<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED MARCH 31, 1999
COMMISSION FILE NUMBER 1-9371
ALLEGHANY CORPORATION
EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER
DELAWARE
STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION
51-0283071
INTERNAL REVENUE SERVICE EMPLOYER IDENTIFICATION NUMBER
375 PARK AVENUE, NEW YORK, NEW YORK 10152
ADDRESS OF PRINCIPAL EXECUTIVE OFFICE, INCLUDING ZIP CODE
212/752-1356
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE
NOT APPLICABLE
FORMER NAME, FORMER ADDRESS, AND FORMER FISCAL YEAR,
IF CHANGED SINCE LAST REPORT
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE
YES /X/ NO / /
INDICATE THE NUMBER OF SHARES OUTSTANDING OF
EACH OF THE ISSUER'S CLASS OF COMMON
STOCK, AS OF THE CLOSE OF THE PERIOD
COVERED BY THIS REPORT:
7,328,294
(AS OF MARCH 31, 1999)
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ALLEGHANY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE THREE MONTHS ENDED
MARCH 31, 1999 AND 1998
(dollars in thousands, except share and per share amounts)
(unaudited)
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
REVENUES
Trust fees $ 39,373 $ 25,048
Net property and casualty premiums earned 144,237 94,050
Interest, dividend and other income 43,203 40,030
Net mineral and filtration sales 48,886 47,688
Net gain (loss) on investment transactions 363 (24)
----------- -----------
Total revenues 276,062 206,792
----------- -----------
COSTS AND EXPENSES
Commissions and brokerage expenses 37,134 25,110
Salaries, administrative and other operating expenses 69,171 51,912
Property and casualty losses and loss adjustment expenses 100,158 65,205
Cost of mineral and filtration sales 33,322 32,548
Interest expense 7,750 7,330
Corporate administration 4,658 6,839
----------- -----------
Total costs and expenses 252,193 188,944
----------- -----------
Earnings from continuing operations, before income taxes 23,869 17,848
Income taxes 7,915 4,889
Earnings from continuing operations 15,954 12,959
Earnings from discontinued operations, net of tax 0 21,241
----------- -----------
Net earnings $ 15,954 $ 34,200
=========== ===========
Basic earnings per share of common stock:**
Continuing operations $ 2.17 $ 1.73
Discontinued operations 0.00 2.82
----------- -----------
Basic earnings per share $ 2.17 $ 4.55
=========== ===========
Diluted earnings per share of common stock:**
Continuing operations $ 2.13 $ 1.70
Discontinued operations 0.00 2.79
----------- -----------
Diluted earnings per share $ 2.13 $ 4.49
=========== ===========
Dividends per share of common stock * *
=========== ===========
Average number of outstanding shares of common stock ** 7,358,605 7,523,232
=========== ===========
</TABLE>
* In March 1999, Alleghany declared a dividend consisting of one share of
Alleghany common stock for every fifty shares outstanding.
** Adjusted to reflect the common stock dividend declared in March 1999.
<PAGE> 3
ALLEGHANY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1999 AND DECEMBER 31, 1998
(dollars in thousands, except share and per share amounts)
<TABLE>
<CAPTION>
March 31,
1999 December 31,
(Unaudited) 1998
---------- ----------
<S> <C> <C>
ASSETS
Available for sale securities:
Fixed maturities:
U.S. Government, government agency and
municipal obligations (amortized cost $518,468) $ 529,559 $ 537,937
Short-term investments (amortized cost 122,682) 122,682 76,015
Bonds, notes and other (amortized cost 622,833) 632,440 687,755
Equity securities (cost 327,966) 796,643 824,326
---------- ----------
2,081,324 2,126,033
Cash 36,532 25,441
Cash pledged to secure trust deposits 9,909 56,907
Premium trust funds 119,028 107,854
Notes receivable 91,536 91,536
Funds held, accounts and other receivables 474,690 502,721
Property and equipment - at cost, less accumulated depreciation and amortization 208,416 208,698
Reinsurance receivable 644,646 571,689
Other assets 599,518 591,565
---------- ----------
$4,265,599 $4,282,444
========== ==========
LIABILITIES AND COMMON STOCKHOLDERS' EQUITY
Property and casualty losses and loss adjustment expenses $1,667,382 $1,554,818
Unearned premium reserve 340,879 389,603
Other liabilities 426,500 443,938
Long-term debt of parent company 39,500 18,200
Long-term debt of subsidiaries 416,329 421,595
Net deferred tax liability 136,481 150,218
Trust deposits secured by pledged assets 14,330 56,644
---------- ----------
Total liabilities 3,041,401 3,035,016
Common stockholders' equity 1,224,198 1,247,428
---------- ----------
$4,265,599 $4,282,444
========== ==========
Shares of common stock outstanding * 7,328,294 7,375,848
========== ==========
Common stockholders' equity per share * $ 167.06 $ 169.12
========== ==========
</TABLE>
* Adjusted to reflect the common stock dividend declared in March
1999.
<PAGE> 4
ALLEGHANY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE THREE MONTHS ENDED
MARCH 31, 1999 AND 1998
(dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $ 15,954 $ 12,959
Adjustments to reconcile net earnings to cash
provided by (used in) operations:
Depreciation and amortization 5,226 6,193
Net (gain) loss on investment transactions (363) 24
Other charges, net 3,012 (15,757)
Decrease (increase) in funds held, accounts and other receivables 28,031 (13,089)
Increase in reinsurance receivable (72,957) (8,515)
Increase in property and casualty losses and loss adjustment expenses 112,564 35,427
(Decrease) increase in unearned premium reserves (48,724) 13,619
Increase in premium trust funds (11,174) --
Increase in other assets (7,953) (456)
(Decrease) increase in other liabilities (17,438) 9,578
Decrease (increase) in cash pledged to secure trust deposits 46,998 (15,109)
(Decrease) increase in trust deposits (42,314) 10,928
--------- ---------
Net adjustments (5,092) 22,843
--------- ---------
Cash provided by operations 10,862 35,802
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of investments (218,855) (50,382)
Maturities of investments 16,994 21,228
Sales of investments 183,909 26,857
Purchases of property and equipment (6,704) (4,926)
Other, net 18,802 (41,885)
--------- ---------
Net cash used in investing activities (5,854) (49,108)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long-term debt (19,800) (12,000)
Proceeds of long-term debt 35,834 12,000
Treasury stock acquisitions (14,172) --
Net cash provided to discontinued operations -- (3,607)
Other, net 4,221 6,019
--------- ---------
Net cash provided by financing activities 6,083 2,412
--------- ---------
Net increase (decrease) in cash 11,091 (10,894)
Cash at beginning of period 25,441 45,772
--------- ---------
Cash at end of period $ 36,532 $ 34,878
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 3,354 $ 4,087
Income taxes $ 6,746 $ 9,766
</TABLE>
<PAGE> 5
Notes to the Consolidated Financial Statements
This report should be read in conjunction with the Annual Report on
Form 10-K for the year ended December 31, 1998 (the "1998 Form 10-K") of
Alleghany Corporation (the "Company").
The information included in this report is unaudited but reflects all
adjustments which, in the opinion of management, are necessary to a fair
statement of the results of the interim periods covered thereby. All adjustments
are of a normal and recurring nature except as described herein.
Spin-off of Chicago Title Corporation
On June 17, 1998, the Company completed the spin-off of the title
insurance and real estate-related services business conducted by Chicago Title
and Trust Company ("CT&T"). The spin-off was effected by a distribution to the
Company's stockholders of shares of a newly formed holding company for CT&T
called Chicago Title Corporation ("Chicago Title"). The common stock of Chicago
Title is traded on the New York Stock Exchange under the symbol "CTZ." The
financial services business conducted through Alleghany Asset Management, Inc.
("Alleghany Asset Management") was not a part of the distribution and remains
with the Company.
The unaudited consolidated financial statements of the Company include
the accounts of the Company and its subsidiaries for all periods presented. In
light of the spin-off of Chicago Title, the spun-off operation is classified as
a "discontinued operation" through the date of the spin-off.
Comprehensive Income
The Company's total comprehensive (loss) income for the three months
ended March 31, 1999 and 1998 was $(14,014) thousand and $92,364 thousand,
respectively. Comprehensive income includes the Company's net earnings adjusted
for changes, net of tax, in unrealized appreciation of investments, which was
$(28,485) thousand and $58,557 thousand, and cumulative translation adjustments,
which was $(1,483) thousand and $(393) thousand, for the three months ended
March 31, 1999 and 1998, respectively.
5
<PAGE> 6
Segment Information
Information concerning the Company's continuing operations by industry
segment is summarized below:
<TABLE>
<CAPTION>
March 31, March 31,
1999 1998
----------- -----------
<S> <C> <C>
REVENUES
Asset management $ 39,937 $ 25,459
Property and casualty
insurance 165,623 113,610
Mining and filtration 48,600 47,655
Corporate activities 21,902 20,068
----------- -----------
Total $ 276,062 $ 206,792
=========== ===========
EARNINGS FROM CONTINUING
OPERATIONS BEFORE TAX
Asset management $ 14,428 $ 8,022
Property and casualty
insurance 11,056 9,765
Mining and filtration 4,344 3,578
Corporate activities (5,959) (3,517)
----------- -----------
Total 23,869 17,848
Income taxes (7,915) (4,889)
Discontinued operations 0 21,241
----------- -----------
Net income $ 15,954 $ 34,200
=========== ===========
March 31, December 31,
1999 1998
----------- -----------
IDENTIFIABLE ASSETS
Asset management $ 69,574 $ 118,458
Property and casualty
insurance 3,124,471 3,064,155
Mining and filtration 337,055 331,714
Corporate activities 734,499 768,117
----------- -----------
Total $ 4,265,599 $ 4,282,444
=========== ===========
</TABLE>
6
<PAGE> 7
Contingencies
The Company's subsidiaries and division are parties to pending claims
and litigation in the ordinary course of their businesses. Each such operating
unit makes provisions on its books in accordance with generally accepted
accounting principles for estimated losses to be incurred as a result of such
claims and litigation, including related legal costs. In the opinion of
management, such provisions are adequate as of March 31, 1999.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION.
The Company reported net earnings from continuing operations of $16.0
million on revenues of $276.1 million during the first quarter of 1999, compared
with net earnings from continuing operations of $13.0 million on revenues of
$206.8 million during the first quarter of 1998.
Net earnings including discontinued operations were $34.2 million in
the first quarter of 1998. Chicago Title, which, as described in the notes
above, is classified as a "discontinued operation," contributed net earnings of
$21.2 million in the first quarter of 1998. No discontinued operations were
recorded in the first quarter of 1999.
Net gains on investment transactions before taxes in the first quarter
of 1999 totalled $363 thousand, compared with net losses of $24 thousand in the
first quarter of 1998.
Underwriters Re Group, Inc. ("Underwriters Re Group") contributed
pre-tax earnings of $11.1 million on revenues of $165.6 million in the first
three months of 1999, compared with $9.8 million on revenues of $113.6 million
in the first three months of 1998. The improved results of Underwriters Re Group
primarily reflect growth in investment income resulting from an increase in
invested assets. The results of Underwriters Re Group include the results of
Venton Holdings Ltd. for the period following its acquisition on October 23,
1998 through December 31, 1998. The results of Venton Holdings Ltd. are reported
on a one quarter lag due to the complexity of converting Lloyd's accounting
information to U.S. accounting principles.
Alleghany Asset Management contributed pre-tax earnings of $14.4
million on revenues of $39.9 million in the 1999 first quarter, compared with
$8.0 million on revenues of $25.5 million in the 1998 first quarter. The
improved results of Alleghany Asset Management from the prior year are primarily
due to an increase in assets under management. As of March 31, 1999, Alleghany
Asset Management had $40.4 billion of assets under management, compared with
$28.8 billion as of the same date in 1998.
7
<PAGE> 8
World Minerals Inc. ("World Minerals") contributed pre-tax earnings of
$4.3 million on revenues of $48.6 million in the 1999 first quarter, compared
with $3.6 million on revenues of $47.7 million in the 1998 first quarter. World
Minerals' results increased slightly despite increased competitive pressure, an
unfavorable product mix, and a decrease in net sales in Latin America. 1998
first quarter results reflect, among other things, the effects of severe El
Nino storms and rail car shortages on World Minerals' Lompoc, California
diatomite operations.
As of March 31, 1999, the Company beneficially owned approximately
22.29 million shares, or 4.7 percent, of the outstanding common stock of
Burlington Northern Santa Fe Corporation, which had an aggregate market value on
that date of approximately $732.8 million, or $32.875 per share, compared with a
market value on December 31, 1998 of $763.4 million, or $34.25 per share. The
aggregate cost of such shares is approximately $253.7 million, or $11.38 per
share.
The Company's common stockholders' equity per share (adjusted for the
March 1999 stock dividend) at March 31, 1999 was $167.06 per share, a 1%
decrease from common stockholders' equity per share of $169.12 as of December
31, 1998, reflecting a decline in market prices of the Company's securities
holdings.
Year 2000
The Year 2000 issue arises from computer programs that use two digits
rather than four digits to define the applicable year. This could result in a
failure of information technology systems ("IT systems") and other equipment
containing imbedded technology ("non-IT systems") to correctly read the year
2000, which could cause significant disruption in business operations. Each of
the Company and its subsidiaries has undertaken a four-phase program to
determine the extent of Year 2000 issues within each of its significant IT
systems and non-IT systems and to take appropriate remedial action. The four
phases of the program are assessment, planning, execution and testing. The
assessment and planning phases were completed in early 1998 and execution and
testing began thereafter. Non-compliant systems were reprogrammed or replaced,
and then tested. The execution and testing phases were largely completed by
year-end 1998, but some testing is continuing in 1999. The cost of remediation
(including replacement software and hardware), testing and outside consultant
fees is currently expected to total $4.7 million, of which about $3.9 million
has been incurred.
Management presently believes that it will be able to timely resolve
the Year 2000 issues affecting the computer systems of the Company and its
subsidiaries and that the cost of addressing such matters will not have a
material impact on the business, operations, or financial condition of the
Company and its subsidiaries. However, the extent to which third party computer
systems are adversely affected could materially
8
<PAGE> 9
adversely affect the business, operations or financial condition of the Company
and its subsidiaries.
A more detailed report of the state of readiness of each of the
Company's operating units and with respect to potential claims under insurance
and reinsurance policies is incorporated in the Company's 1998 Form 10-K, which
report is updated as follows:
Underwriters Re Group
Venton is scheduled to replace its non-compliant IT systems with a new
system. The new system has attained Lloyd's markets Year 2000 certification and
was scheduled to be put in operation by the end of the 1999 first quarter, but
has been delayed to the end of the 1999 second quarter. In light of these
delays, Venton is updating its contingency plans to make the existing IT system
Year 2000 compliant and to attain Lloyd's certification of such system by June
30, 1999.
Alleghany Asset Management
Alleghany Asset Management utilizes four third-party service providers
for critical business services, including custody, security receipt and
delivery, and income collection services. Alleghany Asset Management has
prepared contingency plans for each such third-party system, pursuant to which
Alleghany Asset Management plans to retrieve customer account data at multiple
dates prior to January 1, 2000, and, in the event of a third party failure, will
maintain on an interim basis ongoing account activity on internally maintained
systems that have been tested as Year 2000 compliant. Alleghany Asset Management
is in the process of testing its contingency plans, which it plans to complete
by June 30, 1999.
World Minerals
With respect to its non-IT systems (such as plant and mining equipment
containing embedded chips or programmable logic controllers), with the exception
of three (previously two) plant processing systems which are being replaced or
upgraded in the first half of 1999, World Minerals' assessment, planning and
execution phases are complete. World Minerals believes that, for all internal IT
and non-IT systems, it will have all four phases of its Year 2000 project
completed by June 30, 1999.
Heads and Threads
Heads and Threads has assessed, planned, executed and now completed the
testing of its internal IT systems.
9
<PAGE> 10
The Company's results in the first three months of 1999 are not
indicative of operating results in future periods. The Company and its
subsidiaries have adequate internally generated funds and unused credit
facilities to provide for the currently foreseeable needs of its and their
businesses.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Market risk is the risk of loss from adverse changes in market prices
and rates, such as interest rates, foreign currency exchange rates and commodity
prices. The primary market risk related to the Company's non-trading financial
instruments is the risk of loss associated with adverse changes in interest
rates.
The Company's 1998 Form 10-K provides a more detailed discussion of the
market risks affecting its operations. Based on the Company's estimates as of
March 31, 1999, no material change has occurred in its market risks, as compared
to amounts disclosed in its 1998 Form 10-K.
Forward-Looking Statements
The "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Quantitative and Qualitative Disclosures About
Market Risk" contain disclosures which are forward-looking statements.
Forward-looking statements include all statements that do not relate solely to
historical or current facts, and can be identified by the use of words such as
"may," "will," "expect," "project," "estimate," "anticipate," "plan" or
"continue." These forward-looking statements are based upon the Company's
current plans or expectations and are subject to a number of uncertainties and
risks that could significantly affect current plans and anticipated actions and
the Company's future financial condition and results. The uncertainties and
risks include, but are not limited to, those relating to conducting operations
in a competitive environment; acquisition activities; the complexity of
integrated computer systems; the success and expense of the remediation efforts
of the Company, its subsidiaries and third parties in achieving Year 2000
compliance and general economic conditions. As a consequence, current plans,
anticipated actions and future financial condition and results may differ from
those expressed in any forward-looking statements made by or on behalf of the
Company.
10
<PAGE> 11
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES.
(c) Recent Sales of Unregistered Securities.
On January 20, 1999, the Company issued an aggregate of 7,175 shares of
common stock to Paul F. Woodberry, 1,847 shares upon the exercise of an option
to purchase 1,000 shares of the Company's common stock, subject to adjustment
for stock dividends and the spin-off of Chicago Title, at an exercise price of
$51.8921 per share, or $95,875.00 in the aggregate, and 1,811 shares upon the
exercise of an option to purchase 1,000 shares of the Company's common stock,
subject to adjustment for stock dividends and the spin-off of Chicago Title, at
an exercise price of $68.1810 per share, or $123,500.00 in the aggregate, and
1,776 shares upon the exercise of an option to purchase 1,000 shares of the
Company's common stock, subject to adjustment for stock dividends and the
spin-off of Chicago Title, at an exercise price of $82.7778 per share, or
$147,000.00 in the aggregate, and 1,741 shares upon the exercise of an option to
purchase 1,000 shares of the Company's common stock, subject to adjustment for
stock dividends and the spin-off of Chicago Title, at an exercise price of
$81.4179 per share, or $141,750.00 in the aggregate, granted to Mr. Woodberry on
April 29, 1991, April 27, 1992, April 26, 1993 and April 25, 1994 respectively,
pursuant to the Alleghany Corporation Amended and Restated Directors' Stock
Option Plan. The sale of common stock was exempt from registration under the
Securities Act, pursuant to Section 4(2) thereof, as a transaction not involving
a public offering.
The above does not include unregistered issuances of the Company's
common stock that did not involve a sale, consisting of issuances of common
stock and other securities pursuant to employee incentive plans.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
Exhibit Number Description
10.1 Credit Agreement dated as of March
17, 1999 among Mineral Holdings
Inc., World Minerals Inc., the
Banks named therein and The Chase
Manhattan Bank, as Administrative
Agent and Collateral Agent (the
"World Minerals Credit
Agreement").
10.2 List of Contents of Exhibits,
Annexes and Schedules to the World
Minerals Credit Agreement. The
11
<PAGE> 12
Company agrees to furnish
supplementally a copy of any
omitted exhibit, annex or schedule
to the Securities and Exchange
Commission upon request.
10.3 Subordination Agreement dated as
of March 17, 1999, among Alleghany
Corporation and The Chase
Manhattan Bank.
27 Financial Data Schedule
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the first quarter of 1999.
12
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ALLEGHANY CORPORATION
Registrant
Date: May 10, 1999 /s/ David B. Cuming
----------------------------------------
David B. Cuming
Senior Vice President
(and principal financial officer)
13
<PAGE> 14
EXHIBIT INDEX
Exhibit Number Description
10.1 Credit Agreement dated as of March
17, 1999 among Mineral Holdings
Inc., World Minerals Inc., the
Banks named therein and The Chase
Manhattan Bank, as Administrative
Agent and Collateral Agent (the
"World Minerals Credit
Agreement").
10.2 List of Contents of Exhibits,
Annexes and Schedules to the World
Minerals Credit Agreement. The
Company agrees to furnish
supplementally a copy of any
omitted exhibit, annex or schedule
to the Securities and Exchange
Commission upon request.
10.3 Subordination Agreement dated as
of March 17, 1999, among Alleghany
Corporation and The Chase
Manhattan Bank.
27 Financial Data Schedule
<PAGE> 1
Exhibit 10.1
EXECUTION COPY
================================================================================
CREDIT AGREEMENT
Dated as of March 17, 1999
among
MINERAL HOLDINGS INC.,
WORLD MINERALS INC.,
THE BANKS NAMED HEREIN,
and
THE CHASE MANHATTAN BANK,
as Administrative Agent and
Collateral Agent
------------------------------------
CHASE SECURITIES INC.,
as Arranger and Book Manager
================================================================================
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS..........................................................1
1.1 Defined Terms..........................................................1
1.2 Terms Generally.......................................................16
1.3 Accounting Terms, GAAP................................................17
ARTICLE II THE LOANS..........................................................17
2.1 Making of Loans.......................................................17
2.2 Repayment of Loans, Evidence of Debt..................................18
2.3 Notice of Loans.......................................................19
2.4 Interest..............................................................19
2.5 Alternative Rate of Interest..........................................20
2.6 Interest on Overdue Amounts...........................................21
2.7 Reduction of Commitment...............................................21
2.8 Redeployment Cost.....................................................22
2.9 Conversion and Continuation of Borrowings.............................22
2.10 Increased Costs......................................................23
2.11 Change in Legality...................................................24
2.12 Pro Rata Treatment...................................................25
2.13 Sharing of Setoffs...................................................25
2.14 Payments.............................................................26
2.15 Taxes................................................................26
2.16 Fees.................................................................28
2.17 Removal of Banks.....................................................29
ARTICLE III LETTERS OF CREDIT.................................................30
3.1 Issuance of Letters of Credit.........................................30
3.2 Notice................................................................31
3.3 Reimbursement; Repayment with Loans...................................31
3.4 Increased Costs.......................................................33
3.5 Letter of Credit Fees.................................................35
ARTICLE IV REPRESENTATIONS AND WARRANTIES.....................................35
4.1 Organization..........................................................35
4.2 Corporate Power and Authority; No Required Consents or Approvals......35
4.3 Enforceability........................................................36
4.4 Financial Statements; No Undisclosed Liabilities......................36
4.5 No Material Adverse Change............................................36
4.6 Litigation............................................................37
4.7 Compliance with Laws..................................................37
4.8 Employee Benefit Plans................................................37
4.9 Taxes.................................................................38
4.10 Title to Properties..................................................38
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<PAGE> 3
4.11 Business.............................................................38
4.12 Agreements...........................................................38
4.13 No Material Misstatements............................................39
4.14 Related Party Transactions...........................................39
4.15 Labor Matters and Acts of God........................................39
4.16 Outstanding Debt.....................................................39
4.17 Federal Reserve Regulations..........................................39
4.18 Investment Company Act and Public Utility Holding Company Act........39
4.19 Security Interests...................................................40
4.20 Capital Stock; Subsidiaries..........................................40
4.21 Year 2000 Compliance.................................................41
4.22 Environmental Matters................................................41
ARTICLE V CONDITIONS TO LENDING...............................................41
5.1 Loans on the Closing Date.............................................41
5.2 Loans Made After Closing Date.........................................44
5.3 Letters of Credit Issued After the Closing Date.......................44
ARTICLE VI AFFIRMATIVE COVENANTS..............................................45
6.1 Corporate Existence...................................................45
6.2 Obligations and Taxes.................................................45
6.3 Performance Under Agreements..........................................45
6.4 Access to Properties and Inspections..................................46
6.5 Defense of Claims.....................................................46
6.6 Notices of Litigation or Claims.......................................46
6.7 Notice of Certain Actions.............................................47
6.8 Compliance............................................................47
6.9 Further Assurances....................................................47
6.10 Business and Properties..............................................47
6.11 Financial Statements and Reports.....................................48
6.12 Insurance............................................................49
6.13 Mining Plan..........................................................50
6.14 ERISA................................................................50
6.15 Proceeds.............................................................50
6.16 Additional Subsidiaries..............................................50
6.17 Year 2000 Compliance.................................................51
ARTICLE VII NEGATIVE COVENANTS................................................51
7.1 Indebtedness..........................................................51
7.2 Negative Pledge.......................................................52
7.3 Restricted Payments...................................................53
7.4 Investments...........................................................54
7.5 Nature of Business....................................................55
7.6 Asset Sales...........................................................55
7.7 Acquisitions..........................................................55
7.8 Transactions With Affiliates..........................................57
7.9 Sale and Leaseback Transactions.......................................57
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<PAGE> 4
7.10 Merger or Consolidation..............................................57
7.11 Interest Coverage....................................................58
7.12 Debt to Worth........................................................58
7.13 Net Worth............................................................58
7.14 Fiscal Year..........................................................58
7.15 Restrictive Agreements...............................................58
ARTICLE VIII EVENTS OF DEFAULT................................................59
8.1 Defaults..............................................................59
ARTICLE IX THE ADMINISTRATIVE AGENT...........................................62
ARTICLE X HOLDINGS GUARANTY...................................................65
10.1 Holdings Guaranty....................................................65
10.2 Guarantor's Waivers..................................................66
10.3 Bankruptcy...........................................................68
10.4 Payment..............................................................68
ARTICLE XI MISCELLANEOUS......................................................69
11.1 Notices..............................................................69
11.2 Survival of Agreement................................................70
11.3 Successors and Assigns; Syndications; Loan Sales; Participations.....70
11.4 Expenses of the Lender Parties.......................................74
11.5 Indemnification......................................................74
11.6 Governing Law........................................................75
11.7 Waiver of Jury Trial.................................................76
11.8 Waivers; Amendments..................................................76
11.9 Severability.........................................................77
11.10 Counterparts........................................................78
11.11 Headings............................................................78
11.12 Obligations of Lender Parties Several...............................78
11.13 Entire Agreement....................................................78
11.14 Confidentiality.....................................................78
11.15 Interest Rate Limitation............................................79
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EXHIBITS
EXHIBIT A - Form of Alleghany Subordination Agreement
EXHIBIT B - Form of Assignment and Acceptance
EXHIBIT D - Form of Borrower Pledge Agreement
EXHIBIT E - Form of Holdings Pledge Agreement
EXHIBIT C - Form of Subsidiary Guaranty Agreement
EXHIBIT F - Form of Subsidiary Pledge Agreement
EXHIBIT G - Form of Notice of Borrowing
ANNEXES
ANNEX I - The Banks
ANNEX II - Financing Documents
ANNEX III - List of Jurisdictions
SCHEDULES
Schedule 3.1 - Existing Letters of Credit
Schedule 4.4(a) - Financial Statements
Schedule 4.4(b) - Certain Obligations
Schedule 4.6 - Litigation
Schedule 4.8 - Employee Benefit Plans
Schedule 4.10(a) - Title to Properties
Schedule 4.10(b) - Intellectual Property
Schedule 4.11 - Business
Schedule 4.20 - Owners of Capital Stock
Schedule 7.2 - Liens
Schedule 7.15 - Restrictive Agreements
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<PAGE> 6
CREDIT AGREEMENT dated as of
March 17, 1999, among MINERAL HOLDINGS
INC., a Delaware corporation
("Holdings"), WORLD MINERALS INC., a
Delaware corporation (the "Borrower"),
the BANKS (as hereinafter defined), and
THE CHASE MANHATTAN BANK, a New York
banking corporation ("Chase"), as
Administrative Agent and Collateral
Agent for the Banks and as an Issuing
Bank.
PREAMBLE
The Borrower, Holdings, the Banks, and Chase wish to enter into a credit
facility in order to, among other things, provide for a senior secured revolving
loan facility in a principal amount of $120,000,000 (the "Facility") of which up
to $20,000,000 will be available for the issuance of letters of credit on behalf
of the Borrower and its Subsidiaries (the "Letter of Credit Facility"). On the
Closing Date (as defined below) under this Agreement, the Borrower will use a
portion of the funds available under the Facility to repay all of the loans
outstanding under the Existing Facility (as defined below). Thereafter,
availability under the Facility may be utilized by the Borrower for letters of
credit, acquisitions and general corporate purposes (including payments
permitted pursuant to Section 7.3), in each case subject to the terms and
conditions set forth herein.
The obligations of the Loan Parties (as defined below) under this
Agreement and the other Loan Documents are not guaranteed by Alleghany (as
defined below) and no commitments are made by Alleghany with respect thereto.
IN WITNESS WHEREOF, the parties to this Agreement, intending to be bound
hereby, hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms.
As used in this Agreement, the following terms shall have the following
respective meanings:
"ABR Loan" shall mean a Loan made in accordance with the provisions
of Article II bearing interest at a rate based on the Alternate Base Rate.
"ABR Margin" shall have the meaning given to such term in Section
2.4(c).
"Adjusted LIBO Rate" shall mean, with respect to any Eurodollar Loan
for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of
<PAGE> 7
1%) equal to the product of (a) the LIBO Rate in effect for such Interest Period
and (b) Statutory Reserves.
"Administrative Agent" shall mean Chase, as administrative agent for
the Banks hereunder, and any successor appointed in accordance with Article IX
hereof.
"Administration Fee" shall mean the fee payable by the Borrowers to
the Administrative Agent in accordance with Section 2.16(b) hereof.
"Administrative Questionnaire" means an Administrative Questionnaire
in a form supplied by the Administrative Agent.
"Affiliate" shall mean, with respect to any Person, another Person
that directly or indirectly through one or more intermediaries Controls, is
Controlled by or is under common Control with such Person.
"Alleghany" shall mean Alleghany Corporation, a Delaware corporation
and, as of the date hereof, holder of a majority of the outstanding capital
stock of Holdings.
"Alleghany Subordination Agreement" shall mean a subordination
agreement dated as of the date hereof between Alleghany and the Collateral Agent
in the form of Exhibit A attached hereto.
"Alternate Base Rate" shall mean, with respect to any ABR Loan made
by a Bank, for any day, a variable rate per annum equal to the greatest of (a)
the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%, (b) the
fluctuating rate of interest announced from time to time by the Administrative
Agent in its principal office in New York City as its prime rate in effect on
such day (it being understood that the prime rate is not intended to represent
the lowest rate of interest charged by the Administrative Agent in connection
with extensions of credit to debtors) and (c) the Base CD Rate in effect on such
day plus 1%. If for any reason any Bank shall have determined (which
determination shall be conclusive absent manifest error) that it is unable to
ascertain the Federal Funds Effective Rate or the Base CD Rate or both for any
reason, including the inability or failure of the Administrative Agent to obtain
sufficient quotations in accordance with the terms thereof, the Alternate Base
Rate shall be determined without regard to clause (a) or (c), or both, of this
definition, as appropriate, until the circumstances giving rise to such
inability no longer exist. For purposes of this Agreement, any change in the
Alternate Base Rate shall be effective on the date such change is announced.
"Applicable Law" shall mean all provisions of laws, statutes,
ordinances, rules, regulations or orders of any Governmental Authority
applicable to the Person in question, and all judgments, injunctions, orders and
decrees of all courts and arbitrators in proceedings or actions in which the
Person in question is a party or by which any of its assets or properties may be
bound.
"Assessment Rate" shall mean, for any day, the annual assessment
rate in effect on such day that is payable by a member of the Bank Insurance
Fund classified as "well-capitalized" and within supervisory subgroup "B" (or a
comparable successor risk classification) within the meaning of 12 C.F.R. Part
327 (or any successor provision) to the
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<PAGE> 8
Federal Deposit Insurance Corporation for insurance by such Corporation of time
deposits made in dollars at the offices of such member in the United States,
provided that if, as a result of any change in any law, rule or regulation, it
is no longer possible to determine the Assessment Rate as aforesaid, then the
Assessment Rate shall be such annual rate as shall be determined by the
Administrative Agent to be representative of the cost of such insurance to the
Banks.
"Asset Sale" shall mean any sale, transfer, lease or other
disposition of all or any part of the assets, properties or rights of Holdings,
the Borrower or any other Subsidiary, other than (i) a sale, transfer, lease or
other disposition solely between two Subsidiaries in accordance with Section
7.8(b), (ii) sales of inventory in the ordinary course of business or (iii)
sales or trade ins of property, machinery or equipment which is being replaced
in the ordinary course of business or otherwise within one year of sale.
"Assignment and Acceptance" shall mean an assignment and acceptance
entered into by a Bank and an assignee in the form of Exhibit B attached hereto.
"Bank" and "Banks" shall mean the financial institutions named in
Annex I which have executed and delivered a counterpart of this Agreement, and
any assignee of a Bank pursuant to Section 11.3(b). Unless the context otherwise
requires, "Bank" and "Banks" shall include each Issuing Bank.
"Base CD Rate" shall mean the sum of (a) the product of (i) the
Three-Month Secondary CD Rate times (ii) Statutory Reserves and (b) the
Assessment Rate.
"Board" shall mean the Board of Governors of the Federal Reserve
System of the United States.
"Borrower" shall have the meaning given to such term in the Preamble
of this Agreement.
"Borrower Pledge Agreement" shall mean the Pledge Agreement dated as
of the date hereof and delivered by the Borrower to the Collateral Agent for the
ratable benefit of the Lender Parties, in the form of Exhibit C.
"Business" shall have the meaning given to such term in Section 4.11
hereof.
"Business Day" shall mean any day (other than a Saturday, Sunday or
legal holiday in the State of New York) on which banks are open for business in
New York City except that, if any determination of a "Business Day" shall relate
to a Eurodollar Loan, the term "Business Day" shall, in addition, exclude any
day on which banks are not open for dealings in dollar deposits in the London
interbank market.
"Capital Expenditure" shall mean, with respect to any Person in any
period, the sum of all amounts that would, in accordance with GAAP, be included
as capital expenditures on a consolidated statement of cash flows of such Person
during such period; provided, however, that for the purpose of determining
compliance with Section 7.11, "Capital Expenditure" shall not include capital
expenditures made to improve or develop property (as opposed to capital
expenditures for maintenance or similar ordinary course of business
improvements) acquired in
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<PAGE> 9
an Acquisition permitted under Section 7.7 if, prior to the closing of such
Acquisition, (i) the Borrower notifies the Administrative Agent in writing that
it has elected to treat certain capital expenditures (the "Acquisition CapEx")
relating to such Acquisition as part of the original acquisition or investment
cost, (ii) the Borrower provides the Administrative Agent with a reasonably
detailed description of the Acquisition CapEx, (iii) if all Acquisition CapEx is
included in the "aggregate consideration" for such Acquisition, the Acquisition
is permitted under Section 7.7 and (iv) the Borrower represents to the
Administrative Agent, on behalf of the Banks, that such Acquisition CapEx will
be utilized to refurbish, develop or make similar major improvements on such
property rather than to maintain or make minor improvements in the ordinary
course of business.
"Capital Lease Obligations" shall mean, with respect to any Person
in any period, the obligations of such Person to pay rent or other amounts under
any lease of (or other arrangement conveying the right to use) real or personal
property, or a combination thereof, which obligations are required to be
classified and accounted for as capital leases on a balance sheet of such Person
under GAAP and, for the purposes of this Agreement, the amount of such
obligations at any time shall be the capitalized amount thereof at such time
determined in accordance with GAAP.
"Cash Collateral Account" shall have the meaning given such term in
Section 3.3(c) hereof.
"Cash Flow Ratio" shall have the meaning given such term in Section
2.4(c).
"Celite" shall mean Celite Corporation, a Delaware corporation and a
wholly-owned subsidiary of the Borrower.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. ss. 9601 et seq, as amended from time
to time.
"Charges" shall have the meaning given such term in Section 11.15.
"Chase" shall have the meaning given to such term in the Preamble to
this Agreement.
"Closing" shall mean the closing of the transactions contemplated by
this Agreement.
"Closing Date" shall mean March 17, 1999, or such other date as the
Administrative Agent, the Banks and the Borrower shall agree.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
the rules and regulations issued thereunder, as now and hereafter in effect, or
any successor provision thereto.
"Collateral" shall mean all of the "Collateral" as defined in each
of the Financing Documents.
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<PAGE> 10
"Collateral Agent" shall mean Chase, as Collateral Agent for the
Lender Parties under the Financing Documents, and any successor appointed in
accordance with Article IX hereof.
"Commitment" shall mean, at any time, $120,000,000 less any
reductions made in accordance with Section 2.7.
"Commitment Fee" shall have the meaning given such term in Section
2.16(a) hereof.
"Control" shall mean, with respect to any Person, the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
"Core Products" shall have the meaning given such term in Section
7.4.
"Cumulative Net Income" shall mean, at any time, an amount equal to
the sum of the Net Income of Holdings and its Subsidiaries, on a consolidated
basis, from January 1, 1999, to and including the last day of the last fiscal
quarter which has ended prior to or on the date of such calculation.
"Default" shall mean any event which, with (i) the giving of any
notice expressly provided for in Article VIII and/or (ii) the passage of any
waiting period or cure period expressly provided for therein, would constitute
an Event of Default.
"Dollars" and "$" shall mean lawful money of the United States of
America.
"Domestic Subsidiaries" shall mean, collectively, those Subsidiaries
organized and existing under the laws of the United States or any state of the
United States but excluding any branches of such Subsidiaries registered or
operating in jurisdictions located outside the United States.
"Drawing" shall mean any payment or disbursement made by the Issuing
Bank under a Letter of Credit honoring a demand for payment by a beneficiary of
such Letter of Credit.
"EBITDA" shall be calculated on a consolidated basis for Holdings
and its Subsidiaries and shall mean, for each four-consecutive-quarter period,
without duplication, (a) Net Income for such four-consecutive-quarter period,
plus (b) interest expense deducted in determining such Net Income, plus (c)
depreciation expense deducted in determining such Net Income, plus (d)
amortization expense deducted in determining such Net Income, plus (e) other
non-cash items of expense deducted in determining such Net Income, plus (f)
provision for federal, state, local and foreign taxes to the extent deducted in
determining such Net Income, less (g) to the extent included in determining such
Net Income, income during such period attributable to non-operating gains
(including Asset Sales), including extraordinary or unusual gains, gains from
discontinuance of operations and other non-recurring gains, plus (h) to the
extent deducted in determining such Net Income, losses during such period
attributable to any similar non-operating losses, in each case computed in
accordance with GAAP.
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"Eligible Assignee" means (A) (i) a commercial bank or trust company
organized under the laws of the United States or any state thereof; (ii) a
saving and loan association or savings bank organized under the laws of the
United States or any state thereof; and (iii) a commercial bank or trust company
organized under the laws of any other country or a political subdivision
thereof, provided that such bank or trust company is acting through a trust
company that is organized under the laws of a country that is a member of the
Organization for Economic Cooperation and Development or a political subdivision
of such country and (B) any Bank and any Affiliate of any Bank; provided that no
Affiliate of the Borrower shall be an Eligible Assignee; and provided further
that such Eligible Assignee must have at the time of determination unimpaired
capital and surplus of not less than $100,000,000.
"Environmental Claim" means any liability, contingent or otherwise
(including any liability for damages, natural resource damage, costs of
environmental remediation, administrative oversight costs, fines, penalties or
indemnities), of Holdings, the Borrower or any Subsidiary directly or indirectly
resulting from or based upon (a) violation of any Environmental Law, (b) the
generation, use, handling, transportation, storage, treatment or disposal of any
Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or
threatened release of any Hazardous Materials into the environment or (e) any
contract, agreement or other consensual arrangement pursuant to which liability
is assumed or imposed with respect to any of the foregoing.
"Environmental Laws" means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices, common law or
binding agreements issued, promulgated or entered into by or with any
Governmental Authority, relating in any way to the environment, preservation or
reclamation of natural resources, handling, treatment, storage, disposal,
Release or threatened Release of any Hazardous Material or to health and safety
matters.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as such Act may from time to time be amended, and final regulations
promulgated thereunder.
"ERISA Affiliate" shall mean any Person (including each trade or
business (whether or not incorporated)) which together with Holdings or any of
its Subsidiaries would be deemed to be a member of the same "controlled group"
within the meaning of Section 414(b) of the Code, under "common control" within
the meaning of Section 414(c) of the Code or a member of the same "affiliated
service group" within the meaning of Section 414(m) of the Code and the
regulations, if any, promulgated under Section 414(o) of the Code.
"Eurodollar Loan" shall mean a Loan bearing interest at a rate based
on the LIBO Rate in accordance with the provisions of Article II.
"Eurodollar Margin" shall have the meaning given to such term in
Section 2.4(c).
"Event of Default" shall mean any of the events set forth in Article
VIII hereof.
"Excluded Subsidiary" shall have the meaning given such term in
clause (iv) of the proviso to Section 7.7 hereof.
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"Existing Facility" shall mean the credit facility provided pursuant
to an Amended and Restated Credit Agreement dated as of March 10, 1995, among
the Borrower, Holdings, Chase (as successor to Chemical Bank), Bank of America
National Trust & Savings Association (for itself and as successor to
NationsBank, N.A. (Carolinas)) and the other banks named therein.
"Expropriatory Action" shall mean any action or series of actions
that is taken, authorized, ratified or condoned by the United States of America
or any Governmental Authority or other Person in any country in which a
Subsidiary operates, owns or maintains a place of business, or any agency or
instrumentality thereof, for the appropriation, confiscation, expropriation or
nationalization (by intervention, condemnation or other form of taking), whether
with or without compensation and whether under color of law or otherwise, of any
ownership interest in the stock of any Subsidiary or ownership interest of any
Subsidiary in any asset or property or access thereto.
"Facility" shall have the meaning given to such term in the Preamble
to this Agreement.
"Fair Value" of an asset shall mean the consideration obtainable in
a sale of such asset in an arm's-length transaction with a Person who is not an
Affiliate of the seller.
"Federal Funds Effective Rate" shall mean, for any day, the weighted
average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or if such rate is not so published
for any day which is a Business Day, the average (rounded upwards, if necessary,
to the next 1/100 of 1%) of the quotations for the day of such transactions
received by the Administrative Agent from three Federal Funds brokers of
recognized standing selected by it.
"Fee Letter" shall mean the letter agreement dated as of January 15,
1999 among the Borrower, Holdings, Chase and Chase Securities Inc. with respect
to certain fees and other compensation payable by the Borrower and Holdings to
Chase, Chase Securities Inc. and the Banks.
"Fees" shall mean any and all fees and compensation payable to any
Lender Party hereunder or under any other Loan Document, including, without
limitation, any fees payable under the Fee Letter.
"Final Maturity Date" shall mean the fourth anniversary of the
Closing Date.
"Financial Officer" of any Person shall mean its chief financial
officer or principal accounting officer.
"Financing Documents" shall mean each of the documents identified on
Annex II and the documents and instruments entered into to perfect the security
interest in the capital stock or other ownership interests of a Foreign
Subsidiary granted to the Collateral Agent for the benefit of the Lender Parties
under the Subsidiary Pledge Agreement.
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"Fiscal Year" shall mean, with respect to Holdings and its
Subsidiaries, each period from January 1 to December 31 of each year.
"Foreign Subsidiaries" shall mean, collectively, those Subsidiaries
which are organized or existing under the laws of a jurisdiction located outside
of the United States and any branches of Domestic Subsidiaries which are
registered or operating in jurisdictions located outside of the United States.
"Fronting Fee" shall have the meaning given to such term in Section
3.5.
"GAAP" shall mean generally accepted accounting principles in the
United States in effect from time to time.
"Governmental Authority" shall mean the government of the United
States of America, any other nation or any political subdivision thereof,
whether state or local, and any agency, authority, instrumentality, regulatory
body, court, central bank or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.
"Guarantor Pledge Agreements" shall mean, collectively, the Holdings
Pledge Agreement and the Subsidiary Pledge Agreement.
"Guarantors" shall mean, collectively, Holdings and each of the
Subsidiary Guarantors.
"Guaranty" shall mean any obligation, contingent or otherwise, of
any Person guaranteeing or having the economic effect of guaranteeing any
Indebtedness or other obligation of any other Person in any manner, whether
directly or indirectly, including any obligation of such Person, direct or
indirect, (a) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or to purchase (or to advance or supply funds for
the purchase of) any security for the payment of such Indebtedness, (b) to
purchase property, securities or services for the purpose of assuring the owner
of such Indebtedness of the payment of such Indebtedness, (c) to purchase or
otherwise pay for merchandise, materials, supplies, services or other property
which provides that payment for such merchandise, materials, supplies, services
or other property shall be made regardless of whether delivery of such
merchandise, materials, supplies, services or other property is ever made or
tendered, (d) to maintain the working capital, equity capital or other financial
statement condition or results of the primary obligor so as to enable the
primary obligor to pay such indebtedness or other obligation or (e) as an
account party in respect of any letter of credit or letter of guaranty issued to
support such indebtedness or obligation, provided that the term "Guaranty" shall
not include endorsements for collection or deposit in the ordinary course of
business.
"Harborlite" shall mean Harborlite Corporation, a Delaware
corporation and wholly-owned subsidiary of the Borrower.
"Hazardous Materials" shall mean all explosive or radioactive
substances or wastes and all hazardous or toxic substances, wastes or other
pollutants, including petroleum or petroleum distillates, asbestos or asbestos
containing materials, polychlorinated biphenyls, radon
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<PAGE> 14
gas, infectious or medical wastes and all other substances or wastes of any
nature regulated pursuant to any Environmental Law, including any hazardous
substance under Section 101(14) of CERCLA.
"Holdings" shall have the meaning given to such term in the Preamble
to this Agreement.
"Holdings Guaranty" shall have the meaning given to such term in
Section 10.1.
"Holdings Pledge Agreement" shall mean the Pledge Agreement dated as
of the date hereof, and delivered by Holdings to the Collateral Agent for the
ratable benefit of the Lender Parties, in the form of Exhibit E.
"Indebtedness" of any Person shall mean, without duplication, (a)
all obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments (including any acknowledgments
evidencing payment-in-kind loan transactions), (c) all obligations of such
Person upon which interest charges are customarily paid (other than trade
payables in the ordinary course of business), (d) reimbursement obligations with
respect to letters of credit and similar instruments, (e) all obligations of
such Person under conditional sale or other title retention agreements relating
to property or assets purchased by such Person, (f) all obligations of such
Person issued or assumed as the deferred purchase price of property or services,
other than accounts payable incurred and paid on terms customary in the business
of such Person (it being understood that the "deferred purchase price" in
connection with any purchase of property or assets shall include only that
portion of the purchase price which shall be deferred beyond the date on which
the purchase is actually consummated), (g) all obligations of others secured by
(or for which the holder of such Indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien on property owned or acquired by such
Person, whether or not the obligations secured thereby have been assumed, (h)
obligations under forward sales, futures, options and other similar hedging
arrangements, (i) obligations to purchase or otherwise pay for merchandise,
materials, supplies, services or other property which provides that payment for
such merchandise, materials, supplies, services or other property shall be made
regardless of whether delivery of such merchandise, materials, supplies,
services or other property is ever made or tendered, (j) any Guaranty by such
Person of an obligation of others and (k) all Capital Lease Obligations of such
Person. The Indebtedness of any Person shall include, without duplication, the
Indebtedness of any other entity (including any partnership in which such Person
is a general partner) to the extent such Person is liable therefor as a result
of such Person's ownership interest in such entity, except to the extent the
terms of such Indebtedness provide that such Person is not liable therefor.
"Indemnified Person" shall have the meaning given to such term in
Section 11.5(a).
"Information" shall have the meaning given to such term in Section
11.14(a)(iv).
"Information Memorandum" means the Confidential Information
Memorandum dated January 22, 1999 relating to the Borrower.
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"Insolvency" shall mean, with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of such term as used in
Section 4245 of ERISA.
"Intellectual Property" shall have the meaning given to such term in
Section 4.10(b) hereof.
"Interest Expense" shall be calculated on a consolidated basis for
Holdings and its Subsidiaries and shall mean, for any period, all cash interest
expense of such Persons for all Indebtedness outstanding during such period
computed in accordance with GAAP.
"Interest Payment Date" shall mean (a) the last day of an Interest
Period, (b) in the case of any Eurodollar Loan having an Interest Period of six
months, (i) the day which is three months after the first day of such Interest
Period and (ii) the last day of such Interest Period and (c) the date of any
refinancing or conversion of such Loan with or into a Loan of a different type,
the date of prepayment of such Loan and the Final Maturity Date; provided,
however, that any Interest Payment Date which is not a Business Day shall be
extended to the immediately succeeding Business Day except with respect to a
Eurodollar Loan as provided in the definition of Interest Period.
"Interest Period" shall mean, (a) as to any Eurodollar Loan, the
period commencing on the date of such Loan and ending on the numerically
corresponding day in the calendar month one month, two months, three months or
six months thereafter, as the Borrower may elect and, thereafter, each period
commencing on the last day of the immediately preceding Interest Period for such
Eurodollar Loan and ending on the numerically corresponding day in the calendar
month one month, two months, three months or six months thereafter, as the
Borrower may elect and (b) as to any ABR Loan, the period commencing on the date
of such Loan and ending on the earliest of (i) the immediately succeeding March
31, June 30, September 30, or December 31 or (ii) the date of any conversion in
accordance with Section 2.9 hereof (if after the date of such Loan); provided,
however, that (A) if any Interest Period would end on a day which shall not be a
Business Day, such Interest Period shall be extended to the immediately
succeeding Business Day, unless, in the case such Interest Period is applicable
to a Eurodollar Loan, such next succeeding Business Day would fall in the
immediately succeeding calendar month, in which case such Interest Period shall
end on the immediately preceding Business Day and (B) any Interest Period with
respect to a Eurodollar Loan that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on the last
Business Day of a calendar month.
"Investments" shall have the meaning given such term in Section 7.4
hereof.
"Issuing Bank" shall mean Chase in its capacity as the issuer of a
Letter of Credit hereunder, and any other financial institution that may be
designated by the Administrative Agent with the consent of the Borrower, acting
in such capacity.
"LC Fee" shall have the meaning given to such term in Section
3.5(a).
"Lender Parties" shall mean the Banks, the Administrative Agent and
the Collateral Agent.
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"Lending Office" shall mean, with respect to any of the Banks, the
branch or branches (or Affiliate or Affiliates) from which any such Bank's
Eurodollar Loans or ABR Loans, as the case may be, are made or maintained and
for the account of which all payments of principal of, and interest on, such
Bank's Eurodollar Loans or ABR Loans are made, as provided to the Administrative
Agent from time to time in accordance with Section 11.1 hereof.
"Letter of Credit" shall have the meaning given to such term in
Section 3.1(a) hereof.
"Letter of Credit Exposure" shall mean, at any time, the sum of (a)
the aggregate undrawn principal amount of all Letters of Credit outstanding at
such time, (b) the aggregate principal amount of all Letters of Credit requested
by the Borrower prior to such time pursuant to Section 3.2 and not yet issued by
the Issuing Bank and (c) the aggregate amount of all Reimbursement Obligations
which have not at such time been converted to ABR Loans.
"Letter of Credit Facility" shall have the meaning given to such
term in the Preamble to this Agreement.
"LIBO Rate" shall mean, with respect to any Eurodollar Loan for any
Interest Period, the rate appearing on Page 3750 of the Telerate Service (or on
any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the "LIBO Rate" with respect to such
Eurodollar Loan for such Interest Period shall be the rate determined by the
Administrative Agent to be the arithmetic average of the rates at which dollar
deposits approximately equal in principal amount to such Eurodollar Loan made by
the Administrative Agent and for a maturity comparable to such Interest Period
are offered to the principal London office of the Administrative Agent in
immediately available funds in the London interbank market at approximately
11:00 a.m., London time, two Business Days prior to the commencement of such
Interest Period.
"Lien" shall mean, with respect to any asset, (a) any mortgage, deed
of trust, lien, pledge, hypothecation, encumbrance, charge or security interest
of any kind whatsoever in or on such asset (including the filing of or agreement
to give any financing statement under the Uniform Commercial Code of any
jurisdiction, other than in connection with an operating lease), (b) the
interest of a vendor or a lessor under any conditional sale agreement, capital
lease or title retention agreement (or any financing lease having substantially
the same economic effect as any of the foregoing) relating to such asset and (c)
in the case of securities, any purchase option, call, appreciation right or
similar right of a third party with respect to such securities.
"Loan" shall mean any loan made by a Bank to the Borrower in
accordance with Section 2.3.
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<PAGE> 17
"Loan Documents" shall mean this Agreement, the Financing Documents,
the Alleghany Subordination Agreement or any other agreement, instrument or
certificate delivered by a Loan Party in connection herewith.
"Loan Parties" shall mean the Borrower and the Guarantors.
"Majority Banks" shall mean, at any time, the Banks holding more
than fifty percent (50%) of the aggregate principal amount of the Loans then
outstanding, or if no Loans are then outstanding, Banks having Pro Rata Shares
representing more than fifty percent (50%) of the Commitment.
"Material Adverse Effect" shall mean (a) a material adverse effect
on the business, assets, operations or condition (financial or otherwise) of
Holdings and its Subsidiaries, taken as a whole, (b) a material impairment of
the ability of any Loan Party to perform any of its material obligations under
any Loan Document to which it is a party or (c) any material impairment of the
security interest of the Lender Parties in the Collateral.
"Material Subsidiary" shall mean the Borrower, Celite, Harborlite
and each other Subsidiary (whether existing as of the Closing Date or created in
the future) having total assets or net worth equal to at least five percent (5%)
of Holdings' total assets or net worth, as the case may be, on a consolidated
basis.
"Maximum Rate" shall have the meaning given such term in Section
11.15.
"Multiemployer Plan" shall mean a Plan which is a multiemployer plan
as defined in Section 4001(a)(3) of ERISA.
"Net Income" shall mean, for any Person for any period, the net
income of such Person computed in accordance with GAAP.
"Net Worth" shall be calculated on a consolidated basis for Holdings
and its Subsidiaries and shall mean, at any point in time, the net book value of
the assets of Holdings and its Subsidiaries, as shown on Holdings' consolidated
balance sheet, less the sum of (i) the amount of any write-up effective after
December 31, 1998 in the value of any asset above the cost or depreciated cost
thereof to Holdings and/or the Subsidiaries and (ii) total liabilities as shown
on such balance sheet, in each case computed in accordance with GAAP, provided,
however, that Net Worth shall not include any adjustment required by GAAP to
give effect to losses or gains arising solely as a result of currency
translations.
"Obligations" shall mean the due and punctual payment of principal
of and interest on the Loans, the Fees and any Reimbursement Obligations
hereunder and all other obligations of any Loan Party to any Lender Party under
this Agreement (including, without limitation, all obligations under Section
2.10 and 3.4), the Letters of Credit, any other Loan Document.
"Organizational Documents" shall mean, with respect to any Person,
each instrument or other document that (a) defines the existence of such Person,
as filed or recorded
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<PAGE> 18
with an applicable Governmental Authority or (b) governs the internal affairs of
such Person, in each case as amended, supplemented or restated.
"Other Taxes" shall have the meaning given to such term in Section
2.15(b).
"Parent Contributions" shall mean cash received by Holdings from its
stockholders as a contribution to capital and up to $15 million of any cash
received by Holdings from its stockholders as subordinated debt, provided that
any such subordinated debt is subject to the Alleghany Subordination Agreement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Permitted Acquisitions" shall have the meaning given such term in
Section 7.7 hereof.
"Permitted Indebtedness" shall mean Indebtedness permitted to be
incurred under Section 7.1 hereof.
"Permitted Investments" shall mean (i) direct obligations of the
United States or of any agency thereof, or obligations guaranteed as to
principal and interest by the United States government, (ii) bankers'
acceptances and certificates of deposit issued by the Administrative Agent, any
Bank or any other bank or trust company or, in the case of any subsidiary bank
of a bank holding company, a bank holding company, having capital, surplus and
undivided profits of at least $500,000,000, the short-term deposit rating of
which is given a A1 or P1 rating by Standard & Poor's Ratings Services or
Moody's Investors Service, Inc., as applicable, (iii) obligations of the
Administrative Agent, any Bank or any bank or trust company or bank holding
company described in clause (ii) above, in respect of the repurchase of
obligations of the type described in clause (i) hereof, provided that such
repurchase obligations shall be fully secured by obligations of the type
described in said clause (i) and the possession of such obligations shall be
transferred to, and segregated from other obligations owned by, the
Administrative Agent, any Bank or any such Bank's trust company or bank holding
company, (iv) commercial paper given a rating of A1 or P1 by Standard & Poor's
Ratings Services or Moody's Investors Service, Inc., as applicable, maturing not
more than 270 days from the date of acquisition and (v) shares of funds
registered under the Investment Company Act of 1940, as amended, that have
assets of at least $500,000,000 and invest substantially all their assets in
obligations described in clauses (i) through (iv) above to the extent that such
shares are rated by Moody's Investor Services, Inc. or Standard & Poor's rating
service in one of the two highest rating categories assigned by such agency for
shares of such nature.
"Permitted Liens" shall mean Liens permitted in accordance with
Section 7.2 hereof.
"Permitted Subsidiary Indebtedness" shall mean, at any time, an
aggregate of $15.0 million of Indebtedness incurred by the Foreign Subsidiaries
in the ordinary course of business, other than Indebtedness of a Foreign
Subsidiary to a Loan Party incurred in accordance with the provisions of this
Agreement.
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<PAGE> 19
"Person" shall mean and include any natural person, company,
partnership, limited liability company, joint venture, corporation, business
trust, unincorporated organization or Governmental Authority.
"Plan" shall mean any defined benefit pension plan which is subject
to the provisions of Title IV of ERISA (or similar legislation in the
jurisdiction in which a Subsidiary is organized) and which is maintained for or
contributed to on behalf of employees of the Parent or any Subsidiary, as the
case may be, or any ERISA Affiliate of Holdings or any Subsidiary.
"Pro Rata Share" shall mean, with respect to any Bank at any time,
the percentage set forth in Column B of Annex I attached hereto, as amended from
time to time.
"Rate Certificate" shall have the meaning given to such term in
Section 2.4(c).
"Register" shall have the meaning given such term in Section
11.3(d).
"Regulation D" shall mean Regulation D of the Board, as the same is
from time to time in effect, and all official rulings and interpretations
thereunder or thereof.
"Regulation T" shall mean Regulation T of the Board, as the same is
from time to time in effect, and all official rulings and interpretations
thereunder or thereof.
"Regulation U" shall mean Regulation U of the Board, as the same is
from time to time in effect, and all official rulings and interpretations
thereunder or thereof.
"Regulation X" shall mean Regulation X of the Board, as the same is
from time to time in effect, and all official rulings and interpretations
thereunder or thereof.
"Reimbursement Obligation" shall mean, as to any Letter of Credit
issued hereunder which has been the subject of a Drawing, the obligations of the
Borrower to reimburse the Issuing Bank or, if applicable, the Banks for the
principal amount of such Drawing, plus accrued interest thereon, as provided in
Section 3.3(a) hereof.
"Release" has the meaning set forth in Section 101(22) of CERCLA.
"Reorganization" shall mean, with respect to any Multiemployer Plan,
the condition that such Plan is in reorganization within the meaning of such
term as used in Section 4241 of ERISA.
"Reportable Event" shall mean any reportable event as defined in
Section 4043(c) of ERISA, other than a reportable event as to which provision
for 30-day notice to the PBGC has been waived under applicable regulations
(including subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg. ss. 2615).
"Responsible Officer" of any Person shall mean any executive officer
or the chief financial officer of such a Person.
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<PAGE> 20
"Restricted Payment" shall have the meaning given to such term in
Section 7.3 hereof.
"Sale and Leaseback Transaction" shall mean any arrangement whereby
a Person sells or transfers real or personal property, and thereafter rents or
leases such property to be used for substantially the same purpose or purposes
as the property was used prior to such sale or transfer.
"Single Employer Plan" shall mean a Plan described in Section
4001(a)(15) of ERISA.
"Statutory Reserves" shall mean a fraction (expressed as a decimal),
the numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves), expressed as a decimal,
established by the Board and any other banking authority to which the
Administrative Agent is subject (a) with respect to the Base CD Rate (as such
term is used in the definition of "Alternate Base Rate"), for new negotiable
nonpersonal time deposits in dollars of over $100,000 with maturities
approximately equal to three months and (b) with respect to the Adjusted LIBO
Rate, for Eurocurrency Liabilities (as defined in Regulation D of the Board).
Such reserve percentages shall include those imposed pursuant to such Regulation
D. Eurodollar Loans shall be deemed to constitute Eurocurrency Liabilities and
to be subject to such reserve requirements as Eurocurrency Liabilities are from
time to time subject without benefit of or credit for proration, exemptions or
offsets which may be available from time to time to any Bank under such
Regulation D or any comparable regulation. Statutory Reserves shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.
"Subsidiary" shall mean, at any time, any Person (other than an
Excluded Subsidiary) (a) of which more than 50% of the shares of stock or other
ownership interests entitled to vote in the election of directors (excluding
shares or other ownership interests entitled to vote only upon the failure to
pay dividends thereon or other contingencies) are at the time owned directly or
indirectly through one or more Subsidiaries, by Holdings (including, without
limitation, the Borrower, Celite and Harborlite) or (b) (i) of which at least
25% of the shares of stock or other ownership interests entitled to vote in the
election of directors (excluding shares or other ownership interests entitled to
vote only upon the failure to pay dividends thereon or other contingencies) are
at the time owned directly or indirectly through one or more Subsidiaries, by
Holdings (including, without limitation, the Borrower, Celite and Harborlite)
and (ii) who is under the Control of Holdings.
"Subsidiary Guarantors" shall mean all the Domestic Subsidiaries
other than the Borrower.
"Subsidiary Guaranty Agreement" shall mean the Guaranty Agreement
dated the date hereof and delivered by the Subsidiary Guarantors to the
Collateral Agent for the ratable benefit of the Lender Parties, in the form of
Exhibit E.
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<PAGE> 21
"Subsidiary Pledge Agreement" shall mean the Pledge Agreement dated
the date hereof and delivered by the Subsidiary Pledgors to the Collateral Agent
for the ratable benefit of the Lender Parties, in the form of Exhibit F.
"Subsidiary Pledgors" shall mean the Subsidiaries named as pledgors
in the Subsidiary Pledge Agreement.
"Taxes" shall have the meaning given to such term in Section
2.15(a).
"Third Party Financing" shall mean any funds which are (a) obtained
from sources other than (i) Parent Contributions or (ii) Loans made pursuant to
this Agreement and (b) used by Holdings or any of its Subsidiaries to effect a
Permitted Acquisition.
"Three-Month Secondary CD Rate" shall mean, for any day, the
secondary market rate for three-month certificates of deposit reported as being
in effect on such day (or, if such day shall not be a Business Day, the
immediately preceding Business Day) by the Board through the public information
telephone line of the Federal Reserve Bank of New York (which rate will, under
the current practices of the Board, be published in Federal Reserve Statistical
Release H.15(519) during the week following such day), or, if such rate shall
not be so reported on such day or such next preceding Business Day, the average
of the secondary market quotations for three-month certificates of deposit of
major money center banks in New York City received at approximately 10:00 a.m.,
New York City time, on such day (or, if such day shall not be a Business Day, on
the next preceding Business Day) by the Administrative Agent from three New York
City negotiable certificate of deposit dealers of recognized standing selected
by it.
"Total Capitalization" shall be calculated on a consolidated basis
for Holdings and its Subsidiaries and shall mean, at any time, (i) the sum of
(A) capital stock taken at par value, (B) capital surplus and (C) retained
earnings at such date less (ii) treasury stock plus (iii) Total Indebtedness, in
each case computed in accordance with GAAP.
"Total Indebtedness" shall mean, at any time, the aggregate amount
of Indebtedness of Holdings and its Subsidiaries on a consolidated basis,
computed in accordance with GAAP.
1.2 Terms Generally.
The definitions in Section 1.1 shall apply equally to the singular
and plural forms of the terms defined. Whenever the context may require, any
pronoun shall include the corresponding masculine, feminine and neuter forms.
The words "include", "includes" and "including" shall be deemed to be followed
by the phrase "without limitation." The word "to" shall mean "to and excluding"
and "from" shall mean "from and including." All references herein to Articles,
Sections, Exhibits and Schedules shall be deemed references to Articles and
Sections of, and Exhibits and Schedules to, this Agreement unless the context
shall otherwise require. Unless the context requires otherwise any definition of
or reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein).
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<PAGE> 22
1.3 Accounting Terms, GAAP.
Except as otherwise expressly provided herein, all terms of an
accounting or financial nature shall be construed in accordance with GAAP,
consistently applied, and all financial statements or accounting determinations
required herein to be prepared or made in accordance with GAAP shall be prepared
or made in accordance with GAAP applied on a consistent basis. In the event of
any change in GAAP or announcement by the Financial Accounting Standards Board
(the "FASB") of the effective date of any change in GAAP, which change could
reasonably be expected to materially affect the Borrower's compliance with
Sections 7.11 through 7.13 or any definition of a financial term used herein,
each of the Borrower and the Administrative Agent shall have the right by
written notice to the other to require such other party to negotiate in good
faith for a period of thirty (30) days with respect to amending such Sections or
definitions appropriately to take account of such change, without liability to
either party in the event an agreement is not reached with respect to any such
amendment; provided, however, that such 30-day period shall not extend beyond
the effective date of any change except to the extent that such effective date
was announced by the FASB less than thirty (30) days in advance of such
effective date. Notwithstanding the foregoing, all calculations required under
Sections 7.11 through 7.13 hereof shall be made in accordance with GAAP in
effect as of the Closing Date, unless and until such Sections shall have been
modified in accordance with the preceding sentence.
ARTICLE II
THE LOANS
2.1 Making of Loans.
(a) Subject to the terms and conditions contained herein, each Bank
severally agrees to make Loans to the Borrower from time to time during the
period from the date hereof to the Final Maturity Date (or upon the earlier
termination of the Commitment in accordance with the provisions hereof) in an
amount not to exceed, in the aggregate at any one time outstanding, such Bank's
Pro Rata Share of (i) the Commitment on such date less (ii) the Letter of Credit
Exposure. Each Loan shall be made to the Borrower by each Bank in accordance
with its Pro Rata Share of the then applicable Commitment as provided in clause
(c) below. Except as expressly provided in Section 3.3, Loans requested
hereunder by the Borrower on any date shall be in a minimum principal amount of
$1,000,000 and in integral multiples of $500,000.
(b) Each Loan shall be either an ABR Loan or a Eurodollar Loan as
the Borrower may request in accordance with Section 2.3 hereof. Loans of more
than one type may be outstanding at the same time; provided, that there shall
not at any time be more than a total of six Eurodollar Loans outstanding. Each
Bank may, at its option, fulfill its Pro Rata Share with respect to any
Eurodollar Loan by causing a Lending Office of such Bank to make such Loan;
provided, however, that any exercise of such option shall not affect the
obligation of the Borrower to repay such Loan in accordance with the terms of
this Agreement.
(c) Each Bank shall advance its portion of each Loan hereunder on
the proposed date thereof by paying the required amount to the Administrative
Agent in New York, New
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<PAGE> 23
York, in immediately available funds not later than 12:00 noon, New York City
time on the date of such Loan. The Administrative Agent shall, by 3:00 p.m., New
York City time on such date, credit the amount so received to the general
deposit account maintained by the Borrower with the Administrative Agent. If a
Loan is not made on any date requested by the Borrower because any condition
precedent to such Loan hereunder shall not have been met or for any other
reason, the Administrative Agent shall promptly return to each Bank which has
advanced funds to the Administrative Agent any amounts so transferred.
(d) Unless the Administrative Agent shall have received notice from
a Bank prior to the proposed date of any Loan that such Bank will not make
available to the Administrative Agent such Bank's share of such Loan, the
Administrative Agent may assume that such Bank has made such share available on
such date in accordance with paragraph (c) of this Section and may, in reliance
upon such assumption, make available to the Borrower a corresponding amount. In
such event, if a Bank has not in fact made its share of the applicable Loan
available to the Administrative Agent, then the applicable Bank and the Borrower
severally agree to pay to the Administrative Agent forthwith on demand such
corresponding amount with interest thereon, for each day from and including the
date such amount is made available to the Borrower to but excluding the date of
payment to the Administrative Agent, at (i) in the case of such Bank, the
greater of the Federal Funds Effective Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on interbank
compensation or (ii) in the case of the Borrower, the interest rate applicable
to ABR Loans. If such Bank pays such amount to the Administrative Agent, then
such amount shall constitute such Bank's Loan.
2.2 Repayment of Loans, Evidence of Debt.
(a) The Borrower hereby unconditionally promises to pay to the
Administrative Agent for the account of each Bank the then unpaid principal
amount of each Loan of such Bank on the Final Maturity Date.
(b) Each Bank shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness of the Borrower to such Bank
resulting from each Loan made by such Bank, including the amounts of principal
and interest payable and paid to such Bank from time to time hereunder.
(c) The Administrative Agent shall maintain accounts in which it
shall record (i) the amount of each Loan made hereunder and the Interest Period
applicable thereto, (ii) the amount of any principal or interest due and payable
or to become due and payable from the Borrower to each Bank hereunder and (iii)
the amount of any sum received by the Administrative Agent hereunder for the
account of the Banks and each Bank's share thereof.
(d) The entries made in the accounts maintained pursuant to
paragraph (b) or (c) of this Section shall be conclusive evidence, absent
manifest error, of the existence and amounts of the obligations recorded
therein, provided that the failure of any Bank or the Administrative Agent to
maintain such accounts or any error therein shall not in any manner affect the
obligation of the Borrower to repay the Loans in accordance with the terms of
this Agreement.
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<PAGE> 24
(e) Any Bank may request that Loans made by it be evidenced by a
promissory note. In such event, the Borrower shall prepare, execute and deliver
to such Bank a promissory note payable to the order of such Bank (or, if
requested by such Bank, to such Bank and its registered assigns) and in a
customary form reasonably satisfactory to the Administrative Agent. Thereafter,
the Loans evidenced by such promissory note and interest thereon shall at all
times (including after assignment pursuant to Section 11.3) be represented by
one or more promissory notes in such form payable to the order of the payee
named therein (or, if such promissory note is a registered note, to such payee
and its registered assigns).
(f) During the period from the date hereof to the Final Maturity
Date, the Borrower may borrow, pay, prepay and reborrow Loans hereunder subject
to the terms and conditions of this Agreement (including the provisions
regarding prepayment set forth in Sections 2.7 and 2.8 hereof).
2.3 Notice of Loans.
(a) In order to request a Loan hereunder, the Borrower shall, except
as otherwise expressly provided in Section 3.3, give the Administrative Agent
irrevocable notice, substantially in the form of Exhibit G, (i) not later than
12:00 noon, New York City time, one Business Day before such Loan is to be made
if such Loan is to be an ABR Loan and (ii) not later than 10:00 a.m., New York
City time, three Business Days before such Loan is to be made if such Loan is to
be a Eurodollar Loan. Such notice shall specify (A) whether the Loan then being
requested is to be an ABR Loan or a Eurodollar Loan, (B) the date of the
proposed borrowing and amount thereof and (C) if such Loan is to be a Eurodollar
Loan, the Interest Period with respect thereto. If no election as to the type of
Loan is specified in such notice, the Loan shall be an ABR Loan. If no Interest
Period with respect to any Eurodollar Loan is specified in any such notice, then
the Borrower shall be deemed to have selected an Interest Period of one month's
duration. Promptly following the receipt of a notice of borrowing request, the
Administrative Agent shall advise each Bank of the details thereof and of the
amount of such Bank's Loan to be made as part of the requested borrowing.
(b) The Borrower may continue any Eurodollar Loan or convert all or
any part of any ABR Loan or Eurodollar Loan into a Loan of a different type, in
each case in accordance with Section 2.9 hereof and subject to the limitations
set forth therein.
2.4 Interest.
(a) Subject to Section 2.4(c) below, in the case of an ABR Loan,
interest shall be payable at a variable rate per annum (calculated on the basis
of the actual number of days elapsed over a year of 360 days during any period
that the Alternative Base Rate is determined based upon the Base CD Rate or the
Federal Funds Effective Rate and, at all other times, 365 or 366 days, as the
case may be) equal to the Alternate Base Rate plus the ABR Margin determined in
accordance with Section 2.4(c). Interest will be payable on each ABR Loan on
each applicable Interest Payment Date.
(b) Subject to Section 2.4(c) below, in the case of a Eurodollar
Loan, interest shall be payable at a variable rate per annum (calculated on the
basis of the actual number of days
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<PAGE> 25
elapsed over a year of 360 days) equal to the Adjusted LIBO Rate plus the
Eurodollar Margin determined in accordance with Section 2.4(c). Interest will be
payable on each Eurodollar Loan on each applicable Interest Payment Date. The
Administrative Agent shall determine the applicable Adjusted LIBO Rate for each
Interest Period as soon as practicable after 10:00 a.m., New York City time, two
Business Days prior to the commencement of such Interest Period and shall notify
the Borrower of the Adjusted LIBO Rate so determined. Such determination shall
be conclusive absent manifest error.
(c) Within 60 days (75 days in the case of the fourth fiscal quarter
of each Fiscal Year) after the end of each fiscal quarter of each Fiscal Year
prior to the Final Maturity Date commencing on the fiscal quarter ending
December 31, 1998, the Borrower shall deliver to the Administrative Agent a
certificate (a "Rate Certificate") setting forth the Borrower's calculation,
certified as to accuracy by a Financial Officer of the Borrower, of the ratio of
Total Indebtedness as of the last day of such fiscal quarter to EBITDA for the
four-fiscal-quarter period ending on such last day (the "Cash Flow Ratio"). If
the Administrative Agent determines that the Rate Certificate is accurate, then
the ABR Margin or the Eurodollar Margin, as the case may be, shall be the rate
(the "ABR Margin" or the "Eurodollar Margin", as the case may be) set forth in
the applicable column of the table below opposite the applicable range for such
Cash Flow Ratio:
<TABLE>
<CAPTION>
Cash Flow Ratio ABR Margin Eurodollar Margin
--------------- ---------- -----------------
<S> <C> <C>
Greater than 2.25x 0.250% 1.250%
1.5x to 2.25x 0.125% 1.125%
Less than 1.5x 0% 1.000%
</TABLE>
Notwithstanding the foregoing, for the period commencing on the
Closing Date and ending on March 31, 2000, the ABR Margin and the Eurodollar
Margin shall not be less than 0.125% and 1.125%, respectively. Following the
delivery of a Rate Certificate in accordance with this Section 2.4(c), any
change in the ABR Margin or the Eurodollar Margin, as the case may be, shall
become effective with respect to all ABR Loans or Eurodollar Loans, as the case
may be, and Letters of Credit outstanding hereunder on the first day of the
fiscal quarter immediately following the fiscal quarter in which the Rate
Certificate is delivered.
2.5 Alternative Rate of Interest.
In the event, and on each occasion, that on the date two Business Days
prior to the commencement of any Interest Period for any Eurodollar Loan, the
Administrative Agent shall have determined (which determination shall be
conclusive and binding upon the Borrower) that adequate and reasonable means do
not exist for ascertaining the Adjusted LIBO Rate for such Interest Period, or
the Administrative Agent is advised by the Majority Banks that the rate at which
such dollar deposits are being offered will not adequately and fairly reflect
the cost to such Banks of making or maintaining the principal amount of such
Eurodollar Loan (or Loans) during such Interest Period, then the Administrative
Agent shall promptly give notice of such determination to the Borrower and the
Banks. For one Business Day after receipt of such notice, the Borrower shall
have the right to withdraw its request pursuant to Section 2.1 for a Eurodollar
Loan by notice to the Administrative Agent. After such notice shall have been
given and until the Administrative Agent notifies the Borrower and the Banks
that the circumstances giving rise
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<PAGE> 26
to such notice no longer exist, each request for a Eurodollar Loan shall be
deemed to be a request for an ABR Loan.
2.6 Interest on Overdue Amounts.
If the Borrower defaults in the payment of the principal of or interest on
any Loan or any other amount due hereunder, the Borrower shall, on demand from
time to time, pay interest to the extent permitted by law on such defaulted
amount up to (but not including) the date of actual payment (after as well as
before judgment) at a rate per annum (calculated on the basis of the actual
number of days elapsed over a year of 365 or 366 days, as the case may be) equal
to (i) in the case of overdue principal of any Loan, two percent (2%) plus the
rate otherwise applicable to such Loan or (ii) in the case of any other amount,
two percent (2%) plus the rate applicable to ABR Loans.
2.7 Reduction of Commitment.
(a) Upon at least two Business Days prior notice to the
Administrative Agent and subject to the limitations set forth in paragraph (d)
below, the Borrower may at any time permanently terminate, or from time to time
permanently reduce, the Commitment in effect at such time. Each such reduction
of the Commitment shall be in a minimum principal amount of $1,000,000 or an
integral multiple thereof and shall reduce, on a dollar for dollar basis, the
aggregate Commitment of the Banks in effect on such date. Each notice delivered
by the Borrower pursuant to this Section shall be irrevocable.
(b) If on any date that the Commitment is reduced (including in
connection with a termination of the Commitment)in accordance with paragraph (a)
above the sum of (i) the aggregate amount of Loans outstanding under the
Facility plus (ii) the aggregate amount of the Letter of Credit Exposure at such
time exceeds the Commitment as so reduced, then simultaneously with, and as a
condition to such reduction, the Borrower shall prepay Loans by making a payment
to the Administrative Agent, on behalf of the Banks, in an amount equal to such
excess so that, after giving effect to such payment, the aggregate outstanding
principal amount of all Loans plus the aggregate amount of the Letter of Credit
Exposure at such time does not exceed the Commitment as so reduced. To the
extent the aggregate Letter of Credit Exposure exceeds the Commitment as so
reduced, then on such date the Borrower shall make a deposit in the Cash
Collateral Account in accordance with Section 3.3(d).
(c) Any reduction of the Commitment in accordance with clause (a)
above shall be accompanied (i) by payment of the accrued Commitment Fee on the
amount of the reduction, (ii) in the event that the Commitment is being
terminated, by payment to the Administrative Agent in accordance with Section
3.3(c) hereof and for the benefit of the Banks, of an amount equal to the
aggregate Letter of Credit Exposure and (iii) include any other required charges
on the amount prepaid (including any payments required by Section 2.8 hereof).
(d) All amounts paid by the Borrower under this Section 2.7 shall be
made ratably to each Bank in accordance with its respective Pro Rata Share.
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<PAGE> 27
2.8 Redeployment Cost.
The Borrower shall reimburse each Bank for any loss incurred or to be
incurred by it in the redeployment of the funds released as a result of (A) any
prepayment or payment of any Eurodollar Loan other than on the last day of an
Interest Period applicable thereto (including as a result of an Event of
Default), (B) any failure or refusal of the Borrower to accept (or to meet the
conditions precedent for) any Eurodollar Loan as to which notice was given by
the Borrower hereunder, (C) repayment of any Loans which are Eurodollar Loans in
connection with a reduction of the Commitment in accordance with Section 2.7 or
(D) automatic conversions pursuant to Section 2.11. In the case of a Eurodollar
Loan, such loss, cost or expense to any Bank shall be deemed to include an
amount determined by such Bank to be the excess, if any, of (i) the amount of
interest that would have accrued on the principal amount of such Loan had such
event not occurred, at the Adjusted LIBO Rate that would have been applicable to
such Loan, for the period from the date of such event to the last day of the
then current Interest Period therefor (or, in the case of a failure to borrow,
convert or continue, for the period that would have been the Interest Period for
such Loan), over (ii) the amount of interest that would accrue on such principal
amount for such period at the interest rate that prime banks in the Eurodollar
market would bid were they to bid, at the commencement of such period, for
dollar deposits of a comparable amount and period from other banks in the
Eurodollar market; provided, however, that such loss shall not include any loss,
damage, or exposure resulting from the failure of any Person to whom any such
funds are loaned to timely and duly repay the same, or from any other default or
non performance of such Person's obligations. Upon the occurrence of any event
set forth in clauses (A) through (D) above, the Administrative Agent shall
deliver to the Borrower a certificate setting forth any amount or amounts which
each Bank is entitled to receive pursuant to this Section 2.8 and reasonable
supporting calculations therefor. Such certificate shall be conclusive absent
manifest error. Within 20 days after receipt, the Borrower shall pay the
Administrative Agent, on behalf of the Banks, all amounts set forth therein.
Without prejudice to the survival of any other agreement contained herein, the
agreements and obligations contained in this Section 2.8 shall survive the
payment in full of principal and interest hereunder.
2.9 Conversion and Continuation of Borrowings.
The Borrower shall have the right, at any time, with at least three
Business Days' prior irrevocable notice to the Administrative Agent, (a) to
continue any Loan or portion thereof into a subsequent Interest Period, or (b)
to convert any type of Loan or portion thereof into a Loan of a different type,
in each case subject to the following:
(i) with respect to Eurodollar Loans, no Event of Default
shall have occurred and be continuing at the time of such continuation or
conversion and, no notice described in Section 2.5 or 2.11 (which shall
not have been rescinded) shall have been given by the Bank from which the
Eurodollar Loan is requested;
(ii) each conversion shall be effected by the Banks applying
the proceeds of the new Loan to the Loan (or portion thereof) being
converted;
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<PAGE> 28
(iii) if the new Loan made in respect of the conversion shall
be a Eurodollar Loan, the first Interest Period with respect thereto shall
commence on the date of conversion;
(iv) each request for a Eurodollar Loan, conversion or for a
continuation thereof which shall fail to state the applicable Interest
Period shall be for one month's duration;
(v) no more than a total of six Eurodollar Loans may be
outstanding at any one time; and
(vi) each request for conversion of an ABR Loan to a
Eurodollar Loan hereunder shall be in the principal amount of at least
$500,000.
In the event that the Borrower shall not give notice to continue any
Eurodollar Loan, such Loan (unless repaid) shall automatically become an ABR
Loan at the expiration of the then current Interest Period.
2.10 Increased Costs.
(a) Subject to compliance with subsections (d) and (e) below, if
after the date of this Agreement any change in Applicable Law or in the
interpretation or administration thereof by any Governmental Authority charged
with the interpretation or administration thereof (whether or not having the
force of law) shall change the basis of taxation of payments to any Bank of the
principal of or interest on any Eurodollar Loan or any other fees or amounts
payable hereunder (other than Taxes), or shall impose, modify or deem applicable
any reserve, special deposit or similar requirement against assets of, deposits
with or for the account of, or credit extended by, such Bank or shall impose on
such Bank or the London interbank market any other condition affecting this
Agreement or the Eurodollar Loans, and the result of any of the foregoing shall
be to increase the cost to such Bank of making or maintaining any Eurodollar
Loan or to reduce the amount of any sum received or receivable by such Bank
hereunder (whether of principal, interest or otherwise) in respect thereof, by
an amount deemed by such Bank to be material, then (to the extent the amount is
not included in the computation of the Adjusted LIBO Rate) the Borrower shall
pay to such Bank, upon such Bank's demand, such additional amount or amounts as
will compensate such Bank for such additional costs or reduction.
(b) Subject to compliance with subsections (d) and (e) below, if any
Bank shall have determined that the adoption after the date hereof of any law,
rule, regulation, agreement or guideline regarding capital adequacy, or any
change in any of the foregoing or in the interpretation or administration of any
of the foregoing by any Governmental Authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Bank (or any Lending Office of such Bank) or any Bank's holding company
with any request or directive regarding capital adequacy (whether or not having
the force of law) of any such Governmental Authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on such
Bank's capital or on the capital of such Bank's holding company, if any, as a
consequence of this Agreement or the Loans made by such Bank
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<PAGE> 29
pursuant hereto to a level below that which such Bank or such Bank's holding
company could have achieved but for such adoption, change or compliance (taking
into consideration such Bank's policies and the policies of such Bank's holding
company with respect to capital adequacy) by an amount deemed by such Bank to be
material, then from time to time, after submission by such Bank to the Borrower
of a written request therefor, the Borrower shall pay to such Bank such
additional amount or amounts as will compensate such Bank or such Bank's holding
company for any such reduction suffered.
(c) A certificate of each Bank setting forth such amount or amounts
and the basis for determination from time to time of such amount or amounts as
shall be necessary to compensate such Bank or its holding company as specified
in paragraph (a) or (b) above, as the case may be, shall be delivered to the
Borrower and shall be conclusive absent manifest error. The Borrower shall pay
each Bank the amount shown as due on any such certificate delivered by it within
10 days after their receipt of the same.
(d) Failure on the part of any Bank to demand compensation for any
increased costs or reduction in amounts received or receivable or reduction in
return on capital with respect to any period shall not constitute a waiver of
such Bank's right to demand compensation with respect to such period, except
that no Bank shall be entitled to compensation under this Section 2.10 for any
costs incurred or reduction suffered with respect to any date unless such Bank
shall have notified the Borrower that it will demand compensation for such costs
or reductions not more than nine months after the later of (i) such date and
(ii) the date on which such Bank shall have become aware of such costs or
reductions. The protection of this Section 2.10 shall be available to each Bank
regardless of any possible contention of the invalidity or inapplicability of
the law, rule, regulation, guideline or other change or condition which shall
have occurred or been imposed.
(e) Any Bank claiming any additional amounts payable pursuant to
this Section 2.10 shall use reasonable efforts (consistent with legal and
regulatory restrictions and such Bank's or such Bank's holding company's
internal policies) to file any certificate or document requested by the Borrower
or change its applicable Lending Office to another of its offices, branches or
Affiliates, if the making of such filing or change of Lending Office would avoid
the need for or reduce the amount of any such additional amount attributable to
the Loans and would not, in the sole determination of such Bank, result in any
unreimbursed loss, cost or expense or otherwise be disadvantageous to such Bank.
(f) Without prejudice to the survival of any other agreement
contained herein, the agreements and obligations contained in this Section 2.10
shall survive the payment in full of principal and interest hereunder.
2.11 Change in Legality.
(a) Notwithstanding any other provision herein, if any change in any
law or regulation or in the interpretation thereof by any Governmental Authority
charged with the administration or interpretation thereof shall make it unlawful
for any Bank to make or maintain any Eurodollar Loan or to give effect to its
obligations as contemplated hereby then, by notice to the Borrower and to the
other Banks, (i) all such Eurodollar Loans then outstanding due to such
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<PAGE> 30
Bank shall be automatically converted to an ABR Loan, subject to Sections 2.8
and 2.9, as of the effective date of such notice as provided in paragraph (b)
below, (ii) the obligation of such Bank to continue or convert to Eurodollar
Loans shall terminate immediately and (iii) each subsequent request to such Bank
for a Eurodollar Loan shall be deemed to be a request for an ABR Loan. Any Bank
giving such notice shall (A) use reasonable efforts (consistent with legal and
regulatory restrictions and such Bank's internal policies) to change its
applicable Lending Office to another of its offices, branches or Affiliates, if
such change of Lending Office would permit such Bank to make Eurodollar Loans
and would not, in the sole determination of such Bank, result in any
unreimbursed loss, cost or expense or otherwise be disadvantageous to such Bank
and (B) notify the Administrative Agent and the Borrower at such time as the
circumstances giving rise to its notice shall cease to exist. If the Borrower
shall be prohibited from incurring, continuing or converting to a Eurodollar
Loan from any Bank, Eurodollar Loans shall be made, continued or converted by
the other Banks pro rata in accordance with their respective Pro Rata Share of
the Commitment.
(b) For purposes of Section 2.11(a)(i), a notice to the Borrower by
any Bank shall be effective, if lawful, and if any Eurodollar Loans shall then
be outstanding, on the last day of the then current Interest Period or, if there
is more than one current Interest Period, on the last day of each such Interest
Period, respectively; otherwise, such notice shall be effective on the date of
receipt by the Borrower.
2.12 Pro Rata Treatment.
Except as required under Section 2.11 or 2.15, each Loan, each payment or
prepayment of principal of any Loan, each payment of interest on any Loan and
each conversion of any Loan or continuation of any Loan as a Loan of any type
shall be allocated pro rata among the Banks in accordance with their respective
Pro Rata Shares. Each Bank agrees that in computing such Bank's portion of any
Loan or any payment, prepayment, interest payment, conversion or continuation
with respect thereto, the Administrative Agent may, in its sole discretion,
round the dollar amount of such Bank's pro rata portion to the next higher or
lower whole dollar amount.
2.13 Sharing of Setoffs.
(a) Each Bank agrees that if, through the exercise of a right of
banker's lien, set-off or counterclaim against the Borrower or any other Loan
Party, the unpaid portion of the Loans made by it is proportionately less than
the unpaid portion of the Loans made by any other Bank (i) it shall
simultaneously purchase from such other Bank a participation in the Loans made
by such other Bank, so that the aggregate unpaid principal amount of all Loans
and participations in Loans made by each Bank shall be in the same proportion to
the aggregate unpaid principal amounts of all Loans then outstanding as the
principal amount of such Loans made by it prior to such exercise of banker's
lien, set-off or counterclaim and (ii) such other adjustments shall be made from
time to time as shall be equitable to ensure that all the Banks share such
payment pro rata; provided, however, that if any such purchase or purchases
shall be made pursuant to clause (i) above and the payment giving rise thereto
shall be recovered, such purchase or purchases shall be rescinded to the extent
of such recovery and the purchase price or prices restored without interest.
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<PAGE> 31
(b) If an Event of Default shall have occurred and be continuing,
each Bank is hereby authorized at any time and from time to time to the fullest
extent permitted by law, to set-off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by such Bank to or for the credit or the account
of the Borrower or Holdings against any of and all the obligations of the
Borrower now or hereafter existing under this Agreement and other Loan Documents
held by such Bank, irrespective of whether or not such Bank shall have made any
demand under this Agreement or such other Loan Document and although such
obligations may be unmatured. The rights of each Bank under this Section 2.13(b)
are in addition to other rights and remedies (including other rights of set-off)
which such Bank may have.
2.14 Payments.
(a) The Borrower shall make each payment in respect of the principal
of or accrued interest on any Loan, Fee, Reimbursement Obligation or other
amount due to the Administrative Agent or any Bank under this Agreement or any
other Loan Document, not later than 1:00 p.m., New York City time, on the day
when due, to the Administrative Agent at its offices at 270 Park Avenue, New
York, New York 10017, for the account of such Bank. All payments hereunder shall
be made in United States Dollars in federal or other immediately available funds
and shall be made without set-off or counterclaim.
(b) This transaction is an international loan transaction in which
the specification of Dollars is of the essence, and Dollars shall be the
currency of account and of payment in all events. The payment obligations of the
Borrower shall not be discharged by an amount paid in another currency, whether
pursuant to a judgment or otherwise, to the extent that the amount so paid on
prompt conversion to Dollars under normal banking procedures shall not yield the
amount of Dollars due hereunder. In the event that any payment made in a
currency other than Dollars, whether pursuant to a judgment or otherwise, upon
conversion shall not yield such amount of Dollars, each Bank shall be entitled
to demand immediate payment of, and shall have a separate cause of action for,
such Dollar deficiency.
(c) Whenever any payment (including principal of or interest on any
Loan or any Fee or other amount) hereunder or under any other Loan Document
shall become due, or otherwise would occur, on a day that is not a Business Day,
such payment may be made on the next succeeding Business Day, and such extension
of time shall in such case be included in the computation of such interest, Fee
or other amount, if applicable; provided, however, that, in the case of any
Eurodollar Loan, if such next succeeding Business Day would fall in the next
calendar month, such payment shall be made on the first preceding Business Day.
2.15 Taxes.
(a) Except as otherwise expressly provided in this Section 2.15, any
and all payments by the Borrower in respect of principal or accrued interest on
any Loan, Fee, Reimbursement Obligation or other amount due to any Lender Party
under this Agreement or by a Guarantor pursuant to the Holdings Guaranty or the
Subsidiary Guaranty Agreement shall be made, in accordance with Section 2.14,
free and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities
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<PAGE> 32
with respect thereto, including withholding taxes relating to United States
income taxes or income taxes imposed by any jurisdiction under the laws of which
the Borrower is organized or any political subdivision thereof but excluding
taxes imposed on such Lender Party's overall net income and franchise taxes
imposed on such Lender Party by the jurisdiction of such Bank's Lending Office
or any political subdivision thereof (all such nonexcluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities being referred to
herein as "Taxes"). If the Borrower shall be required by law to deduct any Taxes
from or in respect of any sum payable hereunder to any Lender Party, then (i)
subject to the last sentence of Section 2.15(f), the sum payable shall be
increased by the amount necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
2.15) such Lender Party shall receive an amount equal to the sum it would have
received had no such deductions been made, (ii) the Borrower shall make all
required deductions and (iii) the Borrower shall pay the full amount deducted to
the relevant taxing authority or other Governmental Authority in accordance with
Applicable Law.
(b) In addition, the Borrower agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies that arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement or any
other Loan Document (hereinafter referred to as "Other Taxes").
(c) Subject to the last sentence of Section 2.15(f), the Borrower
will indemnify each Lender Party for the full amount of Taxes (including any
Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this
Section 2.15) paid by such Lender Party, and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto, whether or not
such Taxes or Other Taxes were correctly or legally asserted. Such
indemnification shall be made within 30 days following the date such Lender
Party makes written demand therefor. If any Lender Party receives a refund (or a
credit against its taxes due) directly attributable to any Taxes or Other Taxes
for which such Lender Party has received payment hereunder (or which were paid
directly by the Borrower), it shall repay such refund to the Borrower without
interest promptly after the responsible account officer of such Lender Party has
notice that such refund was so received.
(d) Within 30 days after the date of any payment of Taxes or Other
Taxes withheld by the Borrower in respect of any payment to any Lender Party,
the Borrower will furnish to the Administrative Agent, at its address set forth
in Section 11.1, the original or a certified copy of a receipt evidencing
payment thereof.
(e) Without prejudice to the survival of any other agreement
contained herein, the agreements and obligations contained in this Section 2.15
shall survive the payment in full of principal and interest hereunder.
(f) Each Bank that is organized under the laws of a jurisdiction
outside the United States agrees that if and to the extent it is legally able to
do so, it shall deliver to the Borrower and the Administrative Agent, on or
before the first date of any payment by the Borrower hereunder, such
certificates, documents or other evidence, as required by the Code or Treasury
Regulations issued pursuant thereto, including Internal Revenue Service Form
4224 and any
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<PAGE> 33
other certificate or statement or exemption required by Treasury Regulation
Section 1.1441-1(a) or Section 1.1441-6(c) or any subsequent version thereof,
properly completed and duly executed by such Bank establishing that such payment
is (i) not subject to withholding under the Code because such payment is
effectively connected with the conduct by such Bank of a trade or business in
the United States or (ii) totally exempt from United States withholding tax or,
subject to a reduced rate of such tax under a provision of an applicable tax
treaty. Each Bank that has delivered such certificate or form shall, upon such
certificate or form's obsolescence, expiration or invalidity or upon the
Borrower's reasonable request, replace or update such certificate or form as
necessary. Unless the Borrower and the Administrative Agent have received forms
or other documents satisfactory to them indicating that payments hereunder are
not subject to United States withholding tax or are subject to such tax at a
rate reduced by an applicable tax treaty, the Administrative Agent shall
withhold taxes from such payments at the applicable statutory rate in the case
of payments to or from any Bank or assignee organized under the laws of a
jurisdiction outside the United States. A Bank shall not be entitled to any
additional amounts under Section 2.15(a) or to any indemnification under Section
2.15(c) with respect to any withholding tax (x) that is in effect and would
apply to amounts payable to such Bank at the time such Bank becomes a party to
this Agreement (or designates a new lending office), except to the extent that
such Bank (or its assignor, if any) would have been entitled, at the time of
designation of a new lending office (or assignment), to receive additional
amounts or indemnity from the Borrower with respect to any withholding tax
pursuant to Section 2.15(a) or 2.15(c) or (y) that is attributable to such
Bank's failure to comply with this Section 2.15(f).
(g) Any Lender Party claiming any additional amounts in respect of
Taxes payable pursuant to this Section 2.15 shall use reasonable efforts
(consistent with legal and regulatory restrictions and such Lender Party's
internal policies) to file any certificate or document requested by the Borrower
or to change its applicable Lending Office to another of its offices, branches
or Affiliates, if the making of such a filing or change of Lending Office would
avoid the need for or reduce the amount of any such Taxes attributable to the
Loans and would not, in the sole determination of such Lender Party, result in
any unreimbursed loss, cost or expense or otherwise be disadvantageous to such
Lender Party.
2.16 Fees.
(a) The Borrower agrees to pay to each Bank a commitment fee (the
"Commitment Fee") from the Closing Date to the Final Maturity Date, on the
average daily unused amount of such Bank's Pro Rata Share of the Commitment
(less the Letter of Credit Exposure, if any) during the period for which payment
is made at the rate per annum set forth in the table below opposite the
applicable range for the Cash Flow Ratio, as set forth in the Rate Certificate.
<TABLE>
<CAPTION>
Cash Flow Ratio Commitment Fee
--------------- --------------
<S> <C>
Greater than 2.25 x 0.500%
Less than or equal to 2.25x 0.375%
</TABLE>
Any change in the Commitment Fee following the delivery of a Rate
Certificate in accordance with Section 2.4 shall become effective on the first
day of the fiscal quarter
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<PAGE> 34
immediately following the fiscal quarter in which the Rate Certificate is
delivered. The Commitment Fee shall be payable (i) quarterly on the last
Business Day of each March, June, September and December of each Fiscal Year and
(ii) on any date that the Commitment is terminated or reduced as provided
herein.
(b) The Borrower shall pay to the Administrative Agent an annual
administration fee (the "Administration Fee") as specified in the Fee Letter.
(c) All Fees shall be paid on the date due, in immediately available
funds, to the Administrative Agent for the account of the applicable Bank. Once
paid no Fee shall be refundable under any circumstances; provided, however, that
if any Person acting as Administrative Agent ceases to be the Administrative
Agent, such retiring Administrative Agent shall only be entitled to a pro rata
portion of the annual Administration Fee and shall refund to the Borrower the
remainder of such Administration Fee.
(d) All Fees shall be calculated on the basis of the actual number
of days elapsed over a year of 360 days.
2.17 Removal of Banks.
If any Bank requests compensation under Section 2.10 or 3.4 or if the
Borrower is required to pay any additional amount to any Bank or any
Governmental Authority for the account of any Bank pursuant to Section 2.15, or
if any Bank defaults in its obligation to fund Loans hereunder, then the
Borrower may, at its sole expense and effort, upon notice to such Bank and the
Administrative Agent, require such Bank to assign and delegate, without recourse
(in accordance with and subject to the restrictions contained in Section 11.3),
all its interests, rights and obligations under this Agreement to an assignee
that shall assume such obligations (which assignee may be another Bank, if a
Bank accepts such assignment), provided that (i) the Borrower shall have
received the prior written consent of the Administrative Agent (and, if a
Commitment is being assigned, the Issuing Bank), which consents shall not
unreasonably be withheld or delayed, (ii) such Bank shall have received payment
of an amount equal to its Pro Rata Share of the outstanding principal of the
Loans and Drawings on Letters of Credit, accrued interest thereon, accrued fees
and all other amounts payable to it hereunder, from the 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 Section 2.10 or 3.4 or payments
required to be made pursuant to Section 2.15, such assignment is reasonably
expected to result in a material reduction in such compensation or payments. A
Bank shall not be required to make any such assignment and delegation if within
ten Business Days after notification by the Borrower that it intends to replace
such Bank, as a result of a waiver by such Bank or otherwise, the circumstances
entitling the Borrower to require such assignment and delegation cease to apply.
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<PAGE> 35
ARTICLE III
LETTERS OF CREDIT
3.1 Issuance of Letters of Credit.
(a) Subject to the terms and conditions contained herein, the
Issuing Banks shall from time to time issue, on behalf of the Borrower and its
Subsidiaries, letters of credit (each, a "Letter of Credit") to
(i) insurance carriers,
(ii) Governmental Authorities in connection with reclamation
plans implemented by the Borrower and its Subsidiaries,
(iii) trade creditors to support purchases and sale of
materials and inventory and
(iv) other Persons with whom the Borrower and its Subsidiaries
have business dealings for requirements which arise in the ordinary course
of business.
The aggregate Letter of Credit Exposure on any date shall not exceed the lesser
of (A) $20,000,000 and (B) the Commitment less the sum of (x) the amount of all
Loans then outstanding (or requested in accordance with Section 2.1 hereof)
under the Facility plus (y) the Letter of Credit Exposure on such date. The
aggregate Letter of Credit Exposure for Letters of Credit issued to Governmental
Authorities to satisfy or secure obligations of the Borrower and its
Subsidiaries with respect to workers' compensation laws shall not exceed
$5,000,000 at any time. Each letter of credit issued under the Existing Facility
and listed on Schedule 3.1 which is outstanding on the Closing Date shall
constitute a "Letter of Credit" for all purposes under this Agreement.
(b) Each Letter of Credit shall be issued pursuant to and in
accordance with a letter of credit application in a form acceptable to the
Administrative Agent and the Issuing Bank. Each Letter of Credit shall be issued
in a minimum principal amount of $5,000, and shall permit drawings upon the
presentation of one or more sight drafts; provided, however, that no more than
thirty (30) Letters of Credit shall be outstanding at any time. Each Letter of
Credit shall have an expiry which shall be a Business Day and (i) at least two
Business Days prior to the Final Maturity Date and (ii) no later than the first
anniversary of the date such Letter of Credit is issued.
(c) Immediately upon issuance by the Issuing Bank of a Letter of
Credit in accordance herewith, each other Bank shall be deemed to have
irrevocably and unconditionally purchased and received from the Issuing Bank,
without recourse or warranty, an undivided interest and participation in such
Letter of Credit, including all obligations of the Borrower with respect thereto
and any security therefor or guaranty pertaining thereto, in an amount equal to
the product of (i) the Pro Rata Share of such Bank and (ii) the stated amount of
such Letter of Credit. Each issuance of a Letter of Credit by the Issuing Bank
shall be deemed to utilize the Commitment of each Bank (other than the Issuing
Bank) by an amount equal to the amount of
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<PAGE> 36
such participation and to utilize the Commitment of the Issuing Bank by an
amount equal to the stated amount of such Letter of Credit less the aggregate
amount of all participations therein.
3.2 Notice.
The Borrower shall give the Issuing Bank irrevocable notice not later than
12:00 noon, New York time, at least three Business Days prior to the date of
requested issuance of any Letter of Credit under this Agreement. Such notice
shall refer to this Agreement and shall include
(i) a properly completed letter of credit application on an
appropriate form and
(ii) a form of notice with respect to such Letter of Credit
including (A) the date of issuance (which shall be a Business Day) (B) the
principal amount, (C) the name and address of the beneficiary, (D) whether
multiple drawings should be permitted, (E) the form of the draft and any
other documents required to be presented at the time of any drawing (such
notice to attach copies of such documents) and (F) the expiry date. Each
notice pursuant to this Section 3.2 shall include a representation by the
Borrower, in form satisfactory to the Issuing Bank, as to the purpose of
the issuance thereof. The Issuing Bank shall promptly advise the Banks of
any notice given hereunder.
3.3 Reimbursement; Repayment with Loans.
(a) In the event of a Drawing on any Letter of Credit, the Issuing
Bank shall give prompt telephonic, telecopied or telex notice to the Borrower
and the other Banks of the amount of such Drawing. If the Issuing Bank shall pay
any Drawing under a Letter of Credit, then the Borrower shall without further
notice reimburse the Issuing Bank (or the Issuing Bank shall set-off from the
general account of the Borrower) an amount equal to the amount so drawn,
together with interest on such amount at a rate per annum (calculated on the
basis of the actual number of days elapsed over a year of 365 or 366 days, as
the case may be) equal to the rate applicable to ABR Loans, not later than 12:00
noon, New York City time, on (i) the Business Day immediately following the day
that the Borrower receives notice of such if such notice is received prior to
10:00 a.m., New York City time, or (ii) the second Business Day following the
day that the Borrower receives such notice, if such notice is not received prior
to such time (but in any event before the Final Maturity Date), provided that
the Borrower may, subject to the conditions to borrowing set forth herein,
request in accordance with Section 2.1 that such payment be financed with an ABR
Loan in an equivalent amount and, to the extent so financed, the Borrower's
obligation to make such payment shall be discharged and replaced by the
resulting ABR Loan. If the Borrower fails to make such payment when due, then
the Issuing Bank shall promptly so notify, by telephonic or telex notice, each
Bank of such failure to receive payment of the Reimbursement Obligation and each
Bank shall pay to the Issuing Bank in New York, New York, in immediately
available funds, not later than 3:00 p.m., New York time on the Business Day
immediately following the day such Bank receives such notice, such Bank's Pro
Rata Share of the Reimbursement Obligation and the Issuing Bank shall assign to
each such Bank its Pro Rata Share of such Reimbursement Obligation.
Notwithstanding anything contained in this Agreement to the contrary, each
Bank's obligation to make payments to the
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Issuing Bank under this Section 3.3 shall be unconditional and shall survive the
termination of this Agreement.
(b) The obligations of the Borrower under this Section 3.3 shall be
absolute, unconditional and irrevocable and shall be satisfied strictly in
accordance with the terms of this Agreement and the applicable Letter of Credit
irrespective of:
(i) the lack of validity or enforceability, in whole or in
part, of any Letter of Credit;
(ii) the existence of any claim, set-off, defense or other
right which the Borrower, any Subsidiary of the Borrower or any other
Person may at any time have against the beneficiary under such Letter of
Credit, the Issuing Bank or any Bank (other than the defense of payment in
accordance with the terms of this Agreement and the applicable Letter of
Credit or a defense based on the gross negligence or willful misconduct of
the Issuing Bank) or any other Person in connection with this Agreement or
any other transaction;
(iii) any draft or other document presented under a Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any
respect; provided, however, that payment by the Issuing Bank under such
Letter of Credit against presentation of such draft or document shall not
have constituted gross negligence or willful misconduct of the Issuing
Bank;
(iv) payment by the Issuing Bank under a Letter of Credit
against presentation of a draft or other document which does not comply
with terms of such Letter of Credit; provided, however, that payment by
the Issuing Bank under such Letter of Credit against presentation of such
draft or document shall not have constituted gross negligence or willful
misconduct of the Issuing Bank; and
(v) any other circumstance or event whatsoever, whether or not
similar to any of the foregoing; provided, however, that such other
circumstance or event shall not have been the result of gross negligence
or willful misconduct of the Issuing Bank.
It is understood and agreed that in making any payment under a Letter of Credit
(x) the Issuing Bank's exclusive reliance on the documents presented to it under
such Letter of Credit as to any and all matters set forth therein, including,
without limitation, reliance on the amount of any draft presented under such
Letter of Credit, whether or not the amount due to the beneficiary equals the
amount of such draft and whether or not any document presented pursuant to such
Letter of Credit proves to be insufficient in any respect, if such document on
its face appears to be in order, and whether or not any other statement or any
other document presented pursuant to such Letter of Credit proves to be forged
or invalid or any statement proves to be inaccurate or untrue in any respect
whatsoever, and (y) any non-compliance in any immaterial respect of the
documents presented under a Letter of Credit with the terms thereof shall, in
each case, not be deemed willful misconduct or gross negligence of the Issuing
Bank.
(c) If on the date of termination of the Commitment in accordance
with Section 2.7 or Section 8.1 hereof, any Letter of Credit shall be
outstanding, then on the date of such
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termination and as a condition thereto, the Borrower shall deposit in an
interest-bearing account of the Collateral Agent, for the benefit of the Banks
(the "Cash Collateral Account") an amount equal to the aggregate Letter of
Credit Exposure existing on such date plus any LC Fees payable to the last
expiry date of any Letter of Credit issued hereunder. The Administrative Agent
shall have exclusive dominion and control, including the exclusive right of
withdrawal, over the Cash Collateral Account. If the Issuing Bank shall pay any
Drawing after the date of termination of this Agreement, the Administrative
Agent shall make a payment to each Bank out of the Cash Collateral Account in an
amount equal to such Bank's Pro Rata Share of the aggregate amount of such
Drawing. Any amounts deposited by the Borrower pursuant to this clause (d)
(other than amounts representing fees or expenses due hereunder) shall be
returned with any interest actually earned to the Borrower, to the extent such
funds have not been used to pay Reimbursement Obligations, on the Business Day
following the latest expiry date of any Letter of Credit issued hereunder.
(d) If on any date on which the Commitment is reduced in accordance
with Section 2.7, the aggregate Letter of Credit Exposure exceeds the Commitment
in effect after giving effect to such reduction, then on such date the Borrower
shall deposit in the Cash Collateral Account an amount equal to the amount by
which the Letter of Credit Exposure then exceeds the Commitment in effect after
giving effect to such reduction.
3.4 Increased Costs.
(a) Subject to compliance with subsections (d) and (e) below, if
after the date of this Agreement any change in Applicable Law or in the
interpretation or administration thereof by any Governmental Authority charged
with the interpretation or administration thereof (whether or not having the
force of law)
(i) shall change the basis of taxation of payments to any Bank
of the LC Fee or any other amounts payable hereunder in respect of the
Letters of Credit except to the extent converted to Loans (other than
Taxes imposed on the overall net income of such Bank by the jurisdiction
in which such Bank has its principal office or by any political
subdivision or taxing authority therein), or
(ii) shall impose, modify or deem applicable any reserve,
special deposit or similar requirement with respect to its obligations
under this Article III or the Letters of Credit or shall impose on such
Bank any other condition affecting this Agreement with respect to the
obligations of such Bank under this Article III or the Letters of Credit,
and the result of any of the foregoing shall be to increase the cost to
such Bank of issuing or participating in any Letters of Credit or to
reduce the amount of any sum received or receivable by such Bank hereunder
in respect thereof, by any amount reasonably deemed by such Bank to be
material, then the Borrower will pay such Bank, upon demand, such
additional amount or amounts as will compensate such Bank for such
additional costs incurred or reduction suffered.
(b) Subject to compliance with subsections (d) and (e) below, if any
Bank shall determine that the adoption after the date hereof of any law, rule,
regulation, agreement or guideline regarding capital adequacy, or any change in
any of the foregoing or in the
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interpretation or administration of any of the foregoing by any Governmental
Authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by such Bank (or any Lending Office of
such Bank) or such Bank's holding company with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
Governmental Authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on such Bank's capital or on the capital
of such Bank's holding company, if any, as a consequence of its obligations with
respect to this Article III or any Letter of Credit to a level below that which
such Bank or such Bank's holding company could have achieved but for such
adoption, change or compliance (taking into consideration such Bank's policies
and the policies of such Bank's holding company with respect to capital
adequacy) by an amount deemed by such Bank to be material, then from time to
time, after submission by such Bank to the Borrower of a written request
therefor, the Borrower shall pay to such Bank such additional amount or amounts
as will compensate such Bank or such Bank's holding company for any such
reduction suffered.
(c) A certificate of any Bank setting forth such amount or amounts
and the basis for determination from time to time of such amount or amounts as
shall be necessary to compensate such Bank or its holding company as specified
in paragraph (a) or (b) above, as the case may be shall be delivered to the
Borrower and shall be conclusive absent manifest error. The Borrower shall pay
such Bank the amount shown as due on any such certificate delivered by it within
10 days after its receipt of the same.
(d) Failure on the part of any Bank to demand compensation for any
increased costs or reduction in amounts received or receivable or reduction in
return on capital with respect to any period shall not constitute a waiver of
such Bank's right to demand compensation with respect to such period, except
that no Bank shall be entitled to compensation under this Section 3.4 for any
costs incurred or reduction suffered with respect to any date unless such Bank
shall have notified the Borrower that it will demand compensation for such costs
or reductions not more than nine months after the later of (i) such date and
(ii) the date on which such Bank shall have become aware of such costs or
reductions. The protection of this Section 3.4 shall be available to any Bank
regardless of any possible contention of the invalidity or inapplicability of
any law, rule, regulation, guideline or other change or condition which shall
have occurred or been imposed.
(e) Any Bank claiming any additional amounts payable pursuant to
this Section 3.4 shall use reasonable efforts (consistent with legal and
regulatory restrictions and such Bank's or such Bank's holding company's
internal policies) to file any certificate or document requested by the Borrower
or change its applicable Lending Office to another of its offices, branches or
Affiliates, if the making of such filing or change of Lending Office would avoid
the need for or reduce the amount of any such additional amount attributable to
the Loans and would not, in the sole determination of such Bank, result in any
unreimbursed loss, cost or expense or otherwise be disadvantageous to such Bank.
(f) Without prejudice to the survival of any other agreement
contained herein, the agreements and obligations contained in this Section 3.4
shall survive the payment in full of principal and interest hereunder.
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3.5 Letter of Credit Fees.
The Borrower agrees to pay each Bank a letter of credit fee (the "LC
Fee"), on the last Business Day of each March, June, September and December,
equal to such Bank's Pro Rata Share of the then applicable Eurodollar Margin
(determined in accordance with Section 2.4(c)) per annum of the average daily
aggregate undrawn principal amount of all Letters of Credit outstanding from
time to time during the fiscal quarter ending on such date of payment. The
Borrower agrees to pay the Issuing Bank a fronting fee (the "Fronting Fee"), on
the last Business Day of each March, June, September and December, equal to
0.125% per annum of the average daily aggregate undrawn principal amount of all
Letters of Credit outstanding from time to time during the fiscal quarter ending
on such date of payment. In addition, the Borrower agrees to pay to the Issuing
Bank, on demand, the customary documentation fees for each Letter of Credit
issued by the Issuing Bank (including reasonable fees of counsel). LC Fees and
the Fronting Fee shall be calculated on the basis of the actual number of days
elapsed over a year of 360 days.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Each of the Borrower and Holdings, jointly and severally, represent and
warrant to each of the Banks that:
4.1 Organization.
Each of Holdings and each of its Subsidiaries is a company duly organized,
validly existing and in good standing under the laws of the jurisdiction in
which it is incorporated, has all requisite power and authority to own its
property and assets and to carry on its business as currently conducted and is
qualified to do business in each jurisdiction in which the nature of the
business conducted or the property owned or leased by it requires such
qualification except where the failure to so qualify could not reasonably be
expected to have a Material Adverse Effect.
4.2 Corporate Power and Authority; No Required Consents or Approvals.
(a) Each Loan Party has the power to execute, deliver and perform
its obligations under each Loan Document to which it is a party, to borrow
hereunder (in the case of the Borrower) and to grant Liens pursuant to the
Financing Documents to which it is a party.
(b) The execution, delivery and performance by each Loan Party of
each Loan Document to which it is a party, the borrowings to be made hereunder
by the Borrower and the grant by each Loan Party of Liens pursuant to the
Financing Documents to which it is a party have been duly authorized by all
required company and stockholder action of such Person and will not
(i) violate any provision of Applicable Law, any
Organizational Document, or any indenture or other material agreement or
instrument to which such Loan Party is a party, or by which such Loan
Party or any of its respective properties are or may be bound,
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(ii) conflict with, result in a breach of or constitute (alone
or with notice or lapse of time or both) a default under any such
indenture, material agreement or instrument to which such Loan Party is a
party, or by which such Loan Party or any of its respective properties are
or may be bound or
(iii) result in the creation or imposition of any Lien (other
than a Permitted Lien) upon any property of such Loan Party.
(c) No registration with or consent or approval of, or other action
by, any Governmental Authority is or will be required in connection with the
execution, delivery and performance by any Loan Party of any Loan Document to
which it is a party, any borrowings hereunder (if applicable) or the grant of
Liens by any Loan Party pursuant to the Financing Documents to which it is a
party except (i) as required in connection with the perfection of the security
interests granted pursuant to the Loan Documents and (ii) such as have been
obtained.
4.3 Enforceability.
Each Loan Document has been duly executed and delivered by the Loan Party
thereto and constitutes the legal, valid and binding obligation of such Loan
Party enforceable in accordance with its terms, subject as to matters of law to
any exceptions set forth in the legal opinions delivered pursuant to Section
5.1(k) of this Agreement
4.4 Financial Statements; No Undisclosed Liabilities.
(a) Except as set forth on Schedule 4.4(a), the audited consolidated
financial statements of Holdings and its Subsidiaries for the Fiscal Year ended
December 31, 1997 (the "Audited Financial Statements"),
(i) fairly present in all material respects the financial
position of Holdings and its Subsidiaries at the dates thereof and their
respective results of operations for the periods covered therein in
accordance with GAAP (except as set forth in the notes to such financial
statements) and
(ii) disclose all material liabilities, including contingent
and/or unmatured liabilities, of Holdings and its Subsidiaries as of the
dates thereof, which are required to be disclosed thereon in accordance
with GAAP.
(b) Except as set forth on Schedule 4.4(b), neither Holdings nor any
Subsidiary has any obligations or liabilities, contingent, unmatured or
otherwise, which are material to Holdings and the Subsidiaries considered as a
whole and which have not been disclosed in the unaudited consolidated financial
information of Holdings and its subsidiaries for the year ended December 31,
1998 set forth in the Information Memorandum.
4.5 No Material Adverse Change.
There has been no material adverse change in the business, assets,
operations or condition (financial or otherwise) of Holdings and the
Subsidiaries taken as a whole since December 31, 1998.
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4.6 Litigation.
Except as set forth on Schedule 4.6, to the knowledge of Holdings and its
Subsidiaries, there are no actions, suits or proceedings at law or in equity
instituted or threatened against or directly affecting Holdings or any such
Subsidiary or any of their respective businesses, properties or rights as to
which there is a reasonable possibility of an adverse determination and that, if
adversely determined, could be expected to have a Material Adverse Effect, or
which involve any of the Loan Documents.
4.7 Compliance with Laws.
Neither Holdings nor any of its Subsidiaries is in violation of, or in
default with respect to, any Applicable Law (including, without limitation, any
Environmental Law), other than any such violations or defaults which,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect.
4.8 Employee Benefit Plans.
Holdings, each of its Domestic Subsidiaries, each Plan and each "employee
benefit plan" (within the meaning of Section 3(3) of ERISA) maintained by
Holdings or any of its Domestic Subsidiaries is in compliance in all material
respects with all provisions of ERISA (or similar legislation in the
jurisdiction in which a Domestic Subsidiary is organized) which are applicable
thereto. No Reportable Event within the preceding six years has occurred with
respect to any Single Employer Plan as to which Holdings or any of its Domestic
Subsidiaries was required to file a report (other than on Form 5500) with the
PBGC. No Single Employer Plan has any material unfunded liability that subjects
such Plan to additional funding requirements under Section 412(l) of the Code.
No Single Employer Plan has an accumulated or waived funding deficiency or an
extension of amortization periods for unfunded liability as reflected in its
funding standard account within the meaning of Section 412 of the Code. Neither
Holdings, any of its Domestic Subsidiaries nor any ERISA Affiliate thereof has
incurred any material liability to or on account of a Plan pursuant to Sections
515, 4062, 4063, 4064, 4201 or 4204 of ERISA or expects to incur any liability
under any of the foregoing Sections on account of the termination of
participation in or contributions to any Plan. No proceedings have been
instituted to terminate any Single Employer Plan in other than a "standard
termination" under Section 4041(b) of ERISA. No condition exists which presents
a material risk to Holdings or any of its Domestic Subsidiaries of incurring a
material liability to or on account of a Plan pursuant to the foregoing
provisions of ERISA and the Code. No Lien imposed under the Code or ERISA on the
assets of Holdings or any of its Domestic Subsidiaries exists or is likely to
arise on account of any Single Employer Plan. Except as set forth on Schedule
4.8, Holdings and each of its Domestic Subsidiaries may terminate contributions
to any other employee benefit plans maintained by it without incurring any
material liability to any Person interested therein (other than claims for
benefits incurred or payable under the terms of such plans in the ordinary
course of business and plans maintained pursuant to collective bargaining
agreements).
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4.9 Taxes.
Each of Holdings and each of its Subsidiaries has filed or caused to be
filed all federal, state, local and foreign tax returns which, to its best
knowledge, are required to be filed by it, and have paid or caused to be paid
all taxes shown to be due and payable on such returns or on any assessments
received by it, other than any taxes or assessments the validity of which it is
contesting in good faith by appropriate proceedings and with respect to which
adequate accounting reserves have been set aside to the extent required by GAAP.
4.10 Title to Properties.
(a) Except as set forth on Schedule 4.10(a), Holdings or a
Subsidiary has good title, of a quality commensurate with prudent standards of
business practice, to all of the properties and assets purported to be owned by
them (excluding unpatented mining claims), including all properties reflected on
the Audited Financial Statements (including real property, tangible and
intangible personal property, minerals, whether or not extracted from the
ground, and other mineral rights), except properties and assets disposed of from
the date of the most recent Audited Financial Statements through the Closing
Date in the ordinary course of business. No Lien exists with respect to any such
assets or properties other than Permitted Liens.
(b) Holdings and its Subsidiaries, own, or are licensed to use, all
trademarks, tradenames, patents, patent applications, copyrights, technology,
know-how, processes and other intellectual and proprietary rights (collectively,
the "Intellectual Property") necessary for the conduct of their respective
businesses, except where the failure to own or license such Intellectual
Property would not have a Material Adverse Effect. Schedule 4.10(b) attached
hereto contains a list of all patents, patent applications, trademark and
service mark registrations and applications therefor, and copyright
registrations and applications therefor, purported to be owned by Holdings or
its Subsidiaries as of the Closing Date. Except as set forth on Schedule
4.10(b), no claim has been asserted and is pending by any Person with respect to
the use by Holdings or any of its Subsidiaries of any such Intellectual
Property, or challenging or questioning the validity or effectiveness of any
such Intellectual Property which, if adversely determined, could reasonably be
expected to have a Material Adverse Effect.
4.11 Business.
Except as set forth on Schedule 4.11 attached hereto, Holdings and its
Subsidiaries have engaged (and are currently engaged) only in the mining,
processing and sale of diatomite, perlite and other industrial minerals, the
manufacture and sale of silicates and other filtration and filler products for
industrial and retail applications and the provision of related services (the
"Business").
4.12 Agreements.
Neither Holdings nor any of its Subsidiaries is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any material agreement or instrument the breach of which
would result in a Material Adverse Effect.
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4.13 No Material Misstatements.
Neither the Information Memorandum nor any of the other reports, financial
statements, certificates, exhibits or schedules or other information furnished
by or on behalf of Holdings or any of its Subsidiaries to the Administrative
Agent or any Bank in connection with the negotiation of this Agreement or any
other Loan Document or delivered hereunder or thereunder (as modified or
supplemented by other information so furnished) contains any misstatement of
material fact or omits to state any material fact necessary to make such
statements, in light of the circumstances under which they were made, not
misleading. The Borrower has disclosed to the Banks all agreements, instruments
and corporate or other restrictions to which Holdings, the Borrower or any of
the Subsidiaries is subject, and all other matters known to any of them, that,
individually, or together with other related items, could reasonably be expected
to result in a Material Adverse Effect.
4.14 Related Party Transactions.
The terms of any transactions between Holdings and any of its
Subsidiaries, on the one hand, and any Affiliate of Alleghany which is not a
Subsidiary, on the other hand, were not materially less favorable to Holdings
and its Subsidiaries than terms obtainable in a comparable arm's-length
transaction between non-affiliated parties (it being understood that such
transactions have not been submitted for competitive bids by unrelated Persons).
4.15 Labor Matters and Acts of God.
Since December 31, 1998, neither Holdings nor any of its Subsidiaries has
been affected by any fire, explosion, accident, strike, lockout or other labor
dispute which has had a Material Adverse Effect.
4.16 Outstanding Debt.
Neither Holdings nor any of its Subsidiaries has outstanding Indebtedness,
directly or indirectly, except Permitted Indebtedness. There does not exist,
and, after giving effect to the transactions contemplated by the Loan Documents,
there will not exist, any material default under any instrument or agreement
relating to or evidencing any direct or indirect Indebtedness of Holdings or any
of its Subsidiaries (or any event which, with only the giving of notice or the
passage of time or both, would result in such a breach or default).
4.17 Federal Reserve Regulations.
The making of the Loans hereunder to the Borrower, the use by the Borrower
of the proceeds thereof as contemplated hereby and the security arrangements
contemplated hereby and by the Financing Documents, will not violate or be
inconsistent with any of the provisions of Regulation T, Regulation U or
Regulation X.
4.18 Investment Company Act and Public Utility Holding Company Act.
Neither Holdings nor any of its Subsidiaries is an "investment company" or
a company "controlled" by an "investment company" within the meaning of the
Investment Company Act of
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1940, as amended, or is a "holding company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
4.19 Security Interests.
The provisions of each Financing Document to which any Loan Party is a
party are effective to create in favor of the Collateral Agent, for the benefit
of the Lender Parties, a valid, binding and perfected security interest in and
Lien on all right, title and interest of such Loan Party in all of the
Collateral purported to be covered thereby. Upon the delivery of the shares of
capital stock to be pledged, such security interests and Liens shall have first
priority for all purposes over any other Lien (other than Permitted Liens with
higher priority under Applicable Law) on the Collateral.
4.20 Capital Stock; Subsidiaries.
(a) The authorized capital stock of Holdings consists of 200,000
shares of common stock, $1.00 par value, and 1,700 shares of preferred stock,
$1.00 par value, of which 101,568 shares of common stock and 1,100 shares of
preferred stock are validly issued, fully paid and nonassessable and are
outstanding and owned beneficially and of record in the amounts and by the
Persons set forth on Schedule 4.20 hereto. Except for the options held by
William J. Woods, Jr., no Person holds any option, warrant, stock subscription
or other right to acquire any capital stock of Holdings and no securities
convertible into or exercisable or exchangeable for any capital stock of
Holdings have been authorized or issued.
(b) The authorized capital of the Borrower consists of 1,000 shares
of common stock, par value $1.00 per share (the "Borrower Common Stock") all of
which shares are validly issued, fully paid and nonassessable and are
outstanding. All of the shares of Borrower Common Stock are owned beneficially
and of record by Holdings and pledged to the Collateral Agent for the benefit of
the Lender Parties as provided in the Holdings Pledge Agreement. No Person holds
any option, warrant, stock subscription or other right to acquire any capital
stock of the Borrower and no securities convertible into or exercisable or
exchangeable for any capital stock of the Borrower have been authorized or
issued. Except for the pledge provided for in the Holdings Pledge Agreement, no
Person has any Lien against any capital stock of the Borrower.
(c) The authorized capital of each Subsidiary (other than the
Borrower) is set forth opposite such Subsidiary's name on Schedule 4.20 attached
hereto. All of the shares listed on Schedule 4.20 as being issued are validly
issued, fully paid and nonassessable and are outstanding and owned beneficially
and of record in the amounts and by the Persons set forth thereon. No person
holds any option, warrant, stock subscription or other right to acquire any
capital stock of any Subsidiary and no securities convertible into or
exercisable or exchangeable for any capital stock of such Subsidiary have been
authorized or issued. Except for the pledge provided in the Borrower Pledge
Agreement and the Subsidiary Pledge Agreement and as set forth on Schedule 4.20,
no Person has any Lien against any capital stock of any Subsidiary.
(d) Schedule 4.20 attached hereto sets forth a correct and complete
list of each Person (other than the Subsidiaries) in whom the Borrower or any
Subsidiary presently owns, directly or indirectly, any ownership interest (other
than securities representing less than 10% of
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the aggregate ownership interest of Persons making periodic reports under the
Securities Exchange Act of 1934, as amended, or similar foreign laws). Except as
set forth on Schedule 4.20, Holdings and/or a Subsidiary has the absolute right
and power to sell, assign, convey and transfer any right or benefit incident to
the ownership thereof.
(e) All Material Subsidiaries as of the date hereof have been
identified as such on Schedule 4.20.
4.21 Year 2000 Compliance.
The cost to Holdings and its Subsidiaries of the reprogramming and testing
required by Section 6.17 and of the reasonably foreseeable consequences of year
2000 to Holdings and its Subsidiaries (including reprogramming errors and the
failure of others' systems or equipment) will not result in a Default or have a
Material Adverse Effect.
4.22 Environmental Matters.
Except to an extent that could not reasonably be expected to have a
Material Adverse Effect:
(a) Holdings and the Subsidiaries have complied and are in
compliance with all Environmental Laws, including without limitation all permits
required for the occupation of their respective properties or facilities;
(b) Neither Holdings nor any of the Subsidiaries has received any
notice, report or other information regarding an Environmental Claim with
respect to its past or current operations, properties or facilities; and
(c) Neither Holdings nor any of the Subsidiaries, nor any of their
respective predecessors or Affiliates, has treated, stored, disposed of,
arranged for or permitted the disposal of, transported, handled, or released any
substance (including any Hazardous Material), or owned or operated its business
or any property or facility (and no such property or facility is contaminated by
any such substance) in a manner that has given or would give rise to any
liabilities or investigative, corrective or remedial obligations pursuant to
Environmental Laws.
ARTICLE V
CONDITIONS TO LENDING
5.1 Loans on the Closing Date.
The obligations of the Banks to make Loans hereunder and the obligations
of the Issuing Bank to issue Letters of Credit hereunder, in each case on the
Closing Date, are subject to the satisfaction of the following conditions:
(a) Termination of Existing Facility. Concurrently with the making
of the Loans to be made on the Closing Date, the Borrower shall have repaid all
loans outstanding, and shall
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have no further obligations, under the Existing Facility, and all related Liens,
agreements and instruments shall have been terminated.
(b) Corporate Documents. The Administrative Agent shall have
received (i) a copy of each Organizational Document of the Loan Parties and each
Subsidiary whose shares of capital stock are pledged pursuant to the Subsidiary
Pledge Agreement, including all amendments thereto, certified, as of a recent
date by an appropriate public official of its jurisdiction of incorporation (or,
with the consent of the Administrative Agent, the Secretary or Assistant
Secretary thereof) and a certificate as to the good standing and charter
documents from such public official as of a recent date, (ii) a certificate of
the Secretary or Assistant Secretary of each Loan Party dated the Closing Date
and certifying (A) that attached thereto is a correct and complete copy of the
by-laws of such Person as in effect on the Closing Date and at all times since a
date prior to the date of the resolutions described in clause (B) below, (B)
that attached thereto is a correct and complete copy of resolutions duly adopted
by the Board of Directors of such Person, authorizing the execution, delivery
and performance of the Loan Documents, the borrowings hereunder (if applicable),
the granting of Liens pursuant to the Financing Documents and the other
transactions contemplated hereby, (C) that the certificate of incorporation of
such Person has not been amended since the date of the last amendment thereto
shown on the certificate of good standing furnished pursuant to clause (i)
above, and (D) as to the incumbency and specimen signature of each officer of
such Person executing any Loan Document or any other document delivered in
connection herewith, (iii) a certificate of another officer of such Person as to
the incumbency and specimen signature of the Secretary or Assistant Secretary
executing the certificate pursuant to (ii) above, (iv) a certificate from the
Secretary of State of each state in the United States in which the conduct of
such Person's business or such Person's ownership of assets requires
qualification as to the qualification of such Person to do business and its good
standing in such state, and (v) such other documents as the Administrative
Agent, or O'Sullivan Graev & Karabell, LLP, counsel to the Administrative Agent,
may reasonably request.
(c) Lien Search. The Collateral Agent shall have received and be
reasonably satisfied with the results of a search of the Uniform Commercial Code
filings made with respect to each Loan Party in the jurisdictions listed on
Annex III, which shall not have disclosed any prior Lien or security interest in
the Collateral, other than (A) Permitted Liens and (B) any Liens being released
contemporaneously with the Closing.
(d) No Defaults. Each Loan Party shall be in compliance with the
terms and provisions set forth in each Loan Document to which it is a party, and
at the time of and immediately after the consummation of the transactions
contemplated hereby, no Event of Default or Default shall have occurred and be
continuing.
(e) Insurance. Holdings and its Subsidiaries shall have delivered to
the Administrative Agent certificates of insurance complying with Section 6.12.
(f) Requisite Approvals. Holdings and its Subsidiaries shall have
obtained all required governmental and other consents, licenses, permits and
approvals relating to the transactions contemplated hereby and the other Loan
Documents, including all necessary permits and licenses to operate the Business
in the manner such Business has previously been conducted,
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except for any consent, license, permit or approval the failure of which to
obtain would not reasonably be expected to have a Material Adverse Effect.
(g) Security. The Financing Documents shall be in full force and
effect and no default or event of default shall have occurred and be continuing
thereunder. Each Loan Party shall have delivered to the Collateral Agent all
certificates representing shares of capital stock of any Subsidiary to be
pledged to the Collateral Agent for the benefit of the Lender Parties in
connection with the transactions contemplated by this Agreement, accompanied by
blank undated stock powers and duly executed for transfer. The Collateral Agent
shall have received all documents and instruments, including Uniform Commercial
Code financing statements, required by law or reasonably requested by the
Collateral Agent to be filed, registered or recorded with respect to the
Collateral.
(h) Representations and Warranties. The representations and
warranties of Holdings and the Borrower contained herein, in any other Loan
Document and in any certificate or other instrument delivered pursuant to this
Agreement or any Loan Document shall be correct in all material respects as
though made on and as of such date.
(i) Officer's Certificate. The Administrative Agent shall have
received certificates signed by a Responsible Officer of Holdings and the
Borrower confirming the satisfaction of the conditions precedent set forth
herein on and as of the Closing Date.
(j) Fees and Expenses. All fees and other consideration owing by
Holdings or any of its Subsidiaries to the Lender Parties under the terms of the
Fee Letter, this Agreement, the other Loan Documents, or any other document
executed in connection herewith shall have been paid in full.
(k) Legal Matters. All matters relating to this Agreement, the other
Loan Documents and the transactions contemplated hereby and thereby shall be
satisfactory to the Administrative Agent and O'Sullivan Graev & Karabell, LLP,
counsel to the Administrative Agent. The Administrative Agent shall have
received a legal opinion from Orrick Herrington & Sutcliffe LLP, satisfactory in
form and substance to the Administrative Agent and such legal opinions in form
and substance satisfactory to the Administrative Agent from legal counsels to
such Foreign Subsidiaries as the Administrative Agent shall have reasonably
requested.
(l) Mining Plan. The Administrative Agent and the Banks shall have
received and be satisfied with a mining plan as described in Section 6.13(a).
(m) Financial Statements. The Administrative Agent and the Banks
shall have received and be satisfied with (i) the audited balance sheets and
related statements of income and cash flows of Holdings and its Subsidiaries as
of and for the two fiscal years ended December 31, 1997 and (ii) unaudited
financial information for the year ended December 31, 1998.
(n) Projections. The Administrative Agent shall have received and be
satisfied with financial projections of the consolidated and consolidating
balance sheets and statements of income and cash flows of Holdings and its
Subsidiaries, prepared and presented in accordance with GAAP, for the three
fiscal years ending December 31, 2001.
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5.2 Loans Made After Closing Date.
The obligation of the Banks to make Loans to the Borrower hereunder from
time to time after the Closing Date is subject to the following conditions:
(a) Representations and Warranties. Each of the representations and
warranties contained in any Loan Document qualified as to materiality shall be
true and correct and those not so qualified shall be true and correct on and as
of the date of such Loan, except to the extent such representations expressly
relate to an earlier date in which case such representations and warranties
shall be true and correct as of such earlier date.
(b) Compliance. At the time of and immediately following the
consummation of such Loan or Loans, no Default or Event of Default shall have
occurred and be continuing.
(c) Notice of Borrowings. The Borrower shall have provided (i) a
notice of borrowing to the Administrative Agent in substantially the form of
Exhibit G and (ii) all other documents reasonably requested by the Banks related
to the making of Loans hereunder.
The making of each Loan shall be deemed to constitute a
representation and warranty by Holdings and the Borrower on the date thereof as
to the matters specified in paragraphs (a) and (b) of this Section.
5.3 Letters of Credit Issued After the Closing Date.
The obligation of an Issuing Bank to issue, amend, renew or extend any
Letter of Credit hereunder from time to time after the Closing Date is subject
to the following conditions:
(a) Representations and Warranties. Each of the representations and
warranties contained in any Loan Document qualified as to materiality shall be
true and correct and those not so qualified shall be true and correct in all
material respects on and as of the date of issuance, amendment, renewal or
extension of such Letter of Credit, except to the extent such representations
expressly relate to an earlier date in which case such representations and
warranties shall be true and correct as of such earlier date.
(b) Compliance. At the time of and immediately following the
issuance, amendment, renewal or extension of such Letter of Credit, no Default
or Event of Default shall have occurred and be continuing.
(c) Notice. The Borrower shall have provided the notice required by
Section 3.2 hereof.
Each issuance, amendment, renewal or extension of a Letter of
Credit shall be deemed to constitute a representation and warranty by Holdings
and the Borrower on the date thereof as to the matters specified in paragraphs
(a) and (b) of this Section.
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ARTICLE VI
AFFIRMATIVE COVENANTS
Each of the Borrower and Holdings covenants and agrees with each Bank
that, so long as this Agreement shall remain in effect or any Obligation is
outstanding, without the prior written consent of the Majority Banks, it will,
and it will cause each Subsidiary to:
6.1 Corporate Existence.
Do or cause to be done all things necessary to preserve, renew and keep in
full force and effect its corporate existence and any necessary state or foreign
qualifications (other than any qualifications the absence of which, in the
aggregate, would not result in a Material Adverse Effect), except that the
foregoing shall not prohibit mergers and consolidations permitted under Section
7.10).
6.2 Obligations and Taxes.
Pay or discharge, or cause to be paid or discharged, before the same shall
become delinquent
(i) all taxes, assessments and governmental charges or levies
lawfully imposed upon it or upon its income or profits or in respect of
its property,
(ii) all mineral and other royalties,
(iii) all lawful claims for labor, materials and supplies,
(iv) all required payments under any Permitted Indebtedness
and
(v) all other material obligations;
provided, however, that it shall not be required to pay or discharge or to cause
to be paid or discharged any such amount so long as the validity or amount
thereof shall be contested in good faith by appropriate proceedings and, if
required by GAAP, appropriate reserves or accruals have been made with respect
thereto.
6.3 Performance Under Agreements.
Perform its obligations under this Agreement, each Loan Document and each
other material indenture, agreement or other instrument to which it is a party;
provided, however, that it shall not be required to so perform its obligations
under any such other material indenture, agreement or other instrument to the
extent it shall reasonably believe in good faith that such performance is not
required and, if required by GAAP, appropriate reserves or accruals have been
made with respect thereto.
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6.4 Access to Properties and Inspections.
Maintain financial records in accordance with reasonable and prudent
accounting practices and controls sufficient to prepare the financial statements
required by Section 6.11 and, upon reasonable written notice, at all reasonable
times and as often as any Bank may reasonably request, permit any authorized
representative of any Bank to visit and inspect its properties and records
during normal business hours, and to make extracts from such records and permit
any authorized representative of any Bank to discuss its affairs, finances and
condition with such officers and, with the consent of a Responsible Officer of
the Borrower (which consent shall not be unreasonably withheld or delayed), with
its independent public accountants, in each case as any Bank shall deem
appropriate.
6.5 Defense of Claims.
Use reasonable commercial efforts to vigorously defend itself and its
properties from and against any lawsuits or claims which could reasonably be
expected to result in a Material Adverse Effect unless the Borrower reasonably
believes it has no good faith defense to any such lawsuit or claim.
6.6 Notices of Litigation or Claims.
Promptly upon obtaining notice of the commencement thereof, provide the
Administrative Agent with written notice of any of the following events if any
such event could reasonably be expected to have a Material Adverse Effect:
(a) the issuance by any court or Governmental Authority of any
injunction, order or decision involving Holdings or any Subsidiary or any of
their respective properties;
(b) the filing or commencement of any action, suit or proceeding
against or affecting Holdings or any Subsidiary or any of their respective
properties whether at law or in equity or by or before any court or any federal,
state, municipal, foreign or other Governmental Authority;
(c) any imposition by any Governmental Authority of a Lien which is
not a Permitted Lien;
(d) any claim, demand or action impairing title to any of the
properties or assets of Holdings or any Subsidiary; and
(e) any other adverse action by or notice from a Governmental
Authority with respect to Holdings or any Subsidiary or any of their respective
properties (including any Environmental Claim),
in each case specifying, as applicable, (i) the details of the event or
development requiring such notice and (ii) any action taken or proposed to be
taken with respect thereto.
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6.7 Notice of Certain Actions.
Furnish to the Administrative Agent as promptly as possible after
obtaining knowledge of the occurrence thereof, written notice of
(a) any Default hereunder,
(b) any material default by Holdings or any Subsidiary under any
other material agreement or instrument evidencing Indebtedness,
(c) any development in the business or affairs of Holdings or any
Subsidiary which is likely, in the reasonable judgment of Holdings, to have a
Material Adverse Effect or
(d) the sale by Alleghany of any capital stock of Holdings,
; in each case specifying, as applicable, (i) the nature and extent thereof,
(ii) any rights of any other parties thereto with respect to termination,
acceleration or similar provisions and (iii) any action taken or proposed to be
taken with respect thereto.
6.8 Compliance.
Comply with all Applicable Laws (including ERISA and Environmental Laws),
and maintain all required clearances, consents, permits and governmental
approvals, if the failure to comply with such Applicable Laws or failure to
maintain such clearances, consents, permits and governmental approvals could
reasonably be expected to have a Material Adverse Effect.
6.9 Further Assurances.
Duly execute and deliver, or cause to be duly executed and delivered, at
its own cost and expense, such further documents, and to take all such further
actions, as may be necessary or proper in the reasonable judgment of the
Administrative Agent to carry out the provisions and purposes of this Agreement
and the other Loan Documents and to maintain and preserve the perfection and
priority of the Liens granted pursuant to the Financing Documents.
6.10 Business and Properties.
(a) At all times do or cause to be done all things necessary to
(i) preserve, renew and keep in full force and effect the
rights, licenses, permits, franchises and mining concessions necessary to,
or used or useful in the conduct of, its Business; provided, however, that
Holdings and the Subsidiaries will not be required to preserve, renew or
maintain any right, license, permit or franchise if the Board of Directors
or a Responsible Officer of the Borrower shall determine that the
preservation thereof is no longer desirable in the conduct of the business
of such Person, and
(ii) keep its properties used or useful in the conduct of its
business in good repair, working order and condition and from time to time
make, or cause to be made, all
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needful and proper repairs, renewals and replacements, betterments and
improvements thereto, all as in the judgment of Holdings or such
Subsidiary may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times;
provided, however, that nothing in this Section 6.10 shall prevent
Holdings and any Subsidiary from discontinuing the operation or
maintenance of any of its properties if such discontinuance is, in the
judgment of the Board of Directors or a Responsible Officer of the
Borrower, desirable in the conduct of the business of such Person.
(b) As promptly as possible after obtaining knowledge of the
occurrence thereof, furnish written notice to the Collateral Agent of the
institution of any proceeding for the condemnation or other taking of any
material property of Holdings or its Subsidiaries.
6.11 Financial Statements and Reports.
Furnish to the Administrative Agent:
(a) within 120 days after the end of each Fiscal Year (commencing
with the Fiscal Year ending December 31, 1998), (i) consolidated and
consolidating balance sheets, income statements, cash flow statements and
comparisons to budget showing their financial condition as of the close of such
Fiscal Year and the results of their operations during such year of Holdings and
the Subsidiaries, the consolidated financial statements to be audited by
independent accountants of nationally recognized standing and prepared in
accordance with GAAP and (ii) summary information, in such detail as the
Administrative Agent shall reasonably request, regarding any obligations of
Holdings or any of its Subsidiaries in respect of forward sales contracts,
commodities futures, options or similar hedging arrangements regarding
commodities, and, if the Administrative Agent requests, copies of any
instruments, agreements or other documents evidencing such obligations;
(b) within 120 days after the end of each Fiscal Year, current and
projected annual and cumulative budgets, operating plans and financial
projections for Holdings and the Subsidiaries on a consolidated and
consolidating basis, for such Fiscal Year and the next four succeeding Fiscal
Years;
(c) within 60 days after the end of the first three fiscal quarters
of each Fiscal Year, commencing March 31, 1999, (i) the unaudited consolidating
and consolidated balance sheets, income statements and cash flow statements
(along with comparisons to budget), showing the financial condition and results
of operations of Holdings and the Subsidiaries, as at the end of each such
quarter and for the then elapsed portion of the fiscal year, in each case
prepared in accordance with GAAP and (ii) summary information, in such detail as
the Administrative Agent shall reasonably request, regarding any obligations of
Holdings or any of its Subsidiaries in respect of forward sales contracts,
commodities futures, options or similar hedging arrangements regarding
commodities, and, if the Administrative Agent requests, copies of any
instruments, agreements or other documents evidencing such obligations;
(d) concurrently with the financial statements delivered pursuant to
Section 6.11(a) and (c), certificates of a Financial Officer of Holdings and
concurrently with the financial
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statements delivered pursuant to Section 6.11(a) certificates of the independent
auditors of Holdings, certifying that no Default or Event of Default has
occurred or, if such a Default or Event of Default has occurred, specifying the
nature and extent thereof and any corrective action taken or proposed to be
taken with respect thereto;
(e) concurrently with the statements delivered pursuant to Section
6.11(a) and (c), a report, in form and substance satisfactory to the Banks,
describing
(i) the activities of Holdings or any Subsidiary undertaken
with respect to applicable Environmental Law and
(ii) describing any Environmental Claim received by Holdings
or any Subsidiary;
(f) concurrently with the statements delivered pursuant to Section
6.11(a) and (c), certificates of a Financial Officer of Holdings, certifying for
the fiscal period then ended and as of the last day of such fiscal period
compliance with the covenants set forth in Sections 7.11, 7.12 and 7.13 hereof,
in each case showing the calculation thereof; and
(g) promptly, from time to time, such other information regarding
the operations, business affairs and financial condition of Holdings and the
Subsidiaries as any Bank may reasonably request.
Each consolidated financial statement delivered in accordance
with this Agreement shall be accompanied by a certificate of a Financial Officer
of Holdings, (and, in the case of year-end financial statements and reports, the
independent auditors of Holdings) certifying that such statement fairly presents
in all material respects the consolidated financial position and results of
operations of Holdings and each Subsidiary at the dates thereof and for the
periods then ended and has been prepared in accordance with GAAP, subject to
normal year-end adjustments, as appropriate. Each consolidating financial
statement delivered in accordance with this Agreement shall identify each
Material Subsidiary as of the date of such statement.
6.12 Insurance.
(a) Maintain insurance (including, without limitation, business
interruption insurance) on the business and properties of Holdings and each
Subsidiary to such extent and against such risks, including fire and other risks
insured against by extended coverage, as is customary with companies similarly
situated and in the same or similar businesses, provided that primary insurance
coverages for property and general liability will at all times be provided by
insurance carriers rated at least A+, A1 or A by Standard & Poor's Ratings
Services, Moody's Investors Services, Inc. or A.M. Best, respectively.
(b) Maintain in full force and effect workers' compensation
insurance (with respect to the Domestic Subsidiaries only) and public liability
insurance against claims for personal injury or death or property damage
occurring upon, in, about or in connection with, the use of any properties
owned, occupied or controlled by Holdings or any Subsidiary, in each case as
such Person shall deem reasonably necessary.
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(c) Each insurance policy required under Section 6.12(a) shall
contain endorsements in form satisfactory to the Collateral Agent providing,
among other things, that any loss shall be payable in accordance with the terms
of such policy notwithstanding any act of Holdings or any Subsidiary which might
otherwise result in forfeiture of such insurance and that the insurer waives all
rights of set-off, counterclaim, deduction or subrogation against Holdings or
any Subsidiary.
6.13 Mining Plan.
Prepare and deliver to the Banks
(a) on the second anniversary of the Closing Date and every other
year thereafter, an annual calculation of minable reserves for the material
mining properties of the Borrower and its Subsidiaries, as determined by the
Administrative Agent, together with a detailed five-year mine plan for such
reserves and a conceptual mine plan for recovery of such reserves for an
additional five-year period and
(b) within 12 months of any Permitted Acquisition which involves
material mining properties, the mine plans described in clause (a) above
prepared with respect to such acquired mining properties.
6.14 ERISA.
(a) Comply in all material respects with the provisions of ERISA (or other
similar legislation in the jurisdiction in which such Subsidiary is organized)
applicable to the Plans or any "employee benefit plan" (within the meaning of
Section 3(3) of ERISA) maintained by Holdings or any Subsidiary and (b) furnish
to each Bank, as soon as possible, and in any event within 30 days after any
Responsible Officer of Holdings or any Subsidiary knows or has reason to know of
the following events: (i) the occurrence or expected occurrence of any
Reportable Event with respect to any Single Employer Plan or any withdrawal
from, or the termination, Reorganization or Insolvency of, any Multiemployer
Plan or (ii) the institution of proceedings or the taking of any other action by
the PBGC, the Borrower or any ERISA Affiliate, or any Multiemployer Plan with
respect to the withdrawal from, or the terminating, Reorganization or Insolvency
of, any Multiemployer Plan, a certificate of a Financial Officer of the Borrower
setting forth the details thereof and the action that Holdings or such ERISA
Affiliate proposes to take with respect thereto.
6.15 Proceeds.
Use the proceeds of the Loans solely for the purposes set forth in the
Preamble to this Agreement.
6.16 Additional Subsidiaries.
Notify the Administrative Agent and the Banks if any additional Subsidiary
is formed or acquired after the Closing Date and (a) if such Subsidiary is a
Domestic Subsidiary, Holdings shall cause such Subsidiary to guaranty the
Obligations within 15 Business Days after such Subsidiary becomes a Material
Subsidiary and (b) if any shares of capital stock of such
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Subsidiary are owned by or on behalf of Holdings or any of its Domestic
Subsidiaries, Holdings shall cause such shares to be pledged within 15 Business
Days after such Subsidiary becomes a Material Subsidiary (except that, if such
Subsidiary is a Foreign Subsidiary, the shares of capital stock of such
Subsidiary to be pledged shall be limited to 65% (or, if less, the amount owned
by Holdings or its Domestic Subsidiaries) of the issued and outstanding shares
of each class of capital stock or other ownership interests entitled to vote
(within the meaning of Treas. Reg. Section 1.956-2(c)(2)) of such Subsidiary and
100% (or, if less, the amount owned by Holdings or its Domestic Subsidiaries) of
the issued and outstanding shares of each class of capital stock or other
ownership interests not entitled to vote (within the meaning of Treas. Reg.
Section 1.956-2(c)(2)) of such Subsidiary).
6.17 Year 2000 Compliance.
Do or cause to be done any material reprogramming required to permit the
proper functioning, in and following the year 2000, of (a) the computer systems
of Holdings and its Subsidiaries and (b) equipment containing embedded
microchips (including systems and equipment supplied by others or with which
systems of the Borrower and its Subsidiaries interface) and complete the testing
of all material systems and equipment, as so reprogrammed, by June 30, 1999.
ARTICLE VII
NEGATIVE COVENANTS
Each of the Borrower and Holdings covenants and agrees with each Bank
that, so long as this Agreement shall remain in effect or any Obligation is
outstanding, without the prior written consent of the Majority Banks, it will
not, and will not permit any Subsidiary to:
7.1 Indebtedness.
Incur, create, assume or permit to exist any Indebtedness, except:
(a) Indebtedness under this Agreement and the other Loan Documents;
(b) Indebtedness between or among Holdings and the Subsidiaries
which
(i) in each instance is unsecured and
(ii) if the issuer of such Indebtedness is the Borrower or a
Subsidiary Guarantor, such Indebtedness is subordinate in all respects to
the payment in full of all Obligations under the Facility (provided that
the terms of such subordination will permit (A) the repayment of
Indebtedness of any Subsidiary (other than the Borrower) to the Borrower
or a Subsidiary Guarantor and (B) if no Default or Event of Default has
occurred and is continuing or will occur as a result of such repayment,
the repayment of Indebtedness of the Borrower or a Subsidiary Guarantor to
any Subsidiary);
(c) any obligations in respect of forward sales contracts,
commodities futures, options or similar hedging arrangements regarding
commodities not to exceed $10 million
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outstanding at any one time determined on a marked-to-market basis in accordance
with customary practice in the financial industry;
(d) any Letter of Credit issued hereunder;
(e) endorsements for collection or deposit in the ordinary course of
business;
(f) Capital Lease Obligations and other indebtedness secured by
purchase money security interests created in the ordinary course and not to
exceed $10 million principal amount at any time outstanding;
(g) the Permitted Subsidiary Indebtedness;
(h) Indebtedness to Alleghany
(i) not to exceed $15 million principal amount at any one time
outstanding and
(ii) which is subordinated in all respects to the payment in
full of the Obligations of the Loan Parties to the Banks in accordance
with the Alleghany Subordination Agreement;
(i) surety bonds issued in connection with reclamation obligations
not to exceed $15 million outstanding at any one time;
(j) Indebtedness arising under one or more carnets obtained in the
ordinary course of business; and
(k) Indebtedness permitted under Sections 7.4 and 7.7 hereof.
7.2 Negative Pledge.
Incur, create, assume or suffer or permit to exist any Lien on any
property or assets (including the capital stock of any Subsidiary) or on any
income or rights in respect of any thereof, except:
(a) Liens granted to the Collateral Agent for the benefit of the
Lender Parties pursuant to this Agreement, the Financing Documents, or any other
Loan Document;
(b) Liens incurred and arising out of surety bonds, appeal bonds,
statutory obligations, bids, performance and return of money and similar
obligations and pledges or deposits made in the ordinary course of business in
connection with workmen's compensation, unemployment insurance, old age pensions
and other social security benefits;
(c) Liens imposed by law, including carriers', warehousemen's,
mechanics', landlords', materialmen's and vendors' Liens incurred in the
ordinary course of business and securing obligations which are not yet due or
which are being contested in good faith by
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appropriate proceedings and as to which it shall have set aside adequate
reserves in accordance with GAAP;
(d) Liens securing the payment of Taxes, assessments and
governmental charges or levies, either not yet delinquent or being contested in
good faith by appropriate legal or administrative proceedings and as to which it
shall have set aside adequate reserves in accordance with GAAP;
(e) zoning restrictions, easements, licenses, reservations,
provisions, covenants, conditions, waivers, restrictions on the use of property
or minor irregularities of title which do not in the aggregate impair the use of
any parcel of property material to the operation of the business of Holdings or
any Subsidiary or the value of such property for the purpose of the business of
Holdings or any Subsidiary (it being understood that the existing conditions set
forth on Schedule 4.10(a) constitute Permitted Liens hereunder);
(f) Liens constituting purchase money security interests permitted
by Section 7.1(f) hereof;
(g) Liens described on Schedule 7.2 attached hereto;
(h) extensions and renewals of Liens permitted hereunder; provided,
however, that the Indebtedness secured thereby is not increased and the Lien
does not encumber any property not encumbered by the Lien so extended or
renewed;
(i) Liens on assets acquired in an Acquisition permitted under
Section 7.7; and
(j) Liens to secure Permitted Subsidiary Indebtedness.
Notwithstanding anything herein to the contrary, no Loan Party
shall create, incur, assume, or suffer or permit to exist any Lien on the
capital stock of any Subsidiary, or any part thereof or interest therein, except
Liens granted pursuant to the Financing Documents.
7.3 Restricted Payments.
Declare or pay any dividends (other than dividends payable solely in
shares of its capital stock) or make any other distribution to any security
holder, whether in cash, property, securities or a combination thereof, or
directly or indirectly redeem, repurchase, retire or otherwise acquire for a
consideration, any shares of any class of its respective capital stock or other
ownership interest or set apart any sum for the aforesaid purposes (any such
dividend, distribution, redemption, purchase, retirement or acquisition being
referred to herein as a "Restricted Payment") except as follows:
(i) each Subsidiary shall be authorized to distribute to any
Loan Party and Holdings shall be authorized to distribute to Alleghany
such funds as shall be required to pay the obligations of such Person for
reasonable federal, state, local and foreign income tax purposes in
accordance with the Tax Sharing Agreement dated as of August 1, 1996,
between Alleghany and Holdings,
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(ii) each Subsidiary shall be authorized to make dividends or
distributions from time to time to Holdings or another Subsidiary provided
that a Loan Party shall not make dividends or distributions to any
Subsidiary other than another Loan Party, and
(iii) Holdings shall be authorized to declare or pay dividends
or other distributions in respect of its capital stock during any fiscal
year in an amount not to exceed 25% of Holdings' Net Income during the
preceding fiscal year; provided, however, that no such dividend or other
distribution shall be declared or paid by Holdings if any Default or Event
of Default shall have occurred and be continuing; and provided further
that if payment of a dividend or distribution is not otherwise prohibited
under this clause (iii), Holdings may pay such dividend or distribution if
the declaration thereof was permitted under this clause (iii) .
Any Restricted Payment permitted pursuant to this Section 7.3 may be made in the
form of a dividend or distribution as the Person making such Restricted Payment
shall determine. The making of any loan to an Affiliate (other than Holdings or
a Subsidiary), or the repayment of any Indebtedness to an Affiliate (other than
Alleghany (provided such repayment is in accordance with the terms of the
Alleghany Subordination Agreement), Holdings or a Subsidiary) shall be a
Restricted Payment for the purposes hereof.
7.4 Investments.
Purchase, directly or beneficially, any stock, other securities or
evidences of Indebtedness of, or make or permit to exist any loans or advances
to, or make any investment or acquire any interest whatsoever in any other
Person, including any Excluded Subsidiary (any such transaction, an
"Investment") other than Permitted Investments and Investments
(a) by Holdings in the Borrower,
(b) by the Borrower in a Subsidiary Guarantor,
(c) by a Loan Party in any other Subsidiary provided such Investment
is in the form of equity or debt, and, if such Subsidiary is a newly-formed
Subsidiary and is a Material Subsidiary, the stock of such Subsidiary is first
pledged to the Collateral Agent for the benefit of the Lender Parties in
accordance with Section 6.16 hereof,
(d) as permitted in accordance with Section 7.7 hereof,
(e) by a Loan Party in any other Subsidiary resulting from the
delivery of goods or the provision of services in the ordinary course of
business,
(f) by any Subsidiary (other than the Borrower or a Subsidiary
Guarantor) in any other Subsidiary, and
(g) by Holdings or any Subsidiary in Persons that are not
Subsidiaries;
provided, however, that, with respect to clauses (a) through (g) above, (i) in
no event shall any Investment (other than a Permitted Investment) be made if any
Default or Event of Default shall
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have occurred and be continuing, (ii) the aggregate amount of all Investments in
Excluded Subsidiaries shall not exceed $5 million and (iii) the aggregate amount
of all Investments (other than Permitted Investments and Investments in Excluded
Subsidiaries) in (A) Persons that are not Subsidiaries (other than Kisilidjan,
h.f.) and (B) Subsidiaries that are primarily engaged in businesses other than
the production or marketing of Core Products shall not exceed $5 million in any
Fiscal Year. In this Agreement, the term "Core Products" means (w) diatomite,
(x) perlite, (y) other industrial minerals that are the principal products
produced by any business or Person acquired by the Borrower or any Subsidiary
with the prior written consent of the Majority Banks and (z) products that are
produced through the refining or processing of diatomite, perlite or any such
other industrial minerals.
7.5 Nature of Business.
(a) Effect any material change in its business or create any new
business or subsidiary (including any Excluded Subsidiary) which does not
involve filtration, fillers, diatomite, perlite and/or other industrial
minerals, and related materials and services.
(b) Engage or invest in any business relating to the recycling of
spent filter cake at locations other than Celite's existing facilities without
(i) providing an environmental assessment, in form and
substance satisfactory to the Majority Banks, of such proposed activity
and
(ii) receiving written acknowledgement from the Majority Banks
of their receipt and satisfaction with such report.
(c) Engage in any business involving the disposal in landfills or
other means of permanent storage of spent filter cake without
(i) providing an environmental assessment, in form and
substance satisfactory to the Majority Banks, of such proposed disposal
activities and
(ii) receiving written acknowledgment from the Majority Banks
of their receipt and satisfaction with such report.
7.6 Asset Sales.
Make any Asset Sale, unless
(a) such Asset Sale is for consideration reasonably believed by the
Borrower to be at least equal to the Fair Value of the assets being sold or
(b) the Borrower obtains the prior written consent of the Majority
Banks.
7.7 Acquisitions.
Acquire all or a substantial part of the assets or stock of any other
Person (an "Acquisition"), unless:
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(a) no Default or Event of Default (i) has occurred and is
continuing or (ii) will occur after giving effect to such Acquisition;
(b) if the Acquisition involves aggregate consideration exceeding
$25 million, the Majority Banks give prior written approval to make such
Acquisition;
(c) no Third Party Financing is used to effect such Acquisition;
(d) if the Acquisition involves aggregate consideration exceeding
$15 million, Holdings shall use its best efforts to provide to the Banks at
least 15 days prior to the consummation of such Acquisition (i) an income
statement and a statement of cash flows, in each case covering the twelve month
period ending on the last day of the most recently completed fiscal quarter for
which financials were last provided with pro forma adjustments to reflect the
consummation, on the first day of such period, of such Acquisition (including
the incurrence of any related Loans under this Agreement) and (ii) a balance
sheet as of the last day of the most recently completed fiscal quarter for which
financials were last provided, with pro forma adjustments to reflect the
consummation of such Acquisition (including the incurrence of any related Loans
under this Agreement);
(e) the pro forma financial statements provided pursuant to
subsection (d) above shall show that the financial covenants set forth in
Sections 7.11, 7.12 and 7.13 shall have been satisfied on such pro forma basis;
and
(f) the Borrower shall have taken all steps necessary to pledge as
security for the Facility capital stock acquired in any Acquisition in
accordance with Section 6.16 hereof;
provided, however, that Holdings or any Subsidiary may effect an Acquisition
using Third Party Financing if
(i) no Default or Event of Default (A) has occurred and is
continuing or (B) will occur as a result of such Acquisition,
(ii) 50% of the aggregate consideration involved in such
acquisition is provided as an equity contribution,
(iii) the Borrower shall have (A) notified the Banks of all
material terms of such proposed Acquisition, (B) given the Banks
reasonable time to prepare bids on providing such additional debt
financing and (C) considered in good faith the terms of a Bank's bid, if
any,
(iv) the Borrower shall have created a special purpose
subsidiary (an "Excluded Subsidiary") to effect such Acquisition and
recourse under such Third Party Financing shall be limited to the assets
or capital stock of such Excluded Subsidiary,
(v) no Guaranty or other commitment with respect to such
Excluded Subsidiary shall be entered into by Holdings, the Borrower or any
Subsidiary, and
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(vi) if required under Section 7.4, the Administrative Agent,
on behalf of the Banks, shall have received documentation in form and
substance acceptable to the Collateral Agent, to pledge as security for
the Facility the capital stock of such Excluded Subsidiary in accordance
with Section 6.16 hereof, provided, however, that any pledge under this
Section 7.7 may be junior to any pledge granted to secure such Third Party
Financing.
Any Acquisition permitted under this Section 7.7 is herein referred to as a
"Permitted Acquisition."
7.8 Transactions With Affiliates.
(a) Except as permitted by Section 7.4, enter into any transaction
(including the purchase, sale, lease or exchange of any property or the
rendering of any service) with any Affiliate (including an Excluded Subsidiary
but excluding Holdings or any of its Subsidiaries), except
(i) in the ordinary course of business and upon terms which
are not less favorable and reasonable than those obtainable in an
arm's-length transaction with a Person who is not an Affiliate or
(ii) any management agreement, entered into in the ordinary
course of the Borrower's business, pursuant to which the Borrower provides
reasonable management services to any Affiliate in which Holdings or one
of its Subsidiaries owns a material amount of capital stock.
(b) Enter into any transaction providing for the purchase, sale,
lease or exchange of any property or the rendering of any service involving a
Loan Party, on the one hand, and any other Subsidiary on the other hand, except
in the ordinary course of business and upon terms which are not less favorable
to such Loan Party than those obtainable in an arm's-length transaction with a
Person who is not an Affiliate of Holdings.
7.9 Sale and Leaseback Transactions.
Enter into any Sale and Leaseback Transaction.
7.10 Merger or Consolidation.
Merge into or consolidate or combine with any other Person; provided,
however, that this provision shall not prohibit the merger or consolidation of a
wholly owned Subsidiary (other than an Excluded Subsidiary) with or into the
Borrower, a Subsidiary Guarantor or another wholly owned Subsidiary which is not
an Excluded Subsidiary or as otherwise permitted in accordance with Section 7.7
hereof if
(i) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing,
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(ii) immediately after giving effect to such transaction, all
shares of capital stock that have been pledged pursuant to the Loan
Documents shall continue to be pledged; and
(iii) the Borrower shall deliver a certificate of a Financial
Officer and an opinion of counsel satisfactory in form and substance to
the Banks to the effect that such transaction complies with clauses (i)
and (ii) above.
7.11 Interest Coverage.
Permit the ratio of (a) EBITDA for any four-consecutive-quarter period
less actual Capital Expenditures for such four-consecutive-quarter period to (b)
Interest Expense for such four-consecutive-quarter period to be less than 2.5x
for any four-consecutive-quarter period ending on or prior to December 31, 2000
and 3.0x for any four-consecutive-quarter period thereafter.
7.12 Debt to Worth.
Permit the ratio of (a) Total Indebtedness to (b) Total Capitalization to
at any time exceed 40%.
7.13 Net Worth.
Permit Net Worth at any time to be less than the sum of (i) $185,000,000
plus (ii) 50% of Cumulative Net Income to the last day of the fiscal quarter
most recently then ended.
7.14 Fiscal Year.
Effect any change in the Fiscal Year without obtaining the prior written
approval of the Majority Banks and making any necessary amendments to the
provisions of this Agreement.
7.15 Restrictive Agreements.
Directly or indirectly, enter into, incur or permit to exist any agreement
or other arrangement that prohibits or materially restricts or imposes any
material condition upon (a) the ability of Holdings, the Borrower or any other
Subsidiary to create, incur or permit to exist any Lien upon any of its property
or assets, or (b) the ability of any Subsidiary to pay dividends or other
distributions with respect to any shares of its capital stock or to make or
repay loans or advances to the Borrower or any other Subsidiary or to guarantee
Indebtedness of the Borrower or any other Subsidiary, provided that (i) the
foregoing shall not apply to restrictions and conditions imposed by law or by
any Loan Document, (ii) the foregoing shall not apply to restrictions and
conditions existing on the date hereof identified on Schedule 7.15 (but shall
apply to any extension or renewal of, or any amendment or modification expanding
the scope of, any such restriction or condition), (iii) the foregoing shall not
apply to customary restrictions and conditions contained in agreements relating
to the sale of a Subsidiary or any property or assets of a Subsidiary pending
such sale, provided such restrictions and conditions apply only to the
Subsidiary that is to be sold and such sale is permitted hereunder, (iv) the
foregoing shall not apply to customary restrictions and conditions contained in
joint venture agreements, (v) clause
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(a) of the foregoing shall not apply to restrictions or conditions imposed by
any agreement relating to secured Indebtedness permitted by this Agreement if
such restrictions or conditions apply only to the property or assets securing
such Indebtedness and (vi) clause (a) of the foregoing shall not apply to
customary provisions in leases, licenses and similar contracts restricting the
subletting, assignment or transfer thereof, or any property or asset the subject
thereof.
ARTICLE VIII
EVENTS OF DEFAULT
8.1 Defaults.
In case of the happening of any of the following events (each, an "Event
of Default"):
(a) the Borrower shall fail to make any payment on principal of any
Loan when and as the same shall become due and payable including at the due date
thereof, by acceleration or otherwise; or
(b) the Borrower shall fail to pay any interest or Fee due hereunder
or in connection herewith when and as the same shall become due and payable,
whether at the due date thereof, by acceleration or otherwise, and such failure
shall continue for more than two Business Days following the date such payment
was due; or
(c) the Borrower shall fail to pay any Reimbursement Obligation when
and as the same shall become due or payable; or
(d) default shall be made in the due observance or performance of
any covenant or agreement contained in Article VII of this Agreement or any
covenant or agreement of the Borrower pursuant to Sections 6.1, 6.6, 6.7 or
6.12; or
(e) default shall be made in the due observance or performance of
any other covenant or agreement to be observed or performed under this Agreement
or in any other Loan Document, and such default shall continue unremedied for 30
days after written notice thereof to the Borrower by the Administrative Agent;
or
(f) any representation or warranty contained in this Agreement or in
any other Loan Document or in any report, certificate, financial statement or
other instrument furnished pursuant to this Agreement shall prove to have been
false or misleading in any material respect when made or furnished; or
(g) Holdings or any Material Subsidiary shall
(i) voluntarily commence any proceeding or file any petition
seeking relief under Title 11 of the United States Code or any other
federal, state or foreign bankruptcy, insolvency or similar law,
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(ii) consent to the institution of, or fail to controvert in a
timely and appropriate manner, any such proceeding or the filing of any
such petition,
(iii) apply for or consent to the appointment of a receiver,
trustee, custodian, sequestrator or similar official for any such Person
or for any substantial part of its property or assets,
(iv) file an answer admitting the material allegations of a
petition filed against it in any such proceeding,
(v) make a general assignment for the benefit of creditors,
(vi) fail generally to pay its debts as they become due or
(vii) take any corporate or stockholder action in furtherance
of any of the foregoing; or
(h) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking
(i) relief in respect of Holdings or any Material Subsidiary
or of any substantial part of the property or assets thereof, under Title
11 of the United States Code or any other federal, state or foreign
bankruptcy, insolvency or similar law,
(ii) the appointment of a receiver, trustee, custodian,
sequestrator or similar official for any such Person or for any
substantial part of its property or
(iii) the winding-up or liquidation of any such Person, and
such proceeding, petition or order shall continue unstayed and in effect
for a period of 60 consecutive days; or
(i) a final judgment for the payment of money in an amount in excess
of $5,000,000 shall be rendered by a court or other tribunal against Holdings or
any Subsidiary and shall remain undischarged for a period of 60 consecutive days
during which execution of any such judgment shall not have been effectively
stayed, bonded or vacated; or
(j) any event shall occur or fail to occur if the effect of such
occurrence or failure is to accelerate the maturity of Indebtedness for borrowed
money aggregating $2,500,000 of Holdings or any Subsidiary (other than any Loan
or Letter of Credit Exposure hereunder) or to permit the holder thereof (or a
trustee on behalf of such holder) to cause such Indebtedness to become due prior
to the stated maturity thereof and such occurrence or failure shall not have
been remedied within any applicable period of grace, or any such Indebtedness
shall not be paid when due, whether by acceleration or otherwise; or
(k) (i) Any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Single Employer Plan,
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(ii) any "accumulated funding deficiency" (as defined in
Section 302 of ERISA), whether or not waived, shall exist with respect to
any Single Employer Plan,
(iii) a Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee shall
be appointed, to administer or to terminate, any Single Employer Plan,
which Reportable Event or commencement of proceedings or appointment of a
trustee is, in the reasonable opinion of the Majority Banks, likely to
result in the termination of such Plan for purposes of Title IV of ERISA,
(iv) any Single Employer Plan shall terminate for purposes of
Title IV of ERISA,
(v) Holdings or any Subsidiary or any ERISA Affiliate thereof
shall, or is, in the reasonable opinion of the Majority Banks, likely to,
incur any liability in connection with a withdrawal from, or the
Insolvency or Reorganization of, a Multiemployer Plan, or
(vi) any other event or condition shall occur or exist with
respect to a Plan; and in each case in clauses (i) through (vi) above,
such event or condition, together with all other such events or
conditions, if any, could reasonably be expected to subject Holdings or
any Subsidiary to any tax, penalty or other liabilities which, if the then
present value thereof (estimated in good faith by such Person) were
deducted from the then total assets of such Person, could reasonably be
expected to have a Material Adverse Effect; or
(l) any of the other Loan Documents shall cease to be in full force
and effect, enforceable in accordance with its terms or any security interest
purported to be created by the Financing Documents shall cease to be a valid and
perfected first priority security interest or first priority Lien, as
applicable, subject to any Permitted Liens or any Loan Party shall assert the
invalidity of any such security interest or Lien; or
(m) any Expropriatory Action shall have been taken by any Person
against capital stock of Holdings or any Subsidiary having a Fair Value in
excess of $5,000,000; provided, however, that the Borrower will be permitted to
cure such default within 30 days of the occurrence thereof, by making a payment
with respect to then outstanding Loans to the Administrative Agent, on behalf of
the Banks, in an amount equal to the Fair Value of the capital stock subject to
such Expropriatory Action; or
(n) Holdings shall cease to be the record and beneficial owner of
all of the outstanding shares of the capital stock of the Borrower or the
Borrower shall cease to be the record and beneficial owner of all of the
outstanding shares of the capital stock of the Subsidiary Guarantors; or
(o) Alleghany shall cease to own of record and beneficially 80% of
the outstanding capital stock of Holdings; provided, however, that Alleghany may
sell outstanding capital stock of Holdings if
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(i) such sale of stock is for cash consideration at least
equal to the Fair Value of the stock being sold,
(ii) the proceeds of such sale are contributed to Holdings as
a Parent Contribution and designated to (A) fund Capital Expenditures, (B)
fund Permitted Acquisitions in accordance with Section 7.7 hereof or (C)
prepay Loans outstanding hereunder in accordance with Section 2.7 hereof
and
(iii) after giving effect to such sale Alleghany owns of
record and beneficially at least 60% of the outstanding capital stock of
Holdings;
then, and in any such event (other than an event described in paragraph (g) or
(h) above), and at any time thereafter during the continuance of such event, the
Administrative Agent shall, upon the written request of the Majority Banks, by
notice to the Borrower, take any of the following actions at the same or
different times:
(i) terminate forthwith the Commitment of the Banks under the
Facility,
(ii) declare any Loans then outstanding to be forthwith due
and payable, whereupon the entire unpaid principal of such Loans, together
with accrued interest thereon and any unpaid accrued Fees and all other
liabilities of Holdings and the Borrower accrued hereunder, shall become
forthwith due and payable, without presentment, demand, protest or any
other notice of any kind, all of which are hereby expressly waived by the
Borrower, anything contained herein to the contrary notwithstanding, and
(iii) refuse to issue any additional Letters of Credit and
demand that the Borrowers provide to the Collateral Agent cash collateral
in an amount equal to the Letter of Credit Exposure, such collateral to be
deposited in the Cash Collateral Account to be held by the Collateral
Agent for the benefit of the Lender Parties;
and in any event described in paragraph (g) or (h) above, the Commitment of the
Banks under the Facility shall automatically terminate (together with all
obligations to issue Letters of Credit) and any Loans shall automatically become
due and payable and the Borrower shall be obligated to provide cash collateral
to the Administrative Agent as described in clause (iii), all without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by Holdings and Borrower, anything contained herein to
the contrary notwithstanding.
ARTICLE IX
THE ADMINISTRATIVE AGENT
In order to expedite the various transactions contemplated by this
Agreement, Chase is hereby appointed to act as Administrative Agent and
Collateral Agent. Each Bank hereby irrevocably authorizes and directs the
Administrative Agent and the Collateral Agent, respectively, to take such action
on behalf of such Bank under the terms and provisions of this Agreement and the
Loan Documents and to exercise such powers hereunder and thereunder as are
specifically delegated to or required of the Administrative Agent and the
Collateral Agent,
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respectively, by the terms and provisions hereof and thereof, together with such
powers as are reasonably incidental thereto.
Subject to the appointment and acceptance of a successor
Administrative Agent or Collateral Agent as provided in this paragraph, the
Administrative Agent or the Collateral Agent may resign at any time by notifying
the Banks and the Borrower. Upon any such resignation, the Majority Banks shall
have the right, with the consent of the Borrower except during an Event of
Default, to appoint a successor. If no successor shall have been so appointed by
the Majority Banks and shall have accepted such appointment within 30 days after
the retiring Administrative Agent or Collateral Agent gives notice of its
resignation, then the retiring Administrative Agent or Collateral Agent may, on
behalf of the Banks and the Issuing Bank, appoint a successor Administrative
Agent or Collateral Agent that shall be a bank with an office in New York, New
York, or an Affiliate of any such bank. Upon the acceptance of its appointment
as Administrative Agent or Collateral Agent hereunder by a successor, such
successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent or Collateral Agent,
and the retiring Administrative Agent or Collateral Agent shall be discharged
from its duties and obligations hereunder. The fees payable by the Borrower to a
successor Administrative Agent or Collateral Agent shall be the same as those
payable to its predecessor unless otherwise agreed between the Borrower and such
successor. After the Administrative Agent's or Collateral Agent's resignation
hereunder, the provisions of this Article, Section 11.4 and Section 11.5 shall
continue in effect for the benefit of such retiring Administrative Agent or
Collateral Agent, or any of the respective directors, officers, employees or
agents in respect of any actions taken or omitted to be taken by any of them
while it was acting as Administrative Agent or Collateral Agent.
The Administrative Agent is hereby expressly authorized on behalf of the
Banks, without hereby limiting any implied authority,
(a) to receive on behalf of each Bank any payment of principal of or
interest on the Loans outstanding hereunder and all other amounts accrued
hereunder paid to the Administrative Agent, and promptly to distribute to each
Bank its proper share of all payments so received,
(b) to give notice within a reasonable time on behalf of each of the
Banks to the Borrower of any Event of Default specified in this Agreement of
which the Administrative Agent has actual knowledge, and
(c) to distribute promptly to each Bank copies of all notices,
agreements and other material as provided for in this Agreement as received by
the Administrative Agent.
The Collateral Agent is hereby expressly authorized on behalf of the
Lender Parties, without hereby limiting any implied authority,
(a) to receive and hold on behalf of the Lender Parties any
instrument or certificate which constitutes Collateral,
(b) to give notice within a reasonable time on behalf of each of the
Banks to the Guarantor or the Borrower of any event of default specified in any
Loan Document of which the Collateral Agent has actual knowledge and
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(c) to take any and all action on behalf of the Banks permitted
under the terms of any Loan Document.
The Collateral Agent may, in its discretion and without the consent of the
Banks, appoint sub-agents to act as the Collateral Agent in any jurisdiction or
with respect to any Collateral.
For the sole purpose of taking a security interest in the Collateral in
any country other than the United States (including, without limitation, France
and The Netherlands), the Collateral Agent shall be the joint and several
creditor of each of the Obligations owed by the Loan Parties to the other Lender
Parties. The Collateral Agent shall have its own independent right to demand
payment or performance of any Obligations owed by the Loan Parties, provided
that the Collateral Agent shall receive the written consent of the Majority
Banks prior to exercising such right. The Collateral Agent agrees to distribute
any amounts paid to the Collateral Agent by any Loan Party in satisfaction of
such Loan Party's Obligations to the other Lender Parties in accordance with
this Agreement and the Loan Documents. The payment or performance of any
Obligations to the Collateral Agent shall discharge the corresponding
Obligations to the other Lender Parties.
Neither the Administrative Agent, the Collateral Agent, nor any of their
respective directors, officers, employees or agents shall be liable as such for
any action taken or omitted by any of them hereunder except for its or his own
gross negligence or willful misconduct, or be responsible for any statement,
warranty or representation herein or the contents of any document delivered in
connection herewith or be required to ascertain or to make any inquiry
concerning the performance or observance by Holdings or any other Loan Party of
any of the terms, conditions, covenants or agreements of this Agreement or any
other Loan Document. The Administrative Agent and the Collateral Agent shall not
be responsible to the Banks for the due execution, genuineness, validity,
enforceability or effectiveness of this Agreement, the Loan Documents or any
other instrument or agreement to which reference is made herein. The
Administrative Agent and the Collateral Agent may deem and treat the payee of
any Loan as the owner thereof for all purposes hereof until it shall have
received from the payee of such Loan notice, given as provided herein, of the
transfer thereof. The Administrative Agent and the Collateral Agent shall in all
cases be fully protected in acting, or refraining from acting, in accordance
with written instructions signed by the Majority Banks, and, except as otherwise
specifically provided herein, such instructions and any action taken or failure
to act pursuant thereto shall be binding on all the Banks. Each of the
Administrative Agent and the Collateral Agent shall, in the absence of knowledge
to the contrary, be entitled to rely on any paper or document believed by it in
good faith to be genuine and correct and to have been signed or sent by the
proper Person or Persons. None of the Lender Parties or any of their respective
directors, officers, employees or agents shall have any responsibility to
Holdings, the Borrower, or any other Person on account of the failure or delay
in performance or breach by any other Bank of any of its obligations hereunder
or to any other Bank on account of the failure of or delay in performance or
breach by such other Bank, Holdings, or the Borrower, or any other Person of any
of their respective obligations hereunder or in connection herewith. The
Administrative Agent and the Collateral Agent may execute any and all their
respective duties hereunder by or through agents or employees and shall be
entitled to advice of legal counsel selected by the Administrative Agent with
respect to all matters arising hereunder and shall not be liable for any action
taken or suffered in good faith by it in accordance with the advice of such
counsel.
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Any Person serving as the Administrative Agent or Collateral Agent
hereunder shall have the same rights and powers in its capacity as a Bank as any
other Bank and may exercise the same as though it were not the Administrative
Agent or Collateral Agent. Each of the Administrative Agent, the Collateral
Agent and their respective Affiliates may accept deposits from, lend money to
and generally engage in any kind of business with the Borrower and its
Affiliates as if it were not the Administrative Agent, the Collateral Agent or
such an Affiliate.
Each Bank agrees
(i) to reimburse each of the Administrative Agent and the
Collateral Agent in the amount of such Bank's Pro Rata Share of any
expenses incurred for the benefit of the Banks by such Administrative
Agent or Collateral Agent, including reasonable counsel fees and
compensation of agents and employees paid for services rendered on behalf
of the Banks, not reimbursed by the Loan Parties and
(ii) to indemnify and hold harmless the Administrative Agent,
the Collateral Agent and any of their respective directors, officers,
employees or agents, on demand, in the amount of such Bank's Pro Rata
Share, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on,
incurred by or asserted against it in such capacity or in any way relating
to or arising out of this Agreement, any other Loan Document or any action
taken or omitted by it or any of them under this Agreement or any other
Loan Document, to the extent not reimbursed by the Loan Parties; provided,
however, that no Bank shall be liable to the Administrative Agent or the
Collateral Agent for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the gross negligence or willful misconduct of
the Administrative Agent or the Collateral Agent, as the case may be, or
of any of the directors, officers, employees or agents of such Person.
Each Bank acknowledges that it has, independently and without reliance
upon any other Lender Party and based on such documents and information as it
has deemed appropriate, made its own credit analysis and decision to enter into
this Agreement and the other Loan Documents and to make Loans as contemplated
hereby. Each Bank also acknowledges that it will, independently and without
reliance upon any other Lender Party and based on such documents and information
as it shall deem appropriate at the time, continue to make its own decisions in
taking or not taking action under or based upon this Agreement, any related
agreement or any document furnished hereunder.
ARTICLE X
HOLDINGS GUARANTY
10.1 Holdings Guaranty.
Holdings hereby absolutely, unconditionally and irrevocably guarantees to
the Banks and their successors and assigns, as primary obligor and not merely as
surety, the full and punctual
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payment and performance of all Obligations of the Borrower to the Lender
Parties, when and as due, whether at maturity, by acceleration, or upon a date
fixed for prepayment or mandatory prepayment (the "Holdings Guaranty"). The
liability of Holdings hereunder is as a guarantor of payment and performance,
and not merely of collectability, and is not conditioned or contingent upon the
enforceability of the Loan Documents or any other instruments relating to the
creation or performance of the Obligations or the pursuit by the Lender Parties
of any remedies which they now have or may hereafter have under any Loan
Document, at law, in equity or otherwise. None of the Lender Parties need
inquire into the power of the Borrower or the authority its officers or agents
acting or purporting to act on its behalf. Nothing contained in this Article X
shall prevent the Lender Parties from suing or from exercising any rights
available to them hereunder, under any of the Loan Documents or under applicable
law, and the exercise of any of such rights shall not constitute a legal or
equitable discharge of Holdings. Holdings shall continue to be liable under this
Guaranty and the provisions hereof shall remain in full force and effect
notwithstanding the occurrence of any or all of the following, none of which
shall require notice to Holdings:
(a) any modification, agreement, stipulation or course of dealing
between the Borrower and any Lender Party with respect to the Obligations or any
other matter relating to the Loan Documents, including, without limitation, any
alteration, compromise, acceleration, extension or change in the time or manner
for the payment or performance of any Obligations, any increase or reduction in
the rate of interest charged on funds borrowed pursuant to the Loan Documents;
(b) any waiver of or failure to enforce any of the terms, covenants
or conditions contained in the Loan Documents;
(c) any waiver of any right or remedy against the Borrower or
against any other Person, including, without limitation, any other guarantor,
with respect to all or any portion of the Borrower's or such other Person's
liability for or with respect to the Obligations;
(d) the addition or substitution of one or more guarantors of any or
all of the Borrower's Obligations under the Loan Documents;
(e) the subordination of any rights with respect to any security
given for the Borrower's Obligations or the acceptance of any additional or
substituted security therefor; or
(f) the foreclosure of any Lien with respect to any or all of the
real or personal property now or hereafter securing any of the Obligations,
whether by exercise of a power of sale contained therein, by an action for
judicial foreclosure or by acceptance of a deed in lieu of foreclosure. As
security for the performance of its obligation under this Article X, Holdings
shall execute and deliver to the Collateral Agent for the benefit of the Lender
Parties the Holdings Pledge Agreement.
10.2 Guarantor's Waivers.
Holdings hereby irrevocably waives and relinquishes, and agrees not to
assert or take advantage of, to the maximum extent permitted by law in each
jurisdiction in which the enforcement of such waiver is sought, any and all
rights, remedies and defenses accorded by
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Applicable Law to guarantors or sureties. In addition to, not in limitation of
the immediately preceding sentence, Holdings hereby expressly waives and
relinquishes, and agrees not to assert or take advantage of, to the maximum
extent permitted by law in each jurisdiction in which the enforcement of such
waiver is sought, the following rights, remedies and defenses:
(a) notice of acceptance of this Guaranty;
(b) notice of the existence, creation, incurrence, renewal,
extension, modification or accrual of any Obligations of the Borrower to the
Lender Parties;
(c) notice of any action on the part of the Borrower, the Lender
Parties or any creditor of the Borrower or Holdings, or on the part of any other
Person whomsoever relating to the Obligations or the Loan Documents, including,
without limitation, notice of enforcement of any right or remedy with respect
thereto, except as otherwise expressly set forth herein;
(d) any statute of limitations affecting Holding's liability
hereunder or the enforcement thereof;
(e) any defense that may arise by reason of the incapacity, lack of
authority, death or disability of any Person or the failure of any Lender Party
to file or enforce a claim against the estate (in administration, bankruptcy or
any other proceeding) of any Person;
(f) the right to require the Lender Parties to proceed against the
Borrower or any other Person (including, without limitation, any other
guarantor), or to proceed against or exhaust any security or collateral held by
the Lender Parties at any time, or to enforce any other right or pursue any
other remedy, and Holdings expressly agrees that the Lender Parties may enforce
this Guaranty without the necessity of resorting to or exhausting any security
or collateral and without the necessity of proceeding against the Borrower or
any other Person;
(g) any defense based upon an election of remedies by the Lender
Parties;
(h) any other defense based upon destruction or diminution of
Holding's rights against the Borrower or the Borrower's assets, whether or not
hypothecated as security; and
(i) any defense based upon any statute or rule of law which provides
that the obligation of a surety must be neither larger in amount nor in other
respects more burdensome than that of the principal.
Holding's sole right with respect to any foreclosure of collateral or security
for any of the Obligations shall be to bid at the sale thereof in accordance
with applicable law. The Lender Parties may also bid at any such sale, and in
the event such collateral is sold to any Lender Party in whole or in partial
satisfaction of the Obligations, Holdings shall have no further right or
interest with respect thereto, including, without limitation, any right of
redemption, whether arising under law or in equity.
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10.3 Bankruptcy.
(a) No Effect on Guaranty. The obligations of Holdings under this
Guaranty shall not be altered, limited or affected by any proceeding, voluntary
or involuntary, involving the bankruptcy, insolvency, receivership,
reorganization, liquidation, or arrangement of the Borrower, or by any defense
or decision of any court or administrative body resulting from any such
proceeding. Any interest on the Obligations which accrues after the commencement
of any such proceeding (or, if interest on any portion of the Obligations ceases
to accrue by operation of law by reason of the commencement of such proceeding,
such interest as would have accrued on any such portion of the Obligations if
such proceeding had not been commenced) shall be included in the Obligations for
the purposes hereof, Holdings expressly agreeing that its liability pursuant to
this Guaranty shall be determined without regard to any rule of law or order
arising out of such proceeding which may relieve the Borrower of liability for
any portion of the Obligations. Holdings will permit any trustee in bankruptcy,
receiver, debtor in possession, assignee for the benefit of creditors, or
similar Person, to pay the Lender Parties, or to allow the claim of the Lender
Parties with respect to, any such interest accruing after the date on which such
proceeding is commenced. In the event that all or any portion of the Obligations
are paid or performed by the Borrower, the obligations of Holdings hereunder
shall continue and remain in full force and effect in the event that all or any
part of such payment or performance is avoided or recovered directly or
indirectly from the Lender Parties as a preference, fraudulent transfer or
otherwise.
(b) Filing of Claims. In any bankruptcy or other proceeding
involving the Borrower in which the filing of claims is required or permitted by
law, Holdings shall file all claims that it may have against the Borrower
relating to any Indebtedness of the Borrower to Holdings, and will assign to the
Collateral Agent on behalf of the Lender Parties all rights of Holdings
thereunder. If Holdings does not file any such claim, the Collateral Agent, as
attorney-in-fact for Holdings, is hereby authorized to do so in the name of
Holdings, or, in the Collateral Agent's discretion, to assign the claim to a
nominee and to cause a proof of claim to be filed in the name of the Collateral
Agent's nominee. The foregoing power of attorney is coupled with an interest and
cannot be revoked. The Collateral Agent or its nominee shall have the sole right
to accept or reject any plan proposed in such proceeding and to take any other
action which a party filing a claim is entitled to do. In any such case, whether
in administration, bankruptcy or otherwise, the Person authorized to pay such
claim shall pay to the Collateral Agent, on behalf of the Lender Parties, the
amount payable on such claim and, to the full extent necessary for that purpose,
Holdings hereby assigns to the Collateral Agent, on behalf of the Lender
Parties, all of Holding's rights to any such payments or distributions to which
Holdings would otherwise be entitled; provided, however, that Holding's
obligations hereunder shall not be satisfied except to the extent that the
Collateral Agent receives cash by reason of any such payment or distribution. If
the Collateral Agent receives anything hereunder other than cash, the same shall
be held as additional collateral for amounts due under this Guaranty.
10.4 Payment.
In furtherance of the provisions of this Article and not in limitation of
any other right which any Lender Party may have at law or in equity against
Holdings by virtue of this Guaranty or otherwise, upon the failure of the
Borrower to pay any Obligation when and as the same shall
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become due, whether at maturity, by acceleration, upon a date fixed for
prepayment or mandatory prepayment or otherwise, Holdings hereby promises to,
and will, upon receipt of a written or telexed demand by the Administrative
Agent, forthwith pay, or cause to be paid, to the Collateral Agent for
distribution to the Lender Parties, in cash, the amount of such unpaid
Obligation.
ARTICLE XI
MISCELLANEOUS
11.1 Notices.
All notices, demands and requests of any kind to be delivered to any party
hereto in connection with this Agreement shall be in writing (including
telecopy) and shall be deemed to have been duly given and received if delivered
personally or if sent by nationally-recognized overnight courier, by telecopier
or by first class, registered or certified mail, return receipt requested, to
such party at its address as follows:
(a) if to the Borrower, to:
World Minerals Inc.
137 West Central Avenue
Lompoc, California 93436
Attention: Mr. John F. Liechty,
Senior Vice President, Finance
Telephone: (805) 737-2424
Telecopier: (805) 737-2496
with a copy to:
World Minerals Inc.
130 Castilian Drive
Goleta, California 93117
Attention: Marc E. Fleischman, Esq.
Senior Vice President, Secretary and
General Counsel
Telephone: (805) 562-0250
Telecopier: (805) 562-0299
(b) if to Chase, as Administrative Agent, to:
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10172
Attention: James H. Ramage
Vice President
Telephone: (212) 270-1373
Telecopier: (212) 270-4724
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(c) if to any other Bank, to it at its address (or telecopy number)
set forth on its Administrative Questionnaire.
Any such notice, demand or request so delivered shall be deemed to
have been received (i) on the day of actual delivery in the case of personal
delivery or telecopier delivery, (ii) on the next business day after the date
when sent in the case of delivery by nationally-recognized overnight courier, or
(iii) on the fifth business day after the date of deposit in the U.S. mail in
the case of mailing. Any party hereto may from time to time by notice in writing
served upon the other as aforesaid designate a different mailing address or a
different person to which all such notices, demands or requests thereafter are
to be addressed.
11.2 Survival of Agreement.
All representations and warranties made by any Loan Party herein and in
the other Loan Documents and in any certificate or other instrument prepared or
delivered pursuant to this Agreement or any other Loan Document (i) shall be
considered to have been relied upon by the Lender Parties and (ii) shall survive
the making of Loans by the Banks and all covenants and agreements made by any
Loan Party herein or in any other Loan Document and continue in full force and
effect as long as any principal of or accrued interest on any Loan, any Fee, any
Reimbursement Obligation or any other amount payable under or in connection with
this Agreement or any other Loan Document is outstanding and unpaid.
11.3 Successors and Assigns; Syndications; Loan Sales; Participations.
(a) Whenever in this Agreement any of the parties hereto is referred
to, such reference shall be deemed to include the permitted successors and
assigns of such party, and all covenants, promises and agreements by or on
behalf of any Loan Party or any Lender Party that are contained in this
Agreement or any other Loan Document shall bind and inure to the benefit of
their respective successors and assigns.
(b) Each Bank may assign to one or more Eligible Assignees all or a
portion of its interests, rights and obligations under this Agreement (including
all or a portion of its Commitment, the Loans at the time owing to it and its
rights, titles and interests under the other Loan Documents); provided, however,
that
(i) except in the case of an assignment to a Bank or an
Affiliate of a Bank, the written consent of the Administrative Agent, the
Issuing Bank and the Borrower (which consent shall not be unreasonably
withheld or delayed) to such assignment shall have been given,
(ii) such assignment shall be of a constant, and not a
varying, percentage of all the assigning Bank's rights and obligations
under this Agreement (other than, in the case of the Issuing Bank, any
rights or obligations relating to the Letters of Credit),
(iii) except in the case of an assignment to a Bank or an
Affiliate of a Bank, the Pro Rata Share of the Commitment of the assigning
Bank subject to each such assignment (determined as of the date the
Assignment and Acceptance with respect to such assignment is delivered to
the Administrative Agent) shall not be less than
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$5,000,000 and the Pro Rata Share of the Commitment of such Bank remaining
after such assignment shall not be less than $5,000,000 or shall be zero,
(iv) the parties to each such assignment shall execute and
deliver to the Administrative Agent an Assignment and Acceptance, subject
to such assignment and a processing and recordation fee of $3,500,
(v) such assignment shall not result in any increased costs
which must be paid by the Borrower (including, without limitation, any
amounts payable under Sections 2.8, 2.10, 2.15 and 3.4 hereof) and
(vi) the assignee, if it shall not be a Bank, shall deliver to
the Administrative Agent an Administrative Questionnaire.
Upon acceptance and recording pursuant to paragraph (e) of this Section 11.3,
from and after the effective date specified in each Assignment and Acceptance
(which effective date shall be at least five Business Days after the execution
thereof, unless the Administrative Agent shall otherwise agree) (A) the assignee
thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, become and have the rights and obligations of a Bank
under this Agreement and (B) the assigning Bank thereunder shall, to the extent
of the interest assigned pursuant to such assignment, 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 Bank's rights
and obligations under this Agreement, such Bank shall cease to be a party
hereto) but shall continue to be entitled to the benefits of Sections 2.8, 2.10,
2.15 and 3.4, as well as to any fees or other amounts accrued to its account but
unpaid on such date.
(c) By executing and delivering an Assignment and Acceptance, the
assigning Bank thereunder and the assignee thereunder shall be deemed to confirm
to and agree with each other and the other parties hereto as follows:
(i) such assigning Bank warrants that it is the legal and
beneficial owner of the interest being assigned thereby free and clear of
any adverse claim and that its Pro Rata Share of the Commitment and the
total outstanding balance of its Loans, in each case without giving effect
to assignments thereof which have not become effective, are as set forth
in such Assignment and Acceptance,
(ii) except as set forth in clause (i) above, such assigning
Bank makes no representation or warranty and assumes no responsibility
with respect to any statements, warranties or representations made in or
in connection with this Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement, any
other Loan Documents or any other instrument or document furnished
pursuant hereto, or to the financial condition of any Loan Party, or the
performance or observance by any Loan Party of any of its obligations
under this Agreement, any other Loan Document or any other instrument or
document furnished pursuant hereto,
(iii) such assignee represents and warrants that it is legally
authorized to execute and deliver the Assignment and Acceptance,
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(iv) such assignee confirms that it has received a copy of
this Agreement, together with copies of the most recent financial
statements delivered pursuant to Section 6.11 and such other documents and
information as it has deemed appropriate to make its own credit analysis
and decision to enter into such Assignment and Acceptance;
(v) such assignee will independently and without reliance upon
the Administrative Agent, such assigning Bank or any other Bank and based
on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking
action under this Agreement;
(vi) such assignee appoints and authorizes the Administrative
Agent and the Collateral Agent to take such action as agent on its behalf
and to exercise such powers under this Agreement as are delegated to the
Administrative Agent and Collateral Agent, respectively, by the terms
hereof, together with such powers as are reasonably incidental thereto;
and
(vii) such assignee agrees that it will perform in accordance
with their terms all the obligations which by the terms of this Agreement
are required to be performed by it as a Bank.
Effective upon the assignment of an interest hereunder, Annex I hereto shall be
amended by the Administrative Agent to reflect such assignment.
(d) The Administrative Agent shall maintain at one of its offices in
The City of New York a copy of each Assignment and Acceptance delivered to it
and a register for the recordation of the names and addresses of the Banks, and
the commitments of, and principal amount of the Loans owing to, each Bank
pursuant to the terms thereof from time to time (the "Register"). The entries in
the Register shall be conclusive in the absence of manifest error, and Holdings
and the Borrower, the Administrative Agent and the Banks may treat each Person
whose name is recorded in the Register pursuant to the terms hereof as a Bank
hereunder for all purposes of this Agreement. The Register shall be available
for inspection by the Borrower, the Administrative Agent and any Bank, at any
reasonable time and from time to time upon reasonable prior notice.
(e) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Bank and a permitted assignee subject to such
assignment, the processing and recordation fee referred to in paragraph (b)
above and the written consent of the Borrower to such assignment if required
pursuant to paragraph (b) above, the Administrative Agent shall
(i) accept such Assignment and Acceptance,
(ii) record the information contained therein in the Register
and
(iii) give prompt notice thereof to the Banks and the
Borrower.
(f) Each Bank may without the consent of any Loan Party or the
Administrative Agent sell participations to one or more banks or other entities
in all or a portion of its rights and
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obligations under this Agreement (including all or a portion of the Loans owing
to it); provided, however, that
(i) such Bank's obligations under this Agreement (including
its Pro Rata Share of the Commitment) shall remain unchanged,
(ii) such Bank shall remain solely responsible to the other
parties hereto for the performance of such obligations,
(iii) the participating banks or other entities shall be
entitled to the benefit of the cost and yield protection provisions
contained in Sections 2.8, 2.10, 2.15 and 3.4 to the same extent that the
Bank from which such participating bank or other entity acquired its
participation would be entitled to the benefit of such cost protection
provisions (but shall not, in the aggregate, be entitled to receive
payments under such Sections in amounts in excess of the payments which
would have been made to the selling Bank had such participations not been
sold) and
(iv) the Borrowers, the Administrative Agent and the other
Banks shall continue to deal solely and directly with such Bank in
connection with such Bank's rights and obligations under this Agreement,
and such Bank shall retain the sole right to enforce the obligations of
Holdings or the Borrower relating to the Loans and to approve any
amendment, modification or waiver of any provision of this Agreement
(other than amendments, modifications or waivers with respect to reducing
any Fees payable hereunder or reduce the amount of principal of or
decrease the rate at which interest is payable on the Loans, or the dates
fixed for payments of principal of or interest on the Loans and increasing
or extending the Commitment).
(g) Any Bank or participant may, in connection with any assignment
or participation or proposed assignment or participation pursuant to this
Section 11.3, disclose to the assignee or participant or proposed assignee or
participant any information relating to Holdings and any Subsidiary furnished to
such Bank by or on behalf of Holdings and such Subsidiary; provided, however,
that, prior to any such disclosure of information designated by Holdings or any
Subsidiary as confidential, each such assignee or participant or proposed
assignee or proposed participant shall execute an agreement whereby such Person
shall agree (subject to customary exceptions) to preserve the confidentiality of
such confidential information and to use such information solely for purposes
related to this Agreement.
(h) Any Bank may at any time assign all or any portion of its rights
under this Agreement to a Federal Reserve Bank; provided, however, that no such
assignment shall release a Bank from any of its obligations hereunder.
(i) No Loan Party shall assign or delegate any of its rights or
duties hereunder without the prior written consent of all of the Banks and any
purported assignment or delegation without such consent shall be null and void
and shall be given no force and effect.
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11.4 Expenses of the Lender Parties.
The Borrower agrees to pay all reasonable out-of-pocket expenses
reasonably incurred by the Administrative Agent and the Collateral Agent
associated with the arrangement of the credit facilities hereunder (including
printing, duplicating, mailing, advertising and similar expenses), the
preparation, execution and delivery of this Agreement and the other Loan
Documents (whether or not the transactions hereby contemplated shall be
consummated) or reasonably incurred by any Lender Party in connection with the
enforcement or protection of its rights under this Agreement, any other Loan
Document or the Loans made and Letters of Credit issued hereunder, including,
but not limited to, the reasonable fees and disbursements of O'Sullivan Graev &
Karabell, LLP, special counsel for the Administrative Agent and the Collateral
Agent, and in connection with such enforcement or protection, the reasonable
fees and disbursements of other counsel (including in-house counsel) for the
Banks. All amounts due under this Section 11.4 shall be payable within 15
Business Days after demand by any Lender Party therefor.
11.5 Indemnification.
(a) General. The Borrower hereby agrees to indemnify and hold
harmless the Lender Parties and each of their respective officers, directors,
employees, counsel and agents (each, an "Indemnified Person") from and against
any and all losses, claims, damages and liabilities to which any Indemnified
Person may become subject (excluding any losses, claims, damages and liabilities
arising from gross negligence, willful misconduct, fraud or breach of fiduciary
duty owed to third parties on the part of such Indemnified Person or arising
from any assertion, putative or otherwise, as to the legal capacity or authority
of any Indemnified Person to execute and deliver this Agreement or in respect of
any law governing the corporate powers of any Indemnified Person to perform its
obligations hereunder) arising out of this Agreement, any other Loan Document,
the Facility or any Loans, Letters of Credit or other financial accommodations
thereunder, the use of the proceeds of any such Loans, Letters of Credit or
financial accommodations, the breach of any representation or covenant contained
herein or in any other Loan Document, any act or omission by the Administrative
Agent or the Collateral Agent in connection herewith or with any of the
foregoing (including any claim asserted in any litigation, investigation or
proceeding relating to any of the foregoing, whether or not any Indemnified
Person is a party thereto), and to reimburse each Indemnified Person, within 15
Business Days after written demand, for all legal and other expenses incurred in
connection with investigating or defending any of the foregoing. The foregoing
indemnity obligation shall not, as to any Indemnified Person, apply to any loss,
claim, damage or liability (i) incurred by any Indemnified Person against any
other Indemnified Person hereunder, (ii) arising from the breach by any
Indemnified Person of any of its obligations to Holdings or the Borrower
hereunder or (iii) arising out of any commitment made by any Indemnified Person
which would be breached by performance of such Indemnified Person's obligations
hereunder. Each Indemnified Person will provide prompt written notice to the
Borrower of its assertion of any claim or the commencement of any legal action
or proceeding against such Indemnified Person related to the Facility or the
transactions contemplated hereby.
(b) Environmental Indemnity. The Borrower hereby agrees to
indemnify, defend and hold harmless each Indemnified Person, from and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, charges, expenses or disbursements
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(including reasonable fees and expenses of counsel and the allocated cost of
internal counsel), which may be incurred by or asserted against an Indemnified
Person in connection with or arising out of any Environmental Claim arising out
of or related to any property owned or operated by, any operation of, or the
conduct of business by the Borrower or any of its Subsidiaries. No action taken
by legal counsel chosen by any Lender Party in defending against any such
investigation, litigation or proceeding or requested remedial, removal or
response action shall vitiate or any way impair the Borrower's obligation and
duties hereunder to indemnify and hold harmless the Indemnified Persons. In no
event shall site visit, observation, or testing by any Lender Party be a
representation that Hazardous Materials are or are not present in, on, or under
the site, or that there has been or shall be compliance with any law,
regulation, or ordinance pertaining to Hazardous Materials or any other
Applicable Law. Neither any Loan Party nor any other party is entitled to rely
on any site visit, observation, or testing by any Lender Party. Except as may be
required by Applicable Law, no Lender Party owes any duty of care to protect
Holdings or any Subsidiary or any other party against, or to inform Holdings or
any Subsidiary or any other party of, any Hazardous Materials or any other
adverse condition affecting any site or property. Except as may be required by
Applicable Law, no Lender Party shall be obligated to disclose to Holdings or
any Subsidiary or any other party any report or findings made as a result of, or
in connection with, any site visit, observation, or testing by any Lender Party.
(c) The provisions of this Section 11.5 shall remain operative and
in full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the invalidity or unenforceability of any term or
provision of this Agreement or any other Loan Document or any investigation made
by or on behalf of any Lender Party. All amounts due under this Section 11.5
shall be payable within 15 Business Days after written demand therefor.
(d) To the extent permitted by applicable law, Holdings and the
Borrower shall not assert, and each hereby waives, any claim against any
Indemnitee, on any theory of liability, for special, indirect, consequential or
punitive damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement or any agreement or
instrument contemplated hereby, any Loan or Letter of Credit or the use of the
proceeds thereof.
11.6 Governing Law.
(a) THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO
CONFLICTS OF LAWS PRINCIPLES.
(b) For all purposes of this Agreement or any other Loan Document,
and for all purposes of any suit or proceeding arising out of or relating to the
transactions contemplated hereby or thereby or for recognition or enforcement of
any judgment, each Loan Party and each Lender Party hereby submits to the
personal jurisdiction of the courts of the State of New York and the federal
courts of the United States sitting in New York City, and any appellate court
from any such state or federal court, and hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be heard
and determined in such New York court or, to the extent permitted by law, in
such federal court. The Borrower, Holdings, and each
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Lender Party hereby agree that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in any other jurisdiction by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement shall
affect any right that any Lender Party or the Borrower may otherwise have to
bring any action or proceeding relating to this Agreement or any related matter
against the Borrower or its properties in the case of the Lender Party, or
against any Lender Party, or their respective properties in the case of the
Borrower, in the courts of any jurisdiction.
(c) The Borrower, Holdings and each Lender Party hereby irrevocably
and unconditionally waive, to the fullest extent it may legally and effectively
do so,
(i) any objection which it may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or
relating to this Agreement or any related matter in any New York State or
federal court located in New York and
(ii) the defense of an inconvenient forum to the maintenance
of such action or proceeding in any such court.
(d) The Borrower and each Lender Party hereby irrevocably consent to
service of process by registered United States mail, return receipt requested,
as provided in Section 11.1. Nothing in this Agreement will affect the right of
any party to this Agreement to serve process in any other manner permitted by
law.
11.7 Waiver of Jury Trial.
EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER
LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
11.8 Waivers; Amendments.
(a) No failure or delay of any Lender Party in exercising any power
or right hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the Lender Parties hereunder are cumulative and not exclusive of
any rights or remedies which they would otherwise have. No waiver of any
provision of this Agreement or any other Loan Document or consent to any
departure by any Loan Party therefrom shall in any event be effective unless the
same shall be authorized as provided in
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paragraph (b) below, and then such waiver or consent shall be effective only in
the specific instance and for the purpose for which given. No notice or demand
on any Loan Party in any case shall entitle any Loan Party to any other or
further notice or demand in similar or other circumstances. Each Bank shall be
bound by any amendment, modification, waiver or consent authorized as provided
herein.
(b) Neither this Agreement nor any other Loan Document nor any
provision hereof or thereof may be waived, amended or modified except, in the
case of this Agreement, pursuant to an agreement or agreements in writing
entered into by Holdings, the Borrower and the Majority Banks or, in the case of
any other Loan Document, pursuant to an agreement or agreements in writing
entered into by the Administrative Agent (or, if applicable, the Collateral
Agent) and Holdings, the Borrower or the Subsidiaries that are parties thereto,
in each case with the consent of the Majority Banks; provided, however, that no
such agreement shall
(i) change the principal amount of, or extend or advance the
maturity of or any date for the payment of any Loan or any Fee or
Reimbursement Obligation or waive or excuse any such payment or any part
thereof, increase any Bank's Pro Rata Share of the Commitment, amend or
modify the provisions of Sections 2.12 and 2.13 in a manner that would
alter pro rata sharing of payments required thereby or change the rate of
interest on any Loan, without the written consent of each Bank affected
thereby,
(ii) amend or modify the provisions of this Section 11.8 or
the definition of "Majority Banks", without the written consent of each
Bank, or
(iii) release Holdings from the Holdings Guaranty, release any
Subsidiary Guarantor from the Subsidiary Guaranty Agreement or release any
material part of the Collateral (except as expressly permitted by the
applicable Financing Document) without the written consent of each Bank;
and
provided, further, however, that no such agreement shall amend, modify or
otherwise affect the rights or duties of the Administrative Agent or Collateral
Agent under this Agreement or any other Loan Document without the written
consent of the Administrative Agent and Collateral Agent, respectively, or
change the provisions of Article III with respect to the Issuing Bank's rights
and obligations thereunder without the consent of each Issuing Bank; and
provided, further, that any Issuing Bank may cease to be an Issuing Bank by
agreement between such Issuing Bank and the Borrower (which shall not
unreasonably withhold consent to any proposed resignation by an Issuing Bank).
11.9 Severability.
In the event any one or more of the provisions contained in this Agreement
or other Loan Document should be held invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein or therein shall not in any way be affected or impaired
thereby. The parties shall endeavor in good-faith negotiations to replace the
invalid, illegal or unenforceable provisions with valid provisions, the economic
effect of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
-77-
<PAGE> 83
11.10 Counterparts.
This Agreement may be executed in two or more counterparts, each of which
shall constitute an original but all of which when taken together shall
constitute but one contract, and shall become effective when copies hereof
which, when taken together, bear the signatures of each of the parties hereto
shall be received by the Administrative Agent, the Collateral Agent, Holdings
and the Borrower. Delivery of an executed counterpart of a signature page of
this Agreement by telecopy shall be effective as delivery of a manually executed
counterpart of this Agreement.
11.11 Headings.
Article and Section headings and the Table of Contents used herein are for
convenience of reference only and are not to affect the construction of, or to
be taken into consideration in interpreting, this Agreement.
11.12 Obligations of Lender Parties Several.
The rights and obligations of the Lender Parties under this Agreement and
the other Loan Documents are several and not joint. Nothing contained in this
Agreement or any other Loan Document and no action taken by any Lender Party or
the Borrower pursuant hereto or thereto shall be deemed to constitute the Lender
Party as a partnership, association, joint venture or other entity.
11.13 Entire Agreement.
This Agreement, together with the agreements and documents referred to
herein and the Fee Letter contain the entire agreement of the parties and
supersedes any and all prior agreements among the parties with respect to the
subject matter hereof.
11.14 Confidentiality.
(a) Each Lender Party agrees to keep confidential (and to cause its
respective officers, directors, employees, agents, representatives and
Affiliates to keep confidential) the Information (as defined below), except that
any Lender Party shall be permitted to disclose Information:
(i) to such of its officers, directors, employees, agents,
representatives and Affiliates (including outside counsel) as need to know
such Information;
(ii) to the extent required by applicable laws and regulations
or by any subpoena or similar legal process, or requested by any bank
regulatory authority (provided that such Lender Party shall, except for
Information requested by any such bank regulatory authority, promptly
notify Borrower (to the extent practicable and lawful, notice shall be
given to the Borrower before such disclosure is made so as to permit
Borrower to seek a protective order) of the circumstances and content of
each such disclosure and shall request confidential treatment of any
Information so disclosed);
-78-
<PAGE> 84
(iii) to the extent such Information
(A) becomes publicly available other than as a result of
a breach of this Agreement,
(B) becomes available to such Lender Party on a
non-confidential basis from a source other than the Borrower or its
Affiliates or
(C) was available to such Lender Party on a
non-confidential basis prior to its disclosure to such Lender Party
by the Borrower or its Affiliates; or
(iv) to the extent the Borrower shall have consented to such
disclosure in writing. As used in this Section 11.14, as to any Lender
Party, "Information" shall mean any financial statements, materials,
documents and other information that the Borrower or any of its Affiliates
may have furnished or may hereafter furnish to the Lender Parties in
connection with this Agreement or any other materials prepared by any such
person from any of the foregoing.
(b) Any Person required to maintain the confidentiality of
Information as provided in this Section shall be considered to have complied
with its obligation to do so if such Person has exercised the same degree of
care to maintain the confidentiality of such Information as such Person would
accord to its own confidential information.
11.15 Interest Rate Limitation.
Notwithstanding anything herein to the contrary, if at any time the
interest rate applicable to any Loan, together with all fees, charges and other
amounts that are treated as interest on such Loan under applicable law
(collectively, the "Charges"), shall exceed the maximum lawful rate (the
"Maximum Rate") that may be contracted for, charged, taken, received or reserved
by the Bank holding such Loan in accordance with applicable law, the rate of
interest payable in respect of such Loan hereunder, together with all Charges
payable in respect thereof, shall be limited to the Maximum Rate and, to the
extent lawful, the interest and Charges that would have been payable in respect
of such Loan but were not payable as a result of the operation of this Section
shall be cumulated and the interest and Charges payable to such Bank in respect
of other Loans or periods shall be increased (but not above the Maximum Rate
therefor) until such cumulated amount, together with interest thereon at the
Federal Funds Effective Rate to the date of repayment, shall have been received
by such Bank.
* * * * *
-79-
<PAGE> 85
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers, all as of the day and year
first above written.
MINERALS HOLDINGS INC.
By: /s/ William J. Woods, Jr.
-----------------------------------------
Name: William J. Woods, Jr.
Title: President
WORLD MINERALS INC.
By: /s/ John F. Liechty
-----------------------------------------
Name: John F. Liechty
Title: Senior Vice President
THE CHASE MANHATTAN BANK, individually and as
Administrative Agent and Collateral Agent
By: /s/ James H. Ramage
-----------------------------------------
Name: James H. Ramage
Title: Vice President
BANK OF AMERICA NATIONAL TRUST & SAVINGS
ASSOCIATION
By: /s/ Charles F. Lilygren
-----------------------------------------
Name: Charles F. Lilygren
Title: Senior Vice President
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Lynn Kuncz
-----------------------------------------
Name: Lynn Kuncz
Title: Vice President
<PAGE> 86
UNION BANK OF CALIFORNIA, N.A.
By: /s/ Andrew G. Ewing, Jr.
-----------------------------------------
Name: Andrew G. Ewing, Jr.
Title: Vice President
SANWA BANK CALIFORNIA
By: /s/ Ted A. Dunn
-----------------------------------------
Name: Ted A. Dunn
Title: Vice President
BANQUE NATIONALE DE PARIS
By: /s/ C. Bettles
-----------------------------------------
Name: C. Bettles
Title: Senior Vice President & Manager
By: /s/ Stephane Ronze
-----------------------------------------
Name: Stephane Ronze
Title: Assistant Vice President
BANK OF MONTREAL
By: /s/ Elizabeth F. Trapp
-----------------------------------------
Name: Elizabeth F. Trapp
Title: Director
<PAGE> 87
MELLON BANK, N.A.
By: /s/ William R. Murray
-----------------------------------------
Name: William R. Murray
Title: Vice President
CARIPLO - CASSA DI RISPARMIO DELLE PROVINCIE
LOMBARDE S.p.A.
By: /s/ Anthony F. Giobbi
-----------------------------------------
Name: Anthony F. Giobbi
Title: F.V.P.
By: /s/ Maria Elena Greene
-----------------------------------------
Name: Maria Elena Greene
Title: A.V.P.
BANK LEUMI USA
By: /s/ Del Lorimer
-----------------------------------------
Name: Del Lorimer
Title: V.P./Manager
<PAGE> 88
ANNEX I
Participating Banks
<TABLE>
<CAPTION>
Column A Column B
-------- --------
Institution Pro Rata Share
----------- --------------
<S> <C>
The Chase Manhattan Bank 12.50000000%
270 Park Avenue
New York, NY 10017
Attention: James H. Ramage,
Vice President
Telephone: (212) 270-1373
Telecopier: (212) 270-4724
Bank of America National Trust & 10.83333333%
Savings Association
555 South Flower Street
11th Floor, Unit 5618
Los Angeles, CA 90071
Attention: Charles F. Lilygren
Telephone: (213) 228-2636
Telecopier: (213) 623-1959
PNC Bank, National Association 10.83333333%
249 Fifth Avenue
Pittsburgh, PA 15222
Attention: Lynn Koncz
Telephone: (412) 762-3207
Telecopier: (412) 705-3232
Union Bank of California, N.A. 10.83333333%
445 South Figueroa Street
Los Angeles, CA 90071
Attention: Pete Ewing
Telephone: (213) 236-4271
Telecopier: (213) 236-4066
Sanwa Bank California 10.83333333%
15165 Ventura Blvd.
Sherman Oaks, CA 91403
Attention: Ted Dunn
Telephone: (818) 905-1014
Telecopier: (818) 905-1002
</TABLE>
I-1
<PAGE> 89
<TABLE>
<S> <C>
Banque Nationale de Paris 10.83333333%
725 South Figueroa Street
Los Angeles, CA 90071
Attention: Stephane Ronze
Telephone: (213) 688-6427
Telecopier: (213) 488-9602
Bank of Montreal 10.83333333%
430 Park Avenue
New York, NY 10022
Attention: Ian Plester
Telephone: (212) 605-1417
Telecopier: (212) 605-1451
Mellon Bank, N.A. 10.83333333%
400 S. Hope St.
Los Angeles, CA 90071-2806
Attention: William Murray
Telephone: (213) 553-9563
Telecopier: (213) 629-0484
Cariplo - Cassa di Risparmio Delle 5.83333333%
Provincie Lombarde S.p.A.
10 East 53rd Street
New York 10022
Attention: Anthony F. Giobbi
Telephone: (212) 527-8737
Telecopier: (212) 527-8777
Bank Leumi USA 5.83333333%
8383 Wilshire Blvd.
Beverly Hills, CA 90211
Attention: Del Lorimer
Telephone: (323) 966-4721
Telecopier: (323) 655-3573
</TABLE>
I-2
<PAGE> 90
ANNEX II
Financing Documents
1. Pledge Agreement dated as of the date hereof, between the Borrower and the
Collateral Agent.
2. Pledge Agreement dated as of the date hereof, between Holdings and the
Collateral Agent.
3. Pledge Agreement dated as of the date hereof, between the Subsidiary
Pledgors and the Collateral Agent.
4. Guaranty Agreement dated as of the date hereof, between the Subsidiary
Guarantors and the Collateral Agent.
5. Fee Letter dated as of January 15, 1999, among Holdings, the Borrower,
Chase and Chase Securities, Inc.
II-1
<PAGE> 91
ANNEX III
List of Jurisdictions
Loan Parties:
State of Delaware
State of California
Santa Barbara County, California
Harborlite:
Pinal County, Arizona
San Diego County, California
Gadsden County, Florida
Kalamazoo, Michigan
Franklin County, North Carolina
Sweetwater County, Wyoming
Harris County, Texas
Celite:
Grant County, Washington
Perlite, Inc.:
Taos County, New Mexico
Conejos County, Colorado
III-1
<PAGE> 1
Exhibit 10.2
World Minerals Credit Agreement
EXHIBITS
EXHIBIT A - Form of Alleghany Subordination Agreement
EXHIBIT B - Form of Assignment and Acceptance
EXHIBIT D - Form of Borrower Pledge Agreement
EXHIBIT E - Form of Holdings Pledge Agreement
EXHIBIT C - Form of Subsidiary Guaranty Agreement
EXHIBIT F - Form of Subsidiary Pledge Agreement
EXHIBIT G - Form of Notice of Borrowing
ANNEXES
ANNEX I - The Banks
ANNEX II - Financing Documents
ANNEX III - List of Jurisdictions
SCHEDULES
Schedule 3.1 - Existing Letters of Credit
Schedule 4.4(a) - Financial Statements
Schedule 4.4(b) - Certain Obligations
Schedule 4.6 - Litigation
Schedule 4.8 - Employee Benefit Plans
Schedule 4.10(a) - Title to Properties
Schedule 4.10(b) - Intellectual Property
Schedule 4.11 - Business
Schedule 4.20 - Owners of Capital Stock
Schedule 7.2 - Liens
Schedule 7.15 - Restrictive Agreements
<PAGE> 1
Exhibit 10.3
SUBORDINATION AGREEMENT dated as
of March 17, 1999, among ALLEGHANY
CORPORATION, a Delaware corporation (the
"Subordinated Creditor"), and THE CHASE
MANHATTAN BANK, a New York banking
corporation (the "Collateral Agent"), as
administrative agent and collateral
agent for the Banks (as hereinafter
defined).
Reference is made to the Credit Agreement dated as of March 17,
1999, as the same may hereafter be amended, supplemented, restated or otherwise
modified from time to time (the "Credit Agreement"), among Mineral Holdings
Inc., a Delaware corporation ("Holdings"), World Minerals Inc., a Delaware
corporation (the "Borrower"), the Banks (as defined therein), the Collateral
Agent, as administrative agent and collateral agent for the Banks and as an
Issuing Bank, and the other parties who may from time to time become signatories
thereto, relating to a senior secured credit facility (the "Facility") provided
by the Banks to the Borrower. The Banks, the Issuing Bank, the Collateral Agent
and the Administrative Agent are hereinafter collectively referred to as the
"Lender Parties".
The Borrower is wholly-owned by Holdings, which is in turn owned
approximately 95% by the Subordinated Creditor. In consideration of the Lender
Parties' entering into the Credit Agreement and in order to induce the Lender
Parties to make loans, extend credit and provide other financial accommodations
to or for the benefit of the Borrower and its subsidiaries, or to grant such
renewals or extensions thereof as the Lender Parties may deem advisable, and to
better secure the Lender Parties with respect to the foregoing, the Subordinated
Creditor is entering into this Agreement to, among other things, subordinate its
right to be paid, and any right to any security it may have securing such right
to payment, certain amounts which now or may from time to time be owing or
otherwise payable as provided herein to the Subordinated Creditor from Holdings,
the Borrower and their respective direct and indirect Subsidiaries (as defined
in the Credit Agreement).
ACCORDINGLY, in consideration of the premises and the mutual
covenants and agreements contained in this Agreement, and for other good and
valuable consideration, the receipt and sufficiency are hereby acknowledged, the
parties hereto hereby agree as follows:
Section 1. Certain Definitions. Capitalized terms used and not otherwise
defined in this Agreement have the meanings ascribed to them in the Credit
Agreement.
Section 2. Subordination; Subrogation. Except as otherwise specifically
provided in this Agreement, the Subordinated Creditor shall not ask, demand, sue
for, take or receive from any of Holdings, the Borrower and any of their
respective Subsidiaries (collectively, the "Debtors"), by setoff or in any other
manner, all or any part of any Indebtedness which may now
<PAGE> 2
or hereafter be owing or otherwise payable by any Debtor or any successor of any
Debtor, including, without limitation, a receiver, trustee or
debtor-in-possession (the term "Debtor" hereinafter including, with respect to
any Debtor, any such successor of such Debtor) to the Subordinated
Creditor(whether such Indebtedness consists of principal or interest, absolute
or contingent) (all such liabilities and obligations being referred to in this
Agreement collectively as the "Subordinated Obligations"), including, without
limitation, the taking of any negotiable instruments evidencing the Subordinated
Obligations, unless and until all obligations, liabilities and indebtedness of
such Debtor to the Lender Parties arising under any Loan Document and whether
now existing or hereafter arising, or acquired outright, conditionally or as
collateral security from another Person by the Lender Parties (all such
obligations, indebtedness and liabilities of such Debtor to the Lender Parties
being referred to in this Agreement collectively as the "Obligations"), shall
have been fully and indefeasibly paid and satisfied and all financing
arrangements between such Debtor and the Lender Parties have been terminated.
Notwithstanding any right of the Subordinated Creditor to ask, demand, sue for,
take or receive any payment with respect to the Subordinated Obligations of any
Debtor, all Liens of the Subordinated Creditor, whether now existing or
hereafter arising, on any assets of any Debtor or on any assets securing the
Obligations are hereby subordinated in all respects to all Liens and other
rights and interests of the Lender Parties in those assets, and the Subordinated
Creditor shall have no right to possession of any such asset or to foreclose
upon any such asset, whether by judicial action or otherwise, unless and until
all of the Obligations have been fully and indefeasibly paid and satisfied and
all financing arrangements between such Debtor and the Lender Parties have been
terminated. The Subordinated Creditor agrees that, regardless of whether the
Obligations of any Debtor are secured or unsecured, the Lender Parties shall be
subrogated to the rights of the Subordinated Creditor with respect to the
Subordinated Creditor's claims against such Debtor and the Subordinated
Creditor's Liens, if any, in such Debtor's assets and the proceeds thereof until
all of the Obligations have been fully and indefeasibly paid and satisfied and
all financing arrangements between such Debtor and the Lender Parties have been
terminated.
Section 3. Permitted Payments. Anything contained in this Agreement to the
contrary notwithstanding, the Subordinated Creditor may receive and retain any
payment from a Debtor on or with respect to the Subordinated Obligations of such
Debtor if and only if at the time such payment is made no Default or Event of
Default has occurred and is continuing or will occur as a result of such
payment.
Section 4. Subordinated Obligations Owed Only to the Subordinated
Creditor. The Subordinated Creditor represents and warrants to the Lender
Parties that the Subordinated Creditor has not previously assigned any interest
in any of the Subordinated Obligations of any Debtor to any other Person and
that no other Person owns any interest in any of the Subordinated Obligations of
any Debtor to the Subordinated Creditor. The Subordinated Creditor agrees that
it shall not transfer, sell or assign to any other Person, or suffer or permit
any other Person to own or acquire, any interest in any Subordinated Obligations
of any of the Debtors.
Section 5. The Lender Parties' Priority. In the event of any distribution
of the assets or readjustment of the liabilities of any Debtor, whether by
reason of liquidation, bankruptcy, receivership, assignment for the benefit of
creditors or any other action or proceeding involving
<PAGE> 3
the readjustment of all or any of the liabilities of such Debtor, or the
application of the assets of such Debtor to the payment or liquidation thereof,
the Lender Parties shall be entitled to receive payment in full of all
Obligations then owing by such Debtor prior to the payment of all or any part of
the Subordinated Obligations of such Debtor, and in order to enable the Lender
Parties to enforce their rights hereunder in any such action or proceeding, the
Collateral Agent is hereby authorized and empowered, as attorney-in-fact of the
Subordinated Creditor, in the Collateral Agent's sole discretion to make and
present for and on behalf of the Subordinated Creditor such proofs of claims
against such Debtor if the Subordinated Creditor shall have failed to file such
proofs of claims within seven (7) days after the Collateral Agent has requested
the Subordinated Creditor to file such proofs of claim on account of the
Subordinated Obligations of such Debtor, as the Collateral Agent may deem
expedient or proper, and to vote such proofs of claims in any such proceeding
and to receive and collect any and all dividends or other payments or
disbursements made thereon in whatever form the same may be paid or issued and
to apply the same on account of any of the Obligations. Such agency is coupled
with an interest and may not be revoked.
Section 6. Grant of Authority to the Lender Parties. In the event of any
distribution, division or application, partial or complete, voluntary or
involuntary, by operation of law or otherwise, of all or any part of the assets
of any Debtor or the proceeds thereof to the creditors of such Debtor or its
business, or upon the sale of all or substantially all of such Debtor's assets,
then, and in any such event, any payment or distribution of any kind or
character, either in cash, securities or other property, which shall be payable
or deliverable upon or with respect to any or all of the Subordinated
Obligations of such Debtor to the Subordinated Creditor shall be paid or
delivered directly to the Lender Parties for application to the Obligations,
whether or not due, until all Obligations have been fully paid and satisfied. In
the event that the Subordinated Creditor shall fail or refuse to take any action
that the Collateral Agent requests in writing that the Subordinated Creditor
take with respect to the Subordinated Obligations of any Debtor within thirty
(30) days of the Subordinated Creditor's receipt of such request, the
Subordinated Creditor hereby authorizes and empowers the Collateral Agent, as
its attorney-in-fact, to demand, sue for, collect and receive every such payment
or distribution and give acquittance therefor and to file claims and take such
other proceedings, in the name of the Lender Parties or in the name of the
Subordinated Creditor or otherwise, as the Collateral Agent may deem necessary
or advisable for the enforcement of this Agreement, and the Subordinated
Creditor will execute and deliver to the Collateral Agent such powers of
attorney, assignments or other instruments or documents, as may be requested by
the Collateral Agent in order to enable the Collateral Agent to enforce any and
all claims upon or with respect to any or all of the Subordinated Obligations of
any Debtor and to collect and receive any and all payments or distributions
which may be payable or deliverable at any time upon or with respect to such
Subordinated Obligations, all for the Lender Parties' benefit.
Section 7. Payments Received by the Subordinated Creditor. Should any
payment or distribution, or any security therefor or proceeds thereof, be
received by the Subordinated Creditor upon or with respect to any Subordinated
Obligations or any other obligations of a Debtor to the Subordinated Creditor in
violation of any provision of this Agreement, the Subordinated Creditor shall
receive and hold the same as trustee in trust for the benefit of the Lender
Parties and shall forthwith deliver the same to the Collateral Agent in
precisely the form
<PAGE> 4
received (except for the endorsement or assignment (without recourse, except as
to title) of the Subordinated Creditor where necessary), for application to the
Obligations, whether or not then due. In the event of the failure of the
Subordinated Creditor to make any endorsement or assignment to the Collateral
Agent as required by the immediately preceding sentence, the Collateral Agent is
hereby irrevocably authorized to make the same.
Section 8. Instrument Legend. Within 10 Business Days after the execution
of this Agreement, the Subordinated Creditor shall cause any instrument
evidencing all or any part of the Subordinated Obligations of a Debtor to the
Subordinated Creditor to be inscribed with a legend conspicuously indicating
that payment thereof is subordinated to the claims of the Lender Parties
pursuant to the terms of this Agreement and to cause each such instrument to be
delivered to the Collateral Agent upon request therefor upon and after an Event
of Default, if such original instrument is necessary in order to enable the
Lender Parties to take any action permitted hereunder, including, without
limitation, the filing of proofs of claim on behalf of the Subordinated
Creditor.
Section 9. Continuing Nature of the Subordination. This Agreement is
irrevocable and shall continue until all the terms, covenants and conditions of
the Loan Documents have been fully and completely performed by each of the
Debtors party thereto or are otherwise discharged and released by the Lender
Parties, and the Subordinated Creditor shall not be released from any duty,
obligation or liability hereunder so long as there is any claim of the Lender
Parties against any Debtor arising out of the Loan Documents which has not been
performed, settled, discharged or satisfied in full. The Subordinated Creditor
shall not be released nor shall the Subordinated Creditor's obligations
hereunder be in any way diminished by (i) any extension of time for payment or
performance of the Obligations granted to any Debtor, (ii) any action taken
under the Loan Documents by or on behalf of the Lender Parties in the exercise
of any right thereby conferred or (iii) any delay, failure or omission on the
part of the Lender Parties to enforce any such right. The Lender Parties shall
have full power and authority, without notice to the Subordinated Creditor, to
grant any extensions of time for the payment or performance of the Obligations
as they may deem proper. In addition, the Lender Parties shall have the right to
refinance the Obligations, pursuant to the Credit Agreement or otherwise, and to
make loans and advances in excess of any credit limits contained in the Credit
Agreement, and the terms and conditions of this Agreement shall apply in full to
any such refinancing or loan or advance.
Section 10. Additional Agreements Between the Lender Parties and Debtors.
The Lender Parties may, at any time and from time to time, enter into such
agreements with the Debtors or any of them as the Lender Parties may deem
proper, extending the time of payment or performance of or renewing or otherwise
altering the terms of all or any part of the Obligations or affecting the
Collateral underlying all or any part of the Obligations, or exchange, sell,
release, surrender or otherwise deal with any such Collateral, without in any
way impairing or affecting this Agreement and the Subordinated Creditor's duties
and obligations hereunder.
Section 11. Subordinated Creditor's Acknowledgments and Waivers. The
Subordinated Creditor specifically acknowledges and agrees that the Lender
Parties have made no warranties or representations with respect to the
execution, legality, validity, completeness or enforceability of this Agreement,
the Loan Documents or any other related agreements, or with
<PAGE> 5
respect to the collectibility of the Obligations, and that the Lender Parties
shall be entitled to manage and supervise their loans to the Debtors in
accordance with their usual practices, modified from time to time as they may
deem appropriate under the circumstances without regard to the existence of any
rights that the Subordinated Creditor may now or hereafter have against any
Debtor or in or to any of its assets, and that the Lender Parties shall have no
liability to the Subordinated Creditor for, and the Subordinated Creditor waives
any claim which it may now or hereafter have against the Banks arising out of,
any and all actions which the Lender Parties, in good faith, may take or omit to
take with respect to the Loan Documents or any other related agreements or with
respect to the collection of the Obligations or the valuation, use, protection
or release of the assets of the Debtors (including, without limitation, actions
with respect to (i) the creation, perfection or continuation of Liens in any of
the assets of the Debtors, (ii) the occurrence of an Event of Default, (iii) the
foreclosure upon, sale, release or depreciation of or failure to realize upon
any of the assets of the Debtors and (iv) the collection of any claim for all or
any part of the Obligations from any account debtor, guarantor or any other
Person).
Section 12. Consent. The Subordinated Creditor hereby consents to any and
all extensions or postponements of the time of payment or performance of the
Obligations or to any other indulgence with respect thereto, to any
substitution, exchange or release of Collateral which may at any time secure the
Obligations and/or to the addition or release of any other Person primarily or
secondarily liable therefor.
Section 13. Application of Payments. The Subordinated Creditor agrees that
all payments received by the Lender Parties may be applied and reapplied, in
whole or in part, to any of the Obligations, as any of the Lender Parties, in
its sole discretion, deems appropriate.
Section 14. Governing Law; Consent to Jurisdiction.
(a) THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICTS OF LAWS.
(b) For all purposes of this Agreement, and for all purposes of any
suit or proceeding arising out of or relating to the transactions contemplated
hereby or for recognition or enforcement of any judgment, the Subordinated
Creditor submits to the personal jurisdiction of the courts of the State of New
York and the federal courts of the United States sitting in New York City, and
any appellate court from any such state or federal court, and hereby irrevocably
and unconditionally agrees that all claims with respect to any such action or
proceeding may be heard and determined in such New York court or, to the extent
permitted by law, in such federal court. The Subordinated Creditor agrees that a
final judgment in any such action or proceeding shall be conclusive and may be
enforced in any other jurisdiction by suit on the judgment or in any other
manner provided by law. Nothing in this Agreement shall affect any right that
any Lender Party may otherwise have to bring any action or proceeding relating
to this Agreement or any related matter against the Subordinated Creditor or its
properties in the courts of any jurisdiction.
(c) The Subordinated Creditor hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, (i) any
objection which it may now or
<PAGE> 6
hereafter have to the laying of venue of any suit, action or proceeding arising
out of or relating to this Agreement or any related matter in any New York State
or federal court located in New York and (ii) the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
(d) The Subordinated Creditor irrevocably consents to service of
process by registered United States mail, return receipt requested, as provided
in Section 18 of this Agreement. Nothing in this Agreement will affect the right
of any party to this Agreement to serve process in any other manner permitted by
law.
Section 15. Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
Section 16. No Waiver By Collateral Agent or Lender Parties. No failure on
the part of the Lender Parties to exercise, and no delay in exercising and no
course of dealing with respect to, any right or power under this Agreement or
the Loan Documents shall operate as a waiver thereof, nor shall any single or
partial exercise by the Lender Parties of any right or power under this
Agreement or the Loan Documents, or any abandonment or discontinuance of steps
to enforce such right or power, preclude any other or further exercise thereof
or the exercise of any other right or power. The rights of the Lender Parties in
this Agreement and the Loan Documents are cumulative and are not exclusive of
any other rights or remedies available to the Lender Parties at law or in
equity. No notice to or demand on the Subordinated Creditor in any case shall
entitle the Subordinated Creditor to any other or further notice or demand in
similar or other circumstances.
Section 17. Subrogation. Subject to the indefeasible payment in full in
cash of the Obligations, the Subordinated Creditor shall be subrogated to the
rights of the Lender Parties to receive payments or distributions of assets of
the Debtors made on the Obligations; and, for the purposes of such subrogation,
payments or distributions to the Lender Parties, for their respective accounts,
of any cash, property or securities to which the Subordinated Creditor would be
entitled except for the provisions of this Agreement shall, as between the
Debtors and their respective creditors other than the Lender Parties and the
Subordinated Creditor, be deemed to be a payment by the Debtors to or on account
of Subordinated Obligations, it being understood that the provisions of this
Agreement are, and are intended solely, for the purpose of defining the relative
rights of the Subordinated Creditor, on the one hand, and the Lender Parties, on
the other hand. Nothing contained in this Agreement is intended to or shall
impair, as between the Debtors and the Subordinated Creditor, the obligations of
the Debtors to pay the Subordinated
<PAGE> 7
Obligations in accordance with their respective terms. Nor is any provision of
this Agreement intended to subordinate the Subordinated Obligations to any
indebtedness other than the Obligations.
Section 18. Notices. All notices, demands and requests of any kind to be
delivered in connection with this Agreement shall be deemed to have been duly
given and received if delivered personally or if sent by nationally-recognized
overnight courier or by first class, registered or certified mail, return
receipt requested, address as follows:
(i) if to the Subordinated Creditor to:
Alleghany Corporation
375 Park Avenue
Suite 3201
New York, New York 10152
Attention: Mr. Robert M. Hart,
Senior Vice President, General Counsel
and Secretary
Telephone: (212) 752-1356
Telecopier: (212) 759-8149
(ii) if to any Debtor, to the address of such Debtor set forth in
the Credit Agreement; and
(iii) if to the Collateral Agent, to:
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017
Attention: Mr. James Ramage,
Vice President
Telephone: (212) 270-1373
Telecopier: (212) 270-4724
Any such notice, demand or request so delivered shall be deemed to
have been received (a) on the day of actual delivery in the case of personal
delivery, (b) on the next business day after the date when sent in the case of
delivery by nationally-recognized overnight courier, or (c) on the fifth
business day after the date of deposit in the U. S. mail in the case of mailing.
Any party hereto may from time to time by notice in writing served upon the
other as aforesaid designate a different mailing address or a different person
to which all such notices, demands or requests thereafter are to be addressed.
Section 19. Successors and Assigns. This Agreement is for the benefit of
the Lender Parties and their successors and assigns, and in the event of an
assignment of all or any of the Obligations, the rights hereunder, to the extent
applicable to the Obligations so assigned, may be transferred with such
Obligations. This Agreement shall be binding on the Subordinated Creditor and
its successors. The successors of the Subordinated Creditor shall include,
without limitation, any receiver, trustee or debtor-in-possession. The
Subordinated Creditor shall not
<PAGE> 8
assign any of its interest under this Agreement without the prior written
consent of the Collateral Agent. Any purported assignment inconsistent with this
provision shall be null and void.
Section 20. Amendments and Waivers. Any provision of this Agreement may be
amended or waived, but only if such amendment or waiver is in writing and is
signed by the party to be charged with such waiver, or, in the case of any
amendment, by the Subordinated Creditor and the Collateral Agent.
Section 21. Severability. In the event any one or more of the provisions
of this Agreement should be held invalid, illegal or unenforceable in any
respect in any jurisdiction, such provision or provisions shall be automatically
deemed amended, but only to the extent necessary to render such provision or
provisions valid, legal and enforceable in such jurisdiction, and the validity,
legality and enforceability of the remaining provisions of this Agreement shall
not in any way be affected or impaired thereby.
Section 22. Section Headings. Section headings used in this Agreement are
for convenience only and are not to affect the construction of or be taken into
consideration in interpreting this Agreement.
Section 23. Counterparts. This Agreement may be executed in any number of
identical counterparts, each of which shall be deemed an original for all
purposes and all of which constitute collectively one agreement; but, in making
proof of this Agreement, it shall not be necessary to produce or account for
more than one such counterpart. Delivery of an executed counterpart of a
signature page of this Agreement by telecopy shall be effective as delivery of a
manually executed counterpart of this Agreement.
* * * *
<PAGE> 9
IN WITNESS WHEREOF, this Subordination Agreement has been duly
executed by each of the parties as of the date first written above.
ALLEGHANY CORPORATION
By /s/ David B. Cuming
--------------------------------------
Name: David B. Cuming
Title: Senior Vice President
THE CHASE MANHATTAN BANK,
as administrative agent and collateral
agent for the Banks
By: /s/ James H. Ramage
-------------------------------------
Name: James H. Ramage
Title: Vice President
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ALLEGHANY
CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET AT MARCH 31, 1999 AND
THE CONSOLIDATED STATEMENT OF EARNINGS FOR THE 3 MONTHS THEN ENDED AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<DEBT-HELD-FOR-SALE> 1,284,681
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 796,643
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 2,081,324
<CASH> 46,441
<RECOVER-REINSURE> 644,646
<DEFERRED-ACQUISITION> 0
<TOTAL-ASSETS> 4,265,599
<POLICY-LOSSES> 1,667,382
<UNEARNED-PREMIUMS> 340,879
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 455,829
0
0
<COMMON> 0
<OTHER-SE> 1,224,198
<TOTAL-LIABILITY-AND-EQUITY> 4,265,599
144,237
<INVESTMENT-INCOME> 43,203
<INVESTMENT-GAINS> 363
<OTHER-INCOME> 48,886
<BENEFITS> 100,158
<UNDERWRITING-AMORTIZATION> 0
<UNDERWRITING-OTHER> 0
<INCOME-PRETAX> 23,869
<INCOME-TAX> 7,915
<INCOME-CONTINUING> 15,954
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,954
<EPS-PRIMARY> 2.17
<EPS-DILUTED> 2.13
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
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<CUMULATIVE-DEFICIENCY> 0
</TABLE>
