<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. ____)
MK GOLD COMPANY
(Name of Issuer)
Common Stock, par value $.01 per 55305P100
share
(Title of class of securities) (CUSIP number)
Stephen E. Jacobs, Esq.,
Weil, Gotshal & Manges
767 Fifth Avenue
New York, N.Y. 10153
(212) 310-8000
(Name, address and telephone number of person authorized to receive
notices and communications)
May 12, 1995
(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and
is filing this schedule because of Rule 13d-1(b)(3) or (4), check
the following box [_].
Check the following box if a fee is being paid with the statement [x].
(A fee is not required only if the reporting person: (1) has a
previous statement on file reporting beneficial ownership of more
than five percent of the class of securities described in Item 1;
and (2) has filed no amendment subsequent thereto reporting
beneficial ownershipof five percent or less of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should
be filed with the Commission. See Rule 13d-1(a) for other parties
to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect
to the subject class of securities, and for any subsequent
amendment containing information which would alter disclosures
provided in a prior cover page.
The information required on the remainder of this cover page
shall not be deemed to be "filed" for the purpose of Section 18
of the Securities Exchange Act of 1934 ("Act") or otherwise
subject to the liabilities of that section of the Act but shall
be subject to all other provisions of the Act (however,
see the Notes).
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13D
CUSIP No.55305P100
1 NAME OF REPORTING PERSON: Leucadia National Corporation
S.S. OR I.R.S. IDENTIFICATION NO.
OF ABOVE PERSON:
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) [_]
(b) [_]
3 SEC USE ONLY
4 SOURCE OF FUNDS: BK
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED [_]
PURSUANT TO ITEM 2(d) OR 2(e):
6 CITIZENSHIP OR PLACE OF New York
ORGANIZATION:
NUMBER OF 7 SOLE VOTING POWER: 9,000,000 shares(1)
SHARES
BENEFICIALLY 8 SHARED VOTING POWER: None.
OWNED BY
EACH
9 SOLE DISPOSITIVE POWER: 9,000,000 shares (1)
REPORTING
PERSON WITH 10 SHARED DISPOSITIVE POWER: None.
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY 9,000,000 shares(1)
REPORTING PERSON:
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES [_]
CERTAIN SHARES:
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 46.4%
14 TYPE OF REPORTING PERSON: CO
1. As described in Item 4 hereof, pursuant to a Stock Purchase
Agreement dated May 12, 1995 as amended, the Reporting Person has
the right to acquire such shares, subject to the satisfaction of
certain conditions.
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Item 1. Securities and Issuer.
This Statement relates to the common stock, par value
$0.01 (the "Common Stock"), of MK Gold Company (the "Company").
The address of the principal executive offices of the Company is
720 Park Blvd., Boise, Idaho 83729.
Item 2. Identity and Background.
(a)-(c) This Schedule 13D is being filed by Leucadia
National Corporation ("Leucadia"). Leucadia is a New York
corporation with its principal office at 315 Park Avenue South,
New York, New York 10010. Leucadia is a financial services
holding company principally engaged in personal and commercial
lines of property and casualty insurance, life and health
insurance, banking and lending, incentive services and
manufacturing.
Approximately 39.5% of the outstanding common shares of
Leucadia (including common shares issuable upon the exercise of
warrants) is beneficially owned (directly and through family
members) by Ian M. Cumming, Chairman of the Board of Directors of
Leucadia and by Joseph S. Steinberg, a director and President of
Leucadia (excluding an additional 2.0% of the common shares of
Leucadia beneficially owned by two trusts for the benefit of Mr.
Steinberg's minor children, as to which Mr. Steinberg disclaims
beneficial ownership). Private charitable foundations
independently established by each of Messrs. Cumming and
Steinberg beneficially own approximately .9% and .8%,
respectively, of the outstanding common shares of Leucadia. Mr.
Cumming and Mr. Steinberg each disclaim beneficial ownership of
the common shares of Leucadia held by their respective private
charitable foundation.
The following information with respect to each
executive officer and director of Leucadia is set forth in
Appendix A: (i) name, (ii) business address, (iii) principal
occupation or employment and (iv) name of any corporation or
other organization in which such employment is conducted,
together with the principal business and address of any such
corporation or organization other than Leucadia for which such
information is set forth above.
(d)-(f) During the last five years, Leucadia has not
and, to its knowledge, none of the other persons identified
pursuant to Paragraphs (a) through (c) of this Item 2 has been,
convicted in a criminal proceeding (excluding traffic violations
or similar misdemeanors) or was a party to a civil proceeding of
a judicial or administrative body of competent jurisdiction as a
result of which such individual was or is subject to a judgment,
decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state
securities laws or finding any violation with respect to such
laws. To the knowledge of Leucadia, each of the individuals
identified pursuant to Paragraphs (a) through (c) of this Item 2
is a United States citizen.
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Item 3. Source and Amount of Funds or Other Consideration.
Pursuant to a Stock Purchase Agreement dated May 12,
1995, as amended (the "Stock Purchase Agreement") between
Leucadia and Morrison Knudsen Corporation (the "Seller"), which
is filed as Exhibit 1 to this Schedule 13D and more fully
described in Item 4, Leucadia has agreed to purchase, subject to
certain conditions, and Seller has agreed to sell, subject to
certain conditions, 9 million shares of Common Stock owned by
Seller (the "Shares").
The aggregate consideration to be paid by Leucadia for
the Shares will be $22.5 million. Leucadia expects to derive
such funds from borrowings under bank revolving credit agreements
terminating in 1997. Borrowings under such agreements bear
interest at Leucadia's option at either LIBOR plus .75% or the
bank's Base Rate (defined generally as the higher of the bank's
base or reference rate, or the federal funds rate plus .5%).
Item 4. Purpose of the Transaction.
Leucadia has entered into the Stock Purchase Agreement
to obtain a significant equity interest in the Company. Upon
consummation of the Stock Purchase Agreement, Leucadia will
beneficially own all 9 million shares of Common Stock currently
owned by Seller. The Shares represent approximately 46.4% of the
outstanding Common Stock as reported by the Company in its
Quarterly Report on Form 10-Q for the fiscal quarter ended
December 31, 1994 (the "December 1994 10-Q").
The $22.5 million purchase price
and the Shares are to be deposited with an escrow
agent to be held in accordance with the terms of the Stock
Purchase Agreement.
Seller's has received approval of the Executive
Committee of Seller's Board of Directors, and is awaiting the
approval of certain lenders to Seller. Receipt of these
approvals on or before May 25, 1995 are a condition to Seller's
obligations under the Stock Purchase Agreement. Seller's
obligations under the Stock Purchase Agreement are also
conditioned upon Seller being released from its guarantee
obligations under a $20 million credit facility to the Company by
CIBC, Inc. Each party's obligation to consummate the transaction
is subject to certain other conditions, including the expiration
or termination of applicable waiting periods under the Hart-
Scott-Rodino Antitrust Improvements Act of 1976.
Representatives of Leucadia have had meetings with the
Board of Directors of the Company and senior management thereof.
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In such meetings, Leucadia has expressed its desire to have Ian
M. Cumming, Joseph S. Steinberg and a third person unaffiliated
with Leucadia elected to the Company's Board of Directors for the
three year term ending in 1998. Leucadia believes that the
Company's Board of Directors will cooperate in nominating such
designees, but if not, under the Stock Purchase Agreement,
Leucadia intends to cause Seller to nominate such designees for
election at the 1995 annual meeting as directors whose terms
expire in 1998. Leucadia has requested that the record date for
the 1995 meeting be set no earlier than June 15, 1995, so that it
may be the record holder of the Shares if the purchase occurs on
or before such date. If the transaction is consummated but
Leucadia is not the record holder of the Shares on the record
date for the 1995 annual meeting, Leucadia intends to require
that Seller deliver an irrevocable proxy governing all shares of
Common Stock owned on the record date by Seller (as permitted
under the Stock Purchase Agreement).
Leucadia has agreed with the Company that, for a period
of two years, it will not, without prior approval of the Board of
Directors of the Company, acquire beneficial ownership in any
securities of the Company (other than the Shares).
Depending upon relevant economic and market conditions
prevailing at the time (and subject to the terms of its agreement
with the Company), Leucadia may determine to acquire additional
shares of Common Stock in open market or privately negotiated
transactions or otherwise or to dispose of any or all shares of
Common Stock owned by Leucadia.
Except as described above, Leucadia has no plans or
intentions which would result in or relate to any of the
transactions described in subparagraphs (a) through (j) of Item 4
of Schedule 13D.
The information included in response to Items 3 and 6
hereof is specifically incorporated herein by reference.
Item 5. Interest in Securities of the Issuer.
(a) Pursuant to the terms of the Stock Purchase
Agreement, upon on consummation thereof, Leucadia will directly
own 9 million shares of Common Stock, which represent
approximately 46.4% of the 19,397,800 outstanding Common Stock as
reported in the Company's December 1994 10-Q.
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(b) As of the Closing Date, Leucadia will have sole
voting and dispositive powers with respect to the 9 million
shares of Common Stock.
(c) The information contained in Item 4 of this
Schedule 13D concerning the Stock Purchase Agreement entered into
by Leucadia is incorporated herein by reference.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities
of the Issuer
The information included in response to Item 4 hereof
is incorporated herein by reference.
Except as described above, there are no contracts,
arrangements, understandings or relationships with respect to any
securities of the Company (i) between Leucadia and, to the best
of its knowledge, any of the other persons identified pursuant to
Item 2 above and (ii) between (a) Leucadia and, to the best of
its knowledge, any of the other persons identified pursuant to
Item 2 above and (b) any other person.
Item 7. Materials to be Filed as Exhibits.
1. Stock Purchase Agreement, as amended, dated as of
May 12, 1995, between the Seller and Leucadia.
2. Form of Amended and Restated Revolving Credit
Agreement dated as of January 1, 1994, among Leucadia and the
several banks named therein.
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SIGNATURE
After reasonable inquiry and to the best of my
knowledge and belief, I certify that the information set forth in
this Statement is true, complete and correct.
Dated: May 22, 1995
LEUCADIA NATIONAL CORPORATION
By: /s/ Joseph A. Orlando
----------------------
Title: Vice President and
Comptroller
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Appendix A
Additional Information Concerning Leucadia
Directors and Executive Officers of Leucadia
Set forth below are the name, business address, present
principal occupation or employment of each director and executive
officer of Leucadia. To the knowledge of Leucadia, each person
listed below is a United States citizen. Unless otherwise indi-
cated, the business address of each person named below is c/o
Leucadia National Corporation, 315 Park Avenue South, New York,
New York 10010.
For purposes of this schedule, Leucadia is referred to
as "(a)"
<TABLE>
<CAPTION>
Name and Business Director- Principal Occupa-
Address ships Offices tion or Employment
<S> <C> <C> <C>
Ian M. Cumming (a) Chairman of the Chairman of the
Leucadia National Board of (a) Board of (a)
Corporation
529 E. South Temple
Salt Lake City
Joseph S. Steinberg (a) President of (a) President of (a)
Paul M. Dougan (a) -- President and Chief
c/o Equity Oil Company Executive Officer
10 West 300 South of Equity Oil
Salt Lake City, Utah Company (a company
engaged in oil and
gas exploration and
production having
an office in Salt
Lake City, Utah)
Lawrence D. Glaubinger (a) -- Chairman of the
c/o Stern & Stern Board of Stern &
Industries, Inc. Stern Industries (a
708 Third Avenue company engaged in
New York, N.Y. the manufacture and
sale of textiles);
President of
Lawrence Economic
Consulting Inc., a
management consult-
ing firm
</TABLE>
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Appendix A
<TABLE>
<CAPTION>
Name and Business Director- Principal Occupa-
Address ships Offices tion or Employment
<S> <C> <C> <C>
James E. Jordan (a) -- President of The
c/o The Jordan Company William Penn
9 West 57th St. Corporation (a
New York, N.Y. 10019 holding company for
an investment
advisor to The
William Penn family
of mutual funds)
John W. Jordan II (a) -- Managing Partner of
c/o The Jordan Company The Jordan Company
9 West 57th St. (a company which
New York, N.Y. 10019 seeks out and
finances leveraged
buyouts for its
clients)
Jesse Clyde Nichols, III (a) -- President of
c/o Nichols Industries, Nichols Industries,
Inc. Inc. (a holding
5001 E. 59th St. company for
Kansas City, Mo. 64130 manufacturing and
construction sub-
sidiaries)
Thomas E. Mara Executive Vice Executive Vice
President and President and
Treasurer of (a) Treasurer of (a)
Lawrence S. Hershfield -- Executive Vice Executive Vice
President of (a) President of (a)
Joseph A. Orlando -- Vice President Vice President and
and Comptroller Comptroller of (a)
of (a)
Paul J. Borden -- Vice President Vice President of
of (a) (a)
Mark Hornstein -- Vice President Vice President of
of (a) (a)
Ruth Klindtworth -- Secretary and Secretary and Vice
Vice President- President-Corporate
Corporate Administrator of
Administrator of (a)
(a);
</TABLE>
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Appendix A
<TABLE>
<CAPTION>
Name and Business Director- Principal Occupa-
Address ships Offices tion or Employment
<S> <C> <C> <C>
David K. Sherman -- Vice President Vice President of
of (a); (a)
</TABLE>
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EXHIBIT INDEX
Exhibit No. Document
1. Stock Purchase Agreement, as
amended,
dated as of May 12, 1995, between
the Seller and Leucadia.
2. Form of Amended and Restated
Revolving Credit Agreement dated as
of January 1, 1994, among Leucadia
and the several banks named
therein.
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EXECUTION COPY
--------------
STOCK PURCHASE AGREEMENT
------------------------
This STOCK PURCHASE AGREEMENT (the "Agreement") is made and
entered into as of this 12th day of May, 1995, by and among LEUCADIA
NATIONAL CORPORATION, a New York corporation ("Buyer") and MORRISON
KNUDSEN CORPORATION, a Delaware corporation ("Seller"). The Buyer and
Seller are referred to collectively herein as the "Parties."
RECITALS
--------
A. Seller is the owner of 9,000,000 shares of common stock
(the "Target Shares") of MK Gold Company, a Delaware corporation (the
"Target").
B. This Agreement contemplates a transaction in which
Buyer will purchase from Seller and Seller will sell to Buyer the
Target Shares for the purchase price set forth in Section 2 hereof.
OPERATIVE PROVISIONS
--------------------
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants, agreements and
conditions herein contained, and intending to be legally bound, the
Parties agree as follows:
1. DEFINITIONS
-----------
1.1. "Adverse Consequences". Shall mean all actions, suits,
--------------------
proceedings, investigations, charges, complaints, claims, demands,
liabilities, damages, costs, losses, expenses, and fees, including
court costs and reasonable attorneys' fees and expenses.
1.2. "Affiliate". Has the meaning set forth in Rule 12b-2 of the
---------
regulations promulgated under the Securities Exchange Act.
1.3. "Buyer". Has the meaning set forth in the preface above.
-----
1.4. "Closing". Has the meaning set forth in Section 2.3 below.
-------
1.5. "Closing Date". Has the meaning set forth in Section 2.3
------------
below.
1.6. "Confidential Information". Shall mean any information
------------------------
concerning the businesses and affairs of the Target and that (i) is
not or does not legitimately become
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generally available to the public, or (ii) is not or does not
legitimately become available to a person on a nonconfidential basis
from a source other than the Parties.
1.7. "Escrow Agent". Has the meaning set forth in Section 2.1.1
------------
below.
1.8. "GAAP". Shall mean United States generally accepted
----
accounting principles as in effect from time to time.
1.9. "Hart-Scott-Rodino". Shall mean the Hart-Scott-Rodino
-----------------
Antitrust Improvements Act of 1976, as amended.
1.10. "Indemnified Party". Has the meaning set forth in
-----------------
Section 8 below.
1.11. "Indemnifying Party". Has the meaning set forth in
------------------
Section 8 below.
1.12. "Intercompany Contracts". Shall mean those contracts
----------------------
between Seller and Target listed on Exhibit "A".
1.13. "Knowledge". Shall mean actual knowledge after
---------
reasonable investigation.
1.14. "Ordinary Course of Business". Shall mean the ordinary
---------------------------
course of business consistent with past custom and practice (including
with respect to quantity and frequency).
1.15. "Party". Has the meaning set forth in the preface
-----
above.
1.16. "Person". Shall mean an individual, a partnership, a
------
corporation, a limited liability company, an association, a joint
stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or
political subdivision thereof).
1.17. "Purchase Price". Has the meaning set forth in Section
--------------
2.2 below.
1.18. "Securities Act". Shall mean the Securities Act of
--------------
1933, as amended.
1.19. "Securities Exchange Act". Shall mean the Securities
-----------------------
Exchange Act of 1934, as amended.
1.20. "Security Interest". Shall mean any mortgage, pledge,
-----------------
lien, encumbrance, charge, or other security interest, other than (a)
mechanic's, materialmen's, and similar liens, (b) liens for Taxes not
yet due and payable or for Taxes that the taxpayer is contesting in
good faith through appropriate proceedings, (c) purchase money liens
and liens securing rental payments under capital lease arrangements,
and (d) other liens arising in the Ordinary Course of Business and not
incurred in connection with the borrowing of money.
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1.21. "Seller". Has the meaning set forth in the preface
------
above.
1.22. "Target". Has the meaning set forth in the preface
------
above.
1.23. "Target Shares". Has the meaning set forth in the
-------------
preface above.
1.24. "Tax". Shall mean any federal, state, local or foreign
---
income, gross receipts, license, payroll employment, excise,
severance, stamp, occupation, premium, windfall profits, customs
duties, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on
minimum, estimated or other tax of any kind whatsoever, including any
interest, penalty, or addition thereto, whether disputed or not.
1.25. "Third Party Claim". Has the meaning set forth in
-----------------
Section 8 below.
2. PURCHASE AND SALE OF TARGET SHARES.
----------------------------------
2.1. Basic Transaction. On and subject to the terms and
-----------------
conditions of this Agreement, the Buyer agrees to purchase from the
Seller and the Seller agrees to sell to the Buyer, all of the Target
Shares for the consideration specified below in this Section 2.
2.2. Purchase Price. The purchase price for the Target Shares
--------------
shall be equal to $22,500,000 (the "Purchase Price"). At Closing,
Buyer and Seller shall cause Escrow Agent to release (i) to Seller, by
certified or bank cashier's check (or wire transfer), the Purchase
Price payable in United States Dollars and (ii) to Buyer, the Target
Shares, with stock powers duly executed in blank, and the
Distributions (as defined in Section 5.3 hereof) if any, allocable to
the Target Shares.
2.2.1. Escrow. On the business day following notice to
------
Buyer of the satisfaction or waiver by Seller of the conditions set
forth in Section 7.2.7 hereof, (i) Seller shall deposit with the
Escrow Agent certificates representing the Target Shares, with stock
powers duly executed in blank (the "Escrowed Shares"), and (ii) Buyer
shall deposit with the Escrow Agent immediately available funds equal
to the Purchase Price (the "Escrowed Funds"). If Seller receives any
Distributions allocable to the Target Shares on or after the date
hereof and prior to the Closing, Seller shall promptly deposit such
Distributions with the Escrow Agent (the "Escrowed Distributions").
The Escrowed Shares, the Escrowed Distributions and the Escrowed Funds
shall be held in escrow pursuant to the terms hereof and the terms of
the Escrow Agreement (as defined herein).
2.2.2. Escrow of Escrowed Shares and Escrowed Funds. Buyer
--------------------------------------------
and Seller hereby consent to the appointment of and hereby appoint
Weil, Gotshal & Manges as Escrow Agent (the "Escrow Agent"), to serve
as escrow agent in accordance with the terms of the
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Escrow Agreement, dated May 12, 1995 among Weil, Gotshal & Manges,
Buyer and Seller (the "Escrow Agreement"), annexed hereto as Exhibit
B, the terms of which shall govern the rights and obligations of the
parties hereto with respect to the Escrowed Property (as defined in
the Escrow Agreement).
2.3. The Closing. The closing of the transactions contemplated
-----------
by this Agreement (the "Closing") shall take place at the offices of
Weil, Gotshal & Manges, 767 Fifth Avenue, New York, New York at
9:00 a.m., local time on the third business day following satisfaction
or waiver of the conditions set forth in Section 7 hereof or such
other time and place as the Parties agree upon, and such date is
referred to in this Agreement as the "Closing Date".
2.4. Delivery of Disbursing Instructions to Escrow Agent. On or
---------------------------------------------------
before the second business day following the satisfaction or waiver of
the conditions set forth in Section 7 hereof, Buyer and Seller shall
complete and execute the disbursing instructions annexed to the Escrow
Agreement as Annex A and deliver such disbursing instructions to
Escrow Agent.
2.5. Deliveries at the Closing. At the Closing, (i) the Seller
-------------------------
will deliver to the Buyer the various certificates, instruments, and
documents referred to in Section 7.1 below, (ii) the Buyer will
deliver to the Seller the various certificates, instruments, and
documents referred to in 7.2 below, (iii) the Seller will, subject to
the terms and conditions of the Escrow Agreement, will cause to be
delivered by Escrow Agent to the Buyer stock certificates representing
all the Target Shares, with stock powers duly endorsed in blank or
accompanied by duly executed assignment documents, and the Escrowed
Distributions, if any, and (iv) the Buyer will, subject to the terms
and conditions of the Escrow Agreement, cause to be delivered by
Escrow Agent to the Seller the Purchase Price.
3. REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION.
---------------------------------------------------------
3.1. Representations and Warranties of the Seller. The Seller
--------------------------------------------
represents and warrants to the Buyer that the statements contained in
this Section 3.1 are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as
though made then and as though the Closing Date were substituted for
the date of this Agreement throughout this Section 3.1).
3.1.1. Organization of Seller. Seller is a corporation, is
----------------------
duly organized, validly existing, and in good standing under the laws
of the jurisdiction of its incorporation.
3.1.2. Authorization of Transaction. The Seller has full
----------------------------
power and authority to execute and deliver this Agreement and to
perform its obligations hereunder. This Agreement constitutes the
valid and legal binding obligation of the Seller, enforceable in
accordance with its terms. Except as provided in this Agreement with
respect to Hart-Scott-Rodino and except for filings required under the
Securities Exchange Act, the Seller need not
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give any notice to, make any filing with, or obtain any authorization,
consent, or approval of any United States governmental agency in order
to consummate the transactions contemplated by this Agreement.
3.1.3. Noncontravention. Neither the execution and the
----------------
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will (A) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any United States government, governmental
agency, or court to which the Seller is subject or, any provision of
its charter or bylaws or (B) except as set forth on Schedule 3.1.3,
conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under
any agreement, contract, lease, license, instrument, or other
arrangement to which the Seller or, to the actual knowledge of Seller
without due inquiry, the Target is a party or by which it is bound or
to which any of its assets is subject, except where such conflict,
breach, default, acceleration, right or notice would not have a
material adverse effect upon the Target Shares or Target.
3.1.4. Target Shares. The Seller holds of record and owns
-------------
beneficially 9,000,000 shares of Target's common stock which
represents Forty-Six and One Half percent (46.5%) of the issued and
outstanding shares of the Target common stock, exclusive of shares of
Target common stock reserved for issuance pursuant to the Target's
Stock Incentive Plan and Stock Option Plan for Non-Employee Directors.
The Target Shares constitute all of the shares of capital stock of
Target owned by Seller of record or beneficially. The Target Shares
are free and clear of any restrictions (except under applicable
securities laws) on transfer, Security Interests, options, warrants,
purchase rights, contracts, commitments, equities, claims, and
demands. The Seller is not a party to any option, warrant, purchase
right, or other contract or commitment that requires the Seller to
sell, transfer, or otherwise dispose of any of the Target Shares
(other than this Agreement). The Seller is not a party to any voting
trust, proxy, or other agreement or understanding with respect to the
voting of any capital stock of the Target. The Target Shares will be
sold and delivered to Buyer free and clear of any and all liens,
pledges, charges, equities, restrictions (except under applicable
securities laws), encumbrances, agreements and claims of any nature
and upon Closing Buyer will acquire good an marketable title to the
Target Shares.
3.2. Representations and Warranties of the Buyer. The Buyer
-------------------------------------------
represents and warrants to the Seller that the statements contained in
this Section are correct and complete as of the date of this Agreement
and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date
of this Agreement throughout this Section 3.2).
3.2.1. Organization of the Buyer. The Buyer is a
-------------------------
corporation duly organized, validly existing, and in good standing
under the laws of the jurisdiction of its incorporation.
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3.2.2. Authorization of Transaction. The Buyer has full
----------------------------
power and authority to execute and deliver this Agreement and to
perform its obligations hereunder. This Agreement constitutes the
valid and legally binding obligation of the Buyer, enforceable in
accordance with its terms. Except as provided in this Agreement with
respect to Hart-Scott-Rodino and except for filings required under the
Securities Exchange Act, the Buyer need not give any notice to, make
any filing with, or obtain any authorization, consent, or approval of
any government or governmental agency in order to consummate the
transactions contemplated by this Agreement.
3.2.3. Noncontravention. Neither the execution and the
----------------
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will (A) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restrictions of any government, governmental agency, or court
to which the Buyer is subject or any provision of its charter or
bylaws or (B) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the
right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument, or
other arrangement to which the Buyer is a party or by which it is
bound or to which any of its assets is subject.
3.2.4. Purchase For Investment. The Target Shares to be
-----------------------
purchased pursuant to this Agreement will be so purchased for Buyer's
own account, for investment and not with a view toward the
distribution or resale thereof, except in compliance with the
requirements of all applicable securities laws, including without
limitation the Securities Act. Buyer is a sophisticated purchaser
that has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of the
purchase of the Target Shares and has reviewed Target's filings with
the Securities and Exchange Commission.
Buyer has no, and has taken no action which could result in,
liability or obligation to pay any fees or commissions to any broker,
finder or agent with respect to the transactions contemplated by this
Agreement for which Seller could become liable or obligated.
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4. NO OTHER REPRESENTATIONS AND WARRANTIES.
---------------------------------------
4.1. THE PARTIES HERETO EXPRESSLY ACKNOWLEDGE AND AGREE THAT
EXCEPT AS SET FORTH IN SECTIONS 3.1 AND 3.2 OF THIS AGREEMENT, THERE
ARE NO OTHER REPRESENTATIONS OR WARRANTIES (WHETHER EXPRESS OR
IMPLIED) MADE ON BEHALF OF ANY PARTY HERETO.
5. PRE-CLOSING COVENANTS.
---------------------
The Parties agree that prior to the Closing:
5.1. General. Each of the Parties will use its best efforts to
-------
take all action and to do all things necessary in order to consummate
and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the closing conditions set
forth in Section 7 below).
5.2. Notices and Consents. The Parties will, and Seller will use
--------------------
its best efforts to cause the Target to, give any notices to third
parties, and each of the Parties will, and the Seller will uses its
best efforts to cause the Target to, use its best efforts to obtain
any third-party consents that may be required in connection with the
transaction contemplated in this Agreement. Each of the Parties will
and the Seller will use its best efforts to cause the Target to, given
any notices to, make any filings with, and use its best efforts to
obtain any authorizations, consents, and approvals of governments and
governmental agencies as may be required in connection with the
transactions contemplated in this Agreement. Without limiting the
generally of the foregoing, each of the Parties will file (and the
Seller will use its best efforts to cause the Target to file), any
Notification and Report Forms and related material that it may be
required to file with the Federal Trade Commission and the Antitrust
Division of the United States Department of Justice under the Hart-
Scott-Rodino Act, each of the Parties will use their best efforts to
obtain (and the Seller will use its best efforts to cause the Target
to use its best efforts to obtain) an early termination of the
applicable waiting period (it being understood that this covenant
shall not be deemed to be breach if such early termination is not
obtained), and will make (and the Seller will use its best efforts to
cause the Target to make) any further filings pursuant thereto that
may be necessary in connection therewith.
5.3. Operation of Business. The Seller will use its best effort
---------------------
to cause the Target not to engage in any practice, take any action, or
enter into any transaction outside the Ordinary Course of Business.
Without limiting the generality of the foregoing, the Seller will use
its best efforts to cause the Target not to declare, set aside, or pay
any dividend or make any distribution with respect to its capital
stock or redeem, purchase, or otherwise acquire any of its capital
stock (a "Distribution"). It is the intention of the Parties that any
Distribution allocable to the Target Shares shall be for the benefit
of Buyer. Consequently, (i) Distributions received by Seller prior to
the Closing shall be deposited by Seller with the
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Escrow Agent to be held in accordance with the terms of the Escrow
Agreement, and (ii) Distributions received after the Closing shall be
delivered to Buyer upon receipt by Seller.
5.4. Preservation of Business. The Seller will use its best
------------------------
efforts to cause the Target to keep its business and properties
substantially intact, including its present operations, physical
facilities, working conditions, and relationships with lessors,
licensors, suppliers, customers, employees, partners and joint
venturers.
5.5. Full Access. The Seller will permit, and the Seller will
-----------
use its best efforts to cause the Target to permit, representatives of
the Buyer to have full access at all reasonable times, and in a manner
so as not to interfere with the normal business operations of the
Target to all premises, properties, personnel, books records
(including Tax records), contracts, and documents of or pertaining to
the Target.
5.6. Notice of Development. Each Party will give prompt written
---------------------
notice to the other of any material adverse development causing a
breach of any representations and warranties in Section 3 or 4 above.
No disclosure by any Party pursuant to this Section 5.6, however,
shall be deemed to amend or supplement the Schedules hereto or to
prevent or cure any misrepresentations, breach of warranty, or breach
of covenant.
5.7. Exclusivity. Except as may be required in the exercise of
-----------
its fiduciary duties, (a) the Seller will not (and the Seller will use
its best efforts to cause the Target not to) (i) solicit, initiate, or
encourage the admission of any proposal or offer from any Person
relating to the assets of, the Target (including any acquisition
structured as a merger, consolidation, or share exchange) or (ii)
participate in any discussions or negotiation regarding, furnish any
information with respect to, assist or participate in, or facilitate
in any other manner any effort or attempt by any Person to do or seek
any of the foregoing and (b) the Seller will not vote its Target
Shares in favor of any such acquisition structured as a merger,
consolidation, or share exchange. The Seller will notify the Buyer
immediately if Seller becomes aware of any Person that makes any bona
fide proposal, offer, inquiry, or contact with respect to any of the
foregoing.
5.8. Waiver of Confidentiality Agreement. Seller hereby waives
-----------------------------------
the provisions of paragraph 9 of the Confidentiality Agreement dated
May 4, 1995 between Seller and Buyer (though its representative, CS
First Boston Corporation) (the "May 4, 1995 Confidentiality
Agreement") and acknowledges that Seller shall not seek to enforce
such paragraph 9 against Buyer and will use its best efforts to cause
the Target to waive the provisions of such paragraph 9 and to
acknowledge that Target will not seek to enforce such paragraph 9
against Buyer.
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5.9. Matters Concerning Nominees for Director.
----------------------------------------
5.9.1. Upon the request of Buyer, Seller shall promptly
notify Target of its intention to nominate up to three persons
designated by Buyer for election at the 1995 annual meeting of
stockholders of Target (the "1995 Annual Meeting") as directors whose
terms expire in 1998. In such event, Seller agrees that it shall use
its best efforts promptly to take all steps necessary to comply with
Target's nominating procedures. Buyer agrees that at the time of its
request it will provide Seller with all information concerning such
designees and consents required pursuant to Target's nominating
procedures. Buyer and Seller agree that they will consult in the
preparation of any disclosure required by Target's nominating
procedures.
5.9.2. Buyer shall have the right to require that Seller
retain 100 of the Target Shares at no reduction of the Purchase Price,
so that Seller shall remain a stockholder of record of Target until
after the date of the 1995 Annual Meeting, or any adjournment or
adjournments thereof. Seller shall vote all Target Shares owned of
record by Seller in favor of Buyer's designees at the 1995 Annual
Meeting and any adjournment or adjournments thereof or provide Buyer
with an irrevocable proxy to vote such Target Shares therefor, as
Buyer may request. After the 1995 Annual Meeting, at Buyer's request
Seller shall deliver to Buyer the 100 shares of Target so retained by
Seller, with stock powers duly executed in blank, for no additional
consideration.
6. POST-CLOSING COVENANTS.
----------------------
The Parties agree as follows with respect to the period following
the Closing.
6.1. General. In case at any time after the Closing any further
-------
action is necessary or desirable to carry out the purposes of this
Agreement, each of the Parties will take such further action
(including the execution and delivery of such further instruments and
documents) as any other Party may reasonably request, all at the sole
cost and expense of the requesting Party (unless the requesting Party
is entitled to indemnification therefor under Section 8 below).
6.2. Litigation Support. In the event and for so long as any
------------------
Party actively is contesting or defending against any action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or
demand in connection with (i) any transaction contemplated under this
Agreement or event, incident, action, failure to act, or transaction
on or prior to the Closing Date involving the Target, each of the
other Parties will cooperate with it and its counsel in the contest or
defense, make available their personnel, and provide such testimony
and access to their books and records as shall be necessary in
connection with the contest of defense, all at the sole cost and
expense of the contesting or defending Party (unless the contesting or
defending Party is entitled to indemnification therefor under Section
8 below).
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6.3. Transition. The Seller will not take any action that is
----------
designed or intended to have the effect of discouraging any lessor,
licensor, customer, supplier, partner, joint venturer or other
business associate of the Target from maintaining the same business
relationships with the Target after the Closing as is maintained with
the Target prior the Closing. The Seller will refer all inquiries
relating to the business of the Target to the Target from and after
the Closing. In connection with the Jerooy Gold Projects, for a
period of one (1) year from the date of this Agreement, Seller agrees
to provide and make itself available to provide, such assistance as
Target may reasonably request to: (i) preserve and maintain Target's
interest in the Jerooy Gold Project, (ii) preserve and maintain
Target's agreements with Concern Kyrghyzaltan, and (iii) assist with
any matters relating to the Republic of Kyrghyz, including any
transition or transfers resulting from the transaction contemplated by
this Agreement; provided, however, (a) Seller makes no representation
or warranty with respect to such services, and (b) in advance of
Seller providing such services to Target, Target agrees (x) to
promptly reimburse Seller for any such services provided within ten
(10) business days after Seller submits an invoice for such services,
and (y) to indemnify Seller for any Adverse Consequences resulting
from, relating to or arising from Seller's acts or omissions with
respect to such services.
6.4. Confidentiality. The Seller will treat and hold as such all
---------------
of the Confidential Information, refrain from using any of the
Confidential Information except in connection with this Agreement, and
deliver promptly to the Buyer or destroy, at the request and option of
the Buyer, all tangible embodiments (and all copies) of the
Confidential Information which are in its possession except as may be
required for (i) tax, accounting or other similar purposes, and (ii)
legal purposes. In the event that the Seller is requested or required
(by oral question or request for information or documents in any legal
proceeding, interrogatory, subpoena, civil investigative demand, or
similar process) to disclose any Confidential Information, that Seller
will notify the Buyer promptly of the request or requirement so that
the Buyer may seek an appropriate protective order or waive compliance
with the provisions of this Section 6.4. If, in the absence of a
protective order or the receipt of a waiver hereunder, the Seller is,
on the advice of counsel, compelled to disclosed any Confidential
Information to the tribunal or else stand liable for contempt, Seller
may disclose the Confidential Information to the tribunal; provided,
however, that Seller shall use its best efforts to obtain, at the
request of the Buyer, an order or other assurance that confidential
treatment will be accorded to such portion of the Confidential
Information required to be disclosed as the Buyer shall designate.
The foregoing provisions shall not apply to any Confidential
Information which is generally available to the public immediately
prior to the time of disclosure.
6.5. Intercompany Contract. For a period of two (2) years from
---------------------
and after the Closing: Seller waives any rights, if any, to terminate
the Intercompany Contracts.
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7. CONDITIONS TO OBLIGATION TO CLOSE.
---------------------------------
7.1. Conditions to Obligation of the Buyer. The obligation of
-------------------------------------
the Buyer to consummate the transactions to be performed by it in
connection with the Closing is subject to satisfaction of the
following conditions:
7.1.1. The representations and warranties set forth in
Section 3.1 above shall be true and correct in all material respects
at and as of the Closing Date;
7.1.2. The Seller shall have performed and complied with
all of its covenants hereunder in all material respects through the
Closing;
7.1.3. No final, nonappealable injunction or other order by
any United States court having proper jurisdiction which prevents the
consummation of the transactions contemplated by Section 2 shall have
been issued and remain in effect;
7.1.4. The Seller shall have delivered to the Buyer a
certificate to the effect that each of the conditions specified above
in Section 7.1.1, 7.1.2 and 7.1.6 is satisfied in all respects;
7.1.5. All applicable waiting periods (and any extensions
thereof) under the Hart-Scott-Rodino Act shall have expired or
otherwise been terminated;
The Buyer may waive any condition specified in this Section 7.1 if it
executes a writing so stating at or prior to the Closing
7.2. Conditions to Obligation of the Seller. The obligation of
--------------------------------------
the Seller to consummate the transactions to be performed by them in
connection with the Closing is subject to satisfaction of the
following conditions:
7.2.1. The representations and warranties set forth in
Section 3.2 above shall be true and correct in all material respects
at and as of the Closing Date;
7.2.2. The Buyer shall have performed and complied with all
of its covenants hereunder in all material respects through the
Closing;
7.2.3. No final, nonappealable injunctions or other order
by any United States court having proper jurisdiction which prevents
the consummation of the transactions contemplated by Section 2 shall
have been issued and remain in effect;
7.2.4. The Buyer shall have delivered to the Seller a
certificate to the effect that each of the conditions specified above
in Sections 7.2.1, 7.2.2 and 7.2.6 is satisfied in all respects;
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7.2.5. All applicable waiting periods (and any extensions
thereof) under the Hart-Scott-Rodino Act shall have expired or
otherwise been terminated;
7.2.6. Effective as of the Closing Date, Buyer shall have
purchased from CIBC, Inc. (the "Lender") all of Lender's interest in
and under the $20 million Credit Agreement dated September 2, 1993 by
and among the Seller, the Target and the Lender (the "CIBC Facility")
for a purchase price equal to 100% of amounts outstanding thereunder,
plus accrued but unpaid interest thereon, and Buyer shall cause Seller
and Seller's Affiliates (other than Target) to be released from any
Adverse Consequences or Liabilities in respect of the CIBC Facility,
including guarantees in respect thereof.
7.2.7. On or prior to the close of business on May 17,
1995, Seller shall have received approval of the Executive Committee
of Seller's Board of Directors and Seller's Bank Steering Committee
for this Agreement and the transactions contemplated hereby.
The Seller may waive any condition specified in this Section 7.2 if it
executes a writing so stating at or prior to the Closing.
8. EXCLUSIVE REMEDIES FOR BREACHES OF THIS AGREEMENT.
-------------------------------------------------
8.1. Survival of Representations and Warranties. All of the
------------------------------------------
representations and warranties of the Parties contained in Section 3
of this Agreement shall survive the Closing and continue in full force
and effect for a period of two years thereafter.
8.2. Indemnification Provisions for Benefit of the Buyer.
---------------------------------------------------
8.2.1. In the event the Seller breaches any of its
covenants in Section 2.1 above or any of its representations and
warranties in Section 3.1 above, and, if there is an applicable
survival period pursuant to Section 8.1 above, provided that the Buyer
makes a written claim for indemnification against the Seller pursuant
to Section 10.7 below within such survival period, then the Seller
agrees to indemnify the Buyer from and against the entirety of any
Adverse Consequences the Buyer may suffer before, through and after
the date of the claim for indemnification (including any Adverse
Consequences the Buyer may suffer after the end of any applicable
survival period) resulting from, arising out of, relating to, in the
nature of, or caused by the breach. Notwithstanding any provision
herein to the contrary, the obligation of Seller pursuant to this
Section 8 shall not exceed, in the aggregate, the Purchase Price.
8.3. Indemnification Provisions for Benefit of the Seller.
----------------------------------------------------
8.3.1. In the event the Buyer breaches any of its
representations, warranties, and covenants contained herein, and, if
there is an applicable survival period pursuant to Section 8.1 above,
provided that the Seller makes a written claim for indemnification
against
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the Buyer pursuant to Section 10.7 below within such survival period,
then the Buyer agrees to indemnify the Seller from and against the
entirety of any Adverse Consequences the Seller may suffer before,
through and after the date of the claim for indemnification (including
any Adverse Consequences the Seller may suffer after the end of any
applicable survival period) resulting from, arising out of, relating
to, in the nature of, or caused by the breach.
Buyer agrees that it will not take any action to prevent the
release of Seller from any of Seller's obligations with respect to
Target, provided that, in connection therewith, Buyer shall not be
required to incur or undertake any obligation and Target shall not be
required to modify any existing rights or obligations.
8.4. Matters Involving Third Parties.
-------------------------------
8.4.1. If any third party shall notify any Party (the
"Indemnified Party") with respect to any matter (a "Third Party
Claim") which may give rise to a claim for indemnification against any
other Party (the "Indemnifying Party") under this Section 8, then the
Indemnified Party shall promptly notify each Indemnifying Party
thereof in writing; provided, however, that no delay on the part of
the Indemnified Party thereof in writing; provided, however, that no
delay on the part of the Indemnifying Party shall relieve the
Indemnifying Party from any obligation hereunder unless (and then
solely to the extent) the Indemnifying Party thereby is prejudiced.
8.4.2. Any Indemnifying Party will have the right to defend
the Indemnified Party against the Third Party Claim with counsel of
its choice reasonably satisfactory to the Indemnified Party so long as
(A) the Indemnifying Party notifies the Indemnified Party in writing
within fifteen (15) days after the Indemnified Party has given notice
of the Third Party Claim that the Indemnifying Party will indemnify
the Indemnified Party from and against the entirety of any Adverse
Consequences the Indemnified Party may suffer resulting from, arising
out of, relating to, in the nature of, or caused by the Third Party
Claim, (B) the Indemnifying party provides the Indemnified Party with
evidence reasonably acceptable to the Indemnified Party that the
Indemnifying Party will have the financial resources to defend against
the Third Party Claim and fulfill its indemnification obligations
hereunder, (C) the Third Party Claim involves only money damages and
does not seek an injunction or other equitable relief, (D) settlement
of, or an adverse judgment with respect to, the Third Party Claim is
not, in the good faith judgment of the Indemnified Party, likely to
establish a precedental custom or practice materially adverse to the
continuing business interests of the Indemnified Party, and (E) the
Indemnifying Party conducts the defense of the Third Party Claim
actively and diligently.
8.4.3. So long as the Indemnifying Party is conducting the
defense of the Third Party Claim in accordance with Section 8.4.2
above, (A) the Indemnified Party may retain separate co-counsel at its
sole cost and expense and participate in the defense of the Third
Party Claim, (B) the Indemnified Party will not consent to the entry
of any judgment
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or enter into any settlement with respect to the Third Party Claim
without the prior written consent of the Indemnifying Party (not to be
withheld unreasonably), and (C) the Indemnifying Party will not
consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of
the Indemnified Party (not to be withheld unreasonably).
8.4.4. In the event any of the conditions in Section 8.4.2
above is or becomes unsatisfied, however, (A) the Indemnified Party
may defend against the Third Party Claim in any manner it reasonably
may deem appropriate (and the Indemnified Party need not consult with,
or obtain any consent from, the Indemnifying Party in connection
therewith), (B) the Indemnifying Party will reimburse the Indemnified
Party promptly and periodically for the costs of defending against the
Third Party Claim (including reasonable attorneys' fees and expenses),
and (C) the Indemnifying Party will remain responsible for any Adverse
Consequences the Indemnified Party may suffer resulting from, arising
out of, relating to, in the nature of, or caused by the Third Party
Claim to the fullest extent provided in this Section 8. In all cases,
the Indemnified Party will take all reasonable actions so as to
mitigate any Adverse Consequences.
8.5. Determination of Adverse Consequences. The Parties shall
-------------------------------------
take into account the time cost of money in determining Adverse
Consequences for purposes of this Section 8. All indemnification
payments under this Section 8 shall be deemed adjustments to the
Purchase Price.
8.6. Other Indemnification Provisions. Each of the parties
--------------------------------
agrees that, except as expressly contemplated by Section 10.14, the
rights provided in this Section 8 shall be the exclusive right and
remedy for any Adverse Consequence resulting from a breach of this
Agreement.
9. TERMINATION.
-----------
9.1. Termination of Agreement. Certain of the Parties may
------------------------
terminate this Agreement as provided below:
9.1.1. The Buyer and the Seller may terminate this
Agreement by mutual written consent at any time prior to the Closing;
9.1.2. The Buyer may terminate this Agreement by giving
written notice to the Seller at any time prior to the Closing (A) in
the event the Seller has breached any material representation,
warranty, or covenant contained in this Agreement in any material
respect, the Buyer has notified the Seller of the breach, and the
breach has continued without cure for a period of five (5) business
days after the notice of breach or (B) if the Closing shall not have
occurred on or before July 14, 1995, by reason of the failure of any
condition
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precedent under Section 7.1 hereof (unless the failure results
primarily from the Buyer itself breaching any representation,
warranty, or covenant contained in this Agreement); and
9.1.3. The Seller may terminate this Agreement by giving
written notice to the Buyer at any time prior to the Closing (A) in
the event the Buyer has breached any material representation,
warranty, or covenant contained in this Agreement in any material
respect, the Seller has notified the Buyer of the breach, and the
breach has continued without cure for a period of five (5) business
days after the notice of breach or (B) if the Closing shall not have
occurred on or before July 14, 1995, by reason of the failure of any
condition precedent under Section 7.2 hereof (unless the failure
primarily from the Seller itself breaching any representation,
warranty, or covenant contained in this Agreement).
9.1.4. Effect of Termination. If any Party terminates this
---------------------
Agreement pursuant to Section 9.1 above, all rights and obligations of
the Parties hereunder shall terminate without any liability of any
Party to any other Party (except for any liability of any Party then
in breach).
10. MISCELLANEOUS.
-------------
10.1. Press Releases and Public Announcements. No Party
---------------------------------------
shall issue any press release or make any public announcement relating
to the subject matter of this Agreement without the prior written
approval of the Buyer and the Seller; provided, however, that any
Party may make any public disclosure it believes in good faith is
required by applicable law or any listing or trading agreement
concerning its publicly-traded securities (in which case the
disclosing Party will use its best efforts to advise the other Party
prior to making the disclosure).
10.2. No Third-Party Beneficiaries. This Agreement shall not
----------------------------
confer any rights or remedies upon any Person other than the Parties
and their respective successors and permitted assigns.
10.3. Entire Agreement. This Agreement (including the
----------------
documents referred to herein) constitutes the entire agreement among
the Parties and supersedes any prior understandings, agreements, or
representations by or among the Parties, written or oral, to the
extent they related in any way to the subject matter hereof.
10.4. Succession and Assignment. This Agreement shall be
-------------------------
binding upon and inure to the benefit of the Parties named herein and
their respective successors and permitted assigns. No Party may
assign either this Agreement or any of its rights,interests, or
obligations hereunder without the prior written approval of the Buyer
and the Seller, provided, however, that the Buyer may assign any or
all of its right to purchase the Target Shares (but no other right or
obligation) to one or more of its Affiliates.
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10.5. Counterparts. This Agreement may be executed in one or
------------
more counterparts, each of which shall be deemed an original but all
of which together will constitute one and the same instrument.
10.6. Headings. The section headings contained in this
--------
Agreement are inserted for convenience only and shall not affect in
any way the meaning or interpretation of this Agreement.
10.7. Notices. All notices, requests, demands, claims, and
-------
other communications hereunder will be in writing. Any notice,
request, demand, claim, or other communication hereunder shall be
deemed duly given if (and then two (2) business days after) it is sent
by registered or certified mail, return receipt requested, postage
prepaid, and addressed to the intended recipient as set forth below:
If to the Buyer: LEUCADIA NATIONAL CORPORATION
315 Park Avenue South
New York, New York 10010
Attn: Joseph S. Steinberg, President
With Copy to: WEIL, GOTSHAL & MANGES
767 Fifth Avenue
New York, New York 10153
Attn: Stephen E. Jacobs, Esq.
If to the Seller: MORRISON KNUDSEN CORPORATION
720 Park Boulevard
Boise, Idaho 93729
Attn: Stephen G. Hanks
With Copy to: MORRISON KNUDSEN CORPORATION
720 Park Boulevard
Boise, Idaho 93729
Attn: Jonathan M. Robertson
With Copy to: JONES, DAY, REAVIS & POGUE
555 West 5th Street, Suite 4600
Los Angeles, California 90013
Attn: Robert Dean Avery, Esq.
Any Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set
forth above using any other means (including personal delivery,
expedited courier, messenger service, edge, telex, ordinary mail, or
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<PAGE>
electronic mail), but no such notice, request, demand, claim, or other
communication shall be deemed to have been duly given unless and until
it actually is received by the intended recipient. Any Party may
change the address to which notices, requests, demands, claims, and
other communications hereunder are to be deliver by giving the other
Parties notice in the manner herein set forth.
10.8. Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the domestic laws of the State of New
York without giving effect to any choice or conflict of law provision
or rule (whether of the State of New York or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other
than the State of New York.
10.9. Amendments and Waivers. No amendment of any provision
----------------------
of this Agreement shall be valid unless the same shall be in writing
and signed by the Buyer and the Seller. No waiver by any Party of any
default, misrepresentation, or breach of warranty or covenant
hereunder, whether intentional or not, shall be deemed to extend to
any prior or subsequent default, misrepresentations, or breach of
warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
10.10. Severability. Any term or provision of this Agreement
------------
that is invalid or unenforceable in any situation in any jurisdiction
shall not affect the validity or enforceability of the remaining terms
and provisions hereof or the validity or enforceability of the
offending term or provision in any other situation or in any other
jurisdiction.
10.11. Expenses. Each of the Parties will bear its own costs
--------
and expenses (including legal fees and expenses) incurred in
connection with this Agreement and the transactions contemplated
hereby. The Seller agrees that the Target has not borne or will not
bear any of the Seller's costs and expenses (including any of their
legal fees and expenses) in connection with this Agreement or any of
the transaction contemplated hereby.
10.12. Construction. The Parties have participated jointly in
------------
the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the Parties and
no presumption or burden of proof shall arise favoring any Party by
virtue of the authorship of any of the provisions of this Agreement.
Any reference to any federal, state, local, or foreign statute or law
shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. The word
"including" shall mean including without limitation. The Parties
intend that each representation, warranty, and covenant contained
herein shall have independent significance. If any Party has breached
any representation, warranty, or covenant contained herein in any
respect, the fact that there exists another representation, warranty,
or covenant relating to the same subject matter (regardless of the
relative levels of specificity) which the Party has not breached shall
not
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<PAGE>
detract from or mitigate the fact that the Party is in breach of the
first representation, warranty, or covenant.
10.13. Incorporation of Exhibits and Schedules. The Exhibits
---------------------------------------
and Schedules identified in this Agreement are incorporated herein by
reference and made a part hereof.
10.14. Specific Performance. Each of the Parties acknowledges
--------------------
and agrees that the other Party would be damaged irreparably in the
event any of the provisions of this Agreement are not performed in
accordance with their specific terms or other wise are breached.
Accordingly, each of the Parties agrees that the other Party shall be
entitled to an injunction or injunctions to prevent breaches of the
provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted
in any court of the United States or any state thereof having
jurisdiction over the Parties and the matter in addition to any other
remedy to which they may be entitled, at law or in equity.
10.15. Submission to Jurisdiction. Each of the Parties submits
--------------------------
to the jurisdiction of any state or federal court sitting in New York,
New York in any action or proceeding arising out of or relating to
this Agreement and agrees that all claims in respect of the action or
proceeding may be heard and determined in any such court. Each of the
Parties waives any defense of inconvenient forum to the maintenance of
any action or proceeding so brought and waives any bond, surety or
other security that might be required of any other Party with respect
thereto. Any Party may make service or any other Party by sending or
delivering a copy of the process to the Party to be served at the
address and in the manner provided for the giving of notices in
Section 10.7. Nothing in Section 10.15, however, shall affect the
right of any Party to bring any action or proceeding arising out of or
relating to this Agreement in any other court or to serve legal
process in any other manner permitted by law or at equity. Each
Party agrees that a final judgment in any action or proceeding so
brought shall be conclusive and may be confirmed by suit as the
judgment or in any other manner provided by law or at equity.
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<PAGE>
IN WITNESS WHEREOF, the Parties hereto have executed this
Agreement as of the date first above written.
"BUYER"
LEUCADIA NATIONAL CORPORATION, a New York
corporation
By:
------------------------------------------
Title: President
"SELLER"
MORRISON KNUDSEN CORPORATION, a Delaware
corporation
By:
------------------------------------------
Title:
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<PAGE>
EXHIBIT "A"
INTERCOMPANY AGREEMENT
1. Support Services Agreement dated December 20, 1993, by and
between MK Gold Company, a Delaware corporation and Morrison
Knudsen Corporation, a Delaware corporation.
2. Professional Services Agreement December 20, 1993, by and between
MK Gold Company, a Delaware corporation and Morrison Knudsen
Corporation, a Delaware corporation.
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<PAGE>
EXHIBIT B
AMENDED AND RESTATED ESCROW AND SECURITY AGREEMENT
AMENDED AND RESTATED ESCROW AND SECURITY AGREEMENT, dated as
of May 12, 1995, by and among LEUCADIA NATIONAL CORPORATION, a New
York corporation ("Buyer"), MORRISON KNUDSEN CORPORATION, a Delaware
corporation ("Seller"), MELLON BANK, N.A., as Collateral Agent (as
defined herein) for the MK Lenders (as defined herein) and Weil,
Gotshal & Manges (a partnership including professional corporations)
("Escrow Agent").
W I T N E S S E T H :
-------------------
WHEREAS, pursuant to an agreement made as of the 12th day of
May 1995 between Seller and Buyer (the "Stock Purchase Agreement")
Seller has agreed to sell to Buyer and Buyer has agreed to purchase
from Seller an aggregate of 9,000,000 shares of the outstanding common
stock, par value $.01 per share, of MK Gold Company, a Delaware
corporation ("Target") (the "Target Shares"); and
WHEREAS, the Stock Purchase Agreement provides for the
deposit (a) by Buyer of US$22,500,000 (the "Escrowed Funds") into an
escrow account (the "Cash Escrow Account"), (b) by Sellers of the
Target Shares, with stock powers duly endorsed in blank (the "Escrowed
Shares") into an escrow account (the "Share Escrow Account"), in each
case to be released in accordance with the provisions of Section 3
hereof; and
WHEREAS, the Stock Purchase Agreement also provides that any
dividends, distributions, redemptions, purchases or other acquisitions
of any shares of capital stock of Target (a "Distribution") received
in respect of the Target Shares shall be for the benefit of Buyer and,
if received by Seller on or after the date of the Stock Purchase
Agreement and prior to the Closing (as defined in the Stock Purchase
Agreement) shall be deposited with the Escrow Agent (the "Escrowed
Distributions") as follows: any cash portion of the Escrowed
Distributions shall be deposited in the Cash Escrow Account with the
balance of the Escrowed Distributions to be deposited into an escrow
account (the "Distributions Escrow Account") to be released in
accordance with the provisions of Section 3 hereof; and
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WHEREAS, Seller has entered into a Credit Agreement dated as
of April 11, 1995 by and between Morrison Knudsen Corporation, an Ohio
corporation and Seller, as borrowers (collectively, "Borrowers"),
Mellon Bank, N.A. as Administrative Agent (the"Administrative Agent"),
Mellon Bank, N.A. and Bank of America National Trust and Savings
Association, as Co-Agents (the "Co-Agents"), and the other banks and
other financial institutions named therein, as lenders (the "MK
Lenders"), as amended as of April 25, 1995 (the "MK Credit Agreement")
and the Pledge and Security Agreement dated as of April 11, 1995 by
and between Seller as pledgor, in favor of the Collateral Agent on
behalf of the MK Lenders, the Administrative Agent and the Co-Agents
(the MK Pledge Agreement"); and
WHEREAS, Seller pledged the Escrowed Shares to the
Collateral Agent for the ratable benefit of the MK Lenders, to secure
the Obligations (as defined in the MK Credit Agreement) under the MK
Credit Agreement: and
WHEREAS, the Collateral Agent has been informed that it is a
condition under the Stock Purchase Agreement that the Escrowed Shares
be deposited into the escrow established hereunder; and
WHEREAS, the Escrow Agent is willing to serve as Escrow
Agent and hold the Escrowed Shares and the Escrowed Funds, plus any
interest earned thereon, (collectively, the "Escrowed Property") in
accordance with and subject to the terms and conditions hereof.
NOW, THEREFORE, in consideration of the foregoing and other
good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, and intending to be legally bound, the parties
hereto agree as follows:
1. Seller, Buyer and the Collateral Agent, on behalf of
the MK Lenders, each hereby consent to the appointment of and hereby
appoint Weil, Gotshal & Manges as Escrow Agent, to serve as escrow
agent in accordance with the terms and conditions herein set forth,
and Escrow Agent hereby accepts such appointment.
2. The Escrowed Funds, the Escrowed Distributions, if any,
and the Escrowed Shares shall be deposited with Escrow Agent as
follows:
(a) On the business day next following the satisfaction or
waiver of the conditions set forth in Section
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<PAGE>
7.2.7. of the Stock Purchase Agreement and notice thereof to Buyer
(or, with respect to any Escrowed Distributions, on the business day
next following receipt thereof by Seller), Buyer shall deliver to
Escrow Agent the Escrowed Funds and the Collateral Agent shall deliver
to Escrow Agent the Escrowed Shares, with stock powers duly endorsed
in blank, and Seller shall deliver to Escrow Agent the Escrowed
Distributions, if any. Escrow Agent shall not be liable or
responsible for the collection of the proceeds of any check payable or
endorsed to Escrow Agent hereunder.
(b) Escrow Agent, in accordance with direction provided by
Buyer, shall deposit the Escrowed Funds and the cash portion of any
Escrowed Distributions in certificates of deposit or interest bearing
accounts of Morgan Guaranty Trust Company or any other bank or trust
company, incorporated under the laws of the United States of America
or any state, which has combined capital and surplus of not less than
$100,000,000.
(c) No interest earned on the Escrowed Funds shall become
part of the Escrowed Funds. All interest earned on the Escrowed Funds
shall be the property of Buyer and shall be payable to Buyer at its
written request. Any interest earned on the cash portion of the
Escrowed Distributions shall be added to and become part of the
Escrowed Distributions.
(d) Each of the parties hereto acknowledge its
understanding that pursuant to the terms of the MK Pledge Agreement,
Seller has pledged the Escrowed Shares to the Collateral Agent, for
the ratable benefit of the MK Lenders, to secure the Obligations (as
defined in the MK Credit Agreement) under the MK Credit Agreement and
further acknowledges the security interest in the Escrowed Shares ,
and any proceeds thereof, in favor of and held by the MK Lenders (the
"MK Lenders' Security Interest") and hereby agrees that until all of
the terms and conditions of this escrow agreement have been satisfied
or waived, the Escrow Agent will hold the Escrowed Shares (and any
proceeds thereof) subject to the MK Lenders' Security Interest.
Seller and the Collateral Agent on behalf of the MK
Lenders hereby acknowledge that no action or inaction on the part of
the Escrow Agent of the Buyer shall in any way alter the relative
rights and obligations of Seller, the Collateral Agent and the MK
Lenders in and with respect to the Escrowed Shares and the proceeds of
the sale thereof pursuant to the Stock Purchase Agreement, it being
understood that such rights and obligations shall be governed
exclusively by the MK Credit Agreement and the MK Pledge Agreement.
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<PAGE>
3. The Escrowed Property shall be released by the Escrow
Agent as follows:
(a) On the business day immediately following receipt by
Escrow Agent of Disbursing Instructions in the form attached as Annex
A hereto executed by Buyer, Escrow Agent shall send to Seller and the
Collateral Agent notice in the form attached hereto as Annex A-1 of
receipt of such Disbursing Instructions. If within two business days
of receipt of such Disbursing Instructions, Escrow Agent has not
received notice from Seller or the Collateral Agent that it disputes
the release of the Escrowed Property in accordance with such
Disbursing Instructions, on the third business day following receipt
by Escrow Agent of such Disbursing Instructions, Escrow Agent (i)
shall release to the Collateral Agent from the Escrowed Funds the
purchase price set forth in the Stock Purchase Agreement and (ii)
shall release to Buyer the Escrowed Shares, with stock powers duly
endorsed in blank, and the Escrowed Distributions, if any, including
the balance remaining in the Cash Escrow Account after release of
funds to Seller pursuant to (a)(i) above; and
(b) Upon receipt by the Escrow Agent of Disbursing
Instructions in the form attached as Annex B hereto executed by both
Seller and Buyer, Escrow Agent shall release to the Collateral Agent
the Escrowed Shares, with stock powers duly endorsed in blank, and the
Escrowed Distributions, if any, (including any cash portion of the
Escrowed Distributions and any interest earned thereon) and shall
release to Buyer the Escrowed Funds; and
(c) If the Escrow Agent shall not have received Disbursing
Instructions in the form attached as Annex A or Annex B hereto duly
executed in accordance herewith on or prior to [August 1, 1995],
Escrow Agent shall release to the Collateral Agent the Escrowed Shares
with stock powers duly endorsed in blank, and the Escrowed
Distributions, if any, (including any cash portion of the Escrowed
Distributions and any interest earned thereon), and shall release to
Buyer the Escrowed Funds;
4. Any notice or certificate given to Escrow Agent under
Section 3 shall be delivered either by facsimile transmission, by hand
or by overnight delivery to the parties at the addresses set forth in
Section 15 of this Agreement; provided that facsimile transmission
shall not be effective unless receipt is telephonically confirmed by
the addressees or confirmed in writing (which may be facsimile
transmitted) by the addressees. Any notice received by Escrow Agent
hereunder after 11:00 A.M. New York City time shall be deemed to have
been received on the
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next following business day. In the event of any dispute, Escrow
Agent shall retain the Escrowed Property until the dispute is resolved
by the final order or judgment of a court having jurisdiction with
respect thereto. Reasonable fees and costs of the other party or
parties shall be advanced by the party giving notice of a dispute, and
shall be borne by the party or parties not prevailing in the action.
5. Escrow Agent shall be entitled to rely upon, and shall
be fully protected from all liability, loss, cost, damage or expense
in acting or omitting to act pursuant to, any instruction, order,
judgment, certification, affidavit, demand, notice, opinion,
instrument or other writing delivered to it hereunder without being
required to determine the authenticity of such document, the
correctness of any fact stated therein, the propriety of the service
thereof or the capacity, identity or authority of any party purporting
to sign or deliver such document.
6. The duties of Escrow Agent are only as herein
specifically provided, and are purely ministerial in nature. Escrow
Agent shall neither be responsible for, or under, nor chargeable with
knowledge of, the terms and conditions of any other agreement,
instrument or document in connection herewith, including, without
limitation, the agreements referred to in the preamble to this
Agreement, and shall be required to act in respect of the Escrowed
Property only as provided in this Agreement. This Agreement sets
forth all the obligations of Escrow Agent with respect to any and all
matters pertinent to the escrow contemplated hereunder and no
additional obligations of Escrow Agent shall be implied from the terms
of this Agreement or any other agreement. Escrow Agent shall incur no
liability in connection with the discharge of its obligations under
this Agreement or otherwise in connection therewith, except such
liability as may arise from the willful misconduct or gross negligence
of Escrow Agent.
7. Escrow Agent may consult with counsel of its choice,
which may include attorneys in the firm of Weil, Gotshal & Manges, and
shall not be liable for any action taken or omitted to be taken by
Escrow Agent in accordance with the advice of such counsel.
8. Escrow Agent shall not be bound by any modification,
cancellation or rescission of this Agreement unless in writing and
signed by Escrow Agent.
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9. Escrow Agent shall have no tax reporting duties with
respect to the Escrowed Property, or income thereon, such duties being
the responsibility of the party or parties which receive, or have the
right to receive, any taxable income hereunder. Notwithstanding the
foregoing, Escrow Agent has the authority to comply with the
provisions of Section 468B(g) of the Internal Revenue Code of 1986, as
amended, and any regulations promulgated thereunder. Such authority
shall include, without limitation, (i) the filing of tax returns
(including information returns) with respect to the Escrowed Property,
or income thereon, (ii) the payment of any tax, interest or penalties
imposed thereon, (iii) the withholding of any amounts which are
required to be withheld and (iv) the payment over of such withheld
amounts to the appropriate taxing authority. The parties to this
Agreement, other than Escrow Agent, shall provide Escrow Agent with
all information necessary to enable Escrow Agent to comply with the
foregoing. Escrow Agent may withdraw from the Cash Escrow Account
amounts necessary to pay all applicable income or withholding taxes
(plus interest and penalties thereon) that are required to be paid.
The parties hereto acknowledge that (a) the Escrowed Funds shall
remain the property of Buyer unless and until disbursed to the
Collateral Agent pursuant to Section 3 hereof and (b) the Escrowed
Shares and the Escrowed Distributions shall remain Seller's property
unless and until disbursed to Buyer pursuant to Section 3 hereof.
10. Escrow Agent is acting as a stakeholder only with
respect to the Escrowed Property. If any dispute arises as to whether
Escrow Agent is obligated to deliver the Escrowed Property or as to
whom the Escrowed Property are to be delivered or the amount thereof,
Escrow Agent shall not be required to make any delivery, but in such
event Escrow Agent may hold the Escrowed Property until receipt by
Escrow Agent of instructions in writing, signed by all parties which
have, or claim to have, an interest in the Escrowed Property,
directing the disposition of the Escrowed Property, or in the absence
of such authorization, Escrow Agent may hold the Escrowed Property
until receipt of a certified copy of a final judgment of a court of
competent jurisdiction providing for the disposition of the Escrowed
Property. Escrow Agent may require, as a condition to the disposition
of the Escrowed Property pursuant to written instructions,
indemnification and/or opinions of counsel, in form and substance
satisfactory to Escrow Agent, from each party providing such
instructions. If such written instructions, indemnification and
opinions are not received, or proceedings for such determination are
not commenced within 30 days after receipt by Escrow Agent of notice
of any such dispute and diligently continued, or if Escrow Agent is
uncertain as to which party or
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parties are entitled to the Escrowed Property, Escrow Agent may either
(i) hold the Escrowed Property until receipt of (A) such written
instructions and indemnification or (B) a certified copy of a final
judgment of a court of competent jurisdiction providing for the
disposition of the Escrowed Property, or (ii) deposit the Escrowed
Property in the registry of a court of competent jurisdiction;
provided, however, that notwithstanding the foregoing, Escrow Agent
may, but shall not be required to, institute legal proceedings of any
kind.
11. Buyer and Seller, jointly and severally, agree to
reimburse Escrow Agent on demand for, and to indemnify and hold Escrow
Agent harmless against and with respect to, any and all loss,
liability, damage, or expense (including, without limitation, taxes,
attorneys' fees and costs) that Escrow Agent may suffer or incur in
connection with the entering into of this Agreement and performance of
its obligations under this Agreement or otherwise in connection
therewith, except to the extent such loss, liability, damage or
expense arises from the willful misconduct of Escrow Agent. Escrow
Agent, after not less than ten days prior written notice to the other
parties hereto, shall have the right at any time and from time from
time to charge, and reimburse itself from, the Escrowed Property for
all amounts to which it is entitled pursuant this Agreement. Escrow
Agent shall not receive a fee for its services rendered as Escrow
Agent hereunder.
12. Escrow Agent and any successor escrow agent may at any
time resign as such by delivering the Escrowed Property to either (i)
any successor escrow agent designated by all the parties hereto (other
than Escrow Agent) in writing, or (ii) any court having competent
jurisdiction. Upon its resignation and delivery of the Escrowed
Property as set forth in this paragraph, Escrow Agent shall be
discharged of, and from, any and all further obligations arising in
connection with the escrow contemplated by this Agreement.
13. Escrow Agent shall have the right to represent any
party hereto in any dispute between the parties hereto with respect to
the Escrowed Property or otherwise.
14. This Agreement shall inure to the benefit of, and be
binding upon, the parties hereto and their respective permitted
successors and assigns. Nothing in this Agreement, express or
implied, shall give to anyone, other than the parties hereto and their
respective permitted successors and assigns, any benefit, or any legal
or equitable right, remedy or claim, under
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<PAGE>
or in respect of this Agreement or the escrow contemplated hereby.
15. Except as specifically provided otherwise herein, any
notice authorized or required to be given to a party hereto pursuant
to this Agreement shall be deemed to have been given when hand-
delivered, or when mailed by United States certified or registered
mail, postage prepaid, return receipt requested, addressed to the
parties at the following addresses:
If to Buyer, to:
Leucadia National Corporation
315 Park Avenue South
New York, New York
Attention: Joseph S. Steinberg, President
with a copy to:
Weil, Gotshal & Manges
767 Fifth Avenue
New York, New York 10153
Attention: Stephen E. Jacobs, Esq.
If to Seller, to:
Morrison Knudsen Corporation
720 Park Boulevard
Boise, Idaho 93729
Attention: Stephen G. Hanks
with a copy to:
Jones, Day, Reavis & Pogue
5555 West 5th Street, Suite 4600
Los Angeles, California 90015
Attention: Robert Dean Avery, Esq.
If to the Collateral Agent, to:
Mellon Bank, N.A.
One Mellon BAnk Center
Pittsburgh, Pennsylvania 15258-0001
Attention: Alan Kopolow
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with a copy to:
Murphy, Weir & Butler
101 California Street
San Francisco, California 94111
Attention: Ellen A. Friedman, Esq.
If to Escrow Agent, to:
Weil, Gotshal & Manges
767 Fifth Avenue
New York, New York 10153
Attention: Stephen E. Jacobs, Esq.
Any party may change its respective address by giving notice thereof
in writing to the other parties hereto in the same manner as set forth
above.
16. This Agreement shall terminate on the date on which all
Escrowed Property has been fully disbursed or release herefrom in
accordance with Section 3 hereof.
17. This Agreement shall be construed and enforced in
accordance with the laws of the State of New York. All actions
against Escrow Agent arising under or relating to this Agreement shall
be brought against Escrow Agent exclusively in the appropriate court
in the County of New York, State of New York. Each of the parties
hereto agrees to submit to personal jurisdiction and to waive any
objection as to venue in the County of New York, State of New York.
Service of process on any party hereto in any action arising out of or
relating to this Agreement shall be effective if mailed to such party
and such party's counsel as set forth in Section 15 hereof.
18. TO THE FULL EXTENT PERMITTED BY LAW, EACH OF THE
PARTIES HERETO HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES
THE RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY PARTY HERETO. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR ESCROW AGENT ENTERING INTO THIS
AGREEMENT.
19. This Agreement may be executed in any number of
separate counterparts, each of which shall, collectively and
separately, constitute one agreement.
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20. All pronouns and any variations thereof shall be deemed
to refer to the masculine, feminine or neuter, singular or plural, as
the identity of the parties hereto taken within context may require.
21. The rights of Escrow Agent contained in this Agreement,
including without limitation the right to indemnification, shall
survive the resignation of Escrow Agent and the termination of the
escrow contemplated hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first written
above.
LEUCADIA NATIONAL CORPORATION
By:
--------------------------------
Title:
-----------------------------
MORRISON KNUDSEN CORPORATION
By:
--------------------------------
Title:
-----------------------------
MELLON BANK, N.A., as Collateral
Agent for the MK Lenders
By:
-------------------------------
Title:
----------------------------
ESCROW AGENT: WEIL, GOTSHAL & MANGES
By:
--------------------------------
(A Member of the Firm)
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ANNEX A
-------
Disbursing Instructions for Release
of Escrow Property upon
Satisfaction or Waiver of Conditions
-------------------------------------
Weil, Gotshal & Manges
767 Fifth Avenue
New York, New York 10153
Attn: Stephen E. Jacobs, Esq.
Reference is made to that certain Amended and Restated
Escrow Agreement, dated as of May 12, 1995 by and among Leucadia
National Corporation ("Buyer"), Morrison Knudsen Corporation
("Seller"), Mellon Bank, N.A. as Collateral Agent and Weil, Gotshal &
Manges as Escrow Agent (the "Escrow Agreement"). All capitalized
terms used herein without definition shall have the meanings ascribed
thereto in the Escrow Agreement.
All conditions to closing under the Stock Purchase Agreement
have been satisfied and accordingly, pursuant to and in accordance
with the Escrow Agreement, you are hereby directed (a) to release to
the Collateral Agent US$22,500,000 of the Escrowed Funds from the Cash
Escrow Account established under the Escrow Agreement, (b) to release
to Buyer (i) the Escrowed Shares, together with stock powers duly
endorsed in blank, from the Share Escrow Account established under the
Escrow Agreement, and (ii) the Escrowed Distributions, if any,
including the balance remaining in the Cash Escrow Account after
release of funds to Seller pursuant to (a) above.
LEUCADIA NATIONAL CORPORATION
----------------------------------------------------------------
By:
------------------------------------------------------------
Title:
------------------
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ANNEX A-1
Morrison Knudsen Corporation
720 Park Boulevard
Boise, Idaho 93729
Attention: Stephen G. Hanks
Mellon Bank, N.A.
Attention:
Gentlemen:
Reference is made to that certain Amended and Restated
Escrow Agreement, dated as of May 12, 1995 by and among Leucadia
National Corporation ("Buyer"), Morrison Knudsen Corporation
("Seller"), Mellon Bank, N.A. as Collateral Agent and Weil, Gotshal &
Manges as Escrow Agent (the "Escrow Agreement"). All capitalized
terms used herein without definition shall have the meanings ascribed
thereto in the Escrow Agreement.
On _____, 1995, Escrow Agent received the attached
Disbursing Instructions executed by Buyer stating that all conditions
to closing under the Stock Purchase Agreement have been satisfied and
instructing the Escrow Agent to disburse the Escrowed Property in
accordance with such Disbursing Instructions. In accordance with the
terms of the Escrow Agreement, if Escrow Agent does not receive notice
from Seller or the Collateral Agent that it disputes the release of
the Escrowed Property in accordance with such Disbursing Instructions,
on or before ______, 1995, Escrow Agent shall (a) release to the
Collateral Agent US$22,500,000 of the Escrowed Funds from the Cash
Escrow Account established under the Escrow Agreement, and (b) release
to Buyer (i) the Escrowed Shares, together with stock powers duly
endorsed in blank, from the Share Escrow Account established under the
Escrow Agreement, and (ii) the Escrowed Distributions, if any,
including the balance remaining in the Cash Escrow Account after
release of funds to Seller pursuant to (a) above.
WEIL, GOTSHAL & MANGES
By:
-------------------------
(A Member of the Firm)
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ANNEX B
-------
Disbursing Instructions upon
Section 9 Event
----------------
Weil, Gotshal & Manges
767 Fifth Avenue
New York, New York 10153
Attn: Stephen E. Jacobs, Esq.
Reference is made to that certain Escrow Agreement, dated as
of May ___, 1995 by and among Leucadia National Corporation ("Buyer"),
Morrison Knudsen Corporation ("Seller") and Weil, Gotshal & Manges as
Escrow Agent (the "Escrow Agreement"). All capitalized terms used
herein without definition shall have the meanings ascribed thereto in
the Escrow Agreement.
Pursuant to and in accordance with the Escrow Agreement, you
are hereby directed to (a) to release to Buyer the Escrowed Funds from
the Cash Escrow Account established under the Escrow Agreement and
(b) to release to Seller (i) the Escrowed Shares, together with stock
powers duly endorsed in blank, from the Share Escrow Account
established under the Escrow Agreement and (ii) the Escrowed
Distributions, if any, including the balance remaining in the Cash
Escrow Account after release of the Escrowed Funds to Buyer.
LEUCADIA NATIONAL CORPORATION
----------------------------------------------------------------
By:
------------------------------------------------------------
Title:
------------------
MORRISON KNUDSEN CORPORATION
By:
---------------------
Title:
-------------------
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LEUCADIA NATIONAL CORPORATION
AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
THIS AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT is entered
into as of January 1, 1994 among LEUCADIA NATIONAL CORPORATION, a New
York corporation (the "Company"), the several banks parties to this
Agreement (collectively, the "Banks") and _______ Bank, a New York
banking corporation, as agent for the Banks (the "Agent"), amending
and restating in its entirety the Revolving Credit Agreement dated as
of November 24, 1986 (as heretofore amended) among the Company, the
Banks and the Agent.
The parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
-----------
1.1. Defined Terms. As used in this Agreement, the following
------- -----
terms have the following meanings:
"Agent": _______ Bank acting as agent for the Banks.
-----
"Agreement": this Amended and Restated Revolving Credit
---------
Agreement, as it may be further amended, supplemented or modified from
time to time.
"Allcity": Allcity Insurance Co., a New York corporation.
-------
"Available Commitment": at a particular time, an amount equal to
--------- ----------
the difference between (a) the aggregate amount of the Commitment at
such time and (b) the aggregate unpaid principal amount at such time
of all Loans.
"Banking Subsidiaries": (i) so long as they are Subsidiaries of
------- ------------
the Company, (x) American Investment Bank, N.A., (y) American
Investment Financial, and (z) Governor Financial Corporation and (ii)
any other Subsidiary of the Company taking Federal Deposit Insurance
Corporation (or other similar entity) insured deposits.
"Banks": see preamble.
-----
"Base Rate": the interest rate per annum equal to the higher of
---- ----
(a) the rate of interest publicly announced by the
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Agent at its head office in New York, New York from time to time as
its prime rate (the prime rate is not intended to be the lowest rate
of interest charged by ________ Bank in connection with extensions of
credit to debtors), and (b) one-half of one percentage point (0.5%)
above the overnight Federal Funds Effective Rate. For the purposes of
this definition, "Federal Funds Effective Rate" shall mean, for any
------- ----- --------- ----
day, the rate per annum 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, as published for
such day (or, if such day is not a Business Day, the preceding
business day) by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the
average of the quotations for such day on such transactions received
by the Agent from three funds brokers of recognized standing selected
by the Agent.
"Base Rate Loans": Loans hereunder at any time of reference
---- ---- -----
bearing interest at a rate based upon the Base Rate.
"Borrowing Date": any Business Day specified in a notice
--------- ----
pursuant to Subsection 2.3 as a date on which the Company requests (or
is deemed to have requested) the Banks to make Loans hereunder.
"Business Day": any day on which banking institutions in New
-------- ---
York, New York, are open for the transaction of banking business and,
in the case of Eurodollar Loans, also a day which is a Eurodollar
Business Day.
"CPI": Colonial Penn Insurance Company, a Pennsylvania
---
corporation.
"CPL": Colonial Penn Life Insurance Company, a Pennsylvania
---
corporation.
"Code": the Internal Revenue Code of 1986, as amended and in
----
effect from time to time.
"Commitment": with respect to each Bank, the amount set forth
----------
herein as its commitment to make Loans to the Company as such amount
may be reduced from time to time as provided herein.
"Commitment Percentage": with respect to each Bank, the
---------- ----------
percentage set forth herein as its percentage of the aggregate
Commitment of the Banks to make Loans to the Company.
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"Commitment Period": the period from and including the date
---------- ------
hereof to, but not including, the Termination Date or such earlier
date as the Commitment shall terminate as provided herein.
"Commonly Controlled Entity": an entity, whether or not
-------- ---------- ------
incorporated, which is under common control with the Company within
the meaning of Section 414(b) or (c) of the Code.
"Consolidated" or "consolidated": with reference to any term
------------ ------------
defined herein, that term as applied to the accounts of the Company
and its Subsidiaries, consolidated in accordance with GAAP.
"Consolidated Intangibles": at a particular date, all assets of
------------ -----------
the Company and its Subsidiaries, determined on a consolidated basis
at such date, that would be classified as intangible assets in
accordance with GAAP, but in any event including, without limitation,
unamortized debt discount and expense, unamortized organization and
reorganization expense, costs in excess of the net asset value of
acquired companies, patents, trade or service marks, franchises, trade
names, goodwill and deferred tax assets. Notwithstanding anything to
the contrary contained in the preceding sentence, Consolidated
Intangibles shall not include deferred insurance policy acquisition
costs or the value of life insurance in force.
"Consolidated Net Worth": as to any Person at a particular date,
------------ --- -----
all amounts which should be included under shareholders' equity on a
balance sheet of such Person and its Subsidiaries determined on a
consolidated basis as at such date; provided that, in calculating
--------
shareholders' equity, marketable securities that have not suffered a
decline in value (other than a decline of a temporary nature) shall be
reflected at the amortized cost thereof and marketable securities that
have suffered a decline in value considered to be other than temporary
shall be reflected at the current value thereof. For purposes of this
definition, the recorded value of the Company's outstanding preferred
stock shall be included under shareholders' equity.
"Consolidated Tangible Net Worth": at a particular date, the
------------ -------- --- -----
excess, if any, of Consolidated Net Worth over Consolidated
Intangibles as at such date.
"Contingent Obligation": as to any Person, any reimbursement
---------- ----------
obligation of such Person in respect of the face amount of all letters
of credit for the account of such Person and (without duplication) all
drafts thereunder (other than trade
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letters of credit or interest or currency swap transactions entered
into in the ordinary course of business) and any obligation of such
Person guarantying or in effect guarantying any Indebtedness, leases,
dividends or other obligations ("primary obligations") of any other
------- -----------
Person (the "primary obligor") in any manner, whether directly or
------- -------
indirectly, including, without limitation, any obligation of such
Person, whether or not contingent, (a) to purchase any such primary
obligation or any property constituting direct or indirect security
therefor, (b) to advance or supply funds (i) for the purchase or
payment of any such primary obligation or (ii) to maintain working
capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency of the primary obligor, (c) to
purchase property, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of
the primary obligor to make payment of such primary obligation or (d)
otherwise to assure or hold harmless the owner of such primary
obligation against loss in respect thereof; provided, however, that
-------- -------
the term Contingent Obligation shall not include (i) endorsements of
instruments for deposit or collection in the ordinary course of
business, (ii) indemnities granted in the ordinary course of business
(including in connection with dispositions by the Company and/or its
Subsidiaries), (iii) any insurance or reinsurance obligation of any
Subsidiary of the Company entered into in the ordinary course of the
insurance business of such Subsidiary, (iv) any guaranty by a
Subsidiary of the Company of the obligation of another Subsidiary
(other than the Company), if the guarantied obligation of the
Subsidiary is reflected in the Company's consolidated financial
statements, (v) any obligation (other than the guaranty by a
Subsidiary of an obligation of the Company) reflected in the Company's
consolidated financial statements and (vi) any Indebtedness. The
amount of any Contingent Obligation shall be deemed to be an amount
equal to the stated or determinable amount of the primary obligation
in respect of which such Contingent Obligation is made or, if not
stated or determinable, the maximum reasonably anticipated liability
in respect thereof as determined by the Company in good faith. For
the purposes of this definition, Contingent Obligations shall not
include (x) any guaranty or indemnification undertaking given in
connection with the return of the assets of Colonial Penn Madison
Insurance Company ("Madison"), Commercial Loan Insurance Corporation
-------
("CLIC"), WMAC Credit Insurance Corporation ("WMAC Credit") (or any
---- ---- ------
other assets currently under the control of the Wisconsin Insurance
Commissioner) (collectively, the "Returned Companies") to the control
-------- ---------
of the Company or any of its Subsidiaries, or (y) any contingent
obligation arising from the operations of such Returned Companies;
provided, that, any such guaranty,
-------- ----
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indemnification undertaking or contingent obligation has recourse
solely to such Returned Companies and the operations of such Returned
Companies are kept separate and apart from those of the Company and
each of the Company's other Subsidiaries.
"Contractual Obligation": as to any Person, any provision of any
----------- ----------
security issued by such Person or of any agreement, instrument or
undertaking to which such Person is a party or by which it or any of
its property is bound.
"Default": any of the events specified in Section 7, whether or
-------
not any requirement for the giving of notice, the lapse of time, or
both, or any other condition, has been satisfied.
"Dollars or $": dollars in lawful currency of the United States
------- -- -
of America.
"Domestic Lending Office": the head office of the Agent in New
-------- ------- ------
York, New York, or such other office of the Agent as notified by the
Agent to the Company.
"Empire": Empire Insurance Company, a New York corporation.
------
"Empire Group": Allcity, Empire and their respective
------ -----
Subsidiaries.
"ERISA": the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time.
"Eurodollar Business Day": any Business Day on which commercial
---------- -------- --
banks are open for international business (including dealings in
Dollar deposits) in London or such other Eurodollar Interbank Market
as may be selected by the Agent in its sole discretion acting in good
faith.
"Eurodollar Lending Office": the Head Office of the Agent in New
---------- ------- ------
York, New York, or such other office of the Agent as notified by the
Agent to the Company.
"Eurodollar Loans": Loans hereunder at any time of reference
---------- -----
bearing interest at a rate based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each Interest Period
---------- ----
pertaining to Eurodollar Loans, the rate of interest per annum
(rounded upwards to the nearest 1/100 of one percent) determined by
the Agent to be equal to the quotient of (a) the rate at which
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its Eurodollar Lending Office is offered Dollar deposits two
Eurodollar Business Days prior to the beginning of such Interest
Period pertaining to any such Eurodollar Loan in the Eurodollar
Interbank Market selected by the Agent in its sole discretion in good
faith at 10:00 a.m., New York time, for delivery on the first day of
such Interest Period for the number of days comprised therein and in
an amount equal to the amount of the Eurodollar Loan to be outstanding
during such Interest Period, divided by (b) a number equal to l.00
minus the daily average of the maximum rates in effect on each day of
such Interest Period (expressed as a decimal fraction) at which the
Banks subject thereto would be required to maintain reserves under
Regulation D of the Board of Governors of the Federal Reserve System
(or any successor or similar regulations relating to such reserve
requirements) against "Eurocurrency Liabilities" (as such term is used
in Regulation D), if such liabilities were outstanding.
"Event of Default": any of the events specified in Section 7,
----- -- -------
provided that any requirement for the giving of notice or the lapse of
--------
time, or both, or any other condition specified therein, has been
satisfied.
"Excluded Subsidiaries": on the date hereof and on the date of
-------- ------------
any determination pursuant to this Agreement, Subsidiaries, including
without limitation each Subsidiary which is the debtor in a Permitted
Voluntary Proceeding, in which the Company and its Subsidiaries then
has an aggregate investment at cost, after writedowns which, added
together with all Contingent Obligations of the Company in respect of
liabilities of all such Subsidiaries, are less than 10% of its
Consolidated Tangible Net Worth.
"Existing Subordinated Debt": (i) the Company's 6% Subordinated
-------- ------------ ----
Swiss Franc Bonds due 1996, (ii) the Company's 10-3/8% Senior
Subordinated Notes due 2002 and (iii) the Company's 5-1/4% Convertible
Subordinated Debentures due 2003.
"F&H Guaranty": the Guaranty of the Company in the form of
--- --------
Exhibit E to the Master Agreement dated as of November 1989, by and
among CX Partners, L.P., a Delaware limited partnership, each of its
Limited Partners, including F&H Associates, C.V., a Netherlands
Antilles limited partnership ("F&H"), its Liquidating Trustee, and the
---
parties named therein, with respect to the obligations of F&H under
said Master Agreement.
"GAAP": generally accepted accounting principles consistent with
----
those employed in the preparation of the financial statements for the
fiscal year ended December 31, 1992 referred
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to in Section 3.1 hereof as modified by accounting changes effective
through September 30, 1993 as reflected in the Company's financial
statements for the quarter ended September 30, 1993.
"Governmental Authority": any nation or government, any state or
------------ ---------
other political subdivision thereof, and any entity exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Indebtedness": as to any Person at a particular time, all items
------------
which, in conformity with GAAP, would be classified as liabilities on
a balance sheet of such Person as at such time and which constitute
(a) indebtedness for borrowed money or constituting the deferred
purchase price of assets or other property, (b) obligations with
respect to any conditional sale agreement or title retention
agreement, (c) indebtedness arising under acceptance facilities and
all drafts drawn under all letters of credit issued for the account of
such Person, (d) all liabilities secured by any Lien on any property
owned by such Person even though it has not assumed or otherwise
become liable for the payment thereof, (e) obligations under leases
which have been, or under GAAP are required to be, capitalized, (f)
obligations with respect to interest payable and (g) any asserted
withdrawal liability of such Person or a Commonly Controlled Entity to
a Multiemployer Plan.
"Insurance Subsidiary": any Subsidiary of the Company licensed
--------- ----------
as an insurance company.
"Interest Payment Date": (a) as to any Base Rate Loan, the last
-------- ------- ----
day of each March, June, September and December and on the Termination
Date or such earlier date as the Commitment shall terminate as
provided herein, and (b) as to any Eurodollar Loan in respect of which
the Interest Period is (i) three months or less, the last day of such
Interest Period and (ii) more than three months, the date which is
three months from the first day of such Interest Period and, in
addition, the last day of such Interest Period.
"Interest Period": (a) with respect to any Eurodollar Loan, the
-------- ------
period commencing on the Borrowing Date with respect to such
Eurodollar Loan and ending one, two, three or six months thereafter,
as selected by the Company in its notice of borrowing as provided in
Subsection 2.3; and (b) with respect to any Base Rate Loan, the period
commencing on the Borrowing Date with respect to such Base Rate Loan
and ending 30 days thereafter, as selected by the Company in its
notice of borrowing as provided in
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Subsection 2.3; provided, that, all of the foregoing provisions
-------- ----
relating to Interest Periods are subject to the following:
(i) if any Interest Period pertaining to a Eurodollar Loan would
otherwise end on a day which is not a Eurodollar Business Day, that
Interest Period shall be extended to the next succeeding Eurodollar
Business Day unless the result of such extension would be to carry
such Interest Period into another calendar month in which event such
Interest Period shall end on the immediately preceding Eurodollar
Business Day;
(ii) if any Interest Period pertaining to a Base Rate Loan would
otherwise end on a day which is not a Business Day, such Interest
Period shall be extended to the next succeeding Business Day;
(iii) any Interest Period pertaining to a Eurodollar Loan that
begins on the last Eurodollar Business Day of a calendar month (or on
a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on the
last Eurodollar Business Day of a calendar month; and
(iv) any Interest Period that would otherwise extend beyond the
Termination Date shall end on the Termination Date.
"Investments": any advance, loan, extension of credit or capital
-----------
contribution to, or purchase of any stocks, bonds, notes, debentures
or other securities of, or any other investment in, any Person.
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
----
arrangement, encumbrance, lien (statutory or other), or preference,
priority or other security agreement or preferential arrangement of
any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement, any financing
lease having substantially the same economic effect as any of the
foregoing, and the filing of any financing statement under the Uniform
Commercial Code or comparable law of any jurisdiction).
"Loans": as defined in Subsection 2.1.
-----
"Market Price": with reference to the Company's Common Shares
------ -----
("Common Share") for any Trading Day, the last reported sale price of
------ -----
a Common Share as reported on the New York Stock Exchange or on any
principal stock exchange on which the Common Shares are then listed or
admitted to trading or on the National
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Association of Securities Dealers National Market System, if quoted;
or, if the Common Shares are not then listed or admitted to trading on
any national securities exchange and there is no reported last sale
price or bid and asked prices available, the average of the reported
high-bid and low-asked prices on such day as reported by a reputable
quotation service or a newspaper of general circulation in the Borough
of Manhattan, City and State of New York, customarily published on
each business day; or, in the absence of one or more such quotations,
the current market price determined in good faith by the Board of
Directors of the Company on the basis of such quotations or factors as
it deems appropriate.
"Market Value": with reference to the Company's Common Shares,
------ -----
the average Market Price of such Common Shares for the twenty Trading
Days immediately preceding the date of the sale, transfer or
disposition giving rise to the need to determine Market Value.
"Multiemployer Plan": a Plan which is a multiemployer plan as
------------- ----
defined in Section 4001(a)(3) of ERISA.
"Notes": as defined in Subsection 2.2.
-----
"PBGC": the Pension Benefit Guaranty Corporation established
----
pursuant to Subtitle A of Title IV of ERISA.
"Permitted Distribution": a distribution to the Company's
--------- ------------
shareholders of equity shares of one or more Subsidiaries which is/are
engaged in manufacturing operations, provided, that (i) such
--------
Subsidiary or Subsidiaries has/have an aggregate book value not in
excess of $90,000,000, and (ii) no Default or Event of Default exists
at the time of declaration of such distribution or at the time of the
consummation thereof, either before or after giving effect thereto.
"Permitted Voluntary Proceeding": the commencement by the
--------- --------- ----------
Company of a voluntary case or proceeding under Title 11, U.S. Code or
any similar federal or state law for the relief of debtors with
respect to any Subsidiary if (i) at the time such Subsidiary was
acquired by the Company, the Company contemplated commencing such case
or proceeding, (ii) the sum of the Company's total investment at cost,
after write-downs, in such Subsidiary and the Company's Contingent
Obligations in respect of liabilities of such Subsidiary does not
exceed $90,000,000, and (iii) the commencement of such case or
proceeding does not create nor occasion any violation or noncompliance
with other provisions of this Agreement.
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"Person": an individual, partnership, corporation, business
------
trust, joint stock company, trust, unincorporated association, joint
venture, Governmental Authority or other entity of whatever nature.
"Plan": any pension plan which is covered by Title IV of ERISA
----
and in respect of which the Company or a Commonly Controlled Entity is
an "employer" as defined in Section 3(5) of ERISA.
"Prior Agreement": the Revolving Credit Agreement dated as of
----- ---------
November 24, 1986 among the Company, the Banks and the Agent, as
heretofore amended by agreements of amendment dated as of June 11,
1987, October 19, 1987, April 12, 1988, October 28, 1988, March 6,
1989, August 31, 1989, November 15, 1989, November 6, 1990 and August
1, 1991.
"Prior Notes": the revolving credit notes issued to the Banks
-----------
pursuant to the Prior Agreement.
"Refunding Borrowing": a borrowing hereunder which, after
--------- ---------
application of the proceeds thereof, results in no net increase in the
aggregate outstanding principal amount of Loans hereunder made by the
Banks.
"Reportable Event": any of the events set forth in Section
---------- -----
4043(b) of ERISA or the regulations thereunder.
"Requirements of Law": as to any Person, the Certificate of
------------ -- ---
Incorporation and By-Laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation, or
determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or
any of its property or to which such Person or any of its property is
subject.
"Responsible Officer": the Chairman of the Board of Directors,
----------- -------
President or any Vice President of the Company.
"Single Employer Plan": any Plan which is not a Multiemployer
------ -------- ----
Plan.
"Subordinated Debt": (x) Existing Subordinated Debt and (y)
------------ ----
Indebtedness for borrowed money of the Company incurred after the date
hereof which by its terms is subordinated in right of payment to
Indebtedness of the Company under this Agreement on the terms and
conditions of subordination set forth in Schedule I hereto, or on such
other terms as are acceptable to the Banks in
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their sole discretion; provided that, if the subordination provisions
--------
governing any of the Indebtedness described in the preceding clause
(x) or (y) are amended, modified or supplemented without the prior
written consent of the Banks after the date hereof or, if later, the
date of its issuance, such Indebtedness shall cease to constitute
Subordinated Debt for purposes of Section 6 hereof (although the Agent
or the Banks shall still be entitled to assert the benefits of the
subordination provisions contained therein).
"Subsidiary": as to any Person, a corporation of which shares of
----------
stock having ordinary voting power (other than stock having such power
only by reason of the happening of a contingency) to elect a majority
of the board of directors or other managers of such corporation are at
the time owned, or the management of which is otherwise controlled,
directly, or indirectly through one or more intermediaries, or both,
by such Person.
"Terminating Event": any of the events specified in Section 9.8,
----------- -----
whether or not any requirement for the lapse of time, or any other
condition, has been satisfied.
"Termination Date": June 30, 1997.
----------- ----
"Total Liquid Assets": at any date of determination, the sum of
----- ------ ------
(i) the book value (as determined in accordance with GAAP) of all
marketable securities (adjusted by the net unrealized gain or loss on
such securities not reflected in book value) and aggregate cash and
cash equivalent balances, in each case held by the Company and/or its
consolidated Subsidiaries (other than Banking Subsidiaries and
Insurance Subsidiaries), (ii) balances available under the Company's
bank credit agreements maturing twelve months or more after the date
of determination, and (iii) all amounts legally distributable from the
Company's Insurance Subsidiaries and Banking Subsidiaries. For
purpose of this definition, "marketable securities" shall mean (A)
---------- ----------
securities that are publicly traded and (B) securities offered by an
independent broker that the Company in good faith believes can be sold
within 180 days; and "legally distributable from the Company's
------- ------------- ---- --- ---------
Insurance Subsidiaries and Banking Subsidiaries" shall mean, in the
--------- ------------ --- ------- ------------
case of the Company's Insurance Subsidiaries, the maximum sum which
those regulators with supervisory authority over such Subsidiaries in
the state or states of their incorporation permit them to distribute
by statute, regulation or otherwise, and in the case of the Company's
Banking Subsidiaries, the maximum sum which those regulators with
supervisory authority over such Subsidiaries either at the national
level or in the
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state of their incorporation permit them to distribute by statute,
regulation or otherwise.
"Trading Day": any day on which the principal exchange or
------- ---
quotation systems on which the Company's Common Shares are listed or
traded, is open for trading.
"Tranche": the collective reference to Eurodollar Loans having
-------
the same Interest Period (whether or not originally made on the same
day).
"Voting Stock": as to a corporation, shares of stock having
------ -----
ordinary voting power (other than stock having such power only by
reason of the happening of a contingency).
1.2. Other Definitional Provisions.
----- ------------ ----------
(a) All terms defined in this Agreement shall have the defined
meanings when used in the Note or any certificate or other document
made or delivered pursuant hereto or thereto.
(b) As used herein and in the Notes, and any certificate or
other document made or delivered pursuant hereto, accounting terms
relating to the Company and its Subsidiaries not defined in Subsection
1.1, and accounting terms partly defined in Subsection 1.1 to the
extent not defined, shall have the respective meanings given to them
under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this
Agreement, and section, subsection, schedule and exhibit references
are to this Agreement unless otherwise specified.
SECTION 2. AMOUNT AND TERMS OF REVOLVING CREDIT
COMMITMENT
------------------------------------
2.1. Revolving Credit Commitment. (a) Subject to the terms and
--------- ------ ----------
conditions hereof, each of the Banks severally agrees to make
revolving credit loans (individually, a "Loan"; collectively the
----
"Loans") to the Company from time to time during the Commitment Period
-----
upon notice by the Company to the Agent given in accordance with
Subsection 2.3 hereof, in such sums as are requested by the Company up
to a maximum aggregate principal amount outstanding (after giving
effect to all amounts requested) at any one time equal to such Bank's
Commitment. The Loans shall be made pro rata in accordance with each
--- ----
Bank's Commitment
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Percentage. The respective amount of each Bank's Commitment and its
Commitment Percentage shall be as follows:
Amount of Commitment
Bank Commitment Percentage
---- ---------- ----------
________ Bank $25,000,000 62.5%
________ Bank $15,000,000 37.5%
Total $40,000,000 100%
During the Commitment Period the Company may use the Commitment by
borrowing, repaying the Loans in whole or in part, and reborrowing,
all in accordance with the terms and conditions hereof.
(b) The Loans may be Eurodollar Loans or Base Rate Loans, or
combinations thereof, as determined by the Company and notified to
the Bank in accordance with Subsection 2.3; provided that no
--------
Eurodollar Loan shall be made with an Interest Period extending beyond
the Termination Date. Eurodollar Loans shall be made and maintained
by the Agent for the accounts of the Banks at its Eurodollar Lending
Office, and Base Rate Loans shall be made and maintained by the Agent
for the accounts of the Banks at its Domestic Lending Office.
2.2. Notes. The Loans made pursuant hereto are evidenced by
-----
separate promissory notes of the Company, substantially in the form of
Exhibits A-1 and A-2 (together with any promissory notes in
-------- --- ---
substantially such form issued in substitution or replacement
therefor, the "Notes"); one Note being payable to the order of each
-----
Bank in a principal amount equal to such Bank's Commitment and
representing the obligation of the Company to pay to such Bank the
amount of the Commitment or, if less, the aggregate unpaid principal
amount of all Loans made by such Bank hereunder, plus accrued interest
thereon, as set forth below. Each Bank is hereby authorized to record
the date and amount of its Loan, the maturity date thereof, the date
and amount of each repayment of principal thereof, and, in the case of
Eurodollar Loans, the interest rate with respect thereto, on the
schedule annexed to its Note or any similar record maintained by the
Bank with respect to such Note, and any such recordation shall
constitute prima facie evidence of the accuracy of the information so
----- -----
recorded.
2.3. Procedure for Revolving Credit Borrowing. (a) The Company
--------- --- --------- ------ ---------
may borrow under the Commitment during the Commitment
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Period on any Eurodollar Business Day if the borrowing is a Eurodollar
Loan or on any Business Day if the borrowing is a Base Rate Loan;
provided, that, the Company shall give the Agent irrevocable notice
-------- ----
(which notice must be received by the Agent prior to 10:00 A.M., New
York time) (i) two Eurodollar Business Days prior to the requested
Borrowing Date, in the case of Eurodollar Loans, and (ii) on the
requested Borrowing Date, in the case of Base Rate Loans, specifying
(A) the amount to be borrowed, (B) the requested Borrowing Date, (C)
whether the borrowing is to be a Eurodollar Loan or a Base Rate Loan,
or a combination thereof and (D) the length of the Interest Period for
each Loan included in such notice. Promptly upon receipt of such
notice, the Agent shall notify each of the Banks thereof. Each
borrowing pursuant to the Commitment shall be in an aggregate
principal amount (a) in the case of Base Rate Loans, the lesser of (i)
$100,000 or a whole multiple thereof and (ii) the Available
Commitment, and (b) in the case of Eurodollar Loans, $1,000,000 or a
whole multiple of $100,000 in excess thereof.
(b) Not later than 11:00 A.M. (New York time) on any requested
Borrowing Date, each of the Banks will make available to the Agent, at
its head office, in immediately available funds, the amount to be
loaned by it on such Borrowing Date. Upon receipt from each Bank of
the amount of its Loan, the Agent will make the aggregate amount of
such Loans available to the Company, provided that if the Company
maintains an account on the books of any Bank, the Loan made by such
Bank shall be made available by crediting such account of the Company
on the books of such Bank with the amount of such Loan. The failure
or refusal of any Bank to make available to the Agent at the aforesaid
time on any Borrowing Date the amount of the Loan to be made by such
Bank shall not relieve the other Bank from its several obligation
hereunder to make its respective Commitment Percentage of any
requested Loans.
(c) The Agent may (unless notified to the contrary by a Bank
prior to a Borrowing Date) assume that each Bank has made available to
the Agent on such Borrowing Date such Bank's Commitment Percentage of
the Loans to be made on such Borrowing Date, and the Agent may (but it
shall not be required to), in reliance upon such assumption, make
available to the Company a corresponding amount. If all or any
portion of such amount is made available to the Agent on a date after
such Borrowing Date, such Bank shall pay to the Agent on demand an
amount equal to the product of (i) the average computed for the period
-
referred to in clause (iii) below, of the weighted average interest
---
rate paid by the Agent for Federal funds acquired by the Agent during
each day included in such period, times (ii) the amount equal to the
----- --
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lesser of such Bank's Commitment Percentage of such borrowing or the
portion thereof made available after such Borrowing Date, times (iii)
----- ---
a fraction, the numerator of which is the number of days that elapse
from and including such Borrowing Date to the date on which such
Bank's Commitment Percentage of such borrowing shall become
immediately available to the Agent, and the denominator of which is
360. A statement of the Agent submitted to any Bank with respect to
any amounts owing under this paragraph shall be prima facie evidence
----- -----
of the amount due and owing. If any portion of such Bank's Commitment
Percentage of such Loan is not in fact made available to the Agent by
such Bank within three Business Days of such Borrowing Date, the Agent
shall be entitled to recover such amount from the Company on demand,
with interest thereon at the rate per annum applicable to the Loans
made on such Borrowing Date.
(d) The provisions of Subsection 2.3(a) notwithstanding, if the
Company shall not have given a timely notice of a borrowing to be made
on the last day of any Interest Period for an outstanding Loan, then
unless the Agent shall have received notice that the Company elects
not to make a borrowing on such a day (such notice to have been
received at least one Business Day prior to such day) the Company
shall be deemed irrevocably to have requested a Base Rate Loan to be
made on such day in an amount equal to the amount of such outstanding
Loan (reduced to the extent necessary to reflect any reductions of the
Commitment on or prior to such day) and having an Interest Period of
30 days.
(e) If the Agent, for the account of a Bank makes a new Loan on
a day on which the Company is to repay all or any part of any
outstanding Loan from such Bank, such Bank shall apply the proceeds of
its new Loan to make such repayment, and only an amount equal to the
difference (if any) between the amount being borrowed and the amount
being repaid shall be made available by such Bank to the Company or
remitted by the Company to such Bank as provided in Subsection 2.12,
as the case may be.
2.4. Commitment Fee. The Company agrees to pay to the Agent for
---------- ---
the accounts of the Banks in accordance with their respective
Commitment Percentages a commitment fee from and including the date
hereof to the Termination Date, computed at the rate of 1/2 of 1% per
annum on the average daily amount of the Available Commitment during
the period for which payment is made, payable quarterly on the last
day of each March, June, September and December and on the Termination
Date or such earlier date as the Commitment shall terminate as
provided
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herein, commencing on the first of such dates to occur after the date
hereof.
2.5. Termination or Reduction of Commitment. The Company shall
----------- -- --------- -- ----------
have the right, upon not less than ten Business Days' notice to the
Agent, to terminate the Commitment or, from time to time, reduce the
amount of the Commitment, provided, that, no such reduction or
-------- ----
termination shall be permitted if, after giving effect thereto and to
any prepayments of the Loans made on the effective date thereof, the
then outstanding principal amount of the Loans would exceed the amount
of the Commitment then in effect. Termination of the Commitment shall
also terminate the obligation of the Banks to make Loans. The
Commitment once terminated or reduced may not be reinstated.
2.6. Prepayments. The Company may (i) at any time and from time
-----------
to time prepay the Base Rate Loans, in whole or in part, without
premium or penalty and (ii) subject to payment of the amounts set
forth in Subsection 2.16, prepay the Eurodollar Loans, in either case
upon at least one Business Day's irrevocable notice to the Agent,
specifying the date and amount of prepayment and whether the
prepayment is of Eurodollar Loans or Base Rate Loans, or a combination
thereof, and if of a combination thereof, the amount of prepayment
allocable to each. If such notice is given, the Agent shall thereupon
transmit such notice to the Banks, the Company shall make such
prepayment to the Agent for the accounts of the Banks, and the
prepayment amount specified in such notice shall be due and payable on
the date specified therein, together with accrued interest to such
date on the amount prepaid. Partial prepayments shall be in an amount
equal to $100,000 or a whole multiple thereof and may only be made if,
after giving effect thereto, Subsection 2.8 shall not have been
contravened, and each partial prepayment shall be allocated among the
Banks, in proportion, as nearly as practicable, to the respective
unpaid principal amount of each Bank's Note, with adjustments to the
extent practical to equalize any prior prepayments not exactly in
proportion.
2.7. Repayment of Loans. The Company will pay to the Agent for
--------- -- -----
the accounts of the Banks the unpaid principal amount of each Loan
made by the Banks on the last day of the Interest Period therefor.
2.8. Minimum Accounts of Certain Loans. All borrowings,
------- -------- -- ------- -----
payments and prepayments hereunder shall be in such amounts and be
made pursuant to such elections so that, after giving effect thereto,
the aggregate principal amount of any Tranche shall not be less than
$1,000,000.
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2.9. Interest Rate.
-------- ----
(a) Each Eurodollar Loan shall bear interest for the period from
the date thereof until the stated maturity thereof on the unpaid
principal amount thereof at a rate per annum equal to the Eurodollar
Rate determined by the Agent for the Interest Period therefor plus 3/4
of 1%.
(b) Each Base Rate Loan shall bear interest for the period from
the date thereof on the unpaid principal amount thereof at a
fluctuating rate per annum equal to the Base Rate.
(c) If all or a portion of the principal amount of any Loan
shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), such overdue principal amount of any Loan
shall, without limiting any rights of the Agent under Section 7, bear
interest at a rate per annum which is 2% above the rate which would
otherwise be applicable pursuant to clauses (a) and (b) of this
Subsection 2.9 until paid in full (before as well as after judgment);
provided, that, if such overdue principal amount is in respect of a
-------- ----
Eurodollar Loan and the due date therefor is other than the last day
of the Interest Period with respect thereto, such Eurodollar Loan
shall bear interest from the date that such principal amount was due
to the last day of such Interest Period at a rate per annum which is
2% above the rate which would otherwise be applicable pursuant to
clause (a) above, and for each day thereafter at a rate per annum
which is 2% above the Base Rate from such last day until paid in full
(before as well as after judgment).
(d) Interest on each Loan shall be payable in arrears on each
Interest Payment Date with respect thereto and after the occurrence of
any Default, shall be payable upon demand.
2.10. Computation of Interest and Fees. (a) Commitment fees
----------- -- -------- --- ----
and interest in respect of the Loans shall be calculated on the basis
of a 360-day year for the actual number of days elapsed. The Agent
shall as soon as practicable notify the Company of each determination
of a Eurodollar Rate. Any change in the interest rate on a Loan
resulting from a change in the Base Rate shall become effective as of
the opening of business on the day on which such change in the Base
Rate is announced. The Agent shall as soon as practicable notify the
Company of the effective date and the amount of each such change. The
outstanding amount of the Loans as reflected on the Agent's records
from time to time shall be considered correct and binding on the
Company and the Banks unless within five Business Days after receipt
of any notice by the Agent of such outstanding
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<PAGE>
amount, the Company or any of the Banks, as the case may be, shall
notify the Agent to the contrary.
(b) Each determination of an interest rate by the Agent pursuant
to any provision of this Agreement shall be conclusive and binding on
the Company in the absence of manifest error. The Agent shall, at the
request of the Company, deliver to the Company a statement showing the
quotations used by the Agent in determining any interest rate pursuant
to Subsection 2.9(a).
2.11. Inability to Determine Interest Rate. In the event that
--------- -- --------- -------- ----
the Agent shall have determined (which determination shall be
conclusive and binding upon the Company) that, by reason of
circumstances affecting the interbank Eurodollar market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate
applicable pursuant to Subsection 2.9(a) for any requested Interest
Period with respect to a proposed Loan that the Company has requested
be made as a Eurodollar Loan, the Agent shall forthwith give telex or
telecopy notice of such determination to the Company at least one day
prior to the proposed Borrowing Date for such Eurodollar Loan. If
such notice is given, any requested Eurodollar Loan shall be made as a
Base Rate Loan having an Interest Period of 30 days. Until such
notice has been withdrawn by the Agent, no further Eurodollar Loans
may be requested by the Company.
2.12. Pro Rata Treatment and Payments. All payments (including
--- ---- --------- --- --------
prepayments) to be made by the Company on account of principal,
interest and fees shall be made without set off or counterclaim and
shall be made to the Agent for the accounts of the Banks at the
Agent's office set forth in Subsection 9.2 in lawful money of the
United States of America and in immediately available funds. If any
payment hereunder (other than payments on the Eurodollar Loans)
becomes due and payable on a day other than a Business Day, such
payment shall be extended to the next succeeding Business Day and,
with respect to payments of principal, interest thereon shall be
payable at the Base Rate. If any payment on a Eurodollar Loan becomes
due and payable on a day other than a Eurodollar Business Day, the
maturity thereof shall be extended to the next succeeding Eurodollar
Business Day unless the result of such extension would be to extend
such payment into another calendar month in which event such payment
shall be made on the immediately preceding Eurodollar Business Day.
2.13. Taxes. All payments made by the Company under this
-----
Agreement shall be made free and clear of, and without reduction for
or on account of, any present or future income, stamp or
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<PAGE>
other taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld
or assessed by any Governmental Authority excluding income and
franchise taxes of the United States of America or any political
subdivision or taxing authority thereof or therein (including Puerto
Rico), and the country in which the Agent's Eurodollar Lending Office
is located or any political subdivision or taxing authority thereof or
therein (such non-excluded taxes being called "Foreign Taxes"). If
------- -----
any Foreign Taxes are required to be withheld from any amounts payable
to the Banks hereunder or under the Notes, the amounts so payable to
the Banks shall be increased to the extent necessary to yield to the
Banks (after payment of all Foreign Taxes) interest or any such other
amounts payable hereunder at the rates or in the amounts specified in
this Agreement and the Notes. Whenever any Foreign Tax is payable by
the Company, as promptly as possible thereafter, the Company shall
send to the Agent a certified copy of an original official receipt
showing payment thereof. If the Company fails to pay any Foreign
Taxes when due to the appropriate taxing authority or fails to remit
to the Agent the required receipts or other required documentary
evidence, the Company shall indemnify the Agent and the Banks for any
incremental taxes, interest or penalties that may become payable by
the Banks as a result of any such failure.
2.14. Illegality. Notwithstanding any other provisions herein,
----------
if any Requirement of Law or any change therein or in the
interpretation or application thereof shall make it unlawful for the
Banks to make or maintain Eurodollar Loans as contemplated by this
Agreement, (a) the Commitment to make Eurodollar Loans shall forthwith
be cancelled and (b) the Loans then outstanding as Eurodollar Loans,
if any, shall be repaid on the last day of the Interest Period
therefor, or within such earlier period as required by law, and
reborrowed as Base Rate Loans. If any such prepayment of a Eurodollar
Loan is made on a day which is not the last day of the Interest Period
therefor, the Company shall pay to the Agent for the accounts of the
Banks such amounts, if any, as may be required pursuant to Subsection
2.16.
2.15. Requirements of Law. (a) In the event that any
------------ -- ---
Requirement of Law or any change therein or in the interpretation or
application thereof or compliance by any Bank with any request or
directive (whether or not having the force of law) from any central
bank or other Governmental Authority or any agency or instrumentality
thereof:
(i) does or shall subject any Bank to any tax of any kind
whatsoever other than taxes imposed on or measured by the net
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<PAGE>
income or any franchise taxes imposed in lieu of a tax on or measured
by net income of such Bank or any Transferee, as defined in Subsection
9.6, (such non-excluded items being hereinafter referred to as
"Taxes") with respect to this Agreement, the Notes or any Loans made
-----
hereunder, or changes the basis of taxation of payments to such Bank
of principal, commitment fee, interest or any other amount payable
hereunder (except for changes in the rate of tax on the overall net
income of such Bank);
(ii) does or shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirement
against assets held by, or deposits or other liabilities in or for the
account of, advances or loans by, or other credit extended by, or any
other acquisition of funds by, any office of such Bank which are not
otherwise included in the determination of the Eurodollar Rate; or
(iii) does or shall impose on such Bank any other condition;
and the result of any of the foregoing is to increase the cost to such
Bank of making, renewing or maintaining Loans or extensions of credit
hereunder or to reduce any amount receivable hereunder, in respect of
its Eurodollar Loans, then the Company shall promptly pay to the
Agent, for the account of such Bank, upon demand, any additional
amounts necessary to compensate such Bank for such additional cost or
reduced amount receivable which such Bank deems to be material as
determined by such Bank with respect to such Eurodollar Loans. If
such Bank becomes entitled to claim any additional amounts pursuant to
this subsection, it shall promptly notify the Agent which will
promptly notify the Company of the event by reason of which such Bank
has become so entitled. A statement as to any additional amounts
payable pursuant to the foregoing sentence submitted by the Agent to
the Company shall be conclusive in the absence of manifest error.
This covenant shall survive the termination of this Agreement and
payment of the Notes.
(b) If any change in, or the introduction, adoption,
effectiveness, interpretation, reinterpretation or phase-in of, any
law or regulation, directive, guideline, decision or request (whether
or not having the force of law) of any court, central bank, regulator
or other Governmental Authority affects or would affect the amount of
capital required or expected to be maintained by any Bank or any
corporation controlling any Bank, and such Bank determines (in its
sole and absolute discretion) that the rate of return on such Bank's
or such controlling corporation's capital as a consequence of its
obligation
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<PAGE>
hereunder is reduced to a level below that which such Bank or such
controlling corporation could have achieved but for the occurrence of
any such circumstance, then, in any such case, upon the notice from
time to time by the Agent or such Bank to the Company, the Company
shall pay to the Agent, for the account of such Bank, on demand, any
additional amount or amounts as may be sufficient to compensate such
Bank or such controlling corporation for such reduction in rate of
return. A statement of the Agent or such Bank as to any such
additional amount or amounts (including calculations thereof in
reasonable detail) shall, in the absence of manifest error, be
conclusive and binding on the Company. In determining such amount or
amounts, such Bank may use any method of averaging and attribution
that it (in its sole and absolute discretion) shall deem applicable.
This covenant shall survive the termination of this Agreement and
payment of the Notes.
(c) Any recipient of payments under Subsection 2.13 (including
any Transferee) that is organized under a jurisdiction other than the
United States of America or a state thereof (a "Foreign Recipient"),
------- ---------
no later than the date of the initial Loan (or the date of assignment
or transfer, as the case may be) and, subject to clause (e) below,
annually (or at such other times as the Company may reasonably
request) thereafter, shall deliver two accurate and complete signed
originals of either of Internal Revenue Forms 1001 or 4224 (or any
successor of such form) to the Company (or in the case of a Transferee
which holds a participation interest which it acquired from the Agent,
to the Agent which shall provide copies thereof to the Company), in
either case, indicating that all payments by the Company of principal
of, and interest on, the Loans and all other amounts payable hereunder
to such Foreign Recipient may be made free and clear of, and without
deduction for, any United States withholding tax. The obligation to
deliver forms set forth in the preceding sentence shall not apply for
any period during which any change in law or circumstance shall have
eliminated any and all obligations imposed on the Company to withhold
or deduct United States withholding tax in respect of payments made by
the Company hereunder.
(d) The Company shall not be required to pay any additional
amounts to a Foreign Recipient in respect of United States withholding
tax pursuant to this Subsection 2.15 if the obligation to pay such
additional amounts would not have arisen but for a failure by such
Foreign Recipient to comply with the provisions of Subsection 2.15(c)
for any reason (including a change in circumstances that renders such
Foreign Recipient unable to so comply) other than (x) a change in
applicable law,
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regulation or official interpretation thereof or (y) an amendment,
modification or revocation of any applicable tax treaty or a change in
official position regarding the application or interpretation thereof,
in each case after the date hereof (and in the case of a Transferee,
after the date of assignment or transfer).
(e) If, solely as a result of an event described in clause (x)
or (y) of Subsection 2.15(d), after the date hereof (or, in the case
of a Transferee, after the date of assignment or transfer), (i) any
Foreign Recipient is unable to furnish the Company with a form
otherwise required to be delivered by it pursuant to Subsection
2.15(c), or (ii) any Bank or any Foreign Recipient makes any payment
or becomes liable to make any payment on account of any Taxes, other
than a United States withholding tax, with respect to payments by the
Company hereunder, the Company may, at its option, either (x) prepay
the Loans held by such Bank (or such Foreign Recipient) or (y)
continue to make payments to the Agent on behalf of such Bank or such
Foreign Recipient under the terms of this Agreement and the Notes,
which payments shall be made in accordance with the provisions hereof
if the condition set forth in the next succeeding sentence is
satisfied. If the Company exercises its option under clause (y) of
the preceding sentence, the Company's obligation to make payments to
the Agent on behalf of such Bank (or such Foreign Recipient) under the
terms of this Agreement and the Notes without deduction for Taxes
shall be conditioned on such Bank (or such Foreign Recipient), prior
to the time that the next payment under the Notes is due (and
thereafter as is required by applicable law), having furnished the
Company with such certificate as may be required, and having taken
such other steps as reasonably may be available to it, under
applicable tax laws and any applicable tax treaty or convention to
obtain an exemption from, or reduction (to the lowest applicable rate)
of, such Taxes.
2.16. Indemnity. The Company agrees to indemnify the Agent and
---------
the Banks and to hold the Banks harmless from any loss or expense or
loss of margin which the Banks may sustain or incur as a consequence
of (a) default by the Company in payment when due of the principal
amount of or interest on any Eurodollar Loans, including, but not
limited to, any such loss or expense arising from interest or fees
payable to lenders of funds obtained by the Banks in order to maintain
their Eurodollar Loans hereunder, (b) default by the Company in making
a borrowing or conversion after the Company has given (or is deemed to
have given) a notice of borrowing in accordance with Subsection 2.3,
(c) default by the Company in making any prepayment of a Loan after
the Company has
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given a notice in accordance with Subsection 2.6 hereof and/or (d) the
Company making a prepayment of a Eurodollar Loan (including, without
limitation, any prepayment made as a result of the Agent's exercise of
its rights under Section 7) on a day which is not the last day of an
Interest Period with respect thereto, including, but not limited to,
any such loss or expense arising from interest or fees payable by the
Banks to lenders of funds obtained by them in order to maintain their
Eurodollar Loans hereunder or from the reemployment of funds so
obtained. This covenant shall survive termination of this Agreement
and payment of the Notes.
2.17. Use of Proceeds. The Company shall use the proceeds of
--- -- --------
the Loans as working capital for use in the ordinary course of its
business. No part of the proceeds of any Loans hereunder will be used
(a) for "purchasing" or "carrying" any "margin stock" within the
respective meanings of each of the quoted terms under Regulations U
and X of the Board of Governors of the Federal Reserve System as now
and from time to time hereafter in effect unless (i) the Company shall
have theretofore furnished to the Banks a statement on Federal Reserve
Form U-1 with respect to such Loans or (ii) not more than 25% of the
value of the assets of either the Company or the Company and its
Subsidiaries on a consolidated basis, respectively, which are subject
to the provisions of Sections 6.3 or 6.4 of this Agreement, is
represented by "margin stock" as so defined, or (b) for any purpose
which violates, or which would be inconsistent with, the provisions of
the Regulations of the Board of Governors of the Federal Reserve
System..
2.18 Agent's Fee. The Company shall pay to the Agent, for the
------- ---
Agent's own account, on March 31 of each year while any Loans are
outstanding or any Available Commitment exists, an Agent's Fee of
$12,500.
SECTION 3. REPRESENTATIONS AND WARRANTIES
------------------------------
To induce the Banks to enter into this Agreement and to make the
Loans herein provided for, the Company hereby covenants, represents
and warrants to the Banks that:
3.1. Financial Condition. The consolidated balance sheet of the
--------- ---------
Company and its consolidated Subsidiaries as at December 31, 1992, and
the related consolidated statements of income, statements of changes
in shareholders equity and statements of cash flows for the fiscal
year ended on such date, certified by Coopers & Lybrand, copies of
which have heretofore been furnished to the Banks, are complete and
correct and present
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fairly in accordance with GAAP the consolidated financial condition of
the Company and its consolidated Subsidiaries as at such date, and the
consolidated results of their operations and changes in cash flows for
the fiscal year then ended. All such financial statements, including
the related schedules and notes thereto, have been prepared in
accordance with GAAP applied consistently with the preceding year.
3.2. No Change. Except as set forth in the filings of the
-- ------
Company with the Securities and Exchange Commission prior to the date
hereof, copies of which have been delivered to the Banks, since
December 31, 1992 there has been no material adverse change in the
business, operations, assets or financial or other condition of the
Company and its Subsidiaries taken as a whole.
3.3. Corporate Existence; Compliance with Law. Each of the
--------- --------- ---------- ---- ---
Company and its Subsidiaries (a) is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation, (b) has the corporate power and authority and the legal
right to own and operate its property, to lease the property it
operates and to conduct the business in which it is currently engaged,
(c) is duly qualified as a foreign corporation and in good standing
under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such
qualification, except in those jurisdictions in which the failure to
be so qualified or in good standing would not have a material adverse
effect upon the business, operations or condition, financial or
otherwise, of the Company and its Subsidiaries taken as a whole, and
(d) is in compliance with all Requirements of Law, except (with
reference to each of clauses (a), (b), (c) and (d) above) to the
extent that the failure to comply therewith could not, in the
aggregate, have a material adverse effect on the business,
operations, property or financial or other condition of the Company
and its Subsidiaries taken as a whole, and could not materially
adversely affect the ability of the Company to perform its obligations
under this Agreement and the Notes.
3.4. Corporate Power; Authorization; Enforceable Obligations.
--------- ----- ------------- ----------- -----------
The Company has the corporate power and authority and the legal right
to make, deliver and perform this Agreement and the Notes and to
borrow hereunder and has taken all necessary corporate action to
authorize the borrowings on the terms and conditions of this Agreement
and the Notes and to authorize the execution, delivery and performance
of this Agreement and the Notes. No consent or authorization of,
filing with, or other act by or in respect of any Governmental
Authority, is required in connection with the borrowings hereunder or
with the execution,
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delivery, performance, validity or enforceability of this Agreement or
the Notes. This Agreement has been, and the Notes will be, duly
executed and delivered on behalf of the Company and this Agreement
constitutes, and the Notes when executed and delivered will
constitute, legal, valid and binding obligations of the Company
enforceable against the Company in accordance with their terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally.
3.5. No Legal Bar. The execution, delivery and performance of
-- ----- ---
this Agreement and the Notes, the borrowings hereunder and the use of
the proceeds thereof, will not violate any Requirement of Law or any
Contractual Obligation of the Company or any of its Subsidiaries, and
will not result in, or require, the creation or imposition of any Lien
on any of its or their respective properties or revenues pursuant to
any Requirement of Law or Contractual Obligation.
3.6. No Material Litigation. Except as set forth in the filings
-- -------- ----------
of the Company with the Securities and Exchange Commission copies of
which have been delivered prior to the date hereof, to the Banks, no
litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of the Company,
threatened by or against the Company or any of its Subsidiaries or
against any of its or their respective properties or revenues (a) with
respect to this Agreement or the Notes or any of the transactions
contemplated hereby, or (b) which has any reasonable likelihood of
resulting in any material adverse change in the business, operations,
property or financial or other condition of the Company and its
Subsidiaries taken as a whole.
3.7. No Default. Neither the Company nor any of its
-- -------
Subsidiaries is in default under or with respect to any Contractual
Obligation in any respect which could be materially adverse to the
business, operations, property or financial or other condition of the
Company and its Subsidiaries taken as a whole, or which could
materially adversely affect the ability of the Company to perform its
obligations under this Agreement and the Notes. No Default or Event
of Default has occurred and is continuing.
3.8. Ownership of Property; Liens. Each of the Company and its
--------- -- -------- -----
Subsidiaries has good record and marketable title in fee simple to or
valid leasehold interests in all its real property, and good title to
all its other property (except that such
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<PAGE>
representation is not made for any such property with a book value of
$500,000 or less provided that the aggregate book value of such
property for which such representation is not made shall not exceed
$5,000,000), and none of such property is subject to any Lien, except
as permitted in Subsection 6.3.
3.9. No Burdensome Restrictions. No Contractual Obligation of
-- ---------- ------------
the Company or any of its Subsidiaries and no Requirement of Law
materially adversely affects, or insofar as the Company may reasonably
foresee may so affect, the business, operations, property or financial
or other condition of the Company and its Subsidiaries taken as a
whole.
3.10. Taxes. Each of the Company and its Subsidiaries has filed
-----
or caused to be filed all tax returns which to the knowledge of the
Company are required to be filed, and has paid all taxes shown to be
due and payable on said returns or on any assessments made against it
or any of its property and all other taxes, fees or other charges
imposed on it or any of its property by any Governmental Authority
(other than those the amount or validity of which is currently being
contested in good faith by appropriate proceedings and with respect to
which reserves in conformity with GAAP have been provided on the books
of the Company or its Subsidiaries, as the case may be); and no tax
liens have been filed and, to the knowledge of the Company, no claims
are being asserted with respect to any such taxes, fees or other
charges.
3.11. Federal Regulations. Neither the Company nor any of its
------- -----------
Subsidiaries is engaged or will engage, principally or as one of its
important activities, in the business of extending credit for the
purpose of "purchasing" or "carrying" any "margin stock" within the
respective meanings of each of the quoted terms under Regulations U
and X of the Board of Governors of the Federal Reserve System as now
and from time to time hereafter in effect. No part of the proceeds of
any Loans hereunder will be used (a) for "purchasing" or "carrying"
"margin stock" as so defined unless (i) the Company shall have
theretofore furnished to the Banks a statement on Federal Reserve Form
U-1 with respect to such Loans or (ii) not more than 25% of the value
of the assets of either the Company or the Company and its
Subsidiaries on a consolidated basis, respectively, which are subject
to the provisions of Sections 6.3 or 6.4 of this Agreement, is
represented by "margin stock" as so defined, or (b) for any purpose
which violates, or which would be inconsistent with, the provisions of
the Regulations of such Board of Governors.
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3.12. ERISA. As of January 1, 1993 the actuarially determined
-----
aggregate amount of unfunded vested benefits under the Plans
administered by the Company and its Subsidiaries was less than
$5,000,000. The Company and its Subsidiaries are in compliance with
all applicable provisions of ERISA except for any noncompliance which,
either individually or in the aggregate with all other instances of
such noncompliance, could not have a material adverse effect upon the
business, operations or condition, financial or otherwise, of the
Company and its Subsidiaries taken as a whole. For purposes of this
Subsection 3.12, the term "Subsidiaries" shall not include any
Excluded Subsidiary other than any Excluded Subsidiary which is
treated as a single employer with the Company under the Code.
3.13. Investment Company Act. The Company is not an "investment
---------- ------- ---
company" or a company "controlled" by an "investment company", within
the meaning of the Investment Company Act of 1940, as amended.
3.14. Full Disclosure. Neither this Agreement nor any other
---- ----------
certificate, report, statement or other writing furnished to the Agent
or the Banks by the Company in connection with the negotiation of this
Agreement contains any untrue fact or omits to state a material fact
necessary to make the statements contained herein or therein, in light
of the circumstances under which they were made, not misleading.
3.15. Subordinated Debt. The Indebtedness of the Company
------------ ----
evidenced by its 6% Subordinated Swiss Franc Bonds due 1996, 10-3/8%
Senior Subordinated Notes due 2002 and the 5-1/4% Convertible
Subordinated Debenture due 2003 constitutes Subordinated Debt.
3.16. Nonrecourse Contingent Obligations. As of November 6,
----------- ---------- -----------
1990, each of Madison, CLIC and WMAC Investment Corporation ("WMAC")
----
has assets in excess of its liabilities. The guaranties or
indemnification undertakings given by Madison, CLIC and/or WMAC
referenced in the definition of Contingent Obligation are obligations
of Madison, CLIC or WMAC, as the case may be, without recourse to the
Company.
For purposes of Subsections 3.5, 3.8, and 3.10, the terms "Subsidiary"
and "Subsidiaries" shall not include any Excluded Subsidiaries.
SECTION 4. CONDITIONS PRECEDENT
--------------------
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4.1. Conditions of Initial Loan. The obligation of the Banks to
---------- -- ------- ----
make Loans hereunder on the first Borrowing Date is subject to the
satisfaction of the following conditions precedent:
(a) Notes. The Agent shall have received the Notes, conforming
-----
to the requirements hereof and executed by a duly authorized officer
of the Company.
(b) Legal Opinion. The Banks shall have received an opinion
----- -------
addressed to the Agent and the Banks of Messrs. Weil, Gotshal and
Manges, counsel to the Company, dated the first Borrowing Date and
addressed to the Bank, substantially in the form of Exhibit B. Such
------- -
opinion shall also cover such other matters incident to the
transactions contemplated by this Agreement as the Agent shall
reasonably require.
(c) Borrowing Certificate: The Agent shall have received a
--------- -----------
Borrowing Certificate dated the first Borrowing Date, substantially in
the form of Exhibit C, with appropriate insertions and attachments
------- -
satisfactory in form and substance to the Agent and its counsel,
executed by the President or a Vice President and Secretary or an
Assistant Secretary of the Company.
(d) Payment of Prior Note, Etc. Each Bank shall have received
---------------------------
evidence in form and substance satisfactory to it that (i) the
principal of and interest on the Prior Note and all other obligations
and liabilities of the Company under the Prior Agreement shall have
been paid in full, and (ii) the Commitment (as such term is defined in
the Prior Agreement) shall have been terminated.
(e) Officers' Certificate. The Agent shall have received an
-------- -----------
Officers' Certificate dated the first Borrowing Date, substantially in
the form of Exhibit D, with appropriate insertions and attachments
------- -
satisfactory to the Agent and its counsel, executed by the Comptroller
(or the chief financial officer of the Company, if he is not also the
Comptroller) and the Treasurer of the Company.
(f) Additional Matters. All other documents and legal matters
---------- -------
in connection with the transactions contemplated by this Agreement
shall be satisfactory in form and substance to the Agent and its
counsel.
4.2. Conditions to All Loans. The obligation of the Banks to
---------- -- --- -----
make any Loans to be made by them hereunder (including the
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<PAGE>
initial Loans) is subject to the satisfaction of the following
conditions precedent on the relevant Borrowing Date:
(a) Representations and Warranties. The representations and
--------------- --- ----------
warranties contained in Section 3 (except, in the case of a Refunding
Borrowing, the representations and warranties contained in Subsections
3.2 and 3.6 and the representations and warranty as to the absence of
a Default contained in the last sentence of Subsection 3.7) shall be
correct on and as of the Borrowing Date for such Loan with the same
effect as if made on and as of such date.
(b) No Existing Default. (i) In the case of a Refunding
-- -------- --------
Borrowing, no Event of Default or Terminating Event, other than a
Terminating Event resulting from the incapacity or death of either Ian
Cumming or Joseph Steinberg (a "Delayed Termination Event"), shall
have occurred and be continuing on such Borrowing Date with respect to
such Loans or after giving effect to the Loans to be made on such
Borrowing Date, provided, that if a Delayed Termination Event shall
--------
have occurred, the Interest Period of any Eurodollar Loan made as part
of such Refunding Borrowing shall end on or prior to the date this
Agreement will terminate as a result of such Delayed Termination
Event, and (ii) in the case of any other borrowing, no Default, Event
of Default or Terminating Event shall have occurred and be continuing
hereunder on the Borrowing Date with respect to such Loan or after
giving effect to the Loans to be made on such Borrowing Date.
Each borrowing by the Company hereunder shall constitute a
representation and warranty by the Company hereunder as of the date of
each such borrowing that the conditions in clauses (a) and (b) of this
Subsection 4.2 applicable thereto have been satisfied.
SECTION 5. AFFIRMATIVE COVENANTS
---------------------
The Company hereby agrees that, so long as the Commitment remains
in effect, any Note remains outstanding and unpaid or any other amount
is owing to any of the Banks hereunder, the Company shall, and in the
case of the agreements set forth in Subsections 5.3, 5.4, 5.5 and 5.6
shall cause each of its Subsidiaries other than the Excluded
Subsidiaries to:
5.1. Financial Statements. Furnish to each of the Banks:
--------- ----------
(a) as soon as available, but in any event within one hundred
days after the end of each fiscal year of the Company, a
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<PAGE>
copy of (i) the consolidated balance sheet of the Company and its
consolidated Subsidiaries as at the end of such year and the related
consolidated statements of income, statements of change in shareholder
equity and statements of cash flows for such year, setting forth in
each case in comparative form the figures for the previous year,
certified, without a "going concern" or like qualification or
exception arising out of the scope of the audit, by independent
certified public accountants of nationally recognized standing not
unacceptable to the Agent, (ii) the consolidating balance sheet of the
Company and its consolidated Subsidiaries as at the end of such fiscal
year and the related consolidating statements of income for such
fiscal year, showing in each case inter-company eliminations,
certified by a Responsible Officer as being fairly stated in all
material respects when considered in relation to the consolidated
financial statements of the Company and its consolidated Subsidiaries
taken as a whole; and
(b) as soon as available, but in any event not later than
fifty-five days after the end of each of the first three quarterly
periods of each fiscal year of the Company, (i) the Company's
quarterly report to shareholders on Form 10-Q, as filed with the
Securities and Exchange Commission, certified by a Responsible Officer
as being fairly stated in all material respects (subject to normal
year-end audit adjustments) and (ii) the consolidating balance sheet
of the Company and its Subsidiaries as at the end of each such
quarter, showing inter-company eliminations, and the related
consolidating statements of income, showing inter-company
eliminations, certified by a Responsible Officer as being fairly
stated in all material respects;
all such financial statements to be prepared in accordance with GAAP
applied consistently throughout the periods reflected therein except
as approved by such accountants or Responsible Officer, as the case
may be, and disclosed therein.
5.2. Certificates; Other Information. Furnish to each of the
------------ ----- -----------
Banks:
(a) concurrently with the delivery of the financial statements
referred to in Subsection 5.1 (a) above, a certificate of the
independent certified public accountants certifying such financial
statements stating that in making the examination necessary therefor
no knowledge was obtained of any Default or Event of Default, except
as specified in such certificate;
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<PAGE>
(b) concurrently with the delivery of the financial statements
referred to in Subsections 5.1 (a) and (b) above, a certificate of a
Responsible Officer (i) stating that, to the best of such officer's
knowledge, the Company during such period has observed or performed
all of its covenants and other agreements, and satisfied every
condition contained in this Agreement and in the Notes to be observed,
performed or satisfied by it, and that such officer has obtained no
knowledge of any Default or Event of Default except as specified in
such certificate, and (ii) showing in detail the calculations
supporting such statement in respect of Subsections 6.1, 6.2, 6.6, 6.7
and 6.8;
(c) within ten days after the same are sent, copies of all
financial statements and reports which the Company sends to its
stockholders, and within ten days after the same are filed, copies of
all financial statements and reports which the Company may make to, or
file with, the Securities and Exchange Commission or any successor or
analogous Governmental Authority;
(d) as soon as available, but in any event within one hundred
and twenty days after the end of the fiscal year of the Company, the
annual statement for Charter National Life Insurance Company, CPL, CPI
and the Empire Group as filed with the insurance department in its
state of incorporation; and
(e) promptly, any such additional financial and other
information as the Agent or any Bank may from time to time reasonably
request.
5.3. Payment of Obligations. Pay, discharge or otherwise
------- -- -----------
satisfy at or before maturity or before they become delinquent, as the
case may be, all its Indebtedness and other obligations of whatever
nature, except, in the case of Indebtedness other than that described
in Section 7(e), when the amount or validity thereof is currently
being contested in good faith by appropriate proceedings and reserves
in conformity with GAAP with respect thereto have been provided on the
books of the Company or its Subsidiaries, as the case may be.
5.4. Conduct of Business and Maintenance of Existence. (a)
------- -- -------- --- ----------- -- ---------
Continue to engage in business of the same general type as now
conducted by it, and preserve, renew and keep in full force and effect
its corporate existence and take all reasonable action to maintain all
rights, privileges and franchises necessary or desirable in the normal
conduct of its business, provided, however, that a Permitted
-------- -------
Distribution shall not be prohibited or limited by this Section 5.4;
and (b) comply with all Contractual
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<PAGE>
Obligations and Requirements of Law except to the extent that the
failure to comply therewith could not, in the aggregate, have a
material adverse effect on the business, operations, property or
financial or other condition of the Company and its Subsidiaries taken
as a whole.
5.5. Maintenance of Property, Insurance. Keep all property
----------- -- -------- ---------
useful and necessary in its business in good working order and
condition; to the extent obtainable on terms which its management
deems reasonable, maintain with financially sound and reputable
insurance companies insurance on all its property against such
casualties and contingencies and in such types and amounts as, in the
judgment of its executive officers, is deemed adequate; and furnish to
the Agent, upon written request, full information as to the insurance
carried.
5.6. Inspection of Property; Books and Records; Discussions.
---------- -- -------- ----- --- ------- -----------
Keep proper books of record and account in which full, true and
correct entries in conformity with GAAP and all Requirements of Law
shall be made of all dealings and transactions in relation to its
business and activities; and permit the Banks, through the Agent or
any of their designated representatives, to visit and inspect any of
its properties and examine and make abstracts from any of its books
and records at any reasonable time and as often as may reasonably be
desired, and to discuss the business, investments, operations,
properties and financial and other condition of the Company and its
Subsidiaries with officers and employees of the Company and its
Subsidiaries and with its independent certified public accountants.
5.7. Notices. Promptly give notice in writing to each of the
-------
Banks:
(a) of the occurrence of any Default, Terminating Event or Event
of Default;
(b) of any (i) default or event of default under any Contractual
Obligation of the Company or any of its Subsidiaries or (ii)
litigation, investigation or proceeding which may exist at any time
between the Company or any of its Subsidiaries and any Governmental
Authority, which in either case could have a material adverse effect
on the business, operations, property or financial or other condition
of the Company and its Subsidiaries taken as a whole;
(c) of any litigation or proceeding affecting the Company or any
of its Subsidiaries in which the amount involved is
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<PAGE>
$15,000,000 or more and not covered by insurance or in which
injunctive or similar relief is sought and, if granted, would be
reasonably likely to have a material adverse effect on the business,
assets, operations, financial or other condition of the Company and
its Subsidiaries taken as a whole;
(d) of the following events, as soon as possible and in any
event within 30 days after the Company knows or has reason to know
thereof: (i) the occurrence or expected occurrence of any Reportable
Event with respect to any Plan, or (ii) the institution of proceedings
or the taking or expected taking of any other action by PBGC or the
Company or any Commonly Controlled Entity to terminate, withdraw or
partially withdraw from any Plan and with respect to a Multiemployer
Plan, the Reorganization or Insolvency of the Plan, and in addition to
such notice, deliver to each of the Banks whichever of the following
may be applicable: (A) a certificate of a Responsible Officer of the
Company setting forth details as to such Reportable Event and the
action that the Company or Commonly Controlled Entity proposes to take
with respect thereto, together with a copy of any notice of such
Reportable Event that may be required to be filed with PBGC, or (B)
any notice delivered by PBGC evidencing its intent to institute such
proceedings or any notice to PBGC that such Plan is to be terminated,
as the case may be;
(e) a copy of each notice given by the Company to the holders of
public debt of the Company within five Business Days after such notice
is sent to such holders and notice to each of the Banks regarding any
change in the trustee or Person performing a similar role for such
holders; and
(f) of a material adverse change in the business, operations,
property or financial or other condition of the Company, or the
Company and its Subsidiaries taken as a whole.
Each notice pursuant to this subsection shall be accompanied by a
statement of a Responsible Officer of the Company setting forth
details of the occurrence referred to therein and stating what action
the Company proposes to take with respect thereto. For all purposes
of clause (d) of this subsection, the Company shall be deemed to have
all knowledge of all facts attributable to the administrator of such
Plan.
SECTION 6. NEGATIVE COVENANTS
------------------
The Company hereby agrees that, so long as the Commitment remains
in effect, any Note remains outstanding and unpaid or any other amount
is owing to the Bank hereunder:
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6.1. Maintenance of Consolidated Tangible Net Worth. At any
----------- -- ------------ -------- --- -----
time during each fiscal year commencing after December 31, 1993 the
Company will not permit Consolidated Tangible Net Worth to be less
than an amount equal to the sum of (i) $550,000,000, minus (ii) the
-----
sum of (x) an amount equal to the aggregate amount by which the
capital stock account of the Company shall have been reduced as a
result of purchases by the Company of shares of its capital stock
during the period from January 1, 1994 to and including the date of
computation of Consolidated Tangible Net Worth, (y) the aggregate
amount by which the assets of the Company constituting costs in excess
of the net asset value of acquired companies and deferred taxes, as
determined in accordance with GAAP, shall have increased by reason of
acquisitions made by the Company during the period from January 1,
1994 to and including the date of computation of Consolidated Tangible
Net Worth, (provided that the amount of the decrease in Consolidated
--------
Tangible Net Worth pursuant to clauses (x) and (y) shall not exceed
$50,000,000), and (z) in the event of any Permitted Distribution, an
amount equal to the amount by which Consolidated Tangible Net Worth
is reduced as a result of such Permitted Distribution, plus (iii) an
----
amount equal to the sum of 40% of the Consolidated Net Income of the
Company and its Subsidiaries (as determined in accordance with GAAP)
for each prior full calendar year commencing after December 31, 1993
(provided that (A) the amount determined pursuant to clause (iii)
--------
shall be equal to zero for any calendar year for which there is a net
loss and (B) that the amounts included in net income (determined in
accordance with GAAP) resulting from changes in accounting principles
to the extent that such changes increase intangibles shall not be
included in net income for purposes of this Section 6.1).
6.2. Leverage Ratio. The Company will not at any time permit
-------- -----
the ratio of (a) consolidated Indebtedness, decreased by (i) the
aggregate amount of all customer deposits of the Banking Subsidiaries
and (ii) Subordinated Debt (but only to the extent that Subordinated
Debt does not exceed 40% of Consolidated Tangible Net Worth), to (b)
Consolidated Tangible Net Worth, decreased by an amount equal to 25%
of the investment at equity in all consolidated Insurance Subsidiaries
(as determined in accordance with GAAP), and increased by Subordinated
Debt (to the extent such Subordinated Debt does not exceed 40% of
Consolidated Tangible Net Worth), to exceed 1.60 to 1.0.
6.3. Limitations on Liens. The Company will not, nor shall it
----------- -- -----
permit any Subsidiary to, at any time directly or indirectly create,
incur, assume or suffer to exist, any Lien upon any of
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<PAGE>
its property, assets or revenues, whether now owned or hereafter
acquired, except:
(a) Liens for taxes not yet due or which are being contested in
good faith and by appropriate proceedings if adequate reserves with
respect thereto are maintained on the books of the Company or its
Subsidiaries, as the case may be, in accordance with GAAP;
(b) carriers', warehousemen's, mechanics', material-
men's, repairmen's or other like Liens arising in the ordinary course
of business which are not overdue for a period of more than 30 days or
which are being contested in good faith and by appropriate
proceedings;
(c) pledges or deposits in connection with workmen's
compensation, unemployment insurance and other social security
legislation;
(d) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety
and appeal bonds, performance bonds and other obligations of a like
nature incurred in the ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount, and which do not in any case
materially detract from the value of the property subject thereto or
interfere with the ordinary conduct of the business of the Company or
its Subsidiaries;
(f) Liens described in Schedule II;
-------- --
(g) Liens on assets owned by the Company or any Subsidiary
securing an amount not to exceed (i) $200,000,000 in the aggregate for
all such assets or (ii) $125,000,000 in the aggregate for (x) any
particular asset or (y) for the securities of any particular Person,
provided that the aggregate book value of all assets securing such
--------
Liens shall not exceed 200% of the aggregate amounts secured thereby;
(h) pledges or deposits effected by the Company or any Insurance
Subsidiary as a condition to obtaining or maintaining any license,
permit or authorization to transact insurance or reinsurance business;
(i) deposits with insurance regulatory authorities; and
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(j) Liens arising under ceding reinsurance agreements entered
into by any Insurance Subsidiary.
6.4. Prohibition of Fundamental Changes. The Company will not,
----------- -- ----------- -------
nor will it permit any Subsidiary to, at any time enter into any
transaction of merger or consolidation or amalgamation, or liquidate,
wind up or dissolve itself (or suffer any liquidation or dissolution),
convey, sell, lease, transfer or otherwise dispose of, in one
transaction or a series of transactions, all or substantially all of
its business or assets, except that:
(a) any Subsidiary of the Company may be merged or consolidated
with or into the Company (provided, that, the Company shall be the
-------- ----
continuing or surviving corporation) or with any one or more
Subsidiaries of the Company;
(b) the Company or any Subsidiary may sell, lease, transfer or
otherwise dispose of any or all of its assets (upon voluntary
liquidation or otherwise) to the Company or any Subsidiary;
(c) for purposes of this Subsection 6.4, a Permitted
Distribution shall not constitute a transfer or disposition of all or
substantially all of the Company's business or assets; and
(d) a Permitted Voluntary Proceeding shall not be prohibited by
this Subsection 6.4.
6.5. Investments. The Company will not, nor will it permit any
-----------
Subsidiary to, make or commit to make any Investment in a single
Person, other than an Investment in any Governmental Authority of the
United States of America, in an aggregate amount exceeding the then
Consolidated Tangible Net Worth of the Company.
6.6. Limitation on Contingent Obligations. Except as set forth
---------- -- ---------- -----------
in a letter from the Company to the Agent and the Banks on the date
hereof, the Company will not, nor will it permit any Subsidiary to,
create, incur, assume, guarantee, endorse or otherwise in any way be
or become responsible or liable for, directly or indirectly, or suffer
to exist Contingent Obligations in an aggregate amount for the Company
and its Subsidiaries in excess of $50,000,000 provided, that such
-------- ----
amount shall not include the F&H Guaranty and provided, further, that
-------- -------
in the event that the Company or any Subsidiary incurs a Contingent
Obligation that would have been permitted under Subsection 6.2 hereof
had such Contingent Obligation been incurred as a direct liability,
then for the purposes of this Subsection 6.6, only 50% of the
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<PAGE>
amount of such Contingent Obligation shall be applied towards the
$50,000,000 limitation.
6.7. Total Liquid Assets Ratio. At the end of any calendar
----- ------ ------ -----
quarter, the Company will not permit the ratio of (a) Total Liquid
Assets to (b) the sum of (i) the principal of all outstanding
consolidated Indebtedness due within twelve months (excluding
principal on debt outstanding under revolving credit agreements which
expire by their terms within twelve months of the calculation date and
Indebtedness of the Company's Banking Subsidiaries), (ii) the
principal of all other outstanding consolidated Indebtedness which is
secured by Liens on margin stock (as such term is defined in
Regulation U of the Board of Governors of the Federal Reserve System),
and (iii) interest on all outstanding consolidated Indebtedness
determined on a pro forma basis based on the interest rate or rates on
--- -----
such debt in effect on the calculation date, to be less than 1.25 to
1.
6.8. Limitation on Subsidiary Indebtedness. At the end of any
---------- -- ---------- ------------
calendar quarter commencing after December 31, 1993, the Company will
not permit the aggregate Indebtedness of all of the Company's
consolidated Subsidiaries to be greater than 25% of Consolidated
Tangible Net Worth at such date; provided that, for purpose of this
--------
Subsection 6.8, Indebtedness of a Subsidiary shall not include:
(i) any Indebtedness outstanding at December 31, 1992;
(ii) any Indebtedness secured by Liens permitted under
Subsection 6.3(g);
(iii) any Indebtedness of the Company's Banking Subsidiaries;
(iv) Indebtedness of any Subsidiary the ownership of which is
acquired by the Company, directly or indirectly, after the date
hereof, or which is established by the Company after the date hereof
for the purpose of acquiring assets or equity of any Person not owned,
directly or indirectly, by the Company on the date hereof; provided,
--------
that, such Indebtedness is not guaranteed by nor otherwise have
----
recourse to the Company; and
(v) Any Indebtedness of a Subsidiary to another Subsidiary or to
the Company.
For purposes of Subsections 6.3, 6.4 and 6.6, the terms "Subsidiary"
and "Subsidiaries" shall not include any Excluded
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<PAGE>
<PAGE>
Subsidiary except as otherwise expressly provided in such subsections.
SECTION 7. EVENTS OF DEFAULT
-----------------
Upon the occurrence of any of the following events:
(a) The Company shall fail to pay any principal of or interest
on the Notes, or any other amount payable hereunder, when due in
accordance with the terms thereof or hereof; or
(b) Any representation or warranty made or deemed made by the
Company herein or which is contained in any certificate, document or
financial or other statement furnished at any time under or in
connection with this Agreement shall prove to have been incorrect in
any material respect on or as of the date made or deemed made; or
(c) The Company shall default in the observance or performance
of any agreement contained in Sections 5 and 6; or
(d) The Company shall default in the observance or performance
of any other agreement contained in this Agreement, and such default
shall continue unremedied for a period of 30 days; or
(e) The Company or any of its Subsidiaries shall (i) default in
any payment of principal of or interest on any Indebtedness (other
than the Notes) or in the payment of any Contingent Obligation, beyond
the period of grace (not to exceed 30 days), if any, provided in the
instrument or agreement under which such Indebtedness or Contingent
Obligation was created; or (ii) default in the observance or
performance of any other agreement or condition relating to any such
Indebtedness or Contingent Obligation or contained in any instrument
or agreement evidencing, securing or relating thereto, or any other
event shall occur or condition exist, the effect of which default or
other event or condition is to cause, or to permit the holder or
holders of such Indebtedness or beneficiary or beneficiaries of such
Contingent Obligation (or a trustee or agent on behalf of such holder
or holders or beneficiary or beneficiaries) to cause, with the giving
of notice if required, such Indebtedness to become due prior to its
stated maturity or such Contingent Obligation to become payable; or
(f) (i) The Company or any Subsidiary shall commence any case,
proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to
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<PAGE>
<PAGE>
bankruptcy, insolvency, reorganization or relief of debtors, seeking
to have an order for relief entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts (except
for reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, or composition with respect to Olivehain Securities, a
United Kingdom company, or any of its Subsidiaries, and except for
the commencement of a Permitted Voluntary Proceeding), or (B) seeking
appointment of a receiver, trustee, custodian or other similar
official for it or for all or any substantial part of its assets, or
the Company or any Subsidiary shall make a general assignment for the
benefit of its creditors; or (ii) there shall be commenced against the
Company or any Subsidiary any case, proceeding or other action of a
nature referred to in clause (i) above which (A) results in the entry
of an order for relief or any such adjudication or appointment or (B)
remains undismissed, undischarged or unbonded for a period of 60 days;
or (iii) there shall be commenced against the Company or any
Subsidiary any case, proceeding or other action seeking issuance of a
warrant of attachment, execution, distraint or similar process against
all or any substantial part of its assets which results in the entry
of an order for any such relief which shall not have been vacated,
discharged, or stayed or bonded pending appeal within 60 days from the
entry thereof; or (iv) the Company or any Subsidiary shall have taken
any action in furtherance of, or indicating its consent to, approval
of, or acquiescence in, any of the acts set forth in clause (i), (ii)
or (iii) above; or (v) the Company or any Subsidiary shall generally
not, or shall be unable to, or shall admit in writing its inability
to, pay its debts as they become due; or
(g) (i) Any Person shall engage in any "prohibited transaction"
(as defined in Section 406 of ERISA or Section 4975 of the Code)
involving any Plan, (ii) any "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or not waived, shall exist
with respect to any Plan, (iii) a Reportable Event shall occur with
respect to, or proceedings shall commence to have a trustee appointed,
or a trustee shall be appointed, to administer or to terminate, any
Single Employer Plan, which Reportable Event or institution of
proceedings is, in the reasonable opinion of the Agent, likely to
result in the termination of such Plan for purposes of Title IV of
ERISA, and, in the case of a Reportable Event, the continuance of such
Reportable Event unremedied for ten days after notice of such
Reportable Event pursuant to Section 4043(a), (c) or (d) of ERISA is
given or the continuance of such proceedings for ten days
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<PAGE>
<PAGE>
after commencement thereof, as the case may be, (iv) any Single
Employer Plan shall terminate for purposes of Title V of ERISA, or (v)
any other event or condition shall occur or exist with respect to a
Single Employer Plan; and in each case in clauses (i) through (v)
above, such event or condition, together with all other such events
or conditions, if any, could subject the Company or any of its
Subsidiaries to any tax, penalty or other liabilities which are, in
the aggregate, material in relation to the business, operations,
property or financial or other conditions of the Company and its
Subsidiaries taken as a whole; or
(h) One or more judgments or decrees shall be entered against
the Company or any of its Subsidiaries involving in the aggregate a
liability (not paid or fully covered by insurance) of $1,000,000 or
more and all such judgments or decrees shall not have been vacated,
discharged, or stayed or bonded pending appeal within 60 days from the
entry thereof;
then, and in any such event, (A) if such event is an Event of Default
specified in clause (i) or (ii) of paragraph (f) above, automatically
the Commitment shall immediately terminate and the Loan or Loans
hereunder (with accrued interest thereon) and all other amounts owing
under this Agreement and the Notes shall immediately become due and
payable, and (B) if such event is any other Event of Default, either
or both of the following actions may be taken: (I) the Agent may, and
upon the request of the Banks shall, by notice of default to the
Company, declare the Commitment to be terminated forthwith whereupon
the Commitment shall immediately terminate; and (II) the Agent may,
and upon the request of the Banks shall, by notice of default to the
Company, declare the Loan or Loans hereunder (with accrued interest
thereon) and all other amounts owing under this Agreement and the
Notes to be due and payable forthwith, whereupon the same shall
immediately become due and payable. Except as expressly provided
above in this section, presentment, demand, protest and all other
notices of any kind are hereby expressly waived. For purposes of
paragraphs (e), (f) and (h) above, the terms "Subsidiary" and
"Subsidiaries" shall not include any Excluded Subsidiary.
SECTION 8. THE AGENT
---------
8.1. Appointment. Each Bank hereby irrevocably designates
-----------
and appoints the Agent as the agent of such Bank under this Agreement
and each such Bank irrevocably authorizes the Agent, in such capacity,
to take such action on its behalf under the provisions of this
Agreement, the Notes and any such other documents, and to exercise
such powers and perform such duties as
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<PAGE>
<PAGE>
are expressly delegated to the Agent by the terms of this Agreement,
the Notes and any such other documents, together with such other
powers as are reasonably incidental thereto. Notwithstanding any
provision to the contrary elsewhere in this Agreement, the Agent shall
not have any duties or responsibilities, except those expressly set
forth herein, or any fiduciary relationship with any Bank, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or otherwise exist
against the Agent.
8.2. Delegation of Duties. The Agent may execute any of its
--------------------
duties under this Agreement by or through agents or attorneys-in-fact
and shall be entitled to advice of counsel concerning all matters
pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected
by it with reasonable care.
8.3. Exculpatory Provisions. Neither the Agent nor any of
----------------------
its officers, directors, employees, agents, attorneys-in-fact or
affiliates shall be (i) liable for any action lawfully taken or
omitted to be taken by it or such Person under or in connection with
this Agreement (except for its or such Person's own gross negligence
or willful misconduct) or (ii) responsible in any manner to any of the
Banks for any recitals, statements, representations or warranties made
by the Company or any officer thereof contained in this Agreement or
in any certificate, report, statement or other document referred to or
provided for in, or received by the Agent under or in connection with,
this Agreement or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or the Notes or any
such other document or for any failure of the Company to perform its
obligations hereunder or thereunder. The Agent shall not be under any
obligation to any Bank to ascertain or to inquire as to the observance
or performance of any of the agreements contained in, or conditions
of, this Agreement, or to inspect the properties, books or records of
the Company.
8.4. Reliance by Agent. The Agent shall be entitled to
-----------------
rely, and shall be fully protected in relying, upon any Note, writing,
resolution, notice, consent, certificate, affidavit, letter, telecopy,
telex or teletype message, statement, order or other document or
conversation believed by it to be genuine and correct and to have been
signed, sent or made by the proper Person or Persons and upon advice
and statements of legal counsel (including, without limitation,
counsel to the Company), independent accountants and other experts
selected by the Agent. The Agent may deem and treat the payee of any
Note as the owner
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<PAGE>
<PAGE>
thereof for all purposes unless a written notice of assignment,
negotiation or transfer thereof shall have been filed with the Agent.
The Agent shall be fully justified in failing or refusing to take any
action under this Agreement unless it shall first receive such advice
or concurrence of the Banks as it deems appropriate or it shall first
be indemnified to its satisfaction by the Banks against any and all
liability and expense which may be incurred by it by reason of taking
or continuing to take any such action. The Agent shall in all cases
be fully protected in acting, or in refraining from acting, under this
Agreement and the Notes in accordance with a request of the Banks, and
such request and any action taken or failure to act pursuant thereto
shall be binding upon all the Banks and all future holders of the
Notes.
8.5. Notice of Default. The Agent shall not be deemed to
-----------------
have knowledge or notice of the occurrence of any Default or Event of
Default hereunder unless the Agent has received notice from a Bank or
the Company referring to this Agreement, describing such Default or
Event of Default and stating that such notice is a "notice of
default". In the event that the Agent receives such a notice, the
Agent shall give notice thereof to the Banks. The Agent shall take
such action with respect to such Default or Event of Default as shall
be reasonably directed by the Banks; provided that unless and until
--------
the Agent shall have received such directions, the Agent may (but
shall not be obligated to) take such action, or refrain from taking
such action, with respect to such Default or Event of Default as it
shall deem advisable in the best interests of the Banks.
8.6. Non-Reliance on Agent and Other Lenders. Each Bank
---------------------------------------
expressly acknowledges that neither the Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates has made
any representations or warranties to it and that no act by the Agent
hereinafter taken, including any review of the affairs of the Company,
shall be deemed to constitute any representation or warranty by the
Agent to any Bank. Each Bank represents to the Agent that it has,
independently and without reliance upon the Agent or any other Bank,
and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the
business, operations, property, financial and other condition and
creditworthiness of the Company and made its own decision to make its
Loans hereunder and enter into this Agreement. Each Bank also
represents that it will, independently and without reliance upon the
Agent or any other Bank, and based on such documents and information
as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking
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<PAGE>
<PAGE>
action under this Agreement and to make such investigation as it deems
necessary to inform itself as to the business, operations, property,
financial and other condition and creditworthiness of the Company.
Except for notices, reports and other documents expressly required to
be furnished to the Banks by the Agent hereunder, the Agent shall not
have any duty or responsibility to provide any Bank with any credit or
other information concerning the business, operations, property,
condition (financial or otherwise), prospects or creditworthiness of
the Company which may come into the possession of the Agent or any of
its officers, directors, employees, agents, attorneys-in-fact or
affiliates.
8.7. Indemnification. The Banks agree to indemnify the
---------------
Agent in its capacity as such (to the extent not reimbursed by the
Company and without limiting the obligation of the Company to do so),
ratably according to their respective Commitment Percentages in effect
on the date on which indemnification is sought under this subsection
(or, if indemnification is sought after the date upon which the
Commitments shall have terminated and the Loans shall have been paid
in full, ratably in accordance with their Commitment Percentages
immediately prior to such date), from and against any and all
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind
whatsoever which may at any time (including, without limitation, at
any time following the payment of the Notes) be imposed on, incurred
by or asserted against the Agent in any way relating to or arising out
of, the Commitments, this Agreement, or any documents contemplated by
or referred to herein or therein or the transactions contemplated
hereby or thereby or any action taken or omitted by the Agent under or
in connection with any of the foregoing; provided that no Bank shall
--------
be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting solely from the Agent's
gross negligence or willful misconduct. The agreements in this
subsection shall survive the payment of the Notes and all other
amounts payable hereunder.
8.8. Agent in Its Individual Capacity. The Agent and its
--------------------------------
affiliates may make loans to, accept deposits from and generally
engage in any kind of business with the Company as though the Agent
were not the Agent hereunder. With respect to its Loans made or
renewed by it and any Note issued to it, the Agent shall have the same
rights and powers under this Agreement as any Bank and may exercise
the same as though it were not the Agent, and the terms "Bank" and
"Banks" shall include the Agent in its individual capacity.
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<PAGE>
8.9. Successor Agent. The Agent may resign as Agent upon 10
---------------
days' notice to the Banks. If the Agent shall resign as Agent under
this Agreement then the Banks shall appoint from among the Banks a
successor agent for the Banks, which successor agent shall be approved
by the Company, whereupon such successor agent shall succeed to the
rights, powers and duties of the Agent, and the term "Agent" shall
mean such successor agent effective upon such appointment and
approval, 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 holders of the Notes. After any retiring Agent's resignation as
Agent, the provisions of this Section 8 shall inure to its benefit as
to any actions taken or omitted to be taken by it while it was Agent
under this Agreement.
SECTION 9. MISCELLANEOUS
-------------
9.1. Amendments and Waivers. Neither this Agreement, the Notes,
---------- --- -------
nor any terms hereof or thereof may be amended, supplemented or
modified except pursuant to a written instrument executed by the
Agent, all of the Banks, and the Company.
9.2. Notices. All notices, requests and demands to or upon the
-------
respective parties hereto to be effective shall be in writing or by
telecopy, telegraph or telex and, unless otherwise expressly provided
herein, shall be deemed to have been duly given or made when delivered
by hand, or when deposited in the mail, postage prepaid, or, if sent
by telecopy, when received, or, in the case of telegraphic notice,
when delivered to the telegraph company, or, in the case of telex
notice, when sent, answerback received, addressed as follows or to
such other address as may be hereafter notified by the respective
parties hereto and any future holders of the Notes:
The Company: Leucadia National Corporation
315 Park Avenue South
New York, New York 10010
Attention: President
Telecopy: 212-598-4869
with a copy to: Stephen E. Jacobs
c/o Weil, Gotshal & Manges
767 Fifth Avenue
New York, New York 10153
Telecopy: 212-310-8007
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<PAGE>
The Banks: _________ Bank
_____________________________
_____________________________
___________________
Telecopy: (___) ___-____
_______________________
_______________________
_______________________
Attention:
Telecopy: (___) ___-____
The Agent: ________ Bank
_____________________________
_____________________________
Attention: _____________
Telecopy: (___) ___-____
provided that any notice, request or demand to or upon the Agent
pursuant to Subsections 2.3, 2.5 and 2.6 shall be prior and shall not
be effective until received.
9.3. No Waiver; Cumulative Remedies. No failure to exercise and
-- ------ ---------- --------
no delay in exercising, on the part of the Agent or the Banks, any
right, remedy, power or privilege hereunder, shall operate as a waiver
thereof; nor shall any single or partial exercise of any right,
remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein
provided are cumulative and not exclusive of any rights, remedies,
powers and privileges provided by law.
9.4. Survival of Representations and Warranties. All
-------- -- --------------- --- ----------
representations and warranties made hereunder and in any document,
certificate or statement delivered pursuant hereto or in connection
herewith shall survive the execution and delivery of this Agreement
and the Notes.
9.5. Payment of Expenses and Taxes. The Company agrees (a) to
------- -- -------- --- -----
pay or reimburse the Agent and the Banks for all their reasonable
out-of-pocket costs and expenses incurred in connection with the
development, preparation and execution of, and any amendment,
supplement or modification to, this Agreement and the Notes and any
other documents prepared in connection herewith, and the consummation
of the transactions contemplated hereby and thereby, including,
without limitation, the reasonable fees and disbursements of counsel
to the Agent and the Banks, (b)
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<PAGE>
to pay or reimburse the Agent and the Banks for all of their
reasonable out-of-pocket costs and expenses incurred in connection
with the enforcement or preservation of any rights under this
Agreement, the Notes and any such other documents, including, without
limitation, fees and disbursements of counsel to the Agent and the
Banks, (c) to pay, indemnify, and to hold the Agent and the Banks
harmless from, any and all recording and filing fees and any and all
liabilities with respect to, or resulting from any delay in paying,
stamp, excise and other taxes, if any, which may be payable or
determined to be payable in connection with the execution and delivery
of, or consummation of any of the transactions contemplated by, or any
amendment, supplement or modification of, or any waiver of consent
under or in respect of, this Agreement, the Notes and any such other
documents, and (d) to pay, indemnify, and hold each Bank and the Agent
harmless from and against any and all other liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
or disbursements of any kind or nature whatsoever with respect to the
execution, delivery, enforcement, performance and administration of
this Agreement, the Notes and any such other documents, including,
without limitation, any of the foregoing relating to the violation of,
noncompliance with or liability under, any environmental law
applicable to the operations of the Company, any of its Subsidiaries
or any of the real properties owned or operated by the Company or any
of its Subsidiaries (all the foregoing in this clause (d),
collectively, the "indemnified liabilities"), provided, that the
--------
Company shall have no obligation hereunder to the Agent or any Bank
with respect to indemnified liabilities arising from (i) the gross
negligence or willful misconduct of the Agent or any such Bank or (ii)
legal proceedings commenced against the Agent or any such Bank by any
security holder or creditor thereof arising out of and based upon
rights afforded any such security holder or creditor solely in its
capacity as such. The agreements in this subsection shall survive
repayment of the Notes and all other amounts payable hereunder.
9.6. Successors and Assigns. This Agreement shall be binding
---------- --- -------
upon and inure to the benefit of the Company, the Agent, the Banks,
all future holders of the Notes and their respective successors and
assigns, except that the Company may not assign or transfer any of its
rights under this Agreement without the prior written consent of each
of the Banks. The Company acknowledges that the Banks may at any time
sell, assign, transfer, or grant, participations in the Loans to other
financial institutions (a "Transferee") provided that the Company
----------
shall not, at the time of such disposition, incur any additional
expenses solely as a result of the sale, assignment, transfer or
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<PAGE>
grant of such participations. The Company agrees that each Transferee
may, subject to the provisions of this Agreement, exercise all rights
of payment with respect to the portion of such Loans held by it as
fully as if such Transferee were the direct holder thereof; provided
that a Transferee shall not be entitled to require the Agent to take
or omit to take any action hereunder except action directly affecting
the extension of the maturity of any portion of the principal amount
of or interest on a Loan allocated to such participation or a
reduction of the principal amount of or the rate of interest payable
on the Loans. In addition, the Company agrees that each Transferee
shall be entitled to the benefits of Subsections 2.13, 2.15 and 2.16
(including, without limitation, with respect to Subsection 2.16, that
the covenants therein shall survive termination of this Agreement and
payment of the Notes) with respect to its participation in any
Eurodollar Loans.
9.7. Set-off. In addition to any rights or remedies of the
-------
Banks provided by law, each Bank shall have the right, without prior
notice to the Company, any such notice being expressly waived by the
Company to the extent permitted by applicable law, upon the filing of
a petition under any of the provisions of the federal bankruptcy act
or amendments thereto, by or against; the making of an assignment for
the benefit of creditors by; the application for the appointment; or
the appointment of any receiver of, or of any of the property of; the
issuance of any execution against any of the property of; the issuance
of a subpoena or order, in supplementary proceedings, against or with
respect to any of the property of; or the issuance of a warrant of
attachment against any of the property of; the Company, to set-off and
apply against any indebtedness, whether matured or unmatured of the
Company to such Bank, any amount owing from such Bank to the Company
at, or at any time after, the happening of any of the above mentioned
events, and the aforesaid right of set-off may be exercised by such
Bank against the Company or against any trustee in bankruptcy, debtor
in possession, assignee for the benefit of creditors, receiver or
execution, judgment or attachment creditor of the Company, the Company
or such trustee in bankruptcy, debtor in possession, assignee for the
benefit of creditors, receiver or execution, judgment or attachment
creditor, notwithstanding the fact that such right of set-off shall
not have been exercised by such Bank prior to the making, filing or
issuance, or service upon such Bank (either directly or through the
Agent) of, or of notice of, any such petition; assignment for the
benefit of creditors; appointment or application for the appointment
of a receiver; or issuance of execution, subpoena, order or warrant.
Such Bank agrees promptly to notify the Company and the Agent after
any such set-off and
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<PAGE>
application made by the Bank, provided, that, the failure to give such
-------- ----
notice shall not affect the validity of such set-off and application.
Each Bank agrees with the other Banks that (i) if an amount to be set
off is to be applied to Indebtedness of the Company to a Bank, other
than Indebtedness evidenced by the then outstanding Notes held by all
of the Banks, such amount shall be applied ratably to such other
Indebtedness and to the Indebtedness evidenced by all such Notes, and
(ii) if a Bank shall receive from the Company, whether by voluntary
payment, exercise of the right of set-off, counterclaim, cross action,
enforcement of the claim evidenced by the Notes held by a Bank by
proceeding against the Company at law or in equity or by proof thereof
in bankruptcy, reorganization, liquidation, receivership or similar
proceedings, or otherwise, and shall retain and apply to the payment
of the Note or Notes held by a Bank any amount in excess of its
ratable portion of the payments received by all of the Banks, such
Bank will make such disposition and arrangements with the other Banks
with respect to such excess, either by way of distribution, pro tanto
--- -----
assignment of claims, subrogation or otherwise as shall result in
each Bank receiving in respect of the Notes held by it its
proportionate payment as contemplated by this Agreement; provided,
--------
however, that if all or any part of such excess payment is thereafter
-------
recovered from such Bank, such disposition and arrangements shall be
rescinded and the amount restored to the extent of such recovery, but
without interest.
9.8. Termination. This Agreement shall terminate in the event
-----------
(a) Ian Cumming and Joseph Steinberg cease to own, directly or
indirectly, 32% or more of the Voting Stock of the Company, provided,
--------
that Messrs. Cumming and/or Steinberg may cease to own, directly or
indirectly, 32% or more of the Voting Stock of the Company if: (i) in
the aggregate, they own, directly or indirectly, at least 23% of the
outstanding Voting Stock, and (ii)(x) if during the lifetime of Mr.
Cumming or Mr. Steinberg, the aggregate Market Value of the Voting
Stock owned by them, directly or indirectly, is at least $200,000,000
or (y) if upon the death of either Mr. Cumming or Mr. Steinberg, the
aggregate Market Value of the Voting Stock owned, directly or
indirectly, by the survivor would be at least $100,000,000. For
purposes hereof, the term "owned, directly or indirectly" shall be
------ -------- -- ----------
deemed to include all Voting Stock received from Mr. Cumming or Mr.
Steinberg by any member of their respective immediate families or by
any trust for the benefit of either of them or any member of their
respective immediate families (a "Recipient"), which Voting Stock is
---------
held by a Recipient during the lifetime of Mr. Cumming
or Mr. Steinberg, or (b) either Mr. Cumming or Mr. Steinberg cease to
be a principal executive officer (which shall include
the office of Chairman of the Board of Directors) of the Company.
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<PAGE>
<PAGE>
In determining the number of outstanding Common Shares then held by
Messrs. Cumming and Steinberg and the total number of outstanding
Common Shares, there shall be excluded Common Shares issued by the
Company after December 31, 1991, or the conversion into or exchange
for, after December 31, 1991, Common Shares or securities convertible
into or exchangeable for Common Shares. Such termination shall be
immediate if it arises from any event other than the death or
incapacity of either or both of Ian Cumming and Joseph Steinberg. If
such termination shall arise from the death or incapacity of either or
both of Ian Cumming and Joseph Steinberg such termination shall take
effect 120 days after such event. Upon any such termination, the
Company shall pay to the Agent for the accounts of the Banks all
amounts owing under this Agreement and the Notes. No such termination
shall affect any rights acquired by the Banks under this Agreement
prior to or as a result of such termination.
9.9. Counterparts. This Agreement may be executed by one or
------------
more of the parties to this Agreement in any number of separate
counterparts and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
9.10. Governing Law. This Agreement and the Notes and the
--------- ---
rights and obligations of the parties under this Agreement and the
Notes shall be governed by, and construed and interpreted in
accordance with, the laws (excluding the laws applicable to conflicts
or choice of law) of the State of New York.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered in New York, New York, by their
proper and duly authorized officers as of the day and year first above
written.
LEUCADIA NATIONAL CORPORATION
By:
----------------------------
Title:
________ BANK, as Agent
and as a Bank
By:
----------------------------
Title:
_______________________
By:
----------------------------
Title:
By:
----------------------------
Title:
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TABLE OF CONTENTS
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SECTION 1. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . .1
1.1. Defined Terms . . . . . . . . . . . . . . . . . . . . 1
1.2. Other Definitional Provisions . . . . . . . . . . . . 12
SECTION 2. AMOUNT AND TERMS OF REVOLVING CREDIT
COMMITMENT . . . . . . . . . . . . . . . . . . . 13
2.1. Revolving Credit Commitment . . . . . . . . . . . . . 13
2.2. Notes . . . . . . . . . . . . . . . . . . . . . . . . 13
2.3. Procedure for Revolving Credit Borrowing . . . . . . . 14
2.4. Commitment Fee . . . . . . . . . . . . . . . . . . . . 16
2.5. Termination or Reduction of Commitment . . . . . . . . 16
2.6. Prepayments . . . . . . . . . . . . . . . . . . . . . 16
2.7. Repayment of Loans . . . . . . . . . . . . . . . . . . 17
2.8. Minimum Accounts of Certain Loans . . . . . . . . . . 17
2.9. Interest Rate . . . . . . . . . . . . . . . . . . . . 17
2.10. Computation of Interest and Fees . . . . . . . . . . 18
2.11. Inability to Determine Interest Rate . . . . . . . . 18
2.12. Pro Rata Treatment and Payments . . . . . . . . . . . 19
2.13. Taxes . . . . . . . . . . . . . . . . . . . . . . . . 19
2.14. Illegality . . . . . . . . . . . . . . . . . . . . . 20
2.15. Requirements of Law . . . . . . . . . . . . . . . . . 20
2.16. Indemnity . . . . . . . . . . . . . . . . . . . . . . 23
2.17. Use of Proceeds . . . . . . . . . . . . . . . . . . . 23
2.18 Agent's Fee . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . 24
3.1. Financial Condition . . . . . . . . . . . . . . . . . 24
3.2. No Change . . . . . . . . . . . . . . . . . . . . . . 24
3.3. Corporate Existence; Compliance with Law . . . . . . . 24
3.4. Corporate Power; Authorization; Enforceable
Obligations . . . . . . . . . . . . . . . . . . . . . . 25
3.5. No Legal Bar . . . . . . . . . . . . . . . . . . . . . 25
3.6. No Material Litigation . . . . . . . . . . . . . . . . 26
3.7. No Default . . . . . . . . . . . . . . . . . . . . . . 26
3.8. Ownership of Property; Liens . . . . . . . . . . . . . 26
3.9. No Burdensome Restrictions . . . . . . . . . . . . . . 26
3.10. Taxes . . . . . . . . . . . . . . . . . . . . . . . . 26
3.11. Federal Regulations . . . . . . . . . . . . . . . . . 27
3.12. ERISA . . . . . . . . . . . . . . . . . . . . . . . . 27
3.13. Investment Company Act . . . . . . . . . . . . . . . 27
3.14. Full Disclosure . . . . . . . . . . . . . . . . . . . 28
3.15. Subordinated Debt . . . . . . . . . . . . . . . . . . 28
3.16. Nonrecourse Contingent Obligations . . . . . . . . . 28
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SECTION 4. CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . . 28
4.1. Conditions of Initial Loan . . . . . . . . . . . . . . 28
4.2. Conditions to All Loans . . . . . . . . . . . . . . . 29
SECTION 5. AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . 30
5.1. Financial Statements . . . . . . . . . . . . . . . . . 30
5.2. Certificates; Other Information . . . . . . . . . . . 31
5.3. Payment of Obligations . . . . . . . . . . . . . . . . 32
5.4. Conduct of Business and Maintenance of Existence . . . 32
5.5. Maintenance of Property, Insurance . . . . . . . . . . 32
5.6. Inspection of Property; Books and Records;
Discussions . . . . . . . . . . . . . . . . . . . . . . 33
5.7. Notices . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 6. NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . 34
6.1. Maintenance of Consolidated Tangible Net Worth . . . . 34
6.2. Leverage Ratio . . . . . . . . . . . . . . . . . . . . 35
6.3. Limitations on Liens . . . . . . . . . . . . . . . . . 35
6.4. Prohibition of Fundamental Changes . . . . . . . . . . 36
6.5. Investments . . . . . . . . . . . . . . . . . . . . . 37
6.6. Limitation on Contingent Obligations . . . . . . . . . 37
6.7. Total Liquid Assets Ratio . . . . . . . . . . . . . . 37
6.8. Limitation on Subsidiary Indebtedness . . . . . . . . 38
SECTION 7. EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . 38
SECTION 8. THE AGENT. . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.1. Appointment . . . . . . . . . . . . . . . . . . . . . . 41
8.2. Delegation of Duties . . . . . . . . . . . . . . . . . 42
8.3. Exculpatory Provisions . . . . . . . . . . . . . . . . 42
8.4. Reliance by Agent . . . . . . . . . . . . . . . . . . . 42
8.5. Notice of Default . . . . . . . . . . . . . . . . . . . 43
8.6. Non-Reliance on Agent and Other Lenders . . . . . . . . 43
8.7. Indemnification . . . . . . . . . . . . . . . . . . . . 44
8.8. Agent in Its Individual Capacity . . . . . . . . . . . 44
8.9. Successor Agent . . . . . . . . . . . . . . . . . . . . 44
SECTION 9. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . 45
9.1. Amendments and Waivers . . . . . . . . . . . . . . . . 45
9.2. Notices . . . . . . . . . . . . . . . . . . . . . . . 45
9.3. No Waiver; Cumulative Remedies . . . . . . . . . . . . 46
9.4. Survival of Representations and Warranties . . . . . . 46
9.5. Payment of Expenses and Taxes . . . . . . . . . . . . 47
9.6. Successors and Assigns . . . . . . . . . . . . . . . . 48
9.7. Set-off . . . . . . . . . . . . . . . . . . . . . . . 48
9.8. Termination . . . . . . . . . . . . . . . . . . . . . 49
9.9. Counterparts . . . . . . . . . . . . . . . . . . . . . 50
9.10. Governing Law . . . . . . . . . . . . . . . . . . . . 50
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Exhibit A-1: Revolving Credit Note of the Company to ________ Bank
Exhibit A-2: Revolving Credit Note of the Company to ________ Bank
Exhibit B: Legal Opinion of Company's Counsel
Exhibit C: Borrowing Certificate
Exhibit D: Officer's Certificate (re: Regulation U)
Schedule I: Subordination Provisions
Schedule II: Existing Liens
NYFS04...:\30\76830\0001\2125\AGR21794.Y5A
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Execution Copy
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LEUCADIA NATIONAL CORPORATION
-----------------------------
AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
Dated as of
January 1, 1994
________ BANK
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