
Directors, Maker shall have sold or otherwise transferred any of his
shareholdings in Payee or its successors in interest which constitute
Pledged Collateral (as hereinafter defined) hereunder.
The foregoing remedy of acceleration shall not be exclusive of any other right,
power or remedy available to Payee by law.
6. No delay or omission on the part of Payee in exercising any right,
power or remedy hereunder shall operate as a waiver of such right or any other
right under this Note, nor shall any single or partial exercise of any such
right, power or remedy by Payee preclude any other or further exercise thereof
or the exercise of any other right, power or remedy. A waiver on any one
occasion shall not be construed as a bar to or waiver of any such right, power
or remedy on any future occasion. All remedies hereunder are cumulative and are
not exclusive of any other remedies provided by law.
7. As security for the due and punctual payment of Maker's obligations
under this Note, Maker hereby delivers, pledges and hypothecates to Payee, and
grants to Payee a security interest in, all shares of Series B Convertible
Preferred Stock, $0.01 par value per share, of Payee owned by Maker, whether now
or hereafter acquired, together with any dividends, distributions (whether in
the form of cash, securities or other assets) or other proceeds in respect
thereof
2
<PAGE>
(including shares of Common Stock of Payee issued to Maker upon conversion
thereof), all certificates representing such shares and all stock powers
attached thereto executed in blank (collectively, the "Pledged Collateral").
Maker hereby agrees that physical possession of the Pledged Collateral shall at
all times remain in the Payee until the unpaid principal and interest accrued
thereon of this Note have been fully and finally paid to the Payee.
8. (a) As long as an Event of Default has not occurred under this Note,
Maker shall be entitled to exercise any and all voting and/or consensual rights
relating to or pertaining to the Pledged Collateral.
(b) If any Event of Default under this Note shall occur and be
continuing, the rights of Maker to exercise voting and/or consensual rights with
respect to the Pledged Collateral shall cease, and all such rights shall become
vested in Payee.
9. If an Event of Default under this Note shall occur and be continuing,
then Payee shall be entitled to exercise the rights and remedies of a secured
party under the Uniform Commercial Code of the State of New York.
10. Any notice under or in connection with this Note shall be in writing
and addressed to Maker at _____________________________________ and to Payee at
USS Holdings, Inc., c/o D. George Harris Associates, Inc., 399 Park Avenue, 32nd
Floor, New York, New York 10022 or at such other address specified by notice
given in accordance herewith.
11. Upon the payment of this Note, Payee shall reassign and redeliver to
Maker or his designee, by appropriate instruments of reassignment and release
reasonably satisfactory to such Maker, such of the Pledged Collateral as has not
been sold or otherwise applied by Payee pursuant to this Note.
12. Maker agrees to pay all costs and expenses of enforcement of this
Note, including, but not limited to, attorneys fees and court costs.
13. For purposes of this Note, the following terms shall have the
following meanings:
"Bonus" means the amount of (a) any bonus from the Payee or any of its
subsidiaries paid pursuant to a bonus plan approved by the Payee's Board of
Directors minus (b) any and all taxes estimated to be payable (assuming in each
case the highest applicable marginal tax rate) with respect to any such bonus
described in the foregoing clause (a).
"Interest Payment Date" means the last business day of each March,
June, September and December.
"Principal Payment Date" means any day on which the Maker shall
receive any Bonus from the Payee or any subsidiary thereof on or after (or with
respect to the year ending) December 31, 1996.
"Stockholders Agreement" means the Stockholders Agreement dated as of
February 9, 1996 between Payee and the stockholders thereof, as the same may be
amended, modified or supplemented from time to time in accordance with the terms
thereof.
3
<PAGE>
14. This Note, and the terms, covenants and conditions hereof, shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors, assigns, estates and heirs, except that Maker shall not be permitted
to assign this Note or any interest herein or in the Pledged Collateral (except,
with respect to the Pledged Collateral, to a Permitted Transferee made with the
prior approval of Payee's Board of Directors, in which case the terms, covenants
and conditions hereof, including without limitation the pledge of the Pledged
Collateral, shall be, and shall be deemed to be, binding upon the Permitted
Transferee in respect of such transfer), or otherwise pledge or encumber the
Pledged Collateral, or any part thereof.
15. Neither this Note nor any provisions hereof may be amended, modified,
waived, discharged or terminated orally nor may any of the Pledged Collateral be
released or the pledge or the security interest created hereby extended, except
by an instrument in writing duly signed by or on behalf of Payee.
16. This Note shall be construed and enforced in accordance with the laws
of the State of New York without regard to principles of choice or conflict of
laws.
4
<PAGE>
IN WITNESS WHEREOF, this Note has been executed and delivered by Maker
on the date first set forth above.
_________________________________
[Maker]
5
<PAGE>
Schedule 10
DGHA Stockholders Receiving Options Option Units
D. George Harris 16,000
Anthony J. Petrocelli 11,000
Richard J. Donahue 5,500
Donald G. Kilpatrick 5,500
David Willitts 5,500
Richard J. Nick 3,000
Emanuel J. Di Teresi 2,500
Matthew J. Dowd l,000
-------
Total 50,000
<PAGE>
Schedule 11
Form of HCG/HSC Purchase Agreement
<PAGE>
STOCK PURCHASE AGREEMENT
dated as of ____________, 1996,
among CHASE MANHATTAN CAPITAL
CORPORATION, a New York corporation
("CMCC"), and the Purchaser listed
on the first column of Schedule I
attached hereto (the "Purchaser").
The parties are entering into this Agreement to provide for the sale
of that certain number of shares of Series A Preferred Stock and shares of
Series B Preferred Stock of the Corporation (as hereinafter defined) set forth
in the second column of Schedule I attached hereto (the "Sale Shares"), of USS
Holdings, Inc., a Delaware corporation (the "Corporation") to the Purchaser
pursuant to Section 6(b) of the Stockholders Agreement dated as of February 9,
1996 among the Corporation and the Stockholders as defined therein.
ACCORDINGLY, in consideration of the mutual covenants and agreements
herein contained, the parties hereto hereby agree as follows:
SECTION 1. Sale of Shares.
--------------
Simultaneously with the execution and delivery of this Agreement CMCC
shall sell to the Purchaser, and the Purchaser shall purchase from CMCC, the
Sale Shares.
SECTION 2. Closing.
-------
Simultaneously with the execution and delivery of this Agreement, CMCC
shall deliver to the Corporation stock certificates representing the Sale
Shares, and cause the Corporation to issue and deliver to the Purchaser stock
certificates registered in the name of the Purchaser, representing the Sale
Shares being sold to the Purchaser, against receipt (i) by CMCC of a check
payable to CMCC by the Purchaser of an amount equal to the amount set forth in
the third column of Schedule I attached hereto, and (ii) by the Corporation,
with a copy to CMCC, of a counterpart signature page to the Stockholders
Agreement and the undertaking annexed hereto executed, in each case, by the
Purchaser.
SECTION 3. Representations and Warranties of CMCC.
--------------------------------------
CMCC hereby represents and warrants to the Purchaser that it has good
and marketable title to the Sale Shares, free and clear of all claims, security
interests, judgments, liens, pledges and encumbrances.
SECTION 4. Miscellaneous.
-------------
This Agreement (a) contains the entire agreement among the parties
with respect to the subject matter hereof and supersedes all prior and
contemporaneous arrangements or understandings with respect thereto; (b) may be
executed in any number of counterparts, and each such counterpart shall be
deemed to be an original instrument, but all such counterparts
<PAGE>
together shall constitute but one agreement; and (c) shall be governed by and
construed in accordance with the laws of the State of New York to contracts made
and to be performed therein.
IN WITNESS WHEREOF, the parties hereto have executed this Stock
Purchase Agreement on the date first above written.
CHASE MANHATTAN CAPITAL CORPORATION
By:______________________________________
Name:
Title:
[Purchaser]
By:______________________________________
Name:
2
<PAGE>
Schedule I
----------
Purchaser Sale Shares Purchase Amount $
--------- ----------- -----------------
<PAGE>
FORM OF UNDERTAKING TO
USS HOLDINGS, INC. AND STOCKHOLDERS
DATE
Dear Sirs:
I refer to the Stockholders Agreement (the "Agreement") dated as of
February 9, 1996 among USS Holdings, Inc. ("Holdings") and the other parties
named herein, (collectively, the "Stockholders") each of whom shall be deemed to
be addressees of this undertaking.
I hereby undertake and agree with Holdings and each of the
Stockholders to comply in all respects with all the terms and conditions of the
Agreement.
Sincerely yours
By:_________________________
Title:______________________
<PAGE>
EXHIBIT 10.1.1
AMENDMENT NO. 1 TO STOCKHOLDERS AGREEMENT
AMENDMENT NO. 1 dated as of October 15, 1996 (the "Amendment"), among USS
Holdings, Inc., a Delaware corporation (the "Corporation"), and the stockholders
of the Corporation listed on the signature pages hereof, to the Stockholders
Agreement dated as of February 9, 1996 among the Corporation and the
Stockholders (the "Stockholders Agreement"; terms defined therein being used
herein as therein defined except as otherwise defined herein).
The parties hereto, being the parties to the Stockholders Agreement
required to amend the Stockholders Agreement in accordance with Section 18(a)
thereof, hereby amend the Stockholders Agreement as follows:
1. Section 1(a) of the Stockholders Agreement is hereby amended by (a)
deleting in the definition "DGHA Restricted Shares" the number "276,814" and by
substituting therefor the number "245,098" and (b) deleting in the definition
"Manager Restricted Shares" the number "138,411" and by substituting therefor
the number "122,549".
2. Subparagraph (xi) of Section 4(a) of the Stockholders Agreement is
hereby amended by deleting in clause (a) thereof the words "the DGHA Repurchase
Agreement and the Manager Repurchase Agreement" and by substituting therefor the
words "the DGHA Repurchase Agreement, the Manager Repurchase Agreement and the
Stock Purchase Loan Notes".
3. Subparagraph (xiii) of Section 4(a) of the Stockholders Agreement is
hereby amended by deleting in clause (a) thereof the words "reasonable advances
to employees in the ordinary course of business" and by substituting therefor
the words "loans pursuant to the Stock Purchase Loan Notes and reasonable
advances to employees in the ordinary course of business".
4. Subparagraph (i) of Section 6(a) of the Stockholders Agreement is
hereby amended by deleting the first sentence thereof and by substituting
therefor the following: "CMCC hereby grants to each DGHA Stockholder named on
Schedule 10 attached hereto an option (the "Option") during the Option Term to
purchase, for the purchase price per Unit set out in Section 6(a)(iii), in the
aggregate up to the number of Units equal to the sum of (a) the number of Units
set forth opposite such DGHA Stockholder's name on such Schedule plus (b) the
number of Units that have not been purchased by the HCG/HSC Stockholders
pursuant to Section 6(b) on or prior to December 31, 1996 multiplied by a
fraction the numerator of which is the "number of Units set forth opposite such
DGHA Stockholder's name on such Schedule and the denominator of which is
50,000".
5. Subparagraph (i) of Section 6(b) of the Stockholders Agreement is
hereby amended by deleting in the second sentence thereof the words "within 90
days after the date hereof" and by substituting therefor the words "no later
than December 31, 1996".
6. Section 7(c) of the Stockholders Agreement is hereby amended by
deleting in the first sentence thereof the words "July 31, 1996 (the "Reference
Date"), the Corporation shall have the right, but not the obligation, to issue
to the Manager Stockholders" and by substituting therefor the words "October 31,
1996 (the "Reference Date"), the Corporation shall have the
<PAGE>
right to issue to the Manager Stockholders, or reserve, by action taken by the
Board, for issuance to the Manager Stockholders after the Reference Date,".
7. Section 7(d) of the Stockholders Agreement is hereby amended by
deleting in the first sentence thereof the words "sold by the Corporation to the
Manager Stockholders" and by substituting therefor the words "sold, or reserved
by the Board for sale, by the Corporation to the Manager Stockholders".
8. Section 7(e) of the Stockholders Agreement is hereby amended by
deleting the words "August 10, 1996, the Corporation shall notify CMCC in
writing of (i) the number of Manager Shares that were sold by the Corporation to
the Manager Stockholders" and by substituting therefor the words "December 31,
1996, the Corporation shall notify CMCC in writing of (i) the number of Manager
Shares that were sold, or reserved by the Board for sale, by the Corporation to
the Manager Stockholders".
9. Section 17 of the Stockholders Agreement is hereby amended by (a)
deleting in Section 17(c) thereof the words "Section 14" and by substituting
therefor the words "Section 17(b)" and (b) by adding new Section 17(e) thereto
as follows: "(e) Each Stockholder, by acceptance and receipt of any Securities,
hereby agrees, upon the request of the Corporation, to execute and deliver to
the Corporation any Disclosure Statement and Consent or Consent and Irrevocable
Proxy intended by the Corporation to achieve the Requisite Stockholder
Approval".
10. The parties hereto hereby acknowledge and agree that, notwithstanding
anything to the contrary contained in the Stockholders Agreement, Michael R.
Boyce shall be permitted to purchase, and the Corporation shall be permitted to
sell, up to 4,437 Manager Restricted Shares pursuant to Section 7(a) of the
Stockholders Agreement and, solely with respect to such Manager Restricted
Shares, Mr. Boyce shall be deemed to be a Manager Stockholder for purposes of
the Stockholders Agreement.
11. The parties hereto hereby acknowledge and agree that, notwithstanding
anything to the contrary contained in the Stockholders Agreement, (a) Paul
Guttmann, James Walker and William White shall be permitted to purchase, and
CMCC shall be permitted to sell, up to 12,160 Units pursuant to Section 6(b) of
the Stockholders Agreement, provided that such persons shall not be deemed to be
HCG/HSC Stockholders for purposes of the Stockholders Agreement and (b) the
Corporation shall be permitted to loan to such persons up to 80% of the cash
purchase price to be paid by such persons for such Units, such loans to be
evidenced by Stock Purchase Loan Notes.
12. This Amendment may be executed simultaneously in two or more
counterparts, any one of which need not contain the signatures of more than one
party, but all such counterparts taken together will constitute one and the same
Amendment.
13. This Amendment shall be governed by the internal law, and not the law
of conflicts, of the State of New York.
2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment on the
date first written above.
USS HOLDINGS, INC.
By: /s/ Donald G. Kilpatrick
--------------------------------
Name:
Title:
CHASE MANHATTAN CAPITAL CORPORATION
By: /s/ Jeffrey C. Walker
--------------------------------
Name: Jeffrey C. Walker
Title: President
/s/ D. George Harris
-----------------------------------
D. George Harris
/s/ Anthony J. Petrocelli
-----------------------------------
Anthony J. Petrocelli
/s/ Richard J. Donahue
-----------------------------------
Richard J. Donahue
/s/ Donald G. Kilpatrick
-----------------------------------
Donald G. Kilpatrick
___________________________________
David Willetts
/s/ Richard J. Nick
-----------------------------------
Richard J. Nick
/s/ William J. Sichko
-----------------------------------
William J. Sichko
/s/ Emanuel J. Di Teresi
-----------------------------------
Emanuel J. Di Teresi
/s/ Michael R. Boyce
-----------------------------------
Michael R. Boyce
3
<PAGE>
/s/ Matthew J. Dowd
------------------------------------
Matthew J. Dowd
Trust under Agreement of D. George Harris dated
November 18, 1994 F/B/O Robert Harris
By: /s/ Anthony J. Petrocelli
---------------------------------
Anthony J. Petrocelli, Trustee
By: /s/ Donald G. Kilpatrick
---------------------------------
Donald G. Kilpatrick, Trustee
Trust under Agreement of D. George Harris dated
November 18, 1994 F/B/O Margaret Harris
By: /s/ Anthony J. Petrocelli
---------------------------------
Anthony J. Petrocelli, Trustee
By: /s/ Donald G. Kilpatrick
---------------------------------
Donald G. Kilpatrick, Trustee
Trust under Agreement of D. George Harris dated
November 18, 1994 F/B/O Paige Coleman
By: /s/ Anthony J. Petrocelli
---------------------------------
Anthony J. Petrocelli, Trustee
By: /s/ Donald G. Kilpatrick
---------------------------------
Donald G. Kilpatrick, Trustee
Trust under Agreement of D. George Harris dated
November 18, 1994 F/B/O Keith Coleman
By: /s/ Anthony J. Petrocelli
---------------------------------
Anthony J. Petrocelli, Trustee
By: /s/ Donald G. Kilpatrick
---------------------------------
Donald G. Kilpatrick, Trustee
Trust under Agreement of D. George Harris dated
November 18, 1994 F/B/O Augustus Northridge
4
<PAGE>
By: /s/ Anthony J. Petrocelli
--------------------------------------
Anthony J. Petrocelli, Trustee
By: /s/ Donald G. Kilpatrick
--------------------------------------
Donald G. Kilpatrick, Trustee
Trust under Agreement of D. George Harris dated
January 31, 1995 F/B/O P.G.F. Scurr
By: /s/ Anthony J. Petrocelli
--------------------------------------
Anthony J. Petrocelli, Trustee
By: /s/ Donald G. Kilpatrick
--------------------------------------
Donald G. Kilpatrick, Trustee
Trust under Agreement of Anthony J. Petrocelli dated
October 29, 1990
By: /s/ D. George Harris
--------------------------------------
D. George Harris, Trustee
By: /s/ Donald G. Kilpatrick
--------------------------------------
Donald G. Kilpatrick, Trustee
Trust under Agreement of Donald G. Kilpatrick dated
December 16, 1993 F/B/O Daniel G. Kilpatrick
By: /s/ Donald G. Kilpatrick
--------------------------------------
Donald G. Kilpatrick, Trustee
By: /s/ Anthony J. Petrocelli
--------------------------------------
Anthony J. Petrocelli, Trustee
Trust under Agreement of Donald G. Kilpatrick dated
December 16, 1993 F/B/O Eleanor P. Kilpatrick
By: /s/ Donald G. Kilpatrick
--------------------------------------
Donald G. Kilpatrick, Trustee
By: /s/ Anthony J. Petrocelli
--------------------------------------
Anthony J. Petrocelli, Trustee
5
<PAGE>
Trust under Agreement of Donald G. Kilpatrick dated
December 16, 1993 F/B/O Jennifer C. Kilpatrick
By: /s/ Donald G. Kilpatrick
--------------------------------------
Donald G. Kilpatrick, Trustee
By: /s/ Anthony J. Petrocelli
--------------------------------------
Anthony J. Petrocelli, Trustee
Trust under Agreement of Donald G. Kilpatrick dated
December 16, 1993 F/B/O Douglas A. Kilpatrick
By: /s/ Donald G. Kilpatrick
--------------------------------------
Donald G. Kilpatrick, Trustee
By: /s/ Anthony J. Petrocelli
--------------------------------------
Anthony J. Petrocelli, Trustee
6
<PAGE>
EXHIBIT 10.1.2
USS HOLDINGS, INC.
AMENDMENT NO. 2 TO
STOCKHOLDERS AGREEMENT
Dated as of October 6, 1998
<PAGE>
Table of Contents
<TABLE>
<S> <C>
Section 1. Definitions; Rules of Construction........................................................ 1
Section 2. Board of Directors; Adjustment EBITDA Targets............................................. 12
Section 3. Financial Statements and Other Information, Inspections and Board Meetings................ 15
Section 4. Additional Voting Agreements; Required Sale............................................... 18
Section 5. First Refusal Rights for Securities Issued by the Corporation............................. 21
Section 6. Affiliate Transactions.................................................................... 22
Section 7. Issuance of Additional Securities to DGHA Stockholders and Manager Stockholders........... 22
Section 8. Limitations on Transfers of Stock - General............................................... 23
Section 9. Limitations on Transfers of Restricted Shares............................................. 23
Section 10 Limitations on Transfers prior to Third Anniversary....................................... 23
Section 11 Rights of First Refusal after Third Anniversary........................................... 24
Section 12 Rights of Co-Sale......................................................................... 25
Section 13 Drag-Along Rights......................................................................... 26
Section 14 Options Upon Termination Event............................................................ 28
Section 15 Required Sale............................................................................. 32
Section 16 Regulatory Matters........................................................................ 32
Section 17 Requisite Stockholder Approval............................................................ 34
Section 18 Amendment and Waiver...................................................................... 34
Section 19 Securities Law Compliance; Legends........................................................ 34
Section 20 Duration of Agreement..................................................................... 36
Section 21 Severability.............................................................................. 36
Section 22 Entire Agreement.......................................................................... 37
Section 23 Certain Stockholders...................................................................... 37
Section 24 Successors and Assigns.................................................................... 37
Section 25 Counterparts.............................................................................. 37
Section 26 Remedies.................................................................................. 37
Section 27 Notices................................................................................... 38
Section 28 Governing Law............................................................................. 39
Section 29 Further Assurances........................................................................ 39
Section 30 Jurisdiction; Venue; Process.............................................................. 39
Section 31 Representation and Warranties of the Stockholders......................................... 39
Section 32 Conflicting Agreements.................................................................... 41
Section 33 Mutual Waiver of Jury Trial............................................................... 41
</TABLE>
i
<PAGE>
AMENDMENT NO. 2 dated as of
October 6, 1998 ("Amendment No. 2"),
among USS HOLDINGS, INC., a Delaware
corporation (the "Corporation"), and
the stockholders of the Corporation
(each a "Stockholder" and
collectively the "Stockholders")
listed on the signature pages hereof,
to the Stockholders Agreement (the
"Agreement") dated as of February 9,
1996, as amended, among the
Corporation and the Stockholders.
The parties hereto, being the parties to the Agreement required to
amend the Agreement in accordance with Section 18(a) thereof, hereby amend the
Agreement, which amendment shall become effective upon execution of this
Amendment No. 2 by the Corporation, a Majority of the Institutional Stockholders
and a Majority of the DGHA Stockholders, by deleting all of the text and
replacing it with the following:
SECTION 1. Definitions; Rules of Construction.
----------------------------------
(a) Capitalized terms used in this Agreement have the meanings
ascribed to them below:
"Accounting Period" has the meaning ascribed to it in Section 3(a)(i).
-----------------
"Acquisition" means USS Acquisition, Inc., a Delaware corporation, and
-----------
any successors thereto (including U.S. Silica after the Merger).
"Actual EBITDA" shall be calculated at the end of each Accounting
--------------
Period of the Corporation, beginning with the Accounting Period ending December
31, 1997, and shall mean the EBITDA of the Corporation for the twelve-month
period ended on the last day of such Accounting Period.
"Additional Institutional Director" shall have the meaning ascribed to
---------------------------------
it in Section 2(b).
"Additional Retiring Purchase" has the meaning ascribed to it in
----------------------------
Section 14(a).
"Adjusted Proportionate Percentage" shall mean, with respect to any
---------------------------------
Stockholder, the Proportionate Percentage of such Stockholder, calculated as if
the Retiring Shares were not issued and outstanding at the time of calculation.
"Affiliate" means (i) with respect to any individual, (A) a spouse or
---------
descendant of such individual and (B) any trust or family partnership whose
primary beneficiary shall be such individual and/or such individual's spouse
and/or any Person related by blood or adoption to such individual or such
individual's spouse, (ii) with respect to any Person which is not an individual,
any other Person that, directly or indirectly through one or more intermediaries
Controls, is Controlled by, or is under common Control with, such Person and/or
one or more Affiliates thereof, and, without limiting the generality of the
---
foregoing, with respect to CMC includes (x)
<PAGE>
the ultimate parent corporation of CMC, and all the Affiliates of the
aforementioned ultimate parent and (y) a corporation, a general partnership, a
limited partnership or limited liability corporation, in which all the
beneficial interests of any of the foregoing entities is owned directly or
indirectly by one or more present or former employees or executives of CMC or
their respective Affiliates.
"Approved Sale" has the meaning ascribed to it in Section 13.
-------------
"Board" means the Board of Directors of the Corporation.
-----
"Bylaws" means the Bylaws of the Corporation as amended from time to
------
time.
"Budgeted EBITDA" shall mean, for the twelve-month period ending on
---------------
the last day of each Accounting Period, beginning with the Accounting Period
ending December 31, 1998, the EBITDA set forth opposite such Accounting Period
on Schedule 2.
"Cause" shall mean the commission by a Promoter Stockholder of a
-----
felony or other crime involving moral turpitude, or the commission by a Promoter
Stockholder of any other act which is a breach of his fiduciary duty of loyalty
to his employer or the repeated failure of a Promoter Stockholder to otherwise
perform his duties to his employer as determined in good faith by such
employer's Board of Directors.
"Certificate" means the Amended and Restated Certificate of
-----------
Incorporation of the Corporation as filed with the Secretary of State of
Delaware on February 9, 1996, as supplemented by all Certificates of Designation
and Certificates of Amendment, copies of which are attached as Schedule 3.
"Class A Common Stock" means the Class A Common Stock, $.01 par value,
--------------------
of the Corporation.
"Class B Common Stock" means the Class B Common Stock, $.01 par value,
--------------------
of the Corporation.
"Class C Common Stock" means the Class C Common Stock, $.0l par value,
--------------------
of the Corporation.
"Class C Restricted Shares" means, collectively, the DGHA Restricted
-------------------------
Shares and the Manager Restricted Shares.
"CMC" means Chase Manhattan Capital L.P., a Delaware limited
---
partnership.
"Code" means the Internal Revenue Code of 1986, as amended.
----
"Common Stock" means the Class A Common Stock, the Class B Common
------------
Stock and the Class C Common Stock.
"Common Equivalents" means, at any point in time, (i) as to any
------------------
Stockholder, the number of shares of Common Stock held by such Stockholder at
such time, plus the number of
2
<PAGE>
shares of Common Stock which are issuable (at such time or thereafter) upon the
exercise or conversion of any option, warrant or convertible security held at
such time by such Stockholder and (ii) as to all Stockholders, collectively, the
aggregate number of shares of Common Stock outstanding at such time plus the
aggregate number of shares of Common Stock issuable (at such time or thereafter)
upon the exercise or conversion of all outstanding options, warrants and
convertible securities.
"Company" means, collectively, the Corporation and its Subsidiaries
-------
and, individually, the Corporation and each Subsidiary of the Corporation.
"Compensation Committee" shall mean the Compensation Committee of the
----------------------
Board, as constituted from time to time in accordance with Section 2(c).
"Competitor" means any Person who directly or indirectly, owns,
----------
manages, operates, joins, controls or participates in the ownership, management,
operation or control of, or is connected as a director, officer, employee,
partner, consultant or otherwise with, any profit or non-profit business or
organization in any part of the United States or any other jurisdiction in which
the Company sells products or provides services, which, directly or indirectly,
Competes (as hereinafter defined) with the Company. A profit or non-profit
business or organization shall be deemed to "Compete" with the Company if such
business or organization (i) competes with the business of the Company as it is
conducted as of the date hereof or at any time while this Agreement is in
effect, or (ii) engages in the development, production or sale of products, or
the rendering of services, which are the same as, similar to or competitive
with, the products or services being developed, provided, sold or rendered by
the Company as of the date hereof or at any time while this Agreement is in
effect.
"Control" means the possession, directly or indirectly, of the power,
-------
by stock ownership, contract right, proxy or otherwise, to direct the management
and policies of a Person.
"Corporation" has the meaning ascribed to it in the Preamble.
-----------
"Credit Agreement" means the Credit Agreement dated as of July 21,
----------------
1998, as amended from time to time, among Acquisition and the lenders named
therein.
"Credit Event" means (i) the existence of an event of default under
------------
any Debt Document, or (ii) the existence of a default, which is not waived or
cured within any applicable grace period provided for therein, under any other
document or agreement to which any Company is a party or an obligor, which
evidences indebtedness of any Company individually or in the aggregate of more
than $1,000,000.
"Debt Documents" shall mean the Credit Agreement, the documents
--------------
attached as exhibits thereto and any other loan agreement pursuant to which the
debt under such agreements is refinanced in whole or in part.
"Deferral Date" has the meaning ascribed to it in Section 14(f).
-------------
"Deferral Election" has the meaning ascribed to it in Section 14(f).
-----------------
3
<PAGE>
"DGHA" shall mean D. George Harris & Associates, Inc.
----
"DGHA Fee Letter" means the letter agreement dated the Original
---------------
Agreement Date among the Corporation, certain Subsidiaries thereof and DGHA, as
amended from time to time.
"DGHA Repurchase Agreement" means the DGHA Repurchase Agreement dated
-------------------------
the date hereof, among the Corporation and the DGHA Stockholders named therein.
"DGHA Restricted Shares" means the 216,263 (as adjusted to reflect any
----------------------
stock splits, stock dividends, reverse stock splits or reclassifications of the
Class C Common Stock) shares of Class C Common Stock issued or issuable to the
DGHA Stockholders party to the DGHA Repurchase Agreement (and any Securities
issued in respect thereof), which shares are subject to repurchase by the
Corporation upon an IRR Event pursuant to the DGHA Repurchase Agreement, for so
long as such shares of Class C Common Stock are subject to the DGHA Repurchase
Agreement.
"DGHA Stockholders" shall mean any Person listed on the Schedule of
-----------------
DGHA Stockholders attached hereto as Schedule 4 and any other employee of DGHA
or an Affiliate of DGHA who is designated as such by the Chairman of DGHA.
"EBITDA" has the meaning, for any period, ascribed to such term in the
------
Credit Agreement.
"EBITDA Event" shall mean and occur if, at the end of any Accounting
------------
Period commencing with the twelve-month period ending December 31, 1997, the
Actual EBITDA for the twelve-month period ending on the last day of such
Accounting Period is less than 75% of the Budgeted EBITDA for the twelve-month
period ending on the last day of the corresponding Accounting Period.
"Eligible Stockholders" has the meaning ascribed to it in Section
---------------------
14(a).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"ERISA Affiliate" means any Person that for purposes of Title IV of
---------------
ERISA is a member of the controlled group of any Obligor, or under common
control with any Obligor, within the meaning of Section 414 of the Code.
"ERISA Event" means (a) (i) the occurrence of a reportable event,
-----------
within the meaning of Section 4043 of ERISA, with respect to any Plan unless the
30-day notice requirement with respect to such event (or the penalty for failure
to provide such notice) has been waived by the PBGC; or (ii) the requirements of
subsection (1) of Section 4043(b) of ERISA (without regard to subsection (2) of
such Section) are met with a contributing sponsor, as defined in Section
4001(a)(13) of ERISA, of a Plan, and an event described in paragraph (9), (10),
(11), (12) or (13) of Section 4043(c) of ERISA is reasonably expected to occur
with respect to such Plan within the following 30 days; (b) the application for
a minimum funding waiver with respect to a Plan; (c) the provision by the
administrator of any Plan of a notice of intent to
4
<PAGE>
terminate such Plan, pursuant to Section 4041(a)(2) of ERISA (including any such
notice with respect to a plan amendment referred to in Section 4041(e) of
ERISA); (d) the cessation of operations at a facility of any Obligor or any
ERISA Affiliate in the circumstances described in Section 4062(e) of ERISA; (e)
the withdrawal by any Obligor or any ERISA Affiliate from a Multiple Employer
Plan during a plan year for which it was a substantial employer, as defined in
Section 4001(a)(2) of ERISA; (f) the conditions for imposition of a lien under
Section 302(f) of ERISA shall have been met with respect to any Plan; (g) the
adoption of an amendment to a Plan requiring the provision of security to such
Plan, pursuant to Section 307 of ERISA; or (h) the institution by the PBGC of
proceedings to terminate a Plan pursuant to Section 4042 of ERISA, or the
occurrence of any event or condition described in Section 4042 of ERISA that
could reasonably be expected to constitute grounds for the termination of, or
the appointment of a trustee to administer, such Plan.
"Excess Attributable to the First Priority Additional Retiring
-------------------------------------------------------------
Purchases" shall mean the lesser of (x) the number of Remaining Retiring Shares
- ---------
to be purchased in the aggregate by the First Priority Eligible Stockholders
pursuant to their Additional Retiring Purchases and (y) the excess Remaining
Retiring Shares remaining after the Second Retirement Reduction.
"Excess Attributable to the Second Priority Additional Retiring
--------------------------------------------------------------
Purchases" shall mean the lesser of (x) the number of Remaining Retiring Shares
- ---------
to be purchased in the aggregate by the Second Priority Eligible Stockholders
pursuant to their Additional Retiring Purchases and (y) the excess Remaining
Retiring Shares remaining prior to the First Retirement Reduction.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
------------
or any similar federal law then in force.
"Exclusive Period" has the meaning ascribed to it in Section 15.
----------------
"Exempt Issuance" shall mean (i) the issuance of shares of Class A
---------------
Common Stock or Class B Common Stock upon the conversion of shares of Series B
Preferred Stock and the issuance of shares of Class A Common Stock upon the
conversion of shares of Class B Common Stock, (ii) the issuance of Securities to
a DGHA Stockholder pursuant to Section 3 of the DGHA Repurchase Agreement and
Section 7(b), (iii) the issuance of Securities to a Manager Stockholder pursuant
to Section 3 of the Manager Repurchase Agreement and Section 7(a), (iv) the
issuance of the Warrants pursuant to the Warrant Issuance Agreement and the
issuance of Securities pursuant to the exercise of the Warrants, (v) the
issuance of Securities, or any securities convertible into or exercisable for
Securities, pursuant to a Public Offering and (vi) the issuance of Securities to
a DGHA Stockholder or a Manager Stockholder after repurchase by the Corporation
pursuant to the DGHA Repurchase Agreement, the Manager Repurchase Agreement or
pursuant to Section 14, of an equivalent or greater number of Securities from
one or more DGHA Stockholders, Manager Stockholders or Non-Affiliated
Stockholders.
"Fair Value" has the meaning ascribed to it in Section 15(a).
----------
"First Priority Eligible Stockholders" shall mean (i) with respect to
------------------------------------
any Transfer to be made by a DGHA Stockholder, the other DGHA Stockholders, (ii)
with respect to any Transfer to be made by a Manager Stockholder, the other
Manager Stockholders and (iii) with
5
<PAGE>
respect to any Transfer to be made by a Non-Affiliated Stockholder, the other
Non-Affiliated Stockholders.
"First Refusal Amount" has the meaning ascribed to it in Section 5(a).
--------------------
"First Refusal Securities" has the meaning ascribed to it in Section
------------------------
5(a).
"GAAP" means United States generally accepted accounting principles,
----
consistently applied.
"Individual Investor Put Shares" has the meaning ascribed to it in
------------------------------
Section 14(c).
"Initial Institutional Director" shall have the meaning ascribed to it
------------------------------
in Section 2(a)(iii).
"Initial Public Offering" means the initial Public Offering of equity
-----------------------
securities of the Corporation.
"Initial Retiring Purchase" has the meaning ascribed to it in Section
-------------------------
14(a).
"Institutional Directors" has the meaning ascribed to it in Section
-----------------------
2(b).
"Institutional Securities" means all Securities owned by the
------------------------
Institutional Stockholders.
"Institutional Stockholders" means any Person listed on the Schedule
--------------------------
of Institutional Stockholders attached hereto as Schedule 6 and any successor
to, or Permitted Transferee (excluding any transferee who purchases
Institutional Securities pursuant to Section 6) of, any such Person who or which
agrees in writing to be treated as an Institutional Stockholder hereunder and to
be bound by the terms and comply with all applicable provisions hereof.
"IRR Event" means the occurrence of any of the following:
--------
(i) the sale of all or substantially all of the assets of the
Corporation and its Subsidiaries (in each case after assumption of all
the liabilities of the Corporation or the Subsidiary), on a
consolidated basis;
(ii) the sale of all or substantially all of the Securities;
(iii) a merger of the Corporation or any Subsidiary, provided
that the merger comprises all or substantially all of the assets of
the Corporation and its Subsidiaries, with another Person if the
stockholders of the Corporation immediately prior to such merger do
not own more than 80% of the corporation surviving such merger;
(iv) the consummation of a Qualified Public Offering; or
(v) a sale made pursuant to Section 15.
6
<PAGE>
"Majority of the Institutional Stockholders" means those Institutional
------------------------------------------
Stockholders who at the time in question hold a majority of the Common
Equivalents then held by all Institutional Stockholders.
"Majority of the DGHA Stockholders" means those DGHA Stockholders who
---------------------------------
at the time in question hold a majority of the Common Equivalents then held by
all DGHA Stockholders.
"Management Services Agreement" means the Amended and Restated
-----------------------------
Management Services Agreement dated as of the date hereof among the Corporation,
certain subsidiaries thereof and DGHA, as amended or modified from time to time.
"Manager Repurchase Agreement" means the Manager Repurchase
----------------------------
Agreements, a form of which is attached hereto as Schedule 7, to be entered into
between the Corporation and each Manager Stockholder who purchases Manager
Restricted Shares, respectively.
"Manager Restricted Shares" means the 216,263 (as adjusted to reflect
-------------------------
any stock splits, stock dividends, reverse stock splits or reclassifications of
the Class C Common Stock) shares of Class C Common Stock issued or issuable to
the Manager Stockholders party to the Manager Repurchase Agreement (and any
Securities issued in respect thereof), which shares are subject to repurchase by
the Corporation upon an IRR Event pursuant to the Manager Repurchase Agreement,
for so long as such shares of Class C Common Stock are subject to the Manager
Repurchase Agreement.
"Manager Stockholder" shall mean any Person listed on the Schedule of
-------------------
Manager Stockholders attached hereto as Schedule 8 and any Stockholder who
purchases Securities who is a full-time employee of the Corporation or of any
Subsidiary and is designated as such by the Board, but specifically excluding
the DGHA Stockholders.
"Merger" means the consummation of the merger between Acquisition and
------
U.S. Silica, with U.S. Silica as the surviving corporation.
"Multiple Employer Plan" means a single employer plan, as defined in
----------------------
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of any
Obligor or any ERISA Affiliate and at least one Person other than the Obligors
and the ERISA Affiliates or (b) was so maintained and in respect of which any
Obligor or any ERISA Affiliate could have liability under Section 4064 or 4069
of ERISA in the event such plan has been or were to be terminated.
"Non-Affiliated Stockholder" shall mean any Person listed on the
--------------------------
Schedule of Non-Affiliated Stockholders attached hereto as Schedule 5.
"Notice Date" has the meaning ascribed to it in Section 14(b).
-----------
"Notice of Offer" has the meaning ascribed to it in Section 11(a).
---------------
"Obligor" means Acquisition and U.S. Silica.
-------
"Offer" has the meaning ascribed to it in Section 11(a).
-----
7
<PAGE>
"Offeree" has the meaning ascribed to it in Section 11(a).
-------
"Offeror" shall have the meaning ascribed to it in Section 11(a).
-------
"Officer's Report" has the meaning ascribed to it in Section 3(a)(ii).
----------------
"Original Agreement Date" means February 9, 1996.
-----------------------
"Other Stockholders" has the meaning ascribed to it in Section 12(a).
------------------
"PBGC" means the Pension Benefit Guaranty Corporation.
----
"Permitted Transferees" has the meaning ascribed to such term in
---------------------
Section 8(d).
"Person" shall be construed broadly and shall include an individual, a
------
partnership, a corporation, an association, a joint stock company, a limited
liability company, a trust, a joint venture, an unincorporated organization and
a governmental entity or any department, agency or political subdivision
thereof.
"Plan" means a Single Employer Plan or a Multiple Employer Plan.
----
"Preferred Stock" means (i) the Series A Preferred Stock, the Series B
---------------
Preferred Stock and the Seller Preferred Stock and (ii) any shares of any series
of Preferred Stock of the Corporation issued to the Stockholders on or after the
Original Agreement Date.
"Primary Retirement Notice" has the meaning ascribed to it in Section
-------------------------
14(a).
"Proportionate Percentage" means, with respect to a Stockholder, a
------------------------
fraction (expressed as a percentage) the numerator of which is the number of
Common Equivalents held by such Stockholder and the denominator of which is (i)
in a situation where the Proportionate Percentage is being calculated with
respect to all Stockholders, the total number of Common Equivalents outstanding
at the time in question and (ii) in a situation where the Proportionate
Percentage is being calculated with respect to a group of Stockholders, the
total number of Common Equivalents held by the members of such group.
"Public Offering" means the closing of a public offering of Common
---------------
Stock pursuant to a registration statement declared effective under the
Securities Act, except that a Public Offering shall not include an offering made
in connection with an employee benefit plan.
"Public Sale" means any sale, occurring simultaneously with or after a
-----------
Public Offering, of Securities to the public pursuant to an offering registered
under the Securities Act or to the public through a broker, dealer or market
maker pursuant to the provisions of Rule 144.
"Qualified Public Offering" means the sale by the Corporation and/or
-------------------------
one or more stockholders of the Corporation in an underwritten Public Offering
registered under the Securities Act of Common Stock which results in aggregate
net cash proceeds (net of underwriters' discounts and commissions and estimated
offering expenses) to the Corporation and/or any selling stockholders of not
less than $30 million.
8
<PAGE>
"Registration Rights Agreement" means the Registration Rights
-----------------------------
Agreement dated as of February 9, 1996, as amended by Amendment No. 1 dated as
of the date hereof and as may be amended or modified from time to time in the
future, among the Corporation and the parties named therein.
"Regulatory Problem" means (i) any set of facts or circumstances
------------------
wherein it has been asserted by any governmental regulatory agency, or a
Stockholder believes based on advice of counsel that there is a substantial risk
of such assertion, that such Stockholder is not legally permitted to hold, or
exercise any significant right with respect to, the securities (including any
Securities or debt securities) of the Corporation which it holds or (ii) a
Voting Regulatory Problem.
"Remaining Retiring Shares" has the meaning ascribed to it in Section
-------------------------
14(a).
"Requisite Stockholders" means a Majority of the Institutional
----------------------
Stockholders and a Majority of the DGHA Stockholders; provided, however, that if
the Majority of the Institutional Stockholders have designated the Additional
Institutional Directors pursuant to Section 2(b) hereof, "Requisite
---------
Stockholders" means, solely for purposes of Section 4(a) (other than subsection
- ------------
4(a)(vii) and subsection 4(a)(xi) only with respect to any transactions between
the Corporation or any of its Subsidiaries and any Institutional Stockholder),
Section 4(b) and Section 13, a Majority of the Institutional Stockholders.
"Requisite Stockholder Approval" means the approval of the terms,
------------------------------
vesting or any other characteristics of any restricted stock of the Corporation,
or any compensation arrangement relating to the Corporation, by vote or written
consent in lieu thereof, that is intended to satisfy the requirements of Code
Section 280G(b)(5) and applicable Treasury Regulations thereunder, and shall
also include any vote (with or without a meeting) or any other action or
actions.
"Restricted Securities" means, at any point in time, any Securities
---------------------
which have not theretofore been transferred in a Public Sale.
"Retiring Participation Shares" has the meaning ascribed to it in
-----------------------------
Section 14(a).
"Retiring Shares" has the meaning ascribed to it in Section 14(a).
---------------
"Retiring Stockholder" has the meaning ascribed to it in Section
--------------------
14(a).
"Rule 144" means Rule 144 promulgated by the Securities and Exchange
--------
Commission under the Securities Act as such rule may be amended from time to
time, or any similar rule then in force.
"Sale of the Company" has the meaning ascribed to it in Section 13(a).
-------------------
"Sale Notice" has the meaning ascribed to it in Section 13(a).
-----------
"Second Retirement Notice" has the meaning ascribed to it in Section
------------------------
14(a).
9
<PAGE>
"Second Priority Eligible Stockholders" shall mean (i) with respect to
-------------------------------------
any Transfer to be made by a DGHA Stockholder, the Stockholders other than the
DGHA Stockholders, (ii) with respect to any Transfer to be made by a Manager
Stockholder, the Stockholders other than the Manager Stockholders, and (iii)
with respect to any Transfer to be made by a Non-Affiliated Stockholder, the
Stockholders other than the Non-Affiliated Stockholders.
"Second Retirement Notice" has the meaning ascribed to it in Section
------------------------
14(b).
"Section 12 Acceptance" shall have the meaning ascribed to it in
---------------------
Section 12(a).
"Section 12 Notice" shall have the meaning ascribed to it in Section
-----------------
12(a).
"Section 12 Offer" shall have the meaning ascribed to it in Section
----------------
12(a).
"Section 12 Offeree" shall have the meaning ascribed to it in Section
------------------
12(a).
"Section 12 Offeror" shall have the meaning ascribed to it in Section
------------------
12(a).
"Securities" means the Common Stock, the Preferred Stock, and any and
----------
all other Common Stock, Preferred Stock or other capital stock or equity
securities (including the Warrants and other derivative securities therefor) of
the Corporation.
"Securities Act" means the Securities Act of 1933, as amended, or any
--------------
similar federal law then in force.
"Securities and Exchange Commission" includes any governmental body or
----------------------------------
agency succeeding to the functions thereof
"Seller Preferred Stock" means the Series C Preferred Stock, $0.01 par
----------------------
value, of the Corporation issued to U.S. Borax Inc. upon the closing of the
Stock Purchase Agreement.
"Series A Preferred Stock" means the Series A Preferred Stock, $0.01
------------------------
par value, of the Corporation.
"Series B Preferred Stock" means the Series B Preferred Stock, $0.01
------------------------
par value, of the Corporation.
"Single Employer Plan" means a single employer plan, as defined in
--------------------
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of any
Obligor or any ERISA Affiliate and no Person other than the Obligors and the
ERISA Affiliates or (b) was so maintained and in respect of which any Obligor or
any ERISA Affiliate could have liability under Section 4069 of ERISA in the
event such plan has been or were to be terminated.
"Stock Purchase Agreement" means the Stock Purchase Agreement between
------------------------
U.S. Borax Inc. and the Corporation dated October 23, 1995, as amended or
modified from time to time.
10
<PAGE>
"Subscription Agreement" shall mean the Stock Subscription and
----------------------
Exchange Agreement dated the Original Agreement Date, among the Corporation and
the Stockholders which are parties thereto.
"Subsidiary" means with respect to any Person, any corporation or
----------
other entity of which the shares of stock having a majority of the general
voting power in electing the board of directors of such corporation or other
entity are, at the time as of which any determination is being made, owned by
such Person either directly or indirectly through Subsidiaries.
"Tax Sharing Agreement" means the Amended and Restated Tax Sharing
---------------------
Agreement dated as of July 21, 1998 between the Corporation and the parties
named therein.
"Termination Event" has the meaning ascribed to it in Section 14(d).
-----------------
"Transfer" shall be construed broadly and shall include any transfer
--------
(whether voluntary, involuntary or by operation of law) of securities or any
interest therein, including without limitation, by way of issuance, sale,
participation, pledge, gift, bequeath, intestate transfer, distribution,
liquidation, merger or consolidation.
"Transfer Date" has the meaning ascribed to it in Section 14(e).
-------------
"Trigger Event" shall mean (a) the existence of a Credit Event or the
-------------
occurrence of an EBITDA Event, (b) the termination of the Exclusive Period or
(c) both of Mr. D. George Harris and Mr. Anthony J. Petrocelli shall have
ceased to serve on the Board due to death, disability or resignation.
"U.S. Silica" means U.S. Silica Company, a Delaware corporation.
-----------
"Valuation Price per Share" means, with respect to any Security, the
-------------------------
amount distributable to such Security, if the Company is sold at Fair Value and
the proceeds are distributed by the Corporation in complete liquidation pursuant
to the rights and preferences set forth in the Certificate immediately prior to
the Notice Date.
"Voting Regulatory Problem" shall exist when a Person and such
-------------------------
Person's Affiliates would own, control or have power over a greater quantity of
securities (including any Securities or debt securities) of any kind issued by
the Corporation or any successor than are permitted under any requirement of any
governmental authority having jurisdiction over such Person.
"Voting Securities" means the Class A Common Stock, the Series B
-----------------
Preferred Stock (from and after a Trigger Event in accordance with the terms of
the Certificate) and any other Securities of the Corporation which shall at the
time in question be entitled to vote on each matter as to which stockholders of
the Corporation are entitled to vote.
"Warrants" means the warrants to purchase shares of Series A Preferred
--------
Stock and Series B Preferred Stock granted from time to time pursuant to the
Warrant Issuance Agreement.
11
<PAGE>
"Warrant Issuance Agreement" means a Warrant Issuance Agreement or
--------------------------
similar document to be entered into by the Corporation and the Persons who
shall, from time to time, purchase Warrants.
"Withdrawal Liability" has the meaning assigned to such term in Part I
--------------------
of Subtitle E of Title IV of ERISA.
(b) The use in this Agreement of the term "including" means
"including, without limitation." The words "herein," "hereof," "hereunder"
and other words of similar import refer to this Agreement as a whole,
including the schedules and exhibits, as the same may from time to time be
amended or supplemented, and not to any particular subparagraph or clause
contained in this Agreement. All references to schedules and exhibits mean
the schedules and exhibits attached to this Agreement.
(c) Unless otherwise expressly set forth herein, whenever the term
"best efforts" is used, such efforts shall not include any obligation to
incur substantial expenses or liabilities.
(d) The title of and the section and paragraph headings in this
Agreement are for convenience of reference only and shall not govern the
interpretation of any of the terms or provisions of this Agreement.
(e) The use herein of the masculine, feminine or neuter forms shall
also denote the other forms, as in each case the context may require.
(f) Where specific language is used to clarify by example a general
statement contained herein, such specific language shall not be deemed to
modify, limit or restrict in any manner the construction of the general
statement to which it relates. The language used in this Agreement has
been chosen by the parties to express their mutual intent, and no rule of
strict construction shall be applied against any party.
SECTION 2. Board of Directors; Adjustment EBITDA Targets.
---------------------------------------------
(a) Election of Directors Generally. Each Stockholder shall from
-------------------------------
time to time take such action, in his capacity as a stockholder of the
Corporation, including the voting of all Securities owned or controlled by
such Stockholder, as may be necessary to cause the Corporation to be
managed at all times by a Board, consisting of seven members to be
designated as follows:
(i) for so long as D. George Harris and his Affiliates own
50% or more of the Securities (other than DGHA Restricted Shares) held
by them on the Original Agreement Date, two directors shall be
designated by D. George Harris, one of which designated directors
shall be D. George Harris (each a "George Harris Director" and
together the "George Harris Directors");
(ii) for so long as Anthony J. Petrocelli and his Affiliates
own 50% or more of the Securities (other than the DGHA Restricted
Shares) held by them on
12
<PAGE>
the Original Agreement Date, one director shall be designated by
Anthony J. Petrocelli (the "Petrocelli Director");
(iii) three directors shall be designated by a Majority of the
Institutional Stockholders (each an "Initial Institutional Director"
and together the "Initial Institutional Directors");
(iv) one director shall be the President of the Corporation;
(v) for so long as D. George Harris shall be elected as a
director he shall also be elected as the Chairman of the Board and
Chief Executive Officer of the Corporation, and for so long as Anthony
J. Petrocelli shall be elected as a director he shall also be elected
as the Vice-Chairman of the Board;
Notwithstanding the forgoing, in the event of a Termination Event with
respect to D. George Harris or Anthony J. Petrocelli, the DGHA Stockholder with
respect to which such Termination Event has occurred shall not be entitled to
designate any directors and the Harris Directors or the Petrocelli Director, as
applicable, shall thereafter be designated by the Majority of the DGHA
Stockholders.
(b) Election of Additional Institutional Directors. In addition to
----------------------------------------------
the directors designated pursuant to Section 2(a), upon the occurrence of a
Trigger Event, the Majority of the Institutional Stockholders shall have
the right to designate two additional directors (each an "Additional
Institutional Director" and together the "Additional Institutional
Directors") so as to cause the directors designated by the Institutional
Stockholders to constitute a majority of the directors on the Board;
provided, however, that such right shall be exercisable by the Majority of
-------- -------
the Institutional Stockholders only upon the delivery to the Corporation,
during the continuance of the Trigger Event, of a written notice by a
representative of the Majority of the Institutional Stockholders of their
desire to designate the Additional Institutional Directors. The Initial
Institutional Directors and the Additional Institutional Directors are
referred to herein collectively as the "Institutional Directors" and each,
individually, an "Institutional Director". Each Stockholder shall, at such
times as the Majority of the Institutional Stockholders are entitled to
designate the Additional Institutional Directors and upon written notice
from the Corporation or take such action, in his capacity as a stockholder
of the Corporation, including the voting of all Securities owned or
controlled by such Stockholder, as may be necessary to cause the Additional
Institutional Directors to be elected to the Board.
(c) Compensation Committee. Each Stockholder shall from time to
----------------------
time take such action, in his capacity as a stockholder of the Corporation,
including the voting of all Securities owned or controlled by such
Stockholder, as may be necessary to cause a Compensation Committee of the
Board to be constituted and to consist of three directors, two of which
shall be Institutional Directors and one of which shall be a D. George
Harris Director.
13
<PAGE>
(d) Expenses. The Corporation shall pay the reasonable out-of-
--------
pocket expenses incurred by each Board member designated pursuant to
Section 2(a) or 2(b) in connection with attending the meetings of the Board
and any committees thereof.
(e) Covenant to Vote. Each of the Stockholders agrees to vote, in
----------------
person or by proxy, all of the Securities owned by such Stockholder and
entitled to vote at any annual or special meeting of the stockholders of
the Corporation called for the purpose of voting on the election of
directors, or to execute a written consent in lieu thereof, in favor of the
election of the directors selected in accordance with Section 2(a) or 2(b).
(f) Removal of Directors.
--------------------
(i) At all times (A) a Majority of the Institutional
Stockholders shall have the right to recommend the removal, without
cause, of any or all of the Institutional Directors, (B) D. George
Harris (or, if the George Harris Directors are at such time designated
by the Majority of the DGHA Stockholders, the Majority of the DGHA
Stockholders) shall have the right to recommend the removal, without
cause, of any or all of the George Harris Directors, and (C) Anthony
J. Petrocelli (or, if the Petrocelli Director is at such time
designated by the Majority of the DGHA Stockholders the Majority of
the DGHA Stockholders) shall have the right to recommend the removal,
without cause, of the Petrocelli Director.
(ii) In the event that any Stockholder acting as described in
Section 2(f)(i) shall, in accordance with their rights specified
herein, recommend the removal of any director or directors with
respect to whom they have such right, then each of the other
Stockholders hereby agrees to join with such acting Stockholder in
recommending such removal as described above, and in causing the
Corporation either to promptly hold a special meeting of stockholders
and to vote, in person or by proxy, all of the Securities owned by
such Stockholder and entitled to vote at such meeting or to execute a
written consent in lieu thereof, as the case may be, in favor of such
removal.
(g) Vacancies. In the event a vacancy is created on the Board by
---------
reason of the death, removal or resignation of any director, (i) such
vacancy may be filled by the remaining directors in accordance with
Sections 2(a) or 2(b), as applicable, (ii) if not so filled, each of the
Stockholders hereby agrees, in its capacity as a stockholder of the
Corporation, to elect a director to fill such vacancy in accordance with
the selection procedures set forth in Sections 2(a) and 2(b) as applicable.
Such election shall occur within thirty days after such vacancy occurs.
Each of the Stockholders hereby agrees, in his capacity as a stockholder of
the Corporation, to use his best efforts to cause the Corporation either to
promptly hold a special meeting of stockholders or to execute a written
consent in lieu thereof, and each of the Stockholders hereby agrees to vote
all of the Securities owned by such Stockholder and entitled to vote at
such meeting, in person or by proxy, or pursuant to such written consent of
stockholders, in favor of the person or persons selected in accordance with
Sections 2(a) or 2(b) to fill such vacancy and, if
14
<PAGE>
necessary, in favor of removing any director elected to fill such vacancy
other than in accordance with the selection procedures of Sections 2(a) or
2(b).
(h) No Inconsistent Agreements. Each Stockholder represents that he
--------------------------
has not granted and is not a party to any proxy, voting trust or other
agreement which is inconsistent with or conflicts with the provisions of
this Agreement, and no Stockholder shall grant any proxy or become party to
any voting trust or other agreement which is inconsistent with or conflicts
with the provisions of this Agreement.
(i) Budgeted EBITDA. In the event the Corporation or any Subsidiary
---------------
makes any material capital expenditures not contemplated by the projections
upon which the Budgeted EBITDA targets are based, or the Corporation or any
Subsidiary consummates any mergers, acquisitions or dispositions (whether
of assets or stock or other interests) or other extraordinary transactions,
the Board will determine in good faith appropriate adjustments to the
Budgeted EBITDA targets, which adjustments shall be final and binding.
(j) Appointment of President. Upon the removal or resignation of
------------------------
the President of the Corporation, his successor shall be appointed by the
vote of a majority of the directors on the Board and the outgoing President
shall abstain from such vote.
SECTION 3. Financial Statements and Other Information, Inspections and
-----------------------------------------------------------
Board Meetings.
- --------------
(a) Prior to the consummation of an Initial Public Offering, the
Corporation will deliver to each Stockholder having a Proportionate
Percentage of at least 5%:
(i) as soon as available but in any event within 30 days after
the end of each calendar month (the "Accounting Periods") in each
fiscal year, unaudited consolidated statements of income and cash
flows of the Corporation and its Subsidiaries for such Accounting
Period and for the period from the beginning of the fiscal year to the
end of such Accounting Period, which statements shall also include the
EBITDA of the Corporation and its Subsidiaries for such Accounting
Period, and consolidated balance sheets of the Corporation and its
Subsidiaries as of the end of such Accounting Period, setting forth in
each case comparisons to the corresponding period in the annual budget
and to the corresponding period in the preceding fiscal year with
variances delineated, and all such statements will be prepared in
accordance with generally accepted accounting principles, consistently
applied;
(ii) as soon as available but in any event within 45 days after
the end of each fiscal quarter of the Corporation unaudited
consolidated statements of income and cash flows of the Corporation
and its Subsidiaries for such fiscal quarter, setting forth in each
case comparisons to the corresponding period in the annual budget and
to the corresponding period in the preceding fiscal year with
variances delineated, and accompanied by a written report of the
Corporation's Chief Executive Officer, Chief Operating Officer or
Chief Financial Officer with
15
<PAGE>
respect to (a) such Officer's lack of actual knowledge after due
investigation of any condition or event which constitutes an event of
default under the terms of this Agreement, a Credit Event or an EBITDA
Event; (b) the operations, problems and achievements of the
Corporation during such period and (c) the calculation of the
financial tests required under the Credit Agreement for such period
(such written report being referred to herein as the "Officer's
Report");
(iii) as soon as available but in any event within 90 days
after the end of each fiscal year of the Corporation, audited
consolidated statements of income and cash flows of the Corporation
and its Subsidiaries for such year, and the related balance sheets of
the Corporation and its Subsidiaries as of the end of such year,
setting forth in each case in comparative form the corresponding
figures for the preceding fiscal year and for the annual budget for
such year, and accompanied by (a) an opinion thereon of independent
certified public accountants reasonably acceptable to a majority in
interest of all Stockholders (it being agreed that Price Waterhouse
Coopers is acceptable), which opinion shall state that said financial
statements (other than the annual budget) fairly present the financial
condition and results of operations of the Corporation and its
Subsidiaries as at the end of, and for, such fiscal year, (b) a letter
from such accounting firm stating that in the course of its
examination they obtained no knowledge, except as specifically stated,
that there was a default in existence by the Corporation or any
Subsidiary under this Agreement or any other material agreement to
which the Corporation or any Subsidiary is a party and (c) an
Officer's Report;
(iv) promptly upon receipt thereof, any additional reports,
management letters (including the annual management letter to the
Board) or other detailed information concerning significant aspects of
the Corporation's and its Subsidiaries' operations and financial
affairs given to the Corporation by its independent accountants (and
not otherwise contained in other materials provided hereunder);
(v) no later than 30 days prior to the end of each fiscal year,
a consolidated annual budget prepared on a monthly basis for the
Corporation and its Subsidiaries for the succeeding fiscal year
(displaying anticipated statements of income and cash flows and
balance sheets);
(vi) promptly (but in any event within ten (10) business days)
after the discovery or receipt of notice of (a) any default under the
terms of any material agreement to which the Corporation or any
Subsidiary is a party (including without limitation, this Agreement)
or, without limitation to the generality of the foregoing, a Trigger
Event or any other adverse event or circumstance affecting the
Corporation or any Subsidiary which is material to the Corporation and
its Subsidiaries taken as a whole (including the filing of any
material litigation against the Corporation or any Subsidiary or the
existence of a dispute that may reasonably be expected to lead to
material litigation) or (b) any noncompliance by the Corporation or
any Subsidiary with applicable laws, rules and regulations of
16
<PAGE>
all governmental authorities, the violation of which might reasonably
be expected to have a material adverse effect upon the financial
condition of the Corporation and its Subsidiaries taken as a whole, an
Officer's Certificate specifying the nature and a period of existence
thereof and what actions the Corporation and its Subsidiaries have
taken and propose to take with respect thereto;
(vii) within ten (10) days after transmission thereof, copies
of all registration statements which the Corporation files with the
Securities and Exchange Commission, and copies of all press releases
and other statements made available generally by the Corporation to
the public concerning material developments in the Corporation's
business;
(viii) immediately upon receipt thereof, copies of all
environmental reports or other communications concerning environmental
matters of the Corporation or its Subsidiaries which might reasonably
be expected to have a material adverse effect upon the financial
condition of the Corporation and its Subsidiaries taken as a whole;
and
(ix) with reasonable promptness, such other information and
financial data concerning the Corporation and its Subsidiaries as any
Stockholder having a Proportionate Percentage of at least 5% may
reasonably request.
To the best of the Corporation's knowledge, each of the financial
statements referred to in subparagraphs (i), (ii) and (iii) will be true and
correct in all material respects as of the dates and for the periods stated
therein, subject in the case of the unaudited financial statements to footnotes
and changes resulting from normal year-end audit adjustments.
The Corporation will provide to all Stockholders, when available,
audited consolidated statements of income and cash flows of the Corporation and
its Subsidiaries and the related consolidated balance sheet of the Corporation
and its Subsidiaries, accompanied by an opinion thereon of the Corporation's
independent certified public accountant.
(b) Except as consented to in writing by the Corporation or as
otherwise required by law or judicial order or decree or by any
governmental agency or authority, each Person which obtains information
regarding the Corporation and its Subsidiaries under this Section 3 will
use its best efforts to maintain the confidentiality of all nonpublic
information obtained by it hereunder which the Corporation has reasonably
designated as proprietary or confidential in nature; provided that each
such Person may disclose such information to a Permitted Transferee in
connection with the sale or transfer of any Securities if such Permitted
Transferee agrees in writing to be bound by the provisions hereof.
(c) Prior to the consummation of an Initial Public Offering, the
Corporation will permit each representative designated by any Stockholder
having a Proportionate Percentage of at least 5%, upon reasonable notice to
the Chief Executive Officer of the Corporation, during normal business
hours or such other times as any such holder may reasonably request and in
such manner so as not to unreasonably interfere with the
17
<PAGE>
business and operations of the Corporation or any Subsidiary, to, at such
holder's expense, (i) visit and inspect any of the properties of the
Corporation and its Subsidiaries, (ii) examine the corporate and financial
records of the Corporation and its Subsidiaries and make copies thereof or
extracts therefrom and (iii) discuss the affairs, finances and accounts of
any such corporations with the directors, officers, key employees and
independent accountants of the Corporation and its Subsidiaries.
SECTION 4. Additional Voting Agreements; Required Sale.
-------------------------------------------
(a) The Corporation shall not, and shall ensure that each Subsidiary
shall not, without the affirmative vote or written consent of the Requisite
Stockholders:
(i) consummate a Public Offering;
(ii) except as contemplated by this Agreement, the
Subscription Agreement or the Warrant Issuance Agreement, after it
shall have been executed, issue any Securities other than to the
Corporation or to a wholly-owned Subsidiary;
(iii) merge or consolidate with or into another entity (other
than mergers of wholly-owned Subsidiaries and mergers of a wholly-
owned Subsidiary with and into the Corporation where the Corporation
is the surviving corporation);
(iv) acquire any business from, or capital stock of, any
Person;
(v) redeem the Seller Preferred Stock, otherwise than as
required pursuant to the Certificate;
(vi) amend its Certificate of Incorporation;
(vii) amend its Bylaws;
(viii) increase the compensation of any of its officers,
directors or management employees, above the levels in existence as of
the date hereof, or pay any fees to directors unless approved by the
Compensation Committee;
(ix) sell, lease, exchange, convey, license or otherwise
dispose of in any 12-month period in excess of 10% (or, in the
aggregate during the term of this Agreement, in excess of 25%) of its
consolidated assets or assets which contributed 10% (or, in the
aggregate during the term of this Agreement, in excess of 25%), or
more of its average annual EBITDA over the last 12 fiscal months, in
any transaction or series of related transactions (other than sales in
the ordinary course of business);
(x) liquidate, dissolve or effect a recapitalization or
reorganization in any form of transaction;
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(xi) enter into, revise or amend any contract, agreement or
transaction with any of its officers, directors, management employees
or Affiliates, except for (a) the entering into of the Management
Services Agreement, the DGHA Fee Letter, the Warrant Issuance
Agreement, the Registration Rights Agreement, the Tax Sharing
Agreement, the DGHA Repurchase Agreement and the Manager Repurchase
Agreement and the amendment of the Management Services Agreement
contemplated by Section 5(d) thereof and (b) employment related
transactions on customary terms, bonus plans approved by the
Compensation Committee and for normal employment arrangements and
benefit programs on reasonable terms and except as otherwise
contemplated by this Agreement;
(xii) incur or create, any indebtedness for borrowed money in
excess of the amounts permitted by the Debt Documents;
(xiii) make any loans or advances to, guarantees for the benefit
of, or investments in, any Person (other than a wholly-owned
Subsidiary), except as permitted by the Debt Documents or the
Management Services Agreement and except for (a) reasonable advances
to employees in the ordinary course of business, (b) investments
having a stated maturity no greater than one year from the date the
Corporation makes such investment in (1) obligations of the United
States government or any agency thereof or obligations guaranteed by
the United States government, (2) certificates of deposit of
commercial banks having combined capital and surplus of at least $50
million or (3) commercial paper with a rating of at least "Prime-1" by
Moody's Investors Service, Inc. or "A- 1" by Standard & Poor's
Corporation and (c) repurchase obligations with a term of not more
than seven days for underlying securities of the types described in
clause (b)(1) of this subparagraph (xiii) entered into with any bank
meeting the qualifications specified in clause (b)(2) of this
subparagraph (xiii);
(xiv) declare or pay any dividends upon the Securities (other
than the Series A Preferred Stock and the Seller Preferred Stock); or
(xv) take any action that would cause the Corporation or any
Subsidiary to incur a material liability to any Plan or the PBGC or
substantially increase the rate of annual contributions to any Plan.
(b) At all times during the term of this Agreement the Corporation
will, and will cause each Subsidiary to unless consent is obtained from the
Requisite Stockholders:
(i) cause to be done all things necessary to maintain,
preserve and renew its corporate existence and all material licenses,
authorizations and permits necessary to the conduct of its businesses;
(ii) maintain and keep its properties in good repair, working
order and condition, and from time to time make all necessary or
desirable repairs, renewals and replacements, so that its businesses
may be properly and advantageously conducted at all times;
19
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(iii) pay and discharge when payable all taxes, assessments and
governmental charges imposed upon its properties or upon the income or
profits therefrom (in each case before the same becomes delinquent and
before penalties accrue thereon) and all claims for labor, materials
or supplies which if unpaid might by law become a lien upon any of its
property, unless and to the extent that the same are being contested
in good faith and by appropriate proceedings and adequate reserves (as
determined in accordance with generally accepted accounting
principles, consistently applied) have been established on its books
with respect thereto;
(iv) comply with all other material obligations which it
incurs pursuant to any contract or agreement, whether oral or written,
express or implied, as such obligations become due, unless and to the
extent that the same are being contested in good faith and by
appropriate proceedings and adequate reserves (as determined in
accordance with generally accepted accounting principles, consistently
applied) have been established on its books with respect thereto;
(v) comply with all applicable laws, rules and regulations of
all governmental authorities, the violation of which might reasonably
be expected to have a material adverse effect upon the financial
condition, operating results or business prospects of the Corporation
and its Subsidiaries taken as a whole;
(vi) maintain proper books of record and account which fairly
present its financial condition and results of operations and make
provisions on its financial statements for all such proper reserves as
in each case are required in accordance with generally accepted
accounting principles, consistently applied;
(vii) comply with all environmental regulations and orders with
respect to such regulations, provided that this subparagraph shall not
limit the ability of the Corporation or any Subsidiary thereof to
contest in good faith any such order or regulation;
(viii) apply for and continue in force with good and
responsible insurance companies adequate insurance covering risks of
such types and in such amounts as are customary for well-insured
corporations of similar size engaged in similar lines of business, all
as determined by the Board,
(ix) (A) promptly and in any event within 10 days after
Acquisition or any ERISA Affiliate knows or has reason to know that
any ERISA Event has occurred, furnish to CMC a statement of the chief
financial officer or treasurer of Acquisition describing such ERISA
Event and the action, if any, that Acquisition or such ERISA Affiliate
has taken and proposes to take with respect thereto and (B) on the
date any records, documents or other information must be furnished to
the PBGC with respect to any Plan pursuant to Section 4010 of ERISA,
furnish to CMC a copy of such records, documents and information;
20
<PAGE>
(x) promptly and in any event within five days after receipt
thereof by Acquisition or any ERISA Affiliate, furnish to CMC copies
of each notice from the PBGC stating its intention to terminate any
Plan or to have a trustee appointed to administer any Plan;
(xi) furnish to CMC promptly upon receipt thereof by the
Company or any ERISA Affiliate, a copy of the annual actuarial
valuation report of each Plan; and
(xii) promptly and in any event within ten days after receipt
thereof by Acquisition or any ERISA Affiliate from the sponsor of a
Multiemployer Plan, furnish to CMC copies of each notice concerning
(i) the imposition of Withdrawal Liability by any such Multiemployer
Plan, (ii) the reorganization or termination, within the meaning of
Title IV of ERISA, of any such Multiemployer Plan or (iii) the amount
of liability incurred, or that may be incurred, by Acquisition or any
ERISA Affiliate in connection with any event described in clause (i)
or (ii).
(c) Each Stockholder shall in his capacity as a stockholder of the
Corporation, cause that the Corporation observe and perform its obligations
under Section 4(a) and Section 4(b).
SECTION 5. First Refusal Rights for Securities Issued by the Corporation.
-------------------------------------------------------------
(a) Except for the issuance of Securities in connection with an
Exempt Issuance, if the Corporation authorizes the issuance and sale to any
other Person of any Securities or any securities containing options or
rights to acquire any Securities (the "First Refusal Securities"), the
Corporation will first offer to sell to each Stockholder a portion of the
First Refusal Securities in an amount equal to such Stockholder's
Proportionate Percentage of the First Refusal Securities (the "First
Refusal Amount"). Each Stockholder will be entitled to purchase the First
Refusal Securities at the same price per share and on the same terms as the
First Refusal Securities are to be offered to such other Person.
(b) Each Stockholder must exercise its purchase rights hereunder
within 20 days after receipt of written notice from the Corporation
describing in reasonable detail the First Refusal Securities being offered,
the purchase price per share, the payment terms and such Stockholder's
Proportionate Percentage and First Refusal Amount. If all of the First
Refusal Securities offered to the Stockholders are not fully subscribed by
such Stockholders, the remaining First Refusal Securities will be reoffered
to the Stockholders purchasing their entire First Refusal Amount upon the
terms set forth in this Section until all such First Refusal Securities are
fully subscribed or until all such Stockholders have subscribed for all
such First Refusal Securities which they desire to purchase, except that
such Stockholders must exercise their purchase rights within 5 days after
receipt of all such reoffers.
(c) Upon the expiration of the offering periods described above, the
Corporation will be free to sell such First Refusal Securities which such
Stockholders
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<PAGE>
have not elected to purchase during the 60 days following such expiration,
on terms and conditions no more favorable to the purchasers thereof than
those offered to such Stockholders. Any First Refusal Securities offered or
sold by the Corporation after such 60-day period must be reoffered to the
Stockholders pursuant to the terms of this Section.
(d) Payment for First Refusal Securities which a Stockholder has
elected to purchase shall be made against delivery of (i) the certificates
representing the First Refusal Securities at the principal office of the
Corporation not earlier than 10 days nor later than 20 days after
expiration of the 20 days or 5 days referred to in Section 5(b), as the
case may be, and (ii) of the entire price, by cash, certified or bank
cashier's check, or such other consideration specified in the Corporation's
offer.
SECTION 6. Affiliate Transactions.
----------------------
Payments made by the Corporation to DGHA pursuant to the Management
Services Agreement shall be the only payments permitted to be made by the
Corporation to DGHA and its Affiliates without the consent of a majority of the
Institutional Directors.
SECTION 7. Issuance of Additional Securities to DGHA Stockholders and
----------------------------------------------------------
Manager Stockholders.
- --------------------
(a) The Corporation shall have the right, but not the obligation, to
issue to the Manager Stockholders from time to time, at the discretion of
the Board, any portion of the Manager Restricted Shares that are not issued
and outstanding on or after the date hereof, at a purchase price of $.01
per share; provided, however, that it shall be a condition precedent of the
-------- -------
issue of any Manager Restricted Shares that each Manager Stockholder to
whom any Manager Restricted Shares are issued shall have executed and
delivered to the Corporation a counterpart signature page to this Agreement
and the Manager Repurchase Agreement, pursuant to which such Manager
Stockholder agrees to be bound by the provisions of this Agreement and the
Manager Repurchase Agreement.
(b) The Corporation shall have the right, but not the obligation, to
issue to the DGHA Stockholders from time to time, at the discretion of the
Chairman of the Corporation, any portion of the DGHA Restricted Shares that
are not issued and outstanding on or after the date hereof, at a purchase
price of $.01 per share; provided, however, that it shall be a condition
-------- -------
precedent of the issue of any DGHA Restricted Shares that each DGHA
Stockholder to whom any DGHA Restricted Shares are issued shall have
executed and delivered to the Corporation a counterpart signature page of
this Agreement and the DGHA Repurchase Agreement, pursuant to which such
DGHA Stockholder agrees to be bound by the provisions of this Agreement and
the DGHA Repurchase Agreement.
SECTION 8. Limitations on Transfers of Stock - General.
-------------------------------------------
(a) The provisions regarding Transfers of Securities contained herein
shall apply to all Securities now owned or hereafter acquired by a
Stockholder, including Securities acquired by reason of any dividend,
distribution, exchange or conversion, additional issuances of Securities,
and acquisitions of outstanding Securities from another
22
<PAGE>
Person, and such provisions shall apply to any Securities obtained by a
Stockholder upon the exercise, exchange or conversion of any option,
warrant or other Security.
(b) No Stockholder shall Transfer any Security to a Person not
already a party to this Agreement as a Stockholder unless and until such
Person executes and delivers to the Corporation a written agreement in form
and substance reasonably acceptable to the Corporation pursuant to which
such Person shall agree to become a party to, and to be bound by and to
comply with the provisions of, this Agreement in the same capacity and to
the same extent as the Stockholder Transferring such Security. In the event
of any Transfer to an Affiliate contemplated by clauses (i) (A) or (i)(B)
of the definition thereof, the Transferee shall grant an irrevocable proxy,
which shall be deemed to be coupled with an interest, with respect to
voting rights of such Securities to D. George Harris (or, if D. George
Harris is no longer a Stockholder or if the transferor is D. George Harris,
to Anthony J. Petrocelli and if Anthony J. Petrocelli is no longer a
Stockholder, to an individual elected by a majority of the Board), which
proxy shall expire upon an Initial Public Offering. Any Transfer of
Securities that is not made in compliance with the provisions hereof shall
be void ab initio.
(c) Any provision of this Agreement to the contrary notwithstanding,
no Stockholder shall (i) Transfer any Security to a Person which is a
Competitor or to any Affiliates of a Competitor, (ii) effect any Transfer
which would subject the Corporation to the reporting requirements of the
Exchange Act or (iii) Transfer any Security to any Person if such Transfer
would result in an event of default under any Debt Document.
(d) The restrictions on Transfer contained in Sections 9, 10, 11 and
12 shall not apply with respect to any Transfer of Securities by any
Stockholder to its Affiliates.
SECTION 9. Limitations on Transfers of Restricted Shares.
---------------------------------------------
Except as permitted by Section 8(d) or pursuant to Section 13, no
Stockholder shall Transfer any Class C Restricted Shares at any time that the
Class C Restricted Shares shall be subject to the restrictions contained in the
DGHA Repurchase Agreement or the Manager Repurchase Agreement.
SECTION 10. Limitations on Transfers prior to Third Anniversary.
---------------------------------------------------
Except as permitted by Section 8(d) or pursuant to Section 13 or
Section 14 and except for sales of Securities by Manager Stockholders (to which
CMC shall have consented in its sole discretion) and Non-Affiliated Stockholders
to DGHA Stockholders or Manager Stockholders on or prior to December 31, 1998 at
a price per share equal to $39.90 for Series B Preferred Stock, $39.90 for Class
A Common Stock and $7.78 for Series A Preferred Stock, plus accrued dividends,
no Stockholder shall Transfer any Securities prior to the third anniversary of
the Original Agreement Date.
SECTION 11. Rights of First Refusal after Third Anniversary.
-----------------------------------------------
Except for Transfers permitted by Section 8(d) or Section 13 and
except for sales of Securities by Manager Stockholders (to which CMC shall have
consented in its sole
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<PAGE>
discretion) and Non-Affiliated Stockholders to DGHA Stockholders or Manager
Stockholders on or prior to December 31, 1998 at a price per share equal to
$39.90 for Series B Preferred Stock, $39.90 for Class A Common Stock and $7.78
for Series A Preferred Stock, plus accrued dividends, on or after the third
anniversary of the Original Agreement Date the Stockholders shall comply with
the following procedures in connection with any Transfer of Securities:
(a) The Stockholder ("Offeror") shall first deliver to the
Corporation a written notice (hereinafter in this Section 11 called the
"Notice of Offer"), which shall be irrevocable for a period of 60 days
after delivery thereof, offering (the "Offer") to the Corporation and the
other Stockholders (the "Offerees") all of the Securities proposed to be
Transferred by the Offeror at the purchase price and on the terms specified
therein (which Notice of Offer shall include all relevant terms of the
proposed Transfer). The Offeror shall also furnish to the Corporation such
additional information relating to the Offer as may reasonably be requested
by the Corporation. The Corporation shall have the right and option, for a
period of 30 days after delivery of the Notice of Offer by the Offeror, to
accept all or any portion of the Securities so offered at the purchase
price and on the terms stated in the Notice of Offer. The Corporation
shall, if it does not elect to purchase all of the offered Securities,
deliver a copy of the Notice of Offer to the Offerees. Each Offeree shall
have the right and option, for a period of 30 days after delivery of the
Notice of Offer by the Corporation, by delivery of written notice to the
Corporation (x) to accept all or any of its Proportionate Percentage of the
Securities so offered at the purchase price and on the terms stated in the
Notice of Offer and (y) to offer to purchase any Securities not accepted by
the other Offerees, in which case the Securities not accepted by the other
Offerees, shall be deemed to have been offered to and accepted by the
Offerees, which exercised their option under this clause (y) pro rata in
--- ----
accordance with their respective Proportionate Percentages (computed
without including the Offerees, who have not exercised their option to
purchase Securities under this clause (y)), on the above-described terms
and conditions, and if all of the offered Securities shall not have been
fully subscribed by such Offerees, the remaining offered Securities will be
reofferred to the Offerees who agreed to purchase their entire entitlement
of offered Securities under clause (x) upon the terms set forth in this
Section until all such Securities are fully subscribed or until all such
Offerees have subscribed for all such offered Securities which they desire
to purchase, except that such Offerees must exercise their purchase rights
within five (5) business days after receipt of all such reoffers.
Notwithstanding the foregoing provisions of this Section 11(a), if the
Offeror is a DGHA Stockholder, a Manager Stockholder, a Non-Affiliated
Stockholder or an Institutional Stockholder, the other DGHA Stockholders,
Manager Stockholders, Non-Affiliated Stockholders or Institutional
Stockholders, as the case may be, shall have the right to purchase, on a
pro rata basis among such Stockholders, all of the Securities so offered
--- ----
prior to any purchases by any other Stockholders.
(b) Transfers of Securities under the terms of this Section 11 shall
be made at the offices of the Corporation on a mutually satisfactory
business day within 15 days after the expiration of the applicable time
periods. Delivery of certificates or other instruments evidencing such
Securities, duly endorsed for transfer and free and clear of all liens and
encumbrances, shall be made on such date against payment of the purchase
price therefor.
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<PAGE>
(c) If the Corporation and the Offerees shall not have accepted to
purchase all the Securities offered for sale pursuant to the aforesaid
Notice of Offer, then the Offeror may Transfer to a third party that number
of the Securities not accepted by the Corporation and the Offerees at the
price and on substantially equivalent terms stated in the original Notice
of Offer, at any time within 180 days after the expiration of the Offers
required by Section 11(a). In the event the Securities are not Transferred
by the Offeror on such terms during such 180-day period, the restrictions
of this Section 11 shall again become applicable to any Transfer of
Securities by the Offeror unless within such 180-day period the Offeror
shall deliver to the Corporation a Notice of Offer with respect to an Offer
of the same Securities at a purchase price which is less than the purchase
price set forth in the previous Offer, in which case the 30-day period
specified in Section 11(a) shall be reduced to 15 days and a new 180-day
period shall begin. Nothing in this Section 11 shall preclude any
Stockholder from engaging in discussions with any investment banker,
potential transferee of Securities or other Person with respect to a
possible purchase of Securities from it, so long as the provisions of this
Section 11 are complied with prior to the consummation of any Transfer to
which this applies.
(d) The Offeror may specify in the Notice of Offer that all
Securities mentioned therein must be Transferred, in which case any
acceptance received pursuant to Section 11(a) shall be deemed conditioned
upon (x) receipt of written notices of binding acceptance with respect to
all Securities mentioned in such Notice of Offer or (y) the Transfer of the
remaining Securities pursuant to Section 11 (c).
SECTION 12. Rights of Co-Sale.
-----------------
(a) Subject to the provisions of Section 12(c), in the event that on
or after the third anniversary of the Original Agreement Date a Stockholder
or group of Stockholders (hereinafter, a "Section 12 Offeree") receives a
bona fide offer (the "Section 12 Offer") from a third party which is not an
---- ----
Affiliate of the Section 12 Offeree (the "Section 12 Offeror") to purchase
from such Section 12 Offeree Securities, for a specified price payable in
cash or otherwise and on specified terms and conditions, such Section 12
Offeree shall promptly forward a notice (the "Section 12 Notice") complying
with Section 12(b) to the Corporation and to the other Stockholders (the
Stockholders receiving a Section 12 Notice collectively referred to herein
as the "Other Stockholders"). The Section 12 Offeree shall not Transfer
any Securities prior to the expiration of the 15-day period referred to
below to the Section 12 Offeror unless the terms of the Section 12 Offer
are extended to each Other Stockholder with respect to its Proportionate
Percentage of the aggregate number and classes of Securities to which the
Section 12 Offer relates, whereupon each Other Stockholder shall be
entitled to Transfer such Other Stockholder's Proportionate Percentage of
the aggregate number of Securities to which the Section 12 Offer relates.
Each Other Stockholder shall have a period of 15 days to deliver a written
notice (the "Section 12 Acceptance") to the Section 12 Offeree evidencing
its acceptance of the Section 12 Offer.
(b) The Section 12 Notice shall set forth (i) the number of
Securities to which the Section 12 Offer relates and the name of the
Section 12 Offeree, (ii) the name and address of the Section 12 Offeror,
(iii) the proposed amount and type of consideration
25
<PAGE>
(including, if the consideration consists in whole or in part of non-cash
consideration, such information to the Section 12 Offeree as may be
reasonably necessary for the Other Stockholders to properly analyze the
economic value and investment risk of such non-cash consideration) and the
terms and conditions of payment offered by the Section 12 Offeror and (iv)
that the Section 12 Offeror has been informed of the co-sale rights
provided for in this Section 12, and has agreed to purchase Securities held
by the Other Stockholders in accordance with the terms of this Section 12
(which agreement may contain the Section 12 Offeror's obligation to
purchase all of the Securities held by the Other Stockholders subject to
the Section 12 Offer from the Section 12 Offeree so long as such Section 12
Offeree agrees to purchase simultaneously with such sale from the Other
Stockholders if they deliver a Section 12 Acceptance the Securities held by
the Other Stockholders subject to such Section 12 Notice of Acceptance).
(c) The foregoing provisions of this Section 12 shall not apply to a
Transfer or Transfer(s) by a Stockholder or group of Stockholders of up to
the greater of (i) 0.50% of the Common Equivalents outstanding at such
time, and (ii) 10% of the Securities held by such Stockholder or group of
Stockholders at such time.
SECTION 13. Drag-Along Rights.
-----------------
(a) If the Requisite Stockholders approve a sale of all or
substantially all of the capital stock or assets of the Company to a Person
which is not an Affiliate of any Stockholder (other than an Affiliate of a
DGHA Stockholder) (an "Approved Sale"), whether by way of merger,
consolidation, sale of stock or assets, or otherwise (each, a "Sale of the
Company"), all Stockholders shall consent to and raise no objections
against the Approved Sale, and if the Approved Sale is structured as (A) a
merger or consolidation of the Corporation or a Subsidiary, or a sale of
all or substantially all of the assets of the Corporation or a Subsidiary,
each Stockholder shall waive any dissenters rights, appraisal rights or
similar rights in connection with such merger, consolidation or asset sale,
or (B) a sale of all the capital stock of the Corporation or a Subsidiary,
the Stockholders shall agree to sell their Securities on the terms and
conditions approved by the Requisite Stockholders. The Stockholders shall
take all necessary and desirable actions approved by the Requisite
Stockholders, in connection with the consummation of the Approved Sale,
including the execution of such agreements and such instruments and other
actions reasonably necessary to (1) provide the representations,
warranties, indemnities, covenants, conditions, non-compete agreements,
escrow agreements and other provisions and agreements relating to such
Approved Sale and (2) effectuate the allocation and distribution of the
aggregate consideration upon the Approved Sale as set forth below. The
Stockholders shall be permitted to sell their Securities pursuant to an
Approved Sale without complying with the provisions of Sections 8, 9, 10,
11 or 12 of this Agreement.
(b) The obligations of the Stockholders pursuant to this Section
13 are subject to the satisfaction of the following conditions:
(i) subject to Section 13(b)(iii), upon the consummation of
the Approved Sale, all of the Stockholders shall receive the same
proportion of the
26
<PAGE>
aggregate consideration from such Approved Sale that such holder would
have received if such aggregate consideration had been distributed by
the Corporation in complete liquidation pursuant to the rights and
preferences set forth in the Certificate as in effect immediately
prior to such Approved Sale (giving effect to applicable orders of
priority) and after giving effect to the purchase rights (if any) set
forth in the DGHA Repurchase Agreement and the Manager Repurchase
Agreement;
(ii) if any Stockholders of a class are given an option as to
the form and amount of consideration to be received, all holders of
such class will be given the same option;
(iii) all holders of then-currently exercisable Common
Equivalents will be given an opportunity to either (A) exercise such
rights prior to the consummation of the Approved Sale (but only to the
extent such Common Equivalents are then vested) and participate in
such sale as Stockholders or (B) upon the consummation of the Approved
Sale, receive in exchange for such Common Equivalents consideration
equal to the amount determined by multiplying (x) the same amount of
consideration per share of Common Stock (of the same class as that for
which the Common Equivalent is exercisable) received by the holders of
such class of Common Stock in connection with the Approved Sale less
the exercise price per Common Equivalent by (y) the number of
Common Equivalents;
(iv) no Stockholder shall be obligated to make any out-of-
pocket expenditure prior to the consummation of the Approved Sale
(excluding modest expenditures for postage, copies, etc.) and no
Stockholder shall be obligated to pay more than his pro rata share
(based upon the amount of consideration received) of reasonable
expenses incurred in connection with a consummated Approved Sale to
the extent such costs are incurred for the benefit of all Stockholders
and are not otherwise paid by the Corporation or the acquiring party
(costs incurred by or on behalf of a Stockholder for its or his sole
benefit will not be considered costs of the transaction hereunder),
provided that a Stockholder's liability for such expenses shall be
capped at the total purchase price received by such Stockholder for
his Securities (including the exercise price thereof); and
(v) in the event that the Stockholders are required to
provide any representations or indemnities in connection with the
Approved Sale (other than representations and indemnities concerning
each Stockholder's valid ownership of his Securities, free of all
liens and encumbrances (other than those arising under applicable
securities laws), and each Stockholder's authority, power, and right
to enter into and consummate such purchase or merger agreement without
violating any other agreement), then each Stockholder shall not be
liable for more than his pro rata share (based upon the number of
Securities held and not the amount of consideration received) of any
liability for misrepresentation or indemnity and such liability shall
not exceed the total purchase price received by such Stockholder for
his Securities (including the exercise price thereof), after taxes
27
<PAGE>
(after giving effect to all potential amendments of tax returns
arising in connection with any indemnification claim) and expenses,
and such liability shall be satisfied solely out of any funds escrowed
for such purpose.
(c) If the Corporation and any of the Stockholders or their
representatives, enter into any negotiation or transaction for which Rule
506 under the Securities Act (or any similar rule then in effect) may be
available with respect to such negotiation or reaction (including a merger,
consolidation or other reorganization), each Stockholder who is not an
accredited investor (as such term is defined in Rule 501 under the
Securities Act) will, at the request of the Corporation or the
Institutional Stockholders, appoint a purchaser representative (as such
term is defined in Rule 501 under the Securities Act) reasonably acceptable
to the Corporation or such Stockholders.
SECTION 14. Options Upon Termination Event.
------------------------------
(a) Upon the occurrence of a Termination Event with respect to a
Stockholder who is a Manager Stockholder or a DGHA Stockholder (except a
Termination Event described in Section 14(d)(ii)(1) or (2) with respect to
a Stockholder who is a DGHA Stockholder), in each case occurring on or
prior to the fifth anniversary of the Original Agreement Date (or at any
time with respect to a Termination Event described in Section 14(d)(i)(1)
or (2) with respect to a Stockholder who is a Manager Stockholder), subject
to Section 14(c), the Corporation shall have the right but not the
obligation to purchase any or all of such Stockholder's (the "Retiring
Stockholder") Securities (other than Class C Restricted Shares) (the
"Retiring Shares"). The Corporation shall have 20 days after the
occurrence of any Termination Event described above in which to give notice
(the "Primary Retirement Notice") to the Retiring Stockholder of its
election to purchase all of the Retiring Shares. The Primary Retirement
Notice will disclose in reasonable detail the Corporation's election to
purchase all of the Retiring Shares and the terms and conditions of the
sale including the price per share of the Retiring Shares. In the event
that the Corporation does not elect to purchase all of the Retiring Shares,
the Corporation shall, within 20 days after the occurrence of any
Termination Event described above, deliver, on behalf of the Retiring
Stockholder but at the expense of the Corporation, a written notice (the
"Secondary Retirement Notice") to the remaining Stockholders (the "Eligible
Stockholders") and the Retiring Stockholder, which Secondary Retirement
Notice will disclose in reasonable detail the terms and conditions of the
sale including the total number of Retiring Shares and the number of
Retiring Shares, if any, to be purchased by the Corporation and the price
per share of the Retiring Shares. Upon receipt of the Secondary Retirement
Notice, each Eligible Stockholder shall have a right to purchase the
Retiring Shares which will not be purchased by the Corporation (the "R
Retiring Shares"), in the case of each Eligible Stockholder, up to that
number of the Retiring Shares equal to such Eligible Stockholder's Adjusted
Proportionate Percentage of the Remaining Retiring Shares (such number of
shares hereinafter referred to as the "Retiring Participation Shares") with
respect to such Eligible Stockholder. The Eligible Stockholders shall have
20 days after the Secondary Retirement Notice is received in which to give
counter-notice of such Eligible Stockholder's election to purchase such
Remaining Retiring Shares (such election by an Eligible Stockholder being
referred to as an "Initial Retiring Purchase"). An Initial Retiring
Purchase by an Eligible Stockholder
28
<PAGE>
may be of all or part of his or its Retiring Participation Shares. Any
Eligible Stockholder may at any time elect in his or its counter-notice to
purchase, in addition to his or its Retiring Participation Shares, the
balance (or the balance up to a maximum stated number) of any Remaining
Retiring Shares being offered to other Eligible Stockholders which are not
accepted by such other Eligible Stockholders (such acceptance being
hereinafter referred to as an "Additional Retiring Purchase"). If the
number of Remaining Retiring Shares that the Eligible Stockholders elect to
purchase in their Initial Retiring Purchases and Additional Retiring
Purchases exceeds the number of Remaining Retiring Shares, the number of
Remaining Retiring Shares to be purchased in the aggregate by all Second
Priority Eligible Stockholders shall be reduced to the extent of the Excess
Attributable to the Second Priority Additional Retiring Purchases with such
reduction in the number of Remaining Retiring Shares to be purchased in the
aggregate by all Second Priority Eligible Stockholders to be allocated
among such Second Priority Eligible Stockholders in proportion to the
number of Remaining Retiring Shares each Second Priority Eligible
Stockholder has agreed to purchase in such Second Priority Eligible
Stockholder's Additional Retiring Purchase (the "First Retirement
Reduction"). If any excess remains after the First Retirement Reduction,
the number of Remaining Retiring Shares to be purchased in the aggregate by
all Second Priority Eligible Stockholders shall be further reduced to the
extent of the Excess Attributable to the Second Priority Initial Retiring
Purchases with such reduction in the number of Remaining Retiring Shares to
be purchased in the aggregate by all Second Priority Eligible Stockholders
to be allocated among such Second Priority Eligible Stockholders in
proportion to the number of Remaining Retiring Shares each Second Priority
Eligible Stockholder has agreed to purchase in such Second Priority
Eligible Stockholder's Initial Retiring Purchase (the "Second Retirement
Reduction"). If any excess remains after the Second Retirement Reduction,
the number of Remaining Retiring Shares to be purchased in the aggregate by
all First Priority Eligible Stockholders shall be reduced to the extent of
the Excess Attributable to the First Priority Additional Retiring Purchases
with such reduction in the number of Remaining Retiring Shares to be
purchased in the aggregate by all First Priority Eligible Stockholders to
be allocated among such First Priority Eligible Stockholders in proportion
to the number of Remaining Retiring Shares each First Priority Eligible
Stockholder has agreed to purchase in such First Priority Eligible
Stockholder's Additional Retiring Purchase. To the extent possible, any
mechanical problems shall be solved in any equitable manner determined by
the Board to be consistent with the intent of the parties hereto.
(b) The price per share for Retiring Shares shall be the Valuation
Price per Share as in effect on the date of the Primary Retirement Notice
or, in the event that the Corporation does not deliver a Primary Retirement
Notice, as in effect on the date of the Secondary Retirement Notice (the
"Notice Date").
(c) Upon the occurrence of any Termination Event (except for a
Termination Event described in Section 14(d)(i)(5) or Section 14(d)(ii)(5)
with respect to a Stockholder who is a Manager Stockholder or a DGHA
Stockholder, in each case occurring on or prior to the fifth anniversary of
the Original Agreement Date (or at any time with respect to a Termination
Event described in Section 14(d)(i)(1) or (2) or Section 14(d)(ii)(1) or
(2)), such Stockholder or his or her designated beneficiaries, as the
29
<PAGE>
case may be, shall be entitled to require, subject to the provisions of the
next sentence, by written notice delivered to the Corporation within 60
days of such Termination Event, that the Corporation (or, at the election
of the Corporation, the Corporation's designee) repurchase for cash not
less than all Securities (other than Class C Restricted Shares) then held
by such Stockholder prior to such Termination Event (the "Individual
Investor Put Shares") at a price per share equal to the Valuation Price per
Share as of the date of such Termination Event. The Corporation's
repurchase obligation described in the foregoing sentence shall be in all
cases subject to any applicable restrictions provided by the Delaware
General Corporation Law, the Certificate and any applicable restrictions
and conditions set out in the Debt Documents.
(d) As used in this Section 14, a "Termination Event" shall have
occurred if:
(i) a Manager Stockholder's employment with the Corporation or
any Subsidiary thereof is terminated (and not continued, or
substantially simultaneously resumed, with the Corporation or any
Subsidiary thereof) as a result of:
(1) the death of such Manager Stockholder;
(2) the permanent disability (as determined by the
Board or the Board of Directors of such Subsidiary, as the
case may be, in good faith) of such Manager Stockholder;
(3) the retirement at or above age 65 (or such other
age as may be determined by the Compensation Committee) of
such Manager Stockholder;
(4) termination by the Corporation or any such
Subsidiary of such Manager Stockholder for any reason other
than for Cause; or
(5) such Manager Stockholder notifies the Corporation
or any such Subsidiary that he is terminating his
employment, or the Corporation or any such Subsidiary
notifies such Manager Stockholder that the employment of
such Manager Stockholder is being terminated for Cause.
(ii) a DGHA Stockholder's employment with DGHA or any Affiliate
thereof is terminated (and not continued, or substantially
simultaneously resumed, with DGHA or any Affiliate thereof) as a
result of:
(1) the death of such DGHA Stockholder;
(2) the permanent disability (as determined by the
Board or the Board of Directors of such Affiliate, as the
case may be, in good faith) of such DGHA Stockholder;
30
<PAGE>
(3) the retirement at or above age 70 (or such other
age as may be determined by the Compensation Committee) of
such DGHA Stockholder;
(4) termination by DGHA or any Affiliate thereof of
such DGHA Stockholder for any reason other than for Cause;
or
(5) such DGHA Stockholder notifies DGHA or any
Affiliate thereof that he is terminating his employment, or
DGHA or any Affiliate thereof notifies such DGHA Stockholder
that the employment of such DGHA Stockholder is being
terminated for Cause.
(e) Any repurchase by the Corporation or purchase by an Eligible
Stockholder of the Individual Investor Put Shares or the Retiring Shares,
as the case may be, pursuant to this Section 14 shall be effected by
delivery by the Stockholder or his beneficiaries, as the case may be, of
the certificate(s) for all such Retiring Shares of Individual Investor Put
Shares (properly endorsed for transfer) to the appropriate transferee(s) on
a date five (5) business days after the requisite notice or notices
pursuant to this Section 14 requiring the repurchase or purchase of all
such Retiring Shares or Individual Investor Put Shares, as the case may be,
have been given (the "Transfer Date"). As of the Transfer Date, title to
such Retiring Shares or Individual Investor Put Shares shall be deemed
transferred to the respective transferee(s) upon tender by such
transferee(s) of the purchase price for such Retiring Shares or Individual
Investor Put Shares to the Stockholder or his designated beneficiaries by a
check or checks in New York Clearing House funds or by a wire transfer to
the account of the Stockholder or his designated beneficiaries.
(f) Notwithstanding anything to the contrary contained in this
Section 14, the Corporation and the Retiring Stockholder (in the case of a
repurchase contemplated by Section 14(a)) or the Corporation and the
Manager Stockholder or DGHA Stockholder or his or her designated
beneficiaries (in the case of a repurchase contemplated by (Section 14(c)),
as the case may be, shall have the right and option to elect (the "Deferral
Election"), pursuant to a written agreement duly executed by such persons,
to deem the date of the relevant Termination Event to be deferred for
purposes of this Section 14 until a date (the "Deferral Date") not more
than six years following the date of the Deferral Election. A Deferral
Election must be made within 90 days of the occurrence of the relevant
Termination Event. A Deferral Election shall be effective solely to defer
for purposes of this Section 14 the date of a Termination Event until the
Deferral Date specified in, or determined pursuant to, such Deferral
Election (at which time Sections 14(a) and 14(c) shall be applicable
according to their respective terms) and such Deferral Election shall not
otherwise affect the rights or obligations of any party hereto.
SECTION 15. Required Sale.
-------------
Notwithstanding anything contained herein to the contrary if, at any
time on or after the fourth anniversary of the Original Agreement Date, an IRR
Event shall not have occurred, the Majority of the Institutional Stockholders
shall have the right, at any time, to serve
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<PAGE>
written notice on the Corporation of the desire of the Majority of the
Institutional Stockholders to effect a Sale of the Company. The DGHA
Stockholders shall have the exclusive right for a period of 180 days (the
"Exclusive Period"), commencing on the date of the determination of "Fair Value"
(as hereinafter defined) to consummate either a Sale of the Company at Fair
Value or the acquisition of the Institutional Securities, at a price equal to
what the Institutional Stockholders would receive for the Institutional
Securities if a Sale of the Company was consummated at Fair Value after giving
effect to the provisions of the DGHA Repurchase Agreement and the Manager
Repurchase Agreement. "Fair Value" means the highest price that would be paid
for all or substantially all of (i) the Securities, (ii) the capital stock of a
Subsidiary, (iii) the assets of the Corporation (after the assumption of all of
the liabilities of the Corporation), or (iv) the assets of a Subsidiary (after
the assumption of all the liabilities of such Subsidiary), as the case may be,
and in each case, on a going-concern basis in a single arm's-length transaction
between a willing buyer and a willing seller in an orderly process, using
valuation techniques then prevailing in the securities industry and assuming
full disclosure of all relevant information and a reasonable period of time for
effectuating such sale, as determined jointly by the Majority of the
Institutional Stockholders and the Majority of the DGHA Stockholders. If such
parties are unable to reach agreement within 30 days, such Fair Value shall be
determined by an independent nationally recognized investment bank experienced
in valuing companies or assets jointly selected by the Majority of the
Institutional Stockholders and the Majority of the DGHA Stockholders. If the
parties cannot agree on the selection of an investment bank within 30 days, the
investment bank will be selected by an independent arbitrator appointed in
accordance with the rules of the American Arbitration Association. The
determination of such investment bank shall be final and binding upon the
parties, and the Corporation shall pay the fees and expenses of such investment
bank.
SECTION 16. Regulatory Matters.
------------------
(a) Regulatory Compliance Cooperation.
---------------------------------
(i) If a Stockholder determines that it has a Regulatory
Problem, the Corporation agrees to take all such actions as are
reasonably requested by such Stockholder (x) to effectuate and
facilitate any Transfer by such Stockholder of any Securities (as
defined below) of the Corporation then held by such Stockholder to any
Person designated by such Stockholder, (y) to permit such Stockholder
(or any Affiliate of such Stockholder) to exchange all or any portion
of the voting Securities then held by such Person on a share-for-share
basis for shares of a class of nonvoting Securities of the
Corporation, which nonvoting Securities shall be identical in all
respects to such voting Securities, except that such new Securities
shall be nonvoting and shall be convertible into voting Securities on
such terms as are requested by such Stockholder in light of regulatory
considerations then prevailing, and (z) to continue and preserve the
respective allocation of the voting interests with respect to the
Corporation provided for in the Certificate and this Agreement and
with respect to such Stockholder's ownership of the Corporation's
voting Securities. Such actions may include, without limitation, (x)
entering into such additional agreements as are reasonably requested
by such Stockholder to permit any Person(s) designated by such
Stockholder to exercise any voting power which is relinquished by such
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<PAGE>
Stockholder upon any exchange of voting Securities for nonvoting
Securities of the Corporation; and (y) entering into such additional
agreements, adopting such amendments to this Agreement, the
Certificate and the Bylaws of the Corporation and taking such
additional actions as are reasonably requested by such Stockholder in
order to effectuate the intent of the foregoing; provided, however
that such actions will not change materially any of the agreements,
rights or obligations of the parties reflected herein or in the
Certificate or the Bylaws.
(ii) Before the Corporation redeems, purchases or otherwise
acquires, directly or indirectly, or converts or takes any action with
respect to the voting rights of, any Securities, the Corporation shall
give written notice of such pending action to each Stockholder. Upon
the written request of any Stockholder made within 10 days after its
receipt of such notice stating that after giving effect to such action
such Stockholder would have a Voting Regulatory Problem, the
Corporation shall defer taking such action for such period (not to
extend beyond 45 days after such Stockholder's receipt of the
Corporation's original notice) as such Stockholder requests to permit
it and its Affiliates to reduce the quantity of Securities they own or
take other appropriate action in order to avoid the Voting Regulatory
Problem. In addition, in the event that the Corporation shall be a
party to any merger, consolidation, recapitalization or other
transaction pursuant to which any Stockholder would be required to
take any voting Securities, or any Securities convertible into, or
exchangeable or exercisable for, voting Securities, which might
reasonably be expected to cause such Stockholder to have a Voting
Regulatory Problem, then the Corporation shall not be a party to such
transaction unless such Stockholder shall receive non-voting
Securities.
(b) Cooperation of Other Stockholders. Each Stockholder agrees to
---------------------------------
cooperate with the Corporation in complying with Section 16(a) above,
including without limitation, voting to approve amending the Certificate,
this Agreement or the Bylaws in a manner reasonably requested by the
Stockholder requesting such amendment.
(c) Covenant Not to Amend. The Corporation and each Stockholder
---------------------
agree not to amend or waive the voting or other provisions of the
Certificate, this Agreement or the Bylaws if such amendment or waiver would
cause any Stockholder to have a Voting Regulatory Problem, provided that
any such Stockholder notifies the Corporation that it would have a Voting
Regulatory Problem promptly after it has notice of such amendment or
waiver.
SECTION 17. Requisite Stockholder Approval.
------------------------------
Each Stockholder agrees to consider in good faith any proposal or
proposals made by the Corporation for a Stockholder vote (with or without a
meeting), or for a Stockholder or Stockholders to take any other action or
actions, that the Corporation deems reasonably advisable in connection with
achieving a Requisite Stockholder Approval. The Corporation shall make one or
more proposals for a Stockholder vote (with or without a meeting), or for a
Stockholder or Stockholders to take any other action or actions, that the
Corporation deems reasonably advisable in connection with achieving a Requisite
Stockholder Approval.
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<PAGE>
SECTION 18. Amendment and Waiver.
--------------------
(a) Except as expressly set forth herein, the provisions of this
Agreement may only be amended or waived with the prior written consent of
the Corporation, a Majority of the Institutional Stockholders and a
Majority of the DGHA Stockholders; provided, however, that Schedule 1 to
this Agreement shall be deemed to be automatically amended from time to
time to reflect issuances and Transfers of Securities made in accordance
with the terms hereof without requiring the consent of any party, and the
Corporation will, upon request, distribute to any Stockholder a revised
Schedule 1 to reflect any such changes.
(b) No course of dealing between the Corporation, its Subsidiaries
and the Stockholders (or any of them) or any delay in exercising any rights
hereunder will operate as a waiver of any rights of any party to this
Agreement.
(c) For purposes of this Agreement, shares of capital stock held
by the Corporation or any Subsidiaries will not be deemed to be
outstanding.
(d) The failure of any party to enforce any of the provisions of
this Agreement will in no way be construed as a waiver of such provisions
and will not affect the right of such party thereafter to enforce each and
every provision of this Agreement in accordance with its terms.
SECTION 19. Securities Law Compliance; Legends.
----------------------------------
(a) Restriction on Transfer. No Stockholder shall Transfer
-----------------------
Restricted Securities except in compliance with the conditions specified in
this Agreement or pursuant to a Public Sale.
(b) Restrictive Legends. Each certificate for the Restricted
-------------------
Securities shall (unless otherwise provided by the provisions of Section
19(d)) be stamped or otherwise imprinted with a legend in substantially the
following terms:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER
THE UNITED STATES SECURITIES ACT OF 1933 OR ANY STATE
SECURITIES OR BLUE SKY LAWS. THESE SECURITIES MAY NOT BE
SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
AN EXEMPTION THEREFROM UNDER SAID ACT OR LAWS.
(c) Notice of Transfer. The holder of any Restricted Securities,
------------------
by its acceptance or purchase thereof, agrees, prior to any Transfer of any
such Restricted Securities (except pursuant to an effective registration
statement), to give written notice to the Corporation of such holder's
intention to effect such Transfer and agrees to comply in all other
respects with the provisions of this Section 19. Each such notice shall
describe the manner and circumstances of the proposed Transfer and, unless
waived by the Corporation, shall be accompanied by the written opinion,
addressed to the
34
<PAGE>
Corporation, of counsel for the holder of such Restricted Securities (which
counsel shall be reasonably satisfactory to the Corporation), stating that
in the opinion of such counsel (which opinion shall be reasonably
satisfactory to the Corporation) such proposed Transfer does not involve a
transaction requiring registration or qualification of such Restricted
Securities under the Securities Act or the securities laws of any state of
the United States. Subject to complying with the other applicable
provisions hereof, such holder of Restricted Securities shall be entitled
to consummate such Transfer in accordance with the terms of the notice
delivered by it to the Corporation if the Corporation does not object (on
the basis that such Transfer violates the provisions of this Section 19) to
such Transfer within five days after the delivery of such notice. Each
certificate or other instrument evidencing the securities issued upon the
Transfer of any Restricted Securities (and each certificate or other
instrument evidencing any untransferred balance of such Securities) shall
bear the legend set forth in Section 19(b) unless (i) in such opinion of
such counsel registration of future Transfer is not required by the
applicable provisions of the Securities Act or the securities laws of any
state of the United States or (ii) the Corporation shall have waived the
requirement of such legend.
(d) Removal of Legends, Etc. Notwithstanding the foregoing
-----------------------
provisions of this Section 19, the restriction imposed by Sections 19(a),
(b) and (c) upon the transferability of any Restricted Securities shall
cease and terminate when (i) any such Restricted Securities are sold or
otherwise disposed of in accordance with the intended method of disposition
by the seller or sellers thereof set forth in a registration statement or
are sold or otherwise disposed of in a transaction contemplated by Section
19(c) which does not require that the securities transferred bear the
legend set forth in Section 19(b), or (ii) the holder of such Restricted
Securities has met the requirement of transfer of such Restricted
Securities pursuant to subparagraph (k) of Rule 144. Whenever the
restrictions imposed by Sections 19(a), (b) and (c) shall terminate, as
herein provided, the holder of any Restricted Securities shall be entitled
to receive from the Corporation, without expense, a new certificate not
bearing the restrictive legend set forth in Section 19(b) and not
containing any other reference to the restrictions imposed by Sections
19(a), (b) and (c).
(e) Additional Legend. Each certificate evidencing Securities
-----------------
and each certificate issued in exchange for or upon the Transfer of any
Securities (if such shares remain Securities as defined herein after such
Transfer) shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO
SUBJECT TO A STOCKHOLDERS AGREEMENT DATED AS OF FEBRUARY 9,
1996 AMONG THE ISSUER OF SUCH SECURITIES (THE "COMPANY") AND
CERTAIN OF THE COMPANY'S STOCKHOLDERS. THE TERMS OF SUCH
STOCKHOLDERS AGREEMENT INCLUDE, AMONG OTHER THINGS, VOTING
AGREEMENTS, REPURCHASE AGREEMENTS AND RESTRICTIONS ON
TRANSFERS. A COPY OF SUCH STOCKHOLDERS AGREEMENT WILL BE
FURNISHED WITHOUT
35
<PAGE>
CHARGE BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN
REQUEST."
The Corporation shall imprint such legends on certificates evidencing shares
outstanding prior to the date hereof. The legend set forth above shall be
removed from the certificates evidencing any shares which cease to be Securities
in accordance with the terms of this Agreement.
SECTION 20. Duration of Agreement.
---------------------
The rights and obligations of each Stockholder under this Agreement
shall terminate as to such Stockholder upon the earliest to occur of (a) the
Transfer of all Securities owned by such Stockholder and (b) the consummation of
an IRR Event.
SECTION 21. Severability.
------------
Whenever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, and such invalid, void or
otherwise unenforceable provisions shall be null and void. It is the intent of
the parties, however, that any invalid, void or otherwise unenforceable
provisions be automatically replaced by other provisions which are as similar as
possible in terms to such invalid, void or otherwise unenforceable provisions
but are valid and enforceable to the fullest extent permitted by law.
SECTION 22. Entire Agreement.
----------------
This document embodies the complete agreement and understanding among
the parties hereto with respect to the subject matter hereof and supersedes and
preempts any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof in
any way.
SECTION 23. Certain Stockholders.
--------------------
If any Stockholder is an entity that was formed for the purpose of
acquiring Securities or that has no substantial assets other than Securities or
interests in Securities, such Stockholder agrees that (a) shares of its common
stock or other instruments reflecting equity interests in such entity (and the
shares of common stock or other equity interests in any similar entities
controlling such entity) will note the restrictions contained in this Agreement
on the transfer of Securities as if such common stock or other equity interests
were Securities and (b) no shares of such common stock or other equity interests
may be transferred to any Person other than in accordance with the terms and
provisions of this Agreement as if such common stock or other equity interests
were Securities.
SECTION 24. Successors and Assigns.
----------------------
Except as otherwise provided herein, this Agreement will bind and
inure to the benefit of and be enforceable by the Corporation and its successors
and assigns and the
36
<PAGE>
Stockholders and any subsequent holders of Securities and the respective
successors and permitted assigns of each of them, so long as they hold
Securities. None of the provisions hereof shall create, or be construed or
deemed to create, any right to employment in favor of any Person by the
Corporation or any of its Subsidiaries. This Agreement is not intended to create
any third party beneficiaries.
SECTION 25. Counterparts.
------------
This Agreement may be executed simultaneously in two or more
counterparts, any one of which need not contain the signatures of more than one
party, but all such counterparts taken together will constitute one and the same
agreement. It shall not be necessary in making proof of this Agreement to
produce or account for more than one such counterpart.
SECTION 26. Remedies.
--------
(a) Each Stockholder shall have all rights and remedies reserved for
such Stockholder pursuant to this Agreement, the Subscription Agreement
dated the Original Agreement Date, the Certificate and Bylaws and all
rights and remedies which such holder has been granted at any time under
any other agreement or contract and all of the rights which such holder has
under any law or equity. Any Person having any rights under any provision
of this Agreement will be entitled to enforce such rights specifically, to
recover damages by reason of any breach of any provision of this Agreement
and to exercise all other rights granted by law or equity.
(b) The parties hereto agree that if any parties seek to resolve any
dispute arising under this Agreement pursuant to a legal proceeding, the
prevailing parties to such proceeding shall be entitled to receive
reasonable fees and expenses (including reasonable attorneys' fees and
expenses) incurred in connection with such proceedings.
(c) It is acknowledged that it will be impossible to measure in
money the damages that would be suffered if the parties fail to comply with
any of the obligations herein imposed on them and that in the event of any
such failure, an aggrieved Person will be irreparably damaged and will not
have an adequate remedy at law. Any such person shall, therefore, be
entitled to injunctive relief, including specific performance, to enforce
such obligations, and if any action should be brought in equity to enforce
any of the provisions of this Agreement, none of the parties hereto shall
raise the defense that there is an adequate remedy at law.
SECTION 27. Notices.
-------
All notices, demands or other communications to be given or delivered
under or by reason of the provisions of this Agreement shall be in writing and
shall be deemed to have been given (a) when delivered personally to the
recipient, (b) one business day after being sent by reputable overnight courier
(charges prepaid) (regardless of whether the recipient refuses to accept
delivery), (c) five business days after being sent to the recipient by certified
or registered mail, return receipt requested and postage prepaid (regardless of
whether the recipient refuses to accept delivery) or (d) when sent to the
recipient by facsimile (followed promptly by personal, courier or certified or
registered mail delivery). The Corporation's address is:
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<PAGE>
USS Holdings, Inc.
c/o D. George Harris & Associates, Inc.
399 Park Avenue
32nd Floor
New York, New York 10022
Telephone: (212) 207-6400
Telecopier: (212) 207-6470
Attention: Donald G. Kilpatrick
With a copy to:
Winthrop, Stimson, Putnam & Roberts
One Battery Park Plaza
New York, New York 10004
Telephone: (212) 858-1000
Telecopier: (212) 858-1500
Attention: Kenneth E. Adelsberg, Esq.
The address for each Stockholder is set forth on Schedule 1 hereto;
and if to CMC, with a copy to:
O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza
New York, New York 10112
Telephone: (212) 408-2400
Telecopier: (212) 408-2420
Attention: John J. Suydam, Esq.
SECTION 28. Governing Law.
-------------
All questions concerning the construction, interpretation and validity
of this Agreement shall be governed by and construed in accordance with the
domestic laws of the State of New York without giving effect to any choice or
conflict of law provision or rule (whether in the State of New York or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of New York.
SECTION 29. Further Assurances.
------------------
Each party hereto shall do and perform or cause to be done and
performed all such further acts and things and shall execute and deliver all
such other agreements, certificates, instruments, and documents as any other
party hereto reasonably may request in order to carry out the provisions of this
Agreement and the consummation of the transactions contemplated hereby.
38
<PAGE>
SECTION 30. Jurisdiction; Venue; Process.
----------------------------
The parties to this Agreement agree that jurisdiction and venue in any
action brought by any party hereto pursuant to this Agreement shall properly
(but not exclusively) lie in any federal or state court located in the State of
New York. By execution and delivery of this Agreement, the parties hereto
irrevocably submit to the jurisdiction of such courts for himself and in respect
of his property with respect to such action. The parties hereto irrevocably
agree that venue would be proper in such court, and hereby waive any objection
that such court is an improper or inconvenient forum for the resolution of such
action. The parties further agree that the mailing by certified or registered
mail, return receipt requested, of any process required by any such court shall
constitute valid and lawful service of process against them, without necessity
for service by any other means provided by statute or rule of court.
SECTION 31. Representation and Warranties of the Stockholders.
-------------------------------------------------
Each Stockholder (as to himself or itself only) represents and
warrants to the Corporation and the other Stockholders that, as of the time such
Stockholder becomes a party to this Agreement:
(a) this Agreement has been duly and validly executed and delivered
by such Stockholder and this Agreement constitutes a legal and binding
obligation of such Stockholder, enforceable against such Stockholder in
accordance with its terms;
(b) the execution, delivery and performance by such Stockholder of
this Agreement and the consummation by such Stockholder of the transactions
contemplated hereby will not, with or without the giving of notice or lapse
of time, or both (i) violate any provision of law, statute, rule or
regulation to which the Stockholder is subject, (ii) violate any order,
judgment or decree applicable to such Stockholder, or (iii) conflict with,
or result in a breach or default under, any term or condition of any
agreement or other instrument to which such Stockholder is a party or by
which such Stockholder is bound, except for such violations, conflicts,
breaches or defaults that would not, in the aggregate, materially affect
the Stockholder's ability to perform its obligations hereunder;
(c) the Stockholder purchased the Securities owned by it for its own
account, for investment and not with a view to the distribution thereof
within the meaning of the Securities Act;
(d) the Stockholder understands that the Securities have not been
registered under the Securities Act or registered or qualified under
applicable state securities laws by reason of their issuance by the
Corporation in a transaction exempt from the registration and qualification
requirements of the Securities Act and applicable state securities laws,
and (ii) the Securities must be held by the Stockholder indefinitely unless
a subsequent disposition thereof is registered or qualified under the
Securities Act and applicable state securities laws or is exempt from such
registration or qualification. The Stockholder understands that the
certificates for the Securities will bear the legends described in Section
19(b) and (e);
39
<PAGE>
(e) the Stockholder further understands that, with respect to the
Securities, the exemption from registration afforded by Rule 144 (the
provisions of which are known to the Stockholder) depends on the
satisfaction of various conditions, and that, if applicable, Rule 144 may
only afford the basis for sales only in limited amounts;
(f) the Stockholder has not employed any broker or finder or similar
person in connection with its purchase of the Securities;
(g) except as disclosed in writing to the Corporation prior to the
acquisition of Securities by such Stockholder, the Stockholder is an
"accredited investor" (as defined in Rule 501(a) of Regulation D
promulgated under the Securities Act). The Corporation has made available
to the Stockholder or its representatives all agreements, documents,
records and books that the Stockholder has requested relating to an
investment in the Securities. The Stockholder has had an opportunity to
ask questions of, and receive answers from, Persons acting on behalf of the
Corporation concerning the terms and conditions of this investment, and
answers have been provided to all of such questions to the full
satisfaction of the Stockholder. No oral representations have been made or
furnished to, or relied on by, the Stockholder or its representatives in
connection with its investment in the Securities. The Stockholder has such
knowledge and experience in financial and business matters that it is
capable of evaluating the risks and merits of its investment in the
Securities;
(h) the Stockholder has no need for liquidity in its investment in
the Securities and is able to bear the economic risk of its investment in
the Securities and the complete loss of all of such investment;
(i) the Stockholder further understands that this Agreement is made
with the Stockholder in reliance upon the Stockholder's representations to
the Corporation contained in this Section 31; and
(j) the Stockholder and its representatives have conducted a due
diligence investigation and have had the opportunity to review all
documents and information which the Stockholder and its representatives
have requested concerning Silica, the Corporation, the Subsidiaries and the
Stockholder's investment. In reaching its decision to invest in the
Corporation, the Stockholder has relied on the foregoing investigation and
information, on the representations and warranties in the Stock Purchase
Agreement and on the representations and warranties set forth herein.
SECTION 32. Conflicting Agreements.
----------------------
No Stockholder shall enter into any stockholder agreements or
arrangements of any kind with any Person with respect to any Securities on terms
inconsistent with the provisions of this Agreement (whether or not such
agreements or arrangements are with other Stockholders or with Persons that are
not parties to this Agreement), including but not limited to, agreements or
arrangements with respect to the acquisition or disposition of Securities of the
Corporation in a manner which is inconsistent with this Agreement.
40
<PAGE>
SECTION 33. Mutual Waiver of Jury Trial.
---------------------------
BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL
TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND
EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY
(RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE
RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE
BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE
PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR
PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER THIS
AGREEMENT OR ANY DOCUMENTS RELATED HERETO.
* * * * *
41
<PAGE>
IN WITNESS WHEREOF, the undersigned have duly executed this Amendment
No. 2 as of the date first written above.
USS HOLDINGS, INC.
By: /s/ Donald G. Kilpatrick
----------------------------------
Name:
Title:
CHASE MANHATTAN CAPITAL, L.P.
By: Chase Manhattan Capital Corporation,
its general partner
By: /s/ Arnold L. Chavkin
-----------------------------
Name: Arnold L. Chavkin
Title: General Partner
CHASE VENTURE CAPITAL
ASSOCIATES, L.P.
By: Chase Capital Partners,
its general partner
By: /s/ Arnold L. Chavkin
-----------------------------
Name: Arnold L. Chavkin
Title: General Partner
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
By: __________________________________
Name:
Title:
42
<PAGE>
MASSMUTUAL PARTICIPATION INVESTORS
By: __________________________________
Name:
Title:
MASSMUTUAL CORPORATE INVESTORS
By: __________________________________
Name:
Title:
GERLACH & CO.
By: __________________________________
Name:
Title:
/s/ D. George Harris
--------------------------------------
D. George Harris
/s/ Anthony J. Petrocelli
--------------------------------------
Anthony J. Petrocelli
/s/ Richard J. Donahue
--------------------------------------
Richard J. Donahue
/s/ Donald G. Kilpatrick
--------------------------------------
Donald G. Kilpatrick
______________________________________
David Willetts
/s/ Richard J. Nick
--------------------------------------
Richard J. Nick
43
<PAGE>
______________________________________
William J. Sichko
______________________________________
Emanuel J. Di Teresi
______________________________________
Matthew J. Dowd
______________________________________
Michael R. Boyce
______________________________________
Peter McConnell
______________________________________
Robert F. Clark
______________________________________
Keith Clark
______________________________________
Susan E. Day
______________________________________
Daniel Richardson
______________________________________
Billy Whalen
______________________________________
Max Reynolds
______________________________________
Scott Randolph
______________________________________
Lawrence A. Schulte, Jr.
44
<PAGE>
___________________________________________
Kevin F.X. Brophy
___________________________________________
Gerard A. Gasparovich
___________________________________________
Gordon L. Rulong
___________________________________________
Jeffrey P. Jahn
___________________________________________
Richard Hunnisett
___________________________________________
Patrick W. Reeser
___________________________________________
Beverly G. Sykes, Jr.
___________________________________________
Jeffrey D. Thatcher
___________________________________________
Earle H. Andrews
___________________________________________
Gregory S. Fell
___________________________________________
Teddy D. Glennon
___________________________________________
Robert Mang
___________________________________________
Andrew L. Meyers
45
<PAGE>
___________________________________________
James W. Holmes
___________________________________________
John W. Hammer
___________________________________________
Gilberto Lopez
___________________________________________
Larry D. Martin
___________________________________________
Stephen L. Yeich
___________________________________________
Mack D. Jones
___________________________________________
Donald P. Altand
___________________________________________
Roque A. Pullio
___________________________________________
M. Ben Bushe
___________________________________________
George H. Didawick
___________________________________________
James A. Wagner
___________________________________________
Mark V. Lough
___________________________________________
Gary A. Randolph
46
<PAGE>
___________________________________________
Jon P. Sheridan
___________________________________________
Matthew J. Lyman
___________________________________________
Ronnie D. Conway
___________________________________________
James S. Vaccari
___________________________________________
Raymond A. LeClair
___________________________________________
Robert L. Krepps
___________________________________________
Dale M. McFadden
___________________________________________
William A. White
___________________________________________
Randall J. Massino
___________________________________________
David O. Bach
___________________________________________
Cyrus W. Kreamer, Jr.
___________________________________________
Steven J. Babler
___________________________________________
Kimberly A. Ranft
47
<PAGE>
___________________________________________
David R. Whitmarsh
___________________________________________
John E. Friton
___________________________________________
Eric K. Yildrim
___________________________________________
Les Van Alstyne, Jr.
___________________________________________
William L. Foutch
___________________________________________
Janice M. Widmeyer
___________________________________________
John H. Wilson
___________________________________________
Clive M. Kelsall
___________________________________________
H. William Bentgen
___________________________________________
Robert L. Oren
___________________________________________
John L. Mason
___________________________________________
Harvey S. Goldstein
___________________________________________
Larry A. Burkhart
48
<PAGE>
___________________________________________
Richard E. Goodell
___________________________________________
Gary E. Bockrath
___________________________________________
Robert B. Calamari
___________________________________________
Walter C. Pellish
___________________________________________
John A. Ulizio
___________________________________________
James D. Walker
___________________________________________
Daniel N. Gerber
___________________________________________
Robert H. Morrow
___________________________________________
Paul F. Guttmann
___________________________________________
Jerry D. Austin
___________________________________________
David A. Kistenfeger
___________________________________________
John F. Miller
___________________________________________
Lance D. Reed
49
<PAGE>
___________________________________________
James A. Sinkowski
___________________________________________
Troy L. Trentham
___________________________________________
Ray K. Weiland
___________________________________________
William P. Weiland
___________________________________________
Michael L. Thompson
___________________________________________
Richard J. Shearer
Trust under Agreement of D. George Harris
dated November 18, 1994
F/B/O Robert Harris
By /s/ Anthony J. Petrocelli
----------------------------------------
Anthony J. Petrocelli, Trustee
By /s/ Donald G. Kilpatrick
----------------------------------------
Donald G. Kilpatrick, Trustee
Trust under Agreement of D. George Harris
dated November 18, 1994
F/B/O Margaret Harris
By /s/ Anthony J. Petrocelli
----------------------------------------
Anthony J. Petrocelli, Trustee
By /s/ Donald G. Kilpatrick
----------------------------------------
Donald G. Kilpatrick, Trustee
50
<PAGE>
Trust under Agreement of D. George Harris
dated November 18, 1994
F/B/O Paige Coleman
By /s/ Anthony J. Petrocelli
----------------------------------------
Anthony J. Petrocelli, Trustee
By /s/ Donald G. Kilpatrick
----------------------------------------
Donald G. Kilpatrick, Trustee
Trust under Agreement of D. George Harris
dated November 18, 1994
F/B/O Keith Coleman
By /s/ Anthony J. Petrocelli
----------------------------------------
Anthony J. Petrocelli, Trustee
By /s/ Donald G. Kilpatrick
----------------------------------------
Donald G. Kilpatrick, Trustee
Trust under Agreement of D. George Harris
dated November 18, 1994
F/B/O Augustus Northridge
By /s/ Anthony J. Petrocelli
----------------------------------------
Anthony J. Petrocelli, Trustee
By /s/ Donald G. Kilpatrick
----------------------------------------
Donald G. Kilpatrick, Trustee
51
<PAGE>
Trust under Agreement of D. George Harris
dated January 31, 1995
F/B/O P.G.F. Scurr
By /s/ Anthony J. Petrocelli
----------------------------------------
Anthony J. Petrocelli, Trustee
By /s/ Donald G. Kilpatrick
----------------------------------------
Donald G. Kilpatrick, Trustee
Trust under Agreement of Anthony J.
Petrocelli dated October 29, 1990
By /s/ D. George Harris
----------------------------------------
D. George Harris, Trustee
By ________________________________________
Charles J. Cassata, Trustee
Trust under Agreement of Donald G.
Kilpatrick dated December 16, 1993
F/B/O Daniel G. Kilpatrick
By /s/ Donald G. Kilpatrick
----------------------------------------
Donald G. Kilpatrick, Trustee
By /s/ Anthony J. Petrocelli
----------------------------------------
Anthony J. Petrocelli, Trustee
52
<PAGE>
Trust under Agreement of Donald G. Kilpatrick
dated December 16, 1993
F/B/O Eleanor P. Kilpatrick
By /s/ Donald G. Kilpatrick
----------------------------------------
Donald G. Kilpatrick, Trustee
By /s/ Anthony J. Petrocelli
----------------------------------------
Anthony J. Petrocelli, Trustee
Trust under Agreement of Donald G. Kilpatrick
dated December 16, 1993
F/B/O Jennifer C. Kilpatrick
By /s/ Donald G. Kilpatrick
----------------------------------------
Donald G. Kilpatrick, Trustee
By /s/ Anthony J. Petrocelli
----------------------------------------
Anthony J. Petrocelli, Trustee
Trust under Agreement of Donald G. Kilpatrick
dated December 16, 1993
F/B/O Donald A. Kilpatrick
By /s/ Donald G. Kilpatrick
----------------------------------------
Donald G. Kilpatrick, Trustee
By /s/ Anthony J. Petrocelli
----------------------------------------
Anthony J. Petrocelli, Trustee
53
<PAGE>
Schedule 1
<TABLE>
<S> <C> <C>
Chase Manhattan Capital, L.P. Chase Venture Capital Massachusetts Mutual Life
c/o Chase Manhattan Capital Associates, L.P. Insurance Company
Corporation c/o Chase Capital Partners c/o Mr. Mark Ahmed
380 Madison Avenue, 12th Floor 380 Madison Avenue, 12th Floor Managing Director
New York, NY 10017 New York, NY 10017 Securities Investment Division
Mass Mutual
1295 State Street
Springfield, MA 01111-0001
MassMutual Participation Mass Mutual Corporate Investors D. George Harris
Investors c/o Mr. Mark Ahmed D. George Harris & Associates, Inc.
c/o Mr. Mark Ahmed Managing Director 399 Park Avenue, 32nd floor
Managing Director Securities Investment Division New York, NY 10022
Securities Investment Division Mass Mutual
Mass Mutual 1295 State Street
1295 State Street Springfield, MA 01111-0001
Springfield, MA 01111-0001
Anthony J. Petrocelli Richard J. Donahue Donald G. Kilpatrick
D. George Harris & Associates, Inc. D. George Harris & Associates, Inc. D. George Harris & Associates, Inc.
399 Park Avenue, 32nd floor 399 Park Avenue, 32nd floor 399 Park Avenue, 32nd floor
New York, NY 10022 New York, NY 10022 New York, NY 10022
Richard J. Nick William J. Sichko Emanual J. DiTeresi
D. George Harris & Associates, Inc. 9204 West 141st Street 13905 Flint
399 Park Avenue, 32nd floor Overland Park, KS 66221 Overland Park, KS 66221
New York, NY 10022
Matthew J. Dowd David Willetts Robert F. Clark
D. George Harris & Associates, Inc. 1 Eldon Road 12740 Delmar Dr.
399 Park Avenue, 32nd floor Kensington Leawood, KS 66209
New York, NY 10022 London W8 5PU
United Kingdom
Keith E. Clark Susan E. Dey Daniel E. Richardson
9201 West 146th Pl. 9604 W. 125th St. 11621 Bluejacket
Overland Park, KS 66221 Overland Park, KS 66213 Overland Park, KS 66210
Billy Whalen Max J. Reynolds Scott M. Randolph
13181 Hayes Ct. 2147 West 5025 South 14763 Eby
Overland Park, KS 66223 Roy, UT 84067 Overland Park, KS 66221
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Kevin Brophy Laurence A. Schulte Peter McConnell
399 South Pleasant Ave 8114 West 139th St. 38 Avenue Close
Ridgewood, NY 07450 Overland Park, KS 66223 St. John's Wood
London, NW8 6-A
United Kingdom
Gerald A. Gasparovich Michael R. Boyce Trust under Agreement of D. George
13004 West 128th Place 10600 Highland Lane Harris dated November 18, 1994
Overland Park, KS 66213 Olathe, KS 66061 F/B/O Robert Harris
c/o D. George Harris & Associates, Inc.
399 Park Avenue, 32nd floor
New York, NY 10022
Trust under Agreement of D. George Trust under Agreement of D. George Trust under Agreement of D. George
Harris dated November 18, 1994 Harris dated November 18, 1994 Harris dated November 18, 1994
F/B/O Margaret Harris F/B/O Paige Coleman F/B/O Keith Coleman
c/o D. George Harris & Associates, Inc. c/o D. George Harris & Associates, Inc. c/o D. George Harris & Associates, Inc.
399 Park Avenue, 32nd floor 399 Park Avenue, 32nd floor 399 Park Avenue, 32nd floor
New York, NY 10022 New York, NY 10022 New York, NY 10022
Trust under Agreement of D. George Trust under Agreement of D. George Trust under Agreement of Anthony
Harris dated November 18, 1994 Harris dated January 31, 1995 J. Petrocelli dated October 29, 1990
F/B/O Augustus Northridge F/B/O P.G.F. Scurr c/o D. George Harris & Associates, Inc.
c/o D. George Harris & Associates, Inc. c/o D. George Harris & Associates, Inc. 399 Park Avenue, 32nd floor
399 Park Avenue, 32nd floor 399 Park Avenue, 32nd floor New York, NY 10022
New York, NY 10022 New York, NY 10022
Trust under Agreement of Donald G. Trust under Agreement Donald G. Trust under Agreement of Donald G.
Kilpatrick dated December 16, 1993 Kilpatrick dated December 16, 1993 Kilpatrick dated December 16, 1993
F/B/O Daniel J. Kilpatrick F/B/O Eleanor P. Kilpatrick F/B/O Jennifer C. Kilpatrick
c/o D. George Harris & Associates, Inc. c/o D. George Harris & Associates, Inc. c/o D. George Harris & Associates, Inc.
399 Park Avenue, 32nd floor 399 Park Avenue, 32nd floor 399 Park Avenue, 32nd floor
New York, NY 10022 New York, NY 10022 New York, NY 10022
Trust under Agreement of Donald G.
Kilpatrick dated December 16, 1993
F/B/O Douglas A. Kilpatrick
c/o D. George Harris & Associates, Inc.
399 Park Avenue, 32nd floor
New York, NY 10022
Donald P. Altland Earle H. Andrews Jerry D. Austin
705 Cherry Drive 15929 Short Hill Road 1433 Hamilton Blvd.
Groesbeck, TX 76642 Purcellville, VA 20132 Hagerstown, MD 21742
</TABLE>
2
<PAGE>
<TABLE>
<S> <C> <C>
Steven J. Babler David O. Bach H. William Bentgen
93 Hickory Hill 3555 East 5Th Road 249 Fairway Circle
Eureka, MO 63025 Lasalle, IL 61301 Cross Junction, VA 22624
Gary E. Bockrath Larry A. Burkhart M. Ben Bushe
11411 Eastwood Court 402 S. Illinois Avenue 204 Man O'War
Hagerstown, MD 21742 Martinsburg, WV 25401 Groesbeck, TX 76642
Robert B. Calamari Ronnie D. Conway George H. Didawick
1031 Breckinridge Lane 10920 Forest Trace Lane P. O. Box 615
Winchester, VA 22601 Glen Allen, VA 23060 Berkeley Springs, WV 25411
William P. Farrell Gregory S. Fell William L. Foutch
111 Winterberry Court 2004 Maplewood Drive 18710 Fairfield Road
Winchester, VA 22602 Hagerstown, MD 21740 Hagerstown, MD 21742John
John E. Friton Daniel N. Gerber Teddy D. Glennon
13003 Lance Circle 2143 Castlegreen Drive Route 4, Box 93
Hagerstown, MD 21742 Greencastle, PA 17225 Hedgesville, WV 25427-9316
Harvey S. Goldstein Richard E. Goodell Paul F. Guttmann
505 Victoria Lane Route 5, Box 250 Route 1, Box 246B
Oswego, IL 60543 Hedgesville, WV 25427 Hedgesville, WV 25427
John W. Hammer James W. Holmes Richard Hunnisett
231 Jacques Haven Road 217 Green Acre Circle 14103 Barnhart Road
Gaston, SC 29053 Lexington, SC 29073 Clear Spring, MD 21722
Jeffrey P. Jahn Mack D. Jones Clive M. Kelsall
1026 Lakeview Drive Route 3, Box 53 10241 Orleans Road NE
Cross Junction, VA 22625 Thornton, TX 76687 Little Orleans, MD 21766
David A. Kistenfeger Cyrus W. Kreamer, Jr. Robert L. Krepps
1619 Dairy Lane Rt#l 6 Kilkenny Hill 15 Countryside Avenue
Ottawa, IL 61350 Pacific, MO 63069 Ottawa, IL 61350
Raymond A. LeClair Gilberto Lopez Mark V. Lough
112 1/2 West Superior Street 307 Grantham Road 26 N. Ladow Avenue, Apt. 19D
Ottawa, IL 61350 Irmo, SC 29063 Millville, NJ 08332
Matthew J. Lyman Robert Mang Larry D. Martin
155 Ashland Drive 49 Seely Pine Estates 173 Jefferson Place
Winchester, VA 22603 Berkeley Springs, WV 25411 Columbia, SC 29212
</TABLE>
3
<PAGE>
<TABLE>
<S> <C> <C>
John L. Mason Randall J. Massino Dale M. McFadden
400 Mawani Trail 1029 E. Court Street 708 W. Madison
Berkeley Springs, WV 25411 Hennepin, IL 61327 Ottawa, IL 61350
Andrew L. Meyers John F. Miller Robert H. Morrow
5 Amblers Lane 11905 Sycamore Drive Route 1, Box 242 Honeywood
Shenandoah Junction, WV 25442 Hagerstown, MD 21740 Hedgesville, WV 25427
Robert L. Oren Walter C. Pellish Roque A. Pullio
Rt. 3, Box 5622 1501 W. Stephen Street 802 E. Yeagua
Berryville, VA 22611 Martinsburg, WV 25401 Groesbeck, TX 76642
Gary A. Randolph Kimberly A. Ranft Lance D. Reed
1201 Willow Lane 434 Alverston Court 8235 South Oswego
Sulphur, OK 73086 Ballwin, MO 63021 Tulsa, OK 74137
Patrick W. Reeser Gordon L. Rulong Jon P. Sheridan
Route 1, Box 245 O 18901 Dover Drive 1901 Marsh Lane
Hedgesville, WV 25427 Hagerstown, MD 21742 Ardmore, OK 73401
James A. Sinkowski Beverly G. Sykes, Jr. Jeffrey D. Thatcher
53 Westwood Drive Route 7, Box 12850 Route 2, Box 156
Groton, CT 06340 Berkeley Springs, WV 25411 Berkeley Springs, WV 25411
Michael L. Thompson Troy L. Trentham John A. Ulizio
177 Greenfield Drive 5211 Powers Ferry Road 19223 Old Ipswich Circle
Winchester, VA 22603 Atlanta, GA 30327 Hagerstown, MD 21742
James S. Vaccari Les Van Alstyne, Jr. James A. Wagner
2245 Delaney Drive Rd 1, Box 6 2218 Shamrock Lane
Ottawa, IL 61350 Huntingdon, PA 16652 Millville, NJ 08332
James D. Walker Ray K. Weiland William A. White
2002 Springdale Drive 714 Camelot Estates Drive 2111 Showers Lane
Martinsburg, WV 25401 Hillsboro, MO 63050 Martinsburg, WV 25401
David R. Whitmarsh Janice M. Widmyer John H. Wilson
3475 Geiger Road 75 Michael Manor Rd. 135 10 Paradise Church Road
Ida, MI 48140 Berkeley Springs, W 25411 Hagerstown, NM 21742
Stephen L. Yeich Eric K. Yildrim Richard J. Shearer
263 Hyatt 13316 Keener Road Route 4, Box 8930
Ruston, LA 71270 Hagerstown, MD 21742 Berkeley Springs, WV 25411
</TABLE>
4
<PAGE>
Schedule 2
Accounting Period Budgeted EBITDA
----------------- ---------------
Fiscal Year Ending December 31, 1998 $31,715
Fiscal Year Ending December 31, 1999 $36,695
Fiscal Year Ending December 31, 2000 $40,642
Fiscal Year Ending December 31, 2001 $43,130
Fiscal Year Ending December 31, 2002 $45,400
<PAGE>
Schedule 3
[Form of Restated Certificate]
<PAGE>
Schedule 4
DGHA Stockholders
D. George Harris
Anthony J. Petrocelli
Richard J. Donahue
Donald G. Kilpatrick
Richard J. Nick
<PAGE>
Schedule 5
Non-Affiliated Stockholders
Michael R. Boyce
Peter McConnell
Robert F. Clark
Keith Clark
Susan E. Day
Daniel Richardson
Billy Whalen
Max Reynolds
Scott Randolph
Kevin F. X. Brophy
Lawrence A. Schulte, Jr.
Gerald A. Gasparovich
William J. Sichko
Emanuel J. DiTeresi
Matthew J. Dowd
David Willetts
<PAGE>
Schedule 6
Institutional Stockholders
Chase Manhattan Capital, L.P.
Chase Venture Capital Associates, L.P.
Massachusetts Mutual Life Insurance Company
Massmutual Participation Investors
Massmutual Corporate Investors
Gerlach & Co.
<PAGE>
Schedule 7
Form of Manager Repurchase Agreement
<PAGE>
Schedule 8
Manager Stockholders
Donald P. Altland Larry D. Martin
Earle H. Andrews John L. Mason
Jerry D. Ausin Randall J. Massino
Steven J. Babler Dale M. McFadden
David O. Bach Andrew L. Meyers
H. William Bentgen John F. Miller
Gary E. Bockrath Robert H. Morrow
Larry A. Burkhart Robert L. Oren
M. Ben Bushe Walter C. Pellish
Robert B. Calamari Roque A. Pullio
Ronnie D. Conway Gary A. Randolph
George H. Didawick Kimberly A. Ranft
William P. Farrell Lance D. Reed
Gregory S. Fell Patrick W. Reeser
William L. Foutch Gordon L. Rulong
John E. Friton Richard J. Shearer
Daniel N. Gerber Jon P. Sheridan
Teddy D. Glennon James A. Sinkowski
Harvey S. Goldstein Beverly G. Sykes, Jr.
Richard E. Goodell Jeffrey D. Thatcher
Paul F. Guttmann Michael L. Thompson
John W. Hammer Troy L. Trentham
James W. Holmes John A. Ulizio
Richard Hunnisett James S. Vaccari
Jeffrey P. Jahn Les Van Alstyne, Jr.
Mack D. Jones James A. Wagner
Clive M. Kelsall James D. Walker
David A. Kistenfeger Ray K. Weiland
Cyrus W. Kreamer, Jr. William A. White
Robert L. Krepps David R. Whitmarsh
Raymond A. LeClair Janice M. Widmyer
Gilberto Lopez John H. Wilson
Mark V. Lough Stephen L. Yeich
Matthew J. Lyman Eric K. Yildrim
Robert Mang
<PAGE>
EXHIBIT 10.2
AMENDED AND RESTATED MANAGEMENT SERVICES AGREEMENT (the "Agreement") dated
as of October 1, 1998, among USS HOLDINGS, INC., a Delaware corporation
("USSH"), USS INTERMEDIATE HOLDCO, INC., a Delaware corporation ("USSIH"), U.S.
SILICA COMPANY, a Delaware corporation ("Silica") (collectively, the
"Companies", and individually a "Company"), and D. GEORGE HARRIS & ASSOCIATES,
INC., a Delaware corporation ("DGHA").
WHEREAS, USSH, USSIH, USS Acquisition, Inc., a Delaware corporation
("USSA") and DGHA have entered into a Management Services Agreement dated as of
February 9, 1996 (the "Old Agreement");
WHEREAS, USSA was merged with and into Silica on February 9, 1996.
WHEREAS, each Company desires to continue to avail itself of DGHA's
expertise and consequently has requested DGHA to continue to provide such
expertise, from time to time, in rendering certain management services related
to the business and affairs of such Company and its Subsidiaries and the review
and analysis of certain financial and other transactions.
WHEREAS, DGHA and the Companies agree that it is in their respective
interests to enter into this Agreement whereby, for the consideration specified
herein, DGHA shall provide such services to the Companies.
WHEREAS, each Company and DGHA wish to amend in certain respects and
restate the Old Agreement;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth, the Companies and DGHA agree as follows:
Section 1. Definitions.
-----------
(a) Unless defined herein, capitalized terms used in this Agreement
shall have the meanings ascribed to them in the Amended and Restated
Stockholders Agreement dated as of the date hereof, as amended from time to time
(the "Stockholders Agreement"), among USSH and the Stockholders.
(b) The following capitalized terms used in this Agreement have the
meanings ascribed to them below:
"Actual EBITDA" shall be calculated at the end of each fiscal year,
-------------
beginning with the fiscal year ending December 31, 1998, and shall mean the
EBITDA of the Company for the twelve-month period ended on the last day of each
fiscal year.
"Budgeted EBITDA" shall be calculated at the end of each fiscal year,
---------------
beginning with the fiscal year ending December 31, 1998, and shall mean for each
fiscal year the EBITDA set forth opposite such fiscal year on Exhibit A.
<PAGE>
"EBITDA" shall have the meaning ascribed to it in the Credit Agreement
------
dated as of July 21, 1998, as amended from time to time, among Silica and the
Lenders party thereto.
"New Acquisition" means the acquisition of a business as a going concern,
---------------
whether by asset acquisition, acquisition of capital stock or merger.
(c) The use in this Agreement of the term "including" means
"including, without limitation." The words "herein," "hereof," "hereunder" and
other words of similar import refer to this Agreement as a whole, including the
schedules and exhibits, as the same may from time to time be amended or
supplemented, and not to any particular section, subsection, paragraph,
subparagraph or clause contained in this Agreement. All references to sections,
schedules and exhibits mean the sections of this Agreement and the schedules and
exhibits attached to this Agreement.
(d) The title of and the section and paragraph headings in this
Agreement are for convenience of reference only and shall not govern the
interpretation of any of the terms or provisions of this Agreement.
(e) The use herein of the masculine, feminine or neuter forms shall
also denote the other forms, as in each case the context may require.
Section 2. Retention of DGHA.
-----------------
The Companies retain DGHA, and DGHA accepts such retention, upon the terms
and conditions set forth in this Agreement.
Section 3. Term.
----
(a) Subject to the provisions of Section 3(b), this Agreement shall
commence on the date hereof and shall terminate on December 31, 2000 (the
"Initial Term"); provided that upon the termination of the Initial Term this
Agreement shall be automatically extended until terminated by USSH or DGHA by
serving 9 months prior written notice upon the other..
(b) This Agreement shall automatically terminate with respect to (i)
any Company and its Subsidiaries upon a sale of such Company to a person which
is not an Affiliate of such Company (whether pursuant to a merger or
consolidation, a sale of capital stock or all or substantially all of its
assets) and (ii) all of the Companies in the event that (A) the Majority of the
Institutional Stockholders have designated the Additional Institutional
Directors pursuant to Section 2(b) of the Stockholders Agreement and USSH has
provided written notice to DGHA of its desire to terminate this Agreement
pursuant to this clause (ii)(A) of Section 3(b) or (B) the DGHA Stockholders and
their respective Affiliates cease to own 50% or more of the Securities (other
than the DGHA Restricted Shares) held by them on the date hereof.
(c) This Agreement may be terminated at the option of USSH if neither
D. George Harris nor Anthony J. Petrocelli is actively involved in the
management of DGHA.
2
<PAGE>
Section 4. Management Services.
-------------------
(a) DGHA shall advise the Companies concerning such management matters
as relate to proposed financial transactions, acquisitions and other senior
management matters related to the Companies' business, administration and
policies, in each case as the Companies shall reasonably and specifically
request by way of notice to DGHA, which notice shall specify the services
required of DGHA and shall include all background material necessary for DGHA to
complete such services. DGHA shall not be required to devote any specified
amount of time to any such written request and shall be required to devote only
so much time to any such written request as DGHA shall, in its reasonable
discretion, deem necessary to complete such services. Such consulting services
shall, in DGHA's reasonable discretion, be rendered in person or by telephone or
other communication. DGHA shall (i) use its reasonable efforts to deal
effectively with all subjects submitted to it hereunder and (ii) endeavor to
further, by performance of its services hereunder, the policies and objectives
of the Companies.
(b) DGHA shall perform all such services as an independent contractor
to the Companies. DGHA is not an employee, agent or representative of any
Company and has no authority to act for or to bind any Company without its prior
written consent.
(c) This Agreement shall in no way prohibit DGHA or any partner or
employee thereof from engaging in other activities, whether or not competitive
with any business of the Companies.
Section 5. Compensation.
------------
(a) As consideration for DGHA's agreement to render the management
services set forth in Section 4 and as compensation for any such services
rendered by DGHA, the Companies shall pay DGHA (or one or more designees
thereof) an annual fee (the "Annual Fee") of $500,000, which shall be subject to
the adjustments set out in Sections 5(c) and (d).
(b) The Annual Fee shall be paid for each fiscal year in equal monthly
installments, payable in arrears.
(c) Promptly after receipt by the Compensation Committee of the annual
audited financial statements of the Companies for the preceding fiscal year, the
Companies shall pay DGHA, or, if the result of the following calculation is a
negative number, DGHA shall pay the Companies, an amount equal to the absolute
value of: (i) the aggregate amount of compensation to be paid by the Companies
to DGHA with respect to the preceding fiscal year as determined in accordance
with Exhibit B based on the Actual EBITDA for such fiscal year compared to the
Budgeted EBITDA for such fiscal year minus (ii) the aggregate amount of
compensation actually paid by the Companies to DGHA with respect to the
preceding fiscal year.
Notwithstanding the foregoing, (x) subject to the following clause (y), any
amount payable by DGHA to the Companies pursuant to Section 5(c) shall be paid
by deducting such amount, in equal monthly installments through the end of the
year in which any such amount is determined to be payable by DGHA, from the
monthly installments payable by the Companies to
3
<PAGE>
DGHA pursuant to Section 5(b), and (y) for any fiscal year during which this
Agreement is terminated (and not renewed) pursuant to the terms hereof, (i) the
Budgeted EBITDA for such fiscal year shall be prorated from the end of the
immediately preceding fiscal year through the date of termination, (ii) all
amounts otherwise payable as provided above shall be prorated from the end of
the immediately preceding fiscal year through the date of termination and (iii)
any amount payable by the Companies to DGHA or by DGHA to the Companies, as the
case may be, pursuant to Section 5(c) shall be paid by the Companies or DGHA, as
the case may be, notwithstanding any such termination, promptly after the
financial statements of the Companies for the period from the end of the
immediately preceding fiscal year through the date of termination become
available. The Companies shall promptly prepare and make available such
financial statements.
(d) In the event of (i) any New Acquisition which is approved by the
Requisite Stockholders pursuant to the Stockholders Agreement, this Agreement
shall automatically be amended to increase the levels of aggregate compensation
provided in Exhibit B hereto in such proportions as are necessary to reflect the
increase resulting from such acquisition in the Budgeted EBITDA provided in
Exhibit A hereto (as similarly adjusted), as such increase in the Budgeted
EBITDA was submitted to the Requisite Stockholders in connection with the
approval of such acquisition and (ii) any disposition by the Companies of the
stock or assets of any Company or any Subsidiary thereof, this Agreement shall
automatically be amended to decrease the levels of aggregate compensation
provided in Exhibit B hereto in such proportions as are necessary to reflect the
decrease (based upon the average annual EBITDA contribution of the disposed
assets for the last 12 fiscal quarters immediately preceding such disposition)
resulting from such disposition in the Budgeted EBITDA provided in Exhibit A
hereto (as similarly adjusted).
(e) All accounting determinations under this Agreement will be made in
accordance with generally accepted accounting principles, consistently applied,
as reasonably approved by the Compensation Committee. In the event of any
dispute between the parties relating to any accounting determination or
calculation hereunder, such dispute will be resolved by the Companies'
independent accountants, whose written determination shall be final and binding
on the parties hereto.
(f) The Companies shall reimburse DGHA for all reasonable out-of-
pocket travel and entertainment expenses incurred by DGHA in connection with the
rendering of management services pursuant to this Agreement, provided that in
any one year no more than $100,000 of such expenses not charged against a
completed transaction shall be reimbursed.
Section 6. Loans.
-----
(a) At the request of DGHA, Silica shall provide to DGHA one or more
interest-free loans of not more than $1 million in the aggregate per calendar
year, throughout the term of this Agreement (the "Loans").
(b) The Loans shall mature and be payable as of the date of the
consummation of an IRR Event.
4
<PAGE>
(c) The Loans shall be guaranteed by the persons listed on Schedule 1
attached hereto (the "Guarantors") and in proportion with the percentages listed
opposite such Guarantors' names on Schedule 1, which guarantees shall be several
but not joint obligations of the Guarantor. A form of such guarantees is
attached hereto as Exhibit C.
Section 7. Acquisition Fee.
---------------
Within 30 days after the closing of any New Acquisition, USSH shall pay to
DGHA an acquisition fee equal to 1% (one percent) of the total purchase price,
plus all third party indebtedness for borrowed money assumed by any Company or
any Subsidiary of any Company, paid or payable, or otherwise to be distributed,
directly or indirectly, by any Company or any Subsidiary of any Company in
connection with such New Acquisition.
Section 8. Notices.
-------
All notices, requests, consents and other communications hereunder shall be
in writing and shall be deemed sufficient if personally delivered, sent by
nationally-recognized overnight courier, by facsimile, or by registered or
certified mail, return receipt requested and postage prepaid, addressed as
follows:
if to DGHA, to:
D. George Harris & Associates, Inc.
399 Park Avenue
32nd Floor
New York, New York 10022
Attention: Anthony J. Petrocelli
Telecopier: (212) 207-6450
Telephone: (212) 207-6405
if to the Companies:
USS Holdings, Inc.
c/o U.S. Silica Company
P.O. Box 187
Berkeley Springs, WV 25411
Attention: President
Telecopier: (304) 258-3500
Telephone: (304) 258-2500
5
<PAGE>
with a copy to:
Chase Venture Capital Associates, L.P.
c/o Chase Capital Partners
380 Madison Avenue
12th Floor
New York, NY 10017-2070
Attention: Timothy J. Walsh
Telecopier: (212) 622-3755
Telephone: (212) 622-3054
or to such other address as the party to whom notice is to be given may have
furnished to each other party in writing in accordance herewith. Any such
notice or communication shall be deemed to have been received (a) in the case of
personal delivery, on the date of such delivery, (b) in the case of nationally-
recognized overnight courier, on the next business day after the date when sent,
(c) in the case of facsimile transmission, when received, and (d) in the case of
mailing, on the third business day following that on which the piece of mail
containing such communication is posted.
Section 9. Benefits of Agreement.
---------------------
This Agreement shall bind and inure to the benefit of any successors to or
assigns of DGHA and the Companies; provided, however, that this Agreement may
not be assigned by any party hereto without the prior written consent of the
other parties. The obligations of the Companies hereunder shall be joint and
several.
Section 10. Governing Law.
-------------
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of New York (without giving effect to
principles of conflicts of laws).
Section 11. Entire Agreement; Amendments.
----------------------------
This Agreement contains the entire understanding of the parties with
respect to its subject matter, and neither it nor any part of it may in any way
be altered, amended, extended, waived, discharged or terminated except by a
written agreement signed by each of the parties hereto.
Section 12. Counterparts.
------------
This Agreement may be executed in counterparts, and each such counterpart
shall be deemed to be an original instrument, but all such counterparts together
shall constitute but one agreement.
6
<PAGE>
Section 13. Waivers.
-------
Any party to this Agreement may, by written notice to the other parties,
waive any provision of this Agreement. The waiver by any party of a breach of
any provision of this Agreement shall not operate or be construed as a waiver of
any subsequent breach.
* * * * *
7
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Management
Services Agreement as of the date first above written.
USS HOLDINGS, INC.
By: /s/
------------------------
Name:
Title:
USS INTERMEDIATE HOLDCO, INC.
By: /s/
------------------------
Name:
Title:
U.S. SILICA COMPANY
By: /s/ Richard E. Goodell
------------------------
Name:
Title:
D. GEORGE HARRIS & ASSOCIATES, INC.
By: /s/
------------------------
Name:
Title:
8
<PAGE>
EXHIBIT A
---------
Fiscal Year EBITDA
- ----------- ------
Fiscal Year Ending December 31, 1998 $30,986
Fiscal Year Ending December 31, 1999 33,222
Fiscal Year Ending December 31, 2000 35,607
<PAGE>
EXHIBIT B
---------
Aggregate
For any fiscal year Compensation
------------------- ------------
Actual EBITDA equal to or greater
than 118% of Budgeted EBITDA $804,570
Actual EBITDA equal to or greater
than 116% of Budgeted EBITDA but less
than 118% of Budgeted EBITDA $777,751
Actual EBITDA equal to or greater
than 114% of Budgeted EBITDA but less
than 116% of Budgeted EBITDA $750,932
Actual EBITDA equal to or greater
than 112% of Budgeted EBITDA but less
than 114% of Budgeted EBITDA $724,113
Actual EBITDA equal to or greater
than 110% of Budgeted EBITDA but less
than 112% of Budgeted EBITDA $697,294
Actual EBITDA equal to or greater
than 108% of Budgeted EBITDA but less
than 110% of Budgeted EBITDA $670,475
Actual EBITDA equal to or greater
than 106% of Budgeted EBITDA but less
than 108% of Budgeted EBITDA $643,656
Actual EBITDA equal to or greater
than 104% of Budgeted EBITDA but less
than 106% of Budgeted EBITDA $616,837
Actual EBITDA equal to or greater
than 102% of Budgeted EBITDA but less
than 104% of Budgeted EBITDA $590,018
Actual EBITDA equal to or greater
than 100% of Budgeted EBITDA but less
than 102% of Budgeted EBITDA $563,199
<PAGE>
Aggregate
For any fiscal year Compensation
------------------- ------------
Actual EBITDA equal to or greater
than 98% of Budgeted EBITDA but less
than 100% of Budgeted EBITDA $536,380
Actual EBITDA equal to or greater
than 96% of Budgeted EBITDA but less
than 98% of Budgeted EBITDA $509,561
Actual EBITDA equal to or greater
than 94% of Budgeted EBITDA but less
than 96% of Budgeted EBITDA $482,742
Actual EBITDA equal to or greater
than 92% of Budgeted EBITDA but less
than 94% of Budgeted EBITDA $455,923
Actual EBITDA equal to or greater
than 90% of Budgeted EBITDA but less
than 92% of Budgeted EBITDA $429,104
Actual EBITDA equal to or greater
than 88% of Budgeted EBITDA but less
than 90% of Budgeted EBITDA $402,285
Actual EBITDA equal to or greater
than 86% of Budgeted EBITDA but less
than 88% of Budgeted EBITDA $375,466
Actual EBITDA equal to or greater
than 84% of Budgeted EBITDA but less
than 86% of Budgeted EBITDA $348,647
Actual EBITDA equal to or greater
than 82% of Budgeted EBITDA but less
than 84% of Budgeted EBITDA $321,828
Actual EBITDA equal to or greater
than 80% of Budgeted EBITDA but less
than 82% of Budgeted EBITDA $295,009
Actual EBITDA less than 80% of
Budgeted EBITDA $268,190
<PAGE>
EXHIBIT 10.2.1
ASSIGNMENT AND ASSUMPTION AGREEMENT
1. For and in consideration of the payment by D. George Harris &
Associates, LLC, a Delaware limited liability company ("New DGHA") of one dollar
($1.00), D. George Harris & Associates, Inc., a Delaware corporation ("Old
DGHA") does hereby sell, assign and transfer to New DGHA all of its rights,
title and interest in, to and under the Amended and Restated Management Services
Agreement, dated as of October 6, 1998, among USS Holdings, Inc., a Delaware
Corporation ("Holdings"), Better Minerals & Aggregates Company (formerly USS
Intermediate Holdco, Inc. ("Holdco")), a Delaware corporation ("Better
Minerals"), U.S. Silica Company, a Delaware corporation ("Silica") and Old DGHA
(the "Management Agreement"). New DGHA hereby absolutely and irrevocably assumes
and is, and shall be, liable and solely responsible for any and all liabilities
and obligations of Old DGHA in, to and under to the Management Agreement.
2. For and in consideration of the payment by BMAC Holdings, Inc., a
Delaware corporation ("BMAC") of one dollar ($1.00), Better Minerals does hereby
sell, assign and transfer to BMAC all of its rights, title and interest in, to
and under the Management Agreement. BMAC hereby absolutely and irrevocably
assumes and is, and shall be, liable and solely responsible for any and all
liabilities and obligations of Better Minerals (as Holdco) in, to and under to
the Management Agreement.
3. For and in consideration of the payment by Better Minerals of one
dollar ($1.00), Silica does hereby sell, assign and transfer to Better Minerals
all of its rights, title and interest in, to and under the Management Agreement.
Better Minerals hereby absolutely and irrevocably assumes and is, and shall be,
liable and solely responsible for any and all liabilities and obligations of
Silica in, to and under to the Management Agreement.
4. Each party's signature below shall constitute such party's prior
written consent to all assignments and assumptions herein, pursuant to Section 9
of the Management Agreement.
5. This Assignment and Assumption Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to its principles of conflicts of laws.
IN WITNESS WHEREOF, the parties hereby have caused this Assignment and
Assumption Agreement to be executed as of this 30th day of September, 1999.
D. GEORGE HARRIS & ASSOCIATES, INC.
By: /s/
____________________________________
Name:
<PAGE>
D. GEORGE HARRIS & ASSOCIATES, LLC
By: /s/
--------------------------------------
Name:
USS HOLDINGS, INC.
By: /s/
--------------------------------------
Name:
USS INTERMEDIATE HOLDCO, INC.
By: /s/ John A. Ulizio
--------------------------------------
Name:
U.S. SILICA COMPANY
By: /s/
--------------------------------------
Name:
BMAC HOLDINGS, INC.
By: /s/ John A. Ulizio
--------------------------------------
Name:
BETTER MINERALS & AGGREGATES COMPANY
By: /s/
--------------------------------------
Name:
2
<PAGE>
EXHIBIT 10.3
TAX SHARING AGREEMENT
---------------------
AMENDED AND RESTATED AGREEMENT dated as of October 1, 1999 by and among USS
Holdings, Inc. ("USSH"), USS Intermediate Holdco, Inc. ("Holdco") and the other
---- ------
signatories hereto (the "Subsidiaries").
------------
WHEREAS USSH, Holdco and certain of the Subsidiaries are parties to a Tax
Sharing Agreement dated February 9, 1996, as amended, and seek to further amend
such agreement; and
WHEREAS, USSH is the common parent of an affiliated group of corporations
(an "Affiliated Group"), as defined in Section 1504(a) of the Internal Revenue
----------------
Code of 1986, as amended (the "Code"); and
----
WHEREAS, USSH will file a United States consolidated federal income tax
return (a "Consolidated Return") with members of the Affiliated Group of which
-------------------
USSH is the common parent (the "USSH Consolidated Group"),
-----------------------
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, the parties hereto agree as follows:
1. USSH shall file a Consolidated Return for each taxable period for which
this Agreement is in effect and for which the USSH Consolidated Group remains in
existence.
2. (a) Subject to Section 4, Holdco shall pay to USSH with respect to
each taxable year during which Holdco is a member of the USSH Consolidated Group
an amount equal to the Holdco Tax Amount for such year.
(b) The term "Holdco Tax Amount" shall mean an amount equal to the
-----------------
federal income tax liability that Holdco would have incurred for a taxable year
had Holdco filed a Consolidated Return that included (i) Holdco as common parent
and (ii) those of Holdco's subsidiaries that would be members of an Affiliated
Group having Holdco as the common parent (the "Holdco Subgroup"). For purposes
---------------
of computing the Holdco Tax Amount for a taxable year, the Holdco Subgroup shall
take into account all items of gain, income, deductions, losses, credits,
carryovers of losses and credits (including the credit calculated under Code
Section 53, if any) from prior taxable years (taking into account any actual
federal income tax returns (whether separate returns or Consolidated Returns)
filed by members of the Holdco Subgroup for a prior taxable year of such
member), and all other tax attributes of the Holdco Subgroup, which attributes
may be subject to limitations under the Code and applicable Treasury
Regulations, that would have been taken into account had the Holdco Subgroup
actually filed a Consolidated Return. Without limiting the generality of the
foregoing, computation of the Holdco Tax Amount for any taxable year shall take
into account and compensate the Holdco Subgroup for
<PAGE>
any deductions, losses, credits and carryovers of losses and credits generated
by it (and that were utilized by the USSH Consolidated Group) at the time such
deductions, losses or credits could have been used by the Holdco Subgroup to
reduce its federal income tax liability (had the Holdco Subgroup actually filed
a Consolidated Return).
(c) For purposes of this Agreement, "federal income tax" shall
include, but not be limited to, all federal taxes on income (including any tax
imposed under Code Section 55) and any applicable interest, penalties or
additions to tax.
3. If the Holdco Tax Amount for a taxable year is adjusted after the
initial Consolidated Return of the USSH Consolidated Group has been filed
(whether as a result of an amended return, a claim for refund, an audit by the
Internal Revenue Service ("IRS"), or otherwise), then the amounts calculated
under Section 2(a) shall be recomputed to reflect such adjustments. Subject to
Section 4, Holdco shall make a payment of any resulting additional federal
income tax to USSH or USSH shall make a payment of any resulting federal income
tax refund to Holdco.
4. USSH shall make the computations under Section 2 and 3 in a
reasonable manner. With respect to computations under Section 2, estimated
federal income tax payments by Holdco shall be made no later than three (3)
business days prior to the time USSH is required to make estimated federal
income tax payments to the IRS, and final settlements for a taxable year shall
be made between USSH and Holdco no later than three (3) business days prior to
the filing of the Consolidated Return of the USSH Consolidated Group for such
taxable year. With respect to computations under Section 3, payments determined
to be due to USSH or Holdco shall be paid within fifteen (15) business days
after the relevant federal income tax return (or amended return) or other
document reflecting such adjustment is filed or executed; provided that, in no
-------------
event shall USSH be required to make any actual payment to Holdco with respect
to a refund until USSH actually receives such refund (or actually receives the
benefit of such a refund through the use of a credit or otherwise), and provided
--------
further that, if the Holdco Subgroup for any taxable year has a loss or credit
- ------------
which could be carried back to and which would reduce the Holdco Tax Amount (as
adjusted) for any earlier taxable year for which the Holdco Subgroup was
included in the USSH Consolidated Group, then USSH shall pay to Holdco on the
date the USSH Consolidated Group Consolidated Return is actually filed for such
taxable year the amount by which the Holdco Tax Amount in such earlier taxable
year is reduced by reason of such carryback (or, to the extent that USSH must
file a claim for refund to recoup such amount, the date that USSH actually
receives such refund (or actually receives the benefit of such a refund through
the use of a credit or otherwise)).
5. The principles of this Agreement shall also apply to any
consolidated, combined or unitary state or local income tax return that includes
USSH and Holdco (or one or more of the members of the Holdco Subgroup).
6. This Agreement shall fix the liability between USSH and Holdco as
to the matters covered herein, notwithstanding that (i) the Agreement or any
part thereof is not controlling for federal income tax or other purposes,
including, but not limited to, the computation of earnings and profits for
federal income tax purposes, or (ii) USSH and
2
<PAGE>
corporations (other than Holdco Subgroup members) which are now or may become
members of the USSH Consolidated Group may enter into different agreements for
the allocation of consolidated federal income tax liability to such other
corporations.
7. This Agreement shall apply to the taxable year of the USSH
Consolidated Group ending in 1996 and all subsequent taxable years during which
members of the Holdco Subgroup, as it may exist from time to time, are members
of the USSH Consolidated Group. This Agreement shall supersede any tax sharing
agreements or arrangements with respect to USSH, Holdco or any Subsidiary, and
each of USSH, Holdco, and the Subsidiaries agree that each such agreement shall
be terminated hereby and be of no further force and effect.
8. (a) This Agreement shall be binding upon and inure to the benefit
of any successors or assigns of any of the parties hereto, to the same extent as
if the successor had been an original party to the Agreement.
(b) No amendment, supplement, modification or waiver of this
Agreement shall be binding unless executed in writing by the party to be bound
thereby. No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provision hereof (whether or not
similar), nor shall such waiver constitute a continuing waiver unless otherwise
expressly provided.
(c) Any alteration, modification, addition, deletion, or other
change in the consolidated federal income tax return provisions of the Code or
the Treasury Regulations thereunder shall automatically be applicable to this
Agreement mutatis mutandis.
------- --------
(d) In the event that any one or more of the provisions contained
in this Agreement shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of any
such provision in every other respect and the remaining provisions of this
Agreement shall not be in any way impaired.
(e) This Agreement may be executed in one or more counterparts.
Each person that becomes a member of the Holdco Subgroup after the date hereof
shall become a party hereto by executing a counterpart hereof and delivering the
same to USSH. Each such counterpart shall be deemed an original, but all
counterparts together shall constitute one and the same instrument.
(f) This Agreement shall be governed by the laws of the State of
New York.
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized representatives as of the date first
written above.
USS HOLDINGS, INC.
By: /s/ Richard J. Nick
---------------------------------
Name: Richard J. Nick
Title: Vice President
BMAC HOLDINGS, INC.
By: /s/ Richard J. Nick
---------------------------------
Name: Richard J. Nick
Title: Vice President
BETTER MINERALS & AGGREGATES COMPANY
By: /s/ Richard J. Nick
---------------------------------
Name: Richard J. Nick
Title: Vice President
U.S. SILICA COMPANY
By: /s/ Richard J. Nick
---------------------------------
Name: Richard J. Nick
Title: Vice President
THE FULTON LAND AND TIMBER COMPANY
By: /s/ Richard J. Nick
---------------------------------
Name: Richard J. Nick
Title: Vice President
<PAGE>
OTTAWA SILICA COMPANY
By: /s/ John A. Ulizio
--------------------------------
Name: John A. Ulizio
Title: Secretary
PENNSYLVANIA GLASS SAND CORPORATION
By: /s/ Richard J. Nick
--------------------------------
Name: Richard J. Nick
Title: Treasurer
BETTER MATERIALS CORPORATION
By: /s/ Richard J. Nick
--------------------------------
Name: Richard J. Nick
Title: Vice President
BMC TRUCKING, INC.
By: /s/ Richard J. Nick
--------------------------------
Name: Richard J. Nick
Title: Vice President
BUCKS COUNTY CRUSHED STONE COMPANY
By: /s/ Richard J. Nick
--------------------------------
Name: Richard J. Nick
Title: Vice President
<PAGE>
CHIPPEWA FARMS CORPORATION
By: /s/ Richard J. Nick
-------------------------
Name: Richard J. Nick
Title: Vice President
SHORE STONE COMPANY, INC.
By: /s/ Richard J. Nick
-------------------------
Name: Richard J. Nick
Title: Vice President
GEORGE F. PETTINOS, INC.
By: /s/ Richard J. Nick
-------------------------
Name: Richard J. Nick
Title: Vice President
ELLEN JAY, INC.
By: /s/ Richard J. Nick
-------------------------
Name: Richard J. Nick
Title: Vice President
COMMERCIAL STONE CO., INC.
By: /s/ Richard J. Nick
-------------------------
Name: Richard J. Nick
Title: Assistant Secretary
<PAGE>
EXHIBIT 10.4
$230,000,000
CREDIT AGREEMENT
Dated as of September 30, 1999
Among
BMAC HOLDINGS, INC.,
as Parent Guarantor,
-------------------
BETTER MINERALS & AGGREGATES COMPANY,
as Borrower,
-----------
GEORGE F. PETTINOS (CANADA) LIMITED,
as Canadian Borrower,
---------------------
and
THE INITIAL LENDERS NAMED HEREIN
and
BANQUE NATIONALE DE PARIS,
as Agent, Swing Line Bank and Initial Issuing Bank
--------------------------------------------------
______________________________________
CHASE SECURITIES INC.,
<PAGE>
as Lead Arranger, Book Manager,
Syndication Agent and Documentation Agent
<PAGE>
T A B L E O F C O N T E N T S
<TABLE>
<CAPTION>
Section Page
<S> <C>
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS
1.01. Certain Defined Terms............................................................................ 1
1.02. Computation of Time Periods; Other Definitional Provisions....................................... 28
1.03. Accounting Terms................................................................................. 28
ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES AND THE LETTERS OF CREDIT
2.01. The Advances and the Letters of Credit........................................................... 28
2.02. Making the Advances.............................................................................. 30
2.03. Issuance of and Drawings and Reimbursement Under Letters of Credit............................... 32
2.04. Drawings of Bankers' Acceptances................................................................. 33
2.05. Repayment of Advances............................................................................ 36
2.06. Termination or Reduction of the Commitments...................................................... 38
2.07. Prepayments...................................................................................... 40
2.08. Interest......................................................................................... 43
2.09. Fees............................................................................................. 45
2.10. Conversion of Advances........................................................................... 46
2.11. Renewal and Conversion of Bankers' Acceptances................................................... 47
2.12. Increased Costs, Etc............................................................................. 49
2.13. Payments and Computations........................................................................ 52
2.14. Taxes............................................................................................ 53
2.15. Sharing of Payments, Etc......................................................................... 56
2.16. Use of Proceeds.................................................................................. 57
2.17. Evidence of Debt................................................................................. 58
2.18. Replacement of Lenders........................................................................... 58
ARTICLE III CONDITIONS OF LENDING
3.01. Conditions Precedent to Initial Extension of Credit.............................................. 59
3.02. Conditions Precedent to Each Borrowing, Drawing and Issuance..................................... 66
3.03. Determinations Under Section 3.01................................................................ 67
ARTICLE IV REPRESENTATIONS AND WARRANTIES
</TABLE>
<PAGE>
<TABLE>
<S> <C>
4.01. Representations and Warranties of the Borrower.................................................. 67
ARTICLE V COVENANTS OF THE BORROWER OF THE CANADIAN BORROWER
AND OF THE PARENT GUARANTOR
5.01. Affirmative Covenants........................................................................... 73
5.02. Negative Covenants.............................................................................. 77
5.03. Reporting Requirements.......................................................................... 86
5.04. Financial Covenants............................................................................. 89
5.05. Covenants of the Canadian Borrower.............................................................. 92
ARTICLE VI EVENTS OF DEFAULT
6.01. Events of Default............................................................................... 92
6.02. Actions in Respect of the Letters of Credit and Bankers' Acceptances upon Default............... 95
ARTICLE VII THE AGENT
7.01. Authorization and Action........................................................................ 95
7.02. Agent's Reliance, Etc........................................................................... 96
7.03. BNP and Affiliates.............................................................................. 96
7.04. Lender Party Credit Decision.................................................................... 96
7.05. Indemnification................................................................................. 97
7.06. Successor Agents................................................................................ 98
ARTICLE VIII MISCELLANEOUS
8.01. Amendments, Etc................................................................................. 99
8.02. Notices, Etc.................................................................................... 100
8.03. No Waiver; Remedies............................................................................. 100
8.04. Costs and Expenses.............................................................................. 100
8.05. Right of Set-off................................................................................ 102
8.06. Binding Effect.................................................................................. 102
8.07. Assignments and Participations.................................................................. 103
8.08. Execution in Counterparts....................................................................... 105
8.09. No Liability of the Issuing Bank................................................................ 105
8.10. Confidentiality................................................................................. 106
8.11. Jurisdiction, Etc............................................................................... 106
8.12. Judgment........................................................................................ 106
8.13. Governing Law................................................................................... 107
</TABLE>
<PAGE>
<TABLE>
<S> <C>
8.14. Waiver of Jury Trial................................ 107
8.15. Power of Attorney................................... 107
</TABLE>
SCHEDULES
Schedule I - Commitments and Applicable Lending Offices
Schedule II - Subsidiary Guarantors
Schedule 1.01 - Existing Letters of Credit
Schedule 3.01(f) - Surviving Debt
Schedule 3.01(g)(vii) - Secretary of State Certificates
Schedule 3.01(g)(x)(A) - UCC Financing Statement Filings
Schedule 3.01(g)(x)(B) - Lien Searches
Schedule 3.01(g)(xiv)(B) - Properties Requiring Boundary Surveys
Schedule 3.01(g)(xiv)(C) - Properties Requiring Survey Affidavits
Schedule 3.01(g)(xxii) - Local Counsel
Schedule 3.01(g)(xxv) - Locations of Leased Properties Requiring
Landlord Consents
Schedule 4.01(a) - Share Ownership
Schedule 4.01(b) - Subsidiaries
Schedule 4.01(d) - Authorizations, Approvals, Actions, Notices
and Filings
Schedule 4.01(l) - Plans, Multiemployer Plans and Welfare Plans
Schedule 4.01(t)(i) - Environmental Laws and Permits
Schedule 4.01(t)(ii) - Environmental Action
Schedule 4.01(u)(i) - Environmental Listing
Schedule 4.01(u)(ii) - Storage Tanks
Schedule 4.01(u)(iii) - Asbestos
Schedule 4.01(u)(iv) - Hazardous Material
Schedule 4.01(z) - Open Years
Schedule 4.01(aa) - Excluded Federal Tax Liability
Schedule 4.01(bb) - Excluded State, Local and Foreign Tax
Liability
Schedule 4.01(ee) - Existing Debt
Schedule 4.01(gg) - Material Owned Real Property
Schedule 4.01(hh) - Material Leased Real Property
Schedule 4.01(ii) - Investments
Schedule 4.01(jj) - Intellectual Property
<PAGE>
iv
Schedule 5.01(m) - Properties Requiring Post-Closing Surveys
Schedule 5.02(a)(iii) - Existing Liens
Schedule 5.02(e)(v) - Disposable Real Property
EXHIBITS
Exhibit A-1 - Form of Term A Note
Exhibit A-2 - Form of Term B Note
Exhibit A-3 - Form of Working Capital Note
Exhibit A-4 - Form of Acquisition Note
Exhibit A-5 - Form of Canadian Borrower Note
Exhibit A-6 - Form of Generic Draft
Exhibit B-1 - Form of Notice of Borrowing
Exhibit B-2 - Form of Notice of Drawing
Exhibit C - Form of Assignment and Acceptance
Exhibit D - Form of Security Agreement
Exhibit E - Form of Parent Guarantor Security Agreement
Exhibit F - Form of Intellectual Property Security Agreement
Exhibit G - Form of Canadian Security Agreement
Exhibit H - Form of Parent Guaranty
Exhibit I - Form of Subsidiary Guaranty
Exhibit J - Form of Mortgage
Exhibit K - [Intentionally Omitted]
Exhibit L-1 - Form of Opinion of Counsel for the Borrower, the Parent
Guarantor and the Subsidiary Guarantors
Exhibit L-2 - Form of Opinion of Local Counsel to the Borrower
Exhibit L-3 - Form of Opinion of Canadian Counsel to the Canadian Borrower
Exhibit M-1 - Form of Parent Guarantor Solvency Certificate with Respect to
a Permitted Acquisition
Exhibit M-2 - Form of Parent Guarantor Solvency Certificate with Respect to
the Acquisition
<PAGE>
v
Exhibit M-3 - Form of Parent Guarantor Solvency Certificate with Respect to
an Acquisition Borrowing
Exhibit N-1 - Form of Borrower Intercompany Note
Exhibit N-2 - Form of Subsidiary Intercompany Note
Exhibit O - Form of Canadian Borrower Intercompany Note
<PAGE>
CREDIT AGREEMENT
CREDIT AGREEMENT dated as of September 30, 1999 (this "Agreement"),
among BMAC Holdings, Inc., a Delaware corporation (the "Parent Guarantor"),
----------------
Better Minerals & Aggregates Company, a Delaware corporation formerly known as
"USS Intermediate Holdco, Inc." (the "Borrower"), George F. Pettinos (Canada)
--------
Limited, a corporation organized and existing under the laws of Ontario, Canada
(the "Canadian Borrower"), the banks, financial institutions and other
-----------------
institutional lenders listed on the signature pages hereof as the Initial
Lenders (the "Initial Lenders"), and Banque Nationale de Paris ("BNP"), as the
--------------- ---
Initial Issuing Bank (the "Initial Issuing Bank"), as the swing line bank (the
--------------------
"Swing Line Bank") and as agent (together with any successor appointed pursuant
---------------
to Article VII, the "Agent") for the Lender Parties (as hereinafter defined).
-----
PRELIMINARY STATEMENTS:
(1) The Borrower has requested that the Lender Parties make available
to the Borrower and the Canadian Borrower the Facilities (as hereinafter
defined) (a) to finance the acquisition (the "Acquisition") by the Borrower,
-----------
directly or indirectly, of (i) all of the issued and outstanding capital stock
of Commercial Stone Co. Inc., a Pennsylvania corporation ("CSC"), (ii) all the
outstanding partnership interests in Commercial Aggregates Transportation and
Sales, L.P., a Pennsylvania limited partnership ("CATS"), and (iii) certain real
property (collectively with CSC and CATS, the "Acquired Businesses"), all
-------------------
pursuant to the Purchase Agreement (as hereinafter defined), (b) to refinance
certain Existing Debt, (c) to pay transaction fees and expenses, (d) to provide
for working capital for the Borrower and the Canadian Borrower, (e) to finance
the purchase of Permitted Acquisitions and (f) for other general corporate
purposes permitted under this Agreement.
(2) The Lender Parties are willing to provide the Facilities upon
terms and conditions provided herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, the parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
---------------------
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
<PAGE>
"Acquired Businesses" has the meaning specified in the Preliminary
-------------------
Statements hereto.
"Acquired EBITDA" means, with respect to any Acquired Entity or
---------------
Business or any Sold Entity or Business for any period, the EBITDA of such
Entity or Business for such period.
"Acquired Entity or Business" has the meaning specified in the
---------------------------
definition of the term "Adjusted EBITDA".
---------------
"Acquisition" has the meaning specified in the Preliminary Statements
-----------
hereto.
"Acquisition Advance" has the meaning specified in Section 2.01(e).
-------------------
"Acquisition Borrowing" means a borrowing consisting of simultaneous
---------------------
Acquisition Advances of the same Type made by the Acquisition Lenders,
made, converted or continued on the same date and, in the case of
Eurodollar Rate Advances, as to which a single Interest Period is in
effect.
"Acquisition Commitment" means, with respect to any Acquisition Lender
----------------------
at any time, the amount set forth opposite such Lender's name on Schedule I
hereto under the caption "Acquisition Commitment" or, if such Lender has
entered into one or more Assignments and Acceptances, the amount set forth
for such Lender in the Register maintained by the Agent pursuant to Section
8.07(d) as such Lender's "Acquisition Commitment", as such amount may be
reduced at or prior to such time pursuant to Section 2.06.
"Acquisition Facility" means, at any time, the aggregate amount of the
--------------------
Acquisition Lenders' Acquisition Commitments at such time.
"Acquisition Lender" means any Lender that has an Acquisition
------------------
Commitment.
"Acquisition Note" means a promissory note of the Borrower payable to
----------------
the order of any Acquisition Lender, in substantially the form of Exhibit
A-4 hereto, evidencing the indebtedness of the Borrower to such Lender
resulting from the Acquisition Advances made by such Lender, to the extent
required to be issued pursuant to Section 2.17.
"Acquisition Reduction Amount" has the meaning specified in Section
----------------------------
2.07(b)(vi).
"Advance" means a Term Advance, a Working Capital Advance, an
-------
Acquisition Advance, a Swing Line Advance, a Canadian Borrower Advance or a
Letter of Credit Advance.
"Adjusted EBITDA" means, with respect to any Person for any period,
---------------
EBITDA of such Person for such period, calculated by (a) including in the
determination thereof
<PAGE>
3
the Acquired EBITDA of any other Person, property, business or asset
acquired during such period pursuant to a transaction permitted under
Section 5.02(f) and not subsequently sold, transferred or otherwise
disposed of during such period to the extent acquired by such Person or any
of its Subsidiaries during such period (each such Person, property,
business or asset acquired and not subsequently so disposed of, an
"Acquired Entity or Business"), based on the actual Acquired EBITDA of
---------------------------
such Acquired Entity or Business for such period (including the portion
thereof occurring prior to such acquisition) and (b) excluding in the
determination thereof the Acquired EBITDA of any Person, property, business
or asset sold, transferred or otherwise disposed of by such Person or any
of its Subsidiaries during such period (each such Person, property,
business or asset so sold or disposed of, a "Sold Entity or Business")
-----------------------
based on the actual Acquired EBITDA of such Sold Entity or Business for
such period (including the portion thereof occurring prior to such sale,
transfer or disposition).
"Affiliate" means, as to any Person, any other Person that, directly
---------
or indirectly, controls, is controlled by or is under common control with
such Person or is a director or officer of such Person. For purposes of
this definition, the term "control" (including the terms "controlling",
"controlled by" and "under common control with") of a Person means the
possession, direct or indirect, of the power to vote 5% or more of the
Voting Stock of such Person or to direct or cause the direction of the
management and policies of such Person, whether through the ownership of
Voting Stock, by contract or otherwise, provided that the term "Affiliate",
--------
as to The Chase Manhattan Bank, shall be deemed not to include Chase
Capital.
"Agent" has the meaning specified in the recital of parties to this
-----
Agreement.
"Agent's Account" means (a) in the case of Advances (other than
---------------
Canadian Borrower Advances), the account of the Agent maintained by the
Agent at the Federal Reserve Bank of New York, 33 Liberty Street, New York,
New York 10048, ABA No. 026007689, for further credit to Account No.
750420-701-03 or such other account maintained by the Agent and designated
by the Agent in a written notice to the Lender Parties and the Borrower,
and (b) in the case of any Canadian Borrower Advance, the account of the
Sub-Agent designated in writing from time to time by the Agent to the
Canadian Borrower and the Canadian Lenders for such purpose.
"Annualization Factor" means a factor the numerator of which is the
--------------------
number 365 and the denominator of which is the number of days in the
Rolling Period.
"Applicable Borrower" means (a) with respect to the Term A Facility,
-------------------
the Term B Facility, the Working Capital Facility, the Acquisition
Facility, the Swing Line Facility or the Letter of Credit Facility or any
Advances or Borrowings thereunder, the Borrower and
<PAGE>
4
(b) with respect to the Canadian Facility or any Advances, Drawings or
Borrowings thereunder, the Canadian Borrower.
"Applicable Lending Office" means (a) in the case of any Advances
-------------------------
(other than a Canadian Borrower Advance) and with respect to each Lender
Party, such Lender Party's Domestic Lending Office in the case of a Base
Rate Advance, such Lender Party's Eurodollar Lending Office in the case of
a Eurodollar Rate Advance and (b) in the case of any Canadian Borrower
Advance, each Canadian Lender's Canadian Domestic Lending Office.
"Applicable Margin", with respect to Advances under the Term A
-----------------
Facility, the Working Capital Facility, the Acquisition Facility and the
Canadian Facility, Bankers' Acceptances or commitment fees under the
Working Capital Facility or the Acquisition Facility, as the case may be,
means the applicable percentage per annum determined by reference to the
ratio of (i) Funded Debt as of the last day of the most recently ended
fiscal quarter to (ii) Consolidated EBITDA of the Borrower and its
Subsidiaries for the four fiscal quarters most recently ended prior to the
start of such period, as determined pursuant to the financial statements
most recently delivered to the Agent at the end of each fiscal quarter, as
the case may be, as set forth below:
<TABLE>
<CAPTION>
========================================================================================================================
Eurodollar Rate
Base Rate Advances
Advances under under the Term Applicable Working
the Term A Canadian A Facility, the Margin with Capital Acquisition
Funded Debt to Facility, the Prime Working respect to Facility Facility
EBITDA Ratio Working Capital Rate Capital Facility Bankers' Commitment Commitment
Facility and the Advances and the Acceptances Fees Fees
Acquisition Acquisition
Facility Facility
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Level I
-------
greater than 4.50
to 1.00 2.00% 2.50% 3.00% 4.25% 0.50% 0.75%
------------------------------------------------------------------------------------------------------------------------
Level II
--------
less than or
equal to 4.50 to
1.00 but greater
than 4.25 to 1.00 1.75% 2.25% 2.75% 4.00% 0.50% 0.75%
------------------------------------------------------------------------------------------------------------------------
Level III
---------
less than or
equal to 4.25 to
1.00 but greater than 1.50% 2.00% 2.50% 3.75% 0.50% 0.75%
</TABLE>
<PAGE>
5
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------------------------------------------------
than 4.00 to 1.00
----------------------------------------------------------------------------------------------------------------------
Level IV
--------
less than or
equal to 4.00 to
1.00 but greater
than 3.75 to 1.00 1.25% 1.75% 2.25% 3.50% 0.375% 0.50%
-----------------------------------------------------------------------------------------------------------------------
Level V
-------
less than or
equal to 3.75 to
1.00 1.00% 1.50% 2.00% 3.25% 0.375% 0.50%
========================================================================================================================
</TABLE>
provided that (a) from the date of the Initial Extension of Credit through
--------
and including March 31, 2000, the Applicable Margin shall at all times be
the Level I Applicable Margin referred to above, (b) no change in the
Applicable Margin shall be effective until five Business Days after the date
on which the Agent receives financial statements at the end of each fiscal
quarter, and (c) if the Borrower has not submitted to the Agent the
information described in clause (b) of this proviso as and when required,
-------
the Applicable Margin shall be the Level I Applicable Margin for so long as
such information described in clause (b) of this proviso has not been
-------
received by the Agent.
"Appropriate Lender" means, at any time, with respect to (a) any of
------------------
the Term A, Term B, Working Capital, Canadian or Acquisition Facilities, a
Lender that has a Commitment with respect to such Facility at such time, (b)
the Letter of Credit Facility, (i) any Issuing Bank and (ii) if the other
Working Capital Lenders have made Letter of Credit Advances pursuant to
Section 2.03(c) that are outstanding at such time, each such other Working
Capital Lender and (c) the Swing Line Facility, (i) the Swing Line Bank and
(ii) if the other Working Capital Lenders have made Swing Line Advances
pursuant to Section 2.02(b) that are outstanding at such time, each such
other Working Capital Lender.
"Assignment and Acceptance" means an assignment and acceptance entered
-------------------------
into by a Lender Party and an Eligible Assignee, and accepted by the Agent,
in accordance with Section 8.07 and in substantially the form of Exhibit C
hereto.
"Available Amount" of any Letter of Credit means, at any time, the
----------------
maximum amount available to be drawn under such Letter of Credit at such
time (assuming compliance at such time with all conditions to drawing).
"BA Lending Office" means, with respect to each Canadian Lender, the
-----------------
office of such Lender set forth as its "BA Lending Office" opposite its name
on Schedule I hereto or in the Assignment and Acceptance pursuant to which
it became a lender or such other
<PAGE>
6
office of such Lender in Canada as such Lender may from time to time
specify to the Canadian Borrower and the Agent for such purpose.
"BA Rate" means, for all Bankers' Acceptances comprising part of the
-------
same Drawing to be purchased by a Canadian Lender, the average rate
(calculated on an annual basis of a year of 365 days or 366 Days, as the
case may be, and rounded up to the nearest multiple of 1/4 of 1%, if such
average is not such a multiple) for Canadian Dollar bankers' acceptances
having a comparable term that appears on the Reuters Screen CDOR Page (or
such other page as is a replacement page for such bankers' acceptances) at
10:00 A.M. (Toronto time) or, if such rate is not available at such time,
the applicable discount rate in respect of such Bankers' Acceptances shall
be the discount rate (calculated on an annual basis of 365 days or 366
days, as the case may be), quoted by the Sub-Agent at 9:30 A.M. (Toronto
time) on the date of such Drawing as the discount rate at which the Sub-
Agent would purchase, on such date, its own bankers' acceptances having an
aggregate Face Amount equal to and with a term to maturity the same as the
Bankers' Acceptances to be acquired by such Canadian Lender as part of such
Drawing.
"Bankers' Acceptance" has the meaning specified in Section 2.01(d).
-------------------
"Bank Hedge Agreement" means any Hedge Agreement required or permitted
--------------------
under Article V that is entered into by and between a Loan Party and any
Hedge Bank.
"Base Rate" means a fluctuating interest rate per annum in effect from
---------
time to time, which rate per annum shall at all times be equal to the
higher of:
(a) the rate of interest announced publicly by BNP in New York,
New York, from time to time, as its prime rate (and such term shall
not be construed to be its best or most favorable rate); and
(b) 1/2 of one percent per annum above the Federal Funds Rate.
"Base Rate Advance" means an Advance that bears interest as provided
-----------------
in Section 2.08(b)(i).
"BNP" has the meaning specified in the recital of parties to this
---
Agreement.
"Borrower" has the meaning specified in the recital of parties to this
--------
Agreement.
"Borrower's Account" means (a) with respect to the Borrower, the
------------------
account of such Borrower maintained by the Borrower with BNP at its office
at 499 Park Avenue, New York, New York 10022, Account No. 200877-001-91, or
such other account as the Borrower and the Agent may from time to time
designate as such "Borrower's Account",
<PAGE>
7
and (b) with respect to the Canadian Borrower, the account of such Canadian
Borrower maintained by the Canadian Borrower with the Sub-Agent at its
office at 121 King Street West, Suite 2130, Toronto M5H 3T9, Account
No. 03-32551, or such other account as the Canadian Borrower and the Agent
may from time to time designate as such "Borrower's Account".
"Borrowing" means a Term Borrowing, a Working Capital Borrowing, an
---------
Acquisition Borrowing, a Canadian Borrowing or a Swing Line Borrowing.
"Business Day" means a day of the year on which banks are not required
------------
or authorized by law to close in New York City and, if the applicable
Business Day relates to any Eurodollar Rate Advances, on which dealings are
carried on in the London interbank market.
"Business Plan" means the business plan of the Borrower which shall be
-------------
in form and substance reasonably satisfactory to the Agent (including
projected balance sheets, income, stockholders' equity and cash flow
statements on a monthly basis for the Fiscal Year following such Fiscal
Year then ended).
"Canadian Borrower" has the meaning specified in the recital of
-----------------
parties to this Agreement.
"Canadian Borrower Advance" has the meaning specified in Section
-------------------------
2.01(d).
"Canadian Borrower Note" means a promissory note of the Canadian
----------------------
Borrower payable to the order of any Canadian Lender, in substantially the
form of Exhibit A-5 hereto, evidencing the aggregate indebtedness of the
Canadian Borrower to such Lender resulting from the Canadian Borrower
Advances made by or otherwise owing to such Lender, to the extent required
to be issued pursuant to Section 2.17.
"Canadian Borrowing" means a borrowing consisting of simultaneous
------------------
Canadian Borrower Advances made by the Canadian Lenders on the same date.
"Canadian Business Day" means a day of the year on which banks are not
---------------------
required or authorized by law to close in Toronto, Ontario, Canada.
"Canadian Cash Collateral Account" has the meaning specified in the
--------------------------------
Canadian Security Agreement.
"Canadian Commitment" means, with respect to any Canadian Lender at
-------------------
any time, the Canadian Dollar amount set forth opposite such Lender's name
on Schedule I hereto under the caption "Canadian Commitment" or, if such
Lender has entered into one
<PAGE>
8
or more Assignments and Acceptances, set forth for such Lender in the
Register maintained by the Agent pursuant to Section 8.07(d) as such
Lender's "Canadian Commitment", as such Canadian Dollar amount may be
reduced at or prior to such time pursuant to Section 2.06.
"Canadian Dollars" and "CN$" each means lawful money of Canada.
---------------- ---
"Canadian Domestic Lending Office" means, with respect to each
--------------------------------
Canadian Lender, the office of such Lender specified as its "Domestic
Lending Office" opposite its name on Schedule I hereto or in the Assignment
and Acceptance pursuant to which it became a Lender or such other office of
such Lender as such Lender may from time to time specify to the Canadian
Borrower and the Agent.
"Canadian Facility" means, at any time, the aggregate amount of the
-----------------
Canadian Lenders' Canadian Commitments at such time.
"Canadian Interbank Rate" means the interest rate, expressed as a
-----------------------
percentage per annum, which is customarily used by the Agent when
calculating interest due by it or owing to it arising from or in connection
with correction of errors between it and other Canadian chartered banks.
"Canadian Lender" means any Lender that (a) is a resident in Canada
---------------
for purposes of the Income Tax Act (Canada) and (b) has a Canadian
Commitment.
"Canadian Prime Rate" means a fluctuating interest rate per annum in
-------------------
effect from time to time, which rate per annum shall at all times be equal
to the higher of:
(a) the rate of interest announced publicly by the Sub-Agent in
Toronto, Ontario from time to time as its prime rate for determining
rates of interest on commercial loans in Canadian Dollars made by it
in Canada; and
(b) 3/4 of one percent per annum above the rate for 30-day
Canadian Dollar bankers' acceptances that appears on the Reuters
Screen CDOR Page (or any replacement page) as of 10:00 A.M. (Toronto,
Ontario time) on the date of determination.
"Canadian Prime Rate Advance" means a Canadian Borrower Advance made
---------------------------
in Canadian Dollars that bears interest as provided in Section
2.08(b)(iii).
"Canadian Security Agreement" has the meaning specified in Section
---------------------------
3.01(g)(xi).
<PAGE>
9
"Capital Expenditures" means, for any Person for any period, the sum
--------------------
of, without duplication, (a) all expenditures made, directly or indirectly,
by such Person or any of its Subsidiaries during such period for equipment,
fixed assets, real property or improvements, or for replacements or
substitutions therefor or additions thereto (excluding capitalized
interest), that have been or should be, in accordance with GAAP, reflected
as additions to property, plant or equipment on a Consolidated balance
sheet of such Person plus (b) the aggregate principal amount of all Debt
(including the aggregate principal amount of Obligations under Capitalized
Leases) assumed or incurred in connection with any such expenditures;
provided, however, there shall be excluded from the definition of Capital
-------- -------
Expenditures, expenditures made to finance Permitted Acquisitions.
"Capitalized Leases" means all leases that have been or should be, in
------------------
accordance with GAAP, recorded as capitalized leases.
"Carryover Amount" has the meaning specified in Section 5.04(d).
----------------
"Cash Equivalents" means any of the following, to the extent owned by
----------------
the Parent Guarantor or any of its Subsidiaries free and clear of all Liens
other than Liens created under the Collateral Documents or Permitted Liens
and, other than in the case of investments described in clause (d) below,
having a maturity of not greater than 180 days from the date of acquisition
thereof: (a) readily marketable direct obligations of the Government of the
United States or any agency or instrumentality thereof or obligations
unconditionally guaranteed by the full faith and credit of the Government
of the United States, (b) insured certificates of deposit of or time
deposits with any commercial bank that is a Lender Party or a member of the
Federal Reserve System, issues (or the parent of which issues) commercial
paper rated as described in clause (c), is organized under the laws of the
United States or any State thereof and has combined capital and surplus of
at least $1 billion, (c) commercial paper in an aggregate amount of no more
than $250,000 per issuer outstanding at any time, issued by any corporation
organized under the laws of any State of the United States and rated at
least "Prime-1" (or the then equivalent grade) by Moody's Investors
Service, Inc. or "A-1" (or the then equivalent grade) by Standard & Poor's
Ratings Services, (d) money market or mutual funds that invest in Cash
Equivalents of the types described in clauses (a), (b) and (c) above or (e)
in the case of the Canadian Borrower, any equivalent, prudent, short-term
investment consistent with the foregoing.
"CERCLA" means the Comprehensive Environmental Response, Compensation
------
and Liability Act of 1980, as amended from time to time.
<PAGE>
10
"CERCLIS" means the Comprehensive Environmental Response, Compensation
-------
and Liability Information System maintained by the U.S. Environmental
Protection Agency.
"Chase Capital" means Chase Capital Partners ("CCP") and its
------------- ---
affiliates, which include any corporation, any general partnership, any
limited partnership or any limited liability corporation, the beneficial
interests of which are owned directly or indirectly by one or more present
or former employees or executives of CCP or the respective Affiliates of
any of the foregoing entities.
"Collateral" means all "Collateral" and all "Intellectual Property
----------
Collateral", referred to in the Collateral Documents and all other property
that is or is intended to be subject to any Lien in favor of the Agent for
the benefit of the Secured Parties.
"Collateral Documents" means the Security Agreement, the Canadian
--------------------
Security Agreement, the Intellectual Property Security Agreement, the
Parent Guarantor Security Agreement, the Mortgages and any other agreement
that creates or purports to create a Lien in favor of the Agent for the
benefit of the Secured Parties (including, without limitation, any
agreement executed and delivered pursuant to Section 5.01(m)).
"Commitment" means a Term A Commitment, a Term B Commitment, a Working
----------
Capital Commitment, a Canadian Commitment, an Acquisition Commitment, a
Swing Line Commitment or a Letter of Credit Commitment.
"Confidential Information" means information furnished to the Agent or
------------------------
any Lender Party on a confidential basis by or on behalf of any Loan Party
and designated as such, but does not include any such information that is
or becomes generally available to the public (other than through any breach
of any undertaking hereunder or in connection herewith) or that is or
becomes available to the Agent or such Lender from a source other than any
Loan Party, Chase Capital, Chase Securities Inc. or D. George Harris &
Associates, Inc.
"Consolidated" refers, with respect to any Person, to the
------------
consolidation of accounts of such Person and its Subsidiaries in accordance
with GAAP.
"Conversion", "Convert" and "Converted" each refer to a conversion of
---------- ------- ---------
Advances of one Type into Advances of the other Type pursuant to Section
2.10, 2.11 or 2.12.
"Conversion Date" means September 30, 2002.
---------------
"Current Assets" of any Person means all assets of such Person that
--------------
would, in accordance with GAAP, be classified as current assets of a
company conducting a
<PAGE>
11
business the same as or similar to that of such Person, after deducting
adequate reserves in each case in which a reserve is proper in accordance
with GAAP.
"Current Liabilities" of any Person means (a) all Debt of such Person
-------------------
that by its terms is payable on demand or matures within one year after the
date of determination other than Funded Debt and (b) all other items
(including, without limitation, taxes accrued as estimated and payable
within twelve months) that in accordance with GAAP would be classified as
current liabilities of such Person.
"D. George Harris & Associates Person" shall mean each of D. George
------------------------------------
Harris, Anthony J. Petrocelli, Richard J. Donahue, Donald G. Kilpatrick,
Richard J. Nick and any other Persons whose shares of stock of USS
Holdings, Inc. are voted by one or more of D. George Harris, Anthony J.
Petrocelli and Donald G. Kilpatrick so long as such Persons are associated
with D. George Harris & Associates, LLC.
"Debt" of any Person means, without duplication, (a) all indebtedness
----
of such Person for borrowed money, (b) all Obligations of such Person for
the deferred purchase price of property or services (other than trade
payables not overdue by more than 90 days incurred in the ordinary course
of such Person's business), (c) all Obligations of such Person evidenced by
notes, bonds, debentures or other similar instruments, (d) all Obligations
of such Person created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement
in the event of default are limited to repossession or sale of such
property), (e) all Obligations of such Person as lessee under Capitalized
Leases, (f) all Obligations, contingent or otherwise, of such Person under
acceptance, letter of credit or similar facilities, (g) all Obligations of
such Person to purchase, redeem, retire, defease or otherwise make any
payment in respect of any capital stock of or other ownership or profit
interest in such Person or any other Person or any warrants, rights or
options to acquire such capital stock, valued, in the case of Redeemable
Preferred Stock, at the greater of its voluntary or involuntary liquidation
preference plus accrued and unpaid dividends, (h) all Obligations of such
Person in respect of Hedge Agreements, (i) all Debt of others referred to
in clauses (a) through (h) above or clause (j) below guaranteed directly or
indirectly in any manner by such Person, or in effect guaranteed directly
or indirectly by such Person through an agreement (i) to pay or purchase
such Debt or to advance or supply funds for the payment or purchase of such
Debt, (ii) to purchase, sell or lease (as lessee or lessor) property, or to
purchase or sell services, primarily for the purpose of enabling the debtor
to make payment of such Debt or to assure the holder of such Debt against
loss, (iii) to supply funds to or in any other manner invest in the debtor
(including any agreement to pay for property or services irrespective of
whether such property is received or such services are rendered) or (iv)
otherwise to assure a creditor against loss, and (j) all Debt referred to
in clauses (a) through (i) above of another Person secured by (or for which
the holder of such Debt has
<PAGE>
12
an existing right, contingent or otherwise, to be secured by) any Lien on
property (including, without limitation, accounts and contract rights)
owned by such Person, even though such Person has not assumed or become
liable for the payment of such Debt.
"Declining Lender" has the meaning specified in Section 2.07(c).
----------------
"Default" means any Event of Default or any event that would
-------
constitute an Event of Default but for the requirement that notice be given
or time elapse or both.
"Domestic Lending Office" means, with respect to any Lender Party, the
-----------------------
office of such Lender Party specified as its "Domestic Lending Office"
opposite its name on Schedule I hereto or in the Assignment and Acceptance
pursuant to which it became a Lender Party, as the case may be, or such
other office of such Lender Party as such Lender Party may from time to
time specify to the Borrower and the Agent.
"Domestic Subsidiary" of the Borrower means any Subsidiary of the
-------------------
Borrower organized under the laws of any State of the United States of
America.
"Draft" means a blank bill of exchange, within the meaning of the
-----
Bills of Exchange Act (Canada), drawn by the Canadian Borrower on any
Canadian Lender, in substantially the form of Exhibit A-6, and which,
except as otherwise provided herein, has not been completed or accepted by
such Lender.
"Drawing" means the simultaneous acceptance of Drafts and purchase of
-------
Bankers' Acceptances by the Canadian Lenders, in accordance with Section
2.04(a).
"Drawing Purchase Price" means, with respect to each Bankers'
----------------------
Acceptance to be purchased by any Canadian Lender at any time, the amount
(adjusted to the nearest whole cent or, if there is no nearest whole cent,
the next higher whole cent) obtained by dividing (i) the aggregate Face
Amount of such Bankers' Acceptance, by (ii) the sum of (A) one and (B) the
product of (1) the BA Rate in effect at such time (expressed as a decimal)
multiplied by (2) a fraction the numerator of which is the number of days
-------------
in the term to maturity of such Bankers' Acceptance and the denominator of
which is 365 days or 366 days, as the case may be.
"EBITDA" means, with respect to any Person for any period, the sum,
------
determined on a Consolidated basis, of (a) net income (or net loss) and (b)
without duplication and to the extent deducted from revenues in determining
net income (or net loss) for such period, the sum of (i) Interest Expense,
(ii) income tax expense, (iii) depreciation expense, (iv) amortization
expense, (v) extraordinary or unusual losses deducted in calculating net
income less extraordinary or unusual gains added in calculating net income,
in each case of such Person and its Subsidiaries, determined in accordance
with
<PAGE>
13
GAAP for such period and (vi) in the case of the Parent Guarantor and its
Subsidiaries, fees paid pursuant to the Harris Management Agreement;
provided, however, there shall be excluded from EBITDA, to the extent
-------- -------
therein included, all non-cash foreign currency losses and all non-cash
foreign currency gains.
"Eligible Assignee" means, with respect to any Facility: (i) a Lender;
-----------------
(ii) an Affiliate of a Lender; (iii) 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 $500,000,000; (iv) a savings and loan
association or savings bank organized under the laws of the United States,
or any State thereof, and having a combined capital and surplus of at least
$500,000,000; (v) a commercial bank organized under the laws of any other
country that is a member of the OECD or has concluded special lending
arrangements with the International Monetary Fund associated with its
General Arrangements to Borrow or a political subdivision of any such
country, and having a combined capital and surplus of at least
$500,000,000, so long as such bank is acting through a branch or agency
located in the United States; (vi) a finance company, insurance company or
other financial institution or fund (whether a corporation, partnership,
trust or other entity) that is engaged in making, purchasing or otherwise
investing in commercial loans in the ordinary course of its business and
having a combined capital and surplus of at least $250,000,000; (vii) any
Federal Reserve Bank; (viii) in the case of any Lender that is a fund that
invests in commercial loans, a Related Fund of such Lender; and (ix) any
other Person approved by the Agent and the Borrower, such approval not to
be unreasonably withheld or delayed; provided, however, that neither any
-------- -------
Loan Party nor any Affiliate of a Loan Party shall qualify as an Eligible
Assignee under this definition; and provided further that, with respect to
-------- -------
the Canadian Facility, any Person that is not resident in Canada for
purposes of the Income Tax Act (Canada) shall not qualify as an Eligible
Assignee under this definition.
"Environmental Action" means any action, suit, demand, demand letter,
--------------------
claim, notice of non-compliance or violation, notice of liability or
potential liability, investigation, proceeding, consent order or consent
agreement relating in any way to any Environmental Law, any Environmental
Permit or Hazardous Material or arising from alleged injury or threat to
health, safety or the environment, including, without limitation, (a) by
any governmental or regulatory authority for enforcement, cleanup, removal,
response, remedial or other actions or damages and (b) by any governmental
or regulatory authority or third party for damages, contribution,
indemnification, cost recovery, compensation or injunctive relief.
"Environmental Law" means any federal, state, local or foreign
-----------------
statute, law, ordinance, rule, regulation, code, order, writ, judgment,
injunction, decree or judicial or agency interpretation, policy or guidance
relating to pollution or protection of the environment, health, safety or
natural resources, including, without limitation, those
<PAGE>
14
relating to the use, handling, transportation, treatment, storage,
disposal, release or discharge of Hazardous Materials.
"Environmental Permit" means any permit, approval, identification
--------------------
number, license or other authorization required under any Environmental
Law.
"Equity Contributions" means (a) the contribution by USS Holdings,
--------------------
Inc. to the Parent Guarantor of up to $35,000,000 as common equity on or
prior to the date of the Initial Extension of Credit and (b) the
contribution by USS Holdings, Inc. to the Parent Guarantor of the Net Cash
Proceeds of the sale or issuance by USS Holdings, Inc. of capital stock of
USS Holdings, Inc. to managers and employees of the Parent Guarantor and
its Subsidiaries in an aggregate amount not in excess of $6,516,000 as
common equity on or prior to the date that is six months after the Initial
Extension of Credit.
"Equivalent" (a) in U.S. Dollars of Canadian Dollars, on any date of
----------
determination, means the equivalent thereof determined by using the quoted
spot rate at which the Sub-Agent's principal office in Toronto, Ontario
offers to exchange U.S. Dollars for Canadian Dollars in Toronto, Ontario at
11:00 A.M. (New York City time) on such date, and (b) in Canadian Dollars
of U.S. Dollars, on any date of determination means the equivalent thereof
determined by using the quoted spot rate at which BNP's principal office in
New York City, New York offers to exchange Canadian Dollars for U.S.
Dollars in New York City, New York at 11:00 A.M. (New York City time) on
such date.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time, and the regulations promulgated and rulings
issued thereunder.
"ERISA Affiliate" means any Person that for purposes of Title IV of
---------------
ERISA is a member of the controlled group of any Loan Party, or under
common control with any Loan Party, within the meaning of Section 414 of
the Internal Revenue Code.
"ERISA Event" means (a) (i) the occurrence of a reportable event,
-----------
within the meaning of Section 4043 of ERISA, with respect to any Plan
unless the 30-day notice requirement with respect to such event (or the
penalty for failure to provide such notice) has been waived by the PBGC; or
(ii) the requirements of subsection (1) of Section 4043(b) of ERISA
(without regard to subsection (2) of such Section) are met with a
contributing sponsor, as defined in Section 4001(a)(13) of ERISA, of a
Plan, and an event described in paragraph (9), (10), (11), (12) or (13) of
Section 4043(c) of ERISA is reasonably expected to occur with respect to
such Plan within the following 30 days; (b) the application for a minimum
funding waiver with respect to a Plan; (c) the provision by the
administrator of any Plan of a notice of intent to terminate such Plan,
pursuant to
<PAGE>
15
Section 4041(a)(2) of ERISA (including any such notice with respect to a
plan amendment referred to in Section 4041(e) of ERISA); (d) the cessation
of operations at a facility of any Loan Party or any ERISA Affiliate in the
circumstances described in Section 4062(e) of ERISA; (e) the withdrawal by
any Loan Party or any ERISA Affiliate from a Multiple Employer Plan during
a plan year for which it was a substantial employer, as defined in Section
4001(a)(2) of ERISA; (f) the conditions for imposition of a lien under
Section 302(f) of ERISA shall have been met with respect to any Plan; (g)
the adoption of an amendment to a Plan requiring the provision of security
to such Plan, pursuant to Section 307 of ERISA; or (h) the institution by
the PBGC of proceedings to terminate a Plan pursuant to Section 4042 of
ERISA, or the occurrence of any event or condition described in Section
4042 of ERISA that could reasonably be expected to constitute grounds for
the termination of, or the appointment of a trustee to administer, such
Plan.
"Eurocurrency Liabilities" has the meaning specified in Regulation D
------------------------
of the Board of Governors of the Federal Reserve System, as in effect from
time to time.
"Eurodollar Lending Office" means, with respect to any Lender Party,
-------------------------
the office of such Lender Party specified as its "Eurodollar Lending
Office" opposite its name on Schedule I hereto or in the Assignment and
Acceptance pursuant to which it became a Lender Party (or, if no such
office is specified, its Domestic Lending Office), or such other office of
such Lender Party as such Lender Party may from time to time specify to the
Borrower and the Agent.
"Eurodollar Rate" means, for any Interest Period for all Eurodollar
---------------
Rate Advances comprising part of the same Borrowing, an interest rate per
annum equal to the rate per annum obtained by dividing (a) the average of
the respective rates per annum (rounded upward to the next whole multiple
of 1/16th of 1%) posted by each of the principal London offices of banks
posting rates as displayed on the Dow Jones Markets screen, page 3750 or
such other page as may replace such page on such service for the purpose of
displaying the London interbank offered rate of major banks for deposits in
U.S. Dollars, at approximately 11:00 A.M. (London time) two Business Days
before the first day of such Interest Period for deposits in an amount
substantially equal to BNP's Eurodollar Rate Advance comprising part of
such Borrowing to be outstanding during such Interest Period (or, if BNP
shall not have such Eurodollar Rate Advance, $1,000,000) and for a period
equal to such Interest Period by (b) a percentage equal to 100% minus the
Eurodollar Rate Reserve Percentage for such Interest Period.
"Eurodollar Rate Advance" means an Advance that bears interest as
-----------------------
provided in Section 2.08(b)(ii).
"Eurodollar Rate Reserve Percentage" for any Interest Period for
----------------------------------
all Eurodollar Rate Advances comprising part of the same Borrowing means
the reserve percentage
<PAGE>
16
applicable two Business Days before the first day of such Interest Period
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 a member bank of
the Federal Reserve System in New York City with respect to liabilities or
assets consisting of or including Eurocurrency Liabilities (or with respect
to any other category of liabilities that includes deposits by reference to
which the interest rate on Eurodollar Rate Advances is determined) having a
term equal to such Interest Period, provided that a Lender Party shall be
--------
deemed to be subject to such eurocurrency reserve requirements only from
and after the date that such Lender Party has certified to the Borrower
that a governmental authority has imposed any such eurocurrency reserve
requirements subsequent to the date hereof which increase the cost to such
Lender Party of making or maintaining Eurodollar Rate Advances hereunder.
"Events of Default" has the meaning specified in Section 6.01.
-----------------
"Excess Cash Flow" means, for any period, the sum of (a) pre-tax
----------------
income of the Borrower and its Subsidiaries for such period less
----
Consolidated income taxes plus (b) an amount equal to the aggregate amount
----
of all noncash charges (other than non-cash charges included in Current
Liabilities) deducted in arriving at Consolidated net income (or loss) for
each such period plus (c) an amount (whether positive or negative) equal to
----
the change in Consolidated Current Liabilities of the Borrower and its
Subsidiaries during such period plus (d) the aggregate principal amount of
----
all Debt (including the aggregate principal amount of Obligations under
Capitalized Leases) incurred or assumed during such period to the extent
that the incurrence or assumption of such Debt constitutes a Capital
Expenditure less (e) an amount equal to the aggregate amount of all noncash
----
credits included in arriving at such Consolidated net income (or net loss)
less (f) an amount (whether positive or negative) equal to the change in
----
Consolidated Current Assets (excluding cash and Cash Equivalents) of the
Borrower and its Subsidiaries during such period less (g) an amount equal
----
to the amount of all Capital Expenditures of the Borrower and its
Subsidiaries paid in cash during such period to the extent permitted by
this Agreement less (h) an amount equal to the aggregate amount of all
----
regularly scheduled principal payments of Funded Debt made during such
period, together with any optional prepayments of Term Advances or
Acquisition Advances made during such period in accordance with Section
2.07(a), less (i) an amount equal to the aggregate amount of income of the
----
Borrower and its Subsidiaries for such period included in pre-tax income of
the Borrower and its Subsidiaries for such period resulting from any
transaction creating Net Cash Proceeds or Extraordinary Receipts.
"Existing Debt" means the Debt of the Borrower and its Subsidiaries
-------------
identified on Schedule 4.01(ee).
<PAGE>
17
"Existing Letters of Credit" means each of the letters of credit
--------------------------
referred to on Schedule 1.01 attached hereto.
"Extraordinary Receipts" means any cash received by or paid to or for
----------------------
the account of any Person not in the ordinary course of business
constituting pension plan reversions, proceeds of property damage insurance
(other than proceeds of business interruption insurance to the extent such
proceeds constitute compensation for lost earnings), condemnation awards
(and payments in lieu thereof) and indemnity payments (other than proceeds
to the extent such proceeds constitute compensation for lost earnings);
provided, however, that an Extraordinary Receipt shall not include cash
-------- -------
constituting proceeds of insurance, condemnation awards or indemnity
payments to the extent that such proceeds are applied within six months
after the receipt of such proceeds, or in respect of which expenditures
were previously made, (i) for replacements, substitutions therefor or
additions thereto for inventory, equipment, fixed assets, real property or
improvements relating to the property covered by such payments
(replacements or substitutions to be of such same type of property) or (ii)
in connection with liabilities covered by such indemnity.
"Face Amount" means, with respect to any Bankers' Acceptance, the
-----------
amount payable to the holder of such Bankers' Acceptance on its then
existing Maturity Date.
"Facility" means the Term A Facility, the Term B Facility, the Working
--------
Capital Facility, the Canadian Facility, the Acquisition Facility, the
Swing Line Facility or the Letter of Credit Facility.
"Federal Funds Rate" means, for any period, a fluctuating interest
------------------
rate per annum equal for each day during such period (i) to the rate
published by the Telerate service on page five of its daily report as the
"New York Offered Rate" as of 10:00 A.M. (New York City time) for such day
(or, if such day is not a Business Day, for the immediately preceding
Business Day) or (ii) if the Telerate service shall cease to publish or
otherwise shall not publish such rates for any day that is a Business Day,
to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal Reserve Bank of
New York, or, if such rate is not so published for any day that is a
Business Day, the average of the quotations for such day for such
transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.
"Fiscal Year" means a fiscal year of the Parent Guarantor and its
-----------
consolidated Subsidiaries ending on December 31 in any calendar year.
<PAGE>
18
"Funded Debt" of any Person at any time means indebtedness for
-----------
borrowed amounts of such Person that by its terms matures more than one
year after the date of creation or matures within one year from such date
but is renewable or extendible, at the option of such Person, to a date
more than one year after such date or arises under a revolving credit or
similar agreement that obligates the lender or lenders to extend credit
during a period of more than one year after such date, including, without
limitation, all amounts of Funded Debt of such Person required to be paid
or prepaid within one year after the date of determination.
"GAAP" has the meaning specified in Section 1.03.
----
"Harris Management Agreement" means the Management Services Agreement
---------------------------
dated as of October 6, 1998, among USS Holdings, Inc., a Delaware
corporation, the Parent Guarantor (as assignee of the Borrower), the
Borrower (as assignee of Silica) and D. George Harris & Associates, LLC, a
Delaware limited liability company (as successor or assignee of D. George
Harris & Associates, Inc., a Delaware corporation).
"Hazardous Materials" means (a) petroleum or petroleum products, by-
-------------------
products or breakdown products, radioactive materials, asbestos-containing
materials, polychlorinated biphenyls and radon gas and (b) any other
chemicals, materials or substances designated, classified or regulated as
hazardous or toxic or as a pollutant or contaminant under any Environmental
Law.
"Hedge Agreements" means interest rate swap, cap or collar agreements,
----------------
interest rate future or option contracts, currency swap agreements,
currency future or option contracts and other similar agreements.
"Hedge Bank" means any Lender Party (or any Affiliate thereof) in its
----------
capacity as a party to a Bank Hedge Agreement.
"Home Jurisdiction Withholding Taxes" means (a) in the case of the
-----------------------------------
Borrower or any Subsidiary Guarantor, withholding taxes imposed by the
United States, and (b) in the case of the Canadian Borrower, withholding
taxes imposed by Canada.
"Indemnified Party" has the meaning specified in Section 8.04(b).
-----------------
"Initial Extension of Credit" means the earlier to occur of the
---------------------------
initial Borrowing, the initial issuance of a Letter of Credit or the
initial Drawing hereunder, which in no event shall occur later than October
1, 1999.
"Initial Lenders" has the meaning specified in the recital of parties
---------------
to this Agreement.
<PAGE>
19
"Insufficiency" means, with respect to any Plan, the excess, if any,
-------------
of the accumulated benefit obligation (within the meaning of Statement of
Financial Accounting Standards No. 87) over the fair market value of the
Plan's assets, determined as of the most recent annual actuarial valuation
date for the Plan.
"Intellectual Property Security Agreement" has the meaning specified
----------------------------------------
in Section 3.01(g)(xiii).
"Interest Coverage Ratio" means, with respect to any Person for any
-----------------------
Rolling Period, the ratio of (a) EBITDA of such Person and its Subsidiaries
for such Rolling Period to (b) Interest Expense of such Person and its
Subsidiaries for such Rolling Period.
"Interest Expense" means, with respect to any Person for any period,
----------------
the amount by which (i) interest expense (including the interest component
on obligations under Capitalized Leases (but excluding, to the extent
applicable, interest expense accrued under the agreement, dated August 8,
1995, between Silica and ITT Corporation, as in effect from time to time)),
whether paid or accrued, on all Debt of such Person and its Subsidiaries
for such period, including, without limitation and without duplication, (a)
interest expense in respect of Debt resulting from Advances, (b)
commissions, discounts and other fees and charges payable in connection
with letters of credit (including, without limitation, any Letters of
Credit), (c) interest which is capitalized in accordance with GAAP, (d)
interest expense in respect of the Subordinated Debt and (e) any net
payment payable in connection with Hedge Agreements less the sum of any net
----
credits received in connection with Hedge Agreements exceeds (ii) interest
income, whether paid or accrued of such Person for such period.
"Interest Period" means, for each Eurodollar Rate Advance comprising
---------------
part of the same Borrowing, the period commencing on the date of such
Eurodollar Rate Advance or the date of the Conversion of any Base Rate
Advance into such Eurodollar Rate Advance, and ending on the last day of
the period selected by the Borrower pursuant to the provisions below and,
thereafter, each subsequent period commencing on the last day of the
immediately preceding Interest Period and ending on the last day of the
period selected by the Borrower pursuant to the provisions below. The
duration of each such Interest Period shall be one, two, three or six
months, as the Borrower may, upon notice received by the Agent not later
than 11:00 A.M. (New York City time) on the third Business Day prior to the
first day of such Interest Period, select; provided, however, that:
-------- -------
(a) the Borrower may not select any Interest Period with respect
to any Eurodollar Rate Advance under a Facility that ends after any
principal repayment installment date for such Facility unless, after
giving effect to such selection, the
<PAGE>
20
aggregate principal amount of Base Rate Advances and of Eurodollar
Rate Advances having Interest Periods that end on or prior to such
principal repayment installment date for such Facility shall be at
least equal to the aggregate principal amount of Advances under such
Facility due and payable on or prior to such date;
(b) Interest Periods commencing on the same date for Eurodollar
Rate Advances comprising part of the same Borrowing shall be of the
same duration;
(c) whenever the last day of any Interest Period would otherwise
occur on a day other than a Business Day, the last day of such
Interest Period shall be extended to occur on the next succeeding
Business Day; provided, however, that, if such extension would cause
-------- -------
the last day of such Interest Period to occur in the next following
calendar month, the last day of such Interest Period shall occur on
the immediately preceding Business Day; and
(d) whenever the first day of any Interest Period occurs on a
day of an initial calendar month for which there is no numerically
corresponding day in the calendar month that succeeds such initial
calendar month by the number of months equal to the number of months
in such Interest Period, such Interest Period shall end on the last
Business Day of such succeeding calendar month.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
---------------------
amended from time to time and applicable U.S. Treasury Regulations
promulgated thereunder.
"Inventory" means all Inventory referred to in Section 1(b) of the
---------
Security Agreement.
"Investment" in any Person means any loan or advance to such Person,
----------
any purchase or other acquisition of any evidences of indebtedness, capital
stock or other ownership or profit interest, warrants, rights, options,
obligations or other securities or all or substantially all the assets of
or a business unit or division of such Person, any capital contribution to
such Person or any other investment in such Person, including, without
limitation, any arrangement pursuant to which the investor incurs Debt of
the types referred to in clause (i) or (j) of the definition of "Debt" in
----
respect of such Person.
"IRS" has the meaning specified in Section 2.14(e).
---
"Issuing Bank" means BNP, as issuing bank under the Existing Letters
------------
of Credit and as Initial Issuing Bank hereunder and each Eligible Assignee
to which a Letter of Credit Commitment hereunder has been assigned pursuant
to Section 8.07(b).
<PAGE>
21
"L/C Cash Collateral Account" has the meaning specified in the
---------------------------
Security Agreement.
"L/C Related Documents" has the meaning specified in Section
---------------------
2.05(e)(ii)(A).
"Lender Party" means any Lender, the Swing Line Bank or the Issuing
------------
Bank.
"Lenders" means the Initial Lenders and each Person that shall become
-------
a Lender hereunder pursuant to Section 8.07.
"Letter of Credit" means (i) each Existing Letter of Credit, and (ii)
----------------
each letter of credit issued pursuant to Section 2.01(g) hereof.
"Letter of Credit Advance" means an advance made by the Issuing Bank
------------------------
or any Working Capital Lender pursuant to Section 2.03(c).
"Letter of Credit Agreement" has the meaning specified in Section
--------------------------
2.03(a).
"Letter of Credit Commitment" means, with respect to the Issuing Bank
---------------------------
at any time, the amount set forth opposite such Issuing Bank's name on
Schedule I hereto under the caption "Letter of Credit Commitment" or, if
such Issuing Bank has entered into an Assignment and Acceptances, set forth
for such Issuing Bank in the Register maintained by the Agent pursuant to
Section 8.07(e) as such Issuing Bank's "Letter of Credit Commitment", as
such amount may be reduced at or prior to such time pursuant to Section
2.06.
"Letter of Credit Facility" means, at any time, an amount equal to the
-------------------------
aggregate amount of the Issuing Bank's Letter of Credit Commitment at such
time which shall not exceed $12,000,000.
"Leverage Ratio" means, with respect to any Person at any date of
--------------
determination, the ratio of (a) Funded Debt (other than contingent
obligations of the type described in clause (f) or (h) in the definition of
"Debt") of such Person and its Subsidiaries to (b) Adjusted EBITDA of such
----
Person and its Subsidiaries for the most recently completed Rolling Period
prior to such date multiplied by the Annualization Factor.
"Lien" means any lien, security interest or other charge or
----
encumbrance of any kind, or any other type of preferential arrangement,
including, without limitation, the lien or retained security title of a
conditional vendor and any easement, right of way or other encumbrance on
title to real property.
<PAGE>
22
"Loan Documents" means (a) for purposes of this Agreement and the
--------------
Notes, if any, and any amendment or modification hereof or thereof and for
all other purposes other than for purposes of the Parent Guaranty, the
Subsidiary Guaranty and the Collateral Documents, (i) this Agreement, (ii)
the Notes, if any, (iii) the Collateral Documents, (iv) each Letter of
Credit Agreement, (v) the Parent Guaranty, (vi) the Bankers' Acceptances
and (vii) the Subsidiary Guaranty, and (b) for purposes of the Parent
Guaranty, the Subsidiary Guaranty and the Collateral Documents, (i) this
Agreement, (ii) the Notes, if any, (iii) the Collateral Documents, (iv)
each Letter of Credit Agreement, (v) the Parent Guaranty, (vi) the
Subsidiary Guaranty, (vii) the Bankers' Acceptances and (viii) each Bank
Hedge Agreement, in each case as amended or otherwise modified from time to
time.
"Loan Parties" means the Borrower, the Canadian Borrower, the Parent
------------
Guarantor, each Subsidiary Guarantor and each further Subsidiary of the
Borrower that may become a guarantor or collateral grantor pursuant to
Section 5.01(m) or Section 5.01(n).
"Margin Stock" has the meaning specified in Regulation U.
------------
"Material Adverse Change" means any material adverse change in the
-----------------------
business, condition (financial or otherwise), operations, performance,
properties or prospects of the Borrower and its Subsidiaries, taken as a
whole, or the Acquired Businesses, taken as a whole, as the context
requires.
"Material Adverse Effect" means a material adverse effect on (a) the
-----------------------
business, condition (financial or otherwise), operations, performance,
properties or prospects of the Parent Guarantor and its Subsidiaries, taken
as a whole, (b) the rights and remedies of the Agent or the Lender Parties,
taken as a whole, under any Loan Document or (c) the ability of the Parent
Guarantor and its Subsidiaries, taken as a whole, to perform their
Obligations under any Loan Document to which they are or are to be a party.
"Material Lease" has the meaning specified in Section 4.01(hh).
--------------
"Maturity Date" means, for each Bankers' Acceptance comprising part of
-------------
the same Drawing, the date on which the Face Amount for such Bankers'
Acceptance becomes due and payable in accordance with the provisions set
forth below, which shall be a Canadian Business Day occurring thirty, sixty
or ninety days or, if available to all Canadian Lenders purchasing Bankers'
Acceptances in connection with the applicable Drawing, one hundred and
eighty days after the date on which such Bankers' Acceptance is created and
purchased as part of any Drawing, as the Canadian Borrower may select upon
notice received by the Agent not later than 12:00 noon (New York City time)
on a Canadian Business Day at least two Canadian Business Days prior to the
date on which such
<PAGE>
23
Bankers' Acceptance is to be accepted and purchased (whether as a new
Drawing, by renewal or by Conversion); provided, however, that:
-------- -------
(a) such Borrower may not select any Maturity Date for any
Bankers' Acceptance that occurs after the then scheduled Termination
Date;
(b) the Maturity Date for all Bankers' Acceptances comprising
part of the same Drawing shall occur on the same date; and
(c) whenever the Maturity Date for any Bankers' Acceptance would
otherwise occur on a day other than a Canadian Business Day, such
Maturity Date shall be extended to occur on the next succeeding
Canadian Business Day.
"Mortgage" has the meaning set forth in Section 3.01(g)(xiv).
--------
"Mortgage Policy" has the meaning specified in Section
---------------
3.01(g)(xiv)(A).
"Multiemployer Plan" means a multiemployer plan, as defined in Section
------------------
4001(a)(3) of ERISA, to which any Loan Party or any ERISA Affiliate is
making or accruing an obligation to make contributions, or has within any
of the preceding five plan years made or accrued an obligation to make
contributions.
"Multiple Employer Plan" means a single employer plan, as defined in
----------------------
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of any
Loan Party or any ERISA Affiliate and at least one Person other than the
Loan Parties and the ERISA Affiliates or (b) was so maintained and in
respect of which any Loan Party or any ERISA Affiliate could have liability
under Section 4064 or 4069 of ERISA in the event such plan has been or were
to be terminated.
"Natural Gas Hedge Agreement" means any Hedge Agreements entered into
---------------------------
by a Loan Party pursuant to Section 5.02(b)(ii) hereof.
"Net Cash Proceeds" means, with respect to any sale, lease, transfer
-----------------
or other disposition of any asset or the sale or issuance of any Debt or
capital stock or other ownership or profit interest, any securities
convertible into or exchangeable for capital stock or other ownership or
profit interest or any warrants, rights, options or other securities to
acquire capital stock or other ownership or profit interest by any Person,
or any Extraordinary Receipt received by or paid to or for the account of
any Person, the aggregate amount of cash received from time to time
(whether as initial consideration or through payment or disposition of
deferred consideration) by or on behalf of such Person in connection with
such transaction after deducting therefrom only (without duplication) (a)
the reasonable and customary out-of-pocket expenses incurred by any Loan
Party in
<PAGE>
24
connection therewith, including, but not limited to, brokerage commissions,
underwriting fees and discounts, legal fees, finder's fees and other
similar fees and commissions, (b) the amount of taxes payable in connection
with or as a result of such transaction, (c) the amount of any Debt secured
by a Lien on such asset that, by the terms of such transaction, is required
to be repaid in connection with such transaction and (d) the provision for
cash reserves with respect to any liabilities associated with such assets,
in each case to the extent, but only to the extent, that the amounts so
deducted are properly attributable to such transaction or to the asset that
is the subject thereof.
"Nicks Silica Company Notes" means the promissory note and consulting
--------------------------
agreement of Silica issued in connection with the acquisition by Silica of
certain assets of Nicks Silica Company in an aggregate amount of
$1,950,000, payable during Fiscal Year 1999 through Fiscal Year 2007.
"Note" means a Term Note, a Working Capital Note, a Canadian Borrower
----
Note or an Acquisition Note, in each case to the extent required to be
issued pursuant to Section 2.17.
"Notice of Borrowing" has the meaning specified in Section 2.02(a).
-------------------
"Notice of Drawing" has the meaning specified in Section 2.04(a).
-----------------
"Notice of Issuance" has the meaning specified in Section 2.03(a).
------------------
"NPL" means the National Priorities List under CERCLA.
---
"Obligation" means, with respect to any Person, any payment,
----------
performance or other obligation of such Person of any kind, including,
without limitation, any liability of such Person on any claim, whether or
not the right of any creditor to payment in respect of such claim is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
disputed, undisputed, legal, equitable, secured or unsecured, and whether
or not such claim is discharged, stayed or otherwise affected by any
proceeding referred to in Section 6.01(f). Without limiting the generality
of the foregoing, the Obligations of the Loan Parties under the Loan
Documents include (a) the obligation to pay principal, interest, Letter of
Credit commissions, charges, expenses, fees, attorneys' fees and
disbursements, indemnities and other amounts payable by any Loan Party
under any Loan Document and (b) the obligation of any Loan Party to
reimburse any amount in respect of any of the foregoing that any Lender
Party, in its sole discretion, may elect to pay or advance on behalf of
such Loan Party.
"OECD" means the Organization for Economic Cooperation and
----
Development.
<PAGE>
25
"Open Year" has the meaning specified in Section 4.01(z).
---------
"Other Taxes" has the meaning specified in Section 2.14(b).
-----------
"Parent Guarantor" has the meaning specified in the recital of parties
----------------
to this Agreement.
"Parent Guarantor Security Agreement" has the meaning specified in
-----------------------------------
Section 3.01(g)(xii).
"Parent Guaranty" has the meaning specified in Section 3.01(g)(xv).
---------------
"PBGC" means the Pension Benefit Guaranty Corporation.
----
"Permitted Acquisition" means the purchase or acquisition of all or
---------------------
substantially all of the assets of or a business unit or division of or
the privately held capital stock of a Person engaged in a similar line of
business as the Borrower and its Subsidiaries.
"Permitted Encumbrances" means the Liens disclosed in the Mortgage
----------------------
Policies.
"Permitted Liens" means such of the following as to which no
---------------
enforcement, collection, execution, levy or foreclosure proceedings shall
have been commenced: (a) Liens for taxes, assessments and governmental
charges or levies to the extent not required to be paid under Section
5.01(b) hereof; (b) Liens imposed by law, such as materialmen's,
mechanics', carriers', workmen's and repairmen's Liens and other similar
Liens arising in the ordinary course of business securing obligations that
(i) are not overdue for a period of more than 90 days and (ii) either
individually or when aggregated with all other Permitted Liens outstanding
on any date of determination, do not materially affect the use or value of
the property to which they relate; (c) pledges or deposits to secure the
performance of bids, trade contracts (other than for borrowed money),
leases, surety and appeal bonds, performance bonds and other obligations of
a like nature incurred in the ordinary course of business, to secure
obligations under worker's compensation laws or similar legislation or to
secure public or statutory obligations; (d) easements, rights of way,
defects and other encumbrances on title to real property that do not
materially adversely affect the use of such property for its present
purposes; (e) deed restrictions and other encumbrances on title to real
property that do not, individually or in the aggregate, materially
interfere with the business of the Borrower or any of its Subsidiaries; and
(f) Liens arising under Canadian law or the law of any political
subdivision thereof, imposed on assets owned by the Canadian Borrower or
any of its Subsidiaries, in respect of wages, employee deductions, sales
taxes, goods and service taxes, excise taxes, worker's compensation,
pension fund obligations and overdue rents.
<PAGE>
26
"Person" means an individual, partnership, corporation (including
------
a business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, or a government
or any political subdivision or agency thereof.
"Plan" means a Single Employer Plan or a Multiple Employer Plan.
----
"Preferred Stock" means, with respect to any corporation, capital
---------------
stock issued by such corporation that is entitled to a preference or
priority over any other capital stock issued by such corporation upon any
distribution of such corporation's assets, whether by dividend or upon
liquidation.
"Prepayment Amount" has the meaning specified in Section 5.03(a).
-----------------
"Prepayment Date" has the meaning specified in Section 5.03(a).
---------------
"Prepayment Notice" has the meaning specified in Section 5.03(a).
-----------------
"Pro Rata Share" of any amount means, with respect to any Working
--------------
Capital Lender at any time, the product of such amount times a fraction the
-----
numerator of which is the amount of such Lender's Working Capital
Commitment at such time and the denominator of which is the Working Capital
Facility at such time.
"Purchase Agreement" means that certain Purchase Agreement dated
------------------
as of August 26, 1999 and entered into by and among CATS, Inc., a
Pennsylvania corporation, JHS Family Partnership, a Pennsylvania limited
partnership, RSS Family Partnership, a Pennsylvania limited partnership,
the Dell H. Shearer Grandchildren's Trust, Joseph H. Shearer, R. Scott
Shearer and Silica.
"Redeemable" means, with respect to any capital stock or other
----------
ownership or profit interest, Debt or other right or Obligation, any such
right or Obligation that (a) the issuer has undertaken to redeem at a fixed
or determinable date or dates, whether by operation of a sinking fund or
otherwise, or upon the occurrence of a condition not solely within the
control of the issuer or (b) is redeemable at the option of the holder.
"Reduction Amount" has the meaning specified in Section
----------------
2.07(b)(v).
"Register" has the meaning specified in Section 8.07(e).
--------
"Regulation U" means Regulation U of the Board of Governors of
------------
the Federal Reserve System, as in effect from time to time.
<PAGE>
27
"Related Documents" means the Purchase Agreement, the Harris
-----------------
Management Agreement and the Tax Sharing Agreement.
"Related Fund" means, with respect to any Lender that is a fund
------------
that invests in commercial loans, any other fund that invests in commercial
loans and is managed or advised by the same investment advisor as such
Lender or by an Affiliate of such investment advisor.
"Required Lenders" means, at any time, Lenders owed or holding at
----------------
least 51% of the sum of (a) the aggregate principal amount of the Advances
outstanding at such time, (b) the aggregate Available Amount of all Letters
of Credit outstanding at such time, (c) the aggregate Face Amount of all
Bankers' Acceptances outstanding at such time, (d) the aggregate unused
portion of the Commitments under the Term A and the Term B Facilities at
such time, (e) the aggregate Unused Canadian Commitments at such time, (f)
the aggregate Unused Acquisition Commitments at such time and (g) the
aggregate Unused Working Capital Commitments at such time. For purposes of
this definition, the aggregate principal amount of Swing Line Advances
owing to the Swing Line Bank and of Letter of Credit Advances owing to any
Issuing Bank and the Available Amount of each Letter of Credit shall be
considered to be owed to the Working Capital Lenders ratably in accordance
with their respective Working Capital Commitments.
"Responsible Officer" means any executive officer of any Loan
-------------------
Party or any of its Subsidiaries.
"Rolling Period" means (a) with respect to any fiscal month of
--------------
the Parent Guarantor ending prior to the first anniversary of the date of
the Initial Extension of Credit, the period commencing on the date of the
Initial Extension of Credit and ending on the last day of such fiscal month
and (b) with respect to any fiscal month of the Parent Guarantor ending
thereafter, the consecutive 12 fiscal month period ending on the last day
of such fiscal month.
"Secured Obligations" has the meaning specified in the Security
-------------------
Agreement.
"Secured Parties" means the Agent, the Sub-Agent, the Lender
---------------
Parties, the Hedge Banks and the other Persons the Obligations owing to
which are or are purported to be secured by the Collateral under the terms
of the Collateral Documents.
"Security Agreement" has the meaning specified in Section
------------------
3.01(g)(x).
"Silica" means U. S. Silica Company, a Delaware corporation that
------
is a wholly-owned Subsidiary of the Borrower.
<PAGE>
28
"Single Employer Plan" means a single employer plan, as defined
--------------------
in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of
any Loan Party or any ERISA Affiliate and no Person other than the Loan
Parties and the ERISA Affiliates or (b) was so maintained and in respect of
which any Loan Party or any ERISA Affiliate could have liability under
Section 4069 of ERISA in the event such plan has been or were to be
terminated.
"Sold Entity or Business" has the meaning specified in the
-----------------------
definition of the term "Adjusted EBITDA".
---------------
"Solvent" and "Solvency" mean, with respect to any Person on a
------- --------
particular date, that on such date (a) the fair value of the property of
such Person is greater than the total amount of liabilities, including,
without limitation, contingent liabilities, of such Person, (b) the present
fair salable value of the assets of such Person is not less than the amount
that will be required to pay the probable liability of such Person on its
debts as they become absolute and matured, (c) such Person does not intend
to, and does not believe that it will, incur debts or liabilities beyond
such Person's ability to pay such debts and liabilities as they mature and
(d) such Person is not engaged in business or a transaction, and is not
about to engage in business or a transaction, for which such Person's
property would constitute an unreasonably small capital. The amount of
contingent liabilities at any time shall be computed as the amount that, in
the light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual
or matured liability.
"Stamping Fee" means, with respect to each Bankers' Acceptance,
------------
an amount equal to (a) the Applicable Margin, as in effect on the date of
the Drawing or renewal, as the case may be, of such Bankers' Acceptance
multiplied by (b) the Face Amount of such Bankers' Acceptance, calculated
-------------
on the basis of the term to maturity of such Bankers' Acceptance and a year
of 365 days or 366 days, as the case may be.
"Standby Letter of Credit" means any Letter of Credit issued
------------------------
under the Letter of Credit Facility, other than a Trade Letter of Credit.
"Sub-Agent" means Banque Nationale de Paris (Canada).
---------
"Subordinated Debt" means (a) the Subordinated Notes and the
-----------------
Subordinated Exchange Notes in an aggregate principal amount at any time
not to exceed $150,000,000 and (b) the Debt represented thereby.
"Subordinated Debt Documents" means any indenture under which the
---------------------------
Subordinated Debt is issued and all other instruments, agreements and other
documents evidencing or governing the Subordinated Debt or providing for
any guaranty or other
<PAGE>
29
right in respect thereof (excluding the Registration Rights Agreement and
the Underwriting Agreement prepared in connection with the issuance of the
Subordinated Notes).
"Subordinated Exchange Notes" means the senior subordinated
---------------------------
notes to be issued by the Borrower in exchange for Subordinated Notes on
terms substantially identical to the terms of the Subordinated Notes.
"Subordinated Notes" means the senior subordinated notes to be
------------------
issued by the Borrower in a public offering or in a Rule 144A or other
private placement on or prior to the Initial Extension of Credit in the
aggregate principal amount of $150,000,000.
"Subsidiary" of any Person means any corporation, partnership,
----------
joint venture, limited liability company, trust or estate of which (or in
which) more than 50% of (a) the issued and outstanding capital stock having
ordinary voting power to elect a majority of the Board of Directors of such
corporation (irrespective of whether at the time capital stock of any other
class or classes of such corporation shall or might have voting power upon
the occurrence of any contingency), (b) the interest in the capital or
profits of such limited liability company, partnership or joint venture or
(c) the beneficial interest in such trust or estate is at the time directly
or indirectly owned or controlled by such Person, by such Person and one or
more of its other Subsidiaries or by one or more of such Person's other
Subsidiaries.
"Subsidiary Guarantor" means each direct or indirect wholly-owned
--------------------
Domestic Subsidiary of the Borrower listed on Schedule II hereto and each
other direct or indirect wholly-owned Domestic Subsidiary of the Borrower
that shall be required to execute and deliver a guaranty pursuant to
Section 5.01(n).
"Subsidiary Guaranty" has the meaning specified in Section
-------------------
3.01(g)(xvi).
"Surviving Debt" has the meaning specified in Section 3.01(f).
--------------
"Swing Line Advance" means an advance made by (a) the Swing Line
------------------
Bank pursuant to Section 2.01(f) or (b) any Working Capital Lender pursuant
to Section 2.02(b).
"Swing Line Bank" means BNP.
---------------
"Swing Line Borrowing" means a borrowing consisting of a Swing
--------------------
Line Advance made by the Swing Line Bank pursuant to Section 2.01(f) or the
Working Capital Lenders pursuant to Section 2.02(b).
<PAGE>
30
"Swing Line Commitment" means, with respect to the Swing Line
---------------------
Bank at any time, the amount set forth opposite the Swing Line Bank's name
on Schedule I hereto under the caption "Swing Line Commitment" or, if the
Swing Line Bank has entered into an Assignment and Acceptance, set forth
for the Swing Line Bank in the Register maintained by the Agent pursuant to
Section 8.07(e) as the Swing line Bank's "Swing Line Commitment", as such
amount may be reduced at or prior to such time pursuant to Section 2.06.
"Swing Line Facility" has the meaning specified in Section
-------------------
2.01(f).
"Tax Sharing Agreement" means the Amended and Restated Tax
---------------------
Sharing Agreement dated as of July 21, 1998 among the Parent Guarantor, USS
Holdings, Inc. and all of the Domestic Subsidiaries of the Parent Guarantor
in form and substance satisfactory to the Agent pursuant to Section
3.01(b).
"Taxes" has the meaning specified in Section 2.14(a).
-----
"Term A Advance" has the meaning specified in Section 2.01(a).
--------------
"Term A Borrowing" means a borrowing consisting of simultaneous
----------------
Term A Advances of the same Type made by the Term A Lenders, made,
converted or continued on the same date and, in the case of Eurodollar Rate
Advances, as to which a single Interest Period is in effect.
"Term A Commitment" means, with respect to any Term Lender at any
-----------------
time, the amount set forth opposite such Term Lender's name on Schedule I
hereto under the caption "Term A Commitment" or, if such Term Lender has
entered into one or more Assignments and Acceptances, the aggregate amount
set forth for such Term Lender in the Register maintained by the Agent
pursuant to Section 8.07(e) as such Term Lender's "Term A Commitment".
"Term A Facility" means, at any time, the aggregate amount of the
---------------
Term Lenders' Term A Commitments at such time.
"Term A Lender" means any Lender that has a Term A Commitment.
-------------
"Term Advance" means a Term A Advance or a Term B Advance.
------------
"Term B Advance" has the meaning specified in Section 2.01(b).
--------------
"Term B Borrowing" means a borrowing consisting of simultaneous
----------------
Term B Advances of the same Type made by the Term B Lenders, made,
converted or continued
<PAGE>
31
on the same date and, in the case of Eurodollar Rate Advances, as to which
a single Interest Period is in effect.
"Term B Commitment" means, with respect to any Term Lender, the
-----------------
amount set forth opposite such Term Lender's name on Schedule I hereto
under the caption "Term B Commitment" or, if such Term Lender has entered
into one or more Assignments or Acceptances, the aggregate amount set forth
for such Term Lender in the Register maintained by the Agent pursuant to
Section 8.07(e) as such Term Lender's "Term B Commitment".
"Term B Facility" means, at any time, the aggregate amount of the
---------------
Term Lenders' Term B Commitments at such time.
"Term B Lender" means any Lender that has a Term B Commitment.
-------------
"Term Borrowing" means a Term A Borrowing or a Term B Borrowing.
--------------
"Term Commitment" means a Term A Commitment or a Term B
---------------
Commitment.
"Term Lender" means a Term A Lender or a Term B Lender.
-----------
"Term Notes" means promissory notes of the Borrower payable to
----------
the order of any Lender, in substantially the form of Exhibits A-1 and A-2
hereto, evidencing the indebtedness of the Borrower to such Lender
resulting from the Term A Advances and Term B Advances, respectively, made
by such Lender, to the extent required to be issued pursuant to Section
2.17.
"Termination Date" means (a) with respect to the Term B Facility,
----------------
the earlier of September 30, 2007 and the date of termination in whole of
the Term B Commitments pursuant to Section 2.06 or 6.01, and (b) with
respect to each other Facility hereunder, the earlier of September 30, 2005
and the date of termination in whole of the Term A Commitments, the
Canadian Commitments, the Acquisition Commitments, the Swing Line
Commitments, the Working Capital Commitments and the Letter of Credit
Commitments pursuant to Section 2.06 or 6.01.
"Total Leverage Ratio" means "Consolidated Leverage Ratio" as
--------------------
defined in the Subordinated Debt Documents as in effect on October 1, 1999.
"Trade Letter of Credit" means any Letter of Credit that is
----------------------
issued under the Letter of Credit Facility for the benefit of a supplier of
Inventory to the Borrower or any of its Subsidiaries to effect payment for
such Inventory.
<PAGE>
32
"Type" refers to the distinction between Advances (other than
----
Canadian Borrower Advances) bearing interest at the Base Rate and such
Advances bearing interest at the Eurodollar Rate.
"Unused Acquisition Commitment" means, with respect to any
-----------------------------
Acquisition Lender at any time prior to the Conversion Date, such Lender's
Acquisition Commitment at such time minus the aggregate principal amount of
-----
all Acquisition Advances made by such Lender and outstanding at such time.
"Unused Canadian Commitment" means, with respect to any Canadian
--------------------------
Lender at any time, (a) such Lender's Canadian Commitment at such time
minus (b) the sum of (i) the aggregate principal amount of all Canadian
-----
Borrower Advances made by such Lender at such time, plus (ii) the aggregate
----
Face Amount of all Bankers' Acceptances created and purchased by such
Lender and outstanding at such time.
"Unused Working Capital Commitment" means, with respect to any
---------------------------------
Working Capital Lender at any time, (a) such Lender's Working Capital
Commitment at such time minus (b) the sum of (i) the aggregate principal
-----
amount of all Working Capital Advances, Letter of Credit Advances and Swing
Line Advances made by such Lender (in its capacity as a Lender) and
outstanding at such time, plus (ii) such Lender's Pro Rata Share of (A) the
----
aggregate Available Amount of all Letters of Credit outstanding at such
time, (B) the aggregate principal amount of all Letter of Credit Advances
made by the Issuing Bank pursuant to Section 2.03(c) and outstanding at
such time, and (C) the aggregate principal amount of all Swing Line
Advances made by the Swing Line Bank pursuant to Section 2.01(f) and
outstanding at such time.
"U.S. Dollars" and the sign "$" each means lawful money of the
------------ -
United States of America.
"Voting Stock" means capital stock issued by a corporation, or
------------
equivalent interests in any other Person, the holders of which are
ordinarily, in the absence of contingencies, entitled to vote for the
election of directors (or persons performing similar functions) of such
Person, even if the right so to vote has been suspended by the happening of
such a contingency.
"Welfare Plan" means a welfare plan, as defined in Section 3(1)
------------
of ERISA, that is maintained for employees of any Loan Party or in respect
of which any Loan Party could have a liability.
"Withdrawal Liability" has the meaning specified in Part I of
--------------------
Subtitle E of Title IV of ERISA.
"Working Capital Advance" has the meaning specified in Section
-----------------------
2.01(c).
<PAGE>
33
"Working Capital Borrowing" means a borrowing consisting of
-------------------------
simultaneous Working Capital Advances of the same Type made by the Working
Capital Lenders, made, converted or continued on the same date and, in the
case of Eurodollar Rate Advances, as to which a single Interest Period is
in effect.
"Working Capital Commitment" means, with respect to any Working
--------------------------
Capital Lender at any time, the amount set forth opposite such Lender's
name on Schedule I hereto under the caption "Working Capital Commitment"
or, if such Lender has entered into one or more Assignments and
Acceptances, set forth for such Lender in the Register maintained by the
Agent pursuant to Section 8.07(e) as such Lender's "Working Capital
Commitment", as such amount may be reduced at or prior to such time
pursuant to Section 2.06.
"Working Capital Facility" means, at any time, the aggregate
------------------------
amount of the Working Capital Lenders' Working Capital Commitments at such
time.
"Working Capital Lender" means any Lender that has a Working
----------------------
Capital Commitment.
"Working Capital Note" means a promissory note of the Borrower
--------------------
payable to the order of any Working Capital Lender, in substantially the
form of Exhibit A-3 hereto, evidencing the aggregate indebtedness of the
Borrower to such Lender resulting from the Working Capital Advances made by
such Lender, to the extent required to be issued pursuant to Section 2.17.
"Year 2000 Compliant" means the (a) ability of the computer
-------------------
systems, software, equipment containing embedded microchips (including
systems and equipment supplied by others) and other processing capabilities
of the Parent Guarantor and its Subsidiaries correctly to interpret and
manipulate all data, in whatever form, including printed form, screen
displays, financial records, calculations and loan-related data, so as to
avoid errors in processing that may otherwise occur because of the
inability of such computer systems, software, equipment or other processing
capabilities to recognize accurately the year 2000 or subsequent dates, (b)
the completion of the testing of such ability of such computer systems,
software, equipment and other processing capabilities and (c) the absence
of any reasonably foreseeable consequences (including reprogramming errors)
of the occurrence of the year 2000 to the Parent Guarantor and its
Subsidiaries resulting from the inability of such computer systems,
software, equipment and other processing capabilities to recognize
accurately the year 2000 or subsequent dates that would result in a
Material Adverse Effect.
<PAGE>
34
SECTION 1.02. Computation of Time Periods; Other Definitional
-----------------------------------------------
Provisions. In this Agreement and the other Loan Documents, in the computation
- ----------
of periods of time from a specified date to a later specified date, the word
"from" means "from and including" and the words "to" and "until" each mean "to
but excluding". References in the Loan Documents to any agreement or contract
"as amended" shall mean and be a reference to such agreement or contract as
amended, amended and restated, supplemented or otherwise modified from time to
time in accordance with its terms.
SECTION 1.03. Accounting Terms. All accounting terms not
----------------
specifically defined herein shall be construed in accordance with generally
accepted accounting principles in the United States ("GAAP") as in effect from
----
time to time; provided, however, that for purposes of determining any financial
-------- -------
ratio contained herein, including in the definition of the term "Applicable
Margin" and in Sections 2.16, 5.02(f) and 5.04, all accounting terms herein
shall be interpreted and all accounting determinations hereunder shall be made
in accordance with GAAP as in effect on the date hereof and applied on a basis
consistent with the application used in the financial statements referred to in
Section 5.03.
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
AND THE LETTERS OF CREDIT
SECTION 2.01. The Advances and the Letters of Credit. (a) The Term
-------------------------------------- --------
A Advances. Each Term A Lender severally agrees, on the terms and conditions
- ----------
hereinafter set forth, to make a single advance (a "Term A Advance") to the
--------------
Borrower on the date of the Initial Extension of Credit in an amount not to
exceed such Lender's Term A Commitment at such time. The Term A Borrowing shall
consist of Term A Advances made simultaneously by the Term A Lenders ratably
according to their Term A Commitments. Amounts borrowed under this Section
2.01(a) and repaid or prepaid may not be reborrowed.
(b) The Term B Advances. Each Term B Lender severally agrees, on the
-------------------
terms and conditions hereinafter set forth, to make a single advance (a "Term B
------
Advance") to the Borrower on the date of the Initial Extension of Credit in an
- -------
amount not to exceed such Lender's Term B Commitment at such time. The Term B
Borrowing shall consist of Term B Advances made simultaneously by the Term B
Lenders ratably according to their Term B Commitments. Amounts borrowed under
this Section 2.01(b) and repaid or prepaid may not be reborrowed.
(c) The Working Capital Advances. Each Working Capital Lender
----------------------------
severally agrees, on the terms and conditions hereinafter set forth, to make
advances (each, a "Working Capital Advance") to the Borrower from time to time
-----------------------
on any Business Day during the period
<PAGE>
35
from the date of the Initial Extension of Credit until the Termination Date in
an amount for each such Advance not to exceed such Lender's Unused Working
Capital Commitment at such time. Each Working Capital Borrowing shall be in an
aggregate amount of $500,000 or an integral multiple of $100,000 in excess
thereof (other than a Borrowing the proceeds of which shall be used solely to
repay or prepay in full outstanding Letter of Credit Advances made by the
Issuing Bank) and shall consist of Working Capital Advances made simultaneously
by the Working Capital Lenders ratably according to their Working Capital
Commitments. Within the limits of each Working Capital Lender's Unused Working
Capital Commitment in effect from time to time, the Borrower may borrow under
this Section 2.01(c), prepay pursuant to Section 2.07(a) and reborrow under this
Section 2.01(c).
(d) The Canadian Borrower Advances; Drawings. Each Canadian Lender
----------------------------------------
severally agrees, on the terms and conditions hereinafter set forth, either (A)
to make a single advance (a "Canadian Borrower Advance") in Canadian Dollars to
-------------------------
the Canadian Borrower on the date of the Initial Extension of Credit in an
amount not to exceed such Lender's Unused Canadian Commitment at such time, or
(B) to accept a single Draft (such Draft so accepted, a "Bankers' Acceptance")
-------------------
for the account of the Canadian Borrower, and to purchase such Bankers'
Acceptance on the date of the Initial Extension of Credit, having a Face Amount
not to exceed such Lender's Unused Canadian Commitment at such time. The
Canadian Borrowing, if any, shall consist of Canadian Borrower Advances made
simultaneously by the Canadian Lenders ratably according to their Canadian
Commitments. Each Drawing, if any, shall be comprised solely of Canadian
Dollars, and shall consist of the creation and purchase of Bankers' Acceptances
at or about the same time by the Canadian Lenders ratably in accordance with
their respective Canadian Commitments. Amounts borrowed under this Section
2.01(d) and repaid or prepaid may not be reborrowed.
(e) The Acquisition Advances. Subject to Section 2.16(c), each
------------------------
Acquisition Lender severally agrees, on the terms and conditions hereinafter set
forth, to make advances (each, an "Acquisition Advance") to the Borrower from
-------------------
time to time on any Business Day during the period from the date of the Initial
Extension of Credit until the Conversion Date in an amount for each such Advance
not to exceed such Lender's Unused Acquisition Commitment at such time. Each
Acquisition Borrowing shall be in an aggregate amount of $1,000,000 or an
integral multiple of $100,000 in excess thereof and shall consist of Acquisition
Advances made simultaneously by the Acquisition Lenders ratably according to
their Acquisition Commitments. Amounts borrowed under this Section 2.01(e) and
repaid or prepaid may not be reborrowed.
(f) The Swing Line Advances. The Borrower may request the Swing Line
-----------------------
Bank to make, and the Swing Line Bank agrees on the terms and conditions
hereinafter set forth, to make advances to the Borrower (each, a "Swing Line
----------
Advance") from time to time on any Business Day during the period from the date
- -------
of the Initial Extension of Credit until the Termination Date (i) in an
aggregate amount not to exceed at any time outstanding $3,000,000 (the "Swing
-----
Line Facility") and (ii) in an amount for each such Swing Line Borrowing not to
- -------------
<PAGE>
36
exceed the aggregate of the Unused Working Capital Commitments of the Working
Capital Lenders at such time. No Swing Line Advance shall be used for the
purpose of funding the payment of principal of any other Swing Line Advance.
Each Swing Line Borrowing shall be in an amount of $100,000 or an integral
multiple of $50,000 in excess thereof and shall be made as a Base Rate Advance.
Within the limits of the Swing Line Facility and within the limits referred to
in clause (ii) above, the Borrower may borrow under this Section 2.01(f), repay
pursuant to Section 2.05(d) or prepay pursuant to Section 2.07(a) and reborrow
under this Section 2.01(f).
(g) Letters of Credit. The Issuing Bank severally agrees, on the
-----------------
terms and conditions hereinafter set forth, to issue letters of credit for the
account of the Borrower from time to time on any Business Day during the period
from the date of the Initial Extension of Credit until 60 days before the
Termination Date (i) in an aggregate Available Amount for all Letters of Credit
issued by the Issuing Bank not to exceed at any time the Issuing Bank's Letter
of Credit Commitment at such time and (ii) in an Available Amount for each such
Letter of Credit not to exceed the lesser of (x) the Letter of Credit Facility
at such time and (y) the Unused Working Capital Commitments of the Working
Capital Lenders at such time. No Letter of Credit shall have an expiration date
(including all rights of the Borrower or the beneficiary to require renewal)
later than the earlier of 60 days before the Termination Date and (A) in the
case of a Standby Letter of Credit, one year after the date of issuance thereof
and (B) in the case of a Trade Letter of Credit, 180 days after the date of
issuance thereof. Within the limits of the Letter of Credit Facility, and
subject to the limits referred to above, the Borrower may request the issuance
of Letters of Credit under this Section 2.01(g), repay any Letter of Credit
Advances resulting from drawings thereunder pursuant to Section 2.05(e) and
request the issuance of additional Letters of Credit under this Section 2.01(g).
SECTION 2.02. Making the Advances. (a) Except as otherwise provided
-------------------
in Sections 2.02(b), 2.03 and 2.04, each Borrowing shall be made on notice,
given not later than (x) 11:00 A.M. (New York City time) on the third Business
Day prior to the date of the proposed Borrowing in the case of a Borrowing
consisting of Eurodollar Rate Advances under the Term A Facility, the Term B
Facility, the Working Capital Facility or the Acquisition Facility, (y) 11:00
A.M. (New York City time) on the first Business Day prior to the date of the
proposed Borrowing in the case of a Borrowing consisting of Base Rate Advances,
or (z) 11:00 A.M. (New York City time) on the first Canadian Business Day prior
to the date of the proposed Borrowing in the case of a Borrowing consisting of
Canadian Prime Rate Advances by the Applicable Borrower to the Agent, which
shall give to each Appropriate Lender prompt notice thereof by telecopier. Each
such notice of a Borrowing (a "Notice of Borrowing") shall be in writing, by
-------------------
telecopier, in substantially the form of Exhibit B-1 hereto, specifying therein
the requested (i) date of such Borrowing, (ii) Facility under which such
Borrowing is to be made, (iii) Type of Advances comprising such Borrowing, (iv)
aggregate amount of such Borrowing and (v) in the case of a Borrowing consisting
of Eurodollar Rate Advances, initial Interest Period for each such Advance.
Each Appropriate Lender shall, before 11:00 A.M. (New York City time) on the
date of such Borrowing, make available for the account of its Applicable Lending
<PAGE>
37
Office to the Agent at the applicable Agent's Account, in same day funds, such
Lender's ratable portion of such Borrowing in accordance with the respective
Commitments under the applicable Facility of such Lender and the other
Appropriate Lenders. After the Agent's receipt of such funds and upon
fulfillment of the applicable conditions set forth in Article III, the Agent
will make such funds (in like funds as received by the Agent) available to the
Applicable Borrower by crediting the relevant Borrower's Account; provided,
--------
however, that, in the case of any Working Capital Borrowing, the Agent shall
- -------
first make a portion of such funds equal to the aggregate principal amount of
any Letter of Credit Advances made by any Issuing Bank and by any other Working
Capital Lender and outstanding on the date of such Working Capital Borrowing,
plus interest accrued and unpaid thereon to and as of such date, available to
such Issuing Bank and such other Working Capital Lenders for repayment of such
Letter of Credit Advances.
(b) Each Swing Line Borrowing shall be made on notice, given not later
than 11:00 A.M. (New York City time) on the date of the proposed Swing Line
Borrowing, by the Borrower to the Swing Line Bank and the Agent. Each such
notice, which shall be delivered by a Notice of Borrowing, shall be in writing,
by telecopier, in substantially the form of Exhibit B-1 hereto, specifying
therein the requested (i) date of such Borrowing (which shall be a Business
Day), (ii) amount of such Borrowing and (iii) maturity of such Borrowing (which
maturity shall be no later than the seventh day after the requested date of such
Borrowing). The Swing Line Bank will make the amount thereof available to the
Agent at the Agent's Account, in same day funds. After the Agent's receipt of
such funds and upon fulfillment of the applicable conditions set forth in
Article III, the Agent will make such funds available to the Borrower by
crediting the relevant Borrower's Account. Upon written demand by the Swing
Line Bank with a copy of such demand to the Agent, each other Working Capital
Lender shall purchase from the Swing Line Bank, and the Swing Line Bank shall
sell and assign to each such other Working Capital Lender, such other Lender's
Pro Rata Share of such outstanding Swing Line Advance as of the date of such
demand, by making available for the account of its Applicable Lending Office to
the Agent for the account of the Swing Line Bank, by deposit to the Agent's
Account, in same day funds, an amount equal to the portion of the outstanding
principal amount of such Swing Line Advance to be purchased by such Lender. The
Borrower hereby agrees to each such sale and assignment. Each Working Capital
Lender agrees to purchase its Pro Rata Share of an outstanding Swing Line
Advance on (i) the Business Day on which demand therefor is made by the Swing
Line Bank, provided that notice of such demand is given not later than 11:00
--------
A.M. (New York City time) on such Business Day or (ii) the first Business Day
next succeeding such demand if notice of such demand is given after such time.
Upon any such assignment by the Swing Line Bank to any other Working Capital
Lender of a portion of a Swing Line Advance, the Swing Line Bank represents and
warrants to such other Lender that the Swing Line Bank is the legal and
beneficial owner of such interest being assigned by it, but makes no other
representation or warranty and assumes no responsibility with respect to such
Swing Line Advance, the Loan Documents or any Loan Party. If and to the extent
that any Working Capital Lender shall not have so made the amount of such Swing
Line Advance available to the Agent, such Working Capital Lender
<PAGE>
38
agrees to pay to the Agent forthwith on demand such amount together with
interest thereon, for each day from the date of demand by the Swing Line Bank
until the date such amount is paid to the Agent, at the Federal Funds Rate. If
such Lender shall pay to the Agent such amount for the account of the Swing Line
Bank on any Business Day, such amount so paid in respect of principal shall
constitute a Swing Line Advance made by such Lender on such Business Day for
purposes of this Agreement, and the outstanding principal amount of the Swing
Line Advance made by the Swing Line Bank shall be reduced by such amount on such
Business Day.
(c) Anything in subsection (a) above to the contrary notwithstanding,
(i) neither the Borrower, nor the Canadian Borrower, may select any Eurodollar
Rate Advances for the initial Borrowing hereunder and for the period from the
date of such initial Borrowing to the earlier of (x) a date agreed upon by the
Agent and such Borrower or such Canadian Borrower, as the case may be, (but, in
any event, not exceeding three months from the date of such initial Borrowing)
and (y) the completion of syndication of the Facilities (as shall be specified
by the Agent in a written notice to the Borrower and the Canadian Borrower) or
for any Borrowing if the aggregate amount of such Borrowing is less than
$1,000,000 (or the Equivalent thereof in Canadian Dollars) or if the obligation
of the Appropriate Lenders to make Eurodollar Rate Advances shall then be
suspended pursuant to Section 2.10 or 2.12 and (ii) with respect to Borrowings
consisting of Eurodollar Rate Advances, the Term A Advances, the Term B Advances
and the Working Capital Advances may not be outstanding as part of more than ten
separate Borrowings in the aggregate, the Acquisition Advances may not be
outstanding as part of more than three separate Borrowings and the Canadian
Borrower Advances may not be outstanding as part of more than two separate
Borrowings.
(d) Each Notice of Borrowing shall be irrevocable and binding on the
Applicable Borrower giving such notice. In the case of any Borrowing that the
related Notice of Borrowing specifies is to be comprised of Eurodollar Rate
Advances, the Applicable Borrower giving such notice shall indemnify each
Appropriate Lender against any loss, cost or expense incurred by such Lender as
a result of any failure to fulfill on or before the date specified in such
Notice of Borrowing for such Borrowing the applicable conditions set forth in
Article III, including, without limitation, any loss, cost or expense incurred
by reason of the liquidation or reemployment of deposits or other funds acquired
by such Lender to fund the Advance to be made by such Lender as part of such
Borrowing when such Advance, as a result of such failure, is not made on such
date (but, in any event, excluding any loss of profits and the Applicable Margin
applicable to such Advances).
(e) Unless the Agent shall have received notice from an Appropriate
Lender prior to the date of any Borrowing under a Facility under which such
Lender has a Commitment that such Lender will not make available to the Agent
such Lender's ratable portion of such Borrowing, the Agent may assume that such
Lender has made such portion available to the Agent on the date of such
Borrowing in accordance with subsection (a) or (b) of this Section 2.02 and the
Agent may, in reliance upon such assumption, make available to the Applicable
<PAGE>
39
Borrower on such date a corresponding amount. If and to the extent that such
Lender shall not have so made such ratable portion available to the Agent, such
Lender and the Applicable Borrower severally agree to repay or pay to the Agent
forthwith on demand such corresponding amount and to pay interest thereon, for
each day from the date such amount is made available to such Applicable Borrower
until the date such amount is repaid or paid to the Agent, at (i) in the case of
the Borrower or the Canadian Borrower, the interest rate applicable at such time
under Section 2.08 to Advances comprising such Borrowing and (ii) in the case of
such Lender, the higher of (A) the Federal Funds Rate and (B) the cost of funds
incurred by the Agent in respect of such amount. If such Lender shall pay to
the Agent such corresponding amount, such amount so paid in respect of principal
shall constitute such Lender's Advance as part of such Borrowing for all
purposes.
(f) The failure of any Lender to make the Advance to be made by it as
part of any Borrowing shall not relieve any other Lender of its obligation, if
any, hereunder to make its Advance on the date of such Borrowing, but no Lender
shall be responsible for the failure of any other Lender to make the Advance to
be made by such other Lender on the date of any Borrowing.
SECTION 2.03. Issuance of and Drawings and Reimbursement Under
------------------------------------------------
Letters of Credit. (a) Request for Issuance. Each Letter of Credit shall be
- ----------------- --------------------
issued upon notice, given not later than 11:00 A.M. (New York City time) on the
fifth Business Day prior to the date of the proposed issuance of such Letter of
Credit, by the Borrower to the Issuing Bank, which shall give to the Agent
prompt notice thereof by telecopier. Each such notice of issuance of a Letter
of Credit (a "Notice of Issuance") shall be in writing, by telecopier,
------------------
specifying therein the requested (A) date of such issuance (which shall be a
Business Day), (B) Available Amount of such Letter of Credit, (C) expiration
date of such Letter of Credit, (D) name and address of the beneficiary of such
Letter of Credit and (E) form of such Letter of Credit, and shall be accompanied
by such application and agreement for letter of credit as the Issuing Bank may
specify to the Borrower for use in connection with such requested Letter of
Credit (a "Letter of Credit Agreement"). If the requested form of such Letter
--------------------------
of Credit is acceptable to the Issuing Bank in its sole discretion, the Issuing
Bank will, upon fulfillment of the applicable conditions set forth in Article
III, make such Letter of Credit available to the Borrower at its office referred
to in Section 8.02 or as otherwise agreed with the Borrower in connection with
such issuance. In the event and to the extent that the provisions of any Letter
of Credit Agreement shall conflict with this Agreement, the provisions of this
Agreement shall govern.
(b) Letter of Credit Reports. The Issuing Bank shall furnish (A) to
------------------------
the Agent on the first Business Day of each week a written report summarizing
issuance and expiration dates of Letters of Credit issued during the previous
week and drawings during such week under all Letters of Credit, (B) to each
Working Capital Lender on the first Business Day of the first two months of each
quarterly period a written report summarizing issuance and expiration dates of
Letters of Credit during the preceding month and drawings during such month
under all
<PAGE>
40
Letters of Credit and (C) to the Agent and each Working Capital Lender on the
first Business Day of each calendar quarter a written report setting forth the
average daily aggregate Available Amount during the preceding calendar quarter
of all Letters of Credit.
(c) Drawing and Reimbursement. The payment by the Issuing Bank of a
-------------------------
draft drawn under any Letter of Credit shall constitute for all purposes of this
Agreement the making by the Issuing Bank of a Letter of Credit Advance, which
shall be a Base Rate Advance, in the amount of such draft. In the event of any
drawing under a Letter of Credit, the Issuing Bank shall promptly notify the
Agent, and the Agent shall promptly notify each Working Capital Lender and each
Working Capital Lender shall purchase from the Issuing Bank, and the Issuing
Bank shall sell and assign to each such Working Capital Lender, such Lender's
Pro Rata Share of such outstanding Letter of Credit Advance as of the date of
such purchase, by making available for the account of its Applicable Lending
Office to the Agent for the account of the Issuing Bank, by deposit to the
applicable Agent's Account, in same day funds, an amount equal to the portion of
the outstanding principal amount of such Letter of Credit Advance to be
purchased by such Lender. Promptly after receipt thereof, the Agent shall
transfer such funds to the Issuing Bank. The Borrower hereby agrees to each
such sale and assignment. Each Working Capital Lender agrees to purchase its
Pro Rata Share of an outstanding Letter of Credit Advance on (i) the Business
Day on which notice of the drawing under the related Letter of Credit is given
by the Issuing Bank, provided such notice is given not later than 1:00 P.M. (New
--------
York City time) on such Business Day or (ii) the first Business Day next
succeeding such demand if such notice is given after such time. Upon any such
assignment by the Issuing Bank to any other Working Capital Lender of a portion
of a Letter of Credit Advance, the Issuing Bank represents and warrants to such
other Lender that the Issuing Bank is the legal and beneficial owner of such
interest being assigned by it, free and clear of any liens, but makes no other
representation or warranty and assumes no responsibility with respect to such
Letter of Credit Advance, the Loan Documents or any Loan Party. If and to the
extent that any Working Capital Lender shall not have so made the amount of such
Letter of Credit Advance available to the Agent, such Working Capital Lender
agrees to pay to the Agent forthwith on demand such amount together with
interest thereon, for each day from the date of demand by the Issuing Bank until
the date such amount is paid to the Agent, at the Federal Funds Rate for its
account or the account of the Issuing Bank, as applicable. If such Lender shall
pay to the Agent such amount for the account of the Issuing Bank on any Business
Day, such amount so paid in respect of principal shall constitute a Letter of
Credit Advance made by such Lender on such Business Day for purposes of this
Agreement, and the outstanding principal amount of the Letter of Credit Advance
made by the Issuing Bank shall be reduced by such amount on such Business Day.
(d) Failure to Make Letter of Credit Advances. The failure of any
-----------------------------------------
Lender to make the Letter of Credit Advance to be made by it on the date
specified in Section 2.03(c) shall not relieve any other Lender of its
obligation hereunder to make its Letter of Credit Advance on such date, but no
Lender shall be responsible for the failure of any other Lender to make the
Letter of Credit Advance to be made by such other Lender on such date.
<PAGE>
41
SECTION 2.04. Drawings of Bankers' Acceptances. (a) Request for
-------------------------------- -----------
Drawing. Each Drawing shall be made on notice, given not later than 12:00 noon
- -------
(New York City time) on a Canadian Business Day at least two Canadian Business
Days prior to the date of the proposed Drawing, by the Canadian Borrower to the
Agent, which shall give each Canadian Lender prompt notice thereof by
telecopier. Each notice of a Drawing (a "Notice of Drawing") shall be in
-----------------
writing (including by telecopier), in substantially the form of Exhibit B-2
hereto, specifying therein the requested (i) date of such Drawing (which shall
be a Canadian Business Day), (ii) aggregate Face Amount of such Drawing and
(iii) initial Maturity Date for each Bankers' Acceptance comprising part of such
Drawing; provided, however, that, if the Agent determines in good faith (which
-------- -------
determination shall be conclusive and binding upon the Canadian Borrower) that
the Drafts to be accepted and purchased as part of any Drawing cannot, due
solely to the requested aggregate Face Amount thereof, be accepted and/or
purchased ratably by the Canadian Lenders in accordance with Section 2.01(d),
then the aggregate Face Amount of such Drawing (or the Face Amount of Bankers'
Acceptances to be created and purchased by any Canadian Lender) shall be reduced
to such lesser amount as the Agent determines will permit such Drafts comprising
part of such Drawing to be so accepted and purchased and, unless the Canadian
Borrower shall have given written notice to the contrary to the Agent, each
Canadian Lender shall fund the difference between such Lender's ratable portion
of the original aggregate Face Amount of such Drawing and the Face Amount of the
Bankers' Acceptances to be created by such Lender after giving effect to such
reduction in the form of a Canadian Prime Rate Advance, which shall be deemed
for all purposes hereof to be a Canadian Borrower Advance made pursuant to
Section 2.01(d). The Agent agrees that it will, as promptly as practicable,
notify the Canadian Borrower of the unavailability of Bankers' Acceptances and,
if applicable, of the date and the amount of each Canadian Prime Rate Advance to
be made or actually made in accordance with the immediately preceding sentence.
Each Draft in connection with any requested Drawing (A) shall be in a minimum
amount of CN$100,000 or an integral multiple of CN$100,000 in excess thereof,
and (B) shall be dated the date of the proposed Drawing. Each Canadian Lender
shall, before 1:00 P.M. (Toronto time) on the date of each Drawing, complete one
or more Drafts in accordance with the related Notice of Drawing, accept such
Drafts and purchase the Bankers' Acceptances created thereby for the Drawing
Purchase Price and shall, before 1:00 P.M. (Toronto time) on such date, make
available for the account of its Applicable Lending Office to the Agent at its
appropriate Agent's Account, in same day funds, the Drawing Purchase Price
payable by such Lender for such Drawing less the Stamping Fee payable to such
Lender with respect thereto under Section 2.09(d). Upon the fulfillment of the
applicable conditions set forth in Article III, the Agent will make the funds it
has received from the Canadian Lenders available to the Canadian Borrower by
crediting the relevant Borrower's Account.
(b) Limitations on Drawings. Anything in Section 2.04(a) to the
-----------------------
contrary notwithstanding, the Canadian Borrower may not select a Drawing if the
obligation of the
<PAGE>
42
Canadian Lenders to purchase and accept Bankers' Acceptances shall then be
suspended pursuant to Section 2.04(d) or 2.12.
(c) Binding Effect of Notices of Drawing. Each Notice of Drawing
------------------------------------
shall be irrevocable and binding on the Canadian Borrower. In the case of any
proposed Drawing, the Canadian Borrower shall indemnify each Canadian Lender
against any loss, cost or expense incurred by such Lender as a result of any
failure to fulfill on or before the date specified in the Notice of Drawing for
such Drawing the applicable conditions set forth in Article III, including,
without limitation, any loss, cost or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by such Lender
to fund the Drawing Purchase Price to be paid by such Lender as part of such
Drawing when, as a result of such failure, such Drawing is not made on such date
(but, in any event, excluding any loss of profit and the Stamping Fee applicable
to such Drawing).
(d) Circumstances Making Bankers' Acceptances Unavailable. (i) If,
-----------------------------------------------------
with respect to any proposed Drawing, the Agent determines in good faith that
circumstances affecting the money markets at the time any related Notice of
Drawing is delivered or is outstanding will result in no market for the Bankers'
Acceptances to be created in connection with such Drawing or an insufficient
demand for such Bankers' Acceptances to allow the Lenders creating such Bankers'
Acceptances to sell or trade the Bankers' Acceptances to be created and
purchased or discounted by them hereunder in connection with such Drawing, then,
upon notice to the Canadian Borrower and the Canadian Lenders thereof, (A) the
Notice of Drawing with respect to such proposed Drawing shall be canceled and
the Drawing requested therein shall not be made and (B) the right of the
Canadian Borrower to request a Drawing shall be suspended until the Agent shall
notify such Borrower that the circumstances causing such suspension no longer
exist. In the case of any such cancelation of a Notice of Drawing, unless the
Canadian Borrower shall give written notice to the contrary to the Agent, the
cancelation of any such Notice of Drawing shall be deemed to be the giving by
the Canadian Borrower of a Notice of Borrowing for Canadian Borrower Advances
consisting of Canadian Prime Rate Advances in an aggregate principal amount
equal to the aggregate Face Amount of such proposed Drawing and the Canadian
Lenders shall, subject to the terms and conditions hereof applicable to the
making of Canadian Borrower Advances, make such Advances available to the
Canadian Borrower, if practicable, on the same Business Day as the date of the
requested Drawing, and otherwise on the next Business Day. The Agent agrees
that it will, as promptly as practicable, notify the Canadian Borrower of the
unavailability of Bankers' Acceptances and, if applicable, of the date and the
amount of each Canadian Prime Rate Advance to be made or actually made in
accordance with the immediately preceding sentence.
(ii) Upon the occurrence and during the continuance of any Default,
the obligation of the Canadian Lenders to create and purchase Bankers'
Acceptances shall be suspended.
<PAGE>
43
(e) Assumptions of the Agent. Unless the Agent shall have received
------------------------
notice from a Canadian Lender prior to the date of any Drawing that such Lender
will not make available to it such Lender's ratable share of the proceeds of
such Drawing in accordance with Section 2.04(a), the Agent may assume that such
Lender has made such ratable share available to it on the date of such Drawing
in accordance with Section 2.04(a) and the Agent may, in reliance upon such
assumption, make available to the Canadian Borrower on such date a corresponding
amount. If and to the extent that any such Lender shall not have so made such
ratable share available to the Agent, such Lender and the Canadian Borrower
severally agree to repay or pay to the Agent forthwith on demand such
corresponding amount, together with interest thereon, for each day from the date
such amount is made available to the Canadian Borrower until the date such
amount is repaid or paid to the Agent, at (i) in the case of the Canadian
Borrower, a rate per annum equal to the BA Rate used in calculating the Drawing
Purchase Price with respect to such Drawing, and (ii) in the case of such
Lender, the Canadian Interbank Rate. If such Lender shall pay to the Agent such
corresponding amount, such amount so paid shall constitute such Lender's ratable
share of the proceeds of such Drawing for all purposes under this Agreement.
(f) Presigned Draft Forms. To enable the Canadian Lenders to create
---------------------
Bankers' Acceptances in accordance with Section 2.01(d) and this Section 2.04,
the Canadian Borrower shall supply each Canadian Lender, upon the Canadian
Borrower's execution of this Agreement and from time to time thereafter, with
such number of Drafts provided to the Canadian Borrower by the Agent as the
Agent may from time to time reasonably request, duly endorsed and executed on
behalf of the Canadian Borrower by any one or more of its duly authorized
officers. Each Canadian Lender shall exercise such care in the custody and
safekeeping of any Drafts in its possession from time to time as it would
exercise in the custody and safekeeping of similar property owned by it. The
signatures of officers of the Canadian Borrower on Drafts may be mechanically
reproduced in facsimile and Bankers' Acceptances bearing such facsimile
signatures shall be binding upon the Canadian Borrower as if they had been
manually signed by such officers. Notwithstanding that any of the individuals
whose manual or facsimile signature appears on any Draft as one of such officers
may no longer hold office at the date of such draft or at the date of its
acceptance by a Lender hereunder or at any time thereafter, any Draft or
Bankers' Acceptance so signed shall be valid and binding upon, and enforceable
against, the Canadian Borrower. The Canadian Borrower hereby appoints each
Canadian Lender holding a Draft with respect to a Drawing made under this
Agreement, as its attorney-in-fact to, from time to time, complete such Draft to
adequately reflect such Drawing made by such Canadian Lender.
(g) Distribution of Bankers' Acceptances. Bankers' Acceptances
------------------------------------
purchased by a Canadian Lender in accordance with the terms of Section 2.01(d)
and this Section 2.04 may, in such Lender's sole discretion, be held by such
Lender for its own account until the applicable Maturity Date or sold,
rediscounted or otherwise disposed of by it at any time prior thereto in any
relevant market therefor.
<PAGE>
44
(h) Failure to Fund in Respect of Drawings. The failure of any
--------------------------------------
Canadian Lender to fund the Drawing Purchase Price to be funded by it as part of
any Drawing shall not relieve any other Canadian Lender of its obligation
hereunder to fund its Drawing Purchase Price on the date of such Drawing, but no
Canadian Lender shall be responsible for the failure of any other Canadian
Lender to fund the Drawing Purchase Price to be funded by such other Canadian
Lender on the date of any Drawing.
SECTION 2.05. Repayment of Advances. (a) Term Advances, Canadian
--------------------- -----------------------
Borrower Advances and Drawings under the Canadian Facility. The Borrower shall
- ----------------------------------------------------------
repay to the Agent for the ratable account of the Term A Lenders and Term B
Lenders the aggregate outstanding principal amount of the Term A Advances and
Term B Advances, respectively, and the Canadian Borrower shall repay to the
Agent for the ratable account of the Canadian Lenders the aggregate outstanding
principal amount of the Canadian Borrower Advances and the aggregate Face Amount
of the Banker's Acceptances, as applicable, on the following dates in the
amounts indicated (which amounts shall be reduced as a result of the application
of prepayments in accordance with the order of priority set forth in Section
2.07):
<TABLE>
<CAPTION>
Date Amount
- ---------------- ------------------
Term A Facility Term B Facility Canadian Facility
------------------ --------------------- -----------------------
<S> <C> <C> <C>
December 31, 1999 - $ 250,000 -
March 31, 2000 - 250,000 CN $146,000
June 30, 2000 $1,195,400 250,000 CN $146,000
September 30, 2000 1,195,400 250,000 CN $146,000
December 31, 2000 1,552,300 500,000 CN $146,000
March 31, 2001 1,552,300 500,000 CN $146,000
June 30, 2001 1,552,300 500,000 CN $146,000
September 30, 2001 1,552,300 500,000 CN $146,000
December 31, 2001 2,150,000 500,000 CN $146,000
March 31, 2002 2,150,000 500,000 CN $117,120
June 30, 2002 2,150,000 500,000 CN $117,120
September 30, 2002 2,150,000 500,000 CN $117,120
December 31, 2002 2,150,000 500,000 CN $117,120
March 31, 2003 2,150,000 500,000 CN $117,120
June 30, 2003 2,150,000 500,000 CN $117,120
September 30, 2003 2,150,000 500,000 CN $117,120
December 31, 2003 2,150,000 500,000 CN $117,120
</TABLE>
<PAGE>
45
<TABLE>
<CAPTION>
Amount
------------------
Date Term A Facility Term B Facility Canadian Facility
- ---------------- ------------------ --------------------- -----------------------
<S> <C> <C> <C>
March 31, 2004 2,150,000 500,000 CN $117,120
June 30, 2004 2,150,000 500,000 CN $117,120
September 30, 2004 2,150,000 500,000 CN $117,120
December 31, 2004 2,150,000 500,000 CN $117,120
March 31, 2005 2,150,000 500,000 CN $117,120
June 30, 2005 2,150,000 500,000 CN $117,120
September 30, 2005 2,150,000 500,000 CN $117,120
December 31, 2005 - 9,000,000 -
March 31, 2006 - 9,000,000 -
June 30, 2006 - 9,000,000 -
September 30, 2006 - 9,000,000 -
December 31, 2006 - 12,000,000 -
March 31, 2007 - 12,000,000 -
June 30, 2007 - 12,000,000 -
September 30, 2007 - 12,000,000 -
</TABLE>
provided, however, that the final principal installment of the Term A Facility,
- -------- -------
the Term B Facility and the Canadian Facility, respectively, shall in any event
and in each case be in an amount equal to the aggregate principal amount of the
Term A Advances, the Term B Advances, the Canadian Borrower Advances and the
Bankers' Acceptances, respectively, then outstanding. Any payment by the
Canadian Borrower of any Bankers' Acceptances in accordance with this Section
2.05(a) shall, to the extent of such payment, satisfy the obligations of the
Canadian Borrower under the Bankers' Acceptances to which it relates and, in the
case of a Bankers' Acceptance, the Canadian Lender that has accepted such
Bankers' Acceptance shall, to the extent of such payment to such Canadian
Lender, thereafter be solely responsible for the payment thereof.
(b) Working Capital Advances. The Borrower shall repay to the Agent
------------------------
for the ratable account of the Working Capital Lenders on the Termination Date
the aggregate outstanding principal amount of the Working Capital Advances then
outstanding.
(c) Acquisition Advances. The Borrower shall repay to the Agent for
--------------------
the ratable account of the Acquisition Lenders (x) on each March 31, June 30,
September 30 and December 31, commencing December 31, 2002, an amount equal to
1/12 of the aggregate principal balance of Acquisition Advances outstanding on
the Conversion Date (after giving effect to any prepayments on the Conversion
Date required by Section 2.07(b)(i) or (ii) and
<PAGE>
46
which amount shall be reduced as a result of the application of further
prepayments in accordance with the order of priority set forth in the applicable
paragraph of Section 2.07) or (y) on September 30, 2005 an amount equal to the
aggregate principal amount of the Acquisition Advances then outstanding.
(d) Swing Line Advances. The Borrower shall repay to the Agent, for
-------------------
the account of the Swing Line Bank and each other Working Capital Lender which
has made a Swing Line Advance, the outstanding principal amount of each Swing
Line Advance made by each of them on the earlier of the maturity date specified
in the applicable Notice of Borrowing (which maturity shall be no later than the
seventh day after the requested date of such Borrowing) and the Termination
Date.
(e) Letter of Credit Advances. (i) The Borrower shall repay to the
-------------------------
Agent for the account of the Issuing Bank and each other Working Capital Lender
that has made a Letter of Credit Advance on the earlier of the Termination Date
and on demand the outstanding principal amount of each Letter of Credit Advance
made by each of them.
(ii) The Obligations of the Borrower under this Agreement, any Letter
of Credit Agreement and any other agreement or instrument relating to any Letter
of Credit shall be unconditional and irrevocable, and shall be paid strictly in
accordance with the terms of this Agreement, such Letter of Credit Agreement and
such other agreement or instrument under all circumstances, including, without
limitation, the following circumstances:
(A) any lack of validity or enforceability of any Loan Document,
any Letter of Credit Agreement, any Letter of Credit or any other agreement
or instrument relating thereto (all of the foregoing being, collectively,
the "L/C Related Documents");
---------------------
(B) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations of the Borrower in respect of
any L/C Related Document or any other amendment or waiver of or any consent
to departure from all or any of the L/C Related Documents;
(C) the existence of any claim, set-off, defense or other right that
the Borrower may have at any time against any beneficiary or any transferee
of a Letter of Credit (or any Persons for whom any such beneficiary or any
such transferee may be acting), the Issuing Bank or any other Person,
whether in connection with the transactions contemplated by the L/C Related
Documents or any unrelated transaction;
(D) any statement or any other document presented under a Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any respect;
<PAGE>
47
(E) payment by the Issuing Bank under a Letter of Credit against
presentation of a draft or certificate that does not strictly comply with
the terms of such Letter of Credit;
(F) any exchange, release or non-perfection of any Collateral or
other collateral, or any release or amendment or waiver of or consent to
departure from any guarantee, for all or any of the Obligations of the
Borrower in respect of the L/C Related Documents; or
(G) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing, including, without limitation, any other
circumstance that might otherwise constitute a defense available to, or a
discharge of, the Borrower or a guarantor.
SECTION 2.06. Termination or Reduction of the Commitments. (a)
-------------------------------------------
Optional. (i) The Borrower may, upon at least five Business Days' notice to
- --------
the Agent, terminate in whole or reduce in part the unused portions of the Term
A Commitments and the Term B Commitments, the Unused Acquisition Commitments and
the Unused Working Capital Commitments; provided, however, that each partial
-------- -------
reduction of a Facility (i) shall be in an aggregate amount of $1,000,000 or an
integral multiple of $100,000 in excess thereof and (ii) shall be made ratably
among the Appropriate Lenders in accordance with their Commitments with respect
to such Facility.
(ii) The Canadian Borrower may, upon at least five Canadian Business
Days' notice to the Agent, terminate in whole or reduce in part the Unused
Canadian Commitments; provided, however, that each partial reduction of the
-------- -------
Canadian Facility (i) shall be in an aggregate amount of CN$500,000 or an
integral multiple of CN$100,000 in excess thereof and (ii) shall be made ratably
among the Canadian Lenders in accordance with their Canadian Commitments.
(b) Mandatory. (i) On the date of the Term A Borrowing, after
---------
giving effect to such Term A Borrowing, and from time to time thereafter upon
each repayment or prepayment of the Term A Advances, the aggregate Term A
Commitments of the Term A Lenders shall be automatically and permanently
reduced, on a pro rata basis, by an amount equal to the amount by which the
aggregate Term A Commitments immediately prior to such reduction exceed the
aggregate unpaid principal amount of the Term A Advances then outstanding.
(ii) On the date of the Term B Borrowing, after giving effect to such
Term B Borrowing, and from time to time thereafter upon each repayment or
prepayment of the Term B Advances, the aggregate Term B Commitments of the Term
B Lenders shall be automatically and permanently reduced, on a pro rata basis,
by an amount equal to the amount by which the aggregate Term B Commitments
immediately prior to such reduction exceed the aggregate unpaid principal amount
of the Term B Advances then outstanding.
<PAGE>
48
(iii) On the date of the Canadian Borrowing, after giving effect to
such Canadian Borrowing, and from time to time thereafter upon each repayment or
prepayment of the Canadian Borrower Advances and upon each repayment or
prepayment of any outstanding Bankers' Acceptances, the aggregate Canadian
Commitments shall be automatically and permanently reduced, on a pro rata basis,
by an amount equal to the amount by which the aggregate Canadian Commitments
immediately prior to such reduction exceed the sum of the aggregate principal
amount of the Canadian Borrower Advances outstanding at such time, and the
aggregate Face Amount of all Bankers' Acceptances created and purchased and
outstanding at such time.
(iv) The Working Capital Facility shall be automatically and
permanently reduced on the date on which any prepayment thereof is required to
be made pursuant to Section 2.07(b)(i) or (ii) by an amount equal to the
applicable Reduction Amount, provided that each such reduction of the Working
--------
Capital Facility shall be made ratably among the Working Capital Lenders in
accordance with their Working Capital Commitments.
(v) The Acquisition Facility shall be automatically and permanently
reduced on the date on which any prepayment thereof is required to be made
pursuant to Section 2.07(b)(i) or (ii) by an amount equal to the Acquisition
Reduction Amount, provided that each such reduction of the Acquisition Facility
--------
shall be made ratably among the Acquisition Lenders in accordance with their
Acquisition Commitments. In addition, from and after the Conversion Date, upon
each repayment or prepayment of the Acquisition Advances, the Acquisition
Commitments of the Acquisition Lenders shall be automatically and permanently
reduced, on a pro rata basis, by an aggregate amount equal to the amount by
which the aggregate Acquisition Commitments immediately prior to such reduction
exceed the aggregate unpaid principal amount of the Acquisition Advances then
outstanding.
(vi) The Swing Line Facility and the Letter of Credit Facility shall
each be automatically and permanently reduced from time to time on the date of
each reduction in the Working Capital Facility by the amount, if any, by which
each such Facility exceeds the Working Capital Facility after giving effect to
such reduction of the Working Capital Facility.
SECTION 2.07. Prepayments. (a) Optional. Each Applicable Borrower
----------- --------
may, upon at least one Business Day's notice in the case of Base Rate Advances
or Canadian Prime Rate Advances and three Business Days' notice in the case of
Eurodollar Rate Advances, in each case to the Agent (received not later than
11:00 A.M. (New York City time)) stating the proposed date, whether the
prepayment will be of Working Capital Advances or of Term Advances and
Acquisition Advances and the aggregate principal amount of the prepayment, and
if such notice is given the Applicable Borrower shall, prepay (i) Working
Capital Advances or (ii) Term Advances and Acquisition Advances, as set forth in
the notice described above, comprising part of the same Borrowings, in whole or
ratably in part, in an aggregate principal amount equal to
<PAGE>
49
the amount set forth in the notice described above, together with accrued
interest to the date of such prepayment on the aggregate principal amount
prepaid unless such prepayment is with respect to a Swing Line Advance or a
Working Capital Advance which is a Base Rate Advance; provided, however, that
-------- -------
(x) each partial prepayment (other than a prepayment of Swing Line Advances)
shall be in an aggregate principal amount of $500,000 (or its Equivalent in
Canadian Dollars) or an integral multiple of $100,000 (or its Equivalent in
Canadian Dollars) in excess thereof (or, with respect to Swing Line Advances,
shall be in an aggregate principal amount of $100,000 or an integral multiple of
$50,000 in excess thereof) and (y) if any prepayment of a Eurodollar Rate
Advance is made on a date other than the last day of an Interest Period for such
Advance the Applicable Borrower shall also pay any amounts owing pursuant to
Section 8.04(c). Each such prepayment that is made with respect to the Term
Advances and the Acquisition Advances shall be allocated, subject to Section
2.07(c), among the Term A Facility, the Term B Facility and the Acquisition
Facility ratably (based on the then-outstanding aggregate principal amount of
the Advances under each such Facility) and, within each such Facility, applied
(i) first, in order of maturity to the remaining principal installments thereof
due in the next twelve months and (ii) second, ratably to the remaining
principal installments thereof. Each such prepayment which is made with respect
to Canadian Borrower Advances shall be applied to the Canadian Facility, ratably
to the remaining principal installments thereof. The Canadian Borrower may not
prepay the amount of any Drawing pursuant to this Section 2.07(a), except on the
Maturity Date thereof.
(b) Mandatory. (i) The Borrower shall, no later than the 30th day
---------
following the date on which it delivers the financial statements referred to in
Section 5.03(d) for the Fiscal Year ending on or about December 31, 2000 and for
each Fiscal Year thereafter (but in any event within 120 days after the end of
each Fiscal Year), prepay an aggregate principal amount of Advances comprising
part of the same Borrowings equal to 75% of the amount of Excess Cash Flow of
the Borrower and its Subsidiaries for such Fiscal Year, provided that the amount
--------
of such prepayment shall be reduced to 50% of the amount of Excess Cash Flow of
the Borrower and its Subsidiaries for such Fiscal Year if the Leverage Ratio of
the Parent Guarantor and its Subsidiaries as of the end of such Fiscal Year is
equal to or less than 4.00 to 1.00. Each such prepayment of Advances shall be
allocated as follows:
first, subject to Section 2.07(c), among the Term A Facility, the Term
-----
B Facility and the Acquisition Facility ratably (based on the then-
outstanding aggregate principal amount of the Advances under each such
Facility) and, within each such Facility, applied ratably to the remaining
principal installments thereof, and
second, to the extent that no Term Advances remain outstanding and the
------
Acquisition Facility has been fully repaid and permanently reduced in full,
to the Working Capital Facility as set forth in clause (v) below.
<PAGE>
50
(ii) (x) The Borrower shall, on the date of receipt of the Net Cash
Proceeds by the Parent Guarantor or any of its Domestic Subsidiaries from (A)
the sale, lease, transfer or other disposition of (1) any shares of capital
stock of a Subsidiary of the Borrower (other than directors' qualifying shares
or shares required by applicable law to be held by a Person other than the
Borrower or a Subsidiary of the Borrower), (2) all or substantially all the
assets of any division or line of business of the Borrower or any Subsidiary of
the Borrower or (3) any other assets of the Borrower or any Subsidiary of the
Borrower outside of the ordinary course of business of the Borrower or such
Subsidiary of the Borrower (other than any sale, lease, transfer or other
disposition permitted pursuant to Section 5.02(e)(vi), Section 5.02(e)(xi) or
Section 5.02(e)(xii)), (B) the incurrence or issuance by the Parent Guarantor or
any of its Domestic Subsidiaries of any Debt (other than Debt incurred or issued
pursuant to Section 5.02(b)), (C) (1) the sale or issuance by the Parent
Guarantor or any of its Domestic Subsidiaries to any Person (other than the
Parent Guarantor or any of its Domestic Subsidiaries) of any capital stock or
other ownership or profit interest, any securities convertible into or
exchangeable for capital stock or other ownership or profit interest or any
warrants, rights or options to acquire capital stock or other ownership or
profit interest, in each case of the Parent Guarantor or any of its Domestic
Subsidiaries or (2) without duplication of clause (1) of this sub-clause (C),
the receipt by the Parent Guarantor or any of its Domestic Subsidiaries of any
capital contribution (other than from the Parent Guarantor or any of its
Domestic Subsidiaries), other than (aa) in each case any such issuance or sale
of such equity interests by or to, or receipt of any such capital contribution
by, the Parent Guarantor or any of its Domestic Subsidiaries for the sole
purpose of financing a Permitted Acquisition (including any issuance to one or
more sellers in a Permitted Acquisition), (bb) Net Cash Proceeds from sales and
issuances of such equity interests by or to, and the receipt of such capital
contributions by, the Parent Guarantor or any of its Domestic Subsidiaries in an
aggregate amount not to exceed $750,000 during the term of this Agreement and
(cc) the Equity Contributions, or (D) any Extraordinary Receipt received by or
paid to or for the account of the Parent Guarantor or any of its Domestic
Subsidiaries and not otherwise included in clause (A), (B) or (C) above, prepay
an aggregate principal amount of Advances comprising part of the same Borrowings
equal to the amount of such Net Cash Proceeds; provided that, in the case of any
--------
event described in clause (A) of this Section 2.07(b)(ii)(x), if the Borrower
shall deliver to the Agent a certificate of a Responsible Officer of the
Borrower to the effect that the Borrower and its Subsidiaries intend to apply
the Net Cash Proceeds from such event (or a portion thereof specified in such
certificate), within 270 days after receipt of such Net Cash Proceeds, to
acquire (xx) property or assets (other than Debt (which, for purposes of this
parenthetical, shall be deemed to exclude Cash Equivalents and Working Capital
Advances) or capital stock) to be used in the business of the Borrower or any of
its Subsidiaries, (yy) the capital stock of a Person that becomes a Subsidiary
of the Borrower as a result of the acquisition of such capital stock by the
Borrower or any of its Subsidiaries or (zz) capital stock constituting a
minority interest in any Person that at such time is a Subsidiary of the
Borrower (provided that any such Subsidiary described in clauses (yy) or (zz)
--------
above is primarily engaged in the business of the Borrower or any of its
Subsidiaries), then no prepayment shall be required pursuant to this Section
2.07(b)(ii)(x) in respect of the Net Cash Proceeds in
<PAGE>
51
respect of such event (or the portion of such Net Cash Proceeds specified in
such certificate, if applicable) except to the extent of any such Net Cash
Proceeds therefrom that have not been so applied by the end of such 270-day
period, at which time a prepayment shall be required in an amount equal to the
amount of such Net Cash Proceeds that have not been so applied; provided,
--------
however, that the Borrower shall not be required to prepay Advances pursuant to
- -------
clause (A) of this Section 2.07(b)(ii)(x) to the extent that the aggregate
amount of Net Cash Proceeds from events described in such clause (A) received
during the term of this Agreement and not applied to acquire assets, property or
capital stock in accordance with and within the period prescribed by the first
proviso of this Section 2.07(b)(ii)(x) is less than $7,500,000. Each such
prepayment shall be allocated as follows:
first, subject to Section 2.07(c), among the Term A Facility, the Term
-----
B Facility and the Acquisition Facility ratably (based on the then-
outstanding aggregate principal amount of the Advances under each such
Facility) and, within each such Facility, applied ratably to the remaining
principal installments thereof, and
second, to the extent that no Term Advances remain outstanding and the
------
Acquisition Facility has been fully repaid and permanently reduced in full,
to the Working Capital Facility as set forth in clause (v) below; and
(y) The Canadian Borrower shall, on the date of receipt of the Net Cash
Proceeds by the Canadian Borrower or any of its Subsidiaries from (A) the sale,
lease, transfer or other disposition of any assets of the Canadian Borrower or
any of its Subsidiaries (other than any sale, lease, transfer or other
disposition of assets pursuant to Section 5 02 (e)), (B) the incurrence or
issuance by the Canadian Borrower or any of its Subsidiaries of any Debt (other
than Debt incurred or issued pursuant to Section 5.02 (b)), (C) the sale or
issuance by the Canadian Borrower or any of its Subsidiaries to any Person
(other than the Canadian Borrower or any of its Subsidiaries) of any capital
stock or other ownership or profit interest, any securities convertible into or
exchangeable for capital stock or other ownership or profit interest or any
warrants, rights or options to acquire capital stock or other ownership or
profit interest, in each case of the Canadian Borrower or any of its
Subsidiaries, or (D) any Extraordinary Receipt received by or paid to or for the
account of the Canadian Borrower or any of its Subsidiaries and not otherwise
included in clause (A), (B) or (C) above, prepay an aggregate principal amount
of the Canadian Borrower Advances or Drawings comprising part of the same
Borrowing, equal to the amount of such Net Cash Proceeds.
(iii) The Borrower shall, on each Business Day, prepay an aggregate
principal amount of the Working Capital Advances comprising part of the same
Borrowings, the Swing Line Advances and the Letter of Credit Advances equal to
the amount by which (A) the sum of the aggregate principal amount of (x) the
Working Capital Advances, (y) the Swing Line Advances and (z) the Letter of
Credit Advances then outstanding, plus the aggregate Available Amount of all
Letters of Credit then outstanding, exceeds (B) the Working Capital Facility.
<PAGE>
52
(iv) The Borrower shall, on each Business Day, pay to the Agent for
deposit in the L/C Cash Collateral Account an amount sufficient to cause the
aggregate amount on deposit in such Account to equal the amount by which the
aggregate Available Amount of all Letters of Credit then outstanding exceeds the
Letter of Credit Facility on such Business Day.
(v) Prepayments of the Working Capital Facility made pursuant to
clause (i) or (ii) above shall be first applied to prepay Letter of Credit
-----
Advances then outstanding until such Advances are paid in full, second applied
------
to prepay Swing Line Advances then outstanding until such Advances are paid in
full, third applied to prepay Working Capital Advances then outstanding
-----
comprising part of the same Borrowings (in the order designated by the Borrower)
until such Advances are paid in full and fourth deposited in the L/C Cash
------
Collateral Account to cash collateralize 100% of the Available Amount of the
Letters of Credit then outstanding; and the amount remaining (if any) after the
prepayment in full of the Letter of Credit Advances, Swingline Advances and
Working Capital Advances then outstanding and the cash collateralization of the
aggregate Available Amount of Letters of Credit then outstanding (the sum of
such prepayment amounts, cash collateralization amounts and remaining amount
being referred to herein as the "Reduction Amount") may be retained by the
----------------
Borrower and the Working Capital Facility shall be permanently reduced as set
forth in Section 2.06(b)(iv). Upon the drawing of any Letter of Credit for
which funds are on deposit in the L/C Cash Collateral Account, such funds shall
be applied to reimburse the Issuing Bank or Working Capital Lenders, as
applicable.
(vi) Prepayments of the Acquisition Facility pursuant to Section
2.07(a) or 2.07(b)(i) or (ii) shall be applied to prepay Acquisition Advances
then outstanding comprising part of the same Borrowings until such Acquisition
Advances are paid in full, and thereafter the Acquisition Facility shall be
permanently reduced, in accordance with Section 2.06(b)(v), by the amount of any
prepayment of the Term Facilities and the Acquisition Facility pursuant to
Section 2.07(b)(i) or (ii) remaining (if any) after the prepayment in full of
the Term Advances and the Acquisition Advances then outstanding (the sum of the
aggregate amount applied to prepay Acquisition Advances and such remaining
amount being referred to herein as the "Acquisition Reduction Amount").
----------------------------
(vii) The Canadian Borrower shall, on each Canadian Business Day,
pay to the Agent for deposit in a cash collateral account an amount sufficient
to cause the aggregate amount on deposit in such account to equal the amount by
which the aggregate Face Amount of all Bankers' Acceptances then outstanding
under the Canadian Facility exceeds the Canadian Facility on such Canadian
Business Day.
(viii) All prepayments under this subsection (b), other than
prepayments of Base Rate Advances pursuant to clause (iii), shall be made
together with accrued interest to the date of
<PAGE>
53
such prepayment on the principal amount prepaid, together with any amounts owing
pursuant to Section 8.04(c).
(ix) No prepayment shall be required to be made under subsections
(b)(i) and (ii) of this Section 2.07 unless the amount of such prepayment
exceeds $500,000 in the aggregate.
(c) Term B Opt-Out. With respect to any prepayment of the Term
--------------
Advances and Acquisition Advances pursuant to Section 2.07(b), the Agent shall
ratably pay the Term A Lenders, Term B Lenders and Acquisition Lenders as
provided in Section 2.07; provided, however, that any Term B Lender, at its
-------- -------
option, may, to the extent that Term A Advances or Acquisition Advances are
outstanding at the time of such prepayment, elect not to accept such prepayment,
in which event the provisions of the next sentence shall apply. Any Term B
Lender may, to the extent that Term A Advances or Acquisition Advances are
outstanding at the time of any prepayment referred to in any Prepayment Notice,
elect not to accept its ratable share of such prepayment, by notice given to the
Agent not later than 11:00 A.M. (New York City time) on the first Business Day
prior to the scheduled Prepayment Date (such Term B Lender being a "Declining
---------
Lender"). On the Prepayment Date an amount equal to that portion of the
- ------
Prepayment Amount available to prepay Term B Advances (less any amounts that
would otherwise be payable to the Declining Lenders) shall be applied to prepay
Term B Advances owing to Term B Lenders other than Declining Lenders and any
amounts that would otherwise have been applied to prepay Term B Advances owing
to Declining Lenders shall instead be applied to prepay the remaining Term A
Advances and Acquisition Advances as provided in Sections 2.07(a) and 2.07(b),
provided that on prepayment in full of all Term A Advances and all Acquisition
- --------
Advances, the remainder of any Prepayment Amount shall be applied ratably to
prepay Term B Advances owing to the Declining Lenders.
SECTION 2.08. Interest. (a) Availability of Types of Advances.
-------- ---------------------------------
Subject to the provisions of Sections 2.10 and 2.13, Canadian Borrower Advances
may be Canadian Prime Rate Advances only.
(b) Scheduled Interest. The Applicable Borrower shall pay interest
------------------
on the unpaid principal amount of each Advance owing to each Lender from the
date of such Advance until such principal amount shall be paid in full, at the
following rates per annum:
(i) Base Rate Advances. During such periods as such Advance is a
------------------
Base Rate Advance, a rate per annum equal at all times to the sum of (A)
the Base Rate in effect from time to time plus (B) (1) in the case of any
----
Term B Advance, 2.50% or (2) in the case of any other Advance, the
Applicable Margin in effect from time to time, payable in arrears quarterly
on the last Business Day of each March, June, September and December during
such periods, on the date such Base Rate Advance shall be Converted, on the
date
<PAGE>
54
of any repayment thereof pursuant to Section 2.05, on the date of any
prepayment thereof to the extent required under Section 2.07 and on the
Termination Date.
(ii) Eurodollar Rate Advances. During such periods as such Advance
------------------------
is a Eurodollar Rate Advance, a rate per annum equal at all times
during each Interest Period for such Advance to the sum of (A) the
Eurodollar Rate for such Interest Period for such Advance plus (B) (1) in
----
the case of any Term B Advance, 3.50% or (2) in the case of any other
Advance, the Applicable Margin in effect on the first day of such Interest
Period, payable in arrears on the last day of such Interest Period and, if
such Interest Period has a duration of more than three months, on each day
that occurs during such Interest Period every three months from the first
day of such Interest Period, on the date such Eurodollar Rate Advance shall
be Converted, on the date of any repayment thereof pursuant to Section
2.05, on the date of any prepayment thereof to the extent required under
Section 2.07 and on the Termination Date.
(iii) Canadian Prime Rate Advances. During such periods as such
----------------------------
Advance is a Canadian Prime Rate Advance, a rate per annum equal at all
times to the sum of (A) the Canadian Prime Rate in effect from time to time
plus (B) the Applicable Margin for Canadian Prime Rate Advances in effect
----
from time to time, payable in arrears quarterly on the last Business Day of
each March, June, September and December during such periods, on the date
such Canadian Prime Rate Advance shall be Converted, on the date of any
repayment thereof pursuant to Section 2.05, on the date of any prepayment
thereof to the extent required under Section 2.07 and on the Termination
Date.
(c) Default Interest. Upon the occurrence and during the
----------------
continuance of an Event of Default, the Agent may, and upon the request of the
Required Lenders shall, require that the Applicable Borrower shall pay interest
on (i) the unpaid principal amount of each Advance made to such Applicable
Borrower and owing to each Lender, payable in U.S. Dollars or Canadian Dollars,
as the case may be, in arrears on the dates referred to in clauses (b)(i)
through (b)(iii) above or on demand, at a rate per annum equal at all times to
2% per annum above the rate per annum required to be paid on such Advance
pursuant to clauses (b)(i) through (b)(iii) above and (ii) to the fullest extent
permitted by law, the amount of any interest, fee or other amount payable under
the Loan Documents that is not paid when due, from the date such amount shall be
due (or, with respect to amounts other than principal, interest and fees, from
30 days after such amount is due) until such amount shall be paid in full,
payable in U.S. Dollars or Canadian Dollars, as the case may be, in arrears on
the date such amount shall be paid in full or on demand, at a rate per annum
equal at all times to 2% per annum above the rate per annum required to be paid,
in the case of interest, on the Type of Advance on which such interest has
accrued pursuant to clauses (b)(i) through (b)(iii) above, and, in all other
cases, on Base Rate Advances pursuant to clause (b)(i) above.
<PAGE>
55
(d) Notice of Interest Rate. Promptly after receipt of a Notice of
-----------------------
Borrowing pursuant to Section 2.02(a), the Agent shall give notice to the
Applicable Borrower and each Appropriate Lender of the applicable interest rate
determined by the Agent for purposes of clause (b) above.
(e) BA Rate Determination. If the Reuters Screen CDOR Page is not
---------------------
available for the timely determination of the BA Rate, and the BA Rate for any
Bankers' Acceptances can not otherwise be determined in a timely manner in
accordance with the definition of "BA Rate", the Agent shall forthwith notify
the Canadian Borrower and the Canadian Lenders that such interest rate cannot be
determined for such Bankers' Acceptances, and the obligation of the Canadian
Lenders to make, or to renew, Bankers' Acceptances shall be suspended until the
Agent shall notify the Canadian Borrower and the Canadian Lenders that the
circumstances causing such suspension no longer exist.
(f) Interest Act (Canada). Whenever a rate of interest hereunder is
---------------------
calculated on the basis of a year (the "deemed year") which contains fewer days
-----------
than the actual number of days in the calendar year of calculation, such rate of
interest shall be expressed as a yearly rate for purposes of the Interest Act
(Canada) by multiplying such rate of interest by the number of days in the
deemed year and dividing it by the actual number of days in the calendar year of
calculation.
(g) Nominal Rates; No Deemed Reinvestment. The principle of deemed
-------------------------------------
reinvestment of interest shall not apply to any interest calculation under this
Agreement; all interest payments to be made hereunder shall be paid without
allowance or deduction for reinvestment or otherwise, before and after maturity,
default and judgment. The rates of interest specified in this Agreement are
intended to be nominal rates and not effective rates. Interest calculated
hereunder shall be calculated using the nominal rate method and not the
effective rate method of calculation.
(h) Interest Paid by the Canadian Borrower. Notwithstanding any
--------------------------------------
provision of this Agreement, in no event shall the aggregate "interest" (as
defined in Section 347 of the Criminal Code (Canada)) payable by the Canadian
Borrower under this Agreement exceed the effective annual rate of interest on
the "credit advanced" (as defined in Section 347 of the Criminal Code (Canada))
under this Agreement lawfully permitted by that Section and, if any payment,
collection or demand pursuant to this Agreement in respect of "interest" (as
defined in Section 347 of the Criminal Code (Canada)) is determined to be
contrary to the provisions of that Section, such payment, collection or demand
shall be deemed to have been made by mutual mistake of the Canadian Borrower and
the Canadian Lenders and the amount of such payment or collection shall be
refunded to the Canadian Borrower. For the purposes of this Agreement, the
effective annual rate of interest shall be determined in accordance with
generally accepted actuarial practices and principles over the relevant term
and, in the event of a dispute, a
<PAGE>
56
certificate of a Fellow of the Canadian Institute of Actuaries appointed by the
Canadian Lenders will be prima facie evidence of such rate.
SECTION 2.09. Fees. (a) Commitment Fees. (x) The Borrower shall
---- ---------------
pay to the Agent for the account of the Working Capital Lenders a commitment
fee, from the date hereof in the case of each Initial Lender that is a Working
Capital Lender and from the effective date specified in the Assignment and
Acceptance pursuant to which it became a Working Capital Lender in the case of
each other Lender until the Termination Date, payable in arrears quarterly on
the last Business Day of each March, June, September and December, commencing
December 31, 1999, and on the Termination Date, at a rate per annum equal to the
Applicable Margin on the average daily Unused Working Capital Commitment of such
Lender; and (y) the Borrower shall pay to the Agent for the account of the
Acquisition Lenders a commitment fee, from the date hereof in the case of each
Initial Lender that is an Acquisition Lender and from the effective date
specified in the Assignment and Acceptance pursuant to which it became an
Acquisition Lender in the case of each other Lender until the Conversion Date,
payable in arrears quarterly on the last Business Day of each March, June,
September and December, commencing December 31, 1999, and on the Conversion
Date, at a rate per annum equal to the Applicable Margin on the average daily
Unused Acquisition Commitment of such Lender.
(b) Letter of Credit Fees, Etc. (i) The Borrower shall pay to the
--------------------------
Agent for the account of each Working Capital Lender a commission, payable in
arrears quarterly on the last Business Day of each March, June, September and
December, commencing December 31, 1999, and on the Termination Date, on such
Lender's Pro Rata Share of the average daily aggregate Available Amount during
such quarter of all Letters of Credit outstanding from time to time at the rate
per annum equal to the Applicable Margin for Eurodollar Rate Borrowings under
the Working Capital Facility as in effect from time to time.
(ii) The Borrower shall pay to the Issuing Bank, for its own account,
such commissions, issuance fees, fronting fees, transfer fees and other fees and
charges in connection with the issuance or administration of each Letter of
Credit as the Borrower and the Issuing Bank shall agree.
(c) Agent's Fees. Each Applicable Borrower shall pay to the Agent
------------
for its own account such fees as may from time to time be agreed between such
Applicable Borrower and the Agent.
(d) Stamping Fees. The Canadian Borrower shall, on the date of each
-------------
Drawing and on the date of each renewal of any outstanding Bankers' Acceptances,
pay to the Agent, in Canadian Dollars, for the ratable account of the Canadian
Lenders accepting Drafts and purchasing Bankers' Acceptances, the Stamping Fee
with respect to such Bankers' Acceptances. The Canadian Borrower irrevocably
authorizes each such Canadian Lender to deduct the Stamping Fee payable with
respect to each Bankers' Acceptance of such Canadian Lender from
<PAGE>
57
the Drawing Purchase Price payable by such Canadian Lender in respect of such
Bankers' Acceptance in accordance with Section 2.04 and to apply such amount so
withheld to the payment of such Stamping Fee for the account of the Canadian
Borrower and, to the extent such Stamping Fee is so withheld and legally
permitted to be so applied, the Canadian Borrower's obligations under the
preceding sentence in respect of such Stamping Fee shall be satisfied.
SECTION 2.10. Conversion of Advances. (a) Optional. (X) The
---------------------- --------
Borrower may on any Business Day, upon notice given to the Agent not later than
11:00 A.M. (New York City time) on the third Business Day prior to the date of
the proposed Conversion and subject to the provisions of Sections 2.08 and 2.12,
Convert all or any portion of the Advances of one Type comprising the same
Borrowing into Advances of the other Type; provided, however, that if any
-------- -------
Conversion of Eurodollar Rate Advances into Base Rate Advances is made other
than on the last day of an Interest Period for such Eurodollar Rate Advances the
Borrower shall also pay any amounts owing pursuant to Section 8.04(c), any
Conversion of Base Rate Advances into Eurodollar Rate Advances shall be in an
amount not less than the minimum amount specified in Section 2.02(c), no
Conversion of any Advances shall result in more separate Borrowings than
permitted under Section 2.02(c) and each Conversion of Advances comprising part
of the same Borrowing under any Facility shall be made ratably among the
Appropriate Lenders in accordance with their Commitments under such Facility.
Each such notice of Conversion shall, within the restrictions specified above,
specify (i) the date of such Conversion, (ii) the Advances to be Converted and
(iii) if such Conversion is into Eurodollar Rate Advances, the duration of the
initial Interest Period for such Advances. Each notice of Conversion shall be
irrevocable and binding on the Borrower; and (Y) The Canadian Borrower may on
---
any Business Day, upon notice given to the Agent not later than 12:00 noon (New
York City time) on a Business Day at least two Canadian Business Days prior to
the date of the proposed conversion and subject to the provisions of Sections
2.08 or 2.12, convert all or any portion of the Canadian Prime Rate Advances
comprising part of the same Borrowing to Drawings in accordance with Section
2.04(a) hereof. Each such notice of Conversion shall specify (A) the date of
such Conversion, (B) the Canadian Prime Rate Advances to be Converted, (C) if
less than all of the Canadian Prime Rate Advances comprising part of any
Borrowing are to be Converted, the aggregate amount of Canadian Prime Rate
Advances to be so Converted and (D) the initial term to maturity of the Bankers'
Acceptances (which shall comply with the definition of "Maturity Date" in
Section 1.01); provided, however, that, if the Agent determines in good faith
-------- -------
(which determination shall be conclusive and binding upon the Canadian Borrower)
that the Bankers' Acceptances cannot be Converted ratably by the Canadian
Lenders, due solely to the requested aggregate Face Amount thereof, the
aggregate Face Amount of Bankers' Acceptances to be created and purchased by any
Canadian Lender shall be reduced to such lesser amount as the Agent determines
will permit such Conversion to be so made and each Canadian Lender shall
continue to maintain a Canadian Prime Rate Advance in the amount of the
difference between such Canadian Lender's ratable portion of the original
aggregate amount of the Canadian Prime Rate Advances to be Converted and the
Face Amount of the Bankers' Acceptances to be created
<PAGE>
58
by such Canadian Lender after giving effect to such Conversion. Each notice of
Conversion under this Section 2.10 shall be irrevocable and binding on the
Canadian Borrower.
(b) Mandatory. (i) On the date on which the aggregate unpaid
---------
principal amount of Eurodollar Rate Advances comprising any Borrowing shall be
reduced, by payment or prepayment or otherwise, to less than $1,000,000, such
Advances shall automatically Convert into Base Rate Advances.
(ii) If the Borrower shall fail to select the duration of any
Interest Period for any Eurodollar Rate Advances in accordance with the
provisions contained in the definition of "Interest Period" in Section 1.01, the
Agent will forthwith so notify the Borrower and the Appropriate Lenders,
whereupon each such Eurodollar Rate Advance will automatically, on the last day
of the then existing Interest Period therefor, Convert into a Base Rate Advance.
(iii) Upon the occurrence and during the continuance of any Event of
Default and the determination of the Agent, or the Required Lenders, that any or
all Eurodollar Rate Advances and any or all Conversions are not appropriate, (x)
the applicable Eurodollar Rate Advance will automatically, on the last day of
the then existing Interest Period therefor, Convert into a Base Rate Advance and
(y) the obligation of the Lenders to make, or to Convert the applicable Advances
into, Eurodollar Rate Advances shall be suspended.
SECTION 2.11. Renewal and Conversion of Bankers' Acceptances. (a)
----------------------------------------------
Optional Renewal. The Canadian Borrower may on any Business Day, upon notice
- ----------------
given to the Agent not later than 12:00 noon (New York City time) on a Business
Day at least two Canadian Business Days prior to the date of the proposed
renewal and subject to the provisions of Section 2.12, renew all or any portion
of the Bankers' Acceptances comprising part of the same Drawing; provided,
--------
however, that:
- -------
(i) any renewal of Bankers' Acceptances shall be made only on the
then existing Maturity Date for such Bankers' Acceptances;
(ii) each renewal of Bankers' Acceptances comprising part of the
same Drawing shall be made ratably among the Lenders holding such Bankers'
Acceptances in accordance with the respective amount of such Bankers'
Acceptances so held; and
(iii) upon the occurrence and during the continuance of any Event of
Default and the determination of the Agent, or Canadian Lenders owning or
holding at least 51% of the sum of (x) the aggregate principal amount of
the Canadian Borrower Advances outstanding at such time, (y) the aggregate
Face Amount of all Bankers' Acceptances outstanding at such time and (z)
the aggregate Unused Canadian Commitments at such time, that any or all
Bankers' Acceptances and any or all renewals of any Bankers' Acceptances
are not appropriate, no renewal of any Bankers' Acceptance may be made.
<PAGE>
59
Each such notice of renewal shall, within the restrictions set forth above,
specify (A) the date of such renewal (which shall be the then existing Maturity
Date of such Bankers' Acceptances and shall be a Canadian Business Day), (B) the
Bankers' Acceptances to be renewed, (C) if less than all of the Bankers'
Acceptances comprising part of any Drawing are to be renewed, the aggregate Face
Amount for such renewal and (D) the term to maturity of the renewed Bankers'
Acceptances (which shall comply with the definition of "Maturity Date" in
Section 1.01); provided, however, that, if the Agent determines in good faith
-------- -------
(which determination shall be conclusive and binding upon the Canadian Borrower)
that the Bankers' Acceptances cannot, due solely to the requested aggregate Face
Amount thereof, be renewed ratably by the Canadian Lenders, the aggregate Face
Amount of such renewal (or the Face Amount of Bankers' Acceptances to be created
by any Canadian Lender) shall be reduced to such lesser amount as the Agent
determines will permit such renewal to be so made and each Canadian Lender shall
fund the difference between such Canadian Lender's ratable portion of the
original aggregate Face Amount of such renewal and the Face Amount of the
Bankers' Acceptances to be created by such Canadian Lender after giving effect
to such reduction in the form of a Canadian Prime Rate Advance, which shall be
deemed for all purposes hereof to be a Canadian Borrower Advance made pursuant
to Section 2.01(d). Each notice of renewal under this Section 2.11 shall be
irrevocable and binding on the Canadian Borrower. Upon any renewal of Bankers'
Acceptances comprising part of any Drawing in accordance with this Section
2.11(a), the Canadian Lenders holding the Bankers' Acceptances to be renewed
shall exchange such maturing Bankers' Acceptances for new Bankers' Acceptances
containing the terms set forth in the applicable notice of renewal, and the
Drawing Purchase Price payable for each such renewal shall be applied, together
with other funds, if necessary, available to the Canadian Borrower, to reimburse
the Bankers' Acceptances otherwise maturing on such date. The Canadian Borrower
hereby irrevocably authorizes and directs each Canadian Lender to apply the
proceeds of each renewed Bankers' Acceptance owing to it to the reimbursement,
in accordance with this Section 2.11(a), of the Bankers' Acceptances owing to
such Canadian Lender and maturing on such date.
(b) Optional Conversion. The Canadian Borrower may on any Business
-------------------
Day, upon notice given to the Agent not later than 12:00 noon (New York City
time) on a Business Day at least two Canadian Business Days prior to the date of
the proposed Conversion and subject to the provisions of Section 2.12, Convert
all or any portion of the Bankers' Acceptances comprising part of the same
Drawing to a Canadian Borrowing comprised of Canadian Prime Rate Advances;
provided, however, that:
- -------- -------
(i) any Conversion of Bankers' Acceptances shall be made only on
the then existing Maturity Date for such Bankers' Acceptances;
(ii) each Conversion of Bankers' Acceptances comprising part of the
same Drawing shall be made ratably among the Lenders holding such Bankers'
Acceptances in accordance with the respective amounts of such Bankers'
Acceptances so held; and
<PAGE>
60
(iii) no Conversion may be made if (A) the amount of the Advance to
be made by any Canadian Lender in connection with such Conversion would
exceed such Canadian Lender's unused portion of its Canadian Commitment
under the Canadian Facility in effect at the time of such Conversion, or
(B) after giving effect to such Conversion, the sum of the aggregate
principal amount of outstanding Canadian Borrower Advances plus the
----
aggregate Face Amount of Bankers' Acceptances then outstanding would exceed
the Canadian Facility.
Each such notice of Conversion shall, within the restrictions set forth above,
specify (A) the date of such Conversion (which shall be the then existing
Maturity Date of such Bankers' Acceptances and shall be a Canadian Business
Day), (B) the Bankers' Acceptances to be Converted and (C) if less than all of
the Bankers' Acceptances comprising part of any Drawing are to be Converted, the
aggregate Face Amount of such Conversion. Each notice of Conversion under this
Section 2.11 shall be irrevocable and binding on the Canadian Borrower. Upon any
Conversion of Bankers' Acceptances comprising part of the same Drawing in
accordance with this Section 2.11(b), the obligation of the Canadian Borrower to
reimburse the Lenders under Section 2.13 in respect of the Bankers' Acceptances
otherwise maturing on such date shall, to the extent of such conversion, be
Converted to an obligation to reimburse the Lenders making the Canadian Borrower
Advances made in respect of such maturing Bankers' Acceptances on such date
ratably in accordance with the amount of the Advances held by such Lender at the
time of reimbursement. The Canadian Borrower hereby irrevocably authorizes and
directs each Canadian Lender to apply the net proceeds of each Canadian Prime
Rate Advance made by such Lender pursuant to this Section 2.11(b) to the
reimbursement of the Bankers' Acceptances owing to such Lender and maturing on
such date.
(c) Mandatory Conversion. Upon the occurrence and during the
--------------------
continuance of any Event of Default and the determination of the Agent, or
Canadian Lenders owning or holding at least 51% of the sum of (x) the aggregate
principal amount of the Canadian Borrower Advances outstanding at such time, (y)
the aggregate Face Amount of all Bankers' Acceptances outstanding at such time
and (z) the aggregate Unused Canadian Commitments at such time, that any or all
Bankers' Acceptances and any or all renewals of any Bankers' Acceptances are not
appropriate, or if the Canadian Borrower shall fail (i) to deliver a properly
completed notice of renewal under Section 2.11(a) or a properly completed notice
of Conversion under Section 2.11(b) indicating its intention to renew or to
Convert any maturing Bankers' Acceptances or (ii) to reimburse the Canadian
Lenders for any Bankers' Acceptances comprising part of the same Drawing
pursuant to Section 2.05, the Agent will forthwith so notify the Canadian
Borrower and the Canadian Lenders, whereupon each such Bankers' Acceptance will
automatically, on the then existing Maturity Date of such Bankers' Acceptances,
Convert into a Canadian Prime Rate Advance.
<PAGE>
61
SECTION 2.12. Increased Costs, Etc. (a) If, due to either (i) the
--------------------
introduction of or any change in or in the interpretation of any law or
regulation made following the date hereof or (ii) the compliance with any
guideline or request (whether or not having the force of law) from any central
bank or other governmental authority or the National Association of Insurance
Commissioners introduced or made following the date hereof, there shall be:
(A) any increase in the cost to any Lender Party of agreeing to make
or of making, funding or maintaining Eurodollar Rate Advances or of
agreeing to issue or of issuing or maintaining Letters of Credit or of
agreeing to make or of making or maintaining Letter of Credit Advances;
(B) any increase in the cost to any Lender Party of agreeing to
perform or of performing its obligations under this Agreement under or in
respect of Bankers' Acceptances; or
(C) any reduction in any amount payable to, or any increase in any
payment required to be made by, or any forgiveness or reduction of
effective return to, any Lender Party under this Agreement under or in
respect of any Bankers' Acceptances;
(excluding for purposes of this Section 2.12(a) any such increased cost
resulting from (x) taxes (as to which Section 2.14 shall govern) and (y) the
imposition of, or a change in the rate of, taxes described in clauses (i) and
(ii) of the first sentence of Section 2.14(a)) then the Applicable Borrower
shall from time to time, upon demand, and notice of the event by reason of which
such Lender Party has become entitled to compensation hereunder, by such Lender
Party (with a copy of such demand and notice to the Agent), pay (without
duplication) to the Agent for the account of such Lender Party additional
amounts sufficient to compensate such Lender Party for such increased cost. A
certificate as to the amount of such increased cost, submitted to the Applicable
Borrower by such Lender Party, shall be conclusive and binding for all purposes,
absent manifest error.
(b) If any Lender Party determines that compliance with any law or
regulation or any guideline or request (whether or not having the force of law)
from any central bank or other governmental authority or the National
Association of Insurance Commissioners introduced or made following the date
hereof affects the amount of capital required to be maintained by such Lender
Party or any corporation controlling such Lender Party and that the amount of
such capital is increased by or based upon the existence of such Lender Party's
commitment to lend, to accept, purchase and/or discount Bankers' Acceptances or
to issue Letters of Credit hereunder and other commitments of such type or the
purchase and/or acceptance and maintenance of Bankers' Acceptances or the
issuance or maintenance of the Letters of Credit (or similar contingent
obligations) hereunder, then, upon demand, and notice of the event by reason of
which such Lender Party has become entitled to compensation hereunder, by such
Lender Party (with a copy of such demand to the Agent), the Applicable Borrower
shall pay (without
<PAGE>
62
duplication) to the Agent for the account of such Lender Party, from time to
time as specified by such Lender Party, additional amounts sufficient to
compensate such Lender Party in the light of such circumstances, to the extent
that such Lender Party reasonably determines such increase in capital to be
allocable to the existence of such Lender Party's commitment to lend, to accept,
purchase and/or discount Bankers' Acceptances or to issue Letters of Credit
hereunder or to the purchase and/or acceptance and maintenance of Bankers'
Acceptances or the issuance or maintenance of any Letters of Credit hereunder. A
certificate as to such amounts submitted to the Applicable Borrower by such
Lender Party shall be conclusive and binding for all purposes, absent manifest
error.
(c) If, with respect to any Eurodollar Rate Advances under any
Facility, Lenders owed at least 50% of the then-outstanding aggregate principal
amount thereof notify the Agent that the Eurodollar Rate for any Interest Period
for such Advances will not adequately reflect the cost to such Lenders of
making, funding or maintaining their Eurodollar Rate Advances for such Interest
Period, the Agent shall forthwith so notify the Applicable Borrower and the
Lenders, whereupon (i) each such Eurodollar Rate Advance under any Facility will
automatically, on the last day of the then existing Interest Period therefor,
Convert into a Base Rate Advance and (ii) the obligation of the Lenders to make,
or to Convert Advances into, Eurodollar Rate Advances shall be suspended until
the Agent shall notify the Applicable Borrower that such notifying Lenders have
determined that the circumstances causing such suspension no longer exist.
(d) Notwithstanding any other provision of this Agreement, if the
introduction of or any change in or in the interpretation of any law or
regulation made following the date hereof shall make it unlawful, or any central
bank or other governmental authority shall assert that it is unlawful, for any
Lender or its Eurodollar Lending Office to perform its obligations hereunder to
make Eurodollar Rate Advances or to continue to fund or maintain Eurodollar Rate
Advances hereunder, then, on notice thereof and demand therefor by such Lender
to the Applicable Borrower through the Agent, (i) such Lender's Eurodollar Rate
Advance under each Facility under which such Lender has a Commitment will
automatically, upon such demand, Convert into a Base Rate Advance, on the
respective last days of the then current Interest Periods with respect to such
Advances or within such earlier period as required by law and (ii) the
obligation of such Lender to make, or to Convert Advances into, Eurodollar Rate
Advances shall be suspended until the Agent shall notify the Applicable Borrower
that such Lender has determined that the circumstances causing such suspension
no longer exist.
(e) Notwithstanding any other provision of this Agreement, if the
introduction of or any change in the interpretation of any law or regulation
made following the date hereof shall make it unlawful, or any central bank or
other governmental authority shall assert following the date hereof that it is
unlawful, for any Canadian Lender or its BA Lending Office to perform its
obligations hereunder to complete and accept Drafts, to purchase Bankers'
Acceptances or to continue to fund or maintain Bankers' Acceptances hereunder,
then, on notice thereof and
<PAGE>
63
demand therefor by such Canadian Lender to the Canadian Borrower through the
Agent (i) an amount equal to the aggregate Face Amount of all Bankers'
Acceptances outstanding at such time shall, upon such demand (which shall only
be made if deemed necessary by the applicable Canadian Lender to comply with
applicable law), be deposited by the Canadian Borrower into the Canadian Cash
Collateral Account until the Maturity Date of each such Bankers' Acceptance,
(ii) upon the Maturity Date of any Bankers' Acceptance in respect of which any
such deposit has been made, the Agent shall be, and hereby is, authorized
(without notice to or any further action by the Canadian Borrower) to apply, or
to direct the Agent to apply, such amount (or the applicable portion thereof) to
the reimbursement of such Bankers' Acceptance and (iii) the obligation of the
Canadian Lenders to complete and accept Drafts and purchase Bankers' Acceptances
shall be suspended until the Agent shall notify the Canadian Borrower that such
Lender has determined that the circumstances causing such suspension no longer
exist.
(f) Failure or delay on the part of any Lender Party to demand
compensation pursuant to this Section shall not constitute a waiver of such
Lender Party's right to demand such compensation; provided that the Borrower
--------
shall not be required to compensate a Lender Party pursuant to this Section for
any increased costs or reductions incurred more than 180 days prior to the date
that such Lender Party, as the case may be, notifies the Borrower of the
circumstances giving rise to such increased costs or reductions and of such
Lender Party's intention to claim compensation therefor; provided further that,
-------- -------
if the circumstances giving rise to such increased costs or reductions is
retroactive, then the 180-day period referred to above shall be extended to
include the period of retroactive effect thereof.
SECTION 2.13. Payments and Computations. (a) The Borrower shall make
-------------------------
each payment hereunder irrespective of any right of counterclaim or set-off, not
later than 11:00 A.M. (New York City time) on the day when due in U.S. dollars
to the Agent at the Agent's Account in same day funds. The Canadian Borrower
shall make each payment hereunder irrespective of any right or counterclaim or
set-off, not later than 11:00 A.M. (New York City time) on the day when due in
like funds as advanced to the Agent in same day funds by deposit of such funds
to the applicable Agent's Account. The Agent will promptly thereafter cause like
funds to be distributed (i) if such payment by the Borrower or the Canadian
Borrower, as applicable, is in respect of principal, interest, commitment fees
or any other Obligation then payable hereunder to more than one Lender Party, to
such Lender Parties for the account of their respective Applicable Lending
Offices ratably in accordance with the amounts of such respective Obligations
then payable to such Lender Parties and (ii) if such payment by the Borrower or
the Canadian Borrower, as applicable, is in respect of any Obligation then
payable hereunder to one Lender Party, to such Lender Party for the account of
its Applicable Lending Office, in each case to be applied in accordance with the
terms of this Agreement. Upon its acceptance of an Assignment and Acceptance and
recording of the information contained therein in the Register pursuant to
Section 8.07(e), from and after the effective date of such Assignment and
Acceptance, the Agent shall make all payments hereunder in respect of the
interest assigned thereby to the Lender Party assignee thereunder, and the
parties to such Assignment and
<PAGE>
64
Acceptance shall make all appropriate adjustments in such payments for periods
prior to such effective date directly between themselves.
(b) Subject to subsection (g) of this Section 2.13, if the Agent
receives funds for application to the Obligations under the Loan Documents under
circumstances for which the Loan Documents do not specify the Advances or the
Facility to which, or the manner in which, such funds are to be applied, the
Agent may, but shall not be obligated to, elect to distribute such funds to each
Lender Party ratably in accordance with such Lender Party's proportionate share
of the principal amount of all outstanding Advances, the Face Amount of all
outstanding Bankers' Acceptances and the Available Amount of all Letters of
Credit then outstanding, in repayment or prepayment of such of the outstanding
Advances or other Obligations owed to such Lender Party, and for application to
such principal installments, as the Agent shall direct.
(c) Subject to subsection (g) of this Section 2.13, each of the
Borrower and the Canadian Borrower hereby authorizes each Lender Party, if and
to the extent payment owed to such Lender Party is not made when due hereunder,
to charge from time to time against any or all of the accounts of the Borrower
or the Canadian Borrower, as the case may be, with such Lender Party any amount
so due.
(d) Subject to Section 2.08(f), all computations of interest, fees
and Letter of Credit commissions shall be made by the Agent on the basis of a
year of 360 days, in each case for the actual number of days (including the
first day but excluding the last day) occurring in the period for which such
interest, fees or commissions are payable. Each determination by the Agent of an
interest rate, fee or commission hereunder shall be conclusive and binding for
all purposes, absent manifest error. At the request of the Applicable Borrower,
the Agent shall deliver to the Applicable Borrower a statement showing
quotations used by the Agent in determining such interest rate, fee and
commission.
(e) Whenever any payment hereunder or in respect of Bankers'
Acceptances shall be stated to be due on a day other than a Business Day or a
Canadian Business Day, as the case may be, such payment shall be made on the
next succeeding Business Day or Canadian Business Day, as applicable, and such
extension of time shall in such case be included in the computation of payment
of interest or commitment fee, as the case may be; provided, however, that, if
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such extension would cause payment of interest on or principal of Eurodollar
Rate Advances to be made in the next following calendar month, such payment
shall be made on the next preceding Business Day.
(f) Unless the Agent shall have received notice from the Borrower or
the Canadian Borrower prior to the date on which any payment is due to any
Lender Party hereunder that the Borrower or the Canadian Borrower, as the case
may be, will not make such payment in full, the Agent may assume that the
Applicable Borrower has made such payment in full to the Agent on such date and
the Agent may, in reliance upon such assumption, cause to be distributed
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65
to each such Lender Party on such due date an amount equal to the amount then
due such Lender Party. If and to the extent any Applicable Borrower shall not
have so made such payment in full to the Agent, each such Lender Party shall
repay to the Agent forthwith on demand such amount distributed to such Lender
Party together with interest thereon, for each day from the date such amount is
distributed to such Lender Party until the date such Lender Party repays such
amount to the Agent, at the higher of (A) the Federal Funds Rate and (B) the
cost of funds incurred by the Agent in respect of such amount.
(g) Notwithstanding any other provision of this Agreement or the
other Loan Documents to the contrary (including, without limitation, this
Section 2.13 and Sections 2.08, 2.09, 2.12, 2.14 and 8.04 hereof) the liability
of the Canadian Borrower under this Agreement shall be several and not joint or
joint and several. In no event shall the Canadian Borrower be liable for the
payment of any principal of or interest on any Advances other than Advances
borrowed by it hereunder, any commitment fees other than such fees payable with
respect to the maximum amount of the Canadian Facility, or any costs and
expenses under Section 8.04 hereof other than any such costs and expenses
relating to its indebtedness hereunder or the enforcement of its obligations
under this Agreement and the other Loan Documents. Any payment made by, or on
behalf of, the Canadian Borrower to the Agent's Account shall be deemed a
payment in respect of the Canadian Borrower Advances or any interest, fees,
costs or expenses, as applicable, payable with respect thereto.
SECTION 2.14. Taxes. (a) Any and all payments by the Borrower or the
-----
Canadian Borrower hereunder or in respect of any Bankers' Acceptance shall be
made, in accordance with Section 2.13, free and clear of and without deduction
or withholding for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding, (i) in the case of each Lender Party and the Agent, taxes imposed
- ---------
on the overall net income of such Lender Party or Agent by any jurisdiction, and
franchise taxes imposed on such Lender Party or the Agent in lieu of net income
taxes by the jurisdiction under the laws of which such Lender Party or the Agent
(as the case may be) is organized or any political subdivision thereof or
therein and, in the case of each Lender Party, taxes imposed on its overall net
income and franchise taxes imposed on such Lender Party in lieu of net income
taxes by the state or foreign jurisdiction of such Lender Party's Applicable
Lending Office or any political subdivision thereof or therein and in the case
of the Agent, taxes imposed on its overall net income and franchise taxes
imposed on the Agent in lieu of net income taxes by the state or foreign
jurisdiction of the office or offices through which the Agent performs its
services pursuant to this Agreement and (ii) any tax, levies, imposts,
deductions, charges, withholdings and liabilities that would not have been
imposed but for the existence of any present or former connection between the
Agent or any Lender Party, as applicable (or between the shareholder of the
Agent or such Lender Party), and the taxing authority imposing such tax, levy,
impost, deduction, charge, withholding or liability including, without
limitation, the Agent or Lender Party, as relevant (or shareholders thereof)
being or having been a citizen or resident thereof, being or having been present
therein, being or having been engaged in a trade or business therein,
<PAGE>
66
or having had a permanent establishment therein (but excluding in each case a
connection arising from the Agent's or any Lender Party's execution or
enforcement of or performance of its obligations under or receipt of payment
under this Agreement) (all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities being hereinafter referred to as "Taxes").
-----
If the Borrower or the Canadian Borrower shall be required by law to deduct any
Taxes from or in respect of any sum payable hereunder or in respect of any
Bankers' Acceptance to any Lender Party or the Agent, (i) the sum payable shall
be increased as may be necessary so that after making all required deductions or
withholdings (including deductions applicable to additional sums payable under
this Section 2.14) such Lender Party or the Agent (as the case may be) receives
an amount equal to the sum it would have received had no such deductions or
withholdings been made, (ii) the Borrower or the Canadian Borrower, as the case
may be, shall make such deductions or withholdings and (iii) the Borrower or the
Canadian Borrower, as the case may be, shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable
law.
(b) In addition, the Borrower and the Canadian Borrower shall pay any
present or future stamp, documentary, excise, property or similar taxes, charges
or levies that arise from any payment made by it hereunder or in respect of any
Bankers' Acceptances or from the execution, delivery or registration of, or
otherwise with respect to, this Agreement or any Bankers' Acceptances
(hereinafter referred to as "Other Taxes").
-----------
(c) The Borrower and the Canadian Borrower shall indemnify each
Lender Party and the Agent for the full amount of Taxes and Other Taxes
(including, without limitation, any Taxes or Other Taxes imposed by any
jurisdiction on amounts payable under this Section 2.14) paid by such Lender
Party or the Agent (as the case may be) and any liability (including penalties,
additions to tax, interest and expenses) arising therefrom or with respect
thereto. This indemnification shall be made within 30 days from the date such
Lender Party or the Agent (as the case may be) makes written demand therefor and
provides the Borrower and the Canadian Borrower with evidence of such liability
reasonably satisfactory to the Borrower and the Canadian Borrower.
(d) Within 30 days after the date of any payment of Taxes, the
Borrower shall furnish to the Agent, at its address referred to in Section 8.02,
the original receipt of payment thereof, a certified copy of such receipt or
other evidence of payment reasonably acceptable to the Agent. In the case of
any payment hereunder by or on behalf of the Borrower through an account or
branch outside the United States or on behalf of the Borrower by a payor that is
not a United States person, if the Borrower determines that no Taxes are payable
in respect thereof, the Borrower shall furnish, or shall cause such payor to
furnish, to the Agent, at its address referred to in Section 8.02, an opinion of
counsel acceptable to the Agent stating that such payment is exempt from Taxes.
For purposes of this subsection (d) and subsection (e), the terms "United
------
States" and "United States person" shall have the meanings specified in Section
--------------------
7701 of the Internal Revenue Code. Within 30 days after the date of any payment
of Taxes, the Canadian
<PAGE>
67
Borrower shall furnish to the Agent, at such address, the original receipt of
payment thereof, a certified copy of such receipt or other evidence of payment
reasonably acceptable to the Agent. In the case of any payment hereunder or in
respect of any Bankers' Acceptances by or on behalf of the Canadian Borrower
through an account or branch outside Canada or on behalf of the Canadian
Borrower by a payor that is not a corporation organized under the laws of
Canada, if the Canadian Borrower determines that no Taxes are payable in respect
thereof, the Canadian Borrower shall furnish, or shall cause such payor to
furnish, to the Agent, at such address, an opinion of counsel acceptable to the
Agent stating that such payment is exempt from Taxes.
(e) Each Lender Party organized under the laws of a jurisdiction
outside the United States shall, on or prior to the date of its execution and
delivery of this Agreement in the case of each Initial Lender or the Initial
Issuing Bank, as the case may be, and on the date of the Assignment and
Acceptance pursuant to which it became a Lender Party in the case of each other
Lender Party, and from time to time thereafter if requested in writing by the
Borrower or the Agent (but only so long thereafter as such Lender Party remains
lawfully able to do so and in any event prior to the date of the first payment
to such Lender Party hereunder), provide the Agent and the Borrower with two
duly completed and executed copies of Internal Revenue Service (the "IRS") Form
---
1001 or 4224, as appropriate, or any successor form prescribed by the IRS,
certifying (if it is the case) that such Lender Party is exempt from or is
entitled to a reduced rate of United States withholding tax on payments pursuant
to this Agreement or in respect of any Bankers' Acceptances or to the extent
permitted by law, as an alternative to such Form 1001 or 4224, each such Lender
Party may provide the Borrower and the Agent with two duly completed and
executed copies of IRS Form W-8, or any successor form prescribed by the IRS,
certifying that such Lender Party is exempt from United States federal
withholding tax pursuant to Section 871(h) or Section 881(c) of the Internal
Revenue Code, together with an annual certificate in form and substance
satisfactory to the Borrower or the Agent stating that such Lender Party is not
a "person" described in Section 871(h)(3) or 881(c)(3) of the Internal Revenue
Code. In addition, each Canadian Lender shall provide the Agent and the
Canadian Borrower with any form or certificate certifying that such Canadian
Lender is exempt from or is entitled to a reduced rate of Canadian withholding
tax; provided, however, that each Canadian Lender shall have been advised in
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writing by the Canadian Borrower (including at the time any renewal form is due)
of the form or certificate applicable to it, determined by reference to the
jurisdiction of organization and Applicable Lending Office of such Canadian
Lender set forth on Schedule I hereto, in the case of each Initial Lender, or to
the jurisdiction of organization and Applicable Lending Office of such Canadian
Lender set forth in the Assignment and Acceptance pursuant to which it became a
Canadian Lender, in the case of each other Lender Party, or such other branch or
office of any Canadian Lender designated by such Canadian Lender from time to
time. If the forms provided by a Lender Party at the time such Lender Party
first becomes a party to this Agreement indicates a tax rate with respect to
Home Jurisdiction Withholding Tax in excess of zero, withholding tax at such
rate shall be considered excluded from Taxes unless and until such Lender Party
provides the appropriate form certifying that a lesser rate applies, whereupon
such withholding tax at such lesser rate only shall be considered excluded from
Taxes
<PAGE>
68
for periods governed by such form; provided, however, that, if at the date of
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the Assignment and Acceptance pursuant to which a Lender Party becomes a party
to this Agreement, the Lender Party assignor was entitled to payments under
subsection (a) in respect of Home Jurisdiction Withholding Tax with respect to
interest paid at such date, then, to such extent, the term Taxes shall include
(in addition to withholding taxes that may be imposed in the future or other
amounts otherwise includable in Taxes) Home Jurisdiction Withholding Tax, if
any, applicable with respect to the Lender Party assignee on such date. If any
form or document referred to in this subsection (e) requires the disclosure of
information not substantially similar to the information necessary to compute
the tax payable and information required on the date hereof by IRS Form 1001 or
4224, and which a Lender Party reasonably considers to be confidential, the
Lender Party shall give notice thereof to the Borrower or the Canadian Borrower,
as the case may be, and shall not be obligated to include in such form or
document such confidential information.
(f) For any period with respect to which a Lender Party has failed to
provide the Borrower or the Canadian Borrower, as applicable, with the
appropriate form described in subsection (e) above duly completed and executed
(other than if such failure is due to a change in law occurring after the date
----- ----
on which a form originally was required to be provided or if such form otherwise
is not required under subsection (e) above), such Lender Party shall not be
entitled to indemnification under subsection (a) or (c) of this Section 2.14
with respect to Taxes imposed by the United States or Canada, as applicable, by
reason of such failure; provided, however, that should a Lender Party become
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subject to Taxes because of its failure to deliver a form required hereunder,
the Borrower or the Canadian Borrower, as applicable, shall take such steps as
such Lender Party shall reasonably request at such Lender Party's sole expense
to assist such Lender Party to recover such Taxes.
(g) Any Lender Party claiming additional amounts payable pursuant to
this Section 2.14 shall use reasonable efforts (consistent with its internal
policy and legal and regulatory restrictions) to file any certificate or
document requested by the Borrower or the Canadian Borrower, as the case may be,
or to change the jurisdiction of its Applicable Lending Office if the making of
such filing or change would avoid the need for or reduce the amount of any such
additional amounts which may thereafter accrue and would not, in the sole
judgment of such Lender Party, be disadvantageous to such Lender Party.
(h) If any Lender Party receives a refund of any Taxes or Other Taxes
paid by the Borrower or the Canadian Borrower, as the case may be, pursuant to
Section 2.14(a), Section 2.14(b), or Section 2.14(c), such Lender Party shall,
within 30 days of such receipt, pay to the Borrower or the Canadian Borrower, as
applicable, the amount so received, net of all out-of-pocket expenses of such
Lender Party with respect thereto; provided, however, that such Lender Party
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shall (i) be required to pay to such Borrower or Canadian Borrower only such
amounts as such Lender Party, in its sole discretion, determines is attributable
to Taxes or Other Taxes paid by such Borrower or Canadian Borrower pursuant to
Section 2.14(a), Section 2.14(b) or Section 2.14(c), and (ii) have the sole
discretion to determine whether to contest the
<PAGE>
69
imposition of any Taxes or Other Taxes, regardless of whether such Taxes or
Other Taxes were correctly or legally asserted.
SECTION 2.15. Sharing of Payments, Etc. If any Lender Party shall
------------------------
obtain at any time any payment (whether voluntary, involuntary, through the
exercise of any right of set-off, or otherwise) (a) on account of Obligations
due and payable to such Lender Party hereunder and under any Bankers'
Acceptances at such time in excess of its ratable share (according to the
proportion of (i) the amount of such Obligations due and payable to such Lender
Party and under any Bankers' Acceptances at such time to (ii) the aggregate
amount of the Obligations due and payable to all Lender Parties hereunder and
under any Bankers' Acceptances at such time) of payments on account of the
Obligations due and payable to all Lender Parties hereunder and under any
Bankers' Acceptances at such time obtained by all the Lender Parties at such
time or (b) on account of Obligations owing (but not due and payable) to such
Lender Party hereunder and under any Bankers' Acceptances at such time in excess
of its ratable share (according to the proportion of (i) the amount of such
Obligations owing (but not due and payable) to such Lender Party and under any
Bankers' Acceptances at such time to (ii) the aggregate amount of the
Obligations owing (but not due and payable) to all Lender Parties hereunder and
under any Bankers' Acceptances at such time) of payments on account of the
Obligations owing (but not due and payable) to all Lender Parties hereunder and
under any Bankers' Acceptances at such time obtained by all of the Lender
Parties at such time, such Lender Party shall forthwith purchase from the other
Lender Parties such participations in the Obligations due and payable or owing
to them, as the case may be, as shall be necessary to cause such purchasing
Lender Party to share the excess payment ratably with each of them; provided,
--------
however, that if all or any portion of such excess payment is thereafter
- -------
recovered from such purchasing Lender Party, such purchase from each other
Lender Party shall be rescinded and such other Lender Party shall repay to the
purchasing Lender Party the purchase price to the extent of such Lender Party's
ratable share (according to the proportion of (i) the purchase price paid to
such Lender Party to (ii) the aggregate purchase price paid to all Lender
Parties) of such recovery together with an amount equal to such Lender Party's
ratable share (according to the proportion of (i) the amount of such other
Lender Party's required repayment to (ii) the total amount so recovered from the
purchasing Lender Party) of any interest or other amount paid or payable by the
purchasing Lender Party in respect of the total amount so recovered. The
Borrower and the Canadian Borrower agree that any Lender Party so purchasing a
participation from another Lender Party pursuant to this Section 2.15 may, to
the fullest extent permitted by law, exercise all its rights of payment
(including the right of set-off) with respect to such participation as fully as
if such Lender Party were the direct creditor of such Borrower or Canadian
Borrower in the amount of such participation.
SECTION 2.16. Use of Proceeds. (a) The proceeds of the Term Advances
---------------
shall be available (and the Borrower agrees that it shall use such proceeds)
solely (i) to finance the Acquisition, (ii) to refinance the Existing Debt and
(iii) to pay transaction fees and expenses;
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(b) The proceeds of the Working Capital Advances and the issuances of
Letters of Credit shall be available (and the Borrower agrees that it shall use
such proceeds and Letters of Credit) solely (i) to provide for working capital
for the Borrower and the Canadian Borrower and (ii) for other general corporate
purposes permitted under this Agreement (other than Permitted Acquisitions);
(c) The proceeds of the Acquisition Advances shall be available (and
the Borrower agrees that it shall use such proceeds) solely to finance (i)
Permitted Acquisitions and (ii) to the extent not constituting Permitted
Acquisitions, the development and construction of asphalt production plants and
related facilities, provided that (A) immediately after giving effect to each
--------
Acquisition Advance made to finance such development and construction, on a pro
forma basis for the Rolling Period ended as of the end of the most recent period
for which financial statements were required to be furnished to the Agent
pursuant to Sections 5.03(b), (c) or (d), the Total Leverage Ratio of the Parent
Guarantor and its Subsidiaries shall be not more than 5.00 to 1.00, (B) prior to
each such Acquisition Advance, the Borrower shall have furnished to the Agent a
schedule in form satisfactory to the Agent of the computations used by the
Parent Guarantor in determining compliance with the requirement of clause (A)
above and (C) the Borrower shall have furnished to the Agent a certificate
signed by the chief financial officer or treasurer of the Parent Guarantor,
substantially in the form of Exhibit M-3, attesting to the Solvency of the
Parent Guarantor and its Subsidiaries as of the date of such Acquisition
Borrowing; and
(d) The proceeds of the Canadian Borrower Advances and the Drawings
under the Bankers' Acceptances shall be available (and the Canadian Borrower
agrees that it shall use such proceeds and Drawings) solely for general
corporate purposes of the Canadian Borrower permitted under this Agreement.
SECTION 2.17. Evidence of Debt. (a) Each Lender shall maintain in
----------------
accordance with its usual practice an account or accounts evidencing the
indebtedness of the Applicable Borrower to such Lender resulting from each
Advance owing to such Lender from time to time, including the amounts of
principal and interest payable and paid to such Lender from time to time
hereunder. The Applicable Borrower agrees that upon notice by any Lender Party
to such Applicable Borrower (with a copy of such notice to the Agent) to the
effect that a Note is required or appropriate in order for such Lender to
evidence (whether for purposes of pledge, enforcement or otherwise) the Advances
owing to, or to be made by, such Lender Party, the Applicable Borrower shall
promptly execute and deliver to such Lender a Term A Note, a Term B Note, a
Working Capital Note, a Canadian Borrower Note and an Acquisition Note, as
applicable, payable to the order of such Lender Party in a principal amount
equal to the Term A Commitment, the Term B Commitment, the Working Capital
Commitment, the Canadian Commitment or the Acquisition Commitment, respectively,
of such Lender Party at the time of such request. All references to Notes in
the Loan Documents shall mean Notes, if any, to the extent issued hereunder.
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71
(b) The Register maintained by the Agent pursuant to Section 8.07(e)
shall include a control account, and a subsidiary account for each Lender, in
which accounts (taken together) shall be recorded (i) the date and amount of
each Borrowing made hereunder, the Type of Advances comprising such Borrowing
and, if appropriate, the Interest Period applicable thereto, (ii) the terms of
each Assignment and Acceptance delivered to and accepted by it, (iii) the amount
of any principal or interest due and payable or to become due and payable from
the Applicable Borrower to each Lender Party hereunder, and (iv) the amount of
any sum received by the Agent from the Applicable Borrower hereunder and each
Lender Party's share thereof.
(c) Entries made in good faith by the Agent in the Register pursuant
to subsection (b) above, and by each Lender Party in its account or accounts
pursuant to subsection (a) above, shall be prima facie evidence of the amount of
----- -----
principal and interest due and payable or to become due and payable from the
Applicable Borrower to, in the case of the Register, each Lender Party and, in
the case of such account or accounts, such Lender Party, under this Agreement,
absent manifest error; provided, however, that the failure of the Agent or such
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Lender Party to make an entry, or any finding that an entry is incorrect, in the
Register or such account or accounts shall not limit or otherwise affect the
obligations of the Applicable Borrower under this Agreement.
(d) References herein to Notes shall mean and be references to the
Term A Notes, the Term B Notes, the Working Capital Notes, the Canadian Borrower
Notes and the Acquisition Notes, unless otherwise specifically indicated, in
each case to the extent issued hereunder.
SECTION 2.18. Replacement of Lenders. If any Lender requests
----------------------
compensation under Section 2.12, if any Lender exercises its rights under
Section 2.12(d) or (e), if the Borrower is required to pay any additional amount
to any Lender or any taxing authority for the account of any Lender pursuant to
Section 2.14 or if any Lender shall abstain from approving or disapproving any
amendment, waiver or consent requested by the Borrower, then the Borrower may,
at its sole expense and effort, upon notice to such Lender and the Agent,
require such Lender to assign and delegate, without recourse (in accordance with
and subject to the restrictions contained in Section 8.07), all its interests,
rights and obligations under this Agreement to one or more Eligible Assignees
that shall assume such obligations, provided that (i) the Borrower shall have
--------
received the prior written consent of the Agent (and, if a Working Capital
Commitment is being assigned, the Issuing Bank and the Swingline Bank), which
consent shall not unreasonably be withheld, (ii) such Lender shall have received
payment of an amount equal to the outstanding principal of its Advances, accrued
interest thereon, accrued fees and all other amounts payable to it hereunder
(including all losses, costs and expenses payable pursuant to Section 8.04 (c))
from such Eligible Assignee (to the extent of such outstanding principal and
accrued interest and fees) or the Borrower (in the case of all other amounts)
and (iii) in the case of any such assignment resulting from a claim for
compensation under
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72
Section 2.12 or payments required to be made pursuant to Section 2.14, such
assignment will result in a reduction in such compensation or payments. A Lender
shall not be required to make any such assignment and delegation if, prior
thereto, the circumstances entitling the Borrower to require such assignment and
delegation cease to apply.
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Conditions Precedent to Initial Extension of Credit.
---------------------------------------------------
The obligation of each Lender to make an Advance, of the Issuing Bank to issue a
Letter of Credit and of the Canadian Lenders to accept and/or purchase Bankers'
Acceptances on the occasion of the Initial Extension of Credit hereunder is
subject to the satisfaction of the following conditions precedent before or
concurrently with the Initial Extension of Credit:
(a) The Purchase Agreement shall be in full force and effect and the
Acquisition and the other transactions contemplated by this Agreement shall
have been consummated strictly in accordance with the terms of the Purchase
Agreement and all other related documentation without any waiver or
amendment not consented to by the Lender Parties of any term, provision or
condition set forth therein, and in compliance with all applicable laws,
and the Agent shall be satisfied (i) with the terms and conditions of the
Related Documents in all material respects and (ii) that the assets and
earnings of the Borrower and the Canadian Borrower are sufficient to
support the Obligations of the Borrower and the Canadian Borrower under
this Agreement and the timely amortization of all Debt and other
Obligations of the Borrower and the Canadian Borrower.
(b) The Lender Parties shall be satisfied with the corporate and
legal structure and capitalization of the Loan Parties, including the terms
and conditions of the charter, bylaws and each class of capital stock of
the Loan Parties and of each agreement or instrument relating to such
structure or capitalization.
(c) There shall have been no event, condition or circumstance that
has resulted in or is reasonably likely to result in a Material Adverse
Change with respect to the Borrower and its Subsidiaries, taken as a whole,
since December 31, 1998, or with respect to the Acquired Businesses, taken
as a whole, since March 31, 1999.
(d) There shall exist no action, suit, investigation, litigation or
proceeding affecting any Loan Party or any of its properties or any of its
Subsidiaries or any of their properties pending or threatened before any
court, governmental agency or arbitrator that (i) could have a Material
Adverse Effect or (ii) purports to affect the legality, validity or
<PAGE>
73
enforceability of this Agreement, any other Loan Document, any Related
Document or the consummation of the transactions contemplated hereby and
thereby.
(e) [Intentionally Omitted].
(f) The Agent shall be satisfied that all Existing Debt, other than
the Debt identified on Schedule 3.01(f) (the "Surviving Debt"), has been
--------------
prepaid, redeemed or defeased in full or otherwise satisfied and
extinguished and that all such Surviving Debt shall be on terms and
conditions satisfactory to the Agent. All accrued fees and expenses of the
Agent and the Lender Parties (including the accrued fees and expenses of
counsel to the Agent and of local counsel to the Lender Parties) payable by
the Borrower hereunder and all fees and expenses payable or otherwise borne
by the Borrower in connection with the issuance of the Subordinated Notes
shall have been paid, and the Agent shall be satisfied that the amount of
such fees and expenses shall not exceed $15,000,000.
(g) The Agent shall have received on or before the date of the
Initial Extension of Credit, the following, each dated such day (unless
otherwise specified), in form and substance satisfactory to the Agent
(unless otherwise specified) and (except for any Notes or Drafts) in
sufficient copies for each Lender Party:
(i) Notes payable to the order of the Lenders to the extent
requested by any Lender pursuant to Section 2.17.
(ii) Presigned Drafts delivered pursuant to Section 2.04(f)
hereof.
(iii) A Notice of Borrowing.
(iv) Certified copies of the resolutions (or analogous
authorizations) of the Board of Directors (or other authorized legal
representatives) of the Borrower, the Canadian Borrower, the Parent
Guarantor, each Subsidiary Guarantor and each other Loan Party
approving this Agreement, each other Loan Document and each Related
Document to which it is or is to be a party, and of all documents
evidencing other necessary corporate action and governmental and other
third party approvals and consents, if any, with respect to this
Agreement, each other Loan Document and each Related Document.
(v) A copy of a certificate of the Secretary of State of
the jurisdiction of its incorporation, dated reasonably near the date
of the Initial Extension of Credit, in each case listing the charter
of the Borrower, the Parent Guarantor, each Subsidiary Guarantor and
each other Loan Party and each amendment thereto on file in his office
and certifying that (A) such charter is a true and correct copy
<PAGE>
74
thereof, (B) such amendments are the only amendments to such charter
on file in his office, (C) such Person has paid all franchise taxes to
the date of such certificate and (D) such Person is duly incorporated
and in good standing under the laws of the State of the jurisdiction
of its incorporation.
(vi) (A) A certificate of the Canadian Borrower certifying as
to a true and correct copy of the articles of incorporation or
amalgamation of the Canadian Borrower, together with any amendments
thereto, and (B) a certificate of status of the Province of Ontario
stating that the Canadian Borrower is a corporation incorporated,
amalgamated or continued under the laws of the Province of Ontario and
has not been dissolved.
(vii) A copy of a certificate of the Secretary of State of the
states listed on Schedule 3.01(g)(vii) with respect to the Borrower
and each Subsidiary Guarantor, dated reasonably near the date of the
Initial Extension of Credit, stating that the Borrower and each such
Subsidiary Guarantor is duly qualified and in good standing as a
foreign corporation in such State and has filed all annual reports
required to be filed to the date of such certificate.
(viii) A certificate of each of the Borrower, the Canadian
Borrower, the Parent Guarantor, each Subsidiary Guarantor and each
other Loan Party, signed on behalf of such Person by any two officers
of such Person, dated the date of the Initial Extension of Credit (the
statements made in which certificate shall be true on and as of the
date of the Initial Extension of Credit), certifying as to (A) the
absence of any amendments to the charter of such Person since, in the
case of the Canadian Borrower, the date of the certificate of status
of the Province of Ontario referred to in Section 3.01(g)(vi)(B) and,
in the case of each other Loan Party, the date of the Secretary of
State's certificate referred to in Section 3.01(g)(v), (B) a true and
correct copy of the bylaws of such Person as in effect on the date of
the Initial Extension of Credit, (C) the due incorporation and good
standing of such Person as a corporation organized under the laws of
the jurisdiction of its incorporation and the absence of any
proceeding for the dissolution or liquidation of such Person, (D) the
completeness and accuracy of the representations and warranties made
by such Loan Party contained in the Loan Documents as though made on
and as of the date of the Initial Extension of Credit and (E) the
absence of any event occurring and continuing that constitutes a
Default.
(ix) A certificate of an officer of each of the Borrower, the
Canadian Borrower, the Parent Guarantor, each Subsidiary Guarantor and
each other Loan Party certifying the names and true signatures of the
officers of such Persons authorized to sign this Agreement, each other
Loan Document and each Related
<PAGE>
75
Document to which they are or are to be parties and the other
documents to be delivered hereunder and thereunder.
(x) A security agreement in substantially the form of Exhibit D
(together with each other security agreement delivered pursuant to
Section 5.01(m), in each case as amended, supplemented or otherwise
modified from time to time in accordance with its terms, the "Security
--------
Agreement"), duly executed by the Borrower and each Subsidiary
---------
Guarantor, together with:
(A) certificates representing the Existing Pledged
Shares referred to therein accompanied by undated stock powers
executed in blank,
(B) copies of proper financing statements, under the
Uniform Commercial Code of the states listed in Schedule
3.01(g)(x)(A) and all other jurisdictions that the Agent may deem
necessary or desirable in order to perfect and protect the Liens
created under the Collateral Documents, covering the Collateral
described in the Security Agreement,
(C) completed requests for information, dated on or
before the date of the Initial Extension of Credit, listing all
effective financing statements filed in the jurisdictions listed
in Schedule 3.01(g)(x)(B) that name the Borrower and each
Subsidiary Guarantor as debtor, together with copies of such
other financing statements,
(D) evidence of the completion of all other recordings
and filings of or with respect to the Security Agreement that the
Agent may deem necessary or desirable in order to perfect and
protect the Liens created thereby,
(E) evidence of the insurance required by the terms of
the Security Agreement, naming the Agent as additional insured
and loss payee, in such amounts and covering such risks, as is
satisfactory to the Agent, including, without limitation,
business interruption insurance together with a certificate from
a representative of an insurance company or from an independent
insurance consultant confirming that the coverages are normal and
customary for corporations comparable to the Borrower and each
Subsidiary Guarantor,
(F) copies of the Assigned Agreements referred to in
the Security Agreement,
<PAGE>
76
(G) executed termination statements (Form UCC-3 or a
comparable form), in proper form to be duly filed on the date of
the Initial Extension of Credit under the Uniform Commercial Code
of all jurisdictions that the Agent may deem desirable in order
to terminate or amend existing Liens on the Collateral described
in the Security Agreement and the Parent Guarantor Security
Agreement,
(H) evidence that all other action that the Agent may
deem necessary or desirable in order to perfect and protect the
liens and security interests created under the Security Agreement
has been taken, and
(I) the Blocked Account Letters referred to in the
Security Agreement, duly executed by each Blocked Account Bank
referred to in the Security Agreement.
(xi) A security agreement in substantially the form of Exhibit G
(as such agreement may be amended, supplemented or otherwise modified
from time to time in accordance with its terms, the "Canadian Security
Agreement"), duly executed by the Canadian Borrower, together with
evidence that all other action that the Agent may deem necessary or
desirable in order to perfect and protect the liens and security
interests created under the Canadian Security Agreement has been
taken.
(xii) A security agreement in substantially the form of Exhibit E
(as such agreement may be amended, supplemented or otherwise modified
from time to time in accordance with its terms, the "Parent Guarantor
----------------
Security Agreement"), duly executed by the Parent Guarantor, together
------------------
with:
(A) certificates representing the Pledged Shares
referred to therein accompanied by undated stock powers executed
in blank, and
(B) evidence that all other action that the Agent may
deem necessary or desirable in order to perfect and protect the
liens and security interests created under the Parent Guarantor
Security Agreement has been taken.
(xiii) An intellectual property security agreement in
substantially the form of Exhibit F (together with each other
intellectual property security agreement delivered pursuant to Section
5.01(m), as amended, supplemented or otherwise modified from time to
time in accordance with its terms, the "Intellectual Property Security
------------------------------
Agreement"), duly executed by the Borrower and each Subsidiary
---------
Guarantor, together with evidence that all action that the Agent may
deem
<PAGE>
77
necessary or desirable in order to perfect and protect the first
priority lien and security interests created under the Intellectual
Property Security Agreement has been taken.
(xiv) Deeds of trust, trust deeds, mortgages, leasehold mortgages
and leasehold deeds of trust in substantially the form of Exhibit J
and covering the properties and Material Leases listed on Schedule
4.01(gg) (other than the properties listed on Schedule 5.01(m)) and
Schedule 4.01(hh) (together with each other mortgage delivered
pursuant to Section 5.01(m), in each case as amended, supplemented or
otherwise modified from time to time in accordance with their terms,
the "Mortgages"), duly executed by the applicable Loan Party, together
---------
with:
(A) fully paid American Land Title Association
Lender's Extended Coverage title insurance policies (the
"Mortgage Policies") or commitments in writing to issue such
-----------------
policies in form and substance, with endorsements and in amount
acceptable to the Agent, issued, coinsured and reinsured by title
insurers acceptable to the Agent, insuring the Mortgages as of
the time of the date of the Initial Extension of Credit to be
valid first and subsisting Liens on the property described
therein, free and clear of all defects (including, but not
limited to, mechanics' and materialmen's Liens) and encumbrances,
excepting only Permitted Encumbrances, and providing for such
other affirmative insurance (including endorsements for future
advances under the Loan Documents and for mechanics' and
materialmen's Liens) and such coinsurance and direct access
reinsurance as the Agent may deem necessary or desirable,
(B) boundary surveys of the properties set forth on
Schedule 3.01(g)(xiv)(B) prepared in accordance with American
Land Title Insurance standards (except where surveys prepared to
state standards are acceptable to the title insurer), dated no
more than 30 days before the date of the Initial Extension of
Credit, certified to the Agent and the issuer of the Mortgage
Policies in a manner satisfactory to the Agent by a land surveyor
duly registered and licensed in the States in which the property
described in such surveys is located and acceptable to the Agent,
showing recorded easements and rights of way, unrecorded uses and
occupancies observed by the surveyor, encroachments onto the
boundary lines and onto the easements and rights of way otherwise
shown on the survey, any building setback lines and other
dimensional regulations that are set forth in covenants and
restrictions that may be of record and certifying that such
property is not in a flood hazard area and identifying
<PAGE>
78
the flood classification thereof, or, as applicable, locating any
portion of such property that is in a flood hazard area,
(C) an affidavit of the applicable Loan Party
delivered for the benefit of the issuer of the Mortgage Policies
stating that, since the date of the survey referenced in the
Mortgage Policies in respect of the properties set forth on
Schedule 3.01(g)(xiv)(C), (1) the applicable survey shows the
property in its present condition, (2) there have been no changes
in the boundary lines of the property and (3) no other
improvements have been constructed on or next to the property,
and stating such other matters as the issuer of the Mortgage
Policies may require to omit any exception in the Mortgage
Policies relating to changes in the property since the date of
the survey,
(D) evidence of the insurance required by the terms of
the Mortgages, and
(E) evidence that all other action that the Agent may
deem necessary or desirable in order to create valid first and
subsisting Liens on the property described in the Mortgages has
been taken.
(xv) A guaranty agreement in substantially the form of Exhibit H
(as amended, supplemented or otherwise modified from time to time in
accordance with its terms, the "Parent Guaranty"), duly executed by
---------------
the Parent Guarantor.
(xvi) A guaranty agreement in substantially the form of Exhibit I
(together with each other guaranty and guaranty supplement delivered
pursuant to Section 5.01(n), as amended, supplemented or otherwise
modified from time to time in accordance with its terms, the
"Subsidiary Guaranty"), duly executed by the Subsidiary Guarantors.
-------------------
(xvii) Certified copies of each of the Related Documents, duly
executed by the parties thereto and in form and substance satisfactory
to the Agent, together with all agreements, instruments and other
documents delivered in connection therewith.
(xviii) [Intentionally Omitted.]
(xix) A letter, in form and substance satisfactory to the Agent,
from the Parent Guarantor to PriceWaterhouseCoopers, its independent
certified public accountants, advising such accountants that the Agent
(on its own account or at the request of the Lender Parties) has been
authorized (upon an Event of Default
<PAGE>
79
or upon reasonable notice to the Borrower) to exercise all rights of
the Parent Guarantor to require such accountants to disclose any and
all financial statements and any other information of any kind that
they may have with respect to the Parent Guarantor and its
Subsidiaries and directing such accountants to comply with any
reasonable request of the Agent for such information.
(xx) A solvency certificate from the chief financial officer or
treasurer of the Parent Guarantor, substantially in the form of
Exhibit M-2, together with such other evidence reasonably requested by
the Agent, attesting to the Solvency of the Parent Guarantor and its
Subsidiaries after giving effect to the Acquisition, the Initial
Extension of Credit and the other transactions contemplated hereby.
(xxi) A favorable opinion of Winthrop, Stimson, Putnam & Roberts,
counsel for the Borrower, the Parent Guarantor and each Subsidiary
Guarantor, in substantially the form of Exhibit L-1 hereto and as to
such other matters as the Agent may reasonably request.
(xxii) A favorable opinion of the local counsel to the Borrower
listed on Schedule 3.01(g)(xxii), in substantially the form of Exhibit
L-2 hereto.
(xxiii) A favorable opinion of Fasken, Campell & Godfrey,
Canadian counsel for the Canadian Borrower, in substantially the form
of Exhibit L-3 hereto and as to such other matters as the Agent may
reasonably request.
(xxiv) A reliance letter from Reed Smith Shaw & McClay, counsel
to the seller under the Purchase Agreement, addressed to the Agent.
(xxv) Landlord consents with respect to leased properties listed
in Schedule 3.01(g)(xxv) in form and substance satisfactory to the
Agent.
(xxvi) A letter appointing the Borrower as agent for service of
process for the Canadian Borrower.
(xxvii) A counterpart of this Agreement duly executed by each
party hereto.
(xxviii) A certificate of the chief financial officer or the
treasurer of the Parent Guarantor with respect to the pro forma
Consolidated EBITDA of the Parent Guarantor and its Subsidiaries
(after giving effect to the Acquisition) for the twelve month period
ending June 30, 1999, demonstrating that such pro forma Consolidated
EBITDA is not less than $60,300,000.
<PAGE>
80
(xxix) A certificate of the chief financial officer or the
treasurer of the Parent Guarantor with respect to the ratio of Funded
Debt of the Parent Guarantor and its Subsidiaries as of June 30, 1999,
to the pro forma Consolidated EBITDA of the Parent Guarantor and its
Subsidiaries (after giving effect to the Acquisition) for the twelve
month period ending on such date, demonstrating that such ratio does
not exceed 5.50 to 1.00.
(xxx) Consolidated and consolidating financial projections for
the Parent Guarantor and its Subsidiaries for the period of ten years
following the Initial Extension of Credit, which projections shall
reflect the Acquisition and the other transactions contemplated hereby
and include the written assumptions upon which such projections are
based, and be reasonably satisfactory in all respects to the Agent.
(xxxi) A Consolidated pro forma balance sheet and a related
statement of income of the Parent Guarantor and its Subsidiaries as of
and for the four fiscal quarter period ending June 30, 1999, after
giving effect to the Acquisition and the other transactions
contemplated hereby, and an analysis of the adjustments necessary to
reconcile the entries in such pro forma financial statements to those
financial statements delivered for the Parent Guarantor and its
Subsidiaries for such fiscal quarters pursuant to Section
4.01(f)(i)(y).
(xxxii) (A) (x) The Consolidated balance sheet of the Acquired
Businesses as at March 31, 1997, March 31, 1998 and March 31, 1999,
and the related Consolidated statements of income, stockholders'
equity and cash flow of the Acquired Businesses for the Fiscal Year
then ended, accompanied, as to the Consolidated financial statements,
by an unqualified opinion of Schneider Downs & Co., Inc., independent
public accountants, and (y) the Consolidated balance sheet of the
Acquired Businesses as at June 30, 1999, and the related Consolidated
statements of income, stockholders' equity and cash flow of the
Acquired Businesses for the three months ended on such date, in the
case of the statements referred to in this clause (A)(y) duly
certified by the chief financial officer or treasurer of the Borrower,
which in each case fairly present, subject, in the case of the
statements referred to in clause (A)(y), to year-end audit
adjustments, the Consolidated financial condition of the Acquired
Businesses as at such dates and the Consolidated results of the
operations of the Acquired Businesses for the periods ended on such
dates, all in accordance with generally accepted accounting principles
applied on a consistent basis, and (B) since March 31, 1999, there has
occurred no Material Adverse Change with respect to the Acquired
Businesses, taken as a whole.
(h) [Intentionally Omitted].
<PAGE>
81
(i) The Borrower shall have received not less than $150,000,000 in
gross cash proceeds from the issuance of the Subordinated Notes. The terms
and conditions of the Subordinated Notes (including but not limited to
terms and conditions relating to the interest rate, fees, amortization,
maturity, subordination, covenants, events of default and remedies) and the
provisions of the Subordinated Debt Documents shall be satisfactory in all
material respects to the Agent. The Agent shall have received copies of the
Subordinated Debt Documents, certified by an officer of the Borrower as
true and correct.
SECTION 3.02. Conditions Precedent to Each Borrowing, Drawing and
---------------------------------------------------
Issuance. The obligation of each Appropriate Lender to make an Advance or a
- --------
Drawing (other than a Letter of Credit Advance made by the Issuing Bank or a
Working Capital Lender pursuant to Section 2.03(c) and other than a Swing Line
Advance made by a Working Capital Lender pursuant to Section 2.02(f)) on the
occasion of each Borrowing (including the Initial Extension of Credit), and the
obligation of the Issuing Bank to issue a Letter of Credit (including the
initial issuance), shall be subject to the further conditions precedent that on
the date of such Borrowing, Drawing or issuance (a) the following statements
shall be true (and each of the giving of the applicable Notice of Borrowing,
Notice of Drawing or Notice of Issuance and the acceptance by the Applicable
Borrower of the proceeds of such Borrowing, Drawing or Letter of Credit shall
constitute a representation and warranty by the Borrower that both on the date
of such notice and on the date of such Borrowing, Drawing or issuance such
statements are true):
(i) the representations and warranties contained in each Loan
Document are correct on and as of such date, before and after giving effect
to such Borrowing, Drawing or issuance and to the application of the
proceeds therefrom, as though made on and as of such date other than any
such representations or warranties that, by their terms, refer to a
specific date other than the date of such Borrowing, Drawing or issuance,
in which case as of such specific date; and
(ii) no event has occurred and is continuing, or would result
from such Borrowing, Drawing or issuance or from the application of the
proceeds therefrom, that constitutes a Default;
and (b) the Agent shall have received such other approvals, opinions or
documents as the Agent may reasonably request.
SECTION 3.03. Determinations Under Section 3.01. For purposes of
---------------------------------
determining compliance with the conditions specified in Sections 3.01, each
Lender Party shall be deemed to have consented to, approved or accepted or to be
satisfied with each document or other matter required thereunder to be consented
to or approved by or acceptable or satisfactory to the Lender Parties unless an
officer of the Agent responsible for the transactions contemplated by the Loan
Documents shall have received notice from such Lender Party prior to the date of
the
<PAGE>
82
Initial Extension of Credit specifying its objection thereto and if the initial
extension of credit consists of a Borrowing or Drawing, such Lender Party shall
not have made available to the Agent such Lender Party's ratable portion of such
Borrowing or Drawing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Borrower. The
----------------------------------------------
Borrower represents and warrants as follows:
(a) Each Loan Party (i) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, (ii) is duly qualified and in good standing as a foreign
corporation in each other jurisdiction in which it owns or leases property
or in which the conduct of its business requires it to so qualify or be
licensed except where the failure to so qualify or be licensed is not
reasonably expected to have a Material Adverse Effect and (iii) has all
requisite corporate power and authority (including, without limitation, all
governmental licenses, permits and other approvals) to own or lease and
operate its properties and to carry on its business as now conducted and as
proposed to be conducted except to the extent the failure to do so is not
reasonably expected to have a Material Adverse Effect. All of the
outstanding capital stock of the Borrower has been validly issued, is fully
paid and non-assessable and, as of the date of this Agreement, is owned by
the Parent Guarantor in the amounts and types specified in Schedule 4.01(a)
free and clear of any Liens except those created or permitted under the
Loan Documents.
(b) As of the date of this Agreement, set forth on Schedule 4.01(b)
hereto is a complete and accurate list of all Subsidiaries of each Loan
Party, showing (as to each such Subsidiary) the jurisdiction of its
incorporation, the number of shares of each class of capital stock
authorized, and the number outstanding, on the date hereof and the
percentage of the outstanding shares of each such class owned (directly or
indirectly) by such Loan Party and the number of shares covered by all
outstanding options, warrants, rights of conversion or purchase and similar
rights at the date hereof. All of the outstanding capital stock of all of
such Subsidiaries has been validly issued, is fully paid and non-assessable
and is owned by such Loan Party or one or more of its Subsidiaries free and
clear of all Liens, except those created or permitted under the Loan
Documents. Each such Subsidiary (i) is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of
its incorporation, (ii) is duly qualified and in good standing as a foreign
corporation in each other jurisdiction in which it owns or leases property
or in which the conduct of its business requires it to so qualify or be
licensed except where the failure to so qualify or be licensed is not
reasonably expected to
<PAGE>
83
have a Material Adverse Effect and (iii) has all requisite corporate power
and authority (including, without limitation, all governmental licenses,
permits and other approvals) to own or lease and operate its properties and
to carry on its business as now conducted and as proposed to be conducted
except to the extent the failure to do so is not reasonably expected to
have a Material Adverse Effect.
(c) The execution, delivery and performance by each Loan Party of
this Agreement, each other Loan Document and each Related Document to which
it is or is to be a party, and the consummation of the transactions
contemplated hereby and thereby, are within such Loan Party's corporate
powers, have been duly authorized by all necessary corporate action, and do
not (i) contravene such Loan Party's charter or bylaws, (ii) violate any
law (including, without limitation, the Securities Exchange Act of 1934),
rule, regulation (including, without limitation, Regulation X of the Board
of Governors of the Federal Reserve System), order, writ, judgment,
injunction, decree, determination or award applicable to such Loan Party,
(iii) conflict with or result in the breach of, or constitute a default
under, any contract, loan agreement, indenture, mortgage, deed of trust,
lease or other instrument binding on or affecting any Loan Party, any of
its Subsidiaries or any of their properties or (iv) except for the Liens
created under the Loan Documents, result in or require the creation or
imposition of any Lien upon or with respect to any of the properties of any
Loan Party or any of its Subsidiaries. No Loan Party or any of its
Subsidiaries is in violation of any such law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award or in breach of
any such contract, loan agreement, indenture, mortgage, deed of trust,
lease or other instrument, the violation or breach of which is reasonably
expected to have a Material Adverse Effect.
(d) No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body or any other
third party is required to be obtained by the Loan Parties for (i) the due
execution, delivery, recordation, filing or performance by any Loan Party
of this Agreement, any other Loan Document or any Related Document to which
it is or is to be a party, or for the consummation of the Acquisition or
the other transactions contemplated hereby or thereby, (ii) the grant by
any Loan Party of the Liens granted by it pursuant to the Collateral
Documents, (iii) the perfection or maintenance of the Liens created by the
Collateral Documents (including the first priority nature thereof subject
only to the Liens and security interests permitted in the Loan Documents)
or (iv) the exercise by the Agent or any Lender Party of its rights under
the Loan Documents or the remedies in respect of the Collateral pursuant to
the Collateral Documents, except for the authorizations, approvals,
actions, notices and filings listed on Schedule 4.01(d), all of which have
been duly obtained, taken, given or made and are in full force and effect.
All applicable waiting periods in connection with the Acquisition and the
other transactions contemplated hereby and thereby have expired without any
action having been taken by any competent authority restraining, preventing
or imposing materially adverse conditions upon the Acquisition or the
rights of the Loan
<PAGE>
84
Parties or their Subsidiaries freely to transfer or otherwise to dispose
of, or to create any Lien on, any properties now owned or hereafter
acquired by any of them.
(e) This Agreement has been, and each other Loan Document and each
Related Document when delivered hereunder will have been, duly executed and
delivered by each Loan Party thereto. This Agreement is, and each other
Loan Document and each Related Document when delivered hereunder will be,
the legal, valid and binding obligation of each Loan Party thereto,
enforceable against such Loan Party in accordance with its terms except as
may be limited by bankruptcy, insolvency, reorganization, moratorium or
other laws relating to or limiting creditors' rights or by equitable
principles generally.
(f) (i) (x) The Consolidated balance sheet of the Borrower and its
Subsidiaries as at December 31, 1996, December 31, 1997 and December 31,
1998, and the related Consolidated statements of income, stockholders'
equity and cash flow of the Borrower and its Subsidiaries for the Fiscal
Year then ended, accompanied, as to the Consolidated financial statements,
by an unqualified opinion of PriceWaterhouseCoopers, independent public
accountants, and (y) the Consolidated balance sheet of the Borrower and its
Subsidiaries as at March 31, 1999, June 30, 1999, July 31, 1999 and August
31, 1999, and the related Consolidated statements of income, stockholders'
equity and cash flow of the Borrower and its Subsidiaries for the three
months (or, in the case of the financial statements for July 31, 1999 and
August 31, 1999, the month) ended on each such date, in the case of the
statements referred to in this clause (i)(y) duly certified by the chief
financial officer or treasurer of the Borrower, in each case copies of
which have been furnished to each Lender Party, fairly present, subject, in
the case of the statements referred to in clause (i)(y), to year-end audit
adjustments, the Consolidated financial condition of each of the Borrower
and its Subsidiaries as at such dates and the Consolidated results of the
operations of the Borrower and its Subsidiaries for the periods ended on
such dates, all in accordance with generally accepted accounting principles
applied on a consistent basis, and (ii) there has occurred no Material
Adverse Change with respect to the Borrower and its Subsidiaries, taken as
a whole, since December 31, 1998.
(g) The annual Business Plans of the Borrower and its Subsidiaries
delivered to the Lender Parties pursuant to Section 5.03(e) and the
projections prepared by the Borrower and delivered to the Lender Parties
pursuant to Section 3.01(g)(xxx) were prepared in good faith on the basis
of the assumptions stated therein, which assumptions were fair in the light
of conditions existing at the time of delivery of such annual Business
Plans and projections, and represented, at the time of delivery, the
Borrower's best estimate of its future financial performance (it being
recognized by the Lender Parties that such annual Business Plans and
projections as to future events are not to be viewed as facts and that
actual results during the period covered may differ from the plans).
<PAGE>
85
(h) No information, exhibit or report (excluding any Business Plan or
financial projections), taken as a whole, furnished on behalf of any Loan
Party to the Agent or any Lender Party in connection with the negotiation
of the Loan Documents or pursuant to the terms of the Loan Documents
contained any untrue statement of a material fact or omitted to state a
material fact necessary to make the statements made therein, in light of
the circumstances in which they were made, not misleading as of its date.
(i) There is no action, suit, investigation, litigation or
proceeding affecting any Loan Party or any of its Subsidiaries, including
any Environmental Action, pending or threatened before any court,
governmental agency or arbitrator that (i) individually or in the
aggregate, is reasonably expected to have a Material Adverse Effect or (ii)
purports to affect the legality, validity or enforceability of the
Acquisition, this Agreement, any other Loan Document or any Related
Document or the consummation of the transactions contemplated hereby. There
is no condemnation or similar proceeding pending or threatened affecting
any part of the property subject to a Mortgage that is reasonably expected
to have a Material Adverse Effect.
(j) No proceeds of any Advance, any Drawing or drawings under any
Letter of Credit will be used to acquire any equity security of a class
that is registered pursuant to Section 12 of the Securities Exchange Act of
1934.
(k) The Borrower is not engaged in the business of extending credit
for the purpose of purchasing or carrying Margin Stock, and following
application of the proceeds of each Advance, Drawing or drawing under each
Letter of Credit, not more than 25% of the value of the assets (either of
the Borrower only or of the Borrower and its Subsidiaries on a Consolidated
basis) subject to the provisions of Section 5.02(a) or 5.02(e) or subject
to any restriction contained in any agreement or instrument between the
Borrower and any Lender Party or any Affiliate of any Lender Party relating
to Debt within the scope of Section 6.01(e) will be Margin Stock. For
purposes of this Section 4.01(k), "assets" of the Borrower or any of its
Subsidiaries includes, without limitation, treasury stock of the Borrower
that has not been retired.
(l) Set forth on Schedule 4.01(l) hereto is a complete and accurate
list, as of the date hereof, of all Plans, Multiemployer Plans and Welfare
Plans.
(m) No ERISA Event has occurred or is reasonably expected to occur
with respect to any Plan which is reasonably expected to have a Material
Adverse Effect.
(n) As of the last annual actuarial valuation date, the funded
current liability percentage, as defined in Section 302(d)(8) of ERISA, of
each Plan exceeds 90% except
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86
in any case where the failure to exceed 90% is not reasonably expected to
have a Material Adverse Effect, and there has been no change in the funding
status of any such Plan since such date which is reasonably expected to
have a Material Adverse Effect.
(o) Schedule B (Actuarial Information) to the most recent annual
report (Form 5500 Series) for each Plan, copies of which have been filed
with the Internal Revenue Service and furnished to the Lender Parties, is
complete and accurate and fairly presents the funding status of such Plan,
and since the date of such Schedule B there has been no change in such
funding status which is reasonably expected to have a Material Adverse
Effect.
(p) Neither any Loan Party nor any ERISA Affiliate has incurred or is
reasonably expected to incur any Withdrawal Liability to any Multiemployer
Plan which is reasonably expected to have a Material Adverse Effect.
(q) Neither any Loan Party nor any ERISA Affiliate has been notified
by the sponsor of a Multiemployer Plan that such Multiemployer Plan is in
reorganization or has been terminated, within the meaning of Title IV of
ERISA, and no such Multiemployer Plan is reasonably expected to be in
reorganization or to be terminated, within the meaning of Title IV of ERISA
which, in any such case, is reasonably expected to result in a Material
Adverse Effect.
(r) Except as set forth in the financial statements referred to in
this Section 4.01 or in Section 5.03, the Loan Parties and their respective
Subsidiaries have no material liability with respect to "expected post
retirement benefit obligations" within the meaning of Statement of
Financial Accounting Standards No. 106.
(s) Neither the business nor the properties of any Loan Party or any
of its Subsidiaries are affected by any fire, explosion, accident, strike,
lockout or other labor dispute, drought, storm, hail, earthquake, embargo,
act of God or of the public enemy or other casualty (whether or not covered
by insurance) that could reasonably be expected to have a Material Adverse
Effect.
(t) Except as set forth on Schedule 4.01(t), (i) the operations and
properties of each Loan Party and each of its Subsidiaries comply in all
material respects with all applicable Environmental Laws and Environmental
Permits, all past claims of non-compliance with such Environmental Laws and
Environmental Permits have been resolved without material ongoing
obligations or costs, and (ii) no circumstances exist that are reasonably
expected to (A) form the basis of an Environmental Action against any Loan
Party or any of its Subsidiaries or any of its properties that are
reasonably expected to have a Material Adverse Effect or (B) cause any such
property to be subject
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87
to any material restrictions on ownership, occupancy, use or
transferability under any Environmental Law.
(u) Except as set forth on Schedule 4.01(u) and in each case to the
extent not reasonably expected to have a Material Adverse Effect, (i) none
of the properties currently or formerly owned or operated by any Loan Party
or any of its Subsidiaries is listed or proposed for listing on the NPL or
on the CERCLIS or any analogous foreign, state or local list or is adjacent
to any such property; (ii) there are no underground or aboveground storage
tanks or any surface impoundments, septic tanks, pits, sumps or lagoons in
which Hazardous Materials are being or have been treated, stored or
disposed on any material property currently owned or operated by any Loan
Party or any of its Subsidiaries; (iii) there is no asbestos or asbestos-
containing material on any material property currently owned or operated by
any Loan Party or any of its Subsidiaries; and (iv) to the best knowledge
of any Loan Party, Hazardous Materials have not been released, discharged
or disposed of on any property currently or formerly owned or operated by
any Loan Party or any of its Subsidiaries.
(v) Neither any Loan Party nor any of its Subsidiaries is
undertaking, and has not completed, either individually or together with
other potentially responsible parties, any investigation or assessment or
remedial or response action relating to any actual or threatened release,
discharge or disposal of Hazardous Materials at any site, location or
operation, either voluntarily or pursuant to the order of any governmental
or regulatory authority or the requirements of any Environmental Law that
is reasonably expected to have a Material Adverse Effect.
(w) Neither any Loan Party nor any of its Subsidiaries is a party
to any indenture, loan or credit agreement or any lease or other agreement
or instrument or subject to any charter or corporate restriction that is
reasonably expected to have a Material Adverse Effect.
(x) The Collateral Documents create a valid and perfected security
interest in the Collateral (subject in priority only to the Liens and
security interests permitted under the Loan Documents) securing the payment
of the Secured Obligations, and all filings and other actions necessary or
prudent to perfect and preserve such security interest have been duly
taken. The Loan Parties are the legal and beneficial owners of the
Collateral free and clear of any Lien, except for the liens and security
interests created or permitted under the Loan Documents.
(y) Each Loan Party and each of its Subsidiaries has filed or has
caused to be filed all material tax returns (Federal, state, local and
foreign) which, to the knowledge of the Borrower, are required to be filed
and has paid all taxes shown thereon to be due, together with applicable
interest and penalties (other than any such taxes, interest and
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88
penalties the amount or validity of which is currently being contested in
good faith by appropriate proceedings and with respect to which reserves in
conformity with GAAP have been provided on the books of the applicable Loan
Party).
(z) Set forth on Schedule 4.01(z) hereto is a complete and accurate
list, as of the date hereof, of each taxable year of each Loan Party and
each of its Subsidiaries for which Federal income tax returns have been
filed and for which the expiration of the applicable statute of limitations
for assessment or collection has not occurred by reason of extension or
otherwise (an "Open Year").
---------
(aa) Except as set forth on Schedule 4.01(aa), there is no unpaid
amount, as of the date hereof, of adjustments to the Federal income tax
liability of any Loan Party or any of its Subsidiaries proposed by the
Internal Revenue Service with respect to Open Years and no issues have been
raised by the Internal Revenue Service in respect of Open Years that, in
the aggregate, are reasonably expected to have a Material Adverse Effect.
(bb) Except as set forth on Schedule 4.01(bb), there is no material
unpaid amount, as of the date hereof, of adjustments to the state, local
and foreign tax liability of any Loan Party or any of its Subsidiaries
proposed by any state, local and foreign taxing authorities (other than
amounts arising from adjustments to Federal income tax returns, if any)
with respect to Open Years. No issues have been raised by such taxing
authorities that, in the aggregate, are reasonably expected to have a
Material Adverse Effect.
(cc) Neither any Loan Party nor any of its Subsidiaries is an
"investment company", or an "affiliated person" of, or "promoter" or
"principal underwriter" for, an "investment company", as such terms are
defined in the Investment Company Act of 1940, as amended. Neither the
making of any Advances, nor any Drawing, nor the issuance of any Letters of
Credit, nor the application of the proceeds or repayment thereof by the
Applicable Borrower, nor the consummation of the other transactions
contemplated hereby, will violate any provision of such Act or any rule,
regulation or order of the Securities and Exchange Commission thereunder.
(dd) Each Loan Party is, individually and together with its
Subsidiaries, Solvent.
(ee) Set forth on Schedule 4.01(ee) hereto is a complete and accurate
list of all Existing Debt (other than Surviving Debt), showing as of the
date hereof the principal amount outstanding thereunder.
(ff) Set forth on Schedule 3.01(f) hereto is a complete and accurate
list of all Surviving Debt as of the date hereof, showing the principal
amount outstanding thereunder, the maturity date thereof and the
amortization schedule therefore.
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89
(gg) Set forth on Schedule 4.01(gg) hereto is a complete and accurate
list of all material real property owned, as of the date hereof, by any
Loan Party or any of its Subsidiaries, showing as of the date hereof the
county or other relevant jurisdiction and the state thereof. Except to the
extent the failure to do so is not reasonably expected to have a Material
Adverse Effect, as of the date hereof, each Loan Party or such Subsidiary
has good, marketable and insurable title to such real property, free and
clear of all Liens, other than Liens created or permitted by the Loan
Documents.
(hh) Set forth on Schedule 4.01(hh) hereto is a complete and accurate
list of all material leases of real property (the "Material Leases") under
---------------
which any Loan Party or any of its Subsidiaries is the lessee, as of the
date hereof, showing as of the date hereof the county or other relevant
jurisdiction, state, lessor and expiration date thereof. Except to the
extent the failure to do so is not reasonably expected to have a Material
Adverse Effect, as of the date hereof, each Material Lease is the legal,
valid and binding obligation of the lessor thereof, enforceable in
accordance with its terms and the execution and delivery by the Loan
Parties of the Mortgages does not terminate, or constitute a default under,
any Material Lease and does not give the lessor under any Material Lease
the right to terminate such Material Lease or declare a default thereunder.
(ii) Set forth on Schedule 4.01(ii) hereto is a complete and accurate
list of all Investments held as of the date hereof by any Loan Party or any
of its Subsidiaries showing the amount, obligor or issuer and maturity, if
any, thereof.
(jj) As of the date of this Agreement, set forth on Schedule 4.01(jj)
hereto is a complete and accurate list of all material patents, trademarks,
trade names, service marks and copyrights, and all material applications
therefor and material licenses thereof, of each Loan Party or any of its
Subsidiaries showing the jurisdiction in which registered, the registration
number, the date of registration and the expiration date.
(kk) The Parent Guarantor and each of its Subsidiaries are Year 2000
Compliant, except where any failure to be Year 2000 Compliant is not,
individually or in the aggregate, reasonably expected to have a Material
Adverse Effect.
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90
ARTICLE V
COVENANTS OF THE BORROWER,
OF THE CANADIAN BORROWER
AND OF THE PARENT GUARANTOR
SECTION 5.01. Affirmative Covenants. So long as any Advance shall
---------------------
remain unpaid, any Letter of Credit or Bankers' Acceptance shall be outstanding
or any Lender Party shall have any Commitment hereunder, the Parent Guarantor
will:
(a) Compliance with Laws, Etc. Comply, and cause each of its
-------------------------
Subsidiaries to comply, in all material respects, with all applicable laws,
rules, regulations and orders, such compliance to include, without
limitation, compliance with ERISA.
(b) Payment of Taxes, Etc. Pay and discharge, and cause each of its
---------------------
Subsidiaries to pay and discharge, before the same shall become delinquent,
(i) all material amounts of taxes, assessments and governmental charges or
levies imposed upon it or upon its property and (ii) all lawful claims
that, if unpaid, could reasonably be expected by law to become a Lien upon
its property; provided, however, that neither the Parent Guarantor nor any
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of its Subsidiaries shall be required to pay or discharge any such tax,
assessment, charge or claim (x) that is being contested in good faith and
by proper proceedings and as to which appropriate reserves are being
maintained or (y) in respect of which any Lien resulting therefrom attaches
to its property and becomes enforceable against its other creditors to the
extent that the aggregate amount of all such taxes, assessments, charges
and claims does not exceed $300,000.
(c) Compliance with Environmental Laws. Comply, and cause each of
----------------------------------
its Subsidiaries and all lessees and other Persons operating or occupying
its properties to comply, in all material respects, with all applicable
Environmental Laws and Environmental Permits; obtain and renew and cause
each of its Subsidiaries to obtain and renew all material Environmental
Permits necessary for its operations and properties; and conduct, and cause
each of its Subsidiaries to conduct, any investigation, study, sampling and
testing, and undertake any cleanup, removal, remedial or other action
necessary to remove and clean up all Hazardous Materials from any of its
properties, in accordance with the requirements of all Environmental Laws,
unless the failure to so comply with the foregoing is not reasonably
expected to have a Material Adverse Effect; provided, however, that neither
-------- -------
the Parent Guarantor nor any of its Subsidiaries shall be required to
undertake any such cleanup, removal, remedial or other action to the extent
that its obligation to do so is being contested in good faith and by proper
proceedings and appropriate reserves are being maintained with respect to
such circumstances.
(d) Maintenance of Insurance. Maintain, and cause each of its
------------------------
Subsidiaries to maintain, insurance with responsible and reputable
insurance companies or associations
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91
in such amounts and covering such risks as is usually carried by companies
engaged in similar businesses and owning similar properties in the same
general areas in which the Parent Guarantor or such Subsidiary operates.
Each such insurance policy shall be on terms as provided for in Section
11(a) of the Security Agreement.
(e) Preservation of Corporate Existence, Etc. Preserve and maintain,
----------------------------------------
and cause each of its Subsidiaries to preserve and maintain, its corporate
existence, rights (charter and statutory), and all material permits,
licenses, approvals, privileges and franchises necessary or desirable in
the normal conduct of its business; provided, however, that any of the
-------- -------
Parent Guarantor's Subsidiaries may consummate any merger or consolidation
permitted under Section 5.02(d).
(f) Visitation Rights. Upon 5 Business Days' notice to the Parent
-----------------
Guarantor, permit the Agent or any of the Lender Parties or any agents or
representatives thereof, to examine and make copies of and abstracts from
the records and books of account of, and visit the properties of, the
Parent Guarantor and any of its Subsidiaries, and to discuss the affairs,
finances and accounts of the Parent Guarantor and any of its Subsidiaries
with any of their officers or directors and, as to the Agent only and with
reasonable notice to the Parent Guarantor, with their independent certified
public accountants.
(g) Preparation of Environmental Reports. At the request of the
------------------------------------
Agent at the following times: (i) upon and during the continuance of an
Event of Default and (ii) upon the acquisition or sale of real property by
any Loan Party or any of its Subsidiaries, provide to the Agent within 60
days after such request, at the expense of the Borrower, a Phase I
environmental site assessment report for properties to be acquired and
described in such request, prepared by an environmental consulting firm
reasonably acceptable to the Agent (and, if based upon the recommendation
of such environmental consulting firm upon and during the continuance of an
Event of Default, a Phase II environmental site assessment report)
indicating the presence or absence of Hazardous Materials and the estimated
cost of any compliance, removal or remedial action in connection with any
Hazardous Materials on such properties; without limiting the generality of
the foregoing, if the Agent determines at any time upon and during the
continuance of an Event of Default that a material risk exists that any
such report will not be provided within the time referred to above, the
Agent may retain an environmental consulting firm to prepare such report at
the expense of the Borrower, and the Borrower hereby grants and agrees to
cause any Subsidiary that owns any property described in such request to
grant at the time of such request, to the Agent, the Lender Parties, such
firm and any agents or representatives thereof an irrevocable non-exclusive
license, subject to the rights of tenants, to enter onto their respective
properties to undertake such an assessment.
(h) Keeping of Books. Keep, and cause each of its Subsidiaries to
----------------
keep, proper books of record and account, in which entries which are full
and correct in all
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92
material respects shall be made of all financial transactions and the
assets and business of the Parent Guarantor and each such Subsidiary in
accordance with generally accepted accounting principles in the United
States.
(i) Maintenance of Properties, Etc. Maintain and preserve, and cause
------------------------------
each of its Subsidiaries to maintain and preserve, all of its properties
that are reasonably required in the conduct of its business in good working
order and condition, ordinary wear, tear and depletion excepted.
(j) Compliance with Terms of Leaseholds. Cause each of its
-----------------------------------
Subsidiaries to make all payments and otherwise perform all obligations in
respect of all leases of real property to which any such Subsidiary is a
party, keep such leases in full force and effect and not allow such leases
to lapse or be terminated or any rights to renew such leases to be
forfeited or canceled, notify the Agent of any material default by any
party with respect to such leases and cooperate with the Agent in all
respects to cure any such default, and cause each such Subsidiary to do so,
unless the failure to so comply with the foregoing is not reasonably
expected to have a Material Adverse Effect.
(k) Performance of Related Documents. Unless the failure to so
--------------------------------
comply (other than the failure to comply with the Purchase Agreement) could
not reasonably be expected to have a Material Adverse Effect, perform and
observe, and cause each of its Subsidiaries to perform and observe, all of
the terms and provisions of each Related Document to be performed or
observed by it, maintain each such Related Document in full force and
effect, enforce such Related Document in accordance with its terms, and
upon and during the continuance of an Event of Default, (i) take all such
action to such end as may be from time to time requested by the Agent and
(ii) upon request of the Agent, make to each other party to each such
Related Document such demands and requests for information and reports or
for action as it is entitled to make under such Related Document.
(l) Transactions with Affiliates. (i) Conduct, and cause each of its
----------------------------
Subsidiaries to conduct, all transactions otherwise permitted under the
Loan Documents with any of their Affiliates on terms that are no less
favorable to the Parent Guarantor or such Subsidiary than it would obtain
in a comparable arm's-length transaction with a Person not an Affiliate;
provided, however, that the Borrower may make payments to D. George Harris
-------- -------
& Associates, LLC or any of its designees in an amount not to exceed one
percent (1%) of the consideration paid in connection with (x) any Permitted
Acquisition or (y) the Acquisition; and provided further that transactions
-------- -------
otherwise permitted under the Loan Documents among the Parent Guarantor and
its Subsidiaries and those transactions contemplated by the Tax Sharing
Agreement, the Harris Management Agreement and the Investments contemplated
by Section 5.02(f)(x) shall not be subject to the requirements of this
Section 5.01(l). Without in any way limiting
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93
the generality of the foregoing, any consents or waivers of or amendments,
supplements or modifications to the Harris Management Agreement shall
require the approval of the Compensation Committee constituted by the Board
of Directors of USS Holdings, Inc.
(ii) The foregoing paragraph (i) shall not prohibit, to the extent
otherwise permitted under this Agreement, (A) any Restricted Payment
permitted to be paid pursuant to Section 5.02(g), (B) any issuance of
securities, or other payments, awards or grants in cash, securities or
otherwise pursuant to, or the funding of, employment arrangements, stock
options and stock ownership plans approved by the board of directors of the
Borrower, (C) the grant of stock options or similar rights to employees
and directors of the Borrower pursuant to plans approved by the board of
directors of the Borrower, (D) loans or advances to employees in the
ordinary course of business in accordance with past practices of the
Borrower or any of its Subsidiaries and (E) the payment of reasonable fees
to directors of the Parent Guarantor and its Subsidiaries who are not
employees of the Parent Guarantor or its Subsidiaries.
(m) Covenant to Give Security. Upon the request of the Agent (i)
-------------------------
following the occurrence and during the continuance of an Event of Default
with respect to any parcel of real property in any one county with a fair
market value that is equal to or greater than $125,000 but less than
$250,000 or (ii) upon the acquisition by the Parent Guarantor or any of its
Subsidiaries of real property in any one county with an aggregate fair
market value, at the time of any such acquisition, equal to or greater than
$250,000, take all or any of the following actions, in all cases at the
expense of the Borrower, (A) within 10 days after such request, furnish to
the Agent a description of the real and personal property of the Parent
Guarantor and its Subsidiaries which are not subject to the Collateral
Documents and which meet the criteria of clause (i) or (ii) above, as the
case may be, in detail reasonably satisfactory to the Agent, (B) within 15
days after receipt of such documents, duly execute and deliver mortgages,
pledges, assignments and other security agreements, as specified by and in
form and substance reasonably satisfactory to the Agent, securing payment
of all the Obligations of the Loan Parties under the Loan Documents and
constituting Liens on all such properties, (C) within 30 days after receipt
of such documents, take whatever action (including, without limitation, the
recording of mortgages, the filing of Uniform Commercial Code financing
statements, the giving of notices and the endorsement of notices on title
documents) that may be reasonably necessary or advisable in the opinion of
the Agent to vest in the Agent (or in any representative of the Agent
designated by it) valid and subsisting Liens on the properties purported to
be subject to the security agreements delivered pursuant to this Section
5.01(m), enforceable against all third parties in accordance with their
terms, (D) within 60 days after receipt of such documents, deliver to the
Agent a signed copy of a favorable opinion, addressed to the Agent, of
counsel for the Borrower reasonably acceptable to the Agent, as to such
security agreements creating legal, valid and subsisting Liens enforceable
in accordance with their terms and as to such other matters
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94
as the Agent may reasonably request, (E) as promptly as is practicable
after such request in respect of property subject to clause (ii) above,
deliver to the Agent surveys meeting the criteria specified in Section
3.01(g)(xiv)(B) and Mortgage Policies as to each parcel of real property
subject to such request, (F) as soon as reasonably practicable, and in no
event later than 9 months after the Initial Extension of Credit, cause the
provisions of clauses (A), (B), (C), (D) and (E) above to be satisfied with
respect to each property listed on Schedule 5.01(m), and (G) at any time
and from time to time, promptly execute and deliver any and all further
instruments and documents and take all such other action as the Agent may
deem reasonably desirable in obtaining the full benefits of, or in
preserving the Liens of, such security agreements.
(n) Covenant to Guarantee and Secure Obligations. Unless otherwise
--------------------------------------------
agreed to by the Agent, upon the formation or acquisition of any new direct
or indirect wholly owned Domestic Subsidiary of the Borrower, within 10
days after such formation or acquisition, (i) cause each such Domestic
Subsidiary to duly execute and deliver to the Agent a guaranty or guaranty
supplement, in form and substance satisfactory to the Agent, guaranteeing
the other Loan Parties' obligations under the Loan Documents, and each
applicable Collateral Document in the manner provided therein, (ii)
promptly take such actions to create and perfect Liens on such Domestic
Subsidiary's assets to secure the Obligations as the Agent shall reasonably
request and (iii) if any capital stock or other ownership or profit
interest, warrants, rights, options or Debt of such Subsidiary are owned by
any Loan Party (other than the Canadian Borrower), cause such capital stock
or other ownership or profit interest, warrants, rights, options and
promissory notes evidencing such Debt to be pledged pursuant to the
Security Agreement.
(o) Interest Rate Hedging. Cause the Borrower to enter into prior to
---------------------
March 31, 2000, and thereafter to maintain for successive periods of not
less than three years, Bank Hedge Agreements on such terms as shall be
reasonably satisfactory to the Agent, the effect of which is to fix or
limit the interest cost to the Borrower, during the three-year period
immediately following the date on which the Borrower enters into the
applicable Bank Hedge Agreement, with respect to at least 60% of the Term
Advances outstanding during such three-year period.
(p) Year 2000 Compliance. Be, and cause each of its Subsidiaries to
--------------------
be, Year 2000 Compliant at all times, except where failure to do so is not
reasonably expected to have a Material Adverse Effect.
SECTION 5.02. Negative Covenants. So long as any Advance shall
------------------
remain unpaid, any Letter of Credit or Bankers' Acceptance shall be outstanding
or any Lender Party shall have any Commitment hereunder, the Parent Guarantor
will not, at any time:
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95
(a) Liens, Etc. Create, incur, assume or suffer to exist, or permit
----------
any of its Subsidiaries to create, incur, assume or suffer to exist, any
Lien of any character on or with respect to any of its properties
(including, without limitation, accounts) whether now owned or hereafter
acquired, or sign or file or suffer to exist, or permit any of its
Subsidiaries to sign or file or suffer to exist, under the Uniform
Commercial Code of any jurisdiction, a financing statement that names the
Parent Guarantor or any of its Subsidiaries as debtor, or sign or suffer to
exist, or permit any of its Subsidiaries to sign or suffer to exist, any
security agreement authorizing any secured party thereunder to file such
financing statement, or assign, or permit any of its Subsidiaries to
assign, any accounts or other right to receive income, excluding, however,
--------- -------
from the operation of the foregoing restrictions the following:
(A) in the case of the Borrower and its Subsidiaries:
(i) Liens created under the Loan Documents;
(ii) Permitted Liens;
(iii) Liens existing on the date hereof and described on
Schedule 5.02(a)(iii) hereto or in the Mortgage Policies;
(iv) Liens arising in connection with Capitalized Leases
permitted under Section 5.02(b)(v), provided that no such Lien
--------
shall extend to or cover any Collateral or assets other than the
assets subject to such Capitalized Leases;
(v) purchase money Liens upon or in real property or
equipment acquired or held by the Borrower or any of its
Subsidiaries in the ordinary course of business to secure the
purchase price of such property or equipment or to secure Debt
incurred solely for the purpose of financing the acquisition of
or construction on or improvement of any such property or
equipment to be subject to such Liens, or Liens existing on any
such property or equipment at the time of acquisition (other than
any such Liens created in contemplation of such acquisition that
do not secure the purchase price), or extensions, renewals or
replacements of any of the foregoing for the same or a lesser
amount; provided, however, that no such Lien shall extend to or
-------- -------
cover any property other than the property or equipment being
acquired or constructed and any improvements thereon, and no such
extension, renewal or replacement shall extend to or cover any
property not theretofore subject to the Lien being extended,
renewed or replaced; and provided further that the aggregate
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principal amount of the Debt secured by Liens permitted by this
clause (v) shall not exceed the
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96
amount permitted under Section 5.02(b)(B)(i) at any time
outstanding and that any such Debt shall not otherwise be
prohibited by the terms of the Loan Documents;
(vi) the filing of financing statements solely as a
precautionary measure in connection with operating leases
permitted under Section 5.02(c);
(vii) the replacement, extension or renewal of any Lien
permitted by clause (iii) above upon or in the same property
theretofore subject thereto or the replacement, extension or
renewal (without increase in the amount or change in any direct
or contingent obligor) of the Debt secured thereby;
(viii) Liens for unpaid royalties not then due and payable
which Liens, in the aggregate, are not substantial in amount and
do not, in any case, materially detract from the value of the
property subject thereto or materially interfere with the
ordinary conduct of business of the Borrower and its
Subsidiaries;
(ix) Liens in respect of judgments or decrees not
constituting an Event of Default under Section 6.01(g); and
(x) Permitted Liens as to which enforcement, execution,
levy or foreclosure proceedings shall have been commenced in an
amount not to exceed $500,000 in the aggregate; and
(B) in the case of the Parent Guarantor:
(i) Liens created under the Parent Guarantor Security
Agreement;
(ii) Permitted Liens; and
(iii) Liens in respect of judgments or decrees not
constituting an Event of Default under Section 6.01(g).
(b) Debt. Create, incur, assume or suffer to exist, or permit any of
----
its Subsidiaries to create, incur, assume or suffer to exist, any Debt
other than:
(i) Debt in respect of Bank Hedge Agreements entered into
pursuant to Section 5.01(o);
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(ii) Debt in respect of Natural Gas Hedge Agreements
designed to hedge against fluctuations in natural gas prices,
incurred in the ordinary course of business and consistent with
prudent business practice in an aggregate notional amount not to
exceed at any one time 60% of the sum of (x) the aggregate amount
of the natural gas requirements of the Loan Parties the preceding
12 months, and (y) the projected natural gas requirements of the
Loan Parties for the next six months;
(iii) Debt in respect of surety bonds fully supported by
Letters of Credit;
(iv) the Subordinated Debt;
(v) Capitalized Leases, together with Debt secured by
Liens permitted by Section 5.02(a)(v), the principal amount of
which does not, in the aggregate, exceed $10,000,000 at any one
time outstanding;
(vi) Debt described on Schedule 3.01(f);
(vii) Debt under the Loan Documents;
(viii) indorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of
business;
(ix) Debt in respect of trade payables in an amount not to
exceed $1,000,000 in the aggregate;
(x) Debt in respect of (A) Investments permitted under
Sections 5.02(f)(i), (ii), (vi), (xii), (xiv), (xv), (xvi) and
(xvii) hereof and (B) Restricted Payments permitted under Section
5.02(g) hereof; provided that Debt in respect of Investments
--------
permitted under Section 5.02(f)(xii) shall be permitted under
this Agreement only to the extent that the incurrence of such
Debt is permitted under the Subordinated Debt Documents, and
provided further that the aggregate principal amount of Debt in
-------- -------
respect of Investments permitted under Section 5.02(f)(xvi) shall
not exceed $15,000,000 in the aggregate at any one time
outstanding;
(xi) Debt of the type described in clauses (i) or (j) of
the definition of "Debt" relating to the Debt of any Loan Party
that is permitted under Section 5.02(b) (other than the
Subordinated Debt);
<PAGE>
98
(xii) unsecured Debt not to exceed $750,000 in the
aggregate at any one time outstanding; and
(xiii) the Nicks Silica Company Note.
(c) Lease Obligations. Permit any of its Subsidiaries to create,
-----------------
incur, assume or suffer to exist, any obligations as lessee for the rental
or hire of real or personal property in connection with any operating
leases or Capitalized Lease obligations having an original term of one year
or more that would cause the annual rental obligations of the Borrower and
its Subsidiaries, on a Consolidated basis, to exceed $5,000,000 payable in
any period of 12 consecutive months.
(d) Mergers, Etc. Merge into or consolidate with any Person or
------------
permit any Person to merge into it, or permit any of its Subsidiaries to do
so, except that any Subsidiary of the Borrower may merge into or
consolidate with (i) the Borrower in a transaction in which the Borrower is
the surviving corporation or (ii) any other Subsidiary of the Borrower or
any Person the capital stock of which is acquired in a Permitted
Acquisition in a transaction in which the surviving corporation is a wholly
owned (and, to the extent that a Subsidiary party to such merger or
consolidation is a Domestic Subsidiary, Domestic) Subsidiary of the
Borrower.
(e) Sales, Etc., of Assets. Sell, lease, transfer or otherwise
----------------------
dispose of, or permit any of its Subsidiaries to sell, lease, transfer or
otherwise dispose of, any assets, or grant any option or other right to
purchase, lease or otherwise acquire any assets, except:
(i) sales of Inventory (including, without limitation, sales of
obsolete Inventory) in the ordinary course of its business;
(ii) in a transaction authorized by subsection (d) of this
Section;
(iii) dispositions of used equipment for fair value in the
ordinary course of business, provided that the proceeds thereof are
--------
used in the ordinary course of business to purchase equipment to be
used in the ordinary course of business;
(iv) dispositions of worn out or obsolete tools or equipment no
longer used or, in the Borrower's or the applicable Subsidiary of the
Borrower's good faith judgment, useful in the ordinary course of
business of the Borrower and its Subsidiaries;
(v) upon notice to the Agent, the Borrower and its Subsidiaries
may, in the ordinary course of business, sell, lease, transfer or
otherwise dispose of up to
<PAGE>
99
1,000 acres of owned real property in any period of 24 consecutive
months; provided, however, notwithstanding anything provided for
-------- -------
in the previous sentence, the Borrower may, in the ordinary course of
business, upon notice to the Agent, sell, lease, transfer or otherwise
dispose of the real property listed on Schedule 5.02(c)(v) hereof;
provided that no sale, lease, transfer or disposition made pursuant to
--------
this subsection (v) shall, individually or in the aggregate,
materially interfere with the business of the Borrower and its
Subsidiaries;
(vi) dispositions of any asset by any Subsidiary of the
Borrower to the Borrower or any wholly-owned Domestic Subsidiary;
(vii) dispositions (other than sales) in the ordinary course of
business of property that do not, in the aggregate, materially
interfere with the business of the Borrower and its Subsidiaries;
(viii) sales or other dispositions of capital stock of USS
Holdings, Inc. to management of the Parent Guarantor, its Subsidiaries
and D. George Harris & Associates Persons;
(ix) sales in the ordinary course of business and on a basis
substantially consistent with prior business practice of timber or the
right to harvest timber;
(x) sales in the ordinary course of business and on a basis
substantially consistent with prior business practice of limestone,
the right to mine limestone, waste products and by-products;
(xi) transfers of assets by the Borrower or any of its
Subsidiaries in connection with Investments by the Borrower or any of
its Subsidiaries permitted by Section 5.02(f)(x) in an aggregate
amount (based on the fair market value of such assets as determined by
the Board of Directors of the Borrower) not to exceed, together with
Investments permitted by Section 5.02(f)(x), an amount equal to
$7,000,000, provided that, at the time each such transfer of assets is
--------
made, no Default shall have occurred and be continuing; and
(xii) transfers of real property to a state, county, local or
municipal governmental agency in exchange for the granting of a permit
or the taking of other regulatory action by such governmental agency
to the extent that such transfers (x) do not, individually or in the
aggregate, materially interfere with the business of the Borrower and
its Subsidiaries and (y) enhance the value of mining properties owned
by the Borrower or one of its Subsidiaries, provided that in the case
--------
of each such exchange, the board of directors of the Borrower has
determined in good faith that such exchange is in the best interest of
the Borrower.
<PAGE>
100
(f) Investments in Other Persons. Make or hold, or permit any of its
----------------------------
Subsidiaries to make or hold, any Investment in any Person other than:
(i) Investments by the Borrower or its Subsidiaries in the
Borrower or wholly-owned Domestic Subsidiaries of the Borrower
outstanding on the date hereof, and additional Investments from time
to time hereafter by the Borrower or its Subsidiaries in the Borrower
or wholly-owned Domestic Subsidiaries of the Borrower, constituting
advances made by the Borrower or such Subsidiary for working capital
purposes of the Borrower or such wholly-owned Domestic Subsidiaries,
for so long as such advances are being evidenced by demand notes from
the Borrower or such wholly-owned Domestic Subsidiaries, substantially
in the form of Exhibit N-1 or N-2 hereto, as applicable, that
constitute Pledged Debt under the Security Agreement;
(ii) Investments by the Borrower or its Subsidiaries in its
wholly-owned Subsidiary, George F. Pettinos (Canada) Limited, in an
aggregate amount invested not to exceed $1,000,000 from time to time
outstanding, for so long as such investments are being evidenced by a
demand note from George F. Pettinos (Canada) Limited, substantially in
the form of Exhibit O hereto, that constitutes Pledged Debt under the
Security Agreement;
(iii) loans and advances to employees in the ordinary course of
the business of the Borrower and its Subsidiaries as presently
conducted in an aggregate principal amount not to exceed $300,000 at
any time outstanding;
(iv) Investments by the Loan Parties (x) in Cash Equivalents
deposited in a Blocked Account (as defined in the Security Agreement)
in an aggregate amount at any time invested not to exceed $5,000,000,
(y) in other Cash Equivalents in an aggregate amount at any time
invested not to exceed $1,500,000, and (z) any further Cash
Equivalents deposited pursuant to a deferred compensation plan in the
ordinary course of business of the Loan Parties;
(v) Investments in (x) Hedge Agreements permitted under Section
5.02(b)(i), and in (y) Natural Gas Hedge Agreements permitted under
Section 5.02(b)(ii);
(vi) other Investments existing on the date hereof and described
on Schedule 4.01(b) or Schedule 4.01(ii) hereto;
<PAGE>
101
(vii) Investments in the ordinary course of business of the
Borrower and its Subsidiaries and on a basis substantially consistent
with prior business practice in the form of extensions of trade
credit;
(viii) Investments (x) in the form of loans and advances to
employees of the Borrower and its Subsidiaries the proceeds of which
are applied to the purchase of capital stock of USS Holdings, Inc. and
(y) by the Borrower or its Subsidiaries in capital stock of USS
Holdings, Inc. arising as a result of acquisition of such capital
stock from management or other employees, and their respective
transferees, of the Borrower and its Subsidiaries, provided that the
--------
aggregate outstanding principal amount of all such Investments shall
at no time exceed a total of $600,000;
(ix) Investments in the ordinary course of business in an
insurer required as a condition to the provision by such insurer of
insurance coverage contemplated by Section 5.01(d);
(x) Investments by the Borrower or any of its wholly-owned
Domestic Subsidiaries in a joint venture with Sylvania Company Limited
Partnership to process and sell silica from a deposit in Rockwood,
Michigan in an aggregate amount invested not to exceed, together with
any transfer of assets permitted by Section 5.02(e)(xi), an amount
equal to $7,000,000, provided that, at the time each such Investment
--------
is made, no Default shall have occurred and be continuing;
(xi) Investments in the form of loans to D. George Harris &
Associates, LLC pursuant to the Harris Management Agreement, provided
--------
that (A) the aggregate principal amount of all such Investments made
in any calendar year shall not exceed $1,000,000 and (B) the aggregate
principal amount of all such investments at any one time outstanding
shall not exceed $3,000,000;
(xii) Investments by the Borrower or any of its Subsidiaries,
made either directly or through a wholly-owned Subsidiary specially
organized for the purpose of such Investment, in Permitted
Acquisitions, provided that
--------
(A) before and after giving effect to any such
Investment, on a pro forma basis for the Rolling Period ended as
at the end of the most recent period for which financial
statements were required to be furnished to the Agent pursuant to
Sections 5.03(b), (c) or (d), the Total Leverage Ratio of the
Parent Guarantor and its Subsidiaries (calculated to include all
Investments made after the last day of such Rolling Period as if
such Investments were made on the last day of such Rolling
Period) shall be not more than 5.00 to 1.00,
<PAGE>
102
(B) the Borrower shall have furnished to the Agent a
schedule in form satisfactory to the Agent of the computations
used by the Parent Guarantor in determining compliance with such
requirements,
(C) the Borrower shall have furnished to the Agent a
certificate, signed by the chief financial officer or treasurer
of the Parent Guarantor, substantially in the form of Exhibit M-
1, attesting to the Solvency of the Parent Guarantor and its
Subsidiaries as of the effective date of the Investment (taking
into effect such Investment), and
(D) immediately before and after giving effect thereto,
no Default shall have occurred and be continuing or would result
therefrom;
(xiii) Investments made by the Borrower or any of its wholly-
owned Domestic Subsidiaries in the publicly traded securities of a
Person engaged in a similar line of business as the Borrower and its
Subsidiaries, such Investments at any one time not to exceed $250,000;
(xiv) Investments made by any Loan Party in any wholly-owned
Domestic Subsidiary of the Parent Guarantor;
(xv) Investments made by the Borrower or any of its
Subsidiaries in the Parent Guarantor in order to permit the repurchase
or redemption of the capital stock of USS Holdings, Inc. described in
Section 5.02(g);
(xvi) Investments made by any Subsidiary of the Borrower
incorporated under the laws of Canada or any political subdivision
thereof (a "Canadian Subsidiary") in another Canadian Subsidiary of
-------------------
the Borrower; and
(xvii) Investments made by any Loan Party in the form of the
incurrence of Debt of the type referred to in clause (i) or (j) of the
definition of "Debt" (a "Guaranty") in respect of the Debt of any Loan
---- --------
Party that is permitted under Section 5.02(b); provided that (A) the
--------
Parent Guarantor shall not Guaranty the Subordinated Debt and (B) no
Subsidiary of the Borrower shall Guaranty the Subordinated Debt unless
(x) such Subsidiary has also Guaranteed the Obligations of the Loan
Parties under the Loan Documents pursuant to a Subsidiary Guaranty,
(y) such Guaranty of the Subordinated Debt is subordinated to such
Guaranty of the Obligations of the Loan Parties under the Loan
Documents on terms no less favorable to the Lenders than the
subordination provisions of the Subordinated Debt and (z) such
Guaranty of the Subordinated Debt provides for the release and
termination thereof, without any action by any party, upon any sale by
the Borrower or any of its other Subsidiaries of the capital stock of
such Subsidiary to
<PAGE>
103
the extent that (A) after giving effect to such sale, such Subsidiary
will cease to be a Subsidiary and (B) such sale is permitted under the
Subordinated Debt Documents.
(g) Restricted Payments. Declare or pay any dividends (other than
-------------------
paid-in-kind preferred dividends), purchase, redeem, retire, defease or
otherwise acquire for value any of its capital stock or any warrants,
rights or options to acquire such capital stock, now or hereafter
outstanding, return any capital to its stockholders as such, make any
distribution of assets, capital stock, warrants, rights, options,
obligations or securities to its stockholders as such or issue or sell any
capital stock or any warrants, rights or options to acquire such capital
stock (each, a "Restricted Payment"), or permit any of its Subsidiaries to
------------------
do any of the foregoing or permit any of its Subsidiaries to purchase,
redeem, retire, defease or otherwise acquire for value any capital stock of
the Borrower or any warrants, rights or options to acquire such capital
stock or to issue or sell any capital stock or any warrants, rights or
options to acquire such capital stock, except that, so long as no Default
shall have occurred and be continuing at the time of any action described
below or would result therefrom: (i) this Section 5.02(g) shall not apply
to Restricted Payments made by any Subsidiary of the Borrower, provided
--------
that if any such Subsidiary of the Borrower is not a wholly-owned
Subsidiary of the Borrower, any Restricted Payment made by such Subsidiary
to a Person other than the Borrower or a wholly-owned Subsidiary of the
Borrower shall be no greater than such Person's share of such Restricted
Payment if distributed to the holders of such Subsidiary's capital
securities held by such holders immediately prior to the making of such
Restricted Payment and (ii) this Section 5.02(g) shall not apply to
Restricted Payments made by the Borrower or any of its Subsidiaries
constituting (A) payments to the Parent Guarantor pursuant to the Tax
Sharing Agreement, which payments (x) shall be made not earlier than three
Business Days prior to the date upon which USS Holdings, Inc.'s related
liability to the relevant governmental authority for tax (including,
without limitation, estimated taxes) is paid (or, if no such taxes are
payable, ordinarily would have been due) and (y) shall not exceed the
amount of income taxes which is to be paid by the Loan Parties to USS
Holdings, Inc. pursuant to such Tax Sharing Agreement, (B) payments to the
Parent Guarantor for operating expenses of the Parent Guarantor and USS
Holdings, Inc. in an annual aggregate amount not to exceed $200,000, (C)
Restricted Payments made by the Borrower in any Fiscal Year with 50% of its
portion of Excess Cash Flow for the immediately preceding Fiscal Year in
connection with the repurchase of any of the outstanding capital stock of
USS Holdings, Inc. for cash from employees, former employees, officers,
former officers, directors or former directors of the Borrower or any of
its Subsidiaries (or permitted transferees of such employees, former
employees, officers, former officers, directors or former directors),
pursuant to the terms of agreements (including employment agreements) or
plans (or amendments thereto) approved by the board of directors of the
Borrower, the Parent Guarantor or USS Holdings, Inc. under which such
individuals purchase or sell or are granted the option to
<PAGE>
104
purchase or sell, shares of such common stock, in an amount not to exceed
$2,000,000 in such Fiscal Year, and (D) payments contemplated under the
first proviso to Section 5.01(l).
(h) Change in Nature of Business. (i) Engage in any business or
----------------------------
activity other than the ownership, directly or indirectly, of capital stock
of the Borrower and activities incidental thereto, (ii) own or acquire any
assets (other than capital stock of the Borrower, cash and Cash Equivalents
and other assets incidental to maintaining its existence and ownership of
the foregoing assets) or incur any liabilities (other than liabilities
under the Loan Documents, liabilities imposed by law, including tax
liabilities, and other liabilities incidental to its existence and
permitted business and activities), (iii) permit any of its Subsidiaries to
make any material change in the nature of its business as carried on at the
date hereof or (iv) permit any of its Subsidiaries to engage in any
business not engaged in, or acquire any assets not owned (other than in the
ordinary course of business or as otherwise permitted under this
Agreement), on the date hereof.
(i) Charter Amendments. Amend, or permit any of its Subsidiaries to
------------------
amend, its certificate of incorporation or any provision of its bylaws in
any manner that is adverse to the Lenders in any material respect.
(j) Accounting Changes. Make or permit, or permit any of its
------------------
Subsidiaries to make or permit, any change in accounting policies or
reporting practices, except as required by generally accepted accounting
principles.
(k) Amendment, Etc., of Related Documents. Cancel or terminate any
-------------------------------------
Related Document or consent to or accept any cancelation or termination
thereof, amend, modify or change in any manner any term or condition of any
Related Document or give any consent, waiver or approval thereunder, waive
any default under or any breach of any term or condition of any Related
Document, or take any other action in connection with any Related Document
to the extent that any such action would (i) impair in any material manner
the value of the interest or rights of the Borrower under such Related
Document, (ii) impair in any material manner the rights or interests of the
Agent or any Lender Party or (iii) increase any amount payable by the
Borrower under the Harris Management Agreement (other than as contemplated
by such Agreement as in effect on the date hereof), or permit any of its
Subsidiaries to do any of the foregoing in any such case without the prior
written consent of the Required Lenders which shall not be unreasonably
withheld.
(l) Negative Pledge; Restrictive Agreements. Enter into or suffer to
---------------------------------------
exist, or permit any of its Subsidiaries to enter into or suffer to exist,
any agreement prohibiting or conditioning (a) the payment of dividends or
the making of any other distributions on its capital stock or the payment
of any Debt or other obligations owed to the Borrower,
<PAGE>
105
(b) the making of loans or advances to the Borrower, (c) the transfer of
any of its property or assets to the Borrower or (d) the creation or
assumption of any Lien upon any of its property or assets, other than (i)
in favor of the Secured Parties, (ii) in connection with (A) any Surviving
Debt, or (B) any Debt secured by purchase money Liens and Capitalized
Leases with respect to the specific assets subject to such Liens or
Capitalized Leases, (iii) in connection with operating leases or other
commercial agreements entered into in the ordinary course of business of
the Borrower and its Subsidiaries on a basis consistent with past practice
(other than any such agreements pursuant to which the Borrower or its
Subsidiaries incur Debt) and (iv) in the case of clauses (a), (b) and (c)
above, (A) any encumbrance or restriction pursuant to applicable law or an
agreement in effect at or entered into on the date hereof, (B) any
encumbrance or restriction with respect to a Subsidiary of the Borrower
pursuant to an agreement relating to any Debt incurred by such Subsidiary
prior to the date on which such Subsidiary was acquired by the Borrower or
another Subsidiary of the Borrower (other than Debt incurred as
consideration in, in contemplation of, or to provide all or any portion of
the funds or credit support utilized to consummate the transaction or
series of related transactions pursuant to which such Subsidiary became a
Subsidiary of the Borrower or was otherwise acquired by the Borrower or any
of its Subsidiaries) and outstanding on such date, (C) in the case of
clause (c) above, any encumbrance or restriction (1) that restricts in a
customary manner the subletting, assignment or transfer of any property or
asset that is subject to a lease, license or similar contract or (2)
contained in security agreements securing Debt of the Borrower or any of
its Subsidiary to the extent such encumbrance or restriction restricts the
transfer of the property subject to such security agreements, (D) with
respect to a Subsidiary of the Borrower, any restriction imposed pursuant
to an agreement entered into for the sale or disposition of all or
substantially all the capital stock or assets of such Subsidiary pending
the closing of such sale or disposition and (E) any encumbrance or
restriction existing or created pursuant to Debt permitted to be incurred
by a Subsidiary of the Borrower after the date hereof pursuant to Section
5.02(b); provided, however, that any such encumbrance or restrictions are
reasonable and customary with respect to the type of Debt being incurred
(under the relevant circumstances).
(m) Partnerships. Become a general partner in any general or limited
------------
partnership or joint venture, or permit any of its Subsidiaries to do so.
(n) Prepayments of Subordinated Debt, Etc. (i) Prepay, redeem,
--------------------------------------
purchase, defease or otherwise satisfy prior to the scheduled maturity
thereof in any manner, or make any payment in violation of any
subordination terms of, the Subordinated Debt, other than the payment of
regularly scheduled interest and principal payments as and when due in
respect thereof, or (ii) amend, modify or waive any of its rights under any
Subordinated Debt Document.
<PAGE>
106
(o) Other Transactions. Engage or permit any of its Subsidiaries to
------------------
engage in any Hedge Agreements or any transaction involving commodity
options or futures contracts or any similar speculative transactions
(including, without limitation, take-or-pay contracts for speculative
purposes) except for (x) Bank Hedge Agreements permitted under Section
5.02(b)(i) and (y) Natural Gas Hedge Agreements permitted under Section
5.02(b)(ii).
SECTION 5.03. Reporting Requirements. So long as any Advance shall
----------------------
remain unpaid, any Letter of Credit or Bankers' Acceptance shall be outstanding
or any Lender Party shall have any Commitment hereunder, the Parent Guarantor,
and to the extent applicable, the Canadian Borrower, will furnish to the Agent:
(a) Default and Prepayment Notice. (i) As soon as possible and in any
-----------------------------
event within two days after the occurrence of each Default, a statement of
the chief financial officer or treasurer of the Parent Guarantor or the
Canadian Borrower, as the case may be, setting forth the nature of such
Default and the action that such Borrower or Canadian Borrower has taken
and proposes to take with respect thereto, and (ii) as soon as possible and
in any event no later than 11:00 A.M. (New York City time) at least three
Business Days before any prepayment of Term Advances and Acquisition
Advances is to be made by the Borrower pursuant to Section 2.07(b) (the
"Prepayment Date"), written notice of the principal amount of such
----------------
prepayment (the "Prepayment Amount") and the applicable Prepayment Date.
-----------------
Each such notice (a "Prepayment Notice") shall be by telecopier or
-----------------
otherwise as provided in Section 8.02.
(b) Monthly Financials. As soon as available and in any event within
------------------
30 days after the end of each month, commencing October 31, 1999, an
unaudited Consolidated balance sheet of the Parent Guarantor and its
consolidated Subsidiaries as of the end of such month and unaudited
Consolidated statements of income, stockholders' equity and cash flows of
the Parent Guarantor and its consolidated Subsidiaries for the period
commencing at the end of the previous month and ending with the end of such
month and unaudited Consolidated statements of income, stockholders' equity
and cash flows of the Parent Guarantor and its consolidated Subsidiaries
for the period commencing at the end of the previous Fiscal Year and ending
with the end of such month, setting forth in each case in comparative form
the corresponding figures for the corresponding month of the preceding
Fiscal Year, all in reasonable detail and duly certified (subject to normal
year-end audit adjustments) by the chief financial officer or treasurer of
the Parent Guarantor, together with (i) a certificate of said officer
stating that such officer has obtained no knowledge that a Default has
occurred and is continuing or, if a Default has occurred and is continuing,
a statement as to the nature thereof and the action that the Parent
Guarantor has taken and proposes to take with respect thereto, (ii) in the
event of any change from GAAP in the accounting principles used in the
preparation of such financial statements, a
<PAGE>
107
statement of reconciliation conforming such financial statements to GAAP
and (iii) copies of any management discussions relating to the Borrower or
any of its Subsidiaries distributed to Chase Capital.
(c) Quarterly Financials. (x) As soon as available and in any event
--------------------
within 45 days after the end of each of the first three quarters of each
Fiscal Year, unaudited Consolidated balance sheets of the Parent Guarantor
and its consolidated Subsidiaries as of the end of such quarter and
unaudited Consolidated statements of income and an unaudited Consolidated
statement of stockholders' equity and cash flows of the Parent Guarantor
and its consolidated Subsidiaries for the period commencing at the end of
the previous fiscal quarter and ending with the end of such fiscal quarter
and unaudited Consolidated statements of income and an unaudited
Consolidated statement of stockholders' equity and cash flows of the Parent
Guarantor and its consolidated Subsidiaries for the period commencing at
the end of the previous Fiscal Year and ending with the end of such
quarter, setting forth in each case in comparative form the corresponding
figures for the corresponding period of the preceding Fiscal Year, all in
reasonable detail and duly certified (subject to year-end audit
adjustments) by the chief financial officer or treasurer of the Parent
Guarantor as having been prepared in accordance with accounting principles
consistent with those applied in the most recent annual audit, together
with (i) a certificate of said officer stating that such officer has
obtained no knowledge that a Default has occurred and is continuing or, if
a Default has occurred and is continuing, a statement as to the nature
thereof and the action that the Parent Guarantor has taken and proposes to
take with respect thereto and (ii) in the event of any change from GAAP in
the accounting principles used in the preparation of such financial
statements, a statement of reconciliation conforming such financial
statements to GAAP and (y) within 45 days after the end of each of the
first three quarters of each Fiscal Year, a schedule in form reasonably
satisfactory to the Agent of the computations used by the Parent Guarantor
in determining compliance with the covenants contained in Sections 5.04(a)
through (c).
(d) Annual Financials. As soon as available and in any event within
-----------------
90 days after the end of each Fiscal Year, a copy of the annual audit
report for such year for the Parent Guarantor and its consolidated
Subsidiaries, including therein Consolidated balance sheets of the Parent
Guarantor and the Borrower as of the end of such Fiscal Year and
Consolidated statements of income and consolidated statements of
stockholders' equity and cash flows of the Parent Guarantor and the
Borrower and their consolidated Subsidiaries for such Fiscal Year, in each
case reported on without qualification arising out of the scope of the
audit or with respect to the change in Fiscal Year by independent public
accountants of nationally recognized standing, together with (i) a
certificate of such accounting firm to the Lender Parties stating that in
the course of the regular audit of the business of the Parent Guarantor and
its Subsidiaries, which audit was conducted by such accounting firm in
accordance with generally accepted auditing standards, such
<PAGE>
108
accounting firm has obtained no knowledge that a Default has occurred and
is continuing, or if, in the opinion of such accounting firm, a Default has
occurred and is continuing, a statement as to the nature thereof, (ii) a
schedule in form reasonably satisfactory to the Agent of the computations
used by the Parent Guarantor to determine, and confirmed by such
accountants to be correct in determining, as of the end of such Fiscal
Year, compliance with the covenants contained in Sections 5.04(a) through
(c), (iii) a certificate of the chief financial officer or treasurer of the
Parent Guarantor stating that such officer has obtained no knowledge that a
Default has occurred and is continuing or, if a Default has occurred and is
continuing, a statement as to the nature thereof and the action that the
Parent Guarantor has taken and proposes to take with respect thereto and
(iv) in the event of any change from GAAP in the accounting principles used
in the preparation of such financial statements, a statement of
reconciliation conforming such financial statements to GAAP.
(e) Annual Business Plans. As soon as available and in any event no
---------------------
later than 30 days from the end of each Fiscal Year, the annual Business
Plans prepared by management of the Borrower.
(f) ERISA Events and ERISA Reports. (i) Promptly and in any event
------------------------------
within 10 Business Days after any Loan Party or any ERISA Affiliate knows
or has reason to know that any ERISA Event has occurred, a statement of the
chief financial officer or treasurer of the Borrower describing such ERISA
Event and the action, if any, that such Loan Party or such ERISA Affiliate
has taken and proposes to take with respect thereto and (ii) on the date
any records, documents or other information must be furnished to the PBGC
with respect to any Plan pursuant to Section 4010 of ERISA, a copy of such
records, documents and information.
(g) Plan Terminations. Promptly and in any event within five Business
-----------------
Days after receipt thereof by any Loan Party or any ERISA Affiliate, copies
of each notice from the PBGC stating its intention to terminate any Plan or
to have a trustee appointed to administer any Plan.
(h) Actuarial Reports. Promptly upon receipt thereof by any Loan
-----------------
Party or any ERISA Affiliate, a copy of the annual actuarial valuation
report of each Plan.
(i) Plan Annual Reports. Promptly and in any event within 10 days
-------------------
after the failure to file by the required deadline, including extensions,
with the Internal Revenue Service a required annual report (Form 5500
Series), including required schedules, with respect to any Plan, a
statement of the chief financial officer or treasurer of the Borrower
describing such failure and the action, if any, that the Borrower, or any
Loan Party or ERISA Affiliate, has taken and proposes to take with respect
thereto.
<PAGE>
109
(j) Multiemployer Plan Notices. Promptly and in any event within ten
--------------------------
Business Days after receipt thereof by any Loan Party or any ERISA
Affiliate from the sponsor of a Multiemployer Plan, copies of each notice
concerning (i) the imposition of Withdrawal Liability by any such
Multiemployer Plan, (ii) the reorganization or termination, within the
meaning of Title IV of ERISA, of any such Multiemployer Plan or (iii) the
amount of liability incurred, or that may be incurred, by such Loan Party
or any ERISA Affiliate in connection with any event described in clause (i)
or (ii).
(k) Litigation. Promptly after the commencement thereof, notice of
----------
all actions, suits, investigations, litigation and proceedings before any
court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, affecting any Loan Party or any of
its Subsidiaries of the type described in Section 4.01(i).
(l) Securities Reports. Promptly after the sending or filing thereof,
------------------
copies of all proxy statements, financial statements and reports that any
Loan Party or any of its Subsidiaries sends to its stockholders, and copies
of all regular, periodic and special reports, and all registration
statements, that any Loan Party or any of its Subsidiaries files with the
Securities and Exchange Commission or any governmental authority that may
be substituted therefor, or with any national securities exchange.
(m) Agreement Notices. Promptly upon receipt thereof, copies of all
-----------------
notices, requests and other documents received by any Loan Party or any of
its Subsidiaries under or pursuant to any Related Document regarding or
related to any breach or default by any party thereto or any other event
that could materially impair the value of the interests or the rights of
any Loan Party or any of its Subsidiaries or otherwise have a Material
Adverse Effect and copies of any amendment, modification or waiver of any
provision of any Related Document and, from time to time upon request by
the Agent, such information and reports regarding the Related Documents as
the Agent may reasonably request.
(n) Revenue Agent Reports. Within 15 days after receipt, copies of
---------------------
all Revenue Agent Reports (Internal Revenue Service Form 886-A or any
successor form prescribed by the Internal Revenue Service), that propose,
determine or otherwise set forth positive adjustments to the Federal income
tax liability of the affiliated group (within the meaning of Section
1504(a)(1) of the Internal Revenue Code) of which the Borrower is a member
aggregating $500,000 or more.
(o) Environmental Conditions. Promptly after receipt, notice thereof
------------------------
any Environmental Action against, or the occurrence of any condition on any
property of any Loan Party or any of its Subsidiaries that results in a
material noncompliance by any Loan Party or any of its Subsidiaries with
any Environmental Law or Environmental
<PAGE>
110
Permit, that could (i) be reasonably expected to have a Material Adverse
Effect or (ii) cause any property described in the Mortgages to be subject
to any material restrictions on ownership, occupancy, use or
transferability under any Environmental Law.
(p) Real Property. As soon as available and in any event within 30
-------------
days after the end of each Fiscal Year, a report supplementing Schedules
4.01(gg) and 4.01(hh) hereto, including an identification of all material
real and leased property disposed of by the Borrower or any of its
Subsidiaries during such Fiscal Year, a list and description (including the
county or other relevant jurisdiction, state, record owner, and in the case
of leases of property, lessor, lessee, expiration date and annual rental
cost thereof) of all material real property acquired or leased during such
Fiscal Year and a description of such other changes in the information
included in such Schedules as may be necessary for such Schedules to be
accurate and complete; provided, however, that the Borrower shall notify
-------- -------
the Agent within 15 days following any acquisition of real property which
permits the Agent to request security on such property pursuant to Section
5.01(m)(ii).
(q) Material Adverse Change. Prompt notice of any development that
-----------------------
results in, or could reasonably be expected to result in, a material
adverse change in the business, condition (financial or otherwise),
operations, performance, properties or prospects of the Parent Guarantor
and its Subsidiaries, taken as a whole, since December 31, 1998.
(r) Other Information. Such other information respecting the
-----------------
business, condition (financial or otherwise), operations, performance,
properties or prospects of any Loan Party or any of its Subsidiaries as any
Lender Party (through the Agent) may from time to time reasonably request.
SECTION 5.04. Financial Covenants. So long as any Advance shall
-------------------
remain unpaid, any Letter of Credit or Bankers' Acceptance shall be outstanding
or any Lender Party shall have any Commitment hereunder, the Parent Guarantor
will:
(a) Leverage Ratio. Maintain on a Consolidated basis for itself and
--------------
its Subsidiaries a Leverage Ratio for each Rolling Period set forth below
of not more than the amount set forth below for such Rolling Period:
================================================================================
Rolling Period Ending On or About Ratio
- --------------------------------- -----
- --------------------------------------------------------------------------------
Quarter Ending
- --------------
- --------------------------------------------------------------------------------
December 31, 1999 5.50 to 1.00
- --------------------------------------------------------------------------------
March 31, 2000 5.25 to 1.00
June 30, 2000 5.00 to 1.00
<PAGE>
111
================================================================================
Rolling Period Ending On or About Ratio
- --------------------------------- -----
Quarter Ending
- --------------
- --------------------------------------------------------------------------------
September 30, 2000 5.00 to 1.00
December 31, 2000 5.00 to 1.00
- --------------------------------------------------------------------------------
March 31, 2001 4.50 to 1.00
June 30, 2001 4.50 to 1.00
September 30, 2001 4.25 to 1.00
December 31, 2001 4.00 to 1.00
- --------------------------------------------------------------------------------
March 31, 2002 3.75 to 1.00
June 30, 2002 3.75 to 1.00
September 30, 2002 3.50 to 1.00
December 31, 2002 3.50 to 1.00
- --------------------------------------------------------------------------------
March 31, 2003; 3.25 to 1.00
and each fiscal quarter thereafter
================================================================================
(b) Interest Coverage Ratio. Maintain on a Consolidated basis
-----------------------
for itself and its Subsidiaries an Interest Coverage Ratio for each Rolling
Period set forth below of not less than the amount set forth below for such
Rolling Period:
================================================================================
Rolling Period Ending On or About Ratio
- --------------------------------- -----
Quarter Ending
- --------------------------------------------------------------------------------
March 31, 2000 1.75 to 1.00
June 30, 2000 1.75 to 1.00
September 30, 2000 1.75 to 1.00
December 31, 2000 1.75 to 1.00
- --------------------------------------------------------------------------------
March 31, 2001 1.75 to 1.00
June 30, 2001 1.75 to 1.00
September 30, 2001 1.75 to 1.00
December 31, 2001 2.00 to 1.00
- --------------------------------------------------------------------------------
March 31, 2002 2.00 to 1.00
June 30, 2002 2.00 to 1.00
September 30, 2002 2.00 to 1.00
December 31, 2002 2.25 to 1.00
- --------------------------------------------------------------------------------
March 31, 2003 2.25 to 1.00
June 30, 2003 2.25 to 1.00
- --------------------------------------------------------------------------------
<PAGE>
112
================================================================================
Rolling Period Ending On or About Ratio
- --------------------------------- -----
September 30, 2003 2.25 to 1.00
December 31, 2003 2.50 to 1.00
- --------------------------------------------------------------------------------
March 31, 2004 2.50 to 1.00
June 30, 2004 2.50 to 1.00
September 30, 2004 2.50 to 1.00
December 31, 2004 2.75 to 1.00
- --------------------------------------------------------------------------------
March 31, 2005 2.75 to 1.00
June 30, 2005 2.75 to 1.00
September 30, 2005 2.75 to 1.00
December 31, 2005; and for each fiscal quarter thereafter 3.00 to 1.00
================================================================================
(c) Capital Expenditures. In addition to any amount excluded from
--------------------
the definition of "Extraordinary Receipts" by virtue of the proviso in such
definition, make, or permit any of its Subsidiaries to make, any Capital
Expenditures that would cause the aggregate of all such Capital
Expenditures made by the Borrower and its Subsidiaries in any Fiscal Year
set forth below to exceed the amount set forth below for such Fiscal Year.
Fiscal Year Amount
----------- ------
1999 $20,000,000
2000 $32,000,000
2001 $22,500,000
2002 $15,000,000
2003 $15,000,000
2004 $15,000,000
2005 $15,000,000
2006 $15,000,000
2007 $15,000,000
provided, however, that 50% of the amount of Capital Expenditures permitted
-------- -------
hereunder to be made in any Fiscal Year listed above in this subsection (c)
or permitted to be made pursuant to the third proviso to this subsection
(c) that are not made in such Fiscal Year plus (i) any amount of Excess
----
Cash Flow retained by the Parent Guarantor and its Subsidiaries from the
prior Fiscal Year and (ii) the amount of Capital Expenditures permitted to
be made in any Fiscal Year listed above in this subsection (c) pursuant to
the fourth proviso to this subsection (c) that are not made in such Fiscal
Year (such amounts being referred to herein as the "Carryover Amount") may
----------------
be carried forward to the next (but not any subsequent) Fiscal Year,
provided further that for purposes of this
-------- -------
<PAGE>
113
Section 5.04(c), Capital Expenditures made in any Fiscal Year shall be
deemed to be made first as a use of Capital Expenditures permitted to be
made pursuant to the first proviso of this Section 5.04(c), second as a use
of the limit of Capital Expenditures set forth above for such Fiscal Year,
third as a use of Capital Expenditures permitted to be made pursuant to the
fourth proviso of this Section 5.04(c), and subsequently, as a use of
Capital Expenditures permitted to be made pursuant to the third proviso of
this Section 5.04(c), provided further upon the consummation of a Permitted
-------- -------
Acquisition, the Borrower and its Subsidiaries will be permitted to make
additional Capital Expenditures in an aggregate amount not to exceed 9% of
the total consideration paid for such Permitted Acquisition in each Fiscal
Year, commencing in the Fiscal Year in which such Permitted Acquisition is
made, and provided further upon the consummation of any disposition of real
-------- -------
property permitted pursuant to Section 5.02(e)(v), the Borrower and its
Subsidiaries will be permitted to make additional Capital Expenditures in
the Fiscal Year in which such disposition is consummated in an aggregate
amount not to exceed the Net Cash Proceeds received by the Borrower and its
Subsidiaries in connection with such disposition.
SECTION 5.05. Covenants of the Canadian Borrower. So long as any
----------------------------------
Advance shall remain unpaid, any Letter of Credit or Bankers' Acceptance shall
be outstanding or any Lender Party shall have any Commitment hereunder, the
Canadian Borrower will at all times perform or observe, and will cause each of
its Subsidiaries to perform or observe, all of the terms, covenants and
agreements that the Loan Documents state that the Parent Guarantor or the
Borrower, as applicable, is to cause such Canadian Borrower or such Subsidiaries
to perform or observe.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default. If any of the following events
-----------------
("Events of Default") shall occur and be continuing:
-----------------
(a) the Borrower or the Canadian Borrower shall fail to pay any
principal of, or interest on, any Advance or any portion of any Bankers'
Acceptance when the same becomes due and payable, whether at the due date
thereof or at a date fixed for prepayment or otherwise, or any Loan Party
shall fail to make any other payment in excess of $10,000 under any Loan
Document within 10 days from when the same becomes due and payable; or
<PAGE>
114
(b) any representation or warranty made or deemed made by any
Loan Party (or any of its officers) under or in connection with any Loan
Document shall prove to have been incorrect in any material respect as of
the time when made or deemed made; or
(c) the Borrower shall fail to perform or observe any term,
covenant or agreement contained in Section 2.16, 5.01(e), (f), (g), (l),
(m) or (n), 5.02, 5.03 or 5.04; or
(d) any Loan Party shall fail to perform any other term,
covenant or agreement contained in any Loan Document on its part to be
performed or observed if such failure shall remain unremedied for 10 days
after the earlier of the date on which (A) a Responsible Officer of the
Borrower or the Canadian Borrower becomes aware of such failure or (B)
written notice thereof shall have been given to the Borrower or the
Canadian Borrower, as the case may be, by the Agent or any Lender Party; or
(e) any Loan Party or any of its Subsidiaries shall fail to pay
any principal of, premium or interest on or any other amount payable in
respect of any Debt that is outstanding in a principal or notional amount
of at least $1,000,000 either individually or in the aggregate (but
excluding Debt outstanding hereunder) of such Loan Party or such Subsidiary
(as the case may be), when the same becomes due and payable (whether by
scheduled maturity, required prepayment, acceleration, demand or
otherwise), and such failure shall continue after the applicable grace
period, if any, specified in the agreement or instrument relating to such
Debt; or any other event shall occur or condition shall exist under any
agreement or instrument relating to any such Debt and shall continue after
the applicable grace period, if any, specified in such agreement or
instrument, if the effect of such event or condition is to accelerate, or
to permit the acceleration of, the maturity of such Debt or otherwise to
cause, or to permit the holder thereof to cause, such Debt to mature; or
any such Debt shall be declared to be due and payable or required to be
prepaid or redeemed (other than by a regularly scheduled required
prepayment or redemption), purchased or defeased, or an offer to prepay,
redeem, purchase or defease such Debt shall be required to be made, in each
case prior to the stated maturity thereof; or
(f) any Loan Party or any of its Subsidiaries shall generally
not pay its debts as such debts become due, or shall admit in writing its
inability to pay its debts generally, or shall make a general assignment
for the benefit of creditors; or any proceeding shall be instituted by or
against any Loan Party or any of its Subsidiaries seeking to adjudicate it
a bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or composition
of it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee, or other similar official
for it or for any substantial part of its property and, in the case of any
such proceeding instituted against it (but not instituted by it) that is
being diligently contested by it in good faith,
<PAGE>
115
either such proceeding shall remain undismissed or unstayed for a period of
60 days or any of the actions sought in such proceeding (including, without
limitation, the entry of an order for relief against, or the appointment of
a receiver, trustee, custodian or other similar official for, it or any
substantial part of its property) shall occur; or any Loan Party or any of
its Subsidiaries shall take any corporate action to authorize any of the
actions set forth above in this subsection (f); or
(g) any judgment or order for the payment of money in excess of
$1,000,000 (to the extent not fully paid or discharged) shall be rendered
against any Loan Party or any of its Subsidiaries and either (i)
enforcement proceedings shall have been commenced by any creditor upon such
judgment or order or (ii) there shall be any period of 15 consecutive days
during which a stay of enforcement of such judgment or order, by reason of
a pending appeal or otherwise, shall not be in effect; or
(h) any non-monetary judgment or order shall be rendered against
any Loan Party or any of its Subsidiaries that is reasonably expected to
have a Material Adverse Effect, and there shall be any period of 15
consecutive days during which a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise, shall not be in effect;
or
(i) any provision of any Loan Document after delivery thereof
pursuant to Section 3.01, 5.01(m) or 5.01(n) shall for any reason cease to
be valid and binding on or enforceable against any Loan Party to it, or any
such Loan Party shall so state in writing; or
(j) any Collateral Document after delivery thereof pursuant to
Section 3.01 or 5.01(m) shall for any reason (other than pursuant to the
terms thereof) cease to create a valid and perfected first priority lien on
and security interest in the Collateral purported to be covered thereby
(except as contemplated by the Security Agreement); or
(k) Chase Capital and D. George Harris & Associates Persons, or
entities directly or indirectly controlled by them, shall together (A)
cease to be the record and beneficial owners of at least 51% of the
aggregate voting power represented by the outstanding capital stock
(including the Series B Preferred Stock) of USS Holding, Inc., (B) cause or
permit any of such shares to be subject to any Lien (other than a Lien in
favor of a Loan Party permitted by this Agreement) or (C) cease to control,
directly or indirectly, the Board of Directors of USS Holdings, Inc., the
Parent Guarantor or the Borrower; or
(l) the Borrower shall cease to own, directly or indirectly,
100% of the capital stock of each of Silica and Stone Materials Company
LLC, the Parent Guarantor shall cease to own, directly or indirectly, 100%
of the capital stock of the Borrower or USS
<PAGE>
116
Holdings, Inc. shall cease to own, directly or indirectly, 100% of the
capital stock of the Parent Guarantor; or
(m) any ERISA Event shall have occurred with respect to a Plan
and the sum (determined as of the date of occurrence of such ERISA Event)
of the Insufficiency of such Plan and the Insufficiency of any and all
other Plans with respect to which an ERISA Event shall have occurred and
then exist (or the liability of the Loan Parties and the ERISA Affiliates
related to such ERISA Event) exceeds $1,000,000 and is reasonably expected
to have a Material Adverse Effect; or
(n) any Loan Party or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that it has incurred
Withdrawal Liability to such Multiemployer Plan in an amount that, when
aggregated with all other amounts required to be paid to Multiemployer
Plans by the Loan Parties and the ERISA Affiliates as Withdrawal Liability
(determined as of the date of such notification), exceeds $1,000,000 or
requires payments exceeding $200,000 per annum and is reasonably expected
to have a Material Adverse Effect; or
(o) any Loan Party or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that such Multiemployer
Plan is in reorganization or is being terminated, within the meaning of
Title IV of ERISA, and as a result of such reorganization or termination
the aggregate annual contributions of the Loan Parties and the ERISA
Affiliates to all Multiemployer Plans that are then in reorganization or
being terminated have been or will be increased over the amounts
contributed to such Multiemployer Plans for the plan years of such
Multiemployer Plans immediately preceding the plan year in which such
reorganization or termination occurs by an amount exceeding $200,000 and is
reasonably expected to have a Material Adverse Effect; or
(p) the occurrence of a "Change of Control" as defined in the
Subordinated Debt Documents;
then, and in any such event, the Agent (i) shall at the request, or may with the
consent, of the Required Lenders, by notice to the Borrower or the Canadian
Borrower, as applicable, declare the obligation of each Appropriate Lender to
make Advances (other than Letter of Credit Advances by an Issuing Bank or a
Working Capital Lender pursuant to Section 2.03(c) and Swing Line Advances by a
Working Capital Lender pursuant to Section 2.02 (f)), of each Canadian Lender to
create and/or purchase Bankers' Acceptances and of each Issuing Bank to issue
Letters of Credit to be terminated, whereupon the same shall forthwith
terminate, and (ii) shall at the request, or may with the consent, of the
Required Lenders, by notice to the Borrower or the Canadian Borrower, as
applicable, declare the Advances, all interest thereon and all other amounts
payable under this Agreement, the Notes, if any, and the other Loan Documents to
be forthwith due and payable, whereupon the Advances, all such interest and all
<PAGE>
117
such amounts shall become and be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived by the Borrower and the Canadian Borrower; provided, however, that in the
-------- -------
event of an actual or deemed entry of an order for relief with respect to any
Loan Party or any of its Subsidiaries under the Federal Bankruptcy Code, (x) the
obligation of each Lender to make Advances (other than Letter of Credit Advances
by an Issuing Bank or a Working Capital Lender pursuant to Section 2.03(c) and
Swing Line Advances by a Working Capital Lender pursuant to Section 2.02(f)), of
each Canadian Lender to create and/or purchase Bankers' Acceptances and of each
Issuing Bank to issue Letters of Credit shall automatically be terminated and
(y) the Advances, all such interest and all such amounts shall automatically
become and be due and payable, without presentment, demand, protest or any
notice of any kind, all of which are hereby expressly waived by the Borrower and
the Canadian Borrower.
<PAGE>
118
SECTION 6.02. Actions in Respect of the Letters of Credit and
-----------------------------------------------
Bankers' Acceptances upon Default. If any Event of Default shall have occurred
- ---------------------------------
and be continuing, the Agent may, irrespective of whether it is taking any of
the actions described in Section 6.01 or otherwise, (a) make demand upon the
Borrower to, and forthwith upon such demand the Borrower will, pay to the Agent
on behalf of the Lender Parties in same day funds at the Agent's office
designated in such demand, for deposit in the L/C Cash Collateral Account, an
amount equal to the aggregate Available Amount of all Letters of Credit then
outstanding and (b) make demand upon the Canadian Borrower to, and forthwith
upon such demand, the Canadian Borrower will, pay to the Agent on behalf of the
Canadian Lenders in same day funds at the Agent's office designated in such
demand, for deposit in the Canadian Cash Collateral Account, an amount equal to
the aggregate Face Amount of all Bankers' Acceptances then outstanding. If at
any time the Agent determines that any funds held in the L/C Cash Collateral
Account are subject to any right or claim of any Person other than the Agent and
the Lender Parties or that the total amount of such funds is less than the
aggregate Available Amount of all Letters of Credit, the Borrower will,
forthwith upon demand by the Agent, pay to the Agent, as additional funds to be
deposited and held in the L/C Cash Collateral Account, an amount equal to the
excess of (a) such aggregate Available Amount over (b) the total amount of
funds, if any, then held in the L/C Cash Collateral Account that the Agent
determines to be free and clear of any such right and claim. If at any time the
Agent determines that any funds held in the Canadian Cash Collateral Account are
subject to any right or claim of any Person other than the Agent and the
Canadian Lenders or that the total amount of such funds is less than the
aggregate Face Amount of all Bankers' Acceptances, the Canadian Borrower will,
forthwith upon demand by the Agent, pay to the Agent, as additional funds to be
deposited and held in the Canadian Cash Collateral Account, an amount equal to
the excess of (a) such aggregate Face Amount over (b) the total amount of funds,
if any, then held in the Canadian Cash Collateral Account that the Agent
determines to be free and clear of any such right and claim.
ARTICLE VII
THE AGENT
<PAGE>
119
SECTION 7.01. Authorization and Action. Each Lender Party (in its
------------------------
capacities as a Lender, an Issuing Bank (if applicable), the Swing Line Bank (if
applicable) and a potential Hedge Bank) hereby appoints and authorizes the Agent
and any Sub-Agent appointed by the Agent to take such action as agent on its
behalf and to exercise such powers and discretion under this Agreement and the
other Loan Documents as are delegated to the Agent and the Sub-Agent by the
terms hereof and thereof, together with such powers and discretion as are
reasonably incidental thereto. As to any matters not expressly provided for by
the Loan Documents (including, without limitation, enforcement or collection of
Debt resulting from the Advances), the Agent and the Sub-Agent shall not be
required to exercise any discretion or take any action, but shall be required to
act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Required Lenders, and such
instructions shall be binding upon all Lender Parties and all holders of Notes;
provided, however, that the Agent and the Sub-Agent shall not be required to
- -------- -------
take any action that exposes the Agent or the Sub-Agent, as the case may be, to
personal liability or that is contrary to this Agreement or applicable law. The
Agent agrees to give to each Lender Party prompt notice of each notice given to
it by the Borrower pursuant to the terms of this Agreement. The Agent further
agrees to deliver to each Lender Party copies of each financial statement,
Business Plan or other document furnished to the Agent pursuant to Section
5.03(b), (c), (d) or (e).
SECTION 7.02. Agent's Reliance, Etc. Neither the Agent, the Sub-
---------------------
Agent nor any of its directors, officers, agents or employees shall be liable
for any action taken or omitted to be taken by it or them under or in connection
with the Loan Documents, except for its or their own gross negligence or willful
misconduct. Without limitation of the generality of the foregoing, the Agent
and the Sub-Agent: (a) may treat the Lender that made any Advance as the holder
of the Debt resulting therefrom until the Agent receives and accepts an
Assignment and Acceptance entered into by such Lender, as assignor, and an
Eligible Assignee, as assignee, as provided in Section 8.07; (b) may consult
with legal counsel (including counsel for any Loan Party), independent public
accountants and other experts 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 or experts; (c) makes no warranty or
representation to any Lender Party and shall not be responsible to any Lender
Party for any statements, warranties or representations (whether written or
oral) made in or in connection with the Loan Documents; (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 any Loan Document on the part of any Loan
Party or to inspect the property (including the books and records) of any Loan
Party; (e) shall not be responsible to any Lender Party for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of, or the
perfection or priority of any lien or security interest created or purported to
be created under or in connection with, any Loan Document or any other
instrument or document furnished pursuant thereto; and (f) shall incur no
liability under or in respect of any Loan Document by acting upon any notice,
consent, certificate or other instrument or writing (which may be by telegram,
telecopy or telex) believed by it to be genuine and signed or sent by the proper
party or parties.
<PAGE>
120
SECTION 7.03. BNP and Affiliates. With respect to its Commitments,
------------------
the Advances made by it and any Notes issued to it, BNP shall have the same
rights and powers under the Loan Documents as any other Lender Party and may
exercise the same as though it were not the Agent; and the term "Lender Party"
or "Lenders Parties" shall, unless otherwise expressly indicated, include BNP in
its individual capacity. BNP and its affiliates may accept deposits from, lend
money to, act as trustee under indentures of, accept investment banking
engagements from and generally engage in any kind of business with, any Loan
Party, any of its Subsidiaries and any Person who may do business with or own
securities of any Loan Party or any such Subsidiary, all as if BNP were not the
Agent and without any duty to account therefor to the Lender Parties.
SECTION 7.04. Lender Party Credit Decision. Each Lender Party
----------------------------
acknowledges that it has, independently and without reliance upon the Agent or
any other Lender Party and based on the financial statements referred to in
Section 4.01 and such other documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender Party also acknowledges that it will, independently and
without reliance upon the Agent, the Sub-Agent or any other Lender Party 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.
SECTION 7.05. Indemnification. (a) Each Lender Party severally
---------------
agrees to indemnify the Agent and the Sub-Agent (to the extent not promptly
reimbursed by the Borrower or the Canadian Borrower) from and against such
Lender Party's ratable share (determined as provided below) of any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever that may be
imposed on, incurred by, or asserted against the Agent or the Sub-Agent in any
way relating to or arising out of the Loan Documents or any action taken or
omitted by the Agent under the Loan Documents; provided, however, that no Lender
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Party shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Agent's or the Sub-Agent's gross negligence or willful
misconduct. Without limitation of the foregoing, each Lender Party agrees to
reimburse the Agent and the Sub-Agent promptly upon demand for its ratable share
of any costs and expenses (including, without limitation, fees and expenses of
counsel) payable by the Borrower under Section 8.04, to the extent that the
Agent or the Sub-Agent is not promptly reimbursed for such costs and expenses by
the Borrower or the Canadian Borrower. For purposes of this Section 7.05, the
Lender Parties' respective ratable shares of any amount shall be determined, at
any time, according to the sum of (a) the aggregate principal amount of the
Advances outstanding at such time and owing to the respective Lender Parties,
(b) their respective Pro Rata Shares of the aggregate Available Amount of all
Letters of Credit outstanding at such time, (c) their respective pro rata shares
of the aggregate Face Amount of all Bankers' Acceptances outstanding at such
time, (d) the aggregate unused portions of their respective Term
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Commitments at such time and (e) their respective Unused Working Capital
Commitments, Unused Acquisition Commitments and Unused Canadian Commitments at
such time. The failure of any Lender Party to reimburse the Agent or the Sub-
Agent promptly upon demand for its ratable share of any amount required to be
paid by the Lender Party to the Agent as provided herein shall not relieve any
other Lender Party of its obligation hereunder to reimburse the Agent for its
ratable share of such amount, but no Lender Party shall be responsible for the
failure of any other Lender Party to reimburse the Agent or the Sub-Agent for
such other Lender Party's ratable share of such amount. Without prejudice to the
survival of any other agreement of any Lender Party hereunder, the agreement and
obligations of each Lender Party contained in this Section 7.05(a) shall survive
the payment in full of principal, interest and all other amounts payable
hereunder and under the other Loan Documents.
(b) Each Lender Party severally agrees to indemnify each Issuing Bank
(to the extent not promptly reimbursed by the Borrower) from and against such
Lender Party's ratable share (determined as provided below) of any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever that may be
imposed on, incurred by, or asserted against such Issuing Bank in any way
relating to or arising out of the Loan Documents or any action taken or omitted
by such Issuing Bank under the Loan Documents; provided, however, that no Lender
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Party shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from such Issuing Bank's gross negligence or willful misconduct.
Without limitation of the foregoing, each Lender Party agrees to reimburse such
Issuing Bank promptly upon demand for its ratable share of any costs and
expenses (including, without limitation, fees and expenses of counsel) payable
by the Borrower under Section 8.04, to the extent that such Issuing Bank is not
promptly reimbursed for such costs and expenses by the Borrower. For purposes
of this Section 7.05(b), the Lender Parties' respective ratable shares of any
amount shall be determined, at any time, according to the sum of (a) the
aggregate principal amount of the Advances outstanding at such time and owing to
the respective Lender Parties, (b) their respective Pro Rata Shares of the
aggregate Available Amount of all Letters of Credit outstanding at such time,
(c) their respective pro rata shares of the aggregate Face Amount of all
Bankers' Acceptances outstanding at such time, (d) the aggregate unused portions
of their respective Term Commitments at such time and (e) their respective
Unused Working Capital Commitments and Unused Acquisition Commitments at such
time. The failure of any Lender Party to reimburse such Issuing Bank promptly
upon demand for its ratable share of any amount required to be paid by the
Lender Parties to such Issuing Bank as provided herein shall not relieve any
other Lender Party of its obligation hereunder to reimburse such Issuing Bank
for its ratable share of such amount, but no Lender Party shall be responsible
for the failure of any other Lender Party to reimburse such Issuing Bank for
such other Lender Party's ratable share of such amount. Without prejudice to
the survival of any other agreement of any Lender Party hereunder, the agreement
and obligations of each Lender Party contained in this Section 7.05(b) shall
survive the payment in full of principal, interest and all other amounts payable
hereunder and under the other Loan Documents.
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SECTION 7.06. Successor Agents. (a) The Agent. The Agent may resign
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at any time by giving written notice thereof to the Lender Parties, the Borrower
and the Canadian Borrower and may be removed at any time with or without cause
by the Required Lenders. Upon any such resignation or removal, the Required
Lenders shall have the right to appoint a successor Agent with the consent
(unless a Default has occurred and is continuing) of the Borrower and the
Canadian Borrower (not to be unreasonably withheld). If no successor Agent shall
have been so appointed by the Required Lenders, and shall have accepted such
appointment, within 30 days after the retiring Agent's giving of notice of
resignation or the Required Lenders' removal of the retiring Agent, then the
retiring Agent may, on behalf of the Lender Parties, appoint a successor Agent
with the consent (unless a Default has occurred and is continuing) of the
Borrower and the Canadian Borrower (not to be unreasonably withheld), which
shall be a commercial bank organized under the laws of the United States or of
any State thereof and having a combined capital and surplus of at least
$250,000,000. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent and upon the execution and filing or recording of such financing
statements, or amendments thereto, and such other instruments or notices, as may
be necessary or desirable, or as the Required Lenders may request, in order to
continue the perfection of the Liens granted or purported to be granted by the
Collateral Documents, such successor Agent shall succeed to and become vested
with all the rights, powers, discretion, privileges and duties of the retiring
Agent, and the retiring Agent shall be discharged from its duties and
obligations under the Loan Documents. After any retiring Agent's resignation or
removal hereunder as Agent, the provisions of this Article VII shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Agreement.
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(b) The Sub-Agent. The Sub-Agent may resign at any time by giving
-------------
written notice thereof to the Agent and may be removed at any time with or
without cause by written request of the Agent. The Agent shall be entitled to
appoint a successor Sub-Agent, which shall be a resident in Canada for purposes
of the Income Tax Act (Canada) and which shall be, so long as no Default has
occurred and is continuing, subject to the approval of the Borrower, which
approval shall not be unreasonably withheld or delayed. The Sub-Agent has been
designated under this Agreement to carry out duties of the Agent with respect of
the Canadian Facility. The Sub-Agent shall be subject to each of the
obligations in this Agreement and the Collateral Documents to be performed by
the Sub-Agent, and each of the Borrower, the Canadian Borrower and the Lenders
agrees that the Sub-Agent shall be entitled to exercise each of the rights and
shall be entitled to each of the benefits of the Agent under this Agreement and
the Collateral Documents as relate to the performance of its obligations
hereunder and thereunder.
ARTICLE VIII
MISCELLANEOUS
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124
SECTION 8.01. Amendments, Etc. No amendment or waiver of any
---------------
provision of this Agreement or any Notes or any other Loan Document, nor any
consent to any departure by the Borrower or the Canadian Borrower therefrom,
shall in any event be effective unless the same shall be in writing and signed
(or, in the case of the Collateral Documents, consented to) by the Required
Lenders, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given; provided, however, that
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(a) no amendment, waiver or consent shall, unless in writing and signed by all
of the Lenders, do any of the following at any time: (i) waive any of the
conditions specified in Section 3.01 or, in the case of the initial extension of
credit hereunder, Section 3.02, (ii) change any of the provisions of this
Section or the definition of the term "Required Lenders" or any other provisions
of any Loan Document to the extent that such change changes the percentage of
(w) the Commitments, (x) the aggregate unpaid principal amount of the Advances,
(y) the aggregate Available Amount of outstanding Letters of Credit or (z) the
aggregate Face Amount of outstanding Bankers' Acceptances that, in each case,
shall be required for the Lenders or any of them to take any action hereunder,
(iii) release all or substantially all of the Collateral in any transaction or
series of related transactions, permit the creation, incurrence, assumption or
existence of any senior Lien on all or substantially all of the Collateral in
any transaction or series of related transactions to secure any Obligations
other than Obligations owing to the Secured Parties under the Loan Documents or
release all or substantially all the Subsidiary Guarantors from their
obligations under the Subsidiary Guaranties (or limit substantially all their
liability in respect thereof), as applicable (other than in accordance with the
Subsidiary Guaranties, as applicable), or (iv) amend this Section 8.01, (b) no
amendment, waiver or consent shall, unless in writing and signed by the Required
Lenders and each Lender that has a Commitment under the Term A Facility, the
Term B Facility, the Working Capital Facility, the Canadian Facility or the
Acquisition Facility if affected by such amendment, waiver or consent, (i)
increase the Commitments of such Lender or subject such Lender to any additional
obligations, (ii) reduce the principal of, or interest on, the Advances payable
to such Lender or any fees or other amounts payable hereunder to such Lender or
(iii) postpone any date fixed for any scheduled payment of principal of, or
interest on, the Advances payable to such Lender or any fees or other amounts
payable hereunder to such Lender, (c) no amendment, waiver or consent shall
change the allocation among the Facilities of any prepayment set forth in
Section 2.07, or the order of application of any such prepayment to the
remaining principal installments thereof, unless in writing and, with respect to
each Facility adversely affected thereby, signed by Lenders owed or holding at
least 51% of the aggregate principal amount of the Advances under such Facility
(plus, if such Facility is the Working Capital Facility, the Unused Working
Capital Commitments, or if such Facility is the Acquisition Facility, the Unused
Acquisition Commitments) outstanding at such time and (d) no amendment, waiver
or consent shall change the rights of the Term B Lenders to decline prepayments
as provided in Section 2.07(c), unless in writing and signed by Term B Lenders
holding at least 51% of the Term B Advances outstanding at such time; provided
--------
further that no amendment, waiver or consent shall, unless in writing and signed
- -------
by each Issuing Bank and the Swing Line Bank, as the case may be, in addition to
the Lenders required above to take such action, affect the rights or obligations
of the Issuing Banks or the Swing Line Bank, as the case may be, under this
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125
Agreement; and provided further that no amendment, waiver or consent shall,
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unless in writing and signed by the Agent in addition to the Lenders required
above to take such action, affect the rights or duties of the Agent under this
Agreement.
Upon any sale, lease, transfer or other disposition of any item of
real or personal property in accordance with the terms of the Loan Documents,
the Agent, Mortgagee, Grantee or Beneficiary (each as defined in the Mortgages),
as the case may be, will, at the Borrower's expense, execute and deliver to the
Borrower such documents as the Borrower shall reasonably request to evidence the
release of such item of real or personal property from the Collateral Documents.
SECTION 8.02. Notices, Etc. All notices and other communications
------------
provided for hereunder shall be in writing (including telegraphic or telecopy
communication) and mailed, telegraphed, telecopied or delivered, if to the
Parent Guarantor, BMAC Holdings, Inc., c/o Better Minerals & Aggregates Company,
Route 522 North, P.O. Box 187, Berkeley Springs, WV 25411; if to the Borrower,
Better Minerals & Aggregates Company, Route 522 North, P.O. Box 187, Berkeley
Springs, WV 25411; if to the Canadian Borrower, George F. Pettinos (Canada)
Limited, c/o Better Minerals & Aggregates Company, Route 522 North, P.O. Box
187, Berkeley Springs, WV 25411, Attention: Chief Financial Officer/Treasurer,
telecopier number (304) 258-3500, with a copy to USS Holdings, Inc., c/o D.
George Harris & Associates, Inc., 399 Park Avenue, 32nd Floor, New York, NY
10022, Attention: Treasurer, telecopier number (212) 207-6440; if to any
Initial Lender or the Initial Issuing Bank, at its Domestic Lending Office or
Canadian Domestic Lending Office, as applicable, specified opposite its name on
Schedule I hereto; if to any other Lender Party, at its Domestic Lending Office
or Canadian Domestic Lending Office, as applicable, specified in the Assignment
and Acceptance pursuant to which it became a Lender Party; and if to the Agent,
at its address at 499 Park Avenue, New York, New York 10022, Attention:
Structured Finance Group, telecopier number (212) 418-8269; or, as to each
party, at such other address as shall be designated by such party in a written
notice to the other parties. All such notices and communications shall, when
mailed, telegraphed, telecopied or delivered, be effective when received by the
addressee, except that notices and communications to the Agent pursuant to
Article II, III or VII shall not be effective until received by the Agent.
Delivery by telecopier of an executed counterpart of any amendment or waiver of
any provision of this Agreement or the Notes or of any Exhibit hereto to be
executed and delivered hereunder shall be effective as delivery of a manually
executed counterpart thereof.
SECTION 8.03. No Waiver; Remedies. No failure on the part of any
-------------------
Lender Party or the Agent to exercise, and no delay in exercising, any right
hereunder or under any Note shall operate as a waiver thereof; nor shall any
single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
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126
SECTION 8.04. Costs and Expenses. (a) The Borrower and the Canadian
------------------
Borrower hereby agree to pay on demand (i) all reasonable out-of-pocket costs
and expenses of Chase Securities Inc., the Agent and the Sub-Agent in connection
with the preparation, execution, delivery, administration, modification and
amendment of the Loan Documents (including, without limitation, (A) all
reasonable due diligence, collateral review, syndication, transportation,
computer, duplication, appraisal, audit, insurance, consultant, search, filing
and recording fees and expenses and (B) the reasonable fees and expenses of
counsel for Chase Securities Inc., the Agent and the Sub-Agent with respect
thereto, with respect to advising Chase Securities Inc., the Agent or the Sub-
Agent as to its rights and responsibilities, or the perfection, protection or
preservation of rights or interests, under the Loan Documents (and with respect
to the Mortgages, the granting and recording of the Mortgages and the
administration thereof), with respect to negotiations with any Loan Party or
with other creditors of any Loan Party or any of its Subsidiaries arising out of
any Default or any events or circumstances that may give rise to a Default and
with respect to presenting claims in or otherwise participating in or monitoring
any bankruptcy, insolvency or other similar proceeding involving creditors'
rights generally and any proceeding ancillary thereto relating to any Loan Party
or any of its Subsidiaries) and (ii) all costs and expenses of the Agent, the
Sub-Agent and the Lender Parties in connection with the enforcement (upon and
during the continuance of an Event of Default) of the Loan Documents, whether in
any action, suit or litigation, any bankruptcy, insolvency or other similar
proceeding affecting creditors' rights generally relating to any Loan Party or
any of its Subsidiaries (including, without limitation, the reasonable fees and
expenses of counsel for the Agent, the Sub-Agent and each Lender Party with
respect thereto); provided that, in the case of fees and expenses of counsel for
--------
Chase Securities Inc., the Agent, the Sub-Agent and the Lender Parties, the
Borrower and the Canadian Borrower shall be obligated to pay only the fees and
expenses of a single counsel in any one jurisdiction as to which no conflict of
interest exists.
(b) The Borrower and the Canadian Borrower hereby agree to indemnify
and hold harmless the Agent, the Sub-Agent, each Lender Party and each of their
Affiliates and their officers, trustees, directors, employees, agents and
advisors (each, an "Indemnified Party") from and against any and all claims,
-----------------
damages, losses, liabilities and reasonable expenses (including, without
limitation, reasonable fees and expenses of counsel; provided that, in the case
--------
of fees and expenses of counsel for the Indemnified Parties, the Borrower and
the Canadian Borrower shall be obligated to pay only the fees and expenses of a
single counsel in any one jurisdiction) that may be incurred by or asserted or
awarded against any Indemnified Party, in each case arising out of or in
connection with or by reason of, or in connection with the preparation for a
defense of, any investigation, litigation or proceeding arising out of, related
to or in connection with (i) the Facilities, the actual or proposed use of the
proceeds of the Advances, the Bankers' Acceptances or the Letters of Credit, the
Loan Documents or any of the transactions contemplated thereby, including,
without limitation, any acquisition or proposed acquisition (including, without
limitation, any Permitted Acquisition and any of the other transactions
contemplated hereby) by the Borrower, the Canadian Borrower or any of their
Subsidiaries or (ii) the actual or alleged presence of Hazardous Materials on
any property of any Loan Party or
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127
any of its Subsidiaries or any Environmental Action relating in any way to any
Loan Party or any of its Subsidiaries, in each case whether or not such
investigation, litigation or proceeding is brought by any Loan Party, its
directors, shareholders or creditors or an Indemnified Party or any Indemnified
Party is otherwise a party thereto and whether or not the transactions
contemplated hereby are consummated, except to the extent such claim, damage,
loss, liability or expense is found in a final, non-appealable judgment by a
court of competent jurisdiction to have resulted from such Indemnified Party's
gross negligence or willful misconduct; provided that neither the Borrower nor
--------
the Canadian Borrower shall be liable for any waiver, release or settlement of
any litigation or proceeding entered into by any Indemnified Party without the
Borrower's or the Canadian Borrower's prior written consent, as applicable,
which shall not be unreasonably withheld and provided further that to the extent
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any such Indemnified Party shall be required to refund to the Borrower or the
Canadian Borrower any amount as a result of such judgment, the Agent or any
Lender Party, as the case may be, shall be responsible for the amount of any
such refund required to be made on behalf of each of its respective Affiliates
and their officers, directors, employees, agents and advisors. The Parent
Guarantor, the Borrower and the Canadian Borrower also agree not to assert any
claim against the Agent, the Sub-Agent, any Lender Party or any of their
Affiliates, or any of their respective officers, directors, employees, attorneys
and agents, on any theory of liability, for special, indirect, consequential or
punitive damages arising out of or otherwise relating to the Facilities, the
actual or proposed use of the proceeds of the Advances, the Bankers' Acceptances
or the Letters of Credit, the Loan Documents or any of the transactions
contemplated thereby or for any damages arising from the use by others of
information or other materials obtained through electronic, telecommunications
or other information transmission systems, except to the extent such damages
result from the gross negligence or wilful misconduct of the Agent, the Sub-
Agent, any Lender Party or any of their Affiliates.
(c) If any payment of principal of, or Conversion of, any Eurodollar
Rate Advance is made by the Borrower to or for the account of a Lender Party
other than on the last day of the Interest Period for such Advance, as a result
of a payment or Conversion pursuant to Section 2.10(b)(i) or 2.12(d), or
acceleration of the maturity of the Advances pursuant to Section 6.01 or for any
other reason, the Borrower shall, upon demand by such Lender Party (with a copy
of such demand to the Agent), pay to the Agent for the account of such Lender
Party any amounts required to compensate such Lender Party for any additional
losses, costs or expenses that it may reasonably incur as a result of such
payment, including, without limitation, any loss, cost or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired by
any Lender Party to fund or maintain such Advance (but, in any event, excluding
any loss of profits and the Applicable Margin applicable to such Advances).
(d) If any Loan Party fails to pay when due any costs, expenses or
other amounts payable by it under any Loan Document, including, without
limitation, fees and expenses of counsel and indemnities, such amount may be
paid on behalf of such Loan Party by the Agent, the Sub-Agent or any Lender
Party, in its sole discretion.
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128
(e) Without prejudice to the survival of any other agreement of any
Loan Party hereunder or under any other Loan Document, the agreements and
obligations of the Borrower contained in Sections 2.12 and 2.14 and this Section
8.04 shall survive the payment in full of principal, interest and all other
amounts payable hereunder and under any of the other Loan Documents.
SECTION 8.05. Right of Set-off. Upon (a) the occurrence and during
----------------
the continuance of any Event of Default and (b) the making of the request or the
granting of the consent specified by Section 6.01 to authorize the Agent to
declare the Advances due and payable pursuant to the provisions of Section 6.01,
each Lender Party and each of its respective Affiliates is hereby authorized at
any time and from time to time, to the fullest extent permitted by law, to set
off and otherwise apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by such Lender Party or such Affiliate to or for the credit or the
account of the Borrower or the Canadian Borrower, as the case may be, against
any and all of the Obligations of such Borrower or Canadian Borrower now or
hereafter existing under this Agreement and the Note or Notes (if any) held by
such Lender Party, irrespective of whether such Lender Party shall have made any
demand under this Agreement or such Note or Notes and although such obligations
may be unmatured. Each Lender Party agrees promptly to notify the Borrower or
the Canadian Borrower, as the case may be, after any such set-off and
application; provided, however, that the failure to give such notice shall not
-------- -------
affect the validity of such set-off and application. The rights of each Lender
Party and its respective Affiliates under this Section are in addition to other
rights and remedies (including, without limitation, other rights of set-off)
that such Lender Party and its respective Affiliates may have.
SECTION 8.06. Binding Effect. This Agreement shall become effective
--------------
when it shall have been executed by the Borrower, the Canadian Borrower and the
Agent and when the Agent shall have been notified by each Initial Lender and the
initial Issuing Bank hereunder that such Initial Lender and such initial Issuing
Bank has executed it and thereafter shall be binding upon and inure to the
benefit of the Borrower, the Agent and each Lender Party and their respective
successors and assigns, except that the Borrower shall not have the right to
assign its rights hereunder or any interest herein without the prior written
consent of the Lender Parties.
SECTION 8.07. Assignments and Participations. (a) Each Lender may
------------------------------
assign to one or more Eligible Assignees all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Commitment or Commitments, the Advances owing to it and any Note
or Notes held by it); provided, however, that (i) each such assignment shall be
-------- -------
of a uniform, and not a varying, percentage of all rights and obligations under
and in respect of one or more Facilities, (ii) except in the case of an
assignment to a Person that, immediately prior to such assignment, was a Lender
or an Affiliate or Related Fund of a Lender or an assignment of all of a
Lender's rights and obligations under this Agreement, the aggregate
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129
amount of the Commitments being assigned to such Eligible Assignee pursuant to
such assignment (determined as of the date of the Assignment and Acceptance with
respect to such assignment) shall in no event be less than $5,000,000 and shall
be in an integral multiple of $500,000, (iii) each such assignment shall be to
an Eligible Assignee, (iv) no such assignments shall be permitted without the
consent of the Agent and, in the case of any assignment to an Eligible Assignee
other than a Lender or an Affiliate or Related Fund of a Lender or a Federal
Reserve Bank and so long as no Event of Default has occurred and is continuing,
the Borrower (which consent shall not be unreasonably withheld), (v) no such
assignment shall be effective before the earlier of (A) October 30, 1999 and (B)
such time as Chase Securities Inc. shall have notified the Lender Parties, the
Borrower and the Canadian Borrower that syndication of the Commitments hereunder
has been completed, and (vi) the parties to each such assignment shall execute
and deliver to the Agent, for its acceptance and recording in the Register, an
Assignment and Acceptance, together with any Note or Notes, if any, subject to
such assignment and, except in the case of any assignment to a Lender, an
Affiliate of a Lender or a Related Fund of a Lender, a processing and
recordation fee of $2,500.
(b) With the consent of the Borrower, which shall not be unreasonably
withheld, the Issuing Bank may assign to an Eligible Assignee all of its rights
and obligations under the undrawn portion of its Letter of Credit Commitment at
any time; provided, however, that (i) each such assignment shall be to an
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Eligible Assignee and (ii) the parties to each such assignment shall execute and
deliver to the Agent, for its acceptance and recording in the Register, an
Assignment and Acceptance, together with a processing and recordation fee of
$2,500.
(c) Upon such execution, delivery, acceptance and recording, from and
after the effective date specified in such Assignment and Acceptance, (x) the
assignee thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Lender or Issuing Bank, as the
case may be, hereunder and (y) the Lender or Issuing Bank assignor thereunder
shall, to the extent that rights and obligations hereunder have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning
Lender's or Issuing Bank's rights and obligations under this Agreement, such
Lender or Issuing Bank shall cease to be a party hereto).
(d) By executing and delivering an Assignment and Acceptance, each
Lender Party assignor thereunder and each assignee thereunder confirm to and
agree with each other and the other parties thereto and hereto as follows: (i)
other than as provided in such Assignment and Acceptance, such assigning Lender
Party makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with this Agreement or any other Loan Document or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of, or the
perfection or priority of any lien or
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security interest created or purported to be created under or in connection
with, this Agreement or any other Loan Document or any other instrument or
document furnished pursuant hereto or thereto; (ii) such assigning Lender Party
makes no representation or warranty and assumes no responsibility with respect
to the financial condition of the Borrower, the Canadian Borrower or any other
Loan Party or the performance or observance by any Loan Party of any of its
obligations under any Loan Document or any other instrument or document
furnished pursuant thereto; (iii) such assignee confirms that it has received a
copy of this Agreement, together with copies of the financial statements
referred to in Section 4.01 and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance; (iv) such assignee will, independently and
without reliance upon the Agent, such assigning Lender Party or any other Lender
Party 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; (v) such assignee confirms that it is an Eligible
Assignee; (vi) such assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers and discretion under
the Loan Documents as are delegated to the Agent by the terms hereof, together
with such powers and discretion as are reasonably incidental thereto; and (vii)
such assignee agrees that it will perform in accordance with their terms all of
the obligations which by the terms of this Agreement are required to be
performed by it as a Lender or Issuing Bank, as the case may be.
(e) The Agent shall maintain at its address referred to in Section
8.02 a copy of each Assignment and Acceptance delivered to and accepted by it
and a register for the recordation of the names and addresses of the Lender
Parties and the Commitment under each Facility of, and principal amount of the
Advances owing under each Facility to, each Lender Party from time to time (the
"Register"). The entries in the Register shall be conclusive and binding for
--------
all purposes, absent manifest error, and the Borrower, the Canadian Borrower,
the Agent and the Lender Parties shall treat each Person whose name is recorded
in the Register as a Lender Party hereunder for all purposes of this Agreement.
The Register shall be available for inspection by the Borrower, the Canadian
Borrower or any Lender Party at any reasonable time and from time to time upon
reasonable prior notice.
(f) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender Party and an assignee, together with any Note or Notes
requested by the Assignee subject to such assignment, the Agent shall, if such
Assignment and Acceptance has been completed and is in substantially the form of
Exhibit C hereto, (i) accept such Assignment and Acceptance, (ii) record the
information contained therein in the Register and (iii) give prompt notice
thereof to the Borrower. No assignment shall be effective unless the Assignment
and Acceptance has been registered in the Register as provided in this Section
8.07(f).
(g) Each Lender Party may sell participations in or to all or a
portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitments, the Advances owing to it and
any Note or Notes held by it) to any Person other
<PAGE>
131
than any Loan Party or any of its Subsidiaries or Affiliates; provided,
--------
however, that (i) such Lender Party's obligations under this Agreement
- -------
(including, without limitation, its Commitments) shall remain unchanged, (ii)
such Lender Party shall remain solely responsible to the other parties hereto
for the performance of such obligations, (iii) such Lender Party shall remain
the holder of such Advances and any such Note for all purposes of this
Agreement, (iv) the Borrower, the Canadian Borrower, the Agent and the other
Lender Parties shall continue to deal solely and directly with such Lender Party
in connection with such Lender Party's rights and obligations under this
Agreement, (v) no participant under any such participation shall have any right
to approve any amendment or waiver of any provision of any Loan Document, or any
consent to any departure by any Loan Party therefrom, except to the extent that
such amendment, waiver or consent would increase any Commitment subject to such
participation or subject such participant to any additional obligations, reduce
the principal of, or interest on, the Advances or any fees or other amounts
payable hereunder, in each case to the extent subject to such participation,
postpone any date fixed for any payment of principal of, or interest on, the
Advances or any fees or other amounts payable hereunder, in each case to the
extent subject to such participation, or release all or substantially all of the
Collateral and (vi) no participant under any such participation shall be
entitled to amounts otherwise payable to it with respect to its participations
under Sections 2.12, 2.14 or 8.04(c), unless such amount would have been payable
to the Lender Party that sold such participation if such participation had not
been sold.
(h) Any Lender Party may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
8.07, disclose to the assignee or participant or proposed assignee or
participant, any information relating to the Borrower or the Canadian Borrower
furnished to such Lender Party by or on behalf of such Borrower or such Canadian
Borrower; provided, however, that, prior to any such disclosure, the assignee or
-------- -------
participant or proposed assignee or participant shall agree to preserve the
confidentiality of any Confidential Information received by it from such Lender
Party.
(i) Notwithstanding any other provision set forth in this Agreement,
any Lender Party may at any time create a security interest in all or any
portion of its rights under this Agreement (including, without limitation, the
Advances owing to it and any Note or Notes held by it) in favor of any Federal
Reserve Bank in accordance with Regulation A of the Board of Governors of the
Federal Reserve System, and any Lender Party that is a fund that invests in
commercial loans may, without the consent of the Borrower or the Agent, pledge
or assign all or any portion of its rights under this Agreement (including,
without limitation, the Advances owing to it and any Note or Notes held by it)
to any trustee or any other representative of holders of obligations owed or
securities issued by such fund as security for such obligations or securities,
provided that no such pledge or assignment shall release a Lender Party from any
- --------
of its obligations hereunder, substitute any such pledgee or assignee for such
Lender Party as party hereto or increase the obligations of the Borrower
hereunder.
<PAGE>
132
SECTION 8.08. Execution in Counterparts. This Agreement may be
-------------------------
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 8.09. No Liability of the Issuing Bank. The Borrower assumes
--------------------------------
all risks of the acts or omissions of any beneficiary or transferee of any
Letter of Credit with respect to its use of such Letter of Credit. Neither the
Issuing Bank nor any of its officers or directors shall be liable or responsible
for: (a) the use that may be made of any Letter of Credit or any acts or
omissions of any beneficiary or transferee in connection therewith; (b) the
validity, sufficiency or genuineness of documents, or of any endorsement
thereon, even if such documents should prove to be in any or all respects
invalid, fraudulent or forged; (c) payment by the Issuing Bank against
presentation of documents that do not strictly comply with the terms of a Letter
of Credit, including failure of any documents to bear any reference or adequate
reference to the Letter of Credit as long as any such documents shall
substantially so comply; or (d) any other similar circumstances whatsoever in
making or failing to make payment under any Letter of Credit, except that the
------
Borrower shall have a claim against the Issuing Bank, and the Issuing Bank shall
be liable to the Borrower, to the extent of any direct, but not consequential,
damages suffered by the Borrower that the Borrower proves were caused by (i) the
Issuing Bank's willful misconduct or gross negligence in determining whether
documents presented under any Letter of Credit comply with the terms of the
Letter of Credit or (ii) the Issuing Bank's willful failure to make lawful
payment under a Letter of Credit after the presentation to it of a draft and
certificates strictly complying with the terms and conditions of the Letter of
Credit. In furtherance and not in limitation of the foregoing, the Issuing Bank
may accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary.
SECTION 8.10. Confidentiality. Neither the Agent nor any Lender
---------------
Party shall disclose any Confidential Information to any Person without the
consent of the Borrower, other than (a) (i) to the Agent's or such Lender
Party's Affiliates or any Related Fund of such Lender Party and their officers,
directors, employees, agents and advisors, (ii) in the case of any Lender Party
that is a fund that invests in commercial loans, to representatives of holders
of obligations owed or securities issued by such Lender Party or to ratings
agencies that rate the portfolio of such Lender Party and (iii) to actual or
prospective Eligible Assignees and participants, and in each case only on a
confidential basis, (b) as required by any law, rule or regulation or judicial
process and (c) as requested or required by any state, federal or foreign
authority or examiner regulating insurance companies, banks or banking
(including the National Association of Insurance Commissioners).
<PAGE>
133
SECTION 8.11. Jurisdiction, Etc. (a) Each of the parties hereto
------------------
hereby irrevocably and unconditionally submits, for itself and its property, to
the nonexclusive jurisdiction of any New York State court or federal court of
the United States of America sitting in New York City, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this
Agreement or any of the other Loan Documents to which it is a party, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in any such New York State
court or, to the extent permitted by law, in such federal court. The Canadian
Borrower hereby agrees that service of process in any such action or proceeding
brought in any such New York State court or in such federal court may be made
upon the Borrower at its address for notices as provided for in Section 8.02 and
the Canadian Borrower hereby irrevocably appoints the Borrower its authorized
agent to accept such service of process, and agrees that the failure of the
Borrower to give any notice of any such service shall not impair or affect the
validity of such service or of any judgment rendered in any action or proceeding
based thereon. The Canadian Borrower hereby further irrevocably consents to the
service of process in any action or proceeding to such Canadian Borrower at its
address specified pursuant to Section 8.02. Each of the parties hereto agrees
that a final judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. Nothing in this Agreement shall affect any right that
any party may otherwise have (x) to serve legal process in any other manner
permitted by law, or (y) to bring any action or proceeding relating to this
Agreement or any of the other Loan Documents in the courts of any jurisdiction.
(b) Each of the parties hereto irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, any objection that
it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or any of the other Loan
Documents to which it is a party in any New York State or federal court. Each
of the parties hereto hereby irrevocably waives, to the fullest extent permitted
by law, the defense of an inconvenient forum to the maintenance of such action
or proceeding in any such court.
SECTION 8.12. Judgment. (a) To the extent permitted by applicable
--------
law, if for the purposes of obtaining judgment in any court it is necessary to
convert a sum due hereunder in U.S. Dollars into another currency, the parties
hereto agree, to the fullest extent that they may effectively do so, that the
rate of exchange used shall be that at which in accordance with normal banking
procedures the Agent could purchase U.S. Dollars with such other currency at
BNP's principal office in New York City at 11:00 A.M. (New York City) time on
the Business Day preceding that on which final judgment is given.
(b) To the extent permitted by applicable law, if for the purposes of
obtaining judgment in any court it is necessary to convert a sum due hereunder
in a foreign currency into U.S. Dollars, the parties agree to the fullest extent
that they may effectively do so, that the rate of exchange used shall be that at
which in accordance with normal banking procedures the Agent
<PAGE>
134
could purchase such foreign currency with U.S. Dollars at BNP's principal office
in BNP at 11:00 A.M. (New York City) time on the Business Day preceding that on
which final judgment is given.
(c) To the extent permitted by applicable law, the obligation of the
Borrower or the Canadian Borrower in respect of any sum due in U.S. Dollars from
it to any Lender Party or the Agent hereunder shall, notwithstanding any
judgment in a currency other than U.S. Dollars, be discharged only to the extent
that on the Business Day following receipt by such Lender Party or the Agent (as
the case may be) of any sum adjudged to be so due in such other currency, such
Lender Party or the Agent (as the case may be) may in accordance with normal
banking procedures purchase U.S. Dollars with such other currency; if the U.S.
Dollars so purchased are less than such sum due to such Lender Party or the
Agent (as the case may be) in U.S. Dollars, such Borrower or such Canadian
Borrower, as the case may be, agrees, to the extent permitted by applicable law,
as a separate obligation and notwithstanding any such judgment, to indemnify
such Lender Party or the Agent (as the case may be) against such loss, and if
the U.S. Dollars so purchased exceed such sum due to any Lender Party or the
Agent (as the case may be) in U.S. Dollars, such Lender Party or the Agent (as
the case may be) agrees to remit to such Borrower or such Canadian Borrower, as
the case may be, such excess.
SECTION 8.13. Governing Law. This Agreement and the Notes, if any,
-------------
shall be governed by, and construed in accordance with, the laws of the State of
New York.
SECTION 8.14. Waiver of Jury Trial. Each of the Loan Parties, the
--------------------
Agent and the Lender Parties irrevocably waives all right to trial by jury in
any action, proceeding or counterclaim (whether based on contract, tort or
otherwise) arising out of or relating to any of the Loan Documents, the Advances
or the actions of the Agent or any Lender Party in the negotiation,
administration, performance or enforcement thereof.
SECTION 8.15. Power of Attorney. The Canadian Borrower may from time
-----------------
to time authorize and appoint the Borrower as its attorney-in-fact to execute
and deliver (a) any amendment, waiver or consent in accordance with Section 8.01
on behalf of and in the name of the Canadian Borrower and (b) any notice or
other communication hereunder, on behalf of and in the name of the Canadian
Borrower. Such authorization shall become effective as of the date on which the
Canadian Borrower delivers to the Agent a power of attorney enforceable under
applicable law and any additional information to the Agent as necessary to make
such power of attorney the legal, valid and binding obligation of the Canadian
Borrower.
<PAGE>
135
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
BMAC HOLDINGS, INC.,
as Parent Guarantor
By /s/ Richard Nick
----------------------------------------
Name: Richard Nick
Title: Vice President
BETTER MINERALS & AGGREGATES
COMPANY, as Borrower
By /s/ Richard Nick
----------------------------------------
Name: Richard Nick
Title: Vice President
GEORGE F. PETTINOS (CANADA)
LIMITED, as Canadian Borrower
By /s/ Richard Nick
----------------------------------------
Name: Richard Nick
Title: Vice Presiden
THE CHASE MANHATTAN BANK,
By /s/ Thomas H. Kozlark
----------------------------------------
Name: Thomas H. Kozlark
Title: Vice President
<PAGE>
136
CHASE SECURITIES INC.,
By /s/ Thomas H. Kozlark
------------------------------------
Name: Thomas H. Kozlark
Title: Vice President
<PAGE>
BANQUE NATIONALE DE PARIS,
as Agent, Initial Lender,
Swing Line Bank and Initial Issuing Bank
By /s/ Richard Cushing
-------------------------------------
Name: Richard Cushing
Title: Director
<PAGE>
By /s/ Paul Barnes
-------------------------------------
Name: Paul Barnes
Title: Assistant Vice President
<PAGE>
BANQUE NATIONALE DE PARIS (CANADA),
as Canadian Lender and Sub-Agent
By /s/ Lee Chin Hock
-------------------------------------
Name: Lee Chin Hock
Title: Senior Vice President
General Manager
Ontario, Manitoba,
<PAGE>
Saskatchewan
By /s/ Don R. Lee
-------------------------------------
Name: Don. R. Lee
Title: Vice President
Corporate Banking
<PAGE>
BANK AUSTRIA CREDITANSTALT
CORPORATE FINANCE, INC.
By: /s/ Clifford L. Wells
------------------------------------
Name: Clifford L. Wells
Title: Vice President
By: /s/ William W. Hunter
------------------------------------
Name: William W. Hunter
Title: Vice President
<PAGE>
MERRILL LYNCH SENIOR FLOATING RATE
FUND II, INC.
By: /s/ Paul Travers
--------------------------------------
Name: Paul Travers
Title: Authorized Signatory
PRINCIPAL LIFE INSURANCE COMPANY
By: Principal Capital Management LLC, a
Delaware limited liability company, its
authorized signatory
By: /s/ Jon C. Heiny
--------------------------------------
Name: Jon C. Heiny
Title: Counsel
By: /s/ Jody J. Lamberth
--------------------------------------
Name: Jody J. Lamberth
Title: Authorized Signatory
MORGAN STANLEY DEAN WITTER PRIME
INCOME TRUST
By: /s/ Peter Gewirtz
--------------------------------------
Name: Peter Gewirtz
Title: Authorized Signatory
NATIONAL BANK OF CANADA
By: /s/ Eric L. Moore
--------------------------------------
Name: Eric L. Moore
Title: Vice President
<PAGE>
By: /s/ Donald P. Haddad
--------------------------------------
Name: Donald P. Haddad
Title: Vice President/Manager
FIRST SOURCE FINANCIAL LLP
By: First Source Financial, Inc.,
its Agent/Manager
By: /s/ Pamela D. Eskin
--------------------------------------
Name: Pamela D. Eskin
Title: Vice President
BOEING CAPITAL CORPORATION
By: /s/ James C. Hammersmith
--------------------------------------
Name: James C. Hammersmith
Title: Senior Documentation Officer
BANK POLSKA KASA OPIEKI S.A.
NEW YORK BRANCH
By: /s/ Hussein El Tavzel
--------------------------------------
Name: Hussein El Tavzel
Title: Vice President
<PAGE>
THE TRAVELERS INSURANCE COMPANY
By: /s/ Allen R. Cantrell
------------------------------------
Name: Allen R. Cantrell
Title: Investment Officer
TRAVELERS CORPORATE LOAN FUND INC.
By: Travelers Asset Management International
Corporation
By: /s/ Allen R. Cantrell
------------------------------------
Name: Allen R. Cantrell
Title: Investment Officer
ABN AMRO BANK N.V.
By: /s/ Louis K. McLinden, Jr.
------------------------------------
Name: Louis K. McLinden, Jr.
Title: Vice President
By: /s/ Gregory D. Amoroso
------------------------------------
Name: Gregory D. Amoroso
Title: Senior Vice President
HELLER FINANCIAL, INC.
By: /s/ Scott Ziemke
------------------------------------
Name: Scott Ziemke
Title: Assistant Vice President
ARCHIMEDES FUNDING, L.L.C.
By: ING Capital Advisors LLC,
<PAGE>
as its Collateral Manager
By: /s/ Helen Y. Rhee
---------------------------------------
Name: Helen Y. Rhee
Title: Vice President and Portfolio Manager
<PAGE>
ARCHIMEDES FUNDING II, LTD.
By: ING Capital Advisors LLC,
as its Collateral Manager
By: /s/ Helen Y. Rhee
---------------------------------------
Name: Helen Y. Rhee
Title: Vice President and Portfolio Manager
KZH-ING-1 LLC
By: /s/ Peter Chin
---------------------------------------
Name: Peter Chin
Title: Authorized Agent
KZH-ING-2 LLC
By: /s/ Peter Chin
---------------------------------------
Name: Peter Chin
Title: Authorized Agent
BALANCED HIGH-YIELD FUND I LTD.
By: BHF (USA) Capital Corporation,
as Attorney-In-Fact
By: /s/ John Zapalac
---------------------------------------
Name: John Zapalac
Title: Associate
By: /s/ Ralph Della Rocca
---------------------------------------
Name: Ralph Della Rocca
Title: Assistant Vice President
<PAGE>
NATIONAL CITY BANK
By: /s/ Wilmer J. Jacobs
-----------------------------------------
Name: Wilmer J. Jacobs
Title: Assistant Vice President
FIRST UNION NATIONAL BANK
By: /s/ W. Garreth Horan
-----------------------------------------
Name: W. Gareth Horan
Title: Vice President
METROPOLITAN LIFE INSURANCE COMPANY
By: /s/ James Dingler
-----------------------------------------
Name: James Dingler
Title: Director
FRANKLIN FLOATING RATE TRUST
By: /s/ Chauncey Lufkin
-----------------------------------------
Name: Chauncey Lufkin
Title: Vice President
PPM SPYGLASS FUNDING TRUST
By: /s/ Kelly C. Walker
-------------------
Name: Kelly C. Walker
Title: Authorized Agent
<PAGE>
EXHIBIT 10.5
EXECUTION COPY
SECURITY AGREEMENT
Dated as of September 30, 1999
From
BETTER MINERALS & AGGREGATES COMPANY,
and
THE OTHER GRANTORS REFERRED TO HEREIN,
as Grantors,
-----------
to
BANQUE NATIONALE DE PARIS,
as Agent
--------
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 1. Grant of Security...................................................... 1
SECTION 2. Security for Obligations............................................... 5
SECTION 3. Grantors Remain Liable................................................. 6
SECTION 4. Delivery and Control of Security Collateral and Account Collateral..... 6
SECTION 5. Maintaining the L/C Cash Collateral Account............................ 7
SECTION 6. Maintaining the Blocked Accounts....................................... 7
SECTION 7. Investing of Amounts in the L/C Cash Collateral Account................ 8
SECTION 8. Representations and Warranties......................................... 8
SECTION 9. Further Assurances..................................................... 9
SECTION 10. As to Equipment and Inventory.......................................... 10
SECTION 11. Insurance.............................................................. 11
SECTION 12. Place of Perfection; Records; Collection of Receivables................ 11
SECTION 13. Voting Rights; Dividends; Etc.......................................... 12
SECTION 14. As to the Assigned Agreements.......................................... 13
SECTION 15. Transfers and Other Liens; Additional Shares........................... 13
SECTION 16. Agent Appointed Attorney-in-Fact....................................... 14
SECTION 17. Agent May Perform...................................................... 14
SECTION 18. The Agent's Duties..................................................... 14
SECTION 19. Remedies............................................................... 15
SECTION 20. Registration Rights.................................................... 16
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
SECTION 21. Indemnity and Expenses...................................................... 17
SECTION 22. Security Interest Absolute.................................................. 17
SECTION 23. Amendments; Waivers; Etc.................................................... 17
SECTION 24. Addresses for Notices....................................................... 18
SECTION 25. Continuing Security Interest; Assignments Under the Credit Agreement........ 18
SECTION 26. Release and Termination..................................................... 18
SECTION 27. Mortgages................................................................... 19
SECTION 28. Execution in Counterparts................................................... 19
SECTION 29. Governing Law............................................................... 19
</TABLE>
ii
<PAGE>
SCHEDULES
<TABLE>
<S> <C>
Schedule I - ...................................... Pledged Shares, Pledged Debt
Schedule II - ...................................... Assigned Agreements
Schedule III - ...................................... Locations of Equipment and Inventory
Schedule IV - ...................................... Blocked Accounts
Schedule V - ...................................... Trade Names
</TABLE>
EXHIBITS
Exhibit A - Form of Blocked Account Letter
Exhibit B - Security Agreement Supplement
iii
<PAGE>
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of September 30, 1999, made by Better
Minerals & Aggregates Company, a Delaware corporation formerly known as "USS
Intermediate Holdco, Inc." (the "Borrower"), and each other grantor listed on
the signature pages hereof (together with the Borrower, the "Grantors" and,
--------
individually, a "Grantor"), to Banque Nationale de Paris ("BNP"), as agent
------- ---
(together with any successor agent appointed pursuant to Article VII of the
Credit Agreement (as defined below), the "Agent") for the Secured Parties (as
-----
defined in the Credit Agreement).
PRELIMINARY STATEMENTS:
(1) The Borrower, BMAC Holdings, Inc., a Delaware corporation, and
George F. Pettinos (Canada) Limited, a corporation organized and existing under
the laws of Ontario, Canada (the "Canadian Borrower"), have entered into a
-----------------
Credit Agreement dated as of September 30, 1999 (said Agreement, as it may
hereafter be amended, supplemented or otherwise modified from time to time,
being the "Credit Agreement"; the terms defined therein and not otherwise
----------------
defined herein being used herein as therein defined) with certain Lender Parties
party thereto and Banque Nationale de Paris, as agent for such Lender Parties.
(2) Each Grantor is the owner of the shares of stock or other
ownership interests set forth opposite such Grantor's name and as otherwise
described in Part A of Schedule I hereto and issued by the corporations or other
entities indicated therein (collectively, the "Existing Pledged Shares"), the
-----------------------
indebtedness (whether or not evidenced by instruments) set forth opposite such
Grantor's name and as otherwise described in Part B of Schedule I hereto and
issued by the obligors indicated therein (collectively, the "Existing Pledged
----------------
Debt").
- ----
(3) The Borrower has opened a non-interest bearing cash collateral
account (the "L/C Cash Collateral Account") with BNP at its offices at 499 Park
---------------------------
Avenue, New York, New York 10022, Account No. 200875-001-77, in the name of the
Borrower but under the sole control and dominion of the Agent and subject to the
terms of this Agreement.
(4) It is a condition precedent to the making of Advances and
Drawings and the issuance of Letters of Credit by the Lender Parties and the
entry by the Hedge Banks into the Bank Hedge Agreements with the Borrower under
the Credit Agreement that the Grantors shall have executed and delivered this
Agreement.
<PAGE>
(5) Unless otherwise defined in this Agreement or in the Credit
Agreement, terms defined in Article 8 or 9 of the Uniform Commercial Code in
effect in the State of New York ("N.Y. Uniform Commercial Code") are used in
----------------------------
this Agreement as such terms are defined in such Article 8 or 9.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Lender Parties to make Advances and Drawings and to issue Letters of
Credit under the Credit Agreement and to induce the Hedge Banks to enter into
Bank Hedge Agreements with the Borrower from time to time, the Grantors hereby
agree with the Agent for the ratable benefit of the Secured Parties as follows:
SECTION 1. Grant of Security. Each of the Grantors hereby assigns
-----------------
and pledges to the Agent for its benefit and the ratable benefit of the other
Secured Parties, and hereby grants to the Agent for its benefit and the ratable
benefit of the other Secured Parties, a lien on and security interest in the
following, in each case, as to each type of property described below, whether
now owned or hereafter acquired by such Grantor, wherever located and whether
now or hereafter existing (collectively, the "Collateral"; provided, however,
---------- -------- -------
there shall be excluded from Collateral, any Margin Stock (as such term is
defined in Regulation U of the Board of Governors of the Federal Reserve System)
held by any Grantor):
(a) all of such Grantor's right, title and interest in and to all
equipment in all of its forms (including, without limitation, dredges,
dozers, loaders, forklift trucks, crushing equipment, rod mills, grinding
mills, hydrosizers, air sizers, dust collectors, automated packaging
equipment and bulk storage silos, but excluding any motor vehicle covered
by a certificate of title and a 1979 Beechcraft King Air C90), all fixtures
and all parts thereof and all accessions and additions thereto, parts and
appurtenances thereof, substitutions therefor and replacements thereof (any
and all such equipment, fixtures, parts, accessions, additions,
appurtenances, substitutions and replacements being the "Equipment");
---------
(b) all of such Grantor's right, title and interest in and to all
inventory (including, without limitation, silica sand, kaolin and aplite)
in all of its forms (including, without limitation, (i) all raw materials,
work in process therefor, parts, components, assemblies, supplies,
materials, finished products and other goods and materials used or consumed
in the manufacture or production thereof (including, without limitation,
all wrapping, packaging, advertising, shipping materials, labels and other
devices, names or marks affixed or to be affixed thereto for purposes of
selling or of identifying the same or the seller or manufacturer thereof
owned, consumed, used or held for use or sale, directly or indirectly, by,
or on behalf of, or for the account of, such Grantor), (ii) goods in which
such Grantor has an interest in mass or a joint or other interest or right
of any kind (including, without limitation, goods in which such Grantor has
an interest or right as consignee) and (iii) goods that are returned to or
repossessed or stopped in transit by such Grantor) and all accessions
thereto and products thereof and documents therefor (any and all such
inventory, accessions, products and documents being the "Inventory");
---------
<PAGE>
(c) all of such Grantor's right, title and interest in and to all
accounts, contract rights, chattel paper, instruments, deposit accounts and
general intangibles and all other rights and obligations of any kind,
whether or not arising out of or in connection with the sale or lease of
goods or the rendering of services, and all rights now or hereafter
existing in and to all security agreements, leases and other contracts
securing or otherwise relating to any such accounts, contract rights,
chattel paper, instruments, deposit accounts, general intangibles, rights
or obligations; provided, however, that in connection with any operating
-------- -------
leases or other commercial agreements entered into in the ordinary course
of business of such Grantor on a basis consistent with past practice, such
grant shall only be effective to the extent the grant by such Grantor of a
security interest in any such operating lease or other commercial agreement
is not prohibited by such operating lease or other commercial agreement
without the consent of any other party thereto or would not give any other
party to such operating lease or other commercial agreement the right to
terminate its obligations thereunder (any and all such accounts, contract
rights, chattel paper, instruments, deposit accounts, general intangibles,
rights and obligations, to the extent not referred to in clause (d), (e),
(f) or (g) of this Section 1, being the "Receivables", and any and all such
-----------
leases, security agreements and other contracts to the extent not referred
to in clause (e) of this Section 1, being the "Related Contracts");
-----------------
(d) all of such Grantor's right, title and interest in and to all of
the following (collectively, the "Security Collateral"):
-------------------
(i) the Existing Pledged Shares, together with the certificates
representing such Existing Pledged Shares, and all dividends, cash,
instruments and other property from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all
of such Existing Pledged Shares;
(ii) the Existing Pledged Debt, together with the instruments
evidencing such Existing Pledged Debt, all security therefor and all
interest, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in
exchange for any or all of such Existing Pledged Debt;
(iii) all security entitlements from time to time carried in any
securities account, and all dividends, interest, cash, instruments and
other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such
security entitlements;
(iv) all securities accounts, all security entitlements from
time to time carried in the securities accounts, and all dividends,
interest, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in
exchange for any or all of such security entitlements;
(v) all commodity contracts from time to time carried in any
commodities account and all value, cash, instruments and other
property from
3
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time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of such commodity contracts;
(vi) all commodities accounts, all commodity contracts from
time to time carried in the commodities accounts and all value, cash,
instruments and other property from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all
of such commodity contracts;
(vii) all additional shares of stock of any issuer of any
Existing Pledged Shares or of any other Person and all membership
interests or other equity interests in any Person, from time to time
acquired by the Grantors in any manner (with the exception of (i)
partnership interests described in Section 5.02(f)(x) of the Credit
Agreement, (ii) membership interests or other equity interests to the
extent the underlying partnership or other agreement prohibits
assignment and (iii) the shares of stock issued by any direct, non-
Domestic Subsidiary of any Grantor to the extent the amount of such
shares of stock exceeds 65% of the issued and outstanding shares of
such non-Domestic Subsidiary), together with the certificates
representing such additional shares, membership interests or other
equity interests and all dividends, cash, instruments and other
property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such
shares, membership interests and other equity interests (together with
the Existing Pledged Shares, the "Pledged Shares");
--------------
(viii) all additional indebtedness from time to time owed to the
Grantors (other than loans and advances to employees permitted in the
Loan Documents) by any obligor of the Existing Pledged Debt or any
other Person (whether or not evidenced by instruments) and the
instruments, if any, evidencing such indebtedness, all security
therefor and all interest, cash, instruments and other property from
time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all such indebtedness (together with the
Existing Pledged Debt, the "Pledged Debt"); and
------------
(ix) all additional investment property (including, without
limitation, all (A) securities, whether certificated or
uncertificated, (B) security entitlements, as defined in Section 8-
102(a)(17) of the N.Y. Uniform Commercial Code or, in the case of any
U.S. Treasury book-entry securities, as defined in 31 C.F.R. Section
357.2, or, in the case of any U.S. federal agency book-entry
securities, as defined in the corresponding U.S. federal regulations
governing such book-entry securities, (C) securities accounts, (D)
commodity contracts and (E) commodity accounts) in which such Grantor
has or acquires from time to time any right, title or interest in any
manner, and the certificates or instruments, if any, representing or
evidencing such investment property, and all dividends, interest,
distributions, value, cash, instruments and other property from time
to time received, receivable or otherwise distributed in respect of or
in exchange for any or all of such investment property;
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(e) all of such Grantor's right, title and interest in and to each
Hedge Agreement to which such Grantor is now or may hereafter become a
party and each other agreement listed on Schedule II hereto, in each case
as such Hedge Agreement or other agreement may be amended, supplemented or
otherwise modified from time to time (collectively, the "Assigned
--------
Agreements"), including, without limitation, (i) all rights of such Grantor
----------
to receive moneys due and to become due under or pursuant to the Assigned
Agreements, (ii) all rights of such Grantor to receive proceeds with
respect to the Assigned Agreements or any instruments, opinions or
documents delivered pursuant thereto, (iii) all rights of such Grantor in
and to all mortgages, security agreements, leases or other contracts
securing or otherwise relating to the Assigned Agreements, (iv) all claims
of such Grantor for damages arising out of or for breach of or default
under the Assigned Agreements and (v) all rights of such Grantor to
terminate any Assigned Agreement, to perform thereunder and to compel
performance and otherwise exercise all remedies thereunder; provided,
--------
however, that in connection with any Assigned Agreement entered into in the
-------
ordinary course of business of such Grantor on a basis consistent with past
practice, such grant shall only be effective to the extent (i) the grant by
such Grantor of a security interest in any such Assigned Agreement is not
prohibited by such Assigned Agreement without the consent of any other
party thereto or would not give any other party to such Assigned Agreement
the right to terminate its obligations thereunder or (ii) in the event that
such grant is prohibited by such Assigned Agreement without the consent of
such other party or would give such other party such right to terminate,
such Grantor shall have obtained the consent of such other party to such
grant, such Grantor hereby agreeing to use commercially reasonable efforts
to obtain such consent (all such Collateral being the "Agreement
---------
Collateral");
----------
(f) all of such Grantor's right, title and interest in and to all of
the following (collectively, the "Account Collateral"):
------------------
(i) the L/C Cash Collateral Account, all funds held therein and
all certificates and instruments, if any, from time to time
representing or evidencing the L/C Cash Collateral Account;
(ii) all Blocked Accounts (as hereinafter defined), all funds
held therein and all certificates and instruments, if any, from time
to time representing or evidencing the Blocked Accounts;
(iii) all other deposit accounts of such Grantor, all funds held
therein and all certificates and instruments, if any, from time to
time representing or evidencing such deposit accounts;
(iv) all Collateral Investments (as hereinafter defined) from
time to time and all certificates and instruments, if any, from time
to time representing or evidencing the Collateral Investments;
5
<PAGE>
(v) all notes, certificates of deposit, deposit accounts, checks
and other instruments from time to time hereafter delivered to or
otherwise possessed or required to be delivered to or otherwise
possessed, by the Agent for or on behalf of such Grantor, including,
without limitation, those delivered to or possessed in substitution
for or in addition to any or all of the then existing Account
Collateral; and
(vi) all interest, dividends, distributions, cash, instruments
and other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the then
existing Account Collateral;
(g) all of such Grantor's right, title and interest in and to all
general intangibles of such Grantor (other than general intangibles for
money due or to become due and described in clause (c) of this Section 1)
including, without limitation, all trademarks, trade names, trade styles,
trade secrets, service marks, logos, copyrights, patents, patent
applications and all licenses, license applications, registrations and good
will relating to or associated with any of the foregoing; provided,
--------
however, that in connection with any operating leases or other commercial
-------
agreements entered into in the ordinary course of business of such Grantor
on a basis consistent with past practice, such grant shall only be
effective to the extent the grant by such Grantor of a security interest in
any such operating lease or other commercial agreement is not prohibited by
such operating lease or other commercial agreement without the consent of
any other party thereto or would not give any other party to such operating
lease or other commercial agreement the right to terminate its obligations
thereunder; and
(h) all proceeds of any and all of the foregoing Collateral
(including, without limitation, proceeds that constitute property of the
types described in clauses (a) through (g) of this Section 1) and, to the
extent not otherwise included, all (i) payments under insurance (whether or
not the Agent is the loss payee thereof), or any indemnity, warranty or
guaranty, payable by reason of loss or damage to or otherwise with respect
to any of the foregoing Collateral and (ii) cash.
provided, however, that any or all of the property described in clauses (a)
through (h) located in the State of Alabama shall not constitute Collateral
unless so requested by the Agent under Section 5.01 of the Credit Agreement,
provided that such exclusion shall not be deemed to limit any of the Agent's or
the other Secured Parties' rights or interests in any such property arising
under any mortgage executed by any of the Grantors in favor of the Agent and/or
the Secured Parties and filed for record in Alabama.
SECTION 2. Security for Obligations. This Agreement secures the
------------------------
payment of all Obligations of the Grantors now or hereafter existing under or in
respect of the Loan Documents, whether direct or indirect, absolute or
contingent, including, without limitation, any extensions, modifications,
substitutions, amendments and renewals thereof, whether for principal,
reimbursement obligations, interest, premiums, penalties, fees,
indemnifications, contract causes of action, costs, expenses or otherwise (all
such Obligations secured hereby being
6
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the "Secured Obligations"). Without limiting the generality of the foregoing,
-------------------
this Agreement secures the payment of all amounts that constitute part of the
Secured Obligations and that would be owed by any Grantor to the Agent, or any
of the other Secured Parties under the Loan Documents but for the fact that such
Secured Obligations are unenforceable or not allowable due to the existence of a
bankruptcy, reorganization or similar proceeding involving such Grantor.
SECTION 3. Grantors Remain Liable. Anything contained herein to the
----------------------
contrary notwithstanding, (a) each of the Grantors shall remain liable under the
contracts and agreements included in the Collateral to which it is a party to
the extent set forth therein to perform all of its duties and obligations
thereunder to the same extent as if this Agreement had not been executed, (b)
the exercise by the Agent of any of its rights hereunder shall not release any
Grantor from any of its duties or obligations under the contracts and agreements
included in the Collateral to which it is a party and (c) neither of the Agent
nor any of the other Secured Parties shall have any obligation or liability
under the contracts and agreements included in the Collateral by reason of this
Agreement or any other Loan Document, nor shall any of the Secured Parties be
obligated to perform any of the obligations or duties of the Grantors thereunder
or to take any action to collect or enforce any claim for payment assigned
hereunder.
SECTION 4. Delivery and Control of Security Collateral and Account
-------------------------------------------------------
Collateral. (a) Subject to Section 9 hereof, all certificates or instruments
- ----------
representing or evidencing Security Collateral or Account Collateral shall be
delivered to and held by or on behalf of the Agent pursuant hereto and shall be
in suitable form for transfer by delivery, or shall be accompanied by duly
executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to the Agent. Upon the occurrence and during the
continuance of an Event of Default under the Credit Agreement, the Agent shall
have the right, at any time in its discretion and without notice to the
Grantors, to transfer to or register in the name of the Agent or any of its
nominees any or all of the Security Collateral and the Account Collateral,
subject only to the revocable rights specified in Section 13(a) and shall have
the right at any time to exchange certificates or instruments representing or
evidencing Security Collateral or Account Collateral for certificates or
instruments of smaller or larger denominations.
(b) With respect to any Security Collateral that constitutes a
security and is not represented or evidenced by a certificate or an instrument,
the Grantors shall cause the issuer thereof either (i) to register the Agent as
the registered owner of such security or (ii) to agree in writing with the
Grantors and the Agent that such issuer will comply with instructions with
respect to such security originated by the Agent without further consent of the
Grantors, such agreement to be in form and substance satisfactory to the Agent.
(c) With respect to any Security Collateral that constitutes a
security entitlement, each of the Grantors shall, within 15 days of the Agent's
request therefor, cause the securities intermediary with respect to such
security entitlement either (i) to identify in its records the Agent as having
such security entitlement against such securities intermediary or (ii) to agree
in writing with such Grantor and the Agent that such securities intermediary
will comply with entitlement orders (that is, notifications communicated to such
securities intermediary directing transfer or redemption of the financial asset
to which the Grantors has a security entitlement)
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<PAGE>
originated by the Agent without further consent of the Grantors, such agreement
to be in form and substance satisfactory to the Agent.
(d) With respect to any Security Collateral that constitutes a
commodity contract, each Grantor shall, within 15 days of the Agent's request
therefor, cause the commodity intermediary with respect to such commodity
contract to agree in writing with such Grantor and the Agent that such commodity
intermediary will apply any value distributed on account of such commodity
contract as directed by the Agent without further consent of the Grantors, such
agreement to be in form and substance satisfactory to the Agent.
(e) With respect to any Security Collateral that constitutes a
securities account or a commodity account, each Grantor will, in the case of a
securities account, comply with subsection (c) of this Section 4 with respect to
all security entitlements carried in such securities account and, in the case of
a commodity account, comply with subsection (d) of this Section 4 with respect
to all commodity contracts carried in such commodity account.
SECTION 5. Maintaining the L/C Cash Collateral Account. So long as
-------------------------------------------
any Advance shall remain unpaid, any Letter of Credit, Bankers' Acceptance or
Bank Hedge Agreement shall be outstanding or any Lender Party shall have any
Commitment under the Credit Agreement:
(a) The Borrower shall maintain the L/C Cash Collateral Account with
the Agent.
(b) It shall be a term and condition of the L/C Cash Collateral
Account, notwithstanding any term or condition to the contrary in any other
agreement relating to the L/C Cash Collateral Account, as the case may be,
and except as otherwise provided by the provisions of Section 21, that no
amount (including, without limitation, interest on Collateral Investments)
shall be paid or released to or for the account of, or withdrawn by or for
the account of, the Borrower or any other Person from the L/C Cash
Collateral Account.
The L/C Cash Collateral Account shall be subject to such applicable laws, and
such applicable regulations of the Board of Governors of the Federal Reserve
System and of any other appropriate banking or governmental authority, as may
now or hereafter be in effect.
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<PAGE>
SECTION 6. Maintaining the Blocked Accounts. So long as any Advance
--------------------------------
shall remain unpaid or any Letter of Credit, Bankers' Acceptance or Bank Hedge
Agreement shall be outstanding or any Lender Party shall have any Commitment
under the Credit Agreement:
(a) The Borrower shall maintain blocked deposit accounts ("Blocked
-------
Accounts") only with banks ("Blocked Account Banks") that have entered into
-------- ---------------------
letter agreements in substantially the form of Exhibit A (or such other
form as the Agent shall agree) with such Grantor and the Agent ("Blocked
-------
Account Letters"). As of the date hereof, the Borrower shall have
---------------
delivered each Blocked Account Letter to the Agent, duly executed by the
Borrower, the Agent and the Blocked Account Bank party thereto.
(b) Each Grantor shall immediately instruct each Person obligated at
any time to make any payment to such Grantor for any reason in respect of
Receivables (an "Obligor") to make such payment to a Blocked Account and,
-------
if (i) an Event of Default shall have occurred and be continuing and (ii)
either the making of the request or the granting of the consent specified
by Section 6.01 of the Credit Agreement to authorize the Agent to declare
the Advances due and payable pursuant to the provisions of such Section
6.01 or the making of any demand by the Agent pursuant to Section 6.02 of
the Credit Agreement requiring the Borrower to pay amounts in respect of
Letters of Credit or the Canadian Borrower to pay amounts in respect of
Bankers' Acceptances shall have occurred, shall, at the request of the
Agent, pay to the Agent for application as provided by the terms of the
Credit Agreement, at the end of each Business Day, all proceeds of
Collateral. So long as an Event of Default shall not have occurred and be
continuing and the Agent shall not have given the notice referred to in the
immediately preceding sentence, the Borrower may operate its Blocked
Accounts in accordance with its past business practices.
(c) Upon any termination of any Blocked Account Letter or other
agreement with respect to the maintenance of a Blocked Account by the
Borrower or any Blocked Account Bank, the applicable Grantor shall
immediately notify all Obligors that were making payments to such Blocked
Account to make all future payments to another Blocked Account. The
Borrowers agrees to terminate any or all Blocked Accounts and Blocked
Account Letters upon reasonable request of the Agent.
SECTION 7. Investing of Amounts in the L/C Cash Collateral Account.
-------------------------------------------------------
If requested by the Borrower, the Agent shall, subject to the provisions of
Section 21, from time to time invest:
(a) amounts on deposit in the L/C Cash Collateral Account in such
Cash Equivalents in the name of the Agent as the Borrower may select and
the Agent may approve, which approval shall not be unreasonably withheld;
and
(b) interest paid on the Cash Equivalents referred to in clause (a)
above, and reinvest other proceeds of any such Cash Equivalents that may
mature or be sold, in each case in such Cash Equivalents in the name of the
Agent as the Borrower may select and
9
<PAGE>
the Agent may approve, which approval shall not unreasonably withheld (the
Cash Equivalents referred to in clause (a) above and in this clause (b)
being, collectively, "Collateral Investments").
----------------------
Interest and proceeds that are not invested or reinvested in Collateral
Investments as provided above shall be deposited and held in the L/C Cash
Collateral Account.
SECTION 8. Representations and Warranties. The Grantors represent
------------------------------
and warrant as follows:
(a) On the date hereof all of the Equipment and Inventory is located
at the places specified beneath the Grantors' names on Schedule III hereto.
The principal places of business and chief executive offices of the
Grantors and the offices where the Grantors keep their records concerning
the Receivables and all originals of all chattel paper that evidence
Receivables, are, as of the date hereof, located at the addresses listed
on Schedule V hereto. A complete copy of each Assigned Agreement has been
delivered to the Agent. None of the Receivables or Agreement Collateral is
evidenced by a promissory note or other instrument other than those which
have been delivered to the Agent and others held by the Grantors pursuant
to Section 9 hereof.
(b) Each Grantor is the legal and beneficial owner of its Collateral
free and clear of any Lien, except for the Liens permitted in the Loan
Documents. No effective financing statement or other instrument similar in
effect covering all or any part of the Collateral is on file in any
recording office, except such as may have been filed in favor of the Agent
relating to this Agreement, or as permitted in the Loan Documents.
(c) Set forth on Schedule V hereto is a complete and accurate list as
of the date hereof of all names under which the Grantors are doing
business, including, without limitation, trade names, division names and
fictitious names.
(d) Except to the extent located on or in leased property or subject
to operating leases, the Grantors have exclusive possession and control of
the Equipment and Inventory other than Equipment and Inventory which in the
ordinary course of business is not in the possession and control of the
Grantors, the aggregate amount of which does not exceed $1,000,000.
(e) All of the shares of stock that constitute Pledged Shares have
been duly authorized and validly issued and are fully paid and non-
assessable. The Pledged Debt held by the Grantors has been duly
authorized, authenticated or issued and delivered, is the legal, valid and
binding obligation of the issuers thereof and is not in default.
(f) As of the date hereof the Pledged Shares constitute the percentage
of the issued and outstanding shares of stock of the issuers thereof
indicated on Part A of Schedule I hereto. The Pledged Debt constitutes all
of the outstanding indebtedness owed to the Grantors by the issuers
thereof.
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<PAGE>
(g) The Grantors have no Blocked Accounts or other deposit accounts
other than the Blocked Accounts listed on Schedule IV hereto.
(h) Except to the extent set forth on Schedule 4.01(d) to the Credit
Agreement, all filings and other actions necessary or desirable to perfect
and preserve the security interest in all material respects in the
Collateral taken as a whole created under this Agreement have been duly
made or taken, and this Agreement, the pledge of the Security Collateral
pursuant hereto and the pledge and assignment of the Account Collateral
pursuant hereto, together with such filings and other actions, create a
valid and perfected security interest in all material respects in the
Collateral taken as a whole, securing the payment of the Secured
Obligations subject in priority only to the liens and security interests
permitted in the Loan Documents.
(i) Except to the extent set forth on Schedule 4.01(d) to the Credit
Agreement, no consent of any other Person and no authorization, approval or
other action by, and no notice to or filing with, any governmental
authority or regulatory body or other third party is required (i) for the
grant by the Grantors of the assignment and security interest granted
hereunder, for the pledge by the Grantors of the Security Collateral
pursuant hereto or for the execution, delivery or performance of this
Agreement by the Grantors, (ii) for the perfection or maintenance of the
pledge, assignment and security interest created hereunder (including the
first priority nature of such pledge, assignment or security interest
subject only to the liens and security interests permitted in the Loan
Documents) in all material respects, except for the filing of financing and
continuation statements under the Uniform Commercial Code, or (iii) for the
exercise by the Agent of its voting or other rights provided for in this
Agreement or the remedies in respect of the Collateral pursuant to this
Agreement, except as may be required in connection with the disposition of
any portion of the Security Collateral by laws affecting the offering and
sale of securities generally.
(j) All of the investment property owned by the Grantors on the date
hereof is listed on Schedule I hereto.
(k) Each of the Assigned Agreements listed on Schedule II hereto to
which any Grantor is a party and each other Bank Hedge Agreement, if any,
to which such Grantor is a party, true and complete copies of each of which
have been furnished the Agent, (i) has been duly authorized, executed and
delivered by each of the Grantors party thereto, (ii) has not been amended
or otherwise modified and is in full force, and effect, and (iii) is
binding upon and enforceable against each of the Grantors party thereto and
each other Person party thereto in accordance with its terms. There exists
no violation or default under any Assigned Agreement by any Grantor or, to
the best of such Grantor's knowledge, any other Person party thereto.
SECTION 9. Further Assurances. (a) Each Grantor agrees that from
------------------
time to time, at its own expense, it shall promptly execute and deliver all
further instruments and
11
<PAGE>
documents, and take all further action, that may be reasonably necessary,
customary or that the Agent may reasonably request, in order to perfect and
preserve any pledge, assignment or security interest granted or purported to be
granted hereby or to enable the Agent to exercise and enforce its rights and
remedies hereunder with respect to any Collateral. Without limiting the
generality of the foregoing, each Grantor shall: (i) at the request of the
Agent, mark conspicuously each chattel paper included in the Receivables in an
individual amount in excess of $75,000 and each of its records pertaining to the
Collateral with a legend, in form and substance reasonably satisfactory to the
Agent, indicating that such chattel paper or Collateral is subject to the
security interest granted hereby; (ii) if any Collateral shall be evidenced by a
promissory note or other instrument or chattel paper, and such notes or
instruments shall have an aggregate principal amount in excess of $75,000
individually, or $500,000 in the aggregate, each Grantor shall deliver and
pledge to the Agent for its benefit and the ratable benefit of the other Secured
Parties such note or instrument duly indorsed and accompanied by duly executed
instruments of transfer or assignment, all in form and substance reasonably
satisfactory to the Agent; provided, that so long as (A) no Event of Default
--------
shall have occurred and be continuing and (B) the Required Lenders shall not
have made the request or granted the consent specified by Section 6.01 of the
Credit Agreement to authorize the Agent to declare the Advances due and payable
pursuant to the provisions of such Section 6.01 and the Agent shall not have
made the demand specified in Section 6.02 of the Credit Agreement requiring the
Borrower to pay amounts in respect of Letters of Credit or the Canadian Borrower
to pay amounts in respect of Bankers' Acceptances, each Grantor may retain for
collection in the ordinary course any instruments received by it in the ordinary
course of business and the Agent shall, promptly upon reasonable request of the
applicable Grantor, make appropriate arrangements for making any instrument
pledged by such Grantor available to it for purposes of presentation, collection
or renewal (any such arrangement to be effected, to the extent deemed
appropriate by the Agent, against trust receipt or like document); (iii) deliver
and pledge to the Agent for its benefit and the ratable benefit of the other
Secured Parties certificates representing the Pledged Shares accompanied by
undated stock powers executed in blank and evidence that all other action that
the Agent may deem reasonably necessary or customary in order to perfect and
protect the liens and security interests created under this Agreement has been
taken; (iv) execute and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices, as may be reasonably
necessary or customary as the Agent may request, in order to perfect and
preserve the pledge, assignment and security interests granted or purported to
be granted hereunder; and (v) promptly notify the Agent in writing of any change
in the information set forth on Schedule V hereto.
(b) Each Grantor hereby authorizes the Agent to file one or more
financing or continuation statements, and amendments thereto, relating to all or
any part of the Collateral without the signature of such Grantor where permitted
by law, upon which evidence of such filing shall be sent promptly to such
Grantor. A photocopy or other reproduction of this Agreement or any financing
statement covering the Collateral or any part thereof shall be sufficient as a
financing statement where permitted by law.
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<PAGE>
(c) Each Grantor shall furnish to the Agent from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as the Agent may reasonably
request, all in reasonable detail.
SECTION 10. As to Equipment and Inventory. (a) Each Grantor shall
-----------------------------
keep its Equipment and Inventory (other than assets sold or otherwise disposed
of as permitted by the Loan Documents) at the places therefore specified in
Section 8(a) or, upon 30 days' prior written notice to the Agent, at such other
places in a jurisdiction where all action required by Section 9 shall have been
taken with respect to the Equipment and Inventory.
(b) No Grantor shall keep in any warehouse Inventory of value of which
exceeds $500,000 at any given time (other than any such warehouses with respect
to which the Grantors have obtained landlord consents in form and substance
reasonably satisfactory to the Agent).
SECTION 11. Insurance. (a) Each Grantor shall, at its own expense,
---------
maintain insurance in accordance with Section 5.01(d) of the Credit Agreement.
Each policy for liability insurance shall provide for all losses to be paid on
behalf of the Agent and the applicable Grantor as their interests may appear,
and each policy for property damage insurance shall provide for all losses to be
paid directly to the Agent, for the ratable benefit of the Secured Parties.
Each such policy shall in addition (i) name the applicable Grantor and the Agent
as insured parties thereunder (without any representation or warranty by or
obligation upon the Agent) as their interests may appear, (ii) contain the
agreement by the insurer that any loss thereunder with respect to damage to the
Grantor's property in an amount in excess of $500,000 shall be payable to the
Agent notwithstanding any action, inaction or breach of representation or
warranty by such Grantor, (iii) provide that there shall be no recourse against
the Agent for payment of premiums or other amounts with respect thereto and (iv)
provide that at least ten days' prior written notice of cancellation or of lapse
shall be given to the Agent by the insurer. Each Grantor shall, as often as the
Agent reasonably requests, deliver to the Agent original or duplicate policies
of such insurance. Further, each Grantor shall, at the request of the Agent,
duly execute and deliver instruments of assignment of such insurance policies to
comply with the requirements of Section 9 and use reasonable efforts to cause
the insurers to acknowledge notice of such assignment.
(b) Reimbursement under any liability insurance maintained by any
Grantor pursuant to this Section 11 may be paid directly to the Person who shall
have incurred liability covered by such insurance. In case of any loss
involving damage to Equipment or Inventory when Section 11(c) is not applicable,
the applicable Grantor shall be permitted to use any proceeds to make or cause
to be made the necessary repairs to or replacements or substitutions of or
additions to such Equipment, Inventory, fixed assets, real property or
improvements relating to property covered by such payments (replacements or
substitutions to be of such same type of property), and any proceeds of
insurance maintained by such Grantor pursuant to this Section 11 shall be paid
and applied pursuant to the terms of the Credit Agreement.
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<PAGE>
(c) Upon (i) the occurrence and during the continuance of any Event of
Default and (ii) either the making of the request or the granting of the consent
specified in Section 6.01 of the Credit Agreement to authorize the Agent to
declare the Advances dues and payable pursuant to the provisions of such Section
6.01 or the making of the demand specified in Section 6.02 of the Credit
Agreement to require the Borrower to pay amounts in respect of Letters of Credit
or the Canadian Borrower to pay amounts in respect of Bankers' Acceptances, all
insurance payments in respect of such Equipment or Inventory shall be paid to
and applied by the Agent as specified in Section 19(b).
SECTION 12. Place of Perfection; Records; Collection of Receivables.
-------------------------------------------------------
(a) Each Grantor shall keep its chief places of business and chief executive
offices and the offices where it keeps its records concerning the Collateral and
all originals of all chattel paper that evidence Receivables, at the location
therefor specified in Section 8(a) or, upon 30 days' prior written notice to the
Agent, at such other locations in a jurisdiction where all actions required by
Section 9 shall have been taken with respect to the Collateral.
(b) Except as otherwise provided in this subsection (b), each Grantor
shall continue to collect, at its own expense, all amounts due or to become due
to such Grantor under the Receivables. In connection with such collections,
each Grantor may take and, upon the occurrence and during the continuance of an
Event of Default, at the Agent's direction, with the approval of the Required
Lenders, shall take such action as the Agent may deem necessary or advisable to
enforce collection of the Receivables including, without limitation, (i)
extending or renewing the time or times of payment, or settling for less than
the total unpaid balance, which such Grantor finds appropriate in accordance
with sound judgment consistent with prior business practice and (ii) allowing a
refund or credit due as a result of returned or damaged merchandise, in each
such case in accordance with such Grantor's ordinary course of business
consistent with its prior collection practices; provided, however, that the
-------- -------
Agent shall have the right at any time, upon (i) the occurrence of and during
the continuance of an Event of Default and (ii) either the making of the request
or the granting of the consent specified by Section 6.01 of the Credit Agreement
to authorize the Agent to declare the Advances due and payable pursuant to the
provisions of such Section 6.01 or the making of the demand specified in Section
6.02 of the Credit Agreement to require the Borrower to pay amounts in respect
of Letters of Credit or the Canadian Borrower to pay amounts in respect of
Bankers' Acceptances, upon notice to such Grantor of its intention to do so, to
notify the obligors under any Receivables of the assignment of such Receivables
to the Agent and to direct such obligors to make payment of all amounts due or
to become due to such Grantor thereunder directly to the Agent and, upon such
notification and at the expense of such Grantor, to enforce collection of any
such Receivables, and to adjust, settle or compromise the amount or payment
thereof, in the same manner and to the same extent as such Grantor might have
done. After receipt by any Grantor of the notice from the Agent referred to in
the proviso to the immediately preceding sentence, (i) all amounts and proceeds
-------
(including instruments) received by such Grantor in respect of the Receivables
shall be received in trust for the benefit of the Agent hereunder, shall be
segregated from other funds of such Grantor and shall be forthwith paid over to
the Agent in the same form as so received (with any necessary indorsement) to be
applied as provided by the terms of the Credit Agreement and (ii)
14
<PAGE>
such Grantor shall not adjust, settle or compromise the amount or payment of any
Receivable, release wholly or partly any obligor thereof, or allow any credit or
discount thereon.
SECTION 13. Voting Rights; Dividends; Etc. (a) So long as no Event
-----------------------------
of Default shall have occurred and be continuing:
(i) Each Grantor shall be entitled to exercise any and all voting
and other consensual rights pertaining to the Security Collateral or any
part thereof for any purpose not inconsistent with the terms of this
Agreement or the other Loan Documents; provided, however, that no Grantor
-------- -------
shall exercise or refrain from exercising any such right if such action is
reasonably expected to have a Material Adverse Effect.
(ii) Each Grantor shall be entitled to receive and retain any and all
dividends and interest paid in respect of the Security Collateral;
provided, however, that any and all
-------- -------
(A) dividends and interest paid or payable other than in cash in
respect of, and instruments and other property received, receivable or
otherwise distributed in respect of, or in exchange for, such Security
Collateral,
(B) dividends and other distributions paid or payable in cash in
respect of such Security Collateral in connection with a partial or
total liquidation or dissolution or in connection with a reduction of
capital, capital surplus or paid-in-surplus, and
(C) cash paid, payable or otherwise distributed in respect of
principal of, or in redemption of, or in exchange for, any Security
Collateral,
shall be, and shall be forthwith delivered to the Agent to hold as, Security
Collateral and shall, if received by such Grantor, be received in trust for the
benefit of the Agent, be segregated from other property or funds of such Grantor
and be forthwith delivered to the Agent as Security Collateral in the same form
as so received (with any necessary indorsement or assignment) in each case,
except to the extent such distributions are permitted by the terms of the Credit
Agreement.
(iii) The Agent shall execute and deliver (or cause to be executed
and delivered) to each Grantor all such proxies and other instruments as
such Grantor may request for the purpose of enabling such Grantor to
exercise the voting and other rights that it is entitled to exercise
pursuant to paragraph (i) above and to receive the dividends or interest
payments that it is authorized to receive and retain pursuant to paragraph
(ii) above.
15
<PAGE>
(b) Upon the occurrence and during the continuance of an Event of
Default:
(i) All rights of any Grantor (A) to exercise or refrain from
exercising the voting and other consensual rights that it would otherwise
be entitled to exercise pursuant to Section 13(a)(i) shall, upon notice to
such Grantor by the Agent, cease and (B) to receive the dividends and
interest payments that such Grantor would otherwise be authorized to
receive and retain pursuant to Section 13(a)(ii) shall automatically cease,
and all such rights shall thereupon become vested in the Agent, which shall
thereupon have the sole right to exercise or refrain from exercising such
voting and other consensual rights and to receive and hold as Security
Collateral such dividends and interest payments.
(ii) All dividends and interest payments that are received by any
Grantor contrary to the provisions of paragraph (i) of this Section 13(b)
shall be received in trust for the benefit of the Agent, shall be
segregated from other funds of such Grantor and shall be forthwith paid
over to the Agent as Security Collateral in the same form as so received
(with any necessary indorsement).
SECTION 14. As to the Assigned Agreements. (a) Each Grantor shall,
-----------------------------
at its expense, perform and observe all terms and provisions of each Assigned
Agreement to be performed or observed by it, maintain the Assigned Agreements to
which it is a party in full force and effect except to the extent otherwise
permitted by the Credit Agreement and enforce each of the Assigned Agreements in
accordance with the terms thereof except to the extent the failure so to
perform, observe the terms and provisions of, or enforce, any such Assigned
Agreement other than the Purchase Agreement could reasonably be expected to have
a Material Adverse Effect; and
(b) Each Grantor hereby consents on its behalf and on behalf of its
Subsidiaries to the assignment and pledge to the Agent for its benefit and
the ratable benefit of the other Secured Parties of each Assigned Agreement
to which such Grantor or such Subsidiary is a party by any other Grantor
hereunder.
SECTION 15. Transfers and Other Liens; Additional Shares. (a) Each
--------------------------------------------
Grantor agrees not (i) to sell, assign (by operation of law or otherwise) or
otherwise dispose of, or grant any option with respect to, any of the Collateral
of such Grantor, except sales, assignments and dispositions otherwise permitted
under Section 5.02(e) of the Credit Agreement, or (ii) to create or suffer to
exist any Lien upon or with respect to any of the Collateral, except for the
pledge, assignment and security interest created under this Agreement and the
Liens permitted under Section 5.02(a) of the Credit Agreement.
(b) Each Grantor shall for the Pledged Shares and all other shares of
stock pledged hereunder that are issued by issuers which are controlled by such
Grantor, cause each issuer of the Pledged Shares and each issuer of all other
shares of stock pledged hereunder not to issue any stock or other securities in
addition to or in substitution for the Pledged Shares or such other shares
issued by any such issuer, except to such Grantor.
16
<PAGE>
SECTION 16. Agent Appointed Attorney-in-Fact. Each Grantor hereby
--------------------------------
irrevocably appoints the Agent as its attorney-in-fact, with full authority in
the place and stead of such Grantor and in the name of such Grantor or otherwise
upon (i) the occurrence and during the continuance of an Event of Default and
(ii) either the making of the request or the granting of the consent specified
by Section 6.01 of the Credit Agreement to authorize the Agent to declare the
Advances due and payable pursuant to the provisions of such Section 6.01 or the
making of the demand specified in Section 6.02 of the Credit Agreement to
require the Borrower to pay amounts in respect of Letters of Credit or the
Canadian Borrower to pay amounts in respect of Bankers' Acceptances, and upon
notice to such Grantor, to take any action and to execute any instrument that
the Agent may deem reasonably necessary or advisable to accomplish the purposes
of this Agreement, including, without limitation:
(a) to obtain and adjust insurance required to be paid to the Agent
pursuant to Section 11,
(b) to ask for, demand, collect, sue for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become due under
or in respect of any of the Collateral,
(c) to receive, indorse and collect any drafts or other instruments,
documents and chattel paper in connection with Section 16(a) or 16(b) above, and
(d) to file any claims, to take any action or to institute any
proceedings that the Agent may deem reasonably necessary or desirable for the
collection of any of the Collateral or otherwise to enforce compliance with the
terms and conditions of any Assigned Agreement or the rights of the Agent with
respect to any of the Collateral; provided, that the Agent shall act with
--------
reasonable care in the exercise of the foregoing; and provided, further, that
-------- -------
the Agent shall give the Grantors not less than ten Business Days' prior written
notice of the time and place of any sale or other intended disposition of the
Collateral, except any such Collateral which is perishable or threatens to
decline speedily in value or is of a type customarily sold on a recognized
market.
SECTION 17. Agent May Perform. Upon and during the continuance of an
-----------------
Event of Default, if any Grantor fails to perform any agreement contained
herein, the Agent may itself perform, or cause performance of, such agreement,
and the expenses of the Agent incurred in connection therewith shall be payable
by the Grantors under Section 21(b).
SECTION 18. The Agent's Duties. The powers conferred on the Agent
------------------
hereunder are solely to protect its and the other Secured Parties' interest in
the Collateral and, beyond the exercise of reasonable care, shall not impose any
duty upon it to exercise any such powers. Except for the safe custody of any
Collateral in its possession and the accounting for moneys actually received by
it hereunder, the Agent shall have no duty as to any Collateral, as to
ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relative to any Security Collateral,
whether or not the Agent or any other Secured
17
<PAGE>
Party has or is deemed to have knowledge of such matters, or as to the taking of
any necessary steps to preserve rights against any parties or any other rights
pertaining to any Collateral in each case, beyond the exercise of reasonable
care. The Agent shall be deemed to have exercised reasonable care in the custody
and preservation of any Collateral in its possession if such Collateral is
accorded treatment substantially equal to that which the Agent accords its own
property.
Anything contained herein to the contrary notwithstanding, the Agent
may from time to time, when the Agent deems it to be necessary, appoint one or
more subagents (each a "Subagent") for the Agent hereunder with respect to all
--------
or any part of the Collateral. In the event that the Agent so appoints any
Subagent with respect to any Collateral, (1) the assignment and pledge of such
Collateral and the security interest granted in such Collateral by the Grantors
hereunder shall be deemed for purposes of this Security Agreement to have been
made to such Subagent for the ratable benefit of the Secured Parties, as
security for the Secured Obligations of the Grantors, (2) such Subagent shall
automatically be vested with all rights, powers, privileges, interests and
remedies of the Agent hereunder with respect to such Collateral and (3) the term
"Agent," when used herein in relation to any rights, powers, privileges,
interests and remedies of the Agent with respect to such Collateral, shall
include such Subagent; provided, however, that no such Subagent shall be
-------- -------
authorized to take any action with respect to any such Collateral unless and
except to the extent expressly authorized in writing by the Agent.
SECTION 19. Remedies. If (i) any Event of Default shall have
--------
occurred and be continuing and (ii) either the making of the request or the
granting of the consent specified by Section 6.01 of the Credit Agreement to
authorize the Agent to declare the Advances due and payable pursuant to the
provisions of such Section 6.01 or the making of the demand specified in Section
6.02 of the Credit Agreement to require the Borrower to pay amounts in respect
of Letters of Credit or the Canadian Borrower to pay amounts in respect of
Bankers' Acceptances shall have occurred:
18
<PAGE>
(a) The Agent may exercise in respect of the Collateral, in addition
to other rights and remedies provided for herein or otherwise available to
it, all the rights and remedies of a secured party upon default under the
N.Y. Uniform Commercial Code (whether or not the N.Y. Uniform Commercial
Code applies to the affected Collateral), and also may (i) require each
Grantor to, and such Grantor hereby agrees that it will at its expense and
upon request of the Agent forthwith, assemble all or part of the Collateral
as directed by the Agent (to the extent permitted by applicable law and
without breach of the peace) and make it available to the Agent at a place
and time to be designated by the Agent that is reasonably convenient to
both parties, (ii) without notice except as specified below, sell the
Collateral or any part thereof in one or more parcels at public or private
sale, at any of the Agent's offices or elsewhere, for cash, on credit or
for future delivery, and upon such other terms as the Agent may deem
commercially reasonable, (iii) occupy any premises owned or leased by any
Grantor where the Collateral or any part thereof is assembled or located
for a reasonable period in order to effectuate its rights and remedies
hereunder or under law, without obligation to such Grantor in respect of
such occupation, and (iv) exercise any and all rights and remedies of the
Grantors under or in connection with the Assigned Agreements, the
Receivables and the Related Contracts or otherwise in respect of the
Collateral, including, without limitation, any and all rights of any
Grantor to demand or otherwise require payment of any amount under, or
performance of any provision of, the Assigned Agreements, the Receivables
and the Related Contracts. Each Grantor agrees that, to the extent notice
of sale shall be required by law, at least ten days' notice to such Grantor
of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification. The
Agent shall not be obligated to make any sale of Collateral regardless of
notice of sale having been given. The Agent may adjourn any public or
private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned.
(b) All cash proceeds received by the Agent in respect of any sale
of, collection from, or other realization upon all or any part of the
Collateral shall be applied (after payment of any amounts payable to the
Agent pursuant to Section 21) in whole or in part by the Agent for its
benefit and the ratable benefit of the other Secured Parties against, all
or any part of the Secured Obligations in such order as the Agent shall
elect. Any surplus of such cash or cash proceeds held by the Agent and
remaining after payment in full of all of the Secured Obligations shall be
paid over to the Grantors or their successors or assigns, or as a court of
competent jurisdiction may direct.
(c) All payments received by the Grantors under or in connection with
any Assigned Agreement or otherwise in respect of the Collateral shall be
received in trust for the benefit of the Agent, shall be segregated from
other funds of the Grantors and shall be forthwith paid over to the Agent
in the same form as so received (with any necessary indorsement).
19
<PAGE>
(d) The Agent may, without notice to any Grantor, except as required
by law, and at any time or from time to time, charge, set-off and otherwise
apply all or any part of the L/C Cash Collateral Account against the
Secured Obligations or any part thereof.
(e) To the extent the Collateral is located in the State of
Louisiana, upon (i) the occurrence and during the continuance of an Event
of Default and (ii) either the making of the request or the granting of the
consent specified by Section 6.01 of the Credit Agreement to authorize the
Agent to declare the Advances due and payable pursuant to the provisions of
such Section 6.01 or the making of the demand specified in Section 6.02 of
the Credit Agreement to require the Borrower to pay amounts in respect of
Letters of Credit or the Canadian Borrower to pay amounts in respect of
Bankers' Acceptances, it shall be lawful for the Agent, and the Agent is
hereby authorized by the Grantor without making a demand or putting in
default (a putting in default being expressly waived), to cause all and
singular the Collateral to be seized and sold by executory of ordinary
process, at the Agent's sole option, with or without appraisement
(appraisement being expressly waived), either as an entirety or in lots or
parcels, all as the Agent may determine, to the highest bidder for cash (or
such other terms as the Agent may elect), and otherwise exercise the
rights, powers and remedies provided for herein and under applicable law.
The Agent is hereby appointed agent and attorney-in-fact for the Grantor
and is hereby authorized and empowered to carry out and enforce all
incorporeal rights pledged by the Grantor hereunder. This power, being
coupled with an interest, is irrevocable so long as any of the Secured
Obligations remain outstanding. For purposes of Louisiana executory
process, the Grantor acknowledges the liens, security interests and the
Secured Obligations and does hereby confess judgment in favor of the Agent
for the full amount of the Secured Obligations not paid when due. Any and
all declarations of fact made by authentic act before a notary public in
the presence of two witnesses by a person declaring that such facts lie
within his knowledge shall constitute authentic evidence of such facts for
the purpose of executory process. Upon (i) the occurrence and during the
continuance of an Event of Default and (ii) either the making of the
request or the granting of the consent specified by Section 6.01 of the
Credit Agreement to authorize the Agent to declare the Advances due and
payable pursuant to the provisions of such Section 6.01 or the making of
the demand specified in Section 6.02 of the Credit Agreement to require the
Borrower to pay amounts in respect of Letters of Credit or the Canadian
Borrower to pay the amounts in respect of Bankers' Acceptances, in addition
to all other rights herein conferred on Agent, the Grantor hereby expressly
designates the Agent, or any agents, servants, employees or other person
named by the Agent at that time, as "Keeper" of each and all the Collateral
pending the judicial sale thereof, with all the powers set forth in La.
R.S. 9:5131 et seq. (as hereinafter amended). The designation of a Keeper
made herein shall not be deemed to require the Agent to provoke the
appointment of such a Keeper. The Grantor waives to the fullest extent
permitted by law: (a) the benefit of appraisement provided for in Louisiana
Code of Civil Procedure articles 2332, 2336, 2723, and 2724, and all other
laws conferring the same; (b) the demand and three days' delay provided for
in Louisiana Code of Civil Procedure articles 2639 and 2721; (c) the notice
of seizure provided for in Louisiana Code of Civil Procedure articles 2293
and 2721; (d) the three days' delay provided for in Louisiana
20
<PAGE>
Code of Civil Procedure articles 2331 and 2772; and (e) the other benefits
provided in Louisiana Code of Civil Procedure articles 2331, 2722 and 2723.
SECTION 20. Registration Rights. If the Agent shall determine to exercise
-------------------
its right to sell all or any of the Security Collateral pursuant to Section 19,
each Grantor agrees that, upon request of the Agent, such Grantors will, at its
own expense:
(a) execute and deliver, and cause each issuer of the Security Collateral
contemplated to be sold and the directors and officers thereof to execute and
deliver, all such instruments and documents, and do or cause to be done all such
other acts and things, as may be reasonably necessary or, in the opinion of the
Agent, customary to register such Security Collateral under the provisions of
the Securities Act of 1933, (as amended from time to time, the "Securities
----------
Act"), to cause the registration statement relating thereto to become effective
- ---
and to remain effective for such period as prospectuses are required by law to
be furnished and to make all amendments and supplements thereto and to the
related prospectus that, in the opinion of the Agent, are reasonably necessary
or customary, all in conformity with the requirements of the Securities Act and
the rules and regulations of the Securities and Exchange Commission applicable
thereto;
(b) use its best efforts to qualify the Security Collateral under the
state securities or "Blue Sky" laws and to obtain all necessary governmental
approvals for the sale of the Security Collateral, as reasonably requested by
the Agent;
(c) cause each such issuer to make available to its security holders, as
soon as practicable, an earnings statement that will satisfy the provisions of
Section 11(a) of the Securities Act;
(d) provide the Agent with such other information (including, without
limitation, forward looking information) as may be reasonably necessary or, in
the opinion of the Agent, customary to enable the Agent to effect the sale of
such Security Collateral; and
(e) do or cause to be done all such other acts and things as may be
reasonably necessary to make such sale of the Security Collateral or any part
thereof valid and binding and in compliance with applicable law.
The Agent is authorized, in connection with any sale of the Collateral pursuant
to Section 19, to deliver or otherwise disclose to any prospective purchaser of
the Security Collateral (i) any registration statement or prospectus, and all
supplements and amendments thereto, prepared pursuant to clause (a) above, (ii)
any information and projections provided to it pursuant to clause (d) above and
(iii) any other information in its possession relating to the Security
Collateral (not subject to a confidentiality).
SECTION 21. Indemnity and Expenses. (a) Each Grantor agrees jointly and
----------------------
severally to indemnify the Secured Parties in connection with any claims, losses
and liabilities resulting from
21
<PAGE>
this Agreement to the extent required by, and in accordance with the provisions
of, Section 8.04(b) of the Credit Agreement as if such Grantor were a party to
the Credit Agreement.
(b) Each Grantor agrees jointly and severally to pay the Agent such amounts
of any fees and expenses incurred by the Agent in connection with the
administration of this Agreement as is required by, and in accordance with the
provisions of, Sections 8.04(a) and (b) of the Credit Agreement as if such
Grantor were a party to the Credit Agreement.
SECTION 22. Security Interest Absolute. The obligations of the Grantors
--------------------------
under this Agreement are independent of the Secured Obligations and a separate
action or actions may be brought and prosecuted against any Grantor to enforce
this Agreement, irrespective of whether any action is brought against any other
Loan Party or whether any other Loan Party is joined in any such action or
actions. All rights of the Agent and the pledge, assignment and security
interest hereunder, and all obligations of the Grantors hereunder, shall be
absolute and unconditional, irrespective of:
(i) any lack of validity or enforceability of any Loan Document, any
Bank Hedge Agreement or any other agreement or instrument relating thereto;
(ii) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Secured Obligations, or any other amendment or
waiver of or any consent to any departure from any Loan Document or any Bank
Hedge Agreement, including, without limitation, any increase in the Secured
Obligations resulting from the extension of additional credit to any Loan Party
or otherwise;
(iii) any taking, exchange, release or nonperfection of any collateral,
or any taking, release or amendment or waiver of or consent to departure from
any guaranty, for all or any of the Secured Obligations;
(iv) any manner of application of collateral, or proceeds thereof, to
all or any of the Secured Obligations, or any manner of sale or other
disposition of any collateral for all or any of the Secured Obligations or any
other assets of any Grantor or any of its Subsidiaries;
(v) any change, restructuring or termination of the corporate
structure or existence of any Grantor or any of its Subsidiaries; or
(vi) any other circumstance that might otherwise constitute a defense
available to, or a discharge of, any Grantor or a third-party grantor of a
security interest.
This Agreement shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Secured Obligations is rescinded or
must otherwise be returned by any Secured Party or by any other Person upon the
insolvency, bankruptcy or reorganization of any Loan Party or otherwise, all as
though such payment had not been made.
22
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SECTION 23. Amendments; Waivers; Etc. (a) No amendment or waiver of any
------------------------
provision of this Agreement, and no consent to any departure by any Grantor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the Agent, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.
(b) No failure on the part of the Agent, any Lender Party or any Hedge Bank
to exercise, and no delay in exercising, any right, power or privilege hereunder
shall operate as a waiver thereof or consent thereto; nor shall any single or
partial exercise of any such right, power or privilege preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
(c) Upon the execution and delivery by any Person of a security agreement
supplement in substantially the form of Exhibit B hereto (each a "Security
--------
Agreement Supplement"), (i) such Person shall be referred to as an "Additional
- --------------------
Grantor" and shall be and become a Grantor, and each reference in this Agreement
to "Grantor" or "Grantors" shall also mean and be a reference to such Additional
Grantor and (ii) the schedules attached to such Security Agreement Supplement
shall be incorporated into and become a part of and supplement Schedules I
through V hereto, and the Agent may attach such Schedules as supplements to such
Schedules, and each reference to such Schedules shall mean and be a reference to
such Schedules, as supplemented pursuant hereto.
(d) Delivery by telecopier of an executed counterpart of any amendment or
waiver of any provision of this Agreement or of any Supplement or Schedule
hereto shall be effective as delivery of a manually executed counterpart
thereof.
SECTION 24. Addresses for Notices. All notices and other communications
---------------------
provided for hereunder shall be in writing (including telecopier, telegraphic or
communication) and mailed, telecopied, telegraphed, cabled or delivered, if to
any Grantor, c/o Better Minerals & Aggregates Company, Route 522 North, P.O. Box
187, Berkeley Springs, WV 25411, Attention: Chief Financial Officer, telecopier
number (304) 258-3500, and if to the Agent, any Lender Party or any Hedge Bank,
addressed to it at its address set forth in Section 8.02 of the Credit Agreement
or, as to any party, at such other address as shall be designated by such party
in a written notice to each other party complying as to delivery with the terms
of this Section 24. All such notices and other communications shall, when
mailed, telecopied or telegraphed, be effective when received by the addressee.
SECTION 25. Continuing Security Interest; Assignments Under the Credit
----------------------------------------------------------
Agreement. This Agreement shall create a continuing security interest in the
- ---------
Collateral and shall (a) remain in full force and effect until the latest of the
payment in full in cash of the Secured Obligations, constituting an Advance or
other Secured Obligations then due and payable, the Termination Date and the
termination or expiration of all Bank Hedge Agreements or as otherwise permitted
under the Loan Documents, (b) be binding upon the Grantors, their successors
and assigns and (c) inure, together with the rights and remedies of the Agent
hereunder, to the benefit of the Secured Parties and their respective
successors, transferees and assigns. Without limiting the
23
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generality of the foregoing clause (c), any Lender Party may assign or otherwise
transfer all or any portion of its rights and obligations under the Credit
Agreement (including, without limitation, all or any portion of its Commitment,
the Advances owing to it and any Note or Notes held by it) to any other Person,
and such other Person shall thereupon become vested with all the benefits in
respect thereof granted to such Lender Party herein or otherwise, in each case
as provided in Section 8.07 of the Credit Agreement.
SECTION 26. Release and Termination. (a) Upon any sale, lease, transfer
-----------------------
or other disposition of any item of Collateral in accordance with the terms of
the Loan Documents, the Agent will, at the applicable Grantor's expense, execute
and deliver to such Grantor such documents as such Grantor shall reasonably
request to evidence the release of such item of Collateral from the assignment
and security interest granted hereby; provided, however, that (i) at the time of
-------- -------
such request and such release, no Event of Default shall have occurred and be
continuing, (ii) except to the extent such sale, lease or transfer or other
disposition is permitted under Section 5.02(e) of the Credit Agreement, such
Grantor shall have delivered to the Agent, at least ten Business Days prior to
the date of the proposed release, a written request for release describing the
item of Collateral and the terms of the sale, lease, transfer or other
disposition in reasonable detail, including, without limitation, the price
thereof and any expenses in connection therewith, together with a form of
release for execution by the Agent and a certification by such Grantor to the
effect that the transaction is in compliance with the Loan Documents and as to
such other matters as the Agent may reasonably request and (iii) the proceeds of
any such sale, lease, transfer or other disposition required to be applied in
accordance with Section 2.07 of the Credit Agreement shall be paid to, or in
accordance with the instructions of, the Agent at the closing.
(b) Upon the latest of the payment in full in cash of the Secured
Obligations constituting an Advance or other Secured Obligations then due and
payable, the Termination Date and the termination or expiration of all Bank
Hedge Agreements, the pledge, assignment and security interest granted hereby
shall terminate and all rights to the Collateral shall revert to the Grantors.
Upon any such termination, the Agent will, at the applicable Grantor's expense,
execute and deliver to such Grantor such documents as such Grantor shall
reasonably request to evidence such termination and promptly release and return
Collateral in its possession.
SECTION 27. Mortgages. In the event that any of the Collateral hereunder
---------
is also subject to a valid and enforceable Lien under the terms of any mortgage
and the terms of such mortgage are inconsistent with the terms of this
Agreement, then with respect to such Collateral, the terms of such mortgage
shall be controlling in the case of fixtures and leases, letting and licenses
of, and contracts and agreements relating to, the lease of real property, and
the terms of this Agreement shall be controlling in the case of all other
Collateral.
SECTION 28. Execution in Counterparts. This Agreement may be executed in
-------------------------
any number of counterparts, each of which when so executed shall be deemed to be
an original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.
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SECTION 29. Governing Law. (a) This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of New York, except to the
extent that the validity or perfection of the security interest hereunder, or
remedies hereunder, in respect of any particular Collateral are governed by the
laws of a jurisdiction other than the State of New York.
(b) Each Grantor hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of any New York State
court or federal court of the United States of America sitting in New York City,
and any appellate court from any thereof, in any action or proceeding arising
out of or relating to this Agreement or any other Loan Document or Bank Hedge
Agreement to which it is or is to be a party, or for recognition and enforcement
of any judgment, and each Grantor hereby irrevocably and unconditionally agrees
that all claims in respect of any such action or proceeding may be heard and
determined in any such New York State or, to the extent permitted by law, in
such federal court. Each Grantor irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection or defense
that it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or any of the other Loan
Documents to which it is or is to be a party in any New York State or federal
court. Each Grantor hereby irrevocably waives, to the fullest extent permitted
by law, the defense of an inconvenient forum to the maintenance of such action
or proceeding in any such court. Each Grantor agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing herein shall affect the right that any party may otherwise have to
commence or participate in any action, suit or proceeding relating to this
Agreement, any of the other Loan Documents or any Bank Hedge Agreement to which
it is or is to be a party, or otherwise to proceed against any Grantor, in any
other jurisdiction.
(c) Each Grantor irrevocably consents to the service of any and all
process in any such action, suit or proceeding at the address set forth below
its name on the signature page hereof, by any method permitted by law. Each
Grantor agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law.
(d) To the extent that any Grantor has or hereafter may acquire immunity
from jurisdiction of any court or from any legal process (whether through
service or notice, attachment prior to judgment, attachment in aid of execution,
execution or otherwise) with respect to themselves or their property, such
Grantor hereby irrevocably waives such immunity in respect of its Obligations
under this Agreement, any other Loan Document and any Bank Hedge Agreement to
which it is or is to be a party.
25
<PAGE>
(e) Each Grantor irrevocably waives all right to trial by jury in any
action, proceeding or counterclaim (whether based on contract, tort or
otherwise) arising out of or relating to this Agreement, any other Loan Document
or any Bank Hedge Agreement or the actions of the Agent, any Lender Party or any
Hedge Bank in the negotiation, administration, performance or enforcement
thereof.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
duly executed and delivered by its officer thereunto duly authorized as of the
date first above written.
BETTER MINERALS & AGGREGATES COMPANY
By: /s/ Richard Nick
-------------------------------
Name: Richard Nick
Title: Vice President
PENNSYLVANIA GLASS SAND CORPORATION
By: /s/ Richard Nick
-------------------------------
Name: Richard Nick
Title: Vice President
THE FULTON LAND AND TIMBER COMPANY
By: /s/ Richard Nick
-------------------------------
Name: Richard Nick
Title: Vice President
OTTAWA SILICA COMPANY
By: /s/ John A. Ulizio
-------------------------------
Name:
Title:
26
<PAGE>
GEORGE F. PETTINOS, INC.
By: /s/ Richard Nick
-------------------------------
Name: Richard Nick
Title: Vice President
ELLEN JAY, INC.
By: /s/ Richard Nick
-------------------------------
Name: Richard Nick
Title: Vice President
U.S. SILICA COMPANY
By: /s/ Richard Nick
-------------------------------
Name: Richard Nick
Title: Vice President
BETTER MATERIALS CORPORATION
By: /s/ Richard Nick
-------------------------------
Name: Richard Nick
Title: Vice President
BMC TRUCKING, INC.
By: /s/ Richard Nick
-------------------------------
Name: Richard Nick
Title: Vice President
27
<PAGE>
BUCKS COUNTY CRUSHED STONE COMPANY
By: /s/ Richard Nick
-------------------------------
Name: Richard Nick
Title: Vice President
CHIPPEWA FARMS CORPORATION
By: /s/ Richard Nick
-------------------------------
Name: Richard Nick
Title: Vice President
SHORE STONE COMPANY, INC.
By: /s/ Richard Nick
-------------------------------
Name: Richard Nick
Title: Vice President
COMMERCIAL STONE CO., INC.
By: /s/ Richard Nick
-------------------------------
Name: Richard Nick
Title: Vice President
STONE MATERIALS COMPANY, LLC
By: Better Minerals & Aggregates
Company, as Manager
By: /s/ Richard Nick
-------------------------------
Name: Richard Nick
Title: Vice President
28
<PAGE>
COMMERCIAL AGGREGATES TRANSPORTATION
AND SALES, LLC
By: Stone Materials Company, LLC, as
Manager
By: /s/ Richard Nick
-------------------------------
Name: Richard Nick
Title: Vice President
29
<PAGE>
BANQUE NATIONALE DE PARIS,
as Agent
By: /s/ Richard Cushing
-------------------------------
Name: Richard Cushing
Title: Director
By: /s/ Paul Barnes
-------------------------------
Name: Paul Barnes
Title: Assistant Vice President
30
<PAGE>
SCHEDULE I
to
Security Agreement
Part A
------
Pledged Shares
Percentage of
Stock Issued and
Class of Par Certificate Number Outstanding
Grantor Issuer Stock Value Number of Shares Shares of Issuer
Part B
------
Pledged Debt
Outstanding
Grantor Issuer Description of Debt Final Maturity Principal Amount
<PAGE>
SCHEDULE II
to
Security Agreement
Assigned Agreements
-------------------
<PAGE>
SCHEDULE III
to
Security Agreement
Locations of Equipment and Inventory
------------------------------------
<PAGE>
SCHEDULE IV
to
Security Agreement
Blocked Accounts
----------------
<PAGE>
SCHEDULE V
to
Security Agreement
Principal Places of Business, Trade Names, Etc.
-----------------------------------------------
<PAGE>
EXHIBIT A
to
Security Agreement
BLOCKED ACCOUNT LETTER
______ __, [199_] [20__]
[Blocked Account Bank Address]
Attn: [ ]
Better Minerals & Aggregates Company
Ladies and Gentlemen:
Reference is made to the deposit accounts listed on the attached Schedule I
into which certain monies, instruments and other properties are deposited from
time to time (the "Accounts") maintained with you by [Name of Grantor] (the
--------
"Company"). Pursuant to the Security Agreement dated as of [September 30],
-------
1999 (the "Security Agreement"), the Company has granted to Banque Nationale de
------------------
Paris, as agent (the "Agent") for the Secured Parties referred to in the Credit
-----
Agreement dated as of [September 30], 1999 (the "Credit Agreement") with Better
----------------
Minerals & Aggregates Company, BMAC Holdings, Inc. and George F. Pettinos
(Canada) Limited, a security interest in certain property of the Company,
including, among other things, the following (the "Account Collateral"): the
------------------
Accounts, all funds held therein and all certificates and instruments, if any,
from time to time representing or evidencing the Accounts, all interest,
dividends, cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of the then existing Account Collateral and all proceeds of any and all of the
foregoing Account Collateral and, to the extent not otherwise included, all (i)
payments under insurance (whether or not the Agent is the loss payee thereof),
or any indemnity, warranty or guaranty, payable by reason of loss or damage to
or otherwise with respect to any of the foregoing Account Collateral and (ii)
cash. It is a condition to the continued maintenance of the Accounts with you
that you agree to this letter agreement.
<PAGE>
By signing this letter agreement, you acknowledge notice of the Security
Agreement as it pertains to this Blocked Account Letter and confirm to the Agent
that you have received no notice of any other pledge or assignment of the
Accounts at this time. Further, you hereby agree with the Agent that:
(a) Notwithstanding anything to the contrary in any other agreement
relating to the Accounts, the Accounts are and will be subject to the terms and
conditions of the Security Agreement as it pertains to this Blocked Account
Letter, will be maintained solely for the benefit of the Agent, will be entitled
"[Name of Grantor], Banque Nationale de Paris, as Agent" and will be subject to
written instructions only from an officer of the Agent. You are hereby permitted
to follow the instructions of the Company until such time as you receive written
instructions to the contrary from the Agent.
(b) Upon the written request of the Agent to you, which request shall
specify that an "Event of Default" under the Credit Agreement has occurred and
is continuing (which writing may be by telex or telecopy and upon which you may
conclusively rely, absent manifest error), you shall immediately transfer (at
the cost and expense of the Company) subject to your usual deposit terms, all
available funds then or thereafter deposited in the Accounts by wire transfer
into the Agent's Account at the Federal Reserve Bank of New York, 33 Liberty
Street, New York, NY, 10048, [ABA No. 026007689, for further credit to Account
No. 750420-701-03].
(c) From and after the date that the Agent shall have sent to you a
written notice (which writing may be by telex or telecopy and upon which you may
conclusively rely, absent manifest error) that an "Event of Default" under the
Credit Agreement has occurred and until the date, if any, that the Agent shall
have advised you in writing (which writing may be by telex or telecopy and upon
which you may conclusively rely, absent manifest error) that no Event of Default
is continuing, you shall not honor any withdrawal or transfer from, or any
check, draft or other item of payment on, the Accounts, other than any
withdrawal, transfer, check, draft or other item made in writing by the Agent or
bearing the written consent of the Agent, and, to the extent of available funds
in the Accounts, you shall honor each such withdrawal, transfer, check, draft or
other item made in writing by the Agent or bearing the written consent of the
Agent.
(d) You will follow your usual operating procedures for the handling of
the Accounts, including any remittance received in the Accounts that contains
restrictive endorsements, irregularities (such as a variance between the written
and numerical amounts), undated or postdated items, missing signatures,
incorrect payees, etc.
(e) You shall furnish to the Agent, promptly upon the reasonable written
request of the Agent in each instance, all information regarding the Accounts,
to the extent the same is provided to the Company, for the period of time
specified in such written notice, and the Company hereby authorizes you to
furnish same.
(f) You agree that you will not make, and you hereby waive all of your
rights to make, any charge, debit or offset to the Accounts for any reason
whatsoever, and waive any and all liens, whether contractual or provided under
law, which you may have or hereafter acquire on
<PAGE>
the Accounts or funds therein, in each case, other than any charge, offset,
debit or lien in respect of your customary service charges, such as reversed or
returned credits, items not collected or other charges, expenses and commissions
incurred by you in providing the service, and returned items relating to the
Accounts.
(g) All service charges and fees with respect to the Accounts shall be
payable by the Company.
(h) After the giving of notice referred to in paragraphs (b) and (c)
above, the Agent shall be entitled to exercise any and all rights of the Company
in respect of the Accounts, and the undersigned shall comply in all respects
with such exercise.
(i) Notwithstanding any other provision contained herein, unless you are
grossly negligent or engage in willful misconduct in performance or non-
performance in connection with this letter agreement and the Accounts, the
Agent and the Company agree to hold you harmless from any claims, damages,
losses or expenses incurred by any party in connection herewith; in the event
you breach the standard of care set forth herein, the Company and the Agent
expressly agree that your liability shall be limited to damages directly caused
by such breach and in no event shall you be liable for any incidental, indirect,
punitive or consequential damages or attorneys' fees whatsoever.
(j) Notwithstanding any other provision of this letter agreement, you
shall not be liable for any failure, inability to perform, or delay in
performance hereunder, if such failure, inability, or delay is due to acts of
God, war, civil commotion, governmental action, fire, explosion, strikes, other
industrial disturbances, equipment malfunction, action, non-action or delayed
action on the part of the Company or the Agent or any other entity or any other
causes that are beyond your reasonable control.
(k) The Company and the Agent agree that you may debit the Account for any
items (including, but not limited to, checks, drafts, Automatic Clearinghouse
(ACH) credits or wire transfers) deposited or credit to the Accounts which may
be returned or otherwise not collected and for all charges, fees, commissions
and expenses incurred by you in providing services or otherwise in connection
herewith; you may charge the Accounts as permitted herein at such times as are
in accordance with your customary practices for the chargeback of returned items
and expenses. In the event you are unable to obtain sufficient funds from such
charges to cover returned items, or reversed or returned credits, or items not
collected and any other charges, expenses, or commissions incurred by you in
providing the services, the Company and the Agent shall indemnify you for all
amounts described above incurred by you.
(l) This letter agreement may not be modified or terminated by the Company
unless the prior written consent of you and the Agent are obtained. This letter
agreement may be terminated: (i) immediately for cause or (ii) upon thirty (30)
days' prior written notice to the Company or the Agent, as the case may be,
without cause. Upon such termination you shall close the Accounts and transfer
all funds as they become available in the Accounts to the Agent's
3
<PAGE>
Account specified in paragraph (b) above. Paragraph (k) above shall survive any
such termination and closure of the Accounts for fifteen (15) days.
This letter agreement shall be binding upon you and your successors and
assigns and shall inure to the benefit of the Agent, the Lenders and their
successors, transferees and assigns.
This letter agreement shall become effective immediately upon its execution
by all parties hereto. Any notice permitted or required hereunder shall be in
writing and shall be deemed to have been duly given if sent by personal
delivery, express or first class mail, or facsimile addressed, in the case of
notice to you at your address listed on the signature page hereof.
4
<PAGE>
This letter agreement shall be governed by and construed in accordance with
the laws of the State of New York.
Very truly yours,
[NAME OF GRANTOR]
Address:
Attention:
Telecopier Number:
By:________________________________
Name:
Title:
BANQUE NATIONALE DE PARIS,
as Agent
499 Park Avenue
New York, NY 10022
Attention: Mr. Eric Deram
Telecopier Number:
(212) 418-8269
By:________________________________
Name:
Title:
Acknowledged and agreed to as of
the date first above written:
[BLOCKED ACCOUNT BANK NAME]
By:____________________________
Name:
Title:
5
<PAGE>
SCHEDULE I
to
Blocked Account Letter
Blocked Accounts:
- ----------------
<PAGE>
EXHIBIT B
to
Security Agreement
FORM OF SECURITY AGREEMENT SUPPLEMENT
________________ __, ____
Banque National de Paris, New York Branch,
as Agent
499 Park Avenue
New York, New York 10022
Attention:
Security Agreement dated as of September 30, 1999 among
Better Minerals & Aggregates Company and
additional grantors named therein, as Grantors, and Banque Nationale de Paris,
as Agent
Ladies and Gentlemen:
Reference is made to the above-captioned Security Agreement (as amended,
supplemented or otherwise modified from time to time, the "Security Agreement").
------------------
Unless otherwise defined herein, terms defined in the Security Agreement are
used herein as therein defined.
The undersigned hereby agrees, as of the date first above written, to
become a Grantor under the Security Agreement as if it were an original party
thereto and agrees that each reference in the Security Agreement to a "Grantor"
or the "Grantors" shall also mean and be a reference to the undersigned.
The undersigned hereby assigns and pledges to the Agent for its benefit and
the ratable benefit of the Secured Parties and hereby grants to the Agent for
its benefit and the ratable benefit of the Secured Parties as collateral for the
Secured Obligations a pledge and assignment of, and a security interest in, all
of the right, title and interest of the undersigned in and to its Collateral,
whether now owned or hereafter acquired.
The undersigned has attached hereto supplements to Schedules I through V to
the Security Agreement, and the undersigned hereby certifies that such
supplements have been prepared by the undersigned in substantially the form of
the Schedules to the Security Agreement and are accurate and complete as of the
date first above written.
<PAGE>
The undersigned hereby makes each representation and warranty set forth in
Section 8 of the Security Agreement as to itself and as to its Collateral to the
same extent as each other Grantor and hereby agrees to be bound as a Grantor by
all of the terms and provisions of the Security Agreement to the same extent as
any other Grantor.
This letter shall be governed by and construed in accordance with the laws
of the State of New York.
Very truly yours,
[NAME OF ADDITIONAL
GRANTOR]
By_________________________________
Name:
Title:
Address:
<PAGE>
EXHIBIT 10.6
EXECUTION COPY
INTELLECTUAL PROPERTY SECURITY AGREEMENT
Dated as of September 30, 1999
Between
BETTER MINERALS & AGGREGATES COMPANY,
and
THE OTHER GRANTORS REFERRED TO HEREIN,
as Grantors,
-----------
and
BANQUE NATIONALE DE PARIS,
as Agent
--------
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
SECTION Page
<S> <C>
Section 1. Grant of Security........................................................... 1
Section 2. Security for Obligations.................................................... 3
Section 3. Grantors Remain Liable...................................................... 3
Section 4. Representations and Warranties.............................................. 3
Section 5. Further Assurances.......................................................... 5
Section 6. Transfers and Other Liens................................................... 7
Section 7. Agent Appointed Attorney-in-Fact............................................ 7
Section 8. Agent May Perform........................................................... 8
Section 9. The Agent's Duties.......................................................... 8
Section 10. Remedies.................................................................... 8
Section 11. Indemnity and Expenses...................................................... 10
Section 12. Security Interest Absolute.................................................. 10
Section 13. Amendments; Waivers, Etc.................................................... 10
Section 14. Addresses for Notices....................................................... 11
Section 15. Continuing Security Interest, Assignments under the Credit Agreement........ 11
Section 16. Release and Termination..................................................... 12
Section 17. Execution in Counterparts................................................... 12
Section 18. Governing Law, Submission to Jurisdiction, Waiver of Jury Trial; Etc........ 12
</TABLE>
Schedule I - Patents and Patent Applications
Schedule II - Trademark Registrations, Trademark Applications and Common Law
Trademarks
Schedule III - Copyright Registrations and Applications
i
<PAGE>
Schedule IV - Licenses
Schedule V - Pending Litigation/Unauthorized Uses
Exhibit A - Intellectual Property Security Agreement Supplement
ii
<PAGE>
INTELLECTUAL PROPERTY SECURITY AGREEMENT
INTELLECTUAL PROPERTY SECURITY AGREEMENT, dated as of September 30,
1999, made between Better Minerals & Aggregates Company, a Delaware corporation
formerly known as "USS Intermediate Holdco, Inc." (the "Borrower"), each other
--------
grantor listed on the signature pages hereto (together with the Borrower, the
"Grantors" and, individually, a "Grantor"), and BANQUE NATIONALE DE PARIS
--------
("BNP"), as agent (together with any successor agent appointed pursuant to
---
Article VII of the Credit Agreement (as hereinafter defined), the ("Agent") for
the Lender Parties (as defined in the Credit Agreement) and as custodian for the
Hedge Banks (as defined in the Credit Agreement).
PRELIMINARY STATEMENTS
(1) The Borrower, BMAC Holdings, Inc., a Delaware corporation, and
George F. Pettinos (Canada) Limited, a corporation organized and existing under
the laws of Canada (the "Canadian Borrower"), have entered into a Credit
-----------------
Agreement dated as of September 30, 1999 (said Agreement, as it may hereafter be
amended, supplemented or otherwise modified from time to time, being the "Credit
------
Agreement"; the terms defined therein and not otherwise defined herein being
- ---------
used herein as therein defined) with certain Lender Parties party thereto and
Banque Nationale de Paris, as Agent for such Lender Parties and as Swing Line
Bank and Initial Issuing Bank.
(2) It is a condition precedent to the making of Advances and Drawings
and the issuance of Letters of Credit by the Lender Parties and the entry by the
Hedge Banks into the Bank Hedge Agreements with the Loan Parties under the
Credit Agreement that the Grantors shall have executed and delivered this
Intellectual Property Security Agreement.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Lender Parties to make Advances and Drawings and to issue Letters of
Credit under the Credit Agreement and to induce the Hedge Banks to enter into
Bank Hedge Agreements with the Loan Parties from time to time, the Grantors
hereby agree with the Agent for the ratable benefit of the Secured Parties as
follows:
<PAGE>
Section 1. Grant of Security. Each Grantor hereby assigns and pledges
-----------------
to the Agent for the ratable benefit of the Secured Parties, and hereby grants
to the Agent for the ratable benefit of the Secured Parties a security interest
in, the following, in each case, as to each type of property described below,
whether now owned or hereafter acquired, wherever located and whether now or
hereafter existing (collectively, the "Intellectual Property Collateral"):
--------------------------------
(a) all patents, patent applications and patentable inventions,
including, without limitation, each patent and patent application
identified in Schedule I attached hereto and made a part hereof, and
including without limitation (i) all inventions and improvements described
and claimed therein, (ii) the right to sue or otherwise recover for any
infringements thereof, (iii) all income, royalties, damages and other
payments now and hereafter due and/or payable with respect thereto
(including, without limitation, payments under all licenses entered into in
connection therewith, and damages and payments for past and future
infringements thereof), and (iv) all rights corresponding thereto
throughout the world and all reissues, divisions, continuations,
continuations-in-part, substitutes, renewals, and extensions thereof, all
improvements thereon and all other rights of any kind whatsoever of such
Grantor accruing thereunder or pertaining thereto (the "Patents");
-------
(b) all trademarks, service marks, trade names, trade dress or other
indicia of trade origin, trademark and service mark registrations, and
applications for trademark or service mark registrations and any renewals
thereof, including, without limitation, each registration and application
identified in Schedule II attached hereto and made a part hereof, and
including without limitation (i) the right to sue or otherwise recover for
any and all past, present and future infringements and dilutions thereof,
(ii) all income, royalties, damages and other payments now and hereafter
due and/or payable with respect thereto (including, without limitation,
payments under all licenses entered into in connection therewith, and
damages and payments for past or future infringements thereof), and (iii)
all rights corresponding thereto throughout the world and all other rights
of any kind whatsoever of such Grantor accruing thereunder or pertaining
thereto, together in each case with the goodwill of the business connected
with the use of, and symbolized by, each such trademark, service mark,
trade name, trade dress or other indicia of trade origin (the
"Trademarks"), provided, however, that the Trademarks shall not include any
----------
trademark applications filed in the United States Patent and Trademark
Office under 15 U.S.C. (S) 1051(b) prior to the filing of a verified
statement of use under 15 U.S.C. (S) 1051(d) to the extent that a valid
security interest may not be taken in such an intent-to-use trademark
application under applicable law;
(c) all copyrights, whether statutory or common law, and whether or
not the underlying works of authorship have been published, and all works
of authorship and other intellectual property rights therein, all
copyrights of works based on, incorporated in, derived from or relating to
works covered by such copyrights, all right, title and interest to make and
exploit all derivative works based on or adopted from works covered by such
copyrights, and all copyright registrations and copyright applications, and
any renewals or extensions thereof, including, without limitation, each
copyright registration
<PAGE>
3
and copyright application identified in Schedule III attached hereto and
made a part hereof, and including, without limitation, (i) the right to
print, publish and distribute any of the foregoing, (ii) the right to sue
or otherwise recover for any and all past, present and future infringements
and misappropriations thereof, (iii) all income, royalties, damages and
other payments now and hereafter due and/or payable with respect thereto
(including, without limitation, payments under all licenses entered into in
connection therewith, and damages and payments for past or future
infringements thereof), and (iv) all rights corresponding thereto
throughout the world and all other rights of any kind whatsoever of such
Grantor accruing thereunder or pertaining thereto (the "Copyrights");
----------
(d) all license agreements with any other person in connection with
any of the Patents or Trademarks or Copyrights, or such other person's
patents, trade names, trademarks or copyrights, whether such Grantor is a
licensor or licensee under any such license agreement, in each case, to the
extent such license agreements do not prohibit such Grantor from granting a
security interest in its rights thereunder, including, without limitation,
the license agreements listed on Schedule IV attached hereto and made a
part hereof, and any right to prepare for sale, sell and advertise for
sale, all Inventory (as defined in the Security Agreement) now or hereafter
owned by such Grantor and now or hereafter covered by such licenses (the
"Licenses");
--------
(e) confidential and proprietary information, including know-how,
trade secrets, manufacturing and production processes and techniques,
inventions, research and development information, technical data,
financial, marketing and business data, pricing and cost information,
business and marketing plans, and customer and supplier lists and
information, and including, without limitation, (i) the right to sue or
otherwise recover for any and all past, present and future
misappropriations thereof, and (ii) all income, royalties, damages and
other payments now and hereafter due and/or payable with respect thereto
(including, without limitation, payments under all licenses entered into in
connection therewith, and damages and payments for past or future
misappropriations thereof); provided, that such grant shall only be
--------
effective to the extent the grant by such Grantor of a security interest
pursuant to this Agreement in its right, title and interest in any of the
foregoing is not prohibited by law, contract or otherwise without the
consent of any person or would not give any other person the right to
terminate its obligations with respect thereto (the "Trade Secrets"); and
-------------
(f) all computer software programs and data bases (including source
code, object code and all related applications and data files), firmware,
and documentation and materials relating thereto, and all rights with
respect to the foregoing, including, without limitation, any and all
options, warranties, service contracts, program services, test rights,
maintenance rights, improvement rights, renewal rights and indemnifications
and any substitutions, replacements, additions or model conversions of any
of the foregoing;
<PAGE>
4
provided, that such grant shall only be effective to the extent the grant
--------
by such Grantor of a security interest pursuant to this Agreement in its
right, title and interest in any of the foregoing is not prohibited by law,
contract or otherwise without the consent of any person or would not give
any other person the right to terminate its obligations with respect
thereto (the "Computer Software").
-----------------
Section 2. Security for Obligations. This Agreement secures the
------------------------
payment of all Obligations of each Grantor now or hereafter existing under the
Loan Documents, whether for principal, interest, fees, expenses or otherwise
(all such Obligations being the "Secured Obligations"). Without limiting the
-------------------
generality of the foregoing, this Agreement secures the payment of all amounts
that constitute part of the Secured Obligations and would be owed by such
Grantor to the Secured Parties under the Loan Documents but for the fact that
they are unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving such Grantor.
Section 3. Grantors Remain Liable. Anything herein to the contrary
----------------------
notwithstanding, (a) each Grantor shall remain liable under the contracts and
agreements included in the Intellectual Property Collateral to the extent set
forth therein to perform all of its duties and obligations thereunder to the
same extent as if this Agreement had not been executed, (b) the exercise by the
Agent of any of the rights hereunder shall not release any Grantor from any of
its duties or obligations under the contracts and agreements included in the
Intellectual Property Collateral and (c) no Secured Party shall have any
obligation or liability under the contracts and agreements included in the
Intellectual Property Collateral by reason of this Agreement or any other Loan
Document, nor shall any Secured Party be obligated to perform any of the
obligations or duties of any Grantor thereunder or to take any action to collect
or enforce any claim for payment assigned hereunder.
Section 4. Representations and Warranties. Each Grantor represents
------------------------------
and warrants as to itself and its Intellectual Property Collateral as follows:
(a) Such Grantor is the legal, beneficial, sole and exclusive owner of
the Intellectual Property Collateral free and clear of any Lien, except for
the Liens permitted in the Loan Documents. No effective financing
statement or other instrument similar in effect covering all or any part of
the Intellectual Property Collateral is on file in any recording office,
except such as may have been filed in favor of the Agent relating to this
Agreement or as permitted in the Loan Documents.
(b) Set forth in Schedule I hereto is a complete and accurate list as
of the date hereof of all patents and all patent applications owned by such
Grantor. Set forth in Schedule II hereto is a complete and accurate list
as of the date hereof of all trademark and service mark registrations and
all trademark and service mark applications owned by such Grantor. Set
forth in Schedule III hereto is a complete and accurate list as of the date
hereof of all copyright registrations and copyright applications owned by
<PAGE>
5
such Grantor. Set forth in Schedule IV hereto is a complete and accurate
list as of the date hereof of all Licenses owned by such Grantor in which
such Grantor is (i) a licensor with respect to any of the Patents,
Trademarks or Copyrights, or (ii) a licensee of any other person's patents,
trade names, trademarks, or copyrights.
(c) As of the date of this Agreement, each patent, patent application,
trademark or service mark registration, trademark or service mark
application, copyright registration and copyright application of such
Grantor set forth in Schedules I, II and III is subsisting and has not been
adjudged invalid, unregistrable or unenforceable, in whole or in part, and
is valid, registrable and enforceable. As of the date of this Agreement,
each License of such Grantor identified in Schedule IV is validly
subsisting and has not been adjudged invalid or unenforceable, in whole or
in part, and is valid and enforceable. Such Grantor has notified the Agent
in writing of all uses of which it is aware, as of the date of this
Agreement, of any item of Intellectual Property Collateral which could
reasonably be expected to lead to such item becoming invalid or
unenforceable, including unauthorized uses by third parties and uses which
were not supported by the goodwill of the business connected with such
Intellectual Property Collateral.
(d) As of the date of this Agreement, such Grantor has not made a
previous assignment, transfer or agreement constituting a present or future
assignment, transfer or encumbrance of any of the Intellectual Property
Collateral. As of the date of this Agreement, such Grantor has not granted
any license (other than those listed on Schedule IV hereto), release,
covenant not to sue, or non-assertion assurance to any person with respect
to any part of the Intellectual Property Collateral.
(e) Such Grantor has used its sound business judgment in utilizing
statutory notice in a commercially reasonable manner in connection with its
use of each patent, each registered trademark and registered service mark
and each copyright contained in Schedules I, II and III.
(f) Except to the extent set forth on Schedule 4.01(d) to the Credit
Agreement, all filings and other actions necessary or desirable to perfect
and preserve the security interest in the United States Intellectual
Property Collateral created under this Agreement have been duly made or
taken. This Agreement, together with such filings and other actions, upon
the filing of financing and continuation statements under the Uniform
Commercial Code and the recording of the security interest and lien
provisions of this Agreement with the United States Patent and Trademark
Office and the United States Copyright Office, creates a valid and
perfected security interest in the Intellectual
<PAGE>
6
Property Collateral, securing the payment of the Secured Obligations
subject in priority only to the liens and security interests permitted in
the Loan Documents.
(g) Except to the extent set forth on Schedule 4.01(d) to the Credit
Agreement, no consent of any Person and no authorization, approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body or any other third party is required (i) for the grant by
such Grantor of the assignment and security interest granted hereunder, for
the pledge by such Grantor of the Intellectual Property Collateral pursuant
hereto or for the execution, delivery or performance of this Agreement by
such Grantor, (ii) for the perfection or maintenance of the pledge,
assignment and security interest created hereunder (including the first
priority nature of such pledge, assignment or security interest subject
only to the liens and security interests permitted in the Loan Documents)
or (iii) for the exercise by the Agent of its rights provided for in this
Agreement or the remedies in respect of the Intellectual Property
Collateral pursuant to this Agreement, in each case other than the filing
of financing and continuation statements under the Uniform Commercial Code
and the recording of the security interest and lien provisions of this
Agreement with the United States Patent and Trademark Office and the United
States Copyright Office which shall be duly filed promptly following the
execution of this Agreement.
(h) Except for the Licenses set forth in Schedule IV and except as set
forth in Schedule V hereto, as of the date of this Agreement, such Grantor
has no knowledge of the existence of any right or any claim that is likely
to be made by any third party relating to any item of Intellectual Property
Collateral.
(i) Except as set forth in Schedule V, as of the date of this
Agreement, no claim has been made and is continuing or threatened that any
item of Intellectual Property Collateral is invalid or unenforceable or
that the use by such Grantor of any Intellectual Property Collateral does
or may violate the rights of any Person. Except as set forth in Schedule
V, as of the date of this Agreement, to the best of such Grantor's
knowledge, there is no infringement or unauthorized use of any item of
Intellectual Property Collateral.
Section 5. Further Assurances. (a) Each Grantor agrees that from
------------------
time to time, at its own expense, it shall promptly execute and deliver all
further instruments and documents, and take all further action, that may be
reasonably necessary or customary that the Agent may request, in order to
perfect and preserve any pledge, assignment or security interest granted or
purported to be granted hereby or to enable the Agent to exercise and enforce
its rights and remedies hereunder with respect to any Intellectual Property
Collateral. Without limiting the generality of the foregoing, each Grantor will
execute and file such financing or continuation statements, or amendments
thereto, and such other instruments or notices, as may be reasonably necessary
or customary as the Agent may request, in order to perfect and preserve the
pledge,
<PAGE>
7
assignment and security interest granted or purported to be granted hereby or to
enable the Agent to exercise and enforce its rights and remedies hereunder with
respect to the Intellectual Property Collateral.
(b) Each Grantor hereby authorizes the Agent to file one or more
financing or continuation statements, and amendments thereto, relating to all or
any part of the Intellectual Property Collateral without the signature of such
Grantor where permitted by law upon which evidence of such filing shall be sent
promptly to such Grantor. A photocopy or other reproduction of this Agreement
or any financing statement covering the Intellectual Property Collateral or any
part thereof shall be sufficient as a financing statement where permitted by
law.
(c) Each Grantor shall furnish to the Agent from time to time
statements and schedules further identifying and describing the Intellectual
Property Collateral and such other reports in connection with the Intellectual
Property Collateral as the Agent may reasonably request, all in reasonable
detail.
(d) Each Grantor agrees that, should it obtain an ownership interest
in any patent, patent application, patentable invention, trademark, service
mark, trade name, trade dress, other indicia of trade origin, trademark or
service mark registration, trademark or service mark application, copyright,
work of authorship, copyright registration, copyright application or License,
which is not now a part of the Intellectual Property Collateral, (i) the
provisions of Section 1 will automatically apply thereto, and (ii) any such
patent, patent application, patentable invention, trademark, service mark, trade
name, trade dress, indicia of trade origin, trademark or service mark
registration or trademark or service mark application (together with the
goodwill of the business connected with the use of same and symbolized by same),
copyright, work of authorship, copyright registration, copyright application or
License will automatically become part of the Intellectual Property Collateral.
Each Grantor shall provide to the Agent on a semi-annual basis, beginning on
March 31, 2000, a written report indicating any ownership interest in any
patent, patent application, trademark or service mark registration, trademark or
service mark application, copyright registration or copyright application, or
License that it should obtain (or License that it should grant) during the
immediately previous six month period. Each Grantor authorizes the Agent to
modify this Agreement by amending Schedules I, II, III, IV and V (and will
cooperate with the Agent in effecting any such amendment) to include any patent,
patent application, trademark or service mark registration, trademark or service
mark application, copyright registration, copyright application or License which
becomes part of the Intellectual Property Collateral under this Section.
(e) With respect to each patent, patent application, trademark or
service mark registration, trademark or service mark application, copyright
registration, copyright application and License, each Grantor agrees to take all
steps it deems necessary or appropriate, including, without limitation, in the
United States Patent and Trademark Office, the United States
<PAGE>
8
Copyright Office or in any court, to (i) maintain each such patent, trademark or
service mark registration, copyright registration and License, and (ii) pursue
each such patent application, trademark or service mark application, and
copyright application now or hereafter included in the Intellectual Property
Collateral, including, without limitation, the filing of responses to office
actions issued by the United States Patent and Trademark Office and the United
States Copyright Office, the filing of applications for renewal or extension,
the filing of affidavits under Sections 8 and 15 of the United States Trademark
Act, the filing of divisional, continuation, continuation-in-part and substitute
applications, the filing of applications for re-issue, renewal or extensions,
the payment of maintenance fees, and the participation in interference,
reexamination, opposition, cancellation, infringement and misappropriation
proceedings. Each Grantor agrees to take corresponding steps with respect to
each new or acquired patent, patent application, trademark or service mark
registration, trademark or service mark application, copyright registration,
copyright application or License to which it is now or later becomes entitled.
Any expenses incurred in connection with such activities will be borne by such
Grantor. The Grantors shall not discontinue use of or otherwise abandon any
patent, patent application, trademark or service mark registration, trademark or
service mark application, copyright registration or copyright application now
owned or hereafter acquired or filed, or abandon any right to file any
application for any patent, trademark or copyright, unless the applicable
Grantor shall have previously determined using its sound business judgment that
such use or pursuit or maintenance of the same is no longer desirable in the
conduct of such Grantor's business, in which case, such Grantor will give notice
of any such abandonment or discontinuance to the Agent pursuant to the semi-
annual reporting requirement contained in Section 5(d) above, provided that, in
no event, shall such Grantor discontinue use or otherwise abandon any of the
Intellectual Property Collateral now owned or hereafter acquired or filed, or
abandon any right to file any application to obtain any Intellectual Property
Collateral, if such act, either alone or in aggregation with other such acts, is
reasonably expected to have a Material Adverse Effect.
(f) Each Grantor agrees to notify the Agent promptly and in writing if
it learns (i) that any item of the Intellectual Property Collateral has been
determined to have become abandoned or dedicated or (ii) of any adverse
determination or the institution of any proceeding (including, without
limitation, the institution of any proceeding in the United States Patent and
Trademark Office or any court) regarding any item of the Intellectual Property
Collateral, and such abandonment, dedication, adverse determination or
proceeding is reasonably expected to have a Material Adverse Effect.
(g) In the event that any Grantor becomes aware that any of the
patents, patent applications, trademark and service mark registrations,
trademark and service mark applications, copyright registrations and copyright
applications contained on Schedules I, II and III to this Agreement is infringed
or misappropriated by a third party, such Grantor will promptly notify the Agent
and will take such actions, if any, as such Grantor in its sound business
judgment deems reasonable and appropriate under the circumstances to protect the
same, including, without
<PAGE>
9
limitation, suing for infringement or misappropriation and for an injunction
against such infringement or misappropriation. Any expense incurred in
connection with such activities will be borne by such Grantor.
(h) Each Grantor will continue to use its sound business judgment in
utilizing statutory notice in a commercially reasonable manner in connection
with its use of each of its patents, registered trademarks and service marks,
and copyrights contained in Schedules I, II and III.
(i) Each Grantor will take all steps which it in its sound business
judgment deems reasonable and appropriate under the circumstances to preserve
and protect its Intellectual Property Collateral, including, without limitation,
maintaining the quality of any and all products or services used or provided in
connection with any of the registered trademarks or registered service marks
contained on Schedule II hereto, consistent with sound business practices, and
taking all steps it deems necessary or appropriate to ensure that all licensed
users of any of such registered trademarks or registered service marks use such
consistent standards of quality.
Section 6. Transfers and Other Liens. Each Grantor agrees not (i) to
-------------------------
sell, assign (by operation of law or otherwise) or otherwise dispose of, or
grant any option with respect to, any of the Intellectual Property Collateral,
except sales, assignments and dispositions otherwise permitted under Section
5.02(e) of the Credit Agreement or in Section 5(e) hereof, or (ii) to create or
suffer to exist any Lien upon or with respect to any of the Intellectual
Property Collateral except for the pledge, assignment and security interest
created under this Agreement and the Liens permitted under Section 5.02(a) of
the Credit Agreement.
Section 7. Agent Appointed Attorney-in-Fact. Each Grantor hereby
--------------------------------
irrevocably appoints the Agent such Grantor's attorney-in-fact, with full
authority in the place and stead of such Grantor and in the name of such Grantor
or otherwise, upon (i) the occurrence and during the continuance of an Event of
Default and (ii) the making of the request or the granting of the consent
specified by Section 6.01 of the Credit Agreement to authorize the Agent to
declare the Advances and any amounts otherwise due and payable pursuant to the
provisions of such Section 6.01 or the making of the demand specified in Section
6.02 of the Credit Agreement to require the Borrower to pay amounts in respect
of Letters of Credit or the Canadian Borrower to pay amounts in respect of
Bankers' Acceptances, and upon notice to such Grantor, to take any action and to
execute any instrument that the Agent may deem reasonably necessary or advisable
to accomplish the purposes of this Agreement, including, without limitation:
(a) to ask for, demand, collect, sue for, recover, compromise, receive
and give acquittance and receipts for moneys due and to become due under or
in respect of any of the Intellectual Property Collateral,
<PAGE>
10
(b) to receive, indorse and collect any drafts or other instruments,
documents and chattel paper, in connection with clause (a) above, and
(c) to file any claims or take any action or institute any proceedings
that the Agent may deem reasonably necessary or desirable for the
collection of any payments relating to any of the Intellectual Property
Collateral or otherwise to enforce the rights of the Agent with respect to
any of the Intellectual Property Collateral; provided that the Agent shall
--------
act with reasonable care in the exercise of the foregoing; and provided,
--------
further, that the Agent shall give such Grantor not less than ten Business
-------
Days prior written notice of the time and place of any sale or other
intended disposition of the Intellectual Property Collateral.
Section 8. Agent May Perform. Upon and during the continuance of an
-----------------
Event of Default, if any Grantor fails to perform any agreement contained
herein, the Agent may itself perform, or cause performance of, such agreement,
and the expenses of the Agent incurred in connection therewith shall be payable
by such Grantor under Section 11(b).
Section 9. The Agent's Duties. The powers conferred on the Agent
------------------
hereunder are solely to protect its interest in the Intellectual Property
Collateral and, beyond the exercise of reasonable care, shall not impose any
duty upon it to exercise any such powers. Except for the safe custody of the
certificates of registration for any of the Trademarks or Copyrights or the
letters patent for any of the Patents in its possession and the accounting for
moneys actually received by it hereunder, the Agent shall have no duty as to any
Intellectual Property Collateral, whether or not the Agent or any other Secured
Party has or is deemed to have knowledge of such matters, or as to the taking of
any necessary steps to preserve rights against any parties or any other rights
pertaining to any Intellectual Property Collateral, in each case, beyond the
exercise of reasonable care. The Agent shall be deemed to have exercised
reasonable care in the custody and preservation of the certificates of
registration for any of the Trademarks or Copyrights or the letters patent for
any of the Patents in its possession if such certificates of registration and
letters patent are accorded treatment substantially equal to that which it
accords its own property.
<PAGE>
11
Section 10. Remedies. If (i) any Event of Default shall have
--------
occurred and be continuing and (ii) the making of the request or the granting of
the consent specified by Section 6.01 of the Credit Agreement to authorize the
Agent to declare the Advances due and payable pursuant to the provisions of such
Section 6.01 or the making of the demand specified in Section 6.02 of the Credit
Agreement to require the Borrower to pay amounts in respect of Letters of Credit
or the Canadian Borrower to pay amounts in respect of Bankers' Acceptances shall
have occurred:
(a) The Agent may exercise in respect of the Intellectual Property
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured party
upon default under the Uniform Commercial Code in effect in the State of
New York at such time (the "N.Y. Uniform Commercial Code") (whether or not
----------------------------
the N.Y. Uniform Commercial Code applies to the affected Intellectual
Property Collateral), and also may (i) require each Grantor to, and each
Grantor hereby agrees that it will at its expense and upon request of the
Agent forthwith, assemble all or part of the documents and things embodying
any part of the Intellectual Property Collateral as directed by the Agent
(to the extent permitted by applicable law and without breach of the peace)
and make them available to the Agent at a place and time to be designated
by the Agent that is reasonably convenient to both parties and (ii) without
notice except as specified below, sell the Intellectual Property Collateral
or any part thereof in one or more parcels at public or private sale, at
any of the Agent's offices or elsewhere, for cash, on credit or for future
delivery, and upon such other terms as the Agent may deem commercially
reasonable. In the event of any sale, assignment, or other disposition of
any of the Intellectual Property Collateral, the goodwill of the business
connected with and symbolized by any Trademarks subject to such disposition
will be included, and each Grantor will supply to the Agent or its designee
such Grantor's know-how and expertise, and the documents and things
embodying the same, relating to the manufacture, distribution, advertising
and sale of products or the provision of services relating to any
Intellectual Property Collateral subject to such disposition, and such
Grantor's customer lists and other records and documents relating to such
Intellectual Property Collateral and to the manufacture, distribution,
advertising and sale of such products and services. Each Grantor agrees
that, to the extent notice of sale shall be required by law, at least ten
days' notice to such Grantor of the time and place of any public sale or
the time after which any private sale is to be made shall constitute
reasonable notification. The Agent shall not be obligated to make any sale
of Intellectual Property Collateral regardless of notice of sale having
been given. The Agent may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was
so adjourned.
<PAGE>
12
(b) All cash proceeds received by the Agent in respect of any sale
of, collection from, or other realization upon, all or any part of the
Intellectual Property Collateral shall be applied (after payment of any
amounts payable to the Agent pursuant to Section 11) by the Agent for the
ratable benefit of the Secured Parties against the Secured Obligations in
such order as the Agent shall elect. Any surplus of such cash or cash
proceeds held by the Agent and remaining after payment in full of all the
Secured Obligations shall be paid over to the applicable Grantor or its
successor or assigns, or as a court of competent jurisdiction may direct.
(c) The Agent may exercise any and all rights and remedies of each
Grantor in respect of the Intellectual Property Collateral.
(d) All payments received by any Grantor under or in connection with
any Intellectual Property Collateral shall be received in trust for the
benefit of the Agent, shall be segregated from other funds of such Grantor
and shall be forthwith paid over to the Agent in the same form as so
received (with any necessary endorsement).
Section 11. Indemnity and Expenses. (a) Each Grantor agrees jointly
----------------------
and severally to indemnify the Secured Parties in connection with any claims,
losses and liabilities resulting from this Agreement to the extent required by,
and in accordance with the provisions of, Section 8.04(b) of the Credit
Agreement as if such Grantor were a party to the Credit Agreement.
(b) Each Grantor agrees jointly and severally to pay to the Agent
such amounts of any fees and expenses incurred by the Agent in connection with
the administration of the Agreement as is required by, and in accordance with
the provisions of, Sections 8.04(a) and (b) of the Credit Agreement as if such
Grantor were a party to the Credit Agreement.
Section 12. Security Interest Absolute. The obligations of each
--------------------------
Grantor under this Agreement are independent of the Secured Obligations, and a
separate action or actions may be brought and prosecuted against any Grantor to
enforce this Agreement. All rights of the Agent and the pledge, assignment and
security interest hereunder, and all obligations of each Grantor hereunder,
shall be absolute and unconditional, irrespective of:
(i) any lack of validity or enforce ability of any Loan Document,
any Bank Hedge Agreement or any other agreement or instrument relating
thereto;
(ii) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Secured Obligations, or any other
amendment or waiver of or any consent to any departure from any Loan
Document or any Bank Hedge Agreement,
<PAGE>
13
including, without limitation, any increase in the Secured Obligations
resulting from the extension of additional credit to any Grantor or any of
its Subsidiaries or otherwise;
(iii) any taking, exchange, release or non-perfection of any other
collateral, or any taking, release or amendment or waiver of or consent to
departure from any guaranty, for all or any of the Secured Obligations;
(iv) any manner of application of collateral, or proceeds thereof, to
all or any of the Secured Obligations, or any manner of sale or other
disposition of any collateral for all or any of the Secured Obligations or
any other assets of any Grantor or any of its Subsidiaries;
(v) any change, restructuring or termination of the corporate
structure or existence of any Grantor or any of its Subsidiaries; or
(vi) any other circumstance that might otherwise constitute a defense
available to, or a discharge of, any Grantor or a third-party grantor of a
security interest.
This Agreement shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Secured Obligations is rescinded or
must otherwise be returned by any Secured Party or by any other Person upon the
insolvency, bankruptcy or reorganization of any Loan Party or otherwise, all as
though such payment had not been made.
Section 13. Amendments; Waivers, Etc. (a) No amendment or waiver of
------------------------
any provision of this Agreement, and no consent to any departure by any Grantor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the Agent, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.
(b) No failure on the part of the Agent, any Lender Party or any
Hedge Bank to exercise, and no delay in exercising, any right, power or
privilege hereunder shall operate as a waiver thereof or consent thereto; nor
shall any single or partial exercise of any such right, power or privilege
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege.
(c) Upon the execution and delivery by any Person of an intellectual
property security agreement supplement in substantially the form of Exhibit A
hereto (each an "Intellectual Property Security Agreement Supplement"), (i) such
---------------------------------------------------
Person shall be referred to as an "Additional Grantor" and shall be and become a
Grantor, and each reference in this Agreement to "Grantor" or "Grantors" shall
also mean and be a reference to such Additional Grantor and (ii) the schedules
attached to such Intellectual Property Security Agreement
<PAGE>
14
Supplement shall be incorporated into and become a part of and supplement
Schedules I through IV hereto, and the Agent may attach such Schedules as
supplements to such Schedules, and each reference to such Schedules shall mean
and be a reference to such Schedules, as supplemented pursuant hereto.
(d) Delivery by telecopier of an executed counterpart of any amendment
or waiver of any provision of this Agreement or of any Supplement or Schedule
hereto shall be effective as delivery of a manually executed counterpart
thereof.
Section 14. Addresses for Notices. All notices and other
---------------------
communications provided for hereunder shall be in writing (including telecopier
or telegraphic communication) and mailed, telecopied, telegraphed, cabled or
delivered, if to a Grantor, c/o Better Minerals & Aggregates Company, Route 522
North, P.O. Box 187, Berkeley Springs, WV 25411, Attention: Chief Financial
Officer, telecopier number (304) 258-3500, and if to the Agent, any Lender
Party, the Issuing Bank or any Hedge Bank, addressed to it at its address set
forth in Section 8.02 of the Credit Agreement, or, as to any party at such other
address as shall be designated by such party in a written notice to each other
party complying as to delivery with the terms of this Section 14. All such
notices and other communications shall, when mailed, telecopied or telegraphed,
be effective when received by the addressee.
Section 15. Continuing Security Interest, Assignments under the
---------------------------------------------------
Credit Agreement. This Agreement shall create a continuing security interest in
- ----------------
the Intellectual Property Collateral and shall (a) remain in full force and
effect until the latest of the payment in full in cash of the Secured
Obligations constituting an Advance or other Secured Obligations then due and
payable, the Termination Date and the termination or expiration of all Bank
Hedge Agreements or as otherwise permitted thereunder, (b) be binding upon each
Grantor, its successors and assigns and (c) inure, together with the rights and
remedies of the Agent hereunder, to the benefit of the Secured Parties and their
respective successors, transferees and assigns. Without limiting the generality
of the foregoing clause (c), any Lender may assign or otherwise transfer all or
any portion of its rights and obligations under the Credit Agreement (including,
without limitation, all or any portion of its Commitment, the Advances owing to
it and the Note or Notes held by it) to any other Person, and such other Person
shall thereupon become vested with all the benefits in respect thereof granted
to such Lender herein or otherwise, in each case as provided in Section 8.07 of
the Credit Agreement.
Section 16. Release and Termination. (a) Upon any sale, lease,
-----------------------
transfer or other disposition of any item of Intellectual Property Collateral in
accordance with the terms of the Loan Documents, the Agent will, at the
applicable Grantor's expense, execute and deliver to such Grantor such documents
as such Grantor shall reasonably request to evidence the release of such item of
Intellectual Property Collateral from the assignment and security interest
granted hereby; provided, however, that (i) at the time of such request and such
-------- -------
release, no Event of Default shall
<PAGE>
15
have occurred and be continuing, (ii) except to the extent such sale, lease or
transfer or other disposition is permitted under Section 5.02(e) of the Credit
Agreement, such Grantor shall have delivered to the Agent, at least ten Business
Days prior to the date of the proposed release, a written request for release
describing the item of the Intellectual Property Collateral and the terms of the
sale, lease, transfer or other disposition in reasonable detail, including,
without limitation, the price thereof and any expenses in connection therewith,
together with a form of release for execution by the Agent and a certification
by such Grantor to the effect that the transaction is in compliance with the
Loan Documents and as to such other matters as the Agent may reasonably request
and (iii) the proceeds of any such sale, lease, transfer or other disposition
required to be applied in accordance with Section 2.07 of the Credit Agreement
shall be paid to, or in accordance with the instructions of, the Agent at the
closing.
(b) Upon the latest of the payment in full in cash of the Secured
Obligations constituting an Advance or other Secured Obligations then due and
payable, the Termination Date and the termination or expiration of all Bank
Hedge Agreements, the pledge, assignment and security interest granted hereby
shall terminate and all rights to the Intellectual Property Collateral shall
revert to the Grantors. Upon any such termination, the Agent will, at the
Grantors' expense, execute and deliver to the Grantors such documents as the
Grantors shall reasonably request to evidence such termination and promptly
release and return the Intellectual Property Collateral in its possession.
Section 17. Execution in Counterparts. This Agreement may be executed
-------------------------
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of a signature page to this Agreement by
telecopier shall be effective as delivery of a manually executed counterpart of
this Agreement.
Section 18. Governing Law, Submission to Jurisdiction, Waiver of Jury
---------------------------------------------------------
Trial; Etc. (a) This Agreement shall be governed by and construed in accordance
- ----------
with the laws of the State of New York, except to the extent that the validity
or perfection of the security interest hereunder, or remedies hereunder, in
respect of any particular Intellectual Property Collateral are governed by the
laws of a jurisdiction other than the State of New York. Unless otherwise
defined herein or in the Credit Agreement, terms used in Article 9 of the Code
are used herein as therein defined.
(b) Each Grantor hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of any New York State
court or federal court of the United States of America sitting in New York City,
and any appellate court from any thereof, in any action or proceeding arising
out of or relating to this Agreement or any other Loan Document or Bank Hedge
Agreement to which it is or is to be a party, or for recognition and
<PAGE>
16
enforcement of any judgment, and each Grantor hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in any such New York State or, to the
extent permitted by law, in such federal court. Each Grantor irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection or defense that it may now or hereafter have to the laying of
venue of any suit, action or proceeding arising out of or relating to this
Agreement or any of the other Loan Documents to which it is or is to be a party
in any New York State or federal court. Each Grantor hereby irrevocably waives,
to the fullest extent permitted by law, the defense of an inconvenient forum to
the maintenance of such action or proceeding in any such court. Each Grantor
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing herein shall affect the right that
any party may otherwise have to commence or participate in any action, suit or
proceeding relating to this Agreement, any of the other Loan Documents or any
Bank Hedge Agreement to which it is or is to be a party, or otherwise proceed
against any Grantor, in any other jurisdiction.
(c) Each Grantor irrevocably consents to the service of any and all
process in any such action, suit or proceeding at the address set forth below
its name on the signature page hereof by any method permitted by law.
(d) To the extent that any Grantor has or hereafter may acquire
immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property, such
Grantor hereby irrevocably waives such immunity in respect of its Obligations
under this Agreement, any other Loan Document and any Bank Hedge Agreement to
which it is or is to be a party.
(e) Each Grantor irrevocably waives all right to trial by jury in any
action, proceeding or counterclaim (whether based on contract, tort or
otherwise) arising out of or relating to this Agreement, any other Loan Document
or any Bank Hedge Agreement, the transactions contemplated hereby or thereby or
the actions of the Agent, any Lender Party or any Hedge Bank in the negotiation,
administration, performance or enforcement thereof.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be duly executed and delivered by its officer thereunto duly authorized as of
the date first above written.
BETTER MINERALS & AGGREGATES
COMPANY
<PAGE>
17
By: /s/ Richard Nick
--------------------------------
Name: Richard Nick
Title: Vice President
PENNSYLVANIA GLASS SAND CORPORATION
By: /s/ Richard Nick
--------------------------------
Name: Richard Nick
Title: Vice President
THE FULTON LAND AND TIMBER COMPANY
By: /s/ Richard Nick
--------------------------------
Name: Richard Nick
Title: Vice President
OTTAWA SILICA COMPANY
By:________________________________
Name:
Title:
GEORGE F. PETTINOS, INC.
By: /s/ Richard Nick
--------------------------------
Name: Richard Nick
Title: Vice President
ELLEN JAY, INC.
By: /s/ Richard Nick
--------------------------------
<PAGE>
18
Name: Richard Nick
Title: Vice President
U.S. SILICA COMPANY
By: /s/ Richard Nick
-------------------------------
Name: Richard Nick
Title: Vice President
BETTER MATERIALS CORPORATION
By: /s/ Richard Nick
-------------------------------
Name: Richard Nick
Title: Vice President
BMC TRUCKING, INC.
By: /s/ Richard Nick
-------------------------------
Name: Richard Nick
Title: Vice President
BUCKS COUNTY CRUSHED STONE COMPANY
By: /s/ Richard Nick
-------------------------------
Name: Richard Nick
Title: Vice President
CHIPPEWA FARMS CORPORATION
By: /s/ Richard Nick
-------------------------------
Name: Richard Nick
<PAGE>
19
Title: Vice President
SHORE STONE COMPANY, INC.
By: /s/ Richard Nick
---------------------------------
Name: Richard Nick
Title: Vice President
COMMERCIAL STONE CO., INC.
By: /s/ Richard Nick
---------------------------------
Name: Richard Nick
Title: Vice President
STONE MATERIALS COMPANY, LLC
By: Better Minerals & Aggregates
Company, as Manager
By: /s/ Richard Nick
---------------------------------
Name: Richard Nick
Title: Vice President
COMMERCIAL AGGREGATES TRANSPORTATION
AND SALES, LLC
By: Stone Materials Company, LLC, as
Manager
By: /s/ Richard Nick
---------------------------------
Name: Richard Nick
Title: Vice President
<PAGE>
20
BANQUE NATIONALE DE PARIS,
as Agent
By: /s/ Paul Barnes
----------------------
Name:
Title: AVP
<PAGE>
EXHIBITA
to
Intellectual Property Security Agreement
FORM OF INTELLECTUAL PROPERTY SECURITY AGREEMENT SUPPLEMENT
________ ____, _________
Banque National de Paris, New York Branch,
as Agent
499 Park Avenue
New York, New York 10022
Attention:
Intellectual Property Security Agreement dated as of September 30, 1999 among
Better Minerals & Aggregates Company and additional grantors named therein, as
Grantors, and
Banque Nationale de Paris, as Agent
Ladies and Gentlemen:
Reference is made to the above-captioned Intellectual Property Security
Agreement (as amended, supplemented or otherwise modified from time to time, the
"Security Agreement"). Unless otherwise defined herein, terms defined in the
------------------
Security Agreement are used herein as therein defined.
The undersigned hereby agrees, as of the date first above written, to
become a Grantor under the Security Agreement as if it were an original party
thereto and agrees that each reference in the Security Agreement to a "Grantor"
or the "Grantors" shall also mean and be a reference to the undersigned.
The undersigned hereby assigns and pledges to the Agent for its benefit and
the ratable benefit of the Secured Parties and hereby grants to the Agent for
its benefit and the ratable benefit of the Secured Parties as collateral for the
Secured Obligations a pledge and assignment of, and a security interest in, all
of the right, title and interest of the undersigned in and to its Intellectual
Property Collateral, whether now owned or hereafter acquired.
The undersigned has attached hereto supplements to Schedules I through IV
to the Security Agreement, and the undersigned hereby certifies that such
supplements have been
<PAGE>
prepared by the undersigned in substantially the form of the Schedules to the
Security Agreement and are accurate and complete as of the date first above
written.
The undersigned hereby makes each representation and warranty set forth in
Section 4 of the Security Agreement as to itself and as to its Intellectual
Property Collateral to the same extent as each other Grantor and hereby agrees
to be bound as a Grantor by all of the terms and provisions of the Security
Agreement to the same extent as any other Grantor.
This letter shall be governed by and construed in accordance with the laws
of the State of New York.
Very truly yours,
[NAME OF ADDITIONAL
GRANTOR]
By _______________________________
Name:
Title:
Address:
<PAGE>
EXHIBIT 10.7
EXECUTION COPY
PARENT GUARANTOR SECURITY AGREEMENT
Dated as of September 30, 1999
Between
BMAC HOLDINGS, INC.,
as Guarantor,
------------
and
BANQUE NATIONALE DE PARIS,
as Agent
--------
<PAGE>
T A B L E O F C O N T E N T S
- - - - - - - - - - - - - - -
<TABLE>
<CAPTION>
SECTION Page
<S> <C>
SECTION 1. Grant of Security....................... 1
SECTION 2. Incorporation of Security Agreement..... 2
Schedule I - Pledged Shares
</TABLE>
i
<PAGE>
PARENT GUARANTOR SECURITY AGREEMENT
PARENT GUARANTOR SECURITY AGREEMENT, dated as of September 30, 1999, made
by BMAC Holdings, Inc., a Delaware corporation (the "Guarantor"), to Banque
---------
Nationale de Paris ("BNP"), as agent (together with any successor agent
---
appointed pursuant to Article VII of the Credit Agreement (as hereinafter
defined), the "Agent") for the Lender Parties (as defined in the Credit
-----
Agreement).
PRELIMINARY STATEMENTS.
(1) Better Minerals & Aggregates Company, a Delaware corporation formerly
known as "USS Intermediate Holdco, Inc." (the "Borrower"), the Guarantor and
--------
George F. Pettinos (Canada) Limited, a corporation organized and existing under
the laws of Ontario, Canada (the "Canadian Borrower"), have entered into a
-----------------
Credit Agreement dated as of September 30, 1999 (said Agreement, as it may
hereafter be amended, supplemented or otherwise modified from time to time,
being the "Credit Agreement"; the terms defined therein and not otherwise
----------------
defined herein being used herein as therein defined) with certain Lender Parties
party thereto and Banque Nationale de Paris, as Agent for such Lender Parties
and as Swing Line Bank and Initial Issuing Bank.
(2) The Guarantor is the owner of the shares (the "Pledged Shares") of
--------------
stock described in Schedule I hereto and issued by the corporations named
therein.
(3) It is a condition precedent to the making of Advances and Drawings and
the issuance of Letters of Credit by the Lender Parties and the entry by the
Hedge Banks into the Bank Hedge Agreements with the Loan Parties under the
Credit Agreement that the Guarantor shall have executed and delivered this
Parent Guarantor Security Agreement.
NOW, THEREFORE, in consideration of the premises and in order to induce the
Lender Parties to make Advances and Drawings and to issue Letters of Credit
under the Credit Agreement and to induce the Hedge Banks to enter into Bank
Hedge Agreements with the Loan Parties from time to time, the Guarantor hereby
agrees with the Agent for the ratable benefit of the Secured Parties as follows:
<PAGE>
Section 1. Grant of Security. The Guarantor hereby assigns and
-----------------
pledges to the Agent for the ratable benefit of the Secured Parties, and hereby
grants to the Agent for the ratable benefit of the Secured Parties a security
interest in, the following, in each case, as to each type of property described
below, whether now owned or hereafter acquired, wherever located and whether now
or hereafter existing (collectively, the "Collateral"):
----------
(a) all of the following (the "Security Collateral"):
-------------------
(i) the Pledged Shares and the certificates representing the
Pledged Shares, and all dividends, cash, instruments and other
property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the Pledged
Shares;
(ii) all additional shares of stock from time to time acquired by
the Guarantor in any manner, and the certificates representing such
additional shares, and all dividends, cash, instruments and other
property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such
shares; and
(b) all proceeds of any and all of the foregoing Collateral
(including, without limitation, proceeds that constitute property of the
types described in clause (a) of this Section 1) and, to the extent not
otherwise included, all (i) payments under insurance (whether or not the
Agent is the loss payee thereof), or any indemnity, warranty or guaranty,
payable by reason of loss or damage to or otherwise with respect to any of
the foregoing Collateral and (ii) cash.
Section 2. Incorporation of Security Agreement. The Guarantor and
-----------------------------------
the Agent hereby agree that Sections 2 through 29 of the Security Agreement as
in effect on the date hereof (including all cross-referenced sections and
definitions to the extent necessary) are hereby incorporated into this Agreement
by this reference and for all purposes have the same effect as if set forth in
full in this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by its officer thereunto duly authorized as of
the date first above written.
BMAC HOLDINGS, INC.
By: /s/ Richard Nick
---------------------------
Name: Richard Nick
Title: Vice President
BANQUE NATIONALE DE PARIS,
as Agent
By: /s/ Richard Cushing
--------------------------
Name:
Title: Director
By: /s/ Paul Barnes
--------------------------
Name:
Title: AVP
<PAGE>
Schedule I
PLEDGED SHARES
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
Percentage
of
Stock Certificate Number Outstanding
Stock Issuer Class of Stock Par Value No(s) of Shares Shares
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
==================================================================================================
</TABLE>
<PAGE>
EXHIBIT 10.8
EXECUTION COPY
CANADIAN SECURITY AGREEMENT
Dated as of September 30, 1999
From
GEORGE F. PETTINOS (CANADA) LIMITED,
as Debtor,
to
BANQUE NATIONALE DE PARIS (CANADA),
as Canadian Sub-Agent for the Canadian Lenders
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I SECURITY
1.1 Terms Incorporated by Reference......................................... 1
1.2 Grant of Security....................................................... 1
1.3 Obligations Secured..................................................... 2
1.4 Attachment.............................................................. 2
1.5 Accounts................................................................ 3
1.6 Scope of Security Interest.............................................. 3
1.7 Care and Custody of Collateral.......................................... 3
1.8 Debtor's Dealings with Collateral....................................... 4
1.9 Insurance............................................................... 4
1.10 Leases.................................................................. 5
ARTICLE II ENFORCEMENT
2.1 Default................................................................. 5
2.2 Remedies................................................................ 5
2.3 Additional Rights....................................................... 6
2.4 Concerning the Receiver................................................. 7
2.5 Appointment of Attorney................................................. 7
2.6 Dealing with the Collateral and the Security Interest................... 7
2.7 Standards of Sale....................................................... 8
2.8 Dealings by Third Parties............................................... 8
2.9 Indemnity and Expenses.................................................. 8
ARTICLE III GENERAL
3.1 Release and Discharge................................................... 9
3.2 No Merger, Etc.......................................................... 9
3.3 Waivers, Etc............................................................ 9
3.4 Further Assurances......................................................10
3.5 Successors and Assigns..................................................10
3.6 Headings, Etc...........................................................10
3.7 Severability............................................................10
3.8 Governing Law...........................................................10
</TABLE>
Schedule I - Intellectual Property
Schedule II - Collateral Locations
Schedule III - Deposit Accounts
Schedule IV - Financing Statements
i
<PAGE>
CANADIAN SECURITY AGREEMENT
Canadian Security Agreement dated as of September 30, 1999 made by
George F. Pettinos (Canada) Limited (the "Debtor"), a corporation duly
------
incorporated under the laws of Ontario, Canada, to and in favor of Banque
Nationale de Paris (Canada), as Canadian Sub-Agent (the "Sub-Agent") pursuant to
---------
a Credit Agreement dated as of September 30, 1999 (as amended, supplemented or
otherwise modified from time to time, the "Credit Agreement"; unless otherwise
----------------
defined herein, the terms used herein and not otherwise defined herein having
the respective meanings set forth in the Credit Agreement) by and among Better
Minerals & Aggregates Company, a Delaware corporation formerly known as "USS
Intermediate Holdco, Inc.", as Borrower, the Debtor, as Canadian Borrower, BMAC
Holdings, Inc., the Initial Lenders named therein, and Banque Nationale de
Paris, as Agent, Swing Line Bank and Initial Issuing Bank.
WHEREAS, the Canadian Lenders will either make a Canadian Borrower
Advance or accept Bankers' Acceptances (collectively, the "Advances") as
--------
provided in the Credit Agreement; and
WHEREAS, the Debtor has agreed to execute and deliver this security
agreement to and in favour of the Sub-Agent, for the benefit of the Canadian
Lenders as security for the payment and performance of the obligations, present
or future, direct or indirect, absolute or contingent, matured or unmatured, of
the Debtor to the Canadian Lenders pursuant to the Credit Agreement;
NOW, THEREFORE, in consideration of the foregoing premises and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Debtor hereby agrees with the Sub-Agent for the benefit of the
Canadian Lenders as follows:
ARTICLE I
SECURITY
1.1 Terms Incorporated by Reference. Terms defined in the Personal
Property Security Act (Ontario) (as amended from time to time, the "PPSA") and
----
used in this security agreement shall have the same meaning herein.
<PAGE>
2
1.2 Grant of Security. (1) Subject to Section 1.6, the Debtor
hereby (i) mortgages and charges to the Sub-Agent, for the benefit of the
Canadian Lenders, as and by way of a fixed mortgage and charge; (ii) pledges to
the Sub-Agent, for the benefit of the Canadian Lenders; (iii) assigns and
transfers to the Sub-Agent, for the benefit of the Canadian Lenders, as and by
way of a specific transfer and assignment; and (iv) grants to the Sub-Agent, for
the benefit of the Canadian Lenders, a security interest in all of the Debtor's
right, title and interest in and to the personal property and undertaking of the
Debtor now owned or hereafter acquired (collectively, the "Collateral"),
----------
including, without limitation, any and all of the Debtor's:
(a) inventory, including goods held for sale or lease, goods furnished
or to be furnished to third parties under contracts of lease, consignment
or service, goods which are raw materials or work in process, goods used in
or procured for packing, and materials used or consumed in the business of
the Debtor (collectively, the "Inventory");
---------
(b) equipment, fixtures and other goods of every kind and description,
all licenses and other rights and all records, files, charts, plans,
drawings, specifications, manuals and comments relating thereto
(collectively, the "Equipment");
---------
(c) accounts, due or accruing, and all agreements, books, accounts,
invoices, letters, documents and papers recording, evidencing or relating
thereto;
(d) deposit accounts, including, without limitation, the Deposit
Accounts and the Canadian Cash Collateral Account (as such terms are
hereinafter defined), all funds held therein and all certificates and
instruments, if any, from time to time, representing any such deposit
accounts, together with all interest, dividends, cash, instruments and
other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such deposit
accounts;
(e) money, documents of title, chattel paper, instruments and
securities;
(f) intangibles including all security interests, goodwill, choses in
action and other contractual benefits (including, without limitation, all
benefits under insurance policies and any hedge agreements) and all trade
marks, trade mark registrations and pending trade mark applications,
patents and pending patent applications and copyrights and other
intellectual property (collectively, the "Intellectual Property") including
---------------------
the Intellectual Property described in Schedule I hereto;
(g) substitutions and replacements of and increases, additions and,
where applicable, accessions to the property described in Sections
1.2(l)(a)-(f) inclusive; and
(h) proceeds in any form derived directly or indirectly from any
dealing with all or any part of the property described in Sections
1.2(l)(a)-(g) inclusive or the proceeds therefrom.
(2) Without limiting the generality of the foregoing, the Collateral
shall include all personal property of the Debtor now or hereafter located on or
about or in transit to or
<PAGE>
3
from the locations set out in Schedule II hereto. The Debtor shall promptly
inform the Sub-Agent in writing of any other location at which the Collateral
consisting of tangible personal property may in the future be located.
1.3 Obligations Secured. The mortgages, charges, pledges, transfers,
assignments and security interest granted hereby (collectively, the "Security
---------
Interest") by the Debtor secure payment to the Canadian Lenders and
- ---------
performance of all Obligations of the Debtor now or hereafter existing under or
in respect of the Loan Documents, whether direct or indirect, absolute or
contingent, matured or unmatured, at any time due or accruing, owing by the
Debtor to the Canadian Lenders pursuant to the Credit Agreement.
1.4 Attachment. (1) The Debtor and the Sub-Agent hereby
acknowledge that (i) value has been given; (ii) the Debtor has rights in the
Collateral; (iii) they have not agreed to postpone the time of attachment of the
Security Interest; and (iv) the Debtor has received a duplicate original copy of
this security agreement.
(2) If at any time the Debtor acquires Collateral consisting of
chattel paper, instruments, securities or negotiable documents of title
(collectively, "Negotiable Collateral"), the Debtor will, forthwith upon receipt
---------------------
by the Debtor, deliver to the Sub-Agent, for the benefit of the Canadian
Lenders, such Negotiable Collateral and shall, at the request of the Sub-Agent,
(i) cause the transfer thereof to the Sub-Agent to be registered wherever, in
the reasonable opinion of the Sub-Agent, such registration may be required or
advisable; (ii) duly endorse the same for transfer in blank or as the Sub-Agent
may reasonably direct; and (iii) forthwith deliver to the Sub-Agent any and all
consents or other instruments or documents which may be necessary to effect the
transfer of the Negotiable Collateral to the Sub-Agent or any third party.
1.5 Accounts. So long as any Advance shall remain outstanding
under the Credit Agreement, the Debtor shall maintain deposit accounts in the
Province of Ontario ("Deposit Accounts") only with banks that are listed on
----------------
Schedule III (as such Schedule may be amended or supplemented from time to time)
and shall maintain with one of the banks listed on Schedule III a concentration
account into which all cash receipts and from which all cash disbursements of
its business in the normal course shall flow (the "Canadian Cash Collateral
------------------------
Account").
- -------
1.6 Scope of Security Interest. (1) To the extent that the
creation of the Security Interest would constitute a breach or permit the
acceleration of any agreement, right, license or permit to which the Debtor is a
party, the Security Interest shall not attach thereto but the Debtor shall hold
its interest therein in trust for the Sub-Agent and the Canadian Lenders, and
shall assign such agreement, right, license or permit to the Sub-Agent, for the
benefit of the Canadian Lenders, or as it may direct forthwith upon obtaining
the consent of the other party thereto.
<PAGE>
4
(2) Subject to Section 2.2, the grant of the Security Interest in the
Intellectual Property shall not affect in any way the Debtor's rights to
commercially exploit the Intellectual Property, to defend the Intellectual
Property, to enforce the Debtor's rights therein or with respect thereto against
third parties in any court or to the claim and be entitled to receive any
damages with respect to any infringement thereof.
1.7 Care and Custody of Collateral. (1) The Sub-Agent shall not
be bound to collect, dispose of, realize, protect or enforce any of the Debtor's
right, title and interest in and to the Collateral or to institute proceedings
for the purpose thereof and, without limiting the generality of the foregoing,
the Sub-Agent shall not be required to take any steps necessary to preserve
rights against prior parties in respect of any Negotiable Collateral.
(2) The Sub-Agent shall not have any obligation to keep Collateral in
its possession identifiable.
(3) The Sub-Agent may, at any time upon (a) the occurrence and during
the continuance of an Event of Default and (b) either the making of the request
or the granting of the consent specified by Section 6.01 of the Credit Agreement
to authorize the Agent to declare the "Advances" under and as defined therein
due and payable pursuant to the provisions of such Section 6.01 or the making of
the demand specified in Section 6.02 of the Credit Agreement to require the
Borrower to pay amounts in respect of Letters of Credit or the Debtor to pay
amounts in respect of Bankers' Acceptances (i) notify any person obligated on an
account or on chattel paper or any obligor on an instrument to make payment
thereunder to the Sub-Agent whether or not the Debtor was theretofore making
collections thereon; and (ii) assume control of any proceeds arising from the
Collateral.
1.8 Debtor's Dealings with Collateral. (1) The Debtor shall not,
without the prior written consent of the Sub-Agent, sell, exchange, lease,
release or abandon or otherwise dispose of the Collateral except as permitted
under the Credit Agreement.
(2) The Debtor represents and warrants as follows:
(a) All of the Equipment and Inventory are located on or about or in
transit to or from the locations specified in Schedule II hereto.
(b) The Debtor is the legal and beneficial owner of the Collateral
free and clear of any Liens, except for the Liens permitted in the Loan
Documents and for the security interests created by this security
agreement. Except for the Financing Statements listed on Schedule IV
hereto, no effective financing statement or other instrument similar in
effect covering all or any part of the Collateral is on file in any
recording office, except such as may have been filed in favour of the Sub-
Agent, for the benefit of the Canadian
<PAGE>
5
Lenders, relating to this security agreement or as otherwise permitted in
the Loan Documents.
(c) Except to the extent located on or in leased property or subject
to operating leases, the Debtor has exclusive possession and control of the
Equipment and Inventory other than Inventory in transit to the Debtor from
locations outside Canada.
(d) This security agreement creates a valid security interest in the
Collateral of the Debtor, securing the payment of the Obligations of the
Debtor.
1.9 Insurance. (1) The Debtor shall, at its own expense, maintain
insurance in accordance with Section 5.01(d) of the Credit Agreement. Each
policy for liability insurance shall provide for all losses to be paid on behalf
of the Sub-Agent and the Debtor as their interests may appear, and each policy
for property damage insurance shall provide for all losses to be paid directly
to the Sub-Agent, for the ratable benefit of the Canadian Lenders. Each such
policy shall in addition (i) name the Debtor and the Sub-Agent as insured
parties thereunder (without any representation or warranty by or obligation upon
the Sub-Agent) as their interests may appear, (ii) contain the agreement by the
insurer that any loss thereunder with respect to damage to the Debtor's property
in an amount in excess of $500,000 shall be payable to the Sub-Agent
notwithstanding any action, inaction or breach of representation or warranty by
the Debtor, (iii) provide that there shall be no recourse against the Sub-Agent
for payment of premiums or other amounts with respect thereto and (iv) provide
that at least ten days' prior written notice of cancellation or of lapse shall
be given to the Sub-Agent by the insurer. The Debtor shall, as often as the
Sub-Agent reasonably requests, deliver to the Sub-Agent original or duplicate
policies of such insurance. Further, the Debtor shall, at the reasonable
request of the Sub-Agent, duly execute and deliver instruments of assignment of
such insurance policies to comply with the requirements of Section 3.4 and use
reasonable efforts to cause the insurers to acknowledge notice of such
assignment.
(2) Reimbursement under any liability insurance maintained by the
Debtor pursuant to this Section 1.9 may be paid directly to the Person who shall
have incurred liability covered by such insurance. In case of any loss
involving damage to Equipment or Inventory when Section 1.9(3) is not
applicable, the Debtor shall be permitted to use any proceeds to make or cause
to be made the necessary repairs to or replacements or substitutions of or
additions to such Equipment, Inventory, fixed assets, real property or
improvements relating to property covered by such payments (replacements or
substitutions to be of such same type of property), and any proceeds of
insurance maintained by the Debtor pursuant to this Section 1.9 shall be paid
and applied pursuant to the terms of the Credit Agreement.
(3) Upon (i) the occurrence and during the continuance of any Event of
Default and (ii) either the making of the request or the granting of the consent
specified in Section 6.01 of the Credit Agreement to authorize the Agent to
declare the "Advances" under and
<PAGE>
6
as defined therein due and payable pursuant to the provisions of such Section
6.01 or the making of the demand specified in Section 6.02 of the Credit
Agreement to require the Borrower to pay amounts in respect of Letters of Credit
or the Debtor to pay amounts in respect of Bankers' Acceptances, all insurance
payments in respect of such Equipment or Inventory shall be paid to and applied
by the Sub-Agent as specified in Section 2.2.
1.10 Leases. The last day of the term of any lease, oral or
written, or any agreement therefor, now held or hereafter acquired by the Debtor
shall be excepted from the Security Interests and shall not form part of the
Collateral but the Debtor shall stand possessed of such one day remaining upon
trust to assign and dispose of the same as the Sub-Agent directs. If any such
lease or agreement therefor entered into by the Debtor in the ordinary course of
business of such Debtor contains a provision which provides in effect that such
lease or agreement may not be assigned, sub-leased, charged or made the subject
of any encumbrance without the consent of the lessor, the application of the
Security Interests to any such lease or agreement shall be conditional upon such
consent being obtained.
ARTICLE II
ENFORCEMENT
2.1 Default. The Security Interest shall be and become enforceable
against the Debtor upon (i) the occurrence and during the continuance of an
Event of Default and (ii) either the making of the request or the granting of
the consent specified by Section 6.01 of the Credit Agreement to authorize the
Agent to declare the "Advances" under and as defined therein due and payable
pursuant to the provisions of such Section 6.01 or the making of the demand
specified in Section 6.02 of the Credit Agreement to require the Borrower to pay
amounts in respect of Letters of Credit or the Debtor to pay amounts in respect
of Bankers' Acceptances.
2.2 Remedies. Whenever the Security Interest has become enforceable,
the Sub-Agent may, for the benefit of the Canadian Lenders, realize upon the
Collateral and enforce the rights of the Sub-Agent and the Canadian Lenders by:
(a) entry onto any premises where Collateral consisting of tangible
personal property may be located;
(b) taking possession of the Collateral by any method permitted by
law;
(c) sale or lease of the Collateral;
(d) collection of any proceeds arising in respect of the Collateral;
<PAGE>
7
(e) collection, realization or sale of or other dealing with the
accounts;
(f) the appointment by instrument in writing of a receiver (which term
as used in this security agreement includes a receiver and manager) or
agent of the Collateral;
(g) the institution of proceedings in any court of competent
jurisdiction for the appointment of a receiver of the Collateral;
(h) the institution of proceedings in any court of competent
jurisdiction for sale or foreclosure of the Collateral;
(i) filing proofs of claim and other documents to establish claims in
any proceeding relating to the Debtor; and
(j) any other remedy or proceeding authorized or permitted under the
PPSA or otherwise by law or equity.
Such remedies may be exercised from time to time separately or in combination
and are in addition to and not in substitution for any other rights of the Sub-
Agent and the Canadian Lenders however created. Neither the Sub-Agent nor any
Canadian Lender shall be bound to exercise any such right or remedy, and the
exercise of such rights and remedies shall be without prejudice to the rights of
the Sub-Agent or any Canadian Lender in respect of the Obligations including the
right to claim for any deficiency.
2.3 Additional Rights. In addition to the remedies of the Sub-
Agent and the Canadian Lenders set forth in Section 2.2, the Sub-Agent may,
whenever the Security Interest has become enforceable,
(a) require the Debtor, at the Debtor's expense, to assemble the
Collateral at a place or places designated by notice in writing given by
the Sub-Agent to the Debtor;
(b) require the Debtor, by notice in writing given by the Sub-Agent to
the Debtor, to disclose to the Sub-Agent the location or locations of the
Collateral;
(c) repair, process, modify, complete or otherwise deal with the
Collateral and prepare for the disposition of the Collateral, whether on
the premises of the Debtor or otherwise;
(d) carry on all or any part of the business or businesses of the
Debtor and, to the exclusion of all others including the Debtor, enter
upon, occupy and use all of any of the premises, buildings, plant,
undertaking and other property of or used by the Debtor for such time as
the Sub-Agent sees fit, free of charge, and neither the Sub-Agent nor any
<PAGE>
8
Canadian Lender shall be liable to the Debtor for any act, omission or
negligence in so doing or for any rent, charges, depreciation or damages
incurred in connection therewith or resulting therefrom;
(e) borrow for the purpose of carrying on the business of the Debtor
or for the maintenance, preservation of protection of the Collateral and
mortgage, charge, pledge or grant a security interest in the Collateral,
whether or not in priority to the Security Interest, to secure repayment;
and
(f) demand, commence, continue or defend any judicial or
administrative proceedings for the purpose of protecting, seizing,
collecting, realizing or obtaining possession or payment of the Collateral,
and give valid and effectual receipts and discharges therefor and
compromise or give time for the payment or performance of all or any part
of the accounts or any other obligation of any third party to the Debtor.
2.4 Concerning the Receiver. (1) Any receiver appointed by the
Sub-Agent, for the benefit of the Canadian Lenders, shall be vested with the
rights and remedies which could have been exercised by the Sub-Agent or the
Canadian Lenders in respect of the Debtor or the Collateral and such other
powers and discretions as are granted in the instrument of appointment and any
instrument or instruments supplemental thereto. The identity of the receiver,
any replacement thereof and any remuneration thereof shall be within the sole
and unfettered discretion of the Sub-Agent.
(2) Any receiver appointed by the Sub-Agent for the benefit of the
Canadian Lenders shall act as agent for the Sub-Agent for the purposes of taking
possession of the Collateral, but otherwise and for all other purposes (except
as provided below), as agent for the Debtor. The receiver may sell, lease, or
otherwise dispose of Collateral as agent for the Debtor or as agent for the Sub-
Agent, for the benefit of the Canadian Lenders, as the Sub-Agent may determine
in its discretion. The Debtor agrees to ratify and confirm all actions of the
receiver acting as agent for the Debtor, and to release and indemnify the
receiver in respect of all such actions.
(3) The Sub-Agent, in appointing or refraining from appointing any
receiver, shall not incur liability to the receiver, the Debtor or otherwise and
shall not be responsible for any misconduct or negligence of such receiver.
2.5 Appointment of Attorney. The Debtor hereby irrevocably
appoints the Sub-Agent (and any officer thereof) as attorney of the Debtor (with
full power of substitution) upon (i) the occurrence and during the continuance
of an Event of Default and (ii) either the making of the request or the granting
of the consent specified by Section 6.01 of the Credit Agreement to authorize
the Agent to declare the "Advances" under and as defined therein due and payable
pursuant to the provisions of such Section 6.01 or the making of the demand
<PAGE>
9
specified in Section 6.02 of the Credit Agreement to require the Borrower to pay
amounts in respect of Letters of Credit or the Debtor to pay amounts in respect
of Bankers' Acceptances, to exercise in the name of and on behalf of the Debtor
any of the Debtor's right (including the right of disposal), title and interest
in and to the Collateral including the execution, endorsement and delivery of
any agreements, documents, instruments, securities, documents of title and
chattel paper and any notices, receipts, assignments or verifications of the
accounts. All acts of any such attorney are hereby ratified and approved, and
such attorney shall not be liable for any act, failure to act or any other
matter or thing in connection therewith, except for its own negligence or wilful
misconduct.
2.6 Dealing with the Collateral and the Security Interest . (1)
The Sub-Agent, for the benefit of the Canadian Lenders, shall not be obliged to
exhaust its recourse against the Debtor or any other Person or Persons or
against any other security it may hold in respect of the Obligations before
realizing upon or otherwise dealing with the Collateral in such manner as the
Sub-Agent may consider desirable.
(2) The Sub-Agent may grant extensions or other indulgences, take and
give up securities, accept compositions, grant releases and discharges and
otherwise deal with the Debtor and with other parties, sureties or securities as
the Sub-Agent may see fit without prejudice to the Obligations or the rights of
the Sub-Agent and the Canadian Lenders in respect of the Collateral.
(3) Subject to section 2.7, the Sub-Agent shall not be (i) liable or
accountable for any failure to collect, realize or obtain payment in respect of
the Collateral; (ii) bound to institute proceedings for the purpose of
collecting, enforcing, realizing or obtaining payment of the Collateral or for
the purpose of preserving any rights of the Sub-Agent, the Canadian Lenders, the
Debtor or any other parties in respect thereof; (iii) responsible for any loss
occasioned by any sale or other dealing with the Collateral or by the retention
of or failure to sell or otherwise deal therewith; or (iv) bound to protect the
Collateral from depreciating in value or becoming worthless.
2.7 Standards of Sale. Without prejudice to the ability of the
Sub-Agent to dispose, for the benefit of the Canadian Lenders, of the Collateral
in any manner which is commercially reasonable, the Debtor acknowledges that a
disposition of Collateral by the Sub-Agent which takes place substantially in
accordance with the following provisions shall be deemed to be commercially
reasonable:
(a) Collateral may be disposed of in whole or in part;
(b) Collateral may be disposed of by public auction, public tender or
private contract, with or without advertising and without any other
formality;
<PAGE>
10
(c) any purchaser or lessee of such Collateral may be a customer of
the Sub-Agent or any Canadian Lender or a permitted assignee hereunder,
provided that the Collateral is purchased or leased by such customer on the
basis of fair market value with regard to existing circumstances;
(d) a disposition of Collateral may be on such terms and conditions as
to credit or otherwise as the Sub-Agent, in its sole discretion, may deem
advantageous; and
(e) the Sub-Agent may establish an upset or reserve bid or price in
respect of the Collateral;
but in no event shall any sale of Collateral be inconsistent with the standards
that are generally used by reasonable persons in dispositions of like
Collateral.
2.8 Dealings by Third Parties. No person dealing with the Sub-
Agent or its agent or a receiver shall be required (i) to determine whether the
Security Interest has become enforceable; (ii) to determine whether the powers
which the Sub-Agent or its agent is purporting to exercise have become
exercisable; (iii) to determine whether any money remains due to the Sub-Agent
by the Debtor; (iv) to determine the necessity or expediency of the stipulations
and conditions subject to which any sale or lease shall be made; (v) to
determine the propriety or regularity of any sale or of any other dealing by the
Sub-Agent with the Collateral; or (vi) to see to the application of any money
paid to the Sub-Agent.
2.9 Indemnity and Expenses. (1) Subject to Section 2.13(g) of the
Credit Agreement, the Debtor agrees to indemnify the Sub-Agent and each Canadian
Lender in connection with any claims, losses and liabilities resulting from this
security agreement to the extent required by, and in accordance with the
provisions of, Section 8.04(b) of the Credit Agreement.
(2) Subject to Section 2.13(g) of the Credit Agreement, the Debtor
agrees to pay the Sub-Agent such amounts of any fees and expenses incurred by
the Sub-Agent in connection with the administration of this security agreement
as is required by, and in accordance with the provisions of, Sections 8.04(a)
and (b) of the Credit Agreement.
<PAGE>
11
ARTICLE III
GENERAL
3.1 Release and Discharge. (1) Upon any sale, lease, transfer or
other disposition of any item of any item of Collateral in accordance with the
terms of the Loan Documents, the Sub-Agent will, at the Debtor's expense,
execute and deliver to the Debtor such documents as the Debtor shall reasonably
request to evidence the release of such item of Collateral from the assignment
and security interest granted hereby; provided, however, that (i) at the time of
-------- -------
such request and such release, no Event of Default shall have occurred and be
continuing, (ii) except to the extent such sale, lease or transfer or other
disposition is permitted under Section 5.02(e) of the Credit Agreement, the
Debtor shall have delivered to the Sub-Agent, at least ten Business Days prior
to the date of the proposed release, a written request for release describing
the item of Collateral and the terms of the sale, lease, transfer or other
disposition in reasonable detail, including, without limitation, the price
thereof and any expenses in connection therewith, together with a form of
release for execution by the Sub-Agent and a certification by the Debtor to the
effect that the transaction is in compliance with the Loan Documents and as to
such other matters as the Sub-Agent may reasonably request and (iii) the
proceeds of any such sale, lease, transfer or other disposition required to be
applied in accordance with Section 2.07 of the Credit Agreement shall be paid
to, or in accordance with the instructions of, the Sub-Agent at the closing.
(2) The Security Interest shall be discharged, and all rights to the
Collateral shall revert to the Debtor, at the expense of the Debtor upon, but
only upon, the latest of the payment in full in cash of the Obligations
constituting an Advance or other Obligations then due and payable, the
Termination Date and the Termination or expiration of all Bank Hedge Agreements.
The Sub-Agent and the Canadian Lenders shall, at the Debtor's expense, execute
and deliver to the Debtor such releases and discharges as the Debtor or its
counsel may reasonably require to evidence such termination and promptly release
and return Collateral in its possession.
3.2 No Merger, Etc. No judgment recovered by the Sub-Agent or any
Canadian Lender in connection herewith shall operate by way of merger of or in
any way affect the Security Interest, which is in addition to and not in
substitution for any other security now or hereafter held by the Sub-Agent or
any Canadian Lender on its behalf in respect of the Obligations.
3.3 Waivers, Etc. No amendment, consent or waiver by the Sub-Agent
shall be effective unless made in writing and signed by an authorized officer of
the Sub-Agent and then such amendment, waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.
<PAGE>
12
3.4 Further Assurances. The Debtor shall from time to time,
whether before or after the Security Interest shall have become enforceable, do
all such acts and things and execute and deliver all such deeds, transfers,
assignments and instruments as the Sub-Agent may reasonably require to protect
the Collateral or perfect the Security Interest or to enable the Sub-Agent to
exercise and enforce its rights and remedies hereunder with respect to any
Collateral, and the Debtor shall, from time to time after the Security Interest
has become enforceable, do all such acts and things and execute and deliver all
such deeds, transfers, assignments and instruments as the Sub-Agent may
reasonably require for facilitating the sale of the Collateral in connection
with any realization thereof.
3.5 Successors and Assigns. This security agreement shall be
binding upon the Debtor and its respective successors and assigns, and shall
enure, together with the rights and remedies of each of the Sub-Agent and the
Debtor hereunder and their respective successors and assigns, to the benefit of
the Sub-Agent and the Canadian Lenders and the Debtor, respectively, and their
respective successors and assigns.
3.6 Headings, Etc. The division of this security agreement into
sections and subsections and the insertion of headings are for convenience of
reference only and shall not affect the construction or interpretation thereof.
3.7 Severability. If any provisions of this security agreement
shall be deemed by any court of competent jurisdiction to be invalid or void,
the remaining provisions shall remain in full force and effect.
3.8 Governing Law. This security agreement shall be governed by
and construed in accordance with the laws of the Province of Ontario and the
laws of Canada applicable therein and shall be treated in all respects as an
Ontario contract.
<PAGE>
13
IN WITNESS WHEREOF the Debtor has duly executed this security
agreement under the hands of its proper officers duly authorized in that behalf
as of the day and year first above written.
GEORGE F. PETTINOS (CANADA) LIMITED
Per: /s/
----------------------------
Authorized Signing Officer
<PAGE>
SCHEDULE I
INTELLECTUAL PROPERTY
---------------------
GEORGE F. PETTINOS (CANADA) LIMITED
-----------------------------------
<PAGE>
SCHEDULE II
COLLATERAL, LOCATIONS
---------------------
GEORGE F. PETTINOS (CANADA) LIMITED
-----------------------------------
Street Address County and Lessor Expiration Annual Rental
State Date Loss
<PAGE>
SCHEDULE III
DEPOSIT ACCOUNTS
----------------
GEORGE F. PETTINOS (CANADA) LIMITED
-----------------------------------
NAME AND ADDRESS OF BANK ACCOUNT NUMBER
- ------------------------ --------------
<PAGE>
SCHEDULE IV
FINANCING STATEMENTS
--------------------
GEORGE F. PETTINOS (CANADA) LIMITED
-----------------------------------
<PAGE>
EXHIBIT G TO THE
CREDIT AGREEMENT
AS SEPARATELY EXECUTED
CANADIAN SECURITY AGREEMENT
Dated as of September 30, 1999
From
GEORGE F. PETTINOS (CANADA) LIMITED,
as Debtor,
to
BANQUE NATIONALE DE PARIS (CANADA),
as Canadian Sub-Agent for the Canadian Lenders
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I SECURITY
1.1 Terms Incorporated by Reference......................................... 1
1.2 Grant of Security....................................................... 1
1.3 Obligations Secured..................................................... 2
1.4 Attachment.............................................................. 2
1.5 Accounts................................................................ 3
1.6 Scope of Security Interest.............................................. 3
1.7 Care and Custody of Collateral.......................................... 3
1.8 Debtor's Dealings with Collateral....................................... 4
1.9 Insurance............................................................... 4
1.10 Leases.................................................................. 5
ARTICLE II ENFORCEMENT
2.1 Default................................................................. 5
2.2 Remedies................................................................ 5
2.3 Additional Rights....................................................... 6
2.4 Concerning the Receiver................................................. 7
2.5 Appointment of Attorney................................................. 7
2.6 Dealing with the Collateral and the Security Interest................... 7
2.7 Standards of Sale....................................................... 8
2.8 Dealings by Third Parties............................................... 8
2.9 Indemnity and Expenses.................................................. 8
ARTICLE III GENERAL
3.1 Release and Discharge................................................... 9
3.2 No Merger, Etc.......................................................... 9
3.3 Waivers, Etc............................................................ 9
3.4 Further Assurances......................................................10
3.5 Successors and Assigns..................................................10
3.6 Headings, Etc...........................................................10
3.7 Severability............................................................10
3.8 Governing Law...........................................................10
</TABLE>
Schedule I - Intellectual Property
Schedule II - Collateral Locations
Schedule III - Deposit Accounts
Schedule IV - Financing Statements
i
<PAGE>
EXHIBIT 10.9
EXECUTION COPY
PARENT GUARANTY
Dated as of September 30, 1999
From
BMAC HOLDINGS, INC.,
as Guarantor,
-- ---------
in favor of
THE SECURED PARTIES REFERRED TO IN
THE CREDIT AGREEMENT REFERRED TO HEREIN
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Section Page
<S> <C>
Section 1. Guaranty 1
Section 2. Guaranty Absolute 1
Section 3. Waivers and Acknowledgments 2
Section 4. Subrogation 3
Section 5. Payments Free and Clear of Taxes, Etc 3
Section 6. Representations and Warranties 5
Section 7. [Intentionally Omitted.] 6
Section 8. [Intentionally Omitted.] 6
Section 9. Amendments, Etc 6
Section 10. Notices, Etc 6
Section 11. No Waiver; Remedies 6
Section 12. Right of Set-off 7
Section 13. Continuing Guaranty; Assignments under the Credit Agreement 7
Section 14. Execution in Counterparts 7
Section 15. Governing Law; Jurisdiction; Waiver of Jury Trial, Etc 7
</TABLE>
i
<PAGE>
PARENT GUARANTY
PARENT GUARANTY dated as of September 30, 1999 made by BMAC Holdings,
Inc., a Delaware corporation (the "Guarantor"), in favor of the Secured Parties
---------
(as defined in the Credit Agreement referred to below).
PRELIMINARY STATEMENT. Better Minerals & Aggregates Company, a
Delaware corporation formerly known as "USS Intermediate Holdco, Inc." (the
"Borrower"), the Guarantor and George F. Pettinos (Canada) Limited, a
- ---------
corporation organized and existing under the laws of Ontario Canada (the
"Canadian Borrower"), have entered into a Credit Agreement dated as of September
- ------------------
30, 1999 (said agreement, as it may hereafter be amended or otherwise modified
from time to time, being the "Credit Agreement"; the terms defined therein and
----------------
not otherwise defined herein being used herein as therein defined), with certain
Lender Parties party thereto and Banque Nationale de Paris, as Agent for such
Lender Parties and as Swing Line Bank and Initial Issuing Bank. It is a
condition precedent to the making of Advances, the purchasing, accepting or
renewing of a Bankers' Acceptance and the issuance of Letters of Credit by the
Lender Parties under the Credit Agreement and the entry by the Hedge Banks into
Bank Hedge Agreements with the Loan Parties from time to time that the Guarantor
shall have executed and delivered this Guaranty.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Lender Parties to make Advances and Drawings and to issue Letters of
Credit under the Credit Agreement from time to time and the Hedge Banks to enter
into Bank Hedge Agreements with the Loan Parties from time to time, the
Guarantor hereby agrees as follows:
Section 1. Guaranty. The Guarantor hereby unconditionally and
--------
irrevocably guarantees the punctual payment when due, whether at stated
maturity, by acceleration or otherwise, of all Obligations of the Loan Parties
now or hereafter existing under the Loan Documents, whether for principal,
interest, fees, expenses or otherwise (such Obligations being the "Guaranteed
----------
Obligations"). Without limiting the generality of the foregoing, the
- -----------
Guarantor's liability shall extend to all amounts that constitute part of the
Guaranteed Obligations and would be owed by the Borrower or the Canadian
Borrower to the Agent or any other Secured Party under the Loan Documents but
for the fact that they are unenforceable or not allowable due to the existence
of a bankruptcy, reorganization or similar proceeding involving such Borrower or
such Canadian Borrower.
<PAGE>
Section 2. Guaranty Absolute. The Guarantor guarantees that the
-----------------
Guaranteed Obligations will be paid strictly in accordance with the terms of the
Loan Documents, regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of the
Agent or any other Secured Party with respect thereto. The Obligations of the
Guarantor under this Guaranty are independent of the Guaranteed Obligations or
any other Obligations of any other Loan Party under the Loan Documents, and a
separate action or actions may be brought and prosecuted against the Guarantor
to enforce this Guaranty, irrespective of whether any action is brought against
the Borrower, the Canadian Borrower or any other Loan Party or whether the
Borrower, the Canadian Borrower or any other Loan Party is joined in any such
action or actions. The liability of the Guarantor under this Guaranty shall be
irrevocable, absolute and unconditional irrespective of, and the Guarantor
hereby irrevocably waives any defenses it may now or hereafter have in any way
relating to, any or all of the following:
(a) any lack of validity or enforceability of any Loan Document or any
agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Guaranteed Obligations or any other
Obligations of any other Loan Party under the Loan Documents, or any other
amendment or waiver of or any consent to departure from any Loan Document,
including, without limitation, any increase in the Guaranteed Obligations
resulting from the extension of additional credit to the Borrower, the
Canadian Borrower or any of their Subsidiaries or otherwise;
(c) any taking, exchange, release or non-perfection of any Collateral,
or any taking, release or amendment or waiver of or consent to departure
from any other guaranty, for all or any of the Guaranteed Obligations;
(d) any manner of application of Collateral, or proceeds thereof, to
all or any of the Guaranteed Obligations, or any manner of sale or other
disposition of any Collateral for all or any of the Guaranteed Obligations
or any other Obligations of any other Loan Party under the Loan Documents
or any other assets of the Borrower, the Canadian Borrower or any of their
Subsidiaries;
(e) any change, restructuring or termination of the corporate
structure or existence of the Borrower, the Canadian Borrower or any of
their Subsidiaries;
(f) any failure of any Secured Party to disclose to the Borrower, the
Canadian Borrower, the Guarantor or any other Loan Party any information
relating to the financial condition, operations, properties or prospects of
any other Loan Party now or in the future known to any Secured Party (the
Guarantor waiving any duty on the part of the Secured Parties to disclose
such information); or
(g) any other circumstance (including, without limitation, any statute
of limitations) or any existence of or reliance on any representation by
the Agent or any other Secured Party that might otherwise constitute a
defense available to, or a discharge
2
<PAGE>
of, the Borrower, the Canadian Borrower, the Guarantor, any other Loan
Party or any other guarantor or surety.
This Guaranty shall continue to be effective or be reinstated, as the
case may be, if at any time any payment of any of the Guaranteed Obligations is
rescinded or must otherwise be returned by any Secured Party or any other Person
upon the insolvency, bankruptcy or reorganization of the Borrower, the Canadian
Borrower or any other Loan Party or otherwise, all as though such payment had
not been made.
Section 3. Waivers and Acknowledgments. (a) The Guarantor hereby
---------------------------
waives promptness, diligence, notice of acceptance and any other notice with
respect to any of the Guaranteed Obligations and this Guaranty and any
requirement that the Agent or any other Secured Party protect, secure, perfect
or insure any Lien or any property subject thereto or exhaust any right or take
any action against the Borrower, the Canadian Borrower or any other Person or
any Collateral.
(b) The Guarantor hereby waives any right to revoke this Guaranty, and
acknowledges that this Guaranty is continuing in nature and applies to all
Guaranteed Obligations, whether existing now or in the future.
(c) The Guarantor acknowledges that it will receive substantial direct
and indirect benefits from the financing arrangements contemplated by the Loan
Documents and that the waivers set forth in this Section 3 are knowingly made in
contemplation of such benefits.
Section 4. Subrogation. The Guarantor will not exercise any rights
-----------
that it may now or hereafter acquire against the Borrower, the Canadian Borrower
or any other insider guarantor that arise from the existence, payment,
performance or enforcement of the Guarantor's Obligations under this Guaranty or
any other Loan Document, including, without limitation, any right of
subrogation, reimbursement, exoneration, contribution or indemnification and any
right to participate in any claim or remedy of the Agent or any other Secured
Party against any Loan Party or any other insider guarantor or any Collateral,
whether or not such claim, remedy or right arises in equity or under contract,
statute or common law, including, without limitation, the right to take or
receive from any Loan Party or any other insider guarantor, directly or
indirectly, in cash or other property or by set-off or in any other manner,
payment or security on account of such claim, remedy or right, unless and until
all of the Obligations constituting an Advance or Drawing and all other
Guaranteed Obligations or amounts payable under this Guaranty shall have been
paid in full in cash, all Bank Hedge Agreements shall have expired or terminated
and the Commitments shall have expired or terminated. If any amount shall be
paid to the Guarantor in violation of the preceding sentence at any time prior
to the later of the payment in full in cash of the Guaranteed Obligations and
all other amounts payable under this Guaranty and the later of (i) the
Termination Date and (ii) the expiration or termination of all Bank Hedge
Agreements, such amount shall be held in trust for the benefit of the Agent and
the other Secured Parties and shall forthwith be paid to the Agent to be
credited and applied to the Guaranteed Obligations and all other amounts payable
under this Guaranty, whether matured or unmatured, in accordance with the terms
of the Loan Documents. If (i) the Guarantor shall make payment to the Agent or
any other Secured Party of all or any part of the Guaranteed Obligations, (ii)
all of the
3
<PAGE>
Guaranteed Obligations payable under this Guaranty shall be paid in full in cash
and (iii) the Termination Date shall have occurred and all Bank Hedge Agreements
shall have expired or terminated, the Agent and the other Secured Parties will,
at the Guarantor's request and expense, execute and deliver to the Guarantor
appropriate documents, without recourse and without representation or warranty,
necessary to evidence the transfer by subrogation to the Guarantor of an
interest in the Guaranteed Obligations resulting from such payment by the
Guarantor.
Section 5. Payments Free and Clear of Taxes, Etc. (a) Any and all
-------------------------------------
payments by the Guarantor hereunder shall be made, in accordance with Section
2.14 of the Credit Agreement, free and clear of and without deduction or
withholding for any and all Taxes. If the Guarantor shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder to any Lender
Party or the Agent, (i) the sum payable shall be increased as may be necessary
so that after making all required deductions or withholdings (including
deductions applicable to additional sums payable under this Section 5) such
Lender Party or the Agent (as the case may be) receives an amount equal to the
sum it would have received had no such deductions or withholdings been made,
(ii) the Guarantor shall make such deductions or withholdings and (iii) the
Guarantor shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable law.
(b) In addition, the Guarantor shall pay any Other Taxes.
(c) The Guarantor shall indemnify each Lender Party and the Agent for
the full amount of Taxes and Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this
Section 5 paid by such Lender Party or the Agent (as the case may be) and any
liability (including penalties, additions to tax, interest and expenses) arising
therefrom or with respect thereto. This indemnification shall be made within 30
days from the date such Lender Party or the Agent (as the case may be) makes
written demand therefor and provides the Guarantor with evidence of such
liability reasonably satisfactory to the Guarantor.
(d) Within 30 days after the date of any payment of Taxes, the
Guarantor shall furnish to the Agent, at its address referred to in Section 8.02
of the Credit Agreement, the original receipt of payment thereof, a certified
copy of such receipt or other evidence of payment reasonably acceptable to the
Agent. In the case of any payment hereunder by or on behalf of the Guarantor
through an account or branch outside the United States or on behalf of the
Guarantor by a payor that is not a United States person, if the Guarantor
determines that no Taxes are payable in respect thereof, the Guarantor shall
furnish, or shall cause such payor to furnish, to the Agent, at such address, an
opinion of counsel acceptable to the Agent stating that such payment is exempt
from Taxes. For purposes of this subsection (d) and subsection (e), the terms
"United States" and "United States person" shall have the meanings specified in
- -------------- --------------------
Section 7701 of the Internal Revenue Code.
(e) Each Lender Party organized under the laws of a jurisdiction
outside the United States shall, on or prior to the date of its execution and
delivery of the Credit Agreement in the case of each Initial Lender or the
Initial Issuing Bank, as the case may be, and on the date
4
<PAGE>
of the Assignment and Acceptance pursuant to which it became a Lender Party in
the case of each other Lender Party, and from time to time thereafter if
requested in writing by the Guarantor or the Agent (but only so long thereafter
as such Lender Party remains lawfully able to do so and in any event prior to
the date of the first payment to such Lender Party hereunder), provide the Agent
and the Guarantor with two duly completed and executed copies of Internal
Revenue Service (the "IRS") Form 1001 or 4224, as appropriate, or any successor
---
form prescribed by the IRS, certifying (if it is the case) that such Lender
Party is exempt from or is entitled to a reduced rate of United States
withholding tax on payments pursuant to this Guaranty or in respect of any
Bankers' Acceptances or to the extent permitted by law, as an alternative to
such Form 1001 or 4224, each such Lender Party may provide the Guarantor and the
Agent with two duly completed and executed copies of IRS Form W-8, or any
successor form prescribed by the IRS, certifying that such Lender Party is
exempt from United States federal withholding tax pursuant to Section 871(h) or
Section 881(c) of the Internal Revenue Code, together with an annual certificate
in form and substance satisfactory to the Guarantor or the Agent stating that
such Lender Party is not a "person" described in Section 871(h)(3) or 881(c)(3)
of the Internal Revenue Code. If the forms provided by a Lender Party at the
time such Lender Party first becomes a party to the Credit Agreement indicate a
tax rate with respect to Home Jurisdiction Withholding Tax in excess of zero,
withholding tax at such rate shall be considered excluded from Taxes unless and
until such Lender Party provides the appropriate form certifying that a lesser
rate applies, whereupon such withholding tax at such lesser rate only shall be
considered excluded from Taxes for periods governed by such form; provided,
--------
however, that, if at the date of the Assignment and Acceptance pursuant to
- -------
which a Lender Party becomes a party to this Guaranty, the Lender Party assignor
was entitled to payments under subsection (a) in respect of Home Jurisdiction
Withholding Tax with respect to interest paid at such date, then, to such
extent, the term Taxes shall include (in addition to withholding taxes that may
be imposed in the future or other amounts otherwise includable in Taxes) Home
Jurisdiction Withholding Tax, if any, applicable with respect to the Lender
Party assignee on such date. If any form or document referred to in this
subsection (e) requires the disclosure of information not substantially similar
to the information necessary to compute the tax payable and information required
on the date hereof by IRS Form 1001 or 4224, and which a Lender Party reasonably
considers to be confidential, the Lender Party shall give notice thereof to the
Guarantor and shall not be obligated to include in such form or document such
confidential information.
(f) For any period with respect to which a Lender Party has failed to
provide the Guarantor with the appropriate form described in subsection (e) duly
completed and executed (other than if such failure is due to a change in law
occurring after the date on which a form originally was required to be provided
or if such form otherwise is not required under subsection (e) above), such
Lender Party shall not be entitled to indemnification under subsection (a) or
(c) of this Section 5 with respect to Taxes imposed by the United States by
reason of such failure; provided, however, that should a Lender Party become
-------- -------
subject to Taxes because of its failure to deliver a form required hereunder,
the Guarantor shall take such steps as such Lender Party shall reasonably
request at such Lender Party's sole expense to assist such Lender Party to
recover such Taxes.
5
<PAGE>
(g) Any Lender Party claiming additional amounts payable pursuant to
this Section 5 shall use reasonable efforts (consistent with its internal policy
and legal and regulatory restrictions) to file any certificate or document
requested by the Guarantor or to change the jurisdiction of its Applicable
Lending Office if the making of such filing or change would avoid the need for
or reduce the amount of any such additional amounts which may thereafter accrue
and would not, in the sole judgment of such Lender Party, be disadvantageous to
such Lender Party.
(h) If any Lender Party receives a refund of any Taxes or Other Taxes
paid by the Guarantor pursuant to Section 5(a), Section 5(b), or Section 5(c),
such Lender Party shall, within 30 days of such receipt, pay to the Guarantor
the amount so received, net of all out-of-pocket expenses of such Lender Party
with respect thereto, provided, however, that such Lender Party shall (i) be
-------- -------
required to pay to the Guarantor only such amounts as such Lender Party, in its
sole discretion, determines is attributable to Taxes or Other Taxes paid by the
Guarantor pursuant to Section 5(a), Section 5(b) or Section 5(c), and (ii) have
the sole discretion to determine whether to contest the imposition of any Taxes
or Other Taxes, regardless of whether such Taxes or Other Taxes were correctly
or legally asserted.
Section 6. Representations and Warranties. The Guarantor hereby
-------------------------------
represents and warrants as follows:
(a) The Guarantor (i) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, (ii) is duly qualified and in good standing as a foreign
corporation in each other jurisdiction in which it owns or leases property
or in which the conduct of its business requires it to so qualify or be
licensed except where the failure to so qualify or be licensed is not
reasonably expected to have a Material Adverse Effect and (iii) has all
requisite corporate power and authority to own or lease and operate its
properties and to carry on its business as now conducted and as proposed to
be conducted, except to the extent that the failure to do so is not
reasonably expected to have a Material Adverse Effect.
(b) The execution, delivery and performance by the Guarantor of this
Guaranty are within the Guarantor's corporate powers, have been duly
authorized by all necessary corporate action, and do not (i) contravene the
Guarantor's charter or bylaws, (ii) violate any law (including, without
limitation, the Securities Exchange Act of 1934), rule, regulation
(including, without limitation, Regulations T, U and X of the Board of
Governors of the Federal Reserve System), order, writ, judgment,
injunction, decree, determination or award, (iii) conflict with or result
in the breach of, or constitute a default under, any loan agreement,
contract, indenture, mortgage, deed of trust, lease or other instrument
binding on or affecting the Guarantor, any of its Subsidiaries or any of
its or their properties, the effect of which conflict, breach or default is
reasonably likely to have a Material Adverse Effect or (iv) except for the
Liens created under the Loan Documents, result in or require the creation
or imposition of any Lien upon or with respect to any of the properties of
the Guarantor or any of its Subsidiaries. The Guarantor is not in
violation of any such law, rule, regulation, order, writ, judgment,
injunction, decree,
6
<PAGE>
determination or award, or in breach of any such contract, loan agreement,
indenture, mortgage, deed of trust, lease or other instrument, the
violation or breach of which is reasonably expected to have a Material
Adverse Effect.
(c) No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body or any other
third party is required for (i) the due execution, delivery, recordation,
filing or performance by the Guarantor of this Guaranty and (ii) the
exercise by the Agent, any Lender Party or any Hedge Bank or any Lender
Party of its rights under this Guaranty.
(d) This Guaranty has been duly executed and delivered by the
Guarantor. This Guaranty is the legal, valid and binding obligation of the
Guarantor, enforceable against the Guarantor in accordance with its terms
except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or limiting creditors' rights or by
equitable principles generally.
(e) There are no conditions precedent to the effectiveness of this
Guaranty that have not been satisfied or waived.
(f) The Guarantor has, independently and without reliance upon the
Agent, any Lender Party or any Hedge Bank and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Guaranty.
(g) The Guarantor owns no material assets other than the Pledged
Shares (as defined in the Parent Guarantor Security Agreement).
Section 7. [Intentionally Omitted.]
Section 8. [Intentionally Omitted.] .
Section 9. Amendments, Etc. No amendment or waiver of any provision
----------------
of this Guaranty and no consent to any departure by the Guarantor therefrom
shall in any event be effective unless the same shall be in writing and signed
by the Agent and the Guarantor, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided, however, that any provision of this Guaranty may be amended or
-------- -------
waived in accordance with Section 8.01 of the Credit Agreement.
Section 10. Notices, Etc. All notices and other communications
-------------
provided for hereunder shall be in writing (including telegraphic or telecopy
communication) and mailed, telegraphed, telecopied or delivered to it, if to the
Guarantor, addressed to it at c/o D. George Harris & Associates, Inc., 399 Park
Avenue, 32nd Floor, New York, NY 10022, Attention: Treasurer, telecopier number
(212) 207-6440, if to the Agent or any Lender Party, at its address specified in
the Credit Agreement, if to any Hedge Bank, at its address specified in the Bank
Hedge Agreement to which it is a party, or as to any party at such other address
as shall be
7
<PAGE>
designated by such party in a written notice to each other party. All such
notices and other communications shall, when mailed, telegraphed, telecopied or
delivered, be effective when received by the addressee.
Section 11. No Waiver; Remedies. No failure on the part of the
--------------------
Agent or any other Secured Party to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
Section 12. Right of Set-off. Upon (a) the occurrence and during
----------------
the continuance of any Event of Default and (b) either the making of the request
or the granting of the consent specified by Section 6.01 of the Credit Agreement
to authorize the Agent to declare the Advances and all other amounts payable
under the Credit Agreement and the other Loan Documents to be due and payable
pursuant to the provisions of said Section 6.01 or making of the demand
specified by Section 6.02 of the Credit Agreement requiring the Borrower to pay
amounts in respect of Letters of Credit or the Canadian Borrower to pay amounts
in respect of Bankers' Acceptances, each Lender Party and each of its respective
affiliates is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Lender Party or such Affiliate to
or for the credit or the account of the Guarantor against any and all of the
Obligations of the Guarantor now or hereafter existing under this Guaranty,
whether or not such Lender Party shall have made any demand under this Guaranty
and although such Obligations may be unmatured. Each Lender Party agrees
promptly to notify the Guarantor after any such set-off and application;
provided, however, that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of each Lender Party and
its respective Affiliates under this Section are in addition to other rights and
remedies (including, without limitation, other rights of set-off) that such
Lender Party and its respective Affiliates may have.
Section 13. Continuing Guaranty; Assignments under the Credit
-------------------------------------------------
Agreement. This Guaranty is a continuing guaranty and shall (a) remain in full
- ---------
force and effect until the later of the payment in full in cash of the
Guaranteed Obligations constituting an Advance and all other Guaranteed
Obligations or amounts payable under this Guaranty and the later of (i) the
Termination Date and (ii) the expiration or termination of all Bank Hedge
Agreements, (b) be binding upon the Guarantor, its successors and assigns and
(c) inure to the benefit of and be enforceable by the Agent and the other
Secured Parties and their successors, transferees and assigns. Without limiting
the generality of the foregoing clause (c), any Secured Party may assign or
otherwise transfer all or any portion of its rights and obligations under the
Credit Agreement (including, without limitation, all or any portion of its
Commitment, the Advances owing to it and the Note or Notes held by it) to any
other Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to such Secured Party herein or otherwise,
in each case as and to the extent provided in Section 8.07 of the Credit
Agreement.
8
<PAGE>
Section 14. Execution in Counterparts. This Guaranty may be
-------------------------
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Guaranty by telecopier shall be effective as delivery of a manually executed
counterpart of this Guaranty.
Section 15. Governing Law; Jurisdiction; Waiver of Jury Trial, Etc.
------------------------------------------------------
(a) This Guaranty shall be governed by, and construed in accordance with, the
laws of the State of New York.
(b) The Guarantor hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of any New York State
court or federal court of the United States of America sitting in New York City,
and any appellate court from any thereof, in any action or proceeding arising
out of or relating to this Guaranty or any of the other Loan Documents to which
it is or is to be a party, or for recognition or enforcement of any judgment,
and the Guarantor hereby irrevocably and unconditionally agrees that all claims
in respect of any such action or proceeding may be heard and determined in any
such New York State court or, to the extent permitted by law, in such federal
court. The Guarantor agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Nothing in this
Guaranty shall affect any right that any party may otherwise have to bring any
action or proceeding relating to this Guaranty or any of the other Loan
Documents to which it is or is to be a party in the courts of any jurisdiction.
(c) The Guarantor irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection that it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Guaranty or any of the other Loan Documents
to which it is or is to be a party in any New York State or federal court. The
Guarantor hereby irrevocably waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.
9
<PAGE>
(d) The Guarantor hereby irrevocably waives all right to trial by jury
in any action, proceeding or counterclaim (whether based on contract, tort or
otherwise) arising out of or relating to any of the Loan Documents, the
transactions contemplated thereby or the actions of the Agent or any other
Secured Party in the negotiation, administration, performance or enforcement
thereof.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
BMAC HOLDINGS, INC.
By: /s/ Richard Nick
----------------------------------
Name: Richard Nick
Title: Vice President
10
<PAGE>
EXHIBIT H TO THE
CREDIT AGREEMENT
AS SEPARATELY EXECUTED
PARENT GUARANTY
Dated as of September 30, 1999
From
BMAC HOLDINGS, INC.,
as Guarantor,
-- ---------
in favor of
THE SECURED PARTIES REFERRED TO IN
THE CREDIT AGREEMENT REFERRED TO HEREIN
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Section Page
<S> <C>
Section 1. Guaranty 1
Section 2. Guaranty Absolute 1
Section 3. Waivers and Acknowledgments 2
Section 4. Subrogation 3
Section 5. Payments Free and Clear of Taxes, Etc 3
Section 6. Representations and Warranties 5
Section 7. [Intentionally Omitted.] 6
Section 8. [Intentionally Omitted.] 6
Section 9. Amendments, Etc 6
Section 10. Notices, Etc 6
Section 11. No Waiver; Remedies 6
Section 12. Right of Set-off 7
Section 13. Continuing Guaranty; Assignments under the Credit Agreement 7
Section 14. Execution in Counterparts 7
Section 15. Governing Law; Jurisdiction; Waiver of Jury Trial, Etc 7
</TABLE>
i
<PAGE>
EXHIBIT 10.10
EXECUTION COPY
SUBSIDIARY GUARANTY
Dated as of September 30, 1999
From
THE PERSONS LISTED ON THE SIGNATURE PAGES HEREOF
as Subsidiary Guarantors
in favor of
THE SECURED PARTIES REFERRED TO IN
THE CREDIT AGREEMENT REFERRED TO HEREIN
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Section Page
<S> <C>
SECTION 1. SUBSIDIARY GUARANTY; LIMITATION OF LIABILITY 1
SECTION 2. SUBSIDIARY GUARANTY ABSOLUTE
SECTION 3. WAIVERS AND ACKNOWLEDGMENTS
SECTION 4. SUBROGATION
SECTION 5. PAYMENTS FREE AND CLEAR OF TAXES, ETC
SECTION 6. REPRESENTATIONS AND WARRANTIES
SECTION 7. COVENANTS
SECTION 8. AMENDMENTS, ETC
SECTION 9. NOTICES, ETC
SECTION 10. NO WAIVER; REMEDIES
SECTION 11. RIGHT OF SET-OFF
SECTION 12. CONTINUING SUBSIDIARY GUARANTY; ASSIGNMENTS UNDER
THE CREDIT AGREEMENT
SECTION 13. EXECUTION IN COUNTERPARTS
</TABLE>
<PAGE>
<TABLE>
<S> <C>
SECTION 14. GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL, ETC 11
</TABLE>
<PAGE>
SUBSIDIARY GUARANTY
SUBSIDIARY GUARANTY dated as of September 30, 1999 made by the Persons
listed on the signature pages hereof under the caption "Subsidiary Guarantors"
(together with the Additional Subsidiary Guarantors as defined in Section 8(b),
each a "Subsidiary Guarantor"), in favor of the Secured Parties (as defined in
--------------------
the Credit Agreement referred to below).
PRELIMINARY STATEMENT. The Lender Parties and Banque Nationale de
Paris, as Agent for the Lender Parties, are parties to a Credit Agreement dated
as of September 30, 1999 (said Agreement, as it may hereafter be amended,
supplemented or otherwise modified from time to time, being the "Credit
------
Agreement"; the terms defined therein and not otherwise defined herein being
- ---------
used herein as therein defined) with Better Minerals & Aggregates Company, a
Delaware corporation formerly known as "USS Intermediate Holdco, Inc." (the
"Borrower"), BMAC Holdings, Inc., a Delaware corporation, and George F. Pettinos
(Canada) Limited, a corporation organized and existing under the laws of
Ontario, Canada. Each Subsidiary Guarantor may receive a portion of the proceeds
of the Advances under the Credit Agreement and will derive substantial direct
and indirect benefit from the transactions contemplated by the Credit Agreement.
It is a condition precedent to the making of Advances and Drawings and the
issuance of Letters of Credit by the Lender Parties under the Credit Agreement
and the entry by the Hedge Banks into Bank Hedge Agreements with the Loan
Parties from time to time that each Subsidiary Guarantor shall have executed and
delivered this Subsidiary Guaranty.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Lender Parties to make Advances and Drawings and to issue Letters of
Credit under the Credit Agreement and the Hedge Banks to enter into Bank Hedge
Agreements with the Loan Parties from time to time, each Subsidiary Guarantor,
jointly and severally with each other Subsidiary Guarantor, hereby agrees as
follows:
SECTION 1. Subsidiary Guaranty; Limitation of Liability. (a) Each
--------------------------------------------
Subsidiary Guarantor hereby unconditionally and irrevocably guarantees the
punctual payment when due, whether at stated maturity, by acceleration or
otherwise, of all Obligations of each other Loan Party now or hereafter existing
under the Loan Documents, whether for principal, interest, fees, expenses or
otherwise (such Obligations being the "Guaranteed Obligations"). Without
----------------------
limiting the generality of the foregoing, each Subsidiary Guarantor's liability
shall extend to all amounts that constitute part of the Guaranteed Obligations
and would be owed by any Loan Party to the Agent or any other Secured Party
under the Loan Documents but for the fact that they are unenforceable or not
allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving such Loan Party.
(b) (i) Each Subsidiary Guarantor and by the Agent's acceptance of
this Subsidiary Guaranty, the Agent and each other Secured Party, hereby
confirms that it is the
<PAGE>
intention of all such parties that this Subsidiary Guaranty not constitute a
fraudulent transfer or conveyance for purposes of Bankruptcy Law, the Uniform
Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar
federal or state law to the extent applicable to this Subsidiary Guaranty. To
effectuate the foregoing intention, the Agent, the other Secured Parties and the
Subsidiary Guarantors hereby irrevocably agree that the Obligations of each
Subsidiary Guarantor under this Subsidiary Guaranty shall not exceed the greater
of (A) the net benefit realized by such Subsidiary Guarantor from the proceeds
of the Advances and Drawings made from time to time by the Borrower and the
Canadian Borrower, respectively, to such Subsidiary Guarantor or any subsidiary
of such Subsidiary Guarantor and (B) the maximum amount that will, after giving
effect to such maximum amount and all other contingent and fixed liabilities of
such Subsidiary Guarantor that are relevant under such laws, and after giving
effect to any collections from, rights to receive contribution from or payments
made by or on behalf of any other Subsidiary Guarantor in respect of the
Obligations of such other Subsidiary Guarantor under this Subsidiary Guaranty,
result in the Obligations of such Subsidiary Guarantor under this Subsidiary
Guaranty not constituting a fraudulent transfer or conveyance. For purposes
hereof, "Bankruptcy Law" means Title 11, U.S. Code, or any similar Federal or
--------------
state law for the relief of debtors.
(ii) Each Subsidiary Guarantor agrees that in the event any payment
shall be required to be made to the Secured Parties under this Subsidiary
Guaranty or any other guaranty, such Subsidiary Guarantor will contribute, to
the maximum extent permitted by law, such amounts to each other Subsidiary
Guarantor and each other guarantor so as to maximize the aggregate amount paid
to the Secured Parties under the Loan Documents.
SECTION 2. Subsidiary Guaranty Absolute . Each Subsidiary Guarantor
----------------------------
guarantees that the Guaranteed Obligations will be paid strictly in accordance
with the terms of the Loan Documents, regardless of any law, regulation or order
now or hereafter in effect in any jurisdiction affecting any of such terms or
the rights of the Agent or any other Secured Party with respect thereto (but
subject, however, to the provisions of Section 1 hereof). The Obligations of
each Subsidiary Guarantor under this Subsidiary Guaranty are independent of the
Guaranteed Obligations or any other Obligations of any other Loan Party under
the Loan Documents, and a separate action or actions may be brought and
prosecuted against such Subsidiary Guarantor to enforce this Subsidiary
Guaranty, irrespective of whether any action is brought against the Borrower or
any other Loan Party or whether the Borrower or any other Loan Party is joined
in any such action or actions. The liability of each Subsidiary Guarantor under
this Subsidiary Guaranty shall be irrevocable, absolute and unconditional
irrespective of, and each Subsidiary Guarantor hereby irrevocably waives to the
fullest extent it may legally and effectively do so any defenses it may now or
hereafter have in any way relating to, any or all of the following:
(a) any lack of validity or enforceability of any Loan Document or any
agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in any other
term of, all or any of the Guaranteed Obligations or any other Obligations of
any other Loan Party under the Loan Documents, or any other amendment or waiver
of or any consent to departure from any Loan Document, including, without
limitation, any increase in the Guaranteed Obligations
<PAGE>
resulting from the extension of additional credit to any Loan Party or any of
its Subsidiaries or otherwise;
(c) any taking, exchange, release or non-perfection of any Collateral, or
any taking, release or amendment or waiver of or consent to departure from any
other guaranty, for all or any of the Guaranteed Obligations;
(d) any manner of application of Collateral, or proceeds thereof, to all or
any of the Guaranteed Obligations, or any manner of sale or other disposition of
any Collateral for all or any of the Guaranteed Obligations or any other
Obligations of any other Loan Party under the Loan Documents or any other assets
of any Loan Party or any of its Subsidiaries;
(e) any change, restructuring or termination of the corporate structure or
existence of any Loan Party or any of its Subsidiaries;
(f) any failure of any Secured Party to disclose to such Subsidiary
Guarantor or any other Loan Party any information relating to the financial
condition, operations, properties or prospects of any other Loan Party now or in
the future known to any Secured Party (such Subsidiary Guarantor waiving any
duty on the part of the Secured Parties to disclose such information); or
(g) any other circumstance (including, without limitation, any statute of
limitations) or any existence of or reliance on any representation by the Agent
or any other Secured Party that might otherwise constitute a defense available
to, or a discharge of, the Borrower, any Subsidiary Guarantor, any other Loan
Party or any other guarantor or surety.
This Subsidiary Guaranty shall continue to be effective or be reinstated, as the
case may be, if at any time any payment of any of the Guaranteed Obligations is
rescinded or must otherwise be returned by any Secured Party or any other Person
upon the insolvency, bankruptcy or reorganization of the Borrower or any other
Loan Party or otherwise, all as though such payment had not been made.
SECTION 3. Waivers and Acknowledgments. (a) Each Subsidiary Guarantor
---------------------------
hereby waives promptness, diligence, notice of acceptance and any other notice
with respect to any of the Guaranteed Obligations and this Subsidiary Guaranty
and any requirement that the Agent or any other Secured Party protect, secure,
perfect or insure any Lien or any property subject thereto or exhaust any right
or take any action against any Loan Party or any other Person or any Collateral.
(b) Each Subsidiary Guarantor hereby waives any right to revoke this
Subsidiary Guaranty, and acknowledges that this Subsidiary Guaranty is
continuing in nature and applies to all Guaranteed Obligations, whether existing
now or in the future.
(c) Each Subsidiary Guarantor acknowledges that the Agent may, without
notice to or demand upon such Subsidiary Guarantor and without affecting the
liability of such Subsidiary Guarantor under this Subsidiary Guaranty, foreclose
under any Mortgage by nonjudicial sale, and such Subsidiary Guarantor hereby
waives any defense to the recovery by the Agent and the
<PAGE>
other Secured Parties against such Subsidiary Guarantor of any deficiency after
such nonjudicial sale and any defense or benefits that may be afforded by
applicable law.
(d) Each Subsidiary Guarantor acknowledges that it will receive substantial
direct and indirect benefits from the financing arrangements contemplated by the
Loan Documents and that the waivers set forth in this Section 3 are knowingly
made in contemplation of such benefits.
SECTION 4. Subrogation. No Subsidiary Guarantor will exercise any rights
-----------
that it may now or hereafter acquire against any Loan Party or any other insider
guarantor that arise from the existence, payment, performance or enforcement of
such Subsidiary Guarantor's Obligations under this Subsidiary Guaranty or any
other Loan Document, including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution or indemnification and any right to
participate in any claim or remedy of the Agent or any other Secured Party
against any Loan Party or any other insider guarantor or any Collateral, whether
or not such claim, remedy or right arises in equity or under contract, statute
or common law, including, without limitation, the right to take or receive from
any Loan Party or any other insider guarantor, directly or indirectly, in cash
or other property or by set-off or in any other manner, payment or security on
account of such claim, remedy or right, unless and until all of the Obligations
constituting an Advance or Drawing and all other Guaranteed Obligations or
amounts payable under this Subsidiary Guaranty shall have been paid in full in
cash, all Bank Hedge Agreements shall have expired or terminated and the
Commitments shall have expired or terminated. If any amount shall be paid to
any Subsidiary Guarantor in violation of the preceding sentence at any time
prior to the later of the payment in full in cash of the Guaranteed Obligations
and all other amounts payable under this Subsidiary Guaranty and the later of
(i) the Termination Date and (ii) the expiration or termination of all Bank
Hedge Agreements, such amount shall be held in trust for the benefit of the
Agent and the other Secured Parties and shall forthwith be paid to the Agent to
be credited and applied to the Guaranteed Obligations and all other amounts
payable under this Subsidiary Guaranty, whether matured or unmatured, in
accordance with the terms of the Loan Documents. If (i) any Subsidiary
Guarantor shall make payment to the Agent or any other Secured Party of all or
any part of the Guaranteed Obligations, (ii) all of the Obligations and
constituting an Advance or Drawing and all other Guaranteed Obligations payable
under this Subsidiary Guaranty shall be paid in full in cash and (iii) the
Termination Date shall have occurred and all Bank Hedge Agreements shall have
expired or terminated, the Agent and the other Secured Parties will, at such
Subsidiary Guarantor's request and expense, execute and deliver to such
Subsidiary Guarantor appropriate documents, without recourse and without
representation or warranty, necessary to evidence the transfer by subrogation to
such Subsidiary Guarantor of an interest in the Guaranteed Obligations resulting
from such payment by such Subsidiary Guarantor.
SECTION 5. Payments Free and Clear of Taxes, Etc . (a) Any and all
-------------------------------------
payments by the Subsidiary Guarantors hereunder shall be made, in accordance
with Section 2.14 of the Credit Agreement, free and clear of and without
deduction or withholding for any and all Taxes. If any Subsidiary Guarantor
hereunder shall be required by law to deduct any Taxes from or in respect of any
sum payable hereunder to any Lender Party or the Agent, (i) the sum payable
shall be increased as may be necessary so that after making all required
deductions or withholdings (including deductions applicable to additional sums
payable under this Section 5) such Lender Party or the Agent (as the case may
be) receives an amount equal to the sum it would have
<PAGE>
received had no such deductions or withholdings been made, (ii) such Subsidiary
Guarantor shall make such deductions or withholdings and (iii) such Subsidiary
Guarantor shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable law.
(b) In addition, each Subsidiary Guarantor shall pay any Other Taxes.
(c) Each Subsidiary Guarantor shall indemnify each Lender Party and the
Agent for the full amount of Taxes and Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this Section), paid by such Lender Party or the Agent (as the case
may be) and any liability (including penalties, additions to tax, interest and
expenses) arising therefrom or with respect thereto. This indemnification shall
be made within 30 days from the date such Lender Party or the Agent (as the case
may be) makes written demand therefor and provides such Subsidiary Guarantor
with evidence of such liability reasonably satisfactory to such Subsidiary
Guarantor.
(d) Within 30 days after the date of any payment of Taxes, such Subsidiary
Guarantor shall furnish to the Agent, at its address referred to in Section 8.02
of the Credit Agreement, the original receipt of payment thereof, a certified
copy of such receipt or other evidence of payment reasonably acceptable to the
Agent. In the case of any payment hereunder by or on behalf of such Subsidiary
Guarantor through an account or branch outside the United States or on behalf of
such Subsidiary Guarantor by a payor that is not a United States person, if such
Subsidiary Guarantor determines that no Taxes are payable in respect thereof,
such Subsidiary Guarantor shall furnish, or shall cause such payor to furnish,
to the Agent, at such address, an opinion of counsel acceptable to the Agent
stating that such payment is exempt from Taxes. For purposes of this subsection
(d) and subsection (e), the terms "United States" and "United States person"
------------- --------------------
shall have the meanings specified in Section 7701 of the Internal Revenue Code.
(e) Each Lender Party organized under the laws of a jurisdiction outside
the United States shall, on or prior to the date of its execution and delivery
of the Credit Agreement in the case of each Initial Lender or the Initial
Issuing Bank, as the case may be, and on the date of the Assignment and
Acceptance pursuant to which it became a Lender Party in the case of each other
Lender Party, and from time to time thereafter if requested in writing by any
Subsidiary Guarantor or the Agent (but only so long thereafter as such Lender
Party remains lawfully able to do so and in any event prior to the date of the
first payment to such Lender Party hereunder), provide the Agent and such
Subsidiary Guarantor with two duly completed and executed copies of Internal
Revenue Service (the "IRS") Form 1001 or 4224, as appropriate, or any successor
---
form prescribed by the IRS, certifying (if it is the case) that such Lender
Party is exempt from or is entitled to a reduced rate of United States
withholding tax on payments pursuant to this Subsidiary Guaranty or to the
extent permitted by law, as an alternative to such Form 1001 or 4224, each such
Lender Party may provide such Subsidiary Guarantor and the Agent with two duly
completed and executed copies of IRS Form W-8, or any successor form prescribed
by the IRS, certifying that such Lender Party is exempt from United States
federal withholding tax pursuant to Section 871(h) or Section 881(c) of the
Internal Revenue Code, together with an annual certificate in form and substance
satisfactory to such Subsidiary Guarantor or the Agent stating that such Lender
Party is not a "person" described in Section 871(h)(3) or 881(c)(3) of the
<PAGE>
Internal Revenue Code. If the forms provided by a Lender Party at the time such
Lender Party first becomes a party to the Credit Agreement indicate a tax rate
with respect to Home Jurisdiction Withholding Tax in excess of zero, withholding
tax at such rate shall be considered excluded from Taxes unless and until such
Lender Party provides the appropriate form certifying that a lesser rate
applies, whereupon such withholding tax at such lesser rate only shall be
considered excluded from Taxes for periods governed by such form; provided,
--------
however, that, if at the date of the Assignment and Acceptance pursuant to which
- -------
a Lender Party becomes a party to the Credit Agreement, the Lender Party
assignor was entitled to payments under subsection (a) in respect of Home
Jurisdiction Withholding Tax with respect to interest paid at such date, then,
to such extent, the term Taxes shall include (in addition to withholding taxes
that may be imposed in the future or other amounts otherwise includable in
Taxes) Home Jurisdiction Withholding Tax, if any, applicable with respect to the
Lender Party assignee on such date. If any form or document referred to in this
subsection (e) requires the disclosure of information not substantially similar
to the information necessary to compute the tax payable and information required
on the date hereof by IRS Form 1001 or 4224, and which a Lender Party reasonably
considers to be confidential, the Lender Party shall give notice thereof to each
Subsidiary Guarantor and shall not be obligated to include in such form or
document such confidential information.
(f) For any period with respect to which a Lender Party has failed to
provide each Subsidiary Guarantor with the appropriate form described in
subsection (e) duly completed and executed (other than if such failure is due to
----- ----
a change in law occurring after the date on which a form originally was required
to be provided or if such form otherwise is not required under subsection (e)
above), such Lender Party shall not be entitled to indemnification under
subsection (a) or (c) of this Section 5 with respect to Taxes imposed by the
United States by reason of such failure; provided, however, that should a Lender
Party become subject to Taxes because of its failure to deliver a form required
hereunder, such Subsidiary Guarantor shall take such steps as such Lender Party
shall reasonably request at such Lender Party's sole expense to assist such
Lender Party to recover such Taxes.
(g) Any Lender Party claiming additional amounts payable pursuant to this
Section 5 shall use reasonable efforts (consistent with its internal policy and
legal and regulatory restrictions) to file any certificate or document requested
by any Subsidiary Guarantor or to change the jurisdiction of its Applicable
Lending Office if the making of such filing or change would avoid the need for
or reduce the amount of any such additional amounts which may thereafter accrue
and would not, in the sole judgment of such Lender Party, be disadvantageous to
such Lender Party.
(h) If any Lender Party receives a refund of any Taxes or Other Taxes paid
by such Subsidiary Guarantor pursuant to Section 5(a), Section 5(b), or Section
5(c), such Lender Party shall, within 30 days of such receipt, pay to such
Subsidiary Guarantor the amount so received, net of all out-of-pocket expenses
of such Lender Party with respect thereto, provided, however, that such Lender
-------- -------
Party shall (i) be required to pay to such Subsidiary Guarantor only such
amounts as such Lender Party, in its sole discretion, determines is attributable
to Taxes or Other Taxes paid by such Subsidiary Guarantor pursuant to Section
5(a), Section 5(b) or Section 5(c), and (ii) have the sole discretion to
determine whether to contest the imposition of any Taxes or Other Taxes,
regardless of whether such Taxes or Other Taxes were correctly or legally
asserted.
<PAGE>
SECTION 6. Representations and Warranties. Each Subsidiary Guarantor
------------------------------
hereby represents and warrants as follows:
(a) Such Subsidiary Guarantor (i) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, (ii) is duly qualified and in good standing as a foreign
corporation in each other jurisdiction in which it owns or leases property or in
which the conduct of its business requires it to so qualify or be licensed
except where the failure to so qualify or be licensed is not reasonably expected
to have a Material Adverse Effect and (iii) has all requisite corporate power
and authority (including, without limitation, all governmental licenses, permits
and other approvals) to own or lease and operate its properties and to carry on
its business as now conducted and as proposed to be conducted except to the
extent that the failure to do so is not reasonably expected to have a Material
Adverse Effect. All of the outstanding capital stock of such Subsidiary
Guarantor has been validly issued, is fully paid and non-assessable and each
Subsidiary Guarantor is owned by a Loan Party, free and clear of all Liens,
except those created or permitted under the Loan Documents.
(b) The execution, delivery and performance by such Subsidiary Guarantor of
this Subsidiary Guaranty are within such Subsidiary Guarantor's corporate
powers, have been duly authorized by all necessary corporate action, and do not
(i) contravene such Subsidiary Guarantor's charter or bylaws, (ii) violate any
law (including, without limitation, the Securities Exchange Act of 1934), rule,
regulation (including, without limitation, Regulation X of the Board of
Governors of the Federal Reserve System), order, writ, judgment, injunction,
decree, determination or award, (iii) conflict with or result in the breach of,
or constitute a default under, any loan agreement, contract, indenture,
mortgage, deed of trust, lease or other instrument binding on or affecting such
Subsidiary Guarantor, any of its Subsidiaries or any of its or their properties
the effect of which conflict, breach or default is reasonably likely to have a
Material Adverse Effect or (iv) except for the Liens created under the Loan
Documents, result in or require the creation or imposition of any Lien upon or
with respect to any of the properties of such Subsidiary Guarantor or any of its
Subsidiaries. Neither such Subsidiary Guarantor nor any of its Subsidiaries is
in violation of any such law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award or in breach of any such contract,
loan agreement, indenture, mortgage, deed of trust, lease or other instrument,
the violation or breach of which is reasonably expected to have a Material
Adverse Effect.
(c) No authorization or approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body or any other third
party is required for (i) the due execution, delivery, recordation, filing or
performance by such Subsidiary Guarantor of this Subsidiary Guaranty or any
other Loan Document to which such Subsidiary Guarantor is a party or (ii) the
exercise by the Agent or any Secured Party or any Hedge Bank of its rights under
this Subsidiary Guaranty or any other Loan Document to which such Subsidiary
Guarantor is a party.
(d) There is no action, suit, investigation, litigation or proceeding
affecting such Subsidiary Guarantor, including any Environmental Action, pending
or threatened before any court, governmental agency or arbitrator that (i) is
reasonably expected to have a Material
<PAGE>
Adverse Effect or (ii) purports to affect the legality, validity or
enforceability of this Subsidiary Guaranty or any other Loan Document to which
such Subsidiary Guarantor is a party.
(e) Each of this Subsidiary Guaranty and each other Loan Document to which
it is a party has been duly executed and delivered by such Subsidiary Guarantor.
Each of this Subsidiary Guaranty and each other Loan Document to which it is a
party is the legal, valid and binding obligation of such Subsidiary Guarantor,
enforceable against such Subsidiary Guarantor in accordance with its terms.
(f) There are no conditions precedent to the effectiveness of this
Subsidiary Guaranty that have not been satisfied or waived.
(g) Such Subsidiary Guarantor has, independently and without reliance upon
the Agent, any Lender Party or any Hedge Bank and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Subsidiary Guaranty, and such Subsidiary Guarantor
has established adequate means of obtaining from each of the other Loan Parties
on a continuing basis information pertaining to, and is now, and on a continuing
basis will be, completely familiar with, the financial condition, operations,
properties and prospects of such other Loan Parties.
SECTION 7. Covenants. Each Subsidiary Guarantor covenants and agrees
---------
that, so long as any part of the Guaranteed Obligations constituting an Advance
or any other Guaranteed Obligation shall remain unpaid, any Letter of Credit or
Bankers' Acceptance shall be outstanding, any Lender Party shall have any
Commitment or any Hedge Bank shall have any obligation under any Bank Hedge
Agreement, such Subsidiary Guarantor will at all times perform or observe, and
will cause each of its Subsidiaries to perform or observe, all of the terms,
covenants and agreements that the Loan Documents state that the Borrower is to
cause such Subsidiary Guarantor or such Subsidiaries to perform or observe.
SECTION 8. Amendments, Etc. (a) No amendment or waiver of any provision
---------------
of this Subsidiary Guaranty and no consent to any departure by any Subsidiary
Guarantor therefrom shall in any event be effective unless the same shall be in
writing and signed by the Agent and the Required Lenders, and then such waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that any provision of this
-------- -------
Subsidiary Guaranty may be amended or waived in accordance with Section 8.01 of
the Credit Agreement.
(b) Upon the execution and delivery by any Person of a guaranty supplement
in substantially the form of Exhibit A hereto (each a "Guaranty Supplement"),
-------------------
such Person shall be referred to as an "Additional Subsidiary Guarantor" and
-------------------------------
shall be and become a Subsidiary Guarantor, and each reference in this Agreement
to "Subsidiary Guarantor" shall also mean and be a reference to such Additional
Subsidiary Guarantor.
SECTION 9. Notices, Etc . All notices and other communications provided
------------
for hereunder shall be in writing (including telegraphic or telecopy
communication) and mailed, telegraphed, telecopied or delivered to it, if to any
Subsidiary Guarantor, addressed to it at c/o D. George Harris & Associates,
Inc., 399 Park Avenue, 32nd Floor, New York, NY 10022,
<PAGE>
Attention: Treasurer, telecopier number (212) 207-6440, or, in the case of any
Additional Subsidiary Guarantor, at the address set forth below such Additional
Subsidiary Guarantor's signature on the applicable Guaranty Supplement, if to
the Agent or any Lender Party, at its address specified in the Credit Agreement,
if to any Hedge Bank, at its address specified in the Bank Hedge Agreement to
which it is a party, or as to any party at such other address as shall be
designated by such party in a written notice to each other party. All such
notices and other communications shall, when mailed, telegraphed, telecopied or
delivered, be effective when received by the addressee. Delivery by telecopier
of an executed counterpart of any supplement to or any amendment or waiver of
any provision of this Subsidiary Guaranty shall be effective as delivery of a
manually executed counterpart thereof.
SECTION 10. No Waiver; Remedies . No failure on the part of the Agent or
-------------------
any other Secured Party to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise thereof
or the exercise of any other right. The remedies herein provided are cumulative
and not exclusive of any remedies provided by law.
SECTION 11. Right of Set-off . Upon (a) the occurrence and during the
----------------
continuance of any Event of Default and (b) either the making of the request or
the granting of the consent specified by Section 6.01 of the Credit Agreement to
authorize the Agent to declare the Advances due and payable pursuant to the
provisions of said Section 6.01 or the making of the demand specified by Section
6.02 of the Credit Agreement requiring the Borrower to pay amounts in respect of
Letters of Credit or the Canadian Borrower to pay amounts in respect of Bankers'
Acceptances, each Lender Party and each of its respective Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by such Lender Party or such Affiliate to or for the credit or the
account of any Subsidiary Guarantor against any and all of the Obligations of
such Subsidiary Guarantor now or hereafter existing under this Subsidiary
Guaranty, whether or not such Lender Party shall have made any demand under this
Subsidiary Guaranty and although such Obligations may be unmatured. Each Lender
Party agrees promptly to notify such Subsidiary Guarantor after any such set-off
and application; provided, however, that the failure to give such notice shall
not affect the validity of such set-off and application. The rights of each
Lender Party and its respective Affiliates under this Section are in addition to
other rights and remedies (including, without limitation, other rights of set-
off) that such Lender Party and its respective Affiliates may have.
SECTION 12. Continuing Subsidiary Guaranty; Assignments under the Credit
------------------------------------------------------------
Agreement . This Subsidiary Guaranty is a continuing guaranty and shall (a)
- ---------
remain in full force and effect until the later of the payment in full in cash
of the Guaranteed Obligations constituting an Advance or Drawing and all other
Guaranteed Obligations or amounts payable under this Subsidiary Guaranty and the
later of (i) and the Termination Date and (ii) the expiration or termination of
all Bank Hedge Agreements, (b) be binding upon each Subsidiary Guarantor, its
successors and assigns and (c) inure to the benefit of and be enforceable by the
Agent and the other Secured Parties and their successors, transferees and
assigns. Without limiting the generality of the foregoing clause (c), any
Secured Party may assign or otherwise transfer all or any portion of its rights
and obligations under the Credit Agreement (including, without
<PAGE>
limitation, all or any portion of its Commitments, the Advances owing to it and
the Note or Notes held by it) to any other Person, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted to such
Secured Party herein or otherwise, in each case as and to the extent provided in
Section 8.07 of the Credit Agreement. No Subsidiary Guarantor shall have the
right to assign its obligations hereunder or any interest herein without the
prior written consent of the Secured Parties.
<PAGE>
SECTION 13. Execution in Counterparts . This Subsidiary Guaranty may be
-------------------------
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Subsidiary Guaranty by telecopier shall be effective as delivery of a manually
executed counterpart of this Subsidiary Guaranty.
SECTION 14. Governing Law; Jurisdiction; Waiver of Jury Trial, Etc. (a)
------------------------------------------------------
This Subsidiary Guaranty shall be governed by, and construed in accordance with,
the laws of the State of New York.
(b) Each Subsidiary Guarantor hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of any
New York State court or federal court of the United States of America sitting in
New York City, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Subsidiary Guaranty or any of the
other Loan Documents to which it is or is to be a party, or for recognition or
enforcement of any judgment, and each Subsidiary Guarantor hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in any such New York State court or, to
the extent permitted by law, in such federal court. Each Subsidiary Guarantor
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Subsidiary Guaranty shall
affect any right that any party may otherwise have to bring any action or
proceeding relating to this Subsidiary Guaranty or any of the other Loan
Documents to which it is or is to be a party in the courts of any jurisdiction.
(c) Each Subsidiary Guarantor irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection that it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Subsidiary Guaranty or any of the
other Loan Documents to which it is or is to be a party in any New York State or
federal court. Each Subsidiary Guarantor hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
(d) Each Subsidiary Guarantor hereby irrevocably waives all right to trial
by jury in any action, proceeding or counterclaim (whether based on contract,
tort or otherwise) arising out of or relating to any of the Loan Documents, the
transactions contemplated thereby or the actions of the Agent or any other
Secured Party in the negotiation, administration, performance or enforcement
thereof.
IN WITNESS WHEREOF, each Subsidiary Guarantor has caused this Subsidiary
Guaranty to be duly executed and delivered by its officer thereunto duly
authorized as of the date first above written.
1
<PAGE>
PENNSYLVANIA GLASS SAND CORPORATION
By: /s/ Richard Nick
--------------------------------------
Name: Richard Nick
Title: Vice President
THE FULTON LAND AND TIMBER COMPANY
By: /s/ Richard Nick
--------------------------------------
Name: Richard Nick
Title: Vice President
OTTAWA SILICA COMPANY
By: /s/ John A. Ulizio
--------------------------------------
Name:
Title:
GEORGE F. PETTINOS, INC.
By: /s/ Richard Nick
--------------------------------------
Name: Richard Nick
Title: Vice President
ELLEN JAY, INC.
By: /s/ Richard Nick
--------------------------------------
Name: Richard Nick
Title: Vice President
U.S. SILICA COMPANY (a/k/a U.S. Silica Company,
Inc.)
By: /s/ Richard Nick
--------------------------------------
Name: Richard Nick
Title: Vice President
1
<PAGE>
BETTER MATERIALS CORPORATION
By: /s/ Richard Nick
------------------------------------
Name: Richard Nick
Title: Vice President
BMC TRUCKING, INC.
By: /s/ Richard Nick
------------------------------------
Name: Richard Nick
Title: Vice President
BUCKS COUNTY CRUSHED STONE COMPANY
By: /s/ Richard Nick
------------------------------------
Name: Richard Nick
Title: Vice President
CHIPPEWA FARMS CORPORATION
By: /s/ Richard Nick
------------------------------------
Name: Richard Nick
Title: Vice President
SHORE STONE COMPANY, INC.
By: /s/ Richard Nick
------------------------------------
Name: Richard Nick
Title: Vice President
COMMERCIAL STONE CO., INC.
By: /s/ Richard Nick
------------------------------------
Name: Richard Nick
Title: Vice President
1
<PAGE>
STONE MATERIALS COMPANY, LLC
By: Better Minerals & Aggregates Company, as
Manager
By: /s/ Richard Nick
------------------------------------
Name: Richard Nick
Title: Vice President
COMMERCIAL AGGREGATES TRANSPORTATION AND SALES,
LLC
By: Stone Materials Company, LLC, as Manager
By: /s/ Richard Nick
------------------------------------
Name: Richard Nick
Title: Vice President
1
<PAGE>
EXHIBIT A
to
Subsidiary Guaranty
FORM OF SUBSIDIARY GUARANTY SUPPLEMENT
Banque Nationale de Paris,
as Agent
499 Park Avenue
New York, New York 10022
Attention: Structured Finance Group
Subsidiary Guaranty dated as of September 30, 1999
made by ______________________ in favor of
the Secured Parties referred to therein
---------------------------------------
Ladies and Gentlemen:
Reference is made to the above-captioned Subsidiary Guaranty (as
amended, supplemented or otherwise modified, the "Subsidiary Guaranty").
-------------------
Unless otherwise defined herein, terms defined in the Subsidiary Guaranty and in
the Credit Agreement referred to therein are used herein as therein defined.
The undersigned affirms that it may receive a portion of the
proceeds of the Advances under the Credit Agreement and will derive substantial
direct and indirect benefit from the transactions contemplated by the Credit
Agreement, in consideration for the execution and delivery of this Subsidiary
Guaranty Supplement.
The undersigned hereby agrees, as of the date first above
written, to become a Subsidiary Guarantor under the Subsidiary Guaranty as if
it were an original party thereto and agrees that each reference in the
Subsidiary Guaranty to a "Subsidiary Guarantor" shall also mean and be a
reference to the undersigned.
The undersigned hereby unconditionally and irrevocably guarantees
the punctual payment when due, whether at stated maturity, by acceleration or
otherwise, of all Obligations of each other Loan Party now or hereafter existing
under the Loan Documents to the extent set forth therein.
1
<PAGE>
The undersigned hereby makes each representation and warranty set
forth in Section 6 of the Subsidiary Guaranty to the same extent as each other
Subsidiary Guarantor and hereby agrees to be bound as a Subsidiary Guarantor by
all of the terms and provisions of the Subsidiary Guaranty to the same extent as
all other Subsidiary Guarantors.
This letter shall be governed by and construed in accordance with
the laws of the State of New York.
Very truly yours,
[NAME OF ADDITIONAL SUBSIDIARY
GUARANTOR]
By _______________________________________
Name:
Title:
Address:
1
<PAGE>
EXHIBIT I TO THE
CREDIT AGREEMENT
FORM OF
SUBSIDIARY GUARANTY
Dated as of September 30, 1999
From
THE PERSONS LISTED ON THE SIGNATURE PAGES HEREOF
as Subsidiary Guarantors
in favor of
THE SECURED PARTIES REFERRED TO IN
THE CREDIT AGREEMENT REFERRED TO HEREIN
<PAGE>
EXECUTION COPY
SUBSIDIARY GUARANTY
Dated as of September 30, 1999
From
THE PERSONS LISTED ON THE SIGNATURE PAGES HEREOF
as Subsidiary Guarantors
-- ---------- ----------
in favor of
THE SECURED PARTIES REFERRED TO IN
THE CREDIT AGREEMENT REFERRED TO HEREIN
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Section Page
<S> <C>
SECTION 1. SUBSIDIARY GUARANTY; LIMITATION OF LIABILITY 1
SECTION 2. SUBSIDIARY GUARANTY ABSOLUTE
SECTION 3. WAIVERS AND ACKNOWLEDGMENTS
SECTION 4. SUBROGATION
SECTION 5. PAYMENTS FREE AND CLEAR OF TAXES, ETC
SECTION 6. REPRESENTATIONS AND WARRANTIES
SECTION 7. COVENANTS
SECTION 8. AMENDMENTS, ETC
SECTION 9. NOTICES, ETC
SECTION 10. NO WAIVER; REMEDIES
SECTION 11. RIGHT OF SET-OFF
SECTION 12. CONTINUING SUBSIDIARY GUARANTY; ASSIGNMENTS UNDER
THE CREDIT AGREEMENT
SECTION 13. EXECUTION IN COUNTERPARTS
</TABLE>
<PAGE>
<TABLE>
<S> <C>
SECTION 14. GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL, ETC 11
</TABLE>
<PAGE>
EXHIBIT 12.1
BETTER MINERALS & AGGREGATES COMPANY
RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in Thousands)
<TABLE>
<CAPTION>
Predecessor(a) Successor
----------------------------------- ----------------------------------------------------------------
January 1 February 10
through through
February 9 December 31
1995 1996 1996 1997 1998 1999
-------------------- ------------- --------------- ----------------- ---------------- ----------
Earnings
- --------
<S> <C> <C> <C> <C> <C> <C>
Income (loss) before
income taxes.......... $11,415 $517 $(3,621) $(1,961) $(16,871) $ 1,032
Fixed charges.......... 252 21 10,143 10,578 10,401 19,870
-----------------------------------------------------------------------------------------------------
Total earnings......... $11,667 $538 $ 6,522 $ 8,617 $ (6,470) $20,902
=====================================================================================================
Fixed Charges
- -------------
Interest expense....... $ 162 $13 $10,074 $10,513 $ 10,269 $19,590
Estimated interest in 90 8 69 65 132 280
rental expense........
-----------------------------------------------------------------------------------------------------
Total fixed charges.... $ 252 $21 $10,143 $10,578 $10,401 $19,870
=====================================================================================================
Ratio of Earnings to
Fixed Charges......... 46.3 25.6 0.6(b) 0.8(b) (0.6)(b) 1.1
</TABLE>
(a) Amounts are not comparable to subsequent periods.
(b) Earnings used in computing the ratio of earnings to fixed charges consist of
income (loss) before income taxes plus fixed charges. Fixed charges consist
of interest expense, including amortization of debt issuance costs and
original issue discounts, and a portion of operating lease rental expense
deemed to be representative of the interest factor. Earnings were
insufficient to cover fixed charges by $3.6 million, $2.0 million and $16.9
million for the period from February 10, 1996 to December 31, 1996 and the
years ended December 31, 1997 and 1998, respectively.
<PAGE>
Exhibit 21.1
------------
Subsidiaries of the Registrant
- ------------------------------------------------------------
Names of the Subsidiaries of the State of
Registrant Formation
- ------------------------------------------------------------
U.S. Silica Company Delaware
Better Materials Corporation Pennsylvania
BMC Trucking, Inc. Delaware
Bucks County Crushed Stone Company Pennsylvania
Chippewa Farms Corporation Pennsylvania
Shore Stone Company, Inc. New Jersey
Pennsylvania Glass Sand Corporation Delaware
George F. Pettinos, Inc. Delaware
Ottawa Silica Company Delaware
The Fulton Land and Timber Company Pennsylvania
Ellen Jay, Inc. New Jersey
Stone Materials Company, LLC Delaware
Commercial Stone Co., Inc. Pennsylvania
Commercial Aggregates Transportation and Delaware
Sales, LLC
- ------------------------------------------------------------
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in this Registration Statement on Form S-4 of
Better Minerals & Aggregates Company (formerly USS Intermediate Holdco, Inc.)
of our reports dated March 9, 2000 relating to the financial statements and
financial statement schedule of Better Mineral & Aggregates Company, which
appear in such Registration Statement. We also consent to the reference to us
under the heading "Experts" in such Registration Statement.
PricewaterhouseCoopers LLP
New York, New York
March 14, 2000
----------------
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in this Registration Statement on Form S-4 of
Better Materials Corporation of our report dated August 25, 1999 relating to
the financial statements of Better Materials Corporation, which appears in such
Registration Statement. We also consent to the reference to us under the
heading "Experts" in such Registration Statement.
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
March 14, 2000
<PAGE>
Exhibit 23.3
[Letterhead of Schneider Downs]
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form S-4
(Registration No. 333- ) of our report dated September 8, 1999,
on our audits of the financial statements and financial statement schedules of
Commercial Stone Co., Inc. and Commercial Aggregates Transportation & Sales,
L.P. We also consent to the references to our firm under the caption "Experts."
/s/ Schneider Downs & Co., Inc.
Pittsburgh, Pennsylvania
March 13, 2000
<PAGE>
EXHIBIT 25.1
===============================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
One Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
BETTER MINERALS & AGGREGATES COMPANY
(Exact name of obligor as specified in its charter)
Delaware 55-0749125
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
U.S. Silica Company
(Exact name of obligor as specified in its charter)
Delaware 23-0958670
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
Better Materials Corporation
(Exact name of obligor as specified in its charter)
Pennsylvania 23-1542403
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
<PAGE>
BMC Trucking, Inc.
(Exact name of obligor as specified in its charter)
Delaware 23-2986246
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
Bucks County Crushed Stone Company
(Exact name of obligor as specified in its charter)
Pennsylvania 23-1468333
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
Chippewa Farms Corporation
(Exact name of obligor as specified in its charter)
Pennsylvania 23-2160463
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
Shore Stone Company, Inc.
(Exact name of obligor as specified in its charter)
New Jersey 23-2243672
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
Pennsylvania Glass Sand Corporation
(Exact name of obligor as specified in its charter)
Delaware 94-3024593
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
George F. Pettinos, Inc.
(Exact name of obligor as specified in its charter)
Delaware 23-0966840
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
Ottawa Silica Company
-2-
<PAGE>
(Exact name of obligor as specified in its charter)
Delaware 94-3093543
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
The Fulton Land and Timber Company
(Exact name of obligor as specified in its charter)
Pennsylvania 23-1622540
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
Ellen Jay, Inc.
(Exact name of obligor as specified in its charter)
New Jersey 22-2033676
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
Stone Materials Company, LLC
(Exact name of obligor as specified in its charter)
Delaware 52-2205266
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
Commercial Stone Co., Inc.
(Exact name of obligor as specified in its charter)
Pennsylvania 25-1225764
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
<PAGE>
Commercial Aggregates Transportation and Sales, LLC
(Exact name of obligor as specified in its charter)
Delaware 25-1846125
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
Route 522 North, P.O. Box 187
Berkeley Springs, West Virginia 25411
(Address of principal executive offices) (Zip code)
_____________
13% Senior Subordinated Notes due 2009
(Title of the indenture securities)
===============================================================================
-4-
<PAGE>
1. General information. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which it
is subject.
<TABLE>
<CAPTION>
- ------------------------------------------------
Name Address
- ------------------------------------------------
<S> <C>
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
</TABLE>
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the Commission, are
incorporated herein by reference as an exhibit hereto, pursuant to Rule 7a-
29 under the Trust Indenture Act of 1939 (the "Act") and 17 C.F.R.
229.10(d).
1. A copy of the Organization Certificate of The Bank of New York (formerly
Irving Trust Company) as now in effect, which contains the authority to
commence business and a grant of powers to exercise corporate trust
powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with
Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed
with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed
with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 10th day of March, 2000.
THE BANK OF NEW YORK
By: /s/ MICHAEL CULHANE
--------------------------
Name: MICHAEL CULHANE
Title: VICE PRESIDENT
-6-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
FINANCIAL STATEMENTS OF BETTER MINERAL AND AGGREGATES COMPANY AS CONTAINED IN
THIS REGISTRATION STATEMENT AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<NAME> BETTER MINERALS & AGGREGATES CO
<CIK> 0001108673
<MULTIPLIER> 1,000
<S> <C> <C> <C>
<PERIOD-TYPE> YEAR YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1998 DEC-31-1999
<PERIOD-START> JAN-01-1997 JAN-01-1998 JAN-01-1999
<PERIOD-END> DEC-31-1997 DEC-31-1998 DEC-31-1999
<CASH> 0 2,222 13,573
<SECURITIES> 0 0 0
<RECEIVABLES> 0 30,346 43,552
<ALLOWANCES> 0 (1,060) (1,278)
<INVENTORY> 0 15,844 23,058
<CURRENT-ASSETS> 0 56,443 91,405
<PP&E> 0 235,075 482,117
<DEPRECIATION> 0 (37,198) (59,248)
<TOTAL-ASSETS> 0 274,678 551,603
<CURRENT-LIABILITIES> 0 36,935 45,690
<BONDS> 0 131,918 285,466
0 0 0
0 0 0
<COMMON> 0 0 0
<OTHER-SE> 0 23,396 64,335
<TOTAL-LIABILITY-AND-EQUITY> 0 274,678 551,603
<SALES> 128,512 142,294 209,075
<TOTAL-REVENUES> 128,512 142,294 209,075
<CGS> 88,097 98,478 140,244
<TOTAL-COSTS> 120,328 149,523 190,568
<OTHER-EXPENSES> (1,742) (1,881) (2,171)
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 10,513 10,269 19,590
<INCOME-PRETAX> (1,961) (16,871) 1,032
<INCOME-TAX> (2,239) (2,204) (2,714)
<INCOME-CONTINUING> 278 (14,667) 3,746
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 (2,102) (2,747)
<CHANGES> 0 0 0
<NET-INCOME> 278 (16,769) 999
<EPS-BASIC> 0 0 0
<EPS-DILUTED> 0 0 0
</TABLE>
<PAGE>
EXHIBIT 99.1
LETTER OF TRANSMITTAL
FOR
13% Senior Subordinated Notes Due 2009
Of
Better Minerals & Aggregates Company
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON , 2000 (THE "EXPIRATION DATE")
UNLESS EXTENDED.
The Exchange Agent is:
The Bank Of New York
For Overnight Delivery, Delivery by Hand or Delivery by Registered or
Certified
Mail:
The Bank of New York
101 Barclay St.
New York, NY 10286
Attention: Kin Lau, Reorg-7 EAST
By Facsimile Transmission
(for Eligible Institutions only):
(212) 815-6339
Confirm facsimile by telephone only:
(212) 815-3750
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION VIA A FACSIMILE TRANSMISSION TO A NUMBER OTHER
THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
The undersigned acknowledges receipt of the Prospectus dated , 2000
(the "Prospectus") of Better Minerals & Aggregates Company (the "Issuer"), and
this Letter of Transmittal (the "Letter of Transmittal"), which together
describe the Issuer's offer (the "Exchange Offer") to exchange its 13% Senior
Subordinated Notes due 2009 (the "New Notes"), which have been registered
under the Securities Act of 1933, as amended (the "Securities Act"), for an
equal aggregate principal amount of its outstanding 13% Senior Subordinated
Notes due 2009 (the "Old Notes" and, together with the New Notes, the "Notes")
from the holders thereof.
The terms of the New Notes are identical in all material respects
(including principal amount, interest rate and maturity) to the terms of the
Old Notes for which they may be exchanged pursuant to the Exchange Offer,
except that the New Notes are freely transferable by holders thereof (except
as provided herein or in the Prospectus).
Capitalized terms used but not defined herein shall have the same meaning
given them in the Prospectus.
YOUR BANK OR BROKER CAN ASSIST YOU IN COMPLETING THIS FORM. THE
INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED.
QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE
PROSPECTUS AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE
AGENT.
<PAGE>
The undersigned has checked the appropriate boxes below and signed this
Letter of Transmittal to indicate the action the undersigned desires to take
with respect to the Exchange Offer.
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL AND
THE PROSPECTUS CAREFULLY BEFORE CHECKING ANY BOX BELOW.
List below the Old Notes to which this Letter of Transmittal relates. If
the space provided below is inadequate, the certificate numbers and aggregate
principal amounts should be listed on a separate signed schedule affixed
hereto. The minimum permitted tender is $1,000 in principal amount. All
tenders must be in integral multiples of $1,000.
DESCRIPTION OF OLD NOTES TENDERED HEREWITH
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Aggregate
Principal Amount
Name(s) and Address(es) Certificate Represented Principal Amount
of Registered Holder(s) Number(s)* by Old Notes* Tendered**
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
----------------------------------------------------
----------------------------------------------------
----------------------------------------------------
----------------------------------------------------
Total
- -------------------------------------------------------------------------------
</TABLE>
* Need not be completed by holders.
** Unless otherwise indicated, the holder will be deemed to have tendered
the full aggregate principal amount represented by such Old Notes. See
Instruction 2.
Holders of Old Notes whose Old Notes are not immediately available or who
cannot deliver their Old Notes, this Letter of Transmittal or any other
required documents to the Exchange Agent on or prior to the Expiration Date or
who cannot complete the procedures for book-entry transfer on a timely basis,
must tender their Old Notes according to the guaranteed delivery procedures
set forth in the Prospectus.
Unless the context otherwise requires, the term "holder" for purposes of
this Letter of Transmittal means any person in whose name Old Notes are
registered or any other person who has obtained a properly completed bond
power from the registered holder or any person whose Old Notes are held of
record by The Depository Trust Company ("DTC").
If the undersigned is not a broker-dealer, the undersigned represents that
it is not engaged in, and does not intend to engage in, a distribution of New
Notes. If the undersigned is a broker-dealer that will receive New Notes for
its own account in exchange for Old Notes that were acquired as a result of
market-making activities or other trading activities, it acknowledges that it
will deliver a prospectus in connection with any resale of such New Notes;
however, by so acknowledging and by delivering a prospectus, the undersigned
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act. A broker-dealer may not participate in the Exchange Offer
with respect to Old Notes acquired other than as a result of market-making
activities or other trading activities. Any holder who is an "affiliate" of
the Issuer or who has an arrangement or understanding with respect to the
distribution of the New Notes to be acquired pursuant to the Exchange Offer,
or any broker-dealer who purchased Old Notes from the Issuer to resell
pursuant to Rule 144A under the Securities Act or any other available
exemption under the Securities Act must comply with the registration and
prospectus delivery requirements under the Securities Act.
2
<PAGE>
[_] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s) _______________________________________________
Window Ticket Number (if any) _________________________________________________
Date of Execution of Notice of Guaranteed Delivery ____________________________
Name of Eligible Institution that Guaranteed Delivery _________________________
[_] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO AND COMPLETE THE FOLLOWING:
Name(s) _______________________________________________________________________
Address _______________________________________________________________________
SPECIAL EXCHANGE INSTRUCTIONS
(See Instructions 3, 4 and 5)
SPECIAL DELIVERY INSTRUCTIONS
To be completed ONLY if (see Instructions 3, 4 and 5)
certificates for Old Notes in a
principal amount not tendered, or
New Notes issued in exchange for
Old Notes accepted for exchange,
are to be issued in the name of
someone other than the
undersigned.
To be completed ONLY if
certificates for Old Notes in a
principal amount not tendered, or
New Notes issued in exchange for
Old Notes accepted for exchange,
are to be sent to someone other
than the undersigned, or to the
undersigned at an address other
than that shown above.
Issue certificates to:
Name ______________________________ Deliver certificates to:
(Please Print)
Name ______________________________
Address ___________________________ (Please Print)
___________________________________ Address ___________________________
(Include Zip Code)
___________________________________
___________________________________ (Include Zip Code)
(Tax Identification or Social
Security Number) ___________________________________
(Tax Identification or Social
Security Number)
3
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Issuer the principal amount of the Old Notes
indicated above. Subject to, and effective upon, the acceptance for exchange
of all or any portion of the Old Notes tendered herewith in accordance with
the terms and conditions of the Exchange Offer (including, if the Exchange
Offer is extended or amended, the terms and conditions of any such extension
or amendment), the undersigned hereby exchanges, assigns and transfers to, or
upon the order of, the Issuer all right, title and interest in and to such Old
Notes as are being tendered herewith. The undersigned hereby irrevocably
constitutes and appoints the Exchange Agent as its true and lawful agent and
attorney-in-fact of the undersigned (with full knowledge that the Exchange
Agent also acts as the agent of the Issuer, in connection with the Exchange
Offer) to cause the Old Notes to be assigned, transferred and exchanged.
The undersigned represents and warrants that it has full power and
authority to tender, exchange, assign and transfer the Old Notes and to
acquire New Notes issuable upon the exchange of such tendered Old Notes, and
that, when the same are accepted for exchange, the Issuer will acquire good
and unencumbered title to the tendered Old Notes, free and clear of all liens,
restrictions, charges and encumbrances and not subject to any adverse claim.
The undersigned and any beneficial owner of the Old Notes tendered hereby
further represent and warrant that (i) the New Notes acquired by the
undersigned and any such beneficial owner of Old Notes pursuant to the
Exchange Offer are being obtained in the ordinary course of business of the
person receiving such New Notes, (ii) neither the undersigned nor any such
beneficial owner has an arrangement with any person to participate in the
distribution of such New Notes, (iii) neither the undersigned nor any such
beneficial owner nor any such other person is engaging in or intends to engage
in a distribution of such New Notes and (iv) neither the undersigned nor any
such other person is an "affiliate", as defined under Rule 405 promulgated
under the Securities Act, of the Issuer. The undersigned and each beneficial
owner acknowledge and agree that any person who is an affiliate of the Issuer
or who tenders in the Exchange Offer for the purpose of participating in a
distribution of the New Notes must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with a resale
transaction of the New Notes acquired by such person and may not rely on the
position of the staff of the Securities and Exchange Commission set forth in
the no-action letters discussed in the Prospectus under the caption "The
Exchange Offer--Purpose and Effect of the Exchange Offer." The undersigned and
each beneficial owner will, upon request, execute and deliver any additional
documents deemed by the Exchange Agent or the Issuer to be necessary or
desirable to complete the sale, assignment and transfer of the Old Notes
tendered hereby.
For purposes of the Exchange Offer, the Issuer shall be deemed to have
accepted validly tendered Old Notes when, as and if the Issuer has given oral
notice (confirmed in writing) or written notice thereof to the Exchange Agent.
If any tendered Old Notes are not accepted for exchange pursuant to the
Exchange Offer because of an invalid tender, the occurrence of certain other
events set forth in the Prospectus or otherwise, any such unaccepted Old Notes
will be returned, without expense, to the undersigned at the address shown
below or at a different address as may be indicated herein under "Special
Delivery Instructions" as promptly as practicable after the Expiration Date.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned and every obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned.
The undersigned understands that tenders of Old Notes pursuant to the
procedures described under the caption "The Exchange Offer--Procedures for
Tendering" in the Prospectus and in the instructions hereto will constitute a
binding agreement between the undersigned and the Issuer upon the terms and
subject to the conditions of the Exchange Offer, subject only to withdrawal of
such tenders on the terms set forth in the Prospectus under the caption "The
Exchange Offer--Withdrawal of Tenders."
4
<PAGE>
Unless otherwise indicated under "Special Exchange Instructions," please
cause the New Notes to be issued, and return any Old Notes not tendered or not
accepted for exchange, in the name(s) of the undersigned (and, in the case of
Old Notes tendered by book-entry transfer, by credit to the account at DTC).
Similarly unless otherwise indicated under "Special Delivery Instructions,"
please mail any certificates for Old Notes not tendered or not accepted for
exchange (and accompanying documents, as appropriate), and any certificates
for New Notes, to the undersigned at the address shown below the undersigned's
signatures). If both "Special Exchange Instructions" and "Special Delivery
Instructions" are completed, please cause the New Notes to be issued, and
return any Old Notes not tendered or not accepted for exchange, in the name(s)
of, and deliver any certificates for such Old Notes or New Notes to, the
person(s) so indicated (and in the case of Old Notes tendered by book-entry
transfer, by credit to the account at DTC so indicated). The undersigned
recognizes that the Issuer has no obligation, pursuant to the "Special
Exchange Instructions," to transfer any Old Notes from the name of the
registered holder(s) thereof if the Issuer does not accept for exchange any of
the Old Notes so tendered.
Holders of Old Notes whose Old Notes are not immediately available or who
cannot deliver all other required documents to the Exchange Agent on or prior
to the Expiration Date or who cannot complete the procedures for book-entry
transfer on a timely basis, must tender their Old Notes according to the
guaranteed delivery procedures set forth in the Prospectus.
5
<PAGE>
TENDERING HOLDER(S) SIGN HERE
-----------------------------------------------------------
-----------------------------------------------------------
(SIGNATURE OF REGISTERED HOLDER(S)
OR AUTHORIZED SIGNATORY)
-----------------------------------------------------------
(Date)
-----------------------------------------------------------
(Date)
(MUST BE SIGNED BY REGISTERED HOLDER(S) EXACTLY AS NAME(S)
APPEAR(S) ON CERTIFICATE(S) FOR OLD NOTES HEREBY TENDERED
OR IN WHOSE NAME OLD NOTES ARE REGISTERED ON THE BOOKS OF
DTC OR ONE OF ITS PARTICIPANTS, OR BY ANY PERSON(S)
AUTHORIZED TO BECOME THE REGISTERED HOLDER(S) BY
ENDORSEMENTS AND DOCUMENTS TRANSMITTED HEREWITH. IF
SIGNATURE IS BY A TRUSTEE, EXECUTOR, ADMINISTRATOR,
GUARDIAN, ATTORNEY-IN-FACT, OFFICER OF A CORPORATION OR
OTHER PERSON ACTING IN A FIDUCIARY OR REPRESENTATIVE
CAPACITY, PLEASE SET FORTH THE FULL TITLE OF SUCH PERSON.
SEE INSTRUCTION 3.)
Name(s): __________________________________________________
-----------------------------------------------------------
(Please Print)
Capacity: _________________________________________________
Address: __________________________________________________
-----------------------------------------------------------
(Including Zip Code)
Area Code and Telephone Number: ___________________________
Taxpayer Identification No.: ______________________________
GUARANTEE OF SIGNATURE(S)
(If Required--See Instruction 3)
Authorized Signature: _____________________________________
Name: _____________________________________________________
Title: ____________________________________________________
Address: __________________________________________________
-----------------------------------------------------------
(Including Zip Code)
Name of Firm: _____________________________________________
Area Code and Telephone No.: ______________________________
Dated: , 2000
6
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND CERTIFICATES; GUARANTEED
DELIVERY PROCEDURES.
A holder of Old Notes may tender the same by (i) properly completing,
signing and dating this Letter of Transmittal or a facsimile hereof (all
references in the Prospectus to the Letter of Transmittal shall be deemed to
include a facsimile thereof) and delivering the same, together with the
certificate or certificates, if applicable, representing the Old Notes being
tendered and any required signature guarantees and any other documents
required by this Letter of Transmittal, to the Exchange Agent at its address
set forth above on or prior to the Expiration Date, or (ii) complying with the
procedure for book-entry transfer described below, or (iii) complying with the
guaranteed delivery procedures described below.
Holders of Old Notes may tender Old Notes by book-entry transfer by
crediting the Old Notes to the Exchange Agent's account at DTC in accordance
with DTC's Automated Tender Offer Program ("ATOP") and by complying with
applicable ATOP procedures with respect to the Exchange Offer. DTC
participants that are accepting the Exchange Offer should transmit their
acceptance to DTC, which will edit and verify the acceptance and execute a
book-entry delivery to the Exchange Agent's account at DTC. DTC will then send
a computer-generated message (an "Agent's Message") to the Exchange Agent for
its acceptance in which the holder of the Old Notes acknowledges and agrees to
be bound by the terms of, and makes the representations and warranties
contained in, this Letter of Transmittal, the DTC participant confirms on
behalf of itself and the beneficial owners of such Old Notes all provisions of
this Letter of Transmittal (including any representations and warranties)
applicable to it and such beneficial owner as fully as if it had completed the
information required herein and executed and transmitted this Letter of
Transmittal to the Exchange Agent. Delivery of the Agent's Message by DTC will
satisfy the terms of the Exchange Offer as to execution and delivery of a
Letter of Transmittal by the participant identified in the Agent's Message.
DTC participants may also accept the Exchange Offer by submitting a Notice of
Guaranteed Delivery through ATOP.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE OLD NOTES AND ANY
OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDER, AND EXCEPT
AS OTHERWISE PROVIDED BELOW, THE DELIVERY WILL BE DEEMED MADE ONLY WHEN
ACTUALLY RECEIVED OR CONFIRMED BY THE EXCHANGE AGENT. RATHER THAN MAIL THESE
ITEMS, WE RECOMMEND THAT HOLDERS USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IF
DELIVERY IS BY MAIL, IT IS SUGGESTED THAT REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, BE USED. IN ALL CASES SUFFICIENT TIME SHOULD BE
ALLOWED TO PERMIT TIMELY DELIVERY. NO OLD NOTES OR LETTERS OF TRANSMITTAL
SHOULD BE SENT TO THE ISSUER.
Holders whose Old Notes are not immediately available or who cannot deliver
their Old Notes and all other required documents to the Exchange Agent on or
prior to the Expiration Date or comply with book-entry transfer procedures on
a timely basis must tender their Old Notes pursuant to the guaranteed delivery
procedure set forth in the Prospectus. Pursuant to such procedure: (i) such
tender must be made by or through an Eligible Institution (as defined below);
(ii) on or prior to the Expiration Date, the Exchange Agent must have received
from such Eligible Institution either a properly completed and duly executed
notice of guaranteed delivery by mail, hand delivery or facsimile transmission
(receipt confirmed by telephone and an original delivered by guaranteed
overnight courier) or a properly transmitted agent's message and notice of
guaranteed delivery setting forth the name and address of the tendering
holder, the registered number(s) of the Old Notes, the principal amount of the
Old Notes tendered and stating that the tender is being made thereby; and
(iii) all tendered Old Notes (or a confirmation of any book-entry transfer of
such Old Notes into the Exchange Agent's account at a book-entry transfer
facility) as well as this Letter of Transmittal and all other documents
required by this Letter of Transmittal, must be received by the Exchange Agent
within three New York Stock Exchange trading days after the date of execution
of such letter, telegram or facsimile transmission, all as provided in the
Prospectus.
7
<PAGE>
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering holders, by execution of this Letter of Transmittal
(or facsimile thereof), shall waive any right to receive notice of the
acceptance of the Old Notes for exchange.
2.PARTIAL TENDERS; WITHDRAWALS.
Tenders of Old Notes will be accepted only in integral multiples of $1,000.
If less than the entire principal amount of Old Notes evidenced by a submitted
certificate is tendered, the tendering holder must fill in the aggregate
principal amount of Old Notes tendered in the box entitled "Description of Old
Notes Tendered Herewith." A newly issued certificate for the Old Notes
submitted but not tendered will be sent to such holder as soon as practicable
after the Expiration Date. All Old Notes delivered to the Exchange Agent will
be deemed to have been tendered unless otherwise clearly indicated.
Except as otherwise provided in the prospectus, holders of Old Notes may
withdraw their tenders at any time on or prior to the expiration date.
To be effective with respect to the tender of Old Notes, a written notice
(which may be by telegram, telex, facsimile transmission or letter) of
withdrawal must: (i) be received by the Exchange Agent at one of the addresses
for the Exchange Agent set forth above; (ii) specify the name of the person
who tendered the Old Notes to be withdrawn; (iii) identify the Old Notes to be
withdrawn (including the principal amount of such Old Notes, or, if
applicable, the certificate numbers shown on the particular certificates
evidencing such Old Notes and the principal amount of Old Notes represented by
such certificates); (iv) where certificates for Old Notes have been
transmitted, specify the name in which those Old Notes were registered, if
different from that of the withdrawing holder; (v) include a statement that
such holder is withdrawing its election to have such Old Notes exchanged; and
(vi) be signed by the holder in the same manner as the original signature on
this Letter of Transmittal (including any required signature guarantee). The
Exchange Agent will return the properly withdrawn Old Notes promptly following
receipt of notice of withdrawal. If Old Notes have been tendered pursuant to
the procedure for book-entry transfer described above, any notice of
withdrawal must specify the name and number of the account at the book-entry
transfer facility to be credited with the withdrawn Old Notes or otherwise
comply with the book-entry transfer facility's procedures. All questions as to
the validity of notices of withdrawals, including time of receipt, will be
determined by the Issuer, and such determination will be final and binding on
all parties.
rAny Old Notes so withdrawn will be deemed not to have been validly
tendered for exchange for purposes of the Exchange Offer. Any Old Notes which
have been tendered for exchange but which are not exchanged for any reason
will be returned to the holder thereof without cost to such holder (or, in the
case of Old Notes tendered by book-entry transfer into the Exchange Agent's
account at the book-entry transfer facility pursuant to the book-entry
transfer procedures described above, such Old Notes will be credited to an
account with such book-entry transfer facility specified by the holder) as
soon as practicable after withdrawal, rejection of tender or termination of
the Exchange Offer. Properly withdrawn Old Notes may be re-tendered by
following one of the procedures described under the caption "The Exchange
Offer--Procedures for Tendering" in the Prospectus at any time on or prior to
the Expiration Date.
3. SIGNATURE ON THIS LETTER OF TRANSMITTAL; WRITTEN INSTRUMENTS AND
ENDORSEMENTS; GUARANTEE OF SIGNATURES.
If this Letter of Transmittal is signed by the registered holder(s) of the
Old Notes tendered hereby, the signature must correspond with the name(s) as
written on the face of the certificates without alteration, enlargement or any
change whatsoever.
If any of the Old Notes tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
8
<PAGE>
If a number of Old Notes registered in different names are tendered, it
will be necessary to complete, sign and submit as many separate copies of this
Letter of Transmittal as there are different registrations of Old Notes.
When this Letter of Transmittal is signed by the registered holder or
holders (which term, for the purposes described herein, shall include the
book-entry transfer facility whose name appears on a security listing as the
owner of the Old Notes) of Old Notes listed and tendered hereby, no
endorsements of certificates or separate written instruments of transfer or
exchange are required unless New Notes issued in exchange therefor are to be
issued, or Old Notes are not tendered or not exchanged are to be returned, in
the name of any person other than the registered holder. Signatures on any
such certificates or separate written instruments of transfer or exchange must
be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder or holders of the Old Notes listed, such Old Notes must be
endorsed or accompanied by a properly completed bond power. The bond power
must be signed by the registered holder as the registered holder's name
appears on the Old Notes and an eligible institution must guarantee the
signature on the bond power.
If this Letter of Transmittal, any certificates or separate written
instruments of transfer or exchange are signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or
others acting in a fiduciary or representative capacity, such persons should
so indicate when signing, and, unless waived by the Issuer, proper evidence
satisfactory to the Issuer of their authority to act must be submitted.
Endorsements on certificates or signatures on separate written instruments
of transfer or exchange required by this Instruction 3 must be guaranteed by
an Eligible Institution.
Signatures on this Letter of Transmittal must be guaranteed by an Eligible
Institution (as defined below), unless Old Notes are tendered: (i) by a holder
who has not completed the box entitled "Special Exchange Instructions" or
"Special Delivery Instructions" on this Letter of Transmittal; or (ii) for the
account of an Eligible Institution (as defined below). In the event that the
exhibit signatures in this Letter of Transmittal or a notice of withdrawal, as
the case may be, are required to be guaranteed, such guarantees must be by an
eligible guarantor institution which is a member of a firm of a registered
national securities exchange or of the National Association of Securities
Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States or another "eligible institution" within
the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as
amended (an "Eligible Institution"). If Old Notes are registered in the name
of a person other than the signer of this Letter of Transmittal, the Old Notes
surrendered for exchange must be endorsed by, or be accompanied by a written
instrument or instruments of transfer or exchange, in satisfactory form as
determined by the Issuer, in its sole discretion, duly executed by the
registered holder with the signature thereon guaranteed by an Eligible
Institution.
4. SPECIAL EXCHANGE AND DELIVERY INSTRUCTIONS.
Tendering holders should indicate, as applicable, the name and address to
which the New Notes or certificates for Old Notes not tendered or not accepted
for exchange are to be issued or sent, if different from the name and address
of the person signing this Letter of Transmittal. In the case of issuance in a
different name, the tax identification number of the person named must also be
indicated. Holders tendering Old Notes by book-entry transfer may request that
Old Notes not exchanged be credited to such account maintained at the book-
entry transfer facility as such holder may designate.
5. TRANSFER TAXES.
The Issuer shall pay all transfer taxes, if any, applicable to the transfer
and exchange of Old Notes to it or its order pursuant to the Exchange Offer.
If, however, New Notes or Old Notes not tendered or accepted for exchange are
to be delivered to, or are registered or issued in the name of any person
other than the registered holder of the Old Notes tendered hereby, or if
tendered Old Notes are registered in the name of any person other
9
<PAGE>
than the person signing this Letter of Transmittal, or if a transfer tax is
imposed for any reason other than the transfer and exchange of Old Notes to
the Issuer or its order pursuant to the Exchange Offer, the amount of any such
transfer taxes (whether imposed on the registered holder or any other person)
will be payable by the tendering holder. If satisfactory evidence of payment
of such taxes or exception therefrom is not submitted herewith the amount of
such transfer taxes will be billed directly to such tendering holder.
6. WAIVER OF CONDITIONS.
The Issuer reserves the absolute right to waive, in whole or in part, any
of the conditions to the Exchange Offer set forth in the Prospectus.
7. MUTILATED, LOST, STOLEN OR DESTROYED SECURITIES.
Any holder whose Old Notes have been mutilated, lost, stolen or destroyed,
should contact the Exchange Agent at the address indicated below for further
instructions.
8. IRREGULARITIES.
All questions as to the validity, form, eligibility (including time of
receipt), and acceptance of Letters of Transmittals or Old Notes will be
resolved by the Issuer, whose determination will be final and binding. The
Issuer reserves the absolute right to reject any or all Letters of Transmittal
or tenders that are not in proper form or the acceptance of which would, in
the opinion of the Issuer's counsel, be unlawful. The Issuer also reserves the
right to waive any irregularities or conditions of tender as to the particular
Old Notes covered by any Letter of Transmittal or tendered pursuant to such
letter. None of the Issuer, the Exchange Agent or any other person will be
under any duty to give notification of any defects or irregularities in
tenders or incur any liability for failure to give any such notification. The
Issuer's interpretation of the terms and conditions of the Exchange Offer
shall be final and binding.
9. SUBSTITUTE FORM W-9.
Each holder of Old Notes whose Old Notes are accepted for exchange (or
other payee) is required to provide a correct taxpayer identification number
("TIN"), generally the holder's Social Security or federal employer
identification number, and certain other information, on Substitute Form W-9,
which is provided under "Important Tax Information" below, and to certify that
the holder (or other payee) is not subject to backup withholding. Failure to
provide the information on the Substitute Form W-9 may subject the holder (or
other payee) to a $50 penalty imposed by the Internal Revenue Service and 31%
federal income tax backup withholding on payments made in connection with the
Old Notes.
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions relating to the procedure for tendering, as well as requests for
additional copies of the Prospectus and this Letter of Transmittal, may be
directed to the Exchange Agent at the address and telephone number set forth
above. In addition, all questions relating to the Exchange Offer, as well as
requests for assistance or additional copies of the Prospectus and this Letter
of Transmittal, may be directed to the Exchange Agent at the address and
telephone number indicated above.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A FACSIMILE OR COPY THEREOF
(TOGETHER WITH CERTIFICATES OF OLD NOTES OR CONFIRMATION OF BOOK-ENTRY
TRANSFER AND ALL OTHER REQUIRED DOCUMENTS) OR A NOTICE OF GUARANTEED DELIVERY
MUST BE RECEIVED BY THE EXCHANGE AGENT ON OR PRIOR TO THE EXPIRATION DATE.
10
<PAGE>
IMPORTANT TAX INFORMATION
Under current United States federal income tax law, a holder of Old Notes
whose tendered Old Notes are accepted for exchange is required to provide the
Company (as payor), through the Exchange Agent, with such holder's correct
taxpayer identification number ("TIN") on Substitute Form W-9 or otherwise
establish a basis for exemption from backup withholding. If such holder of Old
Notes is an individual, the TIN is such holder's social security number. If
the Exchange Agent is not provided with the correct taxpayer identification
number, the holder of Old Notes may be subject to a penalty imposed by the
Internal Revenue Service. In addition, delivery of such holder's New Notes may
be subject to backup withholding.
Certain holders of Old Notes (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. Exempt holders of Old Notes should indicate their
exempt status on Substitute Form W-9. A Canadian resident or other non-U.S.
holder may qualify as an exempt recipient by submitting to the Exchange Agent
a properly completed Internal Revenue Service Form W-8 (which the Exchange
Agent will provide upon request) signed under penalty of perjury, attesting to
the holder's exempt status. See the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional
instructions.
If backup withholding applies, the Company is required to withhold 31% of
any payment made to the holder of Old Notes or other payee. Backup withholding
is not an additional federal income tax. Rather, the federal income tax
liability of persons subject to backup withholding will be reduced by the
amount of tax withheld. If withholding results in an overpayment of taxes, a
refund may be obtained from the Internal Revenue Service.
Substitute Form W-9; Taxpayer Identification Number
To prevent backup withholding on payments that are made with respect to Old
Notes exchanged in the Exchange Offer, each holder of Old Notes is required to
provide the Exchange Agent with either (i) the holder's correct TIN by
completing the form below, certifying that the TIN provided on Substitute Form
W-9 is correct (or that such holder of Old Notes is awaiting a TIN) and that
(A) the holder of Old Notes has not been notified by the Internal Revenue
Service that he or she is subject to backup withholding as a result of a
failure to report all interest or dividends or (B) the Internal Revenue
Service has notified the holder of Old Notes that he or she is no longer
subject to backup withholding; or (ii) an adequate basis for exemption (by, in
the case of a Canadian resident holder, submitting a completed Form W-8).
The holder of Old Notes is required to give the Exchange Agent the TIN
(e.g., social security number or employer identification number) of the record
owner of the Old Notes. If the Old Notes are held in more than one name or are
not held in the name of the actual owner, consult the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional guidance regarding which number to report.
- -------------------------------------------------------------------------------
Name of Holder
(if joint, list first and circle the name of the person or entity whose number
you enter in Part I below)
- -------------------------------------------------------------------------------
Address
(if Holder does not complete, signature below will constitute a certification
that the above address is correct)
11
<PAGE>
Dated: ______
(Not required by Canadian resident holders)
PAYER'S NAME: Better Minerals and Aggregates Company
Part 1--PLEASE PROVIDE YOUR
SUBSTITUTE TIN IN THE BOX AT RIGHT AND -----------------------
Form W-9 CERTIFY BY SIGNING AND Social Security Number
DATING BELOW. OR
Department of -----------------------
the Treasury
Internal Employer
Revenue Identification Number
Service
--------------------------------------------------------
Part 2--Certification--Under Penalties of Perjury, I
certify that:
(1)The number shown on this form is my correct
taxpayer identification number (or I am waiting for
a number to be issued to me) and
(2)I am not subject to backup withholding either
because I have not been notified by the Internal
Revenue Service (the "IRS") that I am subject to
backup withholding as a result of a failure to
report all interest or dividends, or the IRS has
notified me that I am no longer subject to backup
withholding.
Payer's Request for
Taxpayer Part 3
Identification
Number (TIN) Awaiting
TIN [_]
Certificate instructions--You must
cross out item (2) in Part 2 above if
you have been notified by the IRS
that you are subject to backup with-
holding because of under-reporting
interest or dividends on your tax re-
turn. However, if after being noti-
fied by the IRS that you were subject
to backup withholding you receive an-
other notification from the IRS stat-
ing that you are no longer subject to
backup withholding, do not cross out
item (2).
Signature: _____________ Date: ______
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENT MADE TO YOU PURSUANT TO THE EXCHANGE
OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE
IF YOU CHECKED THE BOX IN PART 3 OF SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(b) I intend to mail or deliver such an application in the near future. I
understand that if I do not provide a taxpayer identification number within
sixty (60) days, 31% of all reportable payments made to me thereafter will be
withheld until I provide such a number.
- -------------------------------------------------
Signature --------------------------
Date
<PAGE>
(DO NOT WRITE IN THE SPACE BELOW)
<TABLE>
<CAPTION>
Certificate Surrendered Old Notes Tendered Old Notes Accepted
<S> <C> <C>
----------------------------------------------------------------------------
----------------------------------------------------------------------------
</TABLE>
Delivery Prepared by ______ Checked By ______ Date ______
13
<PAGE>
EXHIBIT 99.2
BETTER MINERALS AND AGGREGATES COMPANY
OFFER TO EXCHANGE UP TO $150,000,000 OF THEIR
13% SENIOR SUBORDINATED NOTES DUE 2009
FOR ANY AND ALL OF THEIR OUTSTANDING
13% SENIOR SUBORDINATED NOTES DUE 2009
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON , 2000 UNLESS EXTENDED.
To Our Clients:
Enclosed for your consideration is a Prospectus dated , 2000 (the
"Prospectus") and a Letter of Transmittal (which together constitute the
"Exchange Offer") relating to the offer by Better Minerals and Aggregates
Company (the "Issuer") to exchange their 13% Senior Subordinated Notes due
2009 (the "New Notes") for an equal principal amount of their outstanding 13%
Senior Subordinated Notes due 2009 (the "Old Notes" and together with the New
Notes, the "Notes"). As set forth in the Prospectus, the terms of the New
Notes are identical in all material respects to the Old Notes, except that the
New Notes have been registered under the Securities Act of 1933, as amended,
and therefore will not bear legends restricting their transfer and will not
contain certain provisions providing for the payment of liquidated damages to
the holders of the Old Notes under certain circumstances relating to the
Exchange and Registration Rights Agreement dated as of October 1, 1999 among
the Issuer, its subsidiary guarantors, Chase Securities Inc. and BNP Capital
Markets, LLC (the "Exchange and Registration Rights Agreement"). Old Notes may
be tendered only in integral multiples of $1,000.
The enclosed material is being forwarded to you as the beneficial owner of
Old Notes carried by us for your account or benefit but not registered in your
name. An exchange of any Old Notes may only be made by us as the registered
holder and pursuant to your instructions. Therefore, the Issuer urge
beneficial owners of Old Notes registered in the name of a broker, dealer,
commercial bank, trust company or other nominee to contact such holder
promptly if they wish to exchange Old Notes in the Exchange Offer.
Accordingly, we request instructions as to whether you wish us to exchange
any or all such Old Notes held by us for your account or benefit, pursuant to
the terms and conditions set forth in the Prospectus and Letter of
Transmittal. We urge you to read carefully the Prospectus and Letter of
Transmittal before instructing us to exchange your Old Notes.
Your instructions to us should be forwarded as promptly as possible in
order to permit us to exchange Old Notes on your behalf in accordance with the
provisions of the Exchange Offer. The Exchange Offer expires at 5:00 p.m., New
York City time, on , 2000, unless extended. The term "Expiration Date"
shall mean 5:00 p.m., New York City time, on , 2000, unless the Exchange
Offer is extended as provided in the Prospectus, in which case the term
"Expiration Date" shall mean the latest date and time to which the Exchange
Offer is extended. A tender of Old Notes may be withdrawn at any time on or
prior to 5:00 p.m., New York City time, on the Expiration Date.
Your attention is directed to the following:
1. The Exchange Offer is for the exchange of $1,000 principal amount of
the New Notes for each $1,000 principal amount of the Old Notes, of which
$150,000,000 aggregate principal amount was outstanding as of , 2000.
The terms of the New Notes are identical in all respects to the Old Notes,
except that the New Notes have been registered under the Securities
<PAGE>
Act of 1933, as amended, and therefore will not bear legends restricting
their transfer and will not contain certain provisions providing for the
payment of liquidated damages to the holders of the Old Notes under certain
circumstances relating to the Exchange and Registration Rights Agreement.
2. THE EXCHANGE OFFER IS SUBJECT TO CERTAIN CUSTOMARY CONDITIONS. SEE
"THE EXCHANGE OFFER--CERTAIN CONDITIONS TO THE EXCHANGE OFFER" IN THE
PROSPECTUS.
3. The Exchange Offer and withdrawal rights will expire at 5:00 p.m.,
New York City time, on , , unless extended.
4. The Issuer has agreed to pay the expenses of the Exchange Offer.
5. Any transfer taxes incident to the transfer of Old Notes from the
tendering holder to the Issuer will be paid by the Issuer, except as
provided in the Prospectus and the Letter of Transmittal.
The Exchange Offer is not being made to, nor will tenders be accepted from
or on behalf of, holders of Old Notes residing in any jurisdiction in which
the making of the Exchange Offer or the acceptance thereof would not be in
compliance with the laws of such jurisdiction.
If you wish us to tender any or all of your Old Notes held by us for your
account or benefit, please so instruct us by completing, executing and
returning to us the attached instruction form. The accompanying Letter of
Transmittal is furnished to you for informational purposes only and may not be
used by you to exchange Old Notes held by us and registered in our name for
your account or benefit.
<PAGE>
INSTRUCTIONS
The undersigned acknowledge(s) receipt of your letter and the enclosed
material referred to therein relating to the Exchange Offer of Better Minerals
and Aggregates Company.
This will instruct you to tender for exchange the aggregate principal
amount of Old Notes indicated below (or, if no aggregate principal amount is
indicated below, all Old Notes) held by you for the account or benefit of the
undersigned, pursuant to the terms of and conditions set forth in the
Prospectus and the Letter of Transmittal.
Aggregate Principal Amount of Old Notes to be tendered for exchange:
$ ___________________________
*I (we) understand that if I (we) sign this instruction form without
indicating an aggregate principal amount of Old Notes in the space above, all
Old Notes held by you for my (our) account will be tendered for exchange.
- -------------------------------------------------------------------------------
Signature(s)
- -------------------------------------------------------------------------------
Capacity (full title), if signing in a fiduciary or representative capacity
- -------------------------------------------------------------------------------
Name(s) and address, including zip code
Date: _________________________
- -------------------------------------------------------------------------------
Area Code and Telephone Number
- -------------------------------------------------------------------------------
Taxpayer Identification or Social Security No.
<PAGE>
EXHIBIT 99.3
BETTER MINERALS AND AGGREGATES COMPANY
OFFER TO EXCHANGE UP TO $150,000,000 OF THEIR
13% SENIOR SUBORDINATED NOTES DUE 2009
FOR ANY AND ALL OF THEIR OUTSTANDING
13% SENIOR SUBORDINATED NOTES DUE 2009
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON , 2000, UNLESS EXTENDED.
, 2000
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
Better Minerals and Aggregates Company (the "Issuer"), is offering, upon
the terms and subject to the conditions set forth in the Prospectus dated
, 2000 (the "Prospectus") and the accompanying Letter of Transmittal
enclosed herewith (which together constitute the "Exchange Offer"), to
exchange their 13% Senior Subordinated Notes due 2009 (the "New Notes") for an
equal principal amount of their 13% Senior Subordinated Notes due 2009 (the
"Old Notes" and together with the New Notes, the "Notes"). As set forth in the
Prospectus, the terms of the New Notes are identical in all material respects
to the Old Notes, except that the New Notes have been registered under the
Securities Act of 1933, as amended, and therefore will not bear legends
restricting their transfer and will not contain certain provisions providing
for the payment of liquidated damages to the holders of the Old Notes under
certain circumstances relating to the Exchange and Registration Rights
Agreement dated as of October 1, 1999 among the Issuer, its subsidiary
guarantors, Chase Securities Inc. and BNP Capital Markets, LLC.
THE EXCHANGE OFFER IS SUBJECT TO CERTAIN CUSTOMARY CONDITIONS. SEE "THE
EXCHANGE OFFER--CERTAIN CONDITIONS TO THE EXCHANGE OFFER" IN THE PROSPECTUS.
Enclosed herewith for your information and forwarding to your clients are
copies of the following documents:
1. the Prospectus, dated ; 2000.
2. the Letter of Transmittal for your use (unless Old Notes are tendered
by an Agent's Message) and for the information of your clients (facsimile
copies of the Letter of Transmittal may be used to tender Old Notes);
3. a form of letter which may be sent to your clients for whose accounts
you hold Old Notes registered in your name or in the name of your nominee,
with space provided for obtaining such clients' instructions with regard to
the Exchange Offer;
4. a Notice of Guaranteed Delivery;
5. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9; and
6. a return envelope addressed to The Bank of New York, the Exchange
Agent.
YOUR PROMPT ACTION IS REQUESTED. PLEASE NOTE THAT THE EXCHANGE OFFER WILL
EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON , 2000, UNLESS EXTENDED.
PLEASE FURNISH COPIES OF THE ENCLOSED MATERIALS TO THOSE OF YOUR CLIENTS FOR
WHOM YOU HOLD OLD NOTES REGISTERED IN YOUR NAME OR IN THE NAME OF YOUR NOMINEE
AS QUICKLY AS POSSIBLE.
<PAGE>
In all cases, exchanges of Old Notes accepted for exchange pursuant to the
Exchange Offer will be made only after timely receipt by the Exchange Agent of
(a) certificates representing such Old Notes, or confirmation of book entry
transfer of such Old Notes, as the case may be, (b) the Letter of Transmittal
(or facsimile thereof), properly completed and duly executed, or an Agent's
Message and (c) any other required documents.
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available or (ii) who cannot deliver their Old Notes, the Letter
of Transmittal or an Agent's Message and in either case together with any
other documents required by the Letter of Transmittal to the Exchange Agent on
or prior to the Expiration Date must tender their Old Notes according to the
guaranteed delivery procedures set forth under the caption "The Exchange
Offer--Guaranteed Delivery Procedures" in the Prospectus.
The Exchange Offer is not being made to, nor will tenders be accepted from
or on behalf of, holders of Old Notes residing in any jurisdiction in which
the making of the Exchange Offer or the acceptance thereof would not be in
compliance with the laws of such jurisdiction.
The Issuer will not pay any fees or commissions to brokers, dealers or
other persons for soliciting exchanges of Notes pursuant to the Exchange
Offer. The Issuer will, however, upon request, reimburse you for customary
clerical and mailing expenses incurred by you in forwarding any of the
enclosed materials to your clients. The Issuer will pay or cause to be paid
any transfer taxes payable on the transfer of Notes to them, except as
otherwise provided in Instruction 5 of the Letter of Transmittal.
Questions and requests for assistance with respect to the Exchange Offer or
for copies of the Prospectus and Letter of Transmittal may be directed to the
Exchange Agent by telephone at (212) or by facsimile at (212)
.
Very truly yours,
Better Minerals and Aggregates
Company
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR
ANY OTHER PERSON THE AGENT OF THE ISSUER, OR ANY AFFILIATE THEREOF, OR
AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON
THEIR BEHALF IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED
HEREWITH AND THE STATEMENTS CONTAINED THEREIN.
<PAGE>
EXHIBIT 99.4
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF ALL OUTSTANDING
13% SENIOR SUBORDINATED NOTES DUE 2009
IN EXCHANGE FOR
NEW 13% SENIOR SUBORDINATED NOTES DUE 2009
OF
BETTER MINERALS AND AGGREGATES COMPANY
Registered holders of outstanding 13% Senior Subordinated Notes due 2009
(the "Old Notes") who wish to tender their Old Notes in exchange for a like
principal amount of new 13% Senior Subordinated Notes due 2009 (the "New
Notes") and whose Old Notes are not immediately available or who cannot
deliver their Old Notes or the Letter of Transmittal (or any other required
documents) to The Bank of New York (the "Exchange Agent") prior to the
Expiration Date, may use this Notice of Guaranteed Delivery or one
substantially equivalent hereto. This Notice of Guaranteed Delivery may be
delivered by hand or sent by facsimile transmission (receipt confirmed by
telephone and an original delivered by guaranteed overnight courier) or mail
to the Exchange Agent. See "The Exchange Offer--Procedures for Tendering" in
the Prospectus dated [ ], 2000 of the Better Minerals and Aggregates
Company (the "Prospectus").
The Exchange Agent for the Exchange Offer is:
THE BANK OF NEW YORK
For Overnight Delivery, Delivery by Hand or Delivery by Registered or
Certified Mail:
The Bank of New York
101 Barclay St.
New York, NY 10286
Attention: Kim Lau, Reorg-7 EAST
By Facsimile Transmission
(for eligible institutions only):
(212) 815-6339
Confirm facsimile by telephone only:
(212) 815-3750
<PAGE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION VIA A FACSIMILE TRANSMISSION TO A NUMBER OTHER
THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an eligible institution (as defined in the Prospectus), such
signature guarantee must appear in the applicable space provided on the Letter
of Transmittal for Guarantee of Signatures.
Ladies and Gentlemen:
The undersigned hereby tenders for exchange to the Issuer, upon the terms
and subject to the conditions set forth in the Prospectus and the Letter of
Transmittal, receipt of which is hereby acknowledged, the principal amount of
Old Notes set forth below pursuant to the guaranteed delivery procedures set
forth in the Prospectus under the caption "The Exchange Offer--Guaranteed
Delivery Procedures."
The undersigned understands and acknowledges that the Exchange Offer will
expire at 5:00 p.m., New York City time, on , 2000, unless extended
by the Issuer. The term "Expiration Date" shall mean 5:00 p.m., New York City
time, on , 2000 unless the Exchange Offer is extended as provided in
the Prospectus, in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended.
All authority conferred or agreed to be conferred by this Notice of
Guaranteed Delivery shall survive the death, incapacity or dissolution of the
undersigned, and every obligation of the undersigned under this Notice of
Guaranteed Delivery shall be binding upon the undersigned's heirs, personal
representatives, successors and assigns.
SIGNATURE
- ------------------------------------------- Date: ____________________________
- ------------------------------------------- Date: ____________________________
(Signature(s) of Holder(s) or Authorized Signatory)
Area Code and Telephone Number:
- -------------------------------------------------------------------------------
Name(s):
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Please Print)
<PAGE>
Capacity (full title), if signing in a fiduciary or representative capacity:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Taxpayer Identification or Social Security No.:
- --------------------------------------------------------------------------------
Principal Amount of Old Notes Tendered (must be in integral multiples of
$1,000):
- --------------------------------------------------------------------------------
Certificate Number(s) of Old Notes (if available):
- --------------------------------------------------------------------------------
Aggregate Principal Amount Represented by Certificate(s):
- --------------------------------------------------------------------------------
IF OLD NOTES WILL BE TENDERED BY BOOK-ENTRY TRANSFER, PROVIDE THE FOLLOWING
INFORMATION:
DTC Account Number:
- --------------------------------------------------------------------------------
Transaction Number:
- --------------------------------------------------------------------------------
<PAGE>
GUARANTEE OF DELIVERY
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member of a recognized signature guarantee medallion
program within the meaning of Rule 17Ad-15 under the Securities Exchange Act
of 1934, as amended, hereby guarantees to deliver to the Exchange Agent at one
of its addresses set forth on the reverse hereof, the certificates
representing the Old Notes (or a confirmation of book-entry transfer of such
Old Notes into the Exchange Agent's account at the book-entry transfer
facility), together with a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), with any required signature guarantees,
and any other documents required by the Letter of Transmittal within three New
York Stock Exchange trading days after the Expiration Date (as defined in the
Letter of Transmittal).
Name of Firm:
-------------------------------------- ---------------------------
(Authorized Signature)
Address: ________________________________
------------------------------------------ Title:
-----------------------
Name:
- -------------------------------------------------- ---------------------
(Zip Code) Please Type or Print
Area Code and Date: ____________________
Telephone No.:
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