AMENDED AND RESTATED
CORPORATE GUARANTY
RECITALS
NIAGARA COUNTY INDUSTRIAL DEVELOPMENT AGENCY (Niagara
County, New York), a public benefit corporation of the State of
New York having its principal office at 59 Park Avenue, Room 237,
Lockport, New York 14094 (the "Issuer"), acquired, constructed
and equipped a certain industrial development facility located in
Niagara County, New York (the "Facility") and leased the Facility
to Pyron Corporation, a New York corporation with offices at 5950
Packard Road, Niagara Falls, New York 14304 (the "Company"),
under a Lease Agreement dated as of November 1, 1989 (the "Lease
Agreement"); and
The Issuer financed, in part, the acquisition, construction
and equipping of the Facility by the issuance of its Industrial
Development Revenue Bonds (1989 Pyron Corporation Project) in the
aggregate principal amount of $7,650,000 (the "Bonds") pursuant
to an Indenture of Trust dated as of November 1, 1989 by and
between the Issuer and the Bank of New York, as trustee (the
"Trustee") (the "Indenture"); and
The Issuer secured the Bonds as provided in the Indenture by
granting a mortgage lien on and a security interest in the
Facility and assigning certain of the Issuer's rights under the
Lease Agreement, dated as of November 1, 1989, by and between the
Issuer and the Company to the Trustee pursuant to the Indenture;
and
The Bonds are further secured by an irrevocable five year
letter of credit (the "Letter of Credit") issued in favor of the
Trustee by Chemical Bank, a New York banking corporation (the
"Bank"). In connection with the issuance of the Letter of
Credit, the Company and the Bank entered into a Letter of Credit
Reimbursement Agreement dated as of November 1, 1989 (the
"Reimbursement Agreement").
To secure the obligations of the Company to the Bank under
the Reimbursement Agreement, including any amendments thereto (i)
the Issuer and the Company granted to the Bank a mortgage on and
security interest in certain real and personal property pursuant
to a Bank Mortgage and Security Agreement from the Company and
the Issuer to the Bank dated as of November 1, 1989 (the "Bank
Mortgage"), and (ii) the Company granted to the Bank a security
interest in all machinery, equipment and fixtures of the Company,
then owned or thereafter acquired, pursuant to a security
agreement dated as of November 1, 1989 from the Company to the
Bank (the "Security Agreement").
The Company is a wholly owned subsidiary of Zemex
Corporation, a Delaware corporation (the "Corporate Guarantor").
The Bank required, as a condition and as a further
inducement for it to enter into the transactions contemplated by
the Reimbursement Agreement and the Bonds, that the Corporate
Guarantor unconditionally provide its guaranty on the terms set
forth in a Guaranty Agreement given by the Corporate Guarantor
dated as of November 1, 1989.
The Bank and the Corporate Guarantor desire to amend and
restate the aforesaid Corporate Guaranty Agreement on the terms
hereinafter set forth:
AGREEMENT
In consideration of the premises, the Corporate Guarantor
does hereby, subject to the terms hereof, covenant and agree with
the Bank as follows (terms used herein but not defined shall have
the meanings ascribed thereto in the Reimbursement Agreement):
ARTICLE I
REPRESENTATIONS AND WARRANTIES OF THE CORPORATE
GUARANTOR
The Corporate Guarantor hereby represents and warrants to
the Bank that:
Section 1.01. Due Organization and Qualification. The
Corporate Guarantor is a corporation duly organized, validly
existing and in good standing under the Laws of the State of
Delaware; each Participating Subsidiary is a corporation duly
organized, validly existing and in good standing under the Laws
of its state of incorporation, all as set forth in Exhibit A; the
Corporate Guarantor and each Participating Subsidiary have the
lawful power to own their properties and to engage in the
business they conduct, and each is duly qualified and in good
standing as a foreign corporation in the jurisdictions wherein
the nature of the business transacted by it or property owned by
it is both material and makes such qualification necessary; the
states in which the Corporate Guarantor and each Participating
Subsidiary are qualified to do business are set forth in Exhibit
A; the percentage of the Corporate Guarantor's ownership of the
outstanding stock of each Participating Subsidiary is as listed
in Exhibit A; and the addresses of all places of business of the
Corporate Guarantor and each Participating Subsidiary are as set
forth in Exhibit B;
Section 1.02. No Conflicting Agreement. Neither the
Corporate Guarantor nor any Participating Subsidiary is in
default with respect to any of its existing Indebtedness, and the
making and performance of this Corporate Guaranty will not
(immediately, or with the passage of time or the giving of
notice, or both):
a. Violate the charter or bylaw provisions of the
Corporate Guarantor or any Participating Subsidiary, or violate
any Laws, or result in a default under any material contract,
agreement, or instrument to which the Corporate Guarantor or any
Participating Subsidiary is a party or by which the Corporate
Guarantor or any Participating Subsidiary or its property is
bound; or
b. Result in the creation or imposition of any
security interest in, or lien or encumbrance upon, any of the
assets of the Corporate Guarantor or any Participating
Subsidiary, except in favor of the Bank;
Section 1.03. Capacity. The Corporate Guarantor and each
Participating Subsidiary have the power and authority to enter
into and perform this Corporate Guaranty, to incur the
Obligations herein provided for, and have taken all corporate
action necessary to authorize the execution, delivery, and
performance of this Corporate Guaranty;
Section 1.04. Binding Obligations. This Corporate Guaranty
is valid, binding, and enforceable in accordance with its terms
subject to the general principles of equity (regardless of
whether such question is considered in a proceeding in equity or
at law) and to applicable bankruptcy, insolvency, moratorium,
fraudulent or preferential conveyance and other similar laws
affecting generally the enforcement of creditors' rights;
Section 1.05. Litigation. Except as disclosed in Exhibit C
hereto, there is no pending or threatened order, notice, claim,
litigation, proceeding or investigation against or affecting the
Corporate Guarantor or any Participating Subsidiary, whether or
not covered by insurance, that would involve the payment of Two
Hundred Thousand Dollars ($200,000.00) or more if adversely
determined;
Section 1.06. Title. The Corporate Guarantor and its
Participating Subsidiaries have good and marketable title to all
of their respective material assets, subject to no security
interest, encumbrance or lien, or the claims of any other Person
except for Permitted Liens;
Section 1.07. Financial Statements. The Financial
Statements, including any schedules and notes pertaining thereto,
have been prepared in accordance with generally accepted
accounting principles consistently applied, and fully and fairly
present the financial condition of the Corporate Guarantor and
its Participating Subsidiaries at the dates thereof and the
results of operations for the periods covered thereby, and there
has been no Material Adverse Change in the financial condition or
business of the Corporate Guarantor and its Participating
Subsidiaries from December 31, 1993 to the date hereof;
Section 1.08. No Additional Indebtedness. As of the date
hereof, the Corporate Guarantor and its Participating
Subsidiaries had no Indebtedness of any nature, including, but
without limitation, liabilities for taxes and any interest or
penalties relating thereto, except to the extent reflected (in a
footnote or otherwise) and reserved against in the September 30,
1994 Financial Statements or as disclosed in or permitted by this
Corporate Guaranty; the Corporate Guarantor does not know, and
has no knowledge of any basis for the assertion against it or any
Participating Subsidiary as of the date hereof, of any material
Indebtedness of any nature not fully reflected and reserved
against in the September 30, 1994 Financial Statements;
Section 1.09. Taxes. Except as otherwise permitted herein,
the Corporate Guarantor and its Participating Subsidiaries have
filed all federal, state and local tax returns and other reports
they are required by Laws to file prior to the date hereof and
which are material to the conduct of their respective businesses,
have paid or caused to be paid all taxes, assessments and other
governmental charges that are due and payable prior to the date
hereof, and have made adequate provision for the payment of such
taxes, assessments or other charges accruing but not yet payable;
the Corporate Guarantor has no knowledge of any deficiency or
additional assessment in connection with any taxes, assessments
or charges not provided for on its books;
Section 1.10. Compliance with Laws. Except as otherwise
disclosed in Exhibit D hereto, or except to the extent that the
failure to comply would not materially interfere with the conduct
of the business of the Corporate Guarantor or any Participating
Subsidiary or have a Material Adverse Effect, the Corporate
Guarantor and its Participating Subsidiaries have complied with
all applicable Laws with respect to: (1) any restrictions, speci-
fications, or other requirement pertaining to services that the
Corporate Guarantor or any Participating Subsidiary performs; (2)
the conduct of their respective businesses; (3) the use,
maintenance, and operation of the real and personal properties
owned or leased by them in the conduct of their respective
businesses; and (4) health, safety, worker's compensation, and
equal employment opportunity;
Section 1.11 Environmental Compliance. Except as
otherwise disclosed in Exhibit H hereto, the Corporate Guarantor
and its Participating Subsidiaries and their respective assets
and operations are in compliance in all material respects with
all Environmental Laws. Except as has been disclosed on Exhibit
H, all plants, facilities and properties of the Corporate
Guarantor and its Participating Subsidiaries are and will be on
the date of Closing in a clean and healthful condition, free of
asbestos and of all contamination by Hazardous Materials and
other potentially harmful chemical or physical conditions,
including, without limitation, any contamination of the air,
soil, groundwater or surface waters associated with or adjacent
to such plants, facilities and properties; all storage tanks
(whether above or below ground) located in or on such plants,
facilities and properties are in sound condition, free or
corrosion or leaks that could allow or threaten the release of
any stored material; no Hazardous Materials are, or, to the best
of the Corporate Guarantor's knowledge, have been used, stored,
treated or disposed of in violation of applicable Laws and
regulations; and neither the Corporate Guarantor nor any
Participating Subsidiary is a defendant in any administrative or
judicial action alleging liability under the Comprehensive
Environmental Response, Compensation and Liability Act, as
amended ("CERCLA"), nor has the Corporate Guarantor or any
Participating Subsidiary received a notice that it is a
potentially responsible party under CERCLA or similar state Laws.
The foregoing representations and exceptions thereto shall in no
way diminish or abrogate the covenants made in Section 3.13.
Section 1.12. Full Disclosure. No representation or
warranty by the Corporate Guarantor or any Participating
Subsidiary contained herein or in any certificate or other docu-
ment furnished by the Corporate Guarantor or any Participating
Subsidiary pursuant to this Corporate Guaranty contains any
untrue statement of material fact or omits to state a material
fact necessary to make such representation or warranty not
misleading in light of the circumstances under which it was made;
Section 1.13. Consents. Each consent, approval or
authorization of, or filing, registration or qualification with,
any Person required to be obtained or effected by the Corporate
Guarantor or any Participating Subsidiary in connection with the
execution and delivery of this Corporate Guaranty or the
undertaking or performance of any obligation hereunder has been
duly obtained or effected;
Section 1.14. Existing Borrowings. All existing
Indebtedness: (1) for money borrowed; or (2) under any security
agreement or mortgage from the Corporate Guarantor or any
Participating Subsidiary is described in Exhibit E, unless the
same are less than $25,000.00 in amount;
Section 1.15. Material Contracts. Except as described on
Exhibit F hereto, the Corporate Guarantor and its Participating
Subsidiaries have no material lease, contract or commitment of
any kind (such as employment agreements; collective bargaining
agreements; powers of attorney; distribution arrangements; patent
license agreements; contracts for future purchase or delivery of
goods or rendering of services; bonus, pension and retirement
plans; or accrued vacation pay, insurance and welfare agreements)
which would be required to be listed as an Exhibit to the
Corporate Guarantor's Annual Report on Form 10-K; all parties
(including the Corporate Guarantor and Participating
Subsidiaries) to all such material leases, contracts and other
commitments to which the Corporate Guarantor or any Participating
Subsidiary is a party have to the best of Corporate Guarantor's
knowledge complied with the provisions of such leases, contracts
and other commitments; no party is in default under any provision
thereof; and no event has occurred which, but for the giving of
notice or the passage of time, or both, would constitute a
default;
Section 1.16. No Commissions. Neither the Corporate
Guarantor nor any Participating Subsidiary has made any agreement
or has taken any action which may cause anyone to become entitled
to a commission or finder's fee as a result of the making of the
Loans;
Section 1.17. ERISA. All Defined Benefit Pension Plans, as
defined in the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), of the Corporate Guarantor and each
Participating Subsidiary meet, as of the date hereof, the minimum
funding standards of Section 302 of ERISA, and no Reportable
Event or Prohibited Transaction, as defined in ERISA, has
occurred with respect to any such Plan.
Section 1.18. Survival. All of the representations and
warranties set forth in Article I shall survive until all
Obligations are satisfied in full.
ARTICLE II
AGREEMENTS
Section 2.01. Guaranty of Payment.
a. The Corporate Guarantor hereby absolutely,
irrevocably and unconditionally guarantees to the Bank (i) the
full and prompt payment of all amounts due and payable to the
Bank, directly or indirectly, under the Lease Agreement, the
Additional Lease Agreement and the Bank Mortgage (ii) the full
and prompt payment of all sums due and payable by the Company to
the Bank under the Reimbursement Agreement and the Security
Agreement, and (iii) the punctual performance of all other
obligations of any kind of the Company under the Reimbursement
Agreement, the Bank Mortgage or the Security Agreement. The
Corporate Guarantor hereby irrevocably and unconditionally agrees
that upon any default by the Company in the payment when due of
any sum payable by the Company to the Bank under the
Reimbursement Agreement, the Lease Agreement, the Additional
Lease Agreement, the Bank Mortgage or the Security Agreement
(such documents hereinafter collectively referred to as the
"Financing Documents") after the expiration of any applicable
grace period, the Corporate Guarantor will promptly pay such
sum.
b. All payments by the Corporate Guarantor shall be
paid in immediately available funds and in lawful money of the
United States of America.
c. Each and every default in payment of any amount due
the Bank under the Financing Documents shall give rise to a
separate cause of action hereunder, and separate suits may be
brought hereunder by the Bank as each cause of action arises.
Section 2.02. Obligations Unconditional. The obligations
of the Corporate Guarantor under this Corporate Guaranty shall be
absolute and unconditional and shall remain in full force and
effect until all sums required to be paid under Section 2.01
shall have been paid or provided for and until any obligation of
indemnification of the Bank under this Corporate Guaranty shall
have terminated, and such obligations shall not be affected,
modified or impaired by any state of facts or the happening from
time to time of any event, including, without limitation, any of
the following, whether or not with notice to or the consent of
the Corporate Guarantor:
a. the invalidity, irregularity, illegality or
unenforceability of, or any defect in, the Financing Documents or
any collateral security for any thereof;
b. any claim of immunity on behalf of the Issuer or
any other obligor or with respect to any Property of the Issuer
or of any other obligor;
c. any present or future law or order of any
government (de jure or de facto) or of any agency thereof
purporting to reduce, amend or otherwise affect any obligation of
the Issuer, the Company or any other obligor or to vary any terms
of payment;
d. the occurrence of any event described in Article IX
of the Reimbursement Agreement or Article V of this Guaranty;
e. the waiver, compromise, settlement, amendment,
consent to departure from, release or termination of any or all
of the respective obligations, covenants or agreements of the
Issuer or the Company under any of the Financing Documents
(except by payment in full of all obligations hereunder);
f. the transfer, assignment or mortgage, or the
purported or attempted transfer, assignment or mortgage of all or
any part of the interest of the Issuer or the Company in the
Facility, the Plant, or any other collateral security for the
obligations guaranteed hereunder, or any failure of or defect in
the title with respect to the interest of the Issuer or the
Company in the Facility or the Plant, or the termination of the
Lease Agreement or the Additional Lease Agreement;
g. the release, sale, exchange, surrender or other
change in any security for payment of the Bonds or any amounts
payable pursuant to the Reimbursement Agreement or any of the
Financing Documents;
h. the extension of the time for payment of any
principal or interest payable pursuant to the Reimbursement
Agreement or any part thereof owing or payable pursuant to the
Reimbursement Agreement or under this Corporate Guaranty or of
the time for performance of any other obligations, covenants or
agreements under or arising out of any of the Financing
Documents, or the extension or the renewal of any thereof;
i. the modification or amendment (whether material or
otherwise) of any obligation, covenant or agreement set forth in
any of the Financing Documents, or any one of them;
j. the taking of, or the omission to take, any of the
actions referred to in any of the Financing Documents, or any one
of them;
k. any failure, omission or delay on the part of the
Issuer, the Trustee or any other Person to enforce, assert or
exercise any right, power or remedy conferred on the Issuer, the
Trustee or such other Person in any of the Financing Documents,
or any one of them;
l. the voluntary or involuntary liquidation,
dissolution, sale or other disposition of all or substantially
all the assets, marshalling of assets and liabilities,
receivership, insolvency, bankruptcy, assignment for the benefit
of creditors, reorganization, arrangement, composition with
creditors or readjustment of, or other similar proceedings
affecting the Company, or its successors, or the Issuer or any of
the assets of any of them, or any allegation or contest of the
validity of any of the Financing Documents, or this Corporate
Guaranty, or any one of them, or the disaffirmance or attempted
disaffirmance of any of the Financing Documents or this Corporate
Guaranty, or any one of them, in any such proceedings;
m. the default or failure of the Corporate Guarantor
to perform fully any of its obligations set forth in this
Corporate Guaranty;
n. the assignment of the Lease Agreement or the
Additional Lease Agreement or the sublet of the Facility or the
Plant, in whole or in part; or
o. the discharge or release by the Bank of the
Corporate Guarantor from any obligation hereunder, in whole or in
part;
p. the failure of the Issuer or the Company to
maintain its corporate existence;
q. the failure of the Trustee to mitigate damages; or
r. the existence of any claim, set-off, defense or
other rights which the Corporate Guarantor may have at any time
against the Trustee (or any person for whom the Trustee may be
acting), the Bank (other than the defense of payment to the Bank
in accordance with the terms of this Corporate Guaranty) or any
other Person, whether in connection with the Reimbursement
Agreement, any Financing Document or any unrelated transaction;
provided, however, that nothing in this Section 2.02(r) shall
prevent the Corporate Guarantor from asserting any rights it may
have by separate suit;
s. any statement in any certificate or any other
document presented under the Letter of Credit proving to be
forged, fraudulent, invalid or insufficient in any respect or any
such statement being untrue or inaccurate in any respect
whatsoever;
t. payment by the Bank under the Letter of Credit
against presentation of a draft or certificate which does not
comply with the terms of the Letter of Credit; provided, however,
that such payment shall not have constituted gross negligence or
willful misconduct on the part of the Bank; or
u. to the extent permitted by law, any other event,
action or circumstance that would, in the absence of this
paragraph, result in the release or discharge of the Corporate
Guarantor from the performance or observance of any obligation,
covenant or agreement contained in this Corporate Guaranty or
would otherwise constitute a legal or equitable discharge of the
Corporate Guarantor.
Section 2.03. Waivers by Corporate Guarantor. a. The
Corporate Guarantor hereby waives with respect to the
Reimbursement Agreement, the indebtedness thereunder, the
Financing Documents and this Corporate Guaranty, diligence;
presentment; demand of payment; filing of claims with a court in
the event of bankruptcy of any Person liable in respect of the
Reimbursement Agreement, the indebtedness thereunder or the
Financing Documents; any right to require a proceeding first
against any such Person; protest; notice of dishonor or
nonpayment of any such liabilities and any other notice and all
demands whatsoever. The Corporate Guarantor hereby waives notice
from the Bank of acceptance of, or notice and proof of reliance
on, the benefits of this Corporate Guaranty; provided, however,
that the foregoing provisions shall not be construed as a waiver
or modification, other than with respect to the Reimbursement
Agreement, the indebtedness thereunder, the Financing Documents,
and the guaranty of payment provided for herein, or of the
express obligations of the Bank under the Financing Documents or
this Corporate Guaranty, including, without limitation, express
obligations with respect to the giving of notice.
b. The obligations of the Corporate Guarantor
hereunder shall not be discharged except by full payment of all
Loans (as defined in the Reimbursement Agreement) interest
thereon and all other amounts due thereunder and hereunder.
Section 2.04. Other Security. The Bank may pursue its
rights and remedies under this Corporate Guaranty notwithstanding
(i) any other guaranty of or security for any Loan or the
obligations or liabilities of the Company under the Reimbursement
Agreement or the Financing Documents, and (ii) any action taken
or omitted to be taken by the Bank or any other Person to enforce
any of the rights or remedies under such other guaranty or with
respect to any other security.
Section 2.05. No Set-Off by the Corporate Guarantor. No
set-off, counterclaim, reduction or diminution of an obligation,
or any defense of any kind or nature (other than performance by
the Corporate Guarantor of its obligations hereunder) which the
Corporate Guarantor has or may have with respect to a claim under
this Corporate Guaranty, shall be available hereunder to the
Corporate Guarantor against the Bank.
ARTICLE III
AFFIRMATIVE COVENANTS
So long as the Expiration Date has not occurred and so long
as any amount is due or owing to the Bank under the Reimbursement
Agreement, unless the Bank shall otherwise consent in writing,
the Corporate Guarantor will comply with the following:
Section 3.01. Financial Statements and Reports. The
Corporate Guarantor will furnish the Bank:
a. As soon as reasonably practicable but in any event
within forty-five (45) days after the close of each
quarter-annual accounting period in each fiscal year of the
Corporate Guarantor and its Participating Subsidiaries the
following: (1) a consolidated statement of cash flows of the
Corporate Guarantor and its Participating Subsidiaries for such
quarter annual period; (2) consolidated and consolidating income
statements of the Corporate Guarantor and its Participating
Subsidiaries for such quarter-annual period; and (3) consolidated
and consolidating balance sheets of the Corporate Guarantor and
its Participating Subsidiaries as of the end of such
quarter-annual period--all in reasonable detail, subject to
year-end audit adjustments, and certified by the Corporate
Guarantor's president, vice president, chief financial officer,
or corporate controller to have been prepared in accordance with
generally accepted accounting principles consistently applied by
the Corporate Guarantor and its Participating Subsidiaries,
except for any inconsistencies explained in such certificate;
b. Within ninety (90) days after the close of each
fiscal year of the Corporate Guarantor and its Subsidiaries: (a)
consolidated statements of cash flows of the Corporate Guarantor
and its Subsidiaries for such fiscal year; (b) consolidated and
consolidating income statements of the Corporate Guarantor and
its Subsidiaries for such fiscal year; and (c) consolidated and
consolidating balance sheets of the Corporate Guarantor and its
Subsidiaries as of the end of such fiscal year--all in reasonable
detail, including all supporting schedules, notes and comments;
the consolidated statements and balance sheets shall be audited
by Deloitte & Touche or another independent certified public
accountant selected by Corporate Guarantor and reasonably
acceptable to the Bank, and certified by such accountants to have
been prepared in accordance with generally accepted accounting
principles consistently applied by the Corporate Guarantor and
its Subsidiaries, except for any inconsistencies explained in
such certificate, and the consolidating statements shall be
internally prepared by Corporate Guarantor's financial officer
and certified to the Bank as presenting fairly in all material
respects the financial condition of the Corporate Guarantor and
its Subsidiaries. The Bank shall have the right, from time to
time, to discuss the Corporate Guarantor's affairs directly with
the Corporate Guarantor's independent certified public
accountants after notice to the Corporate Guarantor and
opportunity of the Corporate Guarantor to be present at any such
discussions. In addition, if at anytime the assets, revenues and
net income of both the Corporate Guarantor and its Participating
Subsidiaries do not account for ninety percent (90%) or more of
the consolidated assets, consolidated revenues and consolidated
net income of the Corporate Guarantor and its Subsidiaries, then
within ninety (90) days after the close of each fiscal year, the
Corporate Guarantor shall also furnish to the Bank the following:
(a) consolidated statements of cash flows of the Corporate
Guarantor and its Participating Subsidiaries for such fiscal
year; (b) consolidated and consolidating income statements of the
Corporate Guarantor and its Participating Subsidiaries for such
fiscal year; and (c) consolidated and consolidating balance
sheets of the Corporate Guarantor and its Participating
Subsidiaries as of the end of such fiscal year--all in reasonable
detail, including all supporting schedules, notes and comments;
the consolidated statements and balance sheets shall be audited
by Deloitte & Touche or another independent certified public
accountant selected by the Corporate Guarantor and reasonably
acceptable to the Bank, and certified by such accountants to have
been prepared in accordance with generally accepted accounting
principles consistently applied by the Corporate Guarantor and
its Participating Subsidiaries, except for any inconsistencies
explained in such certificate, and the consolidating statements
shall be internally prepared by Corporate Guarantor's financial
officer and certified to the Bank as presenting fairly in all
material respects the financial condition of the Corporate
Guarantor and its Participating Subsidiaries;
c. As soon as reasonably practicable but in any event
within forty-five (45) days after the close of each quarter-
annual accounting period in each fiscal year of the Corporate
Guarantor and its Participating Subsidiaries, a certificate of
the president, vice president, chief financial officer or
corporate controller of the Corporate Guarantor stating that:
(i) such officer has individually reviewed the provisions of this
Corporate Guaranty; (ii) a review of the activities of the
Corporate Guarantor and its Participating Subsidiaries during
such year or quarter-annual period, as the case may be, has been
made by such officer or under such officer's supervision, with a
view to determining whether the Corporate Guarantor has fulfilled
all its obligations under this Corporate Guaranty; and (iii) to
the best of such officer's knowledge, the Corporate Guarantor has
observed and performed each undertaking contained in this
Corporate Guaranty and is not in default in the observance or
performance of any of the provisions hereof or, if the Corporate
Guarantor shall be so in default, specifying all such defaults
and events of which he may have knowledge. Such certificate
shall further set forth (i) actual intercompany advances as
compared to the limitations set forth in Sections 4.04 and 4.12,
(ii) the current amount of Adjusted Surplus Capital including the
current and cumulative amounts of Restricted Payments, and (iii)
the financial ratios and covenants set forth in Section 3.16
including without limitation all antecedent calculations and the
source of any information that was used in such calculations;
d. Within thirty (30) days after the end of each
month, income statements and balance sheets of each of the
Participating Subsidiaries compared to budget for the prior month
in form satisfactory to the Bank.
e. Promptly after the sending or making available or
filing of the same, copies of all correspondence, reports, proxy
statements and financial statements that the Corporate Guarantor
sends or makes available to its stockholders and all registration
statements and reports that the Corporate Guarantor files with
the Securities and Exchange Commission or any successor Person;
and
f. Immediately upon receipt of the same by Corporate
Guarantor or any Participating Subsidiary, copies of all final
management letters and any other reports which are submitted to
the Corporate Guarantor or any of its Participating Subsidiaries
by its independent accountants in connection with any annual or
interim audit of the Records of the Corporate Guarantor or its
Participating Subsidiaries by such accountants.
Section 3.02. Good Condition. The Corporate Guarantor and
its Participating Subsidiaries will maintain their respective
Inventory, Equipment, Facility Realty and other properties in
good condition and repair (normal wear and tear excepted), and
will pay and discharge or cause to be paid and discharged when
due, the cost of repairs to or maintenance of the same, and will
pay or cause to be paid all rental or mortgage payments due on
such Equipment or Facility Realty. The Corporate Guarantor
hereby agrees that, in the event it or any Participating
Subsidiary fails to pay or cause to be paid any such payment, the
Bank may do so and be reimbursed by the Corporate Guarantor
therefor.
Section 3.03. Insurance. The Corporate Guarantor and its
Participating Subsidiaries will maintain, or cause to be
maintained, public liability insurance and fire and extended
coverage insurance on all assets owned by them, all in such form
and amounts as are consistent with industry practices and with
such insurers as may be satisfactory to the Bank. Such policies
shall name the Bank as loss payee under a standard mortgagee loss
payee clause and as an additional insured, as its interests may
appear, and shall contain a provision whereby they cannot be
cancelled except after thirty (30) days' written notice to the
Bank. The Corporate Guarantor will furnish to the Bank such
evidence of insurance as the Bank may require. The Corporate
Guarantor hereby agrees that, in the event it or any
Participating Subsidiary fails to pay or cause to be paid the
premium on any such insurance, the Bank may do so and be
reimbursed by the Corporate Guarantor therefor. The Bank is
hereby appointed the Corporate Guarantor's attorney-in-fact
(without requiring the Bank to act as such) to endorse any check
which may be payable to the Corporate Guarantor to collect such
returned or unearned premiums or the proceeds of such insurance,
and any amounts so collected may be applied by the Bank toward
satisfaction of any of the Obligations.
Section 3.04. Taxes. The Corporate Guarantor and its
Participating Subsidiaries will pay or cause to be paid when due,
all taxes, assessments and charges or levies imposed upon them or
on any of their property or which any of them is required to
withhold or pay over, except where contested in good faith by
appropriate proceedings with adequate security therefor having
been set aside in a manner satisfactory to Bank. The Corporate
Guarantor and each Participating Subsidiary shall pay or cause to
be paid all such taxes, assessments, charges or levies forthwith
whenever foreclosure on any lien that attaches (or security
therefor) appears imminent.
Section 3.05. Records and Inspection. The Corporate
Guarantor and its Participating Subsidiaries will, when requested
so to do, make available any of their Records for inspection by
duly authorized representatives of the Bank, and will furnish the
Bank any information regarding their business affairs and
financial condition within a reasonable time after written
request therefor.
Section 3.06. Maintenance of Existence and Business. The
Corporate Guarantor and its Participating Subsidiaries will take
all necessary steps to renew, keep in full force and effect, and
preserve their corporate existence, good standing, and
franchises, and will comply in all material respects with all
present and future Laws applicable to them in the operation of
their mining and materials businesses. The Corporate Guarantor
and its Participating Subsidiaries will preserve, renew and keep
in full force and effect all material contracts, Mineral Leases,
governmental licenses, authorizations, consents and approvals,
rights, privileges and franchises necessary or desirable in the
normal course of business.
Section 3.07. Ordinary Course. The Corporate Guarantor and
its Participating Subsidiaries will keep accurate and complete
Records of their Accounts, Inventory and Equipment, consistent
with sound business practices. The Corporate Guarantor and its
Participating Subsidiaries will collect their Accounts and sell
their Inventory only in the ordinary course of business.
Section 3.08. Copies of Tax Returns. Within ten (10) days
of the Bank's request therefor, the Corporate Guarantor will
furnish the Bank with copies of federal income tax returns filed
by the Corporate Guarantor.
Section 3.09. Payment of Indebtedness. The Corporate
Guarantor and its Participating Subsidiaries will pay when due
(or within applicable grace periods) all Indebtedness for
borrowed money (whether direct or indirect, including Guarantee
Obligations) due any Person, except when the amount thereof is
being contested in good faith by appropriate proceedings and with
adequate security therefor being set aside in a manner
satisfactory to the Bank. If default is made by the Corporate
Guarantor or any Participating Subsidiary in the payment of any
principal (or installment thereof) of, or interest on, any such
Indebtedness, the Bank shall have the right, in their discretion,
to pay such interest or principal for the account of the
Corporate Guarantor or such Participating Subsidiary and be
reimbursed by the Corporate Guarantor therefor.
Section 3.10. Notice of Litigation. The Corporate
Guarantor and its Participating Subsidiaries will give immediate
notice to the Bank of: (1) any litigation or proceeding in which
any of them is a party if an adverse decision therein would
require them to pay over more than Two Hundred Thousand Dollars
($200,000.00) or deliver assets the value of which exceeds such
sum (if such claim is not considered to be covered by insurance)
or pay over more than One Million Dollars ($1,000,000.00) (if
such claim is considered to be covered by insurance); and (2) the
institution of any other suit or proceeding involving any of
them, or the overt threat thereof, that might materially and
adversely affect their operations, financial condition, property,
business, or the Collateral.
Section 3.11. Notice to Bank of Default or Prepayment. The
Corporate Guarantor and its Participating Subsidiaries will
notify the Bank immediately if any of them becomes aware of the
occurrence of any Event of Default or of any fact, condition or
event that only with the giving of notice or passage of time or
both, could become an Event of Default, or of the failure of the
Corporate Guarantor or any Participating Subsidiary to observe
any of their respective undertakings hereunder. The Corporate
Guarantor will immediately notify the Bank in writing if a
default occurs under the Zemex Note. In addition, the Corporate
Guarantor will notify the Bank immediately if a prepayment is
made on the Zemex Note.
Section 3.12. Notice of Name Change or Location. The
Corporate Guarantor and its Participating Subsidiaries will
notify the Bank thirty (30) days in advance of any change in (i)
the name of the Corporate Guarantor or any Participating
Subsidiary, (ii) the location of any Collateral, (iii) the
location of any of their places of business or (iv) of the
establishment of any new, or the discontinuance of any existing,
place of business.
Section 3.13. Environmental Compliance.
a. Corporate Guarantor and its Participating
Subsidiary will (1) employ, and cause each of its Participating
Subsidiaries to employ, in connection with its use, if any, of
all real property (including without limitation the Facility
Realty), appropriate technology and compliance procedures and
will maintain compliance with any applicable Environmental Laws,
(2) obtain and maintain, and cause each of its Participating
Subsidiaries to obtain and maintain, any and all material permits
required by applicable Environmental Laws in connection with its
or its Participating Subsidiaries' operations and (3) dispose of,
and cause each of its Participating Subsidiaries to dispose of,
any and all Hazardous Materials only at facilities and with
carriers reasonably believed to possess valid permits under RCRA,
if applicable, and any applicable state and local Environmental
Laws. The foregoing covenants shall apply to the properties and
operations covered by the environmental audit reports listed in
Exhibit H. The Corporate Guarantor shall use its best efforts,
and cause each of its Participating Subsidiaries to use its best
efforts, to obtain all certificates required by law to be
obtained by the Corporate Guarantor and its Participating
Subsidiaries from all contractors employed by the Corporate
Guarantor or any of its Participating Subsidiaries in connection
with the transport or disposal of any Hazardous Materials.
b. In the event that the Bank has reason to believe
that any Corporate Guarantor or Participating Subsidiary has
failed to comply with any material Environmental Laws, or there
exists a threat of material harm to the environment or Persons,
the Bank or its agents shall have the right, but no obligation,
at any time during business hours and upon reasonable written
notice, to enter upon the Facility Realty or any other property
operated by a Corporate Guarantor or Participating Subsidiary and
conduct or cause to be conducted an Environmental Phase I audit
(or an update of any audit completed in connection with the
execution of this Agreement) at Corporate Guarantor's sole
expense and if such Phase I audit (or update) recommends further
testing, then the Bank or its agent may require, but shall not be
obligated to require, upon reasonable written notice, such
further testing at Corporate Guarantor's sole expense. The Bank
or its agent shall use their best efforts to invoke and maintain
all applicable privileges over all audit information generated
pursuant to this provision.
Section 3.14. Notice of Environmental Action. If the
Corporate Guarantor or any of its Participating Subsidiaries
shall:
a. receive written notice that any material violation
of any Environmental Laws may have been committed or is about to
be committed by the Corporate Guarantor or any of its
Participating Subsidiaries;
b. receive written notice that any administrative or
judicial complaint or order has been filed or is about to be
filed against the Corporate Guarantor or any of its Participating
Subsidiaries alleging any material violation of any Environmental
Laws or requiring the Corporate Guarantor or any of its
Participating Subsidiaries to take any action in connection with
the release or threatened release of Hazardous Materials or solid
waste into the environment; or
c. receive written notice from a federal, state,
foreign or local governmental agency or private party alleging
that the Corporate Guarantor or any of its Participating
Subsidiaries is liable or responsible for costs in excess of
$25,000 associated with the response to cleanup, stabilization or
neutralization of any environmental activity;
then it shall provide the Bank with a copy of such notice within
ten (10) Business Days of the Corporate Guarantor's or such
Participating Subsidiary's receipt thereof. Subject to the right
of the Corporate Guarantor or any Participating Subsidiary to
contest in good faith any such actions or proceedings, the
Corporate Guarantor and/or any Participating Subsidiary shall as
promptly as possible resolve, cure and/or have dismissed with
prejudice any such actions or proceedings, to the reasonable
satisfaction of the Bank. The Corporate Guarantor shall
reasonably monitor compliance with Environmental Laws by any and
all owners or operators of the real property owned or leased by
the Corporate Guarantor or any Participating Subsidiary.
Section 3.15. ERISA Compliance. The Corporate Guarantor
and its Participating Subsidiaries will: (1) fund all their
Defined Benefit Pension Plans in accordance with no less than the
minimum funding standards of Section 302 of ERISA and Section 412
of the Internal Revenue Code; (2) furnish the Bank, promptly
after the filing of the same, with copies of all reports or other
statements filed with the United States Department of Labor or
the Internal Revenue Service with respect to all such Plans; and
(3) promptly advise the Bank of the occurrence of any Reportable
Event or Prohibited Transaction with respect to any such Plan.
Section 3.16. Financial Ratios. Unless the Bank otherwise
agree in writing, the Corporate Guarantor and its Participating
Subsidiaries will maintain the following financial ratios and
covenants:
a. Current Ratio. A ratio of Current Assets to
Current Liabilities of not less than 1.50 to 1.00 at all times.
b. Funded Debt to Capital. A ratio of Funded Debt to
Capital of not more than 0.40 to 1.00 at all times.
c. Funded Debt to Cash Flow. At the end of each
fiscal quarter, a ratio of Funded Debt to Cash Flow for the four
(4) quarters just ended of not greater than 4.0 to 1.0 from the
date hereof to September 29, 1995, not greater than 3.5 to 1.0
from and including September 30, 1995 to September 29, 1996, and
not greater than 3.0 to 1.0 from and including September 30, 1996
and at each quarter end thereafter.
d. Debt Service Coverage. At the end of each fiscal
quarter, a Debt Service Coverage Ratio computed for the four (4)
quarters just ended of not less than 1.25 to 1.00 from the date
hereof to September 29, 1996 and not less than 1.35 to 1.00 at
September 30, 1996 and at each quarter end thereafter.
e. Profitability. At the end of each fiscal quarter,
Net Income for the four (4) quarters just ended and Consolidated
Net Income for the four (4) quarters just ended of not less than
One Dollar ($1.00) in each case.
ARTICLE IV
NEGATIVE COVENANTS
The Corporate Guarantor hereby covenants and agrees that, so
long as the Expiration Date has not occurred and so long as any
amount is due or owing to the Bank under the Reimbursement
Agreement, unless otherwise consented to in writing by the Bank:
Section 4.01. Merger or Reorganization. Neither the
Corporate Guarantor nor any Participating Subsidiary will enter
into any merger, consolidation, reorganization or
recapitalization; provided, The Feldspar Corporation or any
Participating Subsidiary may merge into the Corporate Guarantor
or into any Participating Subsidiary (but not a Nonparticipating
Subsidiary) provided the Bank is given not less than thirty (30)
days prior written notice thereof and provided the surviving
entity is a Corporate Guarantor or a Participating Subsidiary
which is a party to this Corporate Guaranty.
Section 4.02. Sale of Assets. Neither the Corporate
Guarantor nor any Participating Subsidiary will sell, transfer,
lease or otherwise dispose of all or any material part of its
assets; provided, however, Corporate Guarantor and its
Participating Subsidiaries may in the ordinary course of business
sell assets with a combined net book value of up to One Million
Dollars ($1,000,000.00) per fiscal year, or may replace damaged
or worn Equipment with Equipment of similar value and use. In
addition, provided there is no Event of Default or Unmatured
Default in existence hereunder and that portion of the sales
price to be paid in cash at least equals or exceeds the net book
value of the assets to be sold, the Bank agrees that The Feldspar
Corporation may sell all or substantially all of its Spruce Pine,
North Carolina assets, its Monticello, Georgia assets, its Edgar,
Florida or Johnson Florida assets, and/or Pyron Metal Powders,
Inc., Suzorite Mica Products Inc. Les Produits Mica Suzorite Inc.
or Suzorite Mineral Products, Inc. may sell all or substantially
all of its (their) assets.
Section 4.03. Encumbrances. Neither the Corporate
Guarantor nor any Participating Subsidiary will: (1) mortgage,
pledge, grant or permit to exist a security interest in or lien
upon any of its assets of any kind, now owned or hereafter
acquired, except for Permitted Liens, or (2) covenant or agree
with any other Person (other than the Bank) not to mortgage,
pledge, or grant a security interest in or a lien upon their
assets.
Section 4.04. Debts and Other Obligations. Neither the
Corporate Guarantor nor any Participating Subsidiary will incur,
create, assume, or permit to exist any Indebtedness except: (1)
the Loans; (2) existing Indebtedness as set forth in Exhibit E;
(3) trade Indebtedness incurred in the ordinary course of
business; (4) contingent Indebtedness permitted by Section 4.09;
(5) Indebtedness, including Permitted Acquisition Indebtedness,
secured by Permitted Liens; (6) Indebtedness owed by any
Participating Subsidiary of the Corporate Guarantor to a
Corporate Guarantor or by a Corporate Guarantor to any
Participating Subsidiary of the Corporate Guarantor, provided
that if any such Indebtedness is evidenced by a document or
instrument, the same is pledged pursuant to an appropriate pledge
agreement; (7) Mineral Leases incurred in the ordinary course of
business and other lease obligations permitted by Section 4.05;
(8) Indebtedness assumed or incurred in connection with a
Permitted Acquisition and payable to parties other than the
seller or the seller's owners provided the aggregate outstanding
amount of such Indebtedness does not exceed at any time Two
Million Five Hundred Thousand Dollars ($2,500,000.00); and (9)
Loan Agreement Indebtedness.
Section 4.05. Leases. The Corporate Guarantor and its
Participating Subsidiaries will not pay, in an aggregate amount
in any fiscal year (commencing with the current fiscal year),
lease obligations in excess of $1,000,000.00; as used in this
paragraph, the term "lease" means an operating lease other than a
Mineral Lease which is not reflected on a consolidated balance
sheet of the Corporate Guarantor and its Participating
Subsidiaries and should not be so reflected under generally
accepted accounting principles consistently applied.
Section 4.06. Untrue Certificate. Neither the Corporate
Guarantor nor any Participating Subsidiary will furnish the Bank
or any Bank any certificate or other document that will contain
any untrue statement of material fact or that will omit to state
a material fact necessary to make it not misleading in light of
the circumstances under which it was furnished.
Section 4.07. Margin Stock. Neither the Corporate
Guarantor nor any Participating Subsidiary will directly or
indirectly apply any part of the proceeds of the Loans to the
purchasing or carrying of any "margin stock" within the meaning
of Regulation U of the Board of Governors of the Federal Reserve
System, or any regulations, interpretations or rulings
thereunder.
Section 4.08. Sale-Leaseback. Neither the Corporate
Guarantor nor any Participating Subsidiary will enter into any
sale-leaseback transaction.
Section 4.09. Guarantee Obligation. Neither the Corporate
Guarantor nor any Participating Subsidiary will create, incur,
suffer to exist a Guarantee Obligation or otherwise become liable
for any obligation of any other Person or any Nonparticipating
Subsidiary, except: (1) the endorsement of commercial paper for
deposit or collection in the ordinary course of business, (2)
guarantees of Permitted Acquisition Indebtedness, (3) the
guaranty by a Participating Subsidiary of the indebtedness of
Pyron Corporation under the Reimbursement Agreement, (4) the
guaranty by a Participating Subsidiary of the Loan Agreement
Indebtedness, (5) guarantees of Nonparticipating Subsidiary
obligations not to exceed, in the aggregate for all
Nonparticipating Subsidiaries, the sum of Two Million Five
Hundred Thousand and No/100 Dollars ($2,500,000.00), and (6)
leases with the Corporate Guarantor or a Participating Subsidiary
permitted under Section 4.05.
Section 4.10. Dividends and Distributions. The Corporate
Guarantor will not declare or pay any cash dividends, or make any
other cash payment or other distribution of an asset on account
of its capital stock.
Section 4.11. Redemptions and Capital Stock. The Corporate
Guarantor will not redeem, purchase or retire any of its capital
stock.
Section 4.12. Prepayments. Neither the Corporate Guarantor
nor any Participating Subsidiary will prepay any Subordinated
Indebtedness, or Indebtedness for borrowed money other than the
Obligations, or enter into or modify any agreement as a result of
which the terms of payment of any of the foregoing Indebtedness
are modified to accelerate or increase payments.
Section 4.13. Subsidiary. Neither the Corporate Guarantor
nor any Participating Subsidiary will form any Subsidiary, make
any investment in or make any loan in the nature of any
investment to any Person, except for: (1) any Permitted
Investments, (2) the formation of a Subsidiary in connection with
making a Permitted Acquisition which qualifies as such under
Section 4.16 below, (3) advances by the Corporate Guarantor to
Participating Subsidiaries of the Corporate Guarantor, and (4)
advances by Participating Subsidiaries of the Corporate Guarantor
to the Corporate Guarantor.
Section 4.14. Loans and Advances. Neither the Corporate
Guarantor nor any Participating Subsidiary will make any loan or
advance to any officer, shareholder, director or employee of a
Corporate Guarantor or any Subsidiary, except for temporary
advances in the ordinary course of business not to exceed Five
Hundred Thousand Dollars ($500,000.00) in the aggregate and loans
to key employees to purchase treasury stock of the Corporate
Guarantor under The Key Employee Stock Purchase Plan.
Section 4.15. Investments. Neither the Corporate Guarantor
nor any Participating Subsidiary will purchase or otherwise
invest in or hold securities, non-operating real estate
(excluding mineral reserves) outside the normal course of
business, or other non-operating assets, except: (1) Permitted
Investments; (2) the present investment in any such assets,
including existing Participating Subsidiaries; and (3) operating
assets that hereafter become non-operating assets.
Section 4.16. Acquisitions. Neither the Corporate
Guarantor nor any Participating Subsidiary will acquire the stock
of, or all or substantially all of the assets of, any Person
without the prior written consent of the Bank; provided however,
with respect to any permitted acquisition (hereinafter a
"Permitted Acquisition"), the Corporate Guarantor may acquire
either all of the stock or assets of such Person and any
Participating Subsidiary may acquire the assets of or merge with
such Person (provided the Participating Subsidiary is the
surviving entity) without obtaining the Bank's approval if: (A)
Not less than ten (10) Business Days prior to entering into a
binding agreement to make any Permitted Acquisition, Corporate
Guarantor shall submit to the Bank the following information :
a. A copy of the signed letter of intent and a
current draft of the acquisition agreement with any prepared
exhibits, including seller financing documents;
b. A written description of the company to be
acquired, including location and type of mining operations, key
management, and real estate assets (including legal descriptions
of any owned real estate), if any;
c. If applicable, historical financial statements of
the Permitted Acquisition for the prior two years and the most
recent interim statement;
d. Copy of acquisition analysis done by Corporate
Guarantor preparatory to making the Permitted Acquisition;
(B) the Permitted Acquisition Price does not exceed Ten Million
Dollars ($10,000,000.00), of which no more than Five Million
Dollars ($5,000,000.00) is payable in cash at the closing of the
Permitted Acquisition or within one hundred eighty (180) days
thereafter; (C) the business of the Permitted Acquisition is in
the mining, manufacturing or processing of either powdered
metals, mica, feldspar, ceramic clays, other industrial minerals
or metal waste recycling and is located in the United States or
Canada; (D) environmental Phase I audits of the real properties
owned by the Permitted Acquisition company conducted within six
(6) months prior to the closing of the acquisition (or material
substantially similar thereto in the opinion of the Bank)
indicate environmental risks and/or exposures for which the
estimated costs to fully remedy and clean-up are less than Four
Hundred Thousand Dollars ($400,000.00), and copies of such are
provided to the Bank; (E) no Event of Default or Unmatured
Default has occurred hereunder and not been cured, or would
otherwise occur as a result of or in connection with the
Permitted Acquisition, whether immediately or on a projected
basis; and (F) whether or not the Bank have been requested to
disburse funds, if such Permitted Acquisition is to become a
party hereto and a Participating Subsidiary, the Corporate
Guarantor must pledge or cause to be pledged to the Bank for the
benefit of the Bank a first priority lien on the outstanding
stock, if any, of the Permitted Acquisition and a first priority
lien, if available, but in no event less than a second priority
lien on all of the Inventory, Accounts, Chattel Paper, Documents,
Instruments and General Intangibles of the Permitted Acquisition;
and (G) if Adjusted Surplus Capital is not positive or, as a
result of such acquisition is not positive, the Person or assets
being acquired must be a Participating Subsidiary or become a
Participating Subsidiary immediately following the acquisition to
qualify as a Permitted Acquisition. Unless the Permitted
Acquisition is to become a Nonparticipating Subsidiary, the Bank
shall be given not less than fifteen (15) Business Days written
notice prior to the closing of any such acquisition to prepare
all necessary documentation, and the legal structure of the Loans
following any Permitted Acquisition must be satisfactory to the
Bank and the Bank's counsel.
Section 4.17. Capital Expenditures. Other than in
connection with funding Permitted Acquisitions and the 1995
expansion at Spruce Pine, North Carolina by The Feldspar
Corporation, neither the Corporate Guarantor nor any
Participating Subsidiary will make or incur Capital Expenditures
without the prior approval of the Bank if such Capital
Expenditures exceed, in the aggregate, Five Million Dollars
($5,000,000.00) for the fiscal year ending December 31, 1995, and
Four Million Dollars ($4,000,000.00) for the fiscal year ending
December 31, 1996 and for each fiscal year thereafter.
Section 4.18. Affiliate Transactions. Except as described
on Exhibit F hereto, Corporate Guarantor will not, and will not
permit any of its Participating Subsidiaries to, directly or
indirectly, enter into or permit to exist any transaction
(including without limitation the purchase, sale, lease or
exchange of any property or the rendering of any service) with
any Affiliate (other than any Participating Subsidiary which is
wholly owned by Corporate Guarantor, on terms that are less
favorable to the Corporate Guarantor or its Participating
Subsidiaries than those that would be obtainable at the time from
any Person who is not an Affiliate. Notwithstanding the
foregoing, Corporate Guarantor will not, and will not permit any
of its Participating Subsidiaries to: (1) pay or incur any
obligation to pay any management fee, consulting fee, service fee
or similar fee or charge to any Affiliate or (2) enter into any
transaction with an Affiliate where the amount to be paid,
whether immediately or over time, exceeds Five Hundred Thousand
Dollars ($500,000.00) in the aggregate. In addition, the
Corporate Guarantor and Suzorite Mica Products Inc. Les Produits
Mica Suzorite Inc. will not modify the Zemex Note so as to extend
the term or reduce the interest rate without prior written
consent of the Banks, nor will the Corporate Guarantor or
Suzorite Mica Products Inc. Les Produits Mica Suzorite Inc.
release or allow to be released any collateral for the Zemex
Note.
Section 4.19. Restricted Payment Negative Covenants.
Notwithstanding the provisions of Sections 4.9 through 4.19 above
(collectively, the "Restricted Payment Negative Covenants"),
provided there is no Event of Default or Unmatured Default in
existence under this Corporate Guaranty and except as hereinafter
set forth, the Corporate Guarantor or any Participating
Subsidiary may, without the consent or approval of the Bank, make
or incur one or more Restricted Payments in connection with
taking actions which would otherwise violate one or more of the
Restricted Payment Negative Covenants and such action and/or
payment will not cause an Event of Default or Unmatured Default
hereunder if, after such Restricted Payment(s) are made or
incurred, the level of Adjusted Surplus Capital remains positive
as evidenced by the reports required by Section 3.1(c) above;
provided, the foregoing shall not apply to Subsection 4.09(4)
which is not intended to be a Restricted Payment Negative
Covenant.
ARTICLE V
EVENTS OF DEFAULT
Section 5.01. Nature of Events. An "Event of Default"
shall exist if any of the following occurs:
a. Payment. The Corporate Guarantor fails to perform
or observe any covenant or undertaking contained in Article II of
this Corporate Guaranty.
b. Covenants. The Corporate Guarantor fails to
perform or observe any covenant or undertaking contained in
Article IV of this Corporate Guaranty or fails to perform any
other covenant or undertaking contained in this Corporate
Guaranty for a period of thirty (30) days.
c. Warranties or Representations. Any warranty,
representation or other statement by or on behalf of or with
respect to the Corporate Guarantor contained in this Corporate
Guaranty shall have been false or misleading in any material
respect when made.
d. If the Corporate Guarantor or any of its
Subsidiaries shall (i) default in the payment of an amount in
excess of $100,000 of (A) principal of or interest on any
Indebtedness, (B) for the deferred purchase price of any property
or assets, (C) for any capitalized lease obligation, or (D) on
any such obligation guaranteed by the Corporate Guarantor or any
of its Subsidiaries or in respect of which any of them is
otherwise contingently liable, in each case beyond the period of
grace, if any, provided in the instrument or agreement under
which the same was created or (ii) default in the observance or
performance of any other term, condition or agreement contained
in any such Indebtedness or in any instrument or agreement
evidencing, securing or relating thereto if the effect thereof is
to cause, or permit the holder or holders of such Indebtedness
(or a trustee or agent on behalf of such holder or holders) to
cause, such Indebtedness to become due prior to its stated
maturity; or
e. If the Corporate Guarantor or any of its
Subsidiaries commences any case, proceeding or other action
relating to it in bankruptcy or seeking reorganization,
liquidation, dissolution, winding-up, arrangement, composition,
readjustment of its debts, or for any other relief, under any
bankruptcy, insolvency, reorganization, liquidation, dissolution,
arrangement, composition, readjustment of debt or any other
similar act or law, of any jurisdiction, domestic or foreign, now
or hereafter existing, or any action by the Corporate Guarantor
or any of its Subsidiaries indicating its consent to, approval
of, or acquiescence in, any such proceeding; the application by
the Corporate Guarantor or any of its Subsidiaries for a
receiver, custodian or trustee of it or for all or a substantial
part of its property; the making by the Corporate Guarantor or
any of its Subsidiaries of a general assignment for the benefit
of creditors; or the inability or the admission by the Corporate
Guarantor or any of its Subsidiaries in writing of its inability
to pay its debts as they mature; or
f. Commencement of any case, proceeding or the taking
of other action against the Corporate Guarantor or any of its
Subsidiaries in bankruptcy or seeking reorganization,
liquidation, dissolution, winding-up, arrangement, composition or
readjustment of its debts, or any other relief, under any
bankruptcy, insolvency, reorganization, liquidation, dissolution,
arrangement, composition, readjustment of debt or any other
similar act or law, of any jurisdiction, domestic or foreign, now
or hereafter existing; or the appointment of a receiver,
custodian or trustee of the Corporate Guarantor or any of its
Subsidiaries or for all or a substantial part of any of their
property; or the issuance of a warrant of attachment, execution,
distraint, or similar process, against any substantial part of
the property of the Corporate Guarantor or any of its
Subsidiaries; and the continuance of any such events for 60 days
undismissed, unbonded or undischarged; or
g. There shall be entered against the Corporate
Guarantor or any Subsidiary of the Corporate Guarantor one or
more judgments or decrees involving in the aggregate a liability
of $100,000 or more and all such judgments or decrees shall not
have been vacated, discharge, or stayed within 60 days from the
entry thereof; or
h. The Corporate Guarantor shall become an
"investment company" within the meaning of the Investment Company
Act of 1940, as the same may be amended from time to time; or
i. (i) Any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975
of the Code) involving any Plan of the Corporate Guarantor or any
of its Subsidiaries, (ii) any "accumulated funding deficiency"
(as defined in Section 302 of ERISA), whether or not waived,
shall exist with respect to any such Plan, (iii) a Reportable
Event shall occur with respect to, or proceedings shall commence
to have a trustee appointed, or a trustee shall be appointed, to
administer to or terminate, any such Plan, which Reportable Event
or institution of proceedings is, in the reasonable opinion of
the Bank, likely to result in the termination of such Plan for
purposes of Title IV of continuance of such Reportable Event
unremedied for ten days after notice of such Reportable Event
pursuant to Section 4043(a), (c) or (d) of ERISA is given or the
continuance of such proceedings for ten days after commencement
thereof, as the case may be, (iv) any such Plan shall terminate
for purposes of Title IV of ERISA, or (v) any other event or
condition shall occur or exist with respect to any such Plan or
having consequences under ERISA; and in each case in clauses (i)
through (v) above, such event or condition could subject the
Corporate Guarantor or any of its Subsidiaries to any tax,
penalty or other liability material in relation to the business,
operations, property or financial or other condition of the
Corporate Guarantor and its Subsidiaries taken as a whole;
j. The occurrence and continuance of an "Event of
Default" as defined in the Reimbursement Agreement other than as
a result of the failure of a party thereto other than the Company
to perform any obligation on such party's part to be performed,
provided, however, that if such "Event of Default" shall be cured
or annulled pursuant to the provisions of the Reimbursement
Agreement, as applicable, it shall no longer constitute an Event
of Default hereunder; or
k. The occurrence and continuance of an "Event of
Default" as defined in the Loan Agreement; provided, however,
that if such "Event of Default" shall be cured or annulled
pursuant to the provisions of the Loan Agreement, as applicable,
it shall no longer constitute an Event of Default hereunder.
Section 5.02. Default Remedies. If any Event of Default
has occurred and is not waived by the Bank, the Bank may proceed
to enforce the provisions hereof and to exercise any other
rights, powers and remedies available to the Bank. The Bank, in
its sole discretion, shall have the right to proceed first and
directly against the Corporate Guarantor under this Corporate
Guaranty without proceeding against or exhausting any other
remedies which it may have and without resorting to any other
security held by the Issuer, the Trustee or the Bank.
Section 5.03. Remedies; Waiver and Notice. a. No remedy
herein conferred upon or reserved to the Bank is intended to be
exclusive of any other available remedy or remedies, but each and
every such remedy shall be cumulative and shall be in addition to
every other remedy given under this Corporate Guaranty or now or
hereafter existing at law or in equity or by statute.
b. No delay or omission by the Bank to exercise any
right or power accruing upon the occurrence of any Event of
Default hereunder shall impair any such right or power or shall
be construed to be a waiver thereof, but any such right or power
may be exercised from time to time and as often as may be deemed
expedient.
c. In order to entitle the Bank to exercise any
remedy reserved to it, in this Corporate Guaranty, it shall not
be necessary for the Bank to give any notice except as may be
expressly required in this Corporate Guaranty.
d. In the event any provision contained in this
Corporate Guaranty should be breached by any party and thereafter
duly waived by the other party so empowered to act, such waiver
shall be limited to the particular breach so waived and shall not
be deemed to waive any other breach hereunder.
e. No waiver, amendment, release or modification of
this Corporate Guaranty shall be established by conduct, custom
or course of dealing.
ARTICLE VI
MISCELLANEOUS
Section 6.01. Obligations Arise on Issuance of Letter of
Credit. The obligations of the Corporate Guarantor hereunder
shall arise absolutely and unconditionally when the Letter of
Credit shall have been issued by the Bank.
Section 6.02. Successors and Assigns. This Corporate
Guaranty shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties.
Section 6.03. Notices. All communications under this
Corporate Guaranty shall be in writing and shall be deemed given
when delivered, and, if delivered by mail, shall be mailed by
registered or certified first class, postage prepaid, and
addressed as follows:
To the Company:
Pyron Corporation
5950 Packard Road
Niagara Falls, New York 14094
Attn: President
To the Corporate Guarantor:
Zemex Corporation
Canada Trust Tower
BCE Place, 161 Bay Street
Suite 3750
Toronto, Ontario M5J 251
Attn: Chief Financial Officer
Facsimile: (416) 365-8094
To the Bank:
Chemical Bank
2300 Main Place Tower
Buffalo, New York 14202
Attention: Account Officer for Pyron Corporation
Facsimile: (716) 843-4939
Any of the persons mentioned above to whom notice may be given
may, by notice given hereunder, designate any further or
different addresses to which subsequent notices, certificates and
other communications can be sent.
Section 6.04. Entire Understanding; Counterparts. This
Corporate Guaranty constitutes the entire agreement and
supersedes all prior agreements and understandings, both written
and oral, among the parties hereto with respect to the subject
matter hereof and may be executed simultaneously in several
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
Section 6.05. Partial Invalidity. The invalidity or
unenforceability of any one or more phrases, sentences, clauses
or sections in this Corporate Guaranty or the application thereof
shall not affect the validity or enforceability of the remaining
portions of this Corporate Guaranty or any part thereof.
Section 6.06. No Waiver; Cumulative Remedies. No failure
to exercise or delay in exercising, on the part of the Bank, any
right, power or privilege hereunder, shall operate as a waiver
thereof; nor shall any single or partial exercise of any right,
power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided are
cumulative and not exclusive of any rights or remedies provided
by law.
Section 6.07. Survival of Representations and Warranties.
All representations and warranties made hereunder and in any
document, certificate or statement delivered pursuant hereto
shall survive the execution and delivery of this Corporate
Guaranty and any Financing Document until this Corporate Guaranty
is no longer in effect and all of the amounts owing hereunder
shall have been paid in full.
Section 6.08. Payment of Expenses and Taxes. The Corporate
Guarantor agrees (a) to pay or reimburse the Bank for all its
costs and expenses incurred in connection with the enforcement
of, or the preservation of, any rights under the Corporate
Guaranty or the Financing Documents or in seeking any advice with
respect thereto, including fees and expenses of counsel to the
Bank, (b) to pay and indemnify and hold the Bank harmless from
any and all recording and filing fees and any and all liabilities
with respect to, or resulting from any delay in paying, stamp and
other taxes, if any which may be payable or determined to be
payable in connection with the execution and delivery of, or
consummation of any of the transactions contemplated by, or any
amendment or modification of or any waiver or consent under or in
respect of, this Corporate Guaranty or the Financing Documents
and (c) to pay, indemnify and hold the Bank harmless from and
against any and all other liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements or any kind or nature whatsoever with respect to
the execution, delivery, enforcement, performance an
administration of this Corporate Guaranty or any Related Document
except to the extent caused by (i) the Bank's willful misconduct
or gross negligence in determining whether documents presented
under the Letter of Credit comply with the terms of the Letter of
Credit (it being understood that any such noncompliance in any
immaterial respect shall not be deemed willful misconduct or
gross negligence of the Bank) or (ii) the Bank's willful failure
to pay under the Letter of Credit after presentation to it by the
Trustee (or any successor Trustee to whom the Letter of Credit
has been transferred in accordance with its terms) of a sight
draft and certificate strictly complying with the terms and
conditions of the Letter of Credit. The agreements in this
Section 6.08 shall survive the payment of all indebtedness of the
Corporate Guarantor hereunder and the termination of this
Corporate Guaranty.
Section 6.09. Severability. Any provision of this
Corporate Guaranty which is prohibited, unenforceable or not
authorized in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition, unenforceability
or nonauthorization without invalidating the enforceability or
authorization of such provision in any other jurisdiction.
Section 6.10. Governing Law. This Corporate Guaranty and
the rights and obligations of the parties under this Corporate
Guaranty shall be governed by , and construed and interpreted in
accordance with the law of the State of New York.
Section 6.11. JURY TRIAL WAIVER. THE CORPORATE GUARANTOR
HEREBY EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY
ACTION OR PROCEEDING TO ENFORCE OR DEFEND ITS RIGHTS OR THE
RIGHTS OF THE BANK HEREUNDER OR UNDER ANY AMENDMENT, INSTRUMENT,
DOCUMENT OR AGREEMENT DELIVERED (OR WHICH MAY IN THE FUTURE BE
DELIVERED) IN CONNECTION WITH THIS CORPORATE GUARANTY OR THE
TRANSACTIONS CONTEMPLATED HEREBY. THE CORPORATE GUARANTOR AGREES
THAT ANY SUCH ACTION SHALL BE TRIED BEFORE A COURT AND NOT BEFORE
A JURY.
Section 6.12. Confidentiality of Certain Information. The
Bank shall hold all Confidential Information obtained pursuant to
the requirements of this Corporate Guaranty, the Reimbursement
Agreement or any Company Related Document which has been
identified as such by the Corporate Guarantor in accordance with
customary procedures of the Bank for handling confidential
information of this nature and in accordance with safe and sound
banking practices. In any event, the Bank may make disclosure to
its examiners, affiliates, outside auditors, counsel and other
professional advisors in connection with this Corporate
Guarantor, the Reimbursement Agreement or any Company Related
Document or as reasonably required by any bona fide transferee or
participant in connection with the contemplated transfer of any
rights of the Bank in any indebtedness of the Corporate Guarantor
to the Bank hereunder or participation therein or as required or
requested by any governmental agency or representative thereof or
pursuant to legal process; provided that, unless specifically
prohibited by applicable law or court order, the Bank shall
notify the Corporate Guarantor promptly of any request by any
governmental agency or representative thereof (other than any
such request in connection with an examination of the financial
condition of the Bank by such governmental agency) for disclosure
of any such non-public information and shall exercise its best
efforts to permit the Corporate Guarantor to respond to such
notice prior to disclosure of such information; and further
provided that in no event shall the Bank be obligated or required
to return any materials furnished by the Corporate Guarantor.
Section 6.13. Date for Reference Purposes Only. Although
this Corporate Guaranty is dated as of the date first above
written for convenience, the actual date of execution hereof by
the Corporate Guarantor, and the effective date hereof, is the
date set forth under the signature of its duly authorized officer
hereinbelow.
Section 6.14. Accounting Terms. Unless otherwise specified
in this Corporate Guaranty, (a) all accounting terms used in this
Corporate Guaranty shall be interpreted, and all accounting
determinations under this Corporate Guaranty or in any
certificate, report or other documents made or delivered pursuant
to this Corporate Guaranty shall be made, and all financial
statements required to be delivered under this Corporate Guaranty
shall be prepared in accordance with GAAP, and (b) all
determinations of compliance with the covenants set forth in
Section 3.16 shall be made in accordance with GAAP.
Section 6.15. Definitions. Terms not otherwise defined
herein or in the Lease Agreement shall have the same meanings as
used in Appendix A attached hereto and made a part hereof.
IN WITNESS WHEREOF, the Corporate Guarantor have caused this
Corporate Guaranty to be duly executed by its duly authorized
officer and its corporate seal to be hereunto affixed as of March
15, 1995.
Zemex Corporation
SEAL By:/s/ Allen J. Palmiere
Vice President
Date: March 15, 1995
Accepted:
CHEMICAL BANK
By/s/ Daniel J. Zimmer
Vice President
Date: March 15, 1995
STATE OF TENNESSEE)
: ss
COUNTY OF DAVIDSON)
On this 15th day of March, 1995, before me personally
came ALLEN J. PALMIERE, to me known, who, being by me duly sworn,
did depose and say that he resides in Toronto, Ontario, Canada;
that he is Vice President of Zemex Corporation, the corporation
described in the foregoing Corporate Guaranty; and he
acknowledged to me that he executed the same by and under the
authority of the Board of Directors of said corporation.
/s/ Carol A. Wilson
Notary Public
APPENDIX A
DEFINITIONS
As used herein:
"Accounts", "Chattel Paper", "Contract Rights", "Documents",
"Equipment", "Fixtures", "General Intangibles", "Goods",
"Instruments" and "Inventory" shall have the same respective
meanings as are given to those terms in the UCC.
"Capital Expenditure Loans", "Loan Termination Date",
"Revolving Loans", "Working Capital Loans" and "Working Capital
Loan Termination Date" shall have the same respective meanings as
are given those terms in the Loan Agreement.
"Adjusted Surplus Capital" means Surplus Capital less the
cumulative amount of all Restricted Payments made or incurred
after September 30, 1994 plus the sum of: (A) all net cash
proceeds received by the Corporate Guarantor after September 30,
1994 from the sale of its stock and/or the exercise of its stock
options and warrants, (B) twenty-five percent (25%) of Net Income
for each fiscal year ending on and after December 31, 1995, and
(C) all cash dividends hereafter paid by Nonparticipating
Subsidiaries to the Corporate Guarantor or a Participating
Subsidiary.
"Affiliates" means as to any Person (A) any Person which,
directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with such
Person, or (B) any Person who is a director or executive officer
(i) of such Person, (ii) of any Subsidiary of such Person or
(iii) of any Person described in clause (A) above. For purposes
of this definition, "control" of a Person shall mean the power,
direct or indirect, (i) to vote or direct the voting of more than
ten percent (10%) of the outstanding shares of voting stock of
such Person, or (ii) to direct or cause the direction of the
management and policies of such Person whether by contract or
otherwise. In no event shall the Bank be deemed to be an
Affiliate of the Corporate Guarantor.
"Bank" means Chemical Bank and its successors and assigns.
"Business Day" means any day on which the state banks and
national banking associations in Nashville, Tennessee and
Buffalo, New York are open for the conduct of ordinary business.
"Capital" means, as to both the Corporate Guarantor and its
Participating Subsidiaries at any time of determination, the sum
of their Funded Debt and Shareholders' Equity as shown on a
consolidated balance sheet of the Corporate Guarantor and its
Participating Subsidiaries, less Intangible Assets,
Nonparticipating Subsidiary Advances, all Guarantee Obligations
incurred by the Corporate Guarantor or any Participating
Subsidiary for or on behalf of any Nonparticipating Subsidiary or
other Person, and all amounts due to a Corporate Guarantor or
Participating Subsidiary from any Affiliate (including without
duplication from any Nonparticipating Subsidiary).
"Capital Expenditures" means all amounts paid by the Corpor-
ate Guarantor and its Participating Subsidiaries in connection
with the purchase of property, plant, machinery, equipment or
other similar expenditures (including capital leases of any of
the foregoing) which would be required to be capitalized and
shown on the balance sheet of Corporate Guarantor and its
Participating Subsidiaries in accordance with generally accepted
accounting principles consistently applied.
"Cash Flow" means, as to both the Corporate Guarantor and
its Participating Subsidiaries, the aggregate of their: (A)
Earnings Before Interest and Taxes, (B) amortization; and (C)
depreciation; all as shown by the consolidated statement of
operations of the Corporate Guarantor and its Participating
Subsidiaries, calculated in accordance with generally accepted
accounting principles consistently applied.
"Change of Control" means the occurrence, after the date of
this Corporate Guaranty, of (i) any Person or two or more Persons
acting in concert acquiring beneficial ownership (within the
meaning of Rule 13d-3 of the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended), directly
or indirectly, of securities of the Corporate Guarantor (or other
securities convertible into such securities) representing 51% or
more of the combined voting power of all securities of the
Corporate Guarantor entitled to vote in the election of
directors; or (ii) commencing after the date of this Corporate
Guaranty, individuals who at the beginning of this Corporate
Guaranty were directors of the Corporate Guarantor ceasing for
any reason to constitute a majority of the Board of Directors of
the Corporate Guarantor unless the Persons replacing such
individuals were nominated by the Board of Directors of the
Corporate Guarantor; or (iii) any Person or two or more Persons
acting in concert acquiring by contract or otherwise, or entering
into a contract or arrangement which upon consummation will
result in its or their acquisition of, or control over,
securities of the Corporate Guarantor (or other securities
convertible into such securities) representing 51% or more of the
combined voting power of all securities of the Corporate
Guarantor entitled to vote in the election of directors.
"Closing" means the valid execution and delivery of the
Corporate Guaranty to the Bank.
"Consolidated Net Income" means, for any particular fiscal
period, the net earnings (or net loss) of the Corporate Guarantor
and its Subsidiaries (whether Participating or Nonparticipating),
determined in accordance with generally accepted accounting
principles consistently applied, excluding however (A) any gains
(or losses) resulting from the sale or write-up of assets, and
(B) any other extraordinary or non-recurring gains.
"Corporate Guaranty" means that Amended and Restated
Corporate Guaranty Agreement of the Corporate Guarantor initially
dated _______________, 1995 in favor of the Bank with respect to
the Reimbursement Agreement, as the same may be further amended
and/or modified from time to time.
"Current Assets" means, at any time, all assets that, in
accordance with generally accepted accounting principles con-
sistently applied, are classified as current assets on a balance
sheet of the Corporate Guarantor and its Participating
Subsidiaries.
"Current Liabilities" means, at any time, all liabilities
that, in accordance with generally accepted accounting principles
consistently applied, are classified as current liabilities on a
balance sheet of the Corporate Guarantor and its Participating
Subsidiaries.
"Debt Service" means for any given period, the sum of the
amounts due from both the Corporate Guarantor and its
Participating Subsidiaries for (A) Interest Expense, (B) Letter
of Credit Fees, and (C) the pro forma current maturities portion
of Long-Term Liabilities for the succeeding four quarter period,
excluding however all amounts due under the Working Capital Loan
and also excluding in 1999 the balloon installments due at the
Loan Termination Date of the Revolving Loans and Capital
Expenditure Loans.
"Debt Service Coverage Ratio" means, as to the Corporate
Guarantor and its Participating Subsidiaries, for any period of
determination, that ratio consisting of the difference between
Cash Flow less the sum of cash taxes paid and Two Million Dollars
($2,000,000.00), divided by Debt Service.
"Earnings Before Interest and Taxes" means, for any period
of determination, the net earnings (or net loss) of both the
Corporate Guarantor and its Participating Subsidiaries exclusive
of all write-ups, gains (or losses) from sales of assets, or
other extraordinary or nonrecurring gains whether of a cash or
noncash nature, but after all expenses and other proper charges
other than Interest Expense and taxes, determined for any period
in accordance with generally accepted accounting principles
consistently applied.
"Eligible Assignee" means (A) a commercial bank organized
under the laws of the United States, or any State thereof, and
having a combined capital and surplus of at least
$300,000,000.00; (B) a commercial bank organized under the laws
of any other country which is a member of the Organization for
Economic Cooperation and Development (the "OECD"), or a political
subdivision of any such country, and having a combined capital
and surplus of at least $300,000,000.00, provided that such bank
is acting through a branch or agency located in the United
States; and (C) any Affiliate of the Bank; (D) any Federal
Reserve Bank. Bank.
"Environmental Laws" means the Comprehensive Environmental
Response, Compensation, and Liability Act (CERCLA) and the
Superfund Amendments and Reauthorization Act (SARA); the Resource
Conservation and Recovery Act (RCRA); the Emergency Planning and
Community Right to Know Act; the Clean Water Act (Federal Water
Pollution Control Act); the Safe Drinking Water Act; the Clean
Air Act; the Surface Mining Control and Reclamation Act; the
Coastal Zone Management Act; the Noise Control Act; the
Occupational Safety and Health Act; the Toxic Substances Control
Act (TSCA); the Federal Insecticide, Fungicide and Rodenticide
Act (FIFRA); any so-called "Superfund" or "Superlien" law; or any
other federal, state or local statute, law, ordinance, code,
rule, regulation, order, decree or other requirements of any
governmental body regulating, relating to or imposing liability
or standards of conduct concerning any Hazardous Materials or
toxic or dangerous chemical, waste, substance or material.
"Environmental Indemnity Agreement" means the Environmental
Indemnity Agreement of the Corporate Guarantor and the
Participating Subsidiaries given to NationsBank of Tennessee,
N.A. and the Bank pursuant to the Loan Agreement.
"Facility Realty" shall mean the land described in the
Description of Facility Realty in the Appendices to the
Indenture, the Lease Agreement and the Bank Mortgage (as the
rights or interests therein or appertaining thereto, together
with all structures, buildings, foundations, related facilities,
fixtures (other than trade fixtures) and other improvements now
or at any time made, erected or situated thereon (including the
improvements made pursuant to Section 2.1 of the Lease Agreement)
and all replacements, improvements, extensions, substitutions,
restorations,repairs or additions thereto; but excluding,
however, any real property or interest therein released pursuant
to Section 6.4 of Lease Agreement.
"Financial Statements" means the consolidated balance sheets
of the Corporate Guarantor as of December 31, 1993, March 31,
1994, June 30, 1994 and September 30, 1994 and statements of
income and shareholders equity of the Corporate Guarantor for the
years or months ended on such dates.
"Fixed Assets" means, at any time, all tangible, fixed
assets which are, in accordance with generally accepted
accounting principles consistently applied, classified as
property, plant and equipment on a balance sheet of the Corporate
Guarantor and its Participating Subsidiaries.
"Funded Debt" means at any date, with respect to the
Corporate Guarantor and its Participating Subsidiaries, all of
the following obligations (without duplication) of Corporate
Guarantor and its Participating Subsidiaries as of such date:
(a) all obligations for borrowed money, (b) all obligations
evidenced by bonds, debentures, notes or other similar
instruments, (c) all obligations to pay the deferred purchase
price of property, except trade accounts payable arising in the
ordinary course of business, (d) all obligations as lessee under
capitalized leases, (e) all obligations to purchase securities or
other property which arise out of or in connection with the sale
of the same or substantially similar securities or property, such
as bankers acceptances or similar instruments, (f) all non-
contingent obligations to reimburse any bank or other person in
respect of amounts paid under a letter of credit or similar
instrument, (g) all debt of others secured by a lien on any asset
of Corporate Guarantor and its Participating Subsidiaries,
whether or not such debt is assumed, and (h) all debt of others
guaranteed by Corporate Guarantor and/or its Participating
Subsidiaries.
"Guarantee Obligation" means with respect to any Person, any
contract, agreement or understanding of such Person pursuant to
which such Person guarantees, or in effect guarantees, any
Indebtedness of any other person (the "primary obligor") in any
manner, whether directly or indirectly, including, without
limitation, agreements (a) to purchase such Indebtedness or any
asset constituting security therefor, (b) to advance or supply
funds for the purchase or payment of such Indebtedness or to
maintain net worth or working capital or other balance sheet
conditions, or otherwise to advance or make available funds for
the purchase or payment of such Indebtedness, (c) to purchase an
asset or service primarily for the purpose of assuring the holder
of such Indebtedness of the ability of the primary obligor to
make payment of the Indebtedness, or (d) otherwise to assure the
holder of the Indebtedness of the primary obligor against loss
with respect thereto; provided, however, that such term shall not
include the endorsement by Corporate Guarantor or a Subsidiary of
negotiable instruments or documents for deposit or collection in
the ordinary course of business. The amount of any Guarantee
Obligation of any guaranteeing person shall be deemed to be the
lower of (a) an amount equal to the stated or determinable amount
of the primary obligation in respect of which such Guarantee
Obligation is made and (b) the maximum amount for which such
guaranteeing person may be liable pursuant to the terms of the
instrument embodying such Guarantee Obligation, unless such
primary obligation and the maximum amount for which such
guaranteeing person may be liable are not stated or determinable,
in which case the amount of such Guarantee Obligation shall be
such guaranteeing person's maximum reasonably anticipated
liability in respect thereof as determined by the Bank in good
faith.
"Hazardous Materials" means any hazardous, toxic or danger-
ous chemical, substance, waste or material defined as such in any
of the Environmental Laws, and petroleum, petroleum products,
oil, asbestos and PCB's.
"Indebtedness" means, as to the Corporate Guarantor or any
Participating Subsidiary, all items of indebtedness, obligation
or liability, whether matured or unmatured, liquidated or
unliquidated, direct or contingent, joint or several, including
without limitation:
(A) All indebtedness guaranteed, directly or
indirectly, in any manner, or endorsed (other than for collection
or deposit in the ordinary course of business) or discounted with
recourse;
(B) All indebtedness in effect guaranteed, directly or
indirectly, through agreements, contingent or otherwise: (1) to
purchase such indebtedness; or (2) to purchase, sell or lease (as
lessee or lessor) property, products, materials or supplies or to
purchase or sell services, primarily for the purpose of enabling
the debtor to make payment of such indebtedness or to assure the
owner of the indebtedness against loss; or (3) to supply funds to
or in any other manner invest in the debtor;
(C) All indebtedness secured by (or for which the
holder of such indebtedness has a right, contingent or otherwise,
to be secured by) any mortgage, deed of trust, pledge, lien,
security interest or other charge or encumbrance upon property
owned or acquired subject thereto, whether or not the liabilities
secured thereby have been assumed; and
(D) All indebtedness incurred as the lessee of
facilities, goods or services under leases that, in accordance
with generally accepted accounting principles consistently
applied, should not be reflected on the Corporate Guarantor's or
any Participating Subsidiary's balance sheet.
"Intangible Assets" means, at any time, goodwill, covenants
not to compete, capitalized financing and transaction costs, and
any surplus resulting from any write-up of assets subsequent to
December 31, 1993 as shown on a balance sheet of both the
Corporate Guarantor and its Participating Subsidiaries.
"Interest Expense" means, with respect to the Corporate
Guarantor and its Participating Subsidiaries for any period, the
gross interest expenses of both the Corporate Guarantor and its
Participating Subsidiaries for such period determined in
accordance with generally accepted accounting principles
consistently applied as shown on their income statement.
"Laws" means all ordinances, statutes, rules, regulations,
orders, injunctions, writs or decrees of any government or
political subdivision or agency thereof, or any court or similar
entity established by any thereof.
"Letter of Credit Facility" means that Letter of Credit
issued by the Bank for the account of Pyron Corporation to The
Bank of New York, as Trustee for Seven Million Six Hundred Fifty
Thousand Dollars ($7,650,000.00) in original principal amount of
Niagara County Industrial Development Agency Industrial
Development Revenue Bonds (1989 Pyron Corporation Project),
pursuant to the Reimbursement Agreement.
"Letter of Credit Fees" means those fees paid from time to
time by Pyron Corporation to Chemical Bank for the Letter of
Credit Facility plus any other fees paid by the Corporate
Guarantor or any Participating Subsidiary to a bank for the
issuance or continuation of any other letter of credit.
"Liabilities" means all Indebtedness that, in accordance
with generally accepted accounting principles consistently
applied, which are classified as liabilities on a balance sheet
of the Corporate Guarantor and its Participating Subsidiaries.
"Loan" means any funds which any Bank has advanced or will
advance to the Corporate Guarantor pursuant to this Corporate
Guaranty, and "Loans" means all such advances by the Bank.
"Loan Agreement" means the Loan and Security Agreement among
the Corporate Guarantor, The Feldspar Corporation, the
Participating Subsidiaries, NationsBank of Tennessee, N.A. and
the Bank dated March , 1995, as amended, restated or modified
from time to time.
"Loan Agreement Indebtedness" means all Indebtedness of the
Corporate Guarantor and/or The Feldspar Corporation to
NationsBank of Tennessee, N.A. and the Bank pursuant to the Loan
Agreement.
"Loan Documents" means this Corporate Guaranty, the Notes,
and the Collateral Documents, or any other document executed or
delivered by or on behalf of the Corporate Guarantor or any
Participating Subsidiary evidencing or securing the Obligations.
"Long-Term Liabilities" means Liabilities less the portion
thereof that constitutes Current Liabilities.
"Material Adverse Change" means a material adverse change in
the business or conditions (financial or otherwise) or in the
results of operations of the Corporate Guarantor and its
Participating Subsidiaries (unless otherwise indicated), taken as
a whole as reasonably determined by the Bank.
"Material Adverse Effect" means, when referring to the
taking of an action or the omission to take an action, that such
action, if taken, or omission, would have a material adverse
effect on the business, condition (financial or otherwise) or
results of operations of the Corporate Guarantor and its
Participating Subsidiaries (unless otherwise indicated), taken as
a whole as reasonably determined by the Bank.
"Mineral Lease" means an operating lease of real property
for the purpose mining minerals and ore in which the rent (and/or
royalties) payable thereunder to the lessor is contingent in
whole or in part on the quantity of minerals and ore mined by the
lessee from the leased site.
"Net Income" means, for any particular fiscal period, the
net earnings (or net loss) of the Corporate Guarantor and its
Participating Subsidiaries, determined in accordance with
generally accepted accounting principles consistently applied,
excluding however (A) any gains (or losses) resulting from the
sale or write-up of assets, and (B) any other extraordinary or
non-recurring non-cash gains.
"Net Cash Sales Proceeds" mean the cash received by any
Corporate Guarantor or Participating Subsidiary at the closing of
any sale of assets (including proceeds received at closing, if
any, from non-compete agreements, consulting agreements or earn-
out agreements) after deducting normal and routine closing costs
and fees paid at or about closing to third party service
providers engaged by the applicable Corporate Guarantor or
Participating Subsidiary to directly facilitate the sale, such as
attorneys, surveyors, environmental engineers and consultants,
and brokers unaffiliated with any Corporate Guarantor, Subsidiary
or Affiliate thereof.
"Nonparticipating Subsidiary" means any Subsidiary which, at
any time of determination, is either not a party hereto or, if a
party, whose outstanding assets and stock have not been pledged
to NationsBank of Tennessee, N.A. for the benefit of NationsBank,
of Tennessee, N.A. and the Bank pursuant to the Loan Agreement.
"Nonparticipating Subsidiary Advances" means any advances of
any kind made (regardless of the form, whether equity or debt,
cash or property) by the Corporate Guarantor or a Participating
Subsidiary to a Nonparticipating Subsidiary, whether such
advances are to fund the purchase price of any Person that will
upon the completion of the acquisition become a Nonparticipating
Subsidiary, to fund working capital advances, or otherwise.
"Obligations" means, respectively, all of the obligations of
the Corporate Guarantor and, to the extent applicable, of Pyron
Corporation:
(A) To pay as and when due all amounts described in
Section 2.01(a) of this Corporate Guaranty whether now existing
or hereafter incurred, matured or unmatured, direct or
contingent, joint or several, including any extensions,
modifications, and renewals thereof and substitutions therefor;
(B) To pay as and when due all amounts owed by Pyron
Corporation to Chemical Bank under the Reimbursement Agreement
and by the Corporate Guarantor under the Corporate Guaranty
whether now existing or hereafter incurred, matured or unmatured,
direct or contingent, joint or several, including any extensions,
modifications, and renewals thereof and substitutions therefor;
and
(C) To reimburse the Bank, on demand, for all of the
Bank's reasonable out-of-pocket expenses and costs, including the
reasonable fees and expenses of its counsel, in connection with
the preparation, administration, amendment, modification, or
enforcement of this Corporate Guaranty and the documents required
hereunder, including, without limitation, any proceeding brought
or threatened to enforce payment of any of the obligations
referred to in the foregoing paragraphs (A) and (B), or any suits
or claims against any Bank whatsoever as a result of such Bank's
execution of this Corporate Guaranty and making of its Loan.
"Participating Subsidiary" individually means any one of the
following corporations, and "Participating Subsidiaries" means
all such corporations jointly and severally:
(A) Pyron Corporation, a New York corporation
(B) Pyron Metal Powders, Inc., a Delaware corporation
(C) Suzorite Mica Products Inc. Les Produits Mica Suzorite
Inc., an Ontario corporation
(D) Suzorite Mineral Products, Inc., a Delaware corporation
(E) The Feldspar Corporation, a North Carolina corporation.
"Permitted Acquisition" means any business, enterprise or
operation of any Person which is the subject of an acquisition
permitted under Section 4.16.
"Permitted Acquisition Indebtedness" means purchase money
indebtedness incurred by the Corporate Guarantor or any
Participating Subsidiary in connection with the purchase of a
Permitted Acquisition approved by the Bank pursuant to Section
4.16 that:
(A) Is owed to the seller or the seller's owners; and
(B) Is not cross-defaulted with and is not more
restrictive in its terms and conditions than the Obligations
secured hereby, in the reasonable judgment of the Bank.
In addition, it shall include such other indebtedness to third
parties, whether assumed or not, as has otherwise been approved
by the Bank pursuant to Section 4.16 or not prohibited by Section
4.04.
"Permitted Acquisition Price" means the aggregate purchase
price of any Permitted Acquisition, including without limitation
the value of any stock, notes, assumed debt, amounts allocated to
non-compete agreements and the minimum amounts reasonably
expected to be paid under any earn-out agreements.
"Permitted Investments" means all expenditures made and all
liabilities incurred (contingent or otherwise) by any Corporate
Guarantor or any Participating Subsidiary for:
(A) obligations issued or guaranteed as to principal
and interest by the United States of America and having a
maturity of not more than twelve (12) months from the date of
purchase;
(B) certificates of deposit, issued by banks organized
under the laws of the United States of America or any State
thereof and foreign subsidiaries of such banks, having a rating
of not less than A or its equivalent by Standard & Poor's
Corporation, or its successor;
(C) commercial paper or finance company paper which is
rated not less than prime-one or A-1 or their equivalents by
Moody's Investor Services, Inc. or Standard & Poor's Corporation
or their successors;
(D) repurchase agreements related to an investment of
the type described in Clause (A) above, provided that the
counter-party thereto is a government securities dealer
designated by the Federal Reserve Bank of New York as a
"Reporting Dealer" and whose financial statements indicate that
it has a capital of at least $50,000,000.00 and that the
investment which is the subject of such repurchase agreement
shall be at all times during the term of the repurchase agreement
in the possession of the Corporate Guarantor (or the Bank) or the
interest of such Corporate Guarantor therein shall be
appropriately recorded in accordance with the United States
Federal Regulations regarding Book Entry Treasury Securities; and
(E) Permitted Acquisitions.
"Permitted Liens" means:
(A) Liens in favor of the Bank;
(B) Security interests in assets (not stock) granted
to secure (1) Permitted Acquisition Indebtedness, provided that
in the case of an acquisition the purchase is either permitted by
Section 4.16 or not otherwise prohibited herein or (2) equipment
notes and capitalized leases granted to secure not more than the
amount of the purchase price financed thereby, provided that the
purchase is permitted by Section 4.17 and the additional amount
incurred in any fiscal year does not exceed Two Million Five
Hundred Thousand Dollars ($2,500,000.00);
(C) Liens for taxes, assessments, or similar charges,
incurred in the ordinary course of business that are not yet due
and payable;
(D) Pledges or deposits made in the ordinary course of
business to secure payment of workmen's compensation, or to
participate in any fund in connection with workmen's
compensation, unemployment insurance, old-age pensions or other
social security programs;
(E) Liens of mechanics, materialmen, warehousemen,
carriers, or other like liens, securing obligations incurred in
the ordinary course of business that are not yet due and payable;
(F) Good faith pledges or deposits made in the
ordinary course of business to secure performance of bids,
tenders, contracts (other than for the repayment of borrowed
money) or leases, not in excess of ten percent (10%) of the
aggregate amount due thereunder, or to secure statutory
obligations, or surety, appeal, indemnity, performance or other
similar bonds required in the ordinary course of business;
(G) Encumbrances consisting of zoning restrictions,
easements or other restrictions on the use of real property, none
of which materially impairs the use of such property by the
Corporate Guarantor or any Participating Subsidiary in the
operations of its business, and none of which is violated in any
material respect by existing or proposed structures or land use;
(H) Existing liens set forth or described on Exhibit
E, attached hereto and made a part hereof, and renewals thereof;
(I) Landlord's liens on Fixtures retained in any
lease;
(J) The following, if the validity or amount thereof
is being contested in good faith by appropriate and lawful
proceedings, so long as levy and execution thereon have been
stayed and continue to be stayed; if Corporate Guarantor or any
Participating Subsidiary has posted such security as may be
required by Laws or as is reasonably satisfactory to Bank; and if
the following do not, in the aggregate, materially detract from
the value of the properties of the Corporate Guarantor or any
Participating Subsidiary taken as a whole, or materially impair
the use thereof in the operation of their respective businesses:
(1) Claims or liens for taxes, assessments or
charges due and payable and subject to interest or penalty;
(2) Claims, liens and encumbrances upon, and
defects of title to, real or personal property, including any
attachment of personal or real property or other legal process
prior to adjudication of a dispute on the merits;
(3) Claims or liens of mechanics, materialmen,
warehousemen, carriers, or other like liens; and
(4) Adverse judgments on appeal;
(K) Liens granted pursuant to the Loan Agreement.
"Person" means any individual, corporation, partnership,
association, joint-stock company, estate, trust, unincorporated
organization, joint venture, court or government or political
subdivision or agency thereof.
"Records" means correspondence, memoranda, tapes, books,
discs, paper, magnetic storage and other documents or information
of any type, whether expressed in ordinary or machine language.
"Reimbursement Agreement" means that Letter of Credit
Reimbursement Agreement executed by Pyron Corporation in
connection with the Letter of Credit Facility, originally dated
November 1, 1989 as amended, modified and restated from time to
time.
"Restricted Payments" means the sum of all payments made,
incurred or guaranteed as to payment by Corporate Guarantor or
any Participating Subsidiary on or after September 30, 1994 which
would violate any of the covenants contained in Sections 4.09
through 4.18 but for the application of Section 4.19.
"Shareholders' Equity" means, at any time, the accounts
required to be set forth in a balance sheet of the Corporate
Guarantor and its Participating Subsidiaries, prepared in
accordance with generally accepted accounting principles
consistently applied, including, but not limited to: (A) the par
or stated value of all outstanding capital stock; (B) capital
surplus, including additional paid-in capital; (C) retained
earnings, (D) cumulative foreign currency translation
adjustments, and (E) treasury stock, less (F) notes receivable
from stockholders.
"Subordinated Indebtedness" means all Indebtedness incurred
at any time by the Corporate Guarantor or any Participating
Subsidiary, the repayment of which is subordinated to the Loans
and the Loan Agreement Indebtedness in form and manner
satisfactory to the Bank. All existing Subordinated
Indebtedness is so specified in Exhibit G attached hereto.
"Subsidiary" means any corporation of which fifty percent
(50%) or more of the outstanding voting securities shall, at the
time of determination, be owned directly, or indirectly through
one or more intermediaries, by the Corporate Guarantor (including
Nonparticipating Subsidiaries, whether or not a party to this
Corporate Guaranty, unless the context otherwise specifies), and
"Subsidiaries" means all such corporations together with each of
the Guarantors, if different.
"Surplus Capital" means the amount of Eleven Million Seven
Hundred Forty-Five Thousand Dollars ($11,745,000), consisting of
the stockholders' equity of the Corporate Guarantor as of
September 30, 1994 (i.e., $50,614,000), less the sum of: (A) its
stockholders equity as of December 31, 1993 (i.e., $26,530,000),
(B) the amount of existing investments in Nonparticipating
Subsidiaries (i.e., $2,133,000), (C) Seven Million Dollars
($7,000,000.00), and (D) Net Income for the period commencing
January 1, 1994 through September 30, 1994 (i.e. $3,206,000).
"UCC" means the Uniform Commercial Code as in effect on the
date hereof in the State of New York, as it may be amended from
time to time; provided that if by reason of mandatory provisions
of law, the perfection or the effect of perfection or
non-perfection of a security interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a
jurisdiction other than New York, "UCC" means the Uniform
Commercial Code as in effect in such other jurisdiction for
purposes of the provisions hereof relating to such perfection or
effect of perfection or non-perfection.
"Unmatured Default" means an event which but for the lapse
of time or the giving of notice, or both, would constitute an
Event of Default.
"Working Capital" means those funds used for general
corporate purposes in the ordinary course of business, but
excluding the costs of the acquisition of any Person, permitted
or otherwise, and the costs of Capital Expenditures.
"Zemex Note" means that Promissory Note in the original
principal amount of CDN$7,500,000.00 dated December 21, 1994
payable on demand to the Corporate Guarantor by Suzorite Mica
Products Inc. Les Produits Mica Suzorite Inc., as successor-in-
interest to Zemex Canada Inc., the original maker.
The definitions in this Appendix A shall apply equally to
both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words
"include", "includes" and "including" shall be deemed to be
followed by the phrase "without limitation". All references
herein to Articles, Sections, Exhibits and Schedules shall be
deemed references to Articles and Sections of, and Exhibits and
Schedules to, this Corporate Guaranty unless the context shall
otherwise require. Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall be
construed in accordance with generally accepted accounting
principles, as in effect from time to time.
AMENDED AND RESTATED CORPORATE GUARANTY AGREEMENT
EXHIBITS
A Corporate Matters [I] - 1.01
B Addresses [J] - 1.01
C Litigation and Claims [K] - 1.05
D Compliance with Laws [D] - 1.10
E Existing Indebtedness and Liens [E] - 1.14, 4.04, "Existing
Liens"
F Material Leases, Contracts and Commitments [M] - 1.15, 4.18
G Subordinated Indebtedness [D] - "Subordinated Debt"
H Environmental Disclosurers
[Add date to definition of Loan Agreement]