Exhibit 99.3
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SENIOR SECURED NOTE PURCHASE AGREEMENT
Among
OGLEBAY NORTON COMPANY,
as the Company,
and
THE GUARANTORS LISTED ON THE SIGNATURE PAGES HERETO,
as the Guarantors,
and
THE 1818 MEZZANINE FUND II, L.P.,
AND THE OTHER PURCHASERS LISTED ON THE SIGNATURE PAGES HERETO
as the Purchasers,
Dated as of October 25, 2002
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TABLE OF CONTENTS
ARTICLE I - DEFINITIONS..................................................... 1
1.1 Definitions................................................... 1
1.2 Accounting Terms.............................................. 21
ARTICLE II - AUTHORIZATION, PURCHASE, SALE AND TERMS OF THE
SENIOR SECURED NOTES; PAYMENTS......................................... 21
2.1 The Senior Notes.............................................. 21
2.2 Purchase of the Senior Notes.................................. 21
2.3 Use of Proceeds............................................... 22
2.4 Payments and Endorsements..................................... 22
2.5 Redemptions and Mandatory Repurchase.......................... 23
2.6 Default Rate of Interest...................................... 26
2.7 Maximum Legal Rate of Interest................................ 26
2.8 Payment on Non-Business Days.................................. 26
2.9 Transfer and Exchange of Senior Notes......................... 27
2.10 Replacement of Senior Notes................................... 27
2.11 Ranking....................................................... 28
2.12 Structuring and Financing Fees................................ 28
ARTICLE III - CONDITIONS TO PURCHASER'S OBLIGATIONS......................... 28
3.1 Representations and Warranties................................ 28
3.2 Documentation at Closing...................................... 28
3.3 No Default.................................................... 30
3.4 Use of Proceeds............................................... 30
3.5 Compliance with this Agreement................................ 31
3.6 No Material Judgment or Order................................. 31
3.7 Compliance Certificate........................................ 31
3.8 Employment Agreements......................................... 31
3.9 Statement of Sources and Uses of Funds........................ 31
3.10 Amendment to Syndicated Facility Documents.................... 31
3.11 Revolving Credit Availability................................. 31
3.12 Financial Statements.......................................... 31
3.13 Pro Forma Balance Sheet....................................... 31
3.14 Pro Forma Financial Projections............................... 32
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS............... 32
4.1 Representations and Warranties of the Purchasers.............. 32
ARTICLE V - REPRESENTATIONS AND WARRANTIES.................................. 33
5.1 Senior Notes constitute Senior Indebtedness................... 33
5.2 Corporate Authority........................................... 34
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5.3 Governmental Approvals........................................ 34
5.4 Subsidiaries, etc............................................. 34
5.5 Capital Stock of Subsidiaries................................. 35
5.6 Investments in Other Persons.................................. 35
5.7 Title to Properties; Leases................................... 35
5.8 Franchises, Patents, Copyrights, etc.......................... 35
5.9 Financial Statements and Projections.......................... 36
5.10 Tax Status.................................................... 36
5.11 Permits; Compliance with Laws................................. 37
5.12 Compliance with Organizational Documents...................... 37
5.13 Government Regulation......................................... 37
5.14 Absence of Financing Statements, etc.......................... 37
5.15 Potential Conflicts of Interest............................... 38
5.16 Certain Transactions.......................................... 38
5.17 Employee Benefit Plans........................................ 38
5.18 Environmental Compliance...................................... 39
5.19 Insurance..................................................... 41
5.20 Securities Act................................................ 41
5.21 Employment of Officers........................................ 42
5.22 Labor Relations............................................... 42
5.23 Trade Relations............................................... 43
5.24 Books and Records............................................. 43
5.25 Other Agreements.............................................. 43
5.26 Representations and Warranties Incorporated from Other
Agreements................................................... 44
5.27 No Material Changes........................................... 44
5.28 Litigation.................................................... 45
5.29 No Materially Adverse Contracts, etc.......................... 45
5.30 Chief Executive Offices....................................... 45
5.31 No Brokers or Finders......................................... 45
5.32 Use of Proceeds............................................... 45
5.33 Solvency...................................................... 46
5.34 No Event of Default........................................... 46
5.35 Disclosure.................................................... 46
ARTICLE VI - AFFIRMATIVE COVENANTS OF THE COMPANY........................... 47
6.1 Punctual Payment.............................................. 47
6.2 Maintenance of Office......................................... 47
6.3 Records and Accounts.......................................... 47
6.4 Financial Statements, Certificates and Information............ 47
6.5 Notices....................................................... 49
6.6 Corporate Existence; Maintenance of Properties................ 50
6.7 Insurance..................................................... 51
6.8 Taxes......................................................... 52
6.9 Inspection of Properties and Books, etc....................... 52
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6.10 Compliance with Laws, Contracts, Licenses, and Permits........ 53
6.11 Employee Benefit Plans........................................ 53
6.12 Subsidiaries, Etc............................................. 53
6.13 Intellectual Property......................................... 54
6.14 Board Rights.................................................. 54
6.15 ESG Acquisition............................................... 56
6.16 Collateral Matters............................................ 56
6.17 Further Assurances............................................ 57
ARTICLE VII - CERTAIN NEGATIVE COVENANTS OF THE COMPANY..................... 58
7.1 Indebtedness.................................................. 58
7.2 Restrictions on Liens......................................... 59
7.3 Restrictions on Investments................................... 61
7.4 Distributions................................................. 61
7.5 Merger, Consolidation and Disposition of Assets............... 62
7.6 Compliance with Environmental Laws............................ 64
7.7 Employee Benefit Plans........................................ 64
7.8 Business Activities........................................... 65
7.9 Transactions with Affiliates.................................. 65
7.10 Capital Expenditures.......................................... 65
7.11 Accounting Practices.......................................... 65
7.12 Amendments to Charter and Agreements; Subordinated Debt....... 66
ARTICLE VIII - FINANCIAL COVENANTS OF THE COMPANY........................... 66
8.1 Total Leverage Ratio.......................................... 66
8.2 Syndicated Debt Ratio......................................... 67
8.3 Interest Coverage............................................. 67
8.4 Cash-Flow Coverage............................................ 68
8.5 Net Worth..................................................... 68
ARTICLE IX - EVENTS OF DEFAULT; ACCELERATION; ETC........................... 69
9.1 Events of Default and Acceleration............................ 69
9.2 Remedies...................................................... 73
9.3 Distribution of Proceeds...................................... 73
9.4 Annulment of Defaults......................................... 74
ARTICLE X - GUARANTEE OF THE SENIOR NOTES................................... 74
ARTICLE XI - MISCELLANEOUS.................................................. 76
11.1 No Waiver; Cumulative Remedies................................ 76
11.2 Amendments, Waivers and Consents.............................. 76
11.3 Addresses for Notices, Etc.................................... 76
11.4 Costs, Expenses and Taxes..................................... 77
11.5 Assignability; Binding Agreement.............................. 78
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11.6 Payments in Respect of Senior Notes........................... 78
11.7 Indemnification............................................... 78
11.8 Survival of Representations and Warranties.................... 79
11.9 Prior Agreements.............................................. 79
11.10 Severability.................................................. 79
11.11 Governing Law................................................. 79
11.12 Dispute Resolution............................................ 79
11.13 Section Headings and Gender; Construction..................... 81
11.14 Counterparts.................................................. 81
11.15 Further Assurances............................................ 81
11.16 Consent to Jurisdiction....................................... 82
11.17 Effect of Judgment............................................ 82
11.18 No Limitation................................................. 82
11.19 Specific Performance.......................................... 82
11.20 Actions by Noteholders........................................ 82
11.21 Non-Disclosure................................................ 83
11.22 Publicity..................................................... 83
11.23 Limitation of Liability....................................... 83
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SCHEDULES AND EXHIBITS
Exhibits
A Form of Joinder Agreement
B Form of Security Agreement
C Form of Pledge Agreement
D Form of Collateral Assignment and Security Agreement
2.1 Form of Senior Note
6.4(d) Form of Financial Compliance Certificate
6.14 Form of Confidentiality Agreement
Schedules
1 Purchasers and Senior Note Amounts
3.2(j) Properties with respect to which Title Commitments Delivered at Closing
3.8 Employment Agreements and Stock-Based Plans
5.4 Subsidiaries
5.5 Capital Stock; Other Matters
5.6 Investments in Other Persons
5.7 Title to Properties; Schedule of Real Estate
5.9 Financial Statements
5.15 Potential Conflicts of Interest
5.16 Certain Transactions
5.17.2 Non-terminable Welfare Plans
5.18(a) Environmental Notices
5.18(c) Hazardous Substances
5.18(f) Environmental Reports
5.19 Insurance
5.21 Employment of Officers
5.22 Labor Relations
5.25 Other Agreements
5.28 Litigation
5.31 Brokers
6.2 Chief Executive Offices
6.15 Terms of ESG Acquisition
7.1(a) Existing Indebtedness
7.1(j) Coal Act Reserves/Post-Employment Benefits Reserves
7.3 Existing Investments
7.5.2 Restricted Property
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Oglebay Norton Company
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Dated as of October 25, 2002
To the Purchasers named in
Schedule 1 hereto
Ladies and Gentlemen:
Oglebay Norton Company, an Ohio corporation (the "Company") and each of the
Initial Guarantors (as defined below) hereby agree with you as follows:
ARTICLE I - DEFINITIONS
1.1 Definitions. As used herein, the following terms shall have the
following meanings (such meanings to be equally applicable to both the singular
and plural forms of the terms defined):
"Acquisition Limit" shall mean, with respect to any merger,
consolidation, asset acquisition or stock acquisition (other than any
acquisition of assets in the ordinary course of business and consistent with
past practice) in any single transaction or series of related transactions and
to any and all consideration paid or otherwise conveyed (and, with respect to
any obligations and/or liabilities, assumed), or committed to be paid, otherwise
conveyed, or assumed by the Company or any of its Subsidiaries (whether in the
form of cash, Indebtedness, Property, or otherwise) (i) during the period from
the Closing Date through September 30, 2004, $10,000,000 and (ii) during the
period from October 1, 2004 and thereafter, $15,000,000.
"Affiliate" shall mean any Person that would be considered to be an
affiliate of the Company under Rule 144 of the Rules and Regulations of the
Securities and Exchange Commission, as in effect on the date hereof, if the
Company were issuing securities; provided that the term "Affiliate" shall not
include any Noteholder.
"Agent" shall mean KeyBank National Association, as agent under the
Syndicated Facility Documents and its successors or assigns as agent for the
holders of Syndicated Debt thereunder.
"Agreement" shall mean this Senior Note Purchase Agreement as from
time to time amended and in effect between the parties.
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"Applicable Law" shall mean and include statutes and rules and
regulations thereunder and interpretations thereof by any competent court or by
any governmental or other regulatory body or official charged with the
administration or the interpretation thereof and requests, directives,
instructions and notices at any time or from time to time heretofore or
hereafter made upon or otherwise issued to any Noteholder by any central bank or
other fiscal, monetary or other authority, whether or not having the force of
law.
"Asset Sale" shall mean any sale, issuance, conveyance, transfer,
lease or other disposition, including by way of merger or consolidation (to the
extent otherwise permitted by Section 7.5.1) or sale and leaseback transaction
(any of the foregoing, a "transfer"), directly or indirectly, in one or a series
of related transactions, of any Property of the Company or any Subsidiary, other
than in the ordinary course of business, to any Person other than the Company or
any Guarantor (other than any Restricted Guarantor). For the purposes of such
definition, the term "Asset Sale" shall not include any transfer of Property to
the extent that the Proceeds from the transfer thereof do not exceed (i)
$500,000 in any transaction or series of related transactions, taken as a whole,
or (ii) $2,000,000 (irrespective of the size of the individual transactions) in
the aggregate for all such transactions on or after the Closing Date.
"Banks" shall mean, collectively, the "Banks" as defined under each of
the Syndicated Facility Documents and Vessel Financing Documents and their
successors and assigns, from time to time.
"Business Day" shall mean any day other than a Saturday, Sunday or
public holiday or the equivalent for banks under the laws of the State of New
York.
"Called Principal" shall mean the principal of the Senior Notes that
is to be prepaid pursuant to either Section 2.5.2 or 2.5.4 (in each case, any
partial payment being applied in satisfaction of required payments of principal
in the order of their scheduled due dates), as the context requires.
"Capital Expenditures" shall mean, for any period, capital
expenditures of the Company and its Subsidiaries, determined in accordance with
GAAP and (b) without duplication, (i) Capitalized Leases of the Company and its
Subsidiaries and (ii) the lease of any assets by the Company or any of its
Subsidiaries under any Synthetic Lease to the extent that such assets would have
been capital assets under GAAP had such Synthetic Lease been treated for
accounting purposes as a Capitalized Lease.
"Capitalized Lease Obligation" shall mean any Indebtedness represented
by the principal portion of obligations under a Capitalized Lease.
"Capitalized Lease" shall mean any lease under which the Company or
any of its Subsidiaries is the lessee or obligor, the discounted future rental
payment obligations under which are required to be capitalized on the balance
sheet of the lessee or obligor in accordance with GAAP.
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"Capital Stock" shall mean any and all shares, interests,
participations or other equivalents (however, designated) of capital stock of a
corporation, any and all equivalent ownership interests in a Person other than a
corporation, including, without limitation, membership interests in a limited
liability company, limited partnership and general partnership interests, and
any and all warrants, rights or options to purchase any of the foregoing.
"Cash Taxes" shall mean, for any period, the consolidated income and
other taxes for such period that are required to be or are paid in cash during
such period, all as determined in accordance with GAAP.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended.
"Closing" shall have the meaning assigned to that term in Section 2.2.
"Closing Date" shall have the meaning assigned to that term in Section
2.2.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Collateral Agent" shall mean The 1818 Mezzanine Fund II, L.P., as
collateral agent for the Noteholders under the Senior Notes Documents, and its
successors or assigns as collateral agent for the holders of the Senior Notes
Obligations thereunder.
"Commission" shall mean the United States Securities and Exchange
Commission (or any other federal agency at that time administering the
Securities Act).
"Company" shall have the meaning assigned to that term in the first
paragraph of this Agreement.
"Compliance Certificate" shall have the meaning assigned to that term
in Section 6.4(d).
"Consolidated" or "consolidated" shall mean with respect to any term
defined herein that term as applied to the accounts of the Company and its
Subsidiaries, consolidated in accordance with GAAP.
"Consolidated EBITDA" shall mean, for any period, on a Consolidated
basis and in accordance with GAAP, Consolidated Net Earnings for such period,
excluding non-recurring non-cash items, plus the aggregate amounts deducted in
determining such Consolidated Net Earnings in respect of (a) income taxes, (b)
Consolidated Interest Expense, and (c) Consolidated Depreciation and
Amortization Charges.
"Consolidated Fixed Charges" shall mean, for any period, on a
Consolidated basis and in accordance with GAAP, the aggregate of (a) cash
interest expense (including, without limitation, the "imputed interest" portion
of capital leases), (b) actual cash expenditures for taxes,
3
(c) cash principal payments on long-term Funded Indebtedness maturing within 12
months of the date in question, and (d) actual cash expenditures relating to
Distributions.
"Consolidated Net Earnings" shall mean, for any period, the Net
Earnings of the Company and its Subsidiaries for such period, determined on a
Consolidated basis in accordance with GAAP.
"Consolidated Net Worth" shall mean, at any date, the stockholders'
equity of the Company, determined as of such date on a Consolidated basis and in
accordance with GAAP.
"Consolidated Pro forma Capital Expenditures" shall mean the sum of
(a) Consolidated Capital Expenditures, plus (b)(i) without duplication, the
amount of capital expenditures of Persons acquired by the Company and its
Subsidiaries during the most recently completed four fiscal quarters to the
extent that such capital expenditures of Persons acquired are confirmed by
audited financial or other information satisfactory to the Noteholders, minus
(ii) capital expenditures of Persons disposed of by the Company and its
Subsidiaries during the most recently completed four fiscal quarters.
"Consolidated Pro forma Cash Flow" shall mean, for any period, (a)
Consolidated Pro forma EBITDA, minus (b) Consolidated Pro forma Capital
Expenditures, as determined in accordance with GAAP.
"Consolidated Pro forma EBITDA" shall mean the sum of (a) Consolidated
EBITDA, plus (b)(i) without duplication, the EBITDA of Persons acquired by the
Company and its Subsidiaries during the most recently completed four fiscal
quarters to the extent that the EBITDA of such Persons is confirmed by audited
financial or other information satisfactory to the Noteholders, minus (ii)
EBITDA of Persons disposed of by the Company and its Subsidiaries during the
most recently completed four fiscal quarters.
"Consolidated Pro forma Fixed Charges" shall mean the sum of (a)
Consolidated Fixed Charges, plus (b)(i) without duplication, the amount of Fixed
Charges of Persons acquired by the Company and its Subsidiaries during the most
recently completed four fiscal quarters to the extent that the Fixed Charges of
such Persons are confirmed by audited financial or other information
satisfactory to the Noteholders, minus (ii) Fixed Charges of Persons disposed of
by the Company and its Subsidiaries during the most recently completed four
fiscal quarters.
"Consolidated Pro forma Interest Expense" shall mean the sum of (a)
Consolidated Interest Expense, plus (b)(i) without duplication, the interest
expense of Persons acquired by the Company and its Subsidiaries during the most
recently completed four fiscal quarters to the extent that such interest expense
is confirmed by audited financial or other information satisfactory to the
Noteholders, minus (ii) interest expense of Persons disposed of by the Company
and its Subsidiaries during the most recently completed four fiscal quarters.
"Cumulative Acquisition Limit" shall mean, for any fiscal year, with
respect to any merger, consolidation, asset acquisition or stock acquisition
(other than any acquisition of
4
assets in the ordinary course of business and consistent with past practice) in
any single transaction or series of transactions (whether related or otherwise),
and to any and all consideration paid or otherwise conveyed (and, with respect
to any obligations and/or liabilities, assumed), or committed to be paid,
otherwise conveyed, or assumed, by the Company or any of its Subsidiaries
(whether as in the form of cash, Indebtedness, Property, or otherwise)
$25,000,000 plus the amount by which $25,000,000 exceeds the aggregate amount
that the Company and its Subsidiaries paid or invested (or committed to be paid
or invested) in acquisitions permitted under Section 7.5.1 and consummated in
the preceding fiscal year.
"Debt Rating" means, as of any date of determination, the rating
determined by either S&P or ▇▇▇▇▇'▇ of the Company's non-credit enhanced, senior
unsecured long term debt.
"Default" shall have the meaning assigned to that term in Section 9.1.
"Depreciation and Amortization Charges" shall mean, for any period, in
accordance with GAAP, the aggregate of all such charges for fixed assets,
leasehold improvements, mining reserves and general intangibles (specifically
including goodwill) of a Person for such period.
"Direct Competitor" means any Person that is engaged, directly or
indirectly, in the operation of a line of business that is in direct competition
with the Company and/or any of its Subsidiaries.
"Distribution" shall mean the declaration or payment of any dividend
on or in respect of any shares of any class of Capital Stock of the Company or
any Subsidiary, other than dividends, stock splits or other equity distributions
payable solely in shares of Capital Stock of the Company or such Subsidiary; the
purchase, redemption, or other retirement of any shares of any class of Capital
Stock of the Company, directly or indirectly through a Subsidiary of the Company
or otherwise; the return of capital by the Company or any Subsidiary to its
stockholders as such; or any other distribution on or in respect of any shares
of any class of Capital Stock of the Company or any Subsidiary.
"EBITDA" shall mean, for any fiscal period, Net Earnings for such
period, excluding non-recurring non-cash items, plus, to the extent deducted in
the calculation of Net Earnings and without duplication, (a) Depreciation and
Amortization Charges for such period, (b) income tax expense for such period,
(c) Interest Expense for such period, all in accordance with GAAP.
"Eligible Noteholder" means any Noteholder other than a Noteholder
that the Company's Board of Directors determines in good faith, after providing
such Noteholder with an opportunity to be heard, is a Direct Competitor or a
significant investor in a Direct Competitor.
"Employee Benefit Plan" shall mean (a) all employee benefit plans
within the meaning of Section 3(3) of ERISA; (b) all bonus or incentive award
plans, severance pay policies or agreements, deferred compensation agreements,
supplemental income arrangements,
5
vacation plans, and all other employee benefit plans, agreements, and
arrangements (including any informal arrangements) not described in (a) above,
including without limitation, any arrangement intended to comply with Section
120, 125, 127, 129 or 137 of the Code; and (c) all plans or arrangements
providing compensation to employee and non-employee directors, and, in the case
of each of (a), (b) and (c), that are maintained or contributed to (or required
to be contributed to) by the Company or any ERISA Affiliate, or that provide
benefits to or otherwise covers employees (including their spouses, dependents
and beneficiaries) of the Company or any ERISA Affiliate. In the case of an
Employee Benefit Plan funded through a trust described in Section 401(a) of the
Code or an organization described in Section 501(c)(9) of the Code, or any other
funding vehicle, each reference to such Employee Benefit Plan shall include a
reference to such trust, organization or other vehicle.
"Employment Agreements" shall have the meaning assigned to that term
in Section 3.8.
"Environmental Laws" shall mean any environmental, health or
safety-related law, statute, regulation, rule, ordinance, order, bylaw or decree
at the federal, state or local level, including without limitation, RCRA,
CERCLA, ▇▇▇▇, the Federal Clean Water Act, the Federal Clean Air Act, the Toxic
Substances Control Act, or any analogous state or local requirements.
"Environmental Reports" shall have the meaning ascribed thereto in
Section 5.18(f).
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" shall mean any Person which is treated as a single
employer with the Company under Section 414 of the Code.
"ERISA Reportable Event" shall mean a reportable event with respect to
a Guaranteed Pension Plan within the meaning of Section 4043 of ERISA and the
regulations promulgated thereunder, for which the notice requirement has not
been waived.
"ESG Acquisition" shall mean the Company's acquisition of 100% of the
outstanding Capital Stock of Erie Navigation Company, Inc., a Pennsylvania
corporation, S&J Trucking, Inc., a Pennsylvania corporation, Serv-All Concrete,
Inc., a Pennsylvania corporation and Mountfort Terminal, Ltd., a Pennsylvania
corporation, on substantially the terms and conditions set forth in Schedule
6.15 hereto.
"Event of Default" shall have the meaning assigned to that term in
Section 9.1.
"Excess Net Proceeds" shall mean, with respect to any transaction,
including, without limitation, any Asset Sale or other transaction contemplated
under Section 2.5.1., the net amount equal to the aggregate cash proceeds
received (including cash proceeds subsequently received in respect of non-cash
consideration initially received) (collectively, "Proceeds") in
6
connection with such transaction minus the sum of (a) the reasonable fees,
commissions and other out-of-pocket expenses incurred by the Company or any
Subsidiary, as applicable, in connection with such transaction (other than
amounts payable to Affiliates of the Company or such Subsidiary), (b) federal,
state and local taxes incurred in connection with such transaction, whether or
not payable at such time, and (c) Proceeds of such transaction required to be
paid, and actually paid as so required, to the Banks under the terms of the
Syndicated Facility Documents; provided that the term "Proceeds" shall not
include or be a reference to cash payments received from (i) any sale of
inventory in the ordinary course, (ii) any disposition in the ordinary course of
the Company's or any of its Subsidiaries' business of assets that are obsolete,
worn out or no longer used or useful in the Company's or any of its Subsidiaries
business, (iii) any sale of accounts or contract claims in each case reasonably
deemed by the Company to be of questionable collectability, (iv) any disposition
of capital assets the proceeds of which (net of taxes payable with respect to
the disposition and the reasonable costs and expenses of sale) are reinvested
within a reasonable period of time and in the ordinary course of business in
capital assets of the Company or its Subsidiaries, (v) insurers for the payment
of claims that the Company and/or any of its Subsidiaries is insured against, or
(vi) any insurer of the Company and/or its Subsidiaries in consideration of the
cancellation of an insurance policy or policies of such insurer (it being
understood that nothing in this definition shall permit or be deemed to
constitute the waiver or consent of the Noteholders (or any of them), of any act
or omission otherwise required or prohibited under the terms of this Agreement).
Notwithstanding the foregoing, the term "Excess Net Proceeds" shall not include
or be a reference to Proceeds up to an aggregate amount of $75,000,000, which
Proceeds are used within 20 Business Days of the Company's (or any of its
Subsidiaries', as applicable) receipt thereof in order to repay (or prepay, as
the case may be) Loans (as defined in the Syndicated Facility Documents) then
outstanding, provided that either or both of the Term Loan Commitment (as
defined in the Syndicated Loan Agreement) and the Revolving Credit Commitment
(as defined in the Syndicated Credit Agreement) are reduced permanently by the
aggregate amount of such prepayments (and, in the case of the Revolving Credit
Commitment, in accordance with Section 2.5(c) of the Syndicated Credit
Agreement).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar successor federal statute, and the rules and regulations
of the Commission thereunder, all as the same shall be in effect at the time.
"Financial Statements" shall mean, collectively, (a) audited
consolidated balance sheet for each of the fiscal years ended December 31, 2000
and December 31, 2001 of the Company and its Subsidiaries and the related
audited consolidated statements of income, retained earnings and cash flows for
the fiscal years then ended, with a report thereon by the independent certified
public accountants of the Company, and, without duplication, and (b) the audited
or unaudited consolidated balance sheets of the Company and its Subsidiaries for
each of the first and second fiscal quarters of the fiscal year 2002 and the
month ending August 31, 2002, and related unaudited consolidated statements of
income and cash flows of the Company and its Subsidiaries; provided that,
following the Closing Date, such term shall also mean and be a reference to the
financial information delivered by the Company pursuant to Section 6.4
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"fiscal quarter" shall mean each quarterly accounting period during
any Fiscal Year; provided that for purposes hereof, all references to the fiscal
quarter ending March 31, June 30, September 30 or December 31 shall mean the
first, second, third or fourth fiscal quarter of the applicable Fiscal Year,
respectively, irrespective of the actual date on which such fiscal quarter may
end.
"Fiscal Year" shall mean the fiscal year of the Company and its
Subsidiaries ending on December 31 of each calendar year.
"Fixed Charges" shall mean, for any period, in accordance with GAAP,
the aggregate of (a) cash interest expense (including, without limitation, the
"imputed interest" portion of Capital Leases), (b) actual cash expenditures for
taxes, (c) cash principal payments on long-term Funded Indebtedness maturing
within 12 months of the date in question, and (d) actual cash expenditures
relating to Distributions.
"Funded Indebtedness" shall mean Indebtedness for borrowed money and
Capitalized Leases, including, but not limited to, current and long-term
Indebtedness and Subordinated Debt; provided, however, that the term "Funded
Indebtedness" shall not include or be a reference to (a) reimbursement
obligations under (i) letters of credit or banker's acceptances up to an
aggregate amount of $3,000,000 from the Closing Date and (ii) standby letters of
credit issued in support of industrial revenue bonds up to an aggregate amount
of $2,500,000 from the Closing Date, (b) Indebtedness arising under any Hedge
Agreement, or (c) Synthetic Leases.
"GAAP" or "generally accepted accounting principles" shall mean
generally accepted accounting principles as then in effect, which shall include
the official interpretations thereof by the Financial Accounting Standards Board
applied on a basis consistent with the past accounting practices and procedures
of the Company.
"Governmental Authority" shall mean the government of any nation,
state, city, locality or other political subdivision of any thereof, any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, and any corporation or other entity
owned or controlled, through stock or capital ownership or otherwise, by any of
the foregoing.
"Guaranteed Obligations" shall have the meaning assigned to that term
in Article X.
"Guaranteed Pension Plan" shall mean any employee pension benefit plan
within the meaning of Section 3(2) of ERISA that the Company or any ERISA
Affiliate maintains or contributes to (or is obligated to contribute to), or
that provides benefits to or otherwise covers employees (including their
spouses, dependents and beneficiaries) of the Company or any ERISA Affiliate,
the benefits of which are guaranteed on termination in full or in part by the
PBGC pursuant to Title IV of ERISA, other than a Multiemployer Plan.
8
"Guarantor" shall mean, collectively, each Subsidiary of the Company
existing on the Closing Date, including, without limitation, the Initial
Guarantors, and each other Person that is required to be or become a guarantor
from time to time pursuant to Section 6.12 hereof.
"Hazardous Substances" shall mean any hazardous waste, hazardous
substances, hazardous materials, pollutant, contaminant, toxic substance,
petroleum product or oil as defined in or pursuant to any Environmental Law or
other chemicals or substances regulated by any Environmental Laws.
"Hedge Agreement" shall mean any currency swap or hedge agreement,
interest rate swap, cap, collar or floor agreement, or other interest rate
management device entered into by the Company with any financial institution.
"Indebtedness" shall mean, as to any Person, whether recourse is
secured by or is otherwise available against all or only a portion of the assets
of such Person, and whether or not contingent, but without duplication:
(a) every obligation for such Person for money borrowed;
(b) every obligation of such Person evidenced by bonds,
debentures, notes or other similar instruments, including obligations
incurred in connection with the acquisition of property, assets or
business;
(c) every reimbursement obligation of such Person with respect
to letters of credit, bankers' acceptances or similar facilities issued for
the account of such Person;
(d) every obligation of such Person issued or assumed as the
deferred purchase price of property or services (including securities
repurchase agreements but excluding trade accounts payable or accrued
liabilities arising in the ordinary course of business which are not
overdue or which are being contested in good faith);
(e) every obligation of such Person under any Capitalized Lease;
(f) every obligation of such Person under any lease (a
"Synthetic Lease") treated as an operating lease under generally accepted
accounting principles and as a loan or financing for U.S. income tax
purposes;
(g) all sales by such Person of (i) accounts or general
intangibles for money due or to become due, (ii) chattel paper, instruments
or documents creating or evidencing a right to payment of money or (iii)
other receivables (together with the items described in the preceding
clauses (i) and (ii), collectively "receivables"), whether pursuant to a
purchase facility or otherwise, other than in connection with the
disposition of the business operations of such Person relating thereto or a
disposition of defaulted receivables for collection and not as a financing
arrangement, and together with any
9
obligation of such Person to pay any discount, interest, fees, indemnities,
penalties, recourse, expenses or other amounts in connection therewith;
(h) every obligation of such Person (each, an "equity related
purchase obligation") to purchase, redeem, retire or otherwise acquire for
value any shares of capital stock of any class issued by such Person, any
warrants, options or other rights to acquire any such shares, or any rights
measured by the value of such shares, warrants, options or other rights;
(i) every obligation of such Person under any forward contract,
futures contract, swap, option or other financing agreement or arrangement
(including, without limitation, caps, floors, collars and similar
agreements), the value of which is dependent upon interest rates, currency
exchange rates, commodities or other indices (each, a "derivative
contract");
(j) every obligation in respect of Indebtedness of any other
entity (including any partnership in which such Person is a general
partner) to the extent that such Person is liable therefor as a result of
such Person's ownership interest in or other relationship with such entity,
except to the extent that the terms of such Indebtedness provide that such
Person is not liable therefor and such terms are enforceable under
applicable law;
(k) every obligation, contingent or otherwise, of such Person
guaranteeing, or having the economic effect of guarantying or otherwise
acting as surety for, any obligation of a type described in any of clauses
(a) through (j) (the "primary obligation") of another Person (the "primary
obligor"), in any manner, whether directly or indirectly, and including,
without limitation, any obligation of such Person (i) to purchase or pay
(or advance or supply funds for the purchase of) any security for the
payment of such primary obligation, (ii) to purchase property, securities
or services for the purpose of assuring the payment of such primary
obligation, or (iii) to maintain working capital, equity capital or other
financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such primary obligation.
The "amount" or "principal amount" of any Indebtedness at any time of
determination represented by (u) any Indebtedness, issued at a price that is
less than the principal amount at maturity thereof, shall be the amount of the
liability in respect thereof determined in accordance with generally accepted
accounting principles, (v) any Capitalized Lease shall be the principal
component of the aggregate of the rentals obligation under such Capitalized
Lease payable over the term thereof that is not subject to termination by the
lessee, (w) any sale of receivables shall be the amount of unrecovered capital
or principal investment of the Purchasers (other than the Company or any of its
wholly-owned Subsidiaries) thereof, excluding amounts representative of yield or
interest earned on such investment, (x) any Synthetic Lease shall be the
stipulated loss value, termination value or other equivalent amount, (y) any
derivative contract shall be the maximum amount of any termination or loss
payment required to be paid by such Person if such
10
derivative contract were, at the time of determination, to be terminated by
reason of any event of default or early termination event thereunder, whether or
not such event of default or early termination event has in fact occurred and
(z) any equity related purchase obligation shall be the maximum fixed redemption
or purchase price thereof inclusive of any accrued and unpaid dividends to be
comprised in such redemption or purchase price.
"Indebtedness for Money Borrowed" shall mean, without duplication, (i)
Indebtedness arising from the lending of money by any Person to the Company or
any of its Subsidiaries; (ii) Indebtedness, whether or not in any such case
arising from the lending by any Person of money to the Company or any of its
Subsidiaries, (A) which is represented by notes payable or drafts accepted that
evidence extensions of credit, (B) which constitutes obligations evidenced by
bonds, debentures, notes or similar instruments, or (C) upon which interest
charges are customarily paid (other than accounts payable) or that was issued or
assumed as full or partial payment for Property; (iii) Indebtedness that
constitutes a Capitalized Lease Obligation; (iv) reimbursement obligations (and
guarantees thereof) with respect to letters of credit; and (v) Indebtedness of
the Company or any of its Subsidiaries under any guaranty of obligations that
would constitute Indebtedness for Money Borrowed under clauses (i) through (iii)
hereof, if owed directly by the Company or any of its Subsidiaries.
"Initial Guarantors" shall mean ONCO Investment Company, a Delaware
corporation, Oglebay Norton Management Company, an Ohio corporation, Oglebay
Norton Industrial Sands, Inc. ("ON Industrial Sands"), a California corporation,
Oglebay Norton Terminals, Inc. (d/b/a Cleveland Bulk Terminal), an Ohio
corporation , Oglebay Norton Engineered Materials Inc., an Ohio corporation
("Oglebay Engineered Materials"), Oglebay Norton Minerals, Inc., a Delaware
corporation, ("ON Minerals"), Oglebay Norton Specialty Minerals, Inc., an Ohio
corporation, ON Marine Services Company, a Delaware corporation ("ON Marine
Services"), Oglebay Norton Marine Services Company, L.L.C. a Delaware limited
liability company, Michigan Limestone Operations, Inc., a Michigan corporation,
Global Stone Corporation, an Ohio corporation, Global Stone Tenn ▇▇▇▇▇▇▇▇
Company, a Delaware corporation, Global Stone Chemstone Corporation, a Delaware
corporation, Global Stone St. Clair, Inc., a Delaware corporation, Global Stone
Filler Products, Inc., a Delaware corporation, Global ▇▇▇▇▇ ▇▇▇▇▇ River, Inc., a
Delaware corporation, GS PC, Inc., a Delaware corporation, Global Stone Penroc,
LP, a Pennsylvania limited partnership, Texas Mining, LP, a Delaware limited
partnership ("Texas Mining"), ON Coast Petroleum Company, a Texas corporation;
Oglebay Norton Marine Management Company, L.L.C., a Delaware limited liability
company, ONCO WVA, Inc., a West Virginia corporation, ONTEX, Inc., a Delaware
corporation, Saginaw Mining Company, an Ohio corporation ("Saginaw"), Global
Stone Management Company, a Georgia corporation, and Global Stone Portage, LLC,
an Indiana limited liability company.
"Intellectual Property" shall mean all patent, copyright, trade
secret, trademark, trade name, service ▇▇▇▇, Internet domain name, logo or other
▇▇▇▇ or logo, or other proprietary rights or valid licenses thereof.
11
"Intercreditor Agreement" shall mean the intercreditor agreement dated
as of the date hereof among the Agent, The 1818 Mezzanine Fund II, L.P., as
Collateral Agent, and the Noteholders, as amended, supplemented and otherwise
modified from time to time in accordance with its terms.
"Interest Expense" shall mean, for any period, interest expense of the
Company and its Subsidiaries during such period, determined in accordance with
GAAP, plus (but without duplication) payments consisting of interest in respect
of any Capitalized Lease or Synthetic Lease.
"Interest Payment Date" shall have the meaning assigned to it in
Section 2.1.
"Interest Rate" shall have the meaning assigned to it in Section 2.1.
"Investments" shall mean all expenditures made and all liabilities
incurred (contingently or otherwise) for the acquisition of stock or
Indebtedness of, or for loans, advances, extensions of credit, capital
contributions or transfers of property to, or in respect of any guaranties (or
other commitments as described under Indebtedness), or obligations of, any
Person. In determining the aggregate amount of Investments outstanding at any
particular time: (i) the amount of any Investment represented by a guaranty
shall be taken at not less than the principal amount of the obligations
guaranteed and still outstanding; (ii) there shall be included as an Investment
all interest accrued with respect to Indebtedness constituting an Investment
unless and until such interest is paid in cash; (iii) there shall be deducted in
respect of each such Investment any amount received in cash as a return of
capital (but only by repurchase, redemption, retirement, repayment, liquidating
dividend or liquidating distribution); (iv) there shall not be deducted in
respect of any Investment any amounts received as earnings on such Investment,
whether as dividends, interest or otherwise, except that accrued interest
included as provided in the foregoing clause (ii) may be deducted when paid in
cash; and (v) there shall not be deducted from the aggregate amount of
Investments any decrease in the value thereof.
"Knowledge of the Company" or "known to the Company" shall mean, as of
any date of determination, the knowledge of or known to any of the Chief
Executive Officer, the Chief Operating Officer, the Chief Financial Officer, the
General Counsel, the Secretary, the Treasurer, the Chief Information Officer,
the Operations Controller, the Vice President for Business Operations and
Development, the Vice President for Human Resources, the Director of Finance and
Accounting, the Director of Environment, Health and Safety of the Company and
the General Manager Lime, the General Manager Fillers, the General Manager MLO,
the General Manager Marine Services and the General Manager Performance Minerals
and any officer who shall be a successor in the responsibilities of any of the
foregoing officers of the Company and its Subsidiaries, in each case, on or as
of such date of determination.
"Lien" shall have the meaning assigned to that term in Section 7.2.
"Make Whole Amount" shall mean the greater of: (a) the product of the
aggregate principal amount of the Senior Notes to be repurchased and 1.18 plus
all accrued and unpaid
12
interest on the principal amount so purchased through the date of purchase; and
(b) the difference between (i) the product of the aggregate principal amount of
the Senior Notes to be repurchased and 1.50, and (ii) the product of (A) the
percentage of the aggregate principal amount of the Senior Notes that is to be
repurchased and (B) all cash payments made by the Company to the Noteholders
(and their predecessors in interest) in respect of the Senior Notes through the
date of the applicable repurchase, including, without limitation, the aggregate
amount of interest payments received by the Noteholders (and the their
predecessors in interest) after the Closing Date but prior to the date of the
applicable prepayment.
"Mandatory Repurchase Event" shall mean the occurrence of any one of
any of the following events: (a) any Person together with all affiliates and
associates of such Person, shall become the beneficial owner, directly or
indirectly, of securities of the Company representing 50% or more the combined
voting power of the Company's then outstanding securities having the right to
vote in an election of the Company's Board of Directors; (b) Persons who
constitute the Company's Board of Directors cease for any reason other than in
the ordinary course, including, without limitation, as a result of a tender
offer, proxy contest, merger or similar transaction, to constitute at least a
majority of the Board; (c) the Board of Directors or stockholders of the Company
shall approve (i) any consolidation or merger of the Company where the
stockholders of the Company, immediately prior to the consolidation or merger,
would not, immediately after the consolidation or merger, beneficially own,
directly or indirectly, shares representing in the aggregate 50% or more of the
voting shares of the corporation issuing cash or securities in the consolidation
or merger (or of its ultimate parent corporation, if any), (ii) any Asset Sale
of all or substantially all of the assets of the Company or any division
thereof, and (iii) any plan or proposal for the liquidation or dissolution of
the Company; or (d) the Senior Notes (or any of them) or any other Senior Notes
Obligations shall cease to constitute, or the Company and its Subsidiaries (or
any of them) shall challenge in writing or otherwise that, the Senior Notes (or
any of them) or any other Senior Notes Obligations constitute "Senior
Indebtedness" and "Designated Senior Indebtedness" in each case as such term is
defined in the Subordinated Notes Indenture.
"Material Adverse Effect" shall mean a material adverse effect on (a)
the business, operations, results of operations, assets, liabilities, prospects,
or condition (financial or otherwise) of the Company and its Subsidiaries,
considered as a whole, (b) the ability of the Company or any Guarantor to
perform its obligations under this Agreement or under any of the other Senior
Notes Documents, (c) the ranking of the Senior Notes and the other Senior Notes
Obligations (including, without limitation, the Guaranteed Obligations of the
Guarantors) as "Senior Indebtedness" (and "Guarantor Senior Indebtedness", in
the case of the Guaranteed Obligations) and "Designated Senior Indebtedness" (in
each case, as defined in the Subordinated Notes Indenture), or the status of the
Senior Notes and other Senior Notes Obligations as refinancing of "Obligations"
under the "Senior Credit Facility" and as "Indebtedness" under the "Senior
Credit Facility" (in each case, as such term is defined in the Subordinated
Notes Indenture), (d) the status of the Liens granted under the Security
Documents as "Permitted Liens" under the Subordinated Notes Indenture, or (e)
the impairment of the ability of any Noteholder to enforce the Senior Notes
Obligations, including, without limitation, the
13
Noteholders' rights and remedies under the Security Documents and other Senior
Notes Documents.
"Material Subsidiary" shall mean each Guarantor party hereto as of the
Closing Date, each other Subsidiary organized under the laws of any jurisdiction
within the United States, and any other Subsidiary organized under the laws of a
jurisdiction outside the United States if such Subsidiary may become a guarantor
hereunder without causing materially adverse tax consequences for the Company
and its Subsidiaries.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc., and any successor
thereto.
"Multiemployer Plan" shall mean any multiemployer plan within the
meaning of Section 3(37) of ERISA maintained or contributed to (or required to
be contributed to) by the Company or any ERISA Affiliate.
"Net Earnings" shall mean, for any period, the net income (loss) for
such period, determined in accordance with GAAP.
"Noteholders" shall mean the holder or holders from time to time of
the Senior Notes.
"Oglebay Engineered Materials" shall have the meaning assigned to such
term in the definition of "Initial Guarantors".
"ON Industrial Sands" shall have the meaning assigned to such term in
the definition of "Initial Guarantors".
"ON Marine Services" shall have the meaning assigned to such term in
the definition of "Initial Guarantors".
"Organizational Documents" shall mean, with respect to any Person that
is a corporation, such Person's Certificate of Incorporation or other charter
documents and by-laws, with respect to any Person that is a limited liability
company, such Person's Certificate of Formation or similar certificate and
limited liability company operating agreement, and with respect to any Person
that is a limited partnership, limited liability partnership or general
partnership, such Person's Certificate of Limited Partnership or similar
certificate and partnership agreement, in each case as amended through and
otherwise as in effect on any date specified with respect thereto.
"PBGC" shall mean the Pension Benefit Guaranty Corporation created by
Section 4002 of ERISA and any successor entity or entities having similar
responsibilities
"Permitted Liens" shall mean liens, security interests and other
encumbrances permitted by Section 7.2.
14
"Person" shall mean any individual, corporation, partnership, limited
liability company, trust, unincorporated association, business, or other legal
entity, and any government or any governmental agency or political subdivision
thereof.
"PIK Interest" shall have the meaning assigned to the term in Section
2.1.
"Prepayment Premium" shall have the meaning ascribed thereto in
Section 2.5.2
"Proceeds" shall have the meaning ascribed thereto in the definition
of "Excess Net Proceeds".
"Pro Forma Balance Sheet" shall have the meaning assigned to that term
in Section 3.13.
"Pro Forma Financial Projections" shall have the meaning assigned to
that term in Section 3.14.
"Property" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible, including, without
limitation, any Capital Stock.
"Purchase Money Indebtedness" shall mean and include (i) Indebtedness
(including Capitalized Lease Obligations) for the payment of all or any part of
the purchase price of any fixed assets, (ii) any Indebtedness (including
Capitalized Lease Obligations) incurred at the time of or within 10 days prior
to or after the acquisition of any fixed assets for the purpose of financing all
or any part of the purchase price thereof, and (iii) any renewals, extensions or
refinancings thereof, but not any increases in the principal amounts thereof
outstanding at the time.
"Purchase Money Lien" shall mean a Lien upon fixed assets which secure
Purchase Money Indebtedness, but only if such Lien shall at all times be
confined solely to the fixed assets the purchase price of which was financed
through the incurrence of the Purchase Money Indebtedness secured by such Lien
including Liens securing Capitalized Lease Obligations.
"Purchasers" shall mean the initial purchasers of the Senior Notes
described on Schedule 1 hereto.
"RCRA" shall mean the Resource Conservation and Recovery Act.
"Real Estate" shall mean all real property at any time owned or
leased, including mineral rights leases, (as lessee or sublessee) by the Company
or any of its Subsidiaries.
"Realty Mortgages" shall mean, collectively, (a) the Open-End
Mortgage, Assignment of Leases and Rents and Fixture Filing (Maximum Principal
Amount Not to Exceed $75,000,000) executed by Oglebay Norton Industrial Sands,
Inc. as of ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇ (▇▇▇▇▇
▇▇
▇▇▇▇▇▇, ▇▇▇▇), (▇) the Open-End Mortgage, Assignment of Leases and Rents and
Fixture Filing (Maximum Principal Amount Not to Exceed $75,000,000) executed by
Oglebay Norton Industrial Sands, Inc. as of October 25, 2002 (▇▇▇▇ County,
Ohio), (c) the Mortgage (Maximum Principal Amount Not to Exceed $75,000,000)
executed by Michigan Limestone Operations, Inc. as of October 25, 2002 (Mackinac
County, Michigan), (d) the Mortgage (Maximum Principal Amount Not to Exceed
$75,000,000) executed by Michigan Limestone Operations, Inc. as of October 25,
2002 (▇▇▇▇▇▇▇▇▇▇▇ County, Michigan), (e) the Open-End Mortgage, Assignment of
Leases and Rents and Fixture Filing (Maximum Principal Amount Not to Exceed
$75,000,000) executed by Michigan Limestone Operations, Inc. (Chippewa County,
Michigan), (f) the Deed of Trust, Assignment of Leases and Rents and Fixture
Filing executed by Oglebay Norton Industrial Sands, Inc. as of October 25, 2002
(Pulawski, Belknap, ▇▇▇▇▇▇ Townships, ▇▇▇▇▇▇ City, Presque Isle, Michigan), (g)
the Deed of Trust, Security Agreement, Assignment of Leases and Rents and
Fixture Filing executed by Texas Mining L.P. as of October 25, 2002 (▇▇▇▇▇▇▇▇▇
County, Texas), (h) the Mortgage, Assignment of Leases and Rents and Fixture
Filing (Maximum Principal Amount Not to Exceed $5,500,000) executed by Global
Stone St. Clair, Inc. as of October 25, 2002 (Sequoyah County, Oklahoma), (i)
the Mortgage, Assignment of Leases and Rents and Fixture Filing (Maximum
Principal Amount of $75,000,000) executed by Global Stone PenRoc, LP as of
October 25, 2002 (York County, Pennsylvania), (j) the Deed to Secure Debt,
Assignment of Leases and Rents and Fixture Filing executed by Global Stone
Filler Products, Inc. as of October 25, 2002 (▇▇▇▇▇▇ County, Georgia), (k) the
Deed to Secure Debt, Assignment of Leases and Rents and Fixture Filing executed
by Global Stone Filler Products, Inc. as of October 25, 2002 (▇▇▇▇▇▇ County,
Georgia), (l) the Deed to Secure Debt, Assignment of Leases and Rents and
Fixture Filing executed by Global Stone Filler Products, Inc. as of October 25,
2002 (Cisco in ▇▇▇▇▇▇ County, Georgia) (m) the Deed of Trust, Assignment of
Leases and Rents and Fixture Filing executed by Global Stone Tenn ▇▇▇▇▇▇▇▇
Company as of October 25, 2002 (Union County, Tennessee), (n) the Deed of Trust,
Assignment of Leases and Rents and Fixture Filing executed by Global Stone
Chemstone Corporation as of October 25, 2002 (Botetourt County, Virginia), (o)
the Deed of Trust, Assignment of Leases and Rents and Fixture Filing executed by
Global Stone Chemstone Corporation as of October 25, 2002 (▇▇▇▇▇▇▇▇▇ County,
Virginia), (p) the Deed of Trust, Assignment of Leases and Rents and Fixture
Filing executed by Global ▇▇▇▇▇ ▇▇▇▇▇ River, Inc. as of October 25, 2002
(▇▇▇▇▇▇▇▇ in Botetourt County, Virginia), (q) the Deed of Trust, Assignment of
Leases and Rents and Fixture Filing executed by Global Stone Chemstone
Corporation as of October 25, 2002 (Middletown County, Virginia), (r) the Deed
of Trust, Assignment of Leases and Rents and Fixture Filing executed by Global
Stone Chemstone Corporation as of October 25, 2002 (▇▇▇▇▇▇▇▇ County, Virginia),
(s) the Deed of Trust, Assignment of Leases and Rents and Fixture Filing
executed by Oglebay Norton Specialty Minerals, Inc. as of October ▇▇, ▇▇▇▇
(▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇), (▇) the Open-End Mortgage, Assignment of
Leases and Rents and Fixture Filing executed by Oglebay Norton Specialty
Minerals, Inc. as of October 25, 2002 (Rio Arriba County, New Mexico), (u) the
Open-End Mortgage, Assignment of Leases and Rents and Fixture Filing (Maximum
Principal Amount Not to Exceed $75,000,000) executed by Oglebay Norton Specialty
Minerals, Inc. (Taos County, New Mexico), (v) the Deed of Trust, Assignment of
Leases and Rents and Fixture Filing executed by Oglebay Norton Industrial Sands,
Inc. as of October 25, 2002 (Bakersfield, ▇▇▇▇ County, California), (w) the Deed
of Trust, Assignment of
16
Leases and Rents and Fixture Filing executed by Oglebay Norton Industrial Sands,
Inc. as of October 25, 2002 (Riverside County, California), and (x) the Deed of
Trust, Assignment of Leases and Rents and Fixture Filing executed by Global
Stone Filler Products, Inc. as of October 25, 2002 (El Paso County, Colorado).
"Reference Balance Sheet Date" shall mean, as of any date of
determination, (a) from the Closing Date until the delivery of the financial
information required to be delivered under Section 6.4 for the fiscal quarter
ending September 30, 2002, December 31, 2001 and (b) thereafter, each of (i)
December 31, 2001 and (ii) the last day of the fiscal quarter ended immediately
prior to such date of determination.
"Release" shall mean any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping or
disposing into the environment (including the abandonment or discarding of
barrels, containers or other closed receptacles containing any Hazardous
Substance).
"Required Company Authorizations" shall mean, with respect to any
Person that is a corporation, the resolutions of the board of directors of such
Person and of such Person's stockholders, with respect to any Person that is a
limited liability company, the resolutions of such Person's managing member,
board of directors and members, and in the case of any limited partnership,
limited liability partnership or general partnership, the resolutions of such
Person's general partner or partners and limited partners, in each case as
applicable and as required under such Person's Organizational Documents and
applicable law with respect to any action taken, to be taken or purported to be
taken.
"Requirement of Law" shall mean as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of such
Person, and any law, treaty, rule, regulation, right, privilege, qualification,
license or franchise or determination of an arbitrator or a court or other
Governmental Authority, in each case applicable or binding upon such Person or
any of its property or to which such Person or any of its property is subject or
pertaining to any or all of the transactions contemplated or referred to herein.
"Restated Articles" shall mean the Amended and Restated Articles of
Incorporation of the Company dated as of April 30, 2001.
"Restricted Guarantor" shall mean ON Marine Services, Oglebay
Engineered Materials, Saginaw, ON Minerals, ON Industrial Sands, and Texas
Mining.
"Restricted Property" shall mean the Property listed on Schedule
7.5.2.
"Restricted Transferee" shall mean any Direct Competitor; provided
that, for the avoidance of doubt, "Restricted Transferee" shall not include or
be a reference to (a) any Affiliate of any Noteholder, or (b) any financial
institution, institutional investor, lender or fund
17
that invests in commercial loans, senior or subordinated indebtedness, or other
indebtedness and securities of any type.
"S&P" means Standard & Poor's Ratings Services, a division of the
▇▇▇▇▇▇-▇▇▇▇ Companies.
"▇▇▇▇" shall mean the Superfund Amendments and Reauthorization Act of
1986.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any similar successor federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Security Documents" shall mean, collectively, (i) the security
agreements dated as of the date hereof duly executed and delivered by the
Company and each Guarantor in substantially the form of Exhibit B, (ii) the
pledge agreements dated as of the date hereof duly executed and delivered by the
Company and each Guarantor in substantially the form of Exhibit C, (iii) the
collateral assignment and security agreements dated as of the date hereof duly
executed and delivered by the Company and each Guarantor in substantially the
form of Exhibit D, (iv) the Realty Mortgages, and (v) such other security
agreements, pledges, assignments, mortgages and other instruments and agreements
as the Noteholders may reasonably request, together with any supplements of any
of the foregoing, each as it may be amended from time to time in accordance with
the terms thereof and hereof.
"Senior Notes" shall have the meaning assigned to that term in Section
2.1.
"Senior Notes Documents" shall mean this Agreement, the Senior Notes,
the Security Documents, the Intercreditor Agreement, and each other agreement,
document and certificate delivered hereunder or thereunder by the Company or any
of its Subsidiaries.
"Senior Notes Obligations" shall mean all indebtedness, obligations
and liabilities of the Company and its Subsidiaries to any of the Noteholders,
individually or collectively, existing on the date of this Agreement or arising
thereafter, direct or indirect, joint or several, absolute or contingent,
matured or unmatured, liquidated or unliquidated, secured or unsecured, arising
by contract, operation of law or otherwise, arising or incurred under this
Agreement, the Senior Notes or any of the other Senior Notes Documents or in
respect of any of the Senior Notes or other instruments at any time evidencing
any of the foregoing.
"Solvent" shall mean, as to any Person, such Person (i) owns Property
whose fair saleable value is greater than the amount required to pay all of such
Person's Indebtedness (including contingent debts, which will be computed at the
amount which, in light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability), (ii) is able to pay all of its Indebtedness as such
Indebtedness matures and (iii) has capital sufficient to carry on its business
and transactions and all business and transactions in which it is about to
engage.
18
"Stock-Based Plans" shall mean, collectively, each of the stock-based
benefit plans of the Company or any ERISA Affiliate as in effect on the date
hereof.
"Subordinated Debt" means all Indebtedness of the Company and any of
its Subsidiaries from any Person, including, without limitation, the
Subordinated Notes, and any extensions or renewals thereof, whether outstanding
on the date hereof or hereafter created or incurred, which is by its terms
subordinate and junior to the Senior Notes Obligations on terms acceptable to
the Noteholders and which is permitted by this Agreement on the date hereof or
at the time it is created or incurred, as applicable.
"Subordinated Notes" shall mean the 10% Senior Subordinated Notes due
2009 issued pursuant to the Subordinated Notes Indenture.
"Subordinated Notes Indenture" shall mean the Indenture with an
aggregate principal amount of $100,000,000 dated as of February 1, 1999, among
the Company, the guarantors named therein, and Norwest Bank Minnesota National
Association, as Trustee, as supplemented by the Supplemental Indenture dated as
of March 5, 1999, by the Supplemental Indenture dated as of April 12, 1999 and
by the Supplemental Indenture dated as of May 10, 1999, and as further
supplemented, amended and/or restated, renewed, extended, refinanced or replaced
from time to time.
"Subsidiary" shall mean any Person which the Company or the designated
parent shall, directly or indirectly through a Subsidiary or Subsidiaries, have
the power to vote or direct the voting of sufficient securities to elect a
majority of directors (or Persons performing similar functions) or with respect
to which the Company or the designated parent acts as a general partner or
managing member or otherwise controls the day-to-day operations of such Person.
Any reference herein to a Subsidiary of the Company shall include any Subsidiary
of the Company as of the Closing Date or at any time thereafter.
"Syndicated Credit Agreement" shall mean that certain Credit
Agreement, dated as of May 15, 1998, as amended and restated as of April 3, 2000
and as subsequently amended by Amendment No. 1 to Credit Agreement and Waiver,
dated as of June 30, 2001, Amendment No. 2 to Credit Agreement and Waiver, dated
as of November 9, 2001, Amendment No. 3 to Credit Agreement, dated as of
December 24, 2001, and Amendment No. 4 to Credit Agreement, dated as of October
23, 2002 among the Company, the Agent, the Banks and the other parties thereto,
as from time to time amended and/or restated, renewed, extended, refinanced or
replaced in accordance with the terms of this Agreement.
"Syndicated Debt" shall mean all Indebtedness of the Company and its
Subsidiaries under the Syndicated Facility Documents and the Vessel Financing
Documents, the repayment of principal of, and interest on, which Indebtedness is
secured by Liens.
"Syndicated Facility Documents" shall mean the Syndicated Credit
Agreement, the Syndicated Loan Agreement, the promissory notes issued
thereunder, the security agreements executed in connection therewith, and all
other documents, agreements and certificates executed
19
or delivered in connection therewith from time to time and any refunding,
refinancing or replacement thereof entered into in accordance with the terms of
this Agreement.
"Syndicated Loan Agreement" shall mean that certain Loan Agreement,
dated as of April 3, 2000, as amended by Amendment No. 1 to Loan Agreement and
Waiver, dated as of June 30, 2001, Amendment No. 2 to Loan Agreement and Waiver,
dated as of November 9, 2001, Amendment No. 3 to Loan Agreement, dated as of
December 24, 2001, and Amendment No. 4 to Loan Agreement, dated as of October
__, 2002 among the Company, the Agent, the Banks and the other parties thereto,
as from time to time amended and/or restated, renewed, extended, refinanced or
replaced in accordance with the terms of this Agreement.
"Synthetic Leases" shall have the meaning assigned to that term in
paragraph (f) of the definition of "Indebtedness".
"Texas Mining" shall have the meaning assigned to such term in the
definition of "Initial Guarantors".
"Total Leverage Ratio" shall mean, at any time, the ratio for the
Company and its Subsidiaries of (a) all Funded Indebtedness (based upon the
financial statements of the Company for the most recently completed fiscal
quarter delivered pursuant to Section 6.4) to (b) Consolidated Pro forma EBITDA
(based upon the financial statements of the Company and its Subsidiaries for the
most recently completed four fiscal quarters delivered pursuant to Section 6.4).
"U.S. Dollars" shall mean the lawful currency of the United States of
America.
"Vessel Financing Credit Agreement" shall mean the Credit Agreement
dated as of July 14, 1997, as amended by the First Amendment to Credit Agreement
dated as of January 15, 1999, the Second Amendment to Credit Agreement dated as
of July 15, 1999, the Third Amendment to Credit Agreement dated as of July 12,
2000, the Fourth Amendment to Credit Agreement dated as of September 30, 2001,
the Fifth Amendment to Credit Agreement dated as of December 24, 2001 and the
Sixth Amendment to Credit Agreement dated as of October __, 2002 by and between
ON Marine Services Company (f/k/a Oglebay Norton Company), a Delaware
corporation, and Oglebay Norton Marine Services Company, L.L.C., as Borrowers
thereunder, and National City Bank, a national banking association, as from time
to time amended and/or restated, renewed, extended, refinanced or replaced in
accordance with the terms of this Agreement.
"Vessel Financing Documents" shall mean the Vessel Financing Credit
Agreement and the First Preferred Fleet Mortgage dated as of July 14, 1997,
executed by ON Marine Services Company, a Delaware corporation, in favor of
National City Bank, with respect to the vessels "Wolverine" and "▇▇▇▇▇ ▇.
▇▇▇▇▇▇", as from time to time amended and/or restated, renewed, extended,
refinanced or replaced in accordance with the terms of this Agreement.
20
1.2 Accounting Terms. All accounting terms not specifically defined herein
shall be construed in accordance with GAAP, and all financial data submitted
pursuant to this Agreement, and all financial tests to be calculated in
accordance with this Agreement, shall be prepared and calculated in accordance
with GAAP. All financial tests relating to the Company shall be calculated with
respect to the Company and its Subsidiaries on a consolidated basis. If any
changes in accounting principles are hereafter occasioned by promulgation of
rules, regulations, pronouncements or opinions by or are otherwise required by
the Financial Accounting Standards Board or the American Institute of Certified
Public Accountants (or successors thereto or agencies with similar functions),
and any of such changes results in a change in the method of calculation of, or
affects the results of such calculation of, any of the financial covenants,
standards or terms found herein, then the parties hereto agree to enter into and
diligently pursue negotiations in good faith in order to amend such financial
covenants, standards or terms so as to reflect fairly and equitably such
changes, with the desired result that the criteria for evaluating the Company's
financial condition and results of operations shall be the same after such
changes as if such changes had not been made.
ARTICLE II - AUTHORIZATION, PURCHASE, SALE AND TERMS OF THE SENIOR
SECURED NOTES; PAYMENTS
2.1 The Senior Notes. The Company has authorized the issuance of its
Senior Secured Notes due October 25, 2008 in the aggregate original principal
amount of $75,000,000 in the form set forth as Exhibit 2.1 attached hereto
(referred to herein individually as a "Senior Note" and collectively as the
"Senior Notes", which terms shall also include any notes delivered in exchange
therefor or replacement thereof). Commencing on the date of issuance, the Senior
Notes will accrue interest on the unpaid principal amount thereof at an interest
rate of 18% per annum (the "Interest Rate"), consisting of 13% in cash interest
and 5% either, at the Company's option, in cash interest or to be added
automatically to the unpaid principal amount of the Senior Notes ("PIK
Interest") on each March 31, June 30, September 30, and December 31 (each, an
"Interest Payment Date"). Interest on the Senior Notes shall be computed based
on a 360-day year of twelve 30-day months, and all PIK Interest on the Senior
Notes will be compounded quarterly. Cash interest on the Senior Notes shall be
payable quarterly in arrears on each Interest Payment Date commencing on
December 31, 2002 by wire transfer of immediately available funds to one or more
accounts designated by the Noteholders. On each Interest Payment Date, the
Company shall deliver a copy of Schedule I to the Senior Notes to the
Noteholders, which shall detail the outstanding principal balance of the Senior
Notes as of such date, including all PIK Interest previously added to the
principal amount thereof.
2.2 Purchase of the Senior Notes. Subject to and in reliance upon the
representations, warranties, terms and conditions of this Agreement, each of the
Purchasers agrees, severally and not jointly, to purchase Senior Notes from the
Company in such amounts as are set forth opposite such Purchaser's name on
Schedule 1. The Senior Notes shall be purchased at a closing (the "Closing") to
be held at the offices of ▇▇▇▇▇▇▇ Procter LLP located in Boston, Massachusetts,
or at such other location as agreed to by the Company and the Purchasers, at
10:00 a.m. Boston time, on the date on which this Agreement is executed and
delivered and upon satisfaction of the
21
conditions described in Article III (the "Closing Date"). At the Closing, the
Company will issue one initial Senior Note to each Purchaser, payable to such
Purchaser or its registered assigns against receipt of immediately available
funds by wire transfer to an account or accounts designated by the Company prior
to the Closing (or in such other manner as is set forth on Schedule 1).
2.3 Use of Proceeds. The Company agrees to use the full proceeds of the
Senior Notes to refinance a portion of the Company's existing Indebtedness under
the Syndicated Credit Agreement.
2.4 Payments and Endorsements.
(a) Payments of principal, interest and premium, if any, on the
Senior Notes shall be made without set off or counterclaim, directly by
wire transfer to the accounts designated, respectively, in writing by the
Purchasers, without any presentment or notation of payment, except that
prior to any transfer of any Senior Note the holder thereof shall endorse
on such Senior Note a record of the date to which interest has been paid
and all payments made on account of principal of such Senior Note. All
payments and prepayments of principal of and interest on the Senior Notes
shall be applied (to the extent thereof) to all of the Senior Notes (or all
of the Senior Notes the holders of which have accepted the Company's
offer(s) to redeem, repurchase or repay, as applicable and as provided
herein) pro rata based on the principal amount outstanding and held by each
holder thereof. The Company hereby authorizes each Noteholder to endorse on
the Senior Notes held thereby the PIK Interest paid thereon, and the
Company shall, upon the request of any Noteholder and in lieu of
endorsement of such PIK Interest, issue to such holder additional Senior
Notes evidencing the PIK Interest paid on the Senior Notes held by such
Noteholder, in each case, promptly upon the request of such holder, all of
which shall be made, issued and otherwise effected in accordance with the
terms of Section 2.9.
(b) Anything herein to the contrary notwithstanding, if any
changes in present or future Applicable Law including, without limitation,
any change according to a prescribed schedule of increasing requirements,
shall impose on the Company any obligation with respect to any amount
payable by it hereunder or under any of the other Senior Notes Documents to
withhold or deduct any taxes, levies, imposts, duties, charges, fees,
deductions or withholdings, the Company will pay to the Purchasers, on the
date on which such amount is due and payable hereunder or under such other
Senior Notes Document, such additional amount in U.S. Dollars as shall be
necessary to enable the Noteholders to receive the same net amount which
the Noteholders would have received on such due date if no such obligation
had been imposed upon the Company. The Company will deliver promptly to the
Noteholders certificates or other valid vouchers for all taxes or other
charges deducted from or paid with respect to payments made by the Company
hereunder or under such other Senior Notes Document.
22
(c) The obligations of the Company under this Section 2.4 shall
survive the payment in full of all amounts due hereunder or under the
Senior Notes.
2.5 Redemptions and Mandatory Repurchase.
2.5.1 Required Redemptions.
(a) On the stated or accelerated maturity of the Senior Notes,
the Company will pay the principal amount of the Senior Notes then
outstanding together with all accrued and unpaid interest thereon. No
redemption of less than all of the Senior Notes shall affect the obligation
of the Company to make the redemption required by the preceding sentence.
The Company shall be required to redeem the Senior Notes in two equal
installments in the amount of $37,500,000, which shall be paid on each of
October 25, 2007 and October 25, 2008.
(b) As soon as possible, and in any event within 30 Business
Days prior to the date on which the Company or any Subsidiary first
possesses Excess Net Proceeds from any issuance by the Company or any of
its Subsidiaries of Capital Stock (other than (i) an issuance of Capital
Stock of the Company the Proceeds of which are used exclusively to finance
acquisitions permitted under Section 7.5.1, (ii) an issuance effected
pursuant to any Stock-Based Plan and any other stock-based benefit plan
disclosed to the Noteholders in writing and approved by the Board of
Directors of the Company, or (iii) an issuance of Capital Stock of the
Company effected pursuant to the terms of any Employment Agreement or other
employment agreement in connection with the repurchase of Capital Stock
held by officers or employees of the Company or any of its Subsidiaries in
accordance with the terms of the applicable agreement, provided that the
aggregate amount of such repurchases under this clause (iii) shall not
exceed 10% of then the outstanding shares of Capital Stock of the Company)
then, in each such case, the Company shall furnish to each Noteholder
written notice setting forth in reasonable detail the facts and
circumstances relating thereto. The possession of such Excess Net Proceeds
by the Company or any Subsidiary, as applicable, shall constitute an
irrevocable offer by the Company to redeem such portion of the Senior Notes
held by the Noteholder as may be redeemed at par with 50% of such Excess
Net Proceeds, subject to the rights of all Noteholders to participate in
the transaction on a pari passu basis.
(c) As soon as possible, and in any event within 30 Business
Days after the date on which the Company or any Subsidiary first possesses
Excess Net Proceeds from the payment of losses, returns, or unearned
premiums under insurance policies, then, in each such case, the Company
shall furnish to each Noteholder written notice setting forth in reasonable
detail the facts and circumstances relating thereto, including, without
limitation, the intended or proposed use of such Excess Net Proceeds. On
the earlier to occur of (i) the actual reinvestment of the Excess Net
Proceeds as permitted hereunder and (ii) the 180/th/ day following the
Company's or any Subsidiary's first possession of the Excess Net Proceeds,
the Company shall furnish to each
23
Noteholder written notice, which notice either shall set forth in
reasonable detail the facts and circumstances of the actual use of such
Excess Net Proceeds on or prior to such date or state that such Excess Net
Proceeds have not been reinvested as permitted hereunder. Unless such
Excess Net Proceeds actually are used (in accordance with the terms hereof)
solely for the purpose of rebuilding, replacing or restoring the Property
the damage or destruction of which gave rise to the payment of such Excess
Net Proceeds within 180 days of receipt of such Excess Net Proceeds, the
possession of such Excess Net Proceeds by the Company or any Subsidiary, as
applicable, shall constitute an irrevocable offer by the Company to redeem
such portion of the Senior Notes held by such Noteholder as may be redeemed
at par with 100% of such Excess Net Proceeds, subject to the rights of all
Noteholders to participate in the transaction on a pari passu basis.
(d) As soon as possible, and in any event within 30 Business
Days prior to the date on which a Company or any Subsidiary first possesses
Excess Net Proceeds from any Asset Sale (other than Proceeds from a sale
and leaseback transaction if such Proceeds, together with the Proceeds of
all other sale and leaseback transactions of the Company and/or any of its
Subsidiaries consummated on or after the Closing Date, do not exceed
$5,000,000) then, in each such case, the Company shall furnish to each
Noteholder written notice setting forth in reasonable detail the facts and
circumstances relating to such Asset Sale, including, without limitation,
the intended or proposed use of such Excess Net Proceeds. On the earlier to
occur of (i) the actual reinvestment of the Excess Net Proceeds permitted
hereunder and (ii) the 180/th/ day following the Company's or any
Subsidiary's first possession of the Excess Net Proceeds, the Company shall
furnish to each Noteholder written notice, which notice either shall set
forth in reasonable detail the facts and circumstances of the actual use of
such Excess Net Proceeds on or prior to such date or state that such Excess
Net Proceeds have not been reinvested as permitted hereunder. Unless such
Excess Net Proceeds are actually reinvested in the business of the Company
and its Subsidiaries in accordance with the terms of this Agreement within
180 days of their receipt, the possession of such Excess Net Proceeds by
the Company or any Subsidiary, as applicable, shall constitute an
irrevocable offer by the Company to redeem such portion of the Senior Notes
held by such Noteholder as may be redeemed with 100% of such Excess Net
Proceeds at par, subject to the rights of all Noteholders to participate in
the transaction on a pari passu basis.
(e) Following receipt of any offer to redeem the Senior Notes
(or a portion thereof) under clauses (b), (c) or (d) of this Section 2.5.1
(the date of which shall be the date of receipt of the applicable Excess
Net Proceeds in the case of clause (b) above and either the date of
receipt, or the 181/st/ date following receipt, as applicable, of such
Excess Net Proceeds, in the case of clauses (c) and (d) above), each
Noteholder shall advise the Company, by written notice, within 20 calendar
days after actual receipt of written notice of such offer, as to whether it
desires to sell all or any of the Senior Notes held by it (in integral
multiples of $100,000), specifying the principal amount of the Senior Notes
to be redeemed by the Company. If a Noteholder accepts such offer but does
not specify an amount it wishes to have redeemed, such Noteholder will be
deemed
24
to have elected to have redeemed all of the Senior Notes held by it, or, if
such amount is less, such Noteholder's pro rata share of the Excess Net
Proceeds then available to redeem Senior Notes. If a Noteholder fails to
respond to such offer by the Company within the 20-day acceptance period,
such offer shall expire in accordance with its terms. The Company shall
redeem Senior Notes elected to be redeemed by the holders thereof under
Section 2.5.2 within 10 Business Days of the expiration of such acceptance
period.
2.5.2 Optional Redemptions. In addition to the redemption of the
Senior Notes required under Section 2.5.1, the Company may at any time on and
after the second anniversary of the Closing Date voluntarily redeem the Senior
Notes in whole, or in part (in a minimum amount of at least $5,000,000 and
integral multiples of $500,000), together with all accrued and unpaid interest
on the amount so redeemed through the date of redemption, at a redemption price
equal to the sum of the principal amount to be redeemed plus the prepayment
premium indicated below corresponding to the period in which the redemption
occurs (such premium, the "Prepayment Premium").
Period Prepayment Premium
October 25, 2004 through October 25, 2005 6% of principal amount to
be redeemed
October 25, 2005 to October 25, 2006 4% of the principal
amount to be redeemed
October 25, 2006 to October 25, 2007 2% of the principal
amount to be redeemed
After October 25, 2007 None
2.5.3 Notice of Redemptions; Pro Rata Redemptions. Written notice of
any redemption pursuant to Section 2.5.1 or Section 2.5.2 shall be given to all
Noteholders at least 30 Business Days prior to the date of any such redemption.
Each redemption of the Senior Notes pursuant to Sections 2.5.1 and 2.5.2 shall
be made so that all outstanding Senior Notes then held by each holder (or, in
the case of any redemption under Section 2.5.1(b) through (d), the Senior Notes
held by each holder thereof accepting the Company's offer as provided in Section
2.5.1(e)) shall be redeemed in a principal amount which shall bear the same
ratio to the total unpaid principal amount being redeemed on all such Senior
Notes as the unpaid principal amount of the Senior Notes then held by such
holder bears to the aggregate unpaid principal amount of such Senior Notes.
2.5.4 Mandatory Repurchase of Senior Notes.
(a) As soon as possible, and in any event within 30 Business
Days prior to the occurrence of a Mandatory Repurchase Event, the Company
shall furnish to
25
each Noteholder written notice setting forth in reasonable detail the facts
and circumstances underlying such Mandatory Repurchase Event. The
occurrence of any such Mandatory Repurchase Event shall constitute an
irrevocable offer by the Company to purchase all of the Senior Notes held
by such Noteholder, for the redemption price specified in Section 2.5.2,
or, in the case of a Mandatory Repurchase Event occurring prior to October
25, 2004, for a redemption price equal to the Make Whole Amount, in each
case, on the occurrence of such Mandatory Repurchase Event and together
with all accrued and unpaid interest on the amount so purchased through the
date of purchase.
(b) Following receipt of any offer to purchase the Senior Notes
under this Section 2.5.4, each Noteholder shall advise the Company, by
written notice, within 10 Business Days after receipt of such offer, as to
whether it desires to sell all or any of the Senior Notes held by it (in
integral multiples of $500,000), specifying the principal amount of the
Senior Notes to be sold by it. If a Noteholder accepts such offer but does
not specify an amount it wishes to receive, such Noteholder will be deemed
to have elected to sell all of the Senior Notes held by it. If a Noteholder
fails to respond to such offer by the Company within the 10 Business Day
acceptance period, such offer shall expire in accordance with its terms.
2.5.5 No Other Acquisition of Senior Notes. The Company will not and
will not permit any Affiliate to purchase, redeem, prepay, tender for or
otherwise acquire, directly or indirectly, any of the outstanding Senior Notes
except upon the repurchase or prepayment of the Senior Notes in accordance with
the other terms of this Section 2.5. The Company will promptly cancel all Senior
Notes acquired by it or any of its Affiliates pursuant to any purchase,
redemption, prepayment or tender for the Senior Notes pursuant to any provision
of this Agreement or otherwise and no Senior Notes may be issued in substitution
or exchange for any such Senior Notes.
2.6 Default Rate of Interest. If an Event of Default has occurred and is
continuing, from and after the date such Event of Default has occurred the
entire outstanding unpaid principal balance of the Senior Notes and any unpaid
interest from time to time in default shall bear interest, payable on demand, at
the applicable Interest Rate plus 2% per annum, or such lower rate as then may
be the maximum rate permitted by Applicable Law; provided, however, that upon
the cessation or cure of such Event of Default, if no other Event of Default is
then continuing, the Senior Notes shall again bear interest at the applicable
Interest Rate as set forth in Section 2.1.
2.7 Maximum Legal Rate of Interest. Nothing in this Agreement or in the
Senior Notes shall require the Company to pay interest at a rate in excess of
the maximum rate permitted by Applicable Law.
2.8 Payment on Non-Business Days. Whenever any payment to be made shall be
due on a day which is not a Business Day, such payment may be made on the next
succeeding
26
Business Day, and such extension of time shall in such case be included in the
computation of payment of interest due.
2.9 Transfer and Exchange of Senior Notes. The Company shall keep a
register in which it shall provide for the registration of the Senior Notes and
the registration of transfers of Senior Notes. The holder of any Senior Note
may, prior to maturity or prepayment thereof, surrender such Senior Note at the
principal office of the Company for transfer or exchange. Any holder desiring to
transfer or exchange any Senior Note shall first notify the Company in writing
at least five days in advance of such transfer or exchange. Within a reasonable
time after such notice to the Company from a holder of its intention to make
such exchange and without expense (other than transfer taxes, if any) to such
holder, the Company shall issue in exchange therefor another Senior Note in the
same aggregate principal amount or if requested by the holder in denominations
of $100,000 and multiples thereof, except in the case of a Senior Note for the
balance of the aggregate amount of the Senior Note so transferred, as of the
date of such issuance, as the unpaid principal amount of the Senior Note so
surrendered and having the same maturity and rate of interest, containing the
same provisions and subject to the same terms and conditions as the Senior Note
so surrendered (provided that no minimum shall apply to a liquidating
distribution of Senior Notes to investors in a Noteholder and any Senior Notes
so distributed may be subsequently transferred by such investor and its
successors in the original denomination thereof without further restriction).
Each new Senior Note shall be made payable to such Person or Persons, or
assigns, as the holder of such surrendered Senior Note may designate, and such
transfer or exchange shall be made in such a manner that no gain or loss of
principal or interest shall result therefrom. The Company shall have no
obligation hereunder or under any Senior Note to any Person other than the
registered holder of each such Senior Note. Notwithstanding anything to the
contrary contained herein, (a) no Noteholder shall be permitted to transfer any
of its Senior Notes unless such Noteholder's transferee has agreed in writing to
be bound by the terms of this Agreement and the other Senior Notes Documents to
which such Noteholder is a party, including the representations and warranties
set forth in Section 4.1 hereof, and (b) so long as no Default has occurred and
is continuing, no Noteholder shall be permitted to transfer any of its Senior
Notes to any Person that is a Restricted Transferee without the prior written
consent of the Company.
2.10 Replacement of Senior Notes. Upon receipt of evidence satisfactory to
the Company of the loss, theft, destruction or mutilation of any Senior Note
and, if requested in the case of any such loss, theft or destruction, upon
delivery of an indemnity bond or other agreement or security reasonably
satisfactory to the Company, or, in the case of any such mutilation, upon
surrender and cancellation of such Senior Note the Company will issue a new
Senior Note of like tenor and amount and dated the date to which interest has
been paid, in lieu of such lost, stolen, destroyed or mutilated Senior Note;
provided, however, if any Senior Note of which a Noteholder, its nominee, or any
of its partners is the holder is lost, stolen or destroyed, the affidavit of an
authorized partner or officer of the holder setting forth the circumstances with
respect to such loss, theft or destruction shall be accepted as satisfactory
evidence thereof, and no indemnification bond or other security shall be
required as a condition to the execution and delivery by the Company of a new
Senior Note in replacement of such lost,
27
stolen or destroyed Senior Note other than the holders written agreement to
indemnify the Company.
2.11 Ranking. The Senior Notes Obligations shall be secured obligations of
the Company and each of the Guarantors. The Senior Notes Obligations and the
rights and remedies of the Noteholders under the Senior Notes Documents shall
rank pari passu in right of payment with the Company's and each of the
Guarantors' existing and future senior indebtedness, including, without
limitation, the Syndicated Debt, and senior to the Company's and each of the
Guarantors' existing or hereafter arising Subordinated Debt (and any other
subordinated Indebtedness), including, without limitation, the Subordinated
Notes. The Liens granted by the Company and the Guarantors to the Noteholders
under the Security Documents shall rank junior to the Liens granted by the
Company and the Guarantors to the Agent and the Banks on the terms and
conditions of, and as otherwise provided in, the Intercreditor Agreement.
Without limiting the foregoing, the Senior Notes Obligations will and shall be
for all purposes (a) "Senior Indebtedness", and "Guaranteed Senior
Indebtedness," in the case of the Guaranteed Obligations, (each as defined in
the Subordinated Notes Indenture), (b) refinancing of "Obligations" and
"Indebtedness" under the "Senior Credit Facility" (each, as defined in the
Subordinated Notes Indenture), (c) "Indebtedness" under the "Senior Credit
Facility" (each as defined in the Subordinated Notes Indenture, and (d)
"Designated Senior Indebtedness" (as defined in the Subordinated Notes
Indenture).
2.12 Structuring and Financing Fees. The Company hereby agrees to pay each
Purchaser or designee such Purchaser's pro rata share (based on the proportion
that the Senior Notes purchased by such Purchaser bears to the total Senior
Notes, in each case, on the Closing Date) of a structuring and financing fee
equal to 1.0% of the original principal amount of the Senior Notes, and such
fees shall be in addition to the amounts required to be paid pursuant to Section
3.2(e). At the option of Purchaser (with respect to such Purchaser) by notice to
the Company, such fee may be paid by each Purchaser (or the applicable
Purchaser) deducting such Purchaser's pro rata share of such fee from the
purchase price of the Senior Notes purchased by such Purchaser.
ARTICLE III - CONDITIONS TO PURCHASER'S OBLIGATIONS
The obligation of the Purchasers to purchase Senior Notes at the Closing is
subject to the following conditions, all or any of which may be waived in
writing by the Purchasers:
3.1 Representations and Warranties. Each of the representations and
warranties of the Company and its Subsidiaries set forth in Article V hereof and
in the other Senior Notes Documents shall be true and correct in all respects at
the time of, and immediately after giving effect to, the purchase of the Senior
Notes.
3.2 Documentation at Closing. The Purchasers shall have received prior to
or at the Closing all of the following, each in form and substance satisfactory
to the Purchasers and ▇▇▇▇▇▇▇ Procter LLP, special counsel to the Purchasers:
28
(a) Certified copies of all Organizational Documents of the
Company and each of the Guarantors; certified copies of the Required
Company Authorizations of the Company and each of the Guarantors evidencing
approval of this Agreement, the other Senior Notes Documents and all other
matters contemplated hereby and thereby; certified copies of all documents
evidencing any other consents and approvals, including governmental
approvals, if any, with respect to this Agreement, the other Senior Notes
Documents and all other matters contemplated hereby or thereby.
(b) A certificate of the Secretary or an Assistant Secretary (or
similar officer) of the Company and each of the Guarantors which
certificate shall certify the names of the officers of the Company and the
Guarantors, as applicable, authorized to sign this Agreement, the other
Senior Notes Documents and any other documents or certificates to be
delivered pursuant hereto or thereto by the Company and the Guarantors or
any of their respective officers, together with the true signatures of such
officers. The Purchasers may conclusively rely on such certificate(s) until
they shall receive a further certificate of the Secretary or an Assistant
Secretary (or similar officer) of the Company and the Guarantors canceling
or amending the prior certificate and submitting the signatures of the
officers named in such further certificate.
(c) A certificate from a duly authorized officer of the Company
stating that (i) the representations and warranties contained in Article V
hereof and otherwise made by the Company in writing in connection with the
transactions contemplated hereby are true and correct, (ii) no condition or
event has occurred or is continuing or will result from the execution and
delivery of this Agreement or any other Senior Notes Documents that
constitutes an Event of Default or would constitute an Event of Default but
for the requirement that notice be given or time elapse or both, and (iii)
all the conditions set forth in this Article III and in the other Senior
Notes Documents have been satisfied (other than those, if any, waived by
Agent and the Purchasers in writing).
(d) The Senior Notes duly executed by the Company and registered
in the respective names of the Purchasers.
(e) Payment for the costs, expenses, taxes and filing fees, if
any, identified in Section 11.4 as to which the Purchasers give the Company
notice prior to or at the Closing, including the reasonable fees and
expenses of ▇▇▇▇▇▇▇ Procter LLP, special counsel to the Purchasers.
(f) A private placement number for the Senior Notes issued by
Standard & Poor's CUSIP Service Bureau.
(g) A solvency certificate from the chief financial officer of
the Company addressed to the Purchasers and dated the Closing Date and
supporting the conclusion, that, after giving effect to the transactions
contemplated in the Senior Notes Documents, the Syndicated Facility
Documents, the Vessel Financing Documents, the Subordinated Notes, and the
incurrence of all financing contemplated herein and therein,
29
the Company and each of the Guarantors (other than the Restricted
Guarantors) is not and will not be rendered insolvent by the indebtedness
incurred in connection herewith or therewith, will not be left with
unreasonably small capital with which to engage in its businesses and will
not have incurred debts beyond its ability to pay such debts in the
ordinary course as they mature and become due.
(h) A favorable opinion of ▇▇▇▇▇▇▇▇ ▇▇▇▇ LLP, counsel to the
Company and the Initial Guarantors, with respect to, among other things,
the Security Documents (other than the Realty Mortgages), in form and
substance satisfactory to the Purchasers.
(i) Evidence reasonably satisfactory to the Purchasers of the
prospective Debt Ratings by S&P and ▇▇▇▇▇'▇ of the Senior Notes.
(j) Each of the Security Documents duly executed and delivered
by the Company and the Guarantors party thereto, together with (i) all
filings to be made thereunder or in connection therewith, including,
without limitation, form UCC-1 financing statements, (ii) evidence of
insurance required under the Security Documents, (iii) commitments to issue
title insurance from Fidelity National Title Insurance Company of New York
(the "Title Company"), subject only to the payment of the title policy
premium, with respect to the Real Estate specified on Schedule 3.2(j) other
than the Properties identified on Schedule 3.2(j) under the heading "Escrow
Delivery" (collectively, the "Remaining Owned Properties"), and (iv) a
letter agreement from the Title Company in substantially the form of that
circulated on October __, 2002 wherein the Title Company agrees to issue
fully paid ALTA lender's title policies for the Remaining Owned Properties.
With respect to items (iii) and (iv) above, all title insurance policies
shall be in form and substance, with endorsements substantially similar to
the corresponding policies issued to the Agent and Banks under the
Syndicated Facility Documents, and in amount acceptable to the Purchasers
and reasonably acceptable to the Company, insured, coinsured and reinsured
by title insurers that either issued such corresponding title policies to
the Agent and the Banks or is otherwise acceptable to the Noteholders and
reasonably acceptable to the Company.
(k) Such other documents referenced in any Exhibit hereto or
relating to the transactions contemplated by this Agreement as the
Purchasers or their special counsel may reasonably request.
3.3 No Default. At the time of and immediately following the Closing there
shall exist no Event of Default and no condition, event or act that, with the
giving of notice or lapse of time, or both, would constitute such an Event of
Default.
3.4 Use of Proceeds. The Company shall have used, or simultaneously with
the Closing shall use, funds from the Senior Notes for the purposes described in
Section 2.3, and shall have delivered reasonably satisfactory evidence thereof
to the Noteholders.
30
3.5 Compliance with this Agreement. The Company and each of the Guarantors
shall have performed and complied with all of its agreements and satisfied the
conditions set forth or contemplated herein that are required to be performed or
complied with or satisfied by it on or before the Closing Date.
3.6 No Material Judgment or Order. There shall not be on the Closing Date
any judgment or order of a court of competent jurisdiction or any ruling of any
Governmental Authority or any condition under any Requirement of Law which, in
the judgment of any of the Purchasers would prohibit the purchase of the Senior
Notes hereunder or subject the Purchasers to any penalty or other onerous
condition under or pursuant to any Requirement of Law if the Senior Notes were
to be purchased hereunder.
3.7 Compliance Certificate. The Purchasers shall have received a
Compliance Certificate of the Company dated as of the Closing Date demonstrating
the Company's compliance with the financial covenants set forth in Article VIII
on a pro forma basis as of August 31, 2002 if such covenants were tested after
giving effect to the transactions contemplated in the Senior Notes Documents
(and consummated on or prior to the Closing Date).
3.8 Employment Agreements. The Company and its Subsidiaries shall have
provided to each of the Purchasers true and correct copies of (a) the employment
agreements (including separation agreements and severance agreements and other
employment-related agreements with respect to employees entitled to severance
payments of at least $50,000) set forth on Schedule 3.8 (the "Employment
Agreements") and (b) the Stock-Based Plans; it being understood that in each
case, the Company shall only provide copies of documents that are not available
through the Company's public filings.
3.9 Statement of Sources and Uses of Funds. The Company shall have
provided the Purchasers with a satisfactory statement of the sources and uses of
funds in connection with the transactions occurring pursuant to the Senior Notes
Documents on the Closing Date.
3.10 Amendment to Syndicated Facility Documents. The Syndicated Facility
Documents, including, without limitation, the financial covenants of the Company
provided for therein and the maturity date thereof, and the Vessel Financing
Documents shall have been amended in form and substance and on terms and
conditions satisfactory to the Purchasers.
3.11 Revolving Credit Availability. After giving effect to all transactions
occurring pursuant to the Senior Notes Documents on the Closing Date, the
Company shall have not less than $7,500,000 of availability under the Syndicated
Credit Agreement.
3.12 Financial Statements. The Purchasers shall have received copies of the
Financial Statements at least five Business Days prior to the Closing Date.
3.13 Pro Forma Balance Sheet. The Company shall have delivered to the
Purchasers, at least five Business Days prior to the Closing Date, a pro forma
consolidated balance sheet of
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the Company and its Subsidiaries (the "Pro Forma Balance Sheet") certified by
the Chief Financial Officer of the Company that it fairly presents the financial
condition of the Company and its Subsidiaries as at August 31, 2002 modified by
pro forma adjustments reflecting the consummation of the transactions
contemplated in this Agreement and all other Senior Notes Documents (and
consummated on or prior to the Closing Date), including all material fees and
expenses in connection therewith.
3.14 Pro Forma Financial Projections. The Company shall have delivered to
the Purchasers quarterly pro forma financial projections for the Company and its
Subsidiaries for the 12 months ending December 31, 2002 and for the 12 months
ending December 31, 2003, and annual financial projections for the Company and
its Subsidiaries thereafter through December 31, 2006, in form and detail
satisfactory to the Purchasers (the "Pro Forma Financial Projections").
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
4.1 Representations and Warranties of the Purchasers. Each of the
Purchasers hereby represents and warrants, solely with respect to itself, which
representations and warranties shall survive the Closing, that:
(a) Such Purchaser has duly authorized, executed and delivered
this Agreement and such of the Senior Notes Documents as require execution
by it and each constitutes the valid and binding obligation of such
Purchaser enforceable in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting generally
the enforcement of creditors' rights and except to the extent that
availability of the remedy of specific performance or injunctive relief is
subject to the discretion of the court before which any proceeding therefor
may be brought.
(b) Such Purchaser is acquiring the Senior Notes for its own
account, and not as nominee or agent.
(c) The Senior Notes are being and will be acquired for the
purpose of investment and not with a view to distribution or resale thereof
in violation of the securities laws; subject, nevertheless, to the
condition that, except as otherwise provided herein and subject to
compliance with applicable securities laws, the disposition of the property
of such Purchaser shall at all times be within its control. Such Purchaser
was not formed solely for the purpose of making an investment in the
Company or its Subsidiaries. Such Purchaser is an "accredited investor" as
that term is defined in Regulation D of the Securities Act with such
knowledge and experience in financial and business matters as are necessary
in order to evaluate the merits and risks of an investment in the Senior
Notes.
(d) Such Purchaser understands that it must bear the economic
risk of its investment for an indefinite period of time because the Senior
Notes are not, and will
32
not be, registered under the Securities Act or any applicable state
securities laws, except as may be provided in this Agreement, and may not
be resold unless subsequently registered under the Securities Act and such
other laws or unless an exemption from such registration is available. Such
Purchaser acknowledges that, in issuing the Senior Notes, the Company is
relying on the representations and warranties of such Purchaser in this
Section 4.1.
(e) No Person has or will have, as a result of the transactions
contemplated by this Agreement, any rights, interest or valid claim against
or upon the Company or any of its Subsidiaries for any commission, fee or
other compensation as a finder or broker because of any act or omission by
such Purchaser or any agent of such Purchaser.
(f) Such Purchaser hereby acknowledges that the Senior Notes
(unless no longer required in the opinion of counsel, which opinion and
counsel shall be reasonably satisfactory to the Company, it being agreed
that ▇▇▇▇▇▇▇ Procter LLP shall be satisfactory) shall bear a legend
substantially in the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT
BE SOLD OR TRANSFERRED WITHOUT COMPLIANCE WITH THE REGISTRATION OR
QUALIFICATION PROVISIONS OF APPLICABLE FEDERAL AND STATE SECURITIES
LAWS OR APPLICABLE EXEMPTIONS THEREFROM.
The acquisition by each such Purchaser of the Senior Notes shall constitute a
confirmation by such Purchaser of the foregoing representations and warranties
made by such Purchaser.
ARTICLE V - REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Purchasers (and each of them) as
of the Closing Date as follows (which representations and warranties shall
survive the Closing), after giving effect to the transactions contemplated by
this Agreement and the other Senior Notes Documents:
5.1 Senior Notes constitute Senior Indebtedness. The Senior Notes (and
each of them) and the other Senior Notes Obligations constitute, and shall
constitute at all times until repurchase or redemption thereof in accordance
with the terms of this Agreement, (a) "Senior Indebtedness" (and "Guaranteed
Senior Indebtedness" in the case of the Guaranteed Obligations) and "Designated
Senior Indebtedness" of the Company and the Guarantors, and (b) "Indebtedness"
under the "Senior Credit Facility", in each case as such terms are defined in
the Subordinated Notes Indenture. The Liens granted under the Security Documents
constitute, and at all times that any Senior Note or other Senior Notes
Obligation shall be outstanding, shall constitute, "Permitted Liens" under (and
as defined in) the Subordinated Notes Indenture.
33
5.2 Corporate Authority.
5.2.1 Organization; Good Standing. Each of the Company and its
Subsidiaries (a) is a corporation, limited partnership or limited liability
company duly organized, validly existing and in good standing under the laws of
its jurisdiction of organization, (b) has all requisite corporate power (or
company or partnership power, as the case may be) to own its property and
conduct its business as now conducted and as presently contemplated, and (c) is
in good standing as a foreign corporation (or company or partnership) and is
duly authorized to do business in each jurisdiction in which such qualification
is necessary, except where a failure to be so qualified would not have a
Material Adverse Effect.
5.2.2 Authorization. The execution, delivery and performance of this
Agreement and the other Senior Notes Documents to which the Company or any of
its Subsidiaries is or is to become a party and the transactions contemplated
hereby and thereby (a) are within the authority of such Person, (b) have been
duly authorized by all necessary proceedings, including, without limitation, the
authorization of the issuance and delivery of the Senior Notes, (c) do not
violate, conflict with or result in any breach or contravention of any provision
of law, statute, rule or regulation to which the Company or any of its
Subsidiaries is subject or any judgment, order, writ, injunction, license or
permit applicable to the Company or any of its Subsidiaries and (d) do not
violate, conflict with, or result in the creation of any Lien on the properties
or assets of the Company or any of its Subsidiaries under, any provision of the
Organizational Documents of, or any material agreement or other material
instrument (including, without limitation, any of the Syndicated Facility
Documents, Subordinated Note Indenture or the Subordinated Notes) binding upon,
the Company or any of its Subsidiaries. The purchase of the Senior Notes is not
subject to preemptive or other similar statutory or contractual rights.
5.2.3 Enforceability. The execution and delivery of this Agreement
and the other Senior Notes Documents to which the Company or any of its
Subsidiaries is or is to become a party will result in valid and legally binding
obligations of such Person enforceable against it in accordance with the
respective terms and provisions hereof and thereof, except as enforceability is
limited by bankruptcy, insolvency, reorganization, moratorium or other laws
relating to or affecting generally the enforcement of creditors' rights and
except to the extent that availability of the remedy of specific performance or
injunctive relief is subject to the discretion of the court before which any
proceeding therefor may be brought.
5.3 Governmental Approvals. The execution, delivery and performance by the
Company and its Subsidiaries of this Agreement and the other Senior Notes
Documents to which the Company or any of its Subsidiaries is or is to become a
party and the transactions contemplated hereby and thereby, including the
issuance and delivery of the Senior Notes do not require the approval or consent
of, or filing with or notification to, any governmental agency or authority.
5.4 Subsidiaries, etc. Other than the Subsidiaries listed on Schedule 5.4
hereto, none of the Company and its Subsidiaries has any Subsidiaries. Except as
set forth on Schedule 5.4
34
hereto, none of the Company and its Subsidiaries is engaged in any joint venture
or partnership with any other Person.
5.5 Capital Stock of Subsidiaries. Except as described on Schedule 5.5,
the Company owns all of the outstanding Capital Stock or other equity interests
of each of its Subsidiaries (except for directors' qualifying shares and shares
owned by others in compliance with local law requirements), beneficially and of
record, free and clear of all liens, encumbrances, restrictions (other than
those under applicable securities laws) and claims of every kind. All the
outstanding shares of Capital Stock or other equity interests of each of the
Subsidiaries have been duly authorized, are validly issued and are fully paid
and nonassessable. Except as described on Schedule 5.5, there are no proxies,
irrevocable or otherwise, with respect to such Capital Stock, and no equity
securities of any Subsidiary are or may become required to be issued by reason
of any options, warrants, scrip, rights to subscribe to, calls or commitments of
any character whatsoever relating to, or securities or rights convertible into
or exchangeable for, any Capital Stock of any such Subsidiary, and there are no
contracts, commitments, understandings or arrangements by which any such
Subsidiary is or may become bound to issue additional Capital Stock or
securities convertible into or exchangeable for such Capital Stock.
5.6 Investments in Other Persons. Except as set forth on Schedule 5.6
attached hereto, none of the Company and its Subsidiaries has made any loan or
advance in excess of $250,000 (other than trade credit advanced in the ordinary
course of business and consistent with past practices) to any Person which is
outstanding on the date of this Agreement, nor is the Company or any of its
Subsidiaries obligated or committed to make any such loan or advance.
5.7 Title to Properties; Leases. Except as indicated on Schedule 5.7
attached hereto, the Company and its Subsidiaries own all of the assets
reflected in the consolidated balance sheet of the Company and its Subsidiaries
as at the Balance Sheet Date or acquired since that date (except property and
assets sold or otherwise disposed of in the ordinary course of business since
that date), subject to no rights of others, including any mortgages, leases,
conditional sales agreements, title retention agreements, Liens or other
encumbrances, except for (a) Permitted Liens and (b) Liens that encumber or
otherwise restrict assets with an aggregate fair market value less than
$250,000. All of the real property presently owned or leased by the Company and
its Subsidiaries is set forth on Schedule 5.7 hereto.
5.8 Franchises, Patents, Copyrights, etc. Each of the Company and its
Subsidiaries own or control all material trademarks, trademarks rights, trade
names, trade name rights, copyrights, patents, patent rights and licenses, which
are necessary for the conduct of their business, subject to the rights of the
Banks pursuant to the Syndicated Facility Documents. Neither the Company nor any
of its Subsidiaries is to the Knowledge of the Company, infringing upon, or
otherwise acting adversely, to any of such trademarks, trademark rights, trade
name rights, copyrights, patent rights or licenses owned by any other Person.
There is no claim or action by any such Person pending, or, to the Knowledge of
the Company, threatened, against any of the Company or any of its Subsidiaries,
with respect to any of the rights or property referred to in this Section 5.8.
35
5.9 Financial Statements and Projections.
5.9.1 Fiscal Year. The Company and each of its Subsidiaries have a
fiscal year that is the 12 months ending on December 31 of each calendar year.
5.9.2 Financial Statements. Except as set forth on Schedule 5.9
hereto, the Financial Statements have been prepared in accordance with generally
accepted accounting principles and fairly present in all material respects the
consolidated financial condition of the Company and its Subsidiaries as at the
close of business on the date thereof and the results of operations for the
periods then ended (subject, in the case of unaudited statements, to year-end
and audit adjustments and the absence of footnotes). There are no contingent
liabilities of the Company or any of its Subsidiaries as of such dates involving
material amounts, known to the Company, which were not disclosed in such balance
sheets and the notes related thereto.
5.9.3 Projections. The projections of the annual operating budgets of
the Company and its Subsidiaries on a consolidated basis, balance sheets and
cash flow statements for the 2002 to 2006 fiscal years and the Pro Forma
Financial Projections, copies of which have been delivered to each Purchaser,
disclose all material assumptions made with respect to general economic,
financial and market conditions used in formulating such projections. To the
Knowledge of the Company no facts exist that (individually or in the aggregate)
would result in any materially adverse change in any of such projections. The
projections are based upon reasonable estimates and assumptions, have been
prepared on the basis of the assumptions stated therein and reflect the
reasonable estimates of the Company of the results of operations and other
information projected therein. It is recognized by the Purchasers that such
projections as to future events are not to be viewed as facts, assurances or
guarantees, that underlying assumptions may not materialize or may prove to be
incorrect, that unanticipated events and circumstances may occur, and that
actual results during the period or periods covered by any such projections
likely will vary from the projected results. The assumptions underlying the
projections are inherently uncertain and are subject to significant business,
economic and competitive uncertainties.
5.9.4 Pro Forma Balance Sheet. The Pro Forma Balance Sheet delivered
to the Purchasers sets forth the assets and liabilities of the Company and its
Subsidiaries on a pro forma basis after taking into account the consummation
(through the Closing Date) of the transactions contemplated in this Agreement as
of August 31, 2002. The Pro Forma Balance Sheet has been prepared by the Company
in accordance with generally accepted accounting principles, consistently
applied, and fairly presents in all material respects the assets and liabilities
of the Company and its Subsidiaries, reflecting the consummation of all of the
transactions contemplated in this Agreement and the other Senior Notes Documents
and based on the assumptions set forth therein as of the Closing Date.
5.10 Tax Status. The Company and its Subsidiaries (a) have made or filed
all material federal, foreign, state, provincial and local income and all other
tax returns, reports and declarations required by any jurisdiction to which any
of them is subject, (b) have paid all taxes
36
and other governmental assessments and charges shown or determined to be due on
such returns, reports and declarations, except those being contested in good
faith and by appropriate proceedings and (c) have set aside on their books
provisions reasonably adequate for the payment of all taxes for periods
subsequent to the periods to which such returns, reports or declarations apply.
There are no unpaid taxes in any material amount claimed to be due by the taxing
authority of any jurisdiction, and, to the Knowledge of the Company, no basis
for any such claim.
5.11 Permits; Compliance with Laws. The Company has all franchises,
authorizations, approvals, orders, consents, licenses, certificates, permits,
registrations, qualifications or other rights and privileges (collectively
"Permits") reasonably necessary to permit it to own its property and to conduct
its business as it is presently conducted or proposed to be conducted, and all
such Permits are valid and in full force and effect. No Permit is subject to
termination as a result of the execution of this Agreement, consummation of the
transactions contemplated hereby or by any other Senior Notes Document. The
Company is now and has heretofore been in compliance with all applicable
statutes, ordinances, orders, rules and regulations promulgated by any U.S.
federal, state, municipal, non-U.S. or other governmental authority that apply
to the conduct of its business, except where the failure to so comply could not
reasonably be expected to have a Material Adverse Effect. The Company has never
entered into or been subject to any judgment, consent decree, compliance order
or administrative order with respect to any aspect of the business, affairs,
properties or assets of the Company or received any request for information,
notice, demand letter, administrative inquiry or formal or informal complaint or
claim from any regulatory agency with respect to any aspect of the business,
affairs, properties or assets of the Company that could reasonably be expected
to have a Material Adverse Effect.
5.12 Compliance with Organizational Documents. None of the Company or any
of its Subsidiaries is in violation of any provision of its Organizational
Documents.
5.13 Government Regulation. Neither the Company nor any of its Subsidiaries
is a "holding company", or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company", as such terms are defined in the Public
Utility Holding Company Act of 1935; nor is it an "investment company", or an
"affiliated company" or a "principal underwriter" of an "investment company", as
such terms are defined in the Investment Company Act of 1940; nor is it subject
to regulation under the Federal Power Act, the Interstate Commerce Act or any
other requirement and law which purports to regulate or restrict its ability to
borrow money.
5.14 Absence of Financing Statements, etc. Except with respect to Permitted
Liens, there is no financing statement, security agreement, chattel mortgage,
real estate mortgage or other document filed or recorded with any filing
records, registry or other public office, that purports to cover, affect or give
notice of any present or possible future lien on, or security interest in, any
assets or property of the Company or any of its Subsidiaries or any rights
relating thereto.
37
5.15 Potential Conflicts of Interest. Except as set forth on Schedule 5.15,
to the Knowledge of the Company and its Subsidiaries, no officer, director,
stockholder or Affiliate of the Company or any of its Subsidiaries, (a) owns,
directly or indirectly, any interest in (excepting less than 1.0% equity holding
for investment purposes in securities of publicly held and traded companies), or
is an officer, director, employee or consultant of, any Person that is, or is
engaged in business as, a competitor (e.g., a business engaged in the industrial
minerals or marine transportation businesses), lessor, lessee, supplier,
distributor, sales agent or customer of, or creditor to or borrower from the
Company or any of its Subsidiaries; (b) owns, directly or indirectly in whole or
in part, any tangible or intangible property that the Company or any of its
Subsidiaries uses in the conduct of business; or (c) has any cause of action or
other claim whatsoever against, or owes or has advanced any amount to the
Company or any of its Subsidiaries except for claims in the ordinary course of
business such as for accrued vacation pay, accrued benefits under employee
benefit plans, and similar matters and agreements existing on the date hereof.
5.16 Certain Transactions. Except for arm's length transactions pursuant to
which the Company or any of its Subsidiaries makes payments in the ordinary
course of business upon terms no less favorable than the Company or such
Subsidiary could obtain from third parties and described on Schedule 5.16, none
of the officers, directors, or employees of the Company or any of its
Subsidiaries (or any of their respective family members) or, to the Knowledge of
the Company, stockholders of the Company (or any of their respective family
members) is presently a party to any transaction with the Company or any of its
Subsidiaries, including any contract, agreement or other arrangement providing
for the furnishing of services to or by, providing for rental of real or
personal property to or from, or otherwise requiring payments to or from any
such Person or, to the Knowledge of the Company, any corporation, partnership,
limited liability company, trust or other entity in which any officer, director,
or any such employee or family member has a substantial interest or is an
officer, director, partner, member or trustee.
5.17 Employee Benefit Plans.
5.17.1 In General. Each Employee Benefit Plan and each Guaranteed
Pension Plan has been maintained and operated in compliance in all material
respects with the provisions of ERISA and, to the extent applicable, the Code,
including but not limited to the provisions thereunder respecting prohibited
transactions and the bonding of fiduciaries and other Persons handling plan
funds as required by Section 412 of ERISA. The Company has heretofore delivered
to the Purchasers the most recently completed annual report, Form 5500, with all
required attachments, and actuarial statement required to be submitted under
Section 103(d) of ERISA, with respect to each Guaranteed Pension Plan.
5.17.2 Terminability of Welfare Plans. Except as disclosed on Schedule
5.17.2, (a) other than normal severance plans, no Employee Benefit Plan that is
an employee welfare benefit plan within the meaning of Section 3(1) or Section
3(2)(B) of ERISA, provides benefit coverage subsequent to termination of
employment, except as required by Title I, Part 6 of ERISA or the applicable
state insurance laws and (b), the Company may terminate each such
38
Employee Benefit Plan at any time (or at any time subsequent to the expiration
of any applicable bargaining agreement) in the discretion of the Company without
liability to any Person other than for claims arising prior to termination.
5.17.3 Guaranteed Pension Plans. Each contribution required to be made
to a Guaranteed Pension Plan, whether required to be made to avoid the
incurrence of an accumulated funding deficiency, the notice or lien provisions
of Section 302(f) of ERISA, or otherwise, has been timely made. No waiver of an
accumulated funding deficiency or extension of amortization periods has been
received with respect to any Guaranteed Pension Plan, and neither the Company
nor any ERISA Affiliate is obligated to or has posted security in connection
with an amendment to a Guaranteed Pension Plan pursuant to Section 307 of ERISA
or Section 401(a)(29) of the Code. No liability to the PBGC (other than required
insurance premiums, all of which have been paid) has been incurred by the
Company or any ERISA Affiliate with respect to any Guaranteed Pension Plan and
there has not been any ERISA Reportable Event , or any other event or condition
which presents a material risk of termination of any Guaranteed Pension Plan by
the PBGC. Based on the latest valuation of each Guaranteed Pension Plan (which
in each case occurred within twelve months of the date of this representation),
the aggregate benefit liabilities of all such Guaranteed Pension Plans within
the meaning of Section 4001 of ERISA did not exceed the aggregate value of the
assets of all such Guaranteed Pension Plans, disregarding for this purpose the
benefit liabilities and assets of any Guaranteed Pension Plan with assets in
excess of benefit liabilities, by more than $250,000.
5.17.4 Multiemployer Plans. None of the Company or any ERISA Affiliate
has incurred any material liability (including secondary liability) to any
Multiemployer Plan as a result of a complete or partial withdrawal from such
Multiemployer Plan under Section 4201 of ERISA or as a result of a sale of
assets described in Section 4204 of ERISA. None of the Company or any ERISA
Affiliate has been notified that any Multiemployer Plan is in reorganization or
insolvent under and within the meaning of Section 4241 or Section 4245 of ERISA
or is at risk of entering reorganization or becoming insolvent, or that any
Multiemployer Plan intends to terminate or has been terminated under Section
4041A of ERISA.
5.17.5 Stock-Based Plans. Each of the Stock-Based Plans is identified
on Schedule 3.8. Each of the Stock-Based Plans has been duly authorized by all
necessary corporate and stockholder action. Sufficient shares of Capital Stock
have been duly reserved for issuance under the Stock-Based Plans.
5.18 Environmental Compliance.
(a) None of the Company and its Subsidiaries, or any of their
facilities, improvements, activities or operations is in violation, or
alleged violation, of any Environmental Law, except where the failure to so
comply could not reasonably be expected to have a Material Adverse Effect.
(b) Except as specifically identified on Schedule 5.18(b),
neither the Company nor any of its Subsidiaries has received notice from
any third party including,
39
without limitation, any federal, state or local Governmental Authority in
the past three years or with respect to any matter that is currently
pending, in effect or remains unresolved: (i) that any one of them has been
identified by the United States Environmental Protection Agency ("EPA") or
any state environmental agency as a potentially responsible --- party under
CERCLA with respect to a site listed on the National Priorities List or any
site listed on an analogous state list; (ii) that any Hazardous Substances
which any of them has generated, recycled, manufactured, treated, stored,
transferred, produced, processed, refined, handled, transported or disposed
of has been found at any site at which a federal, state or local agency or
other third party has conducted or has ordered a site assessment, remedial
investigation, monitoring, removal or other remedial action pursuant to any
Environmental Law; or (iii) that it is or shall be a named party to any
claim, action, cause of action, complaint, or legal or administrative
proceeding (in each case, contingent or otherwise) arising out of any third
party's incurrence of costs, expenses, losses or damages of any kind
whatsoever in connection with the Release of Hazardous Substances.
(c) Except as specifically identified on Schedule 5.18(c)
attached hereto: (i) no portion of the Real Estate has been used by the
Company or any of its Subsidiaries, or to the Knowledge of the Company, by
any other Person for the handling, processing, generation, manufacture,
treatment, production, refining, storage or disposal of Hazardous
Substances except in accordance with applicable Environmental Laws with
which the failure to comply would have a Material Adverse Effect; (ii) no
underground tank, surface impoundment, lagoon or underground storage
receptacle for Hazardous Substances is located on any portion of the Real
Estate; (iii) in the course of any activities conducted by the Company or
its Subsidiaries or operators of its properties, no Hazardous Substances
have been generated or are being used on the Real Estate except in
accordance with applicable Environmental Laws with which the failure to
comply would have a Material Adverse Effect; (iv) there have been no
Releases or threatened Releases of Hazardous Substances by the Company or
its Subsidiaries, and to the Knowledge of the Company, there have been no
Releases or threatened Releases of Hazardous Substances on, upon, at, to,
into or from the properties of the Company or its Subsidiaries by any
Person; and (v) to the Knowledge of the Company, there have been no
Releases on, upon, at, to, from or into any real property in the vicinity
of any of the Real Estate which, through soil or groundwater contamination,
may have come to be located on any of the Real Estate, except where such
Release is in an amount or concentration that does not require reporting to
any governmental authority or any response action under applicable
Environmental Law; and (vi) none of the Company, its Subsidiaries or any of
their operations or the Real Estate is subject to any applicable
Environmental Law requiring the performance of Hazardous Substances site
assessments by the Company or such Subsidiary, or the removal or
remediation of Hazardous Substances by the Company or such Subsidiary, or
the giving of notice by the Company or such Subsidiary to any governmental
agency or the recording or delivery to other Persons of an environmental
disclosure document or statement by virtue of the transactions set forth
herein and
40
contemplated hereby, or as a condition to the recording of any mortgage or
to the effectiveness of any other transactions contemplated hereby.
(d) No lien has been imposed on any of the Real Estate by any
Governmental Authority at the federal, state, or local level in connection
with the presence on or off such property of any Hazardous Substance.
(e) Except as specifically identified on Schedule 5.18(e),
neither the Company nor any Subsidiary: (i) has entered into or been
subject to any consent decree, compliance order, or administrative order
with respect to any Real Estate or any facilities or improvements or any
operations or activities thereon; nor (ii) has received any request for
information, demand letter, or administrative inquiry with respect to
environmental matters, and the Company and its Subsidiaries have no reason
to believe that any of the above will be forthcoming, in each case, in the
past three years or with respect to any matter that is currently pending,
in effect or remains unresolved.
(f) Schedule 5.18(f) lists all of the reports summarizing the
findings of an environmental evaluation of sites, locations or facilities
owned, occupied or operated by the Company or any of its Subsidiaries other
than privileged internal environmental reports of, prepared, in each case,
by personnel of, the Company and its Subsidiaries in the past three years
or with respect to any matter that is currently pending, in effect or
remains unresolved (collectively, the "Environmental Reports"). The Company
has made available to the Purchasers true and correct copies of all
Environmental Reports and all documents or information in the possession or
control or available to the Company or its Subsidiaries concerning
environmental matters relevant to sites, locations or facilities owned,
occupied or operated by the Company and its Subsidiaries.
5.19 Insurance. The Company and each of its Subsidiaries maintains with
financially sound and reputable insurers having an A- rating or better from
Best's Rating Service insurance with respect to its properties and businesses
against such casualties and contingencies as are in accordance with the general
practices of businesses engaged in similar activities in similar geographic
areas, with the details of such coverage being more fully described on Schedule
5.19 hereto. The information with respect to the insurance coverage of the past
and present properties and business of the Company and its Subsidiaries that the
Company has provided to the Purchasers is accurate in all respects.
5.20 Securities Act. None of the Company nor anyone acting on its behalf
has offered or will offer to sell the Senior Notes or similar securities to, or
solicit offers with respect thereto from, or enter into any preliminary
conversations or negotiations relating thereto with, any Person, so as to bring
the issuance and sale of the Senior Notes to the Purchasers under the
registration provisions of the Securities Act. Assuming the accuracy of the
representations and warranties of each Purchaser set forth herein, the issuance
of the Senior Notes to the Purchasers pursuant to this Agreement is not required
to be registered under the Securities Act or applicable state securities law.
41
5.21 Employment of Officers. Except as set forth on Schedule 5.21 hereto,
no senior officer or key employee of the Company or any of its Subsidiaries has
delivered notice of his or her intention to terminate his or her employment with
the Company or any of its Subsidiaries and none of the Company and its
Subsidiaries has any present intention of terminating any such employment.
5.22 Labor Relations.
(a) Except as set forth on Schedule 5.22, (i) there is no labor
strike, picketing of any nature, material labor dispute, slowdown or any
other concerted interference with normal operations, stoppage or lockout
pending or to the Knowledge of the Company, threatened against or affecting
the Company and its Subsidiaries, (ii) there are no union claims or demands
to represent the employees of the Company and its Subsidiaries, neither the
Company nor any of its Subsidiaries has any collective bargaining
obligations with respect to any of its employees, and, to the Knowledge of
the Company, there are no current union organizing activities among the
employees of the Company and its Subsidiaries, (iii) neither the Company
nor any of its Subsidiaries is a party to or bound by any collective
bargaining or similar agreement with any labor organization, or work rules
or practices agreed to with any labor organization or employee association,
applicable to employees of the Company and its Subsidiaries, and (iv) with
respect to bargaining obligations disclosed in Schedule 5.22, the Company
and its Subsidiaries have bargained and continue to bargain in good faith.
(b) The Company and its Subsidiaries are in compliance in all
material respects with all applicable laws and regulations respecting
labor, employment, fair employment practices, work place safety and health,
terms and conditions of employment, and wages and hours. Neither the
Company nor any of its Subsidiaries is delinquent in any payments to any of
its employees or Contingent Workers (as that term is defined in Section
5.22(c) below) for any wages, salaries, commissions, bonuses, fees or other
direct compensation due with respect to any services performed for it to
the date hereof or amounts required to be reimbursed to such employees or
Contingent Workers. There are no material grievances, complaints or charges
with respect to employment or labor matters (including, without limitation,
charges of employment discrimination, retaliation or unfair labor
practices) pending or, to the Knowledge of the Company, threatened in any
judicial, regulatory or administrative forum, or under any dispute
resolution procedure (including, but not limited to, any proceedings under
any dispute resolution procedure under any collective bargaining
agreement). None of the Company's or its Subsidiaries' employment policies
or practices is currently being audited or investigated by any Governmental
Authority, or to the Knowledge of the Company, is subject to imminent audit
or investigation by any Governmental Authority. The Company and its
Subsidiaries are not subject to any consent decree, court order or
settlement in respect of any labor or employment matters. Except as set
forth in Schedule 5.22, no arbitration or similar proceeding with respect
to employment matters is pending or, to the Knowledge of the Company,
threatened and, to the Knowledge of the
42
`
Company, no claim therefor has been asserted that if adversely determined
(individually or together with any other such claims) could reasonably be
expected to have a Material Adverse Effect. Except as disclosed on Schedule
5.22, neither the Company nor any of its Subsidiaries has any policy, plan
or program of paying severance pay or any form of severance compensation in
connection with the termination of the employees of the Company or any of
its Subsidiaries.
(c) Except as would not have a Material Adverse Effect, neither
the Company nor any of its Subsidiaries employs any independent
contractors, temporary employees, leased employees or any other servants or
agents compensated other than through reportable wages paid by the Company
or the applicable Subsidiary (collectively, "Contingent Workers"). To the
extent that the Company or any of its Subsidiaries employs Contingent
Workers, it has properly classified and treated them in accordance with
applicable laws and for purposes of all benefit plans and perquisites.
5.23 Trade Relations. There exists no actual or, to the Knowledge of the
Company, threatened, termination, cancellation or limitation of, or any adverse
modification or change in, the business relationship of the Company or any of
its Subsidiaries or their respective businesses with any customer or any group
of customers whose purchases are individually or in the aggregate material to
the business of the Company and its Subsidiaries taken as a whole, or with any
material supplier, and to the Knowledge of the Company, there exists no present
condition or state of facts or circumstances that would have a Material Adverse
Effect or prevent the Company or any of its Subsidiaries from conducting its
business after the consummation of the transactions contemplated by this
Agreement, in substantially the same manner in which such business has
heretofore been conducted, except for a condition or state of facts or
circumstance the results of which would not have a Material Adverse Effect.
5.24 Books and Records. The books of account, ledgers, order books, records
and documents of the Company and its Subsidiaries accurately and completely
reflect all material information relating to (a) the business of the Company and
its Subsidiaries, (b) the nature, acquisition, maintenance, location and
collection of the assets of the Company and its Subsidiaries, and (c) the nature
of all transactions giving rise to the obligations or accounts receivable of the
Company and its Subsidiaries.
5.25 Other Agreements. Except for the Senior Notes Documents or as set
forth on Schedule 5.25 attached hereto, none of the Company or any of its
Subsidiaries is a party to or otherwise bound or affected by any written:
(a) agreement, contract or commitment with any present or former
shareholder, director or officer;
(b) agreement, contract or commitment for the purchase of, or
payment for, supplies or products, or for the performance of services by a
third party, involving in any one case $1,000,000 or more, (other than
purchase orders issued to, or
43
contracts with, vendors in the ordinary course of business), or any "take
or pay" or requirements contract or other commitment;
(c) agreement, contract or commitment to sell or supply products
or to perform services, involving in any one case $2,000,000 or more, other
than purchase orders received from and contracts with customers in the
ordinary course of business;
(d) note, debenture, bond, conditional sale agreement, equipment
trust agreement, letter of credit agreement, loan agreement or other
agreement or contract, commitment or arrangement for the borrowing or
lending of money or for a line of credit or guarantee, pledge or
undertaking in any manner whatsoever of the indebtedness of (A) officers,
directors, any stockholder or any member of any of their immediate
families, excluding travel allowances made in the ordinary course of
business, or (B) any other Person in an amount in excess of $100,000,
excluding the extension of trade credit in the ordinary course of business
consistent with past practices);
(e) agreement, contract or commitment for any capital
expenditure in excess of $500,000; or
(f) agreement, contract or commitment limiting or restraining it
from engaging or competing in any lines of business with any Person (nor is
any officer or employee of the Company or any Subsidiary subject to any
such agreement except where such limitation runs to the benefit of the
Company or one of its Subsidiaries).
The Company and each of its Subsidiaries and, to the Knowledge of the Company,
each other party thereto have in all respects performed all the obligations
required to be performed by them to date, have received no notice of default and
are not in default under any lease, agreement or contract now in effect to which
the Company or any of its Subsidiaries is a party or by which the Company and
its Subsidiaries or its respective property may be bound, except where the same
would not have a Material Adverse Effect. None of the Company and its
Subsidiaries has any present expectation or intention of not fully performing
all its obligations under each such lease, contract or other agreement, and, to
the Knowledge of the Company, there is no breach or anticipated breach by the
other party to any contract or commitment to which the Company or any of its
Subsidiaries is a party, except where the same would not have a Material Adverse
Effect.
5.26 Representations and Warranties Incorporated from Other Agreements.
Except where such representation or warranty is made expressly as of a
particular date, each of the representations and warranties (a) made by the
Company and its Subsidiaries to the Agent and the Banks in the Syndicated
Facility Documents and Vessel Financing Documents, and (b) each of the
representations and warranties made by the Company in the Subordinated Notes
Indenture is true and correct.
5.27 No Material Changes. Since the Reference Balance Sheet Date there has
occurred no materially adverse change in the financial condition or business of
the Company and its
44
Subsidiaries as shown on or reflected in the consolidated balance sheet of the
Company as at the Reference Balance Sheet Date, or the consolidated statements
of income and cash flows for the period then ended, other than changes in the
ordinary course of business that have not had a Material Adverse Effect. Since
the Reference Balance Sheet Date, the Company has not made any Distributions,
except in accordance with the terms of this Agreement.
5.28 Litigation. Except as set forth on Schedule 5.28, there are no
actions, suits, proceedings, claims, disputes or investigations of any kind,
including, without limitation, any product liability claims, pending or, to the
Knowledge of the Company, threatened, against the Company or any of its
Subsidiaries before any court, tribunal or administrative agency or board that,
if adversely determined, either in any individual case or in the aggregate, (i)
could reasonably be expected to have a Material Adverse Effect, (ii) that
question the validity of this Agreement or any of the other Senior Notes
Documents (or any provision hereof or thereof, or any action taken or to be
taken pursuant hereto or thereto, or (iii) that, if adversely determined, either
in any individual case or in the aggregate, could reasonably be expected to
result in any liability not covered by insurance, or for which adequate reserves
are not maintained on the consolidated balance sheet of the Company and its
Subsidiaries.
5.29 No Materially Adverse Contracts, etc. Neither the Company nor any of
its Subsidiaries is subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation that could
reasonably be expected to have a Material Adverse Effect. None of the Company or
any of its Subsidiaries is a party to any contract or agreement that has or
could reasonably be expected to, in the judgment of the Company's officers, have
any Material Adverse Effect.
5.30 Chief Executive Offices. The chief executive office of the Company and
its Subsidiaries as of the date hereof are set forth on Schedule 6.2, at which
location their books and records are kept.
5.31 No Brokers or Finders. Except as described on Schedule 5.31, no Person
had, has or will have, as a result of the transactions contemplated by this
Agreement, any right, interest or valid claim against or upon the Purchasers,
the Company or any of its Subsidiaries for any commission, fee or other
compensation as a finder or broker because of any act or omission by the
Company, any of its Subsidiaries or any of their agents in connection with the
purchase and sale of the Senior Notes.
5.32 Use of Proceeds.
5.32.1 General. The proceeds of the Senior Notes shall be used for the
purposes described in Section 2.3.
5.32.2 Federal Reserve Regulations. None of the Company nor any of its
Subsidiaries is engaged in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System), and no part of the proceeds
of the Senior Notes will be used to
45
purchase or carry any margin security or to extend credit to others for the
purpose of purchasing or carrying any margin security or in any other manner
which would involve a violation of any of the applicable regulations of the
Board of Governors of the Federal Reserve System.
5.33 Solvency. From and after consummation of the transactions contemplated
by the Senior Notes Documents: (a) the Company and its Subsidiaries, when taken
as a whole, are Solvent, and (b) after adjustments are made for intercompany
advances in the ordinary course of business, each of the Company and the
Guarantors (other than the Restricted Guarantors) is Solvent.
5.34 No Event of Default. No Default or Event of Default has occurred and
is continuing.
5.35 Disclosure. The representations and warranties made or contained in
this Agreement, the disclosure schedules attached hereto and exhibits hereto and
the certificates and statements executed or delivered in connection herewith and
all other information provided in writing by the Company to the Purchasers in
connection with the transactions contemplated hereby, when taken together, do
not and shall not contain any untrue statement of a material fact and do not and
shall not omit to state a material fact required to be stated therein or
necessary in order to make such representations, warranties or other material
fact not misleading in the light of the circumstances in which they were made or
delivered. There is no material fact directly relating to the assets,
liabilities, business, operations, condition (financial or other) or prospects
of the Company (including any competitive developments other than facts which
relate to general economic or industry trends or conditions) that materially
adversely affects the same that has not been set forth in this Agreement, in the
disclosure schedule attached hereto or otherwise certified in writing to the
Noteholders on or prior to the Closing Date. To the Knowledge of the Company, no
officer or director of the Company has been (a) subject to voluntary or
involuntary petition under the federal bankruptcy laws or any state insolvency
law or the appointment of a receiver, fiscal agent or similar officer by a court
for his or her business or property or that of any partnership of which he or
she was a general partner or any corporation or business association of which he
or she was an executive officer; (b) convicted in a criminal proceeding or named
as a subject of a pending criminal proceeding (excluding traffic violations and
other minor offenses); (c) the subject of any order, judgment, or decree (not
subsequently reversed, suspended or vacated) of any court of competent
jurisdiction permanently or temporarily enjoining him or her from, or otherwise
imposing limits or conditions on his or her ability to engage in any securities,
investment advisory, banking, insurance or other type of business or acting as
an officer or director of a public company; (d) found by a court of competent
jurisdiction in a civil action or by the Commission or the Commodity Futures
Trading Commission to have violated any federal or state commodities, securities
or unfair trade practices law, which judgment or finding has not been
subsequently reversed, suspended, or vacated; or (e) has engaged in other
conduct that is required to be disclosed in a prospectus under Item 401(f) of
Commission Regulation S-K.
46
ARTICLE VI - AFFIRMATIVE COVENANTS OF THE COMPANY
The Company covenants and agrees that so long as any of the Senior Notes is
outstanding:
6.1 Punctual Payment. The Company will duly and punctually pay or cause to
be paid the principal and interest on the Senior Notes and the Company will duly
and punctually pay or cause to be paid all other amounts provided for in this
Agreement and the other Senior Notes Documents to which the Company or any of
its Subsidiaries is a party, all in accordance with the terms of this Agreement
and the other Senior Notes Documents.
6.2 Maintenance of Office. The Company and its Subsidiaries will maintain
their chief executive offices in the location specified with respect thereto on
Schedule 6.2 or, at such other place in the United States of America as the
Company shall designate upon not less than 15 days prior written notice to the
Noteholders, where notices, presentations and demands to or upon the Company and
its Subsidiaries in respect of the Senior Notes Documents may be given or made.
6.3 Records and Accounts. The Company will (a) keep, and cause each of its
Subsidiaries to keep, true and accurate records and books of account in which
full, true and correct entries will be made in accordance with generally
accepted accounting principles and (b) maintain adequate accounts and reserves
for all taxes (including income taxes), depreciation, depletion, obsolescence
and amortization of its properties and the properties of its Subsidiaries,
contingencies, and other reserves. The Company will at all times engage
nationally-recognized independent certified public accountants as the
independent certified public accountants of the Company and its Subsidiaries and
will not permit more than 90 days to elapse between the cessation of such firm's
(or any successor firm's) engagement as the independent certified public
accountants of the Company and its Subsidiaries and the appointment in such
capacity of a successor firm as shall be reasonably satisfactory to the
Noteholders.
6.4 Financial Statements, Certificates and Information. The Company will,
and will cause each of its Subsidiaries to, deliver to each of the Noteholders:
(a) within 90 days after the end of each fiscal year (or such
earlier date as may be required by the Commission) commencing with the year
ending December 31, 2002, a copy of the consolidated balance sheet of the
Company and its Subsidiaries as the end of such year, together with
consolidated statements of income, retained earnings and cash flows of the
Company and its Subsidiaries for such year, audited and certified by
independent public accountants of recognized national standing reasonably
satisfactory to the Board of Directors, prepared in accordance with
generally accepted accounting principles consistently applied, and
certified without qualification by any nationally-recognized independent
certified public accountants, together with a written statement from such
accountants to the effect that they have read a copy of this Agreement, and
that, in making the examination necessary to said certification, they have
obtained no knowledge of any Default or Event of Default, or, if such
accountants shall have obtained
47
knowledge of any then existing Default or Event of Default they shall
disclose in such statement any such Default or Event of Default, each of
the foregoing balance sheets and statements to set forth in comparative
form the corresponding figures for the prior fiscal period and to include a
brief written discussion and analysis by management of the results shown
therein;
(b) within 45 days after the end of each of the first three
fiscal quarters of each fiscal year (or such earlier date as may be
required by the Commission) commencing with the fiscal quarter ending March
30, 2003 a copy of the unaudited consolidated balance sheet of the Company
and its Subsidiaries as of the end of such fiscal quarter and the unaudited
consolidated statements of income, retained earnings and cash flows for the
Company and its Subsidiaries for such fiscal quarter and for the year to
date, each of the foregoing balance sheets and statements to set forth in
comparative form the corresponding figures for the prior fiscal period and
to include a brief written discussion and analysis by management of the
results shown therein;
(c) for so long as any senior lender of the Company shall
require the delivery of such financial information, within 30 days after
the end of each month commencing with the month ending October 31, 2002, a
copy of the unaudited consolidated balance sheet of the Company and its
Subsidiaries as of the end of such month and the unaudited consolidated
statements of income and cash flows for the Company and its Subsidiaries
for such month and for the year to date; and
(d) simultaneously with the delivery of the financial statements
referred to in clause (a) and (b) of this Section 6.4, a statement
certified by the principal financial or accounting officer of the Company
in the form of Exhibit 6.4(d) hereto and setting forth in reasonable detail
computations evidencing compliance with the covenants contained in Article
VIII and (if applicable) reconciliations to reflect changes in generally
accepted accounting principles since the Balance Sheet Date (a "Compliance
Certificate") and, with the delivery of the financial statements referred
to in clause (a) above, an annual accountant's management letter;
(e) within 90 days after the end of each fiscal year commencing
with the year ending December 31, 2002, a copy of the annual consolidated
operating budget and financial projections of the Company and its
Subsidiaries for the then current fiscal year, certified by the principal
financial or accounting officer of the Company, together with management's
written discussion and analysis of such budget and financial projections;
(f) promptly, and in any event within five Business Days after
the sending or filing thereof, copies of (i) all proxy statements,
financial statements, material change reports and other material reports
that the Company or any of its Subsidiaries sends to its stockholders,
partners, or members (or equivalent persons thereto), copies of all
regular, periodic and special reports and information forms, and all
registration
48
statements, prospectuses and information memoranda, that any of the Company
or any of its Subsidiaries files with the Commission, or with any national
or international securities exchange, and copies of all private placement
or offering memoranda pursuant to which securities of the Company or any of
its Subsidiaries that are exempt from registration under the Securities Act
are proposed to be issues and sold thereby, and (ii) all financial
information and reports provided to the Agent and/or the Banks under the
Syndicated Facility Documents and the Vessel Financing Documents; and
(g) such other financial and business information as holders of
at least 50% of the principal amount of all Senior Notes then outstanding
may reasonably request.
6.5 Notices.
6.5.1 Defaults. The Company will promptly notify each of the
Noteholders in writing of the occurrence of any Default or Event of Default. If
any Person shall give any notice or take any other action in respect of a
claimed default (whether or not constituting an Event of Default) under this
Agreement or any other note, evidence of indebtedness, indenture or other
material financial obligation to which or with respect to which the Company or
any of its Subsidiaries is a party or obligor, whether as principal, guarantor,
surety or otherwise, the Company shall forthwith give written notice thereof to
each of the Noteholders, describing the notice or action and the nature of the
claimed default.
6.5.2 Environmental Events. The Company will promptly give notice to
each of the Noteholders (a) of any violation of any Environmental Law that the
Company or any of its Subsidiaries that could result in liability to the Company
or any of its Subsidiaries in excess of $50,000 and that reports in writing (or
for which any written report supplemental to any oral report is made) to any
federal, state or local environmental or mining agency, (b) upon becoming aware
thereof, of any inquiry, proceeding, investigation, claim, complaint, suit or
other action, including a notice from any agency of potential environmental
liability, of any federal, state or local environmental or mining agency or
board or any third party, and (c) of any environmental, health or safety
condition that could reasonably be expected to have a Material Adverse Effect.
6.5.3 Notice of Litigation and Judgments. The Company will, and will
cause each of its Subsidiaries to, give notice to each of the Noteholders in
writing (a) within 15 days of becoming aware of any litigation or proceedings
threatened in writing or any pending litigation and proceedings affecting the
Company or any of its Subsidiaries or to which the Company or any of its
Subsidiaries is or becomes a party involving an uninsured claim, or any claim
with respect to which insurance coverage could reasonably be expected to be
disputed, against the Company or any of its Subsidiaries that could reasonably
be expected to have a Material Adverse Effect and stating the nature and status
of litigation or arbitration, mediation or other proceedings, and (b) promptly
after becoming aware of any change in the status or any financial effect on the
Company or any of its Subsidiaries of any such litigation or proceedings,
including, without limitation, any dispute, challenge or claim, or any agreement
relating to insurance
49
coverage of any actual or, to the Knowledge of the Company, threatened claim,
litigation or proceeding that results, or could result in, the Company or any of
its Subsidiaries making cash expenditures in excess of $500,000 for its defense
or to resolve such claim (whether or not such expenditures will be reimbursed);
provided, however, that notice need not be given pursuant to this Section 6.5.3
to the extent the expenditures reflect the payment of deductibles or premiums,
and (c) upon the reasonable request of holders of at least 50% of the principal
amount of the Senior Notes then outstanding, any other information available to
the Company or any of its Subsidiaries with respect to any of the foregoing that
would enable the Noteholders to more fully evaluate such litigation or
proceedings.
6.5.4 Notices under other Agreements. Within 10 Business Days of (a)
Knowledge of the Company of a material breach or violation of any term of or a
default or event of default under any Syndicated Facility Document, Vessel
Financing Document, or the Subordinated Notes Indenture (or any instrument,
agreement or document delivered thereunder or in connection therewith), (b) the
giving or receiving of any notice or certificate under any Syndicated Facility
Document, Vessel Financing Document, or the Subordinated Notes Indenture or any
instrument, document or agreement delivered thereunder or in connection
therewith, by the Company or any Subsidiary, the Company will so notify the
Noteholders.
6.5.5 Notice of Material Events. The Company will, and will cause each
of its Subsidiaries to, give notice in writing to each of the Noteholders of
each of the following as, specified:
(a) promptly, but in no event later than 10 Business Days after
becoming known to the Company, upon any public announcement by ▇▇▇▇▇'▇ or
S&P of any change in the Debt Rating, copies of any public announcement by
▇▇▇▇▇'▇ or S&P of any change in the Debt Rating;
(b) promptly, but in no event later than 10 Business Days after
becoming known to the Company, upon any significant change in accounting
treatment or reporting practices of the Company or any of its Subsidiaries,
notice thereof setting forth in reasonable detail such changes and a brief
discussion by management of the reasons therefor; and
(c) promptly, but in no event later than 10 Business Days after
becoming known to the Company, any fact, circumstance, occurrence or event
that could reasonably be expected to have a Material Adverse Effect, notice
of such fact, circumstance, occurrence or event described in reasonable
detail, together with a discussion and analysis of the circumstances and
likely consequences thereof by management.
6.6 Corporate Existence; Maintenance of Properties. The Company will do or
cause to be done all things necessary to preserve and keep in full force and
effect its corporate existence and the corporate existence of each Subsidiary;
provided that, so long as before and after giving effect thereto no Default
shall have occurred and be continuing, the Company may
50
terminate the existence of Global Stone Oakville, Inc., a Canadian corporation,
if such termination is, in the good faith judgment of the Board of Directors of
Global Stone Oakville, Inc., desirable in the conduct of its business and such
dissolution could not reasonably be expected to have a Material Adverse Effect.
The Company will do or cause to be done all things necessary to preserve and
keep in full force and effect its material rights and franchises and those of
its Subsidiaries. The Company (i) will cause all of its properties and those of
its Subsidiaries used or useful in the conduct of its business or the business
of its Subsidiaries to be maintained and kept in good condition, repair and
working order, ordinary wear and tear excepted, (ii) will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements thereof,
all as in the judgment of the Company may be necessary so that the business
carried on in connection therewith may be properly conducted at all times, and
(iii) will, and will cause each of its Subsidiaries to, continue to engage
primarily in the businesses now conducted by them and in related businesses;
provided that nothing in this Section 6.6 shall prevent the Company from
discontinuing the operation and maintenance of any of its properties or any of
those of its Subsidiaries if such discontinuance is, in the judgment of the
Company, desirable in the conduct of its or their business and that could not
reasonably be expected to have a Material Adverse Effect.
6.7 Insurance.
(a) The Company will, and will cause each of its Subsidiaries
to, maintain with financially sound and reputable insurers having an
A-rating or better from Best's Rating Service insurance with respect to its
properties and business against such casualties and contingencies as shall
be in accordance with the general practices of businesses engaged in
similar activities in similar geographic areas and in amounts, containing
such terms, in such forms and for such periods as may be reasonable and
prudent and customary for similar businesses; provided that the Company and
its Subsidiaries may, in lieu of such insurance, self-insure by maintaining
full reserves with respect to any such casualties and contingencies, which,
in the aggregate are not likely to exceed $3,000,000 at any time, so long
as (i) such reserves are reflected in the consolidated balance sheet of the
Company and its Subsidiaries in accordance with GAAP, and (ii) with respect
to any self-insurance that when fully reserved as required hereby, is or is
likely to exceed $1,000,000, (A) are maintained in an amount at least equal
to, and otherwise as recommended by an actuary or similar third-party
professional of national standing and (B) the failure to maintain insurance
as otherwise required under this Section 6.7(a) shall have been approved in
writing by holders of at least 50% of the outstanding principal of the
Senior Notes, which approval shall not be unreasonably withheld. The
Company will, and will cause each of its Subsidiaries to, maintain
insurance on the Real Estate in accordance with the terms of any lease or
mortgage applicable to the Real Estate.
(b) The Company will, and will cause each of its Subsidiaries
to, enforce all of the Company's and its Subsidiaries' rights under all
insurance policies covering its and their current and former properties and
business, and pursue all material
51
remedies available to the Company and its Subsidiaries with diligence and
in good faith in connection with the enforcement of any such rights.
6.8 Taxes. The Company will, and will cause each of its Subsidiaries to,
duly pay and discharge, or cause to be paid and discharged, before the same
shall become overdue, all taxes, assessments and other governmental charges
imposed upon it and its real properties, sales and activities, or any part
thereof, or upon the income or profits therefrom, as well as all claims for
labor, materials, or supplies that if unpaid could reasonably be expected to by
law become a lien or charge upon any of its property; provided that any such
tax, assessment, charge, levy or claim need not be paid if the validity or
amount thereof shall currently be contested in good faith by appropriate
proceedings and if the Company or such Subsidiary shall have set aside on its
books adequate reserves with respect thereto; and provided further that the
Company and each of its Subsidiaries will pay all such taxes, assessments,
charges, levies or claims forthwith upon the commencement of proceedings to
foreclose any lien that may have attached as security therefor.
6.9 Inspection of Properties and Books, etc.
6.9.1 General. The Company shall permit the Noteholders and their
respective designated representatives, upon reasonable notice if no Default has
occurred and is continuing (and at any time without notice if a Default has
occurred and is continuing) to visit and inspect any of the properties of the
Company or any of its Subsidiaries, to examine the corporate, financial and
operating records of the Company and its Subsidiaries (and to make copies
thereof and extracts therefrom), and to discuss the affairs, finances and
accounts of the Company and its Subsidiaries with, and to be advised as to the
same by, its and their officers, all at such reasonable times and intervals,
during normal business hours if no Default has occurred and is continuing as any
Noteholder may reasonably request (and at any time and without notice if a
Default has occurred and is continuing). So long as no Default has occurred and
is continuing, each Noteholder agrees to use commercially reasonable efforts to
coordinate any visit or inspection thereby (or by its representatives) pursuant
to this Section with the chief financial officer of the Company.
6.9.2 Communications with Accountants. The Company authorizes each
Noteholder, if a Default shall have occurred and be continuing, to communicate
directly with the independent certified public accountants of the Company;
provided that each Noteholder shall give the Company prior notice of such
communications. The Company further authorizes such accountants to disclose to
the Noteholders any and all financial statements and other supporting financial
documents and schedules, including copies of any management letter, with respect
to the business, financial condition and other affairs of the Company or any of
its Subsidiaries, at the expense of the Company. At the request of Noteholders
holding at least 50% of the principal amount of the Senior Notes then
outstanding, the Company shall deliver (promptly upon such request) a letter
addressed to such accountants instructing them to comply with the provisions of
this Section 6.9.2.
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6.10 Compliance with Laws, Contracts, Licenses, and Permits. The Company
will, and will cause each of its Subsidiaries to, comply with (i) the applicable
laws and regulations wherever its business is conducted, including all
Environmental Laws, except where the failure to so comply is not otherwise
expressly prohibited hereunder and such failure is not likely to have a Material
Adverse Effect, (ii) the provisions of its charter documents and by-laws, (iii)
all material agreements and instruments by which it or any of its properties may
be bound and (iv) all applicable decrees, orders, and judgments. If any Permit
from any Governmental Authority shall become necessary or required in order that
the Company or any of its Subsidiaries may fulfill any of its obligations
hereunder or under any of the other Senior Notes Document to which the Company
or such Subsidiary is a party, the Company will, or (as the case may be) will
cause such Subsidiary to, immediately take or cause to be taken all reasonable
steps within the power of the Company or such Subsidiary to obtain such Permit
and furnish the Noteholders with evidence thereof.
6.11 Employee Benefit Plans. The Company will (a) promptly upon filing the
same with the Department of Labor or Internal Revenue Service upon request of a
Noteholder, furnish to the Noteholders a copy of the most recent actuarial
statement required to be submitted under Section 103(d) of ERISA and Annual
Report, Form 5500, with all required attachments, in respect of each Guaranteed
Pension Plan and (b) promptly upon receipt or dispatch, furnish to the
Noteholders any notice, report or demand sent or received in respect of a
Guaranteed Pension Plan under Sections 302, 4041, 4042, 4043, 4063, 4065, 4066
and 4068 of ERISA, or in respect of a Multiemployer Plan, under Sections 4041A,
4202, 4219, 4242, or 4245 of ERISA.
6.12 Subsidiaries, Etc. The Company will not create or have (or permit any
Subsidiary to create or have) any Subsidiaries other than (a) Subsidiaries in
existence on the date hereof, (b) Subsidiaries acquired in accordance with
Section 7.5.1, and (c) direct Subsidiaries of any Guarantor (other than a
Restricted Guarantor) created in connection with any transaction permitted under
the terms of this Agreement; provided that in each case under clauses (b) and
(c), such Subsidiary is wholly-owned, directly or indirectly, by the Company and
is not a Subsidiary of any of the Restricted Guarantors and, before and after
giving effect to the formation or acquisition of such Subsidiary, no Default
shall have occurred and be continuing. If, after the Closing Date, the Company
or any of its Subsidiaries creates or acquires, either directly or indirectly,
any Subsidiary, the Company or such Subsidiary (or its parent if such Subsidiary
is not then a Guarantor) will immediately (and in any event not later than five
Business Days following such creation or acquisition, as the case may be) (i)
notify the Noteholders thereof, (ii) cause each Material Subsidiary created,
acquired or otherwise then existing to become an unlimited, joint and several,
guarantor of all of the Guaranteed Obligations, and (iii) cause such Material
Subsidiary(ies) to execute and deliver to the Noteholders: (A) a joinder to this
Agreement in the form of Exhibit A hereto; (B) documentation of the type
described in Sections 3.2(a), (b), (c), (g).and (j); (C) legal opinions in form
and substance satisfactory to the Noteholders opining as to the authorization,
validity and enforceability of such guaranty and the attachment and perfection
of the security interests and Liens granted by such Material Subsidiary to the
Noteholders, and such other matters and the
53
Noteholders may request; and (D) and such other documentation as the Noteholders
may reasonably request.
6.13 Intellectual Property. The Company covenants and agrees that it will
take all reasonably necessary and advisable steps to obtain ownership in and/or
protection of all material Intellectual Property owned, used or developed by the
Company and its Subsidiaries in the conduct of their business, and that it will
not do any act, or omit to do any act, nor permit any licensee to do any act,
whereby any material Intellectual Property rights of the Company or any
Subsidiary may become abandoned, invalidated, dedicated to the public domain, or
diminished in value; provided, however, that nothing in this Section 6.13 shall
prevent the Company from taking, or refraining from taking, any action if such
action (or refraining from taking action) is in the judgment of the Company in
its best interest and that would not, individually or in the aggregate, have a
Material Adverse Effect. Without limiting the generality of the foregoing, the
Company covenants and agrees that it will diligently prosecute any applications
to obtain registrations of material Intellectual Property, other than
Intellectual Property of a type that is not capable of cost effective protection
or is not eligible for protection through registration; preserve and maintain
all material Intellectual Property rights in all jurisdictions in which the
Company conducts or proposes to conduct business; display appropriate notices of
material Intellectual Property rights on all tangible embodiments; take
reasonable security measures to protect the secrecy and confidentiality of all
valuable information of the Company and its licensors; file all such
applications, renewals, certificates and affidavits as may be reasonably
necessary or advisable to obtain and maintain the ownership, validity and
enforceability of all material Intellectual Property rights of the Company and
its Subsidiaries; appropriately document the Company's ownership of material
Intellectual Property developed by or for the Company and its Subsidiaries; take
all reasonable enforcement actions as may be prudent to protect the material
Intellectual Property of the Company and its Subsidiaries; and conduct the
business of the Company and its Subsidiaries so as not to violate or infringe
the Intellectual Property rights of others.
6.14 Board Rights.
(a) The Company shall permit The 1818 Mezzanine Fund II, L.P. as
the single representative of the Noteholders (the "Representative") to
attend as an observer all meetings of its full Board of Directors (other
than executive sessions of the Board of Directors), including, without
limitation, that in the case of telephonic meetings conducted in accordance
with the Company's by-laws and applicable law, the Representative shall be
given the opportunity to participate in such telephonic meetings; provided
that the Company shall not be obligated to permit any representative of any
Noteholder to attend any meeting of its Board of Directors unless such
Person is a representative of an Eligible Noteholder and that Eligible
Noteholder shall have executed and delivered to the Company a
confidentiality agreement in the form of Exhibit 6.14. The Company shall
give written notice to the Noteholders of every meeting of its full Board
of Directors at the same time and in the same manner as notice is given to
the directors of the Company. The Purchasers agree that only one individual
will serve as the
54
Representative during the term of this Agreement, provided that if the
Representative originally designated discontinues his or her association
with The 1818 Mezzanine Fund II, L.P. a different individual shall be
designated. The Company shall bear the reasonable travel and other
out-of-pocket expenses of the Representative associated with the attendance
and/or participation in the meetings of the Board of Directors. The
Representative shall be entitled to receive all written materials and other
information given to the directors of the Company in connection with such
meetings or otherwise, in each case at the same time such materials and
information are given to the directors; provided that the Representative
shall not be entitled to receive privileged and confidential
attorney-client communications and attorney work product provided to the
Board of Directors; it being understood and agreed that all discussions
thereof do and shall take place in executive sessions of the Board of
Directors and nothing in this proviso clause shall restrict the
Representative's rights to attend meetings of the Board of Directors as
otherwise provided in this Section 6.14. All information provided at, or in
connection with, such meetings is subject to Section 11.21 hereof; it being
understood and agreed that the Representative may (but shall be under no
obligation to do so), at his or her option, convey confidential information
and other information received at any meeting of the Board of Directors (or
otherwise in his or her capacity as the Representative) to the other
Purchasers and each other Noteholder so long as such Person has delivered
an executed confidentiality agreement in the form of Exhibit 6.14 to the
Company with a copy to the Representative.
(b) The 1818 Mezzanine Fund II, L.P. shall be permitted to
designate another Eligible Noteholder as the Representative; provided,
however that in the event The 1818 Mezzanine Fund II, L.P. or its
Affiliates no longer own in excess of $10,000,000 in Senior Notes as a
result of one or more transfers of the Senior Notes, it shall be required
to first offer the position as Representative to either an Eligible
Noteholder that purchased its entire investment in the Senior Notes or to
one of the initial Noteholders that owns in excess of $10,000,000 in
principal amount of the Senior Notes. The Company will have no obligation
to recognize the newly designated Representative at the next meeting of the
Board of Directors if it does not receive at least fifteen days prior to
the next scheduled meeting of the Board of Directors written notice of the
designation of the new Representative and an executed copy of the
confidentiality agreement in the form attached to this Agreement as Exhibit
6.14.
(c) The Company shall permit each Eligible Noteholder to attend,
and each Eligible Noteholder shall be entitled to attend, as an observer,
each annual meeting of the stockholders of the Company and each
presentation of the strategic plan of the Company to the Board of Directors
of the Company; provided that the Company shall not be obligated to permit
any representative of any Noteholder to attend any meeting of its Board of
Directors unless such Person is a representative of an Eligible Noteholder
and that Eligible Noteholder shall have executed and delivered to the
Company a confidentiality agreement in the form of Exhibit 6.14. The
Company shall give written notice of each such meeting at the same time and
in the same manner as notice is given to
55
the stockholders and directors, respectively, of the Company. Each Eligible
Noteholder shall be entitled to receive all written materials and other
information given to the stockholders and the directors, respectively, of
the Company in connection with such meetings. All information provided at
each such meeting of the Board of Directors is subject to Section 11.21.
6.15 ESG Acquisition. The Company and its Subsidiaries shall consummate the
ESG Acquisition in accordance with the terms of this Agreement (including,
without limitation, Schedule 6.15 hereto; it being understood that the Company
shall not be obligated to consummate the ESG Acquisition if the terms deviate in
any material adverse way to the Company from those set forth in Schedule 6.15).
6.16 Collateral Matters.
6.16.1 Real Estate.
(a) Within 45 days following the Closing Date, the Company
will obtain, at its sole cost and expense, a loan policy of title
insurance, ALTA 1970 Form B (amended 10/17/70 and 10/17/84), if available,
and, if not available, in an alternative ALTA form which is acceptable to
Collateral Agent, in its sole discretion, issued by the Title Company for
each of the properties subject to the Realty Mortgages (collectively, the
"Loan Policies" and individually, a "Loan Policy"), with a face value of
not less than $75,000,000 insuring each mortgage or deed of trust, as
appropriate, to be a valid Lien on such Real Estate free and clear of all
defects and encumbrances except for any mortgage or deed of trust pursuant
to the Syndicated Facility Documents with such endorsements and affirmative
insurance (to the extent available) as the Collateral Agent, in its
reasonable discretion, may require.
(b) The Company agrees, to the extent that the Company has or
intends to furnish a Lien to the Agent and the Banks under the Syndicated
Facility Documents on any Real Estate for which it may hold a leasehold
interest ("Leasehold Interest"): (a) to grant the Collateral Agent a
mortgage, deed of trust, or other security instrument, as appropriate
("Leasehold Security Instrument"), sufficient to constitute a Lien against
such Leasehold Interest in form and substance reasonably satisfactory to
it, (b) to provide the Collateral Agent with fully paid Chicago Title
Insurance Company Lender's leasehold title insurance policies, insuring
each Leasehold Security Instrument to be a valid Lien on such Real Estate
free and clear of all defects and encumbrances except for any mortgage or
deed of trust pursuant to the Syndicated Facility Documents with such
endorsements and affirmative insurance (to the extent available) as the
Collateral Agent, in its reasonable discretion, may require, and (c) that
Collateral Agent shall make appropriate fixture filings against any Real
Estate for which the Agent and the Banks under the Syndicated Facility
Documents has or intends to have a fixture filing with respect to any
Leasehold Interest.
56
(c) The Company agrees to amend, at its sole cost and expense,
any mortgage, deed of trust, deed to secure debt, or other security
instrument, as appropriate ("Real Estate Security Instrument"), granted by
the Company, or any Guarantor as the case may be, to the Collateral Agent,
to the extent that such an amendment may be necessary or desirable to
ensure that any Real Estate Security Instrument accurately reflects that
the Company, or Guarantor as the case may be, intends to grant a mortgage
or security interest in all real property owned or leased by the Company or
Guarantor at the locations listed on Schedule 5.7 of this Agreement and to
the extent not previously granted to the Collateral Agent for the purpose
of granting a mortgage or security interest in all real property owned or
leased by the Company or Guarantor which the Company or Guarantor grant to
the Collateral Agent pursuant to this Agreement. Notwithstanding anything
to the contrary contained herein, the obligations of the Company or any
Guarantor to grant mortgages or other security interests in all or any
portion of its Property to the Collateral Agent shall apply only to such
Property or interests on which liens (including fixture filings and
leasehold mortgages) are to be granted to secure the Syndicated Debt.
(d) The Company agrees to promptly inform the Collateral Agent
if it acquires any additional Real Estate and, if so requested by the
Collateral Agent, the Company agrees to: (a) grant the Collateral Agent a
mortgage, deed to secure a debt, or other security instrument, as
appropriate, sufficient to constitute a Lien against such Real Estate in
form and substance reasonably satisfactory to it; and (b) to provide the
Collateral Agent with fully paid Chicago Title Insurance Company Lender's
title insurance policies, in form and substance satisfactory to it, in an
amount acceptable to it and reasonably acceptable to the Company, insured,
coinsured and reinsured by title insurers that either issued such
corresponding title policies to the Agent and the Banks or is otherwise
acceptable to it and reasonably acceptable to the Company, but in each
case, only to the extent that the Company has or intends to furnish a
corresponding Lien and title insurance to the Agent and the Banks under the
Syndicated Facility Documents.
6.16.2 Vessels. The Company agrees to provide the Collateral Agent
with thirty (30) days prior written notice if any of the Liens granted pursuant
to the Vessel Financing Documents are to be discharged and, if so requested by
the Collateral Agent, the Company agrees to permit the Collateral Agent to file
a Lien against the applicable vessel or vessels in form and substance reasonably
satisfactory to it. The Company will provide and execute all documents,
instruments, title policies and opinions as the Collateral Agent shall
reasonably request (at the Company's expense) to grant and perfect such Liens.
6.17 Further Assurances. The Company will, and will cause each of its
Subsidiaries to, cooperate in good faith with the Noteholders and execute such
further instruments and documents as the Noteholders shall reasonably request,
and otherwise act, to carry out to the reasonable satisfaction of the
Noteholders the transactions contemplated by this Agreement and the other Senior
Notes Documents, including, without limitation, with respect to the ranking of
the Senior Notes and other Senior Notes Obligations.
57
ARTICLE VII - CERTAIN NEGATIVE COVENANTS OF THE COMPANY
The Company covenants and agrees that so long as any of the Senior Notes is
outstanding:
7.1 Indebtedness. None of the Company or any of its Subsidiaries will
create, incur, assume, or suffer to exist, or permit any Subsidiary to create,
incur or suffer to exist, any Indebtedness, except:
(a) Syndicated Debt consisting of (i) Senior Secured
Indebtedness (as such term is defined in the Intercreditor Agreement) under
the Syndicated Facility Documents, (ii) under the Vessel Financing
Documents that does not exceed $16,000,000 (and a guaranty by ON Marine
Management Company L.L.C. of Indebtedness under the Vessel Financing
Documents on the same terms as the guarantee thereof in effect on the date
hereof, so long as at the time of the issuance of such guarantee there is
no Event of Default hereunder or resulting therefrom) and (iii) the
Indebtedness existing on the date hereof identified on Schedule 7.1(a);
(b) Indebtedness to the Noteholders arising hereunder and under
the Senior Notes Documents;
(c) accounts payable to trade creditors and current operating
expenses (other than for Indebtedness for Money Borrowed, but including any
accrued earn-out obligations) that are not aged more than 90 days from the
due date, in each case incurred in the ordinary course of business and paid
within such time period, unless the same are being actively contested in
good faith and by appropriate and lawful proceedings; and the Company and
its Subsidiaries shall have set aside such reserves, if any, with respect
thereto as are required by GAAP and deemed adequate by the Company and
their independent accountants;
(d) Capitalized Lease Obligations that, together with all
outstanding Purchase Money Indebtedness, do not exceed $25,000,000 in the
aggregate;
(e) Purchase Money Indebtedness to the extent the incurrence
thereof does not result in a breach of Section 7.10 hereof or the preceding
paragraph (d);
(f) contingent liabilities arising out of endorsements of checks
and other negotiable instruments for deposit or collection in the ordinary
course of business;
(g) Indebtedness incurred (i) in respect of performance, surety
or appeal bonds provided in the ordinary course of business, (ii) under
Hedge Agreements entered into in the ordinary course of business with
respect to an aggregate amount not to exceed at any time $220,000,000 so
long as such Hedge Agreements do not increase the Indebtedness of the
obligor outstanding at any time other than as a result of fluctuations in
foreign currency exchange rates or interest rates or by reason of fees,
indemnities and
58
compensation payable thereunder, and (iii) arising from agreements
providing for indemnification, adjustment of purchase price or similar
obligations, or from guarantees or letters of credit, surety bonds or
performance bonds securing any obligations of the Company and its
Subsidiaries pursuant to such agreements, in any case issued in connection
with the disposition or acquisition of any business or assets permitted
under this Agreement;
(h) Indebtedness issued in exchange for, or the net Proceeds of
which are used to refund or refinance, any Indebtedness permitted by this
Section 7.1 (other than Indebtedness represented by clauses (d), (j), and
(k));
(i) Indebtedness of the Company owed to any of the Guarantors
(other than the Restricted Guarantors) and Indebtedness of the Guarantors
(other than the Restricted Guarantors) owed to the Company or any of the
Guarantors (other than any Restricted Guarantor), provided that such
Indebtedness shall be evidenced by a promissory note or other documentation
and that the Company shall not have loans to the Guarantors outstanding at
any time that exceed $35,000,000 in the aggregate;
(j) Obligations of the Company to make Contingent Payments (as
defined therein) under the Purchase Agreement dated as of April 14, 2000
among Oglebay Norton Company, ▇▇▇▇▇▇▇ Mining, Inc., the ▇▇▇▇ Mining
Company, and Michigan Minerals Associates, Inc., as in effect on the date
hereof;
(k) reserves of the Company that are reflected on the
consolidated balance sheet of the Company and its Subsidiaries and are
identified on Schedule 7.1(k), which reserves are either (1) required by
law, or (2) in respect of post-employment (retirement) benefits that are
determined to be necessary by an independent actuary;
(l) Indebtedness not included in paragraphs (a) through (k)
above which does not exceed in the aggregate $25,000,000 at any one time
outstanding; and
(m) The Subordinated Notes and other unsecured Subordinated Debt
that is subject to a subordination agreement in favor of the Noteholders in
form and substance satisfactory to the Noteholders.
7.2 Restrictions on Liens. The Company will not, and will not permit any
of its Subsidiaries to, (a) create or incur, or suffer to be created or incurred
or to exist, any lien, encumbrance, mortgage, pledge, charge, restriction or
other security interest of any kind, upon any of its property or assets of any
character whether now owned or hereafter acquired, or upon the income or profits
therefrom or enter into or permit to exist any arrangement or agreement,
enforceable under applicable law, which directly or indirectly prohibits the
Company or any of its Subsidiaries from creating or incurring any lien,
encumbrance, mortgage, pledge, charge, restriction or other security interest
(any of the foregoing, a "Lien") other than customary anti-assignment provisions
in leases and licensing agreements and other agreements entered into by the
Company or such Subsidiary in the ordinary course of business and other than as
provided in
59
the Syndicated Facility Documents, the Vessel Financing Documents and the
Subordinated Notes Indenture; (b) except as otherwise permitted by this
Agreement, transfer any of such property or assets or the income or profits
therefrom for the purpose of subjecting the same to the payment of Indebtedness
or performance of any other obligation in priority to payment of its general
creditors; (c) acquire, or agree or have an option to acquire, any property or
assets upon conditional sale or other title retention or purchase money security
agreement, device or arrangement; (d) suffer to exist for a period of more than
30 days after the same shall have been incurred any Indebtedness or claim or
demand against it that if unpaid could reasonably be expected to by law or upon
bankruptcy or insolvency, or otherwise, be given any priority whatsoever over
its general creditors; (e) sell, assign, pledge or otherwise transfer any
receivables with or without recourse; provided that the Company or such
Subsidiary may create or incur or suffer to be created or incurred or to exist:
(a) Liens securing Syndicated Debt;
(b) Liens for taxes (excluding any Lien imposed pursuant to any
of the provisions of ERISA) that are (i) not yet due, (ii) being contested
in good faith in accordance with the terms of this Agreement, or (iii) that
do not exceed $50,000 in the aggregate;
(c) Liens arising in the ordinary course of business by
operation of law or regulation, but only if payment in respect of any such
Lien is not at the time required or if such payment is being contested in
good faith by appropriate proceedings diligently conducted, and such Liens
do not in the aggregate, materially detract from the value of the assets of
the Company and its Subsidiaries or materially impair the use thereof in
the operation of the Company's or its Subsidiaries' business and the
Company or such Subsidiary have set aside on its books adequate reserves
with respect thereto;
(d) Purchase Money Liens securing Purchase Money Indebtedness
permitted under Section 7.1(e) hereof;
(e) easements, rights-of-way or other minor defects or
irregularities in title to Real Estate not interfering in any material
respect with the use of such Real Estate in the business of the Company and
its Subsidiaries;
(f) sales of receivables, which receivables have been determined
to be uncollectible and reserved in accordance with GAAP by the Company,
provided that such sales are permitted under the Syndicated Facility
Documents and the Vessel Financing Documents and that the original amount
of all such receivables sold on or after the Closing Date shall not exceed
$1,500,000 in any calendar year and not more than $3,000,000 in the
aggregate from the Closing Date; and
(g) Liens on fixed assets owned as a result of an acquisition
permitted under Section 7.5.1 hereof, provided that such Liens are released
within 90 days of such acquisition (unless the Company shall have obtained
the prior written consent of the
60
Noteholders holding at least 50% of the principal amount of all Senior
Notes then outstanding).
7.3 Restrictions on Investments. The Company will not, and will not permit
any of its Subsidiaries to make or permit to exist or to remain outstanding any
Investment except Investments in:
(a) marketable direct or guaranteed obligations of the United
States of America that mature within one year from the date of purchase;
(b) demand deposits, certificates of deposit, bankers
acceptances and time deposits of United States banks having total assets in
excess of $1,000,000,000 other than ▇▇▇▇▇ cash demand deposit accounts
maintained by Guarantors, the aggregate amount of which does not exceed at
any time $350,000 in the aggregate;
(c) securities commonly known as "commercial paper" issued by a
corporation organized and existing under the laws of the United States of
America or any state thereof that at the time of purchase have been rated
and the ratings for which are not less than "P 1" if rated by ▇▇▇▇▇'▇, and
not less than "A 1" if rated by S&P;
(d) Investments existing on the date hereof and listed on
Schedule 7.3 hereto.
(e) Investments consisting of loans and advances to employees
for travel, relocation and other similar expenses in the ordinary course of
business not to exceed $250,000 in the aggregate at any time outstanding;
(f) Investments made in an acquisition permitted under Section
7.5.1; and
(g) Investments made in Rabbi trusts in connection with Employee
Benefit Plans approved by the Company's Board of Directors, insurance
policy cash surrender value and deposits made in the ordinary course of
business for worker's compensation, health care plans and other employee
benefit programs, in each case, in the ordinary course of business; and
(h) Investments in intercompany loans permitted under Section
7.1(i).
7.4 Distributions. None of the Company nor any of its Subsidiaries will
declare, pay or make (or commit itself to pay or make) any Distribution or apply
any of its funds, property or assets to the purchase, redemption or other
retirement of any shares of its Capital Stock, or of any options to purchase or
acquire any Capital Stock of the Company or any of its Subsidiaries, except that
any Subsidiary may pay or commit itself to pay dividends to the Company.
Notwithstanding the foregoing, so long as before and after giving effect to any
such Distribution (or series of related Distributions) no Default shall have
occurred and be continuing, the
61
Company may commit itself within 60 Business Days to pay dividends and
repurchase its Capital Stock, and may so pay and repurchase, for any
four-quarter period, an aggregate amount not to exceed 50% of Consolidated Net
Earnings of the Company for the four-quarter period ending immediately prior to
the date of the commitment to pay such dividends or to repurchase such Capital
Stock.
7.5 Merger, Consolidation and Disposition of Assets.
7.5.1 Mergers and Acquisitions. The Company will not, and will not
permit any of its Subsidiaries to, become a party to any merger or
consolidation, or agree to or effect any asset acquisition or stock acquisition
(other than the acquisition of assets in the ordinary course of business
consistent with past practices) except for, so long as before and after giving
effect thereto no Default shall have occurred and be continuing (a) the merger
or consolidation of one or more of the Guarantors (other than Restricted
Guarantors) with and into the Company or another Guarantor (other than any
Restricted Guarantor); provided that no material changes are made to the
Organizational Documents of any Guarantor, Restricted Guarantor or the Company
as part of or in connection with such transaction; (b) the ESG Acquisition, and
(c) an asset acquisition or stock acquisition the aggregate value (including the
value of all consideration to be paid (or assumed in the case of any obligations
or liabilities) in-kind as well as in cash) of which does not exceed the
Acquisition Limit and, when aggregated with the value (including the value of
all consideration to be paid (or assumed in the case of any obligations or
liabilities) in-kind as well as in cash) of all other asset acquisition or stock
acquisitions consummated over the previous four fiscal quarters, does not exceed
the Cumulative Acquisition Limit; provided, however that no such transaction is
permitted if the Total Leverage Ratio, after giving pro forma effect to such
acquisition, exceeds (i) with respect to the period from the Closing Date
through September 30, 2005, 5.5 to 1.00 and (ii) with respect to period from
October 1, 2005 and thereafter, 5.0 to 1.00.
7.5.2 Disposition of Assets. The Company will not sell, lease or
otherwise dispose of any of, or permit any Subsidiary of the Company to sell,
lease or otherwise dispose any of, its Properties, including any disposition of
Property as part of a sale and leaseback transaction, to or in favor of any
Person, except:
(a) sales of its inventory in the ordinary course of business
and other transfers of other Property of the Company or any of its
Subsidiaries expressly permitted under this Article VII (it being
understood that nothing in Section 2.5 shall permit any disposition of
Property of the Company or any of its Subsidiaries not otherwise expressly
permitted under this Agreement);
(b) a transfer of Property other than Restricted Property to
the Company or any Guarantor other than a Restricted Guarantor other than
as provided on Schedule 7.5.2(b) hereto so long as (A) before and after
giving effect to such transfer, no Default shall have occurred and be
continuing, (B) such transfer shall be consummated in accordance with the
Syndicated Facility Documents, the Vessel Financing Documents
62
and the Subordinated Notes Indenture, (C) the Board of Directors of the
Company shall have approved in good faith such transfer, (D) such transfer
shall not be, in any case, in consideration or exchange for any Property,
including, without limitation, cash of any Guarantor, and (E) within five
Business Days of such transfer, the Company and the applicable Guarantors
shall have complied with all provisions of the Security Documents
applicable in the case of such transfer;
(c) so long as no Default exists before and after giving effect
to any such disposition, dispositions of its equipment which, in the
aggregate during any 12-month period, have a fair market value or book
value, whichever is less, of $2,000,000 or less, provided that all Proceeds
thereof are applied in accordance with Section 2.5.1;
(d) so long as no Default exists, replacements of its equipment
with equipment of like kind, function and value, provided that the
replacement equipment shall be acquired prior to or within three months
after any disposition of the equipment that is to be replaced, the
replacement equipment shall be free and clear of Liens other than Permitted
Liens that are not Purchase Money Liens, and, if the value of such
equipment exceeds $500,000, the Noteholders shall have been given at least
five days' prior written notice of such disposition;
(e) so long as no Default exists before and after giving effect
to any such disposition, sale and leaseback transactions by the Company and
its Subsidiaries, provided that the aggregate Proceeds thereof do not
exceed $5,000,000; and
(f) Asset Sales of Property of the Company and its Subsidiaries
(other than any such Asset Sales permitted under other subsections of this
Section 7.5.2) yielding aggregate net Proceeds not to exceed $100,000,000,
provided (A) before and after giving effect to such Assets Sale, no Default
shall have occurred and be continuing, (B) such Asset Sales shall be
consummated in accordance with the Syndicated Facility Documents, the
Vessel Financing Documents and the Subordinated Notes Indenture, (C) the
Board of Directors of the Company and each applicable Subsidiary of the
Company shall have approved in good faith such transfer and have determined
that the consideration received thereby thereunder is fair to Company or
such applicable Subsidiary, as applicable, (D) the Proceeds of such Asset
Sale shall be applied to permanently reduce the amount of the Term Loan
Commitment (as defined in the Syndicated Loan Agreement) and/or the
Revolving Credit Commitment (as defined in the Syndicated Credit Agreement)
in accordance with the terms of the Syndicated Facility Documents (in the
case of the Revolving Loan Commitment, in accordance with Section 2.5(c) of
the Syndicated Credit Agreement (as amended by that certain Amendment No. 4
to Credit Agreement dated as of October 23, 2002), and as contemplated
under clause (b) of the definition of "Applicable Margin" in the Syndicated
Credit Agreement), and (E) such Asset Sales are consummated prior to
October 25, 2004;
63
(g) so long as no Default exists before and after giving effect
to any such disposition, any sale, issuance, conveyance, transfer, lease or
other disposition, including by way of merger or consolidation (to the
extent otherwise permitted by Section 7.5.1) or sale and leaseback
transaction (to the extent otherwise permitted by Section 7.5.2), directly
or indirectly, in one or a series of related transactions, of any Property
of the Company or any Subsidiary, other than in the ordinary course of
business, to any Person other than the Company or any of its Subsidiaries
in each case that are consummated on or after October 25, 2004 in which the
aggregate Proceeds do not exceed $10,000,000;
(h) so long as no Default exists before and after giving effect
to any such disposition, sales of receivables, which receivables have been
determined to be uncollectible and reserved in accordance with GAAP by the
Company, provided that such sales are permitted under the Syndicated
Facility Documents and the Vessel Financing Documents and that the original
amount of all such receivables sold on or after the Closing Date shall not
exceed $1,500,000 in any calendar year and not more than $3,000,000 in the
aggregate from the Closing Date;
(i) cancellation of an insurance policy or policies, provided
that after giving effect to such cancellation the Company and its
Subsidiaries remain in full compliance with Section 6.7 hereof;
The Noteholders agree to release their Liens in connection with the disposition
of any Property by the Company that complies, in every respect, with the terms
of this Section 7.5.2.
7.6 Compliance with Environmental Laws. Except as could not be reasonably
likely to have a Material Adverse Effect, the Company will not, and will not
permit any of its Subsidiaries to, (a) use any of the Real Estate or any portion
thereof for the handling, processing, storage, generation, manufacture,
treatment, production, refining or disposal of Hazardous Substances, except in
compliance with Environmental Laws, (b) cause or permit to be located on any of
the Real Estate any underground tank, surface impoundment, lagoons, pits, sumps,
or underground storage receptacle for Hazardous Substances in any manner that
would violate any Environmental Law or bring such Real Estate in violation of
any Environmental Law, (c) generate any Hazardous Substances on any of the Real
Estate in any manner that would violate any Environmental Law or bring such Real
Estate in violation of any Environmental Law, (d) conduct any activity at any
Real Estate or use any Real Estate in any manner so as to cause a Release or
threatened Release of Hazardous Substances on, upon or into the Real Estate, or
(e) otherwise conduct any activity at any Real Estate or use any Real Estate in
any manner that would violate any Environmental Law or bring such Real Estate in
violation of any Environmental Law.
7.7 Employee Benefit Plans. Neither the Company nor any ERISA Affiliate
will
(a) engage in any non-exempt "prohibited transaction" within
the meaning of Section 406 of ERISA or Section 4975 of the Code; or
64
(b) permit any Guaranteed Pension Plan to incur an "accumulated
funding deficiency", as such term is defined in Section 302 of ERISA,
whether or not such deficiency is or may be waived; or
(c) fail to contribute to any Guaranteed Pension Plan or
Multiemployer Plan to an extent which, or terminate any Guaranteed Pension
Plan or Multiemployer Plan in a manner which, could result in the
imposition of a lien or encumbrance on the assets of the Company or any of
its Subsidiaries pursuant to Section 302(f) or Section 4068 of ERISA; or
(d) amend any Guaranteed Pension Plan in circumstances requiring
the posting of security pursuant to Section 307 of ERISA or Section
401(a)(29) of the Code; or
(e) permit or take any action which would result in the
aggregate benefit liabilities (with the meaning of Section 4001 of ERISA)
of all Guaranteed Pension Plans exceeding the value of the aggregate assets
of such Plans, disregarding for this purpose the benefit liabilities and
assets of any such Plan with assets in excess of benefit liabilities.
7.8 Business Activities. The Company will not, and will not permit any of
its Subsidiaries (including any Subsidiary acquired in accordance with Section
7.5.1) to, engage directly or indirectly (whether through Subsidiaries or
otherwise) in any type of business other than the businesses conducted by them
on the Closing Date and in related businesses.
7.9 Transactions with Affiliates. The Company will not, and will not
permit any of its Subsidiaries to, engage in any transaction with any Affiliate,
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any such
Affiliate or, to the Knowledge of the Company, any corporation, partnership,
limited liability company, trust or other entity in which any such Affiliate has
a substantial interest or is an officer, director, partner, member or trustee on
terms more favorable to such Person than would have been obtainable on an
arm's-length basis in the ordinary course of business.
7.10 Capital Expenditures. The Company and its Subsidiaries will not make
Capital Expenditures (including, without limitation, by way of Capitalized
Leases) which, in the aggregate, as to the Company and its Subsidiaries, during
any fiscal year exceed $30,000,000 per fiscal year for each fiscal year ending
after the Closing Date and on or prior to December 31, 2003, and $35,000,000 per
fiscal year for each fiscal year ending thereafter (each such maximum amount, as
applicable, the "Capital Expenditure Amount").
7.11 Accounting Practices. The Company shall not, and shall not suffer or
permit any Subsidiary to (a) make any significant change in accounting treatment
or reporting practices (provided that the Company shall use its reasonable
judgment in applying the standards in effect), except (i) as required by GAAP,
(ii) a change in the depreciation method employed
65
thereby to straight line depreciation and (iii) a change in a Subsidiary's
accounting treatment or reporting practices to conform the accounting practices
or reporting practices of newly acquired Subsidiaries to the methods used by the
Company, and (iv) any other change which does not affect the calculations
required to determine compliance with Section 8.1, 8.2, 8.3, 8.4 or 8.5 or (b)
change the Fiscal Year of the Company or of any Subsidiary.
7.12 Amendments to Charter and Agreements; Subordinated Debt. The Company
will not, nor will it permit any Subsidiary to, (a) make any amendment or
modification to any indenture, notes or other agreement evidencing or governing
the Subordinated Debt, (b) make any amendment or modification (including,
without limitation, any restatement thereof) to any Syndicated Facility Document
or any Vessel Financing Document without providing to each of the Noteholders
(i) at least five Business Days' (and not more than 15 Business Days') prior
written notice of such amendment or modification, which notice shall include the
material terms and the intended effective date thereof and (ii) promptly (and in
any case not later than five Business Days following such effectiveness) upon
the effectiveness of such amendment and/or modification, written notice of such
effectiveness, which shall be accompanied by a true and correct copy of such
amendment and/or modification, (c) directly or indirectly prepay, defease or in
substance defease, purchase, redeem, repurchase, retire or otherwise acquire,
any Subordinated Debt, except that so long as no Default has occurred and is
continuing, the Company may make regularly scheduled payments of interest with
respect to any Subordinated Debt, or (d) make any amendment or modification to
any terms or provisions of the Organizational Documents of the Company and its
Subsidiaries that is adverse to the Noteholders (or any of them) or adopt any
Organizational Documents with respect to Oglebay Norton Marine Services, L.L.C.,
Global Stone Penroc, L.P. or Oglebay Norton Marine Management Company, L.L.C.
without, in each case, the prior written consent of the Noteholders holding at
least 50% of the principal amount of all Senior Notes then outstanding.
ARTICLE VIII - FINANCIAL COVENANTS OF THE COMPANY
The Company covenants and agrees that, so long as any Senior Note is
outstanding the Company will observe the following covenants:
8.1 Total Leverage Ratio. The Company shall not suffer or permit at any
time, based upon the financial statements most recently delivered pursuant to
Section 6.4, the Total Leverage Ratio to exceed:
(a) 7.25 to 1.00 through September 30, 2002;
(b) 6.90 to 1.00 on October 1, 2002 through December 31, 2002;
(c) 7.10 to 1.00 on January 1, 2003 June 30, 2003;
(d) 6.80 to 1.00 on July 1, 2003 through September 30, 2003;
(e) 6.45 to 1.00 on October 1, 2003 through December 31, 2003;
(f) 6.70 to 1.00 on January 1, 2004 through March 31, 2004;
(g) 6.65 to 1.00 on April 1, 2004 through June 30, 2004;
(h) 6.35 to 1.00 on July 1, 2004 through September 30, 2004;
66
(i) 5.95 to 1.00 on October 1, 2004 through December 31, 2004;
(j) 6.25 to 1.00 on January 1, 2005 through March 31, 2005;
(k) 6.20 to 1.00 on April 1, 2005 through June 30, 2005;
(l) 5.85 to 1.00 on July 1, 2005 through September 30, 2005;
(m) 5.50 to 1.00 on October 1, 2005 through December 31, 2005;
(n) 5.75 to 1.00 on January 1, 2006 through March 31, 2006;
(o) 5.70 to 1.00 on April 1, 2006 through June 30, 2006;
(p) 5.35 to 1.00 on July 1, 2006 through September 30, 2006 and
(q) 5.00 to 1.00 on October 1, 2006 and thereafter.
8.2 Syndicated Debt Ratio. The Company shall not suffer or permit at any
time the ratio of Syndicated Debt to Consolidated Pro forma EBITDA to exceed:
(a) 4.25 to 1.00 through September 30, 2002;
(b) 3.85 to 1.00 on October 1, 2002 through December 31, 2002;
(c) 4.10 to 1.00 on January 1, 2003 through March 31, 2003;
(d) 4.15 to 1.00 on April 1, 2003 through June 30, 2003;
(e) 3.90 to 1.00 on July 1, 2003 through September 30, 2003;
(f) 3.55 to 1.00 on October 1, 2003 through December 31, 2003;
(g) 3.85 to 1.00 on January 1, 2004 June 30, 2004;
(h) 3.55 to 1.00 on July 1, 2004 through September 30, 2004;
(i) 3.15 to 1.00 on October 1, 2004 through December 31, 2004;
(j) 3.45 to 1.00 on January 1, 2005 through March 31, 2005;
(k) 3.40 to 1.00 on April 1, 2005 June 30, 2005;
(l) 3.10 to 1.00 on July 1, 2005 through September 30, 2005;
(m) 2.75 to 1.00 on October 1, 2005 through December 31, 2005;
(n) 3.00 to 1.00 on January 1, 2006 through March 31, 2006;
(o) 2.95 to 1.00 on April 1, 2006 through June 30, 2006;
(p) 2.65 to 1.00 on July 1, 2006 through September 30, 2006 and
(q) 2.50 to 1.00 on October 1, 2006 and thereafter;
in each case, based upon the most recently completed four fiscal quarters
reflected in the financial statements most recently delivered pursuant to
Section 6.4.
8.3 Interest Coverage. The Company shall not suffer or permit at any time
the ratio of Consolidated Pro forma EBITDA to Consolidated Pro Forma Interest
Expense (less non-cash amortized financing and FAS 133 costs to the extent
included in Consolidated Pro forma Interest Expense in accordance with GAAP) to
be less than:
(a) 1.35 to 1.00 on the Closing Date through September 30, 2003;
(b) 1.40 to 1.00 on October 1, 2003 through March 31, 2004;
(c) 1.45 to 1.00 on April 1, 2004 through September 30, 2004;
(d) 1.50 to 1.00 on October 1, 2004 through March 31, 2005;
(e) 1.55 to 1.00 on April 1, 2005 through June 30, 2005;
67
(f) 1.60 to 1.00 on July 1, 2005 through March 31, 2006;
(g) 1.65 to 1.00 on April 1, 2006 through June 30, 2006; and
(h) 1.70 to 1.00 on July 1, 2006 and thereafter;
in each case, based upon the most recently completed four fiscal quarters
reflected in the financial statements most recently delivered pursuant to
Section 6.4.
8.4 Cash-Flow Coverage. The Company shall not suffer or permit at any time
the ratio of Consolidated Pro forma Cash Flow to Consolidated Pro forma Fixed
Charges (excluding from Pro Forma Fixed Charges for purposes of calculating
compliance with this covenant, amounts scheduled to be paid in the current
period with respect to the Revolving Loans and the Term Loans (each as defined
in the Syndicated Credit Agreement)) to be less than:
(a) 0.90 to 1.00 through September 30, 2002;
(b) 0.85 to 1.00 on October 1, 2002 through September 30, 2003;
(c) 0.90 to 1.00 on October 1, 2003 through December 31, 2003;
(d) 0.90 to 1.00 on January 1, 2004 through June 30, 2004;
(e) 1.00 to 1.00 on July 1, 2004 through September 30, 2004;
(f) 1.10 to 1.00 on October 1, 2004 through March 31, 2005;
(g) 1.15 to 1.00 on April 1, 2005 through June 30, 2005;
(h) 1.20 to 1.00 on July 1, 2005 through December 31, 2005;
(i) 1.25 to 1.00 on January 1, 2006 through June 30, 2006;
(j) 1.10 to 1.00 on July 1, 2006 through June 30, 2007; and
(k) 1.25 to 1.00 on July 1, 2007 and thereafter.
in each case, based upon the most recently completed four fiscal quarters
reflected in the financial statements most recently delivered pursuant to
Section 6.4.
8.5 Net Worth. The Company shall not suffer or permit Consolidated Net
Worth at any time, based upon the most recently completed fiscal quarter
reflected in the financial statements most recently delivered pursuant to
Section 6.4, to fall below the current minimum amount required, which current
minimum amount required shall be:
(a) $99,760,000 through September 30, 2002;
(b) $96,480,000 on October 1, 2002 through December 31, 2002;
(c) $90,960,000 on January 1, 2003 through March 31, 2003;
(d) $93,680,000 on April 1, 2003 through June 30, 2003;
(e) $96,560,000 on July 1, 2003 through September 30, 2003;
(f) $94,480,000 on October 1, 2003 through December 31, 2003;
(g) $88,639,000 on January 1, 2004 through March 31, 2004;
(h) $91,645,000 on April 1, 2004 through June 30, 2004;
(i) $94,480,000 on July 1, 2004 through September 30, 2004;
(j) $95,280,000 on October 1, 2004 through December 31, 2004;
(k) $88,860,000 on January 1, 2005 through March 31, 2005;
68
(l) $92,649,000 on April 2005 through June 30, 2005;
(m) $96,890,000 on July 1, 2005 through September 30, 2005;
(n) $98,960,000 on October 1, 2005 through December 31, 2005;
(o) $92,731,000 on January 1, 2006 through March 31, 2006;
(p) $97,501,000 on April 1, 2006 through June 30, 2006;
(q) $102,723,000 on July 1, 2006 through September 30, 2006;
(r) $106,240,000 on October 1, 2006 through December 31, 2006;
(s) $102,240,000 on January 1, 2007 through March 31, 2007; and
(t) $106,240,000 on April 1, 2007 and thereafter.
; provided, however, in each case, that (i) any non-cash impact to Consolidated
Net Worth related to FAS 142 shall be excluded in calculating the Company's
compliance with this covenant and (ii) any potential non-cash impact associated
with the extinguishment of Indebtedness (as a result of the issuance of the
Senior Notes and the required repayment of a portion of the Senior Debt) as
indicated pursuant to EITF 96.19/SFAS 140 shall likewise be excluded in
calculating the Company's compliance with this covenant.
ARTICLE IX - EVENTS OF DEFAULT; ACCELERATION; ETC.
9.1 Events of Default and Acceleration. If any of the following events
(each, an "Event of Default" or, if the giving of notice or the lapse of time or
both is required, then, prior to such notice or lapse of time, "Default") shall
occur:
(a) The Company or any of its Subsidiaries shall fail to pay any
principal or any premium on the Senior Notes or any mandatory repayment or
repurchase thereof, or any fees due hereunder when the same shall become
due and payable, whether at the stated date of maturity or any accelerated
date of maturity or at any other date fixed for payment;
(b) The Company or any of its Subsidiaries shall fail to pay any
interest on the Senior Notes or other sums due hereunder or under any of
the other Senior Notes Documents, in each case within five Business Days
after the same shall become due and payable, whether at the stated date of
maturity or any accelerated date of maturity or at any other date fixed for
payment;
(c) The Company or any of its Subsidiaries shall fail to comply
with any of its covenants contained in Sections 2.1, 2.2, 2.3, 2.5, 2.11,
6.1, 6.3, 6.4, 6.5.1, 6.5.3, 6.5.4, 6.5.5, 6.6, 6.7, 6.8, 6.9, 6.14 or
6.16, in Article VII or Article VIII hereof, or in any Security Document,
or the representations and warranties made by the Company in Section 5.1 or
5.9 (or in any document or certificate delivered with respect to Section
5.9, but only as of the date made) shall prove to have been false in any
material respect upon the date made, deemed to have been made or repeated;
(d) The Company or any of its Subsidiaries shall fail to perform
any other term, covenant or agreement contained herein (other than those
set forth in clauses
69
(a), (b) or (c) above) or in any of the other Senior Notes Documents (other
than those specified elsewhere in this Section 9.1) for 15 days after
written notice of such failure has been given to the Company by a
Noteholder;
(e) Any other representation or warranty of the Company or any
of its Subsidiaries in this Agreement or any of the other Senior Notes
Documents or in any other material document, instrument or certificate
delivered pursuant to or in connection with this Agreement shall prove to
have been false in any material respect upon the date when made or deemed
to have been made or repeated;
(f) The Company or any of its Subsidiaries shall (i) fail to pay
at maturity, or within any applicable period of grace, (A) any obligation
for borrowed money or credit received or in respect of any Indebtedness,
other than Indebtedness in the ordinary course of business and owed to
trade creditors, in excess of $100,000 or (B) Indebtedness incurred in the
ordinary course of business and owed to trade creditors in excess of
$3,000,000, or (ii) fail to observe or perform any material term, covenant
or agreement contained in any agreement by which it is bound, evidencing or
securing borrowed money or credit received or in respect of (A) any
Indebtedness, other than Indebtedness in the ordinary course of business
and owed to trade creditors, in excess of $100,000 or (B) Indebtedness
incurred in the ordinary course of business and owed to trade creditors in
excess of $3,000,000, and, in any case, such failure shall permit the
holder or holders thereof or of any obligations issued thereunder to
accelerate the maturity thereof;
(g) Any "Event of Default" (as defined therein) under the
Syndicated Facility Documents or the Vessel Financing Documents;
(h) Any "Event of Default" (as defined therein) under the
Subordinated Note Indenture;
(i) The Company or any of its Subsidiaries shall make an
assignment for the benefit of creditors, or admit in writing its inability
to pay or generally fail to pay its debts as they mature or become due, or
shall petition or apply for the appointment of a trustee or other
custodian, liquidator or receiver of the Company or any of its Subsidiaries
or of any substantial part of the assets of the Company or any of its
Subsidiaries or shall commence any case or other proceeding relating to the
Company or any of its Subsidiaries under any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or liquidation
or similar law of any jurisdiction, now or hereafter in effect, or shall
take any action to authorize or in furtherance of any of the foregoing, or
if any such petition or application shall be filed or any such case or
other proceeding shall be commenced against the Company or any of its
Subsidiaries and the Company or any of its Subsidiaries shall indicate its
approval thereof, consent thereto or acquiescence therein or such petition
or application shall not have been dismissed within 45 days following the
filing thereof;
70
(j) A decree or order is entered appointing any such trustee,
custodian, liquidator or receiver or adjudicating the Company or any of its
Subsidiaries bankrupt or insolvent, or approving a petition in any such
case or other proceeding, or a decree or order for relief is entered in
respect of the Company or any of its Subsidiaries in an involuntary case
under federal bankruptcy laws as now or hereafter constituted;
(k) There shall remain in force, undischarged, unsatisfied and
unstayed, for more than 30 days any final judgment against the Company or
any of its Subsidiaries which is not covered in full by insurance that,
with other such outstanding final judgments remaining, undischarged against
the Company or any of its Subsidiaries, exceeds in the aggregate $500,000;
(l) Any Subordinated Debt or any preferred stock shall be (or
shall be required at such time to be) prepaid, redeemed or repurchased in
whole or in part or the Company shall be or become required under the
Senior Notes Documents to prepay, redeem or repurchase (or shall be or
become required thereunder to offer to prepay, redeem or repurchase) all or
any part of the Subordinated Debt except to the extent permitted by the
applicable subordination agreement to which the Noteholders are a party;
(m) Any of the Senior Notes Documents (or any provision thereof)
shall be canceled, terminated, revoked or rescinded in each case otherwise
than in accordance with the terms thereof or with the express prior written
agreement, consent or approval of the Noteholders, or any action at law,
suit or in equity or other legal proceeding to cancel, revoke or rescind
any of the Senior Notes Documents shall be commenced by or on behalf of the
Company, any of its Subsidiaries or any of the Company's stockholders, or
any court or any other governmental or regulatory authority or agency of
competent jurisdiction shall make a determination that, or issue a
judgment, order, decree or ruling to the effect that, any one or more of
the Senior Notes Documents is illegal, invalid or unenforceable in
accordance with the terms thereof;
(n) The Company or any ERISA Affiliate incurs any liability to
the PBGC (other than for premium payments), or incurs any liability with
respect to a Guaranteed Pension Plan pursuant to Title IV of ERISA in an
aggregate amount exceeding $1,000,000 or the Company or any ERISA Affiliate
is assessed withdrawal liability pursuant to Title IV of ERISA by a
Multiemployer Plan requiring aggregate annual payments exceeding $100,000
or any of the following occurs with respect to a Guaranteed Pension Plan:
(i) an ERISA Reportable Event, or a failure to make a required installment
or other payment (within the meaning of Section 302(f)(1) of ERISA),
provided that the Noteholders determine in their reasonable discretion that
such event (A) could be expected to result in liability of the Company or
any of its Subsidiaries to the PBGC in any amount or such Guaranteed
Pension Plan in an aggregate amount exceeding $1,000,000 and (B) could
constitute grounds for the termination of such Guaranteed Pension Plan by
the PBGC, for the appointment by the appropriate United States District
71
Court of a trustee to administer such Guaranteed Pension Plan or for the
imposition of a lien in favor of such Guaranteed Pension Plan; or (ii) the
appointment by a United States District Court of a trustee to administer
such Guaranteed Pension Plan; or (iii) the institution by the PBGC of
proceedings to terminate such Guaranteed Pension Plan;
(o) The Company or any of its Subsidiaries shall be enjoined,
restrained or in any way prevented by the order of any court or any
administrative or regulatory agency from conducting any material part of
its business;
(p) There shall occur any material damage to, or loss, theft or
destruction of, any material assets of the Company or its Subsidiaries, or
any strike, lockout, labor dispute, embargo, condemnation, act of God or
public enemy, or other casualty, which in any such case causes, for more
than 30 consecutive days, the cessation or substantial curtailment of
revenue producing activities at any facility of the Company or any of its
Subsidiaries if such event or circumstance is not covered by business
interruption insurance and could reasonably be expected to have a Material
Adverse Effect;
(q) There shall occur the loss, suspension or revocation of, or
failure to renew, any license or permit now held or hereafter acquired by
the Company or any of its Subsidiaries if such loss, suspension, revocation
or failure to renew could reasonably be expected to have a Material Adverse
Effect;
(r) The Company or any of its Subsidiaries or any of their
directors or senior officers in their capacities as such (i) shall be
convicted or found liable and all appeals in connection therewith exhausted
for a state or federal crime, or any criminal action shall otherwise have
been brought against the Company or any of its Subsidiaries or any of their
directors or senior officers in their capacities as such, or (ii) any civil
action shall otherwise have been brought against the Company or any of its
Subsidiaries or any of their directors or senior officers that could lead
to the forfeiture of any assets of the Company or such Subsidiary the value
of which, individually or in the aggregate, exceeds $500,000; or
(s) There shall remain in force any Lien that ranks prior to the
Lien granted to the Collateral Agent on any Real Estate for a period in
excess of 15 days, other than Permitted Liens;
then, and in any such event, (1) Noteholders holding greater than 50%, voting
together as a single class, in principal amount of the Senior Notes may, by
notice to the Company, declare the entire unpaid principal amount of the Senior
Notes, plus the applicable Prepayment Premium under Section 2.5.2 if such
declaration shall occur on or after October 25, 2004 and otherwise in a
principal amount equal to 118% of the principal amount of the Senior Notes,
plus, in any case, all interest accrued and unpaid thereon and all other amounts
payable under this Agreement to be forthwith due and payable, whereupon the
Senior Notes, such premium, all such accrued interest and all such amounts shall
become and be forthwith due and payable (unless there shall have
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occurred an Event of Default under Sections 9.1(i) or (j), in which case all
such amounts shall automatically become due and payable), without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived by the Company, and (2) in the case of Events of Default under clauses
(a) or (b) above, each Noteholder may proceed to protect and enforce its rights
by suit in equity, action at law and/or other appropriate proceeding either for
specific performance of any covenant, provision or condition contained or
incorporated by reference in this Agreement or in aid of the exercise of any
power granted in this Agreement. Notwithstanding the foregoing, but only so long
as the Noteholders shall not have exercised their rights under clauses (1) and
(2) above, with respect to any Event of Default under clause (g) above, such
Event of Default shall be, and shall be deemed to be, for all purposes
hereunder, cured if the "Event of Default" (as defined in the Syndicated
Facility Documents and the Vessel Financing Documents) giving rise to such Event
of Default shall have been cured or waived in accordance with the terms of the
Syndicated Facility Documents and the Vessel Financing Documents and the
Noteholders shall have received written notice thereof (which notice shall
summarize the pertinent facts of such cure and include a true and correct copy
of such waiver); provided that no such cure shall affect (whether to cure,
postpone or otherwise) whether an Event of Default has existed, currently exists
or will exist under or with respect to any other clause of this Section 9.1
notwithstanding that any other such Event of Default arises or may arise under
or on account of the same acts, omissions or circumstances that give rise (or
gave rise) to an Event of Default under clause (g).
9.2 Remedies. In case any one or more of the Events of Default shall have
occurred and be continuing, and whether or not the Noteholders shall have
accelerated the maturity of the Senior Notes pursuant to Section 9.1, each
Noteholder, if owed any amount with respect to the Senior Notes, may proceed to
protect and enforce its rights by suit in equity, action at law or other
appropriate proceeding, subject to the limitations on acceleration in Section
9.1 above, whether for the specific performance of any covenant or agreement
contained in this Agreement and the other Senior Notes Documents or any
instrument pursuant to which the Senior Notes Obligations to such Noteholder are
evidenced, including as permitted by applicable law the obtaining of the ex
parte appointment of a receiver (but only to the extent that Noteholders holding
greater than 50%, voting together as a single class, in principal amount of the
Senior Notes have consented to such appointment), and, if such amount shall have
become due by declaration or otherwise, proceed to enforce the payment thereof
or any other legal or equitable right of such Noteholder. No remedy herein
conferred upon any Noteholder is intended to be exclusive of any other remedy
and each and every remedy shall be cumulative and shall be in addition to every
other remedy given hereunder or now or hereafter existing at law or in equity or
by statute or any other provision of law.
9.3 Distribution of Proceeds. In the event that following the occurrence
or during the continuance of any Default or Event of Default, any Noteholder
receives any monies with respect to the amounts due hereunder, such monies shall
be distributed for application as follows:
(a) First, to the payment of, or (as the case may be) the
reimbursement of the Noteholders for or in respect of all reasonable costs,
expenses, disbursements and
73
losses which shall have been incurred or sustained by the Noteholders in
connection with the collection of such monies by the Noteholders, for the
exercise, protection or enforcement by the Noteholders of all or any of the
rights, remedies, powers and privileges of the Noteholders under this
Agreement or any of the other Senior Notes Documents pro rata based on the
relative amount so incurred or sustained;
(b) Second, to all other Senior Notes Obligations in such order
or preference as the Noteholders may determine; provided, however, that
distributions shall be made among the Noteholders pro rata; and
(c) Third, the excess, if any, shall be returned to the Company
or to such other Persons as are entitled thereto.
9.4 Annulment of Defaults. Section 9.1 is subject to the condition that,
if at any time after the principal of any of the Senior Notes shall have become
due and payable, and before any judgment or decree for the payment of the moneys
so due, or any portion thereof, shall have been entered, then and in every such
case the holders of greater than 51%, voting together as a single class, in
principal amount of all Senior Notes then outstanding may, by written instrument
filed with the Company, rescind and annul such declaration and its consequences;
but no such rescission or annulment shall extend to or affect any subsequent
default or Event of Default or impair any right consequent thereon.
ARTICLE X - GUARANTEE OF THE SENIOR NOTES
Each Guarantor unconditionally guarantees, as a primary obligor and not
merely as a surety, jointly and severally with each other Guarantor, the due and
punctual payment of the principal of, and interest on, each of the Senior Notes
when and as due, whether at maturity, by acceleration, by notice of prepayment
or otherwise and the due and punctual payment and performance of all other
Senior Notes Obligations with respect to the Senior Notes (the "Guaranteed
Obligations"). Each Guarantor further agrees that the Guaranteed Obligations may
be extended and renewed, in whole or in part, without notice to or further
assent from it, and that it will remain bound upon its guarantee notwithstanding
any extension or renewal of any Guaranteed Obligations.
Each Guarantor waives presentment to, demand of payment from and protest to
the Company of any of the Guaranteed Obligations, and also waives notice of
acceptance of its guarantee and notice of protest for nonpayment. The
obligations of a Guarantor hereunder shall not be affected by (a) the failure of
any Noteholder to assert any claim or demand or to enforce any right or remedy
against the Company, as the case may be, or any other Guarantor under the
provisions of this Agreement, the Senior Notes or any of the other Senior Notes
Documents or otherwise; (b) any rescission, waiver, amendment or modification of
any of the terms or provisions of this Agreement, the Senior Notes any guarantee
or any other agreement, (c) the failure of any Noteholder to exercise any right
or remedy against any other Guarantor of any obligations hereunder; or (d) the
failure of any Noteholder to take, register, perfect or preserve any security
for any of the obligations hereunder.
74
The obligations of each Guarantor hereunder shall not be subject to any
reduction, limitation, impairment or termination for any reason, including,
without limitation, any claim of waiver, release, surrender, alteration or
compromise, and shall not be subject to any defense or set off, counterclaim,
recoupment or termination whatsoever by reason of the invalidity, illegality or
unenforceability of the Guaranteed Obligations or otherwise. Without limiting
the generality of the foregoing, the obligations of each Guarantor hereunder
shall not be discharged or impaired or otherwise affected by the failure of any
Noteholder to assert any claim or demand or to enforce any remedy under this
Agreement, the Senior Notes, or under any other guarantee or agreement, by any
waiver or modification of any provision thereof, by any default, failure or
delay, willful or otherwise, in the performance of any Guaranteed Obligations,
or by any other act or omission which may or might otherwise in any manner or to
any extent vary the risk or reduce or extinguish the liability of such Guarantor
or otherwise operate as a discharge of such Guarantor as a matter of law or
equity.
Each Guarantor further agrees that its guarantee shall be a continuing
guarantee and shall stand as a guarantee of full and final payment and
performance of all Guaranteed Obligations hereunder from time to time and shall
continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of principal or interest on any obligation
hereunder is rescinded or must otherwise be returned by the Noteholders upon the
bankruptcy or reorganization of the Company or otherwise.
Each Guarantor hereby waives and releases in favor of the Noteholders all
rights of subrogation against or in respect of the Company and its property and
all rights of indemnification, contribution and reimbursement from the Company
and its property, in each case in connection with this guarantee and any
payments made hereunder, and regardless of whether such rights arise by
operation of law, pursuant to contract or otherwise until such time as the
obligations hereunder have been fully and finally performed and paid.
If, in any action to enforce this guaranty or any proceeding to allow or
adjudicate a claim under this guaranty, a court of competent jurisdiction
determined that enforcement of this guaranty against any Guarantor for the full
amount of the obligations hereunder is not lawful under, or would be subject to
avoidance under, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Bankruptcy Code or any
applicable provision of comparable state law, the liability of such Guarantor
under this guaranty shall be limited to the maximum amount lawful and not
subject to avoidance under such law.
The Company and its Subsidiaries agree that in the event a payment shall be
made by the Company or its Subsidiaries (the "Claiming Note Party") under this
Agreement or any other Senior Notes Documents or assets of such Claiming Note
Party shall be sold pursuant to any mortgage, security agreement or similar
instrument or agreement to satisfy a claim of any of the Noteholders, each other
party to this Agreement (a "Contributing Note Party") shall indemnify the
Claiming Note Party in an amount equal to the amount of such payment or the
greater of the book value or the fair market value of such assets, as the case
may be multiplied by a fraction of which the numerator shall be the net worth of
the Contributing Note Party on the date hereof
75
and the denominator shall be the aggregate net worth of all the parties to this
Agreement on the date hereof.
ARTICLE XI - MISCELLANEOUS
11.1 No Waiver; Cumulative Remedies. No failure or delay on the part of any
Noteholder, in exercising any right, power or remedy hereunder shall operate as
a waiver thereof; nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy hereunder. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
11.2 Amendments, Waivers and Consents. Any provision in this Agreement, the
Senior Notes or the other Senior Notes Documents to the contrary
notwithstanding, this Agreement may be amended, supplemented or otherwise
modified and compliance with any covenant or provision set forth herein may be
omitted or waived, if the Company shall, as long as any Senior Notes are
outstanding, obtain consent thereto in writing from the holder or holders of at
least 50%, voting together as a single class, in principal amount of all Senior
Notes then outstanding, and shall, in any case, deliver copies of such
amendment, supplement, modification or consent, as the case may be, in writing
to all other holders of Senior Notes; provided that no such consent shall be
effective (a) to reduce or to postpone the date fixed for the payment of or the
amount of, or rate of, the principal (including any required redemption or
repurchase of any Senior Note) or interest payable on any Senior Note, (b) or to
modify in any way the ranking of the Senior Notes Obligations evidenced by such
Senior Note, (c) to alter or amend any provisions relating to prepayments,
mandatory purchase or redemption of such Senior Notes, (d) or to alter or amend
the consent mechanism provided for under Section 9.4 or this Section 11.2, in
the case of clauses (a) through (c) of such Senior Note and, in the case of
clause (d), all holders of Senior Notes outstanding. Any waiver or consent may
be given subject to satisfaction of conditions stated therein and any waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given. Written notice of any waiver or consent effected under
this Section shall promptly be delivered by the Company to any Noteholders who
did not execute the same.
11.3 Addresses for Notices, Etc. All notices, requests, demands and other
communications provided for hereunder shall be in writing and mailed (by first
class registered or certified mail, postage prepaid), sent by express overnight
courier service or electronic facsimile transmission with a copy by mail, or
delivered to the applicable party at the addresses indicated below:
76
If to the Company:
prior to January 1, 2003:
Oglebay Norton Company
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇,
Chief Financial Officer
and
▇▇▇▇▇▇▇▇ ▇. Walk, Esq.,
General Counsel
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
From January 1, 2003:
Oglebay Norton Company
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇/▇▇/ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇,
Chief Financial Officer
and
▇▇▇▇▇▇▇▇ ▇. Walk, Esq.,
General Counsel
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to any of the Purchasers, as set forth on Schedule 1 with respect to
such Purchaser; and
If to any other holder of the Senior Notes, at such holder's address for
notice as set forth in the transfer records of the Company
Or, as to each of the foregoing, at such other address as shall be designated by
such Person in a written notice to the other party complying as to delivery with
the terms of this Section. All such notices, requests, demands and other
communications shall, when mailed or sent, respectively, be effective (i) three
days after being deposited in the mails or (ii) one Business Day after being
deposited with the express overnight courier service or sent by electronic
facsimile transmission (with receipt confirmed), respectively, addressed as
aforesaid.
11.4 Costs, Expenses and Taxes. The Company agrees to pay on demand all
reasonable costs and expenses of the Noteholders in connection with the
preparation, execution and delivery of this Agreement, the Senior Notes, the
other Senior Notes Documents and other instruments and documents to be delivered
hereunder, and in connection with the consummation of the transactions
contemplated hereby and thereby, as well as all reasonable costs and expenses
77
of the Noteholders in connection with the amendment, waiver (whether or not such
amendment or waiver becomes effective) or enforcement of this Agreement, the
Senior Notes, the other Senior Notes Documents, and other instruments and
documents to be delivered hereunder and thereunder, including without limitation
the expenses of the Noteholders under Section 6.9.1 hereof at any time after a
Default has occurred and is continuing. Notwithstanding the preceding sentence,
and in addition to the provisions of such sentence, the Company agrees to pay on
demand all reasonable fees and out of pocket expenses of ▇▇▇▇▇▇▇ Procter LLP,
special counsel to the Purchasers in connection with the transactions
contemplated by this Agreement, including any amendment, waiver (whether or not
such amendment or waiver becomes effective) or enforcement of this Agreement,
the Senior Notes, the Senior Notes Documents, and other instruments and
documents to be delivered hereunder and thereunder. In addition, the Company
agrees to pay (a) the travel and other reasonable expenses of the Purchasers
incurred in connection with the transactions contemplated by this Agreement, (b)
any and all stamp and other similar taxes (expressly excluding income and
capital gain taxes) payable or determined to be payable in connection with the
execution and delivery of this Agreement, the Senior Notes, the other Senior
Notes Documents, and the other instruments and documents to be delivered
hereunder or thereunder and (c) the reasonable expenses of preparing Senior
Notes from time to time in connection with exchanges and transfers of notes, the
expenses of delivering copies of Senior Notes Documents to Noteholders, and the
Company agrees to save each Noteholder harmless from and against any and all
liabilities with respect to or resulting from any delay in paying or omission to
pay such taxes and filing fees.
11.5 Assignability; Binding Agreement. This Agreement may not be assigned
by the Company or any Guarantor without the prior written consent of each other
party hereto. This Agreement shall be binding upon and enforceable by, and shall
inure to the benefit of, the parties hereto and their respective successors and
permitted assigns, and no others. Notwithstanding the foregoing, nothing in this
Agreement is intended to give any Person not named herein the benefit of any
legal or equitable right, remedy or claim under this Agreement.
11.6 Payments in Respect of Senior Notes. Each Noteholder and any successor
holder of the Senior Notes by their acceptance thereof, agree that, with respect
to all sums received by them applicable to the payment of principal of or
interest on the Senior Notes equitable adjustment will be made among them so
that, in effect, all such sums shall be shared ratably by all of the Noteholders
whether received by voluntary payment, by realization upon security, by the
exercise of the right of set off, by counterclaim or cross-action or by the
enforcement of any or all of the Senior Notes. If any holder of the Senior Notes
receives any payment on its Senior Notes in excess of its pro rata portion, then
such holder receiving such excess payment shall purchase for cash from the other
holders an interest in their Senior Notes in such amounts as shall result in a
ratable participation by all of the holders in the aggregate unpaid amount of
Senior Notes then outstanding. The Company shall not have any obligation to any
Person under this Section 11.6.
11.7 Indemnification. In addition to the payment of expenses pursuant to
Section 11.4, whether or not the transactions contemplated hereby shall be
consummated, the Company and
78
each Guarantor agrees, jointly and severally, to indemnify, pay and hold each
Noteholder and the partners, members, officers, directors, employees and agents
of each Noteholder (collectively, the "Indemnitees") harmless from and against,
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, expenses and disbursements of any kind or
nature whatsoever (including, without limitation, the reasonable fees and
disbursements of counsel for such Indemnitees in connection with any
investigative, administrative or judicial proceedings, whether or not such
Indemnitees shall be designated a party thereto), which may be imposed on,
incurred by, or asserted against such Indemnitee, in any manner relating to or
arising out of (i) this Agreement, the Senior Notes and the other Senior Notes
Documents and all other matters related thereto or in connection therewith, (ii)
the Noteholders' agreement to purchase the Senior Notes, or the use or intended
use of the proceeds of the Senior Notes hereunder, (iii) the violation of any
securities law by the Company, or any of its Subsidiaries, (iv) the failure of
any of the parties (other than the Purchasers) to the Senior Notes Documents to
comply with any law, rule or regulation applicable to the transactions
contemplated thereby or (v) any Environmental Law, or any Hazardous Substances
(A) present on or under the Real Estate (B) released from or onto the Real
Estate, or (C) generated by the Company or any of its Subsidiaries (the
"Indemnified Liabilities"); provided that the Company shall have no obligation
to an Indemnitee hereunder with respect to Indemnified Liabilities which are
determined by a final court decision or arbitral award to have resulted from the
gross negligence or willful misconduct of that Indemnitee. To the extent that
the undertaking to indemnify, pay and hold harmless set forth in the preceding
sentence may be unenforceable because it violates any law or public policy, the
Company shall contribute the maximum portion which it is permitted to pay and
satisfy under applicable law, to the payment and satisfaction of all Indemnified
Liabilities incurred by the Indemnitees or any of them.
11.8 Survival of Representations and Warranties. All representations and
warranties made to the Noteholders in this Agreement, the Senior Notes, the
other Senior Notes Documents or any other instrument or document delivered in
connection herewith or therewith, shall survive the execution and delivery
hereof and thereof, acceptance of the Senior Notes, payment of the Senior Notes
or upon redemption, prepayment or otherwise, termination of this Agreement,
regardless of any investigation made by the Noteholders or on behalf of the
Noteholders.
11.9 Prior Agreements. This Agreement and the other Senior Notes Documents
constitutes the entire agreement between the parties and supersedes any prior
understandings or agreements concerning the subject matter hereof or thereof.
11.10 Severability. The invalidity or unenforceability of any provision
hereof shall in no way affect the validity or enforceability of any other
provision.
11.11 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of New York.
11.12 Dispute Resolution.
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11.12.1 All disputes, claims, or controversies arising out of or
relating to (i) this Agreement or any other agreement executed and delivered
pursuant to this Agreement or the negotiation, breach, termination, validity or
performance hereof or the transactions contemplated hereby or (ii) the
Noteholders' loan to the Company, that are not resolved by mutual agreement
shall be resolved by litigation, or if the Company and each Noteholder agree to
resolve any particular dispute by arbitration, then such arbitration shall be
conducted in accordance with the procedures set forth in Section 11.12.2 below.
11.12.2 In the event the parties hereto agree to resolve a particular
dispute by arbitration, the following procedures will apply:
(a) The dispute will be submitted solely and exclusively by
binding arbitration to be conducted before J.A.M.S./Endispute, Inc. or its
successor.
(b) The arbitration shall be held in New York, New York before a
single arbitrator and shall be conducted in accordance with the rules and
regulations promulgated by J.A.M.S./Endispute, Inc. unless specifically
modified herein.
(c) The parties covenant and agree that the arbitration hearing
shall commence within 120 days of the date on which a written demand for
arbitration is filed by any party hereto. In connection with the
arbitration proceeding, the arbitrator shall have the power to order the
production of documents by each party and any third-party witnesses. In
addition, each party may take up to three depositions as of right, and the
arbitrator may in his or her discretion allow additional depositions upon
good cause shown by the moving party. However, the arbitrator shall not
have the power to order the answering of interrogatories or the response to
requests for admission. In connection with any arbitration, each party
shall provide to the other, no later than 14 business days before the date
of the arbitration, the identity of all Persons that may testify at the
arbitration and a copy of all documents that may be introduced at the
arbitration or considered or used by a party's witness or expert, and a
summary of the expert's opinions and the basis for said opinions. The
arbitrator's decision and award shall be made and delivered within 60 days
of the conclusion of the arbitration. The arbitrator's decision shall set
forth a reasoned basis for any award of damages or finding of liability.
The arbitrator shall not have power to award damages in excess of actual
compensatory damages and shall not award punitive damages or any other
damages that are specifically excluded under this Agreement, and each party
hereby irrevocably waives any claim to such damages.
(d) The parties covenant and agree that they will participate in
the arbitration in good faith and, except as set forth below, shall (i)
bear their own attorneys' fees costs and expenses in connection with the
arbitration, and (ii) share equally in the fees and expenses charged by
J.A.M.S./Endispute, Inc. The arbitrator may in his or her discretion assess
costs and expenses (including the reasonable legal fees and expenses of the
prevailing party) against any party to a proceeding. Any party
unsuccessfully
80
refusing to comply with an order of the arbitrators shall be liable for
costs and expenses, including attorneys' fees, incurred by the other party
in enforcing the award. This Section 11.12 applies equally to requests for
temporary, preliminary or permanent injunctive relief, except that in the
case of temporary or preliminary injunctive relief any party may proceed in
court without prior arbitration for the limited purpose of avoiding
immediate and irreparable harm. The provisions of this Section 11.12 shall
be enforceable in any court of competent jurisdiction.
(e) Each of the parties hereto irrevocably and unconditionally
consents to the exclusive jurisdiction of J.A.M.S./Endispute, Inc. to
resolve all disputes, claims or controversies arising out of or relating to
this Agreement or the negotiation, breach, termination, validity or
performance hereof and or the transactions contemplated hereby and further
consents to the jurisdiction of the courts of the State of New York for the
purposes of enforcing the arbitration provisions of Section 11.12 of this
Agreement. Each party further irrevocably waives any objection to
proceeding before J.A.M.S./Endispute, Inc. based upon lack of personal
jurisdiction or improper venue and further irrevocably and unconditionally
waives and agrees not to make a claim in any court that arbitration before
J.A.M.S./Endispute, Inc. has been brought in an inconvenient forum. Each of
the parties hereto hereby consents to service of process by registered mail
at the address to which notices are to be given. Each of the parties hereto
agrees that its or his submission to jurisdiction and its or his consent to
service of process by mail are made for the express benefit of the other
parties hereto.
11.13 Section Headings and Gender; Construction. The descriptive headings
in this Agreement have been inserted for convenience only and shall not be
deemed to limit or otherwise affect the construction of any provision thereof or
hereof. The use in this Agreement of the masculine pronoun in reference to a
party hereto shall be deemed to include the feminine or neuter, and vice versa,
as the context may require. The parties have participated jointly in the
negotiation and drafting of this Agreement and the other agreements, documents
and instruments executed and delivered in connection herewith with counsel
sophisticated in investment transactions. In the event an ambiguity or question
of intent or interpretation arises, this Agreement and the agreements, documents
and instruments executed and delivered in connection herewith shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any
provisions of this Agreement and the agreements, documents and instruments
executed and delivered in connection herewith.
11.14 Counterparts. This Agreement may be executed simultaneously in any
number of counterparts, each of which when so executed and delivered shall be
taken to be an original; but such counterparts shall together constitute but one
and the same document.
11.15 Further Assurances. From and after the date of this Agreement, upon
the reasonable request of the Noteholders, the Company and its Subsidiaries
shall execute and deliver such instruments, documents and other writings as may
be reasonably necessary or
81
desirable to confirm and carry out and to effectuate fully the intent and
purposes of the Senior Notes Documents.
11.16 Consent to Jurisdiction. Except as provided in Section 11.12 above,
the Company and its Subsidiaries irrevocably submit to the non-exclusive
jurisdiction of arbitration in New York, New York to resolve all disputes,
claims or controversies arising out of or relating to (i) this Agreement or any
other agreement executed and delivered pursuant to this Agreement or the
negotiation, validity or performance hereof and thereof or the transactions
contemplated hereby and thereby, or (ii) the Noteholders' loan to the Company,
and further consents to the sole and exclusive jurisdiction of the courts of the
State of New York for the purposes of enforcing the arbitration provisions of
Section 11.12 of this Agreement. Each party further irrevocably waives any
objection to proceeding before the arbitrator in New York, New York based upon
lack of personal jurisdiction or improper venue and further irrevocably and
unconditionally waives and agrees not to make a claim in any court that
arbitration before the arbitrator in New York, New York has been brought in an
inconvenient forum. Each of the parties hereto hereby consents to service of
process by registered mail at the address to which notices are to be given. Each
of the parties hereto agrees that its or his submission to jurisdiction and its
or his consent to service of process by mail are made for the express benefit of
the other parties hereto.
11.17 Effect of Judgment. The Company agrees, to the fullest extent it may
effectively do so under applicable law, that a judgment in any suit, action or
proceeding of the nature referred to in Section 11.16 brought in any such court
shall, subject to such rights of appeal on issues other than jurisdiction as may
be available to the Company, be conclusive and binding upon the Company and may
be enforced in the courts of the United States of America or the State of New
York (or any other courts to the jurisdiction of which the Company is or may be
subject) by a suit upon such judgment.
11.18 No Limitation. Nothing in Section 11.16 or 11.17, shall affect the
right of any Noteholder to serve process in any manner permitted by law, or
limit any right that any Noteholder may have to bring proceedings against the
Company in the courts of any jurisdiction or to enforce in any lawful manner a
judgment obtained in one jurisdiction in any other jurisdiction.
11.19 Specific Performance. Upon breach or default by the Company with
respect to any obligation hereunder or under the Senior Notes, each Noteholder
shall be entitled to protect and enforce its rights at law, or in equity or by
other appropriate proceedings for specific performance of such obligation, or
for an injunction against such breach or default, or in aid of the exercise of
any power or remedy granted hereby or thereby or by law.
11.20 Actions by Noteholders. Except as provided in Section 11.2, wherever
in this Agreement action is required or permitted to be taken by, or consent is
required of, or a matter requires the satisfaction of, the Noteholders, such
action may be taken by, and/or such consent may be obtained from, and/or such
satisfaction may be expressed by, the holders of greater than
82
50%, voting together as a single class, of the principal amount of all Senior
Notes then outstanding.
11.21 Non-Disclosure. Each of the Noteholders agrees that it and any of its
representatives shall hold in strict confidence (except as otherwise required by
law) any confidential or proprietary information obtained from the Company and
its Subsidiaries that has been conspicuously marked "confidential". Information
disclosed to or generally known in the industry or obtained or developed by any
Noteholder based on information received from Persons who had a right to
disclose the same to the Noteholders shall not be (and shall not be deemed to
be) confidential or proprietary information. Each Noteholder shall hold all
confidential information obtained by such Noteholder pursuant to the
requirements of this Agreement in accordance with such Noteholder's customary
procedures for handling confidential information of this nature; provided,
however, each Noteholder may disclose such confidential information (a) to its
examiners, affiliates, outside auditors, counsel and other professional
advisors, (b) to any Noteholder, or (c) to any prospective holder of Senior
Notes, provided that such prospective holder shall have executed and delivered,
and otherwise be bound by, a confidentiality agreement in form and substance
substantially similar to Exhibit 6.14, and (d) as required or requested by any
Governmental Authority or representative thereof or pursuant to legal process;
provided, further that (i) unless specifically prohibited by applicable law or
court order, each Noteholder shall use commercially reasonable efforts to give
the Company prompt notice of the applicable request for disclosure of such
non-public information so that the Company may seek an appropriate protective
court order (A) by a governmental authority or representative thereof (other
than any such request in connection with an examination of the financial
condition of such Noteholder by such governmental authority) or (B) pursuant to
legal process, (ii) if, in the absence of a protective order any Noteholder is
compelled to disclose any such non-public information, such Noteholder shall use
commercially reasonable efforts to provide notice to the Company of the
information so disclosed prior to the disclosure thereof, and (iii) in no event
shall any Noteholder be obligated to return any materials furnished by the
Company or any of its Subsidiaries other than those instruments in possession of
any Noteholder evidencing the Senior Notes Obligations once the Senior Notes
Obligations (including the Guaranteed Obligations) have been paid in full in
cash and this Agreement has been terminated in accordance with its terms.
11.22 Publicity. Except as may be required by applicable law, no party
hereto shall issue a publicity release or announcement or otherwise make any
public disclosure concerning this Agreement or the transactions contemplated
hereby, without prior approval by the other parties hereto. If any announcement
is required by law to be made by a party hereto, prior to making such
announcement such party will deliver a draft of such announcement to the other
parties and shall give the other parties an opportunity to comment thereon.
11.23 Limitation of Liability. No Noteholder shall have any liability to
the Company or any of its Subsidiaries (whether sounding in tort, contract, or
otherwise) for consequential damages suffered by the Company or any such
Subsidiaries in connection with, arising out of, or in any way related to the
transactions or relationships contemplated by the Senior Notes
83
Documents, or any act, omission or event occurring in connection therewith, or
for any special exemplary or punitive damages, and the Company and its
Subsidiaries hereby waive, to the maximum extent not prohibited by law, any
right they may have to claim or recover any of the foregoing.
[The remainder of this page has been left blank intentionally]
84
IN WITNESS WHEREOF, the parties hereto have executed this Senior Note
Purchase Agreement as of the date first above written.
COMPANY: OGLEBAY NORTON COMPANY
-------
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Financial Officer
85
GUARANTORS: ONCO INVESTMENT COMPANY
OGLEBAY NORTON MANAGEMENT COMPANY
OGLEBAY NORTON INDUSTRIAL SANDS, INC.
OGLEBAY NORTON TERMINALS, INC.
OGLEBAY NORTON ENGINEERED MATERIALS, INC.
OGLEBAY NORTON MINERALS, INC.
OGLEBAY NORTON SPECIALTY MINERALS, INC.
ON MARINE SERVICES COMPANY
MICHIGAN LIMESTONE OPERATIONS, INC.
GLOBAL STONE CORPORATION
GLOBAL STONE TENN ▇▇▇▇▇▇▇▇ COMPANY
GLOBAL STONE CHEMSTONE CORPORATION
GLOBAL STONE ST. CLAIR, INC.
GLOBAL STONE FILLER PRODUCTS, INC.
GLOBAL ▇▇▇▇▇ ▇▇▇▇▇ RIVER, INC.
GS PC, INC.
ON COAST PETROLEUM COMPANY
ONCO WVA, INC.
ONTEX, INC.
SAGINAW MINING COMPANY
GLOBAL STONE MANAGEMENT COMPANY
By: /s/ ▇▇▇▇▇▇▇▇ ▇. Walk
-------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. Walk
Title: Vice President and Secretary
86
OGLEBAY NORTON MARINE SERVICES
COMPANY, L.L.C.
By: ON MARINE SERVICES COMPANY,
its Member
By: /s/ ▇▇▇▇▇▇▇▇ ▇. Walk
------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. Walk
Title: Vice President and Secretary
87
GLOBAL STONE PENROC, LP
By: GS PC, Inc.,
its General Partner
By: /s/ ▇▇▇▇▇▇▇▇ ▇. Walk
-------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. Walk
Title: Vice President and Secretary
88
TEXAS MINING, LP
By: ONTEX, Inc.,
its General Partner
By: /s/ ▇▇▇▇▇▇▇▇ ▇. Walk
--------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. Walk
Title: Vice President and Secretary
89
OGLEBAY NORTON MARINE MANAGEMENT
COMPANY, L.L.C.
By: OGLEBAY NORTON MARINE SERVICES
COMPANY, L.L.C., its Member
By: /s/ ▇▇▇▇▇▇▇▇ ▇. Walk
--------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. Walk
Title: Vice President and Secretary
90
GLOBAL STONE PORTAGE, LLC
By: GLOBAL STONE CORPORATION,
its Member
By: /s/ ▇▇▇▇▇▇▇▇ ▇. Walk
--------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. Walk
Title: Vice President and Secretary
91
PURCHASERS: THE 1818 MEZZANINE FUND II, L.P.
----------
By: ▇▇▇▇▇ Brothers ▇▇▇▇▇▇▇▇ & Co.,
General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Partner
92
▇▇▇▇ AND ▇▇▇▇▇▇▇ ▇▇▇▇▇ FOUNDATION
By: GRANDVIEW CAPITAL MANAGEMENT, LLC,
its investment adviser
By: /s/ ▇▇▇▇▇ ▇. Buckle
------------------------------------
Name: ▇▇▇▇▇ ▇. Buckle
Title: Senior Vice President
ARROW INVESTMENT PARTNERS
By: /s/ ▇▇▇▇▇ ▇. Buckle
------------------------------------
Name: ▇▇▇▇▇ ▇. Buckle
Title: Senior Vice President
93
SANKATY HIGH YIELD PARTNERS II, L.P.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
SANKATY HIGH YIELD PARTNERS III, L.P.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
▇▇▇▇▇ POINT CBO 1999-1, LTD.
By: SANKATY ADVISORS, LLC, as Collateral Manager
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
▇▇▇▇▇ POINT II CBO 2000-1 LTD.
By: SANKATY ADVISORS, LLC, as Collateral Manager
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇-▇ LTD.
By: SANKATY ADVISORS, LLC, as Collateral Manager
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
94
GREAT POINT CLO 1999-1 LTD.
By: SANKATY ADVISORS, LLC, as Collateral Manager
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
RACE POINT CLO, LIMITED
By: SANKATY ADVISORS, LLC, as Collateral Manager
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
SANKATY CREDIT OPPORTUNITIES, L.P.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
95
TEACHERS INSURANCE AND ANNUITY
ASSOCIATION OF AMERICA
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Director-Private Placements
96
SAFETY NATIONAL CASUALTY CORPORATION
By: GOLDENTREE ASSET MANAGEMENT, L.P.,
Registered Investment Advisor
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Partner
RELIANCE STANDARD LIFE INSURANCE COMPANY
By: GOLDENTREE ASSET MANAGEMENT, L.P.,
Registered Investment Advisor
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Partner
GKW UNIFIED HOLDINGS, LLC
By: GOLDENTREE ASSET MANAGEMENT, L.P.,
Registered Investment Advisor
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Partner
GOLDENTREE HIGH YIELD VALUE MASTER FUND II, LTD.
By: GOLDENTREE ASSET MANAGEMENT, L.P.,
Registered Investment Advisor
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Partner
97
B&W MASTER TOBACCO RETIREMENT TRUST
By: GOLDENTREE ASSET MANAGEMENT, L.P.,
Registered Investment Advisor
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Partner
▇▇▇ ▇▇▇▇▇
By: GOLDENTREE ASSET MANAGEMENT, L.P.,
Registered Investment Advisor
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Partner
BROAD FOUNDATION
By: GOLDENTREE ASSET MANAGEMENT, L.P.,
Registered Investment Advisor
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Partner
THE UNIVERSITY OF CHICAGO
By: GOLDENTREE ASSET MANAGEMENT, L.P.,
Registered Investment Advisor
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Partner
98
GOLDENTREE HIGH YIELD MASTER FUND, LTD
By: GOLDENTREE ASSET MANAGEMENT, L.P.,
Registered Investment Advisor
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Partner
DB STRUCTURED PRODUCTS, INC.
By: GOLDENTREE ASSET MANAGEMENT, L.P.,
Registered Investment Advisor
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Partner
ALPHA U.S. SUBFUND II, LLC
By: GOLDENTREE ASSET MANAGEMENT, L.P.,
Registered Investment Advisor
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Partner
▇▇▇▇▇▇▇ ▇▇▇▇▇ LIVING TRUST
By: GOLDENTREE ASSET MANAGEMENT, L.P.,
Registered Investment Advisor
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Partner
99
▇▇▇▇▇▇▇ FAMILY FOUNDATION
By: GOLDENTREE ASSET MANAGEMENT, L.P.,
Registered Investment Advisor
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Partner
100
EXHIBIT A
Form of Joinder Agreement
The undersigned hereby agrees, effective as of the date hereof, to
become a party to that certain Senior Secured Note Purchase Agreement (the
"Agreement") dated as of October __, 2002 by and among Oglebay Norton Company,
The 1818 Mezzanine Fund II, L.P., and the parties named therein, and for all
purposes of the Agreement, the undersigned shall be included within the term
"Guarantor" (as defined in the Agreement). The address and facsimile number to
which notices may be sent to the undersigned is as follows:
[Name]
[Address]
Facsimile No.:______________________________
Attention: ______________________________
______________________________
[NAME OF UNDERSIGNED]
EXHIBIT B
Form of Security Agreement
SECURITY AGREEMENT dated as of October __, 2002 by ((Company)) ("Pledgor"),
and THE 1818 MEZZANINE FUND II, L.P. ("1818 Mezzanine"), as collateral agent
(together with its successors and assigns in such capacity, the "Collateral
Agent") for itself and the other Noteholders (as hereinafter defined).
1. RECITALS.
Pledgor is a party to that certain Senior Secured Note Purchase Agreement
dated as of October __, 2002 (as amended and in effect from time to time, the
"Note Purchase Agreement"), among Oglebay Norton Company, an Ohio corporation
("Oglebay"), the Guarantors listed on the signature pages thereto, 1818
Mezzanine and the other Purchasers party thereto. Pursuant to the Note Purchase
Agreement, the Purchasers have agreed to purchase the Senior Notes (as defined
in the Note Purchase Agreement). It is a condition precedent to the Purchasers
purchasing the Senior Notes that Pledgor execute and deliver to the Collateral
Agent this Security Agreement for the benefit of the Noteholders and the
Collateral Agent.
Terms defined in the Note Purchase Agreement and not otherwise defined in
this Agreement are used in this Agreement as defined in the Note Purchase
Agreement. Terms that are defined in Articles 8 and 9 of the UCC (as defined
below) and not otherwise defined herein are used herein as therein defined.
NOW, THEREFORE, in consideration of the premises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
2. DEFINITIONS. As used in this Agreement, the following terms shall have the
following meanings:
"Accounts" means and includes "accounts" as defined in the UCC.
"Account Debtor" shall mean any Person obligated to pay all or any part of
any Account in any manner and includes (without limitation) any guarantor
thereof or other accommodation party therefor.
"Approved Securities Intermediary" means a Securities Intermediary or
Commodity Intermediary selected or approved by the Collateral Agent and with
respect to which Pledgor has delivered to the Collateral Agent an executed
Control Account Letter; provided that for so long as the Intercreditor Agreement
shall be in effect, the Collateral Agent shall be deemed to have approved any
Securities Intermediary or Commodity Intermediary that serves as a securities
intermediary or commodity intermediary (each such term, as defined in the UCC)
for the Banks' Agent with respect to Pledgor and any of its Investment Property.
"Banks' Agent" means KeyBank National Association as Agent for the Banks
under the Intercreditor Agreement.
"Cash Collateral Account" shall mean a commercial Deposit Account
designated "cash collateral account" and maintained by Pledgor with the
Collateral Agent (or such financial institution as the Collateral Agent may
designate), without liability by the Collateral Agent or the Noteholders to pay
interest thereon, from which account the Collateral Agent shall have the
exclusive right to withdraw funds until all of the Debt is paid in full.
"Cash Security" shall mean all cash, instruments, Deposit Accounts, and
other cash equivalents, whether matured or unmatured, whether collected or in
the process of collection, upon which Pledgor presently has or may hereafter
have any claim, wherever located, including but not limited to any of the
foregoing that are presently or may hereafter be existing or maintained with,
issued by, drawn upon, or in the possession of the Collateral Agent or any
Noteholder.
"Chattel Paper" means and includes "chattel paper" as defined in the UCC.
"Collateral" means all assets of Pledgor in which a security interest or
Lien is granted to the Collateral Agent for its benefit and the benefit of the
Noteholders pursuant to Section 3 hereof to secure repayment of the Debt and all
other property of Pledgor in which a Lien is granted to the Collateral Agent for
it benefit and the benefit of the Noteholders to secure repayment of the Debt.
"Commodity Account" means and includes a "commodity account" as defined in
the UCC.
"Commodity Intermediary" means and includes a "commodity intermediary" as
defined in the UCC.
"Control Account" means a Securities Account or Commodity Account
maintained by Pledgor with an Approved Securities Intermediary which account is
the subject of an effective Control Account Letter, together with all Financial
Assets held in such account and all certificates and instruments, if any,
representing or evidencing the Financial Assets contained therein.
"Control Account Letter" means a letter agreement, in a form acceptable to
by the Collateral Agent, executed by Pledgor and the Collateral Agent and
acknowledged and agreed to by the relevant Approved Securities Intermediary;
provided that, for so long as the Intercreditor Agreement shall be in effect,
the form of any such letter agreement shall be deemed to be acceptable to the
Collateral Agent if such form is the form of the Control Account Letter to which
the Banks' Agent is party.
"Debt" means, collectively, (a) the Senior Notes Obligations (including,
without limitation, the Guaranteed Obligations), (b) each renewal, exchange,
extension, consolidation or refinancing of the foregoing, in whole or in part,
(c) all interest from time to time accruing on any of the foregoing, and all
structuring and financing and other fees pursuant to the Note
2
Purchase Agreement, (d) all other amounts payable by Oglebay or any Guarantor to
the Collateral Agent or any Noteholder pursuant to the Note Purchase Agreement
or any other Senior Notes Documents, and (e) all Related Expenses.
"Deposit Account" means and includes a "deposit account" as defined in the
UCC.
"Document" means and includes a "document" as defined in the UCC.
"Equipment" means and includes "equipment" as defined in the UCC.
"Event of Default" shall mean an event or condition that constitutes an
Event of Default, as defined in Section 15.1 of this Agreement.
"Financial Asset" means and includes a "financial asset" as defined in the
UCC.
"Fixture" means and includes a "fixture" as defined in the UCC.
"General Intangibles" means and includes "general intangibles" as defined
in the UCC.
"Goods" means and includes "goods" as defined in the UCC.
"Guaranteed Obligations" shall have the meaning ascribed to such term in
the Note Purchase Agreement.
"Hedge Agreement" means any derivative contract (as such term is defined in
the definition of Indebtedness in the Note Purchase Agreement).
"Instruments" means and includes "instruments" as defined by the UCC.
"Intellectual Property" means all Software and all inventions, all designs,
all patents, all applications therefor, all trademarks, service marks, and trade
names, all registrations and applications therefor, all copyrights, all
registrations therefor, and any licenses thereof, in each case, whether now
existing or hereafter arising or acquired.
"Intercreditor Agreement" means the Subordination and Intercreditor
Agreement, dated as of October ___, 2002, among Oglebay, KeyBank National
Association, as Agent, The 1818 Mezzanine Fund II, L.P., as collateral agent,
and the Noteholders, as amended, supplemented and otherwise modified from time
to time in accordance with its terms.
"Inventory" means and includes "inventory" as defined in the UCC.
"Investment Property" means and includes "investment property" as defined
in the UCC.
"Letter-of-credit right" means and includes a "letter-of-credit right" as
defined in the UCC.
"Lien" means any lien, security interest or other charge or encumbrance of
any kind, or any other type of preferential arrangement, including, without
limitation, the lien or retained
3
security title of a conditional vendor and any easement, right of way or other
encumbrance on title to real property.
"Mineral Interest" means (a) any right of Pledgor to extract minerals from
the ground, (b) any minerals which have been extracted from the ground, and (c)
any proceeds or payments owing to Pledgor by virtue of the lease or sublease of
mineral rights or the sale of minerals.
"Noteholders" shall have the meaning assigned to such term in the Note
Purchase Agreement
"Organizational Documents" shall have the meaning assigned to such term in
the Note Purchase Agreement.
"Person" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, corporation, limited liability
company, institution, trust, estate, government or other agency or political
subdivision thereof or any other entity.
"Proceeds" means (a) any proceeds, and (b) whatever is received upon the
sale, exchange, collection, or other disposition of Collateral or proceeds,
whether cash or non-cash. Cash proceeds includes, without limitation, moneys,
checks, and Deposit Accounts. Proceeds includes, without limitation, any Account
arising when the right to payment is earned under a contract right, any
insurance payable by reason of loss or damage to the Collateral, and any return
or unearned premium upon any cancellation of insurance. Except as expressly
authorized in this Agreement, the Note Purchase Agreement, the right of the
Collateral Agent and the Noteholders to Proceeds specifically set forth herein
or indicated in any financing statement shall never constitute an express or
implied authorization on the part of the Collateral Agent or any Noteholder to
Pledgor's sale, exchange, collection, or other disposition of any or all of the
Collateral.
"Products" means property directly or indirectly resulting from any
assembling or commingling of any Collateral.
"Related Expenses" means any and all reasonable costs, liabilities, and
expenses (including, without limitation, losses, damages, penalties, claims,
actions, reasonable attorneys' fees, legal expenses, judgments, suits, and
disbursements) incurred by, imposed upon, or asserted against, the Collateral
Agent or any Noteholder in any attempt by the Collateral Agent or any
Noteholder: (a) to obtain, preserve, perfect, or enforce any security interest
evidenced by this Agreement, or any other Security Document; (b) to obtain
payment, performance, and observance of any and all of the Debt; (c) to
maintain, insure, audit, collect, preserve, repossess, and dispose of any of the
Collateral or any other collateral securing the Debt, including, without
limitation, costs and expenses for appraisals, assessments, and audits of
Pledgor or any such collateral; or (d) incidental or related to (a) through (c)
above, including, without limitation, interest thereupon from the date incurred,
imposed, or asserted until paid in accordance with the terms of the Note
Purchase Agreement.
"Securities Account" means a "securities account" as defined in the UCC.
4
"Securities Intermediary" means a "securities intermediary" as defined in
the UCC.
"Senior Notes" shall have the meaning assigned to such term in the Note
Purchase Agreement.
"Senior Notes Obligations" shall have the meaning assigned to such term in
the Note Purchase Agreement.
"Supporting Obligation" means and includes a "supporting obligation" as
defined in the UCC.
"Software" means and includes "software" as defined in the UCC.
"UCC" means the Uniform Commercial Code as from time to time in effect in
the State of New York; provided, however, that, if, by reason of mandatory
provisions of law, any or all of the attachment, perfection or priority of the
Collateral Agent's security interest in any Collateral is governed by the
Uniform Commercial Code as in effect in a jurisdiction other than the State of
New York, the term "UCC" means the Uniform Commercial Code as from time to time
in effect in such other jurisdiction for purposes of the provisions hereof
relating to such attachment, perfection or priority and for the purposes of
definitions related to such provisions; provided, further, that, if the UCC is
amended after the date hereof, such amendment will not be given effect for the
purposes of this Agreement to the extent such amendment would limit or eliminate
any property or asset of a debtor from being Collateral.
3. SECURITY INTEREST.
(a) Grant of Security Interest. To secure the prompt payment and
performance of the Debt, and in addition to any other collateral or Lien
securing the Debt, Pledgor hereby grants to the Collateral Agent, for itself in
its capacity as the Collateral Agent hereunder and for the ratable benefit of
the Noteholders (including 1818 Mezzanine in its capacity as a Noteholder), a
continuing security interest in and to, and a pledge of all of, the tangible and
intangible personal property and assets of Pledgor, whether now owned or
existing or hereafter acquired or arising and wheresoever located, including,
without limitation: (i) all Accounts and Chattel Paper; (ii) all Inventory and
Goods; (iii) all Mineral Interests; (iv) all Equipment and Fixtures; (v) all
General Intangibles and Intellectual Property; (vi) all Investment Property and
all Letter-of-credit rights; (vii) all Deposit Accounts and any and all deposits
or other sums or property at any time credited by or due from any financial
institution to Pledgor, whether in the Cash Collateral Account, another
depository account, or other account; (viii) all Instruments, Documents,
documents of title, policies and certificates of insurance, securities, choses
in action, cash or other property, to the extent owned by Pledgor or in which
Pledgor has an interest; (ix) all Supporting Obligations; (x) all "commercial
tort claims" (as defined in the UCC) in respect of which notice has been
received as required by the UCC; (xi) all property of Pledgor which now or
hereafter is at any time in the possession or control of any of the Noteholders
or in transit by mail or carrier to or from any of the Noteholders or in the
possession of any Person acting on a Noteholder's behalf, without regard to
whether such Noteholder received the same in pledge, for safekeeping, as the
Collateral Agent for collection or transmission or otherwise or whether such
Noteholder had conditionally released the same, and any and all balances, sums,
proceeds and
5
credits of Pledgor with such Noteholder; (xii) all accessions to, all
substitutions and replacements for, and all Products and Proceeds of the herein
above-referenced property of Pledgor, including, but not limited to, proceeds of
any insurance, indemnity, warranty or guaranty payable to Pledgor; and (xiii)
all books, records, and other property (including, but not limited to, credit
files, programs, printouts, computer software, and disks, magnetic tape and
other magnetic media, and other materials and records) of Pledgor pertaining to
any such above-referenced property of Pledgor.
(b) Perfection.
(i) Authorization by Pledgor.
(A) Perfection by Filing. Pledgor (A) hereby authorizes the
Collateral Agent, at any time and from time to time, to file initial financing
statements, financing statements, continuation statements, and amendments
thereto, including, without limitation, any such financing statements that
describe the Collateral as "all assets" of Pledgor, or words of similar effect,
and (B) otherwise agrees to take such other action and execute such assignments
or other instruments or documents, in each case as the Collateral Agent may
request, to evidence, perfect, or record the Collateral Agent's security
interest in the Collateral or to enable the Collateral Agent to exercise and
enforce its rights and remedies under this Agreement with respect to any
Collateral. Pledgor agrees to furnish any such information to the Collateral
Agent promptly upon request. Any such initial financing statement, financing
statement, continuation statement, or amendment may be filed by the Collateral
Agent on behalf of Pledgor.
(B) Other Perfection Methods. Pledgor shall, at any time and from
time to time take such steps as the Collateral Agent may reasonably request in
order for the Collateral Agent (1) to obtain an acknowledgment, in form and
substance reasonably satisfactory to the Collateral Agent, of any bailee having
possession of any of the Collateral, stating that the bailee holds such
Collateral for the Collateral Agent as secured party, (2) to obtain "control"
(as such term is defined in the UCC with respect to each of the following types
of Collateral) of any Investment Property, Deposit Accounts, Letter-of-credit
rights, or "electronic chattel paper" (as such term is defined in the UCC), with
any agreements establishing such control to be in form and substance reasonably
satisfactory to the Collateral Agent, and (3) otherwise to insure the continued
perfection and priority of the Collateral Agent's security interest in any of
the Collateral and of the preservation of its rights therein. If Pledgor shall
at any time acquire a "commercial tort claim" (as such term is defined in the
UCC) in excess of $100,000, such Pledgor shall promptly notify the Collateral
Agent thereof in a writing, therein providing a reasonable description and
summary thereof, and upon delivery thereof to the Collateral Agent, such Pledgor
shall be deemed to grant thereby to the Collateral Agent, and such Pledgor
hereby grants to the Collateral Agent, for its benefit and the ratable benefit
of the Noteholders, a security interest and Lien in and to such commercial tort
claim and all proceeds thereof, all upon the terms of, and governed by, this
Agreement.
(C) Savings Clause. Nothing contained in this Section 3(b) shall
be construed to narrow the scope of the Collateral Agent's security interests or
the perfection or priority thereof or to impair or otherwise limit any of the
rights, powers, privileges, or remedies of the Agent under any of the Senior
Notes Documents.
6
(ii) Control Accounts. Pledgor shall not maintain any Securities
Account or Commodity Account that is not a Control Account.
(iii) Control of Investment Property. Pledgor shall not grant
"control" (as defined in the UCC with respect to any such Investment Property)
over any Investment Property to any Person other than the Collateral Agent and
as contemplated under the Intercreditor Agreement.
(c) Additional Collateral; Additional Pledgors. Pledgor hereby covenants
and agrees with the Collateral Agent, on its own behalf and on behalf of the
other Noteholders, that at or prior to the consummation of any transaction
involving Pledgor permitted under Section 7.5.1 of the Note Purchase Agreement,
Pledgor shall (a) deliver to the Collateral Agent with sufficient copies for all
the Noteholders supplements of Schedules A, B and C in substantially the form
attached hereto as Exhibit A (each a "Security Agreement Supplement"), which
shall be in form and substance reasonably acceptable to the Collateral Agent,
together with such additional information as the Collateral Agent may request in
connection therewith and with the security interest and Liens granted hereunder,
and (b) shall cause each new Subsidiary of Pledgor to execute and deliver a
security agreement in the form of this Agreement to the Collateral Agent and to
take all actions required to be taken by a Pledgor hereunder.
4. REPRESENTATIONS AND WARRANTIES. Pledgor hereby represents and warrants to
the Collateral Agent and each Noteholder as follows:
4.1 Pledgor is a ((Entity_Type)) duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization, and is duly
qualified to do business in each state in which a failure to so qualify would
have a material adverse effect on Pledgor.
4.2 Pledgor has, and with respect to Collateral acquired after the date
hereof will have, with full power, authority and legal right to pledge the
Collateral, to execute and deliver this Agreement, and to perform and observe
the provisions hereof. The ((Officials)) acting on Pledgor's behalf have been
duly authorized to execute and deliver this Agreement and to authorize the
filing of appropriate financing statements in respect hereof. This Agreement is
valid and binding upon Pledgor in accordance with the terms hereof.
4.3 Neither the execution and delivery of this Agreement, nor the
performance and observance of the provisions hereof, by Pledgor will conflict
with, or constitute a violation or default under, any provision of any
applicable law or of any contract, including, without limitation, Pledgor's
Organizational Documents or of any other writing binding upon Pledgor in any
manner.
4.4 Pledgor's principal place of business and the location where Pledgor
keeps records in respect of the Accounts are set forth on Schedule A hereto and
Pledgor has places of business or maintains Collateral at the locations set
forth on Schedule B hereto. Pledgor does not operate under, or in the preceding
five years has not operated under, any trade names, assumed names, fictitious
names or other names except its legal name and those shown on Schedule C hereto.
Pledgor has no Deposit Account, Securities Account, Commodities Account or
similar
7
account, or "commercial tort claims" (as defined in the UCC) in excess of
$100,000, except, in each case, as listed on Schedule D hereto.
4.5 At the execution and delivery hereof except as permitted pursuant to
the Intercreditor Agreement and the Note Purchase Agreement, (a) there is no
financing statement outstanding covering the Collateral or any part thereof
other than a financing statement in favor of the Collateral Agent, for the
benefit of the Noteholders; (b) none of the Collateral is subject to any
security interest or lien of any kind other than the security interest herein
granted to the Collateral Agent, for the benefit of the Noteholders; (c) except
to the extent contested by Pledgor in good faith and by appropriate to
proceedings and in respect of which Pledgor has set aside on its books adequate
reserves, the Internal Revenue Service has not alleged the nonpayment or
underpayment of any Tax by Pledgor or threatened to make any assessment in
respect thereof; (d) upon execution of this Agreement and the filing of the
financing statements authorized in connection herewith, the Collateral Agent
will have, for its benefit and the benefit of the Noteholders, a valid and
enforceable security interest in the Collateral, and no Lien is senior to such
security interest other than as provided in the Note Purchase Agreement and the
Intercreditor Agreement; and (e) Pledgor has not entered into any contract or
agreement that would prohibit the Collateral Agent and the Noteholders from
acquiring a security interest, mortgage or other lien on, or a collateral
assignment of, any of the property or assets of Pledgor.
4.6 ((Restricted_Guarantors))
4.7 At the execution and delivery hereof, an Event of Default will not
exist.
5. INSURANCE. Pledgor shall at all times maintain insurance upon its
Inventory, Equipment and other personal and real property in accordance with
Section 6.7 of the Note Purchase Agreement.
6. TAXES AND OTHER PLEDGOR OBLIGATIONS. Pledgor shall pay, in each case in
accordance with the terms of the Note Purchase Agreement, in full (a) all taxes,
assessments and governmental charges and levies; (b) all of its wage obligations
to its employees; (c) all obligations under the Employee Retirement Income
Security Act of 1974, as amended; and (d) all of Pledgor's other obligations
calling for the payment of money.
7. CORPORATE NAMES AND LOCATION OF COLLATERAL. Pledgor shall not change its
name or its state of incorporation, unless, in each case, Pledgor shall provide
the Collateral Agent with at least 30 days' prior written notice thereof.
Pledgor shall not use trade names, assumed names or fictitious names without
giving the Collateral Agent at least 30 days' prior written notice thereof.
Pledgor shall also provide the Collateral Agent with at least 30 days' prior
written notification of: (a) any change in any location where any of Pledgor's
Inventory or Equipment is maintained, and any new locations where any of
Pledgor's Inventory or Equipment is to be maintained; (b) any change in the
location of the office where Pledgor's records pertaining to its Accounts are
kept; (c) the location of any new places of business and the changing or closing
of any of its existing places of business; and (d) any change in Pledgor's
chief executive office. In the event of any of the foregoing, Pledgor shall
promptly authorize and deliver to the Collateral Agent (and Pledgor agrees that
the Collateral Agent may authorize and deliver the same as Pledgor's irrevocable
attorney-in-fact) new financing statements describing
8
the Collateral and otherwise in form and substance sufficient for recordation
wherever necessary or appropriate, as determined in the Collateral Agent's sole
discretion, to perfect or continue perfected the security interest of the
Collateral Agent, for the benefit of the Noteholders, in the Collateral, clearly
describing such new places of business or names and providing such other
information in connection therewith as the Collateral Agent may reasonably
request, and Pledgor shall pay all filing and recording fees and taxes in
connection with the filing or recordation of such financing statements and shall
immediately reimburse the Collateral Agent therefor if the Collateral Agent pays
the same. Such amounts not so paid or reimbursed shall be Related Expenses
hereunder.
8. NOTICE. Pledgor shall give the Collateral Agent prompt written notice if
any Event of Default shall occur hereunder or if the Internal Revenue Service
shall allege the nonpayment or underpayment of any tax by Pledgor or threaten to
make any assessment in respect thereof to the extent that such nonpayment,
underpayment or assessment would have a material adverse effect on Pledgor or on
the Collateral Agent's rights hereunder.
9. FINANCIAL RECORDS AND INSPECTION. Pledgor (a) shall maintain at all times
true and complete financial records and books of accounts in accordance with
generally accepted accounting principles consistently applied, and, (b) shall
permit the Collateral Agent and its employees and agents the right to visit and
inspect Pledgor's properties and records and to otherwise exercise all rights
and privileges of the Noteholders set forth and as provided in Section 6.9 of
the Note Purchase Agreement.
10. TRANSFERS, LIENS AND MODIFICATIONS REGARDING COLLATERAL. Except as
specifically permitted pursuant to the Note Purchase Agreement, including,
without limitation, as permitted under Section 7.5.2 thereof, Pledgor shall not,
without the Collateral Agent's prior written consent: (a) sell, assign,
transfer, or otherwise dispose of, or grant any option with respect to, or
create, incur, or permit to exist or grant any pledge, lien, mortgage,
hypothecation, security interest, charge, option or any other encumbrance with
respect to any of the Collateral, or any interest therein, or any proceeds
thereof, except (i) the Lien and security interest granted by Pledgor under this
Agreement and or any other Security Documents to which Pledgor is party and (ii)
as expressly permitted in the Note Purchase Agreement and the Intercreditor
Agreement; or (b) enter into or assent to any amendment, compromise, extension,
release or other modification of any kind of, or substitution for, any of its
Accounts.
11. COLLATERAL. Pledgor shall:
(a) at all reasonable times allow the Collateral Agent by or through any
of its officers, agents, employees, attorneys, or accountants to (i) examine,
inspect, and make extracts from Pledgor's books and other records, including,
without limitation, the tax returns of Pledgor, (ii) after the occurrence of an
Event of Default, arrange for verification of Pledgor's Accounts, under
reasonable procedures, directly with Account Debtors or by other methods, and
(iii) examine and inspect Pledgor's Inventory and Equipment, wherever located,
all in accordance with the provisions of Section 6.9 of the Note Purchase
Agreement;
(b) promptly furnish to the Collateral Agent (in sufficient copies for all
of the Noteholders) upon the Collateral Agent's reasonable request (i)
additional statements and
9
information with respect to the Collateral, and all writings and information
relating to or evidencing any of Pledgor's Accounts (including, without
limitation, computer printouts or typewritten reports listing the mailing
addresses of all present Account Debtors), and (ii) any other writings and
information as the Collateral Agent may request;
(c) immediately notify the Collateral Agent and the Noteholders in writing
of any information that Pledgor has or may receive with respect to the
Collateral which information might in any manner materially and adversely affect
the value thereof or the rights of the Collateral Agent or any Noteholder with
respect thereto;
(d) maintain the Equipment in good operating condition and repair,
ordinary wear and tear excepted, making all necessary replacements thereof so
that the value and operating efficiency thereof shall at all times be maintained
and preserved, and promptly inform the Collateral Agent of any additions to or
deletions from the Equipment; and
(e) upon request of the Collateral Agent, promptly take such action and
promptly make, execute, authorize and deliver all such additional and further
items, deeds, assurances, instruments and any other writings as the Collateral
Agent or the Noteholders may from time to time deem necessary or appropriate,
including, without limitation, financing statements and chattel paper, to carry
into effect the intention of this Agreement or so as to completely vest in and
ensure to the Collateral Agent and the Noteholders their rights hereunder and in
or to the Collateral.
If certificates of title or applications for title are issued or outstanding
with respect to any of Pledgor's Inventory or Equipment, Pledgor shall, upon
request of the Collateral Agent, (i) execute and deliver to the Collateral Agent
a short form security agreement, in form and substance satisfactory to the
Collateral Agent, and (ii) deliver such certificate or application to the
Collateral Agent and cause the interests of the Collateral Agent and the
Noteholders to be properly noted thereon. Pledgor hereby authorizes the
Collateral Agent or the Collateral Agent's designated agent (but without
obligation by the Collateral Agent to do so) to incur Related Expenses (whether
prior to, upon, or subsequent to any Event of Default hereunder), and Pledgor
shall promptly repay, reimburse, and indemnify the Collateral Agent for any and
all Related Expenses. If Pledgor fails to keep and maintain the Equipment in
good operating condition, the Collateral Agent may (but shall not be required
to) so maintain or repair all or any part of the Equipment and the cost thereof
shall be a Related Expense. Pledgor shall pay all Related Expenses to the
Collateral Agent upon demand therefor.
12. COLLECTIONS AND RECEIPT OF PROCEEDS BY PLEDGOR. Prior to exercise by the
Collateral Agent, on its own behalf and on behalf of the Noteholders, of their
rights under this Agreement, both (a) the lawful collection and enforcement of
all of Pledgor's Accounts, and (b) the lawful receipt and retention by Pledgor
of all Proceeds of all of Pledgor's Accounts and Inventory shall be as the agent
of the Collateral Agent and the Noteholders. Upon written notice to Pledgor from
the Collateral Agent upon the occurrence or during the continuance of a Default,
a Cash Collateral Account shall be established by Pledgor at the direction of
the Collateral Agent and all such lawful collections of Pledgor's Accounts and
such Proceeds of Pledgor's Accounts and Inventory shall be remitted daily by
Pledgor to the Collateral Agent in the form in which they are received by
Pledgor, either by mailing or by delivering such collections and Proceeds to
10
the Collateral Agent, appropriately endorsed for deposit in the Cash Collateral
Account. In the event that such notice is given to Pledgor from the Collateral
Agent, Pledgor shall not commingle such collections or Proceeds with any of
Pledgor's other funds or property, but shall hold such collections and Proceeds
separate and apart therefrom upon an express trust for the Collateral Agent. In
such case, the Collateral Agent may, in its sole discretion, at any time and
from time to time, apply all or any portion of the account balance in the Cash
Collateral Account as a credit against the Debt. If any remittance shall be
dishonored, or if, upon final payment, any claim with respect thereto shall be
made against the Collateral Agent on its warranties of collection, the
Collateral Agent may charge the amount of such item against the Cash Collateral
Account or any other Deposit Account maintained by Pledgor with the Collateral
Agent, and, in any event, retain the same and Pledgor's interest therein as
additional security for the Debt. The Collateral Agent may, in its sole
discretion, at any time and from time to time, release funds from the Cash
Collateral Account to Pledgor for use in Pledgor's business. The balance in the
Cash Collateral Account may be withdrawn by Pledgor upon termination of this
Agreement and payment in full of all of the Debt. At the Collateral Agent's
request after the occurrence of an Event of Default, Pledgor shall cause all
remittances representing collections and Proceeds of Collateral to be mailed to
a lock box in Cleveland, Ohio, to which the Collateral Agent shall have access
for the processing of such items in accordance with the provisions, terms, and
conditions of lock box agreement customary to the Banks' Agent or such other
financial institution as may then be the institution maintaining such lock box
account.
13. COLLECTIONS AND RECEIPT OF PROCEEDS BY COLLATERAL AGENT.
(a) Upon the occurrence and during the continuance of a Default, the
Collateral Agent shall at all times have the right, but not the duty, to collect
and enforce any or all of the Accounts as the Collateral Agent may deem
advisable and, if the Collateral Agent shall at any time or times elect to do so
in whole or in part, the Collateral Agent shall not be liable to Pledgor except
for willful misconduct, if any.
(b) Pledgor hereby constitutes and appoints the Collateral Agent, or the
Collateral Agent's designated agent, as Pledgor's attorney-in-fact to exercise,
after the occurrence of an Event of Default, all or any of the following powers
which, being coupled with an interest, shall be irrevocable until the complete
and full payment of all of the Debt:
(i) to receive, retain, acquire, take, endorse, assign, deliver,
accept, and deposit, in the Collateral Agent's name or Pledgor's name, any and
all of Pledgor's cash, instruments, chattel paper, documents, Proceeds of
Accounts, Proceeds of Inventory, collection of Accounts, and any other writings
relating to any of the Collateral. Pledgor hereby waives presentment, demand,
notice of dishonor, protest, notice of protest, and any and all other similar
notices with respect thereto, regardless of the form of any endorsement thereof.
Neither the Collateral Agent nor the Noteholders shall be bound or obligated to
take any action to preserve any rights therein against prior parties thereto;
(ii) to transmit to Account Debtors, on any or all of Pledgor's
Accounts, notice of assignment to the Collateral Agent, for the benefit of the
Noteholders, thereof and the security interest of the Collateral Agent, for the
benefit of the Noteholders, and to request from
11
such Account Debtors at any time, in the Collateral Agent's name or in Pledgor's
name, information concerning Pledgor's Accounts and the amounts owing thereon;
(iii) to transmit to purchasers of any or all of Pledgor's Inventory,
notice of the security interest of the Collateral Agent for the benefit of the
Noteholders, and to request from such purchasers at any time, in the Collateral
Agent's name or in Pledgor's name, information concerning Pledgor's Inventory
and the amounts owing thereon by such purchasers;
(iv) to notify and require Account Debtors on Pledgor's Accounts and
purchasers of Pledgor's Inventory to make payment of their indebtedness directly
to the Collateral Agent, for the benefit of the Noteholders;
(v) to enter into or assent to such amendment, compromise,
extension, release or other modification of any kind of, or substitution for,
the Accounts or any thereof as the Collateral Agent, in its reasonable
discretion, may deem to be advisable;
(vi) to enforce the Accounts or any thereof, or any other Collateral,
by suit or otherwise, to maintain any such suit or other proceeding in the
Collateral Agent's own name or in Pledgor's name, and to withdraw any such suit
or other proceeding. Pledgor agrees to lend every assistance requested by the
Collateral Agent in respect of the foregoing, all at no cost or expense to the
Collateral Agent or the Noteholders and including, without limitation, the
furnishing of such witnesses and of such records and other writings as the
Collateral Agent may require in connection with making legal proof of any
Account. Without limiting any other provision hereof, Pledgor agrees to
reimburse the Collateral Agent and the Noteholders in full for all court costs
and reasonable attorneys' fees and every other cost, expense or liability, if
any, incurred or paid by the Collateral Agent or the Noteholders in connection
with the foregoing, which obligation of Pledgor shall constitute Debt, shall be
secured by the Collateral and shall bear interest, until paid, at the default
rate of interest set forth in Section 2.6 of the Note Purchase Agreement; and
(vii) to accept all collections in any form relating to the
Collateral, including remittances that may reflect deductions, and to deposit
the same, into Pledgor's Cash Collateral Account or, at the option of the
Collateral Agent (subject to the terms of the Intercreditor Agreement) to apply
them as a payment on the Debt.
14. USE OF INVENTORY AND EQUIPMENT. Until an Event of Default shall occur,
Pledgor may (a) retain possession of and use its Inventory and Equipment in any
lawful manner not inconsistent with this Agreement or with the terms,
conditions, or provisions of any policy of insurance thereon; (b) sell or lease
its Inventory in the ordinary course of business; provided, however, that a sale
or lease in the ordinary course of business does not include a transfer in
partial or total satisfaction of any indebtedness, except for transfers in
satisfaction of partial or total purchase money prepayments by a buyer in the
ordinary course of Pledgor's business; and (c) use and consume raw materials or
supplies, the use and consumption of which are necessary in order to carry on
Pledgor's business.
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15. DEFAULT AND REMEDIES.
15.1 Any of the following shall constitute an Event of Default under this
Agreement: (a) an Event of Default, as defined in the Note Purchase Agreement,
shall occur under the Note Purchase Agreement; (b) any representation, warranty
or statement made by Pledgor in or pursuant to this Agreement or in any other
writing received by the Collateral Agent or the Noteholders in connection with
the Debt shall be false or erroneous in any material respect; or (c) Pledgor
shall fail or omit to perform or observe any agreement made by Pledgor in or
pursuant to this Agreement or in any other writing received by the Collateral
Agent or any Noteholder pursuant hereto.
15.2 Upon the occurrence of an Event of Default hereunder, and at all times
thereafter, the Collateral Agent, on its own behalf and on behalf of the
Noteholders, shall have the rights and remedies of a secured party under the
UCC, in addition to the rights and remedies provided elsewhere within this
Agreement or in any other writing executed by Pledgor. The Collateral Agent may
require Pledgor to assemble the Collateral, which Pledgor agrees to do, and make
it available to the Collateral Agent at a reasonably convenient place to be
designated by the Collateral Agent. The Collateral Agent may, with or without
notice to or demand upon Pledgor and with or without the aid of legal process,
make use of such force as may be necessary to enter any premises where the
Collateral, or any thereof, may be found and to take possession thereof
(including anything found in or on the Collateral that is not specifically
described in this Agreement, each of which findings shall be considered to be an
accession to and a part of the Collateral) and for that purpose may pursue the
Collateral wherever the same may be found, without liability for trespass or
damage caused thereby to Pledgor. After any delivery or taking of possession of
the Collateral, or any thereof, pursuant to this Agreement, then, with or
without resort to Pledgor or any other Person or property, all of which Pledgor
hereby waives, and upon such terms and in such manner as the Collateral Agent
may deem advisable, the Collateral Agent, in its discretion, may sell, assign,
transfer, deliver or otherwise liquidate and dispose of any of the Collateral at
any time or, from time to time. Any sale or disposition, subject to the
provisions of applicable law, may be made at private or public proceedings. No
prior notice need be given to Pledgor or to any other Person in the case of any
sale or disposition of Collateral that the Collateral Agent determines to be
perishable or to be declining speedily in value or that is customarily sold in
any recognized market, but, in any other case, the Collateral Agent shall give
Pledgor no fewer than ten (10) days' prior notice of either the time and place
of any public sale of the Collateral or of the time after which any private sale
or other intended disposition thereof is to be made. Pledgor waives
advertisement of any such sale and (except to the extent specifically required
by the preceding sentence) waives notice of any kind in respect of any such
sale. At any such public sale, the Collateral Agent or any Noteholder may
purchase the Collateral, or any part thereof, free from any right of redemption,
all of which rights Pledgor hereby waives and releases. After deducting all
Related Expenses, and after paying all claims, if any, secured by liens having
precedence over the Liens granted under this Agreement, the Collateral Agent
shall apply such net proceeds of each such sale to or toward the payment of the
Debt, whether or not then due, as provided in the Note Purchase Agreement. Any
excess, to the extent permitted by law, shall be paid to Pledgor, and the
obligors on the Debt shall remain liable for any deficiency. In addition, the
Collateral Agent shall at all times have the right to obtain new appraisals of
Pledgor or the Collateral, the cost of which shall be paid by Pledgor.
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16. MAXIMUM LIABILITY OF PLEDGOR.
16.1 Limitation of Liability. If, in any action to enforce this Agreement
or any proceeding to allow or adjudicate a claim under this Agreement, a court
of competent jurisdiction determines that enforcement of this Agreement against
Pledgor for the full amount of the Debt is not lawful under, or would be subject
to avoidance under, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Bankruptcy Code or any
applicable provision of comparable state law, the liability of Pledgor under
this Agreement shall be limited to the maximum amount lawful and not subject to
avoidance under such law.
16.2 Debt May Exceed Pledgor's Maximum Liability. Pledgor agrees that the
Debt may at any time and from time to time exceed the maximum amount of the Debt
secured by this Agreement without impairing this Agreement or affecting the
rights and remedies of the Collateral Agent or the Noteholders hereunder.
16.3 Pledgor's Liability Not Reduced by Payments by Others. No payment or
payments made by Oglebay, Pledgor or any other Person or received or collected
by the Collateral Agent or the Noteholders from Oglebay, Pledgor or any other
Person by virtue of any action or proceeding or any set-off or appropriation or
application at any time or from time to time in reduction of or in payment of
the Debt shall be deemed to modify, reduce, release or otherwise affect the
amount of the Debt secured by this Agreement and this Agreement shall,
notwithstanding any such payment or payments (other than payments made to the
Collateral Agent or the Noteholders by Pledgor or payments received or collected
by the Collateral Agent or the Noteholders from Pledgor), secure the Debt up to
the maximum amount of the Debt secured by this Agreement as set forth above
until the Debt is indefeasibly paid in full in cash.
17. LIMITATION ON DUTY OF THE COLLATERAL AGENT WITH RESPECT TO THE COLLATERAL.
The powers conferred on the Collateral Agent hereunder are solely to protect its
interest in the Collateral and shall not impose any duty on it to exercise any
such powers. Except for the safe custody of any Collateral in its possession and
the accounting for monies actually received by it hereunder, the Collateral
Agent shall have no duty with respect to any Collateral. The Collateral Agent
shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if the Collateral is accorded
treatment that is substantially equivalent to that which the Collateral Agent
accords its own property, it being expressly agreed that the Collateral Agent
shall have no responsibility for (a) ascertaining or taking action with respect
to calls, conversions, exchanges, maturities, tenders or other matters relative
to any Pledged Collateral, whether or not the Collateral Agent has or is deemed
to have knowledge of such matters, or (b) taking any necessary steps to preserve
rights against any parties with respect to any Pledged Collateral, but the
Collateral Agent may do so and all expenses incurred in connection therewith
shall be payable by and for the sole account of Pledgor.
18. INTERPRETATION. Each right, power or privilege specified or referred to in
this Agreement is cumulative and in addition to and not in limitation of any
other rights, powers and privileges that the Collateral Agent and the
Noteholders (or any of them) may otherwise have or acquire by operation of law,
by contract or otherwise. No course of dealing by the Collateral Agent or the
Noteholders in respect of, nor any omission or delay by the Collateral Agent or
the
14
Noteholders in the exercise of, any right, power or privilege shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or privilege preclude any other or further exercise thereof or of any
other right, power or privilege, as the Collateral Agent or the Noteholders may
exercise each such right, power or privilege either independently or
concurrently with others and as often and in such order as the Collateral Agent
and the Noteholders may deem expedient. No waiver, consent or other agreement
shall be deemed to have been made by the Collateral Agent (on its own behalf or
on behalf of the Noteholders) or be binding upon the Collateral Agent (or on the
Noteholders) in any case unless specifically granted by the Collateral Agent in
writing, and each such writing shall be strictly construed. If, at any time, one
or more provisions of this Agreement is or becomes invalid, illegal or
unenforceable in whole or in part, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Pledgor hereby authorizes the Collateral Agent to file financing statements with
respect to the Collateral. A carbon, photographic, or other reproduction of this
Agreement may be used as a financing statement. The captions to sections herein
are inserted for convenience only and shall be ignored in interpreting the
provisions of this Agreement.
19. NOTICE. All notices, requests, demands and other communications provided
for hereunder shall be in writing and, if to Pledgor, mailed or delivered to it,
addressed to it at the address specified on the signature page of this
Agreement, if to the Collateral Agent, mailed or delivered to it, addressed to
the address of the Collateral Agent specified on the signature page to this
Agreement. All notices, statements, requests, demands and other communications
provided for hereunder shall be given by overnight delivery or first class mail
with postage prepaid by registered or certified mail, addressed as aforesaid, or
sent by facsimile with telephonic confirmation of receipt, except that all
notices hereunder shall not be effective until received.
20. GOVERNING LAW; SUBMISSION TO JURISDICTION. The provisions of this Agreement
and the respective rights and duties of Pledgor, the Collateral Agent and the
Noteholders hereunder shall be governed by and construed in accordance with New
York law, without regard to principles of conflict of laws. Pledgor hereby
irrevocably submits to the non-exclusive jurisdiction of any New York state or
federal court sitting in New York, New York, over any action or proceeding
arising out of or relating to this Agreement or any Senior Notes Document, and
Pledgor hereby irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined in such New York state or federal court.
Pledgor, on behalf of itself and its Subsidiaries, hereby irrevocably waives, to
the fullest extent permitted by law, any objection it may now or hereafter have
to the laying of venue in any action or proceeding in any such court as well as
any right it may now or hereafter have to remove such action or proceeding, once
commenced, to another court on the grounds of FORUM NON CONVENIENS or otherwise.
Pledgor agrees that a final, nonappealable judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law.
21. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon Pledgor and
Pledgor's successors and assigns and shall inure to the benefit of, be
enforceable and exercisable by, and be binding upon the Collateral Agent, on its
own behalf and on behalf of the Noteholders and its successors and assigns.
Without limiting the generality of the foregoing, any Noteholder may assign or
otherwise transfer any Senior Note held by it to any other Person as permitted
in
15
the Note Purchase Agreement, and such other Person shall thereupon become vested
with all the benefits in respect thereof granted to the Collateral Agent herein
or otherwise.
22. TERMINATION. At such time as the Debt has been irrevocably paid in full,
and the Note Purchase Agreement terminated and not replaced by any other similar
agreement with the Noteholders, this Agreement shall terminate and, upon written
request of Pledgor, the Collateral Agent shall promptly execute and deliver to
Pledgor appropriate termination statements. This Agreement and the security
interest herein created in the Collateral shall terminate only if (a) Pledgor
delivers a written request for termination to the Collateral Agent and the
Noteholders, (b) the Debt shall have been paid in full at the time such written
termination is received by the Collateral Agent and the Noteholders, and (c) the
Collateral Agent executes an appropriate termination statement; provided that
the Collateral Agent shall release its Liens in all or a part of the Collateral
that is transferred (as defined in the Note Purchase Agreement) in accordance
with the terms and conditions of the Note Purchase Agreement and the Collateral
Agent shall have received at least 10 Business days prior to the proposed
effective date of any such release (in sufficient copies for all the
Noteholders) documentation and other information satisfactory to the Collateral
Agent that such transfer is executed in compliance with the terms and conditions
of the Note Purchase Agreement.
23. ENTIRE AGREEMENT. This Agreement, together with the other Security
Documents to which Pledgor is party, integrates all of the terms and conditions
as to Liens in and to the Collateral granted by Pledgor and supersedes all oral
representations and negotiations and prior writings with respect to the subject
matter hereof.
24. DESIGNATED SENIOR INDEBTEDNESS. THE INDEBTEDNESS EVIDENCED BY THIS
AGREEMENT, THE NOTE PURCHASE AGREEMENT, EACH OF THE SENIOR NOTES, AND EACH OTHER
SENIOR NOTES DOCUMENT IS AND SHALL AT ALL TIMES CONSTITUTE "DESIGNATED SENIOR
INDEBTEDNESS" UNDER THE PROVISIONS OF THAT CERTAIN INDENTURE, DATED AS OF
FEBRUARY 1, 1999, AS AMENDED, AMONG OGLEBAY NORTON COMPANY, THE GUARANTORS NAMED
THEREIN AND NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, AS TRUSTEE.
25. JURY TRIAL WAIVER. PLEDGOR AND THE COLLATERAL AGENT WAIVE ANY RIGHT TO HAVE
A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT,
OR OTHERWISE, AMONG PLEDGOR, THE COLLATERAL AGENT AND THE NOTEHOLDERS, OR ANY
THEREOF, ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT OR ANY
NOTE OR OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH OR THE TRANSACTIONS RELATED THERETO.
26. WAIVER; AMENDMENT.
26.1 None of the terms and conditions of this Agreement may be changed,
waived, modified or varied in any manner whatsoever unless in writing duly
signed by Pledgor and the
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Collateral Agent (and such other percentage of the Noteholders as may be
required by the Note Purchase Agreement). Notwithstanding the foregoing, this
Agreement shall be amended (solely to the extent of replacing 1818 Mezzanine as
the Collateral Agent) by a written notice delivered to Pledgor by the Collateral
Agent and acknowledged in writing by a successor collateral agent, provided that
such acknowledgement shall have the effect of binding such successor collateral
agent to the terms of this Agreement and such successor Collateral Agent shall
be, in its individual capacity, a Noteholder.
26.2 Upon the execution and delivery by Pledgor of a Security Agreement
Supplement in substantially the form of Exhibit A hereto, Schedules A, B and C
attached to such Security Agreement Supplement shall be incorporated into and
become a part of and supplement Schedules A, B, C and D, respectively, hereto,
and the Collateral Agent may attach such supplemental schedules to such
Schedules, and each reference to such Schedules shall mean and be a reference to
such Schedules as supplemented pursuant to each Security Agreement Supplement.
27. OBLIGATIONS ABSOLUTE. The obligations of Pledgor hereunder shall remain in
full force and effect without regard to, and shall not be impaired by, (a) any
bankruptcy, insolvency, reorganization, arrangement, readjustment, composition,
liquidation or the like of Oglebay, Pledgor or any Guarantor; (b) any exercise
or non-exercise, or any waiver of, any right, remedy, power or privilege under
or in respect of this Agreement or any other Senior Notes Document; or (c) any
amendment to or modification of any Senior Notes Document or any security for
any of the Debt whether or not Pledgor shall have notice or knowledge of any of
the foregoing.
28. LIEN Subordination. The security interest and Liens granted hereunder, and
the rights and remedies of the Collateral Agent and the Noteholders under this
Agreement, are subject to the terms of the Intercreditor Agreement. Without
limiting, and in furtherance of, the foregoing, the Collateral Agent shall not
exercise its rights under Sections 13(a) and 15.2 of this Agreement for so long
as the Intercreditor Agreement is in effect, except as expressly permitted
hereby, thereby or otherwise expressly permitted in writing by the Banks' Agent.
In the event of any conflict between the terms and provisions of this Agreement
and the Intercreditor Agreement, the terms and provisions of the Intercreditor
Agreement shall govern and control.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, each of the Pledgor and the Collateral Agent has caused
this Agreement to be duly executed and delivered by its officer thereunto duly
authorized as of the date first above written.
((Pledgor)), as Pledgor
_______________________________
By: ▇▇▇▇▇▇▇▇ ▇. Walk
Title: Vice President and Secretary
Address:
Prior to January 1, 2003:
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▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
From January 1, 2003:
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Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
THE 1818 MEZZANINE FUND II,
L.P. as Collateral Agent
By: ▇▇▇▇▇ Brothers ▇▇▇▇▇▇▇▇ &
Co., General Partner
By:______________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Partner
Address:
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▇▇▇ ▇▇▇▇, ▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
EXHIBIT C
Form of Pledge Agreement
PLEDGE AGREEMENT dated as of October __, 2002 by ((Company)) ("Pledgor") and THE
1818 MEZZANINE FUND II, L.P. ("1818 Mezzanine"), as agent (the "Collateral
Agent") for itself and the other Noteholders (as hereinafter defined).
RECITALS:
Pledgor is a party to that certain Senior Secured Note Purchase
Agreement dated as of October __, 2002 (as amended and in effect from time to
time, the "Note Purchase Agreement"), among Oglebay Norton Company, an Ohio
corporation ("Oglebay"), the Guarantors listed on the signature pages thereto,
1818 Mezzanine and the other Purchasers party thereto. Pursuant to the Note
Purchase Agreement, the Purchasers have agreed to purchase the Senior Notes (as
defined in the Note Purchase Agreement). It is a condition precedent to the
Purchasers purchasing the Senior Notes that Pledgor execute and deliver to the
Collateral Agent this Pledge Agreement for the benefit of the Noteholders and
the Collateral Agent.
Terms defined in the Note Purchase Agreement and not otherwise defined
in this Agreement are used in this Agreement as defined in the Note Purchase
Agreement. Terms that are defined in Articles 8 and 9 of the UCC (as defined
below) and not otherwise defined herein are used herein as therein defined.
NOW,THEREFORE, in consideration of the premises contained herein and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. Definitions. As used herein, the following terms shall have the
following meanings:
"Banks' Agent" shall mean KeyBank National Association as Agent for the
Banks under the Intercreditor Agreement.
"Collateral" shall mean, collectively, the Pledged Securities and each
addition, if any, thereto and each substitution, if any, therefor, in whole or
in part, the certificates representing the Pledged Securities, and all dividends
(whether made in cash or in kind), cash, instruments, chattel paper and other
rights, property or proceeds and products from time to time received, receivable
or otherwise distributed in respect of or in exchange for any and all of the
Pledged Securities, and all proceeds of any of the foregoing, including, without
limitation, cash.
"Debt" shall mean, collectively, (a) the Senior Notes Obligations
(including, without limitation, the Guaranteed Obligations); (b) each renewal,
exchange, extension, consolidation or refinancing of the foregoing, in whole or
in part; (c) all interest from time to time accruing on any of the foregoing,
and all structuring and financing and other fees pursuant to the Note Purchase
Agreement; (d) all other amounts payable by Oglebay or any Guarantor to the
Collateral Agent or any Noteholder pursuant to the Note Purchase Agreement or
any other Senior Notes Documents; and (f) all Related Expenses (as defined in
the Security Agreement).
"Event of Default" shall mean an event or condition that constitutes an
event of default pursuant to Section 9 hereof.
"Guaranteed Obligations" shall have the meaning ascribed to such term
in the Note Purchase Agreement.
"Intercreditor Agreement" means the Intercreditor Agreement, dated as
of October ___, 2002, among Oglebay, KeyBank National Association, as Agent, and
the Noteholders, as amended, supplemented and otherwise modified from time to
time in accordance with its terms.
"Person" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, corporation, limited
liability company, institution, trust, estate, government or other agency or
political subdivision thereof or any other entity.
"Pledged Securities" shall mean all of the shares of capital stock (or
other equity interests) issued by of each Subsidiary of Pledgor owned by
Pledgor, listed, and represented by the stock certificate numbers set forth on,
Exhibit A hereto (the "Initial Pledged Securities"), and all additional shares
of capital stock (or other equity interests) of each Subsidiary of Pledgor owned
by Pledgor from time to time or acquired by Pledgor in any manner.
"Security Agreement" shall mean the security agreement dated as of
October __, 2002, executed by Pledgor in favor of the Collateral Agent, as
collateral agent thereunder on its own behalf and on behalf of the other
Noteholders, as amended, supplemented and otherwise modified from time to time
in accordance with its terms.
"UCC" means the Uniform Commercial Code as from time to time in effect
in the State of New York; provided, however, that, if, by reason of mandatory
provisions of law, any or all of the attachment, perfection or priority of the
Collateral Agent's security interest in any Collateral is governed by the
Uniform Commercial Code as in effect in a jurisdiction other than the State of
New York, the term "UCC" means the Uniform Commercial Code as from time to time
in effect in such other jurisdiction for purposes of the provisions hereof
relating to such attachment, perfection or priority and for the purposes of
definitions related to such provisions; provided, further, that, if the UCC is
amended after the date hereof, such amendment will not be given effect for the
purposes of this Agreement to the extent such amendment would limit or eliminate
any property or asset of a debtor from being Collateral.
Terms used in this Agreement without definition have the meanings ascribed to
such terms in the Note Purchase Agreement. Terms that are defined in Articles 8
and 9 of the UCC and not otherwise defined herein are used herein as therein
defined.
2. Security Interest. (a) Pledgor hereby pledges and grants to the
Collateral Agent, for its benefit and the ratable benefit of the Noteholders
(including 1818 Mezzanine in its capacity as a Noteholder), a security interest
in the Collateral as security for the Debt. (b) Pledgor authorizes the
Collateral Agent, upon the occurrence or during the continuance of an Event of
Default, to transfer to or to register in the name of the Collateral Agent or
the Collateral Agent's nominee
2
any or all of the Collateral, but the Collateral Agent shall be under no duty to
do so. In addition, the Collateral Agent shall have the right upon written
notice to Pledgor, to exchange certificates or instruments representing or
evidencing Collateral for certificates or instruments of smaller or larger
denominations. Notwithstanding any provision or inference herein or elsewhere to
the contrary, the Collateral Agent shall have no right to vote the Pledged
Securities at any time unless and until there shall have occurred an Event of
Default. (c) Pledgor hereby authorizes the Collateral Agent to file one or more
financing or continuation statements, and amendments thereto, relating to all or
part of the Collateral without the signature of Pledgor where permitted by law.
3. Pledgor's Representations and Warranties. Pledgor represents and
warrants to the Collateral Agent and each Noteholder as follows:
3.1 Exhibit A hereto completely and accurately sets forth all
securities constituting the Initial Pledged Securities. Except as indicated on
Exhibit A, each Initial Pledged Security is a "certificated security" (as
defined in the UCC). Pledgor is the legal record and beneficial owner of, and
has good and marketable title to, the Pledged Securities, and the Pledged
Securities are not subject to any pledge, lien, mortgage, hypothecation,
security interest, charge, option, warrant, or other encumbrance whatsoever, nor
to any agreement purporting to grant to any third party a security interest in
the property or assets of Pledgor that would include such Pledged Securities,
except the security interest created by this Agreement or otherwise securing the
Collateral Agent and the Noteholders and the security interests granted by
Pledgor under any syndicated Facility Document in favor of the Banks' Agent and
Banks or as otherwise expressly permitted under the Note Purchase Agreement.
3.2 All of the Pledged Securities are duly authorized and validly
issued, and are fully paid and non-assessable.
3.3 Pledgor has full power, authority and legal right to pledge all
of the Pledged Securities pursuant to the terms of this Agreement.
3.4 No consent, license, permit, approval or authorization, filing or
declaration with any governmental authority, domestic or foreign, and no consent
of any other party, is required to be obtained by Pledgor in connection with the
pledge of the Pledged Securities hereunder, which has not been obtained or made,
and is not in full force and effect.
3.5 Upon the filing of Form UCC-1 financing statements identifying
the Pledged Securities, the Collateral Agent shall have a valid and perfected
Lien on and security interest in the Pledged Securities, securing payment of the
Debt, subject only to the prior security interest of the Banks' Agent in the
Collateral. As of the date hereof, Pledgor has delivered such certificates
evidencing the Pledged Securities (together with transfer powers, in the form of
Exhibit B hereto, executed in blank) to the Banks' Agent and original transfer
powers executed in blank to the Collateral Agent. Pledgor shall, immediately
upon termination of the Syndicated Credit Agreement, Syndicated Loan Agreement
and any pledges constituting Syndicated Facility Documents, deliver to the
Collateral Agent the certificates evidencing the Pledged Securities and any
other securities then pledged, together with transfer powers duly executed in
blank, whereupon the Collateral Agent shall have a valid and perfected first
priority security interest in
3
such Pledged Shares, free of any adverse claim, securing the Debt. Pledgor
hereby consents to and authorizes each delivery of Pledged Securities by the
Banks' Agent to the Collateral Agent made in accordance or in connection with
the Intercreditor Agreement. Pledgor has delivered to the Collateral Agent a
transaction statement in the form of Exhibit C hereto executed by each
Subsidiary of Pledgor that has issued "uncertificated securities" (as defined in
the UCC) to Pledgor, together with an original copy of Pledgor's instruction to
register the pledge made hereunder of such Pledged Securities in the books and
records of such Subsidiary.
3.6 The Pledged Securities constitute one hundred percent (100%) of
the outstanding capital stock (or other equity interests) of each Subsidiary of
Pledgor.
3.7 Pledgor fully anticipates that the Debt will be repaid without
the necessity of selling the Pledged Securities.
3.8 After adjustments are made for intercompany advances in the
ordinary course of business, Pledgor is Solvent and Pledgor will not cease to be
Solvent as a result of the execution and delivery of (and incurrence of the
obligations under) this Agreement and the other Senior Notes Documents to the
Collateral Agent.
3.9 If the Pledged Securities are "restricted" within the meaning of
Rule 144, or any amendment thereof, promulgated under the Securities Act of
1933, as amended (the "Securities Act"), as determined by counsel for the
Collateral Agent, Pledgor further represents and warrants that (a) Pledgor has
been the beneficial owner of the Pledged Securities for a period of at least
three years prior to the date hereof, (b) the full purchase price or other
consideration for the Pledged Securities has been paid or given at least three
years prior to the date hereof, and (c) Pledgor does not have a short position
in or any put or other option to dispose of any securities of the same class as
the Pledged Securities or any other securities convertible into securities of
such class.
4. Event of Default. If an Event of Default shall occur hereunder, the
Collateral Agent, on its own behalf and on behalf of the Noteholders, may, in
the Collateral Agent's discretion and upon such terms and in such manner as the
Collateral Agent shall deem advisable, sell, assign, transfer and deliver or
otherwise liquidate and dispose of the Collateral, or any part thereof, and, in
each case, the Collateral Agent shall apply the net proceeds of the sale thereof
to the Debt, whether or not due, by such allocation as to item and maturity as
the Collateral Agent, in the Collateral Agent's discretion, may deem advisable.
Any sale or disposition, subject to the provisions of applicable law, may be
made at private or public proceedings. No prior notice need be given to Pledgor
or any other Person in the case of any sale of Collateral that the Collateral
Agent determines in good faith to be declining speedily in value or that is
customarily sold at any securities exchange or in the over-the-counter market or
in any other recognized market; but, in any other case, the Collateral Agent
shall give Pledgor not fewer than five Business Days' prior notice of either the
date after which any intended private sale may be made or the time and place of
any intended public sale. Pledgor waives advertisement of sale and, except to
the extent required by the preceding sentence, waives notice of any kind in
respect of any sale. The Collateral Agent shall not be obligated to make any
sale of Pledged Collateral regardless of notice of sale having been given. The
Collateral Agent may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such
4
sale may, without further notice, be made at the time and place to which it was
so adjourned. At any public sale, the Collateral Agent or any of the Noteholders
may purchase the Collateral, or any part thereof, free from any right of
redemption, which rights are hereby waived and released. Pledgor recognizes that
the Collateral Agent may be unable to effect a public sale of all or part of the
Collateral and may be compelled to resort to one or more private sales to a
restricted group of purchasers who will be obligated to agree, among other
things, to acquire such Collateral for their own account, for investment and not
with a view to the distribution or resale thereof. Pledgor acknowledges that any
such private sales may be at prices and on terms less favorable to the seller
than if sold at public sales and agrees that such private sales shall be deemed
to have been made in a commercially reasonable manner, and that the Collateral
Agent has no obligation to delay sale of any such Collateral for the period of
time necessary to permit the issuer of such Collateral to register such
Collateral for public sale under the Securities Act.
5. Term of Agreement. Irrespective of any action, omission or course of
dealing whatever by the Collateral Agent or the Noteholders, this Agreement
shall remain in full force and effect until the Debt shall have been paid in
full. Without limiting the generality of the foregoing, Pledgor (a) agrees that
neither the Collateral Agent nor any Noteholder shall have any duty to make any
presentment or collection, or to preserve any right of any kind, with reference
to the Collateral, and (b) agrees that the Collateral Agent and the Noteholders
shall at all times have the right to grant any indulgence to Oglebay and to deal
in any other manner with Oglebay, including the granting of any extension,
renewal or increase of the Debt or any part thereof, the increase or decrease of
any rate of interest, the forbearance from exercising any right, power, or
privilege, including any right to demand security, the release of, or
forbearance from proceeding against, any security or any obligor, the effecting
of any other release, compromise or settlement, the substitution of security
(even if of a different character or value), and (c) waives notice of the
creation of any Debt, of any default under any Note or other instrument
evidencing the Debt or any part thereof, of any act, omission, or course of
dealing by the Collateral Agent and the Noteholders, and any other notice to
which Pledgor might be entitled to but for the within waiver. This Agreement and
the security interest herein created in the Collateral shall terminate only if
(a) Pledgor delivers a written request for termination to the Collateral Agent
and the Noteholders, (b) the Debt shall have been paid in full at the time such
written termination is received by the Collateral Agent and the Noteholders, and
(c) the Collateral Agent executes an appropriate termination statement; provided
that the Collateral Agent shall release its Liens in all or a part of the
Collateral that is transferred (as defined in the Note Purchase Agreement) in
accordance with the terms and conditions of the Note Purchase Agreement and the
Collateral Agent shall have received [at least 10 Business days prior to the
proposed effective date of any such release] (in sufficient copies for all the
Noteholders) documentation and other information satisfactory to the Collateral
Agent that such transfer is executed in compliance with the terms and conditions
of the Note Purchase Agreement.
6. Additional Covenants of Pledgor.
6.1 Pledgor covenants and agrees to defend the right, title and
security interest of the Collateral Agent and the Noteholders in and to the
Pledged Securities and the proceeds thereof, and to maintain and preserve the
lien and security interest provided for by this Agreement against the claim and
demands of all Persons, so long as this Agreement shall remain in effect.
5
6.2 Subject to the terms of the Intercreditor Agreement and the Note
Purchase Agreement, including, without limitation, Section 7.5.2 thereof,
Pledgor covenants and agrees not to sell, assign, transfer, exchange, or
otherwise dispose of, or grant any option with respect to, or create, incur or
permit to exist any pledge, lien, mortgage, hypothecation, security interest,
charge, option or any other encumbrance with respect to any of the Pledged
Securities, or any interest therein, or any proceeds thereof, except for the
lien and security interest provided for by this Agreement and any security
agreement securing only the Collateral Agent and the Noteholders.
6.3 Pledgor covenants and agrees (a) to cooperate, in good faith,
with the Collateral Agent and the Noteholders and to do or cause to be done all
such other acts as may be necessary to enforce the rights of the Collateral
Agent and the Noteholders under this Agreement, (b) not to take any action, or
to fail to take any action that would be adverse to the interest of the
Collateral Agent and the Noteholders in the Collateral and hereunder, (c) to
make any sale or sales of any portion or all of the Pledged Securities valid and
binding and in compliance with any and all applicable laws, regulations, orders,
writs, injunctions, decrees or awards of any and all courts, arbitrators or
governmental instrumentalities, domestic or foreign, having jurisdiction over
any such sale or sales at Pledgor's expense, and (d) (i) after the occurrence of
an Event of Default, if requested by the Collateral Agent, to deliver promptly
upon such request to the Collateral Agent (i) a supplement hereto, duly executed
by Pledgor, in substantially the form of Exhibit D hereto (each a "Pledge
Agreement Supplement"), in respect of such additional Pledged Securities, and
(ii) in any and all cases, either (a) with respect to any certificated
securities, the certificates evidencing any additional Pledged Securities
purchased or acquired by Pledgor after the date hereof, together with transfer
powers thereto duly endorsed in blank, but only to the extent that the delivery
of such certificates and transfer powers is required by Section 3.5 above, or
(b) (1) in the case of any uncertificated securities not maintained in a
securities account, a transaction statement in the form of Exhibit C hereto
executed by the issuer of such uncertificated securities, together with an
original copy of Pledgor's instruction to register the pledge of such Pledged
Securities and (2) for any other investment property, a control agreement in
form and substance reasonably acceptable to the Collateral Agent with respect to
such additional Pledged Securities.
7. Events of Default. An "Event of Default" shall exist hereunder if (a)
the Debt, or any portion thereof, shall not be paid in full when due and
payable, whether due by lapse of time or acceleration of maturity or otherwise,
(b) an Event of Default, as defined in the Note Purchase Agreement, shall exist
under the Note Purchase Agreement, (c) Pledgor shall fail to fully perform or
omit to perform in any material respect any agreement or other provision
contained or referred to in this Agreement, or (d) any representation, warranty
or statement made in or pursuant to this Agreement, shall be false or erroneous
in any material respect.
8. Attorney-in-Fact. Pledgor hereby authorizes and empowers the Collateral
Agent, on its own behalf and on behalf of the Noteholders, to make, constitute
and appoint any officer or agent of the Collateral Agent as the Collateral Agent
may select, in its exclusive discretion, as Pledgor's true and lawful
attorney-in-fact, with the power to endorse Pledgor's name on all applications,
documents, papers and instruments necessary for the Collateral Agent to take
actions with respect to the Collateral after the occurrence of an Event of
Default, including, without limitation, actions necessary for the Collateral
Agent to assign, pledge, convey or
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otherwise transfer title in or dispose of the Collateral to any Person. Pledgor
ratifies all that such attorney shall lawfully do or cause to be done by virtue
hereof. This power of attorney shall be irrevocable for the life of this
Agreement.
9. Limitation on Duty of the Collateral Agent with Respect to the
Collateral.
The powers conferred on the Collateral Agent hereunder are solely to protect its
interest in the Collateral and shall not impose any duty on it to exercise any
such powers. Except for the safe custody of any Collateral in its possession and
the accounting for monies actually received by it hereunder, the Collateral
Agent shall have no duty with respect to any Collateral. The Collateral Agent
shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if the Collateral is accorded
treatment that is substantially equivalent to that which the Collateral Agent
accords its own property, it being expressly agreed that the Collateral Agent
shall have no responsibility for (a) ascertaining or taking action with respect
to calls, conversions, exchanges, maturities, tenders or other matters relative
to any Pledged Collateral, whether or not the Collateral Agent has or is deemed
to have knowledge of such matters, or (b) taking any necessary steps to preserve
rights against any parties with respect to any Pledged Collateral, but the
Collateral Agent may do so and all expenses incurred in connection therewith
shall be payable by and for the sole account of Pledgor.
10. Maximum Liability of Pledgor.
10.1 Limitation of Liability. If, in any action to enforce this
Agreement or any proceeding to allow or adjudicate a claim under this Agreement,
a court of competent jurisdiction determines that enforcement of this Agreement
against Pledgor for the full amount of the Debt is not lawful under, or would be
subject to avoidance under, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Bankruptcy Code or
any applicable provision of comparable state law, the liability of Pledgor under
this Agreement shall be limited to the maximum amount lawful and not subject to
avoidance under such law.
10.2 Debt May Exceed Pledgor's Maximum Liability. Pledgor agrees that
the Debt may at any time and from time to time exceed the maximum amount of the
Debt secured by this Agreement without impairing this Agreement or affecting the
rights and remedies of the Collateral Agent or the Noteholders hereunder.
10.3 Pledgor's Liability Not Reduced by Payments by Others. No payment
or payments made by Oglebay, Pledgor or any other Person or received or
collected by the Collateral Agent or the Noteholders from Oglebay, Pledgor or
any other Person by virtue of any action or proceeding or any set-off or
appropriation or application at any time or from time to time in reduction of or
in payment of the Debt shall be deemed to modify, reduce, release or otherwise
affect the amount of the Debt secured by this Agreement and this Agreement
shall, notwithstanding any such payment or payments (other than payments made to
the Collateral Agent or the Noteholders by Pledgor or payments received or
collected by the Collateral Agent or the Noteholders from Pledgor), secure the
Debt up to the maximum amount of the Debt secured by this Agreement as set forth
above until the Debt is indefeasibly paid in full in cash.
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11. Costs and Expenses. If Pledgor fails to comply with any of its
obligations hereunder, the Collateral Agent may do so in Pledgor's name or in
the Collateral Agent's name, but at Pledgor's expense, and Pledgor hereby agrees
to reimburse in full the Collateral Agent and the Noteholders all costs and
expenses, including reasonable attorneys' fees, incurred by the Collateral Agent
and the Noteholders in connection with protecting, defending and maintaining the
Collateral. Without limiting the foregoing, any and all reasonable fees, costs
and expenses, of whatever kind or nature, including the reasonable attorneys'
fees and expenses incurred in connection with the filing or recording of any
documents (including all taxes in connection therewith) in public offices, the
payment or discharge of any taxes, maintenance fees, encumbrances or otherwise
protecting, maintaining or preserving the Collateral, or in defending or
prosecuting any actions or proceedings arising out of or related to the
Collateral, shall be borne and paid by Pledgor on demand by the Collateral
Agent.
12. Notice. All notices, requests, demands and other communications
provided for hereunder shall be in writing and, if to Pledgor, mailed or
delivered to it, addressed to it at the address specified on the signature page
of this Agreement, if to the Collateral Agent or a Noteholder, mailed or
delivered to it, addressed to the address of the Collateral Agent specified on
the signature pages of this Agreement. All notices, statements, requests,
demands and other communications provided for hereunder shall be given by
overnight delivery or first class mail with postage prepaid by registered or
certified mail, addressed as aforesaid, or sent by facsimile with telephonic
confirmation of receipt, except that notices pursuant to any of the provisions
hereof shall not be effective until received.
13. No Subrogation. Pledgor shall have no rights against Oglebay with
respect to this Agreement or the Collateral and shall have no right of
subrogation and hereby waives any right to enforce any remedy which the
Collateral Agent or the Noteholders now has or may hereafter have against
Oglebay, any endorser or any other guarantor of all or any part of the Debt, and
Pledgor hereby waives all setoffs and counterclaims and all presentments,
demands for performance, notices of nonperformance, protests, notices of
protest, notices of dishonor, and notices of acceptance of this Agreement.
Pledgor further waives all notices of the existence, creation or incurring of
any new or additional indebtedness arising either in connection with additional
notes issued by Pledgor or otherwise, and also waives all notices that the
principal amount, or any portion thereof, and/or any interest on any instrument
or document evidencing all or any part of the Debt is due, notices of any and
all proceedings to collect from the maker, any endorser or any other guarantor
of all or any part of the Debt, or from any other Person, and, to the extent
permitted by law, notices of exchange, sale, surrender or other handling of any
security or collateral given to the Collateral Agent or any Noteholder to secure
payment of the Debt.
14. Interpretation. Each right, power or privilege specified or referred
to in this Agreement is in addition to any other rights, powers and privileges
that the Collateral Agent and the Noteholders (or any of them) may have or
acquire by operation of law, by other contract or otherwise. No course of
dealing in respect of, nor any omission or delay in the exercise of, any right,
power or privilege by the Collateral Agent and the Noteholders shall operate as
a waiver thereof, nor shall any single or partial exercise thereof preclude any
further or other exercise thereof or of any other, as each right, power or
privilege may be exercised by the Collateral Agent and the Noteholders either
independently or concurrently with other rights, powers and
8
privileges and as often and in such order as the Collateral Agent and the
Noteholders may deem expedient. No waiver, consent or other agreement granted by
the Collateral Agent (on its own behalf or on behalf of the Noteholders) in
respect of this Agreement shall be binding upon the Collateral Agent or the
Noteholders unless specifically granted in writing, which writing shall be
strictly construed.
15. Assignment and Successors. This Agreement shall not be assigned by
Pledgor without the prior written consent of the Collateral Agent. This
Agreement shall bind the successors and permitted assigns of Pledgor and shall
benefit the respective successors and assigns of the Collateral Agent and the
Noteholders. Without limiting the generality of the foregoing, any Noteholder
may assign or otherwise transfer any Senior Note held by it to any other Person
as permitted in the Note Purchase Agreement, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted to the
Collateral Agent herein or otherwise.
16. Governing Law. The provisions of this Agreement, and the respective
rights and duties of Pledgor, the Collateral Agent and the Noteholders
hereunder, shall be governed by the laws of the State of New York, without
regard to principles of conflict of laws.
17. Severability. If, at any time, one or more provisions of this Agreement
is or becomes invalid, illegal or unenforceable in whole or in part, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
18. DESIGNATED SENIOR INDEBTEDNESS. THE INDEBTEDNESS EVIDENCED BY THIS
AGREEMENT, THE NOTE PURCHASE AGREEMENT, EACH OF THE SENIOR NOTES, AND EACH OTHER
SENIOR NOTES DOCUMENT IS AND SHALL AT ALL TIMES CONSTITUTE "DESIGNATED SENIOR
INDEBTEDNESS" UNDER THE PROVISIONS OF THAT CERTAIN INDENTURE, DATED AS OF
FEBRUARY 1, 1999, AS AMENDED, AMONG OGLEBAY NORTON COMPANY, THE GUARANTORS NAMED
THEREIN AND NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, AS TRUSTEE.
19. JURY TRIAL WAIVER. PLEDGOR WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE
IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG
PLEDGOR, COLLATERAL AGENT AND THE NOTEHOLDERS, OR ANY OF THEM, ARISING OUT OF,
IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
AMONG THEM IN CONNECTION WITH THIS AGREEMENT OR ANY NOTE OR OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION THEREWITH OR THE
TRANSACTIONS RELATED THERETO.
20. Waiver; Amendment.
20.1 None of the terms and conditions of this Agreement may be changed,
waived, modified or varied in any manner whatsoever unless in writing duly
signed by Pledgor and the Collateral Agent (and such other percentage of the
Noteholders as may be required by the Note Purchase Agreement). Notwithstanding
the foregoing, this Agreement shall be amended (solely to the extent of
replacing 1818 Mezzanine as the Collateral Agent) by a written notice delivered
9
to Pledgor by the Collateral Agent and acknowledged in writing by a successor
collateral agent; provided that such acknowledgement shall have the effect of
binding such successor collateral agent to the terms of this Agreement and such
successor Collateral Agent shall be, in its individual capacity, a Noteholder.)
20.2 Upon the execution and delivery by Pledgor of a Pledge Agreement
Supplement, Exhibit A attached to such Pledge Agreement Supplement shall be
incorporated into and become a part of and supplement Exhibit A hereto, and the
Collateral Agent may attach such supplemental exhibit to such Exhibit A; and
each reference to such Exhibit shall mean and be a reference to such Exhibits as
supplemented pursuant to each Pledge Agreement Supplement.
21. Obligations Absolute. The obligations of Pledgor hereunder shall remain
in full force and effect without regard to, and shall not be impaired by, (a)
any bankruptcy, insolvency, reorganization, arrangement, readjustment,
composition, liquidation or the like of Oglebay, Pledgor or any Guarantor; (b)
any exercise or non-exercise, or any waiver of, any right, remedy, power or
privilege under or in respect of this Agreement or any other Senior Notes
Document; or (c) any amendment to or modification of any Senior Notes Document
or any security for any of the Debt whether or not Pledgor shall have notice or
knowledge of any of the foregoing.
22. Lien Subordination
The pledge made and the security interest and Liens granted hereunder, and the
rights and remedies of the Collateral Agent hereunder are subject to the terms
of the Intercreditor Agreement. Without limiting, and in furtherance of the
foregoing, the Collateral Agent shall not exercise its rights under Sections
2(b) and 4 hereof so long as the Intercreditor Agreement is in effect, except as
expressly permitted thereby or otherwise expressly permitted in writing by the
Banks' Agent. In the event of any conflict between the terms and provisions of
this Agreement and the Intercreditor Agreement, the terms and provisions of the
Intercreditor Agreement shall govern and control.
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IN WITNESS WHEREOF, each of Pledgor and the Collateral Agent has caused
this Agreement to be duly executed and delivered by its officer thereunto duly
authorized as of the date first above written.
((Pledgor)), as Pledgor
By:___________________________
By: ▇▇▇▇▇▇▇▇ ▇. Walk
Title: Vice President and Secretary
Address:
Prior to January 1, 2003:
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇)▇▇▇-▇▇▇▇
From January 1, 2003:
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
THE 1818 MEZZANINE FUND II, L.P.,
as Collateral Agent
By: ▇▇▇▇▇ Brothers ▇▇▇▇▇▇▇▇ & Co.,
General Partner
By:___________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Partner
Address:
▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇/▇▇/ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
EXHIBIT D
Form of Collateral Assignment and Security Agreement
COLLATERAL ASSIGNMENT AND SECURITY AGREEMENT dated as of October __,
2002 by ((Company)) ("Pledgor"), and THE 1818 MEZZANINE FUND II, L.P. ("1818
Mezzanine"), as collateral agent (together with its successors and assigns in
such capacity, the "Collateral Agent") for itself and the other Noteholders (as
hereinafter defined).
RECITALS:
Pledgor is a party to that certain Senior Secured Note Purchase
Agreement dated as of October __, 2002 (as amended and in effect from time to
time, the "Note Purchase Agreement"), among Oglebay Norton Company, an Ohio
corporation ("Oglebay"), the Guarantors listed on the signature pages thereto,
1818 Mezzanine and the other Purchasers party thereto. Pursuant to the Note
Purchase Agreement, the Purchasers have agreed to purchase the Senior Notes (as
defined in the Note Purchase Agreement). It is a condition precedent to the
Purchasers purchasing the Senior Notes that Pledgor execute and deliver to the
Collateral Agent this Collateral Assignment and Security Agreement for the
benefit of the Noteholders and the Collateral Agent.
Terms defined in the Note Purchase Agreement and not otherwise defined
in this Agreement are used in this Agreement as defined in the Note Purchase
Agreement. Terms that are defined in Articles 8 and 9 of the UCC (as defined
below) and not otherwise defined herein are used herein as therein defined.
NOW, THEREFORE, in consideration of the premises contained herein and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. Grant of Security Interest. To secure the Debt, as hereinafter
defined, Pledgor hereby grants to the Collateral Agent, for itself in its
capacity as the Collateral Agent hereunder and for the ratable benefit of the
Noteholders (including 1818 Mezzanine in its capacity as a Noteholder), subject
to Section 9 hereof, a security interest in and to all of Pledgor's right title
and interest in and to the following (the "Collateral"):
(a) The United States patents, patent application, and patent
licenses set forth in Schedule A hereto (as such Schedule A may be supplemented
from time to time by supplements to this Agreement, each such supplement being
in substantially the form of Appendix A hereto (an "Collateral Assignment and
Security Agreement Supplement"), executed and delivered by Pledgor to the
Collateral Agent from time to time), together with all reissues, divisions,
continuations, continuations-in-part, extensions and reexaminations thereof, and
all rights therein provided by international treaties or conventions (the
"Listed Patents");
(b) The United States trademark and service ▇▇▇▇ registrations,
applications, and licenses set forth in Schedule B hereto (as such Schedule B
may be supplemented from time to time by Collateral Assignment and Security
Agreement Supplements executed and delivered
by Pledgor to the Collateral Agent from time to time), and all goodwill
associated therewith (the "Listed Marks");
(c) The copyrights, United States copyright registrations and
applications and copyright licenses set forth in Schedule C hereto (as such
Schedule C may be supplemented from time to time by Collateral Assignment and
Security Agreement Supplements executed and delivered by Pledgor to the
Collateral Agent from time to time) (the "Listed Copyrights");
(d) any and all claims for damages for past, present and future
infringement, misappropriation or breach with respect to the Listed Patents,
Listed Trademarks and Listed Copyrights, with the right, but not the obligation,
to ▇▇▇ for and collect, or otherwise recover, such damages; and
(e) any and all proceeds of the foregoing.
2. Obligations Secured.
(a) The obligations secured by this Agreement (collectively, the
"Debt") are the payment and performance of, collectively, collectively, (a) the
Senior Notes Obligations (including, without limitation, the Guaranteed
Obligations); (b) each renewal, exchange, extension, consolidation or
refinancing of the foregoing, in whole or in part; (c) all interest from time to
time accruing on any of the foregoing, and all structuring and financing and
other fees pursuant to the Note Purchase Agreement; (d) all other amounts
payable by Oglebay or any Guarantor to the Collateral Agent or any Noteholder
pursuant to the Note Purchase Agreement or any other Senior Notes Documents; and
(f) all Related Expenses (as defined in that certain Security Agreement made by
Pledgor to the Collateral Agent dated as of October __, 2002 (as amended,
amended and restated, supplemented or otherwise modified from time to time, the
"Security Agreement").
3. Warranties and Representations. Pledgor represents and warrants to
the Collateral Agent and the Noteholders that each of the following statements
is true and complete:
(a) Pledgor owns the Collateral and, whether the same are registered
or unregistered, no such Collateral has been adjudged invalid or unenforceable.
The Listed Marks constitute all the marks and applications for marks registered
in the United States Patent and Trademark Office that Pledgor presently owns or
uses in connection with its business. The Listed Patents constitute all the
patents and applications for patents that Pledgor owns or uses in connection
with its business, and the Listed Copyrights constitute all registrations of
copyrights and applications for copyright registrations that Pledgor owns or
uses in connection with its business.
(b) The Collateral is valid and enforceable.
(c) Pledgor has no knowledge of any claim that the use of any of the
Collateral does or may violate the rights of any third person.
(d) Except for the liens granted in this Agreement or permitted by
the Intercreditor Agreement and the Note Purchase Agreement, Pledgor is the sole
and exclusive
2
owner of the entire and unencumbered right, title and interest in and to the
Collateral, free and clear of any liens, charges and encumbrances, including,
without limitation, pledges, assignments, licenses, registered user agreements
and covenants by Pledgor not to ▇▇▇ third persons.
(e) Pledgor has full power, authority and legal right to pledge the
Collateral and enter into this Agreement and perform its terms.
(f) Pledgor has used, and will continue to use, for the duration of
this Agreement, proper statutory notice in connection with its use of the
Collateral, except where the failure to do so will not have a material adverse
effect.
4. Right to Use. Pledgor hereby grants to the Collateral Agent a
royalty free license to use any Marks, Patents, Copyrights, for purposes of
manufacturing, selling and otherwise liquidating Collateral, subject to the
condition that the Collateral Agent shall not exercise such license except after
an Event of Default (as that term is defined in Section 9 of this Agreement).
Pledgor shall not enter into any agreement which is inconsistent with Pledgor's
obligations under this Agreement and shall not otherwise sell or assign its
interest in, or grant any license or sublicense in respect of, the Collateral
without the Collateral Agent's prior written consent. Absent such prior written
consent, any attempted sale or license is null and void.
5. Right to Inspect. Pledgor hereby grants to the Collateral Agent and
its employees and agents the right to visit and inspect Pledgor's properties and
records and to otherwise exercise all rights and privileges of the Noteholders
set forth and as provided in Section 6.9 of the Note Purchase Agreement, at
Pledgor's expense.
6. Standard Patent and Trademark Use.
Pledgor shall not use the Collateral in any manner that would
jeopardize the validity or legal status thereof. Pledgor shall comply with all
patent marking requirements as specified in 35 U.S.C. (S)287. Pledgor shall
further conform its usage of any trademarks to standard trademark usage,
including, but not limited to, using the trademark symbols (r), (TM), and (SM)
where appropriate.
7. [INTENTIONALLY OMITTED]
8. Event of Default.
(a) The occurrence of any of the following shall constitute an
"Event of Default" under this Agreement:
(i) If an Event of Default, as defined in the Note Purchase
Agreement, shall occur under the Note Purchase Agreement; or
(ii) If Pledgor shall fail to perform any obligation of Pledgor
to be performed under this Agreement and the same shall not have been fully
corrected within thirty (30) days after the giving of written notice thereof to
Pledgor by the Collateral Agent.
3
(b) If any Event of Default shall have occurred, Pledgor
irrevocably grants to the Collateral Agent, on behalf of the Noteholders, to
exercise such rights and remedies as allowed by law. Without limiting the
generality of the foregoing, the Collateral Agent may take any or all of the
following actions: (i) declare the entire right, title and interest of Pledgor
in and to the Collateral, together with all patent, copyright and trademark
rights and rights of protection to the same, vested in the Collateral Agent for
the benefit of the Noteholders, in which event such rights, title and interest
shall immediately vest, in the Collateral Agent for the benefit of the
Noteholders, and the Collateral Agent shall be entitled to exercise the power of
attorney referred to in Section 13 hereof to execute, cause to be acknowledged
and notarized and record said absolute assignment with the applicable agency;
and (ii) immediately sell at public or private sale, in a commercially
reasonable manner, or otherwise realize upon all or, from time to time, any of
the Collateral together with the associated goodwill, or any interest which
Pledgor may have therein, and, after deducting from the proceeds of sale or
other disposition of the Collateral all expenses (including all reasonable
expenses for attorneys' and brokers' fees and other legal services), the
Collateral Agent shall apply the residue of such proceeds against payment of the
Debt for the benefit of the Noteholders. Any remainder of the proceeds, after
payment in full of the Debt and to the extent permitted by law, shall be paid to
Pledgor, and the obligors of the Debt shall remain liable for any deficiency.
Notice of any sale or other disposition of the Collateral shall be given to
Pledgor at least five (5) business days before the time of any intended public
or private sale or other disposition of the Collateral is to be made, which
Pledgor hereby agrees shall be reasonable notice of such sale or other
disposition. At any such sale or other disposition, the Collateral Agent or any
Noteholder may, to the extent permissible under applicable law, purchase the
whole or any part of the Collateral sold, free from any right of redemption on
the part of Pledgor, which right is hereby waived and released.
9. Termination. At such time as the Debt has been irrevocably paid in
full, and the Note Purchase Agreement terminated and not replaced by any other
similar agreement with the Noteholders, this Agreement shall terminate and the
Collateral Agent shall execute and deliver to Pledgor all deeds, assignments,
and other instruments as may be necessary or proper to release the Collateral
Agent's security interest in and assignment of the Collateral and to re-vest in
Pledgor full title to the Collateral, subject to any disposition thereof which
may have been made by the Collateral Agent pursuant hereto. This Agreement and
the security interest herein created in the Collateral shall terminate only if
(a) Pledgor delivers a written request for termination to the Collateral Agent
and the Noteholders, (b) the Debt shall have been paid in full at the time such
written termination is received by the Collateral Agent and the Noteholders, and
(c) the Collateral Agent executes an appropriate termination statement; provided
that the Collateral Agent shall release its Liens in all or a part of the
Collateral that is transferred (as defined in the Note Purchase Agreement) in
accordance with the terms and conditions of the Note Purchase Agreement and the
Collateral Agent shall have received at least 10 Business days prior to the
proposed effective date of any such release (in sufficient copies for all the
Noteholders) documentation and other information satisfactory to the Collateral
Agent that such transfer is executed in compliance with the terms and conditions
of the Note Purchase Agreement.
10. Maintaining Collateral, Attorneys' Fees, Costs and Expenses.
Pledgor shall have the obligation and duty to perform all acts necessary to
maintain or preserve the Collateral, provided that Pledgor shall not be
obligated to maintain any Collateral in the event Pledgor determines, in the
reasonable business judgment of Pledgor, that the maintenance of such
4
Collateral is no longer necessary in Pledgor's business. Any and all reasonable
fees, costs and expenses, of whatever kind or nature, including, without
limitation, the attorneys' fees and legal expenses incurred by the Collateral
Agent and the Noteholders in connection with the amendment and enforcement of
this Agreement, all renewals, required affidavits and all other documents
relating hereto and the consummation of this transaction, the filing or
recording of any documents (including all taxes in connection therewith) in
public offices, the payment or discharge of any taxes, counsel fees, maintenance
fees, encumbrances or otherwise protecting, maintaining or preserving the
Collateral, or in defending or prosecuting any actions or proceedings arising
out of or related to the Collateral, shall be borne and paid by Pledgor, upon
demand by the Collateral Agent, and, until so paid, shall be added to the
principal amount of the Debt.
11. Pledgor's Obligations to Prosecute. Except as otherwise agreed to
by the Collateral Agent in writing, Pledgor shall have the duty to prosecute
diligently any patent application or trademark application pending as of the
date of this Agreement or thereafter until the Debt shall have been paid in
full, to file and prosecute opposition and cancellation proceedings and to do
any and all acts which are necessary or desirable to preserve and maintain all
rights in the Collateral, including, but not limited to, payment of any
maintenance fees. Any expenses incurred in connection with the Collateral shall
be borne by Pledgor. Pledgor shall not abandon any Collateral without the prior
written consent of the Collateral Agent, unless such abandonment will not have a
material adverse effect on Pledgor and the conduct of Oglebay's and Pledgor's
business.
12. The Collateral Agent's Rights to Enforce. Pledgor shall have the
right to bring any opposition proceedings, cancellation proceedings or lawsuit
in its own name to enforce or protect the Collateral. The Collateral Agent and
the Noteholders shall have the right, but shall have no obligation, to join in
any such action. Pledgor shall promptly, upon demand, reimburse and indemnify
the Collateral Agent and the Noteholders for all damages, costs and expenses,
including attorneys' fees incurred by the Collateral Agent in connection with
the provisions of this Section 12, in the event the Collateral Agent and the
Noteholders elect to join in any such action commenced by Pledgor.
13. Power of Attorney. Pledgor hereby authorizes and empowers the
Collateral Agent, on behalf of the Noteholders, to make, constitute and appoint
any officer or agent of the Collateral Agent as the Collateral Agent may select,
in its exclusive discretion, as Pledgor's true and lawful attorney-in-fact, with
the power to endorse, after the occurrence of an Event of Default, Pledgor's
name on all applications, documents, papers and instruments necessary for the
Collateral Agent to use the Collateral, or to grant or issue any exclusive or
non exclusive license under the Collateral to any third party, or necessary for
the Collateral Agent to assign, pledge, convey or otherwise effect an absolute
assignment of all right, title and interest in each ▇▇▇▇, Patent and Copyright,
together with associated goodwill, to the Collateral Agent or to a third party
or parties, and to record the same with the United States Patent and Trademark
Office or the United States Copyright Office. Pledgor hereby ratifies all that
such attorney shall lawfully do or cause to be done by virtue hereof. This power
of attorney shall be irrevocable for the life of this Agreement.
5
14. The Collateral Agent's Right to Perform Obligations. If Pledgor fails
to comply with any of its obligations under this Agreement, the Collateral
Agent, on behalf of the Noteholders, may, but is not obligated to, do so in
Pledgor's name or in the Collateral Agent's name, but at Pledgor's expense, and
Pledgor hereby agrees to reimburse the Collateral Agent on demand in full for
all expenses, including reasonable attorneys' fees, incurred by the Collateral
Agent in protecting, defending and maintaining the Collateral.
15. Additional Documents. Pledgor shall, upon written request of the
Collateral Agent, enter into such additional documents or instruments as may be
required by the Collateral Agent in order to effectuate, evidence or perfect the
Collateral Agent's interests in the Collateral as evidenced by this Agreement.
16. New Collateral. If, before the Debt shall have been satisfied in
full, Pledgor shall obtain rights to any new Collateral, the provisions of
Section 1 shall automatically apply thereto as if the same were identified on
Schedules A, B and C (as applicable) as of the date hereof and Pledgor shall
give the Collateral Agent prompt written notice thereof in the form of a
Collateral Assignment and Security Agreement Supplement.
17. Modification for New Collateral. Pledgor hereby authorizes the
Collateral Agent to modify this Agreement by amending Schedules A, B and C (as
applicable) to include any future Collateral as contemplated by Sections 1 and
16 hereof and, at the Collateral Agent's request, Pledgor shall execute any
documents or instruments required by the Collateral Agent in order to modify
this Agreement as provided in this Section 17, provided that any such
modification to Schedules A, B and C shall be effective without the signature of
Pledgor.
18. No Waiver. No course of dealing between Pledgor and the Collateral
Agent and the Noteholders, nor any failure to exercise, nor any delay in
exercising, on the part of the Collateral Agent or the Noteholders, any right,
power or privilege hereunder, under any of the Loan Documents, or any other
document executed in connection with any of the foregoing ("Documents") shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, power or privilege hereunder or thereunder preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.
19. Limitation on Duty of the Collateral Agent with Respect to the
Collateral.
The powers conferred on the Collateral Agent hereunder are solely to protect its
interest in the Collateral and shall not impose any duty on it to exercise any
such powers. Except for the safe custody of any Collateral in its possession and
the accounting for monies actually received by it hereunder, the Collateral
Agent shall have no duty with respect to any Collateral. The Collateral Agent
shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if the Collateral is accorded
treatment that is substantially equivalent to that which the Collateral Agent
accords its own property, it being expressly agreed that the Collateral Agent
shall have no responsibility for taking any necessary steps to preserve rights
against any parties with respect to any Collateral, but the Collateral Agent may
do so and all expenses incurred in connection therewith shall be payable by and
for the sole account of Pledgor.
6
20. Maximum Liability of Pledgor.
(a) Limitation of Liability. If, in any action to enforce this
Agreement or any proceeding to allow or adjudicate a claim under this Agreement,
a court of competent jurisdiction determines that enforcement of this Agreement
against Pledgor for the full amount of the Debt is not lawful under, or would be
subject to avoidance under, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Bankruptcy Code or
any applicable provision of comparable state law, the liability of Pledgor under
this Agreement shall be limited to the maximum amount lawful and not subject to
avoidance under such law.
(b) Debt May Exceed Pledgor's Maximum Liability. Pledgor agrees
that the Debt may at any time and from time to time exceed the maximum amount of
the Debt secured by this Agreement without impairing this Agreement or affecting
the rights and remedies of the Collateral Agent or the Noteholders hereunder.
(c) Pledgor's Liability Not Reduced by Payments by Others. No
payment or payments made by Oglebay, Pledgor or any other Person or received or
collected by the Collateral Agent or the Noteholders from Oglebay, Pledgor or
any other Person by virtue of any action or proceeding or any set-off or
appropriation or application at any time or from time to tine in reduction of or
in payment of the Debt shall be deemed to modify, reduce, release or otherwise
affect the amount of the Debt secured by this Agreement and this Agreement
shall, notwithstanding any such payment or payments (other than payments made to
the Collateral Agent or the Noteholders by Pledgor or payments received or
collected by the Collateral Agent or the Noteholders from Pledgor), secure the
Debt up to the maximum amount of the Debt secured by this Agreement as set forth
above until the Debt is indefeasibly paid in full in cash.
21. Remedies Cumulative. All of the rights and remedies of the Collateral
Agent and the Noteholders with respect to the Collateral, whether established
hereby or by other Senior Notes Documents, or by any other agreements or by law
shall be cumulative and may be executed singularly or concurrently.
22. Severability. The provisions of this Agreement are severable, and,
if any clause or provision shall be held invalid and unenforceable in whole or
in part in any jurisdiction, then such invalidity or unenforceability shall
affect only such clause or provision, or part thereof, in such jurisdiction, and
shall not in any manner affect such clause or provision in any other
jurisdiction, or any other clause or provision of this Agreement in any
jurisdiction.
23. DESIGNATED SENIOR INDEBTEDNESS. THE INDEBTEDNESS EVIDENCED BY THIS
AGREEMENT, THE NOTE PURCHASE AGREEMENT, EACH OF THE SENIOR NOTES, AND EACH OTHER
SENIOR NOTES DOCUMENT IS AND SHALL AT ALL TIMES CONSTITUTE "DESIGNATED SENIOR
INDEBTEDNESS" UNDER THE PROVISIONS OF THAT CERTAIN INDENTURE, DATED AS OF
FEBRUARY 1, 1999, AS AMENDED, AMONG OGLEBAY NORTON COMPANY, THE GUARANTORS NAMED
THEREIN AND NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, AS TRUSTEE.
7
24. Waiver; Amendment. Except as provided in Section 17 above, none of
the terms and conditions of this Agreement may be changed, waived, modified or
varied in any manner whatsoever unless in writing duly signed by Pledgor and the
Collateral Agent (and such other percentage of the Noteholders as may be
required by the Note Purchase Agreement). Notwithstanding the foregoing, this
Agreement shall be amended (solely to the extent of replacing 1818 Mezzanine as
the Collateral Agent) by a written notice delivered to Pledgor by the Collateral
Agent and acknowledged in writing by a successor collateral agent; provided that
such acknowledgement shall have the effect of binding such successor collateral
agent to the terms of this Agreement and such successor Collateral Agent shall
be, in its individual capacity, a Noteholder.)
(b) Upon the execution and delivery by Pledgor of a Collateral
Assignment and Security Agreement Supplement, Schedules A, B and C thereto (as
applicable) shall be incorporated into and become a part of and supplement
Schedules A, B and C hereto, and the Collateral Agent may attach such
supplemental schedules to such Schedules A, B and C; and each reference to such
Schedules shall mean and be a reference to such Schedules as supplemented
pursuant to each Collateral Assignment and Security Agreement Supplement.
25. Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the respective successors and permitted assigns of the
parties, except that Pledgor may not assign any of its rights or duties
hereunder without the prior written consent of the Collateral Agent. Any
attempted assignment or transfer without the prior written consent of the
Collateral Agent shall be null and void. . Without limiting the generality of
the foregoing, any Noteholder may assign or otherwise transfer any Senior Note
held by it to any other Person as permitted in the Note Purchase Agreement, and
such other Person shall thereupon become vested with all the benefits in respect
thereof granted to the Collateral Agent herein or otherwise.
26. Notice. All notices, requests, demands and other communications
provided for hereunder shall be in writing and, if to Pledgor, mailed or
delivered to it, addressed to it at the address specified on the signature page
to this Agreement, if to the Collateral Agent or a Noteholder, mailed or
delivered to it, addressed to the address of the Collateral Agent or such
Noteholder specified on the signature pages of the Credit Agreement. All
notices, statements, requests, demands and other communications provided for
hereunder shall be given by overnight delivery or first class mail with postage
prepaid by registered or certified mail, addressed as aforesaid, or sent by
facsimile with telephonic confirmation of receipt, except that notices pursuant
to any of the provisions hereof shall not be effective until received.
27. Governing Law/Jurisdiction. This Agreement shall be construed and
enforced in accordance with, and the rights of the parties shall be governed by,
the laws of the State of New York, without regard to principles of conflicts of
law. Pledgor hereby consents to the personal jurisdiction of the state and
federal courts of the State of New York in connection with any controversy
related to this Agreement, waives any argument that venue in such forums is not
convenient and agrees that any litigation initiated by Pledgor against the
Collateral Agent or any Noteholder shall be venued in the State or Federal
District Courts of New York.
28. Jury Trial Waiver. Pledgor, the Collateral Agent and the Noteholders,
to the extent permitted by law, each waive any right to have a jury participate
in resolving any dispute,
8
whether sounding in contract, tort, or otherwise, among the Collateral Agent,
the Noteholders and Pledgor, or any of them, arising out of, in connection with,
related to, or incidental to the relationship established between them in
connection with this Agreement or any note or other agreement, instrument or
document executed or delivered in connection therewith or the transactions
related thereto.
29. Obligations Absolute. The obligations of Pledgor hereunder shall
remain in full force and effect without regard to, and shall not be impaired by,
(a) any bankruptcy, insolvency, reorganization, arrangement, readjustment,
composition, liquidation or the like of Oglebay, Pledgor or any Guarantor; (b)
any exercise or non-exercise, or any waiver of, any right, remedy, power or
privilege under or in respect of this Agreement or any other Senior Notes
Document; or (c) any amendment to or modification of any Senior Notes Document
or any security for any of the Debt whether or not Pledgor shall have notice or
knowledge of any of the foregoing.
30. Lien Subordination
The liens and security interest granted hereunder, and the rights and remedies
of the Collateral Agent hereunder are subject to the terms of the Intercreditor
Agreement (as such term is defined in the Note Purchase Agreement). Without
limiting, and in furtherance of the foregoing, the Collateral Agent shall not
exercise its rights under Sections 4 and 8(b) hereof so long as the
Intercreditor Agreement is in effect, except as expressly permitted thereby or
otherwise expressly permitted in writing by Key Bank National Association, as
Agent for the Banks under the Intercreditor Agreement. In the event of any
conflict between the terms and provisions of this Agreement and the
Intercreditor Agreement, the terms and provisions of the Intercreditor Agreement
shall govern and control.
9
IN WITNESS WHEREOF, each of the Pledgor and the Collateral Agent has
caused this Agreement to be duly executed and delivered by its officer thereunto
duly authorized as of the date first above written.
((Pledgor)), as Pledgor
By:___________________________
Name: ▇▇▇▇▇▇▇▇ ▇. Walk
Title: Vice President and Secretary
Address:
Prior to January 1, 2003:
------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
From January 1, 2003:
--------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
THE 1818 MEZZANINE FUND II, L.P.,
as Collateral Agent
By: ▇▇▇▇▇ Brothers ▇▇▇▇▇▇▇▇ & Co.,
General Partner
By:___________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Partner
Address:
▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇/▇▇/ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
EXHIBIT 2.1
Form of Senior Note
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR ANY STATE SECURITIES AND BLUE SKY LAWS AND MAY NOT BE SOLD,
TRANSFERRED, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED EXCEPT (1) PURSUANT TO A
REGISTRATION STATEMENT WITH RESPECT TO SUCH NOTE WHICH IS EFFECTIVE UNDER THE
ACT OR (2) PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE ACT
RELATING TO THE DISPOSITION OF THIS NOTE AND (3) IN ACCORDANCE WITH APPLICABLE
STATE SECURITIES AND BLUE SKY LAWS.
OGLEBAY NORTON COMPANY
SENIOR SECURED NOTE
PPN NO. 677007A@5
Initial Principal: [$________] _____, 2002
FOR VALUE RECEIVED, Oglebay Norton Company, an Ohio corporation (the "Maker"),
hereby promises to pay to the order of [_______________] or its registered
assign and transferee (collectively, the "Payee") the principal sum of
_______________ Dollars ($___________), plus the aggregate amount of accrued
interest from time to time capitalized thereon, less the aggregate amount of
principal prepaid or repaid from time to time, in each case, pursuant to the
terms and conditions of the Purchase Agreement (as defined herein).
1. Notes. This Note is one of the Senior Notes issued pursuant to and is
subject to the terms and entitled to the benefits of the Senior Secured Note
Purchase Agreement dated as of _____, 2002 (as amended, supplemented or
otherwise modified from time to time in accordance with its terms, the "Purchase
Agreement"), among the Maker, the Payee hereof and the other Purchasers referred
to therein. Terms used herein and not otherwise defined herein shall have the
meanings ascribed thereto in the Purchase Agreement.
Commencing on the date of issuance, this Note shall accrue interest on the
unpaid principal amount thereof at an interest rate of 18% per annum (the
"Interest Rate"), consisting of 13% in cash interest and 5% either, at the
Company's option, in cash interest or to be added automatically to the unpaid
principal amount of this Note ("PIK Interest") on each March 31, June 30,
September 30 and December 31 (each, an "Interest Payment Date"). Interest on
this Note shall be computed based on a 360-day year of twelve 30-day months and
all PIK Interest on this Note will be compounded quarterly on each Interest
Payment Date, commencing on December 31, 2002. Cash interest on this Note shall
be payable quarterly in arrears on each Interest Payment Date commencing on
December 31, 2002 by wire transfer of immediately available funds to one or more
accounts designated by the holder of this Note. On each Interest Payment Date,
the Maker shall deliver a copy of Schedule I to this Note to the holder of this
Note, which Schedule I shall detail the outstanding principal balance of this
Note as of such date, including all PIK Interest previously added to the
principal amount thereof.
2. Remedies on Default, Etc. Reference is made to Article 9 of the
Purchase Agreement for the remedies available to the Payee upon the occurrence
of an Event of Default as described in the Purchase Agreement. The Maker hereby
agrees to pay on demand all reasonable costs and expenses, including without
limitation reasonable attorneys' fees and costs of collection, incurred or paid
by the holder of this Note in enforcing this Note in accordance with the
Purchase Agreement.
3. PRIORITY. THIS NOTE, AND THE OBLIGATIONS OF THE MAKER HEREUNDER, SHALL
RANK PARI PASSU IN RIGHT OF PAYMENT WITH THE SENIOR INDEBTEDNESS OF MAKER AND
EACH OF THE GUARANTORS AND SENIOR IN RIGHT OF PAYMENT TO ALL SUBORDINATED DEBT
AND ANY OTHER SUBORDINATED INDEBTEDNESS OF THE MAKER AND EACH OF THE GUARANTORS
ON THE TERMS AND CONDITIONS SET FORTH IN SECTION 2.11 OF THE PURCHASE AGREEMENT,
WHICH SECTION 2.11 IS HEREIN INCORPORATED BY REFERENCE AND MADE A PART HEREOF AS
IF SET FORTH HEREIN IN ITS ENTIRETY. WITHOUT LIMITING THE FOREGOING, THE LIENS
GRANTED BY THE MAKER AND THE GUARANTORS TO THE NOTEHOLDERS UNDER THE SECURITY
DOCUMENTS SHALL RANK JUNIOR TO THE LIENS GRANTED BY THE MAKER AND THE GUARANTORS
TO THE AGENT AND THE BANKS ON THE TERMS AND CONDITIONS OF, AND AS OTHERWISE
PROVIDED IN, THE INTERCREDITOR AGREEMENT DATED AS OF OCTOBER __, 2002 AMONG
KEYBANK NATIONAL ASSOCIATION, AS AGENT, THE 1818 MEZZANINE FUND II, L.P., AS
COLLATERAL AGENT, AND THE NOTEHOLDERS.
4. No Impairment. No provision of the Purchase Agreement or this Note
shall alter or impair the obligation of the Maker, which is absolute and
unconditional, to pay the principal and interest on this Note at the times,
places and rates, and in the coin or currency provided.
5. Waivers; Amendments. The Maker hereby waives presentment, demand,
protest and notice of any kind. No failure or delay on the part of the Maker or
the Payee or holder hereof in exercising any right, power, privilege or remedy
hereunder or under the Purchase Agreement shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right, power, privilege or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power, privilege or remedy. The remedies provided for herein and in
the Purchase Agreement are cumulative and are not exclusive of any remedies that
may be available to the Maker or the Payee at law or in equity or otherwise.
This Note may not be amended and the provisions hereof may not be waived, except
in accordance with the terms of the Purchase Agreement.
6. Lost Notes, etc. If this Note is mutilated, destroyed, lost or stolen,
upon receipt of evidence satisfactory to the Maker of such loss, theft,
destruction or mutilation of this Note and, if requested in the case of any such
loss, theft or destruction, upon delivery of an indemnity bond or other
agreement or security reasonably satisfactory to the Maker, or, in the case of
any such mutilation, upon surrender and cancellation of this Note the Maker
shall issue a new Note of like tenor and amount and dated the date to which
interest has been paid, in lieu of this Note; provided, however, if Payee, its
nominee, or any of its partners or members is the holder of this Note and this
Note is lost, stolen or destroyed, the affidavit of an authorized partner,
member or
2
officer of such holder setting forth the circumstances with respect to such
loss, theft or destruction shall be accepted as satisfactory evidence thereof,
and no indemnification bond or other security shall be required as a condition
to the execution and delivery by the Maker of a new Note in replacement of this
Note other than the holder's written agreement to indemnify the Maker.
7. Governing Law. This Note shall be deemed to be a contract made under
the internal laws of the State of New York, and for all purposes shall be
governed by and construed in accordance with the internal laws of the State of
New York.
8. Acknowledgment and Agreement. By its acceptance of this Note, the
Payee or holder hereof acknowledges and agrees to be bound by the terms and
conditions of the Agency Agreement dated as of October __, 2002, a copy of which
the Payee or holder has received.
[Remainder of Page Intentionally Left Blank]
3
IN WITNESS WHEREOF, the Maker has caused this Note to be duly executed and
delivered on the date set forth above by the duly authorized representative of
the Maker.
OGLEBAY NORTON COMPANY
By:_______________________________
Name:
Title:
4
EXHIBIT 6.4(d)
Form of Compliance Certificate
Oglebay Norton Company
___________, 200__
The 1818 Mezzanine Fund II, L.P.
c/o Brown Brothers ▇▇▇▇▇▇▇▇ & Co.
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Re: Senior Secured Note Purchase Agreement dated as of October __, 2002, among
Oglebay Norton Company (the "Company"), the Guarantors listed on the
signature pages thereto and The 1818 Mezzanine Fund II, L.P. and the other
Purchasers party thereto (the "Agreement")
Ladies and Gentlemen:
Pursuant to the provisions of Section [6.4(a)] [6.4(b)] of the Agreement, the
undersigned, in her capacity as the Chief Financial Officer of the Company,
hereby certifies solely in such capacity and not individually, on behalf of the
Company and each of the Guarantors as follows:
(A) (1) The representations and warranties made by or on behalf of the Company
and each its Subsidiaries in the Agreement, the Security Documents to
which it is a party and the other Senior Notes Documents to which it
is a party are true and correct in all material respects on and as of
the date hereof, with the same effect as if made at and as of the date
hereof; except to the extent such representations and warranties are
specifically made as of a particular date or as of the date of the
applicable Senior Notes Document (in which case such representations
and warranties are true and correct as of such date);
(2) since the Reference Balance Sheet Date, there has occurred no
materially adverse change in the financial condition or business of
the Company and its Subsidiaries as shown on or reflected in the
consolidated balance sheet of the Company as at [________], or the
consolidated statements of income and cash flows for the period then
ended, other than changes in the ordinary course of business that have
not had a Material Adverse Effect. Since the Reference Balance Sheet
Date, the Company has not made any Distributions, except in accordance
with the terms of the Agreement;
(3) there has been no change (i) in the Organizational Documents of the
Company or any of its Subsidiaries from the form heretofore certified
to the Purchasers or (ii) except as set forth in the certificates
attached hereto and except as heretofore disclosed to the Purchasers
in a previous Compliance Certificate, in the incumbency of the
officers of
the Company or any of its Subsidiaries whose signatures have
heretofore been certified to the Purchasers;
(4) the financial statements attached hereto as Schedule 1 are in
compliance with the applicable provisions of Section [6.4(a)] [6.4(b)]
of the Agreement;
(5) the undersigned has reviewed the provisions of the Agreement, and has
caused the provisions of the Agreement to be reviewed, and, to her
knowledge, there is no Default or Event of Default thereunder, and no
condition which the undersigned reasonably anticipates to give rise to
a Default thereunder, other than as set forth on Schedule 2 attached
hereto.
(B) Attached hereto as Schedule 3 are calculations demonstrating that, based
upon the financial statements of the Company and its Subsidiaries attached
hereto as Schedule 1, the Company and its Subsidiaries are in compliance
with all financial restrictions set forth in the Agreement.
(C) [Fiscal Year End Only] Attached hereto as Exhibit A is a true, correct and
complete copy of the annual accountant's management letter related to the
financial statements attached hereto as Schedule 1.
Terms defined in the Agreement and not otherwise expressly defined herein
are used herein with the meanings so defined in the Agreement.
[Signature Page Follows]
In witness whereof, the undersigned has caused an authorized officer to
execute this Certificate on this _____ day of ____________, 200_.
OGLEBAY NORTON COMPANY
By: ______________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Financial Officer
EXHIBIT 6.14
Form of Confidentiality Agreement
[Date]
[Proposed Noteholder]
[Address]
Attn:
Ladies and Gentlemen:
In connection with your proposed purchase (the "Proposed Purchase") of Senior
Notes due 2008 issued by Oglebay Norton Company ("Oglebay") pursuant to the
Senior Secured Note Purchase Agreement, dated as of October __, 2002 (as
amended, supplemented and otherwise modified from time to time, the "Note
Purchase Agreement"), among Oglebay, the Guarantors named therein and the
initial Purchasers named therein, you have received and will receive information
concerning Oglebay and its subsidiaries (collectively, the "Company"). It is a
condition to your receipt of such information that you execute and deliver this
confidentiality agreement to Oglebay. Capitalized terms used herein and not
defined herein are used herein as defined in the Note Purchase Agreement.
You agree that you and any of your representatives (it being understood that
they shall be informed by you of the confidential nature of such information and
that they are bound by the terms of this confidentiality agreement) shall hold
in strict confidence (except as otherwise required by law) any confidential or
proprietary information obtained from the Company (or any Noteholder) (such
information, "Company Confidential Information"). Information disclosed to or
generally known in the industry or obtained or developed by you or your
representatives based on information received from Persons who had a right to
disclose the same to you or such representatives shall not be (and shall not be
deemed to be) confidential or proprietary information or Company Confidential
Information. You agree that you will use Company Confidential Information solely
for the purposes contemplated by the Note Purchase Agreement.
You agree to hold all Company Confidential Information obtained by you in
contemplation of the Proposed Purchase or otherwise pursuant to the requirements
of the Note Purchase Agreement, a copy of the relevant provision of which is
attached hereto as Annex A; provided, however, that you may disclose such
Company Confidential Information (a) to your examiners, affiliates, outside
auditors, counsel and other professional advisors, (b) to any other Noteholder
or to any prospective holder of Senior Notes that has executed a confidentiality
agreement substantially similar to this agreement, and (c) as required or
requested by any governmental authority or representative thereof or pursuant to
legal process; provided, further that unless specifically prohibited by
applicable law or court order, you will use your best efforts prior to
disclosure thereof, to notify Oglebay of the applicable request, (A) by a
governmental authority
or representative thereof (other than any such request in connection with an
examination of your financial condition by such governmental authority) or (B)
pursuant to legal process, for disclosure of such Company Confidential
Information as far in advance of its disclosure as is practicable and, upon
Oglebay's request and at its expense, use your best efforts to obtain assurances
that confidential treatment will be accorded such information.
Except as may be required by applicable law, you hereby agree that you shall not
issue a publicity release or announcement or otherwise make any public
disclosure concerning the Note Purchase Agreement, the transactions contemplated
thereby or the Proposed Purchase, without prior approval by the Noteholders and
Oglebay. If any announcement is required by law to be made by you, prior to
making such announcement you shall deliver a draft of such announcement to the
Noteholders and Oglebay and shall give the Noteholders and Oglebay an
opportunity to comment thereon.
You understand that wrongful use of material, non-public information in the
purchase or sale of securities constitutes a violation of the federal securities
laws.
Upon your receipt of the written request of Oglebay, you agree to redeliver to
Oglebay or destroy promptly the Company Confidential Information delivered to
you by the Company of any Noteholder. You further agree to use commercially
reasonable efforts to destroy all written, electronically-stored and
magnetically-stored memoranda, notes, extractions, abstracts, compilations and
other records prepared by you or your representatives based on the Company
Confidential Information in accordance with your customary procedures for
destroying confidential information. Notwithstanding the foregoing, if the
Proposed Purchase is consummated, in no event shall you be obligated to return
any materials furnished by the Company other than those instruments in your
possession evidencing Senior Notes Obligations once the Senior Notes Obligations
(including the Guaranteed Obligations) have been paid in full in cash and the
Note Purchase Agreement has been terminated in accordance with its terms.
This confidentiality agreement shall be amended automatically without any
further action on the part of any party hereto or otherwise upon your delivery
of an effective joinder agreement in the form of Exhibit A to the Note Purchase
Agreement, whereupon your obligations with respect to all Company Confidential
Information other than Company Confidential Information provided to you under
Section 6.14 of the Note Purchase Agreement (including, without limitation, any
such Company Confidential Information received by the Representative and then
provided to you by the Representative) shall be governed by the terms of the
Note Purchase Agreement. For the avoidance of doubt any Company Confidential
Information that the Company or any of its Subsidiaries is required to provide
(or cause to be provided or made available) to the Noteholders (or the
Collateral Agent as such term is defined in the Security Documents referenced in
the Note Purchase Agreement) under any provision of the Note Purchase Agreement
other than Section 6.14 thereof shall be deemed to be provided under such other
provision of the Note Purchase Agreement (and not Section 6.14 of the Note
Purchase Agreement) for all purposes hereunder.
This letter agreement shall be governed by and construed in accordance with the
laws of the State of New York.
If you are in agreement with the foregoing, please so indicate by signing and
returning one copy of this letter agreement to Oglebay (Attention: ▇▇▇▇▇▇▇▇ ▇.
Walk, Vice President, General Counsel and Secretary).
Very truly yours,
OGLEBAY NORTON COMPANY
By: _______________________________
Name: _____________________________
Title: ____________________________
CONFIRMED AND AGREED
AS OF THE ___ DAY OF _________ 200_:
[PROPOSED NOTEHOLDER]
By: ________________________________
Name: ______________________________
Title: _____________________________