LOAN AND SECURITY AGREEMENT
DATED AS OF MARCH 15, 1995
AMONG
ZEMEX CORPORATION AND
THE FELDSPAR CORPORATION
AND
NATIONSBANK OF TENNESSEE, N.A.,
AND CHEMICAL BANK
AND
NATIONSBANK OF TENNESSEE, N.A., AS AGENT
ZEMEX CORPORATION AND
THE FELDSPAR CORPORATION
LOAN AND SECURITY AGREEMENT
DATED AS OF MARCH 15, 1995
TABLE OF CONTENTS
Paragraph Number Page
I. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . 1
II. THE LOANS . . . . . . . . . . . . . . . . . . . . . . . . 17
2.1 The Revolving Loan Commitments . . . . . . . . . . . 17
2.2 The Capital Expenditure Loan Commitments . . . . . . 18
2.3 The Working Capital Loan Commitment. . . . . . . . . 20
2.4 Borrowing Notices, Interest Rates and Payments of
Interest 21
2.5 Facility Fee . . . . . . . . . . . . . . . . . . . . 23
2.6 Nonusage Fee . . . . . . . . . . . . . . . . . . . . 23
2.7 Agent's Fee. . . . . . . . . . . . . . . . . . . . . 24
2.8 Reduction of Commitment. . . . . . . . . . . . . . . 24
2.9 Alternate Rate of Interest . . . . . . . . . . . . . 24
2.10 Change in Circumstances. . . . . . . . . . . . . . . 24
2.11 Change in Legality . . . . . . . . . . . . . . . . . 26
2.12 Optional Prepayment - Premiums in Certain Events . . 27
2.13 Payment to the Agent . . . . . . . . . . . . . . . . 28
III. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . 28
3.1 Documents Required for the Closing . . . . . . . . . 28
3.2 Requirements for all Subsequent Disbursements. . . . 31
3.3 Legal Matters. . . . . . . . . . . . . . . . . . . . 31
IV. COLLATERAL SECURITY . . . . . . . . . . . . . . . . . . . 31
4.1 Composition of the Collateral. . . . . . . . . . . . 31
4.2 Rights in Property Held by the Banks . . . . . . . . 31
4.3 Rights in Property of the Borrower . . . . . . . . . 32
4.4 Rights in Property of Certain Participating
Subsidiaries 32
4.5 Rights and Property of Suzorite Mica.. . . . . . . . 33
4.6 Priority of Liens. . . . . . . . . . . . . . . . . . 33
4.7 Financing Statements . . . . . . . . . . . . . . . . 33
4.8 Negotiation of Zemex Note. . . . . . . . . . . . . . 34
4.9 Collection of Receivables. . . . . . . . . . . . . . 34
4.10 Mortgagees' and Landlords' Waivers; Georgia Processing
Plant 34
V. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . 35
5.1 Due Organization and Qualification . . . . . . . . . 35
5.2 No Conflicting Agreement . . . . . . . . . . . . . . 35
5.3 Capacity . . . . . . . . . . . . . . . . . . . . . . 36
5.4 Binding Obligations. . . . . . . . . . . . . . . . . 36
5.5 Pledged Stock. . . . . . . . . . . . . . . . . . . . 36
5.6 Litigation . . . . . . . . . . . . . . . . . . . . . 36
5.7 Title. . . . . . . . . . . . . . . . . . . . . . . . 36
5.8 Financial Statements . . . . . . . . . . . . . . . . 36
5.9 No Additional Indebtedness . . . . . . . . . . . . . 36
5.10 Taxes. . . . . . . . . . . . . . . . . . . . . . . . 37
5.11 Compliance with Laws . . . . . . . . . . . . . . . . 37
5.12 Environmental Compliance . . . . . . . . . . . . . . 37
5.13 Full Disclosure. . . . . . . . . . . . . . . . . . . 37
5.14 Consents . . . . . . . . . . . . . . . . . . . . . . 38
5.15 Existing Borrowings. . . . . . . . . . . . . . . . . 38
5.16 Material Contracts . . . . . . . . . . . . . . . . . 38
5.17 Zemex Note . . . . . . . . . . . . . . . . . . . . . 38
5.18 No Commissions . . . . . . . . . . . . . . . . . . . 38
5.19 ERISA. . . . . . . . . . . . . . . . . . . . . . . . 38
5.20 Survival . . . . . . . . . . . . . . . . . . . . . . 38
VI. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . 39
6.1 Use of Proceeds. . . . . . . . . . . . . . . . . . . 39
6.2 Financial Statements and Reports . . . . . . . . . . 39
6.3 Good Condition . . . . . . . . . . . . . . . . . . . 41
6.4 Insurance. . . . . . . . . . . . . . . . . . . . . . 41
6.5 Taxes. . . . . . . . . . . . . . . . . . . . . . . . 41
6.6 Records and Inspection . . . . . . . . . . . . . . . 41
6.7 Maintenance of Existence and Business. . . . . . . . 41
6.8 Ordinary Course. . . . . . . . . . . . . . . . . . . 42
6.9 Copies of Tax Returns. . . . . . . . . . . . . . . . 42
6.10 Payment of Indebtedness. . . . . . . . . . . . . . . 42
6.11 Notice of Litigation . . . . . . . . . . . . . . . . 42
6.12 Notice to Banks of Default or Prepayment . . . . . . 42
6.13 Notice of Name Change or Location. . . . . . . . . . 42
6.14 Environmental Compliance . . . . . . . . . . . . . . 43
6.15 Notice of Environmental Action . . . . . . . . . . . 43
6.16 ERISA Compliance . . . . . . . . . . . . . . . . . . 44
6.17 Financial Ratios . . . . . . . . . . . . . . . . . . 44
VII. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . 45
7.1 Merger or Reorganization . . . . . . . . . . . . . . 45
7.2 Sale of Assets . . . . . . . . . . . . . . . . . . . 45
7.3 Encumbrances . . . . . . . . . . . . . . . . . . . . 46
7.4 Debts and Other Obligations. . . . . . . . . . . . . 46
7.5 Leases . . . . . . . . . . . . . . . . . . . . . . . 46
7.6 Untrue Certificate . . . . . . . . . . . . . . . . . 46
7.7 Margin Stock . . . . . . . . . . . . . . . . . . . . 46
7.8 Sale-Leaseback . . . . . . . . . . . . . . . . . . . 47
7.9 Guarantee Obligation . . . . . . . . . . . . . . . . 47
7.10 Dividends and Distributions. . . . . . . . . . . . . 47
7.11 Redemptions and Capital Stock. . . . . . . . . . . . 47
7.12 Prepayments. . . . . . . . . . . . . . . . . . . . . 47
7.13 Subsidiary . . . . . . . . . . . . . . . . . . . . . 47
7.14 Loans and Advances . . . . . . . . . . . . . . . . . 47
7.15 Investments. . . . . . . . . . . . . . . . . . . . . 47
7.16 Acquisitions . . . . . . . . . . . . . . . . . . . . 47
7.17 Capital Expenditures . . . . . . . . . . . . . . . . 49
7.18 Affiliate Transactions . . . . . . . . . . . . . . . 49
7.19 Restricted Payment Negative Covenants. . . . . . . . 49
VIII. DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . 50
8.1 Events of Default. . . . . . . . . . . . . . . . . . 50
8.2 Acceleration . . . . . . . . . . . . . . . . . . . . 51
8.3 Remedies . . . . . . . . . . . . . . . . . . . . . . 52
IX. THE AGENT. . . . . . . . . . . . . . . . . . . . . . . . 53
9.1 Authorization. . . . . . . . . . . . . . . . . . . . 53
9.2 Standard of Care . . . . . . . . . . . . . . . . . . 53
9.3 No Waiver of Rights. . . . . . . . . . . . . . . . . 54
9.4 Payments . . . . . . . . . . . . . . . . . . . . . . 54
9.5 Indemnification. . . . . . . . . . . . . . . . . . . 54
9.6 Exculpation. . . . . . . . . . . . . . . . . . . . . 54
9.7 Credit Investigation . . . . . . . . . . . . . . . . 55
9.8 Resignation. . . . . . . . . . . . . . . . . . . . . 55
9.9 Proration of Payments. . . . . . . . . . . . . . . . 55
9.10 No Liability For Errors. . . . . . . . . . . . . . . 56
9.11 Offset . . . . . . . . . . . . . . . . . . . . . . . 56
X. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . 56
10.1 Construction . . . . . . . . . . . . . . . . . . . . 56
10.2 Further Assurance. . . . . . . . . . . . . . . . . . 57
10.3 Enforcement and Waiver by the Banks. . . . . . . . . 57
10.4 Expenses of the Banks. . . . . . . . . . . . . . . . 57
10.5 Notices. . . . . . . . . . . . . . . . . . . . . . . 57
10.6 Waiver and Release . . . . . . . . . . . . . . . . . 58
10.7 Indemnification. . . . . . . . . . . . . . . . . . . 59
10.8 Participations and Assignments . . . . . . . . . . . 59
10.9 Applicable Laws. . . . . . . . . . . . . . . . . . . 59
10.10Binding Effect, Assignment and Entire Agreement. . . 59
10.11Severability . . . . . . . . . . . . . . . . . . . . 59
10.12Counterparts . . . . . . . . . . . . . . . . . . . . 59
10.13Venue. . . . . . . . . . . . . . . . . . . . . . . . 60
10.14Confidentiality. . . . . . . . . . . . . . . . . . . 60
10.15Waiver of Jury Trial . . . . . . . . . . . . . . . . 60
SCHEDULE OF EXHIBITS
EXHIBIT
A Form of Notes
B Capital Expenditure Draw Request Form
C Existing Indebtedness and Liens
D Subordinated Indebtedness
E Real Property
F Form of Stock Pledge Agreement
G Form of Guaranty and Suretyship Agreements
H Form of Opinion Letters
I Corporate Matters
(States of Incorporation and Qualification; Stock
Ownership)
J Addresses
K Litigation and Claims
L Compliance with Laws
M Material Leases, Contracts and Commitments
N Environmental Disclosures
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT is made as of the 15th
day of
March, 1995, by and among Zemex Corporation, a Delaware
corporation, and The Feldspar
Corporation, a North Carolina corporation, jointly and severally
(individually and collectively,
the "Borrower"); the Guarantors, jointly and severally, as such
term is defined herein; each of
the undersigned Banks; and NationsBank of Tennessee, N.A. (the
"Agent"), individually and
as Agent for such Banks.
W I T N E S S E T H:
WHEREAS, Borrower has requested the Banks to lend up to
the sum of Twenty-
Five Million Dollars ($25,000,000.00), initially on a revolving
basis and then converting in part
to a reducing revolver and in part to a term loan, and the Banks
are willing to do so upon the
terms and conditions hereinafter set forth; and
WHEREAS, Pyron Corporation is a party to a Letter of
Credit Reimbursement
Agreement (as hereinafter defined) with Chemical Bank, and
NationsBank of Tennessee, N.A.
desires to participate with Chemical Bank in its Letter of Credit
Facility (as hereinafter defined)
provided, among other things, that the Letter of Credit Facility
and this Loan and Security
Agreement are cross-defaulted and cross-collateralized;
NOW, THEREFORE, in consideration of the premises and
the mutual covenants
and obligations herein contained, and each intending to be
legally bound hereby, the parties
agree as follows:
SECTION I. 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.
"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 Zemex Corporation 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 Borrower
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
any of the Banks be deemed
to be Affiliates of the Borrower.
"Agent" means NationsBank of Tennessee, N.A. in its
capacity as agent for the
Banks pursuant to Section IX hereof, and not in its individual
capacity as a Bank, and any
successor Agent appointed pursuant to Section IX.
"Agreement" means this Loan and Security Agreement, as
it may be amended,
restated, renewed or extended from time to time.
"Applicable LIBO Rate Margin" means two and one-quarter
percent (2.25%)
per annum; provided however, that during any fiscal quarter of
the Borrower where the
Borrower shall have satisfied the Funded Debt to Capital ratio
test indicated in the table below,
then the Applicable LIBO Rate Margin for the Effective Period (as
defined below) shall be the
percentage rate per annum set forth opposite the appropriate test
in the table below:
Funded Debt to Capital Applicable LIBO Rate
Margin
Equal to or Greater than 35% 2.25% per annum
Equal to or Greater than 25% and Less Than 35% 1.75% per annum
Less than 25% 1.25% per annum
The Funded Debt to Capital ratio shall be computed as set forth
in Paragraph 6.17(B), and the
Applicable LIBO Rate Margin shall be confirmed by the Agent on
the basis of quarter-annual
financial statements of the Borrower delivered to the Banks
pursuant to Paragraph 6.2(A) and
year end financial statements delivered pursuant to Paragraph
6.2(B). The "Effective Period"
shall be the period commencing on the first Business Day of the
first month following delivery
to the Agent of the financial statements of the Borrower pursuant
to Paragraphs 6.2(A) and
6.2(B), which financial statements indicate that the applicable
test set forth above has been
satisfied for the preceding fiscal quarter, and ending on the
date that is three months after such
commencement date except for the third and fourth fiscal quarters
of each year, where the
ending date shall be four months after the commencement date and
two months after the
commencement date, respectively. At the end of any Effective
Period, the Applicable LIBO
Rate Margin shall automatically become two and one-quarter
percent (2.25%) per annum unless
at or prior to such time the next Effective Period shall have
commenced.
"Applicable Prime Rate Margin" means one-quarter of one
percent (0.25%) per
annum; provided however, that during any fiscal quarter of the
Borrower where the Borrower
shall have satisfied the Funded Debt to Capital ratio test
indicated in the table below, the
Applicable Prime Rate Margin for the Effective Period (as defined
below) shall be the
percentage rate per annum set forth opposite the appropriate test
in the table below:
Funded Debt to Capital Applicable Prime
Rate Margin
Equal to or Greater than 35% 0.25% per annum
Equal to or Greater than 25% and Less Than 35% 0.00% per annum
Less than 25% 0.00% per annum
The Funded Debt to Capital ratio shall be computed as set forth
in Paragraph 6.17(B), and the
Applicable Prime Rate Margin shall be confirmed by the Agent on
the basis of the quarter-
annual financial statements of the Borrower delivered to the
Banks pursuant to Paragraph 6.2(A)
and year end financial statements delivered pursuant to Paragraph
6.2(B). The "Effective
Period" shall be the period commencing on the first Business Day
of the first month following
delivery to the Agent of the financial statements of the Borrower
pursuant to Paragraphs 6.2(A)
and 6.2(B), which financial statements indicate that the
applicable test set forth above has been
satisfied for the preceding fiscal quarter, and ending on the
date that is three months after such
commencement date except for the third and fourth fiscal quarters
of each year, where the
ending date shall be four months after the commencement date and
two months after the
commencement date, respectively. At the end of any Effective
Period, the Applicable Prime
Rate Margin shall automatically become one-quarter of one percent
(0.25%) per annum unless
at or prior to such time the next Effective Period shall have
commenced.
"Bank" means each Bank listed on the signature pages of
this Agreement and their
respective successors and assigns, and "Banks" means all of such
Banks collectively.
"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; provided however, that when used in connection
with determining the LIBO
Rate or notices in connection therewith, the term "Business Day"
shall also exclude any day on
which banks are not open for dealings in U.S. Dollar deposits in
the London Interbank Market.
"Capital" means, as to both the Borrower 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 Borrower and its Participating
Subsidiaries, less Intangible
Assets, Nonparticipating Subsidiary Advances, all Guarantee
Obligations incurred by the
Borrower or any Participating Subsidiary for or on behalf of any
Nonparticipating Subsidiary
or other Person, and all amounts due to a Borrower or
Participating Subsidiary from any
Affiliate (including without duplication from any
Nonparticipating Subsidiary).
"Capital Expenditure Loan" means that nonrevolving
construction/term loan
described in Paragraph 2.2.
"Capital Expenditure Loan Commitment" means, as to any
Bank, the obligation
of such Bank to make Capital Expenditure Loans in an amount not
to exceed the amount set
forth in Paragraph 2.2.
"Capital Expenditure Loan Commitment Percentage" means,
as to any Bank
at any time, the percentage of the aggregate Capital Expenditure
Loan Commitments then
constituted by such Bank's Capital Expenditure Loan Commitment.
"Capital Expenditure Loan Commitment Termination Date"
means
December 31, 1995.
"Capital Expenditures" means all amounts paid by the
Borrower 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 Borrower and its
Participating Subsidiaries in accordance with generally accepted
accounting principles
consistently applied.
"Cash Flow" means, as to both the Borrower 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 Borrower 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 Agreement, 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 Zemex Corporation
(or other securities convertible into such securities)
representing 51% or more of the combined
voting power of all securities of Zemex Corporation entitled to
vote in the election of directors;
or (ii) commencing after the date of this Agreement, individuals
who at the beginning of this
Agreement were directors of Zemex Corporation ceasing for any
reason to constitute a majority
of the Board of Directors of Zemex Corporation unless the Persons
replacing such individuals
were nominated by the Board of Directors of Zemex Corporation; 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 Zemex Corporation (or other securities
convertible into such securities)
representing 51% or more of the combined voting power of all
securities of Zemex Corporation
entitled to vote in the election of directors.
"Closing" means the valid execution and delivery of the
Notes, the Agreement,
and Collateral Documents to the Agent, or as the Banks otherwise
direct.
"Collateral" has the meaning set forth in Paragraph
4.1.
"Collateral Documents" means the documents specified in
Paragraphs 3.1 (B)
through (G).
"Commitment Percentage" means, as to any Bank at any
time, the percentage
of the Total Commitments then constituted by such Bank's
Commitments.
"Commitments" means the Revolving Loan Commitments, the
Capital
Expenditure Loan Commitments, and the Working Capital Commitment.
"Consolidated Net Income" means, for any particular
fiscal period, the net
earnings (or net loss) of the Borrower 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.
"Current Assets" means, at any time, all assets that,
in accordance with generally
accepted accounting principles consistently applied, are
classified as current assets on a balance
sheet of the Borrower 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 Borrower and its Participating
Subsidiaries.
"Debt Service" means for any given period, the sum of
the amounts due from
both the Borrower 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 Borrower
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 Borrower 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; (C) any Bank and any Affiliate of a Bank or
Lender; and (D) any Federal
Reserve 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.
"Eurodollar Liabilities" has the meaning assigned to
that term in Regulation D
of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"Eurodollar Loan" means any Loan which bears interest
based on the LIBO
Rate.
"Eurodollar Rate Reserve Percentage" means the reserve
percentage applicable
during any Eurodollar Loan Interest Period (or if more than one
such percentage shall be so
applicable, the daily average of such percentages for those days
in such Interest Period during
which any such percentage shall be so applicable) under
regulations issued from time to time by
the Board of Governors of the Federal Reserve System (or any
successor) for determining the
maximum reserve requirement (including, without limitation, any
emergency, supplemental or
other marginal reserve requirement) for Banks with respect to
liabilities or assets consisting of
or including Eurodollar Liabilities having a term equal to such
Interest Period.
"Event of Default" has the meaning set forth in
Paragraph 8.1.
"Financial Statements" means the consolidated balance
sheets of Zemex
Corporation as of December 31, 1993, March 31, 1994, June 30,
1994 and September 30, 1994
and statements of income and shareholders equity of Zemex
Corporation for the years or months
ended on such dates.
"Financing Statements" means any one or more filings
made pursuant to the
UCC to perfect the security interests in the Collateral granted
to Banks pursuant to Section IV
hereof.
"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 Borrower
and its Participating
Subsidiaries.
"Floating Rate Loan" means any Loan which bears
interest based on the Prime
Rate.
"Funded Debt" means at any date, with respect to the
Borrower and its
Participating Subsidiaries, all of the following obligations
(without duplication) of Borrower 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 Borrower and its Participating
Subsidiaries, whether or not
such debt is assumed, and (h) all debt of others guaranteed by
Borrower 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 Borrower 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 Banks in good faith.
"Guarantor" individually means any one of the
Participating Subsidiaries, and
"Guarantors" means all such corporations jointly and severally.
"Hazardous Materials" means any hazardous, toxic or
dangerous 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 Borrower 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 Borrower'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 Borrower and its
Participating Subsidiaries.
"Interest Expense" means, with respect to the Borrower
and its Participating
Subsidiaries for any period, the gross interest expenses of both
the Borrower and its Participating
Subsidiaries for such period determined in accordance with
generally accepted accounting
principles consistently applied as shown on their income
statement.
"Interest Payment Date" shall mean, as to any Loan, the
last day of the Interest
Period applicable to such Loan and, in addition, in the case of a
Eurodollar Loan with an
Interest Period of six (6) months' duration or longer, each day
which is three (3) months, or a
whole multiple thereof, after the first day of such Interest
Period and the last day of such Interest
Period.
"Interest Period" shall mean: (a) as to any Eurodollar
Loan, the period
commencing on the date of such Eurodollar Loan and ending on the
numerically corresponding
day (or, if there is no numerically corresponding day, on the
last day) in the calendar month that
is 1, 2, 3, 6 or 12 months thereafter, as the Borrower may elect,
and (b) as to any Floating Rate
Loan, the period commencing on the date of such Loan and ending
on the earliest of (i) the next
succeeding April 1, July 1, October 1 or January 1, and (ii) the
Loan Termination Date, as
applicable; provided, however, that (x) if any Interest Period
would end on a day that shall not
be a Business Day, such Interest Period shall be extended to the
next succeeding Business Day
unless, with respect to Eurodollar Loans only, such next
succeeding Business Day would fall in
the next calendar month, in which case such Interest Period shall
end on the next preceding
Business Day and (y) no Interest Period with respect to any Loan
shall end later than the Loan
Termination Date. Interest shall accrue from and including the
first day of an Interest Period
to but excluding the last day of such Interest Period.
"Interest Rate and Foreign Exchange Contracts" means
interest rate and foreign
exchange swap agreements, interest rate cap agreements, interest
rate collar agreements, interest
rate and foreign exchange insurance and other agreements or
arrangements designed to provide
protection against fluctuations in interest rates and currency
exchange rates.
"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 Chemical 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 Letter of Credit
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
Borrower or any Participating Subsidiary to a bank for the
issuance or continuation of any other
letter of credit.
"Letter of Credit Liabilities" means, as of any date of
determination, the sum
of (a) the maximum aggregate liability of Chemical Bank under the
Letter of Credit Facility, and
(b) the aggregate amount of drawings under the Letter of Credit
Facility for which Chemical
Bank has not been reimbursed by Pyron Corporation.
"Letter of Credit 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.
"Letter of Credit Reimbursement Agreement Guaranty"
means that Amended
and Restated Guaranty and Suretyship Agreement of Zemex
Corporation initially dated
March 15, 1995 in favor of Chemical Bank with respect to the
Letter of Credit Reimbursement
Agreement, as the same may be further amended and/or modified
from time to time.
"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 Borrower and its Participating Subsidiaries.
"LIBO Rate" means, with respect to any Eurodollar Loan
for any Interest Period,
the interest rate per annum (rounded upwards, if necessary, to
the next higher 1/100 of 1%) at
which dollar deposits approximately equal in principal amount to
such Eurodollar Loan and with
a maturity comparable to such Interest Period are offered to
first-class banks in immediately
available funds in the London Interbank Market for Eurodollars at
approximately 12:00 noon,
Nashville time, on the date two (2) Business Days prior to the
commencement of such Interest
Period, as determined by the Agent pursuant to the TELERATE
Reporting System.
"Loan" means any funds which any Bank has advanced or
will advance to the
Borrower pursuant to this Agreement, and "Loans" means all such
advances by all Banks.
"Loan Documents" means this Agreement, the Notes, and
the Collateral
Documents, or any other document executed or delivered by or on
behalf of the Borrower or
any Participating Subsidiary evidencing or securing the
Obligations.
"Loan Termination Date" means, with respect to
Revolving Loans and Capital
Expenditure Loans, January 1, 2000, unless extended in writing by
the Banks in their sole
discretion, and in the case of the Working Capital Loan only
means the Working Capital Loan
Termination Date.
"Long-Term Liabilities" means Liabilities less the
portion thereof that constitutes
Current Liabilities.
"Majority Banks" means those Banks (at least two Banks)
having sixty-six and
two-thirds (66 2/3%) percent or more of the aggregate unpaid
principal amount of the
outstanding Loans and the Letter of Credit Liabilities, or, if no
such amounts are then
outstanding, Banks having at least sixty-six and two-thirds (66
2/3%) percent of the
Commitments.
"Material Adverse Change" means a material adverse
change in the business or
conditions (financial or otherwise) or in the results of
operations of the Borrower and its
Participating Subsidiaries (unless otherwise indicated), taken as
a whole as reasonably
determined by the Majority Banks.
"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
Borrower and its Participating Subsidiaries (unless otherwise
indicated), taken as a whole as
reasonably determined by the Majority Banks.
"Mineral Lease" means an operating lease of real
property for purpose of 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 Borrower 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
Borrower 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 Borrower or
Participating Subsidiary to directly
facilitate the sale, such as attorneys, surveyors, environmental
engineers and consultants, and
brokers unaffiliated with any Borrower, 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 the Agent for the benefit of the Banks in the
manner prescribed in
Section IV hereof.
"Nonparticipating Subsidiary Advances" means any
advances of any kind made
(regardless of the form, whether equity or debt, cash or
property) by the Borrower 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.
"Note" means a promissory note substantially in the
form of Exhibit A attached
hereto, duly executed and delivered to any Bank by Borrower and
payable to the order of a Bank
in the amount of one or more of its Commitments, including any
amendment, modification,
renewal, extension, or replacement thereof, and "Notes" means the
Notes payable to each of the
Banks collectively.
"Obligations" means, respectively, all of the
obligations of the Borrower and, to
the extent applicable, of Pyron Corporation:
(A) To pay the principal of and interest on the
Notes in accordance with
the terms thereof and to satisfy all of the Borrower's other
liabilities to the Banks hereunder,
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 Letter of Credit Reimbursement
Agreement and by Zemex
Corporation under the Letter of Credit Reimbursement Agreement
Guaranty;
(C) To repay to the Banks all amounts advanced by
the Banks hereunder
on behalf of the Borrower, including, but without limitation,
amounts owed under Interest Rate
and Foreign Exchange Contracts to one or more of the Banks,
advances for overdrafts, principal
or interest payments to prior secured parties, mortgagees, or
lienors, or for taxes, levies,
insurance, rent, repairs to or maintenance or storage of any of
the Collateral; and
(D) To reimburse the Banks, on demand, for all of
the Agent's and each
Banks' reasonable out-of-pocket expenses and costs, including the
reasonable fees and expenses
of its counsel, in connection with the preparation or enforcement
of this Agreement and the doc-
uments 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
Agreement and making of its Loan; provided, the expenses and
attorneys' fees of only the
Agent's counsel shall be reimbursed in connection with the
administration, amendment,
modification or waiver of this Agreement and the other Loan
Documents.
"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
"Permitted Acquisition" means any business, enterprise
or operation of any
Person which is the subject of an acquisition permitted under
Paragraph 7.16.
"Permitted Acquisition Indebtedness" means purchase
money indebtedness
incurred by the Borrower or any Participating Subsidiary in
connection with the purchase of a
Permitted Acquisition approved by the Banks pursuant to Paragraph
7.16 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 Banks.
In addition, it shall include such other indebtedness to third
parties, whether assumed or not, as
has otherwise been approved by the Banks pursuant to Paragraph
7.16 or not prohibited by
Paragraph 7.4.
"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 Borrower 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
Borrower (or the Agent) or the interest
of such Borrower 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 Agent for the benefit
of the Banks;
(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 Paragraph 7.16 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 Paragraph
7.17 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 Borrower 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 C, 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 Borrower or any
Participating Subsidiary has posted
such security as may be required by Laws or as is reasonably
satisfactory to Banks; and if the
following do not, in the aggregate, materially detract from the
value of the properties of the
Borrower 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.
"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.
"Pledged Stock" means the stock and other interests
pledged pursuant to the Stock
Pledge Agreement described in Paragraph 3.1.
"Pledgor" means the owner of the Pledged Stock as set
forth in the Stock Pledge
Agreement.
"Prime Rate" means that rate announced by NationsBank
of Tennessee, N.A.
from time to time as the NationsBank Prime Rate. No
representation is made herein that the
NationsBank Prime Rate is the lowest rate at which any Bank will
lend to its customers.
"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.
"Restricted Payments" means the sum of all payments
made, incurred or
guaranteed as to payment by Borrower or any Participating
Subsidiary on or after September 30,
1994 which would violate any of the covenants contained in
Paragraphs 7.9 through 7.18 but
for the application of Paragraph 7.19.
"Revolving Loan" means Loans made pursuant to Paragraph
2.1.
"Revolving Loan Commitment" means, as to any Bank, the
obligation of such
Bank to make Revolving Loans in an amount not to exceed the
amount set forth in
Paragraph 2.1.
"Revolving Loan Commitment Percentage" means as to any
Bank at any time,
the percentage of the aggregate Revolving Loan Commitments then
constituted by such Bank's
Revolving Loan Commitment.
"Shareholders' Equity" means, at any time, the accounts
required to be set forth
in a balance sheet of the Borrower 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
Borrower or any Participating Subsidiary, the repayment of which
is subordinated to the
Obligations in form and manner satisfactory to the Banks. All
existing Subordinated
Indebtedness is so specified in Exhibit D 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 Borrower (including
Nonparticipating Subsidiaries,
whether or not a party to this Agreement, 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 Zemex
Corporation 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).
"Term Loans" means those Capital Expenditure Loans and,
if applicable, any
Revolving Loans and Working Capital Loans, which are converted to
a term loan or term loans
pursuant to Section II.
"Total Commitments" means the aggregate of the several
Commitments of the
Banks in the principal amount of up to Twenty-Five Million
Dollars ($25,000,000.00) as set
forth in Section II of this Agreement.
"UCC" means the Uniform Commercial Code as in effect on
the date hereof in
the State of Tennessee, 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 Tennessee, "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.
"Working Capital Bank" means NationsBank of Tennessee,
N.A.
"Working Capital Commitment" means the commitment of
the Working Capital
Bank to make Working Capital Loans to the Borrower in the
aggregate principal amount not to
exceed Five Million Dollars ($5,000,000.00).
"Working Capital Loan" means Loans made pursuant to
Paragraph 2.3.
"Working Capital Loan Termination Date" means June 30,
1996, unless
extended in writing by NationsBank of Tennessee, N.A. in its sole
discretion.
"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
Zemex Corporation 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 Section I 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 Agreement 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.
SECTION II. THE LOANS
2.1 The Revolving Loan Commitments. (A) Subject to
the terms and
conditions of and relying on the representations, warranties and
covenants contained in this
Agreement, through the day prior to the Loan Termination Date,
each Bank agrees to fund
severally but not jointly to the Borrower the amount set out
below their names, which for all of
the Banks shall be initially an aggregate maximum principal
amount of up to Ten Million Dollars
($10,000,000.00). The Revolving Loan Commitments of the Banks
shall reduce by an aggregate
of Five Hundred Thousand Dollars ($500,000.00) commencing March
31, 1997 and each
quarter-annual period thereafter, as set forth in the following
schedule:
Initial Commitment and
Commitment Reduction Dates
NationsBank
Chemical Bank
Revolving Loan
Commitments
Date of Agreement
$5,000,000
$5,000,000
$10,000,000
April 1, 1997
$4,750,000
$4,750,000
$9,500,000
July 1, 1997
$4,500,000
$4,500,000
$9,000,000
October 1, 1997
$4,250,000
$4,250,000
$8,500,000
January 1, 1998
$4,000,000
$4,000,000
$8,000,000
April 1, 1998
$3,750,000
$3,750,000
$7,500,000
July 1, 1998
$3,500,000
$3,500,000
$7,000,000
October 1, 1998
$3,250,000
$3,250,000
$6,500,000
January 1, 1999
$3,000,000
$3,000,000
$6,000,000
April 1, 1999
$2,750,000
$2,750,000
$5,500,000
July 1, 1999
$2,500,000
$2,500,000
$5,000,000
October 1, 1999
$2,250,000
$2,250,000
$4,500,000
Loan Termination Date
-0-
-0-
-0-
The Revolving Loans shall be evidenced by the (i) Five Million
Dollars ($5,000,000.00) Note
of Borrower to NationsBank of Tennessee, N.A., and (ii) the Five
Million Dollars
($5,000,000.00) Note of Borrower to Chemical Bank, which Notes
are substantially in the form
set forth in Exhibit A-1 attached hereto, with each Note payable
in accordance with its terms.
The Borrower may obtain Loans, repay without penalty or premium
except as set forth in
Paragraph 2.12 below and reborrow hereunder, from the date of
this Agreement up to the day
prior to the Loan Termination Date, the then available Revolving
Loan Commitments or any
lesser sum which is in the minimum amount of Two Hundred Fifty
Thousand Dollars
($250,000.00) and in an integral multiple of Fifty Thousand
Dollars ($50,000.00) if in excess
thereof; provided, however, Borrower may not borrow more than two
(2) times in any calendar
month. Each advance of the Revolving Loans hereunder shall be
made by each Bank ratably
in accordance with its respective Revolving Loan Commitment
Percentage of such advance.
(B) Revolving Loan advances may be used by the
Borrower for
Permitted Acquisitions, Working Capital, and other general
corporate purposes; provided
however, the Banks shall have no obligation to fund if the
conditions precedent in Paragraph 3.2
below have not been satisfied.
(C) The failure of any Bank to make any advances
hereunder pursuant
to its Revolving Loan Commitment shall not relieve any other Bank
of its obligation, if any,
hereunder to make its advances pursuant to its Revolving Loan
Commitment. However, no
Bank shall be responsible for any other Bank's failure or refusal
to make any advances pursuant
to such other Bank's Revolving Loan Commitment.
(D) All outstanding principal and interest on
each such Revolving Loan
shall be due and payable in full in a balloon installment on the
Loan Termination Date. In
addition, all outstanding principal in excess of the then
available Revolving Loan Commitment
shall be due on the Commitment Reduction Date applicable thereto
and otherwise on demand.
2.2 The Capital Expenditure Loan Commitments. (A)
Subject to the terms and
conditions of and relying on the representations, warranties and
covenants contained in this
Agreement, for a period ending on the Capital Expenditure Loan
Commitment Termination
Date, each Bank agrees to fund severally but not jointly to the
Borrower, on a non-revolving
basis, the amount set out beside their names, which for all of
the Banks shall be the aggregate
maximum principal amount of up to Ten Million Dollars
($10,000,000.00). The maximum
Capital Expenditure Loan Commitment of each of the Banks and its
respective Capital
Expenditure Loan Commitment Percentage are as follows:
Capital
Expenditure
Capital Expenditure LoanLoan
Commitment
Bank Commitment Amount Percentage
NationsBank of Tennessee, N.A. $ 5,000,000 50%
Chemical Bank $ 5,000,000 50%
TOTAL COMMITMENTS $10,000,000 100%
The Capital Expenditure Loans shall be evidenced by the (i) Five
Million Dollars
($5,000,000.00) Note of Borrower to NationsBank of Tennessee,
N.A., and (ii) the Five Million
Dollars ($5,000,000.00) Note of Borrower to Chemical Bank, which
Notes are substantially in
the form set forth in Exhibit A-2 attached hereto, with each Note
payable in accordance with its
terms. The Borrower may obtain Loans in any sum which is in the
minimum amount of Two
Hundred Fifty Thousand Dollars ($250,000.00) and in an integral
multiple of Fifty Thousand
Dollars ($50,000.00) if in excess thereof; provided, however,
Borrower may not borrow more
than two (2) times in any calendar month. Each advance of the
Capital Expenditure Loans
hereunder shall be made by each Bank ratably in accordance with
its respective Capital
Expenditure Loan Commitment Percentage of such advance.
(B) Capital Expenditure Loan advances shall be
used by the Borrower
solely for Renovation Costs (as hereinafter defined) associated
with renovating and expanding
the feldspar production facility in Spruce Pine, North Carolina;
provided, however, the Banks
shall have no obligation to fund if the conditions precedent in
Paragraph 3.2 below have not
been satisfied. Furthermore, it shall be a condition precedent
to the Banks funding the initial
draw hereunder that the following conditions be satisfied:
(1) Borrower shall have submitted to each of
the Banks a budget
for the renovation of the Spruce Pine feldspar facility approved
by each Borrower's board of
directors showing total costs for the renovation of not less than
Ten Million Dollars
($10,000,000.00) nor more than Fourteen Million Dollars
($14,000,000.00) (the "Renovation
Costs"); and
(2) Borrower shall have submitted evidence
satisfactory to the
Banks that The Feldspar Corporation has paid for the first Two
Million Five Hundred Thousand
($2,500,000.00) of budgeted Renovation Costs out-of-pocket (the
"Renovation Equity"). The
initial draw request, as well as each subsequent draw request,
shall be submitted on the Capital
Expenditure Draw Request Form attached hereto as Exhibit B, which
form shall be completed
and signed by a Borrower. Borrower shall not be entitled to draw
for or request reimbursement
for its Renovation Equity; provided, upon final completion of all
improvements contemplated
by the Renovation Costs budget, if savings are realized such that
the final Renovation Costs are
less than Twelve Million Five Hundred Thousand Dollars
($12,500,000.00), then the Borrower
may in its final draw request (which must be made prior to April
1, 1996) include a request for
reimbursement of a portion of its Renovation Equity equal to that
amount by which $12,500,000
exceeds the final expended Renovation Costs, but not to exceed in
any event a maximum of Two
Million Five Hundred Thousand Dollars ($2,500,000.00).
(C) The failure of any Bank to make any advances
hereunder pursuant
to its Capital Expenditure Loan Commitment shall not relieve any
other Bank of its obligation,
if any, hereunder to make its advances pursuant to its Capital
Expenditure Loan Commitment.
However, no Bank shall be responsible for any other Bank's
failure or refusal to make any
advances pursuant to such other Bank's Capital Expenditure Loan
Commitment.
(D) On the Capital Expenditure Loan Commitment
Termination Date,
the outstanding balance of the Capital Expenditure Loans shall be
permanently converted to non-
revolving Term Loans. Commencing April 1, 1996, the outstanding
balance of such Term
Loans shall be payable in equal quarter-annual installments of
principal in the aggregate amount
of Two Hundred Seventy-Seven Thousand Seven Hundred Seventy-Seven
and 78/100 Dollars
($277,777.78) each, said installments to be applied pro rata to
the Notes of each Bank. Interest
as hereinbelow set forth shall continue to be due and payable on
the principal balance from time
to time outstanding. All outstanding principal and interest on
each such Term Loan shall be due
and payable in full in a balloon installment on the Loan
Termination Date.
2.3 The Working Capital Loan Commitment. (A) Subject
to the terms and
conditions of and relying on the representations, warranties and
covenants contained in this
Agreement, for a period ending on the day prior to the Working
Capital Loan Termination Date,
the Working Capital Bank agrees to fund to the Borrower the
amount set out below its name,
as follows:
Working Capital
Working Capital Loan Commitment
Bank Commitment Amount Percentage
NationsBank of Tennessee, N.A. $5,000,000 100%
The Working Capital Loans shall be evidenced by the Five Million
Dollars ($5,000,000.00) Note
of Borrower to the Working Capital Bank, which Note is
substantially in the form set forth in
Exhibit A-3 attached hereto, with the Note payable in accordance
with its terms. The Borrower
may obtain Loans, repay without penalty or premium and reborrow
hereunder, from the date
of this Agreement up to but not including the Working Capital
Loan Termination Date, either
the full amount of the Working Capital Loan Commitment or any
lesser sum which is in the
minimum amount of One Thousand Dollars ($1,000.00) and in an
integral multiple of One
Thousand Dollars ($1,000.00) if in excess thereof.
(B) Working Capital Loan advances may be used by
the Borrower for
Working Capital; provided, NationsBank of Tennessee, N.A. shall
have no obligation to fund
if the conditions precedent in Paragraph 3.2 below have not been
satisfied.
(C) On the Working Capital Loan Termination Date,
all outstanding
principal and interest on the Working Capital Loan shall be due
and payable.
2.4 Borrowing Notices, Interest Rates and Payments of
Interest.
(A) Loans made hereunder may be either Eurodollar
Loans, Floating
Rate Loans, or a combination thereof; provided, Eurodollar Loans
made under the Revolving
Loan Commitment or the Capital Expenditure Loan Commitment shall
be in the minimum
amount of $1,000,000.00 and shall be in an integral multiple of
$100,000.00, and Eurodollar
Loans made under the Working Capital Commitment shall be in the
minimum amount of
$250,000.00 and shall be in an integral multiple of $100,000.00.
(B) The Borrower shall give the Agent irrevocable
notice (a "Borrowing
Notice") not later than 10:00 a.m. Nashville time at least three
(3) Business Days prior to the
date of any requested disbursement of Eurodollar Loans and one
(1) Business Day prior to any
requested disbursement of Floating Rate Loans. Each Borrowing
Notice shall be written and
may be made by telecopier, telex or cable in addition to the
means set forth for giving notice
in Paragraph 10.5. Each Borrowing Notice shall specify the
funding source of the Loan, i.e.,
Revolving Loan, Capital Expenditure Loan, or Working Capital
Loan; the requested date of such
requested disbursement; the aggregate amount of such
disbursement; the type of Loan, i.e.,
Eurodollar or Floating Rate; and if a Eurodollar Loan, the
designated Interest Period. The
Agent shall promptly advise the other Banks of any Borrowing
Notice given pursuant to this
Section and each Bank's portion of the requested Loan. Not later
than noon (12:00 a.m.)
Nashville time on each disbursement date, and subject to the
terms and conditions hereof, Agent
will credit the proceeds of the Loans received by Agent from the
Banks to the Borrower's
deposit account with Agent. Each such Borrowing Notice shall
obligate the Borrower to accept
the Loan disbursement requested thereby.
(C) The Borrower shall have the right at any
time, on prior irrevocable
written or telex notice to the Agent not later than 10:00 a.m.,
Nashville time, three (3) Business
Days prior to the date of any requested conversion, to convert
any Floating Rate or Eurodollar
Loan into a Loan of another type, or to continue any Eurodollar
Loan for another Interest Period
(specifying in each case the Interest Period to be applicable
thereto), subject in each case to the
following:
(1) Each conversion or continuation shall be
made prorata
among the Banks in accordance with the respective principal
amounts of the Loan converted or
continued;
(2) No Eurodollar Loan shall be converted at
any time other
than at the end of the Interest Period applicable thereto;
(3) Each conversion shall be effected by
applying the proceeds
of the new Eurodollar and/or Floating Rate Loan, as the case may
be, to the Loan (or portion
thereof) being converted;
(4) The number of Eurodollar Loans
outstanding at one time
may not exceed seven (7); and
(5) No Interest Period may be selected for
any Eurodollar Loan
that would end later than a repayment date occurring on or after
the first day of such Interest
Period if the aggregate outstanding amount of Eurodollar Loans
with Interest Periods ending
prior to such repayment date plus the aggregate outstanding
amount of all Floating Rate Loans
is not equal to or greater than the principal amount(s) of the
Loan(s) to be paid on such
repayment date.
(D) Each notice pursuant to this Paragraph shall
be irrevocable and shall
refer to this Agreement and specify (1) the identity and
principal amount of the particular Loan
that the Borrower requests be converted or continued, (2) if such
notice requests conversion, the
date of such conversion (which shall be a Business Day), and (3)
if a Loan is to be converted
to a Eurodollar Loan or a Eurodollar Loan is to be continued, the
Interest Period with respect
thereto. In the event that the Borrower shall not give notice to
continue any Eurodollar Loan
for a subsequent period, such Eurodollar Loan (unless repaid)
shall automatically be converted
into a Floating Rate Loan. If the Borrower shall fail to specify
in any Borrowing Notice the
type of borrowing or, in the case of a Eurodollar Loan, the
applicable Interest Period, the
Borrower will be deemed to have requested a Floating Rate Loan.
If Agent reasonably believes
that any failure by Borrower to specify the type of borrowing or
the applicable Interest Period
shall have resulted from failure of communications equipment or
clerical error, then prior to
funding any such borrowing the Agent shall use reasonable efforts
to obtain confirmation from
Borrower of the contents of such Borrowing Notice; however, in
the absence of prompt
confirmation by Borrower which specifies the type of borrowing
and/or the applicable Interest
Period, the Borrower will be deemed to have requested a Floating
Rate Loan. Notwithstanding
anything to the contrary contained above, if an Event of Default
shall have occurred and be
continuing, no Eurodollar Loan may be continued and no Floating
Rate Loan may be converted
into a Eurodollar Loan.
(E) Interest shall be charged and paid on each
Loan from the date of
the initial advance thereunder until such Loan is paid or
converted as follows:
(1) For a Floating Rate Loan, at an annual
rate equal to the
Prime Rate plus the Applicable Prime Rate Margin, said rate to
change contemporaneously with
any change in the Prime Rate.
(2) For a Eurodollar Loan, at a rate equal
to the LIBO Rate plus
the Applicable LIBO Rate Margin.
(3) The Borrower shall pay to any Bank, if
and so long as such
Bank shall be required under regulations of the Board of
Governors of the Federal Reserve
System to maintain reserves with respect to liabilities or assets
consisting of or including
Eurodollar Liabilities, additional interest on the unpaid
principal amount of each Eurodollar
Loan, from the date of such advance until said principal amount
is paid in full, at an interest rate
per annum equal at all times to the remainder obtained by
subtracting (i) the LIBO Rate for the
Interest Period from (ii) the rate obtained by dividing the LIBO
Rate by a percentage equal to
100% minus the Eurodollar Rate Reserve Percentage for such
Interest Period, payable on each
date on which interest is payable. Such additional interest
shall be determined by such Bank
who shall notify Borrower thereof; however, such additional
interest shall be payable only if the
condition of Paragraph 2.10(C)(2) is satisfied.
(4) Interest for both Floating Rate Loans
and Eurodollar Loans
shall be computed on the basis of a 360-day year counting the
actual number of days elapsed,
and shall be due and payable without notice on each Interest
Payment Date.
(F) Notwithstanding the foregoing, upon the
occurrence of an Event
of Default interest shall be charged at the Default Rate as
defined and set forth in the Notes,
regardless of whether the Majority Banks have elected to exercise
any other remedies under
Section VIII hereof, including without limitation acceleration of
the maturity of the outstanding
principal of the Notes. All such interest shall be paid at the
time of and as a condition precedent
to the curing of any such default to the extent any right to cure
is given.
(G) All agreements herein made are expressly
limited so that in no
event whatsoever shall the interest and loan charges agreed to be
paid to the Banks for the use
of the money advanced or to be advanced pursuant to this
Agreement exceed the maximum
amounts collectible under applicable laws in effect from time to
time. If for any reason
whatsoever the interest or loan charges paid or contracted to be
paid in respect of the Loans
shall exceed the maximum amounts collectible under applicable
laws in effect from time to time,
then, ipso facto, the obligation to pay such interest and/or loan
charges shall be reduced to the
maximum amounts collectible under applicable laws in effect from
time to time, and any
amounts collected by the Banks that exceed such maximum amounts
shall be applied to the
reduction of the principal balance of the Loans and/or refunded
to Borrower so that at no time
shall the interest or loan charges paid or payable in respect of
the Loans exceed the maximum
amounts permitted from time to time by applicable law. This
provision shall control every other
provision herein and in any and all other agreements and
instruments now existing or hereafter
arising between Borrower and the Banks with respect to the Loans.
2.5 Facility Fee. A facility fee of One Hundred Fifty-
One Thousand One
Hundred Twenty-Two and 50/100 Dollars ($151,122.50) shall be due
and payable in full at
Closing to the Banks in the following amounts: NationsBank of
Tennessee, N.A., $88,061.25,
and Chemical Bank, $63,061.25.
2.6 Nonusage Fee. With respect to each of the
Revolving Loan Commitments,
the Capital Expenditure Loan Commitments, and the Working Capital
Commitment, from and
after the date hereof until the respective Commitment Termination
Date, the Borrower shall pay
to the Agent for the account of the Banks a nonusage fee of three-
eighths of one percent
(0.375%) per annum on the average daily undisbursed amount of
each of the Commitments
during each quarter-annual period or portion thereof. This
nonusage fee shall be payable
quarter-annually in arrears, on the first day of each January 1,
April 1, July 1, and October 1,
commencing April 1, 1995. Any accrued and unpaid nonusage fee on
any Commitment shall
be paid on its respective Commitment Termination Date.
2.7 Agent's Fee. An agent's fee of Twenty Thousand
Dollars ($20,000.00)
per annum shall be due and payable by Borrower to the Agent
annually commencing
December 31, 1995 and each December 31 thereafter.
2.8 Reduction of Commitment. The Borrower shall have
the right to reduce
the amount of the Total Commitments, at any time and from time to
time, in any integral
multiple of Two Hundred Fifty Thousand Dollars ($250,000.00),
which reduction shall, unless
otherwise agreed in writing, reduce each Bank's Commitment pro
rata in accordance with its
Commitment Percentage; provided, if the request for reduction is
made after the Capital
Expenditure Loan Commitment Termination Date and/or the Working
Capital Loan Termination
Date, then it shall reduce pro rata only those Commitments of
each Bank as are still outstanding.
Contemporaneously with each such reduction, the Borrower shall
repay to the Agent for the
account of each Bank in accordance with its respective Commitment
Percentage the amounts,
if any, by which the then outstanding principal balance of each
Note exceeds each Commitment
as so reduced. After each such reduction: (i) the Borrower
shall immediately pay the Agent
any nonusage fee provided for in Paragraph 2.6 with respect to
the amount by which the Total
Commitments are so reduced, but only with respect to the time any
such Commitment existed
and only to the extent not previously paid; (ii) the nonusage fee
provided for in Paragraph 2.6
shall be calculated with respect to the Total Commitments as so
reduced; and (iii) the Total
Commitments may not be increased without the written consent of
the Banks.
2.9 Alternate Rate of Interest.
(A) In the event, and on each occasion, that on
the date of
commencement of any Interest Period for a Eurodollar Loan, any
Bank shall have determined:
(1) That dollar deposits in the amount of
the requested principal
amount of such Eurodollar Loan are not generally available in the
London Interbank Market;
(2) That the rate at which such dollar
deposits are being offered
will not adequately and fairly reflect the cost to Bank of making
or maintaining such Eurodollar
Loan during such Interest Period; or
(3) That reasonable means do not exist for
ascertaining the
LIBO Rate,
such Bank shall, as soon as practicable thereafter, give written
or telephonic notice of such
determination to the Borrower. In the event of any such
determination, any request by the
Borrower for a Eurodollar Loan pursuant to Paragraph 2.4 shall,
until the circumstances giving
rise to such notice no longer exist, be deemed to be a request
for a Floating Rate Loan. Each
determination by a Bank hereunder shall be conclusive absent
manifest error.
2.10 Change in Circumstances.
(A) Notwithstanding any other provision herein,
if after the date of this
Agreement any change in applicable Laws or regulation or in the
interpretation or administration
thereof by any governmental authority charged with the
interpretation or administration thereof
(whether or not having the force of law) shall change the basis
of taxation of payments to a Bank
under any Eurodollar Loan made by a Bank or any other fees or
amounts payable hereunder
(other than taxes imposed on the overall net income of such Bank
by the country in which such
Bank is located, or by the jurisdiction in which such Bank has
its principal office, or by any
political subdivision or taxing authority therein), or shall
impose, modify or deem applicable any
reserve requirement, special deposit, insurance charge (including
FDIC insurance on Eurodollar
deposits) or similar requirement against assets of, deposits with
or for the account of, or credit
extended by, such Bank or shall impose on such Bank or the London
Interbank Market any other
condition affecting this Agreement or Eurodollar Loans made by
such Bank, and the result of
any of the foregoing shall be to increase the cost to such Bank
of making or maintaining any
Eurodollar Loan or to reduce the amount of any sum received or
receivable by such Bank here-
under (whether of principal, interest or otherwise) in respect
thereof by an amount deemed by
such Bank to be material, then the Borrower will pay to such Bank
such additional amount or
amounts as will compensate such Bank for such additional costs of
reduction.
(B) If either:
(1) The introduction of, or any change in,
or in the
interpretation of, any United States or foreign law, rule or
regulation; or
(2) Compliance with any directive,
guidelines or request from
any central bank or other United States or foreign governmental
authority (whether or not having
the force of law) promulgated or made after the date hereof (but
excluding, however, any law,
rule, regulation, interpretation, directive, guideline or request
contemplated by or resulting from
the report dated July, 1988, entitled "International Convergence
of Capital Measurement and
Capital Standards" issued by the Basle Committee on Banking
Regulations and Supervisory
Practices),
affects or would affect the amount of capital required or
expected to be maintained by a Bank
(or any lending office of such Bank) or any corporation directly
or indirectly owning or
controlling such Bank (or any lending office of such Bank) based
upon the existence of this
Agreement, and such Bank shall have determined that such
introduction, change or compliance
has or would have the effect of reducing the rate of return on
Bank's capital or on the capital
of such owning or controlling corporation as a consequence of its
obligations hereunder
(including its Commitment) to a level below that which such Bank
or such owning or controlling
corporation could have achieved but for such introduction, change
or compliance (after taking
into account that Bank's policies or the policies of such owning
or controlling corporation, as
the case may be, regarding capital adequacy) by an amount deemed
by such Bank (in its sole
discretion) to be material, then, from time to time, the Borrower
shall pay to such Bank such
additional amount or amounts as will compensate such Bank for
such reduction attributable to
making, funding and maintaining its Commitment and Loans
hereunder.
(C) A certificate of any Bank setting forth such
amount or amounts as
shall be necessary to compensate such Bank (or its participating
banks or other entities pursuant
to Paragraph 10.8) as specified in paragraph (A) or (B) above, as
the case may be, shall be
delivered to the Borrower and shall be conclusive absent manifest
error; provided however, that
the Borrower shall be responsible for compliance herewith and the
payment of increased costs
only to the extent:
(1) Any change in Laws giving rise to
increased costs occurs
after the date of this Agreement;
(2) Such change in Laws or the application
thereof applies
generally to the banking industry and is not the result of one or
more of the Banks in this
Agreement having inadequate or substandard capital as determined
by its regulators; and
(3) The affected Bank gives notice of the
change giving rise to
increased costs within one hundred eighty (180) Business Days
after such Bank has, or with
reasonable diligence should have had, knowledge of the change, or
else such Bank can only
collect costs from and after the date of the notice.
Subject to the foregoing, the Borrower shall pay the affected
Bank the amount shown as due on
any such certificate within ten (10) days after its receipt of
such certificate.
(D) The protection of this Paragraph 2.10 shall
be available to each
Bank regardless of any possible contention of invalidity or
inapplicability of the law, regulation
or condition that shall have been imposed; provided, if a court
of competent jurisdiction (or a
final administrative proceeding which is not judicially
challenged) finally determines that such
law or regulation is invalid or unapplicable, then the protection
of this Paragraph shall not be
available.
2.11 Change in Legality.
(A) Notwithstanding anything to the contrary
herein contained, if any
change in any law or regulation or in interpretation thereof by
any governmental authority
charged with the administration or interpretation thereof shall
make it unlawful for any Bank to
make or maintain any Eurodollar Loan or to give effect to its
obligations as contemplated
hereby, then, by written notice to the Borrower, such Bank may:
(1) Declare that Eurodollar Loans will not
thereafter be made
by such Bank hereunder, whereupon the Borrower shall be
prohibited from requesting Eurodollar
Loans from such Bank hereunder unless such declaration is
subsequently withdrawn; and
(2) Require that all outstanding Eurodollar
Loans made by it be
converted to Floating Rate Loans, in which event (a) all such
Eurodollar Loans shall be
automatically converted to Floating Rate Loans as of the
effective date of such notice as
provided in paragraph (B) below and (b) all payments and
prepayments of principal that would
otherwise have been applied to repay the converted Eurodollar
Loans shall instead be applied
to repay the Floating Rate Loans resulting from the conversion of
such Eurodollar Loans.
(B) For purposes of this Paragraph 2.11, a notice
to the Borrower by
any Bank pursuant to (A) above shall be effective, if lawful, on
the last day of the then current
Interest Period; in all other cases, such notice shall be
effective on the date of receipt by the
Borrower.
2.12 Optional Prepayment - Premiums in Certain Events.
(A) The Borrower may, upon three (3) Business
Days' prior written
notice to the Agent, and upon payment of all premiums set forth
in subparagraph (D)
hereinbelow, prepay any outstanding Eurodollar Loans prior to any
Interest Payment Date for
such Eurodollar Loans, in whole or in part.
(B) The Borrower may at any time prepay any
outstanding Floating
Rate Loans in whole or in part without premium or penalty.
(C) Each notice of prepayment of any Eurodollar
Loan shall specify the
date and amount of such prepayment and the type of Loan (i.e.,
Revolving, Capital Expenditure,
Working Capital) to which it relates and shall be irrevocable.
The Agent shall promptly notify
the Banks of its receipt of a notice of prepayment. Each partial
prepayment of any Eurodollar
Loans shall be in an aggregate principal amount which is the
lesser of (1) the then outstanding
principal balance of the one or more Eurodollar Loans to be
prepaid, or (2) One Hundred
Thousand Dollars ($100,000.00) or an integral multiple thereof.
Interest on the amount prepaid
accrued to the prepayment date shall be paid on such date.
relevant Interest Payment Date for such borrowing,
Borrower shall pay to Agent for the account
of each Bank, in addition to all other payments then due and
owing the Banks, premiums which
shall be equal to an amount, if any, reasonably determined by
each Bank to be the difference
between the rate of interest then applicable to the relevant
Eurodollar Loan and the yield each
Bank receives upon reinvestment of so much of the relevant
Eurodollar Loans as is prepaid for
the remainder of the term of the relevant Eurodollar Loan or
Loans. Anything in this section
2.12(D) to the contrary notwithstanding, the premiums payable
upon any such prepayment shall
not exceed the amount, if any, reasonably determined by each Bank
to be the difference between
the rate of interest then applicable to the relevant Eurodollar
Loan and the yield that each Bank
could receive upon reinvestment in the "Floor Reinvestment" of so
much of the relevant
Eurodollar Loan as is prepaid for the remainder of the term of
the relevant Eurodollar Loan.
For purposes hereof, "Floor Reinvestment" shall mean an
investment for the time period from
the date of such prepayment to the end of the relevant Interest
Period applicable to such
Eurodollar Loan at an interest rate per annum equal to the
federal funds "offered" rate as
published in the Wall Street Journal on the date of such
prepayment. All determinations,
estimates, assumptions, allocations and the like required for the
determination of such premiums
shall be made by each Bank in good faith and shall be presumed
correct absent demonstrable
error.
2.13 Payment to the Agent.
(A) The Agent shall send the Borrower statements
of all amounts due
hereunder (or the Banks may in the case of Section 2.10 above),
which statements shall be
considered correct and conclusively binding on the Borrower
unless the Borrower notifies the
Agent to the contrary within one hundred eighty (180) days of its
receipt of any statement to
which it objects. All sums payable to the Banks hereunder shall
be paid directly to the Agent
for the account of each Bank in immediately available funds prior
to 12:00 noon, Nashville time,
on the date when such sums are due and payable. Any amounts
received by the Agent after
12:00 noon Nashville time on any Business Day shall be deemed to
have been received on the
next Business Day. Alternatively, at its sole discretion, the
Agent may charge against any
deposit account of the Borrower maintained with any of the Banks
all or any part of any amount
due pursuant to this Agreement.
(B) Each payment made to the Agent on the Notes
or for other sums
or fees due hereunder for the account of the Banks shall in like
funds be properly remitted by
the Agent to each Bank, no later than 2:00 p.m. Nashville time on
the date on which Agent
receives such payment; provided, payments made on the Working
Capital Note shall be remitted
solely to NationsBank of Tennessee, N.A.
SECTION III. CONDITIONS PRECEDENT
The obligation of the Banks to fund and/or continue
funding the Loans hereunder
is subject to the following conditions precedent:
3.1 Documents Required for the Closing. The Borrower
shall have delivered
to the Agent prior to the initial disbursement of the Loans the
following:
(A) The Notes;
(B) Deeds of Trust, Mortgages and/or Deeds to
Secure Debt
(collectively, the "Deeds of Trust") in favor of the Agent for
the benefit of the Banks with
respect to certain of the Borrower's and Guarantors' interest in
the real property described in
Exhibit E attached hereto and located in the States of North
Carolina, Georgia and New York
(the "Real Property");
(C) Stock Pledge Agreement (collectively the
"Stock Pledge
Agreement") in the form attached hereto as Exhibit F, including
Schedule I thereto, duly
executed by the Borrower, together with certificates representing
the shares pledged thereby,
duly endorsed in blank, and stock powers duly endorsed in blank;
(D) Duly executed Guaranty and Suretyship
Agreements (collectively
the "Guaranty and Suretyship Agreements") of the Guarantors, in
the form attached hereto as
Exhibit G;
(E) Duly executed Environmental Indemnity
Agreement of the Borrower
and the Guarantors with respect to all real property owned or
leased by any of them.
(F) The Financing Statements and mortgagee
waivers required by
Section IV;
(G) Amendment to the Letter of Credit
Reimbursement Agreement in
form and substance satisfactory to the Banks and Pyron;
(H) Title insurance policies from a company or
companies satisfactory
to Banks which shall bind such companies to insure the Deed(s) of
Trust as first priority liens
subject only to the Letter of Credit Facility lien in the State
of New York, such matters as the
Banks approve in writing, and other matters shown on Exhibit C.
Such title policy shall also
contain such other endorsements as the Banks may reasonably
require.
(I) Environmental Phase I reports with respect to
all real properties
owned or leased by Borrower or any Participating Subsidiary
(other than Zemex's headquarters
lease in Toronto, Canada and Feldspar's lease in Atlanta,
Georgia) in form and substance
satisfactory to the Banks.
(J) A copy of resolutions of each Borrower's
board of directors,
certified by the corporate secretary or assistant secretary of
each Borrower as of the date of
Closing, authorizing the execution, delivery and performance of
this Agreement, the Notes, the
Collateral Documents, and each other document to be delivered
pursuant hereto;
(K) A copy of resolutions of each Participating
Subsidiary's board of
directors, certified as of the date of Closing by the secretary
of each of such corporations,
authorizing the execution, delivery and performance of any
documents to be delivered by such
corporation pursuant to this Agreement, including without
limitation any of the Collateral
Documents.
(L) A copy, certified as of the most recent date
practicable, by the
applicable Secretaries of State of each Borrower's and
Participating Subsidiary's Charter,
together with a certificate dated the date of the Closing of each
Borrower's corporate secretary
to the effect that such certificates of incorporation have not
been amended since the date of the
aforesaid Secretary of State certifications;
(M) A copy of each Borrower's by-laws certified
by each Borrower's
secretary as of the date of the Closing;
(N) A copy of the by-laws of each Participating
Subsidiary certified by
each Participating Subsidiary's secretary as of the date of
Closing;
(O) A certificate dated the date of the Closing
of each Borrower's
corporate secretary as to the incumbency and signatures of the
officers of each Borrower
executing this Agreement, the Notes, the Collateral Documents,
and each other document to be
delivered pursuant hereto;
(P) A certificate dated the date of the Closing
of each Participating
Subsidiary's corporate secretary as to the incumbency and
signatures of the officers of each of
such corporation executing any document to be delivered pursuant
hereto, including without
limitation any of the Collateral Documents.
(Q) Certificates, as of the most recent dates
practicable, of the aforesaid
Secretary of State and the Secretary of State of each state in
which a Borrower is qualified as
a foreign corporation as to the good standing of such Borrower;
(R) Certificates, as of the most recent date
practicable, of the
Secretaries of State in each state where each Participating
Subsidiary is organized and/or
qualified to do business as a foreign corporation as to the good
standing of each such
Participating Subsidiary;
(S) A written opinion of Messrs. Davis, Graham &
Stubbs, L.L.C.,
the Borrower's counsel, dated the date of the Closing and
addressed individually to each Bank,
in the form attached hereto as Exhibit H-1 and otherwise
satisfactory to the Banks.
(T) The written opinions of Messrs. Smith, Lyons,
Torrance,
Stevenson & Mayer and Messrs. Langlois Robert, the Canadian
counsel for Zemex Corporation
and Suzorite Mica Products Inc. Les Produits Mica Suzorite Inc.,
dated the date of the Closing
and addressed individually to each Bank, in the form attached
hereto as collective Exhibit H-2
and otherwise satisfactory to the Banks.
(U) A certificate, dated the date of the Closing,
signed by the president,
vice president, chief financial officer, or corporate controller
of the Borrower and to the effect
that:
(1) The representations and warranties set
forth within Section V
are true as of the date of the Closing;
(2) No Event of Default hereunder, and no
event which, with
the giving of notice or passage of time or both, would become
such an Event of Default, has
occurred as of such date;
(3) All of the Collateral Documents are and
shall remain in full
force and effect.
(V) Copies of all documents evidencing the terms
and conditions of any
debt specified as Subordinated Indebtedness on Exhibit D in form
and substance satisfactory to
Banks;
(W) A Federal Reserve Form (or Forms) U-1, duly
completed and
executed by the Borrower and each Pledgor.
3.2 Requirements for all Subsequent Disbursements. At
the Closing, and as
an express condition precedent after Closing to each disbursement
of any Loan, each of the
following shall be true and correct:
(A) As of the date thereof, no Event of Default
has occurred and is
continuing, and no Unmatured Default is in existence;
(B) The disbursement will be used only as
permitted in Paragraph 2.1,
2.2 and/or 2.3;
(C) No Material Adverse Change has occurred since
the date of the
Financial Statements or the date of the Closing, as applicable;
and
(D) All of the Collateral Documents remain in
full force and effect, and
Borrower has provided or caused to be provided such additional
Collateral Documents as
required by Paragraph 7.16.
If any of the foregoing statements is not true and correct in the
judgment of the Banks, then the
Banks shall have no obligation to fund the requested
disbursement. In addition, on each
requested disbursement of a Revolving Loan or Capital Expenditure
Loan, the Borrower shall
deliver to the Agent a true and accurate certificate together
with (or included within) any
Borrowing Notice, dated the date on which a Revolving Loan or
Capital Expenditure Loan
disbursement is to be made, signed by the president, vice
president, chief financial officer, or
corporate controller of the Borrower and certifying to the
foregoing.
3.3 Legal Matters. At the time of the Closing and
thereafter, all legal matters
incidental to the Loans shall be satisfactory to Banks and their
counsel.
SECTION IV. COLLATERAL SECURITY
4.1 Composition of the Collateral. The property in
which a security interest
is granted pursuant to the provisions of Paragraphs 4.2, 4.3 and
4.4 is herein collectively called
the "Collateral." The Collateral, together with all of the
Borrower's and any Participating
Subsidiary's other property of any kind, both real and personal,
held by, assigned to, mortgaged
to or conveyed in favor of the Banks, shall stand as one general,
continuing collateral security
for all Obligations and may be retained by the Agent and/or Banks
until all Obligations have
been satisfied in full.
4.2 Rights in Property Held by the Banks. As security
for the prompt
satisfaction of all Obligations and all Guaranties of the
Obligations, the Borrower and each
Participating Subsidiary hereby assign, transfer and set over to
the Banks all of their right, title
and interest in and to, and grant the Banks a lien on and a
security interest in, all amounts that
may be owing from time to time by the Banks to the Borrower or
such Participating Subsidiary
in any capacity, including, but without limitation, any balance
or share belonging to the
Borrower or such Participating Subsidiary of any deposit or other
account with the Banks, which
lien and security interest shall be independent of any right of
set-off which the Banks may have.
4.3 Rights in Property of the Borrower. As further
security for the prompt
satisfaction of all Obligations and all Guaranties of the
Obligations, the Borrower hereby assigns
to the Banks by and through the Agent all of its respective
right, title and interest in and to, and
grants the Banks a lien upon and security interest in, all of the
following, wherever located,
whether now owned or hereafter acquired, together with all
substitutions, replacements,
improvements, accessions or appurtenances thereto, and proceeds
(including without limitation
insurance proceeds) thereof:
(A) Accounts;
(B) Chattel Paper;
(C) Contract Rights;
(D) Documents;
(E) Equipment;
(F) Fixtures;
(G) General Intangibles;
(H) Instruments, including without limitation the
Zemex Note and
security given by Suzorite Mica Products Inc.
Les Produits Mica
Suzorite Inc. to secure the Zemex Note;
(I) Inventory;
(J) The Real Property described in Exhibit E-1;
(K) The Pledged Stock; and
(L) All Records pertaining thereto or to any
other Collateral.
4.4 Rights in Property of Certain Participating
Subsidiaries. As further
security for the prompt satisfaction of all Obligations and all
Guaranties of the Obligations, each
Participating Subsidiary other than Suzorite Mica Products Inc.
Les Produits Mica Suzorite Inc.
hereby assigns to the Banks by and through the Agent all of their
respective right, title and
interest in and to, and grants the Banks a lien upon and security
interest in, all of the following,
wherever located, whether now owned or hereafter acquired,
together with all substitutions,
replacements, improvements, accessions or appurtenances thereto,
and proceeds (including
without limitation insurance proceeds) thereof:
(A) Accounts;
(B) Chattel Paper;
(C) Contract Rights;
(D) Documents;
(E) General Intangibles;
(F) Instruments;
(G) Inventory;
(H) The Real Property described in Exhibit E-2;
and
(I) All Records pertaining thereto or to any
other Collateral.
4.5 Rights and Property of Suzorite Mica. As further
security for the prompt
satisfaction of its Guaranty and Suretyship Agreement, Suzorite
Mica Products Inc. Les Produits
Mica Suzorite Inc. hereby assigns to the Banks by and through the
Agent all of its respective
right, title and interest in and to, and grants the Banks a lien
upon and security interest in all of
the following, wherever located, whether now owned or hereafter
acquired, together with all
substitutions, replacements, improvements, accessions or
appurtenances thereto, and proceeds
(including without limitation insurance proceeds) thereof:
(A) Accounts;
(B) Chattel Paper;
(C) Contract Rights;
(D) Documents;
(E) General Intangibles;
(F) Instruments;
(G) Inventory;
(H) All Records pertaining thereto or to any
other Collateral.
4.6 Priority of Liens. The foregoing liens shall be
first and prior liens except
for any Permitted Liens on assets which have priority or would
have priority by the operation
of Laws.
4.7 Financing Statements.
(A) The Borrower and each Participating
Subsidiary will:
(1) Join with the Agent in executing such
additional Financing
Statements (including amendments thereto and continuation
statements thereof) in form
satisfactory to the Banks as the Banks may specify;
(2) Pay or reimburse the Banks for all costs
and taxes of filing
or recording the same in such public offices as the Banks may
designate, and reimburse the
Banks for performing subsequent verification searches following
Closing in Tennessee, Texas,
North Carolina, New York, Pennsylvania, Georgia and Florida only;
and
(3) Take such other steps as the Banks may
direct, including the
noting of the Banks' lien on the Collateral and on any
certificates of title therefor all to perfect
the Banks' security interest in the Collateral.
(B) A carbon, photographic, or other reproduction
of this Agreement
shall be sufficient as a financing statement and may be filed in
any appropriate office in lieu
thereof.
(C) To the extent lawful, the Borrower and each
Participating
Subsidiary hereby appoint the Agent as their attorney-in-fact
(without requiring the Agent to act
as such) to execute any Financing Statement in the name of the
Borrower or such Participating
Subsidiary, and to perform all other acts that the Agent deems
appropriate to perfect and
continue the Banks' security interest in, and to protect and
preserve, the Collateral.
4.8 Negotiation of Zemex Note. Simultaneously with
the execution of this
Agreement, Zemex Corporation has negotiated the Zemex Note to
Agent by endorsing the
Zemex Note to the order of Agent (without restriction or
qualification) and delivering the Zemex
Note together with all collateral documents securing the payment
of same to Agent on behalf of
the Banks. Agent shall retain possession of the Zemex Note to
perfect the security interest of
the Banks therein. Following the occurrence of any Event of
Default and for so long as such
Event of Default remains uncured, upon demand of the Majority
Banks the Agent may direct
the obligor of the Zemex Note to send all payments made under the
Zemex Note and to send
all notices pertaining to the Zemex Note or the collateral
securing payment of same directly and
exclusively to the Agent on behalf of the Banks as the Agent may
specify.
4.9 Collection of Receivables. Following the
occurrence of any Event of
Default and for so long as such Event of Default remains uncured,
upon demand of the Majority
Banks, Borrower and each Participating Subsidiary shall deposit
or cause to be deposited, all
checks, drafts, cash, and other remittances received in payment
of services rendered or inventory
sold or in payment or on account of its accounts, immediately
upon receipt thereof with Agent
in a special "lockboxed" bank account maintained with Agent, over
which the Majority Banks
alone have power of withdrawal. The funds in said special bank
account shall be held by the
Banks as security for all loans made hereunder and all other
Obligations of Borrower to the
Banks secured hereby. Said proceeds shall be deposited in
precisely the form received, except
for the endorsement of Borrower and each Participating Subsidiary
where necessary to permit
collection, which endorsement Borrower and each Participating
Subsidiary agree to make and
which Agent also hereby is irrevocably authorized to make on
their behalf. Pending such
deposit, Borrower and each Participating Subsidiary agree that
they will not commingle any such
checks, drafts, cash, and other remittances with any of their
funds or property, but will hold
them separate and apart therefrom and upon an express trust for
the Banks until deposit thereof
is made in the said special bank account. At least twice weekly,
Agent will apply the whole or
any part, as the Majority Banks deem appropriate, of the
collected funds on deposit in the said
special bank account against the principal and/or interest of any
loans made hereunder and/or
on Borrower's other Obligations secured hereby, the order and
method of such application to
be in the discretion of the Majority Banks. Any portion of said
funds on deposit in the special
bank account that the Majority Banks elect not to apply will be
paid over by Agent to Borrower.
4.10 Mortgagees' and Landlords' Waivers; Georgia
Processing Plant.
(A) At the request of the Majority Banks, the
Borrower will cause each
mortgagee of all real estate owned by the Borrower or any
Participating Subsidiary, and each
landlord of all premises leased by the Borrower or any
Participating Subsidiary, to execute and
deliver to the Agent instruments, in form and substance
satisfactory to the Banks, by which such
mortgagee or landlord waives its rights, if any, to any portion
of the Collateral located on such
premises, and agrees to provide Agent notice of and an
opportunity to cure any default by
Borrower or such Participating Subsidiary under such mortgage or
lease.
(B) Upon Borrower's either acquiring the
Monticello, Georgia land on
which its operating plant is located or upon Borrower's
renegotiating a new lease term for said
site, Borrower shall immediately notify each Bank and provide to
each Bank a copy of the
applicable deed and/or lease. Thereafter, Borrower agrees to
execute and deliver to the Agent
on behalf of the Banks a Georgia form of deed to secure debt in
the form previously delivered
to Bank on the other Monticello, Georgia property which deed to
secure debt will encumber
Borrower's fee simple and/or leasehold interest in the plant, as
applicable. Borrower agrees that
such deed to secure debt shall be delivered as soon as
practicable after Borrower resolves its title
issues by either acquiring fee simple title or executing a new
lease, but in no event later than
sixty (60) days after Borrower's acquisition of the fee simple
title and/or execution of a written
lease.
SECTION V. REPRESENTATIONS AND WARRANTIES
To induce the Banks to enter into this Agreement, the
Borrower and each
Participating Subsidiary jointly and severally represent and
warrant to each Bank as follows:
5.1 Due Organization and Qualification. Zemex
Corporation is a corporation
duly organized, validly existing and in good standing under the
Laws of the State of Delaware
and The Feldspar Corporation is a corporation duly organized,
validly existing and in good
standing under the Laws of the State of North Carolina; 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 I; the Borrower 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 Borrower and
each Participating Subsidiary are
qualified to do business are set forth in Exhibit I; the
percentage of the Borrower's ownership
of the outstanding stock of each Participating Subsidiary is as
listed in Exhibit I; and the
addresses of all places of business of the Borrower and each
Participating Subsidiary are as set
forth in Exhibit J;
5.2 No Conflicting Agreement. Neither the Borrower
nor any Participating
Subsidiary is in default with respect to any of its existing
Indebtedness, and the making and
performance of this Agreement, the Notes and the Collateral
Documents will not (immediately,
or with the passage of time or the giving of notice, or both):
(1) Violate the charter or bylaw provisions
of the Borrower or
any Participating Subsidiary, or violate any Laws, or result in a
default under any material
contract, agreement, or instrument to which the Borrower or any
Participating Subsidiary is a
party or by which the Borrower or any Participating Subsidiary or
its property is bound; or
(2) Result in the creation or imposition of
any security interest
in, or lien or encumbrance upon, any of the assets of the
Borrower or any Participating
Subsidiary, except in favor of the Banks;
5.3 Capacity. The Borrower and each Participating
Subsidiary have the power
and authority to enter into and perform this Agreement, the Notes
and the Collateral Documents,
as applicable, and to incur the Obligations herein and therein
provided for, and have taken all
corporate action necessary to authorize the execution, delivery,
and performance of this
Agreement, the Notes and the Collateral Documents;
5.4 Binding Obligations. This Agreement and the
Collateral Documents are,
and the Notes when delivered will be, valid, binding, and
enforceable in accordance with their
respective 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;
5.5 Pledged Stock. The Pledgor owns the Pledged
Stock; the Pledged Stock
constitutes one hundred percent (100%) of the issued and
outstanding capital stock of the
respective issuers thereof; and the Pledged Stock has been duly
issued, is fully paid and
non-assessable, and is free of all claims, security interests,
liens, charges and encumbrances;
5.6 Litigation. Except as disclosed in Exhibit K
hereto, there is no pending
or threatened order, notice, claim, litigation, proceeding or
investigation against or affecting the
Borrower 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;
5.7 Title. The Borrower and its Participating
Subsidiaries have good and
marketable title to all of their respective material assets,
including without limitation the
Collateral and the Real Property, subject to no security
interest, encumbrance or lien, or the
claims of any other Person except for Permitted Liens;
5.8 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 Borrower 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 Borrower and its Participating
Subsidiaries from December 31, 1993
to the date hereof;
5.9 No Additional Indebtedness. As of the date
hereof, the Borrower 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 Agreement; the Borrower
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;
5.10 Taxes. Except as otherwise permitted herein, the
Borrower 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 Borrower has no knowledge of any deficiency or
additional assessment in
connection with any taxes, assessments or charges not provided
for on its books;
5.11 Compliance with Laws. Except as otherwise
disclosed in Exhibit L hereto,
or except to the extent that the failure to comply would not
materially interfere with the conduct
of the business of the Borrower or any Participating Subsidiary
or have a Material Adverse
Effect, the Borrower and its Participating Subsidiaries have
complied with all applicable Laws
with respect to: (1) any restrictions, specifications, or other
requirement pertaining to services
that the Borrower 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;
5.12 Environmental Compliance. The Borrower and its
Participating
Subsidiaries and their respective assets and operations are in
compliance in all material respects
with all Environmental Laws, except as may be disclosed on
Exhibit N. Except as has been
disclosed on Exhibit N, all plants, facilities and properties of
the Borrower 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 except as otherwise disclosed in the Environmental
Indemnity Agreement; 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
Borower's knowledge, have
been used, stored, treated or disposed of in violation of
applicable Laws and regulations.
Neither the Borrower 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 Borrower 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 Paragrah 6.14.
5.13 Full Disclosure. No representation or warranty by
the Borrower or any
Participating Subsidiary contained herein or in any certificate
or other document furnished by
the Borrower or any Participating Subsidiary pursuant to this
Agreement 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;
5.14 Consents. Each consent, approval or authorization
of, or filing,
registration or qualification with, any Person required to be
obtained or effected by the Borrower
or any Participating Subsidiary in connection with the execution
and delivery of the Loan
Documents or the undertaking or performance of any obligation
thereunder has been duly
obtained or effected;
5.15 Existing Borrowings. All existing Indebtedness:
(1) for money borrowed;
or (2) under any security agreement or mortgage from the Borrower
or any Participating
Subsidiary is described in Exhibit C, unless the same are less
than $25,000.00 in amount;
5.16 Material Contracts. Except as described on
Exhibit M hereto, the
Borrower 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
Borrower's Annual Report on Form 10-K; all parties (including the
Borrower and Participating
Subsidiaries) to all such material leases, contracts and other
commitments to which the Borrower
or any Participating Subsidiary is a party have to the best of
Borrower'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;
5.17 Zemex Note. Zemex Corporation is the lawful
holder and owner of the
Zemex Note and is the beneficiary of the collateral securing the
payment of same, free and clear
of all liens and encumbrances except the lien of this Agreement.
The Zemex Note and the
collateral documents securing same are valid and binding
according to their terms, and the
indebtedness evidenced by the Zemex Note is not subject to any
defense or setoff. As of the
date of this Agreement, the principal balance outstanding under
the Zemex Note is Seven Million
Five Hundred Thousand Dollars (CDN $7,500,000.00).
5.18 No Commissions. Neither the Borrower 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;
5.19 ERISA. All Defined Benefit Pension Plans, as
defined in the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), of
the Borrower 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.
5.20 Survival. All of the representations and
warranties set forth in Section V
shall survive until all Obligations are satisfied in full.
SECTION VI. AFFIRMATIVE COVENANTS
The Borrower does hereby covenant and agree with each
Bank that, so long as
any of the Obligations remain unsatisfied, it will comply, and it
will cause its Participating
Subsidiaries to comply, with the following covenants:
6.1 Use of Proceeds. The Borrower will use the
proceeds of each of the
respective Loans only for the purposes permitted in Paragraphs
2.1, 2.2 and 2.3, as applicable,
and will furnish the Agent such evidence as it may reasonably
require with respect to such use.
6.2 Financial Statements and Reports. The Borrower
will furnish the Banks:
(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
Borrower and its Participating Subsidiaries the following: (1) a
consolidated statement of cash
flows of the Borrower and its Participating Subsidiaries for such
quarter annual period; (2)
consolidated and consolidating income statements of the Borrower
and its Participating
Subsidiaries for such quarter-annual period; and (3) consolidated
and consolidating balance sheets
of the Borrower 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 Borrower'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 Borrower
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 Zemex
Corporation and its Subsidiaries: (a) consolidated statements of
cash flows of Zemex
Corporation and its Subsidiaries for such fiscal year; (b)
consolidated and consolidating income
statements of Zemex Corporation and its Subsidiaries for such
fiscal year; and (c) consolidated
and consolidating balance sheets of Zemex Corporation 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 Borrower and
reasonably acceptable to the
Banks, and certified by such accountants to have been prepared in
accordance with generally
accepted accounting principles consistently applied by Zemex
Corporation and its Subsidiaries,
except for any inconsistencies explained in such certificate, and
the consolidating statements shall
be internally prepared by Borrower's financial officer and
certified to each Bank as presenting
fairly in all material respects the financial condition of Zemex
Corporation and its Subsidiaries.
The Banks shall have the right, from time to time, to discuss the
Borrower's affairs directly with
the Borrower's independent certified public accountants after
notice to the Borrower and
opportunity of the Borrower to be present at any such
discussions. In addition, if at anytime the
assets, revenues and net income of both the Borrower and its
Participating Subsidiaries do not
account for ninety percent (90%) or more of the consolidated
assets, consolidated revenues and
consolidated net income of Zemex Corporation and its
Subsidiaries, then within ninety (90) days
after the close of each fiscal year, the Borrower shall also
furnish to the Banks the following:
(a) consolidated statements of cash flows of the Borrower and its
Participating Subsidiaries for
such fiscal year; (b) consolidated and consolidating income
statements of the Borrower and its
Participating Subsidiaries for such fiscal year; and (c)
consolidated and consolidating balance
sheets of the Borrower 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 Borrower and
reasonably acceptable to the Banks, and
certified by such accountants to have been prepared in accordance
with generally accepted
accounting principles consistently applied by the Borrower and
its Participating Subsidiaries,
except for any inconsistencies explained in such certificate, and
the consolidating statements shall
be internally prepared by Borrower's financial officer and
certified to each Bank as presenting
fairly in all material respects the financial condition of the
Borrower 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
Borrower and its Participating Subsidiaries, a certificate of the
president, vice president, chief
financial officer or corporate controller of the Borrower stating
that: (i) such officer has
individually reviewed the provisions of this Agreement; (ii) a
review of the activities of the
Borrower 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 Borrower has fulfilled all its
obligations under this Agreement; and (iii)
to the best of such officer's knowledge, the Borrower has
observed and performed each
undertaking contained in this Agreement and is not in default in
the observance or performance
of any of the provisions hereof or, if the Borrower 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 Paragraph 7.4 and 7.12,
(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 Paragraph 6.17,
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 The Feldspar Corporation and
each of the Participating
Subsidiaries compared to budget for the prior month in form
satisfactory to the Banks.
(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
Borrower sends or makes available to its stockholders and all
registration statements and reports
that the Borrower files with the Securities and Exchange
Commission or any successor Person;
and
(F) Immediately upon receipt of the same by
Borrower or any
Participating Subsidiary, copies of all final management letters
and any other reports which are
submitted to the Borrower or any of its Participating
Subsidiaries by its independent accountants
in connection with any annual or interim audit of the Records of
the Borrower or its
Participating Subsidiaries by such accountants.
6.3 Good Condition. The Borrower and its
Participating Subsidiaries will
maintain their respective Inventory, Equipment, Real Property 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 Real
Property. The Borrower hereby agrees that, in the event it or
any Participating Subsidiary fails
to pay or cause to be paid any such payment, the Banks may do so
and be reimbursed by the
Borrower therefor.
6.4 Insurance. The Borrower 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
Banks. Such policies shall name
the Banks as loss payees under a standard mortgagee loss payee
clause and as an additional
insured, as their interests may appear, and shall contain a
provision whereby they cannot be
cancelled except after thirty (30) days' written notice to the
Agent. The Borrower will furnish
to the Agent such evidence of insurance as the Banks may require.
The Borrower 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 Banks may do so and be reimbursed by
the Borrower therefor. The
Agent is hereby appointed the Borrower's attorney-in-fact
(without requiring the Agent to act
as such) to endorse any check which may be payable to the
Borrower to collect such returned
or unearned premiums or the proceeds of such insurance, and any
amounts so collected may be
applied by the Agent toward satisfaction of any of the
Obligations.
6.5 Taxes. The Borrower 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 Banks. The Borrower 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.
6.6 Records and Inspection. The Borrower and its
Participating Subsidiaries
will, when requested so to do, make available any of their
Records for inspection by duly
authorized representatives of the Banks, and will furnish the
Banks any information regarding
their business affairs and financial condition within a
reasonable time after written request
therefor.
6.7 Maintenance of Existence and Business. The
Borrower 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 Borrower 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.
6.8 Ordinary Course. The Borrower and its
Participating Subsidiaries will
keep accurate and complete Records of their Accounts, Inventory
and Equipment, consistent with
sound business practices. The Borrower and its Participating
Subsidiaries will collect their
Accounts and sell their Inventory only in the ordinary course of
business.
6.9 Copies of Tax Returns. Within ten (10) days of
any Bank's request
therefor, the Borrower will furnish the Banks with copies of
federal income tax returns filed by
the Borrower.
6.10 Payment of Indebtedness. The Borrower 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
Banks. If default is made by the
Borrower or any Participating Subsidiary in the payment of any
principal (or installment thereof)
of, or interest on, any such Indebtedness, the Banks shall have
the right, in their discretion, to
pay such interest or principal for the account of the Borrower or
such Participating Subsidiary
and be reimbursed by the Borrower therefor.
6.11 Notice of Litigation. The Borrower and its
Participating Subsidiaries will
give immediate notice to the Agent 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.
6.12 Notice to Banks of Default or Prepayment. The
Borrower and its
Participating Subsidiaries will notify each 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 Borrower or any Participating Subsidiary to observe any of
their respective undertakings
hereunder. Zemex Corporation will immediately notify the Banks
in writing if a default occurs
under the Zemex Note. In addition, Zemex Corporation will notify
the Banks immediately if
a prepayment is made on the Zemex Note.
6.13 Notice of Name Change or Location. The Borrower
and its Participating
Subsidiaries will notify each Bank thirty (30) days in advance of
any change in (i) the name of
the Borrower 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.
6.14 Environmental Compliance.
(A) Borrower 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 Real Property),
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 N. The Borrower 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
Borrower and its Participating
Subsidiaries from all contractors employed by the Borrower or any
of its Participating
Subsidiaries in connection with the transport or disposal of any
Hazardous Materials.
(B) In the event that the Banks have reason to
believe that any Borrower
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 Banks or their agents shall
have the right, but no obligation, at any time during business
hours and upon reasonable written
notice, to enter upon the Real Property or any other property
operated by a Borrower 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
Borrower's sole expense and if such Phase I audit (or update)
recommends further testing, then
the Banks or their agents may require, but shall not be obligated
to require, upon reasonable
written notice, such further testing at Borrower's sole expense.
The Banks or their agents shall
use their best efforts to invoke and maintain all applicable
privileges over all audit information
generated pursuant to this provision.
6.15 Notice of Environmental Action. If the Borrower
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 Borrower 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
Borrower or any of its Participating
Subsidiaries alleging any material violation of any Environmental
Laws or requiring the
Borrower or any of its Participating Subsidiaries to take any
action in connection with the release
or threatened release of Hazardous Substances 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 Borrower
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 Agent and each Bank with a copy of such
notice within ten (10)
Business Days of the Borrower's or such Participating
Subsidiary's receipt thereof. Subject to
the right of the Borrower or any Participating Subsidiary to
contest in good faith any such
actions or proceedings, the Borrower 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 Banks. The Borrower shall
reasonably monitor compliance
with Environmental Laws by any and all owners or operators of
real property owned or leased
by a Borrower or any Participating Subsidiary.
6.16 ERISA Compliance. The Borrower 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 Banks, 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 Banks of
the occurrence of any Reportable
Event or Prohibited Transaction with respect to any such Plan.
6.17 Financial Ratios. Unless the Majority Banks
otherwise agree in writing,
the Borrower 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.
SECTION VII. NEGATIVE COVENANTS
Borrower and each Participating Subsidiary hereby
covenant and agree that
without the prior written consent of the Majority Banks:
7.1 Merger or Reorganization. No Borrower or
Participating Subsidiary will
enter into any merger, consolidation, reorganization or
recapitalization; provided, The Feldspar
Corporation or any Participating Subsidiary may merge into Zemex
Corporation or into The
Feldspar Corporation or any Participating Subsidiary (but not a
Nonparticipating Subsidiary)
provided the Banks are given not less than thirty (30) days prior
written notice thereof and
provided the surviving entity is a Borrower or a Participating
Subsidiary which is a party to this
Agreement.
7.2 Sale of Assets. No Borrower or Participating
Subsidiary will sell, transfer,
lease or otherwise dispose of all or any material part of its
assets; provided, however, Borrower
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 Banks agree that:
(A) The Feldspar Corporation may sell all or
substantially all of its
Spruce Pine, North Carolina assets free and clear of all liens
held by the Banks, provided that
simultaneously therewith: (1) the Borrower pays in full the
Capital Expenditure Loan; (2) not
less than one-half (50%) of the remaining Net Cash Sales
Proceeds, if any, are applied to the
Revolving Loans and Working Capital Loan pro rata in accordance
with the amount of the
Revolving Loan Commitment and the Working Capital Commitment,
with each such
Commitment to be permanently reduced by the amount so applied
(provided, if proceeds are
sufficient to more than payoff in full either Loan, then the
Commitments shall be reduced as
herein set forth but the excess proceeds shall be applied to that
Loan with an outstanding
balance); and (3) any purchase money notes or other instruments
arising from the sale are
pledged to the Banks hereunder on a first lien basis;
(B) the Pyron Corporation may sell all or
substantially all of its assets
free and clear of all liens held by the Banks, provided that
simultaneously therewith: (1) the
Borrower provides for the complete termination of the Letter of
Credit Facility; (2) not less than
one-half (50%) of the remaining Net Cash Sales Proceeds, if any,
are applied to the Revolving
Loans and the Working Capital Loan pro rata in accordance with
the then outstanding amount
of the Revolving Loan Commitment and the Working Capital
Commitment, with each such
Commitment to be permanently reduced by the amount so applied
(provided, if proceeds are
sufficient to more than payoff in full either Loan, then the
Commitments shall be reduced as
herein set forth but the excess proceeds shall be applied to that
Loan with an outstanding
balance); and (3) any purchase money notes or other instruments
arising from the sale are
pledged to the Banks hereunder on a first lien basis; and
(C) The Feldspar Corporation may sell all or
substantially all of its
Monticello, Georgia assets or its Edgar, Florida and/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 free and clear of all
liens held by the Banks, provided that simultaneously therewith:
(1) not less than one-half
(50%) of the Net Cash Sales Proceeds are applied to the Loans and
to permanently reduce the
Commitments as determined by the Banks in their discretion; and
(2) any purchase money notes
or other instruments arising from such a sale are pledged to the
Banks hereunder on a first lien
basis.
7.3 Encumbrances. No Borrower or 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 Banks) not to
mortgage, pledge, or grant a security
interest in or a lien upon their assets.
7.4 Debts and Other Obligations. No Borrower or
Participating Subsidiary
will incur, create, assume, or permit to exist any Indebtedness
except: (1) the Loans;
(2) existing Indebtedness as set forth in Exhibit C; (3) trade
Indebtedness incurred in the
ordinary course of business; (4) contingent Indebtedness
permitted by Paragraph 7.9; (5)
Indebtedness, including Permitted Acquisition Indebtedness,
secured by Permitted Liens; (6)
Indebtedness owed by any Participating Subsidiary of the Borrower
to a Borrower or by a
Borrower to any Participating Subsidiary of the Borrower,
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 Paragraph 7.5; and (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).
7.5 Leases. The Borrower 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 a an
operating lease other than a Mineral Lease which is not reflected
on a consolidated balance sheet
of the Borrower and its Participating Subsidiaries and should not
be so reflected under generally
accepted accounting principles consistently applied.
7.6 Untrue Certificate. No Borrower or Participating
Subsidiary will furnish
the Agent 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.
7.7 Margin Stock. No Borrower or 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.
7.8 Sale-Leaseback. No Borrower or Participating
Subsidiary will enter into
any sale-leaseback transaction.
7.9 Guarantee Obligation. No Borrower or
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 Zemex
Corporation of the Letter of
Credit Reimbursement Agreement, (4) 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 (5)
leases with the Borrower or
a Participating Subsidiary permitted under Paragraph 7.5.
7.10 Dividends and Distributions. Zemex Corporation
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.
7.11 Redemptions and Capital Stock. Zemex Corporation
will not redeem,
purchase or retire any of its capital stock.
7.12 Prepayments. No Borrower or 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.
7.13 Subsidiary. No Borrower or 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 Paragraph 7.16
below, (3) advances by the Borrower to Participating Subsidiaries
of the Borrower, and (4)
advances by Participating Subsidiaries of the Borrower to the
Borrower.
7.14 Loans and Advances. No Borrower or Participating
Subsidiary will make
any loan or advance to any officer, shareholder, director or
employee of a Borrower 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 Zemex Corporation under The Key
Employee Stock Purchase Plan.
7.15 Investments. No Borrower or 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.
7.16 Acquisitions. No Borrower or 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 Banks; provided however, with respect to any permitted
acquisition (hereinafter a
"Permitted Acquisition"), Zemex Corporation may acquire either
all of the stock or assets of
such Person and The Feldspar Corporation or any Participating
Subsidiary may acquire the assets
of or merge with such Person (provided the Participating
Subsidiary or The Feldspar
Corporation is the surviving entity) without obtaining the Banks'
approval if:
(A) Not less than ten (10) Business Days prior to
entering into a binding
agreement to make any Permitted Acquisition, Borrower shall
submit to each of the Banks the
following information: (1) A copy of the signed letter of intent
and a current draft of the
acquisition agreement with any prepared exhibits, including
seller financing documents; (2) 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; (3) If applicable, historical financial
statements of the Permitted Acquisition
for the prior two years and the most recent interim statement;
(4) Copy of acquisition analysis
done by Borrower 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 Banks) 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 Banks;
(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 Banks have been requested
to disburse funds,
if such Permitted Acquisition is to become a party hereto and a
Participating Subsidiary, the
Borrower must pledge or cause to be pledged to the Agent for the
benefit of the Banks 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 Banks 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 Banks and
the Agent's respective counsel.
7.17 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 Borrower nor any Participating
Subsidiary will make or incur Capital
Expenditures without the prior approval of Majority Banks 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.
7.18 Affiliate Transactions. Except as described on
Exhibit M hereto, Borrower
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 Borrower) on
terms that are less favorable
to the Borrower or its Participating Subsidiaries than those that
would be obtainable at the time
from any Person who is not an Affiliate. Notwithstanding the
foregoing, Borrower 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, Zemex Corporation 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 the
prior written consent of the Banks, nor will Zemex Corporation or
Suzorite Mica Products Inc.
Les Produits Mica Suzorite Inc. release or allow to be released
any collateral for the Zemex
Note.
7.19 Restricted Payment Negative Covenants.
Notwithstanding the provisions
of Paragraphs 7.9 through 7.18 above (collectively, the
"Restricted Payment Negative
Covenants"), provided there is no Event of Default or Unmatured
Default in existence under this
Agreement and except as hereinafter set forth, the Borrower or
any Participating Subsidiary
may, without the consent or approval of the Banks, 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 Paragraph 6.2(C) above; provided, the foregoing shall
not apply to subparagraph
7.9(4), which is not intended to be a Restricted Payment Negative
Covenant; and provided
further, with respect to Paragraphs 7.13, 7.15 and 7.16, if any
borrowings are outstanding under
the Revolving Loans at such time, any cash investments in any
single entity or Nonparticipating
Subsidiary shall be limited under all circumstances to a maximum
of Five Million and
No/Dollars ($5,000,000.00) over any period of twelve (12)
consecutive months.
SECTION VIII. DEFAULT
8.1 Events of Default. The occurrence of any one or
more of the following
events shall constitute an "Event of Default" hereunder:
(A) The Borrower shall fail to pay within two (2)
days of the date when
due any installment of principal or interest payable hereunder,
or shall fail to pay within ten (10)
days of written notice any fee payable hereunder.
any of the financial covenants contained in
Paragraph 6.17.
(C) Any Borrower, Participating Subsidiary, or
Pledgor shall fail to
observe or perform any obligation or covenant to be observed or
performed by any of them,
jointly or severally, under any of the Loan Documents; provided,
however, if such failure is not
related to the payment of money, the breach of a financial
covenant contained in Paragraph 6.17,
or the breach of any negative covenant in Section VII, Borrower
shall have ten (10) days to cure
such failure before the Majority Banks and/or Agent exercise the
rights and remedies hereunder,
with such ten (10) day period commencing after notice of such
failure from the Agent or Banks.
(D) Any Borrower or Participating Subsidiary
shall fail to pay any
Indebtedness for borrowed money (whether direct or indirect,
including guarantees of borrowed
money due from Nonparticipating Subsidiaries) due any Person and
such failure shall continue
beyond any applicable grace period and shall equal or exceed,
either individually or in the
aggregate, Two Hundred Fifty Thousand Dollars ($250,000.00) in
amount.
(E) Any Borrower or Participating Subsidiary
shall suffer a Material
Adverse Effect from any event of default arising under any
agreement binding a Borrower or
such Participating Subsidiary.
(F) Any financial statement, representation,
warranty or certificate
made or furnished by any Borrower or Participating Subsidiary to
the Agent or any Bank in
connection with this Agreement or the Loans, or as inducement to
the Banks to enter into this
Agreement, or in any separate statement or document to be
delivered hereunder to the Agent or
any Bank, shall be materially false, incorrect, or incomplete
when made.
(G) Any Borrower or Participating Subsidiary
shall admit its inability
to pay its debts as they mature, or shall make an assignment for
the benefit of its or any of its
creditors.
(H) Proceedings in bankruptcy, or for
reorganization of any Borrower
or Participating Subsidiary, or for the readjustment of any of
their respective debts, under the
United States Bankruptcy Code, as amended, or any part thereof,
or under any other Laws,
whether state or federal, for the relief of debtors, now or
hereafter existing, shall be commenced
by any Borrower or Participating Subsidiary, or shall be
commenced against any Borrower or
Participating Subsidiary.
(I) A receiver or trustee shall be appointed for
any Borrower or
Participating Subsidiary or for any substantial part of their
respective assets, or any proceedings
shall be instituted for the dissolution or the full or partial
liquidation of any Borrower or
Participating Subsidiary, or any Borrower or Participating
Subsidiary shall discontinue business
or materially change the nature of its business.
(J) Any Borrower or Participating Subsidiary
shall suffer final
judgments for payment of money aggregating in excess of Two
Hundred Thousand Dollars
($200,000.00) and shall not discharge the same within a period of
thirty (30) days unless,
pending further proceedings, execution has been effectively
stayed.
(K) A judgment creditor of any Borrower or
Participating Subsidiary
shall obtain possession of any Collateral or other assets by any
means, including, but without
limitation, levy, distraint, replevin or self-help.
(L) Any obligee of Subordinated Indebtedness
shall fail to comply with
the subordination provisions of the instruments evidencing such
Subordinated Indebtedness.
(M) Pyron Corporation shall default under the
Letter of Credit Facility
or the Letter of Credit Reimbursement Agreement.
(N) Any Borrower or Participating Subsidiary
shall default in any other
Indebtedness (excluding the Obligations) owed to the Banks, or
any of them, or under any other
agreements for credit or borrowed money it may have with any
Bank, jointly or severally,
directly or indirectly, whether matured or unmatured.
(O) The occurrence of a Change of Control.
8.2 Acceleration. Upon the occurrence of any of such
Events of Default, the
Majority Banks may, at their option, immediately terminate the
obligation to make any further
advances under the respective Commitments and/or declare the
principal and interest accrued
on the Notes and all other Obligations to be immediately due and
payable, whereupon the same
shall become forthwith due and payable, without presentment,
demand, protest, or any notice
of any kind except as set forth above; provided, that in the case
of the Events of Default
specified in clause (G), (H) or (I) above with respect to
Borrower, without any notice to
Borrower or any act by Agent or the Banks, the Commitments shall
thereupon terminate and the
Notes and all other Obligations shall become immediately due and
payable without presentment,
demand, protest or other notice of any kind, all of which are
waived by the Borrower. In
addition, and regardless of whether the Notes have been
accelerated, the Majority Banks may
upon the occurrence of any Event of Default elect to charge
interest at the Default Rate set forth
in the Notes.
8.3 Remedies. After any acceleration, as provided for
in Paragraph 8.2, the
Banks shall have, in addition to the rights and remedies given it
by the Loan Documents, all
those allowed by all applicable Laws, including, but without
limitation, the UCC as enacted in
any jurisdiction in which any Collateral may be located. Without
limiting the generality of the
foregoing, the Banks may immediately, without demand of
performance and without other notice
(except as specifically required by the Loan Documents) or demand
whatsoever to the Borrower,
all of which are hereby expressly waived, and without
advertisement, sell at public or private
sale, in any manner and at any location authorized by Laws, or
otherwise realize upon, the
whole or, from time to time, any part of the Collateral, or any
interest which the Borrower may
have therein. After deducting from the proceeds of sale or
other disposition of the Collateral
all expenses (including all reasonable expenses for legal
services), the Banks shall apply such
proceeds toward the satisfaction of the Obligations. Any
remainder of the proceeds after
satisfaction in full of the Obligations shall be distributed as
required by applicable Laws. Notice
of any sale or other disposition shall be given to the Borrower
at least five (5) days before the
time of any intended public sale or of the time after which any
intended private sale or other
disposition of the Collateral is to be made, which the Borrower
hereby agrees shall be reasonable
notice of such sale or other disposition. The Borrower agrees to
assemble, or to cause to be
assembled, at its own expense, the Collateral at such place or
places as the Banks shall
designate. At any such sale or other disposition, the Banks may,
to the extent permissible under
applicable Laws, purchase the whole or any part of the
Collateral, free from any right of
redemption on the part of the Borrower, which right is hereby
expressly waived and released.
Without limiting the generality of any of the
rights and remedies conferred
upon the Banks under this Paragraph 8.3, the Banks may, to the
full extent permitted by
applicable Laws:
(A) Engage independent appraisers and field
examiners, reasonably
acceptable to the Borrower, to conduct appraisals and field
examinations of the real properties,
leasehold interest, fixtures, machinery, equipment, inventory and
accounts receivable owned by
Borrower and/or any of its Participating Subsidiaries, with all
of the reasonable costs of such
appraisals and field examinations to be paid by Borrower or, if
paid by the Banks, reimbursed
to the Banks by Borrower upon demand of the Banks. All such
field examinations and
appraisals shall be conducted in accordance with Agent's
guidelines for such appraisals and field
examinations at the time, and Borrower and each Participating
Subsidiary hereby agree that such
guidelines are reasonable;
(B) Enter upon the premises of the Borrower,
exclude therefrom the
Borrower, any Subsidiary or any Affiliate thereof, and take
immediate possession of the
Collateral, either personally or by means of a receiver appointed
by a court of competent
jurisdiction, using all necessary and lawful self-help to do so;
(C) At the Banks' option, use, operate, manage
and control the
Collateral in any lawful manner;
(D) Collect and receive all receivables, rents,
income, revenue,
earnings, issues and profits therefrom; and
(E) Maintain, repair, renovate, alter or remove
the Collateral as the
Banks may determine in their discretion.
SECTION IX. THE AGENT
This Section IX is between and among the Agent and the
Banks only. Neither
the Borrower nor any other creditor of the Borrower shall have
any rights under this section,
whether as a third party beneficiary or otherwise, and this
section may be amended by the Agent
and the Banks acting alone.
9.1 Authorization. Each Bank authorizes the Agent to
act on behalf of such
Bank or holder to the extent provided herein or in any document
or instrument delivered
hereunder or in connection herewith and signed by such Bank, and
to take such other action as
may be reasonably incidental thereto. The Agent shall be
considered as acting solely in an
administrative and ministerial capacity, not as trustee or other
fiduciary of the Banks. The
Agent shall not be construed as having any agency or fiduciary
relationship with the Borrower.
The Agent shall not have any duties or obligations to the Banks
other than those expressly
provided for herein. The Agent shall not be required to exercise
any discretion or take any
action, but shall be fully protected in so acting or in
refraining from acting, upon the instructions
of the Majority Banks (except as otherwise provided in Paragraph
10.3, for matters which
require the consent of all Banks), and such instructions shall be
binding upon all Banks and
holders of the Notes, and the Agent shall not be liable to any
party hereto for any consequence
of any such action or refraining from action. Notwithstanding
any instructions of the Majority
Banks, the Agent shall not be required to take any action that
exposes the Agent to personal
liability or that is contrary to any loan document or applicable
law.
9.2 Standard of Care. Neither the Agent nor any of
its officers, directors,
agents, employees or representatives shall be liable for any
action taken or omitted to be taken
by it or any of them under or in connection with this Agreement,
except for its or their own
gross negligence or willful misconduct. Without limitation of
the generality of the foregoing,
the Agent: (a) may treat the payee of any Notes as the holder
thereof and as a Bank hereunder
until the Agent receives written notice of the assignment or
transfer thereof signed by such payee
and in form satisfactory to the Agent (which notice shall be
binding on all parties hereto); (b)
may consult with legal counsel, independent public accountants
and other experts and advisors
selected by it and shall not be liable for any action taken or
omitted to be taken in good faith
by it in accordance with the advice of such counsel, accountants,
experts or other advisors; (c)
makes no warranty or representation to any Bank and shall not be
responsible to any Bank for
any statements, warranties or representations made in or in
connection with this Agreement or
for any failure or delay in performance by the Borrower or any
Bank under this Agreement;
(d) shall not have any duty to ascertain or to inquire as to the
performance or observance of any
of the terms, covenants or conditions of this Agreement; (e)
shall not be responsible to any Bank
for the due execution, legality, validity, enforceability,
perfection, collectability, genuineness,
sufficiency or value of this Agreement, the Notes, or any other
instrument or document
furnished pursuant thereto or for the accuracy or completeness of
any credit or other information
provided to the Banks; (f) shall incur no liability under or in
respect of this Agreement by acting
upon any notice, consent, certificate or other instrument or
writing (which may be by telecopier,
telegram, cable or telex) believed by it to be genuine and signed
or sent by the proper party or
parties; and (g) shall incur no liability for relying upon any
matters of fact that might reasonably
be expected to be within the knowledge of the Borrower, upon a
certificate or other writing
signed by Borrower, or upon telephone communications with
Borrower which are reasonably
believed to be true and valid.
9.3 No Waiver of Rights. With respect to the Notes,
the Agent shall have the
same rights and powers hereunder as any other Bank and may
exercise the same as though it
were not the Agent, and the Agent may accept deposits from, and
generally engage in any kind
of business with, the Borrower.
9.4 Payments. The Agent shall use its best efforts to
deliver to each Bank on
the same day as received by Agent in immediately available funds
such Bank's pro rata share
of all payments received by the Agent for the benefit of the
Banks, but in the event Agent is
unable to deliver such payments to any Bank on the same day of
receipt, Agent agrees to pay
such Bank interest on the payment for each day the Agent is
unable to deliver the payments after
the date of its receipt based on the overnight federal funds rate
of interest. Any payment due
for any reason under this Agreement that is required to be made
on a date on which the Agent
is not open for business shall be extended until the next day on
which the Agent is open for the
transaction of business.
9.5 Indemnification. The Agent shall not be required
to do any act hereunder
or under any other document or instrument delivered hereunder or
in connection herewith or
take any action toward the execution or enforcement of the agency
hereby created, or to
prosecute or defend any suit in respect of this Agreement or the
Notes or to advance funds
hereunder upon the failure by any Bank to fund its pro rata share
of the Commitment hereunder,
unless ratably indemnified to its satisfaction (to the extent not
reimbursed by Borrower) by the
holders of the Notes against loss, cost, liability and expense
(including reasonable fees and
out-of-pocket expenses of counsel), claim, demand, action, loss
or liability (except such as result
from Agent's gross negligence or willful misconduct) that Agent
may suffer or incur in
connection with this Agreement or any action taken or omitted by
Agent hereunder. If any
indemnity furnished to the Agent for or against any loss, cost,
liability, and expense or for any
purpose shall, in the opinion of the Agent, be insufficient or
become impaired, the Agent may
call for additional indemnity and not commence or cease to do the
acts indemnified against until
such additional indemnity is furnished. Each Bank agrees to
reimburse the Agent promptly upon
demand for such Bank's pro rata share of any expenses referred to
in Paragraph 10.4 incurred
by the Agent to the extent that the Agent is not reimbursed for
such expenses by the Borrower.
9.6 Exculpation. Neither Agent nor any of its
directors, officers, employees
or agents shall be liable for any action taken or not taken by it
in connection herewith (a) with
the consent or at the request of the Banks or Majority Banks, as
appropriate, or (b) in the
absence of its own gross negligence or willful misconduct.
Neither Agent nor any of its
directors, officers, employees or agents shall (i) be responsible
for any recitals, representations
or warranties contained in, or for the execution, validity,
genuineness, effectiveness or
enforceability of this Agreement, any Note or any other
instrument or document delivered
hereunder or in connection herewith, or (ii) be under any duty to
inquire into or pass upon any
of the foregoing matters, or to make any inquiry concerning the
performance by Borrower or
any other obligor of its obligations.
9.7 Credit Investigation. Each Bank acknowledges that
it has made such
inquiries and taken such care on its own behalf as would have
been the case had the
Commitment been granted and the Loan made directly by such Bank
to the Borrower. Each
Bank agrees and acknowledges that the Agent makes no
representations or warranties about the
creditworthiness of the Borrower or any other party to this
Agreement or with respect to the
legality, validity, sufficiency or enforceability of this
Agreement, the Notes or the value of any
security therefor and that each Bank has not entered into this
Agreement in reliance upon any
action, statement, representation, or warranty of any other Bank
or Agent. Each Bank agrees
that it will, independently and without reliance upon the Agent
or any other Bank and based on
such documents and information as it shall deem appropriate at
the time, continue to make its
own credit decisions in taking or not taking action under this
Agreement. Neither the Agent nor
any other Bank shall have any obligation whatsoever to make any
such credit analysis or
decisions for a Bank or to provide any credit or other
information with respect to the Borrower
now or in the future in the possession of the Agent or such other
Bank, except that the Agent
shall promptly forward to the Banks a copy of any notice received
by the Agent from the
Borrower of the occurrence of an Event of Default hereunder and
copies of all material
documents delivered to it by the Borrower pursuant to the terms
hereof.
9.8 Resignation. The Agent may resign at any time as
the Agent under this
Agreement by giving written notice thereof to the Banks and the
Borrower, which resignation
shall be effective upon a successor Agent's acceptance of its
appointment. Upon any such
resignation, the Majority Banks shall have the right to appoint a
successor Agent hereunder. If
no such successor Agent shall have been so appointed by the
Majority Banks, or Borrower shall
have reasonably rejected such appointment, within thirty (30)
days after the retiring Agent's
giving of notice of resignation, then the retiring Agent may, on
behalf of the Banks, appoint a
successor Agent, which shall be a commercial bank organized under
the laws of the United
States of America or of any State thereof having assets of at
least One Billion and No/100
Dollars ($1,000,000,000.00) and which shall be reasonably
acceptable to the Borrower. Upon
the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor
Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and
duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and
obligations hereunder. After any retiring Agent's resignation as
an Agent hereunder, the
provisions of this Section IX shall inure to its benefit as to
any actions taken or omitted to be
taken by it while it was an Agent under the Loan Documents.
9.9 Proration of Payments. Except as may be provided
in other sections of
this Agreement, including Paragraphs 2.13(B) and 7.2, all other
funds received by Banks, or any
of them, with the exception of funds received by Chemical Bank
with respect to the Letter of
Credit Reimbursement Agreement; shall be allocated pro rata among
all Banks in proportion to
their respective outstanding Loan balances and unreimbursed
Letter of Credit drawings, if any;
provided, following the occurrence of an Event of Default
hereunder and the acceleration of the
Obligations, all funds received by the Banks thereafter shall,
unless the Banks otherwise agree,
be allocated in proportion to their respective outstanding Loan
balances and the Letter of Credit
Liabilities. If any Bank or other holder of any Notes shall
obtain any payment or other recovery
(whether voluntary, involuntary, by application of offset or
otherwise) on account of principal
of or interest on the Note then held by it in excess of its pro
rata share of payments and other
recoveries obtained by all Banks or other holders on account of
principal of and interest on the
Notes then held by them, such Bank or other holder shall purchase
from the other Banks or
holders such participation in the Notes held by them as shall be
necessary to cause such
purchasing Bank or other holder to share the excess payment or
other recovery ratably with each
of them; provided, however, if all or any portion of the excess
payment or other recovery is
thereafter recovered from such purchasing holder, the purchase
shall be rescinded and the
purchase price restored to the extent of such recovery, but
without interest. Notwithstanding
the foregoing, no Bank shall have any obligation to account for
or share any amount, property
or profit of any kind received by it for its own account arising
out of a banking or other
relationship with the Borrower apart from the obligations under
the Loan Documents.
9.10 No Liability For Errors. The Agent shall not be
liable for any error in
computing the amounts payable to any Bank in respect of any
amounts due to the Banks
hereunder or in making payment of such amounts. In the event of
an error in computing any
amount payable to any Bank or in the making of a payment, the
Agent, the Borrower and such
Bank shall, forthwith upon discovery of such error, make such
adjustment as shall be required
to correct such error, including the payment of interest on any
amounts that were incorrectly
paid or not paid from the date paid or of the date due to the
date returned or paid, all as the case
may be, at the average daily rate for the overnight sale of
federal funds by the Agent in effect
for such period.
9.11 Offset. In addition to and not in limitation of
all rights of offset that any
Bank or other holder of any Note may have under applicable Laws,
each Bank or other holder
of a Note shall, upon the occurrence of any Event of Default
described in this Agreement or in
the Note in question, have the right to appropriate and apply to
the payment of such Notes any
and all balances, credits, deposits, accounts or moneys of the
Borrower then or thereafter with
such Bank or other holder; provided, however, all funds received
as a result of such offsets shall
be applied pro rata among the Banks in proportion to the Letter
of Credit Liabilities and the
respective outstanding Loan amounts. Each Bank agrees to notify
the Borrower and other Banks
immediately after the exercise by it of this right of offset.
SECTION X. MISCELLANEOUS
10.1 Construction. The provisions of this Agreement
shall be in addition to
those of any guaranty, pledge or security agreement, note or
other evidence of liability held by
the Banks, all of which shall be construed as complementary to
each other; provided, in the
event of any inconsistency, the provisions of this Agreement
shall control. Nothing herein
contained shall prevent the Banks from enforcing any or all other
notes, guaranties, pledge or
security agreements in accordance with their respective terms.
10.2 Further Assurance. From time to time, the
Borrower will execute and
deliver to the Banks such additional documents and will provide
such additional information as
the Banks may reasonably require to carry out the terms of this
Agreement and be informed of
the Borrower's operations, business and condition.
10.3 Enforcement and Waiver by the Banks. The Majority
Banks shall have
the sole and exclusive right to administer, amend, or modify the
Loan Documents, and are
hereby empowered to act for the Banks with regard to the
aggregate Commitments and the
documentation thereof as if said Majority Banks were the sole
lenders or extenders of credit
under the Loan Documents; provided, however, that it shall take
an affirmative vote of all Banks
to: (i) increase any of the several Commitments; (ii) decrease
any of the interest rates on the
Loans; (iii) extend any Commitment Termination Date or Loan
Termination Date on the
Revolving Loan or the Capital Expenditure Loan; (iv) reduce or
postpone the principal payments
due on any Term Loans; (v) postpone any payments of interest or
interest payment dates; (vi)
release any collateral; (vii) amend the definition of Majority
Banks; and (viii) amend this
Paragraph 10.3; and provided further, that with respect to the
Working Capital Loan,
NationsBank of Tennessee, N.A. shall have the sole right without
consulting any other Bank to
determine whether to extend from time to time the Working Capital
Loan Termination Date.
The Banks shall have the right at all times to enforce the
provisions of the Loan Documents in
strict accordance with the terms thereof, notwithstanding any
conduct or custom on the part of
the Banks and/or Agent in refraining from so doing at any time or
times. The failure of the
Banks at any time or times to enforce their rights under such
provisions, strictly in accordance
with the same, shall not be construed as having created a custom
in any way or manner contrary
to specific provisions of the Loan Documents or as having in any
way or manner modified or
waived the same. All rights and remedies of the Banks are
cumulative and concurrent and the
exercise of one right or remedy shall not be deemed a waiver or
release of any other right or
remedy.
10.4 Expenses of the Banks. The Borrower will, on
demand, reimburse the
Agent and the Banks for all out-of-pocket expenses, including the
reasonable fees and expenses
of legal counsel for the Agent and the Banks, incurred by the
Agent and the Banks in connection
with the preparation, administration, amendment, modification, or
enforcement of the Loan
Documents and the collection or attempted collection of the
Notes.
10.5 Notices. Any notices or consents required or
permitted by this Agreement
shall be in writing and shall be deemed delivered when delivered
in person, or when sent by
certified mail, postage prepaid, return receipt requested, by
overnight courier service, or by
facsimile to the address and/or telecopy number as follows,
unless such address or number is
changed by written notice hereunder:
(A) If to the Borrower:
Zemex Corporation
Canada Trust Tower
BCE Place, 161 Bay Street
Suite 3750
Toronto, Ontario M5J 2S1
Attention: Chief Financial Officer
Telecopy: (416) 365-8094
(B) If to the Agent:
NationsBank of Tennessee, N.A., Agent
One NationsBank Plaza
Nashville, Tennessee 37239
Attention: Robert B. Weaver, Vice President
Telecopy: 749-4743 (615)
(C) If to the Banks:
NationsBank of Tennessee, N.A.
One NationsBank Plaza
Nashville, Tennessee 37239
Attention: Large Commercial Lending
Telecopy: 749-4743 (615)
Chemical Bank
2300 Main Place Tower
Buffalo, New York 14202
Attention: Zemex Corporation Account Officer
Telecopy: 716-843-4939
10.6 Waiver and Release. To the maximum extent
permitted by applicable
Laws, the Borrower and each Participating Subsidiary:
(A) Waive: (1) protest of all commercial paper at
any time held by the
Banks on which the Borrower or any Participating Subsidiary is in
any way liable; and (2) notice
and opportunity to be heard, after acceleration in the manner
provided in Paragraph 8.2, before
exercise by the Banks of the remedies of self-help, set-off, or
of other summary procedures
permitted by any applicable Laws or by any agreement with the
Borrower or any Participating
Subsidiary, and, except where required hereby or by any
applicable Laws, notice of any other
action taken by the Banks; and
(B) Release the Banks and their officers,
directors, attorneys,
employees, and agents from all claims for loss or damage caused
by any act or omission on the
part of any of them except for gross negligence, recklessness or
willful misconduct.
10.7 Indemnification. Borrower and each Participating
Subsidiary hereby
indemnify and hold the Banks and their officers, directors,
attorneys, employees and agents free
and harmless from and against any and all actions, causes of
action, suits, losses, liabilities and
damages, and expenses in connection therewith, including without
limitation counsel fees and
disbursements, incurred by the Banks or any of them as a result
of, or arising out of, or relating
to the execution, delivery, performance or enforcement of the
Loan Documents or any
instrument contemplated therein, except for any Bank's gross
negligence or willful misconduct.
If and to the extent that the foregoing undertaking may be
unenforceable for any reason,
Borrower and each Participating Subsidiary hereby agree to make
the maximum contribution to
the payment and satisfaction of such liabilities and costs
permitted under applicable Laws.
10.8 Participations and Assignments. Notwithstanding
any other provision of
this Agreement, the Borrower understands that any Bank may at any
time enter into participation
agreements with one or more participating banks whereby such Bank
will allocate certain
percentages of its Commitment to such bank or banks. The
Borrower acknowledges that, for
the convenience of all parties, this Agreement is being entered
into with the Banks only and that
Borrower's obligations hereunder are undertaken for the benefit
of, and as an inducement to, any
such participating bank as well as the Banks. In addition, any
Bank may assign to one or more
lenders all or a portion of its rights and obligations as a Bank
under this Agreement and the
other Loan Documents; provided, however, that prior thereto any
assigning Bank must obtain
the written consent of the Agent and the Borrower to the
assignee, which consent shall not be
unreasonably withheld if being made to an Eligible Assignee.
10.9 Applicable Laws. The Laws of the State of
Tennessee shall govern the
construction of this Agreement and the rights and remedies of the
parties hereto.
10.10Binding Effect, Assignment and Entire Agreement.
This Agreement shall
inure to the benefit of, and shall be binding upon, the
respective successors and permitted
assigns of the parties hereto. The Borrower has no right to
assign any of its rights or obligations
hereunder without the prior written consent of the Banks. This
Agreement and the documents
executed and delivered pursuant hereto constitute the entire
agreement between the parties, and
supersede all prior agreements and understandings among the
parties hereto. This Agreement
may be amended only by a writing signed on behalf of each party.
10.11Severability. If any provision of this Agreement
shall be held invalid
under any applicable Laws, such invalidity shall not affect any
other provision of this
Agreement that can be given effect without the invalid provision,
and, to this end, the provisions
hereof are severable.
10.12Counterparts. This Agreement may be executed by
the parties
independently in any number of counterparts, all of which
together shall constitute but one and
the same instrument which is valid and effective as if all
parties had executed the same
counterpart.
10.13Venue. It is agreed that venue for any action
arising in connection with
this Agreement or the Obligations secured hereby shall lie
exclusively with courts sitting in the
states of Tennessee and New York, unless the Banks and Agent
otherwise agree in writing.
10.14Confidentiality. Agent and the Banks, together
with their employees,
agents or representatives who have a reasonable need to know such
information, agree to treat
confidentially all information concerning Zemex Corporation and
its Subsidiaries or their assets
and operations obtained by Agent or the Banks or by any of
Agent's or the Banks' authorized
agents or representatives, which information is not (i) contained
in a report or other document
filed with a securities commission or regulatory authority, (ii)
distributed by Zemex Corporation
to its shareholders or (iii) otherwise available to the public
generally (other than by Agent's or
Banks' breach of these confidentiality obligations); provided,
however, that the foregoing
confidentiality restrictions shall not apply where Agent or the
Banks are required to disclose such
information due to a valid subpoena or court order or other
external bank regulatory reporting
requirements. These confidentiality obligations shall survive
the term of this Agreement by two
years.
10.15Waiver of Jury Trial. EACH PARTY HERETO,
INCLUDING THE
BORROWER, EACH SUBSIDIARY, THE BANKS, AND THE AGENT, HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE (TO THE EXTENT
PERMITTED BY APPLICABLE LAWS) ANY RIGHTS THEY MAY HAVE TO A TRIAL
BY JURY OF ANY DISPUTE ARISING UNDER, RELATING TO, OR CONNECTED
WITH
THIS AGREEMENT, THE COLLATERAL OR ANY OTHER AGREEMENT, INSTRUMENT
OR DOCUMENT CONTEMPLATED HEREBY OR DELIVERED IN CONNECTION
HEREWITH AND AGREE THAT ANY SUCH DISPUTE SHALL BE TRIED BEFORE A
JUDGE SITTING WITHOUT A JURY. THIS PROVISION IS A MATERIAL
INDUCEMENT
FOR THE BANKS' AND THE AGENT ENTERING INTO THIS AGREEMENT.
IN WITNESS WHEREOF, the parties hereto have duly
executed this Agreement
as of the day and year first above written.
AGENT BORROWER
NATIONSBANK OF TENNESSEE, N.A., ZEMEX CORPORATION
as Agent
BY: BY:
TITLE: TITLE:
BANKS THE FELDSPAR CORPORATION
NATIONSBANK OF TENNESSEE, N.A.
BY:
BY:
TITLE:
TITLE:
CHEMICAL BANK GUARANTORS AND PARTICIPATING
SUBSIDIARIES
PYRON CORPORATION
BY:
TITLE: BY:
TITLE:
PYRON METAL POWDERS, INC.
BY:
TITLE:
SUZORITE MICA PRODUCTS INC.
LES
PRODUITS MICA SUZORITE INC.
BY:
TITLE:
SUZORITE MINERAL PRODUCTS,
INC.
BY:
TITLE: