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ZEMEX U.S. CORPORATION
$35,000,000
7.54% Senior Secured Notes, Series A, due May 21, 2009
and
$15,000,000
7.76% Senior Secured Notes, Series B, due May 21, 2014
______________
NOTE PURCHASE AGREEMENT
_____________
Dated as of May 21, 1999
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TABLE OF CONTENTS
SECTION HEADING PAGE
SECTION 1. AUTHORIZATION OF NOTES.................................................................1
SECTION 2. SALE AND PURCHASE OF NOTES; GUARANTY; ASSUMPTION.......................................1
Section 2.1. Sale and Purchase of Notes.............................................................1
Section 2.2. Guaranty Agreements....................................................................1
Section 2.3. Security for the Notes.................................................................2
SECTION 3. CLOSING................................................................................2
SECTION 4. CONDITIONS TO CLOSING..................................................................2
Section 4.1. Representations and Warranties of the Company..........................................3
Section 4.2. Representations and Warranties of Guarantors...........................................3
Section 4.3. Performance; No Default................................................................3
Section 4.4. Compliance Certificates................................................................3
Section 4.5. Guaranty Agreement.....................................................................4
Section 4.6. Security Documents, Etc................................................................4
Section 4.7. Filing.................................................................................4
Section 4.8. Intercreditor Agreement................................................................4
Section 4.9. Opinions of Counsel....................................................................4
Section 4.10. Discharge of Outstanding Debt; Release of Collateral...................................4
Section 4.11. Evidence of Insurance..................................................................5
Section 4.12. Purchase Permitted By Applicable Law, etc..............................................5
Section 4.13. Sale of Other Notes....................................................................5
Section 4.14. Payment of Special Counsel Fees........................................................5
Section 4.15. Private Placement Number...............................................................5
Section 4.16. Changes in Corporate Structure.........................................................5
Section 4.17. Proceedings and Documents..............................................................5
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY..........................................5
Section 5.1. Organization; Power and Authority......................................................6
Section 5.2. Authorization, etc.....................................................................6
Section 5.3. Disclosure.............................................................................6
Section 5.4. Organization and Ownership of Shares of Subsidiaries...................................7
Section 5.5. Financial Statements...................................................................7
Section 5.6. Compliance with Laws, Other Instruments, etc...........................................7
Section 5.7. Governmental Authorizations, etc.......................................................7
Section 5.8. Litigation; Observance of Agreements, Statutes and Orders..............................8
Section 5.9. Taxes..................................................................................8
Section 5.10. Title to Property; Leases..............................................................8
Section 5.11. Licenses, Permits, etc.................................................................8
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Section 5.12. Compliance with ERISA.................................................................. 9
Section 5.13. Private Offering by the Company........................................................10
Section 5.14. Use of Proceeds; Margin Regulations....................................................10
Section 5.15. Existing Debt; Future Lien.............................................................10
Section 5.16. Foreign Assets Control Regulations, etc................................................11
Section 5.17. Status under Certain Statutes..........................................................11
Section 5.18. Environmental Matter...................................................................11
Section 5.19. Computer 2000 Compliant................................................................11
SECTION 6. REPRESENTATIONS OF THE PURCHASER.......................................................11
Section 6.1. Purchase for Investment................................................................11
Section 6.2. Source of Funds........................................................................12
SECTION 7. INFORMATION AS TO PARENT GUARANTOR.....................................................13
Section 7.1. Certain Information....................................................................13
Section 7.2. Officer's Certificate..................................................................16
Section 7.3. Inspection.............................................................................16
SECTION 8. PREPAYMENT OF THE NOTES................................................................17
Section 8.1. Required Prepayments...................................................................17
Section 8.2. Optional Prepayments with Make-Whole Amount............................................17
Section 8.3. Allocation of Partial Prepayments......................................................18
Section 8.4. Maturity; Surrender, etc...............................................................18
Section 8.5. Purchase of Notes......................................................................18
Section 8.6. Make-Whole Amount......................................................................18
SECTION 9. AFFIRMATIVE COVENANTS..................................................................20
Section 9.1. Compliance with Law....................................................................20
Section 9.2. Insurance..............................................................................20
Section 9.3. Maintenance of Properties..............................................................20
Section 9.4. Payment of Taxes and Claims............................................................20
Section 9.5. Corporate Existence, etc...............................................................20
SECTION 10. NEGATIVE COVENANTS.....................................................................21
Section 10.1. Consolidated Net Worth.................................................................21
Section 10.2. Limitations on Consolidated Funded Debt................................................21
Section 10.3. Limitation on Consolidated Current Debt................................................21
Section 10.4. Limitation on Priority Debt............................................................21
Section 10.5. Interest Charges Coverage Ratio........................................................21
Section 10.6. Limitation on Liens....................................................................21
Section 10.7. Merger, Consolidation, etc.............................................................24
Section 10.8. Sales of Assets; Sale of Subsidiary Stock..............................................24
Section 10.9. Nature of Business.....................................................................25
Section 10.10. Transactions with Affiliates...........................................................25
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Section 10.11. Post Closing Collateral................................................................26
Section 10.12. New Subsidiary Guarantors..............................................................26
Section 10.13. Further Assurances.....................................................................26
SECTION 11. EVENTS OF DEFAULT......................................................................26
SECTION 12. REMEDIES ON DEFAULT, ETC...............................................................29
Section 12.1. Acceleration...........................................................................29
Section 12.2. Other Remedies.........................................................................29
Section 12.3. Rescission.............................................................................29
Section 12.4. No Waivers or Election of Remedies, Expenses, etc......................................30
SECTION 13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES..........................................30
Section 13.1. Registration of Notes..................................................................30
Section 13.2. Transfer and Exchange of Notes.........................................................30
Section 13.3. Replacement of Notes...................................................................31
SECTION 14. PAYMENTS ON NOTES......................................................................31
Section 14.1. Place of Payment.......................................................................31
Section 14.2. Home Office Payment....................................................................31
SECTION 15. EXPENSES, ETC..........................................................................32
Section 15.1. Transaction Expenses...................................................................32
Section 15.2. Survival...............................................................................32
SECTION 16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT...........................32
SECTION 17. AMENDMENT AND WAIVER...................................................................33
Section 17.1. Requirements...........................................................................33
Section 17.2. Solicitation of Holders of Notes.......................................................33
Section 17.3. Binding Effect, etc....................................................................33
Section 17.4. Notes Held by Company, etc.............................................................33
SECTION 18. NOTICES................................................................................34
SECTION 19. REPRODUCTION OF DOCUMENTS..............................................................34
SECTION 20. CONFIDENTIAL INFORMATION...............................................................35
SECTION 21. MISCELLANEOUS..........................................................................36
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Section 21.1. Submission to Jurisdiction.................... 36
Section 21.2. Currency Rate Indemnity....................... 36
Section 21.3. Payments Free and Clear of Taxes.............. 36
Section 21.4. Successors and Assigns........................ 37
Section 21.5. Payments Due on Non-Business Days............. 37
Section 21.6. Severability.................................. 37
Section 21.7. Construction.................................. 37
Section 21.8. Counterparts.................................. 37
Section 21.9. Governing Law................................. 38
Signature.............................................................. 39
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SCHEDULE A -- INFORMATION RELATING TO PURCHASERS
SCHEDULE B -- DEFINED TERMS
SCHEDULE 4.16 -- CHANGES IN CORPORATE STRUCTURE
SCHEDULE 5.3 -- DISCLOSURE MATTERS
SCHEDULE 5.4 -- SUBSIDIARIES, AFFILIATES AND DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
SCHEDULE 5.5 -- FINANCIAL STATEMENTS
SCHEDULE 5.8 -- EXISTING LITIGATION
SCHEDULE 5.11 -- LICENSES, PATENTS, ETC.
SCHEDULE 5.15 -- EXISTING DEBT AND INVESTMENTS
SCHEDULE 10.6 -- EXISTING LIENS
SCHEDULE 10.11 -- DESCRIPTION OF POST CLOSING COLLATERAL
EXHIBIT 1(a) -- Form of 7.54% Senior Secured Note, Series A, due May 21, 2009
EXHIBIT 1(b) -- Form of 7.76% Senior Secured Note, Series B, due May 21, 2014
EXHIBIT 2 -- Form of Parent Guaranty
EXHIBIT 3 -- Form of Subsidiary Guaranty
EXHIBIT 4.9(a) -- Form of Opinion of Special Counsel for the Company
EXHIBIT 4.9(b) -- Form of Opinion of Special Counsel for the Parent Guarantor
EXHIBIT 4.9(c) -- Form of Opinion of Special Counsel for the Purchasers
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ZEMEX U.S. CORPORATION
Canada Trust Tower
BCE Place, 161 Bay Street, Suite 3750
Toronto, Ontario M5J2S1
7.54% Senior Secured Notes, Series A, due May 21, 2009
and
7.76% Senior Secured Notes, Series B, due May 21, 2014
Dated as of
May 21, 1999
TO EACH OF THE PURCHASERS LISTED IN
THE ATTACHED SCHEDULE A:
Ladies and Gentlemen:
ZEMEX U.S. CORPORATION, a Delaware corporation (the "Company"), agrees
with you as follows:
SECTION 1. AUTHORIZATION OF NOTES.
The Company will authorize the issue and sale of (i) $35,000,000 aggregate
principal amount of its 7.54% Senior Secured Notes, Series A, due May 21, 2009
(the "Series A Notes") and (ii) $15,000,000 aggregate principal amount of its
7.76% Senior Secured Notes, Series B, due May 21, 2014 (the "Series B Notes"
and together with the Series A Notes, the "Notes"). The term "Notes" shall
include any such notes issued in substitution therefor pursuant to Section 13
of this Agreement or the Other Agreements (as hereinafter defined). The Notes
shall be substantially in the form set out in Exhibit 1(a) and Exhibit 1(b),
respectively, with such changes therefrom, if any, as may be approved by you
and the Company. Certain capitalized terms used in this Agreement are defined
in Schedule B; references to a "Schedule" or an "Exhibit" are, unless otherwise
specified, to a Schedule or an Exhibit attached to this Agreement.
SECTION 2. SALE AND PURCHASE OF NOTES; GUARANTIES; COLLATERAL.
Section 2.1. Sale and Purchase of Notes. Subject to the terms and
conditions of this Agreement, the Company will issue and sell to you and you
will purchase from the Company, at the Closing provided for in Section 3, the
Notes in the principal amount specified opposite your name in Schedule A at the
purchase price of 100% of the principal amount thereof. Contemporaneously with
entering into this Agreement, the Company is entering into separate Note
Purchase Agreements (the "Other Agreements") identical with this Agreement with
each of the other purchasers named in Schedule A (the "Other Purchasers"),
providing for the sale at
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such Closing to each of the Other Purchasers of the Notes in the principal
amount specified opposite its name in Schedule A. Your obligation hereunder,
and the obligations of the Other Purchasers under the Other Agreements, are
several and not joint obligations, and you shall have no obligation under any
Other Agreement and no liability to any Person for the performance or
nonperformance by any Other Purchaser thereunder.
Section 2.2. Guaranty Agreements. The payment by the Company of all
amounts due with respect to the Notes and the performance by the Company of its
obligations under this Agreement will be unconditionally guaranteed by (i) the
Parent Guarantor under a Guaranty Agreement dated as of May 21, 1999 (the
"Parent Guaranty"), which Guaranty shall be in substantially the form attached
hereto as Exhibit 2, and (ii) the Subsidiary Guarantors under separate
Subsidiary Guaranty Agreements each dated as of May 21, 1999 (the "Subsidiary
Guaranties") which shall be in substantially the form attached hereto as
Exhibit 3.
Section 2.3. Security for the Notes. The Notes will be secured by certain
personal property of the Company and the Guarantors pursuant to the Security
Documents to be entered into by the Company and the Guarantors with Bank of
America Canada, as collateral agent (together with any successor collateral
agent under the Intercreditor Agreement the "Collateral Agent") for the benefit
of the holders of the Notes.
The Lien and security interest granted by the Company and the Guarantors
pursuant to the Security Documents shall rank pari passu with other existing
Liens that secure the outstanding Debt of the Company and the Guarantors under
the Bank Credit Agreement without preference, priority or distinction by virtue
of the time of filing any financing statement or registration or the difference
in time of incurrence of such Debt, and the enforcement of the rights and
benefits in respect of such Security Documents will be subject to an
Intercreditor Agreement dated as of May 21, 1999 (the "Intercreditor
Agreement") among the Collateral Agent, the Bank Lenders and the Purchasers.
Each Purchaser and each holder by its acceptance of a Note agrees that,
upon the occurrence of a Collateral Release Event, it will, or will direct the
Collateral Agent to, release the Lien of the Security Documents. For purposes
of this Section 2.3, a "Collateral Release Event" shall be deemed to have
occurred at such time that all of the following conditions shall have been
satisfied: (i) the Company shall have a written commitment from a bank or group
of banks to provide an unsecured revolving credit facility to the Company for
at least $25,000,000, (ii) no Default or Event of Default shall have occurred
and be continuing, (iii) the Collateral Agent shall have received the written
direction from all required parties (other than the holders of Notes) to
release the Lien of the Security Documents, and (iv) the Debt of the Company
under the Notes and this Agreement and the Debt of the Guarantors under the
Guaranty Agreements shall rank at least pari passu with all other Debt of the
Company and the Guarantors, respectively.
SECTION 3. CLOSING.
The sale and purchase of the Notes to be purchased by you and the Other
Purchasers shall occur at the offices of Chapman and Cutler, 111 West Monroe
Street, Chicago, Illinois 60603, at 10:00 A.M. Chicago time, at a closing (the
"Closing") on May 26, 1999 or on such other
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Business Day thereafter on or prior to May 30, 1999 as may be agreed upon by
the Company and you and the Other Purchasers. At the Closing the Company will
deliver to you the Notes to be purchased by you in the form of a single Note
(or such greater number of Notes in denominations of at least $500,000 as you
may request) dated the date of the Closing and registered in your name (or in
the name of your nominee), against delivery by you to the Company or its order
of immediately available funds in the amount of the purchase price therefor by
wire transfer of immediately available funds to NationsBank, N.A., Nashville,
Tennessee (ABA #064000020) for credit to the account of the Company (account
number 0112985312). If at the Closing the Company shall fail to tender such
Notes to you as provided above in this Section 3, or any of the conditions
specified in Section 4 shall not have been fulfilled to your satisfaction, you
shall, at your election, be relieved of all further obligations under this
Agreement, without thereby waiving any rights you may have by reason of such
failure or such nonfulfillment.
SECTION 4. CONDITIONS TO CLOSING.
Your obligation to purchase and pay for the Notes to be sold to you at the
Closing is subject to the fulfillment to your satisfaction (or waiver), prior
to or at the Closing, of the following conditions:
Section 4.1. Representations and Warranties of the Company. The
representations and warranties of the Company in this Agreement shall be true
and correct when made and at the time of the Closing.
Section 4.2. Representations and Warranties of Guarantors. The
representations and warranties of the Guarantors in the Guaranty Agreements
shall be true and correct when made and at the time of the Closing.
Section 4.3. Performance; No Default. The Company shall have performed
and complied with all agreements and conditions contained in this Agreement
required to be performed or complied with by it prior to or at the Closing, and
after giving effect to the issue and sale of the Notes (and the application of
the proceeds thereof as contemplated by Section 5.14), no Default or Event of
Default shall have occurred and be continuing. Neither the Company nor any
Subsidiary shall have entered into any transaction since the date of the
Memorandum that would have been prohibited by the covenants contained in
Section 10 of this Agreement had such covenants applied since such date.
Section 4.4. Compliance Certificates.
(a) Officer's Certificate. The Company shall have delivered to you an
Officer's Certificate, dated the date of the Closing, certifying that the
conditions specified in Sections 4.1, 4.3 (as to the Company) and 4.16 (as to
the Company) have been fulfilled.
(b) Officer's Certificate of Guarantors. Each Guarantor shall have
delivered to you an Officer's Certificate of such Guarantor dated the date of
the Closing certifying that the conditions specified in Sections 4.2, (as to
such Guarantor) and 4.16 (as to such Guarantor) have been fulfilled.
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(c) Secretary's Certificate of each Guarantor. Each Guarantor shall have
delivered to you a certificate certifying as to the resolutions attached
thereto and other corporate proceedings relating to the authorization,
execution and delivery of the Guaranty Agreement to which such Guarantor is a
party.
Section 4.5. Guaranty Agreements. The Guaranty Agreements shall have
been duly authorized, executed and delivered by the Guarantors, shall
constitute the legal, valid and binding contract and agreement of the
Guarantors and shall be enforceable against the respective Guarantors in
accordance with their terms.
Section 4.6. Security Documents, Etc. The Security Documents shall have
been duly executed and delivered by the respective parties thereto and shall be
in full force and effect and such Purchaser shall have received true, correct
and complete copies of each thereof.
Section 4.7. Filing. The Security Documents shall have been filed in such
public offices as may be deemed necessary or appropriate by such Purchaser or
such Purchaser's special counsel in order to perfect the Liens granted or
conveyed thereby.
Section 4.8. Intercreditor Agreement. The Intercreditor Agreement shall
have been executed and delivered by the respective parties thereto and shall be
in full force and effect.
Section 4.9. Opinions of Counsel. You shall have received opinions in
form and substance satisfactory to you, dated the date of the Closing (a) from
Hogan & Hartson L.L.P., U.S. counsel for the Company, covering the matters set
forth in Exhibit 4.9(a) and covering such other matters incident to the
transactions contemplated hereby as you or your counsel may reasonably request
(and the Company hereby instructs its counsel to deliver such opinion to you)
(b) from Stikeman, Elliott, Canadian counsel for the Parent Guarantor, covering
matters set forth in Exhibit 4.9(b) and covering such other matters incident to
the transactions contemplated hereby as you or your counsel may reasonably
request (and the Parent Guarantor hereby instructs its counsel to deliver such
opinion to you), and (c) from Chapman and Cutler, your special counsel in
connection with such transactions, substantially in the form set forth in
Exhibit 4.9(c) and covering such other matters incident to such transactions as
you may reasonably request.
Section 4.10. Discharge of Outstanding Debt; Release of Collateral. The
Collateral Agent shall have received (i) a pay out statement and irrevocable
direction regarding the release and discharge of all mortgages, security
interests, deeds and registrations against the Properties of the Company and
the Guarantors, except for any such Liens which are permitted pursuant to
Section 10.6, and (ii) evidence that all Debt of the Company and the Guarantors
owing to NationsBanc N.A. will be paid in full on the Closing Date and the
Credit Agreements in respect thereof have been terminated.
Section 4.11. Evidence of Insurance. Except to the extent that the
Company shall have elected to self-insure in accordance with the terms of the
applicable Security Documents, the holders shall have received certificates of
insurance evidencing the insurance policies and endorsements required by the
applicable Security Documents and evidencing the payment of all
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premiums due thereon and such certificates shall be otherwise satisfactory in
scope and form to you.
Section 4.12. Purchase Permitted By Applicable Law, etc. On the date of
the Closing your purchase of Notes shall (i) be permitted by the laws and
regulations of each jurisdiction to which you are subject, without recourse to
provisions (such as Section 1405(a)(8) of the New York Insurance Law)
permitting limited investments by insurance companies without restriction as to
the character of the particular investment, (ii) not violate any applicable law
or regulation (including, without limitation, Regulation U, T or X of the Board
of Governors of the Federal Reserve System) and (iii) not subject you to any
tax, penalty or liability under or pursuant to any applicable law or
regulation, which law or regulation was not in effect on the date hereof. If
requested by you, you shall have received an Officer's Certificate certifying
as to such matters of fact as you may reasonably specify to enable you to
determine whether such purchase is so permitted.
Section 4.13. Sale of Other Notes. Contemporaneously with the Closing,
the Company shall sell to the Other Purchasers, and the Other Purchasers shall
purchase, the Notes to be purchased by them at the Closing as specified in
Schedule A.
Section 4.14. Payment of Special Counsel Fees. Without limiting the
provisions of Section 15.1, the Company shall have paid on or before the
Closing the reasonable fees, charges and disbursements of your special counsel
referred to in Section 4.9 to the extent reflected in a statement of such
counsel rendered to the Company at least one Business Day prior to the Closing.
Section 4.15. Private Placement Number. A Private Placement number issued
by Standard & Poor's CUSIP Service Bureau (in cooperation with the Securities
Valuation Office of the National Association of Insurance Commissioners) shall
have been obtained for the Notes.
Section 4.16. Changes in Corporate Structure. Except as set forth in
Schedule 4.16, neither the Guarantors nor the Company shall have changed its
jurisdiction of incorporation or been a party to any merger or consolidation
and shall not have succeeded to all or any substantial part of the liabilities
of any other entity, at any time following the date of the most recent
financial statements referred to in Schedule 5.5.
Section 4.17. Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated by this Agreement
and all documents and instruments incident to such transactions shall be
satisfactory to you and your special counsel, and you and your special counsel
shall have received all such counterpart originals or certified or other copies
of such documents as you or they may reasonably request.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to you that:
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Section 5.1. Organization; Power and Authority. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation, and is duly qualified as a foreign
corporation and is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions as to which
the failure to be so qualified or in good standing could not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.
The Company has the power and authority to own or hold under lease the
properties it purports to own or hold under lease, to transact the business it
transacts and proposes to transact, to execute and deliver this Agreement and
the Other Agreements and the Notes and to perform the provisions hereof and
thereof.
Section 5.2. Authorization, etc. This Agreement, the Other Agreements and
the Notes have been duly authorized by all necessary corporate action on the
part of the Company, and this Agreement constitutes, and upon execution and
delivery thereof each Note will constitute, a legal, valid and binding
obligation of the Company enforceable against the Company in accordance with
its terms, except as such enforceability may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and (ii) general
principles of equity (regardless of whether such enforceability is considered
in a proceeding in equity or at law).
Section 5.3. Disclosure. The Company, through its agent, NationsBanc
Montgomery LLC, has delivered to the Purchasers a copy of a Private Placement
Memorandum, dated March, 1999 (the "Memorandum"), relating to the transactions
contemplated hereby. The Memorandum fairly describes, in all material
respects, the general nature of the business and principal properties of the
Company and its Subsidiaries. Except as disclosed in Schedule 5.3, this
Agreement, the Memorandum, the documents, certificates or other writings
delivered to you by or on behalf of the Company in connection with the
transactions contemplated hereby and the financial statements listed in
Schedule 5.5, taken as a whole, do not contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein not misleading in light of the circumstances under which
they were made. Except as disclosed in the Memorandum or as expressly
described in Schedule 5.3, or in one of the documents, certificates or other
writings identified therein, or in the financial statements listed in Schedule
5.5, since December 31, 1998, there has been no change in the financial
condition, operations, business or properties of the Company or any Subsidiary
except changes that individually or in the aggregate could not reasonably be
expected to have a Material Adverse Effect. There is no fact known to the
Company that could reasonably be expected to have a Material Adverse Effect
that has not been set forth herein, including in Schedule 5.3, or in the
Memorandum or in the other documents, certificates and other writings delivered
to you by or on behalf of the Company specifically for use in connection with
the transactions contemplated hereby.
Section 5.4. Organization and Ownership of Shares of Subsidiaries;
Affiliates. (a) Schedule 5.4 contains (except as noted therein) complete and
correct lists (i) of the Company's Subsidiaries, showing, as to each
Subsidiary, the correct name thereof, the jurisdiction of its organization, and
the percentage of shares of each class of its capital stock or similar equity
interests outstanding owned by the Company and each other Subsidiary, (ii) the
Company's Affiliates, and (iii) of the Company's directors and senior officers.
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(b) All of the outstanding shares of capital stock or similar equity
interests of each Subsidiary shown in Schedule 5.4 as being owned by the
Company and its Subsidiaries have been validly issued, are fully paid and
nonassessable and are owned by the Company or another Subsidiary free and clear
of any Lien (except as otherwise disclosed in Schedule 5.4).
(c) Each Subsidiary identified in Schedule 5.4 is a corporation or other
legal entity duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization, and is duly qualified as a foreign
corporation or other legal entity and is in good standing in each jurisdiction
in which such qualification is required by law, other than those jurisdictions
as to which the failure to be so qualified or in good standing could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Each such Subsidiary has the corporate or other power and
authority to own or hold under lease the properties it purports to own or hold
under lease and to transact the business it transacts and proposes to transact.
(d) No Subsidiary is a party to, or otherwise subject to any legal
restriction or any agreement (other than this Agreement, the agreements listed
on Schedule 5.4 and customary limitations imposed by corporate law statutes)
restricting the ability of such Subsidiary to pay dividends out of profits or
make any other similar distributions of profits to the Company or any of its
Subsidiaries that owns outstanding shares of capital stock or similar equity
interests of such Subsidiary.
Section 5.5. Financial Statements. The Company has delivered to each
Purchaser copies of the consolidated financial statements of the Parent
Guarantor and its Subsidiaries listed on Schedule 5.5. All of said financial
statements (including in each case the related schedules and notes) fairly
present in all material respects the consolidated financial position of the
Parent Guarantor and its Subsidiaries as of the respective dates specified in
such Schedule and the consolidated results of their operations and cash flows
for the respective periods so specified and have been prepared in accordance
with GAAP consistently applied throughout the periods involved except as set
forth in the notes thereto (subject, in the case of any interim financial
statements, to normal year-end adjustments).
Section 5.6. Compliance with Laws, Other Instruments, etc. The execution,
delivery and performance by the Company of this Agreement and the Notes will
not (i) contravene, result in any breach of, or constitute a default under, or
result in the creation of any Lien in respect of any property of the Company or
any Subsidiary under, any indenture, mortgage, deed of trust, loan, purchase or
credit agreement, lease, partnership agreement, or any other agreement or
instrument to which the Company or any Subsidiary may be bound or affected,
(ii) conflict with or result in a breach of any of the terms, conditions or
provisions of any order, judgment, decree, or ruling of any court, arbitrator
or Governmental Authority applicable to the Company or any Subsidiary, or (iii)
violate any provision of any statute or other rule or regulation of any
Governmental Authority applicable to the Company or any Subsidiary, in each
case except where such breach, default, conflict or violation could not
individually or in the aggregate reasonably be expected to have a Material
Adverse Effect.
Section 5.7. Governmental Authorizations, etc. No consent, approval or
authorization of, or registration, filing or declaration with, any Governmental
Authority is required in
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connection with the execution, delivery or performance by the Company of this
Agreement or the Notes.
Section 5.8. Litigation; Observance of Agreements, Statutes and Orders.
(a) Except as disclosed in Schedule 5.8, there are no actions, suits or
proceedings pending or, to the knowledge of the Company, threatened against or
affecting the Company or any Subsidiary or any property of the Company or any
Subsidiary in any court or before any arbitrator of any kind or before or by
any Governmental Authority that, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
(b) Neither the Company nor any Subsidiary is in default under any term of
any agreement or instrument to which it is a party or by which it is bound, or
any order, judgment, decree or ruling of any court, arbitrator or Governmental
Authority or is in violation of any applicable law, ordinance, rule or
regulation (including without limitation Environmental Laws) of any
Governmental Authority, which default or violation, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
Section 5.9. Taxes. The Company and its Subsidiaries have filed all tax
returns that are required to have been filed in any jurisdiction, and have paid
all taxes shown to be due and payable on such returns and all other taxes and
assessments levied upon them or their properties, assets, income or franchises,
to the extent such taxes and assessments have become due and payable and before
they have become delinquent, except for any taxes and assessments (i) the
amount of which is not individually or in the aggregate Material or (ii) the
amount, applicability or validity of which is currently being contested in good
faith by appropriate proceedings and with respect to which the Company or a
Subsidiary, as the case may be, has established adequate reserves in accordance
with GAAP. The Company knows of no basis for any other tax or assessment that
could reasonably be expected to have a Material Adverse Effect. The charges,
accruals and reserves on the books of the Company and its Subsidiaries in
respect of Federal, state or other taxes for all fiscal periods are adequate.
The Federal income tax liabilities of the Company and its Subsidiaries have
been determined by the Internal Revenue Service and paid for all fiscal years
up to and including the fiscal year ended December 31, 1988.
Section 5.10. Title to Property; Leases. The Company and its Subsidiaries
have good and sufficient title to their respective properties that individually
or in the aggregate are Material, including all such properties reflected in
the most recent audited balance sheet referred to in Section 5.5 or purported
to have been acquired by the Company or any Subsidiary after said date (except
as sold or otherwise disposed of in the ordinary course of business), in each
case free and clear of Liens prohibited by this Agreement. All leases that
individually or in the aggregate are Material are valid and subsisting and are
in full force and effect in all material respects.
Section 5.11. Licenses, Permits, etc. Except as disclosed in Schedule
5.11,
(a) the Company and its Subsidiaries own or possess all Material
licenses, permits, franchises, authorizations, patents, copyrights,
service marks, trademarks and trade names, or rights thereto, that
individually or in the aggregate are Material, without known conflict
with the rights of others;
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(b) to the best knowledge of the Company, no product of the Company
infringes in any Material respect any license, permit, franchise,
authorization, patent, copyright, service mark, trademark, trade name or
other right owned by any other Person; and
(c) to the best knowledge of the Company, there is no Material
violation by any Person of any right of the Company or any of its
Subsidiaries with respect to any patent, copyright, service mark,
trademark, trade name or other right owned or used by the Company or any
of its Subsidiaries.
Section 5.12. Compliance with ERISA. (a) The Company and each ERISA
Affiliate have operated and administered each Plan in compliance with all
applicable laws except for such instances of noncompliance as have not resulted
in and could not reasonably be expected to result in a Material Adverse Effect.
Neither the Company nor any ERISA Affiliate has incurred any liability
pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of
the Code relating to employee benefit plans (as defined in Section 3 of ERISA),
and no event, transaction or condition has occurred or exists that could
reasonably be expected to result in the incurrence of any such liability by the
Company or any ERISA Affiliate, or in the imposition of any Lien on any of the
rights, properties or assets of the Company or any ERISA Affiliate, in either
case pursuant to Title I or IV of ERISA or to such penalty or excise tax
provisions or to Section 401(a)(29) or 412 of the Code, other than such
liabilities or Liens as would not be individually or in the aggregate Material.
(b) The aggregate present value of the benefit liabilities under all of
the Plans (other than Multiemployer Plans), determined as of the end of such
Plans' most recently ended plan years on the basis of the actuarial assumptions
specified for funding purposes in such Plans' most recent actuarial valuation
reports, did not exceed the aggregate current value of the assets of such
Plans. The term "benefit liabilities" has the meaning specified in section
4001 of ERISA and the terms "current value" and "present value" have the
meanings specified in section 3 of ERISA.
(c) The Company and its ERISA Affiliates have not incurred any Material
withdrawal liabilities (and are not subject to contingent withdrawal
liabilities) under section 4201 or 4204 of ERISA in respect of Multiemployer
Plans that individually or in the aggregate are Material.
(d) The expected post-retirement benefit obligation (determined as of the
last day of the Company's most recently ended fiscal year in accordance with
Financial Accounting Standards Board Statement No. 106, without regard to
liabilities attributable to continuation coverage mandated by section 4980B of
the Code) of the Company and its Subsidiaries is not Material or is disclosed
in the financial statements for the fiscal year ended December 31, 1998
referred to in Schedule 5.5.
(e) The execution and delivery of this Agreement and the issuance and sale
of the Notes will not involve any transaction that is subject to the
prohibitions of section 406 of ERISA or in connection with which a tax could be
imposed pursuant to section 4975(c)(1)(A)-(D) of the Code; which, in either
event, could reasonably be expected to result in a Material Adverse Effect.
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The representation by the Company in the first sentence of this Section 5.12(e)
is made in reliance upon and subject to the accuracy of the representation of
the Purchasers in Section 6.2 as to the sources of the funds used to pay the
purchase price of the Notes to be purchased by the Purchasers.
Section 5.13. Private Offering by the Company. Neither the Company nor,
to the knowledge of the Company, anyone acting on its behalf has offered the
Notes or any similar securities for sale to, or solicited any offer to buy any
of the same from, or otherwise approached or negotiated in respect thereof
with, any person other than the Purchasers and not more than 35 other
Institutional Investors, each of which has been offered the Notes at a private
sale for investment. Neither the Company nor, to the knowledge of the Company,
anyone acting on its behalf has taken, or will take, any action that would
subject the issuance or sale of the Notes to the registration requirements of
Section 5 of the Securities Act.
Section 5.14. Use of Proceeds; Margin Regulations. The Company will apply
the proceeds of the sale of the Notes for general corporate purposes (including
the repayment of Debt of the Company and its Subsidiaries). No part of the
proceeds from the sale of the Notes will be used, directly or indirectly, for
the purpose of buying or carrying any margin stock within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System (12 CFR
222), or for the purpose of buying or carrying or trading in any securities
under such circumstances as to involve the Company in a violation of Regulation
X of said Board (12 CFR 224) or to involve any broker or dealer in a violation
of Regulation T of said Board (12 CFR 220). Margin stock does not constitute
more than 5% of the value of the consolidated assets of the Company and its
Subsidiaries and the Company does not have any present intention that margin
stock will constitute more than 5% of the value of such assets. As used in
this Section, the terms "margin stock" and "purpose of buying or carrying"
shall have the meanings assigned to them in said Regulation U.
Section 5.15. Existing Debt; Future Liens. (a) Except as described
therein, Schedule 5.15 sets forth a complete and correct list of all
outstanding Debt of the Company and its Subsidiaries as of December 31, 1998,
since which date there has been no Material change in the amounts, interest
rates, sinking funds, installment payments or maturities of the Debt of the
Company or its Subsidiaries. Neither the Company nor any Subsidiary is in
default and no waiver of default is currently in effect in the payment of any
principal or interest on any Debt of the Company or such Subsidiary having an
unpaid principal amount in excess of $5,000,000 and no event or condition
exists with respect to any Debt of the Company or any Subsidiary having an
unpaid principal amount in excess of $5,000,000 that would permit (or that with
notice or the lapse of time, or both, would permit) one or more Persons to
cause such Debt to become due and payable before its stated maturity or before
its regularly scheduled dates of payment.
(b) Except as disclosed in Schedule 5.15, neither the Company nor any
Subsidiary has agreed or consented to cause or permit in the future (upon the
happening of a contingency or otherwise) any of its property, whether now owned
or hereafter acquired, to be subject to a Lien not permitted by Section 10.6.
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Section 5.16. Foreign Assets Control Regulations, etc. Neither the sale
of the Notes by the Company nor its use of the proceeds thereof will violate
the Trading with the Enemy Act, as amended, or any of the foreign assets
control regulations of the United States Treasury Department (31 CFR, Subtitle
B, Chapter V, as amended) or any enabling legislation or executive order
relating thereto.
Section 5.17. Status under Certain Statutes. Neither the Company nor any
Subsidiary is subject to regulation under the Investment Advisor Act of 1940,
as amended, the Public Utility Holding Issuer Act of 1935, as amended, the ICC
Termination Act of 1995, as amended, or the Federal Power Act, as amended.
Section 5.18. Environmental Matter. Neither the Company nor any
Subsidiary has knowledge of any Material liability or has received any notice
of any Material claim, and no proceeding has been instituted raising any
Material liability against the Company or any of its Subsidiaries or any of
their respective real properties now or formerly owned, leased or operated by
any of them or other assets, alleging any damage to the environment or
violation of any Environmental Laws, except, in each case, such as could not
reasonably be expected to result in a Material Adverse Effect. Except as
otherwise disclosed to you in writing:
(a) neither the Company nor any Subsidiary has knowledge of any
facts which would give rise to any liability, public or private, of
violation of Environmental Laws or damage to the environment emanating
from, occurring on or in any way related to real properties now or
formerly owned, leased or operated by any of them or to other assets or
their use, except, in each case, such as could not reasonably be expected
to result in a Material Adverse Effect;
(b) neither the Company nor any of its Subsidiaries has stored any
Hazardous Materials on real properties now or formerly owned, leased or
operated by any of them or has disposed of any Hazardous Materials, all
in a manner contrary to any Environmental Laws, in each case in any
manner that could reasonably be expected to result in a Material Adverse
Effect; and
(c) all buildings on all real properties now owned, leased or
operated by the Company or any of its Subsidiaries are in compliance with
applicable Environmental Laws, except where failure to comply could not
reasonably be expected to result in a Material Adverse Effect.
Section 5.19. Computer 2000 Compliant. The Company and its Subsidiaries
have implemented measures to have all critical business and computer systems
year 2000 compliant in a timely manner and the advent of the year 2000 and its
impact on said business and computer systems is not expected to have a Material
Adverse Effect.
SECTION 6. REPRESENTATIONS OF THE PURCHASER.
Section 6.1. Purchase for Investment. You represent that you are
purchasing the Notes for your own account or for one or more separate accounts
maintained by you or for the account
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of one or more pension or trust funds and not with a view to the distribution
thereof, provided that the disposition of your or their property shall at all
times be within your or their control. You further represent that you are an
institutional "accredited investor" within the meaning of Rule 501 of
regulation D as promulgated under the Securities Act. You understand that the
Notes have not been registered under the Securities Act and may be resold only
if registered pursuant to the provisions of the Securities Act or if an
exemption from registration is available, except under circumstances where
neither such registration nor such an exemption is required by law, and that
the Company is not required to register the Notes.
Section 6.2. Source of Funds. You represent that at least one of the
following statements is an accurate representation as to each source of funds
(a "Source") to be used by you to pay the purchase price of the Notes to be
purchased by you hereunder:
(a) the Source is an "insurance company general account" within the
meaning of Department of Labor Prohibited Transaction Exemption ("PTE")
95-60 (issued July 12, 1995) and there is no employee benefit plan or
plans, treating as a single plan all plans maintained by the same
employer or employee organization, with respect to which the amount of
the general account reserves and liabilities for all contracts held by or
on behalf of such plan, exceeds ten percent (10%) of the total reserves
and liabilities of such general account (exclusive of separate account
liabilities) plus surplus, as set forth in the NAIC Annual Statement
filed with your state of domicile; or
(b) the Source is either (i) an insurance company pooled separate
account, within the meaning of PTE 90-1 (issued January 29, 1990), or
(ii) a bank collective investment fund, within the meaning of the PTE
91-38 (issued July 12, 1991) and, except as you have disclosed to the
Company in writing pursuant to this paragraph (b), no employee benefit
plan or group of plans maintained by the same employer or employee
organization beneficially owns more than 10% of all assets allocated to
such pooled separate account or collective investment fund; or
(c) the Source constitutes assets of an "investment fund" (within
the meaning of Part V of the QPAM Exemption) managed by a "qualified
professional asset manager" or "QPAM" (within the meaning of Part V of
the QPAM Exemption), no employee benefit plan's assets that are included
in such investment fund, when combined with the assets of all other
employee benefit plans established or maintained by the same employer or
by an affiliate (within the meaning of Section V(c)(1) of the QPAM
Exemption) of such employer or by the same employee organization and
managed by such QPAM, exceed 20% of the total client assets managed by
such QPAM, the conditions of Part l(c) and (g) of the QPAM Exemption are
satisfied, neither the QPAM nor a person controlling or controlled by the
QPAM (applying the definition of "control" in Section V(e) of the QPAM
Exemption) owns a 5% or more interest in the Company and (i) the identity
of such QPAM, and (ii) the names of all employee benefit plans whose
assets are included in such investment fund, have been disclosed to the
Company in writing pursuant to this paragraph (c); or
(d) the Source is a governmental plan; or
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19
(e) the Source is one or more employee benefit plans, or a separate
account or trust fund comprised of one or more employee benefit plans,
each of which has been identified to the Company in a writing that
references this paragraph (e) and which is received by the Company no
less than five business days prior to Closing;
(f) the Source does not include assets of any employee benefit plan,
other than a plan exempt from the coverage of ERISA; or
(g) the Source is the assets of one or more employee benefit plans
which are managed by an "in-house asset manager," as that term is defined
in Part IV of PTE 96.23, the conditions of Part (I)(a), (b), (c), (d)-(h)
of such exemption have been met with respect to the purchase of the
Notes, and the name of all employee benefit plans whose assets are
included in the transaction have been disclosed to the Company in writing
pursuant to this clause (h).
As used in this Section 6.2, the terms "employee benefit plan",
"governmental plan", "party in interest" and "separate account" shall have the
respective meanings assigned to such terms in Section 3 of ERISA and the term
"plan" has the meaning assigned to such term in Section 4975(e) of the Code.
SECTION 7. INFORMATION AS TO PARENT GUARANTOR.
Section 7.1. Financial and Business Information. The Company shall
deliver to each holder of Notes that is an Institutional Investor:
(a) Quarterly Statements -- within 60 days after the end of each
quarterly fiscal period in each fiscal year of the Parent Guarantor
(other than the last quarterly fiscal period of each such fiscal year),
duplicate copies of:
(i) an unaudited consolidated balance sheet of the Parent
Guarantor and its subsidiaries as at the end of such quarter, and
(ii) unaudited consolidated statements of income, changes in
shareholders' equity and cash flows of the Parent Guarantor and its
subsidiaries for such quarter and (in the case of the second and
third quarters) for the portion of the fiscal year ending with such
quarter,
setting forth in each case in comparative form the figures for the
corresponding periods in the previous fiscal year, all in reasonable
detail, prepared in accordance with GAAP applicable to quarterly
financial statements generally, and certified by a Senior Financial
Officer as fairly presenting, in all material respects, the consolidated
financial position of the companies being reported on and their results
of operations and cash flows, subject to changes resulting from year-end
adjustments provided that delivery within the time period specified above
of copies of the Parent Guarantor's Quarterly Report on Form 10-Q (or
Quarterly Information Form to the extent that such form sets forth
financial and other information which is substantially similar to the
information required to be set forth
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in Form 10-Q) prepared in compliance with the requirements therefor and
filed with the Securities and Exchange Commission or the Ontario
Securities Commission, as the case may be, shall be deemed to satisfy the
requirements of this Section 7.1(a);
(b) Annual Statements -- within 105 days after the end of each
fiscal year of the Parent Guarantor, duplicate copies of,
(i) a consolidated balance sheet of the Parent Guarantor and
its subsidiaries, as at the end of such year, and
(ii) consolidated statements of income, changes in
shareholders' equity and cash flows of the Parent Guarantor and its
subsidiaries, for such year,
setting forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail, prepared in accordance
with GAAP, and accompanied by an opinion thereon of independent certified
public accountants of recognized national standing, which opinion shall
state that such financial statements present fairly, in all material
respects, the consolidated financial position of the companies being
reported upon and their results of operations and cash flows and have
been prepared in conformity with GAAP, and that the examination of such
accountants in connection with such financial statements has been made in
accordance with generally accepted auditing standards, and that such
audit provides a reasonable basis for such opinion in the circumstances
provided that the delivery within the time period specified above of the
Parent Guarantor's Annual Report on Form 10-K (or Annual Information Form
to the extent that such form sets forth financial and other information
which is substantially similar to the information required to be set
forth in Form 10-K) for such fiscal year (together with the Company's
annual report to shareholders, if any, prepared pursuant to Rule 14a-3
under the Exchange Act or similar provisions of the Ontario Securities
Act, as the case may be, prepared in accordance with the requirements
therefor and filed with the Securities and Exchange Commission or the
Ontario Securities Commission, as the case may be, shall be deemed to
satisfy the requirements of this Section 7.1(b);
(c) SEC and Other Reports -- promptly upon their becoming available,
one copy of (i) each financial statement, report, notice or proxy
statement sent by the Parent Guarantor or any subsidiary to public
securities holders generally, and (ii) each regular or periodic report,
each registration statement (without exhibits except as expressly
requested by such holder and excluding registration statements on Form
S-8), and each prospectus and all amendments thereto filed by the Parent
Guarantor or any subsidiary with the Securities and Exchange Commission,
the Ontario Securities Commission or the Toronto Stock Exchange and of
any press release of the Parent Guarantor or the Company generally made
available covering a Material development relating to the Parent
Guarantor, the Company or its Subsidiaries;
(d) Notice of Default or Event of Default -- promptly, and in any
event within five Business Days after a Responsible Officer becoming
aware of the existence of any Default or Event of Default or that any
Person has given any notice or taken any action
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with respect to a claimed default hereunder or that any Person has given
any notice or taken any action with respect to a claimed default of the
type referred to in Section 11(g) of the Note Agreements, a written
notice specifying the nature and period of existence thereof and what
action the Company is taking or proposes to take with respect thereto;
(e) ERISA Matters -- promptly, and in any event within five Business
Days after a Responsible Officer becoming aware of any of the following,
a written notice setting forth the nature thereof and the action, if any,
that the Company or an ERISA Affiliate proposes to take with respect
thereto:
(i) with respect to any Plan, any Reportable Event for which
notice thereof has not been waived pursuant to such regulations as
in effect on the date hereof; or
(ii) the taking by the PBGC of steps to institute, or the
threatening by the PBGC of the institution of, proceedings under
section 4042 of ERISA for the termination of, or the appointment of
a trustee to administer, any Plan, or the receipt by the Company or
any ERISA Affiliate of a notice from a Multiemployer Plan that such
action has been taken by the PBGC with respect to such
Multiemployer Plan; or
(iii) any event, transaction or condition that could result in
the incurrence of any liability by the Company or any ERISA
Affiliate pursuant to Title I or IV of ERISA or the penalty or
excise tax provisions of the Code relating to employee benefit
plans, or in the imposition of any Lien on any of the rights,
properties or assets of the Company or any ERISA Affiliate pursuant
to Title I or IV of ERISA or such penalty or excise tax provisions,
if such liability or Lien, taken together with any other such
liabilities or Liens then existing, could reasonably be expected to
have a Material Adverse Effect;
(f) Amendment of Bank Credit Agreement -- promptly following the
execution and delivery thereof, one copy of any amendment, waiver or
other modification of the Bank Credit Agreement;
(g) Notices from Governmental Authority -- promptly, and in any
event within 30 days of receipt thereof, copies of any notice to the
Parent Guarantor, the Company or any Subsidiary from any Federal or state
Governmental Authority relating to any order, ruling, statute or other
law or regulation that could reasonably be expected to have a Material
Adverse Effect; and
(h) Requested Information -- with reasonable promptness, such other
data and information relating to the business, operations, affairs,
financial condition, assets or properties of the Parent Guarantor, the
Company or any of its Subsidiaries or relating to the ability of the
Company to perform its obligations hereunder and under the Notes as from
time to time may be reasonably requested by any such holder of Notes.
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Section 7.2. Officer's Certificate. Each set of financial statements
delivered to a holder of Notes pursuant to Section 7.1(a) or Section 7.1(b)
hereof shall be accompanied by a certificate of a Senior Financial Officer
setting forth:
(a) Covenant Compliance -- the information (including detailed
calculations) required in order to establish whether the Company was in
compliance with the requirements of Section 10.1 through Section 10.8
hereof, inclusive, during the quarterly or annual period covered by the
statements then being furnished (including with respect to each such
Section, where applicable, the calculations of the maximum or minimum
amount, ratio or percentage, as the case may be, permissible under the
terms of such Sections, and the calculation of the amount, ratio or
percentage then in existence);
(b) Reconciliation to U.S. GAAP -- in the event that the application
of generally accepted accounting principals as in effect in the United
States at the time of delivery of any such financial statements would
result in any material differences in the presentation of the financial
statements then being delivered to the holders, a reconciliation in
reasonable detail (including a description of the reasons therefore) of
the differences which would result if generally accepted accounting
principals then in effect in the United States were applied to such
financial statements;
(c) Parent Guarantor and Company Financial Statements Substantially
Identical -- a statement that the financial position and results of
operations of the Company and the Parent Guarantor as reflected in the
financial statements of the Parent Guarantor are substantially identical
except for the presentation of stockholders equity of the Parent
Guarantor which differs as a result of the Company's status as a
wholly-owned subsidiary of the Parent Guarantor; and
(d) Event of Default -- a statement that such officer has reviewed
the relevant terms hereof and of the Note Agreements and has made, or
caused to be made, under his or her supervision, a review of the
transactions and conditions of the Company and its Subsidiaries from the
beginning of the quarterly or annual period covered by the statements
then being furnished to the date of the certificate and that such review
shall not have disclosed the existence during such period of any
condition or event that constitutes a Default or an Event of Default or,
if any such condition or event existed or exists (including, without
limitation, any such event or condition resulting from the failure of the
Company or any Subsidiary to comply with any Environmental Law),
specifying the nature and period of existence thereof and what action the
Company shall have taken or proposes to take with respect thereto.
Section 7.3. Inspection. The Company shall permit the representatives of
each holder of Notes that is an Institutional Investor:
(a) No Default -- if no Default or Event of Default then exists, at
the expense of such holder and upon reasonable prior notice to the
Company, to visit the principal executive office of the Company, to
discuss the affairs, finances and accounts of the Company and its
Subsidiaries with the Company's officers, and (with the consent of the
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Company, which consent will not be unreasonably withheld) its independent
public accountants, and (with the consent of the Company, which consent
will not be unreasonably withheld) to visit the other offices and
properties of the Company and each Subsidiary, all at such reasonable
times and as often as may be reasonably requested in writing; and
(b) Default -- if a Default or Event of Default then exists, at the
expense of the Company to visit and inspect any of the offices or
properties of the Company or any Subsidiary, to examine all their
respective books of account, records, reports and other papers, to make
copies and extracts therefrom, and to discuss their respective affairs,
finances and accounts with their respective officers and independent
public accountants (and by this provision the Company authorizes said
accountants to discuss the affairs, finances and accounts of the Company
and its Subsidiaries), all at such times and as often as may be
requested.
SECTION 8. PREPAYMENT OF THE NOTES.
Section 8.1. Required Prepayments. (a) On May 21, 2005 and on each May 21
thereafter to and including May 21, 2008, the Company will prepay $7,000,000
principal amount (or such lesser principal amount as shall then be outstanding)
of the Series A Notes at par and without payment of the Make-Whole Amount or
any premium. The entire outstanding principal amount of the Series A Notes
shall become due and payable on May 21, 2009. Upon any partial prepayment of
the Series A Notes pursuant to Section 8.2 or purchase of the Series A Notes
permitted by Section 8.5, the principal amount of each required prepayment of
the Series A Notes becoming due under this Section 8.1(a) on and after the date
of such prepayment or purchase shall be reduced in the same proportion as the
aggregate unpaid principal amount of the Series A Notes is reduced as a result
of such prepayment or purchase.
(b) On May 21, 2010 and on each May 21 thereafter to and including May 21,
2013, the Company will prepay $3,000,000 principal amount (or such lesser
principal amount as shall then be outstanding) of the Series B Notes at par and
without payment of the Make-Whole Amount or any premium. The entire
outstanding principal amount of the Series B Notes shall become due and payable
on May 21, 2014. Upon any partial prepayment of the Series B Notes pursuant to
Section 8.2 or purchase of the Series B Notes permitted by Section 8.5, the
principal amount of each required prepayment of the Series B Notes becoming due
under this Section 8.1(b) on and after the date of such prepayment or purchase
shall be reduced in the same proportion as the aggregate unpaid principal
amount of the Series B Notes is reduced as a result of such prepayment or
purchase.
Section 8.2. Optional Prepayments with Make-Whole Amount. The Company
may, at its option, upon notice as provided below, prepay at any time all, or
from time to time any part of, the Notes of any series, in an amount not less
than 5% of the aggregate principal amount of the Notes of such series then
outstanding in the case of a partial prepayment, at 100% of the principal
amount so prepaid, plus the Make-Whole Amount determined for the prepayment
date with respect to such principal amount. The Company will give each holder
of Notes written notice of each optional prepayment under this Section 8.2 not
less than 30 days and not more
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than 60 days prior to the date fixed for such prepayment. Each such notice
shall specify such date (which shall be a Business Day), the aggregate
principal amount of the Notes of the series to be prepaid on such date, the
principal amount of each Note held by such holder to be prepaid (determined in
accordance with Section 8.3), and the interest to be paid on the prepayment
date with respect to such principal amount being prepaid, and shall be
accompanied by a certificate of a Senior Financial Officer as to the estimated
Make-Whole Amount due in connection with such prepayment (calculated as if the
date of such notice were the date of the prepayment), setting forth the details
of such computation. Two Business Days prior to such prepayment, the Company
shall deliver to each holder of Notes a certificate of a Senior Financial
Officer specifying the calculation of such Make-Whole Amount as of the
specified prepayment date.
Section 8.3. Allocation of Partial Prepayments. In the case of each
partial prepayment of the Notes, the principal amount of the Notes of the
series to be prepaid shall be allocated among all of the Notes of the series to
be prepaid at the time outstanding in proportion, as nearly as practicable, to
the respective unpaid principal amounts thereof not theretofore called for
prepayment.
Section 8.4. Maturity; Surrender, etc. In the case of each prepayment of
Notes pursuant to this Section 8, the principal amount of each Note to be
prepaid shall mature and become due and payable on the date fixed for such
prepayment, together with interest on such principal amount accrued to such
date and the applicable Make-Whole Amount, if any. From and after such date,
unless the Company shall fail to pay such principal amount when so due and
payable, together with the interest and Make-Whole Amount, if any, as
aforesaid, interest on such principal amount shall cease to accrue. Any Note
paid or prepaid in full shall be surrendered to the Company and canceled and
shall not be reissued, and no Note shall be issued in lieu of any prepaid
principal amount of any Note.
Section 8.5. Purchase of Notes. The Company will not and will not permit
any Affiliate to purchase, redeem, prepay or otherwise acquire, directly or
indirectly, any of the outstanding Notes except upon the payment or prepayment
of the Notes in accordance with the terms of this Agreement and the Notes. The
Company will promptly cancel all Notes acquired by it or any Affiliate pursuant
to any payment, prepayment or purchase of Notes pursuant to any provision of
this Agreement and no Notes may be issued in substitution or exchange for any
such Notes.
Section 8.6. Make-Whole Amount. The term "Make-Whole Amount" means, with
respect to a Note of any series, an amount equal to the excess, if any, of the
Discounted Value of the Remaining Scheduled Payments with respect to the Called
Principal of the Note of such series over the amount of such Called Principal,
provided that the Make-Whole Amount may in no event be less than zero. For the
purposes of determining the Make-Whole Amount, the following terms have the
following meanings:
"Called Principal" means, with respect to a Note of any series, that
portion of the principal of such Note that is to be prepaid pursuant to
Section 8.2 or has become or is declared to be immediately due and
payable pursuant to Section 12.1, as the context requires.
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"Discounted Value" means, with respect to the Called Principal of
any Note of any series, the amount obtained by discounting all Remaining
Scheduled Payments with respect to such Called Principal from their
respective scheduled due dates to the Settlement Date with respect to
such Called Principal, in accordance with accepted financial practice and
at a discount factor (applied on the same periodic basis as that on which
interest on the Notes is payable) equal to the Reinvestment Yield with
respect to such Called Principal.
"Reinvestment Yield" means, with respect to the Called Principal of
any Note, 0.50% plus the yield to maturity implied by (i) the yields
reported, as of 10:00 A.M. (New York City time) on the second Business
Day preceding the Settlement Date with respect to such Called Principal,
on the display designated as "Page PX1" on the Bloomberg Financial
Markets Services Screen (or such other display as may replace Page PX1 on
Bloomberg Financial Markets Services Screen) for actively traded U.S.
Treasury securities having a maturity equal to the Remaining Average Life
of such Called Principal as of such Settlement Date, or (ii) if such
yields are not reported as of such time or the yields reported as of such
time are not ascertainable (including by way of interpolation), the
Treasury Constant Maturity Series Yields reported, for the latest day for
which such yields have been so reported as of the second Business Day
preceding the Settlement Date with respect to such Called Principal, in
Federal Reserve Statistical Release H.15 (519) (or any comparable
successor publication) for actively traded U.S. Treasury securities
having a constant maturity equal to the Remaining Average Life of such
Called Principal as of such Settlement Date. Such implied yield will be
determined, if necessary, by (a) converting U.S. Treasury bill quotations
to bond-equivalent yields in accordance with accepted financial practice
and (b) interpolating linearly between (1) the actively traded U.S.
Treasury security with the maturity closest to and greater than the
Remaining Average Life and (2) the actively traded U.S. Treasury security
with the maturity closest to and less than the Remaining Average Life.
"Remaining Average Life" means, with respect to any Called
Principal, the number of years (calculated to the nearest one-twelfth
year) obtained by dividing (i) such Called Principal into (ii) the sum of
the products obtained by multiplying (a) the principal component of each
Remaining Scheduled Payment with respect to such Called Principal by (b)
the number of years (calculated to the nearest one-twelfth year) that
will elapse between the Settlement Date with respect to such Called
Principal and the scheduled due date of such Remaining Scheduled Payment.
"Remaining Scheduled Payments" means, with respect to the Called
Principal of a Note of any series all payments of such Called Principal
and interest thereon that would be due after the Settlement Date with
respect to such Called Principal if no payment of such Called Principal
were made prior to its scheduled due date, provided that if such
Settlement Date is not a date on which interest payments are due to be
made under the terms of the Notes of such series then the amount of the
next succeeding scheduled interest payment will be reduced by the amount
of interest accrued to such Settlement Date and required to be paid on
such Settlement Date pursuant to Sections 8.2 or 12.1.
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"Settlement Date" means, with respect to the Called Principal of any
Note of any series the date on which such Called Principal is to be
prepaid pursuant to Section 8.2 or has become or is declared to be
immediately due and payable pursuant to Section 12.1, as the context
requires.
SECTION 9. AFFIRMATIVE COVENANTS.
The Company covenants that so long as any of the Notes are outstanding:
Section 9.1. Compliance with Law. The Company will and will cause each of
its Subsidiaries to comply with all laws, ordinances or governmental rules or
regulations to which each of them is subject, including, without limitation,
Environmental Laws, and will obtain and maintain in effect all licenses,
certificates, permits, franchises and other governmental authorizations
necessary to the ownership of their respective properties or to the conduct of
their respective businesses, in each case to the extent necessary to ensure
that non-compliance with such laws, ordinances or governmental rules or
regulations or failure to obtain or maintain in effect such licenses,
certificates, permits, franchises and other governmental authorizations could
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
Section 9.2. Insurance. The Company will and will cause each of its
Subsidiaries to maintain, with financially sound and reputable insurers,
insurance with respect to their respective properties and businesses against
such casualties and contingencies, of such types, on such terms and in such
amounts (including deductibles, co-insurance and self-insurance, if adequate
reserves are maintained with respect thereto) as is customary in the case of
entities of established reputations engaged in the same or a similar business
and similarly situated.
Section 9.3. Maintenance of Properties. The Company will and will cause
each of its Subsidiaries to maintain and keep, or cause to be maintained and
kept, their respective properties in good repair, working order and condition
(other than ordinary wear and tear), so that the business carried on in
connection therewith may be properly conducted at all times, provided that this
Section shall not prevent the Company or any Subsidiary from discontinuing the
operation and the maintenance of any of its properties if such discontinuance
is desirable in the conduct of its business and the Company has concluded that
such discontinuance could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
Section 9.4. Payment of Taxes and Claims. The Company will and will cause
each of its Subsidiaries to file all tax returns required to be filed in any
jurisdiction and to pay and discharge all taxes shown to be due and payable on
such returns and all other taxes, assessments, governmental charges, or levies
imposed on them or any of their properties, assets, income or franchises, to
the extent such taxes and assessments have become due and payable and before
they have become delinquent and all claims for which sums have become due and
payable that have or might become a Lien on properties or assets of the Company
or any Subsidiary, provided that neither the Company nor any Subsidiary need
pay any such tax or assessment or claims if (i) the amount, applicability or
validity thereof is contested by the Company or such Subsidiary on a timely
basis in good faith and in appropriate proceedings, and the Company or a
Subsidiary has established adequate reserves therefor in accordance with GAAP
on the books of the
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Company or such Subsidiary or (ii) the non-filing or nonpayment of all such
taxes and assessments in the aggregate could not reasonably be expected to have
a Material Adverse Effect.
Section 9.5. Corporate Existence, etc. Subject to Sections 10.7 and 10.8,
the Company will at all times preserve and keep in full force and effect its
corporate existence, and the Company will at all times preserve and keep in
full force and effect the corporate existence of each of its Subsidiaries
(unless merged into the Company or a Subsidiary) and all rights and franchises
of the Company and its Subsidiaries unless, in the good faith judgment of the
Company, the termination of or failure to preserve and keep in full force and
effect such corporate existence, right or franchise could not, individually or
in the aggregate, have a Material Adverse Effect.
SECTION 10. NEGATIVE COVENANTS.
The Company covenants that so long as any of the Notes are outstanding:
Section 10.1. Consolidated Net Worth. The Company will not at any time
permit Consolidated Adjusted Net Worth to be an amount less than the sum of (a)
$65,000,000 plus (b) 50% of Consolidated Net Income (but in each case only if a
positive number) computed on a cumulative basis for each of the elapsed fiscal
quarters for which financial information is available ending on or after March
31, 1999.
Section 10.2. Limitations on Consolidated Funded Debt. The Company will
not at any time permit Consolidated Funded Debt to exceed 55% of Consolidated
Total Capitalization.
Section 10.3. Limitation on Consolidated Current Debt. The Company will
not, and will not permit any Subsidiary to, incur any Consolidated Current Debt
unless there shall have been during the immediately preceding twelve months a
period of at least 30 consecutive days on each of which there shall have been
no Consolidated Current Debt outstanding in excess of the amount of additional
Consolidated Funded Debt that the Company would have been permitted to (but did
not) have outstanding on such day under Section 10.2.
Section 10.4. Limitation on Priority Debt. The Company will not, and will
not permit any Subsidiary to, create, assume or incur or in any manner be or
become liable in respect of any Priority Debt, unless at the time of issuance
thereof and after giving effect thereto and to the application of the proceeds
thereof, Priority Debt shall not exceed the greater of $30,000,000 or 15% of
Consolidated Adjusted Net Worth.
Section 10.5. Interest Charges Coverage Ratio. The Company will not
permit the ratio of Consolidated Net Income Available for Interest Charges to
Interest Charges for the period of four consecutive fiscal quarters ending on
the last day of each fiscal quarter to be less than 2.5 to 1.0.
Section 10.6. Limitation on Liens. The Company will not, and will not
permit any of its Subsidiaries to, directly or indirectly create, incur, assume
or permit to exist (upon the happening of a contingency or otherwise), any Lien
on or with respect to any Property or asset (including, without limitation, any
document or instrument in respect of goods or accounts receivable) of the
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Company or any such Subsidiary, whether now owned or held or hereafter
acquired, or any income or profits therefrom, or assign or otherwise convey any
right to receive income or profits (unless it makes, or causes to be made,
effective provision whereby the Notes will be equally and ratably secured with
any and all other obligations thereby secured, such security to be pursuant to
an agreement reasonably satisfactory to the Required Holders and, in any such
case, the Notes shall have the benefit, to the fullest extent that, and with
such priority as, the holders of the Notes may be entitled under applicable
law, of an equitable Lien on such property) , except:
(a) Liens for taxes, assessments or other governmental charges which
are not yet due and payable or the payment of which is not at the time
required by Section 9.4;
(b) any attachment or judgment Lien, unless the judgment it secures
shall not, within 60 days after the entry thereof, have been discharged
or execution thereof stayed pending appeal, or shall not have been
discharged within 60 days after the expiration of any such stay;
(c) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other similar Liens, in each
case, incurred in the ordinary course of business for sums not yet due
and payable or the payment of which is not at the time required by
Section 9.4;
(d) Liens incidental to the conduct of business or the ownership of
properties and assets (including landlords', carriers', warehousemen's,
mechanics', materialmen's and other similar Liens) and Liens to secure
the performance of bids, tenders, leases, or trade contracts, or to
secure statutory obligations (including obligations under workers
compensation, unemployment insurance and other social security
legislation), surety or appeal bonds or other Liens incurred in the
ordinary course of business and not in connection with the borrowing of
money;
(e) leases or subleases granted to others, easements, rights-of-way,
restrictions and other similar charges or encumbrances, in each case
incidental to the ownership of property or assets or the ordinary conduct
of the business of the Company or any of its Subsidiaries, provided that
such Liens do not, in the aggregate, detract from the value of such
Property in any material way;
(f) Liens incidental to minor survey exceptions and similar Liens,
provided that such Liens do not, in the aggregate, materially detract
from the value of such Property;
(g) Liens on Property or assets of Subsidiaries securing Debt owing
to the Company or any of its Wholly-owned Subsidiaries;
(h) Liens existing on the date of this Agreement and securing the
Debt of the Company and its Subsidiaries referred to in Schedule 5.15
hereto;
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(i) Liens existing on property of any business entity at the time of
acquisition of the capital stock or assets of such business entity or
merging with or consolidating with such business entity by the Company or
a Subsidiary, provided that (i) the Lien shall attach solely to the
property of the business entity so acquired or merged with or
consolidated with, (ii) at the time of acquisition of or merging with or
consolidating with such business entity, the aggregate amount remaining
unpaid on all Debt secured by Liens on the property of such business
entity, whether or not assumed by the Company or a Subsidiary, shall not
exceed an amount equal to the lesser of the total purchase price or fair
market value at the time of acquisition of or merging with or
consolidating with such business entity (as determined in good faith by
one or more officers of the Company or any Subsidiary, as the case may
be, to whom authority to enter into the transaction has been delegated by
the board of directors of the Company or any Subsidiary, as the case may
be), and (iii) the aggregate principal amount of all Debt secured by such
Liens shall be permitted by the limitations set forth in Section 10.2,
10.3 and 10.4;
(j) Liens given to secure the payment of the purchase price incurred
in connection with the acquisition or construction of property (other
than accounts receivable or inventory) useful and intended to be used in
carrying on the business of the Company or a Subsidiary, including Liens
existing on such property at the time of acquisition or construction
thereof, or Liens incurred within 270 days of such acquisition or the
completion of such construction, provided that (i) the Lien shall attach
solely to the property acquired, purchased or constructed, (ii) at the
time of acquisition or construction of such property, the aggregate
amount remaining unpaid on all Debt secured by Liens on such property,
whether or not assumed by the Company or a Subsidiary, shall not exceed
an amount equal to the lesser of the total purchase price or fair market
value at the time of acquisition or construction of such property (as
determined in good faith by one or more officers of the Company or any
Subsidiary, as the case may be, to whom authority to enter into the
transaction has been delegated by the board of directors of the Company
or any Subsidiary, as the case may be), and (iii) the aggregate principal
amount of all Debt secured by such Liens shall be permitted by the
limitations set forth in Section 10.2, 10.3 and 10.4;
(k) Liens created by the Security Documents and similar security
documents securing Debt outstanding under the Bank Credit Agreement and
related Subsidiary guaranties;
(l) any extensions, renewals or replacements of any Lien permitted
by the preceding subparagraphs (h) through (j), inclusive, of this
Section 10.6, provided that (i) no additional property shall be
encumbered by such Liens, (ii) the unpaid principal amount of the Debt
secured thereby shall not be increased on or after the date of any
extension, renewal or replacement, (iii) the weighted average life to
maturity of the Debt secured by such Liens shall not be reduced, and (iv)
at such time and immediately after giving effect thereto, such Debt shall
be permitted by applicable limitations set forth in Section 10.2, 10.3
and 10.4; and
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(m) in addition to the Liens permitted by the preceding
subparagraphs (a) through (l), inclusive, of this Section 10.6, Liens
securing Debt of the Company or any Subsidiary, provided that such Debt
shall be permitted by the applicable limitations set forth in Section
10.2, 10.3 and 10.4 at the time that the Lien securing such Debt is
created.
Section 10.7. Merger, Consolidation, etc. The Company will not, and will
not permit any of its Subsidiaries to, consolidate with or merge with any other
corporation or convey, transfer or lease substantially all of its assets in a
single transaction or series of transactions to any Person (except that a
Subsidiary of the Company may (x) consolidate with or merge with, or convey,
transfer or lease substantially all of its assets in a single transaction or
series of transactions to, the Company or to a Wholly-owned Subsidiary of the
Company or (y) convey, transfer or lease all or substantially all of its assets
in compliance with the provisions of Section 10.8), provided that the foregoing
restriction does not apply to the consolidation or merger of the Company with,
or the conveyance, transfer or lease of substantially all of the assets of the
Company in a single transaction or series of transactions to, any Person so
long as:
(a) the successor formed by such consolidation or the survivor of
such merger or the Person that acquires by conveyance, transfer or lease
substantially all of the assets of the Company as an entirety, as the
case may be (the "Successor Corporation"), shall be a solvent corporation
organized and existing under the laws of the United States of America,
any State thereof or the District of Columbia;
(b) if the Company is not the Successor Corporation, such
corporation shall have executed and delivered to each holder of Notes its
assumption of the due and punctual performance and observance of each
covenant and condition of this Agreement (pursuant to such agreements and
instruments as shall be reasonably satisfactory to the Required Holders),
and the Company shall have caused to be delivered to each holder of Notes
an opinion of nationally recognized independent counsel, to the effect
that all agreements or instruments effecting such assumption are
enforceable in accordance with their terms and comply with the terms
hereof; and
(c) immediately after giving effect to such transaction:
(i) no Default or Event of Default would exist, and
(ii) the Successor Corporation would be permitted by the
provisions of Section 10.2 hereof to incur at least $1.00 of
additional Consolidated Funded Debt.
Section 10.8. Sales of Assets; Sale of Subsidiary Stock. (a) The Company
will not, and will not permit any Subsidiary to, sell, lease or otherwise
dispose of any substantial part (as defined below) of the assets of the Company
and its Subsidiaries; provided, however, that the Company or any Subsidiary may
sell, lease or otherwise dispose of assets constituting a substantial part of
the assets of the Company and its Subsidiaries if, at such time and after
giving effect thereto, no Default or Event of Default shall have occurred and
be continuing and an
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amount equal to the net proceeds received from such sale, lease or other
disposition during such fiscal year which shall be in excess of 15% of the book
value of Consolidated Total Assets, determined as of the end of the fiscal year
immediately preceding such sale, lease or other disposition shall be used
within 270 days of such disposition:
(1) to acquire (x) property, plant and equipment used or useful in
carrying on the business of the Company and its Subsidiaries, (y) the
capital stock of any Person which shall become a Subsidiary, or (z)
assets of a business entity which will be owned by the Company or a
Subsidiary and having a value at least equal to the value of such assets
sold, leased or otherwise disposed of; or
(2) to prepay or retire Senior Debt of the Company and/or its
Subsidiaries in which case the Notes will be prepaid ratably (in
accordance with the unpaid principal amount of all Senior Debt then
outstanding) pursuant to Section 8.2 of this Agreement.
As used in this Section 10.8, a sale, lease or other disposition of assets
shall be deemed to be a "substantial part" of the assets of the Company and its
Subsidiaries if the book value of such assets, when added to the book value of
all other assets sold, leased or otherwise disposed of by the Company and its
Subsidiaries (other than in transactions in the ordinary course of business and
Excluded Sale and Leaseback Transactions) during any fiscal year of the
Company, exceeds 15% of the book value of Consolidated Total Assets, determined
as of the end of the fiscal year immediately preceding such sale, lease or
other disposition.
(b) The Company will not permit any Subsidiary to issue or transfer any
Subsidiary Stock of such Subsidiary to any Person other than the Company or
another Subsidiary, except for the purpose of qualifying directors, or except
in satisfaction of the validly pre-existing preemptive rights of minority
shareholders in connection with the simultaneous issuance of stock to the
Company and/or a Subsidiary whereby the Company and/or such Subsidiary maintain
their same proportionate interest in such Subsidiary, unless such transfer is
permitted by clause (a) of this Section 10.8.
(c) The Company will not transfer any Subsidiary Stock of any Subsidiary
(except to qualify directors), and will not permit any Subsidiary to transfer
(except to the Company or a Subsidiary) any Subsidiary Stock of any other
Subsidiary, unless such transfer is permitted by clause (a) or (b) of this
Section 10.8.
Section 10.9. Nature of Business. Neither the Company nor any Subsidiary
will engage in any business if, as a result, the general nature of the
business, taken on a consolidated basis, which would then be engaged in by the
Company and its Subsidiaries would be substantially changed from the general
nature of the business engaged in by the Company and its Subsidiaries on the
date of this Agreement.
Section 10.10. Transactions with Affiliates. The Company will not and
will not permit any Subsidiary to enter into directly or indirectly any
Material transaction or Material group of related transactions (including
without limitation the purchase, lease, sale or exchange of properties of any
kind or the rendering of any service) with any Affiliate (other than the
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Company or another Subsidiary), except upon fair and reasonable terms no less
favorable to the Company or such Subsidiary than would be obtainable in a
comparable arm's-length transaction with a Person not an Affiliate.
Section 10.11. Post Closing Collateral. Concurrently with the execution
of documents pursuant to which the Post Closing Collateral shall be subjected
to Liens in favor of the Bank Lenders, the Company shall cause the Guarantors
listed on Schedule 10.11 to deliver the Security Documents pursuant to which
the Post Closing Collateral described in Schedule 10.11 shall be subjected to
the Lien of the Security Documents, together with opinions of counsel to the
Guarantors covering matters relating to such Security Documents which the
Required Holders of the Notes shall reasonably require and such other matters,
including the items described in Section 4.10 and 4.11 with respect to the Post
Closing Collateral, all in form and substance reasonably satisfactory to the
Required Holders of the Notes.
Section 10.12. New Subsidiary Guarantors. If at any time the Company or
the Parent Guarantor shall acquire or create a new Subsidiary (whether direct
or indirect), concurrently with the execution of any guaranty or other
obligation in favor of the Collateral Agent or any Bank Lender, the Company
shall cause such Subsidiary to deliver to each Noteholder a Subsidiary Guaranty
and such Security Documents as the Required Holders may reasonably request,
together with, opinions of counsel to such Subsidiary covering matters relating
to such Subsidiary Guaranty and such Security Documents which the Required
Holders of the Notes shall reasonably require and such other matters, including
items described in Section 4.11 (if required by the nature of such additional
Collateral), all in form and substance reasonably satisfactory to the Required
Holders of the Notes.
Section 10.13. Further Assurances. In the event the Collateral Agent
shall resign or be removed or the Intercreditor Agreement shall no longer be in
full force and effect, the Company will, and will cause each Guarantor to,
execute and deliver to the Noteholders such additional documents (including
amendments to the Security Documents) as the holders of the Notes shall
reasonably request so that there shall continue to be a Collateral Agent under
the Security Documents and to insure that the Lien of the Security Documents
shall continue to be in full force and effect.
The Company also agrees at its own expense to cause or use its best
efforts to cause the Security Documents and all supplements and amendments
thereto and all financing and continuation statements and similar notices
required by applicable law at all times to be kept, recorded and filed in such
manner and in such places to maintain the effectiveness of any original or
supplemental filings under the Uniform Commercial Code, the Personal Property
Security Act (Ontario), or comparable law in any relevant jurisdiction to
maintain, in full force and effect, the Lien and security interest granted by
the Company and the Guarantors to the Noteholders or the Collateral Agent for
the benefit of the Noteholders pursuant to the Security Documents.
SECTION 11. EVENTS OF DEFAULT.
An "Event of Default" shall exist if any of the following conditions or
events shall occur and be continuing:
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(a) the Company defaults in the payment of any principal or
Make-Whole Amount, if any, on any Note when the same becomes due and
payable, whether at maturity or at a date fixed for prepayment or by
declaration or otherwise; or
(b) the Company defaults in the payment of any interest on any Note
for more than five Business Days after the same becomes due and payable;
or
(c) the Company defaults in the performance of or compliance with
any term contained in Section 10.1 through Section 10.8, inclusive,
Section 10.11 or Section 10.12; or
(d) the Company defaults in the performance of or compliance with
any term contained herein (other than those referred to in paragraphs
(a), (b) and (c) of this Section 11) and such default is not remedied
within 30 days after the earlier of (i) a Responsible Officer obtaining
actual knowledge of such default and (ii) the Company receiving written
notice of such default from any holder of a Note (any such written notice
to be identified as a "notice of default" and to refer specifically to
this paragraph (d) of Section 11); or
(e) any Guarantor defaults in any performance of or compliance with
any term contained in the applicable Guaranty Agreement or any Guaranty
Agreement ceases to be in full force and effect;
(f) any representation or warranty made in writing by or on behalf
of the Company or any Guarantor or any officer of the Company in this
Agreement or any officer of a Guarantor in the applicable Guaranty
Agreement or in any writing furnished in connection with the transactions
contemplated hereby proves to have been false or incorrect in any
Material respect on the date as of which made; or
(g) an event of default shall exist under any Security Document; or
(h) the Company, any Guarantor or any Subsidiary of the Company is
in default (as principal or as guarantor or other surety) (x) in the
payment of any principal of or premium or make-whole amount or interest
on any Debt having an unpaid principal amount aggregating in excess of 5%
of Consolidated Adjusted Net Worth beyond any period of grace with
respect thereto or (y) in the performance of or compliance with any term
of such Debt or any mortgage, indenture or other agreement relating
thereto, or any other condition exists, and as a consequence of such
default or condition such Debt has become, or has been declared (or one
or more Persons are entitled to declare such Debt to be), due and payable
before its stated maturity or before its regularly scheduled dates of
payment; or
(i) the Company, any Guarantor or any Subsidiary of the Company (i)
is generally not paying, or admits in writing its inability to pay, its
debts as they become due, (ii) files, or consents by answer or otherwise
to the filing against it of, a petition for relief or reorganization or
arrangement or any other petition in bankruptcy, for liquidation
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or to take advantage of any bankruptcy, insolvency, reorganization,
moratorium or other similar law of any jurisdiction, (iii) makes an
assignment for the benefit of its creditors, (iv) consents to the
appointment of a custodian, receiver, trustee or other officer with
similar powers with respect to it or with respect to any substantial part
of its property, (v) is adjudicated as insolvent or to be liquidated, or
(vi) takes action for the purpose of any of the foregoing; or
(j) a court or governmental authority of competent jurisdiction
enters an order appointing, without consent by the Company, any Guarantor
or any Subsidiary of the Company, a custodian, receiver, trustee or other
officer with similar powers with respect to it or with respect to any
substantial part of its property, or constituting an order for relief or
approving a petition for relief or reorganization or any other petition
in bankruptcy or for liquidation or to take advantage of any bankruptcy
or insolvency law of any jurisdiction, or ordering the dissolution,
winding-up or liquidation of the Company, any Guarantor or any Subsidiary
of the Company, or any such petition shall be filed against the Company,
any Guarantor or any Subsidiary of the Company and such petition shall
not be dismissed within 60 days; or
(k) a final judgment or judgments for the payment of money
aggregating in excess of 5% of Consolidated Adjusted Net Worth are
rendered against one or more of the Company, any Guarantor and any
Subsidiary of the Company and which judgments are not, within 60 days
after entry thereof, bonded, discharged or stayed pending appeal, or are
not discharged within 60 days after the expiration of such stay; or
(l) if (i) any Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code for any plan year or part thereof or a
waiver of such standards or extension of any amortization period is
sought or granted under section 412 of the Code, (ii) a notice of intent
to terminate any Plan shall have been or is reasonably expected to be
filed with the PBGC or the PBGC shall have instituted proceedings under
ERISA section 4042 to terminate or appoint a trustee to administer any
Plan or the PBGC shall have notified the Company or any ERISA Affiliate
that a Plan may become a subject of any such proceedings, (iii) the
aggregate "amount of unfunded benefit liabilities" (within the meaning of
section 4001(a)(18) of ERISA) under all Plans, determined in accordance
with Title IV of ERISA, shall exceed 5% of Consolidated Adjusted Net
Worth, (iv) the Company or any ERISA Affiliate shall have incurred or is
reasonably expected to incur any liability pursuant to Title I or IV of
ERISA or the penalty or excise tax provisions of the Code relating to
employee benefit plans, (v) the Company or any ERISA Affiliate withdraws
from any Multiemployer Plan, or (vi) the Company or any Subsidiary
establishes or amends any employee welfare benefit plan that provides
post-employment welfare benefits in a manner that would increase the
liability of the Company or any Subsidiary thereunder; and any such event
or events described in clauses (i) through (vi) above, either
individually or together with any other such event or events, could
reasonably be expected to have a Material Adverse Effect.
As used in Section 11(l), the terms "employee benefit plan" and "employee
welfare benefit plan" shall have the respective meanings assigned to such terms
in Section 3 of ERISA.
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SECTION 12. REMEDIES ON DEFAULT, ETC.
Section 12.1. Acceleration. (a) If an Event of Default with respect to
the Guarantor or the Company described in paragraph (i) or (j) of Section 11
(other than an Event of Default described in clause (i) of paragraph (i) or
described in clause (vi) of paragraph (i) by virtue of the fact that such
clause encompasses clause (i) of paragraph (i)) has occurred, all the Notes
then outstanding shall automatically become immediately due and payable.
(b) If any other Event of Default has occurred and is continuing, any
holder or holders of more than 50% in principal amount of the Notes at the time
outstanding may at any time at its or their option, by notice or notices to the
Company, declare all the Notes then outstanding to be immediately due and
payable.
(c) If any Event of Default described in paragraph (a) or (b) of Section
11 has occurred and is continuing, any holder or holders of Notes at the time
outstanding affected by such Event of Default may at any time, at its or their
option, by notice or notices to the Company, declare all the Notes held by it
or them to be immediately due and payable.
Upon any Note becoming due and payable under this Section 12.1, whether
automatically or by declaration, such Note will forthwith mature and the entire
unpaid principal amount of such Note, plus (x) all accrued and unpaid interest
thereon and (y) the Make-Whole Amount determined in respect of such principal
amount (to the full extent permitted by applicable law), shall all be
immediately due and payable, in each and every case without presentment,
demand, protest or further notice, all of which are hereby waived. The Company
acknowledges, and the parties hereto agree, that each holder of a Note has the
right to maintain its investment in the Notes free from repayment by the
Company (except as herein specifically provided for), and that the provision
for payment of a Make-Whole Amount by the Company in the event that the Notes
are prepaid or are accelerated as a result of an Event of Default, is intended
to provide compensation for the deprivation of such right under such
circumstances.
Section 12.2. Other Remedies. If any Default or Event of Default has
occurred and is continuing, and irrespective of whether any Notes have become
or have been declared immediately due and payable under Section 12.1, the
holder of any Note at the time outstanding may proceed to protect and enforce
the rights of such holder by an action at law, suit in equity or other
appropriate proceeding, whether for the specific performance of any agreement
contained herein or in any Note, or for an injunction against a violation of
any of the terms hereof or thereof, or in aid of the exercise of any power
granted hereby or thereby or by law or otherwise.
Section 12.3. Rescission. At any time after any Notes have been declared
due and payable pursuant to clause (b) or (c) of Section 12.1, the holders of
more than 50% in principal amount of the Notes then outstanding, by written
notice to the Company, may rescind and annul any such declaration and its
consequences if (a) the Company has paid all overdue interest on the Notes, all
principal of and Make-Whole Amount, if any, on any Notes that are due and
payable and are unpaid other than by reason of such declaration, and all
interest on such overdue principal and Make-Whole Amount, if any, and (to the
extent permitted by applicable law) any overdue interest in respect of the
Notes, at the Default Rate, (b) all Events of Default and
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Defaults, other than non-payment of amounts that have become due solely by
reason of such declaration, have been cured or have been waived pursuant to
Section 17, and (c) no judgment or decree has been entered for the payment of
any monies due pursuant hereto or to the Notes. No rescission and annulment
under this Section 12.3 will extend to or affect any subsequent Event of
Default or Default or impair any right consequent thereon.
Section 12.4. No Waivers or Election of Remedies, Expenses, etc. No
course of dealing and no delay on the part of any holder of any Note in
exercising any right, power or remedy shall operate as a waiver thereof or
otherwise prejudice such holder's rights, powers or remedies. No right, power
or remedy conferred by this Agreement or by any Note upon any holder thereof
shall be exclusive of any other right, power or remedy referred to herein or
therein or now or hereafter available at law, in equity, by statute or
otherwise. Without limiting the obligations of the Company under Section 15,
the Company will pay to the holder of each Note on demand such further amount
as shall be sufficient to cover all reasonable costs and expenses of such
holder incurred in any enforcement or collection under this Section 12,
including, without limitation, reasonable attorneys' fees, expenses and
disbursements.
SECTION 13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
Section 13.1. Registration of Notes. The Company shall keep at its
principal executive office a register for the registration and registration of
transfers of Notes. The name and address of each holder of one or more Notes,
each transfer thereof and the name and address of each transferee of one or
more Notes shall be registered in such register. Prior to due presentment for
registration of transfer, the Person in whose name any Note shall be registered
shall be deemed and treated as the owner and holder thereof for all purposes
hereof, and the Company shall not be affected by any notice or knowledge to the
contrary. The Company shall give to any holder of a Note that is an
Institutional Investor promptly upon request therefor, a complete and correct
copy of the names and addresses of all registered holders of Notes.
Section 13.2. Transfer and Exchange of Notes. Upon surrender of any Note
at the principal executive office of the Company for registration of transfer
or exchange (and in the case of a surrender for registration of transfer, duly
endorsed or accompanied by a written instrument of transfer duly executed by
the registered holder of such Note or its attorney duly authorized in writing
and accompanied by the address for notices of each transferee of such Note or
part thereof), the Company shall execute and deliver, at the Company's expense
(except as provided below), one or more new Notes (as requested by the holder
thereof) of an identical series in exchange therefor, in an aggregate principal
amount equal to the unpaid principal amount of the surrendered Note. Each such
new Note shall be payable to such Person as such holder may request and shall
be substantially in the form of the Note of such series originally issued
hereunder. Each such new Note shall be dated and bear interest from the date
to which interest shall have been paid on the surrendered Note or dated the
date of the surrendered Note if no interest shall have been paid thereon. The
Company may require payment of a sum sufficient to cover any stamp tax or
governmental charge imposed in respect of any such transfer of Notes. Notes
shall not be transferred in denominations of less than $500,000, provided that
if necessary to enable the registration of transfer by a holder of its entire
holding of Notes, one Note may be in a denomination of less than $500,000. Any
transferee, by its acceptance of a Note registered
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in its name (or the name of its nominee), shall be deemed to have made the
representation set forth in Section 6.
Section 13.3. Replacement of Notes. Upon receipt by the Company of
evidence reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of any Note (which evidence shall be, in the case of
an Institutional Investor, notice from such Institutional Investor of such
ownership and such loss, theft, destruction or mutilation), and
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (provided that if the holder of such Note
is, or is a nominee for, an original Purchaser or another holder of a
Note with a minimum net worth equal to the greater of (x) the unpaid
principal amount of the Note which has been lost, stolen or destroyed or
(y) $10,000,000, such Person's own unsecured agreement of indemnity shall
be deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation
thereof,
the Company at its own expense shall execute and deliver, in lieu thereof, a
new Note of an identical series, dated and bearing interest from the date to
which interest shall have been paid on such lost, stolen, destroyed or
mutilated Note or dated the date of such lost, stolen, destroyed or mutilated
Note if no interest shall have been paid thereon.
SECTION 14. PAYMENTS ON NOTES.
Section 14.1. Place of Payment. Subject to Section 14.2, payments of
principal, Make-Whole Amount, if any, and interest becoming due and payable on
the Notes shall be made in Chicago, Illinois at the principal office of Bank of
America NT&SA in such jurisdiction. The Company may at any time, by notice to
each holder of a Note, change the place of payment of the Notes so long as such
place of payment shall be either the principal office of the Company in such
jurisdiction or the principal office of a bank or trust company in such
jurisdiction.
Section 14.2. Home Office Payment. So long as you or your nominee shall
be the holder of any Note, and notwithstanding anything contained in Section
14.1 or in such Note to the contrary, the Company will pay all sums becoming
due on such Note for principal, Make-Whole Amount, if any, and interest by the
method and at the address specified for such purpose below your name in
Schedule A, or by such other method or at such other address as you shall have
from time to time specified to the Company in writing for such purpose, without
the presentation or surrender of such Note or the making of any notation
thereon, except that upon written request of the Company made concurrently with
or reasonably promptly after payment or prepayment in full of any Note, you
shall surrender such Note for cancellation, reasonably promptly after any such
request, to the Company at its principal executive office or at the place of
payment most recently designated by the Company pursuant to Section 14.1.
Prior to any sale or other disposition of any Note held by you or your nominee
you will, at your election, either endorse thereon the amount of principal paid
thereon and the last date to which interest has been paid thereon or surrender
such Note to the Company in exchange for a new Note or Notes pursuant to
Section 13.2. The Company will afford the benefits of this Section 14.2 to any
Institutional
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Investor that is the direct or indirect transferee of any Note purchased by you
under this Agreement and that has made the same agreement relating to such Note
as you have made in this Section 14.2.
SECTION 15. EXPENSES, ETC.
Section 15.1. Transaction Expenses. Whether or not the transactions
contemplated hereby are consummated, the Company will pay all reasonable costs
and expenses (including reasonable attorneys' fees of one special counsel for
the holders of the Notes and, if reasonably required, local or other counsel)
incurred by you and each Other Purchaser or holder of a Note in connection with
such transactions and in connection with any amendments, waivers or consents
under or in respect of this Agreement, the Guaranty Agreements, the Security
Documents or the Notes (whether or not such amendment, waiver or consent
becomes effective), including, without limitation: (a) the costs and expenses
incurred in enforcing or defending (or determining whether or how to enforce or
defend) any rights under this Agreement, the Guaranty Agreements, the Security
Documents or the Notes or in responding to any subpoena or other legal process
or informal investigative demand issued in connection with this Agreement, the
Guaranty Agreements, the Security Documents or the Notes, or by reason of being
a holder of any Note, and (b) the costs and expenses, including financial
advisors' fees, incurred in connection with the insolvency or bankruptcy of any
Guarantor, the Company or any Subsidiary or in connection with any work-out or
restructuring of the transactions contemplated hereby, by the Guaranty
Agreements and by the Notes. The Company will pay, and will save you and each
other holder of a Note harmless from, all claims in respect of any fees, costs
or expenses, if any, of brokers and finders (other than those retained by you).
Section 15.2. Survival. The obligations of the Company under this Section
15 will survive the payment or transfer of any Note, the enforcement, amendment
or waiver of any provision of this Agreement or the Notes, and the termination
of this Agreement and the Guaranty Agreements.
SECTION 16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained herein shall survive the
execution and delivery of this Agreement and the Notes, the purchase or
transfer by you of any Note or portion thereof or interest therein and the
payment of any Note, and may be relied upon by any subsequent holder of a Note,
regardless of any investigation made at any time by or on behalf of you or any
other holder of a Note. All statements contained in any certificate or other
instrument delivered by or on behalf of the Company pursuant to this Agreement
shall be deemed representations and warranties of the Company under this
Agreement. Subject to the preceding sentence, this Agreement and the Notes
embody the entire agreement and understanding between you and the Company and
supersede all prior agreements and understandings relating to the subject
matter hereof.
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SECTION 17. AMENDMENT AND WAIVER.
Section 17.1. Requirements. This Agreement and the Notes may be amended,
and the observance of any term hereof or of the Notes may be waived (either
retroactively or prospectively), with (and only with) the written consent of
the Company and the Required Holders, except that no such amendment or waiver
may, without the written consent of the holder of each Note at the time
outstanding affected thereby, (a) subject to the provisions of Section 12
relating to acceleration or rescission, change the amount or time of any
prepayment or payment of principal of, or the rate, time of payment or method
of computation of interest or of the Make-Whole Amount on, the Notes, (b)
change the percentage of the principal amount of the Notes the holders of which
are required to (i) consent to any such amendment or waiver or (ii) accelerate
the Notes or rescind such acceleration, or (c) amend the interest rate on the
Notes.
Section 17.2. Solicitation of Holders of Notes.
(a) Solicitation. The Company will provide each holder of the Notes
(irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is required, to
enable such holder to make an informed and considered decision with respect to
any proposed amendment, waiver or consent in respect of any of the provisions
hereof or of the Notes. The Company will deliver executed or true and correct
copies of each amendment, waiver or consent effected pursuant to the provisions
of this Section 17 to each holder of outstanding Notes promptly following the
date on which it is executed and delivered by, or receives the consent or
approval of, the requisite holders of Notes.
(b) Payment. The Company will not directly or indirectly pay or cause to
be paid any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, or grant any security, to any holder of Notes as
consideration for or as an inducement to the entering into by any holder of
Notes or any waiver or amendment of any of the terms and provisions hereof
unless such remuneration is concurrently granted, on the same terms, ratably to
each holder of Notes then outstanding even if such holder did not consent to
such waiver or amendment.
Section 17.3. Binding Effect, etc. Any amendment or waiver consented to
as provided in this Section 17 applies equally to all holders of Notes and is
binding upon them and upon each future holder of any Note and upon the Company
without regard to whether such Note has been marked to indicate such amendment
or waiver. No such amendment or waiver will extend to or affect any
obligation, covenant, agreement, Default or Event of Default not expressly
amended or waived or impair any right consequent thereon. No course of dealing
between the Company and the holder of any Note nor any delay in exercising any
rights hereunder or under any Note shall operate as a waiver of any rights of
any holder of such Note. As used herein, the term "this Agreement" and
references thereto shall mean this Agreement as it may from time to time be
amended or supplemented.
Section 17.4. Notes Held by Company, etc. Solely for the purpose of
determining whether the holders of the requisite percentage of the aggregate
principal amount of Notes then outstanding approved or consented to any
amendment, waiver or consent to be given under this Agreement or the Notes, or
have directed the taking of any action provided herein or in the Notes
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to be taken upon the direction of the holders of a specified percentage of the
aggregate principal amount of Notes then outstanding, Notes directly or
indirectly owned by the Company or any of its Affiliates or any Subsidiary
shall be deemed not to be outstanding.
SECTION 18. NOTICES.
All notices and communications provided for hereunder shall be in writing
and sent (a) by telefacsimile if the sender on the same day sends a confirming
copy of such notice by a recognized overnight delivery service (charges
prepaid), or (b) by registered or certified mail with return receipt requested
(postage prepaid), or (c) by a recognized overnight delivery service (with
charges prepaid). Any such notice must be sent:
(i) if to you or your nominee, to you or it at the address specified
for such communications in Schedule A, or at such other address as you or
it shall have specified to the Company in writing,
(ii) if to any other holder of any Note, to such holder at such
address as such other holder shall have specified to the Company in
writing, or
(iii) if to the Company, to the Company at its address set forth at
the beginning hereof to the attention of the President, or at such other
address as the Company shall have specified to the holder of each Note in
writing.
Notices under this Section 18 will be deemed given only when actually received.
SECTION 19. REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by you at the Closing (except the Notes
themselves), and (c) financial statements, certificates and other information
previously or hereafter furnished to you, may be reproduced by you or by the
Company by any photographic, photostatic, microfilm, microcard, miniature
photographic or other similar process and the parties to this Agreement may
destroy any original document so reproduced. You and the Company agree and
stipulate that, to the extent permitted by applicable law, any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by you or by the
Company in the regular course of business) and any enlargement, facsimile or
further reproduction of such reproduction shall likewise be admissible in
evidence. This Section 19 shall not prohibit you or the Company or any other
holder of Notes from contesting any such reproduction to the same extent that
it could contest the original, or from introducing evidence to demonstrate the
inaccuracy of any such reproduction.
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SECTION 20. CONFIDENTIAL INFORMATION.
For the purposes of this Section 20, "Confidential Information" means
information delivered to any Purchaser by or on behalf of the Company or any
Subsidiary in connection with the transactions contemplated by or otherwise
pursuant to this Agreement that is proprietary in nature and that was clearly
marked or labeled or otherwise adequately identified when received by such
Purchaser as being confidential information of the Company or such Subsidiary,
provided that such term does not include information that (a) was publicly
known or otherwise known to such Purchaser prior to the time of such
disclosure, (b) subsequently becomes publicly known through no act or omission
by such Purchaser or any Person acting on its behalf, (c) otherwise becomes
known to such Purchaser other than through disclosure by the Company or any
Subsidiary or (d) constitutes financial statements delivered to such Purchaser
under Section 7.1 that are otherwise publicly available. Each Purchaser will
maintain the confidentiality of such Confidential Information in accordance
with procedures adopted by such Purchaser in good faith to protect confidential
information of third parties delivered to such Purchaser, provided that such
Purchaser may deliver or disclose Confidential Information to (i) such
Purchaser's directors, trustees, officers, employees, agents, attorneys and
affiliates (to the extent such disclosure reasonably relates to the
administration of the investment represented by such Purchaser's Notes), (ii)
such Purchaser's financial advisors and other professional advisors who agree
to hold confidential the Confidential Information substantially in accordance
with the terms of this Section 20, (iii) any other holder of any Note, (iv) any
Institutional Investor to which such Purchaser sells or offers to sell such
Note or any part thereof or any participation therein (if such Person has
agreed in writing prior to its receipt of such Confidential Information to be
bound by the provisions of this Section 20), (v) any Person from which such
Purchaser offers to purchase any security of the Company (if such Person has
agreed in writing prior to its receipt of such Confidential Information to be
bound by the provisions of this Section 20), (vi) any federal or state
regulatory authority having jurisdiction over such Purchaser, (vii) the
National Association of Insurance Commissioners or any similar organization, or
any nationally recognized rating agency that requires access to information
about such Purchaser's investment portfolio or (viii) any other Person to which
such delivery or disclosure may be necessary or appropriate (w) to effect
compliance with any law, rule, regulation or order applicable to such
Purchaser, (x) in response to any subpoena or other legal process, (y) in
connection with any litigation to which such Purchaser is a party or (z) if an
Event of Default has occurred and is continuing, to the extent such Purchaser
may reasonably determine such delivery and disclosure to be necessary or
appropriate in the enforcement or for the protection of the rights and remedies
under such Purchaser's Notes and this Agreement. Each holder of a Note, by its
acceptance of a Note, will be deemed to have agreed to be bound by and to be
entitled to the benefits of this Section 20 as though it were a party to this
Agreement. On reasonable request by the Company in connection with the
delivery to any holder of a Note of information required to be delivered to
such holder under this Agreement or requested by such holder (other than a
holder that is a party to this Agreement or its nominee), such holder will
enter into an agreement with the Company embodying the provisions of this
Section 20.
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SECTION 21. MISCELLANEOUS.
Section 21.1. Submission to Jurisdiction. The Company hereby consents to
the jurisdiction of any state or Federal court located within the County of
Cook, State of Illinois, and irrevocably agrees that all actions or proceedings
relating to this Agreement may be litigated in such courts, and the Company
waives (to the fullest extent permitted by law) any objection which it may have
based on improper venue or forum non conveniens to the conduct of any
proceeding in any such court and waives personal service of any and all process
upon it, and consents that all such service of process be made by first class
mail or messenger directed to it at the address of the Company set forth in
this Agreement and that service so made shall be deemed to be completed upon
the earlier of actual receipt or five Business Days after the same shall have
been posted to the Company's address, as the case may be, in accordance
herewith. Nothing contained in this section shall affect the right of any
holder of Notes to serve legal process in any other manner permitted by law or
to bring any action or proceeding in the courts of any jurisdiction against the
Company or to enforce a judgment obtained in the courts of any other
jurisdiction.
Section 21.2. Currency Rate Indemnity. To the extent permitted by law:
(a) the obligations of the Company to any holder hereunder shall,
notwithstanding any judgment in a currency (the "Judgment Currency")
other than United States Dollars (the "Agreement Currency"), be
discharged only to the extent that on the day following receipt by such
holder of any amount in the Judgment Currency, such holder may in
accordance with normal banking procedures purchase the Agreement Currency
with the Judgment Currency; and
(b) if the amount of the Agreement Currency so purchased is less
than the amount originally to be paid to such holder in the Agreement
Currency, the Company agrees, as a separate obligation and
notwithstanding such judgment, to pay the difference.
Section 21.3. Payments Free and Clear of Taxes. The Company, for the
benefit of the holders of the Notes agrees that in the event payments made by
the Company, hereunder or in respect of the Notes to any holder are subject to
any present or future tax, duty, assessment, impost, levy, withholding or other
similar charge (a "Relevant Tax") imposed upon such holder by the government of
any country or jurisdiction (or any authority therein or thereof) other than
any tax based on or measured by net income imposed on any holder by the country
in which such holder is domiciled (the "Domicile Country"), from or through
which payments hereunder or on or in respect of the Notes are actually made
(each a "Taxing Jurisdiction"), the Company, will pay to the holder such
additional amounts as may be necessary in order that the net amounts paid to
such holder pursuant to the terms of this Agreement or the Notes after
imposition of any such Relevant Tax shall be not less than the amounts
specified in this Agreement or the Notes to be then due and payable (after
giving effect to the exclusion for Relevant Taxes imposed by the government of
the Domicile Country), provided that, notwithstanding the provisions of this
Section 21.3, (1) in no event shall the Company be obligated to pay any
Relevant Tax with respect to any payment to any holder not resident in the
United States in excess of the amount which the Company would have been
obligated to pay if (i) authorization could have been
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obtained under any income tax treaty between the United States and the Taxing
Jurisdiction in force at the relevant time for the Company to make such payment
either without deduction or withholding of Relevant Taxes or with deduction or
withholding of a lesser amount in respect of Relevant Taxes had the Notes held
by such holder been beneficially owned at all relevant times by persons who
were eligible in full for any benefits and exemptions available under such
treaty with respect to interest received from the Company, assuming that the
Company and such persons had made and obtained all relevant claims and
authorizations required under such treaty, and (ii) the Company had made the
minimum deduction or withholding of Relevant Taxes which it would have been
lawfully entitled to do pursuant to such authorization; and (2) no such
additional amounts shall be payable in respect of any Notes to a holder which
is liable for such Relevant Tax in respect of such Notes by reason of such
recipient not dealing at arms length with the Company for purposes of the
Income Tax Act (Canada) or being resident or being deemed to be resident in
such Taxing Jurisdiction or having a permanent establishment in such Taxing
Jurisdiction or carrying on business or being deemed to carry on business in
such Taxing Jurisdiction or having some other business connection with such
Taxing Jurisdiction other than the mere holding of such Notes or the receipt of
income therefrom.
Section 21.4. Successors and Assigns. All covenants and other agreements
contained in this Agreement by or on behalf of any of the parties hereto bind
and inure to the benefit of their respective successors and assigns (including,
without limitation, any subsequent holder of a Note) whether so expressed or
not.
Section 21.5. Payments Due on Non-Business Days. Anything in this
Agreement or the Notes to the contrary notwithstanding, any payment of
principal of or Make-Whole Amount or interest on any Note that is due on a date
other than a Business Day shall be made on the next succeeding Business Day
without including the additional days elapsed in the computation of the
interest payable on such next succeeding Business Day.
Section 21.6. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall (to the full extent permitted by
law) not invalidate or render unenforceable such provision in any other
jurisdiction.
Section 21.7. Construction. Each covenant contained herein shall be
construed (absent express provision to the contrary) as being independent of
each other covenant contained herein, so that compliance with any one covenant
shall not (absent such an express contrary provision) be deemed to excuse
compliance with any other covenant. Where any provision herein refers to
action to be taken by any Person, or which such Person is prohibited from
taking, such provision shall be applicable whether such action is taken
directly or indirectly by such Person.
Section 21.8. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be an original but all of which together
shall constitute one instrument. Each counterpart may consist of a number of
copies hereof, each signed by less than all, but together signed by all, of the
parties hereto.
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Section 21.9. Governing Law. This Agreement shall be construed and
enforced in accordance with, and the rights of the parties shall be governed
by, the law of the State of Illinois excluding choice-of-law principles of the
law of such State that would require the application of the laws of a
jurisdiction other than such State.
* * * * *
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If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterpart of this Agreement and return it to
the Company, whereupon the foregoing shall become a binding agreement between
you and the Company.
Very truly yours,
ZEMEX U.S. CORPORATION
By _____________________________________
Its _______________________________
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The foregoing is hereby agreed
to as of the date thereof.
[VARIATION]
By _____________________________________
Its _______________________________
47
DEFINED TERMS
As used herein, the following terms have the respective meanings set forth
below or set forth in the Section hereof following such term:
"Affiliate" means, at any time, and with respect to any Person (other than
a Subsidiary), (a) any other Person that at such time directly or indirectly
through one or more intermediaries Controls, or is Controlled by, or is under
common Control with, such first Person, and (b) any Person beneficially owning
or holding, directly or indirectly, 10% or more of any class of voting or
equity interests of the Company or any Subsidiary or any corporation of which
the Company and its Subsidiaries beneficially own or hold, in the aggregate,
directly or indirectly, 10% or more of any class of voting or equity interests.
As used in this definition, "Control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise. Unless the context otherwise clearly requires, any
reference to an "Affiliate" is a reference to an Affiliate of the Company.
"Agents" shall mean Bank of America Canada, as Canadian Agent, and Bank of
America National Trust and Savings Association, as U.S. Agent, together with
any successor(s) thereto in such capacity, as agent for the Bank Lenders under
the Bank Credit Agreement.
"Bank Credit Agreement" shall mean the Credit Agreement dated as of May
21, 1999, entered into by and among the Company, the Parent Guarantor, the
Agents, and the Bank Lenders, as amended, restated, modified, extended or
renewed from time to time. The Bank Credit Agreement shall also include any
additional or replacement credit facility with the same or different Bank
Lenders and agents; provided that if such additional or replacement credit
facility shall be secured by a Lien on the Property of the Company and its
Subsidiaries, the Notes shall also be equally and ratably secured thereunder
pursuant to the Security Documents and such Bank Lenders shall have become
parties to the Intercreditor Agreement.
"Bank Lenders" shall mean the banks which are from time to time party to
the Bank Credit Agreement.
"Business Day" means (a) for the purposes of Section 8.6 only, any day
other than a Saturday, a Sunday or a day on which commercial banks in New York
City are required or authorized to be closed, and (b) for the purposes of any
other provision of this Agreement, any day other than a Saturday, a Sunday or a
day on which commercial banks in Chicago, Illinois, or New York City are
required or authorized to be closed.
"Capital Lease" shall mean any lease the obligation for Rentals with
respect to which is required to be capitalized on a consolidated balance sheet
of the lessee and its subsidiaries in accordance with GAAP.
SCHEDULE B
(to Note Purchase Agreement)
48
"Capitalized Rentals" of any Person shall mean as of the date of any
determination thereof the amount at which the aggregate Rentals due and to
become due under all Capitalized Leases under which such Person is a lessee
would be reflected as a liability on a consolidated balance sheet of such
Person.
"Closing" is defined in Section 3 of the Note Agreements.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations promulgated thereunder from time to time.
"Collateral" means the personal Property of the Parent Guarantor, the
Company and the Subsidiary Guarantors described in the Security Documents.
"Collateral Agent" is defined in Section 2.3.
"Collateral Release Event" is defined in Section 2.3.
"Company" means Zemex U.S. Corporation, a Delaware corporation.
"Confidential Information" is defined in Section 20.
"Consolidated Adjusted Net Worth" means, as of the date of any
determination thereof, Consolidated Net Worth, minus (a) minority interests (if
and to the extent included in Consolidated Net Worth) and (b) the excess, if
any, of (i) the aggregate amount of all outstanding Restricted Investments,
over (ii) 10% of Consolidated Net Worth.
"Consolidated Current Debt" means the total amount of Current Debt of the
Company and its Subsidiaries determined on a consolidated basis in accordance
with GAAP.
"Consolidated Debt" means the total amount of all Debt of the Company and
its Subsidiaries determined on a consolidated basis in accordance with GAAP.
"Consolidated Funded Debt" shall mean all Funded Debt of the Company and
its Subsidiaries determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, with reference to any period, the net
income (or loss) of the Company and its Subsidiaries for such period (taken as
a cumulative whole), as determined in accordance with GAAP, after eliminating
all offsetting debits and credits between the Company and its Subsidiaries and
all other items required to be eliminated in the course of the preparation of
consolidated financial statements of the Company and its Subsidiaries in
accordance with GAAP, provided that there shall be excluded:
(a) the income (or loss) of any Person accrued prior to the date it
becomes a Subsidiary or is merged into or consolidated with the Company
or a Subsidiary, and the income (or loss) of any Person, substantially
all of the assets of which have been acquired in any manner, realized by
such other Person prior to the date of acquisition,
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(b) the income (or loss) of any Person (other than a Subsidiary) in
which the Company or any Subsidiary has an ownership interest, except to
the extent that any such income has been actually received by the Company
or such Subsidiary in the form of cash dividends or similar cash
distributions,
(c) the undistributed earnings of any Subsidiary to the extent that
the declaration or payment of dividends or similar distributions by such
Subsidiary is not at the time permitted by the terms of its charter or
any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to such Subsidiary,
(d) any restoration to income of any contingency reserve, except to
the extent that provision for such reserve was made out of income accrued
during such period,
(e) any aggregate net gain (but not any aggregate net loss) during
such period arising from the sale, conversion, exchange or other
disposition of capital assets (such term to include, without limitation,
(i) all non-current assets and, without duplication, (ii) the following,
whether or not current: all fixed assets, whether tangible or
intangible, all inventory sold in conjunction with the disposition of
fixed assets, and all Securities),
(f) any gains resulting from any write-up of any assets (but not any
loss resulting from any write-down of any assets),
(g) any net gain from the collection of the proceeds of life
insurance policies,
(h) any gain or loss arising from the acquisition or disposition of
any Security, or the extinguishment, under GAAP, of any Debt, of the
Company or any Subsidiary,
(i) any net income or gain (but not any net loss) during such period
from (i) any change in accounting principles in accordance with GAAP,
(ii) any prior period adjustments resulting from any change in accounting
principles in accordance with GAAP, (iii) any extraordinary items, or
(iv) any discontinued operations or the disposition thereof,
(j) any deferred credit representing the excess of equity in any
Subsidiary at the date of acquisition over the cost of the investment in
such Subsidiary,
(k) in the case of a successor to the Company by consolidation or
merger or as a transferee of its assets, any earnings of the successor
corporation prior to such consolidation, merger or transfer of assets,
and
(l) any portion of such net income that cannot be freely converted
into United States Dollars.
"Consolidated Net Income Available for Interest Charges" for any period
shall mean the sum of (i) Consolidated Net Income during such period plus (to
the extent deducted in determining Consolidated Net Income), (ii) all
provisions for any Federal, state or other income
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taxes made by the Company and its Subsidiaries during such period, (iii)
depreciation, depletion and amortization, (iv) Interest Charges of the Company
and its Subsidiaries during such period and (v) all costs relating to the
operation of newly constructed facilities to the extent that such costs could
have been capitalized under generally accepted accounting principles in effect
in the United States in 1998. To the extent that Consolidated Net Income
Available for Fixed Charges in any fiscal year shall be increased by the
addition of any amount pursuant to clause (v) of the immediately preceding
sentence, such amount shall be deemed to be a capitalized cost which shall be
deducted from Consolidated Net Income Available for Fixed Charges in subsequent
fiscal years in accordance with generally accepted accounting principles in
effect in the United States in 1998.
"Consolidated Net Worth" means the total amount of shareholders' equity of
the Company and its Subsidiaries, determined on a consolidated basis in
accordance with GAAP.
"Consolidated Total Assets" means, as of the date of any determination
thereof, the total amount of assets of the Company and its Subsidiaries,
determined on a consolidated basis in accordance with GAAP.
"Consolidated Total Capitalization" shall mean the sum of (i) Consolidated
Adjusted Net Worth, and (ii) and Consolidated Funded Debt.
"Current Debt" means, with respect to any Person, all Debt of such Person
(other than Funded Debt) which by its terms or by the terms of any instrument
or agreement relating thereto matures on demand or within one year from the
date of the creation thereof and is not directly or indirectly renewable or
extendible at the option of the obligor in respect thereof to a date one year
or more from such date.
"Debt" means, with respect to any Person, without duplication,
(a) its liabilities for borrowed money;
(b) its liabilities for the deferred purchase price of Property
acquired by such Person (excluding accounts payable and other accrued
liabilities arising in the ordinary course of business but including,
without limitation, all liabilities created or arising under any
conditional sale or other title retention agreement with respect to any
such Property);
(c) all liabilities appearing on its balance sheet in accordance
with GAAP in respect of Capital Leases;
(d) all liabilities for borrowed money secured by any Lien with
respect to any Property owned by such Person (whether or not it has
assumed or otherwise become liable for such liabilities);
(e) all non-contingent liabilities in respect of reimbursement
agreements or similar agreements in respect of letters of credit or
instruments serving a
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similar function issued or accepted for its account by banks and other
financial institutions (whether or not representing obligations for
borrowed money); and
(f) any Guaranty of such Person with respect to liabilities of a
type described in any of clauses (a) through (e) hereof.
Debt of any Person shall include all obligations of such Person of
the character described in clauses (a) through (f) to the extent such
Person remains legally liable in respect thereof notwithstanding that any
such obligation is deemed to be extinguished under GAAP.
"Default" means an event or condition the occurrence or existence of which
would, with the lapse of time or the giving of notice or both, become an Event
of Default.
"Default Rate" means that rate of interest that is the greater of (i) 2%
per annum above the rate of interest stated in clause (a) of the first
paragraph of the Notes of the applicable series or (ii) 2% over the rate of
interest publicly announced by Bank of America National Trust and Savings Bank
in Chicago, Illinois as its "base" or "prime" rate.
"Environmental Laws" means any and all Federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including but not limited to
those related to hazardous substances or wastes, air emissions and discharges
to waste or public systems.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder
from time to time in effect.
"ERISA Affiliate" shall mean any corporation, trade or business that is,
along with the Company, a member of a controlled group of corporations or a
controlled group of trades or businesses, as described in Sections 414(b) and
414(c), respectively, of the Code or Section 4001 of ERISA.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Sale and Leaseback Transaction" shall mean any sale or transfer
of property owned by the Company or any Subsidiary to any Person within 270
days following the acquisition or completion of construction of such property
by the Company or any Subsidiary if the Company or a Subsidiary shall
concurrently with such sale or transfer lease such property, as lessee.
"Excluded Subsidiary" shall have the meaning set forth in the Bank Credit
Agreement.
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"Funded Debt" means, with respect to any Person, all Debt of such Person
which by its terms or by the terms of any instrument or agreement relating
thereto matures, or which is otherwise payable or unpaid, one year or more
from, or is directly or indirectly renewable or extendible at the option of the
obligor in respect thereof to a date one year or more (including, without
limitation, an option of such obligor under a revolving credit or similar
agreement obligating the lender or lenders to extend credit over a period of
one year or more) from, the date of the creation thereof.
"GAAP" means generally accepted accounting principles consistently applied
as in effect from time to time in Canada; provided that all amounts set forth
in financial statements and compliance with all covenants shall be denominated
in United States Dollars.
"Governmental Authority" means
(a) the government of
(i) Canada or any province or other political subdivision
thereof, or
(ii) the United States of America or any State or other
political subdivision thereof, or
(iii) any other jurisdiction in which the Company conducts all
or any part of its business, or which asserts jurisdiction over any
properties of the Company, or
(b) any entity exercising executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to, any such
government.
"Guarantors" means the Parent Guarantor and the Subsidiary Guarantors.
"Guaranty" means, with respect to any Person, any obligation (except the
endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing
any indebtedness, dividend or other obligation of any other Person in any
manner, whether directly or indirectly, including (without limitation)
obligations incurred through an agreement, contingent or otherwise, by such
Person:
(a) to purchase such indebtedness or obligation or any property
constituting security therefor;
(b) to advance or supply funds (i) for the purchase or payment of
such indebtedness or obligation, or (ii) to maintain any working capital
or other balance sheet condition or any income statement condition of any
other Person or otherwise to advance or make available funds for the
purchase or payment of such indebtedness or obligation;
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(c) to lease properties or to purchase properties or services
primarily for the purpose of assuring the owner of such indebtedness or
obligation of the ability of any other Person to make payment of the
indebtedness or obligation; or
(d) otherwise to assure the owner of such indebtedness or obligation
against loss in respect thereof.
In any computation of the indebtedness or other liabilities of the obligor
under any Guaranty, the indebtedness or other obligations that are the subject
of such Guaranty shall be assumed to be direct obligations of such obligor.
"Guaranty Agreements" mean the Parent Guaranty and the Subsidiary
Guaranties.
"Hazardous Material" means any and all pollutants, toxic or hazardous
wastes or any other substances that might pose a hazard to health or safety,
the removal of which may be required or the generation, manufacture, refining,
production, processing, treatment, storage, handling, transportation, transfer,
use, disposal, release, discharge, spillage, seepage, or filtration of which is
or shall be restricted, prohibited or penalized by any applicable law
(including, without limitation, asbestos, urea formaldehyde foam insulation and
polychlorinated biphenyl's).
"Institutional Investor" means (a) any Purchaser, (b) any holder of a Note
holding more than $2,000,000 aggregate principal amount of the Notes and (c)
any bank, trust company, savings and loan association or other financial
institution, any pension plan, any investment company, any insurance company,
any broker or dealer, or any other similar financial institution or entity,
regardless of legal form.
"Intercreditor Agreement" shall have the meaning set forth in Section 2.3.
"Interest Charges" for any period shall mean on a consolidated basis all
interest charges on all Debt (including the interest component of Rentals on
Capital Leases and all amortization of debt discount and expense on any
particular Debt for which such calculation is being made) of the Company and
its Subsidiaries.
"Investments" means all investments, in cash or by delivery of property,
made directly or indirectly in any property or assets or in any Person, whether
by acquisition of shares of capital stock, Debt or other obligations or
Securities or by loan, advance, capital contribution or otherwise.
"Lien" means any interest in Property securing an obligation owed to, or a
claim by, a Person other than the owner of the Property, whether the interest
is based on common law, statute or contract (including the security interest
lien arising from a mortgage, encumbrance, pledge, conditional sale or trust
receipt or a lease, consignment or bailment for security purposes). The term
"Lien" shall not include minor reservations, exceptions, encroachments,
easements, rights-of-way, covenants, conditions, restrictions and other minor
title exceptions affecting Property, provided that they do not constitute
security for a monetary obligation. For the purposes of this Agreement, the
Company or a Subsidiary shall be deemed to be the owner of
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any Property which it has acquired or holds subject to a conditional sale
agreement, financing lease or other arrangement pursuant to which title to the
Property has been retained by or vested in some other Person for security
purposes, and such retention or vesting shall be deemed to be a Lien.
"Material" means material in relation to the business, operations,
affairs, financial condition, assets or properties of the Company and its
Subsidiaries taken as a whole.
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of the
Company and its Subsidiaries taken as a whole, or (b) the ability of the
Company to perform its obligations under this Agreement and the Notes, or (c)
the validity or enforceability of this Agreement and the Notes.
"Memorandum" is defined in Section 5.3.
"Multiemployer Plan" means any Plan that is a "multiemployer plan" (as
such term is defined in section 4001(a)(3) of ERISA).
"Notes" is defined in Section 1.
"Officer's Certificate" means a certificate of a Senior Financial Officer
or of any other officer of the Company whose responsibilities extend to the
subject matter of such certificate.
"Other Agreements" is defined in Section 2.1.
"Other Purchasers" is defined in Section 2.1.
"Parent Guarantor" means Zemex Corporation, a corporation organized under
the laws of Canada.
"Parent Guaranty" is defined in Section 2.2.
"Person" means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization, or a government or
agency or political subdivision thereof.
"Plan" means an "employee benefit plan" (as defined in section 3(3) of
ERISA) that is or, within the preceding three years, has been established or
maintained, or to which contributions are or, within the preceding three years,
have been made or required to be made, by the Company or any ERISA Affiliate or
with respect to which the Company or any ERISA Affiliate may have any material
liability.
"Priority Debt" means the sum of (a) all Debt of the Company and its
Subsidiaries secured by Liens (excluding Debt secured by Liens permitted by
Section 10.6(a) through (g) and Section 10.6(k) of this Agreement), and (b) all
unsecured Debt of Subsidiaries (excluding unsecured Debt owing to the Company
or another Wholly-Owned Subsidiary); provided that
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Debt of Subsidiary Guarantors to any Person shall be excluded so long as such
Person shall be a party to the Intercreditor Agreement and payments in respect
to such Debt shall be subject to the terms of the Intercreditor Agreement.
"Post Closing Collateral" shall mean the real and personal property
described in Schedule 10.11.
"Property" means, unless otherwise specifically limited, real or personal
property of any kind, tangible or intangible, choate or inchoate.
"Purchasers" means the purchasers of the Notes pursuant to this Agreement
and the Other Agreements.
"QPAM Exemption" means Prohibited Transaction Class Exemption 84-14 issued
by the United States Department of Labor.
"Rentals" means, and includes as of the date of any determination thereof,
all fixed payments (including as such all payments which the lessee is
obligated to make to the lessor on termination of the lease or surrender of the
property) payable by the Company or a Subsidiary, as lessee or sublessee under
a lease of real or personal property, but shall be exclusive of any amounts
required to be paid by the Company or a Subsidiary (whether or not designated
as rents or additional rents) on account of maintenance, repairs, insurance,
taxes and similar charges. Fixed rents under any "percentage leases" shall be
computed solely on the basis of the minimum rents, if any, required to be paid
by the lessee regardless of sales volumes or gross revenues.
"Reportable Event" shall have the same meaning as in ERISA.
"Required Holders" means, at any time, the holders of at least 51% in
principal amount of the Notes at the time outstanding (exclusive of Notes then
owned by the Company or any of its Affiliates).
"Responsible Officer" means any Senior Financial Officer and any other
officer of the Company with responsibility for the administration of the
relevant portion of this Agreement.
"Restricted Investments" means all Investments except the following:
(a) property to be used in the ordinary course of business of the
Company and its Subsidiaries;
(b) current assets arising from the sale of goods and services in
the ordinary course of business of the Company and its Subsidiaries;
(c) Investments in one or more Subsidiaries or any Person that
concurrently with such Investment becomes a Subsidiary;
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(d) Investments existing on the date of the Closing and disclosed in
Schedule 5.15 to this Agreement;
(e) Investments in direct obligations of the United States of
America or Canada or any agency or instrumentality of the United States
of America or Canada, the payment or guarantee of which constitutes a
full faith and credit obligation of the United States of America or
Canada, as the case may be, in each case, maturing within one year from
the date of acquisition thereof;
(f) Investments in tax-exempt obligations of any state of the United
States of America, or any municipality of any such state, in each case
rated "AA" or better by S&P, or "Aa2" or better by Moody's or an
equivalent rating by any other credit rating agency of recognized
national standing, provided that such obligations mature within one year
from the date of acquisition thereof;
(g) Investments in certificates of deposit and bankers' acceptances
maturing within one year from the date of issuance thereof, issued by
Bank of America National Trust and Savings Bank or any other bank or
trust company organized under the laws of Canada, the United States or
any State thereof having capital, surplus and undivided profits
aggregating at least $225,000,000; provided that at the time of
acquisition thereof by the Company or a Subsidiary, the senior unsecured
long-term debt of such bank or trust company or of the holding company of
such bank or trust company is rated "AA" or better by S&P or "Aa" or
better by Moody's;
(h) Investments in commercial paper of corporations organized under
the laws of the United States or any state thereof maturing in 270 days
or less from the date of issuance which, at the time of acquisition by
the Company or any Subsidiary, is accorded a rating of "A-1" or better by
S&P or "P-1" by Moody's;
(i) Investments in publicly traded shares of any open-ended mutual
fund, the aggregate asset value of which "marked to market" is at least
$225,000,000, which is managed by a fund manager of recognized national
standing, and which invests not less than 90% of its assets in
obligations described in clauses (e) through (h) hereof; provided that
any such Investments will be classified as current assets in accordance
with GAAP; and
(j) treasury stock.
As of any date of determination, each Restricted Investment shall be valued at
the greater of:
(x) the amount at which such Restricted Investment is shown on the
books of the Company or any of its Subsidiaries (or zero if such
Restricted Investment is not shown on any such books); and
(y) either
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(i) in the case of any Guaranty of the obligation of any
Person, the amount which the Company or any of its Subsidiaries has
paid on account of such obligation less any recoupment by the
Company or such Subsidiary of any such payments, or
(ii) in the case of any other Restricted Investment, the
excess of (x) the greater of (A) the amount originally entered on
the books of the Company or any of its Subsidiaries with respect
thereto and (B) the cost thereof to the Company or its Subsidiary
over (y) any return of capital (after income taxes applicable
thereto) upon such Restricted Investment through the sale or other
liquidation thereof or part thereof or otherwise.
As used in this definition of "Restricted Investments": "Moody's" means
Moody's Investors Service, Inc. and "S&P" means Standard & Poor's Ratings
Group, a division of McGraw Hill, Inc.
In valuing any Investments for the purpose of applying the limitations
set forth in clause (b) of the definition of "Consolidated Adjusted Net
Worth", at any time when an entity becomes a Subsidiary, all Investments
of such entity at such time shall be deemed to have been made by such
entity, as a Subsidiary, at such time.
"Securities Act" means the Securities Act of 1933, as amended from time to
time.
"Security" shall have the same meaning as in Section 2(1) of the
Securities Act of 1933, as amended.
"Security Documents" means, collectively, the Guaranty Agreements, the
Intercreditor Agreement, the General Security Agreement dated as of May 21,
1999 from the Parent Guarantor in favor of the Collateral Agent for the benefit
of the Noteholders, the Security Agreements dated as of May 21, 1999 from the
Company and the Subsidiary Guarantors in favor of the Collateral Agent for the
benefit of the Noteholders, the Share Pledge Agreements dated as of May 21,
1999 from the Parent Guarantor to the Collateral Agent for the benefit of the
Noteholders, the Pledge Agreements, dated as of May 21, 1999 from the Company
and certain Subsidiary Guarantors to the Collateral Agent for the benefit of
the Noteholders, the Pledge Agreement dated as of May 21, 1999 from the Parent
Guarantor in favor of the Collateral Agent for the benefit of the Noteholders
pledging all shares of Inmet Inc. owned by the Parent Guarantor and all other
security agreements, mortgages, hypothec, deeds of trust, patent and trademark
assignments, lease assignments, guarantees and other similar agreements between
the Company, the Guarantors or any Subsidiary and the Noteholders or the
Collateral Agent for the benefit of the Noteholders now or hereinafter
delivered to the Collateral Agent or the Noteholders pursuant to or in
connection with the transactions contemplated hereby, and all financing
statements (or comparable documents now or hereafter filed in accordance with
the Personal Property Security Act (Ontario), the Uniform Commercial Code or
comparable law) against the Company, the Guarantors or any Subsidiary as debtor
in favor of the Noteholders or the Collateral Agent for the benefit of the
Noteholders as secured party, and any amendments, supplements, modifications,
renewals, replacements, consolidations, substitutions and extensions of any of
the foregoing.
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"Senior Debt" means all Consolidated Debt of the Company and its
Subsidiaries other than Subordinated Debt.
"Senior Financial Officer" means the chief financial officer, principal
accounting officer, treasurer or controller of the Company.
"Subordinated Debt" means all unsecured Debt of the Company which shall
contain or have applicable thereto subordination provisions providing for the
subordination thereof to other Debt of the Company (including, without
limitation, the obligations of the Company under this Agreement).
"Subsidiary" means, as to any Person, any corporation, association or
other business entity in which such Person or one or more of its Subsidiaries
or such Person and one or more of its Subsidiaries owns sufficient equity or
voting interests to enable it or them (as a group) ordinarily, in the absence
of contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if more
than a 50% interest in the profits or capital thereof is owned by such Person
or one or more of its Subsidiaries or such Person and one or more of its
Subsidiaries (unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one or more of
its Subsidiaries). Unless the context otherwise clearly requires, any
reference to a "Subsidiary" is a reference to a Subsidiary of the Company.
"Subsidiary Guarantors" shall mean the Subsidiaries of the Parent
Guarantor which are identified as Subsidiary Guarantors on Schedule 5.4.
"Subsidiary Guaranty" is defined in Section 2.2.
"Subsidiary Stock" means, with respect to any Person, the stock (or any
options or warrants to purchase stock or other Securities exchangeable for or
convertible into stock) of any Subsidiary of such Person.
"Successor Corporation" is defined in Section 10.6.
"Wholly-Owned Subsidiary" means, at any time, any Subsidiary one hundred
percent (100%) of all of the outstanding Debt and equity interests (except
directors' qualifying shares) and voting interests of which are owned by any
one or more of the Company and the Company's other Wholly-Owned Subsidiaries at
such time.
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