<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------
FORM 10-K/A
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OF 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ___________ to ____________
Commission file number 0-22572
OM GROUP, INC.
(Exact name of Registrant as specified in charter)
Delaware 52-1736882
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
50 Public Square, 3800 Terminal Tower, Cleveland, Ohio 44113-2204
(Address of principal executive offices) (Zip Code)
216-781-0083
Registrant's telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class Name of each exchange on which registered
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Common Stock, par value $0.01 per share New York Stock Exchange
</TABLE>
Securities registered pursuant to Section 12(g) of the Act:
None
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 such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of the Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The aggregate market value of Common Stock, par value $.01 per share, held
by non-affiliates (based upon the closing sale price on the NYSE) on March 11,
1998 was approximately $983,655,959.
As of March 11, 1998, there were 22,073,626 shares of Common Stock, par
value $.01 per share, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the proxy statement for the annual meeting of stockholders to be
held on May 5, 1998 are incorporated by reference.
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Page 2
Part I
Item 1 BUSINESS
OM Group, Inc. (the Company) is a leading international producer and
marketer of value-added metal-based specialty chemicals and powders.
The Company supplies more than 400 different product offerings -
principally categorized as metal carboxylates, inorganic metal salts,
and metal powders for diverse applications to more than 25
industries. Metal carboxylates are essential components in numerous
complex chemical and industrial processes, and are used in many end
markets, such as coatings, custom catalysts, liquid detergents,
lubricants and fuel additives, plastic stabilizers, polyester
promoters and adhesion promoters for rubber tires. Metal salts are
used in a wide variety of end products including catalysts,
colorants, rechargeable batteries, petroleum additives, magnetic
media and metal finishing agents. High specification metal powders
have several important characteristics that make them essential
components in cemented carbides for mining and machine tools, diamond
tools used in construction, rechargeable batteries, and alloyed
materials for automotive, electronics, transportation and catalyst
applications. Typically, the Company's products represent a small
portion of the customer's total cost of manufacturing or processing,
but are critical to the customer's product performance.
The Company operates in a single business segment with product lines
comprised of metal-based specialty chemicals.
COMPETITION
The Company's businesses are very competitive. Several of the
Company's competitors are divisions or subsidiaries of companies that
are substantially larger and have greater financial resources than
the Company. However, the Company believes it is the only producer
that manufactures and markets three categories of metal-based
specialty chemicals -- carboxylates, inorganic salts and powders. The
Company believes it is the world's leading producer of cobalt
carboxylates, cobalt and nickel specialty inorganic salts and copper
powders. The Company also believes that it is the world's second
largest producer of cobalt extra-fine powders.
The Company believes that its focus on metal-based specialty
chemicals as a core business is an important competitive advantage.
Competition in the metal-based specialty chemicals market is based
primarily on product quality, supply reliability, price, service
and technical support capabilities.
Generally, the Company is able to pass through to its customers
increases and decreases in raw material prices by increasing or
decreasing, respectively, the prices of its products. The degree of
profitability of the Company depends, in part, on the Company's
ability to maintain the differential between its product prices and
raw material prices. The timing and amount of such adjustments in its
product prices depends upon the type of product sold and the
inventories and market share positions of the Company and its
competitors.
The Company's flexibility with respect to the timing of its price
adjustments is greater with respect to carboxylates than with
inorganic salts and powders. Inorganic salt and powder prices respond
almost immediately to changes in the raw material base metal prices.
Competition in the metal-based specialty chemical market is based
primarily on product quality, supply reliability, price, service,
and technical support capabilities.
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Page 3
Part I
Item 1 CUSTOMERS
The Company serves over 1,500 customers with no single customer
accounting for 10% or more of the Company's net sales. During 1997,
approximately 50% of the Company's net sales were to customers in the
Americas, 33% were to customers in Europe, and 17% were to customers
in the Asia Pacific.
While customer demand for the Company's products is generally
non-seasonal, supply/demand and price perception dynamics of key raw
materials do periodically cause customers to either accelerate or
delay purchases of the Company's products, generating short-term
results that may not be indicative of longer-term trends.
RAW MATERIALS
The primary raw materials used by the Company in manufacturing its
products are cobalt, nickel and copper. The cost of raw materials
fluctuates due to actual or perceived changes in supply and demand
and changes in availability from suppliers. The Company's supply of
cobalt has historically been sourced primarily from the Democratic
Republic of Congo (DRC), Australia, Finland and Zambia. Although the
Company has never experienced a material shortage of cobalt,
production problems and political and civil instability in certain
supplier countries may in the future affect the supply and market
prices of cobalt. The Company attempts to mitigate changes in prices
and availability by entering into long-term supply contracts with a
variety of producers. The Company does not anticipate any substantial
interruption in its raw materials supply that would have a material
adverse effect on the Company's operations.
Increases in the cost of raw materials can result in higher working
capital needs when the price of cobalt, the Company's primary raw
material, increases significantly. The Company has had sufficient
cash availability and borrowing capacity to finance higher cost
inventory as needed.
RESEARCH AND DEVELOPMENT
The Company's research and new product development program is an
integral part of its business. Research and development focuses on
adapting proprietary technologies to develop new products and working
with customers to meet their specific requirements. New products
include new chemical formulations, concentrations of various
components, product forms and packaging methods. Research and
development expenses were approximately $6.7 million, $3.8 million,
and $3.4 million for 1997, 1996, and 1995, respectively. In
connection with the acquisition of SCM Metal Products, Inc. (SCM),
research and development expenses increased in 1997 and are
anticipated to increase at a rate of approximately 5-10% per annum.
The Company's research staff of 52 persons conducts carboxylate,
metal salts and powders research and development at the Company's
laboratories located in Cleveland, Ohio; Research Triangle Park,
North Carolina; and Kokkola, Finland. The Company's Finnish facility
also maintains a research agreement with a subsidiary of Outokumpu
Oy.
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Page 4
Part I
Item 1 PATENTS AND TRADEMARKS
The Company holds 151 patents related to the manufacturing,
processing and use of metallo-organic and metal-based compounds. In
addition, the Company has the right to use, and in certain instances
license and sell, technology covered by 16 patents in the areas of
hydrometallurgical processes, solvent extraction, agitators and metal
powders. The Company does not consider any single patent to be
material to its business as a whole.
ENVIRONMENTAL MATTERS
Since 1970, a wide variety of environmental laws and regulations have
been adopted by the United States and by foreign, state and local
governments which continue to be amended and supplemented. The
Company is subject to these laws and regulations as a result of its
operations and use of certain substances that are, or have been,
used, produced or discharged by the Company's plants. In addition,
soil and/or groundwater contamination presently exists and may in the
future be discovered at levels which require remediation under
environmental laws at properties now or previously owned, operated or
used by the Company.
Annual environmental compliance costs have increased to approximately
$3.0 million in 1997. Such ongoing expenses include costs relating to
waste water analysis and disposal, hazardous and non-hazardous solid
waste analysis and disposal, sea water control, air emissions
control, soil and groundwater clean-up and monitoring and related
staff costs. The Company anticipates that it will continue to incur
costs and make expenditures at moderately increasing levels for the
foreseeable future in light of the fact that environmental laws and
regulations are becoming increasingly stringent, including the likely
lowering of permissible discharge limits.
The Company has also incurred capital expenditures of approximately
$1.0 million in 1997 in connection with environmental compliance. The
Company anticipates that capital expenditure levels for such purposes
will increase to approximately $3.0 million in 1998, as it continues
to modify on an ongoing, regular basis, certain of its processes
which may have an environmental impact.
Due to the ongoing development and understanding of facts and
remedial options and due to the possibility of unanticipated
regulatory developments, the amount and timing of future
environmental expenditures could vary significantly from those
currently anticipated. Although it is difficult to quantify the
potential impact of compliance with or liability under environmental
protection laws, based on presently available information, the
Company believes that the ultimate aggregate cost to the Company of
environmental remediation, as well as other legal proceedings arising
in the normal course of business, will not result in a material
adverse effect upon its financial condition or results of operations.
EMPLOYEES
At December 31, 1997, the Company had 758 full-time employees of
which 488 were located in the United States, 218 in Finland, 38 in
Western Europe and 14 in Taiwan. Employees at the Company's
facilities in Research Triangle Park, North Carolina; Franklin,
Pennsylvania; St. George, Utah; and Ezanville, France are
non-unionized. Employees at the Company's facilities in Kokkola,
Finland are members of several national workers' unions under various
union agreements.
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Page 5
Part I
Item 1 Generally, such union agreements have two-year terms. Employees at
the Johnstown, Pennsylvania facility are members of the United
Steelworkers Union. The Johnstown union agreement has a term of 5
years expiring in June of 1998. The Company believes relations with
its employees are good.
INTERNATIONAL OPERATIONS
Financial information related to international operations is
contained in Note J on page 34 of this report.
The Company's products are manufactured at facilities located in
Kokkola, Finland; Ezanville, France; Research Triangle Park, North
Carolina; Franklin, Pennsylvania; Johnstown, Pennsylvania; and St.
George, Utah. The Company conducts its marketing and sales from its
offices in Dusseldorf, Germany; Research Triangle Park, North
Carolina; Cleveland, Ohio; and Taipei, Taiwan.
Although most of the Company's raw material purchases and product
sales are transacted in U.S. Dollars, liabilities for non-U.S.
operating expenses and income taxes are denominated in local
currencies. Accordingly, fluctuations in currency prices may affect
the Company's operating results and net income. Specifically, when
the Finnish Markka weakens against the U. S. Dollar, there is a net
favorable effect on the Company due to lower operating expenses and
lower net balance sheet liabilities when translated into U. S.
Dollars. The reverse is true when the Finnish Markka strengthens
against the U. S. Dollar. In order to partially hedge the balance
sheet exposure to fluctuating rates, the Company enters into forward
contracts to purchase Finnish Markka.
Item 2 PROPERTIES
The Company believes that its plants and facilities, which are of
varying ages and of different construction types, have been
satisfactorily maintained, are in good condition, are suitable for
the Company's operations and generally provide sufficient capacity to
meet the Company's production requirements. The land on which the
Kokkola plant is located is leased with a remaining term of 93 years.
The land on which the St. George, Utah plant is located is leased
with a remaining term, including options, of 47 years. Otherwise, the
real properties comprising the Company's manufacturing facilities are
owned by the Company.
The Company's Kokkola, Finland production facility (KCO) is situated
on property owned by Outokumpu Zinc Oy. KCO and Outokumpu Zinc Oy
share certain physical facilities, services and utilities under
agreements with varying expiration dates. General property and
administrative services are provided under a service agreement, which
expires in 1998, but are priced separately and subject to yearly
renegotiation in anticipation of phasing out Outokumpu Zinc's role as
a service provider. Utilities and raw material purchase assistance
contracts provide that KCO jointly purchase with, or pay a fee to,
affiliates of Outokumpu Oy for assistance in negotiating contracts
and securing bulk quantity discounts.
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Page 6
Part I
Item 2 Certain information regarding the Company's offices and research
and product development and manufacturing facilities is set forth
below:
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Approximate Leased/
Location (a) Facility Function Square Feet Owned
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Cleveland, Ohio Corporate headquarters 8,800 leased
Research and development facility 27,500 owned
Research and development facility 11,400 leased
Marketing and administration offices 10,000 owned
Dusseldorf, Germany Marketing and administration offices 3,800 leased
Taipei, Taiwan Marketing and administration office 1,500 leased
Franklin, Pennsylvania Manufactures carboxylates and salts 220,000 owned
St. George, Utah Manufactures salts 37,000 owned
Kokkola, Finland Manufactures carboxylates,
salts and powders 400,000 owned
Ezanville, France Manufactures carboxylates 50,000 owned
Johnstown, Pennsylvania Manufactures powders 137,700 owned
Research Triangle Park, Manufactures powders 83,525 owned
North Carolina Marketing and administration offices 20,000 owned
Research and development facility 28,475 owned
</TABLE>
(a) Does not include facilities owned or leased by the Company's Asia
Pacific joint ventures.
Item 3 LEGAL PROCEEDINGS
Manufacturers of specialty chemical products, including the Company,
are subject to various legal and administrative proceedings
incidental to such business. In the opinion of the Company,
disposition of all suits and claims should not in the aggregate have
a material adverse effect on the Company's business or financial
position.
Item 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
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Page 7
Part I EXECUTIVE OFFICERS OF THE REGISTRANT
There is set forth below the name, age, positions and offices held by
each of the Company's executive officers as of March 23, 1998 as well
as their business experiences during the past five years. Years
indicate the year the individual was named to the indicated position.
James P. Mooney - 50
Chairman and Chief Executive Officer, 1994
Chairman, President and Chief Executive Officer, 1993
Eugene Bak - 64
President and Chief Operating Officer, 1994
Executive Vice President, 1993
James M. Materna - 52
Chief Financial Officer, 1992
Thomas E. Fleming - 52
Vice President and Chief Marketing Officer, 1997
President, OMG Americas, Inc., 1994 (chemical manufacturer,
subsidiary of registrant)
Vice President, Marketing, Mooney Chemicals, Inc., 1987 (now
known as OMG Americas, Inc., chemical manufacturer, subsidiary
of registrant)
J. R. Hwang - 49
President, OMG Asia Pacific Co., Ltd., 1994 (Asia Pacific
marketing office, subsidiary of registrant)
Director of Far East Operations, The Hall Chemical Company, 1982
(chemical manufacturer)
Kari Muuraiskangas - 53
President, OMG Europe GmbH, 1992 (European marketing office,
subsidiary of registrant)
H. Burnham Tinker - 58
Vice President, Corporate Development, 1994
Vice President, Research and Development, Mooney Chemicals,
Inc., 1990 (now known as OMG Americas, Inc., chemical
manufacturer, subsidiary of registrant)
Antti Aaltonen - 50
President, OMG Kokkola Chemicals Oy, 1996 (chemical
manufacturer, subsidiary of registrant)
Vice President, Operations, OMG Kokkola Chemicals Oy, 1992
(chemical manufacturer, subsidiary of registrant)
Michael J. Scott - 47
Vice President, Human Resources, General Counsel and Secretary,
1995
General Counsel and Secretary, 1991
John R. Holtzhauser - 41
Corporate Controller, 1993
Terry Guckes - 48
Vice President, Planning and Development, 1996
Vice President, Lubrizol International Management Company,
Lubrizol Corporation, 1993 (subsidiary of Lubrizol Corporation,
chemical manufacturer)
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Page 8
Part II
Item 5 MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The information relating to the recent price and dividend history of
the Company's Common Stock is contained on page 35 of this report.
The Company's Common Stock is traded on the New York Stock Exchange.
As of March 11, 1998 the Company had approximately 11,200
shareholders.
Item 6 SELECTED FINANCIAL DATA
Selected financial data for each of the last five years is included
on page 14 of this report.
Item 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Management's Discussion and Analysis of Financial Condition and
Results of Operations is contained on pages 15 through 18,
inclusive, of this report.
Item 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements of the Company and its
subsidiaries, together with the independent auditors' report relating
thereto, are contained on pages 19 through 36, inclusive, of this
report. The quarterly data (unaudited) is contained on page 35 of
this report.
Item 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There are no such changes or disagreements.
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Page 9
Part III
Item 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information relating to directors of the Company contained under
the heading "Election of Directors" on pages 2 and 3 of the Company's
Proxy Statement dated April 3, 1998, is incorporated herein by
reference. Information relative to executive officers of the Company
is contained under Part I of this report.
Item 11 EXECUTIVE COMPENSATION
The information relating to executive compensation contained under
the headings "Committees and Meetings of the Board of Directors" on
pages 5 and 6 and "Executive Compensation" on pages 6 through 9,
inclusive, of the Company's Proxy Statement dated April 3, 1998, is
incorporated herein by reference.
Item 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information relating to security ownership set forth under the
heading "Security Ownership of Directors and Officers, and Certain
Beneficial Owners" on pages 4 and 5 of the Company's Proxy Statement
dated April 3, 1998, is incorporated herein by reference.
Item 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information relating to the related transactions set forth under
the heading "Related Party Transactions" on page 10 of the Company's
Proxy Statement dated April 3, 1998, is incorporated herein by
reference.
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Page 10
Part IV
Item 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Documents filed as part of this Annual Report on Form 10-K
(1) The following Consolidated Financial Statements of OM Group,
Inc. are filed as a separate section of this report:
Consolidated Balance Sheets at December 31, 1997 and 1996 -
page 19.
Statements of Consolidated Income for the years ended
December 31, 1997, 1996 and 1995 page 20.
Statements of Consolidated Stockholders' Equity for the
years ended December 31, 1997, 1996 and 1995 - page 21.
Statements of Consolidated Cash Flows for the years ended
December 31, 1997, 1996 and 1995 - page 22.
Notes to Consolidated Financial Statements
(2) All schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange
Commission are not required under the related instructions
or are inapplicable and, therefore, have been omitted.
(3) Exhibits
(3) Articles of Incorporation and by-laws
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3.1 Amended and Restated Certificate of Incorporation of the Company **
3.2 Amended and Restated Bylaws of the Company **
(4) Instruments defining rights of security holders,
including indentures
4.1 Form of Common Stock Certificate of the Company **
4.2 Amended and Restated Credit Agreement dated
as of January 30, 1998 among National City
Bank as Agent and Letter of Credit Bank and
ABN Amro Bank N.V. as Co-Agent and KeyBank
National Association, Mellon Bank N.A.,
Harris Trust and Savings Bank and NBD Bank
and OM Group, Inc., as Borrower.
4.3 Note Purchase Agreement among OM Group, Inc.
as Seller and The Mutual Life Insurance
Company of New York, Nationwide Life Mutual
Life Insurance Company of New York,
Nationwide Life Insurance Company and
Great-West Life & Annuity Insurance Company
as Purchaser, dated August 30, 1995 (filed
as Exhibit to the Company's Annual Report on
Form 10-K for the fiscal year ended December
31, 1995 and incorporated herein by
reference).
4.4 Stockholder Rights Agreement dated as of
November 5, 1996 between OM Group, Inc. and
National City Bank (filed as Exhibit 1 to
the Company's Current Report on Form 8-K
filed on December 5, 1996 which exhibit is
incorporated herein by reference).
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Page 11
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Part IV
Item 14 4.5 Certificate of Designation, Preferences and
Rights of Series A Participatory Preferred
Stock (filed as Exhibit to Current Report on
Form 8-K filed November 27, 1996 and
incorporated herein by reference).
4.6 Note Purchase Agreement among OM Group, Inc.
as Seller and Nationwide Life Insurance
Company and Great-West Life & Annuity
Insurance Company as Purchaser, dated
October 24, 1997.
(10) Material Contracts
10.1 Service Agreement between Kokkola Chemicals **
Oy and Outokumpu Kokkola Zinc Oy dated March
22, 1993.
10.2 Technology Agreement among Outokumpu Oy, **
Outokumpu Engineering Contractors Oy,
Outokumpu Research Oy, Outokumpu Harjavalta
Metals Oy and Kokkola Chemicals Oy dated
March 24, 1993.
*10.3 OM Group, Inc. Long-Term Incentive **
Compensation Plan.
*10.4 Amendment to OM Group, Inc. Long-Term Incentive ***
Compensation Plan
*10.5 Amendment to OM Group, Inc. Long-Term Incentive
Compensation Plan (filed as Exhibit 99 to
the OM Group, Inc. Form S-8 Registration
Statement filed on July 3, 1996, and
incorporated herein by reference.)
*10.6 Mooney Chemicals, Inc. Welfare Benefit Plan. **
*10.7 Mooney Chemicals, Inc. Profit Sharing Plan. **
*10.8 Amendment to Mooney Chemicals, Inc. Profit Sharing Plan. **
*10.9 OMG/Mooney Chemicals, Inc. Employee Profit
Sharing Plan (January 1, 1994 restatement)
(filed as Exhibit to the Company's Annual
Report on Form 10-K for the fiscal year
ended December 31, 1995 and incorporated
herein by reference).
*10.10 OM Group, Inc. Benefit Restoration Plan,
effective January 1, 1995 (filed as Exhibit
to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1995
and incorporated herein by reference).
*10.11 Trust under OM Group, Inc. Benefit
Restoration Plan, effective January 1, 1995
(filed as Exhibit to the Company's Annual
Report on Form 10-K for the fiscal year
ended December 31, 1995 and incorporated
herein by reference).
*10.12 Amendment to OMG Americas, Inc.
Profit-Sharing Plan (filed as Exhibit 99 to
the OM Group, Inc. Form S-8 Registration
Statement filed on July 3, 1996, and
incorporated herein by reference).
10.13 OM Group, Inc. Non-employee Directors' Plan
dated May 9, 1995, the date of the Annual
Shareholder Meeting formally adopting the
plan (filed as Exhibit to the Company's
Annual Report on Form 10-K for the fiscal
year ended December 31, 1995 and
incorporated herein by reference).
*10.14 OM Group, Inc. Bonus Program for Key Executives **
and Middle Management.
*10.15 Employment Agreement between Mooney Acquisition **
Corporation and James P. Mooney dated September 30,
1991.
*10.16 Amendment to Employment Agreement between OM Group, **
Inc. and James P. Mooney dated August 19, 1992.
*10.17 Employment Agreement between OM Group, Inc. and Kari **
Muuraiskangas dated January 1, 1993.
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Page 12
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Part IV
Item 14 *10.18 Employment Agreement between OM Group, Inc. and **
James M. Materna dated January 1, 1993.
*10.19 Employment Agreement between Mooney Chemicals, **
Inc. and Eugene Bak dated August 19, 1991.
*10.20 Amendment to Employment Agreement between Mooney **
Chemicals, Inc. and Eugene Bak dated September 1, 1992.
*10.21 Retirement Benefit Agreement, Eugene Bak,
dated January 1, 1995 (filed as Exhibit to
the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1995 and
incorporated herein by reference).
*10.22 Employment Agreement between OM Group, Inc. **
and Thomas E. Fleming dated August 19, 1991.
*10.23 Amendment to Employment Agreement between OM **
Group, Inc. and Thomas E. Fleming dated
August 19, 1991.
*10.24 Employment Agreement between Mooney Chemicals, **
Inc. and H. Burnham Tinker dated August 19, 1991.
*10.25 Amendment to Employment Agreement between OM **
Group, Inc. and H. Burnham Tinker dated
August 19, 1991.
*10.26 Employment Agreement between OM Group, Inc.
and Michael J. Scott (filed as Exhibit to the
Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994 and
incorporated herein by reference).
*10.27 Employment Agreement between OM Group, Inc.
and J.R. Hwang (filed as Exhibit to the
Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994 and
incorporated herein by reference).
*10.28 Employment Agreement between OM Group, Inc.
and Terry L. Guckes (filed as Exhibit to the
Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996 and
incorporated herein by reference).
*10.29 Employment Agreement between OM Group, Inc. **
and Antti Aaltonen.
*10.30 Employment Agreement between OM Group, Inc.
and John R. Holtzhauser and Amendment
thereto (filed as Exhibit to the Company's
Annual Report on Form 10-K for the fiscal
year ended December 31, 1994 and
incorporated herein by reference).
10.31 Stock Purchase Agreement between SUSI
Corporation and OM Group, Inc. dated
December 20, 1996 (filed as Exhibit to the
Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996 and
incorporated herein by reference).
10.32 Agreement and Plan of Merger between Auric
Corporation and OM Group, Inc. dated December 19,
1997.
+10.33 Joint Venture Agreement among OMG B.V.,
Groupe George Forrest S.A., La Generale Des
Carrieres Et Des Mines and OM Group, Inc. to
partially or totally process the slag
located in the site of Lumbumbashi,
Democratic Republic of Congo.
+10.34 Agreement for Sale of concentrate production
between Kokkola Chemicals Oy and La Generale
Des Carriers Et Des Mines dated April 21,
1997.
+10.35 Long Term Slag Sales Agreement between La
Generale Des Carrieres Et Des Mines and J.V. Groupement
Pour Le Traitment Du Terrill De Lubumbashi (filed
as an annex to Exhibit 10.33 of the Company's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1997).
+10.36 Long Term Cobalt Alloy Sales Agreement between J.V.
Groupement Pour Le Traitement Du Terril De
Lubumbashi and OMG Kokkola Chemicals Oy (filed
as an annex to Exhibit 10.33 of the Company's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1997).
+10.37 Tolling Agreement between Groupement Pour Le
Traitement Du Terril De Lubumbashi and Societe
De Traitement Du Terril De Lubumbashi (filed as
an annex to Exhibit 10.33 of the Company's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1997.
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<PAGE> 13
Page 13
Part IV
Item 14 + Portions of Exhibit have been omitted and
filed separately with the Securities and
Exchange Commission in reliance on Rule
246-2 and the Company's request for
confidential treatment.
* Indicates a management contract, executive
compensation plan or arrangement.
** These documents were filed as exhibits to the
Company's Form S-1 Registration Statement
(Registration No. 33-60444) which became
effective on October 12, 1993, and are
incorporated herein by reference.
*** Filed as Exhibit 99(b) to the OM Group, Inc.
Form S-8 Registration Statement filed on
February 1, 1994, and incorporated herein by
reference.
(21) List of Subsidiaries (filed as a separate section of
this report)
(23) Consent of Ernst & Young LLP (filed as a separate
section of this report)
(24) Power of Attorney (filed as a separate section of this
report)
(27) Financial Data Schedule (filed as a separate section of
this report)
(b) There were no reports filed on Form 8-K during the last quarter
of 1997.
<PAGE> 14
Page 14
FINANCIAL REVIEW
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SELECTED FINANCIAL DATA
(in millions, except per share data)
<TABLE>
<CAPTION>
Year Ended December 31, 1997 1996 1995 1994 1993
- --------------------------------------------------------------------------------------------------
Income Statement Data:
<S> <C> <C> <C> <C> <C>
Net sales $487.3 $388.0 $361.0 $251.3 $179.5
Gross profit 117.4 84.0 74.6 60.6 45.8
Selling, general and administrative expenses 46.8 32.6 30.6 25.4 20.7
Income from operations 70.6 51.4 44.0 35.2 25.1
Other expense-net (12.6) (7.0) (5.5) (4.1) (2.0)
Net income $ 38.4 $ 30.0 $ 25.9 $ 20.7 $ 15.4
Net income per common share $ 1.84 $ 1.61 $ 1.39 $ 1.11 $ 0.97
Net income per common share --
assuming dillution $ 1.78 $ 1.56 $ 1.36 $ 1.09 $ 0.95
Dividends declared and paid per
common share $ 0.32 $ 0.28 $ 0.24 $ 0.19
Balance Sheet Data:
Total assets $601.1 $443.5 $358.0 $278.0 $217.3
Long-term debt (excluding current portion) 170.3 109.3 89.8 46.6 30.6
</TABLE>
On January 21, 1997, the Company acquired SCM Metal Products, Inc. (SCM) for
$122 million, plus expenses (see Note C to the consolidated financial
statements).
<PAGE> 15
Page 15
MANAGEMENT'S DISCUSSION AND ANALYSIS
of Financial Condition and Results of Operations
The following management's discussion and analysis of financial condition and
results of operations should be read in conjunction with the financial
statements of the Company and the notes thereto appearing elsewhere in this
Annual Report.
Set forth below is summary consolidated financial information of the Company
for the years ended December 31, 1997, 1996 and 1995.
<TABLE>
<CAPTION>
(Thousands of dollars)
Year Ended December 31, 1997 1996 1995
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income Statement Data:
Net sales $487,296 $387,999 $360,959
Gross profit 117,363 83,974 74,563
Selling, general and administrative expenses 46,791 32,553 30,594
--------------------------------------------
Income from operations 70,572 51,421 43,969
Other expense (12,595) (7,018) (5,451)
Income tax expense (19,534) (14,356) (12,585)
--------------------------------------------
Net income $ 38,443 $ 30,047 $ 25,933
============================================
Products Sold: (millions of pounds)
Carboxylates 50.3 43.1 39.7
Salts 61.0 50.7 46.4
Powders 38.6 2.9 2.4
--------------------------------------------
Total 149.9 96.7 88.5
============================================
</TABLE>
RESULTS OF OPERATIONS
Year Ended December 31, 1997 Compared to Year Ended December 31, 1996
Net sales for 1997 were $487.3 million, an increase of 25.6% compared to
1996. The increase in sales resulted principally from the January, 1997
acquisition of SCM Metal Products, Inc. (SCM) and an increase in physical volume
of products sold, which offset a decline in the Company's product prices
resulting from decreasing cobalt market prices.
Cobalt market prices ranged from $18 to $26 per pound during 1997 compared to
$20 to $32 per pound during 1996. The market price of nickel ranged from $2.66
to $3.66 per pound during 1997 compared to $2.92 to $3.78 per pound during 1996.
Pounds of product sold by the Company were approximately 149.9 million pounds
during 1997 compared to 96.7 million pounds in 1996. The increase in carboxylate
products sold resulted from higher sales in all market regions. The increase in
physical volume of salt and powder products sold primarily reflects the addition
of copper salt and powder products sold, as a result of the SCM acquisition.
Gross profit increased to $117.4 million in 1997, a 39.8% increase from 1996.
The improvement in gross profit was primarily the result of the acquisition of
SCM, higher physical volume of products sold, and changes in product mix. Cost
of products sold decreased to 75.9% of net sales for the year ended 1997 from
78.4% of net sales in 1996 primarily because of lower cobalt market prices and
the acquisition of SCM.
<PAGE> 16
Page 16
MANAGEMENT'S DISCUSSION AND ANALYSIS
of Financial Condition and Results of Operations
Selling, general and administrative expenses increased to 9.6% of net sales
in 1997 from 8.4% of net sales in 1996, primarily as a result of the acquisition
of SCM.
Other expense was $12.6 million in 1997 compared to $7.0 million in 1996 due
primarily to increased interest expense on higher outstanding borrowings
associated with the acquisition of SCM, offset by gains on foreign exchange.
Income taxes as a percentage of income before tax increased to 33.7% in 1997
from 32.3% in 1996 due primarily to the non-tax deductible goodwill related to
the acquisition of SCM.
Net income for 1997 was $38.4 million, an increase of $8.4 million from 1996,
primarily due to the aforementioned factors.
Year Ended December 31, 1996 Compared to Year Ended December 31, 1995
Net sales for 1996 were $388.0 million, an increase of 7.5% compared to 1995.
The increase in sales resulted principally from increases in physical volume of
products sold and from changes in product mix, more than offsetting a decline in
the Company's product prices resulting from decreasing cobalt market prices.
Cobalt market prices ranged from $20 to $32 per pound during 1996 compared to
$27 to $32 per pound during 1995. The market price of nickel ranged from $2.92
to $3.78 per pound during 1996 compared to $3.17 to $4.57 per pound during 1995.
Pounds of product sold by the Company were approximately 96.7 million pounds
during 1996 compared to 88.5 million pounds in 1995. The increase in carboxylate
products sold resulted principally from higher sales in Europe. The increase in
salt products sold resulted principally from higher sales of cobalt based
products. The increase in powders sold resulted principally from higher sales of
coarse grade powders.
Gross profit increased to $84.0 million in 1996, a 12.6% increase from 1995.
The improvement in gross profit was primarily the result of higher physical
volume of cobalt based products sold. Cost of products sold decreased to 78.4%
of net sales for the year ended 1996 from 79.3% of net sales in 1995 primarily
because of lower cobalt market prices.
Selling, general and administrative expenses remained approximately the same
at 8.4% of net sales in 1996 and 1995.
Other expenses were $7.0 million in 1996 compared to $5.5 million in 1995 due
primarily to increased interest expense on higher outstanding borrowings, offset
by gains on foreign exchange.
Income taxes as a percentage of income before tax decreased to 32.3% in 1996
from 32.7% in 1995 as a greater percentage of total income was earned in
Finland, which has a lower statutory tax rate (28%) than in the United States.
Net income for 1996 was $30.0 million, an increase of $4.1 million from 1995,
primarily due to the aforementioned factors.
<PAGE> 17
Page 17
MANAGEMENT'S DISCUSSION AND ANALYSIS
of Financial Condition and Results of Operations
LIQUIDITY AND CAPITAL RESOURCES
During 1997, the Company's net working capital increased by approximately $50
million. This increase was primarily the result of a decrease in accounts
payable from payments on certain raw materials and additional working capital
acquired in the purchase of SCM. Capital expenditures increased over the prior
year primarily due to plant expansion at various locations. These increased cash
needs were funded through cash generated by operations as well as additional
borrowings under the Company's revolving credit facility and private placements
with insurance companies.
In April, 1997, the Company sold 3,450,000 shares of common stock at $26.75
per share in a public offering. The net proceeds of the offering, in the amount
of $87.0 million, were used to pay down a portion of the debt incurred in
acquiring SCM.
The Company's revolving credit facility was revised to increase available
credit to $250 million in January, 1998 in connection with the acquisition of
Auric Corporation, and to expand its sources of capital by adding two new
institutions.
In order to convert to a fixed rate and extend the term on a portion of its
borrowings, during October, 1997, the Company borrowed $30 million in a private
placement with a group of insurance companies and used the proceeds to reduce
borrowings under its revolving credit facility with its banks.
In June, 1997, the Company signed contracts as a partner to build a smelter
in Lubumbashi, Democratic Republic of Congo. The Company's approximately $40
million share of the $80 million project will be funded over the two year
construction period through cash generated by operations and the Company's
credit facilities.
The Company believes that it will have sufficient cash generated by
operations and through its credit facilities to provide for its future working
capital and capital expenditure requirements and to pay quarterly dividends on
its common stock, subject to the Board's discretion. In February, 1998, the
Board of Directors authorized an increase in quarterly dividends to $0.09 per
share. Subject to several limitations in its credit facilities, the Company may
incur additional borrowings under this line to finance working capital and
certain capital expenditures, including, without limitation, the purchase of
additional raw materials.
The Company has ongoing capital expenditure programs to improve its
processing technology and plant and equipment, and to expand capacity to
accommodate its substantial growth. The Company anticipates that capital
spending, exclusive of acquisitions or joint ventures, will approximate $50
million per year through 1999.
Although most of the Company's raw material purchases and product sales are
transacted in U.S. Dollars, liabilities for non-U.S. operating expenses and
income taxes are denominated in local currencies. Accordingly, fluctuations in
currency prices will affect the Company's operating results and net income.
Specifically, when the Finnish Markka weakens against the U.S. Dollar, there is
a net favorable effect on the Company due to lower operating expenses and lower
net balance sheet liabilities when translated into U.S. Dollars. The reverse is
true when the Finnish Markka strengthens against the U.S. Dollar. In order to
partially hedge the balance sheet exposure to fluctuating rates, the Company
enters into forward contracts to purchase Finnish Markka.
<PAGE> 18
Page 18
MANAGEMENT'S DISCUSSION AND ANALYSIS
of Financial Condition and Results of Operations
YEAR 2000
The Company presently believes that with modifications to existing computer
software and conversions to new software, the Year 2000 Issue will not pose
significant operational problems to its normal business activities.
The Company anticipates completing its Year 2000 project by December 31,
1998, which is prior to any anticipated impact on its operating systems. This
project will be completed using a combination of existing internal and external
resources. The total cost of the Year 2000 project is estimated at $2.5 million
and is being funded through operating cash flows. Of the total project cost,
approximately $800 thousand is attributable to the purchase of new software
which will be capitalized. The remaining $1.7 million, which will be expensed as
incurred, is not expected to have a material effect on the results of
operations.
CAUTIONARY STATEMENT FOR "SAFE HARBOR" PURPOSES
UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
The Company is making this statement in order to satisfy the "safe harbor"
provisions contained in the Private Securities Litigation Reform Act of 1995.
The foregoing discussion includes forward-looking statements relating to the
business of the Company. Such forward- looking statements are subject to
uncertainties and factors relating to the Company's operations and business
environment, all of which are difficult to predict and many of which are beyond
the control of the Company, that could cause actual results of the Company to
differ materially from those matters expressed in or implied by such
forward-looking statements. The Company believes that the following factors,
among others, could affect its future performance and cause actual results of
the Company to differ materially from those expressed in or implied by
forward-looking statements made by or on behalf of the Company: (a) the price
and supply of raw materials, particularly cobalt, copper and nickel; (b) demand
for metal-based specialty chemicals in the mature markets in the United States
and Europe; (c) demand for metal-based specialty chemicals in Asia-Pacific and
other less mature markets, which geographic areas are an announced focus of the
Company's activities; (d) the effect of non-currency risks of investing in and
conducting operations in foreign countries, together with fluctuations in
currency exchange rates upon the Company's international operations, including
those relating to political, social, economic and regulatory factors; and (e)
the availability and cost of personnel trained in Year 2000 modifications and
the ability to locate and correct all relevant computer codes.
<PAGE> 19
Page 19
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(Thousands of dollars)
December 31, 1997 1996
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 13,193 $ 7,818
Accounts receivable, less allowance of
$680 in 1997 and $210 in 1996 80,602 60,054
Inventories 219,201 195,050
Other current assets 11,753 12,448
-------------------------
Total current assets 324,749 275,370
Property, plant and equipment:
Land 2,867 467
Buildings and improvements 49,939 40,569
Machinery and equipment 162,938 122,695
Furniture and fixtures 8,615 4,074
-------------------------
224,359 167,805
Less accumulated depreciation 74,112 57,184
-------------------------
150,247 110,621
Other assets:
Unprocessed inventory 27,499
Goodwill and other intangible assets, less accumulated
amortization of $8,296 in 1997 and $4,967 in 1996 116,751 23,036
Other assets 9,316 6,930
-------------------------
TOTAL ASSETS $601,063 $ 443,456
=========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 219 $ 3,586
Accounts payable 67,521 77,330
Accrued income taxes 9,532 2,753
Deferred income taxes 8,628 7,038
Other accrued expenses 14,782 10,802
-------------------------
Total current liabilities 100,682 101,509
Long-term debt 170,334 109,295
Contract payable 27,499
Deferred income taxes 20,555 18,393
Other long-term liabilities 8,251 1,438
Stockholders' equity:
Preferred stock, $.01 par value:
Authorized 2,000,000 shares; no shares issued or outstanding
Common stock, $.01 par value:
Authorized 30,000,000 shares; issued 22,209,346 shares
in 1997 and 18,759,346 shares in 1996 222 188
Capital in excess of par value 189,281 102,125
Retained earnings 117,465 85,871
Treasury stock (142,720 shares in 1997 and 141,432 shares
in 1996, at cost) (4,829) (2,621)
Foreign currency translation adjustments (898) (241)
-------------------------
TOTAL STOCKHOLDERS' EQUITY 301,241 185,322
-------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $601,063 $ 443,456
=========================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 20
Page 20
STATEMENTS OF CONSOLIDATED INCOME
<TABLE>
<CAPTION>
(Thousands of dollars, except per share data)
Year Ended December 31, 1997 1996 1995
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $487,296 $ 387,999 $ 360,959
Cost of products sold 369,933 304,025 286,396
--------------------------------------------
117,363 83,974 74,563
Selling, general and administrative expenses 46,791 32,553 30,594
--------------------------------------------
Income from operations 70,572 51,421 43,969
OTHER INCOME (EXPENSE)
Interest expense (13,410) (7,485) (5,516)
Interest income 100 244 398
Foreign exchange gain (loss) 715 223 (333)
--------------------------------------------
(12,595) (7,018) (5,451)
--------------------------------------------
Income before income taxes 57,977 44,403 38,518
Income taxes 19,534 14,356 12,585
--------------------------------------------
NET INCOME $ 38,443 $ 30,047 $ 25,933
============================================
NET INCOME PER COMMON SHARE $ 1.84 $ 1.61 $ 1.39
============================================
NET INCOME PER COMMON SHARE --
ASSUMING DILUTION $ 1.78 $ 1.56 $ 1.36
============================================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 21
Page 21
STATEMENT OF CONSOLIDATED STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Capital Foreign
in Excess Currency
Common of Par Retained Treasury Translation
(Thousands of dollars) Stock Value Earnings Stock Adjustments Total
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1995 $125 $102,088 $ 40,304 $(1,158) $(184) $141,175
Net income 25,933 25,933
Translation adjustment 148 148
Dividends paid (4,474) (4,474)
Treasury stock purchased (1,589) (1,589)
Issuance of shares
under benefit plans,
including tax benefit (393) 628 235
------------------------------------------------------------------------
Balance at December 31, 1995 125 102,088 61,370 (2,119) (36) 161,428
Net income 30,047 30,047
Non-employee directors'
compensation 100 100
Translation adjustment (205) (205)
Dividends paid (5,465) (5,465)
Treasury stock purchased (742) (742)
Issuance of shares
under benefit plans,
including tax benefit (81) 240 159
Three-for-two stock split 63 (63)
------------------------------------------------------------------------
Balance at December 31, 1996 188 102,125 85,871 (2,621) (241) 185,322
Net income 38,443 38,443
Non-employee directors'
compensation 198 198
Translation adjustment (657) (657)
Dividends paid (6,792) (6,792)
Treasury stock purchased (4,173) (4,173)
Issuance of shares
under benefit plans,
including tax benefit (57) 1,965 1,908
Sale of common stock 34 86,958 86,992
------------------------------------------------------------------------
Balance at December 31, 1997 $222 $189,281 $117,465 $(4,829) $(898) $301,241
------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 22
Page 22
STATEMENTS OF CONSOLIDATED CASH FLOWS
<TABLE>
<CAPTION>
(Thousands of dollars)
Year Ended December 31, 1997 1996 1995
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 38,443 $30,047 $ 25,933
Items not affecting cash:
Depreciation and amortization 21,225 15,814 13,734
Foreign exchange (gain) loss (715) (223) 333
Deferred income taxes 5,108 7,841 1,552
Changes in operating assets and liabilities:
Accounts receivable (9,435) 11,905 (25,336)
Inventories 15,520 (83,482) (14,081)
Accounts payable and other accruals (40,837) 34,765 7,342
Other 251 (851) (5,833)
-------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 29,560 15,816 3,644
INVESTING ACTIVITIES
Expenditures for property, plant and equipment--net (34,399) (28,129) (31,215)
Acquisitions of businesses (123,718) (395) (14,511)
-------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (158,117) (28,524) (45,726)
FINANCING ACTIVITIES
Dividend payments (6,792) (5,465) (4,474)
Long-term borrowings 172,315 33,364 94,418
Payments of long-term debt (114,643) (15,591) (46,021)
Purchase of treasury stock (4,173) (742) (1,589)
Proceeds from exercise of stock options 708 159 235
Sale of common stock 86,992
-------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 134,407 11,725 42,569
Effect of exchange rate changes on cash (475) (297) 19
-------------------------------------------
Increase (decrease) in cash 5,375 (1,280) 506
Cash and cash equivalents at beginning of year 7,818 9,098 8,592
-------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 13,193 $ 7,818 $ 9,098
===========================================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 23
Page 23
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Thousands of dollars, except per share amounts)
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of OM Group, Inc.
(the Company) and its majority-owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated in consolidation. Investments in
joint ventures are accounted for under the equity method.
Inventories
Inventories are principally stated at the lower of cost or market and valued
using the last-in, first-out (LIFO) method.
Property, Plant and Equipment
Property, plant and equipment is recorded at historical cost less accumulated
depreciation. Depreciation of plant and equipment is provided by the
straight-line method over the useful lives, ranging from three to forty years,
based on the various classes of assets. Long-lived assets are assessed for
impairment when operating profits for the related business indicate that the
carrying value may not be recoverable.
Research and Development
Selling, general and administrative expenses include research and development
costs of $6,687, $3,756 and $3,413 in 1997, 1996 and 1995, respectively, which
are expensed as incurred.
Income Taxes
Deferred income taxes are provided to recognize the effect of temporary
differences between financial and tax reporting arising principally from
different depreciation methods and inventory reserves. Deferred income taxes are
not provided for undistributed earnings of foreign consolidated subsidiaries, to
the extent such earnings are reinvested for an indefinite period of time.
Foreign Currency Translation
The functional currency for the Company's Finnish subsidiary is the U.S.
dollar since a majority of its purchases and sales are denominated in U.S.
dollars and it holds a significant intercompany note payable, denominated in
U.S. dollars. Accordingly, foreign exchange gains and losses related to assets,
liabilities and transactions which are denominated in other currencies
(principally the Finnish Markka) are included in results of operations. The
Company enters into forward contracts to partially hedge its balance sheet
exposure to the Finnish Markka, and accordingly, gains or losses related to the
forward contracts are included in results of operations.
The functional currency for the Company's other subsidiaries outside of the
United States is the applicable local currency. For those operations, financial
statements are translated into U.S. dollars at year-end exchange rates as to
assets and liabilities and weighted average exchange rates as to revenues and
expenses. The resulting translation adjustments are recorded as a component of
stockholders' equity.
<PAGE> 24
Page 24
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Thousands of dollars, except per share amounts)
Goodwill and Other Intangibles
Goodwill represents principally the excess of the purchase price of
businesses acquired over the fair market value of the net tangible assets
acquired. Other intangibles represent principally patents, trademarks and
technology acquired. Goodwill and other intangible assets are being amortized on
a straight-line basis over their respective useful lives (fifteen to forty
years). Goodwill is assessed for impairment when operating profits for the
related business indicate that the carrying value may not be recoverable.
Cash Equivalents
For purposes of the statements of consolidated cash flows, all highly liquid
investments with a maturity of three months or less when purchased are
considered to be cash equivalents.
Earnings Per Share
The Company adopted Statement of Financial Accounting Standards (SFAS) No.
128 in December 1997. Basic earnings per share are computed based on the
weighted average number of shares outstanding. Diluted earnings per share are
computed based on the weighted average number of shares outstanding and the
dilutive effect of stock options outstanding as discussed in Note H. All prior
period earnings per share amounts have been restated to reflect the adoption of
this statement.
Stock Options and Compensation Plans
The Company grants stock options for a fixed number of shares to certain
employees with an exercise price equal to the fair value of the shares at the
date of grant and accounts for stock options using the intrinsic value method.
Accordingly, compensation expense is not recognized for the stock option grants.
Non-employee members of the Board of Directors are eligible to receive their
annual retainer in the form of cash, stock options, or restricted stock. If
stock options are elected, the exercise price is 75% of the fair market value
and directors' cash compensation is utilized to acquire the options. Also,
directors electing to receive restricted stock receive additional restricted
stock equal to 5% of their applied cash compensation. Accordingly, compensation
expense is recognized for stock option and restricted share grants elected by
eligible directors.
Revenue Recognition
Revenues are recognized when products are shipped to unaffiliated customers.
<PAGE> 25
Page 25
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Thousands of dollars, except per share amounts)
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions in
certain circumstances that affect the amounts reported in the accompanying
consolidated financial statements and notes. Actual results could differ from
these estimates.
Financial Presentation Changes
Certain amounts for prior years have been reclassified to conform to the
current year presentation.
Recently Issued Accounting Pronouncements
In June, 1997, SFAS No. 130, "Reporting Comprehensive Income", was issued.
SFAS No. 130 establishes new standards for reporting comprehensive income and
its components; however the adoption of SFAS No. 130 will have no impact on net
income or stockholders' equity. The Company must adopt SFAS No. 130 in the first
quarter of fiscal year 1998. The Company expects that comprehensive income will
not differ materially from net income.
In June, 1997, SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information", was issued. SFAS No. 131 changes the standards for
reporting financial results by operating segments and related products and
services, geographic areas, and major customers. The Company must adopt SFAS No.
131 no later than year-end 1998; adoption of this statement is not expected to
have a material impact on the Company.
B. INVENTORIES
Current inventories consist of the following:
<TABLE>
<CAPTION>
December 31, 1997 1996
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Raw materials and supplies $110,477 $ 116,389
Finished goods 107,989 87,980
----------------------------
218,466 204,369
LIFO reserve 735 (9,319)
----------------------------
Total inventories $219,201 $ 195,050
============================
</TABLE>
Unprocessed inventory at December 31, 1996 represented cobalt slag feedstock
quantities in excess of a twelve-month supply. The cost of the cobalt obtained
is based upon prevailing market prices.
<PAGE> 26
Page 26
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Thousands of dollars, except per share amounts)
C. ACQUISITION, SALE OF COMMON STOCK,
AND SUPPLEMENTAL EARNINGS PER SHARE
On January 21, 1997, the Company acquired SCM Metal Products, Inc. (SCM), a
subsidiary of U.S. Industries, Inc. SCM, which had fiscal 1996 sales of
approximately $94 million, is one of the world's leading producers of
metal-based specialty powders and chemicals, principally specialty powders
primarily from copper, iron and stainless steel. The total consideration paid by
the Company for SCM was $122 million, plus expenses, and was recorded using the
purchase method of accounting. Accordingly, the Company's results of operations
include the impact of SCM from the date of acquisition. The acquisition was
financed through bank borrowings.
In April, 1997, the Company sold 3,450,000 shares of common stock in a public
offering. The net proceeds of $87.0 million were used to pay down a portion of
the debt incurred in acquiring SCM. Had these shares been issued at the date of
acquisition, net income per common share for the year ended December 31, 1997
would have been $1.81 per share.
Pro forma net sales, net income and net income per share as if the
acquisition had occurred as of January 1, 1997, would not be materially
different from that reported in the Statements of Consolidated Income for the
twelve months ended December 31, 1997. Had the acquisition occurred as of
January 1, 1996, pro forma net sales, net income and net income per share for
the year ended December 31, 1996 would have been as follows:
<TABLE>
<S> <C>
Net sales $482,278
Net income $ 29,187
Net income per common share $ 1.57
Net income per common share-- assuming dilution $ 1.51
</TABLE>
The aforementioned pro forma information includes the amortization of
goodwill associated with the acquisition over 40 years by the straight-line
method and an interest cost on the funds borrowed to finance the acquisition.
D. FINANCIAL INSTRUMENTS
Long-term debt consists of the following:
<TABLE>
<CAPTION>
December 31, 1997 1996
- -------------------------------------------------------------------------------
<S> <C> <C>
Notes payable to banks $ 110,000 $ 79,000
Notes payable to insurance companies 60,000 30,000
Business acquisition debt 3,447
Other 553 434
-----------------------------
170,553 112,881
Less: Current portion 219 3,586
-----------------------------
Total long-term debt $ 170,334 $ 109,295
=============================
</TABLE>
<PAGE> 27
Page 27
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Thousands of dollars, except per share amounts)
At December 31, 1997, the Company had a $180 million revolving credit
facility with a group of banks, with variable interest rates based upon either
the agent bank's rate or LIBOR plus a .35% to .75% margin, at the Company's
option. In connection with the acquisitions of Auric Corporation and Dussek
Campbell Limited (see Note K), the Company's revolving credit facility was
further expanded to $250 million in January, 1998, including $10 million for the
issuance of letters of credit. The five year agreement, expiring in January,
2003, has variable interest rates based upon either the agent bank's rate or
LIBOR plus a .40% to .80% margin. Under this credit agreement, the Company must
meet certain funded debt ratios, and there are also covenants which restrict
the dividend paying and borrowing capability of the Company. Annual dividends
are limited to $12 million or 25% of consolidated net income, whichever is
greater.
During the three year period ended December 20, 1997, the Company had an
interest rate swap agreement to convert the variable interest rates on an
aggregate contract amount of $30 million to a fixed rate of 7.28% plus .35% to
.75%. Subsequent to December 31, 1997, the Company entered into several interest
rate swap agreements to convert the variable interest rates on an aggregate
contract amount of $60 million to an average fixed rate of 5.65% plus .40% to
.80% for a three year period ending February 9, 2001. The combined effective
rate of the Company's bank borrowings and the related swap agreement is 6.57%.
The net interest paid or received on interest rate swaps is included in interest
expense. The counterparties to the interest rate swaps are international
commercial banks.
During 1995 the Company borrowed $30 million from a group of insurance
companies through a private placement. The borrowings bear interest at 7.38% and
are due August 30, 2005. During 1997, in order to convert to a fixed rate and
extend the term on a portion of its borrowings, the Company borrowed an
additional $30 million in a private placement with a group of insurance
companies and used the proceeds to reduce borrowings under its revolving credit
facility with its banks. Borrowings amounting to $15 million bear interest at
6.82% and are due October 24, 2007. The balance of the borrowings bear interest
at 6.99% and are due October 24, 2009. Under the terms of these note purchase
agreements, the Company must meet certain interest coverage and funded debt
ratios. There are also covenants which restrict the dividend paying and
borrowing capability of the Company.
Aggregate annual maturities of long-term debt for the five years following
December 31, 1997 are as follows: 1998 - $219; 1999 - $139; 2000 - $20; 2001 -
$20 and 2002 - $20. Interest paid was $14,771, $7,056 and $4,454 for the years
ended December 31, 1997, 1996 and 1995, respectively. At December 31, 1997 the
carrying value of the Company's debt approximated its fair value.
The Company enters into forward contracts to purchase Finnish Markka to
partially hedge its balance sheet exposure to rate fluctuations between the
Finnish Markka and the U.S. dollar. At December 31, 1997, the notional value of
these forward contracts approximated $7,600. The fair value of the forward
contracts, based on the current settlement price at December 31, 1997,
approximated $300 payable, which was recorded in results of operations.
<PAGE> 28
Page 28
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Thousands of dollars, except per share amounts)
E. INCOME TAXES
Income before income taxes consists of the following:
<TABLE>
<CAPTION>
Year Ended December 31, 1997 1996 1995
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
United States $ 7,794 $ 1,384 $ 4,654
Outside the United States 50,183 43,019 33,864
--------------------------------------------
$ 57,977 $ 44,403 $38,518
============================================
</TABLE>
Income taxes are summarized as follows:
<TABLE>
<CAPTION>
Year Ended December 31, 1997 1996 1995
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
United States:
Federal $ 1,267 $ 923 $ 2,158
State and local 1,166 258 85
Outside the United States 11,993 5,334 8,790
--------------------------------------------
14,426 6,515 11,033
Deferred:
United States 1,209 644 949
Outside the United States 3,899 7,197 603
--------------------------------------------
5,108 7,841 1,552
--------------------------------------------
$ 19,534 $ 14,356 $12,585
============================================
</TABLE>
Significant components of the Company's deferred income taxes are as follows:
<TABLE>
<CAPTION>
Year Ended December 31, 1997 1996
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Current asset - operating accruals $ 3,372 $ 4,203
Current liability - inventories (8,628) (7,038)
Long-term asset - employee benefits 2,580 620
Long-term liability - accelerated depreciation (20,555) (18,393)
------------------------------
$(23,231) $(20,608)
==============================
</TABLE>
A reconciliation of income taxes computed at the United States statutory rate
to the effective income tax rate follows:
<TABLE>
<CAPTION>
Year Ended December 31, 1997 1996 1995
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income taxes at the United States statutory rate 35.0% 35.0% 35.0%
State income taxes, net of federal tax benefit 1.3 .4 .1
Effective tax rate differential of earnings outside
of the United States (2.7) (5.7) (7.2)
Change in statutory tax rate outside of the
United States 1.8
Adjustment of worldwide tax liabilities (2.0) 2.2 2.9
Non-deductible goodwill 1.6 .4 .5
Other--net .5 (.4)
----------------------------------------
33.7% 32.3% 32.7%
========================================
</TABLE>
<PAGE> 29
Page 29
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Thousands of dollars, except per share amounts)
The Company has not provided additional United States income taxes on
approximately $114 million of undistributed earnings of consolidated foreign
subsidiaries included in stockholders' equity. Such earnings could become
taxable upon the sale or liquidation of these foreign subsidiaries or upon
dividend repatriation. The Company's intent is for such earnings to be
reinvested by the subsidiaries or to be repatriated only when it would be tax
effective through the utilization of foreign tax credits. It is not practicable
to estimate the amount of unrecognized withholding taxes and deferred tax
liability on such earnings.
Income tax payments were $12,551, $14,129 and $5,060 during the years ended
December 31, 1997, 1996 and 1995, respectively.
F. RETIREMENT PLANS
The Company sponsors several defined contribution plans covering certain
employees. Company contributions are determined by the Board of Directors based
upon participant compensation. The Company also sponsors a non-contributory,
non-qualified supplemental executive retirement plan for certain employees,
providing benefits beyond those covered in the defined contribution plans.
Beginning in 1997, in connection with the acquisition of SCM, the Company
maintains a 401(k) plan for certain non-union employees in the United States.
Aggregate defined contribution plan expenses were $2,295, $1,727 and $1,388 in
1997, 1996 and 1995, respectively.
In connection with the acquisition of SCM, the Company also has several
non-contributory defined benefit retirement plans covering certain United States
hourly and salaried employees, in order to provide uniform retirement income.
The benefits for these plans are based primarily on years of credited service
and average compensation as defined under the respective plan provisions. The
Company's funding policy is to contribute annually an amount sufficient to meet
the minimum funding requirements set forth in the Employee Retirement Income
Security Act of 1974.
The net periodic pension cost for the year ended December 31, 1997, includes
the following components:
<TABLE>
<S> <C>
Service cost - benefits earned during the period $ 513
Interest cost on projected benefit obligations 1,056
Actual return on plan assets (1,071)
--------
Net pension cost $ 498
========
</TABLE>
<PAGE> 30
Page 30
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Thousands of dollars, except per share amounts)
- ------------------------------------------------------------------------------
The following table sets forth the funded status of the Company's
pension plans and the amounts reflected in the accompanying balance sheets at
December 31, 1997:
<TABLE>
<CAPTION>
Actuarial present value of benefit obligation:
<S> <C>
Vested employees $(10,942)
Non-vested employees (1,018)
-----------
Accumulated benefit obligation (11,960)
Additional amount related to projected
salary increases (2,408)
-----------
Total projected benefit obligation (14,368)
Funded assets at fair value 11,737
-----------
Accrued pension liability $ (2,631)
===========
</TABLE>
Plan assets consist primarily of equity securities and domestic
governmental and corporate obligations.
The following assumptions were used to determine the projected benefit
obligation and plan assets:
Assumed discount rate 7.50%
Assumed rate of compensation increase 4.50%
Expected rate of return on plan assets 9.00%
G. RETIREMENT BENEFITS OTHER THAN PENSIONS
The Company provides health care benefits upon retirement for certain
United States employees with a specified number of years of service. The
estimated cost of their benefits is actuarially determined and accrued over the
employees' service periods as a level percentage of compensation for employees
expected to qualify for benefits.
The components of expense for postretirement benefits are as follows:
<TABLE>
<CAPTION>
Year Ended December 31, 1997 1996 1995
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost - benefits earned during this period $202 $ 27 $16
Interest cost on the accumulated obligation 332 84 75
--------------------------
Postretirement benefit cost $534 $111 $91
==========================
</TABLE>
The liability for postretirement benefit plans other than pensions at
December 31 follows:
<TABLE>
<CAPTION>
1997 1996
- -----------------------------------------------------------------------------
<S> <C> <C>
Accumulated postretirement benefit obligation
Retirees $(1,312) $(506)
Employees eligible to retire (1,199) (253)
Other active employees (3,530) (268)
Unrecognized
Prior service cost 1,468
Net (gain)/loss (44) 200
-------------------
Postretirement benefit obligation $(4,617) $(827)
===================
</TABLE>
<PAGE> 31
Page 31
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Thousands of dollars, except per share amounts)
The increase in annual expense during 1997 and the related accrual at
December 31, 1997 reflects the impact of the acquisition of SCM.
Actuarial assumptions used in the calculation of the liability for
postretirement benefits other than pensions are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Discount rate 7.50% 7.75% 7.75%
Projected health care cost trend rate 9.50% 9.55% 10.20%
Ultimate trend rate 5.50% 5.90% 5.90%
Year ultimate trend rate is achieved 2006 2006 2006
</TABLE>
An increase of 1% in assumed health care cost trend rates would increase the
accumulated benefit obligation as of December 31, 1997 by $1,447 and the
aggregate annual service and interest cost by $109.
H. STOCKHOLDERS' EQUITY
In November, 1996, the Board of Directors declared a dividend distribution of
one Right for each outstanding share of common stock. Each Right entitles the
shareholder to purchase one one-hundredth share of Series A Participating
Preferred Stock at a purchase price of $160 per share, subject to adjustment.
The Rights become exercisable if certain events occurred relating to a person or
group (Acquiring Person) acquiring or attempting to acquire 15% or more of the
outstanding shares of common stock. In the event that the Rights become
exercisable, each Right (except for Rights beneficially owned by the Acquiring
Person, which become null and void) would entitle the holder to purchase for the
exercise price then in effect, shares of the Company's common stock having a
value of twice the exercise price. The Rights may be redeemed by the Board of
Directors in whole, but not in part, at a price of $0.01 per Right. The Rights
have no voting or dividend privileges and are attached to, and do not trade
separately from the common stock. The Rights expire on November 14, 2006.
The following table sets forth the computation of net income per common share
and net income per common share -- assuming dilution:
<TABLE>
<CAPTION>
Year Ended December 31, 1997 1996 1995
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net income $ 38,443 $30,047 $25,933
Weighted average number of shares outstanding 20,929 18,624 18,637
Dilutive effect of stock options 725 642 500
-------------------------------------------
Weighted average number of shares outstanding --
assuming dilution 21,654 19,266 19,137
Net income per common share $ 1.84 $ 1.61 $ 1.39
-------------------------------------------
Net income per common share --
assuming dilution $ 1.78 $ 1.56 $ 1.36
-------------------------------------------
</TABLE>
<PAGE> 32
Page 32
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Thousands of dollars, except per share amounts)
The Company's Long-Term Incentive Compensation Plan has authorized the grant
of options to management personnel for up to 1,523,438 shares of the Company's
common stock. All options granted have 10 year terms and vest and become fully
exercisable at the end of the next fiscal year following the year of grant.
Pro forma information regarding net income and earnings per share is required
by FASB Statement No. 123, "Accounting for Stock Based Compensation", and has
been determined as if the Company had accounted for its employee stock options
under the fair value method of that Statement. The fair value of these options
was estimated at the date of grant using the Black-Scholes options pricing model
with the following weighted-average assumptions:
<TABLE>
<CAPTION>
Year Ended December 31, 1997 1996 1995
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Risk-free interest rate 6.0% 6.5% 6.5%
Dividend yield 1.2% 1.2% 1.2%
Volatility factor of Company common stock .19 .20 .20
Weighted-average expected option life (years) 5 5 5
</TABLE>
For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. The Company's
pro forma information follows:
<TABLE>
<CAPTION>
1997 1996 1995
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net income $ 36,764 $28,874 $25,782
Net income per common share $ 1.76 $ 1.55 $ 1.38
Net income per common share --
assuming dilution $ 1.70 $ 1.50 $ 1.35
</TABLE>
A summary of the Company's stock option activity and related information
follows:
<TABLE>
<CAPTION>
1997 1996 1995
- -----------------------------------------------------------------------------------------------
Weighted Weighted Weighted
Average Average Average
Options Exercise Options Exercise Options Exercise
Price Price Price
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at January 1 1,243,079 $ 12.55 1,061,656 $ 9.94 900,101 $ 7.65
Granted 239,603 39.94 202,860 25.96 208,055 18.72
Exercised (114,909) 6.15 (17,355) 9.19 (46,500) 5.04
Forfeited (4,082) 12.25
---------------------------------------------------------------------
Outstanding at December 31 1,367,773 $ 17.89 1,243,079 $12.55 1,061,656 $ 9.94
Exercisable at end of year 1,138,773 1,055,579 878,168
Weighted-average fair value
of options granted
during the year $ 10.28 $ 7.37 $ 5.46
</TABLE>
The weighted-average remaining contractual life of these options outstanding
is 7.0 years.
<PAGE> 33
Page 33
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Thousands of dollars, except per share amounts)
The following table summarizes information about stock options outstanding
and exercisable at December 31, 1997:
<TABLE>
<CAPTION>
Outstanding Exercisable
------------------------------------- -------------------------
Weighted
Average Weighted Weighted
Remaining Average Average
Number Contractual Exercise Number Exercise
of Shares Life Price of Shares Price
------------------------------------- -------------------------
<S> <C> <C> <C> <C> <C>
Range of exercise prices:
$ 5.04-$13.00 748,824 5.4 $ 8.20 748,824 $ 8.20
$17.31-$39.94 618,949 9.1 $29.61 389,949 $23.54
</TABLE>
I. COMMITMENTS AND CONTINGENCIES
In June, 1997, the Company signed contracts as a partner to build a smelter
in Lubumbashi, Democratic Republic of Congo. The Company's approximately $40
million share of the $80 million project will be funded over the two year
construction period through cash generated by operations and the Company's
credit facilities.
The Company has also entered into a supply agreement with La Generale des
Carriers et des Mines (Gecamines) to purchase all of the concentrate produced by
the Luiswishi mine in Shaba, Democratic Republic of Congo through 1999. Annual
production from this facility is estimated to contain approximately 4,000 metric
tons of cobalt and 8,000 metric tons of copper. The cost of the cobalt and
copper obtained will be based upon the prevailing market price as material is
processed.
The Company is a party to various legal proceedings incidental to its
business and is subject to a variety of environmental and pollution control laws
and regulations in the jurisdictions in which it operates. As is the case with
other companies in similar industries, the Company faces exposure from actual or
potential claims and legal proceedings involving environmental matters. Although
it is difficult to quantify the potential impact of compliance with or liability
under environmental protection laws, management believes that the ultimate
aggregate cost to the Company of environmental remediation, as well as other
legal proceedings arising out of operations in the normal course of business,
will not result in a material adverse effect upon its financial condition or
results of operations.
<PAGE> 34
Page 34
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Thousands of dollars, except per share amounts)
J. BUSINESS AND GEOGRAPHIC INFORMATION
The Company and its operating subsidiaries manufacture and sell metal
carboxylates, salts, and powders that are primarily derived from cobalt, copper
and nickel. Metal carboxylates are essential components in numerous complex
chemical and industrial processes, and are used in many end markets, such as
coatings, custom catalysts, liquid detergents, lubricants and fuel additives,
plastic stabilizers, polyester promoters and adhesion promoters for rubber
tires. Metal salts are used in a wide variety of end products, including
catalysts, colorants, rechargeable batteries, petroleum additives, magnetic
media and metal finishing agents. High specification metal powders have several
important characteristics that make them essential components in cemented
carbides for mining and machine tools, diamond tools used in construction,
rechargeable batteries, and alloyed materials for automotive, electronics,
transportation and catalyst applications. The Company operates in a single
business segment serving numerous customers and industries.
The Company's operations are located principally in the United States and
Finland. Financial information by geographic area is summarized as follows:
<TABLE>
<CAPTION>
Year Ended December 31, 1997 1996 1995
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales:
United States $ 274,200 $160,507 $149,114
Finland 207,122 219,754 202,114
Other 5,974 7,738 9,731
----------------------------------------------
$ 487,296 $387,999 $360,959
==============================================
Operating profit:
United States $ 29,162 $ 13,781 $ 12,108
Finland 48,623 44,063 37,227
Other 901 304 504
Corporate administrative expense (8,114) (6,727) (5,870)
----------------------------------------------
70,572 51,421 43,969
Other expense (12,595) (7,018) (5,451)
----------------------------------------------
Income before income taxes $ 57,977 $ 44,403 $ 38,518
==============================================
December 31, 1997 1996
- ------------------------------------------------------------------------------------------------
Identifiable assets:
United States $355,478 $163,252
Finland 240,551 273,590
Other 5,034 6,614
------------------------------
$601,063 $443,456
==============================
</TABLE>
<PAGE> 35
Page 35
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Thousands of dollars, except per share amounts)
K. SUBSEQUENT EVENTS
On January 30, 1998, the Company acquired Auric Corporation (Auric). Auric,
with annual sales in fiscal 1997 of approximately $48 million, is a leading
producer of electroless nickel, electroplating chemicals and metal concentrates.
The total consideration paid by the Company for Auric was $80 million, plus
expenses.
On February 3, 1998, the Company acquired Dussek Campbell Limited (Dussek).
Dussek, with annual sales in fiscal 1997 of approximately $12 million, excluding
product lines not acquired, is a manufacturer of metal carboxylates. The total
consideration paid by the Company for Dussek was approximately $13 million, plus
expenses.
These acquisitions, which were financed entirely through bank borrowings, are
not reflected in the accompanying financial statements as of December 31, 1997
and will be accounted for by the purchase method of accounting.
L. QUARTERLY DATA (UNAUDITED)
<TABLE>
<CAPTION>
Quarter Ended March 31 June 30 September 30 December 31
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1997
Net sales $110,055 $124,334 $126,317 $126,590
Gross profit 26,578 29,483 29,949 31,353
Income from operations 15,696 17,869 18,320 18,687
Net income 8,216 9,579 10,215 10,433
Net income per
common share $ .44 $ .46 $ .46 $ .48
Net income per
common share --
assuming dilution $ .43 $ .44 $ .45 $ .46
Market price: high-low 31 3/8 - 26 1/2 33 1/4 -25 3/4 39 15/16 - 33 3/16 41 1/4 - 35 1/16
Dividends paid per share $ .08 $ .08 $ .08 $ .08
1996
Net sales $102,853 $101,485 $ 89,071 $ 94,590
Gross profit 20,211 21,030 20,905 21,828
Income from operations 12,258 13,084 13,036 13,043
Net income 7,151 7,583 7,670 7,643
Net income per
common share $ .38 $ .41 $ .41 $ .41
Net income per
common share --
assuming dilution $ .37 $ .39 $ .40 $ .40
Market price: high-low 25 1/8 - 21 5/8 28 - 24 1/2 27 3/8 - 22 3/4 28 3/4 - 25 3/8
Dividends paid per share $ .07 $ .07 $ .07 $ .07
</TABLE>
<PAGE> 36
Page 36
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Stockholders
OM Group, Inc.
We have audited the accompanying consolidated balance sheets of OM Group,
Inc. as of December 31, 1997 and 1996, and the related statements of
consolidated income, stockholders' equity, and cash flows for each of the three
years in the period ended December 31, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of OM Group, Inc. at
December 31, 1997 and 1996, and the consolidated results of its operations and
its cash flows for each of the three years in the period ended December 31,
1997, in conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
Cleveland, Ohio
February 3, 1998
<PAGE> 37
Page 37
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange Act of
1934, the Registrant has duly caused this Annual Report on Form 10-K to be
signed on its behalf by the undersigned, thereunto duly authorized.
OM GROUP, INC.
By: /s/ James P. Mooney
-----------------------------------
James P. Mooney
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual
Report on Form 10-K has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/ James P. Mooney Chairman and Chief Executive Officer June 26, 1998
- -------------------------- ---------------
James P. Mooney
/s/ Eugene Bak * President and Chief Operating Officer June 26, 1998
- -------------------------- ---------------
Eugene Bak
/s/ Markku Toivanen * Director June 26, 1998
- -------------------------- ---------------
Markku Toivanen
/s/ Lee R. Brodeur * Director June 26, 1998
- -------------------------- ---------------
Lee R. Brodeur
/s/ Thomas R. Miklich * Director June 26, 1998
- -------------------------- ---------------
Thomas R. Miklich
/s/ John E. Mooney * Director June 26, 1998
- -------------------------- ---------------
John E. Mooney
/s/ Frank Butler * Director June 26, 1998
- -------------------------- ---------------
Frank Butler
/s/ James M. Materna Chief Financial Officer (Principal June 26, 1998
- -------------------------- Financial and Accounting Officer) ---------------
James M. Materna
/s/ James P. Mooney June 26, 1998
- -------------------------- ---------------
James P. Mooney
Attorney-in-Fact
</TABLE>
*James P. Mooney, by signing his name hereto signs this document on behalf of
each of the persons so indicated above pursuant to powers of attorney duly
executed by such persons and filed with the Securities and Exchange Commission.
<PAGE> 38
Page 38
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Exhibit
- ----------- -------
<S> <C>
4.2 Amended and Restated Credit Agreement dated as of January 30,
1998 among National City Bank as Agent and Letter of Credit Bank
and ABN Amro Bank N.V. as Co-Agent and Keybank National
Association, Mellon Bank N.A., Harris Trust and Savings Bank and
NBD Bank and OM Group, Inc., as Borrower.
4.6 Note Purchase Agreement among OM Group, Inc. as Seller and
Nationwide Life Insurance Company and Great-West Life & Annuity
Insurance Company as Purchaser, dated October 24, 1997.
10.32 Agreement and Plan of Merger between Auric Corporation and OM
Group, Inc. dated December 19, 1997.
10.33 Joint Venture Agreement among OMG B.V., Groupe George Forrest
S.A., La Generale Des Carrieres Et des Mines and OM Group, Inc.
to partially or totally process the slag located in the site of
Lumbumbashi, Democratic Republic of Congo.
10.34 Agreement for sale of concentrate production between Kokkola
Chemicals Oy and La Generale Des Carriers Et des Mines dated
April 21, 1997.
21 List of Subsidiaries
23 Consent of Ernst & Young LLP
24 Power of Attorney
27 Financial Data Schedule
27.1 Restated 1st Quarter 1996 Financial Data Schedule
27.2 Restated 2nd Quarter 1996 Financial Data Schedule
27.3 Restated 3rd Quarter 1996 Financial Data Schedule
27.4 Restated 1st Quarter 1997 Financial Data Schedule
27.5 Restated 2nd Quarter 1997 Financial Data Schedule
27.6 Restated 3rd Quarter 1997 Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 4.2
AMENDED AND RESTATED
CREDIT AGREEMENT
(U.S. $250,000,000)
Dated as of January 30, 1998
among
OM GROUP, INC.
as Borrower
and
THE BANKS WHICH ARE SIGNATORIES HERETO,
NATIONAL CITY BANK
as Agent and
Letter of Credit Bank
and
ABN AMRO BANK N.V.
as Co-Agent
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
- ------- ----
<C> <S> <C>
1 DEFINITIONS AND ACCOUNTING TERMS
1.1 Certain Defined Terms......................................................................... 1
1.2 Computation of Time Periods................................................................... 16
1.3 Accounting Terms.............................................................................. 16
1.4 Dollar Equivalents............................................................................ 17
2 STATEMENT OF TERMS
2.1 Revolving Credit Facility..................................................................... 17
(a) Revolving Credit Loans............................................................... 17
(b) Revolving Credit Borrowings.......................................................... 17
(c) Revolving Credit Notes; Loan Account................................................. 17
(d) Control Account Maintained by Agent.................................................. 18
2.2 Credit Requests............................................................................... 18
(a) Credit Requests Executed by the Borrower............................................. 18
(b) Requests for Revolving Credit Borrowing Deemed Given................................. 19
2.3 Funding of Revolving Credit Loans............................................................. 20
(a) Disbursement of Funds Received....................................................... 20
2.4 Availability of Funds......................................................................... 20
2.5 Failure of Bank to Fund....................................................................... 20
(a) Payment Constituting Ratable Portion................................................. 20
(b) Treatment of Defaulting Bank......................................................... 21
(c) Continuing Borrower Obligation....................................................... 21
(d) Continuing Bank Obligation to Fund................................................... 21
2.6 Repayments and Prepayments.................................................................... 21
(a) Repayment............................................................................ 21
(b) Mandatory Prepayment of Revolving Credit Loans....................................... 21
(c) Mandatory Reduction of Revolving Credit Commitment................................... 22
(d) Voluntary Reduction of Revolving Credit Commitment................................... 22
(e) Permitted Prepayments................................................................ 23
(f) Extension of Commitment Period....................................................... 23
2.7 Rate Conversion and Rate Continuation......................................................... 24
2.8 Letters of Credit............................................................................. 25
(a) Term; Form and Conditions of Letters of Credit....................................... 25
(b) Requests for Letters of Credit....................................................... 26
(c) Participation by Banks in Letters of Credit.......................................... 26
(d) Reimbursement........................................................................ 27
(e) Failure to Reimburse................................................................. 27
(f) Obligations Absolute................................................................. 27
(g) Liability of Letter of Credit Bank................................................... 28
(h) Letter of Credit Bank Indemnity...................................................... 29
(i) Effect of Applicable Law or Custom................................................... 29
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Section Page
- ------- ----
<C> <S> <C> <C>
(j) Termination of Letter of Credit Commitment........................................... 29
2.9 Fees.......................................................................................... 30
(a) Revolving Credit Commitment Fee...................................................... 30
(b) Arrangement and Structuring.......................................................... 30
(c) Annual Agent's Fee................................................................... 30
(d) Letter of Credit Fees................................................................ 30
(e) Late Charges......................................................................... 31
(f) Applicable Risk Participation Percentage and Applicable Facility Fee Percentage...... 31
(g) Payment of Fees; NonRefundable....................................................... 31
2.10 Interest on Revolving Credit Loans............................................................ 31
(a) Interest Rate........................................................................ 32
(b) Applicable LIBOR Margin; Terms of Adjustment......................................... 32
(c) Default Interest..................................................................... 33
(d) Interest Rate Determination.......................................................... 33
2.11 Payments and Computations..................................................................... 34
(a) Payments............................................................................. 34
(b) Payment Procedures................................................................... 34
(c) Authorization to Charge Account...................................................... 34
(d) Computations of Interest and Fees.................................................... 34
(e) Payment not on Business Day.......................................................... 35
(f) Presumption of Payment in Full by Borrower........................................... 35
2.12 Change in Law; LIBOR Rate Loans Unlawful...................................................... 35
2.13 Unavailability................................................................................ 36
(a) Inadequate Rate...................................................................... 36
(b) Unavailable Quotations............................................................... 36
(c) Unavailable Deposits................................................................. 36
2.14 Pro Rata Treatment............................................................................ 36
3 CONDITIONS OF LENDING.
3.1 Conditions Precedent to Initial Loans......................................................... 36
(a) This Agreement....................................................................... 36
(b) Subsidiary Guaranties................................................................ 37
(c) Corporate Action; Incumbency......................................................... 37
(d) Domestic Subsidiary - Corporate Action; Incumbency................................... 37
(e) Good Standing - Borrower............................................................. 37
(f) Good Standing - Domestic Subsidiaries................................................ 37
(g) Revolving Credit Notes............................................................... 37
(h) Legal Opinions....................................................................... 38
(i) Minimum Availability................................................................. 38
(j) Assignment Agreement................................................................. 38
(k) Consents............................................................................. 38
(l) Delivery of Financial Statements; Officer's Certificate.............................. 38
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
Section Page
- ------- ----
<C> <S> <C> <C>
(m) Credit Request and Disbursement Direction Letter..................................... 38
(n) Payment of Fees...................................................................... 38
(o) Projections.......................................................................... 39
(p) Insurance............................................................................ 39
(q) Other Information.................................................................... 39
3.2 Conditions Precedent to all Loans............................................................. 39
(a) Representation Bringdown............................................................. 39
(b) No Default; Compliance with Terms.................................................... 39
(c) No Material Adverse Effect........................................................... 39
4 GENERAL REPRESENTATIONS AND WARRANTIES.
4.1 Existence..................................................................................... 39
4.2 Authorization................................................................................. 40
4.3 Enforceability................................................................................ 40
4.4 Litigation; Proceedings....................................................................... 40
4.5 Taxes......................................................................................... 41
4.6 Title......................................................................................... 41
4.7 No Breach or Default.......................................................................... 41
4.8 Consents; Approvals........................................................................... 41
4.9 Lawful Operations............................................................................. 41
4.10 Environmental Compliance...................................................................... 41
4.11 ERISA......................................................................................... 42
4.12 Adverse Obligations; Labor Disputes........................................................... 43
4.13 Financial Statements.......................................................................... 43
4.14 Value; Solvency............................................................................... 43
4.15 Investment Company Act Status................................................................. 43
4.16 Use of Proceeds; Regulation U/Regulation X Compliance......................................... 43
4.17 Full Disclosure............................................................................... 44
5 COVENANTS OF THE BORROWER.
5.1 Reporting and Notice Covenants................................................................ 44
(a) Quarterly Financial Statements....................................................... 44
(b) Annual Financial Statements.......................................................... 44
(c) Officer's Certificates............................................................... 45
(d) Annual Business Plan................................................................. 45
(e) Other Information.................................................................... 45
(f) Projections.......................................................................... 45
(g) Notices.............................................................................. 46
(h) Notice of Default under ERISA........................................................ 46
(i) Environmental Reporting.............................................................. 46
(j) Multiemployer Plan Withdrawal Liability.............................................. 47
5.2 Affirmative Covenants......................................................................... 47
(a) Corporate Existence.................................................................. 47
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
Section Page
- ------- ----
<C> <S> <C> <C>
(b) Compliance with Law.................................................................. 47
(c) Insurance............................................................................ 47
(d) Taxes................................................................................ 48
(e) Properties; Financial Records........................................................ 48
(f) Visitation........................................................................... 48
(g) Domestic Subsidiaries as Subsidiary Guarantors....................................... 48
(h) Interest Rate Protection Agreements.................................................. 48
5.3 Negative Covenants............................................................................ 49
(a) Mergers; Sales of Assets; Fundamental Transactions................................... 49
(b) Credit Extensions; Investments....................................................... 49
(c) Indebtedness......................................................................... 50
(d) Liens; Leases........................................................................ 50
(e) Dividends............................................................................ 51
(f) Accounting Changes................................................................... 52
(g) Use of Proceeds...................................................................... 52
(h) Compliance with ERISA................................................................ 52
(i) Change in Nature of Business......................................................... 53
5.4 Financial Covenants........................................................................... 53
(a) Consolidated Total Funded Debt to EBITDA Ratio....................................... 53
(b) Consolidated Total Funded Debt....................................................... 53
6 EVENTS OF DEFAULT
6.1 Payment Failure............................................................................... 53
6.2 Representations and Warranties................................................................ 54
6.3 Reporting and Notice Provisions; Violations of Certain Affirmative Covenants.................. 54
6.4 Violation of Negative Covenants; Violation of Certain Other Covenants......................... 54
6.5 Loan Documents................................................................................ 54
6.6 Cross-Default................................................................................. 54
6.7 Termination of Existence...................................................................... 55
6.8 Control....................................................................................... 55
6.9 Failure of Enforceability of this Agreement or any Loan Document.............................. 55
6.10 Judgments..................................................................................... 55
6.11 Forfeiture Proceedings........................................................................ 55
6.12 Payments of Debts............................................................................. 55
6.13 Voluntary Proceedings......................................................................... 55
6.14 Involuntary Proceedings....................................................................... 56
7 REMEDIES
7.1 Optional Defaults............................................................................. 56
7.2 Automatic Defaults............................................................................ 56
7.3 General Rights and Remedies of Agent and the Banks............................................ 56
7.4 Set-off....................................................................................... 56
</TABLE>
iv
<PAGE> 6
<TABLE>
<CAPTION>
Section Page
- ------- ----
<C> <S> <C> <C>
7.5 Acions in Respect of the Letters of Credit upon Default........................................ 57
7.6 Letter of Credit Collateral Account............................................................ 57
(a) Application......................................................................... 57
(b) No Borrower or Third Party Claims..................................................... 57
(c) No Liens or Transfers of Account...................................................... 57
(d) Reasonable Care....................................................................... 58
7.7 Termination; Effect on Borrower Obligations.................................................... 58
7.8 Equalization................................................................................... 58
7.9 Remedies Cumulative............................................................................ 58
8 THE AGENT.
8.1 The Agent...................................................................................... 58
8.2 Nature of Appointment.......................................................................... 58
8.3 Agent as a Bank; Other Transactions............................................................ 59
8.4 Instructions from Banks........................................................................ 59
8.5 Bank's Diligence............................................................................... 59
8.6 No Implied Representations..................................................................... 59
8.7 Sub-Agents..................................................................................... 59
8.8 Agent's Diligence.............................................................................. 59
8.9 Notice of Default.............................................................................. 60
8.10 Agent's Liability.............................................................................. 60
8.11 Agent's Indemnity.............................................................................. 61
8.12 Resignation of Agent........................................................................... 61
9 TRANSFERS AND ASSIGNMENTS.
9.1 Transfer of Commitments........................................................................ 61
(a) Prior Consent......................................................................... 62
(b) Agreement; Transfer Fee............................................................... 62
(c) Revolving Credit Notes................................................................ 62
(d) Parties............................................................................... 62
9.2 Sale of Participations......................................................................... 63
(a) Benefits of Participant............................................................... 63
(b) Rights Reserved....................................................................... 63
(c) No Delegation......................................................................... 63
9.3 Confidentiality................................................................................ 63
10 INDEMNITIES.
10.1 Increased Costs................................................................................ 64
10.2 Risk-Based Capital............................................................................. 64
10.3 Taxes.......................................................................................... 64
(a) Taxes; Withholding.................................................................... 64
(b) Stamp Taxes........................................................................... 65
(c) Indemnification for Other Taxes....................................................... 65
</TABLE>
v
<PAGE> 7
<TABLE>
<CAPTION>
Section Page
- ------- ----
<C> <S> <C> <C>
(d) Request for Refund.................................................................... 65
(e) Furnishing of Certificate............................................................. 66
(f) Exemption Certificate................................................................. 66
(g) Survival of Provision................................................................. 67
10.4 Losses......................................................................................... 67
10.5 Indemnification for Requests................................................................... 67
10.6 General Indemnity.............................................................................. 67
10.7 Environmental Indemnity........................................................................ 68
10.8 Certificate for Indemnification................................................................ 68
10.9 Duty To Mitigate; Standard Treatment........................................................... 68
11 GENERAL
11.1 Amendments and Waivers......................................................................... 68
11.2 Cumulative Provisions; Integration............................................................. 69
11.3 Binding Effect................................................................................. 69
11.4 Costs and Expenses............................................................................. 70
11.5 Survival of Provisions......................................................................... 70
11.6 Immediate U.S. Funds........................................................................... 70
11.7 Captions....................................................................................... 70
11.8 Interest Rate Limitation....................................................................... 70
11.9 Illegality..................................................................................... 70
11.10 Notices........................................................................................ 71
11.11 Governing Law.................................................................................. 71
11.12 Entire Agreement............................................................................... 71
11.13 JURY TRIAL WAIVER.............................................................................. 71
11.14 Jurisdiction; Venue; Inconvenient Forum........................................................ 71
(a) Jurisdiction.......................................................................... 71
(b) Venue; Inconvenient Forum............................................................. 72
11.15 Execution in Counterparts...................................................................... 72
</TABLE>
vi
<PAGE> 8
EXHIBITS AND SCHEDULES
Exhibit A (Form of Revolving Credit Note)
Exhibit B (Form of Credit Request)
Exhibit C (Form of Rate Conversion/Continuation Request)
Exhibit D (Form of Subsidiary Guaranty)
Exhibit E (Form of Acquisition Certificate)
Exhibit F (Form of Bank Assignment)
Annex I Commitments
Annex II Supplemental Schedule
vii
<PAGE> 9
AMENDED AND RESTATED
CREDIT AGREEMENT
(U.S. $250,000,000)
DATED AS OF JANUARY 30, 1998
OM GROUP, INC., a Delaware corporation, the BANKS listed on the
signature pages of this Agreement, NATIONAL CITY BANK, a national banking
association, as Agent for the Banks under this Agreement and as Letter of Credit
Bank and ABN AMRO BANK N.V., as Co-Agent, hereby agree as follows:
1 DEFINITIONS AND ACCOUNTING TERMS.
1.1 CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"ACCUMULATED FUNDING DEFICIENCY" has the meaning ascribed
thereto in section 302(a)(2) of ERISA.
"ACQUISITIONS" means the acquisition by the Borrower of (i)
Auric Corporation (d/b/a Fidelity Chemical Products Corporation), for a
purchase price not to exceed Eighty-Five Million Dollars ($85,000,000)
and (ii) Dussek Campbell Limited, for a purchase price not to exceed
Fifteen Million Dollars ($15,000,000).
"ACQUISITION CERTIFICATE" means the certificate attached
hereto as Exhibit E with respect to the Acquisitions.
"ACQUISITION DOCUMENTS" means, with respect to each of the
Acquisitions, the purchase agreement and all documents or agreements or
instruments delivered by the Borrower or Domestic Subsidiary in
connection therewith.
"ADVANTAGE" means any payment (whether made voluntarily or
involuntarily, by offset of any deposit or other Indebtedness or
otherwise) received by a Bank in respect of the Obligations if the
payment results in any other Bank's having more than its Ratable
Portion of the Obligations in question.
"AFFILIATE" means, with respect to a specified Person, any
other Person: (a) which Controls, or is Controlled by, or is under
common Control with such specified Person.
"AGENT" means National City Bank, its successors and assigns,
in its capacity as administrative agent for the Banks.
"AGENT FEE LETTER" means that certain letter, dated January
30, 1998, from the
<PAGE> 10
Agent addressed to the Borrower and accepted by the Borrower.
"AGREEMENT" means this Amended and Restated Credit Agreement,
which amends and restates in its entirety the Existing Credit
Agreement, and each amendment, supplement or modification, if any, to
this Amended and Restated Credit Agreement.
"ALTERNATE BASE RATE" means, for any day, a rate per annum
equal to the higher of: (a) the rate of interest which is established
from time to time by NCB at its principal office in Cleveland, Ohio as
its "prime rate" or "base rate" in effect, such rate to be adjusted
automatically, without notice, as of the opening of business on the
effective date of any change in such rate (it being agreed that: (i)
such rate is not necessarily the lowest rate of interest then available
from NCB on fluctuating rate loans and (ii) such rate may be
established by NCB by public announcement or otherwise) and (b) the
Federal Funds Rate in effect on such day plus one half of one percent
(1/2 of 1%).
"ALTERNATE BASE RATE LOAN" means an Loan which bears interest
as provided in Section 0(a)(i) of this Agreement.
"ALTERNATE BASE RATE BORROWING" means a Borrowing consisting
of Alternate Base Rate Loans.
"APPLICABLE LIBOR MARGIN" means, with respect to any Margin
Adjustment Date, the percentage applicable to a LIBOR Rate Loan
corresponding to the Consolidated Total Funded Debt to EBITDA Ratio set
forth below (determined on the basis of the Consolidated Total Funded
Debt to EBITDA Ratio for the Cumulative Four Quarter Period ending on
the Determination Date applicable to such Margin Adjustment Date and
calculated in accordance with Section 0 of this Agreement):
=============================================================
Consolidated Total LIBOR Rate
Funded Debt to Margin
EBITDA Ratio
=============================================================
> 2.5 to 1.0 but < 3.0 to 1.0 .80%
- -
- -------------------------------------------------------------
> 2.0 to 1.0 but < 2.5 to 1.0 .65%
- -
- -------------------------------------------------------------
> 1.5 to 1.0 but < 2.0 to 1.0 .55%
- -
- -------------------------------------------------------------
< 1.5 to 1.0 .40%
=============================================================
"APPLICABLE RISK PARTICIPATION PERCENTAGE"; "APPLICABLE
COMMITMENT FEE
2
<PAGE> 11
PERCENTAGE" means, with respect to the risk participation fee
applicable to Standby Letters of Credit required by Section 0 of this
Agreement and the commitment fee required by Section 0(a) of this
Agreement, as the case may be, the percentage set forth in the column
below which is applicable to such risk participation fee or commitment
fee, as the case may be, and which corresponds to the Consolidated
Total Funded Debt to EBITDA Ratio set forth below (in each case
determined on the basis of the Consolidated EBITDA for the Cumulative
Four Quarter Period ending on the Determination Date applicable to such
risk participation fee or commitment fee, as the case may be, and
calculated in accordance with Section 0 of this Agreement):
================================================================================
Consolidated Total Risk Commitment
Funded Debt to Participation Fee Percentage
EBITDA Ratio Margin
===============================================================================
> 2.5 to 1.0 but < 3.0 to 1.0 .80% 0.30%
- -
- --------------------------------------------------------------------------------
> 2.0 to 1.0 but < 2.5 to 1.0 .65% 0.25%
- -
- --------------------------------------------------------------------------------
> 1.5 to 1.0 but < 2.0 to 1.0 .55% 0.20%
- -
- --------------------------------------------------------------------------------
< 1.5 to 1.0 .40% 0.15%
================================================================================
"BANK ASSIGNMENT AGREEMENT" has the meaning specified in
Section 0 of this Agreement.
"BANKS" means the banks listed on the signature pages hereof
and the successors thereto and assignees thereof.
"BORROW" means to obtain a Revolving Credit Borrowing.
"BORROWER" means OM Group, Inc., a Delaware corporation.
"BORROWING" means a group of Revolving Credit Loans of a
single Type made by the Banks on a single date and as to which a single
Interest Period is in effect (i.e., any group of Loans made by the
Banks of a different Type, or having a different Interest Period
(regardless of whether such Interest Period commences on the same date
as another Interest Period), or made on a different date shall be
considered to comprise a different Borrowing).
"BUSINESS DAY" means: (i) a day of the year on which banks are
not required or authorized to close in Cleveland, Ohio and (ii) if the
applicable Business Day relates to
3
<PAGE> 12
LIBOR Rate Loans, a day of the year which is a Business Day described
in clause (i) above and which is also a day on which dealings in Dollar
deposits are carried on in the London interbank market and banks are
open for business in London.
"CAPITALIZED LEASES" means, in respect of any Person, any
lease of property imposing obligations on such Person, as lessee of
such property, which are required in accordance with GAAP to be
capitalized on a balance sheet of such Person.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, 42 U.S.C. Sections 9601 et
seq.
"CHANGE IN CONTROL" means, if (x) any "person" or "group"
shall become the "beneficial owner" (as those terms are respectively
used in the Securities and Exchange Act of 1934, as amended, and the
rules and regulations thereunder) of more than fifty percent (50%) of
the outstanding voting stock of the Borrower or shall otherwise acquire
the power (whether by contract, by proxy or otherwise) to elect a
majority of the Borrower's board of directors or (y) during any twelve
(12) month period, individuals who were directors of the Borrower at
the beginning of such period or were elected to the Board of Directors
of the Borrower with the approval of a majority of such directors shall
cease to constitute a majority of the Board of Directors.
"CLOSING DATE" means the date and the time the initial
Revolving Credit Borrowing is advanced under this Agreement.
"CO-AGENT" means ABN Amro Bank N.V., its successors and
assigns, in its capacity as Co-Agent.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONSOLIDATED EBITDA" means, at the time and for any
Cumulative Four Quarter Period, the Consolidated Net Income for such
period plus the consolidated interest expense for such period for the
Borrower and its Subsidiaries plus the consolidated federal, state and
local income taxes for such period for the Borrower and its
Subsidiaries plus the consolidated depreciation and amortization
expense for such period for the Borrower and its Subsidiaries, each as
determined in accordance with GAAP.
"CONSOLIDATED LEASE EXPENSE" means, for any period, the amount
of lease expense of the Borrower and its Subsidiaries for such period
incurred or accrued by the Borrower and its Subsidiaries in connection
with operating leases, as determined on a consolidated basis in
accordance with GAAP.
"CONSOLIDATED NET INCOME" means, for any period, the net
income (or loss) of the Borrower and its Subsidiaries as determined on
a consolidated basis in accordance
4
<PAGE> 13
with GAAP, after taxes and after extraordinary items, but without
giving effect to any gain resulting from any reappraisal or write-up of
any asset.
"CONSOLIDATED NET WORTH" means, as of the date of
determination, all amounts that would be included under the caption
"shareholders' equity" (or any like caption) on a balance sheet of the
Borrower determined on a consolidated basis in accordance with GAAP as
at such date.
"CONSOLIDATED TOTAL FUNDED DEBT" means, Indebtedness of the
Person in question, including, without limitation, (a) any Capitalized
Lease, (b) any Guaranty of Indebtedness owing by another Person and (c)
any long-term Indebtedness secured by a Lien encumbering any property
owned or being acquired by the Person in question even if the full
faith and credit of that person or entity is not pledged to the payment
thereof.
"CONSOLIDATED TOTAL FUNDED DEBT TO EBITDA RATIO" means, as at
the end of any Fiscal Quarter, the ratio of: (a) the aggregate
principal amount of the Consolidated Funded Debt outstanding as of the
end of such Fiscal Quarter to (b) the Consolidated EBITDA for the
Cumulative Four Quarter Period then ended.
"CONTROL" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies
of a Person, whether through the ownership of voting securities, by
contract or otherwise.
"CONTROL ACCOUNT" has the meaning set forth in Section 0 of
this Agreement and maintained by the Agent in respect of Revolving
Credit Borrowings.
"CREDIT EVENT" means: (a) the incurrence of the obligation of
each Bank to make a Revolving Credit Loan on the occasion of each
Revolving Credit Borrowing or Rate Conversion or Rate Continuation; (b)
the making by any Bank of a Revolving Credit Loan or the issuance by
the Letter of Credit Bank of any Letter of Credit; (c) the delivery by
the Borrower of (i) a Credit Request requesting a Revolving Credit
Borrowing or the issuance of a Letter of Credit or (ii) a Rate
Conversion/Continuation Request requesting the conversion or
continuation of Revolving Credit Borrowings; (d) a Rate Conversion or
Rate Continuation, and (e) the acceptance by the Borrower of proceeds
of any Revolving Credit Borrowing.
"CREDIT REQUEST" has the meaning specified in Section 0(a) of
this Agreement with respect to a request by the Borrower for a
Revolving Credit Borrowing.
"CUMULATIVE FOUR QUARTER PERIOD" means, with respect to any
date of determination, the period consisting of the four consecutive
Fiscal Quarters immediately preceding any such date of determination,
whether such quarters are in the same Fiscal Year of the Borrower or
different Fiscal Years of the Borrower.
5
<PAGE> 14
"DEEMED CREDIT REQUEST" has the meaning specified in Section
0(b) of this Agreement.
"DEFAULT UNDER ERISA" means (a) the occurrence or existence of
a material Accumulated Funding Deficiency in respect of any of the
Borrower's or its Subsidiaries' Pension Plans, (b) any material failure
by the Borrower or any of its Subsidiaries to make a full and timely
payment of premiums required by ERISA for insurance against any
employer's liability in respect of any such plan, (c) any material
breach of a fiduciary duty by the Borrower or any of its Subsidiaries
or any trustee in respect of any such plan or (d) the existence of any
action for the forcible termination of any such plan.
"DETERMINATION DATE" has: (i) in respect of a Margin
Adjustment Date in respect of an Applicable LIBOR Margin, the meaning
specified in Section 0, (ii) in respect to any Fee Adjustment Date in
respect of an Applicable Risk Participation Percentage or an Applicable
Facility Fee Percentage, the meaning specified in Section 0(f) of this
Agreement.
"DOLLAR EQUIVALENT" means, on any date of determination, with
respect to any amount in any covenant and relating to a Subsidiary
which is not a Domestic Subsidiary, the equivalent in Dollars of such
amount, determined by the Agent using the Exchange Rate with respect to
such currency then in effect.
"DOLLARS", "U.S. DOLLARS" and the sign "$" each means lawful
money of the United States.
"DOMESTIC SUBSIDIARY" means each Subsidiary of the Borrower
which is (i) wholly-owned by the Borrower, directly or through one or
more other wholly-owned Subsidiaries and (ii) organized under the laws
of any state of the United States.
"DOMESTIC SUBSIDIARY CERTIFICATE" means a certificate,
together with all of the attachments thereto, substantially in the form
of the certificates delivered by the Borrower pursuant to Section 0
"ENVIRONMENTAL LAWS" means CERCLA, the Hazardous Material
Transportation Act (49 USC 1801 et seq.), RCRA, the Federal Water
Pollution Control Act (33 USC 1251 et seq.), the Toxic Substances
Control Act (15 USC 2601 et seq.) and the Occupational Safety and
Health Act (29 USC 651 et seq.), as such laws have been or hereafter
may be amended, and any and all analogous present or future
environmental Law.
"ERISA" means the Employee Retirement Income Security Act of
1974 (Public Law 93-406), as amended, and in the event of any amendment
affecting any section
6
<PAGE> 15
thereof referred to in this Agreement, that reference shall be
reference to that section as amended, supplemented, replaced or
otherwise modified.
"ERISA AFFILIATE" of any Person means any other Person that
for purposes of Title IV of ERISA is a member of such Person's
controlled group, or under common control with such Person, within the
meaning of Section 414 of the Code.
"ERISA REGULATOR" means any governmental agency (such as the
Department of Labor, the Internal Revenue Service and the Pension
Benefit Guaranty Corporation) having any regulatory authority over any
Employee Benefit Plan.
"EUROCURRENCY LIABILITIES" has the meaning assigned to that
term in Regulation D of the Board of Governors of the Federal Reserve
System, as in effect from time to time.
"EUROCURRENCY RESERVE PERCENTAGE" means, for any Interest
Period in respect of any LIBOR Rate Loan, as of any date of
determination, the aggregate of the then stated maximum reserve
percentages (including any marginal, special, emergency or supplemental
reserves), expressed as a decimal, applicable to such Interest Period
(if more than one such percentage is applicable, the daily average of
such percentages for those days in such Interest Period during which
any such percentages shall be so applicable) by the Board of Governors
of the Federal Reserve System, any successor thereto, or any other
banking authority, domestic or foreign, to which the Agent or any Bank
may be subject in respect to eurocurrency funding (currently referred
to as "Eurocurrency Liabilities" in Regulation D of the Federal Reserve
Board) or in respect of any other category of liabilities including
deposits by reference to which the interest rate on LIBOR Rate Loans is
determined or any category of extension of credit or other assets that
include the LIBOR Rate Loans. For purposes hereof, such reserve
requirements shall include, without limitation, those imposed under
Regulation D of the Federal Reserve Board and the LIBOR Rate Loans
shall be deemed to constitute Eurocurrency Liabilities subject to such
reserve requirements without benefit of credits for proration,
exceptions or offsets which may be available from time to time to any
Bank under said Regulation D.
"EVENT OF DEFAULT" has the meaning specified in Section 0 of
this Agreement.
"EXCHANGE RATE" means, with respect to any currency other than
Dollars on a particular date, the rate at which such currency may be
exchanged into Dollars, as set forth on such date on the relevant
Reuters currency page at or about 11:00 a.m. London time, on such date.
In the event that such rate does not appear on any Reuters currency
page, the "Exchange Rate" with respect to such currency shall be
determined by reference to such other publicly available service for
exchange rates as may be agreed upon by the Agent and the Borrower or,
in the absence of such agreement, such "Exchange Rate"
7
<PAGE> 16
shall instead be the Agent's spot rate of exchange in the market which
its foreign currency exchange operations are then being conducted, at
or about 10:00 A.M., local time, on such date for the purchase of
Dollars with such Alternate Currency, for delivery two (2) Business
Days later; provided, that if at the time of any such determination, no
such spot rate can be reasonably quoted, the Agent may use any
reasonable method as it deems applicable to determine such rate, and
such determination shall be conclusive absent manifest error.
"EXISTING CREDIT AGREEMENT" means that certain Second Amended
and Restated Credit Agreement, dated as of January 21, 1997, among the
Borrower, NCB as Agent, and the banks which are signatories thereto.
"FEDERAL FUNDS RATE" means, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest one hundredth of one
percent (1/100th of 1%) equal to the weighted average of the rates on
overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day, provided that: (a) if the day for which such
rate is to be determined is not a Business Day, the Federal Funds Rate
for such day shall be such a rate on such transactions on the
immediately preceding Business Day as so published on the next
succeeding Business Day and (b) if such rate is not so published for
any Business Day, the Federal Funds Rate for such Business Day shall be
the average of quotations for such day on such transactions received by
the Agent from three Federal funds brokers of recognized standing
selected by the Agent.
"FEE ADJUSTMENT DATE" has the meaning specified in Section 0
of this Agreement.
"FEE DETERMINATION DATE" has the meaning specified in Section
0 of this Agreement.
"FISCAL QUARTER" means any of the four consecutive three-month
fiscal accounting periods of the Borrower ending on March 31, June 30,
September 30 and December 31 of each calendar year.
"FISCAL YEAR" means the Borrower's regular annual accounting
period for federal income tax purposes ending on December 31 of each
calendar year.
"GAAP" means generally accepted accounting principles
consistent with those applied in the preparation of the financial
statements referred to in Section 0 of this Agreement and otherwise
consistently applied.
"GUARANTOR" means a Person who pledges his credit or property
in any manner
8
<PAGE> 17
for the payment or other performance of Indebtedness, agreements or
other obligation of another Person including, without limitation, any
guarantor (whether of collection or payment), any obligor in respect of
a standby letter of credit or surety bond issued for the account of
another Person, any surety, any co-maker, any endorser, and any Person
who agrees conditionally or otherwise to make any loan, purchase or
investment in order to enable another Person to prevent or correct a
default of any kind or otherwise to assure a creditor against loss in
respect of such Indebtedness, agreements or obligations.
"GUARANTY" means the obligations undertaken by a Guarantor.
"INDEBTEDNESS" means, with respect to any Person, without
duplication, (a) indebtedness for borrowed money, (b) obligations of
such Person evidenced by bonds, debentures, notes or other similar
instruments, (c) obligations of such Person for the deferred purchase
price of property or services with a stated maturity of greater than
twelve (12) months, (d) obligations of such Person as lessee under
leases which shall have been or should be, in accordance with GAAP,
recorded as capital leases, (e) all obligations of such Person as an
account party in respect of letters of credit or banker's acceptances,
(f) obligations of a third party secured by any Lien on the properties
or assets of such Person and (g) obligations under any direct or
indirect Guaranty in respect of indebtedness or obligations of a third
party of the kinds referred to in clauses (a) through (g) above.
"INTELLECTUAL PROPERTY" means all inventions, designs,
patents, and applications therefor, trademarks, service marks, trade
names, and registrations and applications therefor, copyrights, any
registrations therefor, and any licenses thereof, whether now owned or
existing or hereafter arising or acquired other than those which are
owned, existing or acquired outside of the United States.
"INTEREST PERIOD" means, for each LIBOR Rate Loan comprising a
Borrowing, the period commencing on the date of such LIBOR Rate Loan or
the date of the Rate Conversion or Rate Continuation of any Loans into
such LIBOR Rate Loan and ending on the numerically corresponding day of
the period selected by the Borrower pursuant to the provisions hereof
and each subsequent period commencing on the last day of the
immediately preceding Interest Period in respect of such LIBOR Rate
Loan and ending on the last day of the period selected by the Borrower
pursuant to the provisions hereof; provided, however, that the duration
of each such Interest Period shall be one, two, three or six months, in
each case as the Borrower may select by delivery to the Agent of a
Credit Request therefor in accordance with Section 0 of this Agreement
and; provided, further, that:
(i) Interest Period for each LIBOR Rate Loan comprising
part of the same Borrowing shall be of the same
duration;
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(ii) whenever the last day of any Interest Period would
otherwise occur on a day other than a Business Day,
the last day of such Interest Period shall be
extended to occur on the next succeeding Business
Day; provided, however, that, if such extension would
cause the last day of such Interest Period to occur
in the next following calendar month, the last day of
such Interest Period shall occur on the immediately
preceding Business Day;
(iii) if the Interest Period commences on a Business Day
for which there is no numerical equivalent in the
calendar month in which the Interest Period is to
end, such Interest Period shall end on the last
Business Day of that calendar month; and
(iv) with respect to LIBOR Rate Loans comprising any
Revolving Credit Borrowing, no Interest Period may
end on a date later than the Revolving Credit
Termination Date.
"LAW" means any law, treaty, regulation, statute or ordinance,
common law, civil law, or any case precedent, ruling, requirement,
directive or request having the force of law of any foreign or domestic
governmental authority, agency or tribunal.
"LC COMMITMENT" means the obligation of the Letter of Credit
Bank under this Agreement to issue Letters of Credit for the account of
the Borrower in an aggregate amount of up to Ten Million Dollars
($10,000,000).
"LC EXPOSURE" means, with respect to any Bank, at any time of
determination, such Bank's Ratable Portion of the sum of: (a) the
aggregate undrawn amount of all Letters of Credit outstanding at such
time and (b) the aggregate amount that has been drawn under such
Letters of Credit which the Letter of Credit Bank or the Banks, as the
case may be, have not at such time been reimbursed by the Borrower.
"LENDING OFFICE" means, with respect to any Bank, the office
of such Bank specified as its "Lending Office" under its name on the
signature pages hereto, or such other office of such Bank as such Bank
may from time to time specify in writing to the Borrower and the Agent
as the office at which Loans are to be made and maintained.
"LETTER OF CREDIT" means any Trade Letter of Credit or Standby
Letter of Credit.
"LETTER OF CREDIT BANK" means National City Bank, its
successors and assigns, in its capacity as issuer of Letters of Credit.
"LETTER OF CREDIT COLLATERAL ACCOUNT" has the meaning
specified in Section 0 of this Agreement.
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<PAGE> 19
"LIBOR RATE LOAN" means a Loan which bears interest as
provided in Section 0(a)(ii) of this Agreement.
"LIBOR RATE BORROWING" means a Borrowing consisting of LIBOR
Rate Loans.
"LIEN" means any lien, security interest or other charge or
encumbrance of any kind, including, without limitation, the lien or
retained security title of a conditional vendor and any easement, right
of way or other encumbrance on title to real property.
"LOAN" means a Revolving Credit Loan.
"LOAN ACCOUNT" has the meaning specified in Section 0 of this
Agreement.
"LOAN DOCUMENTS" means any note, security agreement, or other
lien instrument, reimbursement agreement, financial statement, audit
report, environmental audit, notice, request of advance, interest rate
swap or hedge agreement, officer's certificate or other writing of any
kind which is now or hereafter required to be delivered by or on behalf
of the Borrower to the Agent or the Banks under this Agreement and
includes, without limitation, the Revolving Credit Notes and the other
writings referred to in Sections 0 and 0 of this Agreement.
"LONDON INTERBANK OFFERED RATE" means, for any Interest Period
with respect to a LIBOR Rate Borrowing, the quotient (rounded upwards,
if necessary, to the nearest one sixteenth of one percent (1/16th of
1%)) of: (x) the per annum rate of interest, determined by the Agent in
accordance with its usual procedures (which determination shall be
conclusive absent manifest error) as of approximately 11:00 a.m.
(London time) two Business Days prior to the beginning of such Interest
Period pertaining to such LIBOR Rate Loan, appearing on Page 3750 of
the Telerate Service (or 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 Agent from time to time for purposes
of providing quotations of interest rates applicable to Dollar deposits
in the London interbank market) as the rate in the London interbank
market for Dollar deposits in immediately available funds with a
maturity comparable to such Interest Period divided by (y) a number
equal to 1.00 minus the Eurocurrency Reserve Percentage. In the event
that such rate quotation is not available for any reason, then the rate
(for purposes of clause (x) hereof) shall be the rate, determined by
the Agent as of approximately 11:00 a.m. (London time) two Business
Days prior to the beginning of such Interest Period pertaining to such
LIBOR Rate Loan, to be the average (rounded upwards, if necessary, to
the nearest one sixteenth of one percent (1/16th of 1%) of the per
annum rates at which Dollar deposits in immediately available funds in
an amount comparable to NCB's Ratable Portion of such LIBOR Borrowing
and with a maturity comparable to such Interest Period are offered to
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<PAGE> 20
the prime banks by leading banks in the London interbank market. The
London Interbank Offered Rate shall be adjusted automatically on and as
of the effective date of any change in the Eurocurrency Reserve
Percentage.
"MARGIN ADJUSTMENT DATE" has the meaning specified in Section
0 of this Agreement.
"MATERIAL ADVERSE EFFECT" means, as to any event, occurrence
or condition, if the result thereof would, either singly or in the
aggregate, have a material adverse effect on: (i) the business,
operations, profitability or condition (financial or otherwise) of the
Borrower and its Subsidiaries taken as a whole, (ii) the Borrower's
ability to repay the Obligations or (iii) the legality, validity or
enforceability of this Agreement or the Loan Documents or the rights
and remedies of the Agent and the Banks.
"MULTIEMPLOYER PLAN" means any Employee Benefit Plan which is
a "multiemployer plan" as such term is defined in section 4001(a)(3) of
ERISA.
"NET PROCEEDS" means (i) the cash proceeds (including cash
proceeds subsequently received in respect of non-cash consideration
initially received) from any sale, transfer or other disposition (other
than (a) any sale of Inventory in the ordinary course, (b) disposition
in the ordinary course of Borrower's business of assets that are
obsolete, worn out or no longer used or useful in the Borrower's or its
Subsidiaries' business and (c) disposition of capital assets the
proceeds of which are reinvested within a reasonable period of time in
capital assets of the Borrower or its Subsidiaries) of any asset of the
Borrower or any of its Subsidiaries to any Person (other than the
Borrower or any other Subsidiary of the Borrower) the value of which
asset or assets exceeds Five Million Dollars ($5,000,000) in any
calendar year net of (x) selling expenses, including without limitation
any reasonable broker's fees or commissions, costs of discontinuing
operations associated with such assets and sales, transfer and similar
taxes, and (y) the repayment of any Indebtedness secured by a purchase
money Lien on such assets that is permitted under this Agreement; and
(ii) the cash proceeds from the issuance and/or sale of pari passu debt
securities of the Borrower pursuant to any public offering, private
placement, net of transaction costs and net of expenses including,
without limitation, underwriters' or placement agents' discounts and
commissions and transfer and similar taxes.
"NCB" means National City Bank, its successors and assigns, in
its capacity as a Bank.
"NOTE PURCHASE AGREEMENT" means that certain Note Purchase
Agreement dated as of August 30, 1995, as amended by that certain
Amendment to Note Purchase Agreement, dated as of January 21, 1997,
entered into between and among the Borrower and the Noteholders.
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<PAGE> 21
"NOTEHOLDERS" means the Great-West Life and Annuity Insurance
Company, The Mutual Life Insurance Company of New York, and Nationwide
Life Insurance Company.
"OBLIGATIONS" means the present and future obligations of the
Borrower and its Subsidiaries under this Agreement including, without
limitation, (a) the outstanding principal and accrued interest
(including interest accruing after a petition for relief under the
federal bankruptcy laws has been filed) in respect of any Revolving
Credit Loans; (b) fees owing to the Banks or the Agent under this
Agreement or any Loan Document; (c) any costs and expenses reimbursable
to the Banks, the Letter of Credit Bank and the Agent pursuant to
Section 0 of this Agreement; (d) Taxes, Other Taxes, compensation,
indemnification obligations or other amounts owing by the Borrower to
the Agent, the Letter of Credit Bank or the Banks under this Agreement
or any Loan Document; and (e) the amounts owing to any of the Banks by
the Borrower and its Subsidiaries under any interest rate swap
agreement or similar interest rate hedge in connection with Loans under
this Agreement.
"OPERATING ACCOUNT" means an account maintained by and in the
name of the Borrower at the Payment Office of the Agent, as Agent for
the benefit of the Banks, for the purposes of disbursing the proceeds
of Revolving Credit Loans, which account shall in no case be a payroll
account.
"OTHER TAXES" has the meaning specified in Section 0 of this
Agreement.
"PAYMENT OFFICE" means such office of the Agent as set forth
on the signature page of the Agent or such offices as may be from time
to time selected by the Agent and notified in writing by the Agent to
the Borrower and the Banks as the office to which payments are to be
made to the Agent by the Borrower or the Banks, as the case may be.
"PBGC" means the Pension Benefit Guaranty Corporation or any
other governmental authority succeeding to any of its functions.
"PENSION PLAN" means a defined benefit plan (as defined in
section 3(35) of ERISA) of a Company and includes, without limitation,
any such plan that is a multi-employer plan (as defined in section
3(37) of ERISA) applicable to any of the Borrower or its Subsidiaries'
employees.
"PERMITTED FOREIGN INVESTMENTS" means certificates of deposit
issued by any Bank or by any other financial institution not organized
under the laws of the United States or any state thereof having a
combined capital and surplus aggregating at least Three Hundred Fifty
Million Dollars ($350,000,000), or any other money-market investment if
it carries the highest quality of rating of any nationally recognized
rating agency or any repurchase agreements issued by banks continuously
secured by
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<PAGE> 22
obligations issued or guaranteed and backed by the full faith and
credit of the central bank or national treasury of a country other than
the United States of America; provided, however, that no such security
shall mature more than ninety (90) days after the date when made.
"PERMITTED US INVESTMENTS" means securities that are direct
obligations of the United States of America or any agency thereof, or
certificates of deposit issued by any Bank or by any other financial
institution organized under the laws of the United States or any state
thereof having a combined capital and surplus aggregating at least
Three Hundred Fifty Million Dollars ($350,000,000), or any other
money-market investment if it carries the highest quality of rating of
any nationally recognized rating agency or any repurchase agreements
issued by banks continuously secured by obligations issued or
guaranteed and backed by the full faith and credit of the United States
of America; provided, however, that no such security shall mature more
than ninety (90) days after the date when made.
"PERSON" means an individual, partnership, corporation
(including a business trust), joint stock company, trust,
unincorporated association, joint venture or other entity, or a
government or any political subdivision or agency thereof.
"POTENTIAL DEFAULT" means an event, condition or thing which
with the lapse of any applicable grace period or with the giving of
notice or both would constitute, an Event of Default referred to in
Section 0 of this Agreement and which has not been appropriately waived
in writing in accordance with this Agreement or fully corrected, prior
to becoming an actual Event of Default.
"PROFORMA COVENANT COMPLIANCE" means compliance by Borrower
and its Subsidiaries with the general financial standards contained in
Section 0 of this Agreement as of the time of the event in question and
for the following twelve (12) month period based upon the Projections
delivered by Borrower in contemplation of such event pursuant to
Section 0 if the same are requested by a Bank and otherwise consistent
with Borrower's internally generated and used projections.
"PROJECTIONS" has the meaning ascribed to that term in Section
0.
"PROPERTIES" has the meaning specified in Section 0 of this
Agreement.
"RATABLE PORTION" means, in respect of any Bank, the quotient
(expressed as a percentage) obtained at any time by dividing: (i) such
Bank's Revolving Credit Commitment at such time by (ii) the sum of the
aggregate amount of the Revolving Credit Commitments of all of the
Banks at such time; provided; however, if all of the Revolving Credit
Commitments are terminated pursuant to the terms hereof, then, Ratable
Portion means the quotient (expressed as a percentage) obtained by
dividing (x)
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<PAGE> 23
the aggregate amount of such Bank's Revolving Credit Loans by (y) the
aggregate amount of Revolving Credit Loans of all of the Banks
outstanding at such time.
"RATE CONTINUATION" means, in respect of LIBOR Rate Loans
having a particular Interest Period, a continuation of such LIBOR Rate
Loans pursuant to Section 0 of this Agreement as LIBOR Rate Loans with
an Interest Period of the same duration.
"RATE CONVERSION" means a conversion pursuant to Section 0 of
this Agreement of Loans of one Type into Loans of another Type and,
with respect to LIBOR Rate Loans, from one permissible Interest Period
to another permissible Interest Period.
"RATE CONVERSION/CONTINUATION REQUEST" has the meaning
specified in Section 0 of this Agreement.
"RCRA" means the Resource Conservation and Recovery Act, 42
U.S.C. Sections 6901 et seq.
"REGULATORY CHANGE" means, as to any Bank, any change in
United States federal, state or foreign Laws or regulations or the
adoption or making of any interpretations, directives or requests of or
under any United States federal, state or foreign Laws or regulations
(whether or not having the force of Law) by any court or governmental
authority charged with the interpretation or administration thereof.
"REIMBURSEMENT AGREEMENT" has the meaning set forth in Section
0 of this Agreement.
"REPORTABLE EVENT" means any of the events set forth in
Section 4043 of ERISA excluding those events for which the requirement
of notice has been waived by the PBGC.
"REQUIRED BANKS" means, at any time, (a) Banks (excluding, for
the purposes of this definition, Banks then constituting "defaulting
Banks" under Section 0) holding at least sixty six and two thirds
percent (66-2/3rds%) of the aggregate outstanding principal amount of
Loans of all of the Banks at such time or (b) if no principal amount is
then outstanding, Banks having at least sixty six and two thirds
percent (66-2/3rds%) of the Revolving Credit Commitments at such time,
of all of the Banks at such time.
"REVOLVING CREDIT BORROWING" means an Alternate Base Rate
Borrowing or a LIBOR Rate Borrowing, as the case may be.
"REVOLVING CREDIT COMMITMENT" means, in respect of a Bank, the
obligation of such Bank hereunder to make Revolving Credit Loans as
hereinafter provided, and to participate in the risks of all Letters of
Credit issued by the Letter of Credit Bank up to an
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<PAGE> 24
amount equal to the Revolving Credit Commitment of such Bank as set
forth in Annex I and as further specified in Section 0 of this
Agreement and as such Revolving Credit Commitment may be reduced from
time to time in accordance with Section 0 hereof.
"REVOLVING CREDIT LOAN" means an Loan made by a Bank to the
Borrower pursuant to Section 0 of this Agreement.
"REVOLVING CREDIT NOTE" means a promissory note of the
Borrower payable to the order of a Bank, in substantially the form of
Exhibit A-1 hereto and in the original principal amount of such Bank's
Revolving Credit Commitment, evidencing the aggregate indebtedness of
the Borrower to such Bank resulting from the Revolving Credit Loans
made by such Bank.
"REVOLVING CREDIT TERMINATION DATE" means the earlier of: (i)
__________ __, 2003, as extended pursuant to Section 0 of this
Agreement or (ii) the earlier date of the termination of the Revolving
Credit Commitments pursuant to Section 0 or Section 0 of this
Agreement.
"SOLVENT" means, with respect to any Person, on any date of
determination, that on such date: (a) fair value of the property of the
Person is greater than the total amount of liabilities (including
contingent liabilities) of the Person, (b) the present fair salable
value of the assets of the Person is not less than the amount that will
be required to pay the probable liability of the Person on its debts as
they become absolute and matured, (c) the Person is able to pay all
liabilities of the Person as those liabilities mature, and (d) the
Person does not have unreasonably small capital for the business in
which it is engaged or for any business or transaction in which it is
about to engage.
"STANDBY LETTER OF CREDIT" means any letter of credit issued
by the Letter of Credit Bank from time to time at the request of the
Borrower pursuant to the terms of this Agreement which letter of credit
is not a Trade Letter of Credit.
"SUBSIDIARY" means, in respect of a corporate Person, a
corporation or other business entity the shares constituting a majority
of the outstanding capital stock (or other form of ownership) or
constituting a majority of the voting power in any election of
directors (or shares constituting both majorities) of which are (or
upon the exercise of any outstanding warrants, options or other rights
would be) owned directly or indirectly at the time in question by such
Person or another subsidiary of such Person or any combination of the
foregoing.
"SUBSIDIARY GUARANTOR" means each of OMG Americas, Inc., an
Ohio corporation, OMG Apex, Inc., a Delaware corporation, SCM Metal
Products Inc., a Delaware corporation, and any other Domestic
Subsidiary of the Borrower existing on the Closing Date or thereafter
created.
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<PAGE> 25
"SUBSIDIARY GUARANTY" means, the form of guaranty agreement
attached hereto as Exhibit D.
"SUPPLEMENTAL SCHEDULE" means the schedule which is attached
hereto as Annex II and is incorporated into this Agreement.
"TAXES" has the meaning specified in Section 0(a) of this
Agreement.
"TRADE LETTER OF CREDIT" means any trade letter of credit
issued by the Letter of Credit Bank from time to time at the request of
the Borrower pursuant to the terms of this Agreement for the purpose of
purchasing goods or services in the ordinary course of business.
"TYPE" means, when used in respect of any Loan, the London
Interbank Offered Rate or the Alternate Base Rate in effect in respect
of such Loan.
"UCC" means the Uniform Commercial Code in effect in the State
of Ohio from time to time.
"UNITED STATES" and "U.S." each means United States of
America.
1.2 COMPUTATION OF TIME PERIODS. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
mean "to but excluding".
1.3 ACCOUNTING TERMS. All accounting and financial terms not
specifically defined herein shall be construed in accordance with GAAP as in
effect from time to time. In all cases, such accounting and financial terms
shall be applied on a basis consistent with those applied in the preparation of
the Borrower's audited financial statements for the Fiscal Year ending December
31, 1996; provided, however, (a) that all financial statements shall reflect the
Borrower's adoption of FAS 106 and (b) if any change in GAAP in itself
materially affects the calculation of any financial covenant in Section 0 of
this Agreement, the Borrower may by written notice to the Agent, or the Agent
(upon request by the Required Banks), may by written notice to the Borrower,
require that such covenant thereafter be calculated in accordance with GAAP as
in effect. If any such notice is given, the compliance certificates delivered
pursuant to Section 0 of this Agreement after such change occurs shall be
accompanied by reconciliations of the difference between the calculation set
forth therein and a calculation made in accordance with GAAP as in effect from
time to time after such change occurs.
1.4 DOLLAR EQUIVALENTS. Each reference herein to an amount stated
Dollars shall be a reference to Dollars or the Dollar Equivalent of such amount
unless the context dictates otherwise.
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2 STATEMENT OF TERMS.
2.1 REVOLVING CREDIT FACILITY.
(a) REVOLVING CREDIT LOANS. Subject to the terms and
conditions set forth in this Agreement, each Bank severally agrees to
make, from time to time on and after the Closing Date and up to but
excluding the Business Day immediately preceding the Revolving Credit
Termination Date, advances to or for the account of the Borrower on a
revolving credit basis (each a "Revolving Credit Loan"); that the
outstanding principal amount of Revolving Credit Loans made by or on
behalf of such Bank, when taken together with the outstanding principal
amount of all Revolving Credit Loans made by or on behalf of such Bank,
shall not exceed the amount of such Bank's Revolving Credit Commitment
in effect at such time minus the LC Exposure of such Bank at such time.
Within the limits set forth herein, the Borrower may borrow, prepay and
reborrow Revolving Credit Loans.
(b) REVOLVING CREDIT BORROWINGS. Each Revolving Credit
Borrowing shall be: (i) if comprised of Alternate Base Rate Loans, in
an aggregate amount of not less than One Hundred Thousand Dollars
($100,000) or an integral multiple thereof and (ii) if comprised of
LIBOR Rate Loans, in an aggregate amount of not less than One Million
Dollars ($1,000,000) or an integral multiple of One Hundred Thousand
Dollars ($100,000) in excess thereof. The Borrower shall be entitled to
have more than one Revolving Credit Borrowing outstanding at one time;
provided, however, that the Borrower shall not be entitled to request
any Revolving Credit Borrowing which, together with all outstanding
Revolving Credit Borrowings, would result in any Bank's having an
aggregate of more than six (6) LIBOR Rate Loans outstanding at any one
time.
(c) REVOLVING CREDIT NOTES; LOAN ACCOUNT. Each Bank's
Revolving Credit Loans shall be evidenced at all times by a Revolving
Credit Note. Each Revolving Credit Note shall: (i) be executed and
delivered by the Borrower and payable to the order of such Bank, (ii)
be in a stated principal amount equal to the amount of such Bank's
Revolving Credit Commitment in effect at the execution and delivery of
such Bank's Revolving Credit Note, (iii) mature on the Revolving Credit
Termination Date, (v) bear interest as provided in Section 0, (vi) be
subject to mandatory repayment as provided in Sections 0 and 0 of this
Agreement and (vii) be entitled to the benefits of this Agreement and
the Loan Documents. Whenever the Borrower obtains a Revolving Credit
Borrowing, each Bank shall endorse an appropriate entry on such Bank's
Revolving Credit Note or make an appropriate entry in a loan account
(the "Loan Account") maintained in such Bank's books and records, or
both, to evidence such Bank's Revolving Credit Loans comprising part of
a Revolving Credit Borrowing. The Loan Account shall also evidence: (i)
accrued interest on the Revolving Credit Loans of such Bank, (ii) all
other amounts due to such Bank in respect of such Revolving Credit
Loans and (iii) all
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payments made by the Borrower received by such Bank from the Agent for
application to such Revolving Credit Borrowings. Each entry on such
Bank's Revolving Credit Note or in such Bank's books and records or
Loan Account shall be prima facie evidence of the data entered. Such
entries shall not be a condition to the Borrower's obligation to repay
the Obligations.
(d) CONTROL ACCOUNT MAINTAINED BY AGENT. The Agent shall
maintain on its books and records a control account (the "Control
Account") in respect of the Borrower and the Revolving Credit
Borrowings hereunder in which the Agent shall record: (i) advances of
Revolving Credit Borrowings to the Borrower, (ii) the Ratable Portion
of each Bank in the outstanding Revolving Credit Borrowings, (iii) the
amounts of any Collections and Remittances received and credited to
reduce the Revolving Credit Loans and (iv) the Ratable Portion of each
Bank in such credited Collections and Remittances. Each entry by the
Agent in the Control Account shall be prima facie evidence of the data
entered, absent manifest error.
2.2 CREDIT REQUESTS. Each Revolving Credit Loan shall be made upon
request of a Borrower in accordance with clause (a) below or upon a request
deemed to be made pursuant to clause (b) below:
(a) CREDIT REQUESTS EXECUTED BY THE BORROWER. Requests for
Revolving Credit Loans comprising a Revolving Credit Borrowing shall be
given by the Borrower to the Agent not later than 12:00 noon
(Cleveland, Ohio time): (i) on the Business Day which is the requested
date of a proposed Alternate Base Rate Borrowing comprised of Alternate
Base Rate Loans (the Revolving Credit Borrowing made on the Closing
Date must consist entirely of Alternate Base Rate Loans) and (ii) on
the Business Day which is three (3) Business Days before the requested
date of a proposed LIBOR Rate Borrowing. Except as herein after
permitted, each such request (a "Credit Request") for a Revolving
Credit Borrowing shall be in writing signed by the Borrower and
transmitted by the Borrower to the Agent by telecopier, telex or cable
(in the case of telex or cable, confirmed in writing prior to the date
of the requested Revolving Credit Borrowing), in substantially the form
of Exhibit B hereto. Each Credit Request shall specify: (A) the
requested date of the Revolving Credit Borrowing, (B) the aggregate
amount of such Revolving Credit Borrowing, (C) whether such Revolving
Credit Borrowing is to be comprised of Alternate Base Rate Loans or
LIBOR Rate Loans, and (D) in the case of a proposed LIBOR Rate
Borrowing, the initial Interest Period for such LIBOR Rate Borrowing.
Each Credit Request shall be irrevocable and binding on the Borrower
and be subject to the indemnification provisions of Section 0 of this
Agreement. The Borrower may give a Credit Request telephonically so
long as: (I) a written Credit Request confirmation is received by the
Agent by 1:00 p.m. (Cleveland, Ohio time) on the same day such
telephonic Credit Request was given and (II) that the other
requirements of this Section are satisfied. The Agent may rely on such
telephonic Credit Request to the same extent that the Agent may rely on
a written Credit Request. The
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<PAGE> 28
Borrower shall bear all risks related to the giving of a Credit Request
by the Borrower whether given telephonically or by such other method of
transmission as the Borrower shall elect.
(b) REQUESTS FOR REVOLVING CREDIT BORROWING DEEMED GIVEN. The
Borrower shall be deemed to have made a request for a Borrowing (a
"Deemed Credit Request"), which Deemed Credit Request shall be deemed
to be irrevocable, upon the occurrence of any of the following and the
Banks agree that on the specified date of such occurrence, the Banks
will make the requested Loans pursuant to the Deemed Credit Request and
that the Banks' obligation to make such Loans is absolute and
unconditional and shall not be affected by any event or circumstance
whatsoever, including the occurrence of any Potential Default or Event
of Default hereunder or the failure of any condition precedent set
forth in Section 0 of this Agreement to be satisfied and each such
payment shall be made without any offset, abatement, withholding or
reduction whatsoever:
(i) LETTER OF CREDIT DRAWING. As specified in Section
0 of this Agreement, upon a drawing under a Letters of Credit,
the Borrower shall be deemed to have made a request for an
Alternate Base Rate Borrowing in an amount equal to the amount
necessary either to reimburse the Letter of Credit Bank for
such drawing upon the Letter of Credit together with accrued
interest thereon or, if reimbursement of the Letter of Credit
Bank is made by the Banks for any reason, reimburse the Banks
for such payment.
(ii) PAYMENT OF INTEREST AND OBLIGATIONS. Unless
payment is otherwise made by the Borrower, upon any such
interest or fee hereunder becoming due without payment by the
Borrower, the Borrower shall be deemed to have made a request
for an Alternate Base Rate Borrowing in an amount equal to the
amount necessary to pay such interest or fee.
Each Bank acknowledges and agrees that its obligation to participate in and make
Loans comprising a Borrowing pursuant to a Deemed Credit Request is absolute and
unconditional and shall not be affected by any event or circumstance whatsoever,
including the occurrence of any Potential Default or Event of Default hereunder
or the failure of any condition precedent set forth in Section 0 of this
Agreement to be satisfied at the time of the making of such Deemed Credit
Request, and each Loan made by a Bank in satisfaction of its obligation shall be
made without any offset, abatement, withholding or reduction whatsoever.
2.3 FUNDING OF REVOLVING CREDIT LOANS. The Agent shall notify each
Bank of such Credit Request promptly on the date received by telecopy, telephone
or similar form of transmission. Each Bank shall, before 3:00 p.m. (Cleveland,
Ohio time) on the date of each Revolving Credit Borrowing requested, make
available to the Agent, in immediately available funds at the account of the
Agent maintained at the Payment Office of the Agent, such Bank's
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Ratable Portion of the Revolving Credit Borrowing. On the date requested by the
Borrower for a Revolving Credit Borrowing, after the Agent's receipt of the
funds representing a Bank's Ratable Portion of such Revolving Credit Borrowing
and subject to the terms of this Agreement and the Borrower's fulfillment of the
conditions set forth in Section 0 of this Agreement, the Agent will make such
Revolving Credit Loan of such Bank available to the Borrower in immediately
available funds, by wire transfer or intrabank transfer: (A) to the Operating
Account or (B such other account of the Borrower as the Agent and the Borrower
shall have agreed upon from time to time in writing.
(a) DISBURSEMENT OF FUNDS RECEIVED. On the date requested by
the Borrower for a Revolving Credit Borrowing, after the Agent's
receipt of the funds representing a Bank's Ratable Portion of such
Revolving Credit Borrowing and subject to the terms and conditions set
forth in this Agreement, the Agent shall make such Revolving Credit
Advance of such Bank available to the Borrower, in immediately
available funds, by wire transfer or intrabank transfer to the
Operating Account.
2.4 AVAILABILITY OF FUNDS. Unless the Agent shall have received
notice from a Bank on a Business Day prior to the date (or, in the case of
Alternate Base Rate Loans, prior to the time) of any Revolving Credit Borrowing
that such Bank will not make available to the Agent such Bank's Ratable Portion
of the Revolving Credit Borrowing, the Agent may assume that such Bank has made
its Ratable Portion of the Revolving Credit Borrowing available to the Agent on
the date of the Revolving Credit Borrowing in accordance with Section 0 of this
Agreement. In reliance upon such assumption, the Agent may, but shall not be
obligated to, make available to the Borrower on such date, a portion of the
Revolving Credit Borrowing corresponding to such Bank's Ratable Portion. Any
disbursement by the Agent in reliance on such assumption shall be deemed to be
an advance of a Revolving Credit Loan by such Bank.
2.5 FAILURE OF BANK TO FUND. If and to the extent that any Bank
shall not have made available to the Agent such Bank's Ratable Portion of any
Revolving Credit Borrowing, such Bank and the Borrower severally agree to repay
to the Agent, immediately upon demand by the Agent, an amount equal to such
Bank's Ratable Portion of such Revolving Credit Borrowing, as the case may be,
together with interest thereon for each day from the date such amount is made
available to the Borrower until the date such amount is repaid to the Agent, at:
(a) in the case of the Bank, (i) Federal Funds Rate for the first three (3) days
from and after the date of the Revolving Credit Borrowing and (ii) thereafter,
at the Interest Rate then applicable to Alternate Base Rate Loans and (b) in the
case of the Borrower, the interest rate applicable at the time to Alternate Base
Rate Loans.
(a) PAYMENT CONSTITUTING RATABLE PORTION. If such Bank pays to
the Agent the Bank's Ratable Portion of such Revolving Credit Borrowing
prior to repayment of such amount by the Borrower, the amount so repaid
shall constitute such Bank's Ratable Portion of such Revolving Credit
Borrowing and the Borrower shall have no further obligation to make the
payment required by this Section.
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(b) TREATMENT OF DEFAULTING BANK. The Agent shall not be
obligated to transfer to a defaulting Bank any payments made by the
Borrower to the Agent for the benefit of such defaulting Bank if such
Bank has not made available to the Agent such Bank's Ratable Portion of
any Revolving Credit Borrowing advanced pursuant to this Agreement.
Until the earlier of such defaulting Bank's cure of such failure or the
termination of the Commitments, all amounts repaid to the Agent by the
Borrower which would otherwise be required to be applied to such Bank's
Ratable Portion of the Obligations shall be advanced to the Borrower by
the Agent on behalf such defaulting Bank to cure, in full or in part,
the failure by such Bank, but shall nevertheless be deemed to have been
paid to such defaulting Bank in satisfaction of the Obligations to
which such payment would otherwise have been applied. Notwithstanding
anything contained herein to the contrary, no such defaulting Bank
shall have any voting or consent rights under or with respect to the
Loan Documents or constitute a "Bank" (or be included in the
calculation of "Required Banks" hereunder) for any voting or consent
rights under or with respect to any Loan Document. The terms of this
Section 0 shall: (i) remain effective with respect to such defaulting
Bank until such time as the defaulting Bank shall no longer be in
default of any of its obligations under this Agreement and (ii) shall
not relieve or excuse the performance by the Borrower of any of its
duties or obligations hereunder.
(c) CONTINUING BORROWER OBLIGATION. Failure of any Bank to
fund its Ratable portion of any Borrowing shall not relieve or excuse
the performance by the Borrower of any of its duties or obligations
hereunder.
(d) CONTINUING BANK OBLIGATION TO FUND. It is understood that:
(i) a Bank shall not be responsible for any failure by any other Bank
to perform its obligation to make any Loans hereunder, (ii) the
Revolving Credit Commitment of a Bank shall not be increased or
decreased as a result of any failure by any other Bank to perform its
obligation to make any Loans hereunder, (iii) failure by any Bank to
perform its obligation to make any Loans hereunder shall not excuse any
other Bank from its obligation to make any Revolving Credit Loans
hereunder, and (iv) the obligations of each Bank hereunder shall be
several, not joint and several.
2.6 REPAYMENTS AND PREPAYMENTS; REDUCTION OF COMMITMENTS,
EXTENSION OF COMMITMENTS.
(a) REPAYMENT. The Borrower shall repay to the Agent, for the
account of the Banks, the outstanding principal amount of the Revolving
Credit Loans on the Revolving Credit Termination Date in accordance
with Section 0(a).
(b) MANDATORY PREPAYMENT OF REVOLVING CREDIT LOANS. If, on any
Business Day, (x) the sum of: (A) the aggregate Revolving Credit Loans
outstanding at
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such time plus (B) the aggregate LC Exposure of the Banks outstanding
at such time exceeds (y) the aggregate Revolving Credit Commitments of
all of the Banks then in effect, then the Borrower shall on such day
prepay to the Agent for the account of the Banks an aggregate principal
amount of such Revolving Credit Loans in an amount at least equal to
such excess plus any amounts required pursuant to the provisions of
Section 0 of this Agreement.
(c) MANDATORY REDUCTION OF REVOLVING CREDIT COMMITMENT. The
Borrower shall apply all Net Proceeds acquired in connection with
transactions permitted by this Agreement promptly upon receipt thereof
to prepay the Revolving Credit Loans outstanding at the time of such
receipt and to permanently reduce the Revolving Credit Commitments
(rounded down to the nearest One Hundred Thousand Dollars ($100,000)
amounts in excess of such rounded amount shall be applied to the
outstanding Revolving Credit Loans only): provided, however, that the
Borrower shall not be permitted at any time to reduce the Revolving
Credit Commitments to an amount less than the aggregate LC Exposure of
the Banks outstanding at such time. In the event that the reduction in
the Revolving Credit Commitments required by this Section 0 would cause
the remaining Revolving Credit Commitments to be less than the LC
Exposure of the Banks after giving effect to such reduction, the Agent
shall hold such excess fund in a non-interest bearing account until
such time that the requirements of the immediately preceding sentence
shall not be violated. Each reduction in the aggregate Revolving Credit
Commitments hereunder shall be made among the Banks ratably in
accordance with their Revolving Credit Commitments. On the date of each
reduction, the Borrower shall pay to the Agent for the account of the
Banks (x) the commitment fees and interest accrued through the date of
such reduction in respect of the aggregate Revolving Credit Commitments
and (y) any amounts required pursuant to the provisions of Section 0 of
this Agreement. Any reduction in the Revolving Credit Commitments shall
be a permanent reduction and no amount in excess of such reduced
commitment may be borrowed or reborrowed.
(d) VOLUNTARY REDUCTION OF REVOLVING CREDIT COMMITMENT. Upon
three (3) Business Days prior written notice to the Agent, the Borrower
may in accordance with the terms of this Agreement request that the
Banks permanently reduce, in whole or in part, the aggregate Revolving
Credit Commitment. Each reduction shall be subject to the following:
(i) each such reduction shall be in an aggregate principal amount of
not less than Five Million Dollars ($5,000,000) or any integral
multiple of One Million Dollars ($1,000,000) in excess thereof, (ii)
the Borrower shall not be permitted to reduce the aggregate Revolving
Credit Commitments unless, concurrently with any reduction, the
Borrower shall make a principal payment on each Bank's then outstanding
Revolving Credit Loans in an amount equal to the excess, if any, of (A)
the sum of such Revolving Credit Loans and aggregate LC Exposure over
(B) the Revolving Credit Commitment of such Bank as so reduced and
(iii) the Borrower shall not be permitted at any time to reduce the
Revolving Credit Commitments to an amount less than the aggregate LC
Exposure of the Banks outstanding at such time. Each reduction in the
aggregate
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Revolving Credit Commitments hereunder shall be made among the Banks
ratably in accordance with their Revolving Credit Commitments. On the
date of each reduction, the Borrower shall pay to the Agent for the
account of the Banks (x) the commitment fees and interest accrued
through the date of such reduction in respect of the aggregate
Revolving Credit Commitments and (y) any amounts required pursuant to
the provisions of Section 0 of this Agreement. Any reduction in the
Revolving Credit Commitments shall be a permanent reduction and no
amount in excess of such reduced commitment may be borrowed or
reborrowed.
(e) PERMITTED PREPAYMENTS. The Borrower may prepay all or any
part of Revolving Credit Loans by giving notice to the Agent for the
account of the Banks stating the proposed date of prepayment, the Type
of Borrowing being prepaid and the aggregate principal amount of the
prepayment not later than 12:00 noon (Cleveland, Ohio time) on the
Business Day immediately preceding the Business Day on which such
prepayment is to be made. Upon such notice, the Borrower shall: (A) in
respect of Alternate Base Rate Loans comprising part of the same
Revolving Credit Borrowing, prepay the outstanding aggregate principal
amount thereof in whole or ratably in part and (B) in respect of LIBOR
Rate Loans comprising part of the same Revolving Credit Borrowing,
prepay the outstanding aggregate principal amount thereof in whole and
the interest accrued to the date of such prepayment on the principal
amount of such Borrowing so prepaid; provided, however, that: (I) each
partial prepayment of Alternate Base Rate Loans shall be (x) in an
aggregate principal amount of One Hundred Thousand Dollars ($100,000)
or any multiple thereof or (y) in an amount equal to the aggregate
principal amount of Alternate Base Rate Loans then outstanding, (II)
each partial prepayment of LIBOR Rate Loans shall be (a) in an
aggregate principal amount not less than One Million Dollars
($1,000,000), or an integral multiple of One Hundred Thousand Dollars
($100,000) in excess thereof or (b) in an amount equal to the aggregate
principal amount of LIBOR Rate Loans then outstanding, and (III) any
prepayment of any LIBOR Rate Loans made on other than the last day of
an Interest Period shall obligate the Borrower to reimburse the Bank in
respect thereof pursuant to Section 0 of this Agreement.
(f) EXTENSION OF COMMITMENT PERIOD. During the thirty (30) day
period following delivery by the Borrower pursuant to Section 0 of this
Agreement of its consolidated financial statements for its Fiscal Year
ending December 31, 1998, and annually thereafter during the thirty
(30) day period following delivery by the Borrower of its consolidated
financial statements pursuant to Section 0, the Borrower may request
the Agent to determine if all of the Banks are then willing to extend
the Revolving Credit Termination Date for a single additional year. If
the Borrower so requests the Agent will advise the Banks. If all of the
Banks in their sole discretion are willing to extend the Revolving
Credit Termination Date, the Borrower, the Agent and the Banks shall
execute a definitive written amendment extending the Revolving Credit
Termination Date. No extension shall be effective for any purpose
unless such definitive written instrument is signed by all of the Banks
and delivered within sixty (60) days following the notice from
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the Agent to the Banks that the Borrower has requested such an
extension. No Bank shall be obligated to grant the Borrower any such
extension, and unanimous written consent of all the Banks shall be
required to extend the Revolving Credit Termination Date. In the event
of the failure of any of the Banks to so respond affirmatively or
negatively in writing within such sixty (60) day period, such request
for extension shall be deemed to have been denied.
2.7 RATE CONVERSION AND RATE CONTINUATION. The Borrower shall have
the right to convert or continue any Revolving Credit Borrowing as a LIBOR Rate
Borrowing or an Alternate Base Rate Borrowing, upon request delivered by the
Borrower to the Agent not later than 12:00 noon (Cleveland time): (a) on the
Business Day that Borrower desires to convert any LIBOR Rate Borrowing into an
Alternate Base Rate Borrowing, (b) three Business Days prior to the Business Day
on which the Borrower desires to convert any Alternate Base Rate Borrowing into
a LIBOR Rate Borrowing for a given Interest Period, (c) three Business Days
prior to the Business Day on which Borrower desires to continue any LIBOR Rate
Borrowing as a LIBOR Rate Borrowing for an additional Interest Period of the
same duration, and (d) three Business Days prior to the Business Day on which
Borrower desires to convert any LIBOR Rate Borrowing having a particular
Interest Period into a LIBOR Rate Borrowing having a different permissible
Interest Period; provided, however, that each such Rate Conversion or Rate
Continuation shall be subject to the following:
(i) each Rate Conversion or Rate Continuation shall be made
among the Banks based upon such Bank's Ratable Portion of such
converted or continued Revolving Credit Borrowing;
(ii) if less than all the outstanding principal amount of a
Revolving Credit Borrowing is converted or continued, the aggregate
principal amount of such Revolving Credit Borrowing converted or
continued shall be: (A) in the case of a LIBOR Rate Borrowing, not less
than One Million Dollars ($1,000,000), or an integral multiple of One
Hundred Thousand Dollars ($100,000) in excess thereof and (B) in the
case of an Alternate Base Rate Borrowing, One Hundred Thousand Dollars
($100,000);
(iii) each Rate Conversion or Rate Continuation shall be
effected as if each Bank were applying the proceeds of Loans resulting
from such Rate Conversion or Rate Continuation to Loans being converted
or continued, as the case may be, and the accrued interest on any such
Loans (or portion thereof) being converted or continued shall be paid
to the Agent on behalf of each Bank by the Borrower at the time of such
Rate Conversion or Rate Continuation;
(iv) LIBOR Rate Loans shall not be converted or continued at a
time other than the end of an Interest Period applicable thereto unless
the Borrower shall pay to the Agent for the benefit of the Banks, upon
demand, any amounts due to any of the Banks pursuant to Section 0.4 of
this Agreement;
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(v) a Revolving Credit Borrowing may not be converted into or
continued as a LIBOR Rate Borrowing if the Interest Period applicable
thereto will expire less than one month prior to the Revolving Credit
Termination Date;
(vi) after and during the continuance of a Potential Default,
and after the occurrence of an Event of Default which has not been
waived or otherwise consented to by the Required Banks, a Revolving
Credit Borrowing may not be converted or continued as a LIBOR Rate
Borrowing; and
(vii) any LIBOR Rate Borrowing that cannot be continued as a
LIBOR Rate Borrowing by reason of clause (iv), (v), (vi) or (vi) of
this definition shall be automatically converted at the end of the
Interest Period in effect for each LIBOR Rate Borrowing into an
Alternate Base Rate Borrowing.
Each such request for a conversion or continuation (a "Rate
Conversion/Continuation Request") in respect of a Revolving Credit Borrowing
shall be transmitted by the Borrower to the Agent by telecopier, telex or cable
(in the case of telex or cable, confirmed in writing prior to the effective date
of the Rate Conversion or Rate Continuation requested), in substantially the
form of Exhibit C hereto. The Rate Conversion/Continuation Request shall
specify: (A) the identity and amount of the Loans comprising a Revolving Credit
Borrowing that the Borrower requests be converted or continued, (B) the Type of
Loans into which such Loans are to be converted or continued, (C) if such notice
requests a Rate Conversion, the date of the Rate Conversion (which shall be a
Business Day) and (D) in the case of a Revolving Credit Borrowing converted into
or continued as a LIBOR Rate Borrowing, the Interest Period for such LIBOR Rate
Loans. The Borrower may make Rate Conversion/Continuation Requests
telephonically so long as written confirmation of such Revolving Credit
Borrowing is received by the Agent by 1:00 p.m. (Cleveland, Ohio time) on the
same day of such telephonic Rate Conversion/Continuation Request. The Agent may
rely on such telephonic Rate Conversion/Continuation Request to the same extent
that the Agent may rely on a written Rate Conversion/Continuation Request. Each
Rate Conversion/Continuation Request, whether telephonic or written, shall be
irrevocable and binding on the Borrower and subject the Borrower to the
indemnification provisions of Section 0 of this Agreement. The Borrower shall
bear all risks related to giving any Rate Conversion/Continuation Request
telephonically or by such other method of transmission as Borrower shall elect.
2.8 LETTERS OF CREDIT. Subject to the terms and conditions set
forth in this Agreement, the Letter of Credit Bank agrees, at any time and from
time to time, from and including the Closing Date but in no event after the
thirtieth calendar day immediately preceding the Revolving Credit Termination
Date, to issue and deliver, or to extend the expiration of, Letters of Credit
for the account of the Borrower; provided, however, that, the aggregate LC
Exposure of the Banks shall not at any time exceed the lesser of: (x) Ten
Million Dollars ($10,000,000) outstanding at any time and (y) the difference
between (I) the aggregate Revolving
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Credit Commitments of the Banks as then in effect and (II) the sum of (a) the
aggregate outstanding Revolving Credit Loans of the Banks at such time plus (b)
the aggregate LC Exposure of the Banks at such time.
(a) TERM; FORM AND CONDITIONS OF LETTERS OF CREDIT. Each
Letter of Credit shall be issued in such form as the Letter of Credit
Bank may reasonably require subject to the Uniform Customs and
Practices for Documentary Credits (1993 Revision), International
Chamber of Commerce Publication No. 500, and any subsequent revisions
thereof. Each Letter of Credit shall: (A) permit drawings upon
presentation of one or more sight drafts and such other documents as
specified by the Borrower in the Credit Request delivered pursuant to
Section 0 of this Agreement and agreed to by the Letter of Credit Bank,
which drawings shall occur on or prior to the applicable expiration
date of such Letter of Credit, (B) by its terms expire not later than
the earlier of one (1) year after the date of the Letter of Credit or
the third (3rd) Business Day prior to the Revolving Credit Termination
Date and (C) by its terms provided for payment of drawings in Dollars.
(b) REQUESTS FOR LETTERS OF CREDIT. Letters of Credit shall be
issued upon request given by the Borrower to the Agent not later than
12:00 noon (Cleveland, Ohio time) three (3) Business Days prior to the
specified date for the issuance of the requested Letter of Credit. Each
such request for a Letter of Credit shall be made in the form of a
Credit Request transmitted by the Borrower to the Agent by telecopier,
telex or cable (in the case of telex or cable, confirmed in writing
prior to the date of the requested issuance of the Letter of Credit),
specifying with respect to each Letter of Credit requested: (i) the
face amount thereof, (ii) the beneficiary, (iii) the intended date of
issuance, (iv) the terms of the Letter of Credit, and shall be promptly
forwarded by the Agent to the Letter of Credit Bank. Concurrently with
each Credit Request requesting a Letter of Credit, the Borrower shall
execute and deliver to the Letter of Credit Bank a Reimbursement
Agreement, in the Letter of Credit Bank's then standard form of
application for and reimbursement agreement with respect to letters of
credit (such documents being hereinafter collectively referred to as a
"Reimbursement Agreement"); provided, however, that in the event of any
conflict between the provisions of any such Reimbursement Agreement and
this Agreement, the provisions of this Agreement shall govern.
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(c) PARTICIPATION BY BANKS IN LETTERS OF CREDIT. By the
issuance of a Letter of Credit by the Letter of Credit Bank and without
further action on the part of the Letter of Credit Bank or any Bank,
the Letter of Credit Bank hereby grants to each Bank, and each Bank
hereby acquires from the Letter of Credit Bank, a participation in each
Letter of Credit equal to such Bank's Ratable Portion, effective on the
date of the issuance of each Letter of Credit. In consideration, each
Bank hereby absolutely and unconditionally agrees to pay to the Agent
for the account of such Letter of Credit Bank such Bank's Ratable
Portion of each disbursement made by such Letter of Credit Bank in
respect of such Letter of Credit and not reimbursed by the Borrower as
hereinafter provided or not reimbursed by reason of the illegality of
such reimbursement, or any reimbursement payment required to be
refunded to the Borrower for any reason. Each Bank acknowledges and
agrees that its obligation to acquire risk participations pursuant to
this Section 0 is absolute and unconditional and shall not be affected
by any event or circumstance whatsoever, including the occurrence of
any Potential Default or Event of Default hereunder or the failure of
any condition precedent set forth in Section 0 of this Agreement to be
satisfied and each payment in satisfaction thereof shall be made
without any offset, abatement, withholding or reduction whatsoever;
provided, however, that the foregoing shall not be construed to excuse
the Letter of Credit Bank from liability to any Bank to the extent of
any direct damages (as opposed to consequential damages, claims in
respect of which are hereby waived by each of the Banks to the fullest
extent permitted by applicable Law) suffered by such Bank that are
caused by such Letter of Credit Bank's gross negligence or wilful
misconduct.
(d) REIMBURSEMENT; INTEREST. The Borrower agrees that whenever
there is a drawing on a Letter of Credit issued by the Letter of Credit
Bank, the Borrower shall pay to the Agent on the date of such drawing,
an amount equal to such drawing. The Agent shall promptly remit any
such payment to the Letter of Credit Bank. If there is a drawing on a
Letter of Credit, then, unless the Borrower shall reimburse such amount
in full on such date, the unpaid amount thereof shall bear interest for
the account of the Letter of Credit Bank for each day from and
including the date of such drawing, to but excluding the earlier of the
date of reimbursement or the date on which such drawing is reimbursed
by a Revolving Credit Borrowing, at the rate per annum that would apply
to such amount if such amount were an Alternate Base Rate Loan by a
Bank.
(e) FAILURE TO REIMBURSE. In the event that the Borrower fails
to make a timely reimbursement, together with any interest thereon, to
the Agent on the date of any drawing on a Letter of Credit pursuant to
this Section, such failure shall constitute a Deemed Credit Request
requesting an Alternate Base Rate Loan in an aggregate amount equal to
the amount reimbursable to the Letter of Credit Bank plus any interest
thereon. The Agent shall disburse all such loan proceeds directly to
the Letter of Credit Bank to satisfy the Borrower's aforesaid
reimbursement liability. The obligations of the Banks to the Agent
under this Section are in addition to and not in limitation of the
obligations of the Banks under Section 0 of this Agreement. In the
event that an Loan cannot be legally
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made pursuant to this Section 0 for any reason, each of the Banks shall
reimburse the Letter of Credit Bank in an amount equal to such Bank's
Ratable Portion of the drawing on the Letter of Credit.
(f) OBLIGATIONS ABSOLUTE. The obligation of the Borrower to
reimburse the Letter of Credit Bank shall, in each case, be absolute
and unconditional and shall be performed under all circumstances
including, without limitation: (i) any lack of validity or
enforceability of any Letter of Credit, (ii) the existence of any
claim, offset, defense or other right that the Borrower may have
against the beneficiary of any Letter of Credit or any successor in
interest thereto, (iii) the existence of any claim, offset, defense or
other right that any Bank or the Agent may have against the Borrower or
against the beneficiary of any Letter of Credit or against any
successor in interest thereto, (iv) the existence of any fraud or
misrepresentation in the presentment of any draft or other item drawn
and paid under any Letter of Credit by any person other than the Letter
of Credit Bank, (v) any payment of any draft or other item by the
Letter of Credit Bank which does not strictly comply with the terms of
any Letter of Credit issued by the Letter of Credit Bank, so long as,
in each case, such payment shall not have constituted gross negligence
or willful misconduct on the part of the Letter of Credit Bank, (vi)
any improper use which may be made of the Letter of Credit or any
improper acts or omissions of any beneficiary or transferee of the
Letter of Credit in connection therewith, (vii) any statement or any
other documents presented under any Letter of Credit proving to be
insufficient, forged, fraudulent or invalid in any respect or any
statement therein being untrue or inaccurate in any respect whatsoever,
(viii) the insolvency of any Person issuing any documents in connection
with the Letter of Credit, (ix) any irregularity in the transaction
with respect to which a Letter of Credit is issued, including any fraud
by the beneficiary or any transferee of such Letter of Credit, (x) any
errors, omissions, interruptions or delays in transmission or delivery
of any messages, (xi) any act, error, neglect or default, omission,
insolvency or failure of business of any of the correspondents of the
Letter of Credit Bank, or (xii) any other circumstances arising from
causes beyond the control of the Letter of Credit Bank.
(g) LIABILITY OF LETTER OF CREDIT BANK. It is expressly
understood and agreed that the absolute and unconditional obligation of
the Borrower hereunder to reimburse disbursements in respect of Letters
of Credit issued by a Letter of Credit Bank shall not be construed to
excuse a Letter of Credit Bank from liability to the Borrower to the
extent of any direct damages (as opposed to consequential damages,
claims in respect of which are hereby waived by the Borrower to the
extent permitted by applicable Law) suffered by the Borrower or any
Subsidiary of the foregoing that are caused by the gross negligence or
willful misconduct of the Letter of Credit Bank in determining whether
drafts and other documents presented under a Letter of Credit comply
with the terms thereof. The parties agree that the Letter of Credit
Bank may accept documents that appear on their face to be in order,
without responsibility for further investigation, regardless of any
notice or information to the contrary, and may make payment upon
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presentation of documents that appear on their face to be in
substantial compliance with the terms of such Letter of Credit;
provided, however, that the Letter of Credit Bank shall have the right
in its sole discretion to decline to accept such documents and to
decline to make such payment if such documents are not in strict
compliance with the terms of such Letter of Credit. In making any
payment under any Letter of Credit, the Letter of Credit Bank's (i)
exclusive reliance on the documents, appearing on their face to be in
order, as well as signatures and endorsements presented to it under
such Letter of Credit, in each case as to any and all matters set forth
therein, including reliance on the amount of any draft presented under
such Letter of Credit, whether the amount due to the beneficiary
thereunder equals the amount of such draft, any document presented
pursuant to such Letter of Credit proves to be in order, or any other
statement or any other document or any signature or endorsement with
respect thereto presented pursuant to such Letter of Credit proves to
be forged or invalid or any statement therein proves to be inaccurate
or untrue in any respect whatsoever, and (ii) making payment upon
presentation of documents not complying in any immaterial respect with
the terms of the Letter of Credit shall, in each case, not be deemed to
constitute willful misconduct or gross negligence of the Letter of
Credit Bank. Any action, inaction or omission on the part of the Letter
of Credit Bank or any of its correspondents, under or in connection
with any Letter of Credit issued by the Letter of Credit Bank or any
renewal or extension thereof or the related instruments or documents,
if taken in good faith and in conformity with applicable Laws and
regulations governing Letters of Credit generally and the terms of this
Section 0, shall be binding upon the Borrower and shall not place the
Letter of Credit Bank or any of its correspondents under any liability
to the Borrower. The Letter of Credit Bank's rights, powers, privileges
and immunities specified in or arising under this Agreement are in
addition to any heretofore or at any time hereafter otherwise created
or arising rights, powers, privileges and immunities, whether by
statute or rule of Law or contract.
(h) LETTER OF CREDIT BANK INDEMNITY. The Borrower shall
indemnify the Letter of Credit Bank from and against: (i) any loss or
liability (other than any caused by such Letter of Credit Bank's gross
negligence or willful misconduct as determined by the final judgment of
a court of competent jurisdiction) incurred by the Letter of Credit
Bank in respect of this Agreement and the Letters of Credit and (ii)
any out-of-pocket expenses incurred by the Letter of Credit Bank in
defending itself or otherwise related to this Agreement or any Letter
of Credit (other than any caused by the Letter of Credit Bank's gross
negligence or willful misconduct as determined by the final judgment of
a court of competent jurisdiction) including, without limitation,
reasonable fees and expenses of legal counsel incurred by such Letter
of Credit Bank (including, without limitation, the reasonable
interdepartmental charges of its salaried attorneys) in the defense of
any claim against it or in the prosecution of its rights and remedies.
(i) EFFECT OF APPLICABLE LAW OR CUSTOM. All Letters of Credit
issued hereunder, all reimbursement obligations hereunder and all
reimbursement obligations under any Reimbursement Agreement will,
except to the extent otherwise expressly
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provided in this Agreement, the Reimbursement Agreements or the Letters
of Credit, be governed by the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 500, and any subsequent revisions thereof.
(j) TERMINATION OF LETTER OF CREDIT COMMITMENT. In the event
that: (i) any restriction is imposed on the Letter of Credit Bank
(including, without limitation, any legal lending or acceptance limits
imposed by the United States of America or any political subdivision
thereof or of any foreign government or central bank) which in the
judgment of the Letter of Credit Bank would prevent the Letter of
Credit Bank from issuing Letters of Credit or maintaining its
commitment to issue Letters of Credit or (ii) there shall have
occurred, at any time during the term of this Agreement: (A) any
outbreak of hostilities or other national or international crisis or
change in economic conditions if the effect of such outbreak, crisis or
change would make the creation of Letters of Credit impracticable, (B)
the enactment, publication, decree or other promulgation of any
statute, regulation, rule or order of any court or other governmental
authority which would materially and adversely affect the ability of
the Borrower to perform its obligations under this Agreement, or (C)
the taking of any action by any government or agency in respect of its
monetary or fiscal affairs which would have a material adverse effect
on the issuance of Letters of Credit, then the Letter of Credit Bank,
in the case of the occurrence of any event described hereinabove, shall
give written notice of the occurrence of such event to the Borrower and
the Agent whereupon the commitment of the Letter of Credit Bank to
issue Letters of Credit shall be suspended on the effective date of
such notice and shall continue suspended until the effect of such event
shall cease to exist.
2.9 FEES. The Borrower shall pay to the Agent for its own
account, or for the account of the Letter of Credit Bank or the Banks, as the
case may be, the fees set forth in this Section 0. All fees set forth in this
Section 0 shall be paid on the date due, in immediately available funds, to the
Agent for distribution as appropriate to itself, the Letter of Credit Bank, and
the Banks and once paid, none of such fees shall be refundable under any
circumstances.
(a) REVOLVING CREDIT COMMITMENT FEE. The Borrower agrees to
pay to the Agent for the benefit of the Banks, allocable to the Banks
in accordance with the Ratable Portion of the Banks, a commitment fee
equal to: (x) the Applicable Commitment Fee Percentage then in effect
multiplied by (y) the average daily unused portion of the total of the
Revolving Credit Commitments of the Banks outstanding on the Fee
Percentage Determination Date immediately preceding the applicable Fee
Percentage Adjustment Date. The annual fee shall be payable quarterly
in arrears on the first day of each Fiscal Quarter commencing April 1,
1998, until the Revolving Credit Termination Date.
(b) ARRANGEMENT AND STRUCTURING. The Borrower agrees to pay to
the Agent on the Closing Date for its sole account a one time fee for
arranging and structuring the
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financing transaction contemplated by this Agreement in the amount
specified in the commitment letter executed by the Borrower and the
Agent, dated December 9, 1997.
(c) ANNUAL AGENT'S FEE. The Borrower agrees to pay to the
Agent for its sole account an annual agent fee as set forth in the
Agent's Fee Letter.
(d) LETTER OF CREDIT FEES. The Borrower agrees to pay fees in
respect of Letters of Credit issued for the account of the Borrower as
follows:
(i) ANNUAL LETTER OF CREDIT RISK PARTICIPATION FEE.
The Borrower agrees to pay to the Agent for the benefit of the
Banks, allocable to the Banks in accordance with the Ratable
Portion of the Banks, in advance on the date of issuance of
each Standby Letter of Credit issued for its account and on
any renewal or extension date thereafter, an annual risk
participation fee (adjusted for Standby Letters of Credit
having terms less than one year) equal to: (x) the Applicable
Risk Participation Fee then in effect multiplied by (y) the
face amount of the Standby Letter of Credit issued by the
Letter of Credit Bank.
(ii) ANNUAL LETTER OF CREDIT BANK FEE. Commencing on
April 1, 1998, the Borrower agrees to pay to the Agent for the
sole benefit of the Letter of Credit Bank, payable quarterly
in arrears, an issuance fee equal to: (x) one-eighth of one
percent (1/8%) multiplied by (y) the average daily face amount
of each Standby Letter of Credit outstanding during the
immediately preceding quarter.
(iii) OTHER FEES RELATING TO LETTERS OF CREDIT. The
Borrower agrees to pay to the Agent for the sole benefit of
the Letter of Credit Bank upon issuance of any Letters of
Credit issued for its account any standard fees, amendment and
modification fees and any other standard fees and charges
customarily charged by the Letter of Credit Bank in connection
with Standby Letters of Credit.
(e) LATE CHARGES. If the Borrower fails to pay any amount due
under this Agreement, or any fee in connection herewith, in full within
ten (10) days after its due date, the Agent shall be entitled to, in
addition to its remedies under Section 0 hereof, and the Borrower will
incur and shall pay to the Agent for the benefit of the Banks, in each
such case, a late charge equal to one percent (1%) of the amount failed
to be paid. The payment of a late charge will not cure or constitute a
waiver of any Potential Default or Event of Default under this
Agreement.
(f) APPLICABLE RISK PARTICIPATION PERCENTAGE AND APPLICABLE
FACILITY FEE PERCENTAGE. The Applicable Risk Participation Percentage
or Applicable Commitment Fee Percentage, as the case may be, shall be
calculated as herein specified as of the Closing Date and as of the
first day of the calendar quarter (each an "Fee Adjustment Date")
commencing after the date the Agent shall have received (A) financial
statements
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required by Sections 0, 0 or 0, as the case may be, for the period
ending as of the last day of the Fiscal Quarter or Fiscal Year
immediately preceding such Fee Adjustment Date (each a "Fee
Determination Date") and (B) a certificate complying with Section 0
certifying the Borrower's Consolidated Total Funded Debt to EBITDA
Ratio as of any such Fee Determination Date. On each Fee Adjustment
Date, the Applicable Risk Participation Percentage or Applicable
Commitment Fee Percentage, as the case may be, shall be the percentage
set forth in the definition of "Applicable Risk Participation
Percentage" and "Applicable Facility Fee Percentage" which corresponds
to the Borrower's Consolidated Total Funded Debt to EBITDA Ratio as of
the Fee Determination Date applicable to such Fee Adjustment Date. The
Applicable Risk Participation Percentage and Applicable Commitment Fee
Percentage effective as of a particular Fee Adjustment Date shall
remain effective only until the next succeeding Fee Adjustment Date at
which time the Applicable Risk Participation Percentage and Applicable
Commitment Fee Margin shall be recalculated pursuant to this Section 0;
except, however, that, if an Event of Default shall have occurred which
has not been waived in writing by all of the Banks, or if the Borrower
shall not have delivered as of such Margin Adjustment Date the
financial statements in accordance with Sections 0, 0 and 0 of this
Agreement, the Applicable Risk Participation Fee Percentage shall be
eight-tenths of one percent (.80%) per annum and the Applicable
Commitment Fee Percentage shall be three-tenths of one percent (.30%)
per annum.
(g) PAYMENT OF FEES; NONREFUNDABLE. All fees set forth in this
Section 0 shall be paid on the date due, in immediately available
funds, to the Agent for distribution, if and as appropriate, to the
Banks or the Letter of Credit Bank. Once paid, to the extent permitted
by applicable Law, none of such fees shall be refundable under any
circumstances.
2.10 INTEREST ON REVOLVING CREDIT LOANS.
(a) INTEREST RATE. The Borrower shall pay interest on the
unpaid principal amount of each Revolving Credit Loan made by each Bank
from the date of such Revolving Credit Loan until such principal amount
shall be paid in full as follows:
(i) ALTERNATE BASE RATE LOANS. During such periods as
any Alternate Base Rate Loan comprising a Revolving Credit
Borrowing is outstanding, the Borrower shall pay interest on
such Alternate Base Rate Loan at a rate per annum equal at all
times to the sum of the Alternate Base Rate, payable
quarterly, in arrears, on the first day of each calendar
quarter and on the date such Alternate Base Rate Loan
comprising a Revolving Credit Borrowing shall be converted or
paid in full (whether at maturity, by reason of acceleration
or otherwise) and, after maturity, on demand.
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(ii) LIBOR RATE LOANS. During such periods as any
LIBOR Rate Loan comprising a Revolving Credit Borrowing is
outstanding, the Borrower shall pay interest on such LIBOR
Rate Loan at a rate per annum equal to the sum of the London
Interbank Offered Rate plus the Applicable LIBOR Margin in
effect as of the most recently preceding Margin Adjustment
Date occurring prior to the date of the making of such LIBOR
Rate Loan, or the conversion or continuation of such LIBOR
Rate Loan in accordance with Section 0, payable: (A) on the
last day of each Interest Period and (B) if such Interest
Period has a duration of more than three months, three months
after the first day of such Interest Period and (C) on the
date such LIBOR Rate Loan comprising a Revolving Credit
Borrowing shall be converted to an Alternate Base Rate Loan or
paid in full (whether at maturity, by reason of acceleration
or otherwise) and (D) after maturity, on demand.
(b) APPLICABLE LIBOR MARGIN; TERMS OF ADJUSTMENT.
(i) COMMENCEMENT; CONDITIONS. So long as no Event of
Default shall have occurred which has not been waived in
writing by all of the Banks, the Applicable LIBOR Margin shall
be calculated as herein specified as of the Closing Date and
effective as of the first day of the Fiscal Quarter (each an
"Margin Adjustment Date") during which the Agent shall have
received (A) financial statements required by Sections 0, 0 or
0, as the case may be, for the period ending as of the last
day of the Fiscal Quarter or Fiscal Year immediately preceding
such Margin Adjustment Date (each a "Determination Date") and
(B) a certificate complying with Section 0 certifying the
Borrower's Consolidated Funded Debt to EBITDA Ratio as of any
such Determination Date.
(ii) CALCULATION AND DURATION OF ADJUSTMENT. On each
Margin Adjustment Date, the Applicable LIBOR Margin shall be
the Applicable LIBOR Margin set forth in the definition of
"Applicable LIBOR Margin" which corresponds to the Borrower's
Consolidated Total Funded Debt to EBITDA Ratio as of the
Determination Date applicable to such Margin Adjustment Date.
The Applicable LIBOR Margin effective as of a particular
Margin Adjustment Date shall remain effective only until the
next succeeding Margin Adjustment Date at which time the
Applicable LIBOR Margin shall be recalculated pursuant to this
Subsection (b); provided, however, that: (I) if at any time an
Event of Default shall have occurred that has not been waived
in writing by all of the Banks, or if the Borrower shall not
have delivered as of any Margin Adjustment Date the financial
statements required to have been delivered under Sections 0
and 0 of this Agreement, then, at the election of the Required
Banks, the Applicable LIBOR shall immediately adjust to be
eight-tenths of one percent (0.80%) per annum and (II) if an
Event of Default shall have occurred which has not been waived
in writing by the Required Banks, the interest rate shall,
upon the request
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of the Required Banks, be the interest rate applicable
pursuant to Section 0 of this Agreement.
(c) DEFAULT INTEREST. Following the occurrence of an Event of
Default which has not been waived in writing by all of the Banks, (i)
the principal thereof and the unpaid interest and fees thereon shall,
upon the request of the Required Banks, bear interest, payable on
demand, for Alternate Base Rate Loans and LIBOR Rate Loans, at a rate
per annum which shall be equal at all times to two percent (2.0%) in
excess of the Alternate Base Rate and (ii) the Applicable Risk
Participation Fee shall be two percent (2%) per annum.
(d) INTEREST RATE DETERMINATION.
(i) AGENT DETERMINATION; NOTICE. The Agent shall
determine the London Interbank Offered Rate in accordance
with the definition of London Interbank Offered Rate set forth
in Section 0 of this Agreement. The Agent shall give prompt
notice to each of the Banks and the Borrower of the applicable
interest rate determined by the Agent for purposes of Sections
0 and 0 of this Agreement.
(ii) FAILURE OF BORROWER TO ELECT. If no Interest Period
is specified in any Credit Request or any Rate
Conversion/Continuation Request for any LIBOR Rate Loans, the
Borrower shall be deemed to have selected an Interest Period
with a duration of one month. If the Borrower shall not have
given notice in accordance with Section 0 of this Agreement to
continue any LIBOR Rate Loans into a subsequent Interest
Period (and shall not have otherwise delivered a Rate
Conversion/Continuation Request in accordance with Section 0
of this Agreement to convert such Loans), such LIBOR Rate
Loans shall, at the end of the Interest Period applicable
thereto (unless repaid pursuant to the terms hereof),
automatically convert into Alternate Base Rate Loans.
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2.11 PAYMENTS AND COMPUTATIONS.
(a) PAYMENTS; APPLICATION OF PAYMENTS. Except to the extent
otherwise provided herein, all payments of Obligations shall be made in
Dollars, in immediately available funds, without setoff, counterclaim,
defense or deduction of any kind, to the Agent not later than 12:00
noon (Cleveland, Ohio time) on the day on which such payment shall
become due by deposit of such funds to the Agent's account maintained
at the Payment Office of the Agent. Payments received after 12:00 noon
(Cleveland, Ohio time) shall be deemed to have been received on the
next succeeding Business Day. The Borrower shall at the time of making
a payment hereunder specify to the Agent the Obligations to which such
payment is to be applied. If the Borrower does not specify an
application or if an Event of Default has occurred which has not been
waived in writing by the Required Banks, the Agent may, subject to
Section 0 of this Agreement, distribute a payment to the Letter of
Credit Bank or the Banks for application to such Obligations as the
Agent, in its sole discretion, elects or as the Required Banks shall
have directed; provided, however, the Agent will use reasonable efforts
to avoid an application of a payment which causes early prepayment of a
LIBOR Rate Borrowing prior to expiration of its applicable Interest
Period. Each payment received by the Agent for the account of the
Letter of Credit Bank or a Bank shall be paid on the day of such
receipt, in immediately available funds, to the Letter of Credit Bank
or Bank for the account of its respective Lending Office.
(b) PAYMENT PROCEDURES. The Control Account of the Borrower
will be charged with all Advances made by the Banks to the Borrower and
all other Obligations of the Borrower under this Agreement or any other
Loan Document. The Borrower hereby authorizes each Bank to charge the
Loan Account of the Borrower with such Obligations. The Control Account
of the Borrower will be credited in accordance with this Section 0 with
all payments received by the Agent directly from such Borrower or for
the account of the Borrower. The Agent shall send the Borrower
statements in accordance with the Bank's standard procedures. Absent
manifest error, each such statement shall be final, conclusive and
binding on the Borrower. The Loan Accounts of each Bank shall reflect
the activity in the Control Account applicable to such Bank's Loan
Account.
(c) AUTHORIZATION TO CHARGE ACCOUNT. If and to the extent
payment owed to the Agent or any Bank is not made when due hereunder or
under the Revolving Credit Notes, the Borrower hereby authorizes the
Agent and each Bank to charge from time to time against any or all of
the Borrower's accounts with the Agent or such Bank, as the case may
be, any amount so due. Notice of any such charge shall be given
promptly to the Borrower by the Agent or such Bank, as the case may be.
(d) COMPUTATIONS OF INTEREST AND FEES. All computations of
interest on LIBOR Rate Loans, as well as fees and other compensation
hereunder, shall be made by
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the Agent on the basis of a year of 360 days and for the actual number
of days (including the first day but excluding the last day) occurring
in the period for which such interest or fees are payable. All
computations of interest on Alternate Base Rate Loans shall be made by
the Agent on the basis of a year of 365 or 366 days and in each case
for the actual number of days (including the first day but excluding
the last day) occurring in the period for which such interest or fees
are payable. Each determination by the Agent of interest, fees or other
amounts of compensation due hereunder shall be, absent manifest error,
prima facie evidence thereof.
(e) PAYMENT NOT ON BUSINESS DAY. Whenever any payment
hereunder or under the Revolving Credit Notes shall be stated to be due
on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day. Any such extension of time shall in such
case be included in the computation of payment of interest, fees or
other compensation, as the case may be.
(f) PRESUMPTION OF PAYMENT IN FULL BY BORROWER. Unless the
Agent shall have received notice from the Borrower prior to the date on
which any payment is due to the Banks hereunder that the Borrower will
not make such payment in full, the Agent may assume that the Borrower
has made such payment in full to the Agent on such date. In reliance
upon such assumption, the Agent may, but shall not be obligated to,
distribute to each Bank on such due date the amount then due such Bank.
If and to the extent the Borrower shall not have made such payment in
full to the Agent, each Bank shall repay to the Agent promptly upon
demand the amount distributed to such Bank together with interest
thereon, for each day from the date such amount is distributed to such
Bank until the date such Bank repays such amount to the Agent, at the
Federal Funds Rate for the first three (3) days from and after such
date and thereafter at the Interest Rate then applicable to Alternate
Base Rate Loans.
2.12 CHANGE IN LAW; LIBOR RATE LOANS UNLAWFUL. Notwithstanding any
other provision of this Agreement, if any Bank determines that any applicable
Law, or any change therein, or any change in the interpretation or
administration of any Law by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by such Bank (or its Lending Office) with any request or directive
(whether or not having the force of law) of any such authority, central bank or
comparable agency, shall make it unlawful or impossible, or any such
governmental authority, central bank or agency asserts that it is unlawful, for
any Bank or its Lending Office to perform its obligations hereunder to make
LIBOR Rate Loans or to fund or maintain LIBOR Rate Loans hereunder, then, upon
notice to the Agent and the Borrower by such Bank: (a) the obligation of all of
the Banks to make, or to convert Loans into, LIBOR Rate Loans shall be suspended
until the Agent shall notify the Borrower and the Banks that the circumstances
causing such suspension no longer exist and (b) the Borrower shall immediately,
or at such later date, if any, as may thereafter be permitted by relevant Law,
prepay in full the then outstanding principal amount of all LIBOR Rate Loans of
all Banks, together with interest accrued thereon and any other amounts
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payable to the Banks hereunder unless the Borrower, upon notice from the Agent,
converts all LIBOR Rate Loans of all Banks then outstanding into Loans of
another Type in accordance with Section 0 of this Agreement as to which such
circumstances do not exist. Any such payment or Rate Conversion shall be subject
to the provisions of Section 0 of this Agreement.
2.13 UNAVAILABILITY. Notwithstanding any other provision in this
Agreement, if at any time with respect to any LIBOR Rate Loans:
(a) INADEQUATE RATE. Any Bank notifies the Agent that the
London Interbank Offered Rate for any Interest Period for such LIBOR
Rate Loans will not adequately reflect the cost to such Bank of making,
funding or maintaining its LIBOR Rate Loans for such Interest Period,
the Agent shall promptly notify the Borrower and the Banks;
(b) UNAVAILABLE QUOTATIONS. The Agent determines (which
determination shall be conclusive) that quotations of interest rates
for Dollar deposits are not being provided in the relevant amounts or
for the relevant maturities to, or the circumstances affecting the
London interbank market of deposits in Dollars make it impracticable
to, determine the London Interbank Offered Rate, or
(c) UNAVAILABLE DEPOSITS. Any Bank determines that Dollar
deposits of the relevant amount for the relevant Interest Period are
not available in the London interbank market of deposits of Dollars for
the purpose of funding the LIBOR Rate Loans,
then: (i) each LIBOR Rate Loan will automatically, on the last day of the then
existing Interest Period therefor, convert into an Alternate Base Rate Loan and
(ii) the obligation of the Banks to make or to convert Loans into LIBOR Rate
Loans or continue LIBOR Rate Loans shall be suspended until the Agent shall
notify the Borrower and the Banks that the circumstances causing such suspension
no longer exist.
2.14 PRO RATA TREATMENT. Except as set forth in Sections 0, 0 and 0
of this Agreement, each Borrowing, each payment or prepayment of principal of
any Borrowing, each payment of interest on the Loans, each payment of the fees
provided for hereunder, each Rate Conversion or Rate Continuation of Loans
comprising a Borrowing shall be allocated among the Banks in accordance with
each Bank's Ratable Portion (or if the Commitments shall have expired or been
terminated, in accordance with the respective principal amounts of each Bank's
Loans).
3 CONDITIONS OF LENDING.
3.1 CONDITIONS PRECEDENT TO INITIAL LOANS. The effectiveness of
this Agreement, the obligation of each Bank to make a Revolving Credit Loan on
the occasion of each Revolving Credit Borrowing and each Rate Conversion or Rate
Continuation, and the obligation of the Letter of Credit Bank to issue any
Letter of Credit are subject to the condition precedent that the Agent shall
have received on or before the Closing Date the following:
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(a) THIS AGREEMENT. Counterparts of this Agreement executed
and delivered by or on behalf of each of the parties hereto.
(b) SUBSIDIARY GUARANTIES. Subsidiary Guaranties appropriately
completed and executed by each of the Domestic Subsidiaries.
(c) CORPORATE ACTION; INCUMBENCY. A certificate executed by an
authorized officer of the Borrower certifying: (i) the resolutions of
the Board of Directors of the Borrower authorizing the execution,
performance and delivery of (A) this Agreement, (B) the Revolving
Credit Notes, (C) all Loan Documents to which the Borrower is a party
and (D) each other document executed in connection therewith or in
connection with any of the transactions contemplated herein or therein,
(ii) as true and correct the Articles of Incorporation and By-Laws of
the Borrower, (iii) the names and signatures of the officers of the
Borrower executing or attesting to such documents, (iv) compliance by
the Borrower with all representations, warranties, covenants and
conditions under this Agreement and each of the documents executed in
connection herewith, (v) the absence of any Potential Default or Event
of Default and (vi) the absence of any material litigation with respect
to this Agreement and the transactions contemplated thereby. The Agent
and each Bank may conclusively rely on such certificates until receipt
of notice in writing from the Borrower to the contrary.
(d) DOMESTIC SUBSIDIARY - CORPORATE ACTION; INCUMBENCY. A
certificate executed by an authorized officer of each Domestic
Subsidiary certifying: (i) the resolutions of the Board of Directors of
such Subsidiary authorizing the execution, performance and delivery of
(A) its respective Subsidiary Guaranty and (B) each other document
executed in connection therewith or in connection with any of the
transactions contemplated herein or therein, (ii) as true and correct
the Articles or Certificate of Incorporation and By-Laws or Regulations
of such Subsidiary, (iii) the names and signatures of the officers of
such Subsidiary executing or attesting to such documents, (iv)
compliance by such Subsidiary with all representations, warranties,
covenants and conditions under its respective the Subsidiary Guaranty
and each of the documents executed in connection herewith, (v) the
absence of any Potential Default or Event of Default and (vi) the
absence of any material litigation with respect to its Subsidiary
Guaranty Agreement and the transactions contemplated thereby. The Agent
and each Bank may conclusively rely on such certificates until receipt
of notice in writing from the Borrower to the contrary.
(e) GOOD STANDING - BORROWER. A certificate, as of a recent
date, from the Secretary of State of Delaware as to the good standing
of the Borrower in such jurisdiction.
(f) GOOD STANDING - DOMESTIC SUBSIDIARIES. Certificates, as of
a recent date,
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<PAGE> 48
from appropriate governmental authorities for the jurisdiction of
incorporation with respect to each Domestic Subsidiary as to the good
standing of such Domestic Subsidiary in such jurisdiction.
(g) REVOLVING CREDIT NOTES. The Revolving Credit Notes, in
favor of each of the Banks, in the principal amount of such Bank's
Revolving Credit Commitment, each duly executed by the Borrower.
(h) LEGAL OPINIONS. An opinion of Squire, Sanders & Dempsey,
counsel to the Borrower, in form and substance satisfactory to the
Agent, the Banks and their counsel, (i) with respect to the Borrower,
relating to corporate authority under Delaware law, the enforceability
of this Agreement and the Loan Documents under Ohio law and other
matters customarily addressed in opinions rendered in transactions of
this type and (ii) with respect to the Domestic Subsidiaries, relating
to corporate authority in the jurisdiction in which each such Domestic
Subsidiary is organized, the enforceability of the Subsidiary Guaranty
of each Domestic Subsidiary against such Domestic Subsidiary, and such
other matters customarily addressed in opinions rendered in
transactions of this type.
(i) MINIMUM AVAILABILITY. After the disbursement of the Loan
proceeds necessary to repay the Existing Lenders and to consummate the
Acquisitions, the Borrower shall have the ability to borrow at least
Twenty Million Dollars ($20,000,000) in Revolving Credit Loans.
(j) ASSIGNMENT AGREEMENT. The parties hereto and the parties
to the Existing Credit Agreement shall have executed and delivered an
assignment and acceptance agreement in form and substance satisfactory
to the Agent.
(k) CONSENTS. Evidence satisfactory to the Agent that the
Borrower has obtained, as certified by an officer of the Borrower, all
documents and instruments, including all consents, authorizations,
novations and filings required under law or under any material
contractual obligations of the Borrower as may be necessary for
consummation of the transactions contemplated by this Agreement and the
Loan Documents.
(l) DELIVERY OF FINANCIAL STATEMENTS; OFFICER'S CERTIFICATE.
(i) Company prepared financial statements of the Borrower as of
September 30, 1997, and the audited financial statements of the
Borrower as of December 31, 1996, each in form and substance
satisfactory to the Agent and the Banks and (ii) a certificate of the
chief financial officer of the Borrower, in his or her capacity as
chief financial officer, setting forth the calculations necessary to
determine which of the financial standards specified in definitions of
"Applicable LIBOR Margin" and "Applicable Risk Participation
Percentage" and "Applicable Commitment Fee Percentage" have been
satisfied by the Borrower.
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(m) CREDIT REQUEST AND DISBURSEMENT DIRECTION LETTER. A Credit
Request and a letter from the Borrower directing the Agent to disburse
the proceeds of the Loans.
(n) PAYMENT OF FEES. Evidence of the payment (or disbursement
direction for such payment delivered pursuant to Section 0 of this
Agreement): (i) to the Agent for its own account, the structuring and
arrangement fee and facility fee payable to the Agent and (ii) the
legal fees and out-of-pocket expenses of legal counsel to the Agent
through the time of Closing.
(o) PROJECTIONS. Acceptance by the Agent and the Banks of
projections for Fiscal Year 1998 and each of the next succeeding two
Fiscal Years of the Borrower.
(p) INSURANCE. Evidence satisfactory to the Agent and the
Banks, together with insurance certificates, that the Borrower has
adequate personal and real property, liability, business interruption
and product liability insurance.
(q) OTHER INFORMATION. Such other information, financial or
otherwise, as the Agent, any Bank or respective counsel thereto may
request, in its reasonable discretion.
3.2 CONDITIONS PRECEDENT TO ALL LOANS. The obligation of each
Bank to make a Revolving Credit Loan on the occasion of each Revolving Credit
Borrowing, Rate Conversion and Rate Continuation, and the obligation of the
Letter of Credit Bank to issue any Letter of Credit, are subject to the
condition precedent that, as of the date of any such Loan or issuance, and
before and after giving effect thereto:
(a) REPRESENTATION BRINGDOWN. The representations and
warranties contained in Sections 0 of this Agreement are true and
correct in all material respects on and as of the date of such Credit
Event with the same effect as though made on and as of such date,
except to the extent such representations and warranties expressly
relate to an earlier date; and
(b) NO DEFAULT; COMPLIANCE WITH TERMS. The Borrower shall be
in compliance with all other terms and provisions set forth herein and
in each other Loan Documents on its part to be observed or performed,
and at the time of and immediately after such Credit Event, No
Potential Default or Event of Default shall have occurred which has not
been waived by the Required Lenders; and
(c) NO MATERIAL ADVERSE EFFECT. There has been no event and
there exists no condition which would or which might reasonably be
expected to have a Material Adverse Effect, as determined by the
Required Banks.
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Each Credit Event and each receipt by the Borrower of the proceeds of any Loan
shall constitute a representation and warranty by the Borrower that on the date
of such Credit Event or receipt, as the case may be, the foregoing statements
are true and correct as of such date.
4 GENERAL REPRESENTATIONS AND WARRANTIES.
So long as the Obligations shall remain outstanding, the Banks shall
have any Revolving Credit Commitment and LC Exposure hereunder, and the Letter
of Credit Bank shall have any LC Commitment hereunder, the Borrower represents
and warrants to the Agent and each of the Banks as follows:
4.1 EXISTENCE. The Borrower and each of its subsidiaries is (a)
a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and (b) has all requisite
corporate power and authority , and has all governmental licenses,
authorizations, consents and approvals necessary to own its assets and carry on
its business as now being conducted. The Borrower has no Subsidiaries other
than as listed in the Supplemental Schedule. The Borrower and each of its
Domestic Subsidiaries is duly qualified or licensed to transact business in each
jurisdiction where such qualification or licensure is necessary and a failure to
so qualify or be licensed will have a Material Adverse Effect.
4.2 AUTHORIZATION. The execution, delivery, and performance of
this Agreement, the Loan Documents to which the Borrower or any Domestic
Subsidiary is a party: (a) are within Borrower's or such Domestic Subsidiary's
corporate powers, (b) have been duly authorized by all necessary corporate
action, (c) are not in contravention of Law or the terms of Borrower's or such
Domestic Subsidiary's Certificate of Incorporation or By-Laws or of any
indenture or other document or instrument evidencing Indebtedness for borrowed
money or any other material agreement or undertaking to which the Borrower or
such Domestic Subsidiary is a party or by which it or its property is bound and
(d) do not required any waivers, consents or approvals by any of the creditors
(including, without limitation, the Note Holders) or trustees for creditors of
the Borrower or such Domestic Subsidiary or any other Person. The execution,
delivery, and performance of the Acquisition Documents, upon the consummation of
the Acquisitions: (a) are within Borrower's corporate powers, (b) have been duly
authorized by all necessary corporate action, (c) are not in contravention of
Law or the terms of Borrower's Certificate of Incorporation or By-Laws or of any
indenture or other document or instrument evidencing Indebtedness for borrowed
money or any other material agreement or undertaking to which the Borrower is a
party or by which it or its property is bound and (d) do not required any
waivers, consents or approvals by any of the creditors (including, without
limitation, the Note Holders) or trustees for creditors of the Borrower or any
other Person.
4.3 ENFORCEABILITY. This Agreement and the Loan Documents
constitute, the legal, valid and binding obligations of the Borrower,
enforceable against the Borrower in accordance with the terms thereof subject to
any applicable bankruptcy, insolvency, reorganization,
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moratorium or similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles (whether enforcement is sought by
proceedings in equity or at law). Upon consummation of the Acquisitions, the
Acquisition Documents will constitute, the legal, valid and binding obligations
of the Borrower, enforceable against the Borrower in accordance with the terms
thereof subject to any applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles (whether enforcement is sought by
proceedings in equity or at law).
4.4 LITIGATION; PROCEEDINGS. Except as disclosed in the
Supplemental Schedule, there is no action, suit, investigation or proceeding,
and no order, writ, injunction, judgment or decree, now pending, existing or, to
the knowledge of the Borrower, threatened against the Borrower or any of its
Subsidiaries, affecting any property of the Borrower or any of its Subsidiaries
or with respect to this Agreement or any Loan Document or any Acquisition
Document, whether at law, in equity or otherwise, before any court, board,
commission, agency or instrumentality of any federal, state, local or foreign
government or of any agency or subdivision thereof, or before any arbitrator or
panel of arbitrators which, if adversely determined, might reasonably be
expected to have a Material Adverse Effect.
4.5 TAXES. The Borrower has filed all federal, state and local tax
returns which are required to be filed by the Borrower or its Subsidiaries and,
except to the extent permitted by Section 0 of this Agreement, has paid all
taxes and assessments due as shown on such returns, including interest,
penalties and fees. There are no material tax disputes or contests pending as of
the Closing Date. The charges, accruals and reserves on the books of the
Borrower and its Subsidiaries in respect of taxes and other governmental charges
are, in the opinion of the Borrower, adequate.
4.6 TITLE. The Borrower and each of its Subsidiaries has good
title to all personal property assets reflected in, and good and marketable
title to all real property assets reflected in, the financial statements
referred to in Sections 0 and 0 of this Agreement and in the financial
statements delivered from time to time pursuant to Section 0 of this Agreement.
There are no Liens on any real or personal property of the Borrower, other than
as permitted by Section 0. The Borrower and each of its Subsidiaries owns, or is
licensed to use, all Intellectual Property material to its business.
4.7 NO BREACH OR DEFAULT. Neither the execution and delivery of
this Agreement and the Loan Documents, nor the consummation of the transactions
contemplated hereby and thereby, nor the compliance with the terms and
provisions hereof and thereof will conflict with or result in a breach of, or
constitute a default under: (a) the articles and By-Laws of the Borrower or any
of its Subsidiaries, (b) any applicable law or regulation, (c) any order, writ,
warrant, injunction or decree of any court or governmental authority or agency,
(d) any material agreement or instrument to which the Borrower or any of its
Subsidiaries is a party or by which it is bound or its property subject, or (e)
result in the creation or imposition of any Lien upon any of the revenues or
assets of the Borrower or its Subsidiaries pursuant to the terms of any such
agreement or instrument.
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4.8 CONSENTS; APPROVALS. Except as set forth on the Supplemental
Schedule, no action, consent or approval of, registration or filing with or any
other action by any governmental authority or other Person is or will be
required in connection with execution and delivery of this Agreement, the Loan
Documents or the Acquisition Documents and the transactions contemplated hereby
and thereby, except such as have been made or obtained and are in full force and
effect.
4.9 LAWFUL OPERATIONS. The Borrower and each of its Subsidiaries,
and each of the operations of the Borrower and such Subsidiaries, are in full
compliance with all requirements imposed by Law (whether statutory,
administrative, judicial or other and whether federal, state, or local but
excluding Environmental Laws to the extent addressed in Section 0 below), except
to the extent any such noncompliance, when taken singly or with all other such
noncompliance, has not resulted, and could not reasonably be expected to result,
in a Material Adverse Effect.
4.10 ENVIRONMENTAL COMPLIANCE. Except for copper emissions from the
Subsidiary's plant in Durham, North Carolina (which emissions do no violate
applicable Environmental Laws), hazardous materials have not been released or
disposed of on any property owned or leased by a the Borrower or any of its
Subsidiaries or, to the best knowledge of the Borrower, any property adjoining
any such properties. All environmental permits have been obtained and are in
effect for the operations conducted at all property owned or leased by the
Borrower or any of its Subsidiaries. The Borrower and each of its Subsidiaries
are in material compliance with all applicable Environmental Laws and all
environmental permits. The Borrower and each of its Subsidiaries have disposed
of all wastes generated, including wastes containing hazardous materials, in
material compliance with all applicable Environmental Laws and environmental
permits. There are no past, pending or, to the actual knowledge of the Borrower,
threatened environmental claims against the Borrower or any of its Subsidiaries
that individually or in the aggregate could have a Material Adverse Effect. No
property owned or leased by the Borrower or any of its Subsidiaries, or to the
best knowledge of the Borrower, any property adjoining any such property, is
listed or proposed for listing on the National Priorities List under CERCLA or
on any other list maintained by any governmental authority of sites requiring
environmental investigation or cleanup. Neither the Borrower nor any if its
Subsidiaries has transported or arranged for the transportation of any hazardous
materials to any location that is listed or proposed for listing on the National
Priorities List under CERCLA or on any other analogous list or, to the best
knowledge of the Borrower, to any location that is the subject of any
environmental claim. To the best knowledge of the Borrower, there are no
circumstances with respect to any property owned or leased by the Borrower or
any of its Subsidiaries or the operations of any of the Borrower or its
Subsidiaries that could reasonably be anticipated (i) to form the basis of an
environmental claim against the Borrower or such Subsidiary or any property
owned or leased by the Borrower or any Subsidiary that individually or in the
aggregate might result in a Material Adverse Effect or (ii) to cause any
property owned or leased by the Borrower or any Subsidiary to be subject to any
restrictions on ownership, occupancy, use or
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transferability under any applicable Environmental Law.
4.11 ERISA. The Supplemental Schedule sets forth all of the
Employee Benefit Plans of the Borrower and its Subsidiaries as of the Closing
Date. The Borrower and each ERISA Affiliate of the Borrower are in compliance in
all material respects with the presently applicable provisions of ERISA and the
Code with respect to each Employee Benefit Plan. No Accumulated Funding
Deficiency exists in respect of any Employee Benefit Plan of Borrower or any of
its ERISA Affiliates. No Reportable Event has occurred in respect of any
Employee Benefit Plan which is continuing and which (i) constitutes grounds
either for termination of the plan or for court appointment of a trustee for the
administration thereof or (ii) has resulted or could result in a Material
Adverse Effect. No "prohibited transaction" (as defined in Section 406 of ERISA
or Section 4975 of the Code), has occurred that: (A) could cause the Borrower or
any of its ERISA Affiliates to incur a material liability or (B) has resulted or
could reasonably be expected to result in a Material Adverse Effect. None of the
Borrower or any of its ERISA Affiliates has (i) had an obligation to contribute
to any Multiemployer Plan except as disclosed in the Supplemental Schedule or
(ii) incurred or reasonably expects to incur any material liability for the
withdrawal from such a Multiemployer Plan. Neither the Borrower nor any ERISA
Affiliate of the Borrower has failed to make any contribution or payment to any
Employee Benefit Plan or Multiemployer Plan, or made any amendment to any
Employee Benefit Plan, which has resulted or could reasonably be expected to
result in the imposition of a Lien on the assets of the Borrower or the posting
of a bond or other security under ERISA or the Code
4.12 ADVERSE OBLIGATIONS; LABOR DISPUTES. Neither the Borrower nor
any of its US Subsidiaries is subject to any contract, agreement, corporate
restriction, judgment, decree or order materially and adversely affecting its
business, property, assets, operations or condition, financial or otherwise. The
Borrower is not in default of any indenture or other agreement evidencing
indebtedness or any other material agreement where such default has or could
reasonably be expected to result in a Material Adverse Effect. As of the Closing
Date, the Borrower is not a party to any labor dispute (other than grievance
disputes which do not individually or in the aggregate materially and adversely
affect any of its operations, financial condition, or business). There are no
material strikes, slow downs, walkouts or other concerted interruptions of
operations by employees whether or not relating to any labor contracts.
4.13 FINANCIAL STATEMENTS. The audited balance sheets of the Borrower
for the Fiscal Year ending December 31, 1996, and the related statements of
income, shareholder's equity, and cash flows, and, as applicable, changes in
financial position or cash flows for such Fiscal Years, and the notes to such
financial statements, reported upon by _______________, certified public
accountants, together with the unaudited internal financial statements
consisting of balance sheet and statements of income, shareholder's equity and
cash flows as of the Fiscal Quarter ending September 30, 1997, certified by an
executive officer of the Borrower: (a) have been prepared in accordance with
GAAP, applied on a consistent basis with the Borrower's financial statements
from prior Fiscal Years and (b) fairly present in all material respects (subject
to routine year-end audit adjustments in the case of the unaudited financial
statements) the financial condition of the
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Borrower as of the respective dates thereof (including a full disclosure of
liabilities, contingent or otherwise, if any) and the results of its operations
for the respective fiscal periods then ending. As of the Closing Date, the
Borrower has not experienced a Material Adverse Effect since the December 31,
1996 financial statements nor any change in the Borrower's accounting procedures
used therein. The Borrower and its Subsidiaries did not as of December 31, 1996,
and will not as of the Closing Date, have any material contingent liabilities,
material liabilities for taxes, unusual and material forward or long-term
commitments or material unrealized or anticipated losses from any unfavorable
commitments, except as referred to or reflected in said audited balance sheet or
subsequent 10Q.
4.14 VALUE; SOLVENCY. The Borrower has received fair consideration
and reasonably equivalent value for the obligations and liabilities incurred to
the Banks hereunder. The Borrower is Solvent.
4.15 INVESTMENT COMPANY ACT STATUS. Neither the Borrower nor any of
its Subsidiaries is an "investment company," or an "affiliated person" of, or a
"promoter" or "principal underwriter" for an "investment company" ( as such
terms are defined in the Investment Company Act of 1940, as amended
(15 U.S.C. Section 80(a)(1), et seq.)).
4.16 USE OF PROCEEDS; REGULATION U/REGULATION X COMPLIANCE. The
proceeds of Loans made to the Borrower pursuant to this Agreement will be used
only for general corporate purposes of the Borrower and as more specifically
provided for in this Agreement. No part of the proceeds of Loans made to the
Borrower pursuant to this Agreement will be used, directly or indirectly, to
purchase or carry any "margin stock" or for a purpose which violates any law,
rule, or regulation including, without limitation, the provisions of Regulation
G, T, U, or X of the Board of Governors of the Federal Reserve System, as
amended. Neither the Borrower nor any of its Subsidiaries owns any "margin
stock," as that term is defined in Regulation U and Regulation X of the Board of
Governors of the Federal Reserve System.
4.17 FULL DISCLOSURE. The Borrower has provided all information
requested by the Agent and the Banks. None of the written information, exhibits
or reports furnished by the Borrower to the Agent or the Banks contain any
untrue material fact or omit to state any material fact necessary to make the
statements contained therein not materially misleading in light of the
circumstances and purposes for which such information was furnished; provided,
however, that, with respect to the projections furnished to the Agent, although
the Borrower is not aware of facts that would make the projections incorrect and
believes that the assumptions underlying the projections were developed in good
faith.
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5 COVENANTS OF THE BORROWER.
So long as any of the Obligations shall remain unpaid, the Banks shall
have any Revolving Credit Commitments and LC Exposure hereunder, or the Letter
of Credit Bank shall have any LC Commitment hereunder, the Borrower will comply
with the following provisions unless the Banks shall otherwise consent in
writing:
5.1 REPORTING AND NOTICE COVENANTS.
(a) QUARTERLY FINANCIAL STATEMENTS. The Borrower shall furnish
to the Banks within forty-five (45) days after the end of each of the
first three Fiscal Quarters of the Borrower, consolidated balance
sheets of the Borrower as at the end of such Fiscal Quarter and the
statements of income and cash flows for such Fiscal Quarter, prepared
on an unaudited comparative basis with the comparable period during the
prior year and in accordance with GAAP.
(b) ANNUAL FINANCIAL STATEMENTS. The Borrower shall furnish to
the Banks as soon as available (and in any event within ninety (90)
days after the end of each Fiscal Year of the Borrower), a complete
copy of the audited consolidated, and internally prepared
consolidating, balance sheets of the Borrower as at the end of such
Fiscal Year and the related consolidated statements of income, retained
earnings, statements of shareholder's equity and cash flows for such
Fiscal Year, and the notes thereto) for that Fiscal Year: (i) prepared
on a comparative basis with the prior year and in accordance with GAAP
except as disclosed therein, (ii) audited and certified (without
qualification) by any nationally recognized independent public
accountants selected by the Borrower and meeting the reasonable
satisfaction of the Agent and the Banks to the effect that such
consolidated financial statements present fairly in all material
respects the financial condition and income of the Borrower and its
consolidated Subsidiaries on a consolidated basis in accordance with
GAAP consistently applied and (iii) accompanied by the accountants'
management report relating thereto, if any.
(c) OFFICER'S CERTIFICATES. The Borrower shall furnish to the
Agent and the Banks, concurrently with the financial statements
delivered in connection with Section 0 above and within sixty (60) days
after the end of the fourth Fiscal Quarter of the Borrower, a
certificate of the chief financial officer of the Borrower, in his or
her capacity as chief financial officer, certifying that: (A) with
respect to the first three Fiscal Quarters of the Borrower, to the best
of his knowledge and belief, those financial statements fairly present
in all material respects the financial condition and results of
operations of the Borrower subject (in the case of interim financial
statements) to routine year-end audit adjustments, (B) no Potential
Default or Event of Default then exists or, if any Potential Default or
Event of Default does exist, a brief description of the Potential
Default or Event of Default and the Borrower's intentions in respect
thereto and (C) setting forth the calculations necessary to determine
which of the financial standards specified in
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definition of Applicable LIBOR Margin, Applicable Commitment Fee
Percentage and Applicable Risk Participation Percentage have been
satisfied by the Borrower pursuant to Section 0 of this Agreement and
whether the Borrower is in compliance with the financial covenants
specified in Section 0 of this Agreement.
(d) ANNUAL BUSINESS PLAN. Within sixty (60) days after the end
of each Fiscal Year of the Borrower, the Borrower shall provide the
Agent and the Banks with forecasts prepared by Borrower's management,
in form and substance satisfactory to the Agent and the Banks, of
consolidated and consolidating income statements and consolidated and
consolidating cash flow statements for the Borrower and its
Subsidiaries on a quarterly basis for the next succeeding Fiscal Year.
(e) OTHER INFORMATION. The Borrower shall furnish to the
Agent, promptly upon the Agent's written request, such other
information about the financial condition, properties and operations of
the Borrower, its Subsidiaries and its Employee Benefit Plans as the
Agent may from time to time reasonably request.
(f) PROJECTIONS. The Borrower shall furnish to each of the
Banks, not less than ten (10) days nor more than forty-five (45) days
prior to (1) an acquisition by Borrower of substantially all the assets
or equity interests of another corporation or business enterprise, (2)
a merger or consolidation by the Borrower or any of its Subsidiaries
with any other Person (other than a merger or consolidation referred to
in clause (B) of Section 0, (3) a joint venture with another
corporation or business enterprise, or (4) an investment in or advance
or loan to any person or entity made after the date of this Agreement
pursuant to clause (C) of Section 0 or (iv) below, oral notification to
each Bank regarding such event of the type referred to in clauses (1)
through (4) above and, if any Bank shall request in respect thereto,
twelve (12) month financial projections (the "Projections"), including
a projected balance sheet and cash flow and income statements, prepared
by Borrower's chief financial officer, controller or another officer
reasonably satisfactory to the Required Banks. Notwithstanding the
foregoing, Banks agree that they shall not request Projections in the
event the aggregate dollar amount of such events for a given fiscal
year do not exceed ten percent (10%) of the consolidated Stockholders
Equity of the Companies as of the end of the prior fiscal year. The
Projections shall be prepared on the basis of the historical operations
of the Borrower and its Subsidiaries (and any entity to be acquired or
merged or consolidated with) after giving effect to the event in
question and all reasonable related assumptions. The officer preparing
such Projections shall certify to Banks and the Agent that to the best
of his knowledge and belief such financial information is not
misleading and is accurate in all material respects. The Borrower shall
promptly notify the Banks of any change in the assumptions upon which
the Projections are based between the date of preparation and the date
of the event in question.
(g) NOTICES. The Borrower will cause its chief financial
officer, or in his
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absence another officer designated by him, to give the Agent and each
Bank prompt written notice (and in any event within ten (10) Business
Days) whenever: (i) the Borrower or any of its Subsidiaries receives
notice from any court, agency or other governmental authority of any
alleged non-compliance with any Law or order which could reasonably be
expected to have or result in, if such noncompliance is found to exist,
a Material Adverse Effect, (ii) the Internal Revenue Service or any
other federal, state or local taxing authority shall allege any default
by the Borrower or any of its Subsidiaries in the payment of any tax
material in amount or shall threaten or make any assessment in respect
thereof, (iii) any litigation or proceeding shall be brought against
the Borrower or any of its Subsidiaries before any court or
administrative agency which could, if successfully brought against the
Borrower, reasonably be expected to have or result in a Material
Adverse Effect, (iv) any material adverse change or development in
connection with any such litigation proceeding, or (v) such officer
reasonably believes that any Potential Default or Event of Default has
occurred or that any other representation or warranty made herein shall
for any reason have ceased to be true and complete in any material
respect.
(h) NOTICE OF DEFAULT UNDER ERISA. If Borrower shall receive
notice from any ERISA Regulator or otherwise have actual knowledge that
a Default under ERISA exists with respect to any Employee Benefit Plan,
Borrower shall notify the Agent and each Bank of the occurrence of such
Default under ERISA, within ten (10) Business Days after receiving such
notice or obtaining such knowledge (the disclosures contained in the
Supplemental Schedule being such notice of each Default under ERISA
disclosed therein to the extent of the disclosure therein) and shall:
(i) so long as the Default under ERISA has not been corrected to the
satisfaction of, or waived in writing by the party giving notice, the
Borrower shall thereafter treat as a current liability (if not
otherwise so treated) all liability of Borrower or its Subsidiary that
would arise by reason of the termination of or withdrawal from such
Employee Benefit Plan if such plan was then terminated, and (ii) within
forty-five (45) days of the receipt of such notice or obtaining such
knowledge, furnish to the Agent and each Bank a current consolidated
balance sheet of Borrower with the amount of the current liability
referred to above.
(i) ENVIRONMENTAL REPORTING. The Borrower shall promptly
deliver to the Agent and each Bank, and in any event within ten (10)
Business Days after receipt or transmittal by the Borrower or any of
its Subsidiaries, as the case may be, copies of all material
communications with any government or governmental agency relating to
Environmental Laws and all material communications with any other
Person relating to Environmental Claims brought against the Borrower or
its Subsidiaries which could, in either case, if successfully brought
against the Borrower or such Subsidiaries, reasonably be expected to
result in a Material Adverse Effect.
(j) MULTIEMPLOYER PLAN WITHDRAWAL LIABILITY. The Borrower
shall
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(i) once in each calendar year beginning 1996, request a current
statement of withdrawal liability from each Multiemployer Plan to which
the Borrower or any ERISA Affiliate is or has been obligated to
contribute during such year and (ii) within fifteen (15) days after the
Borrower receives the such current statement, transmit a copy of such
statement to the Agent and each Bank.
5.2 AFFIRMATIVE COVENANTS.
(a) CORPORATE EXISTENCE. The Borrower and each Subsidiary
shall at all times maintain its corporate existence, rights and
franchises.
(b) COMPLIANCE WITH LAW. The Borrower shall comply, and shall
cause each of its Subsidiaries to comply, with all Laws and with every
lawful governmental order (whether administrative or judicial). Without
limiting the generality of the foregoing, the Borrower shall, and shall
cause each of its Subsidiaries to, (a) use and operate all of its
facilities and properties in material compliance with all Environmental
Laws and handle all hazardous materials in material compliance
therewith; keep in full effect each permit, approval, certification,
license or other authorization required by any Environmental Law for
the conduct of any material portion of its business; and comply in all
other material respects with all Environmental Laws (including the
undertaking of any cleanup, remedial or other action necessary in order
to comply with any directive of a governmental authority or
Environmental Law); (b) make a full and timely payment of premiums
required by ERISA and perform and observe all such further and other
requirements of ERISA such that no Default Under ERISA shall occur or
begin to exist and no Lien shall be created; and (c) comply with all
material requirements of all occupational health and safety laws and
federal and state securities laws; provided, however, that, this
Section shall not apply to any of the foregoing (i) if and to the
extent that (x) the same shall be contested in good faith by timely and
appropriate proceedings which are effective to stay enforcement thereof
and against which a bond has been posted or appropriate reserves shall
have been established and as to which no Lien has been created and (y)
non-compliance therewith would not have a Material Adverse Effect or
(ii) if non-compliance would not have a Material Adverse Effect.
(c) INSURANCE. The Borrower will maintain, and will cause each
of its Subsidiaries to maintain, insurance with sound and responsible
insurance companies in such amounts, on such properties and against
such risks as is usually carried by companies of established repute
engaged in the same or similar businesses, owning similar properties,
and located in the same general areas as the Borrower. The Borrower
shall, on the Closing Date and within ten (10) Business Days of the
request by the Agent thereafter, provide evidence (including, without
limitation, full policies if so requested) satisfactory to the Agent
that the Borrower has adequate personal and real property, liability,
business interruption and product liability insurance.
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(d) TAXES. The Borrower shall pay in full, and shall cause
each of its Subsidiaries to pay in full, prior in each case to the date
when penalties for the nonpayment thereof would attach, all taxes,
assessments and governmental charges and levies for which it may be or
become subject and all lawful claims which, if unpaid, might become a
Lien upon its property; provided, however, that no such tax,
assessment, charge or levy need be paid so long as and to the extent
that it is contested in good faith and by timely and appropriate
proceedings effective to stay, during the pendency of such proceedings,
the enforcement thereof and the creation of any Lien, and appropriate
reserves, as required by GAAP, are made on the books of the Borrower
and its Subsidiaries.
(e) PROPERTIES; FINANCIAL RECORDS. The Borrower will keep, and
will cause each of its Subsidiaries to keep, all of its properties
necessary in its business in good working order and condition, ordinary
wear and tear excepted. The Borrower shall maintain at all times, true
and complete financial records in accordance with GAAP, consistently
applied, and, without limiting the generality of the foregoing, make
appropriate accruals to reserves for estimated and contingent losses
and liabilities as required under GAAP.
(f) VISITATION. The Borrower shall promptly upon written or
oral request of the Agent or any Bank permit, and shall cause each of
its Subsidiaries to permit, the Agent or such Bank, as the case may be,
during normal business hours: (i) to examine, with the guidance and
supervision of the Borrower, the Borrower's financial records and to
make copies of and extracts from such records and (ii) upon prior
reasonable notice to the Borrower, to consult with the Borrower's and
its Subsidiaries' officers, directors, accountants, actuaries, trustees
and plan administrators, as the case may be, in respect of the
Borrower's and its Subsidiaries' financial condition, each of which
parties is hereby authorized by the Borrower to make such information
available to such Bank to the same extent that it would to the Borrower
subject only to such professional and legal restrictions to which such
parties may be bound and which cannot be waived by the Borrower or its
Subsidiaries.
(g) DOMESTIC SUBSIDIARIES AS SUBSIDIARY GUARANTORS. Within
thirty (30) days after the creation or acquisition of any Domestic
Subsidiary, the Borrower shall cause such Domestic Subsidiary to
execute and deliver to the Agent and each of the Banks, an
appropriately executed Subsidiary Guaranty, together with a Domestic
Subsidiary Certificate.
(h) INTEREST RATE PROTECTION AGREEMENTS. Prior to the
execution of any interest rate protection agreement, the Borrower
shall, and shall cause each of its Subsidiaries to, submit such
agreement to the Agent for its review for compliance with the current
ISDA documentation standards.
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5.3 NEGATIVE COVENANTS.
(a) MERGERS; SALES OF ASSETS; FUNDAMENTAL TRANSACTIONS. The
Borrower shall not, and shall not permit any of its Subsidiaries to,
(i) merge or consolidate with or into, or enter into any agreement to
merge or consolidate with or into, any other Person or otherwise be a
party to any merger or consolidation, (ii) purchase (whether in one
transaction or a series of transactions) all or substantially all of
the assets and business or equity of any other Person, (iii) acquire
any Subsidiary other than the Subsidiaries set forth on the
Supplemental Schedule, or (iv) lease as lessor, sell, sell-leaseback or
otherwise transfer (whether in one transaction or a series of
transactions) its business or assets (whether now owned or hereafter
acquired); except, that, if immediately after giving effect to such
transaction no Event of Default or Potential Default shall have
occurred, the Borrower and its Subsidiaries may from and after the
Closing Date: (A) enter into a merger or consolidation involving only
Subsidiaries of the Borrower or any merger involving only the Borrower
and one or more of its Subsidiaries in which the Borrower is the
surviving corporation, (B) acquire all or substantially all of the
assets or equity of other Persons (other than the Acquisitions) other
than as set forth in clause (A) above (whether by merger or purchase
and whether in one transaction or a series of transactions) so long as
(x) the target or resulting entity is in the same, substantially
similar or a complementary line of business, (y) the Borrower shall
have establish Pro Forma Covenant Compliance and, to the extent
Projections are requested, the Required Banks do not reasonably object
to the assumptions or other information upon which the relevant
Projections were based and (z) prior to the consummation thereof, the
Agent shall have received copies of the acquisition documents together
with an acquisition certificate, (C) acquire all or substantially all
of the equity of other Persons in connection with the Acquisitions
other than as set forth in clause (A) above so long as prior to the
consummation thereof, the Agent shall have received copies of the
Acquisition Documents together with an Acquisition Certificate and (D)
lease as lessor, sell, sell-leaseback or otherwise transfer its assets
(other than the sale or transfer by the Borrower of any of the capital
stock of any of the Borrower's Subsidiaries) so long as (I) such sale,
lease or transfer is for not less than the fair market value of such
assets, (II) the consideration received therefor is cash or cash
equivalents and (III) the aggregate amount of such transactions entered
into during the term of this Agreement does not exceed Five Million
Dollars ($5,000,000).
(b) CREDIT EXTENSIONS; INVESTMENTS. The Borrower shall not,
except as disclosed in the Supplemental Schedule, and shall not permit
any of its Subsidiaries to, (i) loan any money to or Guaranty or assume
any obligation of any other Person or (ii) make prepayments or advances
to others (except to the Bank in accordance with this Agreement);
except, that this Section shall not apply to: (A) any existing or
future advance, commission or relocation payment, or other loan or
advance made to an employee or to a director or officer of the Borrower
or its Subsidiaries in the ordinary course of business and consistent
with past practice, (B) any Permitted US Investments or
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(C) any Permitted Foreign Investments; provided, however, that the
aggregate amount of such Permitted Foreign Investments in clause (C)
outstanding at any time shall not exceed Thirty-Five Million Dollars
($35,000,000), (D) any existing investment, advance, loan or Guaranty
fully disclosed in the Companies' December 31, 1996 consolidated
audited financial statements or in the Supplemental Schedule, (E) any
other investment, advance or loan provided that (x) the entity invested
in or to which an advance or loan is made is in the same, substantially
similar or a complementary line of business and (y) the Borrower is
able to establish Proforma Covenant Compliance and, to the extent
Projections are requested, the Required Banks do not reasonably object
to the assumptions or other information upon which the relevant
Projections were based, (F) any intercompany loan by the Borrower (not
otherwise permitted by clause (D) above) to, any investment by the
Borrower in, or any Guaranty by the Borrower of any indebtedness of,
any Subsidiary of the Borrower in which the Borrower owns one hundred
percent (100%) of the outstanding common stock (except for shares owned
by directors as required by law); provided, however, that,(X) at the
time of and after giving effect to any such loan or Guaranty (I) no
Potential Default or Event of Default shall have occurred and be
continuing and (II) if such loan or Guaranty exceeds ten percent (10%)
of the Borrower's Consolidated Net Worth, then the Borrower shall
establish Proforma Covenant Compliance and, to the extent Projections
are requested, the Required Banks do not reasonably object to the
assumptions or other information upon which the relevant Projections
were based and (Y) this subsection shall not prohibit any intercompany
loan by the Borrower to, investment by the Borrower in or Guaranty by
the Borrower of the indebtedness of, any joint venture of any
Subsidiary of the Borrower or any of its Subsidiaries with respect to a
Congo smelter project so long as the aggregate amount of any such
loans, investments or guaranties does not exceed Forty Million Dollars
($40,000,000), (G) any endorsement of a check or other medium of
payment for deposit or collection, or any similar transaction in the
normal course of business, or (H) pre-payment for raw materials in the
ordinary course of business and trade accounts arising and outstanding
in the ordinary course of business unless represented by a promissory
note or other instrument.
(c) INDEBTEDNESS. The Borrower shall not, and shall not permit
any Subsidiary to, create, assume, incur, suffer to exist or have
outstanding at any time any indebtedness for borrowed money or any
Funded Indebtedness or other debt of any kind to the extent (i) the
same would cause a violation of the financial covenants set forth in
Section 0 or otherwise violate any other term or provision of this
Agreement or any of the Loan Documents and (ii) the same has covenants
or defaults materially more restrictive on the Borrower and its
Subsidiaries than those set forth in this Agreement.
(d) LIENS; LEASES. The Borrower shall not, and shall not
permit any of its Subsidiaries to, (i) acquire or hold any property
subject to any Lien, (ii) suffer or permit any property now owned or
hereafter acquired by it to be or become encumbered by a Lien, (iii)
sell or otherwise transfer receivables with recourse; except, that this
Section
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shall not prohibit: (A) any lien for a tax, assessment or government
charge or levy for taxes, assessments or charges not yet due and
payable or not yet required to be paid pursuant to Section 0, (B) any
deposits or cash pledges securing only workers' compensation,
unemployment insurance or similar obligations (other than Liens arising
under ERISA) in the ordinary course of business, (C) any mechanic's,
carrier's, landlord's or similar common law or statutory lien incurred
in the normal course of business for amounts that are not yet due and
payable or which are being diligently contested in good faith, so long
as the Agent has been notified thereof and adequate reserves are
maintained for their payment, (D) zoning or deed restrictions, public
utility easements, minor title irregularities and similar matters
having no adverse affect as a practical matter on the ownership or use
of any of the property in question, (E) any Lien (1) which arises in
connection with judgments or attachments the occurrence of which does
not constitute an Event of Default under Section 0 and (2) the
execution or other enforcement of such Lien is effectively stayed and
the claims secured thereby are being actively contested in good faith
and by appropriate proceedings, (F) deposits or cash pledges securing
performance of contracts, bids, tenders, leases (other than Capitalized
Leases), statutory obligations, surety and appeal bonds; provided,
that, clauses (A) through (G) shall only apply to Liens arising by
operation of law and in the ordinary course of business and shall not
apply to any Lien that secures indebtedness for borrowed money or any
Guaranty thereof or any obligation that is in material default in any
manner (other than any default contested in good faith by timely and
appropriate proceedings effective to stay the enforcement of such Lien
and against which a bond has been posted or appropriate reserves shall
have been established), (G) any Lien in favor of the Bank or any
existing Lien fully disclosed in the Supplemental Schedule, (H) any
Lien (including any Lien in respect of a Capitalized Lease of real
property) which is created or assumed in purchasing, constructing or
improving any real property or to which any real property is subject
when purchased; provided, however, that: (x) the mortgage, security
interest or other lien is confined to the property in question and (y)
the Indebtedness secured thereby does not exceed the total cost of the
purchase, construction or improvement and (z) the aggregate outstanding
Indebtedness secured by such Liens (when taken together with any
secured Indebtedness permitted to be secured pursuant to clause (L) of
this subsection) does not at any time exceed Five Million Dollars
($5,000,000), (I) any transfer of a check or other medium of payment
for deposit or collection, or any similar transaction in the normal
course of business, (J) any financing statement perfecting a security
interest that would be permissible under this subsection or (J) any
Lien (including any Lien in respect of a Capitalized Lease of personal
property) which is created in purchasing personal property; provided,
however, that: (x) the Lien is confined to the property in question,
(y) the Indebtedness secured thereby does not exceed the total cost of
the purchase, and (z) the aggregate outstanding Indebtedness secured by
such Liens (when taken together with any secured Indebtedness permitted
to be secured pursuant to clause (H) of this subsection) does not at
any time exceed Five Million Dollars ($5,000,000).
(e) DIVIDENDS. The Borrower shall not make or commit itself to
make any
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Distribution (other than stock dividends) to its shareholders at any
time; except that, if immediately after giving effect to such
transaction no Event of Default or Potential Default shall have
occurred, the Borrower may, during any Fiscal Year: (i) make
Distributions consisting of dividends payable solely in cash in an
aggregate amount not to exceed the greater of (x) Twelve Million
Dollars ($12,000,000) or (y) twenty-five percent (25%) of the
Consolidated Net Income for such Fiscal Year.
(f) ACCOUNTING CHANGES. The Borrower will not, and will not
permit any of its Subsidiaries to, make or permit any change in its
accounting policies or financial reporting practices and procedures,
except as required or permitted by GAAP or any changes in financial
reporting practices and procedures which are required or permitted by
GAAP, in each case as to which the Borrower shall have delivered to the
Agent prior to the effectiveness of any such change a report prepared
by a responsible officer of the Borrower describing such change and
explaining in reasonable detail the basis therefor and effect thereof.
(g) USE OF PROCEEDS. The Borrower shall not use the proceeds
of the Loans for any purpose other than: (i) to refinance Indebtedness
owing to the Borrower's existing banking facility, (ii) to finance the
consummation of the Acquisitions, (iii) to finance acquisitions
(whether of assets or stock, by purchase or merger) as permitted by
Section 0 of this Agreement, and (iv) for working capital and other
general corporate purposes.
(h) COMPLIANCE WITH ERISA. The Borrower shall not and shall
not permit any ERISA Affiliate to: (i) engage in any transaction in
connection with which the Borrower or any ERISA Affiliate could
reasonably be expected to be subject to either a civil penalty assessed
pursuant to section 502(i) of ERISA or a tax imposed by section 4975 of
the Code, terminate or withdraw from any Employee Benefit Plan (other
than a Multiemployer Plan) in a manner, or take any other action with
respect to any such Employee Benefit Plan (including, without
limitation, a substantial cessation of business operations or an
amendment of an Employee Benefit Plan within the meaning of section
4041(e) of ERISA), which could reasonably be expected to result in any
liability of the Company or any ERISA Affiliate to the PBGC, to the
Department of Labor or to a trustee appointed under section 4042(b) or
(c) of ERISA, incur any liability to the PBGC on account of a withdraw
from or a termination of an Employee Benefit Plan under section 4063 or
4064 of ERISA, incur any liability for post-retirement benefits under
any and all welfare benefit plans (as defined in section 3(1) of ERISA)
other than as required by applicable statute, fail to make full payment
when due of all amounts which, under the provisions of any Employee
Benefit Plan or applicable Law, the Borrower or any ERISA Affiliate is
required to pay as contributions thereto, or permit to exist any
Accumulated Funding Deficiency, whether or not waived, with respect to
any Employee Benefit Plan (other than a Multiemployer Plan); provided,
however, that such engagement, termination, withdrawal, action,
incurrence, failure or permitting shall not be deemed to have violated
this clause (i) unless such engagement, termination, withdrawal,
action,
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incurrence, failure or permitting, when taken singly or together with
other such engagements, terminations, withdrawals, actions,
incurrences, failures or permittings, has resulted or could reasonably
be expected to result in a Material Adverse Effect; (ii) at any time
permit the termination of any defined benefit pension plan intended to
be qualified under section 401(a) and 501(a) of the Code; provided,
however, that such termination shall not be deemed to have violated
this clause (ii) unless (A) the value of all benefit liabilities (as
defined in section 4001(a)(16) of ERISA) upon the termination date of
all such terminated defined benefit pension plans of the Borrower, its
Subsidiaries and their ERISA Affiliates exceeds the then current value
(as defined in section 3 of ERISA) of all assets in such terminated
defined benefit pension plans by an amount in excess of One Million
Dollars ($1,000,000) in the aggregate or (B) the payment of such amount
has resulted or could reasonably be expected to result in a Material
Adverse Effect; or (iii) if the Borrower or any ERISA Affiliate becomes
obligated under a Multiemployer Plan (except with respect to the
potential liabilities now existing as disclosed in the Supplemental
Schedule), effect a complete or partial withdrawal such that the
Borrower, its Subsidiaries or their ERISA Affiliates incur Withdrawal
Liability under Title IV of ERISA with respect to Multiemployer Plans
or otherwise have liability under Title IV of ERISA; provided, however,
that the incurrence of such Withdrawal Liability or other liability
under Title IV of ERISA shall not be deemed to be a violation of this
clause (iii) unless, the amount the payment by the Borrower of such
Withdrawal Liability or other liability has resulted or could
reasonably be expected to result in a Material Adverse Effect or could
reasonably be expected to result in the imposition of a Lien.
(i) CHANGE IN NATURE OF BUSINESS. The Borrower shall not, and
shall not permit any of its Subsidiaries to, make any material change
in the nature of its business as carried on at the date hereof.
(j) REGULATION U COMPLIANCE. The Borrower shall not use any
portion of the proceed of any Loan for the purpose of purchasing or
carrying any Margin Stock or for any other purpose in violation of any
requirement of Law or of the terms and conditions of this Agreement.
5.4 FINANCIAL COVENANTS.
(a) CONSOLIDATED TOTAL FUNDED DEBT TO EBITDA RATIO. The
Borrower shall not permit the Consolidated Total Funded Debt to EBITDA
Ratio as at the end of any Fiscal Quarter to exceed 3.00 to 1.00 for
the Cumulative Four Quarter Period then ending.
(b) CONSOLIDATED TOTAL FUNDED DEBT. The Borrower shall not
permit the Consolidated Total Funded Debt to exceed fifty percent (50%)
of the sum of the Consolidated Total Funded Debt plus Consolidated Net
Worth as at the end of any Fiscal Quarter, commencing with the Fiscal
Quarter ending March 31, 1998.
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6 EVENTS OF DEFAULT.
The occurrence of any one or more of the following events shall
constitute an "Event of Default" under this Agreement:
6.1 PAYMENT FAILURE. Failure by the Borrower to: (a) make payment
of principal on the Revolving Credit Notes or (b) pay interest on the Revolving
Credit Notes or pay any other Obligation when required to be paid hereunder to
the extent such failure is not remedied within Five (5) Business Days after such
required date of payment hereunder; or
6.2 REPRESENTATIONS AND WARRANTIES. Any representation or
warranty made or deemed made by the Borrower in respect of the Borrower or any
Subsidiary of the Borrower in this Agreement, any Loan Document or any
certificate, document or financial or other statement furnished at any time in
compliance with or in reference to this Agreement shall prove to have been false
or inaccurate in any material respect when made or deemed to have been made; or
6.3 REPORTING AND NOTICE PROVISIONS; VIOLATION OF CERTAIN
AFFIRMATIVE COVENANTS. Failure by the Borrower (in respect of the Borrower or
any Subsidiary of the Borrower): (a) to perform, keep, or observe any other
term, provision, condition or covenant contained in Section 0(e) through 0(i) of
this Agreement which is required to be performed, kept, or observed by the
Borrower (in respect of the Borrower or any Subsidiary of the Borrower) and such
failure shall continue without remedy for a period of ten (10) Days after
written notice from the Agent and (b) to perform, keep or observe any other
term, provision, condition or covenant contained in this Agreement (other than
those provisions, terms or conditions referenced in Sections 0, 0 and 0 of this
Agreement) which is required to be kept or observed by the Borrower (in respect
of the Borrower or any Subsidiary of the Borrower) and such failure shall
continue without remedy for a period of Thirty (30) Days; or
6.4 VIOLATION OF NEGATIVE COVENANTS; VIOLATION OF CERTAIN OTHER
COVENANTS. Failure by the Borrower (in respect of the Borrower or any
Subsidiary of the Borrower) to perform, keep, or observe any other term,
provision, condition or covenant contained in Section 0(a) through 0(d), 0 or 0
of this Agreement which is required to be performed, kept, or observed by the
Borrower (in respect of the Borrower or any Subsidiary of the Borrower); or
6.5 LOAN DOCUMENTS. Failure by the Borrower or any of its
Subsidiaries to perform, keep, or observe any other term, provision, condition
or covenant contained in this Agreement or any of the Loan Documents which is
required to be performed, kept, or observed by the Borrower (in respect of the
Borrower or any Subsidiary of the Borrower), subject to any cure periods set
forth therein; or
6.6 CROSS-DEFAULT. Any indebtedness of the Borrower or any of its
Subsidiaries for borrowed money (regardless of maturity) or any of its Funded
Indebtedness shall be or become
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"in default" (as defined below), unless the aggregate unpaid principal balance
of all such indebtedness in default does not exceed Five Million Dollars
($5,000,000) at any one time outstanding or if any Event of Default occurs
pursuant to the Note Purchase Agreement or upon the prepayment of the senior
notes issued pursuant thereto upon a Change in Control as provided in Section
8.4 of the Note Purchase Agreement. In this subsection, "in default" means that
(a) there shall have occurred (or shall exist) in respect of the indebtedness in
question (either as in effect at the date of this Agreement or as in effect at
the time in question) any event, condition or other thing which constitutes, or
which with the giving of notice or the lapse of any applicable grace period or
both would constitute, a default which would permit any creditor or creditors or
representative or creditors to accelerate the maturity of any such indebtedness;
or (b) any such indebtedness (other than any payable on demand) shall not have
been paid in full at its stated maturity; or (c) any such indebtedness payable
on demand shall not have been paid in full within ten (10) Banking Days after
any actual demand for payment; or
6.7 TERMINATION OF EXISTENCE. The dissolution or termination of
existence of the Borrower or the discontinuation of the business of the
Borrower; or
6.8 CONTROL. The occurrence of any Change in Control; or
6.9 FAILURE OF ENFORCEABILITY OF THIS AGREEMENT OR ANY LOAN
DOCUMENT. If: (a) any material covenant, agreement or obligation of the Borrower
(in respect of the Borrower or any Subsidiary of the Borrower) contained in or
evidenced by this Agreement or any of the Loan Documents shall cease to be
enforceable, or shall be determined to be unenforceable, in accordance with its
terms or (b) the Borrower or any Subsidiary of the Borrower shall deny or
disaffirm its obligations under this Agreement or any of the Loan Documents; or
6.10 JUDGMENTS. Any judgment for the payment of money (other than
one which is covered by insurance and as to which the insurance carrier shall
have acknowledged coverage in the amount of the insurance without any
reservation of rights or shall have been ordered by a court of competent
jurisdiction to pay such judgment) involving at any time an amount, when taken
together with other such money judgments, in excess of Five Million Dollars
($5,000,000) in the aggregate, shall be rendered against the Borrower or any of
its Subsidiaries and either: (a) such money judgment is not discharged, vacated,
fully bonded or stayed within thirty (30) days after such judgment rendered, (b)
any money judgment is docketed to become a Lien against assets of the Borrower
or any of its Subsidiaries in an amount, when taken together with other such
money judgments, in excess of Five Million Dollars ($5,000,000) or (c) any
action shall be taken by a judgment creditor to attach or levy upon the assets
of the Borrower or any of its Subsidiaries to enforce such judgment; or
6.11 FORFEITURE PROCEEDINGS. The institution against the Borrower
of any criminal proceedings for which forfeiture of any asset or assets; or
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6.12 PAYMENT OF DEBTS. The Borrower or any of its Subsidiaries
shall admit in writing its inability to, or be generally unable to, pay its
debts as such debts become due; or
6.13 VOLUNTARY PROCEEDINGS. The Borrower or any of its Subsidiaries
shall: (a) apply for or consent to the appointment of, or the taking of
possession by, any receiver, custodian, trustee or liquidator for the Borrower
or any of its Subsidiaries or for all or a substantial part of its assets, (b)
make a general assignment for the benefit of creditors, (c) commence a voluntary
case or proceeding or file any petition seeking liquidation, reorganization or
other relief under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect, (d) consent to the
institution of, acquiesce in writing to, or fail to contest in a timely and
appropriate manner, any proceeding or petition described in Subsection 0 below,
(e) file an answer admitting the material allegations of a petition filed
against it in any such proceeding or (f) take any action for the purpose of
effecting any of the foregoing; or
6.14 INVOLUNTARY PROCEEDINGS. The Borrower or any of its
Subsidiaries shall have commenced or filed against it an involuntary proceeding
or an involuntary petition seeking: (a) liquidation, reorganization or other
relief in respect of the Borrower or any of its Subsidiaries, its debts or all
or a substantial part of its assets under any Federal, state or foreign
bankruptcy, insolvency, receivership, or similar law now or hereafter in effect
or (b) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Borrower, any of its Subsidiaries or for
a substantial part of its assets, and, in any such case, either (i) such
proceeding or petition shall continue undismissed for sixty (60) days or (ii) an
order or decree approving or ordering any of the foregoing shall be entered.
7 REMEDIES.
7.1 OPTIONAL DEFAULTS. Upon the occurrence of an Event of Default
described above in Sections 0 through 0 above, inclusive, the Agent may, with
the consent of the Required Banks, and shall, upon the direction of the Required
Banks, (a) declare all of the Obligations due or to become due from the Borrower
to the Agent and the Banks, whether under this Agreement, the Revolving Credit
Notes or otherwise, at the option of the Agent, immediately due and payable,
anything in the Revolving Credit Notes or other evidence of the Obligations or
in any of the other Loan Documents to the contrary notwithstanding and (b)
terminate each Bank's Revolving Credit Commitment whereupon none of the Banks
shall have any further obligation to make any Revolving Credit Loan hereunder.
7.2 AUTOMATIC DEFAULTS. If any Event of Default referred to in
Sections 0 or 0 above shall occur, (a) each Bank's Revolving Credit Commitment
shall automatically and immediately terminate (if not already expired or
terminated by the Borrower or terminated pursuant to this Section 0) whereupon
no Bank shall have any obligation thereafter to make any Revolving Credit Loan
hereunder and (b) all of the Obligations and all other Indebtedness, if any,
then owing to the Banks (other than Indebtedness, if any, already due and
payable) shall thereupon become, and thereafter be, immediately due and payable
in full, all without any presentment, demand or notice
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of any kind, which are hereby waived by the Borrower.
7.3 GENERAL RIGHTS AND REMEDIES OF AGENT AND THE BANKS. The Agent
and the Banks shall have all other legal and equitable rights to which the Agent
and the Banks may be entitled, all of which rights and remedies shall be
cumulative, and none of which shall be exclusive, to the extent permitted by
law, in addition to any other rights or remedies contained in this Agreement or
in any of the other Loan Documents. Each Bank hereby expressly agrees that,
unless requested by the Agent with the concurrence of the Required Banks, such
Bank shall not take or cause to be taken, in respect of the Loans or the other
Obligations, any action or remedy that is independent from the actions or
remedies taken or to be taken by the Agent, except for any actions taken by any
Bank in connection with any Event of Default described in Sections 0 or 0 of
this Agreement.
7.4 SET-OFF. If any Event of Default referred to in Section 0 of
this Agreement shall occur which has not been waived in writing by the Required
Banks, each Bank shall have the right (in addition to such other rights as it
may have by operation of Law or otherwise but subject to Section 0 of this
Agreement) at any time to set off against and to appropriate and apply toward
the payment of the Obligations and all other Indebtedness then owing to it (and
any participation purchased or to be purchased pursuant to Section 0 below)
whether or not the same shall then have matured, any and all deposit balances
then owing by that Bank to or for the credit or account of the Borrower, all
without notice to or demand upon the Borrower or any other Person, all such
notices and demands being hereby expressly waived.
7.5 ACTIONS IN RESPECT OF THE LETTERS OF CREDIT UPON DEFAULT. Upon
the occurrence of Event of Default (unless waived in writing by the Banks in
accordance with this Agreement), to the extent that any Letters of Credit have
been issued which then are outstanding, the Agent, for the benefit of the Letter
of Credit Bank and the Banks, may, and upon the direction of the Required Bank's
shall (whether in addition to taking any of the actions described in this
Section 0 or otherwise), make demand upon Borrower to, and forthwith upon such
demand the Borrower will, pay to the Agent in same day funds, for deposit in a
special cash collateral account (the "Letter of Credit Collateral Account"), to
secure the obligations of the Borrower in respect of any outstanding Letters of
Credit, to be maintained at such office of the Agent as Agent shall direct, an
amount equal to the maximum amount available to be drawn under the Letters of
Credit. In the event that Borrower shall not deposit such funds upon demand by
the Agent, the Agent may, in its sole discretion, deposit any other funds of
Borrower in the possession of the Agent, to the Letter of Credit Collateral
Account until the amount deposited in such account equals the maximum amount
available to be drawn under the Letters of Credit. The Letter of Credit
Collateral Account shall be in the name of Agent (as a cash collateral account),
but under the sole dominion and control of the Agent and subject to the terms of
this Agreement.
7.6 LETTER OF CREDIT COLLATERAL ACCOUNT.
(a) APPLICATION. The Agent may, at any time or from time to
time after
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funds are deposited in the Letter of Credit Collateral Account, apply
funds then held in the Letter of Credit Collateral Account to the
payment of any amounts, in such order as the Agent may elect or shall
be directed by the Banks, as shall have become or shall become due and
payable by the Borrower to the Letter of Credit Bank under this
Agreement or any Reimbursement Agreement first, in respect of the
Letters of Credit and second, after the occurrence and during the
continuance of any Event of Default, in respect of all other amounts
constituting Obligations.
(b) NO BORROWER OR THIRD PARTY CLAIMS. Neither the Borrower
nor any Person claiming on behalf of or through Borrower shall have any
right to withdraw any of the funds held in the Letter of Credit
Collateral Account.
(c) NO LIENS OR TRANSFERS OF ACCOUNT. The Borrower agrees that
it will not: (i) sell or otherwise dispose of any interest in the
Letter of Credit Collateral Account or any funds held therein, or (ii)
create or permit to exist any lien, security interest or other charge
or encumbrances upon or with respect to the Letter of Credit Collateral
Account or any funds held therein, except as provided in or
contemplated by this Agreement.
(d) REASONABLE CARE. The Agent shall exercise reasonable care
in the custody and preservation of any funds held in the Letter of
Credit Collateral Account and shall be deemed to have exercised such
care if such funds are accorded treatment substantially equivalent to
that which the Agent accords its own property, it being understood that
the Agent shall not have any responsibility for taking any necessary
steps to preserve rights against any parties with respect to any such
funds.
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7.7 TERMINATION; EFFECT ON BORROWER OBLIGATIONS. Any termination
by the Agent and\or any Bank of its performance pursuant to this Section 0 shall
not absolve, release, or otherwise affect the liability of the Borrower in
respect of transactions prior to such termination or affect any of the Liens,
rights, powers, and remedies of the Agent or such Bank, which such Liens,
rights, powers and remedies shall, in all events, continue until all Obligations
of the Borrower to the Agent and the Banks are satisfied.
7.8 EQUALIZATION. Each Bank agrees with the other Banks that if at
any time it shall obtain any Advantage over the other Banks or any thereof in
respect of the Loans it will purchase from such other Bank or Banks, for cash
and at par, such additional participation in the Loans owing to the other or
others as shall be necessary to nullify the Advantage. If any such Advantage
resulting in the purchase of an additional participation as aforesaid shall be
recovered in whole or in part from the Bank receiving the Advantage, each such
purchase shall be rescinded, and the purchase price restored (with interest and
other charges if and to the extent actually incurred by the Bank receiving the
Advantage) ratably to the extent of the recovery. During the existence of any
Potential Default, any payment (whether made voluntarily or involuntarily, by
offset of any deposit or other indebtedness or otherwise) of any Indebtedness
owing by the Borrower to any Bank shall be applied to the Obligations owing to
that Bank until the same shall have been paid in full before any thereof shall
be applied to other Indebtedness owing to that Bank.
7.9 REMEDIES CUMULATIVE. The above-stated remedies are not
intended to be exhaustive and the full or partial exercise of any of such
remedies shall not preclude the full or partial exercise of any other remedy by
the Agent under this Agreement, under any Loan Document, or at equity or under
at law.
8 THE AGENT.
8.1 THE AGENT. Each Bank irrevocably appoints the Agent to act as
agent under this Agreement and the Loan Documents for the benefit of such Bank,
with full authority to take such actions, and to exercise such powers, on behalf
of the Banks in respect of this Agreement and the Loan Documents as are herein
and therein respectively delegated to the Agent or as are reasonably incidental
to those delegated powers. The Agent in such capacity shall be deemed to be an
independent contractor of the Banks.
8.2 NATURE OF APPOINTMENT. The Agent shall have no fiduciary
relationship with any Bank by reason of this Agreement and the Loan Documents.
The Agent shall not have any duty or responsibility whatsoever to any Bank
except those expressly set forth in this Agreement and the Loan Documents.
Without limiting the generality of the foregoing, each Bank acknowledges that
the Agent is acting as such solely as a convenience to the Banks and not as a
manager of the commitments or the Obligations evidenced by the Revolving Credit
Notes. This Section 0 does not confer any rights upon the Borrower or anyone
else (except the Banks), whether as a third party beneficiary or otherwise.
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8.3 AGENT AS A BANK; OTHER TRANSACTIONS. The Agent's rights as a
Bank under this Agreement and the Loan Documents shall not be affected by its
serving as the Agent. The Agent and its Affiliates may generally transact any
banking, financial, trust, advisory or other business with the Borrower
(including, without limitation, the acceptance of deposits, the extension of
credit and the acceptance of fiduciary appointments) without notice to the
Banks, without accounting to the Banks, and without prejudice to the Agent's
rights as a Bank under this Agreement and the Loan Documents except as may be
expressly required under this Agreement.
8.4 INSTRUCTIONS FROM BANKS. The Agent shall not be required to
exercise any discretion or take any action as to matters not expressly provided
for by this Agreement and the Loan Documents (including, without limitation,
collection and enforcement actions in respect of any Obligations under the
Revolving Credit Notes or this Agreement and any collateral therefor), except
that the Agent shall take such action, or omit to take such action (other than
actions referred to in Section 0 of this Agreement), as may be reasonably
requested, with instructions in writing, by the Required Banks or all of the
Banks, as applicable pursuant to Section 0 of this Agreement and which actions
and omissions shall be binding upon all of the Banks; provided, however, that
the Agent shall not be required to act (or omit any act) if, in its judgment,
any such action or omission might expose the Agent to personal liability or
might be contrary to this Agreement, any Loan Document or any applicable Law.
8.5 BANK'S DILIGENCE. Each Bank: (a) represents and warrants that
it has made its own decision to enter into this Agreement and the Loan Documents
and (b) agrees that it will make its own decision as to taking or not taking
future actions in respect of this Agreement and the Loan Documents; in each case
without reliance on the Agent or any other Bank and on the basis of its
independent credit analysis and its independent examination of and inquiry into
such documents and other matters as it deems relevant and material.
8.6 NO IMPLIED REPRESENTATIONS. The Agent shall not be liable for
any representation, warranty, agreement or obligation of any kind of any other
party to this Agreement or anyone else, whether made or implied by any Borrower
in this Agreement or any Loan Document or by a Bank in any notice or other
communication or by anyone else or otherwise.
8.7 SUB-AGENTS. The Agent may employ agents and shall not be
liable (except as to money or property received by it or its agents) for any
negligence or misconduct of any such agent selected by it with reasonable care.
8.8 AGENT'S DILIGENCE. The Agent shall not be required: (a) to
keep itself informed as to any Person's compliance with any provision of this
Agreement or any Loan Document, (b) to make any inquiry into the properties,
financial condition or operation of the Borrower or any other matter relating to
this Agreement or any Loan Document, (c) to report to any Bank any information
(other than which this Agreement or any Loan Document expressly requires to be
so
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reported) that the Agent or any of its Affiliates may have or acquire in respect
of the properties, business or financial condition of the Borrower or any other
matter relating to this Agreement or any Loan Document or (d) to inquire into
the validity, effectiveness or genuineness of this Agreement or any Loan
Document.
8.9 NOTICE OF DEFAULT. The Agent shall not be deemed to have
knowledge of any Potential Default or Event of Default unless and until it shall
have received a written notice from the Borrower or any Bank describing it and
citing the relevant provision of this Agreement or any Loan Document. The Agent
shall give each Bank prompt notice of any such written notice other than the
Bank that shall have given the written notice of the Event of Default.
8.10 AGENT'S LIABILITY. Neither the Agent nor any of its directors,
officers, employees, attorneys, and other agents shall be liable for any action
or omission on their respective parts except for gross negligence or willful
misconduct. Without limitation of the generality of the foregoing, the Agent:
(a) may treat the payee of any Revolving Credit Note as the holder thereof until
the Agent receives a fully executed copy of the Assignment Agreement required by
Section 0 of this Agreement signed by such payee and in form satisfactory to the
Agent and the fee required by Section 0 of this Agreement; (b) may consult with
legal counsel, independent public accountants and other experts selected by it
and shall not be liable for any action taken or omitted to be taken in good
faith by it in accordance with the advice or such counsel, accountants or
experts which have been selected by the Agent with reasonable care; (c) makes no
warranty or representation to any Bank and shall not be responsible to any Bank
for any statements, warranties or representations made in or in connection with
this Agreement or any other Loan Document, including, without limitation, the
truth of the statements made in any certificate delivered by the Borrower under
Sections 0 or 0 of this Agreement or in any Credit Request, Rate
Continuation/Conversion Request or any other similar notice or delivery, the
Agent being entitled for the purposes of determining fulfillment of the
conditions set forth therein to rely conclusively upon such certificates; (d)
shall not have any duty to ascertain or to inquire as to the performance or
observance of any of the terms, covenants or conditions of this Agreement, the
Revolving Credit Notes or any other Loan Document or to inspect the property
(including the books and records) of the Borrower; (e) shall not be responsible
to any Bank for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement, or collateral covered by
any agreement or any other Loan Document and (f) shall incur no liability under
or in respect of this Agreement, the Revolving Credit Notes or any other Loan
Document by acting upon any notice, consent, certificate or other instrument or
writing (which may be by telegram, telecopy, cable or telex) believed by it in
good faith to be genuine and correct and signed or sent by the proper party or
parties.
Neither the Agent nor any of its directors, officers, employees or
agents shall have any responsibility to the Borrower on account of the failure
of or delay in performance or breach by any Bank of any of its obligations
hereunder or to any Bank on account of the failure of or delay in performance or
breach by any other Bank or the Borrower of any of their respective obligations
hereunder or under any Loan Document or in connection herewith or therewith. The
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Banks each hereby acknowledge that the Agent shall be under no duty to take any
discretionary action permitted to be taken by it pursuant to the provisions of
this Agreement, the Revolving Credit Notes or any other Loan Document unless it
shall be requested in writing to do so by the Required Banks or all of the
Banks, as applicable pursuant to Section 0 of this Agreement.
8.11 AGENT'S INDEMNITY. The Banks shall indemnify the Agent, in its
capacity as Agent (to the extent the Agent is not reimbursed by the Borrower)
from and against: (a) any loss or liability (other than any caused by the
Agent's gross negligence or willful misconduct) incurred by the Agent acting in
the capacity as Agent in respect of this Agreement, the Revolving Credit Notes
or any Loan Document and (b) any out-of-pocket costs and expenses incurred in
defending itself or otherwise related to this Agreement, the Revolving Credit
Notes or any Loan Document (other than any caused by the Agent's gross
negligence or willful misconduct) including, without limitation, reasonable fees
and disbursements of legal counsel of its own selection (including, without
limitation, the reasonable interdepartmental charges of its salaried attorneys)
in the defense of any claim against it or in the prosecution and enforcement of
its rights and remedies as the Agent (other than the loss, liability or costs
incurred by the Agent in the defense of any claim against it by the Banks
arising in connection with its actions in its capacity as Agent); provided,
however, that each Bank shall be liable for only its Ratable Portion of the
whole loss or liability. After any Agent's resignation as Agent pursuant to
Section 0 of this Agreement, the provisions of this Section 0 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement.
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8.12 RESIGNATION OF AGENT. The Agent may resign as Agent effective
ten (10) Business Days after giving notice thereof to the Banks for any reason.
If the Agent shall resign as Agent under this Agreement, the Required Banks
shall appoint from among the Banks (other than the Bank that has resigned) a
successor agent for the Banks, which successor agent shall be reasonably
acceptable to the Borrower. In the case of resignation by the Agent, if no
successor agent shall have been appointed by the time such resignation becomes
effective, then the retiring Agent may, on behalf of the Banks, appoint a
successor agent from among the remaining Banks. Upon appointment (whether
effected by the Required Banks or the retiring Agent on behalf of the Banks),
the successor agent shall succeed to the rights, powers and duties of the Agent,
and the term "Agent" shall mean such successor agent, effective upon its
appointment, and the former Agent's rights, powers and duties as Agent shall be
terminated, without any other or further act or deed on the part of such former
Agent or any of the parties to this Agreement or any holder of the Revolving
Credit Notes.
9 TRANSFERS AND ASSIGNMENTS.
9.1 TRANSFER OF COMMITMENTS. Each Bank shall have the right at
any time or times to transfer to another financial institution, without
recourse, all or any part of: such Bank's Revolving Credit Commitment; any Loan
made by such Bank; any Revolving Credit Note executed in favor of such Bank, and
any participations, if any, purchased by the Bank pursuant to Section 0 of this
Agreement; provided, however, in each such case, that the transferor and the
transferee shall have complied with the following requirements:
(a) PRIOR CONSENT. No transfer (other than a transfer by any
Bank to any Affiliate of such Bank) may be consummated pursuant to this
Section 0 in the minimum amount of Five Million Dollars ($5,000,000)
without the prior written consent of the Borrower and the Agent, which
shall not be unreasonably withheld; provided, however, that, (i) the
consent of the Borrower shall not be required in the event a Bank
transfers it's commitment to another Bank and (ii) no Bank shall make
any transfer pursuant to this Section 0 if after giving effect to such
transfer such Bank's Revolving Credit Commitment would be less than
Five Million Dollars ($5,000,000) unless such Bank shall transfer all
if its Revolving Credit Commitment and ceases to be a "Bank" under this
Agreement; provided, further, that, if at the time of the proposed
transfer the Borrower is the subject of a proceeding referenced in
Sections 0 or 0 of this Agreement or an Event of Default has otherwise
occurred which has not been waived by the Required Banks, the
Borrower's consent shall not be required and any Bank may consummate a
transfer contemplated by this Section 0 with the consent of the Agent.
Notwithstanding anything to the contrary, any Bank may at any time (i)
assign all or any portion of its rights under this Agreement and its
Revolving Credit Notes to the Federal Deposit Insurance Corporation or
other similar governmental agency, or (ii) create a security interest
in all or any portion of such rights in favor of any Federal Reserve
Bank, in each case in accordance with Regulation A or the Board of
Governors of the Federal Reserve System,
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and no such assignment or creation shall release such assigning Bank
from its obligations hereunder.
(b) AGREEMENT; TRANSFER FEE. The transferor: (i) shall remit
to the Agent an administrative fee of Three Thousand Dollars ($3,000)
and (ii) shall cause the transferee to execute and deliver to the
Borrower, the Agent and each Bank (A) an Assignment Agreement,
substantially in the form of Exhibit F attached hereto, and otherwise
in form and substance satisfactory to the Agent and its counsel (a
"Bank Assignment Agreement"), together with the consents and releases
referenced therein and (B) such additional amendments, assurances and
other writings as the Agent may reasonably require to effect such
transfer.
(c) REVOLVING CREDIT NOTES. The Borrower shall execute and
deliver to the Agent, the transferor and the transferee, any consent or
release (of all or a portion of the obligations of the transferor) to
be delivered in connection with the Assignment Agreement. If a Bank's
entire interest in its Revolving Credit Commitment and in all of its
Loans have been transferred, the Borrower shall execute and deliver to
the transferee appropriate Revolving Credit Notes against return of the
Revolving Credit Notes (marked "replaced") held by the transferor. If
only a portion of a Bank's interest in its Revolving Credit Commitment
and Loans has been transferred, the Borrower shall execute and deliver
a new Revolving Credit Note to each of the transferor and the
transferee against return of the original such Revolving Credit Notes
of the transferor (marked "replaced") held by the transferor.
(d) PARTIES. Upon satisfaction of the requirements of this
Section 0, including the payment of the fee and the delivery of the
documents set forth in Section 0 above, (i) the transferee shall become
and thereafter be deemed to be a "Bank" for the purposes of this
Agreement and (ii) the transferor (A) shall continue to be a "Bank" for
the purposes of this Agreement only if and to the extent that the
transfer shall not have been a transfer of its entire interest in its
Revolving Credit Commitment and Loans and (B) shall cease to be and
thereafter shall no longer be deemed to be a "Bank" in the case of any
transfer of its entire interest in its Revolving Credit Commitment and
Loans and (iii) the signature pages hereto and Annex A hereto shall be
automatically amended, without further action, to reflect the result of
any such transfer.
9.2 SALE OF PARTICIPATIONS. Each Bank shall have the right at any
time or times to sell one or more participations or subparticipations to a
financial institution in all or any part of: such Bank's Revolving Credit
Commitment; any Loan made by such Bank; any Revolving Credit Note executed in
favor of such Bank, and any participations, if any, purchased by such Bank
pursuant to Section 0 of this Agreement or this Section 0; provided, however, in
each such case, that the transferor and the transferee shall have complied with
the following requirements:
(a) BENEFITS OF PARTICIPANT. The provisions of Section 0 of
this Agreement
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shall inure to the benefit of each purchaser of a participation or
subparticipation (provided that each such participant shall look solely
to the seller of its participation for those benefits and the
Borrower's liabilities, if any, under any of those sections shall not
be increased as a result of the sale of any such participation) and
Agent shall continue to distribute payments pursuant to this Agreement
as if no participation has been sold.
(b) RIGHTS RESERVED. In the event any Bank shall sell any
participation or subparticipation, that Bank shall, as between itself
and the purchaser, retain all of its rights (including, without
limitation, rights to enforce against the Borrower this Agreement and
the Loan Documents) and duties pursuant to this Agreement and the Loan
Documents, including, without limitation, that Bank's right to approve
any waiver, consent or amendment pursuant to Section 0 of this
Agreement, except if and to the extent that any such waiver, consent or
amendment would (A) reduce any fee or commission allocated to the
participation or subparticipation, as the case may be, (B) reduce the
amount of any principal payment on any Loan allocated to the
participation or subparticipation, as the case may be, or reduce the
principal amount of any Loan so allocated or the rate of interest
payable thereon, or (C) extend the time for payment of any amount
allocated to the participation or subparticipation, as the case may be.
(c) NO DELEGATION. No participation or subparticipation shall
operate as a delegation of any duty of the seller thereof. Under no
circumstance shall any participation or subparticipation be deemed a
novation in respect of all or any part of the seller's obligations
pursuant to this Agreement.
9.3 CONFIDENTIALITY. The Agent, the Letter of Credit Bank and each
Bank hereby agrees to use commercially reasonable efforts to keep, and to cause
its agents, attorneys and financial advisors to keep, any information delivered
or made available by the Borrower or any of its Subsidiaries to it confidential
from anyone other than Persons employed or retained by the Agent, the Letter of
Credit Bank or any Bank who are or are expected to become engaged in evaluating,
approving, structuring or administering the Loans; provided that nothing herein
shall prevent the Agent, the Letter of Credit Bank or any Bank from disclosing
such information (a) to any other Bank, (b) to any other person if reasonably
incidental to the administration of the Loans, (c) upon the order of any court
or administrative agency, (d) upon the request or demand of any regulatory
agency or authority, (e) which has been publicly disclosed other than as a
result of a disclosure by the Agent, the Letter of Credit Bank or any other Bank
which is not permitted by this Agreement, (f) in connection with any litigation
to which the Agent, the Letter of Credit or any Bank, or their respective
Affiliates may be a party, (g) to the extent reasonably required in connection
with the exercise of any remedy hereunder, (h) to the Agent's, the Letter of
Credit Bank or such Bank's legal counsel and independent auditors, (i) to any
actual or proposed participant or assignee of all or part of its rights
hereunder so long as such participant or assignee has agreed in writing to be
bound by the terms of this Section 0 and (j) to the extent required by Law.
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10 INDEMNITIES.
10.1 INCREASED COSTS. If, due to either: (a) the introduction of
any Law or regulation, or any change (other than any change by way of imposition
or increase of reserve requirements in respect of LIBOR Rate Loans otherwise
included in the Eurocurrency Reserve Percentage) in or in the interpretation of
any Law or regulation or (b) the compliance with any guideline or request from
any central bank or other governmental authority (whether or not having the
force of Law), there shall be any increase in the cost to any Bank of agreeing
to make or making, funding or maintaining Loans, then the Borrower shall from
time to time, upon demand by such Bank (with a copy of such demand to the
Agent), pay to the Agent for the account of such Bank additional amounts
sufficient to indemnify such Bank for such increased cost.
10.2 RISK-BASED CAPITAL. If any Bank determines that: (a)
compliance with any Law or regulation or any interpretation or administration
thereof by any governmental authority charged with the interpretation or
administration thereof or (b) compliance with any directive, guideline or
request from any central bank or other governmental authority (whether or not
having the force of Law) affects or would affect the amount of capital required
or expected to be maintained by such Bank or any corporation controlling such
Bank and that the amount of such capital required to be so maintained is
increased by or based upon the existence of such Bank's Revolving Credit
Commitment to lend hereunder and other commitments of this type, then, upon
demand by such Bank (with a copy of such demand to the Agent), the Borrower
shall immediately pay to the Agent for the account of such Bank, from time to
time as specified by such Bank, additional amounts sufficient to indemnify such
Bank or such corporation, to the extent that such Bank reasonably determines
such increase in capital to be allocable to the existence of such Bank's
Revolving Credit Commitment to lend hereunder.
10.3 TAXES.
(a) TAXES; WITHHOLDING. Any and all payments by the Borrower
hereunder, under the Revolving Credit Notes or the other Loan Documents
shall be made, in accordance with the provisions of Section 2, free and
clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding, in the case of each Bank,
the Letter of Credit Bank and the Agent, taxes imposed on its income,
and franchise taxes imposed on it, by the jurisdiction under the Laws
of which such Bank, the Letter of Credit Bank or the Agent, as the case
may be, is organized or any political subdivision thereof and, in the
case of each Bank, taxes imposed on its income, and franchise taxes
imposed on it, by the jurisdiction of such Bank's Lending Office or any
political subdivision thereof (all such non-excluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If the Borrower shall be required
by Law to deduct any Taxes from or in respect of any sum payable
hereunder or under any Revolving Credit Note to any Bank, the Letter of
Credit Bank or the Agent and makes such deductions from the sums so
payable: (i) the sum payable shall be increased as may
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be necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 0)
such Bank, the Letter of Credit Bank or the Agent receives an amount
equal to the sum it would have received had no such deductions been
made, (ii) the Borrower shall make such deductions and (iii) the
Borrower shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable Law. All
such Taxes shall be paid by the Borrower prior to the date on which
penalties attach thereto or interest accrues thereon; provided,
however, that, if any such penalties or interest become due, the
Borrower shall make prompt payment thereof to the appropriate
governmental authority.
(b) STAMP TAXES. The Borrower agrees to pay, and will
indemnify each Bank, the Letter of Credit Bank or the Agent for, any
present or future stamp or documentary taxes or any other excise or
property taxes, charges or similar levies which arise from any payment
made hereunder, under the Revolving Credit Notes or from the execution,
delivery or registration of, or otherwise with respect to, this
Agreement, the Revolving Credit Notes or the Letters of Credit
(hereinafter referred to as "Other Taxes").
(c) INDEMNIFICATION FOR OTHER TAXES. The Borrower will
indemnify each Bank, the Letter of Credit Bank and the Agent for the
full amount of Taxes or Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed by any jurisdiction on amounts payable
under this Section 0) paid by such Bank, the Letter of Credit Bank or
the Agent 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. Any
indemnification payment shall be made within thirty (30) days from the
date such Bank, the Letter of Credit Bank or the Agent (as the case may
be) makes written demand therefor.
(d) REQUEST FOR REFUND. At the reasonable request of the
Borrower, each Bank, the Letter of Credit Bank and the Agent shall
apply at the Borrower's expense for a refund in respect of Taxes or
Other Taxes previously paid by the Borrower pursuant to this Section 0
if in the good faith opinion of such Bank, the Letter of Credit Bank or
the Agent there is a reasonable basis for such refund. Notwithstanding
the foregoing, none of the Banks, the Letter of Credit Bank or the
Agent shall be obligated to pursue such refund if, in the exercise of
its good faith judgment, such action would be disadvantageous to it. If
any Bank, the letter of Credit Bank or the Agent subsequently receives
from a taxing authority a refund of any Tax previously paid by the
Borrower and for which the Borrower has indemnified the Bank pursuant
to this Section 0, such Bank, the letter of Credit Bank or the Agent,
as the case may be, shall within thirty (30) days after receipt of such
refund, and to the extent permitted by applicable law, pay to the
Borrower the net amount of any such recovery after deducting taxes and
expenses attributable thereto.
(e) FURNISHING OF CERTIFICATE. Within thirty (30) days after
the date of any payment of Taxes, the Borrower will furnish to the
Agent, at its address referred to in
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Section 0 of this Agreement, the original or a certified copy of a
receipt evidencing payment thereof. If Taxes ever become payable in
respect of any payment hereunder or under the Revolving Credit Notes
made during a Fiscal Quarter, thereafter the Borrower will furnish to
the Agent, within thirty (30) days after the end of such Fiscal
Quarter, at such address, a certificate from the Borrower stating that
any payments made during such Fiscal Quarter are exempt from or not
subject to Taxes.
(f) EXEMPTION CERTIFICATE. Not later than: (a) the Closing
Date, (b) in the case of any bank or financial institution that becomes
a Bank after the Closing Date pursuant to Section 0 of this Agreement,
the date of the instrument of assignment pursuant to which such bank or
financial institution became a Bank, (c) annually on each Anniversary
Date thereafter or (d) such other times as the Agent or the Borrower
may reasonably request: (i) each Bank organized under the laws of a
jurisdiction outside the United States shall provide the Agent and the
Borrower with duly completed copies of Form 1001 or Form 4224 or any
successor form prescribed by the Internal Revenue Service of the United
States certifying that such Bank is exempt from United States
withholding taxes with respect to all payments to be made to such Bank
hereunder or other document satisfactory to the Borrower and the Agent
indicating that all payments to be made to such Bank hereunder are not
subject to such taxes and (ii) each other Bank shall provide the Agent
and the Borrower with a written statement which certifies that such
Bank is not a non-resident alien or foreign corporation and which
otherwise satisfies Treasury Regulation Section 1.1441-5(b) or any
successor regulation under the Internal Revenue Code (each such
certificate or statement, an "Exemption Certificate"). Unless the Agent
and the Borrower have received an Exemption Certificate from such Bank,
the Borrower, or the Agent if the Borrower has not withheld, may
withhold taxes from such payments at the applicable statutory rate
(subject, in the case of the Borrower to the requirements of Section 0
above); provided, however, that, if the Borrower has so withheld, the
Borrower shall so notify the Agent. If the Borrower is required to pay
additional amounts to any Bank pursuant to this Section 0, such Bank
shall use commercially reasonable efforts to designate a different
Lending Office if such designation will thereafter avoid the need for
any additional payments under this Section 0 and will not, in the sole
judgment of such Bank, be otherwise disadvantageous to such Bank. A
Bank which ceases to be exempt from United States withholding taxes
shall notify the Agent and the Borrower promptly thereof. If a Bank
organized under the laws of a jurisdiction other than the United States
or a political subdivision thereof fails to comply with the provisions
of this Subsection (f), then the Borrower shall not have any obligation
to increase the sum payable to such Bank pursuant to this Section 0 or
to indemnify such Bank for Taxes as provided in this Section.
(g) SURVIVAL OF PROVISION. Without prejudice to the survival
of any other agreement of the Borrower hereunder, the agreements and
liabilities of the Borrower contained in this Section 0 shall survive
the payment in full of the Obligations.
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10.4 LOSSES. If any payment of principal of, or Rate Conversion or
Rate Continuation of, any LIBOR Rate Loan is not paid when due or is made on a
day other than on the last day of an Interest Period relating to such Loan, as a
result of a payment or Rate Conversion or Rate Continuation pursuant to the
provisions of Section 0 of this Agreement or acceleration of the maturity of the
Revolving Credit Notes pursuant to Section 0 of this Agreement or for any other
reason, the Borrower shall, upon demand by any Bank (with a copy of such demand
to the Agent), pay to the Agent for the account of such Bank any amounts
required to compensate such Bank for any additional losses, costs or expenses
which it may reasonably incur as a result of such payment or Rate Conversion or
Rate Continuation, including, without limitation, any loss, cost or expense
(other than any expenses directly attributable to loan origination efforts)
incurred by reason of the liquidation or reemployment of deposits or other funds
acquired by such Bank to fund or maintain such Loan.
10.5 INDEMNIFICATION FOR REQUESTS. Whenever the Borrower: (a) shall
revoke any Credit Request, any Rate Conversion/Continuation Request involving
any LIBOR Rate Loan, (b) shall for any other reason fail to borrow pursuant to
any such Request or otherwise comply therewith, (c) shall fail to fulfill, on or
before the date specified in any such request, the applicable conditions set
forth in Section 0 of this Agreement or (d) shall fail to honor any prepayment
notice, then, in each case on any Bank's demand, the Borrower shall indemnify
each Bank and the Agent against any loss, cost or expense incurred by such Bank
or the Agent as a result of any such failure by the Borrower, including, without
limitation, any loss, cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Bank or the Agent to
fund the LIBOR Rate Loan to be made by such Bank or the Agent in connection with
such request when such LIBOR Rate Loan, as a result of such failure by the
Borrower, is not made on such date.
10.6 GENERAL INDEMNITY. The Borrower shall indemnify and hold
harmless the Agent, the Letter of Credit Bank, and each Bank, and the respective
directors, officers, employees and Affiliates thereof, from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses and disbursements of any kind or nature whatsoever
including, without limitation, reasonable fees and disbursements of counsel and
settlements costs, which may be imposed on, incurred by, or asserted against the
Agent, the Letter of Credit Bank, or any Bank or the respective directors,
officers, employees and Affiliates thereof in any in connection with any
investigative, administrative or judicial proceeding (whether the Agent or such
Bank is or is not designated as a party thereto) relating to or arising out of
this Agreement or any Loan Document, the transactions contemplated thereby, or
any actual or proposed use of proceeds hereunder or thereunder, except that
neither the Agent, the Letter of Credit Bank, nor any Bank nor any such
directors, officers, employees and Affiliates thereof shall have the right to be
indemnified hereunder for its own gross negligence or willful misconduct as
determined by a court of competent jurisdiction.
10.7 ENVIRONMENTAL INDEMNITY. The Borrower shall, at its sole cost
and expense, indemnify, defend and save harmless the Agent and the Banks (and
each of their respective
72
<PAGE> 81
officers, directors, employees, agents, representatives and contractors and any
subsequent owner of the assets of the Borrower who purchases such assets through
the Agent or pursuant to any enforcement action by the Agent) from and against
any and all damages, losses, liabilities, obligations, penalties, claims,
litigations, demands, defenses, judgments, suits, actions, proceedings, costs,
disbursements and\or expenses (including, without limitation, reasonable
attorneys' and experts' fees, expenses and disbursements) of any kind or nature
whatsoever which may at any time be imposed upon, incurred by or asserted
against any of such indemnified Persons relating to, resulting from or arising
out of: (i) Environmental Claims (other than those caused by the wilful
misconduct or gross negligence of the Agent of the Banks), (ii) a material
misrepresentation or inaccuracy in any representation or warranty contained in
this Agreement relating to the Borrower's compliance with Environmental Laws or
(iii) a breach or failure to perform any covenant made by the Borrower in this
Agreement relating to Environmental Laws or Environmental Claims which continues
uncured after the expiration of any applicable grace period. The Borrower will
pay any sums owing to the Agent or the Banks pursuant to this indemnification
obligation ten (10) days after demand by the Agent, together with interest on
such amount accruing from and after the expiration of such period at the default
rate of interest hereunder.
10.8 CERTIFICATE FOR INDEMNIFICATION. Each demand by Agent or a
Bank for payment pursuant to this Section 0 shall be accompanied by a
certificate setting forth the reason for the payment, the amount to be paid, and
the computations and assumptions in determining the amount, which certificate
shall be presumed to be correct. In determining the amount of any such payment
thereunder, each Bank may use reasonable averaging and attribution methods.
10.9 DUTY TO MITIGATE; STANDARD TREATMENT. Each Bank seeking
payment pursuant to this Section 0 shall use reasonable efforts and take all
reasonable actions to avoid the cause of the payment and to minimize the amount
thereof. Each Bank agrees that it will not seek compensation or reimbursement
provided for in this Section 0 unless such Bank as a matter of policy intends
generally to seek comparable compensation or reimbursement from other borrowers
similarly situated and with similarly documented financial accommodations.
73
<PAGE> 82
11 GENERAL.
This Agreement and the Loan Documents shall be governed by the
following provisions:
11.1 AMENDMENTS AND WAIVERS. No amendment or waiver of any
provision of this Agreement, the Revolving Credit Notes or any Loan Document,
nor consent to any departure by the Borrower therefrom, nor waiver of any Event
of Default under this Agreement, the Revolving Credit Notes or any Loan
Document, shall in any event be effective unless the same shall be in writing
and signed by the Required Banks (or, if unanimous consent of all Banks is
required as hereinafter provided, all of the Banks), the Agent and the Borrower
and, if relating to the Letter of Credit, the Letter of Credit Bank. Such waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given. Unanimous waiver or consent of all Banks shall be
required only with respect to: (a) the waiver of non-payment or extension of
maturity of any Revolving Credit Note, or the payment date of interest,
principal and/or fees thereunder, (b) any reduction in the rate of interest on
the Revolving Credit Notes, or in any amount of principal or interest due on any
Revolving Credit Note, or in the manner of pro rata application of any payments
made by the Borrower to the Banks hereunder, (c) any change in the definition or
calculation of "Required Banks", (d) any change in the dollar amount or
percentage of any Bank's Revolving Credit Commitment, (e) any change in amount
or timing of any fees payable under this Agreement, (f) any waiver of an Event
of Default or Potential Default that would affect the rate of interest or the
amount of fees otherwise payable under this Agreement, (g) any change in any
provision of this Agreement which requires all of the Banks to take any action
under such provision, (h) any amendment to or waiver under any Subsidiary
Guaranty or (i) any change in Section 0, 0, 0 or this Section 0 itself. Notice
of amendments or consents ratified by the Banks hereunder shall immediately be
forwarded by the Borrower to all Banks. Each Bank or other holder of a Revolving
Credit Note shall be bound by any amendment, waiver or consent obtained as
authorized by this section, regardless of its failure to agree thereto.
11.2 CUMULATIVE PROVISIONS; INTEGRATION. Each right, power or
privilege specified or referred to in this Agreement is in addition to and not
in limitation of any other rights, powers and privileges that the Agent, the
Letter of Credit Bank and the Banks may otherwise have or acquire by operation
of Law, by other contract or otherwise. All covenants, conditions, provisions,
warranties, guaranties, indemnities, and other undertakings of the Borrower
contained in this Agreement, each of the Loan Documents, or in any document
referred to in this Agreement or the Loan Document or contained in any agreement
supplementary hereto or thereto, or any schedule or report given to the Agent,
the Letter of Credit Bank or any Bank or contained in any other agreement
between the Agent, the Letter of Credit Bank and the Banks and the Borrower,
whether concurrently or hereafter entered into or delivered, shall be deemed
cumulative to, and not in derogation or substitution of, any of the terms,
covenants, conditions, or agreements of the Borrower contained in this
Agreement.
11.3 BINDING EFFECT. This Agreement shall become effective when it
shall have been
74
<PAGE> 83
executed by the Borrower, the Agent, the Letter of Credit Bank and the Banks and
shall be binding upon and inure to the benefit of the Borrower, the Agent, the
Letter of Credit Bank and the Banks and their respective successors and assigns,
except that the Borrower shall not have the right to assign its rights hereunder
or any interest herein without the prior written consent of the Agent, the
Letter of Credit Bank and the Banks. The Banks may, in their sole discretion,
assign, sell, transfer or sell participations or subparticipations subject to
Section 0 of this Agreement.
11.4 COSTS AND EXPENSES. The Borrower agrees to pay on demand all
reasonable costs and expenses of: (a) the Agent, and the Letter of Credit Bank
(including, without limitation, the reasonable fees and out-of-pocket expenses
of counsel for the Agent) in connection with the preparation, execution,
delivery, administration, modification, amendment and waiver of any default of
this Agreement and the Loan Documents and (b) the Agent, the Letter of Credit
Bank and the Banks (including, without limitation, the reasonable fees and
out-of-pocket expenses of counsel for the Agent, the Letter of Credit Bank and
the Banks) in connection with the enforcement of, the exercise of remedies
under, or the preservation of rights and remedies under this Agreement and any
of the Loan Documents (including any collection, bankruptcy or other enforcement
proceedings arising with respect to the Borrower, this Agreement, or any Event
of Default under this Agreement). All amounts due under this Section 0 shall be
payable upon written demand therefor accompanied by a detailed description of
the amount due and the circumstances giving rise to the cost or expense
involved.
11.5 SURVIVAL OF PROVISIONS. All representations and warranties
made in or pursuant to this Agreement shall survive the execution and delivery
of this Agreement and of the Revolving Credit Notes. The provisions of Sections
0, 0.1 through 0 and 0 of this Agreement shall survive the payment of the
Obligations owed by the Borrower hereunder and the termination of this Agreement
(whether by acceleration or otherwise).
11.6 IMMEDIATE U.S. FUNDS. Unless specifically designated
otherwise, any reference to money is a reference to lawful money of the United
States which, if in the form of credits, shall be in immediately available
funds.
11.7 CAPTIONS. The several captions to different Sections and the
respective subsections thereof are inserted for convenience only and shall be
ignored in interpreting the provisions of this Agreement.
11.8 INTEREST RATE LIMITATION. Notwithstanding anything herein to
the contrary, if at any time the applicable interest rate, together with all
fees and charges that are treated as interest under applicable law as provided
for herein or in any other document executed in connection herewith, or
otherwise contracted for, charged, taken, received or reserved by the Agent, the
Letter of Credit Bank or any Bank, shall exceed the maximum lawful rate that may
be contracted for, charged, taken, received or reserved by the Agent, the Letter
of Credit Bank or any Bank in accordance with applicable law, the rate of
interest and all such charges payable, contracted for, charged, taken, received
or reserved in respect of the Obligations of the Borrower hereunder
75
<PAGE> 84
(including the Loans by the Banks to the Borrower) shall be limited to the
maximum rate permitted by applicable Law.
11.9 ILLEGALITY. If any provision in this Agreement or any other
Loan Document shall for any reason be or become illegal, void or unenforceable,
in whole or in part, that illegality, voidness or unenforceability shall not
affect the remainder of such provision or any other provision of this Agreement
or Loan Document.
11.10 NOTICES. All notices, requests, demands and other
communications provided for hereunder shall be in writing and shall be given
solely: (a) by hand delivery or by overnight courier delivery service, with all
charges paid, (b) by facsimile transmission, if confirmed same day in writing
mailed by first class mail, or (c) by registered or certified mail, postage
prepaid and addressed to the parties. For the purposes of this Agreement, such
notices shall be deemed to be given and received: (i) if by hand or by overnight
courier service, upon actual receipt, (ii) if by facsimile transmission, upon
receipt of machine-generated confirmation of such transmission (and provided the
above-stated written confirmation is sent) or (iii) if by registered or
certified mail, upon actual receipt; provided, however, that requests from the
Borrower to Agent or the Banks pursuant to any of the provisions hereof
including, without limitation, Sections 0 and 0 of this Agreement, shall not be
effective until actually received by the Agent or the Banks, as the case may be.
Notices or other communications hereunder shall be addressed, if to the
Borrower, at the address specified on the signature pages of this Agreement; if
to the Agent or the Letter of Credit Bank, at the address of the Agent specified
on the signature pages of this Agreement, and, if to a Bank, at the address of
such Bank specified on the signature pages of this Agreement.
11.11 GOVERNING LAW. This Agreement and the Loan Documents and the
respective rights and obligations of the parties hereto shall be governed by and
construed in accordance with the internal laws of the State of Ohio (without
giving effect to the conflict of laws rules thereof).
11.12 ENTIRE AGREEMENT. This Agreement, including the exhibits and
schedules thereto, and the Loan Documents constitute the entire contract between
the parties relative to the subject matter hereof. Except for the Agent Letter,
any previous agreement among the parties with respect to the subject matter
hereof is superseded by this Agreement and the Loan Documents. Nothing in this
Agreement or in the Loan Documents, expressed or implied, is intended to confer
upon any party other than the parties hereto and thereto any rights, remedies,
obligations or liabilities under or by reason of this Agreement or the Loan
Documents.
11.13 JURY TRIAL WAIVER. EACH OF THE BORROWER, THE AGENT, THE LETTER
OF CREDIT BANK AND EACH OF THE BANKS WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE
IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG
THE BORROWER, THE AGENT, THE LETTER OF CREDIT BANK AND THE BANKS, OR ANY
THEREOF, ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP
76
<PAGE> 85
ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT OR ANY REVOLVING CREDIT
NOTE OR OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH OR THE TRANSACTIONS RELATED THERETO.
11.14 JURISDICTION; VENUE; INCONVENIENT FORUM.
(a) JURISDICTION. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY,
TO THE NONEXCLUSIVE JURISDICTION OF ANY OHIO STATE COURT OR FEDERAL
COURT OF THE UNITED STATES OF AMERICA SITTING IN CUYAHOGA COUNTY, OHIO,
AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE REVOLVING CREDIT
NOTES OR ANY LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY
JUDGMENT, AND EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH OHIO STATE OR, TO
THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES
HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING
SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT
ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
(b) VENUE; INCONVENIENT FORUM. EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT
MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE REVOLVING CREDIT
NOTES OR ANY OTHER LOAN DOCUMENT IN ANY OHIO STATE OR FEDERAL COURT
SITTING IN OHIO. EACH OF THE PARTIES HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT FORUM
TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT. THE
BORROWER CONFIRMS THAT THE FOREGOING WAIVERS ARE INFORMED AND FREELY
MADE.
11.15 EXECUTION IN COUNTERPARTS. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute but one and the same agreement.
77
<PAGE> 86
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
78
<PAGE> 87
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers or agents thereunto duly
authorized, as of the date first above written.
OM GROUP, INC.
------------------------------
Name: James M. Materna
Title: Chief Financial Officer
Address for notices:
3800 Terminal Tower
Cleveland, Ohio 44113-2204
Attention: Chief Financial Officer
Telecopy: (216) 781-0902
79
<PAGE> 88
NATIONAL CITY BANK, as Agent and Letter of
Credit Bank
------------------------------------------
Name: Timothy G. Healy
Title: Vice President
Address for Notices:
National City Center
1900 East Ninth Street
Cleveland, Ohio 44114
Attention: Timothy G. Healy
Metro Group
Telecopy: (216) 575-9396
Payment Office:
National City Bank
National City Center
1900 East Ninth Street
Cleveland, Ohio 44114
80
<PAGE> 89
BANKS
ABN AMRO BANK N.V., as Co-Agent and a
Bank
-------------------------------------
Name: Roy D. Hasbrook
Title: Group Vice President
-------------------------------------
Name: Louis K. McLinden
Title: Vice President
Address for Notices:
ABN Amro Bank N.V.
One PPG Place, Suite 2950
Pittsburgh, PA 15222-5400
Attention: Roy D. Hasbrook
Telecopy: (412) 566-2266
Lending Office:
ABN Amro Bank N.V.
One PPG Place, Suite 2950
Pittsburgh, Pennsylvania 15222-5400
81
<PAGE> 90
NBD BANK, as a Bank
----------------------------
Name: Paul R. DeMelo
Title: Vice President
Address for Notices:
NBD Bank
611 Woodward Avenue
Detroit, Michigan 48336
Attention: Paul R. DeMelo
Telecopy: (313)225-1212
Lending Office:
NBD Bank
611 Woodward Avenue
Detroit, Michigan 48336
82
<PAGE> 91
HARRIS TRUST AND SAVINGS BANK, as a
Bank
-----------------------------------
Name: William A. McDonnell
Title: Vice President
Address for Notices:
Harris Trust and Savings Bank
111 West Monroe Street
PO Box 755
Chicago, Illinois 60690
Attention: William A. McDonnell
Telecopy: (312)461-5225
Lending Office:
Harris Trust and Savings Bank
111 West Monroe Street
PO Box 755
Chicago, Illinois 60690
83
<PAGE> 92
KEYBANK NATIONAL ASSOCIATION, as a
Bank
----------------------------------
Name: Richard A. Pohle
Title: Vice President
Address for Notices:
KeyBank National Association
127 Public Square
OH-01-27-0606
6th Floor
Cleveland, Ohio 44114
Attention: William J. Kysela
Telecopy: (216) 689-4981
Lending Office:
KeyBank National Association
127 Public Square
Cleveland, Ohio 44114
84
<PAGE> 93
MELLON BANK, N.A., as a Bank
-----------------------------
Name: Henry W. Centa
Title: Vice President
Address for Notices:
Mellon Bank, N.A.
200 Public Square, 29th Floor
Cleveland, Ohio 44114
Attention: Henry W. Centa
Telecopy: (216) 575-0513
Lending Office:
Mellon Bank, N.A.
200 Public Square, 29th Floor
Cleveland, Ohio 44114
85
<PAGE> 94
NATIONAL CITY BANK, as a Bank
-----------------------------
Name: Timothy G. Healy
Title: Vice President
Address for Notices:
National City Center
1900 East Ninth Street
Cleveland, Ohio 44114
Attention: Timothy G. Healy
Metro Group
Telecopy: (216) 575-9396
Lending Office:
National City Center
1900 East Ninth Street
Cleveland, Ohio 44114
86
<PAGE> 95
ANNEX I
COMMITMENTS
Credit Agreement, dated as of January 30, 1998,
among OM Group, Inc., the Agent, the Co-Agent,
the Letter of Credit Bank and the Banks
================================================================================
Revolving
Credit
Bank Commitment
================================================================================
National City Bank $ 63,750,000 25.50%
================================================================================
ABN Amro Bank N.V. $ 60,000,000 24.00%
================================================================================
KeyBank National Association $ 38,125,000 15.25%
================================================================================
Mellon Bank, N.A. $ 38,125,000 15.25%
================================================================================
Harris Trust and Savings Bank $ 25,000,000 10.00%
================================================================================
NBD Bank $ 25,000,000 10.00%
================================================================================
Aggregate Bank Commitments $250,000,000.00 100.00%
================================================================================
Annex I - 1
<PAGE> 96
Annex II
SUPPLEMENTAL SCHEDULE
Credit Agreement, dated as of January 30, 1998,
among OM Group, Inc., the Agent, the Co-Agent,
the Letter of Credit Bank and the Banks
Annex II - 1
<PAGE> 97
EXECUTION COPY
REVOLVING CREDIT NOTE
$25,000,000 Dated: January 30, 1998
FOR VALUE RECEIVED, the undersigned, OM Group, Inc, a Delaware
corporation ("Borrower"), hereby promises to pay to the order of NBD Bank
[Harris Bank and Trust Company] (the "Bank"), in immediately available funds on
the Revolving Credit Termination Date, the lesser of [________________________]
Dollars ($25,000,000) or the aggregate outstanding principal amount of the
Revolving Credit Loans made by the Bank to the Borrower pursuant to the Credit
Agreement (as hereinafter defined). Each capitalized term used herein and not
otherwise defined herein shall have the meaning ascribed to such term in that
certain Credit Agreement, dated as of January 30, 1998 (as the same may from
time to time be amended, supplemented, restated or otherwise modified, the
"Credit Agreement"), among the Borrower, the banks which are signatories thereto
(the "Banks"), ABN Amro Bank N.V., as Co-Agent, National City Bank, as Letter of
Credit Banks ("Letter of Credit Banks"), and National City Bank, as Agent for
the Banks, the Co-Agent and the Letter of Credit Bank ("Agent").
The Borrower promises to pay interest on the unpaid principal
amount of each Revolving Credit Loan evidenced hereby from the date of such
Revolving Credit Loan until such principal amount is paid in full, at such
interest rates, and payable at such times, as are specified in the Credit
Agreement. The Borrower promises to pay on demand interest on any overdue
principal and, to the extent permitted by law, overdue interest from their due
dates at the rate or rates provided in the Credit Agreement.
Both principal and interest in respect of each Revolving
Credit Loan are payable in lawful money of the United States of America to the
Agent at the Payment Office of the Agent in same day funds. Each Revolving
Credit Loan made by the Bank to the Borrower pursuant to the Credit Agreement,
and all payments made on account of the principal amount thereof, shall be
recorded by the Agent and the Bank on its books and records and, prior to any
transfer hereof, endorsed on the grid attached hereto which is a part of this
Revolving Credit Note; provided, however, that the failure of the holder hereof
to make such a notation or any error in such a notation shall not affect the
obligations of the Borrower under this Revolving Credit Note.
This Revolving Credit Note is one of the Notes referred to in,
and is entitled to the benefits of, the Credit Agreement. The Credit Agreement,
among other things, (i) provides for the making of Revolving Credit Loans by the
Bank to the Borrower from time to time in an aggregate amount not to exceed at
any time outstanding the Bank's Revolving Credit Commitment, the indebtedness of
the Borrower resulting from each such Revolving Credit Loan being evidenced by
this Revolving Credit Note, (ii) contains provisions for acceleration of the
<PAGE> 98
maturity hereof upon the happening of certain stated events and also for
prepayments on account of principal hereof prior to the maturity hereof and
(iii) provides for the amendment or waiver of certain terms of the Credit
Agreement, all upon the terms and conditions therein specified.
The Borrower hereby waives diligence, presentment, demand,
protest and notice of any kind whatsoever. The nonexercise by the holder of any
of its rights hereunder in any particular instance shall not constitute a waiver
thereof in that or any subsequent instance. This Revolving Credit Note shall be
binding upon the undersigned and its successors and assigns, and shall inure to
the benefit of the Bank, its successors and assigns and all subsequent holders
of this Note.
THIS REVOLVING CREDIT NOTE HAS BEEN MADE AND EXECUTED IN
CLEVELAND, CUYAHOGA COUNTY, OHIO, AND SHALL BE CONSTRUED ACCORDING TO THE LAWS
OF THE STATE OF OHIO WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAW. IF ANY
PROVISION HEREOF IS IN CONFLICT WITH ANY STATUTE OR RULE OF LAW OF THE STATE OF
OHIO OR IS OTHERWISE UNENFORCEABLE FOR ANY REASON WHATSOEVER, THEN SUCH
PROVISION SHALL BE DEEMED SEPARABLE FROM AND SHALL NOT INVALIDATE ANY OTHER
PROVISION OF THIS NOTE.
OM GROUP, INC. ("BORROWER")
--------------------------------
By: James M. Materna
Title: Chief Financial Officer
2
<PAGE> 99
LOANS AND PAYMENTS OF PRINCIPAL
CREDIT AGREEMENT,
DATED AS OF January 30, 1998
<TABLE>
<CAPTION>
==========================================================================================================================
Date of $ Amount Date Paid Principal Amount Paid Principal Amount Noted by
Loan Outstanding
==========================================================================================================================
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
==========================================================================================================================
</TABLE>
3
<PAGE> 100
EXHIBIT B
FORM OF
CREDIT REQUEST
From: OM Group, Inc. (the "Borrower")
To: National City Bank, as Agent
Date: __________________, 199___
Subject: Amended and Restated Credit Agreement, dated as of January 30,
1998 (as amended from time to time, the "Credit Agreement"),
among the Borrower, the banks which are signatories thereto
(the "Banks"), ABN Amro Bank N.V., as Co-Agent, National City
Bank, as Letter of Credit Bank ("Letter of Credit Banks"), and
National City Bank, as Agent for the Banks, the Co-Agent and
the Letter of Credit Bank ("Agent")
Greetings:
Each capitalized term in this Credit Request shall be defined in
accordance with the Credit Agreement. Pursuant to the Credit Agreement, we
request:
( ) the Banks to grant us an Alternate Base Rate Borrowing in the
aggregate principal sum of $_______________, to be made available on
the _____________ day of ____________________, 199____.
( ) the Banks to grant us a LIBOR Rate Borrowing in the aggregate
principal sum of $_______________, to be made available on the ________
day of ________________, 199___, and to have an initial Interest Period
of _______________.
( ) a Letter of Credit Bank to issue a [Standby Letter of Credit]
[Trade Letter of Credit], dated as of _______________, 199___, for the
account of the Borrower and to and for the benefit of
__________________________________, as beneficiary, for an aggregate
face amount of [$_______________]; and in connection therewith we
enclose a more detailed application and a Reimbursement Agreement.
<PAGE> 101
and, in the case of any requested Borrowing or Letter of Credit issuance, to
disburse the proceeds thereof, or issue such Letter of Credit, as follows:
______________________________________________________________________________
______________________________________________________________________________
_____________________________________________________________________________.
The undersigned hereby certifies that conditions set forth in Section
3.2 of the Credit Agreement are satisfied on the date hereof, and will be
satisfied on the date of the Rate Conversion or Rate Continuation, as the case
may be, before and after giving effect thereto and to the application of the
proceeds therefrom.
Very truly yours,
OM GROUP, INC.,
as Borrower
_____________________________
By: ____________________
Its: ____________________
-2-
<PAGE> 102
EXHIBIT C
FORM OF
RATE CONVERSION/CONTINUATION REQUEST
From: OM Group, Inc. (the "Borrower")
To: National City Bank, as Agent
Date: __________________, 199___
Subject: Amended and Restated Credit Agreement, dated as of January 30,
1998 (as amended from time to time, the "Credit Agreement"),
among the Borrower, the banks which are signatories thereto
(the "Banks"), ABN Amro Bank N.V., as Co-Agent, National City
Bank, as Letter of Credit Bank ("Letter of Credit Banks"), and
National City Bank, as Agent for the Banks, the Co-Agent and
the Letter of Credit Bank ("Agent")
Greetings:
Each capitalized term used in this Rate
Conversion/Continuation Request shall have the meaning ascribed to such term in
the Credit Agreement. Pursuant to the Credit Agreement, the Borrower requests:
( ) the Banks to convert $_________________ principal amount of the
[LIBOR Rate Loans] [Alternate Base Rate Loans] comprising the Revolving
Credit Borrowing (or portion thereof) [made] [converted] [continued] on
_____________, 199_ in the original aggregate principal sum of
$___________________, on _________________, 199_, into [LIBOR Rate
Loans to have an Interest Period of ___ months from the date thereof
commencing on _________________, 199_.] [Alternate Base Rate Loans.]
( ) the Banks to continue $_________________ principal amount of the
LIBOR Rate Loans comprising the Revolving Credit Borrowing (or portion
thereof) [made] [converted] [continued] on _____________, 199_ with a
___ month Interest Period in the original aggregate principal sum of
$___________________ as LIBOR Rate Loans having an Interest Period of
the same duration commencing on _________________, 199_.
( ) the Banks to convert $__________________ principal amount of the
LIBOR Rate Loans comprising the Revolving Credit Borrowing (or portion
thereof) [made][converted] [continued] on _____________, 199__ with a
____ month Interest Period in the original aggregate principal sum of
[$______________] to LIBOR Rate Loans having an Interest
<PAGE> 103
Period of ____ months commencing on ________________, 199__.(1)
The undersigned represents and warrants that this request is made in
compliance with Section 2.7 of the Credit Agreement.
The undersigned hereby certifies that conditions set forth in Section
3.2 of the Credit Agreement are satisfied on the date hereof, and will be
satisfied on the date of the Rate Conversion or Rate Continuation, as the case
may be, before and after giving effect thereto and to the application of the
proceeds therefrom.
Very truly yours,
OM GROUP, INC.,
as Borrower
_________________________________
By: _____________________________
Its: ____________________________
Contact Phone: (_____) ______________
Contact Fax: (_____) ______________
- --------
(1) In the event that Borrower desires to request more than one rate conversion
or rate continuation on the same day, the Borrower may deliver more than one
Rate Conversion/Continuation Request (subject to the limitations of Section
2.11).
2
<PAGE> 104
EXHIBIT D
FORM OF
SUBSIDIARY GUARANTY AGREEMENT
This GUARANTY AGREEMENT (this "Guaranty Agreement") is made as
of the _____ day of _____________, 1998, by [ ___________________], a
__________________ corporation (the "Guarantor"), in favor of National City
Bank, as Agent (the "Agent"), for the benefit of the Banks (as defined below),
the Co-Agent (as defined below) and the Letter of Credit Bank (as defined
below).
RECITALS
WHEREAS, the Agent, OM Group, Inc. (the "Borrower"), the banks
which are party thereto (the "Banks"), ABN Amro Bank, N.V., as Co-Agent (the
"Co-Agent") and National City Bank, as Letter of Credit Bank (the "Letter of
Credit Bank"), will enter into that certain Amended and Restated Credit
Agreement (as the same may from time to time be amended or otherwise modified or
supplemented, the "Credit Agreement"), pursuant to which the Banks will make
certain loans and other financial accommodations available to the Borrower;
WHEREAS, the Guarantor is a wholly-owned subsidiary of the
Borrower and therefore will benefit from the loans and financial accommodations
made available to the Borrower; and
WHEREAS, it is a condition precedent to the Banks' making of
financial accommodations available to the Borrower and the Letter of Credit
Bank's issuing of letters of credit under the Credit Agreement that the
Guarantor shall have executed and delivered this Guaranty Agreement;
NOW, THEREFORE, in consideration of these premises and in
order to induce the Banks to make loans and other financial accommodations
available to the Borrower under the Credit Agreement, the Guarantor hereby
agrees with the Agent, for the benefit of the Banks, the Co-Agent and the Letter
of Credit Bank as follows:
SECTION 1. Definitions. The capitalized terms used herein
which are defined in the Credit Agreement and not otherwise defined herein are
used herein as therein defined.
SECTION 2. Guaranty. The Guarantor hereby unconditionally
guarantees the punctual payment when due, whether at stated maturity, by
acceleration or otherwise, of all obligations the Borrower may now or hereafter
owe to the Agent, the Banks or the Letter of Credit Bank, of every type and
description, including, but not limited to, the Borrower's
<PAGE> 105
obligations under the Credit Agreement and the Loan Documents (all such
obligations of the Borrower being referred to herein as of the "Guaranteed
Obligations") and agrees to pay any and all expenses (including counsel fees and
expenses) incurred by the Agent, the Banks or the Letter of Credit Bank in
enforcing any rights under this Guaranty Agreement.
SECTION 3. Maximum Liability. The maximum liability of the
Guarantor under this Guaranty Agreement shall be the greatest amount which,
after taking into consideration all other valid and enforceable debts and
liabilities of the Guarantor, an applicable court has determined (after any
appeals) would not render the Guarantor insolvent, unable to pay its debts as
they become due, inadequately capitalized for the business which it intends to
conduct, or unable to pay a judgment rendered upon a claim that is the subject
of an action or proceeding pending at the time when the obligations of this
Guaranty Agreement are incurred or increased.
SECTION 4. Guaranty Absolute. The Guarantor guarantees that
the Guaranteed Obligations will be paid strictly in accordance with the terms of
the Credit Agreement and the Loan Documents, regardless of any law, regulation
or order now or hereafter in effect in any jurisdiction affecting any of such
terms or the rights of the Agent or the Banks with respect thereto. The
liability of the Guarantor under this Guaranty Agreement shall be absolute and
unconditional irrespective of:
(a) any lack of validity or enforceability of the Credit
Agreement, the Loan Documents or any other agreement or instrument
relating thereto;
(b) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Guaranteed Obligations, or any
other amendment or waiver of or any consent to departure from the
Credit Agreement, the Loan Documents or any other agreement or
instrument relating thereto;
(c) any exchange, release or non-perfection of any collateral,
or any release or amendment or waiver of or consent to departure from
any other guaranty, for all or any of the Guaranteed Obligations;
(d) failure by the Agent or any Bank to take any steps to
perfect and maintain its or their security interest in, or preserve its
rights to, any security or collateral for the Guaranteed Obligations;
(e) the Agent's or any Bank's election in any proceeding
instituted under Chapter 11 of Title 11 of the United States Code (11
U.S.C. Section 101 et seq.) (the "Bankruptcy Code"), or the application
of Section 1111(b)(2) of the Bankruptcy Code;
(f) any borrowing or grant of a security interest under
Section 364 of the Bankruptcy Code; or
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(g) any other circumstance that might otherwise constitute a
defense available to, or a discharge of, the Borrower or any guarantor.
This Guaranty Agreement shall continue to be effective or shall be reinstated,
as the case may be, if at any time any payment of any of the Guaranteed
Obligations is rescinded or must otherwise be returned by the Agent, any Bank or
the Letter of Credit Bank upon the insolvency, bankruptcy or reorganization of
the Borrower or otherwise, all as though such payment had not been made.
SECTION 5. Waiver. The Guarantor hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Guaranteed Obligations and this Guaranty and any requirement that the Agent, any
Bank or the Letter of Credit Bank protect, secure, perfect or insure any
security interest or lien or any property subject thereto or exhaust any right
or take any action against the Borrower or any other person or entity or any
collateral.
SECTION 6. Subrogation. The Guarantor shall have no right of
subrogation, reimbursement or contribution and hereby waives any right to
enforce any remedy which the Agent, any Bank or the Letter of Credit Bank now
has or may hereafter have against the Borrower, any endorser or any other
guarantor, of all or any part of the Guaranteed Obligations, and the Guarantor
hereby waives any benefit of, and any right to participate in, any security or
collateral given to the Agent to secure payment of the Guaranteed Obligations or
any other liability of the Borrower to the Agent, the Banks or the Letter of
Credit Bank. The Guarantor also waives all setoffs and counterclaims and all
presentments, demands for performance, notices of nonperformance, protests,
notices of protest, notices of dishonor, and notices of acceptance of this
Guaranty Agreement . The Guarantor further waives all notices of the existence,
creation or incurring of new or additional indebtedness, arising either from
additional loans extended to the Borrower or otherwise, and also waives all
notices that the principal amount, or any portion thereof, and/or any interest
on any instrument or document evidencing all or any part of the Guaranteed
Obligations is due, notices of any and all proceedings to collect from the
maker, any endorser or any other guarantor of all or any part of the Guaranteed
Obligations, or from anyone else, and, to the extent permitted by law, notices
of exchange, sale, surrender or other handling of any security or other
collateral given to the Agent or any Bank to secure payment of the Guaranteed
Obligations.
SECTION 7. Financial Condition of Borrower. The Guarantor
hereby assumes responsibility for keeping itself informed of the financial
condition of the Borrower and of all circumstances bearing upon the risk of
nonpayment of the Guaranteed Obligations or any part thereof that diligent
inquiry would reveal and the Guarantor hereby agrees that neither the Agent nor
any Bank shall have any duty to advise the Guarantor of information known to the
Agent or any such Bank regarding such condition or any such circumstances. In
the event the Agent or any Bank, in its sole discretion, undertakes at any time
or from time to time to provide any such information to the Guarantor, neither
the Agent or such Bank shall be under any obligation (i) to undertake any
investigation not a part of its regular business routine (ii) to disclose any
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<PAGE> 107
information which, pursuant to accepted or reasonable commercial finance
practices, the Agent or such Bank wishes to maintain confidential or (iii) to
make any other or future disclosures of such information or any other
information to the Guarantor.
SECTION 8. Marshalling of Assets. The Guarantor consents and
agrees that the Agent, the Banks and the Letter of Credit Bank shall not be
under any obligation to marshall any assets in favor of the Guarantor or against
or in payment of any or all of the Guaranteed Obligations. The Guarantor further
agrees that, to the extent that the Borrower makes a payment or payments to the
Agent, any Bank or the Letter of Credit Bank, or the Agent, any Bank or the
Letter of Credit Bank receives any proceeds of collateral, which payment or
payments or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside and/or required to be repaid to Borrower,
its estate, trustee, receiver or any other party, including, without limitation,
the Guarantor, under any bankruptcy law, state or federal law, common law or
equitable cause, then to the extent of such payment or repayment, the Guaranteed
Obligations or part thereof which has been paid, reduced or satisfied by such
amount shall be reinstated and continued in full force and effect as of the date
such initial payment, reduction or satisfaction occurred.
SECTION 9. Representations and Warranties; Incumbency.
(a) The Guarantor hereby represents and warrants that (i) the
Guarantor is a corporation duly organized and existing in good standing and has
full power and authority to make and deliver this Guaranty Agreement; (ii) the
execution, delivery and performance of this Guaranty Agreement by the Guarantor
have been duly authorized by all necessary action of its directors and
shareholders and do not and will not violate the provisions of, or constitute a
default under, any presently applicable law or its Certificate of Incorporation
or By-Laws or any agreement presently binding on it; (iii) this Guaranty
Agreement has been duly executed and delivered by the authorized officers of the
Guarantor and constitutes its lawful, binding and legally enforceable obligation
(subject to the United States Bankruptcy Code and other similar laws generally
affecting the enforcement of creditors' rights); (iv) the authorization,
execution, delivery and performance of this Guaranty Agreement do not require
notification to, registration with, or consent or approval by, any federal,
state or local regulatory body or administrative agency; and (v) there are no
actions, suits or proceedings pending or threatened against or affecting the
Guarantor, or any of its properties, before any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, that, if adversely determined, may (A) call into question the legality,
validity or enforceability of this Guaranty Agreement or any Loan Document, or
(B) have a material adverse effect on the condition, financial or otherwise,
operations, properties or prospects of the Guarantor.
(b) The Guarantor shall deliver to the Agent, concurrently
with the execution of this Guaranty Agreement, (i) a certificate executed by an
authorized officer of the Guarantor certifying (A) the resolutions of the Board
of Directors of the Guarantor authorizing the execution, performance and
delivery of this Guaranty Agreement and the other Loan Documents
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<PAGE> 108
to which the Guarantor is a party, (B) the names and signatures of the officers
of the Guarantor executing or attesting to this Guaranty Agreement and such
other Loan Documents, and (C) as true, correct, complete and in full force and
effect, without amendment or revocation as of the date hereof, the Guarantor's
Certificate of Incorporation and By-Laws and (ii) a good standing certificate
for the Guarantor issued by the Secretary of State of the state of its
incorporation.
SECTION 10. Negative Covenants. The Guarantor covenants and agrees
that, so long as any part of the Guaranteed Obligations shall remain unpaid or
the Revolving Credit Commitment remains outstanding, the Guarantor will not,
without the prior written consent of the Agent, for the benefit of the Banks:
(a) Liens, Etc. Except as permitted by the Credit Agreement,
create or suffer to exist any lien, security interest or other charge
or encumbrance, upon or with respect to any of its properties, whether
now owned or hereafter acquired, or assign any right to receive income,
in each case to secure any Indebtedness of any Person.
(b) Sales, Etc. of Assets. Except as permitted by the Credit
Agreement, sell, lease, transfer or otherwise dispose of any of its
assets.
(c) Change in Nature of Business. Make any material change in
the nature of its business as carried on at the date of this Guaranty
Agreement.
SECTION 11. Authorization. The Agent, on behalf of the Banks
and the Letter of Credit Bank, is hereby authorized, without notice or demand
and without affecting the liability of the Guarantor hereunder, from time to
time, to (i) renew, extend, accelerate or otherwise change the time for payment
of, or other terms relating to, the Guaranteed Obligations, or otherwise modify,
amend or change the terms of the Credit Agreement, the Loan Documents, or any
other promissory note or other agreement, document or instrument now or
hereafter executed by the Borrower and delivered to the Agent, any Bank or the
Letter of Credit Bank; (ii) accept partial payments on the Guaranteed
Obligations; (iii) take and hold security or collateral for the payment of this
Guaranty Agreement, any other guarantees of the Guaranteed Obligations or other
liabilities of the Borrower and the Guaranteed Obligations guaranteed hereby or
thereby, and exchange, enforce, waive and release any such security or
collateral; (iv) apply such security or collateral and direct the order or
manner of sale thereof as in its discretion it may determine; and (v) settle,
release, compromise, collect or otherwise liquidate the Guaranteed Obligations
and any security or collateral therefor in any manner, without affecting or
impairing the obligations of the Guarantor hereunder.
At any time upon the occurrence and during the continuation of
an Event of Default, the Agent, any Bank or the Letter of Credit Bank may, in
its sole discretion, without notice to the Guarantor and regardless of the
acceptance of any security or collateral for the payment hereof, appropriate and
apply toward the payment of the Guaranteed Obligations (i) any indebtedness due
or to become due from the Agent, any Bank or the Letter of Credit Bank to the
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Guarantor, and (ii) any moneys, credits or other property belonging to the
Guarantor, at any time held by or coming into the possession of the Agent, any
Bank or the Letter of Credit Bank.
SECTION 12. Amendments, Etc. No amendment or waiver of any
provisions of this Guaranty Agreement nor consent to any departure by the
Guarantor therefrom shall in any event be effective unless the same shall be in
writing and signed by the Agent and all of the Banks, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given. No release or termination of this Guaranty Agreement
shall be effected unless the same shall be in writing and executed by the Agent.
SECTION 13. No Waiver; Remedies. No failure on the part of the
Agent or any Bank or the Letter of Credit Bank to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
SECTION 14. Right of Set-off. Upon the occurrence and during
the continuance of any Event of Default, the Agent, each Bank and the Letter of
Credit 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 the Agent, such Bank or the Letter of
Credit Bank to or for the credit or the account of the Guarantor against any and
all of the obligations of the Guarantor now or hereafter existing under this
Guaranty Agreement, irrespective of whether or not the Agent, such Bank or the
Letter of Credit Bank shall have made any demand under this Guaranty Agreement
and although such obligations may be contingent and unmatured. The Agent, each
such Bank and the Letter of Credit Bank agrees promptly to notify the Guarantor
after any such set-off and application made by the Agent, such Bank or the
Letter of Credit Bank, as the case may be, provided that the failure to give
such notice shall not affect the validity of such set-off and application. The
rights of the Agent, each Bank and the Letter of Credit Bank under this Section
14 are in addition to other rights and remedies (including, without limitation,
other rights of set-off) which the Agent, such Bank or the Letter of Credit Bank
may have.
SECTION 15. Continuing Guaranty; Transfer of Advances. This
Guaranty Agreement is a continuing guaranty and shall (i) remain in full force
and effect until the Guaranteed Obligations are paid in full and each Bank's
Revolving Credit Commitment is terminated, and shall continue in effect
thereafter until this Guaranty Agreement is revoked prospectively as to future
transactions by written notice to that effect actually received by the Agent
(but such notice shall not be effective as to any Guaranteed Obligations or the
Revolving Credit Commitment outstanding at that time, any additional interest,
premiums or fees to become payable with respect thereto or any renewals,
extensions, or refinancings of the same), (ii) be binding upon the Guarantor,
its successors and assigns, and (iii) inure to the benefit of and be enforceable
by the Agent and its successors, transferees and assigns. Without limiting the
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generality of the foregoing clause (iii), subject to the limitations, if any,
set forth in the Credit Agreement, the Agent and each Bank may assign or
otherwise transfer any portion of the Advances held by it to any other person or
entity, and such other person or entity shall thereupon become vested with all
the rights in respect thereof granted to the Agent herein or otherwise.
SECTION 16. Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing (including telecopy,
telegraphic, telex or cable communication) and mailed, telecopied, telegraphed,
telexed, cabled or delivered, if to the Guarantor, at its address shown below
its signature hereto; and if to the Agent, at its address specified in the
Credit Agreement, or as to each party at such other address as shall be
designated by such party in a written notice to the other party. All such
notices and other communications shall, when mailed, telecopied, telegraphed,
telexed or cabled, be effective five (5) Business Days after deposit in the
mails, and on the date telecopied, delivered to the telegraph company, confirmed
by telex answerback or delivered to the cable company, respectively.
SECTION 17. Solvency. The Guarantor is solvent (as described
in the Guarantor Credit Agreement). The Guarantor does not believe that final
judgments, if any, against the Guarantor in actions for money damages presently
pending will be rendered at a time when, or in an amount such that, the
Guarantor will be unable to satisfy any such judgments promptly in accordance
with their terms (taking into account the maximum reasonable amount of such
judgments in any such actions and the earliest reasonable time at which such
judgments might be rendered). The cash flow of the Guarantor, after taking into
account all other anticipated uses of the cash of the Guarantor (including the
payments on or in respect of debt referred to in this Section 17), will at all
times be sufficient to pay all such judgments promptly in accordance with their
terms.
SECTION 18. Waiver of Jury Trial. THE PARTIES ACKNOWLEDGE AND
AGREE THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS GUARANTY AGREEMENT, THE
CREDIT AGREEMENT OR THE LOAN DOCUMENTS (AS DEFINED IN THE CREDIT AGREEMENT)
WOULD INVOLVE DIFFICULT AND COMPLEX ISSUES AND THEREFORE AGREE THAT ANY LAWSUIT
GROWING OUT OF OR INCIDENTAL TO ANY SUCH CONTROVERSY WILL BE TRIED IN A COURT OF
COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
SECTION 19. Jurisdiction; Venue; Inconvenient Forum.
(a) Jurisdiction. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE
NONEXCLUSIVE JURISDICTION OF ANY OHIO STATE COURT OR FEDERAL COURT OF THE UNITED
STATES OF AMERICA SITTING IN CUYAHOGA COUNTY, OHIO, AND ANY APPELLATE COURT FROM
ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
GUARANTY AGREEMENT, THE CREDIT AGREEMENT OR THE LOAN DOCUMENTS,
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OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT
OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH OHIO
STATE OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH OF THE
PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING
SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE
JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
(b) Venue; Inconvenient Forum. EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT MAY
LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE
TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS GUARANTY AGREEMENT, THE CREDIT AGREEMENT OR ANY LOAN DOCUMENT
IN ANY OHIO STATE OR FEDERAL COURT SITTING IN CUYAHOGA COUNTY, OHIO. EACH OF THE
PARTIES HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE
DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING
IN ANY SUCH COURT. THE GUARANTOR CONFIRMS THAT THE FOREGOING WAIVERS ARE
INFORMED AND FREELY MADE.
SECTION 20. Governing Law. This Guaranty shall be governed by,
and construed in accordance with, the laws of the State of Ohio.
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IN WITNESS WHEREOF, the Guarantor has caused this Guaranty
Agreement to be duly executed and delivered by its officer thereunto duly
authorized as of the date first above written.
[____________________________],
("GUARANTOR")
____________________________________________
By: ________________________________________
Its:________________________________________
Address for Notices:
____________________________________________
____________________________________________
____________________________________________
Accepted and Agreed to by:
NATIONAL CITY BANK, as Agent
____________________________________
By: Timothy G. Healy
Its: Vice President
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EXHIBIT F
FORM OF
BANK ASSIGNMENT AGREEMENT
This Assignment Agreement (this "Assignment Agreement")
between _____________________________________________________________________
(the "Assignor") and ________________________________________ (the "Assignee")
is dated as of ________________, 19___. The parties hereto agree as follows:
1. PRELIMINARY STATEMENT. The Assignor is a party to an
Amended and Restated Credit Agreement, dated as of January 30, 1998 (which, as
it may be amended, modified, renewed or extended from time to time, is herein
called the "Credit Agreement"), among OM Group, Inc. (the "Borrower"), the banks
which are signatories thereto (the "Banks"), ABN Amro Bank N.V., as Co-Agent
(the "Co-Agent"), National City Bank as Letter of Credit Bank (the "Letter of
Credit Bank"), and National City Bank as agent for the Banks and the Letter of
Credit Bank (the "Agent"). Capitalized terms used herein and not otherwise
defined herein shall have the meanings attributed to them in the Credit
Agreement. The Assignor desires to assign to the Assignee, and the Assignee
desires to assume from the Assignor, an undivided interest (the "Purchased
Percentage") in the Revolving Credit Commitment of the Assignor such that after
giving effect to the assignment and assumption hereinafter provided, the
Revolving Credit Commitment of the Assignee shall equal ________________________
Dollars ($___________) and its percentage of the aggregate amount of the
Revolving Credit Commitments shall equal ________________________ percent
(____%).
2. ASSIGNMENT. For and in consideration of the assumption of
obligations by the Assignee set forth in Section 3 hereof and the other
consideration set forth herein, and effective as of the Effective Date (as
hereinafter defined), the Assignor does hereby sell, assign, transfer and convey
all of its right, title and interest in and to the Purchased Percentage of (i)
the Revolving Credit Commitment of the Assignor (as in effect on the Effective
Date), (ii) any Revolving Credit Loan made by the Assignor which is outstanding
on the Effective Date, (iii) the Assignor's Ratable Portion of each Letter of
Credit, (iv) any Note delivered to the Assignor pursuant to the Credit
Agreement, and (v) the Credit Agreement and the other Loan Documents. Pursuant
to Section 9.1(d) of the Credit Agreement, on and after the Effective Date the
Assignee shall have the same rights, benefits and obligations as the Assignor
had under the Loan Documents with respect to the Purchased Percentage of the
Loan Documents, all determined as if the Assignee were a "Bank" under the Credit
Agreement with ____________________ Dollars ($_____________) equaling
_____________ percent (_____%) of the aggregate amount of the Revolving Credit
Commitments. The Effective Date (the "Effective Date") shall be two Business
Days (or such shorter period agreed to by the Agent) after a Notice of
Assignment substantially in the form of Attachment I hereto and any consents
substantially in the form of Attachment II hereto required to be delivered to
the Agent by Section 9.1(b) of the Credit Agreement have been delivered to the
Agent; provided, however, that, in the event that the Borrower shall
appropriately deliver a Credit Request prior to the time at which all of
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<PAGE> 114
to the effectiveness of this Assignment shall have been met, the Effective Date
shall be the Business Day immediately following the day upon which the Advances
by the Bank are to be made under such Credit Request. In no event will the
Effective Date occur if the payments required to be made by the Assignee to the
Assignor on the Effective Date under Section 4 are not made on or prior to the
proposed Effective Date. The Assignor will notify the Assignee of the proposed
Effective Date on the Business Day prior to the proposed Effective Date and will
notify the Assignee of any pending Credit Request which would delay such
proposed Effective Date.
3. ASSUMPTION. For and in consideration of the assignment of
rights by the Assignor set forth in Section 2 hereof and the other consideration
set forth herein, and effective as of the Effective Date, the Assignee does
hereby accept that assignment, and assume and covenant and agree fully,
completely and timely to perform, comply with and discharge, each and all of the
obligations, duties and liabilities of the Assignor under the Credit Agreement
which are assigned to the Assignee hereunder, which assumption includes, without
limitation, the obligation to fund the unfunded portion of the aggregate amount
of the Revolving Credit Commitments in accordance with the provisions set forth
in the Credit Agreement and to participate in the Letters of Credit pursuant to
its Ratable Portion thereof as if the Assignee were a "Bank" under the Credit
Agreement with ______________________ Dollars ($_______________) equaling
____________ percent (______%) of the aggregate amount of the Revolving Credit
Commitments. The Assignee agrees to be bound by all provisions relating to
"Bank" under and as defined in the Credit Agreement, including, without
limitation, provisions relating to the dissemination of information and the
payment of indemnification.
4. PAYMENTS OBLIGATIONS. On and after the Effective Date, the
Assignee shall be entitled to receive from the Agent all payments of principal,
interest and fees with respect to the Purchased Percentage of the Assignor's
Revolving Credit Commitment, Advances and reimbursement with respect to Letters
of Credit. The Assignee shall advance funds directly to the Agent with respect
to all Advances and reimbursement payments made on or after the Effective Date.
In consideration for the sale and assignment of Advances hereunder the Assignee
shall pay the Assignor, on the Effective Date, an amount in Dollars equal to the
Purchased Percentage of all such Advances. On and after the Effective Date, the
Assignee will also remit to the Assignor any amounts of interest on Advances and
fees received from the Agent which relate to the Purchased Percentage of
Advances made by the Assignor accrued for periods prior to the Effective Date
and not heretofore paid by the Assignee to the Assignor. In the event that
either party hereto receives any payment to which the other party hereto is
entitled under this Assignment Agreement, then the party receiving such amount
shall promptly remit it to the other party hereto.
5. CONFIDENTIALITY. By executing and delivering this
Assignment, the Assignee acknowledges and agrees to the provisions of Section
9.3 of the Credit Agreement.
6. CREDIT DETERMINATION; LIMITATIONS ON ASSIGNOR'S LIABILITY.
The Assignee represents and warrants to the Assignor, the Borrower, the Agent
and the Bank (a) that it is capable of making and has made and shall continue to
make its own credit determinations and analysis based upon such information as
the Assignee deemed sufficient to enter into the transaction contemplated hereby
and not based on any statements or
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representations by the Assignor, (b) the Assignee confirms that it meets the
requirements to be an assignee as set forth in Sections 9.1(a) and 9.1(b) of the
Credit Agreement; (c) the Assignee confirms that it is able to fund the
Advances, and (d) the Assignee agrees that it will perform in accordance with
their terms all of the obligations which by the terms of the Credit Agreement
and the Loan Documents as are required to be performed by it as a Bank
thereunder. It is understood and agreed that the assignment and assumption
hereunder are made without recourse to the Assignor and that the Assignor makes
no representation or warranty of any kind to the Assignee and shall not be
responsible for (i) the due execution, legality, validity, enforceability,
genuineness, sufficiency or collectability of the Credit Agreement or any Loan
Documents, (ii) any representation, warranty or statement made in or in
connection with the Credit Agreement or any of the Loan Documents, (iii) the
financial condition or creditworthiness of the Borrower or any guarantor, (iv)
the performance of or compliance with any of the terms or provisions of the
Credit Agreement or any of the Loan Documents, (v) inspecting any of the
property, books or records of the Borrower or (vi) the validity, enforceability,
perfection, priority, condition, value or sufficiency of any collateral securing
or purporting to secure the Advances. Neither the Assignor nor any of its
officers, directors, employees, agents or attorneys shall be liable for any
mistake, error of judgment, or action taken or omitted to be taken in connection
with the Advances, the Credit Agreement or the Loan Documents, except for its or
their own bad faith or willful misconduct. The Assignee appoints the Agent to
take such action as agent on its behalf and to exercise such powers under the
Credit Agreement as are delegated to the Agent by the terms thereof;
7. INDEMNITY. The Assignee agrees to indemnify and hold the
Assignor harmless against any and all losses, costs and expenses (including,
without limitation, reasonable attorneys' fees) and liabilities incurred by the
Assignor in connection with or arising in any manner from the Assignee's
performance or non-performance of obligations assumed under this Assignment
Agreement.
8. SUBSEQUENT ASSIGNMENTS. After the Effective Date, the
Assignee shall have the right pursuant to Section 9.1 of the Credit Agreement to
assign the rights which are assigned to the Assignee hereunder to any entity or
person, provided that (i) any such subsequent assignment does not violate any of
the terms and conditions of the Credit Agreement, any of the Loan Documents, or
any law, rule, regulation, order, writ, judgment, injunction or decree and that
any consent required under the terms of the Credit Agreement or any of the Loan
Documents has been obtained, (ii) the assignee under such assignment from the
Assignee shall agree to assume all of the Assignee's obligations hereunder in a
manner satisfactory to the Assignor and (iii) the Assignee is not thereby
released from any of its obligations to the Assignor hereunder.
9. REDUCTIONS OF AGGREGATE AMOUNT OF COMMITMENTS. If any
reduction in the aggregate amount of the Revolving Credit Commitments occurs
between the date of this Assignment Agreement and the Effective Date, the
percentage of the aggregate amount of the Revolving Credit Commitments assigned
to the Assignee shall remain the percentage specified in Section 1 hereof and
the dollar amount of the Revolving Credit Commitment of the Assignee shall be
recalculated based on the reduced aggregate amount of the Revolving Credit
Commitments.
3
<PAGE> 116
10. ENTIRE AGREEMENT. This Assignment Agreement and the
attached consent embody the entire agreement and understanding between the
parties hereto and supersede all prior agreements and understandings between the
parties hereto relating to the subject matter hereof.
11. GOVERNING LAW. This Assignment Agreement shall be governed
by the internal law, and not the law of conflicts, of the State of Ohio.
12. NOTICES. Notices shall be given under this Assignment
Agreement in the manner set forth in the Credit Agreement. For the purpose
hereof, the addresses of the parties hereto (until notice of a change is
delivered) shall be the address set forth under each party's name on the
signature pages hereof.
IN WITNESS WHEREOF, the parties hereto have executed this
Assignment Agreement by their duly authorized officers as of the date first
above written.
[NAME OF ASSIGNOR]
_____________________________________
By:__________________________________
Its:_________________________________
[NAME OF ASSIGNEE]
_____________________________________
By:__________________________________
Its:_________________________________
4
<PAGE> 117
ATTACHMENT I
TO
FORM OF BANK ASSIGNMENT AGREEMENT
NOTICE OF ASSIGNMENT
To: OM Group, Inc,
3800 Terminal Tower
Cleveland, Ohio 44113
Attention: __________________
NATIONAL CITY BANK, as Agent
1900 East Ninth Street
10th Floor
Cleveland, Ohio 44114
Attention: ____________________
From:[NAME OF ASSIGNOR]
[NAME OF ASSIGNEE]
______________, 19___
1. We refer to that certain Credit Agreement, dated as of
______________, 1998 (which, as it may be amended, modified, renewed or extended
from time to time, is herein called the "Credit Agreement"), among OM Group,
Inc. (the "Borrower"), the banks which are signatories thereto (the "Banks"),
ABN Amro Bank N.V., as Co-Agent (the "Co-Agent"), National City Bank as Letter
of Credit Bank (the "Letter of Credit Bank"), and National City Bank as agent
for the Banks and the Letter of Credit Bank (the "Agent"). Capitalized terms
used herein and not otherwise defined herein shall have the meanings attributed
to them in the Credit Agreement.
2. This Notice of Assignment (this "Notice" ) is given and
delivered to ****[the Borrower and]**** the Agent pursuant to Section 9.1(a) of
the Credit Agreement.
3. ___________________________("Assignor") and
______________________ (the "Assignee") have entered into an Assignment
Agreement, dated as of ____________, 19___, pursuant to which, among other
things, the Assignor has sold, assigned, delegated and transferred to the
Assignee, and the Assignee has purchased, accepted and assumed from the
Assignor, an undivided interest in and to all of the Assignor's rights and
obligations under the Credit Agreement such that Assignee's percentage of the
aggregate amount of the Revolving Credit Commitments shall equal
__________________ Dollars
- ----------
*to be included only if consent must be obtained from the Company pursuant
to Section 9.01 of the Credit Agreement.
5
<PAGE> 118
($________________________) __________________ percent (____%), effective as of
the "Effective Date" (as hereinafter defined).
4. The "Effective Date" shall be the later of ____________,
19___ or two Business Days (or such shorter period as agreed to by the Agent)
after this Notice of Assignment and any consents required by Sections 9.1(a),
9.1(b) and 9.1(c) of the Credit Agreement have been delivered to the Agent,
provided that the Effective Date shall not occur if any condition precedent
agreed to by the Assignor and the Assignee has not been satisfied; provided,
however, that, in the event that the Borrower shall appropriately deliver a
Credit Request prior to the time at which all of conditions to the effectiveness
of this Assignment shall have been met, the Effective Date shall be the Business
Day immediately following the day upon which the Advances by the Bank are to be
made under such Credit Request.
5. As of this date, the Ratable Portion of the Assignor in the
aggregate amount of the Revolving Credit Commitments, Advances and the LC
Exposure is _____% (____________________________ Dollars ($_______________)). As
of the Effective Date, the Ratable Portion of the Assignor in the aggregate
amount of the Revolving Credit Commitments, Advances and LC Exposure will be
_____% (_______________________ Dollars ($________________)) (as such percentage
may be reduced or increased by assignments which become effective prior to the
assignment to the Assignee becoming effective) and the Ratable Portion of the
Assignee in the aggregate amount of the Revolving Credit Commitments, Advances
and the LC Exposure will be _____% (__________________________ Dollars
($________________)).
6. The Assignor and the Assignee hereby give to the Borrower
and the Agent notice of the assignment and delegation referred to herein. The
Assignor will confer with the Agent before ________________, 19___ to determine
if the Assignment Agreement will become effective on such date pursuant to
Section 3 hereof, and will confer with the Agent to determine the Effective Date
pursuant to Section 3 hereof if it occurs thereafter. The Assignor shall notify
the Agent if the Assignment Agreement does not become effective on any proposed
Effective Date as a result of the failure to satisfy the conditions precedent
agreed to by the Assignor and the Assignee. At the request of the Agent, the
Assignor will give the Agent written confirmation of the occurrence of the
Effective Date.
7. The Assignee hereby accepts and assumes the assignment and
delegation referred to herein and agrees as of the Effective Date (i) to perform
fully all of the obligations under the Credit Agreement which it has hereby
assumed and (ii) to be bound by the terms and conditions of the Credit Agreement
as if it were a "Bank".
8. The Assignor and the Assignee request and agree that any
payments to be made by the Agent to the Assignor on and after the Effective Date
shall, to the extent of the assignment referred to herein, be made entirely to
the Assignee, it being understood that the Assignor and the Assignee shall make
between themselves any desired allocations.
9. The Assignor and the Assignee request and direct that the
Agent prepare and cause the Borrower to execute and deliver the Notes or, as
appropriate, replacements notes, to the Assignor and the Assignee in accordance
with Section 9.1(c) of the Credit Agreement. The
6
<PAGE> 119
Assignor [and the Assignee] agree[s] to deliver to the Agent the original Note
received from it by the Borrower upon its receipt of a new Note in the amount
set forth above.
The Assignee advises the Agent that the address listed below
is its address for notices under the Credit Agreement:
___________________________________
___________________________________
___________________________________
The Assignee advises the Agent that the address listed below
is the address of its Lending Office and the wire transfer instructions for
delivery of funds by the Agent thereto:
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
ASSIGNOR
______________________________________________________________
By:___________________________________________________________
Its: _________________________________________________________
ASSIGNEE
______________________________________________________________
By:___________________________________________________________
Its:__________________________________________________________
7
<PAGE> 120
ATTACHMENT II
TO
FORM OF BANK ASSIGNMENT AGREEMENT
CONSENT AND RELEASE
TO:[NAME OF ASSIGNOR]
____________________________
____________________________
[NAME OF ASSIGNEE]
____________________________
____________________________
________________, 19___
1.We acknowledge receipt from __________________________ (the
"Assignor") and ________________________ (the "Assignee") of the Notice of
Assignment, dated as of _______________, 19____ (the "Notice"). Capitalized
terms used herein and not otherwise defined herein shall have the meanings
attributed to them in the Notice.
2.In consideration of the assumption by the Assignee of the
obligations of the Assignor as referred to in the Notice, [the Borrower****] and
the Agent hereby (i) irrevocably consent[s], pursuant to Section 9.1(a) of the
Credit Agreement, to the assignment and delegation referred to in the Notice and
(ii) as of the Effective Date, irrevocably reduces the percentage of the
Assignor in the aggregate amount of the Revolving Credit Commitments, the
Advances and the Letters of Credit by the percentage of the aggregate amount of
the Revolving Credit Commitments, the Advances and the Letters of Credit
assigned to the Assignee and releases the Assignor from all of its obligations
to the Borrower under the Credit Agreement and any of the Loan Documents to the
extent that such obligations have been assumed by the Assignee.
****[3.The Borrower directs the Agent to prepare for issuance
by the Borrower of new Notes requested by the Assignor and the Assignee in the
Notice.]****
4.In consideration of the assumption by the Assignee of the
obligations of the Assignor as referred to in the Notice, the Agent and each of
the Bank executing below (which constitute the Required Banks under the Credit
Agreement) hereby (i) irrevocably consents, pursuant to Section 9.1(a) of the
Credit Agreement, to the assignment and delegation referred to in the Notice,
(ii) as of the Effective Date, irrevocably releases the Assignor from its
obligations to the Agent under the Credit Agreement or any of the Loan Documents
to the extent that such obligations have been assumed by the Assignee, and (iii)
agrees that, as of the Effective Date, the Agent shall consider the Assignee as
a "Bank" for all purposes under the Credit Agreement and
8
<PAGE> 121
any of the Loan Documents to the extent of the assignment and delegation
referred to in the Notice.
OM GROUP, INC.
______________________________________________________________
By:___________________________________________________________
Its:__________________________________________________________
NATIONAL CITY BANK, as Agent
______________________________________________________________
By:___________________________________________________________
Its:__________________________________________________________
To be included only if the consent of the Borrower is required pursuant to
Section 9.1(a) of the Credit Agreement.
9
<PAGE> 1
Exhibit 4.6
================================================================================
OM GROUP, INC.
$30,000,000
6.82% Senior Notes due 2007
6.99% Senior Notes due 2009
-------------------------
NOTE PURCHASE AGREEMENT
-------------------------
Dated October 24, 1997
================================================================================
<PAGE> 2
TABLE OF CONTENTS
SECTION PAGE
- ------- ----
1. AUTHORIZATION OF NOTES ........................................... 1
2. SALE AND PURCHASE OF NOTES ....................................... 1
3. CLOSING .......................................................... 2
4. CONDITIONS TO CLOSING ............................................ 2
4.1. Representations and Warranties ........................... 2
4.2. Performance; No Default .................................. 2
4.3. Compliance Certificates .................................. 3
4.4. Opinions of Counsel ...................................... 3
4.5. Purchase Permitted By Applicable Law, etc ................ 3
4.6. Sale to Other Purchaser .................................. 3
4.7. Payment of Special Counsel Fees .......................... 4
4.8. Private Placement Number ................................. 4
4.9. Changes in Corporate Structure ........................... 4
4.10. Approvals ................................................ 4
4.11. Guaranty Agreements ...................................... 4
4.12. Credit Agreement, etc .................................... 5
4.13. Debt Repayment ........................................... 5
4.14. Amendments to Credit Agreement; Existing Note
Purchase Agreements ...................................... 5
4.15. Proceedings and Documents ................................ 5
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY .................... 5
5.1. Organization; Power and Authority ........................ 5
5.2. Authorization, etc ....................................... 6
5.3. Disclosure ............................................... 6
5.4. Organization, Power and Authority, and Ownership
of Shares of Subsidiaries; Affiliates .................... 6
5.5. Financial Statements ..................................... 7
5.6. Compliance with Laws, Other Instruments, etc ............. 7
5.7. Governmental Authorizations, etc ......................... 8
5.8. Litigation; Observance of Agreements, Statutes
and Orders ............................................... 8
5.9. Taxes .................................................... 8
5.10. Title to Property; Leases; Investments ................... 8
5.11. Licenses, Permits, etc ................................... 9
5.12. Compliance with ERISA, etc ............................... 9
5.13. Private Offering by the Company .......................... 10
5.14. Use of Proceeds; Margin Regulations ...................... 11
i
<PAGE> 3
SECTION PAGE
- ------- ----
5.15. Existing Indebtedness; Future Liens ...................... 11
5.16. Foreign Assets Control Regulations, etc .................. 11
5.17. Status under Certain Statutes ............................ 11
5.18. Environmental Matters .................................... 12
6. REPRESENTATIONS OF THE PURCHASER ................................. 12
6.1. Purchase for Investment .................................. 12
6.2. Source of Funds .......................................... 12
7. INFORMATION AS TO COMPANY ........................................ 13
7.1. Financial and Business Information ....................... 13
7.2. Officer's Certificate .................................... 16
7.3. Inspection ............................................... 17
8. PAYMENT AND PREPAYMENT OF THE NOTES .............................. 17
8.1. Payment at Maturity ...................................... 17
8.2. Optional Prepayments with Make-Whole Amount .............. 18
8.3. Allocation of Partial Prepayments ........................ 18
8.4. Prepayment of Notes Upon Change of Control ............... 18
8.5. Maturity; Surrender, etc ................................. 18
8.6. Purchase of Notes ........................................ 19
8.7. Make-Whole Amount ........................................ 19
9. AFFIRMATIVE COVENANTS ............................................ 20
9.1. Compliance with Law ...................................... 20
9.2. Insurance ................................................ 21
9.3. Maintenance of Properties ................................ 21
9.4. Payment of Taxes and Claims .............................. 21
9.5. Corporate Existence; Licenses ............................ 21
9.6. Books and Records ........................................ 22
9.7. Environmental Matters .................................... 22
9.8. Prepayment of Notes Upon Change of Control ............... 22
10. NEGATIVE COVENANTS ............................................... 23
10.1. Maintenance of Certain Financial Conditions .............. 23
10.2. Indebtedness; Restricted Subsidiary Indebtedness ......... 23
10.3. Liens .................................................... 27
10.4. Investments, etc ......................................... 29
10.5. Restricted Payments; Restricted Additional Investments ... 31
10.6. Subsidiary Stock and Indebtedness ........................ 33
10.7. Consolidation, Merger, Sale of Assets, etc ............... 34
10.8. Sale Leasebacks .......................................... 37
10.9. Lines of Business ........................................ 38
10.10. Transactions with Affiliates ............................. 38
ii
<PAGE> 4
SECTION PAGE
- ------- ----
10.11. Restrictions on Subsidiary Dividends and Payments ........ 38
11. EVENTS OF DEFAULT ................................................ 38
12. REMEDIES ON DEFAULT, ETC ......................................... 41
12.1. Acceleration ............................................. 41
12.2. Other Remedies ........................................... 41
12.3. Rescission ............................................... 42
12.4. No Waivers or Election of Remedies, Expenses, etc ........ 42
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES .................... 42
13.1. Registration of Notes 42 13.2. Transfer and Exchange of Notes 43
13.3. Replacement of Notes ....................................... 43
14. PAYMENTS ON NOTES ................................................ 43
14.1. Place of Payment ......................................... 43
14.2. Home Office Payment ...................................... 44
15. EXPENSES, ETC .................................................... 44
15.1. Transaction Expenses ..................................... 44
15.2. Survival ................................................. 45
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
ENTIRE AGREEMENT ................................................. 45
17. AMENDMENT AND WAIVER ............................................. 45
17.1. Requirements ............................................. 45
17.2. Solicitation of Holders of Notes ......................... 45
17.3. Binding Effect, etc ...................................... 46
17.4. Notes held by Company, etc ............................... 46
18. NOTICES .......................................................... 46
19. REPRODUCTION OF DOCUMENTS ........................................ 47
20. CONFIDENTIAL INFORMATION ......................................... 47
21. SUBSTITUTION OF PURCHASER ........................................ 48
22. MISCELLANEOUS .................................................... 48
22.1. Successors and Assigns ................................... 48
22.2. Payments Due on Non-Business Days ........................ 49
22.3. Severability ............................................. 49
iii
<PAGE> 5
SECTION PAGE
- ------- ----
22.4. Construction; Accounting Terms ........................... 49
22.5. Counterparts ............................................. 50
22.6. Governing Law ............................................ 50
SCHEDULE A -- Information Relating to Purchasers
SCHEDULE B -- Defined Terms
SCHEDULE B-1 -- Form of Subordination Provisions
SCHEDULE 5.4 -- Subsidiaries and Affiliates
SCHEDULE 5.5 -- Financial Statements
SCHEDULE 5.10 -- Investments
SCHEDULE 5.12 -- Covered Contracts and Related Contracts
SCHEDULE 5.14 -- Use of Proceeds
SCHEDULE 5.15 -- Existing Indebtedness
EXHIBIT 1 -- Form of 6.82% Senior Note due 2007
EXHIBIT 1A -- Form of 6.99% Senior Note due 2009
EXHIBIT 4.4 -- Form of Opinion of Special Counsel to the Company and the
Guarantor
EXHIBIT 4.11 -- Form of Guaranty Agreement
iv
<PAGE> 6
OM GROUP, INC.
3800 TERMINAL TOWER
CLEVELAND, OHIO 44113-2204
6.82% Senior Notes due 2007
6.99% Senior Notes due 2009
October 24, 1997
TO EACH OF THE PURCHASERS LISTED IN
THE ATTACHED SCHEDULE A:
Ladies and Gentlemen:
OM Group, Inc., a Delaware corporation (the "COMPANY"), agrees with you
as follows:
1. AUTHORIZATION OF NOTES.
The Company will authorize the issue and sale of $15,000,000 aggregate
principal amount of its 6.82% Senior Notes due October 27, 2007 (the "2007
NOTES") and $15,000,000 of its 6.99% Senior Notes due October 27, 2009 (the
"2009 NOTES") (collectively, the "NOTES", such term to include any such notes
issued in substitution therefor pursuant to Section 13 of this Agreement or the
Other Agreement (as hereinafter defined)). The Notes shall be substantially in
the form set out in Exhibits 1 and 1A, with such changes therefrom, if any, as
may be approved by you and the Company. Certain capitalized terms used in this
Agreement are defined in Schedule B; references to a "Schedule" or an "Exhibit"
are, unless otherwise specified, to a Schedule or an Exhibit attached to this
Agreement.
2. SALE AND PURCHASE OF NOTES.
Subject to the terms and conditions of this Agreement, the Company will
issue and sell to you and you will purchase from the Company, at the Closing
provided for in Section 3, Notes in the principal amount and with the maturities
specified opposite your name in Schedule A at the purchase price of 100% of the
principal amount thereof. Contemporaneously with entering into this Agreement,
the Company is entering into a separate Note Purchase Agreement (the "OTHER
AGREEMENT") identical with this Agreement with the other purchaser named in
Schedule A (the "OTHER PURCHASER"), providing for the sale at such Closing to
the Other Purchaser of Notes in the principal amount and with the maturities
specified opposite its name in Schedule A. Your obligations hereunder and the
obligations of the Other Purchaser under the Other Agreement are several and not
joint obligations and you shall have no obligation under the Other Agreement and
no liability to any Person for the performance or non-performance by the Other
Purchaser thereunder.
<PAGE> 7
3. CLOSING.
The sale and purchase of the Notes to be purchased by you and the Other
Purchaser shall occur at the offices of Whitman Breed Abbott & Morgan LLP, 200
Park Avenue, New York, New York 10166, at 10:00 a.m., New York City time, at a
closing (the "CLOSING") on October 24, 1997 or on such other Business Day
thereafter on or prior to October 31, 1997 as may be agreed upon by the Company
and you and the Other Purchaser (the "CLOSING DATE"). At the Closing, the
Company will deliver to you the Notes of the maturity so designated to be
purchased by you in the form of a single Note (or such greater number of Notes
in denominations of at least $500,000 as you may request) dated the Closing Date
and registered in your name (or in the name of your nominee), against delivery
by you to the Company or its order of immediately available funds in the amount
of the purchase price therefor by wire transfer of immediately available funds
for the account of the Company to account number 001-2669111 at National City
Bank, Cleveland, Ohio. If at the Closing the Company shall fail to tender such
Notes to you as provided above in this Section 3, or any of the conditions
specified in Section 4 shall not have been fulfilled to your satisfaction, you
shall, at your election, be relieved of all further obligations under this
Agreement, without thereby waiving any rights you may have by reason of such
failure or such nonfulfillment.
4. CONDITIONS TO CLOSING.
Your obligation to purchase and pay for the Notes to be sold to you at
the Closing is subject to the fulfillment to your satisfaction, prior to or at
the Closing, of the following conditions:
4.1. REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Company in this Agreement, and
the representations and warranties of each of OMG Americas, Inc., an Ohio
corporation, OMG Apex, Inc., a Delaware corporation, and SCM Metal Products,
Inc., a Delaware corporation, each a Wholly Owned Restricted Subsidiary
(individually, a "GUARANTOR" and collectively, the "GUARANTORS"), in each
Guaranty Agreement, and all representations and warranties otherwise made in
writing by or on behalf of the Company or each Guarantor in connection with the
transactions contemplated hereby, shall be correct when made and at the time of
the Closing.
4.2. PERFORMANCE; NO DEFAULT.
The Company shall have performed and complied with all agreements and
conditions contained in this Agreement required to be performed or complied with
by it prior to or at the Closing and after giving effect to the issue and sale
of the Notes (and the application of the proceeds thereof as contemplated by
Schedule 5.14) no Default or Event of Default shall have occurred and be
continuing.
-2-
<PAGE> 8
4.3. COMPLIANCE CERTIFICATES.
(a) OFFICER'S CERTIFICATE. The Company shall have delivered to you an
Officer's Certificate, dated the Closing Date, certifying that the conditions
specified in Sections 4.1, 4.2 and 4.9 have been fulfilled.
(b) SECRETARY'S CERTIFICATES. The Company shall have delivered to you a
certificate of the Secretary or an Assistant Secretary of the Company certifying
as to the resolutions attached thereto and other corporate proceedings relating
to the authorization, execution and delivery of the Notes, this Agreement and
the Other Agreement; and each Guarantor shall have delivered to you a
certificate of the Secretary or an Assistant Secretary of such Guarantor
certifying as to the resolutions attached thereto and other corporate
proceedings relating to the authorization, execution and delivery of its
Guaranty Agreement.
4.4. OPINIONS OF COUNSEL.
You shall have received opinions in form and substance satisfactory to
you, dated the Closing Date (a) from Squire, Sanders & Dempsey, special counsel
for the Company and the Guarantor in connection with the transactions
contemplated hereby, covering the matters set forth in Exhibit 4.4 and covering
such other matters incident to such transactions as you or your counsel may
reasonably request (and the Company hereby instructs its counsel to deliver such
opinion to you), (b) from Raikkonen & Ramo Ltd., Finnish counsel to OMG
Kokkola Chemicals Oy, a Wholly Owned Restricted Subsidiary, and (c) from Whitman
Breed Abbott & Morgan LLP, your special counsel in connection with such
transactions, covering such matters as you may reasonably request.
4.5. PURCHASE PERMITTED BY APPLICABLE LAW, ETC.
On the Closing Date your purchase of Notes shall (i) be permitted by the
laws and regulations of each jurisdiction to which you are subject (without
recourse to basket or leeway provisions of said laws, such as Section 1405(a)(8)
of the New York Insurance Law), (ii) not violate any applicable law or
regulation (including, without limitation, Regulation G, T or X of the Board of
Governors of the Federal Reserve System) and (iii) not subject you to any tax,
penalty or liability under or pursuant to any applicable law or regulation,
which law or regulation is not in effect on the date hereof. If requested by
you, you shall have received an Officer's Certificate certifying as to such
matters of fact as you may reasonably specify to enable you to determine whether
such purchase is so permitted. Approvals, in form, scope and substance
satisfactory to you and your special counsel shall have been delivered to you
and your special counsel.
4.6. SALE TO OTHER PURCHASER.
The Other Agreement shall have been duly entered into and,
contemporaneously with the purchase of the Notes to be purchased by you at the
Closing, the Company shall sell to the Other Purchaser and the Other Purchaser
shall purchase the Notes to be purchased by them at the Closing as specified in
Schedule A.
-3-
<PAGE> 9
4.7. PAYMENT OF SPECIAL COUNSEL FEES.
Without limiting the provisions of Section 15.1, the Company shall have
paid on or before the Closing Date the fees, charges and disbursements of your
special counsel referred to in Section 4.4 to the extent reflected in a
statement of such counsel rendered to the Company at least one Business Day
prior to the Closing.
4.8. PRIVATE PLACEMENT NUMBER.
Private Placement numbers issued by Standard & Poor's CUSIP Service
Bureau (in cooperation with the Securities Valuation Office of the National
Association of Insurance Commissioners) shall have been obtained for the 2007
Notes and the 2009 Notes.
4.9. CHANGES IN CORPORATE STRUCTURE.
Neither the Company nor any Restricted Subsidiary shall have changed its
jurisdiction of incorporation or been a party to any merger or consolidation or
shall have succeeded to all or any substantial part of the liabilities of any
other entity, at any time following the date of the most recent financial
statements referred to in Schedule 5.5.
4.10. APPROVALS.
All actions, approvals, consents, waivers, exemptions, orders,
authorizations, registrations, declarations, filings and recordings
(collectively, "APPROVALS"), if any, which are required to be taken, given,
obtained, filed or recorded, as the case may be, by or from or with (a) any
Governmental Authority, (b) any trustee or holder of any indebtedness,
obligation or securities of the Company or any of its Subsidiaries or (c) any
other Person, in connection with the legal and valid execution and delivery by
the Company of this Agreement and the Other Agreement and the consummation of
the transactions contemplated hereby, the issuance and sale by the Company of
the Notes and the legal and valid execution and delivery by each Guarantor of
its Guaranty Agreement, shall have been duly taken, given, obtained, filed or
recorded, as the case may be, and all such Approvals shall be final, subsisting
and in full force and effect on the Closing Date, and shall not be subject to
any further proceedings or appeals or any conditions subsequent not approved by
you. Certified copies or other appropriate evidence of all such Approvals, in
form, scope and substance satisfactory to you and your special counsel, shall
have been delivered to you and your special counsel.
4.11. GUARANTY AGREEMENTS.
Each Guarantor shall have duly authorized, executed and delivered a
Guaranty Agreement substantially in the form of Exhibit 4.11 (as amended or
otherwise modified and in effect from time to time, the "GUARANTY AGREEMENTS");
the Guaranty Agreements shall be in full force and effect; and you and your
special counsel shall have each received an original fully executed counterpart
thereof.
-4-
<PAGE> 10
4.12. CREDIT AGREEMENT, ETC.
You and your special counsel shall have each received copies of the
Credit Agreement and the Bank Guaranty Agreements, certified as true and
complete copies thereof, in each case as in effect on the Closing Date.
4.13. DEBT REPAYMENT.
The Indebtedness of the Company identified on Schedule 5.15 as being
repaid on or prior to the Closing Date shall have been repaid to the extent
specified on Schedule 5.15, and all Liens, if any, securing any of such
Indebtedness identified thereon as being repaid in full shall have been released
and discharged (or provision satisfactory to you and your counsel shall have
been made for the simultaneous repayment of such Indebtedness and release and
discharge of such Liens). You and your special counsel shall have each received
appropriate evidence of such repayment, release and discharge.
4.14. Amendments to Credit Agreement; Existing Note Purchase Agreements.
The Company and the Banks shall have amended the Credit Agreement and
the 1995 Note Purchasers shall have amended the 1995 Note Purchase Agreements to
allow for the transactions contemplated hereby; and the amendments shall be in
full force and effect.
4.15. PROCEEDINGS AND DOCUMENTS.
All corporate and other proceedings in connection with the transactions
contemplated by this Agreement and all documents and instruments incident to
such transactions shall be satisfactory to you and your special counsel, and you
and your special counsel shall have received all such counterpart originals or
certified or other copies of such documents as you or they may reasonably
request
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to you that:
5.1. ORGANIZATION; POWER AND AUTHORITY.
The Company is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation, and is duly
qualified as a foreign corporation and is in good standing in each jurisdiction
in which such qualification is required by law, other than those jurisdictions
as to which the failure to be so qualified or in good standing could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. The Company has the corporate power and authority to own or hold
under lease the properties it purports to own or hold under lease, to transact
the business it transacts and proposes to transact, to execute and deliver this
Agreement and the Other Agreement and the Notes and to perform the provisions
hereof and thereof.
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5.2. AUTHORIZATION, ETC.
This Agreement, the Other Agreement and the Notes have been duly
authorized by all necessary corporate action on the part of the Company and the
Guaranty Agreements have been duly authorized by all necessary corporate action
on the part of each Guarantor; and this Agreement constitutes, and upon
execution and delivery thereof by the Company each Note will constitute, and
upon execution and delivery thereof by the Guarantors the Guaranty Agreements
will constitute, a legal, valid and binding obligation of the Company or each
Guarantor, as the case may be, enforceable against the Company or each
Guarantor, as the case may be, in accordance with its terms, except as such
enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and (ii) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
5.3. DISCLOSURE.
This Agreement, the documents, certificates or other writings delivered
to you by or on behalf of the Company in connection with the transactions
contemplated hereby and the financial statements listed in Schedule 5.5, taken
as a whole, do not contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein not misleading
in light of the circumstances under which they were made. Except as disclosed in
one of the documents, certificates or other writings delivered to you, or in the
financial statements listed in Schedule 5.5, since June 30, 1997, there has been
no change in the financial condition, operations, business, properties or
prospects of the Company or any Subsidiary except changes that individually or
in the aggregate could not reasonably be expected to have a Material Adverse
Effect. There is no fact known to the Company that could reasonably be expected
to have a Material Adverse Effect that has not been set forth herein or in the
other documents, certificates and other writings delivered to you by or on
behalf of the Company specifically for use in connection with the transactions
contemplated hereby.
5.4. ORGANIZATION, POWER AND AUTHORITY, AND OWNERSHIP OF SHARES OF
SUBSIDIARIES; AFFILIATES.
(a) Schedule 5.4 contains complete and correct lists (i) of the
Company's Subsidiaries, showing, as to each Subsidiary, the correct name
thereof, the jurisdiction of its organization, its designation as a Restricted
or Unrestricted Subsidiary, and the percentage of shares of each class of its
capital stock or similar equity interests outstanding owned by the Company and
each other Subsidiary, (ii) of the Company's Affiliates, other than
Subsidiaries, and (iii) of the Company's directors and senior officers.
(b) All of the outstanding shares of capital stock or similar equity
interests of each Subsidiary shown in Schedule 5.4 as being owned by the Company
and its Subsidiaries have been validly issued, are fully paid and nonassessable
and are owned by the Company or another Subsidiary (except for directors'
qualifying shares) free and clear of any Lien.
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(c) Each Subsidiary identified in Schedule 5.4 is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization, and is duly qualified as a foreign corporation and
is in good standing in each jurisdiction in which such qualification is required
by law, other than those jurisdictions as to which the failure to be so
qualified or in good standing could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. Each such Subsidiary
has the corporate or other power and authority to own or hold under lease the
properties it purports to own or hold under lease, to transact the business it
transacts and proposes to transact and, in the case of each Guarantor, to
execute and deliver the Guaranty Agreement to which it is a party and to perform
the provisions thereof.
(d) No Subsidiary is a party to, or otherwise subject to, any legal
restriction or any agreement (other than this Agreement, the agreements listed
on Schedule 5.4 and customary limitations imposed by corporate law statutes)
restricting the ability of such Subsidiary to pay dividends out of profits or
make any other similar distributions of profits to the Company or any of its
Subsidiaries that owns outstanding shares of capital stock or similar equity
interests of such Subsidiary.
5.5. FINANCIAL STATEMENTS.
The Company has delivered to you and the Other Purchaser copies of the
financial statements of the Company and its Subsidiaries listed on Schedule 5.5.
All of said financial statements (including in each case the related schedules
and notes) fairly present in all material respects the consolidated financial
position of the Company and its Subsidiaries as of the respective dates
specified in such Schedule and the consolidated results of their operations and
cash flows for the respective periods so specified and have been prepared in
accordance with GAAP consistently applied throughout the periods involved except
as set forth in the notes thereto (subject, in the case of any interim financial
statements, to normal year-end adjustments).
5.6. COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC.
Neither the execution, delivery and performance by the Company of this
Agreement and the Notes nor the execution, delivery and performance by each
Guarantor of the Guaranty Agreement to which it is a party will (i) contravene,
result in any breach of, or constitute a default under, or result in the
creation of any Lien in respect of any property of the Company, any Guarantor or
any other Subsidiary under, any indenture, mortgage, deed of trust, loan,
purchase or credit agreement, lease, corporate charter or by-law, or any other
agreement or instrument to which the Company, any Guarantor or any other
Subsidiary is bound or by which the Company, any Guarantor or any other
Subsidiary or any of their respective properties may be bound or affected, (ii)
conflict with or result in a breach of any of the terms, conditions or
provisions of any order, judgment, decree, or ruling of any court, arbitrator or
Governmental Authority applicable to the Company, any Guarantor or any other
Subsidiary or (iii) violate any provision of any statute or other rule or
regulation of any Governmental Authority applicable to the Company, any
Guarantor or any other Subsidiary.
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5.7. GOVERNMENTAL AUTHORIZATIONS, ETC.
No Approval by, from or with any Governmental Authority is required in
connection with the execution, delivery or performance by the Company of this
Agreement or the Notes or by the Guarantors of the Guaranty Agreements.
5.8. LITIGATION; OBSERVANCE OF AGREEMENTS, STATUTES AND ORDERS.
(a) There are no actions, suits or proceedings pending or, to the
knowledge of the Company, threatened against or affecting the Company or any
Subsidiary or any property of the Company or any Subsidiary in any court or
before any arbitrator of any kind or before or by any Governmental Authority
that, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
(b) Neither the Company nor any Subsidiary is in default under any term
of any agreement or instrument to which it is a party or by which it is bound,
or any order, judgment, decree or ruling of any court, arbitrator or
Governmental Authority or is in violation of any applicable law, ordinance, rule
or regulation (including without limitation Environmental Laws) of any
Governmental Authority, which default or violation, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
5.9. TAXES.
The Company and its Subsidiaries have filed all tax returns that are
required to have been filed in any jurisdiction, and have paid all taxes shown
to be due and payable on such returns and all other taxes and assessments levied
upon them or their properties, assets, income or franchises, to the extent such
taxes and assessments have become due and payable and before they have become
delinquent, except for any taxes and assessments (i) the amount of which is not
individually or in the aggregate Material or (ii) the amount, applicability or
validity of which is currently being contested in good faith by appropriate
proceedings and with respect to which the Company or a Subsidiary, as the case
may be, has established adequate reserves in accordance with GAAP. The Company
knows of no basis for any other tax or assessment that could reasonably be
expected to have a Material Adverse Effect. The charges, accruals and reserves
on the books of the Company and its Subsidiaries in respect of Federal, state or
other taxes for all fiscal periods are adequate. The Federal income tax
liabilities of the Company and its Subsidiaries have been determined by the
Internal Revenue Service and paid for all fiscal years up to and including the
fiscal year ended December 31, 1995.
5.10. TITLE TO PROPERTY; LEASES; INVESTMENTS.
(a) The Company and its Subsidiaries have good and sufficient title to
their respective properties that individually or in the aggregate are Material,
including all such properties reflected in the most recent audited balance sheet
referred to in Section 5.5 or purported to have been acquired by the Company or
any Subsidiary after said date (except as sold or otherwise disposed of in the
ordinary course of business), in each case free and clear of
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Liens prohibited by this Agreement. All leases that individually or in the
aggregate are Material are valid and subsisting and are in full force and
effect.
(b) Schedule 5.10 correctly lists all Investments of the Company and
each Subsidiary (other than (i) Investments in Subsidiaries and (ii) investments
of the character described in clause (b) of the definition set forth in Schedule
B of the term "Investment") which are existing on the date hereof.
5.11. LICENSES, PERMITS, ETC.
(a) The Company and its Subsidiaries own or possess all licenses,
permits, franchises, authorizations, patents, copyrights, service marks,
trademarks and trade names, or rights thereto, that individually or in the
aggregate are Material, without known conflict with the rights of others.
(b) To the best knowledge of the Company, no product Material to the
Company or any Subsidiary infringes in any material respect any license, permit,
franchise, authorization, patent, copyright, service mark, trademark, trade name
or other right owned by any other Person.
(c) To the best knowledge of the Company, there is no Material violation
by any Person of any right of the Company or any of its Subsidiaries with
respect to any patent, copyright, service mark, trademark, trade name or other
right owned or used by the Company or any of its Subsidiaries.
5.12. COMPLIANCE WITH ERISA, ETC.
(a) The Company and each ERISA Affiliate have operated and administered
each Plan in compliance with all applicable laws except for such instances of
noncompliance as have not resulted in and could not reasonably be expected to
result in a Material Adverse Effect. Neither the Company nor any ERISA Affiliate
has incurred any liability pursuant to Title I or IV of ERISA or the penalty or
excise tax provisions of the Code relating to employee benefit plans (as defined
in Section 3 of ERISA), and no event, transaction or condition has occurred or
exists that could reasonably be expected to result in the incurrence of any such
liability by the Company or any ERISA Affiliate, or in the imposition of any
Lien on any of the rights, properties or assets of the Company or any ERISA
Affiliate, in either case pursuant to Title I or IV of ERISA or to such penalty
or excise tax provisions or to Section 401(a)(29) or 412 of the Code, other than
such liabilities or Liens as would not be individually or in the aggregate
Material.
(b) The present value of the aggregate benefit liabilities under each of
the Plans (other than Multiemployer Plans), determined as of the end of such
Plan's most recently ended plan year on the basis of the actuarial assumptions
specified for funding purposes in such Plan's most recent actuarial valuation
report, did not exceed the aggregate current value of the assets of such Plan
allocable to such benefit liabilities. The term "BENEFIT LIABILITIES" has the
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meaning specified in section 4001 of ERISA and the terms "CURRENT VALUE" and
"PRESENT VALUE" have the respective meanings specified in section 3 of ERISA.
(c) The Company and its ERISA Affiliates have not incurred withdrawal
liabilities (and are not subject to contingent withdrawal liabilities) under
section 4201 or 4204 of ERISA in respect of Multiemployer Plans that
individually or in the aggregate are Material.
(d) The expected postretirement benefit obligation (determined as of the
last day of the Company's most recently ended fiscal year in accordance with
Financial Accounting Standards Board Statement No. 106, without regard to
liabilities attributable to continuation coverage mandated by section 4980B of
the Code) of the Company and its Subsidiaries is not Material.
(e) The execution and delivery of this Agreement and the issuance and
sale of the Notes hereunder will not involve any transaction that is subject to
the prohibitions of section 406 of ERISA or in connection with which a tax could
be imposed pursuant to section 4975(c)(1)(A)-(D) of the Code. The representation
by the Company in the first sentence of this Section 5.12(e) is made in reliance
upon and subject to the accuracy of your representation in Section 6.2 as to the
sources of the funds used to pay the purchase price of the Notes to be purchased
by you.
(f) Attached hereto as Schedule 5.12 is a complete list (i) of each
covered plan which has an interest as a contractholder in (or as the beneficial
owner of) any insurance or annuity contract (a "Covered Contract") issued by any
of the Purchasers (together with sufficient information to identify such
contract and the Purchaser issuing such contract) and (ii) of each related plan
which has an interest as a contractholder in (or as the beneficial owner of) any
insurance or annuity contract issued by the Purchaser issuing a Covered Contract
(together with a description of such contract (a "Related Contract")). As used
in the immediately preceding sentence, the following terms shall have the
following meanings: "covered plan" shall mean an employee benefit plan as
defined in Section 3(3) of ERISA, or a plan as defined in Section 4975(e)(1) of
the Code, with respect to which the Company is a party in interest (as defined
in Section 3(14) of ERISA) or a disqualified person (as defined in Section
4975(e)(2) of the Code), or with respect to which the Notes could constitute an
employer security (as defined in Section V(c) of Prohibited Transaction Class
Exemption 95-60 ("PTCE 95-60")); "related plan" shall mean, with respect to any
Covered Contract, any employee benefit plan maintained by the same employer (or
any affiliate of such employer) or employee organization maintaining the covered
plan identified pursuant to clause (i) with respect to such Covered Contract;
and "affiliate" shall mean an affiliate as defined in Section V(a) of PTCE
95-60.
5.13. PRIVATE OFFERING BY THE COMPANY.
Neither the Company nor anyone acting on its behalf has offered the
Notes or any similar securities for sale to, or solicited any offer to buy any
of the same from, or otherwise approached or negotiated in respect thereof with,
any Person other than you, the Other Purchaser and not more than 25 other
Institutional Investors, each of which has been offered the Notes at private
sale for investment. Neither the Company nor anyone acting on its behalf has
taken, or
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will take, any action that would subject the issuance or sale of the Notes to
the registration requirements of Section 5 of the Securities Act.
5.14. USE OF PROCEEDS; MARGIN REGULATIONS.
The Company will apply the proceeds of the sale of the Notes as set
forth in Schedule 5.14. No part of the proceeds from the sale of the Notes
hereunder will be used, directly or indirectly, for the purpose of buying or
carrying any margin stock within the meaning of Regulation G of the Board of
Governors of the Federal Reserve System (12 CFR 207), or for the purpose of
buying or carrying or trading in any securities under such circumstances as to
involve the Company in a violation of Regulation X of said Board (12 CFR 224) or
to involve any broker or dealer in a violation of Regulation T of said Board (12
CFR 220). Margin stock does not constitute more than 5% of the value of the
consolidated assets of the Company and its Subsidiaries and the Company does not
have any present intention that margin stock will constitute more than 5% of the
value of such assets. As used in this Section, the terms "MARGIN STOCK" and
"PURPOSE OF BUYING OR CARRYING" shall have the meanings assigned to them in said
Regulation G.
5.15. EXISTING INDEBTEDNESS; FUTURE LIENS.
(a) Schedule 5.15 sets forth a complete and correct list of all
outstanding Funded Debt of the Company and its Subsidiaries as of the date
hereof and as of the Closing Date. Neither the Company nor any Subsidiary is in
default in, and no waiver of default is currently in effect relating to, the
payment of any principal or interest on any Indebtedness of the Company or such
Subsidiary and no event or condition exists with respect to any Indebtedness of
the Company or any Subsidiary that would permit (or that with notice or the
lapse of time, or both, would permit) one or more Persons to cause such
Indebtedness to become due and payable before its stated maturity or before its
regularly scheduled dates of payment.
(b) Neither the Company nor any Subsidiary has agreed or consented to
cause or permit in the future (upon the happening of a contingency or otherwise)
any of its property, whether now owned or hereafter acquired, to be subject to a
Lien not permitted by Section 10.3.
5.16. FOREIGN ASSETS CONTROL REGULATIONS, ETC.
Neither the sale of the Notes by the Company hereunder nor its use of
the proceeds thereof will violate the Trading with the Enemy Act, as amended, or
any of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto.
5.17. STATUS UNDER CERTAIN STATUTES.
Neither the Company nor any Subsidiary is subject to regulation under
the Investment Company Act of 1940, as amended, the Public Utility Holding
Company Act of 1935, as amended, the Interstate Commerce Act, as amended, or the
Federal Power Act, as amended.
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5.18. ENVIRONMENTAL MATTERS.
Neither the Company nor any Subsidiary has knowledge of any claim or has
received any notice of any claim, and no proceeding has been instituted raising
any claim against the Company or any of its Subsidiaries or any of their
respective real properties now or formerly owned, leased or operated by any of
them or other assets, alleging any damage to the environment or violation of any
Environmental Laws, except, in each case, such as could not reasonably be
expected to result in a Material Adverse Effect. Except as otherwise disclosed
to you in writing,
(a) neither the Company nor any Subsidiary has knowledge of
any facts which would give rise to any claim, public or private, of
violation of Environmental Laws or damage to the environment emanating
from, occurring on or in any way related to real properties now or formerly
owned, leased or operated by any of them or to other assets or their use,
except, in each case, such as could not reasonably be expected to result in
a Material Adverse Effect;
(b) neither the Company nor any of its Subsidiaries has stored
any Hazardous Materials on real properties now or formerly owned, leased or
operated by any of them and has not disposed of any Hazardous Materials in
a manner contrary to any Environmental Laws in each case in any manner that
could reasonably be expected to result in a Material Adverse Effect; and
(c) all buildings on all real properties now owned, leased or
operated by the Company or any of its Subsidiaries are in compliance with
applicable Environmental Laws, except where failure to comply could not
reasonably be expected to result in a Material Adverse Effect.
6. REPRESENTATIONS OF THE PURCHASER.
6.1. PURCHASE FOR INVESTMENT.
You represent that you are purchasing the Notes for your own account or
for one or more separate accounts maintained by you or for the account of one or
more pension or trust funds and not with a view to the distribution thereof,
PROVIDED that the disposition of your or their property shall at all times be
within your or their control. You understand that the Notes have not been
registered under the Securities Act and may be resold only if registered
pursuant to the provisions of the Securities Act or if an exemption from
registration is available, except under circumstances where neither such
registration nor such an exemption is required by law, and that the Company is
not required to register the Notes.
6.2. SOURCE OF FUNDS.
You represent that at least one of the following statements is an
accurate representation as to each source of funds (a "SOURCE") to be used by
you to pay the purchase price of the Notes to be purchased by you hereunder:
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(a) if you are an insurance company, the Source does not include
assets allocated to any separate account maintained by you in which any employee
benefit plan (or its related trust) has any interest, other than a separate
account that is maintained solely in connection with your fixed contractual
obligations under which the amounts payable, or credited, to such plan and to
any participant or beneficiary of such plan (including any annuitant) are not
affected in any manner by the investment performance of the separate account; or
(b) the Source is either (i) an insurance company pooled
separate account, within the meaning of Prohibited Transaction Exemption ("PTE")
90-1 (issued January 29, 1990), or (ii) a bank collective investment fund,
within the meaning of the PTE 91-38 (issued July 12, 1991) and, except as you
have disclosed to the Company in writing pursuant to this paragraph (b), no
employee benefit plan or group of plans maintained by the same employer or
employee organization beneficially owns more than 10% of all assets allocated to
such pooled separate account or collective investment fund; or
(c) the Source is a governmental plan; or
(d) the Source is one or more employee benefit plans, or a
separate account or trust fund comprised of one or more employee benefit plans,
each of which has been identified to the Company in writing pursuant to this
paragraph (d); or
(e) the Source does not include assets of any employee benefit
plan, other than a plan exempt from the coverage of ERISA.
Each Purchaser whose source of funds includes assets of its insurance
company general account (as defined in Section V(e) of PTCE 95-60), and with
respect to which a Covered Contract is disclosed by the Company on Schedule
5.12, hereby represents to the Company that the reserves and liabilities with
respect to such general account for such Covered Contract and all Related
Contracts, if any, identified by the Company with respect thereto do not exceed
10% of the sum of all reserves and liabilities of such general account plus the
surplus of such Purchaser, such reserves and liabilities and such surplus in
each case being calculated in accordance with the applicable provisions of PTCE
95-60.
As used in this Section 6.2, the terms "EMPLOYEE BENEFIT PLAN", "GOVERNMENTAL
PLAN" and "SEPARATE ACCOUNT" shall have the respective meanings assigned to such
terms in Section 3 of ERISA.
7. INFORMATION AS TO COMPANY.
7.1. FINANCIAL AND BUSINESS INFORMATION.
The Company shall deliver to each holder of Notes that is an
Institutional Investor:
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(a) QUARTERLY STATEMENTS -- within 60 days after the end of each
quarterly fiscal period in each fiscal year of the Company (other than the last
quarterly fiscal period of each such fiscal year), copies of;
(i) a consolidated balance sheet of the Company and its
Restricted Subsidiaries as at the end of such quarter;
(ii) consolidated statement of income of the Company and its
Restricted Subsidiaries, for such quarter and (in the case of the second and
third quarters) for the portion of the fiscal year ending with such quarter; and
(iii) consolidated statement of cash flows of the Company and
its Restricted Subsidiaries for the portion of the fiscal year ending with such
quarter;
setting forth in each case in comparative form the figures for the corresponding
periods in the previous fiscal year, all in reasonable detail, prepared in
accordance with GAAP applicable to quarterly financial statements generally, and
certified by a Senior Financial Officer as fairly presenting, in all material
respects, the financial position of the companies being reported on and their
results of operations and cash flows, subject to changes resulting from year-end
adjustments, PROVIDED that delivery within the time period specified above of
copies of the Company's Quarterly Report on Form 10-Q prepared in compliance
with the requirements therefor and filed with the Securities and Exchange
Commission shall be deemed to satisfy the requirements of this Section 7.1(a);
(b) ANNUAL STATEMENTS -- within 105 days after the end of each
fiscal year of the Company, copies of;
(i) a consolidated balance sheet of the Company and its
Restricted Subsidiaries, as at the end of such year; and
(ii) consolidated statements of income, changes in shareholders'
equity and cash flows of the Company and its Restricted Subsidiaries, for such
year,
setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail, prepared in accordance with GAAP, and
accompanied
(A) by an opinion thereon of independent certified public
accountants of recognized national standing, which opinion shall state that such
financial statements present fairly, in all material respects, the financial
position of the companies being reported upon and their results of operations
and cash flows and have been prepared in conformity with GAAP, and that the
examination of such accountants in connection with such financial statements has
been made in accordance with generally accepted auditing standards, and that
such audit provides a reasonable basis for such opinion in the circumstances,
and
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(B) a certificate of such accountants stating that they have
reviewed this Agreement and stating further whether, in making their audit, they
have become aware of any condition or event that then constitutes a Default or
an Event of Default, and, if they are aware that any such condition or event
then exists, specifying the nature and period of the existence thereof,
PROVIDED that the delivery within the time period specified above of the
Company's Annual Report on Form 10-K for such fiscal year (together with the
Company's annual report to shareholders, if any, prepared pursuant to Rule 14a-3
under the Exchange Act) prepared in accordance with the requirements therefor
and filed with the Securities and Exchange Commission, together with the
accountant's certificate described in clause (B) above, shall be deemed to
satisfy the requirements of this Section 7.1(b);
(c) SEC AND OTHER REPORTS -- promptly upon their becoming
available, one copy of (i) each financial statement, report, notice or proxy
statement sent by the Company or any Subsidiary to public securities holders
generally, and (ii) each regular or periodic report, each registration statement
(without exhibits except as expressly requested by such holder), and each
prospectus and all amendments thereto filed by the Company or any Subsidiary
with the Securities and Exchange Commission and of all press releases and other
statements made available generally by the Company or any Subsidiary to the
public concerning developments that are Material;
(d) NOTICE OF DEFAULT OR EVENT OF DEFAULT __ promptly, and in
any event within five days after a Responsible Officer becoming aware of the
existence of any Default or Event of Default or that any Person has given any
notice or taken any action with respect to a claimed default hereunder or that
any Person has given any notice or taken any action with respect to a claimed
default of the type referred to in Section 11(f), a written notice specifying
the nature and period of existence thereof and what action the Company is taking
or proposes to take with respect thereto;
(e) ERISA MATTERS -- promptly, and in any event within five days
after a Responsible Officer becoming aware of any of the following, a written
notice setting forth the nature thereof and the action, if any, that the Company
or an ERISA Affiliate proposes to take with respect thereto:
(i) with respect to any Plan, any reportable event, as defined
in section 4043(b) of ERISA and the regulations thereunder; or
(ii) the taking by the PBGC of steps to institute, or the
threatening by the PBGC of the institution of, proceedings under section
4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan, or the receipt by the Company or any ERISA Affiliate
of a notice from a Multiemployer Plan that such action has been taken by
the PBGC with respect to such Multiemployer Plan; or
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(iii) any event, transaction or condition that could result in
the incurrence of any liability by the Company or any ERISA Affiliate pursuant
to Title I or IV of ERISA or the penalty or excise tax provisions of the Code
relating to employee benefit plans, or in the imposition of any Lien on any of
the rights, properties or assets of the Company or any ERISA Affiliate pursuant
to Title I or IV of ERISA or to such penalty or excise tax provisions or to
Section 401(a)(29) or 412 of the Code, if such liability or Lien, taken together
with any other such liabilities or Liens then existing, could reasonably be
expected to have a Material Adverse Effect; or
(iv) the existence, at any time after the Closing, of any
Covered Contracts or Related Contracts which are not listed on Schedule 5.12 as
of the Closing Date;
(f) NOTICES FROM GOVERNMENTAL AUTHORITY -- promptly, and in any
event within 10 days of receipt thereof, copies of any notice to the Company or
any Subsidiary from any Federal or state Governmental Authority relating to any
order, ruling, statute or other law or regulation that could reasonably be
expected to have a Material Adverse Effect;
(g) NOTICE OF CHANGE OF CONTROL -- promptly, and in no event
later than 15 days prior to the date of any Change of Control, written notice
thereof in the form of an Officer's Certificate describing in reasonable detail
the facts and circumstances giving rise to such Change of Control, specifying
the date such Change of Control is expected to occur, and making reference to
Section 9.8 of this Agreement and the right of the holders of Notes to require
the prepayment of the Notes on the terms and conditions provided for in such
Section 9.8; and
(h) REQUESTED INFORMATION -- with reasonable promptness, such
other data and information relating to the business, operations, affairs,
financial condition, assets or properties of the Company or any of its
Subsidiaries or relating to the ability of the Company to perform its
obligations hereunder and under the Notes as from time to time may be reasonably
requested in writing by any such holder of Notes.
7.2. OFFICER'S CERTIFICATE.
Each set of financial statements delivered to a holder of Notes pursuant
to Section 7.1(a) or Section 7.1(b) hereof shall be accompanied by a certificate
of a Senior Financial Officer setting forth:
(a) COVENANT COMPLIANCE -- the information (including detailed
calculations) required in order to establish whether the Company was in
compliance with the requirements of Section 10.1 through Section 10.11 hereof,
inclusive, during the quarterly or annual period covered by the statements then
being furnished (including with respect to each such Section, where applicable,
the calculations of the maximum or minimum amount, ratio or percentage, as the
case may be, permissible under the terms
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of such Sections, and the calculation of the amount, ratio or percentage then in
existence); and
(b) EVENT OF DEFAULT -- a statement that such officer has
reviewed the relevant terms hereof and has made, or caused to be made, under
such officer's supervision, a review of the transactions and conditions of the
Company and its Restricted Subsidiaries from the beginning of the quarterly or
annual period covered by the statements then being furnished to the date of the
certificate and that such review has not disclosed the existence during such
period of any condition or event that constitutes a Default or an Event of
Default or, if any such condition or event existed or exists (including, without
limitation, any such event or condition resulting from the failure of the
Company or any Restricted Subsidiary to comply with any Environmental Law),
specifying the nature and period of existence thereof and what action the
Company has taken or proposes to take with respect thereto.
7.3. INSPECTION.
The Company shall permit the representatives of each holder of Notes
that is an Institutional Investor:
(a) NO DEFAULT -- if no Default or Event of Default then exists,
at the expense of such holder and upon reasonable prior notice to the Company,
to visit the principal executive office of the Company, to discuss the affairs,
finances and accounts of the Company and its Restricted Subsidiaries with the
Company's officers, and (with the consent of the Company, which consent will not
be unreasonably withheld) its independent public accountants, and (with the
consent of the Company, which consent will not be unreasonably withheld) to
visit the other offices and properties of the Company and each Restricted
Subsidiary, all at such reasonable times and as often as may be reasonably
requested in writing; and
(b) DEFAULT -- if a Default or Event of Default then exists, at
the expense of the Company to visit and inspect any of the offices or properties
of the Company or any Subsidiary, to examine all their respective books of
account, records, reports and other papers, to make copies and extracts
therefrom, and to discuss their respective affairs, finances and accounts with
their respective officers and independent public accountants (and by this
provision the Company authorizes said accountants to discuss the affairs,
finances and accounts of the Company and its Subsidiaries), all at such times
and as often as may be requested.
8. PAYMENT AND PREPAYMENT OF THE NOTES.
8.1. PAYMENT AT MATURITY.
The Company will pay the entire outstanding principal amount of the 2007
Notes, together with all interest accrued thereon, on October 27, 2007, and will
pay the entire
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outstanding principal amount of the 2009 Notes, together with all interest
accrued thereon, on October 27, 2009.
8.2. OPTIONAL PREPAYMENTS WITH MAKE-WHOLE AMOUNT.
The Notes shall not be subject to prepayment at the option of the
Company except as provided in this Section 8.2. The Company may, at its option,
at any time on or after October 27, 1998, upon notice as provided below, prepay
the Notes at any time in whole, or from time to time in part (in a minium
principal amount of $500,000 and in integral multiples of $1,000, in excess
thereof), at 100% of the principal amount so prepaid, plus the Make-Whole Amount
determined for the prepayment date with respect to such principal amount. The
Company will give each holder of Notes written notice of each optional
prepayment under this Section 8.2 not less than 30 days and not more than 60
days prior to the date fixed for such prepayment. Each such notice shall specify
such date, the maturity of Notes and the aggregate principal amount of such
Notes to be prepaid on such date, the principal amount of each Note held by such
holder to be prepaid (determined in accordance with Section 8.3), and the
interest to be paid on the prepayment date with respect to such principal amount
being prepaid, and shall be accompanied by a certificate of a Senior Financial
Officer as to the estimated Make-Whole Amount due in connection with such
prepayment (calculated as if the date of such notice were the date of the
prepayment), setting forth the details of such computation. Two Business Days
prior to such prepayment, the Company shall deliver to each holder of Notes a
certificate of a Senior Financial Officer specifying the calculation of such
Make-Whole Amount as of the specified prepayment date.
8.3. ALLOCATION OF PARTIAL PREPAYMENTS.
In the case of each partial prepayment of the Notes (other than any such
prepayment pursuant to Section 8.4), the principal amount of the Notes to be
prepaid shall be allocated between the 2007 Notes and the 2009 Notes in
proportion to the aggregate principal amount of each such Note outstanding
immediately prior to such prepayment.
8.4. PREPAYMENT OF NOTES UPON CHANGE OF CONTROL.
The Company shall be required to prepay Notes of each holder thereof
which shall have given notice to the Company of its election to require such
prepayment in connection with a Change of Control, as contemplated by Section
9.8, each such purchase to be made at the price and otherwise upon the terms set
forth and on the date determined in accordance with, and otherwise as provided
in, Section 9.8.
8.5. MATURITY; SURRENDER, ETC.
In the case of each prepayment of Notes pursuant to this Section 8, the
principal amount of each Note to be prepaid shall mature and become due and
payable on the date fixed for such prepayment, together with interest on such
principal amount accrued to such date and the applicable Make-Whole Amount, if
any. From and after such date, unless the Company shall fail to pay such
principal amount when so due and payable, together with the interest and
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Make-Whole Amount, if any, as aforesaid, interest on such principal amount shall
cease to accrue. Any Note paid or prepaid in full shall be surrendered to the
Company and cancelled and shall not be reissued, and no Note shall be issued in
lieu of any prepaid principal amount of any Note.
8.6. PURCHASE OF NOTES.
The Company will not and will not permit any Affiliate to purchase,
redeem, prepay or otherwise acquire, directly or indirectly, any of the
outstanding Notes except upon the payment or prepayment of the Notes in
accordance with the terms of this Agreement and the Notes. The Company will
promptly cancel all Notes acquired by it or any Affiliate pursuant to any
payment, prepayment or purchase of Notes pursuant to any provision of this
Agreement and no Notes may be issued in substitution or exchange for any such
Notes.
8.7. MAKE-WHOLE AMOUNT.
The term "MAKE-WHOLE AMOUNT" means, with respect to any Note, an amount
equal to the excess, if any, of the Discounted Value of the Remaining Scheduled
Payments with respect to the Called Principal of such Note over the amount of
such Called Principal, PROVIDED that the Make-Whole Amount may in no event be
less than zero. For the purposes of determining the Make-Whole Amount, the
following terms have the following meanings:
"CALLED PRINCIPAL" means, with respect to any Note, the
principal of such Note that is to be prepaid pursuant to Section 8.2 or has
become or is declared to be immediately due and payable pursuant to Section
12.1, as the context requires.
"DISCOUNTED VALUE" means, with respect to the Called Principal
of any Note, the amount obtained by discounting all Remaining Scheduled Payments
with respect to such Called Principal from their respective scheduled due dates
to the Settlement Date with respect to such Called Principal, in accordance with
accepted financial practice and at a discount factor (applied on the same
periodic basis as that on which interest on the Notes is payable) equal to the
Reinvestment Yield with respect to such Called Principal.
"REINVESTMENT YIELD" means, with respect to the Called Principal
of any Note, 0.5% over the yield to maturity implied by (i) the yields reported,
as of 10:00 A.M. (New York City time) on the second Business Day preceding the
Settlement Date with respect to such Called Principal, on the display designated
as "Page 678" on the Telerate Access Service (or such other display as may
replace Page 678 on Telerate Access Service) for actively traded U.S. Treasury
securities having a maturity equal to the Remaining Average Life of such Called
Principal as of such Settlement Date, or (ii) if such yields are not reported as
of such time or the yields reported as of such time are not ascertainable, the
Treasury Constant Maturity Series Yields reported, for the latest day for which
such yields have been so reported as of the second Business Day preceding the
Settlement Date with respect to such Called Principal, in Federal Reserve
Statistical Release H.15 (519) (or any comparable successor publication) for
actively traded U.S.
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Treasury securities having a constant maturity equal to the Remaining Average
Life of such Called Principal as of such Settlement Date. Such implied yield
will be determined, if necessary, by (a) converting U.S. Treasury bill
quotations to bond-equivalent yields in accordance with accepted financial
practice and (b) interpolating linearly between (1) the actively traded U.S.
Treasury security with the duration closest to and greater than the Remaining
Average-Life and (2) the actively traded U.S. Treasury security with the
duration closest to and less than the Remaining Average Life.
"REMAINING AVERAGE LIFE" means, with respect to any Called
Principal, the number of years (calculated to the nearest one-twelfth year)
obtained by dividing (i) such Called Principal into (ii) the sum of the products
obtained by multiplying (a) the principal component of each Remaining Scheduled
Payment with respect to such Called Principal by (b) the number of years
(calculated to the nearest one-twelfth year) that will elapse between the
Settlement Date with respect to such Called Principal and the scheduled due date
of such Remaining Scheduled Payment.
"REMAINING SCHEDULED PAYMENTS" means, with respect to the Called
Principal of any Note, all payments of such Called Principal and interest
thereon that would be due after the Settlement Date with respect to such Called
Principal if no payment of such Called Principal were made prior to its
scheduled due date, PROVIDED that if such Settlement Date is not a date on which
interest payments are due to be made under the terms of the Notes, then the
amount of the next succeeding scheduled interest payment will be reduced by the
amount of interest accrued to such Settlement Date and required to be paid on
such Settlement Date pursuant to Section 8.2 or 12.1.
"SETTLEMENT DATE" means, with respect to the Called Principal of
any Note, the date on which such Called Principal is to be prepaid pursuant to
Section 8.2 or has become or is declared to be immediately due and payable
pursuant to Section 12.1, as the context requires.
9. AFFIRMATIVE COVENANTS.
The Company covenants and agrees that from the date of this Agreement
through the Closing Date, and thereafter so long as any Note shall remain
outstanding:
9.1. COMPLIANCE WITH LAW.
The Company will, and will cause each of its Restricted Subsidiaries to,
comply with all laws, ordinances or governmental rules or regulations to which
each of them is subject, obtain and maintain in effect all licenses,
certificates, permits, franchises and other governmental authorizations
necessary to the ownership of their respective properties or to the conduct of
their respective businesses, in each case to the extent necessary to ensure that
non-compliance with such laws, ordinances or governmental rules or regulations
or failures to obtain or maintain in effect such licenses, certificates,
permits, franchises and other governmental authorizations could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
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9.2. INSURANCE.
The Company will, and will cause each of its Restricted Subsidiaries to,
maintain, with financially sound and reputable insurers, insurance with respect
to their respective properties and businesses against such casualties and
contingencies, of such types, on such terms and in such amounts (including
deductibles, co-insurance and self-insurance, if adequate reserves are
maintained with respect thereto) as is customary in the case of entities of
established reputations engaged in the same or a similar business and similarly
situated.
9.3. MAINTENANCE OF PROPERTIES.
The Company will, and will cause each of its Restricted Subsidiaries to,
maintain and keep, or cause to be maintained and kept, their respective
properties in good repair, working order and condition (other than ordinary wear
and tear), so that the business carried on in connection therewith may be
properly conducted at all times, PROVIDED that this Section shall not prevent
the Company or any Restricted Subsidiary from discontinuing the operation and
the maintenance of any of its properties if such discontinuance is desirable in
the conduct of its business and the Company has concluded that such
discontinuance could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
9.4. PAYMENT OF TAXES AND CLAIMS.
The Company will, and will cause each of its Restricted Subsidiaries to,
file all tax returns required to be filed in any jurisdiction and to pay and
discharge all taxes shown to be due and payable on such returns and all other
taxes, assessments, governmental charges, or levies imposed on them or any of
their properties, assets, income or franchises, to the extent such taxes and
assessments have become due and payable and before they have become delinquent,
and all claims for which sums have become due and payable that have or might
become a Lien on properties or assets of the Company or any Restricted
Subsidiary, PROVIDED that neither the Company nor any Restricted Subsidiary need
pay any such tax or assessment or claims if (i) the amount, applicability or
validity thereof is contested by the Company or such Restricted Subsidiary on a
timely basis in good faith and in appropriate proceedings, and the Company or a
Restricted Subsidiary has established adequate reserves therefor in accordance
with GAAP on the books of the Company or such Restricted Subsidiary or (ii) the
nonpayment of all such taxes and assessments in the aggregate could not
reasonably be expected to have a Material Adverse Effect.
9.5. CORPORATE EXISTENCE; LICENSES.
(a) The Company will at all times preserve and keep in full force and
effect its corporate existence. Subject to Sections 10.6 and 10.7, the Company
will at all times preserve and keep in full force and effect the corporate
existence of each of its Restricted Subsidiaries (unless merged into the Company
or a Wholly Owned Restricted Subsidiary) and all rights and franchises of the
Company and its Restricted Subsidiaries unless, in the good faith judgment of
the Company, the termination of or failure to preserve and keep in full force
and
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effect such corporate existence, right or franchise could not, individually or
in the aggregate, have a Material Adverse Effect.
(b) The Company will, and will cause each of its Restricted Subsidiaries
to, maintain the validity of all Licenses necessary in any material respect for
the conduct of the Business of the Company and its Restricted Subsidiaries.
9.6. BOOKS AND RECORDS.
The Company will, and will cause each of its Restricted Subsidiaries to,
(a) keep proper books of record and account in which full, true and correct
entries will be made of all its material business dealings and transactions in
accordance with GAAP applied on a consistent basis and (b) maintain a system of
accounting established and administered in accordance with GAAP, and set aside
on its books from its earnings for each fiscal period all proper reserves,
accruals and provisions which, in accordance with GAAP, should be set aside from
such earnings in connection with its business, including, without limitation,
provisions for depreciation, obsolescence and/or amortization, and accruals for
taxes for such period.
9.7. ENVIRONMENTAL MATTERS.
(a) The Company will, and will cause each of its Restricted Subsidiaries
to, (i) obtain and maintain in full force and effect all Environmental Permits
that may be required from time to time under any Environmental Law for the
conduct of any Material portion of the business of the Company or any Restricted
Subsidiary and (ii) be and remain in compliance in all material respects with
all terms and conditions of all such Environmental Permits and with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in all applicable Environmental
Laws.
(b) The Company will not, and will not permit any of its Restricted
Subsidiaries to, (i) cause or allow (A) any Hazardous Material to be present at
any time on, in, under or above any real properties owned, leased or operated by
the Company or any Restricted Subsidiary or (B) any such real properties or any
part thereof to be used at any time to manufacture, generate, refine, process,
distribute, use, sell, treat, receive, store, dispose of, transport, arrange for
transport of, handle, or be involved in any other activity involving, any
Hazardous Material, or (ii) conduct any such activities described in the
foregoing clause (i)(B) on any such real properties or anywhere else, except, in
each case referred to in the foregoing clauses (i) and (ii), in a manner that is
in compliance in all material respects with all applicable Environmental Laws
and Environmental Permits and to an extent that will not have a Material Adverse
Effect.
9.8. PREPAYMENT OF NOTES UPON CHANGE OF CONTROL.
At any time following the occurrence of a Change of Control (subject to
the next succeeding paragraph of this Section), each holder of a Note shall have
the right at its option exercisable by the giving of notice to the Company (a
"PREPAYMENT ELECTION NOTICE") to elect to require the prepayment by the Company
of all Notes then held by such holder on the
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prepayment date specified by such holder in such Prepayment Election Notice
(which shall not in any event be less than 10 days nor more than 30 days after
the date on which such holder shall have given such Prepayment Election Notice),
such prepayment to be at a price equal to 100% of the principal amount of such
Notes together with interest accrued thereon to such prepayment date. On the
prepayment date specified in any Prepayment Election Notice given by any holder
of a Note, the Company will prepay all Notes held by such holder at the
prepayment price provided for in the first sentence of this Section.
The right of the holder of a Note to give a Prepayment Election Notice
requiring the prepayment of such Note pursuant to this Section following a
Change of Control shall expire at the close of business in New York City on the
thirtieth day following the later of (x) the date of the occurrence of such
Change of Control and (y) actual receipt by such holder of notice of such Change
of Control pursuant to Section 7.1(g). Notwithstanding any provision hereof to
the contrary, no failure on the part of the holder of any Note to exercise such
holder's right to require the prepayment thereof by the Company pursuant to this
Section following a Change of Control shall be deemed a waiver of or otherwise
impair the rights of such holder pursuant to this Section in respect of all
other events or circumstances that shall constitute a Change of Control.
10. NEGATIVE COVENANTS.
The Company covenants and agrees that from the date of this Agreement
through the Closing Date, and thereafter so long as any Note shall remain
outstanding:
10.1. MAINTENANCE OF CERTAIN FINANCIAL CONDITIONS.
(a) CONSOLIDATED NET WORTH. The Company will not permit Consolidated Net
Worth to be less than the sum of (i) $110,000,000, PLUS (ii) 25% of Consolidated
Net Income (but only if a positive number) for the period commencing on June 30,
1995 and ending on the then most recent Determination Date.
(b) COVERAGE RATIO. The Company will not permit the Coverage Ratio as of
any Determination Date to be less than 4.
(c) FUNDED DEBT RATIO. The Company will not permit the Funded Debt Ratio
as of any Determination Date to be greater than (i) 0.60 through December 31,
1997, and (ii) 0.50 thereafter.
10.2. INDEBTEDNESS; RESTRICTED SUBSIDIARY INDEBTEDNESS.
(a) The Company will not, and will not permit any Restricted Subsidiary
to, directly or indirectly, create, incur, assume, guarantee, or otherwise
become directly or indirectly liable with respect to, any Indebtedness, except
that the Company and the Guarantors may become and be liable with respect to the
Indebtedness evidenced by the Notes and guaranteed pursuant to the Guaranty
Agreements and except that, subject (to the extent applicable) to the last
sentence of this subdivision (a):
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(i) any Restricted Subsidiary may incur Indebtedness of such
Restricted Subsidiary owing to the Company or a Wholly Owned Restricted
Subsidiary; and the Company may incur Indebtedness of the Company owing to
Restricted Subsidiaries, but only to the extent permitted by the last sentence
of this Section 10.2;
(ii) the Company and the Guarantors may incur Indebtedness
represented by revolving credit borrowings made by the Company pursuant to the
Credit Agreement and guaranteed by the Guarantors pursuant to the Bank Guaranty
Agreements, PROVIDED that, on the date of incurrence of any such Indebtedness
and after giving effect thereto and to the application of the proceeds thereof,
(A) no Default or Event of Default shall have
occurred and be continuing, and
(B) the aggregate principal amount of all such
Indebtedness outstanding shall not exceed the Permitted Credit
Agreement Amount;
(iii) the Company and (subject to subdivision (b) of this
Section 10.2) any Restricted Subsidiary may incur additional Indebtedness,
PROVIDED that, on the date of incurrence of any such additional Indebtedness and
after giving effect thereto and to the application of the proceeds thereof,
(A) no Default or Event of Default shall have
occurred and be continuing, and
(B) the Pro Forma Coverage Ratio shall be greater
than 4;
(iv) the Company and (subject to subdivision (b) of this Section
10.2) any Restricted Subsidiary may incur Indebtedness ("REFINANCING
INDEBTEDNESS") solely for the purpose of refinancing its Indebtedness
outstanding on the date hereof and described in Schedule 5.15 or Indebtedness
theretofore incurred by it pursuant to subdivision (a)(ii) or (a)(iii) of this
Section 10.2 (any such currently outstanding or previously incurred Indebtedness
"REFINANCED INDEBTEDNESS"), PROVIDED that, it shall be a condition to the
incurrence of any Refinancing Indebtedness to refinance any Refinanced
Indebtedness that,
(A) the principal amount of such Refinancing
Indebtedness shall not exceed the principal amount of such
Refinanced Indebtedness,
(B) the stated maturity of such Refinancing
Indebtedness shall not be earlier than the stated maturity of
such Refinanced Indebtedness,
(C) the Weighted Average Life to Maturity of such
Refinancing Indebtedness shall not be less than the Weighted
Average Life to Maturity of such Refinanced Indebtedness,
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(D) such Refinancing Indebtedness shall not rank
prior in right of payment to such Refinanced Indebtedness or be
entitled to the benefits of any collateral or security to which
such Refinanced Indebtedness is not entitled,
(E) such Refinancing Indebtedness shall not bear
interest at an effective rate per annum higher than that borne
by such Refinanced Indebtedness unless such Refinanced
Indebtedness shall constitute Indebtedness incurred under the
Credit Agreement as permitted by subdivision (a)(ii) of this
Section 10.2, in which case such Refinancing Indebtedness shall
not bear interest at a rate exceeding the then prevailing market
rate for borrowers of similar creditworthiness to the Company,
and
(F) on the date of incurrence of such Refinancing
Indebtedness and after giving effect thereto and to the
application of the proceeds thereof, no Default or Event of
Default shall have occurred or be continuing;
(v) the Company may incur Indebtedness consisting of (A) Swap
Obligations in respect of interest rate swaps, (B) liabilities of the Company in
respect of performance bonds and commercial bank letters of credit issued in the
ordinary course of business of the Company and not in connection with the
borrowing of money (including, without limitation, letters of credit issued in
connection with the procurement and maintenance by the Company of workers'
compensation insurance), and (C) overdrafts of demand deposit accounts
maintained with commercial banks which are unsecured (other than through
customary rights of set-off), each of which is repaid within three Business Days
of its creation, and the aggregate amount of which does not at any time exceed
$1,000,000; and
(vi) the Company and (subject to subdivision (b) of this Section
10.2) any Restricted Subsidiary may incur Indebtedness not otherwise permitted
by this subdivision (a), PROVIDED that,
(A) on the date of incurrence of any such
Indebtedness and after giving effect thereto and to the
application of the proceeds thereof, no Default or Event of
Default shall have occurred and be continuing, and
(B) the aggregate principal amount of all such
Indebtedness of the Company and its Restricted Subsidiaries at
any time outstanding shall not exceed $10,000,000.
It shall be a further condition to the incurrence by the Company or any
Restricted Subsidiary of any Indebtedness otherwise permitted to be incurred by
it pursuant to this Section 10(a) (other than (x) Indebtedness permitted to be
incurred pursuant to clause (ii) hereof and, to the extent incurred to refinance
any such Indebtedness permitted pursuant to said clause (ii), and (y)
Refinancing Indebtedness incurred pursuant to clause (iv) hereof), that, on the
date of such
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incurrence and immediately after giving effect thereto and to the substantially
concurrent incurrence of any other Indebtedness by the Company and its
Restricted Subsidiaries, and to the application of the proceeds of all such
Indebtedness (and, if such Indebtedness is proposed to be incurred pursuant to
clause (iii) hereof, assuming, whether or not in fact the case, that the
aggregate principal amount of Indebtedness outstanding under the Credit
Agreement on such date was equal to the Permitted Credit Agreement Amount),
Consolidated Funded Debt shall not exceed an amount equal to (A) 60% of the sum
of (1) Consolidated Funded Debt, plus (2) Consolidated Net Worth at any time
through December 31, 1997, and (B) at any time after December 31, 1997, 50% of
the sum of (1) Consolidated Funded Debt, PLUS (2) Consolidated Net Worth.
(b) The Company will not permit any Restricted Subsidiary to, directly
or indirectly, create, incur, assume, guarantee, or otherwise become directly or
indirectly liable with respect to, any Indebtedness, except that:
(i) any Person designated a Restricted Subsidiary on Schedule
5.4 may incur Indebtedness, PROVIDED that, on the date of incurrence of any
such Indebtedness and immediately after giving effect thereto and to the
application of the proceeds thereof, the sum (without duplication) of
(A) the aggregate principal amount outstanding of
Included Restricted Subsidiary Debt, PLUS
(B) the aggregate principal amount outstanding of
Included Secured Debt,
shall not exceed the greater of (x) $10,000,000 and (y) 7% of Consolidated
Net Worth, and
(ii) any Person designated a Restricted Subsidiary at any time
subsequent to the date of this Agreement may remain liable for Indebtedness
of such Person existing at such time (and deemed incurred by it at such
time in accordance with subdivision (c) of this Section 10.2), PROVIDED
that, the sum of (1) the aggregate principal amount of all such
Indebtedness of such Person existing on the date it is designated a
Restricted Subsidiary PLUS (2) the aggregate principal amount of all
Indebtedness of each other Person theretofore designated a Restricted
Subsidiary at any time subsequent to the date of this Agreement which
Indebtedness existed on the date such Person was designated a Restricted
Subsidiary, shall not exceed the greater of (x) $20,000,000 and (y) 15% of
Consolidated Net Worth.
Nothing in this subdivision (b) shall be deemed to permit the incurrence on any
date by any Restricted Subsidiary (including any Person designated a Restricted
Subsidiary on such date) of any Indebtedness not permitted to be incurred by it
on such date pursuant to subdivision (a) of this Section 10.2.
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(c) For purposes of the foregoing subdivisions (a) and (b) of this
Section 10.2, (i) in the event the Company or a Restricted Subsidiary shall
extend, renew, refund or refinance any Indebtedness, the Company or such
Restricted Subsidiary, as the case may be, shall be deemed to have incurred such
Indebtedness at the time of such extension, renewal, refunding or refinancing,
and (ii) any Person designated a Restricted Subsidiary at any time after the
date of this Agreement shall be deemed to have incurred all of its outstanding
Indebtedness at such time. The Company will not in any event create, incur,
assume or permit to exist any Indebtedness of the Company to a Subsidiary,
except that the Company may incur and remain liable with respect to Indebtedness
owing to a Restricted Subsidiary which constitutes Subordinated Intercompany
Indebtedness.
10.3. LIENS.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or permit to
exist any Lien on or with respect to any property or asset of any character of
the Company or any such Restricted Subsidiary (whether owned or held on the date
hereof or hereafter acquired) or any interest therein or any income or profits
therefrom except, subject to compliance with the last paragraph of this Section
10.3:
(a) Liens (other than Liens created or imposed under ERISA) for
taxes, assessments or governmental charges or levies the payment of which
is not at the time required by Section 9.4;
(b) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other similar Persons, in each
case incurred in the ordinary course of business for sums either not yet
due or the payment of which is not at the time required by Section 9.4;
(c) Liens (other than Liens created or imposed under ERISA)
incurred or deposits made in the ordinary course of business in connection
with workers' compensation, unemployment insurance and other types of
social security or retirement benefits, or to secure the performance of
tenders, statutory obligations, surety bonds, bids, leases (other than
Capital Leases), government contracts, performance and return-of-money
bonds and other similar obligations (exclusive in any case of obligations
incurred in connection with the borrowing of money, the obtaining of
advances or credit or the payment of the deferred purchase price of
property);
(d) Liens incidental to the conduct of business or to the
ownership or improvement of property of a character which customarily exist
on properties of corporations engaged in similar activities and similarly
situated and which were not incurred in connection with the borrowing of
money, the obtaining of advances of credit or the payment of the deferred
purchase price of property, and which do not, individually or in the
aggregate, interfere with the ordinary conduct of the business of the
Company or any of its Restricted Subsidiaries or detract from the value or
use of the properties subject to any such Liens;
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(e) any attachment or judgment Lien arising in connection with
court proceedings, so long as (i) the execution or other enforcement of
such Lien is effectively stayed and the claims secured thereby are being
actively contested in good faith and by appropriate proceedings diligently
conducted and effective to prevent the forfeiture or sale of any property
of the Company or any of its Restricted Subsidiaries or any interference
with the ordinary use thereof by the Company or any of its Restricted
Subsidiaries, and (ii) such reserve or other appropriate provision, if any,
in the amount and of the type as shall be required by GAAP shall be
maintained therefor;
(f) Liens on property or assets of any Restricted Subsidiary
securing Indebtedness or other obligations of such Restricted Subsidiary
owing to the Company or to a Wholly Owned Restricted Subsidiary;
(g) any Lien created to secure all or any part of the purchase
price, or to secure Indebtedness incurred or assumed to pay all or any part
of the purchase price or cost of construction, of property (or any
improvement thereon) acquired or constructed by the Company or a Restricted
Subsidiary after the Closing Date, PROVIDED that
(i) each such Lien shall extend solely to the item or
items of such property (or improvement thereon) so acquired or
constructed and, if required by the terms of the instrument
originally creating such Lien, other property (or improvement
thereon) which is an improvement to or is acquired for specific use
in connection with such acquired or constructed property (or
improvement thereon) or which is real property being improved by
such acquired or constructed property (or improvement thereon),
(ii) the principal amount of the Debt secured by each
such Lien shall at no time exceed an amount equal to the lesser of
(A) the cost to the Company or such Restricted Subsidiary of the
property (or improvement thereon) so acquired or constructed and (B)
the fair market value (as determined in good faith by the Board of
Directors) of such property (or improvement thereon) at the time of
such acquisition or construction, and
(iii) each such Lien shall be created
contemporaneously with, or within 180 days after, the acquisition or
construction of such property;
(h) any Lien existing on property of a Person immediately prior
to its being consolidated with or merged into the Company or a Restricted
Subsidiary or its becoming, after the Closing Date, a Restricted
Subsidiary, or any Lien existing on any property acquired by the Company or
any Restricted Subsidiary at the time such property is so acquired (whether
or not the Indebtedness secured thereby shall have been assumed), PROVIDED
that (i) no such Lien shall have been created or assumed in contemplation
of such consolidation or merger or such Person's becoming a Restricted
Subsidiary or such acquisition of property, and (ii) each such Lien shall
extend solely to the item or items of property so acquired and, if required
by the terms of the instrument
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originally creating such Lien, other property which is an improvement to or
is acquired for specific use in connection with such acquired property;
(i) other Liens not otherwise permitted by subdivisions (a)
through (h) of this Section 10.3, PROVIDED that such Liens shall be
permitted pursuant to the first sentence of the last paragraph of this
Section 10.3; and
(j) any Lien renewing, extending or refunding any Lien permitted
by subdivision (g), (h) or (i) of this Section 10.3, PROVIDED that (i) the
principal amount of Indebtedness secured by such Lien immediately prior to
such extension, renewal or refunding is not increased or the maturity
thereof reduced, and (ii) such Lien is not extended to any other property.
It shall be a further condition to the creation, incurrence, assumption,
extension, renewal, refunding or refinancing of any Lien otherwise permitted by
subdivision (h), (i) or (j) of this Section that, on the date on which the
Company or any of its Restricted Subsidiaries proposes to take any such action
and immediately after giving effect thereto, to the substantially concurrent
incurrence of any Indebtedness and the substantially concurrent retirement of
any other Indebtedness and to the application of the proceeds of all such
Indebtedness, (A) the Company shall be permitted to incur at least $1.00 of
additional Indebtedness pursuant to subdivision (a)(iii) of Section 10.2 and (B)
the sum (without duplication) of (1) the aggregate principal amount outstanding
of Included Restricted Subsidiary Debt, PLUS (2) the aggregate principal amount
outstanding of Included Secured Debt shall not exceed the greater of (x)
$10,000,000 and (y) 7% of Consolidated Net Worth. For all purposes of this
Section 10.3, (1) Liens existing on or with respect to any property or assets of
any Person at the time it becomes a Restricted Subsidiary shall be deemed to
have been created at such time, (2) any extension, renewal, refunding or
refinancing of any Lien by the Company or any of its Restricted Subsidiaries
shall be deemed to be an incurrence of such Lien at the time of such extension,
renewal, refunding or refinancing, and (3) any Lien existing on any property at
the time it is acquired by the Company or any of its Restricted Subsidiaries
shall be deemed to have been created at the time of such acquisition.
10.4. INVESTMENTS, ETC.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, make or own any Investments except:
(a) the Company and its Restricted Subsidiaries may make and own
Investments in (i) readily marketable direct obligations of the United
States of America or of any agency or instrumentality thereof or readily
marketable obligations unconditionally guaranteed by the United States of
America or by any such agency or instrumentality, in each case so long as
such obligation or guarantee shall have the benefit of the full faith and
credit of the United States of America and such Investment shall mature
within 365 days from the date of acquisition thereof, (ii) certificates of
deposit, time deposits or bankers' acceptances maturing within 365 days
from the date of acquisition thereof issued by, or demand deposit accounts
maintained with, any
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commercial bank or trust company organized under the laws of the United
States of America or any state thereof or the Republic of Finland, the
long-term unsecured debt obligations of which bank or trust company are
rated (or the long-term unsecured debt obligations of the bank holding
company owning all of the capital stock of such bank or trust company are
rated) at least "A2" by Moody's Investors Service Inc. ("MOODY'S") or at
least "A" by Standard & Poor's Rating Group ("S&P"), and which has combined
capital and surplus of at least $250,000,000 (any such bank or trust
company, an "ELIGIBLE BANK"), (iii) repurchase agreements with respect to
securities of the type referred to in the foregoing subdivision (a)(i)
transacted with Eligible Banks organized under the laws of the United
States of America or a state thereof, PROVIDED that each such repurchase
agreement obligates an Eligible Bank to repurchase the securities which are
the subject thereof no later than 30 days after the acquisition of such
repurchase agreement; (iv) obligations of any state of the United States of
America or any municipality of any such state, the interest with respect to
which is exempt from federal income taxation under Section 103 of the Code,
in each case rated at least "A2" by Moody's or at least "AA" by S&P and
maturing within 365 days of the acquisition thereof; and (v) open market
commercial paper of United States corporations maturing not later than 270
days from the acquisition thereof and having a rating of at least P-2 by
Moody's or at least A-2 by S&P;
(b) the Company and its Restricted Subsidiaries may continue to
own (i) Investments in Restricted Subsidiaries of the Company existing on
the date hereof, and (ii) other Investments existing on the date hereof and
described in Schedule 5.10;
(c) the Company and its Restricted Subsidiaries may make and own
Investments in any Restricted Subsidiary or in any Person that concurrently
with such Investment becomes a Restricted Subsidiary; and Restricted
Subsidiaries may make and own Investments consisting of Subordinated
Intercompany Debt incurred by the Company pursuant to and in compliance
with Section 10.2;
(d) the Company and its Restricted Subsidiaries may make and own
Investments in property to be used in the ordinary course of business of
the Company and its Restricted Subsidiaries, as such business is permitted
to be conducted pursuant to Section 10.9;
(e) the Company and each Restricted Subsidiary may make and own
Investments consisting of travel and other like advances in the ordinary
course of its business, as permitted to be conducted hereby, to its
officers and employees;
(f) the Company and each Restricted Subsidiary may make and own
Investments consisting of loans to its officers, directors and employees,
provided that, the aggregate amount that may be so loaned to any one
individual shall not exceed $500,000 at any time outstanding and the
aggregate amount of all such loans by the Company and all Restricted
Subsidiaries shall not exceed $2,000,000 at any time outstanding;
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(g) the Company and its Restricted Subsidiaries may make and own
Investments in currency futures contracts, PROVIDED that such contracts are
entered into in the ordinary course of business in accordance with the
practices of the Company and its Restricted Subsidiaries prior to the date
hereof and solely for the purpose of hedging currency fluctuation risk of
the Company and its Restricted Subsidiaries and not in any event for
speculative purposes;
(h) the Company and its Restricted Subsidiaries may make and own
Investments in interest rate swap contracts, PROVIDED that such contracts
are entered into in the ordinary course of business and solely for the
purpose of hedging interest rate fluctuation risk and reducing interest
rate expense of the Company and its Restricted Subsidiaries and not in any
event for speculative purposes;
(i) the Company and its Restricted Subsidiaries may make and own
Investments consisting of promissory notes or other securities or other
non-cash consideration received in exchange for assets sold pursuant to and
in compliance with subdivision (a)(vi) of Section 10.7, PROVIDED that, (i)
the aggregate unliquidated amount of all such Investments permitted by this
subdivision (i) shall not at any time exceed $10,000,000 and (ii) in the
event that any such Investments shall be converted to cash, at maturity,
upon the disposition thereof or otherwise, and the amount of such cash,
when taken together with all cash into which any other such Investments
shall have been converted and not previously applied pursuant to this
clause (ii), shall equal or exceed $2,000,000, the Company shall, during
the period of 180 days commencing with the date of such event, apply all
such cash realized in respect of all such Investments to (x) the purchase
or acquisition of Alternative Assets, (y) the Retirement of Indebtedness,
or (z) in part to the purchase or acquisition of Alternative Assets and in
part to the Retirement of Indebtedness, such application of cash to be made
in the same manner as if the aggregate amount of such cash constituted the
Net Sale Proceeds of an Excess Sale effected pursuant to subdivision
(a)(vi) of Section 10.7;
(j) the Company and its Restricted Subsidiaries may make and own
Investments in Unrestricted Subsidiaries, PROVIDED that the aggregate
amount of all such Investments does not exceed $20,000,000; and
(k) in addition to the Investments permitted by the foregoing
subdivisions (a) through (j) of this Section 10.4, the Company and its
Restricted Subsidiaries may make Restricted Additional Investments to the
extent permitted by Section 10.5.
For purposes of this Section, Investments owned by any Person or for which it is
obligated at the time it becomes a Restricted Subsidiary shall be deemed to be
made at such time.
10.5. RESTRICTED PAYMENTS; RESTRICTED ADDITIONAL INVESTMENTS.
The Company will not, directly or indirectly, declare, order, pay,
distribute, make, or set apart any sum or property for any Restricted Payment,
and the Company will not,
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and will not permit any Restricted Subsidiary to, make or become obligated to
make any Restricted Additional Investment, in each case unless, both at the time
of and immediately after effect has been given to such proposed action:
(a) no Default or Event of Default shall have occurred and be
continuing,
(b) the Company shall be permitted to incur at least $1.00 of
additional Indebtedness pursuant to subdivision (a)(iii) of Section 10.2,
and
(c) the aggregate amount of:
(i) all sums and property included in all Restricted
Payments directly or indirectly declared, ordered, paid, distributed,
made or set apart by the Company during the period (taken as one
accounting period) from and including June 30, 1995 (the "BASE DATE")
to and including the date of such proposed action (the "COMPUTATION
PERIOD"), PLUS
(ii) the aggregate amount of all Restricted Additional
Investments of the Company and all Restricted Subsidiaries made during
the Computation Period and all commitments for such Restricted
Additional Investments made by the Company or any Restricted Subsidiary
outstanding on the date of such proposed action,
shall not exceed the sum of
(A) $20,000,000, PLUS
(B) 50% of Consolidated Net Income for the period (the
"BASE PERIOD") from and including the Base Date to and including the
Determination Date occurring on or most recently prior to the date of
such proposed action (or minus 100% of Consolidated Net Income in the
case of a deficit); PLUS
(C) the aggregate amount of cash proceeds (net of all
placement, underwriting and brokerage fees and expenses and all other
costs and out-of-pocket expenses in connection therewith) received by
the Company during the Base Period from the sale of capital stock
(other than mandatorily redeemable Preferred Stock) of the Company,
from the sale of rights and warrants to purchase such capital stock,
and as consideration for the issuance of debt securities convertible
into such capital stock (but only to the extent, in the case of any
such debt securities, the same have been converted into such capital
stock during the Base Period).
For all purposes of this Section 10.5, (1) the amount involved in any
Restricted Payment directly or indirectly declared, ordered, paid, distributed,
made or set apart in property, and the amount of any Restricted Additional
Investment made through the transfer of property,
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shall be deemed to be the greater of (x) the fair value of such property (as
determined in good faith by the Board of Directors) and (y) the net book value
thereof on the books of the Company or any of its Restricted Subsidiaries (as
determined in accordance with GAAP), in each case as determined on the date such
Restricted Payment is declared, ordered, paid, distributed, made or set apart,
or the date such Restricted Additional Investment is made or committed to be
made, as the case may be, and (2) all Investments of any Person existing
immediately after such Person becomes a Restricted Subsidiary which would be
Restricted Additional Investments if made by such Person while subject to the
provisions of this Agreement shall be deemed to be Restricted Additional
Investments and to have been made at the time such Person becomes a Restricted
Subsidiary.
The Company will not pay any dividend which it has not declared or
declare any dividend on any shares of any class of its capital stock which is
payable more than 60 days after the date of declaration thereof.
10.6. SUBSIDIARY STOCK AND INDEBTEDNESS.
The Company will not:
(a) directly or indirectly, sell, assign, pledge or otherwise
dispose of any Indebtedness or any shares of stock or other securities of
(or warrants, rights or options to acquire stock or other securities of)
any Restricted Subsidiary, except to a Wholly Owned Restricted Subsidiary
and except as directors' qualifying shares if required by applicable law;
or
(b) permit any Restricted Subsidiary to, directly or
indirectly, sell, assign, pledge or otherwise dispose of any Indebtedness
or any shares of stock or other securities of (or warrants, rights or
options to acquire stock or other securities of) any other Restricted
Subsidiary, except to the Company or a Wholly Owned Restricted Subsidiary
and except as directors' qualifying shares if required by applicable law;
or
(c) permit any Restricted Subsidiary to, directly or
indirectly, issue or sell any shares of its stock (or warrants, rights or
options to acquire any stock) of such Restricted Subsidiary except to the
Company or another Restricted Subsidiary and except (i) as directors'
qualifying shares and (ii) pursuant to a common stock dividend or other
issuance of common stock after giving effect to which the Company shall own
(directly or through Restricted Subsidiaries) the same percentage ownership
of each class of capital stock of such issuing Restricted Subsidiary as it
owned immediately prior to such issuance;
PROVIDED, HOWEVER, that all shares of stock and all Indebtedness and other
securities of any Restricted Subsidiary owned by the Company and its other
Restricted Subsidiaries may be sold as an entirety to any Person other than an
Unrestricted Subsidiary for a consideration at least equal to the fair market
value thereof (as determined by the Board of Directors) if (i) such Restricted
Subsidiary being sold does not at that time own, directly or indirectly, any
stock, Indebtedness or other security of any other Restricted Subsidiary all of
the stock, Indebtedness
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and other securities of which is not being simultaneously sold as permitted by
this proviso, or any Indebtedness of the Company, (ii) the amount of assets of
such Restricted Subsidiary represented by the equity interest to be so
transferred is such that the sale of such amount of assets would then be
permitted pursuant to subdivision (vi) of Section 10.7 (in which case such
amount of assets shall be considered and deemed a disposition of assets for the
purposes of said subdivision (vi)) and (iii) at the time of the consummation of
such transaction and after giving effect thereto (A) no Default or Event of
Default shall have occurred and be continuing and (B) the Company shall be
permitted to incur at least $1.00 of additional Indebtedness pursuant to
subdivision (a)(iii) of Section 10.2.
10.7. CONSOLIDATION, MERGER, SALE OF ASSETS, ETC.
(a) The Company will not, and will not permit any of its Restricted
Subsidiaries to, consolidate or merge with or into any other Person, or permit
any other Person to consolidate with or merge with or into it, or participate in
a share exchange with or sell, lease, transfer, contribute or otherwise dispose
of any of its assets to any other Person, except that, subject in any event to
compliance with subdivision (b) of this Section 10.7:
(i) the Company and any Restricted Subsidiary may (i) sell
inventory held for sale or (ii) sell or otherwise dispose of equipment,
fixtures, supplies or materials no longer required in the business of the
Company or such Restricted Subsidiary or that is obsolete, in each case
referred to in the foregoing clause (i) or (ii), in the ordinary course of
business as such business is permitted to be conducted hereby;
(ii) any Restricted Subsidiary may (i) consolidate with or
merge into the Company or any Wholly Owned Restricted Subsidiary if the
Company or such Wholly Owned Restricted Subsidiary shall be the continuing
or surviving corporation or (ii) consolidate or merge with any other
corporation if such Restricted Subsidiary shall be the continuing or
surviving corporation;
(iii) any Restricted Subsidiary may sell, lease, transfer,
contribute or otherwise dispose of its assets in whole or in part to the
Company or any Wholly Owned Restricted Subsidiary;
(iv) the Company may consolidate or merge with any other
Person if the Company shall be the continuing or surviving corporation;
(v) the Company may consolidate with or merge into, or sell,
transfer or otherwise dispose of its assets as an entirety or substantially
as an entirety, to any other Person (a "SUCCESSOR"; any such consolidation,
merger or disposition of assets being hereinafter referred to as a
"SUCCESSOR TRANSACTION"), but only if such Successor (i) is a solvent
corporation duly organized, validly existing and in good standing under the
laws of the United States of America or a state thereof and (ii) expressly
assumes, not later than the consummation of such Successor Transaction,
pursuant to a written instrument satisfactory in form, scope and substance
to the holders of the Notes, the due and punctual payment of the principal
of, Make-Whole Amount, if any, and interest on
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the Notes according to their tenor, and the due and punctual performance
and observance of the obligations of the Company under this Agreement, an
executed counterpart of which instrument shall have been furnished to each
holder of Notes together with a favorable opinion of counsel satisfactory
to each such holder covering such legal matters relating to such Successor,
the Successor Transaction, such assumption and such instrument as such
holder may reasonably request; and
(vi) the Company or any Restricted Subsidiary, in addition to
making any sale, lease, transfer or other disposition permitted by the
foregoing provisions of this Section, may sell any of its assets for a
consideration at least equal to the fair market value thereof (as
determined by the Board of Directors) at the time of such sale; PROVIDED
that, no such proposed sale of any assets shall be permitted under this
subdivision (a)(vi) unless
(A) immediately after giving effect to such sale (1) the
Disposition Value of all assets sold as permitted by this
subdivision (a)(vi) (including all deemed dispositions pursuant to
the proviso to Section 10.6, but excluding all Excess Sales effected
in compliance with clause (B) of this subdivision (a)(vi)) during
the period of 365 days ending on the date of such proposed sale
shall not exceed 10% of Total Assets determined as of the last day
of the then most recently completed fiscal year of the Company and
(2) the Disposition Value of all assets sold as permitted by this
subdivision (a)(vi) (including all such deemed dispositions but
excluding all such Excess Sales) during the period commencing on the
date of this Agreement and ending on the date of such proposed sale
shall not exceed 20% of such Total Assets determined as of the last
day of such most recently completed fiscal year, or
(B) such sale shall not meet the requirements of, and
shall not be permitted pursuant to, the foregoing clause (A) (any
such sale, an "EXCESS SALE") but each of the following conditions
shall be satisfied with respect thereto:
(1) the Company shall furnish to each holder of a
Note (x) prior to the consummation of such Excess Sale, a
notice specifying the anticipated date of such sale, briefly
describing the assets to be sold and setting forth the
Disposition Value of such assets and the aggregate
consideration and Net Sale Proceeds to be received for such
assets in connection with such sale and, (y) promptly
following the consummation of such sale, a further notice
confirming the date of such sale ("SALE DATE") and the other
information set forth in the notice in respect thereof given
pursuant to the foregoing clause (x) and specifying the manner
in which the Company intends to apply (or cause to be applied)
the Net Sale Proceeds of such Excess Sale in compliance with
the further provisions of this clause (B),
(2) the Company shall, during the period of 180 days
commencing with the Sale Date (the "APPLICATION PERIOD"),
apply (or
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cause to be applied) an amount equal to such Net Sale
Proceeds from such Excess Sale to (x) the purchase or
acquisition of Alternative Assets, (y) the Retirement of
Indebtedness or (z) in part to the purchase or acquisition
of Alternative Assets and in part to the Retirement of
Indebtedness, and
(3) pending application of an amount equal to such
Net Sale Proceeds from such Excess Sale in accordance with
the foregoing clause (B)(2), the Company shall cause an
amount equal to such Net Sale Proceeds (or so much thereof
as shall not have been theretofore so applied) to be
invested in Investments of the character described in
subdivision (a) of Section 10.4.
(b) No consolidation, merger, sale, lease, transfer, contribution or
other disposition referred to in subdivisions (a)(ii) through (a)(vi) of this
Section 10.7 shall be permitted unless (i) immediately after giving effect to
such transaction, (A) no Default or Event of Default shall have occurred and be
continuing and (B) the Company shall be permitted to incur at least $1.00 of
additional Indebtedness pursuant to subdivision (a)(iii) of Section 10.2, and
(ii) if such transaction shall involve or result in a Change of Control, the
Company shall comply with Section 9.8 in connection therewith. Nothing contained
in this Section 10.7 shall permit the disposition of assets consisting of
Indebtedness, stock or other securities (or warrants, rights or options to
acquire stock or other securities) of any Restricted Subsidiary unless such
disposition is also permitted by Section 10.6. No consolidation, merger, sale,
lease, transfer, contribution or other disposition permitted by this Section
10.7 shall release the Company, or any Person which shall have become a
Successor to the Company in the manner permitted hereby, from any of its
liability as obligor in respect of the Notes.
(c) For purposes of this Section 10.7:
(i) "ALTERNATIVE ASSETS" means, in connection with any
proposed sale of assets constituting an Excess Sale,(A) assets
(whether new, additional or replacement assets but exclusive of assets
acquired in the course of regular upkeep and maintenance) which (1)
are similar in nature to other assets owned or leased by the Company
and or its Restricted Subsidiaries prior to or at the time of the
acquisition of such assets and useful in the conduct of the business
of the Company and its Restricted Subsidiaries as permitted to be
conducted pursuant to Section 10.9 and (2) have a fair market value at
least equal to the amount required pursuant to subdivision (vi)(B)(2)
of Section 10.7(a) to be applied to the purchase thereof, or (B)
capital stock of a corporation (1) the assets of which consist
substantially in their entirety of assets of the character described
in the foregoing clause (A)(1) of this definition and have a fair
market value satisfying the requirement described in the foregoing
clause (A)(2) hereof, and (2) which, substantially concurrently with
the acquisition thereof by the Company or a Restricted Subsidiary,
shall become a Wholly Owned Restricted Subsidiary.
(ii) "DISPOSITION VALUE" of any assets sold or proposed to
be sold during any period shall mean the aggregate net book value of
such assets determined as of the date of sale or proposed sale
thereof.
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(iii) "NET SALE PROCEEDS" means, with respect to any sale or
other disposition by the Company or a Restricted Subsidiary of any
property or assets, an amount equal to the excess of (x) the aggregate
amount of the consideration (valued at the fair market value thereof
at the time of such sale or other disposition as determined by the
Board of Directors) received by the Company or such Restricted
Subsidiary in connection with such sale or other disposition over (y)
the reasonable and customary out-of-pocket expenses actually incurred
by the Company or such Restricted Subsidiary in connection therewith.
(iv) "RETIREMENT OF INDEBTEDNESS" means, in connection with
the application of the Net Sale Proceeds of any Excess Sale (or any
part of such Net Sale Proceeds), the application by the Company of an
amount equal to such Net Sale Proceeds (or such part thereof) to the
payment or prepayment of an equivalent principal amount of
Indebtedness of the Company (other than (A) Indebtedness owing to any
Restricted Subsidiary or any Affiliate of the Company and (B)
Indebtedness in respect of any revolving credit or similar credit
facility, including the Credit Agreement, providing the Company with
the right to obtain loans or other extensions of credit from time to
time, except to the extent that in connection with such payment or
prepayment the availability of credit under such credit facility is
permanently reduced by an amount not less than the amount so paid or
prepaid).
(v) "TOTAL ASSETS" means, as of any date, the aggregate net
book value of the consolidated assets of the Company and its
Restricted Subsidiaries (exclusive of assets deemed intangibles in
accordance with GAAP).
10.8. SALE LEASEBACKS.
The Company will not, and will not permit any Restricted Subsidiary to,
enter into any Sale leaseback, except that the Company or any Restricted
Subsidiary may enter into a Sale leaseback relating solely to property acquired
by it subsequent to the Closing if such Sale Leaseback is entered into within
the period of 180 days commencing with the date of such acquisition and if:
(a) the sale of such property in connection with such Sale
Leaseback is permitted by, and is effected pursuant to and in compliance with,
Section 10.7;
(b) if the lease of such property by the Company or a Restricted
Subsidiary as the case may be, in connection with such Sale Leaseback
constitutes a Capital lease, such transaction is permitted pursuant to Section
10.3; and
(c) at the time of and after giving effect to such Sale
Leaseback no Default or Event of Default shall have occurred and be continuing
and the Company shall be permitted to incur at least $1.00 of additional
Indebtedness pursuant to subdivision (a)(iii) of Section 10.2.
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10.9. LINES OF BUSINESS.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, engage to any substantial extent in any business other than the
production and marketing of specialty chemicals (the "Business").
10.10. TRANSACTIONS WITH AFFILIATES.
The Company will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, enter into or be a party to any transaction (including,
without limitation, the purchase, lease, sale or exchange of properties of any
kind or the rendering of any service) with any Affiliate unless such transaction
is entered into upon terms that are fair and reasonable and no less favorable to
the Company or such Restricted Subsidiary, as the case may be, than those which
might be obtained at the time in a comparable arm's-length transaction with any
Person which is not such an Affiliate; PROVIDED that, the foregoing restrictions
shall not apply to (i) transactions in the ordinary course of and pursuant to
the reasonable requirements of the Company's or such Restricted Subsidiary's
Business, or (ii) any transaction between the Company and a Restricted
Subsidiary or between one Restricted Subsidiary and another Restricted
Subsidiary.
10.11. RESTRICTIONS ON SUBSIDIARY DIVIDENDS AND PAYMENTS.
The Company will not permit any Restricted Subsidiary to enter into or
remain a party to any agreement or arrangement which restricts or has the effect
of restricting such Restricted Subsidiary's ability or right to C)i pay
dividends, (ii) make other distributions with respect to its capital stock, or
(iii) make advances to the Company if such agreement or arrangement can
reasonably be expected to impair in any material respect the ability of the
Company to perform its obligations under this Agreement or the Notes or the
ability of the Guarantors to perform their obligations under the Guaranty
Agreements.
11. EVENTS OF DEFAULT.
An "EVENT OF DEFAULT" shall exist if any of the following conditions or
events shall occur and be continuing (whatever the reason for such Event of
Default and whether it shall be voluntary or involuntary or come about or be
effected by operation of law or judicial or governmental or administrative
action or otherwise):
(a) the Company defaults in the payment of any principal or
Make-Whole Amount, if any, on any Note when the same becomes due and
payable, whether at maturity or at a date fixed for prepayment or by
declaration or otherwise; or
(b) the Company defaults in the payment of any interest on
any Note for more than five Business Days after the same becomes due
and payable; or
(c) the Company defaults in the performance of or compliance
with any term contained in Sections 10.1 through 10.8, inclusive; or
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(d) the Company defaults in the performance of or compliance
with any term contained herein (other than those referred to in
paragraphs (a), (b) and (c) of this Section 11) and such default is
not remedied within 30 days after the earlier of (i) a Responsible
Officer obtaining actual knowledge of such default and (ii) the
Company receiving written notice of such default from any holder of a
Note (any such written notice to be identified as a "notice of
default" and to refer specifically to this paragraph (d) of Section
11); or
(e) any representation or warranty made in writing by or on
behalf of the Company or any Guarantor or by any officer of the
Company or any Guarantor in this Agreement or the Guaranty Agreements
or in any writing furnished in connection with the transactions
contemplated hereby proves to have been false or incorrect in any
material respect on the date as of which made; or
(f) (i) the Company or any Restricted Subsidiary is in default
(as principal or as guarantor or other surety) in the payment
of any principal of or premium or Make-Whole Amount or interest on any
Indebtedness that is outstanding in an aggregate principal amount of
at least $5,000,000 beyond any period of grace provided with respect
thereto, or (ii) the Company or any Restricted Subsidiary is in
default in the performance of or compliance with any term of any
evidence of any Indebtedness in an aggregate outstanding principal
amount of at least $5,000,000 or of any mortgage, indenture or other
agreement relating thereto or any other condition exists, if the
effect of any such default or other condition referred to in this
clause (ii) is to cause or permit any such Indebtedness to become due
and payable before its stated maturity or before its regularly
scheduled dates of payment, or (iii) as a consequence of the
occurrence or continuation of any event or condition (other than the
passage of time or the right of the holder of Indebtedness to convert
such Indebtedness into equity interests), (x) the Company or any
Restricted Subsidiary has become obligated to purchase or repay
Indebtedness before its regular maturity or before its regularly
scheduled dates of payment in an aggregate outstanding principal
amount of at least $5,000,000, or (y) one or more Persons have the
right to require the Company or any Restricted Subsidiary so to
purchase or repay such Indebtedness; or
(g) the Company or any Restricted Subsidiary (i) is generally
not paying, or admits in writing its inability to pay, its debts as
they become due, (ii) files, or consents by answer or otherwise to the
filing against it of, a petition for relief or reorganization or
arrangement or any other petition in bankruptcy, for liquidation or to
take advantage of any bankruptcy, insolvency, reorganization,
moratorium or other similar law of any jurisdiction, (iii) makes an
assignment for the benefit of its creditors, (iv) consents to the
appointment of a custodian, receiver, trustee or other officer with
similar powers with respect to it or with respect to any substantial
part of its property, (v) is adjudicated as insolvent or to be
liquidated, or (vi) takes corporate action for the purpose of any of
the foregoing; or
(h) a court or governmental authority of competent jurisdiction
enters an order appointing, without consent by the Company or any of
its Restricted
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Subsidiaries, a custodian, receiver, trustee or other officer
with similar powers with respect to it or with respect to any
substantial part of its property, or constituting an order for relief
or approving a petition for relief or reorganization or any other
petition in bankruptcy or for liquidation or to take advantage of any
bankruptcy or insolvency law of any jurisdiction, or ordering the
dissolution, winding-up or liquidation of the Company or any of its
Restricted Subsidiaries, or any such petition shall be filed against
the Company or any of its Restricted Subsidiaries and such petition
shall not be dismissed within 60 days; or
(i) a final judgment or judgments for the payment of money
aggregating in excess of $1,000,000 are rendered against one or
more of the Company and its Restricted Subsidiaries and which
judgments are not, within 60 days after entry thereof, bonded,
discharged or stayed pending appeal, or are not discharged within 60
days after the expiration of such stay; or
(j) any "Event of Default" shall occur, and be continuing under
(and as the term "Event of Default" is defined in) the Credit
Agreement; or
(k) any Guaranty Agreement or any material provision thereof
shall not be, or shall cease to be, valid and enforceable and
in full force and effect; or any Guarantor shall disaffirm or
repudiate any of its obligations under the Guaranty Agreement to which
it is a party; or any Guarantor shall default in the performance or
observance of any covenant, agreement or condition in the Guaranty
Agreement to which it is a party and (except in the case of Section 1
thereof) such default shall have continued for a period of 30 days
after any Guarantor has knowledge of such default (through notice or
otherwise); or
(l) if (i) any Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code for any plan year or part
thereof or a waiver of such standards or extension of any amortization
period is sought or granted under section 412 of the Code, (ii) a
notice of intent to terminate any Plan shall have been or is
reasonably expected to be filed with the PBGC or the PBGC shall have
instituted proceedings under ERISA section 4042 to terminate or
appoint a trustee to administer any Plan or the PBGC shall have
notified the Company or any ERISA Affiliate that a Plan may become a
subject of any such proceedings, (iii) the aggregate "amount of
unfunded benefit liabilities" (within the meaning of section
4001(a)(18) of ERISA) under all Plans with any unfunded benefit
liabilities, determined in accordance with Title IV of ERISA, shall
exceed $2,000,000, (iv) the Company or any ERISA Affiliate shall have
incurred or is reasonably expected to incur any liability pursuant to
Title I or IV of ERISA or the penalty or excise tax provisions of the
Code relating to employee benefit plans, (v) the Company or any ERISA
Affiliate withdraws from any Multiemployer Plan, or (vi) the Company
or any Subsidiary establishes or amends any employee welfare benefit
plan that provides post-employment welfare benefits in a manner that
would increase the liability of the Company or any Subsidiary
thereunder; and any such event or events described in clauses (i)
through (vi) above, either individually or together with any other
such event or events, could reasonably be expected to have a Material
Adverse Effect.
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As used in Section 11(l), the terms "EMPLOYEE BENEFIT PLAN" and "EMPLOYEE
WELFARE BENEFIT PLAN" shall have the respective meanings assigned to such terms
in Section 3 of ERISA.
12. REMEDIES ON DEFAULT, ETC.
12.1. ACCELERATION.
(a) If an Event of Default with respect to the Company described in
paragraph (g) or (h) of Section 11 (other than an Event of Default described in
clause (i) of paragraph (g) or described in clause (vi) of paragraph (g) by
virtue of the fact that such clause encompasses clause (i) of paragraph (g)) has
occurred, all the Notes then outstanding shall automatically become immediately
due and payable.
(b) If any other Event of Default has occurred and is continuing, any
holder or holders of more than 35% in principal amount of the Notes at the time
outstanding may at any time at its or their option, by notice or notices to the
Company, declare all the Notes then outstanding to be immediately due and
payable.
(c) If any Event of Default described in paragraph (a) or (b) of Section
11 has occurred and is continuing, any holder or holders of Notes at the time
outstanding affected by such Event of Default may at any time, at its or their
option, by notice or notices to the Company, declare all the Notes held by it or
them to be immediately due and payable.
Upon any Notes becoming due and payable under this Section 12.1, whether
automatically or by declaration, such Notes will forthwith mature and the entire
unpaid principal amount of such Notes, plus (x) all accrued and unpaid interest
thereon and (y) the Make-Whole Amount determined in respect of such principal
amount (to the full extent permitted by applicable law), shall all be
immediately due and payable, in each and every case without presentment, demand,
protest or further notice, all of which are hereby waived. The Company
acknowledges, and the parties hereto agree, that each holder of a Note has the
right to maintain its investment in the Notes free from repayment by the Company
(except as herein specifically provided for) and that the provision for payment
of a Make-Whole Amount by the Company in the event that the Notes are prepaid or
are accelerated as a result of an Event of Default is intended to provide
compensation for the deprivation of such right under such circumstances.
12.2. OTHER REMEDIES.
If any Default or Event of Default has occurred and is continuing, and
irrespective of whether any Notes have become or have been declared immediately
due and payable under Section 12.1, the holder of any Note at the time
outstanding may proceed to protect and enforce the rights of such holder by an
action at law, suit in equity or other appropriate proceeding, whether for the
specific performance of any agreement contained herein or in any Note, or for an
injunction against a violation of any of the terms hereof or thereof, or in aid
of the exercise of any power granted hereby or thereby or by law or otherwise.
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12.3. RESCISSION.
At any time after any Notes have been declared due and payable pursuant
to clause (b) or (c) of Section 12.1, the holders of not less than 66 2/3% in
principal amount of the Notes then outstanding, by written notice to the
Company, may rescind and annul any such declaration and its consequences if (a)
the Company has paid all overdue interest on the Notes, all principal of and
Make-Whole Amount, if any, on any Notes that are due and payable and are unpaid
other than by reason of such declaration, and all interest on such overdue
principal and Make-Whole Amount, if any, and (to the extent permitted by
applicable law) any overdue interest in respect of the Notes, at the Default
Rate, (b) all Events of Default and Defaults, other than non-payment of amounts
that have become due solely by reason of such declaration, have been cured or
have been waived pursuant to Section 17, and (c) no judgment or decree has been
entered for the payment of any monies due pursuant hereto or to the Notes. No
rescission and annulment under this Section 12.3 will extend to or affect any
subsequent Event of Default or Default or impair any right consequent thereon.
12.4. NO WAIVERS OR ELECTION OF REMEDIES, EXPENSES, ETC.
No course of dealing and no delay on the part of any holder of any Note
in exercising any right, power or remedy shall operate as a waiver thereof or
otherwise prejudice such holder's rights, powers or remedies. No right, power or
remedy conferred by this Agreement or by any Note upon any holder thereof shall
be exclusive of any other right, power or remedy referred to herein or therein
or now or hereafter available at law, in equity, by statute or otherwise.
Without limiting the obligations of the Company under Section 15, the Company
will pay to the holder of each Note on demand such further amount as shall be
sufficient to cover all costs and expenses of such holder incurred in any
enforcement or collection under this Section 12, including, without limitation,
reasonable attorneys' fees, expenses and disbursements.
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
13.1. REGISTRATION OF NOTES.
The Company shall keep at its principal executive office a register for
the registration and registration of transfers of Notes. The name and address of
each holder of one or more Notes, each transfer thereof and the name and address
of each transferee of one or more Notes shall be registered in such register.
Prior to due presentment for registration of transfer, the Person in whose name
any Note shall be registered shall be deemed and treated as the owner and holder
thereof for all purposes hereof, and the Company shall not be affected by any
notice or knowledge to the contrary. The Company shall give to any holder of a
Note that is an Institutional Investor promptly upon request therefor, a
complete and correct copy of the names and addresses of all registered holders
of Notes.
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13.2. TRANSFER AND EXCHANGE OF NOTES.
Upon surrender of any Note at the principal executive office of the
Company for registration of transfer or exchange (and in the case of a surrender
for registration of transfer, duly endorsed or accompanied by a written
instrument of transfer duly executed by the registered holder of such Note or
his attorney duly authorized in writing and accompanied by the address for
notices of each transferee of such Note or part thereof), the Company shall
execute and deliver, at the Company's expense (except as provided below), one or
more new Notes (as requested by the holder thereof) in exchange therefor, in an
aggregate principal amount equal to the unpaid principal amount of the
surrendered Note. Each such new Note shall be payable to such Person as such
holder may request and shall be substantially in the form of Exhibit 1. Each
such new Note shall be dated and bear interest from the date to which interest
shall have been paid on the surrendered Note or dated the date of the
surrendered Note if no interest shall have been paid thereon. The Company may
require payment of a sum sufficient to cover any stamp tax or governmental
charge imposed in respect of any such transfer of Notes. Notes shall not be
transferred in denominations of less than $1,000,000, PROVIDED that if necessary
to enable the registration of transfer by a holder of its entire holding of
Notes, one Note may be in a denomination of less than $1,000,000. Any
transferee, by its acceptance of a Note registered in its name (or the name of
its nominee), shall be deemed to have made the representation set forth in
Section 6.2.
13.3. REPLACEMENT OF NOTES.
Upon receipt by the Company of evidence reasonably satisfactory to it of
the ownership of and the loss, theft, destruction or mutilation of any Note
(which evidence shall be, in the case of an Institutional Investor, notice from
such Institutional Investor of such ownership and such loss, theft, destruction
or mutilation), and
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (provided that if the holder of
such Note is, or is a nominee for, an original Purchaser or an
Institutional Investor, such Person's own unsecured agreement of
indemnity shall be deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation
thereof,
the Company at its own expense shall execute and deliver, in lieu thereof, a new
Note, dated and bearing interest from the date to which interest shall have been
paid on such lost, stolen, destroyed or mutilated Note or dated the date of such
lost, stolen, destroyed or mutilated Note if no interest shall have been paid
thereon.
14. PAYMENTS ON NOTES.
14.1. PLACE OF PAYMENT.
Subject to Section 14.2, payments of principal, Make-Whole Amount, if
any, and interest becoming due and payable on the Notes shall be made at the
principal office of the
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Company. The Company may at any time, by notice to each holder of a Note, change
the place of payment of the Notes so long as such place of payment shall be the
principal office of a bank or trust company in such jurisdiction or New York
County, State of New York.
14.2. HOME OFFICE PAYMENT.
So long as you or your nominee shall be the holder of any Note, and
notwithstanding anything contained in Section 14.1 or in such Note to the
contrary, the Company will pay all sums becoming due on such Note for principal,
Make-Whole Amount, if any, and interest by the method and at the address
specified for such purpose below your name in Schedule A, or by such other
method or at such other address as you shall have from time to time specified to
the Company in writing for such purpose, without the presentation or surrender
of such Note or the making of any notation thereon, except that upon written
request of the Company made concurrently with or reasonably promptly after
payment or prepayment in full of any Note, you shall surrender such Note for
cancellation, reasonably promptly after any such request, to the Company at its
principal executive office or at the place of payment most recently designated
by the Company pursuant to Section 14.1. Prior to any sale or other disposition
of any Note held by you or your nominee you will, at your election, either
endorse thereon the amount of principal paid thereon and the last date to which
interest has been paid thereon or surrender such Note to the Company in exchange
for a new Note or Notes pursuant to Section 13.2. The Company will afford the
benefits of this Section 14.2 to any Institutional Investor that is the direct
or indirect transferee of any Note purchased by you under this Agreement and
that has made the same agreement relating to such Note as you have made in this
Section 14.2.
15. EXPENSES, ETC.
15.1. TRANSACTION EXPENSES.
Whether or not the transactions contemplated hereby are consummated, the
Company will pay all costs and expenses (including reasonable attorneys' fees of
a special counsel and, if reasonably required, local or other counsel) incurred
by you and the Other Purchaser or holder of a Note in connection with such
transactions and in connection with any amendments, waivers or consents under or
in respect of this Agreement or the Notes (whether or not such amendment, waiver
or consent becomes effective), including, without limitation: (a) the costs and
expenses incurred in enforcing or defending (or determining whether or how to
enforce or defend) any rights under this Agreement or the Notes or in responding
to any subpoena or other legal process or informal investigative demand issued
in connection with this Agreement or the Notes, or by reason of being a holder
of any Note, and (b) the costs and expenses, including financial advisors' fees,
incurred in connection with the insolvency or bankruptcy of the Company or any
Subsidiary or in connection with any work-out or restructuring of the
transactions contemplated hereby and by the Notes. The Company will pay, and
will save you and each other holder of a Note harmless from, all claims in
respect of any fees, costs or expenses if any, of brokers and finders (other
than those retained by you).
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15.2. SURVIVAL.
The obligations of the Company under this Section 15 will survive the
payment or transfer of any Note, the enforcement, amendment or waiver of any
provision of this Agreement or the Notes, and the termination of this Agreement.
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE
AGREEMENT.
All representations and warranties contained herein shall survive the
execution and delivery of this Agreement and the Notes, the purchase or transfer
by you of any Note or portion thereof or interest therein and the payment of any
Note, and may be relied upon by any subsequent holder of a Note, regardless of
any investigation made at any time by or on behalf of you or any other holder of
a Note. All statements contained in any certificate or other instrument
delivered by or on behalf of the Company pursuant to this Agreement shall be
deemed representations and warranties of the Company under this Agreement.
Subject to the preceding sentence, this Agreement and the Notes embody the
entire agreement and understanding between you and the Company and supersede all
prior agreements and understandings relating to the subject matter hereof.
17. AMENDMENT AND WAIVER.
17.1. REQUIREMENTS.
This Agreement and the Notes may be amended, and the observance of any
term hereof or of the Notes may be waived (either retroactively or
prospectively), with (and only with) the written consent of the Company and the
Required Holders, except that (a) no amendment or waiver of any of the
provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof, or any defined term (as it
is used therein), will be effective as to you unless consented to by you in
writing, and (b) no such amendment or waiver may, without the written consent of
the holder of each Note at the time outstanding affected thereby, (i) subject to
the provisions of Section 12 relating to acceleration or rescission, change the
amount or time of any prepayment or payment of principal of, or reduce the rate
or change the time of payment or method of computation of interest or of the
Make-Whole Amount on, the Notes, (ii) change percentage of the principal amount
of the Notes the holders of which are required to consent to any such amendment
or waiver, or (iii) amend any of Sections 8, 11(a), 11(b), 12, 17 or 20.
17.2. SOLICITATION OF HOLDERS OF NOTES.
(a) SOLICITATION. The Company will provide each holder of the Notes
(irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is required, to
enable such holder to make an informed and considered decision with respect to
any proposed amendment, waiver or consent in respect of any of the provisions
hereof or of the Notes. The Company will deliver executed or true and correct
copies of each amendment, waiver or consent effected pursuant to the provisions
of this
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Section 17 to each holder of outstanding Notes promptly following the date on
which it is executed and delivered by, or receives the consent or approval of,
the requisite holders of Notes.
(b) PAYMENT. The Company will not directly or indirectly pay or cause to
be paid any remuneration, whether by way of supplemental or additional interest,
fee or otherwise, or grant any security, to any holder of Notes as consideration
for or as an inducement to the entering into by any holder of Notes or any
waiver or amendment of any of the terms and provisions hereof unless such
remuneration is concurrently paid, or security is concurrently granted, on the
same terms, ratably to each holder of Notes then outstanding even if such holder
did not consent to such waiver or amendment.
17.3. BINDING EFFECT, ETC.
Any amendment or waiver consented to as provided in this Section 17
applies equally to all holders of Notes and is binding upon them and upon each
future holder of any Note and upon the Company without regard to whether such
Note has been marked to indicate such amendment or waiver. No such amendment or
waiver will extend to or affect any obligation, covenant, agreement, Default or
Event of Default not expressly amended or waived or impair any right consequent
thereon. No course of dealing between the Company and the holder of any Note nor
any delay in exercising any rights hereunder or under any Note shall operate as
a waiver of any rights of any holder of such Note. As used herein, the term
"THIS AGREEMENT" and references thereto shall mean this Agreement as it may from
time to time be amended or supplemented.
17.4. NOTES HELD BY COMPANY, ETC.
Solely for the purpose of determining whether the holders of the
requisite percentage of the aggregate principal amount of Notes then outstanding
approved or consented to any amendment, waiver or consent to be given under this
Agreement or the Notes, or have directed the taking of any action provided
herein or in the Notes to be taken upon the direction of the holders of a
specified percentage of the aggregate principal amount of Notes then
outstanding, Notes directly or indirectly owned by the Company or any of its
Affiliates shall be deemed not to be outstanding.
18. NOTICES.
All notices and communications provided for hereunder shall be in
waiting and sent (a) by telecopy if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery service
(charges prepaid), or (b) by registered or certified mail with return receipt
requested (postage prepaid), or (c) by a recognized overnight delivery service
(with charges prepaid). Any such notice must be sent:
(i) if to you or your nominee, to you or it at the address
specified for such communications in Schedule A, or at such other
address as you or it shall have specified to the Company in writing,
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(ii) if to any other holder of any Note, to such holder at such
address as such other holder shall have specified to the Company in
writing, or
(iii) if to the Company, to the Company at its address set forth
at the beginning hereof to the attention of its Chief Financial
Officer, or at such other address as the Company shall have specified
to the holder of each Note in writing.
Notices under this Section 18 will be deemed given only when actually received.
19. REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by you at the Closing (except the Notes
themselves), and (c) financial statements, certificates and other information
previously or hereafter furnished to you, may be reproduced by you by any
photographic, photostatic, microfilm, microcard, miniature photographic or other
similar process and you may destroy any original document so reproduced. The
Company agrees and stipulates that, to the extent permitted by applicable law,
any such reproduction shall be admissible in evidence as the original itself in
any judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by you in the regular
course of business) and any enlargement, facsimile or further reproduction of
such reproduction shall likewise be admissible in evidence. This Section 19
shall not prohibit the Company or any other holder of Notes from contesting any
such reproduction to the same extent that it could contest the original, or from
introducing evidence to demonstrate the inaccuracy of any such reproduction.
20. CONFIDENTIAL INFORMATION.
For the purposes of this Section 20, "Confidential Information" means
information delivered to you by or on behalf of the Company or any Subsidiary in
connection with the transactions contemplated by or otherwise pursuant to this
Agreement that is proprietary in nature and that was clearly marked or labeled
or otherwise adequately identified when received by you as being confidential
information of the Company or such Subsidiary, PROVIDED that such term does not
include information that (a) was publicly known or otherwise known to you prior
to the time of such disclosure, (b) subsequently becomes publicly known through
no act or omission by you or any person acting on your behalf, (c) otherwise
becomes known to you other than through disclosure by the Company or any
Subsidiary or (d) constitutes financial statements delivered to you under
Section 7.1 that are otherwise publicly available. You will maintain the
confidentiality of such Confidential Information in accordance with procedures
adopted by you in good faith to protect confidential information of third
parties delivered to you, provided that you may deliver or disclose
Confidential Information to (i) your directors, officers, employees, agents,
attorneys and affiliates (to the extent such disclosure reasonably relates to
the administration of the investment represented by your Notes), (ii) your
financial advisors and other professional advisors who agree to hold
confidential the Confidential Information substantially in accordance with the
terms of this Section 20, (iii) any other holder of any Note, (iv) any
Institutional Investor to which you sell or offer to sell such Note or any
part thereof or
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any participation therein (if such Person has agreed in writing prior to its
receipt of such Confidential Information to be bound by the provisions of this
Section 20), (v) any Person from which you offer to purchase any security of the
Company (if such Person has agreed in writing prior to its receipt of such
Confidential Information to be bound by the provisions of this Section 20), (vi)
any federal or state regulatory authority having jurisdiction over you, (vii)
the National Association of Insurance Commissioners or any similar organization,
or any nationally recognized rating agency that requires access to information
about your investment portfolio or (viii) any other Person to which such
delivery or disclosure may be necessary or appropriate (w) to effect compliance
with any law, rule, regulation or order applicable to you, (x) in response to
any subpoena or other legal process, (y) in connection with any litigation to
which you are a party or (z) if an Event of Default has occurred and is
continuing, to the extent you may reasonably determine such delivery and
disclosure to be necessary or appropriate in the enforcement or for the
protection of the rights and remedies under your Notes and this Agreement. Each
holder of a Note, by its acceptance of a Note, will be deemed to have agreed to
be bound by and to be entitled to the benefits of this Section 20 as though it
were a party to this Agreement. On reasonable request by the Company in
connection with the delivery to any holder of a Note of information required to
be delivered to such holder under this Agreement or requested by such holder
(other than a holder that is a party to this Agreement or its nominee), such
holder will enter into an agreement with the Company embodying the provisions
of this Section 20.
21. SUBSTITUTION OF PURCHASER.
You shall have the right to substitute any one of your Affiliates as the
purchaser of the Notes that you have agreed to purchase hereunder, by written
notice to the Company, which notice shall be signed by both you and such
Affiliate, shall contain such Affiliate's agreement to be bound by this
Agreement and shall contain a confirmation by such Affiliate of the accuracy
with respect to it of the representations set forth in Section 6. Upon receipt
of such notice, wherever the word "you" is used in this Agreement (other than in
this Section 21), such word shall be deemed to refer to such Affiliate in lieu
of you. In the event that such Affiliate is so substituted as a purchaser
hereunder and such Affiliate thereafter transfers to you all of the Notes then
held by such Affiliate, upon receipt by the Company of notice of such transfer,
wherever the word "you" is used in this Agreement (other than in this Section
21), such word shall no longer be deemed to refer to such Affiliate, but shall
refer to you, and you shall have all the rights of an original holder of the
Notes under this Agreement.
22. MISCELLANEOUS.
22.1. SUCCESSORS AND ASSIGNS.
All covenants and other agreements contained in this Agreement by or on
behalf of any of the parties hereto bind and inure to the benefit of their
respective successors and assigns (including, without limitation, any subsequent
holder of a Note) whether so expressed or not.
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22.2. PAYMENTS DUE ON NON-BUSINESS DAYS.
Anything in this Agreement or the Notes to the contrary notwithstanding,
any payment of principal of or Make-Whole Amount or interest on any Note that is
due on a date other than a Business Day shall be made on the next succeeding
Business Day without including the additional days elapsed in the computation of
the interest payable on such next succeeding Business Day.
22.3. SEVERABILITY.
Any provision of this Agreement that is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.
22.4. CONSTRUCTION; ACCOUNTING TERMS.
(a) Each covenant contained herein shall be construed (absent express
provision to the contrary) as being independent of each other covenant contained
herein, so that compliance with any one covenant shall not (absent such an
express contrary provision) be deemed to excuse compliance with any other
covenant. Where any provision herein refers to action to be taken by any Person,
or which such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person.
(b) Except as specifically provided herein, all accounting terms used
herein which are not expressly defined in this Agreement have the meanings given
to them in accordance with GAAP and all computations made pursuant to this
Agreement shall be made in accordance with GAAP. All balance sheets and other
financial statements delivered pursuant to Section 7.1 shall be prepared in
accordance with GAAP. If any changes in accounting principles from those used in
the preparation of the most recent financial statements referred to in Section
5.5 are hereafter required by the rules, regulations, pronouncements and
opinions of the Financial Accounting Standards Board or the American Institute
of Certified Public Accountants (or successors thereto) and are adopted by the
Company with the agreement of its independent certified public accountants and
such changes result or could result (for any present or future period) in a
change in the method of calculation of any of the financial covenants, standards
or terms in or relating to Section 10, the parties hereto agree to enter into
discussions with a view to amending such provisions so as to equitably reflect
such changes with the desired result that the criteria for evaluating the
financial condition of the Company and its Restricted Subsidiaries shall be the
same after such changes as if such changes had not been made, provided, that no
change in GAAP that would affect or could affect (for any present or future
period) the method of calculation of any of said financial covenants, standards
or terms shall be given effect in such calculations until such provisions are
amended, in a manner satisfactory to the Company and the Required Holders, to so
reflect such change in GAAP.
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<PAGE> 55
22.5. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of
which shall be an original but all of which together shall constitute one
instrument. Each counterpart may consist of a number of copies hereof, each
signed by less than all, but together signed by all, of the parties hereto.
22.6. GOVERNING LAW.
This Agreement shall be construed and enforced in accordance with, and
the rights of the parties shall be governed by, the law of the State of New York
excluding choice-of-law principles of the law of such State that would require
the application of the laws of a jurisdiction other than such State.
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<PAGE> 56
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterpart of this Agreement and return it to the
Company, whereupon the foregoing shall become a binding agreement between you
and the Company.
Very truly yours,
OM GROUP, INC.
By /s/
---------------------------------
Title: CFO
The foregoing is hereby
agreed to as of the
date thereof.
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
By /s/ Ernie P. Friesen
----------------------------------
Title: ERNIE P. FRIESEN
Assistant Vice President
Investments
By /s/ James G. Lowery
----------------------------------
Title: JAMES G. LOWERY
Assistant Vice President
Investments
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<PAGE> 57
SCHEDULE A
----------
INFORMATION RELATING TO PURCHASES
PRINCIPAL AMOUNT PRINCIPAL AMOUNT
OF 2007 NOTES OF 2009 NOTES
NAME AND ADDRESS OF PURCHASER TO BE PURCHASED TO BE PURCHASED
- ----------------------------- --------------- ---------------
NATIONWIDE LIFE INSURANCE $15,000,000
COMPANY
PAYMENTS
- --------
All payments on or in respect of such Note
issued in the name of Nationwide Life Insurance
Company to be by bank wire transfer of Federal
or other immediately available funds to:
The Bank of New York
ABA #021-000-018
BNF: IOC566
F/A/O Nationwide Life Insurance Company
Attn: P + I Department
PPN# 670872 A# 7
Security Description: OM Group, Inc.
With notice of each such payment to:
Nationwide Life Insurance Company
c/o The Bank of New York
P.O. Box 19266
Newark, NJ 07195
Attention: P + I Department
With a copy to:
Nationwide Life Insurance Company
Attention: Investment Accounting
One Nationwide Plaza (1-32-05)
Columbus, OH 43215-2220
<PAGE> 58
Send all notices and communications to:
Nationwide Life Insurance Company
One Nationwide Plaza (1-33-07)
Columbus, Ohio 43215-2220
Attention: Corporate Fixed-Income Securities
The Original Note should be registered in the
name of Nationwide Life Insurance Company and
delivered to:
The Bank of New York
One Wall Street
3rd Floor - Window A
New York, New York 10286
F/A/O Nationwide Life Insurance Company
Acct #267829
Tax I.D. #31-4156830
2
<PAGE> 59
PRINCIPAL AMOUNT PRINCIPAL AMOUNT
OF 2007 NOTES OF 2009 NOTES
NAME AND ADDRESS OF PURCHASER TO BE PURCHASED TO BE PURCHASED
- ----------------------------- --------------- ---------------
GREAT-WEST LIFE & ANNUITY $15,000,000
INSURANCE COMPANY
Payments
- --------
All payments on or in respect of such Note issued in the name of Great-West Life
& Annuity Insurance Company to be by bank wire or intra-bank transfer of
Federal or other immediately available funds (identifying the issue upon which
payment is being made, PPN# 670872 A@ 9, the application of payment as between
interest and principal and a confirmation of the principal balance remaining
after application of such payment to:
Norwest Bank Minnesota, N.A.
ABA #091-000-019 (NW MPLS/TRUST
CLEARING)
Account No.08-40-245
Attention: Account No.12468800
3
<PAGE> 60
Notices
- -------
All notices and confirmations in connection with such payments shall be
delivered or mailed to:
Norwest Bank Minnesota, N.A.
733 Marquette Avenue, Investors Bldg.,
5th Floor
Minneapolis, Minnesota 55479-0047
Attn: Income Collections
All other communications shall be delivered or mailed to:
Great-West Life & Annuity Insurance
Company
8515 East Orchard Road
3rd Floor, Tower 2
Englewood, Colorado 80111
Attention: U.S. Private Placements
Fax: (303) 689-6193
Tax I.D. Number: 84-0467907
The original Note shall be delivered to:
Norwest Bank Minnesota, N.A.
733 Marquette Avenue, 5th Floor
Minneapolis, Minnesota 55479-0047
Attention: Security Clearance
4
<PAGE> 61
SCHEDULE B
----------
DEFINED TERMS
-------------
As used herein, the following terms have the respective meanings set
forth below or set forth in the Section hereof following such term:
"AFFILIATE" means, at any time, and with respect to any Person, any
other Person (a) that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control with,
such first Person, (b) that beneficially owns or holds 5% or more of the voting
securities or other equity interest of such first Person, or (c) 5% or more of
the voting securities or other equity interests of which are beneficially owned
or held by such first Person. As used in this definition, "CONTROL" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise. Unless the context
otherwise clearly requires, any reference to an "Affiliate" is a reference to an
Affiliate of the Company.
"ALTERNATIVE ASSETS" is defined in Section 10.7(c).
"APPLICATION PERIOD" is defined in Section 10.7(a).
"APPROVALS" is defined in Section 4.10.
"BANK GUARANTY AGREEMENTS" means the Guaranty Agreements, dated
January 21, 1997, by OMG Americas, Inc., OMG Apex, Inc. and SCM Metal Products,
Inc. in favor of the Banks, as the same may be amended or otherwise modified and
in effect from time to time.
"BANKS" means National City Bank, ABN AMRO Bank N.V., Keybank National
Association and Mellon Bank, N.A.
"BOARD OF DIRECTORS" means the Board of Directors of the Company or any
duly authorized committee of said Board.
"BUSINESS" is defined in Section 10.9.
"BUSINESS DAY" means (a) for the purposes of Section 8.7 only, any day
other than a Saturday, a Sunday or a day on which commercial banks in New York
City are required or authorized to be closed, and (b) for the purposes of any
other provision of this Agreement, any day other than a Saturday, a Sunday or a
day on which commercial banks in New York, New York or Cleveland, Ohio are
required or authorized to be closed.
"CAPITAL LEASE" means, at any time, a lease with respect to which the
lessee is required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.
<PAGE> 62
"CAPITAL LEASE OBLIGATION" as at any date, with respect to any Capital
Lease, the amount of the obligation the lessee thereunder which would, in
accordance with GAAP, appear as a liability on a balance sheet of such lessee or
in the notes thereto in respect of such Capital Lease.
"CHANGE OF CONTROL" means any of the following events or circumstances
(whether or not in a transaction permitted by Section 10.7):
(a) all or substantially all of the assets of the Company are
sold or otherwise transferred, either in a single transaction or a
series of related transactions;
(b) a merger, consolidation or similar transaction (or series of
related transactions) involving the Company at the completion of and
after giving effect to which neither (x) the Persons owning the voting
stock of the Company prior to such transaction (or prior to the first
of such series of transactions) nor (y) Acceptable Persons own 50% or
more of the total voting power of all classes of the Company's voting
stock outstanding immediately after giving effect to such transaction
or series of transactions; or
(c) the acquisition or holding by any person (as such term is
used in Section 13(d) and Section 14(d)(2) of the Exchange Act as in
effect on the Closing Date), or related Persons constituting a group
(as such term is used in Rule 13d-5 under the Exchange Act as in
effect on the Closing Date), other than an Acceptable Person or such a
group comprised entirely of Acceptable Persons, of beneficial
ownership of in excess of 35% of the total voting power of all classes
of the Company's voting stock then outstanding.
As used in this definition, "ACCEPTABLE PERSON" means, at any time, any Person
who has been a director, officer or full-time employee of the Company for a
continuous period immediately preceding such time of not less than 365 days.
"CLOSING" is defined in Section 3.
"CLOSING DATE" is defined in Section 3.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations promulgated thereunder from time to time.
"COMPANY" means OM Group, Inc., a Delaware corporation.
"CONFIDENTIAL INFORMATION" is defined in Section 20.
"CONSOLIDATED FUNDED DEBT" means, as of any date, the aggregate
principal amount of all Funded Debt of the Company and its Restricted
Subsidiaries on such date determined in accordance with GAAP on a consolidated
basis.
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<PAGE> 63
"CONSOLIDATED INTEREST EXPENSE" means, for any period, the sum (without
duplication) of the following amounts for the Company and its Restricted
Subsidiaries on a consolidated basis after eliminating all intercompany
transactions: (a) the aggregate amount of all interest accrued during such
period (whether or not actually paid) in respect of Indebtedness of the Company
and its Restricted Subsidiaries (including, without limitation, imputed interest
on Capital Lease Obligations), plus (b) amortization of debt discount and
expense during such period, plus (c) all fees and commissions payable in
connection with any letters of credit during such period.
"CONSOLIDATED NET INCOME" means, for any period, the net income (or
deficit) of the Company and its Restricted Subsidiaries for such period (taken
as a cumulative whole) after deducting, without duplication, operating expenses,
provisions for all taxes and reserves (including reserves for deferred income
taxes) and all other proper deductions, all determined in accordance with GAAP
on a consolidated basis, after eliminating all inter-company items and after
deducting portions of income properly attributable to outside minority interests
in the stock and surplus of any Restricted Subsidiary; PROVIDED, HOWEVER, that
there shall in any event be excluded from Consolidated Net Income (without
duplication):
(a) the income (or deficit) of any Person accrued prior to
the date it becomes a Restricted Subsidiary or is merged into or
consolidated with the Company or any Restricted Subsidiary;
(b) any amount representing the interest of the Company or
any Restricted Subsidiary in the earnings of any Person other than a
Restricted Subsidiary, except to the extent that any such earnings
have been actually received by the Company or such Restricted
Subsidiary in the form of cash dividends or similar distributions;
(c) any portion of the net income of a Restricted Subsidiary
which for any reason is unavailable for the payment of dividends to
the Company or another Restricted Subsidiary;
(d) any deferred credit (or amortization of a deferred
credit) representing the excess of the equity in any Person at the
date of acquisition thereof over the cost of the Investment in such
Person;
(e) any gain during such period arising from (i) the sale,
exchange or other disposition of capital assets (such term to include
all fixed assets, whether tangible or intangible, and all securities)
to the extent the aggregate gains from such transactions exceed losses
during such period from such transactions, (ii) any reappraisal,
revaluation or write-up of assets after the date of the most recent
audited financial statements referred to in Section 5.5, (iii) the
acquisition of any securities of the Company or a Restricted
Subsidiary, or (iv) the termination of any Plan;
(f) the proceeds of any life insurance policy;
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<PAGE> 64
(g) any portion of such net income that cannot be freely
converted into U.S. Dollars; and
(h) any item properly classified as extraordinary in
accordance with GAAP.
"CONSOLIDATED NET WORTH" means, as of any date, the sum of the capital
stock (but excluding capital stock subscribed for and unissued, treasury stock
and redeemable Preferred Stock) and surplus (including retained earnings,
additional paid-in capital and the balance of the current profit and loss
account not transferred to surplus) accounts of the Company and its Restricted
Subsidiaries appearing on a consolidated balance sheet of the Company and its
Restricted Subsidiaries prepared in accordance with GAAP as of such date, after
eliminating all intercompany transactions and all amounts properly attributable
to outside minority interests in Restricted Subsidiaries; PROVIDED that, there
shall be excluded therefrom any amounts appearing on such consolidated balance
sheet in respect of (a) any write-up in the book value of any assets resulting
from a revaluation thereof after the date of the most recent audited financial
statements referred to in Section 5.5 and (b) Restricted Additional Investments.
"COVERED CONTRACT" is defined in Section 5.12(f).
"COVERAGE RATIO" means, as of any Determination Date, the number
obtained by dividing (a) EBDAIT for the period of four consecutive fiscal
quarters of the Company ended on such Determination Date by (b) Consolidated
Interest Expense for such period.
"CREDIT AGREEMENT" means the Second Amended and Restated Credit
Agreement, dated January 21, 1997, by and among the Company, the Banks and
National City Bank, as Agent, as the same may be amended or otherwise modified
and in effect from time to time.
"DEFAULT" means an event or condition the occurrence or existence of
which would, with the lapse of time or the giving of notice or both, become an
Event of Default.
"DEFAULT RATE" means that rate of interest that is the greater of (i) 2%
per annum above the rate of interest stated in clause (a) of the first paragraph
of the Notes or (ii) 2% over the rate of interest publicly announced by Morgan
Guaranty Trust Company of New York in New York, New York as its "base" or
"prime" rate.
"DETERMINATION DATE" means each date which shall be the last day of a
fiscal quarter of the Company.
"DISPOSITION VALUE" is defined in Section 10.7(c).
"EBDAIT" means, for any period, Consolidated Net Income for such period
plus all amounts deducted in the computation of such Consolidated Net Income on
account of (a) depreciation, amortization and other non-cash charges, (b)
Consolidated Interest Expense, and (c) taxes imposed on or measured by income or
excess profits.
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<PAGE> 65
"ENVIRONMENTAL LAWS" means any and all Federal, state, local, and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including but
not limited to those related to hazardous substances or wastes, air emissions
and discharges to waste or public systems.
"ENVIRONMENTAL PERMITS" means, collectively, any and all permits,
consents, licenses, approvals and registrations of any nature at any time
required pursuant to or in order to comply with any Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder
from time to time in effect.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that is or was at any relevant time treated as a single employer
together with the Company under section 414 of the Code.
"EVENT OF DEFAULT" is defined in Section 11.
"EXCESS SALE" is defined in Section 10.7(a).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FUNDED DEBT" means, with respect to any Person, as of any date, all
Indebtedness of such Person which would be classified upon a balance sheet of
such Person prepared as of such date in accordance with GAAP as long term or
funded debt, including in any event (without duplication) all Indebtedness of
such Person, whether secured or unsecured, having a final maturity (or which,
pursuant to the terms of a revolving credit agreement or otherwise, is renewable
or extendable at the option of such Person for a period ending) one year or more
after the date of creation thereof, notwithstanding the fact that (a) payments
in respect thereof (whether installment, serial maturity or sinking fund
payments or otherwise) are required to be made by such Person on demand or
within one year after the creation thereof or (b) all or any part of the amount
thereof is at the time also included in current liabilities of such Person.
"FUNDED DEBT RATIO" means, as of any Determination Date, the number
obtained by dividing (a) Consolidated Funded Debt as of such Determination Date
by (b) the sum of (i) Consolidated Funded Debt as of such Determination Date,
plus (ii) Consolidated Net Worth as of such Determination Date.
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States of America.
"GOVERNMENTAL AUTHORITY" means
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<PAGE> 66
(a) the government of
(i) the United States of America or any state or other
political subdivision thereof, or
(ii) any jurisdiction in which the Company or any Restricted
Subsidiary conducts all or any part of its business, or which asserts
jurisdiction over any properties of the Company or any Restricted
Subsidiary, or
(b) any entity exercising executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to, any such
government.
"GUARANTOR" is defined in Section 4.1.
"Guaranty" means, with respect to any Person, any obligation (except the
endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
indebtedness, dividend or other obligation of any other Person in any manner,
whether directly or indirectly, including (without limitation) obligations
incurred through an agreement, contingent or otherwise, by such Person:
(a) to purchase such indebtedness or obligation or any property
constituting security therefor;
(b) to advance or supply funds (i) for the purchase or payment
of such indebtedness or obligation, or (ii) to maintain any working capital
or other balance sheet condition or any income statement condition of any
other Person or otherwise to advance or make available funds for the
purchase or payment of such indebtedness or obligation;
(c) to lease properties or to purchase properties or services
primarily for the purpose of assuring the owner of such indebtedness or
obligation of the ability of any other Person to make payment of the
indebtedness or obligation; or
(d) otherwise to assure the owner of such indebtedness or
obligation against loss in respect thereof.
In any computation of the indebtedness or other liabilities of the obligor under
any Guaranty, the indebtedness or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.
"GUARANTY AGREEMENTS" collectively, the Guaranty Agreements, each dated
October 24, 1997 between the Company and each of the Guarantors.
"HAZARDOUS MATERIAL" means any and all pollutants, toxic or hazardous
wastes or any other substances that might pose a hazard to health or safety, the
removal of which may be required or the generation, manufacture, refining,
production, processing, treatment, storage,
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<PAGE> 67
handling, transportation, transfer, use, disposal, release, discharge, spillage,
seepage, or filtration of which is or shall be restricted, prohibited or
penalized by any applicable law (including, without limitation, asbestos, urea
formaldehyde foam insulation and polychlorinated biphenyls).
"HOLDER" means, with respect to any Note, the Person in whose name such
Note is registered in the register maintained by the Company pursuant to Section
13.1.
"INCLUDED RESTRICTED SUBSIDIARY DEBT" means, as of any date, the
aggregate principal amount outstanding on such date of all Indebtedness of
Restricted Subsidiaries other than
(a) Indebtedness of Restricted Subsidiaries incurred pursuant to
subdivision (a)(i) of Section 10.2,
(b) Indebtedness of the Guarantors consisting of (i) their
Guaranty of Indebtedness of the Company incurred pursuant to subdivision
(a)(ii) of Section 10.2, (ii) their Guaranty of the Notes pursuant to the
Guaranty Agreements, and (iii) Indebtedness outstanding on the date hereof
and described on Schedule 5.15 in a principal amount not exceeding
$4,000,000, and
(c) Indebtedness of Restricted Subsidiaries incurred pursuant to
subdivision (a)(iii) or (a)(vi) of Section 10.2 and secured by Liens
permitted by subdivision (g) or (h) of Section 10.3, or consisting of
obligations in respect of letters of credit, but only to the extent that all
Indebtedness described in this clause (c) shall not exceed $500,000 (or the
equivalent amount of any currency other than United States Dollars) in
aggregate principal amount outstanding.
"INCLUDED SECURED DEBT" means, as of any date, the aggregate principal
amount outstanding on such date of all Indebtedness secured by Liens incurred as
permitted by subdivision (i) of Section 10.3.
"INDEBTEDNESS" with respect to any Person means, at any time, without
duplication,
(a) its liabilities for borrowed money and its redemption
obligations in respect of mandatorily redeemable Preferred Stock;
(b) its liabilities for the deferred purchase price of property
acquired by such Person (excluding accounts payable arising in the ordinary
course of business but including all liabilities created or arising under
any conditional sale or other title retention agreement with respect to any
such property);
(c) all Capital Lease Obligations of such Person;
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<PAGE> 68
(d) all liabilities for borrowed money secured by any Lien with
respect to any property owned by such Person (whether or not such Person
has assumed or otherwise become liable for such liabilities);
(e) all its liabilities in respect of letters of credit or
instruments serving a similar function issued or accepted for its account by
banks and other financial institutions (whether or not representing
obligations for borrowed money);
(f) Swap Obligations of such Person; and
(g) any Guaranty of such Person with respect to liabilities of a
type described in any of clauses (a) through (f) hereof.
Indebtedness of any Person shall include all obligations of such Person of the
character described in clauses (a) through (g) to the extent such Person remains
legally liable in respect thereof notwithstanding that any such obligation is
deemed to be extinguished under GAAP.
"INSTITUTIONAL INVESTOR" means (a) any original purchaser of a Note, (b)
any holder of a Note holding more than 5 % of the aggregate principal amount of
the Notes then outstanding, and (c) any bank, trust company, savings and loan
association or other financial institution, any pension plan, any investment
company, any insurance company, any broker or dealer, or any other similar
financial institution or entity, regardless of legal form.
"INVESTMENT" as applied to any designated Person, means any direct or
indirect purchase or other acquisition by such designated Person for cash or
other property of (a) stock, debt or other securities of any other Person, or
any direct or indirect loan, advance, extension of credit or capital
contribution by such designated Person to any other Person or any Guaranty by
such designated Person with respect to the Indebtedness of such other Person,
including all Indebtedness of and accounts receivable from any such other Person
which are not current assets or did not arise from sales to such other Person in
the ordinary course of business, or (b) any interest in any kind of property or
assets, whether real, personal or mixed, tangible or intangible. In computing
the amount involved in any Investment, (i) undistributed earnings of, and
interest accrued in respect of Indebtedness owing by, any such other Person
accrued after the date of such Investment shall not be included, (ii) there
shall not be deducted from the amounts invested in any such other Person any
amounts received as earnings (in the form of dividends, interest or otherwise)
on such Investment or as loans or advances from such other Person, and (iii)
unrealized increases or decreases in value, or write-ups, write-downs or
write-offs, of Investments in any such other Person shall be disregarded.
"LIEN" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of any
Vendor, lessor, lender or other secured party to or of such Person under any
conditional sale or other title retention agreement or Capital Lease, upon or
with respect to any property or asset of such Person (including in the case of
stock, stockholder agreements, voting trust agreements and all similar
arrangements).
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"MAKE-WHOLE AMOUNT" is defined in Section 8.7.
"MATERIAL" means material in relation to the business, operations,
affairs, financial condition, assets, properties, or prospects of the Company
and its Restricted Subsidiaries taken as a whole.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of the
Company and its Restricted Subsidiaries taken as a whole, or (b) the ability of
the Company to perform its obligations under this Agreement and the Notes, or
(c) the validity or enforceability of this Agreement or the Notes.
"MEMORANDUM" is defined in Section 5.3.
"MULTIEMPLOYER PLAN" means any Plan that is a "multiemployer plan" (as
such term is defined in section 4001(a)(3) of ERISA).
"NET SALE PROCEEDS" is defined in Section 10.7(c).
"1995 NOTE PURCHASE AGREEMENTS" means the Note Purchase Agreements,
dated August 30, 1995, between the Company and each of the 1995 Note Purchasers.
"1995 NOTE PURCHASERS" means the Purchasers named on Schedule A hereto
and The Mutual Life Insurance Company of New York.
"NOTES" is defined in Section 1.
"OFFICER'S CERTIFICATE" means a certificate of a Senior Financial
Officer or of any other officer of the Company whose responsibilities extend to
the subject matter of such certificate.
"OTHER AGREEMENT" is defined in Section 2.
"OTHER PURCHASER" is defined in Section 2.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.
"PCTE 95-60" is defined in Section 5.12(f).
"PERMITTED CREDIT AGREEMENT AMOUNT" means, on any date, the maximum
aggregate principal amount of revolving credit borrowings which the Company is
permitted to have outstanding pursuant to the Credit Agreement as originally
executed and delivered (the "Initial Amount"); PROVIDED, HOWEVER, that if, at
any time or from time to time subsequent to the Closing Date:
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(a) the Company and the banks party thereto shall enter into an
amendment to the Credit Agreement increasing the principal amount of
such borrowings which the Company is permitted to have outstanding
thereunder to an amount (the "Increased Amount") in excess of the
Initial Amount,
(b) the Company would be permitted pursuant to subdivision
(a)(iii) of Section 10.2, on the date the Officer's Certificate
referred to in clause (c) below is furnished by the Company to the
holders of the Notes, after giving effect to all Indebtedness
incurred and all Indebtedness retired on such date by the Company and
its Restricted Subsidiaries, to incur additional Indebtedness in an
amount at least equal to the amount by which said Increased Amount
exceeds the Initial Amount, and
(c) the Company shall furnish a copy of said amendment to the
Credit Agreement to each holder of a Note or Notes, accompanied by
an Officer's Certificate certifying (i) that such copy is true and
complete and said amendment, and the Credit Agreement as amended
thereby, is in full force and effect and (ii) to the effect set forth
in clause (b) above (and setting forth calculations in reasonable
detail demonstrating compliance with the condition contained in said
clause (b)),
then, effective from and after the date said Officer's Certificate is so
furnished, the Permitted Credit Agreement Amount shall be increased to an amount
equal to said Increased Amount (subject to further increase thereafter in
accordance with the further operation of the foregoing provisions of this
definition); BUT PROVIDED FURTHER, HOWEVER, that the Permitted Credit Agreement
Amount shall not in any event on any date exceed the maximum aggregate principal
amount of revolving credit borrowings by the Company which would then be
permitted to be outstanding under the Credit Agreement.
"PERSON" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
"PLAN" means an "employee benefit plan" (as defined in section 3(3) of
ERISA) that is or, within the preceding five years, has been established or
maintained, or to which contributions are or, within the preceding five years,
have been made or required to be made, by the Company or any ERISA Affiliate or
with respect to which the Company or any ERISA Affiliate may have any liability.
"PREFERRED STOCK" means, in respect of any corporation, shares of
capital stock of such corporation that are entitled to preference or priority
over any other shares of the capital stock of such corporation in respect of
payment of dividends or distribution of assets upon liquidation.
"PREPAYMENT ELECTION NOTICE" is defined in Section 9.8.
"PRO FORMA COVERAGE RATIO" means, in connection with the incurrence on
any date of Indebtedness ("INCURRED INDEBTEDNESS") pursuant to subdivision
(a)(iii) of Section 10.2,
-10-
<PAGE> 71
the number obtained by dividing (a) EBDAIT for the period ("COVERAGE PERIOD") of
four consecutive fiscal quarters ended on the Determination Date occurring on or
most recently prior to such date by (b) Consolidated Interest Expense for the
Coverage Period; PROVIDED, HOWEVER, that, in computing EBDAIT and Consolidated
Interest Expense for purposes of determining the Pro Forma Coverage Ratio, it
shall be assumed that the Incurred Indebtedness had been incurred by the Company
or a Restricted Subsidiary on, and all Indebtedness, if any, to be retired with
the proceeds of the Incurred Indebtedness substantially concurrently with the
incurrence thereof had been retired immediately prior to, the first day of the
Coverage Period, and that all such Incurred Indebtedness, and no such retired
Indebtedness, remained outstanding and bore interest during the Coverage Period.
"PROPERTY" or "PROPERTIES" means, unless otherwise specifically limited,
real or personal property of any kind, tangible or intangible, choate or
inchoate.
"REFINANCED INDEBTEDNESS" is defined in Section 10.2(a)(vi).
"REFINANCING INDEBTEDNESS" is defined in Section 10.2(a)(vi).
"RELATED CONTRACT" is defined in Section 5.12(f).
"REQUIRED HOLDERS" means, at any time, the holders of at least 66.67% in
principal amount of the Notes at the time outstanding (exclusive of Notes then
owned by the Company or any of its Affiliates).
"RESPONSIBLE OFFICER" means any Senior Financial Officer and any other
officer of the Company with responsibility for the administration of the
relevant portion of this agreement.
"RESTRICTED ADDITIONAL INVESTMENT" means any Investment other than an
Investment permitted by subdivisions (a) through (j) of Section 10.4.
"RESTRICTED PAYMENT" means any payment or distribution or the incurrence
of any liability to make any payment or distribution, in cash, property or other
assets (other than shares of any class of capital stock of the Company) upon or
in respect of any share of any class of capital stock of the Company or any
warrants, rights or options evidencing a right to purchase or acquire any
securities of the Company, including, without limiting the generality of the
foregoing, payments or distributions as dividends and payments or distributions
for the purpose of purchasing, acquiring, retiring or redeeming any such shares
of stock (or any warrants, rights or options to purchase or acquire any such
securities) or the making of any other distribution in respect of any such
shares of stock (or any warrants, rights or options evidencing a right to
purchase or acquire any such securities).
"RESTRICTED SUBSIDIARY" means, at any time, a Subsidiary of the Company:
-11-
<PAGE> 72
(a) more than 50% (by number of votes) of the Voting Stock of
which shall be owned by the Company and/or one or more of its other
Restricted Subsidiaries, and
(b) which is either (i) designated as a Restricted Subsidiary in
Schedule 5.4 or (ii) designated as a Restricted Subsidiary subsequent to the
Closing Date in the manner and subject to the terms and conditions set forth
below.
The Company may designate any Unrestricted Subsidiary (including any Subsidiary
hereafter acquired or created) as a Restricted Subsidiary by furnishing notice
of such designation, identifying such Subsidiary, to each holder of a Note,
accompanied by an Officer's Certificate, signed by a Senior Financial Officer of
the Company, certifying that the conditions to such designation hereinafter set
forth have been complied with; PROVIDED that, (A) at the time of and after
giving effect to any such designation, no Default or Event of Default shall have
occurred and be continuing and (B) no Subsidiary of a Person which shall
constitute an Unrestricted Subsidiary may be designated a Restricted Subsidiary
for so long as such Person shall remain an Unrestricted Subsidiary. The Company
may not designate any Restricted Subsidiary as an Unrestricted Subsidiary.
"RETIREMENT OF INDEBTEDNESS" is defined in Section 10.7(c)(iv).
"SALE DATE" is defined in Section 10.7(a).
"SALE LEASEBACK" means any transaction or series of transactions
pursuant to which the Company or any Restricted Subsidiary shall sell or
transfer to any Person (other than the Company or a Restricted Subsidiary) any
property, whether now owned or hereafter acquired, and, as part of the same
transaction or series of transactions, the Company or any Restricted Subsidiary
shall rent or lease as lessee, or similarly acquire the right to possession or
use of, such property or one or more properties which it intends to use for the
same purpose or purposes as such property.
"SECURITIES ACT" means the Securities Act of 1933, as amended from time
to time.
"SENIOR FINANCIAL OFFICER" means the chief financial officer, principal
accounting officer, treasurer or comptroller of the Company.
"SUBORDINATED INTERCOMPANY INDEBTEDNESS" means unsecured Indebtedness of
the Company incurred and owing to a Restricted Subsidiary which is validly and
effectively made subordinate and junior in right of payment to the Notes
pursuant to subordination provisions (to which the holder of such Indebtedness
shall have agreed in writing to be bound) contained in the instrument evidencing
such Indebtedness or under which the same is outstanding (and to which
appropriate reference shall be made in the instrument evidencing such
Indebtedness), substantially in the form of Schedule B-i.
"SUBSIDIARY" means, as to any Person, any corporation more than 50% (by
number of votes) of the Voting Stock of which shall be owned by such Person
and/or one or
-12-
<PAGE> 73
more of its other Subsidiaries. Unless the context otherwise clearly requires,
any reference to a "Subsidiary" is a reference to a Subsidiary of the Company.
"SUCCESSOR" is defined in Section 10.7(a).
"SUCCESSOR TRANSACTION" is defined in Section 10.7(a).
"SWAP OBLIGATIONS" means, with respect to any Person, payment
obligations with respect to interest rate swaps, currency swaps and similar
obligations obligating such Person to make payments, whether periodically or
upon the happening of a contingency. For the purposes of this Agreement, the
amount of any Swap Obligation shall be the amount determined in respect thereof
as of the end of the then most recently ended fiscal quarter of such Person,
based on the assumption that such Swap Obligation had terminated at the end of
such fiscal quarter, and in making such determination, if any agreement relating
to such Swap Obligation provides for the netting of amounts payable by and to
such Person thereunder or if any such agreement provides for the simultaneous
payment of amounts by and to such Person, then in each such case, the amount of
such obligation shall be the net amount so determined.
"TOTAL ASSETS" is defined in Section 10.7(c).
"UNRESTRICTED SUBSIDIARY" means any Subsidiary other than a Restricted
Subsidiary.
"VOTING STOCK" means the capital stock of a corporation the holders of
which are ordinarily, in the absence of contingencies, entitled to elect the
corporate directors (or persons performing similar functions) of such
corporation.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, as applied to any
indebtedness at any date, the number of years (or portions of years) obtained by
dividing (a) the then outstanding principal amount of such indebtedness into (b)
the total of the products obtained by multiplying (i) the amount of each then
remaining installment, sinking fund, serial maturity or other required payment
of principal, including payment at final maturity, in respect thereof, by (ii)
the number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the date on which such payment is to be made.
"WHOLLY OWNED RESTRICTED SUBSIDIARY" means, at any time, any Restricted
Subsidiary one hundred percent (100%) of all of the equity interests (except
directors' qualifying shares) and voting interests of which are owned by any one
or more of the Company and the Company's other Wholly Owned Restricted
Subsidiaries at such time.
-13-
<PAGE> 74
SCHEDULE B-1
to
Note Purchase Agreements
FORM OF SUBORDINATION PROVISIONS TO BE MADE
APPLICABLE TO SUBORDINATED INTERCOMPANY INDEBTEDNESS
In order for any indebtedness to constitute Subordinated Intercompany
Indebtedness under and as defined in the Note Purchase Agreements, such
indebtedness shall be evidenced by an instrument or instruments each containing,
or referring to an agreement governing the provisions of such instrument or
instruments containing, subordination provisions substantially similar to those
set forth below.
SUBORDINATION
Section [__] SUBORDINATION. (a) SENIOR DEBT; SUBORDINATED DEBT. Payments
of principal, premium, if any, and interest in respect of the indebtedness
[evidenced by] [issued pursuant to) this Subordinated Note [Agreement] (such
indebtedness being hereinafter called "SUBORDINATED DEBT") shall be subordinate
and junior in right of payment, to the extent and in the manner set forth in
this Section [__], to all indebtedness, obligations and liabilities of OM GROUP,
INC., a Delaware corporation (the "COMPANY"), under the Note Purchase Agreements
dated October __, 1997 (the "NOTE AGREEMENTS"), between the Company and the
respective note purchasers named therein, whether now existing or hereafter
arising, due or to become due, direct or indirect, absolute or contingent,
howsoever evidenced, held or acquired, as such indebtedness, obligations and
liabilities may be modified, extended, renewed or replaced from time to time,
and including without limitation, the obligation of the Company to pay the
principal of and the makewhole amount, if any, and interest on the Company's
6.82% Senior Notes due 2007 and on its 6.99% Senior Notes due 2009 issued and
sold pursuant to the Note Agreements (all such indebtedness, obligations and
liabilities being hereinafter called "SENIOR DEBT"), and each holder of
Subordinated Debt, by its acceptance [hereof] [thereof], agrees to be bound by
such subordination.
(b) PAYMENTS ON ACCOUNT OF SUBORDINATED DEBT. Upon the maturity of any
Senior Debt, whether at stated maturity, by prepayment, acceleration or
otherwise, all principal thereof, makewhole amount, premium, and interest
thereon or any other amounts owing in respect thereof, in each case to the
extent due and owing, shall first be paid in full, or such payment duly provided
for in cash or in a manner satisfactory to the holder or holders of such Senior
Debt, before any payment is made on account of the principal of, premium, if
any, or interest on, or any amount otherwise owing in respect of, the
Subordinated Debt.
(c) SUBORDINATION UPON EVENT OF DEFAULT UNDER SENIOR DEBT. No payment on
account of the principal of, or interest or premium on, or amounts otherwise
owing in respect of, the Subordinated Debt shall be made at any time that a
Default or Event of Default shall
<PAGE> 75
have occurred and be continuing under the Note Agreements or any other
instrument or agreement evidencing or securing any Senior Debt, or governing the
terms thereof. The holders of Subordinated Debt may not accept or receive any
payment on account of Subordinated Debt if such payment would constitute a
violation of Section 10.5 of the Note Agreements.
(d) NO PROCEEDINGS. Unless and until all Senior Debt shall have been
paid in full, no holder of Subordinated Debt will commence any proceeding
against the Company, or join with any creditor in any such proceeding, under any
bankruptcy, reorganization, readjustment of debt, arrangement of debt,
receivership, liquidation or insolvency law or statute of the Federal or any
state government, unless the holders of Senior Debt shall also join in bringing
such proceeding.
(e) SUBORDINATION IN EVENT OF INSOLVENCY, ETC. Upon any distribution of
assets of the Company upon any dissolution, winding up, liquidation or
reorganization of the Company (whether in any bankruptcy or other proceeding
referred to in paragraph (d) or otherwise): (i) the holders of all Senior Debt
shall first be entitled to receive payment in full of the principal thereof,
Make-Whole Amount, premium, and interest due thereon before any holder of
Subordinated Debt is entitled to receive any payment on account of the principal
of or interest or premium on or any other amount owing in respect of the
Subordinated Debt; and (ii) all principal of, premium, if any, and interest on
Subordinated Debt shall forthwith (notwithstanding the terms of paragraphs (b)
and (c)) become due and payable, and any payment or distribution of any
character, whether in cash, securities or other property, which would otherwise
(but for the terms hereof) be payable or deliverable by the Company in respect
of any Subordinated Debt (including any payment or distribution in respect of
any Subordinated Debt by reason of any other indebtedness of the Company being
subordinated to the Subordinated Debt, and any distribution of cash, property,
stock or obligations which are issued pursuant to any order or decree of any
court, or pursuant to reorganization, dissolution or liquidation proceedings,
whether or not purporting to give effect to the subordination of the
Subordinated Debt to the Senior Debt), shall be paid or delivered directly to
the holders of Senior Debt at the time outstanding (or their respective
representatives), ratably according to the respective aggregate amounts
remaining unpaid thereon, until all Senior Debt shall have been paid in full,
and the holders of the Subordinated Debt at the time outstanding irrevocably
authorize, empower and direct all receivers, trustees, liquidators, conservators
and others having authority in the premises to effect all such payment and
deliveries.
(f) PAYMENTS FOR BENEFIT OF SENIOR DEBT. In the event that any holder of
Subordinated Debt shall receive any payment on account of the Subordinated Debt
which it is not entitled to receive under the provisions of this Section [ ],
such payment shall be held by the holder of the Subordinated Debt in trust for
the benefit of, and shall be paid forthwith over and delivered to, the holders
of Senior Debt for application to the payment of all Senior Debt remaining
unpaid to the extent necessary to pay all Senior Debt then due in full in
accordance with the terms of such Senior Debt.
(g) SUBROGATION. Each holder of the Subordinated Debt agrees that no
payment or distribution by it directly to the holders of the Senior Debt
pursuant hereto shall
-2-
<PAGE> 76
entitle such holder to any rights of subrogation in respect thereof until all
Senior Debt shall have been irrevocably paid in full in accordance with the
respective terms thereof.
(h) OBLIGATION OF THE COMPANY UNCONDITIONAL. Nothing contained in this
Section [__] or in the Subordinated Debt is intended to or shall impair, as
between the Company and the holder or holders of the Subordinated Debt, the
obligation of the Company, which is absolute and unconditional, to pay to the
holder or holders of the Subordinated Debt the principal of and interest and
premium, if any, on and all other amounts owing in respect of the Subordinated
Debt as and when the same shall become due and payable in accordance with its
terms, subject to the rights under this Section [__] of the holders of Senior
Debt.
(i) SUBORDINATION NOT AFFECTED, ETC. The terms of this Section [__], the
subordination effected hereby and the rights of the holders of Senior Debt shall
not be affected by (i) any amendment of or addition or supplement to any Senior
Debt or any instrument or agreement relating thereto; (ii) any exercise or
non-exercise of any right, power or remedy under or in respect of any Senior
Debt or any instrument or agreement relating thereto; (iii) any sale, exchange,
release or other transaction affecting all or any part of any property at any
tune pledged or mortgaged to secure, or however securing, Senior Debt; (iv) any
waiver, consent, release, indulgence, extension, renewal, modification, delay or
other action, inaction or omission in respect of any Senior Debt or any
instrument or agreement relating thereto; or (v) any application by any holder
or holders of Senior Debt of any amount or sum (by whomsoever paid or however
realized) to Senior Debt, whether or not any holder of any Subordinated Debt
shall have had notice or knowledge of any of the foregoing.
(j) CHANGES, WAIVERS, ETC. Neither this Section [__] nor any term hereof
may be changed or waived except with the prior written consent of each holder of
Senior Debt at the time outstanding and affected hereby.
-3-
<PAGE> 77
SCHEDULE 5.4
SUBSIDIARIES AND AFFILIATES
This Schedule contains (except as noted herein) complete and
correct lists (i) of the Company's Subsidiaries, showing, as to
each Subsidiary, the correct name thereof, the jurisdiction of
its organization, its designation as a Restricted or
Unrestricted Subsidiary, and the percentage of shares of each
class of its capital stock or similar equity interests
outstanding owned by the Company and each other Subsidiary, (ii)
of the Company's Affiliates, other than Subsidiaries, and (iii)
of the Company's directors and senior officers.
Subsidiaries of the Company
- ---------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Restricted % of Each Class of
("R") or Capital Stock Owned
Name of Jurisdiction of Unrestricted by Company or Other
Subsidiary Organization ("U") Subsidiary
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
D&O Incorporated Japan U 50.00
- -----------------------------------------------------------------------------------------------------------
J&O Incorporated Korea U 50.00
- -----------------------------------------------------------------------------------------------------------
Kokkola Chemicals Finland R 100.00
- -----------------------------------------------------------------------------------------------------------
OMG Americas, Inc. USA-Ohio R 100.00
- -----------------------------------------------------------------------------------------------------------
OMG Apex, Inc. USA-Delaware R 100.00
- -----------------------------------------------------------------------------------------------------------
OMG JETT, Inc. USA-Ohio R 100.00
- -----------------------------------------------------------------------------------------------------------
OM Group Europe GmbH Germany R 100.00
- -----------------------------------------------------------------------------------------------------------
OMG Asia Pacific Co., Ltd. Taiwan R 100.00
- -----------------------------------------------------------------------------------------------------------
SCM Metal Products Inc. USA-Delaware R 100.00
- -----------------------------------------------------------------------------------------------------------
Vasset, S.A France R 100.00
- -----------------------------------------------------------------------------------------------------------
</TABLE>
Affiliates of the Company
- -------------------------
None
<PAGE> 78
Directors and Senior Officers of the Company
- --------------------------------------------
DIRECTORS
Eugene Bak
Lee R. Brodeur
Frank Butler
Thomas R. Miklich
James P. Mooney
John E. Mooney
Markku Toivanen
SENIOR OFFICERS
James P. Mooney
Chairman and Chief Executive Officer
Eugene Bak
President and Chief Operating Officer
Kari Muuraiskangas
President, OMG Europe GmbH
James M. Materna
Chief Financial Officer
Antti Aaltonen
Vice President, Technology
President (OMG Kokkola Chemicals Oy)
Thomas E. Fleming
Vice President, Chief Marketing Officer
H. Burnham Tinker
Vice President, Corporate Development
John R. Holtzhauser
Corporate Controller
Michael J. Scott
General Counsel and Secretary
J.R. Hwang
President, OMG Asia Pacific Co., Ltd.
Terry Guckes,
Vice President, Planning and Development
David A. Handal,
Vice President, Information Systems and Technology
<PAGE> 79
SCHEDULE 5.5
FINANCIAL STATEMENTS
The Company has delivered to each Purchaser copies of the
financial statements of the Company and its Subsidiaries listed
on this Schedule.
1. Consolidated Financial Statements of the Company for
the year ended December 31, 1996.
2. Consolidated Financial Statements of the Company for
the fiscal quarter ended June 30, 1997.
<PAGE> 80
SCHEDULE 5.10
INVESTMENTS
This Schedule correctly lists all investments of the Company
(other than Investments in Subsidiaries) existing on the date of
this Agreement.
None
<PAGE> 81
SCHEDULE 5.12
COVERED CONTRACTS AND RELATED CONTRACTS
None
<PAGE> 82
SCHEDULE 5.14
USE OF PROCEEDS
The Company will apply the proceeds of the sale of the Notes as
set forth in this Schedule.
The proceeds of the sale of the Notes will be used to pay down
existing bank indebtedness as follows:
<TABLE>
<CAPTION>
<S> <C>
Repay Bank Indebtedness ................ $29,950,000
Fees and Expenses ...................... 50,000
-----------
$30,000,000
===========
</TABLE>
<PAGE> 83
SCHEDULE 5.15
INDEBTEDNESS
This Schedule sets forth a complete and correct list of all
Funded Debt of the Company and its Subsidiaries as of October
16, 1997.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Outstanding Principal
Principal to be
Amount (as of Reduced Description
Item No./ September 30. With Note of
Description Obligor Obligee Guarantor 1997) Proceeds Collateral
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
1. $180,000,000 Revolving Company National City Bank, OMG Americas, $154,000,000 $29,950,000 None
Credit Agreement ABN Amro, OMG Apex, and
KeyBank and SCM Metal
Mellon Bank Products
- -----------------------------------------------------------------------------------------------------------------------------------
2. $30,000,000 7.38% Company Great-West Life and OMG Americas, $ 30,000,000 -0- None
Senior Notes Due 2005 Annuity Insurance OMG Apex, and
Company, SCM Metal
Nationwide Life Products
Insurance
Company, and
Mutual Life
Insurance Company
of New York
- -----------------------------------------------------------------------------------------------------------------------------------
3. Technology Loan (KCO) KCO Government of None $ 250,000 -0- None
Finland
- -----------------------------------------------------------------------------------------------------------------------------------
4 Regional Development OMG Wenango County, None $ 250,000 -0- None
Loan Americas Pennsylvania
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 84
EXHIBIT 1
[FORM OF NOTE]
OM GROUP, INC.
6.82% SENIOR NOTE DUE 2007
No. R-______ [Date]
$[__________] PPN# ___________
FOR VALUE RECEIVED, the undersigned, OM GROUP, INC. (herein called the
"Company "), a corporation organized and existing under the laws of the State of
Delaware, hereby promises to pay to [________________________________________],
or registered assigns, the principal sum of
[________________________________________] DOLLARS on October __, 2007, with
interest (computed on the basis of a 360-day year of twelve 30-day months) (a)
on the unpaid balance thereof at the rate of 6.82% per annum from the date
hereof, payable semiannually, on the ___ day of April and the ___day of October
in each year, commencing with April __, 1998, until the principal hereof shall
have become due and payable, the (b) to the extent permitted by law on any
overdue payment (including any overdue prepayment) of principal, any overdue
payment of interest and any overdue payment of any Make-Whole Amount (as defined
in the Note Purchase Agreements referred to below), payable semi-annually as
aforesaid (or, at the option of the registered holder hereof, on demand), at a
rate per annum from time to time equal to the greater of (i) 8.82% or (ii) 2%
over the rate of interest publicly announced by Morgan Guaranty Trust Company of
New York from time to time in New York, New York as its "base" or "prime" rate.
Payments of principal of, interest on and any Make-Whole Amount with
respect to this Note are to be made in lawful money of the United States of
America at the principal office in New York, New York of The Chase Manhattan
Bank or at such other place as the Company shall have designated by written
notice to the holder of this Note as provided in the Note Purchase Agreements
referred to below.
This Note is one of a series of Senior Notes (herein called the "Notes")
issued pursuant to separate Note Purchase Agreements dated October ____, 1997
(as from time to time amended, the "Note Purchase Agreements"), between the
Company and the respective Purchasers named therein and is entitled to the
benefits thereof. Each holder of this Note will be deemed, by its acceptance
hereof, (i) to have agreed to the confidentiality provisions set forth in
Section 20 of the Note Purchase Agreements and (ii) to have made the
representation set forth in Section 6.2 of the Note Purchase Agreements.
This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's
<PAGE> 85
attorney duly authorized in writing, a new Note for a like principal amount will
be issued to, and registered in the name of, the transferee. Prior to due
presentment for registration of transfer, the Company may treat the person in
whose name this Note is registered as the owner hereof for the purpose of
receiving payment and for all other purposes, and the Company will not be
affected by any notice to the contrary.
This Note is subject to mandatory and optional prepayments, in whole or
from time to time in part, at the times and on the terms specified in the Note
Purchase Agreements.
If an Event of Default, as defined in the Note Purchase Agreements,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price (including any
application Make-Whole Amount) and with the effect provided in the Note Purchase
Agreements.
This Note is entitled to the benefits of the Guaranty Agreements, dated
October __, 1997, by OMG Americas, Inc., OMG Apex, Inc. and SCM Metal Products,
Inc.
THIS NOTE IS MADE AND DELIVERED IN NEW YORK, NEW YORK, AND SHALL BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN THE STATE
OF NEW YORK.
OM GROUP, INC.
By
-------------------------------------
Title: Chief Financial Officer
- 2 -
<PAGE> 86
EXHIBIT lA
[FORM OF NOTE]
OM GROUP, INC.
6.99% SENIOR NOTE DUE 2009
No. R-______ [Date)
$[__________] PPN# __________
FOR VALUE RECEIVED, the undersigned, OM GROUP, INC. (herein called the
"Company"), a corporation organized and existing under the laws of the State of
Delaware, hereby promises to pay to
[_________________________________________________], or registered assigns, the
principal sum of [_________________________________________________] DOLLARS on
October __, 2009, with interest (computed on the basis of a 360-day year of
twelve 30-day months) (a) on the unpaid balance thereof at the rate of 6.99% per
annum from the date hereof, payable semiannually, on the ___ day of April and
the ___day of October in each year, commencing with April __, 1998, until the
principal hereof shall have become due and payable, the (b) to the extent
permitted by law on any overdue payment (including any overdue prepayment) of
principal, any overdue payment of interest and any overdue payment of any
Make-Whole Amount (as defined in the Note Purchase Agreements referred to
below), payable semi-annually as aforesaid (or, at the option of the registered
holder hereof, on demand), at a rate per annum from time to time equal to the
greater of (i) 8.99% or (ii) 2% over the rate of interest publicly announced by
Morgan Guaranty Trust Company of New York from time to time in New York, New
York as its "base" or "prime" rate.
Payments of principal of, interest on and any Make-Whole Amount with
respect to this Note are to be made in lawful money of the United States of
America at the principal office in New York, New York of The Chase Manhattan
Bank or at such other place as the Company shall have designated by written
notice to the holder of this Note as provided in the Note Purchase Agreements
referred to below.
This Note is one of a series of Senior Notes (herein called the "Notes")
issued pursuant to separate Note Purchase Agreements dated October , 1997 (as
from time to time amended, the "Note Purchase Agreements"), between the Company
and the respective Purchasers named therein and is entitled to the benefits
thereof. Each holder of this Note will be deemed, by its acceptance hereof, (i)
to have agreed to the confidentiality provisions set forth in Section 20 of the
Note Purchase Agreements and (ii) to have made the representation set forth in
Section 6.2 of the Note Purchase Agreements.
This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a
<PAGE> 87
written instrument of transfer duly executed, by the registered holder hereof or
such holder's attorney duly authorized in writing, a new Note for a like
principal amount will be issued to, and registered in the name of, the
transferee. Prior to due presentment for registration of transfer, the Company
may treat the person in whose name this Note is registered as the owner hereof
for the purpose of receiving payment and for all other purposes, and the Company
will not be affected by any notice to the contrary.
This Note is subject to mandatory and optional prepayments, in whole or
from time to time in part, at the times and on the terms specified in the Note
Purchase Agreements.
If an Event of Default, as defined in the Note Purchase Agreements,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price (including any
application Make-Whole Amount) and with the effect provided in the Note Purchase
Agreements.
This Note is entitled to the benefits of the Guaranty Agreements, dated
October __, 1997, by OMG Americas, Inc. , OMG Apex, Inc. and SCM Metal Products,
Inc.
THIS NOTE IS MADE AND DELIVERED IN NEW YORK, NEW YORK, AND SHALL BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN THE STATE
OF NEW YORK.
OM GROUP, INC.
By
---------------------------------------
Title: Chief Financial Officer
-2-
<PAGE> 1
EXHIBIT 4.11
to
Note Purchase Agreements
FORM OF SUBSIDIARY GUARANTY
---------------------------
GUARANTY AGREEMENT, dated October __, 1997 ("THIS GUARANTY
AGREEMENT"), made and given by OMG Americas, Inc, an Ohio corporation (the
"GUARANTOR"), in favor of NATIONWIDE LIFE INSURANCE COMPANY and GREAT-WEST LIFE
& ANNUITY INSURANCE COMPANY (collectively, the "PURCHASERS") and in favor of the
holders from time to time of the Notes referred to below (such holders, together
with the Purchasers, being herein sometimes referred to collectively as the
"NOTEHOLDERS" and individually as a "NOTEHOLDER"); for the benefit of OM GROUP,
INC. , a Delaware corporation (the "COMPANY").
R E C I T A L S:
- - - - - - - -
A. The Company has entered into two separate Note Purchase Agreements
with the respective Purchasers, dated October __, 1997 (the "NOTE AGREEMENTS");
terms used and not otherwise defined herein having the respective meanings when
used herein as are attributed thereto in the Note Agreements), providing for the
issuance and sale by the Company and, subject to the terms and conditions
thereof, the purchase by the Purchasers of (i) $15,000,000 of its 6.82% Senior
Notes due October __, 2007, and (ii) $15,000,000 of its 6.99% Senior Notes due
October __, 2009 (collectively, the "NOTES", such term to include any such
Senior Note issued pursuant to the Note Agreements in substitution or exchange
for any other such Senior Note; the Notes together with the Note Agreements,
this Guaranty Agreement and all other related agreements and documents issued or
delivered under or pursuant to the Note Agreements or this Guaranty Agreement,
in each case as the same may be amended or otherwise modified and in effect from
time to time, being herein sometimes referred to collectively as the "NOTE
DOCUMENTS").
B. As a condition precedent to the purchase of the Notes to be purchased
pursuant to the Note Agreements, the Purchasers have required, among other
things, that the Guarantor guarantee all of the Company's Obligations referred
to below.
C. The Guarantor is a Wholly Owned Restricted Subsidiary of the Company.
NOW, THEREFORE, for and in consideration of the execution and delivery
by each Purchaser of the Note Agreements to which it is a party and in order to
induce each Purchaser to purchase the Notes to be purchased by it under the Note
Agreements, and for other good and valuable consideration, receipt and
sufficiency of which are hereby acknowledged, the Guarantor hereby agrees as
follows:
1. GUARANTEE OF PAYMENT. The Guarantor hereby irrevocably and
unconditionally guarantees to the Noteholders the prompt payment in full when
due (whether on
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a date fixed for prepayment, at stated maturity, by declaration, acceleration or
otherwise) of the Company's Obligations. For the purposes hereof the "COMPANY'S
OBLIGATIONS" means all indebtedness, obligations and liabilities of the Company
under the Note Documents, now existing or hereafter arising, due or to become
due, direct or indirect, absolute or contingent, howsoever evidenced, held or
acquired, as such indebtedness, obligations and liabilities may be modified,
extended, renewed or replaced from time to time, and including without
limitation, the obligation of the Company to pay the principal of and the
Make-Whole Amount, if any, and interest on the Notes in accordance with the
terms of the Note Documents and all other obligations from time to time owing to
the Noteholders, or any of them, under the Note Documents. The guaranty of the
Guarantor as set forth in this section is a guaranty of payment and not of
collection.
Notwithstanding any provision to the contrary contained herein or in any
Note Document, the liability of the Guarantor with respect to the Company's
Obligations hereunder shall not exceed the Maximum Guaranteed Amount. For
purposes hereof:
(a) "MAXIMUM GUARANTEED AMOUNT" shall mean, as of any date of
determination thereof, the sum of (i) to the extent the proceeds of the
sale pursuant to the Note Agreements of the Notes (or portions thereof)
are used to make Direct Transfers to the Guarantor, the aggregate
outstanding principal amount of such Notes (or such portions thereof)
plus (ii) to the extent the proceeds of the sale pursuant to the Note
Agreements of the Notes (or portions thereof) are not used to make a
Direct Transfer to the Guarantor, the lesser of (A) the aggregate
outstanding principal amount of all such Notes (or such portions
thereof) as of the earlier of the date that enforcement is sought
against the Guarantor hereunder or the date of the commencement of a
case under the U.S. Bankruptcy Code in which the Guarantor is a debtor,
or (B) 95% of the Adjusted Net Worth of the Guarantor at the time of
such sale of Notes.
(b) "DIRECT TRANSFER" shall mean (i) all loans, advances or
capital contributions made to or for the benefit of the Guarantor with
proceeds of any sale of Notes pursuant to the Note Agreements, (ii) all
debt securities or other obligations of the Guarantor acquired from the
Guarantor or retired by the Guarantor with proceeds of any sale of Notes
pursuant to the Note Agreements, (iii) the fair market value of all
property acquired with proceeds of any sale of Notes pursuant to the
Note Agreements and transferred, absolutely and not as collateral, to
the Guarantor, (iv) all equity securities of the Guarantor acquired from
the Guarantor with proceeds of any sale of Notes pursuant to the Note
Agreements and (v) the value of any quantifiable economic benefits not
included in clauses (i) through (iv) above but which are included in
accordance with applicable Federal and state laws governing
determinations of the insolvency of debtors and which accrued to the
Guarantor as a result of the use of proceeds of any sale of Notes
pursuant to the Note Agreements.
(c) "ADJUSTED NET WORTH" shall mean, as of any date of
determination thereof, the excess of (i) the amount of the "present fair
saleable value" of the assets of the Guarantor as of such date of
determination, over (ii) the amount of all "liabilities, contingent or
otherwise," of the Guarantor as of such date of determination, as such
quoted terms are determined in accordance with applicable Federal and
state laws
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governing determinations of the insolvency of debtors. In determining
the Adjusted Net Worth for purposes of calculating the Maximum
Guaranteed Amount, the liabilities of the Guarantor to be used in such
determination pursuant to clause (ii) of the preceding sentence shall in
any event include the liabilities includable in the Maximum Guaranteed
Amount pursuant to clause (i) of the definition of Maximum Guaranteed
Amount.
2. RELEASE OF COLLATERAL, PARTIES LIABLE, ETC. The Guarantor agrees that
the whole or any part of any and all security now or hereafter held for the
Company's Obligations may be exchanged, compromised, released or surrendered
from time to time; that neither the Noteholders nor any of them nor any trustee
or agent which shall at any time hold any such security shall have any
obligation to protect, perfect, secure or insure any Liens now or hereafter held
for the Company's Obligations or the properties subject thereto; that the time
or place of payment of the Company's Obligations may be changed or extended, in
whole or in part, to a time certain or otherwise, and may be renewed or
accelerated, in whole or in part; that the Company may be granted indulgences
generally; that any provisions of the Note Documents or any other documents
executed in connection with this transaction may be modified, amended or waived;
that any party liable for the payment of the Company's Obligations may be
granted indulgences or released; and that any deposit balance for the credit of
the Company or any other party liable for the payment of the Company's
Obligations or liable upon any security therefor may be released, in whole or in
part, at, before and/or after the stated, extended or accelerated maturity of
the Company's Obligations, all without notice to or further assent by the
Guarantor, who shall remain bound thereon, notwithstanding any such exchange,
compromise, surrender, extension, renewal, acceleration, modification,
indulgence or release.
3. WAIVER OF RIGHTS. The Guarantor expressly waives: (a) notice of
acceptance of this Guaranty Agreement by the Noteholders; (b) presentment and
demand for payment of any of the Company's Obligations; (c) protest and notice
of dishonor or of default to the Guarantor or to any other party with respect to
the Company's Obligations or with respect to any security therefor; (d) notices
of any Noteholder or any trustee or agent for any Noteholder obtaining,
amending, substituting for, releasing, waiving or modifying any security
interests, liens or other encumbrances now or hereafter securing the Company's
Obligations, or of the Noteholder or any such trustee or agent subordinating,
compromising, discharging or releasing such security interests, liens or
encumbrances; (e) all other notices to which the Guarantor might otherwise be
entitled; (f) demand for payment under this Guaranty Agreement; and (g) any
right to assert against any Noteholder, as a defense, counterclaim, set-off or
cross-claim, any defense (legal or equitable), set-off, counterclaim or claim
which the Guarantor may now or hereafter have against any Noteholder or the
Company.
4. PRIMARY LIABILITY OF GUARANTOR; SUBROGATION; INTEREST; ACCELERATION.
(a) The Guarantor agrees that this Guaranty Agreement may be enforced by the
Noteholders without the necessity at any time of resorting to or exhausting any
other security or collateral and without the necessity at any time of having
recourse to the Company under the Note Documents or any collateral now or
hereafter securing the Company's Obligations or otherwise, and the Guarantor
hereby waives the right to require the Noteholders to proceed against the
Company or any other Person (including any co-guarantor) or to require the
Noteholders to pursue any other remedy or enforce any other right. The Guarantor
further agrees that nothing contained herein shall
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prevent the Noteholders or any trustee or agent at the time empowered to act on
their behalf from suing the Company with respect to its obligations under the
Note Documents or foreclosing any security interest in or lien on any collateral
now or hereafter securing the Company's Obligations or from exercising any
other rights available to the Noteholders or any such trustee or agent under the
Note Documents if neither the Company nor the Guarantor timely performs the
obligations of the Company thereunder, and the exercise of any of the aforesaid
rights and the completion of any foreclosure proceedings shall not constitute a
discharge of the Guarantor's obligations hereunder; it being the purpose and
intent of the Guarantor that the Guarantor's obligations hereunder shall be
absolute, irrevocable, independent and unconditional under any and all
circumstances. Neither the obligations of the Guarantor under this Guaranty
Agreement nor any remedy for the enforcement thereof shall be impaired,
modified, changed or released in any manner whatsoever by an impairment,
modification, change, release or limitation of the liability of the Company or
any other guarantor of the Company's Obligations, by reason of the Company's or
any other such guarantor's bankruptcy or insolvency or by reason of the
invalidity or unenforceability of all or any portion of the Company's
Obligations. The Guarantor acknowledges that the term "Company's Obligations" as
used herein includes any payments made by the Company or any other guarantor of
the Company's Obligations to the Noteholders and subsequently recovered by the
Company or a trustee for the Company pursuant to the Company's bankruptcy or
insolvency and that the guaranty of the Guarantor hereunder shall be reinstated
to the extent of such recovery.
(b) In the event the Guarantor shall at any time pay any sums on account
of any of the Company's Obligations, the Guarantor shall, to the extent of such
payment, be subrogated to the rights, privileges and powers of the Noteholders
in respect of such Company's Obligation, PROVIDED that, the Guarantor hereby
agrees that it shall not seek to exercise any such rights of subrogation, any
right of reimbursement or indemnity whatsoever or any rights or recourse to any
security for any of the Company's Obligations unless and until all of the
Company's Obligations shall have been indefeasibly paid in full.
(c) As between the Guarantor, on the one hand, and the Noteholders, on
the other hand, the Company's Obligations may be declared to be forthwith due
and payable as provided in Section 12 of the Note Agreements (and shall be
deemed to have become automatically due and payable in the circumstances
provided in said Section 12) for all purposes of this Guaranty Agreement
notwithstanding any stay, injunction or other prohibition preventing such
declaration (or preventing such obligations from becoming automatically due and
payable) as against the Company and, in the event of such declaration (or in the
event of any such obligations being deemed to have become automatically due and
payable), such obligations (whether or not due and payable by the Company) shall
forthwith become due and payable by the Guarantor for purposes of this Guaranty
Agreement and the obligations of the Guarantor hereunder shall be deemed to have
been accelerated with the same effect as if the Notes had been accelerated in
accordance with the terms thereof and of the Note Agreements.
(d) The Guarantor acknowledges, consents and agrees that any interest on
the Company's Obligations which accrues after the commencement of any
bankruptcy, reorganization or insolvency proceeding against the Company, or, if
interest on any portion of the Company's Obligations ceases to accrue by
operation of law by reason of the commencement
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<PAGE> 5
of any such proceeding, such interest as would have accrued on any such portion
of the Company's Obligations if said proceeding had not been commenced, shall be
included in the Company's Obligations, it being the intent hereof that the
amount of the Company's Obligations guaranteed hereunder should be determined
without regard to any rule of law or order which may relieve the Company of any
portion of such Company's Obligations.
5. ATTORNEYS' FEES AND COSTS OF COLLECTION. If at any time or times
hereafter the Noteholders or any trustee or agent acting on their behalf employs
counsel to pursue collection, to intervene, to sue for enforcement of the terms
hereof or of the Note Agreements or any other of the Note Documents, or to file
a petition, complaint, answer, motion or other pleading in any suit or
proceeding relating to this Guaranty Agreement or the Note Agreements or any
other of the Note Documents, then in such event, to the fullest extent permitted
by applicable law, all of the reasonable attorneys' fees relating thereto shall
be an additional liability of the Guarantor to the Noteholders hereunder,
payable on demand.
6. TERM OF GUARANTY; WARRANTIES. This Guaranty Agreement shall continue
in full force and effect until the Company's Obligations are fully and
indefeasibly paid, performed and discharged. This Guaranty Agreement covers the
Company's Obligations whether presently outstanding or arising subsequent to the
date hereof. The Guarantor warrants and represents to the Noteholders (a) that
the Guarantor is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation, (b) that the
Guarantor has all corporate powers and all material governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted, (c) that the execution and delivery by the Guarantor of this Guaranty
Agreement and the other Note Documents, if any, to which it is a party and the
performance by the Guarantor of its obligations hereunder and thereunder are
within the corporate power of the Guarantor, have been duly authorized by all
necessary corporate action, require no action by or in respect of, or filing
with, any governmental body, agency or official (except for any such action or
filing that has been taken and is in full force and effect) and do not
contravene, or constitute a default under, any provision of applicable law or
regulation or of the articles of incorporation or regulations (or other
constitutional documents) of the Guarantor or of any material agreement,
judgment, injunction, order, decree, or other material instrument binding upon
the Guarantor or result in the creation or imposition of any Lien on any asset
of the Guarantor and (d) that this Guaranty Agreement and the other Note
Documents, if any, to which the Guarantor is a party constitute valid, binding
and enforceable agreements of the Guarantor.
7. FURTHER REPRESENTATIONS AND WARRANTIES. The Guarantor agrees that the
Noteholders will have no obligation to investigate the financial condition or
affairs of the Company for the benefit of the Guarantor nor to advise the
Guarantor of any fact respecting, or any change in, the financial condition or
affairs of the Company which might come to the knowledge of any of the
Noteholders at any time, whether or not any of the Noteholders knows or believes
or has reason to know or believe that any such fact or change is unknown to the
Guarantor or might (or does) materially increase the risk of the Guarantor as
guarantor or might (or would) affect the willingness of the Guarantor to
continue as guarantor with respect to the Company's Obligations.
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8. ADDITIONAL LIABILITY OF GUARANTOR. If the Guarantor is or becomes
liable for any indebtedness owing by the Company to any of the Noteholders by
endorsement or otherwise other than under this Guaranty Agreement, such
liability shall not be in any manner impaired or reduced hereby but shall have
all and the same force and effect it would have had if this Guaranty Agreement
had not existed and the Guarantor's liability hereunder shall not be in any
manner impaired or reduced thereby.
9. CUMULATIVE RIGHTS. All rights of the Noteholders hereunder or
otherwise arising under any documents executed in connection with or as security
for the Company's Obligations are separate and cumulative and may be pursued
separately, successively or concurrently, or not pursued, without affecting or
limiting any other right of any of the Noteholders and without affecting or
impairing the liability of the Guarantor.
10. USURY. Notwithstanding any other provisions herein contained, no
provision of this Guaranty Agreement shall require or permit the collection from
the Guarantor of interest in excess of the maximum rate or amount that the
Guarantor may be required or permitted to pay pursuant to applicable law. In the
event any such interest is collected, it shall be applied in reduction of the
Guarantor's obligations hereunder, and the remainder of such excess collected
shall be returned to the Guarantor once such obligations have been fully
satisfied.
11. SUCCESSORS AND ASSIGNS. This Guaranty Agreement shall be binding on
and enforceable against the Guarantor and its successors and assigns; PROVIDED
that, the Guarantor may not assign or transfer any of its obligations hereunder
without prior written consent of the Required Holders. This Guaranty Agreement
is intended for and shall inure to the benefit of the Noteholders and their
respective successors and assigns. This Guaranty Agreement shall be transferable
and negotiable with the same force and effect, and to the same extent, that the
Company's Obligations are transferable and negotiable, it being understood and
stipulated that upon assignment or transfer by any of the Noteholders of any of
the Company's Obligations the legal holder or owner of the Company's Obligations
(or a part thereof or interest therein thus transferred or assigned by any
Noteholder) shall (except as otherwise stipulated by any such Noteholder in its
assignment) have and may exercise all of the rights granted to such Noteholder
under this Guaranty Agreement to the extent of that part of or interest in the
Company's Obligations thus assigned or transferred to said Person. The Guarantor
expressly waives notice of transfer or assignment of the Company , 5
Obligations, or any part hereof, or of the rights of any Noteholder thereunder.
Failure to give notice will not affect the liabilities of the Guarantor
hereunder.
12. APPLICATION OF PAYMENTS. As between the Guarantor and the
Noteholders, each Noteholder may apply any payments received by it from any
source against that portion of the Company's Obligations (principal, interest,
Make-Whole Amount, court costs, attorneys' fees or other) in such priority and
fashion as such Noteholder may deem appropriate.
13. MODIFICATIONS. Any term, covenant, agreement or condition of this
Guaranty may be amended or compliance therewith may be waived (either generally
or in a particular instance and either retroactively or prospectively) only by
an instrument in writing duly executed by the Guarantor and the Required
Holders; PROVIDED that, without the prior written consent of
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Noteholders holding all the Notes at the time outstanding, no such amendment or
waiver shall reduce the aforesaid percentage of the principal amount of the
Notes referred to in this Section, the holders of which are required to consent
to any such amendment or waiver. Any amendment or waiver effected in accordance
with this Section shall apply equally to all Noteholders and shall be binding
upon them and upon each future holder of any Note and upon the Guarantor whether
or not any such Note shall have been marked to indicate such amendment or
waiver. No such amendment or waiver shall extend to or affect any obligation not
expressly amended or waived or impair any right consequent thereon.
14. NOTICES. Notices and other communications provided for herein shall
be in writing and shall be delivered by hand or overnight courier service,
mailed or sent by telex, telecopy, graphic scanning or other telegraphic
communications equipment of the sending party, as follows:
(a) if to the Guarantor, to it at 3800 Terminal Tower,
Cleveland, Ohio 44113-2204, Attention of Michael J. Scott
(Facsimile No. (216) 781-0902),
(b) if to any Purchaser, at the address set forth for such
Purchaser in Schedule A to the Note Agreements, or at such other
address as such Purchaser shall have designated in writing to the
Guarantor; and
(c) if to any other Noteholder, in the manner provided in the
Note Agreements
All notices and other communications given to any party hereto in accordance
with the provisions of this Guaranty Agreement shall be deemed to have been
given on the date of receipt if delivered by hand or overnight courier service
or sent by telex, telecopy, graphic scanning or other telegraphic communications
equipment of the sender, or on the date five Business Days after dispatch by
certified or registered mail if mailed, in each case delivered, sent or mailed
(properly addressed) to such party as provided in this Section or at such other
address or telex, telecopy or other number as shall be designated by such party
in a notice to each other party complying with the terms of this Section.
15. NET PAYMENTS. All payments made by the Guarantor hereunder will be
made without setoff or counterclaim. All payments by the Guarantor hereunder
shall be made free and clear of and without deduction or withholding for any
present or future license, registration or other fees, taxes or other amounts
for or on account of levies, imposts, duties, deductions, withholdings or
other charges of whatsoever nature, imposed, levied, collected, withheld or
assessed by any governmental or taxing authority, excluding income and franchise
taxes imposed on a Noteholder by a jurisdiction under which such Noteholder is
organized or operating in connection with the Note Documents or any political
subdivision thereof ("Taxes"). If the Guarantor shall be required to withhold or
deduct Taxes from any sum payable hereunder, (a) the sum payable shall be
increased as may be necessary so that the amount received is equal to the sum
which would have been received had no withholdings or deductions been made, (b)
the Guarantor shall make such necessary withholdings or deductions and (c) the
Guarantor shall pay the full amount withheld or deducted to the relevant
authority according to applicable law so that the Noteholders shall not be
required to make any deduction or payment of Taxes.
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16. SEVERABILITY. In the event that any provision hereof shall be deemed
to be invalid by reason of the operation of any law or by reason of the
interpretation placed thereon by any court, this Guaranty Agreement shall be
construed as not containing such provision, but only as to such jurisdictions
where such law or interpretation is operative , and the invalidity of such
provision shall not affect the validity of any remaining provision hereof, and
any and all other provisions hereof which are otherwise lawful and valid shall
remain in full force and effect.
17. GOVERNING LAW. THIS GUARANTY AGREEMENT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY,
THE LAW OF THE STATE OF NEW YORK EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW
OF SUCH STATE THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION
OTHER THAN SUCH STATE.
18. HEADINGS. The headings in this instrument are for convenience of
reference only and shall not limit or otherwise affect the meaning of any
provisions hereof.
19. COUNTERPARTS. This Guaranty Agreement may be executed in any number
of counterparts and by different parties hereto on separate counterparts, each
constituting an original, but all together constituting one and the same
instrument.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty Agreement to
be duly executed as of the date first above written.
OMG AMERICAS, INC.
By
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Title
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Exhibit 10.32
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (the "Agreement") is made this 19th
day of December, 1997, by and among OM GROUP, INC., a Delaware corporation
("OMG"), OM GROUP ACQUISITION COMPANY, INC., a Delaware corporation and a direct
wholly-owned subsidiary of OMG ("OMGAC"), and AURIC CORPORATION, a Delaware
corporation ("Auric").
RECITALS
WHEREAS, the Board of Directors of OMG, OMGAC and Auric have approved,
and deem it advisable and in the best interests of their respective companies
and stockholders to consummate, a merger of OMGAC with and into Auric (the
"Merger"), with Auric as the surviving corporation in the Merger, upon the terms
and subject to the conditions set forth in this Agreement, pursuant to which the
shares of common stock, par value $.10 per share, of Auric ("Auric Common
Stock") issued and outstanding immediately prior to the Effective Time (as
defined herein) other than (a) shares of Auric Common Stock owned, directly or
indirectly, by Auric or any subsidiary (as defined herein) of Auric or by OMG,
OMGAC or any other subsidiary of the OMG and (b) Dissenting Shares (as defined
herein), will be converted into the right to receive the Merger Consideration
(as defined herein); and
WHEREAS, the Board of Directors of Auric has directed that this
Agreement be submitted for consideration at a special meeting of the voting
stockholders of Auric;
NOW, THEREFORE, in consideration of their respective representations,
warranties, covenants, agreements and undertakings set forth herein, the parties
agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Upon the terms, subject to the conditions and in
reliance on the representations, warranties and covenants set forth herein, and
in accordance with the Delaware General Corporation Law (the "DGCL"), at the
Effective Time, as defined in Section 1.2, (a) OMGAC shall be merged with and
into Auric and the separate existence and corporate organization of OMGAC shall
cease; (b) Auric shall be the surviving corporation in the Merger (the
"Surviving Corporation") having the name Auric Corporation and shall continue to
be governed by the laws of the State of Delaware; (c) the Certificate of
Incorporation of the Surviving Corporation shall be amended so as to read in its
entirety as set forth on Exhibit A hereto and, as so amended, shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended as provided therein or by applicable law; and (d) the Bylaws of OMGAC as
in effect immediately prior to the Effective Time shall become the Bylaws of the
Surviving Corporation until thereafter amended as provided therein or by
applicable law; provided, that, there shall be an amendment by virtue of the
Merger to change the name of the Surviving Corporation to "Auric Corporation."
1.2 Effective Time of the Merger. Subject to the provisions of this
Agreement, a certificate of merger shall be duly prepared, executed and
acknowledged by the Surviving
<PAGE> 2
Corporation in the Merger (the "Certificate of Merger") and thereafter delivered
on the Closing Date (as defined herein) to the Secretary of State of Delaware
(the "Secretary") for filing in accordance with the DGCL. The Merger shall
become effective upon the filing of the Certificate of Merger with the
Secretary, or at such other time as is permissible in accordance with the DGCL
and as OMG and Auric shall agree should be specified in the Certificate of
Merger (the time the Merger becomes effective being the "Effective Time").
1.3 Effects of the Merger. The Merger shall have the effects set forth
in the DGCL.
1.4 Closing. Unless this Agreement shall have been terminated and the
transactions contemplated herein shall have been abandoned pursuant to Section
8.1, and subject to the satisfaction or waiver of the conditions set forth in
Article 6, the closing of the Merger (the "Closing") will take place at 9:00
a.m., Eastern time, on the second business day after satisfaction of the
conditions set forth in Section 6.1 (or, if the conditions set forth in Sections
6.2 and 6.3 are not satisfied or waived at that time, as soon as practicable
thereafter following such satisfaction or waiver) (the "Closing Date"), at the
offices of Squire, Sanders & Dempsey L.L.P., 4900 Key Tower, 127 Public Square,
Cleveland, Ohio, unless another date, time or place is agreed to in writing by
the parties hereto.
1.5 Directors and Officers of Surviving Corporation. The directors of
OMGAC at the Effective Time shall be the directors of the Surviving Corporation.
The officers of Auric at the Effective Time shall be the officers of the
Surviving Corporation. Each of the officers and directors shall hold office
until their respective successors are duly elected or appointed and qualified or
until their earlier death, resignation or removal in the manner provided in the
Articles of Incorporation and Bylaws of the Surviving Corporation, or as
otherwise provided by law.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF OMGAC AND AURIC;
CONVERSION OF AURIC COMMON STOCK
2.1 Effect on Capital Stock. As of the Effective Time, by virtue of the
Merger and without any action on the part of the holders of any shares of Auric
Common Stock (the "Auric Stockholders") or capital stock of OMGAC:
(a) Capital Stock of OMGAC. Each issued and outstanding share of the
common stock of OMGAC shall be converted into and become one fully paid and
nonassessable share of common stock, par value $.01 per share, of the Surviving
Corporation (the "Surviving Corporation Common Stock").
(b) Cancellation of Treasury Stock and OMG-Owned Auric Common Stock.
Each share of Auric Common Stock that is owned by Auric or by any subsidiary of
Auric, and each share of Auric Common Stock that is owned by OMG, OMGAC or any
other subsidiary of OMG shall automatically be canceled and retired and shall
cease to exist, and no consideration shall be delivered or deliverable in
exchange therefor.
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<PAGE> 3
(c) Exchange of Auric Common Stock. The issued and outstanding shares
of the Auric Common Stock (other than Dissenting Shares, as defined in Section
2.1(d) and shares to be canceled in accordance with Section 2.1(b) hereof) shall
be converted into the right to receive an amount equal to Eighty Million Dollars
($80,000,000), (i) less any amounts that are paid to OMG or the Stockholders'
Representative (as defined herein) as provided in the Escrow Agreement (as
defined herein) and (ii) plus any amounts that are paid by OMG into the Escrow
Fund (as defined herein) pursuant to Article IX hereof (the "Merger
Consideration"). All shares of Auric Common Stock, when so converted, shall no
longer be outstanding and shall automatically be canceled and retired and shall
cease to exist, and each holder of a certificate representing any such shares
(each, an "Auric Certificate") shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration therefor upon
surrender of such Auric Certificate in accordance with Section 2.2, without
interest, or, as provided in Section 2.1(d), to perfect any rights of appraisal
as a Dissenting Shareholder (as defined herein) pursuant to Section 262 of the
DGCL. The Merger Consideration shall be distributed to the Auric Shareholders in
accordance with Section 2.2(b) below.
(d) Shares of Dissenting Stockholders. Notwithstanding anything in this
Agreement to the contrary, any issued and outstanding shares of Auric Common
Stock held by a person (a "Dissenting Shareholder") who duly demands appraisal
of his shares of Auric Common Stock pursuant to Section 262 of the DGCL and
complies with all the provisions of the DGCL concerning the right of holders of
Auric Common Stock to demand appraisal of their shares in connection with the
Merger ("Dissenting Shares") shall not be converted as described in Section
2.1(c) but shall become the right to receive such cash consideration as may be
determined to be due to such Dissenting Shareholder as provided in the DGCL. If,
however, such Dissenting Shareholder withdraws his demand for appraisal or fails
to perfect or otherwise loses his right of appraisal, in any case pursuant to
the DGCL, his shares shall be deemed to be converted as of the Effective Time
into the right to receive the Merger Consideration. Auric shall give OMG (i)
prompt notice of any demands for appraisal of shares received by Auric and (ii)
the opportunity to participate in and direct all negotiations and proceedings
with respect to any such demands. Auric shall not, without the prior written
consent of OMG, make any payment with respect to, or settle, offer to settle or
otherwise negotiate, any such demands.
2.2 Exchange of Auric Certificates.
(a) Payment of Exchange Price. As of the Effective Time, OMG shall
deliver (i) to First Union National Bank or such other bank or trust company
designated by OMG (and reasonably acceptable to Auric) (the "Exchange Agent"),
for the benefit of Auric Stockholders, for conversion in accordance with this
Article II, an amount of cash equal to Seventy Seven Million Dollars
($77,000,000) (such amount being hereinafter referred to as the "Exchange Fund")
and (ii) to First Union National Bank (the "Escrow Agent"), under an Escrow
Agreement in the form attached hereto as Exhibit B (the "Escrow Agreement"),
cash in the amount of Three Million Dollars ($3,000,000) (the "Escrow Fund").
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, but in no event more than three business days thereafter, the
Exchange Agent shall mail to each holder of record as of the Effective Time of
an Auric Certificate or Certificates whose shares
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were converted pursuant to Section 2.1 hereof into the right to receive the
Merger Consideration, (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Auric Certificates
shall pass, only upon delivery of the Auric Certificates to the Exchange Agent
and shall be in such form and have such other provisions as OMG and Auric may
reasonably specify) (the "Transmittal Letter") and (ii) instructions for use in
effecting the surrender of the Auric Certificates in exchange for the Merger
Consideration. Upon surrender of an Auric Certificate for cancellation to the
Exchange Agent or to such other agent or agents as may be appointed by OMG and
OMGAC, together with such Transmittal Letter, duly executed, the holder of such
Auric Certificate shall be entitled to receive in exchange therefor the Initial
Exchange Price (as defined herein) and the right to receive the remainder of the
Merger Consideration for each share of Auric Common Stock formerly represented
by such Auric Certificate as provided in the Escrow Agreement, and the Auric
Certificate so surrendered shall forthwith be canceled. For purposes hereof,
"Initial Exchange Price" shall be equal to the Exchange Fund divided by the
total number of shares of Auric Common Stock issued and outstanding on the
Closing Date.
In the event of a transfer of ownership of Auric Common Stock which is
not registered in the transfer records of Auric, the Merger Consideration may be
paid to a transferee if the Auric Certificate representing such Auric Common
Stock is presented to the Exchange Agent, accompanied by all documents required
to evidence and effect such transfer and by evidence that any applicable stock
transfer taxes have been paid. Until surrendered as contemplated by this Section
2.2, each Auric Certificate shall be deemed at any time after the Effective Time
to represent only the right to receive upon such surrender the Merger
Consideration as contemplated by this Section 2.2.
(c) No Further Ownership Rights in Auric Common Stock; Transfer Books.
The Merger Consideration paid in exchange for the surrender of shares of Auric
Common Stock in accordance with the terms hereof shall be deemed to have been
paid and issued in full satisfaction of all rights pertaining to such shares of
Auric Common Stock, subject, however, to the Surviving Corporation's obligation
to pay any dividends or make any other distributions with a record date prior to
the Effective Time which may have been declared or made by Auric on such shares
of Auric Common Stock in accordance with the terms of this Agreement or prior to
the date hereof and which remain unpaid at the Effective Time. As of the
Effective Time, entries shall be made in the stock transfer books of Auric to
reflect the cancellation of the Auric Common Stock issued and outstanding
immediately prior to the Effective Time and there shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of Auric Common Stock that were outstanding
immediately prior to the Effective Time. If, after the Effective Time, Auric
Certificates are presented to the Surviving Corporation for any reason, they
shall be canceled and converted as provided in this Section 2.2.
(d) Termination of Exchange Fund. Any portion of the Exchange Fund that
remains undistributed to the Auric Stockholders for one year after the Effective
Time shall be delivered to OMG, upon demand, and any Auric Stockholders who have
not theretofore complied with this Article II shall thereafter look only to OMG
for payment of their claim for the Merger Consideration.
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(e) No Liability. None of OMG, OMGAC or Auric shall be liable to any
person for Merger Consideration delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law. If any Auric Certificate
shall not have been surrendered prior to five years after the Effective Time (or
immediately prior to such earlier date on which any Merger Consideration in
respect of such certificate would otherwise escheat to or become the property of
any Governmental Entity (as defined herein)), any such Merger Consideration in
respect of such certificate shall, to the extent permitted by applicable law,
become the property of the Surviving Corporation, free and clear of all claims
or interest of any person previously entitled thereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF AURIC
Auric represents and warrants that the following are true and correct
on the date of this Agreement:
3.1 Organization and Good Standing. Auric is a corporation duly
organized, validly existing and in good standing under the laws of the state of
its incorporation and has full corporate power to enter into this Agreement and
to consummate the transactions contemplated hereby. Auric is qualified to do
business and is in good standing in each jurisdiction in which the nature of its
business or the properties owned or leased by it requires such qualification,
except where the failure to be so qualified and in good standing would not have
a material adverse effect with respect to Auric. Each state or jurisdiction in
which Auric is qualified to do business is set forth on Schedule 3.1. Schedule
3.1 also sets forth each jurisdiction in which assets of Auric are located and
each jurisdiction in which Auric has employees.
3.2 Authority, Noncontravention. The execution and delivery of this
Agreement by Auric and the consummation by Auric of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Auric, subject to the Auric Stockholders' Approval of this
Agreement and the Merger. This Agreement has been duly executed and delivered by
Auric and constitutes a valid and binding obligation of Auric, enforceable
against Auric in accordance with its terms. Except as disclosed in Schedule 3.2,
the execution and delivery of this Agreement does not, and the consummation of
the transactions contemplated hereby and compliance with the provisions of this
Agreement will not, conflict with, or result in any breach or violation of, or
default (with or without notice or lapse of time, or both) under, (a) the
Certificate of Incorporation or Bylaws of Auric, (b) any loan or credit
agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license applicable to Auric or any
subsidiary of Auric or their respective properties or assets or (c) subject to
the governmental filings and other matters referred to in Section 3.3, any
judgment, order, decree, statute, law, ordinance, rule, regulation or
arbitration award applicable to Auric or any other subsidiary of Auric or their
respective properties or assets, other than, in the case of clauses (b) and (c),
any such conflicts, breaches, violations, defaults, rights, losses or liens that
individually or in the aggregate would not have a material adverse effect with
respect to Auric or would not prevent, hinder or materially delay the ability of
Auric to consummate the transactions contemplated by this Agreement.
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3.3 Consents and Approvals. No consent, approval, order or
authorization of, or registration, declaration or filing with, nor notice to,
any federal, state or local government or any court, administrative agency or
commission or other governmental authority or agency, domestic or foreign (a
"Governmental Entity"), is required by or with respect to Auric or any
subsidiary of Auric in connection with the execution and delivery of this
Agreement by Auric or the consummation by Auric of the transactions contemplated
hereby, except for (a) the filing of a premerger notification and report form by
Auric under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
(the "HSR Act"), (b) the filing of the Certificate of Merger with the Secretary,
and appropriate documents with the relevant authorities of other states in which
Auric is qualified to do business and (c) such other consents, approvals,
orders, authorizations, registrations, declarations, filings or notices as are
set forth in Schedule 3.3.
3.4 Capital Structure.
(a) Auric Common Stock. As of the date hereof, the authorized capital
stock of Auric consists solely of 2,000,000 shares of Auric Common Stock. As of
the date of this Agreement, 318,200 of Auric Common Stock were issued and
outstanding and 52,500 were held by Auric as treasury shares.
(b) Other Securities. Except as described in Section 3.4(a) with
respect to the Auric Common Stock and options (and related agreements) to
purchase 74,800 shares of Auric Common Stock (the "Auric Stock Options"), there
are no debt or equity securities outstanding and no options, warrants or other
rights to purchase, agreements or other obligations to issue, or other rights to
convert any obligation into, any shares of capital stock of Auric.
3.5 Subsidiaries. Except as provided in Schedule 3.5, Auric has no
subsidiaries either wholly or partially owned.
3.6 Vote Required. The affirmative vote of a majority of the
outstanding shares of Auric Common Stock entitled to vote thereon is necessary
to approve this Agreement, the Merger and the other transactions contemplated
hereby.
3.7 Financial Statements and the Balance Sheet. Auric has delivered as
described in Schedule 3.7 the following financial information set forth in
subsections (a)-(d) below and will deliver to OMG the other following financial
information (collectively, the "Financial Statements") for Auric:
(a) as of the date of this Agreement, audited consolidated balance
sheets of Auric and its subsidiary as of September 30, 1995 and 1996;
(b) as of the date of this Agreement, a draft consolidated balance
sheet of Auric and its subsidiary as of September 30, 1997 (the "Balance
Sheet"); and
(c) as of the date of this Agreement, the related audited consolidated
statements of operations, stockholders' equity and cash flows for each of
Auric's and its subsidiary's fiscal years in the two-year period ended September
30, 1996.
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(d) as of the date of this Agreement, draft consolidated statements of
operations, stockholders' equity and cash flows of Auric and its subsidiary for
the fiscal year ended September 30, 1997.
(e) within ten (10) days after the date of this Agreement, audited
consolidated balance sheet of Auric and its subsidiary as of September 30, 1997
which will not differ materially from the Balance Sheet.
(f) within ten (10) days after the date of this Agreement, audited
consolidated statements of operations, stockholders' equity and cash flows for
Auric and its subsidiary for the fiscal year ended September 30, 1997 which will
not differ materially from the statements provided under Section 3.7(d).
The Financial Statements are or will be, as the case may be, true and correct in
all material respects, in accordance with the books and records of Auric and
present fairly, in all material respects, the financial position and results of
operation of Auric as of the respective dates thereof and for such periods in
conformity with United States generally accepted accounting principles ("GAAP")
applied on a consistent basis.
3.8 Absence of Certain Liabilities and Changes. Except (a) for
liabilities and obligations reflected or reserved for in the Balance Sheet, (b)
for liabilities and obligations incurred in the ordinary course of business
since the date of the Balance Sheet, (c) for liabilities and obligations
incurred in connection with the Merger or otherwise as contemplated by this
Agreement and (d) as set forth in Schedule 3.8, there are no liabilities or
obligations, secured or unsecured (whether accrued, absolute, contingent or
otherwise) which would be required by GAAP to be reflected or reserved against
in a consolidated balance sheet of Auric or in the notes thereto and which,
individually or in the aggregate, would reasonably be expected to have a
material adverse effect with respect to Auric. Since the date of the Balance
Sheet, Auric has been operated in the ordinary course consistent with past
practice and, except as set forth on Schedule 3.8, or contemplated by Schedule
5.2, there has not been:
(a) any material adverse effect with respect to Auric;
(b) any material change in the accounting methods or principles of
Auric;
(c) any grant of any severance or termination pay by Auric to any
executive officer or director of Auric or any increase in compensation or
benefits payable by Auric under existing employment agreements or severance or
termination pay policies to any of their employees other than (i) in the
ordinary course of business consistent with past practices, (ii) increases or
grants required by contracts disclosed herein or by applicable law, or (iii)
increases, agreements and bonuses disclosed in Schedule 3.14;
(d) any entry by Auric into any employment, bonus or deferred
compensation agreement with any of its directors, officers or other employees,
other than as disclosed in Schedule 3.14;
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<PAGE> 8
(e) any entry by Auric into, or any amendment or termination of, any
material contract, agreement, lease, franchise, security, instrument, permit or
license between Auric and any party, except in the ordinary course of business;
(f) any declaration or payment of a distribution of cash or any other
asset of Auric to Auric Stockholders (i) in the nature of a dividend, (ii) in
redemption or as the purchase price of any of its capital stock, or (iii) in
discharge or cancellation, whether in part or in whole, of any indebtedness
owing to Auric Stockholders, other than as disclosed on Schedule 3.14; or
(g) any purchase commitments in excess of its normal business
requirements.
3.9 Inventory. The Inventory is of a quality and quantity usable in the
ordinary course of business of Auric, except for obsolete items or items below
standard quality as to which a provision determined in a manner consistent with
the prior practice of Auric has been made on the books of Auric in accordance
with GAAP. The value of all inventory items, including finished goods,
work-in-process and raw materials, has been recorded on the books of Auric at
the lower of cost (determined in accordance with the accounting inventory
valuation methods of Auric) or fair market value.
3.10 Receivables. Auric has delivered to OMG an accurate aging schedule
of all of the accounts receivable reflected on the books of Auric as of
September 30, 1997. The reserve on the Balance Sheet for bad debt is reasonable
in light of the nature of the business and Auric's past experience. Any
receivable due from Auric Stockholders (other than business and travel advances
made in the ordinary course of business) shall be paid in full in cash on or
prior to the Closing Date.
3.11 Taxes. Except as set forth on Schedule 3.11, (i) Auric has filed
(or caused to be filed or had filed on its behalf) in a timely manner all
material federal, state, local and foreign returns required by applicable law to
be filed (each a "Return") with respect to all federal, state, local and foreign
taxes and assessments (including all interest, penalties and additions to tax
imposed with respect to such amounts) of Auric ("Taxes") and has paid (or the
consolidated, combined or unitary group of which Auric is a member has paid on
its behalf) all Taxes shown due on such Returns for which Auric may be liable,
except for Taxes that are being contested in good faith by appropriate
proceedings and set forth on Schedule 3.11; (ii) there is no outstanding
agreement, waiver or consent providing for an extension of the statutory period
of limitations applicable to the assessment of any Tax and no power of attorney
granted by Auric with respect to any tax matter is currently in force; (iii)
there is no action, suit, proceeding, investigation, audit or claim now pending
against Auric with respect to any Tax, nor is there any assessment asserted in
writing by any Tax authority; (iv) Auric has not filed any agreement or consent
under Section 341(f) of the Internal Revenue Code of 1986, as amended (the
"Code"); (v) no property of Auric is "tax-exempt use property" within the
meaning of Section 168(h) of the Code nor property that OMG will be required to
treat as being owned by another person pursuant to Section 168(f)(8) of the
Internal Revenue Code of 1954, as amended and in effect immediately prior to the
enactment of the Tax Reform Act of 1986; (vi) Auric has made timely payments of
all material Taxes required to be deducted and withheld from the wages paid to
employees; (vii) Auric has not been a party to any Tax allocation or sharing
agreement; (viii)
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Auric has not received a written claim made by an authority in a jurisdiction
where it does not file Tax Returns that it is or may be subject to taxation by
that jurisdiction; (ix) Auric has not agreed to (nor is it required to make) any
material adjustment under Section 481(a) of the Code by reason of a change in
accounting method or otherwise; (x) all Returns filed by Auric are true,
correct, and complete in all material respects and all material Taxes owed by
Auric that are due and payable prior to the Closing Date have been, or will be
prior to the Closing Date, fully paid in a timely fashion; (xi) Auric has no
material liability, contingent or otherwise, for Taxes not due and payable
except as provided in the Balance Sheet or to the extent incurred since the date
of such Balance Sheet in the ordinary course of its business; (xii) the U.S.
Federal Income Tax Liabilities of Auric have been finally determined by the
Internal Revenue Service and satisfied, or the time for audit has expired, for
all taxable periods through September 30, 1994; (xiii) the most recent federal
income tax audit of Auric by the Internal Revenue Service involved the taxable
year 1994 and such audit was concluded with no adjustment; and (xiv) Auric is
not currently being audited by any state taxing authority and the aggregate
amount of additional taxes assessed (as a result of audit or other
investigation) by state taxing authorities subsequent to January 1, 1993
(regardless of whether the taxable period at issue began before or after January
1, 1993) did not exceed $100,000.
3.12 List of Material Contracts.
(a) Schedule 3.12 lists as of the date of this Agreement: (i) all
commitments and agreements for the purchase or sale of any supplies or services
that involve an expenditure by or payment to Auric of more than $50,000 for any
one contract or series of related contracts; (ii) all personal property leases
under which Auric is either lessor or lessee that involve annual payments or
receipts of $50,000 or more; (iii) all agreements, mortgages, indentures and
other instruments relating to indebtedness for borrowed money to which Auric is
a party or by which it or its properties are bound that require annual payments
by Auric of more than $50,000, (iv) all government contracts and all other
agreements with customers that involve an annual payment to Auric of more than
$50,000 for any one contract or related contracts, and (v) all non-competition
agreements, sales representation, distributorship or consulting agreements, and
non-disclosure agreements entered into by Auric. Auric has made available to OMG
complete and correct copies of all items listed on Schedule 3.12 that are in
writing, and the descriptions of the material terms contained in Schedule 3.12
of all items listed therein that are not in writing are accurate and correct.
(b) Except as disclosed in Schedule 3.12, as of the date of this
Agreement, Auric is not in default under the terms of any item listed on
Schedule 3.12, except where such defaults would not have a material adverse
effect with respect to Auric.
(c) To the best of Auric's knowledge, as of the date of this Agreement,
no other party is in default under the material terms of any of the contracts,
arrangements, instruments or other agreements listed in Schedule 3.12 and each
is valid and in full force and effect with respect to Auric. No party has
notified Auric in writing of its intention to cease to perform any material
services required to be performed by it or withhold any material payment
required to be made by it thereunder.
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3.13 Labor Matters.
(a) During the two (2) years ending on the date hereof, to the
knowledge of Auric, no petition has been filed or proceedings initiated by any
employee or group of employees seeking recognition of a bargaining
representative for Auric. During the two (2) years ending on the date hereof,
Auric has not experienced any strike or work stoppage of any kind. To the best
of Auric's knowledge, there is no organizational effort currently being made or
threatened to organize employees of Auric for the purpose of forming or joining
any labor union. There are no controversies or disputes pending between Auric
and any of its employees other than controversies and disputes with individual
employees arising in the ordinary course of business which have not had and
could not reasonably be foreseen to have, individually or in the aggregate, a
material adverse effect. Except as set forth on Schedule 3.13, there are no
unfair labor practice or other administrative or court proceedings pending, or
to the best of Auric's knowledge, threatened, between Auric and its employees.
(b) No present or former employee of Auric has asserted any claim of
more than $50,000 against Auric under any employment agreement, or otherwise, on
account of or for (i) overtime pay, other than overtime pay for the current
payroll period, (ii) wages or salary for any period other than the current
payroll period, (iii) vacation or time off (or pay in lieu thereof), other than
that earned in respect of the previous twelve months, or (iv) any violation of
any statute, ordinance or regulation relating to minimum wages or maximum hours
of work.
(c) No persons or parties (including but not limited to, governmental
agencies of any kind) have asserted any claim arising out of any breach or
violation by Auric of any statute, ordinance or regulation relating to
discrimination in employment or employment practices or occupational safety and
health standards (including without limitation, the Occupational Safety and
Health Act, the Fair Labor Standards Act, Title VII of the Civil Rights Act of
1964, or the Age Discrimination in Employment Act of 1967) except as set forth
on Schedule 3.13.
3.14 Employee Benefit Plans.
(a) General. Schedule 3.14 sets forth a true and complete list and
brief description of each "employee pension benefit plan" (as defined in Section
3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), "employee welfare benefit plan" (as defined in Section 3(1) of
ERISA) and other employee benefit plans, programs and arrangements (including
without limitation, those providing any stock option, stock purchase, stock
appreciation right, bonus, incentive, deferred compensation, excess benefits,
profit sharing, pension, thrift, savings, stock bonus, employee stock ownership,
salary continuation, severance, retirement, supplemental retirement, disability,
dental, vision care, hospitalization, major medical, life insurance, accident
insurance, vacation, holiday and/or sick leave pay, tuition reimbursement,
fringe benefits, executive perquisite or other employee benefits) now or
heretofore maintained, or contributed to, or required to be contributed to, by
Auric or by any ERISA Affiliate for the benefit of any officer, director or
employee, current or former, active or inactive, maintained by Auric (all the
foregoing being herein called "Benefit Plans"). Auric does not have any formal
plan or commitment, whether legally binding or not, to create any additional
plan or modify or change any existing Benefit Plan that would affect any
employee
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or former employee or officer or director of Auric, except as required by
applicable law. As used herein, "ERISA Affiliate" means any subsidiary of Auric
and any trade or business (whether or not incorporated) that is part of the same
controlled group, or under common control with, or part of an affiliated service
group that includes, Auric within the meaning of Code Sections 414(b), (c), (m)
or (o).
(b) Administration. To the best of Auric's knowledge, each Benefit Plan
has been administered in all material respects in accordance with its terms. All
of the Benefit Plans and Auric are in material compliance in all respects with
the applicable provisions of ERISA and the Code. To the best of Auric's
knowledge, all material reports, returns and similar documents with respect to
the Benefit Plans required to be filed with any government agency or distributed
to any Benefit Plan participant have been duly and timely filed or distributed.
To the best of Auric's knowledge, there are no investigations by any
governmental agency, termination proceedings or other claims (except claims for
benefits payable in the normal operation of the Benefit Plans), suits or
proceedings against or involving any Benefit Plan or asserting any rights or
claims to benefits under any Benefit Plan that could reasonably be expected to
give rise to any liability to Auric or an ERISA Affiliate, nor is Auric aware of
any facts that could reasonably be expected to give rise to any liability in the
event of any such investigation, claim, suit or proceeding.
(c) Contributions; Funding. All contributions to, and payments from,
the Benefit Plans that may have been required to be made in accordance with the
Benefit Plans and applicable law have been timely made. None of the Benefit
Plans is subject to the minimum funding requirements of Section 302 of ERISA or
Section 412 of the Code.
(d) Compliance. To the best of Auric's knowledge, all the Benefit
Plans, as and from the date adopted or as they may have been amended, as, when
and to the extent required, comply, and at all times applicable complied, in all
material respects, with the applicable provisions of the Code, ERISA, the Equal
Pay Act of 1963, as amended, the Age Discrimination in Employment Act of 1967,
as amended, Title VII of the Civil Rights Act of 1964, as amended, all other
federal or state laws regulating employment and employee benefits, and all
regulations and rulings issued by government agencies responsible for the
administration or enforcement of one or more of such laws. Each Benefit Plan
that is an employee pension benefit plan within the meaning of Section 3(2) of
ERISA has received a determination letter from the Internal Revenue Service (the
"IRS") to the effect that such Benefit Plan is currently qualified and exempt
from Federal income taxes under Sections 401(a) and 501(a), respectively, of the
Code, and no such determination letter has been revoked nor has revocation been
threatened, nor has any such Benefit Plan been amended since the date of its
most recent determination letter or application therefor in any respect that
would adversely affect its qualification or increase its cost; and all
amendments required to be adopted by such determination letters have been
adopted within the requisite time periods.
(e) Prohibited Transactions; Reportable Events. No "prohibited
transaction" (as defined in Section 4975 of the Code or Section 406 of ERISA)
has occurred which involves the assets of any Benefit Plan which could
reasonably be expected to subject any employees of Auric, a trustee,
administrator or other fiduciary of any trusts created under any Benefit Plan
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to the tax or penalty on prohibited transactions imposed by Section 4975 of the
Code or the sanctions imposed under Title I of ERISA. None of the Benefit Plans
has been terminated nor have there been any "reportable events" (as defined in
Section 4043 of ERISA and the regulations thereunder) with respect thereto,
except for reportable events with respect to which the 30-day notice period has
been waived. To the best of Auric's knowledge, neither Auric nor any trustee,
administrator or other fiduciary of any Benefit Plan nor any agent of any of the
foregoing has engaged in any transaction or acted or failed to act in a manner
which could reasonably be expected to subject Auric or any Benefit Plan to any
material tax, penalty or other liability under ERISA or any other applicable
law, whether by way of indemnity or otherwise. No Benefit Plan or related trust
has any liability of any nature, accrued or contingent, including, without
limitation, liabilities for federal, state or local taxes, other than for
routine payments to be made in due course to participants, investment managers,
trustees and beneficiaries.
(f) PBGC. None of the Benefit Plans is subject to Title IV of ERISA,
nor is Auric aware of any facts which might give rise to any liability of Auric
under Title IV of ERISA and which could reasonably be anticipated to result in
any claims being made against Auric by the Pension Benefit Guaranty Corporation.
(g) Certain Matters. Except with respect to payments made under the
ESOP or as disclosed in Schedule 3.14, the execution and performance of the
transactions contemplated by this Agreement will not (either alone or upon the
occurrence of any additional or subsequent events) constitute an event under any
Benefit Plan that will or may result in any payment (whether of severance pay or
otherwise), acceleration, vesting or increase in benefits with respect to any
employee, former employee, officer or director of Auric. Except with respect to
payments made under the ESOP or as disclosed in Schedule 3.14, no payment which
will be or may be made by Auric to any employee, former employee, officer or
director or agent thereof will or may be characterized as an "excess parachute
payment" within the meaning of Section 280G(b)(1) of the Code. Except with
respect to payments made under the ESOP or as disclosed in Schedule 3.14, no
payments of any kind will become due in connection with the execution and
performance of the transactions contemplated in this Agreement (either alone or
upon the occurrence of any additional or subsequent events) under any Benefit
Plan.
(h) Post-Retirement Benefits. Except as disclosed in Schedule 3.14, no
Benefit Plan provides benefits, including without limitation, death, disability,
or medical benefits (whether or not insured), with respect to current or former
employees of Auric beyond their retirement or other termination of service other
than (i) coverage mandated by applicable law, (ii) death benefits or retirement
benefits under any "employee pension plan," as that term is defined in Section
3(2) of ERISA, (iii) deferred compensation benefits accrued as liabilities on
the books of Auric or (iv) benefits the full cost of which is, and which will
continue to be, borne solely by the current or former employee (or his
beneficiary).
(i) COBRA. Each Benefit Plan that is a "group health plan" (within the
meaning of Section 5000(b)(1) of the Code) maintained by Auric as of the first
day of each group health plan's first plan year beginning on or after July 1,
1986, has been administered in compliance with the continuation coverage
requirements contained in the Consolidated Omnibus Budget Reconciliation Act of
1985 ("COBRA") and as provided under ERISA Sections 601-609 and
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under former Section 162(k) and current Section 4980B(f) of the Code and any
regulations promulgated or proposed thereunder.
(j) Multiemployer Plans. At no time has Auric or any ERISA Affiliate
been required to contribute to, or incurred any withdrawal liability (within the
meaning of Section 4201 of ERISA) to any Benefit Plan which is a multiemployer
plan as defined in ERISA Section 3(37) (a "Multiemployer Plan").
(k) ESOP. With respect to the ESOP, neither Auric nor any ERISA
Affiliate has incurred, and neither is reasonably expected to incur, any
liability (i) under ERISA or the Code, (ii) to any participant or beneficiary of
the ESOP, or (iii) to any fiduciary of the ESOP for indemnification or
otherwise, arising out of or pertaining to the ESOP's sale of its shares of
Auric Common Stock to OMG.
3.15 Litigation; Compliance with Laws.
(a) Except as disclosed in Schedule 3.15, there is no judicial or
administrative action, proceeding or, to the best of Auric's knowledge,
investigation pending or, to the best of Auric's knowledge, judicial or
administrative action, proceeding or investigation threatened, that could
reasonably be expected to (i) have a material adverse effect with respect to
Auric or (ii) impair Auric's ability to perform its obligations under this
Agreement. Except as disclosed in Schedule 3.15, Auric is not subject to any
outstanding order, injunction or decree which, if adversely determined insofar
as can be reasonably foreseen by Auric, either individually or in the aggregate,
would have such effect.
(b) Auric is not in violation of any applicable law, regulation,
ordinance or any other applicable requirement of any Governmental Entity or
court, which violations in the aggregate would have a material adverse effect
with respect to Auric. As of the date of this Agreement no written notice has
been received by Auric alleging any such violations, except as set forth on
Schedule 3.15.
3.16 Real Property.
(a) Schedule 3.16(a) sets forth all of the real property used by Auric
and owned in fee by Auric (the fee property being hereinafter referred to as the
"Owned Property" and, together with all other real property used by Auric, the
"Property"). As of the Closing Date, the Property is all of the real property
used by Auric, and is adequate for the uses to which it is being put and
sufficient for the conduct of Auric's business and operations as presently
conducted in all material respects. Auric has made available to OMG copies of
any title insurance policies or surveys in its possession relating to the Owned
Property. Auric has, or as of the Closing will have, good and marketable title
to each parcel of Owned Property free and clear of all liens, security
interests, equities, encumbrances and claims of every kind ("Liens"), other than
Permitted Liens (as hereinafter defined).
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(b) Except as disclosed in Schedule 3.16(b), Auric is not a party to
any real property leases. Auric is not in default under the material terms of
any of the real property leases set forth in Schedule 3.16(b).
(c) Auric has not received any notice of violation of any ordinance,
law or regulation of any Governmental Entity resulting from the current uses of,
or the buildings or improvements on, the Property. No proceedings are pending as
of the date hereof or, to the best of Auric's knowledge, threatened for
condemnation of all or any part of the Property.
3.17 Tangible Personal Property. All of the fixtures, machinery and
equipment reflected in the Balance Sheet (the "Tangible Personal Property") are
in existence (except for dispositions made since the date of the Balance Sheet
in the ordinary course of business). Schedule 3.17(a) contains a listing as of
September 30, 1997 of each category of the Tangible Personal Property (other
than items having a value of $5,000 or less). Substantially all of the Tangible
Personal Property is located at the Owned Property. Except as set forth on
Schedule 3.17(b), Auric has good title to, or holds by valid and existing lease,
all of the Tangible Personal Property, free and clear of all Liens, other than
Permitted Liens. The Tangible Personal Property is, to the best of Auric's
knowledge, adequate for the uses to which it is being put and sufficient for the
conduct of Auric's business and operations as presently conducted.
3.18 Proprietary Rights.
(a) Schedule 3.18(a) sets forth a list of all inventions which are the
subject of issued letters patent or an application therefor and all trade and
service marks which have been registered or for which an application for
registration is pending, in each case which are owned and used or held for use
by Auric (each a "Proprietary Right"), specifying as to each, as applicable: (i)
the nature of such Proprietary Right; (ii) the owner of such Proprietary Right;
(iii) the jurisdictions by or in which such Proprietary Right has been issued or
registered or in which an application for such issuance or registration has been
filed, including the respective registration or application numbers, if
available; and (iv) material licenses, sublicenses and other agreements to which
Auric is a party and pursuant to which any person is authorized to use such
Proprietary Right.
(b) Except as set forth on Schedule 3.18(b), (i) Auric is not a
defendant in any claim, suit, action or proceeding which involves a claim of
infringement of any Proprietary Rights, and (ii) to Auric's knowledge, there are
no existing infringements by any other person of any Proprietary Right. Auric
has such rights to use all Proprietary Rights as are necessary to permit Auric
to conduct operations as currently conducted, except where the failure to have
such rights would not have a material adverse effect with respect to Auric. To
Auric's knowledge, the conduct of the business of Auric, as currently conducted,
does not infringe on any proprietary right of any third party. Except as
disclosed on Schedule 3.18(b), to Auric's knowledge, no Proprietary Right is
subject to any outstanding order, judgment, decree, stipulation or agreement
restricting the use thereof by Auric or restricting the licensing thereof by
Auric to any person. With the exception of those matters disclosed on Schedule
3.18(b), Auric has not entered into any special agreement to indemnify any other
person against any charge of infringement of any patent, trademark, service mark
or copyright of Auric.
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3.19 Environmental Matters.
(a) Except as set forth in Schedule 3.19:
(i) Auric is in compliance with all applicable Environmental
Laws including, but not limited to, the possession of all permits and other
governmental authorizations required under applicable Environmental Laws, where
the failure to comply with such Environmental Laws would be reasonably likely to
have a Material Adverse Effect on Auric;
(ii) There is no pending or, to the knowledge of Auric,
threatened claim, lawsuit or administrative proceeding against Auric under any
Environmental Law, which would be reasonably likely to have a Material Adverse
Effect on Auric. Auric has not received written notice from any person,
including a Governmental Entity, alleging that Auric is in violation of any
applicable Environmental Law or otherwise may be liable under any applicable
Environmental Law, which violation or liability is unresolved and would be
reasonably likely to have a Material Adverse Effect on Auric; and
(iii) There have been no Releases, spills or discharges of
Hazardous Materials on or underneath any of the Properties that would be
reasonably likely to have a Material Adverse Effect on Auric.
(b) The following terms shall have the indicated meaning:
"Environmental Laws" means all federal, state, local and
foreign laws and regulations relating to pollution or protection of human health
or the environment, including without limitation, laws relating to Releases or
threatened Releases of Hazardous Materials or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, Release,
disposal, transport or handling of Hazardous Materials and all laws and
regulations with regard to record keeping, notification, disclosure and
reporting requirements respecting Hazardous Materials.
"Hazardous Materials" means all substances defined as
Hazardous Substances, Oils, Pollutants or Contaminants in the National Oil and
Hazardous Substances Pollution Contingency Plan, 40 C.F.R. Section 300.5, or
defined as such by, or regulated as such under, any Environmental Law.
"Release" means any release, spill, emission, discharge,
leaking, pumping, injection, deposit, disposal, dispersal, leaching or migration
into the indoor or outdoor environment (including, without limitation, ambient
air, surface water, groundwater and surface or subsurface strata) or into or out
of any property, including the movement of Hazardous Materials through or in the
air, soil, surface water, groundwater or property.
"Remediation Standard" means a numerical standard that defines
the concentrations of Hazardous Substances that may be permitted to remain in
any environmental media after an investigation, remediation or containment of a
release of Hazardous Substances.
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3.20 Permits and Licenses. Set forth in Schedule 3.20(i) is a list of
all material permits, licenses, franchises or other authorizations held by
Auric. Except as set forth on Schedule 3.20(ii), Auric has all permits,
licenses, franchises and other authorizations necessary for the conduct of the
business and operations as currently conducted, except those the failure of
which to have would not, individually or in the aggregate have a material
adverse effect with respect to Auric. To Auric's knowledge, all such permits,
licenses, franchises and authorizations are valid and in full force and effect
and Auric is in compliance with the terms and conditions of such permits except
where the failure to so comply would not have a material adverse effect with
respect to Auric.
3.21 Insurance. Set forth in Schedule 3.21 is a list of all insurance
policies pursuant to which Auric is insured as of the date of this Agreement.
3.22 Suppliers and Customers. No supplier or customer which accounted
for more than five percent (5%) of the sales or purchases of Auric since
September 30, 1996 has terminated or, to the best of Auric's knowledge,
threatened to terminate, its relationship with Auric. To the best of Auric's
knowledge as of the date hereof, there will not be any adverse effect on the
relationship of Auric with any of its suppliers or customers solely due to Auric
Stockholders ceasing to beneficially own the capital stock of Auric.
3.23 Experience Matters. Set forth in Schedule 3.23 is a reasonably
detailed description of the history of the experience of Auric during the two
(2) years ending on the date hereof with respect to (i) product liability claims
and product warranty claims exceeding $10,000, and (ii) all workers'
compensation claims. Schedule 3.23 also contains a reasonably detailed
description, as of the date of this Agreement, of all product warranty, product
liability and workers' compensation claims currently pending.
3.24 Brokers' or Finders' Fees. Except for Berenson, Minella & Company
and Houlihan, Lokey, Howard & Zukin, no agent, broker, investment banker,
financial advisor or other firm or person is entitled to any brokers' fees,
finders' fees, agents' commissions or other similar forms of compensation in
connection with this Agreement or the transactions contemplated hereby.
3.25 Disclosure. Neither this Agreement (including the Exhibits and
Schedules hereto) nor any certificate by Auric under this Agreement contains or
will contain any untrue statement of a material fact or omits or will omit to
state a material fact necessary in order to make the statements contained herein
or therein not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF OMG AND OMGAC
OMG represents and warrants that the following are true and correct on
the date of this Agreement:
4.1 Organization and Good Standing. Each of OMG and OMGAC is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware
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and has full corporate power and authority to enter into this Agreement and
consummate the transactions contemplated hereby.
4.2 Authority; Noncontravention. The execution and delivery of this
Agreement by OMG and OMGAC and the consummation by OMG and OMGAC of the
transactions contemplated by this Agreement have been duly authorized by all
necessary corporate action on the part of OMG and OMGAC. This Agreement has been
duly executed and delivered by and constitutes a valid and binding obligation of
each of OMG and OMGAC, enforceable against such party in accordance with its
terms. The execution and delivery of this Agreement do not, and the consummation
of the transactions contemplated by this Agreement and compliance with the
provisions of this Agreement will not, conflict with, or result in any breach or
violation of, or default (with or without notice or lapse of time, or both)
under, (a) the certificate of incorporation or bylaws of OMG or OMGAC, (b) any
loan or credit agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise or license applicable to
OMG, OMGAC or any other subsidiary of OMG or their respective properties or
assets or (c) subject to the governmental filings and other matters referred to
in Section 4.3, any judgment, order, decree, statute, law, ordinance, rule,
regulation or arbitration award applicable to OMG, OMGAC or any other subsidiary
of OMG or their respective properties or assets, other than, in the case of
clauses (b) and (c), any such conflicts, breaches, violations, defaults, rights,
losses or liens that individually or in the aggregate would not have a material
adverse effect with respect to OMG or would not prevent, hinder or materially
delay the ability of OMG to consummate the transactions contemplated by this
Agreement.
4.3 Consents and Approvals. No consent, approval, order or
authorization of, or registration, declaration or filing with, or notice to, any
Governmental Entity is required by or with respect to OMG, OMGAC or any other
subsidiary of OMG in connection with the execution and delivery of this
Agreement by OMG or OMGAC or the consummation by OMG or OMGAC, as the case may
be, of any of the transactions contemplated by this Agreement, except for (a)
the filing of a premerger notification and report form under the HSR Act and (b)
the filing of the Certificate of Merger with the Secretary.
4.4 Sufficient Funds. OMG has sufficient funds available (through
existing credit arrangements or otherwise) to provide the Merger Consideration
for all of the outstanding shares of Auric Common Stock and to pay all of its
fees and expenses related to the transactions contemplated by this Agreement.
4.5 Brokers' or Finders' Fees. Except for the engagement of Donaldson,
Lufkin & Jenrette Securities Corporation ("DLJ"), OMG has not dealt with any
broker or finder or incurred any liability for brokers' fees, finders' fees,
agents' commissions or other similar forms of compensation in connection with
this Agreement or the transactions contemplated hereby. OMG shall be solely
responsible for any fees and expenses owing DLJ.
4.6 OMGAC's Operations. OMGAC was formed solely for the purpose of
engaging in the transactions contemplated hereby and has not engaged in any
business activities or conducted any operations other than in connection with
the transactions contemplated hereby.
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4.7 Investigation by OMG. OMG has conducted its own independent review
and analysis of the business, operations, assets, liabilities, results of
operations, financial condition, technology and prospects of Auric and any
subsidiary of Auric and acknowledges that OMG has been provided access to the
personnel, properties, premises and records of Auric and any subsidiary of Auric
for such purpose and, in entering into this Agreement, OMG has relied solely
upon its own investigation and analysis and the representations and warranties
contained herein.
ARTICLE V
FURTHER AGREEMENTS OF THE PARTIES
5.1 Access to Information. Upon reasonable notice, Auric shall give to
OMG and its counsel, accountants and other representatives reasonable access,
during normal business hours throughout the period prior to the Closing, to the
property, books, commitments, agreements, records, files and personnel of Auric,
and Auric shall furnish to OMG during that period all copies of documents and
information concerning the business, properties, financial condition, operations
and personnel of Auric as OMG may reasonably request subject to applicable law.
OMG shall hold, and shall cause its counsel, accountants and other agents and
representatives to hold, all such information and documents in accordance with,
and subject to the terms of, the confidentiality agreement previously executed
by OMG with respect to this transaction.
5.2 Conduct of the Business Pending the Closing. Until the Closing or
the termination of this Agreement, except as otherwise set forth in Schedule 5.2
or contemplated by this Agreement, Auric shall comply with the provisions set
forth below:
(a) Auric shall operate the business in the ordinary course;
(b) Auric shall not grant any general increase in the rates of salaries
or compensation of its employees or any specific increase to any employee except
such as are in accordance with regularly scheduled periodic increases;
(c) Except as provided for under the existing Benefit Plans, Auric
shall not (i) grant or agree to grant any bonuses to any employee, or (ii)
provide for any new pension, retirement or other employment benefits to any of
its employees or any increase in any existing benefits;
(d) Auric shall not amend its Certificate of Incorporation or Bylaws or
enter into any merger or consolidation agreement;
(e) Auric shall use commercially reasonable efforts to maintain and
preserve in all material respects its business, and to maintain its existing
relationships with customers, suppliers, employees and other business
associates;
(f) Other than in the ordinary course of business, Auric shall not
sell, assign, voluntarily encumber, grant a security interest in or license with
respect to, or dispose of, any of its material assets or properties tangible or
intangible in excess of $100,000, or incur any material liabilities;
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(g) Auric shall maintain in full force and effect all insurance
currently maintained by Auric; and
(h) No Benefit Plan, nor any trust established thereunder, shall be
amended or terminated by formal action of Auric after the date copies thereof
are disclosed, and no Benefit Plan or trust relating thereto shall be amended or
terminated by formal action of Auric prior to the Effective Date, except as an
amendment may be necessary to effect the transactions contemplated by this
Agreement so long as any such amendment does not adversely affect Auric's
interests in the Benefit Plan being amended, or as may be adopted as a condition
to the issuance of a favorable determination letter by the IRS, or as otherwise
may be required to comply with the requirements of ERISA and the Code.
5.3 No Solicitation.
(a) Auric and any subsidiary of Auric will not, and will use their best
efforts to cause their officers, directors, employees and investment bankers,
attorneys or other agents retained by or acting on behalf of Auric or any
subsidiary of Auric not to, (i) initiate, solicit or encourage, directly or
indirectly, any inquiries or the making of any proposal that constitutes or is
reasonably likely to lead to any Acquisition Proposal (as defined herein), (ii)
except as permitted below, engage in negotiations or discussions with, or
furnish any information or data to any third party relating to an Acquisition
Proposal, or (iii) except as permitted below, enter into any agreement with
respect to any Acquisition Proposal or approve any Acquisition Proposal.
Notwithstanding anything to the contrary contained in this Section 5.3 or in any
other provision of this Agreement, Auric and its Board of Directors (i) may
participate in discussions or negotiations (including, as a part thereof, making
any counterproposal) with or furnish information to any third party making an
unsolicited Acquisition Proposal (a "Potential Acquiror") or approve an
unsolicited Acquisition Proposal if Auric's Board of Directors is advised by its
financial advisor that such Potential Acquiror has the financial wherewithal to
be reasonably capable of consummating such an Acquisition Proposal, and Auric's
Board of Directors determines in good faith, based upon written advice of its
outside legal counsel, that the failure to participate in such discussions or
negotiations or to furnish such information or approve an Acquisition Proposal
would violate the Board's fiduciary duties under applicable law, and (ii) shall
be permitted to (X) take and disclose to the Auric Stockholders a position with
respect to any tender or exchange offer by a third party, or amend or withdraw
such position or (Y) make disclosure to the Auric Stockholders, in the case of
clause (X) or clause (Y) if Auric's Board of Directors determines in good faith,
based upon advice of its outside legal counsel, that the failure to take such
action would violate such Board's fiduciary duties under, or otherwise violate,
applicable law. Auric agrees that any non-public information furnished to a
Potential Acquiror will be pursuant to a confidentiality agreement substantially
similar to the confidentiality provisions of the confidentiality agreement
entered into between Auric and OMG. In the event that Auric shall determine to
provide any information as described above, or shall receive any Acquisition
Proposal, it shall promptly inform OMG in writing as to the fact that
information is to be provided and shall furnish to OMG the identity of the
recipient of such information and the Potential Acquiror and the terms of such
Acquisition Proposal, except to the extent that Auric's Board of Directors
determines in good faith, based upon written advice of its outside legal
counsel, that any such action described in this sentence would violate such
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Board's fiduciary duties under, or otherwise violate, applicable law. Auric will
keep OMG reasonably informed of the status (including amendments or proposed
amendments) of any such Acquisition Proposal except to the extent that Auric's
Board of Directors determines in good faith, based upon advice of its outside
legal counsel, that any such action would violate such Board's fiduciary duties
under, or otherwise violate, applicable law.
(b) Auric's Board of Directors shall not (i) withdraw or modify or
propose to withdraw or modify, in any manner adverse to OMG, the approval or
recommendation of such Board of this Agreement or the Merger or (ii) approve or
recommend, or propose to approve or recommend, any Acquisition Proposal unless
such Board determines in good faith, based upon written advice of its outside
legal counsel, that the failure to take such action would violate such Board's
fiduciary duties under applicable law.
(c) For purposes of this Agreement, "Acquisition Proposal" shall mean
any bona fide proposal, whether in writing or otherwise, made by a third party
to acquire beneficial ownership (as defined under Rule 13(d) of the Securities
Exchange Act of 1934, as amended) of all or a material portion of the assets of,
or any material equity interest in, Auric or any subsidiary of Auric pursuant to
a merger, consolidation or other business combination, sale of shares of capital
stock, sale of assets, tender offer or exchange offer or similar transaction
involving Auric or any subsidiary of Auric including, without limitation, any
single or multi-step transaction or series of related transactions which is
structured to permit such third party to acquire beneficial ownership of any
material portion of the assets of, or any material portion of the equity
interest in, Auric or any subsidiary of Auric (other than the transactions
contemplated by this Agreement).
5.4 Approval of Auric Stockholders. As soon as reasonably practicable,
Auric shall:
(a) take all steps necessary duly to call, give notice of, convene and
hold a special meeting of Auric Stockholders (the "Auric Special Meeting") (i)
for the purpose of adopting this Agreement (the "Auric Stockholders' Approval")
and (ii) for such other purposes as may be necessary or desirable;
(b) distribute to Auric Stockholders a proxy statement or other
document required in accordance with applicable federal and state law and with
its Certificate of Incorporation and Bylaws to obtain approval of this Agreement
and the Merger;
(c) recommend, through its Board of Directors, to the Auric
Stockholders the adoption of this Agreement and such other matters as may be
submitted to such stockholders in connection with this Agreement; provided that
Auric may withdraw or modify or propose to withdraw or modify, in a manner
adverse to OMG, such approval or recommendation of its Board of Directors in
accordance with Section 5.3 herein; and
(d) cooperate and consult with OMG with respect to each of the
foregoing matters.
5.5 Employment of Employees Following Closing. On the Closing Date, OMG
agrees that the Surviving Corporation will continue to employ the employees of
Auric.
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5.6 ESOP Participants. Auric and the trustees of the ESOP (the
"Trustee") shall take all actions necessary in accordance with applicable law
and the terms of the ESOP to provide the Participants (as such term is defined
in the ESOP) of the ESOP with information regarding the Merger and the
transactions contemplated hereby at least seven days prior to the date of the
Auric Special Meeting for the Auric Stockholders' Approval. Representatives of
OMG shall be entitled to review and comment on any materials to be provided to
the Participants, and shall be entitled to provide information to the
Participants regarding the Merger.
5.7 Environmental Matters. (a) At OMG's sole cost and expense, OMG may,
on or before the date 20 days after the date hereof, perform or have performed
an environmental assessment of the Property at a time mutually convenient to
Auric and OMG; and
(b) After the Closing, OMG shall be solely responsible and liable for
the Property's compliance with all Environmental Laws; subject only, however, to
the obligations of Auric expressly set forth in Section 9.2(a)(ii).
5.8 Real Property. At or prior to the Closing, Auric shall enter into a
purchase agreement, substantially in the form of Exhibit C hereto, providing for
the purchase by Auric of the Real Property presently leased to Auric by Mr.
Maurice Bick.
5.9 Regulatory Approvals. The parties hereto shall use their best
efforts to file as soon as practicable all notifications, filings and other
documents required to obtain all governmental authorizations, approvals,
consents or waivers, including, without limitation, under the HSR Act, and to
respond as soon as practicable to any inquiries received from the Federal Trade
Commission, the Antitrust Division of the Department of Justice, and any other
Governmental Entity for additional information or documentation and to respond
as promptly as practicable to all inquiries and requests received from any
Governmental Entity in connection therewith. The parties hereto will not take
any action that will have the effect of delaying, impairing or impeding the
receipt of any required approvals and will use their best efforts to secure such
approvals as promptly as possible.
5.10 Other Action. Subject to the terms and conditions of this
Agreement, each of the parties shall use its best efforts to cause the
fulfillment at the earliest practicable date but, in any event, prior to the
Closing Date, of all of the conditions to their respective obligations to
consummate the transactions under this Agreement.
5.11 Notices. Each party shall promptly notify the other party in
writing of, and furnish to such party any information that such party may
reasonably request with respect to, (a) the occurrence or nonoccurrence of any
event or the existence of any state of facts that would likely, or with the
lapse of time would likely, cause (i) any representation or warranty contained
herein to be untrue or inaccurate or (ii) any covenant, condition or agreement
contained herein not to be complied with or satisfied and (b) any failure of
Auric or OMG, as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied hereunder; provided,
however, that the delivery of any notice pursuant to this Section 5.11 shall not
limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
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5.12 Publicity. OMG and Auric shall consult with each other before
issuing, and provide each other the opportunity to review and comment upon, any
press release concerning the transactions contemplated by this Agreement and
will not issue a press release prior to such consultation.
5.13 Supplement to Disclosures. For purposes of determining the
accuracy of the representations and warranties of Auric contained in Article III
and the fulfillment of the conditions precedent set forth in Section 6.1, the
Schedules delivered by Auric shall be deemed to include only that information
contained therein on the date of this Agreement and as the same may be amended
or supplemented by Auric, which Auric shall have the right to do at any time
prior to the Closing Date; provided, however, that any amendment or supplement
shall not be deemed to cure a breach of a representation or warranty of Auric
unless permitted by OMG and, in the event that OMG closes the transactions
contemplated by this Agreement, OMG shall have no right to assert a breach of a
representation or warranty with respect to such amended or supplemented
representation or warranty.
5.14 Preservation of Records. OMG agrees, at its own expense, to (a)
preserve and keep the records of Auric for a period of seven (7) years from the
Closing, or for any longer periods as may be required by any government agency
or ongoing litigation, and (b) make such records available to the other as may
be reasonably required by the other. In the event either party wishes to destroy
such records after the time specified above, it shall first give sixty (60)
days' prior written notice to the other and the other shall have the right at
its option and expense, upon prior written notice given to the other within that
sixty (60) day period, to take possession of the records.
5.15 Stockholders' Representative. OMG and Auric agree that from and
after the Closing (i) all communications, notices and deliveries by OMG to the
Stockholders' Representative with respect to any and all matters pertaining to
this Agreement and the Escrow Agreement shall be deemed to be sufficient
communications with, notices or deliveries to Auric, and OMG shall not be
required to communicate with, give notices or make any deliveries to, Auric if
it has communicated with, given notices or made delivery to, the Stockholders'
Representative and (ii) OMG, its officers, directors, agents, counsel and
assigns shall be fully protected in relying upon any communications, notices or
deliveries to them by the Stockholders' Representative on behalf of Auric and
the Auric Stockholders, and shall be entitled to rely upon any act or acts
performed, or undertaken or omitted to be taken by Stockholders' Representative
on behalf of Auric and the Auric Stockholders.
5.16 Stock Options and Purchase Obligations. OMG agrees that
immediately prior to the Closing, Auric may loan to the two employees of Auric,
who hold options to purchase or who have rights to purchase, an aggregate of
20,000 and 24,800 shares of Auric Common Stock, respectively, the amount of
$920,000 and $1,140,800, respectively, to exercise their rights to purchase such
shares. Auric agrees that such loans will be evidenced by promissory notes with
a maturity date of no later than seven (7) days after the Closing Date and that
the Exchange Agent may be instructed by OMG to withhold the amount of such loans
from any payments of Merger Consideration to be paid to such persons for their
Auric Common Stock received upon exercise.
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5.17 ISRA Compliance.
(a) As a condition precedent to consummating the Merger that is the
subject of this Agreement, Auric shall (i) at its sole expense, obtain from the
New Jersey Department of Environmental Protection ("NJDEP") and execute a
Remediation Agreement ("RA") pursuant to sections 13:1K-11.5 and 13:1K-9(e) of
the Industrial Site Recovery Act; NJSA 13:1K-6 et seq. ("ISRA"), the regulations
promulgated thereunder and any amending or successor legislation and
regulations, (ii) identify the Surviving Corporation as the "responsible person"
under the RA and, as such, shall conduct any remediation or other activity
required by NJDEP in connection with the Newark facility and its ISRA
obligations triggered by this Merger transaction, and (iii) obtain and post or
execute prior to the Closing Date, at the lowest cost reasonably possible, and
thereafter maintain in full force and effect, any remediation trust fund,
environmental insurance policy, line of credit, self-guarantee or other
remediation funding source required by the NJDEP, or pursuant to ISRA, until
such remediation funding source is released by the NJDEP. The Surviving
Corporation shall pay any and all remediation funding source surcharges. Within
thirty (30) days of receiving notice that any such remediation funding source is
not satisfactory to the NJDEP (or within such shorter time as may be specified
by the NJDEP or as may be necessary to avoid the imposition of a penalty), the
Surviving Corporation shall take all actions necessary to cure or correct any
deficiency.
(b) Subsequent to the consummation of the Merger, the Surviving
Corporation, as the "responsible person" under the RA, shall conduct any
remediation or other activity required by NJDEP in connection with its ISRA
obligations triggered by this Merger transaction.
(c) All costs associated with Auric's post-closing ISRA obligations
including, but not limited to, counsel fees, investigative costs, monitoring
costs, laboratory costs, consultants' fees, any New Jersey Pollutant Discharge
Elimination System permit or Memorandum of Agreement requirements, any remedial,
removal, or restoration work required or performed by federal, state or local
government agencies or a political subdivision thereof, or performed by any
non-governmental entity or person because of the presence, suspected presence,
release or suspected release of a hazardous substance in soil, surface water or
ground water at the Newark facility, shall be subject to the environmental cost
sharing agreement established under Section 9.2 of this Agreement.
(d) If for any reason the Closing does not occur, OMG shall have no
obligations to NJDEP, and Auric will take all actions that are necessary to
terminate any obligation of OMG to any Governmental Authority under this
Agreement, provided that any such actions will not affect any remedies that
might otherwise be available to the parties.
5.18 ESOP Matters.
(a) Auric may, in its sole discretion, amend the ESOP prior to the
Closing Date, provided that such amendment shall not result in failure of the
ESOP to qualify under Section 401(a) of the Internal Revenue Code of 1986. Auric
shall furnish OMG with copies of such amendments.
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<PAGE> 24
(b) Auric shall, prior to the Closing Date, terminate the ESOP
effective as of the Closing Date. The effect of termination shall be vesting of
all participant accounts as of the Closing Date and distribution of participant
ESOP account balances as soon as practicable following the Closing Date.
(c) The Surviving Corporation shall not amend the ESOP after the
Closing Date except with respect to remedial amendments required by the Internal
Revenue Service as a condition for determination by the Internal Revenue Service
that the ESOP has at all times been a qualified plan under Section 401(a) of the
Internal Revenue Code.
(d) The Surviving Corporation shall, promptly after the Closing Date,
apply to the Internal Revenue Service for a determination that the ESOP is a
qualified plan under Section 401(a) of the Internal Revenue Code as of
termination of the ESOP. The Surviving Corporation shall make any remedial
amendments required by the Internal Revenue Service as a condition of such
determination.
(e) The Surviving Corporation shall, within sixty (60) days after the
receipt of a favorable determination letter from the Internal Revenue Service,
cause the ESOP to distribute participant ESOP account balances to ESOP
participants and beneficiaries or the trustee of an Eligible Retirement Account
designated by such ESOP participants or beneficiaries.
(f) The Surviving Corporation shall, within sixty (60) days following
receipt by the ESOP of any Merger Consideration in accordance with the terms of
the Escrow Agreement, cause the ESOP to allocate such Merger Consideration to
participant ESOP account balances in proportion to such balances as of the
Closing Date and distribute such participant ESOP account balances to ESOP
participants and beneficiaries or the trustee of an Individual Retirement
Account designated by such ESOP participants or beneficiaries.
5.19 Indemnification and Insurance. OMG agrees that all rights to
indemnification for acts or omissions occurring prior to the Effective Time of
the Merger now existing in favor of the current directors or officers of Auric
and its subsidiaries (collectively, the "Indemnified Parties") as provided in
their respective charters or by-laws or, with respect to Auric, by the General
Corporation Law of the State of Delaware shall survive the Merger and shall
continue in full force and effect for a period of not less than six (6) years
from the Closing Date to the fullest extent permitted thereby. For a period of
six (6) years from and after the Closing Date, OMG shall use reasonable efforts
to obtain and maintain standard director's and officer's insurance for the
directors and executive officers of Auric or to obtain "tail insurance" for such
directors and officers in an amount of no less than $2,000,000. Nothing in the
foregoing shall obligate OMG with respect to indemnification for acts or
omissions occurring after the Effective Time.
5.20 Notwithstanding anything to the contrary herein, Auric and OMG
agree that OMG shall not be entitled to indemnification from Auric for: (i) any
increase in the cost of cleanup or correcting a noncompliance with law subject
to indemnity by Auric due to an act or omission after the Closing Date by a
person other than Auric; (ii) any capital improvements and repairs and
modifications to capital improvements associated with the property or the
facilities of the
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<PAGE> 25
Surviving Corporation; (iii) except for any indemnity obligations under Section
9.2, matters arising out of agreements or consent orders with any Governmental
Entity entered into by Auric prior to the Closing Date; and (iv) any costs that
are incurred by Auric in performing its indemnity obligations under Section 9.2
due to any change with respect to the Property or the Surviving Corporation
resulting or arising from the closure or sale of a facility or business, the
construction of new structures or equipment, a modification to existing
structures or equipment, excavation or movement of soil not required by
Environmental Law, or a change in use of the facilities from manufacturing to
any other use.
ARTICLE VI
CONDITIONS OF CLOSING
6.1 Conditions Precedent to Obligations of OMG and OMGAC. The
obligations of OMG and OMGAC to effect the Merger shall be subject to the
satisfaction, on or prior to the Closing Date, of each of the following
conditions (any or all of which may be waived by OMG):
(a) All representations and warranties of Auric contained in this
Agreement shall be true and correct in all material respects, in each case as of
the date of this Agreement and as of the Closing Date with the same effect as
though made on and as of the Closing Date;
(b) Auric shall have performed and complied in all material respects
with all obligations and covenants required by this Agreement to be performed or
complied with by Auric at or prior to the Closing Date;
(c) OMG shall have been furnished with the documents referred to in
Section 7.1;
(d) There shall have been no material adverse change with respect to
Auric, except for changes generally affecting the industry in which Auric is a
member;
(e) The holders of no more than five percent (5%) of the outstanding
shares of Auric Common Stock entitled to vote on the Merger shall, at the
Effective Time, have perfected their dissenters' rights under Delaware law;
(f) Before Closing, OMG shall receive at Auric's expense a survey of
the Owned Property prepared after the date hereof by a registered land surveyor,
which survey will not show any encroachment of improvements on or from the
property or other matters that would have a material adverse effect on the use
of such property;
(g) Before Closing, OMG shall receive, at Auric's expense, the title
commitments relating to Auric's title to the Property from a title company
reasonably satisfactory to OMG; and
(h) The Trustee shall have complied with all provisions of the
governing documents of the ESOP and applicable law necessary for the
consummation of the transactions contemplated hereby.
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<PAGE> 26
6.2 Conditions Precedent to Obligations of Auric. The obligation of
Auric to effect the Merger shall be subject to the satisfaction on or prior to
the Closing Date of each of the following conditions (any or all of which may be
waived by Auric):
(a) All representations and warranties of OMG and OMGAC contained in
this Agreement shall be true and correct in all material respects with the same
effect as though made on and as of the Closing Date;
(b) Each of OMG and OMGAC shall have performed and complied in all
material respects with all obligations and covenants required by this Agreement
to be performed or complied with by OMG or OMGAC, as the case may be, at or
prior to the Closing Date; and
(c) Auric shall have been furnished with the documents referred to in
Section 7.2.
(d) Auric shall have received an opinion of Berenson & Minella &
Company to the effect that the Merger Consideration to be received in the Merger
by the Auric Stockholders, other than the ESOP, officers and directors of Auric
or controlling stockholders of Auric, is fair to such holders from a financial
point of view.
6.3 Conditions Precedent to the Conditions of Both Parties. The
respective obligations of each party to effect the Merger shall be further
subject to the satisfaction or waiver on or prior to the Closing Date of the
following conditions:
(a) The Trustee shall have received an opinion of Houlihan, Lokey,
Howard & Zukin, dated as of the Closing Date, to the effect that, as of such
date the amount paid by OMG for the shares of Auric Common Stock owned by the
ESOP, is not less than the value of such shares and the transactions
contemplated hereby are fair to the ESOP from a financial point of view (the
"ESOP Fairness Opinion"), and the Trustee shall have made the determination, as
required by applicable law, that the Merger is prudent and in the best interest
of the ESOP Participants and their beneficiaries.
(b) Any waiting period applicable to the Merger under the HSR Act shall
have expired or been terminated;
(c) OMG and Auric shall have received evidence, in form and substance
reasonably satisfactory to each of them, that such licenses, permits, consents,
approvals, authorizations, qualifications and orders of Governmental Entities
and other third parties as are necessary in connection with the transactions
contemplated hereby have been obtained, except such licenses, permits, consents,
approvals, authorizations, qualifications and orders which are not, individually
or in the aggregate, material to OMG or Auric or the failure of which to have
been received would not (as compared to the situation in which such license,
permit, consent, approval, authorization, qualification or order had been
obtained) materially dilute the aggregate benefit to OMG of the Merger;
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<PAGE> 27
(d) This Agreement shall have been approved and adopted by the
affirmative vote of a majority of the votes that the Auric Stockholders are
entitled to cast at the Auric Special Meeting; and
(e) No statute, rule, regulation, order, decree or injunction shall
have been enacted, promulgated or issued by any Governmental Entity or court
which prohibits the consummation of the Merger.
ARTICLE VII
DOCUMENTS TO BE DELIVERED AT THE CLOSING
7.1 Documents to be Delivered by Auric. At the Closing, Auric shall
deliver, or cause to be delivered, to OMG the following:
(a) a copy of resolutions of the board of directors of Auric
authorizing the execution, delivery and performance of this Agreement by Auric
and a certificate of the secretary or assistant secretary of Auric, dated the
Closing Date, that such resolutions were duly adopted and are in full force and
effect;
(b) a certificate, dated the Closing Date, executed by the chief
executive officer or the chief financial officer of Auric certifying to the
fulfillment of the conditions specified in Sections 6.1;
(c) a favorable opinion of Auric's counsel, subject to customary
qualifications and limitations, as to the matters set forth on Annex A hereto;
and
(d) a Noncompetition Agreement substantially in the form of Exhibit D
hereto executed by Maurice Bick.
7.2 Documents to be Delivered by OMG. At the Closing, OMG shall deliver
to Auric the following:
(a) payment and evidence of the wire transfer referred to in Section
2.2(a);
(b) a copy of the resolutions of the board of directors of OMG
authorizing the execution, delivery and performance of this Agreement by OMG,
and a certificate of its secretary or assistant secretary, dated the Closing
Date, that such resolutions were duly adopted and are in full force and effect;
(c) a certificate, dated the Closing Date, executed by the chief
executive officer or the chief financial officer of OMG certifying to the
fulfillment of the conditions specified in Section 6.2; and
(d) a favorable opinion of OMG's counsel, subject to customary
qualifications and limitations, as to the matters set forth on Annex B hereto.
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<PAGE> 28
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination. This Agreement may be terminated and abandoned at any
time prior to the Effective Time of the Merger, whether before or after approval
of the Merger by the Auric Stockholders:
(a) by mutual written agreement executed by Auric and OMG;
(b) by OMG, if any of the conditions specified in Section 6.1 shall not
have been satisfied or waived in writing by OMG on or before March 31, 1998;
(c) by Auric, if any of the conditions specified in Section 6.2 shall
not have been satisfied or waived in writing by Auric on or before March 31,
1998;
(d) by either party, if any of the conditions specified in Section 6.3
shall not have been satisfied on or before March 31, 1998;
(e) by Auric or OMG if the Closing shall not have occurred by March 31,
1998; or
(f) by Auric, if Auric exercises its right pursuant to Section 5.3(b).
8.2 Effect of Termination. In the event of termination of this
Agreement by either Auric or OMG as provided in Section 8.1, this Agreement
shall forthwith become void and have no effect, without any liability or
obligation on the part of OMG, OMGAC or Auric, other than pursuant to the
provisions of this Section, Section 5.12 and Section 10.1. Nothing contained in
this Section 8.2 shall relieve any party from liability for any willful breach
of the representations, warranties, covenants or agreements set forth in this
Agreement.
8.3 Amendment. This Agreement may be amended by the parties at any time
before or after the Auric Stockholders' Approval; provided, however, that after
such approval, there shall be made no amendment that by law requires further
approval of the Auric Stockholders without the further approval of such
stockholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties.
ARTICLE IX
SURVIVAL AND INDEMNIFICATION
9.1 Survival and Remedies. Notwithstanding any investigations made by
OMG or Auric, the representations, warranties and covenants of Auric and OMG set
forth in this Agreement shall survive the Closing until the first anniversary of
the Closing Date, except that the environmental indemnity provided for in
Section 9.2(a)(iii) and (v) which shall survive until the third anniversary of
the Closing Date. Each party to this Agreement shall have as the sole and
exclusive remedy a claim for indemnity under this Article IX and shall be
precluded from asserting against another party any other rights resulting from
the breach of any representation, warranty or covenant made by the other party
to this Agreement.
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<PAGE> 29
9.2 Auric's Indemnification.
(a) Subject to the terms, conditions and limitations set forth in this
Section 9.2, Auric agrees to indemnify and hold OMG harmless from and after the
date of this Agreement against and in respect of any losses, liabilities,
damages, deficiencies, attorney's fees or related expenses not reimbursed to OMG
by other third parties (collectively, the "Losses"), resulting from:
(i) claims relating to any misrepresentation or breach of a
representation or warranty made by Auric or nonfulfillment of any covenant on
the part of Auric under this Agreement;
(ii) claims relating to any products sold by Auric prior to
the Closing Date, including but not limited to claims based on tort liability,
product liability, warranty, negligence or strict liability in excess of the
amount reserved therefor on the Balance Sheet or the books of Auric as of the
Closing Date but only to the extent such reserves were calculated in accordance
with GAAP and consistent with past practice;
(iii) claims relating to waste material shipped or sold by
Auric prior to the Closing Date;
(iv) claims for Taxes due from Auric with respect to the
conduct of the business and operations of Auric prior to the Closing Date in
excess of the amount reserved therefor on the Balance Sheet or the books of
Auric as of the Closing Date but only to the extent such reserves were
calculated in accordance with GAAP and consistent with past practice;
(v) (1) claims resulting from cleanup of Hazardous Materials
Released, disposed of or discharged on or prior to the Closing Date on or
beneath the Property owned or operated by Auric on or prior to the Closing Date;
(2) all liabilities arising from the failure of Auric prior to the Closing Date
to be in compliance with any Environmental Laws in effect as of and enforceable
as of the Closing Date; and (3) all requirements imposed by ISRA under Section
5.17 hereof.
(b) Notwithstanding the foregoing, Auric shall not be obligated to
indemnify OMG for any Losses with respect to any claims pursuant to Section
9.2(a)(i), (ii) and (iv) unless and until the amount of all such Losses shall
exceed $250,000 in the aggregate, and then only to the extent of such excess.
OMG shall have no right to make any claim with respect to Section 9.2(a)(i),
(ii) and (iv) unless written notice thereof is given to Auric within one year
from the Closing Date. Such notice shall state the basis of the claim, including
the Section or Sections of this Agreement alleged to have been breached and, to
the extent feasible, the amount or estimated amount of the claim.
(c) Notwithstanding all other provisions hereof, Auric shall be
obligated to indemnify OMG with respect to Losses pursuant to Section
9.2(a)(iii) and (v) which exceed $150,000 per year and then only to the extent
of one-half (50%) of the amount of such excess up to the extent of the Escrow
Funds then held by the Escrow Agent; provided, however, that Auric will be
obligated for Losses only to the extent that:
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<PAGE> 30
(i) cleanup of the Hazardous Materials is required by a
Governmental Entity under an applicable Environmental Law that is in effect as
of and is enforceable as of the Closing Date or is required by an applicable
Environmental Law that is in effect as of and is enforceable as of the Closing
Date;
(ii) the Remediation Standards that must be met in order to
satisfy the requirements of the applicable Environmental Law or Governmental
Entity are the least stringent Remediation Standards that would be applicable
given the use of the property as of the day before the Closing Date;
(iii) such cleanup is for substances that were designated as
Hazardous Materials and would have been subject to cleanup under an applicable
Environmental Law had such cleanup been initiated on or before the Closing Date;
and
(iv) such cleanup is conducted using the most cost effective
methods for investigation, remediation and/or containment consistent with
applicable Environmental Law or the requirements of a Governmental Entity.
To the extent that the Losses incurred in connection with a cleanup
covered by Section 9.2(a)(iii) and (v) are in excess of the Losses that would be
incurred for a cleanup meeting the conditions set forth in this subsection,
Auric shall have no obligation to indemnify OMG for such excess Losses.
Indemnification for Losses shall be available under Section 9.2(a)(iii)
and (v) only with respect to those specific claims for which OMG has provided
written notice to Auric by the third (3) anniversary of the Closing Date. Such
notice must include, based on reasonably available evidence, the following: (i)
location; (ii) the extent of contamination and the impacted media, if known;
(iii) a copy of any notices filed with or received from any Governmental Entity
or other person, or, if no such notice has been filed or received, the basis
upon which the claimant seeks indemnification; and (iv) whether the cleanup was
or will be consistent with the conditions set forth in this Section 9.2(c). If,
before the third anniversary of the Closing, any claim shall have been made in
accordance with Section 9.2(a)(iii) and (v), such claim shall remain a basis for
indemnity until such claim is finally resolved or disposed of, even if beyond
the third anniversary of Closing.
(d) The Escrow Funds held pursuant to the Escrow Agreement shall be the
sole and exclusive source for payment indemnification by Auric of OMG under this
Agreement and shall provide that OMG's claims for indemnification hereunder may
be offset against the amounts then remaining to be paid to the Auric
Stockholders under the Escrow Agreement.
(e) OMG shall promptly notify Auric and the Stockholders'
Representative in writing (with copy to the designated counsel, if any) of the
amount and nature of any claim for indemnification under this Agreement. In the
event of the assertion against OMG by any third party of any liability or claim
with respect to which OMG is entitled to indemnification hereunder, each of
Auric and the Stockholders' Representative shall have the right to compromise or
defend with monies from Escrow Funds as provided therein any such asserted
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<PAGE> 31
liability (and OMG shall cooperate with respect to any such compromise or
defense); provided, however, that Auric shall indemnify OMG against any Loss
resulting from Auric's failure to pay any such liability up to the remaining
amount in the Escrow Fund as may finally be determined. Upon payment of
indemnification, OMG will assign to Auric all of its rights against any
applicable account debtor or other responsible party to the extent of the
indemnification payment and shall thereafter, at the request of Auric, provide
such reasonable assistance as is requested by Auric in connection with the
collection of such assigned third-party claim which, if collected, shall be paid
into the Escrow Fund.
(f) If any claim arising under Section 9.2(a)(iii) and (v) concerns a
Hazardous Substance or Condition involving contamination that occurred both
before and after the Closing Date, a court or other entity or individual having
jurisdiction over such claim shall allocate the cost of the remediation between
OMG and Auric in proportion to each party's contribution to the contamination to
the extent such contribution can be determined and otherwise in proportion to
the period of time each party has owned or had an interest in the Property.
9.3 OMG's Indemnification.
(a) OMG hereby agrees to indemnify and hold Auric and the Auric
Stockholders harmless at all times from and after the Closing Date against and
in respect of any Losses resulting from any misrepresentation or breach of a
representation, warranty made by OMG or non-fulfillment of any covenant on the
part of OMG under this Agreement.
Auric and the Stockholders' Representative shall have no right to make
any claim with respect to Section 9.3(a) unless within one year from the Closing
Date, written notice thereof is given to OMG. Such notice shall state the basis
of the claim, including the Section or Sections of this Agreement alleged to
have been breached and, to the extent feasible, the amount or estimated amount
of the claim.
(b) Auric or the Stockholders' Representative shall promptly notify OMG
in writing of the amount and nature of any claim for indemnification under this
Agreement. In the event of the assertion against Auric by any third party of any
liability or claim with respect to which Auric is entitled to indemnification
hereunder, OMG and its legal representatives shall have the right to compromise
or defend any such asserted liability; provided, however, that OMG shall
indemnify Auric against any loss resulting from OMG's failure to pay any such
liability as may finally be determined by payment of such amount into the Escrow
Fund.
ARTICLE X
MISCELLANEOUS
10.1 Costs and Expenses. Each party hereto shall bear its own costs and
expenses, including attorneys' fees, in connection with this Agreement and the
transactions contemplated hereby except as specifically provided in this
Agreement or the Escrow Agreement.
10.2 Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed to be properly given when delivered personally,
telecopied (which is confirmed) or
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sent by certified or registered mail, postage prepaid, properly addressed to the
parties entitled to such notice at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) If to OMG or OMGAC, to:
OM Group, Inc.
3800 Terminal Tower
Cleveland, Ohio 44113
Attention: General Counsel
with a copy to:
Squire, Sanders & Dempsey L.L.P.
4900 Key Tower
127 Public Square
Cleveland, Ohio 44114-1304
Attention: Carolyn J. Buller, Esq.
(b) If to Auric, to:
Auric Corporation
470 Frelinghuysen Avenue
Newark, New Jersey 07114
Attention: Daniel Davitt, Jr.
Chief Financial Officer
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attention: Milton G. Strom, Esq.
Telecopy: (212) 735-2000
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<PAGE> 33
10.3 Definitions. For purposes of this Agreement:
(a) "material adverse change" or "material adverse effect" means, when
used in connection with Auric or OMG, any change or effect that either
individually or in the aggregate with all other such changes or effects is
materially adverse to the business, assets, properties, condition (financial or
otherwise) or results of operations of such party and its subsidiaries taken as
a whole; provided, however, that a decline in general economic conditions
affecting Auric or OMG shall not be deemed to be a "material adverse change" or
to have a "material adverse effect" with respect to either such party or its
subsidiaries;
(b) "person" means an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity;
(c) "Permitted Liens" shall mean (i) liens for current taxes, general
assessments and other governmental charges not yet due and payable; (ii) (1)
those matters affecting title disclosed in the title reports, title policies and
surveys as to the Property delivered by Auric to OMG as of the date of this
Agreement; (2) easements, including utility easements, and (3) changes in facts
affecting the Property since the last survey of or title report for such
Property which, in each case referred to in clauses 1-3, do not and will not,
individually or in the aggregate, materially interfere with the use of the
property or assets subject thereto or affected thereby as presently used,
otherwise materially detract from the value of the property or assets encumbered
thereby; (iii) present mechanics', carriers', workmen's, repairmen's and similar
liens not to exceed in the aggregate $10,000; (iv) liens reflected or reserved
against on the Balance Sheet; and (v) any purchase money security interest;
(d) "Stockholders' Representative" shall mean Maurice Bick or, if he is
unable or unwilling to act Alan Ruffini, or if he is unwilling or unable to act
Daniel Davitt, Jr., who shall act on behalf of Auric and the Auric Stockholders
as provided herein and in the Escrow Agreement.
(e) a "subsidiary" of any person means another person, an amount of the
voting securities, other voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its board of directors or
other governing body (or, if there are no such voting interests, 50% or more of
the equity interest of which is owned directly or indirectly by such first
person); and
(f) "knowledge" means the actual knowledge of the officers of Auric,
Sylvestor Fong, the Managing Director of Fidelity Chemical Products (Malaysia)
Sdn. Bhd. and Peter Downing and Leonard Wood of Auric.
10.4 Schedules and Exhibits. The Schedules and Exhibits attached to
this Agreement are made a part of this Agreement.
10.5 Representations as to Compliance with Law. Whenever a
representation or warranty is made herein with respect to compliance with any
law, that representation means the applicable subject matter is in compliance
with applicable statutes, regulations, case law and
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<PAGE> 34
ordinances as in existence on the date hereof and on the Closing Date and does
not extend to any amendments, interpretations or revisions of such laws adopted
subsequent to such dates.
10.6 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns. No party shall assign any of its rights or obligations hereunder
without the prior written consent of the other parties.
10.7 Entire Agreement. This Agreement, including the Schedules and
Exhibits hereto, constitutes the entire agreement between the parties with
respect to the subject matter hereof and supersedes all previous negotiations,
commitments and writings.
10.8 Waiver, Discharge, Etc. This Agreement may not be released,
discharged or modified except by an instrument in writing signed on behalf of
each of the parties hereto by their duly authorized officers and
representatives. The failure of either party to enforce any provision of this
Agreement shall not be a waiver of any other provision or subsequent breach of
the same or any other obligation hereunder.
10.9 Governing Law. This Agreement shall be construed and the rights of
the parties hereunder shall be governed by the laws of the State of Delaware,
without regard to its principles regarding conflict of law.
10.10 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one Agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties as of the date first set forth above.
OM GROUP, INC.
By /s/ James P. Mooney
--------------------------------
Name James P. Mooney
------------------------------
Title Chairman and CEO
-----------------------------
OM GROUP ACQUISITION
COMPANY, INC.
By /s/ James P. Mooney
--------------------------------
Name James P. Mooney
------------------------------
Title President
-----------------------------
AURIC CORPORATION
By /s/ Marice Bick
--------------------------------
Name Maurice Bick
------------------------------
Title President
-----------------------------
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<PAGE> 35
EXHIBIT A
CERTIFICATE OF INCORPORATION
OF
Auric Corporation
FIRST: The name of the Corporation is Auric Corporation (hereinafter
the "Corporation").
SECOND: The address of the registered office of the Corporation in the
State of Delaware is 1209 Orange Street, in the City of Wilmington, County of
New Castle. The name of its registered agent at that address is The Corporation
Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of the State of Delaware as set forth in Title 8 of the Delaware Code (the
"DGCL").
FOURTH: The total number of shares of stock which the Corporation shall
have authority to issue is 1,000 shares of Common Stock, each having a par value
of one penny ($.01).
FIFTH: The following provisions are inserted for the management of the
business and the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its directors and stockholders:
(1) The business and affairs of the Corporation shall
be managed by or under the direction of the Board of
Directors.
(2) The directors shall have concurrent power with
the stockholders to make, alter, amend, change, add to or
repeal the By-Laws of the Corporation.
(3) The number of directors of the Corporation shall
be as from time to time fixed by, or in the manner provided
in, the By-Laws of the Corporation. Election of directors need
not be by written ballot unless the By-Laws so provide.
- 35 -
<PAGE> 36
(4) No director shall be personally liable to the
Corporation or any of its stockholders for monetary damages
for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty
to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) pursuant to
Section 174 of the DGCL or (iv) for any transaction from which
the director derived an improper personal benefit. Any repeal
or modification of this Article SIXTH by the stockholders of
the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the
time of such repeal or modification with respect to acts or
omissions occurring prior to such repeal or modification.
(5) In addition to the powers and authority
hereinbefore or by statute expressly conferred upon them, the
directors are hereby empowered to exercise all such powers and
do all such acts and things as may be exercised or done by the
Corporation, subject, nevertheless, to the provisions of the
DGCL, this Certificate of Incorporation, and any By-Laws
adopted by the stockholders; provided; however, that no
By-Laws hereafter adopted by the stockholders shall invalidate
any prior act of the directors which would have been valid if
such By-Laws had not been adopted.
SIXTH: Meetings of stockholders may be held within or without the State
of Delaware, as the By-Laws may provide. The books of the Corporation may be
kept (subject to any provision contained in the DGCL) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the By-Laws of the Corporation.
SEVENTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
I, THE UNDERSIGNED, being the Sole Incorporator hereinbefore named, for
the purpose of forming a corporation pursuant to the DGCL, do make this
Certificate, hereby declaring and certifying that this is my act and deed and
the facts herein stated are true, and accordingly have hereunto set my hand this
______ day of December 1997.
______________________________
Deborah M. Reusch
Sole Incorporator
<PAGE> 1
Exhibit 10.33
JOINT VENTURE AGREEMENT
-----------------------
BETWEEN
OMG B.V.
GROUPE GEORGE FORREST S.A.
AND
LA GENERALE DES CARRIERES ET DES MINES
<PAGE> 2
THE PRESENT AGREEMENT IS ESTABLISHED IN ITS ENTIRETY BY ALL
THE ELEMENTS HEREINAFTER SPECIFIED AND AS REFERRED TO IN THE
RESPECTIVE ARTICLES
I. DEFINITIONS
II. SPECIAL PROVISIONS
1. Formation of a Joint Venture
2. Representations, Warranties, Title to Assets
3. Capital Contributions and. Financing of the Project
4. Management
5. Preliminary Activities
6. Related Agreements
7. Liabilities and Commitments of the Parties
8. Term and Termination
9. Withdrawal Option
10. Buffer Stock
11. Additional Guarantees
12. Developments
III. GENERAL PROVISIONS
1. Hierarchical Order of the Agreements
2. Amendments
3. Restrictions on Transfers
4. Arbitration and Applicable Laws
5. Confidentiality
6. Force Majeure
7. Notices
8. No Waiver
9. Severability and Headings
10. Sovereign Immunity
11. Appendices
12. Further Engagements
13. General Clauses
14. Authorizations and Entering into Force
<PAGE> 3
The Present Agreement is concluded between:
1.OMG B.V. a company organized and existing under the laws of the Netherlands,
having its registered office at ROTTERDAM, being a 100 per cent controlled
subsidiary of OM Group Inc., a company organized and existing under the laws
of the state of DELAWARE (USA) and having its registered office at 3800
Terminal Tower, CLEVELAND 44113 OHIO (USA), which shall be together with its
subsidiary jointly and severally responsible for the obligations of the
subsidiary, OMG B.V. hereinafter referred to as OMG;
2.GROUPE GEORGE FORREST S.A., a company organized and existing under the laws
of Luxembourg and having its registered office at 25 rue de la Chapelle,
Luxembourg, hereinafter referred to as GGF; and
3.LA GENERALE DES CARRIERES ET DES MINES, a corporation organized and existing
under the laws of the Democratic Republic of Congo and having its registered
office at boulevard Kamanyola, P.O. Box 450, LUBUMBASHI, DEMOCRATIC REPUBLIC
OF CONGO, hereinafter referred to as GECAMINES, or GCM.
Whereas the Parties have concluded a Frame Agreement signed in February 1996
where they have agreed on the general outlines of the establishment of a Joint
Venture to partially or totally process the slag in the site of LUBUMBASHI;
Whereas OMG, GGF and GECAMINES have initiated studies to determine the
economical and technical feasibility of a Cobalt Slag Processing Operation in
LUBUMBASHI, DEMOCRATIC REPUBLIC OF CONGO;
Whereas the Parties intend to invest in the Processing Plant if the feasibility
proves to be positive;
<PAGE> 4
4
Whereas for the purpose of carrying out the activities of the Project, the
Parties wish to form:
(a) a Joint Venture Company under the laws of JERSEY in the form of a private
limited liability company or in any other country and/or in such other form
as agreed by the parties (the Joint Venture, hereinafter referred to as
J.V.);
(b) a Slag Processing Company in the form of a Private Company with Limited
Responsibility (SPRL) existing under the laws of the DEMOCRATIC REPUBLIC OF
CONGO, the shares of which shall be primarily owned by the J.V. (hereinafter
referred to as Slag Processing Company of Lubumbashi or Processing Company
or S.T.L.);
Whereas the Parties wish to formalize their Agreement as to the formation and
operation of a J.V. as well as to carry out activities such as feasibility
studies, building of the Plant, Processing of Slag, Purchase of Slag, Sales of
Processed Materials, transportation as well as management related to the
project;
NOW THEREFORE in consideration of the premises and of the Contracts and
Agreements contained in this Agreement, the Parties hereby agree as follows:
<PAGE> 5
5
I. DEFINITIONS
The terms defined hereinafter shall for all purposes of this Agreement and
related Contracts have the meanings hereinafter specified, unless otherwise
specified:
AGREEMENT means this document signed by the Parties and its appendices forming
an integral part of the present Agreement as well as its possible amendments.
BUYER means OMG KOKKOLA CHEMICALS Oy (KCO), a subsidiary of the OMG Group,
buying Cobalt Alloy in the Long Term Cobalt Alloy Sales Agreement.
PURCHASER means the J.V. purchasing Slag in the Long Term Slag Sales Agreement.
COBALT BEARING ALLOY or TREATED MATERIAL means the main end product of the
Processing Company (sometimes also called "Cobalt Alloy") containing cobalt and
copper.
YEAR means calendar year beginning on 1st of January and ending on 31st of
December.
UMPIRE means a person appointed by mutual agreement of the J.V. and the Buyer or
GECAMINES in accordance with the Long Term Slag Sales Agreement or Long Term
Cobalt Alloy Sales Agreement.
CIF means "cost, insurance and freight" as defined in INCOTERMS, 1990 edition.
TOLLING AGREEMENT means the Agreement concluded between the J.V. and the
Processing Company for the purpose of processing Slag into Cobalt bearing Alloy.
LONG TERM COBALT ALLOY SALES AGREEMENT means the Agreement whereby the J.V.
undertakes to sell Cobalt Alloy to the Buyer and the latter undertakes to buy
Cobalt Alloy from the J.V.
LONG TERM SLAG SALES AGREEMENT means the Agreement whereby GECAMINES undertakes
to sell Slag to the J.V. and the latter undertakes to buy Slag from GECAMINES.
DATE OF DELIVERY means the date on which the J.V. takes and becomes the owner of
the Site Slag according to the terms of the ex-site delivery clause.
<PAGE> 6
6
DDU means "delivery duty unpaid" as defined in INCOTERMS, 1990 edition
EXW means "ex works delivery" clause as defined in INCOTERMS, 1990 edition.
SUPPLIER means the GENERALE DES CARRIERES ET DES MINES supplying Slag in the
Long Term Slag Sales Agreement.
J.V. means a private limited liability company having its registered office in
JERSEY.
BUSINESS DAY means a day which is not a Saturday, a Sunday or a public holiday
in Finland, The Netherlands or the Democratic Republic of Congo.
KCO means OMG KOKKOLA CHEMICALS Oy, a subsidiary of the OMG Group located in
KOKKOLA, REPUBLIC OF FINLAND and established under the laws of the REPUBLIC OF
FINLAND.
LMB means the LONDON METAL BULLETIN.
LME means the LONDON METAL EXCHANGE.
SUPPLY LOT means a part of each delivered supply of Cobalt Alloy containing
approximately 100 tons of Cobalt Alloy as divided by the BUYER in KOKKOLA for
weighing, sampling, analysis and moisture content determination.
EXPEDITION LOT means the tonnage of one container of Cobalt Alloy dispatch from
the Processing Plant.
USED LOTS means the Lot or Lots of Cobalt Alloy taken into usage by the BUYER
for a period of one month.
MONTH means calendar month.
PARTIES means the Parties to this Agreement.
QUOTATIONAL PERIOD means the Period defined in Article 5 of the Long Term Slag
Sales Agreement or in Article 6.2 in the Long Term Cobalt Alloy Sales Agreement.
WEIGHTS AND MEASURES
1 (metric) ton = 2,204.6 pounds avoirdupois
1 dmt or ts = 1 dry metric ton
1 wmt or th = 1 wet metric ton
<PAGE> 7
7
TAKEN INTO USAGE means the taking of the Cobalt Alloy either directly from the
ordinary commercial raw material Stock or alternatively from the Buffer Stock as
a complement of the KOKKOLA Processing Plant.
PROJECT means the conception and building of a Processing Plant in LUBUMBASHI
for the purpose of exploiting the Slag Site of LUBUMBASHI as well as the proper
operation of the Processing Plant, the trading operations including related
operations and the distribution of the profits.
PROCESSED SLAG means the Slag resulting from the operations in the Processing
Plant
SLAG means cobalt bearing slag located in the Site in THE DEMOCRATIC REPUBLIC OF
CONGO and to be used as feeding stock in the Processing plant.
SITE or SLAG SITE means the area in the Democratic Republic of Congo where the
Slag is located and available to be delivered to the J.V. pursuant to this
Agreement (called Terril de LUBUMBASHI, originating from the residues of the
WATER JACKET ovens of GECAMINES and namely including the zones I, J, Ki, K2 and
TAS G-L having an average cobalt content of 1,85% as described in further detail
in appendix 1 of the Frame Agreement attached as Appendix 1 to this Agreement).
PROCESSED SLAG SITE means the area in the Democratic Republic of Congo where the
processed slag will be stocked.
PROCESSING COMPANY means the Company to be set up by the J.V. in the Democratic
Republic of Congo in the form of a SPRL for the purposes of operating the
Processing Plant.
COMMERCIAL STOCK means the ordinary stock of Cobalt Alloy enabling the regular
supply of OMG-KCO plant taking into account the periodicity of maritime
arrivals.
BUFFER STOCK means the Cobalt Alloy Stock to be established at OMG in KOKKOLA,
FINLAND in accordance with article 10 of the J.V. Agreement and to be kept
separate from the Ordinary Commercial Cobalt Alloy Stock of OMG KOKKOLA
Chemicals Oy.
<PAGE> 8
8
USD means the lawful currency of the UNITED STATES OF AMERICA.
PROCESSING PLANT means the Plant to be located in LUBUMBASHI in the DEMOCRATIC
REPUBLIC OF CONGO. The Plant shall be operated by the Processing Company for the
purpose of processing Slag into Cobalt bearing Alloy.
SELLER means the J.V. selling Cobalt Alloy in the Long Term Cobalt Alloy Sales
Agreement.
<PAGE> 9
II. SPECIAL PROVISIONS
1. FORMATION OF THE JOINT VENTURE
- -----------------------------------
1.1. The Parties hereby agree to promptly establish a Joint Venture Company in
the form of a private limited liability company to be named GROUPEMENT DU
TRAITEMENT DU TERRIL DE LUBUMBASHI (GTL) or such other name as agreed by the
Parties.
The By-laws of the J.V. shall be prepared and signed by the Parties in such
time as unanimously agreed by them.
1.2 The primary goals of the J.V. are:
i) to establish a Processing Company, a subsidiary to the J.V., to be
registered under the laws of the DEMOCRATIC REPUBLIC OF CONGO and to
be named Societe de Traitement du Terril de LUBUMBASHI (S.T.L.).
ii) to conclude and ensure the best possible follow-up of Agreements such
as:
- The Long Term Slag Sales Agreement
- The Long Term Cobalt Alloy Sales Agreement
- The Tolling Agreement (related to the processing of
the Slag by the Processing Company)
iii) to conclude the Agreement of the Parties concerning the Capital
contributions, the loans and other financing of the Project as well as
optimizing and distributing the profits.
iv) to organize the management and follow-up of the Project.
2. REPRESENTATIONS, WARRANTIES, TITLE TO ASSETS
- ----------------------------------------------------
2.1. Capacity of the Parties
Each of the Parties represents and warrants as follows:
a) that it is a legal entity duly incorporated in its
country of constitution,
<PAGE> 10
b) that it has the corporate capacity to enter into and perform this
Agreement,
that all corporate and other actions required to authorize the party to
enter into and perform this Agreement have been taken;
c) that the Party shall not breach any other agreement or contract by entering
into or performing this Agreement; that this Agreement is valid and binding
upon in accordance with its terms.
3. CAPITAL CONTRIBUTIONS AND FINANCING OF THE PROJECT
- -----------------------------------------------------
3.1. The pre-feasibility study undertaken by OMG has estimated that the total
investment of the Project will be at about 115 USD million. The total
amount shall be decided by the Parties after the completion of the
feasibility studies.
The total capital to be considered below shall therefore be in the order of
USD 115 millions (or such other figure as determined by the Parties after
the completion of the feasibility study), possibly further increased to
obtain the working capital necessary to start the operations.
To that effect, the J.V. shall issue ordinary shares in one or more calls
for Parties to subscribe, such as described in article 3.2. below and the
Parties shall undertake to subscribe such issued ordinary shares as
described below in this article.
i) OMG undertakes to subscribe 51 per cent of any issued ordinary shares
of the J.V.
Additionally OMG undertakes to subscribe ** per cent of any ordinary
shares of the J.V. Company issued prior to the end of 1999 (or such other
date as agreed by the Parties) ** as further determined in article
3.1.iii below and described in further details in the Option Agreement
attached as Appendix 5 to this Agreement.
ii) GGF undertakes to subscribe 29 per cent of any issued ordinary shares
of the J.V. Company.
** Confidential treatment has been requested with respect to certain
information contained within this document. Confidential portions are
omitted and filed separately with the Securities and Exchange Commission
pursuant to Rule 24b-2 of the Securities and Exchange Act of 1934.
<PAGE> 11
11
iii) GCM undertakes initially to subscribe one ordinary share of the J.V.
Company.
Additionally GCM undertakes to progressively purchase ** per cent minus
one share of the total outstanding issued ordinary share capital of the J.V.
Company from OMG ** from the date of the subscription till the date of
the subscription till the date of purchase of such shares by GCM.
For the payment of these purchases GCM ** in compensation for the first
Slag sales under the Long Term Slag Sale Agreement.
J.V. shall act as the paying agent for the purchase and sales of such
shares **
GCM will be paid for the supplied Slag by the J.V. only after the shares
representing ** per cent of the total outstanding ordinary share capital
of the J.V. Coin an have been fully purchased and paid up **.
3.2. The financing as described above shall take place in several separate
installments and in such a manner as decided by the Parties or by the Board
of Directors.
The Parties shall contribute to any capital increase in proportion to their
respective capital contribution obligations as mentioned in Article 3.1.
above or in any other manner as agreed by the Parties.
The preliminary expenses made by the Parties for the Project may be used by
them as a capital contribution, such as specified in Article 5 below.
If any Party (the defaulting party) were unable to participate in any of the
basic capital contributions, duly decided by the Parties or the Board of
Directors of the J.V. within the limits of the overall funding obligations
of the Parties, the other Parties shall have the option to increase their
respective share in the capital of the J.V in proportion to their
shareholdings.
** Confidential treatment has been requested with respect to certain information
contained within this document. Confidential portions are omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities and Exchange Act of 1934.
<PAGE> 12
12
3.3. The Parties agree Chat apart from the obligation to provide with the
capital contributions mentioned in article 3.1. above, the Project is
intended to be self-financing to the maximum extent possible.
To the extent the revenues of the J.V. are insufficient to meet with all
the obligations (including operation expenses and financial charges), the
Parties shall then seek to obtain additional financing from an outside
financing source to be primarily secured by the proceeds from the sales of
the Treated Materials to KCO or by parent guarantees to be provided by the
Parties in proportion to their respective contributions to the J.V.
3.4. Any additional capital increase or a parent loan, which go beyond the
initial capital can only be requested if so decided by the General Meeting
or the Board in accordance with the Articles of the J.V.
In the event that a Party (or several Parties) is not able or willing to
participate in any additional capital contribution, this shall not prevent
the other Parties (or other Party) to increase their capital contributions
and accordingly increase their capital share in the J.V.
Failure by any Party to participate in a capital contribution increasing
the capital beyond the total amount of capital as defined in art. 3.l.
above, cannot be regarded as a default of the failing Party or Parties.
3.5. All the net revenues of the J.V., after payment of all operation costs and
expenses, financial costs, taxes if any and contributions to any applicable
reserve funds as may be required by the law, shall be paid out as
distributions by the J.V. to the Parties in proportion to their capital
participation.
<PAGE> 13
13
4. MANAGEMENT
- ------------------
4.1. After the signing of this Agreement at the latest, the Parties shall
establish a temporary Management Committee composed of 6 members and their
respective alternates.
Each Party shall nominate two representatives thereto.
A Project Manager shall be appointed by OMG to supervise the implementation
and technical execution of the project until the building of the Processing
Plant has been completed.
4.2. The Project shall be administrated by this temporary Management Committee
until the J.V. has been formally established and its Board of Directors has
been elected and nominated.
OMG shall nominate three representatives and 3 alternates to the Board of
Directors, whereas GGF shall nominate 2 representatives and 2 alternates
and GCM shall nominate 1 representative and 1 alternate.
The Chairman of the Board shall be elected among the representative members
of OMG.
Two Vice-Presidents shall be elected. The first Vice- President position
shall be devolved to the representative of GECAMINES and the second one
shall be devolved to one of the GGF representatives.
4.3. The quorum of the Board of Directors is constituted by the presence of at
least four directors. The decisions of the Board of Directors shall require
the affirmative vote of at least four directors.
4.4. The quorum of the General Meeting is constituted upon the presence of
representatives of the Parties possessing at least 66 per cent of the
capital of the J.V.
All decisions of the General Meeting shall require the affirmative vote of
representatives of the Parties possessing at least 66 per cent of the
shares in the J.V. save the decisions which are taken based on the special
procedure envisaged in art 4.5. below where the affirmative vote of 50 per
cent of the shares shall be sufficient.
<PAGE> 14
14
In any case the following matters In the General Meeting shall require the
affirmative vote of the representatives of the Parties possessing at least 66
per cent of the Capital of the J.V.
a) the approval of the annual budget;
b) the increase of the J.V. capital;
c) An outside financing in excess of 5 percent of the amount of the capital;
d) winding-up or liquidation of the J.V. Partnership;
e) the final decision to commence the investment, construction and processing
Operations as envisaged in Article 5.4. below;
f) all decisions in relation to. the matters listed above shall also be
subject to the specific majorities when they relate to the Processing
Company and/or to the instructions to be given by the J.V. to the Board of
Directors of the Processing Company.
g) revision or amendment of any of the Agreements listed in Article 6.
4.5. The Parties agree that the management of the J.V. shall vest in the Board
which may exercise all powers of and do all acts and things on behalf of
the J.V., save such as are required by the local law to be exercised or
done by the J.V. in the General Meeting. Nevertheless, in the event that
the Board of Directors is unable to take a decision in a matter which is
outside of the day to day management of the J.V. and which indecision may
threaten to damage the development of the Project or the security of the
manufacturing of the Slag or the deliveries of Treated Material, such
matters shall be taken to the General Meeting, which shall have the
exclusive right to decide upon those matters with an exceptional majority
of 50 per cent. Before the date of such General Meeting, the Parties will
use their best endeavors to decrease the discrepancies between their points
of view.
4.6. The J.V. shall reimburse the Parties the travel and out of pocket expenses
incurred by the Board of Directors or their representatives to attend the
Board meetings.
<PAGE> 15
15
4.7. All programs and budgets shall be established on a calendar year basis,
unless otherwise mutually agreed.
4.8. STL shall be managed by a Managing Board that shall appoint and elect the
General Director.
OMG shall nominate 3 representatives to the Managing Board, whereas GGF
shall nominate 2 representatives and GCM shall nominate l representative.
The Chairman of the Board shall be elected among the GGF representatives.
Two Vice-Presidents shall be designated and nominated.
The first position shall be devolved to the GECAMINES representative and
the second position shall be devolved to one of the OMG representatives.
5. PRELIMINARY ACTIVITIES
- ------------------------------
5.1. Before deciding on the commercial exploitation of the Slag deposit, such
further investigations and studies (referred to as preliminary activities)
are necessary to determine the feasibility of the investment, the
construction and processing activities.
5.2. The costs and expenses incurred by the Parties prior to the setting up of
the J.V. and approved by the Board of Directors (and by an independent
auditor, if necessary) shall be considered as a contribution against the
obligation of the Parties to provide with the capital contribution of the
J.V. pursuant to Article 3.1. of this Agreement.
5.3. The technical and administrative services needed to carry out the
preliminary activities shall as far as possible be rendered by the Parties
or their affiliated companies on such terms and conditions considered
reasonable and acceptable by the Board of Directors.
5.4. Upon completion of the preliminary activities and after the analysis of the
cobalt contents of the Slag deposit in accordance with Article 3 of the
Frame Agreement, the Parties shall take their final decision as to whether
they begin to invest, construct and initiate the Processing operations.
<PAGE> 16
16
That decision shall be taken no later than six months after the signing of
this Agreement, provided OMG and/or GGF have not made use of the right to
withdraw.
6. RELATED AGREEMENTS
- --------------------------
6.1. Slag Supply
A Long Term Slag Sales Agreement shall be concluded between GCM on the one
hand, and the J.V. on the other hand, whereby the J.V. shall have the
exclusive right to purchase the Slag located on the well known site of
LUBUMBASHI on terms and conditions as set out in the Frame Agreement and in
further details in the Long Term Slag Sales Agreement attached as Appendix
2 to this Agreement.
To ensure uninterrupted and unhindered continuity of Slag deliveries to the
J.V. and to the Processing Company in accordance with the terms of the
Frame Agreement and of the Long Term Slag Sales Agreement, GCM agrees as
detailed in the above mentioned agreements, to accept that a Cobalt Alloy
Buffer Stock be created by the J.V. in KOKKOLA FINLAND with a six month
supply of KCO.
The J.V. shall enter in the accounts and manage the fluctuations of that
stock.
6.2. Cobalt Alloy Sales
OMG undertakes that KCO shall undertake to purchase from the J.V. all or
part of the Cobalt Alloy produced in the Processing Plant in accordance
with the terms and conditions set up in the Long Term Cobalt Alloy Sales
Agreement attached as Appendix 3 to this Agreement.
6.3. Management of STL
The Board of Directors of the J.V. shall determine the by-laws of STL as
well as the possible Management Agreement determining the management rules
of STL in more detail.
<PAGE> 17
17
6.4. Construction of the Processing Plant
GGF's affiliates, the SPRL Entreprises Generales MALTA FORREST (EGMF) for
earth moving and civil works, and NEW BARON & LEVEQUE INTERNATIONAL S.A.
(NBLI) for site supervision, building, commissioning as well as certain
engineering activities related to steel structure, piping, electricity and
instrumentation and certain procurement and follow-up activities, shall be
designated as nominated subcontractors.
These companies shall provide the J.V. with a cost plus fee bid.
On the basis of that bid, the Board of Directors of the J.V. shall decide
either to award the Contract to the EGMF and NBLI or to call for tenders to
third parties. In the latter case the companies EGMF and NBLI shall have
the right of first refusal.
All the principles, terms and conditions for the above mentioned
subcontracts are described separately in the Construct ion Agreement.
6.5. Transportation Services
The J.V. shall appoint GEORGE FORREST INTERNATIONAL S.A. to organize:
1. the handling of the Slag and Processed Slag if required after
completion of the feasibility study.
2. the transportation of Cobalt-bearing Alloy from the Processing Plant
to the port of KOKKOLA in Finland, unloading excluded but the
supervision and related transport insurance included.
That company shall submit a bid to the J.V.
On the basis of that bid, the Board of Directors of the J.V. shall decide
either to appoint the company or to call for bids from third parties. In
such case GFI S.A. shall have the right of first refusal.
<PAGE> 18
18
6.6. Tolling Agreement
The Processing Company, STL, shall enter into a Tolling Agreement with the
J.V. whereby the J.V. shall grant STL the right to process all of the Slag
acquired by the J.V. from GCM on terms and conditions as set out in the
Tolling Agreement attached as Appendix 4 to this Agreement.
7. LIABILITIES AND COMMITMENTS OF THE PARTIES
- -----------------------------------------------
7.1. The Parties' liability for the J.V.'s debts and liabilities are limited to
the capital invested in the J.V.. The J.V. shall be the owner of its assets
and shall be the obligor in respect to its liabilities.
The Parties shall not be liable for the debts or liabilities of the J.V.,
except to the extent any such debts or liabilities shall have been
expressly guaranteed by such Party.
7.2. In order to protect the environment in LUBUMBASHI and subject to the
limitations set out above the Parties undertake to construct, operate and
maintain their Processing Plant in the Democratic Republic of CONGO in an
orderly way and corresponding to the rules for protecting the environment
applicable in the European Union.
8. TERM AND TERMINATION
- -------------------------
8.1. This Agreement shall remain in full force and effect for as long as:
- the J.V. shall hold any rights,
- the assets of the J.V. are not disposed of,
- a final settlement after liquidating the J.V. has not
been made.
8.2. The Parties may at any time terminate this Agreement by mutual agreement in
writing.
In the case of termination by mutual agreement, the Parties shall agree as
to the terms of the dissolution/liquidation of the J.v.
<PAGE> 19
19
8.3. The non-defaulting Parties of the J.v. shall be entitled to vote for the
exclusion of a defaulting Party, if the exclusion is voted unanimously by
the members representing the non-defaulting Parties after having heard the
explanations from the defaulting Party in one of the following cases:
- that Party would materially infringe one of the provisions of this
Agreement or related agreements and would not have remedied such breach as
required in Article 13.1 of the general provisions;
- that Party would be in default of its obligation related to investment
needs as defined in Article 3, providing the terms of Article 13.1. of the
General Provisions have been first made use of.
The non-defaulting Parties may, acting together, either choose to terminate
this Agreement or to acquire all the shares of the defaulting Party and the
defaulting party has the obligation to sell all its shares at a price
defined in article 8.5. below, deducting the possible damages.
8.4. In addition to the terms and conditions of Article 8.3., the non-affected
Parties shall be entitled to vote for the exclusion of any Party affected
by the occurrence of the following cases:
i) any Party becoming insolvent or having a temporary receiver
appointed of its assets or an execution of distress or warrant of
distress levied upon its assets, or if they have a consequence on the
execution of this Agreement.
ii) an order being made or a resolution being passed for winding-up or
liquidation of any Party except that where any such event is only for
the purposes of acquisition or amalgamation with another and the
relevant company emerging is and agrees to be bound by the terms of
this Agreement, providing an endorsement be made and that such an
event shall not endanger the completion of operations to the
satisfaction of the non-affected Parties.
iii) the shares of the social capital of a Party have been acquired to
an extent exceeding 26 percent of the social capital of that Party by
a competitor of any of the other Parties.
<PAGE> 20
20
8.5. In the event of the exclusion of any Party due to Article 8.3 or 8.4 of the
Special Provisions or to Article 13.1 of the General Provisions, as well as
in the event of a voluntary withdrawal, the remaining Parties shall be
entitled (but not obligated) to purchase all the shares, (but not less than
all the shares) of the excluded or withdrawing Party. That purchase shall
be in proportion to the shares already held, unless otherwise agreed by the
non-defaulting Parties. The purchase price shall be set at the book value.
The book value shall be calculated on the capital of the J.V. including the
equity capital, retained earnings and reserves less any and all long and
short term liabilities.
In case any of the Parties would not agree upon the book value, the Parties
shall appoint an independent internationally accepted auditing firm to make
such a valuation. Such a valuation shall be binding to all Parties.
Should the Parties not agree upon the auditing firm, the valuation shall be
decided in an arbitration pursuant to Article 4 of the General Provisions
of the Agreement.
9. WITHDRAWAL OPTION
- --------------------
It is absolutely essential for the Parties that the results from the preliminary
activities will give sufficient evidence that:
i) the cobalt content of the Slag as to quantity and quality will be to the
satisfaction of the Parties as defined in Articles 2 of the Long Term Slag
Sales Agreement in the Appendix 2 hereto.
ii) the commercial exploitation is viable to the satisfaction of the
Parties, in accordance to the feasibility studies, construction and
investment calculations related to the processing as well as the other
activity plans to be completed in accordance with Article 5.1 above.
<PAGE> 21
21
The Parties shall have a period of consideration of 6 months starting on
the date of entering into force of this Agreement. Should the conditions
defined in sub-articles i) and ii) not be fulfilled within the said period
to the satisfaction of any of the Parties, that Party shall have the right
to withdraw from this Agreement without any liability to pay any
compensation or reimbursement of costs to other Parties or any
reimbursement of its own expenses.
10. BUFFER STOCK
- ----------------
The Long Term Slag and Cobalt Alloy Sales Agreements set out that the J.V.
shall constitute and maintain a Cobalt Alloy Buffer Stock in KOKKOLA,
FINLAND containing the equivalent of 6 months of delivery to KCO.
The J.V. shall arrange for the accounts and manage the fluctuations of the
Buffer Stock.
11. ADDITIONAL GUARANTEES
- -------------------------
GECAMINES undertakes :
(i) to guarantee for the J.V. an unhindered access right to the Site,
either by not alienating to a third party or assigning to the J.V. the
ownership of the strip of land through which access to the Site is
made and such as mutually agreed, as well as the exclusive rights to
the Slag.
(ii) to support the obtaining of guarantees from the Government of the
Democratic Republic of Congo such as a guaranty for a favorable fiscal
treatment, guarantees concerning the expatriation of the profits, the
non-expatriation of the Plant and a guarantee that in the case
GECAMINES would be privatized, all its obligations resulting from this
Agreement, would remain in force.
(iii) to support the obtaining of other authorizations, permissions, fiscal
exemptions, export licenses, etc. on behalf of the Processing Company
and/or the J.V.
<PAGE> 22
22
(iv) to give all the necessary assistance to insure a continuous supply of
electricity and water to the Plant.
12. DEVELOPMENTS
- ----------------
Given the possible developments in the processing technology in the coming years
and during the validity period of this Agreement, the Parties shall examine the
possibility to improve the quality of the production with the view to increase
its value added.
<PAGE> 23
23
III. GENERAL PROVISIONS
- --------------------------
1. HIERARCHICAL ORDER OF THE AGREEMENTS
- --------------------------------------------
This Agreement is part of the Agreements concluded between the Parties.
The aim of these Agreements is to set up the terms and conditions of the
purchase of the Slag located at the Site, the setting up of the J.V. and of
the Processing Company and selling the Cobalt-bearing Alloy to KCO for
further processing.
These Agreements are :
(i) JOINT VENTURE AGREEMENT
(ii) LONG TERM SLAG SALES AGREEMENT
(iii) LONG TERM COBALT ALLOY SALES AGREEMENT
(iv) TOLLING AGREEMENT
Although each Agreement mentioned above can be interpreted independently
and according to its own terms, it is to be noted that it is part of a
larger contractual arrangement and that it has to be interpreted in light
of the other Agreement.
In the event of a conflict, the Agreements listed above shall be
interpreted in the above order so that a prior Agreement shall always
supersede a later one.
2. AMENDMENTS
- ------------------
Any amendments or additions to this Agreement shall be valid only if made
in writing and signed by duly authorized representatives of the Parties
hereto.
Should an amendment or modification to this Agreement have an effect to the
other Agreements, the Parties undertake to change or modify these other
Agreements in order to avoid any conflicts between this Agreement and the
other Agreements.
<PAGE> 24
24
3. RESTRICTIONS ON TRANSFERS
- ----------------------------
3.1. A Party shall not have the right to sell, assign, transfer, pledge or
otherwise dispose of the shares it holds in the J.V. unless priorily
consented in writing by all the other Parties.
3.2. The provisions of Article 3.1. shall not be applicable in the case of a
transfer, sale or assignment of the shares by a Party to its affiliate
company provided that the transfer, sale or assignment is total and is
imposed by legitimate reorganization needs of the Party concerned.
For the purposes of this Agreement, an affiliate company shall mean any
company or entity which is a subsidiary or a parent of the transferor Party
or which directly or indirectly controls or is controlled by the transferor
Party.
3.3. Any transfer described or permitted in accordance with Articles 3.1 and 3.2
shall be subject to the transferee giving its written undertaking to be
bound by all the terms, conditions and undertakings of this Agreement and
the relating Agreements.
3.4. Any transfer other than in accordance with Article 3.1. and 3.2. shall not
be possible without the prior written consent of all Parties.
4. ARBITRATION AND APPLICABLE LAWS
- ----------------------------------
In the event the Parties are unable to settle a dispute in connection with
this Agreement out of court, they agree the dispute shall be submitted to
the French section of the tribunals of Brussels which shall give a verdict
pursuant to the Belgian laws.
<PAGE> 25
25
5. CONFIDENTIALITY
- ------------------
5.1. Unless otherwise provided in this Article, all reports, records, data or
any other information of any kind whatsoever developed or acquired by any
Party in connection with the activities of the J.V. and/or the Processing
Company in the DEMOCRATIC REPUBLIC OF CONGO controlled by the J.V., shall
be treated as confidential and no Party shall reveal or otherwise disclose
such confidential information to third parties without the prior consent of
the other Parties.
The above restrictions shall not apply to the disclosure of confidential
information to any affiliate companies or any private or public financing
institutions, any contractors or subcontractors, employees or consultants
of the Parties or of the J.V. or the Processing Company or to any third
party to which a Party envisage the transfer, the sale, assignment,
encumbrance or other disposition of all of its participation in the J.V. in
accordance to the terms of the Article 3 above.
However, this shall only be applicable provided the confidential
information shall only be disclosed to third parties having a legitimate
need for this information and the persons or company to whom such
disclosure is made shall first undertake in writing to protect the
confidential nature of such information, to the same extent as the Parties
are obligated under this Article.
In addition, the above restrictions shall not apply to any Government or
governmental Department or Agency which has the right to require the
disclosure of such confidential information.
These restrictions shall also not apply to such confidential information
which comes into the Public Domain, except the fault from any Party.
This confidentiality obligation shall survive for a period of 5 years
commencing at the termination/dissolution of this Agreement.
The above mentioned restrictions are not valid for information retained by
GECAMINES related to the Site.
<PAGE> 26
26
6. FORCE MAJEURE
- ----------------
6.1. The obligations of any Party shall be suspended to the extent that the
performance of its obligations is prevented or delayed, in whole or in part
by :
accidental act, bad weather, floods, slides, mine disasters or major
accidents, cave-ins, strikes, lock-out, labor disputes, labor shortage,
demonstrations, riots, sabotage, laws, rules or regulations of agency or
governmental bodies or any other event beyond such Party's reasonable
control.
The obligations shall also be suspended in the event of governmental
actions or inactions, restraints of governmental or other competent
authorities, inability to obtain or unavoidable delay in obtaining
necessary materials, facilities and equipment in the open market,
suspension or refusal of access to the deposit Slag Site, interruption or
unavoidable delay in communication or transportation, or any other cause,
whether similar or not to those specifically listed, which shall be beyond
the reasonable control of the Party.
6.2. In the event of such occurrences, the Party affected shall give written
notice to the other Parties as soon as possible after the occurrence of the
event causing the delay or prevention, setting out full particulars and
estimating the duration of the delay or prevention.
The Party affected shall use all possible diligence to remedy the situation
causing the delay as quickly as possible.
The requirement that any such delay shall be remedied with all possible
diligence shall not require a Party to settle strikes, lock out or other
labor conflicts contrary to its wishes and this type of difficulty shall be
handled within the discretion of the Party concerned.
In the event the situation of force majeure would remain enforce for more
than 6 months, the Parties shall meet to analyze the situation en envisage
the termination of this Agreement.
<PAGE> 27
7. NOTICES
- ----------
7.1. All notices required under this Agreement shall be in writing and directed
to the respective Parties at the following addresses :
If to OMG :
OMG EUROPE GMBH
Mr Kari MUURAISKANGAS
Morsenbraicherweg 200
D - 40470 DUSSELDORF
GERMANY
Tel : 00.49.211.96.18.80
Fax : 00.49.211.61.46.29
If to GGF :
c/o G.F.I. S.A.
Managing Director
Parc Industriel
B - 4400 IVOZ-RAMET
BELGIUM
Tel : 00.32.4.338.91.79
Fax : 00.32.4.338.91.86
If to GECAMINES :
Mr General Director
Boulevard du Souverain 30
1000 BRUSSELS
BELGIUM
Tel : 00.32.2.676.89.98
Fax : 00.32.2.676.80.41
Fax Technical Direction : 00.32.2.676.80.48
Any notice shall be deemed to have been given to any Party if personally
delivered to a designated officer of the Party to whom the notice is addressed,
or if sent by registered mail, postage prepaid, with return receipt, and
properly addressed as set forth herein, or if sent by fax or telex to an
authorized representative with evidence of transmission receipt.
The notice shall be effective as of the moment of personal delivery, or in the
case of mailing, as of the date shown on the return receipt, or in the case of
fax or telex, as of the date faxed or telexed.
Any Party may, at any time, change the address to which notices or
communications shall be given by written notice to the other Parties.
<PAGE> 28
8. NO WAIVER
- ------------
The failure of a Party at any time to require the performance of any
provision of this Agreement shall not affect its right to execute that
provision and a waiver by such Party upon a breach thereof shall not be
interpreted as a waiver by such Party of any later non execution of such
provision or as a waiver by such Party of any other provision of this
Agreement.
9. SEVERABILITY AND HEADINGS
- ----------------------------
9.1. If any provision of this Agreement or its related Appendices should be null
and void, such a nullity shall not invalidate all the other provisions in
this Agreement or related Appendices. The Parties of this Agreement shall
endeavor to negotiate so as to replace any null and void provision as well
as any other affected provision.
9.2. The headings in this Agreement are considered for convenience only and
shall not have any effect or limit in interpreting the provisions of this
Agreement.
10. SOVEREIGN IMMUNITY
- -----------------------
To the extent that a Party may be entitled to claim in any jurisdiction in
which legal proceedings may at any time be commenced with respect to this
Agreement, for itself or its activities, properties or assets any immunity
either :
- - from jurisdiction of any court or arbitration
- - from attachment prior to judgment, from execution of a judgment or set-off
- - from any other legal process, and to the extent where such immunity could be
granted by that jurisdiction,
<PAGE> 29
LONG TERM SLAG SALES AGREEMENT
BETWEEN:
GECAMINES
AND:
J. V. GROUPEMENT POUR LE TRAITEMENT DU TERRIL DE
LUBUMBASHI
<PAGE> 30
2
THE PRESENT AGREEMENT IS ESTABLISHED IN ITS ENTIRETY BY ALL THE ELEMENTS
HEREINAFTER SPECIFIED AND AS REFERRED TO IN THE RESPECTIVE ARTICLES
I DEFINITIONS
II SPECIAL PROVISIONS
1 SCOPE
2 QUALITY AND QUANTITY
3 DELIVERY AND TITLE
4 PRICING
5 QUOTATIONAL PERIOD
6 BUFFER STOCK
7 PAYMENT
8 INVOICING CURRENCY AND PAYMENT PROCEDURES
9 WEIGHING, SAMPLING AND ANALYZING
10 TERM AND TERMINATION OF THE AGREEMENT
11 TAXES AND OTHER CHARGES AND FEES
12 HARDSHIP
13 LIABILITIES
14 COVENANTS
III GENERAL DISPOSALS
1 HIERARCHICAL ORDER OF THE AGREEMENTS
2 AMENDMENTS
3 RESTRICTIONS ON TRANSFERS
4 ARBITRATION AND APPLICABLE LAWS
5 CONFIDENTIALITY
6 FORCE MAJEURE
7 NOTICES
8 NO WAIVER
9 SEVERABILITY AND HEADINGS
10 SOVEREIGN IMMUNITY
11 APPENDICES
12 FURTHER ENGAGEMENTS
13 GENERAL CLAUSES
14 ENTERING INTO FORCE
<PAGE> 31
3
The Present Agreement is concluded between:
LA GENERALE DES CARRIERES ET DES MINES, a public company organized and existing
under the laws of the Democratic Republic of Congo, having its registered office
at Boulevard Kamanyola, B.P. 450, Lubumbashi (Democratic Republic of Congo)
(hereinafter referred to as the SUPPLIER or GECAMINES, or GCM)
on the one hand;
AND
J. V. GROUPEMENT POUR LE TRAITEMENT DU TERRIL DE LUBUMBASHI,
having its registered office at JERSEY, (hereinafter referred
to as the PURCHASER or GTL)
on the other hand;
WHEREAS the SUPPLIER is the owner of Slag produced in its water-jacket ovens in
Lubumbashi, the Democratic Republic of Congo, and containing among others
cobalt;
WHEREAS the PURCHASER intends to form a subsidiary company (hereinafter referred
to as the Processing Company) in the Democratic Republic of Congo to establish a
Plant in Lubumbashi for the main purpose of processing all or part of the Slag
existing in the Site. The enriched product obtained after processing is
hereafter referred to as Cobalt Alloy;
WHEREAS the SUPPLIER, in its position as the owner of the Slag on the Site, is
willing to sell the Slag on a long term basis as and when this Agreement shall
become effective and according to the terms and conditions set out hereafter;
WHEREAS the Parties estimated in May 1995 that the total quantity of Slag
located in the Site was approximately 13 million tons, out of which at least
some 4 million dry tons were estimated to correspond to the specifications of
the Frame Agreement signed on the 14th of February 1996 and therefore suitable
for processing;
NOW THEREFORE THE PARTIES HAVE AGREED AS FOLLOWS:
<PAGE> 32
4
I. DEFINITIONS
The terms defined hereinafter shall for all purposes of this Agreement and
related Contracts have the meanings hereinafter specified, unless otherwise
specified :
AGREEMENT means this document signed by the Parties and its appendices forming
an integral part of the present Agreement as well as its possible amendments.
BUYER means OMG KOKKOLA CHEMICALS Oy (KCO), a subsidiary of the OMG Group,
buying Cobalt Alloy in the Long Term Cobalt Alloy Sales Agreement.
PURCHASER means the J.V. purchasing Slag in the Long Term Slag
Sales Agreement.
COBALT BEARING ALLOY or TREATED MATERIAL means the main end product of the
Processing Company (sometimes also called "Cobalt Alloy") containing cobalt and
copper.
YEAR means calendar year beginning on 1st of January and ending on 31st of
December.
UMPIRE means a person appointed by mutual agreement of the J.V. and the Buyer or
GECAMINES in accordance with the Long Term Slag Sales Agreement or Long Term
Cobalt Alloy Sales Agreement.
CIF means "cost, insurance and freight" as defined in INCOTERMS, 1990 edition.
TOLLING AGREEMENT means the Agreement concluded between the J.V. and the
Processing Company for the purpose of processing Slag into Cobalt bearing Alloy.
LONG TERM COBALT ALLOY SALES AGREEMENT means the Agreement whereby the J.V.
undertakes to sell Cobalt Alloy to the Buyer and, the latter undertakes to buy
Cobalt Alloy from the J.V.
LONG TERM SLAG SALES AGREEMENT means the Agreement whereby GECAMINES undertakes
to sell Slag to the J.V. and the latter undertakes to buy Slag from GECAMINES.
<PAGE> 33
5
DATE OF DELIVERY means the date on which the J.V. takes and becomes the owner of
the Site Slag according to the terms of the ex-site delivery clause.
DDU means "delivery duty unpaid" as defined in INCOTERMS, 1990 edition
EXW means "ex works delivery" clause as defined in INCOTERMS, 1990 edition.
SUPPLIER means the GENERALE DES CARRIERES ET DES MINES supplying Slag in the
Long Term Slag Sales Agreement.
J.V. means a private limited liability company having its registered
office in JERSEY .
BUSINESS DAY means a day which is not a Saturday, a Sunday or a public holiday
in Finland, The Netherlands or the Democratic Republic of Congo.
KCO means OMG KOKKOLA CHEMICALS Oy, a subsidiary of the OMG Group located in
KOKKOLA, REPUBLIC OF FINLAND and established under the laws of the REPUBLIC OF
FINLAND.
LMB means the LONDON METAL BULLETIN.
LME means the LONDON METAL EXCHANGE.
SUPPLY LOT means a part of each delivered supply of Cobalt Alloy containing
approximately 100 tons of Cobalt Alloy as divided by the BUYER in KOKKOLA for
weighing, sampling, analysis and moisture content determination.
EXPEDITION LOT means the tonnage of one container of Cobalt Alloy dispatch from
the Processing Plant.
USED LOTS means the Lot or Lots of Cobalt Alloy taken into usage by the BUYER
for a period of one month.
MONTH means calendar month.
PARTIES means the Parties to this Agreement.
<PAGE> 34
6
QUOTATIONAL PERIOD means the Period defined in Article 5 of the Long Term Slag
Sales Agreement or in Article 6.2 in the Long Term Cobalt Alloy Sales Agreement.
WEIGHTS AND MEASURES
1 (metric) ton = 2,204.6 pounds avoirdupois
1 dmt or ts = 1 dry metric ton
1 wmt or th = 1 wet metric ton
TAKEN INTO USAGE means the taking of the Cobalt Alloy either directly from the
ordinary commercial raw material Stock or alternatively from the Buffer Stock as
a complement of the KOKKOLA Processing Plant.
PROJECT means the conception and building of a Processing Plant in LUBUMBASHI
for the purpose of exploiting the Slag Site of LUBUMBASHI as well as the proper
operation of the Processing Plant, the trading operations including related
operations and the distribution of the profits.
PROCESSED SLAG means the Slag resulting from the operations in the Processing
Plant
SLAG means cobalt bearing slag located in the Site in THE DEMOCRATIC REPUBLIC OF
CONGO and to be used as feeding stock in the Processing plant.
SITE or SLAG SITE means the area in the Democratic Republic of Congo where the
Slag is located and available to be delivered to the J.V. pursuant to this
Agreement (called Terril de LUBUMBASHI, originating from the residues of the
WATER JACKET ovens of GECAMINES and namely including the zones I, J, K1, K2 and
TAS G-L having an average cobalt content of 1,85% as described in further detail
in appendix 1 of the Frame Agreement attached as Appendix 1 to this Agreement).
PROCESSED SLAG SITE means the area in the Democratic Republic of Congo where the
processed slag will be stocked.
PROCESSING COMPANY means the Company to be set up by the J.V. in the Democratic
Republic of Congo in the form of a SPRL for the purposes of operating the
Processing Plant.
COMMERCIAL STOCK means the ordinary stock of Cobalt Alloy enabling the regular
supply of OMG-KCO plant taking into account the periodicity of maritime
arrivals.
<PAGE> 35
7
BUFFER STOCK means the Cobalt Alloy Stock to be established at OMG in KOKKOLA,
FINLAND in accordance with article 10 of the J.V. Agreement and to be kept
separate from the Ordinary Commercial Cobalt Alloy Stock of OMG KOKKOLA
Chemicals Oy.
USD means the lawful currency of the UNITED STATES OF AMERICA.
PROCESSING PLANT means the Plant to be located in LUBUMBASHI in the DEMOCRATIC
REPUBLIC OF CONGO. The Plant shall be operated by the Processing Company for the
purpose of processing Slag into Cobalt bearing Alloy.
SELLER means the J.V. selling Cobalt Alloy in the Long Term Cobalt Alloy Sales
Agreement.
<PAGE> 36
8
II. SPECIAL PROVISIONS
----------------------
1. SCOPE
-----
The Parties agree that, according to this Agreement, the Slag located in the
Site corresponding to the specifications set out in article 2 hereafter shall be
reserved and intended to the usage of the PURCHASER and of the Processing
Company, in accordance with the terms and conditions set out in this Agreement .
Hence, subject to the terms and conditions of this Agreement:
(i) the SUPPLIER undertakes to sell the Slag available in the Site and
corresponding to the quantities and specifications set out in Article 2
hereafter to the PURCHASER.
(ii) the PURCHASER undertakes to buy the Slag available in the Site and
corresponding to the quantities and specifications set out in Article 2
hereafter from the SUPPLIER.
The SUPPLIER agrees not to sell the Slag available in the Site and corresponding
to the quantities and specifications set out in Article 2 below, to any other
buyer than the PURCHASER during the validity period of this Agreement and except
with prior written consent of the PURCHASER.
In support of the right to take the Slag in the Site, the SUPPLIER hereby
irrevocably and unconditionally guarantees to the PURCHASER and the Processing
Company a free and unhindered access to the Site during the validity period of
this Agreement.
In order to safeguard the effectiveness of this access, the SUPPLIER agrees
either not to alienate to a third party or to transfer to the J.V. the use of
the strip of land through which access to the Site is made and such as mutually
agreed.
<PAGE> 37
9
2. OUALITY AND QUANTITY
---------------------
2.1. The Slag shall be delivered EXW the Site.
2.2. Information on the quality and quantity of the Slag is based at this stage
on information given by the SUPPLIER. This Agreement covers the tonnages of the
Slag in stock zones I, J, K1, K2 and TAS-GL (a map of the stock zones is
attached as Appendix 1 forming an integral part of this Agreement) :
This represents at least 4 million dry tons of Slag having the following average
analysis (and is attached as Appendix 2 and forming an integral part of this
Agreement) :
-Co: 1.85%
-Cu: 1.39%
-Zn: 7.49%
The quantity of Slag mentioned in Appendix 2 should be sufficient for the
production of Cobalt Alloy containing 5,000 tons of Cobalt per year for a period
of 15 years.
2.3. Should the total tonnage of Slag corresponding to the minimal
specifications be higher than the total quantities indicated above, the
PURCHASER shall have the right of first refusal to buy the excess of the Slag at
terms and conditions to be set out.
In case GECAMINES wants to utilize other part of the stock than what is defined
in Article 2.2, the PURCHASER shall have the right of pre-emption to use it
within 3 months after the written notice addressed by GECAMINES to the
PURCHASER.
The purchase conditions on all or part of that part of the stock shall be
negotiated in the event the pre-emption right is used.
<PAGE> 38
10
2.4. The SUPPLIER has delivered a preliminary map indicating the cobalt contents
of the different zones of the Site. Such map is only preliminary, and shall not
have any value of evidence with regard to the cobalt content of the Slag in the
different zones of the Site.
The PURCHASER shall have the right to take samples in order to analyze the
cobalt content of the Slag. Should an essential part of the Slag have a cobalt
content below the allowed average content, and the J.V. find that the project is
not economically viable, according to the feasibility studies, the J.V. shall
have the right at its full and independent discretion, to terminate this
Agreement by means of a written notice delivered to the SUPPLIER at the latest 6
months after entering into force of this Agreement.
2.5. The SUPPLIER undertakes to sell to the PURCHASER the quantity of Slag
needed to produce the Cobalt Alloy as determined annually by the PURCHASER. That
annual production shall be realized according to the agreed processing
conditions and shall not be superior to 5,000 tons of cobalt contained in the
Cobalt Alloy without the approval of the SUPPLIER.
Nevertheless, the Slag sale shall not be less than what is needed to produce
4,000 tons of cobalt contained in the Cobalt Alloy.
2.6. The PURCHASER shall, either on its own initiative or at the request of
GECAMINES or KCO, organize at least once a year a meeting of these 3 parties in
order to analyze the market conditions and coordinate the commercial policies.
2.7. The PURCHASER shall include in the Long Term Cobalt Alloy Sales Agreement
to be signed with KCO that:
- - KCO shall not receive more than 5,000 tons of cobalt per year, with a minimum
guaranteed supply of 4,000 tons of cobalt contained in the Cobalt Alloy,
according to this Agreement.
- - In case the PURCHASER, after the building up of the Buffer Stock containing
2,500 tons of Cobalt, produces through the Processing company more than 4,000
tons per year, the quantity exceeding 4,000 tons shall be offered at the KCO
market conditions, that shall have the right of first refusal.
<PAGE> 39
11
2.8. The annual quantity of 5,000 tons of Cobalt mentioned above does not
include the quantity comprised in the Buffer Stock and can possibly be revised
after negotiation among the Parties, depending among others on the Processing
capacities in the Democratic Republic of Congo and/or in Finland as well as on
the Cobalt market situation.
3. DELIVERY AND TITLES
-------------------
The quantities specified in Article 2 above shall be delivered EXW Site.
All risk of loss, damage and destruction with regard to each delivery of Slag
shall pass from the SUPPLIER to the PURCHASER along with its title as and when
the delivered Slag has been loaded at the Site by the Processing Company.
4. PRICING
-------
4.1. PAYABLE METALS
The PURCHASER shall pay to the SUPPLIER only for the Cobalt and Copper contained
in the Slag excluding all other materials.
The Cobalt and Copper prices shall be determined separately.
The Slag payment shall be based on the weighing and analyzing of the Slag
carried out at the Processing plant according to a procedure to be determined by
the Parties according to Article 9.
Zinc and lead in form of oxides as well as Processed Slag shall be returned free
of charge to GECAMINES that shall become the owner of them and shall remove them
at its own expense as quickly as possible.
<PAGE> 40
12
4.2. PRICE REFERENCES
The base price for Cobalt applicable for this Agreement ** a combination
of ** of 99.3 cobalt (low) and ** of 99,8 cobalt (low) as published by
LMB over the Quotational period.
The Parties agree to meet to determine a new base price in case the reference
99.3 and/or 99.8 would disappear or would not be representative any more.
The base price for copper is ** over the Quotational Period.
4.3. BASIS PRICE FORMULA
The price to be paid for the Cobalt contents in the Slag shall be as follows,
where P is the prevailing Cobalt price :
(i) In the event that the price of Cobalt (P) is more than or equal to **
USD/lb:
Payable cobalt percentage = **
The percentage of Cobalt payable may, however, not exceed ** of the
reference price.
(ii) In the event that the price of Cobalt (P) is lower than ** USD/lb, the
Parties shall meet to renegotiate the pricing formula **.
The price formulas under (i) and (ii) above are the minimum. The Parties agree
to meet within six months after the beginning of the processing for a possible
review of the price formulas, taking into account the following elements : total
investment expenditure, financing costs, electricity costs, tax treatment, yield
of the processing and quality of the Cobalt Alloy.
The Parties agree that as and when OMG GGF have been fully reimbursed and repaid
the capital invested in the Project including the interests accrued and the
financial charges, the above ricing formula be modified, **.
** Confidential treatment has been requested with respect to certain information
contained within this document. Confidential portions are omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities and Exchange Act of 1934.
<PAGE> 41
13
4.4. PRICE FOR COPPER
The PURCHASER shall pay to the SUPPLIER for copper in the Slag ** of the base
price defined in Article 4.2.
5. QUOTATIONAL PERIOD
------------------
The Quotational Period for Cobalt and Copper is the month following the delivery
month of Cobalt Alloy at Kokkola, Finland.
6. BUFFER STOCK
------------
6.1. ESTABLISHMENT AND QUANTITY
To safeguard that KCO shall get an uninterrupted and sufficient feedstock of
Cobalt Alloy to the KOKKOLA Plants, GECAMINES allows the PURCHASER to build up a
Buffer Stock of Cobalt Alloy in KOKKOLA besides the Commercial Stock to back up
for any supply interruption.
Therefore GECAMINES agrees to sell to the J.V. and the J.V. agrees to purchase
the quantity of Slag necessary for building up the Buffer Stock. The total
cobalt quantity contained in the Buffer Stock shall be 2,500 tons.
The monthly amount of Cobalt Alloy exceeding the monthly agreed tonnage taken
into usage by KCO shall be used for building up the Buffer Stock until the
quantity of 2,500 tons of Cobalt contents has been reached.
In the event that the cobalt content in the Buffer Stock decreases during the
term of this Agreement, either as a result of an interruption of deliveries or
insufficient deliveries, the excess quantity above the agreed monthly supply
shall be used for rebuilding the Buffer Stock until the minimum cobalt content
of 2,500 tons has been reached again.
** Confidential treatment has been requested with respect to certain information
contained within this document. Confidential portions are omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities and Exchange Act of 1934.
<PAGE> 42
14
Nevertheless, the Parties agree that the total amount of Cobalt contained in the
Buffer Stock, i.e. 2.500 tons, be reduced by 400 tons per year from the year
2006 so that the quantity of Cobalt be reduced to 2.100 tons at the end of the
year 2006, and so on, provided, however, that the J.V. has entirely reimbursed
and repaid OMG and GGF in form of dividends or other distributions the total
value of the investment in the Project including all interest and financial
charges. In case not, the reduction of the Buffer Stock shall be postponed
accordingly.
In the event of an interruption of supplies during the reduction periods
hereinabove referred and as a result the level of the Buffer Stock falls short
of the above formula, then the annual reduction shall be postponed until the
minimum level of the Buffer Stock has first been met as follows :
End 2006 : 2.100 tons of Cobalt
End 2007 : 1.700 tons of Cobalt
End 2008 : 1.300 tons of Cobalt
End 2009 : 900 tons of Cobalt
End 2010 : 500 tons of Cobalt
End 2011 : 100 tons of Cobalt
End 2012 : Liquidation of the Buffer Stock.
As regard to any other situation than those mentioned hereinabove, the Parties
will meet to find a joint understanding.
6.2. MANAGEMENT OF THE BUFFER STOCK
KCO shall be responsible towards the J.V. for the management and the risks of
the Buffer Stock, and shall bear all costs linked to it. KCO shall permit the
SUPPLIER and the PURCHASER to check all records containing the necessary
information as to the status and consumption of the Buffer Stock.
The transfer of title related to the Cobalt Alloy of the Buffer Stock shall
pass from the J.V. to KCO as taken into usage.
<PAGE> 43
15
6.3. PAYMENT FOR THE SLAG TAKEN OUT FOR BUILDING-UP OF THE BUFFER STOCK
The regulations as set out in this article are not prejudicing the above
article 6.1, al. 6 and following.
The PURCHASER shall pay for the Slag only after KCO has taken Cobalt Alloy into
usage. The payments shall be made as set out in Art. 6.2 of the Long Term
Cobalt Alloy Sales Agreement.
If GECAMINES so wish and if the PURCHASER is able to find a bank to finance such
a transaction, the PURCHASER may use the Buffer Stock as a collateral for a bank
loan to be used as an advance payment for the Slag to GECAMINES. The loan costs
including interest and charges are at the expense of GECAMINES. The total amount
of such loans including estimated interests related to such loans and bank
charges shall not, however, exceed at any time the value of the Slag used for
the building of the Buffer Stock, as estimated by the PURCHASER and approved by
the bank. The advance payment, bank charges and interests shall be deducted from
the price to be paid by the J.V. to GECAMINES as and when KCO takes into usage
Cobalt Alloy from the Buffer Stock.
KCO shall always have the right, and at its full discretion, to prepay the Slag
corresponding to the cobalt tonnage of the Buffer Stock.
7. PAYMENT
-------
The payments by the PURCHASER to the SUPPLIER for the Cobalt and Copper in the
Slag are based on the delivery of the Slag to the PURCHASER.
The payments by the PURCHASER shall be made within thirty calendar days from end
of each Quotational Period.
<PAGE> 44
16
8. INVOICING CURRENCY AND PAYMENT PROCEDURES
-----------------------------------------
8.1 USD
All bills and payments shall be in USD.
8.2 METHOD OF PAYMENT
Payments by the PURCHASER to the SUPPLIER shall be made by bank transfer to the
SUPPLIER's account.
9. WEIGHING, SAMPLING AND ANALYZING
--------------------------------
The PURCHASER and the SUPPLIER shall confer and, before dispatch of the first
consignment, shall adopt and record mutually acceptable methods of weighing,
sampling and analyzing. Such methods shall be accurate and reliable. They shall
be appropriate and, based on internationally recognized industrial standards
provide efficient and practical ways of determining accurate weights, obtaining
representative samples, and producing accurate analyses of Slag supplies.
10. TERM AND TERMINATION OF THE AGREEMENT
-------------------------------------
10.1. This Agreement shall remain in force for a period of 20 years after its
effective entering into force.
10.2. The Parties may at any time terminate this Agreement by mutual agreement
in writing.
In the case of termination by mutual agreement, the Parties shall agree as
to the terms of the dissolution.
<PAGE> 45
17
10.3. It is expressly agreed between the Parties that should any of the
following events take place, this Agreement shall not terminate nor the rights
of the PURCHASER to purchase the Slag as stipulated in this Agreement:
(i) Should GECAMINES go into bankruptcy,
(ii) Should GECAMINES become insolvent,
(iii) Should GECAMINES have a receiver appointed of its assets,
(iv) Should an order being made or a resolution being passed for winding-up or
liquidate GECAMINES,
(v) Should any other similar event take place as regard to GECAMINES.
10.4. If deemed necessary by the PURCHASER that the SUPPLIER shall take some
special measures to guarantee that the Slag (or what is left from it) can be
used on a continuous basis by the Processing Company, the Parties shall meet to
envisage the necessary safeguard measures. These possible measures shall prior
to their execution be submitted to the agreement of the Parties in order to
comply with the terms and conditions of this Agreement and the related
agreements.
10.5. This Agreement may also be terminated with no damages by the J.V. if:
(i) the samples clearly indicate that the cobalt contents falls short of the
average of 1,85%; or
(ii) it is clear that the Plant cannot operate in a profitable way on a long
term basis; or
(iii)the taxation system in The Democratic Republic of Congo as applicable to
the Processing Company and the Plant abruptly changes in a manner
prejudicing the economic performance of the Processing Company and the
profitability of the Plant.
Such a termination shall be effectuated by a written notice from the
PURCHASER to the SUPPLIER indicating the date of such termination.
<PAGE> 46
18
11. TAXES AND OTHER CHARGES AND FEES
--------------------------------
Any taxes, State fees or other charges on the Slag shall be for the account of
the SUPPLIER, with the exception of the C.C.A.
The PURCHASER shall for the benefit of the Project and of the Processing Company
and the Plant apply for and take benefit of all possible tax reliefs under tax
and investment laws of the Democratic Republic of Congo such as, but not limited
to, tax incentives, lower tax rates, relief of export and import duties and
C.C.A. as well as exemption from withholding taxes for interest and dividend
payments.
In case of any adversary changes in the tax regime with respect to the Cobalt
Alloy and/or with the operation of the Plant or the Processing Company, the
Parties agree to meet.
12. HARDSHIP
--------
If at any moment unanticipated events by the Parties will fundamentally alter
the balance of this Agreement, resulting in an excessive burden to one of the
parties in fulfilling its contractual obligations vis-a-vis the other Party,
this aggrieved Party may proceed as follows:
- - The aggrieved party may request a review of this Agreement within a reasonable
delay after it has got the knowledge of the said change in circumstances and its
effects on the economy of this Agreement.
- - The request shall mention the reasons causing such review.
- - The Parties shall confer within thirty calendar days of receipt of the notice
in view to revise this Agreement on an equitable basis to avoid the excessive
burdens for any of the Parties.
A request to review does not have any suspension effects as to the execution of
this Agreement.
<PAGE> 47
19
13. LIABILITIES
-----------
In the event of a breach to this Agreement, each Party shall be liable for all
direct damage as well as cost, charges and expenses caused through that breach,
which shall be compensated in full.
However, any loss or damage which is an indirect or consequential result of the
nonfulfillment of obligations under or in connection with this Agreement are
excluded unless resulting from a willful or intentional act from the defaulting
Party.
All direct damages and claims can only be set off or deducted from the agreed
price if and when the disagreement has been finally settled or solved
otherwise.
14. COVENANTS
---------
The SUPPLIER shall covenant:
(i) to guarantee an unhindered access right to the Site either by not
alienating to a third party or by transferring to the J.V. the use of the
strip of land through which access to Site is made as mutually agreed, as
well as the exclusive rights to use the slag.
(ii) to support the obtaining from the Government of the Democratic Republic of
Congo of a favorable tax treatment.
(iii) to provide its full support in order to obtain all other necessary
approvals, permissions, tax exemptions and export licenses, etc. for the
Processing Company and/or the PURCHASER;
<PAGE> 48
20
III. GENERAL DISPOSALS
-----------------
1. HIERARCHICAL ORDER OF THE AGREEMENTS
-------------------------------------
This Agreement is part of a number of Agreements concluded between the Parties.
The aim of these Agreements is to set up the terms and conditions of the
purchase of the Slag located at the Site, the setting up of the J.V. and of the
Processing Company and selling the Cobalt bearing Alloy to KCO for further
processing.
These Agreements are:
(i) Joint Venture Agreement
(ii) Long Term Slag Sales Agreement
(iii) Long Term Cobalt Alloy Sales Agreement
(iv) Tolling Agreement.
Although each Agreement mentioned above can be interpreted independently and
according to its terms, it is to be noted that it is part of a larger
contractual arrangement and that it has to be interpreted in light of the other
Agreements.
In the event of a conflict, the Agreements listed above shall be interpreted in
the above order so that a prior Agreement shall always supersede a later one.
2. AMENDMENTS
----------
Any amendments and additions to this Agreement shall be valid only if made in
writing and signed by duly authorized representatives of the Parties hereto.
<PAGE> 49
21
Should an amendment or modification to this Agreement have an effect on the
other Agreements, the Parties undertake to change or modify these other
Agreements in order to avoid any conflicts between the various Agreements.
3. RESTRICTIONS ON TRANSFERS
-------------------------
3.1. A Party shall not have the right to sell, assign, transfer, mortgage,
pledge, charge or otherwise deal with the rights and obligations it holds
in this Agreement.
3.2. The provisions of Article 3.1 shall not be applicable in case of a
transfer, sale or assignment of participation by a Party to an affiliate
company provided that the transfer, sale or assignment is total and imposed
by legitimate reorganisation needs of the Party concerned.
For the purposes of this Agreement, an affiliate company shall mean any
company or entity which is a subsidiary or a parent of the transferor Party
or which directly or indirectly controls or is controlled by the transferor
Party.
3.3. Any transfer beyond the terms and conditions of Article 3.1. and 3.2 shall
not be possible without the prior written consent by all the Parties.
3.4. Any transfer described or permitted in accordance with Articles 3.1 and 3.2
shall be subject to the transferee giving its written undertaking to be
bound by all the terms, conditions and undertakings of this Agreement and
the relating Agreements.
<PAGE> 50
22
4. ARBITRATION AND APPLICABLE LAWS
-------------------------------
In the event the Parties are unable to settle a dispute in connection with this
Agreement out of court, they agree the dispute shall be submitted to the French
section of the tribunals of Brussels which shall give a verdict pursuant
to the Belgian laws.
5. CONFIDENTIALITY
---------------
5.1. Unless otherwise provided in this Article, all reports, records, data or
any other information of any kind whatsoever developed or acquired by any
Party in connection with the activities of the J.V. and/or the Processing
Company in the Democratic Republic of Congo controlled by the J.V., shall
be treated as confidential and no Party shall reveal or otherwise disclose
such confidential information to third parties without the prior consent of
the other Parties.
The above restrictions shall not apply to the disclosure of confidential
information to any affiliate companies or any private or public financing
institutions, any contractors or subcontractors, employees or consultants
of the Parties or of the J.V. or the Processing Company or to any third
party to which a Party envisage the transfer, the sale, assignment,
encumbrance or other disposition of all of its participation in the J.V. in
accordance to the terms of the Article 3 above.
However, this shall only be applicable provided the confidential
information shall only be disclosed to third parties having a legitimate
need for this information and the persons or company to whom such
disclosure is made shall first undertake in writing to protect the
confidential nature of such information, to the same extent as the Parties
are obligated under this Article.
In addition, the above restrictions shall not apply to any Government or
governmental Department or Agency which has the right to require disclosure
of such confidential information.
These restrictions shall also not apply to such confidential information
which comes into the Public Domain, except the fault from any Party.
<PAGE> 51
23
This confidentiality obligation shall survive for a period of 5 years
commencing at the termination/dissolution of this Agreement.
The above mentioned restrictions are not valid for information retained
by GECAMINES related to the Site.
6. FORCE MAJEURE
-------------
6.1. The obligations of any Party shall be suspended to the extent that the
performance of its obligations is prevented or delayed, in whole or in part
by:
- accidental act, bad weather, floods, slides, mine disasters or major
accidents, cave-ins, strikes, lock-out, labor disputes, labor shortage,
demonstrations, riots, sabotage, laws, rules or regulations of agency or
governmental bodies.
The obligations shall also be suspended in the event of governmental
actions or inactions, restraints of governmental or other competent
authorities, inability to obtain or unavoidable delay in obtaining
necessary materials, facilities and equipment in the open market,
suspension or refusal of access to the deposit Slag Site, interruption or
unavoidable delay in communication or transportation, or any other cause,
whether similar or not to those specifically listed, which shall be beyond
the reasonable control of the Party.
6.2. In the event of such occurrences, the Party affected shall give written
notice to the other Parties as soon as possible after the occurrence of the
event causing the delay or prevention, setting out full particulars and
estimating the duration of the delay or prevention.
The Party affected shall use all possible diligence to remedy the situation
causing the delay as quickly as possible.
The requirement that any such delay shall be remedied with all possible
diligence shall not require a Party to settle strikes, lock out or other
labor conflicts contrary to its wishes and this type of difficulty shall be
handled within the discretion of the Party concerned.
<PAGE> 52
24
In the event the situation of force majeure would remain enforce for more
than 6 months, the Parties shall meet to analyze the situation en envisage
the termination of this Agreement.
7. NOTICES
-------
7.1. All notices required under this Agreement shall be in writing and directed
to the respective Parties at the following addresses:
If to GECAMINES: Mr Umba Kyamitala
General Director
Boulevard du Souverain 30
B-1000 BRUSSELS
BELGIUM
Tel. 00.32-2-676 89 98
Fax. 00.32-2-676 80 41
Fax Technical Direction:
00.32-2-676 80 48
If to J.V.:
Any notice shall be deemed to have been given to any Party if personally
delivered to a designated officer of the Party to whom the notice is addressed,
or if sent by registered mail, postage prepaid, with return receipt, and
properly addressed as set forth herein, or if sent by fax or telex to an
authorized representative with evidence of transmission receipt.
The notice shall be effective as of the moment of personal delivery, or in the
case of mailing, as of the date shown on the return receipt, or in the case of
fax or telex, as of the date faxed or telexed.
<PAGE> 53
LONG TERM COBALT ALLOY SALES AGREEMENT
--------------------------------------
BETWEEN
- -------
THE J.V. GROUPEMENT POUR LE TRAITEMENT DU
TERRIL DE LUBUMBASHI
AND
- ---
OMG KOKKOLA CHEMICALS OY
<PAGE> 54
THE PRESENT AGREEMENT IS ESTABLISHED IN ITS ENTIRETY BY ALL
THE ELEMENTS HEREINAFTER SPECIFIED AND AS REFERRED TO IN THE
RESPECTIVE ARTICLES
I. DEFINITIONS
II. SPECIAL PROVISIONS
1. Scope and Quantity
2. Specifications of the Cobalt Alloy
3. Duration
4. Buffer Stock
5. Delivery and Title
6. Payment
7. Weighing, Sampling and Analysis
8. Invoicing Currencies and Payment Procedures
9. Hardship
10. Liabilities
III. GENERAL DISPOSALS
1. Hierarchical Order of the Agreements
2. Amendment
3. Restrictions on Transfers
4. Arbitration and Applicable Laws
5. Confidentiality
6. Force Majeure
7. Notices
8. No Waiver
9. Severability and Headings
10. Sovereign Immunity
11. Further Engagements
12. General Clauses
13. Entering into Force
<PAGE> 55
3
The Present Agreement is concluded between :
SELLER :
J . V. "GROUPEMENT POUR LE TRAITEMENT DU TERRIL DE LUBUMBASHI",
having its registered office in Jersey on the one hand; and
BUYER :
OMG KOKKOLA CHEMICALS OY, having its registered office at P.O. Box 286,
FIN-67101 KOKKOLA, Finland (hereinafter referred to as the BUYER or KCO) on the
other hand.
Whereas the SELLER intends to invest in a Plant to be located in Lubumbashi, the
Democratic Republic of Congo, for the exclusive purpose of processing Slag
presently available in the Site in the Democratic Republic of Congo to be
processed into Cobalt Alloy which will be sold to the BUYER, and
Whereas the Parties wish to enter into this Agreement whereby the SELLER
undertakes to sell Cobalt Alloy, and the BUYER undertakes to buy Cobalt Alloy
according to the terms and conditions herein set forth.
THEREFORE THE PARTIES HAVE AGREED AS FOLLOWS :
<PAGE> 56
4
I. DEFINITIONS
The terms defined hereinafter shall for all purposes of this Agreement and
related Contracts have the meanings hereinafter specified, unless otherwise
specified :
AGREEMENT means this document signed by the Parties and its appendices forming
an integral part of the present Agreement as well as its possible amendments.
BUYER means OMG KOKKOLA CHEMICALS Oy (KCO), a subsidiary of the OMG Group,
buying Cobalt Alloy in the Long Term Cobalt Alloy Sales Agreement.
PURCHASER means the J.V. purchasing Slag in the Long Term Slag
Sales Agreement.
COBALT BEARING ALLOY or TREATED MATERIAL means the main end product of the
Processing Company (sometimes also called "Cobalt Alloy") containing cobalt and
copper.
YEAR means calendar year beginning on 1st of January and ending on 31st of
December.
UMPIRE means a person appointed by mutual agreement of the J.V. and the Buyer or
GECAMINES in accordance with the Long Term Slag Sales Agreement or Long Term
Cobalt Alloy Sales Agreement.
CIF means "cost, insurance and freight" as defined in INCOTERMS, 1990 edition.
TOLLING AGREEMENT means the Agreement concluded between the J.V. and the
Processing Company for the purpose of processing Slag into Cobalt bearing Alloy.
LONG TERM COBALT ALLOY SALES AGREEMENT means the Agreement whereby the J.V.
undertakes to sell Cobalt Alloy to the Buyer and the latter undertakes to buy
Cobalt Alloy from the J.V.
LONG TERM SLAG SALES AGREEMENT means the Agreement whereby GECAMINES undertakes
to sell Slag to the J.V. and the latter undertakes to buy Slag from GECAMINES.
DATE OF DELIVERY means the date on which the J.V. takes and becomes the owner
of the Site Slag according to the terms of the ex-site delivery clause.
<PAGE> 57
5
DDU means "delivery duty unpaid" as defined in INCOTERMS, 1990 edition
EXW means "ex works delivery" clause as defined in INCOTERMs, 1990 edition.
SUPPLIER means the GENERALE DES CARRIERES ET DES MINES supplying Slag in the
Long Term Slag Sales Agreement.
J.V. means a private limited liability company having its registered office
in JERSEY.
BUSINESS DAY means a day which is not a Saturday, a Sunday or a public holiday
in Finland, The Netherlands or the Democratic Republic of Congo.
KCO means OMG KOKKOLA CHEMICALS Oy, a subsidiary of the OMG Group located in
KOKKOLA, REPUBLIC OF FINLAND and established under the laws of the REPUBLIC OF
FINLAND.
LMB means the LONDON METAL BULLETIN.
LME means the LONDON METAL EXCHANGE.
SUPPLY LOT means a part of each delivered supply of Cobalt Alloy containing
approximately 100 tons of Cobalt Alloy as divided by the BUYER in KOKKOLA for
weighing, sampling, analysis and moisture content determination.
EXPEDITION LOT means the tonnage of one container of Cobalt Alloy dispatch from
the Processing Plant.
USED LOTS means the Lot or Lots of Cobalt Alloy taken into usage by the BUYER
for a period of one month.
MONTH means calendar month.
PARTIES means the Parties to this Agreement.
QUOTATIONAL PERIOD means the Period defined in Article 5 of the Long Term Slag
Sales Agreement or in Article 6.2 in the Long Term Cobalt Alloy Sales Agreement.
<PAGE> 58
6
WEIGHTS AND MEASURES
1 (metric) ton = 2,204.6 pounds avoirdupois
1 dmt or ts = 1 dry metric ton
1 wmt or th = 1 wet metric ton
TAKEN INTO USAGE means the taking of the Cobalt Alloy either directly from the
ordinary commercial raw material Stock or alternatively from the Buffer Stock as
a complement of the KOKKOLA Processing Plant.
PROJECT means the conception and building of a Processing Plant in LUBUMBASHI
for the purpose of exploiting the Slag Site of LUBUMBASHI as well as the proper
operation of the Processing Plant, the trading operations including related
operations and the distribution of the profits.
PROCESSED SLAG means the Slag resulting from the operations in the Processing
Plant
SLAG means cobalt bearing slag located in the Site in THE DEMOCRATIC REPUBLIC OF
CONGO and to be used as feeding stock in the Processing plant.
SITE or SLAG SITE means the area in the Democratic Republic of Congo where the
Slag is located and available to be delivered to the J.V. pursuant to this
Agreement (called Terril de LUBUMBASHI, originating from the residues of the
WATER JACKET ovens of GECAMINES and namely including the zones I, J, Kl, K2 and
TAS G-L having an average cobalt content of 1,85% as described in further detail
in appendix 1 of the Frame Agreement attached as Appendix 1 to this Agreement).
PROCESSED SLAG SITE means the area in the Democratic Republic of Congo where the
processed slag will be stocked.
PROCESSING COMPANY means the Company to be set up by the J.V. in the Democratic
Republic of Congo in the form of a SPRL for the purposes of operating the
Processing Plant.
COMMERCIAL STOCK means the ordinary stock of Cobalt Alloy enabling the regular
supply of OMG-KCO plant taking into account the periodicity of maritime
arrivals.
BUFFER STOCK means the Cobalt Alloy Stock to be established at OMG in KOKKOLA,
FINLAND in accordance with article 10 of the J.V. Agreement and to be kept
separate from the Ordinary Commercial Cobalt Alloy Stock of OMG KOKKOLA
Chemicals Oy.
<PAGE> 59
7
USD means the lawful currency of the UNITED STATES OF AMERICA.
PROCESSING PLANT means the Plant to be located in LUBUMBASHI in the DEMOCRATIC
REPUBLIC OF CONGO. The Plant shall be operated by the Processing Company for the
purpose of processing Slag into Cobalt bearing Alloy.
SELLER means the J.V. selling Cobalt Alloy in the Long Term Cobalt Alloy
Sales Agreement.
<PAGE> 60
8
II. SPECIAL PROVISIONS
------------------
1. SCOPE AND QUANTITY
- ---------------------
The SELLER undertakes to sell and deliver to the BUYER and the BUYER undertakes
to buy from the SELLER a minimum annual of 4,000 tons of cobalt and a maximum
annual 5,000 tons of Cobalt contained for the exclusive usage of the Buyer.
The annual quantity of 5,000 tons of Cobalt mentioned above does not include the
quantity contained in the Buffer Stock and could possibly be reviewed after
negotiation between the Parties, depending among others on the Slag
availability, the processing capacity in the Democratic Republic of Congo and/or
in Finland as well as on the Cobalt market situation.
The annual quantity to be delivered shall be agreed by the Parties in the annual
plans to be concluded and agreed three months prior to the beginning of each
year.
In case the SELLER produces through the Processing Company more than 4,000 tons
per year, after the building up of the Buffer Stock, the quantity exceeding
4,000 tons shall be offered in priority to the BUYER at market conditions, and
the latter shall have the right of first refusal.
The J.V. can only sell to other users that tonnage of Cobalt which exceeds 4,000
tons.
2. SPECIFICATIONS OF THE COBALT ALLOY
- --------------------------------------
The Cobalt Alloy to be delivered to KOKKOLA, Finland shall have the following
specifications on a dry basis:
**
** Confidential treatment has been requested with respect to certain information
contained within this document. Confidential portions are omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities and Exchange Act of 1934.
<PAGE> 61
9
3. DURATION
- -----------
This Agreement is concluded for a period of 20 years.
This Agreement shall automatically be prolonged in so far that at the end of the
year 2016 there is still Slag with an average Cobalt content of 1,85% and
capable of being provided on economic viable terms and provided that the Long
Term Slag Sales Agreement shall be prolonged for an equivalent period of time.
This Agreement shall automatically be terminated:
(i) in case there shall no more be Slag available corresponding to the
minimal required quantities and qualities,
(ii) in case of liquidation of the J.V. with no successor,
(iii) in case the BUYER disappears with no successor. Should any of the above
mentioned event take place, no damages or interests shall be paid
whatsoever.
4. BUFFER STOCK
- ---------------
4.1. ESTABLISHMENT AND QUANTITY
To guarantee to the SELLER and BUYER an uninterrupted and sufficient feedstock
of Cobalt Alloy to the KOKKOIA Plants, GECAMINES allows the SELLER and the BUYER
to build up a Buffer Stock of Cobalt Alloy in KOKKOLA, in addition to the
commercial stock to alleviate the problem caused by possible disturbances in the
deliveries.
For that reason GECAMINES undertakes to sell to the J.V. and
the J.V. undertakes to buy from GECAMINES the quantity of Slag
necessary for building up the Buffer Stock. The Cobalt
contained in the Buffer Stock shall be 2,500 tons.
The monthly amount of cobalt contained in the Cobalt Alloy exceeding the agreed
monthly tonnage taken into usage by KCO shall be used for building up the Buffer
Stock until the 2,500 tons of Cobalt Contained in the Cobalt Alloy have been
reached.
<PAGE> 62
10
In the event that the cobalt content in the Buffer Stock decreases during the
validity period of this Agreement, because of interruption or slowing down of
the deliveries the excess quantity above the agreed monthly supply shall be used
for rebuilding the Buffer Stock until the cobalt content of 2,500 tons has been
reached again.
Nevertheless, the Parties agree that the total amount of cobalt contained in the
Buffer Stock, i.e. 2.500 tons, may be reduced by 400 tons per year from the year
2006 so that the quantity of cobalt contents will be reduced to 2.100 tons at
the end of the year 2006, and so on, provided, however, that 0MG and GGF have
been entirely reimbursed and repaid by the J.v. in form of dividends or other
distributions the total value of their investments in the Projects including all
the interests accrued and financial charges. In case not, the reduction of the
Buffer Stock shall be postponed accordingly.
If during the reduction period hereinabove referred there will be disturbances
in the deliveries and as a result the Buffer Stock level falls short of the
above formula, then the annual reductions shall be postponed until the minimum
level of the Buffer Stock has first been met.
End 2006 : 2.100 tons of cobalt
End 2007 : 1.700 tons of cobalt
End 2008 : 1.300 tons of cobalt
End 2009 : 900 tons of cobalt
End 2010 : 500 tons of cobalt
End 2011 : 100 tons of cobalt
End 2012 : Liquidation of the Buffer Stock.
With regard to any situation other than what is regulated hereinabove, the
Parties will meet to find a joint understanding.
4.2. MANAGEMENT OF THE COBALT ALLOY BUFFER STOCK
KCO shall be responsible towards the J.V. for the management of the Buffer
Stock, the risks, and shall bear all costs linked to it. KCO shall permit
GECAMINES and the SELLER to check all records containing the necessary
information as to the status and consumption of the Buffer Stock.
The transfer of title related to the Cobalt Alloy of the Buffer Stock shall pass
from the J.V.. to KCO as taken into usage.
<PAGE> 63
11
4.3. PAYMENT FOR THE SLAG TAKEN OUT FOR BUILDING UP OF THE
BUFFER STOCK
KCO shall pay for the Cobalt Alloy delivered to build up the Buffer Stock as
follows :
(i) KCO shall pay the J.V. for the tolling and transportation costs from the
Democratic Republic of Congo to KOKKOIA at the end of the month following the
delivery at KOKKOLA. These costs shall be agreed upon in the annual budget.
(ii) The balance of the Cobalt and Copper price contained in the Alloy shall be
payable as and when taken into usage from the Buffer Stock.
KCO is aware that the J.V. shall have the right to use the
Buffer Stock as a security for a loan provided that the J.V.
is able to borrow money to pay GECAMINES for the Slag (as
further described in art. 4.3 and 6.3 of the Long Term Slag
Sales Agreement).
The quantity of Cobalt and Copper contained in the Alloy and taken out from the
Buffer Stock shall be priced in the same way as normal lots of Cobalt Alloy
taken into usage by KCO.
5. DELIVERY AND TITLES
- ----------------------
The SELLER shall deliver the Cobalt Alloy, except the Buffer Stock, DDU KOKKOLA
Finland, packed in drums, in bags or otherwise, as agreed in due course between
the SELLER and the BUYER.
GECAMINES, the SELLER and the BUYER shall agree before the end of each calendar
year on the quantity of Cobalt Alloy to be delivered to KCO for the following
year. The delivery shall be made monthly in approximately even supplies.
The transfer of titles and risks shall pass from the SELLER to the BUYER DDU
KOKKOLA.
<PAGE> 64
12
6. PRICING
6.1. PRICE DETERMINATION
The BUYER shall pay to the SELLER only for the Cobalt and Cop- per contents of
each direct shipment or taken out from the Buffer Stock. The price of Cobalt and
Copper shall be determined separately for each Used Lot of Cobalt Alloy as
follows:
(a) Cobalt Price Formula
The reference price of Cobalt to be applicable in the Agreement shall be
** the combination of ** of the 99.3 (low) Cobalt base price and ** of
the Cobalt 99,8 (low) base price both as published by LMB during the
Quotational Period.
The Parties shall agree to meet to determine a new base price in case the
99,3 or 99,8 references disappear or are no more representative.
The price for the Cobalt contained shall be ** of the base price
established as a combination of ** of 99,3 (low) and ** of 99,8 (low).
If the cobalt contents in the Cobalt Alloy exceed ** for a period of at
least ** consecutive months, the Parties will meet to raise the **
ceiling referred to in the above paragraph.
In the event that the Cobalt is taken into usage from the Buffer Stock, the
processing and transport costs already paid by the BUYER earlier shall be
deducted from the above mentioned cobalt price formula.
b) Copper Price Formula
The Copper base price shall be the ** over the Quotational Period.
The price paid for the Copper contained shall be ** of the base price.
** Confidential treatment has been requested with respect to certain
information contained within this document. Confidential portions are
omitted and filed separately with the Securities and Exchange Commission
pursuant to Rule 24b-2 of the Securities and Exchange Act of 1934.
<PAGE> 65
13
6.2. QUOTATIONAL PERIOD
In case of direct delivery, the Cobalt and Copper Quotational Period is the
month following the month of the delivery of Cobalt Alloy to KOKKOLA, FINLAND.
In case of taken into Usage from the Suffer Stock, the Cobalt and Copper
Quotational Period is the month following the month of the Taken into Usage.
6.3. PAYMENT
The payment by the BUYER to the SELLER for each delivery, except for the
deliveries to the Buffer Stock, shall be made as follows:
The payments by the BUYER shall be made within twenty calendar days from the
end of each Quotational Period.
The price payable for all Lots delivered to KCO during any one month shall
be calculated based on the relevant average cobalt and copper contents of
each shipment and on the weight as determined by KCO.
The BUYER shall notify the SELLER no later than ten days after the end of
the Quotational Period applicable to the supplied Lots the following:
(i) weight of supplied Lots during the preceding month
(ii) the average Cobalt and Copper contents of the supplied Lots and
(iii) the price payable for the supplied Lots taking into account the
applicable reference price set out in Article 5 above.
In case the averages of the final analysis of Cobalt and Copper contents are
not available at the time of payment, the BUYER shall make a preliminary
payment based on weights and analysis preliminary determined.
When the final analysis is available, such payment shall be adjusted to
reflect the final weights and analysis by crediting or debiting the
difference in the next payment to be made by the BUYER to the SELLER.
<PAGE> 66
14
6.4. TAXES AND DUTIES
Any and all taxes, customs duties, Government charges or other duties paid or
levied on the Cobalt Alloy in Finland shall be paid by the BUYER. All taxes,
customs duties, Government char- ties or other duties on Cobalt Alloy outside of
Finland shall be paid by the SELLER.
7. WEIGHING, SAMPLING AND ANALYSIS
- ----------------------------------
The BUYER, the SELLER and GECAMINES shall confer and before the first dispatch
shall adopt and record mutually agreed methods of weighing, sampling and
analyzing. Such methods shall be accurate and reliable. They shall be
appropriate and, based on internationally recognized and industrial standards,
provide efficient economic and practical ways of determining accurate weights,
obtaining representative samples, and producing accurate analyses of Cobalt
Alloy.
8. INVOICING CURRENCIES AND PAYMENT PROCEDURES
- -----------------------------------------------
8.1. USD
All bills and payments shall be in USD.
8.2. METHOD OF PAYMENT
Payments by the BUYER to the SELLER shall be made by bank transfer to the
SELLER's account.
<PAGE> 67
15
9. HARDSHIP
- -----------
If at any moment unanticipated events by the Parties fundamentally alter the
balance of this Agreement, resulting in an excessive burden to one of the
parties in fulfilling its contractual obligations vis-a-vis the other Party,
this aggrieved Party may proceed as follows:
- The aggrieved Party may request a review of this Agreement within three
months after it has got the knowledge of the said change in
circumstances and its effects on the economy of this Agreement.
- The request shall mention the reasons causing such review.
- The Parties shall confer within thirty calendar days of receipt of the
notice in view to revise this Agreement on an equitable basis to avoid
the excessive burdens for any of the Parties.
The request to review does not have any suspension effects as to the
execution of this Agreement.
10. LIABILITIES
- ----------------
In the event of a breach to this Agreement, each Party shall be liable for all
direct damage as well as costs, charges and expenses resulting from that breach.
These damages shall be compensated in full.
However, any loss or damage which is an indirect or consequential result of the
nonfulfillment of obligations under or in connection of this Agreement is
excluded unless resulting from a willful or intentional act from the defaulting
Party.
All direct damages and claims can only be set off or deducted from the agreed
price as and when the disagreement thereof between the Parties has been finally
settled or solved otherwise.
<PAGE> 68
16
III. GENERAL DISPOSALS
-----------------
1. HIERARCHICAL ORDER OF THE AGREEMENTS
------------------------------------
This Agreement is part of the Agreements concluded between the Parties.
The aim of these Agreements is to set up the terms and conditions of the
purchase of the Slag located at the Site , the setting up of the J.V. and of the
Processing Company and selling the Cobalt-bearing Alloy to KCO for further
processing.
These Agreements are:
(i) JOINT VENTURE AGREEMENT
(ii) LONG TERM SLAG SALES AGREEMENT
(iii) LONG TERM COBALT ALLOY SALES AGREEMENT
(iv) TOLLING AGREEMENT
Although each Agreement mentioned above can be interpreted independently and
according to its own terms, it is to be noted that it is part of a larger
contractual arrangement and that it has to be interpreted in light of the other
Agreement.
In the event of a conflict between the listed Agreements, they shall be
interpreted in the above order so that a prior Agreement shall always supersede
a later one.
2. AMENDMENTS
----------
Any amendments or additions to this Agreement shall be valid only if made in
writing and signed by duly authorized representatives of the Parties hereto.
<PAGE> 69
17
Should an amendment or modification to this Agreement have an effect on the
other Agreements, the Parties undertake to change or modify these other
Agreements in order to avoid any conflicts between this Agreements and the other
Agreements.
3. RESTRICTIONS ON TRANSFERS
- ----------------------------
3.1. A Party shall not have the right to sell, assign, transfer, mortgage,
pledge, charge or otherwise deal with the rights and obligations it holds
in this Agreement.
3.2. The provisions of Article 3.1. shall not be applicable in the case of a
transfer, sale or assignment of participation by a Party to an affiliate
company provided that the transfer, sale or assignment is total and is
imposed by legitimate reorganization needs of the Party concerned.
For the purposes of this Agreement, an Affiliate Company shall mean any
company or entity which is a subsidiary or a parent of the transferor Party
or which directly or indirectly controls or is controlled by the transferor
Party.
3.3. Any transfer beyond the terms and conditions of Article 3.1. or 3.2. shall
not be possible without the prior written consent of all the Parties.
3.4. Any transfer described or permitted in accordance with Articles 3.2 and 3.3
shall be subject to the transferee giving its written undertaking to be
bound by all the terms, conditions and undertakings of this Agreement and
relating Agreements.
4. ARBITRATION AND APPLICABLE LAWS
- ----------------------------------
In the event the Parties are unable to settle a dispute in connection with
this Agreement out of court, they agree the dispute shall be submitted to
the French section of the tribunals of Brussels which shall give a verdict
pursuant to the Belgian laws.
<PAGE> 70
18
5. CONFIDENTIALITY
- ------------------
5.1. Unless otherwise provided in this Article, all reports, records, data or
any other information of any kind whatsoever developed or acquired by any
Party in connection with the activities of the J.V. and/or the Processing
Company in the DEMOCRATIC REPUBLIC OF CONGO controlled by the J.V., shall
be treated as confidential and no Party shall reveal or otherwise disclose
such confidential information to third parties without the prior consent of
the other Parties.
The above restrictions shall not apply to the disclosure of confidential
information to any affiliate companies or any private or public financing
institutions, any contractors or subcontractors, employees or consultants
of the Parties or of the J.V. or the Processing Company or to any third
party to which a Party envisage the transfer, the sale, assignment,
encumbrance or other disposition of all of its participation in the J.V. in
accordance with the terms of the Article 3 above.
However, this shall only be applicable provided the confidential
information shall only be disclosed to third parties having a legitimate
need for this information and the persons or company to whom such
disclosure is made shall first undertake in writing to protect the
confidential nature of such information, to the same extent as the Parties
are obligated under this Article.
In addition, the above restrictions shall not apply to any Government or
governmental Department or Agency which has the right to require the
disclosure of such confidential information.
These restrictions shall also not apply to such confidential information
which comes into the Public Domain, except the fault from any Party.
This confidentiality obligation shall survive for a period of 5 years
commencing at the termination/dissolution of this Agreement.
The above mentioned restrictions are not valid for information retained by
GECAMINES related to the Site.
<PAGE> 71
19
6. FORCE MAJEURE
- ----------------------
6.1. The obligations of any Party shall be suspended to the extent that the
performance of its obligations is prevented or delayed, in whole or in part
by:
- accidental act, bad weather, floods, slides, mine disasters or major
accidents, cave-ins, strikes, lock-out, labor disputes, labor shortage,
demonstrations riots, sabotage, laws, rules or regulations of agency or
governmental bodies.
The obligations shall also be suspended in the event of governmental
actions or inactions, restraints of governmental or other competent
authorities, inability to obtain or unavoidable delay in obtaining
necessary materials, facilities and equipment in the open market,
suspension or refusal of access to the deposit Slag Site, interruption or
unavoidable delay in communication or transportation, or any other cause,
whether similar or not to those specifically listed, which shall be beyond
the reasonable control of the Party.
6.2. In the event of such occurrences, the affected Party shall give written
notice to the other Party as soon as possible after the occurrence of the
event causing the delay or prevention, setting out full particulars and
estimating the duration of the delay or prevention.
The Party affected shall use all possible diligence to remedy the situation
causing the delay as quickly as possible.
The requirement that any such delay shall be remedied with all possible
diligence shall not require a Party to settle strikes, lock out or other
labor conflicts contrary to its wishes and this type of difficulty shall be
handled within the discretion of the Party concerned.
In the event the situation of force majeure would remain enforce for more
than 6 months, the Parties shall meet to analyze the situation en envisage
the termination of this Agreement.
<PAGE> 72
20
7. NOTICES
- ----------------
7.1. All notices required under this Agreement shall be in writing and directed
to the respective Parties at the following addresses:
-If to J.V.
-If to KCO
OMG EUROPE GMBH
Mr Kari MUURAISKANGAS
Morsenbraicherweg 200
D - 40470 DUSSELDORF
GERMANY
Tel: 00.49.211.96.18.80
Fax: 00.49.211.61.46.29
Any notice shall be deemed to have been given to any Party if personally
delivered to a designated officer of the Party to whom the notice is addressed,
or if sent by registered mail, postage prepaid, with return receipt, and
properly addressed as set forth herein, or if sent by fax or telex to an
authorized representative with evidence of transmission receipt.
The notice shall be effective as of the moment of personal delivery, or in the
case of mailing, as of the date shown on the return receipt, or in the case of
fax or telex, as of the date faxed or telexed.
A Party may, at any time, change the address to which notices or communications
shall be given by written notice to the other Party.
<PAGE> 73
21
8. NO WAIVER
- -----------------
The failure of a Party at any time to require the performance of any provision
of this Agreement shall not affect its right to execute that provision and a
waiver by such Party upon a breach thereof shall not be interpreted as a waiver
by such Party of any later non execution of such provision or as a waiver by
such Party of any other provision of this Agreement.
9. SEVERABILITY AND HEADINGS
- -----------------------------
9.1. If any provision of this Agreement or its related Appendices should be null
and void, such a nullity shall not invalidate all the other provisions in
this Agreement or related Appendices. The Parties of this Agreement shall
endeavor to negotiate so as to replace any null and void provision as well
as any other affected provision.
9.2. The headings in this Agreement are considered for convenience only and
shall not have any effect or limit in interpreting the provisions of this
Agreement.
10. SOVEREIGN IMMUNITY
- --------------------------
To the extent that a Party may be entitled to claim in any jurisdiction in which
legal proceedings may at any time be commenced with respect to this Agreement,
for itself or its activities, properties or assets any immunity either:
-from jurisdiction of any court or arbitration
-from attachment prior to judgment, from execution of a judgment or set-off
<PAGE> 74
22
- from any other legal process, and to the extent where such immunity could
be granted by that jurisdiction, the Parties hereby irrevocably agree not
to claim and hereby waive such immunity in respect of suit, jurisdiction of
any court, attachment prior to judgment, set-off, execution of a judgment
and from other legal process, as well as any immunity whatsoever.
11. FURTHER ENGAGEMENTS
- -----------------------
11.1. The Parties respectively agree to execute and deliver such further
instruments, papers and documents and to take the necessary measures that
may reasonably be necessary or as may reasonably be requested for the
purpose of carrying out the provisions of this Agreement.
11.2. This Agreement shall be binding upon to the benefit of the Parties hereto
and their respective duly authorized representatives, providing they have
agreed to be bound.
12. GENERAL CLAUSES
- ------------------------
12.1. A Party shall be entitled to terminate this Agreement in the event of a
material breach of any provision by the other Party.
However, the termination can only occur in the event it has not been
remedied within thirty days from the date of a written notice to the
defaulting Party.
A material breach shall be considered one which endangers the successful
completion of operations and the general equilibrium of this Agreement.
12.2. The responsibilities and liabilities of the Parties. according to this
Agreement shall survive after the expiry or termination.
<PAGE> 75
23
The expiry or termination of the Agreement or liabilities arising under
this Agreement shall not affect the Parties' obligations expressly stated
in this Agreement to survive, or expressly contemplated in the event of
such expiry or termination.
13. ENTERING INTO FORCE
- --------------------------
This Agreement shall become effective when it has been signed by the duly
authorized representatives of the Parties and provided that the Joint Venture
Agreement has become effective.
In witness whereof the Parties have signed this Agreement drafted in French and
translated into English (French version being binding) in two original copies,
one for each party, by their duly authorized representatives.
Place, date
For J.V.
For OMG-KCO.
<PAGE> 76
TOLLING AGREEMENT
between
GROUPEMENT POUR LE TRAITEMENT DU TERRIL DE LUBUMBASHI
and
SOCIETE DE TRAITEMENT DU TERRIL DE LUBUMBASHI
<PAGE> 77
2
THE PRESENT AGREEMENT IS ESTABLISHED IN ITS ENTIRETY BY ALL
THE ELEMENTS HEREINAFTER SPECIFIED AND AS REFERRED TO IN THE
RESPECTIVE ARTICLES
I. DEFINITIONS
II. SPECIAL PROVISIONS
1. Appointment
2. Conditions Precedent
3. Period of Agreement
4. Processing and Quality Control
5. Basis of Operations
6. Liability
7. Price and Payment
8. Legal Requirements
9. Representations, Warranties and Covenants
10. Breach
III. GENERAL PROVISIONS
1. Hierarchical Order of the Agreements
2. Amendment
3. Restrictions on Transfers
4. Arbitration and Applicable Laws
5. confidentiality
6. Force Majeure
7. Notices
8. No Waiver
9. Severability and Headings
10. Sovereign Immunity
11. Further Engagements
12. General Clauses
13. Entering into Force
<PAGE> 78
3
This Agreement is concluded between
GROUPEMENT POUR LE TRAITEMENT DU TERRIL DE LUBUMBASHI (hereinafter referred to
as GTL) organized and existing under the laws of JERSEY, having its registered
office in Jersey;
and SOCIETE DE TRAITEMENT DU TERRIL DE LUBUMBASHI (hereinafter referred to as
STL S.P.R.L.) _a Private Company with Limited Responsibility organized and
existing under the laws of the Democratic Republic of Congo, having its
registered office at Lubumbashi.
WITNESSETH THAT
Whereas OM GROUP Inc., GROUPE GEORGE FORREST S.A. and La GENERALE DES CARRIERES
ET DES MINES have established the J.V. which again established STL for the
purpose of building and operating plant mentioned hereinafter;
Whereas STL shall operate a Processing Plant in the Democratic Republic of Congo
for the purpose of processing Slag into Cobalt Alloy;
Whereas GECAMINES has concluded a Long Term Slag Sales
Agreement with the J.V.;
Whereas the J.V. has concluded a Long Term Cobalt Alloy Sales Agreement with 0MG
KOKKOLA CHEMICALS OY , whereby the J.V. shall sell agreed quantities of Cobalt
Alloy on a long term basis to 0MG KOKKOLA CHEMICALS OY;
Whereas GTL wishes to enter into a Tolling Agreement with STL and appoint STL to
process the Slag on its behalf in the Democratic Republic of Congo and STL has
agreed to accept such appointment;
Now therefore in consideration of the premises and of the
covenants and agreements contained in this Agreement, the
Parties hereby agree as follows:
<PAGE> 79
4
I. DEFINITIONS
The terms defined hereinafter shall for all purposes of this Agreement and
related Contracts have the meanings hereinafter specified, unless otherwise
specified:
AGREEMENT means this document signed by the Parties and its appendices forming
an integral part of the present Agreement as well as its possible amendments.
BUYER means OMG KOKKOLA CHEMICALS Oy (KCO) , a subsidiary of the 0MG Group,
buying Cobalt Alloy in the Long Term Cobalt Alloy Sales Agreement.
PURCHASER means the J.V. purchasing Slag in the Long Term Slag
Sales Agreement.
COBALT BEARING ALLOY or TREATED MATERIAL means the main end product of the
Processing Company (sometimes also called "Cobalt Alloy") containing cobalt and
copper.
YEAR means calendar year beginning on 1st of January and ending on 31st of
December.
UMPIRE means a person appointed by mutual agreement of the J.V. and the Buyer or
GECAMINES in accordance with the Long Term Slag Sales Agreement or Long Term
Cobalt Alloy Sales Agreement.
CIF means "cost, insurance and freight" as defined in INCOTERMS, 1990 edition.
TOLLING AGREEMENT means the Agreement concluded between the J.V. and the
Processing Company for the purpose of processing Slag into Cobalt bearing Alloy.
LONG TERM COBALT ALLOY SALES AGREEMENT means the Agreement whereby the J.V.
undertakes to sell Cobalt Alloy to the Buyer and the latter undertakes to buy
Cobalt Alloy from the J.V.
LONG TERM SLAG SALES AGREEMENT means the Agreement whereby GECAMINES undertakes
to sell Slag to the J.V. and the latter undertakes to buy Slag from GECAMINES.
DATE OF DELIVERY means the date on which the J.V. takes and becomes the owner of
the Site Slag according to the terms of the ex-site delivery clause.
DDU means "delivery duty unpaid" as defined in INCOTERMS, 1990
edition
<PAGE> 80
5
EXW means "ex works delivery" clause as defined in INCOTERMS, 1990 edition.
SUPPLIER means the GENERALE DES CARRIERES ET DES MINES supplying Slag in the
Long Term Slag Sales Agreement.
J.V. means a private limited liability company having its registered office in
JERSEY.
BUSINESS DAY means a day which is not a Saturday, a Sunday or a public holiday
in Finland, The Netherlands or the Democratic Republic of Congo.
KCO means 0MG KOKKOLA CHEMICALS Oy, a subsidiary of the OMG Group located in
KOKKOLA, REPUBLIC OF FINLAND and established under the laws of the REPUBLIC OF
FINLAND.
LMB means the LONDON METAL BULLETIN.
LME means the LONDON METAL EXCHANGE.
SUPPLY LOT means a part of each delivered supply of Cobalt Alloy containing
approximately 100 tons of Cobalt Alloy as divided by the BUYER in KOKKOLA for
weighing, sampling, analysis and moisture content determination.
EXPEDITION LOT means the tonnage of one container of Cobalt Alloy dispatch from
the Processing Plant.
USED LOTS means the Lot or Lots of Cobalt Alloy taken into usage by the BUYER
for a period of one month.
MONTH means calendar month.
PARTIES means the Parties to this Agreement.
QUOTATIONAL PERIOD means the Period defined in Article 5 of the Long Term Slag
Sales Agreement or in Article 6.2 in the Long Term Cobalt Alloy Sales Agreement.
WEIGHTS AND MEASURES
1 (metric) ton = 2,204.6 pounds avoirdupois
1 dint or ts = 1 dry metric ton
1 wmt or th = 1 wet metric ton
TAKEN INTO USAGE means the taking of the Cobalt Alloy either directly from the
ordinary commercial raw material Stock or alternatively from the Buffer Stock as
a complement of the KOKKOLA Processing Plant.
<PAGE> 81
6
PROJECT means the conception and building of a Processing Plant in LUBUMBASHI
for the purpose of exploiting the Slag Site of LUBUMBASHI as well as the proper
operation of the Processing Plant, the trading operations including related
operations and the distribution of the profits.
PROCESSED SLAG means the Slag resulting from the operations in the Processing
Plant
SLAG means cobalt bearing slag located in the Site in THE DEMOCRATIC REPUBLIC OF
CONGO and to be used as feeding stock in the Processing plant.
SITE or SLAG SITE means the area in the Democratic Republic of Congo where the
Slag is located and available to be delivered to the J.V. pursuant to this
Agreement (called Terril de LUBUMBASHI, originating from the residues of the
WATER JACKET ovens of GECAMINES and namely including the zones I, J, K1, K2 and
TAS G-L having an average Cobalt content of 1,85% as described in further detail
in appendix 1 of the Frame Agreement attached as Appendix 1 to this Agreement).
PROCESSED SLAG SITE means the area in the Democratic Republic of Congo where the
processed slag will be stocked.
PROCESSING COMPANY means the Company to be set up by the J.v. in the Democratic
Republic of Congo in the form of a SPRL for the purposes of operating the
Processing Plant.
COMMERCIAL STOCK means the ordinary stock of Cobalt Alloy enabling the regular
supply of OMG-KCO plant taking into account the periodicity of maritime
arrivals.
BUFFER STOCK means the Cobalt Alloy Stock to be established at OMG in KOKKOLA,
FINLAND in accordance with article 10 of the J.V. Agreement and to be kept
separate from the Ordinary Commercial Cobalt Alloy Stock of OMG KOKKOLA
Chemicals Qy.
USD means the lawful currency of the UNITED STATES OF AMERICA.
PROCESSING PLANT means the Plant to be located in LUBUMBASHI in the DEMOCRATIC
REPUBLIC OF CONGO. The Plant shall be operated by the Processing Company for the
purpose of processing Slag into Cobalt bearing Alloy.
SELLER means the J.V. selling Cobalt Alloy in the Long Term Cobalt Alloy Sales
Agreement.
<PAGE> 82
7
II. SPECIAL PROVISIONS
1. APPOINTMENT
- --------------
GTL hereby grants to STL the right to process all of the Slag to be purchased by
GTL from time to time from GECAMINES and STL accepts such appointment.
STL undertakes to exclusively process the Slag for GTL and shall not process the
Slag for any third party without the consent of GTL. GTL shall not unreasonably
withhold such an agreement.
STL, in performing its functions and activities under this Agreement, shall be
considered as an independent contractor and not an agent of GTL. STL shall not
be entitled to represent or hold itself out as representing the J.V.
2. CONDITIONS PRECEDENT
- -----------------------
This Agreement is subject to the fulfillment of the following conditions
precedent;
(i) that any governmental approvals which may be required for or prior to
the implementation of this Agreement, are duly obtained;
(ii) that the Long Term Slag Supply Agreement has been duly signed and
concluded between GTL and GECAMINES;
(iii) that the Long Term Cobalt Alloy Sales Agreement has been duly signed
and concluded between GTL and KCO.
3. PERIOD OF AGREEMENT
- ----------------------
This Agreement shall be in force for a period of 20 years and shall take effect
commencing at its conclusion.
<PAGE> 83
8
4. PROCESSING AND QUALITY CONTROL
- ---------------------------------
The Slag to be processed by STL will be available EXW Site according to the
instructions given GTL. The Slag shall meet following specifications:
Co: 1,85%
Cu: 1,39%
Zn: 7,49
The Cobalt Alloy to be produced shall meet following specifications:
**
GTL shall be entitled through their employees, representatives or other
appointees to have access to and to inspect the Plant of STL for the purposes of
checking that the Cobalt Alloy meet the above mentioned specifications.
Should the Cobalt Alloy fail to meet the required specifications with the
result, that the transportation of the Treated Material to KOKKOLA, FINLAND is
not economically feasible, then all costs, direct or indirect, relating to such
failure shall be borne by STL.
5. BASIS OF OPERATION
- ---------------------
Ownership to the Slag and to the Cobalt Alloy shall at all times remain with
GTL.
Zinc and lead in form of Oxides as well as Processed Slag shall be returned free
of charge to GECAMINES who shall become their owner. GECAMINES shall remove them
at its own expense as quickly as possible.
STL shall take care of the transportation of the Slag from the Site to the Plant
as well as the transportation of the Processed Slag from the Plant to the place
designated by GTL.
STL shall bear all risks linked to the Slag when loaded for the transportation
at the Site.
The risk linked to the Cobalt Alloy shall pass from STL to GTL at its delivery
to GTL, packed in bags (or otherwise if so agreed), EXW the Plant.
** Confidential treatment has been requested with respect to certain information
contained within this document. Confidential portions are omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities and Exchange Act of 1934.
<PAGE> 84
9
6. LIABILITY
- ------------
STL shall be responsible for all damage resulting from a failure or omission
occurring during operations for which it is responsible.
STL shall indemnify the J.V. and KCO against all requests for indemnification or
other requests from third parties.
In order to protect the environment and subject to the limitations set out
above, the Parties undertake to build, operate and maintain the Processing Plant
in the Democratic Republic of Congo in an orderly way and corresponding to the
rules for protecting the environment applicable in the European Union.
7. PRICE AND PAYMENT
- --------------------
As consideration for the processing of the Slag into Cobalt Alloy (and all
related services), GTL shall pay to STL a tolling fee based on **.
The payment procedure shall be determined later, **.
GTL and STL shall meet ** to discuss of the adjustment of the agreed
price.
8. LEGAL REQUIREMENTS
- ---------------------
STL shall obtain and maintain in force all permits and consents required in the
Democratic Republic of Congo in connection with the Processing of Slag and its
transportation to the Plant.
Such authorizations shall remain valid as long as the above mentioned services
are performed by STL, which shall at all times operate in conformity with the
authorizations, licenses, permits and national legislation of the Democratic
Republic of Congo.
** Confidential treatment has been requested with respect to certain
information contained within this document. Confidential portions are
omitted and filed separately with the Securities and Exchange Commission
pursuant to Rule 24b-2 of the Securities and Exchange Act of 1934.
<PAGE> 85
10
9. REPRESENTATIONS, WARRANTIES AND COVENANTS
- --------------------------------------------
STL will arrange for and obtain and maintain in force all permits and consents
required or to be obtained in connection with the processing and transportation
of the Slag and/or the exportation of the Cobalt Alloy as contemplated in this
Agreement in the Democratic Republic of Congo.
STL will possess the business, professional and technical expertise to handle,
process and safely and lawfully dispose of the Slag and Cobalt Alloy and process
waste respectively in the Democratic Republic of Congo.
STL will maintain the equipment, the Plant and human resources required to
perform its obligations under this Agreement.
STL is duly licensed and authorized by all relevant authorities in the
Democratic Republic of Congo to handle Slag, Treated Material and process waste.
STL shall, at all times while services hereunder are being performed, continue
to remain so licensed and authorized, and STL shall at all times operate in
conformity with the requirements of all applicable permits, licenses,
authorizations and national legislation of the Democratic Republic of Congo.
10. BREACH
- ----------
Should either Party fail to observe any of the provisions or perform any of the
terms or conditions of this Agreement, or be placed under judicial management or
be wound up, whether compulsorily or voluntarily, and/or fail to remedy such
breach or failure within a period of 90 days of notice to it, then without
prejudice to any other rights which might thereupon be available to it, the
other Party shall have the right to proceed against the defaulting Party for the
recovery of incurred damages.
<PAGE> 86
11
III. GENERAL PROVISIONS
1. HIERARCHICAL ORDER OF THE AGREEMENTS
- ---------------------------------------
This Agreement is part of the Agreements concluded between the Parties and other
parties.
The aim of these Agreements is to set up the terms and conditions of the
purchase of the Slag located at the Site, the setting up of the J.V. and of the
Processing Company and selling the Cobalt-bearing Alloy to KCO for further
processing.
These Agreements are:
(i) JOINT VENTURE AGREEMENT
(ii) LONG TERM SLAG SALES AGREEMENT
(iii) LONG TERM COBALT ALLOY SALES AGREEMENT
(iv) TOLLING AGREEMENT
Although each Agreement mentioned above shall be interpreted independently and
according to its own terms, it is to be noted that it is part of a larger
contractual arrangement and each Agreement shall be interpreted in light of the
other Agreements.
In case of a conflict this Agreement and the listed Agreements shall be
interpreted in the above order so that a prior Agreement shall always supersede
a later one.
2. AMENDMENTS
- -------------
Any amendments or additions to this Agreement shall be valid only if made in
writing and signed by duly authorized representatives of the Parties hereto.
Should an amendment or modification to this Agreement have an effect to the
other Agreements, the Parties undertake to change or modify these other
Agreements in order to avoid any conflicts between this Agreement and the other
Agreements.
<PAGE> 87
12
3. RESTRICTIONS ON TRANSFERS
- ----------------------------
A Party shall not have the right to sell, assign, transfer, mortgage, pledge,
charge or otherwise deal with its rights and obligations as defined in this
Agreement.
4. ARBITRATION AND APPLICABLE LAWS
- ----------------------------------
In the event the Parties are unable to settle a dispute in connection with this
Agreement out of court, they agree upon that the dispute shall be submitted to
the French section of the tribunals of Brussels which shall give a verdict
pursuant to the Belgian laws.
5. CONFIDENTIALITY
- ------------------
5.1. Unless otherwise provided in this Article, all reports, records, data or
any other information of any kind whatsoever developed or acquired by
any Party in connection with the activities of the J.V. and/or the
Processing Company in the Democratic Republic of Congo controlled by the
J.V. shall be treated as confidential and no Party shall reveal or
otherwise disclose such confidential information to third parties without
the prior written consent of the other Parties.
The above restrictions shall not apply to the disclosure of confidential
information to any affiliate companies or any private or public financing
institutions, any contractors or subcontractors, employees or consultants
of the Parties or of the J.V. or the Processing Company or to any third
party to which a Party envisage the transfer, the sale, assignment,
encumbrance or other disposition of all of its participation in the J.V. in
accordance with the terms of Article 3 above.
However, this shall only be applicable provided that the confidential
information shall only be disclosed to third parties having a legitimate
need for this information and the persons or company to whom such
disclosure is made shall first undertake in writing to protect the
confidential nature of such information, to the same extent as the Parties
are obligated under this Article.
In addition, the above restrictions shall not apply to any Government or
Governmental Department or Agency which has the right to require the
disclosure of such confidential information.
<PAGE> 88
13
These restrictions shall also not apply to such confidential information
which comes into the Public Domain, except the fault from any Party.
This confidentiality obligation shall survive for a period of 5 years
commencing at the termination/dissolution of this Agreement.
The above mentioned restrictions are not valid for information retained by
GECAMINES related to the Site.
6. FORCE MAJEURE
- ----------------
6.1. The obligations of any Party shall be suspended to the extent that the
performance of its obligations is prevented or delayed, in whole or in
part by:
accidental act, bad weather, floods, slides, mine disasters or major
accidents, cave-ins, strikes, lockout, labor disputes, labor shortage,
demonstrations, riots, sabotage, laws, rules or regulations of agency
or governmental bodies.
The obligations shall also be suspended in the event of governmental
actions or inactions, restraints of governmental or other competent
authorities, inability to obtain or unavoidable delay in obtaining
necessary materials, facilities and equipment in the open market,
suspension or refusal of access to the deposit slag site, interruption or
unavoidable delay in communication or transportation, or any other cause,
whether similar or not to those specifically listed, which shall be beyond
the reasonable control of the Party.
6.2. In the event of such occurrences, the Party affected shall give written
notice to the other Parties as soon as possible after the occurrence of
the event causing the delay or prevention, setting out full particulars
and estimating the duration of the delay or prevention.
The Party affected shall use all possible diligence to remedy the situation
causing the delay as quickly as possible.
The requirement that any such delay shall be remedied with all possible
diligence shall not require a Party to settle strikes, lock out or other
labor conflicts contrary to its wishes and this type of difficulty shall be
handled within the discretion of the Party concerned.
In the event the situation of force majeure would remain enforce for more
than 6 months, the Parties shall meet to analyze the situation en envisage
the termination of this Agreement.
<PAGE> 89
14
7. NOTICES
- ----------
All notices required under this Agreement shall be in writing and directed
to the respective Parties at the following addresses:
- If to GTL
- If to STL
Any notice shall be deemed to have been given to any Party if personally
delivered to a designated officer of the Party to whom the notice is
addressed, or if sent by registered mail, postage prepaid, with return
receipt, and properly addressed as Bet forth herein, or if sent by fax or
telex to the above mentioned address with evidence of transmission
receipt.
The notice shall be effective as of the moment of personal delivery, or in
the case of mailing, as of the date shown on the return receipt, or in the
case of fax or telex, as of the date faxed or telexed.
Any Party may, at any time, change the address to which notices or
communications shall be given by written notice to the other Parties.
8. NO WAIVER
- ------------
The failure of a Party at any time to require the performance of any provision
of this Agreement shall not affect its right to execute that provision and a
waiver by such Party upon a breach thereof shall not be interpreted as a waiver
by such Party of any later non execution of such provision or as a waiver by
such Party of any other provision of this Agreement.
<PAGE> 90
15
9. SEVERABILITY AND HEADINGS
- ----------------------------
9.1. If any provision of this Agreement or its related Appendices
should be null and void, such a nullity shall not invalidate all the other
provisions in this Agreement or related Appendices. The Parties of
this Agreement shall endeavor to negotiate so as to replace any null
and void provision as well as any other affected provision.
9.2. The headings in this Agreement are considered for convenience only and
shall not have any effect or limit in interpreting the provisions of this
Agreement.
10. SOVEREIGN IMMUNITY
- ----------------------
To the extent that a Party may be entitled to claim in any jurisdiction in
which legal proceedings may at any time be commenced with respect to this
Agreement, for itself or its activities, properties or assets any immunity
either:
- from jurisdiction of any court or arbitration from attachment prior
to judgment, from execution of a judgment or set-off,
- from any other legal process, and to the extent where such immunity
could be granted by that jurisdiction, the Parties hereby irrevocably
agree not to claim and hereby waive such immunity in respect of suit,
jurisdiction of any court, attachment prior to judgment,
set-off, execution of a judgment and from other legal process, as
well as any immunity whatsoever.
11. FURTHER ENGAGEMENTS
- -------------------------
11.1. The Parties respectively agree to execute and deliver such further
instruments, papers and documents and to take the necessary measures that
may reasonably be necessary or as may reasonably be requested for the
purpose of carrying out the provisions of this Agreement.
11.2. This Agreement shall be binding upon to the benefit of the Parties hereto
and their respective duly authorized representatives, providing they have
agreed to be bound.
<PAGE> 91
16
12. GENERAL CLAUSES
- -------------------
12.1. Any Party shall be entitled to terminate this Agreement in the event of a
material breach of any provision by any other Party.
However, the termination can only occur in the event it has not been
remedied within thirty days from the date of a written notice to the
defaulting Party or Parties.
A material breach shall be considered one which endangers the successful
completion of operations and the general equilibrium of this Agreement.
12.2. The responsibilities and liabilities of the Parties according to this
Agreement shall survive after the expiry or termination.
The expiry or termination of the Agreement or liabilities arising under
this Agreement shall not affect the Parties obligations expressly stated
in this Agreement to survive, or expressly contemplated in the event of
such expiry or termination.
13. ENTERING INTO FORCE
- -----------------------
This Agreement shall become effective when it has been signed by the duly
authorized representatives of the Parties and provided that the Joint Venture
Agreement has become effective.
IN WITNESS WHEREOF the Parties have signed this Agreement written in French,
along with an English translation, the French text being the authentic text, in
2 original copies, one for each party, by their duly authorized representatives.
Signed at ... on the .. day of .... 1997
<PAGE> 1
Exhibit 10.34
COMMERCIAL CONTRACT No. CO/265/97 March 1997
Between:
1 LA GENERALE DES CARRIERES ET DES MINES a corporation duly incorporated
under the laws of Zaire.
And: OMG KOKKOLA CHEMICALS OY, a corporation duly incorporated under the laws of
Finland (hereafter called "Buyer") of the second part.
IT HAS BEEN AGREED AS FOLLOWS:
1 DEFINITION AND INTERPRETATION
1.1 DEFINITIONS
Wherever used in this agreement unless the context otherwise requires:
"Year" means calendar year commencing on 1 January and ending on 31
December that year.
"Concentrate Co-Cu or "Concentrate" "means the material defined in Clause 4
hereafter.
"Agreement" means this Agreement.
"Business Day" means a day which is not a Saturday, Sunday or a public
holiday in Finland or Zaire.
"Delivered lot" means a lot of concentrate containing approximately 500 wmt
from Kipushi or Luiswishi.
"Received lot" means the concentrate received by OMG in Kokkola containing
approximately 500 wmt.
"Payable metals" are cobalt, copper or all other metals which are
economically recoverable and agreed by both parties.
"Month" means calendar month.
"Quotational period" explained in Clause 8.2 hereunder.
<PAGE> 2
2
"Project" defines Luiswishi project.
"Average Cobalt Content" is defined in Clause 4 hereafter.
"Average Copper Content" is defined in Clause 4 hereafter.
"Ton" and "metric ton" means 2204,62 pounds avoirdupois
"WMT" means wet metric ton.
"DMT" means dry metric ton.
"USD" shall mean lawful money of the United States of America
2 SUBJECT
Gecamines will deliver to OMG the monthly quantity of concentrate, defined
in article 6 hereinafter according to the specifications defined in
articles 3 and 4 hereafter, to 0MG Kokkola Chemicals in Finland.
3 MATERIAL TO BE DELIVERED
Cobalt and copper metal content in the concentrate are defined in article 4
hereinafter.
4 SPECIFICATIONS
Gecamines agrees to sell and deliver and OMG agrees to purchase Co-Cu
concentrate having the following characteristics assayed on a dry basis:
**
The parties can agree to modify the characteristics and possible conditions
and add other payable metals.
5 DURATION
This agreement is in force for two years commencing on the date of
starting the production and deliveries (Article 17). OMG has the option to
continue the contract until this material can be replaced by cobalt
smelter alloy.
6 QUANTITY
Gecamines shall deliver to OMG and OMG shall purchase from Gecamines
300-400 t cobalt content in concentrate in accordance with the
specifications in article 4,
7 DELIVERY
The delivery term to OMG in Kokkola, Finland (DDU Incoterms edition 1990).
Freight, charges, transportation and insurance to be charged from OMG. OMG
will choose the transportation agent as well as the way of packing (big
bags or bulk) after consulting Gecamines.
** Confidential treatment has been requested with respect to certain
information contained within this document. Confidential portions are
omitted and filed separately with the Securities and Exchange Commission
pursuant to Rule 24b-2 of the Securities and Exchange Act of 1934.
<PAGE> 3
3
8 PRICE
The price of concentrate is based on metal content and fixed according
the following formulas
8.1 PRICE DETERMINATION
OMG shall pay to Gecamines for the Cobalt and Copper in the
concentrate. The price will be determined separately for each received
Lot DDU Kokkola.
8.1.1 COBALT PRICE (PCO)
Payable cobalt price for received lot is determined according the
following formula:
**
8.1.2 Copper Price (PCu)
Payable copper price for each received lot is determined according the
following formula.
**
8.1.3 PRICE OF OTHER RECOVERABLE METALS
**
8.2 QUOTATIONAL PERIOD
The applicable Quotational Period for cobalt, copper and other metals
is the month of arrival in Kokkola.
** Confidential treatment has been requested with respect to certain
information contained within this document. Confidential portions are
omitted and filed separately with the Securities and Exchange Commission
pursuant to Rule 24b-2 of the Securities and Exchange Act of 1934.
<PAGE> 4
4
8.3 PAYMENT
After reception in Kokkola OMG will make the payment for received lots.
Weighing and sampling is done according to the procedure described in
article 9.2 for the quantities and that described in 8.1 and 8.2 for the
currency in use. In any case the final payment shall be made in 30 days
after QP. The title is passed from Gecamines to OMG at arrival in
Kokkola. An advance net payment will be negotiated before the first
shipments.
8.4 TAXES AND DUTIES
Any and all taxes, and duties in Zaire relating to this Agreement shall
be paid by Gecamines.
Any and all taxes, and duties paid outside Zaire relating to this
Agreement shall be paid by OMG.
8.5 ACCOUNT
OMG will credit "Project Luiswishi" by opening an account at a bank
approved by the parties of this project
9 WEIGHING, SAMPLING AND ASSAYING
9.1 WEIGHING, SAMPLING AND MOISTURE DETERMINATION IN KIPUSHI OR
LUISWISHI
To be used for transportation and insurance invoicing purposes, only:
(a) OMG and Gecamines shall confer and, before the first shipment,
shall adopt and record mutually acceptable methods of weighing, sampling
and analysing.
(b) The Co-Cu concentrate will be weighed, sampled and analysed in
Kipushi or Luiswishi at Gecamines costs. The shipment shall be divided
in lots of approximately 500 tons. Each lot shall form a separate and
complete delivery for all purposes under this Agreement
(c) Sampling and analysing will be made using mutually agreed methods.
Such weight and moisture content will be provisional for all purposes of
this agreement. After weighing, sampling and analysing Gecamines will
pass the results to OMG by telecopy.
9.2. WEIGHING, SAMPLING AND MOISTURE DETERMINATION AT DISCHARGING PORT:
(a) OMG and Gecamines shall mutually agree the methods of weighing,
sampling and analysing before the first shipment. These shall be
appropriate, based on internationally approved methods, defining exact
weights, samples and analyses.
(b) The Co-Cu concentrate will be weighed and sampled at the discharging
port at OMG's cost. Each received lot means a separate and complete
delivery under this agreement.
<PAGE> 5
5
(c) Sampling and analyses are made according mutually agreed
analytical methods.
Weighing and moisture will be determined according this contract. In
case of arbitration demanded by either of the parties the procedure will
be according art. (9.3). A total of five sets of samples shall be drawn
from each lot and distributed as follows:
- one set of samples for the OMG
- one set of samples for Gecamines
- one set of samples for eventual umpire analysis kept by OMG
- one set of samples for eventual umpire analysis kept by Gecamines one
set of samples for reserve kept by OMG
During these operations Gecamines shall have the right to be represented
at its own expense.
After getting results OMG and Gecamines shall exchange the assays. If
the assays are not ready in 30 calendar days, the analysis that is at
disposal will be used for final invoicing. The invoice will be sent by
telecopy to OMG and the original by courier They shall be final and
binding for both parties of this agreement.
For each lot of 500 tonnes WMT Gecamines will calculate the amount of
cobalt, copper and other elements applicable for each lot preparing an
invoice in accordance with the shipment. The invoice shall be sent by
telecopy to OMG and the original by courier.
9.3 UMPIRE ASSAYING
This process is applicable for the samples taken at the port of arrival.
The analyses should be made independently by OMG and Gecamines. The
exchange of assays will be made by telecopy.
If the difference of assays for Co, Cu and Ni of the two parties is not
higher than 0.20 % the arithmetic mean of these two results will be
accepted final.
In the event of greater difference and if either of parties demand, an
umpire assay may be made on the samples reserved by two independent
laboratories, mutually approved.
The reference assayers cannot act as representative agent of OMG or
Gecamines at the weighing, sampling and moisture determination
operations and/or carry out, for any or both parties, the analysis for
the assay exchange.
Should the umpire assay fall between the results of the two parties or
coincide with either, the arithmetical mean of the umpire assay and the
assay of the party which is the nearer one to the umpire shall be taken
as the agreed assay.
<PAGE> 6
6
Should the umpire assay be the exact mean. of the two parties then the
umpire result shall be final. The cost of the umpire assay shall be
borne equally by both parties when the umpire assay is the exact mean of
the exchanged results.
Should the umpire assay fall outside the exchanged results, the assay of
the party which is nearer the umpire shall be taken as agreed assay. The
cost of this assay shall be borne by the other party.
10 FORCE MAJEURE
In the event of any strike, act of God, war, lockout, flood, accident,
lack transport facilities or any other reason beyond the control of the
parties which prevent the parties to fulfill the obligations of the
agreement, the party involved should immediately inform the other party
in writing of such event and of the estimated duration of fulfilling the
obligations. If these circumstances or the Force Majeure situation
should persist more than 3 months the parties shall meet and consider
the cancelling this agreement.
11 FAIR CLAUSE
In case or events not foreseen by the parties, regardless of the
agreement, one of the parties may demand additional charge to be able to
fulfil its obligation in accordance with this agreement, this party has
to request in writing for a possible modification of this agreement. The
demand should, without delay, include the reason for the request,
explain the situation of the party and the economical consequences to
this agreement.
At default of notifying the party will loose the wright to present the
request in accordance with this article.
12 NOTICES
All notices, requests for information, complaints and other
communication which are required or may be given under this Agreement
shall be in writing delivered personally or sent by registered mail or
telecopy at the following addresses or to other such address as a party
may notify the other party in writing:
If for Gecamines
La Generale des Carrieres et des Mines
Monsieur le President Delegue General
B.P. 450
Lubumbashi
Republic of Zaire
Telephone: +32 2 67 68 045
Telceopy: + 32 2 67 68 047
Brussels
Telephone: +32 2 67 68 983
Telecopy: +32 2 67 68 984
<PAGE> 7
7
Or if for
OMG Kokkola Chemicals Oy
Att: The President
P.O. Box 286, FIN-67101 Kokkola
Finland
Telephone: +35868280111
Telecopy: +358 6 8280 373
13 ASSIGNMENT OF THE AGREEMENT
This agreement as well as all rights and obligations for each party
arising thereof cannot be transferred, assigned, or pledged to a third
party without written permission of the other party before notice with
the exception where assigning company controls the majority. This
permission cannot be withheld unreasonably
14 AMENDMENTS
This present Agreement can only be modified by means of clauses duly
signed by both parties.
15 GOVERNING LAW AND JURISDICTION
Any dispute, occurred between the Parties and resulting from
misinterpretation or execution of the present agreement, shall be
preferably settled amicably. If it is not the case, it will be referred
to the Commercial Arbitration court in Paris which will make a ruling
based on French Law.
16 INTERPRETATION
A) The titles of various articles and paragraphs have no effect in the
interpretation of this agreement.
B) If any period specified in this agreement shall expire in non
business day, the expiring date is the following business day.
17 The agreement shall come into effect after the production has
started, which should be November, 1997.
In Lubumbashi 4 April, 1997
This agreement has been executed in two copies, one for each party.
FOR GECAMINES
YAWILI NYI ZONGIA UMBA KYAMITALA
DELEQUE GENERAL ADJOINT PRESIDENT DELEQUE GENERAL
FOR 0MG KOKKOLA CHEMICALS OY
ANTTI AALTONEN
PRESIDENT
<PAGE> 1
Exhibit 21
Subsidiaries
------------
Name of Subsidiary* Jurisdiction of organization
- ------------------ ----------------------------
Auric Corporation (dba OMG Fidelity) Delaware
Fidelity Chemical Products Malaysia SDN.BHD Malaysia
Fidelity Chemical Products (BAH) Limited Bahamas
D&O Incorporated (50%) Japan
J&O Incorporated (50%) Korea
Kokkola Chemicals Oy Finland
OMG Americas, Inc. Ohio
OMG Apex, Inc Delaware
OMG JETT, Inc. Ohio
OMG Europe GmbH Germany
OMG Asia Pacific Co., Ltd. Taiwan
SCM Metal Products Inc. Delaware
SCM Metal Products Singapore PTE Ltd. (70%) Singapore
Vasset, S.A. France
OMG Belleville Limited Canada
OM Group Export Limited Barbados
OMG BV Netherlands
*Percentage in parenthesis indicates the Company's ownership if other than 100%
<PAGE> 1
Exhibit 23 - Consent of Ernst & Young LLP
We consent to the incorporation by reference in the following Registration
Statements of OM Group, Inc. of our report dated February 3, 1998, with respect
to the consolidated financial statements of OM Group, Inc. included in the
Annual Report (Form 10-K) for the year ended December 31, 1997:
<TABLE>
<CAPTION>
Registration Number Description Filing Date
- ------------------- ----------- -----------
<S> <C> <C>
33-74674 OM Group, Inc. Long-Term Incentive Compensation
Plan -- Form S-8 Registration Statement --
1,015,625 Shares January 27, 1994
333-07529 OMG Americas, Inc. Employees' Profit Sharing Plan
-- Form S-8 Registration Statement -- 250,000
Shares July 3, 1996
333-07531 OM Group, Inc. Non-Employee Directors' Equity
Plan -- Form S-8 Registration Statement --
250,000 Shares July 3, 1996
Cleveland, Ohio
March 19, 1998 /s/ Ernst & Young LLP
</TABLE>
<PAGE> 1
Exhibit 24
OM GROUP, INC.
Form 10-K
Power of Attorney for Directors
The undersigned, a director of OM Group, Inc., a Delaware corporation (the
"Company"), which anticipates the filing with the Securities and Exchange
Commission (the "Commission") under the provisions of the Securities Exchange
Act of 1934 (the "Act") a Form 10-K (together with any and all subsequent
amendments, the "Form 10-K"), does hereby constitute and appoint James P.
Mooney, James M. Materna or Michael J. Scott and any one of them with full power
of substitution and resubstitution, as attorney or attorneys to execute and file
on behalf of the undersigned, in his capacity as director of the Company, the
Form 10-K and any and all other documents to be filed with the Commission
pertaining to the Form 10-K, with full power and authority to do and perform any
and all acts and things whatsoever required or necessary to be done in the
premises, as fully as to all intents and purposes as he could do if personally
present, hereby ratifying and approving the acts of said attorneys and any of
them and any such substitution.
Executed this 20th day of March, 1998.
/s/ Eugene Bak
<PAGE> 2
OM GROUP, INC.
Form 10-K
Power of Attorney for Directors
The undersigned, a director of OM Group, Inc., a Delaware corporation (the
"Company"), which anticipates the filing with the Securities and Exchange
Commission (the "Commission") under the provisions of the Securities Exchange
Act of 1934 (the "Act") a Form 10-K (together with any and all subsequent
amendments, the "Form 10-K"), does hereby constitute and appoint James P.
Mooney, James M. Materna or Michael J. Scott and any one of them with full power
of substitution and resubstitution, as attorney or attorneys to execute and file
on behalf of the undersigned, in his capacity as director of the Company, the
Form 10-K and any and all other documents to be filed with the Commission
pertaining to the Form 10-K, with full power and authority to do and perform any
and all acts and things whatsoever required or necessary to be done in the
premises, as fully as to all intents and purposes as he could do if personally
present, hereby ratifying and approving the acts of said attorneys and any of
them and any such substitution.
Executed this 20th day of March, 1998.
/s/ Lee R. Brodeur
<PAGE> 3
OM GROUP, INC.
Form 10-K
Power of Attorney for Directors
The undersigned, a director of OM Group, Inc., a Delaware corporation (the
"Company"), which anticipates the filing with the Securities and Exchange
Commission (the "Commission") under the provisions of the Securities Exchange
Act of 1934 (the "Act") a Form 10-K (together with any and all subsequent
amendments, the "Form 10-K"), does hereby constitute and appoint James P.
Mooney, James M. Materna or Michael J. Scott and any one of them with full power
of substitution and resubstitution, as attorney or attorneys to execute and file
on behalf of the undersigned, in his capacity as director of the Company, the
Form 10-K and any and all other documents to be filed with the Commission
pertaining to the Form 10-K, with full power and authority to do and perform any
and all acts and things whatsoever required or necessary to be done in the
premises, as fully as to all intents and purposes as he could do if personally
present, hereby ratifying and approving the acts of said attorneys and any of
them and any such substitution.
Executed this 20th day of March, 1998.
/s/ Frank Butler
<PAGE> 4
OM GROUP, INC.
Form 10-K
Power of Attorney for Directors
The undersigned, a director of OM Group, Inc., a Delaware corporation (the
"Company"), which anticipates the filing with the Securities and Exchange
Commission (the "Commission") under the provisions of the Securities Exchange
Act of 1934 (the "Act") a Form 10-K (together with any and all subsequent
amendments, the "Form 10-K"), does hereby constitute and appoint James P.
Mooney, James M. Materna or Michael J. Scott and any one of them with full power
of substitution and resubstitution, as attorney or attorneys to execute and file
on behalf of the undersigned, in his capacity as director of the Company, the
Form 10-K and any and all other documents to be filed with the Commission
pertaining to the Form 10-K, with full power and authority to do and perform any
and all acts and things whatsoever required or necessary to be done in the
premises, as fully as to all intents and purposes as he could do if personally
present, hereby ratifying and approving the acts of said attorneys and any of
them and any such substitution.
Executed this 20th day of March, 1998.
/s/ Thomas R. Miklich
<PAGE> 5
OM GROUP, INC.
Form 10-K
Power of Attorney for Directors
The undersigned, a director of OM Group, Inc., a Delaware corporation (the
"Company"), which anticipates the filing with the Securities and Exchange
Commission (the "Commission") under the provisions of the Securities Exchange
Act of 1934 (the "Act") a Form 10-K (together with any and all subsequent
amendments, the "Form 10-K"), does hereby constitute and appoint James P.
Mooney, James M. Materna or Michael J. Scott and any one of them with full power
of substitution and resubstitution, as attorney or attorneys to execute and file
on behalf of the undersigned, in his capacity as director of the Company, the
Form 10-K and any and all other documents to be filed with the Commission
pertaining to the Form 10-K, with full power and authority to do and perform any
and all acts and things whatsoever required or necessary to be done in the
premises, as fully as to all intents and purposes as he could do if personally
present, hereby ratifying and approving the acts of said attorneys and any of
them and any such substitution.
Executed this 20th day of March, 1998.
/s/ John E. Mooney
<PAGE> 6
OM GROUP, INC.
Form 10-K
Power of Attorney for Directors
The undersigned, a director of OM Group, Inc., a Delaware corporation (the
"Company"), which anticipates the filing with the Securities and Exchange
Commission (the "Commission") under the provisions of the Securities Exchange
Act of 1934 (the "Act") a Form 10-K (together with any and all subsequent
amendments, the "Form 10-K"), does hereby constitute and appoint James P.
Mooney, James M. Materna or Michael J. Scott and any one of them with full power
of substitution and resubstitution, as attorney or attorneys to execute and file
on behalf of the undersigned, in his capacity as director of the Company, the
Form 10-K and any and all other documents to be filed with the Commission
pertaining to the Form 10-K, with full power and authority to do and perform any
and all acts and things whatsoever required or necessary to be done in the
premises, as fully as to all intents and purposes as he could do if personally
present, hereby ratifying and approving the acts of said attorneys and any of
them and any such substitution.
Executed this 20th day of March, 1998.
/s/ Markku Toivanen
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE OM
GROUP, INC. CONSOLIDATED BALANCE SHEETS AT DECEMBER 31, 1997 AND 1996 AND THE OM
GROUP INC. STATEMENTS OF CONSOLIDATED INCOME FOR THE TWELVE MONTHS ENDED
DECEMBER 31, 1997 AND 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1996
<PERIOD-END> DEC-31-1997 DEC-31-1996
<CASH> 13,193 7,818
<SECURITIES> 0 0
<RECEIVABLES> 81,282 60,264
<ALLOWANCES> 680 210
<INVENTORY> 219,201 195,050
<CURRENT-ASSETS> 324,749 275,370
<PP&E> 224,359 167,805
<DEPRECIATION> 74,112 57,184
<TOTAL-ASSETS> 601,063 443,456
<CURRENT-LIABILITIES> 100,682 101,509
<BONDS> 0 0
0 0
0 0
<COMMON> 222 188
<OTHER-SE> 301,019 185,134
<TOTAL-LIABILITY-AND-EQUITY> 601,063 443,456
<SALES> 487,296 387,999
<TOTAL-REVENUES> 487,296 387,999
<CGS> 369,933 304,025
<TOTAL-COSTS> 416,724 336,578
<OTHER-EXPENSES> (815) (467)
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 13,410 7,485
<INCOME-PRETAX> 57,977 44,403
<INCOME-TAX> 19,534 14,356
<INCOME-CONTINUING> 38,443 30,047
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 38,443 30,047
<EPS-PRIMARY> 1.84 1.61
<EPS-DILUTED> 1.78 1.56
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the OM
Group, Inc. Consolidated Balance Sheets at March 31, 1996 (Unaudited) and
the OM Group, Inc. Statements of Consolidated Income for the three months
ended March 31, 1996 (Unaudited) and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 7,630
<SECURITIES> 0
<RECEIVABLES> 69,664
<ALLOWANCES> 0
<INVENTORY> 151,801
<CURRENT-ASSETS> 243,590
<PP&E> 145,782
<DEPRECIATION> 46,540
<TOTAL-ASSETS> 369,544
<CURRENT-LIABILITIES> 85,537
<BONDS> 0
0
0
<COMMON> 125
<OTHER-SE> 167,009
<TOTAL-LIABILITY-AND-EQUITY> 369,544
<SALES> 102,853
<TOTAL-REVENUES> 102,853
<CGS> 82,642
<TOTAL-COSTS> 90,595
<OTHER-EXPENSES> (204)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,894
<INCOME-PRETAX> 10,568
<INCOME-TAX> 3,417
<INCOME-CONTINUING> 7,151
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,151
<EPS-PRIMARY> .38
<EPS-DILUTED> .37
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from OM Group,
Inc. Consolidated Balance Sheets at June 30, 1996 (Unaudited) and the OM
Group, Inc. Statements of Consolidated Income for the three and six months
ended June 30, 1996 (Unaudited) and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996
<PERIOD-END> JUN-30-1996 JUN-30-1996
<CASH> 9,718 9,718
<SECURITIES> 0 0
<RECEIVABLES> 64,462 64,462
<ALLOWANCES> 0 0
<INVENTORY> 161,726 161,726
<CURRENT-ASSETS> 249,575 249,575
<PP&E> 151,424 151,424
<DEPRECIATION> 50,465 50,465
<TOTAL-ASSETS> 398,005 398,005
<CURRENT-LIABILITIES> 88,975 88,975
<BONDS> 0 0
0 0
0 0
<COMMON> 125 125
<OTHER-SE> 173,031 173,031
<TOTAL-LIABILITY-AND-EQUITY> 398,005 398,005
<SALES> 101,485 204,338
<TOTAL-REVENUES> 101,485 204,338
<CGS> 80,455 163,097
<TOTAL-COSTS> 88,401 178,996
<OTHER-EXPENSES> (139) (343)
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 1,860 3,754
<INCOME-PRETAX> 11,363 21,931
<INCOME-TAX> 3,780 7,197
<INCOME-CONTINUING> 7,583 14,734
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 7,583 14,734
<EPS-PRIMARY> .41 .79
<EPS-DILUTED> .39 .77
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the OM
Group, Inc. Consolidated Balance Sheets at September 30, 1996 (Unaudited) and
the OM Group, Inc. Statements of Consolidated Income for the three months and
nine months ended September 30, 1996 (Unaudited) and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996
<PERIOD-END> SEP-30-1996 SEP-30-1996
<CASH> 5,263 5,263
<SECURITIES> 0 0
<RECEIVABLES> 58,561 58,561
<ALLOWANCES> 0 0
<INVENTORY> 194,997 194,997
<CURRENT-ASSETS> 268,903 268,903
<PP&E> 157,327 157,327
<DEPRECIATION> 54,044 54,044
<TOTAL-ASSETS> 419,312 419,312
<CURRENT-LIABILITIES> 100,775 100,775
<BONDS> 0 0
0 0
0 0
<COMMON> 125 125
<OTHER-SE> 178,802 178,802
<TOTAL-LIABILITY-AND-EQUITY> 419,312 419,312
<SALES> 89,071 293,409
<TOTAL-REVENUES> 89,071 293,049
<CGS> 68,166 231,263
<TOTAL-COSTS> 76,035 255,031
<OTHER-EXPENSES> (41) (384)
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 1,776 5,530
<INCOME-PRETAX> 11,301 33,232
<INCOME-TAX> 3,631 10,828
<INCOME-CONTINUING> 7,670 22,404
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 7,670 22,404
<EPS-PRIMARY> .41 1.20
<EPS-DILUTED> .40 1.17
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the OM
Group, Inc. Consolidated Balance Sheets at March 31, 1997 (Unaudited) and the OM
Group, Inc. Statements of Consolidated Income for the three months ended March
31, 1997 (Unaudited) and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 8,177
<SECURITIES> 0
<RECEIVABLES> 76,412
<ALLOWANCES> 0
<INVENTORY> 223,260
<CURRENT-ASSETS> 316,984
<PP&E> 197,628
<DEPRECIATION> 61,154
<TOTAL-ASSETS> 592,955
<CURRENT-LIABILITIES> 97,718
<BONDS> 0
0
0
<COMMON> 188
<OTHER-SE> 191,862
<TOTAL-LIABILITY-AND-EQUITY> 592,955
<SALES> 110,055
<TOTAL-REVENUES> 110,055
<CGS> 83,477
<TOTAL-COSTS> 94,359
<OTHER-EXPENSES> (306)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,666
<INCOME-PRETAX> 12,336
<INCOME-TAX> 4,120
<INCOME-CONTINUING> 8,216
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,216
<EPS-PRIMARY> .44
<EPS-DILUTED> .43
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the OM
Group, Inc. Condensed Consolidated Balance Sheets at June 30, 1997 (Unaudited)
and the OM Group, Inc. Statements of Consolidated Income for the three and six
months ended June 30, 1997 (Unaudited) and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997
<PERIOD-END> JUN-30-1997 JUN-30-1997
<CASH> 8,917 8,917
<SECURITIES> 0 0
<RECEIVABLES> 75,156 75,156
<ALLOWANCES> 0 0
<INVENTORY> 254,564 254,564
<CURRENT-ASSETS> 346,282 346,282
<PP&E> 206,990 206,990
<DEPRECIATION> 65,297 65,297
<TOTAL-ASSETS> 614,770 614,770
<CURRENT-LIABILITIES> 115,537 115,537
<BONDS> 0 0
0 0
0 0
<COMMON> 222 222
<OTHER-SE> 285,813 285,813
<TOTAL-LIABILITY-AND-EQUITY> 614,770 614,770
<SALES> 124,334 234,389
<TOTAL-REVENUES> 124,334 234,389
<CGS> 94,851 178,328
<TOTAL-COSTS> 106,465 200,824
<OTHER-EXPENSES> (106) (412)
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 3,488 7,154
<INCOME-PRETAX> 14,487 26,823
<INCOME-TAX> 4,908 9,028
<INCOME-CONTINUING> 9,579 17,795
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 9,579 17,795
<EPS-PRIMARY> .46 .90
<EPS-DILUTED> .44 .87
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the OM
Group, Inc. Condensed Consolidated Balance Sheets at September 30, 1997
(Unaudited) and the OM Group, Inc. Statements of Consolidated Income for the
three and nine months ended September 30, 1997 (Unaudited) and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997
<PERIOD-END> SEP-10-1997 SEP-10-1997
<CASH> 6,766 6,766
<SECURITIES> 0 0
<RECEIVABLES> 82,825 82,825
<ALLOWANCES> 0 0
<INVENTORY> 228,864 228,864
<CURRENT-ASSETS> 325,954 325,954
<PP&E> 213,492 213,492
<DEPRECIATION> 69,752 69,752
<TOTAL-ASSETS> 595,632 595,632
<CURRENT-LIABILITIES> 84,496 84,496
<BONDS> 0 0
0 0
0 0
<COMMON> 222 222
<OTHER-SE> 293,759 293,759
<TOTAL-LIABILITY-AND-EQUITY> 595,632 595,632
<SALES> 126,317 360,706
<TOTAL-REVENUES> 126,317 360,706
<CGS> 96,368 274,696
<TOTAL-COSTS> 107,997 308,821
<OTHER-EXPENSES> (231) (643)
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 3,132 10,286
<INCOME-PRETAX> 15,419 42,242
<INCOME-TAX> 5,204 14,232
<INCOME-CONTINUING> 10,215 28,010
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 10,215 28,010
<EPS-PRIMARY> .46 1.36
<EPS-DILUTED> .45 1.32
</TABLE>
