As filed with the Securities and Exchange Commission on April 17, 2003
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Salt Holdings Corporation
(Exact name of registrant as specified in its charter)
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Delaware
(State or other jurisdiction of incorporation or organization) |
1400
(Primary Standard Industrial Classification Code Number) |
36-3972986
(I.R.S. Employer Identification No.) |
8300 College Boulevard
Overland Park, Kansas 66210
(913) 344-9200
(Address, including zip code, and telephone number, including area code,
of the registrant's principal executive offices)
Michael E. Ducey
Chief Executive Officer and President
8300 College Boulevard
Overland Park, Kansas 66210
(913) 344-9200
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
Gregory A. Ezring, Esq.
Latham & Watkins LLP
885 Third Avenue
Suite 1000
New York, New York 10022
(212) 906-1200
Approximate date of commencement of proposed exchange offer: As soon as practicable after the effective date of this registration statement.
If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. o
If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
CALCULATION OF REGISTRATION FEE
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Title of Each Class of
Securities to be Registered |
Amount to be
Registered |
Proposed Maximum
Offering Price per Exchange Note(1)(2) |
Proposed Maximum
Aggregate Offering Price(1)(2) |
Amount of
Registration Fee(1)(2) |
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| 12 3 / 4 % Senior Discount Notes due 2012 | $123,500,000 | 56.2% | $69,436,370 | $5,650 | ||||
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The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
Subject to completion, dated April 17, 2003.
PROSPECTUS
SALT HOLDINGS CORPORATION
OFFER TO EXCHANGE
$123,500,000 aggregate principal amount at maturity of its 12 3 / 4 % Series B Senior Discount Notes due 2012, which have been registered under the Securities Act, for any and all of its outstanding 12 3 / 4 % Series A Senior Discount Notes due 2012.
We are offering to exchange our 12 3 / 4 % series B senior discount notes due 2012, or the "exchange notes," for our currently outstanding 12 3 / 4 % series A senior discount notes due 2012, or the "outstanding notes." We refer to the outstanding notes and the exchange notes collectively in this prospectus as the "notes." The exchange notes are substantially identical to the outstanding notes, except that the exchange notes have been registered under the federal securities laws and will not bear any legend restricting their transfer. The exchange notes will represent the same debt as the outstanding notes and we will issue the exchange notes under the same indenture.
We may redeem up to 35% of the exchange notes using proceeds from certain equity offerings on or prior to December 15, 2005. We may redeem the exchange notes on or after December 15, 2007 at the prices set forth in this prospectus. Additionally, we may redeem the notes, in whole but not in part, upon a change of control prior to December 15, 2007. Holders may require us to repurchase the exchange notes upon a change of control. There is no sinking fund for the exchange notes. The exchange notes will rank equal with all of our existing and future unsecured senior debt and senior to our future subordinated unsecured debt. The exchange notes will be effectively subordinated to our secured indebtedness to the extent of the value of the assets securing such indebtedness.
The principal features of the exchange offer are as follows:
Broker-dealers receiving exchange notes in exchange for outstanding notes acquired for their own account though market making or other trading activities must deliver a prospectus in any resale of the exchange notes.
Investing in the exchange notes involves risks. See "Risk Factors" beginning on page 14.
Neither the U.S. Securities and Exchange Commission nor any other federal or state agency has approved or disapproved of these securities to be distributed in the exchange offer, nor have any of these organizations determined that this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus is , 2003.
Each broker-dealer that receives exchange notes for its own account pursuant to the exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of such exchange notes. The letter of transmittal delivered with this prospectus states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act of 1933, as amended. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of exchange notes received in exchange for outstanding notes where such outstanding notes were acquired by such broker-dealer as a result of market making activities or other trading activities. We have agreed that, for a period of 180 days after the completion of the exchange offer, we will make this prospectus available to any broker-dealer for use in connection with any such resale. See "Plan of Distribution."
We have not authorized any dealer, salesman or other person to give any information or to make any representation other than those contained or incorporated by reference in this prospectus. You must not rely upon any information or representation not contained or incorporated by reference in this prospectus as if we had authorized it. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities other than the registered securities to which it relates, nor does this prospectus constitute an offer to sell or a solicitation of an offer to buy securities in any jurisdiction to any person to whom it is unlawful to make such offer or solicitation in such jurisdiction.
CAUTIONARY NOTE REGARDING
FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA
This prospectus, including the sections entitled "Prospectus Summary" and "Business," contains forward-looking statements. These statements relate to future events or our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements, expressed or implied, by these forward-looking statements. These risks and other factors include, among other things, those listed in "Risk Factors" and elsewhere in this prospectus. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expects," "intends," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "continue" or the negative of these terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially. In evaluating these statements, you should specifically consider various factors, including the risks outlined in "Risk Factors." These factors may cause our actual results to differ materially from any forward-looking statement.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. We are under no duty to update any of the forward-looking statements after the date of this prospectus.
Information regarding market and industry statistics contained in the "Prospectus Summary" and "Business" sections is included based on information available to us that we believe is accurate. It is generally based on industry, academic and other publications that are not produced for purposes of securities offerings or economic analysis. We have not reviewed or included data from all sources and cannot assure you of the accuracy of the data we have included.
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MARKET AND INDUSTRY DATA AND FORECASTS
This prospectus includes market share and industry data and forecasts that we obtained from internal company surveys, market research, consultant surveys, publicly available information and industry publications and surveys. Industry surveys, publications, consultant surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but there can be no assurance as to the accuracy and completeness of such information. We have not independently verified any of the data from third-party sources nor have we ascertained the underlying economic assumptions relied upon therein. Similarly, internal company surveys, industry forecasts and market research, which we believe to be reliable based upon management's knowledge of the industry, have not been verified by any independent sources. Forecasts are particularly likely to be inaccurate, especially over long periods of time. In addition, we do not know what assumptions regarding general economic growth were used in preparing the forecasts we cite. Except where otherwise noted, references to North America include only the continental United States and Canada, and statements as to our position relative to our competitors or as to market share refer to the most recent available data. Statements concerning (a) North America general trade salt are generally based on historical sales volumes, (b) North America highway deicing salt are generally based on historical production capacity, (c) sulfate of potash are generally based on historical sales volumes and (d) United Kingdom salt sales (general trade and highway deicing) are generally based on sales volumes. Except where otherwise noted, all references to tons refer to "short tons." One short ton equals 2,000 pounds.
The following items referred to in this prospectus are fiduciary registered and other trademarks pursuant to applicable intellectual property laws and are the property of our wholly owned subsidiary Compass Minerals Group, Inc. or its subsidiaries: "Sifto®," "American Stockman®," "Safe Step®," "Winter Storm®," "Guardian®," "FreezGard®," "Nature's Own®" and "K-Life®."
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WHERE YOU CAN FIND MORE INFORMATION
We have filed with the U.S. Securities and Exchange Commission, or the "SEC," a registration statement on Form S-4, the "exchange offer registration statement," which term shall encompass all amendments, exhibits, annexes and schedules thereto, pursuant to the Securities Act of 1933, as amended, and the rules and regulations thereunder, which we refer to collectively as the "Securities Act," covering the exchange notes being offered. This prospectus does not contain all the information in the exchange offer registration statement. For further information with respect to Salt Holdings Corporation and the exchange offer, reference is made to the exchange offer registration statement. Statements made in this prospectus as to the contents of any contract, agreement or other documents referred to are not necessarily complete. For a more complete understanding and description of each contract, agreement or other document filed as an exhibit to the exchange offer registration statement, we encourage you to read the documents contained in the exhibits.
The indenture governing the notes provides that we will furnish to the holders of the notes copies of the periodic reports required to be filed by us with the SEC under the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, which we refer to collectively as the "Exchange Act." Even if we are not subject to the periodic reporting and informational requirements of the Exchange Act, we will make such filings to the extent that such filings are accepted by the SEC. Furthermore, we will provide the trustee for the notes within 15 days after such filings with annual reports containing the information required to be contained in Form 10-K and quarterly reports containing the information required to be contained in Form 10-Q promulgated by the Exchange Act. From time to time, we will also provide such other information as is required to be contained in Form 8-K promulgated by the Exchange Act. If the filing of such information is not accepted by the SEC or is prohibited by the Exchange Act, you can obtain a copy of such report, at no cost, by writing or telephoning us at the following address:
Salt
Holdings Corporation
8300 College Boulevard
Overland Park, Kansas 66210
Attention: Chief Financial Officer
(913) 344-9200
To ensure timely delivery, please make your request as soon as practicable and, in any event, no later than five business days prior to the expiration of the exchange offer.
You may read and copy any document we file with the SEC at the SEC's public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. Our SEC filings are also available to the public at the SEC's web site at http://www.sec.gov .
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This summary highlights important information about our business and about this offering. It does not include all information you should consider before investing in the exchange notes. Please review this prospectus in its entirety, including the risk factors and our financial statements and the related notes, before you decide to invest. Unless otherwise noted, the terms the "Company," "Salt Holdings," "we," "us" and "our" refer to Salt Holdings Corporation and its consolidated subsidiaries, collectively.
Company Overview
We are the second largest producer of salt in North America, the largest producer of salt in the United Kingdom and overall, the world's third largest producer of salt. In addition, in North America we are the largest producer of sulfate of potash, or SOP, which is used in the production of specialty fertilizers. Salt is one of the most widely used minerals in the world and has a wide variety of end-use applications, including highway deicing, food grade applications, water conditioning and various industrial uses. Our business also includes the following key characteristics:
• We believe that our cash flows are not materially impacted by economic cycles due to the stable end-use markets of salt and the absence of cost effective alternatives.
• We operate eleven facilities in North America and the United Kingdom, including the largest rock salt mine in the world in Goderich, Ontario and the largest salt mine in the United Kingdom in Winsford, Cheshire.
• We believe that we are among the lowest cost rock salt producers in our markets. Our cost advantage is due to the size and quality of our mineral reserves, the strategic location of our facilities and our continuous focus on improving production efficiency. Our salt mines in North America are located near either rail or water transport systems, thereby minimizing shipping and handling costs which constitute a significant portion of the overall delivered cost of salt. Note 11 to our combined and consolidated financial statements included in this prospectus provides additional information regarding geographical data.
For the year ended December 31, 2002, we sold approximately 11.0 million tons of salt and other minerals, generating sales of $502.6 million and operating income of $77.6 million.
We operate through the following product lines:
Highway Deicing
We are the largest producer of rock, or highway deicing, salt in North America. We also operate the largest highway deicing salt mine in the United Kingdom at Winsford, Cheshire and provide an estimated 55% of the United Kingdom's highway deicing salt requirements. We believe we are the only local supplier of highway deicing salt capable of meeting peak winter demand in the United Kingdom. In addition, our highway deicing product line includes the following characteristics:
• We sell primarily to state, provincial, county and municipal highway departments for deicing applications for which demand depends largely on the number of snowfall days.
• While subject to seasonal variations in demand, highway-deicing salt is not materially affected by an economic downturn, as it is an essential part of highway maintenance to ensure public safety and continued personal and commercial mobility.
• Due to the lack of cost-effective alternatives and the steadily expanding highway infrastructure, the production of highway deicing salt in the United States has been increasing over time at 1% per annum, while prices have increased by 4% per annum from 1970 to 2000.
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As a result of the contract bidding for the 2001/2002-winter season, we secured significant price increases in North America of 14% over prices paid by customers during the prior year period on all of our highway deicing volume. We were able to achieve these price increases as a result of industry inventory levels being unusually low following the prior season and the effects of several past successive mild winters that kept price increases at lower than historical rates. These price increases improved our product sales and operating income in the year ended December 31, 2002 by approximately $8 million. Following the mild 2001/2002-winter season, the results of the 2002/2003 bidding season yielded essentially no change in the average prices awarded when compared to the prior year bid price.
General Trade Salt
We are the third largest producer of general trade salt in North America and the second largest in the United Kingdom, serving major retailers, agricultural cooperatives and food producers. Our general trade salt product line includes the following key characteristics:
• We offer a full range of salt products distributed to several end use markets, including consumer applications such as table salt, water conditioning, consumer ice control, food processing, agricultural applications and a variety of industrial applications.
• We believe we are the largest private label producer of water conditioning salt and the largest producer of salt-based agricultural products in North America based on tonnage.
• We manufacture more than 70 private labels of table salt for grocers and major retailers and, in Canada, we market salt under the popular Sifto® brand name.
• We are the market leader in the United Kingdom for evaporated salt used for water conditioning.
• Our operations are generally not susceptible to economic cycles as a result of the non-discretionary need for, and low cost of, salt. From 1970-2000, the production of general trade salt in the United States has been increasing over time at 2% per annum, while prices have been increasing by 5% per annum during the same period.
Sulfate of Potash
We are the market leader in North American sales of SOP. Approximately 62% of our SOP sales in 2002 were made to domestic customers, which include fertilizer manufacturers, dealers and distributors. Our SOP product line includes the following key characteristics:
• SOP is primarily used as a specialty fertilizer, providing essential potassium to high-value, chloride-sensitive crops such as certain vegetables and fruits, tea, tobacco and turf grass. We believe that there are significant growth opportunities for SOP both domestically and internationally because of its favorable impact on crop yield and quality.
• We are the low cost producer of SOP in North America. We leverage our abundant mineral resources and unique low cost manufacturing process to achieve margins that are attractive compared to other fertilizer products.
We believe that SOP, as a non-core product of IMC Global Inc., or "IMC Global," did not receive sufficient focus to realize its full growth potential. As we continue our market development of our SOP product line, we believe that we can take advantage of the significant growth opportunities arising from SOP's superior performance over commodity potash.
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Competitive Strengths
Leading Market Position— We are among the three largest salt producers, who together represent over 80% of total market capacity, in North America. In the United Kingdom, we are the largest highway deicing salt producer, and, along with the next two largest producers, represent over 95% of total production capacity. In the North American SOP market, we are the leading producer and together with the second largest North American SOP producers together have approximately 75% of the North American market.
Low Cost Producer— We believe that our Goderich, Ontario, Cote Blanche, Louisiana and Winsford, Cheshire facilities are the lowest cost, high volume rock salt mines in our served markets. This cost advantage is a result of the size and quality of our reserves, effective mining techniques, low transportation cost due to proximity to either rail or water transport systems and efficient production processes. Through our solar evaporation facility in Ogden, Utah, we believe that we are the low cost solar salt producer in our North American markets and among the lowest cost producers of SOP in the world. Over the last 4 years, we have implemented cost-cutting measures, including head count reductions and pursued significant capital investments to improve mining technology and production efficiencies, as well as to expand and rationalize production.
Stable Financial Performance— Both the North American highway deicing salt and the general trade salt product lines enjoy predictable and consistent annual demand patterns and cash flow as a result of the following:
• Based on the non-discretionary need for salt products and their low cost nature, our business is less susceptible to economic cycles. For example, even in the recessionary period between 1990 and 1992, general trade salt production in the United States continued to grow at an annual compound rate of 3% and sales of highway deicing salt remained consistent with weather patterns during that period.
• The overriding concern for public safety insulates the demand for salt used for highway maintenance from economic cycles. Also, in our highway deicing product line, pricing is set and volume is reserved up to a year in advance under annual contracts.
• While winter weather conditions in individual locations are difficult to predict, the overall amount of snowfall and general intensity of winter weather conditions in our major target markets in the U.S. Upper Midwest and the U.S. and Canadian Great Lakes region are relatively stable. As a result, over the last 17 years, we have, on average, sold approximately 100% of our committed volume.
• In the general trade salt product line, sales are generally secured through long-term customer relationships.
• Our manufacturing costs are relatively stable and have decreased at an annual compound rate of over 1% per ton over the last 5 years. Our manufacturing processes do not materially depend on the consumption of raw materials susceptible to market price fluctuations.
Strong Free Cash Flow— We believe our strong free cash flow is a result of the following business characteristics:
• High margins . We believe that our high margins are the result of low and stable production costs, our strong market position and the many end-use markets in which we operate.
• Low maintenance capital expenditures . Our low maintenance capital expenditure requirements of less than $20 million per annum, coupled with the non-cyclical nature of our business, provide us with a stable stream of cash flow to use in our operations, to reduce debt and to reinvest in our business.
• Completed capacity expansions . During the period from 1998 to 2001, we spent in excess of $17 million per year on average in growth capital expenditures for capacity expansions and productivity enhancements. We believe that our capacity is sufficient to meet our current growth initiatives without
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significant additional spending and that future growth capital will be spent only upon the expectation of significant returns.
Diversified Customer Base and End-Use Markets— Salt is used in numerous different products and in a wide variety of consumer and industrial applications. Due to its unique characteristics and low cost, consumers cannot cost-effectively substitute any other product for salt, resulting in relatively stable consumption and growth over the long term as the general population grows. Salt is the best product available for deicing applications in terms of cost and efficiency. For example, the next most cost-efficient product to highway deicing salt, calcium chloride, costs approximately five times more to purchase. Similarly, there is no cost-effective substitute to salt in the water conditioning and food processing markets. Our presence in different segments of the general trade market effectively diversifies our exposure to events affecting any single end market. No single customer accounted for more than 5% of our 2002 sales while our top ten customers accounted for approximately 25% of 2002 sales.
Significant Barriers to Entry— Each of the primary North American and U.K. market participants has a large base of installed assets that would be extremely expensive and time-consuming for new competitors to replicate. In addition, our mineral rights are strategically located and we believe it is unlikely that a new market entrant would be able to locate a mineral reserve in close proximity to both low cost transportation systems and end-use markets. Due to the low production cost, transportation and handling tends to be a significant component of the total delivered cost of salt, making logistics a key competitive factor in the industry. The higher relative cost associated with transportation acts as a barrier to entry in favor of salt manufacturers located within close proximity to their customers. We maintain approximately 80 depots in North America for storage and distribution of highway deicing salt and we consider our salt distribution network to be the most extensive in our served markets. Our over 35 years of market experience in the highway deicing salt business, proven customer service, product quality and modeling techniques enable us to bid selectively on highway deicing salt contracts which have the most attractive terms. Our long term relationships with major retailers coupled with the higher standard of care required in handling food grade salt create a significant deterrent for potential new entrants in the general trade market. In addition, our customers, specifically government agencies in charge of maintaining public safety over their road network, have stringent qualification standards and a strong preference for dealing with existing salt manufacturers which can handle bulk capacity and have track records for on time delivery. With respect to SOP, high quality potassium sulfate reserves are scarce and we believe that in North America no comparable commercially viable sources are known other than those currently being extracted.
Business Strategy
Increase Revenues— One of our key objectives is to be the market leader with respect to profitable sales growth. We believe that we can achieve this goal through the following:
• Leveraging our leading market position . In the highway deicing product line, we are leveraging our leading market position, distribution infrastructure and low-cost production capability. We intend to strengthen our leadership position by focusing on the customers strategically located within our distribution network. We believe that this will allow us to efficiently grow our business in line with market volume and price growth, which in the United States have increased at an average of 1% and 4% per annum, respectively. We believe we can further increase sales to our existing and new customers by offering liquid deicing products and other value-added deicing products that improve the application of the product to roads and permit the conditioning of roads prior to the impact of snow and ice. In the general trade salt product line, in addition to participating in underlying market growth, we plan to improve our market share by focusing on specialty and high value-added niche products, particularly in deicing and water conditioning applications. For example, we have launched our first high-value deicing product in Canada, Sifto's Extreme® Icemelter, which will compete in this under-
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served market. In our water conditioning business, we intend to continue expanding by focusing on growing regional brands and private label retail water conditioning sales.
• Increase service offerings . We plan on growing our service offerings, including managing customer inventory and replenishment systems such as the deicing management services provided for some U.K. customers. We currently have several such contracts in place and anticipate entering into various other such contracts in the future. Also, we continue to develop alternative mine uses such as waste and document storage. For this purpose, we have already entered into a joint venture with a subsidiary of Vivendi SA to use the excavated space in our mine in the United Kingdom as a document storage site and are awaiting final permitting to also store inert waste. In addition, we are working with various third parties to develop several of our North American salt mines as storage sites for natural gas and waste. We expect to receive ongoing revenue streams from these alternative uses.
• Increase focus on market development in SOP product line . For the seven years prior to IMC Global's ownership of the Company, the sales volume of the SOP product line grew in excess of 25% per annum. However, as a non-core product of IMC Global, we believe that SOP did not receive sufficient focus to realize its full growth potential. We have increased the focus on this product line and have recruited a new sales manager and a dedicated global sales force. We will continue to target specific crops where the benefits of using SOP versus other potassium sources have been scientifically proven, such as wine grapes, tea, nuts and turf grass. We also plan to differentiate ourselves from our competitors through unique value-added products designed for specific crop applications. For example, we have targeted the fast-growing liquid and suspension fertilizer markets that are currently served primarily by non-SOP potassium sources.
• Supplement growth through tuck-in acquisitions . To supplement internal growth, we may pursue opportunistic acquisitions of small complementary businesses in both North America and Europe. There are several smaller producers of highway deicing salt which could be attractive to further expand the scope of our operations. There are also several independent salt producers in various niches of the general trade business market which could broaden both our geographic coverage and product diversity.
Improve Profitability— We intend to continue to focus on productivity enhancements and on improving our cost platform. Examples include the following:
• Plant consolidation and capacity expansion . From 1998 through 2001, we successfully implemented manufacturing programs including consolidation of facilities and over 300,000 tons of capacity expansion while divesting obsolete operations.
• Increasing productivity . We have increased manpower productivity by over 8% per annum in our general trade salt product line over the period from 1998 to 2001 through increased automation and capacity increases. We have installed a continuous miner and shaft automation system which will significantly decrease manufacturing cost and increase manpower productivity at our Winsford facility.
• Optimizing performance . We monitor the performance of each product line on a regular basis to aid in meeting target revenue and margin goals. By maintaining, but not materially growing, our share of the highway deicing market, we believe that we have an opportunity to grow our margin and overall profitability in this product line by focusing on our ability to increase our average price levels and improving our customer mix.
Maximize Cash Flow— As an independent operating entity, we intend to manage our working capital efficiently and generate cash flow from enhanced management focus. Our annual maintenance capital expenditures have averaged approximately $23 million while IMC Global owned us from 1998 to 2001, although for the five years under prior ownership, our annual maintenance capital expenditures were on average approximately $17 million. In the future, we expect to spend approximately $20 million annually on maintenance capital expenditures. In addition to maintenance capital expenditures, during the period from 1998 through 2001 we spent in excess of $17 million per year on average in growth
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capital expenditures for capacity expansions and productivity enhancements. We believe that our capacity is sufficient to meet our current growth initiatives without significant additional spending and that future growth capital will be spent only upon the expectation of significant returns. Also, in connection with the Recapitalization, we received in excess of $114 million of net operating loss carryforwards and expect to realize significant cash tax savings if these carryforwards are able to be utilized. During 2002, net utilization of net operating loss carryforwards was approximately $8.0 million. Due to the uncertainty that these carryforwards will be utilized, a full valuation allowance was previously established against the remaining deferred tax asset. We intend to use our free cash flow to reduce leverage by reducing indebtedness or by reinvesting in our business.
RECAPITALIZATION AND RECENT FINANCINGS
On November 28, 2001, Apollo Management V, L.P., or "Apollo," through its subsidiary YBR Holdings LLC, or "YBR Holdings," acquired control of Salt Holdings from IMC Global pursuant to a recapitalization of Salt Holdings. As of December 31, 2002, YBR Holdings owned approximately 76.2%, IMC Global owned approximately 19.5% and management (through direct investments, a deferred compensation plan and an option plan) owned approximately 4.3% of Salt Holdings' fully-diluted equity. The cash needed to finance the Recapitalization, including related fees and expenses, was provided by equity contributions, the proceeds from the sale of $250.0 million principal amount of 10% senior subordinated notes due 2011 of our wholly owned subsidiary, Compass Minerals Group, Inc., or "Compass Minerals," and borrowings under a $360.0 million senior credit facility provided by affiliates of the initial purchasers of the senior subordinated notes and certain other lenders. The purchase of equity by YBR Holdings and the subsequent recapitalization and related financing are collectively referred to throughout this prospectus as the "Recapitalization."
On April 10, 2002, Compass Minerals issued $75.0 million in aggregate principal amount of its 10% senior subordinated notes due 2011, or the "April 2002 senior subordinated notes," in a private placement under Rule 144A and Regulation S of the Securities Act. In connection with the offering of the April 2002 senior subordinated notes, we amended and restated our senior credit facilities. See "Description of Certain Indebtedness and Preferred Stock."
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Summary of the Terms of the Exchange Offer
The following is a brief summary of terms of the exchange offer. For a more complete description of the exchange offer, see "The Exchange Offer."
| Securities Offered | $123,500,000 in aggregate principal amount at maturity of 12 3 / 4 % Series B Senior Discount Notes due 2012. | |
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Exchange Offer |
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We are offering to exchange $1,000 principal amount at maturity of our 12 3 / 4 % Series B Senior Discount Notes due 2012, which have been registered under the Securities Act, for each $1,000 principal amount at maturity of our currently outstanding 12 3 / 4 % Series A Senior Discount Notes due 2012. We will accept any and all outstanding notes validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on , 2003. Holders may tender some or all of their outstanding notes pursuant to the exchange offer. However, notes may be tendered only in integral multiples of $1,000 in principal amount at maturity. The form and terms of the exchange notes are the same as the form and terms of the outstanding notes except that: |
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• the exchange notes have been registered under the federal securities laws and will not bear any legend restricting their transfer; |
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• the exchange notes bear a series B designation and a different CUSIP number than the outstanding notes; and |
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• the holders of the exchange notes will not be entitled to certain rights under the registration rights agreement, including the provisions for an increase in the interest rate on the outstanding notes in some circumstances relating to the timing of the exchange offer. |
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See "The Exchange Offer." |
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Transferability of Exchange Notes |
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We believe that you will be able to freely transfer the exchange notes without registration or any prospectus delivery requirement so long as you may accurately make the representations listed under "The Exchange Offer—Transferability of the Exchange Notes." If you are a broker-dealer that acquired outstanding notes as a result of market making or other trading activities, you must deliver a prospectus in connection with any resale of the exchange notes. See "Plan of Distribution." |
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Expiration Date |
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The exchange offer will expire at 5:00 p.m., New York City time, on , 2003, unless we decide to extend the exchange offer. |
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Conditions to the Exchange Offer |
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The exchange offer is subject to certain customary conditions, some of which may be waived by us. See "The Exchange Offer—Conditions to the Exchange Offer." |
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Procedures for Tendering Outstanding Notes |
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If you wish to accept the exchange offer, you must complete, sign and date the letter of transmittal, or a facsimile of the letter of transmittal, in accordance with the instructions contained in this prospectus and in the letter of transmittal. You should then mail or otherwise deliver the letter of transmittal, or facsimile, together with the outstanding notes to be exchanged and any other required documentation, to the exchange agent at the address set forth in this prospectus and in the letter of transmittal. |
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By executing the letter of transmittal, you will represent to us that, among other things: |
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• you, or the person or entity receiving the related exchange notes, are acquiring the exchange notes in the ordinary course of business; |
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• neither you nor any person or entity receiving the related exchange notes is engaging in or intends to engage in a distribution of the exchange notes within the meaning of the federal securities laws; |
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• neither you nor any person or entity receiving the related exchange notes has an arrangement or understanding with any person or entity to participate in any distribution of the exchange notes; |
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• neither you nor any person or entity receiving the related exchange notes is an "affiliate" of Salt Holdings, as that term is defined under Rule 405 of the Securities Act; and |
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• you are not acting on behalf of any person or entity who could not truthfully make these statements. |
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See "The Exchange Offer—Procedures for Tendering Outstanding Notes" and "Plan of Distribution." |
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Effect of Not Tendering |
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Any outstanding notes that are not tendered, or that are tendered but not accepted, will remain subject to the restrictions on transfer. Since the outstanding notes have not been registered under the federal securities laws, they bear a legend restricting their transfer absent registration or the availability of a specific exemption from registration. Upon the completion of the exchange offer, we will have no further obligations, except under limited circumstances, to provide for registration of the outstanding notes under the federal securities laws. See "The Exchange Offer—Effect of Not Tendering." |
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Withdrawal Rights |
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Tenders of outstanding notes may be withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration Date. |
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United States Federal Income Tax Consequences |
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The exchange of the exchange notes for the outstanding notes in the exchange offer will not be treated as an "exchange" for U.S. federal income tax purposes. See "Certain United States Federal Income Tax Consequences." |
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Use of Proceeds |
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We will not receive any proceeds from the issuance of exchange notes pursuant to the exchange offer. See "Use of Proceeds." |
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Exchange Agent |
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The Bank of New York, the trustee under the indenture, is serving as exchange agent in connection with the exchange offer. |
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The following is a brief summary of the terms of the exchange notes. The financial terms and covenants of the exchange notes are the same as the outstanding notes. For a more complete description of the terms of the exchange notes, see "Description of the Exchange Notes."
| Issuer | Salt Holdings Corporation. | |
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Securities Offered |
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$123,500,000 in aggregate principal amount at maturity of our 12 3 / 4 % Series B Senior Discount Notes due 2012. |
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Maturity Date |
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December 15, 2012. |
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Interest |
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Prior to December 15, 2007, interest will accrue on the exchange notes in the form of an increase in the accreted value of the exchange notes. Thereafter, cash interest on the exchange notes will accrue and be payable semiannually in arrears on June 15 and December 15 of each year, commencing on June 15, 2008, at a rate of 12 3 / 4 % per annum. The accreted value of each exchange note will increase from the date of issuance until December 15, 2007 at a rate of 12 3 / 4 % per annum, reflecting the accrual of non-cash interest, such that the accreted value will equal the principal amount at maturity on December 15, 2007. |
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Original Issue Discount |
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The exchange notes are being offered with original issue discount for U.S. federal income tax purposes. Thus, although cash interest will not be payable on the exchange notes prior to June 15, 2008, interest will accrue from the issue date of the exchange notes based on the yield to maturity of the exchange notes and will be included as interest income (including for periods ending prior to December 15, 2007) for U.S. federal income tax purposes in advance of receipt of the cash payments to which the income is attributable. See "Certain United States Federal Income Tax Consequences." |
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Ranking |
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The exchange notes are senior obligations of ours. Accordingly, they will rank: |
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• equally with all of our existing and future unsecured senior debt; |
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• ahead of any of our future debt that expressly provides for subordination to the exchange notes; and |
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• subordinated to any of our secured indebtedness to the extent of the value of the security for that indebtedness. As of December 31, 2002, $325.0 million of senior indebtedness under the senior credit facility was secured by substantially all of our assets in connection with our guarantee of the senior credit facilities. |
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The exchange notes will be effectively subordinated to all of the existing and future indebtedness of our subsidiaries. As of December 31, 2002, our subsidiaries had total liabilities of $733.7 million. |
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Optional Redemption |
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We may redeem any of the exchange notes at any time on or after December 15, 2007, in whole or in part, in cash at the redemption prices described in this prospectus, plus accrued and unpaid interest to the date of redemption. At any one or more times on or before December 15, 2005, we may choose to repurchase up to 35% of the exchange notes with the money that we raise in one or more equity offerings, as long as we pay 112 3 / 4 % of the accreted value of the exchange notes and at least 65% of the original aggregate principal amount at maturity of notes remains outstanding afterwards. See "Description of the Exchange Notes—Optional Redemption." |
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Change in Control |
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Upon a change in control, we may be required to make an offer to purchase each holder's exchange notes at a price equal to 101% of the principal amount thereof (or accreted value, as applicable), plus accrued and unpaid interest, if any, to the date of purchase. |
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In addition, upon a change in control prior to December 15, 2007, we may redeem the exchange notes, in whole but not in part, at a redemption price equal to the accreted value of the exchange notes plus an applicable premium. |
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Basic Covenants of the Indenture |
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The indenture contains covenants that will, among other things, limit our ability and the ability of our restricted subsidiaries to: |
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• incur additional indebtedness; |
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• pay dividends on, redeem or repurchase our capital stock; |
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• make investments; |
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• permit payment or dividend restrictions on certain of our subsidiaries; |
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• sell assets; |
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• create certain liens; |
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• engage in transactions with affiliates; and |
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• consolidate or merge or sell all or substantially all of our assets and the assets of our restricted subsidiaries. |
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In addition, we will be obligated to offer to repurchase the exchange notes at 100% of their accreted value, plus accrued and unpaid interest, if any, to the date of repurchase, in the event of certain asset sales. |
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These restrictions and prohibitions are subject to a number of important qualifications and exceptions. See "Description of the Exchange Notes—Certain Covenants." |
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Absence of a Public Market for the Exchange Notes |
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The exchange notes are new securities, for which there is currently no established trading market and none may develop. Accordingly, there can be no assurance as to the development or liquidity of any market for the exchange notes. The initial purchasers of the outstanding notes have advised us that they intend to make a market in the exchange notes. However, they are not obligated to do so and may discontinue any market making activities with respect to the exchange notes at any time without notice. We do not intend to apply for listing of the exchange notes on any securities exchange or to arrange for any quotation system to quote them. |
See the section entitled "Risk Factors" beginning on page 14 for a discussion of factors you should carefully consider before deciding to invest in the exchange notes.
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Summary Combined and Consolidated Financial Information
The following table presents summary combined and consolidated financial information. The statement of operations data for the years ended December 31, 2002, 2001 and 2000 and the balance sheet data as of December 31, 2002 and 2001 are derived from our audited combined and consolidated financial statements included elsewhere in this prospectus. The statement of operations data for the year ended December 31, 1999 and the balance sheet data as of December 31, 2000 and 1999 are derived from our audited combined financial statements that are not included herein. The historical statement of operations data for the year ended December 31, 1998 and the historical balance sheet data as of December 31, 1998 are derived from unaudited financial statements that, in the opinion of management, include all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the data for such periods.
Prior to November 28, 2001, Salt Holdings was incorporated as IMC Potash Corporation, an inactive wholly owned subsidiary of IMC Global. Accordingly, prior to November 28, 2001, the combined and consolidated financial data reflect only the results of Compass Minerals and its subsidiaries. As part of the Recapitalization, IMC Potash Corporation was reincorporated as Salt Holdings. At November 28, 2001, IMC Global contributed the net assets of Compass Minerals to Salt Holdings.
The information included in this table should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the audited combined and consolidated financial statements and accompanying notes thereto included elsewhere in this prospectus.
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For the years ended December 31,
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1998
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1999
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2001
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2002
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(unaudited)
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(dollars in millions)
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| Statement of Operations Data: | ||||||||||||||||
| Sales | $ | 441.5 | $ | 494.4 | $ | 509.2 | $ | 523.2 | $ | 502.6 | ||||||
| Cost of sales—shipping and handling | 97.3 | 126.9 | 140.0 | 143.2 | 137.5 | |||||||||||
| Cost of sales—products(1) | 183.9 | 213.1 | 227.7 | 224.4 | 202.1 | |||||||||||
| Depreciation and amortization | 42.4 | 55.1 | 44.3 | 32.6 | 37.1 | |||||||||||
| Selling, general and administrative expenses | 46.1 | 37.2 | 35.5 | 38.9 | 40.6 | |||||||||||
| Goodwill write-down(2) | — | 87.5 | 191.0 | — | — | |||||||||||
| Restructuring and other charges(2)(3) | 20.3 | 13.7 | 425.9 | 27.0 | 7.7 | |||||||||||
| Operating earnings (loss) | 51.6 | (39.1 | ) | (555.2 | ) | 57.1 | 77.6 | |||||||||
| Net income (loss) | 3.1 | (67.5 | ) | (467.7 | ) | 19.0 | 18.9 | |||||||||
| Other Financial Data: | ||||||||||||||||
| Cash flows provided by operating activities | $ | 25.7 | $ | 78.4 | $ | 72.1 | $ | 112.4 | $ | 82.4 | ||||||
| Cash flows used for investing activities | (39.3 | ) | (48.1 | ) | (34.0 | ) | (43.6 | ) | (19.1 | ) | ||||||
| Cash flows (used for) provided by financing activities | 6.4 | (33.6 | ) | (43.3 | ) | (53.7 | ) | (69.8 | ) | |||||||
| Cash interest expense(4) | — | — | — | — | 40.7 | |||||||||||
| Ratio of earnings to fixed charges(5) | — | — | — | 3.69 | x | 1.67 | x | |||||||||
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Capital expenditures |
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56.7 |
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45.6 |
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33.7 |
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43.0 |
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19.5 |
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| Balance Sheet Data (at period end): | ||||||||||||||||
| Total cash and cash equivalents | $ | 4.9 | $ | 4.3 | $ | 0.3 | $ | 15.9 | $ | 11.9 | ||||||
| Total assets | 1,423.0 | 1,290.5 | 636.0 | 655.6 | 644.1 | |||||||||||
| Total debt(6) | 264.7 | 196.0 | 152.4 | 515.1 | 504.5 | |||||||||||
| Net debt(7) | 259.8 | 191.7 | 152.1 | 499.2 | 489.4 | |||||||||||
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this non-cash charge, goodwill was reduced $191.0 million and mineral properties and rights was reduced $425.9 million. The goodwill write-down in 1999 was the result of lowering goodwill to its recoverable value based on estimated future discounted cash flows of the business.
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You should carefully consider the following risks and all of the information set forth in this prospectus before participating in the exchange offer. The risks described below are not the only ones facing our company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially and adversely affect our business, financial condition or results of operations.
Risks Relating to the Exchange Notes and the Exchange Offer
If you do not properly tender your outstanding notes, your ability to transfer such outstanding notes will be adversely affected .
We will only issue exchange notes in exchange for outstanding notes that are timely received by the exchange agent, together with all required documents, including a properly completed and signed letter of transmittal. Therefore, you should allow sufficient time to ensure timely delivery of the outstanding notes and you should carefully follow the instructions on how to tender your outstanding notes. Neither we nor the exchange agent are required to tell you of any defects or irregularities with respect to your tender of the outstanding notes. If you do not tender your outstanding notes or if we do not accept your outstanding notes because you did not tender your outstanding notes properly, then, after we consummate the exchange offer, you may continue to hold outstanding notes that are subject to the existing transfer restrictions. In addition, if you tender your outstanding notes for the purpose of participating in a distribution of the exchange notes, you will be required to comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale of the exchange notes. If you are a broker-dealer that receives exchange notes for your own account in exchange for outstanding notes that you acquired as a result of market making activities or any other trading activities, you will be required to acknowledge that you will deliver a prospectus in connection with any resale of such exchange notes. After the exchange offer is consummated, if you continue to hold any outstanding notes, you may have difficulty selling them because there will be less outstanding notes outstanding. In addition, if a large amount of outstanding notes are not tendered or are tendered improperly, the limited amount of exchange notes that would be issued and outstanding after we consummate the exchange offer could lower the market price of such exchange notes.
Our substantial indebtedness could adversely affect our financial condition and prevent us from fulfilling our obligations under the exchange notes.
As of December 31, 2002, we had $504.5 million of outstanding indebtedness, including approximately $437.6 million of indebtedness other than the notes, and a stockholders' deficit of $108.7 million. In addition, such outstanding indebtedness does not include (i) $9.3 million of our Settlement Notes, including interest, currently held by a wholly owned subsidiary subject to reissuance under certain circumstances (see Note 9 in our combined and consolidated financial statements), (ii) $3.3 million of our New Seller Notes, including interest (see Note 9 in our combined and consolidated financial statements) and (iii) additional notes which may be issued in exchange for our senior preferred stock. As of December 31, 2002, $16.4 million aggregate initial accreted value of notes could be issued in exchange for our senior preferred stock. As a result, we are a highly leveraged company. This level of leverage could have important consequences for you, including the following:
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In addition, the indenture and our senior credit facilities contain financial and other restrictive covenants that may limit our ability to engage in activities that may be in our long-term best interests. Our failure to comply with those covenants could result in an event of default which, if not cured or waived, could result in the acceleration of all of our debts.
Despite our substantial indebtedness we may still incur significantly more debt. This could exacerbate the risks described above.
The terms of the indenture, the indenture governing the senior subordinated notes and the senior credit facilities permit us and our subsidiaries to incur significant additional indebtedness in the future. As of December 31, 2002, we had approximately $126.4 million available for additional borrowing under the revolving credit facility, subject to certain conditions. All borrowings under the senior credit facilities are effectively senior to the exchange notes.
We are a holding company with no operations of our own and depend on our subsidiaries for cash. Our ability to access the cash flow of our subsidiaries may be contingent upon our ability to refinance the debt of our subsidiaries.
We have no operations of our own and derive substantially all of our revenue and cash flow from our subsidiaries. None of our subsidiaries guaranteed these notes. Creditors of our subsidiaries (including trade creditors) will generally be entitled to payment from the assets of those subsidiaries before those assets can be distributed to us. As a result, these notes will effectively be subordinated to the prior payment of all of the debts (including trade payables) of our subsidiaries.
As of December 31, 2002, the aggregate amount of indebtedness and other liabilities of our subsidiaries was approximately $733.7 million. Further, approximately $126.4 million was available to our subsidiaries for additional borrowing under the revolving credit facility. We cannot assure you that our subsidiaries who have their debt accelerated will be able to repay such indebtedness. We can also not assure you that our assets and our subsidiaries' assets will be sufficient to fully repay the exchange notes and our other indebtedness. See "Description of Certain Indebtedness and Preferred Stock."
We may not have access to the cash flow and other assets of our subsidiaries that may be needed to make payment on the exchange notes.
Although our operations are conducted through our subsidiaries, none of our subsidiaries are obligated to make funds available to us for payment on the exchange notes. Accordingly, our ability to make payments on the exchange notes is dependent on the earnings and the distribution of funds from our subsidiaries. The terms of the senior credit facilities and the indenture governing the senior subordinated notes significantly restrict our subsidiaries from paying dividends and otherwise transferring assets to us. Furthermore, our subsidiaries will be permitted under the terms of the senior credit facilities and other indebtedness to incur additional indebtedness that may severely restrict or prohibit the making of distributions, the payment of dividends or the making of loans by such subsidiaries to us. The terms of the senior credit facilities also restrict our subsidiaries from paying dividends to us in order to fund cash interest on the exchange notes after December 15, 2007 if we do not comply with an adjusted senior indebtedness leverage ratio or if a default or event of default has
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occurred and is continuing under the senior credit facilities. We cannot assure you that we will maintain this ratio.
We cannot assure you that the agreements governing the current and future indebtedness of our subsidiaries will permit our subsidiaries to provide us with sufficient dividends, distributions or loans to fund scheduled interest and principal payments on these exchange notes when due. See "Description of Certain Indebtedness and Preferred Stock."
The exchange notes will be effectively subordinated to the liabilities of our subsidiaries and borrowings under the senior credit facilities.
Our subsidiaries will not guarantee the exchange notes. Therefore, the exchange notes will be effectively subordinated to all of our subsidiaries' liabilities. Our subsidiaries' creditors will have the right to be paid before the holders of the exchange notes from any cash received or held by our subsidiaries. In the event of bankruptcy, liquidation or dissolution of a subsidiary, following payment by the subsidiary of its liabilities, such subsidiary may not have sufficient assets to make payments to us. As of December 31, 2002, the aggregate amount of liabilities of our subsidiaries was approximately $733.7 million.
In connection with our guarantee of the senior credit facilities, substantially all of our assets secure borrowings under the senior credit facilities. The exchange notes will be effectively subordinated to all such secured indebtedness under the senior credit facility to the extent of the value of the collateral. In the event of any bankruptcy, liquidation or dissolution of our assets, holders of secured indebtedness will have a prior claim to the assets that constitute the collateral. Additionally, the indentures governing the exchange notes and the senior subordinated notes and the senior credit facilities permit us and/or our subsidiaries to incur additional indebtedness, including secured indebtedness, under certain circumstances.
Restrictive covenants in the senior credit facilities and the indenture may restrict our ability to pursue our business strategies.
The senior credit facilities and the indenture limit our ability, among other things, to:
In addition, the senior credit facilities require us to maintain financial ratios. We may not be able to maintain these ratios. Covenants in the senior credit facilities may also impair our ability to finance future operations or capital needs or to enter into acquisitions or joint ventures or engage in other favorable business activities.
If we default under the senior credit facilities, we could be prohibited from making any payments on the exchange notes. In addition, the lenders under the senior credit facilities could require
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immediate repayment of the entire principal. If those lenders require immediate repayment, we will not be able to repay them and also repay the exchange notes in full.
To service our indebtedness, including the exchange notes, we will require a significant amount of cash. The ability to generate cash depends on many factors beyond our control.
Our ability to make payments on and to refinance our indebtedness, including the exchange notes, and to fund planned capital expenditures and research and development efforts will depend on our ability to generate cash in the future. This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.
We cannot assure you, however, that our business will generate sufficient cash flow from operations, that currently anticipated cost savings and operating improvements will be realized on schedule or that future borrowings will be available to us in an amount sufficient to enable us to pay our indebtedness, including the exchange notes, or to fund our other liquidity needs. If we consummate an acquisition, our debt service requirements could increase. We may need to refinance all or a portion of our indebtedness, including the exchange notes on or before maturity. We cannot assure you that we will be able to refinance any of our indebtedness, including the senior credit facilities and the exchange notes, on commercially reasonable terms or at all.
We may not have the ability to raise the funds necessary to finance any change of control offer required by the indenture governing the exchange notes.
If we undergo a change of control (as defined in the indenture governing the exchange notes) we may need to refinance large amounts of our debt, including the exchange notes, the senior subordinated notes and borrowings under the senior credit facilities. If a change of control occurs, we must offer to buy back the exchange notes for a price equal to 101% of the accreted value of the exchange notes, plus any accrued and unpaid interest. We cannot assure you that there will be sufficient funds available for us to make any required repurchases of the exchange notes upon a change of control. In addition, the senior credit facilities will prohibit us from repurchasing the exchange notes until we first repay the senior credit facilities in full. If we fail to repurchase the exchange notes in that circumstance, we will go into default under both the indenture governing the exchange notes and the senior credit facilities. Any future debt which we incur may also contain restrictions on repayment upon a change of control. If any change of control occurs, we cannot assure you that we will have sufficient funds to satisfy all of our debt obligations. The buyback requirements also delay or make it harder for others to effect a change of control. However, certain other corporate events, such as a leveraged recapitalization that would increase our level of indebtedness, would not constitute a change of control under the indenture governing the exchange notes. See "Description of the Exchange Notes—Change of Control."
You will be required to pay U.S. federal income tax on accrual of original issue discount on the exchange notes even if we do not pay cash interest.
The exchange notes will be issued at a substantial discount from their principal amount at maturity. Although cash interest will not accrue on the exchange notes prior to December 15, 2007, and there will be no periodic payments of cash interest on the exchange notes prior to June 15, 2008, original issue discount (the difference between the stated redemption price at maturity and the issue price of the exchange notes) will accrue from the issue date of the exchange notes. Consequently, purchasers of the exchange notes generally will be required to include amounts in gross income for United States federal income tax purposes in advance of their receipt of the cash payments to which the income is attributable. Such amounts in the aggregate will be equal to the difference between the stated redemption price at maturity (inclusive of stated interest on the exchange notes) and the issue price of the exchange notes. See "Certain United States Federal Income Tax Consequences."
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You may be unable to sell your exchange notes if a trading market for the exchange notes does not develop.
The exchange notes will be new securities for which there is currently no established trading market and none may develop. We do not intend to apply for listing of the exchange notes on any securities exchange or for quotation on any automated dealer quotation system. The liquidity of any market for the exchange notes will depend on the number of holders of the exchange notes, the interest of securities dealers in making a market in the exchange notes and other factors. The initial purchasers of the outstanding notes have indicated to us that they intend to make a market in the exchange notes, as permitted by applicable laws and regulations. However, the initial purchasers are under no obligation to do so. At their discretion, the initial purchasers could discontinue their market making efforts at any time without notice. Accordingly, we cannot assure you as to the development or liquidity of any market for the exchange notes. If an active trading market does not develop, the market price and liquidity of the exchange notes may be adversely affected. If the exchange notes are traded, they may trade at a discount from their initial offering price depending upon prevailing interest rates, the market for similar securities, general economic conditions, our performance and business prospects and certain other factors.
The market price for the securities may be volatile.
Historically, the market for non-investment grade debt has been subject to disruptions that have caused substantial volatility in the prices of securities similar to the exchange notes. The market for the exchange notes, if any, may be subject to similar disruptions. Any such disruptions may adversely affect the value of your exchange notes.
Risks Relating to Our Business
The demand for our products changes seasonally and is dependent upon weather conditions.
Our highway deicing product line is seasonal, with operating results varying from quarter to quarter. Over the last four years, our North American highway deicing product line has generated over 65% of its annual sales during the months of December through March when the need for highway deicing is at its peak. We need to stockpile sufficient highway deicing salt in the first two fiscal quarters to meet estimated demand for the winter season. Weather conditions which impact our highway deicing product line include levels of temperature, precipitation, snow days and duration and timing of snow fall in our relevant geographic markets. Lower than expected sales by us during this period could have a material adverse effect on the timing of our cash flows and therefore our ability to service our obligations with respect to our indebtedness.
Our SOP operating results are dependent in part upon conditions in the agriculture markets. The agricultural products business can be affected by a number of factors, the most important of which for U.S. markets are weather patterns and field conditions (particularly during periods of traditionally high crop nutrients consumption) and quantities of crop nutrients imported to and exported from North America.
Economic and other risks associated with international sales and operations could adversely affect our business.
Since we manufacture and sell our products primarily in the United States, Canada and the United Kingdom, our business is subject to certain risks associated with doing business internationally. Our sales outside the United States, as a percentage of our total sales, was 34% for the years ended December 31, 2002 and 2001. Accordingly, our future results could be harmed by a variety of factors, including:
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Fluctuations in the value of the U.S. dollar may adversely affect our results of operations. Because our consolidated financial results are reported in dollars, if we generate sales or earnings in other currencies the translation of those results into dollars can result in a significant increase or decrease in the amount of those sales or earnings. In addition, our debt service requirements are primarily in U.S. dollars even though a significant percentage of our cash flow is generated in Canadian dollars and pound sterling. Significant changes in the value of Canadian dollars and pound sterling relative to the U.S. dollar could have a material adverse effect on our financial condition and our ability to meet interest and principal payments on U.S. dollar denominated debt, including the exchange notes and borrowings under the senior credit facilities.
In addition to currency translation risks, we incur currency transaction risk whenever we or one of our subsidiaries enter into either a purchase or a sales transaction using a currency other than the local currency of the transacting entity. Given the volatility of exchange rates, we cannot assure you that we will be able to effectively manage our currency transaction and/or translation risks. It is possible that volatility in currency exchange rates will have a material adverse effect on our financial condition or results of operations. We have in the past experienced and expect to continue to experience economic loss and a negative impact on earnings as a result of foreign currency exchange rate fluctuations. We expect that the portion of our revenues denominated in non-dollar currencies will continue to increase in future periods. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Effects of Currency Fluctuations and Inflation."
Our overall success as a global business depends, in part, upon our ability to succeed in differing economic and political conditions. We cannot assure you that we will continue to succeed in developing and implementing policies and strategies that are effective in each location where we do business.
We are a newly formed company with no operating history as a stand-alone company, which may lead to risks or unanticipated expenses similar to those of a start-up company.
We were not operated as a stand-alone company for the three years prior to the closing of the Recapitalization. Prior to the Recapitalization, IMC Global provided us with a number of support services, including corporate services such as certain accounting functions, internal audit, treasury, taxation, company secretarial, legal and intellectual property, property management, insurance administration, certain human resources functions, credit management and certain information technology functions. While we believe we will be able to complete the arrangement of replacement services appropriate for operation as a stand-alone company, there is a risk that continuity in the performance of these functions will be affected as a result of our transition.
Our operating earnings are affected by the supply and price levels of natural gas.
Energy costs represent approximately 11% of the costs of our North American salt production. Natural gas is a primary fuel source used in the salt production process. Our profitability is impacted by the price and availability of the natural gas we purchase from third parties. A significant increase in
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the price of natural gas that is not recovered through an increase in the price of our products or an extended interruption in the supply of natural gas to our production facilities could have a material adverse effect on our business, financial condition or results of operations.
We face competition in our markets.
We encounter competition in all areas of our business. Competition in our product lines is based on a number of considerations including product performance, cost of transportation in the distribution of salt, brand reputation, quality of client service and support and price. Additionally, customers for our products are attempting to reduce the number of vendors from which they purchase in order to increase their efficiency. Our customers increasingly demand a broad product range and we must continue to develop our expertise in order to manufacture and market these products successfully. To remain competitive, we will need to invest continuously in manufacturing, marketing, customer service and support and our distribution networks. We may have to adjust the prices of some of our products to stay competitive. We cannot assure you that we will have sufficient resources to continue to make such investments or that we will maintain our competitive position. Some of our competitors have greater financial and other resources than we do.
We may be adversely affected by the environmental regulations to which we are subject.
We are subject to numerous environmental, health and safety laws and regulations in the United States, Canada and Europe, including laws and regulations relating to land reclamation and remediation of hazardous substance releases, and discharges to air and water. For example, the U.S. Comprehensive Environmental Response, Compensation, and Liability Act, or "CERCLA," imposes liability, without regard to fault or to the legality of a party's conduct, on certain categories of persons (known as "potentially responsible parties") who are considered to have contributed to the release of "hazardous substances" into the environment. Although we are not currently incurring material liabilities pursuant to CERCLA, we may in the future incur material liabilities, under CERCLA and other environmental cleanup laws, with regard to our current or former facilities, adjacent or nearby third party facilities or off-site disposal locations. Under CERCLA, or its various state analogues, one party may, under certain circumstances, be required to bear more than its proportional share of cleanup costs at a site where it has liability if payments cannot be obtained from other responsible parties. Liability under these laws involves inherent uncertainties. Violations of environmental, health and safety laws are subject to civil, and in some cases criminal, sanctions.
We have received notices from governmental agencies that we may be a potentially responsible party at certain sites under CERCLA or other environmental cleanup laws. We have entered into " de minimis " settlement agreements with the United States with respect to certain CERCLA sites, pursuant to which we have made a one-time cash payment and received statutory protection from future claims arising from those sites. At other sites for which we have received notice of potential CERCLA liability, we have provided information to the U.S. Environmental Protection Agency, or the "EPA," that we believe demonstrates that we are not liable and the EPA has not asserted claims against us with respect to such sites. In some instances, we have agreed, pursuant to consent orders or agreements with the appropriate governmental agencies, to undertake certain investigations, which currently are in progress, to determine whether remedial action may be required to address such contamination. At other locations, we have entered into consent orders or agreements with appropriate governmental agencies to perform remedial activities that will address identified site conditions. At the present time, we are not aware of any additional sites for which we expect to receive a notice from the EPA of potential CERCLA liability. However, based on past operations there is a potential that we may receive such notices in the future for sites of which we are currently unaware. Taking into account established reserves, expenditures for our known environmental liabilities and site conditions currently are not expected, individually or in the aggregate, to be material. However, material expenditures could be required in the future to remediate the contamination at these or at other current or former sites.
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Continued government and public emphasis on environmental issues can be expected to result in increased future investments for environmental controls at ongoing operations, which will be charged against income from future operations. Present and future environmental laws and regulations applicable to our operations may require substantial capital expenditures and may have a material adverse effect on our business, financial condition and results of operations. For more information, see "Business—Environmental, Health and Safety Matters."
Our business could be adversely affected by the Canadian government's proposal to designate road salt as a toxic substance.
In December 2001, the Canadian government released a Priority Substances List Assessment Report for road salt. This report found that road salts are entering the environment under conditions that may have a harmful effect or constitute a danger to the environment. Based on this report, the Minister of Environment has proposed designating road salt as a "toxic" substance pursuant to the Canadian Environmental Protection Act. Canada's federal cabinet, which has ultimate responsibility, has not yet taken final action with respect to this proposal and is not subject to any deadline to do so. At this point, Environment Canada has indicated that, whether or not road salts are declared toxic, their preferred course of action is the establishment of voluntary guidelines for users as opposed to any form of regulation. Environment Canada is currently developing these guidelines based on consultation with a broad-based stakeholders group, which includes the salt industry. Given the importance of road salt for traffic safety and the lack of any practical substitute, we deem it unlikely that any guideline or regulation would result in a ban on the use of road salt. As noted in the December 2001 report, the use of road salt and other deicing agents "is an important component of strategies to keep roadways open and safe during the winter and minimize traffic crashes, injuries and mortality under icy and snowy conditions." The report further stated that mitigation measures "must be based on optimization of winter road maintenance practices so as not to jeopardize road safety, while minimizing the potential for harm to the environment." Although we cannot predict whether the proposal to list road salts will be finalized or the precise form of future regulation, if any, if standardized guidelines are developed for the usage of road salt, we could suffer reduced sales and incur substantial costs and expenses that could have a material adverse effect on our business, financial condition and results of operation. We are not aware of any similar proposals for such designation of road salt in either the United States or the United Kingdom.
Our operations are dependent on our having received the required permits and approvals from governmental authorities.
We hold numerous governmental environmental, mining and other permits and approvals authorizing operations at each of our facilities. A decision by a governmental agency to deny or delay issuing a new or renewed permit or approval, or to revoke or substantially modify an existing permit or approval, could have a material adverse effect on our ability to continue operations at the affected facility. Expansion of our existing operations also is predicated upon securing the necessary environmental or other permits or approvals.
Protection of proprietary technology—Our intellectual property may be misappropriated or subject to claims of infringement.
We attempt to protect our intellectual property rights through a combination of patent, trademark, copyright and trade secret protection, as well as licensing agreements and third-party nondisclosure and assignment agreements. We cannot assure you that any of our applications for protection of our intellectual property rights will be approved or that others will not infringe or challenge our intellectual property rights. We also rely on unpatented proprietary technology. It is possible that others will independently develop the same or similar technology or otherwise obtain access to our unpatented technology. To protect our trade secrets and other proprietary information, we require employees, consultants, advisors and collaborators to enter into confidentiality agreements. We cannot assure you
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that these agreements will provide meaningful protection for our trade secrets, know-how or other proprietary information in the event of any unauthorized use, misappropriation or disclosure. If we are unable to maintain the proprietary nature of our technologies, we could be materially adversely affected.
Our business could suffer if we are unsuccessful in negotiating new collective bargaining agreements.
As of December 31, 2002, we had 1,560 employees. Approximately 39% of our U.S. workforce (54% of our global workforce) is represented by labor unions. Of our nine material collective bargaining agreements, five will expire in 2003 and four will expire in 2004. Additionally, approximately 13% of our workforce is employed in Europe where trade union membership is common. Although we believe that our relations with our employees are good we cannot assure you that we will be successful in negotiating new collective bargaining agreements, that such negotiations will not result in significant increases in the cost of labor or that a breakdown in such negotiations will not result in the disruption of our operations.
We rely on independent distributors.
In addition to our own direct sales force, we depend on the services of independent distributors to sell our products and provide service and aftermarket support to our customers. In 2002, 12% of our revenues were generated through these independent distributors. Many of these independent distributors are not bound to us by exclusive distribution contracts and may offer products and services that compete with ours to our customers. In addition, the majority of the distribution contracts we have with these independent distributors are cancelable by the distributor after a short notice period. The loss of a substantial number of these distributors or the decision by many of these distributors to offer competitors' products to our customers could materially reduce our sales and profits.
We are controlled by Apollo, whose interests may not be aligned with yours.
A holding company controlled by Apollo and its affiliates owns approximately 73% of our fully diluted equity and, therefore, has the power, subject to certain exceptions, to control our affairs and policies. They also control the election of directors, the appointment of management, the entering into of mergers, sales of substantially all of our assets and other extraordinary transactions. The directors so elected have authority, subject to the terms of our debt, to issue additional stock, implement stock repurchase programs, declare dividends and make other decisions about our capital stock. See "Certain Related Party Transactions."
The interests of Apollo and its affiliates could conflict with your interests. For example, if we encounter financial difficulties or are unable to pay our debts as they mature, the interests of Apollo as equity holder might conflict with your interests as a exchange note holder. Affiliates of Apollo may also have an interest in pursuing acquisitions, divestitures, financings or other transactions that, in their judgment, could enhance their equity investments, even though such transactions might involve risks to you as a holder of exchange notes. In addition, our sponsors or their affiliates currently own, and may in the future own, businesses that directly compete with ours.
Our business strategy includes acquisitions to supplement internal growth.
Our business strategy is based in part on our ability to supplement internal growth by pursuing opportunistic acquisitions of small complementary businesses. We do not know whether in the future we will be able to complete acquisitions on acceptable terms, identify suitable businesses to acquire or successfully integrate acquired businesses. We compete with other potential buyers for the acquisition of other small complementary businesses. This competition and, due to our position in certain markets, regulatory considerations may result in fewer acquisition opportunities. If we cannot complete acquisitions, our financial condition or results of operations may be adversely affected.
If we lose our senior management, our business may be adversely affected.
The success of our business is dependent on our senior managers, as well as on our ability to attract and retain other qualified personnel. We cannot assure you that we will be able to attract and retain the personnel necessary for the development of our business. The loss of the services of key personnel or the failure to attract additional personnel as required could have a material adverse effect on our business, financial condition and results of operations. We do not currently maintain "key person" life insurance on any of our key employees.
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Purpose of the Exchange Offer
We sold the outstanding notes to the initial purchasers on December 20, 2002. The initial purchasers subsequently resold the outstanding notes to qualified institutional buyers pursuant to Rule 144A under the Securities Act and to non-U.S. persons outside the United States in reliance on Regulation S under the Securities Act. In connection with the issuance of the outstanding notes, we entered into a registration rights agreement with the initial purchasers of the outstanding notes. The registration rights agreement requires us to register the exchange notes under the federal securities laws and offer to exchange the exchange notes for the outstanding notes. The exchange notes will be issued without a restrictive legend and generally may be resold without registration under the federal securities laws. We are effecting the exchange offer to comply with the registration rights agreement.
The registration rights agreement requires us to:
These requirements under the registration rights agreement will be satisfied when we complete the exchange offer. However, if we fail to meet any of these requirements, we must pay additional interest on the outstanding notes at a rate of 0.25% per annum for the first 90-day period and an additional 0.25% per annum with respect to each subsequent 90-day period until the applicable requirement has been met, up to a maximum additional interest rate of 1.0% per annum. All additional interest that accrues on or prior to December 15, 2007 shall be added to the accreted value of each outstanding note and all additional interest that accrues thereafter shall be payable in cash to holders of outstanding notes on each scheduled interest payment date. We have also agreed to keep the registration statement for the exchange offer effective for not less than 20 business days (or longer, if required by applicable law) after the date on which notice of the exchange offer is mailed to holders.
Under the registration rights agreement, our obligations to register the exchange notes will terminate upon the completion of the exchange offer. However, under certain circumstances specified in the registration rights agreement, we may be required to file a "shelf" registration statement for a continuous offer in connection with the outstanding notes pursuant to Rule 415 under the Securities Act.
This summary includes only the material terms of the registration rights agreement. For a full description, you should refer to the complete copy of the registration rights agreement, which has been filed as an exhibit to the registration statement for the exchange offer and the exchange notes. See "Where You Can Find More Information."
Transferability of the Exchange Notes
Based on an interpretation of the Securities Act by the staff of the SEC in several no-action letters issued to third parties unrelated to us, we believe that you, or any other person receiving exchange
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notes, may offer for resale, resell or otherwise transfer such notes without complying with the registration and prospectus delivery requirements of the federal securities laws, if:
To participate in the exchange offer, you must represent as the holder of outstanding notes that each of these statements is true.
Any holder of outstanding notes who is our affiliate or who intends to participate in the exchange offer for the purpose of distributing the exchange notes:
Broker-dealers receiving exchange notes in exchange for outstanding notes acquired for their own account through market making or other trading activities may not rely on this interpretation by the SEC. Such broker-dealers may be deemed to be "underwriters" within the meaning of the Securities Act and must therefore acknowledge, by signing the letter of transmittal, that they will deliver a prospectus meeting the requirements of the Securities Act in connection with the resale of the exchange notes. The letter of transmittal states that by acknowledging that it will deliver, and by delivering, a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. The SEC has taken the position that participating broker-dealers may fulfill their prospectus delivery requirements with respect to the exchange notes, other than a resale of an unsold allotment from the original sale of the outstanding notes, with the prospectus contained in the exchange offer registration statement. As described above, under the registration rights agreement, we have agreed to allow participating broker-dealers and other persons, if any, subject to similar prospectus delivery requirements to use the prospectus contained in the exchange offer registration statement in connection with the resale of the exchange notes. See "Plan of Distribution."
Terms of the Exchange Offer; Acceptance of Tendered Notes
Upon the terms and subject to the conditions in this prospectus and in the letter of transmittal, we will accept any and all outstanding notes validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on , 2003. We will issue $1,000 principal amount at maturity of exchange notes in exchange for each $1,000 principal amount at maturity of outstanding notes accepted in the exchange offer. Holders may tender some or all of their outstanding notes pursuant to the exchange offer. However, outstanding notes may be tendered only in integral multiples of $1,000 in principal amount at maturity.
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The form and terms of the exchange notes are the same as the form and terms of the outstanding notes except that:
The exchange notes will evidence the same debt as the outstanding notes. Holders of exchange notes will be entitled to the benefits of the indenture.
As of the date of this prospectus, $123.5 million in aggregate principal amount at maturity of notes was outstanding. We have fixed , 2003 as the date on which this prospectus and the letter of transmittal will be mailed initially. We intend to conduct the exchange offer in accordance with the applicable requirements of the Exchange Act and the rules and regulations of the SEC under the Exchange Act.
We shall be deemed to have accepted validly tendered outstanding notes when and if we have given oral or written notice to the exchange agent of our acceptance. The exchange agent will act as agent for the tendering holders for the purpose of receiving the exchange notes from us. If any tendered notes are not accepted for exchange because of an invalid tender, the occurrence of other events described in this prospectus or otherwise, we will return the certificates for any unaccepted notes, at our expense, to the tendering holder as promptly as practicable after the expiration of the exchange offer.
Holders who tender outstanding notes in the exchange offer will not be required to pay brokerage commissions or fees with respect to the exchange of notes. Tendering holders will also not be required to pay transfer taxes in the exchange offer. We will pay all charges and expenses in connection with the exchange offer as described under the subheading "—Solicitation of Tenders; Fees and Expenses." However, we will not pay any taxes incurred in connection with a holder's request to have exchange notes or non-exchanged notes issued in the name of a person other than the registered holder. See "—Transfer Taxes" in this section below.
Expiration Date; Extensions; Amendment
The exchange offer will expire at 5:00 p.m., New York City time, on , 2003, or the "Expiration Date," unless we extend the exchange offer. To extend the exchange offer, we will notify the exchange agent and each registered holder of any extension before 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. We reserve the right to extend the exchange offer, delay accepting any tendered notes or, if any of the conditions described below under the heading "—Conditions to the Exchange Offer" have not been satisfied, to terminate the exchange offer. We also reserve the right to amend the terms of the exchange offer in any manner. We will give oral or written notice of such delay, extension, termination or amendment to the exchange agent.
Interest on the Exchange Notes
Prior to December 15, 2007, interest will accrue on the exchange notes in the form of an increase in the accreted value of the exchange notes. Thereafter, cash interest on the exchange notes will accrue and be payable semiannually in arrears on June 15 and December 15 of each year, commencing on
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June 15, 2008, at a rate of 12 3 / 4 % per annum. The accreted value of each exchange note will increase from the date of issuance until December 15, 2007, at a rate of 12 3 / 4 % per annum, reflecting the accrual of non-cash interest, such that the accreted value will equal the principal amount at maturity on December 15, 2007.
Procedures for Tendering Outstanding Notes
Only a holder of outstanding notes may tender notes in the exchange offer. To tender in the exchange offer, you must:
To tender outstanding notes effectively, you must complete the letter of transmittal and other required documents and the exchange agent must receive all the documents prior to 5:00 p.m., New York City time, on the Expiration Date. Delivery of the outstanding notes may be made by book-entry transfer in accordance with the procedures described below. The exchange agent must receive confirmation of book-entry transfer prior to the Expiration Date.
By executing the letter of transmittal, you will make to us the representations set forth in the first paragraph under the heading "—Transferability of the Exchange Notes."
All tenders not withdrawn before the Expiration Date and the acceptance of the tender by us will constitute agreement between you and us under the terms and subject to the conditions in this prospectus and in the letter of transmittal including an agreement to deliver good and marketable title to all tendered notes prior to the Expiration Date free and clear of all liens, charges, claims, encumbrances, adverse claims and rights and restrictions of any kind.
The method of delivery of outstanding notes and the letter of transmittal and all other required documents to the exchange agent is at the election and sole risk of the holder. Instead of delivery by mail, you should use an overnight or hand delivery service. In all cases, you should allow for sufficient time to ensure delivery to the exchange agent before the expiration of the exchange offer. You may request your broker, dealer, commercial bank, trust company or nominee to effect these transactions for you. You should not send any note, letter of transmittal or other required document to us.
If your notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and you desire to tender, you should contact the registered holder promptly and instruct the registered holder to tender on your behalf. See "Instruction to Registered Holder and/or Book-Entry Transfer Facility Participant from Beneficial Owner" included with the letter of transmittal.
The exchange of notes will be made only after timely receipt by the exchange agent of certificates for outstanding notes, a letter of transmittal and all other required documents, or timely completion of a book-entry transfer. If any tendered notes are not accepted for any reason or if outstanding notes are submitted for a greater principal amount than the holder desires to exchange, the exchange agent will return such unaccepted or non-exchanged notes to the tendering holder promptly after the expiration or termination of the exchange offer. In the case of outstanding notes tendered by book-entry transfer, the exchange agent will credit the non-exchanged notes to an account maintained with The Depository Trust Company.
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Guarantee of Signatures
Holders must obtain a guarantee of all signatures on a letter of transmittal or a notice of withdrawal unless the outstanding notes are tendered:
Signature guarantees must be made by a member of or participant in the Securities Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Program, the Stock Exchange Medallion Program or by an "eligible guarantor institution" within the meaning of Rule 17Ad-15 promulgated under the Exchange Act (namely, banks; brokers and dealers; credit unions; national securities exchanges; registered securities associations; learning agencies; and savings associations).
Signature on the Letter of Transmittal; Bond Powers and Endorsements
If the letter of transmittal is signed by a person other than the registered holder of the outstanding notes, the registered holder must endorse the outstanding notes or provide a properly completed bond power. Any such endorsement or bond power must be signed by the registered holder as that registered holder's name appears on the outstanding notes. Signatures on such outstanding notes and bond powers must be guaranteed by an "eligible guarantor institution."
If you sign the letter of transmittal or any outstanding notes or bond power as a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation, fiduciary or in any other representative capacity, you must so indicate when signing. You must submit satisfactory evidence to the exchange agent of your authority to act in such capacity.
Book-Entry Transfer
We understand that the exchange agent will make a request promptly after the date of this prospectus to establish accounts with respect to the outstanding notes at the book-entry transfer facility, The Depository Trust Company, or the "DTC," for the purpose of facilitating the exchange offer. Subject to the establishment of the accounts, any financial institution that is a participant in DTC's system may make book-entry delivery of outstanding notes by causing DTC to transfer such notes into the exchange agent's account in accordance with DTC's procedures for such transfer. However, although delivery of outstanding notes may be effected through book-entry transfer into the exchange agent's account at DTC, the letter of transmittal (or a manually signed facsimile of the letter of transmittal) with any required signature guarantees, or an "agent's message" in connection with a book-entry transfer, and any other required documents, must, in any case, be transmitted to and received by the exchange agent, or the guaranteed delivery procedures set forth below must be complied with, in each case, prior to the Expiration Date. Delivery of documents to DTC does not constitute delivery to the exchange agent.
The exchange agent and DTC have confirmed that the exchange offer is eligible for the DTC Automated Tender Offer Program. Accordingly, the DTC participants may electronically transmit their acceptance of the exchange offer by causing the DTC to transfer outstanding notes to the exchange agent in accordance with DTC's Automated Tender Offer Program procedures for transfer. Upon receipt of such holder's acceptance through the Automated Tender Offer Program, DTC will edit and verify the acceptance and send an "agent's message" to the exchange agent for its acceptance. Delivery of tendered notes must be made to the exchange agent pursuant to the book-entry delivery procedures set forth above, or the tendering DTC participant must comply with the guaranteed delivery procedures set forth below.
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The term "agent's message" means a message transmitted by DTC, and received by the exchange agent and forming part of the confirmation of a book-entry transfer, which states that:
In the case of an agent's message relating to guaranteed delivery, the term means a message transmitted by DTC and received by the exchange agent, which states that DTC has received an express acknowledgment from the participant in DTC tendering notes that such participant has received and agrees to be bound by the notice of guaranteed delivery.
Determination of Valid Tenders; Salt Holdings' Rights Under the Exchange Offer
All questions as to the validity, form, eligibility, time of receipt, acceptance and withdrawal of tendered notes will be determined by us in our sole discretion, which determination will be final and binding on all parties. We expressly reserve the absolute right, in our sole discretion, to reject any or all outstanding notes not properly tendered or any outstanding notes the acceptance of which would, in the opinion of our counsel, be unlawful. We also reserve the absolute right in our sole discretion to waive or amend any conditions of the exchange offer or to waive any defects or irregularities of tender for any particular note, whether or not similar defects or irregularities are waived in the case of other notes. Our interpretation of the terms and conditions of the exchange offer will be final and binding on all parties. No alternative, conditional or contingent tenders will be accepted. Unless waived, any defects or irregularities in connection with tenders of outstanding notes must be cured by the tendering holder within such time as we determine.
Although we intend to notify holders of defects or irregularities in tenders of outstanding notes, neither we, the exchange agent nor any other person shall be under any duty to give notification of defects or irregularities in such tenders or will incur any liability to holders for failure to give such notification. Holders will be deemed to have tendered outstanding notes only when such defects or irregularities have been cured or waived. The exchange agent will return to the tendering holder, after the expiration of the exchange offer, any outstanding notes that are not properly tendered and as to which the defects have not been cured or waived.
Guaranteed Delivery Procedures
If you desire to tender outstanding notes pursuant to the exchange offer and (1) certificates representing such outstanding notes are not immediately available, (2) time will not permit your letter of transmittal, certificates representing such outstanding notes and all other required documents to reach the exchange agent on or prior to the Expiration Date, or (3) the procedures for book-entry transfer (including delivery of an agent's message) cannot be completed on or prior to the Expiration Date, you may nevertheless tender such notes with the effect that such tender will be deemed to have been received on or prior to the Expiration Date if all the following conditions are satisfied:
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The notice of guaranteed delivery may be sent by hand delivery, facsimile transmission or mail to the exchange agent and must include a guarantee by an eligible guarantor institution in the form set forth in the notice of guaranteed delivery.
Withdrawal Rights
Except as otherwise provided in this prospectus, you may withdraw tendered notes at any time before 5:00 p.m., New York City time, on , 2003. For a withdrawal of tendered notes to be effective, a written or facsimile transmission notice of withdrawal must be received by the exchange agent on or prior to the expiration of the exchange offer. For DTC participants, a written notice of withdrawal may be made by electronic transmission through DTC's Automated Tender Offer Program. Any notice of withdrawal must:
Any permitted withdrawal of notes may not be rescinded. Any notes properly withdrawn will thereafter be deemed not to have been validly tendered for purposes of the exchange offer. The exchange agent will return any withdrawn notes without cost to the holder promptly after withdrawal of the notes. Holders may retender properly withdrawn notes at any time before the expiration of the exchange offer by following one of the procedures described above under the heading "—Procedures for Tendering Outstanding Notes."
Conditions to the Exchange Offer
Notwithstanding any other term of the exchange offer, we shall not be required to accept for exchange, or issue any exchange notes for, any outstanding notes, and may terminate or amend the exchange offer as provided in this prospectus before the acceptance of the outstanding notes, if we determine that the exchange offer violates any law, statute, rule, regulation or interpretation by the staff of the SEC or any order of any governmental agency or court of competent jurisdiction.
These conditions are for the sole benefit of Salt Holdings and may be asserted or waived by us in whole or in part at any time and from time to time in our sole discretion. Our failure to exercise any of
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these rights at any time will not be deemed a waiver of such rights and each of such rights shall be deemed an ongoing right which may be asserted by us at any time and from time to time.
In addition, we will accept for exchange any outstanding notes tendered, and no exchange notes will be issued in exchange for those outstanding notes, if at any time any stop order is threatened or issued with respect to the registration statement for the exchange offer and the exchange notes or the qualification of the indenture under the Trust Indenture Act of 1939. In any such event, we must use every reasonable effort to obtain the withdrawal or lifting of any stop order at the earliest possible moment.
Effect of Not Tendering
To the extent outstanding notes are tendered and accepted in the exchange offer, the principal amount at maturity of outstanding notes will be reduced by the amount so tendered and a holder's ability to sell untendered outstanding notes could be adversely affected. In addition, after the completion of the exchange offer, the outstanding notes will remain subject to restrictions on transfer. Since the outstanding notes have not been registered under the federal securities laws, they bear a legend restricting their transfer absent registration or the availability of a specific exemption from registration. The holders of outstanding notes not tendered will have no further registration rights, except for the limited registration rights described above under the heading "—Purpose of the Exchange Offer."
Accordingly, the notes not tendered may be resold only:
Upon completion of the exchange offer, due to the restrictions on transfer of the outstanding notes and the absence of such restrictions applicable to the exchange notes, it is likely that the market, if any, for outstanding notes will be relatively less liquid than the market for exchange notes. Consequently, holders of outstanding notes who do not participate in the exchange offer could experience significant diminution in the value of their outstanding notes, compared to the value of the exchange notes.
Regulatory Approvals
Other than the federal securities laws, there are no federal or state regulatory requirements that we must comply with and there are no approvals that we must obtain in connection with the exchange offer.
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Solicitation of Tenders; Fees and Expenses
We will bear the expenses of soliciting tenders. We are mailing the principal solicitation. However, our officers and regular employees and those of our affiliates may make additional solicitation by telegraph, telecopy, telephone or in person.
We have not retained any dealer-manager in connection with the exchange offer. We will not make any payments to brokers, dealers, or others soliciting acceptances of the exchange offer. However, we may pay the exchange agent reasonable and customary fees for its services and may reimburse it for its reasonable out-of-pocket expenses.
We will pay the cash expenses incurred in connection with the exchange offer. These expenses include fees and expenses of the exchange agent and trustee, accounting and legal fees and printing costs, among others.
Accounting Treatment
The exchange notes will be recorded at the same carrying value as the outstanding notes. The carrying value is face value. Accordingly, we will recognize no gain or loss for accounting purposes. The expenses of the exchange offer will be expensed over the term of the exchange notes.
Transfer Taxes
We will pay all transfer taxes, if any, required to be paid by us in connection with the exchange of the outstanding notes for the exchange notes. However, holders who instruct us to register exchange notes in the name of, or request that outstanding notes not tendered or not accepted for exchange be returned to, a person other than the registered holder will be responsible for the payment of any transfer tax arising from such transfer.
The Exchange Agent
The Bank of New York is serving as the exchange agent for the exchange offer. ALL EXECUTED LETTERS OF TRANSMITTAL SHOULD BE SENT TO THE EXCHANGE AGENT AT THE ADDRESS LISTED BELOW. Questions, requests for assistance and requests for additional copies of this prospectus or the letter of transmittal should be directed to the exchange agent at the address or telephone number listed below.
| By Registered or Certified Mail: |
The Bank of New York
Corporate Trust Operations Reorganization Unit 101 Barclay Street – 7 East New York, New York 10286 Attn: Carolle Montreuil |
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By Overnight Courier or By Hand: |
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The Bank of New York Corporate Trust Operations Reorganization Unit 101 Barclay Street – 7 East New York, New York 10286 Attn: Carolle Montreuil |
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Confirm by Telephone: |
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(212) 815-5920 |
Originals of all documents sent by facsimile should be promptly sent to the exchange agent by registered or certified mail, by hand, or by overnight delivery service.
DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
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We will not receive any proceeds from the issuance of the exchange notes in the exchange offer. We will receive in exchange outstanding notes in like principal amount. We will retire or cancel all of the outstanding notes tendered in the exchange offer.
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The following table sets forth our consolidated capitalization as of December 31, 2002 on a historical basis. This table should be read in conjunction with the information contained in "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the combined and consolidated financial statements and the notes thereto included in the back of this prospectus.
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As of
December 31, 2002 |
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(in millions)
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| Cash and cash equivalents | $ | 11.9 | |||||
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| Debt: | |||||||
| Senior credit facilities | |||||||
| Revolving debt(1) | $ | — | |||||
| Bank term debt | 109.3 | ||||||
| 10% Senior Subordinated Notes(2) | 328.2 | ||||||
| 12 3 / 4 % Senior Discount Notes | 66.9 | ||||||
| Other long-term debt | 0.1 | ||||||
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| Total debt(3) | 504.5 | ||||||
| Series A Redeemable Preferred Stock | 19.1 | ||||||
| Total stockholders' deficit | (108.7 | ) | |||||
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| Total capitalization | $ | 414.9 | |||||
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SELECTED COMBINED AND CONSOLIDATED FINANCIAL INFORMATION
The following table presents selected combined and consolidated financial information. The statement of operations data for the years ended December 31, 2002, 2001 and 2000 and the balance sheet data as of December 31, 2002 and 2001 are derived from our audited combined and consolidated financial statements included elsewhere in this prospectus. The statement of operations data for the year ended December 31, 1999 and the balance sheet data as of December 31, 2000 and 1999 are derived from our audited combined financial statements that are not included herein. The historical statement of operations data for the year ended December 31, 1998 and the historical balance sheet data as of December 31, 1998 are derived from unaudited financial statements that, in the opinion of management, include all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the data for such periods.
Prior to November 28, 2001, Salt Holdings was incorporated as IMC Potash Corporation, an inactive wholly owned subsidiary of IMC Global. Accordingly, prior to November 28, 2001, the combined and consolidated financial data reflect only the results of Compass Minerals and its subsidiaries. As part of the Recapitalization, IMC Potash Corporation was reincorporated as Salt Holdings. At November 28, 2001, IMC Global contributed the net assets of Compass Minerals to Salt Holdings.
The information included in this table should be read in conjunction with "Prospectus Summary—Summary Combined and Consolidated Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the audited combined and consolidated financial statements and accompanying notes thereto included elsewhere in this prospectus.
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|
For the years ended December 31,
|
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|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
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|
1998
|
1999
|
2000
|
2001
|
2002
|
|||||||||||
|
|
(unaudited)
|
|
|
|
|
|||||||||||
|
|
(dollars in millions)
|
|||||||||||||||
| Statement of Operations Data: | ||||||||||||||||
| Sales | $ | 441.5 | $ | 494.4 | $ | 509.2 | $ | 523.2 | $ | 502.6 | ||||||
| Cost of sales—shipping and handling | 97.3 | 126.9 | 140.0 | 143.2 | 137.5 | |||||||||||
| Cost of sales—products(1) | 183.9 | 213.1 | 227.7 | 224.4 | 202.1 | |||||||||||
| Depreciation and amortization | 42.4 | 55.1 | 44.3 | 32.6 | 37.1 | |||||||||||
| Selling, general and administrative expenses | 46.1 | 37.2 | 35.5 | 38.9 | 40.6 | |||||||||||
| Goodwill write-down(2) | — | 87.5 | 191.0 | — | — | |||||||||||
| Restructuring and other charges(2)(3) | 20.3 | 13.7 | 425.9 | 27.0 | 7.7 | |||||||||||
| Operating earnings (loss) | 51.6 | (39.1 | ) | (555.2 | ) | 57.1 | 77.6 | |||||||||
| Net income (loss) | 3.1 | (67.5 | ) | (467.7 | ) | 19.0 | 18.9 | |||||||||
| Other Financial Data: | ||||||||||||||||
| Cash flows provided by operating activities | $ | 25.7 | $ | 78.4 | $ | 72.1 | $ | 112.4 | $ | 82.4 | ||||||
| Cash flows used for investing activities | (39.3 | ) | (48.1 | ) | (34.0 | ) | (43.6 | ) | (19.1 | ) | ||||||
| Cash flows (used for) provided by financing activities | 6.4 | (33.6 | ) | (43.3 | ) | (53.7 | ) | (69.8 | ) | |||||||
| Cash interest expense(4) | — | — | — | — | 40.7 | |||||||||||
| Ratio of earnings to fixed charges(5) | — | — | — | 3.69 | x | 1.67 | x | |||||||||
|
Capital expenditures |
|
$ |
56.7 |
|
$ |
45.6 |
|
$ |
33.7 |
|
$ |
43.0 |
|
$ |
19.5 |
|
| Balance Sheet Data (at period end): | ||||||||||||||||
| Total cash and cash equivalents | $ | 4.9 | $ | 4.3 | $ | 0.3 | $ | 15.9 | $ | 11.9 | ||||||
| Total assets | 1,423.0 | 1,290.5 | 636.0 | 655.6 | 644.1 | |||||||||||
| Total debt(6) | 264.7 | 196.0 | 152.4 | 515.1 | 504.5 | |||||||||||
| Net debt(7) | 259.8 | 191.7 | 152.1 | 499.2 | 489.4 | |||||||||||
34
In connection with this non-cash charge, goodwill was reduced $191.0 million and mineral properties and rights was reduced $425.9 million. The goodwill write-down in 1999 was the result of lowering goodwill to its recoverable value based on estimated future discounted cash flows of the business.
35
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The statements in this discussion regarding the industry outlook, our expectations regarding the future performance of our business, and the other non-historical statements in this discussion are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described in the "Risk Factors" section. You should read the following discussion together with the section entitled "Risk Factors" and the combined and consolidated financial statements and notes thereto included elsewhere in this prospectus.
Company Overview
We are the second largest producer of salt in North America, the largest producer of salt in the United Kingdom and overall, the world's third largest producer of salt. In addition, in North America we are the largest producer of SOP which is used in the production of specialty fertilizers. Salt is one of the most widely used minerals in the world and has a wide variety of end-use applications, including highway deicing, food grade applications, water conditioning and various industrial uses. Our business also includes the following key characteristics:
• We believe that our cash flows are not materially impacted by economic cycles due to the stable end-use markets of salt and the absence of cost effective alternatives.
• We operate eleven facilities in North America and the United Kingdom, including the largest rock salt mine in the world in Goderich, Ontario and the largest salt mine in the United Kingdom in Winsford, Cheshire.
• We believe that we are among the lowest cost rock salt producers in our markets. Our cost advantage is due to the size and quality of our mineral reserves, the strategic location of our facilities and our continuous focus on improving production efficiency. Our salt mines in North America are located near either rail or water transport systems, thereby minimizing shipping and handling costs which constitute a significant portion of the overall delivered cost of salt. Note 11 to our combined and consolidated financial statements included in this prospectus provides additional information regarding geographical data.
For the year ended December 31, 2002, we sold approximately 11.0 million tons of salt and other minerals, generating sales of $502.6 million and operating income of $77.6 million.
Stand-Alone Company
The combined and consolidated financial information related to periods ending 2001 and prior included in this prospectus has been derived from the consolidated financial statements of IMC Global. The preparation of this information was based on certain assumptions and estimates including allocations of costs from IMC Global which we believe are reasonable. This financial information may not, however, necessarily reflect the results of operations, financial positions and cash flows that would have occurred if we had been a separate, stand-alone entity during the periods presented or our future results of operations, financial position and cash flows.
We believe that there are opportunities to improve performance on both the revenue and cost sides of our business. For example, we believe that our new management focus on operating efficiencies and monitoring capital expenditures following the consummation of the Recapitalization has led to reductions in our operating costs and maintenance capital expenditures. Additionally, we intend to continue to focus on regaining our lost market share and growing our SOP business.
36
In connection with the Recapitalization, we have incurred substantial indebtedness, interest expense and repayment obligations. The interest expense relating to this debt has adversely affected our net income. Upon consummation of the Recapitalization, we incurred a number of one-time fees and expenses of over $35.0 million. See "Certain Related Party Transactions."
Management's Discussion on Critical Accounting Policies
We have identified the critical accounting policies that are most important to the portrayal of our financial condition and results of operations. The policies set forth below require management's most subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.
Inventory Allowances
We record allowances for unusable or slow moving finished goods and raw materials and supplies inventory. We adjust the value of certain inventory to the estimated market value to the extent that management's assumptions of future demand, market or functional conditions indicate the cost basis is either in excess of market or the inventory will not be utilized or sold in future operations. If actual demand or conditions are less favorable than those projected by management, additional inventory write-downs may be required.
Mineral Rights
We maintain $157.6 million of net mineral rights as part of fixed assets at December 31, 2002. Mineral rights are stated at cost, with amortization based on the units of production method, taking into account estimates of recoverable reserves and, in certain instances, the duration of the mining rights. If the actual size, quality or recoverability of the minerals is less than that projected by management or if the length of time of the right to mine the minerals is less than that projected by management, then the rate of amortization could be increased or the value of the rights could be reduced by a material amount.
Deferred Tax Asset Valuation Allowance
We have approximately $106.0 million of net operating loss carryforwards, or "NOLs," at December 31, 2002 that expire between 2009 and 2020. We have previously experienced two ownership changes that have placed significant limitations on our ability to use these NOLs. Since we do not consider utilization of these credits to be more likely than not under our proposed operating structure and current tax law, a valuation allowance has been recorded for the entire amount of the NOLs. In making this determination, management considers a multitude of factors including its internal forecasts. Many of the assumptions in these forecasts are inherently difficult to predict and in some cases are outside of our direct control, and therefore, may prove to be significantly different than the actual outcomes. As a result, the amount of required valuation allowance could be materially different.
Pension Plans
Certain assumptions are used in the calculation of the actuarial valuation of our defined benefit pension plans. These assumptions include discount rates, expected long-term rates of return on plan assets and rates of increase in compensation levels. If actual results vary from those projected by management, adjustments may be required in future periods to meet minimum pension funding, thereby increasing pension expense and our pension liability. Note 7 to our combined and consolidated financial statements included in this prospectus provides additional information regarding pension assumptions used by us.
37
Seller Notes and Settlement Notes
In connection with the Recapitalization on November 28, 2001, we issued $11.3 million in notes payable to IMC Global, or the "Seller Notes" (see Note 9 in our combined and consolidated financial statements). Should certain threshold equity returns not be achieved by Apollo affiliates, the Seller Notes and any accrued and unpaid interest (including any related promissory notes) may be payable in whole or in part to Apollo affiliates rather than IMC Global.
On August 29, 2002, we, Apollo, IMC Global and certain of their affiliates amended the Seller Notes in connection with certain post-closing requirements of the Recapitalization. IMC Global returned $8.4 million of Seller Notes, plus $0.6 million of accrued interest, to Salt Holdings. Pursuant to this settlement, we retained a contingent obligation whereby the $9.0 million of notes plus accrued interest, now termed the "Settlement Notes" ($9.3 million at December 31, 2002) may be payable, in whole or in part, to Apollo affiliates should certain levels of equity returns not be achieved. Future equity returns are inherently difficult to predict, and therefore, our expectations may prove to be significantly different than actual outcomes. As a result, expected future levels of equity returns may not be achieved causing the Settlement Notes to become payable, in whole or in part. At December 31, 2002, management believed the performance targets would be met and accordingly, no amounts payable related to the Settlement Notes have been included in the consolidated balance sheet.
Other Significant Accounting Policies
Other significant accounting policies not involving the same level of measurement uncertainties as those discussed above are nevertheless important to an understanding of our financial statements. Policies related to revenue recognition, financial instruments and consolidation policy require difficult judgments on complex matters that are often subject to multiple sources of authoritative guidance. Certain of these matters are among topics currently under re-examination by accounting standards setters and regulators. Although no specific conclusions reached to date by these standard setters appear likely to cause a material change in our accounting policies, future outcomes cannot be predicted with confidence.
Results of Operations
The following table sets forth certain combined and consolidated historical financial information for the years ended December 31, 2002, 2001 and 2000. We record sales to customers based upon total billings, including pass-through shipping and handling costs necessary to transport our products from the production site to the delivery point. We manage the profitability and attractiveness of existing and prospective customers, product lines and plants by, among other factors, analyzing the customer billings net of related shipping and handling costs. This allows for a more comparable look at the relative profitability of our business as well as providing a more accurate analysis upon which to analyze trends in the business.
The following table and discussion should be read in conjunction with the information contained in our combined and consolidated financial statements and the notes thereto included elsewhere in this prospectus. However, our results of operations set forth below and elsewhere in this prospectus may not necessarily reflect what would have occurred if we had been a separate, stand-alone entity during the periods presented or what will occur in the future. See "Risk Factors—We are a newly formed
38
company with no operating history as a stand-alone company, which may lead to risks or unanticipated expenses similar to those of a start-up company."
|
|
For the year ended December 31,
|
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|---|---|---|---|---|---|---|---|---|---|---|---|
|
|
2002
|
2001
|
2000
|
||||||||
|
|
(dollars in millions)
|
||||||||||
| Sales | $ | 502.6 | $ | 523.2 | $ | 509.2 | |||||
| Cost of sales—shipping and handling | 137.5 | 143.2 | 140.0 | ||||||||
| Cost of sales—products | 239.2 | 257.0 | 272.0 | ||||||||
|
|
|
|
|||||||||
| Gross profit | 125.9 | 123.0 | 97.2 | ||||||||
| Selling, general and administrative expenses | 40.6 | 38.9 | 35.5 | ||||||||
| Goodwill write-down | — | — | 191.0 | ||||||||
| Restructuring and other charges | 7.7 | 27.0 | 425.9 | ||||||||
|
|
|
|
|||||||||
| Operating earnings (loss) | 77.6 | 57.1 | (555.2 | ) | |||||||
| Interest expense | 42.4 | 14.4 | 16.4 | ||||||||
| Other (income) expense | 4.9 | (3.1 | ) | (0.2 | ) | ||||||
|
|
|
|
|||||||||
| Income (loss) before taxes | 30.3 | 45.8 | (571.4 | ) | |||||||
| Income tax expense (benefit) | 11.4 | 26.8 | (103.7 | ) | |||||||
|
|
|
|
|||||||||
| Net income (loss) | $ | 18.9 | $ | 19.0 | $ | (467.7 | ) | ||||
|
|
|
|
|||||||||
| Sales by Segment: | |||||||||||
| Salt | $ | 452.5 | $ | 485.0 | $ | 465.1 | |||||
| Specialty potash fertilizers | 50.1 | 38.2 | 44.1 | ||||||||
|
|
|
|
|||||||||
| Total | $ | 502.6 | $ | 523.2 | $ | 509.2 | |||||
|
|
|
|
|||||||||
Year Ended December 31, 2002 Compared to the Year Ended December 31, 2001
Sales
Sales for 2002 of $502.6 million decreased $20.6 million, or 3.9% compared to $523.2 million in 2001. Sales include revenues from the sale of our products, or "Product Sales," as well as pass-through shipping and handling fees charged to customers to reimburse us for shipping and handling costs incurred in delivering salt and SOP product to the customer. Such shipping and handling fees were $137.5 million during 2002, a decrease of $5.7 million compared to 2001 shipping and handling fees of $143.2 million. The decline in shipping and handling related fees during 2002 was due to fewer tons of products sold compared to 2001.
Product Sales for 2002 of $365.1 million decreased $14.9 million, or 3.9% compared to $380.0 million for 2001. Salt Product Sales for 2002 of $322.3 million decreased $19.5 million, or 5.7% compared to $341.8 million for 2001. This decrease was primarily the result of lower sales volumes in both of our North American and U.K. highway deicing product lines and as well as consumer deicing volumes in the general trade product line, all due to the mild winter experienced in the March 2002 quarter. In particular, highway deicing and consumer deicing Product Sales for the March 2002 quarter decreased $14.1 million and $9.2 million, respectively, from the prior year period. Even though the lower sales volumes continued in the United Kingdom through the December 2002 quarter, North American sales for the December 2002 quarter were approximately at average historical levels. Overall, the reductions in sales volumes were offset in part by improved pricing in our North American and U.K. highway deicing product lines and general trade products. SOP Product Sales for 2002 of $42.8 million increased $4.6 million compared to $38.2 million for 2001 due to increased sales volumes partially offset by lower average prices.
39
Gross Profit
Gross profit for 2002 of $125.9 million increased $2.9 million, or 2.4% compared to $123.0 million for 2001. The increase in gross profit primarily reflects the impact of improved salt pricing, the successful implementation of a cost reduction program and increased SOP sales volumes, offset in part by lower volumes of highway and consumer deicing products.
Selling, General and Administrative Expenses
Selling, general and administrative expenses of $40.6 million for 2002 increased $1.7 million, or 4.4% compared to $38.9 million for 2001. The increase primarily reflects additional costs related to our transition to a stand-alone entity for services previously provided by IMC Global prior to the Recapitalization.
Restructuring and Other Charges
Transition costs are non-recurring in nature and relate to charges required to establish us as an independent entity. During 2002, we incurred $7.7 million of transition costs that were directly related to our transition from an entity controlled by IMC Global and consisted primarily of one-time compensation costs, costs to develop stand-alone tax and inventory strategies and costs associated with determining the post-closing purchase price adjustment.
Interest Expense
Interest expense for 2002 of $42.4 million increased $28.0 million compared to $14.4 million for 2001. This increase is primarily the result of our new capital structure following the Recapitalization on November 28, 2001.
Other (Income) Expense
Other expense for 2002 of $4.9 million increased $8.0 million compared to other income of $3.1 million for 2001. Other income in 2001 was primarily interest income earned from IMC Global. We earned no interest income from IMC Global in 2002. Additionally, we recorded a $5.3 million loss related to refinancing our term loan credit facility in 2002.
Income Tax Expense
Income tax expense for 2002 of $11.4 million decreased $15.4 million compared to $26.8 million of income tax expense for 2001 due to a decline in pre-tax income partially resulting from higher interest expense following the Recapitalization. Our income tax provision differs from the United States statutory federal income tax rate primarily due to U.S. statutory depletion, state income taxes (net of federal tax benefit), foreign income tax rate differentials, changes in the expected utilization of previously reserved NOLs, non-deductible transaction costs and foreign mining taxes.
Year Ended December 31, 2001 Compared to the Year Ended December 31, 2000
Sales
Sales for 2001 of $523.2 million increased $14.0 million, or 2.7% compared to $509.2 million in 2000. Sales include Product Sales as well as pass-through shipping and handling fees charged to customers to reimburse us for shipping and handling costs incurred in delivering salt and SOP product to the customer. Such shipping and handling fees were $143.2 million during 2001, an increase of $3.2 million compared to 2000 shipping and handling fees of $140.0 million. The increase in shipping and handling related fees during 2001 was due to more tons of products sold compared to 2000.
40
Product Sales for 2001 of $380.0 million increased $10.8 million, or 2.9% compared to $369.2 million for 2000. Salt Product Sales for 2001 of $341.8 million increased $16.7 million, or 5.1% compared to $325.1 million for 2000. This increase was primarily the result of higher highway deicing sales volumes in the United Kingdom, higher general trade sales volumes and improved pricing in the North American highway deicing product line for the last half of 2001. In particular, highway deicing Product Sales for 2001 increased 8.4%, contributing approximately $12 million of additional Product Sales. There was also an increase in consumer deicing Product Sales of approximately $3 million as compared to the prior year period.
SOP Product Sales for 2001 of $38.2 million decreased $5.9 million, or 13.4% compared to $44.1 million for 2000. SOP sales volumes for 2001 declined approximately 23.6% as compared to 2000 as a result of lower demand for fertilizers and reduced marketing of SOP as part of IMC Global's broader potash marketing strategy. This decline was partially offset by a 10.2% increase in the average price of SOP.
Gross Profit
Gross profit for 2001 of $123.0 million increased $25.8 million, or 26.5% compared to $97.2 million for 2000. This improvement in gross profit primarily reflects the impact of stronger sales of our winter deicing products during the first quarter of 2001. In addition, reduced SOP sales were more than offset by cost reductions, primarily in the form of lower consumption of purchased raw materials at our Ogden solar evaporation facility. Purchased raw materials are used to supplement SOP production when SOP sales volumes exceed the SOP sales volumes that can be achieved from the annual potash harvest. Furthermore, as a result of asset impairment charges recorded in the fourth quarter of 2000, gross profit during 2001 was favorably impacted by reduced depreciation and amortization expenses of $11.5 million.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for 2001 of $38.9 million increased $3.4 million, or 9.6% compared to $35.5 million for 2000 primarily reflecting higher sales related charges.
Goodwill Write-down, Restructuring and Other Charges
During 2001, we incurred $27.0 million in expenses in connection with the Recapitalization which consisted of transaction and transition costs. The transaction costs were directly related to the acquisition and consisted primarily of outside professional services. Transition costs are non-recurring in nature and related to charges required to establish us as an independent entity. During 2000, we recorded goodwill write-down and restructuring and other charges of $616.6 million. The 2000 charges were comprised of a $191.0 million write-down of goodwill and $425.9 million of restructuring and other charges, which were recorded in the fourth quarter. Substantially all these charges were non-cash charges and reflected the amount by which our net book value exceeded IMC Global's anticipated proceeds from the disposition of the Company.
Other Income/Expense
Other income for 2001 of $3.1 million increased $2.9 million compared to $0.2 million for 2000. This increase was largely the result of Canadian non-cash foreign currency exchange gains.
Interest Expense
Interest expense for 2001 of $14.4 million decreased $2.0 million, or 12.2% compared to $16.4 million for 2000. This decrease was primarily the result of lower average borrowings from IMC
41
Global and its affiliates during 2001 as compared to the prior year period, partially offset by interest expense related to our new debt borrowings at the end of 2001 related to the Recapitalization.
Income Tax Expense
Income tax expense for 2001 of $26.8 million increased $130.5 million compared to an income tax benefit of $103.7 million for 2000. This was due to the effect in 2000 of the $616.6 million asset impairment recorded by us, which resulted in an income tax benefit for the year. Our income tax provision differs from the U.S. statutory federal income tax rate primarily due to U.S. statutory depletion, state income taxes (net of federal tax benefit), foreign income tax rate differentials, foreign mining taxes, non-deductible transaction costs and amortization of goodwill not deductible for tax purposes.
Liquidity and Capital Resources
Historical Cash Flow
Historically, we have used cash generated from operations to meet our working capital needs and to fund capital expenditures. Prior to the Recapitalization, in North America, we participated in IMC Global's centralized treasury management system whereby all of our cash receipts were remitted to IMC Global and all cash disbursements were paid by IMC Global. Prior to the Recapitalization, we maintained a £4.0 million revolving credit facility in the United Kingdom to manage daily cash receipts and disbursements.
For the year ended December 31, 2002
Net cash flow generated by operating activities was $82.4 million for the year ended December 31, 2002. Of this amount, $12.7 million was generated by working capital reductions. The primary working capital reductions were increases in accounts payable and accrued expenses of $14.8 million and decreases in inventories of $3.8 million offset in part by an increase in receivables of $5.9 million. The improvement in working capital is partially due to faster collections of our receivables and the timing of interest payments. These improvements were partially offset by more severe winter weather in December 2002 than in December 2001. Additionally, during 2002, we amended an agreement with a supplier related to the purchase of salt from the supplier's chemical production facility. We received a one-time cash payment of $8.0 million related to the amendment which terminates in December 2010. In the future we may elect to resume purchasing salt from the supplier's facility. In that event, we would repay a ratable portion of the cash received.
Net cash flow used by investing activities was $19.1 million for the year ended December 31, 2002, primarily related to capital expenditures. Extensive efforts have been made throughout 2002 to focus capital spending on maintaining the business while leveraging off of our growth and cost reduction capital spending in prior years. Capital expenditures during 2002 included $17.0 million of expenditures to maintain our facilities. During the four years prior to 2002, on average, we have spent in excess of $20.0 million per year in growth and cost reduction capital expenditures to upgrade our core operating facilities, expand and rationalize production capacities and improve operating efficiencies. Growth and cost reduction capital expenditures were $2.5 million for 2002.
Net cash flow used by financing activities was $69.8 million for the year ended December 31, 2002, primarily due to the $39.8 million repayment of borrowings under our revolving credit facility, combined with $40.0 million of voluntary principal repayments that reduced the amount of long-term debt outstanding under our term loan credit facility. The cash used was partially offset by approximately $13 million of capital contributions received by us from IMC Global related to the post-closing purchase price adjustment
42
In connection with the offering of the April 2002 senior subordinated notes, we amended and restated our senior credit facilities and reduced the term loan credit facility to $150.0 million. In connection with this transaction, we recorded a charge to Other (income) expense in the accompanying combined and consolidated statements of operations of approximately $5.3 million which was reflected as a non-cash add-back to net cash provided by operating activities.
For the year ended December 31, 2001
Net cash flow generated by operating activities was $112.4 million for the year ended December 31, 2001. Of this amount, $50.8 million was generated by working capital reductions. The largest working capital reduction, reflective of our exposure to weather conditions, was a $36.3 million decrease in our receivables. This reduction was primarily related to more severe winter weather in December 2000 than in December 2001.
Net cash flow used by investing activities was $43.6 million for the year ended December 31, 2001, primarily representing capital expenditures of the business. As part of these capital expenditures, we incurred $5.2 million related to the new mine shaft, mill and headframe at the Cote Blanche, Louisiana facility. The remaining capital expenditures included $26.3 million of expenditures to maintain our facilities and $11.6 million of growth and cost reduction capital expenditures. The significant growth and cost reduction projects related to the continuing expansion of our Lyons, Kansas evaporation facility and the purchase of a continuous miner at our Winsford facility.
Net cash flow used by financing activities was $53.7 million for the year ended December 31, 2001. A significant level of activity occurred during the fourth quarter as a result of the Recapitalization. Most notably, Compass Minerals borrowed $250.0 million from its newly issued notes, $225.0 million from its new term loan credit facility and approximately $39.8 million on its new revolving credit facility. These funds were used primarily to repay certain notes payable to IMC Global and affiliates and to declare a dividend to IMC Global. We also incurred $18.0 million in financing costs. Additionally, $70.7 million was used in the net repayment of third-party debt, including a £45.0 million bank facility for our U.K. operations.
For the year ended December 31, 2000
Net cash flow generated from operating activities was $72.1 million for the year ended December 31, 2000. Of this amount, $6.6 million was generated by working capital reductions.
Net cash flow used by investing activities was $34.0 million for the year ended December 31, 2000 primarily representing capital expenditures of the business. Included in this amount was $9.4 million related to the construction of the new mine shaft, mill and headframe at our Cote Blanche, Louisiana facility. The remaining capital expenditures primarily relate to $18.8 million of expenditures to maintain our facilities and $5.5 million of growth and cost reduction capital expenditures. The significant growth and cost reduction projects related to the completion of the rationalization of our facilities in Hutchinson and Lyons, Kansas as well as energy and manpower efficiency projects at our evaporation facilities.
Net cash used by financing activities was $43.3 million for the year ended December 31, 2000, of which $39.6 million was repayments of borrowings from IMC Global and its affiliates. The remaining $3.7 million related to the net repayment of third-party debt, which included capital leases.
Post-Recapitalization
Effective with the consummation of the Recapitalization, we no longer participate in IMC Global's centralized treasury management system. Following the Recapitalization, we established our own centralized treasury management system. Our primary sources of liquidity will continue to be cash flow
43
from operations and borrowings under our revolving credit facility. We expect that ongoing requirements for debt service and capital expenditures will be funded from these sources.
We have incurred substantial indebtedness in connection with the Recapitalization. As of December 31, 2002, we had $501.3 million of indebtedness, net of issuance premium. Our significant debt service obligations could, under certain circumstances, materially affect our financial condition and prevent us from fulfilling our debt obligations. See "Risk Factors—Our substantial indebtedness could adversely affect our financial condition and prevent us from fulfilling our obligations under the exchange notes."
Concurrent with the Recapitalization, Compass Minerals issued $250.0 million aggregate principal amount of its 10% senior subordinated notes due 2011 and entered into the senior credit facilities. The senior credit facilities provided for a term loan credit facility in the principal amount of $225.0 million and a revolving credit facility in an aggregate amount of up to $135.0 million. Upon consummation of the Recapitalization, Compass Minerals borrowed the full amount available under the term loan credit facility and made borrowings under the revolving credit facility based upon our working capital needs. No borrowings were outstanding under the revolving credit facility as of December 31, 2002. Future borrowings under the revolving credit facility will be available to fund our working capital requirements, capital expenditures and for other general corporate purposes. As of December 31, 2002, approximately $126.4 million was available under the revolving credit facility. The revolving credit facility is available until 2008.
On April 10, 2002, Compass Minerals completed an offering of an additional $75.0 million aggregate principal amount of its senior subordinated notes. The April 2002 senior subordinated notes are governed by, and treated as a single class of securities under an indenture, dated November 28, 2001, between Compass Minerals and The Bank of New York, as trustee. The gross proceeds from the offering of the April 2002 senior subordinated notes in the amount of $78.4 million, including a purchase premium in the amount of $3.4 million, were used to refinance borrowings under the term loan credit facility and pay related fees and expenses. The April 2002 senior subordinated notes mature in August 2011. As part of the issuance of the April 2002 senior subordinated notes, we amended the senior credit facilities to reduce the term loan credit facility to $150.0 million and reduce the related interest rate margin by 0.75%. Borrowings under the amended term loan credit facility are due and payable in quarterly installments that began in 2002. The quarterly term loan amortization payments due before 2009 approximate $1.1 million on an annual basis, or 1% of the term loan. The remaining balance of the term loan credit facility will amortize in equal quarterly installments in the eighth year of the term loan credit facility. As of December 31, 2002, the outstanding balance of the term loan was $109.3 million.
In December 2002, certain holders of our preferred stock converted their preferred stock into subordinated discount notes. We then issued $123.5 million in aggregate principal amount of outstanding notes in exchange for the subordinated discount notes. No cash interest will accrue on the notes prior to December 15, 2007. The accreted value of each note will increase from the date of issuance until December 15, 2007 at a rate of 12 3 / 4 % per annum, reflecting the accrual of non-cash interest, such that the accreted value will equal the principal amount at maturity on December 15, 2007. Cash interest will accrue on the notes at a rate of 12 3 / 4 % per annum, beginning December 15, 2007. The first cash interest payment will be made on June 15, 2008. See "Description of the Exchange Notes."
Also, in connection with the Recapitalization, we received in excess of $114.0 million of net operating loss carryforwards and expect to realize significant cash tax savings if these carryforwards are able to be utilized. During 2002, net utilization of net operating loss carryforwards was approximately $8.0 million. Due to the uncertainty that these carryforwards will be utilized, a full valuation allowance was previously established against the remaining deferred tax asset.
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We have two defined benefit pension plans for certain of our United Kingdom and United States employees. Our cash funding policy is to make the minimum annual contributions required by applicable regulations. Since the plans' accumulated benefit obligations are in excess of the fair value of the plans' assets, we may be required to use cash from operations above our historical levels to further fund these plans in the future.
Our contractual obligations and commitments as of December 31, 2002 are as follows (in millions):
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Payments Due by Period
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Contractual Obligations
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Total
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Less than
1 Year |
2-3
Years |
4-5
Years |
After 5 Years
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| Long-term Debt | $ | 501.2 | $ | 1.1 | $ | 2.2 | $ | 2.2 | $ | 495.7 | |||||
| New Seller Notes | 3.3 | — | — | — | 3.3 | ||||||||||
| Capital Lease Obligations | 0.1 | 0.1 | — | — | — | ||||||||||
| Operating Leases(a) | 26.9 | 5.9 | 7.6 | 4.9 | 8.5 | ||||||||||
| Unconditional Purchase Obligations(b) | 65.9 | 7.8 | 15.7 | 15.7 | 26.7 | ||||||||||
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| Total Contractual Cash Obligations | $ | 597.4 | $ | 14.9 | $ | 25.5 | $ | 22.8 | $ | 534.2 | |||||
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Amount of Commitment Expiration per Period |
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Other Commitments
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Total
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Less than
1 Year |
2-3 Years
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4-5
Years |
After
5 Years |
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| Revolver | $ | 126.4 | $ | — | $ | — | $ | — | $ | 126.4 | |||||
| Letters of Credit | 8.6 | 8.6 | — | — | — | ||||||||||
| Settlement Notes(c) | 9.3 | — | — | — | 9.3 | ||||||||||
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| Total Other Commitments | $ | 144.3 | $ | 8.6 | $ | — | $ | — | $ | 135.7 | |||||
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Our ability to make scheduled payments of principal of, to pay the interest on, or to refinance our indebtedness, including the exchange notes, or to fund planned capital expenditures will depend on our ability to generate cash in the future. This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.
Based on our current level of operations, we believe that cash flow from operations and available cash, together with available borrowings under our senior credit facilities, will be adequate to meet our short-term liquidity needs.
As a holding company, our investments in our operating subsidiaries, including Compass Minerals, constitute substantially all of our operating assets. Consequently, our subsidiaries conduct all of our consolidated operations and own substantially all of our operating assets. Our principal source of the cash we need to pay our obligations and to repay the principal amount of our obligations, including the exchange notes, is the cash that our subsidiaries generate from their operations and their borrowings. Our subsidiaries are not obligated to make funds available to us. The terms of the senior credit facilities and the indenture governing the senior subordinated notes significantly restrict our subsidiaries from paying dividends and otherwise transferring assets to us. The terms of the senior credit facilities also restrict our subsidiaries from paying dividends to us in order to fund cash interest payments on the exchange notes after December 15, 2007 if we do not comply with an adjusted senior indebtedness
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leverage ratio or if a default or event of default has occurred and is continuing under the senior credit facilities. We cannot assure you that we will maintain this ratio. Furthermore, our subsidiaries will be permitted under the terms of the senior credit facilities and the indenture governing the senior subordinated notes to incur additional indebtedness that may severely restrict or prohibit the making of distributions, the payment of dividends or the making of loans by such subsidiaries to us. We cannot assure you that the agreements governing the current and future indebtedness of our subsidiaries will permit our subsidiaries to provide us with sufficient dividends, distributions or loans to fund scheduled interest and principal payments on these exchange notes when due. If we consummate an acquisition, our debt service requirements could increase. We may need to refinance all or a portion of our indebtedness, including the exchange notes on or before maturity. We cannot assure you that we will be able to refinance any of our indebtedness, including the senior credit facilities and the exchange notes, on commercially reasonable terms or at all.
Sensitivity Analysis Related to EBITDA
Both prior to the Recapitalization and in connection with the Recapitalization, we have incurred significant non-recurring restructuring and other charges that impact our results of operations. As a result, our results of operations and cash flows are not indicative of what they would have been had we not incurred these non-recurring charges. We believe it would be helpful to provide a sensitivity analysis that describes our ability to satisfy our debt service, capital expenditures and working capital requirements in terms of earnings before interest, taxes, depreciation and amortization, or "EBITDA," and EBITDA adjusted for the restructuring and other charges described below, or "Adjusted EBITDA." Not only do we believe these non-GAAP measures can assist investors in understanding our cost structure, cash flows and financial position, but also financial covenants and ratios in our senior credit facilities and our indentures, such as restrictions on payments and indebtedness and ratios relating to leverage, interest coverage and fixed charge coverage, are also tied to measures that are calculated by adjusting EBITDA as described below. We believe it is necessary to adjust EBITDA to enable investors to see how we view our business given the significant non-recurring restructuring and other charges that have historically affected our results of operations.
Neither EBITDA nor Adjusted EBITDA are calculated under GAAP and neither should be considered in isolation or as a substitute for net income, cash flows or other income or cash flow data prepared in accordance with GAAP or as a measure of our profitability or liquidity. While EBITDA and Adjusted EBITDA and similar variations thereof are frequently used as a measure of operations and the ability to meet debt service requirements, these terms are not necessarily comparable to other similarly titled captions of other companies due to the potential inconsistencies in the method of calculation.
The following is a summary of our goodwill write-down, restructuring and other charges incurred for each of our last five fiscal years:
For the year ended December 31, 1998
In 1998, we incurred restructuring and other charges in the amount of $20.3 million. These charges were largely related to the impairment of certain of our assets in the fourth quarter of 1998, including a $17.7 million write-down of property, plant and equipment at our Hutchinson and Canadian locations, driven by the consolidation of certain facilities. The majority of the write-down related to production equipment and mineral rights. The remaining $2.6 million charge related to the estimated costs of closing the facilities and the severance of employees.
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For the year ended December 31, 1999
In the fourth quarter of 1999, IMC Global implemented a restructuring program which included the closure of our Hutchinson facility and reductions in our employee headcount. In conjunction with this program, we recorded a restructuring charge of $13.7 million, which was comprised of the following:
In 1999, we also recorded a charge in the amount of $87.5 million in connection with goodwill write-down related to our election to change our method of assessing the recoverability of goodwill from one based on undiscounted cash flows to one based on discounted cash flows. We recorded this non-cash write-down of goodwill in the fourth quarter of 1999 as a result of this change in methodology.
For the year ended December 31, 2000
In the fourth quarter of 2000, IMC Global authorized its board of directors to proceed with the sale of our operations. In connection with the proposed sale, we recorded an impairment charge of $616.6 million, $482.1 million after tax, in the fourth quarter of 2000. In addition, as part of this charge, goodwill was reduced $191.0 million to zero and mineral properties and rights was reduced $425.6 million. We recorded a $0.2 million after tax charge for employee severance costs in connection with the proposed sale.
For the year ended December 31, 2001
In connection with the Recapitalization, we expensed certain transaction and transition costs. We incurred $20.1 million of transaction costs related to activities associated with the Recapitalization (which consisted primarily of costs related to outside professional services). We also expensed $6.9 million of transition costs related to activities and other charges incurred in connection with separating us from IMC Global.
For the year ended December 31, 2002
Following the Recapitalization, we incurred and expensed certain non-recurring costs totaling $7.7 million that consist of transition costs required to establish us as an independent entity. The costs were directly related to the transition from an entity controlled by IMC Global and consisted primarily of one-time compensation costs, costs to develop stand-alone tax and inventory strategies and costs associated with determining the post-closing purchase price adjustment.
The adjustments to EBITDA set forth in the table below include adjustments relating to the expenses and charges described above, which we believe are not likely to recur. Although these adjustments are not permitted as adjustments in preparing financial statements in accordance with Regulation S-X, management believes that the presentation of EBITDA, as so adjusted, provides useful
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information in analyzing the effects of non-recurring restructuring charges, including those resulting from the Recapitalization.
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For the year ended December 31,
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1998
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1999
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2000
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2001
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2002
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(unaudited)
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(dollars in millions)
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| Net income (loss) | $ | 3.1 | $ | (67.5 | ) | $ | (467.7 | ) | $ | 19.0 | $ | 18.9 | ||||
| Income tax expense (benefit) | 18.9 | 12.4 | (103.7 | ) | 26.8 | 11.4 | ||||||||||
| Interest expense | 23.2 | 19.0 | 16.4 | 14.4 | 42.4 | |||||||||||
| Depreciation and amortization | 42.4 | 55.1 | 44.3 | 32.6 | 37.1 | |||||||||||
| Goodwill write-down | — | 87.5 | 191.0 | — | — | |||||||||||
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| EBITDA | 87.6 | 106.5 | (319.7 | ) | 92.8 | 109.8 | ||||||||||
| Adjustments to income (loss) from operations: | ||||||||||||||||
| Restructuring and other charges | 20.3 | 13.7 | 425.9 | 27.0 | 7.7 | |||||||||||
| Other income(1) | 6.4 | (3.0 | ) | (0.2 | ) | (3.1 | ) | 4.9 | ||||||||
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| Adjusted EBITDA | $ | 114.3 | $ | 117.2 | $ | 106.0 | $ | 116.7 | $ | 122.4 | ||||||
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Effects of Currency Fluctuations and Inflation
We conduct operations in Canada, the United Kingdom and the United States. Therefore, our results of operations are subject to both currency transaction risk and currency translation risk. We incur currency transaction risk whenever we or one of our subsidiaries enter into either a purchase or sales transaction using a currency other than the local currency of the transacting entity. With respect to currency translation risk, our financial condition and results of operations are measured and recorded in the relevant local currency and then translated into U.S. dollars for inclusion in our historical combined and consolidated financial statements. Exchange rates between these currencies and U.S. dollars in recent years have fluctuated significantly and may do so in the future. The majority of our revenues and costs are denominated in U.S. dollars, with pound sterling, Canadian dollars and other currencies also being significant. We generated 36% of our 2002 sales in foreign currencies, and we incurred 35% of our 2002 total operating expenses in foreign currencies. The net depreciation of the pound sterling and Canadian dollar against the U.S. dollar and other world currencies over the 1998 to 2002 period has had a negative impact on our sales and EBITDA, as reported in U.S. dollars in our combined and consolidated financial statements. Significant changes in the value of the Canadian dollar, the euro or pound sterling relative to the U.S. dollar could have a material adverse effect on our financial condition and our ability to meet interest and principal payments on U.S. dollar denominated debt, including the exchange notes and borrowings under the senior credit facilities.
Seasonality
We experience a substantial amount of seasonality in salt sales. The result of this seasonality is that sales and operating income are generally higher in the first and fourth quarters and lower during the second and third quarters of each year. In particular, sales of highway and consumer deicing salt products are seasonal as they vary based on the severity of the winter conditions in areas where the product is used. Following industry practice in North America, we and our customers stockpile sufficient quantities of deicing salt in the second, third and fourth quarters to meet the estimated requirements for the winter season.
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Market Risk
Interest Rate Risk
As of December 31, 2002, we had $109.3 million of debt outstanding under the term loan credit facility and no debt outstanding under our revolving credit facility. Both the term loan credit facility and revolving credit facility are subject to variable rates. Accordingly, our earnings and cash flows are affected by changes in interest rates. Assuming no change in the term loan credit facility borrowings at December 31, 2002, and an average level of borrowings from our revolving credit facility at variable rates, and assuming a one hundred basis point increase in the average interest rate under these borrowings, it is estimated that our interest expense for the year ended December 31, 2002 would have increased by approximately $1.2 million.
Foreign Currency Risk
We conduct our business primarily in the United Kingdom and North America and export some products to Europe and Southeast Asia. Our operations may, therefore, be subject to volatility because of currency fluctuations, inflation changes and changes in political and economic conditions in these countries. Sales and expenses are frequently denominated in local currencies, and results of operations may be affected adversely as currency fluctuations affect our product prices and operating costs or those of our competitors. We may engage in hedging operations, including forward foreign exchange contracts, to reduce the exposure of our cash flows to fluctuations in foreign currency rates. We will not engage in hedging for speculative investment reasons. Our historical results do not reflect any foreign exchange hedging activity. There can be no assurance that our hedging operations will eliminate or substantially reduce risks associated with fluctuating currencies. See "Risk Factors—Economic and other risks associated with international sales and operations could adversely affect our business."
Commodity Pricing Risk: Commodity Derivative Instruments and Hedging Activities
We have reviewed various options available to mitigate the impact of fluctuating natural gas prices. During 2002 and 2003, we entered into certain financial instruments related to the purchase of natural gas. We have determined that these financial instruments qualify as hedges under SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activity."
Recent Accounting Pronouncements
We have adopted the new rules on accounting for goodwill and other intangible assets as set forth in Statement of Financial Accounting Standards ("SFAS") No. 141, "Business Combinations," and No. 142, "Goodwill and Other Intangible Assets." Under the new rules, goodwill and intangible assets deemed to have indefinite lives are not amortized but are subject to annual impairment tests in accordance with the statements. Other intangible assets continue to be amortized over their useful lives. Adoption of these statements did not have a material impact on our financial statements as we, in the fourth quarter of 2000, recorded a charge to reduce goodwill to zero and has no material other intangible assets with indefinite lives.
In June 2001, the Financial Accounting Standards Board, or "FASB," issued SFAS No. 143, "Accounting for Obligations Associated with the Retirement of Long-Lived Assets." The objective of SFAS No. 143 is to establish an accounting standard for the recognition and measurement of an obligation related to the retirement of certain long-lived assets. The retirement obligation must be one that results from the acquisition, construction or normal operation of a long-lived asset. SFAS No. 143 requires the legal obligation associated with the retirement of a tangible long-lived asset to be recognized at fair value as a liability when incurred and the cost to be capitalized by increasing the carrying amount of the related long-lived asset. SFAS No. 143 became effective for us on January 1,
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2003. We have evaluated the effect of implementing SFAS No. 143 and have determined that its adoption will not have a material impact on our financial position, results of operations or cash flows.
In January of 2002, we adopted SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." This Statement supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" and Accounting Principles Board ("APB") Opinion No. 30, "Reporting the Results of Operations—Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions." This statement establishes an accounting model based on SFAS No. 121 for long lived assets to be disposed of by sale, previously accounted for under APB No. 30. We adopted SFAS No. 144 as of January 1, 2002 without significant effect on our consolidated financial statements.
During the second quarter of 2002, we adopted SFAS No. 145, "Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections." SFAS No. 145 rescinds SFAS No. 4 and SFAS No. 64, which required gains and losses from extinguishment of debt to be classified as extraordinary items. The early adoption of SFAS No. 145 resulted in a $5.3 million charge to other (income) expense related to the debt refinancing that occurred in the quarter ended June 30, 2002 (see Note 6 in the accompanying combined and consolidated financial statements). Under previous guidance this charge would have been recorded as extraordinary loss, net of tax, on the consolidated statement of income.
In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities." This statement addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies EITF Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)." This statement requires that a liability for costs associated with an exit or disposal activity be recognized when the liability is incurred. The provisions of this statement are effective for exit or disposal activities that are initiated after December 31, 2002. We believe that the adoption of SFAS No. 146 will not have a material impact on our financial position, results of operations or cash flows.
In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based Compensation—Transition and Disclosure," which provides guidance on how to transition from the intrinsic value method of accounting for stock-based employee compensation under APB Opinion No. 25 to SFAS No. 123's fair value method of accounting, if a company so elects. We have elected to continue to follow the accounting method under APB Opinion No. 25.
Also during 2002, the FASB issued Interpretation No. ("FIN") 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others." The Interpretation requires that a guarantor recognize a liability for the fair value of guarantee obligations issued after December 31, 2002. We determined that their were no guarantees requiring disclosure as of December 31, 2002. We will record the fair value of future material guarantees, if any.
FIN 46, "Consolidation of Variable Interest Entities," is effective immediately for all enterprises with variable interests in variable interest entities. If an entity is determined to be a variable interest entity, it must be consolidated by the enterprise that absorbs the majority of the entity's expected losses, if they occur, or receives a majority of the entity's expected residual returns, if they occur, or both. We have determined that we do not have variable interest entities, therefore, the impact of FIN 46 did not have any effect on our results of operations or financial position.
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Company Overview
We are the second largest producer of salt in North America, the largest producer of salt in the United Kingdom and overall, the world's third largest producer of salt. In addition, in North America we are the largest producer of sulfate of potash, or SOP, which is used in the production of specialty fertilizers. Salt is one of the most widely used minerals in the world and has a wide variety of end-use applications, including highway deicing, food grade applications, water conditioning and various industrial uses. Our business also includes the following key characteristics:
• We believe that our cash flows are not materially impacted by economic cycles due to the stable end-use markets of salt and the absence of cost effective alternatives.
• We operate eleven facilities in North America and the United Kingdom, including the largest rock salt mine in the world in Goderich, Ontario and the largest salt mine in the United Kingdom in Winsford, Cheshire.
• We believe that we are among the lowest cost rock salt producers in our markets. Our cost advantage is due to the size and quality of our mineral reserves, the strategic location of our facilities and our continuous focus on improving production efficiency. Our salt mines in North America are located near either rail or water transport systems, thereby minimizing shipping and handling costs which constitute a significant portion of the overall delivered cost of salt. Note 11 to our combined and consolidated financial statements included in this prospectus provides additional information regarding geographical data.
For the year ended December 31, 2002, we sold approximately 11.0 million tons of salt and other minerals, generating sales of $502.6 million and operating income of $77.6 million.
Competitive Strengths
Leading Market Position— We are among the three largest salt producers, who together represent over 80% of total market capacity, in North America. In the United Kingdom, we are the largest highway deicing salt producer, and, along with the next two largest producers, represent over 95% of total production capacity. In the North American SOP market, we are the leading producer and together with the second largest North American SOP producers together have approximately 75% of the North American market.
Low Cost Producer— We believe that our Goderich, Ontario, Cote Blanche, Louisiana and Winsford, Cheshire facilities are the lowest cost, high volume rock salt mines in our served markets. This cost advantage is a result of the size and quality of our reserves, effective mining techniques, low transportation cost due to proximity to either rail or water transport systems and efficient production processes. Through our solar evaporation facility in Ogden, Utah, we believe that we are the low cost solar salt producer in our North American markets and among the lowest cost producers of SOP in the world. Over the last 4 years, we have implemented cost-cutting measures, including head count reductions and pursued significant capital investments to improve mining technology and production efficiencies, as well as to expand and rationalize production.
Stable Financial Performance— Both the North American highway deicing salt and the general trade salt product lines enjoy predictable and consistent annual demand patterns and cash flow as a result of the following:
• Based on the non-discretionary need for salt products and their low cost nature, our business is less susceptible to economic cycles. For example, even in the recessionary period between 1990 and 1992, general trade salt production in the United States continued to grow at an annual compound rate of 3% and sales of highway deicing salt remained consistent with weather patterns during that period.
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• The overriding concern for public safety insulates the demand for salt used for highway maintenance from economic cycles. Also, in our highway deicing product line, pricing is set and volume is reserved up to a year in advance under annual contracts.
• While winter weather conditions in individual locations are difficult to predict, the overall amount of snowfall and general intensity of winter weather conditions in our major target markets in the U.S. Upper Midwest and the U.S. and Canadian Great Lakes region are relatively stable. As a result, over the last 17 years, we have, on average, sold approximately 100% of our committed volume.
• In the general trade salt product line, sales are generally secured through long-term customer relationships.
• Our manufacturing costs are relatively stable and have decreased at an annual compound rate of over 1% per ton over the last 5 years. Our manufacturing processes do not materially depend on the consumption of raw materials susceptible to market price fluctuations.
Strong Free Cash Flow— We believe our strong free cash flow is a result of the following business characteristics:
• High margins . We believe that our high margins are the result of low and stable production costs, our strong market position and the many end-use markets in which we operate.
• Low maintenance capital expenditures . Our low maintenance capital expenditure requirements of less than $20 million per annum, coupled with the non-cyclical nature of our business, provide us with a stable stream of cash flow to use in our operations, to reduce debt and to reinvest in our business.
• Completed capacity expansions . During the period from 1998 to 2001, we spent in excess of $17 million per year on average in growth capital expenditures for capacity expansions and productivity enhancements. We believe that our capacity is sufficient to meet our current growth initiatives without significant additional spending and that future growth capital will be spent only upon the expectation of significant returns.
Diversified Customer Base and End-Use Markets— Salt is used in numerous different products and in a wide variety of consumer and industrial applications. Due to its unique characteristics and low cost, consumers cannot cost-effectively substitute any other product for salt, resulting in relatively stable consumption and growth over the long term as the general population grows. Salt is the best product available for deicing applications in terms of cost and efficiency. For example, the next most cost-efficient product to highway deicing salt, calcium chloride, costs approximately five times more to purchase. Similarly, there is no cost-effective substitute to salt in the water conditioning and food processing markets. Our presence in different segments of the general trade market effectively diversifies our exposure to events affecting any single end market. No single customer accounted for more than 5% of our 2002 sales while our top ten customers accounted for approximately 25% of 2002 sales.
Significant Barriers to Entry— Each of the primary North American and U.K. market participants has a large base of installed assets that would be extremely expensive and time-consuming for new competitors to replicate. In addition, our mineral rights are strategically located and we believe it is unlikely that a new market entrant would be able to locate a mineral reserve in close proximity to both low cost transportation systems and end-use markets. Due to the low production cost, transportation and handling tends to be a significant component of the total delivered cost of salt, making logistics a key competitive factor in the industry. The higher relative cost associated with transportation acts as a barrier to entry in favor of salt manufacturers located within close proximity to their customers. We maintain approximately 80 depots in North America for storage and distribution of highway deicing salt and we consider our salt distribution network to be the most extensive in our served markets. Our over 35 years of market experience in the highway deicing salt business, proven customer service, product
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quality and modeling techniques enable us to bid selectively on highway deicing salt contracts which have the most attractive terms. Our long term relationships with major retailers coupled with the higher standard of care required in handling food grade salt create a significant deterrent for potential new entrants in the general trade market. In addition, our customers, specifically government agencies in charge of maintaining public safety over their road network, have stringent qualification standards and a strong preference for dealing with existing salt manufacturers which can handle bulk capacity and have track records for on time delivery. With respect to SOP, high quality potassium sulfate reserves are scarce and we believe that in North America no comparable commercially viable sources are known other than those currently being extracted.
Business Strategy
Increase Revenues— One of our key objectives is to be the market leader with respect to profitable sales growth. We believe that we can achieve this goal through the following:
• Leveraging our leading market position . In the highway deicing product line, we are leveraging our leading market position, distribution infrastructure and low-cost production capability. We intend to strengthen our leadership position by focusing on the customers strategically located within our distribution network. We believe that this will allow us to efficiently grow our business in line with market volume and price growth, which in the United States have increased at an average of 1% and 4% per annum, respectively. We believe we can further increase sales to our existing and new customers by offering liquid deicing products and other value-added deicing products that improve the application of the product to roads and permit the conditioning of roads prior to the impact of snow and ice. In the general trade salt product line, in addition to participating in underlying market growth, we plan to improve our market share by focusing on specialty and high value-added niche products, particularly in deicing and water conditioning applications. For example, we have launched our first high-value deicing product in Canada, Sifto's Extreme® Icemelter, which will compete in this under-served market. In our water conditioning business, we intend to continue expanding by focusing on growing regional brands and private label retail water conditioning sales.
• Increase service offerings . We plan on growing our service offerings, including managing customer inventory and replenishment systems such as the deicing management services provided for some U.K. customers. We currently have several such contracts in place and anticipate entering into various other such contracts in the future. Also, we continue to develop alternative mine uses such as waste and document storage. For this purpose, we have already entered into a joint venture with a subsidiary of Vivendi SA to use the excavated space in our mine in the United Kingdom as a document storage site and are awaiting final permitting to also store inert waste. In addition, we are working with various third parties to develop several of our North American salt mines as storage sites for natural gas and waste. We expect to receive ongoing revenue streams from these alternative uses.
• Increase focus on market development in SOP product line . For the seven years prior to IMC Global's ownership of the Company, the sales volume of the SOP product line grew in excess of 25% per annum. However, as a non-core product of IMC Global, we believe that SOP did not receive sufficient focus to realize its full growth potential. We have increased the focus on this product line and have recruited a new sales manager and a dedicated global sales force. We will continue to target specific crops where the benefits of using SOP versus other potassium sources have been scientifically proven, such as wine grapes, tea, nuts and turf grass. We also plan to differentiate ourselves from our competitors through unique value-added products designed for specific crop applications. For example, we have targeted the fast-growing liquid and suspension fertilizer markets that are currently served primarily by non-SOP potassium sources.
• Supplement growth through tuck-in acquisitions . To supplement internal growth, we may pursue opportunistic acquisitions of small complementary businesses in both North America and Europe.
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There are several smaller producers of highway deicing salt which could be attractive to further expand the scope of our operations. There are also several independent salt producers in various niches of the general trade business market which could broaden both our geographic coverage and product diversity.
Improve Profitability— We intend to continue to focus on productivity enhancements and on improving our cost platform. Examples include the following:
• Plant consolidation and capacity expansion . From 1998 through 2001, we successfully implemented manufacturing programs including consolidation of facilities and over 300,000 tons of capacity expansion while divesting obsolete operations.
• Increasing productivity . We have increased manpower productivity by over 8% per annum in our general trade salt product line over the period from 1998 to 2001 through increased automation and capacity increases. We have installed a continuous miner and shaft automation system which will significantly decrease manufacturing cost and increase manpower productivity at our Winsford facility.
• Optimizing performance . We monitor the performance of each product line on a regular basis to aid in meeting target revenue and margin goals. By maintaining, but not materially growing our share of the highway deicing market, we believe that we have an opportunity to grow our margin and overall profitability in this product line by focusing on our ability to increase our average price levels and improving our customer mix.
Maximize Cash Flow— As an independent operating entity, we intend to manage our working capital efficiently and generate cash flow from enhanced management focus. Our annual maintenance capital expenditures have averaged approximately $23 million while IMC Global owned us from 1998 to 2001, although for the five years under prior ownership, our annual maintenance capital expenditures were on average approximately $17 million. In the future, we expect to spend approximately $20 million annually on maintenance capital expenditures. In addition to maintenance capital expenditures, during the period from 1998 through 2001 we spent in excess of $17 million per year on average in growth capital expenditures for capacity expansions and productivity enhancements. We believe that our capacity is sufficient to meet our current growth initiatives without significant additional spending and that future growth capital will be spent only upon the expectation of significant returns. Also, in connection with the Recapitalization, we received in excess of $114 million of net operating loss carryforwards and expect to realize significant cash tax savings if these carryforwards are able to be utilized. During 2002, net utilization of net operating loss carryforwards was approximately $8.0 million. Due to the uncertainty that these carryforwards will be utilized, a full valuation allowance was previously established against the remaining deferred tax asset. We intend to use our free cash flow to reduce leverage by reducing indebtedness or by reinvesting in our business.
Our salt segment mines, produces, processes and distributes salt in North America and Europe including rock, evaporated and solar salt. The products are marketed primarily in the United States, Canada and the United Kingdom. Salt is used in a wide variety of applications, including as a deicer for both highway and consumer use (rock salt), an ingredient in the production of chemicals for paper bleaching, water treatment and a variety of other industrial uses, a flavor enhancer and preservative in food, a nutrient and trace mineral delivery vehicle in animal feeds and an essential component in both industrial and residential water softeners. The demand for salt has historically remained relatively stable during economic cycles due to its relative low cost and high value in a diverse number of end uses. However, demand in the highway deicing market is affected by changes in winter weather. Approximately 65% of our highway deicing annual revenues are generated from December through March when the need for highway deicing salt is at its peak.
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Salt Industry Overview
The salt industry is characterized by stable demand which is resistant to economic downturns and steady price increases across various grades. Salt is one of the most common and widely consumed minerals in the world due to its low relative cost and its utility in a variety of applications including food processing, water conditioning, industrial chemical processing, nutritional supplements for animal stock and highway deicing. We estimate that the consumption of highway deicing salt for North America is 23 million tons per annum (17 million tons per annum in our served markets) while the general trade market totals 11 million tons per annum. In the United Kingdom, we estimate the size of the highway deicing market is 1.9 million tons per annum while the general trade market is approximately 1.0 million tons per annum. Production of salt used in highway deicing in the U.S. increased at an approximate 1% compound annual growth rate over the last 30 years (1970-2000) while production of general trade salt products increased at an approximate 2% compound annual growth rate over the same period.
Salt prices vary according to purity from the lowest grade (highway deicing salt) at around $18 per ton to the highest grade salt (food grade salt) at more than $400 per ton. The price difference between highway and food grade salt reflects, among other things, the more elaborate refining and packaging processes for higher grade salt. Due to its low production cost, transportation and handling tends to be a significant component of total delivered cost making logistics management and customer service key competitive factors in the industry. The higher relative cost associated with transportation also acts as a barrier to entry in favor of salt manufacturers located within close proximity to their customers. Prices for salt used in highway deicing in the United States increased at an approximate 4% compound annual growth rate over the last 30 years (1970-2000) while prices for general trade salt products increased at an approximate 5% compound annual growth rate over the same period.
Processing Methods
We have production capacity, including salt purchased under long-term contracts, of approximately 14.5 million tons of salt per annum. Mining, other production activities and packaging are currently conducted at eleven of our facilities and at two facilities where finished product is purchased from IMC Global under long-term contracts.
Summarized below are the three processing methods we use to produce salt.
Rock Salt Mining. We employ a drill and blast mining technique at our underground rock salt mines. Mining machinery moves salt from the salt face to conveyor belts where it is then crushed and screened. Salt is then hoisted to the surface where it is loaded onto shipping vessels, railcars or trucks. The primary power sources for each of our rock salt mines are electricity and diesel fuel. At our Winsford, U.K. facility, this mining method is supplemented by a continuous miner process. Rock salt is primarily used in our highway and consumer deicing products.
Mechanical Evaporation. The mechanical evaporation method involves subjecting salt-saturated brine to vacuum pressure and heat, generated by natural gas or oil, to precipitate salt. The salt brine is obtained from underground salt deposits through a series of brine wells. The resulting product has both a high purity and uniform physical shape. Evaporated salt is primarily used in our general trade salt product lines.
Solar Evaporation. The solar evaporation method is used in areas of the world where high salinity brine is available and where weather conditions provide for a high natural evaporation rate. The brine is pumped into a series of large open ponds where sun and wind evaporate the water and crystallize the salt, which is then mechanically harvested and processed through washing, drying and screening. Solar salt is primarily used in our general trade salt product lines.
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Operations and Facilities
United States. Our central and midwestern United States general trade customer base is served by our mechanical evaporation plant in Kansas. Additionally, we serve areas around the Great Lakes with evaporated salt purchased from IMC Global's potash and salt facility in Michigan. The Cote Blanche, Louisiana rock salt mine serves chemical customers in the southern and western United States, highway deicing customers through a series of depots located along the Mississippi and Ohio Rivers, and agriculture customers in the southern and midwestern U.S. Our solar evaporation facility located in Ogden, Utah is the largest solar salt production site in the United States This facility principally serves the western United States general trade markets, and also provides salt for chemical applications, and highway deicing and magnesium chloride which is primarily used in deicing, dust control and soil stabilization applications. Production capacity of salt at our Ogden facility is currently only limited by demand. We also own and operate two salt packaging facilities in Illinois and Wisconsin which also serve consumer deicing and water conditioning customers in the central, midwestern and parts of the northeastern United States.
Canada. Our salt is produced at five different locations in Canada. Mechanically evaporated salt is produced at three facilities strategically located throughout Canada: Amherst, Nova Scotia in eastern Canada; Goderich, Ontario in central Canada; and Unity, Saskatchewan in western Canada. From the Goderich, Ontario rock salt mine, we serve the consumer and highway deicing markets in Canada and the Great Lakes region of the United States. We also purchase salt and other products from IMC Global's potash and salt facilities located in Saskatchewan, which serve both the general trade and the highway deicing markets.
United Kingdom. Our United Kingdom customer base is served by two facilities. Highway deicing customers throughout the United Kingdom are served by the Winsford rock salt mine in northwest England. The Weston Point mechanical evaporation plant is located twelve miles north of the mine and serves the general trade and chemical customers in the United Kingdom as well as in continental Europe.
The table below shows the capacity and type of salt produced at each of our owned or leased production locations:
|
Location
|
Annual Production
Capacity (tons) |
Product Type
|
|||
|---|---|---|---|---|---|
| North America | |||||
| Goderich, Ontario Mine | 6,500,000 | Rock | |||
| Cote Blanche, Louisiana Mine | 2,800,000 | Rock | |||
| Ogden, Utah Plant | 1,500,000 | Solar | |||
| Lyons, Kansas Plant | 425,000 | Evaporated | |||
| Unity, Saskatchewan Plant | 175,000 | Evaporated | |||
| Goderich, Ontario Plant | 170,000 | Evaporated | |||
| Amherst, Nova Scotia Plant | 115,000 | Evaporated | |||
| United Kingdom | |||||
| Winsford, Cheshire Mine | 2,000,000 | Rock | |||
| Weston Point, Cheshire Plant | 850,000 | Evaporated | |||
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In addition to production, we package salt product produced by us or others off-site at two additional facilities. The table below shows the packaging capacity at each of these facilities:
|
Location
|
Annual Packaging
Capacity (tons) |
|
|---|---|---|
| Kenosha, Wisconsin | 100,000 | |
| Chicago, Illinois | 100,000 |
We also purchase finished salt from IMC Global, which is produced as a co-product of their potash operations, under a long term contract. The table below shows the amount and type of salt purchased from each of these production facilities:
|
Location
|
Annual
Purchasing Capacity (tons) |
Product Type
|
||
|---|---|---|---|---|
| Esterhazy, Saskatchewan | 200,000 | Rock | ||
| Hersey, Michigan | 250,000 | Evaporated |
We divide our salt products into two separate product lines: highway deicing salt (including chemical salt) and general trade salt.
Highway Deicing Salt Products
Products and Sales
Highway deicing constitutes our second largest salt product line based on revenue, representing approximately 39% of our sales of salt in 2002. Principal customers are states, provinces, counties, municipalities and road maintenance contractors that purchase bulk salt for ice control on public roadways. Highway deicing salt is sold primarily through an annual tendered bid contract system as well as through some longer-term contracts, with price, product quality and delivery being the primary competitive market factors. Annual supply contracts generally are awarded on the basis of tendered bids once the purchaser is assured that the minimum requirements for purity, service and delivery can be met. The bidding process eliminates the need to invest significant time and effort in marketing and advertising. Location of the source of salt and distribution outlets also play a significant role in determining a supplier. We have an extensive network of approximately 80 depots for storage and distribution of highway deicing salt in North America. The majority of these depots are located on the Great Lakes and the Mississippi and Ohio River systems where our Goderich, Ontario and Cote Blanche, Louisiana mines are located to serve those markets. Salt from our Ogden, Utah facility is also partially used for highway deicing.
We produce highway deicing salt in the United Kingdom for the highway deicing product line through our facility at Winsford, Cheshire, the largest rock salt mine in the United Kingdom. Our superior production capacity, productivity and favorable logistics allows us to be the only supplier of highway deicing salt capable of meeting peak winter demands. This strong position has resulted in us being viewed as a strategic operation by the United Kingdom's Highway Agency. In the United Kingdom approximately 70% of our highway deicing business is on multi-year contracts.
Winter weather variability is the most significant factor affecting salt sales for deicing applications because mild winters reduce the need for salt used in ice and snow control. Over the last four years, our North American highway deicing product line has generated over 65% of its annual sales from December through March when the need for highway deicing is at its peak. Lower than expected sales during this period could have a material adverse effect on our results of operations. The vast majority of North American deicing sales are made in Canada and the midwestern United States where winter weather is generally harsher than in other parts of North America. In keeping with industry practice,
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we, along with our customers, stockpile sufficient quantities of salt to meet estimated requirements for the next winter season. See "Risk Factors—The demand for our products changes seasonally and is dependent upon weather conditions" and "Management's Discussion and Analysis of Financial Condition and Results of Operations—Seasonality."
Chemical customers accounted for approximately 8% of our 2002 sales of salt. Principal customers are producers of intermediate chemical products used in pulp bleaching, water treatment and a variety of other industrial uses that do not have a captive source of brine. Distribution into the chemical market is made primarily through multi-year supply agreements, which are negotiated privately. Price, service and product quality are the major competitive market factors.
The table below shows our shipments of highway deicing and chemical salt products (thousands of tons):
|
|
Year Ended December 31,
|
|||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
|
2000
|
2001
|
2002
|
|||||||||
|
|
Tons
|
%
|
Tons
|
%
|
Tons
|
%
|
||||||
| U.S. | 6,078 | 66 | 5,656 | 60 | 5,104 | 64 | ||||||
| Canada | 2,159 | 24 | 2,301 | 25 | 2,162 | 27 | ||||||
| Europe and Others | 909 | 10 | 1,445 | 15 | 699 | 9 | ||||||
|
|
|
|
|
|
|
|||||||
| Total | 9,146 | 100 | 9,402 | 100 | 7,965 | 100 | ||||||
|
|
|
|
|
|
|
|||||||
Competition
We face strong competition in each of the markets in which we operate. In North America, other large, nationally recognized companies compete against our highway deicing and chemical salt products. In addition, there are several smaller regional producers of highway deicing salt. There are several importers of salt into North America but these mostly impact the eastern seaboard where we have a minimal position. In the United Kingdom, there are two other companies that produce highway deicing salt, one in northern England and the other in Northern Ireland. There are no significant imports of highway deicing salt into the United Kingdom.
General Trade Salt Products
Products and Sales
The general trade business is our largest salt product line based on revenue, and accounted for approximately 53% of our 2002 sales of salt after shipping and handling costs. We are the third largest producer of general trade salt in North America. This product line includes commercial and consumer applications such as table salt, water conditioning, consumer ice control, food processing, agricultural applications, as well as a variety of industrial applications. We believe that we are the largest private label producer of water conditioning and salt-based agricultural products in North America and sell more than 70 private labels of table salt to major retailers. Our Sifto® brand is well recognized in the Canadian market.
In the United Kingdom we operate the largest evaporated salt plant in the United Kingdom at Weston Point. We are one of the U.K. brand market leaders in evaporated salt for water conditioning. We also produce salt for the food, chemical, animal feeds and textile markets. We will continue to pursue further cost reduction investments to help drive future growth and profitability.
We have maintained a significant presence in the general trade business over recent years due to our strong focus on: (i) the midwestern region of the United States; (ii) all of Canada and the United
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Kingdom; (iii) our distribution network to the grocery trade; and (iv) our relationships with large distributors of water conditioning salt.
The general trade market is driven by strong customer relationships. Sales in the general trade salt product line occur through retail channels such as grocery stores, building supply, hardware and automotive stores and feed suppliers. Distribution in the general trade salt product line is channeled through a direct sales force located in various parts of our service territories who sell products to distributors, dealers and end-users. We also maintain a network of brokers who sell table salt, consumer deicing and water conditioning products. These brokers service wholesalers, grocery chains and retailers, as well as the food service industry.
The table below shows our shipments of general trade salt products (thousands of tons):
|
|
Year Ended December 31,
|
|||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
|
2000
|
2001
|
2002
|
|||||||||
|
|
Tons
|
%
|
Tons
|
%
|
Tons
|
%
|
||||||
| United States | 1,537 | 57 | 1,725 | 61 | 1,629 | 59 | ||||||
| Canada | 481 | 18 | 513 | 18 | 506 | 18 | ||||||
| Europe and Others | 668 | 25 | 584 | 21 | 651 | 23 | ||||||
|
|
|
|
|
|
|
|||||||
| Total | 2,686 | 100 | 2,822 | 100 | 2,786 | 100 | ||||||
|
|
|
|
|
|
|
|||||||
Competition
In North America, other large nationally recognized companies compete against our salt business in production and marketing of general trade salt products. In addition, there are several smaller regional producers of general trade salt. There are several importers of salt into North America but they mostly impact the east coast and west coast of the United States where we have a minimal position. In the United Kingdom, there is one other large domestic producer of general trade salt, several small local producers and some imports from continental Europe. We also export salt from the United Kingdom to Scandinavia and continental Europe and compete with many other European producers in these markets.
SOP is primarily used as a specialty fertilizer, providing essential potassium to high-value, chloride-sensitive crops such as vegetables, fruits, tea, tobacco and turf grass. We are the market leader in North America for SOP and market SOP products both domestically and overseas. We offer several grades of SOP which are designed to differentiate us from our competitors, as well as better serve the needs of our customers.
Potash Industry Overview
The annual worldwide consumption of all potash fertilizers approaches 50 million tons. Muriate of potash, or "MOP," or potassium chloride, is the most common source of potassium and accounts for over 90% of all potash consumed in fertilizer production. SOP represents about 5% of potash consumption. The remainder is supplied in the forms of potassium magnesium sulfate, nitrate of potassium, or "NOP," and, to a lesser extent, potassium thiosulfate and monopotassium phosphate. All of these products contain varying concentrations of potassium expressed as potassium oxide (K 2 0) and different combinations of co-nutrients.
MOP is the least expensive form of potash fertilizer based on the concentration of K 2 0. It is the preferred potassium source for most crops. However, SOP (containing approximately 50% K 2 0) is utilized by growers for many high-value crops, especially where the requirements are for fertilizers with
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low chloride content. The use of SOP has been scientifically proven to improve the yield and quality of certain crops.
Examples of crops where SOP is utilized to increase yield and quality include tobacco, tea, potatoes, citrus fruits, grapes, almonds, some vegetables and on turfgrass for golf courses. Approximately 62% of our annual SOP sales volumes in 2002 were made to domestic customers, which include retail fertilizer dealers and distributors of professional turf care products. These dealers and distributors combine or blend SOP with other fertilizers and minerals to produce fertilizer blends tailored to individual requirements.
Operations and Facilities
All of our SOP production is located on the Great Salt Lake near Ogden, Utah. It is the largest SOP production facility in North America. The solar evaporation facility, located west of Ogden, utilizes solar energy and over 40,000 acres of evaporation ponds to manufacture SOP and magnesium chloride from the brines of the Great Salt Lake. This facility has the capacity to annually produce approximately 450,000 tons of SOP, approximately 400,000 tons of magnesium chloride and over 1.5 million tons of salt. The potassium bearing salts are mechanically harvested and refined to high purity SOP in an integrated production facility.
Ogden was unable to produce SOP from 1984 through the beginning of 1989 due to flooding. Following the flood, dikes were raised to a height three feet over the historic peak flood level. Also, the State of Utah constructed and implemented the West Desert Pumping Project which could be utilized to lower the level of the Great Salt Lake by up to twelve inches per year thus reducing the risk of flooding. Although we believe that the subsequent dike improvements and the West Desert Pumping Project have reduced the likelihood of future pond flooding, we maintain both property damage and business interruption insurance policies for this risk.
Products and Sales
Our domestic sales of SOP are concentrated in the western states of California, Oregon, Washington, Idaho and the central tobacco belt area where the crops and soil conditions favor SOP. We generally export SOP through major trading companies. International SOP sales volumes in 2002 were 38% of our annual SOP sales. Prior to the acquisition by IMC Global in 1998, our SOP was marketed and sold by a sales group consisting of trained agronomists and professional fertilizer agents. These representatives directly contacted dealers and growers in the United States. Following the IMC Global acquisition, this SOP sales group was dissolved and the IMC Global sales force handled SOP sales. The IMC Global sales group was responsible for selling all potash and phosphate fertilizer products for IMC Global. Because the bulk of these fertilizers are sold as commodities, the focus on specialty products such as SOP diminished under IMC Global. Upon the purchase of the SOP business from IMC Global, we organized and employed an experienced global sales group similar to the one that was in place prior to 1998.
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The table below shows our shipments of SOP (thousands of tons):
|
|
Year Ended December 31,
|
|||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
|
2000
|
2001
|
2002
|
|||||||||
|
|
Tons
|
%
|
Tons
|
%
|
Tons
|
%
|
||||||
| U.S. | 179 | 73 | 148 | 79 | 151 | 62 | ||||||
| Export(a) | 67 | 27 | 40 | 21 | 91 | 38 | ||||||
|
|
|
|
|
|
|
|||||||
| Total | 246 | 100 | 188 | 100 | 242 | 100 | ||||||
|
|
|
|
|
|
|
|||||||
In addition, under a long term contract with IMC Global, we have the exclusive right in North America (with certain limited exceptions) to purchase the SOP produced at IMC Global's Carlsbad, New Mexico facility to meet a portion of our North American SOP requirements. In addition to the customers previously serviced by our Ogden facility, we began to act as sales agent for IMC to certain customers serviced by the Carlsbad facility following the Recapitalization.
Competition
Approximately 56% of the world SOP production is located in Europe, 14% in the United States and the remaining 30% in various other countries. The world consumption of SOP totals about 2.9 million tons. Our major competition for SOP sales in North America include imports from Germany, Chile and Canada. In addition, there is also some functional competition between SOP, MOP and NOP. For exports into Asia, the Pacific Rim countries and Latin America, we compete with various local and European producers.
We rely on a combination of patents, trademarks, copyright and trade secret protection, employee and third-party non-disclosure agreements, license arrangements and domain name registrations to protect our intellectual property. We sell many of our products under a number of registered trademarks which we believe are widely recognized in the industry. No single patent, trademark or trade name is material to our business as a whole.
Any issued patents that cover our proprietary technology and any of our other intellectual property rights may not provide us with substantial protection or be commercially beneficial to us. The issuance of a patent is not conclusive as to its validity or its enforceability. Competitors may also be able to design around our patents. If we are unable to protect our patented technologies, our competitors could commercialize our technologies.
With respect to proprietary know-how, we rely on trade secret protection and confidentiality agreements. Monitoring the unauthorized use of our technology is difficult, and the steps we have taken may not prevent unauthorized use of our technology. The disclosure or misappropriation of our intellectual property could harm our ability to protect our rights and our competitive position.
As of December 31, 2002, we had 1,560 employees, of which 756 are employed in the United States, 603 in Canada and 201 in the United Kingdom. Approximately 39% of our U.S. workforce (54% of our global workforce) is represented by labor unions. Of our nine material collective bargaining agreements, five will expire in 2003 and four will expire in 2004. Additionally, approximately 13% of our workforce is employed in Europe where trade union membership is common. We consider our labor relations to be good.
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The table below sets forth our principal properties:
|
Location
|
Use
|
Owned/Leased
|
Expiration of Lease
|
|||
|---|---|---|---|---|---|---|
| Ogden, Utah | SOP and solar salt production facility | Owned | N/A | |||
| Lyons, Kansas | Evaporated salt production facility | Owned | N/A | |||
| Cote Blanche, Louisiana | Rock salt production facility | Leased | 2060 | |||
| Weston Point, Cheshire, U.K. | Evaporated salt production facility | Owned | N/A | |||
| Winsford, Cheshire, U.K. | Rock salt production facility | Owned | N/A | |||
| Goderich, Ontario, Canada | Evaporated salt and rock salt production facility | Owned | N/A | |||
| Unity, Saskatchewan, Canada | Evaporated salt production facility | Owned | N/A | |||
| Amherst, Nova Scotia, Canada | Evaporated salt production facility | Owned | N/A | |||
| Overland Park, Kansas | Corporate headquarters | Leased | 2008 |
With respect to each facility at which we extract salt, brine or SOP, we obtain any required or necessary permits prior to the commencement of mining. Permits or licenses are obtained as needed in the normal course of business based on our mine plans and state, provincial and local regulatory provisions regarding mine permitting and licensing. Based on our historical permitting experience, we expect to be able to continue to obtain necessary mining permits to support historical rates of production.
Our mining leases have varying terms. Some will expire after a set term of years, while others continue indefinitely. Many of these leases provide for a royalty payment to the lessor based on a specific amount per ton of mineral extracted or as a percentage of revenue. In addition, we own a number of properties and are party to certain non-mining leases that permit us to perform activities that are ancillary to our mining operations, such as surface use leases, and storage, depot and warehouse leases. We also believe that all of our leases were entered into on market terms.
ENVIRONMENTAL, HEALTH AND SAFETY MATTERS
We produce and distribute crop and animal nutrients, salt and deicing products. These activities subject us to an evolving set of international, federal, state, provincial and local environmental, health and safety ("EHS") laws which regulate, or propose to regulate: (i) product content; (ii) use of products by both us and our customers; (iii) conduct of mining and production operations, including safety procedures followed by employees; (iv) management and handling of raw materials; (v) air and water quality impacts from our facilities; (vi) disposal of hazardous and solid wastes; (vii) remediation of contamination at our facilities and third-party sites; and (viii) post-mining land reclamation. For new regulatory programs, it is difficult to ascertain future compliance obligations or estimate future costs until implementing regulations have been finalized and definitive regulatory interpretations have been adopted. We intend to respond to these regulatory requirements at the appropriate time by implementing necessary modifications to facilities or operating procedures.
We have expended, and anticipate that we will continue to expend, substantial financial and managerial resources to comply with EHS standards. We estimate that our 2003 environmental capital expenditures will total approximately $1.2 million, primarily related to air quality devices and highway deicing salt storage pads. We expect that our estimated expenditures in 2003 for reclamation activities will be approximately $0.2 million. No assurance can be given that greater than anticipated EHS capital expenditures or reclamation expenditures will not be required in 2003 or in the future.
We maintain accounting accruals for certain contingent environmental liabilities and believe such accruals comport with generally accepted accounting principles. We record accruals for environmental investigatory and non-capital remediation costs when litigation has commenced or a claim or
62
assessment has been asserted or is imminent, the likelihood of an unfavorable outcome is probable and the financial impact of such outcome is reasonably estimable. Based on current information, it is the opinion of management that our contingent liability arising from EHS matters, taking into account established accruals, will not have a material adverse effect on our business, financial condition or results of operations. As of December 31, 2002, we have recorded accruals of $2.0 million.
Product Requirements and Impacts
International, federal, state and provincial standards: (i) require registration of many of our products before such products can be sold; (ii) impose labeling requirements on those products; and (iii) require producers to manufacture the products to formulations set forth on the labels. Various environmental, natural resource and public health agencies at all regulatory levels continue to evaluate alleged health and environmental impacts that might arise from the handling and use of products such as those we manufacture. The EPA, the State of California and The Fertilizer Institute have each completed independent assessments of potential risks posed by crop nutrient materials. These assessments concluded that, based on the available data, crop nutrient materials generally do not pose harm to human health. It is unclear whether any further evaluations may result in additional standards or regulatory requirements for the producing industries, including us, or for our customers. At this stage, it is the opinion of management that the potential impact of these standards on the market for our products or on the expenditures that may be necessary to meet new requirements will not have a material adverse effect on our business or financial condition.
In December 2001, the Canadian government released a Priority Substances List Assessment Report for road salt. This report found that road salts are entering the environment under conditions that may have a harmful effect or constitute a danger to the environment. Based on this report, the Minister of Environment has proposed designating road salt as a "toxic" substance pursuant to the Canadian Environmental Protection Act. Canada's federal cabinet, which has ultimate responsibility, has not yet taken final action with respect to this proposal and is not subject to any deadline to do so. This proposal was subject to a public comment, during which individuals and the municipalities which comprise most of our customers expressed a variety of views, including noting the utility and cost-efficiency of salt as compared to other potential measures to reduce ice-related road hazards. At this point, Environment Canada has indicated that, whether or not road salts are declared toxic, their preferred course of action is the establishment of voluntary guidelines for users as opposed to any form of regulation. Environment Canada is currently developing these guidelines based on consultation with a broad-based stakeholders group, which includes the salt industry. Given the importance of road salt for traffic safety and the lack of any practical substitute, we deem it unlikely that any guidance or regulation would result in a ban on the use of road salt. As noted in the December 2001 report, the use of road salt and other deicing agents "is an important component of strategies to keep roadways open and safe during the winter and minimize traffic crashes, injuries and mortality under icy and snowy conditions." The report further stated that mitigation measures "must be based on optimization of winter road maintenance practices so as not to jeopardize road safety, while minimizing the potential for harm to the environment." Since the dissemination of this report, we have endeavored to work more closely with the national government as well as provinces and municipalities to better manage the storage and release of our road salts. As a result, we believe it has become less likely that road salts will be designated as a toxic substance. Although we cannot predict whether the proposal to list road salts will be finalized or the precise form of future regulation, if any, if standardized guidelines are developed for the usage of road salt, we could suffer reduced sales and incur substantial costs and expenses that could have a material adverse effect on our business, financial condition and results of operation. We are not aware of any similar proposals for such designation of road salt in either the United States or the United Kingdom.
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Operating Requirements and Impacts
Permitting
We hold numerous environmental, mining and other permits or approvals authorizing operations at each of our facilities. Our operations are subject to permits for extraction of salt and brine, discharges of process materials to air and surface water, and injection of brine and wastewater to subsurface wells. A decision by a government agency to deny or delay issuing a new or renewed permit or approval, or to revoke or substantially modify an existing permit or approval, could have a material adverse effect on our ability to continue operations at the affected facility. In addition, changes to environmental and mining regulations or permit requirements could have a material adverse effect on our ability to continue operations at the affected facility. Expansion of our operations also is predicated upon securing the necessary environmental or other permits or approvals.
Pursuant to the Mine Safety and Health Act, new interim regulatory standards for diesel particulate matter became effective in 2002 and final standards are expected by 2006, although the final standards are currently subject to litigation. We believe that we are currently in compliance with the interim standards that are in effect between 2002 and 2006. However, material expenditures may be required to achieve compliance with the final standards at the Cote Blanche facility in Louisiana.
Remedial Activities
Remediation at Our Facilities
Many of our formerly-owned and current facilities have been in operation for a number of years. Operations have involved the historical use and handling of regulated chemical substances, salt and by-products or process tailings by us and predecessor operators which have resulted in soil, surface water and groundwater contamination. At some locations there are areas where salt-processing waste and ordinary trash may have been disposed or buried, and have since been closed and covered with soil and other materials. These past operating practices have at certain locations resulted in soil, surface water and groundwater contamination.
At many of these facilities, spills or other releases of regulated substances have occurred previously and potentially could occur in the future, possibly requiring us to undertake or fund cleanup efforts under CERCLA or state and provincial or United Kingdom laws governing cleanup of hazardous substances. In some instances, we have agreed, pursuant to consent orders or agreements with the appropriate governmental agencies, to undertake certain investigations, which currently are in progress, to determine whether remedial action may be required to address such contamination. At other locations, we have entered into consent orders or agreements with appropriate governmental agencies to perform required remedial activities that will address identified site conditions. At still other locations, we have undertaken voluntary remediation, and have removed formerly used underground storage tanks. Taking into account established reserves, expenditures for these known conditions currently are not expected, individually or in the aggregate, to be material. However, material expenditures could be required in the future to remediate the contamination at these or at other current or former sites. In addition, in connection with the Recapitalization, IMC Global has agreed to indemnify us against liabilities for certain known and unknown conditions at existing and former sites.
Remediation at Third-Party Facilities
Along with impacting the sites at which we have operated, various third-parties have alleged that our historic operations have resulted in contamination to neighboring off-site areas or nearby third-party facilities. CERCLA imposes liability, without regard to fault or to the legality of a party's conduct, on certain categories of persons who are considered to have contributed to the release of "hazardous substances" into the environment. Under CERCLA, or its various state analogues, one
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party may, under certain circumstances, be required to bear more than its proportional share of cleanup costs at a site where it has liability if payments cannot be obtained from other responsible parties.
We have entered into " de minimis " settlement agreements with the EPA with respect to certain CERCLA sites, pursuant to which we have made a one-time cash payment and received statutory protection from future claims arising from those sites. In some cases, however, such settlements have included "reopeners," which could result in additional liability at such sites in the event of newly discovered contamination or other circumstances.
At other sites for which we have received notice of potential CERCLA liability, we have provided information to the EPA that we believe demonstrates that we are not liable, and the EPA has not asserted claims against us with respect to such sites. In some instances, we have agreed, pursuant to orders from or agreements with appropriate governmental agencies or agreements with private parties, to undertake or fund investigations, some of which currently are in progress, to determine whether remedial action, under CERCLA or otherwise, may be required to address contamination. At other locations, we have entered into consent orders or agreements with appropriate governmental agencies to perform required remedial activities that will address identified site conditions. At the present time, we are not aware of any additional sites for which we expect to receive a notice from the EPA or any other party of potential CERCLA liability. However, based on past operations, there is a potential that we may receive such notices in the future for sites of which we are currently unaware or that our liability at certain currently known sites may expand. Taking into account established accruals, expenditures for our known environmental liabilities and site conditions currently are not expected, individually or in the aggregate, to be material.
Other than as described in "—Environmental, Health and Safety Matters," we are party from time to time to various routine legal proceedings. These primarily involve commercial claims, products liability claims, personal injury claims and workers' compensation claims. We cannot predict the outcome of these lawsuits, legal proceedings and claims with certainty. Nevertheless, we believe that the outcome of these proceedings, even if determined adversely, would not have a material adverse effect on our business, financial condition and results of operations. In addition, in connection with the Recapitalization, IMC Global has agreed to indemnify us against certain legal matters.
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Directors and Executive Officers
The following table sets forth the name, age and position of each person who is an executive officer or director of the Company or Compass Minerals on the date of this prospectus.
|
Name
|
Age
|
Position
|
||
|---|---|---|---|---|
| Michael E. Ducey | 54 | President, Chief Executive Officer and Director of Salt Holdings and President, Chief Executive Officer and Director of Compass Minerals | ||
| Robert A. Beck | 44 | Vice President and General Manager, SOP of Compass Minerals | ||
| Keith E. Clark | 47 | Vice President and General Manager, General Trade of Compass Minerals | ||
| David J. Goadby | 48 | Vice President of Compass Minerals and Managing Director, Salt Union | ||
| Rodney L. Underdown | 36 | Chief Financial Officer and Vice President of Salt Holdings and Chief Financial Officer of Compass Minerals | ||
| Steven Wolf | 57 | Vice President and General Manager, Highway Deicing of Compass Minerals | ||
| Joel A. Asen | 52 | Director of Compass Minerals | ||
| Robert F. Clark | 60 | Director of Compass Minerals | ||
| Peter P. Copses | 44 | Director of Compass Minerals | ||
| Robert H. Falk | 64 | Director of Salt Holdings and Compass Minerals | ||
| Joshua J. Harris | 38 | Director of Salt Holdings and Director of Compass Minerals | ||
| Scott M. Kleinman | 30 | Director of Salt Holdings and Director of Compass Minerals | ||
| Douglas A. Pertz | 48 | Director of Compass Minerals | ||
| Heinn F. Tomfohrde, III | 69 | Director of Compass Minerals |
Michael E. Ducey was appointed the President and Chief Executive Officer of Salt Holdings in December, 2002. Mr. Ducey joined Compass Minerals as the President and Chief Executive Officer on April 1, 2002. Mr. Ducey has approximately 30 years of broad-based general management and operating experience in the chemical industry with Borden Chemical, a $1.4 billion diversified chemical company. Most recently, he served as Borden Chemical's President and Chief Executive Officer.
Robert A. Beck has recently joined Compass Minerals to serve as the Vice President and General Manager for our SOP subsidiary, GSL Corporation. Mr. Beck was Vice President for Operations at CompuNet Engineering, a network solutions provider. Prior to this, from 1997 to 1998, he was Vice President of Sales and Marketing and, from 1993 to 1997, Director of International Sales for Great Salt Lake Minerals Corp.
Keith E. Clark has served as the Vice President and General Manager of IMC Salt, Inc.'s General Trade segment since 1997 when IMC Inorganic Chemicals, Inc. was still under the management of Harris Chemical Group. Prior to his career at Harris Chemical Group, Mr. Clark served as a Vice President, Operations for North American Salt for 2 years. From 1988 until 1995, Mr. Clark assumed various operations positions at General Chemical, where his last position was Operations Manager.
David J. Goadby has served as the Vice President of Compass Minerals since November 2001 and as the Managing Director of Salt Union Ltd., Compass Minerals' U.K. subsidiary, since 1994, when IMC Inorganic Chemicals, Inc. was still under the management of Harris Chemical Group. Prior to that position, Mr. Goadby served as the Commercial Manager of Salt Union Ltd. for 2 years. From 1984 until 1992, Mr. Goadby was employed with Imperial Chemical Industries plc in various production and distribution positions, where his last position was Business Manager Sulphur Chemicals.
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Rodney L. Underdown was appointed Chief Financial Officer of Salt Holdings in December 2002 and has served as the Vice President of Salt Holdings since November 2001. Mr. Underdown has served as the Chief Financial Officer of Compass Minerals since November 2001. Prior to that he served as the Vice President, Finance of Compass Minerals' salt division since 1998 when it was purchased by IMC Global. Mr. Underdown joined the Harris Chemical Group in 1997, where he served as the Director of Corporate Reporting. Prior to his career at Harris Chemical Group, Mr. Underdown was employed with Arthur Andersen for 9 years, where he served as an Audit Manager.
Steven Wolf has served as the Vice President and General Manager, Highway Deicing of IMC Salt, Inc. since 1994, when IMC Inorganic Chemicals, Inc. was still under the management of Harris Chemical Group. Mr. Wolf joined Harris Chemical Group in 1991, assuming various management responsibilities. Prior to his career at Harris Chemical Group, Mr. Wolf was a Senior Vice President at Kerr McGee for 3 years.
Joel A. Asen has been the President of Asen Advisory since 1992, which provides strategic and financial advisory services. He was Managing Director at Whitehead Sterling from 1991 to 1992, at Paine Webber, Inc. from 1990 to 1991 and at Drexel Burnham Lambert Incorporated from 1988 to 1990. From 1985 to 1988 he was a Senior Vice President at GAF Corporation. Prior to that time, Mr. Asen was a Manager of Business Development at GE and Manager of Marketing and Business Development at GECC. Mr. Asen is also a Director of Resolution Performance Products LLC, Anchor Glass Container Corp. and WMC Resideo.
Robert F. Clark has served as President and Chief Executive Officer of Compass Minerals from November 2001 to April 2002. From April 1999 to November 2001, Mr. Clark served as Senior Vice President of IMC Global and President of IMC Salt, Inc. since joining IMC Global in April 1998 as a result of the acquisition of Harris Chemical Group. From 1993 to 1998, Mr. Clark served as President of Great Salt Lake Minerals, a division of Harris Chemical Group.
Peter P. Copses is a Senior Partner at Apollo where he has worked since 1990. From 1986 to 1990, Mr. Copses was initially an investment banker at Drexel Burnham Lambert Incorporated, and subsequently at Donaldson, Lufkin & Jenrette Securities Corporation, concentrating on the structuring, financing and negotiation of mergers and acquisitions. Mr. Copses is also a Director of Rent-A-Center, Inc., Prandium, Inc., Zale Corporation and Resolution Performance Products LLC.
Robert H. Falk is a Partner at Apollo and has served as an officer of certain affiliates of Apollo since 1992. Prior to 1992, Mr. Falk was a Partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP. Mr. Falk is a Director of Samsonite Corporation.
Joshua J. Harris is a Founding Senior Partner at Apollo and has served as an officer of certain affiliates of Apollo since 1990. Prior to that time, Mr. Harris was a member of the Mergers and Acquisitions Department of Drexel Burnham Lambert Incorporated. Mr. Harris is also a Director of Breuners Home Furnishings Corporation, Pacer International, Inc., Quality Distribution Inc. and Resolution Performance Products LLC.
Scott M. Kleinman is a Principal at Apollo, where he has worked since February 1996. Prior to that time, Mr. Kleinman was employed by Smith Barney Inc. in its Investment Banking division. Mr. Kleinman is also a Director of Resolution Performance Products LLC.
Douglas A. Pertz has been Chairman and Chief Executive Officer of IMC Global since March 2002. From October 2000 to March 2002, Mr. Pertz served as Chairman, President and Chief Executive Officer of IMC Global, and from October 1999 to October 2000, Mr. Pertz served as President and Chief Executive Officer of IMC Global. Mr. Pertz served as President and Chief Operating Officer of IMC Global from October 1998 to October 1999. Prior to joining IMC Global, Mr. Pertz served from 1995 to 1998 as President and Chief Executive Officer and as a director of Culligan Water
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Technologies, Inc., a leading manufacturer and distributor of water purification and treatment products. Mr. Pertz has served as a Director of Compass Minerals since November 2002.
Heinn F. Tomfohrde, III has served the chemicals industry in a variety of leadership positions for 44 years. Mr. Tomfohrde served as President and Chief Operating Officer of International Specialty Products, Inc. and its predecessor company, GAF Chemicals Corp. from 1987 to 1993. Prior to that time, Mr. Tomfohrde spent 31 years with Union Carbide Corp., rising from positions in research and development and marketing to senior management, serving as President of Union Carbides's Consumer and Industrial Products Group from 1983 to 1986. Mr. Tomfohrde is also a Director of Resolution Performance Products LLC.
Board Committees
The Board of Directors of Compass Minerals is comprised of an Executive Committee, Audit Committee, Compensation Committee and Environmental, Health and Safety Committee. The Executive Committee may exercise any of the Board's authority between meetings of the Board. The Audit Committee will recommend the engagement of the independent public accountants; review the professional services provided by, and the fees charged by, the independent public accountants; review the scope of the audit; and review financial statements and matters pertaining to the audit. The Compensation Committee is responsible for assuring that the executive officers and other key management are effectively compensated and that compensation is internally equitable and externally competitive. The Environmental, Health and Safety Committee was established to ensure compliance with environmental, health and safety initiatives and policies adopted by us, including education of site personnel; integration of environmental, health and safety policies into all business decisions; design, operation and management of facilities to protect the environment and the health and safety of all personnel.
Board Compensation
Following consummation of the Recapitalization, the members of Compass Minerals' Board of Directors were reimbursed for their out-of-pocket expenses. Those directors who are not employees receive compensation for their service on the Board of Directors of Compass Minerals.
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Executive Compensation
The following table sets forth information concerning our compensation for services in all capacities for the year ended December 31, 2002 paid to the Chief Executive Officer and the four other most highly compensated executive officers serving as executive officers of Compass Minerals.
|
|
|
|
Long Term Compensation
|
|
||||||
|---|---|---|---|---|---|---|---|---|---|---|
|
|
|
|
Awards
|
Payouts
|
|
|||||
|
|
Annual Compensation for the Year Ended December 31, 2002
|
|
||||||||
|
|
Securities
Underlying Options/SARs (#)(2) |
|
|
|||||||
|
Name and Principal Position
|
Long Term
Incentive Payouts ($) |
All Other
Compensation ($)(4) |
||||||||
|
Salary($)
|
Bonus($)(1)
|
|||||||||
|
Michael E. Ducey(3)
President and Chief Executive Officer of Compass Minerals |
262,500 | 251,328 | 75,565 | — | 130,761 | |||||
|
Robert F. Clark(3)
President and Chief Executive Officer of Compass Minerals |
155,352 | 50,972 | — | — | 660,715 | |||||
|
Steven Wolf
Vice President and General Manager, Highway Deicing of Compass Minerals |
258,803 | 143,465 | — | 63,408 | 412,430 | |||||
|
Keith E. Clark
Vice President and General Manager, General Trade of Compass Minerals |
199,190 | 93,234 | — | 8,150 | 325,054 | |||||
|
David J. Goadby(5)
Vice President of Compass Minerals and Managing Director, Salt Union |
168,774 | 47,095 | — | — | 219,886 | |||||
|
Rodney L. Underdown
Chief Financial Officer of Compass Minerals |
150,000 | 48,960 | — | — | 211,294 | |||||
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The following table shows all grants of options to acquire shares of our common stock made to our named executive officers during 2002.
2001 Option Plan
Our employees, consultants and directors (and employees, consultants and directors of our subsidiaries) are eligible to receive options under the Salt Holdings Corporation 2001 Stock Option Plan. The option plan is administered by our board of directors (or, if determined by the board, by the compensation committee of the board). The option plan permits the grant of options to purchase shares of our common stock. Such options may be non-qualified stock options or incentive stock options. The maximum number of shares of common stock that are issuable under the option plan is 419,750 (subject to adjustment for changes in our capital structure, such as stock dividends, stock splits, mergers and reorganizations).
Following the consummation of the Recapitalization, we granted non-qualified options to purchase common stock to certain management employees, including the executives named in the management table. The per share exercise price of each such option is $10, which is equal to the Recapitalization consideration per share of common stock. The options shall generally become vested and exercisable as follows:
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The term of the options is eight years and thirty days from the date of the Recapitalization. However, all unvested options will automatically expire upon the date of an optionee's termination of employment (or termination of directorship or consultancy, as applicable). In addition, all vested options will generally expire one year following the termination of an optionee's services by us, subject to certain exceptions. Shares of common stock purchased or acquired under the stock plan will generally be subject to restrictions on transfer, repurchase rights and other limitations set forth in the investor rights agreement. See "Certain Related Party Transactions."
Deferred Compensation Plan
In connection with the consummation of the Recapitalization, we adopted the Salt Holdings Corporation Senior Executives' Deferred Compensation Plan. The deferred compensation plan is not a tax qualified retirement plan. The deferred compensation plan is intended to allow certain employees to elect in advance to defer certain retention bonuses or other compensation and to allow such employees to transfer liabilities from certain IMC Global deferred compensation plans to the deferred compensation plan. Any amounts deferred into the deferred compensation plan represent a conditional right to receive our capital stock as described below. Amounts deferred under the deferred compensation plan are represented by bookkeeping accounts maintained on behalf of the participants. Each such account is deemed to be invested in shares of our capital stock. Distributions shall generally be made to a participant under the deferred compensation plan in one lump sum in the form of our capital stock upon the participant's termination of employment or upon certain Apollo "exit events." In connection with the establishment of the deferred compensation plan, we have established a "rabbi trust" which has been funded with shares of our capital stock. All assets contained in the rabbi trust will be subject to the claims of creditors in the event of bankruptcy or insolvency.
Employment Agreements
Michael E. Ducey. Compass Minerals has entered into an employment agreement, dated March 12, 2002, with Mr. Ducey which provides that he serve as its Chief Executive Officer and be nominated for a seat on its Board of Directors. The agreement provides for a base salary, as well as incentive bonuses based upon meeting or exceeding financial objectives. Mr. Ducey is subject to certain non-compete, non-solicitation and confidentiality requirements. In the event that Mr. Ducey's employment is terminated without cause he will receive his base pay until the earlier of twelve months, or the day he accepts other employment, or the day he violates the non-compete agreement.
David J. Goadby. Salt Union has entered into a service agreement, dated September 1, 1997, with Mr. Goadby which provides that he will serve Salt Union as Managing Director until his employment is terminated by either Salt Union, giving Mr. Goadby not less than twelve months prior written notice, or Mr. Goadby, giving Salt Union not less than three months prior written notice. The agreement also provides for an annual base salary of £107,000 per annum, as well as bonuses or additional remuneration, if any, as the board of directors of Salt Union may determine. For a period of six months following termination, Mr. Goadby will be subject to certain non-compete, non-solicitation and non-dealing covenants with regard to customers and non-solicitation of suppliers and managerial, supervisory, technical, sales, financial and administrative employees. In the event of a change of control of Salt Union, Mr. Goadby will be entitled to terminate the agreement immediately and Salt Union will be obligated to pay him an amount equal to his annual base salary and the value of his company car and medical insurance calculated over a twelve month period.
Other Named Executive Officers. We have not entered into employment agreements with any of our executive officers other than Mr. Ducey and Mr. Goadby and, accordingly, each such individual is currently an "at will" employee.
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The following table sets forth certain information regarding the beneficial ownership of our common stock as of December 31, 2002, with respect to each person that is a beneficial owner of more than 5% of our outstanding common stock and beneficial ownership of our common stock by each director and each executive officer named in the Summary Compensation Table and all directors and executive officers as a group:
|
Name and Address of Beneficial Owner
|
Number of
Shares of Common Stock(1) |
Percent of
Class |
|||
|---|---|---|---|---|---|
| Apollo (2) | 6,471,398 | 90.70 | % | ||
| IMC Global (3) | 1,395,700 | 19.56 | % | ||
| Michael E. Ducey (5) | 58,146 | * | |||
| Robert A. Beck (5) | 9,884 | * | |||
| Keith E. Clark (4) | 22,963 | * | |||
| David J. Goadby (5) | 15,115 | * | |||
| Rodney L. Underdown (4) | 10,578 | * | |||
| Steven Wolf (4) | 23,751 | * | |||
| Joel A. Asen (6) | 7,500 | * | |||
| Robert F. Clark (4) | 13,198 | * | |||
| Peter P. Copses (6) | 7,500 | * | |||
| Robert H. Falk (6) | 7,500 | * | |||
| Joshua J. Harris (6) | 7,500 | * | |||
| Scott M. Kleinman (6) | 7,500 | * | |||
| Douglas A. Pertz (6) | 7,500 | * | |||
| Heinn F. Tomfohrde, III (6) | 7,500 | * | |||
| All directors and officers as a group | 206,135 | 2.89 | % |
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common stock then outstanding. See "Certain Related Party Transactions—Agreements Between Stockholders of Salt Holdings Corporation." YBR Holdings is an affiliate of, and is controlled by, Apollo through its majority ownership of YBR Holdings' membership interests. The address of each of YBR Holdings, Apollo and of Messrs. P. Copses, R. Falk, J. Harris and S. Kleinman is c/o Apollo Management, L.P., 1301 Avenue of the Americas, New York, New York 10019.
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CERTAIN RELATED PARTY TRANSACTIONS
Ongoing Relationship with IMC Global
In connection with the Recapitalization, we and IMC Global or their respective affiliates entered into several additional agreements providing for the continuation or transfer and transition of certain aspects of our business operations. These agreements were the result of arm's-length negotiations in connection with the Recapitalization, and we believe they are on terms at least as favorable to us as those we could have obtained from unaffiliated third parties. Set forth below are descriptions of the material agreements that we or our affiliates have entered into with IMC Global.
Supply Agreements
We have contracted with IMC Global or its affiliates to supply some of our facilities with raw materials used in the production of our products and to supply to other facilities finished products that we distribute to our customers or distributors. IMC Global supplies us with the following products:
The terms of these supply contracts range from five to thirteen years and are automatically extended by one-year intervals unless termination notice is given by either party six months prior to the end of the term. The prices we paid for these products varies depending on the product. However, we believe that the prices IMC Global is charging are generally at or below the prices that can be obtained from third persons. Some contracts require the purchase of all of our requirements for a particular product from IMC Global. Others require the purchase of no less than 90% of our requirements from IMC Global, while others have no purchase requirement at all. The SOP supply contract requires us to purchase 28% of our domestic requirements from IMC Global. Certain of those contracts permit us to obtain a lower price elsewhere and, if IMC Global does not match the lower price, we can purchase at the lower price from the third party. We cannot exercise our rights under these provisions more than twice in a year. Under the Hersey salt supply contract, we are required to purchase no less than 200,000 tons of salt products each year under most circumstances and we can purchase from third parties if a force majeure event prevents IMC Global from delivering products to us. Pricing for the Esterhazy highway deicing salt contract is adjusted each year based on a Canadian product price index. Pricing under the other supply contracts is generally adjusted each year based on the movement in the sales prices of the products to our own customers. Under the Hersey salt supply contract the price is adjusted each year based on a salt producer price index, but we have the right to change the pricing adjustment formula to a quarterly adjustment based on the prices we sell the products to our customers.
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Transitional Arrangements
In connection with the Recapitalization, we have also entered into transition arrangements with IMC Global pursuant to which IMC Global will provide services and support to us and assist us in migrating certain information technology to us as a stand alone business. The purpose of the transition arrangements was to develop and implement a transition plan and to assure that we received substantially the same information technology services and systems that we had prior to the Recapitalization. IMC Global provided these services for a year unless we terminated any services earlier. We also entered into transition arrangements with respect to the premises at Overland Park, which premises was shared with IMC Global's chemicals business during part of 2002. This agreement was terminated during 2002.
Railcar Lease Memorandum of Understanding
We sublease railcars from affiliates of IMC Global that are used by us to transport products used in our business. At December 31, 2002, we leased approximately 170 railcars with terms that expire on various dates throughout 2003 and with options available on some railcars until 2014.
Agreements Between Stockholders of Salt Holdings
Stock Rights Agreement
In connection with the Recapitalization, Apollo, certain affiliates of Apollo and IMC Global entered into a stock rights agreement. Material provisions of that agreement are as follows:
Registration Rights. Under the terms of the stock rights agreement, we have agreed to register our shares of common stock owned by Apollo, certain of its affiliates and permitted transferees, and IMC Global under the following circumstances:
Additional Equity Issuances. Prior to an initial public offering where, cumulatively, more than 20% of our stock is sold to the public, we may not issue any of our securities to Apollo or certain of its affiliates or permitted transferees, unless we also offer IMC Global an opportunity to acquire a pro rata percentage of all of the securities to be issued.
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Sales of Securities by Apollo and IMC Global.
Management Consulting Agreement
In connection with the Recapitalization, we entered into a management consulting agreement with Apollo. The agreement allows us and any of our affiliates to avail themselves of Apollo's expertise in areas such as financial transactions, acquisitions and other matters that relate to our business, administration and policies. Apollo received a one time transaction fee for structuring the Recapitalization and will receive an annual fee for its management services and advice. Apollo also has the right to act, in return for additional fees, as our financial advisor or investment banker for any merger, acquisition, disposition or the like if we decide to hire someone to fill such a role.
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DESCRIPTION OF CERTAIN INDEBTEDNESS AND PREFERRED STOCK
We summarize below the principal terms of the agreements that govern certain of our outstanding indebtedness. This summary is not a complete description of all of the terms of the agreements.
The Senior Credit Facilities
In connection with the offering of the April 2002 senior subordinated notes, we amended and restated our senior credit facilities with a syndicate of financial institutions and institutional lenders. Set forth below is a summary of the terms of the amended and restated senior credit facilities.
The amended and restated senior credit facilities provide for senior secured financing by Compass Minerals and certain of its subsidiaries of up to $285.0 million, consisting of (a) a $150.0 million term loan credit facility with a maturity of eight years from the date of the Recapitalization and (b) a $135.0 million revolving credit facility that will terminate in six and one-half years from the date of the Recapitalization. The revolving credit facility permits up to the Canadian dollar equivalent of $30.0 million in revolving loans to be borrowed by a Canadian subsidiary of ours and up to the pounds sterling equivalent of $10.0 million in revolving loans to be borrowed by a United Kingdom subsidiary of ours. The revolving credit facility includes a $50.0 million sub-limit for the issuance of letters of credit for our account. All borrowings are subject to the satisfaction of customary conditions, including absence of a default and accuracy of representations and warranties.
Proceeds of the term loan credit facility were used to finance the Recapitalization. Proceeds of the revolving credit facility have been and will be used for general corporate purposes.
Interest and Fees
The interest rates per annum applicable to loans under the amended and restated senior credit facilities (other than revolving loans to either of the foreign borrowers) are, at the option of Compass Minerals, the Base Rate or Eurodollar Rate plus, in each case, an applicable margin. The applicable margin for loans under the revolving credit facility is subject to adjustment based on Compass Minerals' total leverage ratio. The Base Rate is a fluctuating interest rate equal to the higher of (a) the prime rate of The Chase Manhattan Bank and (b) the federal funds effective rate plus one-half of one percent (0.5%). The interest rates per annum applicable to revolving loans made to either of the foreign borrowers under the revolving credit facility are at the rates plus applicable margins set forth in the amended and restated senior credit agreement governing the amended and restated senior credit facilities. In addition, the borrowers are required to pay to the lenders under the revolving credit facility a commitment fee in respect of the unused commitments thereunder at a rate per annum that is subject to adjustment based on our total leverage ratio.
Prepayments
The term loan is required to be prepaid with, subject to certain exceptions and subject to percentage reductions or elimination based on total leverage ratio of Compass Minerals, 100% of the net cash proceeds of certain asset sales and certain debt issuances, 75% of annual excess cash flow and 50% of the net cash proceeds of certain equity issuances by Salt Holdings.
Voluntary prepayments of loans under the amended and restated senior credit facilities and voluntary reductions in the unused commitments under the revolving credit facility are permitted in whole or in part, in minimum amounts and subject to certain other exceptions as set forth in the amended and restated senior credit agreement.
Amortization of Principal
The term loan amortization payments due before 2009 are nominal amounts. The remaining balance of the term loan will generally amortize in equal quarterly installments in the eighth year of the term loan credit facility.
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Collateral and Guarantees
We and our domestic subsidiaries guarantee (on a senior basis) the obligations of the borrowers under the amended and restated senior credit facilities. Substantially all of the domestic guarantors' real and personal property, including intercompany notes held by the domestic guarantors and certain equity interests held by the domestic guarantors in their respective subsidiaries, secure the domestic guarantees and the obligations of the borrowers under the amended and restated senior credit facilities.
In addition, certain of our foreign subsidiaries, including the foreign borrowers, guarantee (on a senior basis) the obligations of the foreign borrowers under the amended and restated senior revolving credit facility. Substantially all of the foreign guarantors' real and personal property, including intercompany notes held by the foreign guarantors and certain equity interests held by the foreign guarantors in their respective subsidiaries, secure the foreign guarantees and the obligations of the foreign borrowers under the amended and restated senior revolving credit facility.
Covenants and Other Matters
The amended and restated senior credit facilities require us to comply with certain financial covenants, including a maximum total leverage ratio and a minimum interest coverage ratio. The amended and restated senior credit facilities include certain negative covenants restricting our and our subsidiaries' ability to, among other things: (a) declare dividends or redeem or repurchase capital stock; (b) prepay, redeem or purchase certain debt (including the notes); (c) incur liens and engage in sale-leaseback transactions; (d) make loans and investments; (e) guarantee or incur additional debt; (f) amend or otherwise alter terms of debt and other material agreements (including the notes); (g) make capital expenditures; (h) engage in mergers, acquisitions and other business combinations; (i) sell assets; (j) transact with affiliates; and (k) alter the business we conduct. The amended and restated senior credit facilities contain certain customary representations and warranties, affirmative covenants and events of default, including change of control, cross-defaults to other debt and material judgments.
In addition, the terms of the senior credit facilities restrict our subsidiaries from paying dividends to us in order to fund cash interest payments on the exchange notes after December 15, 2007 if we do not comply with an adjusted senior indebtedness leverage ratio or if a default or event of default has occurred and is continuing under the senior credit facilities. We cannot assure you that the agreements governing the senior credit facilities will permit our subsidiaries to provide us with sufficient dividends, distributions or loans to fund scheduled cash interest and principal payments on the exchange notes when due.
Compass Minerals 10% Senior Subordinated Notes Due 2011
Our wholly owned subsidiary, Compass Minerals, has outstanding $325.0 million in aggregate principal amount of 10% Senior Subordinated Notes due 2011. Interest on the senior subordinated notes is payable semiannually on February 15 and August 15 of each year. The senior subordinated notes are guaranteed by all of Compass Minerals' domestic subsidiaries.
The senior subordinated notes constitute unsecured, subordinated indebtedness of Compass Minerals. The senior subordinated notes are effectively subordinated in right of payment to all existing and future senior indebtedness of Compass Minerals and the guarantees are subordinated in right of payment to all existing and future senior indebtedness of the guarantors.
On or after August 15, 2006, Compass Minerals may redeem some or all of the senior subordinated notes, plus accrued and unpaid interest. Prior to August 15, 2004, Compass Minerals may redeem up to 35% of the senior subordinated notes with the proceeds of certain equity offerings of Compass Minerals or Salt Holdings. Upon a change of control of Compass Minerals or Salt Holdings, we must offer to repurchase the senior subordinated notes at a purchase price equal to 101% of the aggregate principal amount, plus accrued and unpaid interest.
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The indenture governing the senior subordinated notes contains certain covenants that limit, among other things, the ability of Compass Minerals and the ability of its subsidiaries to:
13 3 / 4 % Series A Cumulative Senior Redeemable Exchangeable Preferred Stock
We have 16,462 shares of our 13 3 / 4 % Series A Cumulative Senior Redeemable Exchangeable Preferred Stock issued and outstanding, with a liquidation preference of $1,000 per share. The shares of our senior preferred stock provide for cumulative dividends payable at a rate of 13 3 / 4 % per year on the sum of the liquidation preference plus accrued and unpaid dividends. The dividends are payable quarterly in arrears. If and when dividends are declared, they are payable in cash. At our option, we may redeem the senior preferred stock, in whole or in part, at any time prior to November 28, 2013, at a price in cash equal to the liquidation preference plus accrued and unpaid dividends. On the earlier of November 28, 2013, or on upon the occurrence of certain exit events, we shall be required to redeem all outstanding shares of our senior preferred stock at a price in cash equal to the liquidation preference plus accrued and unpaid dividends.
At our option, we may also exchange, in whole but not in part, the then outstanding shares of senior preferred stock for our 13 3 / 4 % Series A Subordinated Discount Debentures due 2013. In addition, upon the transfer of the senior preferred stock to a transferee that is not affiliated with the Company, such transferee shall have the option to convert its senior preferred stock for our subordinated debentures. Each holder exchanging shares of senior preferred stock is entitled to receive an initial accreted value of subordinated discount debentures equal to the liquidation preference, plus accrued and unpaid dividends, of each share of senior preferred stock.
Our subordinated discount debentures, reserved for issuance in exchange for our senior preferred stock, constitute our unsecured, subordinated indebtedness. The subordinated discount debentures are effectively subordinated in right of payment to all of our existing and future indebtedness.
On or after the fifth anniversary of the issuance of the subordinated discount debentures, we may redeem some or all of the subordinated discount debentures, plus accrued and unpaid interest. Upon a change of control or the occurrence of certain exit events as defined in the indenture governing the subordinated discount debentures, we must offer to repurchase the subordinated discount debentures at a purchase price equal to 101% of the aggregate principal amount, plus accrued and unpaid interest.
The indenture governing the subordinated discount debentures contains certain covenants that limit, among other things, the ability of us to consolidate or merge or sell all or substantially all of our assets.
In addition, the subordinated discount debentures may be exchanged, at the option of the holder, for additional notes that are identical to, pari passu with and treated identically with the exchange notes offered in this offering. Each holder exchanging subordinated discount debentures is entitled to receive an equal accreted value of notes.
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DESCRIPTION OF THE EXCHANGE NOTES
The exchange notes will be issued under an indenture between Salt Holdings Corporation (the "Issuer") and The Bank of New York, as trustee. The definitions of certain capitalized terms used in the following summary are set forth below under "—Certain Definitions."
The following description is a summary of the material provisions of the indenture. It does not restate the terms of the indenture in their entirety. We urge that you carefully read the indenture and the Trust Indenture Act of 1939 (the "TIA"), because the indenture and the TIA govern your rights as holders of the notes, not this description. A copy of the indenture may be obtained from us. The definitions of certain capitalized terms used in the following summary are set forth below under "—Certain Definitions."
General
We issued $123.5 million in aggregate principal amount at maturity of the outstanding notes to the initial purchasers on December 20, 2002. The initial purchasers sold the outstanding notes to "qualified institutional buyers," as defined in Rule 144A under the Securities Act. The terms of the exchange notes are substantially identical to the terms of the outstanding notes. However, the exchange notes are not subject to transfer restrictions or registration rights unless held by certain broker-dealers, affiliates of Salt Holdings or certain other persons. See "The Exchange Offer—Transferability of the Exchange Notes." In addition, we do not plan to list the exchange notes on any securities exchange or seek quotation on any automated quotation system. The outstanding notes are listed on Nasdaq's PORTAL system.
The exchange notes will be general unsecured obligations of the Issuer ranking pari passu in right of payment with all unsubordinated indebtedness of the Issuer.
The exchange notes will be issued in fully registered form only, without coupons, in denominations of $1,000 principal amount at maturity and integral multiples of $1,000.
Initially, the trustee will act as paying agent and registrar for the exchange notes. You may present your exchange notes for registration of transfer and exchange at the offices of the registrar, which initially will be the trustee's corporate trust office. The Issuer may change any paying agent and registrar without prior notice.
The Issuer will pay principal (and premium, if any) on the exchange notes at the trustee's corporate office in New York, New York. At the Issuer's option, interest may be paid at the trustee's corporate trust office or by check mailed to the registered address of holders.
Any outstanding notes that remain outstanding after completion of the exchange offer, together with the exchange notes issued in connection with the exchange offer, will be treated as a single class of securities under the indenture.
Principal, Maturity and Interest
The notes will mature on December 15, 2012. Additional notes in an unlimited amount may be issued under the indenture from time to time, subject to the limitations set forth under "—Certain Covenants—Limitation on Incurrence of Additional Indebtedness." The notes and any additional notes subsequently issued will be treated as a single class for all purposes under the indenture.
No cash interest will accrue on the notes prior to December 15, 2007, although for U.S. federal income tax purposes a significant amount of original issue discount, taxable as ordinary income, will be recognized by a holder as such discount accretes. See "Certain United States Federal Income Tax Consequences" for a discussion regarding the taxation of such original issue discount. The accreted value of each note will increase from the date of issuance until December 15, 2007 at a rate of 12 3 / 4 %
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per annum, reflecting the accrual of non-cash interest, such that the accreted value will equal the principal amount at maturity on December 15, 2007. Cash interest will accrue on the notes at the rate per annum shown on the front cover of this prospectus from December 15, 2007, or from the most recent date to which interest has been paid, semiannually on June 15 and December 15 of each year, commencing June 15, 2008, to the holders of record at the close of business on June 1 and December 1 immediately preceding the interest payment date. Interest will be calculated on the basis of a 360-day year comprised of twelve 30-day months.
The notes will not be entitled to the benefit of any mandatory sinking fund.
Redemption
Optional Redemption
The Issuer may redeem all or any portion of the notes, on and after December 15, 2007, upon not less than 30 nor more than 60 days' notice, at the following redemption prices (expressed as percentages of the principal amount at maturity thereof) if redeemed during the twelve-month period commencing on December 15 of the year set forth below, plus, in each case, accrued and unpaid interest, if any, to the date of redemption:
|
Year
|
Percentage
|
||
|---|---|---|---|
| 2007 | 106.375 | % | |
| 2008 | 104.250 | % | |
| 2009 | 102.125 | % | |
| 2010 and thereafter | 100.000 | % |
Optional Redemption upon Equity Offerings
At any time, or from time to time, on or prior to December 15, 2005, we may, at our option, use the net cash proceeds of one or more Equity Offerings to redeem up to 35% in aggregate principal amount at maturity of the notes originally issued under the indenture at a redemption price equal to 112 3 / 4 % of the Accreted Value thereof at the redemption date; provided, however, that after any such redemption the aggregate principal amount at maturity of the notes outstanding must equal at least 65% of the aggregate principal amount at maturity of the notes originally issued under the indenture. In order to effect the foregoing redemption with the net cash proceeds of any Equity Offering, we shall make such redemption not more than 120 days after the consummation of any such Equity Offering.
Optional Redemption upon Change of Control
In addition, at any time prior to December 15, 2007, upon the occurrence of a Change of Control, we may redeem the notes, in whole but not in part, at a redemption price equal to the Accreted Value of the notes on the redemption date plus the Applicable Premium. Notice of redemption of the notes upon a Change of Control will be mailed to holders of the notes not more than 30 days following the occurrence of a Change of Control.
Selection and Notice of Redemption
If less than all of the notes are to be redeemed at any time, the trustee will select those notes for redemption in compliance with the requirements of the principal national securities exchange, if any, on which the notes are listed or, if the notes are not then listed on a national securities exchange, on a proportional basis, by lot or by such method as the trustee considers fair and appropriate, provided that:
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Notice of redemption will be mailed by first-class mail at least 30 but not more than 60 days before the redemption date to each holder of notes to be redeemed at its registered address. If any note is to be redeemed in part only, the notice of redemption that relates to the note will state the portion of the principal amount to be redeemed. A new note in a principal amount at maturity equal to the unredeemed portion will be issued in the name of the holder upon cancellation of the original note. On and after the redemption date, Accreted Value will cease to accrete and interest will cease to accrue, in each case to the extent applicable, on those notes called for redemption if the Issuer has deposited with the paying agent the funds needed to pay the applicable redemption price.
Ranking
The indebtedness evidenced by the notes will be the general unsecured obligation of the Issuer, ranking pari passu in right of payment with all future indebtedness of the Issuer not expressly subordinated to the notes. The notes are effectively subordinated to all secured obligations, if any, of the Issuer to the extent of the value of the assets securing such obligations. The obligations of Compass Minerals Group, Inc. (together with its successors, "Compass Minerals") under the Credit Agreement are guaranteed by the Issuer and each subsidiary of Compass Minerals and are secured by substantially all of the assets of the Issuer, Compass Minerals and each such Subsidiary. See "Description of Certain Indebtedness and Preferred Stock—The Senior Credit Facilities." Although the indenture contains limitations on the amount of additional Indebtedness that we may incur, under certain circumstances the amount of such Indebtedness could be substantial and, in any case, such Indebtedness may be secured Indebtedness.
We are a holding company and do not have any material assets or operations other than ownership of Capital Stock of our Subsidiaries; all of our operations are conducted through our Subsidiaries. Claims of creditors of such Subsidiaries, including trade creditors, and claims of preferred stockholders (if any) of such Subsidiaries generally will have priority with respect to the assets and earnings of such Subsidiaries over the claims of our creditors, including holders of the notes. The notes, therefore, will be structurally subordinated to creditors (including trade creditors) and preferred stockholders (if any) of our Subsidiaries. As of December 31, 2002, we and our Subsidiaries had indebtedness of approximately $504.5 million outstanding, of which $437.6 million would have been at our Subsidiaries. Although the indenture limits the incurrence of Indebtedness and the issuance of preferred stock of our Restricted Subsidiaries, such limitation is subject to a number of significant qualifications. Moreover, the indenture does not impose any limitation on the incurrence by such Restricted Subsidiaries of liabilities that are not considered Indebtedness under the indenture. See "Risk Factors—We are a holding company with no operations of our own and depend on our subsidiaries for cash. Our ability to access the cash flow of our subsidiaries may be contingent upon our ability to refinance the debt of our subsidiaries."
Change of Control
The indenture provides that upon the occurrence of a Change of Control, each holder will have the right to require that we purchase all or a portion of such holder's exchange notes pursuant to the offer described below (the "Change of Control Offer"), at a purchase price equal to 101% of the Accreted Value thereof plus accrued interest to the date of purchase. Notwithstanding the occurrence of a Change of Control, we will not be obligated to repurchase the exchange notes under this covenant if we have exercised our right to redeem all the exchange notes under the terms of the section titled "—Optional Redemption."
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The indenture provides that, prior to the mailing of the notice referred to below, but in any event within 60 days following any Change of Control, we covenant to: repay in full and terminate all commitments under Indebtedness under the Credit Agreement; offer to repay in full and terminate all commitments under all Indebtedness under the Credit Agreement and to repay the Indebtedness owed to (and terminate all commitments of) each lender which has accepted such offer; or obtain consents required under the Credit Agreement to permit the repurchase of the notes as provided below.
We will first comply with the covenant in the immediately preceding sentence before we are required to repurchase notes under the provisions described below. Our failure to comply with the covenant described in the second preceding sentence (and any failure to send the notice referred to in the succeeding paragraph as a result of the prohibition in the second preceding sentence) constitutes an Event of Default described in clause (3) and not in clause (2) under "Events of Default" below.
Within 60 days following the date upon which the Change of Control occurred, we will send, by first-class mail, a notice to each holder, with a copy to the trustee, which notice shall govern the terms of the Change of Control Offer. The notice will state, among other things, the purchase date, which must be no earlier than 30 days nor later than 60 days from the date the notice is mailed, other than as may be required by law (the "Change of Control Payment Date"). Holders electing to have a note purchased pursuant to a Change of Control Offer must surrender the note, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the note completed, to the paying agent at the address specified in the notice prior to the close of business on the third business day prior to the Change of Control Payment Date.
We will not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the indenture applicable to a Change of Control Offer made by us and purchases all notes validly tendered and not withdrawn under such Change of Control Offer.
The Credit Agreement contains, and future indebtedness of us and our Subsidiaries may contain, prohibitions on the occurrence of certain events that would constitute a Change of Control or require such indebtedness to be repaid or purchased upon a Change of Control. There can be no assurance that sufficient funds will be available when necessary to make any required purchases. The Credit Agreement does not permit Compass Minerals to pay dividends or make distributions to us for the purpose of purchasing notes in the event of a Change of Control. Even if sufficient funds were otherwise available, the terms of certain of our Indebtedness could prohibit our prepayment of notes prior to their scheduled maturity. Consequently, if we are not able to prepay such Indebtedness, we will be unable to fulfill our repurchase obligations if holders of notes exercise their repurchase rights following a Change of Control. Our failure to make or consummate the Change of Control Offer or pay the purchase price when due will give the trustee and the holders the rights described under "—Events of Default." In the event we are required to purchase outstanding notes pursuant to a Change of Control Offer, we expect that we would seek third party financing to the extent we lack available funds to meet our purchase obligations. However, there can be no assurance that we would be able to obtain such financing.
The trustee may not waive the covenant relating to a holder's right to redemption upon a Change of Control. However, the covenant and other provisions contained in the indenture relating to our obligation to make a Change of Control Offer may be waived or modified with the written consent of the holders of a majority in principal amount at maturity of the notes. Restrictions described in the indenture on the ability of the Issuer and our Restricted Subsidiaries to incur additional Indebtedness, to grant Liens on our property, to make Restricted Payments and to make Asset Sales may also make more difficult or discourage a takeover of the Issuer, whether favored or opposed by our management. Consummation of any such transaction may require redemption or repurchase of the notes, and there can be no assurance that the Issuer or the acquiring party will have sufficient financial resources to
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effect such redemption or repurchase. Such restrictions and the restrictions on transactions with Affiliates may make more difficult or discourage any leveraged buyout of us or any of our Restricted Subsidiaries by our management. While such restrictions cover a wide variety of arrangements which have traditionally been used to effect highly leveraged transactions, the indenture may not afford you protection in all circumstances from the adverse aspects of a highly leveraged transaction, reorganization, restructuring, merger or similar transaction.
We will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of notes pursuant to a Change of Control Offer. To the extent that the provisions of any securities laws or regulations conflict with the "Change of Control" provisions of the indenture, we will comply with the applicable securities laws and regulations and will not be deemed to have breached our obligations under the "Change of Control" provisions of the indenture by so doing.
The definition of "Change of Control" includes, among other transactions, a disposition of "all or substantially all" of our property and assets. With respect to the disposition of property or assets, the phrase "all or substantially all" as used in the indenture varies according to the facts and circumstances of the subject transaction, has no clearly established meaning under relevant law and is subject to judicial interpretation. Accordingly, in certain circumstances, there may be a degree of uncertainty in ascertaining whether a particular transaction would involve a disposition of "all or substantially all" of the property or assets of a Person, and therefore it may be unclear whether a Change of Control has occurred and whether we are required to make a Change of Control Offer.
Certain Covenants
The indenture contains, among others, the following covenants:
Limitation on Incurrence of Additional Indebtedness
We will not, and will not permit any of our Restricted Subsidiaries to, directly or indirectly, create, incur, assume, guarantee, acquire, become liable, contingently or otherwise, with respect to, or otherwise become responsible for payment of (collectively, "incur"), any Indebtedness (other than Permitted Indebtedness); provided, however, that if no Default or Event of Default shall have occurred and be continuing at the time of or as a consequence of the incurrence of any such Indebtedness, (i) we may incur Indebtedness (including, without limitation, Acquired Indebtedness) if on the date of the incurrence of such Indebtedness, after giving effect to the incurrence thereof, our Consolidated Fixed Charge Coverage Ratio is greater than 2.0 to 1.0 and (ii) any of our Restricted Subsidiaries may incur Indebtedness (including, without limitation, Acquired Indebtedness) if on the date of the incurrence of such Indebtedness, after giving effect to the incurrence thereof, such Restricted Subsidiary's Consolidated Fixed Charge Coverage Ratio is greater than 2.0 to 1.0.
Limitation on Restricted Payments
We will not, and will not cause or permit any of our Restricted Subsidiaries to, directly or indirectly,
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scheduled sinking fund payment, any of our Indebtedness that is subordinate or junior in right of payment to the notes or any Guarantee (other than Indebtedness described in clause (7) of the definition of "Permitted Indebtedness"); or
if at the time of such Restricted Payment or immediately after giving effect thereto:
provided, however, that the sum of clauses (I), (II) and (III) above will not exceed the aggregate amount of all such Investments made by us or any Restricted Subsidiary in the relevant Person or Unrestricted Subsidiary after November 28, 2001.
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However, the provisions set forth in the immediately preceding paragraph do not prohibit:
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permitted to make Restricted Payments under this clause only if after giving effect thereto, we would be permitted to incur at least $1.00 of additional Indebtedness (other than Permitted Indebtedness) pursuant to the "Limitation on Incurrence of Additional Indebtedness" covenant;
In determining the aggregate amount of Restricted Payments made after November 28, 2001, in accordance with clause (3) of the immediately preceding paragraph, amounts expended pursuant to clauses (1), (2), (4), (5), (6), (7), (8), (9), (14) and (16) will be included in the calculation.
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Not later than the date of making any Restricted Payment, we will deliver to the trustee an officers' certificate stating that such Restricted Payment complies with the indenture and setting forth in reasonable detail the basis upon which the required calculations were computed, which calculations may be based upon our latest available internal quarterly financial statements.
Limitation on Asset Sales
We will not, and will not permit any of our Restricted Subsidiaries to, consummate an Asset Sale unless:
and, in each case, such consideration is received at the time of such disposition; provided that the amount of
shall be deemed to be cash for the purposes of this provision only; and
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Pending the final application of the Net Cash Proceeds, we and our Restricted Subsidiaries may temporarily reduce Indebtedness or otherwise invest such Net Cash Proceeds in any manner not prohibited by the indenture.
On the 391st day after an Asset Sale or such earlier date, if any, as the senior management or the Board of Directors of us or of such Restricted Subsidiary determines not to apply the Net Cash Proceeds relating to such Asset Sale as set forth in clauses (3)(a), (3)(b) and (3)(c) of the next preceding paragraph (each, a "Net Proceeds Offer Trigger Date"), such aggregate amount of Net Cash Proceeds which have not been applied on or before such Net Proceeds Offer Trigger Date as permitted in clauses (3)(a), (3)(b) and (3)(c) of the next preceding paragraph (each a "Net Proceeds Offer Amount") shall be applied by us or such Restricted Subsidiary to make an offer to purchase (the "Net Proceeds Offer") on a date (the "Net Proceeds Offer Payment Date") not less than 30 nor more than 60 days following the applicable Net Proceeds Offer Trigger Date, from all holders on a pro rata basis, that amount of notes equal to the Net Proceeds Offer Amount at a price equal to 100% of the Accreted Value of the notes to be purchased, plus accrued and unpaid interest thereon, if any, to the date of purchase; provided, however, that if we are required by the terms of any of our pari passu Indebtedness, such Net Proceeds Offer may be made ratably to purchase the notes and such other Indebtedness of ours that ranks pari passu with the notes.
If at any time any non-cash consideration received by us or any Restricted Subsidiary of ours, as the case may be, in connection with any Asset Sale is converted into or sold or otherwise disposed of for cash (other than interest received with respect to any such non-cash consideration), then such conversion or disposition shall be deemed to constitute an Asset Sale hereunder as of the date of such conversion or disposition and the Net Cash Proceeds thereof will be applied in accordance with this covenant.
The Issuer may defer the Net Proceeds Offer until there is an aggregate unutilized Net Proceeds Offer Amount equal to or in excess of $10.0 million resulting from one or more Asset Sales (at which time, the entire unutilized Net Proceeds Offer Amount, and not just the amount in excess of $10.0 million, shall be applied as required pursuant to the second preceding paragraph).
In the event of the transfer of substantially all (but not all) of the property and assets of us and our Restricted Subsidiaries as an entirety to a Person in a transaction permitted under "Merger, Consolidation and Sale of Assets," which transaction does not constitute a Change of Control, the successor corporation shall be deemed to have sold the properties and assets of us and our Restricted Subsidiaries not so transferred for purposes of this covenant and shall comply with the provisions of clause (3) of this covenant with respect to such deemed sale as if it were an Asset Sale. In addition, the fair market value of such properties and assets of us or our Restricted Subsidiaries deemed to be sold shall be deemed to be Net Cash Proceeds for purposes of this covenant.
Notice of each Net Proceeds Offer will be mailed to the record holders as shown on the register of holders within 25 days following the Net Proceeds Offer Trigger Date, with a copy to the trustee, and will comply with the procedures set forth in the indenture. Upon receiving notice of the Net Proceeds Offer, holders may elect to tender their notes in whole or in part in integral multiples of $1,000 principal amount at maturity in exchange for cash. To the extent holders properly tender notes in an amount exceeding the Net Proceeds Offer Amount, notes of tendering holders will be purchased on a pro rata basis (based on amounts tendered). To the extent that the aggregate amount of the notes tendered pursuant to a Net Proceeds Offer is less than the Net Proceeds Offer Amount, we may use such excess Net Proceeds Offer Amount for general corporate purposes or for any other purposes not prohibited by the indenture. Upon completion of any such Net Proceeds Offer, the Net Proceeds Offer
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Amount shall be reset at zero. A Net Proceeds Offer shall remain open for a period of 20 business days or such longer period as may be required by law.
The Issuer will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of notes pursuant to a Net Proceeds Offer. To the extent that the provisions of any securities laws or regulations conflict with the "Asset Sale" provisions of the indenture, the Issuer shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under the "Asset Sale" provisions of the indenture by virtue thereof. The covenant and other provisions contained in the indenture relating to the Issuer's obligation to make a Net Proceeds Offer may be waived or modified with the written consent of the holders of a majority in principal amount at maturity of the notes.
Limitations on Dividend and Other Payment Restrictions Affecting Subsidiaries
We will not, and will not cause or permit any of our Restricted Subsidiaries (other than a Restricted Subsidiary that has executed a Guarantee) to, directly or indirectly, create or otherwise cause or permit to exist or become effective any encumbrance or restriction on the ability of any Restricted Subsidiary of ours to
except for such encumbrances or restrictions existing under or by reason of:
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Limitation on Issuances of Guarantees by Restricted Subsidiaries
We will not permit any of our Restricted Subsidiaries, directly or indirectly, to guarantee any of our Indebtedness (other than Indebtedness and other obligations under the Credit Agreement), unless (1) such Restricted Subsidiary simultaneously executes and delivers a supplemental indenture to the indenture providing for a Guarantee of payment of the notes by such Restricted Subsidiary and (2) such Restricted Subsidiary waives and will not in any manner whatsoever claim or take the benefit or advantage of any rights of reimbursement, indemnity or subrogation or any other rights against us or any other Restricted Subsidiary as a result of any payment by such Restricted Subsidiary under its Guarantee so long as any notes remain outstanding.
Notwithstanding the foregoing, any such Guarantee by a Restricted Subsidiary may provide by its terms that it shall be automatically and unconditionally released and discharged upon
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Limitations on Liens
We will not, directly or indirectly, create, incur, assume or permit or suffer to exist any Lien of any kind against or upon any property or assets of us, whether owned on the Issue Date or acquired after the Issue Date, or any proceeds therefrom, or assign or otherwise convey any right to receive income or profits therefrom unless:
except for the following Liens which are expressly permitted:
Merger, Consolidation and Sale of Assets
We will not, in a single transaction or series of related transactions, consolidate or merge with or into any Person, or sell, assign, transfer, lease, convey or otherwise dispose of (or cause or permit any Restricted Subsidiary of ours to sell, assign, transfer, lease, convey or otherwise dispose of) all or substantially all of our assets (determined on a consolidated basis for us and our Restricted Subsidiaries) whether as an entirety or substantially as an entirety to any Person unless:
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every covenant of the notes and the indenture on the part of the Issuer to be performed or observed;
Notwithstanding the foregoing, (a) the merger of the Issuer with an Affiliate incorporated solely for the purpose of reincorporating the Issuer in another jurisdiction shall be permitted and (b) the merger of any Restricted Subsidiary of the Issuer into the Issuer or the transfer, lease, conveyance or other disposition of all or substantially all of the assets of a Restricted Subsidiary of the Issuer to the Issuer shall be permitted so long as the Issuer delivers to the trustee an officers' certificate stating that the purpose of such merger, transfer, lease, conveyance or other disposition is not to consummate a transaction that would otherwise be prohibited by clause (3) of this covenant.
For purposes of the foregoing, the transfer (by lease, assignment, sale or otherwise, in a single transaction or series of transactions) of all or substantially all of the properties or assets of one or more Restricted Subsidiaries of the Issuer the Capital Stock of which constitutes all or substantially all of the properties and assets of the Issuer shall be deemed to be the transfer of all or substantially all of the properties and assets of the Issuer.
The indenture provides that upon any consolidation, combination or merger or any transfer of all or substantially all of the assets of the Issuer in accordance with the foregoing in which the Issuer is not the continuing corporation, the successor Person formed by such consolidation or into which the Issuer is merged or to which such conveyance, lease or transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, the Issuer under the indenture and the notes with the same effect as if such Surviving Entity had been named as such.
Limitations on Transactions with Affiliates
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All Affiliate Transactions (and each series of related Affiliate Transactions which are similar or part of a common plan) involving aggregate payments or other property with a fair market value in excess of $2.0 million shall be approved by our Board of Directors or the Board of Directors of such Restricted Subsidiary, as the case may be, such approval to be evidenced by a Board Resolution stating that such Board of Directors has determined that such transaction complies with the foregoing provisions. If we or any of our Restricted Subsidiaries enters into an Affiliate Transaction (or a series of related Affiliate Transactions related to a common plan) that involves an aggregate fair market value of more than $10.0 million, we or such Restricted Subsidiary, as the case may be, shall, prior to the consummation thereof, obtain a favorable opinion as to the fairness of such transaction or series of related transactions to us or the relevant Restricted Subsidiary, as the case may be, from a financial point of view, from an Independent Financial Advisor and file the same with the trustee.
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payments in excess of those set forth in the Management Agreement as in effect on the Issue Date;
Reports to Holders
The indenture provides that, whether or not required by the rules and regulations of the Commission, so long as any notes are outstanding, we will file a copy of the following information and reports with the Commission for public availability (unless the Commission will not accept such a filing) and will furnish to the holders of notes and to securities analysts and prospective investors, upon their written request:
In addition, following the consummation of the exchange offer, whether or not required by the rules and regulations of the Commission, we will file a copy of all such information and reports with the Commission for public availability within the time periods specified in the Commission's rules and regulations (unless the Commission will not accept such a filing) and make such information available to securities analysts and prospective investors upon written request to us.
In addition, we have agreed that, for so long as any notes remain outstanding, we will furnish to the holders and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.
Events of Default
The following events are defined in the indenture as "Events of Default:"
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default be remedied) from the trustee or the holders of at least 25% of the outstanding principal amount at maturity of the notes;
If an Event of Default (other than an Event of Default specified in clause (6) above with respect to us) shall occur and be continuing, the trustee or the holders of at least 25% in principal amount at maturity of outstanding notes may declare the Accreted Value of and accrued and unpaid interest, if any, on all the notes to be due and payable by notice in writing to us and the trustee specifying the respective Event of Default and that it is a "notice of acceleration" (the "Acceleration Notice"), and the same shall become immediately due and payable, or if there are any amounts outstanding under the Credit Agreement, it shall become immediately due and payable upon the first to occur of an acceleration under the Credit Agreement or five business days after receipt by us and the Representative under the Credit Agreement of such Acceleration Notice (but only if such Event of Default is then continuing).
If an Event of Default specified in clause (6) above with respect to us occurs and is continuing, then all unpaid Accreted Value of and premium, if any, and accrued and unpaid interest, if any, on all of the outstanding notes shall automatically become and be immediately due and payable without any declaration or other act on the part of the trustee or any holder.
The indenture provides that, at any time after a declaration of acceleration with respect to the notes as described in the preceding paragraph, the holders of a majority in principal amount at maturity of the notes may rescind and cancel such declaration and its consequences:
No such rescission will affect any subsequent Default or Event of Default or impair any right consequent thereto.
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The holders of a majority in principal amount at maturity of the notes may waive any existing Default or Event of Default under the indenture, and its consequences, except a Default in the payment of the principal of or interest on any notes.
Holders of the notes may not enforce the indenture or the notes except as provided in the indenture and under the TIA. Subject to the provisions of the indenture relating to the duties of the trustee, the trustee is under no obligation to exercise any of its rights or powers under the indenture at the request, order or direction of any of the holders, unless such holders have offered to the trustee reasonable indemnity. Subject to all provisions of the indenture and applicable law, the holders of a majority in aggregate principal amount at maturity of the then outstanding notes have the right to direct the time, method and place of conducting any proceeding for any remedy available to the trustee or exercising any trust or power conferred on the trustee.
Under the indenture, we are required to provide an officers' certificate to the trustee
No Personal Liability of Directors, Officers, Employees, Members and Stockholders
No Affiliate, director, officer, employee, limited liability company member or stockholder of us or any Subsidiary, as such, shall have any liability for any obligations of us under the notes or the indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each holder of notes by accepting a note waives and releases all such liability. The waiver and release were part of the consideration for issuance of the notes.
Legal Defeasance and Covenant Defeasance
We may at any time elect to have our obligations discharged with respect to the outstanding notes ("Legal Defeasance"). Such Legal Defeasance means that we will be deemed to have paid and discharged the entire Indebtedness represented by the outstanding notes, except for:
In addition, we may at any time elect to have our obligations released with respect to certain covenants that are described in the indenture ("Covenant Defeasance"). Any omission to comply with such obligations would then not constitute a Default or Event of Default with respect to the notes. If Covenant Defeasance occurs, our failure to perform these covenants will no longer constitute an Event of Default with respect to the notes.
In order to exercise either Legal Defeasance or Covenant Defeasance:
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public accountants, to pay the principal of, premium, if any, and interest on the notes on the stated date for payment thereof or on the applicable redemption date, as the case may be;
in either case to the effect that, and based thereon such opinion of counsel shall confirm that, the holders will not recognize income, gain or loss for Federal income tax purposes as a result of such Legal Defeasance and will be subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;
However, the opinion of counsel required by clause (2) above is not required if all notes not theretofore delivered to the trustee for cancellation have become due and payable, will become due and payable on the maturity date within one year or are to be called for redemption within one year under arrangements satisfactory to the trustee for the giving of notice of redemption by the trustee in our name, and at our expense.
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Satisfaction and Discharge
The indenture will be discharged when:
When the indenture is discharged, it ceases to be of further effect except for surviving rights of registration or transfer or exchange of the notes.
Modification of the Indenture
From time to time, we and the trustee, without the consent of the holders, may amend the indenture to cure ambiguities, defects or inconsistencies, and to add guaranties to secure the notes or similar provisions, so long as such change does not, in the good faith determination of our Board of Directors, adversely affect the rights of any of the holders in any material respect. In making its determination, our Board of Directors may rely on such evidence as it deems appropriate. Other modifications and amendments of the indenture may be made with the consent of the holders of a majority in principal amount at maturity of the then outstanding notes issued under the indenture, except that the consent of each holder affected thereby is required to:
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occurred or modify any of the provisions or definitions with respect thereto after a Change of Control has occurred; or
Governing Law
The indenture and the notes will be governed by, and construed in accordance with, the laws of the State of New York but without giving effect to applicable principles of conflicts of law to the extent that the application of the law of another jurisdiction would be required thereby.
The Trustee
The Bank of New York is the trustee under the indenture and has been appointed to act as registrar and paying agent with respect to the notes. The indenture provides that, except during the continuance of an Event of Default, the trustee will perform only such duties as are specifically set forth in the indenture. During the existence of an Event of Default, the trustee will exercise such rights and powers vested in it by the indenture and use the same degree of care and skill in its exercise as a prudent man would exercise or use under the circumstances in the conduct of his own affairs.
If the trustee becomes a creditor of ours, the indenture and the provisions of the TIA limit the rights of the trustee to obtain payments of its claims or to realize on certain property received in respect of its claims. Subject to the TIA, the trustee will be permitted to engage in other transactions; however, if the trustee acquires any conflicting interest as described in the TIA, it must eliminate such conflict or resign.
Certain Definitions
Set forth below is a summary of certain of the defined terms used in the indenture. You should read the indenture for the full definition of all such terms and any other terms used herein for which no definition is provided.
"Accreted Value" means, as of any date (the "Specified Date"), the amount provided below for each $1,000 principal amount at maturity of notes:
|
Semi-Annual Accrual Date
|
Accreted Value
|
||
|---|---|---|---|
| June 15, 2003 | $ | 573.38 | |
| December 15, 2003 | $ | 609.93 | |
| June 15, 2004 | $ | 648.82 | |
| December 15, 2004 | $ | 690.18 | |
| June 15, 2005 | $ | 734.18 | |
| December 15, 2005 | $ | 780.98 | |
| June 15, 2006 | $ | 830.77 | |
| December 15, 2006 | $ | 883.73 | |
| June 15, 2007 | $ | 940.07 | |
| December 15, 2007 | $ | 1,000.00 | |
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issue price multiplied by (y) a fraction, the numerator of which is the number of days from the Issue Date to the Specified Date, using a 360-day year of twelve 30-day months, and the denominator of which is the number of days elapsed from the Issue Date to the first Semi-Annual Accrual Date, using a 360-day year of twelve 30-day months;
"Acquired Indebtedness" means Indebtedness of a Person or any of its Subsidiaries
in each case, not incurred by such Person in connection with, or in contemplation of, such Person becoming a Restricted Subsidiary of ours or such acquisition, merger or consolidation.
"Affiliate" of any specified Person means any other Person who directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such specified Person. The term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. "Controlling" and "controlled" shall have correlative meanings. For purposes of the indenture, IMC Global Inc. and its Affiliates are not deemed Affiliates of ours so long as they beneficially own securities representing equal to or less than thirty-five percent of our voting power; provided that Apollo beneficially owns securities representing a greater percentage of our voting power than IMC Global Inc. and its Affiliates.
"Apollo" means Apollo Management V, L.P. and its Affiliates.
"Applicable Premium" means, with respect to a note, the greater of
"Asset Acquisition" means:
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"Asset Sale" means any direct or indirect sale, issuance, conveyance, transfer, lease (other than operating leases entered into in the ordinary course of business), assignment or other transfer for value by us or any of our Restricted Subsidiaries, including any Sale and Leaseback Transaction, to any Person other than us or a Wholly Owned Restricted Subsidiary of ours of
Notwithstanding the preceding, the following items shall not be deemed Asset Sales:
"Beneficial Owner" has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular "person" (as such term is used in Section 13(d)(3) of the Exchange Act), such "person" will be deemed to have beneficial ownership of all securities that such "person" has the right to acquire, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition, regardless of when such right may be exercised.
"Board of Directors" of any Person means the board of directors or equivalent governing board of such Person or any duly authorized committee thereof.
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"Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of any Person to have been duly adopted by the Board of Directors of such Person and to be in full force and effect on the date of such certification, and delivered to the trustee.
"Capacity Arrangements" means any agreement or arrangement involving, relating to or otherwise facilitating, (a) requirement contracts, (b) tolling arrangements or (c) the reservation or presale of production capacity of us or our Restricted Subsidiaries by one or more third parties.
"Capitalized Lease Obligation" means, at the time any determination thereof is to be made, the amount of the liability of a Person under a capital lease that would at that time be required to be capitalized on a balance sheet in accordance with GAAP, with the stated maturity being the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be prepaid by the lessee without payment of a penalty.
"Capital Stock" means:
"Cash Equivalents" means:
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"Change of Control" means the occurrence of one or more of the following:
"Commission" means the Securities and Exchange Commission.
"Commodity Agreement" means any commodity futures contract, commodity option or other similar agreement or arrangement entered into by us or any of our Restricted Subsidiaries designed to protect us or any of our Restricted Subsidiaries against fluctuations in the price of the commodities at the time used in the ordinary course of our business or the business of any of our Restricted Subsidiaries.
"Common Stock" means any and all shares, interests or other participations in, and other equivalents (however designated and whether voting or nonvoting) of, such Person's common stock, whether outstanding on the Issue Date or issued after the Issue Date, including all series and classes of such common stock.
"Consolidated EBITDA" means, with respect to any Person, for any period, the sum (without duplication) of:
all as determined on a consolidated basis for such Person and its Restricted Subsidiaries in accordance with GAAP as applicable.
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"Consolidated Fixed Charge Coverage Ratio" means, with respect to any Person, the ratio of Consolidated EBITDA of such Person during the four full fiscal quarters for which financial statements are available (the "Four Quarter Period") ending on or prior to the date of the transaction giving rise to the need to calculate the Consolidated Fixed Charge Coverage Ratio (the "Transaction Date") to Consolidated Fixed Charges of such Person for the Four Quarter Period. In addition to and without limitation of the foregoing, for purposes of this definition, "Consolidated EBITDA" and "Consolidated Fixed Charges" shall be calculated after giving effect on a pro forma basis (consistent with the provisions below) for the period of such calculation to:
Furthermore, in calculating "Consolidated Fixed Charges" for purposes of determining the denominator (but not the numerator) of this "Consolidated Fixed Charge Coverage Ratio,"
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Currency Agreements, shall be deemed to accrue at the rate per annum resulting after giving effect to the operation of such agreements.
"Consolidated Fixed Charges" means, with respect to any Person for any period, the sum, without duplication, of:
"Consolidated Interest Expense" means, with respect to any Person for any period, the sum of, without duplication:
"Consolidated Net Income" means, with respect to any Person for any period, the aggregate net income (or loss) of such Person and its Restricted Subsidiaries for such period on a consolidated basis, determined in accordance with GAAP; provided that the following shall be excluded:
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"Consolidated Non-cash Charges" means, with respect to any Person for any period, the aggregate depreciation, amortization and other non-cash expenses (solely for the purpose of determining compliance with the "Limitation on Restricted Payments" covenant, excluding any non-cash items for which a future cash payment will be required and for which an accrual or reserve is required by GAAP to be made) of such Person and its Restricted Subsidiaries reducing Consolidated Net Income of such Person and its Restricted Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP.
"Credit Agreement" means the Credit Agreement dated as of November 28, 2001, as amended, among us, Compass Minerals, one or more of our other Subsidiaries, the lenders party to the Credit Agreement in their capacities as lenders and The Chase Manhattan Bank, as administrative agent, together with the related documents (including, without limitation, any guarantee agreements and security documents), in each case as such agreements may be amended (including any amendment and restatement), supplemented or otherwise modified from time to time, including any agreement extending the maturity of, refinancing, replacing or otherwise restructuring (including increasing the amount of available borrowings thereunder or adding Restricted Subsidiaries of ours as additional borrowers or guarantors thereunder) all or any portion of the Indebtedness under such agreement or any successor or replacement agreement and whether by the same or any other agent, lender or group of lenders.
"Currency Agreement" means any foreign exchange contract, currency swap agreement or other similar agreement or arrangement designed to protect us or any Restricted Subsidiary of ours against fluctuations in currency values.
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"Default" means an event that is, or with the passage of time or the giving of notice or both would be, an Event of Default.
"Disqualified Capital Stock" means that portion of any Capital Stock which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable at the option of the holder thereof), or upon the happening of any event (other than an event which would constitute a Change of Control or an Asset Sale), matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the sole option of the holder thereof (except, in each case, upon the occurrence of a Change of Control or an Asset Sale) on or prior to the final maturity date of the notes; provided that any class of Capital Stock of such Person that by its terms authorizes such Person to satisfy its obligations thereunder by delivery of Qualified Capital Stock shall not be deemed Disqualified Capital Stock.
"Domestic Restricted Subsidiary" means any Restricted Subsidiary of ours incorporated or otherwise organized or existing under the laws of the United States, any State or the District of Columbia.
"Equity Offering" means a public or private sale of Qualified Capital Stock (other than on Form S-8) of the Issuer or any direct or indirect parent of the Issuer; provided that with respect to any Equity Offering by such direct or indirect parent of the Issuer, such person contributes the net cash proceeds from such Equity Offering to the Issuer.
"Euros" means the single currency of the participating member states as described in any legislative measures of the European Union for the introduction of, change over to, or operation of, a single or unified European currency.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or any successor statutes.
"Excluded Contribution" means Net Cash Proceeds received by us from (a) contributions to our common equity capital and (b) the sale of our Qualified Capital Stock, in each case designated as Excluded Contributions pursuant to an officers' certificate executed on the date such capital contributions are made or the date such Qualified Capital Stock is sold, as the case may be, which are excluded from the calculation set forth in clause (3) under "—Certain Covenants—Limitation on Restricted Payments."
"Existing Compass Minerals Indenture" means the indenture dated as of November 28, 2001 among Compass Minerals, the guarantors named therein and The Bank of New York, as trustee.
"Existing Compass Minerals Notes" means the 10% Senior Subordinated Notes Due 2011 of Compass Minerals issued under the Existing Compass Minerals Indenture.
"fair market value" means with respect to any asset or property, the price which could be negotiated in an arm's-length, free market transaction, for cash, between a willing seller and a willing and able buyer, neither of whom is under undue pressure or compulsion to complete the transaction. Fair market value shall be determined conclusively by our Board of Directors acting reasonably and in good faith and shall be evidenced by a Board Resolution of our Board of Directors delivered to the trustee.
"Foreign Restricted Subsidiary" means any of our Restricted Subsidiaries incorporated in any jurisdiction outside of the United States.
"GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in
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such other statements by such other entity as may be approved by a significant segment of the accounting profession of the United States, which are in effect as of November 28, 2001.
"guarantee" means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness of any other Person, including any obligation, direct or indirect, contingent or otherwise, of such Person
Notwithstanding the preceding, "guarantee" does not include endorsements for collection or deposit in the ordinary course of business. The term "guarantee" used as a verb has a corresponding meaning.
"Guarantee" means the guarantee by each Guarantor of the Issuer's obligations under the indenture.
"Guarantor" means each of our Restricted Subsidiaries that in the future executes a supplemental indenture in which such Restricted Subsidiary agrees to be bound by the terms of the indenture as a Guarantor, provided that any Person constituting a Guarantor as described above shall cease to constitute a Guarantor when its Guarantee is released in accordance with the terms of the indenture.
"Indebtedness" means with respect to any Person any indebtedness of such Person, without duplication, in respect of:
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involuntary liquidation preference and its maximum fixed repurchase price, but excluding accrued dividends, if any.
For purposes of this definition of Indebtedness, the "maximum fixed repurchase price" of any Disqualified Capital Stock which does not have a fixed repurchase price shall be calculated in accordance with the terms of such Disqualified Capital Stock as if such Disqualified Capital Stock were purchased on any date on which Indebtedness shall be required to be determined pursuant to the indenture, and if such price is based upon, or measured by, the fair market value of such Disqualified Capital Stock, such fair market value shall be determined reasonably and in good faith by the Board of Directors of the issuer of such Disqualified Capital Stock. For purposes of the covenant described above under the caption "Limitation on Incurrence of Additional Indebtedness," in determining the principal amount of any Indebtedness to be incurred by us or any Restricted Subsidiary or which is outstanding at any date, the principal amount of any Indebtedness which provides that an amount less than the principal amount shall be due upon any declaration of acceleration shall be the accreted value of the Indebtedness at the date of determination.
"Independent Financial Advisor" means a firm:
"Interest Swap Obligations" means the obligations of any Person pursuant to any arrangement with any other Person, whereby, directly or indirectly, such Person is entitled to receive from time to time periodic payments calculated by applying either a floating or a fixed rate of interest on a stated notional amount in exchange for periodic payments made by such other Person calculated by applying a fixed or a floating rate of interest on the same notional amount and shall include, without limitation, interest rate swaps, caps, floors, collars and similar agreements.
"Investment" means, with respect to any Person, any direct or indirect loan or other extension of credit, including a guarantee, or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition by such Person of any Capital Stock, bonds, notes, debentures or other securities or evidences of Indebtedness issued by, any Person. "Investment" does not include extensions of trade credit by, prepayment of expenses by, and receivables owing to, us and our Restricted Subsidiaries on commercially reasonable terms in accordance with our normal trade practices or those of such Restricted Subsidiary, as the case may be. For purposes of the "Limitation on Restricted Payments" covenant:
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If we or any Restricted Subsidiary of ours sells or otherwise disposes of any Common Stock of any direct or indirect Restricted Subsidiary of ours such that, after giving effect to any such sale or disposition, such Person ceases to be a Restricted Subsidiary of ours, we shall be deemed to have made an Investment on the date of any such sale or disposition equal to the fair market value of the Common Stock of that Restricted Subsidiary not sold or disposed of.
"Issue Date" means December 20, 2002, the date of original issuance of the notes under the indenture.
"Lien" means any lien, mortgage, deed of trust, pledge, security interest, charge or encumbrance of any kind, including any conditional sale or other title retention agreement, any lease in the nature thereof and any agreement to give any security interest.
"Management Agreement" means the Management Agreement dated as of November 28, 2001 between Compass Minerals and Apollo.
"Merger Agreement" means the Agreement and Plan of Merger, dated as of October 13, 2001, among IMC Global, Inc., us, YBR Holdings LLC and YBR Acquisition Corp.
"Net Cash Proceeds" means (a) with respect to any Asset Sale, the proceeds in the form of cash or Cash Equivalents including payments in respect of deferred payment obligations when received in the form of cash or Cash Equivalents (other than the portion of any such deferred payment constituting interest) received by us or any of our Restricted Subsidiaries from such Asset Sale net of:
and (b) with respect to any issuance or sale of Capital Stock, the cash proceeds of such issuance or sale, net of attorneys' fees, accountants' fees, underwriters' or placement agents' or initial purchasers' fees, discounts or commissions and brokerage, consultant and other fees and expenses actually incurred in connection with such issuance or sale and net of taxes paid or payable as a result thereof.
"Obligations" means all obligations for principal, premium, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness.
"Permitted Business" means the business of us and our Restricted Subsidiaries as existing on the Issue Date and any other businesses that are the same, similar or reasonably related, ancillary or complementary thereto and reasonable extensions thereof.
"Permitted Holders" means Apollo and other Related Parties.
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"Permitted Indebtedness" means, without duplication, each of the following
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reduce (for so long as, and to the extent that, the Indebtedness referred to in this clause (12) remains outstanding) the aggregate amount permitted to be incurred under clause (2) above to the extent set forth therein;
For purposes of determining compliance with the "Limitation on Incurrence of Additional Indebtedness" covenant,
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"Permitted Investments" means:
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"Permitted Liens" means the following types of Liens:
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or, in the case of a refinancing of any Purchase Money Indebtedness, within 180 days of such refinancing;
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"Person" means an individual, partnership, corporation, limited liability company, unincorporated organization, trust or joint venture, or a governmental agency or political subdivision thereof or any other entity.
"Preferred Stock" of any Person means any Capital Stock of such Person that has preferential rights to any other Capital Stock of such Person with respect to dividends or redemptions or upon liquidation.
"Purchase Money Indebtedness" means Indebtedness of us and our Restricted Subsidiaries incurred in the normal course of business for the purpose of financing all or any part of the purchase price, or the cost of installation, construction or improvement, of property or equipment or other related assets and any Refinancing thereof.
"Qualified Capital Stock" means any Capital Stock that is not Disqualified Capital Stock.
"Qualified Receivables Transaction" means any transaction or series of transactions that may be entered into by us or any of our Restricted Subsidiaries in which we or any of our Restricted Subsidiaries may sell, convey or otherwise transfer to (1) a Receivables Subsidiary (in the case of a transfer by us or any of our Restricted Subsidiaries) and (2) any other Person (in the case of a transfer by a Receivables Subsidiary), or may grant a security interest in, any accounts receivable (whether now existing or arising in the future) of us or any of our Restricted Subsidiaries, and any related assets, including all collateral securing such accounts receivable, all contracts and all guarantees or other obligations in respect of such accounts receivable, proceeds of such accounts receivable and other assets (including contract rights) which are customarily transferred or in respect of which security interests are customarily granted in connection with asset securitization transactions involving accounts receivable.
"Recapitalization" means the recapitalization of us and Compass Minerals consummated on November 28, 2001.
"Receivables Subsidiary" means a Wholly Owned Restricted Subsidiary of ours that engages in no activities other than in connection with the financing of accounts receivable and that is designated by our Board of Directors (as provided below) as a Receivables Subsidiary:
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Any such designation by our Board of Directors shall be evidenced to the trustee by filing with the trustee a Board Resolution giving effect to such designation and an officers' certificate certifying that such designation complied with the preceding conditions.
"Refinance" means, in respect of any security or Indebtedness, to refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue a security or Indebtedness in exchange or replacement for, such security or Indebtedness in whole or in part. "Refinanced" and "Refinancing" shall have correlative meanings.
"Refinancing Indebtedness" means any Refinancing by us or any Restricted Subsidiary of ours of (A) for purposes of clause (15) of the definition of "Permitted Indebtedness," Indebtedness incurred or existing in accordance with the "Limitation on Incurrence of Additional Indebtedness" covenant (other than pursuant to clause (2), (4), (5), (6), (7), (8), (9), (10), (11), (12), (13) or (14) of the definition of "Permitted Indebtedness") or (B) for any other purpose, Indebtedness incurred in accordance with the "Limitation on Incurrence of Additional Indebtedness" covenant, in each case that does not:
provided that—
"Related Parties" of a specified Person means
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which consist of such Person and/or such other Persons referred to in the immediately preceding clause (a).
"Representative" means the indenture trustee or other trustee, agent or representative in respect of the Credit Agreement; provided that if, and for so long as, the Credit Agreement lacks such a Representative, then the Representative for such Credit Agreement shall at all times constitute the holders of a majority in outstanding principal amount of obligations under the Credit Agreement.
"Restricted Subsidiary" of any Person means any Subsidiary of such Person which at the time of determination is not an Unrestricted Subsidiary.
"Sale and Leaseback Transaction" means any direct or indirect arrangement with any Person or to which any such Person is a party, providing for the leasing to us or a Restricted Subsidiary of ours of any property, whether owned by us or any Restricted Subsidiary at the Issue Date or later acquired, which has been or is to be sold or transferred by us or such Restricted Subsidiary to such Person or to any other Person from whom funds have been or are to be advanced by such Person on the security of such property other than:
"Securities Act" means the Securities Act of 1933, as amended, or any successor statutes.
"Significant Subsidiary" means (1) any Restricted Subsidiary that would be a "significant subsidiary" as defined in Regulation S-X under the Securities Act as such Regulation is in effect on the Issue Date and (2) any Restricted Subsidiary that, when aggregated with all other Restricted Subsidiaries that are not otherwise Significant Subsidiaries and as to which any event described in clause (5) or (6) under "Events of Default" has occurred and is continuing, would constitute a Significant Subsidiary under clause (1) of this definition.
"Subsidiary," with respect to any Person, means:
"Transactions" means the Recapitalization and the related offering of the Existing Compass Minerals Notes and the initial borrowings under the Credit Agreement on November 28, 2001.
"Treasury Rate" means the rate per annum equal to the yield to maturity at the time of computation of United States Treasury securities with a constant maturity most nearly equal to the period from such date of redemption to December 15, 2007; provided, however, that if the period from such date of redemption to December 15, 2007 is not equal to the constant maturity of a United States Treasury security for which a weekly average yield is given, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of United States Treasury securities for which such yields are given, except that if the period from such date of redemption to December 15, 2007 is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year shall be used.
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"Unrestricted Subsidiary" means (1) any Subsidiary of any Person that is designated an Unrestricted Subsidiary by the Board of Directors of such Person in the manner provided below and (2) any Subsidiary of an Unrestricted Subsidiary. The Board of Directors may designate any Subsidiary, including any newly acquired or newly formed Subsidiary, to be an Unrestricted Subsidiary only if:
The Board of Directors may designate any Unrestricted Subsidiary to be a Restricted Subsidiary only if
"Weighted Average Life to Maturity" means, when applied to any Indebtedness at any date, the number of years obtained by dividing
"Wholly Owned Restricted Subsidiary" of any Person means any Restricted Subsidiary of such Person of which all the outstanding voting securities (other than in the case of a Foreign Restricted Subsidiary, directors' qualifying shares or an immaterial amount of shares required to be owned by other Persons pursuant to applicable law) are owned by such Person or any Wholly Owned Restricted Subsidiary of such Person.
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The exchange notes will be issued in the form of one or more fully registered notes in global form ("Global Notes"). Ownership of beneficial interests in a Global Note will be limited to persons who have accounts with DTC ("participants") or persons who hold interests through participants. Ownership of beneficial interests in a Global Note will be shown on, and the transfer of that ownership will be effected only through, records maintained by DTC or its nominee (with respect to interests of participants) and the records of participants (with respect to interests of persons other than participants).
So long as DTC, or its nominee, is the registered owner or holder of a Global Note, DTC or such nominee, as the case may be, will be considered the sole owner or holder of the notes represented by such Global Note for all purposes under the indenture and the exchange notes. No beneficial owner of an interest in a Global Note will be able to transfer that interest except in accordance with DTC's applicable procedures, in addition to those provided for under the indenture.
Payments of the principal of, and interest on, a Global Note will be made to DTC or its nominee, as the case may be, as the registered owner thereof. Neither Salt Holdings, the Trustee nor any Paying Agent will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in a Global Note or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests.
We expect that DTC or its nominee, upon receipt of any payment of principal or interest in respect of a Global Note, will credit participants' accounts with payments in amounts proportionate to their respective beneficial interests in the principal amount of such Global Note as shown on the records of DTC or its nominee. We also expect that payments by participants to owners of beneficial interests in such Global Note held through such participants will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers registered in the names of nominees for such customers. Such payments will be the responsibility of such participants.
Transfers between participants in DTC will be effected in the ordinary way in accordance with DTC rules and will be settled in same-day funds.
We expect that DTC will take any action permitted to be taken by a holder of exchange notes (including the presentation of exchange notes for exchange as described below) only at the direction of one or more participants to whose account the DTC interests in a Global Note is credited and only in respect of such portion of the aggregate principal amount of exchange notes as to which such participant or participants has or have given such direction. However, if there is an Event of Default under the exchange notes, DTC will exchange the applicable Global Note for Certificated Notes, which it will distribute to its participants.
We understand that: DTC is a limited purpose trust company organized under the laws of the State of New York, a "banking organization" within the meaning of New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the Uniform Commercial Code and a "Clearing Agency" registered pursuant to the provisions of Section 17A of the Exchange Act. DTC was created to hold securities for its participants and facilitate the clearance and settlement of securities transactions between participants through electronic book-entry changes in accounts of its participants, thereby eliminating the need for physical movement of certificates. Indirect access to the DTC system is available to others such as banks, brokers, dealers and trust companies and certain other organizations that clear through or maintain a custodial relationship with a participant, either directly or indirectly ("indirect participants").
Although DTC is expected to follow the foregoing procedures in order to facilitate transfers of interests in a Global Note among participants of DTC, it is under no obligation to perform or continue
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to perform such procedures, and such procedures may be discontinued at any time. Neither Salt Holdings nor the Trustee will have any responsibility for the performance by DTC or its respective participants or indirect participants of their respective obligations under the rules and procedures governing their operations.
If DTC is at any time unwilling or unable to continue as a depositary for the Global Notes and a successor depositary is not appointed by Salt Holdings within 90 days, we will issue Certificated Notes in exchange for the Global Notes. Holders of an interest in a Global Note may receive Certificated Notes in accordance with the DTC's rules and procedures in addition to those provided.
123
Each broker-dealer that receives exchange notes for its own account pursuant to the exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of such exchange notes. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of exchange notes received in exchange for outstanding notes where such outstanding notes were acquired as a result of market making activities or other trading activities. We have agreed that we will, for a period of 180 days after the consummation of the exchange offer, make this prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale. In addition, until , 2003, all dealers effecting transactions in the exchange notes may be required to deliver a prospectus.
We will not receive any proceeds from any sale of exchange notes by broker-dealers. Exchange notes received by broker-dealers for their own account pursuant to the exchange offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the exchange notes or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer and/or the purchasers of any such exchange notes. Any broker-dealer that resells exchange notes that were received by it for its own account pursuant to the exchange offer and any broker or dealer that participates in a distribution of such exchange notes may be deemed to be an "underwriter" within the meaning of the Securities Act and any profit on any such resale of exchange notes and any commissions or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The letter of transmittal states that by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act.
For a period of 180 days after the consummation of the exchange offer, we will promptly send additional copies of this prospectus and any amendment or supplement to this prospectus to any broker-dealer that requests such document in the letter of transmittal. We have agreed to pay all expenses incident to the exchange offer (including the expenses of one counsel for the holders of the exchange notes) other than commissions or concessions of any brokers or dealers and will indemnify the holders of the exchange notes, including any broker-dealers, against certain liabilities, including liabilities under the Securities Act.
124
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following discussion is a summary of certain material United States federal income tax consequences relevant to the exchange of the outstanding notes for the exchange notes pursuant to this exchange offer and the ownership and disposition of the exchange notes, but does not purport to be a complete analysis of all potential tax effects. The discussion is based upon the Internal Revenue Code of 1986, as amended (the "Code"), United States Treasury Regulations issued thereunder, Internal Revenue Service rulings and pronouncements and judicial decisions now in effect, all of which are subject to change at any time. Any such change may be applied retroactively in a manner that could adversely affect a holder of the notes. This discussion does not address all of the United States federal income tax consequences that may be relevant to a holder in light of such holder's particular circumstances or to holders subject to special rules, such as certain financial institutions, U.S. expatriates, partnerships or other pass-through entities, insurance companies, dealers in securities or currencies, traders in securities, United States Holders (as defined below) whose functional currency is not the U.S. dollar, tax-exempt organizations and persons holding the notes as part of a "straddle," "hedge," "conversion transaction" or other integrated transaction. Moreover, the effect of any applicable state, local or foreign tax laws is not discussed. The discussion deals only with notes held as "capital assets" within the meaning of Section 1221 of the Code.
As used herein, "United States Holder" means a beneficial owner of the notes that is, for United States federal income tax purposes:
We have not sought and will not seek any rulings from the Internal Revenue Service (the "IRS") with respect to the matters discussed below. There can be no assurance that the IRS will not take a different position concerning the tax consequences of the exchange of outstanding notes for exchange notes pursuant to this exchange offer or the ownership or disposition of the exchange notes or that any such position would not be sustained. If a partnership or other entity taxable as a partnership holds the notes, the tax treatment of a partner will generally depend on the status of the partner and the activities of the partnership. Such partner should consult its tax advisor as to the tax consequences.
You should consult your own tax advisors as to the particular tax consequences to you of the exchange of outstanding notes for exchange notes pursuant to this exchange offer and the ownership and disposition of the exchange notes, including the applicability of any United States federal tax laws and any state, local or foreign tax laws or tax treaties.
Exchange Pursuant to this Exchange Offer
The exchange of the exchange notes for the outstanding notes in the exchange offer will not be treated as an "exchange" for United States federal income tax purposes, because the exchange notes will not be considered to differ materially in kind or extent from the outstanding notes. Accordingly,
125
the exchange of the exchange notes for the outstanding notes will not be a taxable event to holders for United States federal income tax purposes. Moreover, the exchange notes will have the same tax attributes as the outstanding notes and the same consequences to holders as the outstanding notes have to holders, including the same issue price, adjusted issue price, adjusted tax basis and holding period.
United States Holders
Original Issue Discount
The notes were issued with original issue discount ("OID") for United States federal income tax purposes, and accordingly, United States Holders of notes are subject to special rules relating to the accrual of income for tax purposes. United States Holders of notes generally must include OID in gross income for United States federal income tax purposes on an annual basis under a constant yield accrual method regardless of their regular method of tax accounting. As a result, United States Holders must include OID in income in advance of the receipt of cash attributable to such income. However, United States Holders of the notes generally will not be required to include separately in income cash payments received on such notes to the extent such payments constitute payments of previously accrued OID.
The notes will be treated as issued with OID equal to the excess of a note's "stated redemption price at maturity" over its "issue price." The stated redemption price at maturity of a note includes all payments on the note, whether denominated as principal or interest. Thus, the stated interest on the notes will be taxed as part of OID and will not again be taxed as it is paid. Although not free from doubt, we believe that the issue price should be the offering price listed on the cover page of the offering circular for the notes (although the IRS could argue that the issue price is the initial accreted value). The amount of OID includible in income by an initial United States Holder of a note is the sum of the "daily portions" of OID with respect to the note for each day during the taxable year or portion thereof in which such United States Holder holds such note ("accrued OID"). A daily portion is determined by allocating to each day in any "accrual period" a pro rata portion of the OID that accrued in such period. The "accrual period" of a note may be of any length and may vary in length over the term of the note, provided that each accrual period is no longer than one year and each scheduled payment of principal or interest occurs either on the first or last day of an accrual period. The amount of OID that accrues with respect to any accrual period is the product of the note's adjusted issue price at the beginning of such accrual period and its yield to maturity, determined on the basis of compounding at the close of each accrual period and properly adjusted for the length of such period. The "adjusted issue price" of a note at the start of any accrual period is equal to its issue price, increased by the accrued OID for each prior accrual period and reduced by any prior payments made on such note.
Market Discount
If a United States Holder acquires a note at a cost that is less than its adjusted issue price, as defined above, the amount of such difference is treated as "market discount" for federal income tax purposes, unless such difference is less than .0025 multiplied by the stated redemption price at maturity multiplied by the number of complete years to maturity (from the date of acquisition).
Under the market discount rules of the Code, a United States Holder is required to treat any partial payment of principal on a note, and any gain on the sale, exchange, retirement or other disposition of a note, as ordinary income to the extent of the accrued market discount that has not previously been included in income. If such note is disposed of by the United States Holder in certain otherwise nontaxable transactions, accrued market discount must be included as ordinary income by the United States Holder as if the holder had sold the note at its then fair market value.
126
In general, the amount of market discount that has accrued is determined on a ratable basis. A United States Holder may, however, elect to determine the amount of accrued market discount on a constant yield to maturity basis. This election is made on a note-by-note basis and is irrevocable.
With respect to notes with market discount, a United States Holder may not be allowed to deduct immediately a portion of the interest expense on any indebtedness incurred or continued to purchase or to carry the notes. A United States Holder may elect to include market discount in income currently as it accrues, in which case the interest deferral rule set forth in the preceding sentence will not apply. This election will apply to all debt instruments acquired by the United States Holder on or after the first day of the first taxable year to which the election applies and is irrevocable without the consent of the IRS. A United States Holder's tax basis in a note will be increased by the amount of market discount included in the holder's income under the election.
Acquisition Premium
If a United States Holder purchases a note issued with original issue discount at an "acquisition premium," the amount of original issue discount that the United States Holder includes in gross income is reduced to reflect the acquisition premium. A note will be treated as purchased at an acquisition premium if its adjusted basis, immediately after its purchase, is:
If a note is purchased at an acquisition premium, the United States Holder will reduce the amount of original issue discount that otherwise would be included in income during an accrual period by an amount equal to
As an alternative to reducing the amount of original issue discount that otherwise would be included in income by this fraction, the United States holder may elect to compute original issue discount accruals by treating the purchase as a purchase at original issuance and applying the constant yield method described above.
Election to Treat All Interest as Original Issue Discount
United States Holders may elect to include in gross income all interest that accrues on a note, including any stated interest, original issue discount, market discount, de minimis market discount and unstated interest, as adjusted by acquisition premium, by using the constant yield method described above under the heading "Original Issue Discount." This election for a note with market discount will result in a deemed election to accrue market discount in income currently for the note and for all other debt instruments acquired by the United States Holder with market discount on or after the first day of the taxable year to which the election first applies, and may be revoked only with the permission of the IRS. A United States Holder's tax basis in a note will be increased by each accrual of the amounts treated as original issue discount under the constant yield election described in this paragraph.
Impact of Applicable High Yield Discount Obligation Rules
We believe the notes will be considered applicable high yield discount obligations for United States federal income tax purposes. Accordingly, we will not be permitted to deduct for United States federal
127
income tax purposes OID accrued on the notes until such time as we actually pay such OID in cash or in property other than our stock or our debt (or stock or debt of a person related to us). Moreover, the lesser of (a) the amount of OID on the notes and (b) the product of the total OID on the notes times the ratio of (i) the excess of the note's yield to maturity over the sum of the appropriate applicable federal rate plus 6% to (ii) the yield to maturity (the "Dividend-Equivalent Interest") will not be deductible at any time by us for United States federal income tax purposes (regardless of whether we actually pay such Dividend-Equivalent Interest in cash or other property). A corporate United States Holder will be eligible for the dividends-received deduction for the portion of the Dividend-Equivalent Interest that would have been treated as a dividend had it been distributed by us with respect to our stock.
Sale or Other Disposition of the Notes
A United States Holder will recognize gain or loss on the sale, exchange, redemption, retirement or other taxable disposition of a note equal to the difference between the sum of cash plus the fair market value of all other property received on such disposition and the United States Holder's adjusted tax basis in the note. A United States Holder's adjusted basis in a note generally will be the United States Holder's cost therefor, increased by any OID or market discount included in gross income with respect to the note and decreased by any payments received by such holder with respect to the note. This gain or loss generally will be a capital gain or loss (except as described above under the heading "Market Discount"), and will be a long-term capital gain or loss if the United States Holder has held the note for more than one year. Otherwise, such gain or loss will be a short-term capital gain or loss. The deductibility of capital losses is subject to limitations.
Backup Withholding
A United States Holder may be subject to a backup withholding tax when such holder receives payments on the notes held or upon the proceeds received upon the sale or other disposition of such notes. Certain holders (including, among others, corporations and certain tax-exempt organizations) are generally not subject to backup withholding. A United States Holder will be subject to this backup withholding tax if such holder is not otherwise exempt and such holder:
United States Holders should consult their personal tax advisor regarding their qualification for an exemption from backup withholding and the procedures for obtaining such an exemption, if applicable. The backup withholding tax is not an additional tax and taxpayers may use amounts withheld as a credit against their United States federal income tax liability or may claim a refund as long as they timely provide certain information to the IRS.
Non-United States Holders
A non-United States Holder is a beneficial owner of the notes that is a non-resident alien or a corporation, estate or trust that is not a United States Holder.
128
Original Issue Discount
Payments in respect to OID to a non-United States Holder will not be subject to United States federal withholding tax of 30% provided that such payments are not effectively connected with a United States trade or business and:
Even if the above conditions are not met, a non-United States Holder may be entitled to a reduction in or an exemption from withholding tax on interest under a tax treaty between the United States and the non-United States Holder's country of residence. To claim such a reduction or exemption, a non-United States holder must generally complete IRS Form W-8BEN and claim this exemption on the form. In some cases, a non-United States Holder may instead be permitted to provide documentary evidence of its claim to the intermediary, or a qualified intermediary may already have some or all of the necessary evidence in its files.
A non-United States Holder generally will also be exempt from withholding tax on interest if such interest is effectively connected with such holder's conduct of a United States trade or business (as described below) and the holder provides us with an IRS Form W-8ECI.
Sale or Other Disposition of the Notes
A non-United States Holder will generally not be subject to United States federal income tax or withholding tax on gain recognized on the sale, exchange, redemption, retirement or other taxable disposition of a note that is not effectively connected with a United States trade or business of the non-United States Holder. However, a non-United States Holder may be subject to tax on such gain if such holder is an individual who was present in the United States for 183 days or more in the taxable year of the disposition and certain other conditions are met, in which case such holder may have to pay a United States federal income tax of 30% (or, if applicable, a lower treaty rate) on such gain.
United States Trade or Business
If OID or gain from a disposition of the notes is effectively connected with a non-United States Holder's conduct of a United States trade or business, and, if an income tax treaty applies, the non-United States Holder maintains a United States "permanent establishment" to which the OID or gain is generally attributable, the non-United States Holder generally will be subject to United States federal income tax on the OID or gain on a net basis in the same manner as if it were a United States Holder.
129
A foreign corporation that is a holder of a note also may be subject to a branch profits tax equal to 30% of its effectively connected earnings and profits for the taxable year, subject to certain adjustments, unless it qualifies for a lower rate under an applicable income tax treaty. For this purpose, OID on a note or gain recognized on the disposition of a note will be included in earnings and profits if the OID or gain is effectively connected with the conduct by the foreign corporation of a trade or business in the United States.
Backup Withholding and Information Reporting
Backup withholding will likely not apply to payments of principal or interest made by us or our paying agents, in their capacities as such, to a non-United States Holder of a note if the holder certifies that it is not a United States Holder. However, information reporting on IRS Form 1042-S may still apply with respect to interest payments. Payments of the proceeds from a disposition by a non-United States Holder of a note made to or through a foreign office of a broker will not be subject to information reporting or backup withholding, except that information reporting (but generally not backup withholding) may apply to those payments if the broker is:
Payment of the proceeds from a disposition by a non-United States Holder of a note made to or through the United States office of a broker is generally subject to information reporting and backup withholding unless the holder or beneficial owner establishes an exemption from information reporting and backup withholding.
Non-United States Holders should consult their own tax advisors regarding application of withholding and backup withholding in their particular circumstance and the availability of and procedure for obtaining an exemption from withholding and backup withholding under current Treasury regulations. In this regard, the current Treasury regulations provide that a certification may not be relied on if we or our agent (or other payor) know or have reasons to know that the certification may be false. Any amounts withheld under the backup withholding rules from a payment to a non-United States Holder will be allowed as a credit against the holder's United States federal income tax liability or such holder may claim a refund, provided the required information is furnished to the IRS on a timely basis.
130
The validity of the exchange notes will be passed upon for us by Latham & Watkins LLP, New York, New York.
Ernst & Young LLP, independent auditors, have audited our combined and consolidated financial statements and schedule as of December 31, 2000 and 2001, and for each of the two years in the period ended December 31, 2001, as set forth in their report appearing herein. We have included our financial statements and schedule in the prospectus and elsewhere in the registration statement in reliance on Ernst & Young LLP's report, given on their authority as experts in accounting and auditing.
The consolidated financial statements as of December 31, 2002 and for the year then ended included in this prospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting.
131
SALT HOLDINGS CORPORATION
INDEX TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS
|
|
Page
|
|
|---|---|---|
| Salt Holdings Corporation | ||
|
Report of Independent Accountants |
|
F-2 |
| Report of Independent Auditors | F-3 | |
| Consolidated Balance Sheets as of December 31, 2002 and 2001 | F-4 | |
| Combined and Consolidated Statements of Operations for the three years ended December 31, 2002 | F-5 | |
| Combined and Consolidated Statements of Common Stockholders' Equity (Deficit) for the three years ended December 31, 2002 | F-6 | |
| Combined and Consolidated Statements of Cash Flows for the three years ended December 31, 2002 | F-7 | |
| Notes to Combined and Consolidated Financial Statements | F-8 | |
F-1
Report of Independent Accountants
To
the Board of Directors and Shareholders
of Salt Holdings Corporation:
In our opinion, the consolidated financial statements listed in the index appearing on page F-1 present fairly, in all material respects, the financial position of Salt Holdings Corporation and its subsidiaries at December 31, 2002, and the results of their operations and their cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the index appearing under Item 21(B) presents fairly, in all material respects, the information set forth therein as of and for the year ended December 31, 2002 when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audit. We conducted our audit of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
PricewaterhouseCoopers
LLP
Kansas City, Missouri
April 7, 2003
F-2
Report of Independent Auditors
To
the Board of Directors and Shareholders
Salt Holdings Corporation
We have audited the accompanying consolidated balance sheet of Salt Holdings Corporation as of December 31, 2001, and the related combined and consolidated statements of operations, stockholders' equity (deficit), and cash flows for each of the two years in the period ended December 31, 2001. Our audits also included the financial statement schedule for the years ended December 31, 2001 and 2000 listed in the Index at Item 21(B). These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Salt Holdings Corporation at December 31, 2001, and the combined and consolidated results of its operations and its cash flows for each of the two years in the period ended December 31, 2001, in conformity with accounting principles generally accepted in the United States. Also, in our opinion, the related financial statement schedule for the years ended December 31, 2001 and 2000, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.
/s/ Ernst & Young LLP
Kansas
City, Missouri
December 9, 2002
F-3
SALT HOLDINGS CORPORATION
CONSOLIDATED BALANCE SHEETS
December 31, 2002 and 2001
(in millions, except share data)
The accompanying notes are an integral part of the combined and consolidated financial statements.
F-4
SALT HOLDINGS CORPORATION
COMBINED AND CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended December 31, 2002, 2001 and 2000
(in millions)
|
|
2002
|
2001
|
2000
|
||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Sales | $ | 502.6 | $ | 523.2 | $ | 509.2 | |||||
| Cost of sales — shipping and handling | 137.5 | 143.2 | 140.0 | ||||||||
| Cost of sales — products | 239.2 | 257.0 | 272.0 | ||||||||
|
|
|
|
|||||||||
| Gross profit | 125.9 | 123.0 | 97.2 | ||||||||
|
Selling, general and administrative expenses |
|
|
40.6 |
|
|
38.9 |
|
|
35.5 |
|
|
| Goodwill write-down | — | — | 191.0 | ||||||||
| Restructuring and other charges | 7.7 | 27.0 | 425.9 | ||||||||
|
|
|
|
|||||||||
| Operating earnings (loss) | 77.6 | 57.1 | (555.2 | ) | |||||||
|
Other (income) expense: |
|
|
|
|
|
|
|
|
|
|
|
| Interest expense | 42.4 | 14.4 | 16.4 | ||||||||
| Other, net | 4.9 | (3.1 | ) | (0.2 | ) | ||||||
|
|
|
|
|||||||||
| Income (loss) before income taxes | 30.3 | 45.8 | (571.4 | ) | |||||||
|
Income tax expense (benefit) |
|
|
11.4 |
|
|
26.8 |
|
|
(103.7 |
) |
|
|
|
|
|
|||||||||
| Net income (loss) | 18.9 | 19.0 | (467.7 | ) | |||||||
|
Dividends on redeemable preferred stock |
|
|
10.6 |
|
|
0.8 |
|
|
— |
|
|
|
|
|
|
|||||||||
| Net income (loss) available for common stock | $ | 8.3 | $ | 18.2 | $ | (467.7 | ) | ||||
|
|
|
|
|||||||||
The accompanying notes are an integral part of the combined and consolidated financial statements.
F-5
SALT HOLDINGS CORPORATION
COMBINED AND CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
For the years ended December 31, 2002, 2001 and 2000
(in millions)
|
|
Common
Stock |
Additional
Paid In Capital |
Accumulated
Excess (Deficit) |
Accumulated
Other Comprehensive Income (Loss) |
Total
|
||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Balance, December 31, 1999 | $ | — | $ | 944.7 | $ | (189.6 | ) | $ | 2.5 | $ | 757.6 | ||||||
|
Comprehensive loss: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net loss | (467.7 | ) | (467.7 | ) | |||||||||||||
| Cumulative translation adjustments | (1.4 | ) | (1.4 | ) | |||||||||||||
|
|
|||||||||||||||||
| Comprehensive loss | (469.1 | ) | |||||||||||||||
|
|
|
|
|
|
|||||||||||||
|
Balance, December 31, 2000 |
|
|
— |
|
|
944.7 |
|
|
(657.3 |
) |
|
1.1 |
|
|
288.5 |
|
|
|
Comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income | 36.0 | 36.0 | |||||||||||||||
| Cumulative translation adjustments | (3.2 | ) | (3.2 | ) | |||||||||||||
|
|
|||||||||||||||||
| Comprehensive income | 32.8 | ||||||||||||||||
| Capital contribution from IMC | 82.0 | 82.0 | |||||||||||||||
| Dividend to IMC and affiliates | (71.1 | ) | (71.1 | ) | |||||||||||||
|
|
|
|
|
|
|||||||||||||
|
Balance, November 27, 2001 |
|
$ |
— |
|
$ |
1,026.7 |
|
$ |
(692.4 |
) |
$ |
(2.1 |
) |
$ |
332.2 |
|
|
|
|
|
|
|
|
|||||||||||||
|
Balance, November 28, 2001 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
|
| Contribution of IMCI net assets to SHC (Note 1) | 56.6 | 201.9 | 258.5 | ||||||||||||||
| Capital contribution | 0.5 | 0.5 | |||||||||||||||
| Other | 0.9 | 0.9 | |||||||||||||||
| Redemption and cancellation of stock held by IMC | (49.6 | ) | (141.4 | ) | (192.5 | ) | (383.5 | ) | |||||||||
| Dividends on preferred stock | (0.8 | ) | (0.8 | ) | |||||||||||||
| Comprehensive loss: | |||||||||||||||||
| Net loss | (17.0 | ) | (17.0 | ) | |||||||||||||
| Unfunded pension losses, net of tax | (5.4 | ) | (5.4 | ) | |||||||||||||
| Cumulative translation adjustments | 3.0 | 3.0 | |||||||||||||||
|
|
|||||||||||||||||
| Comprehensive loss | (19.4 | ) | |||||||||||||||
|
|
|
|
|
|
|||||||||||||
|
Balance, December 31, 2001 |
|
|
7.0 |
|
|
61.9 |
|
|
(210.3 |
) |
|
(2.4 |
) |
|
(143.8 |
) |
|
| Dividends on preferred stock | (10.6 | ) | (10.6 | ) | |||||||||||||
| Other | 1.1 | 1.1 | |||||||||||||||
| Comprehensive income: | |||||||||||||||||
| Net income | 18.9 | 18.9 | |||||||||||||||
| Unfunded pension losses, net of tax | (6.5 | ) | (6.5 | ) | |||||||||||||
| Unrealized gain on cash flow hedges, net of tax | 0.1 | 0.1 | |||||||||||||||
| Cumulative translation adjustments | 8.9 | 8.9 | |||||||||||||||
|
|
|||||||||||||||||
| Comprehensive income | 21.4 | ||||||||||||||||
| Capital contributions | 23.2 | 23.2 | |||||||||||||||
|
|
|
|
|
|
|||||||||||||
| Balance, December 31, 2002 | $ | 7.0 | $ | 86.2 | $ | (202.0 | ) | $ | 0.1 | $ | (108.7 | ) | |||||
|
|
|
|
|
|
|||||||||||||
The accompanying notes are an integral part of the combined and consolidated financial statements.
F-6
SALT HOLDINGS CORPORATION
COMBINED AND CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 2002, 2001 and 2000
(in millions)
|
|
2002
|
2001
|
2000
|
||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash flows from operating activities: | |||||||||||||
| Net income (loss) | $ | 18.9 | $ | 19.0 | $ | (467.7 | ) | ||||||
| Adjustments to reconcile net income (loss) to net cash flows provided by operating activities: | |||||||||||||
| Depreciation and depletion | 37.1 | 32.6 | 38.8 | ||||||||||
| Amortization | 1.9 | 0.2 | 5.5 | ||||||||||
| Goodwill write-down | — | — | 191.0 | ||||||||||
| Early extinguishment of long-term debt | 5.3 | — | — | ||||||||||
| Restructuring charge and other charges, net of cash | 1.1 | 1.4 | 425.6 | ||||||||||
| Accreted non-cash interest | 1.1 | — | — | ||||||||||
| Deferred income taxes | (1.9 | ) | 8.2 | (129.6 | ) | ||||||||
| Loss on disposal of property, plant and equipment | 0.2 | 0.2 | 1.9 | ||||||||||
| Changes in operating assets and liabilities: | |||||||||||||
| Receivables | (5.9 | ) | 36.3 | (44.4 | ) | ||||||||
| Inventories | 3.8 | (20.9 | ) | 24.8 | |||||||||
| Other assets | 0.6 | 1.8 | 0.6 | ||||||||||
| Accounts payable and accrued expenses | 14.8 | 3.8 | 11.0 | ||||||||||
| Due to IMC and affiliates | — | 32.1 | 15.1 | ||||||||||
| Other noncurrent liabilities | 5.4 | (2.3 | ) | (0.5 | ) | ||||||||
|
|
|
|
|||||||||||
| Net cash provided by operating activities | 82.4 | 112.4 | 72.1 | ||||||||||
|
|
|
|
|||||||||||
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|||
| Capital expenditures | (19.5 | ) | (43.0 | ) | (33.7 | ) | |||||||
| Proceeds from sales of property, plant and equipment | 0.6 | 0.2 | 0.9 | ||||||||||
| Other | (0.2 | ) | (0.8 | ) | (1.2 | ) | |||||||
|
|
|
|
|||||||||||
| Net cash used in investing activities | (19.1 | ) | (43.6 | ) | (34.0 | ) | |||||||
|
|
|
|
|||||||||||
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
|||
| Revolver activity | (39.8 | ) | 35.4 | 1.6 | |||||||||
| Proceeds from issuance of long-term debt | 78.4 | 475.0 | — | ||||||||||
| Principal payments on other long-term debt, including capital leases | (115.9 | ) | (66.2 | ) | (5.3 | ) | |||||||
| Payments from (to) IMC and affiliates, net | — | (81.1 | ) | (39.6 | ) | ||||||||
| Dividend to IMC and affiliates | — | (398.8 | ) | — | |||||||||
| Deferred financing costs | (6.3 | ) | (18.0 | ) | — | ||||||||
| Capital contributions | 12.8 | — | — | ||||||||||
| Other | 1.0 | — | — | ||||||||||
|
|
|
|
|||||||||||
| Net cash used in financing activities | (69.8 | ) | (53.7 | ) | (43.3 | ) | |||||||
|
|
|
|
|||||||||||
| Effect of exchange rate changes on cash and cash equivalents | 2.5 | 0.5 | 1.3 | ||||||||||
|
|
|
|
|||||||||||
| Net increase (decrease) in cash and cash equivalents | (4.0 | ) | 15.6 | (3.9 | ) | ||||||||
| Cash and cash equivalents, beginning of year | 15.9 | 0.3 | 4.2 | ||||||||||
|
|
|
|
|||||||||||
| Cash and cash equivalents, end of year | $ | 11.9 | $ | 15.9 | $ | 0.3 | |||||||
|
|
|
|
|||||||||||
|
Supplemental cash flow information: |
|
|
|
|
|
|
|
|
|
|
|||
| Interest paid excluding capitalized interest | $ | 29.4 | $ | 15.4 | $ | 12.5 | |||||||
| Income taxes paid | 10.4 | 14.8 | 4.5 | ||||||||||
|
Supplemental disclosure of noncash activities: |
|
|
|
|
|
|
|
|
|
|
|||
| Dividends to IMC and affiliates | $ | — | $ | 44.4 | $ | — | |||||||
| Capital contributions from IMC and affiliates | — | 261.1 | — | ||||||||||
| Issuance of notes due to related parties related to stock redemption | — | 11.4 | — | ||||||||||
| Retirement of Seller Notes plus accrued interest | 9.0 | — | — | ||||||||||
| Preferred stock dividends accrued not paid | 10.6 | 0.8 | — | ||||||||||
The accompanying notes are an integral part of the combined and consolidated financial statements.
F-7
SALT HOLDINGS CORPORATION
NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS
1. Organization, Formation and Basis of Presentation:
The combined and consolidated financial statements include the accounts of Salt Holdings Corporation ("SHC") and its wholly owned subsidiary, Compass Minerals Group, Inc. ("CMG"), formerly IMC Inorganic Chemicals Inc. ("IMCI"), and the combined and consolidated results of three of CMG's wholly owned subsidiaries listed below (collectively, the "Company").
The Company is a producer and marketer of inorganic mineral products with manufacturing sites in North America and Europe. Its principal products are salt and sulfate of potash. The Company serves a variety of markets, including agriculture, food processing, chemical processing, water conditioning and highway deicing.
Prior to November 28, 2001, SHC was incorporated as IMC Potash Corporation, an inactive wholly owned subsidiary of IMC Global Inc. ("IMC"). Accordingly, prior to November 28, 2001, the combined and consolidated financial statements reflect only the results of CMG and its subsidiaries listed above. As part of the recapitalization transaction described below, IMC Potash Corporation was reincorporated as SHC. At November 28, 2001, IMC contributed the net assets of CMG to SHC.
On November 28, 2001, Apollo Management V, L.P. ("Apollo"), through its subsidiary YBR Holdings LLC acquired control of SHC from IMC pursuant to a recapitalization transaction ("Recapitalization") with assets and liabilities of CMG retaining their historical value. Immediately following the Recapitalization, on a fully-diluted basis for management options and stock issuable under SHC's stock option plan, Apollo, co-investors and management own approximately 81% of the outstanding common stock of SHC and IMC owns approximately 19% of the outstanding common stock of SHC.
These combined and consolidated financial statements have been prepared to present the historical financial condition and results of operations and cash flows for the subsidiaries that were included in the Recapitalization.
CMG has been a wholly owned subsidiary of SHC since SHC's acquisition of the Company on November 28, 2001. CMG was a wholly owned subsidiary of IMC since IMC's acquisition of IMCI on April 1, 1998. Certain wholly owned subsidiaries of IMCI (prior to the Recapitalization described above) have been specifically excluded from the combined financial statements for periods prior to the Recapitalization since these subsidiaries were not part of the Recapitalization.
Prior to the Recapitalization, sales in the accompanying combined and consolidated statements of operations represent sales directly attributable to the Company. Costs and expenses in the accompanying combined and consolidated statements of operations represent direct costs and expenses related to the Company. In addition, the combined and consolidated statements of operations include the estimated cost of all services provided by IMC and its subsidiaries to the Company through
F-8
November 27, 2001, which had previously not been directly allocated to the Company. All of the allocations and estimates in the combined and consolidated statements of operations are based on assumptions that Company management believes are reasonable under the circumstances. However, these allocations and estimates are not necessarily indicative of the costs and expenses that would have resulted if the Company had been operated as a separate entity.
2. Summary of Significant Accounting Policies:
a. Management Estimates : The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the combined and consolidated financial statements and accompanying notes. Actual results could differ from those estimates.
b. Basis of Combination/Consolidation: The Company's combined and consolidated financial statements include the accounts of the Company, which include the domestic and foreign subsidiaries discussed in Note 1. The Company's financial statements have been combined through the Recapitalization date and consolidated thereafter. All significant intercompany balances and transactions have been eliminated.
c. Foreign Currency Translation: Assets and liabilities are translated into U.S. dollars at end of period exchange rates. Revenues and expenses are translated using the average rates of exchange for the year. Adjustments resulting from the translation of foreign currency financial statements into the reporting currency, U.S. dollars, are included in accumulated other comprehensive income (loss). Exchange gains and losses from transactions denominated in a currency other than a company's functional currency are included in income.
d. Revenue Recognition: Revenue is recognized by the Company upon the transfer of title and risk of ownership to the customer, which is generally at the time product is shipped. Gross sales represent gross billings to customers net of sales taxes charged for the sale of the product and includes shipping and handling costs which are expensed when the related product is sold.
e. Cash and Cash Equivalents: The Company considers all investments with original maturities of three months or less to be cash equivalents. The Company maintains the majority of its cash in bank deposit accounts with several commercial banks with high credit ratings in the U.S., Canada and Europe. The Company does not believe it is exposed to any significant credit risk on cash and cash equivalents.
f. Inventories: Inventories are stated at the lower of cost or market. Raw materials and supply costs are determined by either the first-in, first-out ("FIFO") or the average cost method. Finished goods costs are determined by the average cost method.
g. Property, Plant and Equipment: Tangible property, plant and equipment, including assets under capital leases, are stated at cost and include interest on funds borrowed to finance construction. The costs of replacements or renewals which improve or extend the life of existing property are capitalized. Maintenance and repairs are expensed as incurred. Mineral deposits are stated at cost with amortization being provided on the units of production method based on estimates of recoverable reserves. Upon retirement or disposition of an asset, any resulting gain or loss is included in results from operations.
Asset classes or groups are depreciated or amortized on a straight-line basis over the following estimated useful lives:
| Land improvements | 5 to 25 years | |
| Buildings and improvements | 10 to 40 years | |
| Machinery and equipment | 3 to 25 years | |
| Furniture and fixtures | 3 to 10 years |
F-9
Prior to 2002, the Company used the methodology prescribed in Statement of Financial Accounting Standards (SFAS) No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, the Company reviewed long-lived assets and the related intangible assets for impairment whenever events or changes in circumstances indicated the carrying amounts of such assets may not have been recoverable. Once an indication of a potential impairment existed, recoverability of the respective assets was determined by comparing the forecasted undiscounted net cash flows of the operation to which the assets related, to the carrying amount, including associated intangible assets, of such operation. If the operation was determined to be unable to recover the carrying amount of its assets, then intangible assets were written down first, followed by the other long-lived assets of the operation, to fair value. Fair value was determined based on discounted cash flows or appraised values, depending upon the nature of the assets.
In January of 2002, the Company adopted SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets". This Statement supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" and Accounting Principles Board ("APB") Opinion No. 30, "Reporting the Results of Operations—Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions". This Statement establishes an accounting model based on SFAS No. 121 for long lived assets to be disposed of by sale, previously accounted for under APB No. 30. The Company adopted SFAS No. 144 as of January 1, 2002 without significant effect on its consolidated financial statements.
h. Goodwill: Goodwill represented the excess of purchase cost over the fair value of net assets of acquired companies (including goodwill related to IMC's acquisition of the Company) and was generally amortized using the straight line method over 40 years. In the fourth quarter of 2000, the Company reduced its goodwill to zero in connection with the proposed IMC sale of the Company (see Note 3). Goodwill amortization charged to earnings for the year ended December 31, 2000 was $5.4 million.
The Company adopted the new rules on accounting for goodwill as set forth in SFAS No. 142 and other intangible assets for 2002. Under the new rules, goodwill and intangible assets deemed to have indefinite lives are not amortized but are subject to annual impairment tests in accordance with the Statements. Other intangible assets continue to be amortized over their useful lives. As of December 31, 2002, the Company has no material other intangible assets with indefinite lives
i. Other Noncurrent Assets: Other noncurrent assets include deferred financing costs of $16.9 million and $17.8 million net of accumulated amortization of $1.9 million and $0.2 million as of December 31, 2002 and 2001, respectively. Deferred financing costs are being amortized over the terms of the debt to which the costs relate and the related amortization is recorded as interest expense.
j. Income Taxes: The Company's U.S. subsidiaries participated in the consolidated federal income tax return of IMC for periods owned by IMC. The foreign subsidiaries file separate-company returns in their respective jurisdictions. For financial reporting purposes, while owned by IMC, the Company computed a provision for income taxes on a stand alone basis. The Company accounts for income taxes using the liability method in accordance with the provisions of SFAS No. 109, Accounting for Income Taxes. Under the liability method, deferred taxes are determined based on the differences between the financial statement and the tax basis of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse.
k. Environmental Costs: Environmental costs, other than those of a capital nature, are accrued at the time the exposure becomes known and costs can reasonably be estimated. Costs are accrued based upon management's estimates of all direct costs, after taking into account reimbursement by third parties. As of December 31, 2002, the Company did not accrue liabilities for unasserted claims that are not probable of assertion and the Company did not provide for environmental clean-up costs, if any, at
F-10
the end of the useful lives of its facilities, since it was not practical to estimate such costs due to the long lives of the Company's mineral deposits.
As discussed in Note 2. o ., the Company will adopt SFAS No. 143, "Accounting for Obligations Associated with the Retirement of Long-Lived Assets" beginning in January 2003 without significant effect on its consolidated financial statements.
l. Stock Options: On November 28, 2001, SHC adopted a stock option plan related to shares of SHC's common stock (see Note 13). The Company has elected to follow Accounting Principles Board (APB) Opinion No. 25 , Accounting for Stock Issued to Employees , and related Interpretations in accounting for its employee stock options and has adopted the pro forma disclosure requirements under SFAS No. 123, Accounting for Stock-Based Compensation. Under APB No. 25, because the exercise price of the Company's employee stock options is equal to or greater than the market price of the underlying stock on the date of grant, no compensation expense is recognized.
SFAS No. 123 requires the disclosure of pro forma net income for stock-based awards as if the Company had used the fair value method of accounting for such awards. The fair values of options granted were estimated at the date of grant using the Minimum Value option pricing model with the following weighted-average assumptions for the year ended December 31, 2002: a risk-free interest rate of 4.9%, and a weighted-average expected life of 7.8 years. Under the Minimum Value option pricing model, the volatility factor is excluded. The Company assumed a 0% dividend yield over the life of the options. The effect of applying SFAS No. 123's fair value method to the Company's stock-based awards resulted in pro forma net income that is not materially different from amounts reported in the accompanying combined and consolidated statement of operations for the years ended December 31, 2002 and 2001.
m. Derivatives: On January 1, 2001, the Company adopted SFAS No.133, Accounting for Derivative Instruments and Hedging Activities, as amended by SFAS No. 137 and SFAS No. 138. The adoption of the provisions of SFAS No. 133, as amended, had no impact on the results of operations or financial position of the Company.
The Company is exposed to the impact of interest rate changes on borrowings, fluctuations in the functional currency of foreign operations and the impact of fluctuations in the purchase price of natural gas consumed in operations, as well as changes in the market value of its financial instruments. The Company has historically entered into natural gas supply agreements to minimize natural gas pricing risks, but not for trading purposes. These supply agreements did not meet the definition of a derivative instrument under the provisions of SFAS No. 133.
In the fourth quarter of 2002, the Company adopted a policy of hedging natural gas prices through the use of swap agreements in order to protect against commodity price fluctuations. All of these derivative instruments held by the Company as of December 31, 2002 qualify as cash flow hedges. The Company does not engage in trading activities with these financial instruments.
n. Concentration of Credit Risk: The Company sells its salt products to various governmental agencies, manufacturers, distributors and retailers primarily in the mid-western United States, and throughout Canada and the United Kingdom. The Company's potash products are sold across North America and internationally. No single customer or group of affiliated customers accounted for more than ten percent of the Company's sales in any year during the three year period ended December 31, 2002, or for more than ten percent of accounts receivable at December 31, 2002 or 2001.
o. Pending Accounting Pronouncements: The Company has adopted the new rules on accounting for goodwill and other intangible assets as set forth in SFAS No. 141, "Business Combinations", and No. 142, "Goodwill and Other Intangible Assets". Under the new rules, goodwill and intangible assets deemed to have indefinite lives are not amortized but are subject to annual impairment tests in accordance with the Statements. Other intangible assets continue to be amortized over their useful
F-11
lives. Adoption of these statements did not have a material impact on the Company's financial statements as the Company, in the fourth quarter of 2000, recorded a charge to reduce goodwill to zero and has no material other intangible assets with indefinite lives.
In June 2001, the FASB issued SFAS No. 143, "Accounting for Obligations Associated with the Retirement of Long-Lived Assets". The objective of SFAS No. 143 is to establish an accounting standard for the recognition and measurement of an obligation related to the retirement of certain long-lived assets. The retirement obligation must be one that results from the acquisition, construction or normal operation of a long-lived asset. SFAS No. 143 requires the legal obligation associated with the retirement of a tangible long-lived asset to be recognized at fair value as a liability when incurred, and the cost to be capitalized by increasing the carrying amount of the related long-lived asset. SFAS No. 143 will be effective for the Company beginning January 1, 2003. The Company has evaluated the effect of implementing SFAS No. 143 and has determined that its adoption will not have a material impact on its financial position, results of operations or cash flows.
As discussed in Note 2. g ., the Company adopted SFAS No. 144 as of January 1, 2002 without significant effect on its consolidated financial statements.
During the second quarter, the Company early adopted SFAS No. 145, "Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections". SFAS No. 145 rescinds SFAS No. 4 and SFAS No. 64, which required gains and losses from extinguishment of debt to be classified as extraordinary items. The early adoption of SFAS No. 145 resulted in a $5.3 million charge to other (income) expense related to the debt refinancing that occurred in the quarter ended June 30, 2002 (See Note 6). Under previous guidance this charge would have been recorded as extraordinary loss, net of tax, on the consolidated statement of operations.
In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities." This Statement addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies EITF Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)." This Statement requires that a liability for costs associated with an exit or disposal activity be recognized when the liability is incurred. The provisions of this Statement are effective for exit or disposal activities that are initiated after December 31, 2002. The Company believes that the adoption of SFAS 146 will not have a material impact on its financial position, results of operations or cash flows.
In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based Compensation—Transition and Disclosure," which provides guidance on how to transition from the intrinsic value method of accounting for stock-based employee compensation under the Accounting Principles Board ("APB") Opinion 25 to SFAS 123's fair value method of accounting, if a company so elects. The Company has elected to continue to follow the accounting method under APB Opinion 25.
Also during 2002, the FASB issued Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others". The Interpretation requires that a guarantor recognize a liability for the fair value of guarantee obligations issued after December 31, 2002. The Company determined that their were no guarantees requiring disclosure as of December 31, 2002.
FIN 46, "Consolidation of Variable Interest Entities," is effective immediately for all enterprises with variable interests in variable interest entities. If an entity is determined to be a variable interest entity, it must be consolidated by the enterprise that absorbs the majority of the entity's expected losses, if they occur, receives a majority of the entity's expected residual returns, if they occur, or both. The Company has determined that it does not have variable interest entities and, therefore, the impact of FIN 46 did not have any effect on our results of operations or financial position.
F-12
p. Reclassifications: Certain reclassifications were made to prior year amounts in order to conform with the current year's presentation.
3. Asset Impairment, Restructuring and Other Charges:
2002
Following the Recapitalization, the Company incurred and expensed certain non-recurring costs totaling $7.7 million that consist of transition costs required to establish the Company as an independent entity. The costs were directly related to the transition from an entity controlled by IMC and consisted primarily of one-time compensation costs, costs to develop stand-alone tax and inventory strategies, and costs associated with determining the post-closing purchase price adjustment.
2001
In connection with the Recapitalization, the Company expensed certain costs totaling $27.0 million which consist of transaction and transition costs. The transaction costs were directly related to the acquisition and consisted primarily of outside professional services. Below is a more detailed description of such costs:
2000
On November 10, 2000, IMC's Board of Directors authorized IMC's management to proceed with negotiations on proposed terms for the sale of the Company. Based on anticipated net proceeds to IMC, the Company recorded an impairment charge of $616.6 million, $482.1 million after tax, in the fourth quarter of 2000. As part of this charge, goodwill was reduced $191.0 million to zero and mineral properties and rights was reduced $425.6 million. Additionally, the Company recorded $0.2 million after tax in the fourth quarter of 2000 for employee severance costs.
4. Inventories and Property, Plant and Equipment:
Inventories consist of the following at December 31 (in millions):
|
|
2002
|
2001
|
||||
|---|---|---|---|---|---|---|
| Finished goods | $ | 83.5 | $ | 83.0 | ||
| Raw materials and supplies | 13.0 | 16.4 | ||||
|
|
|
|||||
| $ | 96.5 | $ | 99.4 | |||
|
|
|
|||||
Certain inventories of approximately $7.5 million at December 31, 2002 and 2001, that will be utilized with respect to long-lived assets have been classified in the consolidated balance sheets as other noncurrent assets.
F-13
Property, plant and equipment consists of the following at December 31 (in millions):
|
|
2002
|
2001
|
||||
|---|---|---|---|---|---|---|
| Land and buildings | $ | 81.9 | $ | 76.7 | ||
| Machinery and equipment | 422.2 | 400.9 | ||||
| Furniture and fixtures | 9.9 | 9.6 | ||||
| Mineral properties and rights | 176.8 | 173.8 | ||||
| Construction in progress | 13.5 | 13.7 | ||||
|
|
|
|||||
| 704.3 | 674.7 | |||||
| Less accumulated depreciation | 291.1 | 252.6 | ||||
|
|
|
|||||
| $ | 413.2 | $ | 422.1 | |||
|
|
|
|||||
5. Income Taxes:
As discussed in Note 2, the Company's income tax provision and related assets and liabilities have been computed on a stand alone basis, for the periods owned by IMC, without regard to actual liabilities and benefits related to consolidated tax return filings by IMC. The schedule of deferred tax assets and liabilities below reflects assets related to net operating loss carryforwards and alternative minimum tax credits, net of the necessary reserves, on an historical basis based upon the Recapitalization and related transfer of certain tax assets to the Company.
The following table summarizes the income tax provision (benefit) of the Company for the years ended December 31 (in millions):
|
|
2002
|
2001
|
2000
|
|||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current: | ||||||||||||
| Federal | $ | — | $ | 5.9 | $ | 17.6 | ||||||
| State | 1.3 | 0.8 | 2.4 | |||||||||
| Foreign | 12.0 | 11.9 | 5.9 | |||||||||
|
|
|
|
||||||||||
|
Total current |
|
|
13.3 |
|
|
18.6 |
|
|
25.9 |
|
||
|
|
|
|
||||||||||
|
Deferred: |
|
|
|
|
|
|
|
|
|
|
||
| Federal | (3.2 | ) | 5.3 | (110.5 | ) | |||||||
| State | (0.4 | ) | 0.8 | (18.1 | ) | |||||||
| Foreign | 1.7 | 2.1 | (1.0 | ) | ||||||||
|
|
|
|
||||||||||
|
Total deferred |
|
|
(1.9 |
) |
|
8.2 |
|
|
(129.6 |
) |
||
|
|
|
|
||||||||||
|
Total provision (benefit) for income taxes |
|
$ |
11.4 |
|
$ |
26.8 |
|
$ |
(103.7 |
) |
||
|
|
|
|
||||||||||
F-14
The following table summarizes components of income (loss) before taxes and the effects of significant adjustments to tax computed at the federal statutory rate for the years ended December 31 (in millions):
|
|
2002
|
2001
|
2000
|
|||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Domestic income (loss) | $ | 8.4 | $ | 22.2 | $ | (583.6 | ) | |||
| Foreign income | 21.9 | 23.6 | 12.2 | |||||||
|
|
|
|
||||||||
| Income (loss) before income taxes | $ | 30.3 | $ | 45.8 | $ | (571.4 | ) | |||
|
|
|
|
||||||||
|
Computed tax at the federal statutory rate of 35% |
|
$ |
10.6 |
|
$ |
16.1 |
|
$ |
(200.0 |
) |
| Foreign income, mining, and withholding taxes | 6.0 | 3.0 | 1.0 | |||||||
| Foreign exchange gain | — | 2.6 | — | |||||||
| Percentage depletion in excess of basis | (1.9 | ) | (2.9 | ) | (1.4 | ) | ||||
| State income taxes, net of federal income tax benefit | 0.6 | 1.1 | 2.1 | |||||||
| Restructuring and other charges | — | 6.8 | — | |||||||
| Write-down and amortization of goodwill | — | — | 94.6 | |||||||
| Net operating loss carryforward benefit | (2.9 | ) | — | — | ||||||
| Other | (1.0 | ) | 0.1 | — | ||||||
|
|
|
|
||||||||
|
Income tax expense (benefit) |
|
$ |
11.4 |
|
$ |
26.8 |
|
$ |
(103.7 |
) |
|
|
|
|
||||||||
|
Effective tax rate |
|
|
38% |
|
|
58% |
|
|
18% |
|
|
|
|
|
||||||||
The Company does not provide U.S. federal income taxes on undistributed earnings of foreign companies that are not currently taxable in the United States. No undistributed earnings of foreign companies were subject to U.S. income tax in the years ended December 31, 2002, 2001 and 2000. Total undistributed earnings on which no U.S. federal income tax has been provided were $73.9 million at December 31, 2002. If these earnings are distributed, foreign tax credits may become available under current law to reduce or possibly eliminate the resulting U.S. income tax liability.
Under SFAS No. 109 deferred tax assets and liabilities are recognized for the estimated future tax effects, based on enacted tax law, of temporary differences between the values of assets and liabilities recorded for financial reporting and for tax purposes and of net operating loss and other carryforwards.
F-15
Significant components of the Company's deferred tax assets and liabilities were as follows at December 31 (in millions):
|
|
2002
|
2001
|
||||||
|---|---|---|---|---|---|---|---|---|
| Deferred tax liabilities: | ||||||||
| Property, plant and equipment | $ | 91.2 | $ | 99.5 | ||||
| Other liabilities | 8.0 | 1.6 | ||||||
|
|
|
|||||||
| Total deferred tax liabilities | 99.2 | 101.1 | ||||||
| Deferred tax assets: | ||||||||
| Net operating loss carryforwards | 39.0 | 41.9 | ||||||
| Alternative minimum tax credit carryforwards | 2.4 | 2.4 | ||||||
| Foreign tax loss carryforwards | — | — | ||||||
| Other assets | — | — | ||||||
|
|
|
|||||||
| Subtotal | 41.4 | 44.3 | ||||||
| Valuation allowance | (41.4 | ) | (44.3 | ) | ||||
|
|
|
|||||||
| Total deferred tax assets | — | — | ||||||
|
|
|
|||||||
| Net deferred tax liabilities | $ | 99.2 | $ | 101.1 | ||||
|
|
|
|||||||
SFAS No. 109 requires a valuation allowance against deferred tax assets if, based on available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. As of December 31, 2002 and 2001, the Company had a valuation allowance relating to such items of $41.4 million and $44.3 million, respectively.
At December 31, 2002, the Company has net operating loss carryforwards of approximately $106.0 million. The Company is a loss corporation as defined in Section 382 of the Internal Revenue Code. The Company has previously incurred two ownership changes that have placed annual limitations on the amount of each loss carryforward utilization. If not utilized, these carryforwards expire between 2009 and 2020. In addition, the Company has a U.S. federal alternative minimum tax credit carryforward at December 31, 2002 of approximately $2.4 million. This credit carryforward may be carried forward indefinitely to offset any excess of regular tax liability over alternative minimum tax liability subject to certain separate company limitations. The alternative minimum tax credit has been fully offset by a valuation allowance since the Company does not foresee utilization of these credits.
6. Long-term Debt:
Third-party long-term debt consists of the following at December 31 (in millions):
|
|
2002
|
2001
|
|||||
|---|---|---|---|---|---|---|---|
| Senior Subordinated Notes | $ | 325.0 | $ | 250.0 | |||
| Senior Discount Notes | 66.9 | — | |||||
| Term Loan | 109.3 | 225.0 | |||||
| Revolving Credit Facility | — | 39.8 | |||||
| Other, including capital lease obligations | 0.1 | 0.3 | |||||
|
|
|
||||||
| 501.3 | 515.1 | ||||||
| Plus premium on Senior Subordinated Notes, net | 3.2 | — | |||||
| Less current portion | (1.2 | ) | (2.5 | ) | |||
|
|
|
||||||
| $ | 503.3 | $ | 512.6 | ||||
|
|
|
||||||
In November 2001, the Company issued $250 million aggregate principal amount of 10% Senior Subordinated Notes due August 15, 2011 (the "Notes") in a private offering pursuant to Rule 144A
F-16
under the Securities Act of 1933. The Notes may be redeemed in whole or in part from time to time, on or after August 15, 2006, at specified redemption prices. The Company's domestic restricted subsidiaries as of the issue date are the guarantors of the Notes, with restricted net assets of $230.4 million at December 31, 2002.
The Notes are general unsecured obligations ranking subordinate in right of payment to all existing and future senior debt. The proceeds from the issuance of the Notes were used to finance the Recapitalization and certain related costs. Interest on the Notes is payable semi-annually in cash on each February 15 and August 15.
On November 28, 2001, the Company entered into a $360 million credit facility (the "Credit Facility") with a syndicate of financial institutions. The Credit Facility allowed for an eight-year $225 million term loan. The term loan was fully drawn as of closing and used to finance the Recapitalization and certain related costs. In addition, the Credit Facility also provides a six and one-half year, $135 million revolving credit facility, $30 million of which may be drawn in Canadian dollars and $10 million of which may be drawn in British pound sterling. Additionally, the revolving credit facility includes a sub-limit for letters of credit in an amount not to exceed $50 million.
Borrowings under the Credit Facility incur interest at either the Eurodollar Rate (LIBOR) or the greater of a specified U.S. and Canadian prime lending rate or the federal funds effective rate plus 0.50% ("Base Rate") plus, in each case, a margin ranging from 1.75% to 3.50%, which margin is dependent upon the Company's leverage ratio, as determined quarterly. Interest on the Credit Facility is payable at least quarterly.
The Company had outstanding letters of credit of $8.6 million as of December 31, 2002. For each drawn letter of credit, the Company is required to pay a per annum participation fee ranging from 2.75% to 3.50%, depending on the Company's leverage ratio, plus other administrative charges. Additionally, the Company will pay a commitment fee ranging from 0.375% to 0.500% per annum, depending on the Company's leverage ratio, and is payable quarterly on the available portion of the revolving credit facility. As of December 31, 2002, additional borrowings of up to $126.4 million under the revolving credit facility were available for working capital and general corporate purposes, subject to certain conditions.
The term loan requires quarterly principal reductions. Also, the Company may be required to make mandatory additional principal reductions, based on the Company's excess cash flow and certain other events as described in the Credit Facility. No mandatory additional principal reductions were required in 2002.
On April 10, 2002, the Company completed an offering of $75.0 million aggregate principal amount of 10% Senior Subordinated Notes due 2011 (the "New Notes"). The New Notes were issued to the bondholders at a premium of $3.4 million, plus accrued interest of $1.1 million from February 15, 2002 and accordingly, the Company received gross proceeds of $79.5 million from the offering of the notes. The New Notes, together with the $250.0 million aggregate principal amount of Notes, are treated as a single class of securities under the Company's existing indenture. The proceeds from the offering of the New Notes, net of transaction costs, were used to repay borrowings under the Company's Credit Facility. In connection with the offering, the Company amended and restated the Credit Facility with respect to a reduction in the Term Loan to $150.0 million and a 0.75% reduction in the interest rate margin charged to the Company on the Term Loan. The Company also incurred a charge of approximately $5.3 million in April 2002, related to the write-off of the deferred financing costs associated with the refinancing of the original Term Loan.
F-17
In December 2002, certain holders of SHC preferred stock converted their preferred stock into notes. Those note holders then issued $123.5 million in aggregate principal amount at maturity of 12 3 / 4 % Senior Discount Notes due 2012 (the "Senior Discount Notes"), in a secondary trading transaction. No cash interest will accrue on the notes prior to December 15, 2007. The accreted value of each note will increase from the date of issuance until December 15, 2007 at a rate of 12 3 / 4 % per annum, reflecting the accrual of non-cash interest, such that the accreted value will equal the principal amount at maturity on December 15, 2007. The Senior Discount Notes may be redeemed in whole or in part from time to time, on or after December 15, 2007, at specified redemption prices. The Senior Discount Notes are general unsecured obligations ranking subordinate in right of payment to all existing and future debt. Cash interest will accrue on the Senior Discount Notes at a rate of 12 3 / 4 % per annum, beginning December 15, 2007. As of December 31, 2002, the accreted value of the Senior Discount Notes was $66.9 million.
The Credit Facility is principally secured by all existing and future assets of the Company, and requires the Company to maintain certain minimum financial covenants including minimum interest coverage ratio, a maximum total leverage ratio, and a maximum level of capital expenditures. The Credit Facility and the indentures governing the Notes and Senior Discount Notes limit the Company's ability, among other things, to: incur additional indebtedness or contingent obligations; pay dividends or make distributions to stockholders; repurchase or redeem stock; make investments; grant liens; make capital expenditures; enter into transactions with stockholders and affiliates; sell assets; and acquire the assets of, or merge or consolidate with, other companies. As of December 31, 2002, the Company was in compliance with each of its covenants.
Future minimum maturities of long-term debt, including the Senior Subordinated Notes, for the years ending December 31, are as follows (in millions):
| 2003 | $ | 1.2 | |
| 2004 | 1.1 | ||
| 2005 | 1.1 | ||
| 2006 | 1.1 | ||
| 2007 | 1.1 | ||
| Thereafter | 495.7 | ||
|
|
|||
| $ | 501.3 | ||
|
|
|||
As of December 31, 2002, the estimated fair value of the Senior Subordinated Notes, based on available trading information, was $357.5 million, and the estimated fair value of amounts outstanding under the Credit Facility and Senior Discount Notes approximated book value.
Prior to the Recapitalization, the Company maintained a 45 million Pound Sterling, five year debt facility (European Facility). The European Facility bore interest at LIBOR plus 1.139%. Commitment fees associated with the European Facility were 30.0 basis points. The European Facility was repaid in 2001 and replaced with a Note Payable to IMC, due on demand. The Note Payable to IMC was repaid in 2001.
Prior to the Recapitalization, the Company also maintained a 4.0 million Pound Sterling revolving credit facility (European Revolving Credit Facility). The European Revolving Credit Facility bore interest at a defined base rate plus 1.0%. The facility was repaid and terminated in 2001.
7. Pension Plans and Other Benefits:
The Company has two defined benefit pension plans for certain of its U.K. and U.S. employees. The size of the U.S. plan is not material to the U.K. plan taken as a whole. Benefits of the U.K. plan are based on a combination of years of service and compensation levels. The U.K. plan's assets consist
F-18
mainly of European equity securities. The Company's funding policy is to make the minimum annual contributions required by applicable regulations.
The Company makes actuarial assumptions that it believes are reasonable. Those assumptions for the years ended December 31, 2002, 2001 and 2000 include a discount rate of 5.5%, expected return on plan assets of 6.5%, and rate of compensation increase of 3.5%.
The following table sets forth pension obligations and plan assets for the Company's defined benefit plans, based on a September 30 measurement date, for the U.K. and U.S. plans, respectively, as of December 31 (in millions):
|
|
2002
|
2001
|
|||||
|---|---|---|---|---|---|---|---|
| Change in benefit obligation: | |||||||
| Benefit obligation as of January 1 | $ | 44.4 | $ | 45.1 | |||
| Service cost | 1.2 | 1.1 | |||||
| Interest cost | 2.6 | 2.4 | |||||
| Actuarial (gain) loss | 1.6 | (2.8 | ) | ||||
| Benefits paid | (1.1 | ) | (0.9 | ) | |||
| Currency fluctuation adjustment | 5.2 | (0.6 | ) | ||||
| Other | 0.1 | 0.1 | |||||
|
|
|
||||||
| Benefit obligation as of December 31 | $ | 54.0 | $ | 44.4 | |||
|
|
|
||||||
|
Change in plan assets: |
|
|
|
|
|
|
|
| Fair value as of January 1 | $ | 34.2 | $ | 46.2 | |||
| Actual return | (4.7 | ) | (11.4 | ) | |||
| Company contributions | 1.1 | 0.8 | |||||
| Currency fluctuation adjustment | 3.1 | (0.6 | ) | ||||
| Benefits paid | (1.1 | ) | (0.9 | ) | |||
| Other | 0.1 | 0.1 | |||||
|
|
|
||||||
| Fair value as of December 31 | $ | 32.7 | $ | 34.2 | |||
|
|
|
||||||
|
Funded status of the plans |
|
$ |
(21.1 |
) |
$ |
(10.2 |
) |
| Unrecognized net (gain) loss | 20.4 | 10.6 | |||||
| Unrecognized transition liability | 0.4 | 0.4 | |||||
|
|
|
||||||
| Prepaid (accrued) benefit cost | $ | (0.3 | ) | $ | 0.8 | ||
|
|
|
||||||
|
Amounts recognized in the statement of financial position consist of: |
|
|
|
|
|
|
|
| Prepaid (accrued) benefit cost | $ | (0.3 | ) | $ | 0.8 | ||
| Accrued benefit liability | (17.4 | ) | (8.2 | ) | |||
| Intangible asset | 0.4 | 0.5 | |||||
| Accumulated other comprehensive income | 17.0 | 7.7 | |||||
|
|
|
||||||
| Net amount recognized | $ | (0.3 | ) | $ | 0.8 | ||
|
|
|
||||||
F-19
The components of net pension expense were as follows for the years ended December 31 (in millions):
|
|
2002
|
2001
|
2000
|
|||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Service cost for benefits earned during the year | $ | 1.2 | $ | 1.1 | $ | 1.2 | ||||
| Interest cost on projected benefit obligation | 2.6 | 2.3 | 2.3 | |||||||
| Return on plan assets | (2.4 | ) | (3.0 | ) | (2.6 | ) | ||||
| Net amortization and deferral | 0.5 | 0.1 | 0.1 | |||||||
|
|
|
|
||||||||
| Net pension expense | $ | 1.9 | $ | 0.5 | $ | 1.0 | ||||
|
|
|
|
||||||||
The projected benefit obligations, accumulated benefit obligations, and fair value of plan assets for the defined benefit pension plans with accumulated benefit obligations in excess of the plans' assets were $54.0 million, $52.7 million, and $32.7 million, respectively, as of December 31, 2002, and $44.4 million, $41.5 million, and $34.2 million, respectively, as of December 31, 2001.
Two of the Company's defined benefit pension plans were merged into the IMC pension plan in 1999. During 2002, one of those plans was terminated and the remaining plan was separated from the IMC pension plan and is disclosed above as the U.S. plan. There were no contributions to the U.S. plans by the Company in the three years ended December 31, 2002.
The Company has defined contribution and pre-tax savings plans (Savings Plans) for certain of its employees. Under each of the Savings Plans, participants are permitted to defer a portion of their compensation. Company contributions to the Savings Plans are based on a percentage of employee contributions. Additionally, certain of the Company's Savings Plans have a profit sharing feature for salaried and non-union hourly employees. The Company contribution to the profit sharing feature is based on the employee's age and pay and the Company's financial performance. The following table summarizes the expense attributable to these Savings Plans for the years ended December 31 (in millions):
|
|
2002
|
2001
|
2000
|
||||||
|---|---|---|---|---|---|---|---|---|---|
| Savings Plans expense | $ | 3.3 | $ | 2.9 | $ | 2.4 | |||
8. Commitments and Contingencies:
The Company is involved in legal and administrative proceedings and claims of various types from normal Company activities. While any litigation contains an element of uncertainty, management presently believes that the outcome of each such proceeding or claim which is pending or known to be threatened, or all of them combined, will not have a material adverse effect on the Company's results of operations or financial position.
Leases: The Company leases certain property and equipment under non-cancelable operating leases for varying periods. The Company also leases various equipment under capital leases with historical cost of $0.4 million and accumulated depreciation of $0.2 million at December 31, 2002, that are included in property, plant, and equipment in the accompanying consolidated balance sheets.
F-20
The aggregate future minimum annual rentals under lease arrangements as of December 31, 2002, are as follows (in millions):
|
Calendar Year
|
Capital Leases
|
Operating Leases
|
||||
|---|---|---|---|---|---|---|
| 2003 | $ | 0.1 | $ | 5.9 | ||
| 2004 | — | 4.3 | ||||
| 2005 | — | 3.3 | ||||
| 2006 | — | 2.6 | ||||
| 2007 | — | 2.3 | ||||
| Thereafter | — | 8.5 | ||||
|
|
|
|||||
| 0.1 | $ | 26.9 | ||||
|
|
||||||
| Less amounts representing interest | — | |||||
|
|
||||||
| Present value of net minimum lease payments | $ | 0.1 | ||||
|
|
||||||
The following table summarizes rental expense, net of sublease income for the years ended December 31 (in millions):
|
|
2002
|
2001
|
2000
|
||||||
|---|---|---|---|---|---|---|---|---|---|
| Rental expense, net of sublease income | $ | 8.1 | $ | 7.7 | $ | 7.0 | |||
Royalties: The Company has various private, state and Canadian provincial leases associated with the salt and specialty potash businesses. The following table summarizes royalty expense related to these leases for the years ended December 31 (in millions):
|
|
2002
|
2001
|
2000
|
||||||
|---|---|---|---|---|---|---|---|---|---|
| Royalty expense | $ | 4.5 | $ | 5.3 | $ | 5.0 | |||
Purchase Commitments: In connection with the operations of the Company's facilities, the Company purchases electricity, steam and other raw materials from third parties under existing contracts, extending, in some cases, for multiple years. Purchases under these contracts are generally based on prevailing market prices. The Company's future minimum long-term purchase commitments are approximately $7.8 million annually from 2003 to 2007 and approximately $26.7 million thereafter.
Environmental Matters: At December 31, 2002 and 2001, the Company has recorded accruals of $2.0 million and $2.8 million, respectively, for estimated future costs associated with existing environmental exposures at certain of its facilities. The Company estimates that a significant portion of these accruals will be used over the next five years.
Purchase Agreement: During 2002, the Company amended an agreement with a supplier related to the purchase of salt from the supplier's chemical production facility in Tennessee. The Company has received a one-time cash payment of $8.0 million related to the amendment. The Company recognized $0.6 million as a net reduction to cost of sales in the Consolidated Statement of Operations resulting from recognition of a ratable portion of the cash received and the sale of certain assets. Approximately $6.3 million of the cash received may be recognized over the remaining life of the amended agreement, terminating December 2010, as certain conditions are met by the Company and the supplier. Alternatively, the Company may elect to resume purchasing salt from the supplier's facility. In that event, the Company would repay a ratable portion of the cash received.
F-21
9. Related Party Transactions:
The following related party transactions are in addition to those disclosed elsewhere in the notes to the combined and consolidated financial statements.
Transactions with IMC and its subsidiaries ("IMC affiliates") and Apollo and its subsidiaries ("Apollo affiliates") are considered related parties. The Company believes that all of the related party transactions approximate terms which would otherwise be negotiated by the Company with unrelated third parties.
In connection with the Recapitalization transaction on November 28, 2001, SHC redeemed $383.5 million of its common stock owned by IMC using $372.1 million in cash and issuing $11.3 million in notes payable to IMC ("Seller Notes"). The Seller Notes bear interest at 10.23% interest. Interest is payable semi-annually, with payments through November 28, 2006 through the issuance of promissory notes with terms the same as the Seller Notes. Interest payments after November 28, 2006 are payable with promissory notes or cash, at the option of SHC. The Seller Notes and any accrued and unpaid interest may be prepaid at any time and mature on the earlier of November 28, 2013 or an Exit Event, as defined. Should certain threshold equity returns not be achieved by Apollo affiliates, the Seller Notes and any accrued and unpaid interest (including the promissory notes) may be payable in whole or in part to Apollo affiliates rather than IMC. The Seller Notes, and all other obligations in respect of these Notes, are subordinated in right of payment to all indebtedness of SHC and any of its subsidiaries. Certain indebtedness of SHC may limit the ability of SHC to pay interest on the Seller Notes in cash.
During the year ended December 31, 2002, SHC and IMC reached an agreement related to the settlement of certain provisions of the agreement to transfer a controlling interest in CMG to SHC. As part of the settlement, SHC received approximately $13.0 million in cash and $8.4 million in Seller Notes plus accrued interest previously outstanding were cancelled. SHC recorded the proceeds as a capital contribution.
On August 29, 2002, SHC, Apollo, IMC and certain of their affiliates amended the Seller Notes in connection with certain post-closing requirements of the Recapitalization transaction. IMC returned $8.4 million of Seller Notes, plus $0.6 million of accrued interest, to SHC and as such, $9.0 million has been recorded as an equity contribution. Pursuant to this settlement, SHC retained a contingent obligation whereby the $9.0 million of notes plus accrued interest (now termed "Settlement Notes") ($9.3 million at December 31, 2002) may be payable, in whole or in part, to Apollo affiliates in the future should certain levels of equity returns not be achieved. At December 31, 2002, management believes the performance targets will be met and accordingly, no amounts payable related to the Settlement Notes have been included in the consolidated balance sheet. IMC retained $2.9 million of Seller Notes plus interest accrued from November 28, 2001 (the "New Seller Notes"). The Settlement Notes and the New Seller Notes contain the same terms and conditions as the Seller Notes.
The following table summarizes inventory sales and purchases between the Company and IMC affiliates for the years ended December 31 (in millions):
|
|
2002
|
2001
|
2000
|
||||||
|---|---|---|---|---|---|---|---|---|---|
| Inventory sales to IMC affiliates | $ | — | $ | 33.7 | $ | 46.4 | |||
| Inventory purchases from IMC affiliates | 19.0 | 16.5 | 30.1 | ||||||
Until November 28, 2001, the Company sold potash to IMC affiliates who marketed, distributed and sold this product to the agricultural industry. The Company was not charged for these services and received a discounted price for the product sales. The Company estimates its results would have been
F-22
as follows, had the Company provided its own sales and marketing resources and directly sold its potash product for the years ended December 31 (in millions, unaudited):
|
|
2001
|
2000
|
|||||
|---|---|---|---|---|---|---|---|
| Gross sales | $ | 528.4 | $ | 514.5 | |||
| Operating earnings (loss) | 60.3 | (552.3 | ) | ||||
Subsequent to November 28, 2001, the Company entered into an agreement with IMC whereby the Company markets SOP produced by IMC at their New Mexico facility as an agent. The Company recognized approximately $0.5 million in fees from IMC for the year ended December 31, 2002.
Sifto had a note payable, due on demand, with IMC that bore interest at 10.0%. At December 31, 2000 approximately $71.6 million was outstanding on this note. NASC had a note payable, due on demand, with IMC that bore interest at 10.0%. The Company participated in HCNA's revolving credit agreement with IMC that provided the Company certain cash management services. The outstanding balance bore interest at one-month LIBOR + 2.75% (9.37% at December 31, 2000). These notes and revolving credit agreement were repaid through a capital contribution from IMC prior to the date of Recapitalization. No amounts were outstanding as of or after December 31, 2001.
Sifto had a note payable, due on demand, with IMC Potash which bore interest at the 30 day CD rate, plus 0.25% as of the first day of each month (6.95% at December 31, 2000). SUL had a note payable, due December 31, 2003, with IMC which bore interest at LIBOR plus 0.65% as of the first day of each quarter (6.775% at December 31, 2000). During 2001, CMGE entered into a note payable, due on December 31, 2001, with IMC, which bore interest at 6.69%. These notes were repaid as of the date of Recapitalization. No amounts were outstanding as of or after December 31, 2001.
The following table summarizes the Company's interest income and expense with IMC and IMC affiliates for the years ended December 31 (in millions):
|
|
2002
|
2001
|
2000
|
||||||
|---|---|---|---|---|---|---|---|---|---|
| Interest income from IMC | $ | — | $ | 2.9 | $ | 3.4 | |||
| Interest expense to IMC | $ | 0.9 | $ | 10.8 | $ | 12.5 | |||
IMC has provided certain management services to the Company. The Company estimates the cost of these services to be $0.7 million for each of the years ended December 31, 2001 and 2000. These costs have been included in the Company's results for each period and have discontinued effective with the Recapitalization. Services provided by IMC included tax, treasury and cash management, risk management, information systems and certain employee benefit administration costs. These estimates are not necessarily indicative of the expenses that would have resulted if the Company had been operated as a separate entity or the future results of the Company.
The Company leases various railcars from IMC affiliates under arrangements expiring through December 31, 2014. The following table summarizes the lease amounts expensed for the years ended December 31 (in millions):
|
|
2002
|
2001
|
2000
|
||||||
|---|---|---|---|---|---|---|---|---|---|
| Railcar lease expense | $ | 0.8 | $ | 0.8 | $ | 0.4 | |||
During the years ended December 31, 2002 and 2001, the Company recorded management fee charges of $0.9 million and $0.1 million, respectively, from Apollo. Additionally, during the year ended December 31, 2001, the Company recorded a $7.5 million charge to Apollo for transaction fees related to the Recapitalization.
F-23
10. Commodity Derivative Instruments and Hedging Activities:
During the fourth quarter of 2002, the Company has adopted a policy of hedging natural gas prices through the use of swap agreements in order to protect against commodity price fluctuations. The Company does not engage in trading activities with these financial instruments.
Effective January 1, 2001, the Company adopted SFAS No. 133 "Accounting for Derivative Instruments and Hedging Activity," which established accounting and reporting standards requiring that every derivative instrument be recorded on the balance sheet as either an asset or liability measured at its fair value. SFAS No. 133 requires that changes in the derivative's fair value be recognized currently in earnings unless specific hedge accounting criteria are met. Special accounting for qualifying hedges allows a derivative's gains and losses to offset related results from the hedged item on the income statement. Companies must formally document, designate, and assess the effectiveness of transactions that receive hedge accounting. All derivative instruments held by the Company as of December 31, 2002 qualify as cash flow hedges. For derivatives classified as cash flow hedges, changes in fair value are recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of any change in the fair value of a derivative designated as a hedge, if any, is immediately recognized in earnings. Hedge effectiveness is measured quarterly based on the change in relative fair value between the derivative contract and the hedged item over time. During the fourth quarter of 2002, we recognized an increase in the net derivative asset and an associated increase in accumulated other comprehensive income totaling approximately $0.1 million. No derivative instruments existed prior to the fourth quarter of 2002.
11. Operating Segments:
The Company's reportable segments are strategic business units that offer different products and services. They are managed separately because each business requires different technology and marketing strategies.
The Company has two reportable segments: Salt and Potash. Salt produces salt for use in road deicing, food processing, water softeners, and agricultural and industrial applications. Potash crop nutrients and industrial grade potash are produced and marketed through the Potash segment.
The accounting policies of the segments are the same as those described in the summary of significant accounting policies. All intersegment sales prices are market-based. The Company evaluates performance based on operating earnings of the respective segments. The notes to the combined and consolidated financial statements include detail related to special charges and should be referred to when viewing the segment information herein.
F-24
Segment information as of and for the years ended December 31, is as follows (in millions):
|
2002
|
Salt
|
Potash
|
Other
(d)
|
Total
|
||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Sales from external customers | $ | 452.5 | $ | 50.1 | $ | — | $ | 502.6 | ||||
| Intersegment sales | — | 11.4 | (11.4 | ) | — | |||||||
| Cost of sales — shipping and handling | 130.2 | 7.3 | — | 137.5 | ||||||||
| Operating earnings (loss) (a) | 79.4 | 6.0 | (7.8 | ) | 77.6 | |||||||
| Depreciation, depletion and amortization | 29.2 | 7.9 | — | 37.1 | ||||||||
| Total assets | 509.8 | 116.0 | 18.3 | 644.1 | ||||||||
| Capital expenditures | 15.3 | 4.2 | — | 19.5 | ||||||||
|
2001
|
Salt
|
Potash
|
Other
(d)
|
Total
|
||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Sales from external customers | $ | 485.0 | $ | 38.2 | $ | — | $ | 523.2 | ||||
| Intersegment sales | — | 12.2 | (12.2 | ) | — | |||||||
| Cost of sales — shipping and handling | 143.2 | — | — | 143.2 | ||||||||
| Operating earnings (loss) (b) | 77.0 | 4.1 | (24.0 | ) | 57.1 | |||||||
| Depreciation, depletion and amortization | 24.5 | 8.1 | 0.2 | 32.8 | ||||||||
| Total assets | 514.2 | 120.9 | 20.5 | 655.6 | ||||||||
| Capital expenditures | 38.5 | 4.5 | — | 43.0 | ||||||||
|
2000
|
Salt
|
Potash
|
Other
(d)
|
Total
|
|||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Sales from external customers | $ | 465.1 | $ | 44.1 | $ | — | $ | 509.2 | |||||
| Intersegment sales | — | 9.4 | (9.4 | ) | — | ||||||||
| Cost of sales — shipping and handling | 140.0 | — | — | 140.0 | |||||||||
| Operating earnings (loss) (c) | (415.5 | ) | (138.8 | ) | (0.9 | ) | (555.2 | ) | |||||
| Depreciation, depletion and amortization (c) | 509.6 | 151.3 | — | 660.9 | |||||||||
| Total assets | 512.8 | 121.9 | 1.3 | 636.0 | |||||||||
| Capital expenditures | 30.0 | 3.7 | — | 33.7 | |||||||||
Financial information relating to the Company's operations by geographic area for the years ended December 31, is as follows (in millions):
|
Sales
|
2002
|
2001
|
2000
|
||||||
|---|---|---|---|---|---|---|---|---|---|
| United States | $ | 345.2 | $ | 339.1 | $ | 337.0 | |||
| Canada | 90.8 | 99.4 | 98.3 | ||||||
| United Kingdom | 60.0 | 79.4 | 66.3 | ||||||
| Other | 6.6 | 5.3 | 7.6 | ||||||
|
|
|
|
|||||||
| $ | 502.6 | $ | 523.2 | $ | 509.2 | ||||
|
|
|
|
|||||||
F-25
Financial information relating to the Company's long-lived assets, including deferred financing costs and other long-lived assets, by geographic area as of December 31 (in millions):
|
Long-Lived Assets
|
2002
|
2001
|
||||
|---|---|---|---|---|---|---|
| United States | $ | 236.2 | $ | 251.5 | ||
| Canada | 110.6 | 102.1 | ||||
| United Kingdom | 93.7 | 96.8 | ||||
|
|
|
|||||
| $ | 440.5 | $ | 450.4 | |||
|
|
|
|||||
12. Redeemable Preferred Stock:
In November 2001, the Board of Directors of the Company authorized 73,704 shares of 133/4% Series A Cumulative Senior Redeemable Exchangeable Preferred Stock due 2013 ("Redeemable Preferred Stock"), par value $0.01 per share, with liquidation preference of $1,000 per share at the time of issuance. As part of the total Redeemable Preferred Stock issued, 1,270 shares were issued to an employee trust in consideration of, and to secure, the Company's obligations to issue preferred stock under an employee deferred compensation plan. The Redeemable Preferred Stock is non-voting with dividends payable quarterly, in arrears in kind. Certain indebtedness obligations of the Company limit SHC's ability to pay cash dividends on preferred stock currently.
In December 2002, certain holders of SHC preferred stock converted their preferred stock into notes (see Note 6). As of December 31, 2002, 16,462 shares remain issued and outstanding.
On November 28, 2013, or earlier in certain instances involving a sale of a substantial amount of the Company's common stock, the Company is required to redeem all outstanding shares of the Redeemable Preferred Stock at a price equal to the liquidation preference plus accrued and unpaid dividends up to that date. The Company may, at its option, at any time, exchange all of the then outstanding shares of Redeemable Preferred Stock for Debentures, subject to the requirements and limitations of its existing indebtedness obligations.
13. Common Stock and Stock Options:
As of November 28, 2001, SHC had 56,629,700 shares of common stock, par value of $1.00 per share, issued and outstanding. As part of the Recapitalization, 49,634,000 shares of common stock were redeemed and cancelled leaving 6,995,700 shares issued and outstanding. As part of the total common shares issued, 120,549 shares were issued to an employee trust in consideration of, and to secure, the Company's obligations to issue common stock under an employee deferred compensation plan. Each outstanding share is entitled to one vote per share. No dividends on common shares may be declared or paid unless the cumulative preferred dividends on all outstanding shares of the Redeemable Preferred Stock have been fully paid for all past dividend periods. Certain indebtedness obligations of the Company also limit SHC's ability to pay cash dividends on common stock.
On November 28, 2001, SHC adopted a stock option plan pursuant to which options with respect to a total of 419,750 shares of SHC's common stock are available for grant to employees of, consultants to, or directors of SHC or the Company. The board of directors of SHC administers the option plan. The right to grant options under the plan expires November 2011, the tenth anniversary of the closing date of the Recapitalization. Options granted under the plan are or will be either non-qualified or incentive stock options. Options are granted in amounts and at such times and to such eligible persons as determined by the board of directors of SHC.
One-half of the options granted to employees will vest in varying amounts from one to four years depending on the terms of the individual option agreements. However, generally upon termination of a grantee's employment within one year following the sale of the Company, all of the time vesting
F-26
options allocated to such terminated employee shall vest immediately. The other one-half of the options granted to employees are performance options and will vest on November 28, 2009, the eighth anniversary of the closing date of the Recapitalization. However, vesting of all or a portion of the performance options may be accelerated upon the consummation of a sale of the Company. Options granted to members of the board of directors of the Company vest at the time of grant. Options expire on the thirtieth day immediately following the eighth anniversary of issuance.
The weighted-average exercise price approximates the weighted-average grant-date fair value of options granted during 2002 and 2001. A summary of the Company's stock option activity, and related information is as follows:
|
|
Number of
options |
Weighted-average
exercise price |
|||
|---|---|---|---|---|---|
| Outstanding at December 31, 2000 | — | $ | — | ||
| Granted | 123,847 | 10.00 | |||
| Exercised | — | — | |||
| Cancelled / Expired | — | — | |||
|
|
|
||||
| Outstanding at December 31, 2001 | 123,847 | 10.00 | |||
|
Granted |
|
225,284 |
|
|
10.53 |
| Exercised | — | — | |||
| Cancelled / Expired | — | — | |||
|
|
|
||||
| Outstanding at December 31, 2002 | 349,131 | $ | 10.34 | ||
|
|
|
||||
At December 31, 2002, 89,579 options with a weighted-average exercise price of $11.13 were fully vested and exercisable. At December 31, 2001, no options were vested. The following table summarizes information about options outstanding at December 31, 2002:
|
|
Options outstanding
|
Options exercisable
|
||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Range of exercise prices
|
Number
outstanding |
Weighted-
average remaining contractual life (years) |
Weighted-
average exercise price |
Number
outstanding |
Weighted-
average exercise price |
|||||||
| $10.00 | 339,605 | 7.13 | $ | 10.00 | 81,826 | $ | 10.00 | |||||
| $10.01 – $23.11 | 9,526 | 7.87 | 22.62 | 7,753 | 23.04 | |||||||
|
|
|
|||||||||||
| Totals | 349,131 | 7.15 | 10.34 | 89,579 | 11.13 | |||||||
|
|
|
|||||||||||
F-27
14. Other Comprehensive Income:
The following tables provide additional detail related to amounts recorded in Other Comprehensive Income:
|
|
Unfunded
Pension Losses |
Unrealized
gains on cash flow hedges |
Foreign
currency adjustments |
Accumulated
other comprehensive income |
||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Balance at November 28, 2001 | $ | — | $ | — | $ | — | $ | — | ||||||
| 2001 changes | (5.4 | ) | — | 3.0 | (2.4 | ) | ||||||||
|
|
|
|
|
|||||||||||
| Balance at December 31, 2001 | (5.4 | ) | — | 3.0 | (2.4 | ) | ||||||||
| 2002 changes | (6.5 | ) | 0.1 | 8.9 | 2.5 | |||||||||
|
|
|
|
|
|||||||||||
| Balance at December 31, 2002 | $ | (11.9 | ) | $ | 0.1 | $ | 11.9 | $ | 0.1 | |||||
|
|
|
|
|
|||||||||||
|
For the year ended December 31, 2002:
|
Before tax
amount |
Tax
(expense) benefit |
Net-of-tax
amount |
||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Minimum pension liability adjustment | $ | (9.3 | ) | $ | 2.8 | $ | (6.5 | ) | |||
| Gas hedging adjustment | 0.2 | (0.1 | ) | 0.1 | |||||||
| Foreign currency translation adjustment | 8.9 | — | 8.9 | ||||||||
|
|
|
|
|||||||||
| Other comprehensive income | $ | (0.2 | ) | $ | 2.7 | $ | 2.5 | ||||
|
|
|
|
|||||||||
15. Quarterly Results (Unaudited) (a) (in millions):
|
Quarter
|
First
|
Second
|
Third
|
Fourth
|
Year
|
||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2002 | |||||||||||||||
| Sales | $ | 162.4 | $ | 82.3 | $ | 92.2 | $ | 165.7 | $ | 502.6 | |||||
| Cost of sales—shipping and handling | 48.5 | 20.2 | 22.5 | 46.3 | 137.5 | ||||||||||
| Gross profit | 39.6 | 16.4 | 16.4 | 53.5 | 125.9 | ||||||||||
| Operating earnings (loss) (b) | 27.5 | 4.5 | 3.5 | 42.1 | 77.6 | ||||||||||
| Net income (loss) | 11.5 | (7.5 | ) | (3.7 | ) | 18.6 | 18.9 | ||||||||
|
Quarter
|
First
|
Second
|
Third
|
Fourth
(c)
|
Year
(c)
|
||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2001 | |||||||||||||||
| Sales | $ | 197.0 | $ | 77.7 | $ | 90.9 | $ | 157.6 | $ | 523.2 | |||||
| Cost of sales — shipping and handling | 59.1 | 17.6 | 23.0 | 43.5 | 143.2 | ||||||||||
| Gross profit | 49.8 | 14.9 | 11.9 | 46.4 | 123.0 | ||||||||||
| Operating earnings (loss) | 40.1 | 5.3 | 2.4 | 9.3 | 57.1 | ||||||||||
| Net income (loss) | 23.0 | — | (0.6 | ) | (3.4 | ) | 19.0 | ||||||||
F-28
We have not authorized any dealer, salesman or other person to give any information or to make any representation other than those contained in this prospectus. You must not rely upon any information or representation not contained or incorporated by reference in this prospectus as if we had authorized it. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities other than the registered securities to which it relates, nor does this prospectus constitute an offer to sell or a solicitation of an offer to buy securities in any jurisdiction to any person to whom it is unlawful to make such offer or solicitation in such jurisdiction.
| Cautionary Note Regarding Forward-Looking Statements and Industry Data | i | |
| Market and Industry Data and Forecasts | ii | |
| Where You Can Find More Information | iii | |
| Prospectus Summary | 1 | |
| Risk Factors | 14 | |
| The Exchange Offer | 23 | |
| Use of Proceeds | 32 | |
| Capitalization | 33 | |
| Selected Combined and Consolidated Financial Information | 34 | |
| Management's Discussion and Analysis of Financial Condition and Results of Operations | 36 | |
| Business | 51 | |
| Management | 66 | |
| Principal Stockholders | 72 | |
| Certain Related Party Transactions | 74 | |
| Description of Certain Indebtedness and Preferred Stock | 77 | |
| Description of the Exchange Notes | 80 | |
| Book-Entry; Delivery and Form | 122 | |
| Plan of Distribution | 124 | |
| Certain United States Federal Income Tax Consequences | 125 | |
| Legal Matters | 131 | |
| Experts | 131 | |
| Index to Combined and Consolidated Financial Statements | F-1 |
Until , 2003, all dealers effecting transactions in the exchange notes, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
SALT HOLDINGS CORPORATION
Offer to Exchange $123,500,000 aggregate
principal amount at maturity of our
12
3
/
4
% Senior Discount Notes due 2012
which have been registered under the
Securities Act of 1933, as amended, for
any and all of our outstanding 12
3
/
4
%
Senior Discount Notes due 2012.
PROSPECTUS
, 2003
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
Article Sixth of Salt Holdings' Certificate of Incorporation eliminates the liability of directors to Salt Holdings or its stockholders, except for liabilities related to breach of duty of loyalty, actions or omissions not in good faith and certain other liabilities.
Section 102(b)(7) of the General Corporation Law of the State of Delaware (the "DGCL"), provides that a corporation may eliminate or limit the personal liability of a director (or certain persons who, pursuant to the provisions of the certificate of incorporation, exercise or perform duties conferred or imposed upon directors by the DGCL) to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, provided that such provision shall not eliminate or limit the liability of a director:
The certificate of incorporation and bylaws of Salt Holdings provide for the indemnification of its directors, officers, employees and agents to the fullest extent permitted by the DGCL and their respective certificate of incorporation. Section 145 of the DGCL provides, in substance, that a Delaware corporation has the power, under specified circumstances, to indemnify their directors, officers, employees and agents in connection with actions, suits or proceedings brought against them by a third party or in the right of the corporation, by reason of the fact that they were or are such directors, officers, employees or agents, against expenses incurred in any such action, suit or proceeding. The DGCL also provides that Delaware corporations may purchase insurance on behalf of any such director, officer, employee or agent. Compass Minerals has purchased and maintains insurance on behalf of Salt Holdings' directors and officers.
Item 21. Exhibits and Financial Statement Schedules.
(A) Exhibits
The following is a list of all the exhibits filed as part of the Registration Statement.
|
Exhibit
No. |
Description of Exhibit
|
|
|---|---|---|
| 2.1 | Agreement and Plan of Merger, dated October 13, 2001, among IMC Global Inc., Salt Holdings Corporation, YBR Holdings LLC and YBR Acquisition Corp. | |
|
2.2 |
|
Amendment No. 1 to Agreement and Plan of Merger, dated November 28, 2001, among IMC Global Inc., Salt Holdings Corporation, YBR Holdings LLC and YBR Acquisition Corp. |
|
3.1 |
|
Amended and Restated Certificate of Incorporation of Salt Holdings Corporation. |
|
3.2 |
|
By-laws of Salt Holdings Corporation. |
|
4.1 |
|
Indenture, dated December 20, 2002, between Salt Holdings Corporation, as issuer, and The Bank of New York, as trustee. |
|
|
|
|
II-1
|
4.2 |
|
Form of Initial Note (included as Exhibit A to Exhibit 4.1). |
|
4.3 |
|
Form of Exchange Note (included as Exhibit B to Exhibit 4.1). |
|
4.4 |
|
Registration Rights Agreement, dated December 20, 2002, between Salt Holdings Corporation, as issuer, and Credit Suisse First Boston Corporation, J.P. Morgan Securities Inc. and Deutsche Bank Securities Inc., as initial purchasers. |
|
5.1 |
|
Opinion of Latham & Watkins LLP, special counsel to Salt Holdings Corporation, dated April 17, 2003. |
|
10.1 |
|
Salt mining lease, dated November 9, 2001, between the Province of Ontario, as lessor, and Sifto Canada Inc. as lessee. |
|
10.2 |
|
Salt and Surface Agreement, dated June 21, 1961, by and between John Taylor Caffery, as agent for Marcie Caffery Gillis, Marcel A. Gillis, Bethia Caffery McCay, Percey McCay, Mary Louise Caffery Ellis, Emma Caffery Jackson, Edward Jackson, Liddell Caffery, Marion Caffery Campbell, Martha Gillis Restarick, Katherine Baker Senter, Caroline Baker, Bethia McCay Brown, Donelson Caffery McCay, Lucius Howard McCurdy Jr., John Andersen McCurdy, Edward Rader Jackson III, individually and as trustee for Donelson Caffery Jackson, and the J.M. Burguieres Company, LTD., and Carey Salt Company as amended by Act of Amendment to Salt Lease, dated May 30, 1973, as further amended by Agreement, dated November 21, 1990, and as further amended by Amendment to Salt and Surface lease, dated July 1, 1997. |
|
10.3 |
|
Royalty Agreement, dated September 1, 1962, between IMC Kalium Ogden Corp. and the Utah State Land Board. |
|
10.4 |
|
Amended and Restated Credit Agreement, dated April 10, 2002, among Salt Holdings Corporation, Compass Minerals Group, Inc., as U.S. borrower, Sifto Canada Inc., as Canadian borrower, Salt Union Limited, as U.K. borrower, JPMorgan Chase Bank, as administrative agent, J.P. Morgan Bank Canada, as Canadian agent, Chase Manhattan International Limited, as U.K. agent, J.P. Morgan Securities Inc., as joint advisor, co-lead arranger and joint bookrunner, Deutsche Banc Alex. Brown Inc., as syndication agent, joint advisor, co-lead arranger and joint-bookrunner, Credit Suisse First Boston Corporation, as co-documentation agent, and Credit Lyonnais, as co-documentation agent. |
|
10.5 |
|
Amendment No. 1 to the Amended and Restated Credit Agreement, dated December 19, 2002, among Salt Holdings Corporation, Compass Minerals Group, Inc., as U.S. borrower, Sifto Canada Inc., as Canadian borrower, Salt Union Limited, as U.K. borrower, JPMorgan Chase Bank, as administrative agent, J.P. Morgan Bank Canada, as Canadian agent, Chase Manhattan International Limited, as U.K. agent, J.P. Morgan Securities Inc., as joint advisor, co-lead arranger and joint bookrunner, Deutsche Banc Alex. Brown Inc., as syndication agent, joint advisor, co-lead arranger and joint bookrunner, Credit Suisse First Boston Corporation, as co-documentation agent, and Credit Lyonnais, as co-documentation agent. |
|
10.6 |
|
U.S. Collateral and Guaranty Agreement, dated November 28, 2001, among Salt Holdings Corporation, Compass Minerals Group, Inc., Carey Salt Company, Great Salt Lake Minerals Corporation, GSL Corporation, NAMSCO Inc., North American Salt Company and JPMorgan Chase Bank, as collateral agent. |
|
10.7 |
|
U.S. Collateral Assignment, dated November 28, 2001, among Salt Holdings Corporation, Compass Minerals Group, Inc. and JPMorgan Chase Bank. |
|
|
|
|
II-2
|
10.8 |
|
Foreign Guaranty, dated November 28, 2001, among Sifto Canada Inc., Salt Union Limited, IMC Global (Europe) Limited, IMC Global (UK) Limited, London Salt Limited, Direct Salt Supplies Limited, J.T. Lunt & Co. (Nantwich) Limited, and JPMorgan Chase Bank, as collateral agent. |
|
10.9 |
|
2001 Stock Option Plan of Salt Holdings Corporation, as adopted by the Board of Directors of Salt Holdings Corporation on November 28, 2001. |
|
10.10 |
|
Salt Holdings Corporation Senior Executives' Deferred Compensation Plan, effective as October 8, 2001. |
|
10.11 |
|
Service Agreement, dated September 1, 1997, between Salt Union Limited and David J. Goadby. |
|
10.12 |
|
Investor Rights Agreement, dated November 28, 2001, between Salt Holdings Corporation and the holders of securities of Salt Holdings Corporation party thereto. |
|
10.13 |
|
Stock Rights Agreement, dated as of November 28, 2001, among Salt Holdings Corporation, Apollo Management V L.P., each of the stockholders listed on Schedule A attached thereto and IMC Global Inc. |
|
10.14 |
|
Management Consulting Agreement, dated November 28, 2001, between Salt Holdings Corporation and Apollo Management V L.P. |
|
10.15 |
|
Master Assignment Agreement, dated April 10, 2002, among Compass Minerals Group, Inc., a Delaware corporation, the lenders party thereto and JPMorgan Chase Bank, as administrative agent for the Existing Lenders (as defined in the Master Assignment Agreement). |
|
10.16 |
|
Employment Agreement, dated March 12, 2002, between Compass Minerals Group, Inc. and Michael E. Ducey. |
|
10.17 |
|
Certificate of Designation for the 133/4% Series A Cumulative Senior Redeemable Exchangeable Preferred Stock. |
|
12.1 |
|
Statement of Computation of Ratio of Earnings to Fixed Charges. |
|
21.1 |
|
Subsidiaries of the Registrant. |
|
23.1 |
|
Consent of Latham & Watkins LLP, special counsel to Salt Holdings Corporation (included in Exhibit 5.1). |
|
23.2 |
|
Consent of Ernst & Young LLP. |
|
23.3 |
|
Consent of PricewaterhouseCoopers LLP. |
|
24.1 |
|
Power of Attorney (included on signature pages attached hereto). |
|
25.1 |
|
Statement of Eligibility of The Bank of New York, as trustee, on Form T-1. |
|
99.1 |
|
Form of Letter of Transmittal. |
|
99.2 |
|
Form of Notice of Guaranteed Delivery. |
|
99.3 |
|
Form of Letter from Salt Holdings Corporation to Registered Holders and DTC Participants. |
|
99.4 |
|
Form of Instructions from Beneficial Owners to Registered Holders and DTC Participants. |
|
99.5 |
|
Form of Letter to Clients. |
|
99.6 |
|
Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. |
II-3
(B) Financial Statement Schedules
SCHEDULE II—VALUATION RESERVES
Salt Holdings Corporation
December 31, 2002, 2001 and 2000
(in millions)
|
Description
|
Balance at
the Beginning of the Year |
Additions
Charged to Expense |
Deductions(1)
|
Other(2)
|
Balance
at the End of the Year |
|||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Deducted from Receivables—Allowance for Doubtful Accounts | ||||||||||||||||
| 2002 | $ | 2.0 | $ | 0.0 | $ | (0.4 | ) | $ | — | $ | 1.6 | |||||
| 2001 | 1.8 | 1.6 | (1.4 | ) | — | 2.0 | ||||||||||
| 2000 | 1.7 | 0.7 | (0.6 | ) | — | 1.8 | ||||||||||
| Deducted from Deferred Income Taxes—Valuation Allowance | ||||||||||||||||
| 2002 | $ | 44.3 | $ | — | $ | (2.9 | ) | $ | — | $ | 41.4 | |||||
| 2001 | 48.3 | — | — | (4.0 | ) | 44.3 | ||||||||||
| 2000 | 48.3 | — | — | — | 48.3 | |||||||||||
Item 22. Undertakings
The Registrant hereby undertakes:
II-4
securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
II-5
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of New York, New York, on April 17, 2003.
| SALT HOLDINGS CORPORATION | ||||
|
|
|
By: |
|
/s/ MICHAEL E. DUCEY |
| Name: Michael E. Ducey | ||||
| Title: President and Chief Executive Officer | ||||
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Michael E. Ducey, jointly and severally, each in his own capacity, his true and lawful attorney-in-fact, with full power of substitution, for him and his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto such said attorney-in-fact and agents with full power and authority to do so and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and as of the dates indicated.
|
/s/
MICHAEL E. DUCEY
Michael E. Ducey |
President, Chief Executive Officer and Director | April 17, 2003 | ||
|
/s/ RODNEY L. UNDERDOWN Rodney L. Underdown |
|
Chief Financial Officer and Vice President |
|
April 17, 2003 |
|
/s/ ROBERT H. FALK Robert H. Falk |
|
Director |
|
April 17, 2003 |
|
/s/ JOSHUA J. HARRIS Joshua J. Harris |
|
Director |
|
April 17, 2003 |
|
/s/ SCOTT M. KLEINMAN Scott M. Kleinman |
|
Director |
|
April 17, 2003 |
II-6
|
Exhibit
No. |
Description of Exhibit
|
|
|---|---|---|
| 2.1 | Agreement and Plan of Merger, dated October 13, 2001, among IMC Global Inc., Salt Holdings Corporation, YBR Holdings LLC and YBR Acquisition Corp. | |
|
2.2 |
|
Amendment No. 1 to Agreement and Plan of Merger, dated November 28, 2001, among IMC Global Inc., Salt Holdings Corporation, YBR Holdings LLC and YBR Acquisition Corp. |
|
3.1 |
|
Amended and Restated Certificate of Incorporation of Salt Holdings Corporation. |
|
3.2 |
|
By-laws of Salt Holdings Corporation. |
|
4.1 |
|
Indenture, dated December 20, 2002, between Salt Holdings Corporation, as issuer, and The Bank of New York, as trustee. |
|
4.2 |
|
Form of Initial Note (included as Exhibit A to Exhibit 4.1). |
|
4.3 |
|
Form of Exchange Note (included as Exhibit B to Exhibit 4.1). |
|
4.4 |
|
Registration Rights Agreement, dated December 20, 2002, between Salt Holdings Corporation, as issuer, and Credit Suisse First Boston Corporation, J.P. Morgan Securities Inc. and Deutsche Bank Securities Inc., as initial purchasers. |
|
5.1 |
|
Opinion of Latham & Watkins LLP, special counsel to Salt Holdings Corporation, dated April 17, 2003. |
|
10.1 |
|
Salt mining lease, dated November 9, 2001, between the Province of Ontario, as lessor, and Sifto Canada Inc. as lessee. |
|
10.2 |
|
Salt and Surface Agreement, dated June 21, 1961, by and between John Taylor Caffery, as agent for Marcie Caffery Gillis, Marcel A. Gillis, Bethia Caffery McCay, Percey McCay, Mary Louise Caffery Ellis, Emma Caffery Jackson, Edward Jackson, Liddell Caffery, Marion Caffery Campbell, Martha Gillis Restarick, Katherine Baker Senter, Caroline Baker, Bethia McCay Brown, Donelson Caffery McCay, Lucius Howard McCurdy Jr., John Andersen McCurdy, Edward Rader Jackson III, individually and as trustee for Donelson Caffery Jackson, and the J.M. Burguieres Company, LTD., and Carey Salt Company as amended by Act of Amendment to Salt Lease, dated May 30, 1973, as further amended by Agreement, dated November 21, 1990, and as further amended by Amendment to Salt and Surface lease, dated July 1, 1997. |
|
10.3 |
|
Royalty Agreement, dated September 1, 1962, between IMC Kalium Ogden Corp. and the Utah State Land Board. |
|
10.4 |
|
Amended and Restated Credit Agreement, dated April 10, 2002, among Salt Holdings Corporation, Compass Minerals Group, Inc., as U.S. borrower, Sifto Canada Inc., as Canadian borrower, Salt Union Limited, as U.K. borrower, JPMorgan Chase Bank, as administrative agent, J.P. Morgan Bank Canada, as Canadian agent, Chase Manhattan International Limited, as U.K. agent, J.P. Morgan Securities Inc., as joint advisor, co-lead arranger and joint bookrunner, Deutsche Banc Alex. Brown Inc., as syndication agent, joint advisor, co-lead arranger and joint-bookrunner, Credit Suisse First Boston Corporation, as co-documentation agent, and Credit Lyonnais, as co-documentation agent. |
|
|
|
|
|
10.5 |
|
Amendment No. 1 to the Amended and Restated Credit Agreement, dated December 19, 2002, among Salt Holdings Corporation, Compass Minerals Group, Inc., as U.S. borrower, Sifto Canada Inc., as Canadian borrower, Salt Union Limited, as U.K. borrower, JPMorgan Chase Bank, as administrative agent, J.P. Morgan Bank Canada, as Canadian agent, Chase Manhattan International Limited, as U.K. agent, J.P. Morgan Securities Inc., as joint advisor, co-lead arranger and joint bookrunner, Deutsche Banc Alex. Brown Inc., as syndication agent, joint advisor, co-lead arranger and joint bookrunner, Credit Suisse First Boston Corporation, as co-documentation agent, and Credit Lyonnais, as co-documentation agent. |
|
10.6 |
|
U.S. Collateral and Guaranty Agreement, dated November 28, 2001, among Salt Holdings Corporation, Compass Minerals Group, Inc., Carey Salt Company, Great Salt Lake Minerals Corporation, GSL Corporation, NAMSCO Inc., North American Salt Company and JPMorgan Chase Bank, as collateral agent. |
|
10.7 |
|
U.S. Collateral Assignment, dated November 28, 2001, among Salt Holdings Corporation, Compass Minerals Group, Inc. and JPMorgan Chase Bank. |
|
10.8 |
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Foreign Guaranty, dated November 28, 2001, among Sifto Canada Inc., Salt Union Limited, IMC Global (Europe) Limited, IMC Global (UK) Limited, London Salt Limited, Direct Salt Supplies Limited, J.T. Lunt & Co. (Nantwich) Limited, and JPMorgan Chase Bank, as collateral agent. |
|
10.9 |
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2001 Stock Option Plan of Salt Holdings Corporation, as adopted by the Board of Directors of Salt Holdings Corporation on November 28, 2001. |
|
10.10 |
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Salt Holdings Corporation Senior Executives' Deferred Compensation Plan, effective as October 8, 2001. |
|
10.11 |
|
Service Agreement, dated September 1, 1997, between Salt Union Limited and David J. Goadby. |
|
10.12 |
|
Investor Rights Agreement, dated November 28, 2001, between Salt Holdings Corporation and the holders of securities of Salt Holdings Corporation party thereto. |
|
10.13 |
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Stock Rights Agreement, dated as of November 28, 2001, among Salt Holdings Corporation, Apollo Management V L.P., each of the stockholders listed on Schedule A attached thereto and IMC Global Inc. |
|
10.14 |
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Management Consulting Agreement, dated November 28, 2001, between Salt Holdings Corporation and Apollo Management V L.P. |
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10.15 |
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Master Assignment Agreement, dated April 10, 2002, among Compass Minerals Group, Inc., a Delaware corporation, the lenders party thereto and JPMorgan Chase Bank, as administrative agent for the Existing Lenders (as defined in the Master Assignment Agreement). |
|
10.16 |
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Employment Agreement, dated March 12, 2002, between Compass Minerals Group, Inc. and Michael E. Ducey. |
|
10.17 |
|
Certificate of Designation for the 133/4% Series A Cumulative Senior Redeemable Exchangeable Preferred Stock. |
|
12.1 |
|
Statement of Computation of Ratio of Earnings to Fixed Charges. |
|
21.1 |
|
Subsidiaries of the Registrant. |
|
23.1 |
|
Consent of Latham & Watkins LLP, special counsel to Salt Holdings Corporation (included in Exhibit 5.1). |
|
23.2 |
|
Consent of Ernst & Young LLP. |
|
23.3 |
|
Consent of PricewaterhouseCoopers LLP. |
|
|
|
|
|
24.1 |
|
Power of Attorney (included on signature pages attached hereto). |
|
25.1 |
|
Statement of Eligibility of The Bank of New York, as trustee, on Form T-1. |
|
99.1 |
|
Form of Letter of Transmittal. |
|
99.2 |
|
Form of Notice of Guaranteed Delivery. |
|
99.3 |
|
Form of Letter from Salt Holdings Corporation to Registered Holders and DTC Participants. |
|
99.4 |
|
Form of Instructions from Beneficial Owners to Registered Holders and DTC Participants. |
|
99.5 |
|
Form of Letter to Clients. |
|
99.6 |
|
Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. |
Exhibit 2.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
among
IMC GLOBAL INC.,
SALT HOLDINGS CORPORATION,
YBR HOLDINGS LLC
and
YBR ACQUISITION CORP.
Dated as of October 13, 2001
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITION OF TERMS
Section 1.1 Certain Definitions......................................................................... 1
Section 1.2 Other Terms................................................................................. 22
Section 1.3 Other Definitional Provisions............................................................... 22
ARTICLE II PRELIMINARY TRANSFERS, THE MERGER; CONVERSION OF SHARES
Section 2.1 Preliminary Transfers....................................................................... 23
Section 2.2 Sale and Purchase........................................................................... 24
Section 2.3 The Merger.................................................................................. 24
Section 2.4 Effective Time.............................................................................. 24
Section 2.5 Closing..................................................................................... 25
Section 2.6 Certificate of Incorporation: By-laws....................................................... 25
Section 2.7 Directors and Officers of the Surviving Corporation and Certain Subsidiaries................ 25
Section 2.8 Conversion of Capital Stock................................................................. 25
Section 2.9 Distribution of Merger Consideration; Payment of Estimated Closing Date
Contribution Amount......................................................................... 27
Section 2.10 Contribution; Adjustment Procedure.......................................................... 28
Section 2.11 Binding Commitment.......................................................................... 32
Section 2.12 Canadian Holdback........................................................................... 32
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER
Section 3.1 Organization of Seller and the Company; Authority........................................... 32
Section 3.2 Organization of Acquired Companies; Authority............................................... 32
Section 3.3 Authorization; Binding Effect............................................................... 33
Section 3.4 Capitalization; Title to Shares............................................................. 34
Section 3.5 Non-Contravention........................................................................... 34
Section 3.6 Consents and Approvals...................................................................... 35
Section 3.7 Financial Information....................................................................... 35
Section 3.8 Absence of Undisclosed Liabilities.......................................................... 36
Section 3.9 Absence of Certain Changes or Events........................................................ 36
Section 3.10 Title to Properties; Sufficiency of Assets.................................................. 37
Section 3.11 Mines....................................................................................... 38
Section 3.12 Intellectual Property....................................................................... 40
Section 3.13 Litigation; Proceedings..................................................................... 40
Section 3.14 Compliance with Laws........................................................................ 41
Section 3.15 Environmental Matters....................................................................... 42
Section 3.16 Contracts and Commitments................................................................... 44
Section 3.17 Taxes....................................................................................... 46
Section 3.18 Employee Benefit Plans...................................................................... 50
|
Section 3.19 Employees................................................................................... 53
Section 3.20 Insurance................................................................................... 55
Section 3.21 Affiliate Transactions...................................................................... 55
Section 3.22 Accounts Receivable......................................................................... 55
Section 3.23 Inventory................................................................................... 55
Section 3.24 Investment Representations.................................................................. 56
Section 3.25 Brokers, Finder's Fees...................................................................... 56
Section 3.26 State Takeover Statutes..................................................................... 56
Section 3.27 WTO Investor; ICA Filing.................................................................... 57
Section 3.28 Business of the Company..................................................................... 57
Section 3.29 Corporate Existence......................................................................... 57
Section 3.30 No Liabilities of the Company............................................................... 57
Section 3.31 No Other Representations or Warranties...................................................... 57
Section 3.32 Disclosure.................................................................................. 57
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER
Section 4.1 Organization and Qualification; Authority................................................... 58
Section 4.2 Authority of Purchaser; Binding Effect...................................................... 58
Section 4.3 Non-Contravention........................................................................... 58
Section 4.4 Consents and Approvals...................................................................... 59
Section 4.5 Financial Capability........................................................................ 59
Section 4.6 Securities; Capitalization of Merger Sub.................................................... 59
Section 4.7 Litigation; Proceedings..................................................................... 60
Section 4.8 Compliance with Laws........................................................................ 60
Section 4.9 Business of Merger Sub and Purchaser........................................................ 60
Section 4.10 No Liabilities of Merger Sub................................................................ 61
Section 4.11 Brokers, Finders Fees....................................................................... 61
Section 4.12 Investment Representations.................................................................. 61
Section 4.13 Purchaser Intention......................................................................... 62
Section 4.14 Corporate Existence......................................................................... 62
Section 4.15 No Other Representations or Warranties...................................................... 62
Section 4.16 Disclosure.................................................................................. 62
ARTICLE V COVENANTS
Section 5.1 Access...................................................................................... 62
Section 5.2 Affirmative Covenants for the Conduct of Business........................................... 63
Section 5.3 Negative Covenants for the Conduct of Business.............................................. 64
Section 5.4 Commercially Reasonable Efforts............................................................. 66
Section 5.5 Employee Matters............................................................................ 67
Section 5.6 Insurance Matters........................................................................... 72
Section 5.7 Intercompany Accounts....................................................................... 72
Section 5.8 Financial Information....................................................................... 72
Section 5.9 Announcement................................................................................ 73
Section 5.10 Notification by Purchaser................................................................... 73
Section 5.11 Further Assurances.......................................................................... 74
|
Section 5.12 Post-Closing Cooperation................................................................... 74
Section 5.13 Certain Transactions....................................................................... 75
Section 5.14 Release of Certain Liens................................................................... 75
Section 5.15 Exclusivity................................................................................ 75
Section 5.16 Non-Competition, Non-Solicitation and Confidentiality...................................... 76
Section 5.17 Change of Corporate Name................................................................... 80
Section 5.18 Seller's Trademarks........................................................................ 81
Section 5.19 Ancillary Agreements....................................................................... 82
Section 5.20 Bank Consent............................................................................... 82
Section 5.21 Goderich Mine Lease........................................................................ 82
ARTICLE VI CERTAIN TAX MATTERS
Section 6.1 Transfer Taxes............................................................................. 83
Section 6.2 Termination of Tax Sharing Agreement....................................................... 83
Section 6.3 Liability for Taxes and Indemnity.......................................................... 83
Section 6.4 Tax Returns................................................................................ 87
Section 6.5 Refunds, Credits, Adjustments and Allocations of Tax Attributes............................ 88
Section 6.6 Mutual Cooperation......................................................................... 90
Section 6.7 Contests................................................................................... 91
Section 6.8 Resolution of Disagreements................................................................ 91
Section 6.9 Payments................................................................................... 92
Section 6.10 Purchase Price and Contribution Adjustments................................................ 92
Section 6.11 Amendment of Tax Returns................................................................... 92
Section 6.12 Certain Taxes.............................................................................. 92
ARTICLE VII CONDITIONS TO CLOSING
Section 7.1 Conditions to the Obligations of Purchaser and Seller...................................... 93
Section 7.2 Conditions to the Obligations of Purchaser................................................. 94
Section 7.3 Conditions to the Obligations of Seller.................................................... 95
ARTICLE VIII SURVIVAL AND INDEMNIFICATION
Section 8.1 Survival................................................................................... 96
Section 8.2 Indemnification by Purchaser............................................................... 96
Section 8.3 Indemnification by Seller.................................................................. 97
Section 8.4 Limitations on Indemnity................................................................... 98
Section 8.5 Indemnification Procedures................................................................. 99
Section 8.6 Computation of Losses Subject to Indemnification........................................... 101
Section 8.7 Certain Other Matters...................................................................... 102
ARTICLE IX TERMINATION
Section 9.1 Termination............................................................................... 102
Section 9.2 Effect of Termination..................................................................... 103
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ARTICLE X MISCELLANEOUS
Section 10.1 Notices.................................................................................... 104
Section 10.2 Amendment; Waiver.......................................................................... 105
Section 10.3 Assignment................................................................................. 105
Section 10.4 Entire Agreement........................................................................... 105
Section 10.5 Parties in Interest........................................................................ 105
Section 10.6 Expenses................................................................................... 106
Section 10.7 Invalid Provisions......................................................................... 106
Section 10.8 GOVERNING LAW.............................................................................. 106
Section 10.9 Severability............................................................................... 107
Section 10.10 Counterparts............................................................................... 107
Section 10.11 Interpretation............................................................................. 107
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Index of Defined Terms
Page
----
Accrued Liability .............................................................. 2, 77
Accrued Liability Determination Date ........................................... 2, 77
Acquired Ancillary Salt Business ............................................... 2, 85
Acquired Companies ............................................................. 2
Acquisition Proposal ........................................................... 3, 83
Actions ........................................................................ 3, 45
Actual Retention Bonuses ....................................................... 3, 34
Actual Sales Bonuses ........................................................... 3, 34
Actual U.K. Funding Amount ..................................................... 3
Additional Acquired Assets ..................................................... 3
Adjustment Demand .............................................................. 3, 93
Affiliate ...................................................................... 3
Affiliated Group ............................................................... 3
Agreement ...................................................................... 2, 4
Apollo ......................................................................... 4
Appraiser ...................................................................... 4, 103
Arbitrator ..................................................................... 4, 78
Attribute Adjustment Payment ................................................... 4, 92
Audited Financial Statements ................................................... 4, 40
Auditor ........................................................................ 4, 35
Bank Commitment Letter ......................................................... 4
Belle Plaine Contract .......................................................... 4, 84
Bridge Commitment Letter ....................................................... 4
Bridge Financing Fee ........................................................... 4, 114
Business Day ................................................................... 4
Business Intellectual Property ................................................. 4
Canadian Plan .................................................................. 4, 56
Canadian Target Tax Amount ..................................................... 4
Capital Expenditure Budget ..................................................... 5
Capital Stock .................................................................. 5
Cash Merger Consideration ...................................................... 5
CERCLA ......................................................................... 5
Certificate of Merger .......................................................... 5, 28
Changes ........................................................................ 5, 96
Claim .......................................................................... 5, 108
Claim Notice ................................................................... 5, 108
Clean Policies ................................................................. 5, 82
Closing ........................................................................ 5, 29
Closing Balance Sheet .......................................................... 5, 33
Closing Date ................................................................... 6, 29
Closing Indebtedness ........................................................... 6, 34
Closing Net Working Capital Amount ............................................. 6, 33
COBRA .......................................................................... 6
Code ........................................................................... 6
Commissioner ................................................................... 6
Commitment Letters ............................................................. 6, 65
Common Stock Certificate ....................................................... 6, 31
Company ........................................................................ 2, 6
Company Common Stock ........................................................... 6
Company Contribution Adjustment ................................................ 6, 36
Company Financial Statements ................................................... 6, 40
Company Material Adverse Effect ................................................ 6, 102
|
Company Preferred Stock ........................................................ 6 Competition Act ................................................................ 7 Confidential Information ....................................................... 7, 86 Confidentiality Agreement ...................................................... 7 Contribution ................................................................... 7, 27 Controlled Group ............................................................... 7, 56 Copyrights ..................................................................... 7 Covered Affiliated Group ....................................................... 7 Determination Date ............................................................. 7, 35 DGCL ........................................................................... 2, 7 EBITDA ......................................................................... 7 Effective Time ................................................................. 7, 29 Employee Trust ................................................................. 7 Employee Trust Common Stock .................................................... 8 Employee Trust Company Stock ................................................... 8 Employee Trust Preferred Stock ................................................. 8 Employee(s) .................................................................... 7 Encumbrance Releases ........................................................... 8, 82 Environmental Law .............................................................. 8, 49 Equity Rights .................................................................. 8 ERISA .......................................................................... 8 ERISA Affiliate ................................................................ 8 Escrow Agent ................................................................... 8 Escrow Agreement ............................................................... 8 Esterhazy Loan ................................................................. 8 Estimated Closing Date Company Contribution Adjustment ......................... 8 Estimated Closing Date Contribution Adjustment ................................. 9 Estimated Closing Date Seller Contribution Adjustment .......................... 9 Estimated Closing Indebtedness ................................................. 9, 33 Estimated Closing Net Working Capital Amount ................................... 9, 33 Estimated Interim Period Adjustment Amount ..................................... 9 Estimated Retention Bonuses .................................................... 9, 33 Estimated Sales Bonuses ........................................................ 9, 33 Estimated U.K. Funding Amount .................................................. 9, 33 European Competition Laws ...................................................... 9, 46 Excluded Assets ................................................................ 9 Excluded Liabilities ........................................................... 9 Excluded Subsidiaries .......................................................... 10 Existing Inventory ............................................................. 10, 88 Expired Leases ................................................................. 10, 90 Extended Termination Date ...................................................... 10, 111 Financing ...................................................................... 10, 65 Financing Documents ............................................................ 10, 66 Foreign Acquired Company ....................................................... 10 Foreign Title Assurances ....................................................... 10, 70 GAAP ........................................................................... 10 Governmental Authority ......................................................... 10 Governmental Order ............................................................. 10 GSL ............................................................................ 11 Hazardous Materials ............................................................ 11 Health and Safety Laws ......................................................... 11, 47 HSR Act ........................................................................ 11 ICA ............................................................................ 11 Identified Expenses ............................................................ 11, 107 IMC Savings Plan ............................................................... 11, 75 Improvements ................................................................... 11, 43 |
Included Subsidiaries .......................................................... 11 Income Tax ..................................................................... 11 Income Tax Returns ............................................................. 11 Income Taxes ................................................................... 11 Indebtedness ................................................................... 11 Indemnifying Party ............................................................. 12, 108 Initial Termination Date ....................................................... 12, 111 Inorganics ..................................................................... 12 Insurance Policies ............................................................. 12, 60 Intellectual Property .......................................................... 12 Interim Period ................................................................. 12 Interim Period Adjustment Amount ............................................... 12 Interim Period Capital Expenditures ............................................ 12 Interim Period EBITDA .......................................................... 12 Interim Period Interest Adjustment Amount ...................................... 12 Interim Period Taxes ........................................................... 12 Knowledge of Purchaser ......................................................... 13 Knowledge of Seller ............................................................ 13 Laguna Grande .................................................................. 13, 84 Laguna Grande Contract ......................................................... 13, 84 Latest Balance Sheet ........................................................... 13 Law(s) ......................................................................... 13 Leased Real Property ........................................................... 13 Leases ......................................................................... 13 Letter Agreement ............................................................... 13 Liens .......................................................................... 14 Losses ......................................................................... 14, 105 Management Agreements .......................................................... 14, 74 Management Rollover Amount ..................................................... 14 Management Rollover Common Amount .............................................. 14 Management Rollover Common Share Number ........................................ 14 Management Rollover Preferred Amount ........................................... 14 Management Rollover Preferred Share Number ..................................... 14 Merger ......................................................................... 2, 14 Merger Consideration ........................................................... 14, 31 Merger Sub ..................................................................... 2, 14 Mine ........................................................................... 14 Mines .......................................................................... 14 Minister ....................................................................... 14 Multiemployer Plan ............................................................. 15, 56 Net Interim Period Adjustment Amount ........................................... 15 Net Working Capital Amount ..................................................... 15 New Mexico Salt Contract ....................................................... 15 Non-Compete Period ............................................................. 15, 83 Non-Purchased Common Stock ..................................................... 15, 30 Notice Period .................................................................. 15, 108 Objection Notice ............................................................... 16, 93 Offering Materials ............................................................. 16, 79 Offerings ...................................................................... 16, 79 Offset Period .................................................................. 16 Offset Period Start Date ....................................................... 16 OHSA ........................................................................... 60 Orders ......................................................................... 16 Ordinary Course of Business .................................................... 16, 70 OSHA ........................................................................... 16 Other Existing Leases .......................................................... 16, 90 |
Other Minerals ................................................................. 16 Other Plan Participant ......................................................... 16, 77 Overland Transition Agreement .................................................. 16 Owned Real Property ............................................................ 16 Paid Canadian Tax Amount ....................................................... 16 Patents ........................................................................ 17 PBGC ........................................................................... 17, 57 Permits ........................................................................ 17 Permitted Competitive Activities ............................................... 17, 84 Permitted Encumbrances ......................................................... 17 Permitted Liens ................................................................ 17 Person ......................................................................... 18 Plaintiff ...................................................................... 18, 106 Plan Employee .................................................................. 18, 75 Plans .......................................................................... 18, 56 Post-Closing Period ............................................................ 18, 92 Pre-Closing Period ............................................................. 18, 92 Preferred Stock Certificate .................................................... 18, 31 Preliminary Transfer Documents ................................................. 18, 102 Preliminary Transfers .......................................................... 18, 27 Present Value .................................................................. 18, 94 Pro Forma Basis ................................................................ 18 PSO ............................................................................ 19 Purchase Consideration ......................................................... 19 Purchased Common Stock ......................................................... 19 Purchased Company Stock ........................................................ 20 Purchased Preferred Stock ...................................................... 20 Purchaser ...................................................................... 20 Purchaser Disclosure Letter .................................................... 20 Purchaser Indemnified Parties .................................................. 20, 105, 106 Purchaser Material Adverse Effect .............................................. 20, 103 Purchaser Pension Plan ......................................................... 20, 76 Purchaser Plans ................................................................ 20, 74 Purchaser's Knowledge .......................................................... 13 Push-back Days ................................................................. 20 Push-back Event ................................................................ 20 Rail Car Lease ................................................................. 21 Real Property .................................................................. 21 Recipient ...................................................................... 21, 98 Release ........................................................................ 21, 49 Renewed Lease .................................................................. 21, 90 Restated Certificate of Incorporation .......................................... 21 Retention Bonuses .............................................................. 21 Sales Bonuses .................................................................. 21 Sales Tax ...................................................................... 21 Salt ........................................................................... 21 Salt Account Plan .............................................................. 22, 75 Secretary of State ............................................................. 22, 28 Securities Act ................................................................. 22 Seller ......................................................................... 2, 22 Seller Confidential Information ................................................ 22, 87 Seller Contribution Adjustment ................................................. 22, 35 Seller Disclosure Letter ....................................................... 22 Seller Group ................................................................... 22 Seller Indemnified Parties ..................................................... 22, 105 Seller Pension Plan ............................................................ 22, 76 |
Seller Retained Common Stock.................................................... 22, 32 Seller's Knowledge.............................................................. 13 Seller's Marks.................................................................. 22, 88 Senior Executive Plan........................................................... 22, 79 Shares.......................................................................... 22 Solvency Letter ................................................................ 22, 103 SOP ............................................................................ 22 SOP Agreement .................................................................. 22 Specified Manager .............................................................. 23 Specified Managers ............................................................. 102 Split Tax Period ............................................................... 23, 92 Stock Purchase ................................................................. 23 Stock Rights Agreement ......................................................... 23 Subsidiary ..................................................................... 23 Supply Agreements .............................................................. 23 Surviving Corporation .......................................................... 23, 28 Surviving Corporation Common Stock ............................................. 23 Surviving Corporation Notes .................................................... 23 Surviving Corporation Preferred Stock .......................................... 23 Target Net Working Capital ..................................................... 24 Tax ............................................................................ 24 Tax Attribute .................................................................. 24, 92 Tax Attribute Deficiency ....................................................... 24, 93 Tax Claim ...................................................................... 24, 98 Tax Rate ....................................................................... 24, 94 Tax Return ..................................................................... 24 Taxable Income ................................................................. 24 Taxes .......................................................................... 24 Third Party Consent ............................................................ 24 Title Commitments .............................................................. 25 Title Policies ................................................................. 25 Trademarks ..................................................................... 25 Transaction .................................................................... 25 Transaction Claims ............................................................. 25, 106 Transaction Documents .......................................................... 25 Transaction Expenses ........................................................... 25 Transferred Accounts ........................................................... 25, 75 Transition Services Agreement .................................................. 25 U.K. Acquired Company .......................................................... 25, 55 U.K. Loans ..................................................................... 26 U.K. Plan ...................................................................... 26, 56 U.K. Tax ....................................................................... 26 U.S. Plan ...................................................................... 26, 56 Unaudited Financial Statements ................................................. 26, 40 United Salt Contract ........................................................... 26 WARN ........................................................................... 26, 59, 75 WTO Investor ................................................................... 26 YPS ............................................................................ 49 |
AGREEMENT AND PLAN OF MERGER, among IMC Global Inc., a Delaware corporation ("Seller"), and Salt Holdings Corporation, a Delaware corporation and an indirect, wholly owned subsidiary of Seller (the "Company"), on the one hand, and on the other hand, YBR Holdings LLC, a Delaware limited liability company ("Purchaser"), and YBR Acquisition Corp., a Delaware corporation, a wholly-owned subsidiary of Purchaser ("Merger Sub"), dated as of October 13, 2001 (this "Agreement").
WHEREAS, the boards of directors of Seller, the Company, Purchaser and Merger Sub have approved this Agreement and determined this Agreement to be advisable and have approved the transactions contemplated hereby, including the merger of Merger Sub with and into the Company (the "Merger") in accordance with the terms of this Agreement and the General Corporation Law of the State of Delaware (the "DGCL"); and
WHEREAS, the board of directors of the Company has approved the form of amendment to the Company's restated certificate of incorporation giving effect to the Restated Certificate of Incorporation (as defined herein) and determined it to be advisable; and
NOW, THEREFORE, in consideration of the covenants and undertakings contained herein, and on the terms and subject to the conditions herein set forth, the parties hereto, intending to be legally bound, agree as follows:
ARTICLE I
DEFINITION OF TERMS
Section 1.1 CERTAIN DEFINITIONS. As used in this Agreement, the following terms shall have the meanings set forth or as referenced below:
"ACCRUED LIABILITY" shall have the meaning set forth in Section 5.5(h).
"ACCRUED LIABILITY DETERMINATION DATE" shall have the meaning set forth in Section 5.5(h).
"ACQUIRED ANCILLARY SALT BUSINESS" shall have the meaning set forth in Section 5.16(a)(v).
"ACQUIRED COMPANIES" shall mean (i) the Company and (ii) each of the following entities (which shall be subsidiaries of the Company following the Preliminary Transfers): IMC Inorganic Chemicals Inc.; GSL Corporation; IMC Kalium Ogden Corp.; NAMSCO INC.; IMC Salt Inc.; Carey Salt Company; Sifto Canada Inc.; IMC Global (Europe) Limited; IMC Global (U.K.) Limited; Salt Union Limited; London Salt Limited; Direct Salt Supplies Limited; J.T. Lunt & Co. (Nantwich) Limited.
"ACQUISITION PROPOSAL" shall have the meaning set forth in
Section 5.15(a).
"ACTIONS" shall have the meaning set forth in Section 3.13(a).
"ACTUAL RETENTION BONUSES" shall have the meaning set forth in
Section 2.10(c).
"ACTUAL SALES BONUSES" shall have the meaning set forth in
Section 2.10(c).
"ACTUAL U.K. FUNDING AMOUNT" shall mean the amount, if any, as determined by the Salt Union Limited's actuary, that would be necessary to bring the funding level of the U.K. Plan to a 90% level on a Minimum Funding Requirement basis pursuant to Section 56 of the Pensions Act 1995 at Closing.
"ADDITIONAL ACQUIRED ASSETS" shall mean (i) the contracts solely
relating to, and copies of customer lists, other contracts, data bases, sales
records and books and records (or portions of such data bases, sales records and
books and records), in each case only to the extent used by Seller or its
Subsidiaries in connection with, the sales and marketing of SOP produced or sold
by the Acquired Companies or (to the extent of copies only) IMC USA, Inc. or its
affiliates (excluding such information with respect to the Royster, Scott and
Howards accounts); (ii) certain assets located at Seller's premises in
Hutchinson, Kansas, which assets are listed in Section 1.1(a) of the Purchaser
Disclosure Letter; (iii) the right to proceeds or benefits from insurance
policies of Seller or any of its subsidiaries covering Losses by any of the
Acquired Companies with respect to any event or condition that occurred or
existed prior to the date of this Agreement (other than those proceeds and
benefits described in clause (iv) of the definition of Excluded Assets); and
(iv) the right to proceeds or benefits from insurance policies of the Seller or
any of its Affiliates covering Losses by any of the Acquired Companies with
respect to any event or condition that occurred or came into existence between
the date of this Agreement and the Closing Date, net of any expenditures made by
the Seller or any of its subsidiaries to remedy such Loss after the date of this
Agreement, which benefits will not be removed from the appropriate Acquired
Company prior to the Closing Date, provided that no netting of expenditures will
be made to the extent that any such proceeds or benefits (that would have been
reimbursed to Seller or any of its Affiliates) are necessary to remedy such Loss
following the Closing Date.
"ADJUSTMENT DEMAND" shall have the meaning set forth in Section 6.3(f)(i).
"AFFILIATE" shall mean, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, such Person at any time during the period for which the determination of affiliation is being made.
"AFFILIATED GROUP" shall mean an affiliated group as defined in Code ss. 1504 (or any similar combined, consolidated or unitary group defined under state, local or foreign Income Tax law).
"AGREEMENT" shall have the meaning ascribed to it in the preamble hereto, as amended or supplemented from time to time in accordance with the terms hereof.
"APOLLO" shall mean Apollo Management, L.P.
"APPRAISER" shall have the meaning set forth in Section 7.3(d).
"ARBITRATOR" shall have the meaning set forth in Section 5.5(h).
"ATTRIBUTE ADJUSTMENT PAYMENT" shall have the meaning set forth in Section 6.3(f).
"AUDITED FINANCIAL STATEMENTS" shall have the meaning set forth in Section 3.7(a).
"AUDITOR" shall have the meaning set forth in Section 2.10(c).
"BANK COMMITMENT LETTER" shall mean the commitment letter for the Bank financing from The Chase Manhattan Bank, J.P. Morgan Securities, Inc. Deutsche Banc Alex Brown Inc. and Bankers Trust Company dated October 13, 2001 attached to Section 4.5 of the Purchase Disclosure Letter or any amendment thereto or replacement thereof.
"BELLE PLAINE CONTRACT" shall have the meaning set forth in
Section 5.16(a)(i).
"BRIDGE COMMITMENT LETTER" shall mean the commitment letter for the bridge financing from Credit Suisse First Boston, The Chase Manhattan Bank, J.P. Morgan Securities, Inc. and Bankers Trust Company dated October 13, 2001 attached to Section 4.5 of the Purchase Disclosure Letter.
"BRIDGE FINANCING FEE" shall have the meaning set forth in
Section 10.6.
"BUSINESS DAY" shall mean any day other than Saturday, Sunday or a day on which banks in New York City are authorized or obligated by law or executive order to close or are otherwise generally closed.
"BUSINESS INTELLECTUAL PROPERTY" shall mean the Intellectual Property owned by or used in the operation of the businesses of the Acquired Companies as presently conducted.
"CANADIAN PLAN" shall have the meaning set forth in Section 3.18(a).
"CANADIAN TARGET TAX AMOUNT" shall mean the sum of (i) Cdn $7,600,000 and (ii) the amount of any Taxes (imposed pursuant to the Income Tax Act (Canada) or any corresponding provision of applicable provincial legislation) due and payable on or prior to, or required to be withheld on or prior to, the Closing (regardless of whether such withheld Taxes are required to be remitted to the relevant taxing authority on or prior to the Closing) by Sifto Canada Inc. with respect to the settlement on or prior to the Closing of any receivable owed by IMC Salt Inc. to Sifto Canada Inc.
"CAPITAL EXPENDITURE BUDGET" shall mean the budgeted capital expenditures of the Acquired Companies as set forth in Section 1.1(b) of the Seller Disclosure Letter.
"CAPITAL STOCK" shall mean (i) in the case of a corporation, any and all shares of capital stock, (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of capital stock, (iii) in the case of a partnership or limited liability company, any and all partnership or membership interests (whether general or limited) and (iv) in any case, any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person.
"CASH AMOUNT" shall mean $600,000,000 plus the Estimated Closing Date Seller Contribution Adjustment, if any, or minus the Estimated Closing Date Company Contribution Adjustment, if any.
"CASH MERGER CONSIDERATION" shall mean $485,000,000 plus the Management Rollover Common Amount.
"CERCLA" shall mean the United States Comprehensive Environmental Response, Compensation, and Liability Act of 1980, 42 USC sec 9601 et seq., as amended from time to time.
"CERTIFICATE OF MERGER" shall have the meaning set forth in
Section 2.4.
"CHANGES" shall have the meaning set forth in Section 6.5(b)(i).
"CLAIM" shall have the meaning set forth in Section 8.5.
"CLAIM NOTICE" shall have the meaning set forth in Section 8.5.
"CLEAN POLICIES" shall have the meaning set forth in Section 5.14.
"CLOSING" shall have the meaning set forth in Section 2.5.
"CLOSING BALANCE SHEET" shall have the meaning set forth in
Section 2.10(c).
"CLOSING DATE" shall have the meaning set forth in Section 2.5.
"CLOSING INDEBTEDNESS" shall have the meaning set forth in
Section 2.10(c).
"CLOSING NET WORKING CAPITAL AMOUNT" shall have the meaning set forth in Section 2.10(c).
"COBRA" shall mean Sections 601 ET. SEQ. of ERISA.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMMISSIONER" shall mean the Commissioner of Competition with respect to the Competition Act (Canada) as set forth in Section 7.1(d).
"COMMITMENT LETTERS" shall have the meaning set forth in Section 4.5.
"COMMON STOCK CERTIFICATE" shall have the meaning set forth in
Section 2.8(a).
"COMPANY" shall have the meaning set forth in the recitals.
"COMPANY COMMON STOCK" shall mean all of the outstanding shares of common stock, par value $.01 per share, of the Company.
"COMPANY CONTRIBUTION ADJUSTMENT" shall have the meaning set forth in Section 2.10(c).
"COMPANY FINANCIAL STATEMENTS" shall have the meaning set forth in Section 3.7(a).
"COMPANY MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on (a) the business, assets, liabilities, operations, results of operations and condition (financial or otherwise) of the Acquired Companies, taken as a whole; PROVIDED, HOWEVER, that adverse effects (i) resulting from a lack of, or decline in, sales of Salt by the Acquired Companies due to warm weather, lack of snowfall, lack of freezing rain or similar weather conditions in the markets in which the Acquired Companies operate or (ii) resulting from the execution and announcement of this Agreement and the transactions contemplated hereby shall, in either such case, be excluded from the determination of Company Material Adverse Effect or (b) the ability of Seller or the Acquired Companies to consummate or perform the transactions contemplated by the Transaction Documents.
"COMPANY PREFERRED STOCK" shall mean the Series A redeemable exchangeable preferred stock par value $0.01 per share, of the Company, having the terms set forth in Section 1.1(i) of the Seller Disclosure Letter to this Agreement, with such amendments as may be reasonably requested by the lenders providing the Financing, which amendments shall not adversely affect the Seller in a disproportionate manner as compared to other preferred stockholders of the Surviving Corporation.
"COMPETITION ACT" shall mean the Competition Act (Canada), as amended.
"CONFIDENTIAL INFORMATION" shall have the meaning set forth in
Section 5.16(c)(i).
"CONFIDENTIALITY AGREEMENT" shall mean the letter agreement with respect to confidential information between Seller and Apollo Advisors, L.P., dated March 22, 2000.
"CONTRIBUTION" shall have the meaning set forth in Section 2.1(b).
"CONTROLLED GROUP" shall have the meaning set forth in Section 3.18(a).
"COPYRIGHTS" shall mean all U.S. and non-U.S. copyrights, moral rights and mask works, all registrations and applications for registration thereof and any extensions thereof.
"COVERED AFFILIATED GROUP" shall mean each Affiliated Group of which any of the Acquired Companies is a member.
"DETERMINATION DATE" shall have the meaning set forth in Section 2.10(c).
"DGCL" shall have the meaning set forth in the recitals.
"EBITDA" shall mean, with respect to the Acquired Companies for any period, the consolidated operating earnings (loss) for such period plus, to the extent deducted in calculating operating earnings (loss), depreciation, amortization and other non-cash expenses
during such period; in each case, with operating earnings (loss) calculated on a consistent basis with the Audited Financial Statements.
"EFFECTIVE TIME" shall have the meaning set forth in Section 2.4.
"EMPLOYEE(S)" shall mean any individual who is an employee of the Acquired Companies, including any employee who is on vacation, leave of absence, lay-off or out due to illness, disability or maternity/parental leave, as of the Closing Date.
"EMPLOYEE TRUST" shall mean that certain rabbi trust to be established, with the Company as grantor and United States Trust Company of New York as trustee, in form and substance reasonably satisfactory to the Purchaser, to hold the Employee Trust Company Stock to secure the Company's obligations to issue Company Common Stock or Company Preferred Stock under the Senior Executive Plan after the Merger.
"EMPLOYEE TRUST COMMON STOCK" shall have the meaning set forth in
Section 2.2.
"EMPLOYEE TRUST COMPANY STOCK" shall have the meaning set forth in Section 2.2.
"EMPLOYEE TRUST PREFERRED STOCK" shall have the meaning set forth in Section 2.2.
"ENCUMBRANCE RELEASES" shall have the meaning set forth in
Section 5.14.
"ENVIRONMENTAL LAW" shall have the meaning set forth in Section 3.15(b)(i).
"EQUITY RIGHTS" shall have the meaning set forth in Section 4.5.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended.
"ERISA AFFILIATE" shall mean any trade, business or other entity (whether or not incorporated) that together with Seller is (or at any relevant time would have been) deemed a "single employer" within the meaning of Section 4001(b) of ERISA or Section 414 of the Code.
"ESCROW AGENT" shall have the meaning set forth in the Escrow Agreement.
"ESCROW AGREEMENT" shall mean that certain agreement, dated as of the Closing Date, among the Escrow Agent, Seller, Apollo and certain of Apollo's funds, pursuant to which the Escrow Agent shall hold and dispose of certain shares of Surviving Corporation Preferred Stock, Surviving Corporation Notes, and Surviving Corporation Common Stock, substantially in the form of agreement set forth in Section 1.1(i) of the Seller Disclosure Letters.
"ESTERHAZY LOAN" shall mean the loan represented by the promissory demand note payable by Sifto Canada Inc. to IMC Esterhazy Canada Limited Partnership, including any accrued and unpaid interest thereon.
"ESTIMATED CLOSING DATE COMPANY CONTRIBUTION ADJUSTMENT" shall
have the meaning set forth in Section 2.10(a).
"ESTIMATED CLOSING DATE CONTRIBUTION ADJUSTMENT" shall have the
meaning set forth in Section 2.10(a).
"ESTIMATED CLOSING DATE SELLER CONTRIBUTION ADJUSTMENT" shall
have the meaning set forth in Section 2.10(a).
"ESTIMATED CLOSING INDEBTEDNESS" shall have the meaning set forth in Section 2.10(b).
"ESTIMATED CLOSING NET WORKING CAPITAL AMOUNT" shall have the
meaning set forth in Section 2.10(b).
"ESTIMATED NET INTERIM PERIOD ADJUSTMENT AMOUNT" shall have the
meaning set forth in Section 2.10(b).
"ESTIMATED RETENTION BONUSES" shall have the meaning set forth in
Section 2.10(b).
"ESTIMATED SALES BONUSES" shall have the meaning set forth in
Section 2.10(b).
"ESTIMATED U.K. FUNDING AMOUNT" shall have the meaning set forth in Section 2.10(a).
"EUROPEAN COMPETITION LAWS" shall have the meaning set forth in
Section 3.14(d).
"EXCLUDED ASSETS" shall mean (i) the real and personal property and other assets relating to the mine and processing facilities at Hutchinson, Kansas, other than the assets which are Additional Acquired Assets, (ii) IMC Salt, Inc.'s accounts receivable from Bonneville Salt Corporation, (iii) the right to any recovery under the lawsuits set forth on Section 1.1(h) of the Seller Disclosure Letter and (iv) the right to proceeds or benefits that the Seller or its Affiliates receives from insurers for claims made under insurance policies prior to Closing related to or arising out of the breakdown of the head frame of shaft number two at the Seller's Cote Blanche mine.
"EXCLUDED LIABILITIES" shall mean all debts, liabilities, taxes and obligations, contractual and otherwise, whether known or unknown, accrued, absolute, contingent or otherwise, material or non-material, and whether due or to become due, including, without limitation, any claim based on or arising out of (a) the generation, storage, transportation, arrangement for transportation or disposal or Release of Hazardous Materials whether arising under CERCLA or any other Environmental Law, and (b) any product liability claim or other claim in respect of any item produced, extracted, manufactured, sold or designed by, or service rendered by or on behalf of, a member of a Seller Group or an Acquired Company or any predecessor thereof (with respect to (a) and (b), an "Obligation") in each case (i) relating to or arising out of an Excluded Subsidiary or the business conducted by such Excluded Subsidiary, whether such Obligation arises before, during or after Closing; (ii) relating to or arising out of a business or line of business conducted by an Acquired Company prior to Closing which business or line of business was not in the salt or specialty potash mining, producing, processing, selling,
distributing, or marketing business or line of business; (iii) the operation and
business of the mine and processing facilities located in Hutchinson, Kansas
whether such Obligation arises before or after Closing; (iv) the operation and
business of the closed-down facilities listed on Section 1.1(g) of the Seller
Disclosure Letter whether such Obligation arises before or after the Closing and
(v) all liabilities of the Company (but not the Included Subsidiaries) prior to
the Closing that do not arise in connection with this Agreement or the
transactions contemplated hereby (other than the Preliminary Transfers).
"EXCLUDED SUBSIDIARIES" shall mean each direct and indirect subsidiary of Inorganics or the Company, other than the Acquired Companies.
"EXISTING INVENTORY" shall have the meaning set forth in Section 5.18(a).
"EXPIRED LEASES" shall have the meaning set forth in Section 5.21.
"EXTENDED TERMINATION DATE" shall have the meaning set forth in
Section 9.1(b).
"FINANCING" shall have the meaning set forth in Section 4.5.
"FINANCING DOCUMENTS" shall have the meaning set forth in Section 4.6.
"FOREIGN ACQUIRED COMPANY" shall mean each Acquired Company that is not a domestic corporation within the meaning of Code (S)7701(a).
"FOREIGN TITLE ASSURANCES" shall have the meaning set forth in
Section 5.2(d).
"GAAP" shall mean U.S. generally accepted accounting principles and practices in effect from time to time.
"GOVERNMENTAL AUTHORITY" shall mean any court, legislative, executive, governmental or regulatory, administrative authority or agency of the United States, Canada, or the United Kingdom (and any Federal, state, provincial, local, municipal or other political subdivision thereof).
"GOVERNMENTAL ORDER" means any Order that enjoins or prohibits the performance of the Merger or a material portion of this Agreement or the Transaction Documents, which Order was sought by a non-governmental third party in a Transaction Claim (as defined in the Letter Agreement, but excluding the requirement that such claim be indemnifiable).
"GSL" shall mean GSL Corporation, a Delaware corporation and its Subsidiaries.
"HAZARDOUS MATERIALS" shall mean all substances defined as Hazardous Substances, Oils, Pollutants or Contaminants in the National Oil and Hazardous Substances Pollution Contingency Plan, 40 C.F.R. (S)300.5, or defined as such by, or regulated as such under, any Environmental Law.
"HEALTH AND SAFETY LAWS" shall have the meaning set forth in
Section 3.15(a).
"HSR ACT" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
"IDENTIFIED EXPENSES" shall have the meaning set forth in Section 8.4(d).
"ICA" shall mean the Investment Canada Act (Canada), as amended.
"IMC SAVINGS PLAN" shall have the meaning set forth in Section 5.5(g).
"IMPROVEMENTS" shall have the meaning set forth in Section 3.10(c).
"INCLUDED SUBSIDIARIES" shall mean all of the Acquired Companies, other than the Company.
"INCOME TAX" or "INCOME TAXES" shall mean all corporate franchise Taxes, all Taxes measured by or based upon net income, and all income, war profits, and excess profits Taxes described in Section 901(b) of the Code, including estimated Taxes, interest, penalties or additions related or attributable thereto.
"INCOME TAX RETURNS" shall mean all Tax Returns relating to Income Taxes.
"INDEBTEDNESS" shall mean, without duplication, (i) any obligation of any of the Acquired Companies for borrowed money or issued in substitution for or exchange of indebtedness for borrowed money, (ii) any obligation of any of the Acquired Companies evidenced by any note, bond, debenture or other debt security, (iii) any obligation of any of the Acquired Companies for the deferred purchase price of property or services with respect to which an Acquired Company is liable, (iv) guarantees by any of the Acquired Companies of obligations of a Person that is not an Acquired Company, (v) the debt portion of any obligations under capitalized leases with respect to which an Acquired Company is liable, (vi) any obligation secured by a Lien (other than a Permitted Lien) on an Acquired Company's assets, (vii) negative cash balances and (viii) any unpaid checks or drafts (less the amount of checks and drafts received but not yet credited to accounts of the Acquired Companies); provided that Indebtedness shall not include current liabilities included in the calculation of Closing Net Working Capital Amount.
"INDEMNIFYING PARTY" shall have the meaning set forth in Section 8.5 hereto.
"INITIAL TERMINATION DATE" shall have the meaning set forth in
Section 9.1(b).
"INORGANICS" shall mean IMC Inorganic Chemicals Inc., a Delaware corporation.
"INSURANCE POLICIES" shall have the meaning set forth in Section 3.20.
"INTELLECTUAL PROPERTY" shall mean all Trademarks, Patents, Copyrights and all other intellectual property rights, including inventions, technology, know-how, confidential and proprietary trade secrets, computer software, technical manuals and documentation used in connection with any of the foregoing.
"INTERIM PERIOD" shall mean the period of days, if any, from and including November 1, 2001 to (but excluding) the Closing Date.
"INTERIM PERIOD ADJUSTMENT AMOUNT" shall mean for the Interim Period or the Offset Period, if any, the amount of the Interim Period EBITDA generated during the relevant period minus the Interim Period Capital Expenditures made during such period minus the amount of the Interim Period Taxes with respect to Taxable Income earned in such period minus the Interim Period Interest Adjustment Amount for such period.
"INTERIM PERIOD CAPITAL EXPENDITURES" shall mean for the Interim Period or the Offset Period, if any, the capital expenditures of the Acquired Companies made during such period to the extent that such capital expenditures do not exceed the Capital Expenditure Budget during such period.
"INTERIM PERIOD EBITDA" shall mean for the Interim Period or the Offset Period, if any, the consolidated EBITDA of the Acquired Companies during such period, calculated on a Pro Forma Basis.
"INTERIM PERIOD INTEREST ADJUSTMENT AMOUNT" shall mean for the Interim Period or the Offset Period, if any, an amount equal to the Cash Amount multiplied by an interest rate equal to 8.75% per annum multiplied by the number of calendar days in such period divided by 365.
"INTERIM PERIOD TAXES" shall mean for the Interim Period or the Offset Period, if any, an amount of assumed taxes equal to ten percent (10%) of the Taxable Income of the Acquired Companies during such period.
"KNOWLEDGE OF SELLER" or "SELLER'S KNOWLEDGE" shall mean the knowledge, after reasonable inquiry, of the individuals set forth in Section 1.1(c) of the Seller Disclosure Letter. If any Person set forth in Section 1.1(c) of the Seller Disclosure Letter shall cease to serve in the position set forth next to such Person's name in such Section prior to Closing, such Person's successor also shall be deemed to be included in such section of the Seller Disclosure Letter for purposes of determining Knowledge of Seller as of the Closing (it being understood that if any person on Section 1.1(c) of the Seller Disclosure Letter is not employed by Seller or its Affiliates at Closing, such person's knowledge as of the last date of his or her employment with Seller or its Affiliates shall be the only knowledge that is charged to Seller at Closing).
"KNOWLEDGE OF PURCHASER" or "PURCHASER'S KNOWLEDGE" shall mean the knowledge, after reasonable inquiry of the individuals set forth in Section 1.1(d) of the Purchaser Disclosure Letter. If any Person set forth in Section 1.1(d) of the Purchaser Disclosure Letter shall cease to serve in the position set forth next to such Person's name in such Section prior to Closing, such Person's successor also shall be deemed to be included in Section 1.1(d) of Purchase Disclosure Letter for purposes of determining Knowledge of Purchaser as of the Closing (it being understood that if any person on Section 1.1(d) of the Purchaser Disclosure Letter is not employed by Purchaser or its Affiliates at Closing, such person's knowledge as of the last date of his or her employment with Purchaser or its Affiliates shall be the only knowledge that is charged to Purchaser at Closing).
"LAGUNA GRANDE" shall have the meaning set forth in Section 5.16(a)(ii).
"LAGUNA GRANDE CONTRACT" shall have the meaning set forth in
Section 5.16(a)(ii).
"LATEST BALANCE SHEET" shall mean the balance sheet included in the Unaudited Financial Statements.
"LAW(S)" shall mean any constitution, treaty, law, statute, ordinance, rule, regulation or decree of binding legal effect of any Governmental Authority.
"LEASED REAL PROPERTY" means all leasehold or subleasehold estates and other rights to explore for, mine or remove Salt or, with respect to GSL only, Other Minerals, from any land or water or to use or occupy any land (whether surface or underground), buildings, structures, improvements, fixtures or other interest in real property held by any of the Acquired Companies.
"LEASES" shall mean all leases, subleases, licenses, concessions and other agreements, pursuant to which the Acquired Companies hold or use any Leased Real Property.
"LETTER AGREEMENT" shall mean the Letter Agreement entered into by Seller, Purchaser and Merger Sub on the date hereof, as attached to Schedule 1.1(s) hereof of the Seller Disclosure Letter.
"LIENS" shall mean any lien, mortgage, pledge, charge, claim, assignment by way of security or similar security interest or encumbrance.
"LOSSES" shall have the meaning set forth in Section 8.2.
"MANAGEMENT AGREEMENTS" shall have the meaning set forth in
Section 5.4(d).
"MANAGEMENT ROLLOVER AMOUNT" shall mean the sum of the Management Rollover Common Amount and the Management Rollover Preferred Amount.
"MANAGEMENT ROLLOVER COMMON AMOUNT" shall mean (i) the aggregate dollar amount of the Estimated Retention Bonuses and the Estimated Sales Bonuses, the recipients of which have elected in writing by the Closing to have transferred to deferred compensation accounts in the Senior Executive Plan multiplied by (ii) 0.487.
"MANAGEMENT ROLLOVER COMMON SHARE NUMBER" shall equal the Management Rollover Common Amount, divided by $10, rounded down to the nearest whole share.
"MANAGEMENT ROLLOVER PREFERRED AMOUNT" shall mean (i) the aggregate dollar amount of the Estimated Retention Bonuses and the Estimated Sales Bonuses, the recipients of which have elected in writing by the Closing to have transferred to deferred compensation accounts in the Senior Executive Plan multiplied by (ii) 0.513.
"MANAGEMENT ROLLOVER PREFERRED SHARE NUMBER" shall equal the Management Rollover Preferred Amount, divided by $1,000, rounded down to the nearest whole share.
"MERGER" shall have the meaning set forth in the recitals.
"MERGER CONSIDERATION" shall have the meaning set forth in
Section 2.8(a).
"MERGER SUB" shall have the meaning set forth in the recitals.
"MINE" or "MINES" shall mean all Real Property, including subsurface, surface and the fixtures associated therewith, of an Acquired Company that is used for mining or extracting Salt and with respect to GSL only, Other Minerals or for which an Acquired Company has the right to explore for and/or extract Salt and, in the case of GSL, Other Minerals.
"MINISTER" shall mean the Minister of Industry as appointed under the Investment Canada Act of Canada.
"MULTIEMPLOYER PLAN" shall have the meaning set forth in Section 3.18(a).
"NET CANADIAN HOLDBACK AMOUNT" shall mean either (a) the difference between the Canadian Target Tax Amount minus the Paid Canadian Tax Amount, if such difference results in a positive number or (b) zero if the difference between the Canadian Target Tax Amount minus the Paid Canadian Tax Amount results in a negative number.
"NET INTERIM PERIOD ADJUSTMENT AMOUNT" shall mean the Interim Period Adjustment Amount for the Interim Period, if any, minus 50% of the Interim Period Adjustment Amount for the Offset Period, if any.
"NET WORKING CAPITAL AMOUNT" shall mean the difference between current assets of the Included Subsidiaries and current liabilities of the Included Subsidiaries, with both current assets and current liabilities determined in accordance with GAAP, applied in a manner consistent with the preparation of the Company Financial Statements. Notwithstanding the foregoing, the following items are to be excluded from the definition and calculation of Net Working Capital Amount to the extent they are included in either current assets or current liabilities of the Included Subsidiaries: (a) notes payable and current maturities of debt and capital lease obligations to the extent included in Indebtedness; (b) accrued, prepaid, deferred and recoverable Income Tax assets and liabilities; (c) current assets, including receivables, and current liabilities including payables, notes and debt owed by any Included Subsidiary to any member of the Seller Group or by any member of the Seller Group to any Included Subsidiary; (d) any current assets or current liabilities related to Excluded Subsidiaries; (e) cash and cash equivalents; (f) any current assets relating to receivables for insurance proceeds; (g) payables related to the Sales Bonuses and the Retention Bonuses; (h) IMC Salt Inc.'s accounts receivable from Bonneville Salt Corporation and (i) the Surviving Corporation Notes. For the avoidance of doubt, no item in respect of current assets or current liabilities of IMC USA Inc., IMC Esterhazy Canada Limited Partnership (Saskatchewan, Canada) or the Company (but not the Included Subsidiaries) shall be included in the calculation of Net Working Capital.
"NEW MEXICO SALT CONTRACT" shall mean the Agreement for the Sale of Salt dated as of April 1, 1981, by and between SPN Dismantling Inc. and Seller; the Assignment of Agreement for the Sale of Salt by and between SPN Dismantling Inc. and New Mexico Salt dated as of September 21, 1983; Letters of Seller Consenting to the Assignment dated September
20, 1983, and September 22, 1983; and the Letter Agreement by and between New Mexico Salt and Seller dated March 18, 1991.
"NON-COMPETE PERIOD" shall have the meaning set forth in Section 5.16(a).
"NON-PURCHASED COMMON STOCK" shall have the meaning set forth in
Section 2.8(a).
"NOTICE PERIOD" shall have the meaning set forth in Section 8.5.
"OBJECTION NOTICE" shall have the meaning set forth in Section 6.3(f)(i).
"OFFERING MATERIALS" shall have the meaning set forth in Section 5.8(a).
"OFFERINGS" shall have the meaning set forth in Section 5.8(a).
"OFFSET PERIOD" shall mean the period of days, if any, from and including the Offset Period Start Date to, but excluding, the earlier of December 18, 2001 and the Closing Date.
"OFFSET PERIOD START DATE" shall mean December 1, 2001 if no Push-back Event has occurred, otherwise the date that is the number of Push-back Days after December 1, 2001.
"ORDERS" shall mean any orders, writs, judgments, injunctions or decrees entered by any Governmental Authority or arbitrator.
"ORDINARY COURSE OF BUSINESS" shall mean in the ordinary course of business consistent with past custom and practice.
"OSHA" shall have the meaning set forth in Section 3.19(d).
"OTHER EXISTING LEASES" shall have the meaning set forth in
Section 5.21.
"OTHER MINERALS" shall mean SOP and magnesium chloride.
"OTHER PLAN PARTICIPANT" shall have the meaning set forth in
Section 5.5(h)(3).
"OVERLAND TRANSITION AGREEMENT" shall mean the agreement between
IMC Salt Inc. and IMC Chemicals Inc. substantially in the form set forth in
Section 1.1(l) of the Seller Disclosure Letter.
"OWNED REAL PROPERTY" shall mean all land (and with respect to properties owned by the Acquired Companies located in the United Kingdom, all freehold land) and buildings, structures, improvements and fixtures located thereon and all easements and other rights and interests appurtenant thereto owned by the Acquired Companies.
"PAID CANADIAN TAX AMOUNT" shall mean the sum of (i) the actual amount paid prior to the Closing in respect of Taxes (imposed pursuant to the Income Tax Act (Canada) or any corresponding provision of applicable provincial legislation) due and payable by Sifto
Canada Inc. with respect to any receivable owed by IMC Salt Inc. to Sifto Canada Inc. in respect of any period (or portion thereof) ended on or prior to the Closing Date and (ii) any Taxes paid or withheld (to the extent the amount is withheld in cash by an Acquired Company and in the cash accounts of such Acquired Company immediately after Closing), in connection with the settlement of such receivables.
"PATENTS" means all U.S. and non-U.S. patents and patent applications, together with any extensions or renewals, divisions, continuations, continuations-in-part, reexaminations and reissues of such patents.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"PERMITS" shall mean all permits, licenses, authorizations and approvals of Governmental Authorities.
"PERMITTED COMPETITIVE ACTIVITIES" shall have the meaning set forth in Section 5.16(a).
"PERMITTED ENCUMBRANCES" shall mean with respect to each parcel
of Real Property: (a) zoning, planning and building codes and other land use
Laws regulating the use, development and occupancy of the Real Property and
permits, consents and rules under such Laws; (b) with respect to the Real
Property located in the United States and Canada, Liens, encumbrances,
easements, rights-of-way, covenants, conditions, restrictions and other matters
affecting title to such Real Property set forth in Section 1.1(e)(i) of the
Seller Disclosure Letter or shown on the surveys delivered to Purchaser or its
representatives on or prior to the date of this Agreement and set forth in
Section 1.1(e)(ii) of the Seller Disclosure Letter; (c) leases and subleases of
Real Property; (d) all easements, encumbrances or other matters which are
necessary for utilities and other similar services on the Real Property; (e)
with respect to the Real Property located in the United Kingdom, Liens,
encumbrances, easements, rights-of-way, covenants, conditions, restrictions and
other matters affecting title to such Real Property set forth on Section
1.1(e)(iii) of the Seller Disclosure Letter or shown on the surveys delivered to
Purchaser or its representatives on or prior to the date of this Agreement and
(f) encumbrances, easements, rights-of-way, covenants, conditions, restrictions
and other matters affecting title to such Real Property which would not
reasonably be expected to materially impair the current use and currently
contemplated use or the value (including mortgageability by Purchaser or its
Affiliates) based on the current use and currently contemplated use, of the
property subject thereto, PROVIDED HOWEVER that no such matters affecting title
shall be Liens for Indebtedness (other than the Financing Statement between
Great Salt Lake Minerals Corporation, as debtor, and Zions Credit Corporation,
as secured party, recorded December 18, 1997 in Entry No. 1510800, Book/Page
1897/1870, as amended by Amendment recorded January 29, 1998, as Entry No.
1518125, in Book 1904 at page 597 of the official records of Weber/Box Elder
County, Utah, which shall be a Permitted Lien).
"PERMITTED LIENS" shall mean (i) Liens identified in the Seller Disclosure Letter, or reflected or referred to in the Company Financial Statements (including the notes thereto), (ii), mechanics', carriers', workers', repairers', suppliers', materialmen's, warehousemen's and other similar Liens arising by operation of Law with respect to liabilities incurred in the ordinary
course of business and which are not overdue or which are being actively
contested in good faith by appropriate proceedings and, with respect to those
being actively contested as of the date hereof, identified in Section 1.1(f)(i)
of the Seller Disclosure Letter, (iii) Liens in favor of Seller or lessor as the
case may be, arising under conditional sales contracts and equipment leases with
third parties, (iv) Liens for Taxes and other governmental levies not yet
delinquent or which are being actively contested in good faith by appropriate
proceedings and, with respect to those being actively contested as of the date
hereof, identified in Section 1.1(f)(ii) of the Seller Disclosure Letter and for
which an adequate reserve is established in accordance with GAAP to the extent
required by GAAP, (v) Permitted Encumbrances with respect to Real Property; and
(vi) such other Liens which would not reasonably be expected to materially
impair the current use or the value based on the current use, of the property
subject thereto.
"PERSON" shall mean an individual, a corporation, a limited liability company, a partnership, an association, a trust or other entity or organization.
"PLAINTIFF" shall have the meaning set forth in Section 8.3(d).
"PLAN EMPLOYEE" shall have the meaning set forth in Section 5.5(g).
"PLANS" shall have the meaning set forth in Section 3.18(a).
"POST-CLOSING PERIOD" shall have the meaning set forth in Section 6.3(c).
"PRE-CLOSING PERIOD" shall have the meaning set forth in Section 6.3(c).
"PREFERRED STOCK CERTIFICATE" shall have the meaning set forth in
Section 2.8(a).
"PRELIMINARY TRANSFER DOCUMENTS" shall have the meaning set forth in Section 7.2(e).
"PRELIMINARY TRANSFERS" shall have the meaning set forth in
Section 2.1(a).
"PRESENT VALUE" shall have the meaning set forth in Section 6.3(f)(B)(1).
"PRO FORMA BASIS" shall mean on a basis giving effect as if the following had occurred on November 1, 2001 (except where indicated below):
(i) the Preliminary Transfers occurred prior to November 1, 2001;
(ii) the Supply Agreements and the Rail Car Lease were effective as of November 1, 2001;
(iii) the Transition Services Agreement and the Overland Park Transition Agreement were effective as of November 1, 2001, but no charges or expenses were payable by the Acquired Companies to any member of the Seller Group;
(iv) the intercompany accounts to be eliminated prior to the Closing pursuant to Section 5.7 hereof were eliminated prior to November 1, 2001;
(v) no intercompany charges (other than pursuant to clause
(ii) above) were charged by any member of the Seller Group to any
Acquired Company;
(vi) no amounts that would be indemnifiable or be payable by a member of the Seller Group to a Purchaser Indemnified Party (regardless of any basket or threshold amounts) after the Closing (as if the Closing had occurred on November 1, 2001) were charged to any Acquired Company;
(vii) employee benefit expenses of the Acquired Companies during the Interim Period or the Offset Period, if any, were the actual employee benefit expenses incurred by the Acquired Companies during such period;
(viii) no write-ups or write-downs of assets will be taken;
(ix) no charges, expenses or increases in charges or expenses will be taken due to any of the Preliminary Transfers;
(x) no amounts that would increase the Seller Contribution Adjustment or the Company Contribution Adjustment if such amount were increased as a result of an action taken or not taken prior to the Closing, if the Closing had occurred on November 1, 2001 (other than through the calculation of Interim Period EBITDA);
(xi) the SOP Agreement became effective and the Acquired Companies were selling SOP directly to their customers rather than to or through any marketing unit of the Seller Group;
(xii) any restructuring charges incurred during the period being measured shall be excluded; and
(xiii) allocated marketing costs for marketing SOP were incurred of $25,000 during the month of November 2001, $50,000 during the month of December 2001 and $75,000 during the month of January 2002, in each case, as applicable, calculated on a daily basis until the Closing Date.
"PSO" shall mean Pension Schemes Office of the Inland Revenue.
"PURCHASE CONSIDERATION" shall mean $115,000,000 minus the Management Rollover Amount.
"PURCHASED COMMON STOCK" shall have the meaning set forth in
Section 2.2.
"PURCHASED COMPANY STOCK" shall have the meaning set forth in
Section 2.2.
"PURCHASED PREFERRED STOCK" shall have the meaning set forth in
Section 2.2.
"PURCHASER" shall have the meaning set forth in the recitals.
"PURCHASER DISCLOSURE LETTER" shall mean the disclosure letter delivered by Purchaser to Seller on or prior to the date hereof.
"PURCHASER INDEMNIFIED PARTIES" shall have the meaning set forth in Section 8.3(a).
"PURCHASER MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on (a) the business, assets, liabilities, operations, results of operations and financial condition of Purchaser, or (b) the ability of the Purchaser to consummate or perform the transactions contemplated by the Transaction Documents.
"PURCHASER PENSION PLAN" shall have the meaning set forth in
Section 5.5(h)(1).
"PURCHASER PLANS" shall have the meaning set forth in Section 5.5(a).
"PUSH-BACK DAYS" in the case of clause (i) of the definition of Push-back Event, shall mean the total number of days such Governmental Order is in effect, and in the case of clause (ii) of the definition of Push-back Event, shall mean the total number of days starting on November 16, 2001 and ending on the date that the consent referenced in Section 7.3(f) of this Agreement is obtained (provided that the consent referenced in Section 7.3(f) of the Seller Disclosure Letter shall be deemed to have been obtained if the agent bank for the agreement listed in such section of the Disclosure Schedule has represented to the Purchaser or confirmed to the Seller in writing that the consent to the transactions contemplated by this Agreement has been obtained, for release no later than the Closing Date, by the banks required to provide their consent pursuant to such Agreement), and, in the event a Push-back Event has occurred under both clause (i) and (ii) of the definition of such term, "Push-back Days" shall mean the greater of such number of days.
"PUSH-BACK EVENT" shall mean either (i) the issuance of a
Governmental Order which is in effect for more than seven (7) calendar days or
(ii) the failure to obtain the consent specified as a condition under Section
7.3(f) of the Merger Agreement by November 15, 2001; provided that the consent
referenced in Section 7.3(f) of the Seller Disclosure Letter shall be deemed to
have been obtained if the agent bank for the agreement listed in such section of
the Disclosure Schedule has represented to the Purchaser or confirmed to the
Seller in writing that the consent to the transactions contemplated by this
Agreement has been obtained, for release no later than the Closing Date, by the
banks required to provide their consent pursuant to such Agreement, provided
further that by November 15, 2001 Purchaser shall have prepared and finalized
for professional printing a preliminary Offering Memorandum with respect to the
proposed financing of subordinated indebtedness, the proceeds from which are to
be used to finance a portion of the transactions contemplated by this Agreement,
and the managing underwriter or initial purchaser thereunder shall have
indicated its unwillingness to proceed with a "roadshow" prior to obtaining such
consent despite Purchaser's commercially reasonable efforts to persuade the
managing underwriter or initial purchaser to begin the "roadshow" prior to
obtaining such consent.
"RAIL CAR LEASE" shall mean the agreement between IMC Salt Inc., Harris Chemicals North America, Inc., The Hutchinson & Northern Railway Company, IMC Chemicals
Inc. and IMC Global Inc., providing for the sublease or assignment of leases by Harris Chemicals North America, Inc., The Hutchinson & Northern Railway Company and IMC Chemicals Inc. of rail cars to IMC Salt Inc. consistent with the term sheet hereto in Section 1.1(m) of the Seller Disclosure Letter.
"REAL PROPERTY" shall mean the Owned Real Property and the Leased Real Property collectively.
"RECIPIENT" shall have the meaning set forth in Section 6.7(a).
"RELEASE" shall have the meaning set forth in Section 3.15(b)(ii).
"RENEWED LEASE" shall have the meaning set forth in Section 5.21.
"RESTATED CERTIFICATE OF INCORPORATION" shall mean the
certificate of incorporation of the Company.
"RETENTION BONUSES" shall mean any retention bonuses and the
additional deferred compensation (but excluding any Sales Bonuses) that are (A)
(i) promised by any Acquired Company to Employees at any time prior to the
Closing, and (ii) payable to such Employee at or following the Closing solely as
a result of the consummation of the transactions contemplated by this agreement
or solely as a result of remaining employed by an Acquired Company for a
specified period of time (or no period of time) following the consummation of
the transactions contemplated by this Agreement, and (B) other deferred
compensation payable at Closing and which has been elected by the Employee
recipient to be transferred to the Senior Executive Plan in lieu of payment at
or following the Closing, as appropriate.
"SALES BONUSES" shall mean any sales bonuses that are (i) promised by any Acquired Company to Employees at any time prior to the Closing, and (ii) payable to such Employee at or following the Closing solely as a result of the consummation of the transactions contemplated by this Agreement.
"SALES TAX" shall mean the Goods and Services Tax/Harmonized Sales Tax, the Quebec Sales Tax, and the retail sales tax legislation of any province of Canada.
"SALT" shall mean sodium chloride.
"SALT ACCOUNT PLAN" shall have the meaning set forth in Section 5.5(g).
"SECRETARY OF STATE" shall have the meaning set forth in Section 2.4.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SELLER" shall have the meaning set forth in the recitals.
"SELLER CONFIDENTIAL INFORMATION" shall have the meaning set forth in Section 5.16(c)(ii).
"SELLER RETAINED COMMON STOCK" shall have the meaning set forth in Section 2.9(b).
"SELLER DISCLOSURE LETTER" shall mean the disclosure letter separately delivered by Seller to Purchaser on or prior to the date hereof.
"SELLER GROUP" shall mean Seller and each of its Subsidiaries and controlled Affiliates including the Excluded Subsidiaries but excluding the Acquired Companies.
"SELLER INDEMNIFIED PARTIES" shall have the meaning set forth in
Section 8.2.
"SELLER PENSION PLAN" shall have the meaning set forth in Section 5.5(h)(2).
"SELLER CONTRIBUTION ADJUSTMENT" shall have the meaning set forth in Section 2.10(c).
"SELLER'S MARKS" shall have meaning set forth in Section 5.18(a).
"SENIOR EXECUTIVE PLAN" shall have the meaning set forth in
Section 5.5(k).
"SHARES" shall mean the outstanding shares of Company Common Stock and Company Preferred Stock.
"SOLVENCY LETTER" shall have the meaning set forth in Section 7.3(d).
"SOP" shall mean potassium sulphate.
"SOP AGREEMENT" shall mean that certain agreement between the Company and Seller dated as of the date hereof for the supply and distribution of specialty potash by the Seller and the Company, substantially in the form of agreement set forth in Section 1.1(k) of the Seller Disclosure Letters.
"SPECIFIED MANAGER" shall have the meaning set forth in Section 7.2(f).
"SPLIT TAX PERIOD" shall have the meaning set forth in Section 6.3(c).
"STOCK PURCHASE" shall have the meaning set forth in Section 2.2.
"STOCK RIGHTS AGREEMENT" shall mean the agreement dated as of the date hereof between the Company, Seller and Purchaser regarding certain matters pertaining to the interests of Seller and Purchaser in the Company, substantially in the form set forth in Section 1.1(n) of the Seller Disclosure Letter.
"SUBSIDIARY" shall mean a Person (i) in which a designated Person owns directly or indirectly more than 50% of the voting equity or (ii) whose financial statements would be consolidated with the designated Person's financial statements in accordance with GAAP.
"SUPPLY AGREEMENTS" shall mean the five agreements between Seller and one or more of the Acquired Companies, dated as of the date hereof for the supply of certain products
by Seller or its Subsidiaries to one or more of the Acquired Companies following the Closing, substantially in the forms set forth in Section 1.1(o) of the Seller Disclosure Letter.
"SURVIVING CORPORATION" shall have the meaning set forth in
Section 2.3.
"SURVIVING CORPORATION COMMON STOCK" shall mean the shares of Common Stock of the Surviving Corporation outstanding immediately after the Merger.
"SURVIVING CORPORATION NOTES" shall mean the notes of the Surviving Corporation issued upon the Merger in the form of Schedule 1.1(e) of the Seller Disclosure Letter with such amendments as may be reasonably requested by the lenders providing the Financing, which amendments shall not (i) adversely affect Seller in a disproportionate manner as compared to the exchange debentures issuable upon the exchange of the Surviving Corporation Preferred Stock (as if such exchange debentures had been issued at Closing), (ii) which amendments shall not reduce the principal amount of such notes and (iii) change the maturity date of such notes unless the Mandatory Redemption Date of the Surviving Corporation Preferred Stock is changed to the same date.
"SURVIVING CORPORATION PREFERRED STOCK" shall mean the Series A redeemable exchangeable preferred stock, par value $0.01 per share, of the Company, having the terms set forth in Section 1.1(p) of the Seller Disclosure Letter to this Agreement, with such amendments as may be reasonably requested by the lenders providing the Financing, which amendments shall not adversely affect the Seller in a disproportionate manner as compared to other preferred stockholders of the Surviving Corporation.
"TARGET NET WORKING CAPITAL" shall mean one hundred twenty nine million dollars ($129,000,000).
"TAX" or "TAXES" shall mean all taxes, charges, duties, fees, levies, penalties or other assessments imposed by any United States Federal, state, provincial, local or foreign taxing authority, including, but not limited to income, alternative or add-on minimum, gross receipts, franchise, profits, excise, property, value added, sales, use, ad valorem, business license, transfer, stamp, recording, registration, occupation, premium, withholding, payroll, employment, custom duty, severance, windfall profit and other taxes, including estimated taxes related thereto and including any interest, penalties or additions attributable to the foregoing.
"TAXABLE INCOME" shall mean, with respect to the Interim Period
or the Offset Period, if any, the Interim Period EBITDA for such period minus
(i) the depreciation and amortization equal to $110,000 multiplied by the number
of days in such Interim Period, minus (ii) the Interim Period Interest
Adjustment Amount for such period.
"TAX ATTRIBUTE" shall have the meaning set forth in Section 6.3(f)(i).
"TAX ATTRIBUTE DEFICIENCY" shall have the meaning set forth in
Section 6.3(f).
"TAX CLAIM" shall have the meaning set forth in Section 6.7(a).
"TAX RATE" shall have the meaning set forth in Section 6.3(f)(B)(2).
"TAX RETURN" shall mean returns, declarations, reports, claims for refund, information returns or other documents (including any related or supporting schedules, statements or information) filed or required to be filed in connection with the determination, assessment or collection of Taxes of any party or the administration of any laws, regulations or administrative requirements relating to any Taxes.
"THIRD PARTY CONSENT" shall mean any approval, consent, amendment or waiver of a Person, other than an Acquired Company, that is required under any organizational or charter document of an Acquired Company or under any contract to which Seller, a member of the Seller Group or an Acquired Company is a party or by which any one of them or any of their properties or assets are bound, in order to consummate the transactions contemplated by this Agreement or by a Transaction Document, including waivers and consents by lenders and waivers and consents required under any contract containing restrictions on the transfer of assets or the change in control of an Acquired Company.
"TITLE COMMITMENTS" shall mean a commitment for a 1999 ALTA Owner's Title Insurance Policy or other form of policy issued by Chicago Title Insurance Company for each parcel of Real Property, together with a copy of all documents referenced therein.
"TITLE POLICIES" shall mean title insurance policies from Chicago Title Insurance Company (which may be in the form of a mark-up of the pro forma Title Commitments), insuring the appropriate Acquired Company's title to each parcel of Owned Real Property or the appropriate Acquired Company's legal, valid, binding and enforceable leasehold interest in each Leased Real Property (as the case may be), subject only to Permitted Liens, in such amount as Purchaser and Seller reasonably determine to be the value of the Real Property insured thereunder.
"TRADEMARKS" shall mean all U.S. and non-U.S. trademarks, trade dress, service marks, brand names, certification marks, logos, all registrations and applications for registration thereof and any extensions and renewals thereof, and the goodwill of any portion of the business of the Acquired Companies symbolized thereby.
"TRANSACTION" shall have the meaning set forth in Section 2.11.
"TRANSACTION CLAIMS" shall have the meaning set forth in Section 8.3(d).
"TRANSACTION DOCUMENTS" shall mean this Agreement, the Stock Rights Agreement, the Transition Services Agreement, the SOP Agreement, the Management Agreements, the Supply Agreements, the Rail Car Lease, the Letter Agreement and the Overland Park Transition Agreement.
"TRANSACTION EXPENSES" shall mean all expenses paid by the Purchaser or their respective affiliates on their behalf in connection with the transactions contemplated by this Agreement, including, but not limited to, fees and expenses relating to legal counsel, accounting services, tax advice, special consultants (including, without limitation, mining experts and environmental consultants), fees relating to the Commitment Letters and the fee to be paid to an Affiliate of Purchaser upon Closing pursuant to the Management Consulting Agreement to be
entered into by Apollo Management L.P. and the Company substantially in the form set forth in Section 1.1(q) of the Purchaser Disclosure Letter.
"TRANSFERRED ACCOUNTS" shall have the meaning set forth in
Section 5.5(g).
"TRANSITION SERVICES AGREEMENT" shall mean that certain agreement dated as of the date hereof between Seller and Inorganics for the provision of certain transitional services to the Acquired Companies substantially in the form set forth in Section 1.1(r) of the Seller Disclosure Letter.
"U.K. ACQUIRED COMPANY" shall have the meaning set forth in
Section 3.17(ii).
"U.K. LOANS" shall mean the loan owed by IMC Global (Europe) Limited to Seller and the loan owed by Salt Union Limited to Seller, including in each case any accrued but unpaid interest thereon.
"U.K. PLAN" shall have the meaning set forth in Section 3.18(a).
"U.K. TAX" shall mean any Tax imposed by any of the Inland Revenue, HM Customs & Excise and the Department of Social Security.
"U.S. PLAN" shall have the meaning set forth in Section 3.18(a).
"UNAUDITED FINANCIAL STATEMENTS" shall have the meaning set forth in Section 3.7(a).
"UNITED SALT CONTRACT" shall mean the Contract dated December 30, 1970, by and between United Salt and Seller and the related Letter Agreement dated September 29, 1998.
"WARN" shall have the meaning set forth in Section 3.19(a).
"WTO INVESTOR" shall have the meaning ascribed to it under the
ICA.
Section 1.2 OTHER TERMS. Other terms may be defined elsewhere in the text of this Agreement and, unless otherwise indicated, shall have such meaning throughout this Agreement.
Section 1.3 OTHER DEFINITIONAL PROVISIONS.
(a) The words "hereof," "herein," "hereto" and "hereunder" and words of similar import, when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.
(b) The terms defined in the singular shall have a comparable meaning when used in the plural, and vice versa.
(c) The terms "dollars" and "$" shall mean United States dollars, unless otherwise indicated.
(d) The term "control" shall mean, as applied to any Person, the possession directly or indirectly of the power to direct or cause the direction of the management of such Person through the ownership of voting securities or otherwise and the terms "controlling" and "controlled" have the correlative meanings.
(e) Whenever the words "include," "includes," or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation" unless the context requires otherwise.
ARTICLE II
PRELIMINARY TRANSFERS, THE MERGER; CONVERSION OF SHARES
Section 2.1 PRELIMINARY TRANSFERS.
(a) EXCLUDED SUBSIDIARIES AND EXCLUDED ASSETS. At or prior to the Closing (and in any event prior to the Contribution), the interests of Inorganics and its Subsidiaries in the Excluded Subsidiaries and the Excluded Assets shall be transferred to Seller or one or more Affiliates thereof other than the Company, Inorganics, or their Subsidiaries (collectively, the "Preliminary Transfers") in the manner set forth in Section 2.1(a) of the Seller Disclosure Letter.
(b) CONTRIBUTION. On the Closing Date and upon the terms and
subject to the conditions of this Agreement (and in any event prior to the
Effective Time), Seller shall contribute all of the issued and outstanding
shares of Capital Stock of Inorganics to the Company and the Company shall issue
to Seller pursuant to such contribution (i) a number of shares of Company Common
Stock, equal to 56,629,600 and (ii) a number of shares of Company Preferred
Stock equal to 73,704 (the "Contribution"). Pursuant to the Contribution, Seller
shall have the right to receive from the Company and the Company shall have the
obligation to pay to Seller (as provided in Section 2.9(d)) the Estimated
Closing Date Company Contribution Adjustment, if any, and the Company shall have
the right to receive from Seller and Seller shall have the obligation to pay to
the Company (as provided in Section 2.9(d)) the Estimated Closing Date Seller
Contribution Adjustment, if any, which obligation may be satisfied by an offset
against, or addition to, as the case may be, the Cash Merger Consideration
payable by the Company to the Seller on the Closing Date in accordance with
Section 2.1(c) hereof. Pursuant to the Contribution, and as provided in Section
2.10, Seller shall have the right to receive from the Company and the Company
shall have the obligation to pay to Seller the Company Contribution Adjustment,
if any, and the Company shall have the right to receive from Seller and Seller
shall have the obligation to pay to the Company the Seller Contribution
Adjustment, if any.
(c) FINANCING. On the Closing Date (but in any event after the Effective Time and upon the terms and subject to the conditions of this Agreement and the definitive financing documents contemplated by the Commitment Letters), Purchaser shall cause Inorganics to obtain the proceeds of the financing contemplated by the Commitment Letters. Purchaser shall cause Inorganics to distribute to the Surviving Corporation an amount equal to the Cash Merger Consideration plus the Estimated Closing Date Company Contribution Adjustment, if any, or minus the Estimated Closing Date Seller Contribution Adjustment, if any, and Purchaser shall cause the Surviving Corporation to pay the Cash Merger Consideration minus the Estimated
Closing Date Seller Contribution Adjustment, if any, or plus the Estimated Closing Date Company Contribution Adjustment, if any, to Seller in accordance with the terms of this Agreement.
Section 2.2 SALE AND PURCHASE. Upon the terms and subject to the conditions of this Agreement, simultaneously with the Effective Time, Seller shall sell, convey, transfer, assign and deliver to Purchaser, and Purchaser shall purchase, acquire and accept from Seller 5,600,000 shares of Company Common Stock minus a number of shares of Company Common Stock equal to the Management Rollover Common Share Number (the "Purchased Common Stock") and 59,000 shares of Company Preferred Stock minus a number of shares of Company Preferred Stock equal to the Management Rollover Preferred Share Number (the "Purchased Preferred Stock" and, together with the Purchased Common Stock, the "Purchased Company Stock"), free and clear of all Liens, in consideration for which, at the Effective Time, Purchaser shall pay to Seller an amount equal to the Purchase Consideration by making a wire transfer of immediately available funds in U.S. dollars to the account designated in writing by Seller at least two (2) business days prior to the Closing. The transactions contemplated by this Section 2.2 are herein referred to as the "Stock Purchase." Upon the terms and subject to the conditions of this Agreement, simultaneously with the Effective Time, the Company shall issue to the Employee Trust a number of shares of Company Common Stock equal to the Management Rollover Common Share Number (the "Employee Trust Common Stock") and a number of shares of Company Preferred Stock equal to the Management Rollover Preferred Share Number (the "Employee Trust Preferred Stock," which together with the Employee Trust Common Stock, the "Employee Trust Company Stock"), in consideration of, and to secure, the Company's obligations to issue Company Common Stock or Company Preferred Stock under the Senior Executive Plan after the Merger.
Section 2.3 THE MERGER. Upon the terms and subject to the conditions of this Agreement and in accordance with the DGCL, at the Effective Time (as defined in Section 2.4 hereof) Merger Sub shall be merged with and into the Company. Upon the Merger, the separate existence of Merger Sub shall cease and the Company shall continue as the surviving corporation (sometimes hereinafter referred to as the "Surviving Corporation"). The Merger shall have the effect as provided herein and in the applicable provisions of the DGCL. Without limiting the generality of the foregoing, upon the Merger, all the rights, privileges, immunities, powers and franchises of the Company and Merger Sub shall vest in the Surviving Corporation and all obligations, duties, debts and liabilities of the Company and Merger Sub shall be the obligations, duties, debts and liabilities of the Surviving Corporation.
Section 2.4 EFFECTIVE TIME. Subject to the provisions of this Agreement, on the Closing Date (as defined in Section 2.5 below), Merger Sub and the Company will cause an appropriate certificate of merger (the "Certificate of Merger") to be executed and filed with the Secretary of State of the State of Delaware (the "Secretary of State") in such form and executed as provided in the DGCL. The Merger shall become effective on the date and at the time when the Certificate of Merger has been duly filed with the Secretary of State or, subject to the DGCL, such later time as is agreed upon by Seller, the Company and Merger Sub and specified in the Certificate of Merger, and such time is hereinafter referred to as the "Effective Time."
Section 2.5 CLOSING. Unless this Agreement shall have been
terminated and the transactions contemplated herein abandoned pursuant to
Section 9.1 and subject to the satisfaction or waiver of the conditions set
forth in Article VII, the closing of the transactions contemplated hereby (the
"Closing") will take place at 10:00 a.m., New York City time, on a date to be
specified by the parties, which shall be no later than the third Business Day
after satisfaction or waiver (by the party entitled to waive the condition) of
all of the conditions set forth in Article VII hereof (other than those
conditions that by their nature are to be fulfilled only at the Closing, but
subject to the fulfillment or waiver of all such conditions at the time of the
Closing) (the "Closing Date"), at the offices of Latham & Watkins, 885 Third
Avenue, New York, New York 10022, unless another date and/or place is agreed to
in writing by the parties hereto.
Section 2.6 CERTIFICATE OF INCORPORATION: BY-LAWS. Pursuant to the Merger, (i) the certificate of incorporation of the Surviving Corporation shall be amended and restated in the form of the certificate of incorporation of Merger Sub, as set forth in Section 2.6(a) of the Purchaser Disclosure Schedule, which shall be in effect immediately prior to the Merger, which shall be the certificate of incorporation of the Surviving Corporation until thereafter changed or amended as provided therein and by applicable law, and (ii) the by-laws of Merger Sub, set forth in Section 2.6(b) of the Purchaser Disclosure Schedule, shall be adopted as the by-laws of the Surviving Corporation until thereafter changed or amended as provided therein and by applicable law.
Section 2.7 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION AND CERTAIN SUBSIDIARIES.
(a) Schedule 2.7 of the Purchaser Disclosure Letter sets forth the names of persons who shall serve as the directors of the Surviving Corporation until their successors shall have been duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the Surviving Corporation's certificate of incorporation and by-laws.
(b) The officers of the Merger Sub immediately prior to the Effective Time shall, from and after the Effective Time, be the officers of the Surviving Corporation and shall hold office until their respective successors are duly elected and qualified, or their earlier death, resignation or removal.
Section 2.8 CONVERSION OF CAPITAL STOCK
(a) At the Effective Time, by virtue of the Merger and without any action on the part of the Company, Merger Sub or the holders of the Shares or holders of the Capital Stock of Merger Sub:
(i) Each issued and outstanding share of Company Common Stock (other than shares of Company Common Stock to be cancelled in accordance with Section 2.8(a)(iii) and other than shares of Purchased Common Stock and Employee Trust Common Stock) (the "Non-Purchased Common Stock") shall be converted into:
(x) an amount in cash equal to (1) the Cash Merger Consideration, divided by (2) the number of such issued and outstanding shares of Non-Purchased Common Stock,
(y) a number of fully paid and nonassessable shares of Surviving Corporation Common Stock equal to (1) 1,395,700 divided by (2) the number of such issued and outstanding shares of Non-Purchased Common Stock, and
(z) a number of Surviving Corporation Notes (having an aggregate principal amount of eleven million three hundred forty thousand dollars ($11,340,000)) equal to (1) 11,340, divided by (2) the number of such issued and outstanding shares of Non-Purchased Common Stock.
Each issued and outstanding share of Company Preferred Stock (excluding shares of the Purchased Preferred Stock, the Employee Trust Preferred Stock, and the Company Preferred Stock to be cancelled in accordance with Section 2.8(a)(iii)) shall be converted into:
(x) an amount in cash equal to (1) the
Management Rollover Preferred Amount,
divided by (2) the number of such issued and
outstanding shares of Company Preferred
Stock (excluding shares of the Purchased
Preferred Stock, the Employee Trust
Preferred Stock and the Company Preferred
Stock to be cancelled in accordance with
Section 2.8(a)(iii)), and
(y) a number of fully paid and nonassessable shares of Surviving Corporation Preferred Stock equal to (1) 14,704 divided by (2) the number of such issued and outstanding shares of Company Preferred Stock (excluding shares of the Purchased Preferred Stock, the Employee Trust Preferred Stock and the Company Preferred Stock to be cancelled in accordance with Section 2.8(a)(iii)).
Each issued and outstanding share of Purchased Common Stock and Employee Trust Common Stock shall be converted into the right to receive one fully paid and nonassessable share of Surviving Corporation Common Stock. Each issued and outstanding share of Purchased Preferred Stock and Employee Trust Preferred Stock shall be converted into the right to receive one fully paid and nonassessable share of Surviving Corporation Preferred Stock. All of such consideration described in this Section 2.8(a)(i) is referred to herein as the "Merger Consideration." All such shares of Company Common Stock and Company Preferred Stock, when so converted, shall no longer be outstanding and shall automatically be cancelled and retired and shall cease to exist, and each holder of a certificate previously representing shares of Company Common Stock (a "Common Stock Certificate") or Company Preferred Stock (a "Preferred Stock Certificate") shall cease to have any rights with respect thereto, except the right to
receive the Merger Consideration for each share of such Company Common Stock or Company Preferred Stock upon the surrender of such certificate in accordance with Section 2.9 following surrender of each share of Company Common Stock or Company Preferred Stock and in accordance with Section 2.9(c).
(ii) Each issued and outstanding share of Capital Stock of Merger Sub shall be converted into a right to receive a proportionate share of each asset held by Merger Sub at the Effective Time other than any commitments or agreements relating to, or proceeds of, the Financing and other than the rights of Merger Sub under this Agreement and transactions contemplated hereby.
(iii) All shares of Company Common Stock, Company Preferred Stock or other Capital Stock of the Company that are held by the Company as treasury stock shall be cancelled and retired and shall cease to exist and no Merger Consideration shall be delivered in exchange therefor and each holder of a certificate formerly representing any such shares shall cease to have any rights with respect thereto.
Section 2.9 DISTRIBUTION OF MERGER CONSIDERATION; PAYMENT OF ESTIMATED CLOSING DATE CONTRIBUTION AMOUNT
(a) At the Closing upon the Merger, the Surviving Corporation shall pay, or cause to be paid to Seller, pursuant to the Merger, the Cash Merger Consideration by making a wire transfer of immediately available funds in U.S. dollars to the account designated in writing by Seller at least two (2) business days prior to the Closing.
(b) Upon the Merger, the Surviving Corporation shall (i) issue to Purchaser certificates representing the Surviving Corporation Common Stock and the Surviving Corporation Preferred Stock issued in the Merger upon conversion of the Purchased Company Stock, (ii) issue to the Employee Trust certificates representing the Surviving Corporation Common Stock and the Surviving Corporation Preferred Stock issued in the Merger upon conversion of the Employee Trust Common Stock and the Employee Trust Preferred Stock and, (iii) issue to Seller certificates representing the Surviving Corporation Common Stock, the Surviving Corporation Preferred Stock and the Surviving Corporation Notes issued in the Merger as part of the Merger Consideration; provided that the Surviving Corporation Notes and certificates representing Surviving Corporation Common Stock (other than the Surviving Corporation Common Stock and the Surviving Corporation Preferred Stock issued pursuant to clauses (i) and (ii) above and 357,000 shares of Surviving Corporation Common Stock which represents just over 5% of the total number of shares of Surviving Corporation Common Stock which shall be held by Seller (the "Seller Retained Common Stock")) and the Surviving Corporation Preferred Stock issued to Seller, each described in (iii) above, shall be immediately deposited with the Escrow Agent pursuant to the Escrow Agreement.
(c) After the Effective Time, the stock transfer books of the Company shall be closed and there shall be no transfers on the stock transfer books of the Surviving Corporation of shares of Company Common Stock and Company Preferred Stock which were outstanding immediately prior to the Effective Time. If, after the Effective Time, Common Stock Certificates and Preferred Stock Certificates are presented to the Surviving Corporation, they
shall be cancelled and exchanged for the appropriate portions of the Merger Consideration, as provided in this Article II; provided that any certificates representing the Surviving Corporation Common Stock, the Surviving Corporation Preferred Stock (other than the Purchased Common Stock and the Seller Retained Common Stock), and Surviving Corporation Notes issued to Seller in exchange for the Common Stock Certificate and Preferred Stock Certificate, respectively, shall be immediately deposited with the Escrow Agent pursuant to the terms of the Escrow Agreement.
(d) At the Closing, as applicable, either (1) the Company shall pay, or cause to be paid, to Seller, pursuant to the Contribution, the Estimated Closing Date Company Contribution Adjustment by increasing the amount of the Cash Merger Consideration by such amount or (2) Seller shall pay, or cause to be paid, to the Company, pursuant to the Contribution, the Estimated Closing Date Seller Contribution Adjustment by reducing the amount of the Cash Merger Consideration by such amount. At the Closing, the Seller shall also pay to the Company the amount of the Bridge Financing Fees by deducting such amount from the Cash Merger Consideration payable pursuant to clause (1) or (2) of the prior sentence.
Section 2.10 CONTRIBUTION; ADJUSTMENT PROCEDURE.
(a) CONTRIBUTION. At the Closing, subject to the terms and conditions hereof and pursuant to the Contribution, either, Seller shall be entitled to receive from the Company the amount of the Estimated Closing Date Contribution Adjustment (the "Estimated Closing Date Company Contribution Adjustment"), if such amount is positive, or the Company shall be entitled to receive from Seller the absolute value of the amount of the Estimated Closing Date Contribution Adjustment (the "Estimated Closing Date Seller Contribution Adjustment"), if such number is negative. The "Estimated Closing Date Contribution Adjustment" shall be equal to the sum (which sum may positive or negative) of (i) the sum of the Estimated Closing Net Working Capital Amount less the Target Net Working Capital Amount (which sum may be positive or negative), minus (ii) the amount of Estimated Closing Indebtedness, minus (iii) the amount of the Estimated Retention Bonuses, minus (iv) the amount of the Estimated Sales Bonuses, minus (v) to the extent that the funding level of the U.K. Plan (as determined by Salt Union Limited's actuary) is, at Closing, below 90% on a Minimum Funding Requirement basis pursuant to Section 56 of the Pensions Act 1995, the amount that is a good faith estimate of the amount that would be necessary to bring the funding level of the U.K. Plan to a 90% level as of the Closing (the "Estimated U.K. Funding Amount"); minus (vi) an amount equal to the Net Canadian Holdback Amount minus (vii) the Estimated Net Interim Period Adjustment Amount.
(b) PRE-CLOSING MATTERS. At least five (5) Business Days prior to Closing, Seller shall deliver to Purchaser its good faith estimates of (A) the amount of Indebtedness outstanding as of the close of business on the date immediately prior to the Closing Date minus any such Indebtedness to be paid at any time prior to the Closing or that will be paid to Seller at the Closing plus any Indebtedness incurred on the Closing Date prior to the Merger that remains outstanding immediately after the Closing (the "Estimated Closing Indebtedness") which Estimated Closing Indebtedness shall include the estimated amount of the U.K. Loans and the Esterhazy Loan as of the Closing Date (which estimated amounts shall be separately set forth), (B) the Net Working Capital Amount at Closing (the "Estimated Closing Net Working Capital Amount"), (C) the amount of the Retention Bonuses to be transferred to the Senior Executive
Plan plus the amount of the Retention Bonuses that will not be rolled-over into the Senior Executive Plan (such sum being referred to as the "Estimated Retention Bonuses"), (D) the amount of the Sales Bonuses (the "Estimated Sales Bonuses"), (E) the Net Canadian Holdback Amount, (F) the Estimated U.K. Funding Amount, and (G) the amount of the Net Interim Period Adjustment Amount (the "Estimated Net Interim Period Adjustment Amount") (which estimates shall set forth, for the Interim Period and the Offset Period, if any, the estimates of the Interim Period EBITDA, the Interim Period Capital Expenditures, the Interim Period Interest Adjustment Amount, the Interim Period Taxes and the Interim Period Adjustment Amounts) together with a reasonably detailed computation of such estimates which shall be computed in accordance with GAAP and on a basis consistent with the preparation of the Company Financial Statements. The Seller will prepare in good faith and deliver to the Purchaser each of the estimated amounts set forth in clauses (A) - (G) above as soon as reasonably practicable following a request from the Purchaser and an indication of the anticipated Closing Date.
(c) CONTRIBUTION ADJUSTMENT.
(i) CLOSING BALANCE SHEET. As soon as reasonably
practicable following the Closing Date, and in any event within one
hundred thirty days (130) days thereafter, the Company shall prepare
and deliver to Seller (i) a consolidated balance sheet of the Included
Subsidiaries as of the close of business on the date immediately prior
to the Closing Date (the "Closing Balance Sheet"), (ii) a consolidated
balance sheet of the Company as of the close of business on the date
immediately prior to the Closing Date, (iii) a calculation of the
"Closing Net Working Capital Amount", which shall equal the Net
Working Capital Amount as reflected on the Closing Balance Sheet minus
the Target Net Working Capital Amount (including the line item
components thereof, together with reasonable back-up information
providing the basis for such balance sheet and calculations), (iv) the
amount of outstanding Indebtedness outstanding as of the close of
business on the date immediately prior to the Closing Date minus any
such Indebtedness to be paid at any time prior to the Closing or that
will be paid by Seller at the Closing plus any Indebtedness incurred
on the Closing Date that remains outstanding immediately after the
Closing (the "Closing Indebtedness") which Closing Indebtedness shall
include the actual amount of the U.K. Loans and the Esterhazy Loan
immediately prior to the Closing, (including the components thereof,
together with reasonable back up information); (v) a calculation of
the amount of Retention Bonuses that would have been paid by the
Acquired Companies to the Employees, in accordance with the terms of
the Retention Bonuses had such Retention Bonuses not been "rolled
over" into the Senior Executive Plan plus the amount of the Retention
Bonuses that were not rolled-over into the Senior Executive Plan (such
sum being referred to as the "Actual Retention Bonuses"), (vi) a
statement of the actual amount of the sales bonuses set forth on
Section 3.16(a)(iii) of the Seller Disclosure Letter that would have
been paid to the Employees in accordance with the terms of such Sales
Bonuses had such Sales Bonuses not been "rolled over" into the Senior
Executive Plan or that were payable (and not paid by Seller prior to
Closing) (the "Actual Sales Bonuses"), (vii) a calculation of the
funding level of the U.K. Plan, at Closing, and the Actual U.K.
Funding Amount as prepared by the Salt Union Limited's actuary in the
U.K. consistent with its prior practice and (viii) a calculation of
the Net Interim Period Adjustment Amount (which calculation shall set
forth, for the Interim Period and the Offset Period, if any, a
calculation of the Interim
Period EBITDA generated, a calculation of the Interim Period Capital Expenditures actually spent during the Interim Period, a calculation of the Interim Period Interest Adjustment Amount, a calculation of the Interim Period Taxes and a calculation of the Interim Period Adjustment Amounts). The Closing Balance Sheet, the Interim Period EBITDA, and the Interim Period Capital Expenditures shall be prepared in accordance with GAAP and on a basis consistent with the preparation of the Company Financial Statements (except as specified in the definition of Interim Period EBITDA). In order for Seller to review the Closing Balance Sheet and calculate the Closing Net Working Capital Amount, the Closing Indebtedness, the Net Interim Period Adjustment Amount (and the elements of such calculation) and to review the calculation of the Actual Retention Bonuses, the Actual Sales Bonuses and the Actual U.K. Funding Amount, the Company will provide to Seller and Seller's accountants prompt and full access to the personnel, accountants and books and records of the Acquired Companies (and shall provide copies of the applicable portions of such books and records as may be reasonably requested), to the extent reasonably related to the preparation of the Closing Balance Sheet and the calculation of the Closing Net Working Capital Amount, the Closing Indebtedness, the Actual Retention Bonuses, the Actual Sales Bonuses and the Actual U.K. Funding Amount, and the Net Interim Period Adjustment Amount (and the elements of such calculation).
(ii) DISPUTES. If Seller disagrees with the calculation of the Closing Net Working Capital Amount, the Closing Indebtedness, the Actual Retention Bonuses, the Actual Sales Bonuses, the Actual U.K. Funding Amount, the Interim Period EBITDA, or the Net Interim Period Adjustment Amount or any element relevant to any such calculations, it shall notify the Company of such disagreement in writing within thirty (30) days after its receipt of the Closing Balance Sheet, which notice shall set forth in detail the particulars of such disagreement. In the event that Seller does not provide such a notice of disagreement within such thirty (30) day period, Seller shall be deemed to have accepted the Closing Balance Sheet and the calculation of the Closing Net Working Capital Amount, the Closing Indebtedness, the Actual Retention Bonuses, the Actual Sales Bonuses, the Actual U.K. Funding Amount, and the Net Interim Period Adjustment Amount (and each element of such calculation), respectively delivered by the Company, which shall be final, binding and conclusive for all purposes hereunder. In the event any such notice of disagreement is timely provided by Seller, the Company and Seller shall use their reasonable best efforts for a period of thirty (30) days (or such longer period as they may mutually agree) to resolve any disagreements with respect to the calculation of the Closing Net Working Capital Amount, the Closing Indebtedness, the Actual Retention Bonuses, the Actual Sales Bonuses, the Actual U.K. Funding Amount or the Net Interim Period Adjustment Amount (or any element thereof). If, at the end of such period, they are unable to resolve such disagreements, then, upon the written request of either party, Arthur Andersen LLP (or if such firm does not accept such engagement Deloitte & Touche LLP, or if such firm does not accept the engagement KPMG International) (the "Auditor") shall resolve any remaining disagreements. The Auditor shall determine as promptly as practicable (but in any event within forty-five (45) days) following the date on which such dispute is referred to the Auditor, based solely on written submissions forwarded by the Company and Seller to the Auditor within ten (10) days following the Auditor's selection, whether the Closing Balance Sheet
was prepared in accordance with the standards set forth in this
Section 2.10(c) with respect to any items identified as disputed in
the notice of disagreement and not previously resolved by the parties,
and if not, whether and to what extent (if any) the Closing Net
Working Capital Amount, the Closing Indebtedness, the Actual Retention
Bonuses, the Actual Sales Bonuses, the Actual U.K. Funding Amount or
the Net Interim Period Adjustment Amount (or any element thereof)
requires adjustment. The parties shall share equally the fees and
expenses of the Auditor. The determination of the Auditor shall be
final, conclusive and binding on the parties. The Auditor's
determination of the amounts of the Closing Net Working Capital
Amount, the Closing Indebtedness, the Actual Retention Bonuses, the
Actual Sales Bonuses, the Actual U.K. Funding Amount or the Net
Interim Period Adjustment Amount (and each element thereof) shall then
be deemed to be the Closing Net Working Capital Amount, the Closing
Indebtedness, the Actual Retention Bonuses, the Actual Sales Bonuses,
the Actual U.K. Funding Amount, the Net Interim Period Adjustment
Amount (and each element thereof), respectively, for purposes of
Section 2.10(c)(iii) of this Agreement. The date on which such items
are accepted or finally determined in accordance with this Section
2.10 is referred as to the "Determination Date."
(iii) CONTRIBUTION ADJUSTMENT. If the amount of the sum of the Closing Net Working Capital Amount minus the Closing Indebtedness minus the Actual Retention Bonuses minus Actual Sales Bonuses minus the Actual U.K. Funding Amount, minus the Net Interim Period Adjustment Amount, if any is (x) less than the sum of the Estimated Closing Net Working Capital Amount minus Estimated Closing Indebtedness minus the Estimated Retention Bonuses minus the Estimated Sales Bonuses minus the Estimated U.K. Funding Amount, minus the Estimated Net Interim Period Adjustment Amount, if any, then Seller shall pay to the Company an amount equal to such shortfall (the "Seller Contribution Adjustment") or (y) greater than the sum of the Estimated Closing Net Working Capital Amount minus Estimated Indebtedness minus the Estimated Retention Bonuses minus Estimated Sales Bonuses minus the Estimated U.K. Funding Amount, minus the Estimated Net Interim Period Adjustment Amount, if any, then the Company shall pay to Seller an amount equal to such excess (the "Company Contribution Adjustment").
(iv) ADJUSTMENT AMOUNTS. The Seller Contribution Adjustment and the Company Contribution Adjustment, if any, shall be calculated as an adjustment on the Determination Date to the amounts contributed to the Company by the Seller and the amounts received by Seller from the Company pursuant to the Contribution. The Seller Contribution Adjustment and the Company Contribution Adjustment, if any, shall bear simple interest at a rate of 12% per annum measured from the Closing Date to the date of such payment. Amounts owing by Seller, if any, pursuant to this Section 2.10 shall be paid by Seller by delivery of immediately available funds to an account designated by the Company within ten (10) Business Days after the Determination Date. Amounts owing by the Company, if any, pursuant to this Section 2.10 shall be paid by the Company by delivery of immediately available funds to an account designated by Seller within ten (10) Business Days after the Determination Date.
Section 2.11 BINDING COMMITMENT. Consummation of each of the Contribution, the Stock Purchase, and the Merger (each a "Transaction") shall be pursuant to a commitment and obligation of each of the Company, Seller, Merger Sub, and Purchaser to consummate, or cause to be consummated, each of the other Transactions if any of them occur, the occurrence of which are subject to the terms and conditions hereof. The consummation of each Transaction shall be a condition to the consummation of each of the other Transactions (whether precedent, subsequent, or concomitant).
Section 2.12 CANADIAN HOLDBACK. At the Closing, if the Net Canadian Holdback Amount is positive, then the Company shall be entitled to retain the Net Canadian Holdback Amount as provided in Section 2.10 and shall release such amount to Seller upon reasonable evidence that (i) all Taxes other than withholding Taxes (imposed pursuant to the Income Tax Act (Canada) or any corresponding provision of applicable provincial legislation) that were due and payable by Sifto Canada Inc. on or prior to the Closing Date with respect to any receivable (or the settlement of any receivable) owed by IMC Salt Inc. to Sifto Canada Inc. in respect of any period (or portion thereof) ended on or prior to the Closing Date have been paid in full, and (ii) all withholding Taxes (imposed pursuant to the Income Tax Act (Canada) or any corresponding provision of applicable provincial legislation) required to be withheld in connection with the settlement on or prior to the Closing of any receivable owed by IMC Salt Inc. to Sifto Canada Inc., regardless of whether such withholding Tax is required to be remitted to the relevant taxing authority on or prior to the Closing Date, shall have been fully paid or fully withheld (to the extent the amount is withheld in cash by an Acquired Company and in the cash accounts of such Acquired Company immediately after Closing), as the case may be; or in lieu of payment to Seller and only upon a request by Seller, the Company shall pay all or any portion of the Net Canadian Holdback Amount to the relevant taxing authority in the manner directed by Seller in connection with any payment in full of such Taxes.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser as follows:
Section 3.1 ORGANIZATION OF SELLER AND THE COMPANY; AUTHORITY. Each of Seller and the Company is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization. Each of Seller and the Company has the requisite corporate power and authority to execute and deliver this Agreement and the other Transaction Documents to which it is a party, and to consummate the transactions contemplated hereby and thereby and to perform its obligations hereunder and thereunder. Each of Seller and the Company previously has supplied Purchaser with or made available to Purchaser true and complete copies of its articles of incorporation and by-laws.
Section 3.2 ORGANIZATION OF ACQUIRED COMPANIES; AUTHORITY.
Section 3.2 of the Seller Disclosure Letter contains a complete and accurate
list of each of the Acquired Companies, its jurisdiction of incorporation or
organization and the jurisdictions in which it is qualified to do business. Each
Acquired Company is duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization, with the requisite corporate or
other organizational power and authority to own, operate or lease its properties and assets and to conduct its business as currently conducted except where the failure to be so organized, existing or in good standing would not, individually or in the aggregate, have a Company Material Adverse Effect. Each Acquired Company is qualified to do business as a foreign organization under the laws of each state or other jurisdiction in which either the ownership or use of the properties or assets owned or used by it, or the nature of the activities conducted by it, requires such qualification, except where the failure to be so qualified would not, individually or in the aggregate, have a Company Material Adverse Effect. Seller has previously provided or made available to Purchaser true and complete copies of the certificate of incorporation and by-laws (or similar organizational documents) of each of the Acquired Companies.
Section 3.3 AUTHORIZATION; BINDING EFFECT.
(a) The execution and delivery by each of Seller and the Company of this Agreement and the other Transaction Documents to which it is a party and the performance of its obligations hereunder and thereunder and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all requisite corporate action on the part of each of Seller and the Company. No other corporate proceedings on the part of Seller or the Company are required in connection with the execution, delivery and performance by either of such parties of the Transaction Documents to which it is a party or the consummation by either of such parties of the transactions contemplated hereby. This Agreement has been duly executed and delivered by each of Seller and the Company and, assuming due authorization, execution and delivery hereof by Purchaser, this Agreement constitutes a binding obligation of each of Seller and the Company enforceable against each of Seller and the Company in accordance with its terms, except as may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or similar laws relating to creditors rights generally and (ii) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity).
(b) Each Included Subsidiary and each member of the Seller Group that is a party to a Transaction Document has all requisite corporate or other organizational power and authority to execute and deliver the Transaction Documents to which it is a party and to consummate the transactions contemplated thereby and perform its obligations thereunder. No other corporate proceedings on the part of any Included Subsidiary or member of the Seller Group that is a party to a Transaction Document are necessary to approve and authorize the execution and delivery of the Transaction Documents to which such Included Subsidiary or member of the Seller Group is a party and the consummation of the transactions contemplated thereby. The Transaction Documents to which any Acquired Company or member of the Seller Group is a party will have been duly executed and delivered at the Closing by the Acquired Company or member of the Seller Group that is a party thereto and will constitute the valid and binding agreements of such Acquired Company or member of the Seller Group, enforceable in accordance with their respective terms, except as may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or other laws relating to creditors rights generally and (ii) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity).
Section 3.4 CAPITALIZATION; TITLE TO SHARES.
(a) As of the date hereof, the authorized Capital Stock of the Company consists of 100 shares of the Company Common Stock, par value $1.00 per share of which 100 shares are issued and outstanding. Immediately prior to the Contribution, the authorized Capital Stock of the Company shall consist of 56,629,700 shares of Company Common Stock, par value $1.00 per share, of which 100 shares will be issued and outstanding and 73,704 shares of Company Preferred Stock, par value $0.01 per share, of which zero shares will be issued and outstanding. All of the issued and outstanding shares of Capital Stock of the Company are owned by Seller, free and clear of all Liens, except for restrictions on transfer under applicable securities laws and have been duly authorized and validly issued and are fully paid and non-assessable. Except as set forth in Section 3.4 of the Seller Disclosure Letter, there are no outstanding options, warrants, rights to subscribe, preemptive rights, rights of first refusal, convertible or exchangeable securities or similar rights (other than this Agreement) pursuant to which the Company is obligated to issue or sell or any third party is entitled to purchase or otherwise acquire any Capital Stock of the Company. There are no outstanding or authorized stock appreciation, phantom stock, profit participation, or similar rights with respect to the Company. There are no voting trusts, proxies, or other agreements or understandings with respect to the voting of the capital stock of the Company.
(b) Section 3.4 of the Seller Disclosure Letter sets forth the
authorized and issued and outstanding Capital Stock of each Included Subsidiary,
the holders thereof and the number of shares, interests, participations, rights
or equivalents owned by each holder. Except as set forth on Section 3.4 of the
Seller Disclosure Letter, all issued and outstanding Capital Stock of each
Included Subsidiary is owned by the Company or an Included Subsidiary free and
clear of any and all Liens, except for restrictions on transfer under applicable
securities laws, and, if such Included Subsidiary is a corporation, have been
validly issued and are fully paid and nonassessable. Except as set forth in
Section 3.4 of the Seller Disclosure Letter, there are no outstanding options,
warrants, rights to subscribe, preemptive rights, rights of first refusal,
convertible or exchangeable securities or similar rights pursuant to which any
Included Subsidiary is obligated to issue or sell or any third party is entitled
to purchase or otherwise acquire any Capital Stock of any Included Subsidiary.
Except as set forth on Section 3.4 of the Seller Disclosure Letter, neither the
Company nor any Included Subsidiary has, directly or indirectly, any material
interest in any other corporation, joint venture, partnership, limited liability
company or other entity or rights to acquire any such interest.
Section 3.5 NON-CONTRAVENTION. Except as set forth in Section 3.5 of the Seller Disclosure Letter, the execution and delivery of this Agreement and the other Transaction Documents to which Seller or any Acquired Company is a party, and the performance by Seller or any Acquired Company of its obligations hereunder or thereunder, do not (i) violate any provision of the articles of incorporation, by-laws or similar organizational documents of Seller or any Acquired Company, (ii) result in the breach or violation of, give rise to any right of termination, acceleration of any obligation or amendment under, require any notice under, result in the loss of material benefit under, result in the creation of a Lien on the Shares or Capital Stock of the Included Subsidiaries or, the assets of any Acquired Company or constitute a default under (in each case, with or without the giving of notice or the lapse of time or both) any mortgage, deed of trust, or other arrangement or instrument for borrowed money, contract, lease,
license, instrument or Permit to which Seller or any Acquired Company is a party or to which their assets are subject, or (iii) assuming that all consents and approvals referred to in Section 3.6 have been obtained, violate any Law or Order; except, as to clauses (ii) and (iii), for such breaches, violations, rights or Liens which would not, individually or in the aggregate, reasonably be expected to (x) result in a Company Material Adverse Effect or (y) prevent or materially delay the consummation of the transactions contemplated hereby.
Section 3.6 CONSENTS AND APPROVALS.
(a) Other than (i) filings under the HSR Act, (ii) filings under the Competition Act (Canada), (iii) filings under the ICA and (iv) as set forth in Section 3.6 of the Seller Disclosure Letter, the execution, delivery and performance of this Agreement and the other Transaction Documents, and the consummation of the transactions contemplated hereby and thereby, by Seller or any Acquired Company do not require any authorization, consent, waiver, approval, exemption, Permit or order of or other action by, or notice or declaration to, or filing with, any Governmental Authority, under any Law applicable to Seller, the Acquired Company or any of their respective assets, except where such violation or the failure to obtain such consent, approval, exemption, Permit or order or to make such notice or declaration or filing would not reasonably be expected to result, individually or in the aggregate, in a Company Material Adverse Effect.
(b) Section 3.6(b) of the Seller Disclosure Letter sets forth each Third Party Consent, except for those which would not, individually or in the aggregate, reasonably be expected to result in a Company Material Adverse Effect.
Section 3.7 FINANCIAL INFORMATION.
(a) Seller has previously delivered to Purchaser (i) the audited consolidated balance sheet of the Included Subsidiaries as of December 31, 1999 and December 31, 2000, and the audited consolidated statements of operations, stockholders' equity and cash flow of the Included Subsidiaries, for the nine months ended December 31, 1998 and the years ended December 31, 1999 and December 31, 2000 including the notes thereto (the "Audited Financial Statements") and (ii) the unaudited condensed consolidated balance sheets of the Included Subsidiaries as of March 31, 2000, June 30, 2000, September 30, 2000, March 31, 2001 and June 30, 2001, and the unaudited condensed consolidated statements of operations and cash flows of the Included Subsidiaries for each of the three month periods ended March 31, 2000, June 30, 2000, September 30, 2000, March 31, 2001 and June 30, 2001 (collectively the "Unaudited Financial Statements" and together with the Audited Financial Statements, the "Company Financial Statements"). Except as set forth on Section 3.7 of the Seller Disclosure Letter, the Company Financial Statements have been prepared from the books and records of the Seller Group and the Included Subsidiaries and fairly present in all material respects in accordance with GAAP the consolidated financial position of and consolidated results of operations of the Included Subsidiaries, and the financial impact of the related party transactions included in the Audited Financial Statements, as of the times and for the periods referred to therein, subject in the case of unaudited interim financial statements to changes resulting from normal year-end adjustments and the absence of footnote disclosure.
(b) Section 3.7 of the Seller Disclosure Letter sets forth all intercompany payables and receivables by and between the Acquired Companies on one hand and the Seller Group on the other hand as of June 30, 2001.
Section 3.8 ABSENCE OF UNDISCLOSED LIABILITIES. No Acquired Company has any liabilities that are in excess of $100,000 individually or $500,000 in the aggregate for all Acquired Companies (whether accrued or contingent) required by GAAP to be reflected on the consolidated financial statements of the Acquired Companies or reflected in the footnotes thereto, except (i) liabilities reflected on the Company Financial Statements, including the notes thereto, (ii) liabilities which have arisen since June 30, 2001 in the Ordinary Course of Business or in accordance with the terms and conditions of this Agreement, and (iii) liabilities disclosed in the Seller Disclosure Letter.
Section 3.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as expressly contemplated by this Agreement or as set forth in Section 3.9 of the Seller Disclosure Letter, since June 30, 2001 until the date hereof, the business of the Acquired Companies has been conducted in all material respects in the Ordinary Course of Business or in response to matters which are actively being contested in good faith by appropriate proceedings and the Acquired Companies, individually or collectively, have not:
(a) suffered any change that has been or would reasonably be expected to result, individually or in the aggregate, in a Company Material Adverse Effect or suffered any material theft, damage, destruction or casualty loss to its assets not covered by insurance;
(b) redeemed or repurchased, directly or indirectly, any shares of Capital Stock or rights to acquire shares of Capital Stock or declared, set aside or paid any dividends or made any other distributions (other than cash dividends or distributions) with respect to any shares of Capital Stock;
(c) issued any Capital Stock, any securities convertible, exchangeable or exercisable into shares of Capital Stock, or warrants, options or other rights to acquire shares of Capital Stock of any Acquired Company;
(d) incurred Indebtedness to third parties in excess of $100,000 individually or $500,000 in the aggregate, other than negative cash balances and unpaid checks or drafts, which occurred or are in existence in the Ordinary Course of Business;
(e) subjected any material property or asset to any Lien (other than Permitted Liens);
(f) sold, leased, assigned or transferred a material portion of its tangible assets, other than sales of inventory, raw materials, obsolete equipment, "trade-in" sales for equipment or vehicle upgrades or similar sales of immaterial assets, in each case in the Ordinary Course of Business, or canceled without fair consideration any material debts or claims owing to or held by it;
(g) sold, assigned, licensed or transferred any material Intellectual Property owned by any Acquired Company;
(h) waived any rights of material value, whether or not in the Ordinary Course of Business;
(i) made or granted any bonus or any prospective wage, salary or
compensation increase to any director, officer, employee or sales representative
(excluding (i) increased compensation based solely on levels of sales, (ii)
increases made in accordance with the Acquired Companies' collective bargaining
agreements, but not excluding changes in commission rates that result in any
such person receiving a compensation increase and (iii) any increases made in
the Ordinary Course of Business since October 1, 2001);
(j) made or granted any material increase in benefits under any employee benefit plan or arrangement, or materially amended (except as required by law to retain registered or qualified status) or terminated any existing employee benefit plan or arrangement, or adopted any new employee benefit plan or arrangement;
(k) made a material change in its accounting methods;
(l) made any loans or advances to, or any guarantees for the benefit of, any Affiliates that will be outstanding following the Closing other than in respect of advances to employees in the Ordinary Course of Business and other than loans or advances provided by an Acquired Company to another Acquired Company;
(m) changed or authorized any change in its certificate of incorporation or by-laws;
(n) incurred expenditures that in the aggregate are materially less than the amounts contemplated by the Capital Expenditure Budget or that materially deviate from the allocation amongst the categories of items contemplated in such Capital Expenditure Budget;
(o) amended or modified any non-compete with any employee of the Acquired Companies; or
(p) committed or agreed to any of the foregoing.
Section 3.10 TITLE TO PROPERTIES; SUFFICIENCY OF ASSETS.
(a) Section 3.10 of the Seller Disclosure Letter sets forth the
address or other description of each material parcel of Owned Real Property.
With respect to each material parcel of Owned Real Property: (i) the Acquired
Companies have good and marketable title, free and clear of all Liens other than
Permitted Liens; (ii) except as set forth in Section 3.10 of the Seller
Disclosure Letter, or in the Title Commitments or in the Foreign Title
Assurances delivered to the Purchaser or its representatives as of the date
hereof (even if only in draft form, which drafts are listed on Section 3.10(a)
of the Seller Disclosure Letter), the Acquired Companies have not leased or
otherwise granted to any Person the right to use or occupy all of such Owned
Real Property or any material portion thereof; and (iii) except as set forth in
Section 3.10 of the Seller Disclosure Letter, or in the Title Commitments or in
the Foreign Title Assurances delivered to the Purchaser or its representatives
as of the date hereof (even if only in draft form, which drafts are listed on
Section 3.10(a) of the Seller Disclosure Letter), there are no outstanding
options,
rights of first offer, rights of reverter or rights of first refusal of third parties to purchase such Owned Real Property.
(b) Section 3.10 of the Seller Disclosure Letter sets forth the address or other description of each material parcel of Leased Real Property. Seller has delivered or made available to Purchaser a true and complete copy of the lease documents for each of such material parcel of Leased Real Property. Except as set forth in Exhibit A of Section 3.10 of the Seller Disclosure Letter, in the Title Commitments or in the Foreign Title Assurances, with respect to each of the aforementioned Leases: (i) such Lease is legal, valid, binding, enforceable and in full force and effect; (ii) the other party to such Lease is not an Affiliate of any of the Acquired Companies; (iii) the Acquired Companies enjoy peaceful and undisturbed possession of all material Leased Real Property and no material landlord-tenant dispute exists with respect to any material Leased Real Property; (iv) the Acquired Companies have not subleased or otherwise granted any Person the right to use or occupy such Leased Real Property; (v) the Acquired Companies have not collaterally assigned or granted any other security interest in such Lease or any interest therein; and (vi) there are no Liens on the estate or interest created by such Lease except for Permitted Liens.
(c) Except as set forth on Section 3.10(c)(I) of the Seller Disclosure Schedule, to Seller's Knowledge, as of the date hereof (i) all material buildings, structures, fixtures, building systems and equipment included in the material Real Property (the "Improvements") are in reasonably good condition and repair for their intended purposes in all material respects, subject to reasonable wear and tear; (ii) to the extent necessary for the operation of the Acquired Companies' business as currently conducted thereon, all utility services or systems for the Real Property have been installed and are operational and sufficient in all material respects for the services conducted at such property and (iii) the Acquired Companies have rights of egress and access to the material Real Property necessary for the conduct of the business thereon.
(d) Except as set forth on Section 3.10(d) of the Seller Disclosure Letter, the Acquired Companies own or hold a valid leasehold interest in, free and clear of all Liens except Permitted Liens, all of the personal property shown on the Latest Balance Sheet, other than personal property disposed of in the Ordinary Course of Business since the date thereof. Except as set forth on Section 3.10(d) of the Seller Disclosure Letter, the assets (including contract rights) and properties (whether real or personal, tangible or intangible) owned or leased by the Acquired Companies and the Additional Acquired Assets (when taken together with the services, supplies and rights to be provided under the Transaction Documents or available to the Acquired Companies under contracts with third parties on financial terms not substantially different from what is currently enjoyed) constitute all of the assets, properties and services necessary to operate the business of the Acquired Companies in all material respects as it is currently conducted and as such business is reflected in the Company Financial Statements for the year ended December 31, 2000 and the six months ended June 30, 2001.
Section 3.11 MINES.
(a) The Acquired Companies are not obligated, by virtue of any prepayment under any contract providing for the sale by the Acquired Companies of Salt, SOP or other minerals sold by the Acquired Companies as of the Closing which contains a "take or pay"
clause or under any similar arrangement, to deliver Salt, SOP or such other minerals at some future time without then or thereafter receiving full payment therefor; and
(b) Assuming the existence of Salt and, with respect to GSL only, Other Minerals as reflected in studies obtained by Seller and heretofore provided to Purchaser and assuming the existence of reasonable mining conditions (i.e., the lack of geological or physical conditions which would prohibit or inhibit the mining process from continuing in a continuous manner), subject to Permitted Liens there are no deficiencies in title to the Salt or to the interest that gives rise to the right of the applicable Acquired Company to mine the Salt and, with respect to GSL only, Other Minerals with respect to that part of the Real Property upon or in which mining operations are conducted that would, other than pursuant to the terms of the Leases for such Mines and the expiration of mining rights in the Permits for such Mines in accordance with their terms, prevent Purchaser from continuing to mine the Mines as such mining is currently conducted. Based upon (i) the geological characteristics of the salt deposits that provide the Acquired Companies' raw materials, (ii) the production rates of Salt for each Mine currently in operation as of the date hereof and (iii) the Acquired Companies' forecasts for production requirements of Salt as of the date hereof, and subject to the Acquired Companies' rights under applicable Permits and contracts, the Acquired Companies' current reserves of Salt would provide sufficient sources of readily recoverable Salt until at least the twentieth anniversary of the date of this Agreement at each such mine. Based upon (i) the Acquired Companies' access to brines from the Great Salt Lake which contain potassium salts, (ii) the production rates of SOP as of the date hereof and (iii) the Acquired Companies' forecasts for production requirements of SOP as of the date hereof, and subject to the Acquired Companies' rights under applicable Permits and contracts, the Acquired Companies' access to potassium rich brines of the Great Salt Lake would provide sufficient reserves of SOP until the twentieth anniversary of the date of this Agreement.
(c) Each Acquired Company which conducts mining activities at a Mine (i) possesses all material certificates, authorities, permits or licenses issued by the appropriate provincial, state, municipal, federal or other regulatory agency or body necessary to carry out mining and extraction activities as currently carried out at the Mines, (ii) is in compliance in all material respects with such certificates, authorities, permits and licenses and with all laws, regulations, tariffs, rules, orders and directives material to its operation, including, without limitation, all laws, regulations and statutes relating to mining claims, concessions or leases, and mining, and (iii) none of such Acquired Companies has received any notice of proceedings relating to the revocation or modification of any such material certificates, authorities, permits or licenses which, individually or in the aggregate, if the subject of an unfavourable decision, order, ruling or finding, would materially and adversely affect the operations currently carried out at the Mines or has received notice of the revocation or cancellation of, or any intention to revoke or cancel, any of the Leases relating to the Mines.
(d) There has been no act or omission by the Acquired Companies which could result by notice or lapse of time, or by both notice and lapse of time, in the breach, termination, abandonment, forfeiture, relinquishment or other premature termination of the Leases relating to the Mines nor has there been any material breach of the provisions or terms and conditions of such Leases.
(e) There are no property payments, royalties, fees or monies payable or required to be paid to any person, other than (i) as reflected or referred to in the Companies Financial Statements (including the notes thereto) and (ii) amounts payable that have arisen since June 30, 2001 in the Ordinary Course of Business, with regard to the Mines and there are no outstanding agreements relating to or options to acquire any part of or all of any of the Mines, in each case except as set forth in Section 3.10 of the Seller Disclosure Letter, in the Title Commitments Title Policies or in the Foreign Title Assurances delivered to the Purchaser or its representatives as of the date hereof (even if only in draft form, which drafts are listed in Section 3.10(a) of the Seller Disclosure Letter).
Section 3.12 INTELLECTUAL PROPERTY. Section 3.12(a) of the
Seller Disclosure Letter lists the following Business Intellectual Property
owned by any Acquired Company, all: (i) Patents; (ii) Trademarks (including
Internet domain name registrations) and material unregistered Trademarks, and
(iii) material Copyright registrations and material unregistered copyrights.
Section 3.12 of the Seller Disclosure Letter also lists (i) all material
computer programs which are owned, licensed, leased or otherwise used by any
Acquired Company; and (ii) all material agreements granting or obtaining any
right to use or practice any rights under any Intellectual Property to which
Seller is a party or is otherwise bound or receives rights, as licensee,
licensor or otherwise thereunder. Except as disclosed on Section 3.12(b) of the
Seller Disclosure Letter, and as would not, individually or in the aggregate,
reasonably be expected to result in a Company Material Adverse Effect: (i) the
Acquired Companies own or have licenses or other rights to use all Business
Intellectual Property, (ii) no claims, or, to Seller's Knowledge, threat of
claims, have been asserted against any Acquired Company by any Person related to
the use of any Business Intellectual Property in the conduct of the businesses
of the Acquired Companies or challenging or questioning the validity or
effectiveness of any license or agreement relating to Business Intellectual
Property, (iii) to the Seller's Knowledge, the conduct of the businesses of the
Acquired Companies as presently conducted does not infringe on the Intellectual
Property rights of any Person, (iv) to Seller's Knowledge, no third party is
infringing, misappropriating or otherwise violating any Business Intellectual
Property owned by the Acquired Companies and (v) all material patents,
trademarks and copyrights included in the Business Intellectual Property that
are owned by the Acquired Companies have been duly maintained and have not been
canceled, expired or abandoned (except for patents and copyrights expiring at
the end of their natural term).
Section 3.13 LITIGATION; PROCEEDINGS.
(a) Except as set forth in Section 3.13 of the Seller Disclosure
Letter, as of the date hereof there are no actions, suits or proceedings
(collectively, "Actions") pending or, to Seller's Knowledge, threatened against
any Acquired Company before any Governmental Authority or arbitrator, except
Actions which individually would result in Losses (excluding attorneys fees and
expenses and diminutions in value) of less than $250,000. Except as set forth in
Section 3.13 of the Seller Disclosure Letter, and except as would not reasonably
be expected to result in a Company Material Adverse Effect, no Acquired Company
is subject to any material outstanding Order issued by any Governmental
Authority or any arbitrator. As of the date, hereof, there are no Actions
pending or, to Seller's Knowledge, threatened against Seller or the Acquired
Companies, by or before any Governmental Authority which challenge the validity
of this Agreement or the transactions contemplated hereby.
(b) The parties agree that the representations and warranties set forth in this Section 3.13 do not apply to compliance with or liabilities under Environmental Laws.
Section 3.14 COMPLIANCE WITH LAWS.
(a) Except as set forth in Section 3.14(a) of the Seller Disclosure Letter, the Acquired Companies to Seller's Knowledge since April 1, 1998 have complied in all material respects with all applicable Laws and Orders.
(b) Section 3.14(b)(i) of the Seller Disclosure Letter lists all material Permits, necessary for the ownership and conduct of the business as it is currently conducted. Except as set forth in Section 3.14(b)(ii) of the Seller Disclosure Letter, such Permits are in full force and effect, except where the failure to hold any such Permit in full force and effect would not, individually or in the aggregate, reasonably be expected to result in a Company Material Adverse Effect. Except as set forth in Section 3.14(b)(iii) of the Seller Disclosure Letter, none of the Acquired Companies have received notice from any competent authority of revocation of or default under any material Permits or of any material non-compliance therewith.
(c) Without limiting Section 3.14(a), neither an Acquired Company nor any director, officer, authorized agent or employee of an Acquired Company has engaged in any activities which violate any Law or Order of any Governmental Authority pertaining to price fixing or collusive practices or similar activities that would violate any anti-trust Law and to the Knowledge of Seller, no investigation by any Governmental Authority with respect to any such violations is pending or threatened with respect to any Acquired Company, except as would not have a Company Material Adverse Effect. No Acquired Company has made any, or has entered into any understanding, agreement or arrangement, written or oral under or pursuant to which, bribes, kickbacks, illegal rebates, payoffs or other forms of illegal payments have been or will be made, provided or suffered and each Acquired Company has since April 1, 1998 been in compliance with the Foreign Corrupt Practices Act of 1977, as amended and the Corruption of Foreign Public Officials Act (Canada, except as would not have a Company Material Adverse Effect.
(d) Each of the Acquired Companies conducts and has conducted its business fully in accordance with the requirements of all laws rules or regulations of the United Kingdom or any country in the European Union dealing with state aid, public procurement, or anti-dumping, and the requirements of any special regulatory regime to which an Acquired Company may be subject in any area of its activities ("European Competition Laws") applicable to its business activities and has not infringed such requirements nor been investigated for any alleged non-compliance or infringement nor been investigated for any alleged non-compliance or infringement nor given any undertakings in connection with any such matters, except as would not have a Company Material Adverse Effect. None of the Acquired Companies is subject to any prohibition, order, condition, undertaking, assurance or similar measure or obligation imposed by or under any European Competition Laws, except as would not have a Company Material Adverse Effect.
(e) The parties agree that the representations and warranties set forth in this Section 3.14 do not apply to compliance with or liabilities under Environmental Laws.
Section 3.15 ENVIRONMENTAL MATTERS.
(a) Except as disclosed in Section 3.15 of the Seller Disclosure Letter:
(i) Each Acquired Company has complied in all material respects with and is currently in compliance in all material respects with all applicable Environmental Laws. Neither Seller nor any Acquired Company has received any oral or written notice from any Governmental Authority which has not been complied with regarding any material liabilities or any material investigatory or remedial obligations arising under applicable Environmental Laws and relating to any Acquired Company or any of their respective properties, facilities or operations. No Acquired Company is subject to any outstanding obligation, including any obligation to pay monies owed or to complete remedial or corrective actions, pursuant to the terms of any agreement, settlement, Order, or judgment relating to any matter arising out of or pertaining to Environmental Law except, in each case, as would not reasonably be expected to result in a Company Material Adverse Effect.
(ii) Each of the Acquired Companies conducts and has conducted its business materially in accordance with all laws and regulations pertaining to the protection of the safety and health of employees ("Health and Safety Laws").
(iii) To the knowledge of the Seller, there are no scheduled changes in Environmental Laws or scheduled changes in a Permit that may prevent continued material compliance with Environmental Laws, Permits or Health and Safety Laws, or that may require any material change in operations by any Acquired Company or that may give rise to any liability or other obligation under any Environmental Laws, Permits or Health and Safety Laws except, in each case, as would not reasonably be expected to result in a Company Material Adverse Effect.
(iv) Each Acquired Company has obtained and complied in all material respects with, and is currently in compliance in all material respects with, all material Permits that are required pursuant to any applicable Environmental Laws for the operation of its business. All such Permits are in full force and effect, are not subject to appeal or any other pending or threatened proceeding seeking to amend, modify, limit or terminate such Permits, except where the failure to hold any such Permit in full force and effect or the existence of any such appeal or any other pending or threatened proceeding seeking to amend, modify, limit or terminate such Permits would not, individually or in the aggregate, reasonably be expected to result in a Company Material Adverse Effect. To the extent required to allow for continued operation of the Acquired Companies' facilities, timely applications for renewal or reissuance of the Permits listed on Exhibit 3.15.1 to Section 3.15 of the Seller Disclosure Letter have been made. A list of all such material Permits is set forth on Exhibit 3.15.1 to Section 3.15 of the Seller Disclosure Letter.
(v) None of the following exists at any property or facility owned, occupied or operated by any Acquired Company as would result in any material liability to any Acquired Company: (i) underground storage tanks or surface impoundments that
do not comply with the technical standards prescribed by Title 40 Code of Federal Regulations Part 280, where applicable, or any applicable provincial equivalent (or any applicable foreign, state or local law requirements which are more stringent than such standards); (ii) asbestos-containing material or materials containing polychlorinated biphenyls which present a risk to human health or which are in a state or condition that requires abatement or remedial action; or (iii) landfills, open dumps or waste treatment, keeping, management, transfer or disposal areas subject to licensing or permitting under the United States Resource Conservation and Recovery Act or applicable Environmental Laws regulating the same.
(vi) Except with regard to concentrations of chloride above background levels (which concentrations may have resulted from the mining, extraction, evaporation, production, processing, storage, loading, handling, transportation, sale, distribution, and marketing of Salt and, in the case of GSL, Other Minerals), no Acquired Company has treated, stored, transported, disposed of or arranged for transportation or disposal of or Released any Hazardous Material or owned, occupied or operated any facility or property, in a manner that could reasonably be expected to result in a Company Material Adverse Effect pursuant to CERCLA or any other applicable Environmental Law.
(vii) Except with regard to concentrations of chloride above background levels (which concentrations may have resulted from the mining, extraction, evaporation, production, processing, storage, loading, handling, transportation, sale, distribution, and marketing of Salt and, in the case of GSL, Other Minerals), no Acquired Company has, either expressly or by operation of Law assumed or undertaken by contract, agreement, or Order, any liability, including any obligation for investigation, cleanup, or corrective or remedial action, of any other Person relating to any Environmental Law or agreement. Section 3.15 of the Seller Disclosure Letter sets forth a true and complete list of all parties indemnified by the Acquired Companies for liabilities arising under Environmental Laws.
(viii) To Seller's Knowledge, Seller has furnished or provided to Purchaser access to all material environmental audits, reports and other material environmental documents created since April 1, 1998 relating to any Acquired Company which are in Seller's possession or under its reasonable control.
(ix) None of the Acquired Companies shall incur Losses in an amount greater than $500,000 to remediate or to come into compliance (as required by a Governmental Authority) the conditions described in either (x) the matter numbered (1) or (y) the matter numbered (2) in Section 3.15(a) of the Seller Disclosure Letter, in each case, only to the extent the existence of such conditions at the properties of the Acquired Companies on the Closing Date were the basis for the Governmental Authority to require remediation.
(x) Where the mining, extraction, evaporation, production, processing, storage, loading, handling, transportation, sale, distribution, and marketing of Salt and, in the case of GSL, Other Minerals, has resulted in concentrations of chloride above background levels, such concentrations of chloride may be commingled with (a) sodium
ferrocyanide/yellow prussiate of soda, and/or (b) any breakdown
product of sodium ferrocyanide/yellow prussiate of soda including, but
not limited to, cyanide (collectively "YPS"). Therefore, where the
Acquired Companies are required to investigate or remediate
concentrations of chloride above background levels, they may also be
required to investigate or remediate YPS. However, the presence of YPS
shall not increase the scope or cost of, or be the sole cause of, any
obligation undertaken or incurred by the Acquired Companies with
respect to chloride contamination, including (x) investigation,
cleanup, or corrective or remedial action, (y) payment of damages, or
(z) payment of fines or penalties under any Environmental Law.
(b) For the purposes of this Agreement:
(i) "Environmental Law" shall mean any federal, state, provincial, foreign or local Laws, Permits, Orders (whether mandatory or by consent), consent agreements and other provisions having the force or effect of law (including common law) applicable to the properties, facilities or operations of any Acquired Company and relating to: pollution or the environment; Releases or threatened Releases of or exposure to Hazardous Materials; the manufacture, processing, distribution, use, treatment, storage, Release, disposal, transport or handling of or exposure to Hazardous Material; and record keeping, notification, disclosure and reporting requirements respecting Hazardous Materials.
(ii) "Release" shall mean release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, escape, leaching or migration into the indoor or outdoor environment, or into or out of any property, including the movement of Hazardous Materials through or in the air, soil, surface water or groundwater.
Section 3.16 CONTRACTS AND COMMITMENTS.
(a) Except as specifically contemplated by this Agreement or as set forth in Section 3.16 or Section 3.12 of the Seller Disclosure Letter, no Acquired Company is a party to or bound by a contract, whether written or oral, of the types set forth below:
(i) any contract with any labor union or any bonus, profit sharing or deferred compensation arrangement;
(ii) any contract for the employment of (i) any officer or (ii) any employee whose annual compensation is in excess of $150,000;
(iii) any contract providing for the payment of material compensation or other benefits, that are material individually or in the aggregate, in the event of a sale or change in control of any of the Acquired Companies;
(iv) any contract under which the Acquired Companies have advanced or loaned any other Person amounts in the aggregate exceeding $50,000, other than trade credit extended in the Ordinary Course of Business;
(v) any contract relating to the borrowing of money from third parties in excess of $250,000;
(vi) any contracts with respect to the investing of funds;
(vii) any licenses with respect to the material Business Intellectual Property of any Acquired Company, including the licensing of any such Business Intellectual Property by a third party to any Acquired Company; or by an Acquired Company to a third party;
(viii) any guaranty of any obligation, other than guarantees of obligations of Acquired Companies and endorsements made for collection;
(ix) any contract pursuant to which any Acquired Company has retained a material liability in connection with the sale of a business or which otherwise contains any material indemnification rights that any Acquired Company has given in connection with the acquisition or sale of a business;
(x) any contract under which any Acquired Company leases any personal property to or from any other Person other than an Acquired Company, except for any contract for the lease of personal property under which the aggregate annual payments do not exceed $250,000, other than in the Ordinary Course of Business;
(xi) any contract for the purchase, sale, or distribution of products or for the furnishing of services involving a sum in excess of $250,000 per year;
(xii) any non-competition or similar contract which purports to limit in any material respect the manner in which, or the localities in which, the businesses of the Acquired Companies is conducted in the United States, United Kingdom or Canada; or
(xiii) any other contract, other than in the Ordinary Course of Business that involves consideration in excess of $500,000 annually.
(b) Except as disclosed in Section 3.16 of the Seller Disclosure Letter, as of the date hereof, (i) to the Knowledge of Seller, no contract disclosed on Section 3.16 of the Seller Disclosure Letter has been terminated by the other party thereto, nor to the Knowledge of Seller is such other party in material breach thereof, (ii) to the Knowledge of Seller, since June 30, 2001, no material customer or supplier has indicated to any Acquired Company or Seller that it shall or, to the Knowledge of Seller, intends to stop or materially decrease the rate of business done with the Acquired Companies (other than in connection with annual contract bidding for the highway salt business in the Ordinary Course of Business), and (iii) no Acquired Company is in material breach of any contract required to be disclosed on Section 3.16 of the Seller Disclosure Letter.
(c) Section 3.16 of the Seller Disclosure Letter lists the ten largest customers and the ten largest suppliers of each of the four (4) main segments of the Acquired Companies (North America highway/chemical salt, North America general trade salt, GSL, Salt Union), and the corresponding amount of business (in dollars) for each such customer or supplier, during the 12-
month period ended December 31, 2000 (it being understood that North American highway salt business referred to in Section 3.16 of the Seller Disclosure Letter is on a 2000-2001 winter season basis).
(d) Seller has provided or made available to Purchaser a true and
correct copy of all written contracts which are required to be disclosed on
Section 3.16 of the Seller Disclosure Letter.
Section 3.17 TAXES. Except as set forth in Section 3.17 of the Seller Disclosure Letter:
(a) each of the Acquired Companies has timely filed (or shall timely file) all Tax Returns that are required to be filed on or before the Closing Date, and all such Tax Returns are (or will be) complete and accurate in all material respects;
(b) all Taxes due and payable by the Acquired Companies on or before the Closing Date, whether or not shown or required to be shown on any Tax Return, have been paid or shall be paid by the Acquired Companies or Seller on or before the Closing Date;
(c) each Covered Affiliated Group has timely filed (or shall timely file) all Tax Returns that are required to be filed on or before the Closing Date to the extent that such Tax Returns include (or are required to include) any of the Acquired Companies, and all such Tax Returns are (or will be), to the extent that they relate to any of the Acquired Companies, complete and accurate in all material respects;
(d) all Taxes due and payable by any Covered Affiliated Group on or before the Closing Date with respect to any Tax period during which any of the Acquired Companies was a member of the group (whether or not such Taxes are shown or required to be shown on any Tax Return) and for which any of the Acquired Companies is or may become liable have been paid or shall be paid on or before the Closing Date;
(e) no Acquired Company (and no Covered Affiliated Group with respect to Tax Returns that include any Acquired Company but only to the extent that any of the Acquired Companies is or may become liable for the payment of the relevant Tax) has received any written notice, or to the Knowledge of Seller, has received any other notice of deficiency or assessment from a taxing authority for any amount of Tax and Seller has no Knowledge that any such assertion of deficiency or assessment of Tax liability will be made;
(f) the Acquired Companies (or the Covered Affiliated Group with respect to Tax Returns that include any Acquired Company) have not consented to extend the time (which extension has not expired) in which any Tax may be assessed or collected by any taxing authority;
(g) to the Knowledge of Seller, no claim has ever been made by a taxing authority in a jurisdiction where the Acquired Companies do not file Tax Returns that any of the Acquired Companies is or may be subject to Taxes assessed by such jurisdiction;
(h) each of the Acquired Companies has withheld and paid to the proper taxing authority on a timely basis all Taxes required to have been withheld and paid in connection with amounts paid, or deemed to have been paid, or owing to any employee, independent contractor, creditor, stockholder or other third party;
(i) none of the Acquired Companies is obligated to make any payments, or is a party to any agreement that under certain circumstances could obligate it to make any payments that would not be deductible under Code (S)280G (or substantially similar provision under foreign law);
(j) none of the Acquired Companies has made an election under Code (S)341(f) (or substantially similar provision under foreign law);
(k) none of the Acquired Companies is a party to any Tax sharing or Tax allocation agreement;
(l) there are no material Liens for Taxes on the assets of any of the Acquired Companies other than Permitted Liens;
(m) no Tax audits or other administrative proceedings or court proceedings are presently pending, or to Seller's Knowledge, threatened with regard to any Taxes or Tax Returns of the Acquired Companies or a Covered Affiliated Group (but only to the extent that any of the Acquired Companies is or may be liable for the relevant Taxes) and none of the Acquired Companies or any Covered Affiliated Group has received a written notice, or to the Knowledge of Seller has received any other notice, that any such audits or proceedings are pending;
(n) the Shares do not constitute taxable Canadian property within the meaning of the Income Tax Act (Canada);
(o) all documentary, stamp and other similar Taxes (other than Taxes to which Section 6.1 applies) relating exclusively to documents the enforcement of which any of the Acquired Companies is interested in (and to the extent necessary for such enforcement) have been duly paid and where applicable the documentation bears an indication that such payments has been made;
(p) none of the Acquired Companies has requested or received (directly or indirectly through its parent corporation) a ruling from any taxing authority or signed a closing or other agreement with any taxing authority that could materially adversely affect such Acquired Company after Closing;
(q) no power of attorney has been granted with respect to any of the Acquired Companies as to any matter relating to Taxes;
(r) none of the Acquired Companies has requested an extension of time within which to file any Tax Returns which Tax Returns have not yet been filed;
(s) except with respect to any Affiliated Group of which IMC Kalium Ogden Corp. was a member during the period from the incorporation of IMC Kalium Ogden Corp. in
1967 to the time that such corporation became a member of the Affiliated Group of which GSL Holding Inc. was the common parent, none of the Acquired Companies has been a member of any Affiliated Group;
(t) none of the Foreign Acquired Companies has any investment in United States property within the meaning of Code (S)956;
(u) to the Seller's Knowledge (which shall not include any obligation to inquire with any independent party as to the value of any asset), the Company will not be, as of the Closing Date, a "United States real property holding corporation" within the meaning of Code (S)897 (without taking into account any obligation pursuant to Code (S)897(c)(1)(A)(ii) to establish the Company's status);
(v) none of the Acquired Companies has agreed, or is required, to make any adjustment under Code (S)481(a) (or substantially similar provision under foreign tax law) by reason of a change in accounting method or otherwise;
(w) no property owned by any of the Acquired Companies (A) is property required to be treated as being owned by another Person pursuant to the provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as amended and in effect immediately prior to the enactment of the Tax Reform Act of 1986, (B) constitutes "tax-exempt use property" within the meaning of Code (S)168(h)(1) or (C) is tax-exempt bond financed property within the meaning of Code (S)168(g);
(x) none of the Acquired Companies has participated in, or cooperated with, an international boycott within the meaning of Code (S)999;
(y) with respect to each Foreign Acquired Company, the Income Tax
Returns of each Covered Affiliated Group have, in all material respects,
correctly and accurately reported and reflected, to the extent required by law,
(i) current and accumulated earnings and profits, (ii) the amount of previously
taxed income within the meaning of Code (S)959 and (iii) any amount required to
be included in gross income under Code (S)951, and there has been no material
change in activities or operations of Foreign Acquired Companies since the
filing of the last Income Tax Return that would cause the amount referred to in
clause (iii) for any federal Income Tax taxable year of an Acquired Company in
which or with which any Split Tax Period of a Foreign Acquired Company ends to
be materially greater, on a yearly basis, than the amount reported in the last
federal Income Tax Return filed;
(z) none of the Foreign Acquired Companies (i) is engaged in a United States trade or business for U.S. federal income tax purposes or (ii) is a passive foreign investment company within the meaning of the Code;
(aa) Section 6.5(d) of the Seller Disclosure Letter sets forth the minimum amount of (i) consolidated net operating losses, consolidated net capital losses, alternative minimum tax net operating losses, and alternative minimum tax credits, in each case allocable to the Acquired Companies under applicable Treasury Regulations, (ii) the number of periods after the Closing Date to which such amounts may be carried-over and (iii) the apportionment and
allocation of applicable limitations under Code(S)(S)382 and 383, including carryover of such limitations;
(bb) none of the Acquired Companies (i) is subject to any joint venture, partnership or other agreement or arrangement that is treated as a partnership for federal income tax purposes or (ii) owns a single member limited liability company that is treated as a disregarded entity for federal Income Tax purposes;
(cc) the Acquired Companies have charged, collected and remitted on a timely basis all Sales Taxes on any sale, supply or delivery whatsoever, made by the Acquired Companies;
(dd) there will be no circumstances existing at the time of Closing that could result in the application of section 78, section 79, or sections 80 to 80.04 of the Income Tax Act (Canada) or any equivalent provincial provision to the Acquired Companies;
(ee) the Acquired Companies have not claimed nor will they claim any reserve under any provision of the Income Tax Act (Canada) or any equivalent provincial provision, if any such amount could be included in the income of the Acquired Companies for any fiscal period ending after the Closing Date except that this provision does not preclude the Acquired Companies from deducting amounts that were deducted for accounting purposes;
(ff) the Acquired Companies that are residents of Canada for purposes of the Income Tax Act (Canada) have not acquired property or services from, or disposed of property or provided services to, a person with whom it does not deal at arm's length (for purposes of and within the meaning of the Income Tax Act (Canada)) for an amount that is other than the fair market value of such property or services, nor have the Acquired Companies been deemed to have done so for purposes of the Income Tax Act (Canada);
(gg) for all transactions between an Acquired Company that is a resident of Canada for purposes of the Income Tax Act (Canada), on the one hand, and any Person not a resident of Canada for purposes of the Income Tax Act (Canada) with whom such Acquired Company was not dealing at arm's length, for the purposes of and within the meaning of the Income Tax Act (Canada), on the other hand, during a taxation year commencing after 1998 and ending before the Closing Date, the Acquired Companies have made or obtained, to the extent they were required to do so, records or documents that satisfy the requirements of paragraphs 247(4)(a) to (c) of the Income Tax Act (Canada);
(hh) as of the Closing Date, there will be no intercompany debt between any of the Acquired Companies of which the creditor is a Foreign Acquired Company;
(ii) without prejudice to subsections (f) and (r) above, no event has occurred nor has any claim been made or notice received whereby any Acquired Company incorporated in the U.K. (a "U.K. Acquired Company") will become entitled to pay any U.K. Tax in whole or in part on a date (which will fall after the Closing Date) later than that on which such U.K. Tax is usually payable to any U.K. taxing authority;
(jj) without prejudice to subsection (g) above, to the Knowledge of Seller, there are no grounds for any claims by any taxing authority in a jurisdiction where any U.K. Acquired Company does not file Tax Returns that such U.K. Acquired Company is or may be subject to Taxes assessed by such jurisdiction and the Seller Disclosure Letter contains details of each jurisdiction where each U.K. Acquired Company files Tax Returns;
(kk) any expenditure of a capital or revenue nature which any U.K. Acquired Company is obliged to make, in the case of capital expenditure, will qualify for capital allowances at the rate of 25% and, in the case of revenue expenditure, will be allowable in full for the purposes of calculating income liable to U.K. Tax in the year when such revenue expenditure accrues for accounting purposes;
(ll) none of the U.K. Acquired Companies is liable for any U.K. Tax which liability is primarily that of another person and there are no circumstances or obligations in existence which could cause such company to become so liable other than, for the avoidance of doubt, income tax and NIC's under the PAYE system;
(mm) each U.K. Acquired Company has obtained all clearances and consents required to be obtained for any transaction, made full and accurate disclosure in respect of such clearance or consent and carried out the transaction in accordance with such clearance or consent;
(nn) if each of the capital assets of each U.K. Acquired Company were disposed of on the date hereof for a consideration equal to the book value of that asset, no liability to U.K. Tax on chargeable gains or balancing charges would arise and all capital assets of the U.K. Acquired Companies, if disposed of otherwise than at book value, would, under U.K. Law relating to taxation in force at the date hereof, give rise to a gain or loss which would be chargeable or allowable for U.K. Tax purposes;
(oo) the entering into or implementation of this Agreement will not result in any U.K. Acquired Company becoming liable to U.K. Tax; and
(pp) the Preliminary Transfers will not result in an aggregate amount of Taxes in excess of $5,000,000 for which any of the Acquired Companies or Purchaser may be liable (including any liability imposed pursuant to Treasury Regulations ss. 1.1502-6 or any comparable provision of state, provincial, local or foreign law) and any and all such Taxes shall be the liability of Seller pursuant to Section 6.3(a).
Section 3.18 EMPLOYEE BENEFIT PLANS.
(a) Except as set forth on Section 3.18(a) of the Seller Disclosure Letter with respect to current or former employees of the Acquired Companies, no Acquired Company or member of the controlled group of companies (as defined in Code ss.ss.414(b) and (c)) that includes any Acquired Company (the "Controlled Group") maintains, contributes or has any liability with respect to any material (i) deferred compensation or bonus or retirement plans or arrangements, (ii) qualified or nonqualified defined contribution or defined benefit plans or arrangements which are employee pension benefit plans (as defined in Section 3(2) of ERISA) or comparable foreign plans (including, without limitation any such plan providing relevant benefits
as defined in Section 612 of the United Kingdom Income and Corporation Taxes Act 1988 (but ignoring the exception in that definition) or pension plans as defined in Section 1 of the Ontario Pension Benefits Act or deferred profit sharing plans as defined in Section 147 of the Canadian Income Tax Act), or (iii) employee welfare benefit plans (as defined in Section 3(1) of ERISA, regardless of whether subject to ERISA), stock option or stock purchase plans, severance or other arrangement, program or agreement providing benefits, or material fringe benefit plans or programs ((i) through (iii) together, the "Plans"). For purposes of this Agreement, the terms "employee pension benefit plan," "employee welfare benefit plan" and "Plan" shall include plans, arrangements, programs and agreements maintained in the United States, Canada and the United Kingdom. Each Plan (x) maintained for current or former employees in the United States may be referred to herein as a "U.S. Plan," (y) maintained for current or former employees in Canada may be referred to herein as a "Canadian Plan" and (z) maintained for current or former employees in the United Kingdom may be referred to herein as a "U.K. Plan." No Acquired Company has ever contributed to or been required to contribute to any multiemployer pension plan (as defined in Section 3(37) of ERISA, a "Multiemployer Plan") other than the Amalgamated Meat Cutters and Butchers Workmen Union and the Industry Pension Fund. Except as otherwise described in Section 3.18(a) of the Seller Disclosure Letter, no Acquired Company maintains or contributes to or has any liability with respect to any employee welfare benefit plan which provides health, accident or life insurance benefits to former employees, their spouses or dependents, other than in accordance with Code (S)4980B or other applicable law.
(b) Each of the Plans (and related trusts and insurance
contracts) complies in all material respects with the requirements of applicable
laws and regulations, including ERISA and the Code. Except as set forth in
Section 3.18(b) of the Seller Disclosure Letter, each Plan that is:
(i) a U.S. Plan that is intended to be a "qualified plan" under Code (S)401(a) is so qualified and each such U.S. Plan has received a favorable determination letter from the Internal Revenue Service as to its qualification under the Code and the tax-exempt status of its related trust (if any);
(ii) a U.K. Plan, where required by applicable law or to qualify for preferred tax treatment, has received a letter of approval from the PSO; and
(iii) a Canadian Plan, where required by applicable law or to qualify for preferred tax treatment, is duly registered under the Income Tax Act (Canada), the Pension Benefits Act (Ontario) and any other applicable law
and, to the Knowledge of the Seller, nothing has occurred since the date of such determination letter, approval letter, or registration, as applicable, that could adversely affect the qualification, approval or registration of any such Plan or the tax exempt status of any related trust.
(c) Except as set forth in Section 3.18(c) of the Seller Disclosure Letter, with respect to each Plan maintained by an Acquired Company or which, pursuant to Section 5.5, will be transferred to Purchaser or one of the Acquired Companies, all required reports and descriptions (including but not limited to Form 5500 Annual Reports, Summary Annual Reports, Summary Plan Descriptions, notifications to the Occupational Pensions Regulatory Authority and the Registrar of Personal and Occupational Pension Schemes, applicable Inland Revenue
filings, and Canada Customs and Revenue Agency Annual Information Returns and related trust tax returns) have been properly and timely filed with the appropriate government agency and distributed to participants as required or if not originally properly and timely filed will be filed (and all penalties for late filing paid) prior to the Closing. The Acquired Companies have complied in all material respects with the requirements of COBRA, where applicable.
(d) With respect to (i) each Plan maintained by an Acquired Company and (ii) each Plan which, in accordance with Section 5.5, will be transferred to Purchaser or one of the Acquired Companies or whose assets and/or liabilities will be transferred to plans maintained by Purchaser or one of the Acquired Companies, all contributions, payment or premiums which are due (including all employer contributions and employee salary reduction contributions) have been paid to such Plan trustee and/or third party to which such contributions, premiums or payments are due in a timely fashion in accordance with its terms and applicable laws and regulations, or with respect to such Plan, all contributions (A) for prior plan years which are not yet due and (B) with respect to the plan year in which the Closing Date occurs (with respect to service during such plan year for the period ending on the Closing Date) have been made or accrued as a current liability on the Closing Balance Sheet, all premiums or other payments which are due have been paid and, except as set forth on Section 3.18(d) of the Seller Disclosure Letter, the fair market value of the assets with respect to each Plan which is a defined benefit plan (within the meaning of Section 3(35) of ERISA) or any comparable foreign Plan (including without limitation any Plan to which Section 56 of the Pensions Act 1995 (United Kingdom) or Subsection 147.1(1) of the Canadian Income Tax Act may apply) equals or exceeds the benefit liabilities thereunder as determined utilizing in the U.K., the minimum funding requirement under Section 56 of the Pensions Act 1995 as of August 31, 2001, and subject to any requirement to equalize Guaranteed Minimum Pensions, and in other jurisdictions utilizing the actuarial methods and assumptions used in the most recent actuarial report filed in accordance with applicable Laws or Orders. All liabilities with respect to such Plans referred to in the preceding sentence are either fully funded or fully accrued on the Latest Balance Sheet.
(e) No Acquired Company has incurred any liability to the Pension Benefit Guaranty Corporation (the "PBGC"), the Internal Revenue Service, any multiemployer plan or otherwise with respect to any Plan currently or previously maintained by any of the Acquired Companies or any member of the Controlled Group that has not been satisfied in full, and no condition exists that presents a material risk to the Acquired Companies of incurring such a liability (other than liability for premiums due to the PBGC).
(f) With respect to each Plan maintained by an Acquired Company or which, pursuant to Section 5.5, will be transferred to Purchaser or one of the Acquired Companies, (i) neither Seller, any Acquired Company, any Plan, any trust created thereunder nor any trustee or administrator thereof has engaged in a transaction in connection with which Seller, any Acquired Company, any Plan, any such trust, or any trustee or administrator thereof, or any party dealing with any Plan or any such trust could reasonably be expected to be subject to either a material civil penalty assessed pursuant to Section 409 or 502(i) of ERISA or the Pensions Act 1995 (United Kingdom) or the Ontario Pension Benefits Act or a material tax imposed pursuant to (S)4975 or 4976 of the Code or the Income and Corporation Taxes Act 1988 (United Kingdom) or the Canadian Income Tax Act or any other applicable tax legislation, and (ii) no actions, investigations, suits or claims with respect to the assets thereof (other than routine claims for
benefits) are pending or, to the Knowledge of Seller, threatened, and Seller has no Knowledge of any facts which would reasonably be expected to give rise to any such actions, investigations, suits or claims, or could reasonably be expected to affect the registration of any Canadian Plan.
(g) With respect to each of the Plans required to be listed on
Section 3.18 of the Seller Disclosure Letter maintained by an Acquired Company
or which, pursuant to Section 5.5, will be transferred to Purchaser or one of
the Acquired Companies, Seller has, to the extent applicable, furnished to
Purchaser true and complete copies of each of the following documents: (i) all
Plan documents, (ii) all related trust agreements, insurance contracts or other
funding agreements which implement such Plans; (iii) the most recent actuarial
reports and financial statements; (iv) with respect to each U.S. Plan (A) all
current summary plan descriptions and summaries of material modifications (B)
the most recent determination letter received from the Internal Revenue Service
and (C) all Form 5500 Annual Reports (including all schedules and other
attachments) required to be filed for the two most recently completed plan
years; (v) with respect to each U.K. Plan (A) all trust deeds and rules and
members' booklet, (B) the most recent letter confirming exempt approved status
received from the PSO and (C) the two most recent trustees' annual report and
accounts; (vi) with respect to each Canadian Plan, the most recent Canada
Customs and Revenue Agency Annual Information Return; and (vii) all other
material employee communications or announcements.
None of the Acquired Companies or their ERISA Affiliates has incurred any liability on account of a "partial withdrawal" or a "complete withdrawal" (within the meaning of ERISA Sections 4205 and 4203, respectively, or Section 75 of the Pensions Act 1995 (United Kingdom)) from any Multiemployer Plan that has not been satisfied in full. If the Acquired Companies and their ERISA Affiliates were to have withdrawn in a complete withdrawal from all Multiemployer Plans to which any of them has contributed to or been required to contribute to during the period commencing July 1, 2000 and ending June 30, 2001, none of the Acquired Companies nor any ERISA Affiliate would have incurred any liability under Title IV of ERISA and, to the Seller's Knowledge, since the end of such period, no such Multiemployer Plan has gone into reorganization and no such Multiemployer Plan has been terminated.
Section 3.19 EMPLOYEES.
(a) Except as set forth on Section 3.19 of the Seller Disclosure Letter, (i) to the Seller's Knowledge, each Acquired Company has complied in all material respects with all applicable laws relating to the employment of personnel and labor; (ii) no Acquired Company is a party to or bound by any collective bargaining agreement or recognizes any trade union, staff association or other body representing workers for the purposes of collective bargaining, nor, within the last three (3) years, has it experienced any strikes, work slowdowns or stoppages, material unfair labor practices claims (to the extent such term is recognized in the jurisdiction in which such Acquired Company operates); (iii) Seller has no Knowledge of any organizational effort presently being made by or on behalf of any labor union with respect to employees of any Acquired Company; (iv) no Acquired Company is aware of any pending or, to the knowledge of Seller, threatened, material grievances or arbitration proceedings under any collective bargaining agreement disclosed in Section 3.19 of the Seller Disclosure Letter or with any material number or category of its employees and there are no written agreements which modify the terms of such collective bargaining agreements; (v) there are no other violations of such collective bargaining
agreements which would have a Company Material Adverse Effect; (vi) no trade
union has applied to have any Acquired Company declared a related employer
pursuant to the Ontario Labour Relations Act or any similar legislation in any
jurisdiction in which any Acquired Company carries on business; (vii) there is
no outstanding obligation or arrangement for the relevant Acquired Company to
pay any payment (including compensation) to any present or former director,
officer, Employee or consultant, which would require payment of more than
$150,000; and (viii) within the period of one year preceding the date of this
Agreement the relevant Acquired Company has not given notice of any redundancies
to the Secretary of State for Education and Employment of the United Kingdom or
started consultations under the United Kingdom's Trade Union and Labour
Relations (Consolidation) Act 1992 with any appropriate representatives (as
referred to in the said Act) and the relevant Acquired Company has not failed to
comply with any obligation under such Act. Except as set forth on Section 3.19
of the Seller Disclosure Letter, no Acquired Company has within the last three
(3) years entered into any agreement which involved any Acquired Company
acquiring any undertaking or part of one such that the United Kingdom's Transfer
of Undertakings (Protection of Employment) Regulations 1981 applied or may apply
thereto and no Acquired Company has, within 90 days immediately preceding the
date of this Agreement, effectuated a "plant closing" or "mass layoff", as
defined in the Workers Adjustment and Retraining Notification ("WARN") Act, or
any analogous U.S. state or U.S. local law affecting in whole or in part any
facility, site of employment, operating unit or employees of the Acquired
Companies, without fully complying with the WARN Act or any analogous U.S. state
or U.S. local law.
(b) All amounts due or accrued due for all salary, wages, bonuses, commissions, vacation with pay, and benefits under the Plans have either been paid or are accurately reflected in the books and records of the relevant Acquired Company. In addition, with the exception of income tax deductions in accordance with applicable law, which are not overdue, and national insurance contributions in respect of the payment period as of the Closing Date, the relevant Acquired Company does not have any outstanding undischarged liability to pay to any governmental or regulatory authority in any jurisdiction any contributions, taxation or other levy arising in connection with the employment or engagement of personnel by the relevant Company, including but not limited to any levy payable under the United Kingdom's Industrial Training Act of 1982.
(c) Two weeks prior to the Closing, Seller shall deliver to Purchaser a correct and complete list as of such date of: (i) all Employees of each Acquired Company; (ii) each such Employees' base salary or wages, position, status as full-time or part-time employees, locations of employment, date of hire, and annual vacation entitlement in days; and (iii) separately identifies any such Employee who is on leave of absence approved by any Acquired Company, including disability or maternity/parental leave or lay-off. At the Closing, Seller shall deliver to Purchaser an updated list of the above information as of the date one Business Day prior to the Closing Date.
(d) There are no outstanding assessments, penalties, fines, liens, charges, surcharges, or other amounts due or owing pursuant to any workplace safety and insurance legislation in respect of any Acquired Company and no Acquired Company has been reassessed in any material respect under such legislation during the past three (3) years and no audit is currently being performed pursuant to any applicable workplace safety and insurance legislation.
There are no claims or potential claims which may materially adversely affect any Acquired Company's accident cost experience. Each Acquired Company has provided to Purchaser all orders and inspection reports under applicable occupational health and safety legislation ("OHSA") relating to the Acquired Company together with the minutes of each Acquired Company's joint health and safety committee meetings for the past three (3) years. There are no charges pending under OHSA in respect of any Acquired Company. The Acquired Company has complied in all material respects with any orders issued under OHSA and there are no appeals of any orders under OHSA currently outstanding.
(e) The Acquired Companies' contractual agreements with owner/operators and independent contractors establish a bonafide arrangement where such individuals are independent contractors to, and not employees of, any of the Companies.
(f) Further, the Seller represents and warrants that neither the execution nor delivery of this agreement, nor the consummation by the Seller of transactions contemplated in accordance with the terms hereby, will violate any of the Company's, or an Acquired Companies', collective bargaining agreements with any labor organizations.
Section 3.20 INSURANCE. The insurance policies currently maintained with respect to the Acquired Companies and their respective assets as of the date hereof (the "Insurance Policies") are listed in Section 3.20 of the Seller Disclosure Letter. The Insurance Policies are to Seller's Knowledge for amounts and against such losses and risks as are consistent with industry practice and, in the reasonable judgment of senior management of the Company, are adequate to protect the properties and business of the Acquired Companies. As of the date hereof, all such Insurance Policies are in full force and effect and all premiums due and payable thereon have been paid in accordance with their terms and no written notice of cancellation has been received since April 1, 1998 by an Acquired Company or by Seller with respect to an Insurance Policy.
Section 3.21 AFFILIATE TRANSACTIONS. Except as disclosed on
Section 3.21 of the Seller Disclosure Letter or as contemplated by the
Transaction Documents, no Affiliate of any Acquired Company or the Seller Group
(other than another Acquired Company) is a party to any contract with any
Acquired Company that will remain in effect following the Closing. Section 3.21
of the Seller Disclosure Letter hereto describes all material services provided
since April 1, 1998 to any Acquired Company by any member of the Seller Group.
Section 3.22 ACCOUNTS RECEIVABLE. Except as set forth on Section 3.22 of the Seller Disclosure Letter, all of the notes and accounts receivable of the Acquired Companies reflected on the Closing Balance Sheet will reflect receivables resulting from bona fide transactions with third parties or with members of the Seller Group, net of applicable reserves for doubtful accounts. As of the Closing Date, no Person shall have any Lien (other than Permitted Liens) on such receivables.
Section 3.23 INVENTORY. Except as set forth on Section 3.23 of the Seller Disclosure Letter, the inventories of the Acquired Companies reflected on the Closing Balance Sheet will be of a quantity and quality usable and saleable in the Ordinary Course of Business,
subject to adequate provision for loss in accordance with GAAP, consistent with historical experience of the Acquired Companies as reflected in the Company Financial Statements.
Section 3.24 INVESTMENT REPRESENTATIONS.
(a) Seller is holding its Surviving Corporation Common Stock, Surviving Corporation Preferred Stock and Surviving Corporation Notes held by it following the Merger hereunder for its own account, with the intention of holding such securities for purposes of investment, and Seller has no intention of selling such securities in a public distribution in violation of the federal securities laws or any applicable state securities laws.
(b) Seller is an "accredited investor" as defined in Rule 501(a) promulgated under the Securities Act.
(c) Seller understands that the investment in the Surviving Corporation Common Stock, Surviving Corporation Preferred Stock and the Surviving Corporation Notes involves substantial risk. Seller has experience as an investor and acknowledges that Seller can bear the economic risk of its investment in the Surviving Corporation Common Stock, Surviving Corporation Preferred Stock and the Surviving Corporation Notes and has such knowledge and experience in financial or business matters that Seller is capable of evaluating the merits and risks of its investment in the Surviving Corporation Common Stock, Surviving Corporation Preferred Stock and the Surviving Corporation Notes. Seller has had an opportunity to ask questions and receive answers concerning the terms of the Merger.
(d) Seller understands that the Surviving Corporation Common Stock, the Surviving Corporation Preferred Stock and the Surviving Corporation Notes to be retained by it in the Merger have not been registered under the Securities Act on the basis that the sale provided for in this Agreement is exempt from the registration provisions thereof and that Purchaser's reliance on such exemption is predicated in part upon the representations of Seller set forth in this Section 3.24.
(e) Seller acknowledges and understand that no public market now exists for any of the Surviving Corporation Common Stock, Stock Surviving Corporation Preferred Stock and the Surviving Corporation Notes and that Purchaser has not provided any assurances that a public market will ever exist for such securities.
Section 3.25 BROKERS, FINDER'S FEES. Other than JP Morgan Chase, the fees of which will be paid by Seller, none of Seller or any of the Acquired Companies has employed any broker, finder, or intermediary in connection with the transactions contemplated by this Agreement which would be entitled to a broker's, finder's or similar fee or commission from any of the Acquired Companies in connection therewith or upon the consummation thereof or the sale of the Company.
Section 3.26 STATE TAKEOVER STATUTES. The board of directors of the Company has unanimously approved this Agreement and the transactions contemplated hereby, including the Merger and such approval constitutes approval of this Agreement, the Merger and the other transactions contemplated hereby under the provisions of Section 203 of the DGCL and represents all the action necessary to ensure that such Section 203 does not apply to Seller, the
Company or Purchaser in connection with the Merger. To the knowledge of Seller, no other state takeover statute is applicable to the Merger or the other transactions contemplated hereby.
Section 3.27 WTO INVESTOR; ICA FILING.
(a) The Canadian business being acquired as part of the transactions contemplated by this agreement is, as of the date hereof, controlled by a WTO Investor.
(b) For the purposes of determining whether the transactions contemplated by this Agreement are subject to review under the ICA, the book value of the assets of the Acquired Companies carrying on the Canadian business, the control of which is being indirectly acquired, does not exceed 50% of the book value of all the assets of the Acquired Companies, each based on the Audited Financial Statement, and the Canadian business is not involved in any of the activities set out at subsection 14.1(5) of the ICA.
Section 3.28 BUSINESS OF THE COMPANY. As of the date hereof, the Company has no Subsidiaries. The Company (i) is not a party to any agreements or arrangements with any Person and (ii) is not subject to or bound by any obligation or undertaking except in connection with the transactions contemplated hereby. Since its formation in 1993, the Company has not engaged, directly or indirectly, in any business or activity of any type or kind other than in connection with this Agreement and the transactions contemplated hereby other than as set forth in Section 3.28 of the Seller Disclosure Letter.
Section 3.29 CORPORATE EXISTENCE. As of the Closing Date, Seller has no intention to cause, or aid in causing, the Company or Inorganics to cease to validly exist under the laws of the jurisdiction of its organization (whether by liquidation, merger, or otherwise). As of the Closing Date, Seller has no intention to cause, or aid in causing, the Company or Inorganics to transfer all or substantially all of its assets to Purchaser or any of the Acquired Companies.
Section 3.30 NO LIABILITIES OF THE COMPANY. At the Effective Time, the Company shall have no material liabilities, other than those liabilities in connection with this Agreement and the other Transaction Documents.
Section 3.31 NO OTHER REPRESENTATIONS OR WARRANTIES. Except for the representations and warranties contained in this Article III, none of Seller nor any other Person makes any other express or implied representation or warranty on behalf of Seller or otherwise in respect of the Acquired Companies or their respective businesses. Seller acknowledges that it is not relying on any representation or warranty of Purchaser except as expressly set forth in Article IV or of any other Person.
Section 3.32 DISCLOSURE. No representation or warranty of Seller in this Agreement and no statement in the Seller Disclosure Letter omits to state a material fact necessary to make the statements herein or therein, in light of the circumstances in which they were made, not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PURCHASER
Purchaser and Merger Sub hereby represent and warrant to Seller as follows:
Section 4.1 ORGANIZATION AND QUALIFICATION; AUTHORITY. Purchaser is a limited liability company and Merger Sub is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation. Purchaser and Merger Sub each have the requisite corporate power and authority to execute and deliver this Agreement and the other Transaction Documents to which it is a party and to consummate the transactions contemplated hereby and to perform its obligations hereunder and thereunder. Purchaser and Merger Sub have previously supplied Seller with true and complete copies of its certificate of incorporation and by-laws or similar organizational documents.
Section 4.2 AUTHORITY OF PURCHASER; BINDING EFFECT. The execution and delivery by each of Purchaser and Merger Sub of this Agreement and the other Transaction Documents to which it is a party and the performance of its obligations hereunder and thereunder and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all requisite corporate action on the part of Purchaser and Merger Sub. No other corporate proceedings on the part of Purchaser or Merger Sub are required in connection with the execution, delivery and performance by Purchaser and Merger Sub of this Agreement or the other Transaction Documents or the consummation by Purchaser and the Merger Sub of the transactions contemplated hereby and thereby. This Agreement has been duly executed and delivered by each of Purchaser and Merger Sub and, assuming due authorization, execution and delivery hereof by Seller, this Agreement constitutes a binding obligation of each of Purchaser enforceable against each of Purchaser and Merger Sub in accordance with its terms, except as may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or similar laws relating to creditors rights generally and (ii) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity).
Section 4.3 NON-CONTRAVENTION. Except as set forth in
Section 4.3 of the Purchaser Disclosure Letter, the execution, delivery and
performance of this Agreement and the other Transaction Documents to which
Purchaser or Merger Sub is a party and the performance by Purchaser and the
Merger Sub of its obligations hereunder or thereunder do not (i) violate any
provision of the articles of incorporation, by-laws or similar organizational
documents of Purchaser or Merger Sub, (ii) result in the breach or violation of,
give rise to any right of termination, acceleration of any obligation or
amendment under, result in the creation of any Lien on any assets of Purchaser
or Merger Sub or constitute a default under (in each case, with or without the
giving of notice or the lapse of time or both) any mortgage, deed of trust, or
other arrangement or instrument for borrowed money, contract (including without
limitation the Commitment Letters and, as of the Closing Date, the agreement(s)
contemplated thereby) or Permit to which Purchaser or Merger Sub is a party or
by which any assets of Purchaser or Merger Sub are bound or (iii) assuming that
all consents and approvals referred to in Section 4.4 have been obtained,
violate any Law or Order, except, as to clause (ii) or (iii), for such breaches,
violations, rights or Liens which would not, individually or in the aggregate,
reasonably be
expected to (x) result in a Purchaser Material Adverse Effect or (y) prevent or materially delay the consummation of the transactions contemplated hereby.
Section 4.4 CONSENTS AND APPROVALS. Other than (i) filings under the HSR Act, (ii) filings under the Competition Act (Canada), (iii) the filings under the ICA and (iv) as set forth in Section 4.4 of the Purchaser Disclosure Letter, the execution, delivery and performance of this Agreement and the other Transaction Documents, and the consummation of the transactions contemplated hereby and thereby, by Purchaser do not require any authorization, consent, approval, exemption, Permit or order of or other action, or notice or declaration to, or filing with, any Governmental Authority under any Law applicable to Purchaser or Merger Sub or any of its assets, except where the violations or failure to obtain such consent, approval, exemption, Permit or order or to make such notice or declaration or filing would not reasonably be expected to (x) result, individually or in the aggregate, in a Purchaser Material Adverse Effect or (y) prevent or materially delay the consummation of any of the transactions contemplated hereby.
Section 4.5 FINANCIAL CAPABILITY. Merger Sub has received the
executed Bank Commitment Letter and the Bridge Commitment Letter attached to
Section 4.5 of the Purchaser Disclosure Letter (together the "Commitment
Letters") with respect to the debt financing arrangements for the transactions
contemplated hereby (the "Financing"). As of the date of this Agreement, the
Commitment Letters are in full force and effect and have not been amended or
rescinded. Merger Sub will deliver to Seller correct and complete copies of the
definitive agreements for the Financing of the transactions contemplated hereby
promptly when entered into. The aggregate proceeds of the Financing provided for
in the Commitment Letters will be sufficient to pay the Cash Merger
Consideration after the adjustments in Article II and perform the other
obligations of Merger Sub and the Surviving Corporation following the Closing.
As of the date hereof, Purchaser and Merger Sub believe that such Financing will
be obtained. Immediately after the Closing, the capitalization of the Surviving
Corporation on a consolidated basis will (i) include equity that will be at a
level not materially less than the equity capitalization set forth in the
Commitment Letters and (ii) include a level of total debt that will not be
materially greater in the aggregate than the total amount of debt (including the
calculated amount of revolving loan facilities) set forth in the Commitment
Letters (other than Closing Indebtedness and subordinated notes payable to
Seller in connection with this Agreement). Notwithstanding the prior sentence,
the Company shall be entitled to make adjustments to the capitalization set
forth in Section 4.6 by issuing subordinated notes on terms equivalent to the
Surviving Corporation Notes instead of preferred stock provided that (i) the
amount of additional notes issued in lieu of preferred stock does not materially
and adversely affect the solvency of the Surviving Corporation, and Seller is
not treated disproportionately with respect to its Surviving Company Notes and
preferred stock as compared to the Purchaser's preferred stock and (ii) at least
32,000 shares of Company Preferred Stock are issued pursuant to the Contribution
and more than 20% of such shares of Company Preferred Stock are transferred to
Purchaser pursuant to the Stock Purchase.
Section 4.6 SECURITIES; CAPITALIZATION OF MERGER SUB. As of the date hereof, the Capital Stock of Merger Sub consists of 1,000 shares of common stock, par value $.01 per share of which 100 shares are outstanding. Prior to the Closing, the Certificate of Incorporation of the Merger Sub shall be amended in the form set forth in Section 2.6(a) of the Purchaser
Disclosure Letter. Immediately after the Closing, there will be no shares of capital stock of the Surviving Corporation outstanding other than as set forth in Article II of this Agreement. There are no outstanding options, warrants, rights, calls, preemptive rights, agreements, convertible or exchangeable securities or other commitments (collectively, "Equity Rights") (other than as contemplated by this Agreement, the Commitment Letters and the definitive financing documents to finance the transactions contemplated hereby (the "Financing Documents") , provided that such Equity Rights pursuant to the Commitment Letters or the Financing Documents are not acquired by Purchaser, Apollo, or any Affiliate thereof other than by purchasing the securities sold in such financing at a price per security that is not less than the price per security received by the Company for all securities of such class) pursuant to which Merger Sub is obligated to issue, sell, purchase, return, transfer, otherwise dispose of, redeem or repurchase or any third party is entitled to purchase or otherwise acquire any shares in the capital, or other securities or interests, of Merger Sub, the Company or any Acquired Company except with respect to management or employees or prospective management or employees of the Acquired Company. There are no agreements among Merger Sub's or Purchaser's shareholders or with respect to the voting or transfer of Merger Sub's or any Acquired Company's Capital Stock other than as set forth in the Stock Rights Agreement.
Section 4.7 LITIGATION; PROCEEDINGS. As of the date hereof,
except as set forth in Section 4.7 of the Purchaser Disclosure Letter, there are
no Actions pending or, to Purchaser's Knowledge, threatened against Purchaser or
Merger Sub before or by any Governmental Authority or arbitrator, except Actions
which either (A) seek damages (including fines and/or penalties) of less than
$250,000 or (B) if no specific amount of damages are sought, would not
reasonably be expected to result in Losses (excluding attorneys fees and
expenses and diminutions in value) of more than $250,000. Except as set forth in
Section 4.7 of the Purchaser Disclosure Letter, and except as would not be
materially adverse to Purchaser or Merger Sub, neither Purchaser nor Merger Sub
is subject to any outstanding order, judgment, or decree issued by any
Governmental Authority or any arbitrator. As of the date hereof, there are no
Actions pending or, to Purchaser's Knowledge, threatened against Purchaser or
Merger Sub, by or before any Governmental Authority which challenge the validity
of this Agreement or the transactions contemplated hereby.
Section 4.8 COMPLIANCE WITH LAWS. Except as set forth in Section 4.8 of the Purchaser Disclosure Letter, since its formation, Purchaser and Merger Sub has complied in all material respects with all applicable Laws and Orders, except where such non-compliance would not be reasonably expected to prevent or materially delay consummation of the Closing or result in a Purchaser Material Adverse Effect. No material claims have been served since their respective formations against Purchaser alleging a violation of any such Laws or Orders.
Section 4.9 BUSINESS OF MERGER SUB AND PURCHASER. Merger Sub has been formed solely for the purpose of engaging in the transactions contemplated hereby. Merger Sub (i) has not entered into any agreements or arrangements with any Person and (ii) is not subject to or bound by any obligation or undertaking except in connection with the transactions contemplated hereby. Except as set forth in Section 4.10 of the Purchaser Disclosure Letter, Merger Sub has not entered into any agreements or arrangements with any of its affiliates in connection with the transactions contemplated by this Agreement. Merger Sub has not engaged,
directly or indirectly, in any business or activity of any type or kind other than in connection with this Agreement and the transactions contemplated hereby.
Section 4.10 NO LIABILITIES OF MERGER SUB. At the Effective Time, Merger Sub shall have no material liabilities, other than those liabilities in connection with this Agreement and the other Transaction Documents.
Section 4.11 BROKERS, FINDERS FEES. There is no investment banker, broker, finder or other intermediary which has been retained by or is authorized to act on behalf of Purchaser or Merger Sub or any Subsidiary of either Purchaser or Merger Sub who is entitled to any fee or commission from Purchaser or Merger Sub or any Subsidiary of Purchaser or Merger Sub including the Company upon the Merger ) in connection with the transactions contemplated by this Agreement, except for the fee to be paid to Apollo Management, L.P. or its affiliates pursuant to the agreement listed in Section 4.10 of the Purchaser Disclosure Letter.
Section 4.12 INVESTMENT REPRESENTATIONS.
(a) Purchaser is acquiring the Surviving Corporation Common Stock and Surviving Corporation Preferred Stock of the Company to be acquired by it hereunder for its own account, solely for the purpose of investment and not with a view to, or for sale in connection with, any distribution thereof in violation of the federal securities laws or any applicable foreign or state securities Law.
(b) Purchaser is an "accredited investor" as defined in Rule 501(a) promulgated under the Securities Act.
(c) Purchaser understands that the acquisition of the Surviving Corporation Common Stock and Surviving Corporation Preferred Stock of the Company to be acquired by it in the Merger involves substantial risk. Purchaser and its officers have experience as an investor in securities of companies such as the Company and acknowledges that each of Purchaser can bear the economic risk of its investment and has such knowledge and experience in financial or business matters that Purchaser is capable of evaluating the merits and risks of its investment in the Surviving Corporation Common Stock and Surviving Corporation Preferred Stock to be acquired by it in the Merger.
(d) Purchaser understands that the Surviving Corporation Common Stock and Surviving Corporation Preferred Stock to be acquired by it in the Merger hereunder have not been registered under the Securities Act on the basis that the sale provided for in this Agreement is exempt from the registration provisions thereof and that Seller's reliance on such exemption is predicated in part upon the representations of Purchaser set forth in this Section 4.13. Purchaser acknowledges that such securities may not be transferred or sold except pursuant to the registration and other provisions of applicable securities Laws or pursuant to an applicable exemption therefrom.
(e) Purchaser acknowledges that the offer and sale of the Surviving Corporation Common Stock and Surviving Corporation Preferred Stock to be acquired by it in the Merger has not been accomplished by the publication of any advertisement.
Section 4.13 PURCHASER INTENTION. As of the Closing Date, Purchaser has no present intention to contribute or transfer any property to, or assume or guarantee any obligations of, any of the Acquired Companies subsequent to the Closing.
Section 4.14 CORPORATE EXISTENCE. As of the Closing Date, Purchaser has no intention to cause the Company or Inorganics to cease to validly exist under the laws of the jurisdiction of its organization (whether by liquidation, merger, or otherwise). As of the Closing Date, Purchaser has no intention to cause the Company or Inorganics to transfer all or substantially all of its assets to Purchaser or any of the Acquired Companies.
Section 4.15 NO OTHER REPRESENTATIONS OR WARRANTIES. Except for the representations and warranties contained in this Article IV, neither Purchaser, Merger Sub nor any other Person makes any other express or implied representation or warranty on behalf of Purchaser or Merger Sub. Purchaser and Merger Sub acknowledge that they are not relying on any representation or warranty of Seller or of any other Person except as expressly set forth in Article III.
Section 4.16 DISCLOSURE. No representation or Warranty of Purchaser or Merger Sub in this Agreement and no statement in the Purchaser Disclosure Letter omits to state a material fact necessary to make the statements herein or therein, in light of the circumstances in which they were made, not misleading.
ARTICLE V
COVENANTS
Section 5.1 ACCESS.
(a) Prior to the Closing, Seller shall permit Purchaser and its representatives to have reasonable access, during regular business hours and upon reasonable advance notice, to the books, records, information, facilities and senior employees of the Acquired Companies and will cooperate with regard to such reasonable due diligence review as Purchaser may reasonably request. Upon reasonable advance notice to Seller and subject to Seller's consent, Purchaser shall be permitted to conduct Phase 1 type environmental investigations at any facility or Real Property owned or operated by the Acquired Companies. Purchaser will not contact in connection with the transactions contemplated by this Agreement employees of any governmental regulatory agencies governing the Acquired Companies' business activities without obtaining the prior written consent of Seller. Purchaser will not contact in connection with the transactions contemplated by this Agreement any customers or suppliers of the Acquired Companies, without the prior consent of Seller which will not be unreasonably withheld with respect to the top twenty (20) customers and suppliers; a representative of Seller shall be entitled to participate with Purchaser in making any contacts to such customers and suppliers. Seller shall not be required to comply with this provision to the extent Seller delivers to Purchaser a written notice that Seller has received advice of counsel stating that Seller's compliance with this Section 5.1 would reasonably be expected to either (i) result in a waiver of
attorney-client privilege or (ii) violate an applicable law; provided that in any such event Seller shall inform Purchaser that information was withheld from Purchaser, the general nature of such information so withheld and the basis for withholding such information and shall cooperate with Purchaser in seeking to develop a mutually acceptable mechanism for the protection of such information in a manner that would not result in a loss of such privilege or a violation of law.
(b) Seller shall provide reasonable access to its premises in Hutchinson, Kansas to Purchaser or the Acquired Companies for one year following the Closing Date for the purpose of taking possession of the Additional Acquired Assets listed in Section 1.1(a) of the Purchaser Disclosure Letter; provided however that following the six month anniversary of the Closing Date, upon two months prior written notice, Seller may require the Purchaser or the Acquired Companies to remove the Additional Acquired Assets if Seller has bona fide plans to sell, remediate or utilize the premises where such Additional Acquired Assets are located, prior to the end of the one year anniversary of the Closing Date. If the Purchaser or the Acquired Companies fail to remove such assets during the time period set forth in the prior sentence, then the rights of Purchaser and the Acquired Companies under this Section 5.1(b) shall cease and the ownership of such Additional Acquired Assets shall revert to the Seller. Purchaser and the Acquired Companies shall bear risk of loss for the Additional Acquired Assets left on Seller's premises in Hutchinson, Kansas, absent Seller's gross negligence or willful misconduct. Purchaser and the Acquired Companies shall take reasonable care in removing any Additional Acquired Asset from such premises and Purchaser shall, or shall cause the Acquired Companies to, indemnify Seller for any material damage or liabilities caused directly by such removal, unless such damages or liability will not adversely affect Seller's near-term plans for the facilities following such removal (it being understood that the removal of the Additional Acquired Assets will adversely affect the use of the premises for mining and salt processing activities).
(c) All information provided to Purchaser and its Affiliates, agents and representatives by or on behalf of Seller or any of the Acquired Companies in connection with the Agreement and the transactions contemplated hereby will be held by Purchaser and its Affiliates, agents and representatives as Evaluation Material, as defined in, and pursuant to the terms of, the Confidentiality Agreement. Purchaser shall, and shall direct its directors, officers, employees, accountants, counsel, consultants, funding sources and other representatives to, comply with the Confidentiality Agreement with respect to Confidential Information.
Section 5.2 AFFIRMATIVE COVENANTS FOR THE CONDUCT OF BUSINESS.
During the period from the date hereof to the Closing, except as set forth in
Section 5.2 of the Seller Disclosure Letter or expressly contemplated by this
Agreement, or with the consent of Purchaser, Seller shall and shall cause the
Acquired Companies to and the Acquired Companies shall:
(a) conduct its business and operations only in the Ordinary Course of Business;
(b) use its commercially reasonable efforts to carry on the business of the Acquired Companies in the same manner as presently conducted and to keep the Acquired Companies' business organization and properties intact;
(c) maintain the Mines and Real Property and other material assets of each Acquired Companies in reasonably good repair, order and condition (subject to normal wear and tear) consistent with current needs;
(d) with respect to all Real Property, if requested by Purchaser, use its commercially reasonable efforts to assist Purchaser in obtaining, (i) Title Commitments for each material parcel of Real Property and Title Policies in accordance with the Title Commitments, (ii) a Survey for each material parcel of Real Property and (iii) for any material parcel of Real Property outside of the United States, any equivalent form of title assurance utilized in such foreign jurisdiction (the "Foreign Title Assurances"); provided that Purchaser shall, or following the Closing shall cause the Acquired Companies to, pay all fees, costs and expenses with respect to the Surveys, the Title Commitments, the Title Policies and the Foreign Title Assurances;
(e) with respect to all material Leased Real Property, use its commercially reasonable efforts to assist Purchaser in obtaining a written consent for each of the Leases from the landlord if required under such Lease or by applicable law in connection with the transactions contemplated in this Agreement, in form and substance reasonably satisfactory to Purchaser and Purchaser's lenders; provided that Seller shall not be required to make any payment to a landlord other than a de minimis payment or such amount as may be required under the Lease;
(f) maintain the books, accounts and records of the Acquired Companies consistent with past practice;
(g) promptly inform Purchaser in writing when it has Knowledge of any material breach of the representations and warranties contained in Article III hereof (it being understood and agreed that for purposes of indemnification pursuant to Article VIII hereof, a breach of this covenant will be treated only as a breach of the underlying representation or warranty);
(h) consult with Purchaser prior to hiring any employee who would be one of the top ten most highly compensated employees of the Acquired Companies;
(i) to the extent available on commercially reasonable terms, maintain insurance policies for amounts and against such losses and risks as are consistent with industry practice and, in the reasonable judgment of senior management of the Seller, are adequate to protect the properties and business of the Acquired Companies, and shall notify Purchaser as promptly as reasonably practicable if it receives any notice of termination or non-renewal of such insurance policies, or if the Seller is unable to purchase replacement insurance policies on commercially reasonable terms; and
(j) promptly notify Purchaser if the entity, that controls the Canadian business being acquired as part of the transactions contemplated by this Agreement, is no longer considered to be a WTO Investor.
Section 5.3 NEGATIVE COVENANTS FOR THE CONDUCT OF BUSINESS.
During the period from the date hereof to the Closing except as set forth in
Section 5.3 of the Seller Disclosure Letter or expressly contemplated by this
Agreement, or with the consent of Purchaser,
Seller, with respect to the Acquired Companies, shall not and shall cause the Acquired Companies not to and the Acquired Companies shall not:
(a) make any loans (other than salary or expense advances in the Ordinary Course of Business) or enter into any material transaction with any Affiliate other than loans or transactions between Acquired Companies or contracts entered into between the Seller Group and the Acquired Companies in the Ordinary Course of Business pursuant to which all obligations of the Acquired Companies shall be fully satisfied as of the Closing Date;
(b) make or grant any increase in the compensation of any of the officers or employees of any Acquired Company except in the Ordinary Course of Business pursuant to annual compensation reviews or renegotiations of collective bargaining or wage agreements or make or grant any increase in any employee benefit plan, incentive arrangement or other benefit covering any of the officers or employees of any Acquired Company, other than changes in the Ordinary Course of Business made to a benefit plan, incentive arrangement or other benefit maintained by Seller and generally applicable to employees and/or officers of Seller and its Subsidiaries or amend any non-compete for any Employee;
(c) establish, amend or contribute to any pension, retirement, profit sharing, or stock bonus plan or multiemployer plan covering any of the officers or employees of any Acquired Company, except as required by law and except contributions in the Ordinary Course of Business;
(d) declare or pay any dividends or distributions other than (i) cash dividends or distributions, or (ii) pursuant to the Preliminary Transfer Documents in accordance with Section 7.2(e);
(e) enter into any contract that would have been required to be disclosed on Section 3.16(a) of the Seller Disclosure Letter if entered into as of the date of this Agreement, other than contracts with unaffiliated Persons in the Ordinary Course of Business and renegotiations of collective bargaining or wage agreements;
(f) make any change in the accounting principles or practices used in the preparation of the Company Financial Statements unless required by GAAP, applicable generally accepted foreign accounting principles or applicable Law;
(g) make or change any election, file any amended Tax Return, enter into any closing agreement, settle any Tax claim or assessment relating to any Acquired Companies, surrender any right to claim a refund of Taxes, or consent to any extension or waiver of the limitation period applicable to any Tax claim or assessment relating to any Acquired Company, if such election, change, amendment, agreement, settlement, surrender, or consent or omission would have the effect of materially increasing the Tax liability of Purchaser or any Acquired Company for any period after the Closing Date;
(h) amend any of their certificates of incorporation or by-laws or similar organizational documents in any respect;
(i) (i) split, combine or reclassify the outstanding Capital Stock of the Acquired Companies; (ii) issue or sell any additional shares of, or securities convertible into or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire, shares of Capital Stock of the Acquired Companies; or (iii) redeem, purchase or otherwise acquire any of its Capital Stock or units or any option, warrant or right relating thereto or any securities convertible into or exchangeable for any of its Capital Stock;
(j) dispose of any assets material to their operations outside of the Ordinary Course of Business;
(k) terminate before its scheduled termination or amend in any material respect any material contract, except in the Ordinary Course of Business;
(l) merge or consolidate with, or acquire a material interest in, any Person, or enter into any material joint venture, partnership or similar arrangement;
(m) adopt a plan of complete or partial liquidation or resolutions providing for or authorizing such liquidation or a dissolution, restructuring, recapitalization or other reorganization;
(n) incur expenditures materially less than the aggregate amount contemplated by the Capital Expenditure Budget for the items contemplated in such Capital Expenditure Budget or that materially deviate from the allocation amongst the categories of items contemplated in such Capital Expenditure Budget;
(o) terminate any employee who is in the top ten employees ranked by total annual compensation other than for cause; or
(p) commit, or enter into any agreement to do, any of the foregoing.
Section 5.4 COMMERCIALLY REASONABLE EFFORTS.
(a) Each of Seller and Purchaser agree to cooperate with respect
to the notices and filings required to be made with, and the consents,
approvals, waivers and authorizations required to be obtained from, Governmental
Authorities prior to Closing in connection with the transactions contemplated
hereby. Each of Seller and Purchaser shall (i) effect, as promptly as reasonably
practicable, the filings and notices required to be made prior to Closing and
(ii) use its commercially reasonable efforts to obtain, as promptly as
reasonably practicable, the consents, approvals, waivers and authorizations of
Governmental Authorities required to be obtained by it prior to Closing; in each
case in connection with the transactions contemplated by this Agreement. The
parties shall cooperate and use their commercially reasonable efforts to obtain
the Third Party Consents and any other consents or waivers that are necessary,
proper or advisable for the consummation of the transactions contemplated by
this Agreement or the Transaction Documents. Neither party shall be required to
materially amend or modify the terms of any of the Transaction Documents in
order to obtain any such consent, approval, waiver or authorization.
(b) Within five (5) Business Days following the date of this Agreement, Seller shall provide Purchaser with information reasonably requested by Purchaser to identify any notices or applications that Purchaser may need to file with a Governmental Authority in respect of any transaction contemplated by this Agreement. Seller shall provide Purchaser, as promptly as reasonably practical, with any information that Purchaser subsequently reasonably requests for the purposes of providing or complying with the requirements of any notice or applications that Purchaser may file with a Governmental Authority. Purchaser and Seller shall, within thirteen (13) Business Days following the date of this Agreement (or such shorter period as required by applicable Law), or such other period as Purchaser and Seller may agree, promptly file the appropriate notices, applications and documentary materials required to be filed by them, or which Purchaser and Seller reasonably deem advisable to file, with Governmental Authorities, including in connection with obtaining all necessary consents, approvals, waivers and authorizations required to be obtained from Governmental Authorities (including the Federal Trade Commission and the Antitrust Division of the United States Department of Justice under the HSR Act and with the Canadian Competition Bureau under the Competition Act) prior to Closing and promptly file any additional information required in connection with such filings as soon as practicable after receipt of request therefor. Purchaser and Seller shall each use commercially reasonable best efforts to obtain an early termination of the applicable waiting periods under the HSR Act, and make any further filings and supply any further information and documentation pursuant thereto and pursuant to the Competition Act that may be necessary, proper, or advisable in connection therewith. Each of Purchaser and Seller agrees to cooperate with and promptly to consult with, to provide any reasonably available information with respect to, and to provide the other party (and its counsel) advance drafts and copies of all presentations and filings to be made with Governmental Authorities.
(c) Purchaser will use its commercially reasonable efforts to obtain as promptly as practicable the Financing required to be obtained to consummate the transactions contemplated hereby on the terms described in the term sheets attached to Commitment Letters. Purchaser will promptly inform Seller of all material developments relating to arranging such Financing. Seller shall cause Inorganics to reasonably cooperate with Purchaser in connection with Purchaser's preparation and negotiation of the Financing Documents.
(d) Purchaser shall use its commercially reasonable efforts to enter into investment agreements with all of the individuals listed on Section 5.4(d) of the Purchaser Disclosure Letter so that the individual will make the investment so indicated (the "Management Agreements").
(e) Each party shall use its commercially reasonable efforts to cause the conditions to its obligations hereunder to be satisfied (including, without limitation, the execution and delivery of all agreements contemplated hereunder to be so executed and delivered and the making and obtaining of all third party and governmental filings, authorizations, approvals, consents, releases and terminations).
Section 5.5 EMPLOYEE MATTERS.
(a) Purchaser shall, and shall cause its applicable Subsidiaries or benefits plans to, give the Employees full credit, for purposes of eligibility and vesting (and, solely with respect to
determining an Employee's eligibility for paid vacation and severance benefits, for purposes of benefit accrual), under any employee benefit plans, collective bargaining arrangements, programs or arrangements maintained by Purchaser and Purchaser's Subsidiaries (collectively, "Purchaser Plans"), for the Employees' service with the Acquired Companies to the same extent recognized under the Plans by the Acquired Companies immediately prior to the Closing Date; provided that such crediting service does not result in duplication of benefits for the same period of service.
(b) Purchaser and Purchaser's Subsidiaries shall (i) waive all
limitations as to preexisting conditions exclusions and waiting periods with
respect to participation and coverage requirements applicable to the Employees
(to the extent that such exclusions or waiting periods were waived or satisfied
pursuant to existing Plans) under any "welfare benefit plans" (as defined in
Section 3(1) of ERISA) that such employees may be eligible to participate in
after the Closing Date and (ii) provide each Employee with credit for any
co-payments and deductibles paid prior to the Closing Date in satisfying any
applicable deductible or out-of-pocket requirements under any welfare benefit
plans that the Employees are eligible to participate in after the Closing Date.
(c) For a period of twelve (12) months following the Closing Date, Purchaser shall cause one of the Acquired Companies to provide Employees with compensation and benefits that are, in the aggregate, substantially comparable to compensation and benefits provided by the Acquired Companies immediately prior to Closing.
(d) Following the Closing, Purchaser and the Acquired Companies shall not, at any time prior to 180 days after the Closing Date, effectuate a plant closing, mass layoff, mass termination or other action resulting in similar workforce reductions or give notice of redundancies that would trigger the Trade Union and Labour Relations (Consolidation) Act 1992, United Kingdom, affecting in whole or in part any facility, site of employment, operating unit or employees of the Acquired Companies, without fully complying under applicable law with the Worker Adjustment and Retraining Notification Act of 1988 ("WARN"), the Employment Standards Act, Ontario, Section 188 of the Trade Union & Labour Relations (Consolidation) Act 1992, United Kingdom, and any other applicable U.S., foreign, state or provincial statutes or laws.
(e) Following the Closing, Purchaser shall cause the Acquired Companies to honor all collective bargaining agreements set forth in Section 3.19 of the Seller Disclosure Letter. Seller agrees and acknowledges that it is responsible for making any required notifications regarding this Agreement and Plan of Merger to any labor organization if such notification is required or contemplated by the terms of its, or an Acquired Companies', collective bargaining agreements with said labor organizations.
(f) Except as expressly provided herein, nothing contained herein is intended to confer upon any Employee the right to continued employment with Purchaser or any of its Subsidiaries for any period, or any benefits under any Plan, including but not limited to, any severance benefits, by reason of this Agreement.
(g) Seller shall take all actions necessary and appropriate to ensure that, as of prior to the Closing Date, (i) Seller shall assign to one of the Acquired Companies, and that such
Acquired Company shall assume, the IMC Global Inc. Retirement Savings and Investment Plan for Hourly Employees, (ii) one or more of the Acquired Companies shall adopt one or more defined contribution plans (collectively, the "Salt Account Plan") effective as of immediately prior to the Closing and (iii) the account transfers discussed in this Section 5.5(g) shall be completed. The Salt Account Plan shall, concurrently with, and to the extent of, receipt of assets as hereinafter provided, assume the account balances in the IMC Global Inc. Profit Sharing and Savings Plan (the "IMC Savings Plan") of each Employee who was at the Closing Date both (i) employed by the Acquired Companies (and set forth on Section 5.5(g) of the Seller Disclosure Letter) and (ii) a participant in the IMC Savings Plan (such an Employee, a "Plan Employee"). As of immediately prior to the Closing Date, Seller shall cause the IMC Savings Plan to transfer to the Salt Account Plan an aggregate amount equal to the account balances of all Plan Employees (whether or not vested) valued as of the most recent accounting date prior to the date of transfer (including an amount reflecting any matching or other Seller contributions accrued but not yet contributed of the Closing Date) ("Transferred Accounts") together with interest accounting for earnings during the period beginning on the applicable valuation date on ending on the actual date of transfer. Seller shall cause the transfer to the Salt Account Plan to be made either in cash, in-kind assets or a combination of cash and in-kind assets, as determined by Seller (and shall include any promissory notes or other evidences of indebtedness with respect to any outstanding loans). Seller shall cause such Acquiring Company(ies) establishing the Salt Account Plan to establish one or more trusts or other funding entities for the purpose of receiving such assets from the IMC Savings Plan. Each Transferred Account shall be invested initially in substantially comparable investment options under the Salt Account Plan as such accounts were invested in the IMC Savings Plan immediately prior to the date of transfer. Seller shall ensure that the transfer set forth above shall comply with the provisions of Code Sections 411(d)(6) and 414(1) and Section 204(h) and 208 of ERISA.
(h) (1) As soon as reasonably practicable after the Closing Date, Purchaser shall take all actions necessary and appropriate to ensure that Purchaser or one of its Affiliates maintains or adopts one or more pension plans (the "Purchaser Pension Plan") effective as of the Closing Date and to ensure that each Purchaser Pension Plan satisfies the following requirements as of the Closing Date: (A) the Purchaser Pension Plan is a qualified, single-employer defined benefit plan under Section 401(a) of the Code; (B) any Purchaser Pension Plan that was in effect before the Closing Date shall not have any "accumulated funding deficiency," as defined in Section 302 of ERISA and Section 412 of the Code, whether or not waived, immediately before the Closing Date; (C) the Purchaser Pension Plan is not the subject of termination proceedings or a notice of termination under Title IV of ERISA; and (D) the Purchaser Pension Plan does not violate the requirements of any applicable collective bargaining agreement. For purposes of Section 5.5(h)(2) and (3), the term "Purchaser" shall mean the Purchaser or any applicable Affiliate of Purchaser that maintains or adopts the Purchaser Pension Plan.
(2) In accordance with the provisions of this Section 5.5(h), effective as of the date of the transfer of assets described in subsection (iv) below, Purchaser shall cause the Purchaser Pension Plan to accept all liabilities for benefits under the IMC Global Inc. Consolidated Retirement Plan for Union Hourly Employees (the "Seller Pension Plan"), whether or not vested, that would have been paid or payable (but for the transfer of assets and liabilities pursuant to this Section 5.5(h)) to or with respect to the Employees and Other Plan Participants (as defined below) under the terms of the Seller Pension Plan, including, but not limited to, all
liabilities for "Section 411(d)(6) protected benefits" (as defined by Section 411(d)(6) of the Code and the regulations thereunder) that have accrued under the Seller Pension Plan as of the Closing Date. Except as may otherwise be permitted by applicable law, Purchaser shall not amend the Purchaser Pension Plan, or permit the Purchaser Pension Plan to be amended so as to eliminate any benefit, whether or not vested, with respect to which liabilities are transferred pursuant to the foregoing provisions of this subsection (ii), including, but not limited to, any such benefit that is a "Section 411(d)(6) protected benefit" (as defined by Section 411(d)(6) of the Code and the regulations thereunder) or to decrease the accrued benefit as of the Closing Date of any Employee or Other Plan Participant (as defined below).
(3) Seller shall cause to be transferred to a trust
established by Purchaser as part of the respective Purchaser Pension Plan cash
or other assets agreed upon by Purchaser and Seller (or any combination of cash
and other assets as agreed upon by Purchaser and Seller) equal to the Accrued
Liability (defined below) under such Seller Pension Plan for all Employees and
Other Plan Participants (as defined below), where such Accrued Liability shall
be determined as of the end of the calendar month which includes the Closing
Date (the "Accrued Liability Determination Date"). Following the transfer of
assets, Purchaser shall assume all liabilities to pay benefits and obligations
to pay benefits of Seller, the Acquired Companies and the Seller Pension Plan
with respect to the Employees and the Other Plan Participants under the Seller
Pension Plan, and Purchaser shall become with respect to each Employee and each
Other Plan Participant responsible for all benefits due and acts, omissions and
transactions under or in connection with such Seller Pension Plan, whether
arising prior to, on or after the Closing Date. In connection with the transfer
of assets and liabilities pursuant to this Section 5.5(h), Purchaser and Seller
shall cooperate with each other in making all appropriate filings required by
the Code and/or ERISA and the regulations thereunder, and the transfer of assets
and liabilities pursuant to this Section 5.5(h) shall be made as soon as
reasonably practicable after the expiration of the thirty (30) day period
following the filing of any required notices with the IRS pursuant to Section
6058(b) of the Code and Purchaser and Seller have supplied each other with
reasonable assurance that the Purchaser Pension Plan in Purchaser's case and the
Seller Pension Plan in Seller's case is a qualified plan meeting the
requirements of Section 401(a) of the Code. The amount of assets so transferred
shall be credited with interest during the period beginning on the Accrued
Liability Determination Date and ending on the date of transfer using the same
annual compounded interest rate that was used to determine the liabilities under
the PBGC's plan termination assumptions. Benefit payments under the Seller
Pension Plan to Employees and Other Plan Participants in pay status shall
continue to be made from the Seller Pension Plan following the Closing Date and
until the date of the asset transfer described above. Any such payments,
adjusted for applicable interest, shall be deducted from the amount required to
be transferred to the Purchaser Pension Plan pursuant to this Section 5.5(h).
Purchaser and Seller each shall ensure that the transfer set forth in this
Section 5.5(h) shall comply with the provisions of Code Sections 411(d)(6) and
414(l) and Sections 204(h) and 208 of ERISA. The term "Other Plan Participant"
shall mean any person who was employed by the Acquired Companies, who has an
accrued benefit (which remains payable in whole or in part) under the Seller
Pension Plan immediately before the Closing Date and who immediately before the
Closing Date is no longer an Employee or who is a beneficiary or an alternate
payee of an individual who was employed by the Acquired Companies or a
beneficiary or alternate payee of an Employee and who has an accrued benefit
(which remains payable in whole or in part) under the Seller Pension Plan.
For purposes of this Section 5.5(h), the term "Accrued Liability"
shall mean, with respect to the Seller Pension Plan, the present value of the
accrued benefit of each Employee and each Other Plan Participant in such Seller
Pension Plan, determined on a termination basis using the interest factors
specified by the PBGC as in effect as of the Closing Date for an immediate or
deferred annuity as appropriate for each such person and using the other methods
and factors specified in the PBGC's regulations (including without limitation
the regulations under ERISA Section 4044) for the valuation of accrued benefits
upon a plan termination, including, but not limited to, the expected retirement
age and expense load assumptions and the 1983 Group Annuity Mortality Table. The
Accrued Liability shall be determined by an enrolled actuary designated by
Seller, and Seller shall provide any actuary designated by Purchaser with such
information as is reasonably necessary to review the calculations of the Accrued
Liability in all material respects and to verify that such calculations have
been performed in a manner consistent with the terms of this Section 5.5(h). If
Purchaser's actuary concludes that the calculations made by Seller's actuary are
incorrect or inconsistent with this Sections 5.5(h), the parties shall seek to
resolve the difference among themselves. If the parties are unable to reach a
final resolution within 30 days following the date Seller has provided the
calculations to Purchaser's actuary, then, unless the parties mutually agree to
continue their efforts to resolve such differences, an actuary selected jointly
by Seller's actuary and Purchaser's actuary (or, if such actuaries are unable to
jointly agree on such an actuary, an arbitrator selected by the New York, NY
office of the American Arbitration Association (the "Arbitrator")) shall resolve
such differences in the manner provided below. Seller and Purchaser shall each
be entitled to make a presentation to the Arbitrator, pursuant to procedures
agreed to among Seller, Purchaser and the Arbitrator, advocating the merits of
the calculations espoused by such party, and the Arbitrator shall be required to
resolve the differences between the parties and determine the appropriate
calculations within ten business days thereafter. Such determination shall be
conclusive and binding upon such parties, absent fraud or manifest error. Seller
and Purchaser shall share equally the fees and expenses of the Arbitrator;
provided, that if the Arbitrator determines that one party has adopted a
position or positions with respect to the calculations referenced in this
Section 5.5(h) that is frivolous or clearly without merit, the Arbitrator may,
in his or her discretion, assign a greater portion of any such fees or expenses
to such party.
(i) On or prior to the Closing Date (1) to the extent that (A)
such liabilities are set forth on the current liabilities section of the Closing
Balance Sheet or (B) assets in an amount equal to such liabilities are either
(I) transferred to the Purchaser or (II) transferred to (or as of the Closing
Date are maintained by or for the benefit of) any Acquired Company or
non-qualified deferred compensation plan set forth on Section 5.5(i)(2) of the
Seller Disclosure Letter, Purchaser or one of the Acquired Companies shall take
all action necessary and appropriate to assume all liabilities with respect to
the Employees under the non-qualified deferred compensation plans set forth on
Section 5.5(i)(1) of the Seller Disclosure Letter, and (2) Seller or the
applicable Acquired Companies shall take all action necessary and appropriate to
amend the non-qualified deferred compensation plans set forth on Section
5.5(i)(2) of the Seller Disclosure Letter to provide that (A) all benefits
accrued by an Employee under such plans shall be distributed to such Employee on
or prior to the Closing Date (or during any period following the Closing Date as
may be determined by Seller) and (B) each such Employee shall be credited with
all benefits or earnings accrued under such plan through the dates of such
distributions. Seller acknowledges and agrees that with respect to the plans set
forth on Section 5.5(i)(2) of the
Seller Disclosure Letter, Seller shall be solely responsible for the payment of benefits thereunder, and Purchaser shall have no liability with respect thereto.
(j) Notwithstanding any other provision herein, nothing in this Agreement shall create any third party beneficiary rights in any Employee, any beneficiary or dependent thereof, or any collective bargaining representative thereof, with respect to the compensation, terms and conditions of employment and benefits that may be provided to any Employee by Purchaser or any of its Affiliates or under any benefit plan that Purchaser or any such Affiliate may maintain.
(k) On or prior to the date hereof, Seller caused the Company to adopt the Salt Holdings Corporation Senior Executives' Deferred Compensation Plan (the "Senior Executive Plan") and Seller shall cause the Company to maintain such plan without amendment or modification until the Closing.
Section 5.6 INSURANCE MATTERS. Seller will use its commercially
reasonable efforts to assist the Acquired Companies in tendering claims to the
applicable insurers under the Insurance Policies and to provide the Acquired
Companies with proceeds in a timely fashion of all claims made by or with
respect to the Included Subsidiaries under the Insurance Policies. Seller shall
provide Purchaser with access to the Insurance Policies and Seller's personnel
and claims administrator to the extent necessary to facilitate Purchaser's and
the Acquired Companies' compliance with their obligations set forth in this
Section 5.6 and to determine coverage for claims that Purchaser and the Acquired
Companies might tender to the applicable insurers under the Insurance Policies.
Following the Closing, Seller shall treat claims for the Acquired Companies in a
manner consistent with the treatment by Seller of claims of the Acquired
Companies prior to the Closing in relation to claims of other members of the
Seller Group.
Section 5.7 INTERCOMPANY ACCOUNTS. Prior to the Closing, Seller and the Acquired Companies shall cause the elimination of all intercompany accounts between the Seller Group on the one hand and the Acquired Companies on the other hand, other than the U.K. Loans and the Esterhazy Loan; provided, however, that the Seller shall not pay, or cause to be repaid, all or any portion of the U.K. Loans and the Esterhazy Loan between the date of this Agreement and the Closing. On the Closing Date, the Surviving Corporation shall cause the U.K. Loans and the Esterhazy Loan to be repaid to Seller immediately following the Effective Time. Seller shall determine the method by which such intercompany accounts are eliminated including but not limited to elimination by means of settlement, setoff or capital contribution. Such elimination of intercompany accounts shall be in satisfaction of all amounts owed by the Seller Group to any of the Acquired Companies and all amounts owed by any of the Acquired Companies to the Seller Group in respect of such intercompany payables and intercompany receivables and each of the Acquired Companies, as applicable, and Seller shall provide the Acquired Companies and Seller, respectively, with a full release, if applicable, of any guarantee or other security interest related to such intercompany accounts.
Section 5.8 FINANCIAL INFORMATION.
(a) Seller shall, and shall cause each of its Subsidiaries to, use commercially reasonable efforts to cooperate with and assist, and shall cause its independent accountants to
cooperate and assist, Purchaser in preparing such information packages and offering materials as the parties to the Commitment Letters may reasonably request (collectively, the "Offering Materials") for use in connection with the offering and/or syndications of debt securities, loan participations and other matters contemplated by the Commitment Letters (the "Offerings"), including, without limitation, making senior management and other representatives of Seller and the Acquired Companies available (at mutually agreeable times) to participate in meetings with prospective investors and participating in "road shows" in connection with any such Offerings and providing such information and assistance as the parties to such Commitment Letters may reasonably request in connection therewith. Following the Closing, Purchaser shall cause the Acquired Companies to reimburse Seller for all reasonable out-of-pocket fees and expenses (including accountants' fees) incurred by Seller in complying with this Section 5.8.
(b) For each month from signing until Closing, Seller shall provide Purchaser with a consolidated income statement (by total company and by division) and a consolidated statement of cash flows and a consolidated balance sheet as of the end of the month, each prepared in accordance with GAAP, within 25 days of the end of such month.
(c) Seller shall instruct Ernst & Young LLP to conduct an audit of the financial statements for the Included Subsidiaries as of, and for the six months ended, June 30, 2001, and Seller will cooperate with such audit. The cost of such audit that is in excess of the cost of the six-month review of the Included Subsidiaries that was already performed by Ernst & Young LLP prior to the date hereof shall be borne fifty percent by Purchaser (or if the Closing occurs, the Surviving Corporation) and fifty percent by Seller, up to a maximum of $100,000 (and if such costs shall be in excess of $100,000, then Seller shall be liable for payment of any excess). The cost of any special bonuses payable to employees of the Acquired Companies in connection with the conduct of the audit shall be borne fifty percent by Purchaser or the Surviving Corporation and fifty percent by Seller, up to a maximum of $20,000 (and if such costs shall be in excess of $20,000, then Seller shall be liable for payment of any excess). Seller shall provide Purchaser a reasonably detailed statement of the cost of the work performed by Ernst & Young LLP.
Section 5.9 ANNOUNCEMENT. Neither Seller nor Purchaser will issue any press release or otherwise make any public statement with respect to this Agreement and the transactions contemplated hereby without the prior consent of the other (which consent shall not be unreasonably withheld or delayed), except as may be required by applicable law or stock exchange regulation. Notwithstanding anything in this Section 5.9 to the contrary, Seller and Purchaser will, to the extent practicable, consult with each other before issuing, and provide each other the opportunity to review and comment upon, any such press release or other public statements with respect to this Agreement and the transactions contemplated hereby whether or not required by law or stock exchange requirements.
Section 5.10 NOTIFICATION BY PURCHASER. Prior to the Closing, Purchaser shall promptly inform Seller in writing when it has Knowledge of any breach of the representations and warranties contained in ARTICLE III (it being understood and agreed that for purposes of indemnification pursuant to Article VIII hereof, a breach of this covenant will be treated only as a breach of the underlying representation or warranty).
Section 5.11 FURTHER ASSURANCES.
(a) At any time after the Closing Date, Seller and Purchaser shall promptly execute, acknowledge and deliver any other assurances or documents reasonably requested by Seller or Purchaser, as the case may be, and necessary for Seller, or Purchaser, as the case may be, to satisfy their respective obligations hereunder or obtain the benefits contemplated hereby.
(b) From and after the Closing, until the earlier of the settlement of or the final judgment for the litigation set forth in Section 5.11(b) of the Seller Disclosure Letter and the second anniversary of the Closing Date, none of the Acquired Companies shall extend an exclusive dealership to any person in the territory previously served by DustChem L.C. for products previously sold by DustChem L.C.
(c) Seller and Purchaser shall reasonably cooperate to finalize the settlement agreement described in Section 5.11(c) of the Seller Disclosure Letter in a manner consistent with such described settlement in Section 5.11(c) of the Seller Disclosure Letter.
Section 5.13 POST-CLOSING COOPERATION.
(a) After the Closing, upon reasonable written notice, Purchaser and Seller shall, in a prompt and timely manner, furnish or cause to be furnished to the other party and its employees, counsel, auditors and representatives access during normal business hours to such information and assistance, including but not limited to the assistance of transferred personnel and Additional Acquired Assets, relating to the Acquired Companies as is reasonably necessary for governmental filings, financial reporting and accounting matters, the preparation and filing of any Tax Returns, reports or forms or the defense of any Tax audit, claim or assessment. Each party shall reimburse the other for reasonable out-of-pocket costs and expenses incurred in assisting the other pursuant to this Section 5.12. Neither party shall be required by this Section 5.12 to take any action that would unreasonably interfere with the conduct of its business or unreasonably disrupt its normal operations.
(b) Following the Closing, Purchaser shall permit Seller and its representatives to have reasonable access during regular business hours and upon reasonable advance notice, to the relevant books, records, information and employees of the Acquired Companies in connection with Seller's defense of the litigation matters listed on Section 8.3(b) of the Seller Disclosure Letter, the pursuit of the litigation matters listed on Section 1.1(h) of the Seller Disclosure Letter as well as any other litigation relating to the Acquired Companies to which a member of the Seller Group is a party or for which the Seller provides indemnity pursuant to this Agreement. Seller and its Affiliates shall have the sole right, at their sole cost and expense to, and shall (i) defend the litigation matters listed on Section 8.3(b) of the Seller Disclosure Letter and (ii) pursue the litigation matters listed on Section 1.1(h) of the Seller Disclosure Letter. Seller shall not settle or compromise any on, or consent to the entry of any judgment, without the prior written consent of the Surviving Corporation (which consent shall not be unreasonably withheld or delayed) PROVIDED, that the Surviving Corporation shall not be required to consent to any settlement or consent to the entry of any judgment which (i) does not include as a term thereof the delivery by the claimant or plaintiff to the Surviving Corporation of a duly executed written
unconditional release of the Surviving Corporation from all Liability in respect of such litigation or (ii) involves the imposition of equitable remedies.
Section 5.13 CERTAIN TRANSACTIONS. Purchaser shall not, and
shall not permit any of its Subsidiaries to, acquire or agree to acquire by
merging or consolidating with, or by purchasing a substantial portion of the
assets of or equity in, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof, or
otherwise acquire or agree to acquire any assets if the entering into of a
definitive agreement relating to or the consummation of such acquisition, merger
or consolidation would reasonably be expected to (i) impose any material delay
in the obtaining of, or significantly increase the risk of not obtaining, any
authorizations, consents, orders, declarations or approvals of any Governmental
Authority necessary to consummate the transactions contemplated by this
Agreement or the expiration or termination of any applicable waiting period,
(ii) significantly increase the risk of any Governmental Authority entering an
order prohibiting the consummation of the transactions contemplated by this
Agreement, (iii) significantly increase the risk of not being able to remove any
such order on appeal or otherwise or (iv) materially delay or prevent the
consummation of the transactions contemplated by this Agreement. Prior to
Closing, Purchaser shall not, and shall not permit any of its Subsidiaries to,
acquire or agree to acquire by merging or consolidating with, or by purchasing a
substantial portion of the assets of or equity in, or by any other manner,
Cargill Corporation or Morton International, Inc and will not enter into any
agreement with any employee/owner of U.S. Salt in connection with this Agreement
or the transactions contemplated hereby.
Section 5.14 RELEASE OF CERTAIN LIENS. With respect to all Real Property, Seller shall use its best efforts to obtain releases of all Liens set forth in Section 5.14 of the Seller Disclosure Letter encumbering such Real Property on or prior to the Closing Date (the "Encumbrance Releases") (other than the Financing Statement between Great Salt Lake Minerals Corporation, as debtor, and Zions Credit Corporation, as secured party, recorded December 18, 1997 in Entry No. 1510800, Book/Page 1897/1870, as amended by Amendment recorded January 29, 1998, as Entry No. 1518125, in Book 1904 at page 597 of the official records of Weber/Box Elder County, Utah, which shall be a Permitted Lien) or, in the event such Encumbrance Releases are not available on or prior to the Closing Date, use its best efforts to cause Chicago Title Insurance Company or its agent to insure over or omit such Liens from the Title Policies or Foreign Title Assurance to be obtained by the Purchaser in connection with any Real Property ("Clean Policies"), (including providing an indemnity to the Chicago Title Insurance Company, if so requested, regarding any payments that may be due under the Liens set forth in Section 5.14 of the Seller Disclosure Letter if necessary to obtain the Clean Policies), and if not released prior to Closing, shall continue to use its best efforts to cooperate to obtain such Encumbrance Releases following Closing.
Section 5.15 EXCLUSIVITY.
(a) Seller agrees that, unless this Agreement is terminated by its terms, Seller shall not directly or indirectly through any Acquired Company, Affiliate, agent or representative or otherwise, (i) solicit, initiate or encourage the submission of any proposal or offer from any Person, relating to any merger or consolidation with or into, or acquisition or purchase of all or any portion of the Capital Stock of, or any material portion of the assets of any Acquired
Company or any other transaction or series of transactions which has a
substantially similar economic effect (except for (x) sales of inventory,
obsolete equipment, "trade-in" sales for equipment or vehicle upgrades or
similar sales of immaterial assets, in each case in the Ordinary Course of
Business, (y) as permitted by this Agreement and (z) the Preliminary Transfers)
(an "Acquisition Proposal"), (ii) substantially respond to any Acquisition
Proposal, participate in any discussions or negotiations regarding, or furnish
to any other Person any confidential information with respect to, or otherwise
facilitate or, encourage any effort or attempt by any other Person to do or seek
to do any of the foregoing, except for provisions of information customarily
provided to third parties in the Ordinary Course of Business where the
disclosing Person has no reason to believe that such information is intended to
be used to evaluate the possibility of making an Acquisition Proposal or (iii)
consummate any of the foregoing (whether by sale, transfer, contribution,
distribution or otherwise); provided that nothing in this Section 5.15(a) shall
(x) prohibit Seller or any Acquired Company from making any disclosure required
by applicable law or (y) prohibit Seller from taking any of the actions of the
type described in this Section 5.15(a) solely to the extent they relate to a
sale of Seller's Capital Stock or assets to, or a business combination with, a
bona fide prospective purchaser involving all or substantially all of Seller's
Capital Stock or assets or any other transaction or series of transactions which
has a substantially similar economic effect.
(b) Seller represents that it has suspended (and has caused its
Affiliates, employees, agents, and representatives to suspend), all contacts,
discussions and negotiations with third parties (other than Purchaser and Apollo
and their respective Affiliates, agents and representatives) regarding any
Acquisition Proposal. Seller shall promptly notify Purchaser if any such
Acquisition Proposal, or any inquiry or contact with any Person with respect
thereto (including any person or entity with whom Seller or any Acquired Company
has already had such discussions), is made in writing or orally to Seller (but
if orally only if to one or more of the officers and employees of Seller listed
Section 1.1(c)(i) or 1.1(c)(ii) of the Seller Disclosure Letter) following the
date hereby.
Section 5.16 NON-COMPETITION, NON-SOLICITATION AND CONFIDENTIALITY.
(a) NON-COMPETITION. During the period beginning on the Closing Date and ending on the eighth anniversary of the Closing Date (the "Non-Compete Period"), Seller shall not, and shall not allow any of its Subsidiaries to, directly or indirectly, compete with the Acquired Companies in (including, without limitation, by soliciting any customer or other business relation of any of the Acquired Companies with respect to) the business of mining, producing, processing, selling, bartering, trading, distributing or marketing (i) Salt anywhere in the United States, Canada, Mexico or the United Kingdom or (ii) SOP in the United States or Canada; except in each case for the Permitted Competitive Activities. "Permitted Competitive Activities" means the following:
(i) the mining, production, processing, sale, barter, trade, distribution and marketing of Salt that is extracted (whether before or after the Closing) by IMC Canada Ltd. from its Belle Plaine, Saskatchewan, Canada facility to The Canadian Salt Company Limited (or its successors or assigns) pursuant to the existing contract between such parties, dated September 13, 1968, as amended through the date hereof, (the "Belle
Plaine Contract"), and the ownership and operation of related production facilities to the extent necessary to comply with the Belle Plaine Contract;
(ii) the mining, production, processing, sale, barter, trade, distribution and marketing of brine Salt from IMC Potash Carlsbad Inc.'s Carlsbad, New Mexico facility (including Laguna Grande de la Sal ("Laguna Grande")) to (i) United Salt Corporation (or its successors and assigns) and New Mexico Salt and Minerals Corp. (or its successors or assigns) pursuant to United Salt Contract and the New Mexico Salt Contract, between Seller or its Subsidiaries and such parties, each as amended through the date hereof, including any extension, renewal (including for periods after expiration of the current contracts), replacement or modification thereof on terms, including volumes, consistent with the existing contracts (which may include leasing Laguna Grande to a third party, contracting with a third party to mine, produce, process, sell, distribute or market Salt from Laguna Grande or for Seller or one of its Subsidiaries to mine, produce, process, sell, distribute or market Salt from Laguna Grande) (as such contracts may be extended, renewed, replaced or modified in accordance herewith, the "Laguna Grande Contract"), and the ownership and operation of related mining production and distribution facilities to the extent necessary to comply with the Laguna Grande Contracts and (ii) to the extent appropriate to meet operational requirements to address environmental requirements;
(iii) the mining, production and processing of by-product Salt from potash facilities (including facilities acquired after the Closing Date) but not the trade, distribution, marketing, sale or barter of Salt;
(iv) the sale, barter, trade, distribution and marketing of by-product Salt at Seller's and its Subsidiaries' existing or later acquired potash facilities in Saskatchewan, Canada to the extent that Seller is required to do so to comply with any currently existing or hereafter adopted applicable Environmental Law (including, without limitation, any Order) or any agreement with appropriate Canadian Governmental Authorities, it being understood that Seller or any of its Subsidiaries may negotiate with Canadian Governmental Authorities regarding compliance in response to requirements of such agencies that Seller and its Subsidiaries comply with applicable Environmental Laws and Seller must in good faith choose any method of compliance that Seller prefers in order to comply with such Environmental Laws other than the sale, barter, trade, distribution or marketing of such Salt and may only sell, barter, trade, distribute or market such Salt if a Canadian Governmental Authority of competent jurisdiction issues an order to the effect that no other method of compliance is acceptable to comply with such Environmental Laws (such as burial or deep well injection);
(v) the mining, production, processing, sale, distribution and marketing of Salt or SOP from facilities, mines or businesses "ancillary" (meaning that no more than one-third of the revenues of such business relates to the mining, production, processing, sale, distribution and marketing of Salt) to any business Seller acquires at any time after the Closing Date (to the extent such business relates to the mining, production, processing, sale, distribution and marketing of Salt, an "Acquired Ancillary Salt Business"), but only if Seller is using commercially reasonable efforts to promptly divest
itself of such Acquired Ancillary Salt Business if such Acquired Ancillary Salt Business represents more than 15% of the gross revenues or total assets of the acquired business or represents in excess of $25,000,000 of gross revenues; provided that any Acquired Ancillary Salt Business does not, while owned by Seller or its affiliates, sell more than 102.5% of the volume of Salt sold in the 12 month period immediately prior to any time of comparison.
(vi) the mining, production, processing, barter, trade, sale and distribution of Salt to Purchaser or the Acquired Companies pursuant to the Supply Agreements (or any additional supply contracts that may be entered into between Seller and/or its Subsidiaries, on the one hand, and Purchaser or an Acquired Company, on the other hand);
(vii) the production, processing, sale, barter, trade, and distribution of SOP to an Acquired Company or Alternate Purchaser (as such term is defined in the SOP Agreement) in accordance with the SOP Agreement or for export (other than to Canada), provided that, if the SOP Agreement is not extended or renewed after 5 years or, if the SOP Agreement is terminated, the production, processing, sale, distribution and marketing of SOP produced by the Carlsbad, New Mexico facility.
(viii) the mining, production, processing, sale, barter, trade, distribution, and marketing of Salt and SOP by Phosphate Resource Partners Limited Partnership, IMC Phosphates Company and their respective subsidiaries; provided that Seller Group shall not directly or indirectly supply or sell Salt or SOP to Phosphate Resource Partners Limited Partnership, IMC Phosphates Company or their respective subsidiaries, except that the Seller Group may supply or sell up to 2,000 tons of SOP per year (which amount shall be deemed to be increased by two percent on each twelve month anniversary of this Agreement) to Phosphate Resource Partners Limited Partnership, IMC Phosphates Company and their respective subsidiaries if such SOP is not resold as fertilizer;
(ix) the mining, production, processing, sale, barter, trade, distribution and marketing of solar Salt produced by the Searles Valley facility of no more than 125,000 tons of solar Salt for general trade or industrial use excluding for the food or the highway business;
(x) the sale, barter, trade, distribution and marketing of Salt as provided in the Esterhazy Supply Agreement and the Hersey Supply Agreement;
(xi) the ownership of less than 10% of the outstanding stock of any publicly-traded corporation so long as Seller and its Subsidiaries are not actively involved in such business; and
(xii) the mining, production, processing, sale, barter, trade distribution and marketing of products (other than SOP) that compete with SOP.
(b) NON-SOLICITATION.
(i) Seller agrees that, unless Purchaser gives its consent, Seller shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, contact, approach or solicit for the purpose of offering employment to or hiring (whether as an employee, consultant, agent, independent contractor or otherwise) or actually hire any Employee or officer employed by any Acquired Company immediately prior to the Closing, provided, however, that if the employment of any such Employee is terminated, Seller may solicit or hire such Employee (i) following the one year anniversary of such termination if such Employee is an officer of, or is in a management position at, any of the Acquired Companies or (ii) following the six month anniversary of such termination for any other Employee employed by an Acquired Company.
(ii) Purchaser agrees that, unless Seller gives its consent, Purchaser shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, contact, approach or solicit for the purpose of offering employment to or hiring (whether as an employee, consultant, agent, independent contractor or otherwise) or actually hire any sales and marketing employees employed by IMC USA, Inc. or IMC Canada Ltd. immediately prior to the Closing, provided, however, that if the employment of any such Employee is terminated, Purchaser may or may cause one of the Acquired Companies to solicit or hire such Employee (i) following the one year anniversary of such termination if such Employee is an officer of, or is in a management position at, IMC USA, Inc. or IMC Canada Ltd. or (ii) following the six month anniversary of such termination for any other Employee employed by IMC USA, Inc. or IMC Canada Ltd.
(c) CONFIDENTIALITY.
(i) Except as required by law or legal process, Seller shall, and shall cause its Subsidiaries and Affiliates, and their respective officers, directors and key employees to, (1) treat and hold as confidential any information to the extent concerning the business and affairs of the Acquired Companies that is not (as of any date of determination) generally available to the public and has not been made generally available to the public after the date hereof by Purchaser (the "Confidential Information") and (2) refrain from using any of the Confidential Information for commercial purposes, except for the performance of the Transition Services Agreement and the Supply Agreements. In the event that Seller or any of its Subsidiaries and Affiliates, and their respective officers, directors or key employees is requested or required (by oral question or request for information or documents in any legal proceeding, interrogatory, subpoena, civil investigative demand, or similar process) to disclose any Confidential Information, Seller shall notify Purchaser promptly of the request or requirement so that Purchaser may seek an appropriate protective order or waive compliance with the provisions of this Section 5.16(c)(i). If such protective order or waiver is not obtained, Seller or such officer, director or key employee may disclose the Confidential Information to the extent so legally required; provided that Purchaser or one of the Acquired Companies, on behalf of such disclosing Person, may obtain, and Seller shall cooperate with any efforts to obtain, at Purchaser's or one of the Acquired Companies' cost, an order or other assurance that confidential treatment shall be accorded to such portion of the Confidential Information required to be disclosed as Purchaser or one of the Acquired Companies shall designate.
(ii) Except as required by law or legal process, Purchaser shall, and shall cause its Subsidiaries (including the Acquired Companies following the Closing Date) and Affiliates, and their respective officers, directors and key employees to, (1) treat and hold as confidential any information to the extent concerning the business and affairs of Seller and its Subsidiaries that is not (as of any date of determination) generally available to the public through no fault of Purchaser or its Affiliates (including the Acquired Companies following the Closing Date) (the "Seller Confidential Information") and (2) refrain from using any of the Seller Confidential Information for commercial purposes. In the event that Purchaser or any of its Subsidiaries (including the Acquired Companies following the Closing Date) and Affiliates, and their respective officers, directors or key employees is requested or required (by oral question or request for information or documents in any legal proceeding, interrogatory, subpoena, civil investigative demand, or similar process) to disclose any Seller Confidential Information, Purchaser shall, or shall cause one of the Acquired Companies to, notify Seller promptly of the request or requirement so that Seller may seek an appropriate protective order or waive compliance with the provisions of this Section 5.16(c)(ii). If such protective order or waiver is not obtained, Purchaser, such Acquired Company or such officer, director or key employee may disclose the Seller Confidential Information to the extent so legally required; provided that Seller, on behalf of such disclosing Person, may obtain, and Purchaser shall, and shall cause the Acquired Companies to, cooperate with any efforts to obtain, at Seller's cost, an order or other assurance that confidential treatment shall be accorded to such portion of the Seller Confidential Information required to be disclosed as Seller shall designate.
(d) Seller and Purchaser acknowledge and agree that in the event of a breach by the other party or such other party's officers, directors or key employees of any of the provisions of this Section 5.16, monetary damages may not constitute a sufficient remedy. Consequently, in the event of any such breach, the non-breaching party may, in addition to other rights and remedies existing in its favor, apply to any court of law or equity of competent jurisdiction for specific performance and/or injunctive or other relief in order to enforce or prevent any violations of the provisions hereof, in each case without the requirement of posting a bond or proving actual damages.
(e) If the final judgment of a court of competent jurisdiction declares that any term or provision of this Section 5.16 is invalid or unenforceable, the Parties agree that the court making the determination of invalidity or unenforceability shall have the power to reduce the scope, duration, or area of the term or provision, to delete specific words or phrases, or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement shall be enforceable as so modified during the period in which the judgment is in effect.
Section 5.17 CHANGE OF CORPORATE NAME. As soon as practicable following the Closing Date, but in no event later than ten (10) business days following the Closing Date, Purchaser shall cause each of the Acquired Companies to change its corporate name to a name that does not include "IMC" and to make any necessary legal filings with the appropriate Governmental Authorities to effectuate such changes. Purchaser shall cause the Acquired
Companies to hold harmless and indemnify Seller against all costs, expenses and damages resulting from or arising in connection with any Acquired Company's use of the "IMC" name as provided in this Section 5.17.
Section 5.18 SELLER'S TRADEMARKS.
(a) Seller hereby grants to the Acquired Companies, effective upon the Closing Date, a non-transferable, nonexclusive, royalty free transitional right and license to use the trademarks, service marks, and trade names listed on Section 5.18 of the Seller Disclosure Letter, together with all slogans, logotypes, designs and trade dress associated therewith (collectively, the "Seller's Marks") solely in connection with the sale of packaged inventory which is in existence as of the Closing Date and is currently being used in the conduct of the Acquired Companies' businesses ("Existing Inventory").
(b) All rights and goodwill arising from the use of Seller's Marks and/or any similar names or marks (including logos) shall inure solely to Seller's benefit. Purchaser agrees that it shall not permit either the Acquired Companies or any of their Affiliates, to use, directly or indirectly, the word "IMC," "IMC Salt" or "IMC Global" or any marks similar thereto, as part of any Acquired Company's or any of their Affiliates' own trade names, or in any other way that suggests that there is any relation or affiliation between Seller and the Acquired Companies or any of their Affiliates other than that created by this Agreement, or as a trademark, service mark or trade name for any other business, product or service. The Acquired Companies shall have no interest in Seller's Marks except as expressly provided in this Agreement and shall not claim any other rights therein. Nothing in this Agreement or in the performance thereof, or that might otherwise be implied by law, shall operate to grant any Acquired Company any right, title, or interest in or to Seller's Marks other than as specified in the limited license grant in this Agreement. All rights not expressly granted in this Agreement or herein are reserved to Seller.
(c) The Acquired Companies' right to use the Seller's Marks shall
automatically cease upon the earlier of (i) the end of the one (1) year period
immediately after the Closing Date; (ii) the depletion of Existing Inventory; or
(iii) the Acquired Companies' failure to cure any material breach with respect
to its use of Seller's Marks within 15 days of receipt of written notice from
Seller. Upon the termination of the Acquired Companies' right to use Seller's
Marks, Purchaser shall cause the Acquired Companies immediately to cease all use
of Seller's Marks and all materials bearing Seller's Marks (such materials to be
returned to Seller or destroyed).
(d) The Acquired Companies agree to assign to Seller and does hereby assign to Seller all rights it may acquire, if any, by operation of law or otherwise in Seller's Marks, including all applications or registrations therefore, along with the goodwill associated therewith. Purchaser shall cause the Acquired Companies to assist Seller in protecting and maintaining Seller's rights in Seller's Marks in connection with the Acquired Companies' licensed use hereunder, including preparation and execution of documents necessary or appropriate to register Seller's Marks and/or record this Agreement. As between the parties, Seller shall have the sole right to, and in its sole discretion may, commence, prosecute or defend, and control any action concerning Seller's Marks.
(e) The Acquired Companies agree to maintain the quality of all products offered under Seller's Marks at a level that meets or exceeds those standards maintained by Seller immediately prior to the execution of this Agreement.
(f) Neither the Acquired Companies nor any of their Affiliates shall directly or indirectly, contest the validity of, by act or omission jeopardize, or take any action inconsistent with, Seller's rights in Seller's Marks (including attempting to register Seller's Marks or a mark incorporating either Seller's Marks or the word "IMC" or any mark similar thereto). The Acquired Companies' rights under the license granted herein are personal and may not be sublicensed, assigned or otherwise transferred.
Section 5.19 ANCILLARY AGREEMENTS.
(a) On the Closing Date, immediately following the Merger, Seller covenants to Purchaser that the Seller shall, or shall cause its subsidiaries, as appropriate, to enter into the Supply Agreements, the SOP Agreement, the Stock Rights Agreement, the Escrow Agreement, the Transition Services Agreement and the Overland Transition Agreement with the Surviving Corporation or the Acquired Companies, as appropriate. Seller covenants to Purchaser that it shall, or it shall cause its subsidiaries, as appropriate, to either enter into the agreements contemplated by the Rail Car Lease prior to the Merger or that it shall, or it shall cause its subsidiaries, as appropriate, to enter into such agreements immediately following the Merger on the Closing Date.
(b) On the Closing Date, immediately following the Merger, Purchaser covenants to Seller that it shall, or shall cause the Surviving Corporation or the Acquired Companies as appropriate, to enter into the Supply Agreements, the SOP Agreement, the Stock Rights Agreement, the Escrow Agreement, the Transition Services Agreement and the Overland Transition Agreement with the Seller or members of the Seller Group, as appropriate. Purchaser covenants to Seller that it either shall enter into the agreements contemplated by the Rail Car Lease either prior to the Merger or that it shall cause the Surviving Corporation to enter into such agreements immediately following the Merger.
Section 5.20 BANK CONSENT.
(a) Seller shall use its best efforts to obtain the consent set forth in Section 7.3(f) of the Seller Disclosure Letter as soon as reasonably possible following the date hereof.
Section 5.21 GODERICH MINE LEASE. Prior to the Closing, Seller shall obtain a renewal for the expired leases set forth on Section 5.21 of the Seller Disclosure Letter (the "Expired Leases"), which renewed lease (the "Renewed Lease") shall have (i) a term that expires no earlier than twelve years from the date of Closing and (ii) other terms (including royalty rates) that are substantially consistent with the terms of the Expired Leases. Seller shall use its reasonable best efforts to cause the method of calculating royalties, and the treatment of the elements in the calculation of the royalties charged under the Renewed Lease to be, and the royalties charged under other existing mining leases with the Minister of Natural Resources for the Province of Ontario or the Minister of Northern Development and Mines (the "Other Existing Leases") relating to Sifto Canada Inc.'s operations in Goderich, Ontario, Canada to continue to
be, consistent with the methodology used in calculating, and the treatment of the elements in the calculation of, the royalty rate reflected in the Company Financial Statements, and to the extent the method of calculating the royalties or the treatment of the elements in the calculation of such royalties results in an increase in the royalties paid or payable to the Minister of Natural Resources for the Province of Ontario or the Minister of Northern Development and Mines under either the Renewed Lease or Other Existing Leases, then Seller shall indemnify the Acquired Companies following the Closing for any such increase in accordance with Section 8.3(c) hereof.
ARTICLE VI
CERTAIN TAX MATTERS
Section 6.1 TRANSFER TAXES. All transfer, documentary, indirect real estate conveyance, sales, use, stamp, registration and other similar Taxes and fees (including penalties and interest thereon but excluding Taxes arising from the transactions contemplated by the provisions of Section 2.1 which will be borne solely by Seller), and any expenses relating to the filing of Tax Returns with respect thereto, incurred in connection with this Agreement or the transactions contemplated thereby (except for those incurred in connection with any Preliminary Transfer) shall be paid one-half by Seller and one-half by the Acquired Companies, provided, however, that any Taxes attributable to the recording of any mortgage or deed of trust incurred in connection with any financings by Purchaser or its Affiliates (including any financings by any Acquired Company in connection with or after the Closing) will be borne solely by the applicable Acquired Company. The party required by applicable law to file all necessary Tax Returns and other documentation with respect to any such Taxes shall prepare and file such Tax Returns and Purchaser and Seller shall each, and shall each cause its Affiliates to, cooperate in the timely preparation and filing of, and join in the execution of, any such Tax Returns and other documentation.
Section 6.2 TERMINATION OF TAX SHARING AGREEMENT. As of the Closing Date, any Tax sharing agreement or other arrangement for the sharing of Taxes between the Company and/or the Included Subsidiaries, on the one hand, and the Seller Group, on the other hand, shall terminate, and except as provided in this Agreement the Company and the Included Subsidiaries shall have no obligation to pay to the Seller Group any amount relating to Taxes under any such agreement or arrangement.
Section 6.3 LIABILITY FOR TAXES AND INDEMNITY.
(a) TAXABLE PERIODS ENDING ON OR BEFORE THE CLOSING DATE. Seller shall be liable for, and shall indemnify and hold Purchaser and its Affiliates including the Acquired Companies harmless against:
(i) any and all liability imposed upon any of the Acquired Companies for Taxes of an Affiliated Group (other than an Affiliated Group of which no Acquired Company is a member prior to the Closing Date and of which an Acquired Company becomes a member after the Closing Date) for any taxable year or period ending on or before the Closing Date and any Split Tax Period which liability is imposed on any of the Acquired Companies pursuant to Treasury Regulations (S)1.1502-6 or any comparable
provision of state, provincial, local or foreign law (including all Taxes directly or indirectly resulting from or caused by Preliminary Transfers);
(ii) any and all liability for Taxes imposed on any of the Acquired Companies, or for which any of the Acquired Companies may otherwise be liable, for any taxable year or taxable period ending on or before the Closing Date or any Pre-Closing Period (including all Taxes directly or indirectly resulting from or caused by Preliminary Transfers);
(iii) any liability for U.K. Taxes imposed on any of the U.K. Acquired Companies as a result of or in connection with (i) any sales occurring on or before the Closing Date of assets of the Seller, the Acquired Companies, or any Affiliate thereof to a director of the Seller, the Acquired Companies, or any Affiliate thereof and/or (ii) any sales or other dispositions occurring on or before the Closing Date of any equity interests in an Excluded Subsidiary, Acquired Company or an Affiliate thereof between the Seller, the Acquired Companies, or any Affiliate thereof; and
(iv) any Attribute Adjustment Payment.
(b) TAXABLE PERIODS COMMENCING AFTER THE CLOSING DATE. Purchaser and the Acquired Companies, jointly and severally, shall be liable for, and shall indemnify and hold the Seller Group harmless against, any and all liability for Taxes imposed on any Acquired Company for any Post Closing Period or any taxable year or taxable period commencing after the Closing Date.
(c) APPORTIONMENT OF TAXES. Any Taxes for a taxable period beginning on or before the Closing Date and ending after the Closing Date (a "Split Tax Period") with respect to the Company and any of the Included Subsidiaries shall be apportioned between the portion of such taxable period ending on the Closing Date (the "Pre-Closing Period") and the portion of such period beginning on the day following the Closing Date (the "Post-Closing Period") based upon an interim closing of the books of the Company, the Included Subsidiaries and their respective Affiliates; PROVIDED, that exemptions, allowances, and deductions that are calculated on an annual basis (including depreciation and amortization deductions), lower bracket amounts, and Taxes calculated on a periodic basis (such as real property Taxes) shall be allocated between the Pre-Closing Period and the Post-Closing Period in proportion to the number of days in each such period.
(d) CLOSING DATE. Notwithstanding anything herein to the contrary, the Acquired Companies, jointly and severally, shall be liable for, and shall indemnify and hold Seller and its Affiliates harmless against, any and all Taxes of the Company and the Included Subsidiaries attributable to operations, acts or omissions of Purchaser, the Company or the Included Subsidiaries occurring after the Closing on the Closing Date that are not in the ordinary course of business (including but not limited to any Tax elections made after the Closing on the Closing Date). All transactions occurring not in the ordinary course of business after the Closing on the Closing Date shall be reported on the separate consolidated United States Federal Income Tax Return of the Company or Purchaser, as applicable, to the extent permitted by Treasury Regulations (S) 1.1502-76(b)(1)(ii)(B), and shall be similarly reported on other Income Tax
Returns of Purchaser and the Company and the Included Subsidiaries to the extent permitted by law.
(e) OVERLAP WITH INDEMNITY. Notwithstanding anything to the contrary in this Agreement, the indemnity obligations of Seller and Purchaser and the Acquired Companies under this Section 6.3 relating to Taxes shall (i) apply without any minimum threshold amount or any maximum limitation, and (ii) survive until the expiration of the relevant applicable statute of limitations (giving effect to any waiver or extension thereof). If there is any conflict between the provisions of this Section 6.3 and the indemnity provisions under Article VIII, the provisions of this Section 6.3 shall govern.
(f) TAX ATTRIBUTE ADJUSTMENT. Seller shall pay to Purchaser or
the applicable Acquired Company the amount for which the Seller is liable as
determined in this Section 6.3(f) and at the time provided in this Section
6.3(f) (the "Attribute Adjustment Payment"). Any Attribute Adjustment Payment
not paid by the date on which such payment is due shall bear interest as
provided in Section 6.9.
(i) ADJUSTMENT DEMAND. Upon the reasonable determination by Purchaser that the actual amount of any tax attribute (including, but not limited to, any apportioned and allocated Code (S)382 or (S)383 limitation) of any Acquired Company described in Section 6.5(d) of the Seller Disclosure Letter (a "Tax Attribute") is less than the amount shown in such section, Purchaser shall provide a written demand (the "Adjustment Demand") to Seller setting forth (i) the amount of such deficiency, (ii) the basis for Purchaser's determination, and (iii) the amount of the Attribute Adjustment Payment claimed due from Seller as a result of such determination. If Seller fails to provide written notice of objection to such Adjustment Demand (an "Objection Notice") within sixty (60) days of receipt of such demand, Seller shall pay to Purchaser, within ninety (90) days of receipt of such demand the amount of the Attribute Adjustment Payment set forth in such demand. If Seller timely provides Purchaser with an Objection Notice, the actual amount of any Tax Attribute deficiency set forth in the Adjustment Demand and the actual Attribute Adjustment Payment relating thereto shall be determined as provided in Section 6.3(f)(ii).
(ii) ATTRIBUTE ADJUSTMENT PAYMENT DISPUTE. If Seller timely provides Purchaser with an Objection Notice such dispute shall be resolved as provided in Section 6.8, PROVIDED, HOWEVER, that all fees and expenses related to the work performed by any Auditor selected by the parties to resolve such dispute shall be apportioned between Seller on the one hand and the Acquired Companies on the other in proportion to the amount of the claimed Attribute Adjustment Payment determined by such Auditor to be due. Any Attribute Adjustment Payment determined pursuant to this Section 6.3(f)(ii) shall be paid within thirty (30) days of such determination.
(iii) FINAL DETERMINATION RELATING TO TAX ATTRIBUTES. Upon a final determination in connection with an audit examination by a taxing authority or an administrative or judicial proceeding (which examination or proceeding shall be subject to Section 6.7) that the actual amount of any Tax Attribute is less than the amount shown in Section 6.5(d) of the Seller Disclosure Letter, Seller shall pay to Purchaser the amount of the related Attribute Adjustment Payment within thirty (30) days of the date on which such determination becomes final. Any
determination described in this Section 6.3(f)(iii) shall be conclusive
notwithstanding any other determination made pursuant to this Section 6.3(f),
and all Attribution Adjustment Payments and other costs paid or previously
determined shall be redetermined in light of the determination described in this
Section 6.3(f)(iii).
(iv) CALCULATION OF ATTRIBUTE ADJUSTMENT PAYMENT. If the actual aggregate amount of a Tax Attribute (determined on an attribute-by-attribute basis) attributable to the periods or portions of periods ending on or before the Closing Date is determined to be less than the aggregate amount shown in Section 6.5(d) of the Seller Disclosure Letter for such Tax Attribute (a "Tax Attribute Deficiency"), the Attribute Adjustment Payment shall be determined as provided in this Section 6.3(f)(iv).
(A) ADJUSTMENTS FOR TAXABLE PERIODS FOR WHICH THE TAX RETURN HAS BEEN FILED. To the extent that any Tax Attributes relating to a Tax Attribute Deficiency have been utilized in the Income Tax Returns of Purchaser, the Acquired Companies, or their Affiliates, which Income Tax Returns have been filed on or before the date of the Adjustment Demand or the date on which a determination becomes final, as applicable, the Attribute Adjustment Payment shall include the amount of the increase in Taxes of the Purchaser, the Acquired Companies, and their Affiliates for the periods to which such Tax Returns relate determined by comparing the Tax liability of the Purchaser, the Acquired Companies, and their Affiliates shown on such Tax Returns with the Tax liability that would be shown on such Tax Returns if amended to reflect such Tax Attribute Deficiency (including amending to reflect the use of any Tax Attribute unutilized at the time of the Adjustment Demand or final determination, as applicable). The amount of the Attribute Adjustment Payment shall be increased by any penalties, interest or additions actually incurred and attributable to the Tax Attribute Deficiency.
(B) ADJUSTMENTS FOR OTHER TAX PERIODS. The Attribute Adjustment Payment relating to any Tax Attribute Deficiency shall also include an amount equal to the Present Value of the Tax Attribute Deficiency multiplied by the Tax Rate (other than in the case of a Tax Attribute Deficiency relating to an alternative minimum tax credit, in which case the Tax Attribute Change will not be multiplied by the Tax Rate). For purposes of this Section 6.3(f)(iv)(B), "Tax Attribute Deficiency" shall not include any portion of a deficiency of Tax Attributes to the extent such portion caused an Attribute Adjustment Payment pursuant to Section 6.3(f)(iv)(A) and any Tax Attributes deemed utilized for purposes of recalculating tax liability pursuant to Section 6.3(f)(iv)(A) shall be treated as actually utilized in the relevant period.
(1) "Present Value" shall mean the present
value, on the date on which such Attribute Adjustment Payment is due, calculated
by using the "base rate" of Citibank, N.A. then in effect as the discount rate
and calculated from the due date of the Income Tax Returns for the periods in
which a greater or lesser amount of Tax Attributes would be utilized due to such
Tax Attribute Deficiency. Such calculation shall be based upon the assumptions
that (I) to the extent that any Tax Attributes are subject to limitations under
Code (S)382 or (S)383, the only limitations applicable to the use of the Tax
Attributes will be the applicable limitations under Code (SS)382 and 383 (taking
into account the amount of any unused Code (S)382 limitation adjustment element
within the meaning of Treas. Reg. (S)1.1502-95(c)(2)(i)(B)) as set forth in
Section 6.5(d) of the Seller Disclosure Letter and the relevant
applicable expiration periods, and (II) taxable income of the Acquired Companies and their Affiliates (determined without regard to any net operating losses) for all relevant taxable years will be sufficient to absorb all allowed Tax Attributes (as subject to any applicable limitations under Code (S)(S)382 and 383).
(2) "Tax Rate" shall mean the sum of (i) the maximum marginal federal Income Tax rate applicable to corporations as of the date of the Adjustment Demand or the date on which a determination becomes final, as applicable, and (ii) five percent (5%).
(v) RELATED MATTERS. Any Attribution Adjustment Payment relating to an adjustment in an allocated amount of applicable limitations under Code (S)(S)382 and 383 listed on Section 6.5(d) of the Seller Disclosure Letter shall be calculated based upon the change in the Present Value of (A) any Tax Attribute affected by such adjustment, multiplied by (B) the Tax Rate (other than in the case of an alternative minimum tax credit in which case the Tax Attribute shall not be multiplied by the Tax Rate). For purposes of determining the allocated amount of such applicable limitations, no net unrealized built-in gain or net unrealized built-in loss existing as of the Closing Date shall be taken into account. Purchaser and Seller agree to make any additional reasonable assumptions that will be necessary in making a proper determination of any Attribution Adjustment Payment. Reasonable adjustments shall be made to any Attribution Adjustment Payment to avoid multiple recoveries for a Tax Attribute Deficiency. This Section 6.3(f) and Section 6.3(a)(iv) provide the sole basis for indemnification or recovery relating to any Tax Attribute Deficiency (including any breach of the representations and warranties contained in Section 3.17(aa)) and shall survive until the tenth anniversary of the Closing Date; PROVIDED, HOWEVER, that if an Adjustment Demand is provided prior to such tenth anniversary date, this Section 6.3(f) shall continue to survive with respect to such Adjustment Demand until all payments due with respect to such Adjustment Demand pursuant to this Section 6.3(f) are made.
Section 6.4 TAX RETURNS.
(a) TAX RETURNS FOR PERIODS ENDING ON OR PRIOR TO THE CLOSING DATE.
(i) CONSOLIDATED TAX RETURNS. Seller shall include the income, gains, losses and deductions of the Acquired Companies on Seller's consolidated United States Federal Income Tax Return and on Seller's (or its Affiliates') consolidated, combined or unitary Income Tax Returns filed for state, local or foreign Income Tax purposes for all periods ending on or prior to the Closing Date on a basis consistent with past Tax Returns, except to the extent required by relevant Tax law. Seller shall allow Purchaser an opportunity to review such Income Tax Returns to the extent that they relate to the Acquired Companies to determine (i) whether they are inconsistent with past Tax Returns or take positions that have no "reasonable basis" within the meaning of Code (S)6662(d) or (ii) whether, if the past Tax Returns do not establish any discernable practice regarding any relevant positions taken therein, such positions are reasonable positions (determined without regard to whether a "reasonable basis" under Code (S)6662(d) exists with respect to such positions). Any dispute relating to the treatment of an item on such Tax Returns shall be resolved pursuant to Section 6.8. Seller shall timely remit to the relevant taxing authority all Income Taxes shown on such Tax Returns. Seller shall provide to Purchaser, as soon as practicable after the filing thereof, a copy of the Income Tax Returns of (i) each Covered
Affiliated Group for the taxable year ending June 30, 2001, (ii) each Acquired Company organized in Canada for the taxable year ending June 30, 2001, and (iii) each U.K. Acquired Company for the taxable year ending December 31, 2000, in each case to the extent filed on or before the Closing Date.
(ii) NONCONSOLIDATED TAX RETURNS. Seller shall prepare, or cause to be prepared, and file, or cause to be filed, all Tax Returns of the Acquired Companies (other than Tax Returns described in Section 6.4(a)(i)) for periods ending on or prior to the Closing Date on a basis consistent with past Tax Returns, except to the extent required by relevant Tax law. Seller shall allow Purchaser an opportunity to review such Tax Returns to the extent that they relate to the Acquired Companies to determine (i) whether they are inconsistent with past Tax Returns or take positions that have no "reasonable basis" within the meaning of Code (S)6662(d) or (ii) whether, if the past Tax Returns do not establish any discernable practice regarding any relevant positions taken therein, such positions are reasonable positions (determined without regard to whether a "reasonable basis" under Code (S)6662(d) exists with respect to such positions). Any dispute relating to the treatment of an item on such Tax Returns shall be resolved pursuant to Section 6.8. Seller shall timely remit to the relevant taxing authority all Taxes shown on such Tax Returns.
(b) TAX RETURNS FOR SPLIT TAX PERIODS. Purchaser shall prepare, or cause to be prepared, and file, or cause to be filed, all Tax Returns of the Acquired Companies for Split Tax Periods on a basis consistent with past Tax Returns, except to the extent required by relevant Tax law. Purchaser shall allow Seller an opportunity to review such Tax Returns to the extent that they relate to Pre-Closing Periods to determine (i) whether they are inconsistent with past Tax Returns or take positions that have no "reasonable basis" within the meaning of Code (S)6662(d) or (ii) whether, if the past Tax Returns do not establish any discernable practice regarding any relevant positions taken therein, such positions are reasonable positions (determined without regard to whether a "reasonable basis" under Code (S)6662(d) exists with respect to such positions). At least two (2) days prior to the due date for the payment of Taxes with respect to a Split Tax Period, Seller shall pay Purchaser or the Acquired Companies the amount of undisputed Taxes shown on such Tax Returns that relate to Pre-Closing Periods (as determined in accordance with Section 6.3(c)), and Purchaser shall, or shall cause the Acquired Companies to, pay all other Taxes shown on such Tax Returns. Any dispute relating to the treatment of any item on such Tax Returns shall be resolved pursuant to Section 6.8. If, upon such resolution, it is determined that any portion of such disputed amount is payable to Purchaser or the Acquired Companies and such portion has not been paid to Purchaser or the Acquired Companies as of the due date of such Tax Return, Seller shall pay to Purchaser or the Acquired Companies, in addition to such disputed amount payable to Purchaser or the Acquired Companies, interest as provided in Section 6.9.
Section 6.5 REFUNDS, CREDITS, ADJUSTMENTS AND ALLOCATIONS OF TAX ATTRIBUTES.
(a) REFUNDS AND CREDITS. Any refunds or credits of previously paid Taxes (as differentiated from Tax credits), including an offset against Tax that would otherwise be due, of the Company and the Included Subsidiaries, to the extent that such refunds or credits are attributable to taxable periods ending on or before the Closing Date, shall be for the account of Seller, and, to the extent that such refunds or credits are attributable to taxable periods beginning
after the Closing Date, such refunds or credits shall be for the account of Purchaser and the Acquired Companies. To the extent that such refunds or credits are attributable to Taxes for a Split Tax Period such refunds and credits shall be for the account of the party who bears responsibility for such Taxes pursuant to Section 6.3(c). Purchaser or the Acquired Companies shall promptly forward to Seller or reimburse Seller for any refunds received by, or credits of Tax available to, Purchaser or its Affiliates that are for the account of Seller hereunder and Seller shall promptly forward to Purchaser or the Acquired Companies or reimburse Purchaser or the Acquired Companies for any refunds received by, or credits of Tax available to, the Seller Group that are for the account of Purchaser or the Acquired Companies hereunder.
(b) ADJUSTMENTS.
(i) If an audit examination of or judicial proceeding arising after the Closing Date involving any Tax Return of Seller, the Company or the Included Subsidiaries for taxable periods ending on or before the Closing Date shall result (by settlement or otherwise) in the final determination of any adjustment the effect of which is to increase or decrease deductions, losses or tax credits or decrease or increase income, gains or recapture of tax credits (the "Changes") relating to or stemming from the adjusted item reflected on Purchaser's, the Company's or the Included Subsidiaries' Tax Returns for any taxable periods commencing after the Closing Date, Seller will notify Purchaser (Purchaser and Seller, for purposes of this Section 6.5(b), shall be deemed to include, where appropriate, the consolidated, combined or unitary group for Tax purposes of which such party is a member) and provide it with all necessary information so that it can reflect on the Tax Returns of Purchaser, the Company or the Included Subsidiaries any appropriate Changes.
(ii) If an audit examination of or judicial proceeding involving any Tax Return of Purchaser, the Company or the Included Subsidiaries for taxable periods commencing after the Closing Date shall result (by settlement or otherwise) in the final determination of any adjustment the effect of which is a Change reflected on the Tax Return of Seller, the Company or the Included Subsidiaries for any taxable periods ending on or before the Closing Date, Purchaser will notify Seller and provide it with all necessary information so that it can reflect on the Tax Returns of Seller, the Company or the Included Subsidiaries any appropriate Changes.
(c) ALLOWANCE OF CARRYBACKS. Without prior written consent of Seller, which consent shall be in the sole and absolute discretion of Seller, neither Purchaser, the Company nor the Included Subsidiaries shall carry back any net operating loss or other Income Tax attribute or item from a taxable year or taxable period commencing after the Closing Date to a taxable year or taxable period ending on or before the Closing Date in which the Seller Group, the Company or any Included Subsidiary has reported any taxable income or other tax attribute against which any such carry-back item can be utilized. Purchaser shall, or shall cause the Acquired Companies to, reimburse Seller for any reasonable costs or liabilities related thereto, including, but not limited to, the reasonable cost of time spent and expenses incurred preparing such carryback Income Tax Returns and any adjustments to Income Taxes for which Seller or its Affiliates are liable that are caused directly or indirectly by such carryback. Any refunds or credits of previously paid Income Taxes that are caused by such carryback shall, for purposes of
Section 6.5(a), be treated as attributable to taxable periods beginning after the Closing Date, and Seller shall promptly forward to Purchaser or the Acquired Companies or reimburse Purchaser or the Acquired Companies with respect to such refund or credit as provided in Section 6.5(a).
(d) ALLOCATION OF ATTRIBUTES. Purchaser and Seller hereby agree that the allocation of tax attributes as set forth in Section 6.5(d) of the Seller Disclosure Letter shall control and neither Purchaser, the Acquired Companies, nor Seller shall take any position inconsistent with such allocation in its financial, accounting or tax reporting. Seller shall not elect, pursuant to Treasury Regulations (S)1.1502-20(g)(1), to reattribute to itself the net operating loss carryovers and net capital loss carryovers attributable to any of the Acquired Companies.
Section 6.6 MUTUAL COOPERATION.
(a) PROVIDING INFORMATION. Notwithstanding the general provisions of Section 5.12, as soon as practicable, but in any event within fifteen (15) days after receipt of a request, Purchaser shall deliver to Seller, or Seller shall deliver to Purchaser, as the case may be, and its designated representatives such records, information and other data relating to the Tax Returns and Taxes of the Company and the Included Subsidiaries and shall make available such knowledgeable employees or representatives as Seller, or Purchaser, as the case may be, may reasonably request, including providing the information and other data customarily required by Seller or Purchaser, to cause the completion and filing of all Tax Returns for which it has responsibility or liability under this Agreement, to respond to audits by any taxing authorities with respect to any Tax Returns or taxable periods for which it has any responsibility or liability under this Agreement or to otherwise enable Seller or Purchaser to satisfy its accounting or tax requirements.
(b) RETENTION OF RECORDS. For a period of five (5) years from and
after the Closing, Purchaser shall, and shall cause the Company and the Included
Subsidiaries to, maintain and make available to Seller and its representatives,
on Seller's reasonable request, copies of any and all information, books, and
records referred to in Section 6.6(a). After such five (5) year period,
Purchaser, the Company and the Included Subsidiaries may dispose of such
information, books, and records but only to the extent that Purchaser, the
Company or the Included Subsidiaries send written notice to Seller specifying in
reasonable detail the information or the contents of the books and records to be
disposed of and Seller does not notify Purchaser, the Company or the Included
Subsidiaries of Seller's desire to obtain such information, books, and records
within thirty (30) days of the receipt of written notice. In the event Seller
timely notifies Purchaser, the Company or the Included Subsidiaries of its
desire to obtain information, books, or records specified in a written notice,
Purchaser, the Company or the Included Subsidiaries shall deliver to Seller such
information, books, or records at the reasonable expense of Seller within sixty
(60) days of the receipt of such written notice.
(c) OBTAINING REFUNDS. Except to the extent inconsistent with
Section 6.5(c), Seller and Purchaser, and their Affiliates, shall cooperate in
obtaining any refund (or an offset against Tax) that Seller or Purchaser
reasonably believes should be available, including, without limitation, through
the filing of appropriate forms with the applicable taxing authorities. This
Agreement shall not be construed to require Seller to provide Purchaser with
access to Seller's consolidated United States Federal Income Tax Returns or any
information with respect thereto
except to the extent that such information relates primarily to the Company or the Included Subsidiaries.
Section 6.7 CONTESTS.
(a) Each of Purchaser, the Company and the Included Subsidiaries, on the one hand, and Seller, on the other hand, (the "Recipient") shall notify the chief tax officer of the other party in writing within 15 days of receipt by the Recipient of written notice of any pending or threatened audit, deficiency, proposed adjustment, assessment, examination or other administrative or court proceeding, suit, dispute or other claim ("Tax Claim") that could affect the liability for Taxes of such other party, and such notice shall provide the details of such Tax Claim. If the Recipient fails to give such prompt notice to the other party, the Recipient shall not be entitled to indemnification for any Taxes arising in connection with such Tax Claim if and to the extent that such failure to give notice materially and adversely affects the other party.
(b) Seller shall have the sole right to represent and control the
Acquired Companies' interests in any Tax Claim relating to taxable periods
ending on or before the Closing Date and to employ counsel of its choice at its
expense; PROVIDED, HOWEVER, that Seller shall have no right to represent the
Acquired Companies' interest in any such Tax Claim unless Seller shall have
first notified Purchaser in writing of Seller's intention to do so within twenty
(20) days of notification of the Tax Claim by Purchaser. Purchaser may
participate in such Tax Claim at its own expense. In the case of a Split Tax
Period, Seller shall be entitled to participate at its expense in any Tax Claim
relating in any part to Taxes attributable to the Pre-Closing Period and, with
the prior written consent of Purchaser, at Seller's sole expense, may assume the
control of such entire Tax Claim. None of Purchaser, any of its Affiliates, or
any Acquired Company may settle or otherwise dispose of any Tax Claim for which
Seller may have a liability under this Agreement, or which may result in an
increase in Seller's liability under this Agreement, without the prior written
consent of Seller, which consent may not be unreasonably withheld, unless
Purchaser and the Acquired Companies fully indemnify Seller in writing with
respect to such liability in a manner satisfactory to Seller. Neither Seller nor
any of its affiliates may settle or otherwise dispose of any Tax Claim for which
Purchaser or the Acquired Companies may have a liability under this Agreement,
or which may result in an increase in Purchaser's or the Acquired Companies'
liability under this Agreement, without the prior written consent of Purchaser,
which consent may not be unreasonably withheld, unless Seller fully indemnifies
Purchaser and the Acquired Companies in writing with respect to such liability
in a manner satisfactory to Purchaser.
(c) Seller shall use its reasonable best efforts to minimize any interest, penalties, and other additions to Taxes that may be payable with respect to any Tax Claim for which the Seller has the right to represent and control the Acquired Companies' interests.
Section 6.8 RESOLUTION OF DISAGREEMENTS. If Seller on the one
hand and Purchaser or the Acquired Companies on the other hand disagree as to
the amount of Taxes for which it is liable under this Agreement, the treatment
of any item on an Tax Return, or any other matter relating to Taxes, Seller and
Purchaser shall promptly consult each other in an effort to resolve such
dispute. If any such point of disagreement cannot be resolved within fifteen
(15) days of the date of consultation, an Auditor (selected as provided in
Section 2.10) shall resolve
any remaining disagreements in the manner provided in Section 2.10. The determination of the Auditor shall be final, conclusive and binding on the parties. All fees and expenses related to the work performed by the Auditor in accordance with this Section 6.8 shall be apportioned between Seller on the one hand and Purchaser and the Acquired Companies on the other hand in proportion to their respective liabilities as determined by the Auditor.
Section 6.9 PAYMENTS. Unless otherwise provided herein, all
payments required to be made under this Article VI, including payments of
indemnification of Tax, shall be made in immediately available funds within five
(5) Business Days of receipt of a written notice from the party entitled to such
payment which sets forth in reasonable detail the basis and an explanation of
the claim hereunder, but where applicable, in no event earlier than two (2)
Business Days before the date on which such amounts are to be paid to the
relevant Governmental Authority. Unless otherwise provided herein, any payment
required to be made under this Article VI which is not made when due hereunder
shall bear interest from the due date (and, if the party requesting payment has
paid a portion of the Tax relating to such requested payment, such portion shall
bear interest from the date of such payment, if earlier) until the date of
payment at the "base rate" of Citibank, N.A. or any successor thereto in New
York. All payments made pursuant to this Article VI shall be adjusted as
provided in Section 8.6.
Section 6.10 PURCHASE PRICE AND CONTRIBUTION ADJUSTMENTS. The parties agree that any payments made pursuant to this agreement (including any indemnification payments) shall be treated for all Tax purposes as either adjustments to the Purchase Consideration or the amounts received or contributed pursuant to the Contribution, as applicable.
Section 6.11 AMENDMENT OF TAX RETURNS. Neither Purchaser nor the Company or any of the Included Subsidiaries shall amend, refile, or otherwise modify any Tax Return for a taxable period ending on or before the Closing Date or any Tax Return for a Split Tax Period (but only to extent that such modifications relate to amounts allocable to a Pre-Closing Period), or waive any limitation period with respect to such Tax Returns, relating in whole or in part to the Company or any of the Included Subsidiaries without the written consent of Seller which shall not be unreasonably withheld. Seller shall not, and shall not cause any of its Affiliates to, amend, refile or otherwise modify any Tax Return of a Covered Affiliated Group to the extent such amendment, refiling or modification relates to an Acquired Company without the written consent of Purchaser, which consent shall not be unreasonably withheld.
Section 6.12 CERTAIN TAXES. Prior to the Closing, Seller shall cause the elimination of all intercompany receivables payable by IMC Salt Inc. to Sifto Canada Inc. Seller shall determine the method by which such intercompany accounts are eliminated including but not limited to elimination by means of settlement or setoff. Seller agrees to pay, or cause to be paid, or withhold, or cause to be withheld, as applicable, on or prior to the Closing Date the Canadian Target Tax Amount. Notwithstanding Section 6.7, Seller shall have the sole right to represent and control the Acquired Companies' interests with respect to any Tax Claim relating to such Taxes. Without prejudice to any other indemnification provisions and without duplication, Seller shall indemnify and hold harmless the Acquired Companies, Purchaser, and their Affiliates from any Taxes (imposed pursuant to the Income Tax Act (Canada) or any corresponding provision of applicable provincial legislation) due and payable by (or required to be withheld by) Sifto Canada Inc. on or prior to the Closing Date with respect to any receivable
(or the settlement of any receivable) owed by IMC Salt Inc. to Sifto Canada Inc. for periods or portions thereof ending on or prior to the Closing.
ARTICLE VII
CONDITIONS TO CLOSING
Section 7.1 CONDITIONS TO THE OBLIGATIONS OF PURCHASER AND SELLER. The obligations of the parties hereto to effect the Closing are subject to the satisfaction (or waiver) prior to the Closing Date of the following conditions:
(a) NO INJUNCTIONS; ORDERS. There shall not be in effect any Order by any Governmental Authority of competent jurisdiction that prohibits or enjoins the Merger or the performance of any material portion of this Agreement or the Transaction Documents.
(b) PENDING LITIGATION. No Action shall be pending or, to the Knowledge of Seller or to the Knowledge of Purchaser, threatened by any Governmental Authority, seeking to enjoin or prohibit the performance of this Agreement or the transactions contemplated hereby, or that would reasonably be expected to materially and adversely affect the right or ability of Purchaser to own, operate or control the Acquired Companies or any material portion of the Acquired Companies or their businesses;
(c) HSR. All waiting periods under the HSR Act applicable to the transactions contemplated by this Agreement shall have expired or been earlier terminated.
(d) COMPETITION ACT (CANADA). Either (i) Purchaser shall have
received an advance ruling certificate pursuant to Section 102 of the
Competition Act, or (ii) the Commissioner of Competition (the "Commissioner")
shall have waived the obligation to notify and supply information pursuant to
Section 113(c) of the Competition Act, (iii) Purchaser and Seller shall each
have filed all notices and information required under Part IX of the Competition
Act, and the applicable waiting period shall have expired, and in respect of
each of (i), (ii) and (iii) above, the Purchaser and Seller shall have satisfied
any request for additional information thereunder, and the Commissioner shall
have confirmed in writing on terms satisfactory to Purchaser in its sole
discretion, that his review of any transaction contemplated by this Agreement
has been completed and that he has no grounds on which to apply for an order
under Section 92 or Section 100 of the Competition Act and no investigation or
inquiry shall be ongoing nor shall the Commissioner have threatened or otherwise
indicated that he will commence an investigation or inquiry under Section 10 of
the Competition Act.
(e) APPROVALS. All waiting periods shall have expired or have been earlier terminated and all consents, approvals, orders or authorizations of Governmental Authorities of appropriate jurisdiction shall have been obtained, both as required under applicable Laws in connection with the sale of the Shares (other than those listed in (c) and (d) above) and shall be in full force and effect, except where the failure to obtain them would not, individually or in the aggregate, have a Company Material Adverse Effect.
Section 7.2 CONDITIONS TO THE OBLIGATIONS OF PURCHASER. The obligation of Purchaser to effect the Closing is further subject to the satisfaction (or waiver by Purchaser) on the Closing Date of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of Seller contained herein (disregarding exceptions and qualifications for "materiality" or "Company Material Adverse Effect") shall be true and correct as of the date thereof and as of the Closing Date as if made as of the Closing Date, except where the failure to be so true and correct would not, individually or in the aggregate, have a Company Material Adverse Effect and except that the representations and warranties that are made as of a specific date need be true and correct in all material respects only as of such date. Purchaser shall have received a certificate from Seller signed by an officer thereof with respect to the foregoing.
(b) COVENANTS. The covenants and agreements of Seller to be performed on or prior to the Closing shall have been duly performed in all material respects. Purchaser shall have received a certificate from Seller signed by an officer thereof with respect to the foregoing.
(c) MATERIAL ADVERSE EFFECT. Since the date hereof, there shall have been no event, transaction, condition or change, individually or in the aggregate with all other related changes or effects, which has had or would reasonably be expected to have a Company Material Adverse Effect.
(d) ANCILLARY AGREEMENTS. Seller shall be prepared, or shall be prepared to cause its Subsidiaries, as appropriate, to, enter into the Supply Agreements, the SOP Agreement, the Transition Services Agreement, the Overland Transition Agreement, the Stock Rights Agreement, the Escrow Agreement and the Rail Car Lease.
(e) PRELIMINARY TRANSFERS. All of the Excluded Subsidiaries shall have been transferred to Seller or other members of the Seller Group in the manner and on the terms and conditions set forth in Section 2.1(a) of the Seller Disclosure Letter and pursuant to mutually satisfactory documentation (the "Preliminary Transfer Documents").
(f) MANAGEMENT AGREEMENTS. As of the Closing, at least fifty percent (50%) of the individuals listed on Section 5.4(d) of the Purchaser Disclosure Letter (the "Specified Managers") shall have entered into Management Agreements with Purchaser on terms reasonably satisfactory to Purchaser, and at least fifty percent (50%) of the Specified Managers shall not have breached their respective Management Agreements.
(g) OPINION. Purchaser shall have received an opinion dated the Closing Date, of Skadden, Arps, Slate, Meagher & Flom LLP, counsel to Seller, substantially in the form set forth in Section 7.2(g) of the Seller Disclosure Letter.
(h) FOREIGN PERSON. Seller shall have delivered to Purchaser a certificate in compliance with Treasury Regulation(S) 1.1445-2(b) that Seller is not a foreign person.
(i) PROCEEDS OF FINANCING. Purchaser shall have obtained debt financing from the lenders referred to in the Commitment Letters on the terms and structure contemplated by the term sheets attached to the Commitment Letters.
(j) THIRD PARTY CONSENTS. All of the Third Party Consents set forth in Section 3.6(b) of the Seller Disclosure Letter shall have been obtained or given, except for Third Party Consents which, if not obtained or given, would not individually, or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.
(k) ENCUMBRANCE RELEASES. All of the Encumbrance Releases or the Clean Policies referred to in Section 5.14 of this Agreement shall have been obtained.
Section 7.3 CONDITIONS TO THE OBLIGATIONS OF SELLER. The obligation of Seller to effect the Closing is subject to the satisfaction (or waiver by Seller) on the Closing Date of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of Purchaser contained herein (disregarding exceptions and qualifications for "materiality" or "Purchaser Material Adverse Effect") shall be true and correct as of the date thereof and as of the Closing Date as if made as of the Closing Date, except where the failure to be so true and correct would not have a Purchaser Material Adverse Effect and except that the representations and warranties that are made as of a specific date need be true and correct in all material respects only as of such date. Seller shall have received a certificate from Purchaser signed by an officer thereof with respect to the foregoing.
(b) COVENANTS. The covenants and agreements of Purchaser to be performed on or prior to the Closing shall have been duly performed in all material respects. Seller shall have received a certificate from Purchaser signed by an officer thereof with respect to the foregoing.
(c) OPINION. Seller shall have received opinions dated the Closing Date, of Latham & Watkins and Morris, Nichols, Arsht & Tunnell, counsels to Purchaser, substantially in the form set forth in Section 7.3(c) of the Purchaser Disclosure Letter.
(d) SOLVENCY LETTER. The Chief Financial Officer of Inorganics shall have delivered a letter to the effect that, at and immediately after the Closing and after giving effect to the transactions contemplated hereby, including Purchaser's obtaining the Financing contemplated hereunder and occurrence of the Merger, none of Purchaser or the Acquired Companies (including the Surviving Corporation) will (i) be insolvent (either because such entity's financial condition is such that the sum of its debts is greater than the fair value of its assets or because the present fair saleable value of its assets will be less than the amount required to pay its probable liabilities on its debts as they mature), (ii) have unreasonably small capital with which to engage in its business or (iii) have incurred or plan to incur debts beyond its ability to pay as they mature, the addressees of which include Seller and on which Seller is entitled to rely (the "Solvency Letter"). In the event that Purchaser has engaged a nationally recognized appraisal firm (the "Appraiser") to prepare such a Solvency Letter, Purchaser shall have delivered such Solvency Letter to Seller.
(e) ANCILLARY AGREEMENTS. Purchaser shall be prepared, or shall be prepared to cause the Surviving Corporation or Acquired Companies, as appropriate, to, enter into the Supply Agreements, the SOP Agreement, the Transition Services Agreement, the Overland
Transition Agreement, the Stock Rights Agreement, the Escrow Agreement and the Rail Car Lease.
(f) THIRD PARTY CONSENTS. All of the Third Party Consents set forth in Section 7.3(f) of the Seller Disclosure Letter shall have been obtained or given, except for Third Party Consents which, if not obtained or given, would not individually, or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.
(g) PROCEEDS OF FINANCING. The proceeds of the debt financing available to the Purchaser, which shall be sufficient, to pay the Cash Merger Consideration plus any Estimated Closing Date Company Contribution Adjustment, if any, less any Estimated Closing Date Seller Contribution Adjustment, if any, upon the Effective Time, shall be available to the Purchaser and Inorganics at the Closing.
ARTICLE VIII
SURVIVAL AND INDEMNIFICATION
Section 8.1 SURVIVAL. The representations and warranties of Seller and Purchaser contained in this Agreement shall survive the Closing for the period set forth in this Section 8.1. All of the covenants and agreements of the parties contained in this Agreement shall survive the Closing until they terminate in accordance with their terms. (i) The representations and warranties of Seller contained in Sections 3.1 (Organization of Seller and the Company; Authority), 3.2 (Organization of Acquired Companies; Authority), 3.3 (Authorization; Binding Effect), 3.4 (Capitalization; Title to Shares), 3.14 (Compliance with Laws) and 3.25 (Brokers, Finders Fees) of this Agreement shall survive indefinitely, (ii) the representations and warranties of Seller contained in Section 3.15 (Environmental Matters) and Section 3.18 (Employee Benefit Plans) of this Agreement shall survive until the fifth anniversary of the Closing Date, and (iii) all other representations and warranties of Seller contained in this Agreement, and all claims and causes of action with respect thereto, shall terminate on the second anniversary of the Closing Date; PROVIDED, HOWEVER, that to the extent that written notice of a claim for indemnification is provided with respect to an indemnifiable matter prior to the date that the covenant, representation or warranty claimed to have been breached would have expired, then such Claim shall survive until its resolution.
The representations and warranties of Purchaser contained in Sections 4.1 (Organization and Qualification; Authority), 4.2 (Authority of Purchaser; Binding Effect), 4.8 (Compliance with Laws) and 4.12 (Brokers, Finders Fees) hereof of this Agreement shall survive indefinitely. All other representation and warranties of Purchaser contained in this Agreement, and all claims and causes of action with respect thereto, shall terminate on the second anniversary of the Closing Date; PROVIDED, HOWEVER, that to the extent that written notice of a Claim for indemnification is provided with respect to an indemnifiable matter prior to such second anniversary, then such Claim shall survive until its resolution.
Section 8.2 INDEMNIFICATION BY PURCHASER. Purchaser hereby agrees that from and after the Closing it shall, or shall cause the Acquired Companies jointly and severally to, indemnify, defend and hold harmless Seller, and its Affiliates, and their respective directors,
officers, shareholders, partners, attorneys, accountants, agents and employees and their heirs and successors (the "Seller Indemnified Parties") from, against and in respect of any actual damages, claims, losses (excluding punitive and consequential damages unless payable to a third party and directly attributable to Seller or its Affiliates actions, but including losses attributable to the diminution in value of the Acquired Companies), liabilities and reasonable costs and expenses (including without limitation reasonable attorneys' and consultants' fees and including the reasonable costs and expenses of investigating or defending any indemnifiable claim) (collectively but without duplication, "Losses") imposed on any of the Seller Indemnified Parties relating to or arising out of (i) any breach of any representation or warranty made by Purchaser contained in this Agreement; (ii) the breach of any covenant or agreement of Purchaser contained in this Agreement; and (iii) any claim (whether or not successful), liability or obligation for payment of fees and/or expenses as a broker or finder in connection with the origin, negotiation or execution of this Agreement or the other Transaction Documents or the consummation of the transactions contemplated hereby based upon any alleged agreement, arrangement or understanding between the claimant and Purchaser or any of its agents or representatives.
Section 8.3 INDEMNIFICATION BY SELLER.
(a) Seller hereby agrees that from and after the Closing it shall indemnify, defend and hold harmless Purchaser and its Affiliates (including the Acquired Companies following the Closing) and its and their respective directors, officers, shareholders, partners, attorneys, accountants, agents and employees and their heirs and successors (the "Purchaser Indemnified Parties") from, against and in respect of any Losses imposed on, sustained, incurred or suffered by any of the Purchaser Indemnified Parties relating to or arising out of (i) any breach of any representation or warranty made by Seller contained in this Agreement; (ii) the breach of any covenant or agreement of Seller made in this Agreement; and (iii) any claim (whether or not successful), liability or obligation for payment of fees and/or expenses as a broker or finder in connection with the origin, negotiation or execution of this Agreement or the other Transaction Documents or the consummation of the transactions contemplated hereby based upon any alleged agreement, arrangement or understanding between the claimant and the Company or Seller or any of their agents or representatives.
(b) Seller hereby agrees that from and after the Closing it shall indemnify, defend and hold harmless each Purchaser Indemnified Party (including the Acquired Companies following the Closing) from, against and in respect of any Losses imposed on, sustained, incurred or suffered by any of the Purchaser Indemnified Parties relating to or arising out of (i) the Excluded Subsidiaries or the sale, transfer, assignment or other divestiture of the assets of the Excluded Subsidiaries or related to or arising out of the Excluded Liabilities and (ii) any Loss imposed on an Acquired Company in connection with proceedings in connection with the lawsuits or claims listed on Section 8.3(b) (ii) of the Seller Disclosure Letter, or any other claim arising out of the same facts and circumstances as the lawsuits listed on Section 8.3(b)(ii) of the Seller Disclosure Letter. This Section 8.3(b) shall survive indefinitely and shall not be limited by Section 8.4.
(c) Seller hereby agrees that from and after the Closing it shall indemnify, defend and hold harmless Purchaser and its Affiliates and its and their respective directors, officers, shareholders, partners, attorneys, accountants, agents and employees and their heirs and
successors (the "Purchaser Indemnified Parties") from, against and in respect of any Losses imposed on, sustained, incurred or suffered by any of the Purchaser Indemnified Parties relating to or arising out of the royalty payments due under the Expired Leases for the time period prior to Closing, including any deficiencies in prior royalty payments. Seller hereby agrees that from and after the Closing it shall indemnify, defend and hold harmless the Purchaser Indemnified Parties from, against and in respect of, and only to the extent of, any Losses solely attributable to an increase in the royalties paid or payable pursuant to the Renewed Lease or Other Existing Leases by the Purchaser Indemnified Parties to the Minister of Natural Resources for the Province of Ontario or the Minister of Northern Development and Mines during the period beginning on the Closing Date and ending on the twelfth anniversary thereof (or such earlier termination of the Renewed Leases or Other Existing Leases, as applicable) that is a direct result of a change in the method of calculating the royalties for the Renewed Lease or Other Existing Leases or the treatment of the elements in the calculation of such royalties for the Renewed Lease or Other Existing Leases from the royalty rate reflected in the Company Financial Statements, it being understood that any change (following the first change agreed to by the Seller, Sifto Canada Inc. and the Minister of Natural Resources for the Province of Ontario or the Minister of Northern Development and Mines following the date of this Agreement) to the method of calculating the royalties for the Renewed Lease or Other Existing Leases or the treatment of the elements in the calculation of such royalties that results in an increase in the royalties paid shall be disregarded for purposes of this Section 8.3(c) and that any change, following the date of this Agreement, to the method of calculating the royalties for the Renewed Lease or Other Existing Leases or the treatment of the elements in the calculation of such royalties that reduces the amount of royalties paid shall offset any Losses suffered by the Purchaser Indemnified Parties for purposes of this Section 8.3(c).
(d) Seller hereby agrees that from and after the date hereof, it shall indemnify, defend and hold harmless each Purchaser Indemnified Party from, against and in respect of any Losses imposed on, sustained, incurred or suffered by any of the Purchaser Indemnified Parties relating to or arising out of any claim or action by any Person (other than Purchaser, Merger Sub or any of their respective affiliates) ("Plaintiff") with respect to any transaction, proposed transaction, negotiations, discussions or agreements or alleged agreements or arrangements with Persons other than Purchaser, Merger Sub or any of their respective affiliates in connection with or concerning the acquisition of the Acquired Companies (either alone or together with other subsidiaries of the Company) or the assets of some or all of the Acquired Companies including any claim of interference with such transaction, negotiations, discussions, agreements or arrangements except for claims brought by Seller or its Affiliates for breach of the Merger Agreement (such indemnified claims, the "Transaction Claims"). Notwithstanding anything contained herein to the contrary, whether or not the Closing occurs and whether or not the Merger Agreement is terminated, the terms of this Section 8.3(d) shall survive until the end of the applicable statute of limitations for any claim or action by a Plaintiff with respect to any Transaction Claim.
Section 8.4 LIMITATIONS ON INDEMNITY.
(a) Notwithstanding the provisions of this Article VIII, Seller shall not be liable to the Purchaser Indemnified Parties for any Losses with respect to any matters arising under clause (i) of Section 8.3(a) except to the extent the Losses therefrom in the aggregate exceed
$7,000,000, in which event Seller shall be liable to the Purchaser Indemnified Parties only for such Losses above such amount; PROVIDED that the aggregate liability of Seller under Section 8.3(a)(i) shall not exceed $300,000,000. Purchaser shall not be entitled under this Agreement to multiple recovery for the same Losses.
(b) Notwithstanding the provisions of this Article VIII, Purchaser or the Acquired Companies shall not be liable to the Seller Indemnified Parties for any Losses with respect to any matters arising under clause (i) of Section 8.2 except to the extent the Losses therefrom in the aggregate exceed $7,000,000, in which event Purchaser or the Acquired Companies shall be liable to the Seller Indemnified Parties only for such Losses above such amount; PROVIDED that the aggregate liability of Purchaser or the Acquired Companies under Section 8.2 shall not exceed $300,000,000. Seller shall not be entitled under this Agreement to multiple recovery for the same Losses.
(c) In determining whether (1) there has been a breach of a
representation or warranty for the purposes of Section 8.2(i) or 8.3(a)(i) and,
(2) the amount of Loss pursuant to Sections 8.2(i) and 8.3(a)(i) above, each
representation and warranty shall be read without regard and without giving
effect to any "material" "materiality" or "Material Adverse Effect" standard or
qualification (but excluding any specific dollar threshold) contained in such
representation or warranty (as if such standard or qualification were deleted
from such representation or warranty). Indemnification shall not be available
hereunder in respect of indemnity pursuant to Section 8.2(i) or 8.3(a)(i) (or
counted toward the respective $7,000,000 baskets in this Section 8.4) in respect
of any item unless such items, or such item together with a series of related
items, result in a Loss of $100,000 or more.
(d) Notwithstanding any other provisions of this Article VIII, Seller shall not be liable to the Purchaser Indemnified Parties under this Article VIII, Section 9.2(b) and the Letter Agreement for any liabilities of the Purchaser Indemnified Parties with respect to Losses which are Identified Expenses in excess of (considered in the aggregate with any Identified Expenses indemnified pursuant to the Letter Agreement or indemnified pursuant to Section 9.2(b) of this Agreement) $5,000,000; and provided, further, that such $5,000,000 limitation shall not apply to Losses that are not Identified Expenses, including, without limitation, the costs and expenses in investigating or defending a claim or action by a Plaintiff and any judgment or settlement paid to any Plaintiff; and provided further that any Losses that are Identified Expenses payable pursuant to Section 8.3(d) hereof shall be limited to documented out-of-pocket Identified Expenses. "Identified Expenses" means costs and expenses related to the investigation, negotiation, documentation and financing of the transactions contemplated by the Merger Agreement, including, without limitation, fees and expenses related to legal counsel, accounting services, tax advice, special consultants (including, without limitation, mining experts and environmental counsel and consultants), travel, printing of offering and syndication documents, and reimbursement of the expenses of the proposed financing sources.
Section 8.5 INDEMNIFICATION PROCEDURES. With respect to indemnification claims under this Agreement other than those relating to liability for the payment of Taxes (which shall be subject to Article VI), all claims for indemnification by any Indemnified Party hereunder shall be asserted and resolved as set forth in this Section 8.5. In the event that, prior to the expiration of the survival period in Section 8.1, any Indemnified Party shall incur or suffer
any Loss in respect of which indemnification may be sought under this Article VIII or receive a Claim (as defined below), such Indemnified Party must assert a claim for indemnification by written notice to the party from whom indemnification is being sought (the "Indemnifying Party") prior to the expiration of such survival period stating in reasonable detail the nature of such claim and the amount or estimated amount of Loss to the extent then feasible (which estimate shall not be conclusive on the final amount of such claim) (a "Claim Notice"). In the event that any written claim or demand for which an Indemnifying Party may be liable to any Indemnified Party under this Article VIII (a "Claim") is asserted against or sought to be collected from any Indemnified Party by a third party, such Indemnified Party shall as promptly as practicable deliver a Claim Notice to the Indemnifying Party. The failure on the part of the Indemnified Party to give any such Claim Notice in a reasonably prompt manner shall not relieve the Indemnifying Party of any indemnification obligation hereunder, unless such Claim Notice is delivered following the expiration of the applicable survival proceed, except to the extent that the Indemnifying Party is materially prejudiced thereby. The Indemnifying Party shall have twenty (20) days from the personal delivery or mailing of the Claim Notice (the "Notice Period") to notify the Indemnified Party in writing (a) whether or not the Indemnifying Party has sufficient information to assess the liability of the Indemnifying Party to the Indemnified Party hereunder with respect to such Claim and (b) whether or not it desires to defend the Indemnified Party against such Claim. In the event that the Indemnifying Party notifies the Indemnified Party pursuant to the preceding sentence that the Indemnifying Party does not have sufficient information with which to assess its liability to the Indemnified Party, the Indemnified Party and the Indemnifying Party shall promptly cooperate to provide the Indemnifying Party with sufficient information with which to assess such liability, and with respect to the notification required pursuant to clause (b) of the preceding sentence, the Notice Period shall not begin to run until the Indemnifying Party has such sufficient information. In the event that the Indemnifying Party fails to provide notice within the Notice Period that it desires to defend the Indemnified Party against such Claim, the Indemnified Party shall have the right to defend such Claim on behalf of and for the benefit of and for the account and risk of the Indemnifying Party and to seek indemnification hereunder.
Except as hereinafter provided, in the event that the Indemnifying Party notifies the Indemnified Party within the Notice Period that it desires to defend the Indemnified Party against a Claim which is asserted against or sought to be collected from any Indemnified Party by a third party (other than the Indemnifying Party and its Affiliates), the Indemnifying Party, at its sole cost and expense, shall have the right to defend the Indemnified Party by appropriate proceedings and shall have the sole power to direct and control such defense at its cost; PROVIDED, HOWEVER, that the amount of any award shall be a liability of the Indemnifying Party hereunder and shall be subject to the limitations set forth in Section 8.4 hereof. If any Indemnified Party desires to participate in any such defense it may do so at its sole cost and expense, PROVIDED, HOWEVER, that if the defendants in any Action shall include both an Indemnifying Party and any Indemnified Party and such Indemnified Party shall have reasonably concluded, upon the advice of counsel, that counsel selected by the Indemnifying Party has a conflict of interest because of the availability of different or additional defenses to such Indemnified Party, such Indemnified Party shall have the right to select one separate counsel reasonably acceptable to the Indemnifying Party to participate in the defense of such Action on its behalf, at the expense of the Indemnifying Party subject to the proviso contained in the immediately preceding sentence. The Indemnified Party shall not settle, admit or in any other way materially prejudice a Claim for
which it is indemnified by the Indemnifying Party without the written consent of the Indemnifying Party (which shall not be unreasonably withheld) unless (i) the Indemnifying Party elects not to defend the Indemnified Party against such Claim, (ii) the Indemnifying Party shall not notify the Indemnified Party of its desire to defend the Indemnified Party with respect to such Claim during the Notice Period or (iii) the Indemnifying Party shall fail to defend such Claim in good faith and on a timely basis following the Indemnifying Party's election to defend such claim. The Indemnifying Party shall not settle or compromise any action, or consent to the entry of any judgment, without the prior written consent of the Indemnified Party (which consent shall not be unreasonably withheld or delayed) PROVIDED, that an Indemnified Party shall not be required to consent to any settlement which (i) does not include as a term thereof the delivery by the claimant or plaintiff to the Indemnified Party of a duly executed written unconditional release of the Indemnified Party from all liability in respect of such Claim or litigation or (ii) involves the imposition of equitable remedies, imposing any material obligations on such Indemnified Party other than financial obligations for which such Indemnified Party will be fully indemnified hereunder. Notwithstanding the foregoing, the Indemnified Party shall have the sole right to defend, settle or compromise any Claim with respect to which it has agreed in writing to waive its right to indemnification pursuant to this Agreement. Notwithstanding the foregoing, the Indemnified Party, during the period the Indemnifying Party is determining whether to elect to assume the defense of a matter covered by this Section 8.5, shall take such reasonable actions as it deems necessary to preserve any and all rights with respect to the matter, without such actions being construed as a waiver of the Indemnified Party's rights to defense and indemnification pursuant to this Agreement. If the Indemnifying Party elects not to defend the Indemnified Party against a Claim, or fails to notify the Indemnified Party of its desire to defend the Indemnified Party with respect to such Claim during the Notice Period, then any Loss (including reasonable attorneys' fees and expenses) of the Indemnified Party relating to or arising out of such Claim, or, if the same be contested by the Indemnified Party, then that portion thereof as to which such defense is unsuccessful (and the reasonable costs and expenses pertaining to such defense) shall be the liability of the Indemnifying Party hereunder, subject to the limitations set forth in Section 8.4 hereof. To the extent any party shall direct, control or participate in the defense or settlement of any third party claim or demand, the other parties will give such party and its counsel access to, during normal business hours and upon reasonable notice, the relevant business records and other documents, and shall permit them to consult with the employees and counsel of the other party. The Indemnified Party and the Indemnifying Party each shall act in good faith in the defense of all such Claims. Amounts payable by the Indemnifying Party to the Indemnified Party in respect of any Losses for which such party is entitled to indemnification hereunder shall be payable by the Indemnifying Party as incurred by the Indemnified Party except to the extent contested by the Indemnifying Party.
Section 8.6 COMPUTATION OF LOSSES SUBJECT TO INDEMNIFICATION. The determination of whether a breach occurs and the amount of any Loss for which indemnification is provided under this Article VIII or otherwise in this Agreement shall be computed to take into account: (i) any insurance proceeds to which the Indemnified Party is entitled to receive (but only when and to the extent received); (ii) the present value, based upon the rate in 6.3(f), of any increase or reduction in Taxes of any Indemnified Party recognized with respect to any taxable period ending on or before the end of the third taxable period following the taxable period in which the Loss is recognized (or, if later, the taxable period in which the indemnification occurs) (the determination of whether an increase or reduction in Taxes is recognized and the amount
hereof shall be made by comparing the actual Tax liability of the Indemnified Parties, for such periods, with the Tax liability of the Indemnified Parties, for such periods, that would have occurred if the Indemnified Party had neither incurred the Loss nor received any indemnification payment therefor); (iii) any prior or subsequent recovery in respect of part or all of a Claim by any Indemnified Party, whether by payment, discount, credit, offset or otherwise; and (iv) the amount of any provisions reflected in the Company Financial Statements in respect of matters giving rise to such Losses.
Section 8.7 CERTAIN OTHER MATTERS.
(a) If the Closing shall occur, the indemnification provisions of this Article VIII shall be the sole and exclusive remedy for money damages in respect of any inaccuracy or breach of any representation or warranty or any breach of any covenant or agreement made in this Agreement other than in respect of any claim under Article VI or as otherwise agreed in writing by the parties hereto. No party shall be entitled to seek, and to the fullest extent permitted by applicable Law, the parties hereto waive, any rights they might otherwise have to rescind the sale and purchase of the Shares. Without limiting the foregoing, the indemnities provided in this Article VIII shall constitute Purchaser Indemnified Party's exclusive remedy for any Losses arising under Environmental Laws (except with respect to Excluded Liabilities) and the Purchaser Indemnified Parties expressly waive and relinquish, on behalf of themselves, their successors and any assigns, any and all rights, claims or remedies such person may have against Seller under any Environmental Laws (except with respect to Excluded Liabilities), as presently in force or hereafter enacted, promulgated, or amended (including, without limitation, under the Comprehensive Environmental Response Compensation and Liability Act, or any similar state or local law) or at common law.
(b) Upon making any payment to an Indemnified Party for any indemnification claim pursuant to this Article VIII, the Indemnifying Party shall be subrogated, to the extent of such payment, to any rights which the Indemnified Party or its Affiliates may have against any other Persons with respect to the subject matter underlying such indemnification claim and the Indemnified Party shall, at the Indemnifying Party's sole cost and expense, take such actions as the Indemnifying Party may reasonably require to perfect such subrogation or to pursue such rights against such other Persons as the Indemnified Party or its Affiliates may have.
ARTICLE IX
TERMINATION
Section 9.1 TERMINATION. This Agreement may be terminated at any time prior to the Closing Date:
(a) by written agreement of Purchaser and Seller;
(b) by either Purchaser or Seller, by giving written notice of such termination to the other party, if the Closing shall not have occurred on or prior to December 18, 2001 (the "Initial Termination Date"); provided however that by written notice to Seller given between December 1 and December 18, 2001, Purchaser may extend the Initial Termination Date until
January 31, 2002 (the "Extended Termination Date"), if (A) (i) on December 4, 2001, Seller shall not yet have received the consent set forth in Section 7.3(f) of the Seller Disclosure Letter, (ii) on December 18, 2001, the condition set forth in Section 7.1(a) of this Agreement is not satisfied as a result of an action brought by a non-governmental party in relation to a Transaction Claim (but disregarding the requirement that such claim be indemnifiable pursuant to the Letter Agreement) or (iii) at any time between December 4, 2001 and December 18, 2001 an Order by a Governmental Authority of competent jurisdiction that prohibits or enjoins the Merger or the performance of any material portion of this Agreement or the Transaction Documents is in effect and (B) the conditions to Closing set forth in Article VII (other than that condition set forth in Sections 7.1(a) or 7.3(f) and other than conditions which would be unable to be satisfied if the Closing were held on December 18, 2001 as a result of the failure to be satisfied of the conditions set forth in Sections 7.1(a) or 7.3(f)) have been satisfied or would be reasonably capable of being fulfilled if the Closing were held on December 18, 2001; in each case unless the failure to consummate the Closing by either the Initial Termination Date, or the Extended Termination Date, as appropriate, shall be due to the failure of the party seeking to terminate this Agreement to have fulfilled any of its obligations under this Agreement, including, without limitation, the obligations of Purchaser and Seller under Section 5.4 hereof;
(c) by either Seller or Purchaser in the event that any Governmental Authority shall have issued a final, non-appealable order, decree or ruling or taken any other final, non-appealable action, or adopted any Law, in each case permanently restraining, enjoining or otherwise prohibiting any material part of the transactions contemplated by this Agreement;
(d) by Seller, so long as Seller is not then in breach of its obligations under this Agreement, upon a material breach of any covenant or agreement on the part of Purchaser set forth in this Agreement, or if any representation or warranty of Purchaser shall be untrue, in each case such that the conditions set forth in Section 7.3(a) or (b) would not be satisfied, PROVIDED, HOWEVER, that if any such breach is curable prior to the Termination Date by Purchaser, for so long as Purchaser, following written notice from Seller, shall be using its best efforts to cure such breach, Seller may not terminate this Agreement pursuant to this Section 9.1(d);
(e) by Purchaser, so long as Purchaser is not then in breach of its obligations under this Agreement, upon a material breach of any covenant or agreement on the part of Seller set forth in this Agreement, or if any representation or warranty of Seller shall be untrue, in each case such that the conditions set forth in Section 7.2(a) or (b) would not be satisfied, PROVIDED, HOWEVER, that if any such breach is curable prior to the Termination Date by Seller, for so long as Seller, following written notice with respect to such breach from Purchaser, shall be using its reasonable best efforts to cure such breach, Purchaser may not terminate this Agreement pursuant to this Section 9.1(e).
Section 9.2 EFFECT OF TERMINATION.
(a) In the event of the termination of this Agreement in accordance with Section 9.1 hereof, this Agreement shall thereafter become void and have no effect except as provided in Sections 8.3(d), 8.4(d), 8.5 and 9.2 of this Agreement; and no party hereto shall have any liability to the other party hereto or their respective Affiliates, directors, officers or employees except that
nothing herein shall relieve any Party from liability for any willful breach of this Agreement prior to such termination.
(b) If this Agreement is terminated pursuant to Section 9.1(b)
hereof due to the failure to be satisfied of (x) the condition set forth in
Section 7.3(f) or (y) another condition which has not been satisfied as a result
of the failure of the condition set forth in Section 7.3(f), then Seller shall
reimburse Purchaser's documented out-of-pocket Identified Expenses relating to
the investigation and negotiation of this transaction up to a maximum (in the
aggregate with Identified Expenses otherwise payable by Seller to Purchaser
pursuant to Section 8.3(d) or the Letter Agreement) of five million dollars
($5,000,000).
ARTICLE X
MISCELLANEOUS
Section 10.1 NOTICES. All notices or other communications hereunder shall be in writing and shall be deemed to have been duly given and made if served by personal delivery upon the party for whom it is intended, if delivered by registered or certified mail, return receipt requested, or by an internationally recognized courier service, or if sent by telecopier, provided that the telecopy is promptly confirmed by telephone confirmation thereof, to the person at the address set forth below, or such other address as may be designated in writing hereafter, in the same manner, by such person:
To Seller:
IMC Global Inc.
100 South Saunders Road
Suite 300
Lake Forest, IL 60045
Telephone: (847) 739-1200
Telecopy: (847) 739-1606
Attn: General Counsel
With a copy to:
Skadden, Arps, Slate, Meagher
& Flom LLP
Four Times Square
New York, New York 10036
Telephone: 212-735-3000
Telecopy: 212-735-2000
Attn: Stephen F. Arcano
To Purchaser and Merger Sub:
YBR Holdings LLC and YBR Acquisition Corp.
c/o Apollo Management, L.P.
1301 Avenue of the Americas
38th Floor
New York, New York 10019
Telephone: 212-515-3200
Telecopy: 212-515-3288
Attn: Scott Kleinman
With a copy to:
Latham & Watkins
885 Third Avenue
Suite 1000
New York, New York 10022
Telephone: 212-906-1200
Telecopy: 212-751-4864
Attn: Raymond Lin
Section 10.2 AMENDMENT; WAIVER. Any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by Purchaser and Seller, or in the case of a waiver, by the party against whom the waiver is to be effective. No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.
Section 10.3 ASSIGNMENT. No party to this Agreement may assign any of its rights or obligations under this Agreement without the prior written consent of the other party hereto, except that each of the Purchaser Indemnified Parties may assign their rights to indemnification pursuant to this Agreement and the Letter Agreement as collateral security to lenders providing financing pursuant to the Commitment Letters (or financing utilized in place thereof).
Section 10.4 ENTIRE AGREEMENT. This Agreement (including the Seller Disclosure Letter, the Purchaser Disclosure Letter and all exhibits hereto and thereto) contains the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral or written, with respect to such matters, except for the Confidentiality Agreement which will remain in full force and effect for the term provided for therein.
Section 10.5 PARTIES IN INTEREST. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns. Nothing in this Agreement, express or implied, is intended to confer upon any Person other than
Purchaser, Seller, or their successors or permitted assigns, any rights or remedies under or by reason of this Agreement.
Section 10.6 EXPENSES. Except as otherwise expressly provided in this Agreement, whether or not the transactions contemplated by this Agreement are consummated, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be borne by the party incurring such expenses. If the Merger is consummated, the Surviving Corporation shall pay, or shall cause the Acquired Companies to pay, the Transaction Expenses, less any amount paid by Seller pursuant to the following sentence. If the Merger is consummated, Seller shall pay one half of the fees related to the bridge financing available pursuant to the Bridge Commitment Letter, provided that the Seller shall not be required to pay more than $2,500,000 pursuant to this sentence (the amount that is one-half of such fees, subject to the $2,500,000 maximum, is referred to herein as the "Bridge Financing Fee"), and Purchaser shall cause the Acquired Companies to pay the remainder of such fees payable pursuant to the Bridge Commitment Letter. Purchaser shall provide Seller with reasonable documentation to support the calculation of the Bridge Financing Fee, including the fees payable pursuant to the Bridge Commitment Letter.
Section 10.7 INVALID PROVISIONS. If any provision of this Agreement is held to be illegal, invalid or unenforceable under any present or future law or order, and if the rights or obligations of any party hereto under this Agreement will not be materially and adversely affected thereby, (i) such provision will be fully severable, (ii) this Agreement will be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part hereof, and (iii) the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom.
Section 10.8 GOVERNING LAW. THE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. With respect to any Action arising out of or relating to this Agreement or the transactions contemplated hereby after the Closing Date, Seller and Purchaser hereby agree and consent to be subject to the exclusive jurisdiction of the courts of the State of Delaware and the federal courts within such state. The parties hereto irrevocably waive the defense of an inconvenient forum to the maintenance of any such action or proceeding. Each of Purchaser and Seller further irrevocably consents to the service of process out of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by registered airmail, postage prepaid, to such party at its address set forth in this Agreement, such service of process to be effective upon acknowledgement of receipt of such registered mail. Nothing in this Section shall affect the right of any party hereto to serve legal process in any other manner permitted by law. The consents to jurisdiction set forth in this Section shall not constitute general consents to service of process in the State of Delaware and shall have no effect for any purpose except as provided in this Section and shall not be deemed to confer rights on any person other than the parties hereto. The parties hereto agree that a final 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.
Section 10.9 SEVERABILITY. Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction. If any provision of this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable.
Section 10.10 COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which shall constitute one and the same agreement.
Section 10.11 INTERPRETATION.
(a) The heading references herein and the table of contents hereto are for convenience purposes only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.
(b) Certain information set forth in the Seller Disclosure Letter is included solely for informational purposes and may not be required to be disclosed pursuant to this Agreement, and the disclosure of any information shall not be deemed to constitute an acknowledgment that such information is required to be disclosed in connection with the representations and warranties made by Seller in this Agreement or that it is material, nor shall such information be deemed to establish a standard of materiality.
IN WITNESS WHEREOF, the parties have executed or caused this Agreement to be executed as of the date first written above.
IMC GLOBAL INC.
Title:
SALT HOLDINGS CORPORATION
Title:
YBR HOLDINGS LLC
Title:
YBR ACQUISITION CORP.
Title:
Exhibit 2.2
AMENDMENT NO. 1 TO
AGREEMENT AND PLAN OF MERGER
AMENDMENT NO. 1 (the "AMENDMENT"), dated as of November 28, 2001, by and among IMC Global Inc., a Delaware corporation ("Seller"), and Salt Holdings Corporation, a Delaware corporation and an indirect, wholly owned subsidiary of Seller (the "Company"), on the one hand, and on the other hand, YBR Holdings LLC, a Delaware limited liability company ("Purchaser"), and YBR Acquisition Corp., a Delaware corporation, a wholly owned subsidiary of Purchaser ("Merger Sub") to the Agreement and Plan of Merger (the "AGREEMENT"), dated as of October 13, 2001, by and among Seller, the Company, Purchaser and Merger Sub. Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in the Agreement.
WHEREAS, the parties hereto desire to enter into this Amendment so as to make certain modifications to the Agreement;
NOW, THEREFORE, for good and valuable consideration and in consideration of the respective representations, warranties, covenants and agreements set forth in the Agreement, the parties hereto, intending to be legally bound, agree as follows:
ARTICLE I
AMENDMENTS
Section 1.1 COMPANY COMMON STOCK DEFINITION
The language in Section 1.1 of the Agreement is hereby amended by deleting the phrase "par value $.01 per share" in the definition of "Company Common Stock" and replacing it with the phrase "par value $1.00 per share".
Section 1.2 AMENDMENTS RELATING CANADIAN HOLDBACK AMOUNT
(a) The inclusion of an amount in the "Net Canadian Holdback Amount" (as defined in, and pursuant to, the Agreement) that represents the portion of the "Canadian Target Tax Amount" (as defined in the Agreement) described in clause (i) of the definition of "Canadian Target Tax Amount" in lieu of payment or withholding of such amount pursuant to Section 6.12 of the Agreement or payment or withholding of taxes, as represented in Section 3.17 of the Agreement, to which such amount relates shall not constitute a failure to satisfy a condition, provided in Section 7.2(a) or (b) of the Agreement, to the obligation of the Purchaser to effect the Closing (as defined in the Agreement);
(b) The language in Sections 2.10 and 2.12 of the Agreement is hereby amended as follows:
(1) in the first sentence of Section 2.10(c)(i) delete the word "and" that appears between the words "practice" and "(viii)" and replace it with a comma;
(2) at the end of the first sentence of Section 2.10(c)(i) (but before the period) add the words "and (ix) a calculation of the Net Canadian Holdback Amount";
(3) in the last sentence of Section 2.10(c)(i):
(A) delete the first occurrence of the phrase "Actual Sales Bonuses and the Actual U.K. Funding Amount," and replace it with the phrase "Actual Sales Bonuses, the Actual U.K. Funding Amount and the Net Canadian Holdback Amount,"; and
(B) delete the phrase "Actual U.K. Funding Amount, and the Net Interim Period Adjustment Amount (and the elements of such calculation)" and replace it with "Actual U.K. Funding Amount, the Net Interim Period Adjustment Amount (and the elements of such calculation) and the Net Canadian Holdback Amount";
(4) in the first sentence of Section 2.10(c)(ii) delete the phrase "or the Net Interim Period Adjustment Amount or" and replace it with "the Net Interim Period Adjustment Amount or the Net Canadian Holdback Amount or";
(5) in the second sentence of Section 2.10(c)(ii) delete the phrase "and the Net Interim Period Adjustment Amount (and each element of such calculation)," and replace it with "the Net Interim Period Adjustment Amount (and each element of such calculation) and the Net Canadian Holdback Amount,";
(6) in the third, fifth, and eighth sentences of Section 2.10(c)(ii) delete the phrase "or the Net Interim Period Adjustment Amount (or any
element thereof)" and replace it with ", the Net Interim Period Adjustment Amount (or any element thereof) or the Net Canadian Holdback Amount";
(7) in the eighth sentence of Section 2.10(c)(ii) add the words "or the Net Canadian Holdback Amount" between the second occurrence of the phrase "(and each element thereof)" and the word ", respectively,";
(8) add the following sentence at the end of Section 2.10(c)(iii):
If the amount of the Net Canadian Holdback Amount used to determine the Estimated Closing Date Contribution Adjustment pursuant to Section 2.10(a) exceeds the amount of the Net Canadian Holdback Amount determined pursuant to this Section 2.10(c), the Company shall pay to Seller the amount of such excess in the manner provided in Section 2.10(c)(iv). If the amount of the Net Canadian Holdback Amount determined pursuant to this Section 2.10(c) exceeds the amount of the Net Canadian Holdback Amount used to determine the Estimated Closing Date Contribution Adjustment pursuant to Section 2.10(a), Seller shall pay to the Company the amount of such excess in the manner provided in Section 2.10(c)(iv).
and
(9) in Section 2.12, delete the phrase "At the Closing" and
replace it with the phrase "From and after the Closing"
, and add the words "(as may be adjusted pursuant to
Section 2.10(c)" immediately after the each occurrence
of the phrase "Net Canadian Holdback Amount".
Section 1.3 INTERCOMPANY ACCOUNTS
Section 5.7 of the Agreement is hereby amended to delete the phrase "Prior to the Closing" in the first line of the first sentence, and replacing it with the phrase "Effective immediately prior to the closing". Notwithstanding the foregoing,
Section 6.12 of the Agreement shall govern the repayment of any receivables owed by IMC Salt Inc. to Sifto Canada Inc.
Section 1.4 NO IMPACT ON INDEMNITY, ETC.
The provisions of this Amendment shall have no impact on the Seller's obligation to indemnify the Purchaser pursuant to the provisions of the Agreement (including Article VI thereof) with respect to Taxes (as defined therein).
Section 1.5 ACTIONS RELATING TO LIS PENDENS.
Article V is hereby amended to insert the following Section 5.22:
Section 5.22 CERTAIN LIS PENDENS In addition to any other obligation set forth in this Agreement, Seller covenants and agrees to promptly pursue legal proceedings or other actions to cause any caution, lis pendens, affidavit, caveat or similar notice filing, which are now or in the future filed by or on behalf of Madison Dearborn Partners LLC against any of the Properties, removed as promptly as practicable from the applicable record. So long as any such caution, lis pendens, affidavit, caveat or similar notice filing by or on behalf of Madison Dearborn Partners shall encumber any Property or Properties, Seller further agrees that at the request of the purchaser's title company providing insurance to any successor in interest to any such Property or Properties to which any such notice filing relates, or any lender secured by any such Property or Properties, from time to time, to provide reasonable assistance to any such party in obtaining a title endorsement similar in scope and nature relating to the notice filings as the Purchaser obtained at the Closing, which will include issuing, affirming, reaffirming or confirming to the purchaser's title company its obligations under the indemnity given to the title company at the Closing and relating to such notice filings referred to above in connection with the Closing as if such indemnity were given to purchaser's title company.
Section 1.6 LETTERS OF CREDIT
Article V is hereby amended to insert the following Section 5.23:
Section 5.23 CERTAIN LETTERS OF CREDIT. Purchaser agrees to cause the Surviving Corporation to use is reasonable best efforts to replace the Letters of Credit of Seller for the benefit of IMC Salt, Inc., Sifto Canada, Inc. and IMC Kalium Ogden Corp. set forth in item 3 of Section 3.16(a)(v) of the Seller Disclosure Schedule as soon as reasonably practicable following
the Closing. Purchaser hereby agrees to reimburse Seller for any amounts extended pursuant to such existing Letters of Credit.
Section 1.7 ACKNOWLEDGEMENT OF COLLATERAL
Article X is hereby amended to insert the following Section 10.12:
Section 10.12 ACKNOWLEDGMENT. Seller hereby acknowledges that the Purchaser will assign the Supply Agreements as collateral for the benefit of the Lenders under the Credit Agreement dated as of November 28, 2001 among Salt Holdings Corporation; Compass Minerals Group, Inc., as US Borrower; Sifto Canada, Inc., as Canadian Borrower; Salt Union Limited, as UK Borrower; The Lenders Party Hereto; JPMorgan Chase Bank, as Administrative Agent; J.P. Morgan Bank Canada, as Canadian Agent; Chase Manhattan International Limited, as UK Agent; J.P. Morgan Securities Inc., as Joint Advisor, Co-Lead Arranger and Joint Bookrunner; Deutsche Banc Alex. Brown Inc., as Syndication Agent, Joint Advisor, Co-Lead Arranger and Joint Bookrunner; Credit Suisse First Boston, as Co-Documentation Agent; and Credit Lyonnais, as Co-Documentation Agent.
Section 1.8 REAL ESTATE SCHEDULE AMENDMENTS
(a) Section 1.1(e)(i) - Permitted Encumbrances (US Properties) (Canadian Properties) of the Seller Disclosure Letter is hereby amended and restated in its entirety to read as set forth in Exhibit A attached hereto.
(b) Section 1.1(e)(ii) - Surveys of the Seller Disclosure Letter is hereby amended and restated in its entirety to read as set forth in Exhibit B attached hereto.
(c) Section 1.1(e)(iii) - Permitted Encumbrances (U.K. Properties) of the Seller Disclosure Letter is hereby amended and restated in its entirety to read as set forth in Exhibit C attached hereto.
(d) Exhibit 3.10 to Section 3.10 of the Seller Disclosure Letter is hereby amended and restated in its entirety to read as set forth in Exhibit D attached hereto.
(e) Section 3.10(a) of the Seller Disclosure Letter is hereby amended and restated in its entirety to read as set forth in Exhibit E attached hereto.
Section 1.9 INTELLECTUAL PROPERTY SCHEDULE AMENDMENTS
(a) Section 3.12 of the Seller Disclosure Letter to the Agreement is hereby amended as follows:
(1) on the last row of the table in Section 3.12(a)(i), in the column entitled "Owner of Record", delete the name "Carey Sale Company, Inc." and replace it with the name "Carey Salt Company, Inc.";
(2) in the table in Section 3.12(a)(ii), in the row for owner of record IMC Salt Inc., trademark EV'R-FLO, replace the word "Registered" in the "Status" column with the words "Registration was not renewed.";
(3) in the table in Section 3.12(a)(iv), in the row listing the System/Software Services Agreement between Salt Union Limited and Comice Computing Associated Limited, delete the language included in the "Terms" column;
(4) in the table in Section 3.12(a)(iv), in the row listing the License Agreement between Vigoro Canada Acquisition Corp. and IMC Kalium Canada Ltd, add the following words after the existing language in the "Goods" column: "NOTE: On September 21, 2001, Licensor sent a Notice of Termination to Licensee terminating this Agreement.";
(5) delete Section 3.12(b)(i) in its entirety, and replace with the following: "OWNERSHIP EXCEPTIONS. Certain of the patents, trademarks and copyrights listed on Section 3.12(a)(i), (ii) and (iii) are not listed in the applicable intellectual property registry as being held in the name of any Acquired Company, as indicated by the designation [*]. As of the Closing, any of such patents, trademarks and copyrights that are not listed as "Abandoned" have been assigned to an Acquired Company and such assignments have been filed or are in the process of being filed with the applicable
intellectual property registry, or a name change has been filed or is in the process of being filed with the applicable intellectual property registry to reflect the proper name of an Acquired Company, as appropriate";
(b) delete Section 3.12(b)(ii) in its entirety, and replace with the following: "In a Settlement Agreement dated October 19, 2001, by and between Cargill, Incorporated, IMC Salt, Inc. and IMC Kalium Ltd (n/k/a IMC USA, Inc.), the parties to the Settlement Agreement settled the dispute arising out of IMC's applications for the trademarks WHITE DIAMOND and DIAMOND HARD DIAMOND PURE. A copy of the Settlement Agreement has been provided to Purchaser".
Section 1.10 MISCELLANEOUS SCHEDULE AMENDMENTS
(a) Section 3.4 of the Seller Disclosure Letter to the Agreement is hereby amended as follows:
(1) In Section (b)(I)(13) (IMC Kalium Ogden Corp.), delete the word "Alberta" in the "Qualification" row;
(2) In Section (b)(I)(3) (IMC Global (UK) Limited), delete the phrases "Cert #2 55,556 shares - Issued 5/31/96" and "Cert #3 157,000,000 shares - Issued 5/31/96" in the "Owner & % Interest" row and replace them with the phrase "Cert #5 157,055,556 shares - Issued 23/11/01";
(3) In Section (b)(I)(4) (Salt Union Limited), delete the phrase "Cert #15 - Issued 5/21/96" in the "Owner & % Interest" row and replace it with the phrase "Cert #18 - Issued 23/11/01"; and
(4) In Section (b)(I)(4) (Salt Union Limited), delete the phrase "Cert. # __ - Issued __" in the "Owner & % Interest" row for owner Rose Marie Williams, and replace it with the phrase with "Cert. # 16 - Issued 14/4/2001".
(b) Section 3.16 of the Seller Disclosure Letter to the Agreement is hereby amended as follows:
(1) in Section 3.16(viii), delete the third from last bullet point in its entirety which stated: "Counter indemnity made by Salt Union Limited (the "Company") in favour of The Governor and Company of the Bank of Scotland (the "Bank") in respect of the performance bond issued by the Bank on behalf of the Company to guarantee a sum in the amount of(pound)500,000 in favour of Norfolk County Council in connection with the Company's obligations under a PFI Contract for the design, building, financing, and operation of a serviced salt supply system made between (1) Norfolk County Council and (2) the Company dated 30 March 2000";
(2) in Section 3.16(xi) delete the language in footnote 3 which stated "Agreement to be novated to Ineos Chlor" and replace it with "Agreement to be assigned to Ineos Chlor" for the Salt Union Limited Sales Contract for customer "ICI Chemicals & Polymers/Chlor-Chemicals"; and
(3) in Section 3.16(xi) delete the following contract, which was the sixth entry of the Salt Union Limited Haulage Contracts:
ARTICLE II
MISCELLANEOUS
Section 2.1 NATURE OF AMENDMENT. Except as expressly provided herein, the Agreement shall continue to be, and shall remain, in full force
and effect. Except as expressly provided herein, this Amendment shall not be deemed to be a waiver of, or consent to, or a modification or amendment of, any other term of condition of the Agreement. Any reference to the Agreement in the Agreement or any other document (except as specifically indicated to the contrary) shall be deemed to be a reference to the Agreement as amended hereby.
Section 2.2 GOVERNING LAW. This Amendment shall be governed by, and construed in accordance with, the laws of the State of Delaware.
Section 2.3 COUNTERPARTS. This Amendment may be executed and delivered (including by facsimile transmission) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed and delivered shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed or caused this Amendment to be executed as of the date first written above.
IMC GLOBAL INC.
Title:
SALT HOLDINGS CORPORATION
Title:
YBR HOLDINGS LLC
Title:
YBR ACQUISITION CORP.
Title:
EXHIBIT 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF SALT HOLDINGS CORPORATION
It is hereby certified that:
l. The present name of the corporation (hereinafter called the "corporation") is Salt Holdings Corporation.
2. The name under which the corporation was originally incorporated is IMC Potash Corporation and the date of filing of the corporation's original Certificate of Incorporation with the Secretary of State of the State of Delaware is December 17, 1993.
3. Pursuant to Section 245 of the General Corporation Law of the State of Delaware, this Restated Certificate of Incorporation restates, integrates and further amends the provisions of the corporation's Certificate of Incorporation.
4. The amendments and restatement herein certified have been duly adopted by the Board of Directors of the Corporation (the "Board") and the shareholders of the Corporation as prescribed by Sections 228, 242 and 245 of the General Corporation Law of the State of Delaware.
5. The Certificate of Incorporation of the corporation, as amended and restated herein, shall at the effective time of this Restated Certificate of Incorporation, read as follows:
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION OF
SALT HOLDINGS CORPORATION
ADOPTED IN ACCORDANCE WITH THE PROVISIONS
OF SECTION 242 AND 245 OF THE GENERAL
CORPORATION LAW OF THE STATE OF DELAWARE
This corporation was originally incorporated on December 17, 1993. The name under which this corporation was originally incorporated is IMC Potash Corporation.
FIRST: The name of the Corporation is Salt Holdings Corporation
(the "Corporation").
SECOND: The address of the Corporation's registered office in the
|
State of Delaware is 2711 Centerville Road, Suite 400, Wilmington, County of New Castle, Delaware 19808, and the name of its registered agent at such address is Corporation Service Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware as it now exists or may hereafter be amended and supplemented.
FOURTH: The total number of shares of stock which the Corporation shall have authority to issue is:
(i) 9,500,000 shares of Class A Common Stock, par value $.01 per share (hereinafter referred to as "Class A Common Stock");
(ii) 500,000 shares of Class B Common Stock, par value S.01 per share (hereinafter referred to as "Class B Common Stock"); and
(iii) 150,000 shares of Preferred Stock, par value $.01 per share (hereinafter referred to as "Preferred Stock").
The Corporation's Class A Common Stock and Class B Common Stock are referred to hereinafter, together, as the "Common Stock."
A. Powers and Rights of Holders of Common Stock.
1. Except as stated in this Subpart A of Article FOURTH, the Class A Common Stock and Class B Common Stock shall be identical in all respects and shall have the same powers, preferences and rights.
2. Except as may be otherwise required by law, and subject to the provisions of the Class B Common Stock and any series of Preferred Stock at the time outstanding, the holders of Class A Common Stock issued and outstanding shall have and
possess the exclusive voting rights and powers, whether at a meeting of stockholders or in connection with any action taken by written consent, and the holders of Class B Common Stock shall have no voting rights or powers. The total number of shares of Class B Common which the Corporation shall have the authority to issue may be increased or decreased (but not below the number of shares thereof then outstanding) solely with the affirmative vote or consent of the holders of a majority of the outstanding shares of Class A Common Stock and without a separate class vote of the holders of Class B Common Stock.
3. Each holder of Class A Common Stock issued and outstanding shall be entitled to one vote for each share of Class A Common Stock registered in such holder's name on the books of the Corporation, and, except as may be otherwise required by law, each holder of Class B Common Stock issued and outstanding shall not be entitled to vote with respect to each share of Class B Common Stock registered in such holder's name on the books of the Corporation.
4. Any direct or indirect transfer of issued and outstanding shares of Class B Common Stock other than a Permitted Transfer (as defined herein) or any event or circumstance as a result of which a holder of Class B Common Stock ceases to be a Contracted Holder (as defined herein) shall result in the automatic conversion of the shares of Class B Common Stock being transferred to or held by such non-Contracted Holder into a like number of shares of Class A Common Stock. No purported transfer of shares of Class B Common Stock shall be effective unless and until the transferor has surrendered to the Corporation, at its office or agency maintained for that purpose, the certificates representing the shares of Class B Common Stock to be transferred, which certificates shall be duly endorsed or accompanied by executed stock powers, with the signatures appropriately guaranteed. All such certificates shall be accompanied by written notice of the holder's intention to transfer the shares, including a statement of the number of shares of Class B Common Stock to be transferred and, if applicable, converted and the name or names and address or addresses in which the certificate or certificates for shares of Class B Common Stock or Class A Common Stock, as the case may be, issuable upon such conversion shall be issued and, if required, funds for the payment of any applicable transfer taxes. The Corporation, as soon as practicable thereafter, will deliver at said office to the transferee of converted shares of Class B Common Stock, or to any nominee or designee of such transferee, a certificate or certificates for the number of full shares of Class A Common Stock issuable upon such conversion and, in the event that the transferor is transferring less than the aggregate number of shares represented by the certificates surrendered, a certificate or certificates for the number of full shares of Class B Common Stock not being transferred. Shares of Class B Common Stock shall be, and shall be deemed to have been, converted as of the date of the surrender of the certificates for transfer to a non-Contracted Holder and conversion as hereinbefore provided, or the date on which a holder of Class B Common Stock ceases to be a Contracted Holder. as the case may be, and the person or persons in whose name Class A Common Stock is issuable upon such
conversion shall be treated for all purposes as the record holder or holders of such Class A Common Stock on such date.
The Corporation shall take all such actions as are necessary to cause the shares of Class B Common Stock so convened to be returned to the status of authorized and unissued shares of Class B Common Stock. The Corporation shall at all times reserve for issuance a number of shares of Class A Common Stock (which may include Class A Common Stock held by the Corporation as treasury stock) which shall be sufficient for issuance upon conversion of all of the then outstanding Class B Common Stock pursuant to this Section 4 or otherwise. The Corporation as a condition to the transfer or the registration of transfer of shares of Class B Common Stock to a purported Contracted Holder, may require the furnishing of such affidavits or other proof as it reasonably deems necessary to establish that such transferee is a Contracted Holder. For purposes hereof, (a) "Permitted Transfer" means a direct or indirect transfer of issued and outstanding shares of Class B Common Stock to a Contracted Holder, (b) "Contracted Holder" means any Person who is a party to, or is subject to, an agreement with the Corporation that sets forth rights and obligations associated with the ownership or transfer of Class B Common Stock and, (c) "Person" means and includes an individual, a partnership, a limited liability company, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof. All certificates evidencing shares of Class B Common Stock shall conspicuously note the foregoing restrictions on transfer and automatic conversion terms.
5. Upon the completion of an underwritten public offering of Common Stock by the Corporation pursuant to an effective registration statement filed by the Corporation with the Securities and Exchange Commission (other than on Forms S-4 or S-8 or successors to such forms) under the Securities Act of 1933, as amended, all of the shares of Class B Common Stock issued and outstanding as of the date of the completion of such public offering shall be automatically converted into shares of Class A Common Stock on a share for share basis and shall otherwise cease to be outstanding, effective as of the date of the completion of such public offering. All Persons registered as holders of shares of Class B Common Stock on the date of the completion of such public offering shall be treated for all purposes as the record holders of an equal number of shares of Class A Common Stock on such date. The Corporation, as soon as practicable thereafter, will deliver to each of the holders of the shares of Class B Common Stock converted into shares of Class A Common Stock a certificate or certificates for the Class A Common Stock against receipt from such holder of the certificate theretofore representing an equal number of shares of Class B Common Stock. Pending delivery of certificates for shares of Class A Common Stock after the completion of such public offering, certificates for shares of Class B Common Stock so converted shall be deemed to be certificates for an equal number of shares of Class A Common Stock.
6. Dividends may be paid to the holders of the Class A Common Stock and Class B Common Stock, as and when declared by the Board of Directors, out of any funds of the Corporation legally available for the payment of such dividends. If and when dividends on the Class A Common Stock and Class B Common Stock are
declared from time to time by the Board of Directors, whether payable in cash, in property or in shares of stock of the Corporation, the holders of the Class A Common Stock and Class B Common Stock shall be entitled to share equally, on a per share basis, in such dividends. If shares of Class B Common Stock are paid as dividends on Class B Common Stock and shares of Class A Common Stock are paid as dividends on Class A Common Stock, in an equal amount per share of Class B Common Stock and Class A Common Stock in proportionate amounts, such payment will be deemed to be a like dividend or other distribution.
7. Subject to the provisions of any series of Preferred Stock at the time outstanding, upon liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, the assets of the Corporation available for distribution to the stockholders of the Corporation shall be distributed to the holders of the Class A Common Stock and Class B Common Stock, on a pro rata basis, based on the number of shares held by each such holder, without regard to class.
8. If the Corporation shall in any manner split, subdivide, combine or reclassify any outstanding shares of one class of Common Stock, the outstanding shares of the other class of Common Stock shall be proportionately split, subdivided, combined or reclassified in the same manner and on the same basis as the outstanding shares of the class of Common Stock that have been split, subdivided, combined or reclassified, unless a different basis has been approved by the holders of a majority of the outstanding shares of the class of Common Stock adversely affected.
B. Preferred Stock.
The Board of Directors of the Corporation is expressly authorized to provide for the issuance of all or any shares of the Preferred Stock in one or more classes or series, and to fix for each such class or series such distinctive designations and such powers, preferences and rights and such qualifications, limitations or restrictions thereof, as shall be stated and expressed in the resolution or resolutions adopted by the Board of Directors providing for the issuance of such class or series and as may be permitted by the General Corporation Law of the State of Delaware.
FIFTH: The number of Directors of the Corporation shall be such as from time to time shall be fixed by, or in the manner provided in, the By-laws of the Corporation. Election of Directors need not be by written ballot.
SIXTH: The personal liability of the directors of the Corporation is hereby eliminated to the fullest extent permitted by paragraph (7) of subsection (b) of Section 102 of the General Corporation Law of the State of Delaware, as the same may be amended and supplemented. Any repeal or modification of this Article Sixth shall not adversely affect any right or protection of a director of the Corporation existing immediately prior to such repeal or modification.
SEVENTH: The Corporation shall, to the fullest extent permitted or required by Section 145 of the General Corporation Law of the Sate of Delaware, as the same may be amended and supplemented, indemnify any and all officers or directors to whom it shall have power to indemnify under said section from and against any and all of the expenses, liabilities or other matters referred to in or covered by said section, and the indemnification provided for herein shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any By-Law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director or officer and shall inure to the benefit of the heirs, executors and administrators of such person. Any repeal or modification of this Article Seventh shall not adversely affect any right or protection existing hereunder immediately prior to such repeal or modification.
EIGHTH: From time to time any of the provisions of this certificate of incorporation may be amended, altered or repealed, and other provisions authorized by the laws of the State of Delaware at the time in force may be added or inserted in the manner and at the time prescribed by said laws, and all rights at any time conferred upon the stockholders of the Corporation by this certificate of incorporation are granted subject to the provisions of this Article Eighth.
NINTH: In furtherance and not in limitation of the rights, powers, privileges and discretionary authority granted or conferred by the General Corporation Law of the State of Delaware or other statutes or laws of the state of Delaware, the Board of Directors is expressly authorized to make, alter, amend or repeal the By-Laws of the Corporation, without any action on the part of the Stockholders, but the Stockholders may make additional By-Laws and may alter, amend or repeal any By-Law whether adopted by them or otherwise. The Corporation may in its By-Laws confer powers upon its Board of Directors in addition to the foregoing and in addition to the powers and authorities expressly conferred upon the Board of Directors by applicable law.
IN WITNESS WHEREOF, the undersigned has executed this Amended and Restated Certificate of Incorporation of Salt Holdings Corporation on behalf of the Corporation and does verify and affirm, under penalty of perjury that this Amended and Restated Certificate of Incorporation is the act and deed of the Corporation and that the facts stated herein are true as of this 28 day of November, 2001.
SALT HOLDINGS CORPORATION
CERTIFICATE OF CHANGE OF REGISTERED AGENT
AND
REGISTERED OFFICE
*****
SALT HOLDINGS CORPORATION, a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware
DOES HEREBY CERTIFY:
That the registered office of the corporation in the state of Delaware is hereby changed to Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle.
That the registered agent of the corporation is hereby changed to THE CORPORATION TRUST COMPANY, the business address of which is identical to the aforementioned registered office as changed.
That the changes in the registered office and registered agent of the corporation as set forth herein were duly authorized by resolution of the Board of Directors of the corporation.
IN WITNESS WHEREOF, the corporation has caused this Certificate to be signed by an authorized officer, this 30th day of October 2002.
SALT HOLDINGS CORPORATION
* Any authorized officer or the chairman or Vice-Chairman of the Board of Directors may execute this certificate.
EXHIBIT 3.2
BY LAWS
OF
IMC POTASH CORPORATION
now known as
SALT HOLDINGS CORPORATION
BYLAWS
OF
IMC POTASH CORPORATION
ARTICLE I. OFFICES
1.01. PRINCIPAL AND BUSINESS OFFICES. The corporation may have such principal and other business offices, either within or without the State of Delaware, as the Board of Directors may designate or as the business of the corporation may require from time to time.
1.02. REGISTERED OFFICE. The registered office of the corporation required by the Delaware General Corporation Law to be maintained in the State of Delaware may be, but need not be, identical with the principal office in the State of Delaware, and the address of the registered office may be changed from time to time by the Board of Directors or by the registered agent. The business office of the registered agent of the corporation shall be identical to such registered office.
ARTICLE II. STOCKHOLDERS
2.01. ANNUAL MEETING. The annual meeting of the stockholders shall be held at such date and time as shall be fixed by resolution of the Board of Directors, for the purpose of electing directors and for the transaction of such other business as may come before the meeting. If the day fixed for the annual meeting shall be a legal holiday in the State of Delaware, such meeting shall be held on the next succeeding business day.
2.02. SPECIAL MEETING. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute, may be called by the Board of Directors or the President or the Secretary or by the person, or in the manner, designated by the Board of Directors.
2.03. PLACE OF MEETING. The Board of Directors may designate any place, either within or without the State of Delaware, as the place of meeting for any annual meeting or for any special meeting of stockholders called by the Board of Directors. If no designation is made, or if a special meeting be otherwise called, the place of meeting shall be the registered office of the corporation in the State of Delaware.
2.04. NOTICE OF MEETING. Written notice stating the place, day and hour of the meeting of stockholders and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered to each stockholder of record entitled to vote at such meeting not less than ten (10) days (unless a longer period is required by law or the articles of incorporation) nor more than sixty (60) days before the date of the meeting, either personally or by mail, by or at the direction of the Board of Directors, the President, the Secretary, or any other officer or persons calling the meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail, addressed to the stockholder at his address as it appears on the stock record books of the corporation, with postage thereon prepaid.
2.05. ADJOURNMENT. Any meeting of stockholders may be adjourned to reconvene at any place designated by vote of a majority of the shares represented thereat. At the adjourned meeting, the corporation may transact any business which might have been transacted at the original meeting. No notice of the time or place of an adjournment need be given if the time and place are announced at the meeting at which an adjournment is taken, unless the adjournment is for more than thirty (30) days or a
new record date is fixed for the adjourned meeting, in which case notice of the adjourned meeting shall be given to each stockholder. Unless a new record date for the adjourned meeting is fixed, the determination of stockholders of record entitled to notice of or to vote at the meeting at which adjournment is taken shall apply to the adjourned meeting.
2.06. FIXING OF RECORD DATE. For the purpose of determining stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or stockholders entitled to receive payment of any dividend, or in order to make a determination of stockholders for any other proper purpose, the Board of Directors may fix in advance a date as the record date for any such determination of stockholders, such date in any case to be not more than sixty (60) days and, in case of a meeting of stockholders, not less than ten (10) days prior to the date on which the particular action requiring such determination of stockholders is to be taken. If no record date is fixed, the record date for determining:
(a) stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held;
(b) stockholders entitled to express consent to a corporate action in writing without meeting shall be the day on which the first written consent is expressed; or
(c) stockholders for any other purpose shall be the close of business on the day on which the Board of Directors adopts the resolution relating thereto.
2.07. VOTING RECORDS. The officer having charge of the stock transfer books for shares of the corporation shall, at least ten (10) days before each meeting of stockholders, make a complete record of the stockholders entitled to vote at such meeting, arranged in alphabetical order, with the address of and the number of shares held by each. Such record shall be produced and kept open to the examination of any stockholders, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held as specified in the notice of the meeting or at the place of the meeting. The record shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholders present. The original stock transfer books shall be the only evidence as to who are the stockholders entitled to examine such record or transfer books or to vote at any meeting of stockholders.
2.08. QUORUM. Except as otherwise provided in the certificate of incorporation, a majority of the shares entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of stockholders, but in no event shall less than one-third of the shares entitled to vote constitute a quorum. If a quorum is present, the affirmative vote of the majority of the shares represented at the meeting and entitled to vote on the subject matter shall be the act of the stockholders unless the vote of a greater number or voting by classes is required by law or the certificates of incorporation. Though less than a quorum of the outstanding shares are represented at a meeting, a majority of the shares represented at a meeting which initially had a quorum may adjourn the meeting from time to time without further notice.
2.09. CONDUCT OF MEETING. The President, and in his absence, a Vice President in the order provided under Section 4.07, and in their absence, any person chosen by the stockholders present shall call the meeting of the stockholders to order and shall act as chairman of the meeting. The Secretary of the corporation shall act as secretary of all meetings of the stockholders, but, in the absence of the Secretary, the presiding officer may appoint any other person to act as secretary of the meeting.
2.10. PROXIES. At all meetings of stockholders, a stockholder entitled to vote may vote in person or by proxy appointed in writing by the stockholder or by his duly authorized attorney in fact. Such proxy shall be filed with the Secretary of the corporation before or at the time of the meeting. Unless otherwise provided in the proxy and supported by sufficient interest, a proxy may be revoked at any time before it is voted, either by written notice filed with the Secretary or the acting secretary of the meeting or by oral notice given by the stockholder to the presiding officer during the meeting. The presence of a stockholder who has filed a proxy shall not of itself constitute a revocation. No proxy shall be valid after three (3) years from the date of its execution, unless otherwise provided in the proxy. The Board of Directors shall have the power and authority to make rules establishing presumptions as to the validity and sufficiency of proxies.
2.11. VOTING OF SHARES. Each outstanding share shall be entitled to one vote upon each matter submitted to a vote at a meeting of stockholders, except to the extent that the voting rights of the shares of any class or classes are enlarged, limited or denied by the certificate of incorporation.
2.12. VOTING OF SHARES BY CERTAIN HOLDERS.
(a) OTHER CORPORATIONS. Shares standing in the name of another corporation may be voted either in person or by proxy, by the president of such corporation or any other officer appointed by such president. A proxy executed by any principal officer of such other corporation or assistant thereto shall be conclusive evidence of the signer's authority to act, in the absence of express notice to this corporation, given in writing to the Secretary of this corporation, of the designation of some other person by the board of directors or the by-laws of such other corporation.
(b) LEGAL REPRESENTATIVES AND FIDUCIARIES. Shares held by any administrator, executor, guardian, conservator, trustee in bankruptcy, receiver, or assignee for creditors may be voted by a duly executed proxy, without a transfer of such shares to his name. Shares standing in the name of a fiduciary may be voted by him, either in person or by proxy. A proxy executed by a fiduciary, shall be conclusive evidence of the signer's authority to act, in the absence of express notice to this corporation, given in writing to the Secretary of this corporation, that such manner of voting is expressly prohibited or otherwise directed by the document creating the fiduciary relationship.
(c) PLEDGEES. A stockholder whose shares are pledged shall be entitled to vote such shares unless in the transfer of the shares the pledgor has expressly authorized the pledgee to vote the shares and thereafter the pledgee, or his proxy, shall be entitled to vote the shares so transferred.
(d) TREASURY STOCK AND SUBSIDIARIES. Neither treasury shares, nor shares held by another corporation if a majority of the shares entitled to vote for the election of directors of such other corporation is held by this corporation, shall be voted at any meeting or counted in determining the total number of outstanding shares entitled to vote, but shares of its own issue held by this corporation in a fiduciary capacity, or held by such other corporation in a fiduciary capacity, may be voted and shall be counted in determining the total number of outstanding shares entitled to vote.
(e) JOINT HOLDERS. Shares of record in the names of two or more persons or shares to which two or more persons have the same fiduciary relationship, unless the Secretary of the corporation is given notice otherwise and furnished with a copy of the instrument creating the relationship, may be voted as follows: (i) if voted by an individual, his vote binds all holders; or
(ii) if voted by more than one holder, the majority vote binds all, unless the vote is evenly split in which case the shares may be voted proportionately, or according to the ownership interest as shown in the instrument filed with the Secretary of the corporation.
2.13. WAIVER OF NOTICE BY STOCKHOLDERS. Whenever any notice whatever is required to be given to any stockholder of the corporation under the certificate of incorporation or by-laws or any provision of the Delaware General Corporation Law, a waiver thereof in writing, signed at any time, whether before or after the time of meeting, by the stockholder entitled to such notice, shall be deemed equivalent to the giving of such notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except where the person attends for the express purpose of objecting to the transaction of any business. Neither the business, nor the purpose of any regular or special meeting of stockholders, directors or members of a committee of directors need be specified in the waiver.
2.14. STOCKHOLDERS CONSENT WITHOUT MEETING. Any action required or permitted by the certificate of incorporation or by-laws or any provision of law to be taken at a meeting of the stockholders, may be taken without a meeting, prior notice or vote, if a consent in writing, setting forth the action so taken, shall be signed by the number of stockholders required to authorize such action at a meeting. If the action is authorized by less than unanimous consent, notice of the action shall be given to nonconsenting Stockholders.
ARTICLE III. BOARD or DIRECTORS
3.01. GENERAL POWERS AND NUMBER. The business and affairs of the corporation shall be managed by its Board of Directors. The number of directors of the corporation shall initially be one (1), and thereafter the number of directors shall be such number (one or more) as may be fixed from time to time by resolution of the shareholders or Board of Directors.
3.02. TENURE AND QUALIFICATIONS. Each director shall hold office until the next annual meeting of stockholders and until his successor shall have been qualified and elected, or until his prior death, resignation or removal. A director may be removed from office by affirmative vote of a majority of the outstanding shares entitled to vote for the election of such director, taken at a meeting of stockholders called for that purpose. A director may resign at any time by filing his written resignation with the Secretary of the corporation. Directors need not be residents of the State of Delaware or stockholders of the corporation.
3.03. REGULAR MEETINGS. A regular meeting of the Board of Directors shall be held without other notice than this by-law immediately after the annual meeting of stockholders, and each adjourned session thereof. The place of such regular meeting shall be the same as the place of the meeting of stockholders which precedes it, or such other suitable place as may be announced at such meeting of stockholders. The Board of Directors may provide, by resolution, the time and place, either within or without the State of Delaware, for the holding of additional regular meetings without other notice than such resolution.
3.04. SPECIAL MEETINGS. Special meetings of the Board of Directors may be called by or at the request of the President, Secretary or any director. The President or Secretary calling any special meeting of the Board of Directors may fix any place, either within or without the State of Delaware, as the place for holding any special meeting of the Board of Directors called by them, and if no other place is fixed the place of the meeting shall be the registered office of the corporation in the State of Delaware.
3.05. NOTICE; WAIVER. Notice of each meeting of the Board of Directors (unless otherwise provided in or pursuant to Section 3.03) shall be given to each director not less than twenty-
four (24) hours prior to the meeting by giving oral, telephone or written notice to a director in person, or by telegram, or not less than three (3) days prior to a meeting by delivering or mailing notice to the business address or such other address as a director shall have designated in writing and filed with the Secretary. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail so addressed, with postage thereon prepaid. If notice be given by telegram, such notice shall be deemed to be delivered when the telegram is delivered to the telegraph company. Whenever any notice whatever is required to be given to any director of the corporation under the certificate of incorporation or by-laws or any provision of law, a waiver thereof in writing, signed at any time, whether before or after the time of meeting, by the director entitled to such notice, shall be deemed equivalent to the giving of such notice. The attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting and objects thereat to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting.
3.06. QUORUM. Except as otherwise provided by law or by the certificate of incorporation or these by-laws, a majority of the directors shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, but in no event shall less than one-third of the directors constitute a quorum. A majority of the directors present (though less than such quorum) may adjourn the meeting from time to time without further notice.
3.07. MANNER OF ACTING. The act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors, unless the act of a greater number is required by law or by the certificate of incorporation or these by-laws.
3.08. CONDUCT OF MEETINGS. The President, and in his absence, a Vice President in the order provided under Section 4.07, and in their absence, any director chosen by the directors present, shall call meetings of the Board of Directors to order and shall act as chairman of the meeting. The Secretary of the Corporation shall act as secretary of all meetings of the Board of Directors but in the absence of the Secretary, the presiding officer may appoint any Assistant Secretary or any director or other person present to act as secretary of the meeting.
3.09. VACANCIES. Any vacancy occurring in the Board of Directors, including a vacancy created by an increase in the number of directors, may be filled until the next succeeding annual election by the affirmative vote of a majority of the directors then in office, though less than a quorum of the Board of Directors; provided, that in case of a vacancy created by the removal of a director by vote of the stockholders, the stockholders shall have the right to fill such vacancy at the same meeting or any adjournment thereof.
3.10. COMPENSATION. The Board of Directors, by affirmative vote of a majority of the directors then in office, and irrespective of any personal interest of any of its members, may establish reasonable compensation of all directors for services to the corporation as directors, officers or otherwise, or may delegate such authority to an appropriate committee. The Board of Directors also shall have authority to provide for or delegate authority to an appropriate committee to provide for reasonable pensions, disability or death benefits, and other benefits or payments, to directors, officers and employees and to their estates, families, dependents or beneficiaries on account of prior services rendered by such directors, officers and employees to the corporation.
3.11. PRESUMPTION OF ASSENT. A director of the corporation who is present at a meeting of the Board of Directors or a committee thereof of which he is a member at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless his dissent shall be
entered in the minutes of the meeting or unless he shall file his written dissent to such action with the person acting as the secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the Secretary of the corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a director who voted in favor of such action.
3.12. COMMITTEES. The Board of Directors by resolution adopted by the affirmative vote of a majority of the directors may designate one or more committees, each committee to consist of one or more directors elected by the Board of Directors, which to the extent provided in said resolution as initially adopted, and as thereafter supplemented or amended by further resolution adopted by a like vote, shall have and may exercise the powers of the Board of Directors in the management of the business and affairs of the corporation and may authorize the seal of the corporation to be affixed to all papers which may require it. Each such committee shall fix its own rules governing the conduct of its activities and shall make such reports to the Board of Directors of its activities as the Board of Directors may request.
3.13. UNANIMOUS CONSENT WITHOUT MEETING. Any action required or permitted by the certificate of incorporation or by-laws or any provision of law to be taken by the Board of Directors at a meeting or by a resolution of any committee thereof may be taken without a meeting if a consent in writing, setting forth the action so taken, filed with the minutes of the proceedings, shall be signed by all of the directors then in office.
3.14. TELEPHONIC MEETINGS. Members of the Board of Directors, or any committee designated by the Board, may participate in a meeting of such Board or committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this by-law shall constitute presence in person at such meeting.
ARTICLE IV. OFFICERS
4.01. NUMBER. The principal officers of the corporation shall be a President, any number of Vice Presidents, a Secretary, and a Chief Financial Officer, each of whom shall be elected by the Board of Directors. Such other officers and assistant officers as may be deemed necessary may be elected or appointed by the Board of Directors. Any number of offices may be held by the same person.
4.02. ELECTION AND TERM OF OFFICE. The officers of the corporation to be elected by the Board of Directors shall be elected annually by the Board of Directors at the first meeting of the Board of Directors held after each annual meeting of the stockholders. If the election of officers shall not be held at such meeting, such election shall be held as soon thereafter as conveniently may be. Each officer shall hold office until his successor shall have been duly elected or until his prior death, resignation or removal. Any officer may resign at any time upon written notice to the corporation. Failure to elect officers shall not dissolve or otherwise affect the corporation.
4.03. REMOVAL. Any officer or agent may be removed by the Board of Directors whenever in its judgment the best interests of the corporation will be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Election or appointment shall not of itself create contract rights.
4.04. VACANCIES. A vacancy in any, principal office because of death, resignation, removal, disqualification or otherwise, shall be filled by the Board of Directors for the unexpired portion of the term.
4.05. PRESIDENT. The President shall be the principal executive officer of the corporation and, subject to the control of the Board of Directors, shall in general supervise and control all of the business and affairs of the corporation. He shall, when present, preside at all meetings of the stockholders and of the Board of Directors. He shall have authority, subject to such rules as may be prescribed by the Board of Directors, to appoint such agents and employee of the corporation as he shall deem necessary, to prescribe their powers, duties and compensation, and to delegate authority to them. Such agents and employee shall hold office at the discretion of the President. He shall have authority to sign, execute and acknowledge, on behalf of the corporation, all deeds, mortgages, bonds, stock certificates, contracts, leases, reports and all other documents or instruments, of every conceivable kind and character whatsoever, necessary or proper to be executed in the course of the corporation's regular business, or which shall be authorized by resolution of the Board of Directors; and, except as otherwise provided by law or the Board of Directors, he may authorize any Vice President or other officer or agent of the corporation to sign, execute and acknowledge such documents or instruments in his place and stead. In general he shall perform all duties incident to the office of President and such other duties as may be prescribed by the Board of Directors from time to time.
4.06. THE CHAIRMAN OF THE BOARD. If a Chairman of the Board is appointed, the Chairman of the Board shall perform such duties and have such authority as may be delegated or assigned to him by the President or by the Board of Directors.
4.07. THE VICE PRESIDENTS. In the absence of the President or in the event of his death, inability or refusal to act, or in the event for any reason it shall be impracticable for the President to act personally, the Vice President (or in the event there be more than one Vice President, the Vice Presidents in the order designated by the Board of Directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President. Any Vice President may sign, with the Secretary or Assistant Secretary, certificates for shares of the corporation; and shall perform such other duties and have such authority as from time to time may be delegated or assigned to him by the President or by the Board of Directors. The execution of any instrument of the corporation by any Vice President shall be conclusive evidence, as to third parties, of his authority to act in the stead of the President.
4.08. THE SECRETARY. The Secretary shall: (a) keep the minutes of the meetings of the stockholders and of the Board of Directors in one or more books provided for the purpose; (b) attest instruments to be filed with the Secretary of State; (c) see that all notices are duly given in accordance with the provisions of these bylaws or as required by law; (d) be custodian of the corporate records and of the seal of the corporation and see that the seal of the corporation is affixed to all documents the execution of which on behalf of the corporation under its seal is duly authorized; (e) keep or arrange for the keeping of a register of the post office address of each stockholder which shall be furnished to the Secretary by such stockholder; (f) sign with the President, or a Vice President, certificates for shares of the corporation, the issuance of which shall have been authorized by resolution of the Board of Directors; (g) have general charge of the stock transfer books of the corporation; and (h) in general perform all duties incident to the office of Secretary and have such other duties and exercise such authority as from time to time may be delegated or assigned to him by the President or by the Board of Directors.
4.09. THE CHIEF FINANCIAL OFFICER. The Chief Financial Officer shall
(a) have charge and custody of and be responsible for all funds and securities
of the corporation; (b) receive and give receipts for moneys due and payable to
the corporation from any source whatsoever, and deposit all such moneys in the
name of the corporation in such banks, trust companies or other depositaries as
shall be selected in accordance with the provisions of Section 5.04; and (c) in
general perform all of the duties incident to the office of Chief Financial
Officer and have such other duties and exercise such other authority as from
time to time may be delegated or assigned to him by the President or by the
Board of
Directors. If required by the Board of Directors, the Chief Financial Officer shall give a bond for the faithful discharge of his duties in such sum and with such surety or sureties as the Board of Directors shall determine.
4.10. ASSISTANT SECRETARIES AND ASSISTANT CHIEF FINANCIAL OFFICERS. There shall be such number of Assistant Secretaries and Assistant Chief Financial Officers as the Board of Directors may from time to time authorize. The Assistant Secretaries may sign with the President or a Vice President certificates for shares of the corporation the issuance of which shall have been authorized by a resolution of the Board of Directors. The Assistant Chief Financial Officers shall respectively, if required by the Board of Directors, give bonds for the faithful discharge of their duties in such sums and with such sureties as the Board of Directors shall determine. The Assistant Secretaries and Assistant Chief Financial Officers, in general, shall perform such duties and have such authority as shall from time to time be delegated or assigned to them by the Secretary or the Chief Financial Officer, respectively, or by the President or the Board of Directors.
4.11. OTHER ASSISTANTS AND ACTING OFFICERS. The Board of Directors shall have the power to appoint any person to act as assistant to any officer, or as agent for the corporation in his stead, or to perform the duties of such officer whenever for any reason it is impracticable for such officer to act personally, and such assistant or acting officer or other agent so appointed by the Board of Directors shall, have the power to perform all the duties of the office to which he is so appointed to be an assistant, or as to which he is so appointed to act, except as such power may be otherwise defined or restricted by the Board of Directors.
4.12. SALARIES. The salaries of the principal officers shall be fixed from time to time by the Board of Directors or by a duly authorized committee thereof, and no officer shall be prevented from receiving such salary by reason of the fact that he is also a director of the corporation.
ARTICLE V. CONTRACTS, LOANS, CHECKS
AND DEPOSITS; SPECIAL CORPORATE ACTS
5.01. CONTRACTS. The Board of Directors may authorize any officer or officers, agent or agents, to enter into any contract or execute or deliver any instrument in the name of and on behalf of the corporation, and such authorization may be general or confined to specific instances. In the absence of other designation, all deeds, mortgages and instruments of assignment or pledge made by the corporation shall be executed in the name of the corporation by the President or a Vice President and by the Secretary, an Assistant Secretary, the Treasurer or an Assistant Treasurer; the Secretary or an Assistant Secretary, when necessary or required, shall affix the corporate seal thereto; and when so executed no other party to such instrument or any third party shall be required to make any inquiry into the authority of the signing officer or officers.
5.02. LOANS. No indebtedness for borrowed money shall be contracted on behalf of the corporation and no evidences of such indebtedness shall be issued in its name unless authorized by or under the authority of a resolution of the Board of Directors. Such authorization may be general or confined to specific instances.
5.03. CHECKS, DRAFTS, ETC. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the corporation, shall be signed by such officer or officers, agent or agents of the corporation and in such manner as shall from time to time be determined by or under the authority of a resolution of the Board of Directors.
5.04. DEPOSITS. All funds of the corporation not otherwise employed shall be deposited from time to time to the credit of the corporation in such banks, trust companies or other depositories as may be selected by or under the authority of a resolution of the Board of Directors.
5.05. VOTING OF SECURITIES OWNED BY THIS CORPORATION. Subject always to the specific directions of the Board of Directors, (a) any shares or other securities issued by any other corporation and owned or controlled by this corporation may be voted at any meeting of security holders of such other corporation by the President of this corporation if he is present, or in his absence, by a Vice President of this corporation who may be present, and (b) whenever, in the judgment of the President, or in his absence, of a Vice president, it is desirable for this corporation to execute a proxy or written consent in respect to any shares or other securities issued by any other corporation and owned by this corporation, such proxy or consent shall be executed in the name of this corporation by the President or one of the Vice Presidents of this corporation, without necessity of any authorization by the Board of Directors, affixation of corporate seal or countersignature or attestation by another officer. Any person or persons designated in the manner above stated as the proxy or proxies of this corporation shall have full right, power and authority to vote the shares or other securities issued by such other corporation and owned by this corporation the same as such shares or other securities might be voted by this corporation.
ARTICLE VI. CERTIFICATES FOR SHARES AND THEIR TRANSFER
6.01. CERTIFICATES FOR SHARES. Certificates representing shares of the corporation shall be in such form, consistent with law, as shall be determined by the Board of Directors, such certificates shall be signed by the President or a Vice President and by the Secretary or an Assistant Secretary or Treasurer or Assistant Treasurer. All certificates for shares shall be consecutively numbered or otherwise identified. The name and address of the person to whom the shares represented thereby are issued, with the number of shares and date of issue, shall be entered on the stock transfer books of the corporation. All certificates surrendered to the corporation for transfer shall be cancelled and no new certificate shall be issued until the former certificate for a like number of shares shall have been surrendered and cancelled, except as provided in Section 6.06.
6.02. FACSIMILE SIGNATURES AND SEAL. The seal of the corporation on any certificates for shares maybe a facsimile. The signature of the President or Vice President and the Secretary or Assistant Secretary upon a certificate may be facsimiles if the certificate is manually signed on behalf of a transfer agent, or a registrar, other than the corporation itself or an employee of the corporation.
6.03. SIGNATURE BY FORMER OFFICERS. In case any officer, who has signed or whose facsimile signature has been placed upon any certificate for shares, shall have ceased to be such officer before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer at the date of its issue.
6.04. TRANSFER OF SHARES. Prior to due presentment of a certificate for shares for registration of transfer the corporation may treat the registered owner of such shares as the person exclusively entitled to vote, to receive notifications and otherwise to have and exercise all the rights and power of an owner. Where a certificate for shares is presented to the corporation with a request to register for transfer, the corporation shall not be liable to the owner or any other person suffering loss as a result of such registration of transfer if (a) there were on or with the certificate the necessary endorsements, and (b) the corporation had no duty to inquire into adverse claims or has discharged any such duty. The corporation may require reasonable assurance that said endorsements are genuine and effective and compliance with such other regulations as may be prescribed by or under the authority of the Board of Directors. Where a transfer of shares is made for collateral security, and not absolutely, it shall be so
expressed in the entry of transfer if, when the shares are presented, both the transferor and the transferee so request.
6.05. RESTRICTIONS ON TRANSFER. The face or reverse side of each certificate representing shares shall bear a conspicuous notation of any restriction imposed by the corporation upon the transfer of such shares. Otherwise the restriction is invalid except against those with actual knowledge of the restrictions.
6.06. DESTROYED OR STOLEN CERTIFICATES. The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to by lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the person requesting such new certificate or certificates, or his or her legal representative, to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed.
6.07. CONSIDERATION FOR SHARES. The shares of the corporation may be issued for such consideration as shall be fixed from time to time by the Board of Directors, consistent with the law of the State of Delaware.
6.08. STOCK REGULATIONS. The Board of Directors shall have the power and authority to make all such further rules and regulations not inconsistent with the statutes of the State of Delaware as it may deem expedient concerning the issue, transfer and registration of certificates representing shares of the corporation.
ARTICLE VII. SEAL
7.01. The Board of Directors may provide a corporate seal in an appropriate form,
ARTICLE VIII. AMENDMENTS
8.01. BY STOCKHOLDERS. These by-laws may be adopted, amended or repealed and new by-laws may be adopted by the stockholders entitled to vote at the stockholders' annual meeting without prior notice or at any other meeting provided the amendment under consideration has been set forth in the notice of meeting, by affirmative vote of not less than a majority of the shares present or represented at any meeting at which a quorum is in attendance.
8.02. BY DIRECTORS. These by-laws may be adopted, amended or repealed by the Board of Directors as provided in the certificate of incorporation by the affirmative vote of a majority of the number of directors present at any meeting at which a quorum is in attendance; but no by-law adopted by the stockholders shall be amended or repealed by the Board of Directors if the by-laws so provide.
8.03. IMPLIED AMENDMENTS. Any action taken or authorized by the Board of Directors, which would be inconsistent with the by-laws then in effect but is taken or authorized by affirmative vote of not less than the number of directors required to amend the by-laws so that the bylaws would be consistent with such action, shall be given the same effect as though the by-laws had been temporarily amended or suspended so far, but only so far, as is necessary to permit the specific action so taken or authorized.
ARTICLE IX. INDEMNIFICATION OF DIRECTORS AND OFFICERS
9.01. INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES. The Corporation shall indemnify to the full extent permitted by law any person made or threatened to made a party to an action or proceeding, whether criminal, civil, administrative or investigative, by reason of the fact that the person, his or her testator or intestate is or was a director, officer or employee of the Corporation or any predecessor of the Corporation or serves or served any other enterprise as a director, officer or employee at the request of the Corporation or any predecessor of the Corporation.
EXHIBIT 4.1
SALT HOLDINGS CORPORATION,
as Issuer,
and
THE BANK OF NEW YORK,
as Trustee
INDENTURE
Dated as of December 20, 2002
12 3/4% Senior Discount Notes Due 2012
CROSS-REFERENCE TABLE
TIA Section Indenture Section ----------- ----------------- 310(a)(1)..................................................................... 7.10 (a)(2)..................................................................... 7.10 (a)(3)..................................................................... N.A. (a)(4)..................................................................... N.A. (a)(5)..................................................................... 7.8; 7.10 (b)........................................................................ 7.8; 7.10; 11.2 (c)........................................................................ N.A. 311(a)........................................................................ 7.11 (b)........................................................................ 7.11 (c)........................................................................ N.A. 312(a)........................................................................ 2.5 (b)........................................................................ 11.3 (c)........................................................................ 11.3 313(a)........................................................................ 7.6 (b)(1)..................................................................... 7.6 (b)(2)..................................................................... 7.6 (c)........................................................................ 7.6; 11.2 (d)........................................................................ 7.6 314(a)........................................................................ 4.8; 4.10 (b)........................................................................ N.A. (c)(1)..................................................................... 7.2; 11.4; 11.5 (c)(2)..................................................................... 7.2; 11.4; 11.5 (c)(3)..................................................................... N.A. (d)........................................................................ N.A. (e)........................................................................ 11.5 (f)........................................................................ N.A. 315(a)........................................................................ 7.1(b) (b)........................................................................ 7.5 (c)........................................................................ 7.1 (d)........................................................................ 6.5; 7.1(c) (e)........................................................................ 6.11 316(a)(last sentence)......................................................... 2.9 (a)(1)(A).................................................................. 6.5 (a)(1)(B).................................................................. 6.4 (a)(2)..................................................................... N.A. (b)........................................................................ 6.7 (c)........................................................................ 9.4 317(a)(1)..................................................................... 6.8 (a)(2)..................................................................... 6.9 (b)........................................................................ 2.4 318(a)........................................................................ 11.1 (c)........................................................................ 11.1 |
TABLE OF CONTENTS
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ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
1.1. Definitions........................................................................................1
1.2. Incorporation by Reference of TIA.................................................................35
1.3. Rules of Construction.............................................................................36
ARTICLE TWO
THE SECURITIES
2.1. Form and Dating...................................................................................37
2.2. Execution and Authentication......................................................................38
2.3. Registrar and Paying Agent........................................................................39
2.4. Paying Agent To Hold Assets in Trust..............................................................40
2.5. Holder Lists......................................................................................40
2.6. Transfer and Exchange.............................................................................41
2.7. Replacement Securities............................................................................42
2.8. Outstanding Securities............................................................................42
2.9. Treasury Securities...............................................................................43
2.10. Temporary Securities..............................................................................43
2.11. Cancellation......................................................................................43
2.12. Defaulted Interest................................................................................44
2.13. CUSIP and ISIN Numbers............................................................................44
2.14. Restrictive Legends...............................................................................44
2.15. Book-Entry Provisions for Global Security.........................................................47
2.16. Special Transfer Provisions.......................................................................48
ARTICLE THREE
REDEMPTION
3.1. Notices to Trustee................................................................................53
3.2. Selection of Securities To Be Redeemed............................................................53
3.3. Notice of Redemption..............................................................................53
3.4. Effect of Notice of Redemption....................................................................54
3.5. Deposit of Redemption Price.......................................................................55
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3.6. Securities Redeemed in Part.......................................................................55
ARTICLE FOUR
COVENANTS
4.1. Payment of Securities.............................................................................55
4.2. Maintenance of Office or Agency...................................................................56
4.3. Limitation on Restricted Payments.................................................................56
4.4. Limitation on Incurrence of Additional Indebtedness...............................................61
4.5. Corporate Existence...............................................................................61
4.6. Payment of Taxes and Other Claims.................................................................61
4.7. Maintenance of Properties and Insurance...........................................................62
4.8. Compliance Certificate; Notice of Default.........................................................62
4.9. Compliance with Laws..............................................................................63
4.10. Reports to Holders................................................................................63
4.11. Waiver of Stay, Extension or Usury Laws...........................................................64
4.12. Limitations on Transactions with Affiliates.......................................................65
4.13. Limitation on Dividend and Other Payment Restrictions Affecting Subsidiaries......................66
4.14. Limitation on Issuances of Guarantees by Restricted Subsidiaries..................................68
4.15. Limitation on Liens...............................................................................69
4.16. Change of Control.................................................................................70
4.17. Limitation on Asset Sales.........................................................................72
ARTICLE FIVE
SUCCESSOR CORPORATION
5.1. Merger, Consolidation and Sale of Assets..........................................................76
5.2. Successor Corporation Substituted.................................................................79
ARTICLE SIX
DEFAULT AND REMEDIES
6.1. Events of Default.................................................................................79
6.2. Acceleration......................................................................................80
6.3. Other Remedies....................................................................................81
6.4. Waiver of Past Defaults...........................................................................82
6.5. Control by Majority...............................................................................82
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6.6. Limitation on Suits...............................................................................82
6.7. Rights of Holders To Receive Payment..............................................................83
6.8. Collection Suit by Trustee........................................................................83
6.9. Trustee May File Proofs of Claim..................................................................83
6.10. Priorities........................................................................................84
6.11. Undertaking for Costs.............................................................................84
6.12. Restoration of Rights and Remedies................................................................84
6.13. Rights and Remedies Cumulative....................................................................85
ARTICLE SEVEN
TRUSTEE
7.1. Duties of Trustee.................................................................................85
7.2. Rights of Trustee.................................................................................86
7.3. Individual Rights of Trustee......................................................................88
7.4. Trustee's Disclaimer..............................................................................88
7.5. Notice of Default.................................................................................88
7.6. Reports by Trustee to Holders.....................................................................89
7.7. Compensation and Indemnity........................................................................89
7.8. Replacement of Trustee............................................................................90
7.9. Successor Trustee by Merger, Etc..................................................................91
7.10. Eligibility; Disqualification.....................................................................91
7.11. Preferential Collection of Claims Against the Issuer..............................................92
ARTICLE EIGHT
DISCHARGE OF INDENTURE; DEFEASANCE
8.1. Termination of the Issuer's Obligations...........................................................92
8.2. Legal Defeasance and Covenant Defeasance..........................................................93
8.3. Conditions to Legal Defeasance or Covenant Defeasance.............................................95
8.4. Application of Trust Money........................................................................96
8.5. Repayment to the Issuer...........................................................................97
8.6. Reinstatement.....................................................................................97
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
9.1. Without Consent of Holders........................................................................98
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9.2. With Consent of Holders...........................................................................99
9.3. Compliance with TIA..............................................................................100
9.4. Revocation and Effect of Consents................................................................100
9.5. Notation on or Exchange of Securities............................................................101
9.6. Trustee To Sign Amendments, Etc..................................................................101
ARTICLE TEN
GUARANTEE OF SECURITIES
10.1. Unconditional Guarantee..........................................................................102
10.2. Limitations on Guarantees........................................................................103
10.3. Execution and Delivery of Guarantee..............................................................103
10.4. Release of a Guarantor...........................................................................104
10.5. Waiver of Subrogation............................................................................105
10.6. Immediate Payment................................................................................106
10.7. No Setoff........................................................................................106
10.8. Obligations Absolute.............................................................................106
10.9. Obligations Continuing...........................................................................106
10.10. Obligations Not Reduced..........................................................................107
10.11. Obligations Reinstated...........................................................................107
10.12. Obligations Not Affected.........................................................................107
10.13. Waiver...........................................................................................108
10.14. No Obligation To Take Action Against the Issuer..................................................109
10.15. Dealing with the Issuer and Others...............................................................109
10.16. Default and Enforcement..........................................................................110
10.17. Amendment, Etc...................................................................................110
10.18. Acknowledgment...................................................................................110
10.19. Costs and Expenses...............................................................................110
10.20. No Merger or Waiver; Cumulative Remedies.........................................................110
10.21. Survival of Obligations..........................................................................111
10.22. Guarantee in Addition to Other Obligations.......................................................111
10.23. Severability.....................................................................................111
10.24. Successors and Assigns...........................................................................111
ARTICLE ELEVEN
MISCELLANEOUS
11.1. TIA Controls.....................................................................................111
11.2. Notices..........................................................................................112
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11.3. Communications by Holders with Other Holders.....................................................113
11.4. Certificate and Opinion as to Conditions Precedent...............................................113
11.5. Statements Required in Certificate or Opinion....................................................113
11.6. Rules by Trustee, Paying Agent, Registrar........................................................114
11.7. Legal Holidays...................................................................................114
11.8. Governing Law....................................................................................114
11.9. No Adverse Interpretation of Other Agreements....................................................114
11.10. No Recourse Against Others.......................................................................114
11.11. Successors.......................................................................................115
11.12. Duplicate Originals..............................................................................115
11.13. Severability.....................................................................................115
Exhibit A - Form of Initial Note
Exhibit B - Form of Exchange Note
Exhibit C - Form of Certificate for Transfers to Non-QIB Accredited Investors
Exhibit D - Form of Certificate for Transfers Pursuant to Regulation S
Exhibit E - Guarantee
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Note: This Table of Contents shall not, for any purpose, be deemed to be part of this Indenture
INDENTURE dated as of December 20, 2002 between SALT HOLDINGS CORPORATION, a Delaware corporation (the "ISSUER" or the "COMPANY"), and THE BANK OF NEW YORK, as trustee (the "TRUSTEE").
The Issuer has duly authorized the creation of an issue of 12 3/4% Senior Discount Notes Due 2012 and, when and if issued as provided in the Registration Rights Agreement in an Exchange Offer, 12 3/4% Senior Discount Notes Due 2012 registered under the Securities Act of 1933, as amended, and, to provide therefor, the Issuer has duly authorized the execution and delivery of this Indenture. All things necessary to make the Securities, when duly issued and executed by the Issuer and authenticated and delivered hereunder, the valid and binding obligations of the Issuer and to make this Indenture a valid and binding agreement of the Issuer have been done.
This Indenture is subject to, and shall be governed by, the mandatory provisions of the Trust Indenture Act of 1939 (the "TIA"), as amended, that are required to be a part of and to govern indentures qualified under the TIA.
Each party hereto agrees as follows for the benefit of the other party and for the equal and ratable benefit of the Holders of the Securities:
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
1.1. DEFINITIONS.
"ACCELERATION NOTICE" has the meaning set forth in Section 6.2.
"ACCREDITED INVESTOR" has the meaning set forth in Section 2.16(a).
"ACCRETED VALUE" means, as of any date (the "SPECIFIED DATE"), the amount provided below for each $1,000 principal amount at maturity of Securities:
(1) if the Specified Date occurs on one of the following dates (each, a "SEMI-ANNUAL ACCRUAL DATE"), the Accreted Value will equal the amount set forth below for such Semi-Annual Accrual Date:
SEMI-ANNUAL ACCRUAL DATE ACCRETED VALUE ------------------------ -------------- June 15, 2003................................................. $ 573.38 December 15, 2003............................................. $ 609.93 |
June 15, 2004................................................. $ 648.82 December 15, 2004............................................. $ 690.18 June 15, 2005................................................. $ 734.18 December 15, 2005............................................. $ 780.98 June 15, 2006................................................. $ 830.77 December 15, 2006............................................. $ 883.73 June 15, 2007................................................. $ 940.07 December 15, 2007............................................. $ 1,000.00 |
(2) if the Specified Date occurs before the first Semi-Annual Accrual Date, the Accreted Value will equal the sum of (A) the original issue price of a Security and (B) an amount equal to the product of (x) the Accreted Value for the first Semi-Annual Accrual Date less such original issue price multiplied by (y) a fraction, the numerator of which is the number of days from the Issue Date to the Specified Date, using a 360-day year of twelve 30-day months, and the denominator of which is the number of days elapsed from the Issue Date to the first Semi-Annual Accrual Date, using a 360-day year of twelve 30-day months;
(3) if the Specified Date occurs between two Semi-Annual Accrual
Dates, the Accreted Value will equal the sum of (A) the Accreted
Value for the Semi-Annual Accrual Date immediately preceding
such Specified Date and (B) an amount equal to the product of
(x) the Accreted Value for the immediately following Semi-Annual
Accrual Date less the Accreted Value for the immediately
preceding Semi-Annual Accrual Date multiplied by (y) a fraction,
the numerator of which is the number of days from the
immediately preceding Semi-Annual Accrual Date to the Specified
Date, using a 360-day year of twelve 30-day months, and the
denominator of which is 180; or
(4) if the Specified Date occurs after the last Semi-Annual Date, the Accreted Value will equal $1,000.
"ACQUIRED INDEBTEDNESS" means Indebtedness of a Person or any of its Subsidiaries (1) existing at the time such Person becomes a Restricted Subsidiary of the Company or at the time it merges or consolidates with the Company or any of its Restricted Subsidiaries or (2) assumed in connection with the acquisition of assets from such Person, in each case, not incurred by such Person in connection with, or in contemplation of, such Person becoming a Restricted Subsidiary of the Company or such acquisition, merger or consolidation.
"AFFILIATE" means, with respect to any specified Person, any other Person who directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such specified Person. The term "control" means the possession, directly
or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. "Controlling" and "controlled" have correlative meanings. For purposes of this Indenture, IMC Global Inc. and its Affiliates shall not be deemed to be an Affiliate of the Company so long as they beneficially own securities representing equal to or less than thirty-five percent of the voting power of the Company; PROVIDED that Apollo beneficially owns securities representing a greater percentage of the voting power of the Company than IMC Global Inc. and its Affiliates.
"AFFILIATE TRANSACTION" has the meaning set forth in Section 4.12(a).
"AGENT" means any Registrar, Paying Agent or co-Registrar.
"AGENT MEMBERS" has the meaning set forth in Section 2.15(a).
"APOLLO" means Apollo Management V, L.P. and its Affiliates.
"APPLICABLE PREMIUM" means, with respect to a Security, the greater of
(i) 1.0% of the Accreted Value of such Security and (ii) (a) the present value
of all remaining required principal payments due on such Security and all
premium payments relating thereto assuming a redemption date of December 15,
2007, computed using a discount rate equal to the Treasury Rate plus 50 basis
points, minus (b) the Accreted Value of such Security on the date of redemption.
"ASSET ACQUISITION" means:
(1) an Investment by the Company or any of its Restricted Subsidiaries in any other Person pursuant to which such Person shall become a Restricted Subsidiary of the Company or any Restricted Subsidiary of the Company, or shall be merged with or into or consolidated with the Company or any Restricted Subsidiary of the Company; or
(2) the acquisition by the Company or any of its Restricted Subsidiaries of the assets of any Person (other than a Restricted Subsidiary of the Company) which constitute all or substantially all of the assets of such Person or comprise any division or line of business of such Person or any other properties or assets of such Person other than in the ordinary course of business.
"ASSET SALE" means any direct or indirect sale, issuance, conveyance, transfer, lease (other than operating leases entered into in the ordinary course of business), assignment or other transfer for value by the Company or any of its Restricted Subsidiaries, including any Sale and Leaseback Transaction, to any Person other than the Company or a Wholly Owned
Restricted Subsidiary of the Company of (a) any Capital Stock of any Restricted Subsidiary of the Company (other than directors' qualifying shares); or (b) any other property or assets of the Company or any Restricted Subsidiary of the Company other than in the ordinary course of business; PROVIDED, HOWEVER, that Asset Sales shall not include:
(1) a transaction or series of related transactions for which the Company or its Restricted Subsidiaries receive aggregate consideration of less than $3.0 million;
(2) the sale or exchange of equipment in connection with the purchase or other acquisition of other equipment, in each case used in the business of the Company and its Restricted Subsidiaries;
(3) the sale, lease, conveyance, disposition or other transfer of all or substantially all of the assets of the Company as permitted under Section 5.1;
(4) disposals of equipment in connection with the reinvestment in or the replacement of its equipment and disposals of worn-out or obsolete equipment, in each case in the ordinary course of business of the Company or its Restricted Subsidiaries;
(5) the sale of accounts receivable pursuant to a Qualified Receivables Transaction;
(6) sales or grants of licenses to use the Company's or any Restricted Subsidiary's patents, trade secrets, know-how and technology to the extent that such license does not prohibit the licensor from using the patent, trade secret, know-how or technology;
(7) the disposition of any Capital Stock or other ownership interest in or assets or property of an Unrestricted Subsidiary;
(8) Capacity Arrangements;
(9) any Restricted Payment permitted under Section 4.3 or that constitutes a Permitted Investment; and
(10) one or more Sale and Leaseback Transactions for which the Company or any Restricted Subsidiary of the Company receives aggregate consideration of less than $15.0 million.
"BANKRUPTCY LAW" means Title 11, U.S. Code, or any similar federal, state or foreign law for the relief of debtors.
"BENEFICIAL OWNER" has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular "person" (as such term is used in Section 13(d)(3) of the Exchange Act), such "person" shall be deemed to have beneficial ownership of all securities that such "person" has the right to acquire, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition, regardless of when such right may be exercised.
"BOARD OF DIRECTORS" means, as to any Person, the board of directors or equivalent governing board of such Person or any duly authorized committee thereof.
"BOARD RESOLUTION" means, with respect to any Person, a copy of a resolution certified by the Secretary or an Assistant Secretary of such Person to have been duly adopted by the Board of Directors of such Person and to be in full force and effect on the date of such certification, and delivered to the Trustee.
"BUSINESS DAY" means any day other than a Saturday, Sunday or any other day on which banking institutions in the City of New York are required or authorized by law or other governmental action to be closed.
"CAPACITY ARRANGEMENTS" means any agreement or arrangement involving, relating to or otherwise facilitating, (a) requirement contracts, (b) tolling arrangements or (c) the reservation or presale of production capacity of the Company or its Restricted Subsidiaries by one or more third parties.
"CAPITALIZED LEASE OBLIGATION" means, at the time any determination thereof is to be made, the amount of the liability of a Person under a capital lease that would at that time be required to be capitalized on a balance sheet in accordance with GAAP, with the stated maturity being the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be prepaid by the lessee without payment of a penalty.
"CAPITAL STOCK" means:
(1) with respect to any person that is in the case of a corporation, any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents (however designated and whether or not voting) of corporate stock; and
(2) with respect to any other Person, any and all partnership, membership, limited liability company interests or other equity interests of such Person.
"CASH EQUIVALENTS" means:
(1) U.S. dollars, and in the case of any Foreign Restricted Subsidiaries of the Company, Euros and such local currencies held by them from time to time in the ordinary course of business;
(2) marketable direct obligations issued by, or unconditionally guaranteed by, the United States, Canada and the United Kingdom or issued by any agency of these countries and backed by the full faith and credit of the respective country, in each case maturing within one year from the date of acquisition thereof;
(3) marketable direct obligations issued by any State of the United States of America or any political subdivision of any such State or any public instrumentality thereof maturing within one year from the date of acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either Standard & Poor's Ratings Services ("S&P") or Moody's Investors Service, Inc. ("MOODY'S") or, if Moody's and S&P cease to exist, any other nationally recognized statistical rating organization designated by the Board of Directors of the Company;
(4) commercial paper maturing no more than one year from the date of creation thereof and, at the time of acquisition, having a rating of at least A- 1 from S&P or at least P-1 from Moody's or, if Moody's and S&P cease to exist, the equivalent from any other nationally recognized statistical rating organization designated by the Board of Directors of the Company;
(5) time deposits, certificates of deposit or bankers' acceptances maturing within one year from the date of acquisition thereof issued by any bank organized under the laws of the United States of America or any state thereof or the District of Columbia or any foreign jurisdiction having at the date of acquisition thereof combined capital and surplus of not less than $250.0 million;
(6) repurchase obligations with a term of not more than
thirty days for underlying securities of the types described in clause
(2) above entered into with any bank meeting the qualifications
specified in clause (5) above;
(7) investments in money market funds which invest substantially all their assets in securities of the types described in clauses (2) through (6) above; and
(8) overnight deposits and demand deposit accounts (in the respective local currencies) maintained in the ordinary course of business.
"CHANGE OF CONTROL" means the occurrence of one or more of the following events:
(1) any sale, lease, exchange, conveyance, disposition or other transfer (in one transaction or a series of related transactions) of all or substantially all of the Company's assets to any Person or group of related Persons for purposes of Section 13(d) of the Exchange Act (a "GROUP"), together with any Affiliates of such Person, other than to the Permitted Holders;
(2) any approval, adoption or initiating of a plan or proposal for the liquidation or dissolution of the Company;
(3) any Person or Group, together with any Affiliates thereof (other than the Permitted Holders), shall become the Beneficial Owner or owner of record (by way of merger, consolidation or other business combinations or by purchase in one transaction or a series of related transactions) of shares representing more than 50% of the aggregate ordinary voting power represented by the issued and outstanding Capital Stock of the Company;
(4) any Person or Group, together with any Affiliates or Related Persons thereof (other than the Permitted Holders), shall succeed in having a sufficient number of its nominees elected to the Board of Directors of the Company such that such nominees, when added to any existing director remaining on the Board of Directors of the Company after such election who was a nominee of or is an Affiliate or Related Person of such Person or Group, will constitute a majority of the Board of Directors of the Company; or
(5) the Company shall cease to own, directly or indirectly, a majority of the Capital Stock of Compass Minerals.
"CHANGE OF CONTROL DATE" has the meaning set forth in Section 4.16(c).
"CHANGE OF CONTROL OFFER" has the meaning set forth in Section 4.16(a).
"CHANGE OF CONTROL PAYMENT DATE" has the meaning set forth in Section 4.16(a).
"COMMISSION" means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act or, with respect to the Commission's duties under the TIA, if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the TIA, then the body performing such duties at such time.
"COMMODITY AGREEMENT" means any commodity futures contract, commodity option or other similar agreement or arrangement entered into by the Company or any Restricted Subsidiaries of the Company designed to protect the Company or any of its Restricted Subsidiaries against fluctuations in the price of the commodities at the time used in the ordinary course of business of the Company or any of its Restricted Subsidiaries.
"COMMON STOCK" of any Person means any and all shares, interests or other participations in, and other equivalents (however designated and whether voting or non-voting) of such Person's common stock, whether outstanding on the Issue Date or issued after the Issue Date, and includes, without limitation, all series and classes of such common stock.
"COMPANY" means the party named as such in this Indenture until a successor replaces it pursuant to this Indenture and thereafter shall mean such successor Person.
"COMPASS MINERALS" means Compass Minerals Group, Inc.
"CONSOLIDATED EBITDA" means, with respect to any Person, for any period, the sum (without duplication) of:
(1) Consolidated Net Income; and
(2) to the extent Consolidated Net Income has been reduced by the following,
(a) all income taxes of such Person and its Restricted Subsidiaries paid or accrued in accordance with GAAP for such period (other than income taxes attributable to extraordinary, unusual or nonrecurring gains or losses),
(b) Consolidated Interest Expense, and
(c) Consolidated Non-cash Charges less any non-cash items increasing Consolidated Net Income for such period,
all as determined on a consolidated basis for such Person and its Restricted Subsidiaries in accordance with GAAP as applicable.
"CONSOLIDATED FIXED CHARGE COVERAGE RATIO" means, with respect to any Person, the ratio of Consolidated EBITDA of such Person during the four full fiscal quarters for which financial statements are available (the "FOUR QUARTER PERIOD") ending on or prior to the date of the transaction giving rise to the need to calculate the Consolidated Fixed Charge Coverage Ratio (the "TRANSACTION DATE") to Consolidated Fixed Charges of such Person for the Four Quarter Period. In addition to and without limitation of the foregoing, for purposes of this definition, "Consolidated EBITDA" and "Consolidated Fixed Charges" shall be calculated
after giving effect on a pro forma basis (consistent with the provisions below) for the period of such calculation to:
(1) the incurrence or repayment of any Indebtedness of such Person or any of its Restricted Subsidiaries (and the application of the proceeds thereof) giving rise to the need to make such calculation and any incurrence or repayment of other Indebtedness (and the application of the proceeds thereof), other than the incurrence or repayment of Indebtedness in the ordinary course of business for working capital purposes pursuant to working capital facilities, occurring during the Four Quarter Period or at any time subsequent to the last day of the Four Quarter Period and on or prior to the Transaction Date, as if such incurrence or repayment, as the case may be (and the application of the proceeds thereof), occurred on the first day of the Four Quarter Period;
(2) any asset sales or other dispositions or Asset Acquisitions (including, without limitation, any Asset Acquisition giving rise to the need to make such calculation as a result of such Person or one of its Restricted Subsidiaries (including any Person who becomes a Restricted Subsidiary as a result of the Asset Acquisition) incurring, assuming or otherwise being liable for Acquired Indebtedness and also including any Consolidated EBITDA (including any pro forma expense and cost reductions, adjustments and other operating improvements or synergies both achieved by such Person during such period and to be achieved by such Person and with respect to the acquired assets, all as determined in good faith by a responsible financial or accounting officer of such Person attributable to the assets which are the subject of the Asset Acquisition or asset sale or other disposition during the Four Quarter Period) occurring during the Four Quarter Period or at any time subsequent to the last day of the Four Quarter Period and on or prior to the Transaction Date, as if such asset sale or other disposition or Asset Acquisition (including the incurrence, assumption or liability for any such Acquired Indebtedness) occurred on the first day of the Four Quarter Period. If such Person or any of its Restricted Subsidiaries directly or indirectly guarantees Indebtedness of a third Person, the preceding sentence shall give effect to the incurrence of such guaranteed Indebtedness as if such Person or any Restricted Subsidiary of such Person had directly incurred or otherwise assumed such guaranteed Indebtedness; and
(3) all adjustments used in connection with the calculation of pro forma EBITDA and Adjusted EBITDA as set forth in the offering circular dated November 15, 2001 relating to the issuance by Compass Minerals of the Existing Compass Minerals Notes to the extent such adjustments are not fully reflected in such Four Quarter Period and continue to be applicable.
Furthermore, in calculating "Consolidated Fixed Charges" for purposes of determining the denominator (but not the numerator) of this "Consolidated Fixed Charge Coverage Ratio,"
(1) interest on outstanding Indebtedness determined on a fluctuating basis as of the Transaction Date and which will continue to be so determined thereafter shall be deemed to have accrued at a fixed rate per annum equal to the rate of interest on such Indebtedness in effect on the Transaction Date; and
(2) notwithstanding clause (1) above, interest on Indebtedness determined on a fluctuating basis, to the extent such interest is covered by agreements relating to Interest Swap Obligations or Currency Agreements, shall be deemed to accrue at the rate per annum resulting after giving effect to the operation of such agreements.
"CONSOLIDATED FIXED CHARGES" means, with respect to any Person for any period, the sum, without duplication, of:
(1) Consolidated Interest Expense (excluding amortization or write-off of deferred financing costs and the payment of non-cash interest relating to the Securities or any other debt securities issued after the Issue Date, directly or indirectly, in exchange for shares of the Issuer's Series A Preferred Stock outstanding on the Issue Date), plus
(2) the product of (x) the amount of all dividend payments on any series of Preferred Stock of such Person or its Restricted Subsidiaries (other than dividends paid in Qualified Capital Stock) paid, accrued or scheduled to be paid or accrued during such period times (y) a fraction, the numerator of which is one and the denominator of which is one minus the then current effective consolidated federal, state and local income tax rate of such Person, expressed as a decimal.
"CONSOLIDATED INTEREST EXPENSE" means, with respect to any Person for any period, the sum of, without duplication:
(1) the aggregate of the interest expense of such Person and its Restricted Subsidiaries for such period determined on a consolidated basis in accordance with GAAP, including, without limitation, (a) any amortization of debt discount and amortization or write-off of deferred financing costs (including the amortization of costs relating to interest rate caps or other similar agreements), (b) the net costs under Interest Swap Obligations, (c) all capitalized interest and (d) the interest portion of any deferred payment obligation; and
(2) the interest component of Capitalized Lease Obligations paid, accrued and/or scheduled to be paid or accrued by such Person and its Restricted Subsidiaries
during such period as determined on a consolidated basis in accordance with GAAP, minus interest income for such period.
"CONSOLIDATED NET INCOME" means, with respect to any Person, for any period, the aggregate net income (or loss) of such Person and its Restricted Subsidiaries for such period on a consolidated basis, determined in accordance with GAAP; PROVIDED that there shall be excluded therefrom:
(1) after-tax gains or losses from Asset Sales (without regard to the $3.0 million limitation set forth in the definition thereof) or abandonments or reserves relating thereto;
(2) after-tax items which are extraordinary gains or losses or nonrecurring gains, losses, expenses or income (including, without limitation, expenses related to the Transactions, severance and transition expenses incurred as a direct result of the transition of the Company to an independent operating company in connection with the Transactions provided that with respect to any nonrecurring item or transition expense, the Company delivers to the Trustee an Officers' Certificate specifying and quantifying such item or expense and states that such item or expense is a general non-recurring item or specifically a severance or transition expense, as the case may be);
(3) the net income of any Person acquired in a "pooling of interests" transaction accrued before the date it becomes a Restricted Subsidiary of the referent Person or is merged or consolidated with the referent Person or any Restricted Subsidiary of the referent Person;
(4) the net income (but not loss) of any Restricted Subsidiary of the referent Person to the extent that the declaration of dividends or similar distributions by that Restricted Subsidiary of that income is prohibited by contract, operation of law or otherwise (other than as permitted by Section 4.13);
(5) the net income of any Person, other than a Restricted Subsidiary of the referent Person, except to the extent of cash dividends or distributions paid to the referent Person or to a Restricted Subsidiary of the referent Person by such Person;
(6) the establishment of accruals and reserves within twelve months after November 28, 2001 that are required to be so established in accordance with GAAP;
(7) income or loss attributable to discontinued operations (including, without limitation, operations disposed of during such period whether or not such operations were classified as discontinued);
(8) in the case of a successor to the referent Person by consolidation or merger or as a transferee of the referent Person's assets, any earnings of the successor corporation prior to such consolidation, merger or transfer of assets; and
(9) solely for the purposes of determining the amount available to make Restricted Payments pursuant to Section 4.3(c)(i), payments of non-cash interest (net of any related tax benefit included in determining Consolidated Net Income) on the Securities or any other debt securities of the Issuer issued after the Issue Date, directly or indirectly, in exchange for shares of the Issuer's Series A Preferred Stock outstanding on the Issue Date.
"CONSOLIDATED NON-CASH CHARGES" means, with respect to any Person, for any period, the aggregate depreciation, amortization and other non-cash expenses (solely for the purpose of determining compliance with Section 4.3, excluding any non-cash items for which a future cash payment will be required and for which an accrual or reserve is required by GAAP to be made) of such Person and its Restricted Subsidiaries reducing Consolidated Net Income of such Person and its Restricted Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP.
"CORPORATE TRUST OFFICE" means the office of the Trustee at which the
corporate trust business of the Trustee shall, at any particular time, be
principally administered, which office is, at the date of this Indenture,
located at 101 Barclay Street, Floor 8W, New York, New York 10286, Attention:
Corporate Trust Administration.
"COVENANT DEFEASANCE" has the meaning set forth in Section 8.2(c).
"CREDIT AGREEMENT" means the Credit Agreement dated as of November 28, 2001, as amended, among the Company, Compass Minerals, one or more other Subsidiaries of the Company, the lenders party thereto in their capacities as lenders thereunder and The Chase Manhattan Bank, as administrative agent, together with the related documents thereto (including, without limitation, any guarantee agreements and security documents), in each case as such agreements may be amended (including any amendment and restatement thereof), supplemented or otherwise modified from time to time, including any agreement extending the maturity of, refinancing, replacing or otherwise restructuring (including increasing the amount of available borrowings thereunder or adding Restricted Subsidiaries of the Company as additional borrowers or guarantors thereunder) all or any portion of the Indebtedness under such agreement or any successor or replacement agreement and whether by the same or any other agent, lender or group of lenders.
"CURRENCY AGREEMENT" means any foreign exchange contract, currency swap agreement or other similar agreement or arrangement designed to protect the Company or any Restricted Subsidiary of the Company against fluctuations in currency values.
"CUSTODIAN" means any receiver, trustee, assignee, liquidator, sequestrator or similar official under any Bankruptcy Law.
"DEFAULT" means an event that is, or with the passage of time or the giving of notice or both would be, an Event of Default.
"DEPOSITORY" shall mean The Depository Trust Company, New York, New York, or a successor thereto registered under the Exchange Act or other applicable statute or regulation.
"DISQUALIFIED CAPITAL STOCK" means that portion of any Capital Stock which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable at the option of the holder thereof), or upon the happening of any event (other than an event which would constitute a Change of Control or an Asset Sale), matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the sole option of the holder thereof (except, in each case, upon the occurrence of a Change of Control or an Asset Sale), on or prior to the final maturity date of the Securities; PROVIDED that any class of Capital Stock of such Person that by its terms authorizes such Person to satisfy its obligations thereunder by delivery of Qualified Capital Stock shall not be deemed Disqualified Capital Stock.
"DOMESTIC RESTRICTED SUBSIDIARY" means any Restricted Subsidiary of the Company incorporated or otherwise organized or existing under the laws of the United States, any State thereof or the District of Columbia.
"EQUITY OFFERING" means a public or private sale of Qualified Capital Stock (other than on Form S-8) of the Issuer or any direct or indirect parent of the Issuer; PROVIDED that with respect to any Equity Offering by such direct or indirect parent of the Issuer, such Person contributes the net cash proceeds from such Equity Offering to the Issuer.
"EUROS" means the single currency of the participating member states as described in any legislative measures of the European Union for the introduction of, change over to, or operation of, a single or unified European currency.
"EVENT OF DEFAULT" has the meaning set forth in Section 6.1.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, or any successor statute or statutes thereto.
"EXCHANGE NOTES" means the 12 3/4% Senior Discount Notes Due 2012 (the terms of which are identical to the Initial Notes except that the Exchange Notes shall be registered under the Securities Act, and shall not contain the restrictive legend on the face of the form of
the Initial Notes) to be issued in exchange for the Initial Notes pursuant to the registered Exchange Offer.
"EXCHANGE OFFER" means the registration by the Company under the Securities Act pursuant to a registration statement of the offer by the Company to each Holder of the Initial Notes to exchange all the Initial Notes held by such Holder for the Exchange Notes in an aggregate Accreted Value and aggregate principal amount at maturity equal to the aggregate Accreted Value and aggregate principal amount at maturity of the Initial Notes held by such Holder, all in accordance with the terms and conditions of the Registration Rights Agreement.
"EXCLUDED CONTRIBUTION" means Net Cash Proceeds received by the
Company from (a) contributions to its common equity capital and (b) the sale of
Qualified Capital Stock of the Company, in each case designated as Excluded
Contributions pursuant to an Officers' Certificate executed on the date such
capital contributions are made or the date such Qualified Capital Stock is sold,
as the case may be, which are excluded from the calculation set forth in clause
(c) of Section 4.3.
"EXISTING COMPASS MINERALS INDENTURE" means the indenture dated as of November 28, 2001 among Compass Minerals, the guarantors named therein and The Bank of New York, as trustee.
"EXISTING COMPASS MINERALS NOTES" means the 10% Senior Subordinated Notes due 2011 of Compass Minerals issued under the Existing Compass Minerals Indenture.
"FAIR MARKET VALUE" means with respect to any asset or property, the price which could be negotiated in an arm's-length, free market transaction, for cash, between a willing seller and a willing and able buyer, neither of whom is under undue pressure or compulsion to complete the transaction. Fair market value shall be determined conclusively by the Board of Directors of the Company acting reasonably and in good faith and shall be evidenced by a Board Resolution of the Board of Directors of the Company delivered to the Trustee.
"FOREIGN RESTRICTED SUBSIDIARY" means any Restricted Subsidiary of the Company incorporated in any jurisdiction outside of the United States.
"GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession of the United States, which are in effect as of November 28, 2001.
"GLOBAL SECURITY" has the meaning set forth in Section 2.1.
"GUARANTEE" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness of any other Person,
including any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness of such other Person (whether arising by virtue of
partnership arrangements, or by agreements to keep-well, to purchase assets,
goods, securities or services (unless such purchase arrangements are on
arm's-length terms and are entered into in the ordinary course of business), to
take-or-pay, or to maintain financial statement conditions or otherwise), or
(ii) entered into for purposes of assuring in any other manner the obligee of
such Indebtedness of the payment thereof or to protect such obligee against loss
in respect thereof (in whole or in part); provided that the term "guarantee"
shall not include endorsements for collection or deposit in the ordinary course
of business. The term "guarantee" used as a verb has a corresponding meaning.
"GUARANTEE" means the guarantee by each Guarantor of the Issuer's obligations under this Indenture.
"GUARANTOR" means each of the Company's Restricted Subsidiaries that in the future executes a supplemental indenture in which such Restricted Subsidiary agrees to be bound by the terms of this Indenture as a Guarantor; PROVIDED that any Person constituting a Guarantor as described above shall cease to constitute a Guarantor when its Guarantee is released in accordance with the terms of this Indenture.
"HOLDER" or "SECURITYHOLDER" means the registered holder of any Security.
"INDEBTEDNESS" means with respect to any Person, any indebtedness of such Person, without duplication, in respect of:
(1) all obligations of such Person for borrowed money;
(2) all Obligations of such Person evidenced by bonds, debentures, notes or other similar instruments;
(3) all Capitalized Lease Obligations of such Person;
(4) the deferred and unpaid purchase price of property, all conditional sale obligations and all obligations under any title retention agreement (but excluding trade accounts payable and other accrued liabilities arising in the ordinary course of business);
(5) all Obligations for the reimbursement of any obligor on any letter of credit, banker's acceptance or similar credit transaction;
(6) guarantees and other contingent Obligations in respect of Indebtedness referred to in clauses (1) through (5) above and clause (8) below;
(7) all Obligations of any other Person of the type referred to in clauses (1) through (6) which are secured by any Lien on any property or asset of such Person, the amount of such Obligations being deemed to be the lesser of the fair market value of such property or asset or the amount of the Obligation so secured;
(8) all Obligations under Currency Agreements or Commodity Agreements and Interest Swap Obligations of such Person; and
(9) all Disqualified Capital Stock issued by such Person with the amount of Indebtedness represented by such Disqualified Capital Stock being equal to the greater of its voluntary or involuntary liquidation preference and its maximum fixed repurchase price, but excluding accrued dividends, if any.
For purposes hereof, the "maximum fixed repurchase price" of any Disqualified Capital Stock which does not have a fixed repurchase price shall be calculated in accordance with the terms of such Disqualified Capital Stock as if such Disqualified Capital Stock were purchased on any date on which Indebtedness shall be required to be determined pursuant to this Indenture, and if such price is based upon, or measured by, the fair market value of such Disqualified Capital Stock, such fair market value shall be determined reasonably and in good faith by the Board of Directors of the issuer of such Disqualified Capital Stock. For purposes of Section 4.4, in determining the principal amount of any Indebtedness to be incurred by the Company or any Restricted Subsidiary or which is outstanding at any date, the principal amount of any Indebtedness which provides that an amount less than the principal amount thereof shall be due upon any declaration of acceleration thereof shall be the accreted value thereof at the date of determination.
"INDENTURE" means this Indenture, as amended or supplemented from time to time in accordance with the terms hereof.
"INDEPENDENT FINANCIAL ADVISOR" means a firm:
(1) which does not have a direct or indirect common equity interest in the Company; and
(2) which, in the judgment of the Board of Directors of the Company, is otherwise independent and qualified to perform the task for which it is to be engaged.
"INITIAL NOTES" means the 12 3/4% Senior Discount Notes Due 2012 of the Issuer issued on the Issue Date and authenticated and delivered under this Indenture pursuant to
Section 2.2 and any other Securities (other than Exchange Notes) issued after
the Issue Date in accordance with clause (iii) of the fourth paragraph of
Section 2.2.
"INSTITUTIONAL ACCREDITED INVESTOR" has the meaning set forth in
Section 2.16(a).
"INTEREST PAYMENT DATE" means the stated maturity of an installment of interest on the Securities.
"INTEREST SWAP OBLIGATIONS" means the obligations of any Person pursuant to any arrangement with any other Person, whereby, directly or indirectly, such Person is entitled to receive from time to time periodic payments calculated by applying either a floating or a fixed rate of interest on a stated notional amount in exchange for periodic payments made by such other Person calculated by applying a fixed or a floating rate of interest on the same notional amount and shall include, without limitation, interest rate swaps, caps, floors, collars and similar agreements.
"INVESTMENT" means, with respect to any Person, any direct or indirect loan or other extension of credit (including, without limitation, a guarantee) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition by such Person of any Capital Stock, bonds, notes, debentures or other securities or evidences of Indebtedness issued by, any Person. "Investment" shall exclude extensions of trade credit by, prepayment of expenses by, and receivables owing to, the Company and its Restricted Subsidiaries on commercially reasonable terms in accordance with normal trade practices of the Company or such Restricted Subsidiary, as the case may be. For purposes of Section 4.3:
(1) "Investment" shall include and be valued at the fair market value of the net assets of any Restricted Subsidiary of the Company at the time that such Restricted Subsidiary is designated an Unrestricted Subsidiary of the Company and shall exclude the fair market value of the net assets of any Unrestricted Subsidiary of the Company at the time that such Unrestricted Subsidiary is designated a Restricted Subsidiary of the Company; and
(2) the amount of any Investment shall be the original cost of such Investment plus the cost of all additional Investments by the Company or any of its Restricted Subsidiaries, without any adjustments for increases or decreases in value, or write-ups, write-downs or write-offs with respect to such Investment, reduced by the payment of dividends or distributions in connection with such Investment or any other amounts received in respect of such Investment; PROVIDED that no such payment of dividends or distributions or receipt of any such other amounts shall reduce the amount of any Investment if such payment of dividends or distributions or receipt of any such amounts would be included in Consolidated Net Income.
If the Company or any Restricted Subsidiary of the Company sells or otherwise disposes of any Common Stock of any Person that prior to such sale or disposition was a direct or indirect Restricted Subsidiary of the Company such that after giving effect to any such sale or disposition, such Person ceases to be a Restricted Subsidiary of the Company, the Company shall be deemed to have made an Investment on the date of any such sale or disposition equal to the fair market value of the Common Stock of such Person not sold or disposed of.
"ISSUE DATE" means December 20, 2002, the date of original issuance of the Initial Notes.
"ISSUER" means the parties named as such in the first paragraph of this Indenture.
"LEGAL DEFEASANCE" has the meaning set forth in Section 8.2(b).
"LIEN" means any lien, mortgage, deed of trust, pledge, security interest, charge or encumbrance of any kind (including any conditional sale or other title retention agreement, any lease in the nature thereof and any agreement to give any security interest).
"MANAGEMENT AGREEMENT" means the Management Agreement dated as of November 28, 2001 between Compass Minerals and Apollo.
"MATURITY DATE" means December 15, 2012.
"MERGER AGREEMENT" means the Agreement and Plan of Merger, dated as of October 13, 2001, among IMC Global, Inc., the Company, YBR Holdings LLC and YBR Acquisition Corp.
"NET CASH PROCEEDS" means (a) with respect to any Asset Sale, the proceeds in the form of cash or Cash Equivalents including payments in respect of deferred payment obligations when received in the form of cash or Cash Equivalents (other than the portion of any such deferred payment constituting interest) received by the Company or any of its Restricted Subsidiaries from such Asset Sale net of:
(1) reasonable out-of-pocket expenses and fees relating to such Asset Sale (including, without limitation, legal, accounting and investment banking fees and sales commissions);
(2) taxes paid or payable after taking into account any reduction in consolidated tax liability due to available tax credits or deductions and any tax sharing arrangements;
(3) any repayment of Indebtedness that is required to be repaid in connection with such Asset Sale;
(4) appropriate amounts to be provided by the Company or any Restricted Subsidiary, as the case may be, as a reserve, in accordance with GAAP, against any liabilities associated with such Asset Sale and retained by the Company or such Restricted Subsidiary, as the case may be, after such Asset Sale, including, without limitation, pension and other post-employment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations associated with such Asset Sale; and
(5) all distributions and other payments required to be made to minority interest holders in Restricted Subsidiaries or joint ventures as a result of such Asset Sale;
and (b) with respect to any issuance or sale of Capital Stock, means the cash proceeds of such issuance or sale, net of attorneys' fees, accountants' fees, underwriters' or placement agents' or initial purchasers' fees, discounts or commissions and brokerage, consultant and other fees and expenses actually incurred in connection with such issuance or sale and net of taxes paid or payable as a result thereof.
"NET PROCEEDS OFFER" has the meaning set forth in Section 4.17.
"NET PROCEEDS OFFER AMOUNT" has the meaning set forth in Section 4.17.
"NET PROCEEDS OFFER PAYMENT DATE" has the meaning set forth in Section 4.17.
"NET PROCEEDS OFFER TRIGGER DATE" has the meaning set forth in Section 4.17.
"NON-U.S. PERSON" means a Person who is not a "U.S. Person" (as defined in Regulation S).
"OBLIGATIONS" means all obligations for principal, premium, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness.
"OFFERING CIRCULAR" means the Offering Circular dated December 13, 2002 relating to the offering of the Initial Notes.
"OFFICER" means, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, any Vice President, the Chief Financial Officer, the Controller, the Treasurer or the Secretary of such Person.
"OFFICERS' CERTIFICATE" means a certificate signed by two Officers of the Issuer or of any Guarantor, as applicable, except that an authentication order pursuant to Section 2.2 may be signed by only one such Officer.
"OFFSHORE GLOBAL SECURITIES" has the meaning provided in Section 2.1.
"OFFSHORE PHYSICAL SECURITIES" has the meaning provided in Section 2.1.
"OPINION OF COUNSEL" means a written opinion from legal counsel, which opinion and counsel are reasonably acceptable to the Trustee.
"PAYING AGENT" has the meaning set forth in Section 2.3.
"PERMANENT OFFSHORE GLOBAL SECURITIES" has the meaning provided in
Section 2.1.
"PERMITTED BUSINESS" means the business of the Company and its Restricted Subsidiaries as existing on the Issue Date and any other businesses that are the same, similar or reasonably related, ancillary or complementary thereto and reasonable extensions thereof.
"PERMITTED HOLDERS" means Apollo and other Related Parties.
"PERMITTED INDEBTEDNESS" means, without duplication, each of the following:
(1) Indebtedness under (y) the Securities issued on the Issue Date and any Guarantees thereof and (z) additional Securities or other debt securities (i) issued, directly or indirectly, in exchange for shares of the Issuer's Series A Preferred Stock outstanding on the Issue Date and (ii) with a principal amount or accreted value (in the case of the Securities or debt securities issued at a discount) not in excess of the aggregate liquidation preference and accumulated but unpaid dividends on such Series A Preferred Stock;
(2) Indebtedness incurred pursuant to the Credit Agreement by the Company and its Restricted Subsidiaries, in an aggregate principal amount at any time outstanding not to exceed $360.0 million less the amount of all repayments of term debt and permanent commitment reductions under the Credit Agreement with Net Cash Proceeds of Asset Sales applied thereto as required by Section 4.17(iii); PROVIDED that the aggregate principal amount of Indebtedness permitted to be incurred from time to time under this clause (2) shall be reduced dollar for dollar by the amount of any Indebtedness then outstanding under clause (12) below and PROVIDED FURTHER that any Indebtedness outstanding pursuant to the Credit Agreement as of the Issue Date shall be deemed to be incurred under this clause (2); and PROVIDED FURTHER that the amount of Indebtedness permitted to be incurred pursuant to the Credit Agreement in accordance with this clause (2) shall be in addition to any Indebtedness to be incurred pursuant to the Credit Agreement in reliance on and in accordance with clauses (10) and (16) below;
(3) other Indebtedness (including Indebtedness under the Issuer's 10.23% Seller Notes due November 28, 2015 in an aggregate principal amount not to exceed the sum of $8.4 million plus accrued and unpaid interest thereon in the form of additional Indebtedness) of the Company and its Restricted Subsidiaries outstanding on the Issue Date (other than pursuant to the Credit Agreement) reduced by the amount of any scheduled amortization payments or mandatory prepayments when actually paid or permanent reductions thereon;
(4) Interest Swap Obligations of the Company covering Indebtedness of the Company or any of its Restricted Subsidiaries and Interest Swap Obligations of any Restricted Subsidiary of the Company covering Indebtedness of the Company or such Restricted Subsidiary; PROVIDED, HOWEVER, that such Interest Swap Obligations are entered into to protect the Company and its Restricted Subsidiaries from fluctuations in interest rates on Indebtedness incurred in accordance with this Indenture to the extent the notional principal amount of each such Interest Swap Obligation does not exceed the principal amount of the Indebtedness to which such Interest Swap Obligation relates;
(5) Indebtedness under Currency Agreements; provided that in the case of Currency Agreements which relate to Indebtedness, such Currency Agreements do not increase the Indebtedness of the Company and its Restricted Subsidiaries outstanding other than as a result of fluctuations in foreign currency exchange rates or by reason of fees, indemnities and compensation payable thereunder;
(6) Indebtedness of a Restricted Subsidiary of the Company to the Company or to a Restricted Subsidiary of the Company for so long as such Indebtedness is held by the Company, a Restricted Subsidiary of the Company or the lenders or collateral agent under the Credit Agreement, in each case subject to no Lien held by a Person other than the Company, a Restricted Subsidiary of the Company or the lenders or collateral agent under the Credit Agreement; provided that if as of any date any Person other than the Company, a Restricted Subsidiary of the Company or the lenders or collateral agent under the Credit Agreement owns or holds any such Indebtedness or holds a Lien in respect of such Indebtedness, such date shall be deemed the incurrence of Indebtedness not constituting Permitted Indebtedness under this clause (6) by the issuer of such Indebtedness;
(7) Indebtedness of the Company to a Restricted Subsidiary of the Company for so long as such Indebtedness is held by a Restricted Subsidiary of the Company or the lenders or the collateral agent under the Credit Agreement and is subject to no Lien other than a Lien in favor of the lenders or collateral agent under the Credit Agreement; provided that (a) any Indebtedness of the Company to any
Restricted Subsidiary of the Company is unsecured and subordinated, pursuant to a written agreement, to the Company's obligations under this Indenture and the Securities and (b) if as of any date any Person other than a Restricted Subsidiary of the Company owns or holds any such Indebtedness or any Person holds a Lien other than a Lien in favor of the lenders or collateral agent under the Credit Agreement in respect of such Indebtedness, such date shall be deemed the incurrence of Indebtedness not constituting Permitted Indebtedness under this clause (7) by the Company;
(8) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; PROVIDED, HOWEVER, that such Indebtedness is extinguished within two Business Days of incurrence;
(9) Indebtedness of the Company or any of its Restricted Subsidiaries in respect of performance bonds, bankers' acceptances, workers' compensation claims, surety or appeal bonds, payment obligations in connection with self-insurance or similar obligations, and bank overdrafts (and letters of credit in respect thereof);
(10) Indebtedness represented by Capitalized Lease Obligations, Purchase Money Indebtedness or Acquired Indebtedness of the Company and its Restricted Subsidiaries not to exceed $20.0 million in the aggregate at any one time outstanding; provided that all or a portion of the $20.0 million permitted to be incurred under this clause (10) may, at the option of the Company, be incurred under the Credit Agreement or pursuant to clause (16) below (in addition to the amount set forth therein) instead of pursuant to Capitalized Lease Obligations, Purchase Money Indebtedness or Acquired Indebtedness;
(11) Indebtedness arising from agreements of the Company or a Restricted Subsidiary of the Company providing for indemnification, adjustment of purchase price or similar obligations, in each case, incurred or assumed in connection with the disposition of any business, assets or a Subsidiary, other than guarantees by the Company or a Restricted Subsidiary of the Company of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition; PROVIDED, HOWEVER, that:
(a) such Indebtedness is not reflected on the balance sheet of the Company or any Restricted Subsidiary of the Company (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected on such balance sheet for purposes of this clause (a)); and
(b) the maximum assumable liability in respect of all such Indebtedness shall at no time exceed the gross proceeds including the fair market value of non-cash proceeds (the fair market value of such non-cash proceeds being measured at the time they are received as determined in good faith by the Board of Directors of the Company or the Restricted Subsidiary, as applicable, and without giving effect to any subsequent changes in value) actually received by the Company and its Restricted Subsidiaries in connection with such disposition;
(12) the incurrence by a Receivables Subsidiary of Indebtedness in a Qualified Receivables Transaction that is without recourse (other than pursuant to representations, warranties, covenants and indemnities entered into in the ordinary course of business in connection with a Qualified Receivables Transaction) to the Company or to any Restricted Subsidiary of the Company or their assets (other than such Receivables Subsidiary and its assets), and is not guaranteed by any such Person, PROVIDED that any outstanding Indebtedness incurred under this clause (12) shall reduce (for so long as, and to the extent that, the Indebtedness referred to in this clause (12) remains outstanding) the aggregate amount permitted to be incurred under clause (2) above to the extent set forth therein;
(13) Indebtedness under Commodity Agreements;
(14) guarantees by the Company or any Restricted Subsidiary
of the Company of each other's Indebtedness, including agreements of
the Company to keep-well or maintain financial statement conditions of
any Restricted Subsidiary of the Company, PROVIDED that such
Indebtedness is permitted to be incurred under this Indenture and, if
a Restricted Subsidiary guarantees the Company's Indebtedness, such
Restricted Subsidiary has complied, to the extent applicable, with
Section 4.14;
(15) Refinancing Indebtedness;
(16) additional Indebtedness of the Company and its Restricted Subsidiaries in an aggregate principal amount not to exceed $50.0 million at any one time outstanding (which amount may, but need not, be incurred in whole or in part under the Credit Agreement) plus up to an additional amount as contemplated by, and to the extent not incurred under, clause (10) above; and
(17) Indebtedness of the Company or any of its Restricted Subsidiaries consisting of (x) the financing of insurance premiums in the ordinary course of business or (y) take-or-pay obligations contained in supply arrangements entered into in the ordinary course of business and on a basis consistent with past practice.
For purposes of determining compliance with Section 4.4,
(a) in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (1) through (17) above or is entitled to be incurred pursuant to the Consolidated Fixed Charge Coverage Ratio provisions of such Section, the Company shall, in its sole discretion, classify (or later reclassify) such item of Indebtedness in any manner that complies with Section 4.4,
(b) accrual of interest, accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms or in the form of Capital Stock, the payment of dividends on Disqualified Capital Stock in the form of additional shares of the same class of Disqualified Capital Stock and increases in the amount of Indebtedness outstanding solely as a result of fluctuations in the exchange rate of currencies will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Capital Stock for purposes of Section 4.4,
(c) guarantees of, or obligations in respect of letters of credit relating to, Indebtedness which is otherwise included in the determination of a particular amount of Indebtedness shall not be included,
(d) if obligations in respect of letters of credit are incurred pursuant to the Credit Agreement and are being treated as incurred pursuant to clause (2) above and the letters of credit relate to other Indebtedness, then such other Indebtedness shall not be included, and
(e) if such Indebtedness is denominated in a currency other than U.S. dollars, the U.S. dollar equivalent principal amount thereof will be calculated based on the relevant currency exchange rates in effect on the date such Indebtedness was incurred.
"PERMITTED INVESTMENTS" means:
(1) Investments by the Company or any Restricted Subsidiary
of the Company in any Person that is or will become immediately after
such Investment a Restricted Subsidiary of the Company or that will
merge or consolidate into the Company or a Restricted Subsidiary of
the Company; provided that such Restricted Subsidiary of the Company
is not restricted from making dividends or similar distributions by
contract, operation of law or otherwise other than as permitted by
Section 4.13;
(2) Investments in the Company by any Restricted Subsidiary of the Company; PROVIDED that any Indebtedness evidencing such Investment is unsecured and subordinated, pursuant to a written agreement, to the Company's obligations under the Securities and this Indenture;
(3) Investments in cash and Cash Equivalents;
(4) loans and advances to employees and officers of the Company and its Restricted Subsidiaries made (a) in the ordinary course of business for bona fide business purposes not to exceed $5.0 million in the aggregate at any one time outstanding or (b) to fund purchases of Capital Stock of the Company or Compass Minerals under any stock option plan or similar employment arrangements so long as no cash is actually advanced by the Company or any of its Restricted Subsidiaries to such employees and officers to fund such purchases;
(5) Currency Agreements, Commodity Agreements and Interest Swap Obligations entered into in the ordinary course of the Company's or its Restricted Subsidiaries' businesses and otherwise in compliance with this Indenture;
(6) Investments in securities of trade creditors or customers received (a) pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of such trade creditors or customers or (b) in settlement of delinquent obligations of, and other disputes with, customers, suppliers and others, in each case arising in the ordinary course of business or otherwise in satisfaction of a judgment;
(7) Investments (a) made by the Company or its Restricted
Subsidiaries consisting of consideration received in connection with
an Asset Sale made in compliance with Section 4.17, (b) consisting of
consideration received by the Company or any of its Restricted
Subsidiaries in connection with a transaction that would be an Asset
Sale if it consisted of aggregate consideration received by the
Company or any of its Restricted Subsidiaries of $3.0 million or more
or (c) acquired in exchange for, or out of the proceeds of, a
substantially concurrent offering of Capital Stock (other than
Disqualified Capital Stock) of the Company (which proceeds of any such
offering of Capital Stock of the Company shall not have been, and
shall not be, included in clause (3)(b) of the first paragraph of
Section 4.3);
(8) Investments of a Person or any of its Subsidiaries existing at the time such Person becomes a Restricted Subsidiary of the Company or at the time such Person merges or consolidates with the Company or any of its Restricted Subsidiaries, in either case in compliance with this Indenture; provided that such Investments were not made by such Person in connection with, or in anticipation or contemplation of,
such Person becoming a Restricted Subsidiary of the Company or such merger or consolidation;
(9) Investments in the Securities or the Existing Compass Minerals Notes;
(10) Investments in existence on the Issue Date;
(11) guarantees of Indebtedness to the extent permitted pursuant to Sections 4.4 and 4.14; and
(12) additional Investments (including Investments in joint ventures and Unrestricted Subsidiaries) not to exceed $35.0 million at any one time outstanding.
"PERMITTED LIENS" means the following types of Liens:
(1) Liens for taxes, assessments or governmental charges or claims that are either (a) not delinquent or (b) contested in good faith by appropriate proceedings and as to which the Company or its Restricted Subsidiaries shall have set aside on its books such reserves, if any, as shall be required pursuant to (x) GAAP in the case of a Domestic Restricted Subsidiary, and (y) generally accepted accounting principles in effect from time to time in the applicable jurisdiction, in the case of a Foreign Restricted Subsidiary;
(2) statutory and common law Liens of landlords and Liens of carriers, warehousemen, mechanics, suppliers, materialmen, repairmen, customs and revenue authorities and other Liens imposed by law incurred in the ordinary course of business for sums not yet delinquent or being contested in good faith, if such reserve or other appropriate provision, if any, as shall be required by GAAP shall have been made in respect thereof;
(3) Liens incurred or deposits made in the ordinary course of business in connection with workers' compensation, unemployment insurance and other types of social security, including any Lien securing letters of credit issued in the ordinary course of business consistent with past practice in connection therewith, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, performance and return-of-money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money);
(4) judgment Liens not giving rise to an Event of Default so long as such Lien is adequately bonded and any appropriate legal proceedings which may have been duly initiated for the review of such judgment shall not have been finally terminated or the period within which such proceedings may be initiated shall not have expired;
(5) licenses, sublicenses, leases, subleases, easements, rights-of-way, zoning restrictions and other similar charges or encumbrances in respect of property not interfering in any material respect with the ordinary conduct of the business of the Company and its Restricted Subsidiaries, taken as a whole;
(6) any interest or title of a lessor under any Capitalized Lease Obligation or operating lease; provided that such Liens do not extend to any property or asset which is not leased property subject to such Capitalized Lease Obligation or operating lease;
(7) Liens securing Indebtedness permitted pursuant to clause (10) of the definition of "Permitted Indebtedness"; PROVIDED, HOWEVER, that in the case of Purchase Money Indebtedness (a) the Indebtedness shall not exceed the cost of such property or assets and shall not be secured by any property or assets of the Company or any Restricted Subsidiary of the Company other than the property and assets so acquired or constructed and any improvements thereon and (b) the Lien securing such Indebtedness shall be created within 180 days of such acquisition or construction or, in the case of a refinancing of any Purchase Money Indebtedness, within 180 days of such refinancing;
(8) Liens upon specific items of inventory or other goods and proceeds of any Person securing such Person's obligations in respect of bankers' acceptances or similar credit transactions issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods;
(9) Liens securing reimbursement obligations with respect to commercial letters of credit which encumber documents and other property relating to such letters of credit and products and proceeds thereof;
(10) Liens encumbering deposits made to secure obligations arising from statutory, regulatory, contractual, or warranty requirements of the Company or any of its Restricted Subsidiaries, including rights of offset and setoff;
(11) Liens securing Interest Swap Obligations so long as the Interest Swap Obligations relate to Indebtedness that is otherwise permitted under this Indenture;
(12) Liens in the ordinary course of business not exceeding $10.0 million at any one time outstanding that (a) are not incurred in connection with borrowing money and (b) do not materially detract from the value of the property or materially impair its use;
(13) Liens by reason of judgment or decree not otherwise resulting in an Event of Default;
(14) Liens securing Indebtedness permitted to be incurred pursuant to clause (16) of the definition of "Permitted Indebtedness";
(15) Liens securing Indebtedness under Currency Agreements and Commodity Agreements permitted under this Indenture;
(16) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with importation of goods;
(17) Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of goods entered into by the Company or any of its Restricted Subsidiaries in the ordinary course of business;
(18) Liens securing Acquired Indebtedness incurred in
accordance with Section 4.4 (including, without limitation, clause
(10) of the definition of "Permitted Indebtedness"); PROVIDED that:
(a) such Liens secured such Acquired Indebtedness at the time of and prior to the incurrence of such Acquired Indebtedness by the Company or a Restricted Subsidiary of the Company and were not granted in connection with, or in anticipation of, the incurrence of such Acquired Indebtedness by the Company or a Restricted Subsidiary of the Company; and
(b) such Liens do not extend to or cover any property or assets of the Company or of any of its Restricted Subsidiaries other than the property or assets that secured the Acquired Indebtedness prior to the time such Indebtedness became Acquired Indebtedness of the Company or a Restricted Subsidiary of the Company and are no more favorable to the lienholders than those securing the Acquired Indebtedness prior to the incurrence of such Acquired Indebtedness by the Company or a Restricted Subsidiary of the Company; and
(19) Liens securing insurance premium financing arrangements, PROVIDED that such Lien is limited to the applicable insurance contracts.
"PERSON" means an individual, partnership, corporation, limited liability company, unincorporated organization, trust or joint venture, or a governmental agency or political subdivision thereof or any other entity.
"PHYSICAL SECURITIES" has the meaning provided in Section 2.1. Physical Securities are sometimes referred to herein as certificated Securities.
"PREFERRED STOCK" of any Person means any Capital Stock of such Person that has preferential rights to any other Capital Stock of such Person with respect to dividends or redemptions or upon liquidation.
"PRIVATE PLACEMENT LEGEND" means the legend initially set forth on the Initial Notes in the form set forth in the first paragraph of Section 2.14.
"PURCHASE MONEY INDEBTEDNESS" means Indebtedness of the Company and its Restricted Subsidiaries incurred in the normal course of business for the purpose of financing all or any part of the purchase price, or the cost of installation, construction or improvement, of property or equipment or other related assets and any Refinancing thereof.
"QIB" means any "qualified institutional buyer" (as defined under the Securities Act).
"QUALIFIED CAPITAL STOCK" means any Capital Stock that is not Disqualified Capital Stock.
"QUALIFIED RECEIVABLES TRANSACTION" means any transaction or series of transactions that may be entered into by the Company or any of its Restricted Subsidiaries pursuant to which the Company or any of its Restricted Subsidiaries may sell, convey or otherwise transfer to (1) a Receivables Subsidiary (in the case of a transfer by the Company or any of its Restricted Subsidiaries) and (2) any other Person (in the case of a transfer by a Receivables Subsidiary), or may grant a security interest in, any accounts receivable (whether now existing or arising in the future) of the Company or any of its Restricted Subsidiaries, and any assets related thereto including, without limitation, all collateral securing such accounts receivable, all contracts and all guarantees or other obligations in respect of such accounts receivable, proceeds of such accounts receivable and other assets (including contract rights) which are customarily transferred or in respect of which security interests are customarily granted in connection with asset securitization transactions involving accounts receivable.
"RECAPITALIZATION" means the recapitalization of the Company and Compass Minerals consummated on November 28, 2001.
"RECEIVABLES SUBSIDIARY" means a Wholly Owned Restricted Subsidiary of the Company that engages in no activities other than in connection with the financing of accounts receivable and that is designated by the Board of Directors of the Company (as provided below) as a Receivables Subsidiary:
(1) no portion of the Indebtedness or any other Obligations (contingent or otherwise) of which (a) is guaranteed by the Company or any Restricted Subsidiary of the Company (excluding guarantees of Obligations (other than the principal of, and interest on, Indebtedness) pursuant to representations, warranties, covenants and indemnities entered into in the ordinary course of business in connection with a Qualified Receivables Transaction), (b) is recourse to or obligates the Company or any Restricted Subsidiary of the Company in any way other than pursuant to representations, warranties, covenants and indemnities entered into in the ordinary course of business in connection with a Qualified Receivables Transaction or (c) subjects any property or asset of the Company or any Restricted Subsidiary of the Company, directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to representations, warranties, covenants and indemnities entered into in the ordinary course of business in connection with a Qualified Receivables Transaction;
(2) with which neither the Company nor any Restricted Subsidiary of the Company has any material contract, agreement, arrangement or understanding other than on terms no less favorable to the Company or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Company, other than fees payable in the ordinary course of business in connection with servicing accounts receivable; and
(3) with which neither the Company nor any Restricted Subsidiary of the Company has any obligation to maintain or preserve such Restricted Subsidiary's financial condition or cause such Restricted Subsidiary to achieve certain levels of operating results.
Any such designation by the Board of Directors of the Company shall be evidenced to the Trustee by filing with the Trustee a Board Resolution giving effect to such designation and an Officers' Certificate certifying that such designation complied with the foregoing conditions.
"RECORD DATE" means the applicable record date specified in the Securities.
"REDEMPTION DATE," when used with respect to any Security to be redeemed, means the date fixed for such redemption pursuant to this Indenture and the Securities.
"REDEMPTION PRICE," when used with respect to any Security to be redeemed, means the price fixed for such redemption, payable in immediately available funds, pursuant to this Indenture and the Securities.
"REFERENCE DATE" has the meaning set forth in Section 4.3(c)(i).
"REFINANCE" means, in respect of any security or Indebtedness, to refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue a security or Indebtedness in exchange or replacement for, such security or Indebtedness in whole or in part. "REFINANCED" and "REFINANCING" shall have correlative meanings.
"REFINANCING INDEBTEDNESS" means any Refinancing by the Company or any
Restricted Subsidiary of the Company of (A) for purposes of clause (15) of the
definition of Permitted Indebtedness, Indebtedness incurred or existing in
accordance with Section 4.4 (other than pursuant to clause (2), (4), (5), (6),
(7), (8), (9), (10), (11), (12), (13) or (14) of the definition of "Permitted
Indebtedness") or (B) for any other purpose, Indebtedness incurred in accordance
with Section 4.4, in each case that does not:
(1) result in an increase in the aggregate principal amount of Indebtedness of such Person as of the date of such proposed Refinancing (plus the amount of any premium, accrued interest and defeasance costs, required to be paid under the terms of the instrument governing such Indebtedness and plus the amount of reasonable fees, expenses, discounts and commissions incurred by the Company in connection with such Refinancing); or
(2) create Indebtedness with (a) if the Indebtedness being Refinanced was incurred pursuant to clause (3) of the definition of "Permitted Indebtedness," a Weighted Average Life to Maturity that is less than the Weighted Average Life to Maturity of the Indebtedness being Refinanced or a final maturity earlier than the final maturity of the Indebtedness being Refinanced or (b) if the Indebtedness being Refinanced was otherwise incurred in accordance with the definition of "Permitted Indebtedness" or with Section 4.4, a Weighted Average Life to Maturity that is less than the Weighted Average Life to Maturity of the Securities or a final maturity earlier than the final maturity of the Securities; PROVIDED that (x) if such Indebtedness being Refinanced is Indebtedness solely of the Company, then such Refinancing Indebtedness shall be Indebtedness solely of the Company and (y) if such Indebtedness being Refinanced is subordinate or junior to the Securities, then such Refinancing Indebtedness shall be subordinate to the Securities at least to the same extent and in the same manner as the Indebtedness being Refinanced.
"REGISTRAR" has the meaning set forth in Section 2.3.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement, dated December 20, 2002 among the Issuer and Credit Suisse First Boston Corporation, J.P. Morgan Securities Inc. and Deutsche Banc Securities Inc.
"REGULATION S" means Regulation S under the Securities Act.
"RELATED PARTIES" means with respect to a Person (a) that is a natural person (1) any spouse, parent or lineal descendant (including by adoption) of such Person or (2) the estate of such Person during any period in which such estate holds Capital Stock of the Company for the benefit of any Person referred to in clause (a)(1) and (b) that is a trust, corporation, partnership, limited liability company or other entity, the beneficiaries, stockholders, partners, owners or Persons beneficially owning an interest of more than 50% of which consist of such Person and/or such other Persons referred to in the immediately preceding clause (a).
"REPLACEMENT ASSETS" has the meaning set forth in Section 4.17(iii)(B).
"REPRESENTATIVE" means the indenture trustee or other trustee, agent or representative in respect of the Credit Agreement; PROVIDED that if, and for so long as, the Credit Agreement lacks such a representative, then the Representative for such Credit Agreement shall at all times constitute the holders of a majority in outstanding principal amount of obligations under the Credit Agreement.
"RESPONSIBLE OFFICER" means, when used with respect to the Trustee, any officer in the Corporate Trust Office of the Trustee with direct responsibility for the administration of this Indenture or to whom any corporate trust matter is referred because of such officer's knowledge of and familiarity with the particular subject.
"RESTRICTED PAYMENT" has the meaning set forth in Section 4.3.
"RESTRICTED SECURITY" has the meaning assigned to such term in Rule 144(a)(3) under the Securities Act; PROVIDED that the Trustee shall be entitled to request and conclusively rely on an Opinion of Counsel with respect to whether any Security constitutes a Restricted Security.
"RESTRICTED SUBSIDIARY" of any Person means any Subsidiary of such Person which at the time of determination is not an Unrestricted Subsidiary.
"RULE 144A" means Rule 144A under the Securities Act.
"SALE AND LEASEBACK TRANSACTION" means any direct or indirect arrangement with any Person or to which any such Person is a party, providing for the leasing to the Company or a Restricted Subsidiary of any property, whether owned by the Company or any Restricted Subsidiary at the Issue Date or later acquired, which has been or is to be sold or transferred by the Company or such Restricted Subsidiary to such Person or to any other Person from whom funds have been or are to be advanced by such Person on the security of such property other than (a) arrangements between the Company and a Wholly Owned Restricted Subsidiary of the Company or between Wholly Owned Restricted Subsidiaries of the Company or (b) any arrangement whereby the transfer involves fixed or capital assets and is consummated within
120 days after the date the Company or a Restricted Subsidiary acquires or finishes construction of such fixed or capital assets.
"SECURITIES" means the Initial Notes, the Exchange Notes and any other Securities issued after the Issue Date in accordance with clause (iii) of the fourth paragraph of Section 2.2 treated as a single class of securities, as amended or supplemented from time to time in accordance with the terms hereof, that are issued pursuant to this Indenture.
"SECURITIES ACT" means the Securities Act of 1933, as amended, or any successor statute or statutes thereto.
"SERIES A PREFERRED STOCK" means the 13 3/4% Series A Cumulative Senior Redeemable Exchangeable Preferred Stock, par value $0.01 per share, of the Issuer.
"SIGNIFICANT SUBSIDIARY," with respect to any Person, means any Restricted Subsidiary of such Person that satisfies the criteria for a "significant subsidiary" as defined in Regulation S-X under the Securities Act as such Regulation is in effect on the Issue Date and (2) any Restricted Subsidiary that, when aggregated with all other Restricted Subsidiaries that are not otherwise Significant Subsidiaries and as to which any event described in clause (v), (vi) or (vii) of Section 6.1 has occurred and is continuing, would constitute a Significant Subsidiary under clause (1) of this definition.
"SUBSIDIARY," with respect to any Person, means:
(1) any corporation of which the outstanding Capital Stock having at least a majority of the votes entitled to be cast in the election of directors under ordinary circumstances shall at the time be owned, directly or indirectly, by such Person or a Subsidiary of such Person; or
(2) any other Person of which at least a majority of the voting interest under ordinary circumstances is at the time, directly or indirectly, owned by such Person or a Subsidiary of such Person.
"SURVIVING ENTITY" has the meaning set forth in Section 5.1(a)(i).
"TEMPORARY OFFSHORE GLOBAL SECURITIES" has the meaning set forth in
Section 2.1.
"TIA" or "TRUST INDENTURE ACT" means the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb), as amended, as in effect on the date of the execution of this Indenture until such time as this Indenture is qualified under the TIA, and thereafter as in effect on the date on which this Indenture is qualified under the TIA, except as otherwise provided in Section 9.3.
"TRANSACTION DATE" has the meaning specified in the definition of "Consolidated Fixed Charge Coverage Ratio."
"TRANSACTIONS" means the Recapitalization and the related offering of the Existing Compass Minerals Notes and the initial borrowings under the Credit Agreement on November 28, 2001.
"TREASURY RATE" means the rate per annum equal to the yield to maturity at the time of computation of United States Treasury securities with a constant maturity most nearly equal to the period from such date of redemption to December 15, 2007; PROVIDED, HOWEVER, that if the period from such date of redemption to December 15, 2007 is not equal to the constant maturity of the United States Treasury security for which a weekly average yield is given, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of United States Treasury securities for which such yields are given, except that if the period from such date of redemption to December 15, 2007 is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year shall be used.
"TRUSTEE" means the party named as such in this Indenture until a successor replaces it in accordance with the provisions of this Indenture and thereafter means such successor.
"UNRESTRICTED SUBSIDIARY" of any Person means (1) any Subsidiary of
such Person that is designated an Unrestricted Subsidiary by the Board of
Directors of such Person in the manner provided below and (2) any Subsidiary of
an Unrestricted Subsidiary. The Board of Directors may designate any Subsidiary
(including any newly acquired or newly formed Subsidiary) to be an Unrestricted
Subsidiary unless such Subsidiary owns any Capital Stock of, or owns or holds
any Lien on any property of, the Company or any other Subsidiary of the Company
that is not a Subsidiary of the Subsidiary to be so designated; PROVIDED that
(x) either (i) the Company certifies to the Trustee in an Officers' Certificate
that such designation complies with Section 4.3 or (ii) the Subsidiary to be so
designated at the time of designation has total consolidated assets of $1,000 or
less and (y) each Subsidiary to be so designated and each of its Subsidiaries
has not at the time of designation, and does not thereafter, create, incur,
issue, assume, guarantee or otherwise become directly or indirectly liable with
respect to any Indebtedness pursuant to which the lender has recourse to any of
the assets of the Company or any of its Restricted Subsidiaries (other than the
assets of such Unrestricted Subsidiary). The Board of Directors may designate
any Unrestricted Subsidiary to be a Restricted Subsidiary only if (x)
immediately after giving effect to such designation, the Company is able to
incur at least $1.00 of additional Indebtedness (other than Permitted
Indebtedness) in compliance with Section 4.4 and (y) immediately before and
immediately after giving effect to such designation, no Default or Event of
Default shall have occurred and be continuing. Any such designation by the Board
of Directors shall be evidenced to the Trustee by promptly filing
with the Trustee a copy of the Board Resolution giving effect to such designation and an Officers' Certificate certifying that such designation complied with the foregoing provisions.
"U.S. GLOBAL SECURITIES" has the meaning provided in Section 2.1.
"U.S. GOVERNMENT OBLIGATIONS" means direct obligations of, and obligations guaranteed by, the United States of America for the payment of which the full faith and credit of the United States of America is pledged and which are not callable or redeemable at the issuer's option.
"U.S. LEGAL TENDER" means such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts.
"U.S. PHYSICAL SECURITIES" means the Securities issued in the form of permanent certificated Securities in registered form in substantially the form set forth in Exhibit A to Institutional Accredited Investors which are not QIBs (excluding Non-U.S. Persons) who purchased Securities pursuant to Regulation D of the Securities Act.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any Indebtedness at any date, the number of years obtained by dividing (1) the then outstanding aggregate principal amount of such Indebtedness into (2) the sum of the total of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payment of principal, including payment at final maturity, in respect thereof, by (b) the number of years (calculated to the nearest one-twelfth) which will elapse between such date and the making of such payment.
"WHOLLY OWNED RESTRICTED SUBSIDIARY" of any Person means any Restricted Subsidiary of such Person of which all the outstanding voting securities (other than in the case of a Foreign Restricted Subsidiary, directors' qualifying shares or an immaterial amount of shares required to be owned by other Persons pursuant to applicable law) are owned by such Person or any Wholly Owned Restricted Subsidiary of such Person.
1.2. INCORPORATION BY REFERENCE OF TIA.
Whenever this Indenture refers to a provision of the TIA, such provision is incorporated by reference in, and made a part of, this Indenture. The following TIA terms used in this Indenture have the following meanings:
"INDENTURE SECURITIES" means the Securities.
"INDENTURE SECURITY HOLDER" means a Holder or a Securityholder.
"INDENTURE TO BE QUALIFIED" means this Indenture.
"INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the
Trustee.
"OBLIGOR" on the indenture securities means the Company, any Guarantor or any other obligor on the Securities.
All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by Commission rule and not otherwise defined herein have the meanings assigned to them therein.
1.3. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural, and words in the plural include the singular;
(6) provisions apply to successive events and transactions; and
(7) "herein," "hereof" and other words of similar import
refer to this Indenture as a whole and not to any particular Article,
Section or other subdivision.
(8) all ratios and computations based on GAAP contained in this Indenture shall be computed in accordance with the definition of GAAP set forth in Section 1.1.
(9) all references to Sections or Articles refer to Sections or Articles in this Indenture unless otherwise indicated.
ARTICLE TWO
THE SECURITIES
2.1. FORM AND DATING.
The Initial Notes and the Trustee's certificate of authentication shall be substantially in the form of EXHIBIT A and the Exchange Notes and the Trustee's certificate of authentication shall be substantially in the form of EXHIBIT B. The Securities may have notations, legends or endorsements required by law, stock exchange rule or usage. The Issuer and the Trustee shall approve the form of the Securities and any notation, legend or endorsement on them. Each Security shall be dated the date of its authentication.
The terms and provisions contained in the Securities, annexed hereto as EXHIBIT A and EXHIBIT B, shall constitute, and are hereby expressly made, a part of this Indenture and, to the extent applicable, the Issuer and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby.
Securities offered and sold in reliance on Rule 144A shall be issued initially in the form of one or more permanent global Securities in registered form, substantially in the form set forth in EXHIBIT A (the "U.S. GLOBAL SECURITIES"), deposited with the Trustee, as custodian for the Depository, duly executed by the Issuer and authenticated by the Trustee as hereinafter provided, and shall bear the legends set forth in Section 2.14. The aggregate principal amount at maturity of the U.S. Global Securities may from time to time be increased or decreased by adjustments made on the records of the Trustee, as custodian for the Depository, as hereinafter provided.
Securities issued in exchange for interests in the U.S. Global Securities pursuant to Section 2.15 may be issued in the form of permanent certificated Securities in registered form and shall bear the first legend set forth in Section 2.14.
Securities offered and sold in offshore transactions in reliance on Regulation S shall be issued initially in the form of one or more temporary global Securities in registered form substantially in the form set forth in EXHIBIT A (the "TEMPORARY OFFSHORE GLOBAL SECURITIES"), registered in the name of the nominee of the Depository, deposited with the Trustee, as custodian for the Depository, duly executed by the Issuer and authenticated by the Trustee as hereinafter provided and shall bear the legends set forth in Section 2.14. At any time on or after the 41st day after the Issue Date, upon receipt by the Trustee, Registrar and the Issuer of a certificate substantially in the form of EXHIBIT D hereto, one or more permanent global Securities in registered form substantially in the form set forth in EXHIBIT A (the "PERMANENT OFFSHORE GLOBAL SECURITIES"; and together with the Temporary Offshore Global Securities, the "OFFSHORE
GLOBAL SECURITIES"), duly executed by the Issuer and authenticated by the Trustee as hereinafter provided shall be deposited with the Trustee, as custodian for the Depository or its nominee, and the Registrar shall reflect on its books and records the date and a decrease in the principal amount at maturity of the Temporary Offshore Global Securities in an amount equal to the principal amount at maturity of the beneficial interest in the Temporary Offshore Global Securities transferred. The aggregate principal amount at maturity of the Offshore Global Securities may from time to time be increased or decreased by adjustments made on the records of the Trustee, as custodian for the Depository, as hereinafter provided.
Securities issued in exchange for interests in the Offshore Global Securities pursuant to Section 2.15 may be issued in the form of permanent certificated Securities in registered form (the "OFFSHORE PHYSICAL SECURITIES") and shall bear the first legend set forth in Section 2.14. All Securities offered and sold in reliance on Regulation S shall remain in the form of an Offshore Global Security until the consummation of the Exchange Offer pursuant to the Registration Rights Agreement.
The Offshore Physical Securities and the U.S. Physical Securities are sometimes collectively herein referred to as the "PHYSICAL SECURITIES." The U.S. Global Securities and the Offshore Global Securities are sometimes referred to herein as the "GLOBAL SECURITIES."
2.2. EXECUTION AND AUTHENTICATION.
One Officer or an Assistant Secretary of the Issuer (each of whom shall, in each case, have been duly authorized by all requisite corporate actions) shall sign the Securities for the Issuer by manual or facsimile signature.
If an Officer whose signature is on a Security was an Officer at the time of such execution but no longer holds that office at the time the Trustee authenticates the Security, the Security shall nevertheless be valid.
A Security shall not be valid until an authorized signatory of the Trustee manually signs the certificate of authentication on the Security. The signature shall be conclusive evidence that the Security has been authenticated under this Indenture.
The Trustee shall authenticate (i) Initial Notes for original issue on the Issue Date in the aggregate principal amount at maturity not to exceed $123,500,000, (ii) pursuant to the Exchange Offer, Exchange Notes from time to time for issue only in exchange for a like Accreted Value and principal amount at maturity of Initial Notes and (iii) subject to compliance with Section 4.4, one or more series of Securities for original issue after the Issue Date (such Securities to be substantially in the form of EXHIBIT A or EXHIBIT B, as the case may be) in an unlimited amount (and if in the form of EXHIBIT A the same Accreted Value and principal amount at maturity of Exchange Notes in exchange therefor upon consummation of a registered
exchange offer), in each case upon written orders of the Issuer in the form of an Officers' Certificate, which Officers' Certificate shall, in the case of any issuance pursuant to clause (iii) above, certify that such issuance is in compliance with Section 4.4. In addition, each such Officers' Certificate shall specify the amount of Securities to be authenticated, the date on which the Securities are to be authenticated, whether the Securities are to be Initial Notes, Exchange Notes or Securities issued under clause (iii) of the preceding sentence and the aggregate principal amount at maturity of Securities outstanding on the date of authentication, and shall further specify the amount at maturity of such Securities to be issued as a Global Security or Physical Securities. Such Securities shall initially be in the form of one or more Global Securities, which (i) shall represent, and shall be denominated in an amount equal to the aggregate principal amount at maturity of, the Securities to be issued, (ii) shall be registered in the name of the Depository for such Global Security or Securities or its nominee and (iii) shall be delivered by the Trustee to the Depository or pursuant to the Depository's instruction. All Securities issued under this Indenture shall vote and consent together on all matters as one class and no series of Securities will have the right to vote or consent as a separate class on any matter.
The Trustee may appoint an authenticating agent reasonably acceptable to the Issuer to authenticate the Securities. Unless otherwise provided in the appointment, an authenticating agent may authenticate Securities whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with the Issuer and Affiliates of the Issuer.
The Securities shall be issuable only in registered form without coupons in denominations of $1,000 principal amount at maturity and integral multiples thereof.
2.3. REGISTRAR AND PAYING AGENT.
The Issuer shall maintain an office or agency in the Borough of Manhattan, The City of New York, where (a) Securities may be presented or surrendered for registration of transfer or for exchange ("REGISTRAR"), (b) Securities may be presented or surrendered for payment ("PAYING AGENT") and (c) notices and demands to or upon the Issuer in respect of the Securities and this Indenture may be served. The Issuer may also from time to time designate one or more other offices or agencies where the Securities may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; PROVIDED, HOWEVER, that no such designation or rescission shall in any manner relieve the Issuer of its obligation to maintain an office or agency in the Borough of Manhattan, The City of New York, for such purposes. The Issuer may act as its own Registrar or Paying Agent except that for the purposes of Articles Three and Eight and Sections 4.16 and 4.17, neither the Issuer nor any Affiliate of the Issuer shall act as Paying Agent. The Registrar shall keep a register of the Securities
and of their transfer and exchange. The Issuer, upon notice to the Trustee, may have one or more co-Registrars and one or more additional paying agents reasonably acceptable to the Trustee. The term "Paying Agent" includes any additional paying agent. The Issuer hereby initially appoints the Trustee as Registrar and Paying Agent until such time as the Trustee has resigned or a successor has been appointed.
The Issuer shall enter into an appropriate agency agreement with any Agent not a party to this Indenture, which agreement shall implement the provisions of this Indenture that relate to such Agent. The Issuer shall notify the Trustee, in advance, of the name and address of any such Agent. If the Issuer fails to maintain a Registrar or Paying Agent, the Trustee shall act as such.
The Trustee is authorized to enter into a letter of representations with the Depository in the form provided by the Issuer and to act in accordance with such letter.
2.4. PAYING AGENT TO HOLD ASSETS IN TRUST.
The Issuer shall require each Paying Agent other than the Trustee to agree in writing that each Paying Agent shall hold in trust for the benefit of Holders or the Trustee all assets held by the Paying Agent for the payment of Accreted Value of, premium, if any, or interest on, the Securities (whether such assets have been distributed to it by the Issuer or any other obligor on the Securities), and shall notify the Trustee of any Default or Event of Default by the Issuer (or any other obligor on the Securities) in making any such payment. If either the Issuer or a Subsidiary acts as Paying Agent, it shall segregate such assets and hold them as a separate trust fund. The Issuer at any time may require a Paying Agent to distribute all assets held by it to the Trustee and account for any assets disbursed and the Trustee may at any time during the continuance of any payment Default or payment Event of Default, upon written request to a Paying Agent, require such Paying Agent to distribute all assets held by it to the Trustee and to account for any assets distributed. Upon distribution to the Trustee of all assets that shall have been delivered by the Issuer to the Paying Agent, the Paying Agent shall have no further liability for such assets.
2.5. HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Holders. If the Trustee is not the Registrar, the Issuer shall furnish to the Trustee on or before each Interest Payment Date and at such other times as the Trustee may request in writing a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Holders, which list may be conclusively relied upon by the Trustee.
2.6. TRANSFER AND EXCHANGE.
(a) Subject to the provisions of Sections 2.14 and 2.15, when Securities are presented to the Registrar or a co-Registrar with a request to register the transfer of such Securities or to exchange such Securities for an equal principal amount at maturity of Securities of other authorized denominations, the Registrar or co-Registrar shall register the transfer or make the exchange as requested if its requirements for such transaction are met; PROVIDED, HOWEVER, that the Securities surrendered for registration of transfer or exchange shall be duly endorsed or accompanied by a written instrument of transfer in form satisfactory to the Issuer and the Registrar or co-Registrar, duly executed by the Holder thereof or his attorney duly authorized in writing. To permit registrations of transfers and exchanges, the Issuer shall execute and the Trustee shall authenticate Securities at the Registrar's or co-Registrar's request. No service charge shall be made for any registration of transfer or exchange, but the Issuer may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchanges or transfers pursuant to Section 2.2, 2.10, 3.6, 4.16, 4.17 or 9.5). The Registrar or co-Registrar shall not be required to register the transfer of or exchange of any Security (i) during a period beginning at the opening of business 15 days before the mailing of a notice of redemption of Securities and ending at the close of business on the day of such mailing, (ii) selected for redemption in whole or in part pursuant to Article Three, except the unredeemed portion of any Security being redeemed in part, and (iii) during a Change of Control Offer or a Net Proceeds Offer if such Security is tendered pursuant to such Change of Control Offer or Net Proceeds Offer and not withdrawn. A Global Security may be transferred, in whole but not in part, in the manner provided in this Section 2.6(a), only to a nominee of the Depository for such Global Security, or to the Depository, or a successor Depository for such Global Security selected or approved by the Issuer, or to a nominee of such successor Depository.
(b) If at any time the Depository for the Global Security or Securities notifies the Issuer that it is unwilling or unable to continue as Depository for such Global Security or Securities or the Issuer becomes aware that the Depository has ceased to be a clearing agency registered under the Exchange Act, the Issuer shall appoint a successor Depository with respect to such Global Security or Securities. If a successor Depository for such Global Security or Securities has not been appointed within 90 days after the Issuer receives such notice or become aware of such ineligibility, the Issuer shall execute, and the Trustee, upon receipt of an Officers' Certificate for the authentication and delivery of Securities, shall authenticate and make available for delivery, Securities in definitive form, in an aggregate principal amount at maturity equal to the principal amount at maturity of the Global Security representing such Securities, in exchange for such Global Security. The Issuer shall reimburse the Registrar, the Depository and the Trustee for expenses they incur in documenting such exchanges and issuances of Securities in definitive form.
The Issuer may at any time and in its sole discretion determine that the Securities shall no longer be represented by such Global Security or Securities. In such event the Issuer will execute, and the Trustee, upon receipt of a written order for the authentication and delivery of individual Securities in exchange in whole or in part for such Global Security or Securities, will authenticate and make available for delivery individual Securities in definitive form in an aggregate principal amount at maturity equal to the principal amount at maturity of such Global Security or Securities in exchange for such Global Security or Securities.
In any exchange provided for in any of the preceding two paragraphs, the Issuer will execute and the Trustee will authenticate and make available for delivery individual Securities in definitive registered form in authorized denominations. Upon the exchange of a Global Security for individual Securities, such Global Security shall be cancelled by the Trustee. Securities issued in exchange for a Global Security pursuant to this Section 2.6(b) shall be registered in such names and in such authorized denominations as the Depository for such Global Security, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee. The Trustee shall make available for delivery such Securities to the Persons in whose names such Securities are so registered.
Neither the Issuer, the Trustee, any Paying Agent or the Registrar will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in a Global Security or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests.
2.7. REPLACEMENT SECURITIES.
If a mutilated Security is surrendered to the Trustee or if the Holder of a Security claims that the Security has been lost, destroyed or wrongfully taken, the Issuer shall issue and the Trustee shall authenticate a replacement Security if the Trustee's requirements are met. If required by the Trustee or the Issuer, such Holder must provide an indemnity bond or other indemnity, sufficient in the judgment of both the Issuer and the Trustee, to protect the Issuer, the Trustee or any Agent from any loss which any of them may suffer if a Security is replaced. The Issuer may charge such Holder for its reasonable out-of-pocket expenses in replacing a Security pursuant to this Section 2.7, including reasonable fees and expenses of counsel.
Every replacement Security is an additional obligation of the Issuer.
2.8. OUTSTANDING SECURITIES.
Securities outstanding at any time are all the Securities that have been authenticated by the Trustee except those cancelled by it, those delivered to it for cancellation and those described in this Section as not outstanding. A Security does not cease to be outstanding because
the Issuer, any Guarantor or any of their respective Subsidiaries or Affiliates holds the Security.
If a Security is replaced pursuant to Section 2.7 (other than a mutilated Security surrendered for replacement), it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Security is held by a BONA FIDE purchaser or a protected purchaser. A mutilated Security ceases to be outstanding upon surrender of such Security and replacement thereof pursuant to Section 2.7. If the principal amount at maturity of any Security is considered paid under Section 4.1, it ceases to be outstanding and interest ceases to accrue.
If on a Redemption Date or the Maturity Date the Paying Agent (other than the Issuer or a Subsidiary) holds U.S. Legal Tender sufficient to pay all of the Accreted Value of, premium, if any, and interest due on the Securities payable on that date, then on and after that date such Securities cease to be outstanding and interest on them ceases to accrue.
2.9. TREASURY SECURITIES.
In determining whether the Holders of the required principal amount at maturity of Securities have concurred in any direction, waiver or consent, Securities owned by the Issuer, any of its Subsidiaries or any of its respective Affiliates shall be disregarded, except that, for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Securities that a Responsible Officer of the Trustee knows or has reason to know are so owned shall be disregarded.
2.10. TEMPORARY SECURITIES.
Until definitive Securities are ready for delivery, the Issuer may prepare and the Trustee shall authenticate temporary Securities. Temporary Securities shall be substantially in the form of definitive Securities but may have variations that the Issuer considers appropriate for temporary Securities, as evidenced by execution of such temporary Securities by the Issuer. Without unreasonable delay, the Issuer shall prepare and the Trustee shall authenticate definitive Securities in exchange for temporary Securities. Until such exchange, temporary Securities shall be entitled to the same rights, benefits and privileges as definitive Securities. Notwithstanding the foregoing, so long as the Securities are represented by a Global Security, such Global Security may be in typewritten form.
2.11. CANCELLATION.
The Issuer at any time may deliver Securities to the Trustee for cancellation. The Registrar and the Paying Agent shall forward to the Trustee any Securities surrendered to them for registration of transfer, exchange or payment. The Trustee, or at the direction of the Trustee,
the Registrar or the Paying Agent (other than the Issuer or a Subsidiary), and no one else, shall cancel and shall dispose of all Securities surrendered for registration of transfer, exchange, payment or cancellation in accordance with its procedures for the disposition of cancelled securities. Subject to Section 2.7, the Issuer may not issue new Securities to replace Securities that they have paid or delivered to the Trustee for cancellation. If the Issuer or any Guarantor shall acquire any of the Securities, such acquisition shall not operate as a redemption or satisfaction of the Indebtedness represented by such Securities unless and until the same are surrendered to the Trustee for cancellation pursuant to this Section 2.11.
2.12. DEFAULTED INTEREST.
If the Issuer defaults in a payment of interest on the Securities, it shall, unless the Trustee fixes another record date pursuant to Section 6.10, pay the defaulted interest, plus (to the extent lawful) any interest payable on the defaulted interest, in any lawful manner. The Issuer may pay the defaulted interest to the Persons who are Holders on a subsequent special record date, which date shall be the fifteenth day next preceding the date fixed by the Issuer for the payment of defaulted interest or the next succeeding Business Day if such date is not a Business Day. At least 15 days before any such subsequent special record date, the Issuer shall mail to each Holder, with a copy to the Trustee, a notice that states the subsequent special record date, the payment date and the amount of defaulted interest, and interest payable on such defaulted interest, if any, to be paid.
2.13. CUSIP AND ISIN NUMBERS.
The Issuer in issuing the Securities may use "CUSIP" and "ISIN" numbers, and if so, the Trustee shall use the CUSIP numbers in notices of redemption or exchange as a convenience to Holders; PROVIDED, HOWEVER, that any such notice may state that no representation is made as to the correctness or accuracy of the CUSIP and ISIN numbers printed in the notice or on the Securities, and that reliance may be placed only on the other identification numbers printed on the Securities and that any such redemption or exchange shall not be affected by any defect or omission of such CUSIP and ISIN numbers. The Issuer will promptly notify the Trustee of any change in CUSIP or ISIN number.
2.14. RESTRICTIVE LEGENDS.
Unless and until a Security is exchanged for an Exchange Note or sold in connection with an effective registration statement under the Securities Act pursuant to the Registration Rights Agreement, (i) the U.S. Global Securities and U.S. Physical Securities shall bear the legend set forth below (the "PRIVATE PLACEMENT LEGEND") on the face thereof and (ii) the Offshore Physical Securities, until at least the 41st day after the Issue Date and receipt by the Issuer and the Trustee of a certificate substantially in the form of EXHIBIT D hereto, and the
Temporary Offshore Global Securities shall bear the legend set forth below on the face thereof.
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT, WITHIN THE TIME PERIOD REFERRED TO IN RULE 144(k) UNDER THE SECURITIES ACT AS IN EFFECT ON THE DATE OF THE TRANSFER OF THIS SECURITY, RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE ISSUER OR ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE) AND IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT AT MATURITY OF SECURITIES OF LESS THAN $100,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF
THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS SECURITY WITHIN THE TIME PERIOD REFERRED TO IN RULE 144(k) UNDER THE SECURITIES ACT AFTER THE ORIGINAL ISSUANCE OF THE SECURITIES, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR OR NON-U.S. PERSON, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE ISSUER SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANING GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS SECURITY IN VIOLATION OF THE FOREGOING RESTRICTION.
Each Global Security shall also bear the following legend on the face thereof:
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY, OR BY ANY SUCH NOMINEE OF THE DEPOSITORY, OR BY THE DEPOSITORY OR NOMINEE OF SUCH SUCCESSOR DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITORY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTION 2.16 OF THE INDENTURE GOVERNING THIS SECURITY.
2.15. BOOK-ENTRY PROVISIONS FOR GLOBAL SECURITY.
(a) Each Global Security initially shall (i) be registered in the name of the Depository or the nominee of such Depository, (ii) be delivered to the Trustee as custodian for such Depository and (iii) bear legends as set forth in Section 2.14.
Members of, or participants in, the Depository ("AGENT MEMBERS") shall have no rights under this Indenture with respect to any Global Security held on their behalf by the Depository, or the Trustee as its custodian, or under any Global Security, and the Depository may be treated by the Issuer, the Trustee and any agent of the Issuer or the Trustee as the absolute owner of each Global Security for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Issuer, the Trustee or any agent of the Issuer or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depository or impair, as between the Depository and its Agent Members, the operation of customary practices governing the exercise of the rights of a Holder of any Security.
(b) Transfers of Global Securities shall be limited to transfers in
whole, but not in part, to the Depository, its successors or their respective
nominees. Interests of beneficial owners in any Global Security may be
transferred or, subject to Section 2.1, exchanged for Physical Securities in
accordance with the rules and procedures of the Depository and the provisions of
Section 2.16. In addition, U.S. Physical Securities and Offshore Physical
Securities shall be transferred to all beneficial owners in exchange for their
beneficial interests in U.S. Global Securities or Offshore Global Securities, as
the case may be, if (i) the Depository notifies the Issuer that it is unwilling
or unable to continue as Depository for the U.S. Global Securities or the
Offshore Global Securities and a successor depositary is not appointed by the
Issuer within 90 days of such notice or (ii) an Event of Default has occurred
and is continuing and the Registrar has received a written request from the
Depository or the Trustee to issue Physical Securities.
(c) In connection with any transfer or exchange of a portion of the beneficial interest in any Global Security to beneficial owners pursuant to paragraph (b), the Registrar shall (if one or more Physical Securities are to be issued) reflect on its books and records the date and a decrease in the principal amount at maturity of such Global Security in an amount equal to the principal amount at maturity of the beneficial interest in such Global Security to be transferred, and the Issuer shall execute, and the Trustee shall authenticate and make available for delivery, one or more U.S. Physical Securities or Offshore Physical Securities, as the case may be, of like tenor and amount.
(d) In connection with the transfer of U.S. Global Securities or
Offshore Global Securities, in whole, to beneficial owners pursuant to paragraph
(b), the U.S. Global Securities or the Offshore Global Securities, as the case
may be, shall be deemed to be surrendered to the Trustee for cancellation, and
the Issuer shall execute, and the Trustee shall authenticate and make available
for delivery, to each beneficial owner identified by the Depository in exchange
for its beneficial interest in such U.S. Global Securities or Offshore Global
Securities, as the case may be, an equal aggregate principal amount at maturity
of U.S. Physical Securities or Offshore Physical Securities, as the case may be,
of authorized denominations.
(e) Any Physical Security constituting a Restricted Security
delivered in exchange for an interest in a Global Security pursuant to paragraph
(b) or (c) shall, except as otherwise provided by paragraphs (a)(i)(x), (d),
(e)(ii) and (f) of Section 2.16, bear the legend regarding transfer restrictions
applicable to the Physical Securities set forth in Section 2.14.
(f) The Holder of a Global Security may grant proxies and otherwise authorize any person, including Agent Members and persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Securities.
2.16. SPECIAL TRANSFER PROVISIONS.
(a) TRANSFERS TO NON-QIB INSTITUTIONAL ACCREDITED INVESTORS. The following provisions shall apply with respect to the registration of any proposed transfer of a Security constituting a Restricted Security to any institutional accredited investor (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) (an "ACCREDITED INVESTOR" or an "INSTITUTIONAL ACCREDITED INVESTOR") which is not a QIB (excluding Non-U.S. Persons):
(i) the Registrar shall register the transfer of any Security constituting a Restricted Security, whether or not such Security bears the Private Placement Legend, if (x) the transferee certifies that it is not an Affiliate of the Issuer and the requested transfer is after the second anniversary of the later of the (a) Issue Date and (b) the last date on which the Issuer or an Affiliate of the Issuer was the owner of such Security (or any predecessor Security) or such shorter period of time as permitted by Rule
144(k) under the Securities Act or any successor provision thereunder or (y) the proposed transferee has delivered to the Registrar a certificate substantially in the form of EXHIBIT C hereto and if such transfer is in respect of an aggregate principal amount at maturity of Securities of less than $100,000, the proposed transferee has delivered to the Registrar and the Issuer an opinion of counsel acceptable to the Issuer that such transfer is in compliance with the Securities Act and such other certifications, legal opinions or other information that the Trustee may reasonably request in order to confirm that such transaction is being made pursuant to an exemption from or in a transaction not subject to the registration requirements of the Securities Act; and
(ii) if the proposed transferor is an Agent Member holding a beneficial interest in the U.S. Global Security, the Registrar shall register the transfer of any Security constituting a Restricted Security, whether or not such Security bears a Private Placement Legend upon receipt by the Registrar of (x) the certificate, if any, required by paragraph (i) above and (y) instructions given in accordance with the Depository's and the Registrar's procedures, whereupon (a) the Registrar shall reflect on its books and records the date and (if the transfer does not involve a transfer of outstanding U.S. Physical Securities) a decrease in the principal amount at maturity of the applicable U.S. Global Security in an amount equal to the principal amount at maturity of the beneficial interest in such U.S. Global Security to be transferred, and (b) the Issuer shall execute and the Trustee shall authenticate and make available for delivery one or more U.S. Physical Securities of like tenor and amount.
(b) TRANSFERS TO QIBS. The following provisions shall apply with respect to the registration of any proposed transfer of a Security to a QIB (excluding transfers to Non-U.S. Persons):
(i) if the Security to be transferred consists of (x) either Offshore Physical Securities prior to the removal of the Private Placement Legend or U.S. Physical Securities, the Registrar shall register the transfer if such transfer is being made by a proposed transferor who has checked the box provided for on the form of Security stating, or has otherwise advised the Issuer and the Registrar in writing, that the sale has been made in compliance with the provisions of Rule 144A to a transferee who has signed the certification provided for on the form of Security stating, or has otherwise advised the Issuer and the Registrar in writing, that it is purchasing the Security for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a QIB within the meaning of Rule 144A, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Issuer as it has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon its foregoing representations in order to claim the exemption
from registration provided by Rule 144A or (y) an interest in the U.S. Global Securities, the transfer of such interest may be effected only through the book entry system maintained by the Depository; and
(ii) if the proposed transferee is an Agent Member, and the Securities to be transferred consist of U.S. Physical Securities which after transfer are to be evidenced by an interest in a U.S. Global Security, upon receipt by the Registrar of instructions given in accordance with the Depository's and the Registrar's procedures, the Registrar shall reflect on its books and records the date and an increase in the principal amount at maturity of the applicable U.S. Global Security in an amount equal to the principal amount at maturity of the U.S. Physical Securities to be transferred, and the Trustee shall cancel the U.S. Physical Securities so transferred.
(c) TRANSFERS OF INTERESTS IN THE TEMPORARY OFFSHORE GLOBAL SECURITIES. The following provisions shall apply with respect to registration of any proposed transfer of an interest in a Temporary Offshore Global Securities:
(i) The Registrar shall register the transfer of any Security (x) if the proposed transferee is a Non-U.S. Person and the proposed transferor has delivered to the Registrar a certificate substantially in the form of Exhibit D hereto or (y) if the proposed transferee is a QIB and the proposed transferor has checked the box provided for on the form of Security stating, or has otherwise advised the Issuer and the Registrar in writing, that the sale has been made in compliance with the provisions of Rule 144A to a transferee who has signed the certification provided for on the form of Security stating, or has otherwise advised the Issuer and the Registrar in writing, that it is purchasing the Security for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a QIB within the meaning of Rule 144A, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Issuer as it has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon its foregoing representations in order to claim the exemption from registration provided by Rule 144A.
(ii) If the proposed transferee is an Agent Member, upon receipt by the Registrar of the documents referred to in clause (i)(y) above and instructions given in accordance with the Depository's and the Registrar's procedures, the Registrar shall reflect on its books and records the date and an increase in the principal amount at maturity of the U.S. Global Securities in an amount equal to the principal amount at maturity of the Temporary Offshore Global Securities to be transferred, and the Trustee shall decrease the amount of the Temporary Offshore Global Securities.
(d) TRANSFERS OF INTERESTS IN THE PERMANENT OFFSHORE GLOBAL SECURITIES OR UNLEGENDED OFFSHORE PHYSICAL SECURITIES. The following provisions shall apply with respect to any transfer of interests in Permanent Offshore Global Securities or unlegended Offshore Physical Securities. The Registrar shall register the transfer of any such Security without requiring any additional certification.
(e) TRANSFERS TO NON-U.S. PERSONS AT ANY TIME. The following provisions shall apply with respect to any transfer of a Security to a Non-U.S. Person:
(i) Prior to the 41st day after the Issue Date, the Registrar shall register any proposed transfer of a Security to a Non-U.S. Person upon receipt of a certificate substantially in the form of Exhibit D hereto from the proposed transferor.
(ii) On and after the 41st day after the Issue Date, the Registrar shall register any proposed transfer to any Non-U.S. Person if the Security to be transferred is a U.S. Physical Security or an interest in U.S. Global Securities, upon receipt of a certificate substantially in the form of EXHIBIT D hereto from the proposed transferor.
(iii) (a) If the proposed transferor is an Agent Member holding a beneficial interest in the U.S. Global Securities, upon receipt by the Registrar of (x) the documents, if any, required by paragraph (ii) and (y) instructions in accordance with the Depository's and the Registrar's procedures, the Registrar shall reflect on its books and records the date and a decrease in the principal amount at maturity of the U.S. Global Securities in an amount equal to the principal amount at maturity of the beneficial interest in the U.S. Global Securities to be transferred, and (b) if the proposed transferee is an Agent Member, upon receipt by the Registrar of instructions given in accordance with the Depository's and the Registrar's procedures, the Registrar shall reflect on its books and records the date and an increase in the principal amount at maturity of the Offshore Global Securities in an amount equal to the principal amount at maturity of the U.S. Physical Securities or the U.S. Global Securities, as the case may be, to be transferred, and the Trustee shall cancel the U.S. Physical Security, if any, so transferred or decrease the amount of the U.S. Global Security.
(f) PRIVATE PLACEMENT LEGEND. Upon the registration of transfer,
exchange or replacement of Securities not bearing the Private Placement Legend,
the Registrar shall make available for delivery Securities that do not bear the
Private Placement Legend. Upon the registration of transfer, exchange or
replacement of Securities bearing the Private Placement Legend, the Registrar
shall make available for delivery only Securities that bear the Private
Placement Legend unless (i) the circumstance contemplated by paragraph
(a)(i)(x), (d) or (e)(ii) of this Section 2.16 exists or (ii) there is delivered
to the Registrar an Opinion of Counsel reasonably satisfactory to the Issuer and
the Trustee to the effect that neither such legend
nor the related restrictions on transfer are required in order to maintain compliance with the provisions of the Securities Act.
(g) GENERAL. By its acceptance of any Security bearing the Private Placement Legend, each Holder of such Security acknowledges the restrictions on transfer of such Security set forth in this Indenture and in the Private Placement Legend and agrees that it will transfer such Security only as provided in this Indenture.
The Registrar shall retain copies of all letters, notices and other written communications received pursuant to Section 2.15 or this Section 2.16 in accordance with its customary procedures. The Issuer shall have the right to inspect and make copies of all such letters, notices or other written communications at any reasonable time upon the giving of reasonable written notice to the Registrar.
(h) NO OBLIGATION OF THE TRUSTEE. (i) The Trustee shall have no responsibility or obligation to any beneficial owner of a Global Security, a member of, or a participant in, the Depository or any other Person with respect to the accuracy of the records of the Depository or its nominee or of any participant member thereof, with respect to any ownership interest in the Securities or with respect to the delivery to any participant, member, beneficial owner or other Person (other than the Depository) of any notice (including any notice of redemption or repurchase) or the payment of any amount, under or with respect to such Securities. All notices and communications to be given to the Holders and all payments to be made to Holders under the Securities shall be given or made only to the registered Holders (which shall be the Depository or its nominee in the case of a Global Security). The rights of beneficial owners in any Global Security shall be exercised only through the Depository subject to the applicable rules and procedures of the Depository. The Trustee may rely and shall be fully protected in relying upon information furnished by the Depository with respect to its members, participants and any beneficial owners.
(ii) The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Security (including any transfers between or among Depository participants, members or beneficial owners in any Global Security) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.
ARTICLE THREE
REDEMPTION
3.1. NOTICES TO TRUSTEE.
If the Issuer elects to redeem Securities pursuant to Paragraph 5 of the Securities, it shall notify the Trustee in writing of the Redemption Date, the Redemption Price and the principal amount at maturity of the applicable Securities to be redeemed. The Issuer shall give notice of redemption to the Paying Agent and Trustee at least 45 days but not more than 60 days before the Redemption Date (unless a shorter notice shall be agreed to by the Trustee in writing), together with an Officers' Certificate stating that such redemption will comply with the conditions contained herein.
3.2. SELECTION OF SECURITIES TO BE REDEEMED.
In the event that less than all of the Securities are to be redeemed at any time, selection of such Securities for redemption will be made by the Trustee in compliance with the requirements of the principal national securities exchange, if any, on which such Securities are listed or, if such Securities are not then listed on a national securities exchange, on a PRO RATA basis, by lot or by such method as the Trustee shall deem fair and appropriate; PROVIDED, HOWEVER, that no Securities of a principal amount at maturity of $1,000 or less shall be redeemed in part; and PROVIDED, FURTHER, that if a partial redemption is made with the Net Cash Proceeds of an Asset Sale or Equity Offering, selection of the Securities or portions thereof for redemption shall be made by the Trustee only on a PRO RATA basis or on as nearly a PRO RATA basis as is practicable (subject to the procedures of the Depository), unless such method is otherwise prohibited.
3.3. NOTICE OF REDEMPTION.
At least 30 days but not more than 60 days before a Redemption Date, the Issuer shall mail a notice of redemption by first class mail, postage prepaid, to each Holder whose Securities are to be redeemed at its registered address. At the Issuer's request at least 45 days before a Redemption Date (unless a shorter period shall be acceptable to the Trustee), the Trustee shall give the notice of redemption in the Issuer's name and at the Issuer's expense. Each notice of redemption shall identify the Securities to be redeemed and shall state:
(a) the Redemption Date;
(b) the Redemption Price and the amount of accrued interest, if any, to be paid;
(c) the name and address of the Paying Agent;
(d) that Securities called for redemption must be surrendered to the Paying Agent to collect the Redemption Price plus accrued interest, if any;
(e) that, unless the Issuer defaults in making the redemption payment, Accreted Value or interest on Securities called for redemption ceases to accrete or accrue, as the case may be, on and after the Redemption Date, and the only remaining right of the Holders of such Securities is to receive payment of the Redemption Price and accrued interest, if any, upon surrender to the Paying Agent of the Securities redeemed;
(f) if any Security is being redeemed in part, the portion of the principal amount at maturity of such Security to be redeemed and that, after the Redemption Date, and upon surrender of such Security, a new Security or Securities in aggregate principal amount at maturity equal to the unredeemed portion thereof will be issued;
(g) if fewer than all the Securities are to be redeemed, the identification of the particular Securities (or portion thereof) to be redeemed, as well as the aggregate principal amount at maturity of Securities to be redeemed and the aggregate principal amount at maturity of Securities to be outstanding after such partial redemption;
(h) the Paragraph of the Securities pursuant to which the Securities are to be redeemed; and
(i) the CUSIP or ISIN number, if any, printed on the Securities being redeemed and a statement that no representation is made as to the correctness or accuracy of the CUSIP or ISIN number, if any, listed in such notice or printed on the Securities.
The notice, if mailed in a manner herein provided, shall be conclusively presumed to have been given, whether or not the Holder receives such notice. In any case, failure to give such notice by mail or any defect in the notice to the Holder of any Security designated for redemption in whole or in part shall not affect the validity of the proceedings for the redemption of any other Security.
3.4. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section 3.3, Securities called for redemption become due and payable on the Redemption Date and at the Redemption Price plus accrued interest, if any. Upon surrender to the Trustee or Paying Agent, such Securities called for redemption shall be paid at the Redemption Price (which shall include accrued interest thereon to the Redemption Date), but installments of interest, the maturity of which is
on or prior to the Redemption Date, shall be payable to Holders of record at the close of business on the relevant Record Dates.
3.5. DEPOSIT OF REDEMPTION PRICE.
On or before 11:00 a.m. New York time on the Redemption Date, the Issuer shall deposit with the Paying Agent U.S. Legal Tender sufficient to pay the Redemption Price plus accrued interest, if any, of all Securities to be redeemed on that date.
If the Issuer complies with the preceding paragraph, then, unless the Issuer defaults in the payment of such Redemption Price plus accrued interest, if any, Accreted Value on the Securities to be redeemed will cease to accrete and interest on the Securities to be redeemed will cease to accrue, as applicable, on and after the applicable Redemption Date, whether or not such Securities are presented for payment.
3.6. SECURITIES REDEEMED IN PART.
Upon surrender of a Security that is to be redeemed in part only, the Trustee shall upon written instruction from the Issuer authenticate for the Holder a new Security or Securities in a principal amount at maturity equal to the unredeemed portion of the Security surrendered.
ARTICLE FOUR
COVENANTS
4.1. PAYMENT OF SECURITIES.
The Issuer shall pay the Accreted Value of, premium, if any, and interest on the Securities in the manner provided in the Securities. An installment of Accreted Value of, premium, if any, or interest on the Securities shall be considered paid on the date it is due if the Trustee or Paying Agent holds on that date U.S. Legal Tender designated for and sufficient to pay the installment. If the Issuer or any Subsidiary of the Issuer acts as Paying Agent, an installment of Accreted Value of, premium, if any, or interest shall be considered paid on the date it is due if the entity acting as Paying Agent complies with the second sentence of Section 2.4. Interest on the Securities will be computed on the basis of a 360-day year comprised of twelve 30-day months. As provided in Section 6.9, upon any bankruptcy or reorganization procedure relative to the Issuer, the Trustee shall serve as Paying Agent, if any, for the Securities.
4.2. MAINTENANCE OF OFFICE OR AGENCY.
The Issuer shall maintain in the Borough of Manhattan, The City of New York, the office or agency required under Section 2.3. The Issuer shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Issuer shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the address of the Trustee set forth in Section 11.2.
The Issuer may also from time to time designate one or more other offices or agencies where the Securities may be presented or surrendered for any or all such purposes and may from time to time rescind such designations. The Issuer will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.
The Issuer hereby initially designates the Trustee at its address at 101 Barclay Street, Floor 8W, New York, New York 10286, Attention: Corporate Trust Administration, as such office of the Issuer in accordance with Section 2.3.
4.3. LIMITATION ON RESTRICTED PAYMENTS.
The Company shall not, and shall not cause or permit any of its Restricted Subsidiaries to, directly or indirectly, (1) declare or pay any dividend or make any distribution (other than dividends or distributions payable in Qualified Capital Stock of the Company) on or in respect of shares of the Company's Capital Stock to holders of such Capital Stock; (2) purchase, redeem or otherwise acquire or retire for value any Capital Stock of the Company or any warrants, rights or options to purchase or acquire shares of any class of such Capital Stock of the Company; (3) make any principal payment on, purchase, defease, redeem, prepay, decrease or otherwise acquire or retire for value, prior to any scheduled final maturity, scheduled repayment or scheduled sinking fund payment, any Indebtedness of the Company that is subordinate or junior in right of payment to the Securities or any Guarantee (other than Indebtedness described in clause (7) of the definition of "Permitted Indebtedness"); or (4) make any Investment (other than Permitted Investments) (each of the foregoing actions set forth in clauses (1), (2), (3) and (4) being referred to as a "RESTRICTED PAYMENT"), if at the time of such Restricted Payment or immediately after giving effect thereto:
(a) a Default or an Event of Default shall have occurred and be continuing; or
(b) the Company is not able to incur at least $1.00 of additional Indebtedness (other than Permitted Indebtedness) in compliance with Section 4.4; or
(c) the aggregate amount of Restricted Payments (including such proposed Restricted Payment) made subsequent to November 28, 2001 (the amount expended for such purposes, if other than in cash, being the fair market value of such property as determined reasonably and in good faith by the Board of Directors of the Company whose determination shall be conclusive) shall exceed the sum of:
(i) 50% of the cumulative Consolidated Net Income (or if cumulative Consolidated Net Income shall be a loss, minus 100% of such loss) of the Company earned subsequent to November 28, 2001 and on or prior to the date the Restricted Payment is made (the "REFERENCE DATE") (treating such period as a single accounting period); plus
(ii) 100% of the aggregate Net Cash Proceeds and the fair market value, as determined in good faith by the Board of Directors of the Company, of property other than cash received by the Company from any Person (other than a Subsidiary of the Company) from the issuance and sale subsequent to November 28, 2001 and on or prior to the Reference Date of Qualified Capital Stock of the Company (other than Excluded Contributions); plus
(iii) without duplication of any amounts included in clause (c)(ii) above, 100% of the aggregate Net Cash Proceeds of any equity contribution received by the Company subsequent to November 28, 2001 from a holder of the Company's Capital Stock (other than Excluded Contributions); plus
(iv) the amount by which Indebtedness of the Company or any of its Restricted Subsidiaries is reduced on the Company's balance sheet upon the conversion or exchange subsequent to November 28, 2001 of any Indebtedness of the Company or any of its Restricted Subsidiaries incurred after November 28, 2001 into or for Qualified Capital Stock; plus
(v) without duplication, the sum of:
(a) the aggregate amount returned in cash on or with respect to Investments (other than Permitted Investments) made subsequent to November 28, 2001 whether through interest payments, principal payments, dividends or other distributions or payments;
(b) the net cash proceeds received by the Company or any Restricted Subsidiary of the Company from the disposition of all or any portion of such Investments (other than to a Subsidiary of the Company); and
(c) upon redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary, the fair market value of such Subsidiary (valued in each case as provided in the definition of "Investment");
PROVIDED, HOWEVER, that the sum of clauses (a), (b) and (c) above shall not exceed the aggregate amount of all such Investments made by the Company or any Restricted Subsidiary in the relevant Person or Unrestricted Subsidiary subsequent to November 28, 2001.
Notwithstanding the foregoing, the provisions set forth in the immediately preceding paragraph do not prohibit:
(1) the payment of any dividend or other distribution within 60 days after the date of declaration of such dividend or other distribution if the dividend or other distribution would have been permitted on the date of declaration;
(2) if no Default or Event of Default shall have occurred and be continuing, the acquisition of any shares of Capital Stock of the Company, either (a) solely in exchange for shares of Qualified Capital Stock of the Company, or (b) through the application of net proceeds of a substantially concurrent sale for cash (other than to a Subsidiary of the Company) of shares of Qualified Capital Stock of the Company;
(3) if no Default or Event of Default shall have occurred and be continuing, the acquisition of any Indebtedness of the Company that is subordinate or junior in right of payment to the Securities or a Guarantee either (a) solely in exchange for shares of Qualified Capital Stock of the Company, or (b) through the application of net proceeds of a substantially concurrent sale for cash (other than to a Subsidiary of the Company) of (i) shares of Qualified Capital Stock of the Company, or (ii) Refinancing Indebtedness;
(4) if no Default or Event of Default shall have occurred and be continuing, repurchases by the Company or any Restricted Subsidiary of the Company of securities of the Company from employees, directors or consultants of the Company or any Subsidiaries of the Company or their authorized representatives (a) upon the death, disability or termination of employment of such employees, directors or consultants or to the extent required pursuant to employee benefit plans, employment agreements or consulting agreements or (b) pursuant to any other agreements with such employees or directors of or consultants to the Company or any Subsidiaries of the Company, in an aggregate amount not to exceed $7.5 million in any calendar year (with unused amounts in any calendar year being carried over to succeeding years subject to a maximum of $15.0 million in any calendar year), PROVIDED that the cancellation of Indebtedness owing to the Company or any Restricted Subsidiary of the Company from such employees, directors or consultants of the Company or any of its Restricted
Subsidiaries in connection with a repurchase of Capital Stock of the Company will not be deemed to constitute a Restricted Payment under this Indenture;
(5) the declaration and payment of dividends to holders of any class or series of Preferred Stock of the Company, provided that for the most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date of issuance of such Preferred Stock, after giving effect to such issuance on a PRO FORMA basis, the Company would have been able to incur at least $1.00 of Indebtedness (other than Permitted Indebtedness) pursuant to Section 4.4;
(6) the payment of dividends on the Company's Common Stock following the first public offering of the Company's Common Stock after the Issue Date, of up to 6% per annum of the net proceeds received by the Company in such public offering (other than public offerings with respect to the Company's Common Stock registered on Form S-8);
(7) the repurchase, retirement or other acquisition or retirement for value of any securities of the Company in existence on the Issue Date and from the Persons holding such securities on the Issue Date and which are not held by Apollo or any of its Affiliates or members of management of the Company and its Subsidiaries on the Issue Date (including any equity interests issued in respect of any such securities constituting equity interests as a result of a stock split, recapitalization, merger, combination, consolidation or similar transaction); PROVIDED, HOWEVER, that the Company shall be permitted to make Restricted Payments under this clause only if after giving effect thereto, the Company would be permitted to incur at least $1.00 of additional Indebtedness (other than Permitted Indebtedness) pursuant to Section 4.4;
(8) other Restricted Payments in an aggregate amount not to exceed $15.0 million;
(9) if no Default or Event of Default shall have occurred and be continuing, payments or distributions to dissenting stockholders pursuant to applicable law, pursuant to or in connection with a consolidation, merger or transfer of assets that complies with the provisions of this Indenture applicable to mergers, consolidations and transfers of all or substantially all of the property and assets of the Company;
(10) Investments that are made with Excluded Contributions;
(11) any payments made to consummate the Transactions pursuant to or contemplated by the Merger Agreement and any other agreements related to the Recapitalization in effect on the closing date of the Recapitalization, in each case, as
such agreements or documents are in effect on the Issue Date as amended from time to time so long as such amendment is in the good faith judgment of the Board of Directors of the Company not more disadvantageous to the Holders of the Securities in any material respect than such agreements or documents as in effect on the Issue Date;
(12) repurchases of Capital Stock deemed to occur upon the exercise of stock options, warrants or other convertible securities, to the extent such Capital Stock represents a portion of the consideration for such exercise;
(13) the acquisition of any shares of Disqualified Capital Stock of the Company either (a) solely in exchange for shares of Disqualified Capital Stock of the Company or (b) through the application of the net proceeds of a substantially concurrent sale for cash (other than to a Subsidiary of the Company) of shares of Disqualified Capital Stock of the Company;
(14) any purchase or redemption of Indebtedness that ranks junior to the Securities utilizing any Net Cash Proceeds remaining after the Company has complied with the requirements of the covenants described under Sections 4.16 and 4.17;
(15) the payment of dividends, other distributions or amounts by the Company to any direct or indirect parents of the Company in amounts required to pay the tax obligations of the Company and its Subsidiaries and the tax obligations of any direct or indirect parents of the Company attributable to the Company and its Subsidiaries; PROVIDED that (x) the amount of dividends paid pursuant to this clause (15) to enable any direct or indirect parents of the Company to pay Federal and state income taxes at any time shall not exceed the amount of such Federal and state income taxes actually owing by any direct or indirect parents of the Company at such time for the respective period and (y) any refunds received by any direct or indirect parents of the Company attributable to the Company and its Subsidiaries shall promptly be returned by such direct or indirect parents to the Company; and
(16) if no Default or Event of Default shall have occurred and be continuing, payments by the Company of cash, in lieu of the issuance of fractional shares upon the exercise of warrants or upon the conversion or exchange of, or issuance of Capital Stock in lieu of cash dividends on, any Capital Stock of the Company or any Restricted Subsidiary, which in the aggregate do not exceed $3.0 million.
In determining the aggregate amount of Restricted Payments made subsequent to
November 28, 2001, in accordance with clause (c) of the immediately preceding
paragraph, amounts expended pursuant to clauses (1), (2), (4), (5), (6), (7),
(8), (9), (14) and (16) shall be included in such calculation.
Not later than the date of making any Restricted Payment, the Company shall deliver to the Trustee an Officers' Certificate stating that such Restricted Payment complies with this Indenture and setting forth in reasonable detail the basis upon which the required calculations were computed, which calculations may be based upon the Company's latest available internal quarterly financial statements.
4.4. LIMITATION ON INCURRENCE OF ADDITIONAL INDEBTEDNESS.
The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume, guarantee, acquire, become liable, contingently or otherwise, with respect to, or otherwise become responsible for payment of (collectively, "INCUR") any Indebtedness (other than Permitted Indebtedness); PROVIDED, HOWEVER, that if no Default or Event of Default shall have occurred and be continuing at the time of or as a consequence of the incurrence of any such Indebtedness, (i) the Company may incur Indebtedness (including, without limitation, Acquired Indebtedness) if on the date of the incurrence of such Indebtedness, after giving effect to the incurrence thereof, the Company's Consolidated Fixed Charge Coverage Ratio is greater than 2.0 to 1.0 and (ii) any Restricted Subsidiary of the Company may incur Indebtedness (including, without limitation, Acquired Indebtedness) if on the date of the incurrence of such Indebtedness, after giving effect to the incurrence thereof, such Restricted Subsidiary's Consolidated Fixed Charge Coverage Ratio is greater than 2.0 to 1.0.
4.5. CORPORATE EXISTENCE.
Except as otherwise permitted by Article Five, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and the corporate, partnership or other existence of each of its Restricted Subsidiaries in accordance with the respective organizational documents of each such Restricted Subsidiary and the rights (charter and statutory) and material franchises of the Company and each of its Restricted Subsidiaries; PROVIDED, HOWEVER, that neither the Company nor any Restricted Subsidiary shall be required to preserve any such right or franchise or in the case of any Restricted Subsidiary, its existence, if (in each case) the Board of Directors of the Company shall determine that the loss thereof is not, and will not be, adverse in any material respect to the Holders.
4.6. PAYMENT OF TAXES AND OTHER CLAIMS.
The Company shall pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (a) all material taxes, assessments and governmental charges levied or imposed upon it or any of its Subsidiaries or upon the income, profits or property of it or any of its Restricted Subsidiaries and (b) all lawful claims for labor, materials and supplies which, in each case, if unpaid, might by law become a material liability or Lien upon the
property of it or any of its Restricted Subsidiaries; PROVIDED, HOWEVER, that the Company shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, (i) the applicability or validity is being contested in good faith by appropriate proceedings and for which appropriate provision has been made or (ii) where the failure to effect such payment or discharge is not adverse in any material respect to the Holders.
4.7. MAINTENANCE OF PROPERTIES AND INSURANCE.
(a) The Company shall cause all material properties owned by or
leased by it or any of its Restricted Subsidiaries used or useful to the conduct
of its business or the business of any of its Restricted Subsidiaries, taken as
a whole, to be maintained and kept in normal condition, repair and working order
and supplied with all necessary equipment and shall cause to be made all
repairs, renewals, replacements, and betterments thereof, all as in its judgment
may be necessary, so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; PROVIDED, HOWEVER, that
nothing in this Section 4.7 shall prevent the Company or any of its Restricted
Subsidiaries from discontinuing the use, operation or maintenance of any of such
properties, or disposing of any of them, if such discontinuance or disposal is,
in the judgment of the Board of Directors of the Company or any such Restricted
Subsidiary desirable in the conduct of the business of the Company or any such
Restricted Subsidiary, and if such discontinuance or disposal is not adverse in
any material respect to the Holders; PROVIDED FURTHER that nothing in this
Section 4.7 shall prevent the Company or any of its Restricted Subsidiaries from
discontinuing or disposing of any properties to the extent otherwise permitted
by this Indenture.
(b) The Company shall maintain, and shall cause its Restricted Subsidiaries to maintain, insurance with responsible carriers against such risks and in such amounts, and with such deductibles, retentions, self-insured amounts and co-insurance provisions, as are, in the Company's reasonable judgment, customarily carried by similar businesses of similar size, including property and casualty loss, workers' compensation and interruption of business insurance.
4.8. COMPLIANCE CERTIFICATE; NOTICE OF DEFAULT.
(a) The Issuer and each Guarantor, if any, shall deliver to the Trustee, within 120 days after the close of each fiscal year of the Issuer, an Officers' Certificate stating that a review of the activities of the Issuer or the applicable Guarantor has been made under the supervision of the signing Officers with a view to determining whether it has kept, observed, performed and fulfilled its obligations under this Indenture and further stating, as to each such Officer signing such certificate, that to the best of his or her knowledge, the Issuer or the applicable Guarantor during such preceding fiscal year has kept, observed, performed and fulfilled each and every such covenant and no Default or Event of Default occurred during such
year and at the date of such certificate there is no Default or Event of Default that has occurred and is continuing or, if such signers do know of such Default or Event of Default, the certificate shall describe its status with particularity. The applicable Officers' Certificate shall also notify the Trustee should either of the Issuer or any Guarantor elect to change the manner in which it fixes its fiscal year end.
(b) The annual financial statements delivered pursuant to Section 4.10 shall be accompanied by a written report of the Company's independent accountants (who shall be a firm of established national reputation) that in conducting their audit of such financial statements nothing has come to their attention that would lead them to believe that the Issuer has violated any provisions of Article Four, Five or Six of this Indenture insofar as they relate to accounting matters or, if any such violation has occurred, specifying the nature and period of existence thereof, it being understood that such accountants shall not be liable directly or indirectly to any Person for any failure to obtain knowledge of any such violation.
(c) The Issuer shall promptly deliver to the Trustee, in the event that any Officer becomes aware of any Default or Event of Default in the performance of any covenant, agreement or condition contained in this Indenture, an Officers' Certificate specifying the Default or Event of Default and describing its status with particularity.
(d) The Issuer shall file with the Trustee promptly at the end of each calendar year (i) a written notice specifying the amount of the original issue discount (including daily rates and accrual periods) accrued on outstanding Securities as of the end of such year and (ii) such other specific information relating to such original issue discount as may then be relevant under the Internal Revenue Code of 1986, as amended from time to time.
4.9. COMPLIANCE WITH LAWS.
The Company shall comply, and shall cause each of its Subsidiaries to comply, with all applicable statutes, rules, regulations, orders and restrictions of the United States, all states and municipalities thereof, and of any governmental department, commission, board, regulatory authority, bureau, agency and instrumentality of the foregoing, in respect of the conduct of their respective businesses and the ownership of their respective properties, except for such noncompliances as would not in the aggregate have a material adverse effect on the financial condition or results of operations of the Company and its Subsidiaries taken as a whole.
4.10. REPORTS TO HOLDERS.
Whether or not required by the rules and regulations of the Commission, so long as any Securities are outstanding, the Company shall file a copy of the following information and reports with the Commission for public availability (unless the Commission will not accept
such a filing) and shall furnish to the Holders of Securities and to securities analysts and prospective investors, upon their written request:
(i) all quarterly and annual financial information that would be required to be contained in a filing with the Commission on Forms 10-Q and 10-K if the Company were required to file such Forms, including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" that describes the financial condition and results of operations of the Company and its consolidated Subsidiaries and, with respect to the annual information only, a report thereon by the Company's certified independent accountants; and
(ii) all current reports that would be required to be filed with the Commission on Form 8-K if the Company were required to file such reports, in each case within the time periods specified in the Commission's rules and regulations.
In addition, following the consummation of the Exchange Offer, whether or not required by the rules and regulations of the Commission, the Company shall file a copy of all such information and reports with the Commission for public availability within the time periods specified in the Commission's rules and regulations (unless the Commission will not accept such a filing) and make such information available to securities analysts and prospective investors upon written request to the Company.
In addition, for so long as any Securities remain outstanding, the Company shall furnish to the Holders and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.
4.11. WAIVER OF STAY, EXTENSION OR USURY LAWS.
The Issuer and each Guarantor, if any, covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law or any usury law or other law that would prohibit or forgive such Issuer or such Guarantor from paying all or any portion of the Accreted Value of, premium, if any, and/or interest on the Securities or the Guarantee of any such Guarantor as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Indenture, and (to the extent that it may lawfully do so) each hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.
4.12. LIMITATIONS ON TRANSACTIONS WITH AFFILIATES.
(a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, enter into or permit to exist any transaction or series of related transactions (including, without limitation, the purchase, sale, lease or exchange of any property or the rendering of any service) with, or for the benefit of, any of its Affiliates (each an "AFFILIATE TRANSACTION"), other than (x) Affiliate Transactions permitted under paragraph (b) below and (y) Affiliate Transactions on terms that are no less favorable than those that could reasonably have been obtained in a comparable transaction at such time on an arm's-length basis from a Person that is not an Affiliate of the Company or such Restricted Subsidiary. All Affiliate Transactions (and each series of related Affiliate Transactions which are similar or part of a common plan) involving aggregate payments or other property with a fair market value in excess of $2.0 million shall be approved by the Board of Directors of the Company or such Restricted Subsidiary, as the case may be, such approval to be evidenced by a Board Resolution stating that such Board of Directors has determined that such transaction complies with the foregoing provisions. If the Company or any Restricted Subsidiary of the Company enters into an Affiliate Transaction (or a series of related Affiliate Transactions related to a common plan) that involves an aggregate fair market value of more than $10.0 million, the Company or such Restricted Subsidiary, as the case may be, shall, prior to the consummation thereof, obtain a favorable opinion as to the fairness of such transaction or series of related transactions to the Company or the relevant Restricted Subsidiary, as the case may be, from a financial point of view, from an Independent Financial Advisor and file the same with the Trustee.
(b) The restrictions set forth in clause (a) shall not apply to:
(i) reasonable fees and compensation paid to and indemnity provided on behalf of, officers, directors, employees or consultants of the Company or any Restricted Subsidiary of the Company as determined in good faith by the Company's Board of Directors;
(ii) transactions exclusively between or among the Company and any of its Restricted Subsidiaries or exclusively between or among such Restricted Subsidiaries, PROVIDED such transactions are not otherwise prohibited by this Indenture;
(iii) any agreement as in effect or entered into as of the Issue Date or any amendment thereto or any transaction contemplated thereby (including pursuant to any amendment thereto) in any replacement agreement thereto so long as any such amendment or replacement agreement is not more disadvantageous to the Holders in any material respect than the original agreement as in effect on the Issue Date;
(iv) Restricted Payments and Permitted Investments permitted by this Indenture;
(v) transactions in which the Company or any of its Restricted Subsidiaries, as the case may be, delivers to the Trustee a letter from an Independent Financial Advisor stating that such transaction is fair to the Company or such Restricted Subsidiary from a financial point of view or meets the requirements of the first sentence of paragraph (a) above;
(vi) the issuance of securities or other payments, awards or grants in cash, securities or otherwise pursuant to or the funding of, employment arrangements, stock options and stock ownership plans or similar employee benefit plans approved by Board of Directors of the Company in good faith and loans to employees of the Company and its Subsidiaries which are approved by the Board of Directors of the Company in good faith;
(vii) transactions with customers, clients, suppliers, or purchasers or sellers of goods or services, in each case on ordinary business terms and otherwise in compliance with the terms of this Indenture, which are fair to the Company or its Restricted Subsidiaries, in the reasonable determination of the Board of Directors of the Company or the senior management thereof, or are on terms at least as favorable as could reasonably have been obtained at such time from an unaffiliated party;
(viii) fees payable to Apollo pursuant to the Management Agreement as in effect on the Issue Date or pursuant to any amendment, restatement or replacement thereof to the extent that such amendment, restatement or replacement does not provide for any fees or other payments in excess of those set forth in the Management Agreement as in effect on the Issue Date;
(ix) any contribution to the capital of the Company by any Permitted Holder, or any sales of Capital Stock of the Company to any Permitted Holder; and
(x) any tax sharing agreement or arrangement and payments pursuant thereto among the Company and its Subsidiaries and any other Person with which the Company or its Subsidiaries is required or permitted to file a consolidated tax return or with which the Company or any of its Restricted Subsidiaries is or could be part of a consolidated group for tax purposes in amounts not otherwise prohibited by this Indenture.
4.13. LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES.
The Company shall not, and shall not cause or permit any of its Restricted Subsidiaries (other than a Restricted Subsidiary that has executed a Guarantee) to, directly or indirectly, create or otherwise cause or permit to exist or become effective any encumbrance or restriction
on the ability of any Restricted Subsidiary of the Company to (a) pay dividends or make any other distribution on or in respect of its Capital Stock (it being understood that the priority of any Preferred Stock in receiving dividends or liquidating distributions prior to dividends or liquidating distributions being paid on Common Stock shall not be deemed a restriction on the ability to make distributions on Capital Stock); (b) make loans or advances or to pay any Indebtedness or other obligation owed to the Company or any other Restricted Subsidiary of the Company; or (c) transfer any of its property or assets to the Company or any other Restricted Subsidiary of the Company, except for such encumbrances or restrictions existing under or by reason of:
(i) applicable law, rule, regulation, order, grant or governmental permit;
(ii) this Indenture, the Existing Compass Minerals Indenture and the Existing Compass Minerals Notes and the guarantees thereof;
(iii) the Credit Agreement;
(iv) customary non-assignment provisions of any contract, license or any lease of any Restricted Subsidiary of the Company;
(v) any instrument governing Acquired Indebtedness, which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person or the properties or assets of the Person so acquired;
(vi) agreements existing or entered into on the Issue Date to the extent and in the manner such agreements are in effect on the Issue Date;
(vii) purchase money obligations for property acquired in the ordinary course of business or Capitalized Lease Obligations that impose restrictions of the nature discussed in clause (c) above on the property so acquired;
(viii) contracts for the sale of assets, including, without limitation, customary restrictions with respect to a Restricted Subsidiary of the Company pursuant to an agreement that has been entered into for the sale or disposition of all or substantially all of the Capital Stock or assets of such Restricted Subsidiary;
(ix) secured Indebtedness otherwise permitted to be incurred pursuant to Sections 4.4 and 4.15 that limit the right of the debtor to dispose of the assets securing such Indebtedness;
(x) customary provisions in joint venture agreements and other similar agreements entered into in the ordinary course of business;
(xi) customary net worth and restrictions on transfer, assignment or subletting provisions contained in leases and other agreements entered into by the Company or any Restricted Subsidiary;
(xii) any restriction in any agreement or instrument of a Receivables Subsidiary governing a Qualified Receivables Transaction;
(xiii) any agreement governing Indebtedness incurred to Refinance the Indebtedness issued, assumed or incurred pursuant to an agreement referred to in clauses (i) through (xii) above; PROVIDED, HOWEVER, that the provisions relating to such encumbrance or restriction contained in any such Indebtedness, taken as a whole, are no less favorable to the Company in any material respect as determined by the Board of Directors of the Company in its reasonable and good faith judgment than the provisions relating to such encumbrance or restriction contained in agreements referred to in such clauses; or
(xiv) any agreement governing Indebtedness permitted to be incurred pursuant to Section 4.4; PROVIDED that either (y) the provisions relating to such encumbrance or restriction contained in such Indebtedness, taken as a whole, are no less favorable to the Company in any material respect as determined by the Board of Directors of the Company in its reasonable and good faith judgment than the provisions contained in the Credit Agreement, the Existing Compass Minerals Indenture or in this Indenture, in each case, as in effect on the Issue Date or (z) any encumbrance or restriction contained in such Indebtedness does not prohibit (except upon a default or event of default thereunder) the payment of dividends in an amount sufficient, as determined by the Board of Directors of the Company in its reasonable and good faith judgment, to make scheduled payments of cash interest on the Securities.
4.14. LIMITATION ON ISSUANCES OF GUARANTEES BY RESTRICTED SUBSIDIARIES.
The Company shall not permit any Restricted Subsidiary of the Company, directly or indirectly, to Guarantee any Indebtedness of the Company (other than Indebtedness and other obligations under the Credit Agreement), unless (i) such Restricted Subsidiary simultaneously executes and delivers a supplemental indenture to this Indenture providing for a Guarantee of payment of the Securities by such Restricted Subsidiary and (ii) such Restricted Subsidiary waives and will not in any manner whatsoever claim or take the benefit or advantage of any rights of reimbursement, indemnity or subrogation or any other rights against the Company or any other Restricted Subsidiary as a result of any payment by such Restricted Subsidiary under its Guarantee so long as any Securities remain outstanding.
Notwithstanding the foregoing, any such Guarantee by a Restricted Subsidiary may provide by its terms that it shall be automatically and unconditionally released and discharged
upon (i) any sale, exchange or transfer, to any Person not an Affiliate of the Company, of all of the Company's and each Restricted Subsidiary's Capital Stock in, or all or substantially all the assets of, such Restricted Subsidiary (which sale, exchange or transfer is not prohibited by this Indenture), (ii) the release or discharge of the guarantee, if any, which resulted in the creation of such Guarantee, except a discharge or release by or as a result of payment under such guarantee or (iii) the designation of such Restricted Subsidiary as an Unrestricted Subsidiary in accordance with the provisions of this Indenture.
4.15. LIMITATION ON LIENS.
The Company shall not, directly or indirectly, create, incur, assume or permit or suffer to exist any Liens of any kind against or upon any property or assets of the Company whether owned on the Issue Date or acquired after the Issue Date, or any proceeds therefrom, or assign or otherwise convey any right to receive income or profits therefrom unless:
(a) in the case of Liens securing Indebtedness that is expressly subordinate or junior in right of payment of the Securities, the Securities are secured by a Lien on such property, assets or proceeds that is senior in priority to such Liens; and
(b) in all other cases, the Securities are equally and ratably secured, except for the following Liens which are expressly permitted:
(i) Liens existing as of the Issue Date;
(ii) Liens securing Indebtedness (including any guarantee) incurred by the Company under the Credit Agreement;
(iii) Liens securing the Securities;
(iv) Liens in favor of the Company;
(v) Liens securing Refinancing Indebtedness which is incurred to Refinance any Indebtedness (including, without limitation, Acquired Indebtedness) which has been secured by a Lien permitted under this Indenture and which has been incurred in accordance with the provisions of this Indenture; PROVIDED, HOWEVER, that such Liens:
(a) are no less favorable to the Holders and are not more favorable to the lienholders with respect to such Liens than the Liens in respect of the Indebtedness being Refinanced; and
(b) do not extend to or cover any property or assets of the Company not securing the Indebtedness so Refinanced; and
(vi) Permitted Liens.
4.16. CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, the Company shall be obligated to make an offer to purchase (the "CHANGE OF CONTROL OFFER"), and shall purchase, on a Business Day (the "CHANGE OF CONTROL PAYMENT DATE") as described below, all or a portion of the then outstanding Securities at a purchase price equal to 101% of the Accreted Value thereof, plus accrued and unpaid interest, if any, thereon to the Change of Control Payment Date. The Change of Control Offer shall remain open for at least 20 Business Days and until the close of business on the Change of Control Payment Date. Notwithstanding the occurrence of a Change of Control, the Company shall not be obligated to repurchase the Securities pursuant to this Section 4.16 in the event that the Company has exercised its right to redeem all the Securities under the terms of Article III of this Indenture and paragraph 5 of the Securities.
(b) Prior to the mailing of the notice referred to below, but in any event within 60 days following any Change of Control, the Company covenants to:
(i) repay in full and terminate all commitments under Indebtedness under the Credit Agreement and offer to repay in full and terminate all commitments under all Indebtedness under the Credit Agreement and to repay the Indebtedness owed to (and terminate all commitments of) each lender which has accepted such offer; or
(ii) obtain the requisite consents under the Credit Agreement to permit the repurchase of the Securities as provided below.
The Company shall first comply with the covenant in the immediately preceding sentence before it shall be required to repurchase Securities pursuant to the provisions described below. The Company's failure to comply with the covenant described in the second preceding sentence (and any failure to send the notice referred to in clause (c) below because the same is prohibited by the second preceding sentence) may (with notice and lapse of time) constitute an Event of Default described in clause (iii) of Section 6.1 but shall not constitute an Event of Default described in clause (ii) of Section 6.1.
(c) Within 60 days following the date upon which a Change of Control occurs (the "CHANGE OF CONTROL DATE"), the Company shall send, by first class mail, a notice to each Holder, with a copy to the Trustee, which notice shall govern the terms of the Change of Control Offer. The notice to the Holders shall contain all instructions and materials necessary to enable such Holders to tender Securities pursuant to the Change of Control Offer. Such notice shall state:
(i) that the Change of Control Offer is being made pursuant to this Section 4.16 and that all Securities tendered and not withdrawn will be accepted for payment;
(ii) the purchase price (including the amount of accrued interest) and the Change of Control Payment Date, which shall be a Business Day, that is not earlier than 30 days or later than 60 days from the date such notice is mailed, other than as may be required by law;
(iii) that any Security not tendered will continue to accrete Accreted Value or accrue interest, as the case may be;
(iv) that, unless the Company defaults in making payment therefor, any Security accepted for payment pursuant to the Change of Control Offer shall cease to accrete Accreted Value or accrue interest, as the case may be, after the Change of Control Payment Date;
(v) that Holders electing to have a Security purchased pursuant to a Change of Control Offer will be required to surrender the Security, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Security completed, to the Paying Agent at the address specified in the notice prior to the close of business on the third Business Day prior to the Change of Control Payment Date;
(vi) that Holders will be entitled to withdraw their election if the Paying Agent receives, not later than the second Business Day prior to the Change of Control Payment Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount at maturity of the Securities the Holder delivered for purchase and a statement that such Holder is withdrawing his election to have such Security purchased;
(vii) that Holders electing to have their Securities purchased only in part will be issued new Securities in a principal amount at maturity equal to the unpurchased portion of the Securities surrendered; and
(viii) the circumstances and relevant facts regarding such Change of Control.
The Company shall not be required to make a Change of Control Offer upon a Change of Control if any other Person makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Section 4.16 applicable to a Change of Control Offer made by the Company and purchases all Securities validly tendered and not withdrawn under such Change of Control Offer.
On or before the Change of Control Payment Date, the Company shall (i) accept for payment Securities or portions thereof tendered pursuant to the Change of Control Offer, (ii) deposit with the Paying Agent U.S. Legal Tender sufficient to pay the purchase price plus accrued interest, if any, of all Securities so tendered and (iii) deliver to the Trustee Securities so accepted together with an Officers' Certificate stating the Securities or portions thereof being purchased by the Company. The Paying Agent shall promptly mail to the Holders of Securities so accepted payment in an amount equal to the purchase price plus accrued interest, if any, and upon written order of the Company the Trustee shall promptly authenticate and mail to such Holders new Securities equal in principal amount to any unpurchased portion of the Securities surrendered. Any Securities not so accepted shall be promptly mailed by the Company to the Holder thereof. For purposes of this Section 4.16, the Trustee shall act as the Paying Agent.
Any amounts remaining with the Paying Agent after the purchase of Securities pursuant to a Change of Control Offer shall be returned by the Trustee to the Company.
The Company shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of Securities pursuant to a Change of Control Offer. To the extent the provisions of any securities laws or regulations conflict with the provisions of this Section 4.16, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Section 4.16 by virtue thereof.
4.17. LIMITATION ON ASSET SALES.
The Company shall not, and shall not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless:
(i) the Company or the applicable Restricted Subsidiary, as the case may be, receives consideration at the time of such Asset Sale at least equal to the fair market value of the assets sold or otherwise disposed of (as determined in good faith by the Company's senior management or, in the case of an Asset Sale in excess of $5.0 million, the Board of Directors of the Company);
(ii) at least 75% of the consideration received by the Company or the Restricted Subsidiary, as the case may be, from such Asset Sale shall be in the form of (x) cash or Cash Equivalents, (y) properties and assets to be owned by the Company or any of its Restricted Subsidiaries and used in a Permitted Business or (z) Capital Stock in one or more Persons engaged in a Permitted Business that are or thereby become Restricted Subsidiaries of the Company, and, in each case, such consideration is received at the time of such disposition; PROVIDED that the amount of (a) any liabilities
(as shown on the Company's or such Restricted Subsidiary's most recent balance sheet) of the Company or any Restricted Subsidiary (other than liabilities that are by their terms subordinated to the Securities) that are assumed by the transferee of any such assets, and (b) any notes or other securities received by the Company or any such Restricted Subsidiary from such transferee that are converted by the Company or such Restricted Subsidiary into cash within 180 days after such Asset Sale (to the extent of the cash received) shall be deemed to be cash for the purposes of this provision only; and
(iii) upon the consummation of an Asset Sale, the Company shall apply, or cause such Restricted Subsidiary to apply, the Net Cash Proceeds relating to such Asset Sale within 390 days of receipt thereof either:
(A) to prepay any Indebtedness under the Credit Agreement or Indebtedness of a Restricted Subsidiary and, in the case of Indebtedness under any revolving credit facility, effect a permanent reduction in the availability under such revolving credit facility (or effect a permanent reduction in availability under such revolving credit facility regardless of the fact that no prepayment is required);
(B) to make an Investment (x) in properties and assets that replace the properties and assets that were the subject of such Asset Sale, (y) in properties and assets that will be used by the Company or a Restricted Subsidiary in a Permitted Business or (z) permitted by clause (1) of the definition of Permitted Investments (collectively, "REPLACEMENT ASSETS"); or
(C) a combination of prepayment and investment permitted by the foregoing clauses (iii)(A) and (iii)(B).
Pending the final application of the Net Cash Proceeds, the Company and its Restricted Subsidiaries may temporarily reduce Indebtedness or otherwise invest such Net Cash Proceeds in any manner not prohibited by this Indenture.
On the 391st day after an Asset Sale or such earlier date, if any, as the senior management or the Board of Directors of the Company or of such Restricted Subsidiary determines not to apply the Net Cash Proceeds relating to such Asset Sale as set forth in clauses (iii)(A), (iii)(B) and (iii)(C) of the next preceding paragraph (each, a "NET PROCEEDS OFFER TRIGGER DATE"), such aggregate amount of Net Cash Proceeds which have not been applied on or before such Net Proceeds Offer Trigger Date as permitted in clauses (iii)(A), (iii)(B) and (iii)(C) of the next preceding paragraph (each a "NET PROCEEDS OFFER AMOUNT") shall be applied by the Company or such Restricted Subsidiary to make an offer to purchase (the "NET PROCEEDS OFFER") on a date (the "NET PROCEEDS OFFER PAYMENT Date") not less than 30 nor more
than 60 days following the applicable Net Proceeds Offer Trigger Date, from all Holders on a pro rata basis, that amount of Securities equal to the Net Proceeds Offer Amount at a price equal to 100% of the Accreted Value of the Securities to be purchased, plus accrued and unpaid interest thereon, if any, to the date of purchase; PROVIDED, HOWEVER, that if the Company is required by the terms of any PARI PASSU Indebtedness of the Company, such Net Proceeds Offer may be made ratably to purchase the Securities and such other Indebtedness of the Company that ranks PARI PASSU with the Securities.
If at any time any non-cash consideration received by the Company or any Restricted Subsidiary of the Company, as the case may be, in connection with any Asset Sale is converted into or sold or otherwise disposed of for cash (other than interest received with respect to any such non-cash consideration), then such conversion or disposition shall be deemed to constitute an Asset Sale hereunder as of the date of such conversion or disposition and the Net Cash Proceeds thereof shall be applied in accordance with this Section.
The Company may defer the Net Proceeds Offer until there is an aggregate unutilized Net Proceeds Offer Amount equal to or in excess of $10.0 million resulting from one or more Asset Sales (at which time, the entire unutilized Net Proceeds Offer Amount, and not just the amount in excess of $10.0 million, shall be applied as required pursuant to the second preceding paragraph).
In the event of the transfer of substantially all (but not all) of the
property and assets of the Company and its Restricted Subsidiaries as an
entirety to a Person in a transaction permitted under Section 5.1, which
transaction does not constitute a Change of Control, the successor corporation
shall be deemed to have sold the properties and assets of the Company and its
Restricted Subsidiaries not so transferred for purposes of this Section, and
shall comply with the provisions of clause (iii) of this Section with respect to
such deemed sale as if it were an Asset Sale. In addition, the fair market value
of such properties and assets of the Company or its Restricted Subsidiaries
deemed to be sold shall be deemed to be Net Cash Proceeds for purposes of this
Section 4.17.
Notice of each Net Proceeds Offer pursuant to this Section 4.17 shall be mailed or caused to be mailed, by first class mail, by the Company within 25 days following the applicable Net Proceeds Offer Trigger Date to all Holders at their last registered addresses, with a copy to the Trustee. A Net Proceeds Offer shall remain open for a period of 20 Business Days or such longer period as may be required by law. The notice shall contain all instructions and materials necessary to enable such Holders to tender Securities pursuant to the Net Proceeds Offer and shall state the following terms:
(i) that Holders may elect to have their Securities purchased by the Company either in whole or in part (subject to proration as hereinafter described in the
event the Net Proceeds Offer is oversubscribed) in integral multiples of $1,000 principal amount at maturity, at the applicable purchase price;
(ii) that the Net Proceeds Offer is being made pursuant to this Section 4.17 and that all Securities tendered will be accepted for payment; PROVIDED, HOWEVER, that if the principal amount of Securities tendered in the Net Proceeds Offer exceeds the aggregate amount of the Net Proceeds Offer Amount, the Company shall select the Securities to be purchased on a PRO RATA basis (based on amounts tendered) (with such adjustments as may be deemed appropriate by the Company so that only Securities in denominations of $1,000 principal amount at maturity, or integral multiples thereof, shall be purchased);
(iii) the purchase price (including the amount of accrued interest, if any) and the purchase date (which shall be no earlier than 30 days nor later than 60 days from the Net Proceeds Offer Trigger Date, other than as may be required by applicable law);
(iv) that any Security not tendered will continue to accrete Accreted Value or accrue interest, as the case may be;
(v) that, unless the Company defaults in making payment therefor, any Security accepted for payment pursuant to the Net Proceeds Offer shall cease to accrue interest after the Net Proceeds Offer Payment Date;
(vi) that Holders electing to have a Security purchased pursuant to the Net Proceeds Offer will be required to surrender the Security, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Security completed, to the Paying Agent at the address specified in the notice prior to the close of business on the Net Proceeds Offer Payment Date;
(vii) that Holders will be entitled to withdraw their election if the Paying Agent receives, not later than the second Business Day prior to the Net Proceeds Offer Payment Date, a facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Security the Holder delivered for purchase and a statement that such Holder is withdrawing his election to have such Security purchased; and
(viii) that Holders whose Securities are purchased only in part will be issued new Securities in a principal amount at maturity equal to the unpurchased portion of the Securities surrendered.
On or before the Net Proceeds Offer Payment Date, the Company shall
(i) accept for payment Securities or portions thereof tendered pursuant to the
Net Proceeds Offer, (ii) deposit with the Paying Agent U.S. Legal Tender
sufficient to pay the purchase price, plus
accrued interest, if any, of all Securities to be purchased and (iii) deliver to the Trustee Securities so accepted together with an Officers' Certificate stating the Securities or portions thereof being purchased by the Company. The Paying Agent shall promptly mail to the Holders of Securities so accepted payment in an amount equal to the purchase price, plus accrued interest, if any, thereon set forth in the notice of such Net Proceeds Offer. Any Security not so accepted shall be promptly mailed by the Company to the Holder thereof. For purposes of this Section 4.17, the Trustee shall act as the Paying Agent.
Any amounts remaining after the purchase of Securities pursuant to a Net Proceeds Offer shall be returned by the Trustee to the Company. To the extent that the aggregate amount of the Securities tendered pursuant to a Net Proceeds Offer is less than the Net Proceeds Offer Amount, the Company may use such excess Net Proceeds Offer Amount for general corporate purposes or for any other purposes not prohibited by this Indenture. Upon completion of any such Net Proceeds Offer, the Net Proceeds Offer Amount shall be reset at zero.
The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Securities pursuant to a Net Proceeds Offer. To the extent that
the provisions of any securities laws or regulations conflict with the
provisions of this Section 4.17, the Company shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under this Section 4.17 by virtue thereof. The provisions of this
Section and other provisions contained in this Indenture relating to the
Company's obligation to make a Net Proceeds Offer may be waived or modified with
the written consent of the Holders of a majority in principal amount at maturity
of the Securities.
ARTICLE FIVE
SUCCESSOR CORPORATION
5.1. MERGER, CONSOLIDATION AND SALE OF ASSETS.
(a) The Company shall not, in a single transaction or series of related transactions, consolidate or merge with or into any Person, or sell, assign, transfer, lease, convey or otherwise dispose of (or cause or permit any Restricted Subsidiary of the Company to sell, assign, transfer, lease, convey or otherwise dispose of) all or substantially all of the Company's assets (determined on a consolidated basis for the Company and the Company's Restricted Subsidiaries) whether as an entirety or substantially as an entirety to any Person unless:
(i) either (a) the Company shall be the surviving or continuing corporation, partnership, trust or limited liability company or (b) the Person (if other than the Company) formed by such consolidation or into which the Company is merged or the Person which acquires by sale, assignment, transfer, lease, conveyance or other disposition the properties and assets of the Company and of the Company's Restricted Subsidiaries substantially as an entirety (the "SURVIVING ENTITY"):
(x) shall be a corporation, partnership, trust or limited liability company organized and validly existing under the laws of the United States or any State thereof or the District of Columbia; and
(y) shall expressly assume, by supplemental indenture (in form and substance reasonably satisfactory to the Trustee), executed and delivered to the Trustee, the due and punctual payment of the principal of, and premium, if any, and interest on all of the Securities and the performance of every covenant of the Securities and this Indenture on the part of the Company to be performed or observed;
(ii) immediately after giving effect to such transaction on a PRO FORMA basis and the assumption contemplated by clause (a)(i)(y) above (including giving effect to any Indebtedness and Acquired Indebtedness incurred or anticipated to be incurred in connection with or in respect of such transaction), the Company or such Surviving Entity, as the case may be, shall be able to incur at least $1.00 of additional Indebtedness (other than Permitted Indebtedness) pursuant to Section 4.4;
(iii) immediately before and immediately after giving effect to such transaction on a PRO FORMA basis and the assumption contemplated by clause (a)(i)(y) above (including, without limitation, giving effect to any Indebtedness and Acquired Indebtedness incurred or anticipated to be incurred or repaid and any Lien granted or to be released in connection with or in respect of the transaction), no Default or Event of Default shall have occurred or be continuing; and
(iv) the Company or the Surviving Entity, as the case may be, shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, sale, assignment, transfer, lease, conveyance or other disposition and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture comply with the applicable provisions of this Indenture and that all conditions precedent in this Indenture relating to such transaction have been satisfied.
Notwithstanding the foregoing, (i) the merger of the Company with an Affiliate incorporated solely for the purpose of reincorporating the Company in another jurisdiction shall be
permitted and (ii) the merger of any Restricted Subsidiary of the Company into the Company or the transfer, lease, conveyance or other disposition of all or substantially all of the assets of a Restricted Subsidiary of the Company to the Company shall be permitted so long as the Company delivers to the Trustee an Officers' Certificate stating that the purpose of such merger, transfer, lease, conveyance or other disposition is not to consummate a transaction that would otherwise be prohibited by clause (iii) of this Section 5.1(a).
(b) For purposes of the foregoing paragraph (a), the transfer (by lease, assignment, sale or otherwise, in a single transaction or series of transactions) of all or substantially all of the properties or assets of one or more Restricted Subsidiaries of the Company the Capital Stock of which constitutes all or substantially all of the properties and assets of the Company, shall be deemed to be the transfer of all or substantially all of the properties and assets of the Company.
(c) Each Guarantor (other than any Guarantor whose Guarantee is to be released in accordance with the terms of such Guarantee and this Indenture in connection with any transaction complying with the provisions of Section 4.17) shall not, and the Company shall not cause or permit any Guarantor to, consolidate with or merge with or into any Person other than the Company or any other Guarantor unless:
(i) the Person formed by or surviving any such consolidation or merger (if other than the Guarantor) or to which such sale, lease, conveyance or other disposition shall have been made is a corporation, partnership or limited liability company organized and validly existing under the laws of the United States, any State thereof, the District of Columbia or the jurisdiction in which such Guarantor is organized;
(ii) such Person expressly assumes by supplemental indenture all of the obligations of the Guarantor on its Guarantee;
(iii) immediately after giving effect to such transaction on a PRO FORMA basis, no Default or Event of Default shall have occurred and be continuing; and
(iv) immediately after giving effect to such transaction and the use of any net proceeds therefrom on a PRO FORMA basis, the Company could satisfy the provisions of clause (ii) of Section 5.1(a)
Any merger or consolidation of a Guarantor with and into the Company (with the
Company being the surviving entity) or another Guarantor that is a Wholly Owned
Restricted Subsidiary of the Company need only comply with clause (iv) of
Section 5.1(a).
5.2. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation, combination or merger or any transfer of all or substantially all of the assets of the Company in accordance with Section 5.1 in which the Company or any Guarantor, as applicable, is not the continuing corporation, the successor Person formed by such consolidation or into which the Company or such Guarantor is merged or to which such conveyance, lease or transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company or such Guarantor under this Indenture and the Securities or any Guarantee, as applicable, with the same effect as if such Surviving Entity had been named as such.
ARTICLE SIX
DEFAULT AND REMEDIES
6.1. EVENTS OF DEFAULT.
Each of the following shall be an "EVENT OF DEFAULT":
(i) the failure to pay interest on any Securities when the same becomes due and payable and the default continues for a period of 30 days;
(ii) the failure to pay the principal on any Securities, when such principal becomes due and payable, at maturity, upon redemption or otherwise (including the failure to make a payment to purchase Securities tendered pursuant to a Change of Control Offer or a Net Proceeds Offer);
(iii) a default by the Company or any Restricted Subsidiary of the Company in the observance or performance of any other covenant or agreement contained in this Indenture, which default continues for a period of 30 days after the Company receives written notice specifying the default (and demanding that such default be remedied) from the Trustee or from the Holders of at least 25% of the outstanding principal amount at maturity of the Securities;
(iv) the failure to pay at final stated maturity (giving effect to any applicable grace periods and any extensions thereof) the principal amount of any Indebtedness of the Company or the Indebtedness of any Significant Subsidiaries of the Company, or the acceleration of the final stated maturity of any such Indebtedness by the holders thereof, if the aggregate principal amount of such Indebtedness, together with the principal amount of any other such Indebtedness in default for failure to pay principal at
final stated maturity or which has been accelerated, exceeds $10.0 million or more at any time;
(v) one or more judgments in an aggregate amount in excess of $10.0 million (exclusive of amounts covered by insurance other than self-insurance) shall have been rendered against the Company or any of its Significant Subsidiaries and such judgments remain undischarged, unpaid or unstayed for a period of 60 days after such judgment or judgments become final and non-appealable;
(vi) the Company or any of its Significant Subsidiaries (i) commences a voluntary case or proceeding under any Bankruptcy Law with respect to itself, (ii) consents to the entry of a judgment, decree or order for relief against it in an involuntary case or proceeding under any Bankruptcy Law, (iii) consents to the appointment of a custodian of it or for substantially all of its property, (iv) consents to or acquiesces in the institution of a bankruptcy or an insolvency proceeding against it, (v) makes a general assignment for the benefit of its creditors or (vi) takes any corporate action to authorize or effect any of the foregoing; or
(vii) a court of competent jurisdiction enters a judgment, decree or order for relief in respect of the Company or any of its Significant Subsidiaries in an involuntary case or proceeding under any Bankruptcy Law, which shall (i) approve as properly filed a petition seeking reorganization, arrangement, adjustment or composition in respect of the Company or any of its Significant Subsidiaries, (ii) appoint a Custodian of the Company or any of its Significant Subsidiaries or for substantially all of any of its property or (iii) order the winding-up or liquidation of its affairs; and such judgment, decree or order shall remain unstayed and in effect for a period of 60 consecutive days.
If, pursuant to clause (iii) above, the Holders of at least 25% of the then outstanding principal amount at maturity of Securities notify the Company as specified in such clause, such Holders shall similarly notify the Trustee. Any notice given pursuant to clause (iii) above or the immediately preceding sentence shall be given by registered or certified mail, return receipt requested.
6.2. ACCELERATION.
If an Event of Default (other than an Event of Default specified in clause (vi) or (vii) of Section 6.1 above with respect to the Company) shall occur and be continuing, the Trustee or the Holders of at least 25% in principal amount at maturity of outstanding Securities may declare the Accreted Value of, and accrued and unpaid interest, if any, on all the Securities to be due and payable by notice in writing to the Issuer and the Trustee specifying the respective Event of Default and that it is a "notice of acceleration" (the "ACCELERATION NOTICE"), and the same (i) shall become immediately due and payable or (ii) if there are any
amounts outstanding under the Credit Agreement, shall become immediately due and
payable upon the first to occur of an acceleration under the Credit Agreement or
five (5) Business Days after receipt by the Company and the Representative under
the Credit Agreement of such Acceleration Notice (but only if such Event of
Default is then continuing). If an Event of Default specified in clause (vi) or
(vii) of Section 6.1 above with respect to the Company occurs and is continuing,
then all unpaid Accreted Value of, and accrued and unpaid interest, if any, on
all of the outstanding Securities shall IPSO FACTO become and be immediately due
and payable without any declaration or other act on the part of the Trustee or
any Holder.
At any time after a declaration of acceleration with respect to the
Securities as described in the preceding paragraph, the Holders of a majority in
principal amount at maturity of the Securities may rescind and cancel such
declaration and its consequences (i) if the rescission would not conflict with
any judgment or decree, (ii) if all existing Events of Default have been cured
or waived except nonpayment of Accreted Value, premium, if any, or interest, if
any, that has become due solely because of the acceleration, (iii) to the extent
the payment of such interest is lawful, interest on overdue installments of
interest, if any, and overdue Accreted Value and premium, if any, which has
become due otherwise than by such declaration of acceleration has been paid,
(iv) if the Company has paid the Trustee its reasonable compensation and
reimbursed the Trustee for its expenses, disbursements and advances, and any
other amounts due to the Trustee under Section 7.7 and (v) in the event of the
cure or waiver of an Event of Default of the type described in clause (vi) or
(vii) of Section 6.1, the Trustee shall have received an Officers' Certificate
and an Opinion of Counsel that such Event of Default has been cured or waived.
No such rescission shall affect any subsequent Default or Event of Default or
impair any right consequent thereto.
6.3. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy by proceeding at law or in equity to collect the payment of Accreted Value of, premium, if any, or interest on the Securities or to enforce the performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of the Securities or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Securityholder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative to the extent permitted by law.
6.4. WAIVER OF PAST DEFAULTS.
Subject to Sections 2.9, 6.2, 6.7 and 9.2, the Holders of not less than a majority in principal amount at maturity of the outstanding Securities by notice to the Trustee may waive an existing Default or Event of Default and its consequences, except a Default or Event of Default in the payment of Accreted Value of, premium, if any, or interest, if any, on any Security as specified in clauses (i) and (ii) of Section 6.1. The Company shall deliver to the Trustee an Officers' Certificate stating that the requisite percentage of Holders have consented to such waiver and attaching copies of such consents. When a Default or Event of Default is waived, it is cured and ceases.
6.5. CONTROL BY MAJORITY.
The Holders of not less than a majority in aggregate principal amount at maturity of the outstanding Securities may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on it. Subject to Section 7.1, however, the Trustee may refuse to follow any direction that conflicts with any law or this Indenture, that the Trustee determines may be unduly prejudicial to the rights of another Securityholder, or that may involve the Trustee in personal liability.
6.6. LIMITATION ON SUITS.
A Securityholder may not pursue any remedy with respect to this Indenture or the Securities unless:
(i) the Holder gives to the Trustee written notice of a continuing Event of Default;
(ii) the Holder or Holders of at least 25% in principal amount at maturity of the outstanding Securities make a written request to the Trustee to pursue the remedy;
(iii) such Holder or Holders offer and, if requested, provide to the Trustee indemnity satisfactory to the Trustee against any loss, liability or expense;
(iv) the Trustee does not comply with the request within 45 days after receipt of the request and the offer and, if requested, the provision of indemnity; and
(v) during such 45-day period the Holder or Holders of a majority in principal amount at maturity of the outstanding Securities do not give the Trustee a direction which, in the opinion of the Trustee, is inconsistent with the request.
A Securityholder may not use this Indenture to prejudice the rights of another Securityholder or to obtain a preference or priority over such other Securityholder.
6.7. RIGHTS OF HOLDERS TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of any Holder to receive payment of Accreted Value of, premium, if any, and interest, if any, on a Security, on or after the respective due dates expressed in such Security, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of the Holder.
6.8. COLLECTION SUIT BY TRUSTEE.
If an Event of Default in payment of principal, premium, if any, or interest specified in clause (i) or (ii) of Section 6.1 occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Issuer or any other obligor on the Securities for the whole amount of Accreted Value of, premium, if any, and accrued interest, if any, and fees remaining unpaid, together with interest on overdue Accreted Value and premium, if any, and, to the extent that payment of such interest is lawful, interest on overdue installments of interest, if any, in each case at the rate PER ANNUM borne by the Securities and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due to the Trustee under Section 7.7.
6.9. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due to the Trustee under Section 7.7) and the Securityholders allowed in
any judicial proceedings relating to the Issuer, its creditors or its property
and shall be entitled and empowered to participate as a member, voting or
otherwise, of any official committee appointed for such matter, to collect and
receive any monies or other securities or property payable or deliverable upon
the conversion or exchange of the Securities or upon any such claims and to
distribute the same, and any Custodian in any such judicial proceedings is
hereby authorized by each Securityholder to make such payments to the Trustee
and, in the event that the Trustee shall consent to the making of such payments
directly to the Securityholders, to pay to the Trustee any amount due to it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agent and counsel, and any other amounts due the Trustee under
Section 7.7. Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any Securityholder
any plan of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof, or to authorize the Trustee to
vote in respect of the claim of any Securityholder in any such proceeding.
6.10. PRIORITIES.
If the Trustee collects any money or property pursuant to this Article Six, it shall pay out the money or property in the following order:
First: to the Trustee for amounts due under Section 7.7;
Second: to Holders for interest accrued on the Securities, ratably, without preference or priority of any kind, according to the amounts due and payable on the Securities for interest, if any;
Third: to Holders for Accreted Value and premium, if any, due and unpaid on the Securities, ratably, without preference or priority of any kind, according to the amounts due and payable on the Securities for principal; and
Fourth: to the Issuer or to the Guarantors, if any, as their respective interests may appear.
The Trustee, upon prior notice to the Issuer, may fix a record date and payment date for any payment to Securityholders pursuant to this Section 6.10.
6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.7, or a suit by a Holder or Holders of more than 10% in principal amount at maturity of the outstanding Securities.
6.12. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then, and in every such case, subject to any determination in such proceeding, the Issuer, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Issuer, Trustee and the Holders shall continue as though no such proceeding had been instituted.
6.13. RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or wrongfully taken Securities in Section 2.7, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.
ARTICLE SEVEN
TRUSTEE
7.1. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture and use the same degree of care and skill in its exercise as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs.
(b) Except during the continuance of an Event of Default:
(i) The Trustee need perform only those duties as are specifically set forth herein or in the TIA and no duties, covenants, responsibilities or obligations shall be implied in this Indenture against the Trustee.
(ii) In the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates (including Officers' Certificates) or opinions (including Opinions of Counsel) furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture, but need not verify the contents thereof.
(c) Notwithstanding anything to the contrary herein, the Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:
(i) This paragraph does not limit the effect of paragraph
(b) of this Section 7.1.
(ii) The Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts.
(iii) The Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.5.
(d) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or to take or omit to take any action under this Indenture or take any action at the request or direction of Holders if it shall have reasonable grounds for believing that repayment of such funds is not assured to it.
(e) Every provision of this Indenture that in any way relates to the Trustee is subject to this Section 7.1.
(f) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Issuer. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.
(g) In the absence of bad faith, negligence or willful misconduct on the part of the Trustee, the Trustee shall not be responsible for the application of any money by any Paying Agent other than the Trustee.
7.2. RIGHTS OF TRUSTEE.
Subject to Section 7.1:
(a) The Trustee may conclusively rely on any document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate and an Opinion of Counsel, which shall conform to the provisions of Section 11.5. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such certificate or opinion.
(c) The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits to take in good faith which it reasonably believes to be authorized or within its rights or powers.
(e) The Trustee may consult with counsel and the advice or opinion of such counsel as to matters of law shall be full and complete authorization and protection from liability in respect of any action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel.
(f) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request, order or direction of any of the Holders pursuant to the provisions of this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which may be incurred therein or thereby.
(g) The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate (including any Officers' Certificate), statement, instrument, opinion (including any Opinion of Counsel), notice, request, direction, consent, order, bond, debenture, or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled, upon reasonable notice to the Issuer, to examine the books, records, and premises of the Issuer, personally or by agent or attorney at the sole cost of the Company and shall incur no liability or additional liability of any kind by reason of such inquiry or investigation.
(h) The Trustee shall not be required to give any bond or surety in respect of the performance of its powers and duties hereunder.
(i) The permissive rights of the Trustee to do things enumerated in this Indenture shall not be construed as duties.
(j) The Trustee shall not be charged with knowledge of any Default or Event of Default, of the identity of any Restricted Subsidiary or the existence of any Change of Control or Asset Sale unless either (i) a Responsible Officer shall have actual knowledge thereof or (ii) the Trustee shall have received written notice thereof from either of the Issuer or any Holder.
(k) Delivery of reports, information and documents to the Trustee under Section 4.10 is for informational purposes only and the Trustee's receipt of the foregoing shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Issuer's compliance with any of the covenants hereunder.
(l) The rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and each agent, custodian and other Person employed to act hereunder.
(m) The Trustee may request that the Company deliver an Officers' Certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture, which Officers' Certificate may be signed by any person authorized to sign an Officers' Certificate, including any person specified as so authorized in any such certificate previously delivered and not superseded.
7.3. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the owner or pledgee of Securities and may otherwise deal with the Issuer, its Subsidiaries (including any Guarantors) or their respective Affiliates with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights. However, the Trustee must comply with Sections 7.10 and 7.11.
7.4. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture, any Guarantee or the Securities, it shall not be accountable for the Issuer's use of the proceeds from the Securities, and it shall not be responsible for any statement of the Issuer in this Indenture or any document issued in connection with the sale of Securities or any statement in the Securities other than the Trustee's certificate of authentication. The Trustee makes no representations with respect to the effectiveness or adequacy of this Indenture.
7.5. NOTICE OF DEFAULT.
If a Default or an Event of Default occurs and is continuing and the Trustee receives actual notice of such Default or Event of Default, the Trustee shall mail to each Securityholder notice of the uncured Default or Event of Default within 90 days after such Default or Event of Default occurs. Except in the case of a Default or an Event of Default in payment of Accreted Value of, premium, if any, or interest on, if any, any Security, including an accelerated payment and the failure to make payment on the Change of Control Payment Date pursuant to a Change of Control Offer or the Net Proceeds Offer Payment Date pursuant to a Net Proceeds Offer, the Trustee may withhold the notice if and so long as the Board of Directors, the executive committee, or a trust committee of directors and/or Responsible Officers, of the
Trustee in good faith determines that withholding the notice is in the interest of the Securityholders.
7.6. REPORTS BY TRUSTEE TO HOLDERS.
Within 60 days after each May 15, beginning with the first May 15 following the date of this Indenture, the Trustee shall, to the extent that any of the events described in TIA Section 313(a) occurred within the previous twelve months, but not otherwise, mail to each Securityholder a brief report dated as of such date that complies with TIA Section 313(a). The Trustee also shall comply with TIA Sections 313(b), 313(c) and 313(d).
A copy of each report at the time of its mailing to Securityholders shall be mailed to the Issuer and filed with the Commission and each securities exchange, if any, on which the Securities are listed.
The Issuer shall notify the Trustee if the Securities become listed on any securities exchange or of any delisting thereof and the Trustee shall comply with TIA Section 313(d).
7.7. COMPENSATION AND INDEMNITY.
The Issuer shall pay to the Trustee, from time to time, such compensation for its services hereunder as the Issuer and the Trustee shall from time to time agree in writing. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Issuer shall reimburse the Trustee upon request for all reasonable disbursements, expenses and advances (including reasonable fees and expenses of counsel) incurred or made by it in addition to the compensation for its services, except any such disbursements, expenses and advances as may be attributable to the Trustee's negligence, bad faith or willful misconduct. Such expenses shall include the reasonable fees and expenses of the Trustee's agents and counsel.
The Issuer shall indemnify the Trustee and its agents, employees, officers, stockholders and directors for, and hold them harmless against, any loss, liability or expense (including reasonable attorneys' fees and expenses) incurred by them except for such actions to the extent caused by any negligence, bad faith or willful misconduct on their part, arising out of or in connection with the acceptance or administration of this trust including the cost and expense of enforcing this Indenture and the Securities against the Issuer (including this Section 7.7) including the reasonable costs and expenses of defending themselves against or investigating any claim (whether asserted by the Issuer, any Holder or any other Person) or liability in connection with the exercise or performance of any of the Trustee's rights, powers or duties hereunder. The Trustee shall notify the Issuer promptly of any claim asserted against the Trustee or any of its agents, employees, officers, stockholders and directors for which it may seek indemnity, PROVIDED that any failure to so notify the Issuer shall not relieve the Issuer of
its indemnity obligations hereunder. The Issuer may, subject to the approval of the Trustee, defend the claim and the Trustee shall cooperate in the defense. The Trustee and its agents, employees, officers, stockholders and directors subject to the claim may have separate counsel and the Issuer shall pay the reasonable fees and expenses of such counsel; PROVIDED, HOWEVER, that the Issuer will not be required to pay such fees and expenses if, subject to the approval of the Trustee, it assumes the Trustee's defense and there is no conflict of interest between the Issuer and the Trustee and its agents, employees, officers, stockholders and directors subject to the claim in connection with such defense as reasonably determined by the Trustee. The Issuer need not pay for any settlement made without its written consent, which consent will not be unreasonably withheld, delayed or conditioned. The Issuer need not reimburse any expense or indemnify against any loss or liability to the extent incurred by the Trustee through its negligence, bad faith or willful misconduct.
To secure the Issuer's payment obligations in this Section 7.7, the Trustee shall have a Lien prior to the Securities against all money or property held or collected by the Trustee, in its capacity as Trustee. The obligations of the Issuer under this Section shall not be subordinated except with respect to assets or money held in trust to pay principal of, premium, if any, or interest on particular Securities.
When the Trustee incurs expenses or renders services after an Event of Default specified in clause (vi) or (vii) of Section 6.1 occurs, such expenses and the compensation for such services shall be paid to the extent allowed under any Bankruptcy Law.
Notwithstanding any other provision in this Indenture, the foregoing provisions of this Section 7.7 shall survive the satisfaction and discharge of this Indenture or the appointment of a successor Trustee.
7.8. REPLACEMENT OF TRUSTEE.
The Trustee may resign at any time by so notifying the Issuer in writing. The Holders of a majority in principal amount at maturity of the outstanding Securities may remove the Trustee by so notifying the Issuer and the Trustee and may appoint a successor Trustee. The Issuer may remove the Trustee if:
(i) the Trustee fails to comply with Section 7.10;
(ii) the Trustee is adjudged bankrupt or insolvent;
(iii) a receiver or other public officer takes charge of the Trustee or its property; or
(iv) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Issuer shall notify each Holder of such event and shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in principal amount at maturity of the Securities may appoint a successor Trustee to replace the successor Trustee appointed by the Issuer.
A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Issuer. Immediately after that, the retiring Trustee shall transfer, after payment of all sums then owing to the Trustee pursuant to Section 7.7, all property held by it as Trustee to the successor Trustee, subject to the Lien provided in Section 7.7, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. A successor Trustee shall mail notice of its succession to each Securityholder.
If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee at the Issuer's expense, the Issuer or the Holders of at least 10% in principal amount at maturity of the outstanding Securities may petition any court of competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this Section 7.8, the Issuer's and the Guarantors' obligations under Section 7.7 shall continue for the benefit of the retiring Trustee.
7.9. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the resulting, surviving or transferee corporation without any further act shall, if such resulting, surviving or transferee corporation is otherwise eligible hereunder, be the successor Trustee; PROVIDED that such corporation shall be otherwise qualified and eligible under this Article Seven.
7.10. ELIGIBILITY; DISQUALIFICATION.
This Indenture shall always have a Trustee who satisfies the requirement of TIA Sections 310(a)(1), 310(a)(2) and 310(a)(5). The Trustee shall have a combined capital and surplus of at least $50,000,000 as set forth in its most recent published annual report of condition. In addition, if the Trustee is a corporation included in a bank holding company system, the Trustee, independently of the bank holding company, shall meet the capital requirements of TIA
Section 310(a)(2). The Trustee shall comply with TIA Section 310(b); PROVIDED, HOWEVER, that there shall be excluded from the operation of TIA Section 310(b)(1) any indenture or indentures under which other securities, or certificates of interest or participation in other securities, of the Issuer are outstanding, if the requirements for such exclusion set forth in TIA Section 310(b)(1) are met. The provisions of TIA Section 310 shall apply to the Issuer and any other obligor of the Securities.
7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE ISSUER.
The Trustee, in its capacity as Trustee hereunder, shall comply with
TIA Section 311(a), excluding any creditor relationship listed in TIA Section
311(b). A Trustee who has resigned or been removed shall be subject to TIA
Section 311(a) to the extent indicated.
ARTICLE EIGHT
DISCHARGE OF INDENTURE; DEFEASANCE
8.1. TERMINATION OF THE ISSUER'S OBLIGATIONS.
The Issuer may terminate its obligations under the Securities and this
Indenture, except those obligations referred to in the penultimate paragraph of
this Section 8.1, if all Securities previously authenticated and delivered
(other than destroyed, lost or stolen Securities which have been replaced or
paid or Securities for whose payment U.S. Legal Tender has theretofore been
deposited with the Trustee or the Paying Agent in trust or segregated and held
in trust by the Issuer and thereafter repaid to the Issuer, as provided in
Section 8.5) have been delivered to the Trustee for cancellation and the Issuer
has paid all sums payable by them hereunder, or if:
(i) either (i) pursuant to Article Three, the Issuer shall have given notice to the Trustee and mailed a notice of redemption to each Holder of the redemption of all of the Securities in accordance with the provisions hereof or (ii) all Securities have otherwise become due and payable hereunder;
(ii) the Issuer shall have irrevocably deposited or caused to be deposited with the Trustee or a trustee satisfactory to the Trustee, under the terms of an irrevocable trust agreement in form and substance satisfactory to the Trustee, as trust funds in trust solely for the benefit of the Holders of that purpose, U.S. Legal Tender in such amount as is sufficient without consideration of reinvestment of such interest, to pay Accreted Value of, premium, if any, and interest, if any, on the outstanding Securities to maturity or redemption; PROVIDED that the Trustee shall have been irrevocably instructed
to apply such U.S. Legal Tender to the payment of said Accreted Value, premium, if any, and interest, if any, with respect to the Securities;
(iii) no Default or Event of Default with respect to this Indenture or the Securities shall have occurred and be continuing on the date of such deposit or shall occur as a result of such deposit (other than a Default or Event of Default resulting from the incurrence of Indebtedness all or a portion of the proceeds of which will be used to defease the Securities pursuant to this Article Eight concurrently with such incurrence) and such deposit will not result in a breach or violation of, or constitute a default under, any other instrument or agreement (including, without limitation, the Credit Agreement) to which either the Issuer or any Restricted Subsidiary is bound is a party or by which either is bound;
(iv) the Issuer shall have paid all other sums payable by it hereunder; and
(v) the Issuer shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent providing for or relating to the termination of the Issuer's obligations under the Securities and this Indenture have been complied with. Such Opinion of Counsel shall also state that such satisfaction and discharge does not result in a default under the Credit Agreement or any other material agreement or instrument then known to such counsel that binds or affects the Issuer.
Subject to the next sentence and notwithstanding the foregoing paragraph, the Issuer's obligations in Sections 2.5, 2.6, 2.7, 2.8, 4.1, 4.2, 7.7, 8.5 and 8.6 shall survive until the Securities are no longer outstanding pursuant to the last paragraph of Section 2.8. After the Securities are no longer outstanding, the Issuer's obligations in Sections 7.7, 8.5 and 8.6 shall survive.
After such delivery or irrevocable deposit, the Trustee upon request shall acknowledge in writing the discharge of the Issuer's obligations under the Securities and this Indenture except for those surviving obligations specified above.
8.2. LEGAL DEFEASANCE AND COVENANT DEFEASANCE.
(a) The Issuer may, at its option by Board Resolutions of the Board
of Directors of the Issuer, at any time, elect to have either paragraph (b) or
(c) below applied to all outstanding Securities upon compliance with the
conditions set forth in Section 8.3.
(b) Upon the Issuer's exercise under paragraph (a) hereof of the option applicable to this paragraph (b), the Issuer shall, subject to the satisfaction of the conditions set forth in Section 8.3, be deemed to have been discharged from its obligations with respect to all outstanding
Securities on the date the conditions set forth below are satisfied (hereinafter, "LEGAL DEFEASANCE"). For this purpose, Legal Defeasance means that the Issuer shall be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Securities, which shall thereafter be deemed to be "outstanding" only for the purposes of Section 8.4 and the other Sections of this Indenture referred to in (i) and (ii) below, and to have satisfied all its other obligations under such Securities and this Indenture (and the Trustee, on demand of and at the expense of the Issuer, shall execute proper instruments acknowledging the same), except for the following provisions, which shall survive until otherwise terminated or discharged hereunder: (i) the rights of Holders of outstanding Securities to receive solely from the trust fund described in Section 8.4, and as more fully set forth in such Section, payments in respect of the Accreted Value of, premium, if any, and interest, if any, on such Securities when such payments are due, (ii) the Company's obligations with respect to such Securities under Article Two and Section 4.2, (iii) the rights, powers, trusts, duties and immunities of the Trustee hereunder and the Company's obligations in connection therewith and (iv) this Article Eight. Subject to compliance with this Article Eight, the Issuer may exercise its option under this paragraph (b) notwithstanding the prior exercise of its option under paragraph (c) hereof.
(c) Upon the Issuer's exercise under paragraph (a) hereof of the option applicable to this paragraph (c), the Issuer shall, subject to the satisfaction of the conditions set forth in Section 8.3, be released from its obligations, if any, under the covenants contained in Sections 4.3 and 4.4 and Sections 4.12 through 4.17 and Article Five with respect to the outstanding Securities on and after the date the conditions set forth below are satisfied (hereinafter, "COVENANT DEFEASANCE"), and the Securities shall thereafter be deemed not "OUTSTANDING" for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed "OUTSTANDING" for all other purposes hereunder (it being understood that such Securities shall not be deemed outstanding for accounting purposes). For this purpose, such Covenant Defeasance means that, with respect to the outstanding Securities, the Company may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Section 6.1(iii), but, except as specified above, the remainder of this Indenture and such Securities shall be unaffected thereby. In addition, upon the Issuer's exercise under paragraph (a) hereof of the option applicable to this paragraph (c), subject to the satisfaction of the conditions set forth in Section 8.3 hereof, Sections 6.1(iii), 6.1(iv) and 6.1(v) shall not constitute Events of Default.
8.3. CONDITIONS TO LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of either
Section 8.2(b) or 8.2(c) to the outstanding Securities:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(i) the Issuer must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders, U.S. Legal Tender or non-callable U.S. Government Obligations which through the scheduled payment of principal, premium, if any, and interest in respect thereof in accordance with their terms, will provide, not later than one day before the due date of any payment on the Securities, U.S. Legal Tender, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium, if any, and interest on the Securities on the stated date for payment thereof or on the applicable redemption date, as the case may be;
(ii) in the case of an election under Section 8.2(b), the
Issuer shall have delivered to the Trustee an Opinion of Counsel in
the United States reasonably acceptable to the Trustee confirming that
(a) the Issuer has received from, or there has been published by, the
Internal Revenue Service a ruling or (b) since the date of the
execution of this Indenture, there has been a change in the applicable
federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the Holders will
not recognize income, gain or loss for federal income tax purposes as
a result of such Legal Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Legal Defeasance had not
occurred;
(iii) in the case of an election under Section 8.2(c), the Issuer shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that the Holders of the Securities will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;
(iv) no Default or Event of Default shall have occurred and be continuing on the date of such deposit (other than a Default or Event of Default resulting from the incurrence of Indebtedness all or a portion of the proceeds of which will be used to defease the Securities pursuant to this Article Eight concurrently with such incurrence) or insofar as Sections 6.1(vi) and 6.1(vii) hereof are concerned, at any time in the period ending on the 91st day after the date of such deposit;
(v) such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under this Indenture (other than a Default or Event of Default resulting from the incurrence of Indebtedness all or a portion of the proceeds of which will be used to defease the Securities pursuant to this Article Eight concurrently with such incurrence), the Credit Agreement or any other material agreement or instrument to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound;
(vi) the Issuer shall have delivered to the Trustee an Officers' Certificate stating that the deposit was not made by the Issuer with the intent of preferring the Holders over any other creditors of the Issuer or with the intent of defeating, hindering, delaying or defrauding any other creditors of the Issuer or others;
(vii) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent hereunder provided for or relating to the Legal Defeasance or the Covenant Defeasance have been complied with; and
(viii) the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that assuming no intervening bankruptcy or insolvency of the Company between the date of deposit and the 91st day following the deposit and that no Holder is an insider of the Company, after the 91st day following the deposit, the trust funds will not be subject to the effect of Section 547 of the United States Bankruptcy Code or Section 15 of the New York Debtor and Creditor Law.
Notwithstanding the foregoing, the Opinion of Counsel required by clause (ii) above of this Section 8.3 need not be delivered if all Securities not theretofore delivered to the Trustee for cancellation (i) have become due and payable, (ii) will become due and payable on the Maturity Date within one year or (iii) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company.
8.4. APPLICATION OF TRUST MONEY.
The Trustee or Paying Agent shall hold in trust U.S. Legal Tender or U.S. Government Obligations deposited with it pursuant to this Article Eight, and shall apply the deposited U.S. Legal Tender and the money from U.S. Government Obligations in accordance with this Indenture to the payment of Accreted Value of, premium, if any, and interest, if any, on the Securities.
The Issuer shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the U.S. Legal Tender or U.S. Government Obligations deposited
pursuant to Section 8.3 hereof or the Accreted Value, premium, if any, and interest received, if any, in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Securities.
Anything in this Article Eight to the contrary notwithstanding, the Trustee shall deliver or pay to the Issuer from time to time upon the Issuer's request any U.S. Legal Tender or U.S. Government Obligations held by it as provided in Section 8.3 which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.
8.5. REPAYMENT TO THE ISSUER.
The Trustee and the Paying Agent shall pay to the Issuer upon request any money held by them for the payment of Accreted Value, premium, if any, or interest, if any, that remains unclaimed for two years; PROVIDED that the Trustee or such Paying Agent, before being required to make any payment, may at the expense of the Issuer cause to be published once in a newspaper of general circulation in The City of New York or mail to each Holder entitled to such money notice that such money remains unclaimed and that after a date specified therein which shall be at least 30 days from the date of such publication or mailing any unclaimed balance of such money then remaining will be repaid to the Issuer. After payment to the Issuer, Holders entitled to such money must look to the Issuer for payment as general creditors unless an applicable law designates another Person.
8.6. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any U.S. Legal Tender or U.S. Government Obligations in accordance with this Article Eight by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Issuer's obligations under this Indenture and the Securities shall be revived and reinstated as though no deposit had occurred pursuant to this Article Eight until such time as the Trustee or Paying Agent is permitted to apply all such U.S. Legal Tender or U.S. Government Obligations in accordance with this Article Eight; PROVIDED that if the Issuer has made any payment of interest on, premium, if any, or principal of any Securities because of the reinstatement of its obligations, the Issuer shall be subrogated to the rights of the Holders of such Securities to receive such payment from the U.S. Legal Tender or U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
9.1. WITHOUT CONSENT OF HOLDERS.
Subject to Section 9.3, the Issuer and the Trustee, together, may amend or supplement this Indenture or the Securities without notice to or consent of any Securityholder:
(i) to cure any ambiguity, defect or inconsistency, so long as such change does not, in the good faith determination of the Board of Directors of the Company, adversely affect the rights of any of the Holders in any material respect. In formulating its determination on such matters, the Board of Directors of the Company will be entitled to rely on such evidence as it deems appropriate;
(ii) to evidence the succession in accordance with Article Five of another Person to the Company and the assumption by any such successor of the covenants of the Company herein and in the Securities;
(iii) to provide for uncertificated Securities in addition to or in place of certificated Securities;
(iv) to make any other change that does not adversely affect the rights of any Securityholders hereunder in any material respect;
(v) to comply with any requirements of the Commission in connection with the qualification of this Indenture under the TIA;
(vi) to add or release any Guarantor pursuant to the terms of this Indenture; or
(vii) to provide for issuance of the Exchange Notes, which will have terms substantially identical in all material respects to the Initial Notes (except that the transfer restrictions contained in the Initial Notes will be modified or eliminated, as appropriate), and which will be treated together with any outstanding Initial Notes, as a single issue of securities, PROVIDED that for purposes of this clause (vii), the terms Initial Notes and Exchange Notes, shall include any other Securities issued in accordance with clause (iii) of the fourth paragraph of Section 2.2 or Securities issued in exchange therefor which are identical in all material respects to such Securities (except that the transfer restrictions on the Securities issued in exchange for Securities issued in accordance
with clause (iii) of the fourth paragraph of Section 2.2 shall be modified or eliminated, as appropriate);
PROVIDED that the Company has delivered to the Trustee an Opinion of Counsel and an Officers' Certificate, each stating that such amendment or supplement complies with the provisions of this Section 9.1.
9.2. WITH CONSENT OF HOLDERS.
Subject to Sections 6.7 and 9.3, the Issuer and the Trustee, together, with the written consent of the Holder or Holders of at least a majority in aggregate principal amount at maturity of the outstanding Securities, may amend or supplement this Indenture or the Securities without notice to any other Securityholders. Subject to Sections 6.7 and 9.3, the Holder or Holders of a majority in aggregate principal amount at maturity of the outstanding Securities may waive compliance by the Issuer with any provision of this Indenture or the Securities without notice to any other Securityholder. Without the consent of each Securityholder affected, however, no amendment, supplement or waiver, including a waiver pursuant to (and to the extent provided in) Section 6.4, may:
(i) reduce the amount of Securities whose Holders must consent to an amendment, supplement or waiver;
(ii) reduce the rate of or change or have the effect of changing the time for payment of interest, including default interest, on any Security;
(iii) reduce the principal or Accreted Value of or change or have the effect of changing the fixed maturity of any Security, or change the date on which any Securities may be subject to redemption or reduce the redemption price therefor;
(iv) make any Securities payable in money other than that stated in the Securities;
(v) make any change in provisions of this Indenture protecting the right of each Holder to receive payment of Accreted Value of, premium, if any, and interest, if any, on such Security on or after the due date thereof or to bring suit to enforce such payment, or permitting Holders of a majority in principal amount at maturity of the Securities to waive Defaults or Events of Default;
(vi) modify or change any provision of this Indenture or the related definitions affecting ranking of the Securities in a manner which adversely affects the Holders;
(vii) amend, change or modify in any material respect the obligation of the Issuer to make and consummate a Change of Control Offer in the event of a Change of Control which has occurred or modify any of the provisions or definitions with respect thereto after a Change of Control has occurred; or
(viii) make any changes in Section 6.4, 6.7 or this
Section 9.2.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, supplement or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section 9.2 becomes effective, the Issuer shall mail to the Holders affected thereby a notice briefly describing the amendment, supplement or waiver. Any failure of the Issuer to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture.
9.3. COMPLIANCE WITH TIA.
From the date on which this Indenture is qualified under the TIA, every amendment, waiver or supplement of this Indenture or the Securities or any Guarantee shall comply with the TIA as then in effect.
9.4. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, waiver or supplement becomes effective, a consent to it by a Holder is a continuing consent by the Holder and every subsequent Holder of a Security or portion of a Security that evidences the same debt as the consenting Holder's Security, even if notation of the consent is not made on any Security. However, any such Holder or subsequent Holder may revoke the consent as to his Security or portion of his Security by notice to the Trustee or the Issuer received before the date on which the Trustee receives an Officers' Certificate certifying that the Holders of the requisite principal amount at maturity of Securities have consented (and not theretofore revoked such consent) to the amendment, supplement or waiver.
The Issuer may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to consent to any amendment, supplement or waiver. If a record date is fixed, then notwithstanding the last sentence of the immediately preceding paragraph, those Persons who were Holders at such record date (or their duly designated proxies), and only those Persons, shall be entitled to revoke any consent previously given, whether or not such Persons continue to be Holders after such record date. No such consent shall be valid or effective for more than 90 days after such record date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Securityholder, unless it makes a change described in any of clauses
(i) through (vii) of Section 9.2, in which case, the amendment, supplement or
waiver shall bind only each Holder of a Security who has consented to it and
every subsequent Holder of a Security or portion of a Security that evidences
the same debt as the consenting Holder's Security; PROVIDED that any such waiver
shall not impair or affect the right of any Holder to receive payment of
principal of, premium, if any, and interest on a Security, on or after the
respective due dates expressed in such Security, or to bring suit for the
enforcement of any such payment on or after such respective dates without the
consent of such Holder.
9.5. NOTATION ON OR EXCHANGE OF SECURITIES.
If an amendment, supplement or waiver changes the terms of a Security, the Issuer may require the Holder of the Security to deliver it to the Trustee. The Issuer shall provide the Trustee with an appropriate notation on the Security about the changed terms and cause the Trustee to return it to the Holder at the Issuer's expense. Alternatively, if the Issuer or the Trustee so determines, the Issuer in exchange for the Security shall issue and the Trustee shall authenticate a new Security that reflects the changed terms. Failure to make the appropriate notation or issue a new Security shall not affect the validity and effect of such amendment, supplement or waiver.
9.6. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall execute any amendment, supplement or waiver authorized pursuant to this Article Nine; PROVIDED that the Trustee may, but shall not be obligated to, execute any such amendment, supplement or waiver which affects the Trustee's own rights, duties or immunities under this Indenture. The Trustee shall be entitled to receive, and shall be fully protected in relying upon, an Opinion of Counsel and an Officers' Certificate each complying with Sections 11.4 and 11.5 and stating that the execution of any amendment, supplement or waiver authorized pursuant to this Article Nine is authorized or permitted by this Indenture and constitutes the legal, valid and binding obligations of the Issuer enforceable in accordance with its terms. Such Opinion of Counsel shall be at the expense of the Issuer.
ARTICLE TEN
GUARANTEE OF SECURITIES
10.1. UNCONDITIONAL GUARANTEE.
Subject to the provisions of this Article Ten, each Guarantor, if any, upon the execution and delivery of a Guarantee pursuant to Section 4.14, shall hereby, jointly and severally, unconditionally and irrevocably guarantee (such guarantee to be referred to herein as the "GUARANTEE") to each Holder of a Security authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of this Indenture, the Securities or the obligations of the Issuer or any other Guarantors to the Holders or the Trustee hereunder or thereunder, that: (a) the Accreted Value of, premium, if any, and interest, if any, on the Securities shall be duly and punctually paid in full when due, whether at maturity, upon redemption at the option of Holders pursuant to the provisions of the Securities relating thereto, by acceleration or otherwise, and interest on the overdue Accreted Value and (to the extent permitted by law) interest, if any, on the Securities and all other obligations of the Issuer or the Guarantors to the Holders or the Trustee hereunder or thereunder (including amounts due the Trustee under Section 7.7 hereof) and all other obligations shall be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and (b) in case of any extension of time of payment or renewal of any Securities or any of such other obligations, the same shall be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at maturity, by acceleration or otherwise. Failing payment when due of any amount so guaranteed, or failing performance of any other obligation of the Issuer to the Holders under this Indenture or under the Securities, for whatever reason, such Guarantor shall be obligated to pay, or to perform or cause the performance of, the same immediately. An Event of Default under this Indenture or the Securities shall constitute an event of default under the Guarantees, and shall entitle the Holders of Securities to accelerate the obligations of the Guarantors hereunder in the same manner and to the same extent as the obligations of the Issuer.
Each Guarantor, if any, upon the execution and delivery of a Guarantee pursuant to Section 4.14, shall hereby agree that its obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Securities or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Securities with respect to any provisions hereof or thereof, any release of any other Guarantor, if any, the recovery of any judgment against the Issuer, any action to enforce the same, whether or not a Guarantee is affixed to any particular Security, or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a Guarantor. Each Guarantor, if any, upon the execution and delivery of a Guarantee pursuant to Section 4.14, shall hereby
waive the benefit of diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of Issuer, any right to require a proceeding first against the Issuer, protest, notice and all demands whatsoever and covenants that its Guarantee shall not be discharged except by complete performance of the obligations contained in the Securities, this Indenture and the Guarantees. Each Guarantee is a guarantee of payment and not of collection. If any Holder or the Trustee is required by any court or otherwise to return to the Issuer or to any Guarantor, or any custodian, trustee, liquidator or other similar official acting in relation to such Issuer or such Guarantor, any amount paid by such Issuer or such Guarantor to the Trustee or such Holder, each Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect. Each Guarantor, if any, upon the execution and delivery of a Guarantee pursuant to Section 4.14, shall hereby further agree that, as between it, on the one hand, and the Holders of Securities and the Trustee, on the other hand, (a) subject to this Article Ten, the maturity of the obligations guaranteed hereby may be accelerated as provided in Article Six hereof for the purposes of the Guarantees, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (b) in the event of any acceleration of such obligations as provided in Article Six hereof, such obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantors for the purpose of the Guarantees.
No Affiliate, stockholder, officer, director, limited liability company member or employee, past, present or future, of any Guarantor, as such, shall have any personal liability under such Guarantor's Guarantee by reason of his, her or its status as such Affiliate, stockholder, officer, director, limited liability company member or employee.
10.2. LIMITATIONS ON GUARANTEES.
The obligations of any Guarantor under its Guarantee shall be limited to the maximum amount which, after giving effect to all other contingent and fixed liabilities of such Guarantor and after giving effect to any collections from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under its Guarantee or pursuant to its contribution obligations under this Indenture, will result in the obligations of such Guarantor under the Guarantee not constituting a fraudulent conveyance or fraudulent transfer under federal or state law. Each Guarantor that makes a payment or distribution under a Guarantee shall be entitled to a contribution from each other Guarantor in an amount PRO RATA, based on the net assets of each Guarantor, determined in accordance with GAAP.
10.3. EXECUTION AND DELIVERY OF GUARANTEE.
To further evidence the Guarantees set forth in Section 10.1, each
Guarantor, if any, upon the execution and delivery of a Guarantee pursuant to
Section 4.14, hereby agrees that a notation of its Guarantee, substantially in
the form of EXHIBIT E hereto, shall be endorsed on each Security authenticated
and delivered by the Trustee. The Guarantee of any Guarantor
shall be executed on behalf of such Guarantor by either manual or facsimile signature of two Officers of such Guarantor, each of whom, in each case, shall have been duly authorized to so execute by all requisite corporate action. The validity and enforceability of any Guarantee shall not be affected by the fact that it is not affixed to any particular Security.
Each Guarantor, if any, upon the execution and delivery of a Guarantee pursuant to Section 4.14, hereby agrees that its Guarantee set forth in Section 10.1 shall remain in full force and effect notwithstanding any failure to endorse on each Security a notation of such Guarantee.
If an Officer of a Guarantor whose signature is on this Indenture or a Guarantee no longer holds that office at the time the Trustee authenticates the Security on which such Guarantee is endorsed or at any time thereafter, such Guarantor's Guarantee of such Security shall nevertheless be valid.
The delivery of any Security by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of any Guarantee set forth in this Indenture on behalf of each Guarantor.
10.4. RELEASE OF A GUARANTOR.
(a) If no Default or Event of Default exists or would exist under this Indenture, upon the sale or disposition of all of the Capital Stock of a Guarantor by the Company or any Restricted Subsidiary of the Company, in a transaction or series of related transactions that either (i) does not constitute an Asset Sale or (ii) constitutes an Asset Sale and such Asset Sale is not in violation of Section 4.17, or upon the consolidation or merger of a Guarantor with or into any Person in compliance with Article Five (in each case, other than to the Company or an Affiliate of the Company), or if any Guarantor is dissolved or liquidated in accordance with this Indenture, such Guarantor's Guarantee will be automatically discharged and such Guarantor shall be released from all obligations under this Article Ten without any further action required on the part of the Trustee or any Holder. Any Guarantor not so released or the entity surviving such Guarantor, as applicable, shall remain or be liable under its Guarantee as provided in this Article Ten.
(b) In addition, each such Guarantee will be automatically discharged and the Guarantor party thereto shall be released from all obligations under this Article Ten without any further action on the part of the Trustee or any Holder upon (i) the release or discharge of the guarantee which resulted in the creation of such Guarantee under such Section 4.14, except a discharge or release by or as a result of payment under such Guarantee or (ii) the designation of such Guarantor as an Unrestricted Subsidiary in accordance with the provisions of this Indenture. Any Guarantor not so released or the entity surviving such Guarantor, as applicable, shall remain or be liable under its Guarantee as provided in this Article Ten.
(c) The obligations of each Guarantor will be automatically released upon such Guarantor ceasing to be a subsidiary of the Issuer as a result of any foreclosure on any pledge or security interest securing Obligations with respect to the Credit Agreement or other exercise of remedies in respect thereof if such Guarantor is released from its guarantee of Obligations with respect to the Credit Agreement.
(d) The Trustee shall deliver an appropriate instrument evidencing the release of a Guarantor upon receipt of a request by the Issuer or such Guarantor accompanied by an Officers' Certificate and an Opinion of Counsel certifying as to the compliance with this Section 10.4; PROVIDED, HOWEVER, that the legal counsel delivering such Opinion of Counsel may rely as to matters of fact on one or more Officers' Certificates of the Company.
The Trustee shall execute any documents reasonably requested by the Issuer or a Guarantor in order to evidence the release of such Guarantor from its obligations under its Guarantee endorsed on the Securities and under this Article Ten.
Except as set forth in Articles Four and Five and this Section 10.4, nothing contained in this Indenture or in any of the Securities shall prevent any consolidation or merger of a Guarantor with or into the Issuer or another Guarantor or shall prevent any sale or conveyance of the property of a Guarantor as an entirety or substantially as an entirety to the Issuer or another Guarantor.
10.5. WAIVER OF SUBROGATION.
Until this Indenture is discharged and all of the Securities are discharged and paid in full, each Guarantor, upon the execution and delivery of a Guarantee pursuant to Section 4.14, shall hereby irrevocably waive and agrees not to exercise any claim or other rights which it may now or hereafter acquire against the Issuer that arise from the existence, payment, performance or enforcement of the Issuer's obligations under the Securities or this Indenture and such Guarantor's obligations under its Guarantee and this Indenture, in any such instance, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution, indemnification, and any right to participate in any claim or remedy of the Holders against the Issuer, whether or not such claim, remedy or right arises in equity, or under contract, statute or common law, including, without limitation, the right to take or receive from the Issuer, directly or indirectly, in cash or other property or by setoff or in any other manner, payment or security on account of such claim or other rights. If any amount shall be paid to any Guarantor in violation of the preceding sentence and any amounts owing to the Trustee or the Holders of Securities under the Securities, this Indenture, or any other document or instrument delivered under or in connection with such agreements or instruments, shall not have been paid in full, such amount shall have been deemed to have been paid to such Guarantor for the benefit of, and held in trust for the benefit of, the Trustee or the Holders and shall forthwith be paid to the Trustee for the benefit of itself or such Holders to be credited and applied
to the obligations in favor of the Trustee or the Holders, as the case may be, whether matured or unmatured, in accordance with the terms of this Indenture. Each Guarantor acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by this Indenture and that the waiver set forth in this Section 10.5 is knowingly made in contemplation of such benefits.
10.6. IMMEDIATE PAYMENT.
Each Guarantor, upon the execution and delivery of a Guarantee pursuant to Section 4.14, shall hereby agree to make immediate payment to the Trustee, on behalf of the Holders or itself, of all Obligations due and owing or payable to the respective Holders or the Trustee upon receipt of a demand for payment therefor by the Trustee to such Guarantor in writing.
10.7. NO SETOFF.
Each payment to be made by a Guarantor hereunder in respect of the Obligations shall be payable in the currency or currencies in which such Obligations are denominated, and shall be made without setoff, counterclaim, reduction or diminution of any kind or nature.
10.8. OBLIGATIONS ABSOLUTE.
The obligations of each Guarantor hereunder are and shall be absolute and unconditional and any monies or amounts expressed to be owing or payable by each Guarantor hereunder which may not be recoverable from such Guarantor on the basis of a Guarantee shall be recoverable from such Guarantor as a primary obligor and principal debtor in respect thereof.
10.9. OBLIGATIONS CONTINUING.
The obligations of each Guarantor hereunder shall be continuing and shall remain in full force and effect until all the obligations have been paid and satisfied in full. Upon the execution and delivery of a Guarantee pursuant to Section 4.14, each Guarantor shall hereby agree with the Trustee that it will from time to time deliver to the Trustee suitable acknowledgments of its continued liability hereunder and under any other instrument or instruments in such form as counsel to the Trustee may advise and as will prevent any action brought against it in respect of any default hereunder being barred by any statute of limitations now or hereafter in force and, in the event of the failure of a Guarantor so to do, it hereby irrevocably appoints the Trustee the attorney and agent of such Guarantor to make, execute and deliver such written acknowledgment or acknowledgments or other instruments as may from time to time become necessary or advisable, in the judgment of the Trustee on the advice of counsel, to fully maintain and keep in force the liability of such Guarantor hereunder and under its Guarantee.
10.10. OBLIGATIONS NOT REDUCED.
The obligations of each Guarantor hereunder shall not be satisfied, reduced or discharged solely by the payment of such principal, premium, if any, interest, fees and other monies or amounts as may at any time prior to discharge of this Indenture pursuant to Article Eight be or become owing or payable under or by virtue of or otherwise in connection with the Securities or this Indenture.
10.11. OBLIGATIONS REINSTATED.
The obligations of each Guarantor hereunder shall continue to be effective or shall be reinstated, as the case may be, if at any time any payment which would otherwise have reduced the obligations of any Guarantor hereunder (whether such payment shall have been made by or on behalf of the Issuer or by or on behalf of a Guarantor) is rescinded or reclaimed from any of the Holders upon the insolvency, bankruptcy, liquidation or reorganization of the Issuer or any Guarantor or otherwise, all as though such payment had not been made. If demand for, or acceleration of the time for, payment by the Issuer is stayed upon the insolvency, bankruptcy, liquidation or reorganization of such Issuer, all such Indebtedness otherwise subject to demand for payment or acceleration shall nonetheless be payable by each Guarantor as provided herein.
10.12. OBLIGATIONS NOT AFFECTED.
The obligations of each Guarantor hereunder shall not be affected, impaired or diminished in any way by any act, omission, matter or thing whatsoever, occurring before, upon or after any demand for payment hereunder (and whether or not known or consented to by any Guarantor or any of the Holders) which, but for this provision, might constitute a whole or partial defense to a claim against any Guarantor hereunder or might operate to release or otherwise exonerate any Guarantor from any of its obligations hereunder or otherwise affect such obligations, whether occasioned by default of any of the Holders or otherwise, including, without limitation:
(i) any limitation of status or power, disability, incapacity or other circumstance relating to the Issuer or any other Person, including any insolvency, bankruptcy, liquidation, reorganization, readjustment, composition, dissolution, winding-up or other proceeding involving or affecting such Issuer or any other Person;
(ii) any irregularity, defect, unenforceability or invalidity in respect of any indebtedness or other obligation of the Issuer or any other Person under this Indenture, the Securities or any other document or instrument;
(iii) any failure of the Issuer, whether or not without fault on its part, to perform or comply with any of the provisions of this Indenture or the Securities, or to give notice thereof to a Guarantor;
(iv) the taking or enforcing or exercising or the refusal or neglect to take or enforce or exercise any right or remedy from or against the Issuer or any other Person or their respective assets or the release or discharge of any such right or remedy;
(v) the granting of time, renewals, extensions, compromises, concessions, waivers, releases, discharges and other indulgences to the Issuer or any other Person;
(vi) any change in the time, manner or place of payment of, or in any other term of, any of the Securities, or any other amendment, variation, supplement, replacement or waiver of, or any consent to departure from, any of the Securities or this Indenture, including, without limitation, any increase or decrease in the Accreted Value or principal amount at maturity of or premium, if any, or interest on any of the Securities;
(vii) any change in the ownership, control, name, objects, businesses, assets, capital structure or constitution of the Issuer or a Guarantor;
(viii) any merger or amalgamation of the Issuer or a Guarantor with any Person or Persons;
(ix) the occurrence of any change in the laws, rules, regulations or ordinances of any jurisdiction by any present or future action of any governmental authority or court amending, varying, reducing or otherwise affecting, or purporting to amend, vary, reduce or otherwise affect, any of the Obligations or the obligations of a Guarantor under its Guarantee; and
(x) any other circumstance, including release of a Guarantor pursuant to Section 10.4 (other than by complete, irrevocable payment) that might otherwise constitute a legal or equitable discharge or defense of the Issuer under this Indenture or the Securities or of another Guarantor in respect of its Guarantee hereunder;
PROVIDED, that the provisions of this Section 10.12 are not intended to affect
in any way any release of a Guarantor in accordance with the provisions of
Section 10.4.
10.13. WAIVER.
Without in any way limiting the provisions of Section 10.1 hereof,
each Guarantor, upon the execution and delivery of a Guarantee pursuant to
Section 4.14, shall hereby waive
notice of acceptance hereof, notice of any liability of any Guarantor hereunder, notice or proof of reliance by the Holders upon the obligations of any Guarantor hereunder, and diligence, presentment, demand for payment on the Issuer, protest, notice of dishonor or nonpayment of any of the Obligations, or other notice or formalities to the Issuer or any Guarantor of any kind whatsoever.
10.14. NO OBLIGATION TO TAKE ACTION AGAINST THE ISSUER.
Neither the Trustee nor any other Person shall have any obligation to enforce or exhaust any rights or remedies or to take any other steps under any security for the Obligations or against the Issuer or any other Person or any property of such Issuer or any other Person before the Trustee is entitled to demand payment and performance by any or all Guarantors of their liabilities and obligations under their Guarantees or under this Indenture.
10.15. DEALING WITH THE ISSUER AND OTHERS.
The Holders, without releasing, discharging, limiting or otherwise affecting in whole or in part the obligations and liabilities of any Guarantor and without the consent of or notice to any Guarantor, may
(i) grant time, renewals, extensions, compromises, concessions, waivers, releases, discharges and other indulgences to the Issuer or any other Person;
(ii) take or abstain from taking security or collateral from the Issuer or from perfecting security or collateral of the Issuer;
(iii) release, discharge, compromise, realize, enforce or otherwise deal with or do any act or thing in respect of (with or without consideration) any and all collateral, mortgages or other security given by the Issuer or any third party with respect to the obligations or matters contemplated by this Indenture or the Securities;
(iv) accept compromises or arrangements from the Issuer;
(v) apply all monies at any time received from the Issuer or from any security upon such part of the Obligations as the Holders may see fit or change any such application in whole or in part from time to time as the Holders may see fit; and
(vi) otherwise deal with, or waive or modify their right to deal with, the Issuer and all other Persons and any security as the Holders or the Trustee may see fit.
10.16. DEFAULT AND ENFORCEMENT.
If any Guarantor fails to pay in accordance with Section 10.6 hereof, the Trustee may proceed in its name as trustee hereunder in the enforcement of the Guarantee of any such Guarantor and such Guarantor's obligations thereunder and hereunder by any remedy provided by law, whether by legal proceedings or otherwise, and to recover from such Guarantor the obligations.
10.17. AMENDMENT, ETC.
No amendment, modification or waiver of any provision of this Indenture relating to any Guarantor or consent to any departure by any Guarantor or any other Person from any such provision will in any event be effective unless it is signed by such Guarantor and the Trustee.
10.18. ACKNOWLEDGMENT.
Each Guarantor, upon the execution and delivery of a Guarantee pursuant to Section 4.14, shall hereby acknowledge communication of the terms of this Indenture and the Securities and shall hereby consent to and approves of the same.
10.19. COSTS AND EXPENSES.
Each Guarantor shall pay on demand by the Trustee any and all costs, fees and expenses (including, without limitation, legal fees on a solicitor and client basis) incurred by the Trustee, its agents, advisors and counsel or any of the Holders in enforcing any of their rights under any Guarantee.
10.20. NO MERGER OR WAIVER; CUMULATIVE REMEDIES.
No Guarantee shall operate by way of merger of any of the obligations of a Guarantor under any other agreement, including, without limitation, this Indenture. No failure to exercise and no delay in exercising, on the part of the Trustee or the Holders, any right, remedy, power or privilege hereunder or under this Indenture or the Securities, shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder or under this Indenture or the Securities preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges in the Guarantee and under this Indenture, the Securities and any other document or instrument between a Guarantor and/or the Issuer and the Trustee are cumulative and not exclusive of any rights, remedies, powers and privilege provided by law.
10.21. SURVIVAL OF OBLIGATIONS.
Without prejudice to the survival of any of the other obligations of any Guarantor hereunder, the obligations of each Guarantor under Section 10.1 shall survive the payment in full of the Obligations under the Securities, but only if and to the extent such payment is avoided, and in such case shall be enforceable against such Guarantor to the same extent as prior to any such payment and without regard to and without giving effect to any defense, right of offset or counterclaim available to or which may be asserted by the Issuer or any Guarantor.
10.22. GUARANTEE IN ADDITION TO OTHER OBLIGATIONS.
The Obligations of each Guarantor under its Guarantee and this Indenture are in addition to and not in substitution for any other Obligations to the Trustee or to any of the Holders in relation to this Indenture or the Securities and any guarantees or security at any time held by or for the benefit of any of them.
10.23. SEVERABILITY.
Any provision of this Article Ten which is prohibited or unenforceable in any jurisdiction shall not invalidate the remaining provisions and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction unless its removal would substantially defeat the basic intent, spirit and purpose of this Indenture and this Article Ten.
10.24. SUCCESSORS AND ASSIGNS.
Each Guarantee shall be binding upon and inure to the benefit of each Guarantor and the Trustee and the other Holders and their respective successors and permitted assigns, except that no Guarantor may assign any of its obligations hereunder or thereunder, except as otherwise permitted in this Indenture.
ARTICLE ELEVEN
MISCELLANEOUS
11.1. TIA CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts with another provision which is required to be included in this Indenture by the TIA, the required provision shall control.
11.2. NOTICES.
Any notices or other communications required or permitted hereunder shall be in writing, and shall be sufficiently given if made by hand delivery, by telex, by telecopier or registered or certified mail, postage prepaid, return receipt requested, addressed as follows:
if to the Issuer or a Guarantor:
Salt Holdings Corporation
8300 College Boulevard
Overland Park, KS 66210
Attention: Chief Financial Officer Fax No: (913) 338-7932
with a copy to:
Latham & Watkins
885 Third Avenue
New York, NY 10022
Attention: Gregory Ezring, Esq.
Fax No: (212) 751-4864
if to the Trustee:
The Bank of New York
101 Barclay Street
Floor 8W
New York, New York 10286
Attention: Corporate Trust Administration
if to the Trustee for presentation of Securities for payment or for registration of transfer or exchange:
The Bank of New York
101 Barclay Street
Floor 8W
New York, New York 10286
Attention: Corporate Trust Administration
The Issuer and the Trustee by written notice to each other such Person may designate additional or different addresses for notices to such Person. Any notice or communication to the Issuer and the Trustee, shall be deemed to have been given or made as of the date so delivered
if personally delivered; when answered back, if telecopied; and five (5) calendar days after mailing if sent by registered or certified mail, postage prepaid (except that a notice of change of address shall not be deemed to have been given until actually received by the addressee), except that, with respect to any mailing, notices to the Trustee shall be deemed effective only upon receipt.
Any notice or communication mailed to a Securityholder shall be mailed to him by first class mail or other equivalent means at his address as it appears on the registration books of the Registrar and shall be sufficiently given to him if so mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any defect in it shall not affect its sufficiency with respect to other Securityholders. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it.
11.3. COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS.
Securityholders may communicate pursuant to TIA Section 312(b) with other Securityholders with respect to their rights under this Indenture or the Securities. The Issuer, the Trustee, the Registrar and any other Person shall have the protection of TIA Section 312(c).
11.4. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Issuer to the Trustee to take any action under this Indenture, the Issuer shall furnish to the Trustee at the request of the Trustee:
(i) an Officers' Certificate, in form and substance satisfactory to the Trustee, stating that, in the opinion of the signers, all conditions precedent to be performed or effected by the Issuer, if any, provided for in this Indenture relating to the proposed action have been complied with; and
(ii) an Opinion of Counsel stating that, in the opinion of such counsel, any and all such conditions precedent have been complied with.
11.5. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture, other than the Officers' Certificate required by Section 4.8, shall include:
(i) a statement that the Person making such certificate or opinion has read such covenant or condition;
(ii) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of such Person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and
(iv) a statement as to whether or not, in the opinion of each such Person, such condition or covenant has been complied with; PROVIDED, HOWEVER, that with respect to matters of fact an Opinion of Counsel may rely on an Officers' Certificate or certificates of public officials.
11.6. RULES BY TRUSTEE, PAYING AGENT, REGISTRAR.
The Trustee, Paying Agent or Registrar may make reasonable rules for its functions.
11.7. LEGAL HOLIDAYS.
If a payment date is not a Business Day, payment may be made on the next succeeding day that is a Business Day.
11.8. GOVERNING LAW.
THIS INDENTURE, THE SECURITIES AND ANY GUARANTEES WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. Each of the parties hereto agrees to submit to the jurisdiction of the courts of the State of New York in any action or proceeding arising out of or relating to this Indenture, the Securities or any Guarantees.
11.9. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret another indenture, loan or debt agreement of any of the Company or any of its Subsidiaries. Any such indenture, loan or debt agreement may not be used to interpret this Indenture.
11.10. NO RECOURSE AGAINST OTHERS.
No Affiliate, director, officer, employee, limited liability company members or stockholder of the Company or any Subsidiary, as such, shall have any liability for any obligations
of the Issuer under the Securities or any Guarantee or this Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Securityholder by accepting a Security waives and releases all such liability. Such waiver and release are part of the consideration for the issuance of the Securities.
11.11. SUCCESSORS.
All agreements of the Issuer and the Guarantors, if any, in this Indenture and the Securities and the Guarantees shall bind their respective successors. All agreements of the Trustee in this Indenture shall bind its successor.
11.12. DUPLICATE ORIGINALS.
All parties may sign any number of copies of this Indenture. Each signed copy or counterpart shall be an original, but all of them together shall represent the same agreement.
11.13. SEVERABILITY.
In case any one or more of the provisions in this Indenture, the Securities or the Guarantees shall be held invalid, illegal or unenforceable, in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions shall not in any way be affected or impaired thereby, it being intended that all of the provisions hereof shall be enforceable to the full extent permitted by law.
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed all as of the date first written above.
SALT HOLDINGS CORPORATION
Title:
THE BANK OF NEW YORK, as Trustee
By: /s/ Kevin Fox
---------------------------------
Name: Kevin Fox
Title: Assistant Treasurer
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SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed all as of the date first written above.
SALT HOLDINGS CORPORATION
By: /s/ Rodney Underdown
---------------------------------
Name: Rodney Underdown
Title: VP
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THE BANK OF NEW YORK, as Trustee
Title:
EXHIBIT A
[FORM OF INITIAL NOTE](a)
[FACE OF SECURITY]
SALT HOLDINGS CORPORATION
THIS NOTE IS ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR PURPOSES OF
SECTION 1271 ET SEQ. OF THE INTERNAL REVENUE CODE. FOR EACH $1,000
PRINCIPAL AMOUNT AT MATURITY OF THIS NOTE, THE ISSUE PRICE IS $539.95.
THE ISSUE DATE OF THIS NOTE IS DECEMBER 20, 2002 AND THE YIELD TO
MATURITY IS 12 3/4%.
12 3/4% SENIOR DISCOUNT NOTE DUE 2012
No. Principal Amount at Maturity: $
ISIN No.
CUSIP No.
SALT HOLDINGS CORPORATION, a Delaware corporation (the "COMPANY" or the "ISSUER," which terms include any of its successors under the Indenture
hereinafter referred to), for value received promises to pay to or
registered assigns, the principal sum of ($ ) on December 15,
2012.
Interest Payment Dates: June 15 and December 15, commencing June 15,
2008.
Record Dates: June 1 and December 1.
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Reference is made to the further provisions of this Security contained herein, which will for all purposes have the same effect as if set forth at this place.
IN WITNESS WHEREOF, the Issuer has caused this Security to be signed manually or by facsimile by its duly authorized officer.
Dated: SALT HOLDINGS CORPORATION
By:
----------------------------------
Name:
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Title:
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
CERTIFICATE OF AUTHENTICATION
This is one of the 12 3/4% Senior Discount Notes Due 2012 described in the within-mentioned Indenture.
Dated: December 20, 2002 THE BANK OF NEW YORK, as Trustee
By:
----------------------------------
Authorized Signatory
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[REVERSE OF SECURITY]
SALT HOLDINGS CORPORATION
12 3/4% SENIOR DISCOUNT NOTE DUE 2012
1. INTEREST.
SALT HOLDINGS CORPORATION, a Delaware corporation (the "COMPANY" or the "ISSUER," which terms include any of its successors under the Indenture hereinafter referred to), promises to pay interest on the principal amount of this Security at the rate per annum shown above. Prior to December 15, 2007, interest on this Security will accrue in the form of an increase in the Accreted Value of the Notes, and no cash interest shall be paid. The Accreted Value of this Security will increase from the date of issuance until December 15, 2007 at a rate of 12 3/4% per annum compounded semi-annually as provided in the definition of "Accreted Value" in the Indenture such that the Accreted Value will equal the principal amount at maturity on December 15, 2007. The Issuer will pay interest semiannually on June 15 and December 15 of each year (the "INTEREST PAYMENT DATE"), commencing June 15, 2008. Interest on this Security will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from and including December 15, 2007. Interest on this Security will be computed on the basis of a 360-day year of twelve 30-day months.
The Issuer shall pay cash interest on overdue principal, and on overdue premium, if any, and overdue interest, to the extent lawful, at the rate of interest borne by this Security.
2. METHOD OF PAYMENT.
The Issuer shall pay interest on the Securities (except defaulted interest) to the Persons who are the registered Holders at the close of business on the Record Date immediately preceding the Interest Payment Date even if the Securities are canceled on registration of transfer or registration of exchange (including pursuant to an Exchange Offer (as defined in the Indenture)) after such Record Date. Holders must surrender Securities to a Paying Agent to collect principal payments. The Issuer shall pay Accreted Value or principal, premium, if any and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts ("U.S. LEGAL TENDER"). However, the Issuer may pay Accreted Value or principal, premium, if any, and interest by wire transfer of federal funds, or interest by check payable in such U.S. Legal Tender. The Issuer may deliver any such interest payment to the Paying Agent or to a Holder at the Holder's registered address.
3. PAYING AGENT AND REGISTRAR.
Initially, The Bank of New York (the "TRUSTEE") will act as Paying Agent and Registrar. The Issuer may change any Paying Agent, Registrar or co-Registrar without notice to the Holders. The Company or any of its Subsidiaries may, subject to certain exceptions, act as Registrar or co-Registrar.
4. INDENTURE.
The Issuer issued the Securities under an Indenture, dated as of December 20, 2002 (the "INDENTURE"), between the Issuer and the Trustee. This Security is one of a duly authorized issue of Securities of the Issuer designated as its 12 3/4% Senior Discount Notes Due 2012 (the "INITIAL NOTES"). Capitalized terms herein are used as defined in the Indenture unless otherwise defined herein. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) (the "TIA"), as in effect on the date of the Indenture until such time as the Indenture is qualified under the TIA, and thereafter as in effect on the date on which the Indenture is qualified under the TIA. Notwithstanding anything to the contrary herein, the Securities are subject to all such terms, and Holders of Securities are referred to the Indenture and the TIA for a statement of them. The Securities are general obligations of the Issuer unlimited in amount, of which an aggregate principal amount at maturity of $123,500,000 has been issued on the Issue Date.
5. OPTIONAL REDEMPTION.
The Issuer may redeem the Securities, in whole at any time or in part from time to time, on and after December 15, 2007, upon not less than 30 nor more than 60 days' notice, at the following redemption prices (expressed as percentages of the principal amount at maturity thereof) if redeemed during the twelve-month period commencing on December 15 of the years set forth below, plus, in each case, accrued and unpaid interest thereon, if any, to the date of redemption (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date):
Year Percentage
---- ----------
2007........................ 106.375%
2008........................ 104.250%
2009........................ 102.125%
2010 and thereafter......... 100.000%
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The Issuer may redeem the Securities, at any time, or from time to time, on or prior to December 15, 2005, by using the Net Cash Proceeds of one or more Equity Offerings to redeem up to 35% in aggregate principal amount at maturity of the Securities originally issued under the Indenture at a redemption price equal to 112 3/4% of the Accreted Value thereof to
the date of redemption; PROVIDED, HOWEVER, that after any such redemption the aggregate principal amount at maturity of the Securities outstanding must equal at least 65% of the aggregate principal amount at maturity of the Securities originally issued under the Indenture. In order to effect the foregoing redemption with the net cash proceeds of any Equity Offering, the Issuer shall make such redemption not more than 120 days after the consummation of any such Equity Offering.
In addition, at any time prior to December 15, 2007, upon the occurrence of a Change of Control, the Issuer may redeem the Securities, in whole but not in part, at a redemption price equal to the Accreted Value thereof plus the Applicable Premium to the date of redemption. Notice of redemption of the Securities pursuant to this paragraph shall be mailed to Holders of the Securities not more than 30 days following the occurrence of a Change of Control.
6. NOTICE OF REDEMPTION.
Notice of redemption shall be mailed by first-class mail at least 30 days but not more than 60 days before the Redemption Date to each Holder of Securities to be redeemed at such Holder's registered address. Securities in denominations of $1,000 principal amount at maturity may be redeemed only in whole. The Trustee may select for redemption portions (equal to $1,000 principal amount at maturity or any integral multiple thereof) of the principal of Securities that have denominations larger than $1,000 principal amount at maturity.
If any Security is to be redeemed in part only, the notice of redemption that relates to such Security shall state the portion of the principal amount at maturity thereof to be redeemed. A new Security in a principal amount at maturity equal to the unredeemed portion thereof will be issued in the name of the Holder thereof upon cancellation of the original Security. On and after the Redemption Date, interest will cease to accrue on Securities or portions thereof called for redemption, subject to the provisions of the Indenture.
7. CHANGE OF CONTROL OFFER.
Upon the occurrence of a Change of Control, the Issuer will be required, as and to the extent set forth in the Indenture, to offer to purchase all of the outstanding Securities at a purchase price equal to 101% of the Accreted Value thereof, plus accrued and unpaid interest, if any, thereon to the date of repurchase (subject to the right of Securityholders of record on the relevant record date to receive interest due on the relevant interest payment date); PROVIDED HOWEVER, that notwithstanding the occurrence of a Change of Control, the Issuer shall not be obligated to repurchase the Securities pursuant to this paragraph 7 in the event that the Issuer has exercised its right to redeem all of the Securities under the terms of paragraph 5 hereof).
8. LIMITATION ON ASSET SALES.
The Issuer is, subject to certain conditions, obligated to make an offer to purchase Securities at 100% of their Accreted Value, plus accrued and unpaid interest, if any, thereon to the date of repurchase with certain Net Cash Proceeds of certain sales or other dispositions of assets in accordance with the Indenture.
9. REGISTRATION RIGHTS.
Pursuant to the Registration Rights Agreement, the Issuer will be obligated to consummate an exchange offer pursuant to which the Holder of this Security shall have the right to exchange this Security for the Issuer's 12 3/4% Senior Discount Notes Due 2012 (the "EXCHANGE NOTES"), which shall have been registered under the Securities Act, in like Accreted Value and principal amount at maturity and having terms identical in all material respects to the Initial Notes. The Holders of Securities shall be entitled to an increase in the Accreted Value of the Securities or to receive certain additional interest payments in the event such exchange offer is not consummated and upon certain other conditions, all pursuant to and in accordance with the terms of the Registration Rights Agreement.
10. DENOMINATIONS; TRANSFER; EXCHANGE.
The Securities are in registered form, without coupons, in denominations of $1,000 principal amount at maturity and integral multiples of $1,000 principal amount at maturity. A Holder shall register the transfer of or exchange Securities in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay certain transfer taxes or similar governmental charges payable in connection therewith as permitted by the Indenture. The Registrar need not register the transfer of or exchange any Securities or portions thereof selected for redemption, except the unredeemed portion of any security being redeemed in part.
11. PERSONS DEEMED OWNERS.
The registered Holder of a Security shall be treated as the owner of it for all purposes.
12. UNCLAIMED FUNDS.
If funds for the payment of Accreted Value or principal, premium, if any, or interest remain unclaimed for two years, the Trustee and the Paying Agent will repay the funds to the Issuer at its request. After that, all liability of the Trustee and such Paying Agent with respect to such funds shall cease.
13. DISCHARGE PRIOR TO REDEMPTION OR MATURITY.
The Issuer may be discharged from its obligations under the Indenture or the Securities except for certain provisions thereof, and may be discharged from obligations to comply with certain covenants contained in the Indenture and the Securities upon satisfaction of certain conditions specified in the Indenture.
14. AMENDMENT; SUPPLEMENT; WAIVER.
Subject to certain exceptions, the Indenture and the Securities may be amended or supplemented with the written consent of the Holders of at least a majority in aggregate principal amount at maturity of the Securities then outstanding, and any existing Default or Event of Default or compliance with any provision may be waived with the consent of the Holders of a majority in aggregate principal amount at maturity of the Securities then outstanding. Without notice to or consent of any Holder, the parties thereto may amend or supplement the Indenture, the Securities and any Guarantee to, among other things, cure any ambiguity, defect or inconsistency, provide for uncertificated Securities in addition to or in place of certificated Securities or comply with any requirements of the Commission in connection with the qualification of the Indenture under the TIA, or make any other change that does not materially adversely affect the rights of any Holder of a Security.
15. RESTRICTIVE COVENANTS.
The Indenture contains certain covenants that, among other things, limit the ability of the Company and its Restricted Subsidiaries to make restricted payments, to incur indebtedness, to create liens, to sell assets, to permit restrictions on dividends and other payments by Restricted Subsidiaries of the Company to the Company, to consolidate, merge or sell all or substantially all of its assets or to engage in transactions with affiliates. The limitations are subject to a number of important qualifications and exceptions. The Company must annually report to the Trustee on compliance with such limitations.
16. DEFAULTS AND REMEDIES.
If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in aggregate principal amount at maturity of Securities then outstanding may declare all the Securities to be due and payable immediately in the manner and with the effect provided in the Indenture. Holders of Securities may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee is not obligated to enforce the Indenture or the Securities, unless it has received indemnity satisfactory to it. The Indenture permits, subject to certain limitations therein provided, Holders of a majority in aggregate principal amount at maturity of the Securities then outstanding to direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of Securities notice of certain continuing Defaults or Events of Default if it determines that withholding notice is in their interest.
17. TRUSTEE DEALINGS WITH ISSUER.
The Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with the Issuer, its Subsidiaries or their respective Affiliates as if it were not the Trustee.
18. NO RECOURSE AGAINST OTHERS.
No Affiliate, stockholder, director, officer, employee or limited liability company member of the Issuer or any of its Subsidiaries shall have any liability for any obligation of the Issuer under the Securities or the Indenture or for any claim based on, in respect of or by reason of, such obligations or their creation. Each Holder of a Security by accepting a Security waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Securities.
19. AUTHENTICATION.
This Security shall not be valid until the Trustee or authenticating agent signs the certificate of authentication on this Security.
20. ABBREVIATIONS AND DEFINED TERMS.
Customary abbreviations may be used in the name of a Holder of a Security or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
21. GOVERNING LAW.
This Security shall be governed by, and construed in accordance with, the laws of the State of New York without giving effect to applicable principles of conflicts of laws to the extent that the application of the laws of another jurisdiction would be required thereby.
22. CUSIP AND ISIN NUMBERS.
Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Issuer has caused CUSIP and ISIN numbers to be printed on the Securities as a convenience to the Holders of the Securities. No representation is made as to the accuracy of such numbers as printed on the Securities and reliance may be placed only on the other identification numbers printed hereon.
23. INDENTURE.
Each Holder, by accepting a Security, agrees to be bound by all of the terms and provisions of the Indenture, as the same may be amended from time to time.
The Issuer will furnish to any Holder of a Security upon written request and without charge a copy of the Indenture which has the text of this Security in larger type. Requests may be made to: Salt Holdings Corporation, 8300 College Boulevard, Overland Park, KS, 66210, Attn: Chief Financial Officer.
ASSIGNMENT FORM
I or we assign and transfer this Security to
and irrevocably appoint_______________________________________________agent to transfer this Security on the books of the Issuer. The agent may substitute another to act for him.
Dated: Signed:
-------------- -----------------------
(Sign exactly as
name appears on the
other side of this
Security)
Signature Guarantee: ------------------------------
Participant in a recognized
Signature Guarantee
Medallion Program (or other
signature guarantor program
reasonably acceptable to
the Trustee)
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In connection with any transfer of this Security occurring prior to the date which is the earlier of (i) the date of the declaration by the Commission of the effectiveness of a registration statement under the Securities Act of 1933, as amended (the "SECURITIES ACT"), covering resales of this Security (which effectiveness shall not have been suspended or terminated at the date of the transfer) and (ii) December 20, 2004, the undersigned confirms that it has not utilized any general solicitation or general advertising in connection with the transfer and that this Security is being transferred:
[CHECK ONE]
/ / (1) to the Issuer or a subsidiary thereof; or
/ / (2) pursuant to and in compliance with Rule 144A under the Securities Act; or
/ / (3) to an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act) that has
furnished to the Trustee a signed letter containing certain
representations and agreements (the form of which letter can be
obtained from the Trustee); or
/ / (4) outside the United States to a "foreign person" in compliance with Rule 904 of Regulation S under the Securities Act; or
/ / (5) pursuant to the exemption from registration provided by Rule 144 under the Securities Act; or
/ / (6) pursuant to an effective registration statement under the Securities Act; or
/ / (7) pursuant to another available exemption from the registration requirements of the Securities Act;
and unless the box below is checked, the undersigned confirms that such Security is not being transferred to an "affiliate" of the Issuer as defined in Rule 144 under the Securities Act of 1933, as amended (an "AFFILIATE"):
/ / The transferee is an Affiliate of the Issuer.
Unless one of the items is checked, the Trustee will refuse to
register any of the Securities evidenced by this certificate in the name of any
person other than the registered Holder thereof; PROVIDED that if box (3), (4),
(5) or (7) is checked, the Issuer or the Trustee may require, prior to
registering any such transfer of the Securities, in its sole discretion, such
legal opinions, certifications (including an investment letter in the case of
box (3) or (4)) and other information as the Trustee or the Issuer have
reasonably requested to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act.
If none of the foregoing boxes is checked, the Trustee or Registrar shall not be obligated to register this Security in the name of any person other than the Holder hereof unless and until the conditions to any such transfer of registration set forth herein and in Section 2.16 of the Indenture shall have been satisfied.
Dated: Signed:
---------------- -----------------------
(Sign exactly as
name appears on the
other side of this
Security)
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Signature Guarantee: ------------------------------
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this Security for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Issuer as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A.
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company pursuant to Section 4.16 or Section 4.17 of the Indenture, check the appropriate box:
Section 4.16 / / Section 4.17 / /
If you want to elect to have only part of this Security purchased by the Company pursuant to Section 4.16 or Section 4.17 of the Indenture, state the
amount: $___________
Dated:
-------------- Signed:
-----------------------
(Sign exactly as
name appears on the
other side of this
Security)
Signature Guarantee: ------------------------------
Participant in a recognized
Signature Guarantee
Medallion Program (or other
signature guarantor program
reasonably acceptable to
the Trustee)
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EXHIBIT B
[FORM OF EXCHANGE NOTE](a)
[FACE OF SECURITY]
THIS NOTE IS ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR PURPOSES OF SECTION 1271 ET SEQ. OF THE INTERNAL REVENUE CODE. FOR EACH $1,000 PRINCIPAL AMOUNT AT MATURITY OF THIS NOTE, THE ISSUE PRICE IS $539.95. THE ISSUE DATE OF THIS NOTE IS DECEMBER 20, 2002 AND THE YIELD TO MATURITY IS 12 3/4%.
SALT HOLDINGS CORPORATION
12 3/4% SENIOR DISCOUNT NOTE DUE 2012
CUSIP No.
ISIN No.
No. Principal Amount at Maturity: $
SALT HOLDINGS CORPORATION, a Delaware corporation (the "COMPANY" or the "ISSUER," which terms include any of its successors under the Indenture hereinafter referred to), for value received promises to pay to or registered assigns, the principal sum of ($ ), on December 15, 2012.
Interest Payment Dates: June 15 and December 15, commencing June 15,
2008.
Record Dates: June 1 and December 1.
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Reference is made to the further provisions of this Security contained herein, which will for all purposes have the same effect as if set forth at this place.
IN WITNESS WHEREOF, the Issuer has caused this Security to be signed manually or by facsimile by its duly authorized officer.
Dated: SALT HOLDINGS CORPORATION
By:
---------------------------
Name:
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Title:
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
CERTIFICATE OF AUTHENTICATION
This is one of the 12 3/4% Senior Discount Notes Due 2012 described in the within-mentioned Indenture.
Dated: December 20, 2002 THE BANK OF NEW YORK, as Trustee
By:
-----------------------------
Authorized Signatory
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[REVERSE OF SECURITY]
SALT HOLDINGS CORPORATION
12 3/4% SENIOR DISCOUNT NOTE DUE 2012
1. INTEREST.
SALT HOLDINGS CORPORATION, a Delaware corporation (the "COMPANY" or the "ISSUER," which terms include any of its successors under the Indenture hereinafter referred to), promises to pay interest on the principal amount of this Security at the rate PER ANNUM shown above. Prior to December 15, 2007, interest on this Security will accrue in the form of an increase in the Accreted Value of the Notes, and no cash interest shall be paid. The Accreted Value of this Security will increase from the date of issuance until December 15, 2007 at a rate of 12 3/4% per annum compounded semi-annually as provided in the definition of "Accreted Value" in the Indenture such that the Accreted Value will equal the principal amount at maturity on December 15, 2007. The Issuer will pay interest semiannually on June 15 and December 15 of each year (the "INTEREST PAYMENT DATE"), commencing June 15, 2008. Interest on this Security will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from and including December 15, 2007. Interest on this Security will be computed on the basis of a 360-day year of twelve 30-day months.
The Issuer shall pay cash interest on overdue principal, and on overdue premium, if any, and overdue interest, to the extent lawful, at the rate of interest borne by this Security.
2. METHOD OF PAYMENT.
The Issuer shall pay interest on the Securities (except defaulted interest) to the Persons who are the registered Holders at the close of business on the Record Date immediately preceding the Interest Payment Date even if the Securities are canceled on registration of transfer or registration of exchange (including pursuant to an Exchange Offer (as defined in the Indenture)) after such Record Date. Holders must surrender Securities to a Paying Agent to collect principal payments. The Issuer shall pay Accreted Value or principal, premium, if any and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts ("U.S. LEGAL TENDER"). However, the Issuer may pay Accreted Value or principal, premium, if any, and interest by wire transfer of federal funds, or interest by check payable in such U.S. Legal Tender. The Issuer may deliver any such interest payment to the Paying Agent or to a Holder at the Holder's registered address.
3. PAYING AGENT AND REGISTRAR.
Initially, The Bank of New York (the "TRUSTEE") will act as Paying Agent and Registrar. The Issuer may change any Paying Agent, Registrar or co-Registrar without notice to the Holders. The Company or any of its Subsidiaries may, subject to certain exceptions, act as Registrar or co-Registrar.
4. INDENTURE.
The Issuer issued the Securities under an Indenture, dated as of December 20, 2002 (the "INDENTURE"), between the Issuer and the Trustee. This Security is one of a duly authorized issue of Securities of the Issuer designated as its 12 3/4% Senior Discount Notes Due 2012 (the "INITIAL NOTES"). Capitalized terms herein are used as defined in the Indenture unless otherwise defined herein. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) (the "TIA"), as in effect on the date of the Indenture until such time as the Indenture is qualified under the TIA, and thereafter as in effect on the date on which the Indenture is qualified under the TIA. Notwithstanding anything to the contrary herein, the Securities are subject to all such terms, and Holders of Securities are referred to the Indenture and the TIA for a statement of them. The Securities are general obligations of the Issuer unlimited in amount, of which an aggregate principal amount at maturity of $123,500,000 has been issued on the Issue Date.
5. OPTIONAL REDEMPTION.
The Issuer may redeem the Securities, in whole at any time or in part from time to time, on and after December 15, 2007, upon not less than 30 nor more than 60 days' notice, at the following redemption prices (expressed as percentages of the principal amount at maturity thereof) if redeemed during the twelve-month period commencing on December 15 of the years set forth below, plus, in each case, accrued and unpaid interest thereon, if any, to the date of redemption (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date):
Year Percentage
---- ----------
2007.............................. 106.375%
2008.............................. 104.250%
2009.............................. 102.125%
2010 and thereafter............... 100.000%
|
The Issuer may redeem the Securities, at any time, or from time to time, on or prior to December 15, 2005, by using the Net Cash Proceeds of one or more Equity Offerings to redeem up to 35% in aggregate principal amount at maturity of the Securities originally issued
under the Indenture at a redemption price equal to 112 3/4% of the Accreted Value thereof to the date of redemption; PROVIDED, HOWEVER, that after any such redemption the aggregate principal amount at maturity of the Securities outstanding must equal at least 65% of the aggregate principal amount at maturity of the Securities originally issued under the Indenture. In order to effect the foregoing redemption with the net cash proceeds of any Equity Offering, the Issuer shall make such redemption not more than 120 days after the consummation of any such Equity Offering.
In addition, at any time prior to December 15, 2007, upon the occurrence of a Change of Control, the Issuer may redeem the Securities, in whole but not in part, at a redemption price equal to the Accreted Value thereof plus the Applicable Premium to the date of redemption. Notice of redemption of the Securities pursuant to this paragraph shall be mailed to Holders of the Securities not more than 30 days following the occurrence of a Change of Control.
6. NOTICE OF REDEMPTION.
Notice of redemption shall be mailed by first-class mail at least 30 days but not more than 60 days before the Redemption Date to each Holder of Securities to be redeemed at such Holder's registered address. Securities in denominations of $1,000 principal amount at maturity may be redeemed only in whole. The Trustee may select for redemption portions (equal to $1,000 principal amount at maturity or any integral multiple thereof) of the principal of Securities that have denominations larger than $1,000 principal amount at maturity.
If any Security is to be redeemed in part only, the notice of redemption that relates to such Security shall state the portion of the principal amount at maturity thereof to be redeemed. A new Security in a principal amount at maturity equal to the unredeemed portion thereof will be issued in the name of the Holder thereof upon cancellation of the original Security. On and after the Redemption Date, interest will cease to accrue on Securities or portions thereof called for redemption, subject to the provisions of the Indenture.
7. CHANGE OF CONTROL OFFER.
Upon the occurrence of a Change of Control, the Issuer will be required, as and to the extent set forth in the Indenture, to offer to purchase all of the outstanding Securities at a purchase price equal to 101% of the Accreted Value thereof, plus accrued and unpaid interest, if any, thereon to the date of repurchase (subject to the right of Securityholders of record on the relevant record date to receive interest due on the relevant interest payment date); PROVIDED, HOWEVER, that notwithstanding the occurrence of a Change of Control, the Issuer shall not be obligated to repurchase the Securities pursuant to this paragraph 7 in the event that the Issuer has exercised its right to redeem all of the Securities under the terms of paragraph 5 hereof).
8. LIMITATION ON ASSET SALES.
The Issuer is, subject to certain conditions, obligated to make an offer to purchase Securities at 100% of their Accreted Value, plus accrued and unpaid interest, if any, thereon to the date of repurchase with certain Net Cash Proceeds of certain sales or other dispositions of assets in accordance with the Indenture.
9. DENOMINATION, TRANSFER, EXCHANGE.
The Securities are in registered form, without coupons, in denominations of $1,000 principal amount at maturity and integral multiples of $1,000 principal amount at maturity. A Holder shall register the transfer of or exchange Securities in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay certain transfer taxes or similar governmental charges payable in connection therewith as permitted by the Indenture. The Registrar need not register the transfer of or exchange any Securities or portions thereof selected for redemption, except the unredeemed portion of any security being redeemed in part.
10. PERSONS DEEMED OWNERS.
The registered Holder of a Security shall be treated as the owner of it for all purposes.
11. UNCLAIMED FUNDS.
If funds for the payment of Accreted Value or principal, premium, if any, or interest remain unclaimed for two years, the Trustee and the Paying Agent will repay the funds to the Issuer at its request. After that, all liability of the Trustee and such Paying Agent with respect to such funds shall cease.
12. DISCHARGE PRIOR TO REDEMPTION OR MATURITY.
The Issuer may be discharged from its obligations under the Indenture or the Securities except for certain provisions thereof, and may be discharged from obligations to comply with certain covenants contained in the Indenture and the Securities upon satisfaction of certain conditions specified in the Indenture.
13. AMENDMENT; SUPPLEMENT; WAIVER.
Subject to certain exceptions, the Indenture and the Securities may be amended or supplemented with the written consent of the Holders of at least a majority in aggregate principal amount at maturity of the Securities then outstanding, and any existing Default or Event of Default or compliance with any provision may be waived with the consent of the Holders of a majority in aggregate principal amount at maturity of the Securities then outstanding. Without notice to or consent of any Holder, the parties thereto may amend or supplement the
Indenture, the Securities and any Guarantee to, among other things, cure any ambiguity, defect or inconsistency, provide for uncertificated Securities in addition to or in place of certificated Securities or comply with any requirements of the Commission in connection with the qualification of the Indenture under the TIA, or make any other change that does not materially adversely affect the rights of any Holder of a Security.
14. RESTRICTIVE COVENANTS.
The Indenture contains certain covenants that, among other things, limit the ability of the Company and its Restricted Subsidiaries to make restricted payments, to incur indebtedness, to create liens, to sell assets, to permit restrictions on dividends and other payments by Restricted Subsidiaries of the Company to the Company, to consolidate, merge or sell all or substantially all of its assets or to engage in transactions with affiliates. The limitations are subject to a number of important qualifications and exceptions. The Company must annually report to the Trustee on compliance with such limitations.
15. DEFAULTS AND REMEDIES.
If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in aggregate principal amount at maturity of Securities then outstanding may declare all the Securities to be due and payable immediately in the manner and with the effect provided in the Indenture. Holders of Securities may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee is not obligated to enforce the Indenture or the Securities, unless it has received indemnity satisfactory to it. The Indenture permits, subject to certain limitations therein provided, Holders of a majority in aggregate principal amount at maturity of the Securities then outstanding to direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of Securities notice of certain continuing Defaults or Events of Default if it determines that withholding notice is in their interest.
16. TRUSTEE DEALINGS WITH ISSUER.
The Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with the Issuer, its Subsidiaries or their respective Affiliates as if it were not the Trustee.
17. NO RECOURSE AGAINST OTHERS.
No Affiliate, stockholder, director, officer, employee or limited liability company member of the Issuer or any of its Subsidiaries shall have any liability for any obligation of the Issuer under the Securities or the Indenture or for any claim based on, in respect of or by reason of, such obligations or their creation. Each Holder of a Security by accepting a Security waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Securities.
18. AUTHENTICATION.
This Security shall not be valid until the Trustee or authenticating agent signs the certificate of authentication on this Security.
19. ABBREVIATIONS AND DEFINED TERMS.
Customary abbreviations may be used in the name of a Holder of a Security or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
20. GOVERNING LAW.
This Security shall be governed by, and construed in accordance with, the laws of the State of New York without giving effect to applicable principles of conflicts of laws to the extent that the application of the laws of another jurisdiction would be required thereby.
21. CUSIP AND ISIN NUMBERS.
Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Issuer has caused CUSIP and ISIN numbers to be printed on the Securities as a convenience to the Holders of the Securities. No representation is made as to the accuracy of such numbers as printed on the Securities and reliance may be placed only on the other identification numbers printed hereon.
22. INDENTURE.
Each Holder, by accepting a Security, agrees to be bound by all of the terms and provisions of the Indenture, as the same may be amended from time to time.
The Issuer will furnish to any Holder of a Security upon written request and without charge a copy of the Indenture which has the text of this Security in larger type. Requests may be made to: Salt Holdings Corporation, 8300 College Boulevard, Overland Park, KS, 66210, Attn: Chief Financial Officer.
ASSIGNMENT FORM
I or we assign and transfer this Security to
and irrevocably appoint_______________________________________________agent to transfer this Security on the books of the Issuer. The agent may substitute another to act for him.
Dated: Signed:
-------------- -----------------------
(Sign exactly as
name appears on the
other side of this
Security)
Signature Guarantee: ------------------------------
Participant in a recognized
Signature Guarantee
Medallion Program (or other
signature guarantor program
reasonably acceptable to
the Trustee)
|
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company pursuant to Section 4.16 or Section 4.17 of the Indenture, check the appropriate box:
Section 4.16 / / Section 4.17 / /
Dated: Signed:
-------------- -----------------------
(Sign exactly as
name appears on the
other side of this
Security)
Signature Guarantee: ------------------------------
Participant in a recognized
Signature Guarantee
Medallion Program (or other
signature guarantor program
reasonably acceptable to
the Trustee)
|
EXHIBIT C
Form of Certificate to Be
Delivered in Connection with
TRANSFERS TO NON-QIB ACCREDITED INVESTORS
[Date]
Attention:
Ladies and Gentlemen:
In connection with our proposed purchase of the Securities of Salt Holdings Corporation (the "ISSUER"), we confirm that:
1. We have received a copy of the Offering Circular (the "OFFERING
CIRCULAR"), dated December 13, 2002, relating to the Securities and such other
information as we deem necessary in order to make our investment decision. We
acknowledge that we have read and agreed to the matters stated on pages (i) and
(ii) of the Offering Circular and in the section entitled "Transfer
Restrictions" of the Offering Circular, including the restrictions on
duplication and circulation of the Offering Circular.
2. We understand that any subsequent transfer of the Securities is subject to certain restrictions and conditions set forth in the Indenture relating to the Securities (as described in the Offering Circular) and the undersigned agrees to be bound by, and not to resell, pledge or otherwise transfer the Securities except in compliance with, such restrictions and conditions and the Securities Act of 1933, as amended (the "SECURITIES ACT").
3. We understand that the offer and sale of the Securities have not been registered under the Securities Act, and that the Securities may not be offered or sold except as permitted in the following sentence. We agree, on our own behalf and on behalf of any accounts for which we are acting as hereinafter stated, that if we should sell or otherwise transfer any Securities prior to the date which is two years after the original issuance of the Securities, and if such transfer is in respect of any aggregate principal amount at maturity of Securities of less than $100,000, also furnishes an opinion of counsel acceptable to the Issuer that such transfer complies with the Securities Act, we will do so only (i) to the Issuer or any of its subsidiaries, (ii) inside the United States in accordance with Rule 144A under the Securities Act to a "qualified institutional buyer" (as defined in Rule 144A under the Securities Act), (iii) inside the United States to an institutional "accredited investor" (as defined below) that, prior to such
transfer, furnishes (or has furnished on its behalf by a U.S. broker-dealer) to the Trustee (as defined in the Indenture relating to the Securities), a signed letter containing certain representations and agreements relating to the restrictions on transfer of the Securities, (iv) outside the United States in accordance with Rule 904 of Regulation S under the Securities Act, (v) pursuant to the exemption from registration provided by Rule 144 under the Securities Act (if available), or (vi) pursuant to an effective registration statement under the Securities Act, and we further agree to provide to any person purchasing any of the Securities from us a notice advising such purchaser that resales of the Securities are restricted as stated herein.
4. We understand that, on any proposed resale of any Securities, we will be required to furnish to the Trustee and the Issuer such certification, legal opinions and other information as the Trustee and the Issuer may reasonably require to confirm that the proposed sale complies with the foregoing restrictions. We further understand that the Securities purchased by us will bear a legend to the foregoing effect.
5. We are an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Securities, and we and any accounts for which we are acting are each able to bear the economic risk of our or their investment, as the case may be.
6. We are acquiring the Securities purchased by us for our account or for one or more accounts (each of which is an institutional "accredited investor") as to each of which we exercise sole investment discretion, and we are acquiring the Securities not with a view to, or for offer or sale in connection with, any distribution in violation of the Securities Act.
You and the Issuer are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby.
Very truly yours,
Title:
Form of Certificate To Be
Delivered in Connection with
TRANSFERS PURSUANT TO REGULATION S
[Date]
Attention:
In connection with our proposed sale of $_________ aggregate principal amount at maturity of the Securities, we confirm that such sale has been effected pursuant to and in accordance with Regulation S under the U.S. Securities Act of 1933, as amended (the "SECURITIES ACT"), and, accordingly, we represent that:
(1) the offer of the Securities was not made to a person in the United States;
(2) either (a) at the time the buy offer was originated, the transferee was outside the United States or we and any person acting on our behalf reasonably believed that the transferee was outside the United States, or (b) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither we nor any person acting on our behalf knows that the transaction has been prearranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United States in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act; and
(5) we have advised the transferee of the transfer restrictions applicable to the Securities.
You and the Issuer are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Terms used in this certificate have the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
EXHIBIT E
GUARANTEE
For value received, the undersigned hereby unconditionally guarantees, as principal obligor and not only as a surety, to the Holder of this Security the cash payments in United States dollars of Accreted Value of, premium, if any, and interest, if any, on this Security in the amounts and at the times when due and interest on the overdue Accreted Value, premium, if any, and interest, if any, of this Security, if lawful, and the payment or performance of all other obligations of the Issuer under the Indenture (as defined below) or the Securities, to the Holder of this Security and the Trustee, all in accordance with and subject to the terms and limitations of this Security, Article Ten of the Indenture and this Guarantee. This Guarantee will become effective in accordance with Article Ten of the Indenture and its terms shall be evidenced therein. The validity and enforceability of any Guarantee shall not be affected by the fact that it is not affixed to any particular Security.
Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Indenture dated as of December 20, 2002, between Salt Holdings Corporation, a Delaware corporation (the "COMPANY" or the "ISSUER"), and The Bank of New York, as trustee (the "TRUSTEE").
The obligations of the undersigned to the Holders of Securities and to the Trustee pursuant to this Guarantee and the Indenture are expressly set forth in Article Ten of the Indenture and reference is hereby made to the Indenture for the precise terms of the Guarantee and all of the other provisions of the Indenture to which this Guarantee relates.
THIS GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. The undersigned Guarantor hereby agrees to submit to the jurisdiction of the courts of the State of New York in any action or proceeding arising out of or relating to this Guarantee.
This Guarantee is subject to release upon the terms set forth in the Indenture.
IN WITNESS WHEREOF, each Guarantor has caused its Guarantee to be duly executed.
[ ]
Title:
EXHIBIT 4.4
$123,500,000
SALT HOLDINGS CORPORATION
12 3/4% SENIOR DISCOUNT NOTES DUE 2012
REGISTRATION RIGHTS AGREEMENT
December 20, 2002
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Deutsche Bank Securities Inc.
c/o Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, New York 10010-3629
Ladies and Gentlemen:
Salt Holdings Corporation, a Delaware corporation (the "ISSUER" or the "COMPANY"), proposes to issue to Credit Suisse First Boston Corporation, J.P. Morgan Securities Inc. and Deutsche Bank Securities Inc. (collectively, the "INITIAL PURCHASERS"), upon the terms set forth in a purchase agreement dated December 13, 2002 (the "PURCHASE AGREEMENT"), $123,500,000 aggregate principal amount at maturity of its 12 3/4% Senior Discount Notes Due 2012 (the "INITIAL SECURITIES"). The Initial Securities will be issued pursuant to an Indenture, dated as of December 20, 2002 (the "INDENTURE"), between the Issuer and The Bank of New York , as trustee (the "TRUSTEE"). As an inducement to the Initial Purchasers to enter into the Purchase Agreement, the Company agrees with the Initial Purchasers, for the benefit of the Initial Purchasers and the holders of the Securities (as defined below) (collectively the "HOLDERS"), as follows:
1. REGISTERED EXCHANGE OFFER. Unless not permitted by applicable law (after the Company has complied with the ultimate paragraph of this Section 1), the Company shall prepare and, not later than 120 days (such 120th day being an "EXCHANGE FILING DEADLINE") after the date on which the Initial Purchasers receive the Initial Securities pursuant to the Purchase Agreement (the "CLOSING DATE"), file with the Securities and Exchange Commission (the "COMMISSION") a registration statement (the "EXCHANGE OFFER REGISTRATION STATEMENT") on an appropriate form under the Securities Act of 1933, as amended (the "SECURITIES ACT"), with respect to a proposed offer (the "REGISTERED EXCHANGE OFFER") to the Holders of Transfer Re-
stricted Securities (as defined in Section 6 hereof), who are not prohibited by
any law or policy of the Commission from participating in the Registered
Exchange Offer, to issue and deliver to such Holders, in exchange for the
Initial Securities, a like aggregate accreted value and aggregate principal
amount at maturity of debt securities of the Company issued under the Indenture,
identical in all material respects to the Initial Securities and registered
under the Securities Act (the "EXCHANGE SECURITIES"). The Company shall use its
commercially reasonable efforts to (i) cause such Exchange Offer Registration
Statement to become effective under the Securities Act within 180 days after the
Closing Date (such 180th day being an "EXCHANGE EFFECTIVENESS DEADLINE") and
(ii) keep the Exchange Offer Registration Statement effective for not less than
20 business days (or longer, if required by applicable law) after the date
notice of the Registered Exchange Offer is mailed to the Holders (such period
being called the "EXCHANGE OFFER REGISTRATION PERIOD").
If the Company commences the Registered Exchange Offer, the Company will be required to consummate the Registered Exchange Offer no later than 210 days after the Closing Date (such 210th day being the "CONSUMMATION DEADLINE").
Following the declaration of the effectiveness of the Exchange Offer Registration Statement, the Company shall promptly commence the Registered Exchange Offer, it being the objective of such Registered Exchange Offer to enable each Holder of Transfer Restricted Securities electing to exchange the Initial Securities for Exchange Securities (assuming that such Holder is not an affiliate of the Company within the meaning of the Securities Act, acquires the Exchange Securities in the ordinary course of such Holder's business and has no arrangements with any person to participate in the distribution of the Exchange Securities and is not prohibited by any law or policy of the Commission from participating in the Registered Exchange Offer) to trade such Exchange Securities from and after their receipt without any limitations or restrictions under the Securities Act and without material restrictions under the securities laws of the several states of the United States.
The Company acknowledges that, pursuant to current interpretations by the Commission's staff of Section 5 of the Securities Act, in the absence of an applicable exemption therefrom, (i) each Holder which is a broker-dealer electing to exchange Initial Securities, acquired for its own account as a result of market making activities or other trading activities, for Exchange Securities (an "EXCHANGING DEALER"), is required to deliver a prospectus containing the information set forth in (a) Annex A hereto on the cover, (b) Annex B hereto in the "Exchange Offer Procedures" section and the "Purpose of the Exchange Offer" section, and (c) Annex C hereto in the "Plan of Distribution" section of such prospectus in connection with a sale of any such Exchange Securities received by such Exchanging Dealer pursuant to the Registered Exchange Offer and (ii) an Initial Purchaser that elects to sell Securities (as defined below) acquired in exchange for Initial Securities constituting any portion of an unsold allot-
ment, is required to deliver a prospectus containing the information required by Items 507 or 508 of Regulation S-K under the Securities Act, as applicable, in connection with such sale.
The Company shall use its best efforts to keep the Exchange Offer Registration Statement effective and to amend and supplement the prospectus contained therein, in order to permit such prospectus to be lawfully delivered by all persons subject to the prospectus delivery requirements of the Securities Act for such period of time as such persons must comply with such requirements in order to resell the Exchange Securities; PROVIDED, HOWEVER, that (i) in the case where such prospectus and any amendment or supplement thereto must be delivered by an Exchanging Dealer or an Initial Purchaser, such period shall be the lesser of 180 days and the date on which all Exchanging Dealers and the Initial Purchasers have sold all Exchange Securities held by them (unless such period is extended pursuant to Section 3(j) below) and (ii) the Company shall make such prospectus and any amendment or supplement thereto available to any broker-dealer for use in connection with any resale of any Exchange Securities for a period of not less than 180 days after the consummation of the Registered Exchange Offer.
If, upon consummation of the Registered Exchange Offer, any Initial Purchaser holds Initial Securities acquired by it as part of its initial distribution, the Company, simultaneously with the delivery of the Exchange Securities pursuant to the Registered Exchange Offer, shall issue and deliver to such Initial Purchaser upon the written request of such Initial Purchaser, in exchange (the "PRIVATE EXCHANGE") for the Initial Securities held by such Initial Purchaser, a like accreted value and principal amount at maturity of debt securities of the Company issued under the Indenture and identical in all material respects to the Initial Securities (the "PRIVATE EXCHANGE SECURITIES"). The Initial Securities, the Exchange Securities and the Private Exchange Securities are herein collectively called the "SECURITIES".
In connection with the Registered Exchange Offer, the Company shall:
(a) mail to each Holder a copy of the prospectus forming part of the Exchange Offer Registration Statement, together with an appropriate letter of transmittal and related documents;
(b) keep the Registered Exchange Offer open for not less than 20 business days (or longer, if required by applicable law) after the date notice thereof is mailed to the Holders;
(c) utilize the services of a depositary for the Registered Exchange Offer with an address in the Borough of Manhattan, The City of New York, which may be the Trustee or an affiliate of the Trustee;
(d) permit Holders to withdraw tendered Securities at any time prior to the close of business, New York time, on the last business day on which the Registered Exchange Offer shall remain open; and
(e) otherwise comply with all applicable laws.
As soon as practicable after the close of the Registered Exchange Offer or the Private Exchange, as the case may be, the Company shall:
(x) accept for exchange all the Securities validly tendered and not withdrawn pursuant to the Registered Exchange Offer and the Private Exchange;
(y) deliver to the Trustee for cancellation all the Initial Securities so accepted for exchange; and
(z) cause the Trustee to authenticate and deliver promptly to each Holder of the Initial Securities, Exchange Securities or Private Exchange Securities, as the case may be, equal in accreted value and principal amount at maturity to the Initial Securities of such Holder so accepted for exchange.
The Indenture provides that the Exchange Securities will not be subject to the transfer restrictions set forth in the Indenture and that all the Securities will vote and consent together on all matters as one class and that none of the Securities will have the right to vote or consent as a class separate from one another on any matter.
To the extent applicable, interest on each Exchange Security and Private Exchange Security issued pursuant to the Registered Exchange Offer and in the Private Exchange will accrue from the last interest payment date on which interest was paid on the Initial Securities surrendered in exchange therefor or, if no interest has been paid on the Initial Securities, from December 15, 2007.
Each Holder participating in the Registered Exchange Offer shall be required to represent to the Company that at the time of the consummation of the Registered Exchange Offer (i) any Exchange Securities received by such Holder will be acquired in the ordinary course of business, (ii) such Holder will have no arrangements or understanding with any person to participate in the distribution of the Securities or the Exchange Securities within the meaning of the Securities Act, (iii) such Holder is not an "affiliate," as defined in Rule 405 of the Securities Act, of the Company or if it is an affiliate, such Holder will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable, (iv) if such Holder is not a broker-dealer, that it is not engaged in, and does not intend to engage in, the distribution of the Exchange Securities and (v) if such Holder is a broker-dealer, that it will receive Exchange Securities for its own account in exchange for Initial Securities that were
acquired as a result of market-making activities or other trading activities and that it will be required to acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities.
Notwithstanding any other provisions hereof, the Company will ensure that
(i) any Exchange Offer Registration Statement and any amendment thereto and any
prospectus forming part thereof and any supplement thereto complies in all
material respects with the Securities Act and the rules and regulations
thereunder, (ii) any Exchange Offer Registration Statement and any amendment
thereto does not, when it becomes effective, contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and (iii) any prospectus
forming part of any Exchange Offer Registration Statement, and any supplement to
such prospectus, does not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
If following the date hereof there has been announced a change in Commission policy with respect to exchange offers that in the reasonable opinion of counsel to the Company raises a substantial question as to whether the Registered Exchange Offer is permitted by applicable federal law, the Company will seek a no-action letter or other favorable decision from the Commission allowing the Company to consummate the Registered Exchange Offer. The Company will pursue the issuance of such a decision to the Commission staff level. In connection with the foregoing, the Company will take all such other actions as may be requested by the Commission or otherwise required in connection with the issuance of such decision, including without limitation (i) participating in telephonic conferences with the Commission, (ii) delivering to the Commission staff an analysis prepared by counsel to the Company setting forth the legal bases, if any, upon which such counsel has concluded that the Registered Exchange Offer should be permitted and (iii) diligently pursuing a resolution (which need not be favorable) by the Commission staff.
2. SHELF REGISTRATION. If, (i) because of any change in law or in
applicable interpretations thereof by the staff of the Commission, the Company
is not permitted to effect a Registered Exchange Offer, as contemplated by
Section 1 hereof, (ii) the Registered Exchange Offer is not consummated by the
210th day after the Closing Date, (iii) any Initial Purchaser so requests with
respect to the Initial Securities (or the Private Exchange Securities) not
eligible to be exchanged for Exchange Securities in the Registered Exchange
Offer and held by it following consummation of the Registered Exchange Offer or
(iv) any Holder (other than an Exchanging Dealer) is not eligible to participate
in the Registered Exchange Offer or, in the case of any Holder (other than an
Exchanging Dealer) that participates in the Registered Exchange Offer, such
Holder does not receive freely tradeable Exchange Securities on the date of the
exchange and any such Holder so requests, the Company shall take the following
ac-
tions (the date on which any of the conditions described in the foregoing clauses (i) through (iv) occur, including in the case of clauses (iii) or (iv) the receipt of the required notice, being a "TRIGGER DATE"):
(a) The Company shall promptly (but in no event more than 120 days after the Trigger Date (such 120th day being a "SHELF FILING DEADLINE," each of the Exchange Filing Deadline and the Shelf Filing Deadline, a "FILING DEADLINE") file with the Commission and thereafter use commercially reasonable efforts to cause to be declared effective no later than 180 days after the Trigger Date (such 180th day being a "SHELF EFFECTIVENESS DEADLINE," each of the Exchange Effectiveness Deadline and the Shelf Effectiveness Deadline, an "EFFECTIVENESS DEADLINE") a registration statement (the "SHELF REGISTRATION STATEMENT" and, together with the Exchange Offer Registration Statement, a "REGISTRATION STATEMENT") on an appropriate form under the Securities Act relating to the offer and sale of the Transfer Restricted Securities by the Holders thereof from time to time in accordance with the methods of distribution set forth in the Shelf Registration Statement and Rule 415 under the Securities Act (hereinafter, the "SHELF REGISTRATION"); PROVIDED, HOWEVER, that no Holder (other than an Initial Purchaser) shall be entitled to have the Securities held by it covered by such Shelf Registration Statement unless such Holder agrees in writing to be bound by all the provisions of this Agreement applicable to such Holder.
(b) The Company shall use its best efforts to keep the Shelf Registration Statement continuously effective in order to permit the prospectus included therein to be lawfully delivered by the Holders of the relevant Securities, for a period of two years (or for such longer period if extended pursuant to Section 3(j) below) from the date of its effectiveness or such shorter period that will terminate when all the Securities covered by the Shelf Registration Statement (i) have been sold pursuant thereto or (ii) are no longer restricted securities (as defined in Rule 144 under the Securities Act, or any successor rule thereof). The Company shall be deemed not to have used its best efforts to keep the Shelf Registration Statement effective during the requisite period if it voluntarily takes any action that would result in Holders of Securities covered thereby not being able to offer and sell such Securities during that period, unless such action is required by applicable law.
(c) Notwithstanding any other provisions of this Agreement to the contrary, the Company shall cause the Shelf Registration Statement and the related prospectus and any amendment or supplement thereto, as of the effective date of the Shelf Registration Statement, amendment or supplement, (i) to comply in all material respects with the applicable requirements of the Securities Act and the rules and regulations of the Commission and (ii) not to contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made, not misleading.
3. REGISTRATION PROCEDURES. In connection with any Shelf Registration contemplated by Section 2 hereof and, to the extent applicable, any Registered Exchange Offer contemplated by Section 1 hereof, the following provisions shall apply:
(a) The Company shall (i) furnish to each Initial Purchaser, prior to the filing thereof with the Commission, a copy of the Registration Statement and each amendment thereof and each supplement, if any, to the prospectus included therein and, in the event that an Initial Purchaser (with respect to any portion of an unsold allotment from the original offering) is participating in the Registered Exchange Offer or the Shelf Registration Statement, the Company shall use its best efforts to reflect in each such document, when so filed with the Commission, such comments as such Initial Purchaser reasonably may propose; (ii) include the information set forth in Annex A hereto on the cover, in Annex B hereto in the "Exchange Offer Procedures" section and the "Purpose of the Exchange Offer" section and in Annex C hereto in the "Plan of Distribution" section of the prospectus forming a part of the Exchange Offer Registration Statement and include the information set forth in Annex D hereto in the Letter of Transmittal delivered pursuant to the Registered Exchange Offer; (iii) if requested by an Initial Purchaser, include the information required by Items 507 or 508 of Regulation S-K under the Securities Act, as applicable, in the prospectus forming a part of the Exchange Offer Registration Statement; (iv) include within the prospectus contained in the Exchange Offer Registration Statement a section entitled "Plan of Distribution," reasonably acceptable to the Initial Purchasers, which shall contain a summary statement of the positions taken or policies made by the staff of the Commission with respect to the potential "underwriter" status of any broker-dealer that is the beneficial owner (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT")) of Exchange Securities received by such broker-dealer in the Registered Exchange Offer (a "PARTICIPATING BROKER-DEALER"), whether such positions or policies have been publicly disseminated by the staff of the Commission or such positions or policies, in the reasonable judgment of the Initial Purchasers based upon advice of counsel (which may be in-house counsel), represent the prevailing views of the staff of the Commission; and (v) in the case of a Shelf Registration Statement, include the names of the Holders who propose to sell Securities pursuant to the Shelf Registration Statement as selling securityholders.
(b) The Company shall give written notice to the Initial Purchasers, the Holders of the Securities and any Participating Broker-Dealer from whom the Company has received prior written notice that it will be a Participating Broker-Dealer in the Registered Exchange Offer (which notice pursuant to clauses (ii)-(v) hereof shall
be accompanied by an instruction to suspend the use of the prospectus until the requisite changes have been made):
(i) when the Registration Statement or any amendment thereto has been filed with the Commission and when the Registration Statement or any post-effective amendment thereto has become effective;
(ii) of any request by the Commission for amendments or supplements to the Registration Statement or the prospectus included therein or for additional information;
(iii) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose;
(iv) of the receipt by the Company or its legal counsel of any notification with respect to the suspension of the qualification of the Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and
(v) of the happening of any event that requires the Company to make changes in the Registration Statement or the prospectus in order that the Registration Statement or the prospectus do not contain an untrue statement of a material fact nor omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of the prospectus, in light of the circumstances under which they were made) not misleading.
(c) The Company shall make every reasonable effort to obtain the withdrawal at the earliest possible time, of any order suspending the effectiveness of the Registration Statement.
(d) The Company shall furnish to each Holder of Securities included within the coverage of the Shelf Registration, without charge, at least one copy of the Shelf Registration Statement and any post-effective amendment thereto, including financial statements and schedules, and, if the Holder so requests in writing, all exhibits thereto (including those, if any, incorporated by reference).
(e) The Company shall deliver to each Exchanging Dealer and each Initial Purchaser, and to any other Holder who so requests, without charge, at least one copy of the Exchange Offer Registration Statement and any post-effective amendment thereto, including financial statements and schedules, and, if any Initial Purchaser or
any such Holder requests, all exhibits thereto (including those incorporated by reference).
(f) The Company shall, during the Shelf Registration Period, deliver to each Holder of Securities included within the coverage of the Shelf Registration, without charge, as many copies of the prospectus (including each preliminary prospectus) included in the Shelf Registration Statement and any amendment or supplement thereto as such person may reasonably request. The Company consents, subject to the provisions of this Agreement, to the use of the prospectus or any amendment or supplement thereto by each of the selling Holders of the Securities in connection with the offering and sale of the Securities covered by the prospectus, or any amendment or supplement thereto, included in the Shelf Registration Statement.
(g) The Company shall deliver to each Initial Purchaser, any Exchanging Dealer, any Participating Broker-Dealer and such other persons required to deliver a prospectus following the Registered Exchange Offer, without charge, as many copies of the final prospectus included in the Exchange Offer Registration Statement and any amendment or supplement thereto as such persons may reasonably request. The Company consents, subject to the provisions of this Agreement, to the use of the prospectus or any amendment or supplement thereto by any Initial Purchaser, if necessary, any Participating Broker-Dealer and such other persons required to deliver a prospectus following the Registered Exchange Offer in connection with the offering and sale of the Exchange Securities covered by the prospectus, or any amendment or supplement thereto, included in such Exchange Offer Registration Statement.
(h) Prior to any public offering of the Securities pursuant to any Registration Statement the Company shall register or qualify or cooperate with the Holders of the Securities included therein and their respective counsel in connection with the registration or qualification of the Securities for offer and sale under the securities or "blue sky" laws of such states of the United States as any Holder of the Securities reasonably requests in writing and do any and all other acts or things necessary or advisable to enable the offer and sale in such jurisdictions of the Securities covered by such Registration Statement; PROVIDED, HOWEVER, that the Company shall not be required to (i) qualify generally to do business in any jurisdiction where it is not then so qualified or (ii) take any action which would subject it to general service of process or to taxation in any jurisdiction where it is not then so subject.
(i) The Company shall cooperate with the Holders of the Securities to facilitate the timely preparation and delivery of certificates representing the Securities to be sold pursuant to any Registration Statement free of any restrictive legends and in such denominations and registered in such names as the Holders may request a reason-
able period of time prior to sales of the Securities pursuant to such Registration Statement.
(j) Upon the occurrence of any event contemplated by paragraphs (ii)
through (v) of Section 3(b) above during the period for which the Company
is required to maintain an effective Registration Statement, the Company
shall promptly prepare and file a post-effective amendment to the
Registration Statement or a supplement to the related prospectus and any
other required document so that, as thereafter delivered to Holders of the
Securities or purchasers of Securities, the prospectus will not contain an
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
If the Company notifies the Initial Purchasers, the Holders of the
Securities and any known Participating Broker-Dealer in accordance with
paragraphs (ii) through (v) of Section 3(b) above to suspend the use of the
prospectus until the requisite changes to the prospectus have been made,
then the Initial Purchasers, the Holders of the Securities and any such
Participating Broker-Dealers shall suspend use of such prospectus, and the
period of effectiveness of the Shelf Registration Statement provided for in
Section 2(b) above and the Exchange Offer Registration Statement provided
for in Section 1 above shall each be extended by the number of days from
and including the date of the giving of such notice to and including the
date when the Initial Purchasers, the Holders of the Securities and any
known Participating Broker-Dealer shall have received such amended or
supplemented prospectus pursuant to this Section 3(j). Notwithstanding the
foregoing, the Company may suspend the offering and sales under the
Exchange Offer Registration Statement subsequent to the consummation of the
Registered Exchange Offer or the Shelf Registration Statement for up to 90
days in each year during which such Exchange Offer Registration Statement
is required to be effective and usable hereunder subsequent to the
consummation of the Registered Exchange Offer or such Shelf Registration
Statement is required to be effective and usable hereunder (measured from
the date of effectiveness of such Shelf Registration Statement to
successive anniversaries thereof) if (A) either (x)(I) the Company shall be
engaged in a material acquisition or disposition and (II)(aa) such
acquisition or disposition is required to be disclosed in the Exchange
Offer Registration Statement or the Shelf Registration Statement, the
related prospectus or any amendment or supplement thereto, or the failure
by the Company to disclose such transaction in the Exchange Offer
Registration Statement or the Shelf Registration Statement or related
prospectus, or any amendment or supplement thereto, as then amended or
supplemented, would cause such Exchange Offer Registration Statement or
Shelf Registration Statement, prospectus or amendment or supplement
thereto, to contain an untrue statement of material fact or omit to state a
material fact necessary in order to make the statements therein not
misleading, in light of the circumstances under which they were made, (bb)
information regarding the existence of
such acquisition or disposition has not then been publicly disclosed by or on behalf of the Company and (cc) a majority of the Board of Directors of the Company determines in the exercise of its good faith judgment that disclosure of such acquisition or disposition would not be in the best interest of the Company or would have a material adverse effect on the consummation of such acquisition or disposition or (y) a majority of the Board of Directors of the Company determines in the exercise of its good faith judgment that compliance with the disclosure obligations set forth in this Section 3(j) would otherwise have a material adverse effect on the Company and its subsidiaries, taken as a whole, and (B) the Company notifies the Holders within two business days after such Board of Directors makes the relevant determination set forth in clause (A); provided, however, that in each such case the applicable period of effectiveness of the Shelf Registration Statement provided for in Section 2(b) above and the Exchange Offer Registration Statement provided for in Section 1 above shall each be extended by the number of days during which such effectiveness was suspended pursuant to the foregoing and Additional Interest shall not apply during any period the Company is permitted to suspend offerings and sales under this sentence.
(k) Not later than the effective date of the applicable Registration Statement, the Company will provide a CUSIP number for the Initial Securities, the Exchange Securities or the Private Exchange Securities, as the case may be, and provide the applicable trustee with printed certificates for the Initial Securities, the Exchange Securities or the Private Exchange Securities, as the case may be, in a form eligible for deposit with The Depository Trust Company.
(l) The Company will comply with all rules and regulations of the
Commission to the extent and so long as they are applicable to the
Registered Exchange Offer or the Shelf Registration and will make generally
available to its security holders (or otherwise provide in accordance with
Section 11(a) of the Securities Act) an earnings statement satisfying the
provisions of Section 11(a) of the Securities Act, no later than 45 days
after the end of a 12-month period (or 90 days, if such period is a fiscal
year) beginning with the first month of the Company's first fiscal quarter
commencing after the effective date of the Registration Statement, which
statement shall cover such 12-month period.
(m) The Company shall cause the Indenture to be qualified under the Trust Indenture Act of 1939, as amended, in a timely manner and containing such changes, if any, as shall be necessary for such qualification. In the event that such qualification would require the appointment of a new trustee under the Indenture, the Company shall appoint a new trustee thereunder pursuant to the applicable provisions of the Indenture.
(n) The Company may require each Holder of Securities to be sold pursuant to the Shelf Registration Statement to furnish to the Company such information regarding the Holder and the distribution of the Securities as the Company may from time to time reasonably require for inclusion in the Shelf Registration Statement, and the Company may exclude from such registration the Securities of any Holder that unreasonably fails to furnish such information within a reasonable time after receiving such request.
(o) The Company shall enter into such customary agreements and take all such other action, if any, as any Holder of the Securities shall reasonably request in order to facilitate the disposition of the Securities pursuant to any Shelf Registration.
(p) In the case of any Shelf Registration, the Company shall (i) make
reasonably available for inspection by the Holders of the Securities, any
attorney, accountant or other advisor retained by the Holders of the
Securities all relevant financial and other records, pertinent corporate
documents and properties of the Company and (ii) cause the Company's
officers, directors, employees, accountants and auditors to supply all
relevant information reasonably requested by the Holders of the Securities,
attorney, accountant or advisor in connection with the Shelf Registration
Statement, in each case, as shall be reasonably necessary to enable such
persons, to conduct a reasonable investigation within the meaning of
Section 11 of the Securities Act; PROVIDED, HOWEVER, that the foregoing
inspection and information gathering shall be coordinated on behalf of the
Initial Purchasers by you and on behalf of the other parties, by one
counsel designated by and on behalf of such other parties as described in
Section 4 hereof.
(q) In the case of any Shelf Registration, the Company, if requested by any Holder of Securities covered thereby, shall cause (i) its counsel to deliver an opinion relating to the Securities in customary form addressed to such Holders and dated the effective date of such Shelf Registration Statement (it being agreed that the matters to be covered by such opinion shall include, without limitation, the due incorporation and good standing of the Company and its subsidiaries; the qualification of the Company and its subsidiaries to transact business as foreign corporations; the due authorization, execution and delivery of the relevant agreement of the type referred to in Section 3(o) hereof; the due authorization, execution, authentication and issuance, and the validity and enforceability, of the applicable Securities; the absence of material legal or governmental proceedings involving the Company and its subsidiaries; the absence of governmental approvals required to be obtained in connection with the Shelf Registration Statement, the offering and sale of the applicable Securities, or any agreement of the type referred to in Section 3(o) hereof; the compliance as to form of such Shelf Registration Statement and any documents incorporated by reference therein and of the
Indenture with the requirements of the Securities Act and the Trust Indenture Act, respectively; and, as of the date of the opinion and as of the effective date of the Shelf Registration Statement or most recent post-effective amendment thereto, as the case may be, the absence from such Shelf Registration Statement and the prospectus included therein, as then amended or supplemented, and from any documents incorporated by reference therein of an untrue statement of a material fact or the omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading (in the case of any such documents, in the light of the circumstances existing at the time that such documents were filed with the Commission under the Exchange Act), all in the manner covered by the opinion of Latham & Watkins delivered to the Purchasers on the date hereof and (ii) its independent public accountants to provide to the selling Holders of the applicable Securities a comfort letter in customary form and covering matters of the type customarily covered in comfort letters to selling security holders in a shelf registration, subject to receipt of appropriate documentation as contemplated, and only if permitted, by Statement of Auditing Standards No. 72.
(r) If a Registered Exchange Offer or a Private Exchange is to be consummated, upon delivery of the Initial Securities by Holders to the Company (or to such other Person as directed by the Company) in exchange for the Exchange Securities or the Private Exchange Securities, as the case may be, the Company shall mark, or caused to be marked, on the Initial Securities so exchanged that such Initial Securities are being canceled in exchange for the Exchange Securities or the Private Exchange Securities, as the case may be; in no event shall the Initial Securities be marked as paid or otherwise satisfied.
(s) The Company shall use its reasonable efforts to take all other steps necessary to effect the registration of the Securities covered by a Registration Statement contemplated hereby.
4. REGISTRATION EXPENSES. (a) All expenses incident to the Company's performance of and compliance with this Agreement will be borne by the Company, regardless of whether a Registration Statement is ever filed or becomes effective, including without limitation;
(i) all registration and filing fees and expenses;
(ii) all fees and expenses of compliance with federal securities and state "blue sky" or securities laws;
(iii) all expenses of printing (including printing certificates for the Securities to be issued in the Registered Exchange Offer and the
Private Exchange and printing of Prospectuses), messenger and delivery services and telephone;
(iv) all fees and disbursements of counsel for the Company;
(v) all application and filing fees in connection with listing the Exchange Securities on a national securities exchange or automated quotation system pursuant to the requirements hereof; and
(vi) all fees and disbursements of independent certified public accountants of the Company (including the expenses of any special audit and comfort letters required by or incident to such performance).
The Company will bear its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expenses of any annual audit and the fees and expenses of any person, including special experts, retained by the Company.
(b) In connection with any Registration Statement required by this Agreement, the Company will reimburse the Initial Purchasers and the Holders of Transfer Restricted Securities who are tendering Initial Securities in the Registered Exchange Offer and/or selling or reselling Securities pursuant to the "Plan of Distribution" contained in the Exchange Offer Registration Statement or the Shelf Registration Statement, as applicable, for the reasonable fees and disbursements of not more than one counsel, who shall be Cahill Gordon & Reindel.
5. INDEMNIFICATION. (a) The Company agrees to indemnify and hold harmless each Holder of the Securities, any Participating Broker-Dealer and each person, if any, who controls such Holder or such Participating Broker-Dealer within the meaning of the Securities Act or the Exchange Act (each Holder, any Participating Broker-Dealer and such controlling persons are each referred to as an "INDEMNIFIED PARTY" and, collectively as the "INDEMNIFIED PARTIES") from and against any losses, claims, damages or liabilities, joint or several, or any actions in respect thereof (including, but not limited to, any losses, claims, damages, liabilities or actions relating to purchases and sales of the Securities) to which each Indemnified Party may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such losses, claims, damages, liabilities or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in a Registration Statement or prospectus or in any amendment or supplement thereto or in any preliminary prospectus relating to a Shelf Registration, or arise out of, or are based upon, the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and shall reimburse, as incurred, the Indemnified Parties for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action in respect thereof; PROVIDED, HOWEVER, that
(i) the Company shall not be liable in any such case to the extent that such
loss, claim, damage or liability arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in a
Registration Statement or prospectus or in any amendment or supplement thereto
or in any preliminary prospectus relating to a Shelf Registration in reliance
upon and in conformity with written information pertaining to such Holder and
furnished to the Company by or on behalf of such Holder specifically for
inclusion therein and (ii) with respect to any untrue statement or omission or
alleged untrue statement or omission made in any preliminary prospectus relating
to a Shelf Registration Statement, the indemnity agreement contained in this
subsection (a) shall not inure to the benefit of any Holder or Participating
Broker-Dealer from whom the person asserting any such losses, claims, damages or
liabilities purchased the Securities concerned, to the extent that a prospectus
relating to such Securities was required to be delivered by such Holder or
Participating Broker-Dealer under the Securities Act in connection with such
purchase and any such loss, claim, damage or liability of such Holder or
Participating Broker-Dealer results from the fact that there was not sent or
given to such person, at or prior to the written confirmation of the sale of
such Securities to such person, a copy of the final prospectus if the Company
had previously furnished copies thereof to such Holder or Participating
Broker-Dealer which final prospectus corrected such untrue statement or omission
or alleged untrue statement or omission made in any preliminary prospectus;
PROVIDED FURTHER, HOWEVER, that this indemnity agreement will be in addition to
any liability which the Company may otherwise have to such Indemnified Party.
The Company shall also indemnify underwriters, their officers and directors and
each person who controls such underwriters within the meaning of the Securities
Act or the Exchange Act to the same extent as provided above with respect to the
indemnification of the Holders of the Securities if requested by such Holders.
Any amounts advanced by the Company to an Indemnified Party pursuant to this
Section 5 as a result of any losses described herein shall be returned to the
Company if it shall be finally determined by a court of competent jurisdiction
in a judgment not subject to appeal or further review that such Indemnified
Party was not entitled to such indemnification by the Company.
(b) Each Holder of the Securities, severally and not jointly, will indemnify and hold harmless the Company and each person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act from and against any losses, claims, damages or liabilities or any actions in respect thereof, to which the Company or any such controlling person may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such losses, claims, damages, liabilities or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in a Registration Statement or prospectus or in any amendment or supplement thereto or in any preliminary prospectus relating to a Shelf Registration, or arise out of or are based upon the omission or alleged omission to state therein a material fact necessary to make the statements therein not misleading, but in each case only to the extent that the untrue statement or omission or alleged untrue statement or omission was made in reliance upon and in conformity with written in-
formation pertaining to such Holder and furnished to the Company by or on behalf of such Holder specifically for inclusion therein; and, subject to the limitation set forth immediately preceding this clause, shall reimburse, as incurred, the Company for any legal or other expenses reasonably incurred by the Company or any such controlling person in connection with investigating or defending any loss, claim, damage, liability or action in respect thereof. This indemnity agreement will be in addition to any liability which such Holder may otherwise have to the Company or any of its controlling persons.
(c) Promptly after receipt by an Indemnified Party under this Section 5 of
notice of the commencement of any action or proceeding (including a governmental
investigation), such Indemnified Party will, if a claim in respect thereof is to
be made against the indemnifying party under this Section 5, notify the
indemnifying party of the commencement thereof; PROVIDED that the omission so to
notify the indemnifying party will not relieve it from any liability which it
may have to any Indemnified Party under subsection (a) or (b) above unless the
indemnifying party is materially prejudiced thereby; and PROVIDED, FURTHER, that
the omission so to notify the indemnifying party will not, in any event, relieve
the indemnifying party from any obligations to any Indemnified Party other than
the indemnification obligation provided in paragraph (a) or (b) above. In case
any such action is brought against any Indemnified Party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such Indemnified Party (who
shall not, except with the consent of the Indemnified Party, be counsel to the
indemnifying party), and after notice from the indemnifying party to such
Indemnified Party of its election so to assume the defense thereof the
indemnifying party will not be liable to such Indemnified Party under this
Section 5 for any legal or other expenses, other than reasonable costs of
investigation, subsequently incurred by such Indemnified Party in connection
with the defense thereof. In no event shall the indemnifying party be liable for
fees and expenses of more than one counsel (in addition to any local counsel)
separate from its own counsel for the Indemnified Party in connection with any
one action or separate but related actions in the same jurisdiction arising out
of the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the Indemnified Party, effect any
settlement of any pending or threatened action in respect of which any
Indemnified Party is or could have been a party and indemnity could have been
sought hereunder by such Indemnified Party unless such settlement includes an
unconditional release of such Indemnified Party from all liability on any claims
that are the subject matter of such action, and does not include a statement as
to or an admission of fault, culpability or a failure to act by or on behalf of
any Indemnified Party..
(d) If the indemnification provided for in this Section 5 is unavailable
or insufficient to hold harmless an Indemnified Party under subsections (a) or
(b) above, then each indemnifying party shall contribute to the amount paid or
payable by such Indemnified Party as
a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to in subsection (a) or (b) above (i) in such proportion as is appropriate to reflect the relative benefits received by the indemnifying party or parties on the one hand and the Indemnified Party on the other from the exchange of the Securities, pursuant to the Registered Exchange Offer, or (ii) if the allocation provided by the foregoing clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the indemnifying party or parties on the one hand and the Indemnified Party on the other in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities (or actions in respect thereof) as well as any other relevant equitable considerations. The relative fault of the parties shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company on the one hand or such Holder or such other Indemnified Party, as the case may be, on the other, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid by an Indemnified Party as a result of the losses, claims, damages or liabilities referred to in the first sentence of this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such Indemnified Party in connection with investigating or defending any action or claim which is the subject of this subsection (d). Notwithstanding any other provision of this Section 5(d), the Holders of the Securities shall not be required to contribute any amount in excess of the amount by which the net proceeds received by such Holders from the sale of the Securities pursuant to a Registration Statement exceeds the amount of damages which such Holders have otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this paragraph (d), each person, if any, who controls such Indemnified Party within the meaning of the Securities Act or the Exchange Act shall have the same rights to contribution as such Indemnified Party and each person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act shall have the same rights to contribution as the Company.
(e) The agreements contained in this Section 5 shall survive the sale of the Securities pursuant to a Registration Statement and shall remain in full force and effect, regardless of any termination or cancellation of this Agreement or any investigation made by or on behalf of any Indemnified Party.
6. ADDITIONAL INTEREST UNDER CERTAIN CIRCUMSTANCES. (a) Additional interest (the "ADDITIONAL INTEREST") with respect to the Securities shall be assessed as follows if any of the following events occur (each such event in clauses (i) through (iv) below being herein called a "REGISTRATION DEFAULT"):
(i) any Registration Statement required by this Agreement is not filed with the Commission on or prior to the applicable Filing Deadline;
(ii) any Registration Statement required by this Agreement is not declared effective by the Commission on or prior to the applicable Effectiveness Deadline;
(iii) the Registered Exchange Offer has not been consummated on or prior to the Consummation Deadline; or
(iv) any Registration Statement required by this
Agreement has been declared effective by the Commission but
(A) such Registration Statement thereafter ceases to be
effective or (B) such Registration Statement or the related
prospectus ceases to be usable in connection with resales of
Transfer Restricted Securities during the periods specified
herein because either (1) any event occurs as a result of
which the related prospectus forming part of such
Registration Statement would include any untrue statement of
a material fact or omit to state any material fact necessary
to make the statements therein in the light of the
circumstances under which they were made not misleading, or
(2) it shall be necessary to amend such Registration
Statement or supplement the related prospectus, to comply
with the Securities Act or the Exchange Act or the
respective rules thereunder; provided, however, the
Registration Default referred to in this Section 6(a)(iv)
shall be deemed not to have occurred and to be continuing,
and Additional Interest shall not accrue, during any period
the Company is permitted to suspend offerings and sales
pursuant to Section 3(j).
Each of the foregoing will constitute a Registration Default whatever the reason for any such event and whether it is voluntary or involuntary or is beyond the control of the Company or pursuant to operation of law or as a result of any action or inaction by the Commission.
Additional Interest shall accrue on the Securities over and above the interest set forth in the title of the Securities from and including the date on which any such Registration Default shall occur to but excluding the date on which all such Registration Defaults have been cured, at a rate of 0.25% per annum (the "ADDITIONAL INTEREST RATE") for the first 90-day period immediately following the occurrence of such Registration Default. The Additional Interest Rate shall increase by an additional 0.25% per annum with respect to each subsequent 90-day period until all Registration Defaults have been cured, up to a maximum Additional Interest Rate of 1.0% per annum.
(b) A Registration Default referred to in Section 6(a)(iv) hereof shall be deemed not to have occurred and be continuing in relation to a Shelf Registration Statement or the related prospectus if (i) such Registration Default has occurred solely as a result of (x) the filing of a post-effective amendment to such Shelf Registration Statement to incorporate annual audited financial information with respect to the Company where such post-effective amendment is not yet effective and needs to be declared effective to permit Holders to use the related prospectus or (y) other material events, with respect to the Company that would need to be described in such Shelf Registration Statement or the related prospectus and (ii) in the case of clause (y), the Company is proceeding promptly and in good faith to amend or supplement such Shelf Registration Statement and related prospectus to describe such events; PROVIDED, HOWEVER, that in any case if such Registration Default occurs for a continuous period in excess of 30 days, Additional Interest shall be payable in accordance with the above paragraph from the day such Registration Default occurs until such Registration Default is cured.
(c) Any amounts of Additional Interest due pursuant to Section 6(a) that accrue prior to December 15, 2007 shall be added to the accreted value of each Security and any amounts of Additional Interest that accrue thereafter shall be payable in cash on the regular interest payment dates with respect to the Securities. The amount of Additional Interest will be determined by multiplying the applicable Additional Interest Rate by the accreted value of the Securities and further multiplied by a fraction, the numerator of which is the number of days such Additional Interest Rate was applicable during such period (determined on the basis of a 360-day year comprised of twelve 30-day months), and the denominator of which is 360.
(d) "TRANSFER RESTRICTED SECURITIES" means each Security until (i) the date on which such Security has been exchanged by a person other than a broker-dealer for a freely transferable Exchange Security in the Registered Exchange Offer, (ii) following the exchange by a broker-dealer in the Registered Exchange Offer of an Initial Security for an Exchange Note, the date on which such Exchange Note is sold to a purchaser who receives from such broker-dealer on or prior to the date of such sale a copy of the prospectus contained in the Exchange Offer Registration Statement, (iii) the date on which such Security has been effectively registered under the Securities Act and disposed of in accordance with the Shelf Registration Statement or (iv) the date on which such Security is distributed to the public pursuant to Rule 144 under the Securities Act or is saleable pursuant to Rule 144(k) under the Securities Act.
7. RULES 144 AND 144A. The Company shall use its best efforts to file the reports required to be filed by it under the Securities Act and the Exchange Act in a timely manner and, if at any time the Company is not required to file such reports, it will, upon the request of any Holder of Securities, make available other information to the extent necessary to permit sales of their securities pursuant to Rules 144 and 144A. The Company will provide a copy of this Agreement to prospective purchasers of Initial Securities identified to the Company by the
Initial Purchasers upon request. Notwithstanding the foregoing, nothing in this
Section 7 shall be deemed to require the Company to register any of its
securities pursuant to the Exchange Act.
8. MISCELLANEOUS.
(a) REMEDIES. The Company acknowledges and agrees that any failure by the Company to comply with its obligations under Section 1 and 2 hereof may result in material irreparable injury to the Initial Purchasers or the Holders for which there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely and that, in the event of any such failure, the Initial Purchasers or any Holder may obtain such relief as may be required to specifically enforce the Company's obligations under Sections 1 and 2 hereof. THE COMPANY FURTHER AGREES TO WAIVE THE DEFENSE IN ANY ACTION FOR SPECIFIC PERFORMANCE THAT A REMEDY AT LAW WOULD BE ADEQUATE.
(b) NO INCONSISTENT AGREEMENTS. The Company will not on or after the date of this Agreement enter into any agreement with respect to its securities that could impair the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. The rights granted to the Holders hereunder do not in any way conflict with the rights granted to the holders of the Company's securities under any agreement in effect on the date hereof.
(c) AMENDMENTS AND WAIVERS. The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, except by the Company and the written consent of the Holders of a majority in principal amount at maturity of the Securities affected by such amendment, modification, supplement, waiver or consents.
(d) NOTICES. All notices and other communications provided for or permitted hereunder shall be made in writing by hand delivery, first-class mail, facsimile transmission, or air courier which guarantees overnight delivery:
(1) if to a Holder of the Securities, at the most current address given by such Holder to the Company.
(2) if to the Initial Purchasers;
Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, NY 10010-3629
Fax No.: (212) 325-8278
Attention: Transactions Advisory Group
with a copy to:
Cahill Gordon & Reindel
80 Pine Street
New York, NY 10005
Fax No.: (212) 269-5420
Attention: John A. Tripodoro, Esq.
(3) if to the Company, at its address as follows:
Compass Minerals Group, Inc.
8300 College Boulevard
Overland Park, KS 66210
Fax No.: (913) 338-7932
Attention: Chief Financial Officer
with a copy to:
Latham & Watkins
885 Third Avenue
New York, NY 10022
Fax No.: (212) 751-4864
Attention: Gregory Ezring, Esq.
All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; three business days after being deposited in the mail, postage prepaid, if mailed; when receipt is acknowledged by recipient's facsimile machine operator, if sent by facsimile transmission; and on the day delivered, if sent by overnight air courier guaranteeing next day delivery.
(e) THIRD PARTY BENEFICIARIES. The Holders shall be third party beneficiaries to the agreements made hereunder between the Company, on the one hand, and the Initial Purchasers, on the other hand, and shall have the right to enforce such agreements directly to the extent they may deem such enforcement necessary or advisable to protect their rights or the rights of Holders hereunder.
(f) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the Company and its successors and assigns. A Holder of Securities takes such Securities subject to the terms of this Agreement.
(g) COUNTERPARTS. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.
(h) HEADINGS. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
(j) SEVERABILITY. If any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby.
(k) SECURITIES HELD BY THE COMPANY. Whenever the consent or approval of Holders of a specified percentage of principal amount at maturity of Securities is required hereunder,
Securities held by the Company or its affiliates (other than subsequent Holders of Securities if such subsequent Holders are deemed to be affiliates solely by reason of their holdings of such Securities) shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage.
By the execution and delivery of this Agreement, the Issuer submits to the non-exclusive jurisdiction of the Federal and state courts in the Borough of Manhattan in The City of New York in any suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.
If the foregoing is in accordance with your understanding of our agreement, please sign and return to the Issuer a counterpart hereof, whereupon this instrument, along with all counterparts, will become a binding agreement among the several Initial Purchasers and the Issuer in accordance with its terms.
Very truly yours,
SALT HOLDINGS CORPORATION
Title:
The foregoing Registration
Rights Agreement is hereby confirmed
and accepted as of the date first
above written.
CREDIT SUISSE FIRST BOSTON CORPORATION
J.P. MORGAN SECURITIES INC.
DEUTSCHE BANK SECURITIES INC.
By: CREDIT SUISSE FIRST BOSTON CORPORATION
ANNEX A
Each broker-dealer that receives Exchange Securities for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Securities received in exchange for Initial Securities where such Initial Securities were acquired by such broker-dealer as a result of market-making activities or other trading activities. The Company has agreed that, for a period of 180 days after the Expiration Date (as defined herein), it will make this Prospectus available to any broker-dealer for use in connection with any such resale. See "Plan of Distribution."
ANNEX B
Each broker-dealer that receives Exchange Securities for its own account in exchange for Initial Securities, where such Initial Securities were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. See "Plan of Distribution."
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Securities for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Securities received in exchange for Initial Securities where such Initial Securities were acquired as a result of market-making activities or other trading activities. The Company has agreed that, for a period of 180 days after the Expiration Date, it will make this prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale. In addition, until , 200[ ], all dealers effecting transactions in the Exchange Securities may be required to deliver a prospectus.(1)
The Company will not receive any proceeds from any sale of Exchange Securities by broker-dealers. Exchange Securities received by broker-dealers for their own account pursuant to the Exchange Offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the Exchange Securities or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer or the purchasers of any such Exchange Securities. Any broker-dealer that resells Exchange Securities that were received by it for its own account pursuant to the Exchange Offer and any broker or dealer that participates in a distribution of such Exchange Securities may be deemed to be an "underwriter" within the meaning of the Securities Act and any profit on any such resale of Exchange Securities and any commission or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The Letter of Transmittal states that, by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act.
For a period of 180 days after the Expiration Date the Company will promptly send additional copies of this Prospectus and any amendment or supplement to this Prospectus to
any broker-dealer that requests such documents in the Letter of Transmittal. The Company has agreed to pay all expenses incident to the Exchange Offer (including the expenses of one counsel for the Holders of the Securities) other than commissions or concessions of any brokers or dealers and will indemnify the Holders of the Securities (including any broker-dealers) against certain liabilities, including liabilities under the Securities Act.
ANNEX D
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.
If the undersigned is not a broker-dealer, the undersigned represents that it is not engaged in, and does not intend to engage in, a distribution of Exchange Securities. If the undersigned is a broker-dealer that will receive Exchange Securities for its own account in exchange for Initial Securities that were acquired as a result of market-making activities or other trading activities, it acknowledges that it will deliver a prospectus in connection with any resale of such Exchange Securities; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act.
[LATHAM & WATKINS LETTERHEAD]
April 17, 2003
Salt Holdings Corporation
8300 College Boulevard
Overland Park, Kansas 66210
Ladies and Gentlemen:
In connection with the registration of $123,500,000 aggregate principal amount at maturity of 12 3/4% Senior Discount Notes due December 15, 2012 (the "Exchange Notes") by Salt Holdings Corporation, a Delaware corporation (the "Company"), under the Securities Act of 1933, as amended (the "Act"), on Form S-4 filed with the Securities and Exchange Commission (the "Commission") on April 17, 2003 (File No. 333- ) (the "Registration Statement"), you have requested our opinion with respect to the matters set forth below.
In our capacity as your counsel in connection with such registration, we are familiar with the proceedings taken by the Company in connection with the authorization and issuance of the Exchange Notes. In addition, we have made such legal and factual examinations and inquiries, including an examination of originals or copies certified or otherwise identified to our satisfaction of such documents, corporate records and instruments, as we have deemed necessary or appropriate for purposes of this opinion. In our examination, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals, and the conformity to authentic original documents of all documents submitted to us as copies.
We are opining herein as to the effect on the subject transaction only of the internal laws of the State of New York and the Delaware General Corporation Law, and we express no opinion with respect to the applicability thereto, or the effect thereon, of the laws of any other jurisdiction or, in the case of Delaware, any other laws, or as to any matters of municipal law or the laws of any local agencies within any state.
Capitalized terms used herein without definition have the meanings ascribed to them in the Registration Statement.
Subject to the foregoing and the other matters set forth herein, it is our opinion that as of the date hereof, the Exchange Notes have been duly authorized by the Company, and when executed,
SALT HOLDINGS CORPORATION
APRIL 17, 2003
authenticated and delivered by or on behalf of the Company against the due tender and delivery to the Trustee of the Outstanding Notes in an aggregate principal amount at maturity equal to the aggregate principal amount at maturity of the Exchange Notes, will constitute legally valid and binding obligations of the Company, enforceable against the Company in accordance with their terms.
The opinion rendered in the preceding paragraph relating to the
enforceability of the Exchange Notes is subject to the following exceptions,
limitations and qualifications: (i) the effect of bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium or other similar laws now or
hereafter in effect relating to or affecting the rights and remedies of
creditors; (ii) the effect of general principles of equity, whether enforcement
is considered in a proceeding in equity or at law, and the discretion of the
court before which any proceeding therefor may be brought; (iii) the
unenforceability under certain circumstances under law or court decisions of
provisions providing for the indemnification of or contribution to a party with
respect to a liability where such indemnification or contribution is contrary to
public policy; (iv) we express no opinion concerning the enforceability of the
waiver of rights or defenses contained in Section 4.11 of the Indenture; and
(v) the unenforceability of any provision requiring the payment of attorneys'
fees, except to the extent a court determines such fees to be reasonable.
We have not been requested to express, and with your knowledge and consent, do not render any opinion as to the applicability to the obligations of the Company under the Indenture and the Exchange Notes of Section 548 of the United States Bankruptcy Code or applicable state law (including, without limitation, Article 10 of the New York Debtor and Creditor Law) relating to fraudulent transfers and obligations.
To the extent that the obligations of the Company under the Indenture
may be dependent upon such matters, we assume for purposes of this opinion that
(i) each of the parties to the Indenture other than the Company (a) is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization; (b) has the requisite power and authority to
perform its obligations under the Indenture; and (c) has duly authorized,
executed and delivered the Indenture; (ii) with respect to each of the parties
to the Indenture other than the Company, the Indenture constitutes its legally
valid and binding agreement, enforceable against it in accordance with its
terms; and (iii) the Trustee is in compliance, generally and with respect to
acting as Trustee under the Indenture, with all applicable laws and regulations.
We express no opinion as to any state or federal laws or regulations applicable
to the subject transaction because of the nature or extent of the business of
any parties to the Indenture.
We consent to your filing this opinion as an exhibit to the Registration Statement and to the reference to our firm contained under the heading "Legal Matters."
Truly yours,
/s/ Latham & Watkins LLP |
Exhibit 10.1
KNOW YE that under the MINING ACT and the regulations and subject to the limitations thereof, and in consideration of the rents, conditions and provisions hereinafter reserved and contained, WE, hereinafter referred to as the "Lessor", by these Presents do demise and lease unto
SIFTO CANADA INC., incorporated under the laws of Ontario, hereinafter called the "Lessee", its successors and assigns,
WHEREAS under subsection 176(3) of the Mining Act, R.S.O. 1990, the Minister may, subject to the approval of the Lieutenant Governor in Council, issue a lease of any mining lands on such terms and conditions as he considers expedient;
AND WHEREAS the Lessor is the owner in fee simple of the lands described in the attached Schedule and the parties hereto are desirous of entering into a Salt Mining Lease with respect to such lands on the terms and conditions herein contained;
NOW THEREFORE THIS INDENTURE WITNESSES that under the Mining Act, R.S.O. 1990, and the regulations made thereunder, the Lessor doth hereby demise and lease unto the Lessee, its successors and assigns, for the term hereinafter set forth, the mining lands described in the attached Schedule and hereinafter referred to as the "premises", together with all salt and salt products in, upon and under the premises, with full and exclusive liberty, power and authority for the Lessee, its agents, servants and workmen to enter upon the premises and to explore for such salt and salt products and to work, mine, remove and sell such salt and salt products, and to do all other things necessary and proper for the
more effectual working of the premises and for procuring and making fit for sale the salt and salt products to be mined therefrom, and to carry on all of the said work on or under the premises.
SAVING AND EXCEPTING thereout and therefrom any lands lying within the hereinbefore described premises, the mining rights to which have been patented, sold, leased or otherwise alienated, or dealt with by the Lessor;
ALSO SAVING AND EXCEPTING the free use, passage and enjoyment of, in, over and upon all navigable waters which shall or may hereafter be found on or under, or to be flowing through or upon any part of the premises.
ALSO RESERVING the right of access to the shores of all rivers, streams and lakes for all vessels, boats and persons.
ALSO RESERVING the right to raise, lower and maintain the waters of any lake or stream which may be found on or under or be flowing through or upon or over any part of the premises to and at such height as may be deemed advisable by the Lessor without any liability for damage by the Lessor or by any person, company or corporation lawfully authorized so to raise or lower the said waters.
1. TO HAVE AND TO HOLD the said demise premises for a term of twenty-one years to be computed from the first day of June, two thousand and one and from thenceforth next ensuing and fully to be complete and ended on the thirty-first day of May, two thousand and twenty-two, subject the right of renewal as hereinafter set out.
2. YIELDING AND PAYING THEREFOR in lawful money of Canada, unto Us, Our Heirs and Successors, in advance yearly and every year during the said term, at the Ministry of Northern Development and Mines, Sudbury, for the first year of the said term the rent or sum of SIXTEEN THOUSAND AND NINETEEN DOLLARS AND NINETY-EIGHT CENTS, the receipt of which is hereby acknowledged, and for each and every subsequent year under the Mining Act, on or before the first day of June in each and every year thereafter during the said term.
3. Also yielding and paying a royalty of $0.32 per tonne of salt and any natural impurities loose in bulk (salt) sold from the Lessee's property for the first four years of the terms of this lease and thereafter a royalty calculated in accordance with the following formula:
R2= R1[1 + [(X-Y)/Y]]
Where:
R1= a royalty rate per tonne of salt sold from the Lessee's property during the previous four year period of the term of the lease.
R2= the royalty rate per tonne of salt sold from the Lessee's property for each successive four year period of this lease, after the first four years.
X= the sum of Total Proceeds divided by total Quantity of salt produced from the Lessee's property for the previous four year period as reported on the Lessee' tax returns under the Mining Tax Act.
Y= the sum of Total Proceeds divided by total Quantity of salt produced from the Lessee's property for the four year period before the previous four year period as reported on the Lessee's tax return under the Mining Tax Act.
3.1 The Lessee shall forward to the Lessor the royalty payment for the period June 1 to June 30, 2001, by December 31, 2001, and thereafter forward to the Lessor on or before the thirty-first day of July in each and every year during the term of this lease the royalty payment for the preceding twelve month period from July 1 to June 30.
PROVIDED THAT:
1. The Lessee shall pay the rent in the manner hereinbefore mentioned, without any deduction whatsoever.
2. The books, accounts and records of the Lessee having reference to its operations on the premises and the plant and machinery in connection therewith shall be open to inspection by the Lessor or any person designated by him during normal business hours.
3. The Lessor may require the Lessee to furnish security in the form of an irrevocable letter of credit in such amount as may be satisfactory to the Lessor to secure payment of the royalty and other conditions of this Lease.
4. This Lease is granted and accepted by the Lessee on the express condition and understanding that the Lessee shall have no recourse against the Lessor should the Lessor's title to the premises be found to be defective or should this Lease prove ineffectual by reason of any defect in such title.
5. The premises are subject to the conditions in Section 91 of the Mining Act, R.S.O. 1990, or such other provision substituted therefrom at any time requiring that all ores and minerals, raised or removed therefrom shall be treated and refined within Canada.
6. This Lease and the term or terms hereby created shall not be transferred, charged, pledged, mortgaged, assigned, sublet or otherwise disposed of without the written consent of the Lessor or of some officer duly authorized by him.
7. Nothing herein contained shall in any manner restrict fishing or fishing rights in the waters covering the premises and that the Lessee shall not do any act resulting in damage to fishing or the fishing industry in the said waters or to nets or other appliances used in fishing such waters.
8. No rock or other material shall be dislodged or disturbed from its natural state which would in any way divert or affect the natural flow of any waters covering the premises so as to interfere with the economic development of water power in this vicinity.
9. The right to remove and to authorize the removal of sand and gravel and all ores, mines and minerals other than salt and salt products from the premises and to grant such parts of the said premises for water lots, wharf and such other purposes as may be deemed necessary is specifically reserved to the Lessor, provided that any such removal or grant shall not unreasonably interfere with the rights granted to the Lessee hereunder and its salt operations.
10. The Lessee shall not in any way interfere with navigation, with the use of docks and wharves now existing or that may hereafter be constructed upon or built out in the waters covering any of the premises or with the right of access to the water by the riparian proprietor or by the Lessor.
11. The Lessor and its agents and designates shall for all lawful purposes provide sufficient notice to the Lessee and have full and free access to any and every part of the premises during normal business hours subject to such access interfering as little as reasonably possible with the use of the premises by the Lessee and subject to the Lessee's obligations under all applicable statutes and regulations having to do with the operation of the mines in the premises.
12. Notwithstanding anything in this lease, entrance to the premises and removal of salt will only be through existing adjacent underground workings and extensions thereto.
13. This Lease and the terms hereby created shall be subject to the Environmental Assessment Act, the Environmental Protection Act, the Forest Fires Prevention Act, the Mining Act, the Mining Tax Act, the Ontario Water Resources Act, the Petroleum Resources Act, and any other applicable acts and any amendments made thereto or regulations thereunder which have been or shall hereafter be made.
14. If the rent provided herein or any part thereof shall remain unpaid for two years after the same shall have become legally due and payable, whether such rent shall have been legally demanded or not, this Lease may be terminated by the Lessor without any liability by the Lessor to the Lessee.
15. Mining within 1000 metres of the shoreline shall not be carried out without first studying the effects of subsidence and obtaining written approval from the Director of Mine Rehabilitation and the Director shall provide such approval within a reasonable length of time.
16. The Lessee shall, both during and following the term of this Lease, indemnify and hold the Lessor harmless against any and all actions, suits, proceedings, costs, charges, damages, expenses, claims or demands resulting from any property damage or bodily injury including death, resulting in whole or in part from, or in any manner based upon, anything done, or omitted to be done, by the Lessee or its employees or agents under this lease, including the Lessee's operations, actions and maintenance of the premises, EXCEPT that nothing contained herein shall in any way diminish, remove or cause to be inoperative, any immunity, protection, or other limitation of liability of the Lessee, all whether by statute or regulation.
17. If default is made in any of the provisos, terms or conditions contained herein and such default is not remedied within sixty days after notice has been delivered or sent to the Lessee at its last known address of record in the Ministry of Northern Development and Mines setting forth such default and called upon the Lessee to remedy the same, this Lease may be terminated by the Lessor without any liability by the Lessor to the Lessee.
18. Upon the termination of this Lease by the Lessor, it shall be lawful for the Lessor to enter into and upon the premises and to repossess the premises absolutely free and clear of every and any estate, right, title, interest, claim, demand or encumbrance therein or thereto whether existing, arising or accruing before or after the termination of this Lease.
19. Upon the termination of this Lease by the effluxion of time or otherwise, the Lessee shall have the right to remove from the premises, all engines, tools, machinery, ducts, conveyers, trucks, structures, chattels and personal property which it may have placed or erected thereon within six months after the termination of this Lease.
20. The Lessee shall and will pay all provincial, municipal and other taxes, rates, duties and assessments that are now or may at any time hereafter be imposed against the premises or the product thereof or the profit therefrom.
21. If application is made by the Lessee therefore within ninety days before the expiry of this Lease or its renewal, or within such further period of time as the Lessor may deem proper and the provisos, terms and conditions herein contained have been fulfilled to the satisfaction of the Lessor, and the rent herein reserved has been paid, and the Lessee can reasonably demonstrate to the satisfaction of the Lessor that the productive life of the premises as a salt mine is longer than the current term of this Lease, this Lease shall be renewed for one further term of twenty-one years, at such rental and royalty charges and subject to such reservations, provisions and conditions as the Lessor considers expedient.
22. Wherever in this Lease the word "Lessee" occurs it shall be construed as including Lessees and also the heirs, executors, administrators, successors, assigns and other legal representatives of the Lessee or Lessees as the case may be and words importing the singular number only shall include more persons, parties or things than one.
23. In the event of the salt mine on the lands herein described or on adjoining lands owned, leased or occupied by the Lessee not being operated for a continuous period of twenty-four months, the Lessor may notwithstanding any other provision herein contained terminate this Lease by notice in writing signed by the Senior Manager, Mining Lands Section, Ministry of Northern Development and Mines, or by the holder of any successor office thereof, acting on behalf of the Ministry of Northern Development and Mines, and sent by registered mail to the last known address of the Lessee as indicated herein.
24. Should the premises or any part thereof be covered by navigable waters, this Lease shall be subject to the provisions of the Navigable Waters Protection Act (Canada), the Beds of Navigable Waters Act and the Lakes and Rivers Improvement Act.
25. Any dispute relating to this Lease, including any dispute relating to the royalty payable pursuant to paragraph 3, shall be finally determined in accordance with an arbitration carried out under the Arbitration Act, S.O. 1991 C.17, as amended from time to time.
26. Any notice or other undertaking hereunder shall be well and sufficiently given if delivered on a business day within normal business hours or sent by prepaid registered mail,
If to the Lessor at:
Ministry of Northern Development and Mines Willet Green Miller Centre 933 Ramsey Lake Road, 6th Floor Sudbury, Ontario
P3E 6B5
Attention: Senior Manager, Mining Lands Section
and if to the Lessee at:
Sifto Canada Inc.
North Harbour Road
P.O. Box 370
Goderich, Ontario
N7A 3Y9
Attention: Mine Manager
Any notice delivered as aforesaid shall be deemed to have been given on the date of delivery and any notice mailed as aforesaid shall be deemed to have been given on the third business day following the date of mailing of such notice. Either party may give to the other party from time to time notice of change of address for the purpose of notice hereunder and such new address shall be the address for notice as herein set out.
GIVEN under the Great Seal of Our Province of Ontario.
WITNESS: THE HONOURABLE HILARY M. WESTON
LIEUTENANT GOVERNOR OF OUR PROVINCE OF ONTARIO
At our City of Toronto in Our said Province this ninth day of November in the year of Our Lord two thousand and one and in the fiftieth year of Our Reign.
BY COMMAND
Vishnu Prasad
Co-ordinator, Crown Land Registry
Land Management Section
Ministry of Natural Resources
for and on behalf of the
Minister of Northern Development and Mines
AND IN WITNESS WHEREOF the Lessee has hereunto affixed its corporate seal under the hands of its proper officers duly authorized in that behalf.
SIFTO CANADA INC.
Main Office File No. 110822, 168314
Land Registrar
Ministry of Consumer and Business Services will mail duplicate to:
Sifto Canada Inc.
North Harbour Road
P.O. Box 370
Goderich, Ontario
N7A 3Y9
EXHIBIT 10.2
SALT AND SURFACE LEASE
STATE OF LOUISIANA
PARISH OF ST. MARY
THIS AGREEMENT OF LEASE made and entered into this 21st day of June , 1961, by and between JOHN TAYLOR CAFFERY, individually, and as Agent and Attorney-in-Fact for MRS. MARCIE CAFFERY GILLIS, COL. MARCEL A. GILLIS, MRS. BETHIA CAFFERY McCAY, PERCY L. McCAY, MRS. MARY LOUISE CAFFERY ELLIS, MRS. EMMA CAFFERY JACKSON,, EDWARD R. JACKSON, LIDDELL CAFFERY, MRS. MARION CAFFERY CAMPBELL, and GEORGE LEE CAMPBELL, M.D., by virtue of a power of attorney dated September 1, 1954, passed before Edward F. Wegmann, Notary Public of Orleans Parish, Louisiana, a certified copy whereof is attached hereto as part hereof, currently in full force and effect, JOHN TAYLOR CAFFERY, as Agent and Attorney-in-Fact for MRS. MARTHA GILLIS RESTARICK, MRS. KATHERINE BAKER SENTER, MISS CAROLINE BAKER, MRS. BETHIA McCAY BROWN and DONELSON CAFFERY McCAY, by virtue of a power of attorney passed before Patrick A. Schott, Notary -Public of Orleans Parish, Louisiana, on December 1, 1956, a certified copy whereof is attached hereto as part hereof, currently in full force and effect, JOHN TAYLOR CAFFERY, as Agent and Attorney-in-Fact for LUCIUS HOWARD McCURDY, JR. AND JOHN ANDERSON McCURDY, by virtue of a power of attorney passed before R.L. Redfearn, Notary Public of Orleans Parish, Louisiana, on July 5, 1960, a certified copy whereof is attached hereto as part hereof, currently in full force and effect, EDWARD RADER JACKSON III, individually and as Trustee for DONELSON CAFFERY JACKSON, a minor, by virtue of trust established by notarial act before Taylor Caffery, Notary Public of Orleans Parish, Louisiana, June 20, 1955, currently in full force and effect, duly
authorized by an order of the 24th Judicial District Court for the Parish of Jefferson, State of Louisiana, dated January 5, 1961, a certified copy whereof is attached hereto as part hereof, and THE J.M. BURGUIERES COMPANY, LTD., a Louisiana corporation domiciled in New Orleans, Louisiana, herein represented by Edward E. Burguieres and Joan Burguieres Brown, its Assistant-Secretary and Managing Director and its Director, respectively, duly authorized by virtue of a resolution adopted at a meeting of its Board of Directors, all as will appear by reference to a certified copy of said resolution which is annexed hereto as part hereof (all of the aforesaid parties being hereinafter sometimes called "Lessor"), and THE CAREY SALT COMPANY, a Kansas corporation, authorized to do and doing business within the State of Louisiana, herein represented by HOWARD J. CAREY, JR., its President, duly authorized by resolution of its Board of Directors, a certified copy of which is annexed hereto as part hereof, (hereinafter sometimes called "Lessee").
W I T N E S S E T H:
1. Lessor, in consideration of the Development and Production Royalties herein provided to be paid to Lessor, of the agreements of Lessee herein contained, and other valuable considerations, hereby grants, leases and lets exclusively unto Lessee for the purposes of digging, sinking, constructing and building a shaft or shafts necessary or proper for the establishment and operation of a salt mine, and/or boring, drilling or sinking a well or wells into the salt, and mining and producing salt from the mine or mines and/or well or wells to be established by Lessee, including the building of the necessary surface facilities, structures, plants, conveyors, wharves, docks, warehouses, power stations, telephone and telegraph lines, pipe lines, utility lines and other structures and appurtenances in order to, produce, take care of, treat, process, transport, store and own salt produced from the leased lands and for dredging and maintaining the canal hereinafter specifically mentioned, constructing roads and bridges, housing
its employees, drilling and operating water wells and equipment in connection therewith for use in connection with or incidental to operation of the salt mine or mines and/or well or wells and other physical facilities, and for all structures, equipment, servitudes, privileges and all other rights necessary, useful or convenient in connection with any such operations conducted by Lessee on the leased lands, all, however, subject to the terms and to the conditions hereinafter stated, the following lands situated in the Pariah of St. [Mary, State of Louisiana, to-wit:
The lands outlined in red on the map or aerial photograph attached hereto and made a part hereof as Exhibit "A," including the land hereinafter referred to in Paragraph 5 (a) shown in green on said map or aerial photograph; which said lands shall hereinafter sometimes be referred to simply as "Cote Blanche Island"; the lands herein leased being the following described lands to-wit:
That certain Island or tract of land, together with all of the rights, ways, privileges, servitudes and advantages thereunto belonging or in anywise appertaining, situated in the Parish -of St. Mary, State of Louisiana, known as Cote Blanche Island, sometimes described as comprising all of Sections 19, 20, 21, 22, 23, 24 and 25 of Township 15 South, Range 7 East; sometimes described as lying in Township 15 South, Range 7 East and being bounded on the South by Cote Blanche Bay, on the West by lands of John M. Caffery in Sections 6 and 11 and the lands of Cypremort Land Company in Section 14, on the North by lands of John M. Caffery in Sections 6, 5 and 12 and on the East by lands of John M. Caffery in Section 12, by lands of The Chicago Title and Trust Company in Section 7, and by lands of John M. Caffery in Section 13; and sometimes described as comprising all or parts of Sections 5, 6, 7, 10, 11, 12, 13, 14 and 15 of Township 15 South, Range 7 East; and sometimes more particularly described as follows:
(A) A tract of land measuring eight hundred arpents, more or less bounded on the Westerly side by lands belonging in February, 1836, to Dr. Walter Brashear and Owen Thomas, and being the same tract which B.G. Tenney and R.C. Nicholas purchased from C.N. Thomas and Susan Jett Thomas, wife of Charles W. Howard, by act passed before W. Christy, late Notary Public in and for the City of New Orleans, La., on the 4th day of February, 1836.
(B) Another tract of land adjoining the one described situated on the Northwest end of Cote Blanche Island, containing 400 arpents, formerly known as Dr. Walter Brashear tract, and which was purchased by the said Tenney and Nicholas at public sale made on March 3rd, 1836, by John
Moore, Parish Judge, as property belonging to Dr. Walter Brashear and his children as heirs of Margaret Brashear, his deceased wife.
(C) Another tract of land on the Southwest corner of said Cote Blanche Island, containing about 320 arpents, bounded North and East by lands formerly belonging to said Tenney and Nicholas, and on the, South and West by the Bay and Sea Marsh, and being the same tract purchased by the said Tenney and Nicholas from Owen, Mary and Sophie Thomas, as per deed executed and recorded in the Recorder's Office in the Parish of St. Mary, in Book E of Conveyances, Page 73.
LESS AND EXCEPTING FROM THE ABOVE DESCRIBED PROPERTY:
That portion of the extreme northern edge of Cote Blanche Hummoch, commonly called Cote Blanche Island, situated in-Township Fifteen (15) South, Range seven (7) East, Southwestern Land District of Louisiana in the Parish of St. Mary, immediately south of, and rendering fractional, Section Five (5) of said Township and Range, and containing in the aggregate 7.7b acres and to be composed of three tracts of 0.94 acres, 1.86 acres and 4.96 acres, all as delineated upon a map or plat made by Walter Y. Kamper, Surveyor and Civil Engineer, dated in May, 1917, attached to and made part thereof for a full descript on of the property conveyed, to an act of sale by the J.M. Burguieres Company, Ltd., and Donelson Caffery to The Albert Hanso Lumber Company, Ltd., dated August 31, 1917, recorded January 4, 1919, Book 3-T page 473 No. 45501, conveyance records of St. Mary Parish, Louisiana.
2. Lessee, in exercising the rights herein granted, shall not use any portion of the surface of the leased property other than:
(A) A 160 acre tract of land to be selected by Lessee within forty-five (45) days after the approval of surveyors as provided in Paragraph 36, surveyed by a surveyor approved by Lessor and the survey placed of record by Lessee in the public records of St. Mary Parish, Louisiana, the request for approval of surveyors to be made within forty-five (45) days of the effective date of this lease. The tract shall not include any of the present Shell production facilities or wellheads.
Lessee shall have the exclusive use of this 160 acre tract of land, shall have the right to fence or otherwise enclose same, and may use the surface thereof for
any and all legal uses and purposes whatsoever that it may desire in connection with the salt business contemplated herein.
It is understood and agreed that on said 160 acre tract of land Lessee's principal surface facilities shall be situated, including, but without limitation on the rights and uses otherwise authorized, the surface entrance to Lessee's mine or mines, shaft or shafts, well or wells, and Lessee's plants, offices, warehouses, power stations and all other surface structures other than hereinbelow mentioned.
(B) Lessee contemplates the improvement and use of a canal presently running from the Intracoastal Canal in a southerly direction near the western edge of the leased premises, originally dredged by Humble Oil & Refining Company, and the extension of said canal by Lessee, turning East and traversing the island a sufficient distance to have barges reasonably close to the surface facilities of Lessee. For this purpose Lessee shall have the right to dredge and maintain such a slip or canal across the leased premises with a maximum width of 200 feet. The canal sides shall be piled and bulwarked where the canal first enters the leased premises for a distance o(pound)at least thirty-five (35) feet. Lessee obligates itself to maintain its canal, bulwarks and piling in good repair so as to reasonably guard against erosion. At such time as this lease may terminate Lessee agrees, upon request of Lessor, to pile and bulwark the entire entrance to the canal, where it first enters the leased premises, and to backfill the canal with clam shells or gravel or similar material for a distance of at least thirty-five (35) feet from its entrance on the island so as to guard against future erosion.
Lessee shall not extend the canal beyond the 160 acre tract hereinabove referred to and whereon Lessee's principal surface facilities are to be situated.
(C) A strip of land 150 feet in width between the location of Lessee's principal surface facilities and its canal hereinabove referred to in subparagraph 2(B), a strip of land 150 feet in width between the location of Lessee's principal surface facilities and Cote Blanche Bay, and a strip of land 155 feet in width along each bank of the afore mentioned canal; said 150 foot strips of land to be used by Lessee primarily for transporting its products, as well as materials, supplies and equipment, and waste disposal, whether by truck, conveyor belt, pipe line, or in any other manner. Any installations or improvements by Lessee on each of said 150 foot access strips shall be so constructed or installed as to permit Lessor to cross from one side to the other on foot or in vehicles, at approximately surface level, at some point approximately midway of the length of each of the two said 150 foot access strips, provided, however, that no bridge or underpass shall be required over or under the canal referred to in subparagraph 2(B) above, or the 155 foot strips on either side thereof. Said 155 foot strips are intended primarily for wharfage, dockage or storage, but may likewise be used for the same purposes as the 150 foot strips.
The strips of land herein authorized for Lessee's use are not to be fenced, or otherwise enclosed; it being intended that Lessors are to have access thereto and the use thereof insofar as such use does not interfere with or disturb the rights of Lessee. Lessee shall not construct facilities on the 150 foot strips (from Lessee's principal surface locations to the shore of Cote Blanche Bay and to the canal to be installed by Lessee) in such a manner as to cut off or hinder vehicular traffic from moving across the same from one side to the other in at least one place on each of them, so as to allow ready access by Lessor, its heirs or assigns, to all parts of Cote Blanche Island.
(D) Lessee shall also have the right to use the surface of such additional portions of the leased premises as may be reasonably necessary for drilling, maintaining and operating water wells and brine wells at any reasonable place or places on the leased premises (including the 160 acre tract hereinabove described), with water and brine lines therefrom to Lessee's surface facilities, and for constructing and maintaining telephone and telegraph lines, pipe lines, power lines, gas lines, roads and other like facilities contemplated hereunder, together with the use of existing roads and the right of ingress to and egress from and across said leased premises for the proper enjoyment of the rights granted herein. At the request of Lessor, Lessee shall bury below plow depth any water, pipe or brine lines installed by it outside of the 160 acre tract.
3. Lessor shall have the right to the full use and enjoyment of the surface of all other portions of the leased premises not hereinabove set forth as subject to use by Lessee, together with the right to use the 150 foot strips as hereinabove referred to in subparagraph 2(C), insofar as Lessor's use thereof does not interfere with or disturb the rights of Lessee.
4. Lessor shall have the full right to grant future oil, gas and other mineral leases, except salt, provided that each such future oil, gas and mineral lease shall expressly obligate the lessee therein to cooperate with Lessee herein in the conduct of its operations in order that the purposes of both leases may be best effectuated, and Lessee herein expressly agrees to cooperate with any such future oil, gas and mineral lessee in the conduct of its operations in order that the purposes of both leases may be best effectuated, particularly, but not limited to, arranging with the oil, gas and mineral lessee so as to permit drilling of oil and/or gas wells within the areas affected by this lease.
5. It is expressly understood and agreed that unless written permission of Lessor is first obtained:
(A) there is to be no mining of salt, drilling of brine wells, or use or sale of brine for its salt content by Lessee, or anyone claiming by or through Lessee, on or under the land identified in green on map or aerial photograph attached hereto and made a part hereof as "Exhibit `A' "; and
(B) there is to be no digging for or mining of rock salt by Lessee, or anyone claiming by or through Lessee, in or from any formation, strata or horizon lying below a depth of 3,000 feet from the surface of the earth, provided this shall not restrict the right of Lessee to drill brine wells and conduct brine operations at a greater depth.
Except to such extent as is herein otherwise specifically authorized, it is intended hereby that neither Lessee nor Lessor, nor anyone claiming by or through either of them, is to (i) mine salt, drill brine wells, or use or sell brine for its content from said land referred to in subparagraph 5(A) above; or (ii) dig for or mine rock salt from depths below 3,000 feet from the surface of the earth.
6. Lessor shall, however, have the right to leach out or excavate or grant to others the right to leach out or excavate salt cavities on said land hereinabove referred to in subparagraph 5(A), and said right is hereby expressly reserved to Lessor. It is recognized and understood that the reservation by Lessor of the rights herein set forth with respect to said land referred to in subparagraph 5(A) above, is, among other purposes, specifically in order that Lessor may retain sufficient area and salt wherein salt cavities may be created for the storage of gaseous and liquid substances, and, accordingly, Lessor shall have the right to use and/or authorize others to use such cavities for the storage of gaseous and liquid substances; provided,
however, that no fissionable or radioactive materials shall be stored in any such cavity or cavities at any time. Lessor agrees specifically to assume full responsibility and liability for any loss or damage in proper amount that Lessee may sustain in any manner arising out of or in connection with the excavation, construction, installation, care and/or maintenance of any such cavity or cavities or the use thereof, or the exercise by Lessor or any one claiming by, through or under Lessor, of any of the rights reserved above, including, but not limited to, breaking into any mine or mines, and/or well or wells, of Lessee, or loss or damage to any surface facilities or structures of Lessee; and Lessor agrees, immediately prior to the commencement of any such operations, to indemnify Lessee against any and all such loss and damage, and to furnish bond or carry adequate insurance for the purpose, delivering to Lessee evidence thereof in an acceptable form.
7. The lands hereinabove described in this lease are subject to an oil, gas and mineral lease executed by John Taylor Caffery, et alii, as Lessor, under date of November 25th, 1953, in favor of Shell Oil Company, as Lessee, an extract of the provisions of which lease is recorded in St. Mary Parish, Conveyance Book 8-Q, Entry Number 89040, and amended by instrument dated November 25th, 1953, recorded in St. Mary Parish, Conveyance Book 8-W, Entry No. 90665, and in which lease Lessor reserved the right to thereafter mine and produce salt from the said premises, Lessor herein granting unto Lessee herein all rights so reserved as to the mining and production of salt by Lessor in the above referred to lease and amendment, except those specifically reserved herein to Lessor.
8. No map or plat herein referred to, or required to be furnished hereunder, shall be used by anyone other than the parties hereto for the purposes of this agreement as a basis of attempting to establish what any person may believe to be the boundary of Cote Blanche Island, and the parties hereto shall not be stopped from asserting as against third parties that
some other boundary is the correct boundary of Cote Blanche Island. In other words, any such map used or referred to in connection herewith is for the purposes of this agreement and the convenience of the parties hereto, and shall have no other effect, bearing, consequence, result, applicability, reference or relevancy to any other ownership, map, thing, or otherwise whatsoever.
9. For the purposes of this lease, the following definitions shall apply:
(A) "Salt" shall mean chloride of sodium, whether shipped in the form in which it is mined, or whether it is additionally crushed, evaporated, otherwise processed or refined before shipment.
(B) "Rock Salt" refers to salt produced by mining, as distinguished from salt produced by brine operations or other processes.
(C) "Ton" shall refer to a short ton of 2,000 pounds.
(D) "Salt Shipped" shall mean all salt shipped from the leased premises, or used or consumed on the premises.
(E) "Minimum Tons of Salt to be Shipped" shall indicate the number of tons which, as a minimum, Lessee is obligated either to ship each calendar year this lease shall remain in effect subsequent to the Primary Term, or pay Production Royalty thereon just as though the same had been shipped.
(F) "Primary Term" shall refer to the period of time between the effective date hereof and the date of completion of Development Work; provided, however, that in no event shall the Primary Term of this lease extend beyond a period of five (5) years from the effective date hereof.
(G) "Development Work" refers to the erection of the necessary physical facilities, the sinking of the shaft or shafts, the opening of working faces, and such other work as is preliminary to the actual commencement of mining operations, together with the initial mining, producing and shipping by Lessee of 190,000 tons of salt from the leased premises, exclusive of salt excavated or otherwise removed in the digging of the shaft or shafts.
(H) "Development Royalty" refers to the annual sum of $10,000.00 herein provided to be paid by Lessee to Lessor during the Primary Term of this lease, and shall cover and represent all royalty due on the salt removed in the digging of the shaft or shafts and the removal of the initial 190,000 tons of Salt Shipped from the leased premises during said Primary Term.
(I) "Production Royalty" refers to the royalty payable by Lessee to Lessor subsequent to the expiration of the Primary Term for Salt Shipped or on the Minimum Tons of Salt to be Shipped.
(J) "Base Period" means the initial fractional part of a calendar year, if any, and the first full calendar year for which Production Royalty is due, this being a period which commences immediately when the Primary Term of this lease comes to an end.
(K) "Basic Production Royalty" means Production Royalty per ton of Salt Shipped to be paid by Lessee to Lessor quarterly each year after the Primary Term hereof, subject to annual retroactive adjustment for each calendar year subsequent to the Base Period in the first quarter of the following year in the event of a change in the Base Average Price or Revised Base Average Price for that particular year.
The Basic Production Royalty shall be' twenty-two cents (22(cent)) per ton of Salt Shipped, until adjusted as hereinbelow provided in paragraph 12.
The amount of the Basic Production Royalty to be paid by Lessee to Lessor per ton shall be subject to adjustment upward or downward in 2 1/2(cent) per ton units, in the manner hereinafter more fully set forth in paragraph 12, and when so adjusted shall thereafter continue as the Basic Production Royalty to be paid by Lessee to Lessor, subject to retroactive adjustment each year, until a further adjustment results from a subsequent change in the Base Average Price or Revised Base Average Price.
(L) "Deduction from Basic Production Royalty" shall mean an amount of two cents (2(cent)) per ton of Salt Shipped during the first full thirty (30) calendar months and the initial fractional part of a calendar month, if any, for which Production Royalty is due, which amount shall be deducted from the Basic Production Royalty otherwise due during such months.
(M) "Average Price" means, for the period involved, the average price received by Lessee from the Sale in Bulk of rock salt produced from the leased premises of the grades Coarse Rock Salt and Mine Run or Mill Run Rock Salt, determined by dividing the total dollars received by Lessee from the Sale in Bulk of Rock Salt of said grades, f.o.b. mine (or adjusted to allow for any freight factor included in the price), by the total tons of said grades sold. There shall be included in such determination for any period involved the tons of Mine Run or Mill Run Rock Salt used or consumed by Lessee, its successors or assigns, and not sold to a purchaser, as though sold at the Current Market Price of Mine Run or Mill Pun Rock Salt prevailing on the last day of the period in question.
(N) "Base Average Price" means the Average Price for the Base Period, but in no event shall the Base Average Price be less than $3.70 per ton.
(O) "Annual Average Price" means the Average Price for each calendar year subsequent to the Base Period. This Annual Average Price shall be determined for each calendar year during the first quarter of the following year.
(P) "Revised Base Average Price" shall be the amount determined in the manner hereinafter set forth as an adjustment of the Base Average Price or a Revised Base Average Price previously determined and prevailing.
In the event the Annual Average Price as above defined should, for a particular year, be as much as fifty cents (50(cent)) per ton above or below the Base Average Price or the Revised Base Average Price theretofore prevailing, then the Base Average Price or Revised Base Average Price theretofore prevailing shall be adjusted up or down in the amount of fifty cents (50(cent)) per ton, or multiples thereof, according to whether or not the Annual Average Price increased or decreased.
Adjustments in the "Base Average Price or Revised Base Average Price shall only be in units of fifty cents (50(cent)), it being intended that no adjustment is to be made for the fractional part of any fifty cent (50(cent)) unit that the Annual Average Price for a particular year is above or below the Base Average Price or Revised Base Average Price. For example, if the Annual Average Price for a given year reflects a difference of forty-nine cents (49(cent)) above or below the prevailing Base Average Price or Revised Base Average Price there is to be no adjustment; if such difference is in the amount of sixty-three cents (63(cent)), the Base Average Price or Revised Base Average Price shall be
increased or decreased fifty cents (50(cent)), as the case may be; if such difference is in the amount of $1.47, the Base Average Price or Revised Base Average Price shall be increased or decreased $1.00, as the case may be.
(Q) Use herein of the term "Base Average Price or Revised Base Average Price" means Base Average Price until such time as a Revised Base Average Price has been determined and thenceforth means Revised Base Average Price.
(R) "Coarse Rock Salt" as used herein means those grades or screenings of Rock Salt, exclusive of Mine Run or Mill Run Rock Salt, Sold in Bulk, 90% or more of which, in a screen analysis, is retained on a U.S. Standard ]6 mesh sieve, and which contains no additives.
It is recognized by the parties that at the present time Coarse Rock Salt consists of the following four grades:
(1) No. 2
(2) No. 1
(3) "A" Grade
(4) "C" Grade.
It is further recognized that classification, description and identification of grades of Coarse Rock Salt may vary or change from time to time, and accordingly, it is intended that Coarse Rock Salt as used herein shall continue to include all salt presently included in the grades above mentioned, notwithstanding any change in the manner in which such salt may hereafter be classified, described or identified, and, further, to include in Coarse Rock Salt any and all other Rock Salt grades, other than Mine Run or
Mill Run Rock Salt, Sold in Bulk, 90% or more of which, in a screen analysis, is retained on a U.S. Standard 16 mesh sieve, and which contains no additives.
(S) "Mine Run or Mill Run Rock Salt" is that Rock Salt Sold in Bulk which has been subjected to primary and secondary crushing so that it passes through a screen with approximately 5/8" openings, and not otherwise classified into grades or sizes.
(T) "Current Market Price of Mine Run or Mill Run Rock Salt" is considered as the price at which Southern Louisiana Mine Run or Mill Run Rock Salt of equal quality is available from other producers of salt, f.o.b. mine, to any purchaser of salt in quantities in excess of five thousand (5,000) tons of salt on an annual contract basis, and the parties agree that this price at the present time is $3.70 per ton.
(U) "Sale in Bulk" or "Sold in Bulk" as used herein shall be considered as any sale of Coarse Rock Salt or of Mine Run or Mill Run Rock Salt not in bag or container form or in compressed shapes.
10. Subject to the terms, conditions and provisions hereinafter set forth, this lease shall remain in force for a period of ninety-nine (99) years from the effective date hereof; provided, however, that in the event actual mining operations are not conducted during any five (5) consecutive years subsequent to the Primary Term hereof, Lessor shall, at its option, have the right to cancel and terminate this lease, notwithstanding the payment of minimum Production Royalties during any such five (5) year period, by giving notice in writing to Lessee that it exercises its option for such cancellation and termination, such cancellation and termination to become effective sixty (60) days from the date of receipt by Lessee of such notice from Lessor of its intent to terminate.
Lessee agrees, subject to its right to surrender and terminate this lease as herein otherwise set forth, that it will commence such Development Work as is preliminary to the actual commencement of mining operations within two (2) years from the effective date of this lease, and will thereafter proceed with such Development Work with reasonable diligence.
Lessee shall have the right to surrender and terminate this lease during the Primary Term hereof by giving Lessor notice in writing of its intention to so surrender and terminate the lease at least sixty (60) days prior to the date on which such surrender and termination is to become effective, and said notice shall set forth specifically the date on which the surrender and termination is to become effective. Upon compliance with this provision, this lease shall cease and terminate on the effective date of surrender as set forth in the aforementioned notice, and the rights and obligations of the parties shall be the same as though the lease had come to an end through expiration of its term.
Should Lessee exercise its right to terminate this lease during the Primary Term hereof, Lessee agrees and obligates itself to restore substantially to its original condition the surface of the property other than the canal which shall be governed by subparagraph 2(B) herein. Should Lessor, within thirty (30) days from the date Lessor receives notice from Lessee of its intent to terminate the lease, so request in writing, Lessee agrees and obligates itself to plug or fill any holes or shafts created by it on the leased premises, other than the canal, provided Lessor makes available for the purpose an adequate supply of dirt situated on the 160 acre portion of the leased premises referred to in subparagraph 2(A), and provided further that such dirt is to be taken reasonably evenly off the surface so as to not leave any other holes or objectionable depressions in or on the surface of the premises.
After expiration of the Primary Term, Lessee shall have the right to surrender- and terminate this lease upon giving Lessor notice in writing of its intent to so surrender and terminate the lease at least two (2) years prior to the date on which such surrender and termination is to become effective, and said notice shall state specifically the date on which said termination shall become effective. Upon compliance with this provision, this lease shall cease and terminate on the effective date of the surrender as set forth in the above mentioned notice, and the rights and obligations of the parties shall be the same .as though the lease had come to an end through expiration of its term.
Subject to the additional Production Royalty payment hereinafter set forth, Lessee shall have the right, after the expiration of the Primary Term hereof, to surrender and terminate this lease upon shorter notice of its intention to do so, provided it gives Lessor notice in writing of its intent to so surrender and terminate the lease and sets forth specifically the date on which such surrender and termination is to become effective. In the event of termination on less than two (2) years notice, Lessee agrees that if the Production Royalty for the period from date of notice to date of termination is less than $20,000.00, it will supplement the said amount so that Lessor shall receive a minimum of $20,000.00 Production Royalty for such period. While it is contemplated that notice of termination under the provisions of this paragraph will not be given by Lessee arbitrarily or without just cause, and that Lessee will not so terminate except in the exercise of sound business judgment, based on facts and circumstances beyond Lessee's control that render it unprofitable, impracticable or undesirable for Lessee to continue its operations, if Lessor is of the opinion that Lessee has acted arbitrarily in giving such notice, it shall so notify Lessee in writing, and any dispute between Lessor and Lessee in connection therewith shall be determined by arbitration, in accordance with the provisions of paragraph 27 hereof. In the event
it is agreed or found by arbitrators that the termination is arbitrary, then the minimum Production Royalty to be paid by Lessee to Lessor for the period from date of notice to date of termination shall be $56,000.00 instead of $20,000.00.
11. During the Primary Term of this lease, as hereinabove defined, Lessee shall pay to Lessor an annual Development Royalty of $10,000.00, and which Development Royalty shall be in lieu of all Production Royalties during the Primary Term including Production Royalties on all salt removed in the digging of the shaft or shafts and for the initial 190,000 tons of salt mined, produced and shipped from the leased premises during the Primary Term hereof. The payment of the Development Royalty of $10,000.00 for the first year of the Primary Terra is acknowledged. Subsequent Development Royalties for succeeding years of the Primary Term are to be paid annually in advance, beginning on or before one year from the date of this agreement of lease.
It is understood and agreed that each annual Development Royalty payment is intended to cover a full twelve month period, and the Development Royalty of $10,000.00 for the then current year during which the Primary Term of this lease comes to an end is to be prorated, such proration to be in the same proportion as that elapsed portion of the year for which such Development Royalty has been paid bears to a full twelve month period, and Lessee shall be entitled to apply the remaining portion of that year's Development Royalty on Production Royalty accruing for salt thereafter mined, produced and shipped.
12. After expiration of the Primary Term Lessee shall pay Lessor Production Royalty on all Salt Shipped hereunder as follows:
(A) During the first thirty (30) full calendar months and the initial fractional part of a month, if any, for which Production Royalty is payable, Lessee shall
pay Lessor the Basic Production Royalty of twenty-two cents (22
(cent)) per ton, subject to the provisions for adjustment as
hereinbelow set forth, from which shall be deducted the two cents
(2(cent)) per ton Deduction from Basic Production Royalty.
(B) Subsequent to the first thirty (30) full calendar months and the initial fractional part of a month, if any, for which Production Royalty is payable, Lessee shall pay Lessor the Basic Production Royalty of twenty-two cents (22(cent)} per ton, subject to the provisions for adjustment hereinbelow set forth.
The Basic Production Royalty shall be adjusted up or down, as the case may be, whenever upon expiration of any calendar year subsequent to the Base Period it is determined that the Annual Average Price for that particular year is above or below the Base Average Price or Revised Base Average Price previously determined and prevailing to such extent as to cause an adjustment therein.
The Production Royalty per ton payable by Lessee to Lessor for the preceding calendar year shall be increased if the Revised Base Average Price for such preceding calendar year has increased and shall be decreased if the Revised Base Average Price for such preceding calendar year has decreased, the amount of retroactive adjustment of Production Royalty for such preceding calendar year to be calculated as follows:
Divide the amount of the increase or decrease in the Revised Base Average Price for the particular calendar year above or below the previous Base Average Price or Revised Base Average Price by fifty cents (50(cent)) and multiply the result by 2 1/2(cent). The amount thus determined is the amount by which the Production Royalty for such calendar year is to be increased or decreased, as the case may be.
The amount by which Production Royalty is to be adjusted for a particular calendar year is to be added to or subtracted from the Basic Production Royalty paid for that year, and the amount thereby determined shall thenceforth be the Basic Production Royalty for payment of Production Royalty during the year then in progress and thereafter, subject to further adjustment in accordance with the provisions hereof, and the previous Basic Production Royalty theretofore prevailing shall no longer be applicable.
As an example of the foregoing: if the Revised Base Average Price for a particular year shows an increase of $1.00 above the Base Average Price or Revised Base Average Price theretofore prevailing, then $1.00 is to be divided by fifty cents (50(cent)), and the resultant quotient of two is then multiplied by 2 1/2(cent), thereby establishing a five cent (5(cent)) increase in Production Royalty to be paid by Lessee to Lessor retroactively for the preceding calendar year. This five cent (5(cent)) increase is then to be added to the Basic Production Royalty theretofore prevailing. Assuming this amount to have been twenty-two cents (22(cent)), a new Basic Production Royalty of twenty-seven cents (27(cent)) per ton would thereby be established, and Lessee would thereafter pay to Lessor a Basic Production Royalty of twenty-seven cents (27(cent)) per ton, until such time as the Revised Base Average Price was again adjusted, where upon the applicable increase or decrease in the Basic Production Royalty would again be determined in the same manner as hereinabove set forth, and a new Basic Production Royalty established. If in the above example the $1.00 increase in the Base Average Price or Revised Base Average Price were to occur during the period in which the Deduction from Basic Production Royalty is applicable, the following would result: To the Basic Production Royalty of twenty-two cents (22(cent)) would be added the indicated five cent (5(cent)) increase in Production Royalty,
producing a Basic Production Royalty of twenty-seven cents (27(cent)), which would thereafter, until further adjustment, be the Basic Production Royalty. For this year, however, since the Basic Production Royalty is subject to the two cent (2(cent)) per ton Deduction from Basic Production Royalty, the Production Royalty retroactively payable for the preceding calendar year would be twenty-seven cents (27(cent)) minus two cents (2(cent)), or twenty-five cents (25(cent)) per ton.
Adjustment of Production Royalty by the payment to Lessor by Lessee of any additional amount due retroactively for a preceding calendar year shall be made during the first quarter of the following year, and in no event shall an adjustment of Production Royalty be retroactive for a greater period then the preceding calendar year.
Whenever any reimbursement is due Lessee by Lessor retroactively for a particular calendar year, by reason of a decrease in the Revised Base Average Price, Lessee shall be entitled to retain royalty thereafter accruing to Lessor and to apply same to the credit of Lessor until Lessee has been fully reimbursed the amount of such excess payment; provided, however, that Lessor may, at its option, remit to Lessee such excess payment in cash. Lessor agrees that should they or any of them transfer, sell or otherwise dispose of their interest in the property, or in royalties accruing therefrom, or any portion thereof, such disposition is to be made expressly subject to Lessee's right to retain future royalty, as above set forth, and to reimburse itself for any excess royalty theretofore paid to Lessor and not previously reimbursed to Lessee.
13. Lessee shall pay Production Royalties to Lessor quarterly in January, April, July and October of each year, each payment to cover Production Royalty for Salt Shipped during the immediately preceding three (3) month period, and the payment in January of each
year shall include any amount payable under the provisions of paragraph 16 hereof, in the event the minimum number of tons of salt were not shipped during the preceding year.
14. In addition to the Production Royalty set out above, Lessee also agrees to pay all severance, sales, use and/or production taxes with respect to the salt mined, produced and shipped by Lessee or with respect to other operations of Lessee under this lease, required by local, State or Federal laws, even though the said laws may impose the payment of said taxes upon Lessor.
15. Lessor shall be furnished with two copies of all the severance tax reports filed by Lessee with the appropriate authorities.
16. During the entire term, expecting the Primary Term, of this lease the following minimum tons of salt must be shipped by Lessee each year as set out in the schedule below, or Lessee must pay Lessor Production Royalty on such minimum number of tons of salt, just as though they had been shipped, in order to keep the lease in full force and effect:
MINIMUM NUMBER OF TONS OF SALT
YEARS TO BE SHIPPED
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First three (3) full calendar years and initial fractional 189,000 tons per year
part of year for which Production Royalties are to be Paid
Next three (3) full calendar years 216,000 tons per year
Next three (3) full calendar years 250,000 tons per year
Remaining term of lease 300,000 tons per year
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provided, however, that during the calendar year in which the Primary Term of this lease comes to an end and the payment of Production Royalty commences, the minimum Production Royalty to be paid for the remainder of that year shall not be on the basis of 189,000 tons of salt, but shall be prorated in, the proportion that the remainder of the year after expiration of the Primary Term bears to the full year, subject to those provisions of paragraph 10 above which relate to a minimum Production Royalty to be paid Lessor in the event Lessee terminates this lease subsequent to the Primary Term hereof on less than two (2) years notice. In the event the term of this lease ends on other than the last day of a calendar year., the minimum Production Royalty
for the first fractional part of the calendar year in which the term of this lease ends shall be prorated in the proportion that such fractional part of the year in which the lease is in effect bears to a full calendar year.
The intent of the foregoing is that the penalty Lessee shall suffer in the event the minimum tons of salt are not shipped is that Lessee shall pay Lessor such amount of Production Royalty as this lease may provide during; the particular calendar year within which less than the minimum tons of salt are shipped, calculated upon the premise that the minimum number of tons of salt had been shipped. This minimum Production Royalty shall be cancelled out each year and there shall be no carry over or carry back as to either party.
17. In addition to the taxes referred to in paragraph 14, Lessee shall bear and pay all taxes imposed upon the entire 160 acre tract hereinabove described in subparagraph 2(A), as well as the taxes on the full area of each 150 foot and 155 foot strips hereinabove provided for in paragraph 2 (whether or not the entire area of each such 150 foot and foot 155 foot strips are being used by Lessee).
Lessee shall also bear and pay all taxes imposed upon property and improvements placed by Lessee on the lands herein leased, and shall likewise bear and pay all additional taxes which are imposed upon or are directly or indirectly attributable to Lessee's operations and activities upon the leased premises, provided that the Lessee shall not be obligated to pay increased taxes on the Lessor's lands other than those portions hereinabove set forth and those in actual physical use by Lessee. All other taxes are to be borne and paid by Lessor.
When the properties are not assessed separately, each party shall bear his proportionate share on the basis of their respective areas or values, whichever is the more appropriate.
18. Until such time as Lessee may be notified of a change in ownership in accordance with the provisions of paragraph 28, the royal ties provided for hereunder shall be
paid to Lessor in the following proportions, by mailing to the address shown following each respective name:
1. The J.M. Burguieres Co., Ltd.
Louisa Post Office, Louisiana 3/8 of 8/8 or 96/256
2. Mr. John Taylor Caffery
1806 National Bank of Commerce Building
New Orleans 12, Louisiana 1/8 of 5/8 or 20/256
3. Mrs. Mary Louise Caffery Ellis
c/o The National Bank of
Commerce in New Orleans
Corner Baronne & Common Streets
New Orleans 12, Louisiana 1/8 of 5/8 or 20/256
4. Mrs. Marion Caffery Campbell
1010 22nd Street
Beaumont, Texas 1/8 of 5/8 or 20/256
5. Mr. Liddell Caffery
808 West Beach Pass
Pass Christian, Mississippi 3/32 of 5/8 or 15/256
6. Mrs. Marcie Caffery Gillis
638 S. Beach
Waveland, Mississippi 1/16 of 5/8 or 10/256
7. Mrs. Martha Gillis Restarick
6 Arlington Court
Rome, Georgia 1/16 of 5/8 or 10/256
8. Mrs. Katherine Baker Senter
6031 S. Robertson Street
New Orleans 18, Louisiana 1/16 of 5/8 or 10/256
9. Miss Caroline Baker
906 Royal Street--Apt. D
New Orleans, Louisiana 1/16 of 5/8 or 10/256
10. Mrs. Bethia Caffery McCay
c/o Percy L. McCay Whitney Bank
228 St. Charles
New Orleans 12, Louisiana 1/16 of 5/8 or 10/256
11. Mrs. Emma Caffery Jackson
34 Tokalon Place
Metairie, Louisiana 1/16 of 5/8 or 10/256
12. Mr. Donelson Caffery McCay
4724 Carondelet Street
New Orleans 15, Louisiana 1/32 of 5/8 or 5/256
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13. Mrs. Bethia McCay Brown
320 Lakeside Drive
Monroe, Louisiana 1/32 of 5/8 or 5/256
14. Mr. Edward Rader Jackson, III
206 Jefferson Avenue
Metairie, Louisiana 1/32 of 5/8 or 5/256
15. Mr. Donelson Caffery Jackson
c/o Mr. Edward R. Jackson, III
206 Jefferson Avenue
Metairie, Louisiana 1/32 of 5/8 or 5/256
16. Mr. Lucius Howard McCurdy, Jr.
c/o Milling, Saal, Saunders, Benson &
Woodward
Whitney Building
New Orleans, Louisiana 1/64 of 5/8 or 21/2/256
17. Mr. John Anderson McCurdy
808 West Beach Pass
Pass Christian, Mississippi 1/64 of 5/8 or 21/2/256
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256/256
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In the event royalties payable hereunder become payable to more than thirty
(30) persons or payees, Lessee shall have the option of paying all royalty due
hereunder in one check to the credit of Lessor in the Whitney National Bank of
New Orleans, Louisiana, which bank and its successors is hereby designated as
Lessor's Agent and shall thereafter continue as the depository for all royalties
payable hereunder regardless of changes of ownership of the right to receive
said royalties.
19. It is specially agreed that if Lessee makes a bona fide effort to properly pay royalties hereunder, this lease shall not be cancelled because of an error in judgment or other mistake made in good faith by Lessee in the payment of royalty; but the person to whom the royalty may legally be due, and after the requirements of this lease as to notices of change of ownership set out in paragraph 28 have been complied with, may make demand upon Lessee
therefor. Thereafter do default may be claimed until sixty (60) days after the demand has been made upon Lessee by registered or certified mail, and Lessee has failed to pay such royalty or to file a concursus proceeding and to deposit the amount in question in the registry of the court.
20. Lessee agrees that it will keep accurate records of the tonnage of all Salt Shipped under this agreement, as well as the prices actually received by it for all Mine Run, Mill Run and Coarse Grades of Rock Salt shipped and sold, and deliver to Lessor statements thereof.
Lessor, its agents and representatives, including certified public accountants, shall have the right, annually, to inspect the records of Lessee regarding the matters above set forth in this paragraph.
It is specifically provided that neither the making by Lessee nor the acceptance by Lessor of any payment hereunder, including the payment of royalties, shall prejudice the right of Lessor or Lessee to protest the correctness thereof; provided, however, that unless same is protested in writing within three (3) years after the close of the calendar year in which such payment was made, the same shall, for all purposes, be considered correct, conclusive and binding.
21. Lessee agrees that Lessor, its agents, engineers, and other representatives shall have the right at its or their own risk and responsibility to enter into the said mine or mines and other facilities, whether above or below the surface of the earth, in order to survey, inspect, examine, certify or measure the same, or any part or parts thereof, for any legal purpose, and for these purposes to freely use the means of access to said mine or mines without hindrance or molestation, and also to examine the maps of Lessee showing the mine workings and improvements in and upon the leased premises. When requested to do so by Lessor, Lessee shall furnish such copies of Lessee's blue prints or maps as may be desired by Lessor.
The rights of entry, inspection and visitation herein granted shall be limited to only once in any three (3) month period, and in each instance shall be exercised only at a reasonable time, upon Lessor first giving Lessee five (5) days advance notice in writing of the date or dates on which Lessor desires to exercise such rights.
The rights of entry, inspection and visitation shall apply to Lessor as an entirety, and not to individual lessors, it being intended that Lessee shall not be required to make its facilities available for such entry, inspection and visitation more often than once in any three (3) month `period. Each exercise of the right as herein authorized may be more than one of the individual lessors, together with their agents, engineers and other representatives.
22. All of the roads on Cote Blanche Island are private, none having ever been made public, and Lessee agrees that it will at no time grant permission to any state, parish, ward or other governmental subdivision to maintain or otherwise work on any of said roads unless requested by Lessor in writing to grant such permission. Lessee agrees to maintain 100% any road which may service facilities or places used commercially by Lessee only. As to all roads or parts of roads which are used in common by Lessee and other present or future tenants or lessees, Lessee shall arrange with said other tenant or tenants for the costs of such upkeep, and any dispute between Lessor and Lessee with respect to such upkeep shall be determined by arbitration in accordance with the provisions of paragraph 27. Lessor, its successors, heirs, agents and representatives shall at all times have the free right to use all roads for its private purposes. No main roads shall be fenced off or blocked. Auxiliary roads within Lessee's 160 acre surface area may be enclosed at the discretion of Lessee.
23. At such time as this lease terminates for any cause or reason whatsoever, the following provisions shall be applicable with reference to the machinery, equipment, buildings and all things used in connection with the operation of the mine:
A. In any and all events the mine shaft, guides and buildings shall be left on the leased premises, without the necessity of payment by Lessor to Lessee therefor.
B. As to all other property used in connection with the operation of the mine, Lessor shall have the option to purchase the same from Lessee at its then fair market value as is where is, but only if Lessor purchases all of said other property. To determine whether it wishes to exercise this option, Lessor shall have a period of sixty (60) days after receipt of notice of termination of the lease from Lessee to inspect the property. On or before the end of the sixty (60) day period Lessor shall notify Lessee in writing whether or not it elects to exercise the option to so purchase said other mining equipment and property. If Lessor elects to purchase the property it shall have an additional sixty (60) days within which to arrange for the payment therefor, which shall be made in cash to Lessee, and title and right to possession thereof shall pass to Lessor on the date of termination of the lease.
C. If Lessor fails to give the notice required by subparagraph 23B above, or in the event Lessor does not elect to exercise its option to purchase said other property, Lessee shall have the right to remove the same from the premises, and shall have a period of six (6) months from the date of termination of the lease to do so. This right of Lessee to remove the remaining property includes the right to remove all
machinery, equipment and materials and other property, regardless of whether or not attached to the building in which it is situated or the manner of such attachment.
D. Any such property remaining at the end of the said six months period shall become the property of the Lessor without the necessity of Lessor paying Lessee therefor. On the other hand, at Lessor's option, Lessor may within ninety (90) days thereafter require Lessee to remove any property of Lessee it does not wish to remain on the premises, other than the mine shaft, guides and buildings.
E. Any dispute between Lessor and Lessee in connection with the matters contained in this paragraph 23 shall be determined by arbitration in accordance with the provisions of paragraph 27.
24. Lessee agrees to hold Lessor harmless from all claims for damages or injuries, including death of any person, or damage to property in connection with the leased premises occurring through the negligence of Lessee, and to defend any such suit brought against Lessor on account of such claim, and to pay any judgment against Lessor resulting from any such suit. Lessee further agrees that it will use due care and diligence to avoid damage to property or injuries to persons, and Lessee will compensate Lessor for any damage or injury, including reasonable attorney fees in case of suit, suffered by it as the result of any damage or injury occurring through the negligence of Lessee. Correspondingly, Lessor agrees to hold Lessee harmless from all claims for damages or injuries, including death of any person, or damage to property in connection with the leased premises, occurring through the negligence of Lessor, and to defend any suit brought against Lessee on account of such claim, and to pay any judgment against Lessee resulting from any such suit. Lessor further agrees that it will use due care and diligence to avoid damage to property or injuries to persons and Lessor will compensate
Lessee for any damage or injury, including reasonable attorney fees in case of suit, suffered by it as the result of any damage or injury occurring through the negligence of Lessor. If injury, loss-or damage is caused by the joint or concurring negligence of Lessor and Lessee, then Lessor and Lessee shall be liable in solido therefor, with right of contribution against the other party. Both Lessor and Lessee agree to notify the other in writing within ten (10) days of the receipt of notice by said party that a suit has been filed against it which may result in any liability on the part of the other under the provisions of this lease, and within sixty (60) days of the receipt of notice by said party that a claim is being asserted against it, which may result in any liability on the part of the other under the provisions of this lease.
25. It is recognized and understood that Lessee is considering an arrangement hereunder it will exercise the rights hereunder in association with another company, and the right of Lessee to assign this lease in whole or in part to accomplish such purpose is expressly granted. In the event, however, that Lessee does not enter into such an arrangement as contemplated, and ever wishes to sell any of its rights hereunder, Lessor shall be given the privilege of purchasing, the same if it meets any offer or bid which Lessee has received for the same, by cash purchase within thirty (30) days of receipt of notice from Lessee that such interest is for sale. A conveyance to a subsidiary or affiliated company, or to the stockholders of Lessee, a merger, or the granting of a mortgage or other security device shall not be considered a sale or assignment for the purpose of this paragraph.
26. It is agreed and understood that the estate of either party hereto may be assigned or sub-leased in whole or in part, subject to the provisions set forth in paragraph 25 above; provided, however, that in the event Lessor, after receiving notice of any proposed sale to be given by Lessee to Lessor, and within the thirty (30) days granted Lessor to purchase the
interest offered for sale, does not wish to exercise its rights to purchase the interest, but considers the prospective purchaser to be either financially or morally undesirable, Lessor shall so advise Lessee in writing, setting forth its objection to such prospective purchaser and its reasons therefor. If Lessee is of the opinion that Lessor's objections are justified, Lessee will not consummate the proposed sale. If, however, Lessee is of the opinion that Lessor's objections are not justified, it shall so notify Lessor, and Lessor and Lessee agree that this dispute shall be determined by arbitration in accordance with the provisions of paragraph 27.
27. For the determination of any matter made subject to arbitration hereunder, either party hereto may by written notice to the other appoint an arbitrator. Thereupon, within twenty (20) days after giving of such notice, the other shall by written notice to the former appoint another arbitrator. In default of such second appointment within the twenty (20) day period, the arbitrator first appointed shall be sole arbitrator. When any two arbitrators have been appointed as aforesaid, they shall, if possible, agree upon a third arbitrator and shall appoint him by notice in writing, signed by both of them in triplicate, one of which triplicate notices shall be given to each party hereto if twenty (20) days shall elapse after the appointment of the second arbitrator without notice of appointment of the third arbitrator being given as aforesaid, then either party hereto, or both parties jointly, may apply to any Judge of either the District Court of St. Mary Parish or Orleans Parish, Louisiana, or any Judge of the United States District Court for the Eastern District of Louisiana, to appoint the third arbitrator, in which event the first appointment so made shall be binding upon the parties. Upon appointment of the third arbitrator (whichever way appointed as aforesaid), the arbitrators shall fix a reasonable time and place for hearing, giving notice to each of the parties hereto at least ten (10) days prior to the date of such hearing, and each party hereto may submit such evidence as it may see fit. A majority vote of
the arbitrators shall constitute a final and binding determination of any matter referred to them under any provision of this lease, and the arbitrators within ten (10) days shall communicate their decision in writing to Lessor and Lessee. In the event the arbitrators fail to communicate their decision in writing to Lessor and Lessee within sixty (60) days from the date on which the hearing is concluded, or within ninety (90) days from the date on which the third arbitrator is appointed, whichever shall occur first, then their appointment as arbitrators shall terminate and any action taken by them become null and void, and either party hereto may thereupon again institute the procedure for arbitration in the same manner as hereinabove set forth, as though no arbitrators had theretofore been appointed.
Each party shall pay the expense of the arbitrator selected by or for it, and the costs and expenses incurred in the preparation and presentation of its evidence and the fees and charges of its witnesses and counsel, and all other costs of the arbitration shall be equally divided between the parties hereto.
28. It is understood and agreed that no change or division whatsoever and howsoever arising, relative to ownership of the land, royalties or lease, or any part of the same, shall operate to increase the obligations or diminish the rights of either party hereto, and that regardless of any such change or division of ownership the leased land shall be developed and operated as an entirety; and that notwithstanding any other actual or constructive knowledge or notice whatsoever thereof, no such change or division shall be binding upon either party unless and until after thirty (30) days written notice thereof, together with certified copies of recordable written instruments evidencing such change or divisions, shall have been delivered to the other party.
29. Lessor warrants and agrees to defend the title to the leased premises and to maintain Lessee in possession thereof for all purposes of this lease, but it is stipulated and agreed that, in the event of loss or failure of title, or eviction of the Lessee, the responsibility of Lessor to Lessee for restitution, reimbursement and/or damages, under such warranty, shall be limited solely to the reimbursement of Lessee for all money actually received by Lessor as Production Royalty. The amount received as Development Royalty, which includes payment for salt removed in opening the shaft and working surfaces, is never to be returned in any event. This return of Production Royalty is further restricted in that no Production Royalty received by Lessor more than one (1) year prior to the very date upon which demand for return of royalty shall be made need be returned or shall be returnable hereunder. Nor shall the returnable Production Royalty include either interest or severance taxes accrued or paid. Also, only that portion of the returnable Production Royalty need be returned which shall be applicable to that portion of .the property from which Lessee may be evicted in the event such eviction be from less than the entire property. Lessee hereby waives and renounces in favor of Lessor any claim, right, demand or cause of action for a greater return or for damages. However, it is agreed that Lessee may, at its option, discharge any tax, mortgage or other lien or privilege which may rank prior to this lease and be subrogated to the rights of the holders thereof, and to apply royalties accruing hereunder toward satisfying the same.
30. If Lessor owns an interest in the leased premises less than the entire fee simple estate, or no estate therein, then the royalties herein provided for shall be paid to Lessor only in the proportion which its interest, if any, bears to the whole and undivided fee.
31. All terms and express or implied covenants of this lease shall be subject to all valid federal and state laws, executive orders, rules and regulations of any regulatory
authority having jurisdiction, and this lease shall neither be terminated in whole or in part, nor Lessee be held liable in damages, or failure to comply therewith, if compliance is prevented by or if such failure is the result of any such law, order, rule or regulation.
32. If Lessee should conduct any brine operations on the leased premises, Production Royalty for the salt thus produced and shipped shall be computed hereunder just as though the number of tons of Salt Shipped had been shipped as Rock Salt. In the event Lessee advises Lessor that it has no further use for any cavity so created and that such cavity may be used by Lessor, such cavity shall be offered to Lessor free of cost to Lessor for use by Lessor, its successors and assigns, in storing liquids. The outside casing or pipe installed for production from any brine well or wells shall not be pulled by Lessee but shall remain for use by Lessor, free of cost to Lessor. Lessee's use of any cavity created by its brine operations shall not include the right to use same for storage, but Lessee's right to use cavities otherwise created for such purpose is expressly recognized. Lessee, however, shall not store any radioactive or fissionable material in any such cavity. It is understood that Lessee, in its sole judgment, shall determine when it has no further use for any such cavity and as to whether or not to notify Lessor that it shall have the right to use such cavity for its purposes.
It is agreed and understood that in the use of any such cavity or cavities by Lessor no radioactive or fissionable materials shall be stored. Lessor further agrees specifically to assume full responsibility and liability for any loss or damage that Lessee may sustain in any manner arising out of or in connection with the care and maintenance of any such cavity or cavities or the use thereof, including, but not limited to, breaking into any mine or mines and/or well or wells of Lessee, or loss or damage to any surface facilities or structures of Lessee, and Lessor agrees immediately prior to the use of any such cavities to indemnify Lessee against any
and all such loss and damage, and to furnish bond or carry adequate insurance for the purpose, delivering to Lessee evidence hereof in an acceptable form; provided, however, that before any such cavity is turned over to Lessor and becomes the responsibility of Lessor, Lessor shall be given ample opportunity and time to inspect and test the cavity, and shall be furnished access to all records of Lessee concerning the physical characteristics of the cavity promptly upon request by Lessor. If Lessor does not desire to assume responsibility for the cavity it may refuse the tender thereof, in which event Lessee may remove therefrom such portions of its equipment or material as it may desire and plug and abandon such cavity, or Lessee may use such cavity for such purposes as it may see fit, including the right of storage.
The term radioactive and fissionable, as herein used, does not apply to normal hydrocarbons or chemical compounds but relates to material in an active state of atomic decomposition, such as to be radioactive and which is dangerous to persons or property.
33. In the event Lessor considers that Lessee has failed to conform or comply with any of the express or implied obligations of this agreement, Lessor shall notify Lessee in writing, setting forth specifically the respects in which Lessor considers that Lessee has so failed to perform or comply, and Lessee shall have sixty (60) days after receipt of such notice within which to remedy or commence to remedy any such .defaults so alleged by Lessor. The delivery of said notice to Lessee and the lapse of sixty (60) days thereafter shall be a precedent condition to the bringing of any action by Lessor under this agreement. If an adverse claim is asserted against the title of Lessor, or any portion thereof', Lessee shall be entitled to withhold payment to Lessor to' the extent of the disputed portion, or to provoke a concursus and deposit the disputed amount in the registry of the court until such claim has been finally determined or until
Lessor shall have furnished bend to Lessee in an amount and with sureties satisfactory to Lessee, or other adequate security with respect to such claim.
34. When performance by Lessee hereunder is delayed or interrupted by lack of labor or materials, or by fire, storm, flood, war, rebellion, insurrection, riot, strike, differences with workmen or failure of carriers to transport or furnish facilities for transportation, or as a result of some order, requisition or necessity of the federal or state government, or any governmental subdivision, or as the result of any cause whatsoever beyond the control of Lessee, the time of such delay or interruption shall not be counted against Lessee, anything in this lease to the contrary notwithstanding. During any calendar year within which less than the minimum number of tons of salt may be shipped and such force majeure as is defined herein shall occur, then and in that event, the minimum number of tons of salt required to be shipped shall be reduced proportionately, that is to say, as the ratio of the number of days covered by the force majeure shall bear to 365 days (for example, if the force majeure should cover a period of 14 days, the minimum number of tons of salt required to be shipped shall be reduced by 14/365).
The foregoing provisions of this force majeure clause shall not be so interpreted under any circumstances as to extend the term of this lease beyond a period of ninety-nine (99) years from the effective date hereof.
By the same token, in the event any such force majeure as described above, shall occur and operate to impair-the ability of Lessor to perform any obligations hereunder Lessor shall be similarly excused from performing during the existence of the force majeure and shall have a similar length of time after the force majeure has ended to perform.
35. In the event Lessee obtains a title opinion or title opinion or supplemental title opinion or opinions upon the property herein leased, two unsigned carbon copies thereof shall be furnished to Lessor.
36. If Lessee shall cause any of the exterior or interior lines of the property covered by this lease to be surveyed, Lessee shall furnish Lessor with four copies or prints of such survey or surveys. Lessee agrees that before having any such survey made, it will request Lessor in writing to submit the names of at least three (3) registered surveyors property licensed by the State of Louisiana, and Lessee agrees that it will use one of the surveyors on the list submitted by Lessor for any survey it has made on the leased premises, provided, however, that if Lessor fails to submit such list of approved surveyors to Lessee in writing within a period of thirty (30) days from the date of receipt by Lessor of Lessee's request to submit such a list of names of surveyors satisfactory to Lessor, Lessee shall then have the right to select any surveyor of its choice who is properly licensed in the State of Louisiana. Lessee shall also furnish Lessor with four copies or prints of all maps submitted by it to any parish, state or federal regulatory body in connection with any proposed action, if there is such regulatory body or if such-map is required.
37. Lessee shall not cut, damage or use oak trees growing upon the premises leased wherever it is possible to conduct its operations without disturbing the same; provided, however, that Lessee shall have no liability for damage to trees resulting from its normal operations.
38. Any notice, request, approval, consent, exercise of an option or election, furnishing of a report, statement, record, map, document, or other instrument or communication
pursuant to any provision hereof shall be deemed sufficiently given, delivered, furnished or served if sent by certified or registered mail addressed, respectively, to the following:
A. TO THE LESSOR:
1. John Taylor Caffery 1572 Henry Clay Avenue New Orleans 18, Louisiana
2. The J.M. Burguieres Company, Ltd. Louisa Post Office, Louisiana
B. TO THE LESSEE:
1. The Carey Salt Company Hutchinson, Kansas
Either Lessor or Lessee shall have the right to change the person or persons above designated to receive any such communication or instrument, or the address to which any such person should be addressed, by giving written notice thereof to the other signed by the persons then designated, or in the event. of Lessor, if not signed by those designated, in lieu thereof signed by such of the parties constituting Lessor then entitled in the aggregate to receive at least 51% of-the royalties due hereunder; provided, however, that neither Lessee nor Lessor shall be entitled to designate more than two (2) such parties and, in the event more than two (2) are designated, the other party may, at its option, select any two of those designated as to whom the provisions of this paragraph shall apply.
In the event of the death or incapacity of any individual or the liquidation or dissolution of any corporate party designated by Lessor under the provisions of this paragraph, another person shall be designated in his stead, by written notice signed by such of the parties constituting Lessor as are then entitled in the aggregate to receive at least 51% of the royalties due hereunder; provided that in absence of such notification and designation communications and instruments sent in accordance with the previous designations shall be valid and binding.
In all instances in which Lessor is required or empowered herein to give notices to Lessee, to make requests of Lessee, to advise Lessee of approvals or grant consents to Lessee, to
appoint arbitrators, to exercise options or any similar rights or privileges hereunder, same shall be made, given or sent to Lessee by the parties designated by Lessor to receive notices under the provisions of this paragraph and, when so given, shall be conclusively presumed to be on behalf of and shall be binding upon all parties constituting Lessor. Notwithstanding the provisions of the preceding sentence, however, whenever Lessor is require to consent to or approve of a proposed action or operation by Lessee hereunder, such consent or approval of such of the parties constituting Lessor and then being entitled in the aggregate to receive at least 51% of the royalties due hereunder shall be sufficient to enable Lessee to so act or operate and shall bind all of the parties then constituting Lessor and their heirs, executors, administrators, successors and assigns, whether or not notice of such consent or approval is given by Lessor in the manner otherwise provided in this paragraph 38, and whether or not the parties designated by Lessor under the provision of this paragraph join in such consent or approval. Failure of Lessor to communicate to Lessee whether or not any consent or approval requested of Lessor by Lessee is granted within sixty (60) days from the mailing of such request shall be equivalent to approval or consent of Lessor.
39. This agreement shall be binding upon, and, subject to other provisions of this agreement, inure to the benefit of, the heirs, executors, administrators, successors and assign of the parties hereto.
40. This lease may be executed by the parties separately, on different dates, and in counterparts, but shall nevertheless be binding and effective as of the date first written on the first page hereof.
IN WITNESS WHEREOF the parties hereto have executed this lease in quadruplicate originals in the presence of the competent witnesses who have signed opposite their respective names.
WITNESSES TO SIGNATURE OF
LESSORS:
LOIS DIECK LESSORS:
----------
LOIS DIECK
DOROTHY THOMPSON JOHN TAYLOR CAFFERY
---------------- -------------------
DOROTHY THOMPSON JOHN TAYLOR CAFFERY, Individually and as
agent and Attorney-in-Fact for Mrs.
Marcie Caffery Gillis, Col. Marcel
A. Gillis, Mrs. Bethia Caffery McCay,
Percy L. McCay, Mrs. Mary Louise Caffery
Ellis, Mrs. Emma Caffery Jackson, Edward
R. Jackson, Liddell Caffery, Mrs. Marion
Caffery Campbell, George Lee Campbell,
M.D., Mrs. Martha Gillis Restarick, Mrs.
Katherine Baker Senter, Miss Caroline
Baker, Mrs. Bethia McCay Brown, Donelson
Caffery McCay, Lucius Howard McCurdy,
Jr. and John Anderson McCurdy.
LOIS DIECK EDWARD RADER JACKSON, III
---------- -------------------------
LOIS DIECK EDWARD RADER JACKSON, III
DOROTHY THOMPSON DONELSON CAFFERY JACKSON
----------------
DOROTHY THOMPSON
BY: EDWARD RADER JACKSON, III, TRUSTEE
----------------------------------
EDWARD RADER JACKSON, III
LOIS DIECK
----------
LOIS DIECK
DOROTHY THOMPSON
----------------
DOROTHY THOMPSON
THE J.M. BURGUIERES COMPANY, LTD.
LOIS DIECK BY: JOAN BURGUIERES BROWN
---------- ---------------------
LOIS DIECK JOAN BURGUIERES BROWN, DIRECTOR
DOROTHY THOMPSON BY: EDWARD E.BURGUIERES
---------------- -------------------
DOROTHY THOMPSON EDWARD E.BURGUIERES, ASSISTANT
SECRETARY AND MANAGING DIRECTOR
WITNESSES TO SIGNATURE LESSEE:
OF LESSEE:
DAVID L. JOHNSTON THE CAREY SALT COMPANY
-----------------
WILLIAM B. SWEARER BY: HOWARD J. CAREY, JR.
------------------ --------------------
HOWARD J. CAREY, JR., PRESIDENT
39
|
ENTRY N. 153936 RECORDED IN CONVEYANCE BOOK 17-S AT FOLIO 870 |
STATE OF LOUISIANA
PARISH OF ST. MARY
ACT OF AMENDMENT TO SALT LEASE
THIS ACT OF AMENDMENT, made and entered into as of the 30th day of May, 1973, by and between THE J. M. BURGUIERES CO., LTD. and JOHN TAYLOR CAFFERY, individually and as Agent and Attorney in Fact of the persons listed on the Exhibit attached hereto as Exhibit "A", pursuant to and by virtue of powers of attorney of record in St. Mary Parish, Louisiana, or attached hereto, being the owners of all mineral, royalty, surface and leasing rights in and to the lands more particularly described in that certain Salt Lease dated June 21, 1961, recorded in Conveyance Book 11-U, Entry No. 111822 of the records of St. Mary Parish, Louisiana, (hereinafter referred to as "Lease") hereinafter collectively referred to as "LESSORS", and DOMTAR CHEMICALS INC., a Delaware corporation, owner of all of the rights of the Lessee under the above Lease hereafter referred to as "LESSEE".
W I T N E S S E T H
For and in consideration of good and valuable considerations the receipt and adequacy of which is hereby acknowledged) and of the mutual advantages and obligations of the parties as set out hereinbelow, Lessors and Lessee hereby agree to amend the Lease, effective as of the date hereof, as follows:
1.) Sub-paragraph 9 (M) is hereby deleted and replaced by the following:
"`Average Price' means, for the period involved, the average price per ton received by Lessee from the sale in bulk of Rock Salt produced from the leased premises, in the following grades; Coarse Rock Salts, Mine Run or Mill Run Rock Salt and Ice Control Salt. The said `Average Price shall be determined by dividing the total dollars received by Lessee from the sale in bulk of Rock Salt of the said grades of f.o.b. mine (or adjusted to allow for any freight factor included in the price) by the total tonnage of the said grades sold. Provided, however, that
there shall be deducted from the total dollars received in respect of the sale of Salt the cost to Lessee of depot operations, Y.P.S. process and additives allocable to such Salt sold. There shall be included in such determination for any period involved the tons of Mine Run or Mill Run Rock Salt used or consumed by Lessee, its successors or assigns, and not sold to a purchaser, as though sold at the Current Market Price of Mine Run or Mill Run Rock Salt prevailing on the last day of the period in question."
2.) Sub-paragraph 9 (T) is hereby deleted and replaced by the following:
"(T) `Current Market Price of Mine Run or Mill Run Rock Salt' shall be considered to be the average price obtained by Lessee, F.O.B. mine, from all sales of such salt by Lessee of quantities in excess of five thousand (5,000) tons during any calendar year."
3.) The initial sub-paragraph of paragraph 38 is hereby deleted and replaced by the following:
"Any, notice, request, approval, consent, exercise of an option or election, furnishing of a report, statement, records, maps document or other instrument or communication pursuant to any provision hereof shall be deemed sufficiently given, delivered, furnished or served if sent by certified or registered mail addressed, respectively, to the following:
A. TO THE LESSORS:
1. John Taylor Caffery 1572 Henry Clay Avenue New Orleans, Louisiana 70118
2. The J. M. Burguieres Co., Ltd.
Suite 1800, 225 Baronne Street
New Orleans, Louisiana 70112
B. TO THE LESSEE:
1. Domtar Chemicals, Inc. Chicago O'Hare Aerospace Office Center 406 - 9950 Lawrence Avenue Schiller Park, Illinois
with copy to:
Domtar Chemicals, Inc. P. 0. Box 7210
Montreal 101, Canada Attention: Mr. Andre Gascon"
4.) The Lease is amended by adding thereto the following:
"Anything herein contained to the contrary notwithstanding, the only royalties to be paid by Lessee to Lessors on account of Salt Shipped shall be paid in accordance with the Royalty Schedule set forth on Exhibit `B' to this amendment. The quarterly royalty payments to be paid by Lessee to Lessors on account of Salt Shipped shall be provisionally based on the Average Price for the immediately preceding calendar year. Such provisional royalties payable shall be calculated by multiplying the appropriate Base Production Royalty in Exhibit `B' by the total tonnage of Salt Shipped in such quarter. The appropriate Base Production Royalty shall be determined from the column titled `Base Production Royalty' which is directly opposite the range into which the Average Price for the immediately preceding calendar year falls in the columns titled `Average Price'. For the purpose of determining whether an underpayment or overpayment of royalties has occurred in the preceding calendar year, within the first quarter of each year, Lessee shall determine the average price for the preceding year (herein referred to as `Actual Average Price'). In the event the total Royalty paid by Lessee to Lessors during such preceding year (herein referred to as `Actual Royalty Paid') is less than that which would have been paid had the Actual Average Price been utilized as the basis under Exhibit `B' for such royalty payments (herein referred to as `Adjusted Royalty'), Lessee shall, within the first quarter of each year, pay to Lessors the difference between Actual Royalty Paid and Adjusted Royalty. In the event Actual Royalty Paid exceeds Adjusted Royalty, Lessee may retain royalty thereafter accruing to Lessors until Lessee has been fully reimbursed the amount of such excess Royalty Payment. (Nothing herein contained shall change Lessee's obligations under paragraph 14.)"
AS THUS AMENDED, the Lease shall remain in full force and effect as originally executed.
Lessors hereby acknowledge that the aforesaid Lease is in full force and effect and that Domtar Chemicals, Inc. is the proper current Lessee.
This agreement and all rights, interests, titles and obligations of the parties hereto shall be binding upon and inure to the benefit of the respective parties, their heirs, successors and assigns.
IN WITNESS WHEREOF, Lessors and Lessee have executed this agreement in quadruplicate originals in the presence of the undersigned competent witnesses as of the date hereinabove mentioned. WITNESSES:
----------------------------- ------------------------------------------------
JOHN TAYLOR CAFFERY, Individually and on
----------------------------- behalf of and as Agent for the other Owners and
Lessors
THE J. M. BURGUIERES CO., LTD.
By:
----------------------------- ---------------------------------------------
"LESSORS"
-----------------------------
|
DOMTAR CHEMICALS, INC.
By:
----------------------------- ---------------------------------------------
"LESSORS"
-----------------------------
|
AGREEMENT
AGREEMENT entered into as of this 21st day of November, 1990, by and among:
THE J.M. BURGUIERES CO., LTD., ISLAND PARTNERSHIP and FIRST NATIONAL BANK OF COMMERCE, as trustee for Carolina F. Baker ("Lessor"),
DOMTAR INDUSTRIES INC. ("Domtar"`), and
CAREY SALT COMPANY ("Assignee");
WHEREAS, Domtar is the Lessee under a Salt and Surface Lease dated June 21, 1961, recorded C.O.B. 11-U. Entry No. 111822 of the records of St. Mary Parish, Louisiana, by and between John Taylor Caffery, et al. as Lessor and the Carey Salt Company as Lessee, as amended, which Lease as amended is made a part hereof by reference as though set out herein in extenso (hereinafter referred to as the "Lease");
WHEREAS, the Lease:
a. Provides in Section 25 that the Lessor shall have the privilege of purchasing the leasehold interest of Lessee under certain circumstances as fully set out in the Lease;
b. Provides in Section 25 that a leasehold mortgage or other security device shall not be considered a sale or assignment for the purposes of such Section;
c. Provides in Section 26 that in the event of a proposed assignment Lessor shall have the right to object to a prospective assignee;
d. Provides in Section 36 that Lessor may approve the surveyor which will prepare a survey of the premises demised under the Lease (the "Leased Premises"); and
e. Provides in Section 38 for certain notice provisions;
WHEREAS, Domtar desires to assign to Assignee its interest in the Lease and all properties relating to the operation of the salt mine as set out in an Agreement, as amended, furnished Lessor by Domtar under cover of letters dated September 29, 1989, November 9, 1990 and November 14, 1990 (the "Assignment(degree)) which letter and the Agreement enclosed therein are made a part hereof by reference as though set out herein in extenso (such interest is hereinafter referred to as the "Leasehold Interest"); and
WHEREAS, Lessor is willing to consent to the Assignment and approve the Assignee in consideration of and on the basis of the agreements set out herein, without admitting in any way that the form of the September 29, 1989 letter complied with the terms of the Salt and Surface Lease.
NOW, THEREFORE, THIS INSTRUMENT WITNESSETH:
1. Effective the data of Assignment of the Leasehold Interest
to Assignee, the Lease is deemed to be modified so as to add a provision to
Section 24 providing that Lessor will be named as an additional assured in
Lessee's liability policies in the insured amount of $20,000,000.00 per
occurrence with no lesser ceiling per claimant relating to the mine which is
located in and under the leased property and that Leases shall carry insurance
in sufficient amounts with carriers reasonably acceptable to Lessor which shall
insure the continuation of the payment of royalties for up to two years in
annual amounts equal to the annual Production Royalty payable with respect to
1,500,000 tons of salt even though the mine on the leasehold properties may be
unable to produce for any reason, including but not limited to mine disaster or
any other business interruption. Lessee shall from time to time deliver such
certificates of insurance as Lessor may reasonably request to evidence the
existence of the coverages repaired by this Section.
2. Effective the date of the Assignment of the Leasehold Interest to Assignee, section 16 of the Lease is deemed to be amended so that "MINIMUM NUMBER OF TONS OF SALT TO BE SHIPPED" commencing January 1, 1990 and for the remaining term of the Lease shall be one million (1,000,000) tons per year.
3. At the date and time of the Assignment of the Leasehold Interest to Assignee, Domtar shall pay to Lessor the sum of TEN DOLLARS ($10.00) and other valuable consideration, which amount shall be over and above any and all other payments due to the Lessor under the Lease.
4. In consideration of the agreements and payments herein set out, the Lessor:
a. Hereby advise Domtar and the Assignee that they do not wish to purchase the Leasehold Interest of Domtar;
b. Hereby waive and release the option to purchase under the provisions of Section 25 of the Lease for the purposes of this transaction only;
c. Approve Assignee as a lessee under the provisions of
Section 26 of the Lease;
d. Grant to Domtar the right to assign the Leasehold Interest to Assignee and stipulate that they have no further objections of any sort to such assignment;
e. Approve the use of the services of Gandolfo, Kuhn & Luecke to survey the Leased Premises for Lessee's own purposes, provided that four (4) copies of any such survey will be provided to Lessor, that such survey shall not be used in any respect for any purposes between Lessor and Lessee, and that the Lessor shall not in any way be deemed to vouch for the accuracy of the survey.
5. Lessor acknowledges that:
a. The Lease is in full force and effect and has not bean amended or modified except by Act of Amendment to Salt Lease dated as of May 30, 1973, recorded Entry No. 153935, C.O.B. 17-S, folio 870 of the records of St. Mary Parish, and
b. To the best knowledge of Lessor, there are no defaults by Lessee thereunder.
6. Effective the date of the Assignment of the Leasehold Interest to Assignee, the Lease is hereby amended to add the following provision after section 40 thereof:
"41
a. For the purpose of this Section 41, the following definitions shall apply: The term "Mortgagee" shall mean any bank, bank holding company, savings and loan association, trust company, credit corporation, insurance company or pension fund (including any entity acting as trustee or agent for any of the foregoing), having assets in excess of One Billion Dollars ($1,000,000,000.00), or a wholly-owned subsidiary of any of the foregoing entities. The term "Nominee" shall mean a direct or indirect wholly-owned subsidiary of a Mortgagee.
b. Lessee is hereby given the right by Lessor to mortgage to one or more Mortgagees its interest in this Lease, under one or more mortgages or other security devices (a "Mortgage"), and as collateral security for such Mortgage(s), to give to such Mortgagee(s) a lien, assignment and/or security interest in (i) any personal property included within this Lease and (ii) the income, receipts, revenues and profits of the premises demised under this, Lease (the "Leased Premises") save and except the Lessor's royalties. If Lessee shall mortgage this Lease and if any such Mortgagee shall send to Lessor a true copy thereof, together
with written notice specifying the name and address of the Mortgagee, Lessor agrees that so long as such Mortgage shall remain unsatisfied, the following provisions shall apply: (i) Lessor shall not agree to a consensual cancellation, termination, surrender, or modification of this Lease by Lessee, without the prior consent in writing of such Mortgagee and no such consensual cancellation, termination, surrender or modification without such prior consent shall be binding on such Mortgagee: and (ii) Lessor shall, upon sending Lessee any notice of default, simultaneously send a copy of such notice to such Mortgagee(s), at the same time and in the same manner that such notice is sent to Lessee, and to such addresses as may be designated in a written notice from such Mortgagee(s) received by Lessor. No notice given by Lessor to Lessee shall be binding upon or affect a Mortgagee unless a copy of such notice shall be given to the Mortgagee pursuant to this subparagraph (b). In addition to the other rights of the mortgagee(s) set forth in this Paragraph 41, such Mortgagee(s) shall after service of any such notice upon it, have the right to cure and cause the cure of any default by Lessee hereunder, and Lessor shall accept such performance by or at the instigation of such Mortgagee(s) as if the same had been done by Lessee.
c. Before giving any notice of election to terminate this Lease. Lessor shall allow Mortgagee the same cure periods given to Lessee hereunder to cure such default, running concurrently with the cure period afforded to Lessee.
d. In the event of a default by Lessee in the performance of any term, covenant, condition or agreement on Lessee's part to be performed under this lease of a nature that cannot practicably be cured by Mortgagee without taking
possession of the Leased Premises, or of a nature that is not susceptible of being cured by Mortgagee, Lessor shall not terminate this Lease by reason of such default, if and so long as (i) in the case of a default which cannot practicably be cured by Mortgagee without taking possession of the Leased Premises, Mortgagee shall deliver to Lessor, prior to the date of which Lessor shall be entitled to terminate this Lease, a written instrument in which Mortgagee agrees to commence foreclosure proceedings or take any other steps or actions to obtain possession of the Leased Premises, and Mortgagee thereafter commences such proceedings or actions within a reasonable time, diligently prosecutes the same to completion (unless in the meantime the Mortgagee acquires Lessee's interest under this Lease, either in its own name or through a Nominee), and upon obtaining possession of the Leased Premises (including possession by a keeper, receiver, Nominee of purchaser at a foreclosure or other sale), diligently and with continuity proceeds to cure such default and effects a cure of such default; or (ii) in the case of a default which is not susceptible of being cured by Mortgagee, Mortgagee shall, within a reasonable time, institute foreclosure proceedings or take any other steps or actions to obtain possession of the Leased premises, and diligently prosecute the same to completion (unless in the meantime, Mortgagee acquires Lessee's interest under this Lease, either in its own name or through a Nominee). Mortgagee shall not be required to continue to proceed to obtain possession, or to continue in possession of the Leased Premises pursuant to clause (i), or continue to prosecute foreclosure proceedings or any other action pursuant to clause (ii) above, if and when such default shall be cured. If
Mortgagee, its Nominee, or a purchaser at a foreclosure or other sale shall acquire title to Lessee's interest in the Lease and shall cure all of Lessee's defaults under this Lease, which defaults mortgagee received notice of in accordance with the terms of this Section 41, and which are susceptible of being cured by such mortgagee or by such Nominee or purchaser, as the case may be, within the time reasonably required therefor, then the defaults of any prior holder of Lessee's interest in this Lease which are not susceptible of being cured by such Mortgagee (or by such Nominee or purchaser) shall not be deemed to be defaults under this Lease as between Lessor and the Mortgagee, its Nominee or such purchaser.
e. No mortgagee or its Nominee shall become liable under the provisions of this Lease unless and until such time as it becomes the owner of Lessee's interest in this Lease.
f. (i) In the case of termination of this Lease by reason of
any default or for any other reason prior to the end of the
stated term of the Lease and if an assignment under subsection
(g) hereof is prohibited as a result of a bankruptcy, Lessor
shall give prompt notice thereof to each Mortgagee in the
manner provided is subsection (b) hereof. Lessor, on written
request of any such mortgagee, made any time within sixty (60)
days after the receipt of such notice by such Mortgagee, shall
execute and deliver a new lease of the Leased premises to the
Mortgages, or its Nominee, for the remainder of the term of
this Lease had this Lease not been terminated, upon all of the
terms, covenants and conditions contained in this Lease,
provided that the prospective tenant thereunder agrees to
comply with the requirements of this subparagraph (f). The
tenant under such
new lease shall (x) simultaneously with the delivery of such new lease, pay to Lessor all unpaid rental, royalties and any other amounts of money due under this Lease as if this Lease had continued in effect up to and including the data o! the commencement of the team of such new lease, and all reasonable expenses, including reasonable attorneys fees, incurred by Lessor in connection with any defaults by Lessee under this Lease, the termination of this Lease and the preparation of the new lease, less any amounts collected by Lessor from any subtenants or other occupants of the Leased Premises in payment of any obligations described hereinabove, and (y) cure all defaults existing under the Lease which are susceptible of being cured by such tenant under the new lease within the time reasonably required therefor.
(ii) Any such new lease shall maintain the same priority as this Lease with regard to any mortgage affecting the teased Premises or any part thereof or any other rights, liens or encumbrances thereon. The provisions of the immediately preceding sentence shall be self-executing, and Lessor shall have no obligation to do anything, other than to execute and deliver such new lease, to assure to the tenant under such new lease good title to the leasehold estate created thereby.
(iii) If more than one Mortgagee requests a new lease pursuant to this subparagraph (f), the Lessor shall recognize as the Mortgagee entitled to receive such new lease the holder of the Mortgage with the highest lien priority.
(iv) Any new Lessee must accept all Lessee obligations and responsibilities and acquire all Lessee's assets (relating to or used in connection with the Leased premises that are necessary to discharge Lessee's obligations under the Lease),
which- are then in existence and owned by Lessee at the time of the execution of the new lease. Further, there may be no partial assignment of lessee's rights under the Lease.
g. Lessee shall have the right to assign this Lease to a
Mortgagee or to a Nominee of such Mortgagee (provided that, in
the case of an assignment to a Nominee of a mortgagee, the
mortgagee shall guarantee the Nominee's obligations to pay
royalties and to maintain the insurance provided for herein).
The provisions of Sections 25 and 26 of this Lease shall not
apply to the acquisition by the Mortgagee or such Nominee of
Lessee's interest hereunder as a result of foreclosure of a
mortgage, exercise of a power of sale or by assignment in lieu
of foreclosure or any first transferee of either of them,
provided the Mortgage& or a Nominee or the first transferee of
the Mortgagee or such Nominee of the estate created under this
Lease (i) shall have a net worth immediately after such
transfer that is equal to or greater than the net worth of
Casey Salt Company immediately after its acquisition of the
Lessee's interest in this Lease, (ii) has or will have
supervisory personnel at the Leased premises who are
experienced in underground mining operations, and (iii) as to
the Mortgagee at the time of such taking of title (or if there
is more than one Mortgagee, then the holders or participants
of at least ten per cent (lot) of the debt secured by the
Mortgage) shall have a rating by Moody's or Standard and
Poor's on their respective long term debt of at least the
minimum "investment" grade. Any transfers of this Lease
thereafter occurring shall be subject to Sections 25 and 26 of
the Lease. Unless an assignment pursuant to this subsection
(g) is prohibited
by bankruptcy, Messes will take any steps necessary to effectuate as assignment and render unnecessary the execution of a new lease pursuant to subsection 6(f)."
7. The Lease, as amended by this Agreement and the Amendment to salt Lease dated May 30, 1973, is hereby ratified and confirmed.
WITNESS the signatures of the parties on the data first above set out.
WITNESSES: LESSOR:
THE J.M. BURGUIERES CO., LTD.
-------------------------------- By:
-----------------------------------
Its:
-------------------------------- ----------------------------------
ISLAND PARTNERSHIP
-------------------------------- By:
-----------------------------------
Its:
----------------------------------
-------------------------------- By:
-----------------------------------
Its:
----------------------------------
By:
-----------------------------------
Its:
----------------------------------
FIRST NATIONAL BANK OF COMMERCE,
as Trustee for CAROLINE F. BAKER
-------------------------------- By:
-----------------------------------
Its:
-------------------------------- ----------------------------------
DOMTAR INDUSTRIES INC.
-------------------------------- By:
-----------------------------------
Its:
-------------------------------- ----------------------------------
10
|
ASSIGNEE:
CAREY SALT COMPANY
-------------------------------- By:
-----------------------------------
Its:
-------------------------------- ----------------------------------
|
ENTRY N. 258,785 RECORDED IN CONVEYANCE BOOK 40-0 AT FOLIO 532 BY AND BETWEEN STATE OF LOUISIANA ISLAND PARTNERSHIP, ET AL AND CAREY SALT COMPANY PARISH OF ST. MARY |
AMENDMENT TO SALT AND SURFACE LEASE
KNOW ALL MEN BY THESE PRESENTS THAT:
THIS ACT OF AMENDMENT is made and entered into as of the 1st day of July, 1997, by and between
ISLAND PARTNERSHIP (TIN: 72-1172684), a Louisiana partnership whose Articles of Partnership were recorded September 6, 1990 with the Office of the Louisiana Secretary of State under Charter No. 34363277J and in Partnership Book 10, page 931, under Entry No. 555 of the Recorder's office of St. Mary Parish, Louisiana, domiciled in Jefferson Parish, Louisiana, appearing herein through and being represented by CAFFERY McCAY, RADER JACKSON and K. B. SENTER, duly authorized pursuant to the terms and provisions of the aforesaid Articles of Partnership, whose mailing address is 332 Friedrichs Avenue, Metairie, LA 70005;
JMB PARTNERSHIP (TIN: 72-1324158), a Louisiana partnership whose Articles of Partnership were recorded May 31, 1996 with the Office of the Louisiana Secretary of State and in Partnership Book 12, under Entry No. 602 of the Recorder's office of St. Mary Parish, Louisiana, domiciled in Franklin, St. Mary Parish, Louisiana, appearing herein through and being represented by RONALD C. CAMBRE, its President, duly authorized by authority delegated to him at the annual meeting of the Partners of JMB Partnership held January 27, 1997, whose mailing address is P. O. Box 333, Franklin, LA 70538-0333; and
CAROLINE F. BAKER TRUST #1 (TIN: 72-6125336), a Louisiana intervivos trust recorded February 2, 1988 in Book 30-Z, folio 584, under Entry No. 221709, of the Conveyance Records of St. Mary Parish, Louisiana, appearing herein through and being represented by FIRST NATIONAL BANK, OF COMMERCE, its Trustee, said bank appearing herein through and being represented by CHRISTIAN FATZER, JR., its Assistant Vice President and Trust Officer, duly authorized by resolution of the Board of Directors of said bank, a certified copy of which is annexed hereto and made a part hereof, whose mailing address is P. O. Box 60279, New Orleans, LA 70160;
(hereinafter collectively referred to as "LESSORS"), AND
CAREY SALT COMPANY (TIN: 13-3563048), a Delaware corporation, authorized to do and doing business in the State of Louisiana, appearing herein through and being represented by JOHN S. FALLIS, its Vice President, duly authorized, whose mailing address for the purpose of this instrument is P. O. Box 10, Lydia, LA 70569
(hereinafter referred to as "LESSEE")
WITNESSETH
LESSORS declared that they are the owners of all mineral, royalty, surface and leasing rights in and to the lands more particularly described in that certain SALT AND SURFACE LEASE dated June 21, 1961, recorded in Book 11-U, under Entry No. 111822 of the Conveyance Records of St. Mary Parish, Louisiana; as supplemented by the SELECTION OF SURFACE ACREAGE dated October 9, 1961, filed October 19, 1961, recorded in Book 11-X, folio 444, under Entry No. 112825 of the Conveyance Records of St. Mary Parish, Louisiana; as amended by ACT OF AMENDMENT TO SALT LEASE dated May 30, 1973, filed May 31, 1973, recorded in Book 17-S, folio 870, under Entry No. 153936 of the Conveyance Records of St. Mary Parish, Louisiana, as further amended by AGREEMENT dated November 21, 1990, filed November 26, 1990, recorded in Book 33-Z, folio 186, under Entry No. 232548 of the Conveyance Records of St. Mary Parish, Louisiana, (hereinafter collectively referred to as the "Lease") and in and to the lands hereinafter described.
For and in consideration of good and valuable consideration and of the mutual advantages to be derived, LESSORS and LESSEE hereby agree to amend the Lease, as of the effective date hereof, as follows:
1. LESSORS and LESSEE do release from the lands covered by the Lease the following described property, to-wit:
That certain tract or parcel of land lying and being situated in Section 20, T15S-R7E, St. Mary Parish, Louisiana, being more particularly shown, designated and described as Tract "EFGHIJKE" on plat of survey entitled
"PLAN OF LAND SHOWING PROPERTY OF ISLAND PARTNERSHIP, ET AL TO BE RELEASED FROM AND TO BE ADDED TO LEASE TO CAREY SALT COMPANY" made by Lamon G. Miller, P.L.S, dated April 18, 1997, bearing Drawing No. 9694, a copy of which is annexed hereto and made a part hereof for greater particularity as to description, containing 12.0879 acres.
2. LESSORS and LESSEE do add to and include in the lands covered by the Lease (and, accordingly, LESSORS do grant, lease, let and hire unto LESSEE) the following described property, to-wit:
That certain tract or parcel of land lying and being situated in Sections 19 & 20, T15S-R7E, St. Mary Parish, Louisiana, being more particularly shown, designated and described as Tract "ABCDA" on plat of survey entitled "PLAN OF LAND SHOWING PROPERTY OF ISLAND PARTNERSHIP, ET AL TO BE RELEASED FROM AND TO BE ADDED TO LEASE TO CAREY SALT COMPANY" made by Lamon G. Miller, P.L.S, dated April 18, 1997, bearing Drawing No. 9694, a copy of which is annexed hereto and made a part hereof for greater particularity as to description, containing 10.0589 acres.
EXCEPT AS HEREIN AMENDED, LESSORS and LESSEE declare that the Lease shall remain in full force and effect.
LESSORS hereby acknowledge that the Lease is in full force and effect and that CAREY SALT COMPANY is the proper current LESSEE.
This amendment and all rights, titles, interests and obligations of the LESSORS and LESSEE shall be binding upon and inure to the benefit of the respective parties, their heirs, successors or assigns.
LESSORS and LESSEE do hereby authorized and request the Clerk of Court and Ex-Officio Recorder of Conveyances for St. Mary Parish, Louisiana, to make mention of this amendment in the margin of his records in Book 11-U, Entry No. 111822 of the Conveyance Records of St. Mary Parish, Louisiana, to serve as occasion may require.
WITNESSES:
By:
--------------------------------- ------------------------------------
CAFFERY McCAY
---------------------------------
By:
--------------------------------- ------------------------------------
RADER JACKSON
---------------------------------
By:
--------------------------------- ------------------------------------
K. B. SENTER
---------------------------------
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JMB PARTNERSHIP
By:
--------------------------------- ------------------------------------
RONALD C. CAMBRE, PRESIDENT
---------------------------------
CAROLINE F. BAKER TRUST #1
BY: FIRST NATIONAL BANK OF
COMMERCE TRUSTEE
By:
--------------------------------- ------------------------------------
CHRISTIAN FATZER, JR., ASST.
VICE PRES. AND TRUST OFFICER
---------------------------------
WITNESSES:
CAREY SALT COMPANY
By:
--------------------------------- ------------------------------------
JOHN S. FALLIS
---------------------------------
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EXHIBIT 10.3
No. 19024
ROYALTY AGREEMENT
Parties: Utah State Land Board - "State."
Dix R. Turnbow - 50%, N.G. Morgan, Sr. - 25%, and Virgil V.
Peterson - 25%, "Lessees."
Date: September 1, 1962
WHEREAS, Lessees wish to extract and recover salts and salt
|
products, or products manufactured from salts, excluding production of Magnesium Chloride and its derivatives, from Great Salt Lake, and is entering into a lease of even date for such purpose.
1. As used herein, the word "salts" means sodium chloride and all other salts, salt products, or products manufactured from salts, except Magnesium Chloride and derivatives, extracted from Great Salt Lake, and it means and includes other substances extracted from said waters, sodium chloride produced or derived from other sources.
The word "dry" used in conjunction with the word "salts" means actual weight of salt calculated to a moisture-free basis. Methods of sampling. testing and calculating moisture-free weight shall conform to methods prescribed by Ass'n of Official Agricultural Chemists and approved by State. "Ton" means 2000 lbs avoirdupois.
"Shipped by Lessees" means "shipped, used or consumed in a manufacturing process, or sold or disposed of by Lessees.
2. During term of agreement Lessees have continuing right to appropriate, remove and divert water of and from Great Salt Lake for purpose of extracting salts; provided agreement shall not be construed to relieve Lessees from full compliance with Title 73, Utah Code Annotated, 1963, relative to diversion of waters of State of Utah, where such is applicable.
3. Lessees shall pay royalty to State when and as herein provided. Royalty on gross value at point of shipment of any and all extracted products sold or used, except KC1 which shall be not lest than 9%, shall be: 1.6% for first 3 years; 2.0% for next 5 years; and then increase at a rate of 0.2 of 1% per year until it reaches maximum of 3%. In any event, royalty shall be not less than 30 cents/ton for KC1, 10 cents/ton for Na2SO4, 10 cents/ton for sodium chloride, 40 cents/ton for chlorine.
4. Within 60 days after close of each calendar quarter, Lessees to file with State a certificate specifying number of tons of dry salts shipped during such quarters, and pay State appropriate royalty.
5. State or its agents have right at reasonable times to inspect books and records of Lessees as they pertain to number of tons shipped and computations relating to moisture content.
6. Lessees have continuing right to construct and maintain ditches, flumes, etc. where they deem essential for transporting waters of Lake to evaporating ponds. After installation of any ditches, flumes, etc. Lessees to file with State a plat or map showing exact location, size and dimensions. Any residue brines to be returned to the Lake.
7. Terms of agreement 16 years from September 1, 1962, ending August 31, 1979 and thereafter so long as salts are removed from premises and/or from Lake brines, and State receives a minimum royalty of not less than $10,000 per year, unless sooner terminated as in this paragraph. This agreement may be terminated by Lessees on the last day of any calendar year by written notice to State of intention at least 6 months prior to date specified in said notice. Coincidental with termination date, Lessees to cease extraction of salts from waters of the Lake unless and until it shall have once more entered into an agreement therefor with the State. In event Lessees fail to pay all monies due the State under terms of this agreement or violate any other term or condition, and within 60 days after written notice of such by State to Lessees, Lessees fail to make payment or correct default, then State may terminate agreement by written notice to Lessees not less than 30 days prior to date specified in notice. Coincidental with termination Lessees shall cease extraction of salt from waters of the Lake unless and until it has once more entered into an agreement with State and has cured any and all defaults.
8. In event any other person or company enters into an agreement with State requiring them to pay monies to State for extraction of salts from Lake in amounts which, when computed on dry basis shipped, is less than the royalty stated in Item No. 3, then from the 1st day of the next calendar quarter after date of such other agreement and while such other agreement remains in effect, this agreement shall be deemed to be automatically amended so that Lessees pay an equivalent amount. In event State enters into an agreement with a third party providing for a royalty less than above for crude salts shipped outside the State, then this agreement is automatically amended so Lessees pay a like amount.
9. Any notice to be given by State to Lessees shall be deemed to have been served when served personally on any individual or when mailed, registered mail postage prepaid to Lessees at principal office of Lessees.
Any notice to be given by Lessees by State shall be deemed to have been served when served personally on the Director of Utah State Land Board, or successor board, commission or agency of State, or when mailed registered mail postage prepaid addressed to Director, Utah State Land Board, or successor board, etc.
10. Neither party is liable to the other for loss or damage nor is either party considered in default if performance is delayed or prevented due to acts of God, war, revolution, etc., or by any acts, laws, regulations, etc. of U.S. Government, fires, explosions, cyclones, floods, strikes, embargoes, failure of transportation or sources of supply, etc.
11. Lessees' benefits and its liabilities binding on its successors and assigns. State's benefits and its liabilities binding on all boards, commissions and agencies of the State, including Utah State Land Board and all successor boards, etc.
12. State reserves a lien on all unshipped salts for royalties due hereunder and for such royalties as may be hereafter due from any unshipped salts.
13. Lessees understand that there is a previous lease for extraction of Magnesium Chloride and derivatives with Bonneville-on-the-Hill Company and Lessees agree to hold State harmless against any claims of Bonneville-on-the-Hill pursuant to their lease.
Utah State Land Board
Max G. Gardner, Director
Dix R. Turnbow
N.G. Morgan, Sr.
Virgil V. Peterson
No. 19024
LEASE AGREEMENT
Parties: Utah State Land Board - "State."
Dix R. Turnbow - 50%, N.G. Morgan - 25%, and Virgil V.
Peterson, 25% - "Lessees."
Date: September 1, 1962
WHEREAS, State is entering into an Agreement with Lessees for payment of
|
royalty on salts and salt products extracted from waters of Great Salt Lake, excluding Magnesium Chloride and its derivatives, referred to as "Royalty Contract;" and
WHEREAS, Lessees desire to use premises of the State for extraction and recovery of such salts, etc., excluding Magnesium Chloride and derivatives, which premise State is authorized by law to lease:
1. Agreed State leases to Lessees land (see lease) in Box Elder County, Utah:
14,380.66 acres m/1 - unsurveyed - in Twp. 6 North, Range 6 West, and 6,400 acres m/1 - unsurveyed - in Twp. 6 North, Range 4 West and Twp. 6 North, Range 5 West.
Total leased 20,780.56 acres
2. Lessees agree to pay rental of fifty cents (50(cent)) per acre per annum, in advance on January 2nd of each year, except first year paid on application for lease. State may adjust rentals at end of first 25 years if it sees fit. All rentals paid to be credited against royalties, if any, which may accrue during year in which rentals are paid. Minimum rental of $10,000 per annum whether or not Lessees surrender or contract a portion of the lands under lease.
3. Lessees have right to use premises for production or manufacture of salts and salt products, and manufacture of salt production of Magnesium Chloride and its derivatives.
4. Lease for term of 49 years commencing 9-1-62 and ending 8-31-2011, or upon termination of Royalty Agreement dated 9-1-62, whichever is sooner.
5. Lease is subject to law and to rules and regulations of Utah State Land Board and to rules and regulations hereafter promulgated by the State.
6. Lease may not be assigned, mortgaged, encumbered or disposed of in whole or in part without consent of the State.
7. State has right to enter premises at all reasonable times to inspect workings thereon.
8. Agreed lease is issued only under such title as the State now holds, and in event the State is divested of title, State is not liable for damage sustained by Lessee, nor is Lessee entitled to any refund of rents or royalties heretofore paid.
9. Agreed that State reserves right to grant easements over and on the lands for installation and maintenance of roads, power lines, pipe lines, etc., and Lessees are not entitled to compensation for loss of land due to granting such easements. State reserves any and all existing easements and Lessees agree to use premises in such a manner. State reserves right to grant additional leases for other purposes providing they do not conflict with use of lands by Lessees.
State of Utah - State Land Board Max C. Gardner
Director
Dix R. Turnbow
N.G. Morgan, Sr.
Virgil V. Peterson
SUPPLEMENTAL AGREEMENT
Parties: Virgil V. Peterson, et al. - Nonoperators
Lithium Corporation - Operator
Date: October 1, 1963
Concurrent with execution of this Agreement, parties are entering into an
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agreement dated 10-1-63 relating to State of Utah Leases Nos. 19024 and 19059 and State of Utah Royalty Agreement No. 19024, and
WHEREAS, on January 8, 1962, Peterson filed in office of Utah State Engineer his Application to Appropriate Water (No. 34020) - approved by State Engineer Feb. 28, 1963, and
WHEREAS, on July 16, 1963, Peterson filed Application to Appropriate Water (No. 35428) on which action is pending:
Parties agree:
1. Peterson represents and declares that said water applications were filed for use and benefit of Nonoperators and their successors. Peterson agrees that he will, upon request of owners, transfer and assign all rights under such water applications.
2. Parties recognize and agree that water applications and rights thereunder are intended to be subject to Agreement of 10-1-63, and said water applications and rights are included in the term "Property" as used in Agreement of 10-1-63, as fully as if specifically referred to and identified therein. Parties agree that all rights and obligations of both parties under Agreement of 10-1-63 shall extend to and apply to each of said water applications and all rights thereunder.
/s/ Virgil V. Peterson
E.L. Bondy Lithium corporation
/s/ F. F. C.
Dix R. Turnbow
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N.G. Morgan, Sr.
Virgil Peterson
Morgan-Peterson Enterprises
N.G. Morgan, Sr.
19024
L E A S E A G R E E M E N T
THIS AGREEMENT, made and entered into at Salt Lake City, Utah, by and between the UTAH STATE LAND BOARD, acting in behalf of the STATE OF UTAH, hereinafter referred to as the "STATE," and DIX R. TURNBOW - 50% interest, N.G. MORGAN - 25% interest, and VIRGIL V. PETERSON - 25% interest, having their principal place of business at Salt Lake City, Utah, hereinafter referred to as "LESSEES."
W I T N E S S E T H :
WHEREAS, by instrument of even date herewith the STATE is entering into an agreement with the LESSEES for the payment of royalty on salts, and salt products extracted and recovered by LESSEES from the waters of the Great Salt Lake, excluding the production of Magnesium Chloride and its derivatives, herein referred to as "Royalty Contract," and
WHEREAS, LESSEES desire to use premises of the STATE for or in connection with the extraction and recovery of such salts, salt products, or salt products manufactured therefrom, excluding the production of Magnesium Chloride and its derivatives, and the STATE has premises suitable for such purposes which it is authorized by law to lease;
NOW, THEREFORE, it is agreed at follows:
1. The STATE does hereby lease to the LESSEES the following described tracts of land situated in Box Elder County, State of Utah:
UNSURVEYED LANDS:
Commencing at a point where the meander line of Great Salt Lake intersects or meets the east line of Section 36, T. 6 N., R. 6 W., SLM, running thence S.3/4mi m/1 to the proposed southeast corner of Section
36, being a township corner, thence W. 5 mi. m/1, N. 1-1/4 mi. m/1, W. 1
mi. m/1, N.3/4mi m/1, E. 1 mi. m/1, N. 4 mi. m/1, E. 2-7/8 mi. m/1 to a
point where the meander line of Great Salt Lake intersects the north line
of Section 3, T. 6 N., R. 6 W., SLM, thence southerly along said meander
line 3-1/2 mi. m/1 to the north boundary of the north segment of Lake
Crystal Salt Company lease ML 1623, then westerly along the north boundary
to the northwest corner of said lease, thence south along the west boundary
to the southwest corner of said lease, thence south 2376' m/1 to the north
boundary of the south segment of Mineral Lease 01623, thence west 7245' m/1
to the proposed west boundary of Section 27, T. 6 N., R. 6 W., SLM, thence
south along said west boundary 1526' m/1 to the north property line of the
Southern Pacific Company, thence easterly along said property line 2-1/2
miles m/1 to the meander line of Great Salt Lake, thence southeasterly
along said meander line to point of beginning, which when surveyed will
probably be described as:
Township 6 North, Range 6 West, SLM
------------------------------------
Sec. 3 - Part, Unsur. Sec. 22 - All
Sec. 4 - All Sec. 23 - Part
Sec. 5 - All Sec. 25 - Part
Sec. 8 - All Sec. 26 - Part
Sec. 9 - All Sec. 27 - Part
Sec. 10 - Part, Unsur. Sec. 28 - All
Sec. 11 - Part, Unsur. Sec. 29 - All
Sec. 14 - Part, Unsur. Sec. 30 - N1/2, N1/2S1/2
Sec. 15 - All Sec. 32 - All
Sec. 16 - All Sec. 33 - All
Sec. 17 - All Sec. 34 - All
Sec. 20 - All Sec. 35 - All
Sec. 21 - All Sec. 36 - Part, Unsur.
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Containing 14,380.56 acres m/1
ALSO UNSURVEYED LANDS:
Commencing at a point where the meander line of Great Salt Lake joins
or intersects the south boundary of Section 15, Township 6 N., R. 5 W.,
SLM, running thence northerly 2-1/2 mi., m/1, to the center line of Sec. 2,
T. 6 N., R. 5 W., SLM, thence E. 1-3/4 mi. m/1, to the proposed west
boundary northwest corner when surveyed of section 7, T. 6 N., R. & W.,
SLM, thence E. 1-1/2 mi. m/1, S. 2 mi. m/1, E.1/2mi. m/1, S. 1 mi. m/1, W.
2 mi. m/1 to the proposed SW corner when surveyed of Sec. 19, T. 6 N., R. 4
W., SLM, thence N.3/4mi. m/1 to the proposed northeast corner, when
surveyed of Section 24, T. 6 N., R. 5 W., SLM, thence W. 2-3/4 mi. m/1, to
point of beginning, which when surveyed will probably be described as:
Township 6 North, Range 4 West Township 6 North, Range 5 West
------------------------------ ------------------------------
Sec. 7 - All Sec. 1 - S1/2
Sec. 8 - W1/2 Sec. 2 - S1/2 of unsur. part
Sec. 17 - W1/2 Sec. 10 - Part, unsur.
Sec. 18 - All Sec. 11 - Part, unsur.
Sec. 19 - Part Sec. 12 - All
Sec. 20 - Part Sec. 13 - All
Sec. 14 - All
Sec. 15 - Part, unsur.
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Containing 6,400.00 acres m/1
TOTAL for lease - 20,780.56 acres m/1
2. LESSEES agree during the term hereof, as rental for land covered by this lease, to pay the sum of fifty cents ($0.50) per acre per annum, all such payments of rentals to be made in advance on the second day of January of each year except the rental for the year in which the lease is issued, which is payable on the application for this lease. The STATE may adjust lease rentals at the end of the direct twenty-five years as it shall see fit in the best interest of the STATE. All rentals paid hereunder shall be credited against the royalties, if any, which may accrue on production during the year for which such rentals are paid. There shall be a minimum rental hereunder of Ten Thousand Dollars ($10,000.00) per annum whether or not LESSEES shall surrender or contract a portion of the area of lands under lease.
3. LESSEES shall have the right to use the leased premises for the production manufacture of salts and salt products, and manufacture of salt products exclusive of the production of Magnesium Chloride and its derivatives.
4. This lease agreement shall be for a term of Forty-Nine (49) years Commencing at of September 1, 1962, and ending August 31, 2011, or upon termination of the Royalty Agreement between the parties dated September 1, 1962, whichever is sooner.
5. This Lease is made subject to law and to the rules and regulations of the Utah State Land Board and to such rules and regulations as may be hereafter promulgated by the STATE.
6. This Lease shall not be assigned, mortgaged, or otherwise encumbered or disposed of in whole or in part without the consent of the STATE.
7. The STATE or its officers or agents shall have the right to enter upon the leased premises at all reasonable times to inspect the workings thereon.
8. It is mutually understood and agreed that this Lease is issued only under such title as the State of Utah may now hold, and that in the event the STATE is hereafter divested of such title, the STATE shall not be liable for any damage sustained by the LESSEE, nor shall the LESSEE be entitled to or claim any refund of rentals or royalties or other moneys theretofore paid to the LESSOR.
9. It is understood and agreed that the STATE reserves the right to grant and convey easements over and upon the lends hereby leased for the installation and maintenance of roads, power lines, pipe lines or other facilities, and LESSEES shall not be entitled to any compensation for loss of lands due to the granting of such easements. The STATE also reserves any and all existing easements over and upon the leased premises, and LESSEES agree to use the leased premises in such a manner. The STATE also reserves the right to grant additional leases on the above described lands for other purposes, providing such leases would not conflict with the use of the lands by the LESSEES hereunder.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the first day of September 1962.
STATE OF UTAH - STATE LAND BOARD
LESSEES:
Exhibit 10.4
EXECUTION COPY
CREDIT AGREEMENT
Dated as of November 28, 2001,
as Amended and Restated as of April 10, 2002,
Among
SALT HOLDINGS CORPORATION;
COMPASS MINERALS GROUP, INC.,
as US Borrower;
SIFTO CANADA INC.,
as Canadian Borrower;
SALT UNION LIMITED,
as UK Borrower;
THE LENDERS PARTY HERETO;
JPMORGAN CHASE BANK,
as Administrative Agent;
J.P. MORGAN BANK CANADA,
as Canadian Agent;
CHASE MANHATTAN INTERNATIONAL LIMITED,
as UK Agent;
J.P. MORGAN SECURITIES INC.,
as Joint Advisor, Co-Lead Arranger and Joint Bookrunner;
DEUTSCHE BANC ALEX. BROWN INC.,
as Syndication Agent, Joint Advisor, Co-Lead Arranger and Joint Bookrunner;
CREDIT SUISSE FIRST BOSTON,
as Co-Documentation Agent;
CREDIT LYONNAIS,
as Co-Documentation Agent
Contents, p. i
TABLE OF CONTENTS
Page
----
ARTICLE I
Definitions
SECTION 1.01. Definitions ......................................................... 1
SECTION 1.02. Classification of Loans and Borrowings .............................. 46
SECTION 1.03. Terms Generally ..................................................... 46
ARTICLE II
Amount and Terms of Credit
SECTION 2.01. Commitments ......................................................... 47
SECTION 2.02. Loans and Borrowings ................................................ 48
SECTION 2.03. Requests for Borrowings ............................................. 49
SECTION 2.04. Swingline Loans ..................................................... 50
SECTION 2.05. Letters of Credit ................................................... 51
SECTION 2.06. Funding of Borrowings ............................................... 55
SECTION 2.07. Canadian Bankers' Acceptances ....................................... 56
SECTION 2.08. Interest Elections .................................................. 59
SECTION 2.09. Termination and Reduction of Commitments ............................ 61
SECTION 2.10. Repayment of Loans and B/As; Evidence of Debt ....................... 63
SECTION 2.11. Voluntary Prepayments ............................................... 63
SECTION 2.12. Mandatory Repayments ................................................ 65
SECTION 2.13. Fees ................................................................ 71
SECTION 2.14. Interest ............................................................ 72
SECTION 2.15. Alternate Rate of Interest .......................................... 74
SECTION 2.16. Increased Costs ..................................................... 74
SECTION 2.17. Break Funding Payments .............................................. 75
SECTION 2.18. Taxes ............................................................... 76
SECTION 2.19. Payments Generally; Pro Rata Treatment; Sharing of Set-offs ......... 78
SECTION 2.20. Mitigation Obligations; Replacement of Lenders ...................... 80
SECTION 2.21. Collection Allocation Mechanism ..................................... 81
SECTION 2.22. Redenomination of Sterling .......................................... 83
ARTICLE III
Conditions Precedent to Credit
SECTION 3.01. Execution of Agreement; Notes ....................................... 84
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Contents, p. ii
SECTION 3.02. Officer's Certificate ............................................... 84
SECTION 3.03. Opinions of Counsel ................................................. 84
SECTION 3.04. Company Documents; Proceedings ...................................... 84
SECTION 3.05. Adverse Change, etc. ................................................ 85
SECTION 3.06. Litigation .......................................................... 85
SECTION 3.07. Approvals ........................................................... 85
SECTION 3.08. Consummation of the Merger, etc. .................................... 85
SECTION 3.09. US Collateral and Guaranty Agreement; Foreign Pledge Agreements ..... 87
SECTION 3.10. US Collateral and Guaranty Agreement; Foreign Security Agreements ... 87
SECTION 3.11. US Collateral Assignment ............................................ 88
SECTION 3.12. Foreign Guaranty .................................................... 88
SECTION 3.13. Mortgages; Surveys, etc. ............................................ 88
SECTION 3.14. Shareholders' Agreements; Management Agreements; Retained Existing
Indebtedness Agreements; Tax Allocation Agreements ................ 90
SECTION 3.15. Consent Letter ...................................................... 91
SECTION 3.16. Solvency Certificate; Insurance Certificates ........................ 91
SECTION 3.17. Historical Financial Statements; Pro Forma Financial Statements;
Projections ....................................................... 91
SECTION 3.18. Payment of Fees ..................................................... 92
SECTION 3.19. Payment of Existing Indebtedness .................................... 92
ARTICLE IIIA
Conditions Precedent to Effectiveness of
Amendment and Restatement of the Existing Credit Agreement
SECTION 3A.01. Consents .......................................................... 92
SECTION 3A.02. Permitted Transactions ............................................ 92
SECTION 3A.03. No Default; Representations and Warranties ........................ 93
SECTION 3A.04. Fees; Expenses .................................................... 93
SECTION 3A.05. Master Assignment Agreement ....................................... 93
ARTICLE IV
Conditions Precedent to All Credit Events
SECTION 4.01. No Default; Representations and Warranties .......................... 93
SECTION 4.02. Notice of Borrowing; Letter of Credit Request ....................... 93
|
Contents, p. iii
ARTICLE V
Representations and Warranties
SECTION 5.01. Company Status ...................................................... 94
SECTION 5.02. Company Power and Authority ......................................... 95
SECTION 5.03. No Violation ........................................................ 95
SECTION 5.04. Litigation .......................................................... 95
SECTION 5.05. Use of Proceeds; Margin Regulations ................................. 96
SECTION 5.06. Governmental Approvals .............................................. 96
SECTION 5.07. Investment Company Act .............................................. 97
SECTION 5.08. Public Utility Holding Company Act .................................. 97
SECTION 5.09. True and Complete Disclosure ........................................ 97
SECTION 5.10. Financial Condition; Financial Statements; Undisclosed Liabilities;
Projections ....................................................... 97
SECTION 5.11. The Security Interests .............................................. 99
SECTION 5.12. Compliance with ERISA ............................................... 99
SECTION 5.13. Capitalization ...................................................... 101
SECTION 5.14. Subsidiaries ........................................................ 101
SECTION 5.15. Intellectual Property, etc. ......................................... 101
SECTION 5.16. Compliance with Statutes, etc. ...................................... 102
SECTION 5.17. Environmental Matters ............................................... 102
SECTION 5.18. Properties .......................................................... 103
SECTION 5.19. Labor Relations ..................................................... 103
SECTION 5.20. Tax Returns and Payments ............................................ 103
SECTION 5.21. Retained Existing Indebtedness ...................................... 104
SECTION 5.22. Insurance ........................................................... 104
SECTION 5.23. Representations and Warranties in Other Documents ................... 104
SECTION 5.24. The Transaction ..................................................... 104
SECTION 5.25. Special Purpose Corporations ........................................ 104
SECTION 5.26. Subordination ....................................................... 104
ARTICLE VI
Affirmative Covenants
SECTION 6.01. Information Covenants ............................................... 105
SECTION 6.02. Books, Records and Inspections ...................................... 109
SECTION 6.03. Insurance ........................................................... 109
SECTION 6.04. Payment of Taxes .................................................... 110
SECTION 6.05. Corporate Franchises ................................................ 110
SECTION 6.06. Compliance with Statutes, etc. ...................................... 111
SECTION 6.07. Compliance with Environmental Laws .................................. 111
SECTION 6.08. ERISA ............................................................... 112
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Contents, p. iv
SECTION 6.09. Good Repair ......................................................... 113
SECTION 6.10. End of Fiscal Years; Fiscal Quarters ................................ 113
SECTION 6.11. Additional Security; Further Assurances ............................. 113
SECTION 6.12. Foreign Subsidiaries Security ....................................... 115
SECTION 6.13. Use of Proceeds ..................................................... 116
SECTION 6.14. Permitted Acquisitions .............................................. 116
SECTION 6.15. Performance of Obligations .......................................... 118
SECTION 6.16. Maintenance of Company Separateness ................................. 118
SECTION 6.17. Contributions ....................................................... 119
SECTION 6.18. Interest Rate Protection ............................................ 119
SECTION 6.19. Seller Note and Discount Notes ...................................... 119
ARTICLE VII
Negative Covenants
SECTION 7.01. Business ............................................................ 120
SECTION 7.02. Consolidation; Merger; Sale or Purchase of Assets; etc. ............. 120
SECTION 7.03. Liens ............................................................... 124
SECTION 7.04. Indebtedness ........................................................ 126
SECTION 7.05. Advances; Investments; Loans ........................................ 129
SECTION 7.06. Dividends, etc. ..................................................... 132
SECTION 7.07. Transactions with Affiliates and Unrestricted Subsidiaries .......... 135
SECTION 7.08. Designated Senior Debt .............................................. 135
SECTION 7.09. Consolidated Interest Coverage Ratio ................................ 136
SECTION 7.10. Adjusted Total Leverage Ratio ....................................... 136
SECTION 7.11. Capital Expenditures ................................................ 137
SECTION 7.12. Limitation on Voluntary Payments and Modifications of Indebtedness;
Modifications of Certificate of Incorporation, By-Laws and
Certain Other Agreements; Issuances of Capital Stock; etc. ........ 138
SECTION 7.13. Limitation on Issuance of Capital Stock ............................. 140
SECTION 7.14. Limitation on Certain Restrictions on Subsidiaries .................. 141
SECTION 7.15. Limitation on the Creation of Subsidiaries, Joint Ventures and
Unrestricted Subsidiaries ......................................... 142
ARTICLE VIII
Events of Default
SECTION 8.01. Payments ............................................................ 143
SECTION 8.02. Representations, etc. ............................................... 143
SECTION 8.03. Covenants ........................................................... 143
SECTION 8.04. Default Under Other Agreements ...................................... 144
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Contents, p. v
SECTION 8.05. Bankruptcy, etc. ................................................... 144
SECTION 8.06. ERISA .............................................................. 144
SECTION 8.07. Security Documents ................................................. 145
SECTION 8.08. Guaranties ......................................................... 145
SECTION 8.09. Judgments .......................................................... 145
SECTION 8.10. Ownership .......................................................... 146
SECTION 8.11. Remedies Blockage .................................................. 146
ARTICLE IX
The Agents
SECTION 9.01. Appointment ........................................................ 146
SECTION 9.02. Delegation of Duties ............................................... 147
SECTION 9.03. Exculpatory Provisions ............................................. 147
SECTION 9.04. Reliance by Agents ................................................. 148
SECTION 9.05. Notice of Default .................................................. 148
SECTION 9.06. Nonreliance on Agents and Other Lenders ............................ 148
SECTION 9.07. Indemnification .................................................... 149
SECTION 9.08. Agents in their Individual Capacities .............................. 149
SECTION 9.09. Holders ............................................................ 149
SECTION 9.10. Resignation of the Agents .......................................... 149
SECTION 9.11. Power of Attorney .................................................. 150
SECTION 9.12. Trustee Provisions ................................................. 150
ARTICLE X
Miscellaneous
SECTION 10.01. Payment of Expenses, etc. .......................................... 151
SECTION 10.02. Right of Setoff .................................................... 152
SECTION 10.03. Notices; Authorized Representative ................................. 153
SECTION 10.04. Benefit of Agreement ............................................... 153
SECTION 10.05. No Waiver; Remedies Cumulative ..................................... 156
SECTION 10.06. Calculations; Computations ......................................... 156
SECTION 10.07. GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE ................... 158
SECTION 10.08. Counterparts ....................................................... 159
SECTION 10.09. [Reserved] ......................................................... 159
SECTION 10.10. Headings Descriptive ............................................... 159
SECTION 10.11. Amendment or Waiver, etc. .......................................... 159
SECTION 10.12. Survival ........................................................... 161
SECTION 10.13. Domicile of Loans and Commitments .................................. 161
SECTION 10.14. Confidentiality .................................................... 161
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Contents, p. vi
SECTION 10.15. Waiver of Jury Trial ............................................... 161 SECTION 10.16. Register ........................................................... 162 SECTION 10.17. Limitation on Additional Amounts, etc. ............................. 162 SECTION 10.18. Judgment Currency .................................................. 162 SECTION 10.19. Immunity ........................................................... 163 SECTION 10.20. Existing Credit Agreement .......................................... 163 SECTION 10.21. Master Assignment Agreement ........................................ 163 |
Contents, p. vii
SCHEDULE I List of Lenders and Commitments
SCHEDULE II Lender Addresses
SCHEDULE III Tax Returns and Payments
SCHEDULE IV Retained Existing Indebtedness
SCHEDULE V Real Properties
SCHEDULE VI Plans
SCHEDULE VII Capitalization
SCHEDULE VIII Subsidiaries
SCHEDULE IX Insurance
SCHEDULE X Existing Liens
SCHEDULE XI Existing Investments
SCHEDULE 2.05 Existing Letters of Credit
SCHEDULE 5.01 Permitted Encumbrances
SCHEDULE 5.04 Litigation
SCHEDULE 5.10 Financial Condition; Financial Statements; Undisclosed
Liabilities; Projections
SCHEDULE 5.13 Capitalization
SCHEDULE 5.15 Intellectual Property, etc.
SCHEDULE 5.16 Compliance with Statutes, etc.
SCHEDULE 5.17 Environmental Matters
SCHEDULE 5.19 Labor Relations
SCHEDULE 10.03 Addresses
EXHIBIT A-1 Form of Term Note
EXHIBIT A-2 Form of Revolving Note
EXHIBIT A-3 Form of Swingline Note
EXHIBIT B-1 Form of Opinion of Latham & Watkins, special counsel to the
Credit Parties
EXHIBIT B-2 Form of Opinion of Stikeman Elliott, special Canadian counsel
to the Credit Parties
EXHIBIT B-3 Form of Opinion of Latham & Watkins, special English counsel
to the Credit Parties
EXHIBIT C Form of Officers' Certificate
EXHIBIT D Form of US Collateral and Guaranty Agreement
EXHIBIT E Form of US Collateral Assignment
EXHIBIT F Form of Foreign Guaranty
EXHIBIT G Form of Consent Letter
EXHIBIT H Form of Solvency Certificate
EXHIBIT I Form of Assignment and Assumption Agreement
EXHIBIT J Form of Holdings Shareholder Subordinated Note
EXHIBIT K Form of Intercompany Note
EXHIBIT L Form of Master Assignment Agreement
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CREDIT AGREEMENT, dated as of November 28,
2001, as amended and restated as of April 10, 2002,
among SALT HOLDINGS CORPORATION, compass minerals
group, inc., SIFTO CANADA INC., SALT UNION LIMITED,
the LENDERS from time to time party hereto, JPMORGAN
CHASE BANK, as Administrative Agent, JPMORGAN BANK
CANADA, as Canadian Agent, and CHASE MANHATTAN
INTERNATIONAL LIMITED, as UK Agent.
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W I T N E S S E T H :
WHEREAS, subject to and upon the terms and conditions set forth herein, the Lenders are willing to make available to the respective Borrowers the respective credit facilities provided for herein;
WHEREAS, subject to and upon the terms and conditions set forth herein, the Existing Credit Agreement (except for the Exhibits and Schedules thereto, which shall not be modified in any manner by this amendment and restatement) is hereby amended and restated, effective as of the Amendment and Restatement Date, to read in its entirety as set forth herein;
NOW, THEREFORE, it is agreed:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS. As used herein, the following terms shall have the meanings herein specified unless the context otherwise requires:
"ACQUIRED BUSINESS" shall mean any Person or business, division or product line acquired pursuant to a Permitted Acquisition.
"ACQUIRED EBITDA" shall mean, for any Acquired Business for any period, the Consolidated EBITDA as determined for such Acquired Business on a basis substantially the same (with necessary reference changes) as provided in the first sentence of the definition of Consolidated EBITDA contained herein, except that (a) all references therein and in the component definitions used in determining Consolidated EBITDA to "THE US BORROWER AND ITS SUBSIDIARIES" shall be deemed to be references to the respective Acquired Business and (b) the adjustments contained in clause (ii) of the first sentence of the definition of Consolidated EBITDA shall not be made. All calculations of Acquired EBITDA shall be made on a Pro Forma Basis (for such purpose treating (i) each reference to "CONSOLIDATED EBITDA" contained in the definition of Pro Forma Basis as if it were a reference to "ACQUIRED EBITDA," (ii) clause (v) of said definition as if same applied to a determination of Acquired EBITDA for purposes of Section 7.11, and (iii) the text "the last two fiscal quarters comprising the respective Test Period" appearing in clause (v) of said definition as if same were a reference to "the trailing twelve month period immediately preceding the respective Permitted Acquisition" and disregarding subclauses (B) and (C) of clause (v) of said definition).
"ACQUIRED PERSON" shall have the meaning provided in the definition of Permitted Acquisition.
"ADDITIONAL SECURITY AND GUARANTY DOCUMENTS" shall have the meaning provided in Section 6.11.
"ADDITIONAL SENIOR SUBORDINATED NOTE DOCUMENTS" shall mean the Additional Senior Subordinated Notes and all other documents executed and delivered with respect to the Additional Senior Subordinated Notes.
"ADDITIONAL SENIOR SUBORDINATED NOTES" shall mean unsecured senior subordinated notes of the US Borrower reasonably satisfactory to the Administrative Agent (i) that are subordinated to the Obligations to the same extent as, or to a greater extent than, the Senior Subordinated Notes are subordinated to the Obligations, (ii) that contain payment blockage provisions that are no less favorable to the Lenders than the payment blockage provisions of the Senior Subordinated Notes and (iii) that otherwise contain terms and conditions (including, without limitation, the maturity thereof, the interest rate applicable thereto (PROVIDED that Additional Senior Subordinated Notes may bear interest at a rate or be issued at a discount that together result in a yield that is a market yield at the time of issuance thereof), amortization, defaults, voting rights, covenants and events of default) that are no less favorable to the Lenders than the terms and conditions of the Senior Subordinated Notes.
"ADJUSTED CONSOLIDATED NET INCOME" for any period shall mean Consolidated Net Income for such period PLUS, without duplication, (a) the sum of the amount of all net non-cash charges (including, without limitation, depreciation, amortization, deferred tax expense and non-cash interest expense but excluding any net non-cash charges reflected in Adjusted Consolidated Working Capital) and net non-cash losses that were included in arriving at Consolidated Net Income for such period less (b) the amount of all net non-cash gains (exclusive of items reflected in Adjusted Consolidated Working Capital) included in arriving at Consolidated Net Income for such period.
"ADJUSTED CONSOLIDATED WORKING CAPITAL" at any time shall mean Consolidated Current Assets (but excluding therefrom all cash and Cash Equivalents) LESS Consolidated Current Liabilities.
"ADJUSTED EXCESS CASH FLOW" shall mean, for any period, the remainder of
(a) Excess Cash Flow for such period MINUS (b) the product of (i) the aggregate
amount of principal repayments of Loans to the extent (and only to the extent)
that such repayments were made as a voluntary prepayment pursuant to Section
2.11 with internally generated funds (but in a case of a voluntary prepayment of
Revolving Loans or Swingline Loans, only to the extent accompanied by a
corresponding voluntary reduction to the Total Revolving Loan Commitment) during
such period multiplied by (ii) (A) at any time the Applicable Excess Cash Flow
Percentage then in effect is equal to 75%, 4/3, and (B) at any time the
Applicable Excess Cash Flow Percentage then is effect is equal to 50%, 2.
"ADJUSTED SENIOR LEVERAGE RATIO" shall mean the Adjusted Total Leverage Ratio, except that references to "CONSOLIDATED DEBT" and "ADJUSTED TOTAL LEVERAGE RATIO" therein shall instead be references to "CONSOLIDATED SENIOR DEBT" and "ADJUSTED SENIOR LEVERAGE RATIO," respectively.
"ADJUSTED TOTAL LEVERAGE RATIO" shall mean, on any date, the ratio of (a) Consolidated Debt on such date to (b) Consolidated EBITDA for the Test Period most recently ended on or prior to such date. All calculations of the Adjusted Total Leverage Ratio shall be made on a Pro Forma Basis, with determinations of Adjusted Total Leverage Ratio to give effect to all adjustments (including, without limitation, those specified in clauses (iv) and (v)) contained in the definition of "PRO FORMA BASIS" contained herein.
"ADMINISTRATIVE AGENT" shall mean Chase and shall include any successor to the Administrative Agent appointed pursuant to Section 9.10.
"AFFECTED LOANS" shall have the meaning provided in Section 2.12(i).
"AFFILIATE" shall mean, with respect to any Person, any other Person directly or indirectly controlling (including but not limited to all directors and officers of such Person), controlled by, or under direct or indirect common control with such Person; PROVIDED, HOWEVER, that (a) for purposes of Section 7.07 and except as otherwise provided in clause (b) of this proviso, an Affiliate of Holdings shall include any Person that directly or indirectly owns more than 5% of any class of the capital stock of Holdings and any officer or director of Holdings or any such Person, and (b) the Seller shall be deemed not to be an Affiliate of Holdings and its Subsidiaries so long as the Seller does not own at any time an aggregate amount greater than 35% of the outstanding capital stock of Holdings.
"AGENT" shall mean, except as otherwise provided in Article IX, any or all of the Administrative Agent, the Canadian Agent, the UK Agent, the Syndication Agent and the Co-Documentation Agents, as the context may require.
"AGREEMENT" shall mean this Credit Agreement, as the same may be from time to time modified, restated, amended and/or supplemented.
"AMENDMENT AND RESTATEMENT DATE" shall be April 10, 2002, PROVIDED that all the conditions precedent to the effectiveness of the amendment and restatement of the Existing Credit Agreement pursuant to this Agreement set forth in Article IIIA shall have been satisfied.
"APOLLO GROUP" shall mean Apollo Management V, L.P., a Delaware limited partnership, and its Affiliates.
"APOLLO MANAGEMENT AGREEMENT" shall mean the management agreement, dated as of November 28, 2001, between Apollo Management V, L.P. and the US Borrower, as the same may be amended, modified or supplemented from time to time in accordance with the terms hereof and thereof.
"APPLICABLE AGENT" shall mean (a) with respect to a Loan or Borrowing made to the US Borrower, or with respect to any payment that does not relate to any Loan or Borrowing, the Administrative Agent, (b) with respect to a Loan or Borrowing made to the Canadian Borrower or a B/A, the Canadian Agent and (c) with respect to a Loan or Borrowing made to the UK Borrower, the UK Agent.
"APPLICABLE EXCESS CASH FLOW PERCENTAGE" shall mean, with respect to any Excess Cash Flow Payment Date, 75%; PROVIDED that so long as no Default or Event of Default is then in existence, if, on the last day of the relevant Excess Cash Flow Payment Period, the Adjusted Total Leverage Ratio for the Test Period then most recently ended (as established
pursuant to the officer's certificate delivered (or required to be delivered) pursuant to Section 6.01(e)) (a) is LESS than or equal to 3.25:1.00 but greater than 2.75:1.00, then the Applicable Excess Cash Flow Percentage shall instead be 50% or (b) is LESS than or equal to 2.75:1.00, then the Applicable Excess Cash Flow Percentage shall instead be 0%.
"APPLICABLE PREPAYMENT PERCENTAGE" shall mean, at any time, (a) for purposes of Section 2.12(c), 100%; PROVIDED that if at any time the Adjusted Total Leverage Ratio is LESS than or equal to 3.25:1.00 (as established pursuant to the officer's certificate last delivered (or required to be delivered) pursuant to Section 6.01(e)), the Applicable Prepayment Percentage shall instead be 75%, (b) for purposes of Section 2.12(d), 100%; PROVIDED that, in the case of the issuance of unsecured Indebtedness only, if at any time the Adjusted Total Leverage Ratio is LESS than or equal to 3.25:1.00 (as established pursuant to the officer's certificate last delivered (or required to be delivered) pursuant to Section 6.01(e)), the Applicable Prepayment Percentage shall instead be 75%, and (c) for purposes of Section 2.12(e), 50%; PROVIDED that if at any time the Adjusted Total Leverage Ratio is LESS than or equal to 3.25:1.00 (as established pursuant to the officer's certificate last delivered (or required to be delivered) pursuant to Section 6.01(e)), the Applicable Prepayment Percentage shall instead be 0%. Notwithstanding anything to the contrary contained in this definition, at any time that a Default or an Event of Default is then in existence, the Applicable Prepayment Percentage for purposes of (x) Section 2.12(c) and (d) shall be 100% and (y) Section 2.12(e) shall be 50%.
"APPLICABLE RATE" shall mean initially, a percentage per annum equal to (a) in the case of Term Loans maintained as (i) Base Rate Loans, 1.75% and (ii) Eurodollar Loans, 2.75%, (b) in the case of Revolving Loans maintained as (i) Base Rate Loans, 2.50%, (ii) Canadian Base Rate Loans, 2.50%, (iii) Eurodollar Loans, 3.50% and (iv) Canadian Prime Rate Loans, 2.50%, (c) in the case of Swingline Loans, 2.50%, (d) in the case of B/A Drawings, 3.50%, and (d) in the case of the Commitment Fee, 0.50%. From and after each day of delivery of any certificate and financial statements delivered in accordance with the first sentence of the following paragraph indicating a different margin than that described in the immediately preceding sentence (each, a "START DATE") to and including the applicable End Date described below, the Applicable Rate for Term Loans shall (subject to any adjustment pursuant to the immediately succeeding paragraph) be that set forth below under the caption "Eurodollar Term Loans" or "Base Rate Term Loans", as applicable, and the Applicable Rate for Revolving Loans, Swingline Loans, Letters of Credit, B/A Drawings and Commitment Fees shall (subject to any adjustment pursuant to the immediately succeeding paragraph) be that set forth below under the caption "Eurodollar Revolving Loans and B/A Drawings", "Base Rate Revolving Loans, Canadian Base Rate Loans and Canadian Prime Rate Loans" or "Commitment Fee", as applicable, in each case opposite the Total Leverage Ratio indicated to have been achieved in any certificate delivered in accordance with the following sentence:
Base Rate
Revolving Loans,
Canadian Base
Eurodollar Rate Loans and
Eurodollar Revolving Loans Base Rate Canadian Prime
Total Leverage Ratio Term Loans and B/A Drawings Term Loans Rate Loans Commitment Fee
------------------------------------------------------------------------------------------------------------
Greater than 2.75% 3.50% 1.75% 2.50% 0.500%
3.75:1.00
Less than or equal 2.50% 3.25% 1.50% 2.25% 0.500%
to 3.75:1.00 but
greater than
3.25:1.00
Less than or equal 2.50% 3.00% 1.50% 2.00% 0.375%
to 3.25:1.00 but
greater than
2.75:1.00
Less than or equal 2.50% 2.75% 1.50% 1.75% 0.375%
to 2.75:1.00
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The Total Leverage Ratio shall be determined based on the delivery of a certificate of the US Borrower by an Authorized Officer of the US Borrower to the Administrative Agent (with a copy to be furnished by the Administrative Agent to each Lender), which certificate shall be accompanied by the financial statements required by Section 6.01(b) or (c) and shall set forth the calculation of the Total Leverage Ratio (based on such financial statements) as at the last day of the Test Period ended immediately prior to the relevant Start Date (but determined on a Pro Forma Basis to give effect to any Permitted Acquisition or Subsidiary Redesignation effected on or prior to the date of the delivery of such certificate) and the Applicable Rates that shall be thereafter applicable (until same are changed or cease to apply in accordance with the following sentences); PROVIDED that at the time of the consummation of any Permitted Acquisition or Subsidiary Redesignation or any issuance of Permitted Debt or Disqualified Preferred Stock, an Authorized Officer of the US Borrower shall deliver to the Administrative Agent a certificate setting forth the calculation of the Total Leverage Ratio on a Pro Forma Basis as of the last day of the last Calculation Period ended prior to the date on which such Permitted Acquisition or Subsidiary Redesignation is consummated or such Permitted Debt or Disqualified Preferred Stock is/are issued for which financial statements have been made available (or were required to be made available) pursuant to Section 6.01(b) or (c), as the case may be, and the date of such consummation shall be deemed to be a Start Date and the
Applicable Rates that shall be thereafter applicable (until same are changed or cease to apply in accordance with the following sentence) shall be based upon the Total Leverage Ratio as so calculated. The Applicable Rates so determined shall apply, except as set forth in the next succeeding sentence, from the relevant Start Date to the earliest of (a) the date on which the next certificate is delivered to the Administrative Agent, (b) the date on which the next Permitted Acquisition or Subsidiary Redesignation is consummated or Permitted Debt or Disqualified Preferred Stock is/are issued or (c) the date that is 45 days following the last day of the Test Period in which the previous Start Date occurred (such earliest date, the "END DATE"), at which time, if no certificate has been delivered to the Administrative Agent indicating an entitlement to new Applicable Rates (and thus commencing a new Start Date), the Applicable Rates shall be those set forth in the table above determined as if the Total Leverage Ratio were greater than 3.75:1.00 (such Applicable Rates as so determined, the "HIGHEST APPLICABLE RATES"). Notwithstanding anything to the contrary contained above in this definition, (a) the Applicable Rates shall be the Highest Applicable Rates at all times during which there shall exist any Default or Event of Default, and (b) prior to the date of delivery of the financial statements pursuant to Section 6.01(c) for the fiscal quarter ended June 30, 2002, in no event shall the Applicable Rates be LESS than those described in the first sentence of this definition.
"APPROVED FUND" shall have the meaning provided in Section 10.04(b).
"ASSET SALE" shall mean any sale, transfer or other disposition by Holdings
or any of its Subsidiaries to any Person other than Holdings or any Wholly-Owned
Subsidiary of Holdings of any asset (including, without limitation, any capital
stock or other securities of another Person, but excluding the sale by such
Person of its own capital stock) of Holdings or such Subsidiary other than (a)
sales, transfers or other dispositions of inventory made in the ordinary course
of business, (b) dispositions or transfers arising out of, or in connection
with, the events described in clauses (a) and (b) of the definition of Recovery
Event, (c) any sale or other disposition of Cash Equivalents in the ordinary
course of business, (d) any merger, consolidation or liquidation permitted by
Sections 7.02(g) and (h), (e) any transfer of assets permitted pursuant to
Section 7.02(e), (f) or (1), (f) any transaction permitted pursuant to Section
7.02(k), (g) any sale permitted pursuant to Section 7.02(n) and (h) any other
sales and dispositions that generate Net Sale Proceeds of LESS than $750,000 in
the aggregate in any fiscal year of the US Borrower.
"ASSIGNED INTERESTS" shall have the meaning provided in the Master Assignment Agreement.
"ASSIGNMENT AND ASSUMPTION AGREEMENT" shall mean the Assignment and Assumption Agreement substantially in the form of Exhibit I (appropriately completed).
"AUTHORIZED OFFICER" shall mean, with respect to (a) the delivery of Notices of Borrowing, Letter of Credit Requests and similar notices, the chief financial officer, the chief operating officer, any treasurer or other financial officer of the applicable Borrower, (b) delivery of financial information and officer's certificates pursuant to this Agreement, the chief operating officer, the chief financial officer, any treasurer or other financial officer of Holdings or the US Borrower, as the case may be, and (c) any other matter in connection with this Agreement or any other Credit Document, any officer (or a person or persons so designated by any two officers) of the applicable Credit Party, in each case to the extent reasonably acceptable to the Administrative Agent.
"AVAILABLE BASKET AMOUNT" shall mean, on any date of determination, an
amount equal to the sum of (a) $25,000,000 MINUS (b) the aggregate amount of
Investments made (including for such purpose the fair market value of any assets
contributed to any Joint Venture or Unrestricted Subsidiary (as determined in
good faith by senior management of Holdings), net of Indebtedness and, without
duplication, Capitalized Lease Obligations assigned to, and assumed by, the
respective Joint Venture or Unrestricted Subsidiary in connection therewith)
pursuant to Section 7.05(1) after the Effective Date, MINUS (c) the aggregate
amount of Indebtedness or other obligations (whether absolute, accrued,
contingent or otherwise and whether or not due) of any Joint Venture or
Unrestricted Subsidiary for which Holdings or any of its Subsidiaries (other
than the respective Joint Venture or Unrestricted Subsidiary) is liable, MINUS
(d) all payments made by Holdings or any of its Subsidiaries (other than the
respective Joint Venture or Unrestricted Subsidiary) in respect of Indebtedness
or other obligations of the respective Joint Venture or Unrestricted Subsidiary
(including, without limitation, payments in respect of obligations described in
preceding clause (c)) after the Effective Date, PLUS (e) the amount of any
increase to the Available Basket Amount made after the Effective Date in
accordance with the provisions of Section 7.05(1), PLUS (f) in the case of any
Subsidiary Redesignation, an amount equal to the lesser of (i) the aggregate
amount of all cash Investments theretofore made in the Unrestricted Subsidiary
subject to such Subsidiary Redesignation (LESS any increases in the Available
Basket Amount theretofore made in accordance with the provisions of Section
7.05(1) that were attributable to such Unrestricted Subsidiary) and (ii) the
fair market value (as determined in good faith by the US Borrower) of the assets
of such Unrestricted Subsidiary (net of all consolidated Indebtedness and other
consolidated obligations of such Unrestricted Subsidiary). In connection with
the foregoing, it is understood that the acquisition of an Acquired Person that
has ownership interests in one or more Joint Ventures pursuant to a Permitted
Acquisition effected in accordance with the relevant requirements of this
Agreement, shall not be deemed to constitute an Investment pursuant to Section
7.05(1) and the Available Basket Amount shall not be reduced as a result of the
payment of consideration to effect the Permitted Acquisition (although the
Available Basket Amount would be affected to the extent preceding clause (c) or
(d) applies with respect to the Joint Venture so acquired or to the extent
additional Investments are made in the respective Joint Venture pursuant to
Section 7.05(1)).
"AVAILABLE REVOLVING LOAN COMMITMENT" shall mean, as to any Revolving Lender at any time, an amount equal to such Revolving Lender's Revolving Loan Commitment at such time MINUS such Revolving Lender's Revolving Credit Exposure at such time (if any).
"AVAILABLE REVOLVING PERCENTAGE" of any Lender at any time shall mean a fraction (expressed as a percentage) the numerator of which is the Available Revolving Loan Commitment of such Lender at such time and the denominator of which is the total Available Revolving Loan Commitments of all Revolving Lenders at such time; PROVIDED that if the Available Revolving Percentage of any Lender is to be determined after the Total Revolving Loan Commitment has been terminated, then the Available Revolving Percentages of the Lenders shall be determined immediately prior (and without giving effect) to such termination.
"B/A" shall mean any instrument, including a bill of exchange within the meaning of the Bills of Exchange Act (Canada), and a depository bill issued in accordance with the Depository Bills and Notes Act (Canada), denominated in Canadian Dollars, drawn by the
Canadian Borrower and accepted by a Canadian Lender in accordance with the terms of this Agreement.
"B/A DRAWING" shall mean B/As accepted and purchased on the same date and as to which a single Contract Period is in effect, including any B/A Equivalent Loans accepted and purchased on the same date, and as to which a single Contract Period is in effect. For greater certainty, all provisions of this Agreement that are applicable to B/As are also applicable, mutatis mutandis, to B/A Equivalent Loans.
"B/A EQUIVALENT LOAN" is defined in Section 2.07(k).
"BANKRUPTCY CODE" shall have the meaning provided in Section 8.05.
"BASE RATE" shall mean, for any day, a rate per annum equal to the greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on such day PLUS 1/2 of 1%. Any change in the Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective from and including the effective date of such change in the Prime Rate or the Federal Funds Effective Rate, respectively.
"BASE RATE LOANS" shall mean each US Dollar Loan designated as such by the US Borrower at the time of the incurrence thereof or conversion thereto.
"BORROWERS" shall mean the US Borrower, the Canadian Borrower and the UK Borrower, collectively.
"BORROWING" shall mean and include (a) the borrowing of Swingline Loans from the Swingline Lender on a given date and (b) the borrowing of one Type of Loan pursuant to a single Tranche by the US Borrower, the Canadian Borrower or the UK Borrower, as the case may be, from all of the Lenders having Commitments with respect to such Tranche on a pro rata basis on a given date (or resulting from conversions on a given date), having in the case of Eurodollar Loans the same Interest Period.
"BUSINESS DAY" shall mean (a) for all purposes other than as covered by clause (b) or (c) below, any day except Saturday, Sunday and any day that shall be in New York City a legal holiday or a day on which banking institutions are authorized or required by law or other government action to close, (b) with respect to all notices and determinations in connection with, and payments of principal and interest on, Eurodollar Loans, any day that is a Business Day as described in clause (a) above that is also a day for trading by and between banks in the applicable currency in the interbank Eurodollar market, except any day that shall be in London a legal holiday or a day on which banking institutions are authorized or required by law or other government action to close, and (c) with respect to all notices and determinations in connection with Loans made to the Canadian Borrower or B/As and with respect to all payments of principal and interest on Loans made to the Canadian Borrower and all payments in respect of B/As, the term "BUSINESS DAY" shall also exclude any day on which banks are not open for dealings in deposits in Toronto.
"CALCULATION PERIOD" shall mean the period of four consecutive fiscal quarters of the US Borrower (taken as one accounting period) most recently ended prior to the date of the respective Permitted Acquisition or Subsidiary Redesignation, as the case may be.
"CAM" shall mean the mechanism for the allocation and exchange of interests in the Loans, B/As, participations in Letters of Credit and collections thereunder established under Section 2.21.
"CAM EXCHANGE" shall mean the exchange of the Lenders' interests provided for in Section 2.21.
"CAM EXCHANGE DATE" shall mean the first date after the Initial Borrowing Date on which there shall occur (a) any event described in Section 8.05 with respect to any Borrower or (b) an acceleration of the maturity of Loans pursuant to Article VIII.
"CAM PERCENTAGE" shall mean, as to each Lender, a fraction, expressed as a decimal, of which (a) the numerator shall be the sum of (i) the aggregate Obligations owed to such Lender, (ii) the LC Exposure, if any, of such Lender, and (iii) the Swingline Exposure, if any, of such Lender, in each case immediately prior to the CAM Exchange Date, and (b) the denominator shall be the sum of (i) the aggregate Obligations owed to all the Lenders and (ii) the aggregate LC Exposure of all the Lenders, in each case immediately prior to the CAM Exchange Date; PROVIDED that, for purposes of clause (a) above, the Obligations owed to the Swingline Lender will be deemed not to include any Swingline Loans except to the extent provided in clause (a)(iii) above.
"CANADIAN AGENT" shall mean J.P. Morgan Bank Canada, in its capacity as Canadian agent for the Lenders hereunder, or any successor thereto appointed in accordance with Article IX.
"CANADIAN BASE RATE" shall mean a fluctuating rate of interest per annum which is equal at all times to the greater of: (a) the reference rate of interest (however designated) announced from time to time by the Canadian Agent as being its reference rate for determining interest chargeable by it on U.S. Dollar-denominated commercial loans made in Canada; and (b) 0.50% above the Federal Funds Effective Rate from time to time in effect.
"CANADIAN BORROWER" shall mean Sifto Canada Inc., a corporation organized under the laws of the province of Ontario, Canada.
"CANADIAN DOLLAR EQUIVALENT" shall mean, at any time for the determination thereof, the amount of Canadian Dollars that could be purchased with the amount of US Dollars (or any other foreign currency, as applicable) involved in such computation at the spot exchange rate therefor as quoted by the Administrative Agent as of 11:00 a.m. (local time) on the date two Business Days prior to the date of any determination thereof for purchase on such date.
"CANADIAN DOLLARS" or "C$" shall mean the lawful money of Canada.
"CANADIAN INTERCOMPANY LOAN" shall have the meaning provided in Section 5.05(a).
"CANADIAN INTERCOMPANY NOTE" shall have the meaning provided in Section 7.05(f).
"CANADIAN LENDER" shall mean a Lender with a Canadian Revolving Loan Sub-Commitment or with any outstanding Canadian Revolving Loans or B/A Drawings.
"CANADIAN LENDING OFFICE" shall mean, as to any Canadian Lender, the applicable branch or office of such Canadian Lender designated by such Canadian Lender to make Loans to
the Canadian Borrower and to accept and purchase or arrange for the purchase of
B/As of the Canadian Borrower; PROVIDED that any such branch or office shall be
(a) of a bank named in Schedule I or Schedule II to the Bank Act (Canada) or (b)
a branch or office either (i) of a financial institution or other entity that is
not a "NON-RESIDENT OF CANADA" (as such term is defined in the Canadian Tax Act)
or (ii) of a financial institution that is named on Schedule III to the Bank Act
(Canada) and through which an "AUTHORIZED FOREIGN BANK" (as such term is defined
in the Canadian Tax Act) carries on a Canadian banking business.
"CANADIAN PERCENTAGE" shall mean, with respect to any Canadian Lender, the percentage of the total Canadian Revolving Loan Sub-Commitments represented by such Lender's Canadian Revolving Loan Sub-Commitment. If a calculation involving the Canadian Percentage is required to be made after the Canadian Revolving Loan Sub-Commitments have terminated or expired, the Canadian Percentages shall be determined based upon the Canadian Revolving Loan Sub-Commitments most recently in effect, giving effect to any assignments.
"CANADIAN PERMITTED ENCUMBRANCES" shall mean Permitted Encumbrances and the Permitted Liens described in Sections 7.03(a), (b), (c), (f), (g) and (h).
"CANADIAN PRIME RATE" shall mean, for any day, the rate of interest per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greater of (a) the interest rate per annum publicly announced from time to time by the Canadian Agent as its reference rate in effect on such day at its principal office in Toronto for determining interest rates applicable to commercial loans denominated in Canadian Dollars in Canada (each change in such reference rate being effective from and including the date such change is publicly announced as being effective) and (b) the interest rate per annum equal to the sum of (i) the CDOR Rate on such day (or, if such rate is not so reported on the Reuters Screen CDOR Page, the average of the rate quotes for bankers' acceptances denominated in Canadian Dollars with a term of 30 days received by the Canadian Agent at approximately 10:00 a.m., Toronto time, on such day (or, if such day is not a Business Day, on the next preceding Business Day) from one or more banks of recognized standing selected by it) and (ii) 1.00% per annum.
"CANADIAN REVOLVING BORROWING" shall mean a Borrowing comprised of Canadian Revolving Loans.
"CANADIAN REVOLVING CREDIT EXPOSURE" shall mean, at any time, the sum of
(a) the US Dollar Equivalent of the aggregate principal amount of the Canadian
Revolving Loans denominated in Canadian Dollars outstanding at such time, (b)
the aggregate principal amount of the Canadian Revolving Loans denominated in US
Dollars outstanding at such time and (c) the US Dollar Equivalent of the
aggregate face amount of the B/As accepted by the Canadian Lenders and
outstanding at such time. The Canadian Revolving Credit Exposure of any Lender
at any time shall be such Lender's Canadian Percentage of the total Canadian
Revolving Credit Exposure at such time.
"CANADIAN REVOLVING LOAN" shall mean a Loan made by a Canadian Lender pursuant to Section 2.01(c). Each Canadian Revolving Loan (a) denominated in Canadian Dollars shall be a Canadian Prime Rate Loan and (b) denominated in US Dollars shall be a Canadian Base Rate Loan or a Eurodollar Loan.
"CANADIAN REVOLVING LOAN SUB-COMMITMENT" shall mean, with respect to each Lender, the commitment of such Lender to make Canadian Revolving Loans hereunder during
the Revolving Availability Period and to accept and purchase or arrange for the purchase of B/As pursuant to Section 2.07, expressed as an amount expressed in US Dollars representing the maximum potential aggregate amount of such Lender's Canadian Revolving Credit Exposure hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.09 or 2.20(b) and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 10.04 or 10.11(b); PROVIDED that the Canadian Percentage of each Lender shall at all times equal the UK Percentage of such Lender. The initial amount of each Lender's Canadian Revolving Loan Sub-Commitment is set forth opposite such Lender's name in Schedule I directly below the column entitled "CANADIAN REVOLVING LOAN SUB-COMMITMENT," or in the Assignment and Assumption Agreement pursuant to which such Lender shall have assumed its Canadian Revolving Loan Sub-Commitment, as applicable. The initial aggregate amount of the Lenders' Canadian Revolving Loan Sub-Commitments is $30,000,000.
"CANADIAN TAX ACT" shall mean the Income Tax Act (Canada) or any successor law purported to cover the same subject matter, as amended from time to time.
"CAPITAL EXPENDITURES" shall mean, with respect to any Person, for any period, all expenditures by such Person that should be capitalized in accordance with GAAP during such period, including all such expenditures with respect to fixed or capital assets (including, without limitation, expenditures for maintenance and repairs that should be capitalized in accordance with GAAP) and, without duplication, the amount of all Capitalized Lease Obligations incurred by such Person during such period.
"CAPITAL LEASE," as applied to any Person, shall mean any lease of any property (whether real, personal or mixed) by that Person as lessee that, in conformity with GAAP, is accounted for as a capital lease on the balance sheet of that Person.
"CAPITALIZED LEASE OBLIGATIONS" shall mean all obligations under Capital Leases of the US Borrower or any of its Subsidiaries, in each case taken at the amount thereof accounted for as liabilities in accordance with GAAP.
"CASH EQUIVALENTS" shall mean, as to any Person, (a) US Dollars and, in the
case of any Foreign Subsidiaries of the US Borrower, Euros and such local
currencies held by them from time to time in the ordinary course of business,
(b) securities issued or directly and fully guaranteed or insured by the United
States, Canada and Great Britain or any agency or instrumentality thereof
(PROVIDED that the full faith and credit of the respective country is pledged in
support thereof) having maturities of not more than six months from the date of
acquisition, (c) time deposits, certificates of deposit, eurodollar time
deposits and bankers' acceptances of any Lender or any commercial bank having,
or that is the principal banking subsidiary of a bank holding company organized
under the laws of the United States, any State thereof, the District of Columbia
or any foreign jurisdiction having capital, surplus and undivided profits
aggregating in excess of $250,000,000 and having a long-term unsecured debt
rating of at least "A" or the equivalent thereof from S&P or "A2" or the
equivalent thereof from Moody's, with maturities of not more than six months
from the date of acquisition by such Person, (d) repurchase agreements with a
term of not more than 30 days, involving securities of the types described in
preceding clause (b), and entered into with commercial banks meeting the
requirements of preceding clause (c), (e) commercial paper issued by any Person
incorporated in the United States rated at least A-1 or the equivalent thereof
by S&P or at least P-1 or the equivalent thereof by Moody's and in each case
maturing not more than six months after the date of acquisition by such Person,
(f)
investments in money market funds substantially all of whose assets are comprised of securities of the types described in clauses (b) through (e) above and (g) overnight deposits and demand deposit accounts (in the respective local currencies) maintained in the ordinary course of business.
"CDOR RATE" shall mean, on any date, an interest rate per annum equal to the average discount rate rounded upward to the nearest 1/100/th/ of 1% applicable to bankers' acceptances denominated in Canadian Dollars with a term of 30 days (for purposes of the definition of "CANADIAN PRIME RATE") or with a term equal to the Contract Period of the relevant B/As (for purposes of the definition of "DISCOUNT RATE") appearing on the Reuters Screen CDOR Page (as defined in the International Swaps and Derivative Association, Inc. 1991 definitions, as modified and amended from time to time), or on any successor or substitute page of such Screen, or any successor to or substitute for such Screen, providing rate quotations comparable to those currently provided on such page of such Screen, as determined by the Canadian Agent from time to time, at approximately 10:00 a.m., Toronto time, on such date (or, if such date is not a Business Day, on the next preceding Business Day).
"CHANGE IN LAW" shall mean (a) the adoption of any law, rule or regulation after the date of this Agreement, (b) any change in any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the date of this Agreement or (c) compliance by any Lender or the Letter of Credit Issuer (or, for purposes of Section 2.16(b), by any lending office of such Lender or by such Lender's or the Letter of Credit Issuer's holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement.
"CHANGE OF CONTROL EVENT" shall mean, (a) at any time prior to the
consummation of a Qualified IPO, (i) Apollo Group shall cease to own on a fully
diluted basis in the aggregate at least 35% of the economic and voting interest
in Holdings's capital stock (for such purpose excluding the Initial Preferred
Stock, any other Qualified Preferred Stock and any Disqualified Preferred Stock,
in each case to the extent same is not Voting Stock) or (ii) Apollo Group,
together with the Management Participants and other investors (other than the
Seller and its Affiliates, except to the extent Apollo Group shall have the
power to vote (or cause to be voted at its discretion), pursuant to contract,
irrevocable proxy or otherwise, the Voting Stock in Holdings held by the Seller
or any of its Affiliates) that own shares of Holdings Common Stock on the
Initial Borrowing Date (and/or other investors (other than the Seller and its
Affiliates, except to the extent Apollo Group shall have the power to vote (or
cause to be voted at its discretion), pursuant to contract, irrevocable proxy or
otherwise, the Voting Stock in Holdings held by the Seller or any of its
Affiliates) that will acquire such shares within 90 days after the Initial
Borrowing Date and have been identified to the Administrative Agent prior to the
Initial Borrowing Date), shall cease to own on a fully diluted basis in the
aggregate at least a majority of the outstanding Voting Stock of Holdings or
(iii) any Person or "GROUP" (within the meaning of Rules 13d-3 and 13d-5 under
the Securities Exchange Act of 1934, as in effect on the Effective Date), other
than the Permitted Holders, shall (A) have acquired, directly or indirectly,
beneficial ownership on a fully diluted basis of a percentage of the voting
and/or economic interest in Holdings's capital stock that exceeds the percentage
of the voting and/or economic interest in Holdings's capital stock then
beneficially owned, directly or indirectly, on a fully diluted basis by Apollo
Group or (B) obtained the power (whether or not exercised) to elect a majority
of Holdings's directors or (iv) the Board of Directors of Holdings shall cease
to consist
of a majority of Continuing Directors or (v) a "CHANGE OF CONTROL" or similar
event shall occur as provided in any Senior Subordinated Note Document, any
Additional Senior Subordinated Note Document, any Discount Notes, the Seller
Note, Permitted Debt, Disqualified Preferred Stock, the Initial Preferred Stock
or other Qualified Preferred Stock or the documentation governing the same, to
the extent the outstanding principal amount or liquidation preference, as the
case may be, of such Permitted Debt, Disqualified Preferred Stock or Qualified
Preferred Stock exceeds $10,000,000 or (b) at any time after a Qualified IPO,
(i) any Person or "GROUP" (within the meaning of Rules 13d-3 and 13d-5 under the
Securities Exchange Act of 1934, as in effect on the Effective Date), other than
the Permitted Holders, shall have acquired beneficial ownership of 25% or more
on a fully diluted basis of the voting and/or economic interest in Holdings's
capital stock and Apollo Group shall own LESS than such Person or "GROUP" on a
fully diluted basis of the economic and voting interest in Holdings's capital
stock or (ii) the Board of Directors of Holdings shall cease to consist of a
majority of Continuing Directors or (iii) a "CHANGE OF CONTROL" or similar event
shall occur as provided in any Senior Subordinated Note Document, any Additional
Senior Subordinated Note Document, any Discount Notes, the Seller Note or any
Permitted Debt, Disqualified Preferred Stock, the Initial Preferred Stock or
other Qualified Preferred Stock or the documentation governing the same to the
extent the outstanding principal amount or liquidation preference, as the case
may be, of such Permitted Debt, Disqualified Preferred Stock or Qualified
Preferred Stock exceeds $10,000,000 or (c) at any time (i) Holdings shall cease
to own on a fully diluted basis 100% of the economic and voting interest in the
capital stock of the US Borrower, (ii) the US Borrower shall cease to own on a
fully diluted basis 100% of the economic and voting interest in the Canadian
Borrower (either directly or through one or more Wholly-Owned Subsidiaries of
the US Borrower) or (iii) the US Borrower shall cease to own on a fully diluted
basis 100% of the economic and voting interest in the UK Borrower (either
directly or through one or more Wholly-Owned Subsidiaries of the US Borrower).
"CHASE" shall mean JPMorgan Chase Bank and any successor thereto.
"CODE" shall mean the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated thereunder. Section references to the Code are to the Code, as in effect at the date of this Agreement and any subsequent provisions of the Code, amendatory thereof, supplemental thereto or substituted therefor.
"CO-DOCUMENTATION AGENTS" shall mean Credit Suisse First Boston and Credit Lyonnais.
"COLLATERAL" shall mean all property (whether real or personal, movable or immovable) with respect to which any security interests have been granted (or purported to be granted) pursuant to any Security Document, including, without limitation, all Pledged Collateral, all Security Agreement Collateral, all Mortgaged Property and all cash and Cash Equivalents delivered as collateral pursuant to any Security Document.
"COLLATERAL AGENT" shall have the meaning provided in the respective Security Documents.
"COMMITMENT" shall mean any of the commitments of any Lender, I.E., whether the Term Loan Commitment, Canadian Revolving Loan Sub-Commitment, UK Revolving Loan Sub-Commitment or the Revolving Loan Commitment.
"COMMITMENT FEE" shall have the meaning provided in Section 2.13(a).
"COMMODITY AGREEMENT" shall mean any commodity futures contract, commodity option or other similar agreement or arrangement entered into by the US Borrower or any Subsidiary of the US Borrower designed to protect the US Borrower or any of its Subsidiaries against fluctuations in the price of the commodities at the time used in the ordinary course of business of the US Borrower or any of its Subsidiaries.
"COMPANY" shall mean any corporation, limited liability company, partnership or other business entity (or the adjectival form thereof, where appropriate).
"CONSOLIDATED CURRENT ASSETS" shall mean, at any time, the current assets of the US Borrower and its Subsidiaries at such time determined on a consolidated basis.
"CONSOLIDATED CURRENT LIABILITIES" shall mean, at any time, the current liabilities of the US Borrower and its Subsidiaries determined on a consolidated basis, but excluding the current portion of, and accrued but unpaid interest on, any Indebtedness under this Agreement and any other long-term Indebtedness that would otherwise be included therein.
"CONSOLIDATED DEBT" shall mean, at any time, the sum of (without duplication) (a) all Indebtedness (other than take-or-pay obligations) of the US Borrower and its Subsidiaries as would be required to be reflected on the liability side of a balance sheet of such Person in accordance with GAAP as determined on a consolidated basis (excluding all Indebtedness of the US Borrower and its Subsidiaries of the type described in clause (h) of the definition of Indebtedness), (b) unreimbursed drawings on all letters of credit issued for the account of the US Borrower or any of its Subsidiaries and (c) all Contingent Obligations of the US Borrower and its Subsidiaries in respect of Indebtedness of other Persons (I.E., Persons other than the US Borrower or any of its Subsidiaries) of the type referred to in preceding clauses (a) and (b) of this definition, LESS all cash and Cash Equivalents of the US Borrower and its Subsidiaries at such time; PROVIDED that, for purposes of this definition, (i) any Disqualified Preferred Stock of Holdings shall be treated as Indebtedness of the US Borrower, with an amount equal to the greater of the liquidation preference or the maximum mandatory fixed repurchase price of any such outstanding Disqualified Preferred Stock deemed to be a component of Consolidated Debt, (ii) the amount available to be drawn under letters of credit issued for the account of the US Borrower or any of its Subsidiaries (other than unreimbursed drawings) shall be excluded in making any determination of "CONSOLIDATED DEBT" and (iii) with respect to any determination of Consolidated Debt as of any time during the fourth calendar quarter of any year, the amount of (A) Revolving Loans and Swingline Loans outstanding and (B) cash and Cash Equivalents held by the US Borrower and its Subsidiaries as of any such time shall be deemed to be equal to the average of the amount of Revolving Loans and Swingline Loans outstanding, and cash and Cash Equivalents held by the US Borrower and its Subsidiaries, at the end of each fiscal quarter of the US Borrower included in the applicable Test Period most recently ended prior to such date.
"CONSOLIDATED EBIT" shall mean, for any period, the Consolidated Net Income of the US Borrower and its Subsidiaries for such period, determined on a consolidated basis, before Consolidated Interest Expense (to the extent deducted in arriving at Consolidated Net Income) and provision for taxes based on income for such period, in each case that were included in arriving at Consolidated Net Income for such period.
"CONSOLIDATED EBITDA" shall mean, for any period, Consolidated EBIT for
such period, adjusted by (a) adding thereto (in each case to the extent deducted
in determining Consolidated Net Income for such period and not already added
back in determining Consolidated EBIT) the amount of (without duplication) (i)
all amortization and depreciation and other non-cash items and (ii) any
management fees and consulting fees paid pursuant to, and in accordance with the
requirements of, clauses (c) and (g) of Section 7.07 during such period, in each
case that were deducted in arriving at Consolidated EBIT for such period, and
(b) subtracting therefrom the amount of all cash payments made in such period to
the extent that same relate to a non-cash item incurred in a previous period
that was added back to Consolidated EBITDA in such previous period pursuant to
clause (a)(i) above in this definition. Notwithstanding anything to the contrary
contained above, to the extent Consolidated EBITDA is to be determined for any
Test Period that ends prior to December 31, 2002, Consolidated EBITDA shall be
calculated in accordance with the definition of Test Period contained herein.
"CONSOLIDATED INTEREST COVERAGE RATIO" shall mean, for any period, the ratio of Consolidated EBITDA to Consolidated Interest Expense for such period. All calculations of the Consolidated Interest Coverage Ratio shall be made on a Pro Forma Basis, with determinations of Consolidated Interest Coverage Ratio to give effect to all adjustments (including, without limitation, those specified in clauses (iv) and (v)) contained in the definition of "PRO FORMA BASIS" contained herein.
"CONSOLIDATED INTEREST EXPENSE" shall mean, for any period, the total
consolidated interest expense of the US Borrower and its Subsidiaries for such
period (calculated without regard to any limitations on the payment thereof)
PLUS, without duplication, (a) that portion of Capitalized Lease Obligations of
the US Borrower and its Subsidiaries representing the interest factor for such
period, and capitalized interest expense, PLUS (b) the product of (i) the amount
of all cash Dividend requirements (whether or not declared or paid) on
Disqualified Preferred Stock of Holdings paid, accrued or scheduled to paid or
accrued during such period multiplied by (ii) a fraction, the numerator of which
is one and the denominator of which is one MINUS the then-current effective
consolidated Federal, state, local and foreign income tax rate (expressed as a
decimal number between one and zero) of Holdings as would be required to be
reflected in the audited consolidated financial statements of Holdings for its
most recently completed fiscal year (whether or not such financial statements
are actually prepared), which amounts described in preceding clause (b) shall be
treated as interest expense of the US Borrower and its Subsidiaries for purposes
of this definition regardless of the treatment of such amounts under GAAP, PLUS
(c) the aggregate amount of all cash Dividends paid by the US Borrower to
Holdings for such period pursuant to Section 7.06(b) to the extent such
Dividends were used to make interest payments on any outstanding Holdings
Shareholder Subordinated Notes, in each case payable or paid in cash in such
period and net of the total consolidated cash interest income of the US Borrower
and its Subsidiaries for such period, but excluding the amortization of (i) any
deferred financing costs and (ii) any costs in respect of any Interest Rate
Protection Agreement. Notwithstanding anything to the contrary contained above,
to the extent Consolidated Interest Expense is to be determined for any Test
Period that ends prior to the first anniversary of the Initial Borrowing Date,
Consolidated Interest Expense for all portions of such period occurring prior to
the Initial Borrowing Date shall be calculated in accordance with the definition
of Test Period contained herein.
"CONSOLIDATED NET INCOME" shall mean, for any period, the remainder of (a) the net after-tax income of the US Borrower and its Subsidiaries determined on a consolidated basis, without giving effect to (without duplication) (i) (A) any after-tax nonrecurring gains or losses or after-tax items classified as extraordinary gains or losses and (B) any other nonrecurring cash and non-cash expenses incurred or payments made by the US Borrower and its Subsidiaries in connection with the Transaction, (ii) any transition expenses (including, without limitation, severance expenses) incurred as a direct result of the transition of the US Borrower to an independent operating company in connection with the Transaction (provided that with respect to any nonrecurring transition expenses, the US Borrower shall have delivered to the Administrative Agent a certificate specifying and quantifying such expenses and stating that same is a transition expense), (iii) the establishment of accruals and reserves within twelve months of the Initial Borrowing Date that are required to be so established in accordance with GAAP with respect to the condition of the business of the US Borrower and its Subsidiaries in existence on the Initial Borrowing Date, (iv) gains and losses from the sale or disposition of assets (other than sales or dispositions of inventory, equipment, raw materials and supplies in the ordinary course of business) by the US Borrower and its Subsidiaries and (v) expenses of the US Borrower and its Subsidiaries incurred to replace or repair damage to property of the US Borrower and its Subsidiaries that is the subject of any non-recurring event referred to in the definition of the term Recovery Event to the extent such expenses exceed $1,000,000 during any period of four consecutive fiscal quarters of the US Borrower and to the extent insurance proceeds are not received in respect thereof MINUS (b) the aggregate amount of all Dividends paid by the US Borrower to Holdings for such period pursuant to Section 7.06(b) (to the extent attributable to interest payments on any outstanding Holdings Shareholder Subordinated Notes), (f) and (g) (in each case to the extent that such amounts were not already deducted in determining the net after-tax income of the US Borrower and its Subsidiaries for such period); PROVIDED that the following items shall be excluded in computing Consolidated Net Income (without duplication): (i) the net income or net losses of any Person in which any other Person or Persons (other than the US Borrower and its Wholly-Owned Subsidiaries) has an equity interest or interests, except to the extent of the amount of dividends or other distributions actually paid to the US Borrower or such Wholly-Owned Subsidiaries by such Person during such period, (ii) except for determinations expressly required to be made on a Pro Forma Basis, the net income (or loss) of any Person accrued prior to the date it becomes a Subsidiary or all or substantially all of the property or assets of such Person are acquired by a Subsidiary and (iii) the net income of any Subsidiary to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary of such net income is not at the time permitted by the operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to such Subsidiary.
"CONSOLIDATED SENIOR DEBT" shall mean, at any time, (a) Consolidated Debt LESS (b) the sum of (i) the aggregate outstanding principal amount of the Senior Subordinated Notes at such time, (ii) the aggregate principal amount of all other subordinated debt incurred pursuant to Section 7.04(f) or (o) and outstanding at such time and otherwise included in Consolidated Debt and (iii) the aggregate liquidation preference of all Disqualified Preferred Stock issued pursuant to Section 7.13(c) and otherwise included in Consolidated Debt.
"CONTINGENT OBLIGATIONS" shall mean, as to any Person, any obligation of such Person guaranteeing or intended to guaranty any Indebtedness, leases, dividends or other
obligations ("PRIMARY OBLIGATIONS") of any other Person (the "PRIMARY OBLIGOR") in any manner, whether directly or indirectly, including, without limitation, any obligation of such Person, whether or not contingent, (a) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (b) to advance or supply funds (i) for the purchase or payment of any such primary obligation or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (c) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (d) otherwise to assure or hold harmless the owner of such primary obligation against loss in respect thereof; PROVIDED, HOWEVER, that the term Contingent Obligation shall not include endorsements of instruments for deposit or collection or standard contractual indemnities entered into, in each case in the ordinary course of business. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder) as determined by such Person in good faith.
"CONTINUING DIRECTORS" shall mean the directors of Holdings on the Initial Borrowing Date and each other director if such director's nomination for the election to the Board of Directors of Holdings is recommended by a majority of the then Continuing Directors.
"CONTRACT PERIOD" shall mean, with respect to any B/A, the period commencing on the date such B/A is issued and accepted and ending on the date 30, 60, 90, 180, 270 or 360 days thereafter, as the Canadian Borrower may elect (in each case subject to availability); PROVIDED that if such Contract Period would end on a day other than a Business Day, such Contract Period shall be extended to the next succeeding Business Day.
"CREDIT DOCUMENTS" shall mean this Agreement, the Notes, each Guaranty and each Security Document.
"CREDIT EVENT" shall mean the making of a Loan or the issuance of a Letter of Credit or a B/A Drawing.
"CREDIT PARTY" shall mean, collectively, each US Credit Party and each Foreign Credit Party.
"DECREASING TERM LENDER" shall have the meaning provided in the Master Assignment Agreement.
"DEFAULT" shall mean any event, act or condition that with notice or lapse of time, or both, would constitute an Event of Default.
"DEFAULTING LENDER" shall mean any Lender with respect to which a Lender Default is in effect.
"DEPARTING LENDER" shall have the meaning provided in the Master Assignment Agreement.
"DISCOUNT NOTES" shall mean any 13 3/4% unsecured, subordinated Discount Notes, issued in exchange for shares of Initial Preferred Stock pursuant to the terms of
such Initial Preferred Stock (which Discount Notes shall not be guaranteed or supported in any way by any subsidiary of Holdings).
"DISCOUNT PROCEEDS" shall mean, with respect to any B/A, an amount in
Canadian Dollars (rounded upward, if necessary, to the nearest C$0.01)
calculated by multiplying (a) the face amount of such B/A by (b) the quotient
obtained by dividing (i) one by (ii) the sum of (A) one and (B) the product of
(1) the Discount Rate (expressed as a decimal) applicable to such B/A and (2) a
fraction of which the numerator is the Contract Period applicable to such B/A
and the denominator is 365, with such quotient being rounded upward or downward
to the fifth decimal place and .000005 being rounded upward.
"DISCOUNT RATE" shall mean, with respect to a B/A being accepted and purchased on any day, (a) for a Lender that is a Schedule I Lender, (i) the CDOR Rate applicable to such B/A or, (ii) if the discount rate for a particular Contract Period is not quoted on the Reuters Screen CDOR Page, the arithmetic average (as determined by the Canadian Agent) of the percentage discount rates (expressed as a decimal and rounded upward, if necessary, to the nearest 1/100 of 1%) quoted to the Canadian Agent by the Schedule I Reference Lenders as the percentage discount rate at which each such Schedule I Reference Lender would, in accordance with its normal practices, at approximately 10:00 a.m., Toronto time, on such day, be prepared to purchase bankers' acceptances accepted by such Schedule I Reference Lender having a face amount and term comparable to the face amount and Contract Period of such B/A, and (b) for a Lender that is a Schedule II Lender or a Schedule III Lender, the lesser of (i) the CDOR Rate applicable to such B/A PLUS 0.10% per annum and (ii) the arithmetic average (as determined by the Canadian Agent) of the percentage discount rates (expressed as a decimal and rounded upward, if necessary, to the nearest 1/100 of 1%) quoted to the Canadian Agent by the Schedule II Reference Lenders as the percentage discount rate at which each such Schedule II Reference Lender would, in accordance with its normal practices, at approximately 10:00 a.m., Toronto time, on such day, be prepared to purchase bankers' acceptances accepted by such bank having a face amount and term comparable to the face amount and Contract Period of such B/A.
"DISQUALIFIED PREFERRED STOCK" shall mean any Preferred Stock of Holdings other than Qualified Preferred Stock.
"DIVIDEND" shall have the meaning provided in the preamble to Section 7.06.
"DOCUMENTS" shall mean and include (a) the Credit Documents, (b) the Merger Documents, (c) the Senior Subordinated Note Documents, (d) the Initial Preferred Stock Documents, (e) the Seller Note, (f) the Canadian Intercompany Note, (g) the UK Intercompany Note and (h) all other documents, agreements and instruments executed in connection with the Transaction.
"DOMESTIC SUBSIDIARY" shall mean each Subsidiary of Holdings (other than the US Borrower) incorporated or organized in the United States or any State thereof or the District of Columbia.
"EFFECTIVE DATE" shall mean November 28, 2001.
"ELIGIBLE TRANSFEREE" shall mean and include a commercial bank, insurance company, mutual fund, financial institution, a finance company, a "QUALIFIED INSTITUTIONAL BUYER" (as defined in Rule 144A of the Securities Act), any fund that invests in bank loans or any other
"ACCREDITED INVESTOR" (as defined in Regulation D of the Securities Act) (other than an individual).
"EMU LEGISLATION" shall mean the legislative measures of the European Union for the introduction of, changeover to or operation of a single or unified European currency.
"END DATE" shall have the meaning provided in the definition of "APPLICABLE RATE."
"ENVIRONMENTAL CLAIMS" shall mean any and all administrative, regulatory or judicial actions, suits, demands, demand letters, orders, directives, claims, liens, notices of non-compliance or violation, investigations or proceedings (hereafter, "CLAIMS"), including, without limitation, any and all Claims by Governmental Authorities or any other third parties for enforcement, cleanup, removal, response, or any other remedial actions or seeking, fines, penalties, contribution, indemnification, cost recovery, natural resource damages compensation or any other damages or injunctive relief, resulting in any way from or relating to (a) the non-compliance (or alleged non-compliance) with any Environmental Law or any permit issued under any Environmental Law, (b) the presence, use, handling, transportation, storage, Release or threatened Release of or exposure to any Hazardous Materials or (c) the alleged injury or threat of injury to health, safety or the environment.
"ENVIRONMENTAL LAW" shall mean any federal, state, provincial, foreign or local policy, statute, law, rule, regulation, ordinance, code or rule of common law now or hereafter in effect and in each case as amended, and any judicial or administrative interpretation thereof, including any judicial or administrative order, consent, decree or judgment (for purposes of this definition (collectively, "LAWS")), relating to the environment, Hazardous Materials, the preservation or reclamation of natural resources or health and safety to the extent such health and safety issues arise under the Occupational Safety and Health Act of 1970, as amended, or any such similar Laws.
"EQUITY CONTRIBUTION" shall have the meaning provided in Section 3.08(a).
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder. Section references to ERISA are to ERISA, as in effect at the date of this Agreement and any subsequent provisions of ERISA, amendatory thereof, supplemental thereto or substituted therefor.
"ERISA AFFILIATE" shall mean each person (as defined in Section 3(9) of ERISA) that together with Holdings or a Subsidiary of Holdings would be deemed to be a "SINGLE EMPLOYER" within the meaning of Section 414(b), (c), (m) or (o) of the Code.
"EURO" shall mean the single currency of the European Union as constituted by the Treaty on European Union and as referred to in the EMU Legislation.
"EURODOLLAR RATE" shall mean (a) relative to any Interest Period for a Borrowing of a Eurodollar Loan, (i) the interest rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) for deposits in US Dollars in respect of US Dollar Loans and for deposits in Sterling in respect of Sterling Loans for a period equal to the relevant Interest Period that appears on Telerate Page 3750 (or any successor page) at approximately 11:00 a.m. (London time) on the date that is two Business Days prior to the commencement of such Interest Period for a term
comparable to such Interest Period, (ii) to the extent that an interest rate is not ascertainable pursuant to preceding clause (i), the interest rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) for deposits in US Dollars for a period equal to the relevant Interest Period that appears on the Reuters Screen LIBO Page (or any successor page) (or, if more than one such rate appears on such page, the arithmetic mean of all such rates) at approximately 11:00 a.m. (London time) on the date that is two Business Days prior to the commencement of such Interest Period for a term comparable to such Interest Period or (iii) to the extent that an interest rate is not ascertainable pursuant to preceding clause (i) or (ii), the arithmetic average (rounded upwards, if necessary, to the nearest 1/100 of 1%) of the offered quotation to first-class banks in the London interbank Eurodollar market by the Administrative Agent for deposits in US Dollars in respect of US Dollar Loans and for deposits in Sterling in respect of Sterling Loans of amounts in immediately available funds comparable to the outstanding principal amount of the Eurodollar Loan of the Administrative Agent with terms comparable to the Interest Period applicable to such Eurodollar Loan commencing two Business Days thereafter as of 11:00 a.m. (London time) on the date that is two Business Days prior to the commencement of such Interest Period, divided (in any case) by (b) a percentage equal to 100% MINUS the then stated maximum rate of all reserve requirements (including, without limitation, any marginal, emergency, supplemental, special or other reserves required by applicable law) applicable to any member bank of the Federal Reserve System in respect of Eurocurrency funding or liabilities as defined in Regulation D (or any successor category of liabilities under Regulation D) or in effect in Canada or the United Kingdom and to which Canadian Lenders or UK Lenders, as applicable, are subject for any category of deposits or liabilities customarily used to fund loans in the applicable currency or by reference to which interest rates applicable to loans in the applicable currency are determined in the applicable jurisdiction.
"EVENT OF DEFAULT" shall have the meaning provided in Article VIII.
"EXCESS CASH FLOW" shall mean, for any period, the remainder of (a) the sum
of (i) Adjusted Consolidated Net Income for such period, and (ii) the decrease,
if any, in Adjusted Consolidated Working Capital from the first day to the last
day of such period, MINUS (b) the sum of (i) the amount of Capital Expenditures
made by the US Borrower and its Subsidiaries on a consolidated basis during such
period pursuant to and in accordance with Sections 7.11(a) and (b), except to
the extent financed with the proceeds of Indebtedness (other than the proceeds
of Revolving Loans or Swingline Loans) or pursuant to Capitalized Lease
Obligations, (ii) the aggregate amount of permanent principal payments of
Indebtedness for borrowed money of the US Borrower and its Subsidiaries and the
permanent repayment of the principal component of Capitalized Lease Obligations
of the US Borrower and its Subsidiaries (excluding (A) payments with proceeds of
asset sales, (B) payments with the proceeds of Indebtedness or equity and (C)
payments of Loans, B/As or other Obligations; PROVIDED that repayment of Loans
shall be deducted in determining Excess Cash Flow if such payments were required
as a result of a Scheduled Repayment under Section 2.12(b)) during such period,
(iii) the increase, if any, in Adjusted Consolidated Working Capital from the
first day to the last day of such period and (iv) without duplication of amounts
deducted in the preceding clauses (b)(i), (ii) and (iii), the amount of cash
expended in respect of Permitted Acquisitions during such period, except to the
extent financed with Indebtedness, equity or Net Sale Proceeds of Asset Sales
(in the case of such Net Sales Proceeds, to the extent the amount of prepayments
required pursuant to Section 2.12(c) is reduced as a result of such Permitted
Acquisitions having been made).
"EXCESS CASH FLOW PAYMENT DATE" shall mean the date occurring 90 days after the last day of a fiscal year of the US Borrower (beginning with the US Borrower's fiscal year ending on December 31, 2002).
"EXCESS CASH FLOW PAYMENT PERIOD" shall mean, (a) with respect to the repayment required on the first Excess Cash Flow Payment Date, the period from the Initial Borrowing Date to December 31, 2002, and (b) with respect to the repayment required on each successive Excess Cash Flow Payment Date, the immediately preceding fiscal year of the US Borrower.
"EXCHANGE SENIOR SUBORDINATED NOTES" shall mean Senior Subordinated Notes that are substantially identical securities to the Senior Subordinated Notes issued on or prior to the Initial Borrowing Date, which Exchange Senior Subordinated Notes shall be issued pursuant to a registered exchange offer or private exchange offer for the Senior Subordinated Notes and pursuant to the Senior Subordinated Notes Indenture. In no event will the issuance of any Exchange Senior Subordinated Notes increase the aggregate principal amount of Senior Subordinated Notes then outstanding or otherwise result in an increase in an interest rate applicable to the Senior Subordinated Notes.
"EXCLUDED ASSETS" shall have the meaning provided in the Merger Agreement.
"EXCLUDED SUBSIDIARIES" shall have the meaning provided in the Merger Agreement.
"EXCLUDED TAXES" shall mean, with respect to any Agent, any Lender, the Letter of Credit Issuer or any other recipient of any payment to be made by or on account of any obligation of any Borrower hereunder, (a) income or franchise taxes imposed on (or measured by) its net income (including alternative minimum tax) by the United States of America, or by the jurisdiction under the laws of which such recipient is organized or in which its principal office is located or in which it is engaged in business or, in the case of any Lender, in which its applicable lending office is located, (b) any branch profits taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction described in clause (a) above and (c) in the case of a Non-US Lender or a Foreign Lender (other than an assignee pursuant to a request by a Borrower under Section 2.20(b) or 10.11(b)), any withholding tax that (i) is in effect and would apply to amounts payable to such Non-US Lender or Foreign Lender at the time such Non-US Lender or Foreign Lender becomes a party to this Agreement (or designates a new lending office), except to the extent that such Non-US Lender or Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from the Borrowers with respect to any withholding tax pursuant to Section 2.18(a), or (ii) is attributable to such Foreign Lender's failure to comply with Section 2.18(e) or 2.18(f), as applicable.
"EXISTING CREDIT AGREEMENT" shall mean the Credit Agreement, dated as of November 28, 2001, among Holdings, the Borrowers, the lenders party thereto, the Administrative Agent, the Canadian Agent, and the UK Agent.
"EXISTING INDEBTEDNESS" shall mean all Indebtedness of Holdings and its Subsidiaries that is repaid on the Initial Borrowing Date.
"EXISTING LETTERS OF CREDIT" shall mean each letter of credit previously issued for the account of, or guaranteed by, any Borrower or any Subsidiary of any Borrower that (a) is outstanding on the Effective Date and (b) is listed on Schedule 2.05.
"FEDERAL FUNDS EFFECTIVE RATE" shall mean, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.
"FOREIGN CREDIT PARTY" shall mean the Canadian Borrower, the UK Borrower and each other Guarantor that is also a Foreign Subsidiary of Holdings.
"FOREIGN GUARANTY" shall have the meaning provided in
Section 3.12.
"FOREIGN LENDER" shall mean, as to the Canadian Borrower, any Lender that is not a resident of Canada for purposes of the Canadian Tax Act, and as to the UK Borrower, any Lender that is neither a resident in the United Kingdom nor is liable for the United Kingdom corporation tax with respect to any payment to be made by or on account of any obligation of the UK Borrower.
"FOREIGN MORTGAGED PROPERTY" shall mean any Mortgaged Property located outside the United States or any State thereof.
"FOREIGN OBLIGATIONS" shall have the meaning provided in the applicable Foreign Guaranty.
"FOREIGN PENSION PLAN" shall mean any plan, fund (including, without limitation, any superannuation fund) or other similar program established or maintained outside the United States of America by Holdings or any one or more of its Subsidiaries primarily for the benefit of employees of Holdings or any of its Subsidiaries residing outside the United States of America, which plan, fund or other similar program provides, or results in, retirement income, a deferral of income in contemplation of retirement or payments to be made upon termination of employment, and which plan is not subject to ERISA or the Code.
"FOREIGN PERFECTION CERTIFICATE" shall mean a certificate in the form attached to each Foreign Security Agreement, with such modifications to such form as the Collateral Agent may reasonably request, or any other form approved by the Collateral Agent.
"FOREIGN PLEDGE AGREEMENTS" shall have the meaning provided in
Section 3.09.
"FOREIGN SECURITY AGREEMENTS" shall have the meaning provided in Section 3.10.
"FOREIGN SUBSIDIARY" shall mean, as to any Person, each Subsidiary of such Person that is not a Domestic Subsidiary.
"FOREIGN UNRESTRICTED SUBSIDIARY" shall mean each Unrestricted Subsidiary that is incorporated under the laws of any jurisdiction other than the United States, any State thereof or the District of Columbia.
"GAAP" shall mean generally accepted accounting principles in the United States of America as in effect from time to time; it being understood and agreed that determinations in accordance with GAAP for purposes of Article VII, including defined terms as used therein, are subject (to the extent provided therein) to Section 10.06(a).
"GOVERNMENTAL AUTHORITY" shall mean the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.
"GUARANTIES" shall mean and include each of the US Collateral and Guaranty Agreement, the Foreign Guaranty and each Additional Security and Guaranty Document that is a guaranty agreement entered into pursuant to Section 6.11 and/or 6.12.
"GUARANTORS" shall mean and include each of Holdings and the US Borrower (in their capacity as a guarantor under the US Collateral and Guaranty Agreement), the Canadian Borrower and the UK Borrower (in their capacity as guarantor under the Foreign Guaranty) and each of the other Subsidiaries of Holdings that has executed the US Collateral and Guaranty Agreement or the Foreign Guaranty on the Initial Borrowing Date and any other Subsidiary of Holdings that has entered into the US Collateral and Guaranty Agreement or the Foreign Guaranty pursuant to Sections 6.11 and/or 6.12
"HAZARDOUS MATERIALS" shall mean (a) any petrochemical or petroleum products or byproducts, radioactive materials, asbestos, urea formaldehyde foam insulation, transformers or other equipment that contain dielectric fluid containing levels of polychlorinated biphenyls, and radon gas; and (b) any chemicals, materials or substances prohibited, limited or regulated by or pursuant to any Environmental Law.
"HIGHEST APPLICABLE RATES" shall have the meaning provided in the definition of the term Applicable Rate.
"HOLDINGS" shall mean Salt Holdings Corporation, a Delaware corporation.
"HOLDINGS COMMON STOCK" shall have the meaning provided in
Section 5.13.
"HOLDINGS DISTRIBUTION" shall have the meaning provided in
Section 5.05.
"HOLDINGS SHAREHOLDER SUBORDINATED NOTE" shall mean an unsecured junior subordinated note issued by Holdings (and not guaranteed or supported in any way by any Subsidiary of Holdings) in the form of Exhibit J.
"INCREASING TERM LENDER" shall have the meaning provided in the Master Assignment Agreement.
"INDEBTEDNESS" of any Person shall mean, without duplication,
(a) all indebtedness of such Person for borrowed money, (b) all obligations of
such Person evidenced by bonds, debentures, notes or similar instruments, (c)
the deferred purchase price of assets or services payable to the sellers thereof
or any of such seller's assignees that in accordance with GAAP would be shown as
a long-term liability on the liability side of the balance sheet of such Person
but excluding deferred rent as determined in accordance with GAAP, (d) the face
amount of all letters of credit issued for the account of such Person and,
without duplication, all drafts drawn thereunder, (e) the face amount of all
bankers' acceptances and all obligations of such Person,
contingent or otherwise, in respect of bankers' acceptances, (f) all Indebtedness of a second Person secured by any Lien on any property owned by such first Person, whether or not such Indebtedness has been assumed, (g) all Capitalized Lease Obligations of such Person, (h) all obligations under Interest Rate Protection Agreements and Other Hedging Agreements and (i) all Contingent Obligations of such Person; PROVIDED that Indebtedness shall not include account payables and accrued expenses, in each case arising in the ordinary course of business.
"INDEMNIFIED TAXES" shall mean Taxes other than Excluded Taxes.
"INITIAL BORROWING DATE" shall mean the date upon which the initial Borrowing of Loans and/or incurrence of B/A Drawings occurs.
"INITIAL PREFERRED STOCK" shall mean the Qualified Preferred Stock issued by Holdings on the Initial Borrowing Date pursuant to the Merger Agreement (and shall include Qualified Preferred Stock issued as dividends thereon in accordance with the terms thereof).
"INITIAL PREFERRED STOCK DOCUMENTS" shall mean all agreements and other documents governing, or relating to, the Initial Preferred Stock.
"INTERCOMPANY LOAN" shall have the meaning provided in
Section 7.05(f).
"INTERCOMPANY NOTES" shall mean promissory notes, in the form of Exhibit K, evidencing Intercompany Loans.
"INTEREST ELECTION REQUEST" shall mean a request by a Borrower
to convert or continue a Revolving Borrowing or B/A Drawing in accordance with
Section 2.08.
"INTEREST PAYMENT DATE" shall mean (a) with respect to any Base Rate Loan (other than a Swingline Loan) or Canadian Prime Rate Loan, the last day of each March, June, September and December, (b) with respect to any Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurodollar Borrowing with an Interest Period of more than three months' duration, each day prior to the last day of such Interest Period that occurs at intervals of three months' duration after the first day of such Interest Period and (c) with respect to any Swingline Loan, the day that such Loan is required to be repaid; PROVIDED, that if any such Interest Payment Date referred to in clause (a) or (c) above is not a Business Day, the "Interest Payment Date" shall be the next succeeding Business Day.
"INTEREST PERIOD" shall mean, with respect to any Eurodollar Borrowing, the period commencing on the date of such Borrowing and ending on the numerically corresponding day in the calendar month that is one, two, three or six months thereafter (or nine or twelve months thereafter if, at the time of the relevant Borrowing, all Lenders participating therein agree to make an interest period of such duration available), as the applicable Borrower may elect; PROVIDED, that (a) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day, and (b) any Interest Period that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period. For purposes hereof, the date of
a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.
"INTEREST RATE PROTECTION AGREEMENT" shall mean any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedging agreement or other similar agreement or arrangement.
"INVESTCO" shall mean YBR Holdings LLC, a Delaware limited liability company.
"INVESTMENT" shall have the meaning provided in the preamble to Section 7.05.
"JOINT VENTURE" shall mean any Person, other than an individual or a Wholly-Owned Subsidiary of the US Borrower, (a) in which the US Borrower or any of its Subsidiaries holds or acquires an ownership interest (whether by way of capital stock, partnership or limited liability company interest, or other evidence of ownership) and (b) that is engaged in a Permitted Business.
"JUDGMENT CURRENCY" shall have the meaning provided in Section 10.18(a).
"JUDGMENT CURRENCY CONVERSION DATE" shall have the meaning provided in Section 10.18(a).
"LC DISBURSEMENT" shall mean a payment made by the Letter of Credit Issuer pursuant to a Letter of Credit.
"LC EXPOSURE" shall mean, at any time, the sum of (a) the
aggregate undrawn amount of all outstanding Letters of Credit at such time PLUS
(b) the aggregate amount of all LC Disbursements that have not yet been
Wreimbursed by or on behalf of the US Borrower at such time. The LC Exposure of
any Revolving Lender at any time shall be the sum of (i) for each Letter of
Credit, such Revolving Lender's participation (calculated as set forth in
Section 2.05(d)) in the undrawn amount of such Letter of Credit at such time
PLUS (ii) for each LC Disbursement, such Revolving Lender's participation
(calculated as set forth in Section 2.05(d)) in such LC Disbursement to the
extent not yet reimbursed by or on behalf of the US Borrower at such time.
"LC RESERVE ACCOUNT" shall have the meaning provided in
Section 2.21(c).
"LEASEHOLD" of any Person shall mean all of the right, title and interest of such Person as lessee or licensee in, to and under leases or licenses of land, improvements and/or fixtures.
"LENDER" shall have the meaning provided in the first paragraph of this Agreement.
"LENDER DEFAULT" shall mean (a) the refusal (that has not been
retracted) of a Lender to make available its portion of any Borrowing or B/A
Drawing or to fund its portion of any unreimbursed payment under Section 2.05 or
(b) a Lender having notified the Administrative Agent and/or any Borrower that
it does not intend to comply with the obligations under Section 2.01 or 2.05, in
the case of either clause (a) or (b) above as a result of the appointment of a
receiver or conservator with respect to such Lender at the direction or request
of any regulatory agency or authority.
"LETTER OF CREDIT" shall mean any letter of credit issued pursuant to this Agreement and each Existing Letter of Credit.
"LETTER OF CREDIT ISSUER" shall mean Chase and any other
Lender that, at the request of the US Borrower and with the consent of the
Administrative Agent, agrees in such Lender's sole discretion to become a Letter
of Credit Issuer for purposes of issuing Letters of Credit pursuant to Article
II. The Letter of Credit Issuer may, in its discretion, arrange for one or more
Letters of Credit to be issued by Affiliates of the Letter of Credit Issuer, in
which case the term "LETTER OF CREDIT ISSUER" shall include any such Affiliate
with respect to Letters of Credit issued by such Affiliate; PROVIDED that any
such arrangement shall not relieve or reduce the Letter of Credit Issuer's
obligation to issue Letters of Credit hereunder.
"LETTER OF CREDIT REQUEST" shall have the meaning provided in
Section 2.05(b).
"LIEN" shall mean any mortgage, pledge, security interest, encumbrance, lien, hypothec or charge of any kind (including any agreement to give any of the foregoing, any conditional sale or other title retention agreement, any financing or similar statement or notice filed under the UCC or any similar recording or notice statute, and any lease having substantially the same effect as the foregoing).
"LOAN" shall mean each Term Loan, each Revolving Loan and each Swingline Loan.
"LOCAL TIME" shall mean (a) with respect to a Loan or Borrowing made to the US Borrower, New York City time, (b) with respect to a Loan or Borrowing made to the Canadian Borrower or a B/A, Toronto time and (c) with respect to a Loan or Borrowing made to the UK Borrower, London time.
"MANAGEMENT AGREEMENTS" shall have the meaning provided in
Section 3.14(b).
"MANAGEMENT PARTICIPANTS" shall mean members of senior management of Holdings and its Subsidiaries acceptable to the Agents.
"MANAGEMENT ROLLOVER AMOUNT" shall mean the aggregate amount, not in excess of $4,000,000, of certain sales and retention bonuses and other amounts elected by management of the US Borrower to be transferred to deferred compensation accounts under the Senior Executive Plan.
"MARGIN STOCK" shall have the meaning provided in Regulation U.
"MASTER ASSIGNMENT AGREEMENT" shall mean the Master Assignment Agreement in the form of Exhibit L.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on the business, condition (financial or otherwise), prospects or results of operations of the US Borrower and its Subsidiaries taken as a whole or Holdings and its Subsidiaries taken as a whole (other than in respect of the Excluded Subsidiaries and Excluded Assets), in each case since June 30, 2001.
"MATURITY DATE," with respect to any Tranche of Loans, shall mean the Term Loan Maturity Date, the Revolving Loan Maturity Date or the Swingline Expiry Date, as the case may be.
"MAXIMUM PERMITTED ACQUISITION LEVERAGE RATIO" shall mean, at
any time, the maximum Adjusted Total Leverage Ratio that may exist pursuant to
Section 7.10 without giving rise to a Default or an Event of Default at such
time, adjusted by reducing the ratio appearing in such maximum Adjusted Total
Leverage Ratio by 0.25.
"MAXIMUM PERMITTED CONSIDERATION" shall mean, with respect to any Permitted Acquisition, the sum (without duplication) of (a) the aggregate liquidation preference of Preferred Stock issued by Holdings as consideration in connection with such Permitted Acquisition, (b) the aggregate principal amount of Permitted Acquired Debt acquired or assumed by Holdings or any of its Subsidiaries in connection with such Permitted Acquisition, (c) the aggregate principal amount of all cash paid (or to be paid) by Holdings or any of its Subsidiaries in connection with such Permitted Acquisition (including payments of fees and costs and expenses in connection therewith), (d) the aggregate principal amount of all other Indebtedness assumed, incurred and/or issued in connection with such Permitted Acquisition and (e) the fair market value (determined in good faith by senior management of Holdings) of all other consideration payable in connection with such Permitted Acquisition (other than Holdings Common Stock).
"MERGER" shall have the meaning provided in Section 3.08(a).
"MERGER AGREEMENT" shall mean the merger agreement dated as of October 13, 2001, entered into among Holdings, the US Borrower, IMC Global, Inc., YBR Holdings LLC and YBR Acquisition Corp.
"MERGER CONSIDERATION" shall have the meaning provided in
Section 3.08(a).
"MERGER DOCUMENTS" shall mean and include (a) the Merger Agreement and (b) all other agreements and documents governing, or relating to, the Merger.
"MERGER TRANSACTIONS" shall mean the Stock Purchase, the Merger, the Equity Contribution, the repayment of Existing Indebtedness, the payment of the Stock Purchase Price and the Merger consideration and the issuance of the Seller Note, the common stock of Holdings and the Initial Preferred Stock pursuant to the Merger Agreement and the other transactions contemplated by the Merger Agreement.
"MOODY'S" shall mean Moody's Investors Service, Inc.
"MORTGAGE" shall mean a mortgage, leasehold mortgage, deed of trust, leasehold deed of trust, deed to secure debt, leasehold deed to secure debt or similar security instrument.
"MORTGAGE POLICY" shall mean a mortgage title insurance policy or a binding commitment with respect thereto.
"MORTGAGED PROPERTY" shall mean any Real Property owned or leased by a Credit Party that is encumbered (or required hereunder to be encumbered) by a Mortgage and that is owned or leased by a Credit Party.
"MULTI-CURRENCY COMMITMENT" shall mean a Canadian Revolving Loan Sub-Commitment and a UK Revolving Loan Sub-Commitment.
"MULTI-CURRENCY LENDER" shall mean a Canadian Lender and a UK Lender.
"MULTIEMPLOYER PLAN" shall mean any multiemployer plan as
defined in Section 4001(a)(3) of ERISA and that is a pension plan as defined in
Section 3(2) of ERISA that is maintained or contributed to by (or to which there
is an obligation to contribute of) Holdings, a Subsidiary of Holdings or an
ERISA Affiliate, and each such plan for the five-year period immediately
following the latest date on which Holdings, a Subsidiary of Holdings or an
ERISA Affiliate maintained, contributed to or had an obligation to contribute to
such plan.
"NET CASH PROCEEDS" shall mean for any event requiring a repayment of Term Loans pursuant to Section 2.12 (other than from any Asset Sale), the gross cash proceeds (including any cash received by way of deferred payment pursuant to a promissory note, receivable or otherwise, but only as and when received) received from such event, net of reasonable transaction costs (including, as applicable, any underwriting, brokerage or other customary commissions and reasonable legal, advisory and other fees and expenses associated therewith) received from any such event.
"NET SALE PROCEEDS" shall mean for any sale of assets, the gross cash proceeds (including any cash received by way of deferred payment pursuant to a promissory note, receivable or otherwise, but only as and when received) received from any sale of assets, net of (a) reasonable transaction costs (including, without limitation, any underwriting, brokerage or other customary selling commissions and reasonable legal, advisory and other fees and expenses, including title and recording expenses, associated therewith) and payments of unassumed liabilities relating to the assets sold at the time of, or within 30 days after, the date of such sale, (b) the amount of such gross cash proceeds required to be used to repay any Indebtedness (other than Indebtedness of the Lenders pursuant to this Agreement) that is secured by the respective assets that were sold, and (c) the estimated marginal increase in income taxes that will be payable by Holdings's consolidated group with respect to the fiscal year in which the sale occurs as a result of such sale; PROVIDED, HOWEVER, that such gross proceeds shall not include any portion of such gross cash proceeds that Holdings determines in good faith should be reserved for post-closing adjustments (including indemnification payments) (in the event such amount of gross cash proceeds so reserved exceeds $50,000, to the extent the US Borrower delivers to the Lenders a certificate signed by its chief financial officer or treasurer, controller or chief accounting officer as to such determination), it being understood and agreed that on the day that all such post-closing adjustments have been determined (which shall not be later than six months following the date of the respective asset sale), the amount (if any) by which the reserved amount in respect of such sale or disposition exceeds the actual post-closing adjustments payable by Holdings or any of its Subsidiaries shall constitute Net Sale Proceeds on such date received by Holdings and/or any of its Subsidiaries from such sale, lease, transfer or other disposition. The parties hereto acknowledge and agree that Net Sale Proceeds shall not include any trade-in- credits or purchase price reductions received by Holdings or any of its Subsidiaries in connection with an exchange of equipment for replacement equipment that is the functional equivalent of such exchanged equipment.
"NON-CREDIT PARTY" shall mean any Subsidiary of Holdings that is not a Credit Party.
"NON-DEFAULTING LENDER" shall mean each Lender other than a Defaulting Lender.
"NON-US LENDER" shall have the meaning provided in Section 2.18(e).
"NON-WHOLLY-OWNED ENTITY" shall have the meaning provided in the definition of Permitted Acquisition.
"NOTE" shall mean each Term Note, each Revolving Note and/or each Swingline Note, as the context may require.
"NOTICE OF BORROWING" shall mean a request by a Borrower for a Borrowing in accordance with Section 2.03.
"NOTICE OFFICE" shall mean (a) except as provided in clauses (b), (c) and (d) below, the office of the Administrative Agent, located at One Chase Manhattan Plaza, New York, New York, 10081, Attention: Janet Belden, or such other office or offices as the Administrative Agent may designate in writing to the Borrowers and the Lenders from time to time, (b) in the case of Letters of Credit, the office of the respective Letter of Credit Issuer designated in writing by such Letter of Credit Issuer, with a copy to the Administrative Agent at One Chase Manhattan Plaza, New York, New York, 10081, Attention: Janet Belden, (c) in the case of B/As and Canadian Revolving Loans, the office of the Canadian Agent at South Tower, Royal Bank Plaza, Suite 1800, 200 Bay St., Toronto, Ontario, Canada, M5J 2J2, Attention: Funding Officer, Phone: 416-981-9235, Fax: 416-981-9128, or as otherwise designated in writing by the Canadian Agent to the US Borrower and the Administrative Agent, with a copy (in each case) to the Administrative Agent at One Chase Manhattan Plaza, New York, New York, 10081, Attention: Janet Belden and (d) in the case of UK Revolving Loans, the office of the UK Agent at 9 Thomas Moore Street, London, UK, Attention: Steve Clarke, Fax: +44 207 777 2360, or as otherwise designated in writing by the UK Agent to the US Borrower and the Administrative Agent, with a copy to the Administrative Agent at One Chase Manhattan Plaza, New York, New York, 10081, Attention: Janet Belden.
"OBLIGATION CURRENCY" shall have the meaning provided in
Section 10.18(a).
"OBLIGATIONS" shall have the meaning provided in the US Collateral and Guaranty Agreement.
"OFFERING MEMORANDUM" shall mean the US Borrower's Offering Memorandum, dated November 15, 2001, relating to the offering and sale of the Senior Subordinated Notes on the Initial Borrowing Date.
"OTHER HEDGING AGREEMENTS" shall mean (a) any foreign exchange contracts, currency swap agreements or other similar agreements or arrangements designed to protect against fluctuations in currency values and (b) any Commodity Agreements.
"OTHER TAXES" shall mean any and all present or future recording, stamp, documentary, excise, transfer, sales or similar taxes, charges or levies arising from any payment made under any Credit Document or from the execution, delivery or enforcement of, or otherwise with respect to, any Credit Document.
"PARTICIPANT" shall have the meaning provided in Section 2.05(d).
"PAYMENT OFFICE" shall mean (a) except as provided in clauses (b), (c) and (d) below, the office of the Administrative Agent, located at One Chase Manhattan Plaza, New York, New York, 10081, Attention: Janet Belden, or such other office or offices as the Administrative Agent may designate in writing to the Borrowers and the Lenders from time to time, (b) in the case of Letters of Credit, the office of the respective Letter of Credit Issuer designated in writing by such Letter of Credit Issuer, with a copy to the Administrative Agent at One Chase Manhattan Plaza, New York, New York, 10081, Attention: Janet Belden, (c) in the case of B/As and Canadian Revolving Loans, the office of the Canadian Agent at South Tower, Royal Bank Plaza, Suite 1800, 200 Bay St., Toronto, Ontario, Canada, M5J 2J2, Attention: Funding Officer, Phone: 416-981-9235, Fax: 416-981-9128, or as otherwise designated in writing by the Canadian Agent to the US Borrower and the Administrative Agent, with a copy (in each case) to the Administrative Agent at One Chase Manhattan Plaza, New York,
New York, 10081, Attention: Janet Belden and (d) in the case of UK Revolving Loans, the office of the UK Agent at 9 Thomas Moore Street, London, UK, Attention: Steve Clarke, Fax: +44 207 777 2360, or as otherwise designated in writing by the UK Agent to the US Borrower and the Administrative Agent, with a copy to the Administrative Agent at One Chase Manhattan Plaza, New York, New York, 10081, Attention: Janet Belden.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established pursuant to Section 4002 of ERISA, or any successor thereto.
"PERFECTION CERTIFICATE" shall mean each of the US Perfection Certificate and each Foreign Perfection Certificate.
"PERMITTED ACQUIRED DEBT" shall have the meaning provided in
Section 7.04(d).
"PERMITTED ACQUISITION" shall mean the acquisition by the US Borrower or any of its Wholly-Owned Subsidiaries of assets constituting a business, division or product line of any Person not already a Subsidiary of the US Borrower or such Wholly-Owned Subsidiary or of 100% of the capital stock or other equity interests of any such Person; PROVIDED that (a) the consideration paid by the US Borrower or such Wholly-Owned Subsidiary consists solely of cash (including proceeds of Revolving Loans), the issuance of Holdings Common Stock, the issuance of any Qualified Preferred Stock or Disqualified Preferred Stock otherwise permitted pursuant to Section 7.13, the issuance of Indebtedness otherwise permitted in Section 7.04 (including Permitted Subordinated Indebtedness) and the assumption/acquisition of any Permitted Acquired Debt (calculated in accordance with GAAP) relating to such business, division, product line or Person that is permitted to remain outstanding in accordance with the requirements of Section 7.04, (b) in the case of the acquisition of 100% of the capital stock or other equity interests of any Person, such Person (the "ACQUIRED PERSON") shall own no capital stock or other equity interests of any other Person unless either (i) the Acquired Person owns 100% of the capital stock or other equity interests of such other Person or (ii) if the Acquired Person owns capital stock or equity interests in any other Person that is not a Wholly-Owned Subsidiary of the Acquired Person (a "NON-WHOLLY-OWNED ENTITY"), both (A) the Acquired Person shall not have been created or established in contemplation of, or for purposes of, the respective Permitted Acquisition and (B) any Non-Wholly-Owned Entity of the Acquired Person shall have been non-wholly owned prior to the date of the respective Permitted Acquisition and not created or established in contemplation thereof, (c) the assets acquired, or the business of the Acquired Person and its Subsidiaries, shall be in a Permitted Business and (d) all applicable requirements of Sections 6.14 and 7.02 applicable to Permitted Acquisitions are satisfied. Notwithstanding anything to the contrary contained in the immediately preceding sentence, an acquisition that does not otherwise meet the requirements set forth above in the definition of "PERMITTED ACQUISITION" shall constitute a Permitted Acquisition if, and to the extent, the Required Lenders agree in writing that such acquisition shall constitute a Permitted Acquisition for purposes of this Agreement.
"PERMITTED ACQUISITION ADDITIONAL COST-SAVINGS" shall mean, in connection with each Permitted Acquisition, those demonstrable cost-savings and other adjustments (in each case not included pursuant to clause (iii) or (iv) of the definition of Pro Forma Basis contained herein and otherwise without duplication) reasonably anticipated by the US Borrower as of any date of determination to be achieved in connection with such Permitted Acquisition for the twelve-month period following the consummation of such Permitted Acquisition, which cost-savings
and other adjustments shall be estimated on a good faith basis by the US Borrower as of each date of determination and, if requested by the Administrative Agent on a timely basis, shall be verified as of such date of determination (a) by a nationally recognized accounting firm or (b) as otherwise agreed to by the Administrative Agent, in each case prior to the inclusion of the applicable cost-savings and other adjustments in the calculation of Permitted Acquisition Additional Cost-Savings. It is understood and agreed that, for the avoidance of duplication, no anticipated cost-savings or other adjustments shall be included in the calculation of Permitted Acquisition Additional Cost-Savings for any period to the extent such anticipated cost-savings or other adjustments are otherwise reflected in Consolidated EBITDA for such period by virtue of the achievement of actual cost-savings or other results that were part of the cost-savings or other adjustments anticipated to be achieved.
"PERMITTED BUSINESS" shall mean each business conducted by the US Borrower and its Subsidiaries on the date hereof and any other business or activities as may be substantially similar, incidental or related thereto, and reasonable extensions of the foregoing.
"PERMITTED DEBT" shall mean and include Permitted Acquired Debt, Permitted Subordinated Refinancing Indebtedness and Permitted Subordinated Indebtedness.
"PERMITTED ENCUMBRANCES" shall mean (a) those liens, encumbrances, hypothecs and other matters affecting title to any Real Property and found reasonably acceptable by the Administrative Agent, (b) as to any particular Real Property at any time, such easements, encroachments, covenants, restrictions, agreements, rights of way, minor defects, irregularities or encumbrances on title that could not reasonably be expected to materially impair such Real Property for the purpose for which it is held by the mortgagor or grantor thereof, or the lien or hypothec held by the Collateral Agent, (c) zoning and other municipal ordinances that are not violated in any material respect by the existing improvements and the present use made by the mortgagor or grantor thereof of the premises, except if permitted by a variance or "GRANDFATHER" provision, (d) general real estate taxes and assessments not yet delinquent, (e) such other items included on Schedule 5.01 hereto, and (f) such other similar items as the Administrative Agent may consent to (such consent not to be unreasonably withheld).
"PERMITTED HOLDERS" shall mean Apollo Group and the Management Participants (to the extent acting as a "group" within the meaning of Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, as in effect on the Effective Date).
"PERMITTED LIENS" shall have the meaning provided in
Section 7.03.
"PERMITTED SALE-LEASEBACK TRANSACTION" shall mean any sale by
the US Borrower or any of its Subsidiaries of any asset first acquired by the US
Borrower or such Subsidiary after the Effective Date, which asset, in each case,
is thereafter leased by the purchaser thereof to the US Borrower or such
Subsidiary; PROVIDED that (i) the consideration for such sale shall be entirely
in cash, (ii) the consideration for such sale shall be in an amount at least
equal to 85% of the aggregate amount expended by the US Borrower or such
Subsidiary in so acquiring such asset, (iii) each such sale-leaseback
transaction is effected within 90 days of the acquisition by the US Borrower or
such Subsidiary of such asset, and (iv) in each case, the respective transaction
is otherwise effected in accordance with the applicable requirements of
Section 7.02(o).
"PERMITTED SUBORDINATED INDEBTEDNESS" shall mean subordinated
Indebtedness (other than the Senior Subordinated Notes) of the US Borrower
incurred in connection with a Permitted Acquisition and in accordance with
Section 6.14, which Permitted Subordinated Indebtedness and all terms and
conditions thereof (including, without limitation, the maturity thereof, the
interest rate applicable thereto, amortization, defaults, remedies, voting
rights, subordination provisions, etc.), and the documentation therefor, shall
be reasonably satisfactory to the Administrative Agent; PROVIDED that, in any
event, unless the Required Lenders otherwise expressly consent in writing prior
to the incurrence thereof, (a) no such Indebtedness shall be guaranteed by
Holdings or any Subsidiary thereof, (b) no such Indebtedness shall be secured by
any asset of Holdings or any of its Subsidiaries and (c) such Indebtedness has
substantially the same (or, from the perspective of the Lenders, more favorable)
subordination (including payment blockage) provisions as are contained in the
Senior Subordinated Note Documents. The incurrence of Permitted Subordinated
Indebtedness shall be deemed to be a representation and warranty by Holdings and
the Borrowers that all conditions thereto have been satisfied in all material
respects and that same is permitted in accordance with the terms of this
Agreement, which representation and warranty shall be deemed to be a
representation and warranty for all purposes hereunder, including, without
limitation, Articles V and VIII.
"PERMITTED SUBORDINATED REFINANCING INDEBTEDNESS" shall mean
Indebtedness of the US Borrower issued or given in exchange for, or all the
proceeds of which are used to refinance, all of the outstanding Senior
Subordinated Notes, so long as (a) such Indebtedness has a weighted average life
to maturity greater than or equal to the weighted average life to maturity of
the Senior Subordinated Notes, (b) such refinancing does not (i) increase the
amount of such Indebtedness outstanding immediately prior to such refinancing or
(ii) add guarantors, obligors or security from that which applied to the Senior
Subordinated Notes, (c) such Indebtedness has substantially the same (or, from
the perspective of the Lenders, more favorable) subordination provisions, if
any, as applied to the Senior Subordinated Notes, and (d) all other terms of
such refinancing (including, without limitation, with respect to the
amortization schedules, redemption provisions, maturities, covenants, defaults
and remedies), are not, taken as a whole, materially LESS favorable to the US
Borrower and its Subsidiaries than those previously existsing with respect to
the Senior Subordinated Notes.
"PERMITTED TRANSACTIONS" shall mean (a) the issuance by the US Borrower on or prior to the Amendment and Restatement Date of at least $75,000,000 in aggregate principal amount of Additional Senior Subordinated Notes for gross cash proceeds (prior to deduction of underwriting discounts and commissions) of at least $75,000,000 and (b) the use by the US Borrower of $74,437,500 of Net Cash Proceeds from such issuance of Additional Senior Subordinated Notes to prepay the Term Loans, in each case pursuant to Section 7.04(p) of the Existing Credit Agreement as amended and restated by this Agreement.
"PERSON" shall mean any individual, partnership, joint venture, firm, corporation, limited liability company, association, trust or other enterprise or any Governmental Authority.
"PLAN" shall mean any pension plan as defined in Section 3(2) of ERISA and that is subject to Title I of ERISA and that is maintained or contributed to by (or to which there is an obligation to contribute of) Holdings or a Subsidiary of Holdings or an ERISA Affiliate, and each such plan for the five-year period immediately following the latest date on which Holdings, or a Subsidiary of Holdings or an ERISA Affiliate maintained, contributed to or had an obligation to contribute to such plan but excluding all Multiemployer Plans.
"PLEDGED COLLATERAL" shall mean all of the "COLLATERAL" (a) as defined in Section 4.01 of the US Collateral and Guaranty Agreement and (b) as defined in any Foreign Pledge Agreement or Foreign Security Agreement.
"POST-CLOSING PERIOD" shall have the meaning provided in
Section 6.14(a).
"PREFERRED STOCK," as applied to the capital stock of any Person, shall mean capital stock of such Person (other than common stock of such Person) of any class or classes (however designated) that ranks prior, as to the payment of dividends or as to the distribution of assets upon any voluntary or involuntary liquidation, dissolution or winding-up of such Person, to shares of capital stock of any other class of such Person, and shall include the Initial Preferred Stock and any other Qualified Preferred Stock and Disqualified Preferred Stock.
"PRIME RATE" shall mean the rate that Chase announces from time to time as its prime lending rate, the Prime Rate to change when and as such prime lending rate changes. The Prime Rate is a reference rate and does not necessarily represent the lowest or best rate actually charged to any customer.
"PRINCIPAL AMOUNT" shall mean (a) the stated amount of each US Dollar Loan and/or (b) the US Dollar Equivalent of the stated amount of each Loan other than a US Dollar Loan, as the context may require.
"PRO FORMA BASIS" shall mean, in connection with any calculation of compliance with any financial covenant or financial term, the calculation thereof after giving effect on a pro forma basis to (without duplication) (a) if the relevant period to be tested includes any period prior to the Initial Borrowing Date, the consummation of the Transaction as if the same had occurred on the first day of such period, (b) the incurrence of any Indebtedness (other than revolving Indebtedness, except to the extent same is incurred to finance the Transaction, to refinance other outstanding Indebtedness (including to refinance any outstanding Indebtedness of an Unrestricted Subsidiary at the time same is designated as a Subsidiary pursuant to a Subsidiary Redesignation) or to finance Permitted Acquisitions) or issuance of any Preferred Stock (other than Qualified Preferred Stock of Holdings) after the first day of the relevant Calculation Period as if such Indebtedness or Preferred Stock had been incurred or issued (and the proceeds thereof applied) on the first day of the relevant Calculation Period, (c) the permanent repayment of any Indebtedness (other than (A) revolving Indebtedness except to the extent paid with Permitted Debt or Disqualified Preferred Stock and (B) Term Loans (except to the extent repaid with proceeds of the type described in succeeding clause (vi))) or Preferred Stock (other than Qualified Preferred Stock of Holdings) after the first day of the relevant Calculation Period as if such Indebtedness or Preferred Stock had been retired or redeemed on the first day of the relevant Calculation Period, (d) the Permitted Acquisition, if any, then being consummated as well as any other Permitted Acquisition consummated after the first day of the relevant Calculation Period and on or prior to the date of the respective Permitted Acquisition then being effected, (e) the Subsidiary Redesignation, if any, then being effected as well as any other Subsidiary Redesignation after the first day of the relevant Calculation Period and on or prior to the date of the respective Subsidiary Redesignation then being designated, and (f) any repayment of Term Loans with cash proceeds contributed by Holdings to the US Borrower, which cash proceeds were initially received by Holdings from the issuance of Holdings Common Stock or Qualified Preferred Stock to, or any cash equity contributions from, Apollo Group as if
such Term Loans had been repaid on the first day of the relevant Calculation Period, with the following rules to apply in connection therewith:
(i) all Indebtedness and Preferred Stock
(other than Qualified Preferred Stock of Holdings) (A) (other
than revolving Indebtedness, except to the extent same is
incurred to finance the Transaction, to refinance other
outstanding Indebtedness (including to refinance any
outstanding Indebtedness of an Unrestricted Subsidiary at the
time same is designated as a Subsidiary pursuant to a
Subsidiary Redesignation), or to finance Permitted
Acquisitions) incurred or issued after the first day of the
relevant Calculation Period (whether incurred to finance a
Permitted Acquisition, to refinance Indebtedness or
otherwise) shall be deemed to have been incurred or issued
(and the proceeds thereof applied) on the first day of the
respective Calculation Period and remain outstanding through
the date of determination (and thereafter in the case of
projections pursuant to Section 6.14(a)(iv)) and (B) (other
than (1) revolving Indebtedness except to the extent paid
with Permitted Debt or Disqualified Preferred Stock and (2)
Term Loans (except to the extent repaid with proceeds of the
type described in succeeding clause (vi))) permanently
retired or redeemed after the first day of the relevant
Calculation Period shall be deemed to have been retired or
redeemed on the first day of the respective Calculation
Period and remain retired through the date of determination
(and thereafter in the case of projections pursuant to
Section 6.14(a)(iv));
(ii) all Indebtedness or Preferred Stock (other than Qualified Preferred Stock of Holdings) assumed to be outstanding pursuant to preceding clause (i) shall be deemed to have borne interest or accrued dividends, as the case may be, at (A) the rate applicable thereto, in the case of fixed rate Indebtedness or Preferred Stock or (B) the rates that would have been applicable thereto during the respective period when same was deemed outstanding, in the case of floating rate Indebtedness or Preferred Stock (although interest expense with respect to any Indebtedness or Preferred Stock for periods while same was actually outstanding during the respective period shall be calculated using the actual rates applicable thereto while same was actually outstanding); PROVIDED that for purposes of calculations pursuant to Section 6.14(a)(iv), all Indebtedness or Preferred Stock (whether actually outstanding or deemed outstanding) bearing interest at a floating rate of interest shall be tested on the basis of the rates applicable at the time the determination is made pursuant to said provisions;
(iii) in making any determination of Consolidated EBITDA, pro forma effect shall be given to any Subsidiary Redesignation or Permitted Acquisition effected or consummated after the first day of the respective period being tested, taking into account (in the case of a Permitted Acquisition only), for any portion of the relevant period being tested occurring prior to the consummation of such Permitted Acquisition, demonstrable cost savings actually achieved simultaneously with, or to be achieved within the one-year period following, the closing of the respective Permitted Acquisition, which cost savings would be permitted to be recognized in pro forma statements prepared in accordance with
Regulation S-X under the Securities Act, as if such cost savings were realized on the first day of the relevant period;
(iv) without duplication of adjustments provided above, in case of any Permitted Acquisition consummated after the first day of the relevant period being tested, pro forma effect shall be given to the termination of operating leases or replacement of operating leases with Capitalized Lease Obligations or with other Indebtedness, and to any replacement of Capitalized Lease Obligations or other Indebtedness with operating leases, in each case effected at the time of the consummation of such Permitted Acquisition or thereafter, in each case if effected after the first day of the period being tested and prior to the date the respective determination is being made, as if such termination or replacement had occurred on the first day of the relevant period;
(v) in making any determination of Consolidated EBITDA for purposes of any calculation of the Adjusted Total Leverage Ratio, the Adjusted Senior Leverage Ratio and the Consolidated Interest Coverage Ratio only, (A) for any Permitted Acquisition that occurred during the last two fiscal quarters comprising the respective Test Period (and, in the case of Section 6.14, thereafter and on or prior to the relevant date of determination), there shall be added to Consolidated EBITDA the amount of Permitted Acquisition Additional Cost-Savings, determined in accordance with the definition thereof contained herein, expected to be realized with respect to such Permitted Acquisition, (B) for any Permitted Acquisition effected in the second fiscal quarter of the respective Test Period, the Consolidated EBITDA shall be increased by 50% of the Permitted Acquisition Additional Cost Savings estimated to arise in connection with the respective Permitted Acquisition and (C) for any Permitted Acquisition effected in the first fiscal quarter of the respective Test Period, the Consolidated EBITDA shall be increased by 25% of the Permitted Acquisition Additional Cost-Savings estimated to arise in connection with the respective Permitted Acquisition; PROVIDED that the aggregate additions to Consolidated EBITDA, for any period being tested, pursuant to this clause (v) shall not exceed 15% of the amount that would have been Consolidated EBITDA in the absence of the adjustment pursuant to this clause (v); and
(vi) all Term Loans repaid with cash proceeds contributed by Holdings to the US Borrower, which cash proceeds were initially received by Holdings from the issuance of Holdings Common Stock or Qualified Preferred Stock to, or any cash equity contributions from, Apollo Group after the first day of the relevant Calculation Period shall be deemed to have been repaid on the first day of the respective Calculation Period.
Notwithstanding anything to the contrary contained above, (a) for purposes of Sections 7.09 and 7.10 and, for purposes of all determinations of the Applicable Rate, pro forma effect (as otherwise provided above) shall only be given for events or occurrences that occurred during the respective Test Period but not thereafter and (b) for purposes of Section 6.14, pro forma effect (as otherwise provided above) shall be given for events or occurrences that occurred
during the respective Test Period and thereafter but on or prior to the respective date of determination.
"PRO FORMA FINANCIAL STATEMENTS" shall have the meaning provided in Section 3.17(a).
"PROJECTIONS" shall mean the projections contained in the Confidential Information Memorandum, dated October 2001, that were prepared by or on behalf of the US Borrower in connection with the Transaction and delivered to the Agents and the Lenders prior to the Initial Borrowing Date.
"PUBLIC OFFERING" shall mean an underwritten public offering of Holdings Common Stock or an offering thereof pursuant to Rule 144A under the Securities Act.
"PURCHASER" shall mean YBR Acquisition Corp., a Delaware corporation that is a direct, Wholly Owned Subsidiary of Investco.
"QUALIFIED IPO" shall mean an underwritten public offering of Holdings Common Stock that generates cash proceeds to Holdings of at least $75,000,000.
"QUALIFIED PREFERRED STOCK" shall mean any Preferred Stock of Holdings, the express terms of which shall provide that dividends thereon shall not be required to be paid at any time (and to the extent) that such payment would be prohibited by the terms of this Agreement or any other agreement of Holdings relating to outstanding indebtedness and that, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event (including any Change of Control Event), cannot mature and is not mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, and is not redeemable, or required to be repurchased, at the sole option of the holder thereof (including, without limitation, upon the occurrence of a Change of Control Event), in whole or in part, on or prior to the date occurring two years after the Term Loan Maturity Date; PROVIDED that any such Preferred Stock of Holdings may provide that such Preferred Stock may be redeemable after (a) all Obligations have been paid in full in cash or (b) the Required Lenders shall have consented in writing to such redemption.
"REAL PROPERTY" of any Person shall mean all of the right, title and interest of such Person in and to land, immovable property, improvements and fixtures, including Leaseholds.
"RECOVERY EVENT" shall mean the receipt by Holdings or any of its Subsidiaries of any insurance or condemnation proceeds (other than proceeds from business interruption insurance) payable (a) by reason of theft, physical destruction or damage or any other similar event with respect to any properties or assets of Holdings or any of its Subsidiaries, (whether under any policy of insurance required to be maintained under Section 6.03 or otherwise) and (b) by reason of any condemnation, taking, seizing or similar event with respect to any properties or assets of Holdings or any of its Subsidiaries.
"REGISTER" shall have the meaning provided in Section 10.16.
"REGULATION D" shall mean Regulation D of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof establishing reserve requirements.
"REGULATION U" shall mean Regulation U of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof.
"RELEASE" shall mean any release, disposing, discharging, injecting, spilling, pumping, leaking, leaching, dumping, emitting, escaping, emptying, seeping, placing, depositing, disposal, migrating or pouring, into, through or upon any land or water or air, or otherwise entering into the environment or within or upon any building, structure, facility or fixture.
"REPORTABLE EVENT" shall mean an event described in
Section 4043(c) of ERISA with respect to a Plan that is subject to Title IV of
ERISA other than those events as to which the 30-day notice period is waived
under subsection .22, .23, .24, .25, .27 or .28 of PBGC Regulation Section 4043
and the advance reporting events under subsections .61 to .68 of PBGC Regulation
Section 4043.
"REQUIRED LENDERS" shall mean Non-Defaulting Lenders, the sum of whose outstanding Term Loans and Revolving Loan Commitments (or after the termination thereof, Revolving Credit Exposures) represent an amount greater than 50% of the sum of all outstanding Term Loans of Non-Defaulting Lenders and the sum of the Revolving Loan Commitments of all Non-Defaulting Lenders (or after the termination thereof, the aggregate Revolving Credit Exposures of all Non-Defaulting Lenders at such time). For purposes of this definition, the calculation of the outstanding principal amount of all Revolving Loans denominated in Canadian Dollars and Revolving Loans denominated in Sterling shall be determined by taking the US Dollar Equivalent thereof at the time of any such calculation.
"RESTRICTED INDEBTEDNESS" shall mean Indebtedness of Holdings or any of its Subsidiaries, the payment, prepayment, redemption, repurchase or defeasance of which is restricted under Section 7.12.
"RETAINED EXISTING INDEBTEDNESS" shall have the meaning provided in Section 5.21.
"RETAINED EXISTING INDEBTEDNESS AGREEMENTS" shall have the
meaning provided in Section 3.14(c).
"REVOLVING AVAILABILITY PERIOD" shall mean the period from and including the Effective Date to but excluding the earlier of the Revolving Loan Maturity Date and the date of termination of the Revolving Loan Commitments as provided for herein.
"REVOLVING CREDIT EXPOSURE" shall mean at any time, for any Revolving Lender, the sum at such time of such Revolving Lender's (a) US Revolving Credit Exposure, (b) Canadian Revolving Credit Exposure and (c) UK Revolving Credit Exposure. The total Revolving Credit Exposure at any time shall be the aggregate amount of the Revolving Lenders' Revolving Credit Exposures at such time.
"REVOLVING FACILITY LOAN" shall have the meaning provided in
Section 5.05(e).
"REVOLVING LOAN" shall mean a Loan made pursuant to clause
(b), (c) or (d) of Section 2.01.
"REVOLVING LOAN COMMITMENT" shall mean, with respect to each Lender, the commitment, if any, of such Lender to make Revolving Loans hereunder during the Revolving Availability Period, expressed as an amount expressed in US Dollars representing the maximum
potential aggregate amount of such Lender's Revolving Credit Exposure hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.09 or 2.20(b) and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 10.04 or 10.11(b). The initial amount of each Lender's Revolving Loan Commitment is set forth opposite such Lender's name in Schedule I directly below the column entitled "REVOLVING LOAN COMMITMENT," or in the Assignment and Assumption Agreement pursuant to which such Lender shall have assumed its Revolving Loan Commitment, as applicable. The initial aggregate amount of the Lenders' Revolving Loan Commitments is $135,000,000.
"REVOLVING LOAN MATURITY DATE" shall mean May 28, 2008, or, if such date is not a Business Day, the next succeeding Business Day.
"REVOLVING LENDER" shall mean, at any time, each Lender with a Revolving Loan Commitment or with outstanding Revolving Loans.
"REVOLVING NOTE" shall mean a promissory note substantially in the form of Exhibit A-2 with blanks appropriately completed in conformity herewith.
"S&P" shall mean Standard & Poor's Ratings Services, a division of The McGraw Hill Companies, Inc.
"SCHEDULE I LENDER" shall mean any Lender named on Schedule I to the Bank Act (Canada).
"SCHEDULE I REFERENCE LENDER" shall mean any Schedule I Lender as may be agreed by the Canadian Borrower and the Canadian Agent from time to time.
"SCHEDULE II LENDER" shall mean any Lender named on Schedule II to the Bank Act (Canada) or any Lender that is a Canadian financial institution other than a Canadian chartered bank and is not a Schedule III Lender.
"SCHEDULE II REFERENCE LENDER" shall mean J.P. Morgan Bank Canada.
"SCHEDULE III LENDER" shall mean any Lender named on Schedule III to the Bank Act (Canada).
"SCHEDULED REPAYMENT" shall have the meaning provided in
Section 2.12(b).
"SEC" shall mean the United States Securities and Exchange Commission or any successor thereto.
"SECURED PARTIES" shall have the meaning provided in the respective Security Documents.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
"SECURITY AGREEMENT" shall mean each Foreign Security Agreement, the US Collateral and Guaranty Agreement and the US Collateral Assignment.
"SECURITY AGREEMENT COLLATERAL" shall mean all of the "COLLATERAL" as defined in any Security Agreement.
"SECURITY DOCUMENTS" shall mean and include the US Collateral and Guaranty Agreement, each Foreign Pledge Agreement, each Security Agreement, each Mortgage and each Additional Security and Guaranty Document, if any.
"SELLER" shall mean IMC Global, Inc., a Delaware corporation.
"SELLER NOTE" shall mean the unsecured subordinated Note issued by Holdings to the Seller on or before the Initial Borrowing Date in accordance with the terms of the Merger Agreement (which note shall not be guaranteed or supported in any way by any Subsidiary of Holdings).
"SENIOR EXECUTIVE PLAN" shall have the meaning provided in the Merger Agreement.
"SENIOR SUBORDINATED NOTE DOCUMENTS" shall mean the Senior Subordinated Notes, the Senior Subordinated Note Indenture and all other documents executed and delivered with respect to the Senior Subordinated Notes or Senior Subordinated Note Indenture, as in effect on the Initial Borrowing Date and as the same may be amended, modified or supplemented from time to time in accordance with the terms hereof and thereof.
"SENIOR SUBORDINATED NOTE INDENTURE" shall mean the Indenture, dated as of November 28, 2001, among the US Borrower, the US Credit Parties that are subsidiary guarantors thereunder and the Senior Subordinated Note Indenture Trustee, as in effect on the Initial Borrowing Date and as thereafter amended, modified or supplemented from time to time in accordance with the requirements hereof and thereof.
"SENIOR SUBORDINATED NOTE INDENTURE TRUSTEE" shall mean The
Bank of New York or any successor thereto.
"SENIOR SUBORDINATED NOTES" shall mean the US Borrower's 10% Senior Subordinated Notes due 2011, issued pursuant to the Senior Subordinated Note Indenture, as in effect on the Initial Borrowing Date and as the same may be amended, modified or supplemented from time to time in accordance with the terms hereof and thereof. As used herein, the term "SENIOR SUBORDINATED NOTES" shall include any Exchange Senior Subordinated Notes issued pursuant to the Senior Subordinated Notes Indenture in exchange for theretofore outstanding Senior Subordinated Notes, as contemplated by the Offering Memorandum and the definition of Exchange Senior Subordinated Notes.
"SHAREHOLDERS' AGREEMENTS" shall have the meaning provided in
Section 3.14(a).
"SPOT EXCHANGE RATE" shall mean, on any day, (a) with respect to Sterling, the spot rate at which US Dollars are offered on such day by the UK Agent in London for Sterling at approximately 11:00 a.m. (London time) and (b) with respect to Canadian Dollars, the spot rate at which US Dollars are offered on such day by the Canadian Agent in Toronto for Canadian Dollars at approximately 11:00 a.m. (Toronto time).
"START DATE" shall have the meaning provided in the definition of Applicable Rate.
"STATED AMOUNT" of each Letter of Credit shall mean the maximum amount available to be drawn thereunder (regardless of whether any conditions for drawing could then be met).
"STERLING" or "(POUND)" shall mean freely transferable lawful money of the United Kingdom.
"STERLING EQUIVALENT" shall mean, at any time for the determination thereof, the amount of Sterling that could be purchased with the amount of US Dollars (or any other foreign currency, as applicable) involved in such computation at the spot exchange rate therefor as quoted by the Administrative Agent as of 11:00 a.m. (local time) on the date two Business Days prior to the date of any determination thereof for purchase on such date.
"STOCK PURCHASE" shall have the meaning provided in Section 3.08(a).
"STOCK PURCHASE PRICE" shall have the meaning provided in
Section 3.08(a).
"SUBSIDIARY" of any Person shall mean and include (a) any corporation more than 50% of whose stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of such corporation (irrespective of whether or not at the time stock of any class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time owned by such Person directly or indirectly through Subsidiaries and (b) any partnership, limited liability company, association, joint venture or other entity (other than a corporation) in which such Person directly or indirectly through Subsidiaries, has more than a 50% equity interest at the time. Notwithstanding the foregoing (and except for purposes of Sections 5.01, 5.04, 5.12, 5.16, 5.17, 5.20, 6.01(h), 6.04, 6.06, 6.07, 6.08, 8.05, 8.06 and 8.09, and the definitions of Unrestricted Subsidiary, Foreign Unrestricted Subsidiary and Wholly-Owned Unrestricted Subsidiary contained herein), an Unrestricted Subsidiary shall be deemed not to be a Subsidiary of Holdings or any of its other Subsidiaries for purposes of this Agreement.
"SUBSIDIARY GUARANTOR" shall mean (a) each US Credit Party (other than Holdings) in its capacity as a Guarantor under the US Collateral and Guaranty Agreement, and (b) each Foreign Credit Party in its capacity as a Guarantor under the Foreign Guaranty.
"SUBSIDIARY REDESIGNATION" shall have the meaning provided in the definition of "UNRESTRICTED SUBSIDIARY" contained in this Article I.
"SWINGLINE EXPIRY DATE" shall mean the date which is five Business Days prior to the Revolving Loan Maturity Date.
"SWINGLINE EXPOSURE" shall mean, at any time, the aggregate principal amount of all Swingline Loans outstanding at such time. The Swingline Exposure of any Lender at any time shall be the sum of (a) with respect to any Swingline Loan in which the Revolving Lenders shall not have been required to participate pursuant to (S) 2.04(c), such Lender's Available Revolving Percentage at such time of each such Swingline Loan at such time and (b) with respect to each Swingline Loan in which the Revolving Lenders shall have acquired participations pursuant to (S) 2.04(c), such Lender's Available Revolving Percentage as of the date of such participation of each such Swingline Loan at such time.
"SWINGLINE LENDER" shall mean Chase, in its capacity as lender of Swingline Loans hereunder.
"SWINGLINE LOAN" shall mean a Loan made pursuant to Section 2.04.
"SWINGLINE NOTE" shall mean a promissory note substantially in the form of Exhibit A-3 with blanks appropriately completed in conformity herewith.
"SYNDICATION AGENT" shall mean Deutsche Banc Alex. Brown Inc.
"SYNTHETIC PURCHASE AGREEMENT" shall mean any swap, derivative or other agreement or combination of agreements pursuant to which Holdings or any of its Subsidiaries or any Unrestricted Subsidiary is or may become obligated to make (a) any payment not expressly permitted hereunder (i) in connection with a purchase by any Person other than Holdings or any of its Subsidiaries of any capital stock of or other equity interests in Holdings or any of its Subsidiaries, (ii) in respect of any Restricted Indebtedness or (iii) in respect of any liabilities of any Unrestricted Subsidiary or (b) any payment not expressly permitted hereunder the amount of which is determined by reference to (i) the price or value at any time of any capital stock of or other equity interests in Holdings or any of its Subsidiaries, (ii) Restricted Indebtedness or (iii) liabilities of any Unrestricted Subsidiary. Notwithstanding the foregoing, (A) the term "Synthetic Purchase Agreement" shall not include any swap, derivative or other agreement or combination of agreements to the extent that the inclusion of such agreement or combination of agreements in such term would restrict any transaction not otherwise restricted under this Agreement, unless such agreement or combination of agreements or the consummation of the transactions contemplated thereby is intended to have or would have an economic effect that is substantially equivalent to an economic effect of any transaction that is otherwise restricted under this Agreement and (B) any payment made or obligation incurred pursuant to a Synthetic Purchase Agreement that has an economic effect that is substantially equivalent to the economic effect of any payment or obligation expressly permitted by any provision of this Agreement will be deemed to have been made or incurred pursuant to such provision.
"TAX ALLOCATION AGREEMENTS" shall have the meaning provided in
Section 3.14.
"TAXES" shall mean any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any Governmental Authority.
"TERM LENDERS" shall mean a Lender with a Term Loan Commitment or an outstanding Term Loan.
"TERM LOAN" shall mean a Loan made pursuant to clause (a) of
Section 2.01.
"TERM LOAN COMMITMENT" shall mean, with respect to each Lender, the commitment, if any, of such Lender to make a Term Loan hereunder on the Initial Borrowing Date, expressed as an amount representing the maximum principal amount of the Term Loan to be made by such Lender hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.09 or 2.20(b) and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 10.04 or 10.11(b). The initial amount of each Lender's Term Loan Commitment is set forth opposite such Lender's name in Schedule I directly below the column entitled "TERM LOAN COMMITMENT," or in the Assignment and Assumption Agreement pursuant to which such Lender shall have assumed its Term Loan Commitment, as applicable. The initial aggregate amount of the Lenders' Term Loan Commitments is $225,000,000.
"TERM LOAN MATURITY DATE" shall mean November 28, 2009, or, if such date is not a Business Day, the next succeeding Business Day.
"TERM NOTE" shall mean a promissory note substantially in the form of Exhibit A-1 with blanks appropriately completed in conformity herewith.
"TEST PERIOD" shall mean, as of any date, the period of four
consecutive fiscal quarters of the US Borrower then last ended prior to such
date, in each case taken as one accounting period. Notwithstanding anything to
the contrary contained above or in Section 10.06 or otherwise required by GAAP,
(a) Consolidated EBITDA for the fiscal quarters ending on June 30, 2001 and
September 30, 2001, shall be $13,575,000 and $9,908,000, respectively, and (b)
Consolidated Interest Expense for the fiscal quarters ending on June 30, 2001,
September 30, 2001 and December 31, 2001, shall be $9,428,125, $9,428,125, and
$9,569,375, respectively.
"TOTAL COMMITMENT" shall mean, at any time, the sum of the Total Term Loan Commitment and the Total Revolving Loan Commitment.
"TOTAL LEVERAGE RATIO" shall mean, on any date, the ratio of
(a) Consolidated Debt on such date to (b) Consolidated EBITDA for the Test
Period most recently ended prior to such date. All calculations of the Total
Leverage Ratio shall be made on a Pro Forma Basis, it being understood and
agreed that, as provided in the definition of Pro Forma Basis, the adjustments
contained in clause (v) thereof shall not be taken into account in determining
the Total Leverage Ratio.
"TOTAL REVOLVING LOAN COMMITMENT" shall mean, at any time, the sum of the Revolving Loan Commitments of each of the Revolving Lenders at such time.
"TOTAL TERM LOAN COMMITMENT" shall mean the sum of the Term Loan Commitments of each of the Term Lenders.
"TOTAL UNUTILIZED REVOLVING LOAN COMMITMENT" shall mean, at any time, (a) the Total Revolving Loan Commitment at such time LESS (b) the sum of the total Revolving Credit Exposures of all the Revolving Lenders at such time.
"TRANCHE" shall mean the respective facility and commitments utilized in making Loans and accepting and purchasing B/As hereunder, with there being five separate Tranches, I.E., Term Loans, US Revolving Loans, Canadian Revolving Loans and B/A Drawings, UK Revolving Loans and Swingline Loans.
"TRANSACTION" shall mean, collectively, (a) the consummation of the Merger Transactions, (b) the entering into of the Credit Documents and the incurrence of all Loans hereunder on the Initial Borrowing Date, (c) the issuance of the Senior Subordinated Notes and (d) the payment of fees and expenses in connection with the foregoing.
"TRANSACTION COSTS" shall have the meaning provided in
Section 5.05(a)(i).
"TYPE" shall mean any type of Loan determined with respect to the interest option applicable thereto, I.E., a Base Rate Loan, a Eurodollar Loan or a Canadian Prime Rate Loan.
"UCC" shall mean the Uniform Commercial Code as in effect from time to time in the relevant jurisdiction.
"UK AGENT" shall mean Chase Manhattan International Limited, in its capacity as UK agent for the Lenders hereunder, or any successor thereto appointed in accordance with Article IX.
"UK BORROWER" shall mean Salt Union Limited, a company incorporated under the laws of England and Wales in the United Kingdom.
"UK INTERCOMPANY LOAN" shall have the meaning provided in
Section 5.05(a).
"UK INTERCOMPANY NOTE" shall have the meaning provided in
Section 7.05(f).
"UK LENDER" shall mean a Lender with a UK Revolving Loan Sub-Commitment or with outstanding UK Revolving Loans.
"UK LENDING OFFICE" shall mean as to any UK Lender, the applicable branch or office of such UK Lender designated by such UK Lender to make Loans to the UK Borrower.
"UK PERCENTAGE" shall mean, with respect to any UK Lender, the percentage of the total UK Revolving Loan Sub-Commitments represented by such Lender's UK Revolving Loan Sub-Commitment. If a calculation involving the UK Percentage is required to be made after the UK Revolving Loan Sub-Commitments have terminated or expired, the UK Percentages shall be determined based upon the UK Revolving Loan Sub-Commitments most recently in effect, giving effect to any assignments.
"UK REVOLVING BORROWING" shall mean a Borrowing comprised of UK Revolving Loans.
"UK REVOLVING CREDIT EXPOSURE" shall mean, at any time, the sum of (a) the US Dollar Equivalent of the aggregate principal amount of the UK Revolving Loans denominated in Sterling outstanding at such time and (b) the aggregate principal amount of UK Revolving Loans denominated in US Dollars outstanding at such time. The UK Revolving Credit Exposure of any Lender at any time shall be such Lender's UK Percentage of the total UK Revolving Credit Exposure at such time.
"UK REVOLVING LOAN" shall mean a Loan made by a UK Lender pursuant to Section 2.01(d). Each UK Revolving Loan shall be a Eurodollar Loan.
"UK REVOLVING LOAN SUB-COMMITMENT" shall mean, with respect to
each Lender, the commitment of such Lender to make UK Revolving Loans hereunder
during the Revolving Availability Period, expressed as an amount expressed in US
Dollars representing the maximum potential aggregate amount of such Lender's UK
Revolving Credit Exposure hereunder, as such commitment may be (a) reduced from
time to time pursuant to Section 2.09 or 2.20(b) and (b) reduced or increased
from time to time pursuant to assignments by or to such Lender pursuant to
Section 10.04 or 10.11(b); PROVIDED that the UK Percentage of each Lender shall
at all times equal the Canadian Percentage of such Lender. The initial amount of
each Lender's UK Revolving Loan Sub-Commitment is set forth opposite such
Lender's name in Schedule I directly below the column entitled "UK REVOLVING
LOAN SUB-COMMITMENT," or in the Assignment and Assumption Agreement pursuant to
which such Lender shall have assumed its UK Revolving Loan Sub-Commitment, as
applicable. The initial aggregate amount of the Lenders' UK Revolving
LoanSub-Commitments is $10,000,000.
"UNFUNDED CURRENT LIABILITY" of any Plan shall mean the amount, if any, by which the value of the accumulated plan benefits under the Plan, determined on a plan termination basis in accordance with actuarial assumptions at such time consistent with those prescribed by the PBGC for purposes of Sections 4022 and 4044 of ERISA, exceeds the fair market value of all plan assets allocable to such liabilities under Title IV of ERISA (excluding any accrued but unpaid contributions).
"UNRESTRICTED SUBSIDIARY" shall mean any Subsidiary of the
US Borrower that is acquired or created after the Initial Borrowing Date and
designated by the US Borrower as an Unrestricted Subsidiary hereunder by written
notice to the Administrative Agent; PROVIDED that the US Borrower shall only be
permitted to so designate a new Unrestricted Subsidiary after the Initial
Borrowing Date and so long as (a) no Default or Event of Default exists or would
result therefrom and (b) all of the provisions of Section 7.15 shall have been
complied with in respect of such newly-designated Unrestricted Subsidiary and
such Unrestricted Subsidiary shall be capitalized (to the extent capitalized by
the US Borrower or any of its Subsidiaries) through Investments as permitted by,
and in compliance with, Section 7.05(1), with any assets owned by such
Unrestricted Subsidiary at the time of the initial designation thereof to be
treated as Investments pursuant to Section 7.05(1); PROVIDED that at the time of
the initial Investment by the US Borrower or any of its Wholly-Owned
Subsidiaries in such Subsidiary, the US Borrower shall designate such entity as
an Unrestricted Subsidiary in a written notice to the Administrative Agent. The
US Borrower may designate any Unrestricted Subsidiary to be a Subsidiary for
purposes of this Agreement (each, a "SUBSIDIARY REDESIGNATION"); PROVIDED that
(i) such Unrestricted Subsidiary, both before and after giving effect to such
designation, shall be a Wholly-Owned Subsidiary of the US Borrower, (ii) no
Default or Event of Default then exists or would occur as a consequence of any
such Subsidiary Redesignation (including, but not limited to, under Sections
7.03 and 7.04), (iii) all actions that would be required to be taken pursuant to
Section 7.15(a) in connection with the establishment, creation or acquisition of
a new Domestic Subsidiary or a new Wholly-Owned Foreign Subsidiary are taken at
the time of the respective Subsidiary Redesignation, (iv) calculations are made
by the US Borrower of compliance with the covenants contained in Sections 7.09
and 7.10 (in each case, giving effect to the last sentence appearing therein)
for the relevant Calculation Period, on a Pro Forma Basis as if the respective
Subsidiary Redesignation (as well as all other Subsidiary Redesignations
theretofore consummated after the first day of such Calculation Period) had
occurred on the first day of such Calculation Period, and such calculations
shall show that such financial covenants would have been complied with if the
Subsidiary Redesignation had occurred on the first day of such Calculation
Period (for this purpose, (A) if the first day of the respective Calculation
Period occurs prior to the Initial Borrowing Date, calculated as if the
covenants contained in Sections 7.09 and 7.10 (in each case, giving effect to
the last sentence appearing therein) had been applicable from the first day of
the Calculation Period and (B) using the covenant levels contained in such
Sections 7.09 and 7.10 for the Test Period ending March 31, 2002 in connection
with any Subsidiary Redesignation made prior to March 31, 2002), (v) based on
good faith projections prepared by the US Borrower for the period from the date
of the respective Subsidiary Redesignation to the date that is one year
thereafter, the level of financial performance measured by the covenants
contained in Sections 7.09 and 7.10 (in each case, giving effect to the last
sentence appearing therein) shall be better than or equal to such level as would
be required to provide that no Default or Event of Default would exist under the
financial covenants contained in Sections 7.09 and 7.10 ((A) in each case,
giving effect to the last sentence appearing therein and (B) using the covenant
levels contained in such Sections 7.09 and 7.10 for the Test Period ending March
31, 2002 for any portion of such period prior to March 31, 2002) through the
date that is one year from the date of the respective Subsidiary Redesignation,
(vi) calculations are made by the US Borrower demonstrating compliance with an
Adjusted Senior Leverage Ratio not to exceed (A) 3.25 in the case of any
Subsidiary Redesignation consummated on or prior to June 30, 2003 and (B) 3.00
in the case of any Subsidiary
Redesignation consummated thereafter, in each case on the last day of the relevant Calculation Period, on a Pro Forma Basis as if the respective Subsidiary Redesignation (as well as all other Subsidiary Redesignations theretofore consummated after the first day of such Calculation Period) had occurred on the first day of such Calculation Period, (vii) all representations and warranties contained herein and in the other Credit Documents shall be true and correct in all material respects with the same effect as though such representations and warranties had been made on and as of the date of such Subsidiary Redesignation (both before and after giving effect thereto), unless stated to relate to a specific earlier date, in which case such representations and warranties shall be true and correct in all material respects as of such earlier date, (viii) after giving effect to such Subsidiary Redesignation and all payments made in connection therewith, the Total Unutilized Revolving Loan Commitment shall equal or exceed, and shall be reasonably expected (based on calculations made by the US Borrower) at all times during the twelve-month period following the date of such Subsidiary Redesignation to equal or exceed, $20,000,000, and (ix) the US Borrower shall have delivered to the Administrative Agent an officer's certificate executed by an Authorized Officer of the US Borrower, certifying to the best of such officer's knowledge, compliance with the requirements of preceding clauses (i) through (viii), inclusive, and containing the calculations required by the preceding clauses (iv), (v), (vi) and (viii).
"US BORROWER" shall mean Compass Minerals Group, Inc., a Delaware corporation.
"US COLLATERAL AND GUARANTY AGREEMENT" shall have the meaning provided in Section 3.09.
"US COLLATERAL ASSIGNMENT" shall have the meaning provided in
Section 3.11.
"US CREDIT PARTY" shall mean Holdings, the US Borrower and each other Guarantor that is also a Domestic Subsidiary.
"US DOLLAR EQUIVALENT" shall mean, at any time for the determination thereof, (a) except as provided in clause (b) of this definition, the amount of US Dollars that could be purchased with the amount of Canadian Dollars or Sterling or any other foreign currency, as applicable, at the Spot Exchange Rate therefor on the date two Business Days prior to the date of any determination thereof for purchase on such date and shall be calculated in accordance with Section 10.06(b) and (b) for purposes of Section 10.06(d), the amount of US Dollars that could be purchased with the amount of the applicable currency involved in such computation at the spot exchange rate therefore as quoted or utilized by the Applicable Agent on the date of any determination thereof for purchase on such day.
"US DOLLAR LOAN" shall mean all Loans denominated in US Dollars.
"US DOLLARS" and the sign "$" shall each mean freely transferable lawful money of the United States.
"US MORTGAGED PROPERTY" shall mean any Mortgaged Property located in the United States or any State thereof.
"US PERFECTION CERTIFICATE" shall mean a certificate in the form of Annex II to the US Collateral and Guaranty Agreement and any other form approved by the Collateral Agent.
"US REVOLVING BORROWING" shall mean a Borrowing comprised of US Revolving Loans.
"US REVOLVING CREDIT EXPOSURE" shall mean, at any time, the sum of (a) the outstanding principal amount of US Revolving Loans, (b) the LC Exposure and (c) the Swingline Exposure at such time. The US Revolving Credit Exposure of any Lender at any time shall be the sum of (i) the outstanding principal amount of each US Revolving Loan made by such Lender that is outstanding at such time, (ii) such Lender's LC Exposure at such time and (iii) such Lender's Swingline Exposure at such time.
"US REVOLVING LOAN" shall mean a Loan made by a Revolving Lender pursuant to Section 2.01(b).
"VOTING STOCK" shall mean, as to any Person, any class or classes of capital stock of such Person pursuant to which the holders thereof have the general voting power under ordinary circumstances to elect at least a majority of the Board of Directors of such Person.
"WHOLLY-OWNED DOMESTIC SUBSIDIARY" shall mean, as to any Person, any Wholly-Owned Subsidiary of such Person that is a Domestic Subsidiary.
"WHOLLY-OWNED FOREIGN SUBSIDIARY" shall mean, as to any Person, any Wholly-Owned Subsidiary of such Person that is a Foreign Subsidiary.
"WHOLLY-OWNED SUBSIDIARY" shall mean, as to any Person,
(a) any corporation 100% of whose capital stock (other than director's
qualifying shares and/or other nominal amounts of shares required to be held
other than by such Person under applicable law) is at the time owned by such
Person and/or one or more Wholly-Owned Subsidiaries of such Person and (b) any
partnership, limited liability company, association, joint venture or other
entity in which such Person and/or one or more Wholly-Owned Subsidiaries of such
Person has a 100% equity interest at such time; PROVIDED that (i) except
as provided in the last sentence of the definition of Subsidiary and (ii) other
than in the definition of Wholly-Owned Unrestricted Subsidiary, no Unrestricted
Subsidiary shall be considered a Wholly-Owned Subsidiary.
"WHOLLY-OWNED UNRESTRICTED SUBSIDIARY" shall mean any
Wholly-Owned Subsidiary that is an Unrestricted Subsidiary.
"WRITTEN" (whether lower or upper case) or "in writing" shall mean any form of written communication or a communication by means of telex, facsimile device, telegraph or cable.
SECTION 1.02. CLASSIFICATION OF LOANS AND BORROWINGS.
For purposes of this Agreement, Loans may be classified and referred to by
Tranche (E.G., a "REVOLVING LOAN") or by Type (E.G., a "EURODOLLAR LOAN") or by
Tranche and Type (E.G., a "EURODOLLAR REVOLVING LOAN"). Borrowings also may be
classified and referred to by Tranche (E.G., a "REVOLVING BORROWING") or by Type
(E.G., a "EURODOLLAR BORROWING") or by Tranche and Type (E.G., a "EURODOLLAR
REVOLVING BORROWING").
SECTION 1.03. TERMS GENERALLY. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include", "includes" and "including" shall, if such words are not followed by the phrase "without limitation", be deemed to be followed by the phrase "without limitation". The word "will" shall be construed to have the same meaning and effect as the word "shall". Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or
other document herein shall be construed as referring to such agreement,
instrument or other document as from time to time amended, supplemented or
otherwise modified (subject to any restrictions on such amendments, supplements
or modifications set forth herein), (b) any reference herein to any Person shall
be construed to include such Person's successors and assigns, (c) the words
"herein", "hereof" and "hereunder", and words of similar import, shall be
construed to refer to this Agreement in its entirety and not to any particular
provision hereof, (d) the words "the date hereof" and "the date of this
Agreement" shall be construed to refer to November 28, 2001, (e) all references
herein to Articles, Sections, Exhibits and Schedules shall be construed to refer
to Articles and Sections of, and Exhibits and Schedules to, this Agreement and
(f) the words "asset" and "property" shall be construed to have the same meaning
and effect and to refer to any and all tangible and intangible assets and
properties, including cash, securities, accounts and contract rights.
Article II
AMOUNT AND TERMS OF CREDIT
SECTION 2.01. COMMITMENTS. Subject to the terms and conditions set forth herein:
(a) (a) each Term Lender agrees to make a Term Loan to the US Borrower in US Dollars on the Initial Borrowing Date in a principal amount not exceeding its Term Loan Commitment;
(b) each Revolving Lender agrees, from time to time during the Revolving Availability Period, to make US Revolving Loans to the US Borrower in US Dollars in an aggregate Principal Amount that will not result in such Revolving Lender's Revolving Credit Exposure exceeding such Lender's Revolving Loan Commitment;
(c) each Canadian Lender agrees, from time to time during the Revolving Availability Period, to make Canadian Revolving Loans to the Canadian Borrower from its Canadian Lending Office in Canadian Dollars and/or US Dollars and/or to cause its Canadian Lending Office to accept and purchase or arrange for the acceptance and purchase of drafts drawn by the Canadian Borrower in Canadian Dollars as B/As in an aggregate Principal Amount that will not result in (A) such Lender's Canadian Revolving Credit Exposure exceeding such Lender's Canadian Revolving Loan Sub-Commitment or (B) such Lender's Revolving Credit Exposure exceeding such Lender's Revolving Loan Commitment; and
(d) each UK Lender agrees, from time to time during the Revolving Availability Period, to make UK Revolving Loans and/or to cause its UK Lending Office to make UK Revolving Loans to the UK Borrower in Sterling and/or US Dollars in an aggregate Principal Amount that will not result in (A) such Lender's UK Revolving Credit Exposure exceeding such Lender's UK Revolving Loan Sub-Commitment or (B) such Lender's Revolving Credit Exposure exceeding such Lender's Revolving Loan Commitment.
(e) Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrowers may borrow, prepay and reborrow Revolving Loans. Amounts repaid in respect of Term Loans may not be reborrowed.
SECTION 2.02. LOANS AND BORROWINGS. (a) Each Loan (other than a
Swingline Loan) shall be made as part of a Borrowing consisting of Loans of the
same Tranche and Type made by the applicable Lenders (i) in the case of Term
Borrowings, ratably in accordance with their respective Term Loan Commitments,
(ii) in the case of US Revolving Borrowings, ratably in accordance with their
respective Available Revolving Loan Commitments as of the date of borrowing,
(iii) in the case of Canadian Revolving Borrowings, ratably in accordance with
their respective Canadian Revolving Loan Sub-Commitments as of the date of
borrowing and (iv) in the case of UK Revolving Borrowings, ratably in accordance
with their respective UK Revolving Loan Sub-Commitments as of the date of
borrowing. The failure of any Lender to make any Loan required to be made by it
shall not relieve any other Lender of its obligations hereunder; PROVIDED that
the Commitments of the Lenders are several and no Lender shall be responsible
for any other Lender's failure to make Loans as required.
(b) Subject to Section 2.15, (i) each US Revolving Borrowing and Term Borrowing shall be comprised entirely of Base Rate Loans or Eurodollar Loans as the US Borrower may request in accordance herewith; PROVIDED that all Borrowings made on the Initial Borrowing Date must be made as Base Rate Borrowings, (ii) each Canadian Revolving Borrowing (A) denominated in Canadian Dollars shall be comprised entirely of Canadian Prime Rate Loans and (B) denominated in US Dollars shall be comprised entirely of Eurodollar Loans and Canadian Base Rate Loans, as the Canadian Borrower may request in accordance herewith and (iii) each UK Revolving Borrowing shall be comprised entirely of Eurodollar Loans. Each Swingline Loan shall be a Base Rate Loan. Subject to Section 2.20, each Lender at its option may make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; PROVIDED that any exercise of such option shall not affect the obligation of the applicable Borrower to repay such Loan in accordance with the terms of this Agreement.
(c) At the commencement of each Interest Period for any Term Borrowing, such Borrowing shall be in an aggregate amount that is an integral multiple of $1,000,000 and not less than $5,000,000. At the time that each US Revolving Borrowing is made, such Borrowing shall be in an aggregate amount that is an integral multiple of $1,000,000 and not less than $2,000,000; PROVIDED that a Base Rate Revolving Borrowing may be in an aggregate amount that is equal to the Total Unutilized Revolving Loan Commitment, or that is required to finance the reimbursement of an LC Disbursement as contemplated by Section 2.05(e). At the time that each Canadian Revolving Borrowing and UK Revolving Borrowing denominated in US Dollars is made, such Borrowing shall be in an aggregate amount that is an integral multiple of $500,000 and not less than $1,000,000. At the commencement of each Interest Period for any Eurodollar Borrowing that is denominated in Sterling, such Borrowing shall be in an aggregate amount that is an integral multiple of (pound)500,000 and not less than (pound)1,000,000; PROVIDED that a Eurodollar Borrowing that is denominated in Sterling may be in an aggregate amount the US Dollar Equivalent of which is equal to the entire unused balance of the UK Revolving Loan Sub-Commitments. At the time that each Canadian Prime Rate Borrowing is made, such Borrowing
shall be in an aggregate amount that is an integral multiple of C$1,000,000 and not less than C$2,000,000; PROVIDED that a Canadian Prime Rate Borrowing may be in an aggregate amount the US Dollar Equivalent of which is equal to the entire unused balance of the Canadian Revolving Loan Sub-Commitments. Each Swingline Loan shall be in an amount that is an integral multiple of $100,000 and not less than $500,000. Borrowings of more than one Type and Tranche may be outstanding at the same time; PROVIDED that there shall not at any time be more than a total of 20 Eurodollar Borrowings outstanding.
(d) Notwithstanding any other provision of this Agreement, the applicable Borrower shall not be entitled to request, or to elect to convert or continue, any Borrowing or B/A Drawing if the Interest Period requested with respect thereto would end after the applicable Maturity Date.
SECTION 2.03. REQUESTS FOR BORROWINGS. To request a Revolving
Borrowing or Term Borrowing, the applicable Borrower shall notify the Applicable
Agent of such request by telephone or telecopy (a) in the case of a Eurodollar
Borrowing, not later than 11:00 a.m., Local Time, three Business Days before the
date of the proposed Borrowing, (b) in the case of a Base Rate Borrowing, not
later than 11:00 a.m., New York City time, one Business Day before the date of
the proposed Borrowing, PROVIDED that any such notice of a Base Rate Revolving
Borrowing to finance the reimbursement of an LC Disbursement as contemplated by
Section 2.05(e) may be given not later than 10:00 a.m., New York City time, on
the date of the proposed Borrowing, (c) in the case of a Canadian Base Rate
Borrowing, not later than 11:00 a.m., Local Time, one Business Day before the
date of the proposed Borrowing and (d) in the case of a Canadian Prime Rate
Borrowing, not later than 11:00 a.m., Local Time, one Business Day before the
date of the proposed Borrowing. Each such telephonic Notice of Borrowing shall
be irrevocable and shall be confirmed promptly by hand delivery or telecopy to
the Administrative Agent of a written Notice of Borrowing in a form approved by
the Administrative Agent and signed by the applicable Borrower (or by the US
Borrower on behalf of the applicable Borrower). Each such telephonic and written
Notice of Borrowing shall specify the following information in compliance with
Section 2.02:
(i) the Borrower requesting such Borrowing (or on whose behalf the US Borrower is requesting such Borrowing);
(ii) whether the requested Borrowing is to be a Term Borrowing, US Revolving Borrowing, Canadian Revolving Borrowing or UK Revolving Borrowing;
(iii) the currency and the aggregate amount of such Borrowing;
(iv) the date of such Borrowing, which shall be a Business Day;
(v) the Type of such Borrowing;
(vi) in the case of a Eurodollar Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term "Interest Period"; and
(vii) the location and number of the applicable Borrower's account to which funds are to be disbursed, which shall comply with the requirements of Section 2.06.
If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be (A) in the case of a US Revolving Borrowing or Term Borrowing, a Base Rate Borrowing, (B) in the case of a Canadian Revolving Borrowing, a Canadian Prime Rate Borrowing and (C) in the case of a UK Revolving Borrowing, a Eurodollar Borrowing. If no Interest Period is specified with respect to any requested Eurodollar Borrowing, then the applicable Borrower shall be deemed to have selected an Interest Period of one month's duration. Promptly following receipt of a Notice of Borrowing in accordance with this Section, the Applicable Agent shall advise each Lender of the details thereof and of the amount of such Lender's Loan to be made as part of the requested Borrowing. If no currency is specified (1) with respect to any Canadian Revolving Borrowing, then the currency of such Canadian Revolving Borrowing shall be Canadian Dollars and (2) with respect to any UK Revolving Borrowing, then the currency of such UK Revolving Borrowing shall be Sterling.
SECTION 2.04. SWINGLINE LOANS. (a) Subject to the terms and conditions set forth herein, the Swingline Lender agrees to make Swingline Loans to the US Borrower from time to time during the Revolving Availability Period, in an aggregate Principal Amount at any time outstanding that will not result in (i) the aggregate principal amount of outstanding Swingline Loans exceeding $15,000,000 or (ii) the sum of the total Revolving Credit Exposures exceeding the Total Revolving Loan Commitment. Within the foregoing limits and subject to the terms and conditions set forth herein, the US Borrower may borrow, prepay and reborrow Swingline Loans.
(b) To request a Swingline Loan, the US Borrower shall notify the Administrative Agent of such request by telephone (confirmed by telecopy), not later than 12:00 noon, New York City time, on the day of a proposed Swingline Loan. Each such notice shall be irrevocable and shall specify the requested date (which shall be a Business Day) and amount of the requested Swingline Loan. The Administrative Agent will promptly advise the Swingline Lender of any such notice received from the US Borrower. The Swingline Lender shall make each Swingline Loan available to the US Borrower by means of a credit to the general deposit account of the US Borrower with the Swingline Lender (or, in the case of a Swingline Loan made to finance the reimbursement of an LC Disbursement as provided in Section 2.05(e), by remittance to the Letter of Credit Issuer) by 3:00 p.m., New York City time, on the requested date of such Swingline Loan.
(c) The Swingline Lender may by written notice given to the Administrative Agent not later than 12:00 noon, New York City time, on any Business Day require the Revolving Lenders to acquire participations on such Business Day in all or a portion of the Swingline Loans outstanding. Such notice shall specify the aggregate amount of Swingline Loans in which Revolving Lenders will participate. Promptly upon receipt of such notice, the Administrative Agent will give notice thereof to each Revolving Lender, specifying in such notice such Lender's Available Revolving Percentage (for each Swingline Loan, as of the date of such participation) of such Swingline Loan or Loans. Each Revolving Lender hereby absolutely and unconditionally agrees, upon receipt of notice as provided above, to pay to the
Administrative Agent, for the account of the Swingline Lender, such Lender's Available Revolving Percentage (for each Swingline Loan, as of the date of such participation) of such Swingline Loan or Loans. Each Revolving Lender acknowledges and agrees that its obligation to acquire participations in Swingline Loans pursuant to this paragraph is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the occurrence and continuance of a Default or reduction or termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. Each Revolving Lender shall comply with its obligation under this paragraph by wire transfer of immediately available funds, in the same manner as provided in Section 2.06 with respect to Loans made by such Lender (and Section 2.06 shall apply, MUTATIS MUTANDIS, to the payment obligations of the Revolving Lenders), and the Administrative Agent shall promptly pay to the Swingline Lender the amounts so received by it from the Revolving Lenders. The Administrative Agent shall notify the US Borrower of any participations in any Swingline Loan acquired pursuant to this paragraph, and thereafter payments in respect of such Swingline Loan shall be made to the Administrative Agent and not to the Swingline Lender. Any amounts received by the Swingline Lender from the US Borrower (or other party on behalf of the US Borrower) in respect of a Swingline Loan after receipt by the Swingline Lender of the proceeds of a sale of participations therein shall be promptly remitted to the Administrative Agent; any such amounts received by the Administrative Agent shall be promptly remitted by the Administrative Agent to the Revolving Lenders that shall have made their payments pursuant to this paragraph and to the Swingline Lender, as their interests may appear. The purchase of participations in a Swingline Loan pursuant to this paragraph shall not relieve the US Borrower of any default in the payment thereof.
SECTION 2.05. LETTERS OF CREDIT. (a) GENERAL. On the Initial Borrowing Date, each Existing Letter of Credit will automatically, without any action on the part of any person, be deemed to be a Letter of Credit issued hereunder for the account of the applicable Borrower for all purposes of this Agreement and the other Credit Documents. In addition, subject to the terms and conditions set forth herein, the US Borrower may request the issuance of Letters of Credit for its own account, in a form reasonably acceptable to the Administrative Agent and the Letter of Credit Issuer, at any time and from time to time during the Revolving Availability Period. In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application or other agreement submitted by the US Borrower to, or entered into by the US Borrower with, the Letter of Credit Issuer relating to any Letter of Credit, the terms and conditions of this Agreement shall control.
(b) NOTICE OF ISSUANCE, AMENDMENT, RENEWAL, EXTENSION; CERTAIN CONDITIONS. To request the issuance of a Letter of Credit (or the amendment, renewal or extension of an outstanding Letter of Credit), the US Borrower shall hand deliver or telecopy (or transmit by electronic communication, if arrangements for doing so have been approved by the Letter of Credit Issuer) to the Letter of Credit Issuer and the Administrative Agent (reasonably in advance of the requested date of issuance, amendment, renewal or extension) a notice requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended, renewed or extended, and specifying the date of issuance, amendment, renewal or extension (which shall be a Business Day), the date on which such Letter of Credit is to expire (which shall comply with paragraph (c) of this Section), the amount of such Letter of Credit, the name and address of the
beneficiary thereof and such other information as shall be necessary to prepare, amend, renew or extend such Letter of Credit (a "LETTER OF CREDIT REQUEST"). If requested by the Letter of Credit Issuer, the US Borrower also shall submit a letter of credit application on the Letter of Credit Issuer's standard form in connection with any request for a Letter of Credit. A Letter of Credit shall be issued, amended, renewed or extended only if (and upon issuance, amendment, renewal or extension of each Letter of Credit the US Borrower shall be deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or extension (i) the LC Exposure shall not exceed $50,000,000 and (ii) the total Revolving Credit Exposures shall not exceed the Total Revolving Loan Commitment.
(c) EXPIRATION DATE. Each Letter of Credit shall expire at or prior to the close of business on the earlier of (i) the date one year after the date of the issuance of such Letter of Credit (or, in the case of any renewal or extension thereof, one year after such renewal or extension) and (ii) the date that is five Business Days prior to the Revolving Loan Maturity Date.
(d) PARTICIPATIONS. By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) and without any further action on the part of the Letter of Credit Issuer or the Lenders, the Letter of Credit Issuer hereby grants to each Revolving Lender, and each Revolving Lender (each, a "PARTICIPANT") hereby acquires from the Letter of Credit Issuer, a participation in such Letter of Credit or increase therein, as applicable, equal to such Lender's Available Revolving Percentage (as of the date of the issuance of such Letter of Credit or the date of such increase, as applicable) of the aggregate amount available to be drawn under such Letter of Credit. In consideration and in furtherance of the foregoing, each Revolving Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of the Letter of Credit Issuer with respect to each Letter of Credit, such Lender's Available Revolving Percentage (as determined above deeming LC Disbursements thereunder to be made first from increases taken in inverse chronological order and then from the initial Letter of Credit amount) of each LC Disbursement made by the Letter of Credit Issuer with respect to such Letter of Credit and not reimbursed by the US Borrower on the date due as provided in paragraph (e) of this Section, or of any reimbursement payment required to be refunded to the US Borrower for any reason. Each Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit or the occurrence and continuance of a Default or reduction or termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.
(e) REIMBURSEMENT. If the Letter of Credit Issuer shall make any LC Disbursement in respect of a Letter of Credit, the US Borrower shall reimburse such LC Disbursement by paying to the Administrative Agent an amount equal to such LC Disbursement not later than 12:00 noon, New York City time, on the Business Day immediately following the day that the US Borrower receives notice of such LC Disbursement; PROVIDED that the US Borrower may, subject to the conditions to borrowing set forth herein, request in accordance with Section 2.03 or 2.04 that such payment be financed with a Base Rate Revolving Borrowing or Swingline Loan in an equivalent amount and, to the extent so financed, the US Borrower's obligation to make such payment shall be discharged and replaced by the resulting Base Rate Revolving Borrowing or Swingline Loan. If the US Borrower fails to make such payment when
due, the Administrative Agent shall notify each Revolving Lender of the applicable LC Disbursement, the payment then due from the US Borrower in respect thereof and the amount of such Lender's participation in such LC Disbursement, determined as set forth in paragraph (d) above. Promptly following receipt of such notice, each Revolving Lender shall pay to the Administrative Agent its participation in such LC Disbursement, in the same manner as provided in Section 2.06 with respect to Loans made by such Lender (and Section 2.06 shall apply, mutatis mutandis, to the payment obligations of the Revolving Lenders), and the Administrative Agent shall promptly pay to the Letter of Credit Issuer the amounts so received by it from the Revolving Lenders. Promptly following receipt by the Administrative Agent of any payment from the US Borrower pursuant to this paragraph, the Administrative Agent shall distribute such payment to the Letter of Credit Issuer or, to the extent that Revolving Lenders have made payments pursuant to this paragraph to reimburse the Letter of Credit Issuer, then to such Lenders and the Letter of Credit Issuer as their interests may appear. Any payment made by a Revolving Lender pursuant to this paragraph to reimburse the Letter of Credit Issuer for any LC Disbursement (other than the funding of Base Rate Revolving Loans or a Swingline Loan as contemplated above) shall not constitute a Loan and shall not relieve the US Borrower of its obligation to reimburse such LC Disbursement.
(f) OBLIGATIONS ABSOLUTE. The US Borrower's obligation to reimburse LC Disbursements as PROVIDED in paragraph (e) of this Section shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit or this Agreement, or any term or provision therein, (ii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii) payment by the Letter of Credit Issuer under a Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit, or (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of, or provide a right of setoff against, the US Borrower's obligations hereunder. Neither the Administrative Agent, the Lenders nor the Letter of Credit Issuer, nor any of their respective Affiliates, nor any of their (and their respective Affiliates') respective directors, officers, employees, agents and advisors, shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of the Letter of Credit Issuer; PROVIDED that the foregoing shall not be construed to excuse the Letter of Credit Issuer from liability to the US Borrower to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the US Borrower to the extent permitted by applicable law) suffered by the US Borrower that are caused by the Letter of Credit Issuer's failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. The parties hereto expressly agree that, in the absence of gross negligence or willful misconduct on the part of the Letter of Credit Issuer (as finally determined by a court of
competent jurisdiction), the Letter of Credit Issuer shall be deemed to have exercised care in each such determination. In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented that appear on their face to be in substantial compliance with the terms of a Letter of Credit, the Letter of Credit Issuer may, in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit.
(g) DISBURSEMENT PROCEDURES. The Letter of Credit Issuer shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit. The Letter of Credit Issuer shall promptly notify the Administrative Agent and the US Borrower by telephone (confirmed by telecopy) of such demand for payment and whether the Letter of Credit Issuer has made or will make an LC Disbursement thereunder; PROVIDED that any failure to give or delay in giving such notice shall not relieve the US Borrower of its obligation to reimburse the Letter of Credit Issuer and the Revolving Lenders with respect to any such LC Disbursement.
(h) INTERIM INTEREST. If the Letter of Credit Issuer shall make any LC Disbursement, then, unless the US Borrower shall reimburse such LC Disbursement in full on the date such LC Disbursement is made, the unpaid amount thereof shall bear interest, for each day from and including the date such LC Disbursement is made to but excluding the date that the US Borrower reimburses such LC Disbursement, at the rate per annum then applicable to Base Rate Revolving Loans; PROVIDED that, if the US Borrower fails to reimburse such LC Disbursement when due pursuant to paragraph (e) of this Section, then Section 2.14(c) shall apply. Interest accrued pursuant to this paragraph shall be for the account of the Letter of Credit Issuer, except that interest accrued on and after the date of payment by any Revolving Lender pursuant to paragraph (e) of this Section to reimburse the Letter of Credit Issuer shall be for the account of such Lender to the extent of such payment.
(i) REPLACEMENT OF THE LETTER OF CREDIT ISSUER. The Letter of Credit
Issuer may be replaced at any time by written agreement among the US Borrower,
the Administrative Agent, the replaced Letter of Credit Issuer and the successor
Letter of Credit Issuer; PROVIDED that no Letters of Credit issued by the
existing Letter of Credit Issuer shall terminate solely due to such replacement
of the Letter of Credit Issuer. The Administrative Agent shall notify the
Lenders of any such replacement of the Letter of Credit Issuer. At the time any
such replacement shall become effective, the US Borrower shall pay all unpaid
fees accrued for the account of the replaced Letter of Credit Issuer pursuant to
Section 2.13(b). From and after the effective date of any such replacement, (i)
the successor Letter of Credit Issuer shall have all the rights and obligations
of the Letter of Credit Issuer under this Agreement with respect to Letters of
Credit to be issued thereafter and (ii) references herein to the term "Letter of
Credit Issuer" shall be deemed to refer to such successor or to any previous
Letter of Credit Issuer, or to such successor and all previous Letter of Credit
Issuers, as the context shall require. After the replacement of an Letter of
Credit Issuer hereunder, the replaced Letter of Credit Issuer shall remain a
party hereto and shall continue to have all the rights and obligations of an
Letter of Credit Issuer under this Agreement with respect to Letters of Credit
issued by it prior to such replacement, but shall not be required to issue
additional Letters of Credit.
(j) CASH COLLATERALIZATION. If any Event of Default shall occur and be
continuing, on the Business Day that the US Borrower receives notice from the
Administrative Agent or the Required Lenders (or, if the maturity of the Loans
has been accelerated, Revolving Lenders with LC Exposure representing greater
than 50% of the total LC Exposure) demanding the deposit of cash collateral
pursuant to this paragraph, the US Borrower shall deposit in an account with the
Administrative Agent, in the name of the Administrative Agent and for the
benefit of the Lenders, an amount in cash equal to the LC Exposure as of such
date PLUS any accrued and unpaid interest thereon; PROVIDED that the obligation
to deposit such cash collateral shall become effective immediately, and such
deposit shall become immediately due and payable, without demand or other notice
of any kind, upon the occurrence of any Event of Default with respect to the US
Borrower described in Section 8.05. Each such deposit shall be held by the
Administrative Agent as collateral for the payment and performance of the
obligations of the US Borrower under this Agreement. The Administrative Agent
shall have exclusive dominion and control, including the exclusive right of
withdrawal, over such account. Other than any interest earned on the investment
of such deposits, which investments shall be made at the option and sole
discretion of the Administrative Agent and at the US Borrower's risk and
expense, such deposits shall not bear interest. Interest or profits, if any, on
such investments shall accumulate in such account. Moneys in such account shall
be applied by the Administrative Agent to reimburse the Letter of Credit Issuer
for LC Disbursements for which it has not been reimbursed and, to the extent not
so applied, shall be held for the satisfaction of the reimbursement obligations
of the US Borrower for the LC Exposure at such time or, if the maturity of the
Loans has been accelerated (but subject to the consent of Revolving Lenders with
LC Exposure representing greater than 50% of the total LC Exposure), be applied
to satisfy other obligations of the US Borrower under this Agreement. If the US
Borrower is required to provide an amount of cash collateral hereunder as a
result of the occurrence of an Event of Default, such amount (to the extent not
applied as aforesaid) shall be returned to the US Borrower within three Business
Days after all Events of Default have been cured or waived. If the US Borrower
is required to provide an amount of cash collateral hereunder pursuant to
Section 2.12(a), such amount (to the extent not applied as aforesaid) shall be
returned to the US Borrower as and to the extent that, after giving effect to
such return, the US Borrower would remain in compliance with Section 2.12(a) and
no Default shall have occurred and be continuing.
SECTION 2.06. FUNDING OF BORROWINGS. (a) Each Lender shall make each Loan to be made by it and disburse the Discount Proceeds (net of applicable acceptance fees) of each B/A to be accepted and purchased by it hereunder on the proposed date thereof by wire transfer of immediately available funds by 12:00 noon, New York City time, to the account of the Applicable Agent most recently designated by it for such purpose by notice to the Lenders; PROVIDED that Swingline Loans shall be made as PROVIDED in Section 2.04. The Applicable Agent will make such Loans or Discount Proceeds (net of applicable acceptance fees) available to the applicable Borrower by promptly crediting the amounts so received, in like funds, to an account of the applicable Borrower (i) in New York City in the case of Loans made to the US Borrower, (ii) in Toronto, in the case of Canadian Revolving Loans or B/As and (iii) in London, in the case of UK Revolving Loans, and in each case designated by the applicable Borrower in the applicable Notice of Borrowing; PROVIDED that Base Rate Revolving Loans made to finance the reimbursement of an LC Disbursement as PROVIDED in Section 2.05(e) shall be remitted by the Administrative Agent to the Letter of Credit Issuer.
(b) Unless the Applicable Agent shall have received notice from a Lender
prior to the proposed date of any Borrowing or acceptance and purchase of B/As
that such Lender will not make available to the Applicable Agent such Lender's
share of such Borrowing or the applicable Discount Proceeds (net of applicable
acceptance fees), the Applicable Agent may assume that such Lender has made such
share available on such date in accordance with paragraph (a) of this Section
and may, in reliance upon such assumption, make available to the applicable
Borrower a corresponding amount. In such event, if a Lender has not in fact made
its share of the applicable Borrowing available to the Applicable Agent, then
the applicable Lender and the applicable Borrower severally agree to pay to the
Administrative Agent forthwith on demand such corresponding amount with interest
thereon, for each day from and including the date such amount is made available
to the applicable Borrower to but excluding the date of payment to the
Applicable Agent, at (i) in the case of a Lender, the greater of (A)(1) the
Federal Funds Effective Rate, in the case of Loans denominated in US Dollars and
(2) the rate reasonably determined by the Applicable Agent to be the cost to it
of funding such amount, in the case of Loans denominated in Canadian Dollars or
Sterling, and (B) a rate determined by the Applicable Agent in accordance with
banking industry rules on interbank compensation, or (ii) in the case of a
Borrower, the interest rate applicable to Base Rate Loans. If such Lender pays
such amount to the Applicable Agent, then such amount shall constitute such
Lender's Loan included in such Borrowing.
SECTION 2.07. CANADIAN BANKERS' ACCEPTANCES. (a) Each acceptance and
purchase of B/As of a single Contract Period pursuant to Section 2.01(c) or
Section 2.08 shall be made ratably by the Canadian Lenders in accordance with
the amounts of their Canadian Revolving Loan Sub-Commitments. The failure of any
Canadian Lender to accept any B/A required to be accepted by it shall not
relieve any other Canadian Lender of its obligations hereunder; PROVIDED that
the Canadian Revolving Loan Sub-Commitments are several and no Canadian Lender
shall be responsible for any other Canadian Lender's failure to accept B/As as
required.
(b) The B/As of a single Contract Period accepted and purchased on any date shall be in an aggregate amount that is an integral multiple of C$1,000,000 and not less than C$2,000,000. The face amount of each B/A shall be C$100,000 or any whole multiple thereof. If any Canadian Lender's ratable share of the B/As of any Contract Period to be accepted on any date would not be an integral multiple of C$100,000, the face amount of the B/As accepted by such Lender may be increased or reduced to the nearest integral multiple of C$100,000 by the Canadian Agent in its sole discretion. B/As of more than one Contract Period may be outstanding at the same time; PROVIDED that there shall not at any time be more than a total of five B/A Drawings outstanding (or such greater number as the Applicable Agent shall agree).
(c) To request an acceptance and purchase of B/As, the Canadian Borrower shall notify the Canadian Agent of such request by telephone or by telecopy not later than 11:00 a.m., Local Time, one Business Day before the date of such acceptance and purchase. Each such request shall be irrevocable and, if telephonic, shall be confirmed promptly by hand delivery or telecopy to the Canadian Agent of a written request in a form approved by the Canadian Agent and signed by the Canadian Borrower. Each such telephonic and written request shall specify the following information:
(i) the aggregate face amount of the B/As to be accepted and purchased;
(ii) the date of such acceptance and purchase, which shall be a Business Day;
(iii) the Contract Period to be applicable thereto, which shall be a period contemplated by the definition of the term "Contract Period" (and which shall in no event end after the Maturity Date); and
(iv) the location and number of the Canadian Borrower's account to which any funds are to be disbursed, which shall comply with the requirements of Section 2.06. If no Contract Period is specified with respect to any requested acceptance and purchase of B/As, then the Canadian Borrower shall be deemed to have selected a Contract Period of 30 days' duration.
Promptly following receipt of a request in accordance with this paragraph, the Canadian Agent shall advise each Canadian Lender of the details thereof and of the amount of B/As to be accepted and purchased by such Lender.
(d) The Canadian Borrower hereby appoints each Canadian Lender as its
attorney to sign and endorse on its behalf, manually or by facsimile or
mechanical signature, as and when deemed necessary by such Lender, blank forms
of B/As. It shall be the responsibility of each Canadian Lender to maintain an
adequate supply of blank forms of B/As for acceptance under this Agreement. The
Canadian Borrower recognizes and agrees that all B/As signed and/or endorsed on
its behalf by any Canadian Lender shall bind the Canadian Borrower as fully and
effectually as if manually signed and duly issued by authorized officers of the
Canadian Borrower. Each Canadian Lender is hereby authorized to issue such B/As
endorsed in blank in such face amounts as may be determined by such Lender;
PROVIDED that the aggregate face amount thereof is equal to the aggregate face
amount of B/As required to be accepted by such Lender. No Canadian Lender shall
be liable for any damage, loss or claim arising by reason of any loss or
improper use of any such instrument unless such loss or improper use results
from the bad faith, gross negligence or willful misconduct of such Lender. Each
Canadian Lender shall maintain a record with respect to B/As (i) received by it
from the Canadian Agent in blank hereunder, (ii) voided by it for any reason,
(iii) accepted and purchased by it hereunder and (iv) canceled at their
respective maturities. Each Canadian Lender further agrees to retain such
records in the manner and for the periods provided in applicable provincial or
Federal statutes and regulations of Canada and to provide such records to the
Canadian Borrower upon its request and at its expense. Upon request by the
Canadian Borrower, a Lender shall cancel all forms of B/A that have been
pre-signed or pre-endorsed on behalf of the Canadian Borrower and that are held
by such Lender and are not required to be issued pursuant to this Agreement.
(e) Drafts of the Canadian Borrower to be accepted as B/As hereunder shall be signed as set forth in paragraph (d) above. Notwithstanding that any Person whose signature appears on any B/A may no longer be an authorized signatory for any of the Lenders or the Canadian Borrower at the date of issuance of such B/A, such signature shall nevertheless be
valid and sufficient for all purposes as if such authority had remained in force at the time of such issuance and any such B/A so signed shall be binding on the Canadian Borrower.
(f) Upon acceptance of a B/A by a Lender, such Lender shall purchase, or arrange the purchase of, such B/A from the Canadian Borrower at the Discount Rate for such Lender applicable to such B/A accepted by it and provide to the Canadian Agent the Discount Proceeds for the account of the Canadian Borrower as provided in Section 2.07. The acceptance fee payable by the Canadian Borrower to a Lender under Section 2.13 in respect of each B/A accepted by such Lender shall be set off against the Discount Proceeds payable by such Lender under this paragraph. Notwithstanding the foregoing, in the case of any B/A Drawing resulting from the conversion or continuation of a B/A Drawing or Canadian Revolving Loan pursuant to Section 2.08, the net amount that would otherwise be payable to the Canadian Borrower by each Lender pursuant to this paragraph will be applied as provided in Section 2.08(f).
(g) Each Lender may at any time and from time to time hold, sell, rediscount or otherwise dispose of any or all B/A's accepted and purchased by it; provided that no such sale or disposition shall cause the amount payable by a Borrower under Section 2.18 to exceed the amount that would have been payable thereunder in the absence of such sale or disposition.
(h) Each B/A accepted and purchased hereunder shall mature at the end of the Contract Period applicable thereto.
(i) The Canadian Borrower waives presentment for payment and any other defense to payment of any amounts due to a Lender in respect of a B/A accepted and purchased by it pursuant to this Agreement that might exist solely by reason of such B/A being held, at the maturity thereof, by such Lender in its own right and the Canadian Borrower agrees not to claim any days of grace if such Lender as holder sues the Canadian Borrower on the B/A for payment of the amounts payable by the Canadian Borrower thereunder. On the specified maturity date of a B/A, or such earlier date as may be required pursuant to the provisions of this Agreement, the Canadian Borrower shall pay the Lender that has accepted and purchased such B/A the full face amount of such B/A (or shall make provision for the conversion or continuation of such B/A in accordance with Section 2.08) in Canadian Dollars, and after such payment the Canadian Borrower shall have no further liability in respect of such B/A and such Lender shall be entitled to all benefits of, and be responsible for all payments due to third parties under, such B/A.
(j) At the option of the Canadian Borrower and any Lender, B/As under this Agreement to be accepted by that Lender may be issued in the form of depository bills for deposit with The Canadian Depository for Securities Limited pursuant to the Depository Bills and Notes Act (Canada). All depository bills so issued shall be governed by the provisions of this Section 2.07.
(k) If a Canadian Lender is not a chartered bank under the Bank Act (Canada) or if a Canadian Lender notifies the Canadian Agent in writing that it is otherwise unable to accept B/As, such Canadian Lender will, instead of accepting and purchasing B/As, make a Loan (a "B/A EQUIVALENT LOAN") from its Canadian Lending Office to the Canadian Borrower in the amount and for the same term as the draft that such Canadian Lender would otherwise have been required to accept and purchase hereunder. Each such Canadian Lender may request that such
B/A Equivalent Loan be evidenced by a non-interest bearing promissory note, in a form approved by the US Borrower and the Applicable Agent. Each such Canadian Lender will provide to the Canadian Agent the Discount Proceeds of such B/A Equivalent Loan for the account of the Canadian Borrower in the same manner as such Canadian Lender would have provided the Discount Proceeds in respect of the draft that such Canadian Lender would otherwise have been required to accept and purchase hereunder. Each such B/A Equivalent Loan will bear interest at the same rate that would result if such Canadian Lender had accepted (and been paid an acceptance fee) and purchased (on a discounted basis) a B/A for the relevant Contract Period (it being the intention of the parties that each such B/A Equivalent Loan shall have the same economic consequences for the Lenders and the Canadian Borrower as the B/A that such B/A Equivalent Loan replaces). All such interest shall be paid in advance on the date such B/A Equivalent Loan is made, and will be deducted from the principal amount of such B/A Equivalent Loan in the same manner in which the Discount Proceeds of a B/A would be deducted from the face amount of the B/A. Subject to the repayment requirements of this Agreement, on the last day of the relevant Contract Period for such B/A Equivalent Loan, the Canadian Borrower shall be entitled to convert each such B/A Equivalent Loan into another type of Loan, or to roll over each such B/A Equivalent Loan into another B/A Equivalent Loan, all in accordance with the applicable provisions of this Agreement.
(l) If the Applicable Agent determines and promptly notifies the US Borrower that, by reason of circumstances affecting the money market, there is no market for B/As, (i) the right of the Canadian Borrower to request an acceptance and purchase of B/As shall be suspended until the Applicable Agent determines that the circumstances causing such suspension no longer exist and so notifies the US Borrower, and (ii) any notice relating to an acceptance and purchase of B/As that is outstanding at such time shall be deemed to be a notice requesting a Canadian Prime Rate Borrowing (as if it were a notice given pursuant to Section 2.03).
SECTION 2.08. INTEREST ELECTIONS. (a) Each Revolving Borrowing and Term Borrowing initially shall be of the Type specified in the applicable Notice of Borrowing and, in the case of a Eurodollar Borrowing, shall have an initial Interest Period as specified in such Notice of Borrowing. Each B/A Drawing shall have a Contract Period as specified in the applicable request therefor. Thereafter, the applicable Borrower may elect to convert such Borrowing or a B/A Drawing to a different Type or to continue such Borrowing or B/A Drawing and, in the case of a Eurodollar Borrowing, may elect Interest Periods therefor, all as PROVIDED in this Section, it being understood that no B/A Drawing may be converted or continued other than at the end of the Contract Period applicable thereto. The applicable Borrower may elect different options with respect to different portions of the affected Borrowing or B/A Drawing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing or accepting the B/As comprising such B/A Drawing, as the case may be, and the Loans or B/As comprising each such portion shall be considered a separate Borrowing or B/A Drawing. Notwithstanding any other provision of this Section, no Borrowing or B/A Drawing may be converted into or continued as a Borrowing or B/A Drawing with an Interest Period ending after the applicable Maturity Date. This Section shall not apply to Swingline Borrowings, which may not be converted or continued.
(b) To make an election pursuant to this Section, a Borrower (or the US Borrower on its behalf) shall notify the Applicable Agent of such election by telephone or telecopy (i) in
the case of an election that would result in a Borrowing, by the time that a Notice of Borrowing would be required under Section 2.03 if such Borrower were requesting a Revolving Borrowing of the Type resulting from such election to be made on the effective date of such election and (ii) in the case of an election that would result in a B/A Drawing or the continuation of a B/A Drawing, by the time and date that a request would be required under Section 2.07 if such Borrower were requesting an acceptance and purchase of B/As to be made on the effective date of such election. Each such Interest Election Request shall be irrevocable and, if telephonic, shall be confirmed promptly by hand delivery or telecopy to the Applicable Agent of a written Interest Election Request in a form approved by the Applicable Agent and signed by the applicable Borrower (or the US Borrower on its behalf). Notwithstanding any other provision of this Section, no Borrower shall be permitted to (i) change the currency of any Borrowing, (ii) elect an Interest Period for Eurodollar Loans that does not comply with Section 2.02(d) or (iii) convert any Borrowing or B/A Drawing to a Borrowing or B/A Drawing not available under the Tranche of Commitments pursuant to which such Borrowing or B/A Drawing was made.
(c) Each telephonic and written Interest Election Request shall specify the following information in compliance with Section 2.02 and paragraph (f) of this Section:
(i) the Borrowing or B/A Drawing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing or B/A Drawing (in which case the information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing or B/A Drawing);
(ii) the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be a Base Rate Borrowing, a Eurodollar Borrowing, a Canadian Prime Rate Borrowing or a B/A Drawing; and
(iv) if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term "Interest Period", and in the case of an election of a B/A Drawing, the Contract Period to be applicable thereto, which shall be a period contemplated by the definition of the term "Contract Period".
If any such Interest Election Request requests a Eurodollar Borrowing or B/A Drawing but does not specify an Interest Period or Contract Period, then the applicable Borrower shall be deemed to have selected an Interest Period or Contract Period of one month's or 30 days' duration, as applicable.
(d) Promptly following receipt of an Interest Election Request, the Applicable Agent shall advise each applicable Lender of the details thereof and of such Lender's portion of each resulting Borrowing or B/A Drawing.
(e) If the applicable Borrower fails to deliver a timely Interest Election Request with respect to a Eurodollar Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period applicable thereto, such Eurodollar Borrowing shall, (i) in the case of a Borrowing by the US Borrower denominated in US Dollars, be converted to a Base Rate Borrowing, (ii) in the case of a Borrowing by the Canadian Borrower denominated in US Dollars, be converted to a Canadian Base Rate Borrowing and (iii) in the case of a Borrowing by the UK Borrower denominated in Sterling, be converted to a Eurodollar Borrowing with an Interest Period of one month's duration. Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing and the Applicable Agent, at the request of the Required Lenders, so notifies the US Borrower, then, so long as an Event of Default is continuing (i) no outstanding Borrowing denominated in US Dollars may be converted to or continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar Borrowing denominated in US Dollars shall be converted to a Base Rate Borrowing at the end of the Interest Period applicable thereto.
(f) Upon the conversion of any Canadian Borrowing (or portion thereof), or the continuation of any B/A Drawing (or portion thereof), to or as a B/A Drawing, the net amount that would otherwise be payable to the Canadian Borrower by each Lender pursuant to Section 2.07(f) in respect of such new B/A Drawing shall be applied against the principal of the Canadian Revolving Loan made by such Lender as part of such Canadian Borrowing (in the case of a conversion), or the reimbursement obligation owed to such Lender under Section 2.07(i) in respect of the B/As accepted by such Lender as part of such maturing B/A Drawing (in the case of a continuation), and the Canadian Borrower shall pay to such Lender an amount equal to the difference between the principal amount of such Canadian Revolving Loan or the aggregate face amount of such maturing B/As, as the case may be, and such net amount.
(g) A Borrowing of any Tranche may not be converted to or continued as a Eurodollar Borrowing if after giving effect thereto (i) the Interest Period therefor would commence before and end after a date on which any principal of the Loans of such Tranche is scheduled to be repaid and (ii) the sum of the aggregate principal amount of outstanding Eurodollar Borrowings of such Tranche with Interest Periods ending on or prior to such scheduled repayment date PLUS the aggregate principal amount of outstanding Base Rate Borrowings of such Tranche would be less than the aggregate principal amount of Loans of such Tranche required to be repaid on such scheduled repayment date.
(h) The Available Revolving Percentage of each Lender with respect to any continued or converted Revolving Borrowing shall be deemed to be the percentage of such Borrowing held by such Lender immediately prior to such continuance or conversion.
SECTION 2.09. TERMINATION AND REDUCTION OF COMMITMENTS. (a) Unless
previously terminated, (i) the Term Loan Commitments shall terminate at 5:00
p.m., New York City time, on the Initial Borrowing Date and (ii) the Revolving
Loan Commitments shall terminate on the Revolving Loan Maturity Date.
(b) The Borrowers may at any time terminate, without payment of any premium or penalty, or from time to time reduce, the Commitments of any Tranche; PROVIDED that (i) each reduction of the Commitments of any Tranche shall be in an amount that is an integral multiple
of $1,000,000 and not less than $1,000,000, (ii) the Borrowers shall not terminate or reduce the Revolving Loan Commitments if, after giving effect to any concurrent prepayment of the Revolving Loans in accordance with Section 2.12, (A) the sum of the Revolving Credit Exposures would exceed the Total Revolving Loan Commitment or (B) the sum of the Multi-Currency Commitments of any Lender would exceed the Revolving Loan Commitment of such Lender, (iii) the Canadian Borrower shall not terminate or reduce the Canadian Revolving Loan Sub-Commitments if, after giving effect to any concurrent prepayment of the Canadian Revolving Loans in accordance with Section 2.12, the sum of the Canadian Revolving Credit Exposures would exceed the sum of the Canadian Revolving Loan Sub-Commitments and (iv) the UK Borrower shall not terminate or reduce the UK Revolving Loan Sub-Commitments if, after giving effect to any concurrent prepayment of the UK Revolving Loans in accordance with Section 2.12, the sum of the UK Revolving Credit Exposures would exceed the sum of the UK Revolving Loan Sub-Commitments.
(c) The applicable Borrower shall notify the Administrative Agent of any
election to terminate or reduce the Commitments under paragraph (b) of this
Section at least three Business Days prior to the effective date of such
termination or reduction, specifying such election and the effective date
thereof. Promptly following receipt of any notice, the Administrative Agent
shall advise the Lenders of the contents thereof. Each notice delivered by a
Borrower pursuant to this Section shall be irrevocable; PROVIDED that a notice
of termination of the Revolving Loan Commitments, the Canadian Revolving Loan
Sub-Commitments or the UK Revolving Loan Sub-Commitments delivered by a Borrower
may state that such notice is conditioned upon the effectiveness of other credit
facilities, in which case such notice may be revoked by such Borrower (by notice
to the Administrative Agent on or prior to the specified effective date) if such
condition is not satisfied. Any termination or reduction of the Commitments of
any Tranche shall be permanent. Except as provided in paragraph (d) of this
Section, each reduction of the Commitments of any Tranche shall be made ratably
among the Lenders in accordance with their respective Commitments under such
Tranche.
(d) In the event of certain refusals by a Lender to consent to certain
proposed changes, waivers, discharges or terminations with respect to this
Agreement that have been approved by the Required Lenders as (and to the extent)
provided in Section 10.11(b), the Borrowers shall have the right, subject to
obtaining the consents required by Section 10.11(b), upon five Business Days'
prior written notice to the Administrative Agent at the applicable Notice Office
(which notice the Administrative Agent shall promptly transmit to each of the
Lenders), to terminate the entire Revolving Loan Commitment, Canadian Revolving
Loan Sub-Commitment and UK Revolving Loan Sub-Commitment of such Lender, so long
as all Loans (other than Term Loans that are not being repaid pursuant to
Section 10.11(b)), together with accrued and unpaid interest, fees and all other
amounts, owing to such Lender (excluding amounts owing in respect of Term Loans
maintained by such Lender, if such Term Loans are not being repaid pursuant to
Section 10.11(b)) are repaid concurrently with the effectiveness of such
termination (at which time Schedule I shall be deemed modified to reflect such
changed amounts) and at such time, unless the respective Lender continues to
have outstanding Term Loans hereunder, such Lender shall no longer constitute a
"Lender" for purposes of this Agreement, except with respect to indemnifications
under this Agreement (including, without limitation, Sections 2.16, 2.17, 2.18,
2.19 and 10.01), which shall survive as to such repaid Lender.
SECTION 2.10. REPAYMENT OF LOANS AND B/As; EVIDENCE OF DEBT. (a) Each Borrower hereby unconditionally promises to pay (i) to the Applicable Agent for the account of each Lender the then unpaid principal amount of each Revolving Loan of such Lender made to such Borrower on the Revolving Loan Maturity Date, and the face amount of each B/A of such Borrower, if any, accepted by such Lender as provided in Section 2.07, (ii) to the Administrative Agent for the account of each Lender the then unpaid principal amount of each Term Loan of such Lender as provided in Section 2.12 and (iii) to the Swingline Lender the then unpaid principal amount of each Swingline Loan on the earlier of the Revolving Loan Maturity Date and the first date after such Swingline Loan is made that is the 15th or last day of a calendar month and is at least two Business Days after such Swingline Loan is made; PROVIDED that on each date that a US Revolving Borrowing is made, the US Borrower shall repay all Swingline Loans that were outstanding on the date such Borrowing was requested.
(b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of each Borrower to such Lender resulting from each Loan made or B/A accepted by such Lender, including the amounts of principal and interest and amounts in respect of B/As payable and paid to such Lender from time to time hereunder.
(c) The Administrative Agent shall maintain accounts in which it shall
record (i) the amount of each Loan made hereunder, the Tranche, Type and
currency thereof and the Interest Period applicable thereto, and the amount of
each B/A and the Contract Period applicable thereto, (ii) the amount of any
principal, interest or other amount in respect of any B/A due and payable or to
become due and payable from the Canadian Borrower to each Lender hereunder,
(iii) the amount of any principal or interest due and payable or to become due
and payable from the applicable Borrower to each Lender hereunder and (iv) the
amount of any sum received by the Administrative Agent hereunder for the account
of the Lenders and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to paragraph (b) or (c) of this Section shall be prima facie evidence of the existence and amounts of the obligations recorded therein; PROVIDED that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of any Borrower to repay the Loans or B/As in accordance with the terms of this Agreement.
(e) Any Lender may request that Loans of any Tranche made by it be evidenced by a promissory note. In such event, the applicable Borrower shall prepare, execute and deliver to such Lender a promissory note payable to the order of such Lender (or, if requested by such Lender, to such Lender and its registered assigns) and in the form of Exhibit A-1, A-2 or A-3, as applicable. Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 10.04) be represented by one or more promissory notes in such form payable to the order of the payee named therein (or, if such promissory note is a registered note, to such payee and its registered assigns).
SECTION 2.11. VOLUNTARY PREPAYMENTS. (a) The Borrowers shall have the right at any time and from time to time to prepay any Borrowing or amount owed in respect of outstanding B/As, in whole or in part, subject to prior notice in accordance with paragraph (c) of this Section and payment of any amounts required under Section 2.17.
(b) Prior to any optional or mandatory prepayment of Borrowings or amounts owing in respect of outstanding B/A Drawings, the applicable Borrower shall select the Borrowing or Borrowings and the B/A Drawing or B/A Drawings to be prepaid and shall specify such selection in the notice of such prepayment pursuant to paragraph (c) below.
(c) The US Borrower, Canadian Borrower or UK Borrower, as the case may be, shall give the Applicable Agent at the applicable Notice Office written notice (or telephonic notice promptly confirmed in writing) of its intent to prepay the Loans, whether such Loans are Term Loans, US Revolving Loans, Canadian Revolving Loans, UK Revolving Loans or Swingline Loans, the amount of such prepayment, the Types of Loans to be repaid and (in the case of Eurodollar Loans) the specific Borrowing(s) pursuant to which such Eurodollar Loans were made, which notice (i) shall be given by the applicable Borrower, (A) prior to 12:00 noon. (Local Time) at least one Business Day prior to the date of such prepayment in the case of Loans maintained as Base Rate Loans (other than Swingline Loans), Canadian Base Rate Loans and Canadian Prime Rate Loans, (B) prior to 12:00 noon. (Local Time) at least one Business Day prior to the date of such prepayment in the case of Eurodollar Loans and (C) prior to 12:00 noon (Local Time) on the date of such prepayment in the case of Swingline Loans and (ii) shall, except in the case of Swingline Loans, promptly be transmitted by the Applicable Agent to each of the applicable Lenders.
(d) except for a prepayment pursuant to Section 2.20, each prepayment of B/A Drawings or principal of Term Borrowings pursuant to this Section 2.11 shall be applied to the B/As included in such B/A Drawing or the Term Loans included in such Term Borrowing, as applicable, and to reduce the remaining Scheduled Repayments of the Term Loans, at the US Borrower's option, in direct order of maturity or on a pro rata basis (in each case, based upon the then remaining principal amounts of such Scheduled Repayments after giving effect to all prior reductions thereto);
(e) Amounts to be applied pursuant to this Section or Article VIII to prepay or repay amounts to become due with respect to outstanding B/As shall be deposited in the Prepayment Account (as defined below). The Canadian Agent shall apply any cash deposited in the Prepayment Account allocable to amounts to become due in respect of B/As on the last day of their respective Contract Periods until all amounts due in respect of outstanding B/As have been prepaid or until all the allocable cash on deposit has been exhausted. For purposes of this Agreement, the term "Prepayment Account" shall mean an account established by the Canadian Borrower with the Canadian Agent and over which the Canadian Agent shall have exclusive dominion and control, including the exclusive right of withdrawal for application in accordance with this paragraph (e). The Canadian Agent will, at the request of the Canadian Borrower, invest amounts on deposit in the Prepayment Account in short-term, cash equivalent investments selected by the Canadian Agent in consultation with the Canadian Borrower that mature on or prior to the last day of the applicable Contract Periods of the B/As to be prepaid; provided, however, that the Canadian Agent shall have no obligation to invest amounts on deposit in the Prepayment Account if an Event of Default shall have occurred and be continuing. The Canadian Borrower shall indemnify the Canadian Agent for any losses relating to the investments so that the amount available to prepay amounts due in respect of B/As on the last day of the applicable Contract Period is not less than the amount that would have been available had no investments been made pursuant hereto. Other than any interest earned on such
investments (which shall be for the account of the Canadian Borrower, to the extent not necessary for the prepayment of B/As in accordance with this Section), the Prepayment Account shall not bear interest. Interest or profits, if any, on such investments shall be deposited in the Prepayment Account and reinvested and disbursed as specified above. If the maturity of the Loans and all amounts due hereunder has been accelerated pursuant to Article VIII, the Canadian Agent may, in its sole discretion, apply all amounts on deposit in the Prepayment Account to satisfy any of the Obligations in respect of Canadian Revolving Loans and B/As (and the Canadian Borrower hereby grants to the Canadian Agent, as agent for the Secured Parties, a security interest in its Prepayment Account to secure such Obligations).
SECTION 2.12. MANDATORY REPAYMENTS. (a) (i) If on any date the Revolving Credit Exposure of any Lender (after giving effect to any concurrent prepayment of the Revolving Loans) would exceed such Lender's Revolving Loan Commitment, or if the sum of the Revolving Credit Exposures (after giving effect to any concurrent prepayment of the Revolving Loans) would exceed the Total Revolving Loan Commitment, the US Borrower shall repay on such date the principal of Swingline Loans and, after all Swingline Loans have been repaid in full or if no Swingline Loans are outstanding, the US Borrower, the Canadian Borrower and/or the UK Borrower, as applicable, shall repay on such date the principal of Revolving Loans, in either case, in the aggregate amount necessary to eliminate such excess. If, after giving effect to the prepayment of all outstanding Swingline Loans and all outstanding Revolving Loans, the LC Exposure of any Lender exceeds such Lender's Revolving Loan Commitment as then in effect, the US Borrower shall pay to the Administrative Agent at the applicable Payment Office on such date the amount in cash and/or Cash Equivalents necessary to eliminate such excess (up to the aggregate amount of LC Exposure at such time) and the Administrative Agent shall hold such payment as security for the obligations of the US Borrower hereunder pursuant to a cash collateral agreement to be entered into in form and substance reasonably satisfactory to the Administrative Agent.
(ii) If on any date the Canadian Revolving Credit Exposure (after giving effect to all other prepayments on such date) would exceed the total Canadian Revolving Loan Sub-Commitments, the Canadian Borrower shall prepay on such date the principal of Canadian Revolving Loans incurred by it in an aggregate amount equal to such excess.
(iii) If on any date the UK Revolving Credit Exposure (after giving effect to all other prepayments on such date) would exceed the total UK Revolving Loan Sub-Commitments, the UK Borrower shall prepay on such date the principal of UK Revolving Loans incurred by it in an aggregate amount equal to such excess.
(b) In addition to any other mandatory repayments pursuant to this Section 2.12, on each date set forth below, the US Borrower shall be required to repay that principal amount of Term Loans, to the extent then outstanding, as is set forth opposite each such date (each such repayment, as the same may be reduced as provided in Sections 2.11(d) and 2.12(h), a "SCHEDULED REPAYMENT"):
Scheduled Repayment Date Amount ------------------------ ------ June 30, 2002 $ 375,000 September 30, 2002 $ 375,000 December 31, 2002 $ 375,000 March 31, 2003 $ 375,000 June 30, 2003 $ 375,000 September 30, 2003 $ 375,000 December 31, 2003 $ 375,000 March 31, 2004 $ 375,000 June 30, 2004 $ 375,000 September 30, 2004 $ 375,000 December 31, 2004 $ 375,000 March 31, 2005 $ 375,000 June 30, 2005 $ 375,000 September 30, 2005 $ 375,000 December 31, 2005 $ 375,000 March 31, 2006 $ 375,000 June 30, 2006 $ 375,000 September 30, 2006 $ 375,000 December 31, 2006 $ 375,000 March 31, 2007 $ 375,000 June 30, 2007 $ 375,000 September 30, 2007 $ 375,000 December 31, 2007 $ 375,000 March 31, 2008 $ 375,000 June 30, 2008 $ 375,000 September 30, 2008 $ 375,000 December 31, 2008 $ 375,000 March 31, 2009 $ 34,968,750 June 30, 2009 $ 34,968,750 September 30, 2009 $ 34,968,750 Term Loan Maturity Date $ 34,968,750 |
(c) In addition to any other mandatory repayments pursuant to this Section 2.12, on each date on or after the Effective Date on which Holdings or any of its Subsidiaries receives Net Sale Proceeds from any Asset Sale, an amount equal to the Applicable Prepayment Percentage of the Net Sale Proceeds from such Asset Sale shall be applied as a mandatory repayment in accordance with the requirements of Section 2.12(h) and 2.12(i); PROVIDED that with respect to no more than $25,000,000 in the aggregate of such Net Sale Proceeds received by Holdings and its Subsidiaries in any fiscal year of Holdings, such Net Sale Proceeds shall not give rise to a mandatory repayment on such date to the extent that no Default or Event of Default then exists and such Net Sale Proceeds shall be used or contractually committed to be used to purchase assets used or to be used in the businesses permitted pursuant to Section 7.01 (including, without limitation (but only to the extent permitted by Section 7.02), the purchase of the capital stock of a Person engaged in such businesses) within 350 days following the date of receipt of such Net Sale Proceeds from such Asset Sale; and PROVIDED FURTHER that (i) if all or any
portion of such Net Sale Proceeds are not so used (or contractually committed to be used) within such 350-day period, such remaining portion shall be applied on the last day of such period (or such earlier date, if any, as Holdings or the relevant Subsidiary determines not to reinvest the Net Sale Proceeds from such Asset Sale as set forth above) as a mandatory repayment as provided above (without giving effect to the immediately preceding proviso) and (ii) if all or any portion of such Net Sale Proceeds are not so used within such 350-day period referred to in clause (i) of this proviso because such amount is contractually committed to be used and subsequent to such date such contract is terminated or expires without such portion being so used, such remaining portion shall be applied on the date of such termination or expiration as a mandatory repayment as provided above (without giving effect to the immediately preceding proviso). Notwithstanding the foregoing provisions of this Section 2.12(c), so long as no Default or Event of Default shall have occurred and be continuing, no mandatory repayments shall be required pursuant to the immediately preceding proviso appearing in this Section 2.12(c) until the date on which the aggregate Net Sale Proceeds from all Asset Sales not reinvested within the time periods specified by said proviso equals or exceeds $2,000,000.
(d) In addition to any other mandatory repayments pursuant to this Section
2.12, on each date on or after the Effective Date on which Holdings or any of
its Subsidiaries receives any cash proceeds from any incurrence of Indebtedness
(other than Indebtedness permitted to be incurred pursuant to Section 7.04 as in
effect on the Effective Date and Indebtedness permitted to be incurred pursuant
to Section 7.04(p) as in effect on the Amendment and Restatement Date) or
issuance of Preferred Stock (other than (i) Disqualified Preferred Stock to the
extent the proceeds therefrom are used to effect Permitted Acquisitions and (ii)
Qualified Preferred Stock) by Holdings or any of its Subsidiaries, an amount
equal to the Applicable Prepayment Percentage of the Net Cash Proceeds of the
respective incurrence of Indebtedness or issuance of Preferred Stock shall be
applied as a mandatory repayment in accordance with the requirements of Section
2.12(h) and 2.12(i). Notwithstanding the foregoing provisions of this Section
2.12(d), so long as no Default or Event of Default shall have occurred and be
continuing, no mandatory repayment shall be required pursuant to this Section
2.12(d) until the date on which the sum of (A) the Net Cash Proceeds required to
be applied as mandatory repayments in the absence of this sentence PLUS (B) the
Net Cash Proceeds required to be applied as mandatory repayments pursuant to
Section 2.12(e) in the absence of the last sentence of said Section 2.12(e),
equals or exceeds $2,000,000.
(e) In addition to any other mandatory repayments pursuant to this Section 2.12, on each date on or after the Effective Date on which Holdings or any of its Subsidiaries receives any cash proceeds from any sale or issuance of Qualified Preferred Stock or common equity of (or cash capital contributions to) Holdings or any of its Subsidiaries (other than (i) pursuant to the Merger Transactions, (ii) sales or issuances to, or capital contributions from, Apollo Group, (iii) issuances of Holdings Common Stock to management of Holdings and its Subsidiaries (including as a result of the exercise of any options with respect thereto) in an aggregate amount not to exceed $10,000,000 in any fiscal year of Holdings, (iv) equity contributions to any Subsidiary of Holdings made by Holdings or any other Subsidiary of Holdings, (v) any issuance of Holdings Common Stock or Qualified Preferred Stock to the extent the proceeds therefrom are used to effect Permitted Acquisitions and (vi) additional issuances of Holdings Common Stock or Qualified Preferred Stock, (A) to the extent that the aggregate proceeds excluded pursuant to this clause (vi) after the Effective Date do not exceed $20,000,000), an amount equal to the
Applicable Prepayment Percentage of the Net Cash Proceeds of the respective
equity issuance or capital contribution shall be applied as a mandatory
repayment in accordance with the requirements of Section 2.12(h) and 2.12(i);
PROVIDED that Net Cash Proceeds received by Holdings from additional sales or
issuances of Holdings Common Stock (other than from a Public Offering) shall not
be required to be applied as a mandatory repayment on the date of receipt
thereof, to the extent that (A) no Default or Event of Default then exists and
(B) Holdings delivers a certificate to the Administrative Agent on or prior to
such date stating that such Net Cash Proceeds shall be used or contractually
committed to be used to make Capital Expenditures and/or effect Permitted
Acquisitions within 270 days following the date of receipt of such Net Cash
Proceeds (which certificate shall set forth the estimates of the proceeds to be
so expended) and PROVIDED FURTHER that (1) if all or any portion of such Net
Cash Proceeds are not so used (or contractually committed to be used) within
such 270-day period, such remaining portion shall be applied on the last day of
such period (or such earlier date, if any, as Holdings or the relevant
Subsidiary determines not to reinvest the Net Cash Proceeds from such equity
issuance or capital contribution as set forth above) as a mandatory repayment as
provided above (without giving effect to the immediately preceding proviso) and
(2) if all or any portion of such Net Cash Proceeds are not so used within such
270-day period referred to in clause (1) above because such amount is
contractually committed to be used and subsequent to such date such contract is
terminated or expires without such portion being so used, such remaining portion
shall be applied on the date of such termination or expiration as a mandatory
repayment as provided above (without giving effect to the immediately preceding
proviso). Notwithstanding the foregoing provisions of this Section 2.12(e), so
long as no Default or Event of Default shall have occurred and be continuing, no
mandatory repayment shall be required pursuant to this Section 2.12(e) until the
date on which the sum of (I) the Net Cash Proceeds required to be applied as
mandatory repayments in the absence of this sentence PLUS (II) the Net Cash
Proceeds required to be applied as mandatory repayments pursuant to Section
2.12(d) in the absence of the last sentence in said Section 2.12(d), equals or
exceeds $2,000,000.
(f) In addition to any other mandatory repayments pursuant to this Section 2.12, within 10 days following each date on or after the Effective Date on which Holdings or any of its Subsidiaries receives any cash proceeds from any Recovery Event, an amount equal to 100% of the proceeds of such Recovery Event (net of reasonable costs (including, without limitation, legal costs and expenses) and taxes incurred in connection with such Recovery Event and the amount of such proceeds required to be used to repay any Indebtedness (other than Indebtedness of the Lenders pursuant to this Agreement) that is secured by the respective assets subject to such Recovery Event) shall be applied as a mandatory repayment in accordance with the requirements of Section 2.12(h) and 2.12(i); PROVIDED that (i) so long as no Default or Event of Default then exists and such proceeds do not exceed $5,000,000, such proceeds shall not be required to be so applied on such date to the extent that Holdings has delivered a certificate to the Administrative Agent on or prior to such date stating that such proceeds shall be used or shall be committed to be used to replace or restore any properties or assets in respect of which such proceeds were paid within 360 days following the date of such Recovery Event (which certificate shall set forth the estimates of the proceeds to be so expended) and (ii) so long as no Default or Event of Default then exists and to the extent that (A) the amount of such proceeds exceeds $5,000,000, (B) the amount of such proceeds, together with other cash available to Holdings and its Subsidiaries and permitted to be spent by them on Capital Expenditures during the relevant period, equals at least
100% of the cost of replacement or restoration of the properties or assets in
respect of which such proceeds were paid as determined by Holdings and as
supported by such estimates or bids from contractors or subcontractors or such
other supporting information as the Administrative Agent may reasonably accept,
(C) Holdings has delivered to the Administrative Agent a certificate on or prior
to the date the respective mandatory repayment would otherwise be required
pursuant to this Section 2.12(f) in the form described in clause (i) above and
also certifying its determination as required by preceding clause (B) and
certifying the sufficiency of business interruption insurance as required by
succeeding clause (D), and (D) Holdings has delivered to the Administrative
Agent such evidence as the Administrative Agent may reasonably request in form
and substance reasonably satisfactory to the Administrative Agent establishing
that Holdings has sufficient business interruption insurance and that Holdings
will receive payment thereunder in such amounts (if any) and at such times (if
any) as may be necessary to satisfy all obligations and expenses of Holdings and
its Subsidiaries (including, without limitation, all debt service requirements,
including pursuant to this Agreement), without any delay or extension thereof,
for the period from the date of the respective casualty, condemnation or other
event giving rise to the Recovery Event and continuing through the completion of
the replacement or restoration of the respective properties or assets, then the
entire amount of the proceeds of such Recovery Event and not just the portion in
excess of $5,000,000 shall be deposited with the Administrative Agent pursuant
to a cash collateral arrangement reasonably satisfactory to the Administrative
Agent whereby such proceeds shall be disbursed to Holdings from time to time as
needed to pay or reimburse Holdings or such Subsidiary actual costs incurred by
it in connection with the replacement or restoration of the respective
properties or assets (pursuant to such certification requirements as may be
established by the Administrative Agent); PROVIDED FURTHER that at any time
while an Event of Default has occurred and is continuing, the Required Lenders
may direct the Administrative Agent (in which case the Administrative Agent
shall, and is hereby authorized by the Borrowers to, follow said directions) to
apply any or all proceeds then on deposit in such collateral account to the
repayment of Obligations hereunder in the same manner as proceeds would be
applied pursuant to the US Collateral and Guaranty Agreement or Foreign Security
Agreement, as applicable; and PROVIDED FURTHER that if all or any portion of
such proceeds not required to be applied as a mandatory repayment pursuant to
the second preceding proviso (whether pursuant to clause (i) or (ii) thereof)
are either (1) not so used or committed to be so used within 360 days after the
date of the respective Recovery Event (or such earlier date, if any, as Holdings
or the relevant Subsidiary determines not to reinvest the proceeds from such
Recovery Event as set forth above) or (2) if committed to be used within 360
days after the date of receipt of such net proceeds and not so used within 18
months after the date of the respective Recovery Event then, in either such
case, such remaining portion not used or committed to be used in the case of
preceding clause (1) and not used in the case of preceding clause (2) shall be
applied on the date occurring 360 days after the date of the respective Recovery
Event in the case of clause (1) above or the date occurring 18 months after the
date of the respective Recovery Event in the case of clause (2) above as a
mandatory repayment in accordance with the requirements of Section 2.12(h) and
2.12(i).
(g) In addition to any other mandatory repayments pursuant to this Section 2.12, on each Excess Cash Flow Payment Date, an amount equal to the Applicable Excess Cash Flow Percentage of the Adjusted Excess Cash Flow for the relevant Excess Cash Flow Payment Period
shall be applied as a mandatory repayment in accordance with the requirements of
Section 2.12(h).
(h) Each amount required to be applied pursuant to Sections 2.12(c), (d),
(e), (f) and (g) and Section 7.04(p) in accordance with this Section 2.12(h)
shall be applied to repay the outstanding principal amount of Term Loans on a
pro rata basis. All repayments of outstanding Term Loans pursuant to Section
2.12(c), (d), (e), (f) or (g) or Section 7.04(p) shall be applied to reduce the
then remaining Scheduled Repayments of the Term Loans on a pro rata basis (based
upon the then remaining Scheduled Repayments after giving effect to all prior
reductions thereto).
(i) With respect to each repayment of Loans required by this Section 2.12
or Section 7.04(p), the US Borrower, the Canadian Borrower or the UK Borrower,
as the case may be, may designate the Types of Loans of the respective Tranche
that are to be repaid and, in the case of Eurodollar Loans, the specific
Borrowing or Borrowings of the respective Tranche pursuant to which such
Eurodollar Loans were made; PROVIDED that: (i) repayments of Eurodollar Loans
pursuant to this Section 2.12 or Section 7.04(p) on a day other than the last
day of an Interest Period applicable thereto shall be accompanied by payment by
the US Borrower or the UK Borrower, as the case may be, of all breakage costs
and other amounts owing to each Lender pursuant to Section 2.17; (ii) if any
repayment of Eurodollar Loans made pursuant to a single Borrowing shall reduce
the outstanding Eurodollar Loans made pursuant to such Borrowing to an amount
LESS than the minimum amount for such Borrowing set forth in Section 2.02(c),
such Borrowing shall be converted at the end of the then current Interest Period
into a Borrowing of Base Rate Loans; and (iii) each repayment of any Tranche of
Loans made pursuant to a Borrowing shall be applied pro rata among such Tranche
of Loans. In the absence of a designation by the US Borrower, the Canadian
Borrower or the UK Borrower, as the case may be, as described in the preceding
sentence, the Administrative Agent shall, subject to the above, make such
designation in its sole discretion with a view, but no obligation, to minimize
breakage costs owing under Section 2.17. Notwithstanding the foregoing
provisions of this Section 2.12 (other than Section 2.12(a) or (b), which
Sections shall not have the benefits of this sentence or Section 7.04(p)), if at
any time the mandatory repayment of Loans pursuant to this Section 2.12 or
Section 7.04(p) would result, after giving effect to the procedures set forth in
this clause (i) above, in any Borrower incurring breakage costs under Section
2.17 as a result of Eurodollar Loans being repaid other than on the last day of
an Interest Period applicable thereto (any such Eurodollar Loans, "Affected
Loans"), the US Borrower, the Canadian Borrower or the UK Borrower, as the case
may be, may elect, by written notice to the Administrative Agent, to have the
provisions of the following sentence be applicable so long as no Default or
Event of Default then exists. At the time any Affected Loans are otherwise
required to be prepaid, the US Borrower, the Canadian Borrower or the UK
Borrower, as the case may be, may elect to deposit 100% (or such lesser
percentage elected by the US Borrower, the Canadian Borrower or the UK Borrower,
as the case may be, as not being repaid) of the principal amounts that otherwise
would have been paid in respect of the Affected Loans with the Administrative
Agent to be held as security for the obligations of the US Borrower, the
Canadian Borrower or the UK Borrower, as the case may be, hereunder pursuant to
a cash collateral agreement to be entered into in form and substance
satisfactory to the Administrative Agent, with such cash collateral to be
released from such cash collateral account (and applied to repay the principal
amount of such Eurodollar Loans) upon each occurrence thereafter of the last day
of an Interest Period applicable to such
Eurodollar Loans (or such earlier date or dates as shall be requested by the US Borrower, the Canadian Borrower or the UK Borrower, as the case may be), with the amount to be so released and applied on the last day of each Interest Period to be the amount of such Eurodollar Loans to which such Interest Period applies (or, if LESS, the amount remaining in such cash collateral account); PROVIDED, HOWEVER, that at any time while an Event of Default has occurred and is continuing, the Required Lenders may direct the Administrative Agent (in which case the Administrative Agent shall, and is hereby authorized by the Borrowers to, follow said directions) to apply any or all proceeds then on deposit in such collateral account to the payment of such Affected Loans.
(j) Notwithstanding anything to the contrary contained elsewhere in this Agreement, all then outstanding Loans of a given Tranche shall be repaid in full on the respective Maturity Date for such Tranche of Loans.
(k) Notwithstanding anything to the contrary contained in this
Section 2.12 (and subject to Section 2.21), all payments owing with respect to
each Tranche of outstanding Loans pursuant to this Section 2.12 shall be made in
the respective currency or currencies in which the respective obligations are
owing in accordance with the terms of this Agreement. For purposes of making
calculations pursuant to this Section 2.12, the Administrative Agent shall be
entitled to use the US Dollar Equivalent of any such amounts required to be
converted into other currencies for purposes of making determinations pursuant
to this Section 2.12.
SECTION 2.13. FEES. (a) The US Borrower agrees to pay to the Administrative Agent for the account of each Lender a Commitment Fee (the "COMMITMENT FEE"), which shall accrue at the Applicable Rate on the average daily unused amount of the Term Loan Commitment and the Revolving Loan Commitment of such Lender during the period from and including the Effective Date to but excluding the date on which such Commitment terminates. Accrued Commitment Fees shall be payable in arrears (i) in the case of Commitment Fees in respect of the Revolving Loan Commitments, on the last day of March, June, September and December of each year and on the date on which the Revolving Loan Commitments terminate, commencing on the first such date to occur after the date hereof, and (ii) in the case of Commitment Fees in respect of the Term Loan Commitments, on the Initial Borrowing Date or any earlier date on which such Commitments terminate. All Commitment Fees shall be computed on the basis of a year of 360 days and, in each case, shall be payable for the actual number of days elapsed (including the first day but excluding the last day). For purposes of computing Commitment Fees with respect to Revolving Loan Commitments, a Revolving Loan Commitment of a Lender shall be deemed to be used to the extent of the outstanding Revolving Loans and LC Exposure of such Lender (and the Swingline Exposure of such Lender shall be disregarded for such purpose).
(b) The US Borrower agrees to pay (i) to the Administrative Agent for the account of each Revolving Lender a participation fee with respect to its participations in Letters of Credit, which shall accrue at the same Applicable Rate as interest on Eurodollar Revolving Loans on the average daily amount of such Lender's LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Initial Borrowing Date to but excluding the later of the date on which such Lender's Revolving Loan Commitment terminates and the date on which such Lender ceases to have any LC Exposure,
and (ii) to the Letter of Credit Issuer (for its own account) a fronting fee, which shall accrue at the rate or rates per annum separately agreed upon between the US Borrower and the Letter of Credit Issuer on the average daily amount of the LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Initial Borrowing Date to but excluding the later of the date of termination of the Revolving Loan Commitments and the date on which there ceases to be any LC Exposure, as well as the Letter of Credit Issuer's standard fees with respect to the issuance, amendment, renewal or extension of any Letter of Credit or processing of drawings thereunder. Participation fees and fronting fees accrued through and including the last day of March, June, September and December of each year shall be payable on the third Business Day following such last day, commencing on the first such date to occur after the Initial Borrowing Date; PROVIDED that all such fees shall be payable on the date on which the Revolving Loan Commitments terminate and any such fees accruing after the date on which the Revolving Loan Commitments terminate shall be payable on demand. Any other fees payable to the Letter of Credit Issuer pursuant to this paragraph shall be payable within 10 days after demand. All participation fees and fronting fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).
(c) The Canadian Borrower agrees to pay to the Canadian Agent, for the
account of each Canadian Lender, on each date on which B/As drawn by the
Canadian Borrower are accepted hereunder, in Canadian Dollars, an acceptance fee
computed by multiplying (i) the face amount of all B/As drawn on such date by
(ii) the Applicable Rate for B/A Drawings on such date by (iii) a fraction, the
numerator of which is the number of days in the Contract Period applicable to
such B/A and the denominator of which is 365.
(d) Each Borrower agrees to pay to the Administrative Agent, for its own account, fees payable in the amounts and at the times separately agreed upon between the US Borrower and the Administrative Agent.
(e) All fees payable hereunder shall be paid on the dates due, in immediately available funds, to the Administrative Agent (or to the Letter of Credit Issuer, in the case of fees payable to it) for distribution, in the case of Commitment Fees and participation fees, to the Lenders entitled thereto. Fees paid shall not be refundable under any circumstances.
SECTION 2.14. INTEREST. (a) The Loans comprising each Base Rate Borrowing (including each Swingline Loan) shall bear interest at the Base Rate PLUS the Applicable Rate.
(b) The Loans comprising each Eurodollar Borrowing shall bear interest at the Eurodollar Rate for the Interest Period in effect for such Borrowing PLUS the Applicable Rate.
(c) Notwithstanding the foregoing, if any principal of or interest on any Loan or any fee or other amount payable by any Borrower hereunder is not paid when due, whether at stated maturity, upon acceleration or otherwise, such overdue amount shall bear interest, after as well as before judgment, at a rate per annum equal to (i) in the case of overdue principal of any Loan, 2% PLUS the rate (including margin) otherwise applicable to such Loan as PROVIDED in the preceding paragraphs of this Section or (ii) in the case of any other amount, 2% PLUS the rate
(including margin) applicable to Base Rate Revolving Loans as provided in paragraph (a) of this Section.
(d) The loans comprising each Canadian Prime Rate Borrowing shall bear interest at the Canadian Prime Rate PLUS the Applicable Rate.
(e) Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date and on the applicable Maturity Date for such Loan and, in the case of Revolving Loans of any Tranche, upon termination of such Tranche of the Revolving Loan Commitments; PROVIDED that (i) interest accrued pursuant to paragraph (c) of this Section shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan (other than a prepayment of a Base Rate Revolving Loan or Canadian Prime Rate Loan prior to the end of the Revolving Availability Period), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of any Eurodollar Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion.
(f) All interest hereunder shall be computed on the basis of a year of 360 days, except that (i) interest on Borrowings denominated in Sterling and (ii) interest computed by reference to (A) the Canadian Prime Rate and (B) the Base Rate at times when the Base Rate is based on the Prime Rate shall be computed on the basis of a year of 365 days (or, except in the case of Borrowings denominated in Sterling, 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The applicable Base Rate, Eurodollar Rate or Canadian Prime Rate shall be determined by the Applicable Agent, and such determination shall be conclusive absent manifest error. For the purposes of the Interest Act (Canada), (i) whenever any interest or fee under this Agreement is calculated using a rate based on a year of 360 days or 365 days, as the case may be, the rate determined pursuant to such calculation, when expressed as an annual rate, is equivalent to (A) the applicable rate based on a year of 360 days or 365 days, as the case may be, (B) multiplied by the actual number of days in the calendar year in which the period for which such interest or fee is payable (or compounded) ends, and (C) divided by 360 and 365, as the case may be. The rates of interest under this Agreement are nominal rates, and not effective rates or yields. The principle of deemed reinvestment of interest does not apply to any interest calculation under this Agreement.
(g) If any provision of this Agreement would require the Canadian Borrower to make any payment of interest or other amount payable to any Canadian Lender in an amount or calculated at a rate that would be prohibited by law or would result in a receipt by that Lender of "interest" at a "criminal rate" (as such terms are construed under the Criminal Code (Canada)), then, notwithstanding such provision, such amount or rate shall be deemed to have been adjusted with retroactive effective to the maximum amount or rates of interest, as the case may be, as would not be so prohibited by law or so result in a receipt by that Lender of "interest" at a "criminal rate", such adjustment to be effected, to the extent necessary (but only to the extent necessary), as follows:
(i) first, by reducing the amount or rate of interest or the amount or rate of any acceptance fee required to be paid to the affected Lender under Section 2.13(c); and
(ii) thereafter, by reducing any fees, commissions, premiums and other amounts required to be paid to the affected Lender that would constitute interest for purposes of Section 347 of the Criminal Code (Canada).
SECTION 2.15. ALTERNATE RATE OF INTEREST. If prior to the commencement of any Interest Period for a Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination shall be conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining the Eurodollar Rate for such Interest Period; or
(b) the Administrative Agent is advised by the Required Lenders that the Eurodollar Rate for such Interest Period will not adequately and fairly reflect the cost to such Lenders of making or maintaining their Loans included in such Borrowing for such Interest Period;
then the Applicable Agent shall give notice thereof to the applicable Borrower and the Lenders by telephone or telecopy as promptly as practicable thereafter and, in the case of Eurodollar Borrowings, until the Administrative Agent notifies the applicable Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, (i) any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective and (ii) if any Notice of Borrowing requests a Eurodollar Borrowing, (A) in the case of a Eurodollar Borrowing made to the US Borrower, such Borrowing shall be made as a Base Rate Borrowing, (B) in the case of a Eurodollar Borrowing made to the Canadian Borrower, such Borrowing shall be made as a Canadian Base Rate Borrowing and (C) in the case of a Eurodollar Borrowing made to the UK Borrower, such Borrowing shall bear interest at such rate as the Lenders and the UK Borrower may agree adequately reflects the costs to the Lenders of making or maintaining their Loans (or, in the absence of such agreement, shall be repaid as of the last day of the current Interest Period applicable thereto).
SECTION 2.16. INCREASED COSTS. (a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender (except any such reserve requirement reflected in the Eurodollar Rate) or the Letter of Credit Issuer; or
(ii) impose on any Lender or the Letter of Credit Issuer or the London or Canadian interbank markets any other condition affecting this Agreement or Eurodollar Loans or B/A Drawings made by such Lender or any Letter of Credit or participation therein;
and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Eurodollar Loan or obtaining funds for the purchase of B/As (or of maintaining
its obligation to make any such Loan or to accept and purchase B/As) or to increase the cost to such Lender or the Letter of Credit Issuer of participating in, issuing or maintaining any Letter of Credit or to reduce the amount of any sum received or receivable by such Lender or the Letter of Credit Issuer hereunder (whether of principal, interest or otherwise), then the applicable Borrower will pay to such Lender or the Letter of Credit Issuer, as the case may be, such additional amount or amounts as will compensate such Lender or the Letter of Credit Issuer, as the case may be, for such additional costs incurred or reduction suffered.
(b) If any Lender or the Letter of Credit Issuer determines that any Change in Law regarding capital requirements has or would have the effect of reducing the rate of return on such Lender's or the Letter of Credit Issuer's capital or on the capital of such Lender's or the Letter of Credit Issuer's holding company, if any, as a consequence of this Agreement or the Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by the Letter of Credit Issuer, to a level below that which such Lender or the Letter of Credit Issuer or such Lender's or the Letter of Credit Issuer's holding company could have achieved but for such Change in Law (taking into consideration such Lender's or the Letter of Credit Issuer's policies and the policies of such Lender's or the Letter of Credit Issuer's holding company with respect to capital adequacy), then from time to time the applicable Borrower will pay to such Lender or the Letter of Credit Issuer, as the case may be, such additional amount or amounts as will compensate such Lender or the Letter of Credit Issuer or such Lender's or the Letter of Credit Issuer's holding company for any such reduction suffered.
(c) A certificate of a Lender or the Letter of Credit Issuer setting forth the amount or amounts necessary to compensate such Lender or the Letter of Credit Issuer or its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section shall be delivered to the applicable Borrower and shall be conclusive absent manifest error. The US Borrower shall pay such Lender or the Letter of Credit Issuer, as the case may be, the amount shown as due on any such certificate within 10 days after receipt thereof.
(d) Failure or delay on the part of any Lender or the Letter of Credit Issuer to demand compensation pursuant to this Section shall not constitute a waiver of such Lender's or the Letter of Credit Issuer's right to demand such compensation; PROVIDED that the US Borrower shall not be required to compensate a Lender or the Letter of Credit Issuer pursuant to this Section for any increased costs or reductions incurred more than 270 days prior to the date that such Lender or the Letter of Credit Issuer, as the case may be, notifies the US Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender's or the Letter of Credit Issuer's intention to claim compensation therefor; PROVIDED FURTHER that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 270-day period referred to above shall be extended to include the period of retroactive effect thereof.
SECTION 2.17. BREAK FUNDING PAYMENTS. In the event of (a) the payment of any principal of any Eurodollar Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Revolving Loan or Term Loan or to issue B/As for acceptance and purchase on the date specified in any notice delivered pursuant hereto (regardless of whether such notice may be revoked under Section 2.12(e) and is revoked in accordance
therewith), or (d) the assignment of any Eurodollar Loan or the right to receive
payment in respect of a B/A other than on the last day of the Interest Period or
Contract Period, as the case may be, applicable thereto as a result of a request
by the applicable Borrower pursuant to Section 2.20, then, in any such event,
such Borrower shall compensate each Lender for the loss, cost and expense
attributable to such event. In the case of a Eurodollar Loan, such loss, cost or
expense to any Lender shall be deemed to include an amount determined by such
Lender to be the excess, if any, of (i) the amount of interest that would have
accrued on the principal amount of such Loan had such event not occurred, at the
Eurodollar Rate that would have been applicable to such Loan, for the period
from the date of such event to the last day of the then current Interest Period
therefor (or, in the case of a failure to borrow, convert or continue, for the
period that would have been the Interest Period for such Loan), over (ii) the
amount of interest that would accrue on such principal amount for such period at
the interest rate that such Lender would bid were it to bid, at the commencement
of such period, for dollar deposits of a comparable amount and period from other
banks in the eurodollar market. A certificate of any Lender setting forth any
amount or amounts that such Lender is entitled to receive pursuant to this
Section shall be delivered to the applicable Borrower and shall be conclusive
absent manifest error. The applicable Borrower shall pay such Lender the amount
shown as due on any such certificate within 10 days after receipt thereof.
SECTION 2.18. TAXES. (a) Any and all payments by or on account of any obligation of any Borrower hereunder or under any other Credit Document shall be made free and clear of and without deduction for any Indemnified Taxes or Other Taxes; PROVIDED that if any Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Applicable Agent, Lender or Letter of Credit Issuer (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the applicable Borrower shall make such deductions and (iii) the applicable Borrower shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.
(b) In addition, the applicable Borrower shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law. Each Lender and Letter of Credit Issuer represents that, to its knowledge, except for any such Other Taxes that may be imposed under the federal, state or local laws of the United States, Canada and the United Kingdom (or any political subdivision thereof), it is not aware of any Other Taxes imposed by any other Governmental Authority.
(c) Each Borrower shall indemnify the Applicable Agent, each Lender and the Letter of Credit Issuer, within 20 days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by the Applicable Agent, such Lender or the Letter of Credit Issuer, as the case may be, on or with respect to any payment by or on account of any obligation of any Borrower hereunder or under any other Credit Document (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) and any penalties, interest and reasonable expenses arising therefrom or with respect thereto whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority; PROVIDED, HOWEVER, that the Borrowers shall not be obligated to make payment to the Applicable Agent, any Lender or the Letter of Credit Issuer (as the case may be) pursuant to this Section 2.18(c) in respect of
penalties, interest and other expenses arising from any Indemnified Taxes or Other Taxes, if such penalties, interest and other expenses are attributable solely to the gross negligence or wilful misconduct of the Applicable Agent, the Lender or the Letter of Credit Issuer (as the case may be); PROVIDED FURTHER, that the Applicable Agent, the Lender or the Letter of Credit Issuer (as the case may be) shall use commercially reasonable efforts promptly to notify the US Borrower upon receipt of any written demand or notice for payment of Indemnified Taxes or Other Taxes that are indemnifiable under this Section 2.18(c), and shall reasonably cooperate with the Borrowers to minimize the amount of Indemnified Taxes and Other Taxes to the extent permitted by law. A certificate as to the amount of such payment or liability delivered to the applicable Borrower by a Lender or the Letter of Credit Issuer, or by the Applicable Agent on its own behalf or on behalf of a Lender or the Letter of Credit Issuer, shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the applicable Borrower to a Governmental Authority, such Borrower shall deliver to the Applicable Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Applicable Agent.
(e) On or before the date it becomes a party to this Agreement, each Lender that is lending to the US Borrower or receiving payments under this Agreement from the US Borrower and that is not a United States Person as defined in Section 7701(a)(30) of the Code (a "NON-US LENDER") shall deliver to the US Borrower two copies of duly completed United States Internal Revenue Service Form (i)W-8ECI specifying that all payments to be received under this Agreement or any other Credit Document by such Non-US Lender will be effectively connected with the conduct of a trade or business in the US, (ii) W-8BEN certifying eligibility for complete exemption from US Federal withholding tax with respect to payments to be made under this Agreement or under any other Credit Document under an applicable tax treaty or (iii) in the case of a Non-US Lender that cannot submit a United Stated Internal Revenue Service Form as provided in clause (i) or (ii) and that is qualified to receive interest under this Agreement free of United States withholding pursuant to Section 871(h) of the Code, W-8BEN and a certificate reasonably acceptable to the Applicable Agent (a "NON-BANK CERTIFICATE"). Each Non-US Lender shall redeliver such forms promptly upon the obsolescence or invalidity of any form previously delivered by such Non-US Lender, except to the extent that such Non-US Lender is unable to redeliver such forms due to the adoption of, or change in, any law, rule, treaty or regulation or in the interpretation or application thereof by any Governmental Authority after the date on which the applicable loan is made by such Non-US Lender.
(f) Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which the applicable Borrower is located, or any treaty to which such jurisdiction is a party, with respect to payments under this Agreement shall deliver to such Borrower (with a copy to the Applicable Agent), at the time or times prescribed by applicable law, such properly completed and executed documentation prescribed by applicable law or reasonably requested by the applicable Borrower as will permit such payments to be made without withholding or at a reduced rate, PROVIDED that such Foreign Lender has received written notice from such Borrower advising it of the availability of such exemption or reduction and supplying all applicable documentation.
(g) If and to the extent that any Lender or Letter of Credit
Issuer is able, in its sole opinion, to apply or otherwise take advantage of any
tax refund or offsetting tax credit or other similar tax benefit arising out of
or in conjunction with any deduction or withholding that gives rise to an
obligation on any Borrower to pay any Taxes or Other Taxes pursuant to this
Section 2.18, such Lender or Letter of Credit Issuer (as the case may be) shall,
to the extent that in its sole reasonable opinion it can do so without any other
adverse tax consequences for such Lender or Letter of Credit Issuer (as the case
may be), reimburse to the applicable Borrower at such time as such tax refund,
credit or benefit shall have been received by such Lender or Letter of Credit
Issuer (as the case may be) such amount as such Lender or Letter of Credit
Issuer (as the case may be) shall, in its sole opinion, have determined to be
attributable to the relevant deduction or withholding and as will leave such
Lender or Letter of Credit Issuer (as the case may be) in no better or worse
position than it would have been in if the payment of such Taxes or Other Taxes
(as the case may be) had not been required.
(h) Notwithstanding anything to the contrary contained in this
Section 2.18, if a Lender or Letter of Credit Issuer is a conduit entity
participating in a conduit financing arrangement (as defined in Section 7701(l)
of the Code and the Treasury regulations issued thereunder) with respect to any
payments made by the Borrowers hereunder or under any other Credit Document, the
Borrowers shall not be obligated to pay additional amounts to such Lender or
Letter of Credit Issuer (as the case may be) pursuant to this Section 2.18 to
the extent that the amount of Taxes exceeds the amount that would have been
otherwise payable had such Lender or Letter of Credit Issuer (as the case may
be) not been a conduit entity participating in a conduit financing arrangement.
SECTION 2.19. PAYMENTS GENERALLY; PRO RATA TREATMENT;
SHARING OF SET-OFFS. (a) Each Borrower shall make each payment required to be
made by it hereunder or under any other Credit Document (whether of principal,
interest, fees or reimbursement of LC Disbursements, or of amounts payable under
Section 2.16, 2.17 or 2.18, or otherwise) prior to the time expressly required
hereunder or under such other Credit Document for such payment (or, if no such
time is expressly required, prior to 12:00 noon, New York City time), on the
date when due, in immediately available funds, without set-off or counterclaim.
Any amounts received after such time on any date may, in the discretion of the
Applicable Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Applicable Agent at its Payment Office, except payments to
be made directly to the Letter of Credit Issuer or Swingline Lender as expressly
provided herein and except that payments pursuant to Sections 2.16, 2.17, 2.18
and 9.07 shall be made directly to the Persons entitled thereto and payments
pursuant to other Credit Documents shall be made to the Persons specified
therein. The Applicable Agent shall distribute any such payments received by it
for the account of any other Person to the appropriate recipient promptly
following receipt thereof. If any payment under any Credit Document shall be due
on a day that is not a Business Day, the date for payment shall be extended to
the next succeeding Business Day, and, in the case of any payment accruing
interest, interest thereon shall be payable for the period of such extension.
All payments hereunder of principal or interest in respect of any Loan or
amounts owing in respect of any B/A Drawing (or of any breakage indemnity in
respect of any Loan or B/A Drawing) shall be made in the currency of such Loan
or B/A Drawing; all other payments hereunder and under each other Credit
Document shall be made in US Dollars, except as otherwise expressly provided
herein.
(b) If at any time insufficient funds are received by and available to the Applicable Agent to pay fully all amounts of principal, amounts owing in respect of B/A Drawings, unreimbursed LC Disbursements, interest and fees then due hereunder, such funds shall be applied (i) first, towards payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties (based on the US Dollar Equivalent of such amounts or the US Dollar amount thereof, as applicable), and (ii) second, towards payment of principal, amounts owing in respect of B/A Drawings, and unreimbursed LC Disbursements then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal, face amounts of B/As and amounts of unreimbursed LC Disbursements then due to such parties (based on the US Dollar Equivalent of such amounts or the US Dollar amount thereof, as applicable).
(c) If any Lender shall, by exercising any right of set-off or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Revolving Loans, Term Loans, amounts owing in respect of any B/A Drawing or participations in LC Disbursements or Swingline Loans resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Revolving Loans, Term Loans, amounts owing in respect of any B/A Drawing and participations in LC Disbursements and Swingline Loans and accrued interest thereon than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Revolving Loans, Term Loans, amounts owing in respect of any B/A Drawing and participations in LC Disbursements and Swingline Loans of other Lenders to the extent necessary so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Revolving Loans, Term Loans, amounts owing in respect of any B/A Drawing and participations in LC Disbursements and Swingline Loans; PROVIDED that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this paragraph shall not be construed to apply to any payment made by any Borrower pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in LC Disbursements to any assignee or participant, other than to US Borrower or any Subsidiary or Affiliate thereof (as to which the provisions of this paragraph shall apply). Each Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against such Borrower rights of set-off and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the such Borrower in the amount of such participation.
(d) Unless the Applicable Agent shall have received notice from a Borrower prior to the date on which any payment is due to the Applicable Agent for the account of the Lenders or the Letter of Credit Issuer hereunder that the applicable Borrower will not make such payment, the Applicable Agent may assume that such Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the Letter of Credit Issuer, as the case may be, the amount due. In such event, if the applicable Borrower has not in fact made such payment, then each of the Lenders or the Letter of Credit Issuer, as the case may be, severally agrees to repay to the Applicable Agent forthwith on
demand the amount so distributed to such Lender or Letter of Credit Issuer with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Applicable Agent, at the greater of the Federal Funds Effective Rate and a rate determined by the Applicable Agent in accordance with banking industry rules on interbank compensation.
(e) If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.04(c), 2.05(d) or (e), 2.06(b), 2.19(d) or 9.07, then the Applicable Agent may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by the Applicable Agent for the account of such Lender to satisfy such Lender's obligations under such Sections until all such unsatisfied obligations are fully paid.
SECTION 2.20. MITIGATION OBLIGATIONS; REPLACEMENT OF LENDERS. (a) If any Lender requests compensation under Section 2.16, or if any Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.18, then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the reasonable judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.16 or 2.18, as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. Each Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.
(b) If any Lender requests compensation under Section 2.16, or if any Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.18, or if any Lender defaults in its obligation to fund Loans hereunder, then the applicable Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 10.04), all its interests, rights and obligations under this Agreement to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (i) the applicable Borrower shall have received the prior written consent of the Administrative Agent (and, if a Revolving Loan Commitment is being assigned, the Letter of Credit Issuer and Swingline Lender), which consent shall not unreasonably be withheld, (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and participations in LC Disbursements and Swingline Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the applicable Borrower (in the case of all other amounts) and (iii) in the case of any such assignment resulting from a claim for compensation under Section 2.16 or payments required to be made pursuant to Section 2.18, such assignment will result in a material reduction in such compensation or payments. A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the applicable Borrower to require such assignment and delegation cease to apply.
SECTION 2.21. COLLECTION ALLOCATION MECHANISM. (a) On the CAM Exchange Date, (i) the Commitments shall automatically and without further act be terminated as provided in Article VIII, (ii) each Revolving Lender shall immediately be deemed to have acquired (and shall promptly make payment therefor to the Administrative Agent in accordance with Section 2.04(c)) participations in the Swingline Loans in an amount equal to such Revolving Lender's Swingline Exposure on such date and (iii) the Lenders shall automatically and without further act (and without regard to the provisions of Section 10.04) be deemed to have exchanged interests in the Loans (other than the Swingline Loans) and B/A Drawings and, in the case of the Revolving Lenders, participations in Swingline Loans and Letters of Credit such that in lieu of the interest of each Lender in each Loan, B/A Drawing and Letter of Credit in which it shall participate as of such date (including such Lender's interest in the Obligations of each Credit Party in respect of each such Loan, B/A Drawing and Letter of Credit), such Lender shall hold an interest in every one of the Loans (other than the Swingline Loans) and B/A Drawings and a participation in every one of the Swingline Loans and Letters of Credit (including the Obligations of each Credit Party in respect of each such Loan and B/A Drawing and each LC Reserve Account established pursuant to Section 2.21(c) below), whether or not such Lender shall previously have participated therein, equal to such Lender's CAM Percentage thereof. Each Lender and each Credit Party hereby consents and agrees to the CAM Exchange, and each Lender agrees that the CAM Exchange shall be binding upon its successors and assigns and any person that acquires a participation in its interests in any Loan or B/A Drawing. Each Credit Party agrees from time to time to execute and deliver to the Administrative Agent all such Notes and other instruments and documents as the Administrative Agent shall reasonably request to evidence and confirm the respective interests of the Lenders after giving effect to the CAM Exchange, and each Lender agrees to surrender any Notes originally received by it in connection with its Loans hereunder to the Administrative Agent against delivery of new Notes evidencing its interests in the Loans; PROVIDED, HOWEVER, that the failure of any Credit Party to execute or deliver or of any Lender to accept any such Note, instrument or document shall not affect the validity or effectiveness of the CAM Exchange.
(b) As a result of the CAM Exchange, upon and after the CAM Exchange Date, each payment received by the Administrative Agent or the Collateral Agent pursuant to any Credit Document in respect of the Obligations, and each distribution made by the Collateral Agent pursuant to any Security Document in respect of the Obligations, shall be distributed to the Lenders pro rata in accordance with their respective CAM Percentages. Any direct payment received by a Lender upon or after the CAM Exchange Date, including by way of setoff, in respect of an Obligation shall be paid over to the Administrative Agent for distribution to the Lenders in accordance herewith.
(c) In the event that on the CAM Exchange Date any Letter of Credit shall be outstanding and undrawn in whole or in part, or any LC Disbursement shall not have been reimbursed by the US Borrower or with the proceeds of a Revolving Borrowing, each Revolving Lender shall promptly pay over to the Administrative Agent, in immediately available funds, an amount in US Dollars equal to such Revolving Lender's Available Revolving Percentage (calculated as of the date of issuance of each such outstanding and undrawn Letter of Credit and each Letter of Credit in respect of which each such LC Disbursement was made) of each such undrawn face amount or (to the extent it has not already done so) each such unreimbursed drawing, as the case may be, together with interest thereon from the CAM Exchange Date to the
date on which such amount shall be paid to the Administrative Agent at the rate that would be applicable at the time to a Base Rate Revolving Loan in a principal amount equal to such amount. The Administrative Agent shall establish a separate account or accounts for each Lender (each, an "LC RESERVE ACCOUNT") for the amounts received with respect to each such Letter of Credit pursuant to the preceding sentence. The Administrative Agent shall deposit in each Lender's LC Reserve Account such Lender's CAM Percentage of the amounts received from the Revolving Lenders as provided above. The Administrative Agent shall have sole dominion and control over each LC Reserve Account, and the amounts deposited in each LC Reserve Account shall be held in such LC Reserve Account until withdrawn as provided in paragraph (d) or (e) below. The Administrative Agent shall maintain records enabling it to determine the amounts paid over to it and deposited in the LC Reserve Accounts in respect of each Letter of Credit and the amounts on deposit in respect of each Letter of Credit attributable to each Lender's CAM Percentage. The amounts held in each Lender's LC Reserve Account shall be held as a reserve against the LC Exposures, shall be the property of such Lender, shall not constitute Loans to or give rise to any claim of or against any Credit Party and shall not give rise to any obligation on the part of any Borrower to pay interest to such Lender, it being agreed that the reimbursement obligations in respect of Letters of Credit shall arise only at such times as drawings are made thereunder, as provided in Section 2.05.
(d) In the event that after the CAM Exchange Date any drawing
shall be made in respect of a Letter of Credit, the Administrative Agent shall,
at the request of the Letter of Credit Issuer, withdraw from the LC Reserve
Account of each Lender any amounts, up to the amount of such Lender's CAM
Percentage of such drawing, deposited in respect of such Letter of Credit and
remaining on deposit and deliver such amounts to the Letter of Credit Issuer in
satisfaction of the reimbursement obligations of the Revolving Lenders under
Section 2.05(e). In the event that any Revolving Lender shall default on its
obligation to pay over any amount to the Administrative Agent in respect of any
Letter of Credit as provided in this Section 2.21, the Letter of Credit Issuer
shall, in the event of a drawing thereunder, have a claim against such Revolving
Lender to the same extent as if such Lender had defaulted on its obligations
under Section 2.05(c), but shall have no claim against any other Lender in
respect of such defaulted amount. Each other Lender shall have a claim against
such defaulting Revolving Lender for any damages sustained by it as a result of
such default, including, in the event that such Letter of Credit shall expire
undrawn, its CAM Percentage of the defaulted amount.
(e) In the event that after the CAM Exchange Date any Letter of Credit shall expire undrawn, the Administrative Agent shall withdraw from the LC Reserve Account of each Lender the amount remaining on deposit therein in respect of such Letter of Credit and distribute such amount to such Lender.
(f) With the prior written approval of the Administrative Agent (not to be unreasonably withheld), any Lender may withdraw the amount held in its LC Reserve Account in respect of the undrawn amount of any Letter of Credit. Any Lender making such a withdrawal shall be unconditionally obligated, in the event there shall subsequently be a drawing under such Letter of Credit, to pay over to the Administrative Agent, for the account of the applicable Issuing Bank, on demand, its CAM Percentage of such drawing.
(g) In the event the CAM Exchange Date shall occur, Obligations of the Credit Parties denominated in any currency other than US Dollars shall, automatically and with no further act required, be converted to obligations of the same Credit Parties denominated in US Dollars. Such conversion shall be deemed to have occurred immediately prior to the Lenders being deemed to have exchanged interests pursuant to Section 2.21(a)(iii) and shall be effected based upon the Spot Exchange Rates in effect with respect to the relevant currencies on the CAM Exchange Date. On and after any such conversion, all amounts accruing and owed to any Lender in respect of its Obligations shall accrue and be payable in US Dollars at the rates otherwise applicable hereunder (and, in the case of interest on Loans and B/A Drawings, at the default rate applicable to ABR Loans hereunder).
SECTION 2.22. REDENOMINATION OF STERLING. (a) Each obligation of any party to this Agreement to make a payment denominated in Sterling if the United Kingdom adopts the Euro as its lawful currency after the date hereof shall be redenominated into Euro at the time of such adoption (in accordance with the EMU Legislation). If the basis of accrual of interest expressed in this Agreement in respect of Sterling shall be inconsistent with any convention or practice in the London interbank market for the basis of accrual of interest in respect of the Euro, such expressed basis shall be replaced by such convention or practice with effect from the date on which the United Kingdom adopts the Euro as its lawful currency; provided that if any Borrowing in Sterling is outstanding immediately prior to such date, such replacement shall take effect, with respect to such Borrowing, at the end of the then current Interest Period.
(b) Without prejudice and in addition to any method of conversion or rounding prescribed by any EMU Legislation and (i) without limiting the liability of any Borrower for any amount due under this Agreement and (ii) without increasing any Commitment of any Lender, all references in this Agreement to minimum amounts (or integral multiples thereof) denominated in Sterling shall, if the United Kingdom adopts the Euro as its lawful currency after the date hereof, immediately upon such adoption, be replaced by references to such minimum amounts (or integral multiples thereof) as shall be specified herein with respect to Borrowings denominated in Euro.
(c) Each provision of this Agreement shall be subject to such reasonable changes of construction as the UK Agent (in consultation with the UK Borrower) may from time to time specify to be appropriate to reflect the adoption of the Euro by the United Kingdom and any relevant market conventions or practices relating to the Euro.
ARTICLE III
CONDITIONS PRECEDENT TO CREDIT
EVENTS ON THE INITIAL BORROWING DATE. The obligation of each Lender to make each Loan and accept and purchase each B/A hereunder, and the obligation of each Letter of Credit Issuer to issue each Letter of Credit hereunder, in each case on the Initial Borrowing Date, is subject at the time of the making of such Loan or the issuance of such Letter of Credit, as the case may be, to the satisfaction of the following conditions:
SECTION 3.01. EXECUTION OF AGREEMENT; NOTES. On or prior to the Initial Borrowing Date, (a) the Effective Date shall have occurred and (b) there shall have been delivered to the Administrative Agent for the account of each Lender requesting same the appropriate Term Note and/or Revolving Notes and to the Swingline Lender, if so requested, the Swingline Notes, in each case executed by the US Borrower, the Canadian Borrower or the UK Borrower, as the case may be, and in the amount, maturity and as otherwise provided herein.
SECTION 3.02. OFFICER'S CERTIFICATE. On the Initial Borrowing Date, the Administrative Agent shall have received a certificate from Holdings and each Borrower dated such date signed by an appropriate officer of such Credit Party stating that all of the applicable conditions set forth in Sections 3.05 through 3.08, inclusive, and 4.01 (other than such conditions to the extent that same are subject to the satisfaction of the Agents and/or the Required Lenders), have been satisfied on such date.
SECTION 3.03. OPINIONS OF COUNSEL. On the Initial Borrowing Date, the Administrative Agent shall have received opinions, addressed to each Agent, the Collateral Agent and each of the Lenders and dated the Initial Borrowing Date, from (a) Latham & Watkins, special counsel to the Credit Parties, which opinion shall cover the matters contained in Exhibit B-1 and such other matters incident to the transactions contemplated herein as the Agents may reasonably request, (b) Stikeman Elliott, special Canada counsel to the Credit Parties, which opinion shall cover the matters contained in Exhibit B-2 and such other matters incident to the transactions contemplated herein as the Agents may reasonably request, (c) Latham & Watkins, special English counsel to the Credit Parties, which opinion shall cover the matters contained in Exhibit B-3 and such other matters incident to the transactions contemplated herein as the Agents may reasonably request, and (d) local counsel to the Credit Parties and/or the Agents in (i) Illinois, Kansas, Utah and Wisconsin in the United States and (ii) Saskatchewan, Nova Scotia and Quebec in Canada, in each case reasonably satisfactory to the Agents, which opinions in the case of this clause (d) (A) shall cover the perfection of the security interests granted pursuant to the Security Documents and such other matters incident to the transactions contemplated herein as the Agents may reasonably request and (B) shall be in form and substance reasonably satisfactory to the Agents.
SECTION 3.04. COMPANY DOCUMENTS; PROCEEDINGS. (a) On the Initial Borrowing Date, the Administrative Agent shall have received from each Credit Party a certificate, dated the Initial Borrowing Date, signed by the chairman of the board, the chief executive officer, the president or any vice president of such Credit Party (or, in the case of any Foreign Credit Party, an authorized signatory thereof as permitted under applicable law and the relevant charter documents of such Foreign Credit Party), and attested to by the secretary or any assistant secretary of such Credit Party (or, in the case of any Foreign Credit Party, another authorized signatory thereof as permitted under applicable law and the relevant charter documents of such Foreign Credit Party), in the form of Exhibit C with appropriate insertions, together with copies of the certificate or articles of incorporation, certificate of formation, operating agreements and by-laws (or equivalent organizational documents) of such Credit Party and the resolutions of such Credit Party referred to in such certificate and each of the foregoing shall be in form and substance reasonably satisfactory to the Administrative Agent.
(b) On the Initial Borrowing Date, all Company and legal proceedings and all instruments and agreements in connection with the transactions contemplated by this Agreement and the other Documents shall be reasonably satisfactory in form and substance to the Administrative Agent, and the Administrative Agent shall have received all information and copies of all certificates, documents and papers, including good standing certificates, bring- down certificates and any other records of Company proceedings and governmental approvals, if any, that the Administrative Agent reasonably may have requested in connection therewith, such documents and papers, where appropriate, to be certified by proper Company or governmental authorities.
SECTION 3.05. ADVERSE CHANGE, ETC. On the Initial Borrowing Date, nothing shall have occurred that has had, or is reasonably likely to have, a material adverse effect on the Transaction or a Material Adverse Effect.
SECTION 3.06. LITIGATION. On the Initial Borrowing Date, there
shall be no actions, suits, proceedings or investigations pending or threatened
(a) with respect to this Agreement or any other Document or the Transaction, (b)
with respect to any Retained Existing Indebtedness or Existing Indebtedness, (c)
that is reasonably likely to have a Material Adverse Effect or (d) that is
reasonably likely to have (i) a Material Adverse Effect or (ii) a material
adverse effect on the Transaction, the rights or remedies of the Lenders or the
Agents hereunder or under any other Credit Document or on the ability of any
Credit Party to perform its respective obligations to the Lenders or the Agents
hereunder or under any other Credit Document.
SECTION 3.07. APPROVALS. On the Initial Borrowing Date, (a) all necessary and material governmental (domestic and foreign), regulatory and third party approvals in connection with any Existing Indebtedness or Retained Existing Indebtedness, the Transaction or the transactions contemplated by the Documents and otherwise referred to herein or therein shall have been obtained and remain in full force and effect and, to the extent reasonably requested by the Administrative Agent, evidence thereof shall have been provided to the Administrative Agent and (b) all applicable appeal periods and waiting periods shall have expired without any action being taken by any competent authority that restrains (or that could have a reasonable likelihood of restraining), prevents or imposes materially adverse conditions upon the consummation of the Transaction, the making of the Loans and the transactions contemplated by the Documents or otherwise referred to herein or therein. On the Initial Borrowing Date, there shall not exist any judgment, order, injunction or other restraint issued or filed or a hearing seeking injunctive relief or other restraint pending or notified prohibiting or imposing materially adverse conditions upon, or materially delaying, or making economically unfeasible, the consummation of the Transaction or the making of the Loans.
SECTION 3.08. CONSUMMATION OF THE MERGER, ETC. (a) On the Initial Borrowing Date, pursuant to or in connection with the Merger Agreement, (a) the Apollo Group shall have capitalized Investco with cash common equity (the "EQUITY CONTRIBUTION") in an aggregate amount of not less than $115,000,000 (LESS the Management Rollover Amount), (b) prior to the Stock Purchase and Merger, all the capital stock of the US Borrower will be contributed by the Seller to Holdings, (c) prior to or concurrent with the Stock Purchase and Merger, the US Borrower and its subsidiaries will cause the Excluded Assets and Excluded
Subsidiaries (in each case as defined in the Merger Agreement) to be transferred to the Seller or one or more of its Affiliates (other than Holdings and its Subsidiaries and the US Borrower and its Subsidiaries), (d) (i) Investco will purchase certain previously outstanding common stock and preferred stock of Holdings (the "STOCK PURCHASE") from the Seller for an aggregate cash purchase price of $115,000,000 (LESS the Management Rollover Amount) (the "STOCK PURCHASE PRICE") and (ii) concurrent with or immediately after the Stock Purchase, the Purchaser will merge (the "MERGER") with and into Holdings, with Holdings as the surviving corporation in the Merger, and (e) pursuant to the Merger or immediately thereafter (pursuant to certain transactions in connection with the Stock Purchase and Merger contemplated by the Merger Agreement), (i) Investco will receive, in exchange for the common stock and preferred stock of Holdings acquired pursuant to the Stock Purchase, (A) common stock of Holdings representing not less than 70% of the post-Merger common stock of Holdings and (B) Initial Preferred Stock with an aggregate liquidation preference of $59,000,000 (LESS an amount equal to 51.3% of the Management Rollover Amount) and (ii) the Seller will receive (A) aggregate cash consideration (the "MERGER CONSIDERATION") in the amount that, together with the amount of the Stock Purchase Price, the Management Rollover Amount and the aggregate amount of the Existing Indebtedness and Retained Existing Indebtedness, equals $600,000,000, subject to further adjustment (other than in respect of the Stock Purchase Price, the Management Rollover Amount and the Existing Indebtedness and Retained Existing Indebtedness) as provided in the Merger Agreement, (B) all the common stock of Holdings not transferred to Investco, which will have a value, based on the amount of cash consideration paid to the Seller pursuant to the Stock Purchase and Merger, of $13,957,000, (C) Initial Preferred Stock with an aggregate liquidation preference of $14,704,000 and (D) the Seller Note in the principal amount of $11,340,000.
(b) On the Initial Borrowing Date, the US Borrower shall have issued $250,000,000 in aggregate principal amount of its Senior Subordinated Notes and shall have received gross cash proceeds equal to the aggregate principal amount of such Senior Subordinated Notes and shall have utilized the entire amount of such gross cash proceeds to make payments owing in connection with the Transaction (including payment of fees related to such issuance) prior to any Borrower utilizing any proceeds of any Loans for such purpose.
(c) On the Initial Borrowing Date, (i) the Administrative Agent shall have received true and correct copies of all Merger Documents, all Senior Subordinated Note Documents, the Initial Preferred Stock Documents and the Seller Note, certified as such by an appropriate officer of Holdings, (ii) (A) all Merger Documents that were executed on October 13, 2001, shall be in the form so executed, and all exhibits (including, without limitation, the form of Initial Preferred Stock and Seller Note) thereto shall be executed in the form attached to the respective Merger Document on October 13, 2001, with, in each case, any changes thereto or waivers to the terms thereof to be reasonably satisfactory to the Agents and (B) all other Documents, and all of the terms and conditions thereof, shall be in form and substance reasonably satisfactory to the Agents and (iii) all of the Documents shall be in full force and effect. All material conditions precedent to the consummation of the Transaction as set forth in the respective Documents shall have been satisfied, and not waived unless consented to by the Agents (which consent shall not be unreasonably withheld), to the reasonable satisfaction of the Agents. Each component of the Transaction shall have been consummated in accordance with the terms and conditions of the applicable Documents and all applicable laws.
SECTION 3.09. US COLLATERAL AND GUARANTY AGREEMENT; FOREIGN
PLEDGE AGREEMENTS. On the Initial Borrowing Date, (a) Holdings, the US
Borrower and each Domestic Subsidiary of the US Borrower shall have duly
authorized, executed and delivered the US Collateral and Guaranty Agreement in
the form of Exhibit D, with such changes thereto, or additional pledge
agreements (or amendments thereto) entered into in connection therewith, as the
Collateral Agent may reasonably request in respect of any Pledged Collateral of
any Foreign Subsidiary to be pledged by any US Credit Party (as amended,
restated, modified and/or supplemented from time to time in accordance with the
terms thereof and hereof (as well as any guaranty, pledge and/or security
agreements delivered by any Domestic Subsidiary of the US Borrower pursuant to
Section 6.11(a) or (b)), the "US COLLATERAL AND GUARANTY AGREEMENT"), (b) each
Foreign Subsidiary of the US Borrower organized under the laws of Canada (or any
province or territory thereof) or of England and Wales in the United Kingdom
(other than such Foreign Subsidiaries that do not own any equity of any other
Person) shall have duly authorized, executed and delivered one or more other
pledge agreements in form and substance satisfactory to the Collateral Agent in
connection with the Pledged Collateral to be pledged by any such Foreign
Subsidiary (such pledge agreements referred to in this clause (b), as the same
may be amended, restated, modified and/or supplemented from time to time in
accordance with the terms thereof and hereof (as well as any pledge agreements
delivered by any Foreign Subsidiary pursuant to Section 6.11(a)), the "FOREIGN
PLEDGE AGREEMENTS" and each, a "FOREIGN PLEDGE AGREEMENT"), (c) each Credit
Party party to the US Collateral and Guaranty Agreement or a Foreign Pledge
Agreement shall have delivered to the Collateral Agent, as pledgee thereunder,
all of the certificated Pledged Collateral, if any, referred to therein and then
owned by each such Credit Party, (i) endorsed in blank in the case of promissory
notes constituting such Pledged Collateral and (ii) together with (A) executed
and undated stock powers or stock transfer forms, as applicable, in the case of
capital stock constituting such Pledged Collateral and (B) proper financing
statements (Form UCC-1) or appropriate local or foreign equivalent fully
executed for filing under the UCC or other appropriate filing offices of each
jurisdiction as may be necessary or, in the reasonable opinion of the Collateral
Agent, desirable to perfect the security interests purported to be created by
the US Collateral and Guaranty Agreement and Foreign Pledge Agreements, and (d)
each Credit Party shall have taken all such further actions as may be necessary
or, in the reasonable opinion of the Collateral Agent, desirable, to perfect the
security interest purported to be created by the US Collateral and Guaranty
Agreement and Foreign Pledge Agreements, and the US Collateral and Guaranty
Agreement and each Foreign Pledge Agreement shall be in full force and effect.
SECTION 3.10. US COLLATERAL AND GUARANTY AGREEMENT; FOREIGN SECURITY AGREEMENTS. On the Initial Borrowing Date, each Foreign Subsidiary of the US Borrower incorporated under the laws of Canada (or any province or territory thereof) or of England and Wales in the United Kingdom shall have duly authorized, executed and delivered one or more other security agreements in form and substance satisfactory to the Collateral Agent in connection with the Security Agreement Collateral of each such Foreign Subsidiary (such security agreements (as well as any security agreements delivered by any Foreign Subsidiary pursuant to Section 6.11(b)), the "FOREIGN SECURITY AGREEMENTS" and each, a "FOREIGN SECURITY AGREEMENT"). The US Collateral and Guaranty Agreement and the Foreign Security Agreements executed and delivered on the Initial Borrowing Date shall cover all of each Credit Party's present and future Security Agreement Collateral and shall be delivered together with:
(a) executed copies of financing statements (Form UCC-1) or appropriate local or foreign equivalents (if any) in appropriate form for filing under the UCC or appropriate local or foreign equivalent of each jurisdiction as may be necessary or, in the reasonable opinion of the Collateral Agent, desirable to perfect the security interests purported to be created by the US Collateral and Guaranty Agreement and the Foreign Security Agreements;
(b) certified copies of Requests for Information or Copies (Form UCC-11), or equivalent reports (if any), listing all effective financing statements that name any Credit Party as debtor and that are filed in the jurisdictions referred to in clause (i) above together with copies of all other financing statements that name any Credit Party as debtor (none of which shall cover any Collateral except to the extent evidencing Permitted Liens or in respect of which the Collateral Agent shall have received termination statements (Form UCC-3 or the equivalent) as shall be required by local or foreign law fully executed for filing);
(c) evidence of the completion (or arrangements therefor reasonably satisfactory to the Collateral Agent) of all other recordings and filings of, or with respect to, the US Collateral and Guaranty Agreement and the Foreign Security Agreements as may be necessary to perfect the security interests intended to be created by the US Collateral and Guaranty Agreement and the Foreign Security Agreements; and
(d) evidence that all other actions necessary to perfect and protect the security interests purported to be created by the US Collateral and Guaranty Agreement and the Foreign Security Agreements have been taken.
SECTION 3.11. US COLLATERAL ASSIGNMENT. On the Initial Borrowing Date, each of Holdings and the US Borrower shall have duly authorized, executed and delivered the US Collateral Assignment in the form of Exhibit E (as amended, restated, modified and/or supplemented from time to time in accordance with the terms thereof, the "US COLLATERAL ASSIGNMENT") and shall have taken all such further actions as may be necessary or, in the reasonable opinion of the Collateral Agent, desirable, to perfect the security interest purported to be created by the US Collateral Assignment, and the US Collateral Assignment shall be in full force and effect.
SECTION 3.12. FOREIGN GUARANTY. On the Initial Borrowing Date, the Canadian Borrower, the UK Borrower and each other Foreign Subsidiary of the US Borrower shall have duly authorized, executed and delivered the Foreign Guaranty in the form of Exhibit F, with such changes thereto as the Collateral Agent may reasonably request with respect to any such Foreign Subsidiary (as amended, restated, modified and/or supplemented from time to time in accordance with the terms thereof and hereof, the "FOREIGN GUARANTY"), and the Foreign Guaranty shall be in full force and effect.
SECTION 3.13. MORTGAGES; SURVEYS, ETC. (a) On the Initial Borrowing Date, the Collateral Agent shall have received:
(i) fully executed counterparts of Mortgages, in form and substance reasonably satisfactory to the Collateral Agent, which Mortgages shall cover such of the Real Property located in the United States or any State thereof that is owned or leased by any US Credit Party and that is designated as a "US MORTGAGED PROPERTY" on Part A of Schedule V, together with evidence that counterparts of such Mortgages have been delivered to the title insurance company retained by the US Borrower in connection with the execution and delivery of such Mortgages for recording in all places to the extent necessary or, in the reasonable opinion of the Collateral Agent, desirable to effectively create a valid and enforceable first priority mortgage lien, subject only to Permitted Encumbrances, on each such US Mortgaged Property in favor of the Collateral Agent (or such other trustee as may be required or desired under local law) for the benefit of the Secured Parties;
(ii) surveys, in form and substance reasonably satisfactory to the Collateral Agent, of the US Mortgaged Properties, certified by a licensed professional surveyor reasonably satisfactory to the Collateral Agent and dated a recent date reasonably acceptable to the Collateral Agent; and
(iii) Mortgage Policies on the Mortgages for the US Mortgaged Properties issued by Chicago Title Insurance Company in amounts reasonably satisfactory to the Collateral Agent and assuring the Collateral Agent that each of the Mortgages on such US Mortgaged Properties is a valid and enforceable first priority mortgage lien on such US Mortgaged Properties, free and clear of all defects and encumbrances except Permitted Encumbrances, and such Mortgage Policies shall otherwise be in form and substance reasonably satisfactory to the Collateral Agent and shall include, as appropriate, an endorsement for future advances under this Agreement and the Notes and for any other matter that the Collateral Agent in its discretion may reasonably request, shall not include an exception for mechanics' liens, and shall provide for affirmative insurance and such reinsurance as the Collateral Agent in its discretion may reasonably request.
(b) On the Initial Borrowing Date, the US Borrower shall have delivered to each lessor of a US Mortgaged Property a copy of the Mortgage encumbering such US Mortgaged Property, together with written notice specifying the Collateral Agent as mortgagee thereunder and setting forth the Collateral Agent's name and address.
(c) On the Initial Borrowing Date, with respect to each parcel of Real
Property located (i) in Canada that is owned by the Canadian Borrower or any of
its Subsidiaries and (ii) in the United Kingdom that is owned by the UK Borrower
or any of its Subsidiaries, in each case that is designated on Part C of
Schedule V as a "FOREIGN MORTGAGED PROPERTY," the respective Foreign Credit
Party owning same shall have executed and delivered such security documentation
as the Collateral Agent may reasonably request to create a valid and enforceable
first priority mortgage lien, subject only to Canadian Permitted Encumbrances in
the case of the Foreign Mortgaged Property referred to in clause (i) of this
Section 3.13(c) and only to Permitted Encumbrances in the case of the Foreign
Mortgaged Property referred to in clause (ii) of this Section 3.13(c), on each
such Foreign Mortgaged Property in favor of the Collateral Agent (or
such other agent or trustee as may be required or desired under local law) for
the benefit of the Secured Parties. All actions required pursuant to this
Section 3.13(c) shall be taken to the reasonable satisfaction of the Agents.
(d) On the Initial Borrowing Date, with respect to each parcel of Real Property located (i) in Canada that is leased by the Canadian Borrower or any of its Subsidiaries and (ii) in the United Kingdom that is leased by the UK Borrower or any of its Subsidiaries, in each case that is designated on Part C of Schedule V as a "FOREIGN LEASE SUBJECT TO AN ASSIGNMENT FOR SECURITY PURPOSES," the respective Foreign Credit Party leasing same shall have executed and delivered such security documentation as the Collateral Agent may reasonably request to create an assignment for security purposes on such Foreign Credit Party's Leasehold interest in the respective Foreign Mortgaged Property. All actions required pursuant to this Section 3.13(d) shall be taken to the reasonable satisfaction of the Collateral Agent.
(e) On the Initial Borrowing Date, with respect to each parcel of Real
Property located in the United States that is leased by the US Borrower or any
of its Subsidiaries, in each case that is designated on Part D of Schedule V as
a "US LEASE SUBJECT TO AN ASSIGNMENT FOR SECURITY PURPOSES," the respective US
Credit Party leasing same shall have executed and delivered such security
documentation as the Collateral Agent may reasonably request to create an
assignment for security purposes on such US Credit Party's Leasehold interest in
the respective US Mortgaged Property. All actions required pursuant to this
Section 3.13(e) shall be taken to the reasonable satisfaction of the Collateral
Agent.
SECTION 3.14. SHAREHOLDERS' AGREEMENTS; MANAGEMENT AGREEMENTS; RETAINED EXISTING INDEBTEDNESS AGREEMENTS; TAX ALLOCATION AGREEMENTS. On or prior to the Initial Borrowing Date, there shall have been delivered to the Administrative Agent true and correct copies, certified as true and complete by an appropriate officer of Holdings, of the following documents, in each case as same will be in effect on the Initial Borrowing Date after the consummation of the Transaction:
(a) all agreements (including, without limitation, shareholders' agreements, subscription agreements and registration rights agreements) entered into by Holdings or any of its Subsidiaries governing the terms and relative rights of its capital stock and any agreements entered into by shareholders relating to any such entity with respect to its capital stock (collectively, the "SHAREHOLDERS' AGREEMENTS");
(b) all material agreements with members of, or with respect to, the management of Holdings or any of its Subsidiaries after giving effect to the Transaction (collectively, the "MANAGEMENT AGREEMENTS");
(c) all agreements evidencing or relating to Retained Existing Indebtedness of Holdings or any of its Subsidiaries (collectively, the "RETAINED EXISTING INDEBTEDNESS AGREEMENTS"); and
(d) any tax sharing or tax allocation agreements entered into by Holdings or any of its Subsidiaries (collectively, the "TAX ALLOCATION AGREEMENTS");
all of which Shareholders' Agreements, Management Agreements, Retained Existing Indebtedness Agreements and Tax Allocation Agreements shall be in form and substance reasonably satisfactory to the Agents and shall be in full force and effect on the Initial Borrowing Date.
SECTION 3.15. CONSENT LETTER. On the Initial Borrowing Date, the Administrative Agent shall have received a letter from CT Corporation System, 111 Eighth Avenue, New York, New York 10011, substantially in the form of Exhibit G, indicating its consent to its appointment by each Credit Party as its agent to receive service of process as specified in Section 10.07 of this Agreement.
SECTION 3.16. SOLVENCY CERTIFICATE; INSURANCE CERTIFICATES. On or before the Initial Borrowing Date, the Administrative Agent shall have received:
(a) a solvency certificate in the form of Exhibit H from an officer of the US Borrower, dated the Initial Borrowing Date, and supporting the conclusion that, after giving effect to the Transaction and the incurrence of all financings contemplated herein, the US Borrower (on a stand-alone basis), the Canadian Borrower (on a stand-alone basis), the UK Borrower (on a stand-alone basis) and the US Borrower and its Subsidiaries (on a consolidated basis), in each case, are not insolvent and will not be rendered insolvent by the indebtedness incurred in connection herewith, will not be left with unreasonably small capital with which to engage in its or their respective businesses and will not have incurred debts beyond its or their ability to pay such debts as they mature and become due; and
(b) evidence of insurance complying with the requirements of Section 6.03 for the business and properties of the US Borrower and its Subsidiaries, in scope, form and substance reasonably satisfactory to the Agents, and naming the Collateral Agent as an additional insured and/or loss payee, and stating that such insurance shall not be canceled or revised without at least 30 days' prior written notice by the insurer to the Collateral Agent.
SECTION 3.17. HISTORICAL FINANCIAL STATEMENTS; PRO FORMA FINANCIAL
STATEMENTS; PROJECTIONS. (a) On or prior to the Initial Borrowing Date, there
shall have been delivered to the Administrative Agent (i) true and correct
copies of the historical financial statements referred to in Section 5.10(b) and
(ii) (A) an unaudited PRO FORMA consolidated balance sheet of the US Borrower
and its Subsidiaries as of September 30, 2001, and the related PRO FORMA
statement of income for the twelve-month period ended as of such date and, after
giving effect to the Transaction and the incurrence of all Indebtedness
contemplated herein and prepared in accordance with GAAP (the "PRO FORMA
Financial Statements"), together with a related funds flow statement, and (B) a
certificate of the chief financial officer of the US Borrower to the effect that
such PRO FORMA Financial Statements fairly present in all material respects the
PRO FORMA financial condition of Holdings and its Subsidiaries as of such date,
in each case in accordance with GAAP, which historical financial statements, PRO
FORMA Financial Statements, certificate of Holdings and funds flow statement
shall be reasonably satisfactory to the Agents.
(b) On or prior to the Initial Borrowing Date, there shall have been delivered to the Administrative Agent the Projections containing the projected consolidated financial statements of the US Borrower and its Subsidiaries certified by an officer of the US Borrower for the five fiscal years ended after the Initial Borrowing Date, which Projections (i) shall reflect the forecasted consolidated financial conditions and income and expenses of the US Borrower and its Subsidiaries after giving effect to the Transaction and the related financing thereof and the other transactions contemplated hereby and (ii) shall be reasonably satisfactory in form and substance to the Agents.
SECTION 3.18. PAYMENT OF FEES. On the Initial Borrowing Date, all costs, fees and expenses, and all other compensation due to the Agents or the Lenders (including, without limitation, legal fees and expenses), shall have been paid to the extent due.
SECTION 3.19. PAYMENT OF EXISTING INDEBTEDNESS. On the Initial
Borrowing Date, Holdings and its Subsidiaries shall have repaid or repurchased
in full all their Existing Indebtedness (excluding Retained Existing
Indebtedness), and the Agents shall be satisfied that all commitments,
guarantees and security interests relating thereto shall have been terminated or
shall be terminated simultaneously with the repayment or repurchase of the
respective Existing Indebtedness. After giving effect to the Transaction and the
other transactions contemplated hereby and by the Merger Agreement, Holdings and
its Subsidiaries shall have outstanding no Indebtedness or Preferred Stock or
other preferred equity interests other than (a) the Senior Subordinated Notes,
(b) in the case of Holdings, the Initial Preferred Stock and the Seller Note,
(c) Indebtedness incurred pursuant to this Agreement and the other Credit
Documents, (d) the UK Intercompany Loan, (e) the Retained Existing Indebtedness
(if any) and (f) the Canadian Intercompany Loan.
ARTICLE IIIA
CONDITIONS PRECEDENT TO EFFECTIVENESS OF
AMENDMENT AND RESTATEMENT OF THE EXISTING CREDIT AGREEMENT
The amendment and restatement of the Existing Credit Agreement pursuant to this Agreement shall become effective immediately upon satisfaction of each of the following conditions precedent on or before the Amendment and Restatement Date:
SECTION 3A.01. CONSENTS. The Administrative Agent shall have received
duly executed counterparts of this Agreement that, when taken together, bear the
signatures of Holdings, the Borrowers, the Required Lenders and each Term Lender
(after giving effect to the assignments of the Assigned Interests pursuant to
Section 5 of the Master Assignment Agreement).
SECTION 3A.02. PERMITTED TRANSACTIONS. The Permitted Transactions shall have been consummated simultaneously with or prior to the effectiveness of the amendment and restatement of the Existing Credit Agreement on the Amendment and Restatement Date.
SECTION 3A.03. NO DEFAULT; REPRESENTATIONS AND WARRANTIES. On and as of the Amendment and Restatement Date and also after giving effect to the transactions contemplated herein, (a) there shall have occurred and be continuing no Default or Event of Default, (b) all representations and warranties of each Credit Party contained herein and in each other Credit Document shall be true and correct in all material respects with the same effect as though such representations and warranties had been made on and as of the Amendment and Restatement Date (it being understood and agreed that any representation or warranty that by its terms is made as of a specified date shall be required to be true and correct in all material respects only as of such specified date).
SECTION 3A.04. FEES; EXPENSES. The Administrative Agent shall have received all reasonable fees and expenses required to be paid or reimbursed by any Credit Party under or in connection with this Agreement, the Master Assignment Agreement or under any other Credit Document and (in the case of expenses to be reimbursed, including reasonable fees, charges and disbursements of counsel) invoiced in writing to any Credit Party on or prior to the Amendment and Restatement Date.
SECTION 3A.05. MASTER ASSIGNMENT AGREEMENT. The Administrative Agent shall have received duly executed counterparts of the Master Assignment Agreement that, when taken together, bear the signatures of the US Borrower, each Increasing Term Lender and each Decreasing Term Lender that is not a Departing Lender, and the Master Assignment Agreement shall have become effective simultaneously with or prior to the effectiveness of the amendment and restatement of the Existing Credit Agreement on the Amendment and Restatement Date.
ARTICLE IV
CONDITIONS PRECEDENT TO ALL CREDIT EVENTS
The obligation of each Lender to make Loans (including Loans made on the Initial Borrowing Date) and accept and purchase B/As, and the obligation of each Letter of Credit Issuer to issue any Letter of Credit, is subject, at the time of each such Credit Event (except as hereinafter indicated), to the satisfaction of the following conditions:
SECTION 4.01. NO DEFAULT; REPRESENTATIONS AND WARRANTIES. At the time of each such Credit Event and also after giving effect thereto (a) there shall exist no Default or Event of Default and (b) all representations and warranties contained herein and in each other Credit Document shall be true and correct in all material respects with the same effect as though such representations and warranties had been made on the date of such Credit Event (it being understood and agreed that any representation or warranty that by its terms is made as of a specified date shall be required to be true and correct in all material respects only as of such specified date).
SECTION 4.02. NOTICE OF BORROWING; LETTER OF CREDIT REQUEST. (a) Prior
to the making of each Loan (excluding Swingline Loans), the Administrative Agent
shall have received a Notice of Borrowing meeting the requirements of Section
2.03. Prior to the
making of each Swingline Loan, the Swingline Lender shall have received the notice required by Section 2.04.
(b) Prior to the issuance of each Letter of Credit, the Administrative Agent and the respective Letter of Credit Issuer shall have received a Letter of Credit Request meeting the requirements of Section 2.05.
(c) Prior to the acceptance and purchase of any B/A, the Administrative
Agent and shall have received a written request meeting the requirements of
Section 2.07(c).
The occurrence of the Initial Borrowing Date and the acceptance of the benefits or proceeds of each Credit Event shall constitute a representation and warranty by each of Holdings and each Borrower to each Agent and each of the Lenders that all the conditions specified in Article III (with respect to the Initial Borrowing Date and the Credit Events to occur on the Initial Borrowing Date) and in this Article IV (with respect to the Initial Borrowing Date and the Credit Events to occur on or after the Initial Borrowing Date) and applicable to such Credit Event (other than such conditions to the extent that same are subject to the satisfaction of the Agents and/or the Required Lenders) exist as of that time. All of the Notes, certificates, legal opinions and other documents and papers referred to in Article III and in this Article IV, unless otherwise specified, shall be or shall have been delivered to the Administrative Agent at the applicable Notice Office for the account of each of the Lenders and, except for the Notes, in sufficient counterparts or copies for each of the Lenders and shall be in form and substance satisfactory to the Lenders.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders to enter into this Agreement and to make the Loans, accept and purchase B/As and issue and/or participate in the Letters of Credit provided for herein, each of Holdings and each Borrower makes the following representations and warranties to the Lenders, in each case after giving effect to the Transaction, all of which shall survive the execution and delivery of this Agreement, the making of the Loans and the issuance of the Letters of Credit (with the occurrence of the Initial Borrowing Date and each Credit Event on and after the Initial Borrowing Date being deemed to constitute a representation and warranty that the matters specified in this Article V are true and correct in all material respects on and as of the Initial Borrowing Date and the date of each such Credit Event, unless stated to relate to a specific earlier date, in which case such representations and warranties shall be true and correct in all material respects only as of such earlier date):
SECTION 5.01. COMPANY STATUS. Each of Holdings and each of its Subsidiaries (a) is a duly organized and validly existing Company in good standing under the laws of the jurisdiction of its organization (provided that the representation and warranty in this clause (a) as it relates to Foreign Subsidiaries of Holdings shall only be made to the extent that such concept is legally applicable under the laws of the respective jurisdictions in which such Foreign Subsidiaries are organized), (b) has the Company power and authority to own its property and assets and to transact the business in which it is engaged and presently proposes to
engage and (c) is duly qualified and is authorized to do business and is in good standing in all jurisdictions where it is required to be so qualified and where the failure to be so qualified would have a Material Adverse Effect (provided that the representation and warranty in this clause (c) as to good standing as it relates to Foreign Subsidiaries of Holdings shall be made only to the extent that such concept is legally applicable under the laws of the respective jurisdictions in which such Foreign Subsidiaries are organized).
SECTION 5.02. COMPANY POWER AND AUTHORITY. Each Credit Party has the Company power and authority to execute, deliver and carry out the terms and provisions of the Documents to which it is a party and has taken all necessary Company action to authorize the execution, delivery and performance of the Documents to which it is a party. Each Credit Party has duly executed and delivered each Document to which it is a party and each such Document constitutes the legal, valid and binding obligation of such Credit Party enforceable in accordance with its terms, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws generally affecting creditors' rights and by equitable principles (regardless of whether enforcement is sought in equity or at law).
SECTION 5.03. NO VIOLATION. Neither the execution, delivery or performance by any Credit Party of the Documents to which it is a party, nor compliance by any Credit Party with the terms and provisions thereof, nor the consummation of the transactions contemplated herein or therein, (a) will contravene any material provision of any applicable law, statute, rule or regulation, or any order, writ, injunction or decree of any Governmental Authority, (b) will conflict or be inconsistent with, or result in any breach of, any of the terms, covenants, conditions or provisions of, or constitute a default under, or (other than pursuant to the Security Documents) result in the creation or imposition of (or the obligation to create or impose) any Lien upon any of the property or assets of such Credit Party or any of its Subsidiaries pursuant to the terms of any indenture, mortgage, deed of trust, loan agreement, credit agreement or any other material agreement or instrument to which such Credit Party or any of its Subsidiaries is a party or by which it or any of its property or assets are bound or to which such Credit Party and any of its Subsidiaries may be subject or (c) will violate any provision of the certificate or articles of incorporation, by-laws, certificate of partnership, partnership agreement, certificate of limited liability company, limited liability company agreement or equivalent organizational document, as the case may be, of such Credit Party or any of its Subsidiaries.
SECTION 5.04. LITIGATION. Except as set forth in Schedule 5.04 hereto, there are no actions, suits, proceedings or investigations pending or, to the best knowledge of each of Holdings and each Borrower, threatened (a) with respect to any Credit Document, (b) with respect to the Transaction or any other Document, or (c) with respect to Holdings or any of its Subsidiaries (i) that could reasonably be expected to have a Material Adverse Effect or (ii) that could reasonably be expected to have a material adverse effect on the rights or remedies of the Agents or the Lenders or on the ability of any Credit Party to perform its respective obligations to the Agents or the Lenders hereunder and under the other Credit Documents to which it is, or will be, a party. Additionally, there does not exist any judgment, order or injunction prohibiting or imposing material adverse conditions upon the occurrence of any Credit Event.
SECTION 5.05. USE OF PROCEEDS; MARGIN REGULATIONS. (a) The proceeds of the Term Loans, together with the proceeds of the Revolving Facility Loan and the proceeds of the issuance of the Senior Subordinated Notes, shall be utilized by the US Borrower on the Initial Borrowing Date solely to (i) pay fees and expenses incurred in connection with the Merger Transaction in an aggregate amount not to exceed $32,000,000 (the "TRANSACTION COSTS"), (ii) make a transfer to Holdings by means of a distribution (the "HOLDINGS DISTRIBUTION") in the minimum amount that is necessary to enable Holdings to (A) pay the Merger Consideration and (B) pay the Transaction Costs (to the extent not paid by the US Borrower), (iii) make a transfer to the Canadian Borrower by means of an intercompany loan (the "CANADIAN INTERCOMPANY LOAN") in an aggregate principal amount not to exceed the Canadian Dollar Equivalent of $40,000,000, (iv) make a transfer to the UK Borrower and/or IMC Global (Europe) Limited by means of an intercompany loan (the "UK INTERCOMPANY LOAN") in an aggregate principal amount not to exceed (pound)51,000,000 and (v) pay the Existing Indebtedness.
(b) The Holdings Distribution shall be utilized by Holdings on the Initial Borrowing Date solely to finance the Transaction and pay the Transaction Costs (to the extent not paid by the US Borrower).
(c) The proceeds of the Canadian Intercompany Loan shall be utilized by the Canadian Borrower on the Initial Borrowing Date solely to repay Existing Indebtedness of the Canadian Borrower.
(d) The proceeds of the UK Intercompany Loan shall be utilized by the UK Borrower on the Initial Borrowing Date solely to repay Existing Indebtedness of the UK Borrower.
(e) The proceeds of all Revolving Loans, Swingline Loans and B/As shall be utilized by each Borrower for the general corporate and working capital purposes of the US Borrower and its Subsidiaries (including, but not limited to, Permitted Acquisitions); PROVIDED that up to, but no more than $29,000,000 of Revolving Loans (the "REVOLVING FACILITY LOAN") may be utilized by the US Borrower and its Subsidiaries on the Initial Borrowing Date for working capital purposes.
(f) Neither the making of any Loan, nor the use of the proceeds thereof, nor the occurrence of any other Credit Event, will violate or be inconsistent with the provisions of Regulation U or X of the Board of Governors of the Federal Reserve System and no part of any Credit Event (or the proceeds thereof) will be used to purchase or carry any Margin Stock or to extend credit for the purpose of purchasing or carrying any Margin Stock.
SECTION 5.06. GOVERNMENTAL APPROVALS. Except as may have been obtained or made on or prior to the Initial Borrowing Date (and which remain in full force and effect on the Initial Borrowing Date), no order, consent, approval, license, authorization or validation of, or filing, recording or registration with, or exemption by, any foreign or domestic Governmental Authority, or any subdivision thereof, is required to authorize or is required in connection with (a) the execution, delivery and performance of any Document or (b) the legality, validity, binding effect or enforceability of any Document.
SECTION 5.07. INVESTMENT COMPANY ACT. Neither Holdings nor any of its Subsidiaries is an "investment company" or a company "controlled" by an "investment company," within the meaning of the Investment Company Act of 1940, as amended.
SECTION 5.08. PUBLIC UTILITY HOLDING COMPANY ACT. Neither Holdings nor any of its Subsidiaries is a "holding company," or a "subsidiary company" of a "holding company," or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company," within the meaning of the Public Utility Holding Company Act of 1935, as amended.
SECTION 5.09. TRUE AND COMPLETE DISCLOSURE. All factual information (taken as a whole) heretofore or contemporaneously furnished by or on behalf of Holdings or any of its Subsidiaries in writing to any Agent or any Lender (including, without limitation, all information contained in the Documents) for purposes of or in connection with this Agreement or any transaction contemplated herein or therein is, and all other such factual information (taken as a whole) hereafter furnished by or on behalf of any such Persons in writing to any Agent or any Lender will be, true and accurate in all material respects on the date as of which such information is dated or certified and not incomplete by omitting to state any material fact necessary to make such information (taken as a whole) not misleading at such time in light of the circumstances under which such information was provided, it being understood and agreed that for purposes of this Section 5.09, such factual information shall not include the Projections or any PRO FORMA financial information.
SECTION 5.10. FINANCIAL CONDITION; FINANCIAL STATEMENTS;
UNDISCLOSED LIABILITIES; PROJECTIONS. (a) On and as of the Initial Borrowing
Date, on a pro forma basis after giving effect to the Transaction and to all
Indebtedness (including the Loans and the Senior Subordinated Notes) incurred,
and to be incurred, and Liens created, and to be created, by each Credit Party
in connection therewith, with respect to the US Borrower (on a stand-alone
basis), the Canadian Borrower (on a stand-alone basis), the UK Borrower (on a
stand-alone basis) and the US Borrower and its Subsidiaries (on a consolidated
basis), (i) the sum of the assets, at a fair valuation, of the US Borrower (on a
stand-alone basis), the Canadian Borrower (on a stand-alone basis), the UK
Borrower (on a stand-alone basis) and the US Borrower and its Subsidiaries (on a
consolidated basis) will exceed its or their debts, (ii) it has or they have not
incurred nor intended to, nor believes or believe that it or they will, incur
debts beyond its or their ability to pay such debts as such debts mature and
(iii) it or they will have sufficient capital with which to conduct its or their
business. For purposes of this Section 5.10(a), "debt" means any liability on a
claim, and "claim" means (A) right to payment, whether or not such a right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (B)
right to an equitable remedy for breach of performance if such breach gives rise
to a payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured
or unsecured. The amount of contingent liabilities at any time shall be computed
as the amount that, in the 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.
(b) (i) (A) The audited combined balance sheets of the US Borrower and its Subsidiaries for the nine months ended on December 31, 1998, for the fiscal years ended December 31, 1999, and December 31, 2000, respectively, and for the six months ended on June 30, 2001, and the related audited combined statements of income and cash flows of the US
Borrower and its Subsidiaries for such periods ended on such dates, and (B) the unaudited combined balance sheet of US Borrower and its Subsidiaries as of September 30, 2001, and the related unaudited combined statements of income and cash flows of US Borrower and its Subsidiaries for the nine-month period ended on such date, copies of which (in each case) have been furnished to the Lenders prior to the Initial Borrowing Date, present fairly in all material respects the combined financial position of US Borrower and its Subsidiaries at the dates of such balance sheets and the combined results of the operations of US Borrower and its Subsidiaries for the periods covered thereby. Except as set forth in Schedule 5.10-A hereto, all such financial statements have been prepared in accordance with GAAP consistently applied except to the extent provided in the notes to said financial statements.
(ii) The PRO FORMA Financial Statements, copies of which have been furnished to the Lenders prior to the Initial Borrowing Date pursuant to Section 3.17(a), present a good faith estimate of the consolidated PRO FORMA financial condition of the US Borrower at the date of such PRO FORMA Financial Statements and for the period covered thereby (after giving effect to the Transaction).
(c) Except as set forth in Schedule 5.10-B hereto, since June 30, 2001 (but after giving effect to the Transaction as if same had occurred prior thereto), nothing has occurred that has had or could reasonably be expected to have a Material Adverse Effect.
(d) Except as fully reflected in the financial statements
described in Section 5.10(b) and except for the Indebtedness incurred under this
Agreement, the Seller Note and the Senior Subordinated Notes, (i) as of the
Initial Borrowing Date (and after giving effect to any Loans made on such date
and the repayment of Existing Indebtedness), there were no liabilities or
obligations (excluding obligations incurred in the ordinary course of business)
with respect to Holdings or any of its Subsidiaries of any nature whatsoever
(whether absolute, accrued, contingent or otherwise and whether or not due)
that, either individually or in the aggregate, could reasonably be expected to
be material to Holdings and its Subsidiaries taken as a whole and (ii) as of the
Initial Borrowing Date, neither Holdings nor any Borrower knows of any basis for
the assertion against it or any of its Subsidiaries of any such liability or
obligation that, either individually or in the aggregate, are or would be
reasonably likely to have, a Material Adverse Effect.
(e) The Projections delivered to the Agents and the Lenders prior to the Initial Borrowing Date have been prepared on a basis consistent with the financial statements referred to in Section 5.10(b), and have been prepared in good faith and are based on reasonable assumptions under the then known facts and circumstances. On the Initial Borrowing Date, the management of each of Holdings and each Borrower believes that the Projections are reasonable and attainable based upon the then known facts and circumstances (it being understood that nothing contained in this Section 5.10(e) shall constitute a representation that the results forecasted in such Projections will in fact be achieved). There is no fact known to Holdings or any Borrower that could reasonably be expected to have a Material Adverse Effect, that has not been disclosed herein or in such other documents, certificates and statements furnished to the Lenders for use in connection with the transactions contemplated hereby.
SECTION 5.11. THE SECURITY INTERESTS. On and after the Initial Borrowing Date, each of the Security Documents creates (or after the execution and delivery thereof will create), as security for the Obligations secured thereby, a valid and enforceable perfected security interest in and Lien in favor of the Collateral Agent on all of the Collateral subject thereto, superior to and prior to the rights of all third Persons, and subject to no other Liens (except that (a) the Security Agreement Collateral may be subject to Permitted Liens relating thereto, (b) the Mortgaged Properties may be subject to Permitted Encumbrances relating thereto and the Mortgaged Property referred to in Section 3.13(c)(i) may be subject to Canadian Permitted Encumbrances relating thereto and (c) the Pledged Collateral may be subject to the Liens described in clauses (a) and (e) of Section 7.03); PROVIDED that the security documentation covering (i) Real Property designated on Part B of Schedule V as a "FOREIGN MORTGAGED PROPERTY" and (ii) Real Property designated on Part C of Schedule V as a "FOREIGN LEASE SUBJECT TO AN ASSIGNMENT FOR SECURITY PURPOSES" may be subject to applicable limitations under local law. No filings or recordings are required in order to perfect and/or render enforceable as against third parties the security interests created under any Security Document except for filings or recordings required in connection with any such Security Document that shall have been made (A) on or prior to the Initial Borrowing Date (or (1) within 10 days thereafter in the case of UCC-1 filings in connection with the US Collateral and Guaranty Agreement and filings with the Quebec Register of Personal and Moveable Real Rights in connection with a Foreign Security Agreement entered into by Subsidiaries of Holdings organized under the laws of Canada (or any province or territory thereof) or (2) within 21 days in the case of filings on Form 395 in connection with a Foreign Security Agreement entered into by Subsidiaries of Holdings organized under the laws of England and Wales in the United Kingdom) as contemplated by Section 3.10 or 3.12 or (B) on or prior to the execution and delivery thereof as contemplated by Sections 6.11, 6.12 and 7.15 (or (1) within 10 days thereafter in the case of UCC-1 filings in connection with the US Collateral and Guaranty Agreement and filings with the Quebec Register of Personal and Moveable Real Rights in connection with a Foreign Security Agreement entered into by Subsidiaries of Holdings organized under the laws of Canada (or any province or territory thereof) or (2) within 21 days in the case of filings on Form 395 in connection with a Foreign Security Agreement entered into by Subsidiaries of Holdings organized under the laws of England and Wales in the United Kingdom).
SECTION 5.12. COMPLIANCE WITH ERISA. (a) (i) Part A of
Schedule V sets forth, as of the Initial Borrowing Date, each Plan and each
Multiemployer Plan; (ii) except as set forth in Part B of Schedule VI, each Plan
(and each related trust, insurance contract or fund) is in substantial
compliance with its terms and with all applicable laws, including without
limitation ERISA and the Code; (iii) except as set forth in Part C of Schedule
VI, each Plan (and each related trust, if any) that is intended to be qualified
under Section 401(a) of the Code has received a determination letter from the
Internal Revenue Service to the effect that it meets the requirements of
Sections 401(a) and 501(a) of the Code and such determination letter has not
been revoked or, with respect to a newly established Plan, the remedial
amendment period described in the regulations under Section 401(b) of the Code
has not expired; (iv) except as set forth in Part D of Schedule VI, no action,
suit, proceeding, hearing, audit or investigation with respect to the
administration, operation or the investment of assets of any Plan (other than
routine claims for benefits) is pending or, to the best knowledge of each of
Holdings and each Borrower, threatened; (v) no Reportable Event has occurred;
(vi) to the best knowledge of each of Holdings and each Borrower, no
Multiemployer Plan is insolvent or in reorganization; (vii) no Plan has an
Unfunded Current Liability; (viii) no Plan that is subject to Section 412 of the
Code or Section 302 of ERISA has an accumulated funding deficiency, within the
meaning of such sections of the Code or ERISA, or has applied for or received a
waiver of an accumulated funding deficiency or an extension of any amortization
period, within the meaning of Section 412 of the Code or Section 303 or 304 of
ERISA; (ix) all contributions required to be made with respect to each Plan,
each Multiemployer Plan and each Foreign Pension Plan have been timely made by
Holdings and each Subsidiary of Holdings; (x) neither Holdings nor any
Subsidiary of Holdings has incurred any liability (including any indirect,
contingent or secondary liability) to or on account of a Plan pursuant to
Section 409, 502(i) or 502(1) of ERISA or Section 4975 of the Code or expects to
incur any such liability under any of the foregoing sections with respect to any
Plan; (xi) neither Holdings nor any Subsidiary of Holdings nor any ERISA
Affiliate has incurred any liability (including any indirect, contingent or
secondary liability) to or on account of a Plan pursuant to Section 4062, 4063,
4064 or 4069 of ERISA or Section 401(a)(29) or 4971 of the Code or expects to
incur any such liability under any of the foregoing sections with respect to any
Plan; (xii) to the knowledge of Holdings and its Subsidiaries, neither Holdings
nor any Subsidiary of Holdings nor any ERISA Affiliate has incurred any
liability (including any indirect, contingent or secondary liability) to or on
account of a Multiemployer Plan pursuant to Section 515, 4201, 4204, or 4212 of
ERISA; (xiii) no condition exists that presents a material risk to Holdings or
any Subsidiary of Holdings or any ERISA Affiliate of incurring a liability to or
on account of a Plan or, to the best knowledge of each of Holdings and each
Borrower, a Multiemployer Plan pursuant to the foregoing provisions of ERISA and
the Code; (xiv) no proceedings have been instituted under Section 4042 of ERISA
to terminate or appoint a trustee to administer any Plan that is subject to
Title IV of ERISA; (xv) using actuarial assumptions and computation methods
consistent with Part 1 of subtitle E of Title IV of ERISA, the aggregate
liabilities of Holdings and its Subsidiaries and its ERISA Affiliates to all
Multiemployer Plans in the event of a complete withdrawal therefrom, as of the
close of the most recent fiscal year of each such Multiemployer Plan ended prior
to the date of the most recent Credit Event, would not exceed an amount that
could reasonably be expected to have a Material Adverse Effect; (xvi) each group
health plan (as defined in Section 607(1) of ERISA or Section 4980B(g)(2) of the
Code) maintained by Holdings or any Subsidiary that covers or has covered
employees or former employees of Holdings, any Subsidiary of Holdings or any
ERISA Affiliate has at all times been operated in compliance with the provisions
of Part 6 of subtitle B of Title I of ERISA and Section 4980B of the Code;
(xvii) no lien imposed under the Code or ERISA on the assets of Holdings or any
Subsidiary of Holdings or any ERISA Affiliate exists or is likely to arise on
account of any Plan; and (xviii) Holdings and its Subsidiaries may on a
prospective basis cease contributions to or terminate any employee benefit plan
maintained by any of them without incurring any liability; except, with respect
to clauses (v)-(xviii), to the extent any exceptions thereunder could not,
either individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(b) Each Foreign Pension Plan has been maintained in substantial compliance with its terms and with the requirements of any and all applicable laws, statutes, rules, regulations and orders and has been maintained, where required, in good standing with applicable regulatory authorities. Neither Holdings nor any of its Subsidiaries has incurred any liability that could reasonably be expected, either individually or in the aggregate, to have a Material Adverse Effect in connection with the termination of or withdrawal from any Foreign
Pension Plan that has not been accrued or otherwise properly reserved on Holdings's or such Subsidiary's balance sheet. With respect to each Foreign Pension Plan that is required by applicable local law or by its terms to be funded through a separate funding vehicle, the present value of the accrued benefit liabilities (whether or not vested) under each such Foreign Pension Plan, determined as of the latest valuation date for such Foreign Pension Plan on the basis of actuarial assumptions, each of which is reasonable or utilized in accordance with applicable law, rule, or regulation, did not exceed the current value of the assets of such Foreign Pension Plan allocable to such benefit liabilities except to the extent that such underfunding could not reasonably be expected, either individually or in the aggregate, to have a Material Adverse Effect.
SECTION 5.13. CAPITALIZATION. (a) On the Initial Borrowing
Date, the authorized capital stock of Holdings shall be as set forth on Schedule
5.13. All such outstanding shares of Holdings Common Stock have been duly and
validly issued, are fully paid and nonassessable and have been issued free of
preemptive rights. Except as set forth on Schedule VII, Holdings does not have
outstanding any securities convertible into or exchangeable for its capital
stock or outstanding any rights to subscribe for or to purchase, or any options
for the purchase of, or any agreements providing for the issuance (contingent or
otherwise) of, or any calls, commitments or claims of any character relating to,
its capital stock, except (A) as set forth in any Shareholders' Agreement as in
effect on the Initial Borrowing Date and (B) for options, warrants, restricted
stock units and rights to purchase shares of Holdings Common Stock and/or
Qualified Preferred Stock that may be issued from time to time.
(b) On the Initial Borrowing Date, (i) the authorized capital stock of the US Borrower shall be as set forth on Schedule 5.13, all of which shall be issued and outstanding and owned by Holdings and (ii) the authorized capital stock of the Canadian Borrower and UK Borrower shall be as set forth on Schedule 5.13, all of which shall be issued and outstanding and owned by the US Borrower.
SECTION 5.14. SUBSIDIARIES. On and as of the Initial Borrowing Date, Holdings has no Subsidiaries other than those Subsidiaries listed on Schedule VIII. Schedule VIII correctly sets forth, as of the Initial Borrowing Date, (a) the percentage ownership (direct and indirect) of Holdings in each class of capital stock or other equity interests of each of its Subsidiaries and also identifies the direct owner thereof and (b) the jurisdiction of organization of each Subsidiary of Holdings. All outstanding equity interests of each Subsidiary of Holdings have been duly and validly issued, are fully paid and non-assessable, have been issued free of preemptive rights and, in the case of equity of Foreign Subsidiaries, no depository receipts have been issued in respect of such equity. No Subsidiary of Holdings has outstanding any securities convertible into or exchangeable for its capital stock or outstanding any right to subscribe for or to purchase, or any options or warrants for the purchase of, or any agreement providing for the issuance (contingent or otherwise) of or any calls, commitments or claims of any character relating to, its capital stock or any stock appreciation or similar rights.
SECTION 5.15. INTELLECTUAL PROPERTY, ETC. Except as disclosed in Schedule 5.15 hereto, each of Holdings and each of its Subsidiaries owns or has a valid existing license to use all patents, trademarks, permits, service marks, trade names, copyrights, licenses, franchises and other rights with respect to the foregoing reasonably necessary for the conduct of
its business, without any known conflict with the rights of others which, or the failure to obtain which, as the case may be, could reasonably be expected to result in a Material Adverse Effect.
SECTION 5.16. COMPLIANCE WITH STATUTES, ETC. Except as set forth in Schedule 5.16 hereto, each of Holdings and each of its Subsidiaries is in compliance with all applicable statutes, regulations, rules and orders of, and all applicable restrictions imposed by, all Governmental Authorities, domestic or foreign, in respect of the conduct of its business and the ownership of its property, except such non-compliance as is not reasonably likely to, individually or in the aggregate, have a Material Adverse Effect.
SECTION 5.17. ENVIRONMENTAL MATTERS. (a) Except as set forth in Schedule 5.17 hereto, each of Holdings and each of its Subsidiaries has complied with, and on the date of each Credit Event is in compliance with, all applicable Environmental Laws and the requirements of any permits issued under such Environmental Laws, and neither Holdings nor any of its Subsidiaries is liable for any penalties, fines or forfeitures for failure to comply with any of the foregoing. There are no pending or past or, to the best knowledge of each of Holdings and each Borrower after due inquiry, threatened Environmental Claims against Holdings or any of its Subsidiaries, or against any Real Property owned or operated by Holdings or any of its Subsidiaries. There are no facts, circumstances, conditions or occurrences with respect to the business or operations of Holdings or any of its Subsidiaries or any Real Property currently or formerly owned or operated by Holdings or any of its Subsidiaries or, to the knowledge of each of Holdings and each Borrower, any property adjoining or in the vicinity of any such Real Property that could reasonably be expected (i) to form the basis of an Environmental Claim against Holdings or any of its Subsidiaries or any such Real Property or (ii) to cause any such Real Property to be subject to any restrictions on the ownership, occupancy, use or transferability of such Real Property by Holdings or any of its Subsidiaries under any applicable Environmental Law.
(b) Hazardous Materials have not at any time been generated, used, treated or stored on, or transported by Holdings or any of its Subsidiaries or by any Person acting for or under contract to Holdings or any of its Subsidiaries or, to the knowledge of each of Holdings and each Borrower, by any other Person, to or from any Real Property owned or operated by Holdings or any of its Subsidiaries, except in material compliance with all applicable Environmental Laws and as reasonably required in connection with the operation, use and maintenance of such Real Property or by Holdings's or such Subsidiary's business. Hazardous Materials have not at any time been Released by Holdings or any of its Subsidiaries or by any Person acting for or under contract to Holdings or any of its Subsidiaries or, to the knowledge of each of Holdings and each Borrower, by any other Person on, at, under or from any Real Property currently or formerly owned or operated by Holdings or any of its Subsidiaries, except in compliance with all applicable Environmental Laws and as required in connection with the operation, use and maintenance of such Real Property or by Holdings's or such Subsidiary's business.
(c) Notwithstanding anything to the contrary contained in this Section 5.17, the representations and warranties made in this Section 5.17 shall only be untrue if the aggregate effect of all Environmental Claims, Releases and conditions, failures and non-compliances, in each case of the types described above, could reasonably be expected to have a Material Adverse Effect.
SECTION 5.18. PROPERTIES. All material Real Property owned by Holdings or any of its Subsidiaries and all material Leaseholds leased by Holdings or any of its Subsidiaries, in each case as of the Initial Borrowing Date, and the nature of the interest therein, is correctly set forth in Schedule V. Each of Holdings and each of its Subsidiaries has good and marketable title to, or a validly subsisting leasehold interest in, all material properties owned or leased by it, including all Real Property reflected in Schedule V and in the financial statements (including the Pro Forma Financial Statements) referred to in Section 5.10(b) (except such properties sold in the ordinary course of business since the dates of the respective financial statements referred to therein), free and clear of all Liens, other than Permitted Encumbrances (except that the Mortgaged Property referred to in Section 3.13(c)(i) may be subject to Canadian Permitted Encumbrances relating thereto).
SECTION 5.19. LABOR RELATIONS. Neither Holdings nor any of
its Subsidiaries is engaged in any unfair labor practice that could reasonably
be expected to have a Material Adverse Effect. Except as disclosed in Schedule
5.19 hereof, there is (a) no unfair labor practice complaint pending against
Holdings or any of its Subsidiaries or, to the best knowledge of each of
Holdings and each Borrower, threatened against any of them, before the National
Labor Relations Board, and no grievance or arbitration proceeding arising out of
or under any collective bargaining agreement is so pending against Holdings or
any of its Subsidiaries or, to the best knowledge of each of Holdings and each
Borrower, threatened against any of them, (b) no strike, labor dispute, slowdown
or stoppage pending against Holdings or any of its Subsidiaries or, to the best
knowledge of each of Holdings and each Borrower, threatened against Holdings or
any of its Subsidiaries, and (c) no union representation question existing with
respect to the employees of Holdings or any of its Subsidiaries and, to the best
knowledge of each of Holdings and each Borrower, no union organizing activities
are taking place, except (with respect to any matter specified in clause (a),
(b) or (c) above, either individually or in the aggregate) such as is not
reasonably likely to have a Material Adverse Effect.
SECTION 5.20. TAX RETURNS AND PAYMENTS. Except as provided in Part A of Schedule III, each of Holdings and each of its Subsidiaries has filed all United States Federal income tax returns and all other material tax returns, domestic and foreign, required to be filed by it and has paid all material taxes and assessments payable by it that have become due, except for those contested in good faith and fully provided for on the financial statements of Holdings and its Subsidiaries in accordance with GAAP. Each of Holdings and each of its Subsidiaries has provided adequate reserves (in the good faith judgment of the management of Holdings) for the payment of all United States Federal, state and foreign income taxes that have not yet become due. Except as provided in Part B and C of Schedule III, there is no material action, suit, proceeding, investigation, audit, or claim now pending or, to the knowledge of each of Holdings and each Borrower, threatened by any authority regarding any taxes relating to Holdings or any of its Subsidiaries. Except as provided in Part D of Schedule III, neither Holdings nor any of its Subsidiaries has entered into an agreement or waiver or been requested to enter into an agreement or waiver extending any statute of limitations relating to the payment or collection of taxes of Holdings or any of its Subsidiaries, or is aware of any circumstances that would cause the taxable years or other taxable periods of Holdings or any of its Subsidiaries not to be subject to the normally applicable statute of limitations, in each case except to the extent the liability for taxes of Holdings or such Subsidiary giving rise to any extension of any such normally applicable statute of limitation is not material.
SECTION 5.21. RETAINED EXISTING INDEBTEDNESS. Schedule IV sets forth a true and complete list of all Indebtedness of Holdings and its Subsidiaries as of the Initial Borrowing Date and that is to remain outstanding after giving effect to the Transaction (excluding the Obligations, the Senior Subordinated Notes and the Seller Note, the "Retained Existing Indebtedness"), in each case showing the aggregate principal amount thereof and the name of the respective borrower and any other entity that directly or indirectly guaranteed such debt.
SECTION 5.22. INSURANCE. Set forth on Schedule IX is a true, correct and complete summary of all insurance carried by each Credit Party on and as of the Initial Borrowing Date, with the amounts insured set forth therein.
SECTION 5.23. REPRESENTATIONS AND WARRANTIES IN OTHER DOCUMENTS. All representations and warranties set forth in the other Documents were true and correct in all material respects at the time as of which such representations and warranties were made (or deemed made) and shall be true and correct in all material respects as of the Initial Borrowing Date as if such representations or warranties were made on and as of such date, unless stated to relate to a specific earlier date, in which case such representations or warranties shall be true and correct in all material respects as of such earlier date.
SECTION 5.24. THE TRANSACTION. At the time of consummation thereof, the Transaction shall have been consummated in all material respects in accordance with the terms of the relevant Documents therefor and all applicable laws. At the time of consummation thereof, all material consents and approvals of, and filings and registrations with, and all other actions in respect of, all governmental agencies, authorities or instrumentalities required in order to make or consummate the Transaction in accordance with the terms of the relevant Documents therefor and all applicable laws have been obtained, given, filed or taken and are or will be in full force and effect (or effective judicial relief with respect thereto has been obtained). All applicable waiting periods with respect thereto have or, prior to the time when required, will have, expired without, in all such cases, any action being taken by any competent authority that restrains, prevents, or imposes material adverse conditions upon the Transaction. Additionally, there does not exist any judgment, order or injunction prohibiting or imposing material adverse conditions upon any element of the Transaction, the occurrence of any Credit Event, or the performance by Holdings and its Subsidiaries of their respective obligations under the Documents and all applicable laws.
SECTION 5.25. SPECIAL PURPOSE CORPORATIONS. Holdings has no significant assets (other than the capital stock of the US Borrower) or material liabilities (other than those liabilities under the Documents to which it is a party).
SECTION 5.26. SUBORDINATION. The subordination provisions contained in the Seller Note, the Initial Preferred Stock and the Senior Subordinated Note Documents and, on and after the execution and delivery thereof, the Holdings Shareholder Subordinated Notes, Discount Notes, Permitted Subordinated Refinancing Indebtedness and Permitted Subordinated Indebtedness, are enforceable against Holdings, each Borrower, the respective Subsidiary Guarantors and the holders of such Indebtedness, as applicable, and all Obligations hereunder and under the other Credit Documents (including, without limitation, the US Collateral and Guaranty Agreement and the Foreign Guaranty) are within the definitions of "Senior Debt" (or "Guarantor Senior Debt" in the case of the obligations of any Subsidiary Guarantor) and
"Designated Senior Debt" (or any similar terms in any such case) included in such subordination provisions.
ARTICLE VI
AFFIRMATIVE COVENANTS
Each of Holdings and each Borrower hereby covenants and agrees that as of the Effective Date and thereafter for so long as this Agreement is in effect and until the Total Commitment has terminated, no Letters of Credit or Notes are outstanding and the Loans, LC Disbursements and all amounts due in respect of B/As, together with interest, fees and all other Obligations (other than any indemnities described in Section 10.12 that are not then due and payable) incurred hereunder, are paid in full:
SECTION 6.01. INFORMATION COVENANTS. The US Borrower will furnish to each Lender:
(a) MONTHLY REPORTS. Within 60 days after the end of each fiscal month of the US Borrower (commencing with its fiscal month ending January 31, 2002), (i) the consolidated balance sheet of the US Borrower and its Subsidiaries as at the end of such fiscal month and the related consolidated statements of income for such fiscal month and for the elapsed portion of the fiscal year ended with the last day of such fiscal month, in each case (A) without giving effect to any Permitted Acquisition consummated in the 60-day period prior to the end of such fiscal month and (B) commencing with the US Borrower's fiscal month ending January 31, 2003, setting forth comparative figures for the corresponding fiscal month in the prior fiscal year and comparable budgeted figures for such fiscal month as set forth in the respective budget delivered pursuant to Section 6.01(d) and (ii) the consolidated statements of income for such fiscal month for each Acquired Business acquired during the 60-day period prior to the end of such fiscal month, all of which shall be certified by the chief financial officer or other Authorized Officer of the US Borrower, subject to normal year-end audit adjustments and the absence of footnotes.
(b) QUARTERLY FINANCIAL STATEMENTS. Within 45 days after the close of
the first three quarterly accounting periods in each fiscal year of the US
Borrower, (i) the consolidated balance sheet of the US Borrower and its
Subsidiaries as at the end of such quarterly accounting period and the
related consolidated statements of income and retained earnings and of cash
flows for such quarterly accounting period and for the elapsed portion of
the fiscal year ended with the last day of such quarterly accounting
period, in each case setting forth comparative figures for the
corresponding quarterly accounting period in the prior fiscal year and
comparable budgeted figures for such quarterly accounting period as set
forth in the respective budget delivered pursuant to Section 6.01(d) and
(ii) management's discussion and analysis of significant operational and
financial developments during such quarterly accounting period, all of
which shall be in reasonable detail and certified by the chief financial
officer or other Authorized Officer of the US Borrower that they fairly
present in all material respects the financial condition of the US Borrower
and its Subsidiaries as of the dates indicated and the results of their
operations and changes in their cash flows for the periods indicated, subject to normal year-end audit adjustments and the absence of footnotes. If the US Borrower has designated any Unrestricted Subsidiaries hereunder, then the quarterly financial information required by this Section 6.01(b) shall include a reasonably detailed presentation, either on the face of the financial statements or in the footnotes thereto, and in management's discussion and analysis of operational and financial developments, of the financial condition and results of operations of the US Borrower and its Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries of the US Borrower.
(c) ANNUAL FINANCIAL STATEMENTS. Within 90 days after the close of each fiscal year of the US Borrower, (i) the consolidated balance sheet of the US Borrower and its Subsidiaries as at the end of such fiscal year and the related consolidated statements of income and retained earnings and of cash flows for such fiscal year, in each case setting forth comparative consolidated figures for the preceding fiscal year and comparable budgeted figures for such fiscal year as set forth in the respective budget delivered pursuant to Section 6.01(d) and (except for such comparable budgeted figures) certified by independent certified public accountants of recognized national standing as shall be reasonably acceptable to the Administrative Agent, in each case without any qualification or material exception as to the scope of such audit and to the effect that such statements fairly present in all material respects the financial condition of the US Borrower and its Subsidiaries as of the dates indicated and the results of their operations and changes in financial position for the periods indicated in conformity with GAAP applied on a basis consistent with prior years, together with a certificate of such accounting firm stating that in the course of its regular audit of the business of the US Borrower and its Subsidiaries, which audit was conducted in accordance with generally accepted auditing standards, no Default or Event of Default that has occurred and is continuing has come to their attention or, if such a Default or an Event of Default has come to their attention, a statement as to the nature thereof, and (ii) management's discussion and analysis of significant operational and financial developments during such fiscal year. If the US Borrower has designated any Unrestricted Subsidiaries hereunder, then the annual financial information required by this Section 6.01(c) shall include a reasonably detailed presentation, either on the face of the financial statements or in the footnotes thereto, and in management's discussion and analysis of operational and financial developments, of the financial condition and results of operations of the US Borrower and its Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries of the US Borrower. In addition, to the extent that Holdings prepares annual financial statements for its internal purposes or for the SEC, Holdings will within 120 days after the close of each of its fiscal years (or such shorter period as may be required by the SEC) furnish same to each Lender.
(d) BUDGETS, ETC. Not more than 60 (or, in the case of the US Borrower's fiscal year commencing on January 1, 2002, 90) days after the commencement of each fiscal year of the US Borrower, consolidated budgets (including Capital Expenditures budgets) of the US Borrower and its Subsidiaries (i) in reasonable detail for each of the four fiscal quarters of such fiscal year and (ii) in summary form for each of the five fiscal years immediately following such fiscal year, in each case as customarily prepared by
management for its internal use setting forth, with appropriate discussion, the principal assumptions upon which such budgets are based. Together with each delivery of financial statements pursuant to Sections 6.01(b) and (c), a comparison of the current year to date financial results against the budgets required to be submitted pursuant to this clause (d) shall be presented.
(e) OFFICER'S CERTIFICATES. At the time of the delivery of the
financial statements provided for in Sections 6.01(b) and (c), a
certificate of the chief financial officer or other Authorized Officer of
the US Borrower to the effect that, to the best of such officer's
knowledge, no Default or Event of Default exists or, if any Default or
Event of Default does exist, specifying the nature and extent thereof,
which certificate shall, (i) if delivered in connection with the financial
statements in respect of a period ending on the last day of a fiscal
quarter or a fiscal year of Holdings, set forth (A) the calculations
required to establish whether (1) Holdings and its Subsidiaries were in
compliance with the provisions of Sections 2.12, 7.02, 7.04(d), (g), (h),
(i), (1), (m) and (o), 7.05(e), (f), (k), (o) and (p), 7.06(b) and (f), and
(2) the US Borrower and its Subsidiaries were in compliance with the
provisions of Sections 7.09, 7.10 and 7.11, in each case, as at the end of
such fiscal quarter or year, as the case may be, and (B) the calculation of
the Total Leverage Ratio, the Adjusted Total Leverage Ratio and the
Adjusted Senior Leverage Ratio as at the last day of the respective fiscal
quarter or fiscal year of the US Borrower, as the case may be, and (ii) if
delivered with the financial statements required by Section 6.01(c), set
forth in reasonable detail the amount of (and the calculations required to
establish the amount of) Adjusted Excess Cash Flow for the respective
Excess Cash Flow Payment Period.
(f) NOTICE OF DEFAULT OR LITIGATION. Promptly, and in any event within three Business Days after an executive officer of Holdings or any of its Subsidiaries obtains actual knowledge thereof, notice of (i) the occurrence of any event that constitutes a Default or an Event of Default, which notice shall specify the nature and period of existence thereof and what action each of Holdings and each Borrower proposes to take with respect thereto, (ii) any litigation or proceeding pending or threatened (A) against Holdings or any of its Subsidiaries that could reasonably be expected to have a Material Adverse Effect, (B) with respect to any material Indebtedness of Holdings or any of its Subsidiaries or (C) with respect to any Document (other thansuch Documents referred to in clause (f) of the definition thereof), (iii) any governmental investigation pending or threatened against Holdings or any of its Subsidiaries that could reasonably be expected to have a Material Adverse Effect and (iv) any other event that could reasonably be expected to have a Material Adverse Effect.
(g) AUDITORS' REPORTS. Promptly upon receipt thereof, a copy of each report or "management letter" submitted to Holdings or any of its Subsidiaries by its independent accountants in connection with any annual, interim or special audit made by them of the books of Holdings or any of its Subsidiaries and the management's non-privileged responses thereto.
(h) ENVIRONMENTAL MATTERS. Promptly after an executive officer of Holdings or any of its Subsidiaries obtains actual knowledge of any of the following (but only to the
extent that any of the following, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect), written notice of:
(i) any pending or threatened Environmental Claim against Holdings or any of any of its Subsidiaries or any Real Property owned or operate by Holdings or any of its Subsidiaries;
(ii) any condition or occurrence on any Real Property at any time owned or operated by Holdings or any of its Subsidiaries that (A) results in non-compliance by Holdings or any of its Subsidiaries with any applicable Environmental Law or (B) could reasonably be anticipated to form the basis of an Environmental Claim against Holdings or any of its Subsidiaries or any such Real Property;
(iii) any condition or occurrence on any Real Property owned or operated by Holdings or any of its Subsidiaries that could reasonably be anticipated to cause such Real Property to be subject to any restrictions on the ownership, occupancy, use or transferability by Holdings or such Subsidiary, as the case may be, of its interest in such Real Property under any Environmental Law; and
(iv) the taking of any removal or remedial action in response to the actual or alleged presence of any Hazardous Material on any Real Property owned or operated by Holdings or any of its Subsidiaries.
All such notices shall describe in reasonable detail the nature of the claim, investigation, condition, occurrence or removal or remedial action and each of Holdings's, each of its Subsidiary's and each other third Person's response or proposed response thereto. In addition, Holdings agrees to provide the Lenders with copies of all material nonprivileged communications by Holdings or any of its Subsidiaries with any Person, government or governmental agency relating to Environmental Laws or to any of the matters set forth in clauses (i) - (iv) above, and such reasonably detailed nonprivileged reports relating to any of the matters set forth in clauses (i) - (iv) above as may reasonably be requested by the Administrative Agent or the Required Lenders.
(i) ANNUAL MEETINGS WITH LENDERS. At the written request of the Administrative Agent, the US Borrower will, within 120 days after the close of each of its fiscal years, hold a meeting (at a mutually agreeable location and time) open to all of the Lenders at which meeting shall be reviewed the financial results of the previous fiscal year and the financial condition of the US Borrower and its Subsidiaries and the budgets presented for the current fiscal year of the US Borrower and its Subsidiaries.
(j) NOTICE OF COMMITMENT REDUCTIONS AND MANDATORY REPAYMENTS. On or prior to the date of any reduction to the Total Revolving Loan Commitment or any mandatory repayment of outstanding Term Loans pursuant to any of Sections 2.12(c) through (g), inclusive, the US Borrower shall provide written notice of the amount of the respective
reduction or repayment, as the case may be, to the Total Revolving Loan Commitment or the outstanding Term Loans, as applicable, and the calculation thereof (in reasonable detail).
(k) OTHER INFORMATION. Promptly upon transmission thereof, copies of any filings and registrations with, and reports to, the SEC by Holdings or any of its Subsidiaries and copies of all financial statements, proxy statements, notices and reports as Holdings or any of its Subsidiaries shall send generally to analysts and the holders of their capital stock (including the Initial Preferred Stock) or of any Permitted Debt, the Seller Note, any Discount Notes or the Senior Subordinated Notes, in their capacity as such holders (to the extent not theretofore delivered to the Lenders pursuant to this Agreement) and, with reasonable promptness, such other information or documents (financial or otherwise) as any Agent on its own behalf or on behalf of the Required Lenders may reasonably request from time to time.
(l) CONCURRENTLY with any delivery of financial statements under clause (b) or (c) above, a certificate of the chief financial officer of the US Borrower setting forth the information required pursuant to (i) the paragraphs numbered 1, 2, 3, 8, 9, 10, 11, 12 and 13 of the US Perfection Certificate and (ii) the equivalent paragraphs under Foreign Perfection Certificates and such other paragraphs under Foreign Perfection Certificates and such other information as the Administrative Agent may reasonably request and/or as the Administrative Agent shall have designated, or in each case confirming that there has been no change in such information since the date of the applicable Perfection Certificate delivered on the later of the Initial Borrowing Date and the date of the most recent certificate delivered pursuant to this Section 6.01(l).
SECTION 6.02. BOOKS, RECORDS AND INSPECTIONS. Holdings will, and will cause each of its Subsidiaries to, keep proper books of record and account in which full, true and correct entries in conformity with GAAP and all requirements of law shall be made of all dealings and transactions in relation to its business and activities. Holdings will, and will cause each of its Subsidiaries to, permit, upon reasonable notice to the chief financial officer or other Authorized Officer of Holdings, officers and designated representatives of any Agent or the Required Lenders to visit and inspect under the guidance of officers of Holdings any of the properties or assets of Holdings and any of its Subsidiaries in whomsoever's possession, and to examine the books of account of Holdings and any of its Subsidiaries and discuss the affairs, finances and accounts of Holdings and of any of its Subsidiaries with, and be advised as to the same by, their officers and independent accountants, all at such reasonable times and intervals and to such reasonable extent as such Agent or the Required Lenders may desire; provided that so long as no Default or Event of Default is then in existence, Holdings shall have the right to participate in any discussions of the Agents or the Lenders with any independent accountants of Holdings.
SECTION 6.03. INSURANCE. (a) The US Borrower will, and will cause each of its Subsidiaries to, (i) maintain, with financially sound and reputable insurance companies, insurance on all its property in at least such amounts and against at least such risks as is consistent and in accordance with industry practice and (ii) furnish to the Administrative Agent and each of the Lenders, upon request, full information as to the insurance carried. Such
insurance shall include physical damage insurance on all real and personal property (whether now owned or hereafter acquired) on an all risk basis and business interruption insurance. The provisions of this Section 6.03 shall be deemed supplemental to, but not duplicative of, the provisions of any Security Documents that require the maintenance of insurance.
(b) The US Borrower will, and will cause each of its Subsidiaries to,
at all times keep the respective property of the US Borrower and its
Subsidiaries (except real or personal property leased or financed through third
parties in accordance with this Agreement) insured in favor of the Collateral
Agent, and all policies or certificates with respect to such insurance (and any
other insurance maintained by, or on behalf of, the US Borrower or any
Subsidiary of the US Borrower) (i) shall be endorsed to the Collateral Agent's
satisfaction for the benefit of the Collateral Agent (including, without
limitation, by naming the Collateral Agent as certificate holder, mortgagee and
loss payee with respect to real property, certificate holder and loss payee with
respect to personal property, additional insured with respect to general
liability and umbrella liability coverage and certificate holder with respect to
workers' compensation insurance), (ii) shall state that such insurance policies
shall not be cancelled or materially changed without at least 30 days' prior
written notice thereof by the respective insurer to the Collateral Agent and
(iii) shall, upon the request of the Collateral Agent, be deposited with the
Collateral Agent.
(c) If the US Borrower or any of its Subsidiaries shall fail to maintain all insurance in accordance with this Section 6.03, or if the US Borrower or any of its Subsidiaries shall fail to so name the Collateral Agent as an additional insured, mortgagee or loss payee, as the case may be, or so deposit all certificates with respect thereto, the Administrative Agent and/or the Collateral Agent shall have the right (but shall be under no obligation) to procure such insurance, and the Credit Parties agree to jointly and severally reimburse the Administrative Agent or the Collateral Agent, as the case may be, for all costs and expenses of procuring such insurance.
SECTION 6.04. PAYMENT OF TAXES. Holdings will pay and discharge, and will cause each of its Subsidiaries to pay and discharge, all material taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits, or upon any material properties belonging to it, prior to the date on which penalties attach thereto, and all material lawful claims for sums that have become due and payable that, if unpaid, might become a Lien not otherwise permitted under Section 7.03(a); PROVIDED that neither Holdings nor any of its Subsidiaries shall be required to pay any such tax, assessment, charge, levy or claim that is being contested in good faith and by proper proceedings if it has maintained adequate reserves with respect thereto in accordance with GAAP and such failure to pay could not reasonably be expected to result in a Material Adverse Effect.
SECTION 6.05. CORPORATE FRANCHISES. Holdings will do, and
will cause each of its Subsidiaries to do, or cause to be done, all things
necessary to preserve and keep in full force and effect its existence and its
material rights, franchises, authority to do business, licenses and patents,
except for rights, franchises, authority to do business, licenses and patents
the loss of which (individually or in the aggregate) could not reasonably be
expected to have a Material Adverse Effect; PROVIDED, HOWEVER, that any
transaction permitted by Section 7.02 will not constitute a breach of this
Section 6.05.
SECTION 6.06. COMPLIANCE WITH STATUTES, ETC. Holdings will, and will cause each of its Subsidiaries to, comply with all applicable statutes, regulations and orders of, and all applicable restrictions imposed by, all Governmental Authorities, domestic or foreign, in respect of the conduct of its business and the ownership of its property, except for such non-compliance as would not, either individually or in the aggregate, have a Material Adverse Effect or a material adverse effect on the ability of any Credit Party to perform its obligations under any Credit Document to which it is a party.
SECTION 6.07. COMPLIANCE WITH ENVIRONMENTAL LAWS. (a) (i) Holdings will comply, and will cause each of its Subsidiaries to comply, in all material respects with all Environmental Laws applicable to their businesses or the ownership or use of Real Property now or hereafter owned or operated by Holdings or any of its Subsidiaries, will promptly pay or, with respect to any of its Subsidiaries, cause to be paid all costs and expenses incurred in connection with such compliance, and will keep or cause to be kept all such Real Property free and clear of any Liens imposed pursuant to such Environmental Laws and (ii) neither Holdings nor any of its Subsidiaries will generate, use, treat, store or Release, or permit the generation, use, treatment, storage or Release of, Hazardous Materials on any Real Property owned or operated by Holdings or any of its Subsidiaries other than in compliance with Environmental Laws and as required in connection with the normal business operations of Holdings and its Subsidiaries, or transport or permit the transportation of Hazardous Materials other than in compliance with Environmental Laws and as required in connection with the normal business operations of Holdings and its Subsidiaries, unless the failure to comply with the requirements specified in clause (i) or (ii) above, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. If Holdings or any of its Subsidiaries or any tenant or occupant of any Real Property owned or operated by Holdings or any of its Subsidiaries causes or permits any intentional or unintentional act or omission resulting in the presence or Release of any Hazardous Material in a quantity or concentration sufficient to require reporting or to trigger an obligation to undertake clean-up, removal or remedial action under applicable Environmental Laws, Holdings agrees to undertake, and/or to cause any of its Subsidiaries, tenants, occupants or other third Persons to undertake, at their sole expense, any clean up, removal, remedial or other action required pursuant to Environmental Laws to remove and clean up any Hazardous Materials from any Real Property, except where the failure to do so would not reasonably be expected to have a Material Adverse Effect; PROVIDED that neither Holdings nor any of its Subsidiaries shall be required to undertake any clean up, removal, remedial or other action while the requirement to undertake such clean up, removal, remedial or other action is being contested in good faith and by proper proceedings, so long as it has maintained adequate reserves with respect to such clean up, removal, remedial or other action to the extent required in accordance with GAAP. Notwithstanding any provision of this Section 6.07(a), Holdings shall not be required by this Section 6.07(a) to exercise any degree of control over the operations of any of its Subsidiaries that could reasonably be construed under applicable Environmental Law to make Holdings liable for Environmental Claims arising from or causally related to the Real Property or operations of such Subsidiary as an owner or an operator or upon any other basis.
(b) At the written request of the Administrative Agent or the Required Lenders, which request shall specify in reasonable detail the basis therefor, at any time and from time to time, Holdings and the Borrowers will provide, at their sole cost and expense, an environmental site assessment report concerning any Real Property now or hereafter owned or operated by
Holdings or any of its Subsidiaries, prepared by an environmental consulting
firm approved by the Administrative Agent, addressing the matters in clause (i),
(ii) or (iii) below that gives rise to such request (or, in the case of a
request pursuant to following clause (i), addressing such matter as may be
requested by the Administrative Agent or the Required Lenders) and estimating
the range of the potential costs of any removal, remedial or other corrective
action in connection with any such matter; PROVIDED that in no event shall such
request be made unless (i) an Event of Default has occurred and is continuing,
(ii) the Lenders are entitled to receive notice under Section 6.01(h) for any
event for which notice is required to be delivered for any such Real Property or
(iii) the Administrative Agent or the Required Lenders reasonably believe that
there was a breach of any representation, warranty or covenant contained in
Section 5.17 or 6.07(a). If Holdings or any Borrower fails to provide the same
within 60 days after such request was made, the Administrative Agent may order
the same, and Holdings and the Borrowers shall grant and hereby grant, to the
Administrative Agent and the Lenders and their agents access to such Real
Property owned or operated by Holdings or any of its Subsidiaries, and
specifically grants the Administrative Agent and the Lenders and their agents an
irrevocable non-exclusive license, subject to the rights of tenants, to
undertake such an assessment, all at each of Holdings's and the Borrowers'
expense.
SECTION 6.08. ERISA. To the extent that any of the following events could, either individually or in the aggregate, reasonably be expected to result in liabilities in excess of $2,500,000, as soon as possible and, in any event, within ten Business Days after Holdings or any Subsidiary of Holdings or any ERISA Affiliate knows or has reason to know of the occurrence of any of the following, Holdings will deliver to each of the Lenders a certificate of the chief financial officer or other Authorized Officer of Holdings setting forth the full details as to such occurrence and the action, if any, that Holdings, such Subsidiary or such ERISA Affiliate is required or proposes to take, together with any notices required or proposed to be given to or filed with or by Holdings, such Subsidiary, the ERISA Affiliate, the PBGC or any other governmental agency, a Plan or, to the extent received by Holdings, Multiemployer Plan participant or the Plan or Multiemployer Plan administrator with respect thereto: that a Reportable Event has occurred (except to the extent that Holdings has previously delivered to the Lenders a certificate and notices (if any) concerning such event pursuant to the next clause hereof); that a contributing sponsor (as defined in Section 4001(a)(13) of ERISA) of a Plan subject to Title IV of ERISA is subject to the advance reporting requirement of PBGC Regulation Section 4043.61 (without regard to subparagraph (b)(1) thereof), and an event described in subsection .62, .63, .64, .65, .66, .67 or .68 of PBGC Regulation Section 4043 is reasonably expected to occur within the following 30 days; that an accumulated funding deficiency, within the meaning of Section 412 of the Code or Section 302 of ERISA, has been incurred or an application has been made or is reasonably expected to be made for a waiver or modification of the minimum funding standard (including any required installment payments) or an extension of any amortization period under Section 412 of the Code or Section 303 or 304 of ERISA with respect to a Plan; that any contribution required to be made by Holdings, any Subsidiary or any ERISA Affiliate with respect to a Plan, a Multiemployer Plan or a Foreign Pension Plan has not been timely made; that a Plan or a Multiemployer Plan has been or is reasonably expected to be terminated, reorganized, partitioned or declared insolvent under Title IV of ERISA; that a Plan has an Unfunded Current Liability; that proceedings have been or are reasonably expected to be instituted under Section 4042 of ERISA to terminate or appoint a
trustee to administer a Plan or a Multiemployer Plan that is subject to Title IV of ERISA; that a proceeding has been instituted against Holdings, any Subsidiary of Holdings or any ERISA Affiliate pursuant to Section 515 of ERISA to collect a delinquent contribution to a Multiemployer Plan; that Holdings, any Subsidiary of Holdings or any ERISA Affiliate will or is reasonably expected to incur any liability (including any indirect, contingent, or secondary liability) to or on account of the termination of or withdrawal from a Plan or a Multiemployer Plan under Section 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or with respect to a Plan under Section 401(a)(29), 4971 or 4980 of the Code or with respect to a group health plan (as defined in Section 607(1) of ERISA or Section 4980B(g)(2) of the Code) under Section 4980B of the Code (other than for the provision of benefits in accordance with such Section); that Holdings or any Subsidiary of Holdings will or is reasonably expected to incur any liability (including any indirect, contingent, or secondary liability) with respect to a Plan under Section 4975 of the Code or Section 409, 502 (i) or 502(1) of ERISA; or that Holdings or any Subsidiary of Holdings will or is reasonably expected to incur any material liability pursuant to any employee welfare benefit plan (as defined in Section 3(1) of ERISA) that provides benefits to retired employees or other former employees (other than as required by Section 601 of ERISA) or any Plan or Foreign Pension Plan. Holdings will deliver to each of the Lenders (i) at the request of any Lender on ten Business Days' notice a complete copy of the annual report (on Internal Revenue Service Form 5500 series) of each Plan (including, to the extent required, the related financial and actuarial statements and opinions and other supporting statements, certifications, schedules and information) required to be filed with the Internal Revenue Service and (ii) copies of any records, documents or other information that must be furnished to the PBGC with respect to any Plan pursuant to Section 4010 of ERISA. In addition to any certificates or notices delivered to the Lenders pursuant to the first sentence hereof, copies of any material documents or other information required to be furnished to the PBGC, and any material notices received by Holdings, any Subsidiary of Holdings or any ERISA Affiliate with respect to any Plan, Multiemployer Plan or Foreign Pension Plan shall be delivered to the Lenders no later than ten Business Days after the date such documents and/or information has been furnished to the PBGC or such notice has been received by Holdings, such Subsidiary or such ERISA Affiliate, as applicable.
SECTION 6.09. GOOD REPAIR. Holdings will, and will cause each of its Subsidiaries to, ensure that its material properties and equipment used in its business are kept in good repair, working order and condition, ordinary wear and tear excepted, and that from time to time there are made in such properties and equipment all needful and proper repairs, renewals, replacements, extensions, additions, betterments and improvements thereto, to the extent and in the manner useful or customary for companies in similar businesses.
SECTION 6.10. END OF FISCAL YEARS; FISCAL QUARTERS. The US Borrower will cause (a) each of its, and each of its Domestic Subsidiaries', fiscal years to end on December 31 of each year and (b) each of its, and each of its Domestic Subsidiaries', fiscal quarters to end on March 31, June 30, September 30 and December 31 of each year.
SECTION 6.11. ADDITIONAL SECURITY; FURTHER ASSURANCES. (a) The US Borrower will, promptly after (i) the creation or acquisition of any Domestic Subsidiary, notify the Administrative Agent thereof and cause such Domestic Subsidiary to duly authorize, execute and deliver counterparts of the US Collateral and Guaranty Agreement, (ii) the creation or acquisition of any Wholly-Owned Foreign Subsidiary, notify the Administrative Agent thereof
and cause such Wholly-Owned Foreign Subsidiary to duly authorize, execute and
deliver counterparts of the Foreign Guaranty, (iii) the creation or acquisition
of any Wholly-Owned Foreign Subsidiary organized under the laws of Canada (or
any province or territory thereof) or of England and Wales in the United
Kingdom, notify the Administrative Agent thereof and cause each such
Wholly-Owned Foreign Subsidiary to duly authorize, execute and deliver
counterparts of the applicable Security Documents that any such Wholly-Owned
Foreign Subsidiary would have been required to duly authorize, execute and
deliver on the Initial Borrowing Date if same were a Credit Party on such date
and (iv) any Wholly-Owned Foreign Subsidiary (other than a Foreign Subsidiary
described in clause (iii) above) created or acquired after the Initial Borrowing
Date has or at any time acquires assets with a fair market value (as determined
in good faith by the US Borrower) that equals or exceeds $10,000,000, notify the
Administrative Agent thereof and cause each such Wholly-Owned Foreign Subsidiary
to duly authorize, execute and deliver counterparts of security agreements,
pledge agreements and other security documentation that the Collateral Agent may
request, in the case of each of clauses (i), (ii), (iii) and (iv) above,
together with each of the other relevant certificates, opinions of counsel and
other documentation that such Subsidiary would have been required to deliver
pursuant to Sections 3.03, 3.04, 3.09, 3.10, 3.11, 3.12 and 3.13, as applicable,
on the Initial Borrowing Date and together with such other certificates,
opinions of counsel and other documentation as the Collateral Agent may
reasonably request (although no Wholly-Owned Foreign Subsidiary shall be
required to enter into any Guaranty or Security Document pursuant to this
Section 6.11 to the extent that the entering into of any such Guaranty or
Security Document by such Wholly-Owned Foreign Subsidiary would not be permitted
under applicable law).
(b) Subject to Section 6.12 and clause (a) of this Section 6.11, Holdings will, and will cause each of the other Credit Parties to, (i) grant to the Collateral Agent security interests and mortgages in such assets and properties of Holdings and such Credit Parties as are not covered by the original Security Documents, and as may be reasonably requested from time to time by the Administrative Agent or the Required Lenders, (ii) within 10 days following the Initial Borrowing Date, grant to the Collateral Agent a leasehold mortgage in the leasehold rights of the US Borrower in respect of the mine located at Cote Blanche, Louisiana, and (iii) subject to the last sentence of this Section 6.11(b), grant a mortgage in any Real Property located in the United States and grant a fixed charge over any Real Property located in Canada or the United Kingdom, in each case the fair market value of which (as determined in good faith by senior management of the US Borrower) is GREATER than $5,000,000, unless the Collateral Agent determines that the detriment to the Borrowers of entering into such mortgage or fixed charge, as applicable, would be excessive in view of the related benefits to be received by the Secured Parties (all such security and guaranty documentation referred to in clauses (a) and (b) of this Section 6.11 are collectively referred to as the "ADDITIONAL SECURITY AND GUARANTY DOCUMENTS"), in each case (in the case of a Wholly-Owned Foreign Subsidiary) to the extent that the entering into of such Additional Security and Guaranty Documents by such Wholly-Owned Foreign Subsidiaries is permitted under applicable law. All such Additional Security and Guaranty Documents shall be reasonably satisfactory in form and substance to the Administrative Agent and, in the case of security documentation, shall constitute valid and enforceable perfected security interests, hypothecations and mortgages superior to and prior to the rights of all third Persons and subject to no other Liens except for Permitted Liens. The Additional Security and Guaranty Documents or instruments related thereto shall have been duly recorded or filed in such
manner and in such places as are required by law to give the Administrative Agent and/or the Collateral Agent the Liens, rights, powers and privileges purported to be created thereby and all taxes, fees and other charges payable in connection therewith shall have been paid in full. Notwithstanding the foregoing, this Section 6.11(b) shall not apply to (and Holdings and its Subsidiaries shall not be required to grant a mortgage in or fixed charge over, as applicable) any Real Property the fair market value of which (as determined in good faith by senior management of the US Borrower) is LESS than $5,000,000.
(c) Holdings will, and will cause each of its Subsidiaries to, at the expense of Holdings and the Borrowers, make, execute, endorse, acknowledge, file and/or deliver to the Collateral Agent from time to time such vouchers, invoices, schedules, confirmatory assignments, conveyances, financing statements, transfer endorsements, powers of attorney, certificates, real property surveys, reports and other assurances or instruments and take such further steps relating to the Collateral covered by any of the Security Documents as the Collateral Agent may reasonably require. Furthermore, each of Holdings and each Borrower shall cause to be delivered to the Collateral Agent such opinions of counsel, title insurance and other related documents as may be reasonably requested by the Collateral Agent to assure itself that this Section 6.11 has been complied with.
(d) Holdings and each Borrower agrees that each action required above
by this Section 6.11 shall be completed as soon as possible, but in no event
later than 90 days (or such later date as may be acceptable to the
Administrative Agent) after such action is either requested to be taken by the
Administrative Agent, the Collateral Agent or the Required Lenders or required
to be taken by Holdings and its Subsidiaries pursuant to the terms of this
Section 6.11; PROVIDED that in no event will Holdings or any of its Subsidiaries
be required to take any action, other than using its commercially reasonable
efforts, to obtain consents from third parties with respect to its compliance
with this Section 6.11.
SECTION 6.12. FOREIGN SUBSIDIARIES SECURITY. If, with respect to
any Foreign Subsidiary, following such Foreign Subsidiary's becoming subject to
United States Federal income tax on its worldwide income or following a change
in the relevant sections of the Code or the regulations, rules, rulings, notices
or other official pronouncements issued or promulgated thereunder that gives the
Administrative Agent a reasonable basis to make a request under this Section
6.12, Holdings does not within 45 days after a request from the Administrative
Agent or the Required Lenders deliver evidence, in form and substance reasonably
satisfactory to the Administrative Agent, with respect to any Foreign Subsidiary
(and in the case of clause (a) below, any Foreign Unrestricted Subsidiary) of
Holdings (in the case of clause (a) below, all of the capital stock of which is
not already pledged pursuant to the US Collateral and Guaranty Agreement) that
(a) a pledge of more than 66-2/3% of the total combined voting power of all
classes of capital stock of such Foreign Subsidiary (or Foreign Unrestricted
Subsidiary) entitled to vote to secure the Obligations of the US Borrower, (b)
in the case of a Foreign Subsidiary that has entered into a Foreign Security
Agreement, the entering into by such Foreign Subsidiary of a security agreement
in substantially the form of such Foreign Security Agreement to secure the
Obligations of the US Borrower and to secure the Obligations of such Foreign
Subsidiary under the Credit Documents, (c) in the case of a Foreign Subsidiary
that has entered into a Foreign Pledge Agreement, the entering into by such
Foreign Subsidiary of a pledge agreement in substantially the form of such
Foreign Pledge Agreement to secure the Obligations of the US
Borrower and to secure the Obligations of such Foreign Subsidiary under the Credit Documents and/or (d) in the case of a Foreign Subsidiary that has entered into a Foreign Guaranty, the entering into by such Foreign Subsidiary of a Guaranty in substantially the form of such Foreign Guaranty to guaranty the Obligations of the US Borrower and the other US Credit Parties under the Credit Documents, in any such case could reasonably be expected to cause (i) the undistributed earnings of such Foreign Subsidiary (or Foreign Unrestricted Subsidiary) as determined for United States Federal income tax purposes to be treated as a deemed dividend to such Foreign Subsidiary's (or such Foreign Unrestricted Subsidiary's) United States parent for United States Federal income tax purposes or (ii) other material adverse United States Federal income tax consequences to the Credit Parties, then in the case of a failure to deliver the evidence described in clause (a) above, that portion of such Foreign Subsidiary's (or such Foreign Unrestricted Subsidiary's) outstanding capital stock so issued by such Foreign Subsidiary (or such Foreign Unrestricted Subsidiary), in each case not theretofore pledged pursuant to the US Collateral and Guaranty Agreement to secure the Obligations of the US Borrower and of such Foreign Subsidiary under the US Collateral and Guaranty Agreement shall be pledged to the Collateral Agent for the benefit of the Secured Parties pursuant to the US Collateral and Guaranty Agreement (or another pledge agreement in a form substantially similar to the pledge provisions of the US Collateral and Guaranty Agreement, with such modifications to such form as the Administrative Agent may reasonably request, if needed), and in the case of a failure to deliver the evidence described in clauses (b), (c) or (d) above, such Foreign Subsidiary (to the extent same is a Wholly-Owned Foreign Subsidiary) shall execute and deliver such security, pledge and/or guaranty agreements in a form substantially similar to the applicable Foreign Security Agreement, Foreign Pledge Agreement and/or Foreign Guaranty, with such modifications to such form as the Administrative Agent may reasonably request, if needed), as the case may be, granting to the Collateral Agent for the benefit of the Secured Parties a security interest in all of such Foreign Subsidiary's assets or the capital stock and promissory notes owned by such Foreign Subsidiary, as the case may be, and guaranteeing and securing the Obligations of the US Borrower under the Credit Documents and under any Interest Rate Protection Agreement or Other Hedging Agreement and the obligations of such Foreign Subsidiary thereunder, in each case to the extent that the entering into of such Foreign Security Agreement, Foreign Pledge Agreement and/or Guaranty (or document with substantially similar security, pledge and/or guaranty provisions) is permitted by the laws of the respective foreign jurisdiction and with all documents delivered pursuant to this Section 6.12 to be in form and substance reasonably satisfactory to the Administrative Agent and/or the Collateral Agent.
SECTION 6.13. USE OF PROCEEDS. All proceeds of the Loans shall be used as provided in Section 5.05.
SECTION 6.14. PERMITTED ACQUISITIONS. (a) Subject to the provisions of this Section 6.14 and the requirements contained in the definition of Permitted Acquisition, the US Borrower and its Wholly-Owned Subsidiaries may from time to time effect Permitted Acquisitions, so long as (in each case except to the extent the Required Lenders otherwise specifically agree in writing in the case of a specific Permitted Acquisition): (i) no Default or Event of Default shall be in existence at the time of the consummation of the proposed Permitted Acquisition or immediately after giving effect thereto; (ii) the US Borrower shall have given the Administrative Agent and the Lenders at least five Business Days' prior written notice of any Permitted Acquisition; (iii) calculations are made by the US Borrower of compliance with the
covenants contained in Sections 7.09 and 7.10 (in each case, giving effect to
the last sentence appearing therein) for the relevant Calculation Period, on a
Pro Forma Basis as if the respective Permitted Acquisition (as well as all other
Permitted Acquisitions theretofore consummated after the first day of such
Calculation Period) had occurred on the first day of such Calculation Period,
and such calculations shall show that such financial covenants would have been
complied with if the Permitted Acquisition had occurred on the first day of such
Calculation Period (for this purpose, (A) if the first day of the respective
Calculation Period occurs prior to the Initial Borrowing Date, calculated as if
the covenants contained in said Sections 7.09 and 7.10 (in each case, giving
effect to the last sentence appearing therein) had been applicable from the
first day of the Calculation Period and (B) using the covenant levels contained
in such Sections 7.09 and 7.10 for the Test Period ending March 31, 2002 in
connection with a Permitted Acquisition consummated prior to March 31, 2002);
(iv) based on good faith quarterly projections prepared by the US Borrower for
the period from the date of the consummation of the Permitted Acquisition to the
date that is one year thereafter, the level of financial performance measured by
the covenants contained in Sections 7.09 and 7.10 (in each case, giving effect
to the last sentence appearing therein) shall be better than or equal to such
level as would be required to provide that no Default or Event of Default would
exist under the financial covenants contained in Sections 7.09 and 7.10 ((A) in
each case, giving effect to the last sentence appearing therein and (B) using
the covenant levels contained in such Sections 7.09 and 7.10 for the Test Period
ending March 31, 2002 for any portion of such period prior to March 31, 2002)
through the date that is one year from the date of the consummation of the
respective Permitted Acquisition; (v) calculations are made by the US Borrower
demonstrating compliance with an Adjusted Senior Leverage Ratio not to exceed
(A) 3.25:1.00 in the case of any Permitted Acquisition consummated on or prior
to June 30, 2003, and (B) 3.00:1.00 in the case of any Permitted Acquisition
consummated thereafter, in each case on the last day of the relevant Calculation
Period, on a Pro Forma Basis as if the respective Permitted Acquisition (as well
as all other Permitted Acquisitions theretofore consummated after the first day
of such Calculation Period) had occurred on the first day of such Calculation
Period; (vi) the Maximum Permitted Consideration payable in connection with the
proposed Permitted Acquisition does not exceed $50,000,000 (vii) all
representations and warranties contained herein and in the other Credit
Documents shall be true and correct in all material respects with the same
effect as though such representations and warranties had been made on and as of
the date of such Permitted Acquisition (both before and after giving effect
thereto), unless stated to relate to a specific earlier date, in which case such
representations and warranties shall be true and correct in all material
respects as of such earlier date; (viii) the US Borrower provides to the
Administrative Agent and the Lenders, as soon as available but not later than
five Business Days after the execution thereof, a copy of any executed purchase
agreement or similar agreement with respect to such Permitted Acquisition; (ix)
after giving effect to such Permitted Acquisition and the payment of all
post-closing purchase price adjustments required (in the good faith
determination of the US Borrower) in connection with such Permitted Acquisition
(and all other Permitted Acquisitions for which such purchase price adjustments
may be required to be made) and all capital expenditures (and the financing
thereof) reasonably anticipated by the US Borrower to be made in the business
acquired pursuant to such Permitted Acquisition within the 90-day period (such
period for any Permitted Acquisition, a "POST-CLOSING PERIOD") following such
Permitted Acquisition (and in the businesses acquired pursuant to all other
Permitted Acquisitions with Post-Closing Periods ended during the Post-Closing
Period of such Permitted Acquisition), the Total Unutilized Revolving Loan
Commitment shall equal or exceed, and shall be reasonably expected (based on
calculations made by the US Borrower) at all times during the twelve-month
period following the date of such Permitted Acquisition to equal or exceed,
$20,000,000; and (x) the US Borrower shall have delivered to the Administrative
Agent an officer's certificate executed by an Authorized Officer of the US
Borrower, certifying, to the best of such officer's knowledge, compliance with
the requirements of preceding clauses (i) through (ix), inclusive, and
containing the calculations required by the preceding clauses (iii), (iv), (v),
(vi) and (ix); PROVIDED, HOWEVER, that so long as (A) the Maximum Permitted
Consideration payable in connection with the proposed Permitted Acquisition does
not exceed $7,500,000 and (B) the Maximum Permitted Consideration paid in
connection with the proposed Permitted Acquisition, when combined with the
Maximum Permitted Consideration paid in connection with all other Permitted
Acquisitions consummated in the same fiscal quarter as such proposed Permitted
Acquisition, does not exceed $15,000,000, the US Borrower shall not be required
to comply with clauses (ii) and (viii) above in connection with such Permitted
Acquisition and the officer's certificate otherwise required to be delivered
pursuant to clause (x) above shall instead be delivered to the Administrative
Agent within 45 days following the end of the fiscal quarter in which such
Permitted Acquisition is consummated.
(b) At the time of each Permitted Acquisition involving the creation or acquisition of a Subsidiary, or the acquisition of capital stock or other equity interests of any Person, the capital stock or other equity interests thereof created or acquired in connection with such Permitted Acquisition shall be pledged for the benefit of the Secured Parties pursuant to the US Collateral and Guaranty Agreement or appropriate Foreign Pledge Agreement in accordance with the requirements of Section 7.15.
(c) Holdings and each Borrower shall, and shall cause each Subsidiary that is formed to effect a Permitted Acquisition or that is acquired pursuant to a Permitted Acquisition to, comply with, and execute and deliver all of the documentation required by, Sections 6.11 and 7.15, to the reasonable satisfaction of the Administrative Agent.
(d) The consummation of each Permitted Acquisition shall be deemed to be a representation and warranty by Holdings and each Borrower that the certifications by the US Borrower (or by one or more of its Authorized Officers) pursuant to Section 6.14(a) are true and correct and that all conditions thereto have been satisfied and that same is permitted in accordance with the terms of this Agreement, which representation and warranty shall be deemed to be a representation and warranty for all purposes hereunder, including, without limitation, Articles IV and VIII.
SECTION 6.15. PERFORMANCE OF OBLIGATIONS. Holdings will, and will cause each of its Subsidiaries to, perform all of its obligations under the terms of each mortgage, deed of trust, indenture, loan agreement or credit agreement and each other material agreement, contract or instrument by which it is bound, except such non-performance as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
SECTION 6.16. MAINTENANCE OF COMPANY SEPARATENESS. Holdings will, and will cause each of its Subsidiaries and Unrestricted Subsidiaries to, satisfy customary Company formalities, including, as applicable, the holding of regular board of directors' and
shareholders' meetings or action by directors or shareholders without a meeting and the maintenance of Company offices and records. Neither Holdings nor any of its Subsidiaries shall make any payment to a creditor of any Unrestricted Subsidiary in respect of any liability of any Unrestricted Subsidiary, or enter into any Synthetic Purchase Agreement in respect of any liability of any Unrestricted Subsidiary, and no bank account of any Unrestricted Subsidiary shall be commingled with any bank account of Holdings or any of its Subsidiaries. Any financial statements distributed to any creditors of any Unrestricted Subsidiary shall clearly establish or indicate the Company separateness of such Unrestricted Subsidiary from Holdings and its Subsidiaries. Finally, neither Holdings nor any of its Subsidiaries shall take any action, or conduct its affairs in a manner, that is likely to result in the Company existence of Holdings or any of its Subsidiaries or Unrestricted Subsidiaries being ignored, or in the assets and liabilities of Holdings or any of its Subsidiaries being substantively consolidated with those of any other such Person or any Unrestricted Subsidiary in a bankruptcy, reorganization or other insolvency proceeding.
SECTION 6.17. CONTRIBUTIONS. (a) Holdings will, upon its receipt thereof, contribute as an equity contribution to the capital of the US Borrower, any cash proceeds received by Holdings (i) from any asset sale, any incurrence of Indebtedness, any Recovery Event, any sale or issuance of its equity, any cash capital contributions or any tax refunds and (ii) in respect of any indemnification right of Holdings or any of its Subsidiaries under any Document (except to the extent the US Collateral Assignment requires such proceeds to be otherwise applied).
(b) The Borrowers will use the proceeds of all equity contributions
received by the US Borrower from Holdings as provided in the relevant clause of
Section 2.12 to the extent required to be so applied.
SECTION 6.18. INTEREST RATE PROTECTION. No later than 180 days following the Initial Borrowing Date, the Borrowers will enter into (and for a period of at least three years thereafter maintain) one or more Interest Rate Protection Agreements reasonably satisfactory to the Agents so that, after giving effect to such Interest Rate Protection Agreements, the US Borrower shall be protected from upward fluctuations in interest rates with respect to at least 50% of the aggregate principal amount of all Term Loans and Senior Subordinated Notes combined then outstanding.
SECTION 6.19. SELLER NOTE AND DISCOUNT NOTES. Holdings will pay all interest on the Seller Note and any Discount Notes solely through accretion of additional principal or the issuance of additional Seller Notes or Discount Notes, as applicable, rather than in cash.
Article VII
NEGATIVE COVENANTS
Each of Holdings and each Borrower hereby covenants and agrees that as of the Effective Date and thereafter for so long as this Agreement is in effect and until the Total Commitment has terminated, no Letters of Credit or Notes are outstanding and the Loans, LC Disbursements and all amounts due in respect of B/As, together with interest, fees and all other
Obligations (other than any indemnities described in Section 10.12 that are not then due and payable) incurred hereunder, are paid in full:
SECTION 7.01. BUSINESS. (a) Holdings will not, and will not permit any of its Subsidiaries to, engage directly or indirectly in any business other than a Permitted Business.
(b) Holdings will not permit any Unrestricted Subsidiary to engage (directly or indirectly) in any business other than a Permitted Business.
(c) Notwithstanding the foregoing or anything else in this Agreement to the contrary, Holdings will not engage in any business or own any significant assets or have any material liabilities other than (i) its ownership of the equity interests in the US Borrower and (ii) those liabilities that it is responsible for under this Agreement and the other Documents to which it is a party; provided that Holdings may engage in those activities that are incidental to (A) the maintenance of its existence in compliance with applicable law, (B) legal, tax and accounting matters in connection with any of the foregoing activities and (C) transactions expressly permitted under Section 7.12(b).
SECTION 7.02. CONSOLIDATION; MERGER; SALE OR PURCHASE OF ASSETS; ETC. Holdings will not, nor will Holdings permit any of its Subsidiaries to, wind up, liquidate or dissolve its affairs or enter into any transaction of merger, amalgamation or consolidation, or convey, sell, lease or otherwise dispose of all or any part of its property or assets (other than inventory in the ordinary course of business), or enter into any sale-leaseback transactions, or purchase or otherwise acquire (in one or a series of related transactions) any part of the property or assets (other than purchases or other acquisitions of inventory, materials, general intangibles, equipment, goods and services in the ordinary course of business) of any Person or agree to do any of the foregoing at any future time, except that the following shall be permitted:
(a) the US Borrower and its Subsidiaries may, as lessee, enter into operating leases in the ordinary course of business with respect to real, personal, movable or immovable property;
(b) Capital Expenditures by the US Borrower and its Subsidiaries to the extent not in violation of Section 7.11;
(c) Investments permitted pursuant to Section 7.05 and the disposition or liquidation of Cash Equivalents in the ordinary course of business;
(d) the US Borrower and any of its Subsidiaries may sell or otherwise dispose of assets (excluding capital stock of, or other equity interests in, Subsidiaries, Joint Ventures and Unrestricted Subsidiaries) that, in the reasonable opinion of such Person, are obsolete, uneconomic or no longer useful or desirable in the conduct of such Person's business; PROVIDED that, except with respect to asset dispositions or transfers arising out of, or in connection with, the events described in clauses (a) and (b) of the definition of Recovery Event, (i) each such sale or disposition shall be for an amount at least equal to the fair market value thereof (as determined in good faith by senior management of Holdings), (ii) to the extent any such sale or disposition (or any series of related sales or
dispositions) generates Net Sale Proceeds (or involves assets the fair market
value of which (as determined in good faith by senior management of Holdings)
is) equal to or greater than $3,000,000, such sale or disposition (or series of
related sales or dispositions) results in consideration at least 75% of which
(taking into account the amount of cash, the principal amount of any promissory
notes and the fair market value, as determined by Holdings in good faith, of any
other consideration) shall be in the form of cash, PROVIDED, HOWEVER, that,
notwithstanding the foregoing, up to $10,000,000 of such consideration in the
aggregate in any fiscal year of the US Borrower may be in the form of (A) assets
to be owned by the US Borrower or any of its Wholly-Owned Subsidiaries and used
in connection with a Permitted Business and/or (B) 100% of the capital stock of
any entity that owns assets used in a Permitted Business, which entity shall, as
a result of such acquisition, become a Wholly-Owned Subsidiary of the US
Borrower (and, if the Person that sold such assets was (1) a US Credit Party,
such Wholly-Owned Subsidiary shall become a US Credit Party or (2) a Foreign
Credit Party, such Wholly-Owned Subsidiary shall become a Foreign Credit Party),
and PROVIDED that the acquisition of such assets by the purchaser subject
to a Capitalized Lease Obligation or other purchase money obligation shall be
deemed to be cash consideration in an amount equal to the aggregate amount of
such Capitalized Lease Obligations or other purchase money obligations assumed,
(iii) the aggregate Net Sale Proceeds (including for this purpose the fair
market value of all non-cash proceeds received as a result of an Asset Sale)
from all assets sold or otherwise disposed of pursuant to this clause (d), when
added to the aggregate amount of all Capitalized Lease Obligations and all other
purchase money obligations assigned and/or assumed in connection with all assets
sold or otherwise disposed of pursuant to this clause (d), shall not exceed
$15,000,000 in the aggregate in any fiscal year of the US Borrower, and (iv) in
the case of any sale or disposition of an asset constituting an Asset Sale, the
Net Sale Proceeds therefrom are either applied to repay Term Loans and/or reduce
the Total Revolving Loan Commitment as provided in Section 2.12(c) or reinvested
in replacement assets or retained to the extent permitted by Section 2.12(c);
(e) any Subsidiary of the US Borrower may convey, lease, license, sell or otherwise transfer all or any part of its business, properties and assets to the US Borrower or to any Subsidiary Guarantor that is a Wholly-Owned Domestic Subsidiary, so long as any security interests granted to the Collateral Agent for the benefit of the Secured Parties pursuant to the applicable Security Documents in the assets so transferred shall remain in full force and effect and perfected (to at least the same extent as in effect immediately prior to such transfer) and all actions required to maintain said perfected status have been taken;
(f) any Foreign Subsidiary of the US Borrower may convey, lease,
license, sell or otherwise transfer all or any part of its business, properties
and assets to a Wholly-Owned Foreign Subsidiary of the US Borrower, so long as
(i) any security interests granted to the Collateral Agent for the benefit of
the Secured Parties pursuant to the applicable Security Documents in the assets
so transferred shall remain in full force and perfected (to at least the same
extent as in effect immediately prior to such transfer) and all actions required
to maintain said perfected status have been taken and (ii) the aggregate fair
market value (as determined in good faith by Holdings) of all such assets so
transferred to Wholly-Owned Foreign Subsidiaries that are not Foreign Credit
Parties shall not exceed $7,500,000;
(g) any Subsidiary of the US Borrower may merge with and into, or be dissolved or liquidated into, the US Borrower or any Subsidiary Guarantor that is a Wholly-Owned Domestic Subsidiary, so long as (i) the US Borrower or such Subsidiary Guarantor is the surviving corporation of any such merger, dissolution or liquidation and (ii) any security interests granted to the Collateral Agent for the benefit of the Secured Parties pursuant to the applicable Security Documents in the assets and capital stock of such Subsidiary shall remain in full force and effect and perfected (to at least the same extent as in effect immediately prior to such merger, dissolution or liquidation) and all actions required to maintain said perfected status have been taken;
(h) any Foreign Subsidiary of the US Borrower may merge with and into, or be dissolved or liquidated into, the Canadian Borrower, the UK Borrower or any other Wholly-Owned Foreign Subsidiary of the US Borrower (provided that the Canadian Borrower shall not merge with and into, or be dissolved or liquidated into, the UK Borrower and the UK Borrower shall not merge with and into, or be dissolved or liquidated into, the Canadian Borrower), so long as (i)(A) in the case of any such merger, dissolution or liquidation involving the Canadian Borrower, the Canadian Borrower is the surviving corporation thereof and (B) in the case of any such merger, dissolution or liquidation involving the UK Borrower, the UK Borrower is the surviving corporation thereof, (ii) in the case of any such merger, dissolution or liquidation involving a Foreign Credit Party, such Foreign Credit Party is the surviving corporation thereof, (iii) in all other cases, such Wholly-Owned Foreign Subsidiary is the surviving corporation of any such merger, dissolution or liquidation, and (iv) any security interests granted to the Collateral Agent for the benefit of the Secured Parties pursuant to the applicable Security Documents in the assets and capital stock of such Foreign Subsidiary shall remain in full force and effect and perfected (to at least the same extent as in effect immediately prior to such merger, dissolution or liquidation) and all actions required to maintain said perfected status have been taken;
(i) the US Borrower and its Wholly-Owned Subsidiaries shall be permitted to make Permitted Acquisitions, so long as such Permitted Acquisitions are effected in accordance with the requirements of Section 6.14;
(j) the Merger shall be permitted to the extent consummated in accordance with the relevant requirements of Section 3.08;
(k) the US Borrower and its Subsidiaries may, in the ordinary course of business, license, as licensor or licensee, patents, trademarks, copyrights and know-how to or from third Persons or one another, so long as any such license by the US Borrower or any such Subsidiary in its capacity as licensor is permitted to be assigned pursuant to the relevant Security Agreement (to the extent that a security interest in such patents, trademarks, copyrights and know-how is granted thereunder) and does not otherwise prohibit the granting of a Lien by the US Borrower or any such Subsidiary pursuant to such Security Agreement in the intellectual property covered by such license;
(l) the US Borrower and its Domestic Subsidiaries may transfer assets (other than cash) to Wholly-Owned Foreign Subsidiaries, so long as (i) no Default or Event of
Default exists at the time of the respective transfer and (ii) the aggregate fair market value of all such assets so transferred (determined in good faith by senior management of Holdings) to all such Wholly-Owned Foreign Subsidiaries does not exceed $15,000,000;
(m) the US Borrower and any of its Subsidiaries may sell or otherwise dispose of the capital stock of, or other equity interests in, any of their respective Subsidiaries (other than the Canadian Borrower or the UK Borrower, the equity interests of which may not be sold or otherwise disposed of pursuant to this subsection (m)), Joint Ventures and Unrestricted Subsidiaries; provided that (i) in the case of a sale or other disposition of the capital stock or other equity interests of any Wholly-Owned Subsidiary of the US Borrower, 100% of the capital stock or other equity interests of such Subsidiary shall be so sold or disposed of, (ii) each such sale or disposition shall be for an amount at least equal to the fair market value thereof (as determined in good faith by senior management of Holdings), (iii) each such sale results in consideration at least 75% of which (taking into account the amount of cash, the principal amount of any promissory notes and the fair market value, as determined by Holdings in good faith, of any other consideration) shall be in the form of cash, (iv) the aggregate Net Sale Proceeds of all assets sold or otherwise disposed of pursuant to this clause (m) shall not exceed $30,000,000 in the aggregate and (v) the Net Sale Proceeds therefrom are applied to repay Term Loans and/or reduce the Total Revolving Loan Commitment as provided in Section 2.12(c) and/or reinvested in replacement assets or retained to the extent permitted by Section 2.12(c);
(n) the US Borrower and any of its Subsidiaries may enter into agreements to (i) sell excess capacity at one or more of its facilities or (ii) lease or sublease real property in the ordinary course of business to the extent such property is not used or useful in the business of the US Borrower or its Subsidiaries; PROVIDED that any such agreements do not interfere in any material respect with the operations of the US Borrower or any of its Subsidiaries or otherwise leave the US Borrower or any of its Subsidiaries with insufficient capacity to meet its own ongoing (and reasonably anticipated) requirements;
(o) the US Borrower or any of its Subsidiaries may effect Permitted Sale-Leaseback Transactions in accordance with the definition thereof; PROVIDED that (i) the aggregate amount of all proceeds received by the US Borrower and its Subsidiaries from all Permitted Sale-Leaseback Transactions consummated on and after the Effective Date shall not exceed $25,000,000 and (ii) the Net Sale Proceeds from all such Permitted Sale-Leaseback Transactions are applied to repay Term Loans as provided in Section 2.12(c) and/or reinvested in replacement assets or retained to the extent permitted by Section 2.12(c); and
(p) the US Borrower and any of its Subsidiaries may enter into
agreements to effect acquisitions and dispositions of stock or assets, so long
as the respective transaction is permitted pursuant to the provisions of this
Section 7.02; PROVIDED that the US Borrower and any of its Subsidiaries may
enter into agreements to effect acquisitions and dispositions of capital stock
or assets in transactions not permitted by the provisions of this Section 7.02
at the time the respective agreement is entered into, so long as in the case of
each such agreement, such agreement shall be expressly conditioned upon
obtaining the requisite consent of the Required Lenders under this Agreement or the repayment of all Obligations hereunder as a condition precedent to the consummation of the respective transaction and, if for any reason the transaction is not consummated because of a failure to obtain such consent, the aggregate liability of Holdings and any of its Subsidiaries under any such agreement shall not exceed $7,500,000.
To the extent the Required Lenders waive the provisions of this
Section 7.02 with respect to the sale or other disposition of any Collateral, or
any Collateral is sold or otherwise disposed of as permitted by this Section
7.02, such Collateral (unless transferred to the US Borrower or a Subsidiary
thereof) shall (except as otherwise provided above) be sold or otherwise
disposed of free and clear of the Liens created by the Security Documents and
the Administrative Agent shall take such actions (including, without limitation,
directing the Collateral Agent to take such actions) as are appropriate in
connection therewith.
Section 7.03. LIENS. Holdings will not, and will not permit any of its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with respect to any property or assets of any kind (real or personal, tangible or intangible, movable or immovable) of Holdings or any of its Subsidiaries, whether now owned or hereafter acquired, or sell any such property or assets subject to an understanding or agreement, contingent or otherwise, to repurchase such property or assets (including sales of accounts receivable or notes with recourse to Holdings or any of its Subsidiaries) or assign any right to receive income, except for the following (collectively, the "Permitted Liens"):
(a) inchoate Liens for taxes, assessments or governmental charges or levies not yet due and payable or Liens for taxes, assessments or governmental charges or levies being contested in good faith and by appropriate proceedings for which adequate reserves have been established (i) in the case of Domestic Subsidiaries of Holdings, in accordance with GAAP and (ii) in the case of Foreign Subsidiaries of Holdings, in accordance with generally accepted accounting principles in effect from time to time in the respective jurisdiction of such Foreign Subsidiary;
(b) Liens in respect of property or assets of the US Borrower or any of its Subsidiaries imposed by law that were incurred in the ordinary course of business and that have not arisen to secure Indebtedness for borrowed money, such as carriers', materialmen's, warehousemen's and mechanics' Liens, statutory and common law landlord's Liens, and other similar Liens arising in the ordinary course of business, and that either (i) do not in the aggregate materially detract from the value of such property or assets or materially impair the use thereof in the operation of the business of Holdings or any of its Subsidiaries or (ii) are being contested in good faith by appropriate proceedings, which proceedings have the effect of preventing the forfeiture or sale of the property or assets subject to such Lien;
(c) Liens created by or pursuant to this Agreement and the Security Documents;
(d) Liens in existence on the Initial Borrowing Date that are listed, and the property subject thereto described, in Schedule X, without giving effect to any extensions or renewals thereof;
(e) Liens arising from judgments, decrees, awards or attachments in circumstances not constituting an Event of Default under Section 8.09; provided that the aggregate amount of cash and property (determined on a fair market value basis) of Holdings and its Subsidiaries deposited or delivered to secure the respective judgment or decree or subject to attachment shall not exceed $7,500,000 at any time;
(f) Liens (other than any Lien imposed by ERISA) (i) incurred or deposits made in the ordinary course of business of the US Borrower and any of its Subsidiaries in connection with workers' compensation, unemployment insurance and other types of social security, (ii) to secure the performance by the US Borrower and any of its Subsidiaries of tenders, statutory obligations (other than excise taxes), surety, stay, customs and appeal bonds, statutory bonds, bids, leases, government contracts, trade contracts, performance and return of money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money) to the extent incurred in the ordinary course of business or (iii) to secure the performance by the US Borrower and any of its Subsidiaries of any lease of Real Property, to the extent incurred or made in the ordinary course of business consistent with past practices and to the extent such Liens (A) consist of deposits or (B) do not apply to any assets other than assets located at the Real Property subject to such lease; provided that the aggregate amount of deposits at any time pursuant to subclauses (ii) and (iii) above shall not exceed $20,000,000 in the aggregate;
(g) (i) licenses, sublicenses, leases or subleases granted to third Persons in the ordinary course of business not interfering in any material respect with the business of Holdings or any of its Subsidiaries and (ii) any interest or title of a licensor, lessor or sublessor under any lease permitted by this Agreement;
(h) easements, rights-of-way, restrictions, minor defects or irregularities in title, encroachments and other similar charges or encumbrances, in each case not securing Indebtedness and not interfering in any material respect with the ordinary conduct of the business of the US Borrower and of its Subsidiaries taken as a whole;
(i) Liens arising from precautionary UCC financing statements regarding operating leases;
(j) Liens created pursuant to Capital Leases permitted pursuant to Section 7.04(d); provided that (i) such Liens only serve to secure the payment of Indebtedness arising under such Capitalized Lease Obligation (and other Indebtedness permitted by Section 7.04(d) and incurred from the same Person as such Indebtedness) and (ii) the Lien encumbering the asset giving rise to the Capitalized Lease Obligation does not encumber any asset of Holdings or any other asset of the US Borrower or any of its Subsidiaries (other than other assets subject to Capitalized Lease Obligations and/or other Indebtedness incurred pursuant to Section 7.04(d), in each case owing to the same Person as such Capitalized Lease Obligation);
(k) Permitted Encumbrances;
(l) Liens arising pursuant to purchase money mortgages or security interests securing Indebtedness representing the purchase price (or financing of the purchase price within 90 days after the respective purchase) of assets acquired after the Initial Borrowing Date; provided that (i) any such Liens attach only to the assets so purchased, upgrades thereon and, if the asset so purchased is an upgrade, the original asset itself (and such other assets financed by the same financing source), (ii) the Indebtedness (other than Indebtedness incurred from the same financing source to purchase other assets and excluding Indebtedness representing obligations to pay installation and delivery charges for the property so purchased) secured by any such Lien does not exceed 100%, nor is less than 80%, of the lesser of the fair market value or the purchase price of the property being purchased at the time of the incurrence of such Indebtedness and (iii) the Indebtedness secured thereby is permitted to be incurred pursuant to Section 7.04(d);
(m) Liens on property or assets acquired pursuant to a Permitted Acquisition, or on property or assets of a Subsidiary of the US Borrower in existence at the time such Subsidiary is acquired pursuant to a Permitted Acquisition; provided that (i) any Indebtedness that is secured by such Liens is permitted to exist under Section 7.04(d), and (ii) such Liens are not incurred in connection with, or in contemplation or anticipation of, such Permitted Acquisition and do not attach to any asset of Holdings or any other asset of the US Borrower or any of its Subsidiaries;
(n) Liens arising out of any consignment or similar arrangements for the sale of goods entered into by the US Borrower or any of its Subsidiaries in the ordinary course of business to the extent such Liens do not attach to any assets other than the goods subject to such consignment or similar arrangements;
(o) Liens securing insurance premium financing arrangements; provided that such Liens are limited to the applicable insurance contracts;
(p) Liens (i) incurred in the ordinary course of business in connection with the purchase or shipping of goods or assets (or the related assets and proceeds thereof), which Liens are in favor of the seller or shipper of such goods or assets and only attach to such goods or assets, and (ii) in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods; and
(q) additional Liens incurred by the US Borrower and any of its Subsidiaries, so long as the value of the property subject to such Liens, and the Indebtedness and other obligations secured thereby, do not exceed $7,500,000.
SECTION 7.04. INDEBTEDNESS. Holdings will not, and will not permit any of its Subsidiaries to, contract, create, incur, assume or suffer to exist any Indebtedness, except:
(a) Indebtedness incurred pursuant to this Agreement and the other Credit Documents;
(b) Retained Existing Indebtedness outstanding on the Initial Borrowing Date and listed on Schedule IV (as reduced by any repayments thereof before, on or after the Initial Borrowing Date), without giving effect to any subsequent extension, renewal or refinancing thereof;
(c) Indebtedness under (i) Interest Rate Protection Agreements entered into to protect any Borrower against fluctuations in interest rates in respect of Indebtedness otherwise permitted to be incurred by such Borrower under this Agreement or (ii) Other Hedging Agreements so long as management of such Person has determined that the entering into of any such Other Hedging Agreement is a bona fide hedging activity (and is not for speculative purposes) and is in the ordinary course of business and consistent with its past practices;
(d) (i) Indebtedness of a Subsidiary acquired pursuant to a Permitted Acquisition (or Indebtedness assumed by the US Borrower or any of its Wholly-Owned Subsidiaries pursuant to a Permitted Acquisition as a result of a merger or consolidation or the acquisition of an asset securing such Indebtedness) (the "Permitted Acquired Debt"), so long as (A) such Indebtedness was not incurred in connection with, or in anticipation or contemplation of, such Permitted Acquisition and (B) such Indebtedness does not constitute debt for borrowed money (except to the extent such Indebtedness cannot be repaid in accordance with its terms at the time of its assumption pursuant to such Permitted Acquisition (without the payment of a penalty or premium) and the aggregate principal amount of all such Indebtedness for borrowed money permitted pursuant to this parenthetical does not exceed $30,000,000), it being understood and agreed that Capitalized Lease Obligations and purchase money Indebtedness shall not constitute debt for borrowed money for purposes of this clause (B) and (ii) Capitalized Lease Obligations and Indebtedness of the US Borrower and any of its Subsidiaries representing purchase money Indebtedness secured by Liens permitted pursuant to Section 7.03(1); provided that the sum of (1) the aggregate principal amount of all Permitted Acquired Debt at any time outstanding plus (2) the aggregate amount of Capitalized Lease Obligations incurred on and after the Initial Borrowing Date and outstanding at any time (including Indebtedness evidenced by Capitalized Lease Obligations arising from Permitted Sale-Leaseback Transactions) plus (3) the aggregate principal amount of all such purchase money Indebtedness incurred on and after the Initial Borrowing Date and outstanding at any time, shall not exceed $40,000,000;
(e) Indebtedness constituting Intercompany Loans to the extent permitted by Section 7.05(f);
(f) Permitted Subordinated Refinancing Indebtedness, so long as no Default or Event of Default is in existence at the time of any incurrence thereof and immediately after giving effect thereto; PROVIDED that no Subsidiary of Holdings shall Guaranty any Permitted Subordinated Refinancing Indebtedness unless such Guaranty is subordinated to the Guaranty pursuant to the US Collateral and Guaranty Agreement on terms no less favorable to the Lenders than the subordination provisions of the Permitted Subordinated Refinancing Indebtedness;
(g) unsecured Indebtedness of the US Borrower and any other US Credit Party that is a Subsidiary Guarantor incurred under the Senior Subordinated Notes and the other Senior Subordinated Note Documents issued for cash in an aggregate principal amount not to exceed $250,000,000; provided that no Subsidiary of Holdings shall Guaranty any Indebtedness or other Obligations under the Senior Subordinated Notes unless such Guaranty is subordinated to the Guaranty pursuant to the US Collateral and Guaranty Agreement on terms no less favorable to the Lenders than the subordination provisions of the Senior Subordinated Notes;
(h) on and after the date on which any shares of Initial Preferred Stock are exchanged for Discount Notes in accordance with the terms thereof and hereof, unsecured Indebtedness of Holdings under such Discount Notes in an aggregate principal amount not to exceed the aggregate liquidation preference of the shares of Initial Preferred Stock exchanged for such Discount Notes plus the aggregate principal amount of any additional Discount Notes issued in respect of regularly scheduled interest payments thereon in accordance with the terms thereof and hereof and LESS the amount of any repayments of principal thereof after the Initial Borrowing Date;
(i) unsecured Indebtedness of Holdings incurred under the Seller Note in an aggregate principal amount not to exceed $11,340,000 plus the aggregate amount of any accrued and unpaid interest on the Seller Note that is capitalized in accordance with the terms thereof and hereof and less the amount of any repayments of principal thereof after the issuance thereof;
(j) Indebtedness of the US Borrower or any of its Subsidiaries that may be deemed to exist in connection with agreements providing for indemnification, purchase price adjustments, earn-outs and similar obligations in connection with acquisitions or sales of assets and/or businesses effected in accordance with the requirements of this Agreement (so long as any such obligations are those of the Person making the respective acquisition or sale and are not guaranteed by any other Person);
(k) Contingent Obligations of (i) the US Borrower or any of its Subsidiaries as a guarantor of the lessee or contracting party, as the case may be, under any lease or other contract pursuant to which the US Borrower or any of its Wholly-Owned Subsidiaries is the lessee or contracting party so long as such lease or other contract is otherwise permitted hereunder, (ii) the US Borrower or any of its Subsidiaries as a guarantor of any Capitalized Lease Obligation to which a Joint Venture is a party or any contract entered into by such Joint Venture in the ordinary course of business, provided that the maximum liability of the US Borrower or any such Subsidiary in respect of any obligations as described pursuant to this clause (ii) is permitted as an Investment on such date pursuant to the requirements of Section 7.05(l), and (iii) the US Borrower or any of its Subsidiaries that may be deemed to exist pursuant to acquisition agreements entered into in connection with Permitted Acquisitions, including any obligation to pay the purchase price therefor and any indemnification, purchase price adjustment and similar obligations;
(l) Indebtedness with respect to performance bonds, surety bonds, appeal bonds or customs bonds required in the ordinary course of business or in connection with the enforcement of rights or claims of the US Borrower or any of its Subsidiaries or in connection with judgments that do not result in a Default or an Event of Default;
(m) unsecured Indebtedness of Holdings under the Holdings Shareholder
Subordinated Notes issued after the Initial Borrowing Date in connection
with a redemption or repurchase of Holdings Common Stock pursuant to
Section 7.06(b);
(n) Indebtedness of the US Borrower or any of its Subsidiaries consisting of (i) the financing of insurance premiums in the ordinary course of business or (ii) take-or-pay obligations contained in supply arrangements entered into in the ordinary course of business and on a basis consistent with past practice; and
(o) (i) Permitted Subordinated Indebtedness incurred in accordance with the requirements of the definition thereof and (ii) additional unsecured Indebtedness of the US Borrower and any of its Subsidiaries not otherwise permitted pursuant to this Section 7.04, so long as the aggregate principal amount of all Indebtedness permitted by this clause (o), when added to the aggregate liquidation preference for all Disqualified Preferred Stock issued after the Initial Borrowing Date pursuant to Section 7.13(c), does not exceed $50,000,000 at any time outstanding.
(p) unsecured Indebtedness of the US Borrower and any other US Credit
Party that is a Subsidiary Guarantor incurred under any Additional Senior
Subordinated Notes and any Additional Senior Subordinated Note Documents in
an aggregate principal amount not to exceed $100,000,000 (plus the
aggregate principal amount of any Additional Senior Subordinated Notes
issued as part of the Permitted Transactions); PROVIDED that on the date on
which Holdings or any of its Subsidiaries receives any Net Cash Proceeds
from the issuance of any such Additional Senior Subordinated Notes, an
amount equal to the amount of such Net Cash Proceeds shall be applied as a
mandatory prepayment of Term Loans in accordance with the requirements of
Section 2.12(i); PROVIDED FURTHER that, notwithstanding any other provision
of this Agreement to the contrary, any Net Cash Proceeds in excess of
$74,437,500 received from the issuance of Additional Senior Subordinated
Notes issued as part of the Permitted Transactions shall not be applied as
set forth in the immediately preceding proviso; PROVIDED FURTHER that no
Subsidiary of Holdings shall Guaranty any Indebtedness or other Obligations
under the Additional Senior Subordinated Notes unless such Guaranty is
subordinated to the Guaranty pursuant to the US Collateral and Guaranty
Agreement on terms no less favorable to the Lenders than the subordination
provisions of the Additional Senior Subordinated Notes;
SECTION 7.05. ADVANCES; INVESTMENTS; LOANS. Holdings will not, and will not permit any of its Subsidiaries to, lend money or extend credit or make advances to any Person, or purchase or acquire any stock, obligations or securities of, or any other interest in, or guarantee any Indebtedness or other obligations of, or make any capital contribution to, any Person, or purchase or own a futures contract or otherwise become liable for the purchase or sale
of currency or other commodities at a future date in the nature of a futures contract, or hold any cash or Cash Equivalents (any of the foregoing, an "Investment"), except:
(a) the US Borrower and any of its Subsidiaries may invest in cash and Cash Equivalents;
(b) the US Borrower and any of its Subsidiaries may acquire and hold receivables owing to it, if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms (including the dating of receivables) of the US Borrower or such Subsidiary;
(c) the US Borrower and any of its Subsidiaries may acquire and own investments (including debt obligations and equity securities) received in connection with the bankruptcy or reorganization of suppliers and customers and in settlement of delinquent obligations of, and other disputes with, customers and suppliers arising in the ordinary course of business;
(d) Interest Rate Protection Agreements and Other Hedging Agreements entered into in compliance with Section 7.04(c) shall be permitted;
(e) advances, loans and investments in existence on the Initial Borrowing Date and listed on Schedule XI shall be permitted, without giving effect to any additions thereto or replacements thereof, it being understood that any additional Investments made with respect to such existing Investments shall be permitted only if independently permitted under the other provisions of this Section 7.05;
(f) the US Borrower and any of its Wholly-Owned Subsidiaries may make intercompany loans and advances between and among one another (collectively, "INTERCOMPANY LOANS"); PROVIDED that (i) at no time shall the aggregate outstanding principal amount of all Intercompany Loans made pursuant to this clause (f) by Credit Parties to Wholly-Owned Subsidiaries that are not Credit Parties, when added to the aggregate amount of contributions, capitalizations and forgiveness theretofore made pursuant to Section 7.05(p) in respect of Wholly-Owned Foreign Subsidiaries that are not Credit Parties, exceed $25,000,000 (determined without regard to any write-downs or write-offs of such loans and advances), (ii) (A) the Canadian Intercompany Loan and the UK Intercompany Loan shall each be evidenced by an Intercompany Note (the "CANADIAN INTERCOMPANY NOTE" and "UK INTERCOMPANY NOTE", respectively) (which shall be pledged to the Collateral Agent pursuant to the US Collateral and Guaranty Agreement) and (B) the obligations of the Canadian Borrower under the Canadian Intercompany Loan shall be Foreign Obligations guaranteed under the Foreign Guaranty and the obligations of the UK Borrower under the UK Intercompany Loan shall be Foreign Obligations guaranteed under the Foreign Guaranty, (iii) if any such Intercompany Loan (other than the Canadian Intercompany Loan and the UK Intercompany Loan) made by a Credit Party is evidenced by a promissory note or other instrument, such promissory note or other instrument shall be an Intercompany Note and such Intercompany Note shall be pledged to the Collateral Agent to the extent required pursuant to the US Collateral and Guaranty Agreement or the applicable Foreign Pledge Agreement and (iv) each Intercompany Loan made either (A) to the US Borrower or (B) by a Wholly-Owned Foreign Subsidiary to a US Credit
Party or by a Non-Credit Party to a Credit Party shall include (or, if not evidenced by an Intercompany Note, the books and records of the respective parties shall note that such Intercompany Loan is subject to) the subordination provisions attached as an Annex to the form of Intercompany Note;
(g) loans and advances by the US Borrower and any of its Subsidiaries to employees of Holdings and any of its Subsidiaries in the ordinary course of business and for bona fide business purposes (including travel and entertainment expenses) shall be permitted, so long as the aggregate principal amount thereof at any time outstanding (determined without regard to any write-downs or write-offs of such loans and advances) shall not exceed $5,000,000;
(h) Holdings may acquire and hold obligations of one or more officers or other employees of Holdings or any of its Subsidiaries in connection with such officers' or employees' acquisition of shares of Holdings Common Stock, so long as no cash is actually advanced by Holdings or any of its Subsidiaries to such officers or employees in connection with the acquisition of any such obligations;
(i) the Merger Transactions shall be permitted to be consummated in accordance with the requirements of Section 3.08;
(j) the US Borrower and any of its Wholly-Owned Subsidiaries may make
Permitted Acquisitions in accordance with the relevant requirements of
Section 6.14;
(k) Holdings and its Subsidiaries may own the capital stock of their respective Subsidiaries created or acquired in accordance with the terms of this Agreement (so long as all amounts invested in such Subsidiaries are independently permitted under another provision of this Section 7.05);
(l) so long as no Default or Event of Default exists or would exist immediately after giving effect to the respective Investment, the US Borrower and any of its Wholly-Owned Subsidiaries shall be permitted to make Investments in any Joint Venture or any Unrestricted Subsidiary on any date in an amount not to exceed the Available Basket Amount on such date (after giving effect to all prior and contemporaneous adjustments thereto, except as a result of such Investment), it being understood and agreed that to the extent any Credit Party (after the respective Investment has been made) receives a cash return from the respective Joint Venture or Unrestricted Subsidiary of amounts previously invested pursuant to this clause (1), which cash return may be made by way of repayment of principal in the case of loans and cash equity returns (whether as a distribution, dividend or redemption) in the case of equity investments, or a return in the form of an asset distribution from the respective Joint Venture or Unrestricted Subsidiary of any asset previously contributed pursuant to this clause (1) (excluding the amounts of all Dividends paid by Unrestricted Subsidiaries that are referred to in clause (i) of the proviso to Section 7.06(g)), then the amount of such cash return of investment or the fair market value of such distributed asset (as determined in good faith by senior management of Holdings), as the case may be, shall, upon the Administrative Agent's receipt of a certification of the amount of the return of investment from an Authorized Officer of
Holdings, apply to increase the Available Basket Amount as provided in the definition of Available Basket Amount; PROVIDED that the aggregate amount of increases to the Available Basket Amount described above shall not exceed the amount of returned investment and, in no event, shall the amount of the increases made to the Available Basket Amount in respect of any Investment exceed the amount previously invested pursuant to this clause (1);
(m) the US Borrower and any of its Subsidiaries may receive and hold promissory notes and other non-cash consideration received in connection with any asset sale permitted by Section 7.02(d) and (m);
(n) the US Borrower and any of its Subsidiaries may convey, lease, license, sell or otherwise transfer or acquire assets and properties to the extent permitted by Section 7.02(e), (f), (g), (h) and (1);
(o) the US Borrower and any of its Subsidiaries may make advances in the form of a prepayment of expenses, so long as such expenses were incurred in the ordinary course of business and are being paid in accordance with customary trade terms of the US Borrower or such Subsidiary;
(p) the US Borrower and its Wholly-Owned Subsidiaries may make cash capital contributions to their respective Wholly-Owned Subsidiaries, and may capitalize or forgive any Indebtedness owed to them by a Wholly-Owned Foreign Subsidiary and outstanding under clause (f) of this Section 7.05; PROVIDED that the aggregate amount of such contributions, capitalizations and forgiveness on and after the Effective Date made to Wholly-Owned Foreign Subsidiaries that are not Credit Parties, when added to the aggregate outstanding principal amount of Intercompany Loans made to Wholly-Owned Foreign Subsidiaries that are not Credit Parties under such clause (f) (determined without regard to any write-downs or write-offs thereof) shall not exceed an amount equal to $25,000,000;
(q) in addition to Investments permitted by clauses (a) through (p) of this Section 7.05, the US Borrower and any of its Subsidiaries may make additional loans, advances and other Investments to or in a Person in an aggregate amount for all loans, advances and other Investments made pursuant to this clause (q) (determined without regard to any write-downs or write-offs thereof), net of cash repayments of principal in the case of loans, sale proceeds in the case of Investments in the form of debt instruments and cash equity returns (whether as a distribution, dividend, redemption or sale) in the case of equity investments, not to exceed $35,000,000 at any time outstanding; and
(r) the US Borrower and any of its Subsidiaries may guarantee any
Indebtedness or other obligations of another Person to the extent expressly
permitted under clauses (a), (f), (g), (k) or (p) of Section 7.04 or clause
(d) of Section 7.04 to the extent such guaranty exists on the date of the
applicable Permitted Acquisition.
SECTION 7.06. DIVIDENDS, ETC. Holdings will not, and will not permit any of its Subsidiaries to, declare or pay any dividends or return any capital to its stockholders or
authorize or make any other distribution, payment or delivery of property or cash to its stockholders as such, or redeem, retire, purchase or otherwise acquire, directly or indirectly, for consideration, any shares of any class of its capital stock, now or hereafter outstanding (or any warrants for or options or stock appreciation rights in respect of any of such shares), or set aside any funds for any of the foregoing purposes, and Holdings will not permit any of its Subsidiaries to enter into any Synthetic Purchase Agreement with respect to or purchase or otherwise acquire for consideration any shares of any class of the capital stock of Holdings or any other Subsidiary, as the case may be, now or hereafter outstanding (or any options or warrants or stock appreciation rights issued by such Person with respect to its capital stock), and Holdings will not permit any of the Unrestricted Subsidiaries to enter into any Synthetic Purchase Agreement with respect to, or purchase or otherwise acquire, directly or indirectly, for consideration, any shares of any class of capital stock of Holdings (all of the foregoing, except to the extent paid by such Person to its shareholders with the common stock of such Person, "Dividends"), except that:
(a) any Subsidiary of the US Borrower may pay Dividends to the US Borrower or any Wholly-Owned Subsidiary of the US Borrower;
(b) the US Borrower may pay cash Dividends to Holdings to enable
Holdings to, and Holdings may, redeem or purchase shares of Holdings Common
Stock, Preferred Stock of Holdings or options to purchase Holdings Common
Stock or Preferred Stock of Holdings, as the case may be, in either case
held by former employees, consultants, officers or directors of Holdings or
any of its Subsidiaries following the termination of their employment or
resignation from their respective positions (by death, disability or
otherwise) issued to any such employees, consultants, officers or
directors; PROVIDED that (i) the only consideration paid by Holdings in
respect of such redemptions and/or purchases shall be cash, forgiveness of
liabilities and/or Holdings Shareholder Subordinated Notes, (ii) the sum of
(A) the aggregate amount paid by Holdings in cash in respect of all such
Dividends, redemptions and/or purchases made pursuant to this Section
7.06(b) PLUS (B) the aggregate amount of liabilities so forgiven PLUS (C)
the aggregate amount of all cash principal and interest payments made on
HoldingsShareholder Subordinated Notes, in each case after the Initial
Borrowing Date, shall not exceed $10,000,000, and (iii) at the time of any
cash Dividend, payment or forgiveness of liabilities permitted to be made
pursuant to this Section 7.06(b), including any cash payment under a
Holdings Shareholder Subordinated Note, no Default or Event of Default
shall then exist or result therefrom;
(c) so long as no Default or Event of Default exists or would result therefrom, the US Borrower may pay cash Dividends to Holdings to enable Holdings to, and Holdings may, pay regularly accruing cash Dividends on Disqualified Preferred Stock issued pursuant to Section 7.13(c), with such Dividends to be paid in accordance with the terms of the respective certificate of designation therefor;
(d) any Subsidiary of the US Borrower that is not a Wholly-Owned Subsidiary may pay cash Dividends to its shareholders, members or partners generally, so long as the US Borrower or its respective Subsidiary that owns the equity interest or interests in the Subsidiary paying such Dividends receives at least its proportionate share thereof (based upon its relative holdings of equity interests in the Subsidiary paying such Dividends and
taking into account the relative preferences, if any, of the various classes of equity interests in such Subsidiary or the terms of any agreements applicable thereto);
(e) the Merger Transactions shall be permitted;
(f) the US Borrower may pay cash Dividends to Holdings so long as the proceeds thereof are promptly used by Holdings to pay operating expenses incurred in the ordinary course of business (including, without limitation, outside directors and professional fees, expenses and indemnities) and other similar corporate overhead costs and expenses; PROVIDED that the aggregate amount of all cash Dividends paid pursuant to this clause (f) shall not exceed $2,000,000 in any fiscal year of the US Borrower;
(g) the US Borrower may pay cash Dividends to Holdings (and Holdings may pay cash Dividends to any direct or indirect parent company of Holdings that is the taxpayer for the consolidated group of which Holdings and the Domestic Subsidiaries are members) at the times and in the amounts necessary to enable Holdings (and/or such direct or indirect parent company) to pay its tax obligations; PROVIDED that (i) the aggregate amount of cash Dividends paid pursuant to this clause (g) to enable Holdings (and/or such direct or indirect parent company) to pay United States Federal and state income taxes at any time shall not exceed the aggregate amount of such United States Federal and state income taxes equal to the lesser of (A) the aggregate amount of taxes actually owing by Holdings (determined as if Holdings were the ultimate taxpayer for its consolidated group) and (B) the aggregate amount of taxes actually owing by such direct or indirect parent company, in each case at such time for the respective period, (ii) any refunds received by Holdings (and/or such direct or indirect parent company) shall promptly be returned by Holdings (and/or such direct or indirect parent company to Holdings for return) to the US Borrower, (iii) Holdings may pay Dividends only pursuant to this clause (g) to pay any direct or indirect parent company's United States Federal and state income tax obligations and (iv) at such time as Holdings is the ultimate taxpayer for its consolidated group, no further Dividends may be paid by Holdings pursuant to this clause (g); and
(h) Holdings may pay regularly accruing Dividends with respect to the Initial Preferred Stock and other Qualified Preferred Stock through the issuance of additional shares of Initial Preferred Stock and Qualified Preferred Stock (but not in cash), respectively, in accordance with the terms of the documentation governing the same;
(i) the US Borrower may pay the Holdings Distribution; and
(j) Holdings may redeem or repurchase shares of Qualified Preferred Stock and/or Holdings Common Stock held by the Apollo Group or an Affiliate thereof for an amount of cash not in excess of the amount of net cash proceeds received by Holdings from substantially simultaneous issuances of Qualified Preferred Stock and/or Holdings Common Stock to Persons that are members of management of Holdings and its Subsidiaries at the time of such issuance; PROVIDED that Holdings may not redeem or repurchase shares of Qualified Preferred Stock and/or Holdings Common Stock held by
Apollo or an Affiliate thereof pursuant to this clause (j) for an amount of cash in excess of $2,000,000 in the aggregate during the term of this Agreement.
SECTION 7.07. TRANSACTIONS WITH AFFILIATES AND UNRESTRICTED SUBSIDIARIES. Holdings will not, and will not permit any of its Subsidiaries to, enter into any transaction or series of transactions with any Affiliate of Holdings or any of its Subsidiaries or any of its Unrestricted Subsidiaries other than on terms and conditions substantially as favorable to Holdings or such Subsidiary as would be reasonably expected to be obtainable by Holdings or such Subsidiary at the time in a comparable arm's-length transaction with a Person other than an Affiliate; PROVIDED that the following shall in any event be permitted under this Section 7.07: (a) the Transaction; (b) (i) transactions by and among Holdings and its Subsidiaries or (ii) transactions to the extent expressly permitted by Sections 7.02(e), (f), (g), (h) or (i), 7.04, 7.05 and 7.06; (c) so long as no Default or Event of Default is then in existence or would result therefrom, the payment, on a quarterly basis, of management fees to Apollo Group in an aggregate amount not to exceed $250,000 in any fiscal quarter of the US Borrower pursuant to, and in accordance with the terms of, the Apollo Management Agreement; provided that (i) at any time a Default or an Event of Default is in existence and such management fees cannot be paid as PROVIDED above, such fees shall continue to accrue and may be paid at such time when all Defaults and Events of Default have been cured or waived and so long as no Default or Event of Default will exist immediately after giving effect to the payment thereof, and (ii) to the extent that Apollo Group voluntarily defers any management fees otherwise payable to it in any fiscal quarter of the US Borrower pursuant to the provisions above at a time when no Default or Event of Default exists, such deferred management fees may thereafter be payable to Apollo Group at any time so long as no Default or Event of Default is then in existence; (d) customary fees to non-officer directors of Holdings and its Subsidiaries; (e) Holdings and its Subsidiaries may enter into employment arrangements with respect to the procurement of services with their respective officers and employees in the ordinary course of business; (f) the payment on the Initial Borrowing Date of one-time consulting and advisory fees to Apollo Group in an aggregate amount not to exceed the limitation set forth in the Apollo Management Agreement; (g) the reimbursement of Apollo Group for its reasonable out-of-pocket expenses incurred in connection with performing management services to Holdings and its Subsidiaries pursuant to the Apollo Management Agreement or in connection with the Transaction; (h) so long as no Default or Event of Default is then in existence or would result therefrom, the payment to Apollo Group of merger advisory fees for each Permitted Acquisition in an amount not to exceed 1% of the fair market value of the business or assets acquired pursuant to such Permitted Acquisition (determined in good faith by senior management of Holdings); (i) the payment of consulting, management or other fees to the US Borrower or any Subsidiary thereof that is a Credit Party by any of their respective Subsidiaries in the ordinary course of business; and (j) payments pursuant to Tax Allocation Agreements either (A) existing on the Initial Borrowing Date or (B) amended, modified, changed or entered into in accordance with the requirements of Section 7.12(e). In no event shall any management, consulting or similar fee be paid or payable by Holdings or any of its Subsidiaries to any Person that is an Affiliate of Holdings or any of its Subsidiaries except as specifically provided in this Section 7.07.
SECTION 7.08. DESIGNATED SENIOR DEBT. Neither Holdings nor any Borrower shall designate any Indebtedness (other than the Obligations) as "Designated Senior Debt" (or any similar term) (as defined in the Senior Subordinated Notes Indenture, the Seller
Note, the Initial Preferred Stock and, on and after the execution and delivery thereof, any Discount Notes and any agreement relating to Permitted Subordinated Indebtedness and Permitted Subordinated Refinancing Indebtedness); provided that Indebtedness under the Senior Subordinated Notes or under any Permitted Subordinated Indebtedness or Permitted Subordinated Refinancing Indebtedness may be designated as Designated Senior Debt under the Seller Note, the Initial Preferred Stock and, after the execution and delivery thereof, any Discount Notes.
SECTION 7.09. CONSOLIDATED INTEREST COVERAGE RATIO. The US Borrower will not permit the Consolidated Interest Coverage Ratio for any Test Period ending on the last day of any fiscal quarter of the US Borrower specified below to be LESS than the ratio set forth opposite such fiscal quarter below:
Fiscal Quarter Ending Ratio --------------------- ----- March 31, 2002 1.80:1.0 June 30, 2002 1.80:1.0 September 30, 2002 1.80:1.0 December 31, 2002 1.80:1.0 March 31, 2003 2.00:1.0 June 30, 2003 2.00:1.0 September 30, 2003 2.00:1.0 December 31, 2003 2.00:1.0 March 31, 2004 2.00:1.0 June 30, 2004 2.25:1.0 September 30, 2004 2.25:1.0 December 31, 2004 2.25:1.0 March 31, 2005 2.50:1.0 June 30, 2005 2.50:1.0 September 30, 2005 2.50:1.0 December 31, 2005 2.50:1.0 March 31, 2006 2.50:1.0 June 30, 2006 2.50:1.0 September 30, 2006 2.50:1.0 Thereafter 2.75:1.0 |
Notwithstanding anything to the contrary contained in this Agreement, all calculations of compliance with this Section 7.09 shall be made on a Pro Forma Basis.
SECTION 7.10. ADJUSTED TOTAL LEVERAGE RATIO. The US Borrower will not permit the Adjusted Total Leverage Ratio on the last day of any fiscal quarter of the US Borrower specified below to exceed the respective ratio set forth opposite such fiscal quarter below:
Fiscal Quarter Ending Ratio --------------------- ----- March 31, 2002 5.50:1.0 June 30, 2002 5.50:1.0 September 30, 2002 5.50:1.0 |
Fiscal Quarter Ending Ratio --------------------- ----- December 31, 2002 5.50:1.0 March 31, 2003 5.25:1.0 June 30, 2003 5.25:1.0 September 30, 2003 5.25:1.0 December 31, 2003 5.25:1.0 March 31, 2004 5.00:1.0 June 30, 2004 5.00:1.0 September 30, 2004 5.00:1.0 December 31, 2004 5.00:1.0 March 31, 2005 4.50:1.0 June 30, 2005 4.50:1.0 September 30, 2005 4.50:1.0 December 31, 2005 4.50:1.0 March 31, 2006 4.00:1.0 June 30, 2006 4.00:1.0 September 30, 2006 4.00:1.0 December 31, 2006 4.00:1.0 March 31, 2007 4.00:1.0 June 30, 2007 4.00:1.0 Thereafter 3.50:1.0 |
Notwithstanding anything contrary contained above or elsewhere in this Agreement, (a) all calculations of compliance with this Section 7.10 shall be made on a Pro Forma Basis and (b) in no event shall the Adjusted Total Leverage Ratio be greater than the Maximum Permitted Acquisition Leverage Ratio upon the consummation of, and after giving effect on a Pro Forma Basis to, any Permitted Acquisition.
SECTION 7.11. CAPITAL EXPENDITURES. (a) Holdings will not, and will not permit any of its Subsidiaries to, make any Capital Expenditures, except that (i) during the period from the Initial Borrowing Date through and including December 31, 2001, the US Borrower and any of its Subsidiaries may make Capital Expenditures in an aggregate amount not to exceed $5,000,000, and (ii) during any fiscal year set forth in the table below, the US Borrower and any of its Subsidiaries may make Capital Expenditures, so long as the aggregate amount of such Capital Expenditures does not exceed in any fiscal year set forth below the sum of (A) the amount set forth opposite such fiscal year below PLUS (B) for each Acquired Business acquired after the Initial Borrowing Date and prior to the first day of the respective fiscal year set forth below, 25% of the Acquired EBITDA of such Acquired Business for the trailing twelve months of such Acquired Business immediately preceding its acquisition for which financial statements for such Acquired Business have been made available to the US Borrower and the Lenders PLUS (C) for each Acquired Business acquired during the respective fiscal year, the amount for such Acquired Business specified in preceding clause (B) multiplied by a percentage, the numerator of which is the number of days in the fiscal year after the date of the respective acquisition and the denominator of which is 365 or 366, as the case may be:
Fiscal Year Ending Amount ------------------ ------ December 31, 2002 $ 40,000,000 December 31, 2003 $ 35,000,000 December 31, 2004 $ 35,000,000 December 31, 2005 $ 35,000,000 December 31, 2006 $ 35,000,000 December 31, 2007 $ 35,000,000 December 31, 2008 $ 35,000,000 December 31, 2009 $ 35,000,000 |
(b) Notwithstanding the foregoing, in the event that the amount of Capital Expenditures permitted to be made by the US Borrower and any of its Subsidiaries pursuant to clause (a) above in any fiscal year set forth in the table above (before giving effect to any increase in such permitted expenditure amount pursuant to this clause (b)) is greater than the amount of such Capital Expenditures made by the US Borrower and any of its Subsidiaries during such fiscal year, such excess (the "Rollover Amount") may be carried forward and utilized to make Capital Expenditures in succeeding fiscal years; PROVIDED that in no event shall the Rollover Amount available to be utilized in any succeeding fiscal year exceed 50% of the applicable permitted scheduled Capital Expenditure amount as set forth in clause (a) above for the fiscal year by reference to which the Rollover Amount was determined.
(c) Notwithstanding the foregoing, the US Borrower and any of its Subsidiaries may make Capital Expenditures (which Capital Expenditures will not be included in any determination under the foregoing clause (a)) with the insurance proceeds received by the US Borrower or any of its Subsidiaries from any Recovery Event so long as such Capital Expenditures are used or committed to be used to replace or restore any properties or assets in respect of which such proceeds were paid within 360 days following the date of the receipt of such insurance proceeds, in each case to the extent such insurance proceeds do not require, or result in, a mandatory repayment of Term Loans pursuant to Section 2.12(f).
(d) Notwithstanding the foregoing, the US Borrower and any of its Subsidiaries may make Capital Expenditures (which Capital Expenditures will not be included in any determination under the foregoing clause (a)) with the Net Sale Proceeds of Asset Sales, to the extent such Net Sale Proceeds do not require, or result in, a mandatory repayment of Term Loans pursuant to Section 2.12(c) and such proceeds are reinvested as required by said Section 2.12(c).
(e) Notwithstanding the foregoing, the US Borrower and any of its Wholly-Owned Subsidiaries may make Capital Expenditures (which Capital Expenditures will not be included in any determination under the foregoing clause (a)) constituting Permitted Acquisitions effected in accordance with the requirements of Section 7.02(i).
SECTION 7.12. LIMITATION ON VOLUNTARY PAYMENTS AND MODIFICATIONS OF INDEBTEDNESS; MODIFICATIONS OF CERTIFICATE OF INCORPORATION, BY-LAWS AND CERTAIN OTHER AGREEMENTS; ISSUANCES OF CAPITAL STOCK; ETC. Holdings will not, and will not permit any of its Subsidiaries to:
(a) amend or modify, or permit the amendment or modification of, any provision of any Holdings Shareholder Subordinated Note or, after the incurrence or issuance thereof, amend or modify, or permit the amendment or modification of, any provision of any Qualified Preferred Stock (other than Initial Preferred Stock), Disqualified Preferred Stock or Permitted Debt or of any agreement (including, without limitation, any purchase agreement, indenture, loan agreement, security agreement or certificate of designation) relating thereto in a manner that could reasonably be expected to in any way be adverse to the interests of the Lenders;
(b) make or permit any Unrestricted Subsidiary to make (or give any notice in respect of) any voluntary or optional payment or prepayment on or redemption, repurchase or acquisition for value of (including, without limitation, by way of entering into any Synthetic Purchase Agreement with respect thereto or depositing with the trustee with respect thereto or any other Person money or securities before due for the purpose of paying when due), or any prepayment or redemption as a result of any asset sale, excess cash flow recapture, exit event (in the case of the Seller Note, the Initial Preferred Stock and any Discount Notes), change of control or similar event of, the Seller Note, the Initial Preferred Stock, any Discount Note, any Senior Subordinated Note (except, in the case of the Senior Subordinated Notes, through the issuance of Exchange Senior Subordinated Notes as contemplated in the definition of Senior Subordinated Notes and consistent with the requirements of the definition of Exchange Senior Subordinated Notes), any Additional Senior Subordinated Notes, any Permitted Subordinated Refinancing Indebtedness or any Permitted Subordinated Indebtedness; PROVIDED that, so long as no Default or Event of Default then exists or would result therefrom, (i) any Senior Subordinated Notes may be refinanced with Permitted Subordinated Refinancing Indebtedness, (ii) the US Borrower may repurchase the Senior Subordinated Notes, the Additional Senior Subordinated Notes and the Permitted Subordinated Refinancing Indebtedness on the open market, in an aggregate Principal Amount for all purchases made pursuant to this clause (ii) not to exceed $20,000,000, so long as the Adjusted Total Leverage Ratio is LESS than or equal to 2.75:1.0 on the last day of the Test Period most recently ended prior to the consummation of the respective repurchase (as set forth in the officer's certificate most recently delivered pursuant to Section 6.01(e)) and (iii) Initial Preferred Stock may be exchanged for Discount Notes pursuant to the terms of such Initial Preferred Stock.
(c) make (or give any notice in respect of) any principal or interest payment on, or any redemption or acquisition for value of, any Holdings Shareholder Subordinated Note, except to the extent permitted by Section 7.06(b);
(d) amend or modify, or permit the amendment or modification of, any provision of the Seller Note, any Initial Preferred Stock, any Discount Note, any Senior Subordinated Note Document, the Canadian Intercompany Note or the UK Intercompany Note, except for any such amendment or modification that could not reasonably be expected to be adverse to the interests of the Lenders in any material respect and that is expressly agreed to in writing by the Administrative Agent;
(e) amend, modify or change in any way that could reasonably be expected
to be adverse to the interests of the Lenders in any material respect any Tax
Allocation Agreement, any Management Agreement, any Merger Document, its
certificate or articles of incorporation (including, without limitation, by the
filing or modification of any certificate of designation other than any
certificates of designation relating to Qualified Preferred Stock or
Disqualified Preferred Stock issued as permitted herein), by-laws, certificate
of partnership, partnership agreement, certificate of limited liability company,
limited liability company agreement or any agreement entered into by it with
respect to its capital stock or other equity interest (including any
Shareholders' Agreement), or enter into any new Tax Allocation Agreement,
Management Agreement or agreement with respect to its capital stock or other
equity interest that could reasonably be expected to in any material respect be
adverse to the interests of the Lenders or, in the case of any Management
Agreement, that involves the payment by Holdings or any of its Subsidiaries of
any amount that could give rise to a violation of this Agreement; PROVIDED that
(i) the foregoing clause shall not restrict the ability of Holdings and its
Subsidiaries to amend their respective certificates of incorporation to
authorize the issuance of capital stock otherwise permitted to be issued
pursuant to the terms of this Agreement and (ii) any amendment, modification or
change to any Tax Allocation Agreement, and the entering into of any new Tax
Allocation Agreement, shall, in each case, be reasonably satisfactory in form
and substance to the Administrative Agent; or
(f) amend or modify, or permit the amendment or modification of, (i) the Senior Executive Plan if such amendment or modification of the Senior Executive Plan would cause the interests in the Senior Executive Plan to give rise to any rights other than rights to receive common stock of Holdings and Qualified Preferred Stock (including the Initial Preferred Stock) held under the Senior Executive Plan or (ii) any of the mortgagee protective provisions contained in any lease governing any Real Property that is leased by Holdings or any of its Subsidiaries and is subject to a Mortgage or a collateral assignment in favor of the Collateral Agent.
SECTION 7.13. LIMITATION ON ISSUANCE OF CAPITAL STOCK. (a) Holdings
will not, and will not permit any of its Subsidiaries to, issue (i) any
Preferred Stock (other than Preferred Stock issued pursuant to clauses (c) and
(d) below) or any options, warrants or rights to purchase Preferred Stock or
(ii) any redeemable common stock unless, in either case, the issuance thereof
is, and all terms thereof are, satisfactory to the Required Lenders in their
sole discretion.
(b) Holdings will not permit any of its Subsidiaries to issue any capital
stock (including by way of sales of treasury stock) or any options or warrants
to purchase, or securities convertible into, capital stock, except (i) for
transfers and replacements of then outstanding shares of capital stock, (ii) for
stock splits, stock dividends and additional issuances that do not decrease the
percentage ownership of Holdings or any of its Subsidiaries in any class of the
capital stock of such Subsidiaries, (iii) to qualify directors to the extent
required by applicable law, (iv) that Subsidiaries formed after the Initial
Borrowing Date pursuant to Section 7.15 may issue capital stock in accordance
with the requirements of Section 7.15 and (v) that Subsidiaries may issue common
stock to the US Borrower and its Subsidiaries in connection with any transaction
permitted by Section 7.05(p). All capital stock issued in accordance with this
Section 7.13(b)
shall, to the extent owned by any Credit Party and required by the US Collateral and Guaranty Agreement or a Foreign Pledge Agreement, be delivered to the Collateral Agent for pledge pursuant to such US Collateral and Guaranty Agreement or Foreign Pledge Agreement.
(c) Holdings may issue Disqualified Preferred Stock so long as (i) no
Default or Event of Default then exists or would exist immediately after giving
effect to the respective issuance, (ii) the aggregate liquidation preference for
all Disqualified Preferred Stock issued after the Initial Borrowing Date
pursuant to this Section 7.13(c) shall not exceed, when combined with the
aggregate principal amount of all then outstanding Indebtedness permitted by
Section 7.04(o), $50,000,000, (iii) with respect to each issue of Disqualified
Preferred Stock, the gross cash proceeds therefrom (or in the case of
Disqualified Preferred Stock directly issued as consideration for a Permitted
Acquisition, the fair market value thereof (as determined in good faith by
Holdings) of the assets received therefor) shall not be less than the
liquidation preference thereof at the time of issuance, (iv) calculations are
made by the US Borrower of compliance with the covenants contained in Sections
7.09 and 7.10 for the Calculation Period most recently ended prior to the date
of the respective issuance of Disqualified Preferred Stock, on a Pro Forma Basis
after giving effect to the respective issuance of Disqualified Preferred Stock,
and such calculations shall show that such financial covenants would have been
complied with if such issuance of Disqualified Preferred Stock had been
consummated on the first day of the respective Calculation Period, and (v) the
US Borrower shall furnish to the Administrative Agent a certificate by an
Authorized Officer of the US Borrower certifying to the best of such officer's
knowledge as to compliance with the requirements of this Section 7.13(c) and
containing the pro forma calculations required by preceding clause (iv).
(d) Holdings may issue Qualified Preferred Stock (i) in payment of regularly accruing dividends on theretofore outstanding shares of Qualified Preferred Stock as contemplated by Section 7.06(h) and (ii) so long as, with respect to each other issue of Qualified Preferred Stock, Holdings receives reasonably equivalent consideration (as determined in good faith by Holdings).
SECTION 7.14. LIMITATION ON CERTAIN RESTRICTIONS ON SUBSIDIARIES.
Holdings will not, and will not permit any of its Subsidiaries to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective,
any encumbrance or restriction on the ability of any such Subsidiary to (a) pay
dividends or make any other distributions on its capital stock or any other
interest or participation in its profits owned by Holdings or any Subsidiary of
Holdings, or pay any Indebtedness owed to Holdings or a Subsidiary of Holdings,
(b) make loans or advances to Holdings or any Subsidiary of Holdings or (c)
transfer any of its properties or assets to Holdings or any of its Subsidiaries
except for such encumbrances or restrictions existing under or by reason of (i)
applicable law, (ii) this Agreement and the other Credit Documents, (iii) the
provisions contained in the Retained Existing Indebtedness, (iv) customary
provisions restricting subletting or assignment of any lease governing a
leasehold interest of Holdings or a Subsidiary of Holdings entered into in the
ordinary course of business and consistent with past practices, (v) customary
provisions restricting assignment of any contract entered into by Holdings or
any Subsidiary of Holdings in the ordinary course of business, (vi) any
agreement or instrument governing Permitted Acquired Debt, which encumbrance or
restriction is not applicable to any Person or the properties or assets of any
Person, other than the Person or the properties or assets of the Person acquired
pursuant to the respective Permitted Acquisition and
so long as the respective encumbrances or restrictions were not created (or made
more restrictive) in connection with or in anticipation of the respective
Permitted Acquisition, (vii) customary provisions restricting the assignment of
licensing agreements, management agreements or franchise agreements entered into
by Holdings or any of its Subsidiaries in the ordinary course of business,
(viii) restrictions applicable to any Joint Venture that is a Subsidiary
existing at the time of the acquisition thereof as a result of an Investment
pursuant to Section 7.05 or a Permitted Acquisition effected in accordance with
Section 6.14, PROVIDED that the restrictions applicable to the respective such
Joint Venture are not made worse, or more burdensome, from the perspective of
Holdings and its Subsidiaries, than those as in effect immediately before giving
effect to the consummation of the respective Investment or Permitted
Acquisition, (ix) any restriction or encumbrance with respect to a Subsidiary
imposed pursuant to an agreement that has been entered into for the sale or
disposition of all or substantially all of the capital stock or assets of such
Subsidiary, so long as such sale or disposition of all or substantially all of
the capital stock or assets of such Subsidiary is permitted under this
Agreement, (x) restrictions on the transfer of any asset pending the close of
the sale of such asset so long as such sale is permitted under this Agreement,
(xi) the documentation governing Permitted Debt (other than Permitted Acquired
Debt) so long as such restrictions are no more restrictive than those contained
in the Senior Subordinated Note Documents, (xii) the Senior Subordinated Note
Documents, (xiii) restrictions on the transfer of assets securing purchase money
obligations and Capitalized Lease Obligations otherwise permitted hereunder, and
(xiv) customary net worth provisions contained in Real Property leases entered
into by Subsidiaries of the US Borrower so long as the US Borrower has
determined in good faith that such net worth provisions could not reasonably be
expected to impair the ability of the US Borrower and its Subsidiaries to meet
their ongoing obligations (including those under this Agreement and under the
Senior Subordinated Notes).
SECTION 7.15. LIMITATION ON THE CREATION OF SUBSIDIARIES, JOINT VENTURES AND UNRESTRICTED SUBSIDIARIES. (a) Notwithstanding anything to the contrary contained in this Agreement, Holdings will not, and will not permit any of its Subsidiaries to, establish, create or acquire after the Effective Date any Subsidiary or Unrestricted Subsidiary (other than Joint Ventures permitted to be established in accordance with the requirements of Section 7.05(1)); PROVIDED that (i) the US Borrower, any of its Wholly-Owned Subsidiaries and any Unrestricted Subsidiary shall be permitted to establish, create or acquire an Unrestricted Subsidiary, so long as (A) if an Unrestricted Subsidiary is established, created or acquired by a Credit Party, the capital stock or other equity interests of such new Unrestricted Subsidiary that is owned by such Credit Party shall be pledged as, and to the extent, required pursuant to the US Collateral and Guaranty Agreement or a Foreign Pledge Agreement and the certificates (if any) representing such stock or other equity interests, together with appropriate powers duly executed in blank, shall be delivered to the Collateral Agent, and (B) all Investments by the US Borrower and its Subsidiaries in, or to acquire, any Unrestricted Subsidiary (including as a result of the designation thereof as provided in the definition of Unrestricted Subsidiary) are permitted pursuant to Section 7.05(1), (ii) the US Borrower and its Wholly-Owned Subsidiaries shall be permitted to establish or create Wholly-Owned Subsidiaries so long as, in each case, (A) at least 10 days' (or such shorter period of time as is acceptable to the Administrative Agent) prior written notice thereof is given to the Administrative Agent, (B) the capital stock or other equity interests of such new Subsidiary are promptly pledged pursuant to, and to the extent required by,
this Agreement and the US Collateral and Guaranty Agreement or a Foreign Pledge
Agreement and the certificates, if any, representing such stock or other equity
interests, together with stock or other appropriate powers duly executed in
blank, are delivered to the Collateral Agent, (C) in the case of a Domestic
Subsidiary, such new Domestic Subsidiary promptly executes a counterpart of the
US Collateral and Guaranty Agreement, (D) in the case of any Foreign Subsidiary,
such new Foreign Subsidiary promptly executes a counterpart of the Foreign
Guaranty and, to the extent required by Section 6.11(a), the applicable Security
Documents and (E) such new Subsidiary takes all actions required pursuant to
Section 6.11 and (iii) Subsidiaries may be acquired pursuant to Permitted
Acquisitions so long as, in each such case, (A) with respect to each Domestic
Subsidiary and each Wholly-Owned Foreign Subsidiary acquired pursuant to a
Permitted Acquisition, the actions specified in the preceding clause (ii), shall
be taken and (B) with respect to each Subsidiary that is acquired pursuant to a
Permitted Acquisition, all capital stock or other equity interests thereof owned
by any Credit Party shall be pledged pursuant to the US Collateral and Guaranty
Agreement (in the case of a Foreign Subsidiary, to the extent required thereby)
or a Foreign Pledge Agreement. In addition, each new Subsidiary that is required
to execute any Credit Document shall execute and deliver, or cause to be
executed and delivered, all other relevant documentation of the type described
in Article V as such new Subsidiary would have had to deliver if such new
Subsidiary were a Credit Party on the Initial Borrowing Date.
(b) Holdings will not, nor will Holdings permit any of its Subsidiaries to, enter into any Joint Venture, except to the extent permitted by Section 7.05(1).
ARTICLE VIII
EVENTS OF DEFAULT
Upon the occurrence of any of the following specified events (each, an "Event of Default"):
SECTION 8.01. PAYMENTS. Any Borrower shall (a) default in the payment when due of any principal of the Loans or the face amount of any B/A or (b) default, and such default shall continue for three or more Business Days, in the payment when due of any LC Disbursement (or any interest thereon), any interest on the Loans or any fees or any other amounts owing hereunder or under any other Credit Document; or
SECTION 8.02. REPRESENTATIONS, ETC. Any representation, warranty or statement made or deemed made by any Credit Party herein or in any other Credit Document or in any statement or certificate delivered pursuant hereto or thereto shall prove to be untrue in any material respect on the date as of which made or deemed made; or
SECTION 8.03. COVENANTS. Any Credit Party shall (a) default in the due
performance or observance by it of any term, covenant or agreement contained in
Section 6.01(f)(i), 6.10, 6.13, 6.14, 6.17, 6.19 or Article VII, or (b) default
in the due performance or observance by it of any term, covenant or agreement
(other than those referred to in Section 8.01, 8.02 or clause (a) of this
Section 8.03) contained in this Agreement and such default shall
continue unremedied for a period of at least 30 days after notice to the defaulting party by the Administrative Agent or the Required Lenders; or
SECTION 8.04. DEFAULT UNDER OTHER AGREEMENTS. (a) Holdings or any of its Subsidiaries shall (i) default in any payment with respect to any Indebtedness (other than the Obligations) beyond the period of grace, if any, provided in the instrument or agreement under which such Indebtedness was created or (ii) default in the observance or performance of any agreement or condition relating to any such Indebtedness or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or holders of such Indebtedness (or a trustee or agent on behalf of such holder or holders) to cause (determined without regard to whether any notice is required), any such Indebtedness to become due prior to its stated maturity; or (b) any Indebtedness (other than the Obligations) of Holdings or any of its Subsidiaries shall be declared to be due and payable, or shall be required to be prepaid other than by a regularly scheduled required prepayment or as a mandatory prepayment (unless such required prepayment or mandatory prepayment results from a default thereunder or an event of the type that constitutes an Event of Default), prior to the stated maturity thereof; PROVIDED that it shall not constitute an Event of Default pursuant to clause (a) or (b) of this Section 8.04 unless the principal amount of any one issue of such Indebtedness, or the aggregate amount of all such Indebtedness referred to in clauses (a) and (b) above, exceeds $5,000,000 at any one time; or
SECTION 8.05. BANKRUPTCY, ETC. Holdings or any of its Subsidiaries shall commence a voluntary case concerning itself under Title 11 of the United States Code entitled "Bankruptcy", as now or hereafter in effect, or any successor thereto (the "Bankruptcy Code") or under any similar law of any jurisdiction; or an involuntary case is commenced against Holdings or any of its Subsidiaries and the petition is not controverted within 20 days, or is not dismissed within 60 days, after commencement of the case; or a receiver or custodian (as defined in the Bankruptcy Code or in any similar law of any jurisdiction) is appointed for, or takes charge of, all or substantially all of the property of Holdings or any of its Subsidiaries; or Holdings or any of its Subsidiaries commences any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction whether now or hereafter in effect relating to Holdings or any of its Subsidiaries; or there is commenced against Holdings or any of its Subsidiaries any such proceeding that remains undismissed for a period of 60 days; or Holdings or any of its Subsidiaries is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or Holdings or any of its Subsidiaries suffers any appointment of any receiver, custodian or the like for it or any substantial part of its property to continue undischarged or unstayed for a period of 60 days; or Holdings or any of its Subsidiaries makes a general assignment for the benefit of creditors; or any Company action is taken by Holdings or any of its Subsidiaries for the purpose of effecting any of the foregoing; or
SECTION 8.06. ERISA. (a) (i) Any Plan shall fail to satisfy the
minimum funding standard required for any plan year or part thereof under
Section 412 of the Code or Section 302 of ERISA or a waiver of such standard or
extension of any amortization period is sought or granted under Section 412 of
the Code or Section 303 or 304 of ERISA, (ii) a Reportable Event shall have
occurred, (iii) a contributing sponsor (as defined in Section
4001(a)(13) of ERISA) of a Plan subject to Title IV of ERISA shall be subject to the advance reporting requirement of PBGC Regulation Section 4043.61 (without regard to subparagraph (b)(1) thereof) and an event described in subsection .62, .63, .64, .65, .66, .67 or .68 of PBGC Regulation Section 4043 shall be reasonably expected to occur within the following 30 days, (iv) any Plan that is subject to Title IV of ERISA shall have had or is likely to have a trustee appointed under Section 4042 of ERISA to administer such Plan, (v) any Plan that is subject to Title IV of ERISA is, shall have been or is likely to be terminated or to be the subject of termination proceedings under ERISA, (vi) any Plan shall have an Unfunded Current Liability, (vii) a contribution required to be made by Holdings or any Subsidiary of Holdings with respect to a Plan, a Multiemployer Plan or a Foreign Pension Plan has not been timely made, (viii) Holdings or any Subsidiary of Holdings has incurred or is likely to incur any liability to or on account of a Plan or Multiemployer Plan under Section 409, 502(i) or 502(1) of ERISA or Section 4975 of the Code, (ix) Holdings or any Subsidiary of Holdings or any ERISA Affiliate has incurred or is likely to incur any liability to or on account of a Plan under Section 4062, 4063, 4064, 4069 of ERISA or Section 401(a)(29) or 4971 of the Code or on account of a group health plan (as defined in Section 607(1) of ERISA or Section 4980B(g)(2) of the Code) under Section 4980B of the Code (other than for the provision of benefits in accordance with such Section), (x) Holdings or any Subsidiary of Holdings or any ERISA Affiliate has incurred or is likely to incur any liability to or on account of a Multiemployer Plan under Section 515, 4201, 4204 or 4212 of ERISA or (xi) Holdings or any Subsidiary of Holdings has incurred or is likely to incur liabilities pursuant to one or more employee welfare benefit plans (as defined in Section 3(1) of ERISA) that provide benefits to retired employees or other former employees (other than as required by Section 601 of ERISA) or pursuant to any Plan or Foreign Pension Plan; and (b) there shall result from the event or events set forth in this Section 8.06 the imposition of a lien, the granting of a security interest, or a liability; and (c) such lien, security interest or liability, individually and/or in the aggregate, in the opinion of the Required Lenders, has had, or could reasonably be expected to have, a Material Adverse Effect; or
SECTION 8.07. SECURITY DOCUMENTS. (a) Any Security Document shall cease to be in full force and effect, or shall cease to give the Collateral Agent the Liens, rights, powers and privileges purported to be created thereby in favor of the Collateral Agent, superior to and prior to the rights of all third Persons (except as permitted by Section 7.03), and subject to no other Liens (except as permitted by Section 7.03), or (b) any Credit Party shall default in the due performance or observance of any term, covenant or agreement on its part to be performed or observed pursuant to any such Security Document and such default shall continue beyond any cure or grace period specifically applicable thereto pursuant to the terms of any such Security Document; or
SECTION 8.08. GUARANTIES. Any Guaranty or any provision thereof shall cease to be in full force and effect, or any Guarantor or any Person acting by or on behalf of such Guarantor shall deny or disaffirm such Guarantor's obligations under the relevant Guaranty or any Guarantor shall default in the due performance or observance of any term, covenant or agreement on its part to be performed or observed pursuant to any Guaranty; or
SECTION 8.09. JUDGMENTS. One or more judgments or decrees shall be entered against Holdings or any of its Subsidiaries involving a liability (to the extent not paid or not fully covered by insurance) in excess of $5,000,000 for all such judgments and decrees and
all such judgments or decrees shall not have been vacated, discharged or stayed or bonded pending appeal within 60 days from the entry thereof; or
SECTION 8.10. OWNERSHIP. A Change of Control Event shall have occurred; or
SECTION 8.11. REMEDIES BLOCKAGE. Any holder of any Seller Note, shares of Initial Preferred Stock or Discount Notes shall take any action to cause the Indebtedness or any other obligations in respect thereof to become due and payable, institute any legal proceedings (including any involuntary bankruptcy proceeding) against Holdings or otherwise to enforce or collect upon the Indebtedness or any other obligations in respect thereof or take any other action to enforce such holder's remedies with respect thereto;
then, and in any such event, and at any time thereafter, if any Event of Default shall then be continuing, the Administrative Agent shall, upon the written request of the Required Lenders, by written notice to the Borrowers, take any or all of the following actions, without prejudice to the rights of any Agent or any Lender to enforce its claims against any Guarantor or any Borrower except as otherwise specifically provided for in this Agreement (PROVIDED that if an Event of Default specified in Section 8.05 shall occur with respect to any Borrower, the result that would occur upon the giving of written notice by the Administrative Agent as specified in clauses (a), (b) and (c) below shall occur automatically without the giving of any such notice): (a) declare the Total Commitment terminated, whereupon the Commitment of each Lender shall forthwith terminate immediately and any Commitment Fees shall forthwith become due and payable without any other notice of any kind; (b) declare the principal of and any accrued interest in respect of all Loans, B/As then outstanding and all other Obligations owing hereunder (including LC Disbursements) to be, whereupon the same shall become, forthwith due and payable by the Borrowers without presentment, demand, protest or other notice of any kind, all of which are hereby waived by each Credit Party; (c) enforce, as Collateral Agent (or direct the Collateral Agent to enforce), any or all of the Liens and security interests created pursuant to the Security Documents; (d) terminate any Letter of Credit that may be terminated in accordance with its terms; (e) direct the US Borrower to pay (and the US Borrower hereby agrees upon receipt of such notice, or upon the occurrence of any Event of Default specified in Section 8.05, to pay) to the Collateral Agent at the applicable Payment Office such additional amounts of cash, to be held as security for the US Borrower's reimbursement obligations in respect of Letters of Credit then outstanding, equal to the aggregate Stated Amount of all Letters of Credit then outstanding; and (f) apply any cash collateral as provided in Section 2.12.
ARTICLE IX
THE AGENTS
SECTION 9.01. APPOINTMENT. Each Lender hereby irrevocably designates and appoints Chase as Administrative Agent (for purposes of this Article IX, the term "Administrative Agent" shall mean Chase in its capacity as Administrative Agent hereunder and in its capacity as Collateral Agent pursuant to the Security Documents), J.P. Morgan Securities Inc. as Joint Advisor, Co-Lead Arranger and Joint Bookrunner, Deutsche Banc Alex. Brown Inc.
as Syndication Agent, Joint Advisor, Co-Lead Arranger and Joint Bookrunner, Credit Suisse First Boston as Co-Documentation Agent, Credit Lyonnais as Co-Documentation Agent, J.P. Morgan Bank Canada as Canadian Agent and Chase Manhattan International Limited as UK Agent, in each case to act as specified herein and in the other Credit Documents, and each such Lender hereby irrevocably authorizes the Agents to take such action on its behalf under the provisions of this Agreement and the other Credit Documents and to exercise such powers and perform such duties as are expressly delegated to the Agents by the terms of this Agreement and the other Credit Documents, together with, in the case of the Administrative Agent, the Collateral Agent, the Canadian Agent and the UK Agent, such other powers as are reasonably incidental thereto. Each Agent agrees to act as such upon the express conditions contained in this Article IX. Notwithstanding any provision to the contrary elsewhere in this Agreement or in any other Credit Document, no Agent shall have any duties or responsibilities, except those expressly set forth herein or in the other Credit Documents, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or otherwise exist against any Agent. The provisions of this Article IX are solely for the benefit of the Agents and the Lenders, and neither Holdings nor any of its Subsidiaries shall have any rights as a third party beneficiary of any of the provisions hereof. In performing its functions and duties under this Agreement, each of the Agents shall act solely as agent of the Lenders and does not assume and shall not be deemed to have assumed any obligation or relationship of agency or trust with or for Holdings or any of its Subsidiaries.
SECTION 9.02. DELEGATION OF DUTIES. Each Agent may execute any of its duties under this Agreement or any other Credit Document by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. No Agent shall be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care.
SECTION 9.03. EXCULPATORY PROVISIONS. No Agent nor any of its respective officers, directors, employees, agents, attorneys-in-fact or affiliates shall be (a) liable for any action lawfully taken or omitted to be taken by it or such person in its capacity as Agent under or in connection with this Agreement or the other Credit Documents (except for its own gross negligence or willful misconduct as determined by a court of competent jurisdiction in a final and non-appealable decision) or (b) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by Holdings, any of its Subsidiaries or any of their respective officers contained in this Agreement or the other Credit Documents, any other Document or in any certificate, report, statement or other document referred to or provided for in, or received by such Agent under or in connection with this Agreement or any other Document or for any failure of Holdings, any of its Subsidiaries or any of their respective officers to perform its obligations hereunder or thereunder. No Agent shall be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or the other Documents, or to inspect the properties, books or records of Holdings or any of its Subsidiaries. No Agent shall be responsible to any Lender for the effectiveness, genuineness, validity, enforceability, collectability or sufficiency of this Agreement or any other Document or for any representations, warranties, recitals or statements made herein or therein or made in any written or oral statement or in any financial or other statements, instruments, reports, certificates or any other documents in connection herewith or therewith furnished or made by any Agent to the Lenders or by or on
behalf of Holdings or any of its Subsidiaries to any Agent or any Lender or be required to ascertain or inquire as to the performance or observance of any of the terms, conditions, provisions, covenants or agreements contained herein or therein or as to the use of the proceeds of the Loans or of the existence or possible existence of any Default or Event of Default.
SECTION 9.04. RELIANCE BY AGENTS. Each Agent shall be entitled to rely, and shall be fully protected in relying, upon any note, writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, facsimile, telex or teletype message, statement, order or other document or conversation reasonably believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to Holdings or any of its Subsidiaries), independent accountants and other experts selected by any Agent. Each Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Credit Document unless it shall first receive such advice or concurrence of the Required Lenders as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action. The Agents shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the other Credit Documents in accordance with a request of the Required Lenders, and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders.
SECTION 9.05. NOTICE OF DEFAULT. No Agent shall be deemed to have knowledge or notice of the occurrence of any Default or Event of Default unless such Agent has actually received notice from a Lender or a Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a "NOTICE OF DEFAULT". In the event that the Administrative Agent receives such a notice, the Administrative Agent shall give prompt notice thereof to the Lenders. The Administrative Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders; PROVIDED that, unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Lenders.
SECTION 9.06. NONRELIANCE ON AGENTS AND OTHER LENDERS. Each Lender expressly acknowledges that no Agent nor any of its respective officers, directors, employees, agents, attorneys-in-fact or affiliates has made any representations or warranties to it and that no act by any Agent hereinafter taken, including any review of the affairs of Holdings or any of its Subsidiaries, shall be deemed to constitute any representation or warranty by such Agent to any Lender. Each Lender represents to each Agent that it has, independently and without reliance upon such Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, assets, operations, property, financial and other condition, prospects and creditworthiness of Holdings and its Subsidiaries and made its own decision to make its Loans hereunder and enter into this Agreement. Each Lender also represents that it will, independently and without reliance upon any Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement, and to make such investigation as it deems necessary to inform itself as to the business, assets, operations, property, financial and other
condition, prospects and creditworthiness of Holdings and its Subsidiaries. No Agent shall have any duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, assets, property, financial and other condition, prospects or creditworthiness of Holdings or any of its Subsidiaries that may come into the possession of such Agent, the Co-Documentation Agents or any of their officers, directors, employees, agents, attorneys-in-fact or affiliates.
SECTION 9.07. INDEMNIFICATION. The Lenders agree to indemnify each Agent in its capacity as such ratably according to their respective "percentages" as used in determining the Required Lenders at such time or, if the Commitments have terminated and all Loans have been repaid in full, as determined immediately prior to such termination and repayment (with such "percentages" to be determined as if there are no Defaulting Lenders), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, reasonable expenses or disbursements of any kind whatsoever that may at any time (including, without limitation, at any time following the payment of the Obligations) be imposed on, incurred by or asserted against such Agent in its capacity as such in any way relating to or arising out of this Agreement or any other Credit Document, or any documents contemplated by or referred to herein or the transactions contemplated hereby or any action taken or omitted to be taken by such Agent under or in connection with any of the foregoing, but only to the extent that any of the foregoing is not paid by Holdings or any of its Subsidiaries; PROVIDED that no Lender shall be liable to any Agent for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting primarily from the gross negligence or willful misconduct of such Agent (as determined by a court of competent jurisdiction in a final and non-appealable decision). If any indemnity furnished to any Agent for any purpose shall, in the opinion of such Agent be insufficient or become impaired, such Agent may call for additional indemnity and cease, or not commence, to do the acts indemnified against until such additional indemnity is furnished. The agreements in this Section 9.07 shall survive the payment of all Obligations.
SECTION 9.08. AGENTS IN THEIR INDIVIDUAL CAPACITIES. Each Agent and its respective affiliates may make loans to, accept deposits from and generally engage in any kind of business with Holdings and its Subsidiaries as though such Agent were not an Agent hereunder. With respect to the Loans made by it and all Obligations owing to it, each Agent shall have the same rights and powers under this Agreement as any Lender and may exercise the same as though it were not an Agent, and the terms "Lender" and "Lenders" shall include each Agent in its individual capacity.
SECTION 9.09. HOLDERS. The Administrative Agent may deem and treat the payee of any Note as the owner thereof for all purposes hereof unless and until a written notice of the assignment, transfer or endorsement thereof, as the case may be, shall have been filed with the Administrative Agent. Any request, authority or consent of any Person or entity who, at the time of making such request or giving such authority or consent, is the holder of any Note shall be conclusive and binding on any subsequent holder, transferee, assignee or endorsee, as the case may be, of such Note or of any Note or Notes issued in exchange therefor.
SECTION 9.10. RESIGNATION OF THE AGENTS. (a) The Administrative Agent may resign from the performance of all its functions and duties hereunder and/or under the other Credit Documents at any time by giving 30 Business Days' prior written notice to Holdings
and the Lenders. Such resignation shall take effect upon the appointment of a successor Administrative Agent pursuant to clauses (b) and (c) below or as otherwise provided below.
(b) Upon any such notice of resignation, the Required Lenders shall appoint a successor Administrative Agent hereunder or thereunder who shall be a commercial bank or trust company reasonably acceptable to Holdings.
(c) If a successor Administrative Agent shall not have been so appointed within such 30 Business Day period, the Administrative Agent, with the consent of Holdings (which consent shall not be unreasonably withheld or delayed), shall then appoint a successor Administrative Agent who shall serve as Administrative Agent hereunder or thereunder until such time, if any, as the Required Lenders appoint a successor Administrative Agent as provided above.
(d) If no successor Administrative Agent has been appointed pursuant to clause (b) or (c) above by the 30th Business Day after the date such notice of resignation was given by the Administrative Agent, the Administrative Agent's resignation shall become effective and the Required Lenders shall thereafter perform all the duties of the Administrative Agent hereunder and/or under any other Credit Document until such time, if any, as the Lenders appoint a successor Administrative Agent as provided above.
(e) Each of the Co-Documentation Agents and the Syndication Agent may resign from the performance of all its functions and duties hereunder and/or under the other Credit Documents at any time by giving five Business Days' prior written notice to the Lenders. Such resignation shall take effect at the end of such five Business Day period.
SECTION 9.11. POWER OF ATTORNEY. Each of the Administrative Agent and the Collateral Agent is hereby expressly authorized (with the right of sub-delegation) by, and on behalf of, each other Agent and each Lender to enter into any Security Document required to be executed and delivered pursuant to this Agreement or the other Credit Documents in order to secure the obligations of the Borrowers and Guarantors hereunder and thereunder. Each of the Administrative Agent and the Collateral Agent shall be entitled to all declarations, and may appoint any attorney-in-fact to act on its behalf, as it considers necessary or useful in connection with the entering into of such Security Documents. The Administrative Agent and the Collateral Agent shall further be entitled to rescind, amend and/or execute new and different versions of the aforementioned Security Documents in accordance with the terms of this Agreement. Each Lender and each of the Co-Documentation Agents and the Syndication Agent hereby grants to each of the Administrative Agent and the Collateral Agent an irrevocable power of attorney, in such Lender's and such Agent's name, to take the actions contemplated above in this Section 9.11.
SECTION 9.12. TRUSTEE PROVISIONS. (a) The Collateral Agent shall hold the security constituted by the English Security Agreements as agent and trustee for each of the Lenders in accordance with their terms. The Collateral Agent shall not be liable for any failure, omission, or defect in registering, protecting or perfecting the security constituted by any English Security Document or any security created thereby.
(b) The Collateral Agent has no obligation to enquire into or check the title which any Credit Party may have to any property over which security is intended to be created by any English Security Document or to insure any such property.
(c) The Collateral Agent is not under any obligation to hold any title deeds, English Security Agreements or any other documents in connection with the property charged by any Security Document or any other such security in its own possession or to take any steps to protect or preserve the same. The Collateral Agent may permit the relevant Credit Party, any bank providing safe custody services or any professional adviser of the Collateral Agent to retain all such title deeds, English Security Agreements and other documents in its possession.
(d) All amounts received by the Collateral Agent under the English Security Agreements may be (i) invested in any investment for the time being authorised by English law for the investment by trustees of trust money or in any other investments which may be selected by the Collateral Agent with the consent of the Required Lenders; or (ii) placed on deposit at such bank or institution (including any Agent or Lender) and upon such terms as the Collateral Agent may think fit. Any and all such monies and all interest thereon shall be paid over to the Collateral Agent forthwith upon demand by the Collateral Agent.
(e) Each Lender confirms its approval of the English Security Agreements and authorises and directs the Collateral Agent (by itself or by such person(s) as it may nominate) to execute and enforce the same as trustee (or agent) or as otherwise provided (and whether or not expressly in the Lenders' names) on its behalf.
ARTICLE X
MISCELLANEOUS.
SECTION 10.01. PAYMENT OF EXPENSES, ETC. The Borrowers jointly and severally agree to: (a) pay all reasonable out-of-pocket costs and expenses of the Agents and the Collateral Agent (including, without limitation, the reasonable fees and disbursements of Cravath, Swaine & Moore and no more than one local and one foreign counsel to the Agents and the Collateral Agent in each applicable jurisdiction) in connection with the negotiation, preparation, execution and delivery of the Credit Documents and the documents and instruments referred to therein and any amendment, waiver or consent relating thereto and in connection with the Agents' syndication efforts with respect to this Agreement (it being understood that, for purposes of this clause (a), the Agents shall use the same counsel); (b) pay all reasonable out-of-pocket costs and expenses of each Agent, the Collateral Agent, each Letter of Credit Issuer and each of the Lenders in connection with the enforcement of the Credit Documents and the documents and instruments referred to therein and, after an Event of Default shall have occurred and be continuing, the protection of the rights of each Agent, the Collateral Agent, each Letter of Credit Issuer and each of the Lenders thereunder (including, without limitation, the reasonable fees and disbursements of one counsel plus no more than one local and one foreign counsel in each applicable jurisdiction, and consultants for the Agents, the Collateral Agent, the Letter of Credit Issuers and the Lenders); (c) pay and hold each of the Lenders harmless from and against
any and all present and future stamp and other similar taxes with respect to the foregoing matters and save each of the Lenders harmless from and against any and all liabilities with respect to or resulting from any delay or omission (other than to the extent attributable to such Lender) to pay such taxes; and (d) indemnify each Agent, the Collateral Agent, each Letter of Credit Issuer and each Lender and their respective officers, directors, employees, representatives, trustees, affiliates and agents from and hold each of them harmless against any and all losses, liabilities, claims, damages or expenses incurred by any of them as a result of, or arising out of, or in any way related to, or by reason of, (i) any investigation, litigation or other proceeding (whether or not any Agent, the Collateral Agent, any Letter of Credit Issuer or any Lender is a party thereto and whether or not any such investigation, litigation or other proceeding is between or among any Agent, the Collateral Agent, any Letter of Credit Issuer, any Lender, any Credit Party or any third Person or otherwise) related to the entering into and/or performance of this Agreement or any other Document or the use of the proceeds of any Loans or B/As hereunder or any drawing on any Letter of Credit or the Transaction or the consummation of any other transactions contemplated in any Document (but excluding any such losses, liabilities, claims, damages or expenses to the extent incurred by reason of the gross negligence or willful misconduct of the Person to be indemnified (as determined by a court of competent jurisdiction in a final and non-appealable decision)), or (ii) the actual or alleged presence or Release of Hazardous Materials on, at or from any real property currently or formerly owned or operated by Holdings or its Subsidiaries or any Environmental Claim, in each case, including, without limitation, the reasonable fees and disbursements of counsel and independent consultants incurred in connection with any such investigation, litigation or other proceeding. To the extent that the undertaking to indemnify, pay or hold harmless any Agent or any Lender set forth in the preceding sentence may be unenforceable because it is violative of any law or public policy, the Borrowers jointly and severally shall make the maximum contribution to the payment and satisfaction of each of the indemnified liabilities that is permissible under applicable law.
SECTION 10.02. RIGHT OF SETOFF. In addition to any rights now or hereafter granted under applicable law or otherwise, and not by way of limitation of any such rights, upon the occurrence of an Event of Default, each Agent, the Collateral Agent, each Letter of Credit Issuer and each Lender are hereby authorized at any time or from time to time, without presentment, demand, protest or other notice of any kind to any Credit Party or to any other Person, any such notice being hereby expressly waived, to set off and to appropriate and apply any and all deposits (general or special) and any other Indebtedness at any time held or owing by such Agent, the Collateral Agent, such Letter of Credit Issuer or such Lender (including, without limitation, by branches and agencies of such Agent, the Collateral Agent, such Letter of Credit Issuer and such Lender wherever located) to or for the credit or the account of any Credit Party against and on account of the Obligations of any Credit Party to such Agent, the Collateral Agent, such Letter of Credit Issuer or such Lender under this Agreement or under any of the other Credit Documents, including, without limitation, all interests in Obligations of any Credit Party purchased by such Lender pursuant to Section 2.19(c), and all other claims of any nature or description arising out of or connected with this Agreement or any other Credit Document, irrespective of whether or not such Agent, the Collateral Agent, such Letter of Credit Issuer or such Lender shall have made any demand hereunder and although said Obligations shall be contingent or unmatured.
SECTION 10.03. NOTICES; AUTHORIZED REPRESENTATIVE. (a) Except as otherwise expressly provided herein, all notices and other communications provided for hereunder shall be in writing (including facsimile communication) and mailed, faxed or delivered by overnight courier, if to any Credit Party, at the address specified in Schedule 10.03 or in the other relevant Credit Documents, as the case may be; if to the Administrative Agent or any Letter of Credit Issuer, at such Person's applicable Notice Office; if to any Lender, at its address specified for such Lender on Schedule II; or, at such other address for any party as shall be designated by such party in a written notice to the other parties hereto. All such notices and communications shall be effective when received. References herein to the taking of any action hereunder of an administrative nature by any Borrower shall be deemed to include references to the US Borrower's taking such action on such Borrower's behalf and the Agents are expressly authorized to accept any such action taken by the US Borrower as having the same effect as if taken by such Borrower. Notwithstanding anything to the contrary contained in this Agreement, notices, requests, demands and other communications made to Lenders in their capacity as such may be made by electronic transmission.
(b) For greater certainty, and without limiting the powers of the
Administrative Agent or Collateral Agent, or any other Person acting as an agent
for such Agents pursuant to any Credit Document, hereunder or under any of the
other Credit Documents, each of Holdings and the Borrowers hereby acknowledges
that the Canadian Agent shall, for purposes of holding any security granted by
any of Holdings or any Subsidiary of Holdings on property pursuant to the laws
of the Province of Quebec to secure obligations of Holdings or such Subsidiary
of Holdings under any debenture, be the holder of an irrevocable power of
attorney (fonde de pouvoir) (within the meaning of the Civil Code of Quebec) for
all present and future Secured Parties and in particular for all present and
future holders of any such debenture. Each of the Agents and the Lenders hereby
irrevocably constitutes, to the extent necessary, the Canadian Agent as the
holder of an irrevocable power of attorney (fonde de pouvoir) (within the
meaning of Article 2692 of the Civil Code of Quebec) in order to hold security
granted by any of Holdings or any Subsidiary of Holdings in the Province of
Quebec to secure the obligations of any of Holdings or any Subsidiary of
Holdings under any debenture. Each assignee of an Agent or a Lender shall be
deemed to have confirmed and ratified the constitution of the Canadian Agent as
the holder of such irrevocable power of attorney (fonde de pouvoir) by execution
of an Assignment and Assumption Agreement. Notwithstanding the provisions of
Section 32 of the An Act respecting the special powers of legal persons
(Quebec), the Canadian Agent may acquire and be the holder of any debenture.
Each of Holdings and the Borrowers hereby acknowledges that such debenture
constitutes a title of indebtedness, as such term is used in Article 2692 of the
Civil Code of Quebec.
SECTION 10.04. BENEFIT OF AGREEMENT. (a) This Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective successors and assigns of the parties hereto; PROVIDED, HOWEVER, no Credit Party may assign or transfer any of its rights, obligations or interest hereunder or under any other Credit Document without the prior written consent of each of the Lenders; PROVIDED FURTHER that, although any Lender may grant participations in its rights hereunder, such Lender shall remain a "Lender" for all purposes hereunder (and may not transfer or assign all or any portion of its Commitments or Loans hereunder except as provided in Section 10.04(b)) and the participant shall not constitute a "Lender" hereunder; PROVIDED FURTHER that no Lender shall transfer or grant any participation
under which the participant shall have rights to approve directly or indirectly,
through any agreement or otherwise, any amendment to or waiver of this Agreement
or any other Credit Document except to the extent such amendment or waiver would
(i) extend the final scheduled maturity of any Loan, Note or Letter of Credit
(unless such Letter of Credit is not extended beyond the Revolving Loan Maturity
Date) in which such participant is participating, or reduce the rate or extend
the time of payment of interest or fees thereon (except in connection with a
waiver of applicability of any post-default increase in interest rates) or
reduce the principal amount thereof, or increase the amount of the participant's
participation over the amount thereof then in effect (it being understood that a
waiver of any Default or Event of Default or of a mandatory reduction in the
Total Commitment or of a mandatory repayment of Loans shall not constitute a
change in the terms of such participation, that an increase in any Commitment or
Loan shall be permitted without the consent of any participant if the
participant's participation is not increased as a result thereof and that any
amendment or modification to the financial definitions in this Agreement or to
Section 10.06(a) shall not constitute a reduction in any rate of interest or
fees for purposes of this clause (i)), (ii) consent to the assignment or
transfer by the US Borrower, the Canadian Borrower or the UK Borrower of any of
their respective rights and obligations under this Agreement or (iii) release
all or substantially all of the Collateral under all of the Security Documents
(except as expressly provided in the Security Documents) supporting any of the
Loans hereunder in which such participant is participating. In the case of any
such participation, the participant shall not have any rights under this
Agreement or any of the other Credit Documents (the participant's rights against
such Lender in respect of such participation to be those set forth in the
agreement executed by such Lender in favor of the participant relating thereto)
and, except as set forth in Section 2.21, all amounts payable by the US
Borrower, the Canadian Borrower or the UK Borrower hereunder shall be determined
as if such Lender had not sold such participation.
(b) Notwithstanding the foregoing, any Lender (or any Lender together with one or more other Lenders) may (i) assign all or a portion of its Commitments and related outstanding Obligations (or, if the Commitments with respect to the relevant Tranche have terminated, outstanding Obligations) hereunder to (A) its parent company and/or any affiliate of such Lender that is at least 50.1% owned by such Lender or its parent company or to one or more Lenders or (B) in the case of any Lender that is a fund that invests in bank loans or that manages (directly or through an Affiliate) any fund that invests in bank loans, any fund that invests in bank loans and is managed by the same investment advisor as such Lender, by an Affiliate of such investment advisor or by such Lender, as the case may be (an "APPROVED FUND"), or (ii) assign all, or if LESS than all, a portion equal to at least $1,000,000 in the case of assignments of Term Loans and $5,000,000 in the case of assignments of Revolving Loan Commitments and Revolving Loans, in each case in the aggregate for the assigning Lender or assigning Lenders, of such Commitments and related outstanding Obligations (or, if the Commitments with respect to the relevant Tranche have terminated, outstanding Obligations) hereunder to one or more Eligible Transferees (treating (A) any fund that invests in loans and (B) any other fund that invests in loans and is managed by the same investment advisor as such fund or by an Affiliate of such investment advisor, as a single Eligible Transferee), each of which assignees shall become a party to this Agreement as a Lender by execution of an Assignment and Assumption Agreement; PROVIDED that (1) at such time Schedule I shall be deemed modified to reflect the Commitments and/or outstanding Loans, as the case may be, of such new Lender and of the existing Lenders,
(2) upon surrender of the old Notes, if any (or the furnishing of a standard
indemnity letter from the respective assigning Lender in respect of any lost
Notes reasonably acceptable to the applicable Borrowers or Borrower), new Notes
will be issued, at the Borrowers' expense, to any such new Lenders and to the
assigning Lender, if requested by any such new Lender or such assigning Lender,
to the extent needed to reflect the revised Commitments and/or outstanding
Loans, as the case may be, (3) the consent of the Administrative Agent and, so
long as no Default or Event of Default is then in existence, the US Borrower
shall be required in connection with any assignment to an Eligible Transferee
(other than a Lender or an Affiliate of a Lender or an Approved Fund of a
Lender) pursuant to clause (ii) of this Section 10.04(b) (which consent, in the
case of the US Borrower, shall not be unreasonably withheld or delayed), and (4)
except in the case of an assignment to a Lender or an Affiliate of a Lender, the
consent of each Letter of Credit Issuer shall be required in connection with any
assignment of Revolving Loan Commitments pursuant to clause (ii) above in this
Section 10.04(b) (which consent, in each case, shall not be unreasonably
withheld or delayed); PROVIDED FURTHER that such transfer or assignment will not
be effective until recorded by the Administrative Agent on the Register pursuant
to Section 10.16; and PROVIDED FURTHER that no assignment of Revolving Loan
Commitments of any Tranche shall be permitted without the consent of the
Administrative Agent, except in the case of an assignment to a Lender that holds
Revolving Loan Commitments of such Tranche. Notwithstanding anything to the
contrary contained herein, (a) no assignment by any Multi-Currency Lender of
Revolving Loan Commitments to any assignee shall be permitted unless,
immediately after giving effect to such assignment and any concurrent assignment
of Multi-Currency Commitments, (i) such assigning Multi-Currency Lender's
Available Revolving Loan Commitment, and such assignee's Available Revolving
Loan Commitment, at such time equals or exceeds zero and (ii) such assigning
Multi-Currency Lender's Revolving Loan Commitment equals or exceeds such
assigning Multi-Currency Lender's Multi-Currency Commitments and (b) no
assignment by any Multi-Currency Lender at any time of Multi-Currency
Commitments of either Tranche to any assignee shall be permitted unless such
assigning Multi-Currency Lender assigns to such assignee at such time (i) an
equal percentage of each Tranche of such assigning Multi-Currency Lender's
Multi-Currency Commitments and (ii) an amount of such assigning Multi-Currency
Lender's Revolving Loan Commitments that is equal to or greater than the
aggregate amount of the Multi-Currency Commitments assigned by such assigning
Lender at such time to such assignee. To the extent of any assignment pursuant
to this Section 10.04(b), the assigning Lender shall be relieved of its
Obligations hereunder with respect to its assigned Commitments and/or
outstanding Loans or B/As. In the case of Loans to the US Borrower, at the time
of each assignment of such Loan pursuant to this Section 10.04(b) to a Person
that is not already a Lender hereunder and that is not a United States person
(as such term is defined in Section 7701(a)(30) of the Code) for United States
Federal income tax purposes, the respective assignee Lender shall provide to the
US Borrower and the Administrative Agent the appropriate Internal Revenue
Service Forms required by Section 2.17(e) and a Non-Bank Certificate described
in Section 2.18(e). To the extent that an assignment of all or any portion of a
Lender's Commitments and outstanding Obligations pursuant to Section 2.20 or
this Section 10.04(b) would, due to circumstances existing at the time of such
assignment, result in increased costs under Section 2.16, 2.17 or 2.18 from
those being charged by the respective assigning Lender prior to such assignment,
then the Borrowers shall not be obligated to pay such increased costs (although
the Borrowers shall be obligated to pay any other increased costs of the type
described above resulting from changes after the date of the respective
assignment).
(c) Nothing in this Agreement shall prevent or prohibit any Lender or the Swingline Lender from pledging its Loans and Notes hereunder to a Federal Reserve Bank in support of borrowings made by such Lender from such Federal Reserve Bank and any Lender that is a fund may pledge all or any portion of its Notes or Loans to its trustee in support of its obligations to its trustee. No pledge pursuant to this clause (c) shall release the transferor Lender from any of its obligations hereunder.
(d) In the event that S&P or Moody's shall, after the date that any
Revolving Lender becomes a Lender, downgrade the long-term certificate of
deposit ratings or long-term senior unsecured debt ratings of such Lender (or
the parent company thereof), and the resulting ratings shall be BBB+ or lower in
the case of S&P or Baa1 or lower in the case of Moody's, then the Letter of
Credit Issuer shall have the right, but not the obligation, at its own expense,
upon notice to such Lender and the Administrative Agent, to replace (or to
request the US Borrower, at the sole expense of the Letter of Credit Issuer, to
use its reasonable efforts to replace) such Lender with respect to such Lender's
Revolving Loan Commitment with an assignee (which assignee shall be, to the
extent required by Section 10.04(b), reasonably acceptable to the US Borrower),
and such Lender hereby agrees to transfer and assign without recourse all its
interests, rights and obligations in respect of its Revolving Loan Commitment to
such assignee; PROVIDED, HOWEVER, that (i) no such assignment shall conflict
with any law, rule and regulation or order of any Governmental Authority and
(ii) such assignee shall pay to such Lender in immediately available funds on
the date of such assignment the principal of and interest accrued to the date of
payment on the Loans and LC Disbursements of such Lender hereunder and all other
amounts accrued for such Lender's account or owed to it hereunder.
(e) Notwithstanding anything to the contrary contained in this Agreement, including in this Section 10.04, any assignment of Loans, B/As and Commitments in violation of the terms of this Section 10.04 shall be deemed to be the grant of a participation in such Loans, B/As and Commitments, as the case may be for all purposes of this Agreement.
SECTION 10.05. NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the part of any Agent, the Collateral Agent or any Lender in exercising any right, power or privilege hereunder or under any other Credit Document and no course of dealing between any Credit Party and any Agent, the Collateral Agent or any Lender shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder or under any other Credit Document preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder or thereunder. The rights and remedies herein expressly provided are cumulative and not exclusive of any rights or remedies that any Agent, the Collateral Agent or any Lender would otherwise have. No notice to or demand on any Credit Party in any case shall entitle any Credit Party to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of the Agents, the Collateral Agent or the Lenders to any other or further action in any circumstances without notice or demand.
SECTION 10.06. CALCULATIONS; COMPUTATIONS.. (a) The financial statements to be furnished to the Lenders pursuant hereto shall be made and prepared in accordance with GAAP and, except as set forth in the notes thereto or as otherwise disclosed in writing by the US Borrower to the Lenders, be consistently applied throughout the periods involved; PROVIDED that, except as otherwise specifically provided herein, all computations
determining the Adjusted Total Leverage Ratio, the Total Leverage Ratio and the
Adjusted Senior Leverage Ratio and compliance with Sections 2.12, 6.14 and
Article VII, including definitions used therein shall, in each case, utilize
accounting principles and policies in effect at the time of the preparation of,
and in conformity with those used to prepare, the December 31, 2000 financial
statements delivered to the Lenders pursuant to Section 5.10(b); PROVIDED
FURTHER that (i) to the extent expressly required pursuant to the provisions of
this Agreement, certain calculations shall be made on a Pro Forma Basis, (ii) to
the extent compliance with Section 7.09 or 7.10 or the determination of any of
the Adjusted Total Leverage Ratio, the Total Leverage Ratio and the Adjusted
Senior Leverage Ratio would include periods occurring prior to the Initial
Borrowing Date, such calculation shall be adjusted on a Pro Forma Basis to give
effect to the Transaction as if same had occurred on the first day of the
respective period, (iii) in the case of any determinations of Consolidated
Interest Expense or Consolidated EBITDA for any portion of any Test Period that
ends prior to the Initial Borrowing Date, all computations determining
compliance with Section 7.09 or 7.10 and all determinations of the Adjusted
Total Leverage Ratio, the Adjusted Senior Leverage Ratio and the Total Leverage
Ratio (including as used in the definition of Applicable Rate) shall be
calculated in accordance with the definition of Test Period contained herein and
(iv) for purposes of calculating the Applicable Rate, financial ratios,
financial terms, all covenants and related definitions, all such calculations
based on the operations of the US Borrower and its Subsidiaries on a
consolidated basis shall be made without giving effect to the operations of any
Unrestricted Subsidiaries.
(b) The US Dollar Equivalent of each Loan denominated in Sterling and each Loan and B/A Drawing denominated in Canadian Dollars shall be calculated on the date when the applicable Notice of Borrowing is delivered or the acceptance and purchase of any B/A is requested, on the second Business Day of each month and at such other times as may be designated by the Applicable Agent. Such US Dollar Equivalent shall remain in effect until the same is recalculated by the Applicable Agent as provided above and notice of such recalculation is received by the US Borrower, it being understood that until such notice is received, the US Dollar Equivalent shall be that US Dollar Equivalent as last reported to the US Borrower by the Applicable Agent. The Applicable Agent shall promptly notify the US Borrower and the Lenders of each such determination of the US Dollar Equivalent.
(c) For the purpose of determining compliance with Sections 7.04(d), (g) and (o), any interest on any Indebtedness theretofore incurred pursuant to such Sections that is capitalized and/or paid in the form of additional Indebtedness with the same terms shall not be treated as an incurrence of additional Indebtedness for purposes of determining compliance with the dollar limitations set forth therein.
(d) Notwithstanding anything to the contrary contained in clause (a) of this Section 10.06, for purposes of determining compliance with any incurrence tests set forth in Articles VI or VII (excluding Sections 7.09 and 7.10), any amounts so incurred or expended (to the extent incurred or expended in a currency other than US Dollars) shall be converted into US Dollars on the basis of the US Dollar Equivalent of the respective such amounts as in effect on the date of such incurrence or expenditure under any provision of any such Section that has an aggregate US Dollar limitation provided for therein (and to the extent the respective incurrence test limits the aggregate amount outstanding (or expended) at any time and is expressed in US Dollars, all outstanding amounts originally incurred or expended in a currency other than US
Dollars shall be converted into US Dollars on the basis of the US Dollar Equivalent of the respective such amounts as in effect on the date any new incurrence or expenditures made under any provision of any such Section that regulates the US Dollar amount outstanding (or expended) at any time).
SECTION 10.07. GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE. (a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL, EXCEPT AS EXPRESSLY PROVIDED OTHERWISE IN CERTAIN OF THE OTHER CREDIT DOCUMENTS, BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, IN EACH CASE WHICH ARE LOCATED IN THE COUNTY OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT, EACH OF HOLDINGS AND EACH BORROWER HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH OF HOLDINGS AND EACH BORROWER HEREBY IRREVOCABLY DESIGNATES, APPOINTS AND EMPOWERS CT CORPORATION SYSTEM, WITH OFFICES ON THE DATE HEREOF AT 111 EIGHTH AVENUE, NEW YORK, NEW YORK 10011 AS ITS DESIGNEE, APPOINTEE AND AGENT TO RECEIVE, ACCEPT AND ACKNOWLEDGE FOR AND ON ITS BEHALF, AND IN RESPECT OF THE PROPERTY OF HOLDINGS AND ITS SUBSIDIARIES, SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS THAT MAY BE SERVED IN ANY SUCH ACTION OR PROCEEDING. IF FOR ANY REASON SUCH DESIGNEE, APPOINTEE AND AGENT SHALL CEASE TO BE AVAILABLE TO ACT AS SUCH, EACH OF HOLDINGS AND EACH BORROWER AGREES TO DESIGNATE A NEW DESIGNEE, APPOINTEE AND AGENT IN NEW YORK COUNTY ON THE TERMS AND FOR THE PURPOSES OF THIS PROVISION SATISFACTORY TO THE ADMINISTRATIVE AGENT UNDER THIS AGREEMENT. EACH OF HOLDINGS AND EACH BORROWER HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH COURTS LACK JURISDICTION OVER HOLDINGS AND EACH BORROWER, AND AGREES NOT TO PLEAD OR CLAIM, IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN ANY OF THE AFORESAID COURTS, THAT ANY SUCH COURT LACKS JURISDICTION OVER SUCH CREDIT PARTY. EACH OF HOLDINGS AND EACH BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO HOLDINGS AND EACH BORROWER, AT ITS ADDRESS FOR NOTICES PURSUANT TO SECTION 10.03, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. EACH OF HOLDINGS AND EACH BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO SUCH SERVICE OF PROCESS AND FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY ACTION OR PROCEEDING COMMENCED HEREUNDER
OR UNDER ANY OTHER CREDIT DOCUMENT THAT SERVICE OF PROCESS WAS IN ANY WAY INVALID OR INEFFECTIVE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY AGENT, THE COLLATERAL AGENT, ANY LENDER OR THE HOLDER OF ANY NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY CREDIT PARTY IN ANY OTHER JURISDICTION.
(b) EACH OF HOLDINGS AND EACH BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (a) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
Section 10.08. COUNTERPARTS. This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. A complete set of counterparts executed by all the parties hereto shall be lodged with the Borrowers and the Administrative Agent.
Section 10.09. [Reserved]
Section 10.10. HEADINGS DESCRIPTIVE. The headings of the several sections and subsections of this Agreement are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Agreement.
Section 10.11. AMENDMENT OR WAIVER, ETC. (a) Neither this Agreement
nor any other Credit Document nor any terms hereof or thereof may be changed,
waived, discharged or terminated unless such change, waiver, discharge or
termination is in writing signed by the respective Credit Parties party thereto
and the Required Lenders; PROVIDED that no such change, waiver, discharge or
termination shall, without the consent of each Lender (other than a Defaulting
Lender) (with Obligations being directly affected thereby in the case of the
following clause (i), and in such case only to the extent of such Obligations),
(i) extend the final scheduled maturity of any Loan or Note or extend the
Revolving Loan Maturity Date or extend the stated maturity of any Letter of
Credit beyond the Revolving Loan Maturity Date, or reduce the rate or extend the
time of payment of interest or fees thereon, or reduce the principal amount
thereof or extend any Scheduled Repayment or reduce the amount of any such
Scheduled Repayment (it being understood that any amendment or modification to
the financial definitions in this Agreement or to Section 10.06(a) shall not
constitute a reduction in any rate of interest or fees for purposes of this
clause (i)), (ii) release all or substantially all the Collateral (except as
expressly permitted in this Agreement and/or the Security Documents) under all
the Security Documents, (iii) release any Guaranty (except as expressly provided
in the Guaranties), (iv) amend, modify or waive any provision of this Section
10.11 (except for technical amendments with respect to additional extensions of
credit pursuant to this Agreement that afford the protections to such additional
extensions of credit of the type provided to the Term Loans and the Revolving
Loan Commitments on the Effective Date), (v) reduce the percentage specified in
the
definition of Required Lenders (it being understood that, with the consent of
the Required Lenders, additional extensions of credit pursuant to this Agreement
may be included in the determination of the Required Lenders on substantially
the same basis as the extensions of Term Loans and Revolving Loan Commitments
are included on the Effective Date), (vi) consent to the assignment or transfer
by any Borrower of any of its respective rights and obligations under this
Agreement or any other Credit Document or (vii) amend, modify or waive the
requirement set forth in Section 2.19(b) that funds be applied ratably among the
parties entitled thereto; PROVIDED FURTHER that no such change, waiver,
discharge or termination shall (A) increase the Commitments of any Lender over
the amount thereof then in effect without the consent of such Lender (it being
understood that waivers or modifications of conditions precedent, covenants,
Defaults or Events of Default or of a mandatory reduction in the Total
Commitment shall not constitute an increase of the Commitment of any Lender, and
that an increase in the available portion of any Commitment of any Lender shall
not constitute an increase in the Commitment of such Lender), (B) without the
consent of each Letter of Credit Issuer, amend, modify or waive any provision of
Section 2.05 or alter its rights or obligations with respect to Letters of
Credit, (C) without the consent of the Swingline Lender, alter its rights or
obligations with respect to Swingline Loans or (D) without the consent of the
Administrative Agent, Collateral Agent, Canadian Agent or UK Agent, amend,
modify or waive any provision of Article X as same applies to the Administrative
Agent, Collateral Agent, Canadian Agent or UK Agent, as the case may be, or any
other provision as same relates to the rights or obligations of the
Administrative Agent, Collateral Agent, Canadian Agent or UK Agent, as the case
may be.
(b) If, in connection with any proposed change, waiver, discharge or
termination of or to any of the provisions of this Agreement as contemplated by
clauses (i) through (v), inclusive, of the first proviso to Section 10.11(a),
the consent of the Required Lenders is obtained but the consent of one or more
of such other Lenders whose consent is required is not obtained, then the
Borrowers shall have the right, so long as all non-consenting Lenders whose
individual consent is required are treated as described in either clause (i) or
(ii) below, to either (i) replace each such non-consenting Lender or Lenders
(or, at the option of the Borrowers if the respective Lender's consent is
required with respect to LESS than all Tranches of Loans (or related
Commitments), to replace only the Commitments and/or Loans of the respective
non-consenting Lender that gave rise to the need to obtain such Lender's
individual consent) with one or more assignees pursuant to Section 2.20 so long
as at the time of such replacement, each such assignee consents to the proposed
change, waiver, discharge or termination or (ii) terminate such non-consenting
Lender's Commitment (if such Lender's consent is required as a result of its
Commitment) and/or repay each Tranche of outstanding Loans of such Lender that
gave rise to the need to obtain such Lender's consent and/or cash collateralize
its LC Exposure, in accordance with Section 2.05(j); PROVIDED that, unless the
Commitments that are terminated and Loans that are repaid pursuant to preceding
clause (ii) are immediately replaced in full at such time through the addition
of new Lenders or the increase of the Commitments and/or outstanding Loans of
existing Lenders (who in each case must specifically consent thereto), then in
the case of any action pursuant to preceding clause (ii), the Required Lenders
(determined after giving effect to the proposed action) shall specifically
consent thereto; PROVIDED FURTHER that the Borrowers shall not have the right to
replace a Lender, terminate its Commitment or repay its Loans solely as a result
of the exercise of such Lender's rights (and the withholding of any required
consent by such Lender) pursuant to the second proviso to Section 10.11(a).
SECTION 10.12. SURVIVAL. All indemnities set forth herein including, without limitation, in Sections 2.11(g), 2.18, 9.04, 9.07 and 10.01 shall, subject to the provisions of Section 10.17 (to the extent applicable), survive the execution and delivery of this Agreement and the making and repayment of the Loans.
SECTION 10.13. DOMICILE OF LOANS AND COMMITMENTS. Each Lender may transfer and carry its Loans and/or Commitments at, to or for the account of any branch office, subsidiary or affiliate of such Lender; PROVIDED that no Borrower shall be responsible for increased costs arising under Section 2.16 or 2.18 resulting from any such transfer to the extent such increased costs would not otherwise be applicable to such Lender in the absence of such transfer (although the Borrowers shall be obligated to pay any other increased costs of the type described above resulting from changes after the date of the respective transfer).
SECTION 10.14. CONFIDENTIALITY. (a) Each of the Lenders agrees that it will use its reasonable efforts not to disclose without the prior consent of Holdings (other than to its directors, trustees, employees, officers, auditors, counsel or other professional advisors, to affiliates or to another Lender if the disclosing Lender or such Lender's holding or parent company in its sole discretion determines that any such party should have access to such information; PROVIDED that such persons shall be subject to the provisions of this Section 10.14 to the same extent as such Lender) any information with respect to Holdings or any of its Subsidiaries that is furnished by Holdings or any of its Subsidiaries pursuant to this Agreement; PROVIDED that any Lender may disclose any such information (i) that is publicly known at the time of the disclosure or that has become generally available to the public, (ii) as may be required or appropriate (A) in any report, statement or testimony submitted to any Governmental Authority (including the Federal Reserve Board and the Federal Deposit Insurance Corporation and similar organizations (whether in the United States or elsewhere) or their successors) having or claiming to have jurisdiction over such Lender or (B) in connection with any request or requirement of any such regulatory body (including any securities exchange or self-regulatory organization), (iii) as may be required or appropriate in response to any summons or subpoena or in connection with any litigation or other legal process, (iv) to comply with any law, order, regulation or ruling applicable to such Lender, and (v) to any prospective transferee in connection with any contemplated transfer of any of the Notes or any interest therein by such Lender; PROVIDED that such prospective transferee agrees to be bound by this Section 10.14 to the same extent as such Lender.
(b) Each of Holdings and the Borrowers hereby acknowledges and agrees that each Lender may share with any of its Affiliates any information related to Holdings or any of its Subsidiaries (including, without limitation, any nonpublic customer information regarding the creditworthiness of Holdings and its Subsidiaries); PROVIDED that such Persons shall be subject to the provisions of this Section 10.14 to the same extent as such Lender.
SECTION 10.15. WAIVER OF JURY TRIAL. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
SECTION 10.16. REGISTER. Each Borrower hereby designates the Administrative Agent to serve as such Borrower's agent, solely for purposes of this Section 10.16, to maintain a register (the "Register") on which it will record the Commitments from time to time of each of the Lenders, the Loans made by each of the Lenders and each repayment in respect of the Principal Amount of the Loans of each Lender. Failure to make any such recordation, or any error in such recordation shall not affect any Borrower's obligations in respect of such Loans. With respect to any Lender, the transfer of any Commitment of such Lender and the rights to the principal of, and interest on, any Loan shall not be effective until such transfer is recorded on the Register maintained by the Administrative Agent with respect to ownership of such Commitment and Loans and prior to such recordation all amounts owing to the transferor with respect to such Commitment and Loans shall remain owing to the transferor. The registration of assignment or transfer of all or part of any Commitment and Loans shall be recorded by the Administrative Agent on the Register only upon the acceptance by the Administrative Agent of a properly executed and delivered Assignment and Assumption Agreement pursuant to Section 10.04(b), together with a processing and recordation fee of $3,500. Coincident with the delivery of such an Assignment and Assumption Agreement to the Administrative Agent for acceptance and registration of assignment or transfer of all or part of a Commitment and/or Loan, or as soon thereafter as practicable, the assigning or transferor Lender shall surrender the Note, if any, evidencing such Commitment and/or Loan, and thereupon one or more new Notes in the same aggregate principal amount shall be issued to the assigning or transferor Lender and/or the new Lender. Each Borrower agrees to indemnify the Administrative Agent from and against any and all losses, claims, damages and liabilities of whatsoever nature that may be imposed on, asserted against or incurred by the Administrative Agent in performing its duties under this Section 10.16.
SECTION 10.17. LIMITATION ON ADDITIONAL AMOUNTS, ETC. Notwithstanding anything to the contrary contained in Section 2.16 or 2.18, unless a Lender gives notice to the US Borrower, the Canadian Borrower or the UK Borrower, as the case may be, that it is obligated to pay an amount under such Section within six months after the later of (a) the date the Lender incurs the respective increased costs, Taxes, loss, expense or liability, reduction in amounts received or receivable or reduction in return on capital or (b) the date such Lender has actual knowledge of its incurrence of the respective increased costs, Taxes, loss, expense or liability, reductions in amounts received or receivable or reduction in return on capital, then such Lender shall only be entitled to be compensated for such amount by the US Borrower, the Canadian Borrower or the UK Borrower, as the case may be, pursuant to said Section 2.16 or 2.18, as the case may be, to the extent of the costs, Taxes, loss, expense or liability, reduction in amounts received or receivable or reduction in return on capital that are incurred or suffered on or after the date that occurs six months prior to such Lender giving notice to the US Borrower, the Canadian Borrower or the UK Borrower, as the case may be, that it is obligated to pay the respective amounts pursuant to said Section 2.16 or 2.18, as the case may be. This Section 10.17 shall have no applicability to any Section of this Agreement other than said Sections 2.16 and 2.18.
SECTION 10.18. JUDGMENT CURRENCY. (a) Each Borrower's obligation hereunder and under the other Credit Documents to make payments in US Dollars or, (i) in the case of a Canadian Dollar Revolving Loan or B/A or B/A Equivalent Loan, in Canadian Dollars or (ii) in the case of a Sterling Revolving Loan, in Sterling (in any such case, the "OBLIGATION
CURRENCY") shall not be discharged or satisfied by any tender or recovery pursuant to any judgment expressed in or converted into any currency other than the Obligation Currency, except to the extent that such tender or recovery results in the effective receipt by the Administrative Agent, the Collateral Agent, the respective Letter of Credit Issuer or the respective Lender of the full amount of the Obligation Currency expressed to be payable to the Administrative Agent, the Collateral Agent, such Letter of Credit Issuer or such Lender under this Agreement or the other Credit Documents. If for the purpose of obtaining or enforcing judgment against any Borrower in any court or in any jurisdiction, it becomes necessary to convert into or from any currency other than the Obligation Currency (such other currency being hereinafter referred to as the "JUDGMENT CURRENCY") an amount due in the Obligation Currency, the conversion shall be made, at the Canadian Dollar Equivalent or Sterling Equivalent thereof or, in the case of conversions into other currencies, at the rate of exchange quoted by the Administrative Agent, determined, in each case, as of the date immediately preceding the day on which the judgment is given (such Business Day being hereinafter referred to as the "JUDGMENT CURRENCY CONVERSION DATE").
(b) If there is a change in the rate of exchange prevailing between the Judgment Currency Conversion Date and the date of actual payment of the amount due, each of the US Borrower, Canadian Borrower and UK Borrower covenants and agrees, to pay, or cause to be paid, such additional amounts, if any (but in any event not a lesser amount) as may be necessary to ensure that the amount paid in the Judgment Currency, when converted at the rate of exchange prevailing on the date of payment, will produce the amount of the Obligation Currency that could have been purchased with the amount of Judgment Currency stipulated in the judgment or judicial award at the rate of exchange prevailing on the Judgment Currency Conversion Date.
(c) For purposes of determining any rate of exchange for this Section 10.18, such amounts shall include any premium and costs payable in connection with the purchase of the Obligation Currency.
SECTION 10.19. IMMUNITY. To the extent that the Canadian Borrower or UK Borrower has or hereafter may acquire any immunity from jurisdiction of any court or from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, or otherwise) with respect to itself or its property, each of the Canadian Borrower and UK Borrower hereby irrevocably waives such immunity in respect of its obligations hereunder and under the other Credit Documents to which it is a party to the extent permitted by applicable law and, without limiting the generality of the foregoing, agrees that the waivers set forth in this Section 10.19 shall be to the fullest extent permitted under the Foreign Sovereign Immunities Act of 1976 of the United States and are intended to be irrevocable for purposes of such Act.
SECTION 10.20. EXISTING CREDIT AGREEMENT. The rights and obligations
of the parties to the Existing Credit Agreement (including with respect to any
expenses, fees or other amounts accrued thereunder) with respect to the period
prior to the Amendment and Restatement Date shall be governed by the provisions
of this Agreement and the documents related hereto, except as provided in
Section 5(d) of the Master Assignment Agreement.
SECTION 10.21. MASTER ASSIGNMENT AGREEMENT. Each of the parties hereto hereby consents to the sales, assignments, purchases and assumptions provided for in paragraphs (a) and (b) of Section 5 of the Master Assignment Agreement, notwithstanding any
failure to comply with the requirement of Section 10.04(b) of the Existing Credit Agreement for the execution of an Assignment and Assumption Agreement, and agrees that each Decreasing Term Lender that is not a Departing Lender and each Increasing Term Lender shall be a party to this Agreement and, to the extent of the interests purchased by such Increasing Term Lender pursuant to such paragraphs or held by such Increasing Term Lender prior to the effectiveness of the Master Assignment Agreement, shall have the rights and obligations of a Term Lender under this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized officers to execute and deliver this Agreement as of the date first above written.
SALT HOLDINGS CORPORATION,
by
Title:
COMPASS MINERALS GROUP, INC., as
US Borrower,
by
Title:
SIFTO CANADA INC., as Canadian Borrower,
by
Title:
SALT UNION LIMITED, as UK Borrower,
by
Title:
JPMORGAN CHASE BANK,
as Administrative Agent,
by
Title:
J.P. MORGAN BANK CANADA, as
Canadian Agent,
Title:
CREDIT SUISSE FIRST BOSTON,
individually and as Co-Documentation
Agent,
by
Title:
CREDIT LYONNAIS NEW YORK
BRANCH, individually and as Co-
Documentation Agent,
by
Title:
SIGNATURE PAGE
TO THE AMENDED
AND RESTATED
CREDIT AGREEMENT
DATE AS OF April 10, 2002
Name of Institution
JP Morgan Chase Bank
by
Name:
Name of Institution
Deutsche Bank, AG Canada Branch
by
Name:
Name of Institution
Credit Suisse First Boston
by
Name:
Title:
SIGNATURE PAGE
TO THE AMENDED
AND RESTATED
CREDIT AGREEMENT
DATE AS OF April 10, 2002
Name of Institution
CREDIT LYONNAIS NEW YORK BRANCH
by
Name:
Name of Institution
Fortis Capital Corp.
by
Name:
Name of Institution
NATIONWIDE MUTUAL INSURANCE
COMPANY
by
Name:
Title:
SIGNATURE PAGE
TO THE AMENDED
AND RESTATED
CREDIT AGREEMENT
DATE AS OF April 10, 2002
Name of Institution
NATIONWIDE LIFE INSURANCE COMPANY
by
Name:
Name of Institution
General Electric Capital Corporation
by
Name:
Name of Institution
Allied Irish Bank
by
Name:
Title:
SIGNATURE PAGE
TO THE AMENDED
AND RESTATED
CREDIT AGREEMENT
DATE AS OF April 10, 2002
Name of Institution
AIB Debt Management Ltd.
by
Name:
Name of Institution
Protective Life Insurance Company
by
Name:
Name of Institution
Natexis Banques Populaires
by
Name:
Title:
SIGNATURE PAGE
TO THE AMENDED
AND RESTATED
CREDIT AGREEMENT
DATE AS OF April 10, 2002
Name of Institution
The Sumitomo Trust & Banking Co.,
Ltd. New York Branch
by
Name:
Name of Institution
CIT Lending Services Corporation
by
Name:
Name of Institution
Pinehurst Trading, Inc.
by
Name:
Title:
SIGNATURE PAGE
TO THE AMENDED
AND RESTATED
CREDIT AGREEMENT
DATE AS OF April 10, 2002
Name of Institution
Allstate Life Insurance Company
by
Name:
Name of Institution
AIMCO CLO Series 2001-A
by
Name:
Name of Institution
Centurion CDO II, Ltd.
by
Name:
Title:
SIGNATURE PAGE
TO THE AMENDED
AND RESTATED
CREDIT AGREEMENT
DATE AS OF April 10, 2002
Name of Institution
SEQUILS Centurian V Ltd.
by
Name:
Name of Institution
KZH Sterling LLC
by
Name:
Name of Institution
KZH Cypress Tree-1 LLC
by
Name:
Title:
SIGNATURE PAGE
TO THE AMENDED
AND RESTATED
CREDIT AGREEMENT
DATE AS OF April 10, 2002
Name of Institution
ARES III CLO Ltd.
by
Name:
Name of Institution
ARES IV CLO Ltd.
by
Name:
Name of Institution
ARES V CLO Ltd.
by
Name:
Title:
SIGNATURE PAGE
TO THE AMENDED
AND RESTATED
CREDIT AGREEMENT
DATE AS OF April 10, 2002
Name of Institution
Harbour Town Funding Trust
by
Name:
Name of Institution
Harbour Town Funding LLC
by
Name:
Name of Institution
Sankaty Advisors, LLC
by
Name:
Title:
SIGNATURE PAGE
TO THE AMENDED
AND RESTATED
CREDIT AGREEMENT
DATE AS OF April 10, 2002
Name of Institution
Sankaty High Yield Partners III, L.P.
by
Name:
Name of Institution
Black Diamond International Funding, Ltd.
by
Name:
Name of Institution
Black Rock Senior Loan Trust
by
Name:
Title:
SIGNATURE PAGE
TO THE AMENDED
AND RESTATED
CREDIT AGREEMENT
DATE AS OF April 10, 2002
Name of Institution
Caisse de Depot et Placement du Quebec
by
Name:
Name of Institution
Carlyle High Yield Partners III, Ltd.
by
Name:
Name of Institution
Jupiter Funding Trust
by
Name:
Title:
SIGNATURE PAGE
TO THE AMENDED
AND RESTATED
CREDIT AGREEMENT
DATE AS OF April 10, 2002
Name of Institution
Rosemont CLO, Ltd.
Name:
Name of Institution
Denali Capital LLC
by
Name:
Name of Institution
Constantinus Eaton Vance CDO V Ltd.
by
Name:
Title:
SIGNATURE PAGE
TO THE AMENDED
AND RESTATED
CREDIT AGREEMENT
DATE AS OF April 10, 2002
Name of Institution
Eaton Vance CDO III Ltd.
by
Name:
Name of Institution
Eaton Vance CDO IV, Ltd.
by
Name:
Name of Institution
Eaton Vance Institutional Senior
Loan Fund
by
Name:
Title:
SIGNATURE PAGE
TO THE AMENDED
AND RESTATED
CREDIT AGREEMENT
DATE AS OF April 10, 2002
Name of Institution
Eaton Vance Senior Income Trust
by
Name:
Name of Institution
Grayson & Co.
by
Name:
Name of Institution
Oxford Strategic Income Fund
by
Name:
Title:
SIGNATURE PAGE
TO THE AMENDED
AND RESTATED
CREDIT AGREEMENT
DATE AS OF April 10, 2002
Name of Institution
Senior Debt Portfolio
by
Name:
Name of Institution
Fidelity Advisor Series II
by
Name:
Name of Institution
BALLYROCK CDO I Limited
by
Name:
Title:
SIGNATURE PAGE
TO THE AMENDED
AND RESTATED
CREDIT AGREEMENT
DATE AS OF April 10, 2002
KZH WATERSIDE LLC
by
Name:
Title:
EMERALD ORCHARD LIMITED
by
Name:
Title:
TRYON CLO Ltd. 2000-1
by
Name:
Title:
SIGNATURE PAGE
TO THE AMENDED
AND RESTATED
CREDIT AGREEMENT
DATE AS OF April 10, 2002
APEX (IDM) CDO, I, Ltd.
by
Name:
RIVIERA FUNDING LLC
by
Name:
AIM FLOATING RATE FUND
by
Name:
Title:
SIGNATURE PAGE
TO THE AMENDED
AND RESTATED
CREDIT AGREEMENT
DATE AS OF April 10, 2002
AMARA-1 FINANCE, LTD.
by
Name:
Title:
AVALON CAPITAL LTD.
by
Name:
Title:
AVALON CAPITAL LTD. 2
by
Name:
Title:
SIGNATURE PAGE
TO THE AMENDED
AND RESTATED
CREDIT AGREEMENT
DATE AS OF April 10, 2002
CERES II FINANCE LTD.
by
Name:
Title:
CHARTER VIEW PORTFOLIO
by
Name:
Title:
DIVERSIFIED CREDIT PORTFOLIO LTD.
by
Name:
Title:
SIGNATURE PAGE
TO THE AMENDED
AND RESTATED
CREDIT AGREEMENT
DATE AS OF April 10, 2002
OASIS COLLATERALIZED HIGH INCOME PORTFOLIOS-1,
LTD.
by
Name:
Title:
SEQUILS-LIBERTY, LTD.
by
Name:
Title:
NEMEAN CLO, LTD.
by
Name:
Title:
SIGNATURE PAGE
TO THE AMENDED
AND RESTATED
CREDIT AGREEMENT
DATE AS OF April 10, 2002
ONYX CLO, LTD.
by
Name:
Title:
KATONAH I, LTD.
by
Name:
KATONAH II, LTD.
by
Name:
Title:
SIGNATURE PAGE
TO THE AMENDED
AND RESTATED
CREDIT AGREEMENT
DATE AS OF April 10, 2002
KATONAH III, LTD.
by
Name:
METROPOLITAN LIFE INSURANCE COMPANY
by
Name:
ELF FUNDING TRUST III,
by
Name:
Title:
SIGNATURE PAGE
TO THE AMENDED
AND RESTATED
CREDIT AGREEMENT
DATE AS OF April 10, 2002
OAK HILL SECURITIES FUND, L.P.
by
Name:
Title:
OAK HILL SECURITIES FUND II, L.P.
by
Name:
Title:
OAK HILL CREDIT PARTNERS I, LIMITED
by
Name:
Title:
SIGNATURE PAGE
TO THE AMENDED
AND RESTATED
CREDIT AGREEMENT
DATE AS OF April 10, 2002
OAK HILL CREDIT PARTNERS II, LIMITED
by
Name:
Title:
CAPTIVA III FINANCE LTD.
by
Name:
CAPTIVA IV FINANCE LTD.
by
Name:
Title:
SIGNATURE PAGE
TO THE AMENDED
AND RESTATED
CREDIT AGREEMENT
DATE AS OF April 10, 2002
DELANO COMPANY
by
Name:
Title:
JISSEKIKUN FUNDING, LTD.
by
Name:
Title:
SEQUILS-MAGNUM, LTD.
by
Name:
Title:
SIGNATURE PAGE
TO THE AMENDED
AND RESTATED
CREDIT AGREEMENT
DATE AS OF April 10, 2002
PPM SHADOW CREEK FUNDING TRUST
by
Name:
Title:
PPM SPYGLASS FUNDING TRUST
by
Name:
Title:
PPM SHADOW CREEK FUNDING LLC
by
Name:
Title:
SIGNATURE PAGE
TO THE AMENDED
AND RESTATED
CREDIT AGREEMENT
DATE AS OF April 10, 2002
DRYDEN LEVERAGE LOAN CDO 2002-II
by
Name:
Title:
PUTNAM DIVERSIFIED INCOME TRUST
by
Name:
Title:
TCW SELECT LOAN FUND, LIMITED
by
Name:
Title:
SIGNATURE PAGE
TO THE AMENDED
AND RESTATED
CREDIT AGREEMENT
DATE AS OF April 10, 2002
TRAVELERS CORPORATE LOAN FUND INC.
by
Name:
Title:
COLUMBUS LOAN FUNDING LTD.
by
Name:
Title:
EXHIBIT 10.5
EXECUTION COPY
AMENDMENT No. 1 dated as of December 19, 2002 (this "AMENDMENT"), to the CREDIT AGREEMENT, dated as of November 28, 2001, as amended and restated as of April 10, 2002 (the "CREDIT AGREEMENT"), among SALT HOLDINGS CORPORATION, COMPASS MINERALS GROUP, INC., SIFTO CANADA INC., SALT UNION LIMITED, the LENDERS from time to time party thereto, JPMORGAN CHASE BANK, as Administrative Agent, JPMORGAN BANK CANADA, as Canadian Agent, and CHASE MANHATTAN INTERNATIONAL LIMITED, as UK Agent.
A. Pursuant to the Credit Agreement, the Lenders have extended credit to the Borrowers, and have agreed to extend credit to the Borrowers, in each case pursuant to the terms and subject to the conditions set forth therein.
B. Holdings has requested that the Lenders agree to amend certain provisions of the Credit Agreement pursuant to the terms and subject to the conditions set forth herein to permit Holdings Discount Note Offerings and the refinancing of the New Holdings Discount Notes with Permitted Holdings Refinancing Indebtedness.
C. The undersigned Lenders are willing to amend the Credit Agreement pursuant to the terms and subject to the conditions set forth herein.
D. Capitalized terms used but not defined herein shall have the respective meanings assigned to them in the Credit Agreement, as amended hereby.
Accordingly, in consideration of the mutual agreements herein contained and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, and subject to the conditions set forth herein, the parties hereto hereby agree as follows:
SECTION 1. AMENDMENTS TO SECTION 1.01. Section 1.01 of the Credit Agreement is hereby amended as follows:
(a) by amending the definition of the term "CONSOLIDATED INTEREST EXPENSE" to insert immediately after the words "Holdings Shareholder Subordinated Notes" in clause (c) thereof:
, PLUS (d) the aggregate amount of all cash Dividends paid by the US Borrower to Holdings for such period pursuant to Section 7.06(k) to the extent such Dividends were used to make cash interest payments on (or pay cash liquidated damages in respect of) any outstanding New Holdings Discount Notes or Permitted Holdings Refinancing Indebtedness;
(b) by amending the definition of the term "DOCUMENTS" to insert immediately after clause (g) thereof the phrase ", (h) the New Holdings Discount Notes Documents, (i) the Permitted Holdings Refinancing Documents" and relettering clause (h) thereof as clause (j); and
(c) by inserting the following definitions in the appropriate alphabetical order:
"EXCHANGE NEW HOLDINGS DISCOUNT NOTES" shall mean senior unsecured notes of Holdings that are substantially identical securities to Initial New Holdings Discount Notes issued pursuant to a Holdings Discount Note Offering, which Exchange New Holdings Discount Notes shall be issued pursuant to an exchange offer that is registered under the Securities Act for such Initial New Holdings Discount Notes under the New Holdings Discount Notes Indenture. In no event will the issuance of any Exchange New Holdings Discount Notes (i) increase the accreted value of the New Holdings Discount Notes outstanding as of such date, (ii) increase the aggregate principal amount at maturity of the New Holdings Discount Notes then outstanding or (iii) otherwise result in an increase in the interest rate applicable to the New Holdings Discount Notes.
"HOLDINGS DISCOUNT NOTE OFFERING" shall mean the consummation from time to time of the following transactions: (a) the sale by holders of shares of Initial Preferred Stock of all or a portion of the shares of Initial Preferred Stock outstanding as of December 19, 2002, to the purchasers specified in the purchase agreement relating to an offer and sale of New Holdings Discount Notes; (b) the exchange by such purchasers of the shares of Initial Preferred Stock sold pursuant to clause (a) above for Discount Notes pursuant to the terms of the Initial Preferred Stock; (c) the exchange by such purchasers of the Discount Notes received upon the exchange described in clause (b) above for Initial New Holdings Discount Notes having an accreted value as of the date of the issue thereof equal to the accreted value as of such date of such Discount Notes; (d) to the extent provided for in such purchase agreement, the offer and sale by such purchasers of such Initial New Holdings Discount Notes in an offering exempt from registration under the Securities Act; (e) subsequent to a sale of such Initial New Holdings Discount Notes as described in clause (d) above the exchange of such Initial New Holdings Discount Notes for Exchange New Holdings Discount Notes having an accreted value as of the date of the consummation of such exchange equal to the accreted value as of such date of such Initial New Holdings Discount Notes pursuant to an exchange offer pursuant to a registration statement under the Securities Act; and (f) the payment by Holdings of transaction costs incurred by it in connection with the foregoing transactions.
"INITIAL NEW HOLDINGS DISCOUNT NOTES" shall mean senior unsecured notes of Holdings issued pursuant to a Holdings Discount Note Offering under the New Holdings Discount Notes Indenture and not guaranteed or supported in any way by any Subsidiary of Holdings.
"NEW HOLDINGS DISCOUNT NOTES" shall mean all outstanding Initial New Holdings Discount Notes not surrendered pursuant to an exchange offer and all outstanding Exchange New Holdings Discount Notes.
"NEW HOLDINGS DISCOUNT NOTES DOCUMENTS" shall mean the New Holdings Discount Notes, the New Holdings Discount Notes Indenture and all other documents executed and delivered with respect to the New Holdings Discount Notes or New Holdings Discount Notes Indenture, as in effect on the date Initial New Holdings Discount Notes are first sold pursuant to a Holdings Discount Note Offering and as the same may thereafter be amended, modified or supplemented from time to time in accordance with the requirements hereof and thereof.
"NEW HOLDINGS DISCOUNT NOTES INDENTURE" shall mean the Indenture, to be dated as of the date Initial New Holdings Discount Notes are first sold pursuant to a Holdings Discount Note Offering, between Holdings and The Bank of New York, as in effect on such date and as thereafter amended, modified or supplemented from time to time in accordance with the requirements hereof and thereof.
"PERMITTED HOLDINGS REFINANCING DOCUMENTS" shall mean all notes evidencing Permitted Holdings Refinancing Indebtedness, any indenture or other agreement governing the terms of the Permitted Holdings Refinancing Indebtedness and all other documents executed and delivered with respect to the foregoing documents, as in effect on the date the Permitted Holdings Refinancing Indebtedness is first incurred and as the same may thereafter be amended, modified or supplemented from time to time in accordance with the requirements hereof and thereof.
"PERMITTED HOLDINGS REFINANCING INDEBTEDNESS" shall mean Indebtedness of Holdings issued or given in exchange for, or all the proceeds of which are used to refinance, all of the then-outstanding New Holdings Discount Notes, so long as (a) such Indebtedness has a weighted average life to maturity greater than or equal to the weighted average life to maturity of the New Holdings Discount Notes, (b) such refinancing does not (i) increase the amount of such Indebtedness outstanding immediately prior to such refinancing or (ii) add guarantors, obligors or security different from those which applied to the New Holdings Discount Notes and (c) all other terms of such refinancing (including with respect to the amortization schedules, redemption provisions, maturities, covenants, defaults, remedies and cash interest payment provisions), are not, taken as a whole, materially less favorable to Holdings and its Subsidiaries than those previously existing with respect to the New Holdings Discount Notes.
SECTION 2. AMENDMENT TO SECTION 6.19. Section 6.19 of the Credit Agreement is hereby amended and restated as follows:
SECTION 6.19. SELLER NOTE, DISCOUNT NOTES AND NEW HOLDINGS DISCOUNT NOTES. Holdings will pay (a) all interest on the Seller Note and any Discount Notes, (b) during the period commencing on the date of the initial issuance by Holdings of Initial New Holdings Discount Notes and ending on December 15, 2007, all interest on (and any liquidated damages in respect of) the New Holdings Discount Notes and (c) during the period specified in the Permitted Holdings Refinancing Documents, which period shall in no event end prior to December 15, 2007, all interest on (and any liquidated damages in respect of) the Permitted Holdings Refinancing Indebtedness solely through accretion of additional principal or the issuance of additional Seller Notes, Discount Notes, New Holdings Discount Notes or notes evidencing Permitted Holdings Refinancing Indebtedness, as applicable, rather than in cash.
SECTION 3. AMENDMENT TO SECTION 7.01. Section 7.01 of the Credit Agreement is hereby amended by inserting the phrase ", under the definition of Holdings Discount Note Offering or as necessary to permit the incurrence of the Permitted Holdings Refinancing Indebtedness" at the end of clause (c) thereof before the period
SECTION 4. AMENDMENT TO SECTION 7.04. Section 7.04 of the Credit Agreement is hereby amended by deleting the word "and" at the end of clause (n) thereof replacing the period at the end of clause (o) thereof with a semicolon and inserting at the end of such Section:
(q) on and after the date on which any Discount Notes are exchanged for Initial New Holdings Discount Notes in accordance with the definition of Holdings Discount Note Offering, unsecured Indebtedness of Holdings under the New Holding Discount Notes issued in accordance with the terms of the definition of Holdings Discount Note Offering PLUS the amount of any accretions of principal on the New Holdings Discount Notes after the date of the issue thereof in accordance with the terms of such New Holdings Discount Notes LESS the amount of any repayments of principal thereof after the Initial Borrowing Date; and
(r) Permitted Holdings Refinancing Indebtedness, so long as no Default or Event of Default is in existence at the time of any incurrence thereof and immediately after giving effect thereto.
SECTION 5. AMENDMENT TO SECTION 7.06. Section 7.06 of the Credit Agreement is hereby amended by deleting the word "and" at the end of clause (i) thereof, replacing the period at the end of clause (j) thereof with ";"and inserting at the end of such Section:
(k) after December 15, 2007, the US Borrower shall be permitted (not more than two Business Days prior to the date on which Holdings shall be obligated to make each such cash interest payment or payment of cash liquidated damages, as applicable) to pay cash Dividends to Holdings in an amount not in excess of each regularly scheduled cash interest payment on (or payment of cash liquidated damages in respect of) the New Holdings Discount Notes pursuant to the terms thereof, as applicable, or each regularly scheduled cash interest payment on (or payment of cash liquidated damages in respect of) the Permitted Holdings Refinancing Indebtedness, as applicable; PROVIDED that (i) on a Pro Forma Basis and after giving effect to such payment of cash Dividends to Holdings, the Adjusted Senior Leverage Ratio is less than or equal to 1.75:1.0 and (ii) at the time of such payment of cash Dividends and also after giving effect thereto there exists no Default or Event of Default; and
(1) the US Borrower shall be permitted to pay cash Dividends to Holdings in an amount not to exceed $5,000,000 in the aggregate for all Holdings Discount Note Offerings and the incurrence of the Permitted Holdings Refinancing Indebtedness solely for the purpose of permitting Holdings to pay, as incurred, transaction costs incurred by Holdings in connection with Holdings Discount Note Offerings and the incurrence of the Permitted Holdings Refinancing Indebtedness.
SECTION 6. AMENDMENT TO SECTION 7.07. Section 7.07 of the Credit Agreement is hereby amended by deleting the word "and" at the end of clause (i) thereof, replacing the period at the end of clause (j) thereof with "; and" and inserting at the end of such Section the phrase "(k) the payment by Holdings to unaffiliated third parties of customary transaction costs in connection with Holdings Discount Note Offerings and the incurrence of Permitted Holdings Refinancing Indebtedness, the performance by Holdings of its obligations under any customary purchase agreement entered into in connection with a Holdings Discount Note Offering and the performance by Holdings of its obligations under any customary registration rights agreement entered into in connection with a Holdings Discount Note Offering involving an offering of Initial New Holdings Discount Notes pursuant to Rule 144A under the Securities Act" before the period.
SECTION 7. AMENDMENT TO SECTION 7.12. Section 7.12 of the Credit Agreement is hereby amended by:
(a) amending and restating clause (b) thereof as follows:
(b) make or permit any Unrestricted Subsidiary to make (or give any notice in respect of) any voluntary or optional payment or prepayment on or redemption, repurchase or acquisition for value of (including, without limitation, by way of entering into any Synthetic Purchase Agreement with respect thereto or depositing with the trustee with respect thereto or any other Person money or securities before due for the purpose of paying when due), or any prepayment or redemption as a result of any asset sale, excess cash flow recapture, exit event (in the case of the Seller Note, the Initial Preferred Stock and any Discount Notes),
change of control or similar event of, the Seller Note, the
Initial Preferred Stock, any Discount Note, any Senior
Subordinated Note (except, in the case of the Senior Subordinated
Notes, through the issuance of Exchange Senior Subordinated Notes
as contemplated in the definition of Senior Subordinated Notes
and consistent with the requirements of the definition of
Exchange Senior Subordinated Notes), any Additional Senior
Subordinated Notes, any Permitted Subordinated Refinancing
Indebtedness, any Permitted Subordinated Indebtedness, any
Permitted Holdings Refinancing Indebtedness or any New Holdings
Discount Notes (except, in the case of the Initial New Holdings
Discount Notes, through the issuance of Exchange New Holdings
Discount Notes as contemplated in the definition of Holdings
Discount Note Offering and consistent with the requirements of
the definition of Exchange New Holdings Discount Notes); PROVIDED
that, so long as no Default or Event of Default then exists or
would result therefrom, (i) any Senior Subordinated Notes may be
refinanced with Permitted Subordinated Refinancing Indebtedness,
(ii) the US Borrower may repurchase the Senior Subordinated
Notes, the Additional Senior Subordinated Notes and the Permitted
Subordinated Refinancing Indebtedness on the open market, in an
aggregate Principal Amount for all purchases made pursuant to
this clause (ii) not to exceed $20,000,000, so long as the
Adjusted Total Leverage Ratio is less than or equal to 2.75:1.0
on the last day of the Test Period most recently ended prior to
the consummation of the respective repurchase (as set forth in
the officer's certificate most recently delivered pursuant to
Section 6.01(e)), (iii) Initial Preferred Stock may be exchanged
for Discount Notes pursuant to the terms of such Initial
Preferred Stock, (iv) Discount Notes may be exchanged for Initial
New Holdings Discount Notes in accordance with clause (c) of the
definition of Holdings Discount Note Offering and (v) the New
Holdings Discount Notes may be refinanced with Permitted Holdings
Refinancing Indebtedness;.
(b) amending and restating clause (d) thereof as follows:
(d) amend or modify, or permit the amendment or modification of, any provision of the Seller Note, any Initial Preferred Stock, any Discount Note (except for an amendment of the indenture relating to the Discount Notes to the extent necessary to permit the exchanges contemplated by clause (c) of the definition of Holdings Discount Note Offering, which amendment shall be reasonably satisfactory to the Administrative Agent), any Senior Subordinated Note Document, any New Holdings Discount Notes Document, any Permitted Holdings Refinancing Document, the Canadian Intercompany Note or the UK Intercompany Note, except for any such amendment or modification that could not reasonably be expected to be adverse to the interests of the Lenders in any material respect and that is expressly agreed to in writing by the Administrative Agent;.
SECTION 8. AMENDMENT TO SECTION 7.14. Section 7.14 of the Credit Agreement is hereby amended by deleting the word "and" after clause (xiii) thereof and inserting the phrase ", (xv) the New Holdings Discount Notes Documents and (xvi) the Permitted Holdings Refinancing Documents" at the end of such Section before the period.
SECTION 9. AMENDMENT TO SECTION 8.11. Section 8.11 of the Credit Agreement is hereby amended and restated as follows:
SECTION 8.11. REMEDIES BLOCKAGE. Any holder of any Seller Note, shares of Initial Preferred Stock, Discount Notes, New Holdings Discount Notes or Permitted Holdings Refinancing Indebtedness shall take any action to cause the Indebtedness or any other obligations in respect thereof to become due and payable, institute any legal proceedings (including any involuntary bankruptcy proceeding) against Holdings or otherwise to enforce or collect upon the Indebtedness or any other obligations in respect thereof or take any other action to enforce such holder's remedies with respect thereto;
SECTION 10. AGENT. Holdings agrees that the Initial New Holdings Discount Notes shall have (a) terms consistent with those specified in the definition of the term "INITIAL NEW HOLDINGS DISCOUNT NOTES", (b) terms consistent with those specified on Exhibit A to this Amendment and (c) such other terms as may be reasonably satisfactory to the Administrative Agent.
SECTION 11. REPRESENTATIONS AND WARRANTIES. Each of Holdings and each Borrower represents and warrants to the Administrative Agent and to each of the Lenders that:
(a) This Amendment has been duly authorized, executed and delivered by each of Holdings and each Borrower and constitutes a legal, valid and binding obligation of each of Holdings and each Borrower, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.
(b) Neither the execution, delivery or performance by any of Holdings or any Borrower of this Amendment, nor compliance by any of Holdings or any Borrower with the terms and provisions hereof, nor the consummation of a Holdings Discount Note Offering, (i) will contravene any material provision of any applicable law, statute, rule or regulation, or any order, writ, injunction or decree of any Governmental Authority, (ii) will conflict or be inconsistent with, or result in any breach of, any of the terms, covenants, conditions or provisions of, or constitute a default under, or result in the creation or imposition of (or the obligation to create or impose) any Lien upon any of the property or assets of Holdings or any Borrower or any of their respective Subsidiaries pursuant to the terms of any indenture, mortgage, deed of trust, loan agreement, credit agreement or any other material agreement or instrument to which Holdings or any Borrower or any of their respective Subsidiaries is a party or by which Holdings or any Borrower or any of their respective Subsidiaries or any of property or assets of Holdings or any Borrower or any of their respective Subsidiaries are bound or to which Holdings or any Borrower or any of their respective Subsidiaries may be subject or (iii) will violate any provision of the certificate or articles of incorporation, by-laws, certificate of partnership, partnership agreement, certificate of limited liability company, limited liability company agreement or equivalent organizational document, as the case may be, of Holdings or any Borrower or any of their respective Subsidiaries.
(c) The representations and warranties of each of Holdings and each Borrower set forth in the Credit Documents are true and correct on and as of the date hereof, except to the extent such representations and warranties expressly relate to an earlier date, in which case such representations and warranties are true and correct as of such earlier date.
(d) Immediately prior to and after giving effect to this Amendment, no Default or Event of Default shall have occurred and be continuing.
SECTION 12. AMENDMENT FEE. In consideration of the agreements of the Lenders contained in this Amendment, the US Borrower agrees to pay to the Administrative Agent, for the account of each Lender that delivers an executed counterpart of this Amendment prior to 5:00 p.m., New York City time, on December 19, 2002, an amendment fee in an amount equal to 0.125% of such Lender's Revolving Loan Commitments and outstanding Term Loans as of such date.
SECTION 13. CONDITIONS TO EFFECTIVENESS. This Amendment shall become effective as of the date fast above written when (a) the Administrative Agent shall have received counterparts of this Amendment that, when taken together, bear the signatures of Holdings, each Borrower and the Required Lenders, (b) all fees and expenses required to be paid or reimbursed by the US Borrower under or in connection with this Amendment or the Credit Agreement shall have been paid or reimbursed, as applicable, (c) the definitive forms of the New Holdings Discount Notes Documents shall have been provided to the Administrative Agent and the Administrative Agent shall be reasonably satisfied that such forms conform in all material respects to the terms specified in the definition of the term "INITIAL NEW HOLDINGS DISCOUNT NOTES" and specified in the description attached as Exhibit A to this Amendment and (d) Holdings shall have complied with its agreement under Section 10. The Administrative Agent shall notify each of the US Borrower and Holdings promptly of its satisfaction with the forms of the New Holdings Discount Notes Documents as provided in clause (c) of the foregoing sentence.
SECTION 14. CREDIT AGREEMENT. Except as specifically amended hereby, the Credit Agreement shall continue in full force and effect in accordance with the provisions thereof as in existence on the date hereof. After the date hereof, any reference to the Credit Agreement shall mean the Credit Agreement as amended or modified hereby. This Amendment shall be a Credit Document for all purposes.
SECTION 15. APPLICABLE LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 16. COUNTERPARTS. This Amendment may be executed in two or more counterparts, each of which shall constitute an original but all of which when taken together shall constitute but one agreement. Delivery of an executed signature page to this Amendment by facsimile transmission shall be effective as delivery of a manually signed counterpart of this Amendment.
SECTION 17. EXPENSES. The US Borrower agrees to reimburse the Administrative Agent for its out-of-pocket expenses in connection with this Amendment, including the reasonable fees, charges and disbursements of Cravath, Swaine & Moore, counsel for the Administrative Agent.
SECTION 18. HEADINGS. The Section headings used herein are for convenience of reference only, are not part of this Amendment and are not to affect the construction of, or to be taken into consideration in interpreting, this Amendment.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective authorized officers as of the day and year first written above.
SALT HOLDINGS CORPORATION,
by /s/ Rodney Underdown ----------------------------------------- Name: Rodney Underdown Title: VP |
COMPASS MINERALS GROUP, INC., as US Borrower
by /s/ Rodney Underdown ----------------------------------------- Name: Rodney Underdown Title: VP |
SIFTO CANADA INC., as Canadian Borrower,
by /s/ Rodney Underdown ----------------------------------------- Name: Rodney Underdown Title: VP |
SALT UNION LIMITED, as UK Borrower,
by /s/ Michael E. Ducey ----------------------------------------- Name: Michael E. Ducey Title: Director |
JPMORGAN CHASE BANK, individually and as Administrative Agent
Title:
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective authorized officers as of the day and year first written above.
SALT HOLDINGS CORPORATION,
Title:
COMPASS MINERALS GROUP, INC., as US Borrower
Title:
SIFTO CANADA INC., as Canadian Borrower,
Title:
SALT UNION LIMITED, as UK Borrower,
Title:
JPMORGAN CHASE BANK, individually and as
Administrative Agent
by /s/ Lawrence Palumbo, Jr. ----------------------------------------- Name: Lawrence Palumbo, Jr. Title: Voce President |
J.P. MORGAN BANK CANADA, as Canadian Agent
by /s/ Christine Chan ----------------------------------------- Name: Christine Chan Title: Vice President |
CHASE MANHATTAN INTERNATIONAL LIMITED, as
UK Agent,
Title:
CREDIT SUISSE FIRST BOSTON, individually and
as Co-Documentation Agent,
Title:
CREDIT LYONNAIS NEW YORK BRANCH,
individually and as Co-Documentation Agent,
Title:
J.P. MORGAN BANK CANADA, as Canadian Agent
Title:
CHASE MANHATTAN INTERNATIONAL LIMITED, as
UK Agent,
Title:
CREDIT SUISSE FIRST BOSTON, individually and
as Co-Documentation Agent,
by /s/ S. William Fox ----------------------------------------- Name: S. William Fox Title: Vice President by /s/ Ian W. Nalitt ----------------------------------------- Name: Ian W. Nalitt Title: Associate |
CREDIT LYONNAIS NEW YORK BRANCH,
individually and as Co-Documentation Agent,
Title:
J.P. MORGAN BANK CANADA, as Canadian Agent
Title:
CHASE MANHATTAN INTERNATIONAL LIMITED, as
UK Agent,
Title:
CREDIT SUISSE FIRST BOSTON, individually and
as Co-Documentation Agent,
Title:
CREDIT LYONNAIS NEW YORK BRANCH,
individually and as Co-Documentation Agent,
by /s/ Alex Averbukh ----------------------------------------- Name: Alex Averbukh Title: Vice President |
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19, 2002
To Approve the Amendment:
Name of Institution:
AIB DEBT MANAGEMENT LTD.
by /s/ John Farrace ----------------------------------------- Name: John Farrace Title: SVP by /s/ Rima Terradista ----------------------------------------- Name: Rima Terradista Title: SVP |
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19, 2002
To Approve the Amendment:
Name of Institution:
AIM FLOATING RATE FUND
By: INVESCO Senior Secured Management, Inc.
As Attorney in fact
by /s/ Thomas H. B. Ewald ----------------------------------------- Name: Thomas H. B. Ewald Title: Authorized Signatory |
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19, 2002
To Approve the Amendment:
Name of Institution:
ALLIED IRISH BANKS NC
by /s/ John Farrace ----------------------------------------- Name: John Farrace Title: SVP by /s/ Rima Terradista ----------------------------------------- Name: Rima Terradista Title: SVP |
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19, 2002
To Approve the Amendment:
Name of Institution:
AMARA-I FINANCE, LTD.
By: INVESCO Senior Secured Management, Inc.
As Financial Manager
by /s/ Thomas H. B. Ewald ----------------------------------------- Name: Thomas H. B. Ewald Title: Authorized Signatory |
ARES III CLO Ltd.
By: ARES CLO Management LLC,
Investment Manager
By: /s/ Seth J. Brufsky
-------------------------
Name: Seth J. Brufsky
Title: Vice President
|
ARES V CLO Ltd.
By: Ares CLO Management V, L.P.,
Investment Manager
By: Ares CLO GP V, LLC,
Its Managing Member
By: /s/ Seth J. Brufsky
----------------------------
Name: Seth J. Brufsky
Title: Vice President
|
ARES IV CLO Ltd.
By: Ares CLO Management IV, L.P.,
Investment Manager
By: Ares CLO GP IV, LLC,
Its Managing Member
By: /s/ Seth J. Brufsky
-----------------------------
Name: Seth J. Brufsky
Title: Vice President
|
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19, 2002
To Approve the Amendment:
Name of Institution:
AVALON CAPITAL LTD.
By: INVESCO Senior Secured Management, Inc.
As Portfolio Advisor
by /s/ Thomas H. B. Ewald ----------------------------------------- Name: Thomas H. B. Ewald Title: Authorized Signatory |
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19, 2002
To Approve the Amendment:
Name of Institution:
AVALON CAPITAL LTD. 2
By: INVESCO Senior Secured Management, Inc.
As Portfolio Advisor
by /s/ Thomas H. B. Ewald ----------------------------------------- Name: Thomas H. B. Ewald Title: Authorized Signatory |
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19, 2002
To Approve the Amendment:
DAVID L. BABSON & COMPANY INC.
In its individual capacity and as
Collateral Manager on behalf of the
investment funds under its management as
listed below.
- APEX (IDM) CDO I, Ltd.
- TRYON CLO Ltd. 2000-1
by /s/ William A. Hayes -------------------------------------- Name: William A. Hayes Title: Managing Director |
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19, 2002
To Approve the Amendment:
Name of Institution:
Ballyrock CDO I Limited
by /s/ Lisa Rymut ----------------------------------------- Name: Lisa Rymut Title: Assistant Treasurer |
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19, 2002
To Approve the Amendment:
Name of Institution:
BIG SKY SENIOR LOW FUND, LTD.
By: EATON VANCE MANAGEMENT AS INVESTMENT
ADVISOR
by /s/ Payson F. Swaffield ----------------------------------------- Name: Payson F. Swaffield Title: Vice President |
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19, 2002
To Approve the Amendment:
BLACKDIAMOND INTERNATIONAL FUNDING, LTD.
by /s/ Alan Corkish ----------------------------------------- Name: Alan Corkish Title: Director |
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19, 2002
To Approve the Amendment:
Name of Institution:
BRYN MAWR CLO, Ltd.
By: Deerfield Capital Management LLC
as its Collateral Manager
by /s/ Mark E. Wittnebel ----------------------------------------- Name: Mark E. Wittnebel Title: Sr. Vice President |
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19, 2002
To Approve the Amendment:
Name of Institution:
CAISSE DE DEPOT ET PLACEMENT DU QUEBEC
by /s/ James B. Mcmullan ----------------------------------------- Name: James B. McMullan Title: Director by /s/ Diane C. Favreau ----------------------------------------- Name: Diane C. Favreau Title: Vice-President |
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19, 2002
To Approve the Amendment:
Name of Institution:
CAPTIVA III FINANCE LTD. (ACCT. 275),
as advised by Pacific Investment Management
Company LLC
by /s/ David Dyer ----------------------------------------- Name: David Dyer Title: Director |
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19, 2002
To Approve the Amendment:
Name of Institution:
CAPTIVA IV FINANCE LTD. (ACCT. 1275),
as advised by Pacific Investment Management
Company LLC
by /s/ David Dyer ----------------------------------------- Name: David Dyer Title: Director |
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19, 2002
To Approve the Amendment:
Name of Institution:
Carlyle High Yield Partners III, Ltd.
by /s/ Linda Pace ----------------------------------------- Name: Linda Pace Title: Principal |
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19, 2002
To Approve the Amendment:
Name of Institution:
Carlyle High Yield Partners IV, Ltd.
by /s/ Linda Pace ----------------------------------------- Name: Linda Pace Title: Principal |
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19, 2002
To Approve the Amendment:
Name of Institution:
CERES II FINANCE LTD.
By: INVESCO Senior Secured Management, Inc.
As Sub-Management Agent (Financial)
by /s/ Thomas H. B. Ewald ----------------------------------------- Name: Thomas H. B. Ewald Title: Authorized Signatory |
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19, 2002
To Approve the Amendment:
Name of Institution:
CHARTER VIEW PORTFOLIO
By: INVESCO Senior Secured Management, Inc.
As Investment Advisor
by /s/ Thomas H. B. Ewald ----------------------------------------- Name: Thomas H. B. Ewald Title: Authorized Signatory |
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19, 2002
To Approve the Amendment:
Name of Institution:
COSTANTINUS EATON VANCE CDO V, LTD
BY: EATON VANCE MANAGEMENT AS INVESTMENT
ADVISOR
by /s/ Payson F. Swaffield ----------------------------------------- Name: Payson F. Swaffield Title: Vice President |
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19, 2002
To Approve the Amendment:
C-SQUARED CDO LTD.
By: TCW Advisors, Inc., as its
Portfolio Manager
By: /s/ Jonathan R. Insull
----------------------
Name: Jonathan R. Insull
Title: Managing Director
|
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19, 2002
To Approve the Amendment:
Name of Institution:
DELANO COMPANY (#274)
By: Pacific Investment Management Company
LLC, As its Investment Advisor
by /s/ Mohan V. Phansalkar ------------------------------------ Name: Mohan V. Phansalkar Title: Executive Vice President |
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19, 2002
To Approve the Amendment:
Name of Institution:
Denali Capital LLC, managing member of DC
Funding Partners, portfolio manager for
DENALI CAPITAL CLO I, LTD, or an affiliate
by /s/ John P. Thacker ----------------------------------------- Name: John P. Thacker Title: Chief Credit Officer |
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19,
2002
To Approve the Amendment:
Name of Institution:
DEUTSCHE BANK TRUST COMPANY AMERICAS
by /s/ Marco Orlando ----------------------------------------- Name: Marco Orlando Title: Director |
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19,
2002
To Approve the Amendment:
Name of Institution:
DIVERSIFIED CREDIT PORTFOLIO LTD.
By: INVESCO Senior Secured Management, Inc.
as Investment Advisor
by /s/ Thomas H. B. Ewald ----------------------------------------- Name: Thomas H. B. Ewald Title: Authorized Signatory |
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19,
2002
To Approve the Amendment:
Name of Institution:
EATON VANCE CDO III, LTD
BY: EATON VANCE MANAGEMENT AS
INVESTMENT ADVISOR
by /s/ Payson F. Swaffield ----------------------------------------- Name: Payson F. Swaffield Title: Vice President |
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19,
2002
To Approve the Amendment:
Name of Institution:
EATON VANCE SENIOR INCOME TRUST
BY: EATON VANCE MANAGEMENT AS
INVESTMENT ADVISOR
by /s/ Payson F. Swaffield ----------------------------------------- Name: Payson F. Swaffield Title: Vice President |
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19,
2002
To Approve the Amendment:
Name of Institution:
EATON VANCE INSTITUTIONAL SENIOR LOAN
FUND
BY: EATON VANCE MANAGEMENT AS
INVESTMENT ADVISOR
by /s/ Payson F. Swaffield ----------------------------------------- Name: Payson F. Swaffield Title: Vice President |
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19,
2002
To Approve the Amendment:
Name of Institution:
Fidelity Advisor Series II: Fidelity
Advisor Floating Rate High Income Fund
by /s/ Francis V. Knox Jr. ----------------------------------------- Name: Francis V. Knox Jr. Title: Assistant Treasurer |
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19,
2002
To Approve the Amendment:
Name of Institution:
GENERAL ELECTRIC CAPITAL CORPORATION
by /s/ Anne Kennelly Kratley ----------------------------------------- Name: Anne Kennelly Kratley Title: Manager - Operations |
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19,
2002
To Approve the Amendment:
Name of Institution:
GRAYSON & CO.
BY: BOSTON MANAGEMENT AND RESEARCH AS
INVESTMENT ADVISOR
by /s/ Payson F. Swaffield ----------------------------------------- Name: Payson F. Swaffield Title: Vice President |
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19,
2002
To Approve the Amendment:
Name of Institution:
JISSEKIKUN FUNDING, LTD. (#1288)
By: Pacific Investment Management Company
LLC,
As its Investment Advisor
by /s/ Mohan V. Phansalkar ----------------------------------------- Name: Mohan V. Phansalkar Title: Executive Vice President |
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19,
2002
To Approve the Amendment:
Name of Institution:
KATONAH I, LTD.
by /s/ Ralph Della Rocca
-----------------------------------------
Name: Ralph Della Rocca
Title: Authorized Officer
Katonah Capital, LLC as Manager
|
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19,
2002
To Approve the Amendment:
Name of Institution:
KATONAH II, LTD.
by /s/ Ralph Della Rocca
-----------------------------------------
Name: Ralph Della Rocca
Title: Authorized Officer
Katonah Capital, LLC as Manager
|
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19,
2002
To Approve the Amendment:
Name of Institution:
KATONAH III, LTD.
by /s/ Ralph Della Rocca
-----------------------------------------
Name: Ralph Della Rocca
Title: Authorized Officer
Katonah Capital, LLC as Manager
|
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19,
2002
To Approve the Amendment:
Name of Institution:
METROPOLITAN LIFE INSURANCE COMPANY
by /s/ James R. D ----------------------------------------- Name: James R. D Title: Director |
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19,
2002
To Approve the Amendment:
Name of Institution:
NATIONWIDE LIFE INSURANCE COMPANY
by /s/ Thomas S. Leggett
-----------------------------------------
Name: Thomas S. Leggett
Title: Associate Vice President Public
Bonds
|
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19,
2002
To Approve the Amendment:
Name of Institution:
NATIONWIDE LIFE INSURANCE COMPANY
by /s/ Thomas S. Leggett
-----------------------------------------
Name: Thomas S. Leggett
Title: Associate Vice President Public
Bonds
|
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19,
2002
To Approve the Amendment:
Name of Institution:
NATEXIS BANQUES POPULAIRES
by /s/ William J. Burke ----------------------------------------- Name: William J. Burke Title: Vice President by /s/ Michael J. Storms ----------------------------------------- Name: Michael J. Storms Title: Associate |
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19,
2002
To Approve the Amendment:
Name of Institution:
OAK HILL CREDIT PARTNERS II, LIMITED
By: Oak Hill CLO Management II, LLC
as Investment Manager
by /s/ Scott D. Krase ----------------------------------------- Name: Scott D. Krase Title: Authorized Signatory |
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19,
2002
To Approve the Amendment:
Name of Institution:
OAK HILL CREDIT PARTNERS I, LIMITED
By: Oak Hill CLO Management I, LLC
as Investment Manager
by /s/ Scott D. Krase ----------------------------------------- Name: Scott D. Krase Title: Authorized Signatory |
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19,
2002
To Approve the Amendment:
Name of Institution:
OAK HILL SECURITIES FUND II, L.P.
By: Oak Hill Securities GenPar II, L.P.
its General Partner
By: Oak Hill Securities MGP II, Inc.,
its General Partner
by /s/ Scott D. Krase ----------------------------------------- Name: Scott D. Krase Title: Authorized Signatory |
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19,
2002
To Approve the Amendment:
Name of Institution:
OAK HILL SECURITIES FUND, L.P.
By: Oak Hill Securities GenPar, L.P.
its General Partner
By: Oak Hill Securities MGP, Inc.,
its General Partner
by /s/ Scott D. Krase ----------------------------------------- Name: Scott D. Krase Title: Authorized Signatory |
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19,
2002
To Approve the Amendment:
Name of Institution:
OASIS COLLATERALIZED HIGH INCOME
PORTFOLIOS-1 LTD.
By: INVESCO Senior Secured Management, Inc.
As Subadvisor
by /s/ Thomas H. B. Ewald ----------------------------------------- Name: Thomas H. B. Ewald Title: Authorized Signatory |
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19,
2002
To Approve the Amendment:
Name of Institution:
OXFORD STRATEGIC INCOME FUND
BY: EATON VANCE MANAGEMENT
AS INVESTMENT ADVISOR
by /s/ Payson F. Swaffield ----------------------------------------- Name: Payson F. Swaffield Title: Vice President |
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19,
2002
To Approve the Amendment:
Name of Institution:
PPM SHADOW CREEK FUNDING LLC
by /s/ Anne E. Morris ----------------------------------------- Name: Ann E. Morris Title: Asst. Vice President |
PUTNAM DIVERSIFIED INCOME TRUST
by /s/ Beth Mazer ----------------------------------------- Name: Beth Mazer Title: VP |
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19,
2002
To Approve the Amendment:
Name of Institution:
ROSEMONT CLO, Ltd.
By: Deerfield Capital Management LLC
as its Collateral Manager
by /s/ Mark E. Wittnebel ----------------------------------------- Name: Mark E. Wittnebel Title: Sr. Vice President |
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19,
2002
To Approve the Amendment:
Name of Institution:
Sankaty Advisors, LLC as Collateral
Manager for Race Point CLO, Limited, as
Term Lender
by /s/ Diane J. Exter
-----------------------------------------
Name: Diane J. Exter
Title: Managing Director
Portfolio Manager
|
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19,
2002
To Approve the Amendment:
Name of Institution:
Sankaty High Yield Partners III, L.P.
by /s/ Diane J. Exter
-----------------------------------------
Name: Diane J. Exter
Title: Managing Director
Portfolio Manager
|
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19,
2002
To Approve the Amendment:
Name of Institution:
SENIOR DEBT PORTFOLIO
By: Boston Management and Research as
Investment Advisor
by /s/ Payson F. Swaffield ----------------------------------------- Name: Payson F. Swaffield Title: Vice President |
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19,
2002
To Approve the Amendment:
Name of Institution:
SEQUILS-Cumberland I, Ltd.
By: Deerfield Capital Management LLC
as its Collateral Manager
by /s/ Mark E. Wittnebel ----------------------------------------- Name: Mark E. Wittnebel Title: Sr. Vice President |
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19,
2002
To Approve the Amendment:
Name of Institution:
SEQUILS-LIBERTY, LTD.
By: INVESCO Senior Secured Management, Inc.
As Collateral Manager
by /s/ Thomas H. B. Ewald ----------------------------------------- Name: Thomas H. B. Ewald Title: Authorized Signatory |
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19,
2002
To Approve the Amendment:
Name of Institution:
SEQUILS-MAGNUM, LTD. (#1280)
By: Pacific Investment Management Company
LLC, as its Investment Advisor
by /s/ Mohan V. Phansalkar ----------------------------------------- Name: Mohan V. Phansalkar Title: Executive Vice President |
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19,
2002
To Approve the Amendment:
Name of Institution:
The Sumitomo Trust & Banking Co., Ltd.,
New York Branch
by /s/ Elizabeth A. Quirk ----------------------------------------- Name: Elizabeth A. Quirk Title: Vice President |
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19,
2002
To Approve the Amendment:
SIGNATURE BLOCK
TCW SELECT LOAN FUND, LIMITE
By: TCW Advisors, Inc. as is
Collateral Manager
By: /s/ Jonathan R. Insull
----------------------
Name: Jonathan R. Insul
Title: Managing Directo
By: /s/ William Brennan
-------------------
Name: William Brennan
Title: Vice President
|
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19,
2002
To Approve the Amendment:
Name of Institution:
TEXTRON FINANCIAL CORPORATION
by /s/ Matthew J. Coigan ----------------------------------------- Name: Matthew J. Coigen Title: Vice President |
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19,
2002
To Approve the Amendment:
Name of Institution:
TORONTO DOMINION (NEW YORK), INC.
by /s/ Stacey L. Malek ----------------------------------------- Name: Stacey L. Malek Title: Vice President |
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19,
2002
To Approve the Amendment:
CITIGROUP INVESTMENTS
CORPORATE LOAN FUND INC.
BY TRAVELERS ASSET MANAGEMENT
INTERNATIONAL COMPANY, LLC
By /s/ Robert M. Mills ------------------------------------- Name: Robert M. Mills Title: Investment Officer |
SIGNATURE PAGE TO THE AMENDMENT TO
COMPASS MINERALS GROUP, INC. CREDIT
AGREEMENT, DATED AS OF DECEMBER 19,
2002
To Approve the Amendment:
Name of Institution:
Wrigley CDO, Ltd. (#1285)
By: Pacific Investment Management Company
LLC, as its Investment Advisor
by /s/ Mohan V. Phansalkar ----------------------------------------- Name: Mohan V. Phansalkar Title: Executive Vice President |
EXHIBIT 10.6
EXECUTION COPY
US COLLATERAL AND GUARANTY AGREEMENT
dated as of November 28, 2001,
among
SALT HOLDINGS CORPORATION,
COMPASS MINERALS GROUP, INC.,
each other Subsidiary of
SALT HOLDINGS CORPORATION
listed on Schedule I hereto
and
JPMORGAN CHASE BANK,
as Collateral Agent
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
SECTION 1.01. Credit Agreement ..................................... 1
SECTION 1.02. Other Defined Terms .................................. 2
ARTICLE II
GUARANTY
SECTION 2.01. Guaranty ............................................. 7
SECTION 2.02. Guaranty of Payment .................................. 7
SECTION 2.03. No Limitations, Etc. ................................. 8
SECTION 2.04. Reinstatement ........................................ 9
SECTION 2.05. Agreement To Pay; Subrogation ........................ 9
SECTION 2.06. Information .......................................... 9
ARTICLE III
PLEDGE OF SECURITIES
SECTION 3.01. Pledge ............................................... 10
SECTION 3.02. Delivery of the Pledged Collateral ................... 11
SECTION 3.03. Representations, Warranties and Covenants ............ 11
SECTION 3.04. Certification of Limited Liability Company and Limited
Partnership Interests ................................ 13
SECTION 3.05. Registration in Nominee Name; Denominations .......... 13
SECTION 3.06. Voting Rights; Dividends and Interest, etc. .......... 13
ARTICLE IV
SECURITY INTERESTS IN PERSONAL PROPERTY
SECTION 4.01. Security Interest .................................... 16
SECTION 4.02. Representations and Warranties ....................... 17
SECTION 4.03. Covenants ............................................ 20
SECTION 4.04. Other Actions ........................................ 25
SECTION 4.05. Covenants regarding Patent, Trademark and Copyright
Collateral ........................................... 28
SECTION 4.06. Lockbox System ....................................... 30
SECTION 4.07. Collections .......................................... 32
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Page
----
ARTICLE V
REMEDIES
SECTION 5.01. Remedies upon Default.................................... 32
SECTION 5.02. Application of Proceeds.................................. 35
SECTION 5.03. Grant of License to Use Intellectual Property............ 36
SECTION 5.04. Securities Act, etc...................................... 36
ARTICLE VI
INDEMNITY, SUBROGATION AND SUBORDINATION
SECTION 6.01. Indemnity and Subrogation................................ 37
SECTION 6.02. Contribution and Subrogation............................. 37
SECTION 6.03. Subordination............................................ 38
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Notices.................................................. 38
SECTION 7.02. Security Interest Absolute............................... 38
SECTION 7.03. Survival of Agreement.................................... 39
SECTION 7.04. Binding Effect; Several Agreement........................ 39
SECTION 7.05. Successors and Assigns................................... 40
SECTION 7.06. Collateral Agent's Fees and Expenses; Indemnification ... 40
SECTION 7.07. Collateral Agent Appointed Attorney-in-Fact.............. 41
SECTION 7.08. GOVERNING LAW............................................ 42
SECTION 7.09. Waivers; Amendment....................................... 42
SECTION 7.10. WAIVER OF JURY TRIAL..................................... 43
SECTION 7.11. Severability............................................. 43
SECTION 7.12. Counterparts............................................. 44
SECTION 7.13. Headings................................................. 44
SECTION 7.14. Jurisdiction; Consent to Service of Process.............. 44
SECTION 7.15. Termination or Release................................... 45
SECTION 7.16. Additional Subsidiaries.................................. 46
SECTION 7.17. Right of Setoff.......................................... 46
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EXHIBITS
SCHEDULES
Schedule I Subsidiary Parties
Schedule II Capital Stock; Debt Securities
Schedule III U.S. Copyrights; Licenses; Patents; Trademark/Trade Names
Schedule IV Excluded Assets
Schedule V Excluded Letters of Credit
ANNEXES
Annex I Supplement No. [ ] to the US Collateral and Guaranty Agreement
Annex II Form of Perfection Certificate
Annex III Form of Name Change Agreement
Annex IV Lockbox Agreement
-iii-
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US COLLATERAL AND GUARANTY AGREEMENT dated as of
November 28, 2001, among SALT HOLDINGS CORPORATION, a
Delaware corporation ("HOLDINGS"), COMPASS MINERALS GROUP,
INC., a Delaware corporation (the "US BORROWER"), each other
Subsidiary of Holdings listed on Schedule I hereto (each
such Subsidiary individually a "SUBSIDIARY PARTY") and
JPMORGAN CHASE BANK, a New York banking corporation
("CHASE"), as collateral agent (in such capacity, the
"COLLATERAL AGENT") for the Secured Parties (as defined
below).
Reference is made to the Credit Agreement dated as of November
|
28, 2001 (as amended, supplemented, waived or otherwise modified from time to time, the "CREDIT AGREEMENT"), among Holdings, the US Borrower, Sifto Canada Inc., a company incorporated under the laws of the province of Ontario, Canada (the "CANADIAN BORROWER"), Salt Union Limited, a company incorporated under the laws of England and Wales (the "UK BORROWER" and, together with the Canadian Borrower, the "FOREIGN BORROWERS"; the Foreign Borrowers together with the US Borrower, the "BORROWERS"), the lenders from time to time party thereto (the "LENDERS"), Chase, as administrative agent for the Lenders (in such capacity, the "ADMINISTRATIVE AGENT"), J.P. Morgan Bank Canada, as Canadian Agent, and Chase Manhattan International Limited, as UK Agent. The Lenders have agreed to extend credit to the Borrowers subject to the terms and conditions set forth in the Credit Agreement. The obligations of the Lenders to extend such credit are conditioned upon, among other things, the execution and delivery of this Agreement. Holdings and the Subsidiary Parties other than the Borrowers are affiliates of the Borrowers and each Borrower is an affiliate of each other Borrower. Holdings and the Subsidiary Parties other than the Borrowers will derive substantial benefits from the extensions of credit to the Borrowers and each of the Borrowers will derive substantial benefits from the extensions of credit to each of the other Borrowers, in each case pursuant to the Credit Agreement. Holdings and each of the Subsidiary Parties are willing to execute and deliver this Agreement in order to induce the Lenders to extend such credit. Accordingly, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. CREDIT AGREEMENT. (a) Capitalized terms used in this Agreement and not otherwise defined herein have the meanings specified in the Credit Agreement. All terms defined in the New York UCC (as defined herein) and not defined in this Agreement have the meanings specified in the New York UCC.
(b) The rules of construction specified in Section 1.02 and Section 10.06 of the Credit Agreement also apply to this Agreement.
SECTION 1.02. OTHER DEFINED TERMS. As used in this Agreement, the following terms have the meanings specified below:
"ACCOUNT DEBTOR" means any Person who is or who may become obligated to any Grantor under, with respect to or on account of an Account.
"ASSIGNED CONTRACTS" has the meaning assigned to such term in the US Collateral Assignment.
"COLLATERAL" means Security Agreement Collateral and Pledged Collateral.
"COLLATERAL AGENT" has the meaning assigned to such term in the preamble to this Agreement.
"COLLECTION DEPOSIT ACCOUNT" means a lockbox account of a Grantor maintained for the benefit of the Secured Parties with the Collateral Agent or with a Sub-Agent pursuant to a Lockbox Agreement.
"CONCENTRATION ACCOUNT" means the cash collateral account established at the office of JPMorgan Chase Bank located at 270 Park Avenue, New York, NY 10017, in the name of the Collateral Agent, Account No. [ ].
"COPYRIGHT LICENSE" means any written agreement, now or hereafter in effect, granting any right to any third party under any copyright now or hereafter owned by any Grantor or that such Grantor otherwise has the right to license, or granting any right to any Grantor under any copyright now or hereafter owned by any third party, and all rights of such Grantor under any such agreement.
"COPYRIGHTS" means all of the following: (a) all copyright rights in any work subject to the copyright laws of the United States or any other country, whether as author, assignee, transferee or otherwise, and (b) all registrations and applications for registration of any such copyright in the United States or any other country, including registrations, recordings, supplemental registrations and pending applications for registration in the United States Copyright Office, including those listed on Schedule III.
"CREDIT AGREEMENT" has the meaning assigned to such term in the preliminary statement of this Agreement.
"CREDIT AGREEMENT OBLIGATIONS" means any Obligations other than obligations described in clauses (d) and (e) of the definition of the term "Obligations".
"DOCUMENTS" means all instruments, files, records, ledger sheets and documents covering or relating to any of the Collateral.
"EQUITY INTERESTS" means shares of capital stock, partnership, joint venture, member or limited liability or unlimited liability company interests, beneficial interests in a trust or other equity ownership interests in a Person of whatever nature and rights, warrants or options to acquire any of the foregoing.
"FEDERAL SECURITIES LAWS" has the meaning assigned to such term in
Section 5.04.
"FOREIGN OBLIGATIONS" has the meaning assigned to such term in the Foreign Guaranty.
"GENERAL FUND ACCOUNT" means the general fund account established at the office of JPMorgan Chase Bank located at 270 Park Avenue, New York, NY 10017, in the name of the US Borrower, Account No. [ ].
"GENERAL INTANGIBLES" means all choses in action and causes of action and all other intangible personal property of any Grantor of every kind and nature (other than Accounts), including corporate or other business records, indemnification claims, contract rights (including rights under leases, whether entered into as lessor or lessee, Interest Rate Protection Agreements, Other Hedging Agreements and other agreements), Intellectual Property, goodwill, registrations, franchises, tax refund claims and any letter of credit, guaranty, claim, security interest or
other security held by or granted to any Grantor to secure payment by an Account Debtor of any of the Accounts.
"GRANTORS" means Holdings, the US Borrower and the Subsidiary Parties.
"GUARANTORS" means Holdings, the US Borrower and the Subsidiary Parties.
"INDEMNITEE" has the meaning assigned to such term in Section 7.06(b).
"INSTRUMENT" has the meaning assigned to such term in Article 9 of the New York UCC.
"INTELLECTUAL PROPERTY" means all intellectual and similar property of any Grantor of every kind and nature, including inventions, designs, Patents, Copyrights, Licenses, Trademarks, trade secrets, confidential or proprietary technical and business information, know-how, show-how or other data or information, software and databases and all embodiments or fixations thereof and related documentation, registrations and franchises, and all additions, improvements and accessions to, and books and records describing or used in connection with, any of the foregoing.
"LICENSE" means any Patent License, Trademark License, Copyright License or other license or sublicense to which any Grantor is a party, including those listed on Schedule III (other than those license agreements in existence on the date hereof and listed on Schedule IV).
"LOCKBOX AGREEMENT" means a Lockbox Agreement substantially in the form of Annex IV, or any other form approved by the Collateral Agent, among a Grantor, the Collateral Agent and a Sub-Agent.
"LOCKBOX SYSTEM" has the meaning assigned to such term in Section 4.06(a).
"NEW YORK UCC" means the Uniform Commercial Code as from time to time in effect in the State of New York.
"OBLIGATIONS" means (a) the due and punctual payment by each Borrower of (i) all amounts due in respect of B/As and the principal of, premium (if any) and interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) on the Loans and B/As, when and as due,
whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise, (ii) each payment required to be made by any Borrower under the Credit Agreement in respect of any Letter of Credit, when and as due, including payments in respect of reimbursement of disbursements, interest thereon and obligations to provide cash collateral, and (iii) all other monetary obligations of any Borrower to any of the Secured Parties under the Credit Agreement and each of the other Credit Documents, including fees, costs, expenses and indemnities, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), (b) the due and punctual performance of all other obligations of each Borrower under or pursuant to the Credit Agreement and each of the other Credit Documents, (c) the due and punctual payment and performance of all the obligations of each other Credit Party under or pursuant to this Agreement and each of the other Credit Documents, (d) the due and punctual payment and performance of all obligations of each Credit Party under each Interest Rate Protection Agreement and each Other Hedging Agreement that (i) is in effect on the Effective Date with a counterparty that is a Lender or an Affiliate of a Lender as of the Effective Date or (ii) is entered into after the Effective Date with any counterparty that is a Lender or an Affiliate of a Lender at the time such Interest Rate Protection Agreement or Other Hedging Agreement, as applicable, is entered into and (e) the due and punctual payment and performance of all monetary obligations and other liabilities of each Credit Party to the Administrative Agent or any of its Affiliates in respect of overdrafts and related liabilities and obligations arising from or in connection with treasury, depositary or cash management services or in connection with any automated clearinghouse transfer of funds.
"PATENT LICENSE" means any written agreement, now or hereafter in effect, granting to any third party any right to make, use or sell any invention on which a patent, now or hereafter owned by any Grantor or that any Grantor otherwise has the right to license, is in existence, or granting to any Grantor any right to make, use or sell any invention on which a patent, now or hereafter owned by any third party, is in existence, and all rights of any Grantor under any such agreement.
"PATENTS" means all of the following: (a) all letters patent of the United States or the equivalent thereof in any other country, all registrations and
recordings thereof, and all applications for letters patent of the United States or the equivalent thereof in any other country, including registrations, recordings and pending applications in the United States Patent and Trademark Office or any similar offices in any other country, including those listed on Schedule III, and (b) all reissues, continuations, divisions, continuations-in-part, renewals or extensions thereof, and the inventions disclosed or claimed therein, including the right to make, use and/or sell the inventions disclosed or claimed therein.
"PERFECTION CERTIFICATE" means a certificate substantially in the form of Annex II, completed and supplemented with the schedules and attachments contemplated thereby, and duly executed by the chief financial officer and the chief legal officer of the US Borrower.
"PLEDGED COLLATERAL" has the meaning assigned to such term in Section 3.01.
"PLEDGED DEBT SECURITIES" has the meaning assigned to such term in
Section 3.01.
"PLEDGED SECURITIES" means any promissory notes, stock certificates or other securities now or hereafter included in the Pledged Collateral, including all certificates, instruments or other documents representing or evidencing any Pledged Collateral.
"PLEDGED STOCK" has the meaning assigned to such term in Section 3.01.
"PLEDGORS" means Holdings, the US Borrower and the Subsidiary Parties.
"PROCEEDS" has the meaning specified in Section 9-102 of the New York
UCC.
"SECURED PARTIES" means (a) the Lenders, (b) the Collateral Agent, (c) the Administrative Agent (and any Affiliate of the Administrative Agent to which any obligations described in clause (e) of the definition of the term "Obligations" is owed), (d) the Canadian Agent, (e) the UK Agent, (f) the Letter of Credit Issuer, (g) each counterparty to any Interest Rate Protection Agreement or Other Hedging Agreement with a Credit Party that either (i) is in effect on the Effective Date if such counterparty is a Lender or an Affiliate of a Lender as of the Effective Date or (ii) is entered into after the Effective Date if such counterparty is a Lender or an Affiliate of a Lender at the time such Interest Rate Protection Agreement or Other
Hedging Agreement, as applicable, is entered into, (h) the beneficiaries of each indemnification obligation undertaken by any Credit Party under any Credit Document and (i) the successors and assigns of each of the foregoing.
"SECURITY AGREEMENT COLLATERAL" has the meaning assigned to such term in Section 4.01.
"SECURITY INTEREST" has the meaning assigned to such term in Section 4.01.
"SUB-AGENT" means a financial institution that has delivered to the Collateral Agent an executed Lockbox Agreement.
"SUBSIDIARY PARTIES" means (a) the Subsidiaries of Holdings identified on Schedule I and (b) each other Subsidiary of Holdings that becomes a party to this Agreement as contemplated by Section 7.16.
"TRADEMARK LICENSE" means any written agreement, now or hereafter in effect, granting to any third party any right to use any trademark now or hereafter owned by any Grantor or that any Grantor otherwise has the right to license, or granting to any Grantor any right to use any trademark now or hereafter owned by any third party, and all rights of any Grantor under any such agreement.
"TRADEMARKS" means all of the following: (a) all trademarks, service marks, trade names, corporate names, company names, business names, fictitious business names, trade styles, trade dress, logos, other source or business identifiers, designs and general intangibles of like nature, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and all registration and recording applications filed in connection therewith, including registrations and registration applications in the United States Patent and Trademark Office or any similar offices in any State of the United States or any other country or any political subdivision thereof, and all extensions or renewals thereof, including those listed on Schedule III, (b) all goodwill associated therewith or symbolized thereby and (c) all other assets, rights and interests that uniquely reflect or embody such goodwill.
"US COLLATERAL ASSIGNMENT" shall have the meaning assigned to such term in the Credit Agreement.
ARTICLE II
GUARANTY
SECTION 2.01. GUARANTY. Each Guarantor unconditionally guarantees, jointly with the other Guarantors and severally, as a primary obligor and not merely as a surety, the due and punctual payment and performance of the Obligations. Each of the Guarantors further agrees that the Obligations may be extended or renewed, in whole or in part, without notice to or further assent from it, and that it will remain bound upon its guaranty notwithstanding any extension or renewal of any Obligation. Each of the Guarantors waives presentment to, demand of payment from and protest to each of the Borrowers or any other Credit Party of any of the Obligations, and also waives notice of acceptance of its guaranty and notice of protest for nonpayment.
SECTION 2.02. GUARANTY OF PAYMENT. Each of the Guarantors further agrees that its guaranty hereunder constitutes a guaranty of payment when due and not of collection, and waives any right to require that any resort be had by the Collateral Agent or any other Secured Party to any security held for the payment of the Obligations or to any balance of any deposit account or credit on the books of the Collateral Agent or any other Secured Party in favor of any Borrower or any other Person.
SECTION 2.03. NO LIMITATIONS, ETC. (a) Except for termination of a Guarantor's obligations hereunder as expressly provided in Section 7.15, the obligations of each Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality or unenforceability of the 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 (i) the failure of the Collateral Agent or any other Secured Party to assert any claim or demand or to enforce any right or remedy under the provisions of any Credit Document or otherwise; (ii) any rescission, waiver, amendment or modification of, or any release from any of the terms or provisions of, any Credit Document or any other agreement, including with respect to any other Guarantor under this Agreement; (iii) the release of any security held by the Collateral Agent or any other Secured Party for the Obligations or any of them; (iv) any
default, failure or delay, wilful or otherwise, in the performance of the Obligations; or (v) any other act or omission that may or might in any manner or to any extent vary the risk of any Guarantor or otherwise operate as a discharge of any Guarantor as a matter of law or equity (other than the indefeasible payment in full in cash of all the Obligations). The taking and holding of security to the extent permitted by the Credit Agreement for the payment and performance of this Agreement and the other Obligations, the exchange, waiver or release of any or all such security (with or without consideration), the enforcement or application of such security and direction of the order and manner of any sale thereof in their sole discretion or the release or substitution of any one or more other guarantors or obligors upon or in respect of the Obligations will not affect the obligations of any Guarantor hereunder.
(b) To the fullest extent permitted by applicable law, each Guarantor waives any defense based on or arising out of any defense of any Borrower or any other Credit Party or the unenforceability of the Obligations or any part thereof from any cause, or the cessation from any cause of the liability of any Borrower or any other Credit Party, other than the indefeasible payment in full in cash of all the Obligations. The Collateral Agent and the other Secured Parties may, at their election, foreclose on any security held by one or more of them by one or more judicial or nonjudicial sales, accept an assignment of any such security in lieu of foreclosure, compromise or adjust any part of the Obligations, make any other accommodation with any Borrower or any other Credit Party or exercise any other right or remedy available to them against any Borrower or any other Credit Party, without affecting or impairing in any way the liability of any Guarantor hereunder except to the extent the Obligations have been fully and indefeasibly paid in full in cash. To the fullest extent permitted by applicable law, each Guarantor waives any defense arising out of any such election even though such election operates, pursuant to applicable law, to impair or to extinguish any right of reimbursement or subrogation or other right or remedy of such Guarantor against any Borrower or any other Credit Party, as the case may be, or any security.
SECTION 2.04. REINSTATEMENT. Each of the Guarantors agrees that its guaranty hereunder shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of any Obligation is rescinded or must otherwise be restored by the Collateral Agent or any other Secured Party upon the bankruptcy or reorganization of any Borrower, any other Credit Party or otherwise.
SECTION 2.05. AGREEMENT TO PAY; SUBROGATION. In furtherance of the foregoing and not in limitation of any other right that the Collateral Agent or any other Secured Party has at law or in equity against any Guarantor by virtue hereof, upon the failure of any Borrower or any other Credit Party to pay any Obligation when and as the same shall become due, whether at maturity, by acceleration, after notice of prepayment or otherwise, each Guarantor hereby promises to and will forthwith pay, or cause to be paid, to the Collateral Agent for distribution to the applicable Secured Parties in cash the amount of such unpaid Obligation. Upon payment by any Guarantor of any sums to the Collateral Agent as provided above, all rights of such Guarantor against any Borrower or any other Guarantor arising as a result thereof by way of right of subrogation, contribution, reimbursement, indemnity or otherwise shall in all respects be subject to Article VI.
SECTION 2.06. INFORMATION. Each Guarantor assumes all responsibility for being and keeping itself informed of each Borrower's and each other Credit Party's financial condition and assets, and of all other circumstances bearing upon the risk of nonpayment of the Obligations and the nature, scope and extent of the risks that such Guarantor assumes and incurs hereunder, and agrees that none of the Collateral Agent or the other Secured Parties will have any duty to advise such Guarantor of information known to it or any of them regarding such circumstances or risks.
ARTICLE III
PLEDGE OF SECURITIES
SECTION 3.01. PLEDGE. As security for the payment or performance, as the case may be, in full of the Obligations, each Pledgor hereby assigns and pledges to the Collateral Agent, its successors and assigns, for the benefit of the Secured Parties, and hereby grants to the Collateral Agent, its successors and assigns, for the benefit of the Secured Parties, a security interest in all of such Pledgor's right, title and interest in, to and under (a) the shares of capital stock and other Equity Interests owned by it and listed on Schedule II and any other Equity Interests of the US Borrower or any Subsidiary of the US Borrower obtained in the future by such Pledgor and the certificates representing all such Equity Interests (the "PLEDGED STOCK"), PROVIDED that the Pledged Stock shall not include (i) more than 65% of the issued and outstanding voting Equity Interests of any Foreign Subsidiary to secure
the Obligations other than the Foreign Obligations and (ii) at the option of the Collateral Agent, the issued and outstanding Equity Interests of any Foreign Subsidiary of the US Borrower if such Pledgor assigns and pledges to the Collateral Agent, its successors and assigns, for the benefit of the Secured Parties, and grants to the Collateral Agent, its successors and assigns, for the benefit of the Secured Parties, a security interest in all of such Pledgor's right, title and interest to and under such Equity Interests pursuant to a Foreign Pledge Agreement entered into with the Collateral Agent that is in compliance with and is governed by the laws of the jurisdiction of organization of such Foreign Subsidiary; (b)(i) the debt securities listed opposite the name of such Pledgor on Schedule II, (ii) any debt securities in the future issued to such Pledgor and (iii) the promissory notes and any other instruments evidencing such debt securities (the "PLEDGED DEBT SECURITIES"); (c) all other property that may be delivered to and held by the Collateral Agent pursuant to the terms hereof; (d) subject to Section 3.06, all payments of principal, premium (if any) or interest, dividends, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of, in exchange for or upon the conversion of, and all other Proceeds received in respect of, the securities referred to in clauses (a), (b) and (c) above; (e) subject to Section 3.06, all rights and privileges of such Pledgor with respect to the securities and other property referred to in clauses (a), (b), (c) and (d) above; and (f) all Proceeds of any of the foregoing (the items referred to in clauses (a) through (f) above being collectively referred to as the "PLEDGED COLLATERAL").
TO HAVE AND TO HOLD the Pledged Collateral, together with all right, title, interest, powers, privileges and preferences pertaining or incidental thereto, unto the Collateral Agent, its successors and assigns, for the benefit of the Secured Parties, forever; SUBJECT, HOWEVER, to the termination provisions of Section 7.15 and the other terms, covenants and conditions hereinafter set forth (including in Section 3.06).
SECTION 3.02. DELIVERY OF THE PLEDGED COLLATERAL. (a) Each Pledgor
agrees promptly to deliver or cause to be delivered to the Collateral Agent any
and all Pledged Securities that have a value, individually, in excess of
$250,000 or, in the aggregate for all Pledgors for all Pledged Collateral
required to be delivered pursuant to this clause (a) and clause (b) of this
Section 3.02, in excess of $2,000,000 (but only to the extent of such excess).
(b) Each Pledgor will cause any Indebtedness in a principal amount, individually, in excess of $250,000, and in the aggregate for all Pledgors for all Pledged Collateral required to be delivered pursuant to this clause (b) and clause (a) of this Section 3.02, in excess of $2,000,000 (but only to the extent of such excess) for borrowed money owed to such Pledgor by any Person to be evidenced by a duly executed promissory note that is pledged and delivered to the Collateral Agent pursuant to the terms hereof, PROVIDED, that no Pledgor shall be required pursuant to paragraph (a) of this Section 3.02 or this paragraph (b) to cause any Indebtedness of Holdings or any Subsidiary of Holdings for borrowed money to be evidenced by a promissory note, unless such Indebtedness remains outstanding for more than five Business Days.
(c) Upon delivery to the Collateral Agent, (i) any Pledged Securities shall be accompanied by stock powers duly executed in blank or other instruments of transfer satisfactory to the Collateral Agent and by such other instruments and documents as the Collateral Agent may reasonably request and (ii) all other property comprising part of the Pledged Collateral shall be accompanied by proper instruments of assignment duly executed by the applicable Pledgor and such other instruments or documents as the Collateral Agent may reasonably request. Each delivery of Pledged Securities shall be accompanied by a schedule describing the securities, which schedule shall be attached hereto as Schedule II and made a part hereof; PROVIDED that failure to attach any such schedule hereto shall not affect the validity of such pledge of such Pledged Securities. Each schedule so delivered shall supplement any prior schedules so delivered.
SECTION 3.03. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Pledgors jointly and severally represent, warrant and covenant to and with the Collateral Agent, for the benefit of the Secured Parties, that:
(a) Schedule II correctly sets forth the percentage of the issued and outstanding shares of each class of the Equity Interests of the issuer thereof represented by such Pledged Stock;
(b) the Pledged Stock and Pledged Debt Securities have been duly and validly authorized and issued by the issuers thereof and (i) in the case of Pledged Stock, are fully paid and nonassessable and (ii) in the case of Pledged Debt Securities, are legal, valid and binding obligations of the issuers thereof;
(c) except for the security interests granted hereunder, each of the
Pledgors (i) is and, subject to any transfers made in compliance with the
Credit Agreement, will continue to be the direct owner, beneficially and of
record, of the Pledged Securities indicated on Schedule II as owned by such
Pledgor, (ii) holds the same free and clear of all Liens (other than Liens
described in clauses (a) and (e) of Section 7.03 of the Credit Agreement),
(iii) will make no assignment, pledge, hypothecation or transfer of, or
create or permit to exist any security interest in or other Lien on, the
Pledged Collateral, other than Liens created by this Agreement and Liens
described in clauses (a) and (e) of Section 7.03 of the Credit Agreement,
and transfers made in compliance with the Credit Agreement, and (iv)
subject to Section 3.06, will cause any and all Pledged Collateral, whether
for value paid by the Pledgor or otherwise, to be forthwith deposited with
the Collateral Agent and pledged or assigned hereunder;
(d) except for restrictions and limitations imposed by the Credit Documents or securities laws generally, the Pledged Collateral is and will continue to be freely transferable and assignable, and none of the Pledged Collateral is or will be subject to any option, right of first refusal, shareholders agreement, charter or by-law provisions or contractual restriction of any nature that might prohibit, impair, delay or otherwise affect the pledge of such Pledged Collateral hereunder, the sale or disposition thereof pursuant hereto or the exercise by the Collateral Agent of rights and remedies hereunder;
(e) each of the Pledgors (i) has the power and authority to pledge the Pledged Collateral pledged by it hereunder in the manner hereby done or contemplated and (ii) will defend its title or interest thereto or therein against any and all Liens (other than the Lien created by this Agreement and Liens described in clauses (a) and (e) of Section 7.03 of the Credit Agreement), however arising, of all Persons whomsoever;
(f) no consent or approval of any Governmental Authority, any securities exchange or any other Person was or is necessary to the validity of the pledge effected hereby (other than such as have been obtained and are in full force and effect);
(g) by virtue of the execution and delivery by the Pledgors of this Agreement, when any Pledged Securities
are delivered to the Collateral Agent in accordance with this Agreement, the Collateral Agent will obtain a legal, valid and perfected first-priority lien upon and security interest in such Pledged Securities as security for the payment and performance of the Obligations; and
(h) the pledge effected hereby is effective to vest in the Collateral Agent, for the benefit of the Secured Parties, the rights of the Collateral Agent in the Pledged Collateral as set forth herein.
SECTION 3.04. CERTIFICATION OF LIMITED LIABILITY COMPANY AND LIMITED PARTNERSHIP INTERESTS. Each interest in any limited liability company or limited partnership controlled by any Grantor and pledged hereunder shall be represented by a certificate, shall be a "security" within the meaning of Article 8 of the New York UCC and shall be governed by Article 8 of the New York UCC.
SECTION 3.05. REGISTRATION IN NOMINEE NAME; DENOMINATIONS. The Collateral Agent, on behalf of the Secured Parties, shall have the right (in its sole and absolute discretion) to hold the Pledged Securities in its own name as pledgee, the name of its nominee (as pledgee or as sub-agent) or the name of the applicable Pledgor, endorsed or assigned in blank or in favor of the Collateral Agent. Each Pledgor will promptly give to the Collateral Agent copies of any notices or other communications received by it with respect to Pledged Securities registered in the name of such Pledgor. The Collateral Agent shall, at any time that an Event of Default has occurred and is continuing, have the right to exchange the certificates representing Pledged Securities for certificates of smaller or larger denominations for any purpose consistent with this Agreement.
SECTION 3.06. VOTING RIGHTS; DIVIDENDS AND INTEREST, ETC. (a) Unless
and until an Event of Default shall have occurred and be continuing and the
Collateral Agent shall have notified the Pledgors that their rights under this
Section are being suspended:
(i) Each Pledgor shall be entitled to exercise any and all voting and/or other consensual rights and powers inuring to an owner of Pledged Securities or any part thereof for any purpose consistent with the terms of this Agreement, the Credit Agreement and the other Credit Documents; PROVIDED that such rights and powers shall not be exercised in any manner that could materially and adversely affect the rights inuring to a
holder of any Pledged Securities or the rights and remedies of any of the Collateral Agent or the other Secured Parties under this Agreement, the Credit Agreement or any other Credit Document, or the ability of the Secured Parties to exercise the same.
(ii) The Collateral Agent shall execute and deliver to each Pledgor, or cause to be executed and delivered to such Pledgor, all such proxies, powers of attorney and other instruments as such Pledgor may reasonably request for the purpose of enabling such Pledgor to exercise the voting and/or consensual rights and powers it is entitled to exercise pursuant to subparagraph (i) above.
(iii) Each Pledgor shall be entitled to receive and retain any and all dividends, interest, principal and other distributions paid on or distributed in respect of the Pledged Securities to the extent and only to the extent that such dividends, interest, principal and other distributions are permitted by, and otherwise paid or distributed in accordance with, the terms and conditions of the Credit Agreement, the other Credit Documents and applicable laws; PROVIDED that any noncash dividends, interest, principal or other distributions that would constitute Pledged Stock or Pledged Debt Securities, whether resulting from a subdivision, combination or reclassification of the outstanding Equity Interests of the issuer of any Pledged Securities or received in exchange for Pledged Securities or any part thereof, or in redemption thereof, or as a result of any merger, consolidation, acquisition or other exchange of assets to which such issuer may be a party or otherwise, shall be and become part of the Pledged Collateral, and, if received by any Pledgor, shall not be commingled by such Pledgor with any of its other funds or property but shall be held separate and apart therefrom, shall be held in trust for the benefit of the Collateral Agent and shall be forthwith delivered to the Collateral Agent in the same form as so received (with any necessary endorsement).
(b) Upon the occurrence and during the continuance of an Event of
Default, after the Collateral Agent shall have notified the Pledgors of the
suspension of their rights under paragraph (a)(iii) of this Section 3.06, then
all rights of any Pledgor to dividends, interest, principal or other
distributions that such Pledgor is authorized to receive pursuant to paragraph
(a)(iii) of this Section 3.06 shall cease, and all such rights shall thereupon
become vested in the Collateral Agent, which shall
have the sole and exclusive right and authority to receive and retain such dividends, interest, principal or other distributions. All dividends, interest, principal or other distributions received by any Pledgor contrary to the provisions of this Section 3.06 shall be held in trust for the benefit of the Collateral Agent, shall be segregated from other property or funds of such Pledgor and shall be forthwith delivered to the Collateral Agent upon demand in the same form as so received (with any necessary endorsement). Any and all money and other property paid over to or received by the Collateral Agent pursuant to the provisions of this paragraph (b) shall be retained by the Collateral Agent in an account to be established by the Collateral Agent upon receipt of such money or other property and shall be applied in accordance with the provisions of Section 5.02. After all Events of Default have been cured or waived and the applicable Pledgor or Pledgors have delivered to the Collateral Agent certificates to that effect, the Collateral Agent shall, within five Business Days after all such Events of Default have been cured or waived, repay to each Pledgor (without interest) all dividends, interest, principal or other distributions that such Pledgor would otherwise be permitted to retain pursuant to the terms of paragraph (a)(iii) of this Section 3.06 and that remain in such account.
(c) Upon the occurrence and during the continuance of an Event of Default, after the Collateral Agent shall have notified the Pledgors of the suspension of their rights under paragraph (a)(i) of this Section 3.06, all rights of any Pledgor to exercise the voting and consensual rights and powers it is entitled to exercise pursuant to paragraph (a)(i) of this Section 3.06, and the obligations of the Collateral Agent under paragraph (a)(ii) of this Section 3.06, shall cease, and all such rights shall thereupon become vested in the Collateral Agent, which shall have the sole and exclusive right and authority to exercise such voting and consensual rights and powers; PROVIDED that, unless otherwise directed by the Required Lenders, the Collateral Agent shall have the right from time to time following and during the continuance of an Event of Default to permit the Pledgors to exercise such rights.
(d) Any notice given by the Collateral Agent to the Pledgors
suspending their rights under paragraph (a) of this Section 3.06 (i) may be
given by telephone if confirmed in writing within two Business Days, (ii) may be
given to one or more of the Pledgors at the same or different times and (iii)
may suspend the rights of the Pledgors under paragraph (a)(i) or paragraph
(a)(iii) in part without suspending all such rights (as specified by the
Collateral
Agent in its sole and absolute discretion) and without waiving or otherwise affecting the Collateral Agent's rights to give additional notices from time to time suspending other rights so long as an Event of Default has occurred and is continuing.
ARTICLE IV
SECURITY INTERESTS IN PERSONAL PROPERTY
SECTION 4.01. SECURITY INTEREST. (a) As security for the payment or performance, as the case may be, in full of the Obligations, each Grantor hereby assigns and pledges to the Collateral Agent, its successors and assigns, for the benefit of the Secured Parties, and hereby grants to the Collateral Agent, its successors and assigns, for the benefit of the Secured Parties, a security interest (the "SECURITY INTEREST") in all right, title or interest in or to any and all the following assets and properties now owned or at any time hereafter acquired by such Grantor or in which such Grantor now has or at any time in the future may acquire any right, title or interest (collectively, the "SECURITY
AGREEMENT COLLATERAL"):
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all Deposit Accounts;
(iv) all Documents;
(v) all Equipment;
(vi) all General Intangibles;
(vii) all Instruments;
(viii) all Inventory;
(ix) all Investment Property;
(x) all Letter-of-credit rights;
(xi) all Assigned Contracts;
(xii) all books and records pertaining to the Security Agreement Collateral; and
(xiii) to the extent not otherwise included, all Proceeds and products of any and all of the foregoing and all collateral security and guarantees given by any Person with respect to any of the foregoing.
PROVIDED, HOWEVER, that notwithstanding any of the other provisions set forth in this Article IV, this Agreement shall not constitute a grant of a security interest (A) in any asset listed on Schedule IV and (B) in any Security Agreement Collateral that on the Effective Date is not material or that is acquired after the Effective Date, in each case to the extent that such grant of a security interest is prohibited by applicable law, requires a consent not obtained of any Governmental Authority pursuant to applicable law, or is prohibited by, constitutes a breach or a default under, results in or would permit the termination of, or requires any consent (other than of any Grantor) not obtained under, any contract, license, agreement, instrument, indenture, permit or other document, in each case evidencing or giving rise to such Security Agreement Collateral or, in the case of any Investment Property, Equity Interests in any Joint Venture, or Pledged Debt Securities, any applicable shareholder or similar agreement, except to the extent that such requirement of law or the term in such contract, license, agreement, instrument, indenture, permit or other document or shareholder or similar agreement providing for such prohibition, breach, default or termination or requiring such consent is ineffective under applicable law; PROVIDED further that the foregoing limitation shall not affect, limit, restrict or impair the grant by such Grantor of a security interest pursuant to this Agreement in any receivable or any money or other amounts due or to become due under any such contract, license, agreement, instrument, indenture, permit or other document or in the Proceeds from the sale or disposition of any such contract, license, agreement, instrument, indenture, permit or other document.
(b) Each Grantor hereby irrevocably authorizes the Collateral Agent at any time and from time to time to file in any relevant jurisdiction any initial financing statements (including fixture filings) and amendments thereto that contain the information required by Article 9 of the Uniform Commercial Code of each applicable jurisdiction for the filing of any financing statement or amendment, including (a) whether such Grantor is an organization, the type of organization and any organizational identification number issued to such Grantor and (b) in the case of a financing statement filed as a fixture filing or covering Security Agreement Collateral constituting minerals or the like to be extracted or timber
to be cut, a sufficient description of the real property to which such Security Agreement Collateral relates. Each Grantor agrees to provide such information to the Collateral Agent promptly upon request.
The Collateral Agent is further authorized to file with the United States Patent and Trademark Office or United States Copyright Office (or any successor office or any similar office in any other country) such filings and other documents as may be necessary or advisable for the purpose of perfecting, confirming, continuing, enforcing or protecting the Security Interest granted by each Grantor, without the signature of any Grantor, and naming any Grantor or the Grantors as debtors and the Collateral Agent as secured party.
(c) The Security Interest is granted as security only and shall not subject the Collateral Agent or any other Secured Party to, or in any way alter or modify, any obligation or liability of any Grantor with respect to or arising out of the Security Agreement Collateral.
SECTION 4.02. REPRESENTATIONS AND WARRANTIES. The Grantors jointly and severally represent and warrant to the Collateral Agent and the Secured Parties that:
(a) each Grantor has good and valid rights in and title to the Security Agreement Collateral with respect to which it has purported to grant a Security Interest hereunder and has full power and authority to grant to the Collateral Agent the Security Interest in such Security Agreement Collateral pursuant hereto and to execute, deliver and perform its obligations in accordance with the terms of this Agreement, without the consent or approval of any other Person other than any consent or approval that has been obtained;
(b)(i) the Perfection Certificate has been duly prepared, completed and executed and the information set forth therein, including the exact legal name of such Grantor, is correct and complete as of the Effective Date. Uniform Commercial Code financing statements (including fixture filings, as applicable) that have been fully executed or authenticated, as requested by the Collateral Agent, or other appropriate filings, recordings or registrations containing a description of the Security Agreement Collateral have been delivered to the Collateral Agent for filing in each governmental, municipal or other office specified in Schedule 6 to the Perfection Certificate, which are all the filings, recordings and registrations (other
than filings required to be made in the United States Patent and Trademark Office and the United States Copyright Office in order to perfect the Security Interest in Security Agreement Collateral consisting of United States Patents, Trademarks and Copyrights) that are necessary as of the Effective Date to publish notice of and protect the validity of and to establish a legal, valid and perfected security interest in favor of the Collateral Agent (for the benefit of the Secured Parties) in respect of all Security Agreement Collateral in which the Security Interest may be perfected by filing, recording or registration in the United States (or any political subdivision thereof) and its territories and possessions, and no further or subsequent filing, refiling, recording, rerecording, registration or reregistration is necessary in any such jurisdiction, except as provided under applicable law with respect to the filing of continuation statements; and (ii) each Grantor represents and warrants that a fully executed agreement containing a description of all Security Agreement Collateral consisting of Intellectual Property with respect to United States Patents and United States registered Trademarks (and Trademarks for which United States registration applications are pending) and United States registered Copyrights has been delivered to the Collateral Agent for recording such Intellectual Property by the United States Patent and Trademark Office and the United States Copyright Office pursuant to 35 USC. (S) 261, 15 USC. (S) 1060 or 17 USC. (S) 205 and the regulations thereunder, as applicable, and otherwise as may be required pursuant to the laws of any other necessary jurisdiction and reasonably requested by the Collateral Agent, to protect the validity of and to establish a legal, valid and perfected security interest in favor of the Collateral Agent (for the benefit of the Secured Parties) in respect of all Security Agreement Collateral consisting of such Intellectual Property in which a security interest may be perfected by recording with the United States Patent and Trademark Office and the United States Copyright Office and no further or subsequent filing, refiling, recording, rerecording, registration or reregistration is necessary (other than such actions as are necessary to perfect the Security Interest with respect to any Security Agreement Collateral consisting of Patents, Trademarks and Copyrights (or registration or application for registration thereof) acquired or developed after the date hereof);
(c) the Security Interest constitutes (i) a legal and valid security
interest in all the Security Agreement Collateral securing the payment and
performance of the Obligations, (ii) subject to the filings described in
Section 4.02(b), a perfected security interest in all Security Agreement
Collateral in which a security interest may be perfected by filing,
recording or registering a financing statement or analogous document in the
United States (or any political subdivision thereof) and its territories
and possessions pursuant to the Uniform Commercial Code or other applicable
law in such jurisdictions and (iii) a security interest that shall be
perfected in all Security Agreement Collateral in which a security interest
may be perfected upon the receipt and recording of Schedule III to this
Agreement with the United States Patent and Trademark Office and the United
States Copyright Office, as applicable, and otherwise as may be required
pursuant to the laws of any other necessary jurisdiction and reasonably
requested by the Collateral Agent. The Security Interest is and shall be
prior to any other Lien on any of the Security Agreement Collateral, other
than Liens expressly permitted to be prior to the Security Interest
pursuant to Section 7.03 of the Credit Agreement; and
(d) the Security Agreement Collateral is owned by the Grantors free
and clear of any Lien, except for Liens expressly permitted pursuant to
Section 7.03 of the Credit Agreement. None of the Grantors has filed or
consented to the filing of (i) any financing statement or analogous
document under the Uniform Commercial Code or any other applicable laws
covering any Security Agreement Collateral, (ii) any assignment in which
any Grantor assigns any Security Agreement Collateral or any security
agreement or similar instrument covering any Security Agreement Collateral
with the United States Patent and Trademark Office or the United States
Copyright Office or (iii) any assignment in which any Grantor assigns any
Security Agreement Collateral or any security agreement or similar
instrument covering any Security Agreement Collateral with any foreign
governmental, municipal or other office, which financing statement or
analogous document, assignment, security agreement or similar instrument is
still in effect, except, in each case, for Liens expressly permitted
pursuant to Section 7.03 of the Credit Agreement. None of the Grantors hold
any commercial tort claim except as indicated on the Perfection
Certificate.
SECTION 4.03. COVENANTS. (a) Each Grantor agrees promptly to notify the Collateral Agent in writing of any change (i) in its corporate name (and in connection therewith agrees to enter into a Name Change Agreement substantially in the form of Annex III), (ii) in the location of its chief executive office, its principal place of business, any office in which it maintains books or records relating to Security Agreement Collateral owned by it or any office or facility at which Security Agreement Collateral owned by it is located (including the establishment of any such new office or facility), (iii) in its identity or type of organization or corporate structure, (iv) in its Federal Taxpayer Identification Number or organizational identification number or (v) in its jurisdiction of organization. Each Grantor agrees to promptly provide the Collateral Agent with certified organizational documents reflecting any of the changes described in the preceding sentence. Each Grantor agrees not to effect or permit any change referred to in the preceding sentence unless all filings have been made under the Uniform Commercial Code or otherwise that are required in order for the Collateral Agent to continue at all times following such change to have a valid, legal and perfected first priority security interest in all the Security Agreement Collateral. Each Grantor agrees promptly to notify the Collateral Agent if any material portion of the Security Agreement Collateral owned or held by such Grantor is damaged or destroyed.
(b) Each Grantor agrees to maintain, at its own cost and expense, such complete and accurate records with respect to the Security Agreement Collateral owned by it as is consistent with its current practices and in accordance with reasonably prudent and standard practices used in industries that are the same as or similar to those in which such Grantor is engaged, but in any event to include complete accounting records indicating all payments and proceeds received with respect to any part of the Security Agreement Collateral, and, upon the occurrence and during the continuance of an Event of Default, at such time or times as the Collateral Agent may reasonably request, promptly to prepare and deliver to the Collateral Agent a duly certified schedule or schedules in form and detail satisfactory to the Collateral Agent showing the identity, amount and location of any and all Security Agreement Collateral.
(c) Each Grantor shall, at its own expense, take any and all actions necessary and reasonable to defend title to the Security Agreement Collateral against all Persons and to defend the Security Interest of the Collateral Agent in
the Security Agreement Collateral and the priority thereof against any Lien not expressly permitted pursuant to Section 7.03 of the Credit Agreement.
(d) Each Grantor agrees, at its own expense, to execute, acknowledge, deliver and cause to be duly filed all such further instruments and documents and take all such actions as the Collateral Agent may from time to time request to better assure, preserve, protect and perfect the Security Interest and the rights and remedies created hereby, including the payment of any fees and taxes required in connection with the execution and delivery of this Agreement, the granting of the Security Interest and the filing of any financing statements (including fixture filings) or other documents in connection herewith or therewith. If any amount payable under or in connection with any of the Security Agreement Collateral shall be or become evidenced by any promissory note or other instrument, such note or instrument shall be immediately pledged and delivered to the Collateral Agent, duly endorsed in a manner satisfactory to the Collateral Agent.
Without limiting the generality of the foregoing, upon the occurrence and during the continuance of an Event of Default, each Grantor hereby authorizes the Collateral Agent, with prompt notice thereof to the Grantors, to supplement this Agreement by supplementing Schedule III or adding additional schedules hereto to specifically identify any asset or item that may constitute Copyrights, Licenses, Patents or Trademarks; PROVIDED that any Grantor shall have the right, exercisable within 10 days after it has been notified by the Collateral Agent of the specific identification of such Security Agreement Collateral, to advise the Collateral Agent in writing of any inaccuracy of the representations and warranties made by such Grantor hereunder with respect to such Security Agreement Collateral. Each Grantor agrees that it will use its best efforts to take such action as shall be necessary in order that all representations and warranties hereunder shall be true and correct with respect to such Security Agreement Collateral within 30 days after the date it has been notified by the Collateral Agent of the specific identification of such Security Agreement Collateral.
(e) The Collateral Agent and such Persons as the Collateral Agent may reasonably designate shall have the right during normal business hours and subject to Grantors' reasonable procedures, at the Grantors' own cost and expense, to inspect the Security Agreement Collateral, all records related thereto (and to make extracts and copies from such records) and the premises upon which any of the
Security Agreement Collateral is located, to discuss the Grantors' affairs with the officers of the Grantors and their independent accountants (but only in the presence of an officer of the US Borrower, PROVIDED that officers of the US Borrower are made available at reasonable times and locations) and to verify under reasonable procedures, in accordance with Section 6.02 of the Credit Agreement, the validity, amount, quality, quantity, value, condition and status of, or any other matter relating to, the Security Agreement Collateral, including, in the case of Accounts or Security Agreement Collateral in the possession of any third person, by contacting Account Debtors or the third person possessing such Security Agreement Collateral for the purpose of making such a verification. Subject to Section 10.14 of the Credit Agreement, the Collateral Agent shall have the right to share any information it gains from such inspection or verification with any Secured Party.
(f) At its option, the Collateral Agent may discharge past due taxes, assessments, charges, fees, Liens, security interests or other encumbrances at any time levied or placed on the Security Agreement Collateral and not permitted pursuant to Section 7.03 of the Credit Agreement, and may pay for the maintenance and preservation of the Security Agreement Collateral to the extent any Grantor fails to do so as required by the Credit Agreement or this Agreement, and each Grantor jointly and severally agrees to reimburse the Collateral Agent on demand for any payment made or any expense incurred by the Collateral Agent pursuant to the foregoing authorization; PROVIDED that nothing in this Section 4.03(g) shall be interpreted as excusing any Grantor from the performance of, or imposing any obligation on the Collateral Agent or any Secured Party to cure or perform, any covenants or other promises of any Grantor with respect to taxes, assessments, charges, fees, liens, security interests or other encumbrances and maintenance as set forth herein or in the other Credit Documents.
(g) If at any time any Grantor shall take a security interest in any property that has a value, individually, in excess of $250,000 of an Account Debtor or any other Person to secure payment and performance of an Account, such Grantor shall promptly assign such security interest to the Collateral Agent (unless, in the case of any such property, such assignment is prohibited by any contract giving rise to such property or by applicable law, PROVIDED that (i) with respect to such contract in existence on the Effective Date, such Grantor has used reasonable efforts to remove any such prohibition, and (ii) with respect to such contract acquired after the Effective Date, such Grantor
shall have used reasonable efforts to prevent the inclusion of any such prohibitions in any such contracts). Such assignment need not be filed of public record unless necessary to continue the perfected status of the security interest against creditors of and transferees from the Account Debtor or other Person granting the security interest.
(h) Each Grantor shall remain liable to observe and perform all the conditions and obligations to be observed and performed by it under each contract, agreement or instrument relating to the Security Agreement Collateral, all in accordance with the terms and conditions thereof, and each Grantor jointly and severally agrees to indemnify and hold harmless the Collateral Agent and the Secured Parties from and against any and all liability for such performance.
(i) None of the Grantors shall make or permit to be made an assignment, pledge or hypothecation of the Security Agreement Collateral or shall grant any other Lien in respect of the Security Agreement Collateral, except as expressly permitted by Section 7.03 of the Credit Agreement. None of the Grantors shall make or permit to be made any transfer of the Security Agreement Collateral and each Grantor shall remain at all times in possession of the Security Agreement Collateral owned by it, except that (i) Inventory may be sold in the ordinary course of business and (ii) unless and until the Collateral Agent shall notify the Grantors that an Event of Default shall have occurred and be continuing and that during the continuance thereof the Grantors shall not sell, convey, lease, assign, transfer or otherwise dispose of any Security Agreement Collateral (which notice may be given by telephone if confirmed in writing within 2 Business Days), the Grantors may use and dispose of the Security Agreement Collateral in any lawful manner not inconsistent with the provisions of this Agreement, the Credit Agreement or any other Credit Document. Without limiting the generality of the foregoing, each Grantor agrees that it shall not permit any Inventory to be in the possession or control of any warehouseman, bailee, agent or processor at any time after March 31, 2002 unless such warehouseman, bailee, agent or processor shall have been notified of the Security Interest and the US Borrower shall have used commercially reasonable efforts to obtain from such warehouseman, bailee, agent or processor an acknowledgment in writing, in form and substance satisfactory to the Collateral Agent, that such warehouseman, bailee, agent or processor holds the Inventory for the benefit of the Collateral Agent subject to the Security Interest and shall act upon the instructions of the Collateral Agent without further consent from the Grantor,
and that such warehouseman, bailee, agent or processor further agrees to waive and release any Lien held by it with respect to such Inventory, whether arising by operation of law or otherwise.
(j) None of the Grantors will, without the Collateral Agent's prior written consent, grant any extension of the time of payment of any Accounts included in the Security Agreement Collateral, compromise, compound or settle the same for less than the full amount thereof, release, wholly or partly, any Person liable for the payment thereof or allow any credit or discount whatsoever thereon, other than extensions, credits, discounts, compromises or settlements granted or made in the ordinary course of business and consistent with its current practices and in accordance with reasonably prudent and standard practice used in industries that are the same as or similar to those in which such Grantor is engaged.
(k) The Grantors, at their own expense, shall maintain or cause to be
maintained insurance covering physical loss or damage to the Inventory and
Equipment in accordance with Section 6.03 of the Credit Agreement. Each Grantor
irrevocably makes, constitutes and appoints the Collateral Agent (and all
officers, employees or agents designated by the Collateral Agent) as such
Grantor's true and lawful agent (and attorney-in-fact) for the purpose, during
the continuance of an Event of Default, of making, settling and adjusting claims
in respect of Security Agreement Collateral under policies of insurance,
endorsing the name of such Grantor on any check, draft, instrument or other item
of payment for the proceeds of such policies of insurance and for making all
determinations and decisions with respect thereto. In the event that any Grantor
at any time or times shall fail to obtain or maintain any of the policies of
insurance required hereby or to pay any premium in whole or part relating
thereto, the Collateral Agent may, without waiving or releasing any obligation
or liability of the Grantors hereunder or any Event of Default, in its sole
discretion, obtain and maintain such policies of insurance and pay such premium
and take any other actions with respect thereto as the Collateral Agent deems
advisable. All sums disbursed by the Collateral Agent in connection with this
Section 4.03(l), including reasonable attorneys' fees, court costs, expenses and
other charges relating thereto, shall be payable, upon demand, by the Grantors
to the Collateral Agent and shall be additional Obligations secured hereby.
(l) Each Grantor shall maintain, in form and manner satisfactory to the Collateral Agent, its Chattel Paper and its books, records and documents evidencing or
pertaining thereto with an appropriate reference to the fact that such Chattel Paper has been assigned to the Collateral Agent for the benefit of the Secured Parties and that the Collateral Agent has a security interest therein.
SECTION 4.04. OTHER ACTIONS. In order to further insure the attachment, perfection and priority of, and the ability of the Collateral Agent to enforce, the Collateral Agent's security interest in the Security Agreement Collateral, each Grantor agrees, in each case at such Grantor's own expense, to take the following actions with respect to the following Security Agreement Collateral:
(a) INSTRUMENTS AND TANGIBLE CHATTEL PAPER. If any Grantor shall at any time hold or acquire any Instruments or Tangible Chattel Paper that have a value, individually, in excess of $250,000 or, in the aggregate for all Grantors, in excess of $2,000,000 (but only to the extent of such excess), such Grantor shall forthwith endorse, assign and deliver the same to the Collateral Agent, accompanied by such instruments of transfer or assignment duly executed in blank as the Collateral Agent may from time to time specify.
(b) DEPOSIT ACCOUNTS. For each deposit account that any Grantor at any time opens or maintains in respect of deposits in excess of $500,000 for all accounts at such deposit bank, such Grantor shall, at the Collateral Agent's request and option, pursuant to an agreement in form and substance satisfactory to the Collateral Agent, either (i) cause the depositary bank to agree to comply at any time with instructions from the Collateral Agent to such depositary bank directing the disposition of funds from time to time credited to such deposit account, without further consent of such Grantor, or (ii) arrange for the Collateral Agent to become the customer of the depositary bank with respect to the deposit account, with the Grantor being permitted, only with the consent of the Collateral Agent, to exercise rights to withdraw funds from such deposit account. The Collateral Agent agrees with each Grantor that the Collateral Agent shall not give any such instructions or withhold any withdrawal rights from any Grantor, unless an Event of Default has occurred and is continuing, or, after giving effect to any withdrawal would occur. The provisions of this paragraph shall not apply to (A) any deposit account for which any Grantor, the depositary bank and the Collateral Agent have entered into a cash collateral agreement specially negotiated among such Grantor, the depositary bank and the Collateral Agent for the
specific purpose set forth therein and (B) deposit accounts for which the Collateral Agent is the depositary.
(c) INVESTMENT PROPERTY. If any Grantor shall at any time hold or acquire any certificated securities with a value, individually, in excess of $500,000 or, in the aggregate for all Grantors for all Investment Property, in excess of $2,000,000 (but only to the extent of such excess), such Grantor shall forthwith endorse, assign and deliver the same to the Collateral Agent, accompanied by such instruments of transfer or assignment duly executed in blank as the Collateral Agent may from time to time specify. If any securities now or hereafter acquired by any Grantor with a value, individually, in excess of $500,000 or, in the aggregate for all Grantors for all Investment Property, in excess of $2,000,000 (but only to the extent of such excess) are uncertificated and are issued to such Grantor or its nominee directly by the issuer thereof, such Grantor shall immediately notify the Collateral Agent thereof and, at the Collateral Agent's request and option, pursuant to an agreement in form and substance satisfactory to the Collateral Agent, either (i) cause the issuer to agree to comply with instructions from the Collateral Agent as to such securities, without further consent of any Grantor or such nominee, or (ii) arrange for the Collateral Agent to become the registered owner of the securities. If any securities, whether certificated or uncertificated, or other investment property now or hereafter acquired by any Grantor that have a value, individually, in excess of $500,000 or, in the aggregate for all Grantors for all Investment Property, in excess of $2,000,000 (but only to the extent of such excess) are held by such Grantor or its nominee through a securities intermediary or commodity intermediary, such Grantor shall immediately notify the Collateral Agent thereof and, at the Collateral Agent's request and option, pursuant to an agreement in form and substance satisfactory to the Collateral Agent, either (A) cause such securities intermediary or (as the case may be) commodity intermediary to agree to comply with entitlement orders or other instructions from the Collateral Agent to such securities intermediary as to such securities or other investment property, or (as the case may be) to apply any value distributed on account of any commodity contract as directed by the Collateral Agent to such commodity intermediary, in each case without further consent of any Grantor or such nominee, or (B) in the case of Financial Assets or
other Investment Property held through a securities intermediary, arrange for the Collateral Agent to become the entitlement holder with respect to such investment property, with the Grantor being permitted, only with the consent of the Collateral Agent, to exercise rights to withdraw or otherwise deal with such investment property. The Collateral Agent agrees with each of the Grantors that the Collateral Agent shall not give any such entitlement orders or instructions or directions to any such issuer, securities intermediary or commodity intermediary, and shall not withhold its consent to the exercise of any withdrawal or dealing rights by any Grantor, unless an Event of Default has occurred and is continuing, or, after giving effect to any such investment and withdrawal rights would occur. The provisions of this paragraph (c) shall not apply to any financial assets credited to a securities account for which the Collateral Agent is the securities intermediary.
(d) ELECTRONIC CHATTEL PAPER AND TRANSFERABLE RECORDS. If any Grantor
at any time holds or acquires an interest in any electronic chattel paper
or any "transferable record," as that term is defined in Section 201 of the
Federal Electronic Signatures in Global and National Commerce Act, or in
Section 16 of the Uniform Electronic Transactions Act as in effect in any
relevant jurisdiction, in either case that have a value, individually, in
excess of $500,000 or, in the aggregate for all Grantors, in excess of
$2,000,000 (but only to the extent of such excess) such Grantor shall
promptly notify the Collateral Agent thereof and, at the request of the
Collateral Agent, shall take such action as the Collateral Agent may
reasonably request to vest in the Collateral Agent control under UCC
Section 9-105 of such electronic chattel paper or control under Section 201
of the Federal Electronic Signatures in Global and National Commerce Act
or, as the case may be, Section 16 of the Uniform Electronic Transactions
Act, as so in effect in such jurisdiction, of such transferable record. The
Collateral Agent agrees with such Grantor that the Collateral Agent will
arrange, pursuant to procedures satisfactory to the Collateral Agent and so
long as such procedures will not result in the Collateral Agent's loss of
control, for the Grantor to make alterations to the electronic chattel
paper or transferable record permitted under UCC Section 9-105 or, as the
case may be, Section 201 of the Federal Electronic Signatures in Global and
National Commerce Act or Section 16 of the Uniform Electronic Transactions
Act for a party in control to
allow without loss of control, unless an Event of Default has occurred and is continuing or would occur after taking into account any action by such Grantor with respect to such electronic chattel paper or transferable record.
(e) LETTER-OF-CREDIT RIGHTS. If any Grantor is at any time a beneficiary under a letter of credit now or hereafter issued in favor of such Grantor that has a face amount, individually, in excess of $500,000 or, in the aggregate for all Grantors, in excess of $2,000,000 (but only to the extent of such excess)(other than any letter of credit in existence on the Effective Date and listed on Schedule V), such Grantor shall promptly notify the Collateral Agent thereof and, at the request and option of the Collateral Agent, such Grantor shall, pursuant to an agreement in form and substance satisfactory to the Collateral Agent, either (i) arrange for the issuer and any confirmer of such letter of credit to consent to an assignment to the Collateral Agent of the proceeds of any drawing under the letter of credit or (ii) arrange for the Collateral Agent to become the transferee beneficiary of the letter of credit, with the Collateral Agent agreeing, in each case, that the proceeds of any drawing under the letter of credit are to be paid to the applicable Grantor unless an Event of Default has occurred or is continuing.
(f) COMMERCIAL TORT CLAIMS. If any Grantor shall at any time hold or acquire a commercial tort claim, the Grantor shall immediately notify the Collateral Agent thereof in a writing signed by such Grantor, including a summary description of such claim, and grant to the Collateral Agent in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance satisfactory to the Collateral Agent.
SECTION 4.05. COVENANTS REGARDING PATENT, TRADEMARK AND COPYRIGHT COLLATERAL. (a) Each Grantor agrees that it will not, and will not permit any of its licensees to, do any act, or omit to do any act, whereby any Patent that is material to the conduct of such Grantor's business may become invalidated or dedicated to the public, and agrees that it shall continue to mark any products covered by a Patent with the relevant patent number as necessary and sufficient to establish and preserve its maximum rights under applicable patent laws.
(b) Each Grantor (either itself or through its licensees or its sublicensees) will, for each Trademark material to the conduct of such Grantor's business, (1) maintain such Trademark in full force free from any claim of abandonment or invalidity for non-use, (2) maintain the quality of products and services offered under such Trademark, (3) display such Trademark with notice of Federal or foreign registration to the extent necessary and sufficient to establish and preserve its maximum rights under applicable law and (4) not knowingly use or knowingly permit the use of such Trademark in violation of any third party rights.
(c) Each Grantor (either itself or through its licensees or its sublicensees) will, for each work covered by a Copyright material to the conduct of such Grantor's business, continue to publish, reproduce, display, adopt and distribute the work with appropriate copyright notice as necessary and sufficient to establish and preserve its maximum rights under applicable copyright laws.
(d) Each Grantor shall notify the Collateral Agent immediately if it knows or has reason to know that any Patent, Trademark or Copyright material to the conduct of its business may become abandoned, lost or dedicated to the public, or of any adverse determination or development (including the institution of, or any such determination or development in, any proceeding in the United States Patent and Trademark Office, United States Copyright Office or any court or similar office of any country) regarding such Grantor's ownership of any Patent, Trademark or Copyright, its right to register the same, or its right to keep and maintain the same.
(e) In no event shall any Grantor, either itself or through any agent, employee, licensee or designee, file an application for any Patent, Trademark or Copyright (or for the registration of any Trademark or Copyright) material to the conduct of such Grantor's business with the United States Patent and Trademark Office, United States Copyright Office or any office or agency in any political subdivision of the United States or in any other country or any political subdivision thereof, unless it promptly informs the Collateral Agent thereof, and, upon request of the Collateral Agent, executes and delivers any and all agreements, instruments, documents and papers as the Collateral Agent may request to evidence the Collateral Agent's security interest in such Patent, Trademark or Copyright, and each Grantor hereby appoints the Collateral Agent as its attorney-in-fact to execute and file such writings for the foregoing purposes, all acts of such
attorney being hereby ratified and confirmed; such power, being coupled with an interest, is irrevocable.
(f) Each Grantor will take all necessary steps that are consistent with the practice in any proceeding before the United States Patent and Trademark Office, United States Copyright Office or any office or agency in any political subdivision of the United States or in any other country or any political subdivision thereof, to maintain and pursue each application that is material to the conduct of any Grantor's business relating to the Patents, Trademarks and/or Copyrights (and to obtain the relevant grant or registration) and to maintain each issued Patent and each registration of the Trademarks and Copyrights that is material to the conduct of any Grantor's business, including timely filings of applications for renewal, affidavits of use, affidavits of incontestability and payment of maintenance fees, and, if consistent with good business judgment, to initiate opposition, interference and cancellation proceedings against third parties.
(g) In the event that any Grantor has reason to believe that any Security Agreement Collateral consisting of a Patent, Trademark or Copyright material to the conduct of any Grantor's business has been or is about to be infringed, misappropriated or diluted by a third party, such Grantor promptly shall notify the Collateral Agent and shall, if consistent with such Grantor's good business judgment, promptly sue for infringement, misappropriation or dilution and to recover any and all damages for such infringement, misappropriation or dilution, and take such other actions as are appropriate under the circumstances to protect such Security Agreement Collateral.
(h) Upon and during the continuance of an Event of Default, each Grantor shall use its best efforts to obtain all requisite consents or approvals by the licensor of each Copyright License, Patent License or Trademark License to effect the assignment of all such Grantor's right, title and interest thereunder to the Collateral Agent or its designee.
SECTION 4.06. LOCKBOX SYSTEM. (a) Within 30 days after the occurrence and during the continuance of any Event of Default, the Grantors shall establish in the name of the Collateral Agent, and subject to the control of the Collateral Agent pursuant to the Lockbox Agreements, for the benefit of the Collateral Agent and the other Secured Parties, a system of lockboxes and related deposit accounts (the "LOCKBOX SYSTEM") with one or more financial institutions that are reasonably satisfactory to the
Collateral Agent into which the Proceeds of all Accounts, Inventory and Assigned Contracts shall be deposited and forwarded to the Collateral Agent in accordance with the Lockbox Agreements.
(b) All Proceeds of Accounts, Inventory and Assigned Contracts that have been received on any Business Day through the Lockbox System will be transferred into the Concentration Account on such Business Day to the extent required by the applicable Lockbox Agreement. All Proceeds stemming from the sale of a substantial portion of the Security Agreement Collateral (other than Proceeds of Inventory and Accounts) that have been received by a Grantor on any Business Day will be transferred into the Concentration Account on such Business Day. All Proceeds received on any Business Day by the Collateral Agent pursuant to Section 4.07 will be transferred into the Concentration Account on such Business Day.
(c) The Concentration Account is, and shall remain, under the sole dominion and control of the Collateral Agent. Each Grantor acknowledges and agrees that (i) such Grantor has no right of withdrawal from the Concentration Account, (ii) the funds on deposit in the Concentration Account shall continue to be collateral security for all of the Obligations and (iii) upon the occurrence and during the continuance of an Event of Default, at the Collateral Agent's election, the funds on deposit in the Concentration Account shall be applied as provided in Section 5.02.
(d) Effective upon notice to the Grantors from the Collateral Agent
after the occurrence and during the continuance of an Event of Default (PROVIDED
that the Lockbox System has been established pursuant to Section 4.06(a))(which
notice may be given by telephone if confirmed in writing within two Business
Days), the Concentration Account will, without any further action on the part of
any Grantor, the Collateral Agent or any Sub-Agent, convert into a closed
lockbox account under the exclusive dominion and control of the Collateral Agent
in which funds are held subject to the rights of the Collateral Agent hereunder.
Each Grantor irrevocably authorizes the Collateral Agent to notify each
Sub-Agent (i) of the occurrence of an Event of Default (PROVIDED that the
Lockbox System has been established pursuant to Section 4.06(a)) and (ii) of the
matters referred to in this paragraph (d). Following the occurrence of an Event
of Default (PROVIDED that the Lockbox System has been established pursuant to
Section 4.06(a)), the Collateral Agent may instruct each Sub-Agent to transfer
immediately all funds held in each
Collection Deposit Account to the Concentration Account. Each Grantor hereby agrees to irrevocably direct each Sub-Agent to comply with the instructions of the Collateral Agent with respect to each Collection Deposit Account without further consent from the Grantor or any other Person.
SECTION 4.07. COLLECTIONS. If the Lockbox System has been established pursuant to Section 4.06(a):
(a) Effective upon notice to the Grantors from the Collateral Agent after the occurrence and during the continuance of an Event of Default, each Grantor agrees (i) to notify and direct promptly each Account Debtor and every other Person obligated to make payments on Accounts, in respect of any Inventory or with respect to any Assigned Contracts to make all such payments directly to the Lockbox System established in accordance with Section 4.06, (ii) to use all reasonable efforts to cause each Account Debtor and every other Person identified in clause (i) above to make all payments with respect to Accounts, Inventory and Assigned Contracts directly to the Lockbox System and (iii) promptly to deposit all payments received by it on account of Accounts, Inventory and Assigned Contracts, whether in the form of cash, checks, notes, drafts, bills of exchange, money orders or otherwise, in the Lockbox System in precisely the form in which received (but with any endorsements of such Grantor necessary for deposit or collection), and until they are so deposited such payments shall be held in trust by such Grantor for and as the property of the Collateral Agent.
(b) Effective upon notice to the Grantors from the Collateral Agent after the occurrence and during the continuance of an Event of Default, without the prior written consent of the Collateral Agent, no Grantor shall, in a manner adverse to the Lenders, change the general instructions given to Account Debtors in respect of payment on Accounts to be deposited in the Lockbox System. Until the Collateral Agent shall have advised the Grantors to the contrary, each Grantor shall, and the Collateral Agent hereby authorizes each Grantor to, enforce and collect all amounts owing on the Accounts, Inventory and Assigned Contracts, for the benefit and on behalf of the Collateral Agent and the other Secured Parties; PROVIDED, HOWEVER, that such privilege may at the option of the Collateral Agent be terminated upon the occurrence and during the continuance of any Event of Default.
ARTICLE V
REMEDIES
SECTION 5.01. REMEDIES UPON DEFAULT. Upon the occurrence and during the continuance of an Event of Default, each Grantor and each Pledgor agrees to deliver each item of Collateral to the Collateral Agent on demand, and it is agreed that the Collateral Agent shall have the right to take any of or all the following actions at the same or different times: (a) with respect to any Security Agreement Collateral consisting of Intellectual Property, on demand, to cause the Security Interest to become an assignment, transfer and conveyance of any of or all such Security Agreement Collateral by the applicable Grantors to the Collateral Agent, or to license or sublicense, whether general, special or otherwise, and whether on an exclusive or nonexclusive basis, any such Security Agreement Collateral throughout the world on such terms and conditions and in such manner as the Collateral Agent shall determine (other than in violation of any then-existing licensing arrangements to the extent that waivers cannot be obtained), and (b) with or without legal process and with or without prior notice or demand for performance, to take possession of the Security Agreement Collateral and without liability for trespass to enter any premises where the Security Agreement Collateral may be located for the purpose of taking possession of or removing the Security Agreement Collateral and, generally, to exercise any and all rights afforded to a secured party under the Uniform Commercial Code or other applicable law. Without limiting the generality of the foregoing, each Grantor and each Pledgor agrees that the Collateral Agent shall have the right, subject to the requirements of applicable law, to sell or otherwise dispose of all or any part of the Collateral at a public or private sale or at any broker's board or on any securities exchange, for cash, upon credit or for future delivery as the Collateral Agent shall deem appropriate. The Collateral Agent shall be authorized at any such sale (if it deems it advisable to do so) to restrict the prospective bidders or purchasers to Persons who will represent and agree that they are purchasing the Collateral for their own account for investment and not with a view to the distribution or sale thereof, and upon consummation of any such sale the Collateral Agent shall have the right to assign, transfer and deliver to the purchaser or purchasers thereof the Collateral so sold. Each such purchaser at any such sale shall hold the property sold absolutely, free from any claim or right on the part of any Grantor or Pledgor, and the Grantors and Pledgors hereby waive (to the extent permitted by law) all rights of redemption, stay and
appraisal that such Grantor or Pledgor now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted.
The Collateral Agent shall give the applicable Grantors or Pledgors 10 days' written notice (which each Grantor or Pledgor agrees is reasonable notice within the meaning of Section 9-611 of the New York UCC or its equivalent in other jurisdictions) of the Collateral Agent's intention to make any sale of Security Agreement Collateral or Pledged Collateral. Such notice, in the case of a public sale, shall state the time and place for such sale and, in the case of a sale at a broker's board or on a securities exchange, shall state the board or exchange at which such sale is to be made and the day on which the Collateral, or portion thereof, will first be offered for sale at such board or exchange. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as the Collateral Agent may fix and state in the notice (if any) of such sale. At any such sale, the Collateral, or portion thereof, to be sold may be sold in one lot as an entirety or in separate parcels, as the Collateral Agent may (in its sole and absolute discretion) determine. The Collateral Agent shall not be obligated to make any sale of any Collateral if it shall determine not to do so, regardless of the fact that notice of sale of such Collateral shall have been given. The Collateral Agent may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for sale, and such sale may, without further notice, be made at the time and place to which the same was so adjourned. In case any sale of all or any part of the Collateral is made on credit or for future delivery, the Collateral so sold may be retained by the Collateral Agent until the sale price is paid by the purchaser or purchasers thereof, but the Collateral Agent shall not incur any liability in case any such purchaser or purchasers shall fail to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may be sold again upon like notice. At any public (or, to the extent permitted by law, private) sale made pursuant to this Section, any Secured Party may bid for or purchase, free (to the extent permitted by law) from any right of redemption, stay, valuation or appraisal on the part of any Grantor or Pledgor (all said rights being also hereby waived and released to the extent permitted by law), the Collateral or any part thereof offered for sale and may make payment on account thereof by using any claim then due and payable to such Secured Party from any Grantor or Pledgor as a credit against the purchase price (in which case such claim shall
be extinguished), and such Secured Party may, upon compliance with the terms of sale, hold, retain and dispose of such property without further accountability to any Grantor or Pledgor therefor. For purposes hereof, a written agreement to purchase the Collateral or any portion thereof shall be treated as a sale thereof; the Collateral Agent shall be free to carry out such sale pursuant to such agreement and no Grantor or Pledgor shall be entitled to the return of the Collateral or any portion thereof subject thereto, notwithstanding the fact that after the Collateral Agent shall have entered into such an agreement all Events of Default shall have been remedied and the Obligations paid in full. As an alternative to exercising the power of sale herein conferred upon it, the Collateral Agent may proceed by a suit or suits at law or in equity to foreclose this Agreement and to sell the Collateral or any portion thereof pursuant to a judgment or decree of a court or courts having competent jurisdiction or pursuant to a proceeding by a court-appointed receiver. Any sale pursuant to the provisions of this Section 5.01 shall be deemed to conform to the commercially reasonable standards as provided in Section 9-610(b) of the New York UCC or its equivalent in other jurisdictions.
SECTION 5.02. APPLICATION OF PROCEEDS. The Collateral Agent shall apply the proceeds of any collection or sale of Collateral, as well as any Collateral consisting of cash, as follows:
FIRST, to the payment of all costs and expenses incurred by the Collateral Agent in connection with such collection or sale or otherwise in connection with this Agreement, any other Credit Document or any of the Obligations, including all court costs and the fees and expenses of its agents and legal counsel, the repayment of all advances made by the Collateral Agent or the Administrative Agent hereunder or under any other Credit Document on behalf of any Grantor or Pledgor and any other costs or expenses incurred by any Secured Party in connection with the exercise of any right or remedy hereunder or under any other Credit Document;
SECOND, to the payment in full of the Obligations (the amounts so applied to be distributed among the Secured Parties pro rata in accordance with the amounts of the Obligations owed to them on the date of any such distribution); and
THIRD, to the Grantors and Pledgors, their successors or assigns, or as a court of competent jurisdiction may otherwise direct.
The Collateral Agent shall have absolute discretion as to the time of application of any such proceeds, moneys or balances in accordance with this Agreement. Upon any sale of Collateral by the Collateral Agent (including pursuant to a power of sale granted by statute or under a judicial proceeding), the receipt of the Collateral Agent or of the officer making the sale shall be a sufficient discharge to the purchaser or purchasers of the Collateral so sold and such purchaser or purchasers shall not be obligated to see to the application of any part of the purchase money paid over to the Collateral Agent or such officer or be answerable in any way for the misapplication thereof.
SECTION 5.03. GRANT OF LICENSE TO USE INTELLECTUAL PROPERTY. For the purpose of enabling the Collateral Agent to exercise rights and remedies under this Article at such time as the Collateral Agent shall be lawfully entitled to exercise such rights and remedies, each Grantor hereby grants to the Collateral Agent an irrevocable (unless and until this Agreement is terminated, in which case such license shall be revoked automatically without further action by either party and exercisable without payment of royalty or other compensation to the Grantors), nonexclusive license to use, license or sublicense any of the Security Agreement Collateral consisting of Intellectual Property now owned or hereafter acquired by such Grantor, except to the extent that the granting of such license would result in the permanent destruction of the validity or value of such Intellectual Property, and wherever the same may be located, and including in such license reasonable access to all media in which any of the licensed items may be recorded or stored and to all computer software and programs used for the compilation or printout thereof. The use of such license by the Collateral Agent shall be exercised, at the option of the Collateral Agent, upon the occurrence and during the continuation of an Event of Default; PROVIDED that any license, sublicense or other transaction entered into by the Collateral Agent in accordance herewith shall be binding upon the Grantors notwithstanding any subsequent cure of an Event of Default.
SECTION 5.04. SECURITIES ACT, ETC. In view of the position of the Pledgors in relation to the Pledged Collateral, or because of other current or future circumstances, a question may arise under the Securities Act of 1933, as now or hereafter in effect, or any similar statute hereafter enacted analogous in purpose or effect (such Act and any such similar statute as from time to time in effect being called the "Federal Securities Laws") with respect to any disposition of the Pledged Collateral permitted hereunder. Each Pledgor understands that
compliance with the Federal Securities Laws might very strictly limit the course of conduct of the Collateral Agent if the Collateral Agent were to attempt to dispose of all or any part of the Pledged Collateral, and might also limit the extent to which or the manner in which any subsequent transferee of any Pledged Collateral could dispose of the same. Similarly, there may be other legal restrictions or limitations affecting the Collateral Agent in any attempt to dispose of all or part of the Pledged Collateral under applicable Blue Sky or other state securities laws or similar laws analogous in purpose or effect. Each Pledgor recognizes that in light of such restrictions and limitations the Collateral Agent may, with respect to any sale of the Pledged Collateral, limit the purchasers to those who will agree, among other things, to acquire such Pledged Collateral for their own account, for investment, and not with a view to the distribution or resale thereof. Each Pledgor acknowledges and agrees that in light of such restrictions and limitations, the Collateral Agent, in its sole and absolute discretion, (a) may proceed to make such a sale whether or not a registration statement for the purpose of registering such Pledged Collateral or part thereof shall have been filed under the Federal Securities Laws and (b) may approach and negotiate with a single potential purchaser to effect such sale. Each Pledgor acknowledges and agrees that any such sale might result in prices and other terms less favorable to the seller than if such sale were a public sale without such restrictions. In the event of any such sale, the Collateral Agent shall incur no responsibility or liability for selling all or any part of the Pledged Collateral at a price that the Collateral Agent, in its sole and absolute discretion, may in good faith deem reasonable under the circumstances, notwithstanding the possibility that a substantially higher price might have been realized if the sale were deferred until after registration as aforesaid or if more than a single purchaser were approached. The provisions of this Section 5.04 will apply notwithstanding the existence of a public or private market upon which the quotations or sales prices may exceed substantially the price at which the Collateral Agent sells.
ARTICLE VI
INDEMNITY, SUBROGATION AND SUBORDINATION
SECTION 6.01. INDEMNITY AND SUBROGATION. In addition to all such rights of indemnity and subrogation as the Guarantors may have under applicable law (but subject to Section 6.03), each Borrower agrees that (a) in the event a payment shall be made by Holdings or any other Guarantor
under this Agreement, each Borrower shall indemnify such Guarantor for the full amount of such payment and such Guarantor shall be subrogated to the rights of the Person to whom such payment shall have been made to the extent of such payment and (b) in the event any assets of any Guarantor shall be sold pursuant to any Security Document to satisfy a claim of any Secured Party, each Borrower shall indemnify Holdings or such other Guarantor in an amount equal to the greater of the book value or the fair market value of the assets so sold.
SECTION 6.02. CONTRIBUTION AND SUBROGATION. Holdings and each other Guarantor (a "CONTRIBUTING GUARANTOR") agrees (subject to Section 6.03) that, in the event a payment shall be made by Holdings or any other Guarantor hereunder or assets of Holdings or any other Guarantor shall be sold pursuant to any Security Document to satisfy a claim of any Secured Party and Holdings or such other Guarantor (the "CLAIMING GUARANTOR") shall not have been fully indemnified by the Borrowers as provided in Section 6.01, the Contributing Guarantor shall indemnify the Claiming Guarantor 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, in each case multiplied by a fraction of which the numerator shall be the net worth of the Contributing Guarantor on the date hereof and the denominator shall be the aggregate net worth of all the Guarantors on the date hereof (or, in the case of any Guarantor becoming a party hereto pursuant to Section 7.16, the date of the Supplement hereto executed and delivered by such Guarantor). Any Contributing Guarantor making any payment to a Claiming Guarantor pursuant to this Section 6.02 shall be subrogated to the rights of such Claiming Guarantor under Section 6.01 to the extent of such payment.
SECTION 6.03. SUBORDINATION. Notwithstanding any provision of this Agreement to the contrary, all rights of the Guarantors under Sections 6.01 and 6.02 and all other rights of indemnity, contribution or subrogation under applicable law or otherwise shall be fully subordinated to the indefeasible payment in full in cash of the Obligations. No failure on the part of any Borrower, Holdings or any other Guarantor to make the payments required by Sections 6.01 and 6.02 (or any other payments required under applicable law or otherwise) shall in any respect limit the obligations and liabilities of any Guarantor with respect to its obligations hereunder, and each Guarantor shall remain liable for the full amount of the obligations of such Guarantor hereunder.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. NOTICES. All communications and notices hereunder shall (except as otherwise expressly permitted herein) be in writing and given as provided in Section 10.03 of the Credit Agreement. All communications and notices hereunder to any Subsidiary Party shall be given to it in care of the US Borrower as provided in Section 10.03 of the Credit Agreement.
SECTION 7.02. SECURITY INTEREST ABSOLUTE. All rights of the Collateral Agent hereunder, the Security Interest, the security interest in the Pledged Collateral and all obligations of each Grantor and Pledgor hereunder shall be absolute and unconditional irrespective of (a) any lack of validity or enforceability of the Credit Agreement, any other Credit Document, any agreement with respect to any of the Obligations or any other agreement or instrument relating to any of the foregoing, (b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to any departure from the Credit Agreement, any other Credit Document or any other agreement or instrument, (c) any exchange, release or non-perfection of any Lien on other collateral, or any release or amendment or waiver of or consent under or departure from any guaranty, securing or guaranteeing all or any of the Obligations, or (d) any other circumstance that might otherwise constitute a defense available to, or a discharge of, any Grantor or Pledgor in respect of the Obligations or this Agreement.
SECTION 7.03. SURVIVAL OF AGREEMENT. All covenants, agreements, representations and warranties made by the Credit Parties in the Credit Documents and in the certificates or other instruments delivered in connection with or pursuant to this Agreement or any other Credit Document shall be considered to have been relied upon by the other parties hereto and shall survive (except as otherwise provided in the applicable Credit Documents) the execution and delivery of the Credit Documents and the making of any Loans, acceptance and purchase of any B/As and issuance of any Letters of Credit, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Collateral Agent, any other Agent, the Letter of Credit Issuer or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended under the Credit Agreement, and shall continue in full force and effect (except as
otherwise provided in the applicable Credit Document) as long as the principal of, premium (if any) or any accrued interest on any Loan or B/A or any fee or any other amount payable under the Credit Agreement is outstanding and unpaid or any Letter of Credit is outstanding and so long as the Commitments have not expired or terminated.
SECTION 7.04. BINDING EFFECT; SEVERAL AGREEMENT. This Agreement shall become effective as to any Credit Party when a counterpart hereof executed on behalf of such Credit Party shall have been delivered to the Collateral Agent and a counterpart hereof shall have been executed on behalf of the Collateral Agent, and thereafter shall be binding upon such Credit Party and the Collateral Agent and their respective successors and assigns, and shall inure to the benefit of such Credit Party, the Collateral Agent and the other Secured Parties and their respective successors and assigns, except that no Credit Party shall have the right to assign or transfer its rights or obligations hereunder or any interest herein or in the Collateral (and any such assignment or transfer shall be void) except as expressly contemplated by this Agreement or the Credit Agreement. This Agreement shall be construed as a separate agreement with respect to each Credit Party and may be amended, modified, supplemented, waived or released with respect to any Credit Party without the approval of any other Credit Party and without affecting the obligations of any other Credit Party hereunder.
SECTION 7.05. SUCCESSORS AND ASSIGNS. Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party; and all covenants, promises and agreements by or on behalf of any Grantor, any Pledgor or the Collateral Agent that are contained in this Agreement shall bind and inure to the benefit of their respective successors and assigns.
SECTION 7.06. COLLATERAL AGENT'S FEES AND EXPENSES; INDEMNIFICATION.
(a) Each Grantor and each Pledgor jointly and severally agrees to pay upon
demand to the Collateral Agent the amount of any and all reasonable expenses,
including the reasonable fees, disbursements and other charges of its counsel
and of any experts or agents, that the Collateral Agent may incur in connection
with (i) the administration of this Agreement (including the customary fees and
charges of the Collateral Agent for any audits conducted by it or on its behalf
with respect to the Accounts or Inventory), (ii) the custody or preservation of,
or the sale of, collection from or other realization upon any of the Collateral,
(iii) the exercise, enforcement or
protection of any of the rights of the Collateral Agent hereunder or (iv) the failure of any Grantor or Pledgor to perform or observe any of the provisions hereof.
(b) Without limitation of its indemnification obligations under the other Credit Documents and without duplication of any amounts paid pursuant to clause (a) of this Section 7.06, each Grantor and each Pledgor jointly and severally agrees to indemnify the Collateral Agent, each other Agent, each Letter of Credit Issuer and each Lender and their respective officers, directors, employees, representatives, trustees, affiliates and agents (each, an "INDEMNITEE") against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including the reasonable fees, charges and disbursements of any counsel for any Indemnitee, incurred by or asserted against any Indemnitee arising out of, in connection with, or as a result of, the execution, delivery or performance of this Agreement or any claim, litigation, investigation or proceeding relating hereto or to the Collateral, whether or not any Indemnitee is a party thereto; PROVIDED that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or wilful misconduct of such Indemnitee.
(c) Any such amounts payable as provided hereunder shall be additional Obligations secured hereby and by the other Security Documents. The provisions of this Section 7.06 shall remain operative and in full force and effect regardless of the termination of this Agreement or any other Credit Document, the consummation of the transactions contemplated hereby, the repayment of any of the Obligations, the invalidity or unenforceability of any term or provision of this Agreement or any other Credit Document, or any investigation made by or on behalf of the Collateral Agent or any other Secured Party. All amounts due under this Section 7.06 shall be payable on written demand therefor.
SECTION 7.07. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT. Each Grantor and each Pledgor hereby appoints the Collateral Agent the attorney-in-fact of such Grantor or Pledgor for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instrument that the Collateral Agent may deem necessary or advisable to accomplish the purposes hereof, which appointment is irrevocable (unless and until this Agreement is terminated, in which case such power-of-
attorney shall be revoked automatically without further action by any party) and coupled with an interest. Without limiting the generality of the foregoing, the Collateral Agent shall have the right, upon the occurrence and during the continuance of an Event of Default, with full power of substitution either in the Collateral Agent's name or in the name of such Grantor or Pledgor (a) in the case of a Grantor (i) to receive, endorse, assign and/or deliver any and all notes, acceptances, checks, drafts, money orders or other evidences of payment relating to the Security Agreement Collateral or any part thereof; (ii) to demand, collect, receive payment of, give receipt for and give discharges and releases of all or any of the Security Agreement Collateral; (iii) to sign the name of any Grantor on any invoice or bill of lading relating to any of the Security Agreement Collateral; (iv) to send verifications of Accounts to any Account Debtor; (v) to commence and prosecute any and all suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect or otherwise realize on all or any of the Security Agreement Collateral or to enforce any rights in respect of any Security Agreement Collateral; (vi) to settle, compromise, compound, adjust or defend any actions, suits or proceedings relating to all or any of the Security Agreement Collateral; (vii) to notify, or to require any Grantor to notify, Account Debtors to make payment directly to the Collateral Agent; and (viii) to use, sell, assign, transfer, pledge, make any agreement with respect to or otherwise deal with all or any of the Security Agreement Collateral, and to do all other acts and things necessary to carry out the purposes of this Agreement, as fully and completely as though the Collateral Agent were the absolute owner of the Security Agreement Collateral for all purposes; and (b) in the case of a Pledgor (i) to ask for, demand, sue for, collect, receive and give acquittance for any and all moneys due or to become due under and by virtue of any Pledged Collateral; (ii) to endorse checks, drafts, orders and other instruments for the payment of money payable to the Pledgor representing any interest or dividend or other distribution payable in respect of the Pledged Collateral or any part thereof or on account thereof and to give full discharge of the same; (iii) to settle, compromise, prosecute or defend any action, claim or proceeding with respect thereto; and (iv) to sell, assign, endorse, pledge, transfer and to make any agreement respecting, or otherwise deal with, the same; PROVIDED that nothing herein contained shall be construed as requiring or obligating the Collateral Agent to make any commitment or to make any inquiry as to the nature or sufficiency of any payment received by the Collateral Agent, or to present or file any claim or notice, or to take any action with respect to the Pledged Collateral or any part thereof or the moneys
due or to become due in respect thereof or any property covered thereby. The Collateral Agent and the other Secured Parties shall be accountable only for amounts actually received as a result of the exercise of the powers granted to them herein, and neither they nor their officers, directors, employees or agents shall be responsible to any Grantor or Pledgor for any act or failure to act hereunder, except for their own gross negligence or wilful misconduct.
SECTION 7.08. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 7.09. WAIVERS; AMENDMENT. (a) No failure or delay by the Collateral Agent, any other Agent, the Letter of Credit Issuer or any other Secured Party in exercising any right or power hereunder or under any other Credit Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Collateral Agent, each other Agent, the Letter of Credit Issuer and the other Secured Parties hereunder and under the other Credit Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or consent to any departure by any Credit Party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section 7.09, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan, the acceptance and purchase of a B/A or the issuance of a Letter of Credit shall not be construed as a waiver of any Default, regardless of whether the Collateral Agent, any other Agent, any Lender or the Letter of Credit Issuer may have had notice or knowledge of such Default at the time.
(b) Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Collateral Agent and the Credit Party or Credit Parties with respect to which such waiver, amendment or modification is to apply, subject to any consent required in accordance with Section 10.04 of the Credit Agreement.
SECTION 7.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT, ANY OTHER CREDIT DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY
(WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.
SECTION 7.11. SEVERABILITY. Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.
SECTION 7.12. COUNTERPARTS. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute a single contract (subject to Section 7.04), and shall become effective as provided in Section 7.04. Delivery of an executed signature page to this Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this Agreement.
SECTION 7.13. HEADINGS. Article and Section headings used herein are for the purpose of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.
SECTION 7.14. JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a) Each of the Credit Parties hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to any Credit Document, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that
a final 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. Nothing in this Agreement or any other Credit Document shall affect any right that the Collateral Agent, any other Agent, the Letter of Credit Issuer or any other Secured Party may otherwise have to bring any action or proceeding relating to this Agreement or any other Credit Document against Holdings, any of the Borrowers, any other Grantor or Pledgor or any of their properties in the courts of any jurisdiction.
(b) Each of the Credit Parties hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any other Credit Document in any court referred to in paragraph (a) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.
(c) Each Grantor and each Pledgor irrevocably consents to service of process in the manner provided for notices in Section 10.07 of the Credit Agreement. Nothing in this Agreement or any other Credit Document will affect the right of any Secured Party to serve process in any other manner permitted by law.
SECTION 7.15. TERMINATION OR RELEASE. (a) This Agreement, the Guaranties hereunder, the Security Interest and all other security interests granted hereby shall terminate when all the Credit Agreement Obligations have been indefeasibly paid in full in cash and the Lenders have no further commitment to lend or purchase and accept B/As under the Credit Agreement, the LC Exposure has been reduced to zero and the Letter of Credit Issuer has no further obligations to issue Letters of Credit under the Credit Agreement.
(b) A Subsidiary Party shall automatically be released from its obligations hereunder and the Security Interest in the Collateral of such Subsidiary Party shall be automatically released (i) upon the designation by the US Borrower of such Subsidiary Party as an Unrestricted Subsidiary, PROVIDED that such designation was permitted by the Credit Agreement, and (ii) in the event that all the capital stock of such Subsidiary Party shall be sold, transferred or otherwise disposed of to a Person that is not Holdings or a Subsidiary Party in accordance with the terms
of the Credit Agreement, PROVIDED that the Required Lenders shall have consented to such sale, transfer or other disposition (to the extent required by the Credit Agreement) and the terms of such consent did not provide otherwise.
(c) Upon any sale or other transfer by any Grantor or Pledgor of any Collateral that is permitted under the Credit Agreement to any Person that is not Holdings or any Subsidiary Party in accordance with the terms of the Credit Agreement, or upon the effectiveness of any written consent to the release of the Security Interest granted hereby in any Collateral pursuant to Section 10.04 of the Credit Agreement, the Security Interest in such Collateral shall be automatically released.
(d) In connection with any termination or release pursuant to paragraph (a), (b), or (c) of this Section 7.15, the Collateral Agent shall execute and deliver to any Grantor or Pledgor, as the case may be, at such Grantor's or Pledgor's expense, all documents that such Grantor or Pledgor shall reasonably request to evidence such termination or release. Any execution and delivery of documents pursuant to this Section 7.15 shall be without recourse to or warranty by the Collateral Agent.
SECTION 7.16. ADDITIONAL SUBSIDIARIES. Pursuant to Section 6.11 of the
Credit Agreement, each Domestic Subsidiary of the US Borrower that was not in
existence or not a Domestic Subsidiary of the US Borrower on the date of the
Credit Agreement is required to enter into this Agreement (a) as a Guarantor,
(b) as a Grantor and (c) as a Pledgor. Upon execution and delivery by the
Collateral Agent and a Subsidiary of the US Borrower of an instrument in the
form of Annex I, such Subsidiary shall become a Subsidiary Party hereunder with
the same force and effect as if originally named as a Subsidiary Party herein.
The execution and delivery of any such instrument shall not require the consent
of Holdings or any Subsidiary Party hereunder. The rights and obligations of
Holdings and each Subsidiary Party hereunder shall remain in full force and
effect notwithstanding the addition of any new Subsidiary Party as a party to
this Agreement.
SECTION 7.17. RIGHT OF SETOFF. If an Event of Default shall have occurred and be continuing, each Secured Party and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other obligations at any time owing by such Secured Party or Affiliate to or for the credit or the
account of any Subsidiary Party against any of and all the obligations of such Subsidiary Party now or hereafter existing under this Agreement held by such Secured Party, irrespective of whether or not such Secured Party shall have made any demand under this Agreement and although such obligations may be unmatured. The rights of each Secured Party under this Section are in addition to other rights and remedies (including other rights of setoff) that such Secured Party may have.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.
SALT HOLDINGS CORPORATION,
Title:
COMPASS MINERALS GROUP, INC.,
Title:
CAREY SALT COMPANY,
Title:
GREAT SALT LAKE MINERALS CORPORATION,
Title:
GSL CORPORATION,
Title:
NAMSCO INC.,
Title:
NORTH AMERICAN SALT COMPANY,
Title:
JPMORGAN CHASE BANK, as
Collateral Agent,
Title:
Schedule I to the US Collateral and Guaranty Agreement
SUBSIDIARY PARTIES
Carey Salt Company
Great Salt Lake Minerals Corporation
GSL Corporation
NAMSCO Inc.
North American Salt Company
Schedule II to the US Collateral and Guaranty Agreement
CAPITAL STOCK
Number and
Class Percentage
Number of Registered of Equity of Equity
Issuer Certificate Owner Interests Interests
------ ----------- ---------- ---------- ----------
|
DEBT SECURITIES
Principal
Issuer Amount Date of Note Maturity Date
------ --------- ------------ -------------
|
OTHER PROPERTY
Schedule III to the US Collateral and Guaranty Agreement
[Schedule provided by Latham & Watkins NY]
Schedule IV to the US Collateral and Guaranty Agreement
EXCLUDED ASSETS
None.
Schedule V to the US Collateral and Guaranty Agreement
EXCLUDED LETTER OF CREDIT RIGHTS
Annex I to the US Collateral and Guaranty Agreement
SUPPLEMENT NO. __ dated as of , to the US Collateral and Guaranty Agreement dated as of November 28, 2001 (as amended, supplemented, waived or otherwise modified from time to time, the "US COLLATERAL AND GUARANTY AGREEMENT"), among SALT HOLDINGS CORPORATION, a Delaware corporation ("HOLDINGS"), COMPASS MINERALS GROUP, INC., a Delaware corporation (the "US BORROWER"), each other Subsidiary of Holdings listed on Schedule I thereto (each such Subsidiary individually a "SUBSIDIARY PARTY") and JPMORGAN CHASE BANK, a New York banking corporation ("CHASE"), as collateral agent (in such capacity, the "COLLATERAL AGENT") for the Secured Parties (as defined therein).
A. Reference is made to the Credit Agreement dated as of November 28, 2001 (as amended, supplemented, waived or otherwise modified from time to time, the "CREDIT AGREEMENT"), among Holdings, the US Borrower, Sifto Canada Inc., a company incorporated under the laws of the province of Ontario, Canada, Salt Union Limited, a company incorporated under the laws of England and Wales, the lenders from time to time party thereto (the "LENDERS"), Chase, as administrative agent for the Lenders (in such capacity, the "ADMINISTRATIVE AGENT"), J.P. Morgan Bank Canada, as Canadian Agent, and Chase Manhattan International Limited, as UK Agent.
B. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the US Collateral and Guaranty Agreement the Credit Agreement.
C. The Grantors have entered into the US Collateral and Guaranty Agreement in order to induce the Lenders to make Loans and accept and purchase B/As and the Letter of Credit Issuer to issue Letters of Credit. Section 7.16 of the US Collateral and Guaranty Agreement provides that additional Subsidiaries of the US Borrower may become Grantors, Pledgors and Guarantors under the US Collateral and Guaranty Agreement by execution and delivery of an instrument in the form of this Supplement. The undersigned Subsidiary of the US Borrower (the "NEW SUBSIDIARY PARTY") is executing this Supplement in accordance with the requirements of the Credit Agreement to become a Grantor, Pledgor and Guarantor under the US Collateral and Guaranty Agreement in order to induce the Lenders to make additional Loans and accept and purchase additional B/As and the Letter of Credit Issuer to issue
additional Letters of Credit and as consideration for Loans previously made and B/As previously accepted and purchased and Letters of Credit previously issued.
Accordingly, the Collateral Agent and the New Subsidiary Party agree as follows:
SECTION 1. In accordance with Section 7.16 of the US Collateral and Guaranty Agreement, the New Subsidiary Party by its signature below becomes a Grantor, Pledgor and Guarantor under the US Collateral and Guaranty Agreement with the same force and effect as if originally named therein as a Grantor, Pledgor and Guarantor and the New Subsidiary Party hereby (a) agrees to all the terms and provisions of the US Collateral and Guaranty Agreement applicable to it as a Grantor, Pledgor and Guarantor thereunder and (b) represents and warrants that the representations and warranties made by it as a Grantor, Pledgor and Guarantor thereunder are true and correct on and as of the date hereof. In furtherance of the foregoing, the New Subsidiary Party, as security for the payment and performance in full of the Obligations (as defined in the US Collateral and Guaranty Agreement), does hereby create and grant to the Collateral Agent, its successors and assigns, for the benefit of the Secured Parties, their successors and assigns, a security interest in and lien on all of the New Subsidiary Party's right, title and interest in and to the Collateral (as defined in the US Collateral and Guaranty Agreement) of the New Subsidiary Party. Each reference to a "Grantor," "Pledgor" and "Guarantor" in the US Collateral and Guaranty Agreement shall be deemed to include the New Subsidiary Party. The US Collateral and Guaranty Agreement is hereby incorporated herein by reference.
SECTION 2. The New Subsidiary Party represents and warrants to the Collateral Agent and the other Secured Parties that this Supplement has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms.
SECTION 3. This Supplement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Supplement shall become effective when the Collateral Agent shall have received counterparts of this Supplement that, when taken together, bear the signatures of the New Subsidiary Party and the Collateral Agent. Delivery of an executed signature page to this Supplement by facsimile transmission shall be effective as
delivery of a manually signed counterpart of this Supplement.
SECTION 4. The New Subsidiary Party hereby represents and warrants that (a) set forth on Schedule I attached hereto is a true and correct schedule of the location of any and all Collateral of the New Subsidiary Party, (b) set forth on Schedule II attached hereto is a true and correct schedule of all the Pledged Securities of the New Subsidiary Party and (c) set forth under its signature hereto, is the true and correct location of the chief executive office of the New Subsidiary Party and its jurisdiction of formation.
SECTION 5. Except as expressly supplemented hereby, the US Collateral and Guaranty Agreement shall remain in full force and effect.
SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 7. In case any one or more of the provisions contained in this Supplement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and in the US Collateral and Guaranty Agreement shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties hereto shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.
SECTION 8. All communications and notices hereunder shall be in writing and given as provided in Section 7.01 of the US Collateral and Guaranty Agreement. All communications and notices hereunder to the New Subsidiary Party shall be given to it in care of the US Borrower as provided in Section 10.03 of the Credit Agreement.
SECTION 9. The New Subsidiary Party agrees to reimburse the Collateral Agent for its reasonable out-of-pocket expenses in connection with this Supplement, including the reasonable fees, other charges and disbursements of counsel for the Collateral Agent.
IN WITNESS WHEREOF, the New Subsidiary Party and the Collateral Agent have duly executed this Supplement to the US Collateral and Guaranty Agreement as of the day and year first above written.
[Name Of New Subsidiary Party],
Title:
Address:
JPMORGAN CHASE BANK, as Collateral Agent,
Title:
Schedule I to Supplement No. __ to the US Collateral and Guaranty Agreement
LOCATION OF SECURITY AGREEMENT COLLATERAL
Location Description -------- ----------- |
Schedule II to Supplement No. __ to the US Collateral and Guaranty Agreement
PLEDGED COLLATERAL
CAPITAL STOCK
Number and
Number of Registered Class of Percentage
Issuer Certificate Owner Shares of Shares
------ ----------- ---------- ---------- ----------
|
DEBT SECURITIES
Principal
Issuer Amount Date of Note Maturity Date
------ --------- ------------ -------------
|
OTHER PROPERTY
Annex II to the US Collateral and Guaranty Agreement
[Form of]
PERFECTION CERTIFICATE
Reference is made to (a) the Credit Agreement dated as of November 28, 2001 (as amended, supplemented, waived or otherwise modified from time to time, the "CREDIT AGREEMENT"), among Salt Holdings Corporation ("HOLDINGS"), Compass Minerals Group, Inc. (the "US BORROWER"), Sifto Canada Inc. (the "CANADIAN BORROWER"), Salt Union Limited (the "UK BORROWER"), the lenders from time to time party thereto and JPMorgan Chase Bank, as Administrative Agent, J.P. Morgan Bank Canada, as Canadian Agent, and Chase Manhattan International Limited, as UK Agent and (b) the US Collateral and Guaranty Agreement dated as of November 28, 2001 (as amended, supplemented, waived or otherwise modified from time to time, the "US COLLATERAL AND GUARANTY AGREEMENT"), among Holdings, the US Borrower, each Subsidiary of Holdings identified therein and JPMorgan Chase Bank, as Collateral Agent for the Secured Parties. Capitalized terms used but not defined herein have the meanings assigned in the Credit Agreement or the US Collateral and Guaranty Agreement, as applicable.
The undersigned, an officer of the US Borrower, hereby certifies to the Collateral Agent and each other Secured Party as follows:
1. NAMES. (a) The exact corporate name of each Grantor, as such name appears in its respective certificate of incorporation, is as follows:
(b) Set forth below is each other corporate name each Grantor has had in the past five years, together with the date of the relevant change:
(c) Except as set forth below, no Grantor has changed its identity or corporate structure in any way within the past five years. Changes in identity or corporate structure would include mergers, consolidations and acquisitions, as well as any change in the form, nature or jurisdiction of corporate organization. If any such change has occurred, include the information required by Sections 1 and 2 of this certificate as to each acquired or constituent party to a merger or consolidation.
(d) The following is a list of all other names (including trade names or similar appellations) used by each Grantor or
any of its divisions or other business units in connection with the conduct of its business or the ownership of its properties at any time during the past five years:
(e) Set forth below is the organizational number of each Grantor that is a registered organization:
(f) Set forth below is the Federal Taxpayer Identification Number of each Grantor:
(g) Set forth below is the corporate name, the organizational number and the Federal Taxpayer Identification Number of each Subsidiary of Holdings other than the Grantors that is subject to US Federal income taxation on its worldwide income:
2. CURRENT LOCATIONS. (a) The chief executive office of each Grantor is located at the address set forth opposite its name below:
Grantor Mailing Address County State ------- --------------- ------ ----- |
(b) Set forth below opposite the name of each Grantor are all locations where such Grantor maintains any books or records relating to any Accounts (with each location at which chattel paper, if any, is kept being indicated by an "*"):
Grantor Mailing Address County State ------- --------------- ------ ----- |
(c) The jurisdiction of formation of each Grantor that is a registered organization is set forth opposite its name below:
Grantor Jurisdiction |
(d) Set forth below opposite the name of each Grantor are all the locations where such Grantor maintains any Equipment or other Collateral not identified above:
Grantor Mailing Address County State ------- --------------- ------ ----- |
(e) Set forth below opposite the name of each Grantor are all the places of business of such Grantor not identified in paragraph (a), (b), (c) or (d) above:
Grantor Mailing Address County State ------- --------------- ------ ----- |
(f) Set forth below opposite the name of each Grantor are the names and addresses of all Persons other than such Grantor that have possession of any of the Collateral of such Grantor:
Grantor Mailing Address County State ------- --------------- ------ ----- |
3. UNUSUAL TRANSACTIONS. All Accounts have been originated by the Grantors and all Inventory has been acquired by the Grantors in the ordinary course of business.
4. FILE SEARCH REPORTS. File search reports have been obtained from each
Uniform Commercial Code filing office identified with respect to such Grantor in
Section 2 hereof, and such search reports reflect no liens against any of the
Collateral other than those permitted under the Credit Agreement.
5. UCC FILINGS. Duly authenticated financing statements on Form UCC-1 are in substantially the form of Exhibit E hereto.
6. SCHEDULE OF FILINGS. Attached hereto as Exhibit F is a schedule setting forth, with respect to the filings described in Section 5 above, each UCC-1 filing and the filing office in which such filing is to be made.
7. FILING FEES. All filing fees and taxes payable in connection with the filings described in Section 5 above have been paid.
8. STOCK OWNERSHIP AND OTHER EQUITY INTERESTS. Attached hereto as Exhibit H is a true and correct list of all the issued and outstanding stock, partnership interests, limited liability company membership interests or other equity interests of Holdings and each Subsidiary of Holdings and the record and beneficial owners of such stock, partnership interests, membership interests or other equity interests. Also set forth on Exhibit H is each equity investment of Holdings or any Subsidiary of Holdings that represents 50% or
less of the equity of the entity in which such investment was made.
9. DEBT INSTRUMENTS. Attached hereto as Exhibit I is a true and correct list of all instruments, including any promissory notes, and other evidence of indebtedness held by Holdings and each Subsidiary of Holdings that are required to be pledged under the US Collateral and Guaranty Agreement, including all intercompany notes between Holdings and each Subsidiary of Holdings and each Subsidiary of Holdings and each other such Subsidiary.
10. ADVANCES. Attached hereto as Exhibit J is (a) a true and correct list of all advances made by Holdings to any Subsidiary of Holdings or made by any Subsidiary of Holdings to Holdings or any other Subsidiary of Holdings (other than those identified on Exhibit I), which advances will be on and after the date hereof evidenced by one or more intercompany notes pledged to the Collateral Agent under the US Collateral and Guaranty Agreement, and (b) a true and correct list of all unpaid intercompany transfers of goods sold and delivered by or to Holdings or any Subsidiary of Holdings.
11. MORTGAGE FILINGS. Attached hereto as Exhibit K is a schedule setting forth, with respect to each Mortgaged Property, (a) the exact name of the Person that owns such property as such name appears in its certificate of incorporation or other organizational document, (b) if different from the name identified pursuant to clause (a), the exact name of the current record owner of such property reflected in the records of the filing office for such property identified pursuant to the following clause and (c) the filing office in which a Mortgage with respect to such property must be filed or recorded in order for the Collateral Agent to obtain a perfected security interest therein.
12. INTELLECTUAL PROPERTY. Attached hereto as Exhibit L in proper form for filing with the United States Patent and Trademark Office is a schedule setting forth all of each Grantor's Patents, Patent Licenses, Trademarks and Trademarks Licenses, including the name of the registered owner, the registration number and the expiration date of each Patent, Patent License, Trademark and Trademark License owned by any Grantor. Also attached hereto as Exhibit L in proper form for filing with the United States Copyright Office is a schedule setting forth all of each Grantor's Copyrights and Copyright Licenses, including the name of the registered owner, the registration number and the expiration date of each Copyright or Copyright License owned by any Grantor.
13. COMMERCIAL TORT CLAIMS. No commercial tort claims are held by any Grantor.
IN WITNESS WHEREOF, the undersigned have duly executed this certificate on this 28th day of November, 2001.
COMPASS MINERALS GROUP, INC.,
Title: [officer]
Annex III to the US Collateral and Guaranty Agreement
[Form of]
NAME CHANGE AGREEMENT
Re: [US Borrower]
Reference is made to the Credit Agreement dated as of November 28, 2001 (as amended, supplemented, waived or otherwise modified from time to time, the "CREDIT AGREEMENT"), among Salt Holdings Corporation, Compass Minerals Group, Inc. (the "US BORROWER"), Sifto Canada Inc., Salt Union Limited, the Lenders from time to time party thereto, JPMorgan Chase Bank, as Administrative Agent, J.P. Morgan Bank Canada, as Canadian Agent, and Chase Manhattan International Limited, as UK Agent. All capitalized terms used but not defined herein have the meanings assigned in the Credit Agreement.
This will advise you in accordance with Section 4.03 of the US Collateral and Guaranty Agreement that [ ] (the "SUBSIDIARY") will change its name effective as of [date must be at least 30 days following this notice].
The Subsidiary hereby reaffirms its obligations as Grantor, Pledgor and Guarantor under the US Collateral and Guaranty Agreement and (i) [the US Borrower] [PARENT OF SUBSIDIARY] (the "PARENT") hereby reaffirms its pledge of all the Pledged Collateral in the Subsidiary under the US Collateral and Guaranty Agreement and (ii) [the US Borrower] hereby reaffirms its pledge of the Intercompany Note evidencing Indebtedness owed by the Subsidiary under the US Collateral and Guaranty Agreement.
Each of the undersigned hereby confirms to you that all the information set forth in the Perfection Certificate most recently delivered by the US Borrower under the Credit Agreement with respect to the Subsidiary continues to be complete and accurate, other than the name thereof, which will change as set forth above [and except that [ ]], and the Perfection Certificate is hereby deemed amended to reflect the foregoing changes.
Enclosed herewith are the following:
(a) [a] replacement stock certificate[s] representing all the Pledged Collateral in the
Subsidiary, together with [an] undated executed stock power[s] executed in blank;
(b) UCC amendments reflecting the name change for every filing office requiring a filing, as reflected in the Perfection Certificate;
(c) [Describe intellectual property filings required in connection with items whose registrations have been changed;]
[Describe any other UCC filings or other materials delivered in connection with the name change.]
[Discuss whether an opinion under the US Collateral and Guaranty Agreement is appropriate or necessary under these particular circumstances.]
If you have any questions about the foregoing, please call
[ ] at [ ].
[US Borrower]
Title:
[SUBSIDIARY]
Title:
[PARENT]
Title:
Title:
Annex IV to the US Collateral and Guaranty Agreement
LOCKBOX AGREEMENT dated as of [ ], among [Name of
Grantor] (the "GRANTOR"), JPMORGAN CHASE BANK, a New York
banking corporation ("CHASE"), as collateral agent (in such
capacity, the "COLLATERAL AGENT") for the Secured Parties
(such term and each other capitalized terms used but not
defined herein have the meaning given to them in the US
Collateral and Guaranty Agreement referred to below) and
[ ], a [ ] banking corporation (the "SUB-AGENT").
A. The Grantor and the Collateral Agent are parties to a US Collateral and Guaranty Agreement dated as of November 28, 2001 (as amended, supplemented, waived or otherwise modified from time to time, the "US COLLATERAL AND GUARANTY AGREEMENT"). Pursuant to the terms of the US Collateral and Guaranty Agreement, the Grantor has granted to the Collateral Agent, for the benefit of the Secured Parties, a security interest in its Accounts and other Collateral (including Inventory, cash, cash accounts and Proceeds) to secure the payment and performance of the Obligations and has irrevocably appointed the Collateral Agent as its agent to collect amounts due in respect of Accounts, Inventory and Assigned Contracts.
B. The Sub-Agent has agreed to act as collection sub-agent of the Collateral Agent to receive and forward payments with respect to the Accounts, Inventory and Assigned Contracts on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, the parties hereto agree as follows:
1. The Collateral Agent hereby appoints the Sub-Agent as its collection sub-agent under the US Collateral and Guaranty Agreement and authorizes the Sub-Agent, on the terms and subject to the conditions set forth herein, to receive payments in respect of Collateral consisting of Accounts, Inventory and Assigned Contracts.
2. The Sub-Agent has established and shall maintain deposit account number [ ] (including all subaccounts thereof) for the benefit of the Collateral Agent (such account being called the "COLLECTION DEPOSIT ACCOUNT"). The Collection Deposit Account shall be designated with the title "JPMorgan Chase Bank, as Collateral Agent under the US Collateral and Guaranty
Agreement dated as of November 28, 2001" (or a similar title). Subject to the Sub-Agent's Terms for Remittance Banking (Lockbox) Services attached hereto as Exhibit A, to the extent that the terms thereof relate to procedures or fees and to the extent not inconsistent with the terms hereof, all payments received by the Sub-Agent in Lockbox Number [ ] and [ ] or any replacements in respect thereof (the "LOCKBOXES") shall be promptly deposited in the Collection Deposit Account and shall not be commingled with other funds. All funds at any time on deposit in the Collection Deposit Account shall be held by the Sub-Agent for application in accordance with the terms of this Agreement. The Sub-Agent agrees to give the Collateral Agent and the applicable Grantor prompt notice if the Collection Deposit Account shall become subject to any writ, judgment, warrant of attachment, execution or similar process. As security for the payment and performance of the Obligations, the Grantor hereby confirms and pledges, assigns and transfers to the Collateral Agent, and hereby creates and grants to the Collateral Agent, a security interest in the Collection Deposit Account, all property and assets held therein and all Proceeds thereof.
3. The Collection Deposit Account shall be under the sole dominion and control of the Collateral Agent, who shall possess all right, title and interest in all of the items from time to time in the Collection Deposit Account and their Proceeds. The Sub-Agent shall be the Collateral Agent's agent for the purpose of holding and collecting such items and their Proceeds. Neither the Grantor nor any Person or entity claiming by, through or under the Grantor shall have any right, title or interest in, or control over the use of, or any right to withdraw any amount from, the Collection Deposit Account, except that the Collateral Agent shall have the right to withdraw amounts from the Collection Deposit Account. The Sub-Agent shall be entitled to rely on, and shall act in accordance with, all instructions given to it by the Collateral Agent with respect to the Collection Deposit Account. The Collateral Agent shall have the sole power to agree with the Sub-Agent as to specifications for Lockbox services.
4. Upon receipt of written, telecopy or telephonic notice (which, in the case of telephonic notice, shall be promptly confirmed in writing or by telecopy) from the Collateral Agent, the Sub-Agent shall, if so directed in such notice (subject to the Sub-Agent's right to request that the Collateral Agent furnish, in form satisfactory to the Sub-Agent, signature cards and/or other appropriate documentation), promptly transmit or deliver to the Collateral Agent at the office specified in paragraph 12
hereof (or such other office as the Collateral Agent shall specify) (a) all
funds, if any, then on deposit in, or otherwise to the credit of, the Collection
Deposit Account (PROVIDED that funds on deposit that are subject to collection
may be transmitted promptly upon availability for withdrawal), (b) all checks,
drafts and other instruments for the payment of money received in the Lockboxes
and in the possession of the Sub-Agent, without depositing such checks, drafts
or other instruments in the Collection Deposit Account or any other account and
(c) any checks, drafts and other instruments for the payment of money received
in the Lockboxes by the Sub-Agent after such notice, in whatever form received,
PROVIDED that the Sub-Agent may retain a reasonable reserve in a separate
deposit account with the Sub-Agent in respect of unpaid fees and amounts that
may be subject to collection.
5. The Sub-Agent is hereby instructed and authorized to transfer by wire transfer or Automated Clearing House ("ACH") from the Collection Deposit Account all funds that are from time to time deposited or otherwise credited to such account (after such funds become available to the Sub-Agent, either through the Federal Reserve System or other clearing mechanism used by the Sub-Agent's branch and to the extent such funds exceed $1,000), to such account as the Collateral Agent may from time to time direct, PROVIDED that, unless the Collateral Agent otherwise instructs, no such transfer shall be required if such transfer would result in the transfer of an amount less than $1,000. Unless otherwise directed by the Collateral Agent, such funds shall be transferred on each Business Day by wire transfer or ACH and shall be identified as follows:
JPMorgan Chase Bank
ABA Number
For credit to JPMorgan Chase Bank,
New York, NY 10017
Account Number
Re: [ ] Cash Collateral Account
These transfer instructions and authorizations may not be amended, altered or revoked by the Grantor without the prior written consent of the Collateral Agent. The Collateral Agent, however, shall have the right to amend or revoke these transfer instructions and authorizations at any time without the consent of the Grantor.
6. The Sub-Agent shall furnish the Collateral Agent and the applicable Grantor with monthly statements setting forth the amounts deposited in the Collection Deposit Account and all transfers and withdrawals therefrom,
and shall furnish such other information at such times as shall be reasonably requested by the Collateral Agent.
7. The fees for the services of the Sub-Agent shall be mutually agreed upon between the Grantor and the Sub-Agent and shall be the obligation of the Grantor; PROVIDED, HOWEVER, that, notwithstanding the terms of any agreement under which the Collection Deposit Account shall have been established with the Sub-Agent, the Grantor and the Sub-Agent agree not to terminate such Collection Deposit Account for any reason (including the failure of the Grantor to pay such fees) for so long as this Agreement shall remain in effect (it being understood that the foregoing shall not be construed to prohibit the resignation of the Sub-Agent in accordance with paragraph 9 below). Neither the Collateral Agent nor the Secured Parties shall have any liability for the payment of any such fees. The Sub-Agent may perform any of its duties hereunder by or through its agents, officers or employees.
8. The Sub-Agent hereby represents and warrants that (a) it is a banking corporation duly organized, validly existing and in good standing under the laws of [ ] and has full corporate power and authority under such laws to execute, deliver and perform its obligations under this Agreement and (b) the execution, delivery and performance of this Agreement by the Sub-Agent have been duly and effectively authorized by all necessary corporate action and this Agreement has been duly executed and delivered by the Sub-Agent and constitutes a valid and binding obligation of the Sub-Agent enforceable in accordance with its terms.
9. The Sub-Agent may resign at any time as Sub-Agent hereunder by delivery to the Collateral Agent and the applicable Grantor of written notice of resignation not less than thirty days prior to the effective date of such resignation. The Sub-Agent may be removed by the Collateral Agent at any time, with or without cause, by written, telecopy or telephonic notice (which, in the case of telephonic notice, shall be promptly confirmed in writing or by telecopy) of removal delivered to the Sub-Agent and the applicable Grantor. Upon receipt of such notice of removal, or delivery of such notice of resignation, the Sub-Agent shall (subject to the Sub-Agent's right to request that the Collateral Agent furnish, in form satisfactory to the Sub-Agent, signature cards and/or other appropriate documentation), promptly transmit or deliver to the Collateral Agent at the office specified in paragraph 12 (or such other office as the Collateral Agent shall specify (a) all funds, if any, then on deposit in, or otherwise to the credit of, the Collection Deposit Account (PROVIDED that
funds on deposit that are subject to collection may be transmitted promptly upon availability for withdrawal), (b) all checks, drafts and other instruments for the payment of money received in the Lockboxes and in the possession of the Sub-Agent, without depositing such checks, drafts or other instruments in the Collection Deposit Account or any other account, and (c) any checks, drafts and other instruments for the payment of money received in the Lockboxes by the Sub-Agent after such notice, in whatever form received.
10. The Grantor consents to the appointment of the Sub-Agent and agrees that the Sub-Agent shall incur no liability to the Grantor as a result of any action taken pursuant to an instruction given by the Collateral Agent in accordance with the provisions of this Agreement. The Grantor agrees to indemnify and defend the Sub-Agent against any loss, liability, claim or expense (including reasonable attorneys' fees) arising from the Sub-Agent's entry into this Agreement and actions taken hereunder, except to the extent resulting from the Sub-Agent's gross negligence or willful misconduct.
11. The term of this Agreement shall extend from the date hereof until the earlier of (a) the date on which the Sub-Agent has been notified in writing by the Collateral Agent that the Sub-Agent has no further duties under this Agreement and (b) the date of termination specified in the notice of removal given by the Collateral Agent, or notice of resignation given by the Sub-Agent, as the case may be, pursuant to paragraph 9. The obligations of the Sub-Agent contained in the last sentence of paragraph 9 and in paragraph 15, and the obligations of the Grantor contained in paragraphs 7 and 10, shall survive the termination of this Agreement.
12. All notices and communications hereunder shall be in writing and shall be delivered by hand or by courier service, mailed by certified or registered mail or sent by telecopy (except where telephonic instructions or notices are authorized herein) and shall be effective on the day on which received (a) in the case of the Collateral Agent, to JPMorgan Chase Bank, 270 Park Avenue, New York, New York 10017, Attention of [Collateral Monitoring Department], (b) in the case of the Sub-Agent, addressed to [ ], Attention of [ ] and (c) in the case of any Grantor, addressed as set forth below the name of such Grantor on the signature page hereto. For purposes of this Agreement, any officer of the Collateral Agent shall be authorized to act, and to give instructions and notices, on behalf of the Collateral Agent hereunder.
13. The Sub-Agent will not assign or transfer any of its rights or obligations hereunder (other than to the Collateral Agent) without the prior written consent of the other parties hereto, and any such attempted assignment or transfer shall be void.
14. Except as provided in paragraph 5 above, this Agreement may be amended only by a written instrument executed by the Collateral Agent, the Sub-Agent and the Grantor, acting by their duly authorized representative officers.
15. Except as otherwise provided in the Credit Agreement with respect to rights of set off available to the Sub-Agent in its capacity as a Lender (if and so long as the Sub-Agent is a Lender thereunder), the Sub-Agent hereby irrevocably waives any right to set off against, or otherwise deduct from, any funds held in the Collection Deposit Account and all items (and Proceeds thereof) that come into its possession in connection with the Collection Deposit Account any indebtedness or other claim owed by the Grantor or any affiliate thereof to the Sub-Agent; PROVIDED, HOWEVER, that this paragraph shall not limit the ability of the Sub-Agent to, and the Sub-Agent may, (a) exercise any right to set off against, or otherwise deduct from, any such funds to the extent necessary for the Sub-Agent to collect any fees owed to it by the Grantor in connection with the Collection Deposit Account, (b) charge back and net against the Collection Deposit Account any returned or dishonored items or other adjustments in accordance with the Sub Agent's usual practices and (c) (i) establish the reserves contemplated in paragraph 4 in respect of unpaid fees and amounts that may be subject to collection and (ii) transfer funds in respect of such reserves from the Collection Deposit Account to the separate deposit account with the Sub-Agent as contemplated in paragraph 4.
16. This Agreement shall inure to the benefit of and be binding upon the Collateral Agent, the Sub-Agent, the Grantor and their respective permitted successors and assigns.
17. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. Delivery of an executed signature page to this Agreement by facsimile transmission shall be effective as delivery of a manually executed counterpart hereof.
18. EXCEPT TO THE EXTENT THE LAWS OF THE STATE OF [ ] GOVERN THE COLLECTION DEPOSIT ACCOUNT, THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
19. The Sub-Agent shall be an independent contractor. This Agreement does not give rise to any partnership, joint venture or fiduciary relationship.
20. In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized officers as of the day and year first above written.
[Name of Grantor],
Title:
Address:
JPMORGAN CHASE BANK,
as Collateral Agent,
Title:
Address:
[Sub-Agent],
by
Title:
Address:
EXHIBIT 10.7
EXECUTION COPY
US COLLATERAL ASSIGNMENT dated as of
November 28, 2001, among SALT HOLDINGS CORPORATION, a
Delaware corporation ("HOLDINGS"), COMPASS MINERALS
GROUP, INC., a Delaware corporation (the "US
BORROWER"), and JPMORGAN CHASE BANK, a New York
banking corporation ("CHASE"), as collateral agent
(in such capacity, the "COLLATERAL AGENT") for the
Secured Parties (as defined in the US Collateral and
Guaranty Agreement referred to below).
Reference is made to (a) the Credit Agreement dated as of November 28, 2001 (as amended, supplemented, waived or otherwise modified from time to time, the "CREDIT AGREEMENT"), among Holdings, the US Borrower, Sifto Canada Inc. (the "CANADIAN BORROWER"), Salt Union Limited (the "UK BORROWER" and, together with the US Borrower and the Canadian Borrower, the "BORROWERS"), the lenders from time to time party thereto (the "LENDERS"), Chase, as administrative agent for the Lenders (in such capacity, the "ADMINISTRATIVE AGENT"), J.P. Morgan Bank Canada, as Canadian Agent, and Chase Manhattan International Limited, as UK Agent, (b) the US Collateral and Guaranty Agreement dated as of November 28, 2001 (as amended, supplemented, waived or otherwise modified from time to time, the "US COLLATERAL AND GUARANTY AGREEMENT"), among Holdings, the US Borrower, each Subsidiary of Holdings listed on Schedule I thereto and Chase, as Collateral Agent, and (c) the Merger Agreement dated as of October 13, 2001 (as amended, supplemented, waived or otherwise modified from time to time, the "MERGER AGREEMENT"), among Holdings, the US Borrower, IMC Global, Inc., YBR Holdings LLC and YBR Acquisition Corp.
All capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Credit Agreement or the US Collateral and Guaranty Agreement.
The Lenders have agreed to make Loans to the Borrowers and to accept and purchase B/As, and the Letter of Credit Issuer has agreed to issue Letters of Credit for the account of the US Borrower, pursuant to, and upon the terms and subject to the conditions specified in, the Credit Agreement. Each of the Guarantors (as defined in the US Collateral and Guaranty Agreement) has agreed to guaranty, among other things, all the obligations of the Borrowers under the Credit Agreement. The obligations of the Lenders to make Loans and accept and purchase B/As and the Letter of Credit Issuer to issue Letters of Credit are conditioned
upon, among other things, the execution and delivery by Holdings and the US
Borrower of an agreement in the form hereof to secure (a) the due and punctual
payment by each Borrower of (i) all amounts due in respect of B/As and the
principal of, premium (if any) and interest (including interest accruing during
the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) on
the Loans and B/As, when and as due, whether at maturity, by acceleration, upon
one or more dates set for prepayment or otherwise, (ii) each payment required to
be made by any Borrower under the Credit Agreement in respect of any Letter of
Credit, when and as due, including payments in respect of reimbursement of
disbursements, interest thereon and obligations to provide cash collateral, and
(iii) all other monetary obligations of any Borrower to any of the Secured
Parties under the Credit Agreement and each of the other Credit Documents,
including fees, costs, expenses and indemnities, whether primary, secondary,
direct, contingent, fixed or otherwise (including monetary obligations incurred
during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding), (b)
the due and punctual performance of all other obligations of each Borrower under
or pursuant to the Credit Agreement and each of the other Credit Documents, (c)
the due and punctual payment and performance of all the obligations of each
other Credit Party under or pursuant to this Agreement and each of the other
Credit Documents, (d) the due and punctual payment and performance of all
obligations of each Credit Party under each Interest Rate Protection Agreement
and each Other Hedging Agreement that (i) is in effect on the Effective Date
with a counterparty that is a Lender or an Affiliate of a Lender as of the
Effective Date or (ii) is entered into after the Effective Date with any
counterparty that is a Lender or an Affiliate of a Lender at the time such
Interest Rate Protection Agreement or Other Hedging Agreement, as applicable, is
entered into and (e) the due and punctual payment and performance of all
monetary obligations and other liabilities of each Credit Party to the
Administrative Agent or any of its Affiliates in respect of overdrafts and
related liabilities and obligations arising from or in connection with treasury,
depositary or cash management services or in connection with any automated
clearinghouse transfer of funds (all the monetary and other obligations
described in the preceding clauses (a) through (e) being collectively called the
"OBLIGATIONS"; all the Obligations other than the monetary and other obligations
described in clauses (d) and (e) being collectively called the "CREDIT AGREEMENT
OBLIGATIONS").
Accordingly, Holdings, the US Borrower and the Collateral Agent, on behalf of itself and each Secured Party (and each of their respective successors or assigns), hereby agree as follows:
SECTION 1. COLLATERAL ASSIGNMENT. As collateral security for the Obligations, each of Holdings and the US Borrower hereby assigns to the Collateral Agent (for the benefit of the Secured Parties), and hereby grants to the Collateral Agent (for the benefit of the Secured Parties) a security interest in, all of Holdings's and the US Borrower's, respectively, right, title and interest in, to and under the following contracts and instruments, as the same may be modified, amended or supplemented from time to time:
(a) all indemnification and similar rights of Holdings under the Merger Agreement, including all such rights of Holdings under Section 8.3 of the Merger Agreement; and
(b) such other contracts and instruments of Holdings and the US Borrower as Holdings, the US Borrower and the Collateral Agent shall mutually designate from time to time in a writing that refers to this Section 1(b). The contracts and instruments listed in clauses (a) and (b), as amended and in effect from time to time, are referred to collectively as the "ASSIGNED CONTRACTS". The foregoing assignment shall include (a) any and all rights to receive and demand payments under any and all Assigned Contracts, (b) any and all rights to receive and compel performance under any and all Assigned Contracts, (c) the right to make all waivers, amendments, determinations and agreements of or under any and all Assigned Contracts, (d) the right to take such action, including commencement, conduct and consummation of legal, administrative or other proceedings, as shall be permitted by the Assigned Contracts or by law and (e) any and all other rights, interests and claims now existing or hereafter arising under or in connection with any and all Assigned Contracts; PROVIDED, that the Collateral Agent and the Secured Parties shall have no power or authority to exercise any of the aforementioned rights other than after the occurrence and during the continuation of an Event of Default.
SECTION 2. AGREEMENTS, REPRESENTATIONS AND WARRANTIES. Each of Holdings and the US Borrower further agrees, represents and warrants to the Collateral Agent and the Secured Parties that:
(a) as of the Initial Borrowing Date, the Assigned Contracts are in full force and effect, there being no default thereunder by Holdings or the US Borrower. Holdings and the US Borrower will not permit any waiver, supplement, amendment, change or modification to be made to the Assigned Contracts, except as permitted in accordance with the Credit Agreement, without the written consent of the Collateral Agent; and
(b) it has the right, power and authority to grant to the Collateral Agent a security interest in its right, title and interest in and to the Assigned Contracts. It has not heretofore hypothecated, assigned, mortgaged, pledged, encumbered or otherwise transferred its right, title or interest under the Assigned Contracts in any manner to any person other than the Collateral Agent, nor will it do so at any time hereafter without the Collateral Agent's prior written consent in each instance. Any such hypothecation, assignment, mortgage, pledge or encumbrance without the Collateral Agent's consent shall be void and of no force or effect.
SECTION 3. NO OBLIGATIONS FOR COLLATERAL AGENT. Each of Holdings and the US Borrower specifically acknowledges and agrees that the Collateral Agent does not assume, and shall have no responsibility for, the performance of any obligations to be performed under or with respect to the Assigned Contracts or by it and it hereby agrees to indemnify and hold harmless the Collateral Agent with respect to any and all claims by any person relating to such obligations. The Collateral Agent, in its discretion and at the US Borrower's expense, may file or record this Agreement. The Collateral Agent agrees to notify the US Borrower promptly after any such filing or recording.
SECTION 4. REMEDIES UPON DEFAULT. Upon the commencement and during the continuance of an Event of Default, the Collateral Agent may, at its option, without notice to or demand upon Holdings or the US Borrower (both of which are hereby waived for the purpose of this Section 4), in addition to all other rights and remedies provided under any of the Credit Documents, in its own name or the name of Holdings or the US Borrower, demand, sue upon or otherwise enforce the Assigned Contracts to the same extent as if the Collateral Agent were the party named in the Assigned Contracts, and exercise all other rights of Holdings and the US Borrower under the Assigned Contracts in such manner as it may determine. Any moneys actually received by the Collateral Agent pursuant to the exercise of any of the rights and remedies granted in this Collateral Assignment shall be applied as follows:
FIRST, to the payment of all costs and expenses incurred by the Collateral Agent in connection with such collection or sale or otherwise in connection with this Agreement, any other Credit Document or any of the Obligations, including all court costs and the fees and expenses of its agents and legal counsel, the repayment of all advances made by the Collateral Agent or the Administrative Agent hereunder or under any other Credit Document on behalf of any Grantor or Pledgor and any other costs or expenses incurred by any Secured Party in connection with the exercise of any right or remedy hereunder or under any other Credit Document;
SECOND, to the payment in full of the Obligations (the amounts so applied to be distributed among the Secured Parties pro rata in accordance with the amounts of the Obligations owed to them on the date of any such distribution); and
THIRD, to Holdings and the US Borrower, their successors or assigns, or as a court of competent jurisdiction may otherwise direct.
SECTION 5. REIMBURSEMENT OF COLLATERAL AGENT. (a) Each of Holdings and the US Borrower agrees to pay upon demand to the Collateral Agent the amount of any and all reasonable expenses, including the reasonable fees, other charges and disbursements of its counsel and of any experts or agents, that the Collateral Agent may incur in connection with (i) the administration of this Agreement, (ii) the custody or preservation of, or the sale of, collection from, or other realization upon, any of the Collateral, (iii) the exercise or enforcement of any of the rights of the Collateral Agent hereunder or (iv) the failure of Holdings or the US Borrower to perform or observe any of the provisions hereof.
(b) Without limitation of its indemnification obligations under the other Credit Documents and without duplication of any amounts paid pursuant to clause (a) of this Section 5, each of Holdings and the US Borrower agrees to indemnify the Collateral Agent, each other Agent, each Letter of Credit Issuer and each Lender and their respective officers, directors, employees, representatives, trustees, affiliates and agents (each, an "INDEMNITEE") against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including the reasonable fees, charges and disbursements of any counsel for any Indemnitee, incurred by or asserted against any Indemnitee arising out of, in connection with, or as a
result of, the execution, delivery or performance of this Agreement, or any claim, litigation, investigation or proceeding relating hereto or to any of the foregoing, whether or not any Indemnitee is a party thereto; PROVIDED, that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or wilful misconduct of such Indemnitee.
(c) Any amounts payable as provided hereunder shall be additional Obligations secured hereby and by the other Security Documents. The provisions of this Section 5 shall remain operative and in full force and effect regardless of the termination of this Agreement, the consummation of the transactions contemplated hereby, the repayment of any of the Obligations, the invalidity or unenforceability of any term or provision of this Agreement or any other Credit Document or any investigation made by or on behalf of the Collateral Agent or any other Secured Party. All amounts due under this Section 5 shall be payable on written demand therefor and shall bear interest at the rate specified in Section 2.14 of the Credit Agreement.
SECTION 6. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT. Upon the occurrence and during the continuation of an Event of Default, the Collateral Agent shall have the right, as the true and lawful attorney-in-fact and agent of Holdings and the US Borrower, with power of substitution for Holdings and the US Borrower and in Holdings's and the US Borrower's name, the Collateral Agent's name or otherwise for the use and benefit of the Collateral Agent (a) to receive, endorse, assign and/or deliver any and all notes, acceptances, checks, drafts, money orders or other evidences of payment relating to the Assigned Contracts or any part thereof; (b) to demand, collect, receive payment of, give receipt for and give discharges and releases of all or any of the Assigned Contracts; (c) to sign the name of Holdings and the US Borrower on any invoice or bill of lading relating to any of the Assigned Contracts; (d) to commence and prosecute any and all suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect or otherwise realize on all or any of the Assigned Contracts or to enforce any rights in respect of any Assigned Contracts; (e) to settle, compromise, compound, adjust or defend any actions, suits or proceedings relating to all or any of the Assigned Contracts; and (f) to use, sell, assign, transfer, pledge, make any agreement with respect to or otherwise deal with all or any of the Assigned Contracts, and to do all
other acts and things necessary to carry out the purposes of this Collateral Assignment, as fully and completely as though the Collateral Agent were Holdings and/or the US Borrower, as applicable, named in the Assigned Contracts; PROVIDED, HOWEVER, that nothing herein contained shall be construed as requiring or obligating the Collateral Agent or any other Secured Party to make any commitment or to make any inquiry as to the nature or sufficiency of any payment received by the Collateral Agent or any other Secured Party, or to present or file any claim or notice, or to take any action with respect to the Assigned Contracts or any part thereof or the moneys due or to become due in respect thereof or any property covered thereby, and no action taken or omitted to be taken by the Collateral Agent or any other Secured Party with respect to the Assigned Contracts or any part thereof shall give rise to any defense, counterclaim or offset in favor of Holdings or the US Borrower or to any claim or action against the Collateral Agent or any other Secured Party. It is understood and agreed that the appointment of the Collateral Agent as the agent and attorney-in-fact of Holdings and the US Borrower for the purposes set forth above is coupled with an interest and is irrevocable. The provisions of this Section 6 shall in no event relieve Holdings or the US Borrower of any of its obligations hereunder or under the other Credit Documents with respect to the Assigned Contracts or any part thereof or impose any obligation on the Collateral Agent or any other Secured Party to proceed in any particular manner with respect to the Assigned Contracts or any part thereof, or in any way limit the exercise by the Collateral Agent or any other Secured Party of any other or further right that it may have on the date of this Collateral Assignment or hereafter, whether hereunder, under any other Credit Document, by law or otherwise. Any sale pursuant to the provisions of this Section 6 shall be deemed to conform to the commercially reasonable standards as provided in Section 9-610(b) of the Uniform Commercial Code as from time to time in effect in the State of New York or its equivalent in other jurisdictions.
SECTION 7. WAIVERS; AMENDMENT. (a) No failure or delay of the Collateral Agent in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Collateral Agent hereunder and of the Collateral Agent, the other Agents, the Letter of Credit Issuer and the other Secured Parties under the other Credit Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of any provisions of this Agreement or any other Credit Document or consent to any departure by Holdings or the US Borrower therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) below, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice to or demand on Holdings or the US Borrower in any case shall entitle Holdings or the US Borrower to any other or further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Collateral Agent, Holdings and the US Borrower, subject to any consent required in accordance with Section 10.11 of the Credit Agreement.
SECTION 8. SECURITY INTEREST ABSOLUTE. All rights of the Collateral Agent hereunder and all obligations of Holdings and the US Borrower hereunder shall be absolute and unconditional irrespective of (a) any lack of validity or enforceability of any Credit Document, any agreement with respect to any of the Obligations or any other agreement or instrument relating to any of the foregoing, (b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to any departure from the Credit Agreement, any other Credit Document or any other agreement or instrument, (c) any exchange, release or non-perfection of any Lien on other collateral, or any release or amendment or waiver of or consent under or departure from any guaranty, securing or guaranteeing all or any of the Obligations, or (d) any other circumstance that might otherwise constitute a defense available to, or a discharge of, Holdings or the US Borrower in respect of the Obligations or this Agreement (other than the indefeasible payment in full in cash of the Obligations).
SECTION 9. TERMINATION. This Agreement shall terminate when all the Credit Agreement Obligations have been indefeasibly paid in full in cash and the Lenders have no further commitment to lend or accept and purchase B/As under the Credit Agreement, the LC Exposure has been reduced to zero and the Letter of Credit Issuer has no further commitment to issue Letters of Credit under the Credit Agreement. Upon such termination, the Collateral Agent shall take such action as Holdings or the US Borrower shall reasonably request at the expense of the US Borrower to reassign and deliver to Holdings or the US Borrower, as
applicable, without recourse or warranty, the Assigned Contracts and related documents, if any, in which the Collateral Agent shall have any interest under this Collateral Assignment and which shall then be held by the Collateral Agent or be in its possession and the security interest of the Collateral Agent in the Assigned Contracts shall terminate. In connection with any termination or release the Collateral Agent shall execute and deliver to the US Borrower, at the US Borrower's expense, all Uniform Commercial Code termination statements and similar documents that the US Borrower shall reasonably request to evidence such termination or release. Any execution and delivery of termination statements or documents pursuant to this Section shall be without recourse to or warranty by the Collateral Agent.
SECTION 10. NOTICES. All communications and notices hereunder shall (except as otherwise expressly permitted herein) be in writing and given as provided in Section 10.03 of the Credit Agreement.
SECTION 11. FURTHER ASSURANCES. Each of Holdings and the US Borrower covenants to execute and deliver to the Collateral Agent, promptly after demand, such additional assurances, writings or other instruments as may reasonably be required by the Collateral Agent to effectuate the purposes hereof.
SECTION 12. BINDING EFFECT; SEVERAL AGREEMENT; ASSIGNMENTS. Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party, and all covenants, promises and agreements by or on behalf of Holdings and the US Borrower that are contained in this Agreement shall bind and inure to the benefit of their respective successors and assigns. This Agreement shall become effective as to Holdings and the US Borrower when a counterpart hereof executed on behalf of Holdings and the US Borrower, respectively, shall have been delivered to the Collateral Agent and a counterpart hereof shall have been executed on behalf of the Collateral Agent, and thereafter shall be binding upon Holdings and the US Borrower and the Collateral Agent and their respective successors and assigns, and shall inure to the benefit of Holdings, the US Borrower, the Collateral Agent and the other Secured Parties and their respective successors and assigns, except that Holdings and the US Borrower shall have no right to assign or transfer their rights or obligations hereunder or any interest herein (and any such assignment or transfer shall be void) except as expressly contemplated by this Agreement or the other Credit Documents.
SECTION 13. SURVIVAL OF AGREEMENT; SEVERABILITY. (a) All covenants, agreements, representations and warranties made by Holdings and the US Borrower herein and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement shall be considered to have been relied upon by the Secured Parties and shall survive (except as otherwise provided in the applicable Credit Documents) the making by the Lenders of the Loans, the acceptance and purchase by the Lenders of B/As, the issuance of Letters of Credit by the Letter of Credit Issuer and the execution and delivery to the Lenders of any notes evidencing the Loans, regardless of any investigation made by the Lenders or on their behalf and notwithstanding that the Collateral Agent, any other Agent, the Letter of Credit Issuer or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended under the Credit Agreement, and shall continue in full force and effect (except as otherwise provided in the applicable Credit Documents) as long as the principal of, premium (if any) or any accrued interest on any Loan or B/A or any fee or any other amount payable under the Credit Agreement is outstanding and unpaid or any Letter of Credit is outstanding and so long as the Commitments have not expired or terminated.
(b) In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.
SECTION 14. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 15. COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall constitute an original, but all of which when taken together shall constitute a single contract, and shall become effective as provided in Section 12. Delivery of an executed counterpart of a signature page to this Agreement
by facsimile transmission shall be effective as delivery of a manually executed counterpart of this Agreement.
SECTION 16. JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a) Each of Holdings and the US Borrower hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or any other Credit Document, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final 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. Nothing in this Agreement or any other Credit Document shall affect any right that the Collateral Agent or any other Secured Party may otherwise have to bring any action or proceeding relating to this Agreement or any other Credit Document against Holdings, the US Borrower or their respective properties in the courts of any jurisdiction.
(b) Each of Holdings and the US Borrower irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any other Credit Document in any court referred to in paragraph (a) of this Section. Each of Holdings and the US Borrower hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 10. Nothing in this Agreement or any other Credit Document will affect the right of any party to this Agreement to serve process in any other manner permitted by law.
SECTION 17. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT, ANY OTHER CREDIT DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 17.
SECTION 18. RULES OF INTERPRETATION; HEADINGS. The rules of interpretation specified in Sections 1.02 and 10.06 of the Credit Agreement shall be applicable to this Agreement. Section headings used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.
SALT HOLDINGS CORPORATION,
Title:
COMPASS MINERALS GROUP, INC.,
Title:
JPMORGAN CHASE BANK,
as Collateral Agent,
Title:
EXHIBIT 10.8
EXECUTION COPY
FOREIGN GUARANTY
dated as of November 28, 2001,
among
SIFTO CANADA INC.,
SALT UNION LIMITED,
each other Foreign Subsidiary of
SALT HOLDINGS CORPORATION
identified herein
and
JPMORGAN CHASE BANK,
as Collateral Agent
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
SECTION 1.01. CREDIT AGREEMENT ............................................ 2
SECTION 1.02. OTHER DEFINED TERMS ......................................... 2
ARTICLE II
GUARANTY
SECTION 2.01. GUARANTY .................................................... 3
SECTION 2.02. GUARANTY OF PAYMENT ......................................... 4
SECTION 2.03. NO LIMITATIONS, ETC. ........................................ 4
SECTION 2.04. REINSTATEMENT ............................................... 8
SECTION 2.05. AGREEMENT TO PAY; SUBROGATION ............................... 8
SECTION 2.06. INFORMATION ................................................. 8
ARTICLE III
INDEMNITY, SUBROGATION AND SUBORDINATION
SECTION 3.01. INDEMNITY AND SUBROGATION ................................... 9
SECTION 3.02. CONTRIBUTION AND SUBROGATION ................................ 9
SECTION 3.03. SUBORDINATION ............................................... 9
ARTICLE IV
MISCELLANEOUS
SECTION 4.01. NOTICES ..................................................... 10
SECTION 4.02. SURVIVAL OF AGREEMENT ....................................... 10
SECTION 4.03. BINDING EFFECT; SEVERAL AGREEMENT ........................... 10
SECTION 4.04. SUCCESSORS AND ASSIGNS ...................................... 11
SECTION 4.05. COLLATERAL AGENT'S FEES AND EXPENSES; INDEMNIFICATION ....... 11
SECTION 4.06. GOVERNING LAW ............................................... 12
SECTION 4.07. WAIVERS; AMENDMENT .......................................... 12
SECTION 4.08. WAIVER OF JURY TRIAL ........................................ 13
SECTION 4.09. SEVERABILITY ................................................ 13
SECTION 4.10. COUNTERPARTS ................................................ 13
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SECTION 4.11. HEADINGS .................................................... 13 SECTION 4.12. JURISDICTION; CONSENT TO SERVICE OF PROCESS ................. 14 SECTION 4.13. TERMINATION OR RELEASE ...................................... 14 SECTION 4.14. ADDITIONAL FOREIGN SUBSIDIARY GUARANTORS .................... 15 SECTION 4.15. RIGHT OF SETOFF ............................................. 15 SECTION 4.16. CALCULATING CANADIAN INTEREST ............................... 16 SECTION 4.17. FOREIGN CURRENCY OBLIGATIONS ................................ 16 SECTION 4.18. TAXES PAYABLE BY FOREIGN GUARANTOR .......................... 17 |
SCHEDULES
Schedule I Foreign Subsidiary Guarantors
ANNEXES
Annex I Supplement No. [ ] to the Foreign Guaranty
-ii-
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FOREIGN GUARANTY dated as of November 28,
2001, among SIFTO CANADA INC., a company incorporated
under the laws of the province of Ontario, Canada
(the "CANADIAN BORROWER"), SALT UNION LIMITED, a
company incorporated under the laws of England and
Wales (the "UK BORROWER" and, together with the
Canadian Borrower, the "FOREIGN BORROWERS"), each
other Foreign Subsidiary of SALT HOLDINGS
CORPORATION, a Delaware corporation ("HOLDINGS"),
listed on Schedule I hereto (the "FOREIGN SUBSIDIARY
GUARANTORS"; the Foreign Borrowers and the Foreign
Subsidiary Guarantors are referred to collectively
herein as the "FOREIGN GUARANTORS") and JPMORGAN
CHASE BANK, a New York banking corporation ("CHASE"),
as collateral agent (in such capacity, the
"COLLATERAL AGENT") for the Secured Parties (as
defined below).
Reference is made to the Credit Agreement dated as of November 28,
|
2001 (as amended, supplemented, waived or otherwise modified from time to time, the "CREDIT AGREEMENT"), among Holdings, COMPASS MINERALS GROUP, INC. (the "US BORROWER"), the Foreign Borrowers (together with the US Borrower, the "BORROWERS"), the lenders from time to time party thereto (the "LENDERS"), Chase, as administrative agent for the Lenders (in such capacity, the "ADMINISTRATIVE AGENT"), J.P. MORGAN BANK CANADA, as Canadian Agent, and CHASE MANHATTAN INTERNATIONAL LIMITED, as UK Agent.
The Lenders have agreed to extend credit to the Borrowers subject to the terms and conditions set forth in the Credit Agreement. The obligations of the Lenders to extend such credit are conditioned upon, among other things, the execution and delivery of this Agreement. The Foreign Subsidiary Guarantors are affiliates of the Foreign Borrowers and each Foreign Borrower is an affiliate of the other Foreign Borrower. The Foreign Subsidiary Guarantors will derive substantial benefits from the extensions of credit to the Foreign Borrowers and each of the Foreign Borrowers will derive substantial benefits from the extensions of credit to the other Foreign Borrower, in each case pursuant to the Credit Agreement. The Foreign Guarantors are willing to execute and deliver this Agreement in order to induce the Lenders to extend such credit. Accordingly, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. CREDIT AGREEMENT. (a) Capitalized terms used in this Agreement and not otherwise defined herein have the meanings specified in the Credit Agreement.
(b) The rules of construction specified in Section 1.02 and Section 10.06 of the Credit Agreement also apply to this Agreement.
SECTION 1.02. OTHER DEFINED TERMS. As used in this Agreement, the following terms have the meanings specified below:
"CREDIT AGREEMENT" has the meaning assigned to such term in the preliminary statement of this Agreement.
"FOREIGN CREDIT AGREEMENT OBLIGATIONS" means all Foreign Obligations other than obligations described in clauses (d) and (e) of the definition of the term "Foreign Obligations".
"FOREIGN OBLIGATIONS" means (a) the due and punctual payment by each Foreign Borrower of (i) all amounts due in respect of B/As and the principal of, premium (if any) and interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) on the Canadian Revolving Loans, the UK Revolving Loans, the Canadian Intercompany Note and the UK Intercompany Note, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise, and (ii) all other monetary obligations of each Foreign Borrower to any of the Secured Parties under the Credit Agreement and each of the other Credit Documents, including fees, costs, expenses and indemnities, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), (b) the due and punctual performance of all other obligations of each Foreign Borrower under or pursuant to the Credit Agreement and each of the other Credit Documents, (c) the due and punctual payment and performance of all the obligations of each other Foreign Credit Party under or pursuant to this Agreement and each of the other Credit Documents, (d) the due and punctual payment and performance of all obligations of each Foreign Credit Party under each
Interest Rate Protection Agreement and each Other Hedging Agreement that (i) is
in effect on the Effective Date with a counterparty that is a Lender or an
Affiliate of a Lender as of the Effective Date or (ii) is entered into after the
Effective Date with any counterparty that is a Lender or an Affiliate of a
Lender at the time such Interest Rate Protection Agreement or Other Hedging
Agreement, as applicable, is entered into and (e) the due and punctual payment
and performance of all monetary obligations and other liabilities of each
Foreign Credit Party to the Administrative Agent or any of its Affiliates in
respect of overdrafts and related liabilities and obligations arising from or in
connection with treasury, depositary or cash management services or in
connection with any automated clearinghouse transfer of funds; PROVIDED that no
obligation or liability shall be included in the definition of the term "Foreign
Obligations" to the extent that, if it were so included, this Foreign Guaranty
would constitute unlawful financial assistance within the meaning of Sections
151 and 152 of the Companies Act 1985 (United Kingdom) (it being understood and
agreed that the exclusion of any obligation or liability from the definition of
the term "Foreign Obligations" pursuant to this proviso shall constitute under
Section 8.08 of the Credit Agreement the failure of this Agreement to be in full
force and effect).
"INDEMNITEE" has the meaning assigned to such term in Section 4.05(b).
"SECURED PARTIES" means (a) the Lenders, (b) the Collateral Agent,
(c) the Administrative Agent (and any Affiliate of the Administrative Agent to
which any obligations described in clause (e) of the definition of the term
"Foreign Obligations" is owed), (d) the Canadian Agent, (e) the UK Agent, (f)
each counterparty to any Interest Rate Protection Agreement or Other Hedging
Agreement with a Foreign Credit Party that either (i) is in effect on the
Effective Date if such counterparty is a Lender or an Affiliate of a Lender as
of the Effective Date or (ii) is entered into after the Effective Date if such
counterparty is a Lender or an Affiliate of a Lender at the time such Interest
Rate Protection Agreement or Other Hedging Agreement, as applicable, is entered
into, (g) the beneficiaries of each indemnification obligation undertaken by any
Foreign Credit Party under any Credit Document and (h) the successors and
assigns of each of the foregoing.
ARTICLE II
Guaranty
SECTION 2.01. GUARANTY. Each Foreign Guarantor unconditionally guarantees, jointly with the other Foreign Guarantors and severally, as a primary obligor and not merely as a surety, the due and punctual payment and performance of the Foreign Obligations. Each of the Foreign Guarantors further agrees that the Foreign Obligations may be extended or renewed, in whole or in part, without notice to or further assent from it, and that it will remain bound upon its guaranty notwithstanding any extension or renewal of any Foreign Obligation. Each of the Foreign Guarantors waives presentment to, demand of payment from and protest to each of the Foreign Borrowers or any other Foreign Credit Party of any of the Foreign Obligations, and also waives notice of acceptance of its guaranty and notice of protest for nonpayment.
SECTION 2.02. GUARANTY OF PAYMENT. Each of the Foreign Guarantors further agrees that its guaranty hereunder constitutes a guaranty of payment when due and not of collection, and waives any right to require that any resort be had by the Collateral Agent or any other Secured Party to any security held for the payment of the Foreign Obligations or to any balance of any deposit account or credit on the books of the Collateral Agent or any other Secured Party in favor of any Foreign Borrower or any other Person.
SECTION 2.03. NO LIMITATIONS, ETC. (a) Except for termination of a
Foreign Guarantor's obligations hereunder as expressly provided in Section 4.13,
the obligations of each Foreign Guarantor hereunder are continuing,
unconditional and absolute and, without limiting the generality of the
foregoing, shall not be subject to any reduction, limitation, impairment or
termination for any reason, including any claim of waiver, release, surrender,
alteration or compromise, and shall not be subject to any defense or setoff,
counterclaim, recoupment or termination whatsoever by reason of the invalidity,
illegality or unenforceability of the Foreign Obligations or otherwise. Without
limiting the generality of the foregoing, the obligations of each Foreign
Guarantor hereunder shall not be discharged or impaired or otherwise affected by
(i) the failure of the Collateral Agent or any other Secured Party to assert any
claim or demand or to enforce any right or remedy under the provisions of any
Credit Document or otherwise; (ii) any rescission, waiver, amendment or
modification of, or any release from any of the terms or
provisions of, any Credit Document or any other agreement, including with
respect to any other Foreign Guarantor under this Agreement; (iii) the release,
non-perfection or invalidity of any security held by the Collateral Agent or any
other Secured Party for the Foreign Obligations or any of them; (iv) any
default, failure or delay, wilful or otherwise, in the performance of the
Foreign Obligations; (v) any extension, other indulgence, renewal, settlement,
discharge, compromise, waiver, subordination or release in respect of any
Foreign Obligation, security, Person or otherwise; (vi) any increase or decrease
in the principal, the rates of interest or other amounts payable in respect of
the Foreign Obligations; (vii) any change in the existence, structure,
constitution, name, objects, powers, business, control or ownership of any
Foreign Borrower or Foreign Credit Party or any other Person, or any insolvency,
bankruptcy, reorganization or other similar proceeding affecting any Foreign
Borrower or Foreign Credit Party or any other Person or its assets; (viii) the
existence of any claim, set-off or other rights that the Foreign Guarantor may
have at any time against any Foreign Borrower or Foreign Credit Party, any
Applicable Agent, any Lender, or any other Person, whether in connection
herewith or any unrelated transactions; (ix) any limitation, postponement,
prohibition, subordination or other restriction on the rights of any Agent or
any other Secured Party to payment of the Foreign Obligations; (x) any release,
substitution or addition of any cosigner, endorser or other Foreign Guarantor of
the Foreign Obligations; (xi) any defense arising by reason of any failure of
any Agent or any other Secured Party to make any presentment, demand for
performance, notice of non-performance, protest, and any other notice, including
notice of all of the following: acceptance of this Foreign Guaranty, partial
payment or non-payment of all or any part of the Foreign Obligations and the
existence, creation, or incurring of new or additional Foreign Obligations;
(xii) any defense arising by reason of any failure of any Agent or any other
Secured Party to proceed against any Foreign Borrower or Foreign Credit Party or
any other Person, to proceed against, apply or exhaust any security held from
any Foreign Borrower or Foreign Credit Party or any other Person for the Foreign
Obligations, to proceed against, apply or exhaust any security held from the
Foreign Guarantor or any other Person for this Foreign Guaranty or to pursue any
other remedy in the power of any Agent or any other Secured Party whatsoever;
(xiii) any law that provides that the Foreign Obligation of a Foreign Guarantor
must neither be larger in amount nor in other respects more burdensome than that
of the principal Foreign Obligation or that reduces a Foreign Guarantor's
Foreign Obligation in proportion to the
principal Foreign Obligation; (xiv) any defense arising by reason of any incapacity, lack of authority, or other defense of any Foreign Borrower or Foreign Credit Party or any other Person, or by reason of the cessation from any cause whatsoever of the liability of any Foreign Borrower or Foreign Credit Party or any other Person with respect to all or any part of the Foreign Obligations; (xv) any defense arising by reason of any failure by any Agent or any other Secured Party to obtain, perfect or maintain a perfected or prior (or any) security interest in or lien or encumbrance upon any property of any Foreign Borrower or Foreign Credit Party or any other Person, or by reason of any interest of any Agent or any other Secured Party in any property, whether as owner thereof or the holder of a security interest therein or lien or encumbrance thereon, being invalidated, voided, declared fraudulent or preferential or otherwise set aside, or by reason of any impairment by any Agent or any other Secured Party of any right to recourse or collateral; (xvi) any defense arising by reason of the failure of any Agent or any other Secured Party to marshall any assets; (xvii) any defense based upon any failure of any Agent or any other Secured Party to give to any Foreign Borrower or Foreign Credit Party or the Foreign Guarantor notice of any sale or other disposition of any property securing any or all of the Foreign Obligations or any guarantee thereof, or any defect in any notice that may be given in connection with any sale or other disposition of any such property, or any failure of any Agent or any other Secured Party to comply with any provision of applicable law in enforcing any security interest in or lien upon any such property, including any failure by any Agent or any other Secured Party to dispose of any such property in a commercially reasonable manner; (xviii) any dealing whatsoever with any Foreign Borrower or Foreign Credit Party or other Person or any security, whether negligently or not, or any failure to do so; (xix) any defense based upon or arising out of any bankruptcy, insolvency, reorganization, moratorium, arrangement, readjustment of debt, liquidation or dissolution proceeding commenced by or against any Foreign Borrower or Foreign Credit Party or any other Person, including any discharge of, or bar against collecting, any of the Foreign Obligations, in or as a result of any such proceeding; or (xx) any other act or omission that may or might in any manner or to any extent vary the risk of any Foreign Guarantor or otherwise operate as a discharge of any Foreign Guarantor as a matter of law or equity (other than the indefeasible payment in full in cash of all the Foreign Obligations). The foregoing provisions apply (and the foregoing waivers will be effective) even if the effect of any action (or failure to take action) by any Agent or any other Secured Party is to
destroy or diminish the Foreign Guarantor's subrogation rights, the Foreign Guarantor's right to proceed against any Foreign Borrower or Foreign Credit Party for reimbursement, the Foreign Guarantor's right to recover contribution from any other Foreign Guarantor or any other right or remedy. The taking and holding of security (to the extent permitted by the Credit Documents) for the payment and performance of this Agreement and the other Foreign Obligations (other than obligations in respect of the Canadian Intercompany Note and the UK Intercompany Note), the exchange, waiver or release of any or all such security (with or without consideration), the enforcement or application of such security and the direction of the order and manner of any sale thereof in their sole discretion or the release or substitution of any one or more other guarantors or obligors upon or in respect of the Foreign Obligations will not affect the obligations of any Foreign Guarantor hereunder.
(b) To the fullest extent permitted by applicable law, each Foreign Guarantor waives any defense based on or arising out of any defense of any Foreign Borrower or any other Foreign Credit Party or the unenforceability of the Foreign Obligations or any part thereof from any cause, or the cessation from any cause of the liability of any Foreign Borrower or any other Foreign Credit Party, other than the indefeasible payment in full in cash of all the Foreign Obligations. The Collateral Agent and the other Secured Parties may, at their election, foreclose on any security held by one or more of them by one or more judicial or nonjudicial sales, accept an assignment of any such security in lieu of foreclosure, compromise or adjust any part of the Foreign Obligations, make any other accommodation with any Foreign Borrower or any other Credit Party or exercise any other right or remedy available to them against any Foreign Borrower or any other Credit Party, without affecting or impairing in any way the liability of any Foreign Guarantor hereunder except to the extent the Foreign Obligations have been fully and indefeasibly paid in full in cash. To the fullest extent permitted by applicable law, each Foreign Guarantor waives any defense arising out of any such election even though such election operates, pursuant to applicable law, to impair or to extinguish any right of reimbursement or subrogation or other right or remedy of such Foreign Guarantor against any Foreign Borrower or any other Foreign Credit Party, as the case may be, or any security.
SECTION 2.04. REINSTATEMENT. Each of the Foreign Guarantors agrees that its guaranty hereunder shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of any Foreign
Obligation is rescinded or must otherwise be restored by the Collateral Agent or any other Secured Party upon the bankruptcy or reorganization of any Foreign Borrower, any other Foreign Credit Party or otherwise.
SECTION 2.05. AGREEMENT TO PAY; SUBROGATION. In furtherance of the foregoing and not in limitation of any other right that the Collateral Agent or any other Secured Party has at law or in equity against any Foreign Guarantor by virtue hereof, upon the failure of any Foreign Borrower or any other Foreign Credit Party to pay any Foreign Obligation when and as the same shall become due, whether at maturity, by acceleration, after notice of prepayment or otherwise, each Foreign Guarantor hereby promises to and will forthwith pay, or cause to be paid, to the Collateral Agent for distribution to the applicable Secured Parties in cash the amount of such unpaid Foreign Obligation. Upon payment by any Foreign Guarantor of any sums to the Collateral Agent as provided above, all rights of such Foreign Guarantor against any Foreign Borrower or any other Foreign Guarantor arising as a result thereof by way of right of subrogation, contribution, reimbursement, indemnity or otherwise shall in all respects be subject to Article III.
SECTION 2.06. INFORMATION. Each Foreign Guarantor assumes all responsibility for being and keeping itself informed of each Foreign Borrower's and each other Credit Party's financial condition and assets, and of all other circumstances bearing upon the risk of nonpayment of the Foreign Obligations and the nature, scope and extent of the risks that such Foreign Guarantor assumes and incurs hereunder, and agrees that none of the Collateral Agent or the other Secured Parties will have any duty to advise such Foreign Guarantor of information known to it or any of them regarding such circumstances or risks.
ARTICLE III
INDEMNITY, SUBROGATION AND SUBORDINATION
SECTION 3.01. INDEMNITY AND SUBROGATION. In addition to all such
rights of indemnity and subrogation as the Foreign Guarantors may have under
applicable law (but subject to Section 3.03), each Foreign Borrower agrees that
(a) in the event a payment shall be made by any Foreign Guarantor under this
Agreement, each Foreign Borrower shall indemnify such Foreign Guarantor for the
full amount of such payment and such Foreign Guarantor shall be subrogated to
the rights of the Person to whom such payment shall have
been made to the extent of such payment and (b) in the event any assets of any Foreign Guarantor shall be sold pursuant to any Security Document to satisfy a claim of any Secured Party, each Foreign Borrower shall indemnify such Foreign Guarantor in an amount equal to the greater of the book value or the fair market value of the assets so sold.
SECTION 3.02. CONTRIBUTION AND SUBROGATION. Each Foreign Guarantor (a
"CONTRIBUTING GUARANTOR") agrees (subject to Section 3.03) that, in the event a
payment shall be made by any Foreign Guarantor hereunder or assets of any
Foreign Guarantor shall be sold pursuant to any Security Document to satisfy a
claim of any Secured Party and such Foreign Guarantor (the "CLAIMING GUARANTOR")
shall not have been fully indemnified by the Foreign Borrowers as provided in
Section 3.01, the Contributing Guarantor shall indemnify the Claiming Guarantor
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, in each case
multiplied by a fraction of which the numerator shall be the net worth of the
Contributing Guarantor on the date hereof and the denominator shall be the
aggregate net worth of all the Foreign Guarantors on the date hereof (or, in the
case of any Foreign Subsidiary Guarantor becoming a party hereto pursuant to
Section 4.13, the date of the Supplement hereto executed and delivered by such
Foreign Subsidiary Guarantor). Any Contributing Guarantor making any payment to
a Claiming Guarantor pursuant to this Section 3.02 shall be subrogated to the
rights of such Claiming Guarantor under Section 3.01 to the extent of such
payment.
SECTION 3.03. SUBORDINATION. Notwithstanding any provision of this Agreement to the contrary, all rights of the Foreign Guarantors under Sections 3.01 and 3.02 and all other rights of indemnity, contribution or subrogation under applicable law or otherwise shall be and are hereby fully subordinated to the indefeasible payment in full in cash of the Foreign Obligations. No failure on the part of either Foreign Borrower or any other Foreign Guarantor to make the payments required by Sections 3.01 and 3.02 (or any other payments required under applicable law or otherwise) shall in any respect limit the obligations and liabilities of any Foreign Guarantor with respect to its obligations hereunder, and each Foreign Guarantor shall remain liable for the full amount of the obligations of such Foreign Guarantor hereunder.
ARTICLE IV
MISCELLANEOUS
SECTION 4.01. NOTICES. All communications and notices hereunder shall (except as otherwise expressly permitted herein) be in writing and given as provided in Section 10.03 of the Credit Agreement. All communications and notices hereunder to any Foreign Guarantor shall be given to it (i) in the case of a Foreign Guarantor incorporated under the laws of Canada, in care of the Canadian Borrower as provided in Section 10.03 of the Credit Agreement and (ii) in the case of a Foreign Guarantor incorporated under the laws of England and Wales, in care of the UK Borrower as provided in Section 10.03 of the Credit Agreement.
SECTION 4.02. SURVIVAL OF AGREEMENT. All covenants, agreements, representations and warranties made by the Foreign Credit Parties in the Credit Documents and in the certificates or other instruments delivered in connection with or pursuant to this Agreement or any other Credit Document shall be considered to have been relied upon by the other parties hereto and shall survive (except as otherwise provided in the applicable Credit Documents) the execution and delivery of the Credit Documents and the making of any Loans, the acceptance and purchase of any B/As and the issuance of any Letters of Credit, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Collateral Agent, any other Agent, the Letter of Credit Issuer or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended under the Credit Agreement, and shall continue in full force and effect (except as otherwise provided in the applicable Credit Documents) as long as the principal of, premium (if any) or any accrued interest on any Loan or B/A or any fee or any other amount payable under the Credit Agreement is outstanding and unpaid or any Letter of Credit is outstanding and so long as the Commitments have not expired or terminated.
SECTION 4.03. BINDING EFFECT; SEVERAL AGREEMENT. This Agreement shall become effective as to any Foreign Guarantor when a counterpart hereof executed on behalf of such Foreign Guarantor shall have been delivered to the Collateral Agent and a counterpart hereof shall have been executed on behalf of the Collateral Agent, and thereafter shall be binding upon such Foreign Guarantor and the Collateral Agent and their respective successors and assigns, and shall inure to the benefit of such Foreign
Guarantor, the Collateral Agent and the other Secured Parties and their respective successors and assigns, except that no Foreign Guarantor shall have the right to assign or transfer its rights or obligations hereunder or any interest herein (and any such assignment or transfer shall be void) except as expressly contemplated by this Agreement or the Credit Agreement. This Agreement shall be construed as a separate agreement with respect to each Foreign Guarantor and may be amended, modified, supplemented, waived or released with respect to any Foreign Guarantor without the approval of any other Foreign Guarantor and without affecting the obligations of any other Foreign Guarantor hereunder.
SECTION 4.04. SUCCESSORS AND ASSIGNS. Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party; and all covenants, promises and agreements by or on behalf of any Foreign Guarantor or the Collateral Agent that are contained in this Agreement shall bind and inure to the benefit of their respective successors and assigns.
SECTION 4.05. COLLATERAL AGENT'S FEES AND EXPENSES; INDEMNIFICATION.
(a) Each Foreign Guarantor jointly and severally agrees to pay upon demand to
the Collateral Agent the amount of any and all reasonable expenses, including
the reasonable fees, disbursements and other charges of its counsel and of any
experts or agents, that the Collateral Agent may incur in connection with (i)
the administration of this Agreement, (ii) the exercise, enforcement or
protection of any of the rights of the Collateral Agent hereunder or (iii) the
failure of any Foreign Guarantor to perform or observe any of the provisions
hereof.
(b) Without limitation of its indemnification obligations under the other Credit Documents and without duplication of any amounts paid pursuant to clause (a) of this Section 4.05, each Foreign Guarantor jointly and severally agrees to indemnify the Collateral Agent, each other Agent and each Lender and their respective officers, directors, employees, representatives, trustees, affiliates and agents (each, an "INDEMNITEE") against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including the reasonable fees, charges and disbursements of any counsel for any Indemnitee, incurred by or asserted against any Indemnitee arising out of, in connection with, or as a result of, the execution, delivery or performance of this Agreement or any claim, litigation, investigation or
proceeding relating hereto, whether or not any Indemnitee is a party thereto; PROVIDED that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or wilful misconduct of such Indemnitee.
(c) Any such amounts payable as provided hereunder shall be additional Obligations guaranteed hereby. The provisions of this Section 4.05 shall remain operative and in full force and effect regardless of the termination of this Agreement or any other Credit Document, the consummation of the transactions contemplated hereby, the repayment of any of the Foreign Obligations, the invalidity or unenforceability of any term or provision of this Agreement or any other Credit Document, or any investigation made by or on behalf of the Collateral Agent or any other Secured Party. All amounts due under this Section 4.05 shall be payable on written demand therefor.
SECTION 4.06. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 4.07. WAIVERS; AMENDMENT. (a) No failure or delay by the Collateral Agent, any other Agent or any other Secured Party in exercising any right or power hereunder or under any other Credit Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Collateral Agent, each other Agent and the other Secured Parties hereunder and under the other Credit Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or consent to any departure by any Foreign Guarantor therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section 4.07, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan, the acceptance and purchase of a B/A or issuance of a Letter of Credit shall not be construed as a waiver of any Default, regardless of whether the Collateral Agent, any other Agent, any Lender or the Letter of Credit Issuer may have had notice or knowledge of such Default at the time.
(b) Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Collateral Agent and the Foreign Guarantor or Foreign Guarantors with respect to which such waiver, amendment or modification is to apply, subject to any consent required in accordance with Section 10.04 of the Credit Agreement.
SECTION 4.08. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER CREDIT DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 4.09. SEVERABILITY. Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.
SECTION 4.10. COUNTERPARTS. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute a single contract (subject to Section 4.03), and shall become effective as provided in Section 4.03. Delivery of an executed signature page to this Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this Agreement.
SECTION 4.11. HEADINGS. Article and Section headings used herein are for the purpose of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.
SECTION 4.12 JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a) Each of the Foreign Guarantors hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or any other Credit Document, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final 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. Nothing in this Agreement or any other Credit Document shall affect any right that the Collateral Agent, any other Agent or any other Secured Party may otherwise have to bring any action or proceeding relating to this Agreement or any other Credit Document against either of the Foreign Borrowers or any other Foreign Guarantors or any of their properties in the courts of any jurisdiction.
(b) Each of the Foreign Guarantors hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any other Credit Document in any court referred to in paragraph (a) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.
(c) Each Foreign Guarantor irrevocably consents to service of process in the manner provided for notices in Section 10.07 of the Credit Agreement. Nothing in this Agreement or any other Credit Document will affect the right of any Secured Party to serve process in any other manner permitted by law.
SECTION 4.13. TERMINATION OR RELEASE. (a) This Agreement and the guarantees hereunder shall terminate when all the Foreign Credit Agreement Obligations have been indefeasibly paid in full in cash and the Lenders have no further commitment to lend to either Foreign Borrower or purchase and accept B/As under the Credit Agreement.
(b) A Foreign Subsidiary Guarantor shall automatically be released from its obligations hereunder
(i) upon the designation by the US Borrower of such Foreign Subsidiary Guarantor as an Unrestricted Subsidiary, PROVIDED that such designation was permitted by the Credit Agreement, and (ii) in the event that all the capital stock of such Foreign Subsidiary Guarantor shall be sold, transferred or otherwise disposed of to a Person that is not Holdings or a Subsidiary of Holdings in accordance with the terms of the Credit Agreement, PROVIDED that the Required Lenders shall have consented to such sale, transfer or other disposition (to the extent required by the Credit Agreement) and the terms of such consent did not provide otherwise.
(c) In connection with any termination or release pursuant to
paragraph (a) or (b) of this Section 4.13, the Collateral Agent shall execute
and deliver to any Foreign Guarantor at such Foreign Guarantor's expense, all
documents that such Foreign Guarantor shall reasonably request to evidence such
termination or release. Any execution and delivery of documents pursuant to this
Section 4.13 shall be without recourse to or warranty by the Collateral Agent.
SECTION 4.14. ADDITIONAL FOREIGN SUBSIDIARY GUARANTORS. Pursuant to
Section 6.11 of the Credit Agreement, each Foreign Subsidiary of the US Borrower
that was not in existence or not a Foreign Subsidiary of the US Borrower on the
date of the Credit Agreement is required to enter into this Agreement as a
Foreign Subsidiary Guarantor (except to the extent that the entering into of
this Foreign Guaranty would not be permitted under applicable law). Upon
execution and delivery by the Collateral Agent and a Foreign Subsidiary of the
US Borrower of an instrument in the form of Annex I, such Foreign Subsidiary
shall become a Foreign Subsidiary Guarantor hereunder with the same force and
effect as if originally named as a Foreign Subsidiary Guarantor herein. The
execution and delivery of any such instrument shall not require the consent of
any Foreign Guarantor hereunder. The rights and obligations of each Foreign
Guarantor hereunder shall remain in full force and effect notwithstanding the
addition of any new Foreign Subsidiary Guarantor as a party to this Agreement.
SECTION 4.15. RIGHT OF SETOFF. If an Event of Default shall have occurred and be continuing, each Secured Party and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other obligations at any time owing by such Secured Party or Affiliate to or for the credit or the account of any Foreign Guarantor against any of and all the obligations of such Foreign Guarantor now or hereafter
existing under this Agreement held by such Secured Party or any of its Affiliates, irrespective of whether or not such Secured Party or any of its Affiliates shall have made any demand under this Agreement and although such obligations may be unmatured. The rights of each Secured Party and each of its Affiliates under this Section 4.15 are in addition to other rights and remedies (including other rights of setoff) which such Secured Party and each of its Affiliates may have. The applicable Secured Party agrees to notify the applicable Foreign Guarantor after any such setoff and application made by such Secured Party; provided that the failure to give notice shall not affect the validity of such setoff and application.
SECTION 4.16. CALCULATING CANADIAN INTEREST. For purposes of the Interest Act (Canada) only, (a) whenever any interest or fee under this Agreement is calculated using a rate based on a year of 360 days or 365 days, as the case may be, the rate determined pursuant to such calculation, when expressed as an annual rate, is equivalent to (i) the applicable rate based on a year of 360 days or 365 days, as the case may be, (ii) MULTIPLIED by the actual number of days in the calendar year in which the period for which such interest or fee is payable (or compounded) ends, and (iii) DIVIDED by 360 or 365, as the case may be, (b) the principle of deemed reinvestment of interest does not apply to any interest calculation under this Agreement and (c) the rates of interest stipulated in this Agreement are intended to be nominal rates and not effective rates or yields.
SECTION 4.17. FOREIGN CURRENCY OBLIGATIONS. Except as otherwise provided in the Credit Agreement, each Foreign Guarantor will make payment relative to each Foreign Obligation in the currency (the "ORIGINAL CURRENCY") in which the applicable Foreign Borrower or Foreign Credit Party is required to pay such Foreign Obligation. If the Foreign Guarantor makes payment relative to any Foreign Obligation in a currency (the "OTHER CURRENCY") other than the Original Currency (whether voluntarily or pursuant to an order or judgment of a court or tribunal of any jurisdiction), such payment will constitute a discharge of the liability of the Foreign Guarantor hereunder in respect of such Foreign Obligation only to the extent of the amount of the Original Currency that the Applicable Agent or the Collateral Agent, as applicable, is able to purchase in accordance with the terms of the Credit Agreement with the amount it receives on the date of receipt. If the amount of the Original Currency that the Applicable Agent or the Collateral Agent, as applicable, is able to purchase is less than the amount of such currency originally due to it in respect to the relevant Foreign Obligation, the Foreign
Guarantor will indemnify and save each Agent and each other Secured Party harmless from and against any loss or damage arising as a result of such deficiency. This indemnity will constitute a Foreign Obligation separate and independent from the other Foreign Obligations contained in this Foreign Guaranty, will give rise to a separate and independent cause of action, will apply irrespective of any indulgence granted by any Agent or any other Secured Party and will continue in full force and effect notwithstanding any judgment or order in respect of any amount due hereunder or under any judgement or order.
SECTION 4.18. TAXES PAYABLE BY FOREIGN GUARANTOR. Except as otherwise provided in the Credit Agreement, all payments to be made by the Foreign Guarantor hereunder will be made free and clear of and without deduction for any taxes, levies, duties, fees, deductions, withholdings, restrictions or conditions of any nature whatsoever. If at any time any applicable law, regulation or international agreement requires the Foreign Guarantor to make any such deduction or withholding from any such payment, the sum due from the Foreign Guarantor with respect to such payment will be increased to the extent necessary to ensure that, after the making of such deduction or withholding, the Applicable Agent or the Collateral Agent, as applicable, receives an amount equal to the sum that it would have received had no deduction or withholding been required, except as otherwise provided by the Credit Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.
SIFTO CANADA INC.,
Title:
SALT UNION LIMITED,
Title:
IMC GLOBAL (EUROPE) LIMITED,
Title:
IMC GLOBAL (UK) LIMITED,
Title:
LONDON SALT LIMITED,
Title:
DIRECT SALT SUPPLIES LIMITED,
Title:
J.T. LUNT & CO. (NANTWICH)
LIMITED,
Title:
JPMORGAN CHASE BANK, as
Collateral Agent,
Title:
Schedule I to the Foreign Guaranty
FOREIGN SUBSIDIARY GUARANTORS
IMC Global (Europe) Limited
IMC Global (UK) Limited
London Salt Limited
Direct Salt Supplies Limited
J.T. Lunt & Co. (Nantwich) Limited
Annex I to the Foreign Guaranty
SUPPLEMENT NO. __ dated as of , to the Foreign Guaranty dated as of November 28, 2001, among SIFTO CANADA INC., a company incorporated under the laws of the province of Ontario, Canada (the "CANADIAN BORROWER"), SALT UNION LIMITED, a company incorporated under the laws of England and Wales (the "UK BORROWER" and, together with the Canadian Borrower, the "FOREIGN BORROWERS"), each other Foreign Subsidiary of SALT HOLDINGS CORPORATION, a Delaware corporation ("HOLDINGS"), listed on Schedule I thereto (the "FOREIGN SUBSIDIARY GUARANTORS"; the Foreign Borrowers and the Foreign Subsidiary Guarantors are referred to collectively herein as the "FOREIGN GUARANTORS") and JPMORGAN CHASE BANK, a New York banking corporation ("CHASE"), as collateral agent (in such capacity, the "COLLATERAL AGENT") for the Secured Parties (as defined therein).
A. Reference is made to the Credit Agreement dated as of November 28, 2001 (as amended, supplemented, waived or otherwise modified from time to time, the "CREDIT AGREEMENT"), among Holdings, Compass Minerals Group, Inc., a Delaware corporation, the Foreign Borrowers, the lenders from time to time party thereto (the "LENDERS"), Chase, as administrative agent for the Lenders (in such capacity, the "ADMINISTRATIVE AGENT"), J.P. MORGAN BANK CANADA, as Canadian Agent, and CHASE MANHATTAN INTERNATIONAL LIMITED, as UK Agent.
B. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Foreign Guaranty and in the Credit Agreement.
C. The Foreign Guarantors have entered into the Foreign Guaranty in order to induce the Lenders to make Loans and accept and purchase B/As and the Letter of Credit Issuer to issue Letters of Credit. Section 4.13 of the Foreign Guaranty provides that additional Foreign Subsidiaries of the US Borrower may become Foreign Subsidiary Guarantors under the Foreign Guaranty by execution and delivery of an instrument in the form of this Supplement. The undersigned Foreign Subsidiary of Holdings (the "NEW FOREIGN SUBSIDIARY") is executing this Supplement in accordance with the requirements of the Credit Agreement to become a Foreign Subsidiary Guarantor under the Foreign Guaranty in order to induce the Lenders to make additional
Loans and accept and purchase additional B/As and the Letter of Credit Issuer to issue additional Letters of Credit and as consideration for Loans previously made and B/As previously accepted and purchased and Letters of Credit previously issued.
Accordingly, the Collateral Agent and the New Foreign Subsidiary agree as follows:
SECTION 1. In accordance with Section 4.13 of the Foreign Guaranty, the New
Foreign Subsidiary by its signature below becomes a Foreign Subsidiary Guarantor
under the Foreign Guaranty with the same force and effect as if originally named
therein as a Foreign Subsidiary Guarantor and the New Foreign Subsidiary hereby
(a) agrees to all the terms and provisions of the Foreign Guaranty applicable to
it as a Foreign Subsidiary Guarantor thereunder and (b) represents and warrants
that the representations and warranties made by it as a Foreign Subsidiary
Guarantor thereunder are true and correct on and as of the date hereof. Each
reference to a "Foreign Subsidiary Guarantor" in the Foreign Guaranty shall be
deemed to include the New Foreign Subsidiary. The Foreign Guaranty is hereby
incorporated herein by reference.
SECTION 2. The New Foreign Subsidiary represents and warrants to the Collateral Agent and the other Secured Parties that this Supplement has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms.
SECTION 3. This Supplement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Supplement shall become effective when the Collateral Agent shall have received counterparts of this Supplement that, when taken together, bear the signatures of the New Foreign Subsidiary and the Collateral Agent. Delivery of an executed signature page to this Supplement by facsimile transmission shall be effective as delivery of a manually signed counterpart of this Supplement.
SECTION 5. Except as expressly supplemented hereby, the Foreign Guaranty shall remain in full force and effect.
SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 7. In case any one or more of the provisions contained in this Supplement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and in the Foreign Guaranty shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties hereto shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.
SECTION 8. All communications and notices hereunder shall be in writing and given as provided in Section 4.01 of the Foreign Guaranty. All communications and notices hereunder to the New Foreign Subsidiary shall be given to it in care of the US Borrower as provided in Section 10.03 of the Credit Agreement.
SECTION 9. The New Foreign Subsidiary agrees to reimburse the Collateral Agent for its reasonable out-of-pocket expenses in connection with this Supplement, including the reasonable fees, other charges and disbursements of counsel for the Collateral Agent.
IN WITNESS WHEREOF, the New Foreign Subsidiary and the Collateral Agent have duly executed this Supplement to the Foreign Guaranty as of the day and year first above written.
[Name Of New Foreign Subsidiary],
Title:
Address:
JPMORGAN CHASE BANK, as
Collateral Agent,
Title:
EXHIBIT 10.9
SALT HOLDINGS CORPORATION
2001 Stock Option Plan
ARTICLE I
PURPOSE OF THE PLAN
The purpose of the SALT HOLDINGS CORPORATION 2001 STOCK OPTION PLAN (the "PLAN") is (a) to further the growth and success of SALT HOLDINGS CORPORATION, a Delaware corporation (the "COMPANY"), and its Subsidiaries (as hereinafter defined) by enabling directors and employees of, or consultants to, the Company or any of its Subsidiaries to acquire Shares (as hereinafter defined), thereby increasing their personal interest in such growth and success, and (b) to provide a means of rewarding outstanding performance by such persons to the Company and/or its Subsidiaries. Options granted under the Plan (the "OPTIONS") may be either incentive stock options ("ISOs"), intended to qualify as such under the provisions of Section 422 of the Internal Revenue Code of 1986, as amended (the "CODE"), or non-qualified stock options ("NSOs"). In this Plan, the terms "Parent" and "Subsidiary" mean "Parent Corporation" and "Subsidiary Corporation," respectively, as such terms are defined in Sections 424(e) and (f) of the Code. Unless the context otherwise requires, any ISO or NSO is referred to in this Plan as an "Option."
ARTICLE II
DEFINITIONS
As used in the Plan, the following terms shall have the meanings set forth below:
"AFFILIATE" means with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries Controls, is Controlled by, or is under common Control with, such Person and/or one or more Affiliates thereof. The term "Control" includes, without limitation, the possession, directly or indirectly, of the power to direct the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. The term "Affiliate" shall not include at any time any portfolio companies of Apollo Management V, L.P. or its Affiliates.
"BOARD" has the meaning set forth in Section 3.1 hereof.
"CAPITAL STOCK" means any and all shares, interests, participation or other equivalents (however designated) of corporate stock, including all Common Stock and preferred stock.
"CAUSE" means an Optionee's (a) conviction of a felony or a crime of moral turpitude (other than a traffic violation), (b) willful commission of any action that is materially harmful to the Company or its Affiliates on a consolidated basis (other than any action taken in good faith utilizing the Optionee's business judgement), or (c) failure to obey any communicated lawful directive of the Board delivered to Optionee.
"CLOSING DATE" means November 28, 2001.
"CODE" has the meaning set forth in Article I hereof.
"COMMITTEE" has the meaning set forth in Section 3.1 hereof.
"COMMON STOCK" means the non-voting Class B Common Stock of the Company, par value $0.01 per share; provided that in the event of (a) a Public Offering of at least five percent of the outstanding shares of voting Class A Common Stock of the Company, par value $0.01 per share ("Class A Common Stock"), or (b) any transfer of shares of Common Stock by an Optionee to any Person not subject the Investor Rights Agreement or any similar stockholders agreement, Common Stock shall mean Class A Common Stock.
"COMPANY" has the meaning set forth in Article I hereof.
"DISQUALIFYING DISPOSITION" has the meaning set forth in Article 15 hereof.
"EFFECTIVE DATE" has the meaning set forth in Section 11.2 hereof.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FAIR MARKET VALUE" has the meaning set forth in Section 6.2 hereof.
"INDEPENDENT THIRD PARTY" means, immediately prior to the contemplated
transaction, any Person which (a) does not own in excess of five percent (5%) of
the Common Stock deemed outstanding, at such time (on a fully diluted basis) and
(b) is not an Affiliate of any such owner.
"INVESTOR" means Apollo Investment Fund V, L.P., Apollo Overseas Partners V, L.P., or any investment fund managed by Apollo Management V, L.P. or any of its Affiliates, and any of their successors and assigns.
"INVESTOR INVESTMENT" means direct or indirect investments in Shares, preferred stock or other securities of the Company made by the Investor on or after the Closing Date.
"INVESTOR IRR" means the pre-tax compounded annual internal rate of return calculated on a quarterly basis realized to the Investor on the Investor Investment, based on the aggregate amount invested by the Investor for all Investor Investments and the aggregate amount received by the Investor for all Investor Investments, assuming all Investor Investments were purchased by one Person and were held continuously by such Person. The Investor IRR shall be determined based on the actual time of each Investor Investment and actual cash received by the Investor in respect of all Investor Investments and including, as a return on such investment, any cash dividends, cash distributions or cash interest made by the Company or any Subsidiary in respect of such investment during such period, but excluding any other amounts payable that are not directly attributable to the Investor Investment.
"INVESTOR RIGHTS AGREEMENT" means the Investor Rights Agreement, dated as of the Closing Date, among the Company and the holders party thereto, as it is amended, supplemented or restated from time to time.
"ISOs" has the meaning set forth in Article I hereof.
"NASDAQ" has the meaning set forth in Section 6.2(a) hereof.
"NOTICE" has the meaning set forth in Section 9.2 hereof.
"NSOs" has the meaning set forth in Article I hereof.
"OPTION" has the meaning set forth in Article I hereof.
"OPTION AGREEMENT" has the meaning set forth in Section 5.2 hereof.
"OPTION PRICE" has the meaning set forth in Section 6.1 hereof.
"OPTION SHARES" has the meaning set forth in Section 9.2(b) hereof.
"OPTIONEES" has the meaning set forth in Section 5.1(a).
"PERSON" shall be construed broadly and shall include, without limitation, an individual, a partnership, a corporation, an association, a joint stock company, a limited liability company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof.
"PLAN" has the meaning set forth in Article I hereof
"PUBLIC OFFERING" means the closing of a public offering of Common Stock pursuant to a registration statement declared effective under the Securities Act, except that a Public Offering shall not include an offering made in connection with an employee benefit plan or made primarily to employees or consultants of the Company.
"REALIZATION EVENT" means (a) the consummation of a Sale of the Company or (b) any transaction or series of related transactions in which the Investor sells at least 50% of the Shares directly or indirectly acquired by it and at least 50% of the aggregate of all of the Investor Investments.
"REORGANIZATION" has the meaning set forth in Section 10.1 hereof.
"RESERVED SHARES" means, at any time, an aggregate of 419,750 shares of Common Stock.
"SALE OF THE COMPANY" means the sale of the Company to one or more Independent Third Parties or IMC Global, Inc. or its Affiliates, or any of their successors, pursuant to which such party or parties acquire (a) Capital Stock of the Company possessing the voting power to elect a majority of the Board (whether by merger, consolidation or sale or transfer of the Company's Capital Stock) or (b) all or substantially all of the Company's assets determined on a consolidated basis.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHARES" means shares of Common Stock.
"SUBSIDIARY" means any corporation or other entity of which the Company owns securities or interests having a majority, directly or indirectly, of the ordinary voting power in electing the board of directors or managers thereof.
"TERMINATION DATE" means the tenth anniversary of the Effective Date.
"TERMINATION OF RELATIONSHIP" means (a) if the Optionee is an employee of the Company or any Subsidiary, the termination of the Optionee's employment with the Company and its Subsidiaries for any reason; (b) if the Optionee is a consultant to the Company or any Subsidiary, the termination of the Optionee's consulting relationship with the Company and its Subsidiaries for any reason; and (c) if the Optionee is a director of the Company or any Subsidiary, the termination of the Optionee's service as a director of such Company or Subsidiary for any reason.
"VESTED OPTIONS" means Options that have vested in accordance with the applicable Option Agreement.
ARTICLE III
ADMINISTRATION OF THE PLAN; SHARES SUBJECT TO THE PLAN
3.1 COMMITTEE.
The Plan shall be administered by the Board of Directors of the Company (the "BOARD") or the Compensation Committee (the "COMMITTEE") appointed from time to time by the Board. The term "Committee" shall, for all purposes of the Plan other than this Section 3, be deemed to refer to the Board if the Board is administering the Plan.
3.2 PROCEDURES.
The Committee shall adopt such rules and regulations as it shall deem appropriate concerning the holding of meetings and the administration of the Plan. The entire Committee shall constitute a quorum and the actions of the entire Committee present at a meeting, or actions approved in writing by the entire Committee, shall be the actions of the Committee.
3.3 INTERPRETATION.
Except as may otherwise be expressly reserved to the Board as provided herein, and with respect to any Option, except as may otherwise be provided in the Option Agreement evidencing such Option, the Committee shall have all powers with respect to the administration of the Plan, including the interpretation of the provisions of the Plan and any Option Agreement (including, without limitation, whether any particular termination of employment is for Cause), and all decisions of the Board or the Committee, as the case may be, shall be reasonable and made in good faith and shall be conclusive and binding on all participants in the Plan.
3.4 NUMBER OF SHARES.
Subject to the provisions of Article X (relating to adjustments upon changes in capital structure and other corporate transactions), the aggregate number of Shares with respect to which Options may be granted under the Plan shall not exceed the Reserved Shares. If and to the extent that Options granted under the Plan terminate, are reduced in number, expire or are canceled without having been fully exercised, new Options may be granted under the Plan with respect to the Shares covered by the unexercised portion of such terminated, expired or canceled Options.
3.5 RESERVATION OF SHARES.
The number of Shares reserved for issuance upon the exercise of Options granted under the Plan shall at no time be less than the maximum number of Shares which may be purchased at any time pursuant to outstanding Options.
ARTICLE IV
ELIGIBILITY
4.1 GENERAL.
Options may be granted under the Plan only to persons who are employees or directors of, or consultants to, the Company or any of its Subsidiaries on the date of the grant. Options granted to consultants and non-employee directors shall be NSOs. Options granted to employees of the Company or any of its Subsidiaries shall be, in the discretion of the Committee, either ISOs or NSOs on the date of the grant.
4.2 EXCEPTIONS.
Notwithstanding anything contained in Section 4.1 to the contrary, no ISO may be granted under the Plan to an employee who owns, directly or indirectly (within the meaning of Sections 422(b)(6) and 425(d) of the Code), stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its Parent, if any, or any of its Subsidiaries, unless (a) the Option Price of the Shares subject to such ISO is fixed at not less than 110% of the Fair Market Value of such Shares on the date of the grant (as determined in accordance with Section 6.2), and (b) such ISO by its terms is not exercisable after the expiration of five years from the date it is granted.
ARTICLE V
GRANT OF OPTIONS
5.1 GENERAL.
Subject to Section 5.6, Options may be granted under the Plan at any time and from time to time on or prior to the Termination Date. Subject to the provisions of the Plan, the Committee shall have plenary authority, in its sole discretion, to determine:
(a) The persons (from among the class of persons eligible to receive Options under the Plan) to whom Options shall be granted (the "OPTIONEES")
(b) The time or times at which Options shall be granted; and
(c) The number of Shares for which an Option may be exercisable.
5.2 OPTION AGREEMENTS.
Each Option granted under the Plan shall be designated as an ISO or an NSO and shall be subject to the terms and conditions applicable to ISOs and/or NSOs (as the case may be) set forth in the Plan. Each Option shall specify the number of Shares for which such Option shall be exercisable and the exercise price for such Shares. In addition, each Option shall be evidenced by a written agreement (an "OPTION AGREEMENT") that shall be executed by the Company and the Optionee.
5.3 VESTING.
The Committee shall determine whether and to what extent any Options which are exercisable for Shares are also subject to vesting based upon the Optionee's continued service to, or the performance of duties for, the Company and its Subsidiaries.
5.4 NO EVIDENCE OF EMPLOYMENT OR SERVICE.
Nothing contained in the Plan or in any Option Agreement shall confer upon any Optionee any right with respect to the continuation of his or her employment by or service with the Company or any of its Subsidiaries or interfere in any way with the right of the Company or any such Subsidiary (subject to the terms of any separate agreement to the contrary) at any time to terminate such employment or service or to increase or decrease the compensation of the Optionee from the rate in existence at the time of the grant of an Option.
5.5 DATE OF GRANT.
The date of grant of an Option under this Plan shall be the date as of which the Committee approves the grant; provided, however, that in the case of an ISO, the date of grant shall in no event be earlier than the date as of which the Optionee becomes an employee, director or consultant of the Company or one of its Subsidiaries.
5.6 SHARES.
Options shall be granted to purchase a specified number of Shares not to exceed, in the aggregate, the Reserved Shares. Options may only be exercisable for whole Shares.
ARTICLE VI
OPTION PRICE
6.1 GENERAL.
The price (the "OPTION PRICE") at which each Share may be purchased shall be determined by the Committee and set forth in the Option Agreement; provided, however, that in the case of an ISO, such Option Price shall in no event be less than 100% (or 110% if Section 4.2(a) hereof is applicable) of the Fair Market Value of the Shares on the date of the grant (as determined in accordance with Section 6.2).
6.2 DETERMINATION OF FAIR MARKET VALUE.
Subject to the requirements of Section 422 of the Code regarding ISO's, for purposes of the Plan, the "Fair Market Value" of a Share as of a particular date shall be determined as follows:
(a) If such Shares are publicly traded, (i) the closing price on the business day immediately preceding such date if any trades were made on such business day and such information is available, otherwise the average of the last bid and asked prices on the business day immediately preceding such date in the over-the-counter market as reported by the National Association of Securities Dealers Automated Quotations System ("NASDAQ") or (ii) if such Shares are then traded on a national securities exchange, the closing price on the business day immediately preceding such date, if any trades were made on such business day and such information is available, otherwise the average of the high and low prices on the business day immediately preceding such date on the principal national securities exchange on which it is so traded; or
(b) If there is no public trading market for such Shares, the Fair Market Value of a Share shall be determined based upon the method set forth in the definition of "Fair Market Value" contained in the Investor Rights Agreement.
ARTICLE VII
Automatic TERMINATION OF OPTIONS
Each Option granted under the Plan shall automatically terminate and shall become null and void and be of no further force or effect upon such date or dates set forth in the applicable Option Agreement, consistent with the terms of this Plan. Any Shares that are not acquired as a result of an Option expiring without being fully exercised shall be available for award by the Committee to another eligible person.
ARTICLE VIII
LIMITATIONS ON ISOS; NOTICE TO OPTIONEES GRANTED ISOS
In accordance with Section 422(d) of the Code, to the extent that the aggregate Fair Market Value of all stock with respect to which incentive stock options are exercisable for the first time by such Optionee during any calendar year (under all plans of the Company and its subsidiaries) exceeds $100,000, such ISOs shall be treated as NSOs.
Under certain circumstances, the exercise of an ISO may disqualify the holder from recovering the favorable tax benefits ISOs offer. Therefore, the Company recommends that each Optionee holding an ISO consult with a competent tax advisor before taking any action with respect to his or her ISOs.
ARTICLE IX
PROCEDURE FOR EXERCISE
9.1 PAYMENT.
An Optionee shall pay for the exercise of a Vested Option in United States currency by cash or personal or certified check payable to the Company in an amount equal to the aggregate Option Price of the Shares with respect to which the Option is being exercised.
9.2 NOTICE.
An Optionee (or other person, as provided in Section 11.2) may exercise an Option (for the Shares represented thereby) granted under the Plan in whole or in part (but for the purchase of whole Shares only), as provided in the Option Agreement evidencing his or her Option, by delivering a written notice (the "NOTICE") to the Secretary of the Company. The Notice shall state:
(a) That the Optionee elects to exercise the Option;
(b) The number of Shares with respect to which the Option is being exercised (the "OPTION SHARES");
(c) The method of payment for the Option Shares (which method must be available to the Optionee under the terms of his or her Option Agreement);
(d) The date upon which the Optionee desires to consummate the purchase (which date must be prior to the termination of such Option);
(e) A copy of any election filed or intended to be filed by the Optionee with respect to such Option Shares pursuant to Section 83(b) of the Code; and
(f) Any additional provisions consistent with the Plan as the Committee may from time to time require.
The exercise date of an Option shall be the date on which the Company receives the Notice from the Optionee. Such Notice shall also contain, to the extent such Optionee is not then a party to the Investor Rights Agreement, an Adoption Agreement, in form and substance satisfactory to the Board pursuant to which the Optionee agrees to become a party to the Investor Rights Agreement.
9.3 ISSUANCE OF CERTIFICATES.
The Company shall issue stock certificates in the name of the Optionee
(or such other person exercising the Option in accordance with the provisions of
Section 11.2), for the securities purchased upon exercise of an Option as soon
as practicable after receipt of the Notice and payment of the aggregate Option
Price for such securities; provided that the Company may elect to not issue any
fractional Shares upon the exercise of any Options (determining the fractional
Shares after aggregating all Shares issuable to a single holder as a result of
an exercise of an Option for more than one Share) and in lieu of issuing such
fractional Shares, shall pay the Optionee the Fair Market Value thereof. Neither
the Optionee nor any person exercising an Option in accordance with the
provisions of Section 11.2 shall have any privileges as a stockholder of the
Company with respect to any Shares of stock subject to an Option granted under
the Plan until the date of issuance of stock certificates pursuant to this
Section 9.3.
ARTICLE X
ADJUSTMENTS
10.1 CHANGES IN CAPITAL STRUCTURE.
If the Common Stock is changed by reason of a stock split, reverse
|
stock split, or stock combination, stock dividend or distribution, or converted into or exchanged for other securities as a result of a merger, consolidation or reorganization (a "REORGANIZATION"), the Board shall make such adjustments in the number and class of shares of stock available under the Plan as shall be necessary to preserve to an Optionee rights substantially proportionate to his rights existing immediately prior to such transaction or event (but subject to the limitations and restrictions on such rights), including, without limitation, a corresponding adjustment changing the number and class of shares allocated to, and the Option Price of, each Option or portion thereof outstanding at the time of such change. In addition, with respect to unvested Options only, the preceding sentence shall apply to extraordinary cash dividends on Common Stock. Notwithstanding anything contained in the Plan to the contrary, in the case of ISOs, no adjustment under this Section 10.1 shall be appropriate if such adjustment (a) would constitute a modification, extension or renewal of such ISOs within the meaning of Sections 422 and 424 of the Code, and the regulations promulgated by the Treasury Department thereunder, or (b) would, under Section 422 of the Code and the regulations promulgated by the Treasury Department thereunder, be considered as the adoption of a new plan requiring stockholder approval. The Company will not, in any event, permit the exercise price of any Option to be less than the par value of the Common Stock.
10.2 SPECIAL RULES.
The following rules shall apply in connection with Section 10.1 above:
(a) No adjustment shall be made for cash dividends (except as
|
described in Section 10.1) or the issuance to stockholders of rights to subscribe for additional Shares, or other securities; and
(b) Any adjustments referred to in Section 10.1 shall be made by the Board in its reasonable discretion and shall, absent manifest error, be conclusive and binding on all persons holding any Options granted under the Plan.
10.3 RIGHT TO INCLUDE VESTED OPTIONS UPON A REALIZATION EVENT.
Upon a Realization Event, the Company may, but is not obligated to, purchase each outstanding Vested Option for an amount equal to (a) the amount per share received in respect of the Shares sold in such transaction constituting the Realization Event (b) less the Option Price thereof.
ARTICLE XI
RESTRICTIONS ON OPTIONS AND OPTION SHARES
11.1 COMPLIANCE WITH SECURITIES LAWS.
No Options shall be granted under the Plan, and no securities shall be
|
issued and delivered upon the exercise of Options granted under the Plan, unless and until the Company and/or the Optionee shall have complied with all applicable Federal or state registration, listing and/or qualification requirements and all other requirements of law or of any regulatory agencies having jurisdiction.
The Committee in its discretion may, as a condition to the exercise of any Option granted under the Plan, require an Optionee (a) to represent in writing that the securities received upon exercise of an Option are being acquired for investment and not with a view to distribution and (b) to make such other representations and warranties as are deemed reasonably appropriate by the Company. Stock certificates representing securities acquired upon the exercise of Options that have not been registered under the Securities Act shall, if required by the Committee, bear the legends as may be required by the Investor Rights Agreement and Option Agreement evidencing a particular Option.
11.2 NONASSIGNABILITY OF OPTION RIGHTS.
No Option granted under this Plan shall be assignable or otherwise transferable by the Optionee, except by will or by the laws of descent and distribution. An Option may be exercised during the lifetime of the Optionee only by the Optionee. If an Optionee dies, his or her Options shall thereafter be exercisable, during the period specified in the applicable Option Agreement (as the case may be), by his or her executors or administrators to the full extent (but
only to such extent) to which such Options were exercisable by the Optionee at the time of his or her death.
Before issuing any Shares upon exercise of Options to any person who is not already a party to the Investor Rights Agreement, the Company shall obtain, in appropriate form, an executed Adoption Agreement from such person unless a Public Offering shall have already occurred.
This Plan shall become effective on the date of its adoption by the Board (the "EFFECTIVE DATE"); provided, however, that no ISO shall be exercisable by an Optionee unless and until the Plan shall have been approved by the stockholders of the Company in accordance with the provisions of its Articles of Incorporation and By-laws, which approval shall be obtained by a simple majority vote of stockholders, voting either in person or by proxy, at a duly held stockholders' meeting, or by written consent, within twelve months before or after the adoption of the Plan by the Board.
11.3 RESTRICTIONS FOR THE UNITED KINGDOM AND CANADA.
All Optionees who are residents of the United Kingdom shall be subject to the additional restrictions set forth on SCHEDULE I attached hereto. All Optionees who are residents of Canada shall be subject to the additional restrictions set forth on SCHEDULE II attached hereto.
ARTICLE XII
TERMINATION OF THE PLAN
No Options may be granted after the Termination Date. Any Option outstanding as of the Termination Date shall remain in effect until the earlier of the exercise thereof and the Option Term with respect to such Option.
ARTICLE XIII
AMENDMENT OF PLAN
The Plan may be modified or amended in any respect by the Committee with the prior approval of the Board; provided, however, that the approval of the holders of a majority of the votes that may be cast by all of the holders of shares of common stock of the Company entitled to vote (voting together as a single class, with each such holder entitled to cast one vote per share held by such holder) shall be obtained prior to any such amendment becoming effective if such approval is required by law or is necessary to comply with regulations promulgated by the Securities and Exchange Commission under Section 16(b) of the Exchange Act or with Section 422 of the Code or the regulations promulgated by the Treasury Department thereunder. Notwithstanding the foregoing, the Plan may not be modified or amended with respect to any existing Option Agreement if such change would impair the rights of the applicable Optionee without the consent of such Optionee.
ARTICLE XIV
CAPTIONS
The use of captions in this Plan is for convenience. The captions are not intended to provide substantive rights.
ARTICLE XV
DISQUALIFYING DISPOSITIONS
If securities acquired by exercise of an ISO granted under this Plan are disposed of within two years following the date of grant of the ISO or one year following the issuance of the securities to the Optionee (a "DISQUALIFYING DISPOSITION"), the holder of such securities shall, immediately prior to such Disqualifying Disposition, notify the Company in writing of the date and terms of such Disqualifying Disposition and provide such other information regarding the Disqualifying Disposition as the Company may reasonably require.
ARTICLE XVI
WITHHOLDING TAXES
Whenever, under the Plan, securities are to be delivered to an Optionee upon exercise of an NSO (or an exercise of an ISO that will be taxed as an NSO), such Optionee shall remit or, in appropriate circumstances, agree to remit when due, an amount sufficient to satisfy all current or estimated future Federal, state, local and foreign withholding tax and employment tax requirements relating thereto. The Company shall deduct from such number of securities to be delivered to Optionee the number of securities necessary for the Company to satisfy all current or estimated future Federal, state, local and foreign withholding tax and employment tax requirements relating thereto.
ARTICLE XVII
OTHER PROVISIONS
Each Option granted under the Plan may contain such other terms and conditions not inconsistent with the Plan as may be determined by the Committee, in its sole discretion. Notwithstanding the foregoing, each ISO granted under the Plan shall include those terms and conditions which are necessary to qualify the ISO as an "incentive stock option" within the meaning of Section 422 of the Code and the regulations thereunder and shall not include any terms or conditions which are inconsistent therewith.
ARTICLE XVIII
NUMBER AND GENDER
With respect to words used in this Plan, the singular form shall include the plural form, the masculine gender shall include the feminine gender, and vice-versa, as the context requires.
ARTICLE XIX
GOVERNING LAW
All questions concerning the construction, interpretation and validity of this Plan and the instruments evidencing the Options granted hereunder shall be governed by and construed and enforced in accordance with the domestic laws of the State of New York, without giving effect to any choice or conflict of law provision or rule (whether in the State of New York or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New York. In furtherance of the foregoing, the internal law of the State of New York will control the interpretation and construction of this Plan, even if under such jurisdiction's choice of law or conflict of law analysis, the substantive law of some other jurisdiction would ordinarily apply.
* * * * * *
As adopted by the Board of Directors of Salt Holdings Corporation on November 28, 2001.
EXHIBIT 10.10
SALT HOLDINGS CORPORATION
SENIOR EXECUTIVES' DEFERRED COMPENSATION PLAN
The Salt Holdings Corporation Senior Executives' Deferred Compensation Plan (the "Plan") has been adopted by Salt Holdings Corporation, a corporation organized under the laws of the state of Delaware, effective as of the Effective Date (as hereinafter defined), for the benefit of its eligible employees.
The Plan is a nonqualified deferred compensation plan pursuant to which the Company (as hereinafter defined) and its affiliates may defer compensation on behalf of certain employees. The Plan is maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees, within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended.
ARTICLE I.
DEFINITIONS
The following words and phrases used in this Plan shall have the respective meanings set forth below unless the context clearly indicates to the contrary. Wherever appropriate herein, words used in the singular shall be considered to include the plural, words used in the plural shall be considered to include the singular, and the masculine gender shall be deemed to include the feminine gender.
Section 1.1 "ADMINISTRATOR" shall mean the Company acting through the Board or any Person to whom it delegates its authority pursuant to Article VI.
Section 1.2 "AFFILIATE" shall mean with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries Controls, is Controlled by, or is under common Control with, such Person and/or one or more Affiliates thereof. The term "Control" includes, without limitation, the possession, directly or indirectly, of the power to direct the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. The term "Affiliate" shall not include at any time any portfolio companies of Apollo Management V, L.P. or its Affiliates.
Section 1.3 "BOARD" shall mean the Board of Directors of the Company.
Section 1.4 "CLOSING DATE" shall mean the date on which the Proposed Merger is consummated.
Section 1.5 "COMMON STOCK" shall mean shares of Company's common stock, par value $0.01 per share.
Section 1.6 "COMPANY" shall mean Salt Holdings Corporation, a Delaware corporation.
Section 1.7 "DEFERRAL ELECTION FORM" shall mean the written form or forms pursuant to which a Participant may elect to make a Retention Bonus Deferral, a Sales Price Incentive Bonus Deferral and/or a Transferred Deferral, if any, in accordance with Section 3.1.
Section 1.8 "DEFERRED COMMON STOCK UNIT" shall mean the right of a Participant to receive one share of Common Stock as of the Distribution Date in accordance with Article V.
Section 1.9 "DEFERRED COMPENSATION ACCOUNT" of a Participant shall mean the bookkeeping account established on behalf of the Participant in accordance with Section 3.1.
Section 1.10 "DEFERRED PREFERRED STOCK UNIT" shall mean the right of a Participant to receive one share of Preferred Stock as of the Distribution Date in accordance with Article V.
Section 1.11 "DISTRIBUTION DATE" shall mean the date on which the event described in Section 5.1 shall occur.
Section 1.12 "EFFECTIVE DATE" means the effective date of the Plan which shall be October 8, 2001.
Section 1.13 "EXIT EVENT" shall have the meaning set forth in the Proposed Stock Rights Agreement.
Section 1.14 "FUND" shall have the meaning set forth in Section 3.4.
Section 1.15 "INVESTORS" shall mean Apollo Investment Fund V, L.P., Apollo Overseas Partners V, L.P., or any investment fund managed by Apollo Management V, L.P. or any of its Affiliates, and any of their successors and assigns.
Section 1.16 "INVESTORS' COMMON STOCK INVESTMENT RATIO" shall mean, as of the Closing Date, the ratio of (a) the aggregate value as of such date of shares of Common Stock purchased (directly or indirectly) by the Investors as of the Closing Date to (b) the sum of (i) the aggregate value as of such date of shares of Common Stock purchased (directly or indirectly) by the Investors as of the Closing Date and (ii) the aggregate value as of such date of shares of Preferred Stock purchased (directly or indirectly) by the Investors as of the Closing Date.
Section 1.17 "INVESTORS' COMMON STOCK MERGER CONSIDERATION" shall mean the merger consideration per share of Common Stock paid by the Investors as of the Closing Date, subject to appropriate adjustment by the Administrator for stock splits, stock dividends, combinations and similar transactions.
Section 1.18 "INVESTORS' PREFERRED STOCK INVESTMENT RATIO" shall mean, as of the Closing Date, the ratio of (a) the aggregate value as of such date of shares of Preferred Stock purchased (directly or indirectly) by the Investors as of the Closing Date to (b) the sum of (i) the aggregate value as of such date of shares of Common Stock purchased (directly or indirectly) by the
Investors as of the Closing Date and (ii) the aggregate value as of such date of shares of Preferred Stock purchased (directly or indirectly) by the Investors as of the Closing Date.
Section 1.19 "INVESTORS' PREFERRED STOCK MERGER CONSIDERATION" shall mean the merger consideration per share of Preferred Stock paid by the Investors as of the Closing Date, subject to appropriate adjustment by the Administrator for stock splits, stock dividends, combinations and similar transactions.
Section 1.20 "PARTICIPANT" shall mean any person included in the Plan as provided in Article II.
Section 1.21 "PERSON" shall be construed broadly and shall include, without limitation, an individual, a partnership, a corporation, an association, a joint stock company, a limited liability company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof.
Section 1.22 "PLAN" shall mean the Salt Holdings Corporation Senior Executives' Deferred Compensation Plan, as set forth in this document and as it may hereafter be amended from time to time.
Section 1.23 "PREFERRED STOCK" shall mean shares of any class of the Company's preferred stock issued and outstanding as of the Closing Date.
Section 1.24 "PROPOSED MERGER" shall mean that certain proposed merger between (a) the Company or one of its Affiliates and (b) one or more Affiliates of the Investors.
Section 1.25 "PROPOSED MERGER AGREEMENT" shall mean the agreement effectuating the Proposed Merger, as it may be revised or amended from time to time.
Section 1.26 "PROPOSED STOCK RIGHTS AGREEMENT" shall mean that certain Stock Rights Agreement to be entered into in connection with Proposed Merger, as it may be revised or amended from time to time.
Section 1.27 "RETENTION AGREEMENT" with respect to any Participant shall mean the Retention Bonus and Severance Agreement entered into by and between the Participant and IMC Global Inc., as described on Exhibit A hereto.
Section 1.28 "RETENTION BONUS DEFERRAL" shall mean the Participant's retention bonus payment pursuant to the Retention Agreement which the Participant elects to defer pursuant to Section 2.2 of the Plan.
Section 1.29 "SALES PRICE INCENTIVE BONUS DEFERRAL" shall mean a Participant's sales price incentive bonus payment pursuant to the Retention Agreement which the Participant elects to defer pursuant to Section 2.2 of the Plan.
Section 1.30 "TRANSFERRED DEFERRAL" shall mean the Participant's balance, if any, as of the Closing Date in (a) the IMC Global, Inc. 1998 Voluntary Nonqualified Deferred Compensation Plan, (b) the IMC Global Inc. 1998 Supplemental Executive Retirement Plan or (c) to the extent permitted by the Company, any other similar nonqualified deferred compensation plan, in each case which the Participant elects to defer pursuant to Section 2.2 of the Plan.
Section 1.31 "TERMINATION OF EMPLOYMENT" shall mean the time when the employee-employer relationship between the Participant and the Company or any of its Affiliates is terminated for any reason, with or without good cause, including, but not by way of limitation, a termination by resignation, discharge, disability, death or retirement, but excluding transfers among and between the Company and any Affiliate of the Company.
ARTICLE II.
PARTICIPATION
Section 2.1 PARTICIPATION. Unless otherwise determined by the Administrator in its sole discretion, each employee of the Company who, as of the Effective Date, has entered into a Retention Agreement and is actively employed by the Company or any of its Affiliates shall be eligible to participate in the Plan.
Section 2.2 DEFERRED COMPENSATION. In accordance with the terms set forth in a Participant's Deferral Election Form, each Participant shall be entitled to make a Retention Bonus Deferral, a Sales Price Incentive Bonus Deferral and/or a Transferred Deferral, as applicable, in such amount as is elected by such Participant in his Deferral Election Form. In the event that a Participant elects to make (a) a Retention Bonus Deferral and/or Sales Price Incentive Bonus Deferral, such Participant shall, in accordance with the terms of his Deferral Election Form, forego the receipt of that portion of his retention bonus and/or sales price incentive bonus under his Retention Agreement so elected and instead such Participant's Deferred Compensation Account shall be credited with Deferred Common Stock Units and/or Deferred Preferred Stock Units in accordance with the terms of this Plan and/or (b) a Transferred Deferral, such Participant shall, in accordance with the terms of his Deferral Election Form, forego the receipt of that portion of the payment of his existing balance so elected that would have otherwise been payable as of or following the Closing Date under such applicable nonqualified deferred compensation plan and instead such Participant's Deferred Compensation Account shall be credited with Deferred Common Stock Units and/or Deferred Preferred Stock Units in accordance with the terms of this Plan. Such Retention Bonus Deferral, Sales Price Incentive Bonus Deferral and/or Transferred Deferral shall be irrevocable and shall be effective as of the Closing Date.
ARTICLE III.
PARTICIPATION
Section 3.1 DEFERRED COMPENSATION ACCOUNTS
(a) The Administrator shall establish and maintain for each Participant a Deferred Compensation Account to which shall be (i) credited the amounts determined under Section
3.1(b), (ii) credited amounts determined under Section 4.2 and (iii) debited the amount of any distributions under the Plan.
(b) As of the Closing Date, each Participant's Deferred Compensation Account shall be credited with the amount of his Retention Bonus Deferral, Sales Price Incentive Bonus Deferral and/or Transferred Deferral. Notwithstanding any other provision of this Plan, no amount shall be credited to any Participant's Deferred Compensation Account prior to the Closing Date.
Section 3.2 DESIGNATION OF BENEFICIARY. Each Participant shall have the right to designate, revoke and redesignate beneficiaries hereunder and to direct payment of the amount or distribution of the items credited to his Deferred Compensation Account to such beneficiaries upon his death. Designation, revocation and redesignation of beneficiaries shall be made on such form as shall be designated by the Administrator and shall be effective upon delivery to the Administrator.
Section 3.3 ASSIGNMENTS PROHIBITED. No part of a Participant's Deferred Compensation Account shall be liable for the debts, contracts or engagements of any Participant, his beneficiaries or successors in interest, or be taken in execution by levy, attachment or garnishment or by any other legal or equitable proceeding, nor shall any such person have any rights to alienate, anticipate, commute, pledge, encumber or assign any benefits or payments hereunder in any manner whatsoever except to designate a beneficiary as provided herein.
Section 3.4 FUND. The Administrator, in its discretion, may elect to establish a fund (the "FUND") containing assets equal to the amounts credited to Participants' Deferred Compensation Accounts, and may elect in its discretion to designate a trustee to hold the Fund in trust; provided, however, that such Fund shall remain a general asset of the Company subject to the rights of creditors of the Company in the event of the Company's bankruptcy or insolvency as defined in any such trust.
ARTICLE IV.
DEEMED INVESTMENTS
Section 4.1 DEFERRED STOCK UNITS. Unless otherwise determined by the Administrator in its reasonable discretion, as of the Closing Date each Participant's Deferred Compensation Account shall be deemed to be invested in:
(a) That number of Deferred Common Stock Units equal to the ratio of
(i) the product of (A) the sum of such Participant's (I) Retention Bonus
Deferral, (II) Sales Price Incentive Bonus Deferral and (III) Transferred
Deferral and (B) the Investors' Common Stock Investment Ratio to (ii) the
Investors' Common Stock Merger Consideration; and
(b) That number of Deferred Preferred Stock Units equal to the ratio of (i) the product of (A) the sum of such Participant's (I) Retention Bonus Deferral (II) Sales Price Incentive Bonus Deferral and (III) Transferred Deferral and (B) the Investors' Preferred Stock Investment Ratio to (ii) the Investors' Preferred Stock Merger Consideration.
Section 4.2 DIVIDEND EQUIVALENTS. As of the date the Company pays any dividend (whether in cash or in kind) on shares of Common Stock or Preferred Stock, each Participant's Deferred Compensation Account shall be credited with:
(a) That number of Deferred Common Stock Units equal to the ratio of
(i) the aggregate value of the dividend that would have been payable on the
Deferred Common Stock Units held by the Participant immediately prior to such
payment date had the shares of Common Stock represented by such Deferred Common
Stock Units been outstanding as of such payment date to (ii) the fair market
value per share of Common Stock as of such date (determined in accordance with
the terms of the Participant's Investor Rights Agreement with the Company); and
(b) That number of Deferred Preferred Stock Units equal to the ratio of (i) the aggregate value of the dividend that would have been payable on the Deferred Preferred Stock Units held by the Participant immediately prior to such payment date had the shares of Preferred Stock represented by such Deferred Preferred Stock Units been outstanding as of such payment date to (ii) the fair market value per share of Preferred Stock as of such date (determined in accordance with the terms of the Participant's Investor Rights Agreement with the Company).
Section 4.3 FORFEITURE. Notwithstanding any other provision of the
Plan (a) a Participant's Retention Bonus Deferral shall be forfeited if, and to
the extent that, such Participant would not have been entitled to receive either
(i) a Retention Bonus pursuant to Section 1 of his Retention Agreement or (ii)
Severance payments pursuant to Section 2 of his Retention Agreement and (b) a
Participant's Sales Price Incentive Bonus Deferral shall be forfeited if, and to
the extent that, such Participant would not have been entitled to receive a
Sales Price Incentive Bonus pursuant to Section 1 of his Retention Agreement.
Section 4.4 NON-CONSUMMATION OF PROPOSED MERGER. Notwithstanding any other provision of the Plan (a) in the event that the Proposed Merger Agreement is not fully executed by the parties thereto on or prior to December 31, 2001, the Plan will terminate as of December 31, 2001 and (b) in the event that the Proposed Merger Agreement is terminated in accordance with its terms prior to the Closing Date, the Plan will terminate as of the effective date of such termination, and in each such case all Retention Bonus Deferrals, Sales Price Incentive Bonus Deferrals and Transferred Deferrals shall become void and of no effect as of the date of Plan termination.
ARTICLE V.
BENEFITS
Section 5.1 TIME OF DISTRIBUTION. Each Participant's Deferred Compensation Account, to the extent not previously forfeited pursuant to Section 4.3, shall be distributed to the Participant (or his beneficiaries, as applicable), less any amounts required to be withheld by applicable law, upon (or as soon as reasonably practicable following) the earlier to occur following the Closing Date of (a) the Participant's Termination of Employment or (b) an Exit Event.
Section 5.2 FORM OF DISTRIBUTION. With respect to Deferred Common Stock Units, all distributions from the Plan shall be made in the form of whole shares of Common Stock with fractional shares credited to federal income taxes withheld. With respect to Deferred Preferred Stock Units, all distributions from the Plan shall be made in the form of whole shares of Preferred Stock with fractional shares credited to federal income taxes withheld. Notwithstanding any other provision of the Plan, unless otherwise determined by the Administrator, no share of Common Stock or Preferred Stock shall be issued to any Participant (or his beneficiaries, applicable) under this Plan unless and until such Participant has entered into an Investor Rights Agreement with the Company.
ARTICLE VI.
ADMINISTRATIVE PROVISIONS
Section 6.1 ADMINISTRATOR'S DUTIES AND POWERS
(a) The Board shall conduct the general administration of the Plan in accordance with the Plan and shall have full discretionary power and authority to carry out that function. Among its necessary powers and duties, are the following:
(i) To delegate all or part of its function as Administrator to others and to revoke any such delegation.
(ii) To determine questions of eligibility and vesting of Participants and their entitlement to benefits.
(iii) To select and engage attorneys, accountants, actuaries, trustees, appraisers, brokers, consultants, administrators, physicians or other persons to render service or advice with regard to any responsibility the Administrator or the Board has under the Plan, or otherwise, to designate such persons to carry out responsibilities, and (with the Company, the Board and its officers, trustees and employees) to rely upon the advice, opinions or valuations of any such persons, to the extent permitted by law, being fully protected in acting or relying thereon in good faith.
(iv) To interpret the Plan for purpose of the administration and application of the Plan, in a manner not inconsistent with the Plan or applicable law and to amend or revoke any such interpretation.
(v) To adopt Rules of the Plan that are not inconsistent with the Plan or applicable law and to amend or revoke any such rules.
(b) Every finding, decision, and determination made by the Administrator shall, to the full extent permitted by law, be final and binding upon all parties, except to the extent found by a court of competent jurisdiction to be unreasonable.
Section 6.2 INDEMNIFICATION BY THE COMPANY; LIABILITY INSURANCE
(a) The Company shall pay or reimburse any of the Company's officers, directors or employees who administer the Plan for all expenses incurred by such persons in, and shall indemnify and hold them harmless from, all claims, liability and costs (including reasonable attorneys' fees) arising out of the good faith performance of their Plan functions.
(b) The Company may obtain and provide for any such person, at the Company's expense, liability insurance against liabilities imposed on him by law.
Section 6.3 LIMITATIONS UPON POWERS. The Plan shall be uniformly and consistently administered, interpreted and applied with regard to all Participants in similar circumstances. The Plan shall be administered, interpreted and applied fairly and equitably in accordance with the specified purposes of the Plan.
Section 6.4 RECORDKEEPING
(a) The Administrator shall maintain suitable records as follows: (i) records of each Participant's individual Deferred Compensation Accounts, (ii) records which show the operations of the Plan, and (iii) records of its deliberations and decisions.
(b) The Administrator may appoint a secretary to keep the record of proceedings, to transmit its decisions, instructions, consents or directions to any interested party, to execute and file, on behalf of the Administrator, such documents, reports or other matters as may be necessary or appropriate under applicable law to perform ministerial acts.
(c) The Administrator shall not be required to maintain any records or accounts which duplicate any records or accounts maintained by the Company.
Section 6.5 SERVICE OF PROCESS. The Secretary of the Company is hereby designated as agent of the Plan for the service of legal process.
Section 6.6 SERVICE IN MORE THAN ONE CAPACITY. Any person or group of persons may serve in more than one capacity with respect to the Plan.
Section 6.7 STATEMENT TO PARTICIPANTS. The Administrator shall from time to time in its discretion furnish to each Participant a statement setting forth the value of his Deferred Compensation Accounts and such other information as the Administrator shall deem advisable to furnish.
Section 6.8 CORPORATE CHANGES. If the Company at any time (a) increases or decreases proportionately to all holders of shares of its Common Stock or Preferred Stock then outstanding, whether by stock dividend, stock split, consolidation of shares, or (b) otherwise effectuates any change in the capitalization of the Company, then all Deferred Common Stock Units and/or Deferred Preferred Stock Units theretofore credited and unforfeited shall be equitably adjusted with respect to the number of shares of such Common Stock or Preferred Stock, as applicable, represented thereby (or exchanged for a right to receive another class or kind of securities of the
Company) in such manner as shall be determined in good faith by the Administrator in its sole discretion.
ARTICLE VII.
MISCELLANEOUS PROVISIONS
Section 7.1 AMENDMENT OF PLAN. Except as may otherwise be prohibited by applicable law, the Plan may be wholly or partially amended by the Administrator from time to time including retroactive amendments; provided, however, that no amendment shall decrease the non-forfeitable interest any Participant or any other person entitled to payment under the Plan has in the Participant's Deferred Compensation Accounts without such Participant's written approval.
Section 7.2 ERRORS AND MISSTATEMENTS. In the event of any misstatement or omission of fact by a Participant to the Administrator or any clerical error resulting in payment of benefits in an incorrect amount, the Administrator shall promptly cause the amount of future payments to be corrected upon discovery of the facts and shall pay the Participant or any other person entitled to payment under the Plan any underpayment in cash in a lump sum or to recoup any overpayment from future payments to the participant or any other person entitled to payment under the Plan in such amounts as the Administrator shall direct or to proceed against the Participant or any other person entitled to payment under the Plan for recovery of any such overpayment.
Section 7.3 GOVERNING LAW. This Plan shall be construed, administered and governed in all respects under and by applicable federal laws and, where state law is applicable, the laws of the State of Delaware.
Section 7.4 TAX WITHHOLDING. During the time a Participant is employed with the Company, the Company shall deduct from such Participant's wages any amounts required to be withheld by the Company with respect to the accrual of a Participant's benefits hereunder. Further, there shall be deducted from each payment of a Participant's Benefits under the Plan any taxes required to be withheld by the Company in respect of such payment. The Company shall have the right to reduce any payment by an amount sufficient to pay said taxes. In lieu of a deduction, the Committee may permit the Participant to pay or reimburse the Company for said taxes.
Section 7.5 LIMITATION ON RIGHTS OF EMPLOYEES. The Plan is strictly a voluntary undertaking on the part of the Company and shall not constitute a contract of employment between the Company and any Participant. Nothing contained in the Plan shall give any Participant the right to be retained in the service of the Company or to interfere with or restrict the right of the Company, which is hereby expressly reserved, to discharge or retire any Participant, except as provided by law, at any time without notice and with or without cause. Inclusion under the Plan will not give any Participant any right or claim to any benefit hereunder except to the extent such right has specifically become fixed under the terms of the Plan. The doctrine of substantial performance shall have no application to Participants or any other persons entitled to payments under the Plan.
Section 7.6 PAYMENT ON BEHALF OF MINORS. In the event any amount becomes payable under the Plan to a minor or a person who, in the sole judgment of the Administrator is considered by reason of physical or mental condition to be unable to give a valid receipt therefor, the Administrator may direct that such payment be made to any person found by the administrator in its sole judgment, to have assumed the care of such minor or other person. Any payment made pursuant to such determination shall constitute a full release and discharge of the Company, the Board, the Administrator, and their officers, directors and employees.
Section 7.7 REFERENCES. Unless the context clearly indicates to the contrary, a reference to a statute, regulation or document shall be construed as referring to any subsequently enacted, adopted or executed statute, regulation or document.
Section 7.8 TERMINATION OF THE PLAN. While the Plan is intended as a permanent program, the Board shall have the right at any time to declare the Plan terminated completely as to the Company or as to any division, facility or other operational unit thereof. In the event of any termination, the Administrator shall continue to maintain Participants' Deferred Compensation Accounts (in accordance with the terms of the Plan) and payment of such Deferred Compensation Accounts shall be made in accordance with Article V.
Section 7.9 EFFECT UPON OTHER PLANS. Except to the extent provided herein, nothing in this Plan shall be construed to affect the provisions of any other plan maintained by the Company.
Section 7.10 TITLES. Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of the Plan.
Section 7.11 ENFORCEMENT. In the event the Company or any Participant institutes litigation to enforce or protect its rights under the Plan, the party prevailing in any such litigation shall be paid by the non-prevailing party, in addition to all other relief, all reasonable attorneys' fees, out-of-pocket costs and disbursements relating to such litigation.
* * * * *
IN WITNESS WHEREOF, the Company has caused this instrument to be executed effective as of the date first above written.
SALT HOLDINGS CORPORATION
EXHIBIT 10.11
[GRAPHIC REMOVED HERE]
SALT UNION LIMITED
3 Kings Court . Manor Farm Road . Manor Park . Runcorn . Cheshire . England .
WA7 1HR . Tel: 01928 579679 . Fax: 01928 579432
DATED 1st SEPTEMBER 1997
SALT UNION LIMITED
- and -
DAVID GOADBY
SERVICE AGREEMENT
Registered in England No 2654529 Registered Office: 3 Kings Court Manor Farm Road Manor Park Runcorm Cheshire England WA71HR A member of the HARRIS CHEMICAL GROUP
THIS AGREEMENT is made the 1st SEPTEMBER 1997 BETWEEN:
(1) Salt Union Limited whose registered office is situate at 3 Kings Court, Manor Farm Road, Manor Park, Runcorn, Cheshire, WA7 IHR and registered number is 2654529 (hereinafter called "the Company");
and
(2) David John Goadby of 7 Gorse Close, Norley, Near Warrington, Cheshire, WA6 8PY (hereinafter called "the Executive").
NOW IT IS HEREBY AGREED as follows:
1. DEFINITIONS
In this Agreement:
"Associated Company" means a company which is from time
to time a subsidiary or a holding
company (as those expressions are
defined by Section 736 of the
Companies Act 1985) of the Company
or a subsidiary (other than the
Company) of a holding company of
the Company and the expression
"Associated Companies" shall be
construed accordingly;
"Board" means the Board of Directors from
time to time of the Company;
"Collective Investment Scheme" means collective investment scheme
as defined in Section 75 of the
Financial Services Act 1986;
"Control" means the holding of 51 per cent or
more of the issued voting share
capital of the Company or
Associated Company;
"Employment" means the employment established by
this Agreement:
2
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"Parent" Harris Chemical Group Inc
2. APPOINTMENT AND TERM
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2.1 The Company shall employ the Executive and the Executive shall serve the Company as Managing Director.
2.2 The Executive's employment shall be deemed to have commenced on the signing of this Agreement and shall continue (subject to the provisions of clause 2.3 and to the provisions for earlier determination hereinafter contained) unless and until terminated by either the Company giving to the Executive not less than twelve months prior notice in writing or by the Executive giving to the Company not less than three months prior notice in writing.
2.3 If the Executive's employment terminates:
(i) by reason of the liquidation of the Company for the purposes
of amalgamation or reconstruction; or
(ii) as part of any arrangement for the amalgamation of the
undertaking of the Company not involving liquidation; or
(iii) as part of any arrangement for the transfer of the whole or
part of the undertaking of the Company to an Associated
Company;
and the Executive is offered employment as Managing Director of any
undertaking from such amalgamation or reconstruction by events described
at (a) (b) or (c) above at a location in North West England or otherwise
as is mutually agreeable to both the Executive and the Company on terms
which, when taken as a whole, are no less favourable to the Executive
than the terms of the Executive's Employment, the Executive will have no
claim against the Company or any Associated Company, in respect of the
termination of the Executive's employment by reason of the events
described in (a) (b) or (c) of this clause.
2.4 In the event that a company acquires control of the Company, the Executive will be entitled to terminate this Agreement with immediate effect and upon such termination the Company shall compensate the Executive by paying him as liquidated damages in full and final settlement of any claims which he has against the Company by reason of the termination of this Agreement a sum equivalent to basic salary, the value of the
Executive's Company Car and Medical Insurance calculated over a twelve month period (less such tax and National Insurance contributions as may be properly deducted therefrom) at the rate to which the Executive shall have been entitled immediately prior to that termination. The value of the Executive's benefits in kind should be assessed on the Inland Revenue agreed scale then prevailing.
2.5 Any payment to the Executive on determination of this Agreement (whether accrued salary, holiday pay or otherwise) shall have deducted at source by the Company any income tax or employees National Insurance contributions which the Company is obliged to deduct.
3. DUTIES
3.1 The Executive's duties shall be those of Managing Director. The Board may from time to time impose on or assign to the Executive such reasonable duties as it may determine, provided always that such duties shall be commensurate with the Executive's position and status. The Executive shall devote the whole of his time and attention, abilities and skill during working hours to carrying out his duties, shall faithfully, efficiently and diligently perform such duties to promote the best interests of the Company and any Associated Company and for that purpose shall exercise such powers consistent with the office to which he is appointed and also such powers as may from time to time be conferred on him by the Board.
Further the Executive accepts that the Board may due to urgent business requirements require him to perform other duties or tasks not within the scope of his normal duties and the Executive agrees to perform those duties or undertake those tasks as if they were specifically required under this Agreement.
3.2 The Executive shall obey the reasonable and lawful restrictions, directions, rules or the regulations given to him by the Company or from time to time established or laid down by the Company concerning its employees.
3.3 The Executive shall at all times promptly give to the Company (in writing if so requested) all such information and explanations as it may require in connection with matters relating to the Employment or with the business of the Company or any Associated Company.
3.4 In pursuance of his duties hereunder the Executive shall, if so required by the Company and without further remuneration therefor, perform such reasonable services for any Associated Company as the Company may reasonably require from time to time, and shall act as director, officer or employee of such Associated Company and carry out such reasonable duties upon such appointment as if they were duties to be performed by him on behalf of the Company under this Agreement provided in each case that such services or duties are commensurate with the Executive's position and status.
3.5 If the Executive is given notice under Clause 2.2 above the Company shall be under no obligation to vest in or assign to the Executive any powers or duties or to provide any work for the Executive, and the Company may at any time or from time to time suspend the Executive from the performance of his duties or exclude him from any premises of the Company, but salary will not cease to be payable by reason only of the suspension or exclusion of the Executive and the Executive will continue to receive all other benefits (unless and until the Employment shall be terminated under any provision of this Agreement).
4. TRAVEL AND RESIDENCE
The Executive shall, if and for so long as he is so required by the Company and without any further remuneration therefor other than is herein mentioned, perform his duties at the Company's premises at 3 Kings Court, Manor Farm Road, Manor Park, Runcorn, Cheshire, WA7 1HR and elsewhere in North West England or such other locations as shall be mutually agreeable to both the Executive and the Company, and in the course of his employment the Executive may be expected to travel (from time to time) both within and outside the United Kingdom.
5. HOURS
The Executive shall work such hours as are necessary in order to fulfill properly his duties and shall be entitled to no further remuneration from work performed outside his normal working hours.
6. NON-COMPETITION
Save with the written consent of the Board, the Executive shall not during the continuance of this Agreement be engaged or interested either directly or indirectly in any business other than that of the Company or any Associated Company to which his duties shall be extended. Nothing in this clause shall preclude the Executive from being the holder of shares or other securities in any company which are quoted, listed or otherwise dealt in on a recognised stock exchange or other securities market and which confer not more than 1 per cent of the votes which could be cast at a general meeting of the company concerned unless the Board shall require him not to do so in any particular case on the ground that such company is or may be carrying on a business competing or tending to compete with the business of the Company or any Associated Company nor shall anything in this clause preclude the Executive from investing in the units of any Collective Investment Scheme or business expansion scheme or similar fund.
7. CONFIDENTIAL INFORMATION
7.1 The Executive shall not either during the continuance of this Agreement or thereafter for so long as the same is not commonly known in the trade (except through breach by the Executive of this obligation of confidence) other than for the benefit of the Company or any Associated Company use or reveal to any person any of the trade secrets, secret or confidential operations, processes or dealings or any other confidential information concerning the Company or any Associated Company or any client or customer of the Company or any Associated Company including (but without limiting the generality of the foregoing) any information or knowledge relating to any other business carried on or under investigation by the Company and/or any Associated Company, its manufacturing plans, processes of manufacture, ideas, inventions, know how, techniques, designs, researches, prices, products, markets, marketing, business strategies or suppliers where such information or knowledge was obtained by him whilst in the employ of the Company or any Associated Company.
7.2 The foregoing obligation of confidence shall not apply to any disclosure to the officials of the Company whose province it is to know the same, or where the Executive is ordered so to do by a court of competent jurisdiction or by the direction of the Company or is required to do so by law.
8. COMPANY PROPERTY
All documents, papers, correspondence, notes, memoranda, records (which shall include information recorded or stored in writing and also information recorded and stored upon magnetic tape or disc or otherwise recorded or stored for reproduction whether by mechanical or electronic means and whether or not such reproduction will result in a permanent record thereof being made) and writings made by the Executive relative to the business of the Company or any Associated Company or which have come into his possession in the course of the Employment, shall be and remain the property of the Company or the Associated Company (as the case may be), shall be kept in safe custody by the Executive and shall be handed over by the Executive to the Company or the Associated Company (as the case may be) together with any other property of whatever nature of the Company or any Associated Company on demand with the exception of the motor car referred to and subject to the provisions of clause 11 below and in any event on leaving the service of the Company the Executive shall not keep any copies thereof.
9. REMUNERATION
9.1 During the Employment the Company shall pay to the Executive:
9.1.1 a salary at the rate of (pound)81,600 pounds per annum (or at
such other rate as the parties hereto shall from time to time
agree) payable by equal calendar monthly installments in
arrears on the twenty-fifth day of each month and accruing from
day to day;
9.1.2 such bonuses or additional remuneration (if any) as the Board
may from time to time determine provided always that the
Executive shall be entitled to participate in a bonus scheme on
terms notified to him from time to time by the Company save
that the Company may at any time discontinue the operation or
payment of any such bonus scheme by giving not less than three
months prior notice in writing of such discontinuance.
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9.2 Regardless of anything to the contrary contained in the Articles of Association of the Company or any Associated Company, the Executive shall not be entitled to any other remuneration whether as an ordinary, executive or local director of the Company or any Associated Company or otherwise and the Executive shall, as the Company may direct,
either effectually waive his right to any such remuneration or shall account for and pay over the same to the Company immediately he receives it; and
9.3 The rate of the salary specified in sub-clause 9.1.1 of this clause shall be reviewed annually on 1 April.
10. EXPENSES
The Company shall (on production of satisfactory receipts if requested) reimburse or cause to be reimbursed to the Executive all reasonable travel, hotel, entertaining and other out-of-pocket expenses properly, wholly and necessarily incurred by him, or which he may from time to time be authorised to incur, in the performance of his duties under this Agreement and such expenses shall be presented to the Company's Chief Financial Officer for his signature and approval before payment is made to the Executive. Any credit card supplied to the Executive by the Company shall be used solely for expenses properly, wholly and necessarily incurred by him or as may have been authorised in the course of the Employment and such credit card shall be returned immediately on demand to the President of the Parent Company and in any event on the termination for whatever reason of the Employment.
11. CAR
11.1 The Company shall, during the continuance of the Employment (subject to
his being fully qualified to drive), provide for the Executive subject
to the Company's insurance policy rules, a motor car of a type as
specified in the Company's present car policy and shall renew or replace
the same from time to time in accordance with the Company's policy from
time to time relating to the provision of motor cats. The Company shall
bear the cost of insuring (but not any increase in insurance premiums
occasioned solely by reason of the conviction of the Executive for any
offence) testing, taxing, repairing (subject as provided below) and
maintaining and running the same.
11.2 The Executive shall:
11.2.1 take good care of the car and procure that the provisions and
conditions of any policy of insurance relating thereto are
observed;
11.2.2 not permit such car to be taken out of the United Kingdom
without the written consent of the Company; and
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11.2.3 return the car and its keys to the Chief Financial Officer of
the Company immediately upon the Executive ceasing to hold a
valid full driving license and in any event on termination for
whatever reason of the Employment.
12. HOLIDAYS
12.1 The Executive shall be entitled to twenty-six working days holiday with
pay in each year to be taken at such time or times, as the Board may
approve in addition to the normal statutory, bank and other public
holidays for the time being recognised by the Company. The holiday year
runs from 1st January to 31st December. Holidays not taken in any such
year or by the determination of this Agreement will be lost and the
Executive will not be entitled to any accrued holiday pay or pay in lieu
of holiday except on termination of the employment.
12.2 If the Executive shall serve under this Agreement during part only of a
calendar year, he shall be entitled to 2 working days holiday in respect
of each full calendar month served.
12.3 Upon termination of this Agreement for whatever reason whether lawful or
unlawful, the Executive should be entitled to a payment in lieu on a
pro-rata basis for any holidays not taken which have accrued in a
calendar year then current. This payment shall be calculated by
multiplying the accrued entitlement of 1/260 of the Executive's salary
at the time.
12.4 Similarly if at the date of termination of the employment the Executive
should have taken more holiday than has accrued the Company may make
deductions for the appropriate amount from any accrued salary. This
deduction shall be calculated in accordance with the formula set out in
Clause 12.3 above.
13. SICKNESS
13.1 If the Executive shall during the Employment be prevented by illness,
accident or injury from performing his duties hereunder, he shall be
entitled (subject to production of medical certificates satisfactory to
the Company if requested) to receive for a period of 26 weeks in any
twelve month period his salary at the rate specified in Clause 9.1.1
hereof (less any statutory sick pay).
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13.2 The Executive will, if required by the Company, whether in connection
with absence through illness, accident or injury or generally in
connection with the Employment, at the Company's expense present himself
for a medical examination by a doctor selected by the Company, a copy of
whose report shall be available on request to the Executive.
14. INVENTIONS
14.1 In view of his position as Managing Director and the duties thereby
entailed and the responsibilities arising from the nature of such duties
the Executive shall have a special obligation to further the interests
of the Company. Accordingly, if at any time during the Employment, the
Executive shall make or discover any invention, development,
improvement, process or secret whether alone or in conjunction with any
other person, firm or company which (whether the subject of letters
patent or not) shall relate to or concern any of the products or methods
of production of the Company or any Associated Company whether in exile
or planned or merely contemplated (referred to as an "Invention") then:
14.1.1 the Executive shall forthwith in writing communicate full
details thereof including (without prejudice to the generality
of the foregoing) all necessary plans and models to the Board
or as the Board may direct;
14.1.2 any such Invention made or discovered by the Executive, or his
share therein if made or discovered jointly, shall insofar as
it relates to or concerns the business of the Company or any
Associated Company belong to and be the absolute property of
the Company;
14.1.3 all information relating to an Invention shall be regarded as
confidential and accordingly the provisions of clause 7 hereof
shall apply thereto (as well after as before any registration
or application to register any patent in respect of such
Invention);
14.1.4 at the request of the Company (whether during the continuance
of the Employment or thereafter) the Executive shall at the
expense of the Company as part of his duties join with and
assist the Company or any nominee of the Company in obtaining
and/or renewing letters patent, design and/or trade mark
registrations or other like protection in such countries as the
Board may direct for
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the Invention and shall execute such deeds and documents and
carry out such acts as may be necessary for vesting in the
Company or its nominee (as the case may be) the sole beneficial
right in the Invention; and
14.1.5 the Company shall be under no liability to account to the
Executive for any revenue or profit derived or resulting from
the Invention.
The provisions of this clause shall be without prejudice to the
Executive's rights (if any) under Section 40 of the Patents Act 1977 or
any modification or re-enactment thereof and the Executive hereby
irrevocably and by way of security appoints any Director of the Company
to be his attorney and in his name and on his behalf to do and execute
any such act or instrument as may be necessary for the purpose of
implementing the above provisions.
15. TERMINATION
15.1 The Company may by notice in writing to the Executive determine this
Agreement forthwith (and the Executive shall have no claim against the
Company for damages or otherwise by reason of such determination) if the
Executive shall:
15.1.1 commit an act of bankruptcy; or
15.1.2 commit any serious breach of or continue (after written
warning) any material breach of any of his obligations to the
Company or any Associated Company under this Agreement; or
15.1.3 be convicted of an offence under any present or future statute,
order or regulation relating to insider dealing; or
15.1.4 have an order made against him under any of the provisions of
Sections 6 to 10 (inclusive) of the Company Directors
Disqualification Act 1986 or for any reason whatsoever shall be
or become prohibited by law from being a director; or
15.1.5 refuse without proper reason to comply with any lawful and
reasonable orders or directions given to him by the Board; or
15.1.6 be guilty of conduct which brings the Company or any Associated
Company into serious disrepute so long as the Company within
three months of having been made aware of the conduct
determines this Agreement; or
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15.1.7 be convicted of any criminal offence (other than any offence
under road traffic legislation in the United Kingdom or
elsewhere for which he is not sentenced to any term of
imprisonment whether immediate or suspended).
15.2 The Executive's employment shall automatically terminate by reason of
the Executive's retirement, without the need for the Company to give
notice hereunder in accordance with Clause 2.2. above, on the
Executive's sixty-second birthday.
15.3 On termination of this Agreement for whatever cause the Executive shall
forthwith resign from all offices held by him in the Company and any
Associated Company (but such resignation shall be without prejudice to
any claims which the Executive may have for breach of this Agreement)
and hereby irrevocably appoints and authorises the Chief Financial
officer of the Company to be his attorney to sign such resignation in
his name.
16. MISREPRESENTATION
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The Executive shall not at any time make any untrue statement about or in relation to the Company or any Associated Company or its or their personnel and in particular, shall not after the determination of the Employment wrongfully represent himself as being employed by or connected with the Company or any Associated Company.
17. POST-EMPLOYMENT RESTRICTIONS
The Executive undertakes and agrees with the Company that for a period of six months from the termination of the Employment he will not without the prior consent in writing of the Board directly or indirectly:
17.1 carry on or be concerned or (save as the holder of shares or other
securities in any company which are quoted, listed or otherwise dealt in
on a recognised stock exchange or other securities market and which
confer not more than 1 per cent of the votes which could be cast at a
general meeting of the company concerned and save as an investor in the
units of any Collective Investment Scheme or in a business expansion
scheme or similar fund) interested in any business within the United
Kingdom of the kind carried on at the date of termination or the
Employment by the Company or any Associated Company and to which the
Executive's duties related;
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17.2 canvass or solicit (in competition with the Company or any Associated
Company to which the Executive duties related) the custom of or deal
with any person or firm or company who at any time during the period of
twelve months immediately preceding the date of termination of the
Employment was to the knowledge of the Executive a customer or
prospective customer or in the habit of dealing with the Company or any
Associated Company in respect of goods or services of a type supplied by
the Company or any Associated Company to which the Executive's duties
related and who was known to the Executive by reason of the Employment;
17.3 solicit or entice or endeavour to solicit or entice away from the
Company or any Associated Company to which the Executive's duties
related any supplier who has supplied goods or services to the Company
or any Associated Company during the period of six months immediately
preceding the date of termination of the Employment if such solicitation
or enticement causes or would cause such supplier to cease supplying, or
materially to reduce its supply of, those goods or services to the
Company or any Associated Company.
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Further the Executive undertakes and agrees with the Company that for a period of six months from the termination of Employment he will not without the prior consent in writing of the Board directly or indirectly;
17.4 solicit or entice or endeavor to solicit or entice away from the Company
or any Associated Company any director, manager, employee or consultant
who was employed or engaged by the Company or any Associated Company at
the date of termination of the Employment in a managerial, supervisory,
technical, sales, financial or administrative post and to whom the
Executive's duties related whether or not such person would commit any
breach of his contract of employment by reason of leaving the employment
of the Company or any Associated Company; and
17.5 the Executive agrees and acknowledges that each of the restrictions
contained in the foregoing sub-clauses of this clause shall constitute
entirely separate and independent restrictions on him and that the
duration, extent and application of each of the restrictions are no
greater than is necessary for the protection of the goodwill of the
business, trade secrets and confidential information of the Company or
any Associated Company and that such restrictions would not operate
harshly or unreasonably on him; and
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17.6 if any such restriction is held to be invalid but, if reduced whether in
its field or activity, in its duration or in its geographical area,
would be valid in such reduced form, then such reduced restriction and
all other remaining restrictions shall continue to apply to the extent
that they shall not be held to be invalid.
18. PENSION AND MEDICAL INSURANCE SCHEMES
18.1 The Executive now and throughout the term of this Agreement has the
option to be a member of the Defined Benefit Pension Scheme or such
other pension scheme or schemes (if any) in which the Company
participates and which the Executive is eligible to join in accordance
with the rules thereof and the Company shall duly and punctually pay all
contributions due from it under the rules of the scheme in respect of
the Executive's benefits thereunder. The Executive's contributions to
the scheme or schemes will be deducted from his salary. The Company has
contracted out of the State Earnings Related Pension Scheme.
18.2 The Executive shall be entitled to membership of the Company's Medical
Insurance Scheme from time to time in force applicable to full-time
employees or officers of the Company in accordance with the rules
applicable thereto and the Company shall bear the subscriptions
therefor. Membership will include cover for the Executive, his spouse
and his children under the age of 18.
19. ENTIRE AGREEMENT
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This Agreement shall be in substitution for any previous service agreement between the Company or any Associated Company and the Executive and for any terms of employment previously in force between the Company or any Associated Company and the Executive and the Executive acknowledges and warrants that there are no agreements or arrangements whether written, oral or implied between the Company or any Associated Company and the Executive relating to the employment of the Executive other that those expressly set out in this Agreement and that he is not entering into this Agreement in reliance on say representation not expressly set out in this Agreement.
20. NO COMMISSIONS
The Executive shall under no circumstances whatsoever either directly or indirectly receive or accept for his own benefit any commission, rebate, discount, gratuity or profit from any person, company or firm having business transactions with the Company or any Associated Company.
21. EMPLOYMENT RIGHTS ACT 1996
The written particulars of terms of employment referred to in Section 1 of the Employment Rights Act 1996 are contained herein and accordingly no separate written statement will be given by the Company to the Executive.
22. NOTICES
Any notice or other document to be given under this Agreement to the Company shall be delivered or sent by first class recorded delivery post or facsimile or telex to the Company at its registered office from time to time (for the attention of the Secretary of the Company) and any notice or other document to be given under this Agreement to the Executive shall be delivered to him or sent by first class recorded delivery post or facsimile or telex to his usual or last known place of residence. Any such notice or other document shall be deemed to have been served:
22.1 if delivered, at the time of delivery; or
22.2 if posted, at the expiration of 48 hours after the envelope containing
the same was put into the post; or
22.3 if sent by facsimile or telex, at the expiration of 12 hours after the
same was dispatched or (in the case of telex and if earlier) when the
sender shall have received the recipient's answerback code after
sending.
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In proving such service it shall be sufficient to prove that delivery was made or that the envelope containing such notice was properly addressed and posted pre-paid first class recorded delivery letter or that the facsimile or telex was properly addressed and dispatched as the case may be.
23. DISCIPLINARY AND GRIEVANCE PROCEDURE
There is no formal disciplinary procedure. If the Executive is dissatisfied with any disciplinary decision relating to him or seeks redress of any grievance relating to the Employment (other than
the construction of this Agreement), he should first refer the matter to the President of Parent Company and then to the Chairman of the Parent Company.
24. PERIOD OF CONTINUOUS EMPLOYMENT
The Executive has service with ICI which service commenced on 1 September 1972 and which counts as part of the Executive's continuous period of employment.
25. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with English law and the parties hereby submit to the jurisdiction of the English Courts as regards any claim or matter arising under this Agreement.
IN WITNESS whereof this document is executed as a Deed and is delivered on the day and year first above written.
THE COMMON SEAL of )
)
---------------- )
LIMITED )
was hereunto )
affixed in )
the presence of: )
Director
Secretary
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SIGNED AS A DEED by ) the said ___________ ) _____________ in the presence of: ) |
EXHIBIT 10.12
INVESTOR RIGHTS AGREEMENT dated as of the Original Issue Date (this "AGREEMENT") among SALT HOLDINGS CORPORATION, a Delaware corporation (the "COMPANY") and the HOLDERS that are parties hereto.
WHEREAS, each Holder deems it to be in the best interest of the Company and the Holders that provision be made for the continuity and stability of the business and policies of the Company, and, to that end, the Company and the Holders hereby set forth herein their agreement with respect to the Common Stock, Preferred Stock and Options owned by them.
NOW, THEREFORE, in consideration of the premises and of the mutual consents and obligations hereinafter set forth, the parties hereto hereby agree as follows:
Section 1. DEFINITIONS.
As used in this Agreement:
"AFFILIATE" of the Company or YBR means a Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the Company or YBR, as applicable. As used in this definition, the term "control," including the correlative terms "controlling," "controlled by" and "under common control with," means possession, directly or indirectly, of the power to direct or cause the direction of management or policies (whether through ownership of securities or any partnership or other ownership interest, by contract or otherwise) of a Person. The term "Affiliate" shall not include at any time any portfolio companies of Apollo Management V, L.P. or its Affiliates.
"AFFILIATE" of a Holder (other than YBR) means: (i) any member of the immediate family of an individual Holder, including parents, siblings, spouse and children (including those by adoption); the parents, siblings, spouse, or children (including those by adoption) of such immediate family member, and in any such case any trust whose primary beneficiary is such individual Holder or one or more members of such immediate family and/or such Holder's lineal descendants; (ii) the legal representative or guardian of such individual Holder or of any such immediate family members in the event such individual Holder or any such immediate family members becomes mentally incompetent; and (iii) any Person controlling, controlled by or under common control with a Holder. As used in this definition, the term "control," including the correlative terms "controlling," "controlled by" and "under common control with," means possession, directly or indirectly, of the power to direct or cause the direction of management or policies (whether through ownership of securities or any partnership or other ownership interest, by contract or otherwise) of a Person. The term "Affiliate" shall not include at any time any portfolio companies of Apollo Management V, L.P or its Affiliates.
"APOLLO GROUP" means Apollo Investment Fund V, L.P., a Delaware limited partnership, Apollo Overseas Partner V, L.P. and each of their respective Affiliates.
"ASSET SALE" means the sale of all or substantially all of the assets of the Company to a Person or Group which is not an Affiliate of YBR.
"BOARD" means the Board of Directors of the Company and any duty authorized committee thereof. All determinations by the Board required pursuant to the terms of this Agreement to be made by the Board shall be binding and conclusive.
"CAUSE" means a Non-YBR Holder's (a) conviction of a felony or crime of moral turpitude (other than a traffic violation), (b) willful commission of any action that is materially harmful to the Company or its Affiliates on a consolidated basis (other than any action taken in good faith utilizing such Non-YBR Holder's business judgement), or (c) failure to follow any lawful communicated directive of the Board delivered to the Non-YBR Holder.
"COME ALONG OPTION" has the meaning ascribed to such term in Section 4.2(b).
"COMMON STOCK" means: (a) all shares of the voting or non-voting common stock of the Company owned by each of the Holders on the date hereof; (b) all shares of the voting or non-voting common stock hereafter issued by the Company to or acquired by any Holder, whether in connection with a purchase, issuance, grant, stock split, stock dividend, reorganization, warrant, option, convertible security, right to acquire, deferred compensation plan or otherwise; and (c) all securities of the Company or any other Person which any Holder acquires in respect of his, her or its shares of Common Stock in connection with any exchange, merger, recapitalization, consolidation, reorganization or other transaction to which the Company is a party. All references herein to Common Stock owned by a Holder include the community interest or similar marital property interest, if any, of the spouse of such Holder in such Common Stock. The term "common stock" means any stock of any class of the Company which has no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company and which is not subject to redemption by the Company (whether or not shares of such class have voting rights).
"CONTROL DISPOSITION" means a Disposition which would have the effect of transferring to a Person or Group that is not an Affiliate of YBR a number of shares of Common Stock such that, following the consummation of such Disposition, such Person or Group possesses the voting power to elect a majority of the Board (whether by merger, consolidation or sale or transfer of Common Stock).
"DISPOSITION" means any direct or indirect transfer, assignment, sale,
gift, pledge, hypothecation or other encumbrance, or any other disposition, of
Common Stock or Preferred Stock (or any interest therein or right thereto) or of
all or part of the voting power (other than the granting of a revocable proxy)
associated with the Common Stock or Preferred Stock (or any interest therein)
whatsoever, or any other transfer of beneficial ownership of Common Stock or
Preferred Stock whether voluntary or involuntary, including, without limitation
(a) as a part of any liquidation of a Non-YBR Holder's assets or (b) as a part
of any reorganization of a Non-YBR Holder pursuant to the United States or other
bankruptcy law or other similar debtor relief laws; PROVIDED, that (i) without
limiting restrictions contained in this Agreement, pledge arrangements which may
be entered into by a Non-YBR Holder pledging his, her or its Common Stock or
Preferred Stock to banks or other bona fide sources of financing and any
transactions contemplated thereby, shall not constitute a Disposition, and (ii)
the participation by a Non-YBR Holder in a proposed underwritten public offering
of common stock or preferred stock of the Company (including the entry into an
underwriting agreement, a custody agreement and other
agreements ordinarily executed by selling Holders in connection therewith), which public offering, if consummated, would constitute a Qualified Public Offering, and the consummation thereof, or the participation by a Non-YBR Holder in any other registration pursuant to any demand or piggyback registration rights that such Non-YBR Holder may have pursuant to any registration rights or similar agreement with the Company and the consummation thereof, shall not constitute a Disposition, it being understood that, if such proposed underwritten public offering is terminated or abandoned prior to consummation or is not consummated in a manner which constitutes a Qualified Public Offering, or such other registration is terminated or abandoned prior to consummation or is not consummated, the Common Stock or Preferred Stock of such participating Non-YBR Holder shall remain subject to this Agreement and no Disposition thereof (whether pursuant to agreement entered into in connection with such proposed underwritten public offering or otherwise) shall be permitted hereunder without compliance with the terms of this Agreement. The term Disposition shall include a Control Disposition.
"DIVORCED NON-YBR HOLDER" has the meaning ascribed to such term in
Section 2.1.
"DIVORCED SPOUSE" has the meaning ascribed to such term in Section 2.1.
"ELIGIBLE OFFEREES" means the Company and YBR.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.
"FAIR MARKET VALUE OF THE SHARES OF COMMON STOCK" means as of any particular date (the "DETERMINATION DATE") for a share of Common Stock the ratio of (a) the sum of (i) the product of (A) the ratio of (I) the cash purchase price paid by YBR, the Apollo Group and their Affiliates for the equity of the Company as of the Original Issue Date plus the value of the equity retained by IMC Global, Inc. on the Original Issue Date plus or minus any post-closing adjustments made in connection with the agreement evidencing the merger between an affiliate of YBR and the Company to (II) the Company's consolidated earnings before interest, taxes, depreciation and amortization ("EBITDA") for the 12 months prior to the Original Issue Date as described in the Company's applicable high yield prospectus and (B) the Company's EBITDA for the 12 months prior to the Determination Date calculated on the same basis as EBITDA was calculated for the 12 months prior to the Original Issue Date plus (ii) the amount that would be received by the Company upon the exercise of all Options outstanding that have an exercise price that is less than the fair market value per share of Common Stock as of the Determination Date, such fair market value to be determined assuming the receipt of amounts for the exercise of all Options outstanding unless after such assumption the fair market value per share of Common Stock is less than the exercise price per share of the Options ("IN THE MONEY OPTIONS") minus (iii) the amount of the Company's net debt and Fair Market Value of the Shares of Preferred Stock as of the Determination Date to (b) the number of shares of Common Stock outstanding as of the Determination Date determined on a fully diluted basis (including the number of shares subject to In-the Money Options as of such date). For purposes of this definition of Fair Market Value of the Shares of Common Stock, EBITDA for the 12 months prior to the Determination Date shall be adjusted to take into account a materially good or bad winter pursuant to the terms
agreed to by YBR and the Company's Chief Executive Officer, which terms shall be set forth on ANNEX I hereto (or other factors that may be appropriate from time to time). The Company shall deliver a written notice to Holders on a quarterly basis of such Fair Market Value.
"FAIR MARKET VALUE OF THE SHARES OF PREFERRED STOCK" means the per share fair market value of the outstanding Preferred Stock of the Company, which shall be calculated as of any Determination Date as the sum of the Original Cost and the value of the dividends accrued, but not paid, to the Preferred Stock as such fair market value was last determined in good faith by the Board prior to the Offer or, if the Board determines in good faith that such fair market value has materially changed from the amounts as last determined by the Board prior to the Offer, the fair market value as determined in good faith by the Board as of the most recent practicable date prior to the Offer; PROVIDED, HOWEVER, that if shares of Preferred Stock are publicly traded or quoted at the time of any Offer, then the fair market value of such shares shall be the most recently quoted trading price on the business day immediately prior to the Offer. The Board shall have no obligation to determine such fair market value at any time. Neither the Company nor any officer, director, employee or agent of the Company shall have any liability with respect to valuation of shares of Preferred Stock that are bought or sold at the fair market value, as determined pursuant to this paragraph even though the fair market value, as so determined, may be more or less than actual fair market value, and shall be fully protected in relying in good faith upon the records of the Company and upon information, opinions, reports or statements presented to the Company by any Person as to matters which the Company or such director, officer, employee or agent reasonably believes are within such other Person's professional or expert competence and who has been selected with reasonable care by or on behalf of the Company. The fair market value of Preferred Stock as of the date of this Agreement and until the first determination of fair market value thereof by the Board shall, for purposes of this paragraph, be deemed to be Original Cost, subject to appropriate adjustment by the Board for stock splits, stock dividends, combinations and similar transactions. The Company shall deliver a written notice to Holders on a quarterly basis of such Fair Market Value.
"GOOD REASON" means voluntary resignation after any of the following actions are taken by the Company or any of its subsidiaries without the Non-YBR Holder's consent: (a) the continued failure to pay compensation when due to the Non-YBR Holder for more than 30 (30) days; (b) a significant diminution in the responsibilities or authority of the Non-YBR Holder; (c) a significant diminution in the annual base compensation and other benefits to be paid to the Non-YBR Holder (but not including any diminution related to a broader compensation or benefit reduction that is not limited to any particular employee) or (d) relocation of the Non-YBR Holder's primary work place beyond a fifty (50) mile radius of the employee's current location; provided, that none of the events described in the foregoing clauses (a), (b), (c) or (d) shall constitute Good Reason unless the Non-YBR Holder shall have notified the Company in writing describing the events which constitute Good Reason and then only if the Company shall have failed to cure such event within 30 days after the Company's receipt of such written notice.
"GROUP" shall have the meaning ascribed thereto in Section 13(d)(3) of the Exchange Act.
"HOLDERS" means the holders of securities of the Company (and the Persons who have a right to receive securities of the Company pursuant to Options or any deferred
compensation plan) who are parties hereto or to any other similar investor rights agreement or stockholders agreement.
"INITIAL PURCHASED SHARES" shall mean, with respect to each Non-YBR Holder, all shares of Common Stock and Preferred Stock (a) purchased by such Non-YBR Holder as of the Original Issue Date and (b) issuable to such Non-YBR Holder pursuant to a distribution from the Company's Senior Executives' Deferred Compensation Plan pursuant to any deferral election made thereunder on or prior to the Original Issue Date, and any securities of the Company which may be issued or distributed with respect to, or in exchange or substitution for, or conversion of, such Initial Purchased Securities.
"IRA" has the meaning ascribed to such term in Section 6.2(c).
"MATERIAL AGREEMENT" has the meaning ascribed to such term in Section 4.1.
"NON-INITIAL PURCHASED SHARES" shall mean all shares of Common Stock or Preferred Stock that may be purchased by, transferred to, or are otherwise held by, any Non-YBR Holder (whether upon the exercise of an Option or otherwise) other than Initial Purchased Shares.
"NON-YBR HOLDERS" means Holders other than the Company and YBR.
"NOTICE" has the meaning ascribed to such term in Section 4.1.
"OFFER" has the meaning ascribed to such term in Section 2.1, 2.2, 2.3, 2.4 or 2.5, as applicable.
"OPTION" means the options issued to Holders pursuant to the Company's 2001 Stock Option Plan, as it is amended, supplemented or restated from time to time, or any other option plan approved by the Company.
"ORIGINAL COST" means:
(a) With respect to a share of Common Stock, $10 per share, subject to appropriate adjustment by the Board for stock splits, stock dividends, combinations and similar transactions; and
(b) With respect to a share of Preferred Stock, $1,000 per share, subject to appropriate adjustment by the Board for stock splits, stock dividends, combinations and similar transactions.
"ORIGINAL ISSUE DATE" means the date of consummation of the merger between YBR and the Company.
"PERSON" shall be construed broadly and shall include, without limitation, an individual, a partnership, a corporation, an association, a joint stock company, a limited liability company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department agency or political subdivision thereof.
"PIGGY-BACK REGISTRATION RIGHTS" has the meaning ascribed to such term in Section 10.
"PREFERRED STOCK" means shares of any class of preferred stock of the Company issued and outstanding as of the Original Issue Date or any exchange debentures issued in exchange for such preferred stock pursuant to its terms.
"PROPORTIONATE PERCENTAGE" means, with respect to any Holder, (i) in
respect of shares of Common Stock, a fraction (expressed as a percentage) the
numerator of which is the total number of shares of Common Stock held by such
Holder (including any shares of Common Stock that such Holder purchases pursuant
to any Option exercised in connection with the applicable Section 4.2
Transaction or any shares distributed pursuant to any deferred compensation plan
in connection with the applicable Section 4.2 Transaction) and the denominator
of which is the total number of shares of Common Stock outstanding at the time
of determination (including any shares of Common Stock that such Holder
purchases pursuant to any Option exercised in connection with the applicable
Section 4.2 Transaction or any shares distributed pursuant to any deferred
compensation plan in connection with the applicable Section 4.2 Transaction) and
(ii) in respect of the Preferred Stock, a fraction (expressed as a percentage)
the numerator of which is the total number of shares of Preferred Stock held by
such Holder and the denominator of which is the total number of shares of
Preferred Stock outstanding at the time of determination.
"PUBLIC SALE" means any sale, occurring simultaneously with or after an initial public offering, of Common Stock or Preferred Stock to the public pursuant to an offering registered under the Securities Act or to the public in the manner described by the provisions of Rule 144(f).
"PURCHASE PRICE" means, subject to adjustment pursuant to Section 3.5 and the provisions of this paragraph, (i) for purposes of the purchase of Securities Subject to the Offer under Sections 2.1, 2.2, 2.3 or 2.5, and shares of Common Stock or Preferred Stock purchased by a Divorced Non-YBR Holder or a Surviving Non-YBR Holder under Sections 2.1 or 2.2, the Original Cost of such Securities Subject to the Offer and (ii) for purposes of the purchase of Securities Subject to the Offer under Section 2.4, the Fair Market Value of the shares of Common Stock and the Fair Market Value of the Shares of Preferred Stock.
"QUALIFIED PUBLIC OFFERING" means an underwritten public offering of Common Stock by the Company pursuant to an effective registration statement filed by the Company with the Securities and Exchange Commission (other than on Forms S-4 or S-8 or successors to such forms) under the Securities Act, pursuant to which the aggregate offering price of the Common Stock sold in such offering is at least $100,000,000.
"QUALIFIED PREFERRED PUBLIC OFFERING" means an underwritten public offering of Preferred Stock by the Company pursuant to an effective registration statement filed by the Company with the Securities and Exchange Commission (other than on Forms S-4 or S-8 or successors to such forms) under the Securities Act, pursuant to which the aggregate offering price of the Preferred Stock sold in such offering is at least $50,000,000.
"RECEIPT NOTICE" has the meaning ascribed to such term in Section 3.4.
"REQUIRED VOTING PERCENTAGE" means a majority of the shares of Common Stock outstanding owned by the Holders as of the date the vote is taken and the vote of the shares of Common Stock owned by YBR.
"SALE NOTICE" has the meaning ascribed to such term in Section 4.2(a).
"SECTION 4.2 TRANSACTION" has the meaning ascribed to such term in
Section 4.2(a).
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the rules and regulations thereunder.
"SECURITIES SUBJECT TO THE OFFER" means: (i) with respect to an Offer required under Section 2.1, all shares of Common Stock and Preferred Stock transferred to or retained by or vested in the Divorced Spouse (defined therein) and not elected to be purchased by the Divorced Non-YBR Holder (as defined therein) within the time limits specified in that section, and no others; (ii) with respect to an Offer required under Section 2.2, all shares of Common Stock and Preferred Stock vesting in or transferable to any heir or legatee of the deceased spouse other than the Surviving Non-YBR Holder (as defined in that Section) and not elected to be purchased by the Surviving Non-YBR Holder within the time limits specified in that Section, and no others; and (iii) all shares of Common Stock and Preferred Stock owned by a Non-YBR Holder required to make an Offer under Sections 2.3, 2.4 and 2.5.
"SUBJECT EMPLOYEE" has the meaning ascribed to such term in Section 6.2(c).
"SURVIVING NON-YBR HOLDER" has the meaning ascribed to such term in
Section 2.2.
"TAG ALONG HOLDER" has the meaning ascribed to such term in Section 4.2(a).
"TAG ALONG NOTICE" has the meaning ascribed to such term in Section 4.2(a).
"YBR" means YBR Holdings LLC, a Delaware limited liability company.
Section 2. GENERAL RULE.
Without limiting Section 7, except as expressly permitted by the terms of Sections 2, 4, 5, 9 and 10 without the consent of the Company, no Non-YBR Holder shall make any Disposition, directly or indirectly, through an Affiliate or otherwise. The preceding sentence shall apply with respect to all shares of Common Stock and Preferred Stock held at any time by a Non-YBR Holder (including without limitation to all shares of Common Stock acquired upon the exercise of any stock option or upon the distribution from any deferred compensation plan), regardless of the manner in which such Non-YBR Holder initially acquired Common Stock or Preferred Stock, as applicable. In the event of a conflict between any provision of this Section 2 and Section 9, the terms of Section 9 shall control.
2.1 DIVORCE OF NON-YBR HOLDER.
If the marital relationship of a Non-YBR Holder is terminated by divorce, and pursuant to such divorce, or any property settlement in connection with such divorce, Common Stock or Preferred Stock, previously registered in the name of such Non-YBR Holder ("DIVORCED NON-YBR HOLDER") are transferred to, or a community property interest or similar marital property interest is retained by or vested in, the spouse of the Divorced Non-YBR Holder ("DIVORCED SPOUSE"), the Divorced Non-YBR Holder shall promptly notify the Company of such event. The Divorced Non-YBR Holder shall have the option to purchase all of the Divorced Non-YBR Holder's Common Stock and all of the Divorced Non-YBR Holder's Preferred Stock, which have been transferred to or which are retained by or vested in the Divorced Spouse by virtue of the divorce decree, property settlement, or by operation of the community property or similar marital property laws for the Purchase Price, and the Divorced Spouse shall be obligated to sell such Common Stock and such Preferred Stock, to the Divorced Non-YBR Holder for the Purchase Price. Such option must be exercised, and the purchase consummated, within 30 days after the Common Stock and the Preferred Stock are transferred to or otherwise vested in or allowed to be retained by the Divorced Spouse. The option shall be exercised by the giving of written notice of exercise to the Divorced Spouse. The Divorced Non-YBR Holder shall, within five days after the expiration of such 30 day period, deliver written notice to the Company as to whether the Divorced Non-YBR Holder has purchased all of the Common Stock and the Preferred Stock, so transferred to or otherwise vested in or retained by the Divorced Spouse. In the event such written notice states that the Divorced Non-YBR Holder has not purchased all such Common Stock and Preferred Stock, or no such notice is delivered to the Company within the time required, the Divorced Spouse shall be deemed to have made an irrevocable offer (the "OFFER") of all such Common Stock and Preferred Stock, to the Eligible Offerees, and the Company shall (and is hereby authorized by the Non-YBR Holders and their respective spouses to), within five business days after (i) the receipt of such notice, if delivered within the time required, or (ii) if such notice is not delivered within the time required, the receipt by the Company of evidence, satisfactory to it that all such Common Stock and Preferred Stock, were not purchased by the Divorced Non-YBR Holder within such 30 day period, deliver written notice of the Offer to the Eligible Offerees stating all such Common Stock and Preferred Stock are Securities Subject to the Offer pursuant to this Section 2.1, and the date of such Offer shall be deemed to be the date such written notice of the Offer is so delivered by the Company.
2.2 DEATH OF SPOUSE.
If the spouse of a Non-YBR Holder dies, and all or any portion of the Common Stock and/or Preferred Stock registered in the name of such Non-YBR Holder ("SURVIVING NON-YBR HOLDER") vests in or is transferable to any heir or legatee other than the Surviving Non-YBR Holder, the Surviving Non-YBR Holder shall promptly notify the Company of such event. The Surviving Non-YBR Holder shall have the option to purchase all of the Common Stock and Preferred Stock vesting in or transferable to such heir or legatee for the Purchase Price, and such heir or legatee and the estate of the deceased spouse shall be obligated to sell such Common Stock and Preferred Stock to the Surviving Non-YBR Holder for the Purchase Price. Such option must be exercised, and the purchase consummated, within one hundred twenty days after the last to occur of (a) the entry of an order of a probate or similar court (having jurisdiction over the estate of the deceased spouse) (i) admitting to probate the will of the deceased spouse, or
determining the heirs of the deceased spouse if the deceased spouse is determined to have died intestate, or (b) the appointment of the executor, administrator or legal representative of the estate of the deceased spouse. The option shall be exercised by the giving of written notice of exercise to the executor, administrator or legal representative of the deceased spouse's estate. The Surviving Non-YBR Holder shall, within five days after the expiration of such 30 day period, deliver written notice to the Company as to whether the Surviving Non-YBR Holder has purchased all of the Common Stock and Preferred Stock, vesting in or transferable to any such heir or legatee. In the event such written notice states that the Surviving Non-YBR Holder has not purchased all such Common Stock and Preferred Stock, or no such notice is delivered to the Company within the time required, all such heirs and legatees shall be deemed to have made an irrevocable Offer (the "OFFER") of such Common Stock and Preferred Stock, to the Eligible Offerees, and the Company shall (and is hereby authorized by the Non-YBR Holders and their respective spouses to), within five business days after (i) the receipt of such notice, if delivered within the time required, or (ii) if such notice is not given within the time required, the receipt by the Company of evidence satisfactory to it that all such Common Stock and Preferred Stock, were not purchased by the Surviving Non-YBR Holder within such one hundred twenty day period, deliver written notice of the Offer to the Eligible Offerees stating that all such Common Stock and Preferred Stock are Securities Subject to the Offer pursuant to this Section 2.2, and the date of such Offer shall be deemed to be the date such written notice of the Offer is so delivered by the Company.
2.3 BANKRUPTCY.
If any of the following events occurs:
(a) Any Non-YBR Holder shall (i) voluntarily be adjudicated as bankrupt or insolvent; (ii) consent to or not contest the appointment of a receiver or trustee for himself, herself or itself or for all or any part of his, her or its property; (iii) file a petition seeking relief under the bankruptcy, rearrangement, reorganization or other debtor relief laws of the United States or any state or any other competent jurisdiction; or (iv) make a general assignment for the benefit of his, her or its creditors; or
(b) If (i) a petition is filed against a Non-YBR Holder seeking relief under the bankruptcy, rearrangement, reorganization or other debtor relief laws of the United States or any state or other competent jurisdiction; or (ii) a court of competent jurisdiction enters an order, judgment or decree appointing a receiver or trustee for a Non-YBR Holder, or for any part of his, her or its property, and such petition, order, judgment or decree shall not be and remain discharged or stayed within a period of sixty days after its entry;
then any such event shall be deemed an irrevocable "OFFER," and such Non-YBR Holder shall promptly notify the Company of such event, and the Company shall, within five business days from receipt thereof (or, if no such notice is delivered to the Company by the Non-YBR Holders, within five business days from the Company's receipt of evidence, satisfactory to it, of any of the foregoing events), deliver written notice of the Offer to the Eligible Offerees stating that all of the shares of Common Stock and Preferred Stock registered in the name of such Non-YBR
Holder are Securities Subject to the Offer pursuant to this Section 2.3. The date of such Offer shall be deemed to be the date such written notice of the Offer is so delivered by the Company.
2.4 DEATH OF NON-YBR HOLDER.
The death of a Non-YBR Holder shall be deemed an irrevocable "OFFER" by his or her estate (the "OFFEROR"), and the Offeror's executor or personal representative promptly shall notify the Company of that event. The Company shall, within five business days after learning of such death, deliver written notice of the Offer to the Eligible Offerees stating that all of the shares of the Common Stock and Preferred Stock of the Offeror are Securities Subject to the Offer pursuant to this Section 2.4. The date of such Offer shall be deemed to be the date on which such written notice is so delivered by the Company.
2.5 INDIRECT TRANSACTION.
In the event of a transaction involving a change of ownership interest
or voting power of a Non-YBR Holder which avoids the restrictions on
Dispositions provided in this Section 2, such transaction shall be deemed a
Disposition by such Non-YBR Holder and an irrevocable "OFFER," and such Non-YBR
Holder ("OFFEROR") shall promptly notify the Company of such event and offer
(the "OFFER"), by written notice to the Company, to sell all Securities Subject
to the Offer to the Eligible Offerees for the Purchase Price. Offers under this
Section 2.5 shall (a) be in writing; (b) be irrevocable for so long as any
Eligible Offeree has the right to purchase any Securities Subject to the Offer;
(c) be sent by the Offeror to the Company; and (d) contain a description of the
proposed transaction and change of ownership interest or voting power. The
Company shall, within five business days from receipt thereof (or, if no such
written notice is delivered to the Company by the Non-YBR Holder, within five
business days from the Company's receipt of evidence, satisfactory to it, of
such a Disposition by the Offeror), deliver written notice of the Offer to the
Eligible Offerees stating that all Common Stock and Preferred Stock registered
in the name of such Non-YBR Holder are Securities Subject to the Offer Pursuant
to this Section 2.5. The date of such Offer shall be deemed to be the date such
written notice of the Offer is so delivered by the Company.
Section 3. PROCEDURES; PRICE.
3.1 THE COMPANY.
The Company shall have the right, for 30 days following the date of an Offer, to accept the Offer as to all or any Securities Subject to the Offer. If the Company shall not have sufficient surplus to permit it lawfully to purchase Securities Subject to the Offer which the Company has accepted in whole or in part, the Non-YBR Holders shall, promptly upon the request of the Company, take such action to vote their respective shares to reduce the stated capital of the Company to the extent permitted by law or to authorize such other steps as may be appropriate or necessary in order to enable the Company, if possible, lawfully to purchase such Securities Subject to the Offer.
3.2 YBR.
If the Company does not accept the Offer with respect to all Securities Subject to the Offer within the 30 day period specified in Section 3.1, the Company shall promptly give written notice thereof to YBR and YBR shall have the right, for 30 days following the receipt of such notice, to accept the Offer as to any remaining Securities Subject to the Offer.
3.3 CERTAIN EFFECTS OF OFFERS.
Subject to the provisions of Section 6.2, all Common Stock and Preferred Stock transferred in accordance with the terms of this Agreement to any third party or to any Eligible Offeree (other than the Company), and all Securities Subject to the Offer under Sections 2.1 through 2.5 (unless acquired by the Company), shall remain subject to the terms of this Agreement; PROVIDED, that upon the sale of (or other realization upon) Common Stock or Preferred Stock by any banks or other bona fide sources of financing pursuant to, or upon the occurrence of any transfer of such Common Stock or such Preferred Stock to any such banks or other bona fide sources of financing or any third party pursuant to, pledge arrangements which may be entered into by the Company's Holders pledging their capital stock or notes thereto to secure financing, such Common Stock and Preferred Stock so pledged shall not remain subject to the terms of this Agreement.
3.4 ACCEPTANCE; CLOSING.
If an Eligible Offeree (other than the Company) accepts an Offer as to all or any portion of the Securities Subject to the Offer, it shall evidence its acceptance by delivering to the Company a written notice of intent to purchase such Securities Subject to the Offer. The Company shall, in turn, promptly notify in writing any Non-YBR Holder or any other party required to sell Securities Subject to the Offer of the receipt of such notices ("RECEIPT NOTICE"). The Company shall accept an Offer as to the Securities Subject to the Offer by promptly notifying the Non-YBR Holder or any other party required to sell Securities Subject to the Offer of such acceptance, and such notice by the Company shall be deemed a Receipt Notice. The closing of the acquisitions of Securities Subject to the Offer by Eligible Offerees shall be consummated within 90 days following the delivery of the Receipt Notice. In the case of all acquisitions of Securities Subject to the Offer by Eligible Offerees such acquisitions shall be consummated at a closing held at the principal offices of the Company (unless otherwise mutually agreed), at which time the Purchase Price (if cash, in the form of a cashier's check) shall be delivered to the transferor of the Common Stock and the Preferred Stock or the transferor's representative, and the transferor or the transferor's representative shall deliver to the Eligible Offerees purchasing such shares and certificates representing the Securities Subject to the Offer so purchased, duly endorsed for transfer or accompanied by duly executed stock powers or assignment forms, and evidence of good title to the Securities Subject to the Offer so purchased and the absence of liens, encumbrances and adverse claims with respect thereto and such other matters as are deemed necessary by the Company for the proper transfer of the Securities Subject to the Offer so purchased to the acquiring Eligible Offerees on the books of the Company.
3.5 FORM OF PAYMENT
The Purchase Price for all Securities Subject to the Offer pursuant to an Offer made under Sections 2.1 through 2.5 shall be paid in cash.
Section 4. CERTAIN DISPOSITIONS.
4.1 LOAN AND OTHER AGREEMENTS: CERTAIN RESTRICTIONS.
Notwithstanding anything in this Agreement to the contrary, no Non-YBR
Holder shall make any Disposition (including but not limited to a Disposition
pursuant to Sections 2, 4 or 5 (other than pursuant to Section 4.2 or paragraph
5.1(a) and excluding any Disposition pursuant to Section 10) which, in the
Company's reasonable judgment (as evidenced by a resolution of the Board), would
cause a breach or default or acceleration of payments under any loan agreement,
note, indenture or other agreement or instrument to which the Company and/or its
Affiliates are a party and under which the indebtedness or liability of the
Company and/or its Affiliates exceeds $1,000,000 ("MATERIAL AGREEMENT").
Therefore, each Non-YBR Holder desiring or required to make a Disposition shall,
prior to attempting to effect any such Disposition, (a) give written notice
("NOTICE") to the Company describing the proposed Disposition and the proposed
transferee in sufficient detail, setting forth the number of shares of Common
Stock or Preferred Stock as to which such Non-YBR Holder desires to make a
Disposition; and (b) provide such other information concerning the Disposition
as the Company reasonably requests. If, in the Company's reasonable judgment
(which judgment shall be communicated in writing within ten days of the
Company's receipt of the Notice and all other information it has reasonably
requested), the proposed Disposition would cause a breach or default or
acceleration of payments under any Material Agreement, then such Disposition may
not be made, and any attempted Disposition shall be null and void. If the
Company approves such Disposition (which approval shall be deemed given if no
notification is given by the Company in accordance with the immediately
preceding sentence) and any shares of Common Stock or Preferred Stock with
respect to which approval has been given are not actually transferred within the
relevant time period provided in the applicable provisions of this Agreement,
then all of the provisions of this Agreement shall apply to any subsequent
transaction affecting such Common Stock and Preferred Stock (except as expressly
excluded by the other terms of this Agreement). Additionally, all shares of
Common Stock and Preferred Stock transferred (whether to a third party or any
Non-YBR Holder) pursuant to a Disposition complying with the terms of this
Section 4 shall remain subject to this Agreement.
4.2 COME-ALONG AND TAG ALONG RIGHTS.
(a) Subject to the provisions of paragraph 4.2(b), prior to the consummation of a Qualified Public Offering or Qualified Preferred Public Offering, if YBR desires to effect (i) an Asset Sale, (ii) any sale or transfer of shares of Common Stock or Preferred Stock (other than any transfer described in the seventh sentence of this Section 4.2(a)) following which (when aggregated with all prior such sales or transfers) YBR shall have disposed of at least 10% of number of shares of Common Stock or Preferred Stock, as applicable, that YBR owned as of the time Original Issue Date to a transferee or Group, or (iii) a
Control Disposition or any sale or transfer of shares of Common Stock
or Preferred Stock following a Control Disposition (any event
described in subsection (i), (ii) or (iii) being a "SECTION 4.2
TRANSACTION"), it shall give written notice to the Non-YBR Holders
offering such Non-YBR Holders the option to participate in such
Section 4.2 Transaction. The notice shall set forth the material terms
of the proposed Section 4.2 Transaction and identify the contemplated
transferee or Group (a "SALE NOTICE"). Each of the Non-YBR Holders
may, by written notice to YBR (a "TAG ALONG NOTICE") delivered within
ten days after the date of the Sale Notice (each such Non-YBR Holder
delivering such timely notice being a "TAG ALONG HOLDER"), elect to
sell in such Section 4.2 Transaction by specifying the maximum number
of shares of Common Stock or Preferred Stock (including within this
number that number of shares of Common Stock and Preferred Stock to be
distributed to such Tag Along Holder in connection with such Tag Along
Transaction from any deferred compensation plan or which such Tag
Along Holder may obtain by exercising any Options held by the Tag
Along Holder that are vested as of the date of such Tag Along Notice
or which would vest in connection with such Section 4.2 Transaction,
collectively the "DEEMED HELD SHARES") such Tag Along Holder desires
to include in such Section 4.2 Transaction. If none of the Holders
delivers a timely Tag Along Notice, YBR may thereafter consummate the
Section 4.2 Transaction, on substantially the same terms and
conditions as are described in the Sale Notice. If one or more of the
Non-YBR Holders gives YBR a timely Tag Along Notice, then YBR shall
use all reasonable efforts to cause the prospective transferee or
Group to agree to acquire all shares identified in all timely Tag
Along Notices, upon the same terms and conditions as applicable to the
shares held by YBR. If such prospective transferee or Group is unable
or unwilling to acquire all shares proposed to be included in the
Section 4.2 Transaction upon such terms, then YBR may elect to cancel
such Section 4.2 Transaction or to allocate the maximum number of
shares that each prospective transferee or Group is willing to
purchase among YBR and the Tag Along Holders in the proportion that
each such Tag Along Holder's and YBR's Proportionate Percentage bears
to the total Proportionate Percentages of YBR and the Tag Along
Holders (e.g., if the Sale Notice contemplated a Section 4.2
Transaction of 10% Proportionate Percentage by YBR, and if YBR at such
time owns a 30% Proportionate Percentage and one Tag Along Holder who
owns a 20% Proportionate Percentage elects to participate, then YBR
would be entitled to sell a 6% Proportionate Percentage (30%/50% x the
10% Proportionate Percentage) and the Tag Along Holder would be
entitled to sell a 4% Proportionate Percentage (20%/50% x the 10%
Proportionate Percentage) (and for purposes of calculating the maximum
number of shares of Common Stock or Preferred Stock that any Non-YBR
Holder shall be permitted to sell in accordance such Non-YBR Holder's
Proportionate Percentage, such Non-YBR-Holder shall be deemed to first
sell in such Section 4.2 Transaction any shares that the Non-YBR
Holder has previously sold to the Company pursuant to a Section
9(b)(ii) Sale). Notwithstanding the provisions of this Section, during
the first 12 months of this Agreement, YBR may transfer any number of
shares of Common Stock then owned by it on the date hereof without
complying with the provision of this
Section so long as such transfer would not be deemed to be a Control
Disposition. Notwithstanding any other provision in this Agreement, no
Section 4.2 Transaction shall be subject to the requirements of
Sections 2.1 through 2.5, Section 3 (other than as set forth in
Section 3.3) or Section 4.1. Upon the closing of the sale of any
shares of Common Stock or Preferred Stock (including any Deemed Held
Shares) pursuant to this paragraph, the Holders shall deliver at such
closing, against payment of the purchase price therefor, certificates
representing their shares of Common Stock or Preferred Stock to be
sold, duly endorsed for transfer or accompanied by duly endorsed stock
powers, and evidence of good title to the shares to be sold and the
absence of liens, encumbrances and adverse claims with respect thereto
and such other matters as are deemed necessary by the Company for the
proper transfer of such shares on the books of the Company. For
purposes of this paragraph 4.2(a), any holder of Common Stock who has
a contractual right to participate in such Section 4.2 Transaction or
any other holder of Common Stock or Preferred Stock who is otherwise
participating in such Section 4.2 Transaction with the consent of YBR
shall be deemed to be a "Non-YBR Holder" hereunder.
(b) If YBR desires to effect a Section 4.2 Transaction, then in
lieu of complying with the requirement of paragraph 4.2(a), YBR at its
option (the "COME ALONG OPTION") may require all Non-YBR Holders to
sell the same percentage of their respective shares of Common Stock or
Preferred Stock (including their Deemed Held Shares) as YBR desires to
sell to the transferee or Group selected by YBR, at the same price per
share and on the same terms and conditions as apply to those sold by
YBR (and for purposes of calculating the number of shares of Common
Stock or Preferred Stock of any Non-YBR Holder that may be subject to
such Come Along Option, such Non-YBR Holder shall be deemed to first
sell in such Section 4.2 Transaction any shares that the Non-YBR
Holder has previously sold to the Company pursuant to a Section 9
(b)(ii) Sale). All Non-YBR Holders shall consent to and raise no
objections against the Section 4.2 Transaction, and if the Section 4.2
Transaction is structured as (i) a merger or consolidation of the
Company or an Asset Sale, each Non-YBR Holder shall waive any
dissenters rights, appraisal rights or similar rights in connection
with such merger, consolidation or Asset Sale, or (ii) a sale of all
the capital stock of the Company, the Non-YBR Holders shall agree to
sell all their shares of Common Stock or Preferred Stock which are the
subject of the Section 4.2 Transaction (including their Deemed Held
Shares). The Non-YBR Holders shall take all necessary and desirable
actions approved by YBR in connection with the consummation of the
Section 4.2 Transaction, including obtaining Board consent to the
Section 4.2 Transaction and the execution of such agreements and such
instruments and other actions reasonably necessary to provide
customary representations, warranties, and indemnities regarding
title, as well as escrow arrangements relating to such Section 4.2
Transaction. Notwithstanding any other provision of this Agreement, no
such Disposition shall be subject to the requirements of Sections 2.1
through 2.5 or Section 3. Upon the closing of any shares of Common
Stock or Preferred Stock pursuant to this paragraph, the Non-YBR
Holders shall deliver at such closing, against payment of the purchase
price
therefor, certificates representing their shares of Common Stock or Preferred Stock to be sold, duly endorsed for transfer or accompanied by duly endorsed stock powers, and evidence of good title to the shares to be sold and the absence of liens, encumbrances and adverse claims with respect thereto and such other matters as are deemed necessary by the Company for the proper transfer of such shares on the books of the Company.
(c) For purposes of this Section 4.2, a Control Disposition shall include an indirect Disposition triggered by a transfer of the membership units of YBR to a Person or Group that is not an Affiliate of YBR.
(d) The Company and the Non-YBR Holder shall cooperate in causing any Deemed Held Shares that are ultimately included in a Section 4.2 Transaction to be delivered to the Non-YBR Holder immediately prior to the closing of such Section 4.2 Transaction in order that the Non-YBR Holder may exercise his rights under Section 4.2(a) or that YBR may exercise its rights under Section 4.2(b), as the case may be.
Section 5. PERMITTED TRANSFERS.
5.1 DISPOSITIONS.
The following Dispositions shall be permitted without compliance with the provisions of Section 2 and 3 (but Section 4 shall apply to each of the following Dispositions other than a Disposition described in paragraphs 5.1(a), and Sections 10 and 11(t) shall apply to 5.1(a)):
(a) By any Non-YBR Holder (i), in the case of shares of Common
Stock or Preferred Stock, with respect to a Public Sale in connection
with the exercise of Piggyback Registration Rights in accordance with
Section 10 or (ii) a Public Sale of Common Stock that occurs at least
twelve months following a Qualified Public Offering or a Public Sale
of Preferred Stock that occurs at least 12 months following a
Qualified Preferred Public Offering;
(b) By any individual Non-YBR Holder during such Non-YBR Holder's
lifetime to: (i) a guardian of the estate of such Non-YBR Holder, (ii)
an inter-vivos trust primarily for the benefit of such Non-YBR Holder;
(iii) an inter-vivos trust whose primary beneficiary is one or more of
such Non-YBR Holder's lineal descendants (including lineal descendants
by adoption); (iv) the spouse of such Non-YBR Holder during marriage
and not incident to divorce; or (v) such Non-YBR Holder's Affiliates;
(c) To any individual Non-YBR Holder by: (i) a guardian of the estate of such Non-YBR Holder; (ii) an inter-vivos trust whose primary beneficiary is such Non-YBR Holder or one or more of such Non-YBR Holder's lineal descendants (including lineal descendants by adoption), (iii) the spouse of such Non-YBR Holder during marriage and not incident to divorce; or (iv) such Non-YBR Holder's lineal descendants (including lineal descendants by adoption);
(d) With the consent of the Company, by any Non-YBR Holder to a qualified retirement plan sponsored by the Non-YBR Holder;
(e) By any qualified retirement plan referred to in paragraph 5.1(d) to participants, alternate payees and beneficiaries to the extent required by law and the provisions of such plan;
(f) By any Non-YBR Holder which is a trust, to any successor trust or successor trustee; and
(g) With the consent of the Company, by any Non-YBR Holder to other entities for tax planning purposes.
PROVIDED, HOWEVER, that as a condition to any such permitted transfer, any Person (including such Person's spouse, if any), (other than the Company), so acquiring such Common Stock or Preferred Stock shall be required to subject the Common Stock acquired by such Person to the provisions of this Agreement, and thereafter any such Person shall be deemed a "Non-YBR Holder" for the purposes of this Agreement.
5.2 PLEDGES.
(a) Unless approved by a majority of the Board, no Non-YBR Holder shall pledge any shares of Common Stock or Preferred Stock held by it, unless such pledge is made by such Non-YBR Holder to the Company.
(b) A breach by any Non-YBR Holder of the covenants contained in this Section 5.2 shall not relieve or waive the obligations of all other Non-YBR Holders to comply with such covenants.
Section 6. CONDITIONS; ADDITIONAL PARTIES.
6.1 CONDITIONS TO PERMITTED TRANSFERS.
As a condition to the Company's obligation to effect a transfer permitted by this Agreement on the books and records of the Company, any transferee (other than a transferee described in paragraph 5.1(a)) of Common Stock or Preferred Stock shall be required to become a party to this Agreement by executing (together with such Person's spouse, if applicable) an Adoption Agreement in substantially the form of EXHIBIT A or in such other form that is reasonably satisfactory to the Company and upon execution of such Adoption Agreement such transferee shall have all the rights and obligations of a Non-YBR Holder hereunder.
6.2 ADDITIONAL PARTIES.
(a) If required under the terms of this Agreement, or upon the written approval of the holders of at least the Required Voting Percentage, any Person which acquires any shares of Common Stock or Preferred Stock subsequent to the execution of this Agreement shall become a party to this Agreement upon executing (together with such Person's spouse, if any) an Adoption Agreement in
substantially the form of EXHIBIT A or in such other form that is reasonably satisfactory to the Company and upon execution of such Adoption Agreement such transferee shall have all the rights and obligations of a Non-YBR Holder hereunder.
(b) In the event that any Person acquires shares of Common Stock or Preferred Stock from (i) a Non-YBR Holder or any Affiliate or member of such Non-YBR Holder's Group or (ii) any direct or indirect transferee of a Non-YBR Holder, including pursuant to any Disposition contemplated by Section 5.1 of this Agreement, such Person shall be subject to any and all obligations and restrictions of the Non-YBR Holder (for whom the shares of Common Stock or Preferred Stock were purchased) hereunder, as if such Person was such Non-YBR Holder named herein, including, without limitation, the obligation to make an Offer to Eligible Offerees pursuant to Section 2.4 upon the death of the Non-YBR Holder (from whom the shares of Common Stock or Preferred Stock were purchased). Additionally, whenever a Non-YBR Holder makes a transfer of shares of Common Stock or Preferred Stock, including pursuant to any Disposition contemplated by Section 5.1 of this Agreement, such shares and/or Preferred Stock shall contain a legend so as to inform any transferee that such shares and/or Preferred Stock were held originally by a Non-YBR Holder and are subject to repurchase upon the death of such Non-YBR Holder. Such legend shall not be placed on any shares of Common Stock or Preferred Stock acquired from a Non-YBR Holder by the Company, YBR or any of their Affiliates.
(c) Any shares of Common Stock or Preferred Stock acquired by an
individual retirement account ("IRA") on behalf of an employee of the
Company or any of its subsidiaries (the "SUBJECT EMPLOYEE") shall be
deemed to be a Non-YBR Holder. Additionally, such Subject Employee
shall be deemed to be a Non-YBR Holder and his or her IRA shall be
deemed to have acquired all shares and/or Preferred Stock it holds
from such Subject Employee pursuant to a transfer that is subject to
Section 6.2(b) above.
Section 7. Restriction on Transfer.
(a) No shares of Common Stock or Preferred Stock shall be transferable except upon the conditions specified in this Section 7, which conditions are intended to insure compliance with the provisions of the Securities Act.
(b) Each certificate representing shares of Common Stock and Preferred Stock shall (unless otherwise permitted by the provisions of paragraph (d) below) be stamped or otherwise imprinted with a legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES OR BLUE SKY LAWS. THESE SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT OR LAWS. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO AN INVESTOR RIGHTS AGREEMENT DATED AS OF THE ORIGINAL ISSUE DATE AMONG THE ISSUER OF SUCH SECURITIES (THE "COMPANY"), AND THE OTHER PARTIES NAMED THEREIN. THE TERMS OF SUCH INVESTOR RIGHTS AGREEMENT INCLUDE, AMONG OTHER THINGS, RESTRICTIONS ON TRANSFER. A COPY OF SUCH AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST."
(c) The holder of any shares of Common Stock or Preferred Stock
by acceptance thereof agrees, prior to any transfer of any such
shares, to give written notice to the Company of such holder's
intention to effect such transfer and to comply in all other respects
with the provisions of this Section. Each such notice shall describe
the manner and circumstances of the proposed transfer. Upon request by
the Company, the holder delivering such notice shall deliver a written
opinion, addressed to the Company, of counsel for the holder of such
shares, stating that in the opinion of such counsel (which opinion and
counsel shall be reasonably satisfactory to the Company) such proposed
transfer does not involve a transaction requiring registration or
qualification of such shares under the Securities Act. Such holder of
such shares shall be entitled to transfer such shares in accordance
with the terms of the notice delivered to the Company, if the Company
does not reasonably object to such transfer and request such opinion
within fifteen days after delivery of such notice, or, if it requests
such opinion, does not reasonably object to such transfer within
fifteen days after delivery of such opinion. Each certificate or other
instrument evidencing the securities issued upon the transfer of any
shares of Common Stock shall bear the legend set forth in paragraph
(b) above unless (i) in such opinion of counsel to the holder of such
shares (which opinion and counsel shall be reasonably acceptable to
the Company) registration of any future transfer is not required by
the applicable provisions of the Securities Act or (ii) the Company
shall have waived the requirement of such legends.
(d) Notwithstanding the foregoing provisions of this Section 7, the restrictions imposed by this Section upon the transferability of any shares of Common Stock or Preferred Stock shall cease and terminate when (i) any such shares are sold or otherwise disposed of (A) pursuant to an effective registration
statement under the Securities Act or (B) in a transaction
contemplated by paragraph (c) above which does not require that the
shares so transferred bear the legend set forth in paragraph (b)
hereof, or (ii) the holder of such shares has met the requirements for
transfer of such shares under Rule 144(k) under the Securities Act
(subject to the delivery of opinions as set forth above). Whenever the
restrictions imposed by this Section shall terminate, the holder of
any shares as to which such restrictions have terminated shall be
entitled to receive from the Company, without expense, a new
certificate not bearing the restrictive legend set forth in paragraph
(b) above and not containing any other reference to the restrictions
imposed by this Section.
Section 8. NOTICES.
In the event a notice or other document is required to be sent hereunder to the Company or to any Holder or the spouse or legal representative of a Holder, such notice or other document, if sent by mail, shall be sent by registered mail, return receipt requested (and by air mail in the event the addressee is not in the continental United States), to the party entitled to receive such notice or other document at the address set forth on ANNEX II hereto. Any such notice shall be effective and deemed received three days after proper deposit in the mails, but actual notice shall be effective however and whenever received. The Company or any Holder or spouse or their respective legal representatives may effect a change of address for purposes of this Agreement by giving notice of such change to the Company, and the Company shall, upon the request of any party hereto, notify such party of such change in the manner provided herein. Until such notice of change of address is properly given, the addresses set forth herein shall be effective for all purposes.
Section 9. REPURCHASE RIGHTS AND SALE RIGHTS. With respect to the Initial Purchased Shares only (except as otherwise specifically provided):
(a) If a Non-YBR Holder voluntarily resigns, other than for Good Reason, as an employee of the Company or any of the Company's subsidiaries or if a Non-YBR Holder's employment with the Company or any of the Company's subsidiaries is terminated for Cause, then the Company or any of its subsidiaries shall have the right, but not the obligation, to repurchase all or any portion of the shares of Common Stock and Preferred Stock (whether Initial Purchased Shares or Non-Initial Purchased Shares and whether held by the Non-YBR Holder or one or more permitted transferees) in accordance with this Section 9 at the Fair Market Value of the shares of Common Stock and Fair Market Value of the shares of Preferred Stock. The Company or any of its subsidiaries may exercise its right to purchase such shares of Common Stock and shares of Preferred Stock until (i) with respect to any shares of Common Stock that may be received by any Non-YBR Holder upon exercise of any Options that are vested as of the date of the Non-YBR Holder's termination of employment ("OPTION SHARES"), the seven month anniversary of the date of exercise of such Options, (ii) with respect to any shares of Common Stock or Preferred Stock issuable to any Non-YBR Holder pursuant to a deferred compensation plan, the later of (A) the seven month anniversary of the date such shares first become vested pursuant to such deferred compensation plan or (B) the 30/th/ day following the date of the Non-YBR Holder's termination of employment or (iii) with
respect to any other shares of Common Stock or Preferred Stock, the 30th
day following the date of the Non-YBR Holder's termination of employment
(such date described in subsection (i), (ii) or (iii), as applicable, the
"REPURCHASE DATE"). On or before the Repurchase Date, the Company or its
applicable subsidiary shall give written notice to YBR stating whether it
will exercise such purchase rights. If such notice states that the Company
and its subsidiaries will not exercise its purchase rights, YBR shall have
the right to purchase the shares of Common Stock and shares of Preferred
Stock on the same terms and conditions as the Company and its subsidiaries
until the later of (x) the 30th day following the receipt of such notice or
(y) the Repurchase Date. Notwithstanding any provision of this Section 9(a)
to the contrary, in no event shall the Company or YBR purchase any Option
Shares or shares of Common Stock or Preferred Stock issued pursuant to a
deferred compensation plan prior to six months and one day following the
earlier of (A) the date such shares were first purchased by the Non-YBR
Holder upon exercise of the Options or (B) the date such shares became
vested under any deferred compensation plan, as applicable. The
Determination Date for purposes of determining the Fair Market Value shall
be the closing date of the purchase of the applicable shares, as described
in Section 9(c).
(b) (i) Except as otherwise set forth in Section 9(b)(ii), if a
Non-YBR Holder's employment with the Company or any of the Company's
subsidiaries is terminated by the Company or its applicable subsidiary
without Cause or a Non-YBR Holder voluntarily resigns as an employee
of the Company or any of the Company's subsidiaries for Good Reason
(in either event, a "SECTION 9(b) TERMINATION"), then such Non-YBR
Holder (or any permitted transferee) shall for 30 days following the
date of such Section 9(b) Termination have the right, but not the
obligation, to sell all (but not less than all) of his shares of
Common Stock and Preferred Stock to the Company in accordance with
this Section 9(b)(i) at the Fair Market Value of the Shares of Common
Stock and Fair Market Value of the Shares of Preferred Stock;
PROVIDED, HOWEVER, that notwithstanding the forgoing, in no event
shall the Company purchase any shares of Common Stock that are issued
upon the exercise of any Options prior to the date of such Section
9(b) Termination or any shares of Common Stock or Preferred Stock that
are issued pursuant to a deferred compensation plan prior to six
months and one day following the earlier of (A) the date such shares
were first purchased by the Non-YBR Holder upon exercise of such
Options or (B) the date such shares became vested under any deferred
compensation plan, as applicable (and to the extent the Company is
prohibited from purchasing any shares pursuant to the foregoing
proviso, the Company shall so purchase upon the first date permissible
under the foregoing proviso). In order to exercise the sale right
pursuant to this Section 9(b)(i), the Non-YBR Holder shall be required
to provide the Company with written notice within 30 days following
the date of such Section 9(b) Termination (or, if later, within the 30
consecutive day period beginning six months and one day following the
earlier of (A) the date such shares were first purchased by the
Non-YBR Holder upon exercise of such Options or (B) the date such
shares became vested under any deferred compensation plan, as
applicable) (the "SECTION 9(b) NOTICE PERIOD") stating that he wishes
to exercise such sale right. The Determination Date for purposes of
determining the Fair Market Value for purposes of this Section 9(b)(i) shall be the closing date of the purchase of the applicable shares, as described in Section 9(c).
(ii) Notwithstanding Section 9(b)(i), in the event of any
Section 9(b) Termination, the applicable Non-YBR Holder (or any
permitted transferee) shall, solely with respect to any Option Shares,
have the right, but not the obligation, to sell all (but not less than
all) of his Option Shares to the Company in accordance with this
Section 9(b)(ii) (a "SECTION 9(b)(ii) SALE"). In order to effectuate
any Section 9(b)(ii) Sale, the applicable Non-YBR Holder must exercise
all Options that are vested as of the date of the Section 9(b)
Termination prior to the six month anniversary of such Section 9(b)
Termination and, within the Section 9(b) Notice Period, provide the
Company with written notice that the Non-YBR Holder wishes to sell his
Option Shares to the Company pursuant to a Section 9(b)(ii) Sale. The
terms of any such Section 9(b)(ii) Sale shall be as follows: (A) the
effective date of such Section 9(b)(ii) Sale shall be six months and
one day following the date of exercise of the Options (or, if later,
the closing date of the purchase of the applicable shares, as
described in Section 9(c)) (the "SECTION 9(b)(ii) SALE DATE"); (B) the
purchase price per each Option Share shall be equal to the Fair Market
Value of the Shares of Common Stock on the Section 9(b)(ii) Sale Date;
and (C) unless otherwise determined by the Company in its discretion
(I) the aggregate purchase price for all Option Shares shall be paid
by the Company via a promissory note (a "COMPANY NOTE") payable to the
Non-YBR Holder in the principal amount equal to such aggregate
purchase price, (II) the Company Note shall bear simple interest,
compounded annually, at the rate equal to the applicable interest rate
contained in the Company's revolving credit facility in effect as of
the Section 9(b)(ii) Sale Date, and (III) all amounts of interest and
principal with respect to the Company Note shall become payable only
upon the earlier to occur of (1) the tenth anniversary of the Section
9(b)(ii) Sale Date or (2) the first date upon which such Option Shares
could have been sold in accordance with Section 4.2 or Section 10.
Notwithstanding the foregoing, in the event that any Non-YBR Holder
requests that the Company provide him with a loan pursuant to Section
9(b)(iii), the Company may, in lieu of making such loan, elect to
extend the period during which an Option may be exercised following
the Non-YBR Holder's termination of employment (the "EXTENSION
PERIOD"); PROVIDED, HOWEVER, that such Extension Period may not extend
beyond the date the Option would otherwise have terminated in
accordance with the terms of the applicable Option Agreement; and
PROVIDED, FURTHER, that (x) unless otherwise determined by the
Company, the Non-YBR Holder may not undertake any Section 9(b)(ii)
Sale during the Extension Period, (y) during the Extension Period the
terms of Section 9(b)(iii) shall not apply, and (z) upon the
termination of the Extension Period the terms of this Section 9(b)(ii)
and Section 9(b)(iii) shall apply.
(iii) Upon the advanced written request of any applicable Non-YBR Holder, in connection with the exercise of any Options following a Section 9(b) Termination, the Company shall loan the Non-YBR Holder an amount equal to the sum of (A) the aggregate exercise price for all Option Shares (B) the
amount of incremental income taxes payable by the Non-YBR Holder in
connection the exercise of such Options (the "INCREMENTAL TAX AMOUNT")
(which amount shall be utilized to pay such aggregate exercise price
and Incremental Tax Amount). Such loan shall be made as of the date
the Options are exercised and shall be evidenced by a full recourse
promissory note (a "NON-YBR HOLDER NOTE"), payable to the Company, in
a principal amount equal to the sum of (A) such aggregate exercise
price and (B) the Incremental Tax Amount. Each Non-YBR Holder Note
shall bear simple interest, compounded annually, at the rate equal to
the market rate in effect as of the date of exercise of the Options.
All interest and principal with respect to a Non-YBR Holder Note shall
become payable only upon the earlier to occur of (x) the seven month
anniversary of the date the loan is made or (y) the first date upon
which such Option Shares could have been sold in accordance with
Section 4.2 or Section 10. Unless otherwise agreed to by the Company
and the Non-YBR Holder, upon the Section 9(b)(ii) Sale Date the
Company shall, in lieu of issuing a Company Note pursuant to the terms
of Section 9(b)(ii): (1) cancel the applicable Non-YBR Holder Note and
(2) issue a Company Note in the principal amount equal to the excess
of (A) the otherwise applicable principal amount of such Company Note
as determined in accordance with Section 9(b)(ii)(C)(I) over (B) the
accreted principal amount of the Non-YBR Holder Note.
(c) The closing of the purchase or sale of the shares of Common Stock and shares of Preferred Stock, pursuant to this Section 9 shall take place on a date designated by the Company, one of its subsidiaries, or YBR, as applicable, consistent with the terms of Section 9(a) or 9(b). The Company, one of its subsidiaries, or YBR, as applicable, will pay for the shares of Common Stock and shares of Preferred Stock purchased or sold pursuant to this Section 9 by delivery of a check or wire transfer of funds, in exchange for the delivery by the Non-YBR Holder of the certificates representing such shares of Common Stock and shares of Preferred Stock, duly endorsed for transfer to the Company or YBR. The Company shall have the right to record such transfer on its books and records without the consent of the Non-YBR Holder.
(d) Notwithstanding anything to the contrary contained in this Agreement, all purchases of shares of Common Stock and shares of Preferred Stock by the Company shall be subject to applicable restrictions contained in federal law and the Delaware General Corporation Law and in the Company's and its respective subsidiaries' debt and equity financing agreements. Notwithstanding anything to the contrary contained in this Agreement, if any such restrictions prohibit or otherwise delay the purchase of the shares of Common Stock and shares of Preferred Stock hereunder which the Company is otherwise entitled or required to make, then the Company shall make such purchases within 30 days of the date that it is permitted to do so under such restrictions. Notwithstanding anything to the contrary contained in this Agreement, the Company and its subsidiaries may not effectuate any transaction contemplated by this Section 9 if such transaction would violate the terms of any Material Agreement; PROVIDED, HOWEVER, that to the extent that such transaction becomes permissible pursuant to the terms of such Material Agreement, the Company will effectuate such transaction as of the date that such transaction first becomes permissible under the applicable Material Agreement and,
with respect to any shares of Common Stock or Preferred Stock that are distributed to any Non-YBR Holder pursuant to any deferred compensation plan which such Non-YBR Holder requests to sell pursuant to Section 9(b)(i) but which sale is not permitted pursuant to this Section 9(d), then the Company shall loan the Non-YBR Holder an amount equal to the amount of incremental income taxes payable by the Non-YBR Holder in connection with such distribution from the deferred compensation plan. Any loan described in the preceding sentence shall be evidenced by a full recourse promissory note, payable to the Company, in a principal amount equal to the amount of such incremental income taxes, which shall be become payable upon the earliest to occur of (x) the tenth anniversary of the date the loan is made, (y) the date the Company repurchases such shares pursuant to Section 9(b)(i) and this Section 9(d) or (z) the date such shares are disposed of in accordance with Section 4.2 or Section 10. In addition, such note shall be subject to such other terms as described in Section 9(b)(iii) with respect to the Non-YBR Holder Note.
(e) In the event that shares of Common Stock and shares of Preferred Stock are purchased or sold pursuant to this Section 9, the Non-YBR Holder, and such Non-YBR Holder's successors, assigns or representatives, will take all steps necessary and desirable to obtain all required third-party, governmental and regulatory consents and approvals and take all other actions necessary and desirable to facilitate consummation of such repurchase in a timely manner.
Section 10. PIGGY-BACK REGISTRATION RIGHTS.
(a) PARTICIPATION. Subject to Section 10(b), if at any time after the
date hereof the Company files a Registration Statement (other than a
registration on Form S-4 or S-8 or any successor form to such Forms or any
registration of securities as it relates to an offering and sale to
management of the Company pursuant to any employee stock plan or other
employee benefit plan arrangement) with respect to an offering that
includes any shares of Common Stock or Preferred Stock, then the Company
shall give prompt notice (the "INITIAL NOTICE") to the Non-YBR Holders and
the Non-YBR Holders shall be entitled to include in such Registration
Statement the Registrable Securities (as defined in Section 10(f)) held by
them. If the Non-YBR Holders elect to include any or all of their
Registrable Securities in such Registration Statement, then the Company
shall give prompt notice (the "PIGGYBACK NOTICE") to each Holder (excluding
the Non-YBR Holders) and each such Holder shall be entitled to include in
such Registration Statement the Registrable Securities held by it. The
Initial Notice and Piggyback Notice shall offer the Non-YBR Holders and the
Holders, respectively, the right, subject to Section 10(b) (the "PIGGY BACK
REGISTRATION RIGHT"), to register such number of shares of Registrable
Securities as each Non-YBR Holder and each Holder may request and shall set
forth (i) the anticipated filing date of such Registration Statement and
(ii) the number of shares of Common Stock or Preferred Stock that is
proposed to be included in such Registration Statement. Subject to Section
10(b), the Company shall include in such Registration Statement such shares
of Registrable Securities for which it has received written requests to
register such shares within 15 days after the Initial Notice and 7 days
after the Piggyback Notice has been given.
(b) UNDERWRITER'S CUTBACK. Notwithstanding the foregoing, if a registration pursuant to this Section 10 involves an Underwritten Offering (as defined in Section 10(f)) and the managing underwriter or underwriters of such proposed Underwritten Offering delivers an opinion to the Holders that the total or kind of securities which such Holders and any other persons or entities intend to include in such offering would be reasonably likely to adversely affect the price, timing or distribution of the securities offered in such offering, then the Company shall include in such registration (i) first, 100% of the securities the Company, or the Person initiating such registration, proposes to sell, and (ii) second, to the extent of the amount of securities which all other Holders have requested to be included in such registration, which, in the opinion of the managing underwriter or underwriters, can be sold without such adverse effect referred to above, such amount to be allocated pro rata among all other Holders based upon the relative aggregate amount of gross proceeds to be received by any other Holders in the offering (and for purposes of calculating the foregoing amount, any shares sold by a Non-YBR Holder to the Company pursuant to a Section 9(b)(ii) Sale shall be deemed to be the first shares available to be included in such Underwritten Offering by such Non-YBR Holder).
(c) COMPANY CONTROL. The Company may decline to file a Registration Statement after giving the Initial Notice or the Piggyback Notice, or withdraw a Registration Statement after filing and after such Piggyback Notice, but prior to the effectiveness of the Registration Statement, provided that the Company shall promptly notify each Holder in writing of any such action and provided further that the Company shall bear all reasonable expenses incurred by such Holder or otherwise in connection with such withdrawn Registration Statement. Notwithstanding any other provision herein, the Company shall have sole discretion to select any and all underwriters that may participate in any Underwritten Offering.
(d) PARTICIPATION IN UNDERWRITTEN OFFERINGS. No Person may participate in any Underwritten Offering hereunder unless such Person (i) agrees to sell such Person's securities on the basis provided in any underwriting arrangements approved by the Persons entitled to approve such arrangements and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements, lock-ups and other documents required for such underwriting arrangements. Nothing in this Section 10(d) shall be construed to create any additional rights regarding the piggyback registration of Registrable Securities in any Person otherwise than as set forth herein.
(e) EXPENSES. The Company or YBR will pay all registration expenses in connection with each registration of Registrable Securities requested pursuant to this Section 10; provided, that each Holder shall pay all applicable underwriting fees, discounts and similar charges.
(f) CERTAIN DEFINITIONS. For purposes of this Section 10:
(i) "REGISTRABLE SECURITIES" shall mean (A) all Initial Purchased Shares, and (B) all Non-Initial Purchased Shares; PROVIDED, HOWEVER, that Non-Initial Purchased Shares shall only be deemed to be Registrable Securities following the date that the Apollo Group has sold shares of Common Stock in registered offerings in exchange for net proceeds at
least equal to the amount of the aggregate amount paid by the Apollo Group for all shares of Common Stock purchased by the Apollo Group during the period beginning on the Original Issue Date and ending on the date of any such registered offering; and, PROVIDED, FURTHER, that any Registrable Securities shall cease to be Registrable Securities when (I) a registration statement with respect to the sale of such Registrable Securities has been declared effective under the Securities Act and such Registrable Securities have been disposed of in accordance with the plan of distribution set forth in such registration statement, (II) such Registrable Securities are distributed pursuant to Rule 144 (or any similar provision then in force) under the Securities Act or (III) such Registrable Securities shall have been otherwise transferred and new certificates for them not bearing a legend restricting further transfer under the Securities Act shall have been delivered by the Company; and PROVIDED, FURTHER, that any securities that have ceased to be Registrable Securities shall not thereafter become Registrable Securities and any security that is issued or distributed in respect of securities that have ceased to be Registrable Securities is not a Registrable Security. Notwithstanding any other provision of this Section 10(f)(i), with respect to any Registration Statement that registers shares of Common Stock, "Registrable Securities" shall only include shares of Common Stock and with respect to any Registration Statement that registers shares of Preferred Stock, "Registrable Securities" shall only include share of Preferred Stock.
(ii) "UNDERWRITTEN OFFERING" means a sale of shares of Common Stock or Preferred Stock to an underwriter for reoffering to the public.
Section 11. MISCELLANEOUS PROVISIONS.
(a) All questions concerning the construction, interpretation and validity of this Agreement shall be governed by and construed in accordance with the domestic laws of the State of New York without giving effect to any choice or conflict of law provision or rule (whether in the State of New York or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New York.
(b) Whenever the context requires, the gender of all words used herein shall include the masculine, feminine and neuter, and the number of all words shall include the singular and plural.
(c) This Agreement shall be binding upon the Company, the Non-YBR Holders, any spouses of the Non-YBR Holders, and their respective heirs, executors, administrators and permitted successors and assigns.
(d) This Agreement may be amended or waived from time to time by an instrument in writing signed by the Company and the Holders having the Required Voting Percentage, PROVIDED, that this Agreement may be amended by the Company without the consent of any Holder to cure any ambiguity or to cure, correct or supplement any defective provisions contained herein, or to make any other provisions with respect to matters or questions hereunder as the Company may deem necessary or advisable so long as such action does not affect adversely the interest of any Holder.
(e) This Agreement shall terminate automatically upon: (i) the dissolution of the Company; (ii) the occurrence of any event which reduces the number of Holders to one in accordance with the terms hereof; or (iii) the consummation of a Control Disposition.
(f) Any Holder who disposes of all of his, her or its Common Stock and Preferred Stock in conformity with the terms of this Agreement shall cease to be a party to this Agreement and shall have no further rights hereunder.
(g) The spouses of the individual Non-YBR Holders are fully aware of, understand and fully consent and agree to the provisions of this Agreement and its binding effect upon any community property interests or similar marital property interests in the Common Stock and Preferred Stock they may now or hereafter own, and agree that the termination of their marital relationship with any Non-YBR Holder for any reason shall not have the effect of removing any Common Stock and Preferred Stock of the Company otherwise subject to this Agreement from the coverage of this Agreement and that their awareness, understanding, consent and agreement are evidenced by their signing this Agreement. Furthermore, each individual Non-YBR Holder agrees to cause his or her spouse (and any subsequent spouse) to execute and deliver, upon the request of the Company, a counterpart of this Agreement, or an Adoption Agreement substantially in the form of EXHIBIT A or in a form satisfactory to the Company.
(h) Any Disposition or attempted Disposition in breach of this Agreement shall be void and of no effect; PROVIDED, that the Company may determine to treat any attempted Disposition in breach of this Agreement, as an Offer pursuant to Section 2.5. Additionally, Section 4 shall apply to such attempted Disposition; PROVIDED, HOWEVER, that the time periods set forth in that Section shall begin to run as of the date the Company receives evidence satisfactory to it of such attempted Disposition. In connection with any attempted Disposition in breach of this Agreement, the Company may hold and refuse to transfer any Common Stock or any certificate therefor or any Note tendered to it for transfer, in addition to and without prejudice to any and all other rights or remedies which may be available to it or the Holders. Each party to this Agreement acknowledges that a remedy at law for any breach or attempted breach of this Agreement will be inadequate, agrees that each other party to this Agreement shall be entitled to specific performance and injunctive and other equitable relief in case of any such breach or attempted breach and further agrees to waive (to the extent legally permissible) any legal conditions required to be met for the obtaining of any such injunctive or other equitable relief (including posting any bond in order to obtain equitable relief).
(i) Each individual Non-YBR Holder and his or her spouse, if any, hereby appoints the Company as their agent and attorney-in-fact to make the Offers required and take all actions necessary under Sections 2.1 through 2.5 and Section 6 on their behalf and to execute any required Adoption Agreement on
their behalf, and expressly bind themselves to such Offers and to the Company's execution of any such Adoption Agreement without further action on their part, and all such powers of attorney granted herein are deemed to be coupled with an interest in the Common Stock and Preferred Stock shall survive the death, disability, bankruptcy or dissolution of such Non-YBR Holder or his or her spouse, if any.
(j) This Agreement may be executed simultaneously in two or more counterparts, any one of which need not contain the signatures of more than one party, but all such counterparts taken together will constitute one and the same agreement. It shall not be necessary in making proof of this Agreement to produce or account for more than one such counterpart. The failure of any Holder to execute this Agreement does not make it invalid as against any other Holder.
(k) Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, and such invalid, void or otherwise unenforceable provisions shall be null and void. It is the intent of the parties, however, that any invalid, void or otherwise unenforceable provisions be automatically replaced by other provisions which are as similar as possible in terms to such invalid, void or otherwise unenforceable provisions but are valid and enforceable to the fullest extent permitted by law.
(l) Each party hereto shall do and perform or cause to be done and performed all such further acts and things and shall execute and deliver all such other agreements, certificates, instruments, and documents as any other party hereto reasonably may request in order to carry out the provisions of this Agreement and the consummation of the transactions contemplated hereby.
(m) The parties to this Agreement agree that jurisdiction and venue in any action brought by any party hereto pursuant to this Agreement shall properly (but not exclusively) lie in any federal or state court located in the State of New York. By execution and delivery of this Agreement, the parties hereto irrevocably submit to the jurisdiction of such courts for himself and in respect of his property with respect to such action. The parties hereto irrevocably agree that venue would be proper in such court, and hereby waive any objection that such court is an improper or inconvenient forum for the resolution of such action. The parties further agree that the mailing by certified or registered mail, return receipt requested, of any process required by any such court shall constitute valid and lawful service of process against them, without necessity for service by any other means provided by statute or rule of court.
(n) No course of dealing between the Company, or its subsidiaries, and the Holders (or any of them) or any delay in exercising any rights hereunder will
operate as a waiver of any rights of any party to this Agreement. The failure of any party to enforce any of the provisions of this Agreement will in no way be construed as a waiver of such provisions and will not affect the right of such party thereafter to enforce each and every provision of this Agreement in accordance with its terms.
(o) BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OR ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHT OR REMEDIES UNDER THIS AGREEMENT OR ANY DOCUMENTS RELATED HERETO.
(p) This Agreement sets forth the entire agreement of the parties hereto as to the subject matter hereof and supersedes all previous agreements among all or some of the parties hereto, whether written, oral or otherwise. Unless otherwise provided herein, any consent required by the Company may be withheld by the Company in its sole discretion.
(q) No Person not a party to this Agreement, as a third party beneficiary or otherwise, shall be entitled to enforce any rights or remedies under this Agreement.
(r) If, and as often as, there are any changes in the Common Stock or Preferred Stock by way of stock split, stock dividend, combination or reclassification, or through merger, consolidation, reorganization or recapitalization, or by any other means, appropriate adjustment shall be made in the provisions of this Agreement, as may be required, so that the rights, privileges, duties and obligations hereunder shall continue with respect to the Common Stock or Preferred Stock as so changed.
(s) No director of the Company shall be personally liable to the Company or any Holder as a result of any acts or omissions taken under this Agreement in good faith.
(t) Except for Dispositions allowed under Section 4.2 or
Section 9, if the Company proposes for any reason to register shares
of Common Stock or Preferred Stock under the Securities Act, the
Non-YBR Holders shall not engage in, or permit a Disposition of, any
shares of Common Stock or Preferred Stock without the prior written
consent of the Company for a period as shall be determined by the
managing underwriters, which period cannot last more than one
hundred and eighty (180) days after the effective date of such registration statement.
(u) In the event additional shares of Common Stock or Preferred Stock are issued by the Company to a Holder at any time during the term of this Agreement, either directly or upon the exercise or exchange of securities of the Company exercisable for or exchangeable into shares or Common Stock or Preferred Stock, such additional shares of Common Stock or Preferred Stock, as a condition to such issuance, become subject to the terms and provisions of this Agreement.
(v) Notwithstanding anything to the contrary contained herein, YBR may assign its rights or obligations, in whole or in part, under this Agreement to one or more of its Affiliates.
(w) In the event that any member of YBR becomes an owner of Common Stock or Preferred Stock of the Company, such member shall automatically become a party to this Agreement and this Agreement shall be amended and restated to provide that the Apollo Group or a designee of the Apollo Group shall have all of the rights of YBR hereunder.
This Agreement is executed by the Company and by each Holder and spouse of a Non-YBR Holder to be effective as of the date first above written.
COMPANY
SALT HOLDINGS CORPORATION
Title
HOLDERS
YBR HOLDINGS LLC
Title
NON-YBR HOLDERS
See Annex II
EXHIBIT A
ADOPTION AGREEMENT
This Adoption Agreement ("Adoption") is executed pursuant to the terms of the Investor Rights Agreement dated as of the Original Issue Date, a copy of which is attached hereto (the "Investor Rights Agreement"), by the transferee ("Transferee") executing this Adoption. By the execution of this Adoption, the Transferee agrees as follows:
(1) ACKNOWLEDGEMENT. Transferee acknowledges that Transferee is acquiring certain shares of Common Stock and/or Preferred Stock of Salt Holdings Corporation, a Delaware corporation (the "Company"), subject to the terms and conditions of the Investor Rights Agreement, among the Company and the Holders party thereto. Capitalized terms used herein without definition are defined in the Investor Rights Agreement and are used herein with the same meanings set forth therein.
(2) AGREEMENT. Transferee (i) agrees that the shares of Common Stock and/or Preferred Stock acquired by Transferee, and certain other shares of Common Stock, Preferred Stock , and other securities that may be acquired by Transferee in the future, shall be bound by and subject to the terms of the Investor Rights Agreement, pursuant to the terms thereof, and (ii) hereby adopts the Investor Rights Agreement with the same force and effect as if he were originally a party thereto.
(3) NOTICE. Any notice required as permitted by the Investor Rights Agreement shall be given to Transferee at the address listed beside Transferee's signature below.
(4) JOINDER. The spouse of the undersigned Transferee, if applicable, executes this Adoption to acknowledge its fairness and that it is in such spouse's best interest, and to bind such spouse's community interest, if any, in the shares of Common Stock, Preferred Stock, and other securities referred to above and in the Investor Rights Agreement, to the terms of the Investor Rights Agreement.
ANNEX I
ANNEX II
(i) If to the Company:
Salt Holdings Corporation 8300 College Park Boulevard Overland Park, Kansas 66210 Attention: Vice President-Human Resources
with a copy to:
Latham & Watkins 885 Third Avenue New York, N.Y. 10022-4802 Attention: Raymond Y. Lin, Esq.
(ii) If to YBR:
YBR Holdings LLC c/o Apollo Management, L.P.
1301 Avenue of the Americas
New York, NY 10019
Attention: Scott Kleinman
with a copy to:
Latham & Watkins 885 Third Avenue New York, N.Y. 10022-4802 Attention: Raymond Y. Lin, Esq.
(iii) If to any Non-YBR Holder, to the address set forth with respect to such Non-YBR Holder in the Company's records.
* * * * *
NON-YBR HOLDERS
EXHIBIT 10.13
STOCK RIGHTS AGREEMENT
among
SALT HOLDINGS CORPORATION
a Delaware corporation
(Company),
APOLLO MANAGEMENT V L.P.
a Delaware limited partnership
(Apollo Management),
The Stockholders Identified on Schedule A
and
IMC GLOBAL INC.
a Delaware corporation
(IMC Global)
TABLE OF CONTENTS
Page
----
SECTION 1 DEFINITIONS:.........................................................1
1.1 As used in this Agreement, the following terms have the
following meanings:..............................................1
SECTION 2 TRANSFER AND CLAWBACK RIGHTS........................................10
2.1 Securities Held by Escrow Agent...................................10
2.2 Transfer..........................................................10
2.3 Compliance with the Escrow Agreement..............................11
2.4 Clawback Determination............................................11
2.5 Clawback of Securities, Securities Proceeds.......................12
2.6 Clawback Notice...................................................12
2.7 The IMC Stockholder Covenant......................................13
2.8 Certificated Securities and Payment of Proceeds...................13
SECTION 3 BRING-ALONG RIGHTS..................................................13
SECTION 4 TAG-ALONG RIGHTS....................................................15
SECTION 5 VOTING OF IMC COMMON STOCK..........................................16
SECTION 6 REGISTRATION RIGHTS.................................................16
6.1 Demand Registration...............................................16
6.2 Underwriting......................................................17
6.3 Deferral..........................................................17
6.4 Survival..........................................................17
6.5 This Section 6 shall remain in full force and effect
following any Exit Event........................................17
6.6 IMC Transaction Stock.............................................17
SECTION 7 PIGGYBACK REGISTRATION RIGHTS.......................................18
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SECTION 8 REGISTRATION PROCEDURES.............................................19
8.1 Holdback Agreements...............................................19
8.2 Expenses..........................................................19
8.3 Registration Procedures...........................................19
8.4 Conditions to Stockholder Rights; Indemnification by
Stockholder.....................................................22
8.5 Indemnification by Company........................................23
SECTION 9 ADDITIONAL COMPANY EQUITY ISSUANCES TO APOLLO STOCKHOLDERS..........23
SECTION 10 TRANSACTIONS WITH AFFILIATES AND OTHERS............................23
SECTION 11 MISCELLANEOUS......................................................24
11.1 Termination.......................................................24
11.2 Legends...........................................................24
11.3 Successors, Assigns and Transferees...............................25
11.4 Specific Performance..............................................25
11.5 Governing Law.....................................................25
11.6 Submission to Jurisdiction; Waiver of Jury Trial..................25
11.7 Interpretation....................................................25
11.8 Representation....................................................25
11.9 Notices...........................................................25
11.10 Recapitalization, Exchange, Etc...................................26
11.11 Counterparts......................................................27
11.12 Severability......................................................27
11.13 Amendment.........................................................27
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SALT HOLDINGS CORPORATION
STOCK RIGHTS AGREEMENT
This Stock Rights Agreement ("AGREEMENT") is entered into as of November 28, 2001 by and among Salt Holdings Corporation, a Delaware corporation (the "COMPANY"), Apollo Management V L.P., a Delaware limited partnership ("APOLLO MANAGEMENT"), each of the stockholders of the Company listed on Schedule A attached hereto (such listed stockholders collectively and together with Apollo Management referred to as the "APOLLO INVESTORS") and IMC Global Inc., a Delaware corporation ("IMC GLOBAL" and together with the Apollo Investors, the "INITIAL STOCKHOLDERS").
RECITALS
WHEREAS, the Parties are each parties to that certain Agreement and Plan of Merger dated as of October 13, 2001 (the "MERGER AGREEMENT");
WHEREAS, as a condition of consummating the transactions contemplated by the Merger Agreement, the Initial Stockholders are executing this Agreement;
WHEREAS, the Company and the Initial Stockholders desire to enter into this Agreement to provide for certain matters with respect to the ownership and transfer of Securities now held of record or beneficially by, or hereafter acquired by, any Stockholder.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, and the mutual agreements set forth herein and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the Parties hereto, intending to be legally bound, hereby agree as follows:
SECTION 1 DEFINITIONS:
1.1 As used in this Agreement, the following terms have the following meanings:
"AGREED VALUE" shall mean with respect to (i) any number of shares of IMC Preferred Stock, the relevant Liquidation Preference per share of Preferred Stock multiplied by such number of shares of IMC Preferred Stock plus accrued and unpaid dividends thereon or, if any IMC Preferred Stock has been exchanged for Note Securities, the principal amount of such Note Securities plus accrued and unpaid interest thereon, (ii) any number of shares of IMC Common Stock, the relevant Transaction Common Share Price multiplied by such number of shares of IMC Common Stock, (iii) any IMC Notes, the principal amount of such IMC Notes plus accrued and unpaid interest thereon, and (iv) any Securities Proceeds, the Fair Market Value of such Securities Proceeds, which, if cash, shall be the amount of cash received in respect of such Securities Proceeds, and if Cash Equivalents, shall be the Cash Equivalent Value.
"APOLLO AFFILIATE" means Apollo Management and its affiliates, including the Apollo Investors, other than any affiliate that is a portfolio company of any investment fund that is an affiliate of Apollo Management.
"APOLLO COMMON STOCK" means the shares of Common Stock received by the Apollo Investors pursuant to the Merger Agreement, including any shares of Common Stock held by the Apollo Investors immediately after the Closing, and any shares of Capital Stock received in distribution thereon or as the result of any stock split, reverse stock split or recapitalization or in exchange for the Apollo Common Stock.
"APOLLO PREFERRED STOCK" means the shares of Preferred Stock received by the Apollo Investors pursuant to the Merger Agreement, including any shares of Preferred Stock held by the Apollo Investors immediately after the Closing, and any debt securities of the Company or shares of Capital Stock received in distribution thereon or as the result of any stock split, reverse stock split or recapitalization or in exchange for the Apollo Preferred Stock.
"APOLLO STOCKHOLDERS" means any of the Apollo Investors or any Person to whom Securities are Transferred in accordance with the Syndication Option provided for by SECTION 2.2(b), or any successor thereto. In the event that any Apollo Investor distributes its Securities to its investors or to any of its affiliates, then Apollo Stockholders shall include such distributees.
"BOARD OF DIRECTORS" means the board of directors of the Company.
"BRING-ALONG TAX AMOUNT" means the aggregate United States federal and state corporate income tax that, to the extent an EMC Stockholder is treated as the owner of IMC Common Stock transferred pursuant to SECTION 3 for income tax purposes, the IMC Stockholder is expected to incur as a result of such transfer; PROVIDED, HOWEVER, that (i) the amount of Bring-Along Tax Amount shall not exceed the gain, if any, recognized by such IMC Stockholder from such transfer multiplied by the combined federal and state tax rate applicable to such IMC Stockholder for the relevant taxable year, (ii) the amount of Bring-Along Tax Amount shall be adjusted taking into account any applicable net operating losses, capital losses and carryovers of net operating losses and capital losses then available to the IMC Stockholders, and (iii) before any Bring-Along Tax Amount is taken into account, the WC Stockholder shall provide basis of the computation of the Bring-Along Tax Amount to Apollo Management.
"BUSINESS DAY" means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by law to be closed in New York, New York.
"CAPITAL STOCK" means any and all shares of capital stock or any other interest participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the Person issuing such capital stock or other interest participation.
"CASH EQUIVALENT" means a class of equity securities that are publicly traded and listed on the NASDAQ National Market or the New York Stock Exchange, have readily ascertainable market prices and has a market capitalization of at least $2 billion, a trading history of at least six (6) months, and are "freely tradable" by the Apollo Stockholders with no legal or contractual restrictions or obligations on transfer or sale, including pursuant to (a) applicable securities laws, (b) agreements entered into in connection with the receipt of the equity securities at issue or (c) agreements, including any agreements with respect to debt, pursuant to which an event of default, "change of control" provision, acceleration provision or restrictive covenant would be triggered or breached; PROVIDED, HOWEVER, that if in the reasonable judgment of the Apollo Stockholders, disposing of all such equity securities would require the services of an underwriter or result in the Apollo Stockholders selling at a discount to the then current
market price of such securities, such securities shall not be deemed to be Cash Equivalents. For purposes of this definition, "freely tradable" shall mean that the securities at issue are either registered under the Securities Act or may be transferred pursuant to Rule 144 under the Securities Act without volume or manner of sale limitations.
"CASH EQUIVALENT VALUE" means, with respect to any Cash Equivalent, the average of the closing price of such Cash Equivalent for the ten trading days prior to the date of measurement less the amount of the brokerage commission necessary for the sale of such Cash Equivalents.
"CERTIFICATE OF DESIGNATION" means the Certificate of Designation of the Preferred Stock.
"CERTIFICATE OF INCORPORATION" means the Company's Certificate of Incorporation, including all amendments thereto, as filed with the Secretary of State of the State of Delaware as of the date hereof.
"CLAWBACK DETERMINATION EVENT" means any event that is a Disposition Event or the Exit Event.
"CLAWBACK NOTICE" means any written notice delivered by the Apollo Investors to the IMC Stockholders and the Escrow Agent specifying in reasonable detail the calculation of any Clawback Rights and the date by which Securities must be transferred to the Apollo Stockholders to satisfy the Clawback Rights or consummate the Clawback Determination Event described in such notice and such Clawback Notice shall comply with the requirements of the Escrow Agreement.
"CLAWBACK RIGHTS" means the right by the Apollo Stockholders to acquire Securities and Securities Proceeds pursuant to SECTION 2.5 upon the occurrence of any Clawback Determination Event.
"CLAWBACK TERMINATION DATE" means the date following the Exit Event upon which the Clawback Rights have been fulfilled in accordance with the terms hereof and the final Clawback Notice.
"CLOSING" means the date that the Merger occurs.
"COMMON SHARES SOLD" means the Apollo Common Stock (or any equity or debt security or other interest received by the Apollo Stockholders in exchange for shares of Apollo Common Stock), directly or indirectly, disposed of (or deemed to have been disposed of) in the event of the realization of cash or Cash Equivalents in any Clawback Determination Event; PROVIDED that in the event that such Clawback Determination Event is the Exit Event, this definition shall be modified as set forth in SECTION 2.4(b). In the event of a Clawback Determination Event where the consideration consists of cash or Cash Equivalents and other property, the deemed Common Shares Sold shall be that portion of the Apollo Common Stock attributable to the cash and/or Cash Equivalent consideration and the remaining portion shall not be deemed Common Shares Sold. In determining the portion that is attributable to cash and Cash Equivalents and the portion that is attributable to other property, the value of cash and Cash Equivalents shall be the amount of cash or the Cash Equivalent Value and the value of other property shall be the Fair Market Value of such other property at the time of the Clawback Determination Event.
"COMMON STOCK" means the Class A common stock, par value $0.01 per share, of the Company, or if the Common Stock is no longer outstanding, the class of Capital Stock issued in exchange for, or in lieu of, Common Stock.
"COMPANY SALE" means any transaction or series of transactions as a
result of which one or more Persons acting as a group (other than any Apollo
Affiliate or IMC Stockholder or any affiliate of any IMC Stockholder) acquires
(i) equity securities of the Company constituting greater than fifty percent
(50%) of the Company's voting Common Stock (whether such transaction is effected
by merger, consolidation, recapitalization, sale or transfer of the Company's
equity or otherwise) or (ii) all or substantially all of the assets of the
Company and its subsidiaries.
"CUMULATIVE SHORTFALL AMOUNT" means, with respect to any Subsequent Clawback Determination Event, an amount equal to the sum of all Shortfall Amounts in respect of all Prior Clawback Determination Events prior to such Subsequent Clawback Determination Event, with each such Shortfall Amount being grossed up at 22.75% per annum, compounded quarterly from the date of the respective Prior Clawback Determination Event to which such Shortfall Amount relates until the date of such Subsequent Clawback Determination Event.
"DISPOSITION EVENT" means any direct or indirect realization of cash or Cash Equivalents by the Apollo Stockholders that is not an Exit Event in respect of Apollo Common Stock or in respect of any equity or debt security or other interest received by the Apollo Stockholders in exchange for shares of Apollo Common Stock; PROVIDED, that any distribution of Apollo Common Stock (i) to the investors in any investment fund of the Apollo Investors, (ii) to any Apollo Affiliate, and (iii) prior to the first anniversary of the Closing in accordance with the Syndication Option provided for by SECTION 2.2(b) or by the subsequent transfer of such shares received pursuant to the Syndication Option by such transferees to their affiliates, shall not constitute a Disposition Event.
"ESCROW AGENT" means The Bank of New York, a New York banking corporation.
"ESCROW AGREEMENT" means that certain Escrow Agreement, dated as of November 28, 2001, among the Company, the Escrow Agent, the IMC Stockholders and the Apollo Investors, pursuant to which the Escrow Agent shall hold and dispose of Escrowed Securities and Securities Proceeds of Escrowed Securities in accordance with the terms thereof.
"ESCROWED SECURITIES" means, collectively, the shares of IMC Common Stock, the shares of IMC Preferred Stock, the IMC Notes, any shares of stock or notes issued in exchange for any of the foregoing and any shares of stock or notes distributed on account of any of the foregoing, at any time while any such shares or notes are required to be held in escrow by the Escrow Agent pursuant to the Escrow Agreement.
"EXCESS AMOUNT" means, with respect to any Subsequent Clawback Determination Event, an amount equal the Transaction Common Share Price in such Subsequent Clawback Determination Event minus the Threshold Price in such Subsequent Clawback Determination Event multiplied by the number of Common Shares Sold in such Subsequent Clawback Determination Event.
"EXIT EVENT" means (i) the first direct or indirect realization of cash or Cash Equivalents by the Apollo Stockholders in respect of Apollo Common Stock or in respect of any equity or debt security or other interest received by the Apollo Stockholders in exchange for shares of Apollo Common Stock where after such realization of cash or Cash Equivalents the Apollo Stockholders, in the aggregate, have disposed of for cash or Cash Equivalents, ninety percent (90%) or more of the Apollo Common Stock initially issued to the Apollo Investors pursuant to the Merger Agreement; PROVIDED, HOWEVER, that if the Common Stock has no or nominal value, Exit Event shall mean the first direct or indirect realization
of cash disposition by the Apollo Stockholders in respect of Apollo Preferred Stock or in respect of any equity or debt security or other interest received by the Apollo Stockholders in exchange for shares of Apollo Preferred Stock, including Note Securities, where after such realization of cash the Apollo Stockholders, in the aggregate, have disposed of for cash ninety percent (90%) or more of the Apollo Preferred Stock initially issued to the Apollo Investors pursuant to the Merger Agreement or (ii) a Full Return Disposition Event.
"FAIR MARKET VALUE" means, for any asset (other than cash or Cash Equivalents), the value, as of any measurement date, of such asset as mutually agreed by the Apollo Stockholders and the IMC Stockholders, and if no such agreement is reached, by an independent nationally recognized investment banking firm or "Big 5" accounting firm acting as a third party appraiser selected by the Apollo Stockholders and reasonably acceptable to the IMC Stockholders, which value shall take into consideration limitations on liquidity; PROVIDED, that to the extent the asset at issue is equity securities that are publicly traded and listed on the NASDAQ National Market or a national securities exchange, Fair Market Value shall mean the average of the last reported sales prices of such securities as reported by NASDAQ, National Market System, or if such securities are listed on a securities exchange, the average of the last reported sales prices of such securities on such exchange which shall be for consolidated trading if applicable to such exchange, or if not so reported, the average of the last reported bid prices of such securities, in each case for the ten (10) trading days immediately after the measurement date (in any case, reduced by an amount representing reasonable and customary underwriting discounts, reasonable and customary block trade discounts or reasonable and customary brokerage commissions, as the case may be). With respect to any Clawback Determination Event or Subsequent Clawback Determination Event, the measurement date shall be the date on which such Clawback Determination Event or Subsequent Clawback Determination Event occurs.
"FULL RETURN DISPOSITION EVENT" means, a Disposition Event in which the sum of (i) the product of (a) the number of Common Shares Sold in such Disposition Event multiplied by (b) the Transaction Common Share Price for such Disposition Event plus, for each prior Disposition Event that has occurred (a "PRIOR DISPOSITION EVENT") (ii) the product of (s) the number of Common Shares Sold in such Prior Disposition Event multiplied by (t) the Transaction Common Share Price realized in such prior Disposition Event (with the product obtained in this clause (ii) added to the product obtained in clause (1) for each Prior Disposition Event) is greater than the product of (x) the total number of shares of Apollo Common Stock (whether or not disposed of previously) multiplied by (y) the then current Threshold Price; PROVIDED that if such Disposition Event is prior to the third anniversary of the Closing, the Threshold Price in clause (y) shall equal the price set forth opposite the year 2004 in the definition of Threshold Price below.
"IMC COMMON STOCK" means the 1,038,700 shares of the Common Stock received beneficially by IMC Global pursuant to the Merger Agreement and deposited with the Escrow Agent to be held, in escrow, in accordance with the Escrow Agreement, and any shares of Common Stock received in distribution thereon or as the result of any stock split, reverse stock split or recapitalization or in exchange for IMC Common Stock.
"IMC NOTES" means the Company debt securities received beneficially by IMC Global pursuant to the Merger Agreement, and any notes or other Securities received in distribution thereon or in exchange therefor.
"IMC PREFERRED STOCK" means the shares of Preferred Stock received beneficially by IMC Global pursuant to the Merger Agreement, and any debt securities of the Company or shares of Capital Stock received in distribution thereon or as the result of any stock split, reverse stock split or recapitalization or in exchange for the IMC Preferred Stock.
"IMC REGISTERED STOCK" means the 357,000 shares of Common Stock received by and registered in the name of IMC Global pursuant to the Merger Agreement that are not subject to the terms and conditions of this Agreement, and any shares of Common Stock received in distribution thereon or as the result of any stock split, reverse stock split or recapitalization or in exchange for IMC Registered Stock.
"IMC STOCKHOLDER" means IMC Global.
"IMC TRANSACTION STOCK" means the IMC Common Stock and the IMC Registered Stock.
"IPO DATE" means the date on which the Company consummates a Qualified Public Offering.
"LIQUIDATION PREFERENCE" has the meaning ascribed to such term in the Certificate of Designation.
"MANAGEMENT CONSULTING AGREEMENT" means that certain Management Consulting Agreement dated as of November 28, 2001, by and between the Company and Apollo Management, substantially consistent with the form attached as EXHIBIT 1.1 (q) to the YBR Holdings LLC Disclosure Letter attached to the Merger Agreement.
"MERGER" means the merger of YBR Acquisition Corp., a Delaware corporation, into the Company pursuant to the Merger Agreement.
"NOTE SECURITIES" means the debt securities, if any, to be issued by the Company in exchange for the Preferred Stock, and any notes or other Securities received in distribution thereon or in exchange therefor.
"NY UCC" means the Uniform Commercial Code as in effect from time to time in the State of New York
"OFFICERS' CERTIFICATE" means a certificate signed by two officers of the signing entity, one of whom shall be the president, chief financial officer, chief operating officer, or a vice president of the signing entity.
"OTHER CASH RETURNS" means any cash dividends or other cash received by the Apollo Stockholders in a distribution on shares of the Apollo Common Stock or shares of the Apollo Preferred Stock or fees paid to the Apollo Affiliates, excluding (i) cash Securities Proceeds received by any Apollo Stockholder in connection with a Clawback Determination Event, (ii) fees, reimbursement and indemnifications provided for by the Management Consulting Agreement; PROVIDED that the fees under Section 6 thereof shall be excluded only up to $3 million in the aggregate, (iii) amounts representing the stated dividends on the Preferred Stock or the liquidation preference thereof, or (iv) any reasonable and customary fees, stock options, reasonable out-of-pocket expense reimbursements, coverage under
directors and officers insurance and indemnification protection for officers and directors received by or covering any Apollo Stockholder.
"PARTIES" means the Stockholders and the Company.
"PERSON" means any natural person, corporation, limited partnership, general partnership, limited liability company, joint stock company, joint venture, association, company, trust or other organization, or any governmental authority.
"PRE-EMPTIVE PERCENTAGE" means, at any time, as to each IMC Stockholder, the quotient obtained (expressed as a percentage) by dividing (i) the number of shares of IMC Common Stock held by such IMC Stockholder by (ii) the total number of shares of Common Stock issued and outstanding on the date of determination.
"PREFERRED STOCK" means the Series A Redeemable Exchangeable Preferred Stock, par value $0.01 per share, of the Company, or if the Preferred Stock is no longer outstanding, the Note Securities or other debt securities of the Company or the class of Capital Stock issued in exchange for, or in lieu of, Preferred Stock.
"PRIOR CLAWBACK DETERMINATION EVENT" means any Clawback Determination Event that results in the transfer of Securities or Securities Proceeds pursuant to SECTION 2.5 and occurs prior to a Subsequent Clawback Determination Event.
"QUALIFIED PUBLIC OFFERING" means an underwritten public offering of Common Stock by the Company pursuant to an effective registration statement filed by the Company with the Securities and Exchange Commission (other than on Forms S-4 or S-8 or successors to such forms) under the Securities Act, after which, cumulatively, more than twenty percent (20%) of the Company has been sold to the public in one or more registered offerings.
"REGISTRABLE COMMON STOCK" means all shares of Common Stock, whether or not issued pursuant to the Merger Agreement and however and whenever obtained, beneficially owned, or owned of record, by any Apollo Stockholder, any IMC Stockholder or the Escrow Agent (in its capacity as such).
"SECURITIES" means the Common Stock, the Preferred Stock and the IMC Notes.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITIES PROCEEDS" means any dividend, interest payment, distribution or other amount, whether in the form of cash or otherwise, received in respect of, or upon any disposition of, any Securities, and any notes (including Note Securities) or securities that are not Common Stock, Preferred Stock or IMC Notes received in distribution upon or respect of, or in exchange for, any Securities.
"SHORTFALL AMOUNT" means, with respect to any Prior Clawback Determination Event, an amount equal to (i) the Differential Amount in such Prior Clawback Determination Event minus (ii) the sum of the Agreed Value of Securities Proceeds plus the Agreed Value of IMC Preferred Stock plus the Agreed Value of IMC Notes plus the Agreed Value of IMC Common Stock, in each case at the time of the Prior Clawback Determination Event, transferred to the Apollo Stockholders pursuant to SECTION 2.5 in such Prior Clawback Determination Event.
"STOCKHOLDERS" means the IMC Stockholders and the Apollo Stockholders.
"SUBSEQUENT CLAWBACK DETERMINATION EVENT" means any Clawback Determination Event (which may also be the Exit Event), other than the first Clawback Determination Event to occur.
"THIRD PARTY PURCHASER" means any Person other than a Stockholder or their Permitted Transferees who purchases or intends to purchase Common Stock from any Stockholder or their Permitted Transferees.
"THRESHOLD PRICE" means, as of each anniversary date of the Closing indicated below, the price per share opposite such date.* For any date between the dates indicated below, Threshold Price shall be the interpolated price between the prices between such date, using a straight line average and the actual number of days elapsed over 365 or 366, as the case may be. For any date after the last date indicated below, the Threshold Price shall be the last price per share indicated below as of that date grossed up at 22.75% per annum, compounded quarterly until the date in question. In the event the Apollo Stockholders receive Other Cash Returns, the Threshold Price at such time shall be reduced by an amount equal to the amount of Other Cash Returns so received divided by the number of shares of Apollo Common Stock then held by the Apollo Stockholders, and all future Threshold Prices thereafter shall be reduced by such amount. In the event of any stock split, stock dividend, reverse stock split, or recapitalization ("RECAPITALIZATION"), the Threshold Price will be adjusted such that the Threshold Price for one share of Common Stock immediately prior to the Recapitalization shall equal (i) the Threshold Price for one share of Common Stock immediately following the Recapitalization MULTIPLIED BY (ii) the number of shares of Common Stock received in the Recapitalization in respect of one share of Common Stock. The parties understand and acknowledge that the implied total return on investment on shares of Common Stock and Preferred Stock calculated in the Threshold Price takes into account the full dividend on the Preferred Stock.
ANNIVERSARY DATE PRICE
2002 $ 13.56
2003 $ 18.16
2004 $ 24.08
2005 $ 31.67
2006 $ 41.37
2007 $ 53.75
2008 $ 69.50
2009 $ 89.51
2010 $ 114.87
2011 $ 146.98
2012 $ 187.57
2013 $ 238.82
2014 $ 303.45
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"TRANSACTION COMMON SHARE PRICE" means with respect to any Clawback Determination Event, the cash or Cash Equivalents realized in respect of Common Shares Sold divided by the number of Common Shares Sold; PROVIDED that in the event that such Clawback Determination Event is the Exit Event, this definition shall be modified as set forth in SECTION 2.4.
"TRANSFER" means, sell, transfer, convey, assign, pledge, hypothecate or otherwise dispose of
(a) The following terms have the meanings defined for such terms in the Sections set forth below:
TERM SECTION ----------------------------------------------------- Amendment 10(c) Apollo Investors Preamble Apollo Management Preamble Agreement Preamble Bring-Along Notice 3 Bring-Along Right 3 Commission 8.3 Company Preamble Demand Notice 6.1 Differential Amount 2.4(a) IMC Global Preamble Initial Stockholders Preamble Majority Period 5(b) Merger Agreement Recitals Other Registering Holders 7 Post Transaction Value 2.4(b) Primary Registration 7 Prospectus 8.3 Registering Stockholder 7 Registration Statement 8.3 Request Notice 6.1 Requesting Stockholder 6.1 Sale Notice 4 Secondary Registration 7 Syndication Option 2.2(b) Tag-Along Stockholders 4 Tag-Along Notice 4 Tag-Along Right 4 Third Party Terms 3 Vote 5(a) Vote Directing Party 5(a) |
(b) Unless the context of this Agreement otherwise requires, (i) words of any gender include each other gender; (ii) words using the singular or plural number also include the plural or singular number, respectively; (iii) the terms "hereof," "herein," "hereby" and derivative or similar words refer to this entire Agreement; (iv) the term "Section" refers to the specified Section of this Agreement; (v) the word "including" shall mean "including, without limitation", and (vi) the word "or" shall be disjunctive but not exclusive.
(c) References to agreements and other documents shall be deemed to include all subsequent amendments and other modifications thereto.
(d) References to statutes shall include all regulations promulgated thereunder and references to statutes or regulations shall be construed as including all statutory and regulatory provisions consolidating, amending or replacing the statute or regulation.
(e) The language used in this Agreement shall be deemed to be the language chosen by the Parties to express their mutual intent, and no rule of strict construction shall be applied against either Party.
SECTION 2 TRANSFER AND CLAWBACK RIGHTS
2.1 SECURITIES HELD BY ESCROW AGENT. On the date of the Closing at the Effective Time (as such term in defined in the Merger Agreement), (i) all of the shares of the IMC Common Stock will be issued by the Company in registered certificated form in the name of the Escrow Agent and deposited with the Escrow Agent (in its capacity as such) to be held, in escrow, in accordance with the terms of the Escrow Agreement, (ii) all of the shares of the IMC Preferred Stock will be issued by the Company in registered certificated form in the name of the Escrow Agent and deposited with the Escrow Agent (in its capacity as such) to be held, in escrow, in accordance with the terms the Escrow Agreement, and (iii) all of the IMC Notes will be issued by the Company payable to the Escrow Agent and deposited with the Escrow Agent (in its capacity as such) to be held, in escrow, in accordance with the terms the Escrow Agreement.
2.2 TRANSFER.
(a) Until the Clawback Termination Date, the Escrow Agent shall hold in accordance with the terms of the Escrow Agreement and the Escrow Agent and the IMC Stockholders shall not Transfer any IMC Common Stock, any IMC Preferred Stock or any IMC Notes, any Securities Proceeds of any IMC Common Stock, any IMC Preferred Stock or any IMC Notes, any interest in any IMC Common Stock, any IMC Preferred Stock or any IMC Notes or any interest in any Securities Proceeds of any IMC Common Stock, any WC Preferred Stock or IMC Notes to any Person, except to an Apollo Stockholder pursuant to the Clawback Rights under SECTION 2.5 and except for any Bring-Along Tax Amount transferred to any IMC Stockholder pursuant to SECTION 3. After the Clawback Termination Date, the IMC Stockholders shall hold the IMC Common Stock, the IMC Preferred Stock, the WC Notes and any Securities Proceeds free of any restrictions under SECTION 2 of this Agreement.
(b) Subject to the provisions of SECTION 3 and SECTION 4, the Apollo
Stockholders may Transfer at any time, and from time to time, Apollo Common
Stock and any such Transfer that is a Clawback Determination Event shall trigger
the Clawback Rights, if applicable; PROVIDED, HOWEVER, until the first
anniversary of the Closing, the Apollo Stockholders shall have the option (the
"SYNDICATION OPTION") to Transfer, in one or a series of transactions, up to an
aggregate of one-third (1/3) of the Apollo Common Stock and any such Transfer
(i) shall at the time of Transfer be designated by the Transferring Apollo
Stockholders in a written notice to the IMC Stockholders as a Transfer under the
Syndication Option, (ii) shall not trigger the Clawback Rights for the
Transferring Apollo Stockholders and (iii) shall entitle any Person to whom such
shares of Apollo Common Stock are so Transferred to thereafter be deemed to be
an Apollo Stockholder for purposes of this Agreement and be entitled to the
Clawback Rights attributable to such shares of Apollo Common Stock upon any
future Clawback Determination Event; PROVIDED, that immediately after giving
effect to the Syndication Option, the Apollo Investors beneficially own a
majority of the outstanding Common Stock and possess the tight to elect at least
a majority of the Board of Directors of the Company. Any Transfer by any Apollo
Stockholder prior to the
first anniversary of the Closing that qualifies as a Clawback Determination Event shall be a Clawback Determination Event unless such Transfer is designated by the Transferring Apollo Stockholder as a Transfer under the Syndication Option as set forth in the preceding sentence. The Apollo Investors shall cause each transferee who is an Apollo Stockholder to be bound by the terms hereof.
2.3 COMPLIANCE WITH THE ESCROW AGREEMENT. The IMC Stockholders and the Escrow Agent agree that, subject to fulfilling the Clawback Rights on an ongoing basis, all IMC Common Stock, all IMC Preferred Stock, all IMC Notes and all Securities Proceeds of any IMC Common Stock, IMC Preferred Stock and IMC Notes shall be held by the Escrow Agent in accordance with the terms of the Escrow Agreement until the Clawback Termination Date and the termination of the Escrow Agreement in accordance with its terms.
2.4 CLAWBACK DETERMINATION.
(a) Upon the occurrence of any Clawback Determination Event, if the Transaction Common Share Price is less than the Threshold Price at such time, then the Escrow Agent as instructed under SECTION 2.5 shall transfer to the Apollo Stockholders Securities and Securities Proceeds with an Agreed Value equal to the Differential Amount. The "DIFFERENTIAL AMOUNT" shall be equal to the Threshold Price minus the Transaction Common Share Price multiplied by the number of Common Shares Sold in such Clawback Determination Event by the Apollo Stockholders.
(b) Notwithstanding and in addition to the provisions of clause (a) above, in the event that the Clawback Determination Event is the Exit Event, (i) the Transaction Common Share Price shall be calculated as follows: (x) the total amount of cash and Cash Equivalents received by the Apollo Stockholders for the Common Shares Sold in the Exit Event plus the Post Transaction Value of the equity in the Company (or its successor) or the acquiring entity of the Company held by the Apollo Stockholders immediately following the Exit Event, if any, plus the Fair Market Value of any other property received in the Exit Event for Apollo Common Stock disposed of in the Exit Event and not otherwise included, divided by (y) the total number of shares of Apollo Common Stock held by all of the Apollo Stockholders immediately prior to the Exit Event, and (ii) Common Shares Sold shall include the total number of shares of Apollo Common Stock held by all of the Apollo Stockholders immediately prior to the Exit Event. "POST TRANSACTION VALUE" shall mean the aggregate Fair Market Value of the equity in the Company (or its successor) or the acquiring entity of the Company held by the Apollo Stockholders immediately following the Exit Event; PROVIDED that the determination of such Fair Market Value shall take into account the valuation of the Company (or its successor) or the acquiring entity of the Company in the transaction that constitutes the Exit Event.
(c) In the event of a Subsequent Clawback Determination Event in
which the Transaction Common Share Price is greater than the Threshold Price at
such time, the Apollo Stockholders shall deliver or cause to be delivered to the
Escrow Agent in accordance with the Escrow Agreement, Securities and Securities
Proceeds equal to the lesser of (i) the Securities and Securities Proceeds
transferred to the Apollo Stockholders pursuant to SECTION 2.5 in all Prior
Clawback Determination Events that have not been redeposited with the Escrow
Agent pursuant to this SECTION 2.4(c) and (ii) an amount of Securities and
Securities Proceeds with an Agreed Value equal to the applicable Excess Amount
minus the applicable Cumulative Shortfall Amount; PROVIDED, that in either case
(x) the Securities and Securities Proceeds to be so delivered shall be delivered
on a pro rata basis in the same proportions as the Securities and Securities
Proceeds transferred to the Apollo Stockholders pursuant to SECTION 2.5 in all
Prior Clawback Determination Events, (y) notwithstanding anything to the
contrary, with respect to Securities other than Common Stock and Securities Proceeds, the Apollo Stockholders shall have the right to deliver or cause to be delivered cash in lieu of such other Securities or Securities Proceeds equal to the Agreed Value thereof and (z) if the Subsequent Clawback Determination Event is the Exit Event, the Apollo Stockholders shall have the right to deliver or cause to be delivered cash in whole or partial satisfaction of their obligations under this SECTION 2.4(c) equal to the Agreed Value of the Securities and Securities Proceeds that would have otherwise been delivered.
(d) All transfers of securities pursuant to this SECTION 2 shall be effectuated to the nearest whole security for the purpose of avoiding the transfer, or payment in cash in lieu of, fractional securities; PROVIDED that if rounding to the nearest whole security would result in a per security value differential greater than $10,000, such transfer shall either include securities or, at the option of the Apollo Investors, be effectuated with cash payments in lieu of fractional securities.
2.5 CLAWBACK OF SECURITIES, SECURITIES PROCEEDS.
(a) If the Differential Amount is greater than zero, then the Clawback Notice delivered by the Apollo Investors shall instruct the Escrow Agent to transfer to the Apollo Stockholders (or to Third-Party Purchasers on behalf of the Apollo Stockholders), first, the Securities Proceeds at Agreed Value held by the Escrow Agent at such time, and second, on a pro rata basis, the IMC Preferred Stock at Agreed Value, the IMC Notes at Agreed Value and the IMC Common Stock at Agreed Value held by the Escrow Agent at such time. For purposes of this SECTION 2.5(a), "pro rata" shall mean that the Securities to be transferred pursuant to the Clawback Right shall be split among the IMC Preferred Stock, the IMC Notes and the IMC Common Stock in amounts proportionate to the total amount of IMC Preferred Stock at Agreed Value, the total amount of IMC Notes at Agreed Value and the total amount of Common Stock at Agreed Value held by the Agent at such time. If all such Securities and Securities Proceeds are so transferred and the Clawback Right is not satisfied in full, then the IMC Stockholders and the Escrow Agent shall have no further obligation to pay any difference.
(b) To the extent the Apollo Investors have a final judgment of any court of law or equity of competent jurisdiction that is unstayed for at least sixty (60) days against IMC Global for indemnification under the Merger Agreement, the Apollo Investors shall be entitled to satisfy such judgment, to the extent such judgment is not otherwise satisfied, by delivering a Clawback Notice to the Escrow Agent instructing the Escrow Agent to transfer to the Apollo Investors, in accordance with the terms set forth in this SECTION 2.5, Securities and Securities Proceeds with a Fair Market Value up to the amount of such judgment; PROVIDED that any Preferred Stock, IMC Notes and Note Securities transferred pursuant to this Section shall be valued at the respective Agreed Value for each Security.
2.6 CLAWBACK NOTICE.
(a) The Apollo Investors shall deliver to the IMC Stockholders and the Escrow Agent a Clawback Notice in connection with each Clawback Determination Event at least ten (10) Business Days prior to the Clawback Determination Event. The Clawback Notice shall instruct the Escrow Agent, if applicable, to (1) release any remaining Securities and Securities Proceeds to the IMC Stockholders and (ii) terminate the Escrow Agreement in accordance with the terms thereof. The Apollo Investors shall be entitled to deliver any Clawback Notice either (i) in advance of a Clawback Determination Event specifying that Securities shall be delivered to the Apollo Stockholders (or to Third-Party Purchasers on behalf of the Apollo Stockholders) on a specified date in order to consummate the Clawback Determination Event and fulfill the corresponding Clawback Rights (which notice may be
conditional or contingent upon the consummation of such Clawback Determination Event) or (ii) following the consummation of a Clawback Determination Event and specifying that Securities shall be delivered to the Apollo Stockholders on a specified date in order to fulfill the Clawback Rights in connection with the already consummated Clawback Determination Event described in the Clawback Notice. In the event that Securities are delivered pursuant to a Clawback Notice in advance of the consummation of a Clawback Determination Event and either the Clawback Determination Event is not thereafter consummated or the Clawback Determination Event is consummated on terms different than those described in the Clawback Notice, the Apollo Investors will deliver a written notice to the Escrow Agent (which written notice shall be delivered to the IMC Stockholders two (2) Business Days prior to delivery to the Escrow Agent) specifying in reasonable detail a revised calculation of any Clawback Rights and, if necessary, either (i) redeposit with the Escrow Agent in accordance with Escrow Agreement the Securities that do not fall within the Clawback Rights or (ii) instruct that additional Securities be delivered to the Apollo Stockholders to fulfill the Clawback Rights. Any Clawback Notice delivered in accordance with this Section shall be delivered by both telecopy and overnight courier or hand delivery.
(b) The Apollo Investors shall be the only Persons authorized to delivered a Clawback Notice and the Escrow Agent shall be obligated to follow the instructions contained in any such Clawback Notice in accordance with the terms of the Escrow Agreement.
2.7 THE IMC STOCKHOLDER COVENANT. The IMC Stockholders, jointly and severally, unconditionally covenant to cause to be delivered to the Apollo Stockholders the Escrowed Property in the amount of the Differential Amount under SECTIONS 2.4(a) AND (b) when and as due, net of any amounts required to be delivered to the Escrow Agent pursuant to SECTION 2.4(c); PROVIDED, HOWEVER, that in the event of a breach of this covenant, the IMC Stockholders will not be personally liable hereunder for such breach except to the extent of their interest in the Escrowed Property.
2.8 CERTIFICATED SECURITIES AND PAYMENT OF PROCEEDS. The Company agrees that all Escrowed Securities will at all times be "certificated securities" (as defined in Article 8 of the NY UCC) and that all "proceeds" (as defined in Article 9 of the NY UCC) of the Escrowed Securities will be paid or otherwise delivered directly to the Escrow Agent to be held, in escrow, in accordance with the terms of the Escrow Agreement.
SECTION 3 BRING-ALONG RIGHTS
In the event that, at any time after the date hereof, one or more of the Apollo Stockholders, in one transaction or a series of related transactions that constitute a Company Sale, proposes to Transfer all or any portion of the Common Stock then held by such Apollo Stockholder to any Third Party Purchasers (other than Apollo Affiliates), then such Apollo Stockholder shall have the right (a "BRING-ALONG RIGHT"), but not the obligation, to cause any of the other Stockholders to tender for purchase to the Third Party Purchaser, a number of shares of Common Stock equaling the amount derived by multiplying (i) the total number of shares of Common Stock held by such Stockholder, by (ii) a fraction, the numerator of which is the total number of shares of Common Stock to be Transferred by such Apollo Stockholder in connection with such Company Sale and the denominator of which is the total number of the then outstanding shares of Common Stock held by all Apollo Stockholders. If any IMC Stockholder is required to transfer shares of Common Stock pursuant to this SECTION 3, references to "Common Stock" shall mean "IMC Transaction Stock" with respect to such IMC Stockholder. If any IMC Stockholder is required to Transfer shares of IMC Common Stock pursuant to this SECTION 3 and the
event giving rise to such Bring-Along Right is also a Clawback Determination Event, the number of shares of EMC Common Stock that such IMC Stockholder shall be required to Transfer shall be calculated after giving effect to the Clawback Rights and any calculations set forth in SECTION 2.5. Following a Company Sale, one or more of the Apollo Stockholders shall be entitled to exercise a Bring-Along Right in the event such Apollo Stockholder, in one transaction or a series of related transactions, proposes to Transfer twenty percent (20%) or more of the Common Stock then held by such Apollo Stockholder to any Third Party Purchasers and such Bring-Along Right shall be governed by this SECTION 3 in the same manner as if the event triggering the right to exercise such Bring-Along Right were a Company Sale.
If any Apollo Stockholder elects to exercise its Bring-Along Right,
then it shall so notify the other Stockholders ("BRING-ALONG NOTICE") at least
ten (10) Business Days prior to the date on which such Apollo Stockholder
expects to consummate the Transfer giving rise to such Bring-Along Right. Each
Bring-Along Notice shall set forth: (1) the name of the Third Party Purchaser
and the number of shares of Common Stock proposed to be purchased by such Third
Party Purchaser, (ii) the proposed amount and form of consideration and terms
and conditions of payment offered by the Third Party Purchaser and a summary of
any other material terms pertaining to the Transfer ("THIRD PARTY TERMS") and
(iii) the number of shares of Common Stock that such Stockholder is required to
sell in such Transfer. The terms and conditions applicable to such purchase and
sale of any shares of Common Stock purchased from any Stockholder pursuant to
this SECTION 3 shall otherwise be the same as the terms and conditions
applicable to the Apollo Stockholder exercising the Bring-Along Right. If, prior
to the Exit Event, any IMC Stockholder is required to Transfer shares of Common
Stock pursuant to this SECTION 3, the Apollo Investors, on the same day it
delivers the applicable Bring-Along Notice, shall deliver a written notice to
the Escrow Agent attaching the Bring-Along Notice and instructing the Escrow
Agent to release such number of shares of IMC Common Stock as are required to
satisfy the obligations of the IMC Stockholders under this SECTION 3; PROVIDED
that such notice shall state, and the IMC Stockholders hereby agree, that the
Securities Proceeds from the Transfer of any such Common Stock (net of the
Bring-Along Tax Amount) shall be remitted directly to the Escrow Agent to be
held in accordance with the terms of the Escrow Agreement, unless the Clawback
Termination Date shall occur in connection with such transaction.
Upon the giving of a Bring-Along Notice, each Stockholder shall be obligated to Transfer the number of shares of Common Stock required to be Transferred by such Stockholder as set forth in the Bring-Along Notice on the Third Party Terms.
At the closing of the Transfer to any Third Party Purchaser pursuant to this SECTION 3, if the Exit Event has not yet occurred, each Stockholder who is an IMC Stockholder Transferring shares of IMC Common Stock shall instruct the Third Party Purchaser to remit directly to the Escrow Agent the Securities Proceeds for the shares of IMC Common Stock to be Transferred by such Stockholder (less (i) any portion of the consideration to be escrowed or otherwise held back in accordance with the Third Party Terms; PROVIDED, HOWEVER, that such escrow or hold back is pro rata among all Stockholders Transferring shares of Common Stock and (ii) an amount equal to the Bring-Along Tax Amount, if any), against delivery by such Stockholder of the certificates (if any) representing such shares of Common Stock, duly endorsed for Transfer or with duly executed stock powers or similar instruments, in each case, as may be reasonably requested by the Third Party Purchaser and the Company, and the compliance by such Stockholder or the Escrow Agent with any other conditions to closing generally applicable to all Stockholders Transferring shares of Common Stock in such transaction.
SECTION 4 TAG-ALONG RIGHTS
In the event that, at any time after the date hereof, one or more of the Apollo Stockholders, in one transaction or a series of related transactions proposes to Transfer twenty percent (20%) or more of the Common Stock then held by such Apollo Stockholder to any Third Party Purchasers (other than Apollo Affiliates), then each other Stockholder (collectively, the "TAG-ALONG STOCKHOLDERS") shall have the right (the "TAG-ALONG RIGHT") to Transfer the same percentage of his, her or its Common Stock as all Apollo Stockholders are proposing to Transfer in such a transaction by requesting that such Third Party Purchaser purchase from such Tag-Along Stockholder up to the number of shares of Common Stock equal to the number derived by multiplying (i) the total number of shares of Common Stock that the proposed Third Party Purchaser(s) have agreed or committed to purchase by (ii) a fraction, the numerator of which is the total number of shares of Common Stock owned by such Tag-Along Stockholder, and the denominator of which is the total number of shares of Common Stock then outstanding. If any IMC Stockholder is entitled to transfer shares of Common Stock pursuant to this SECTION 4, references to "Common Stock" shall mean "IMC Transaction Stock" with respect to such IMC Stockholder. If any IMC Stockholder is entitled to Transfer shares of IMC Common Stock pursuant to this SECTION 4 and the event giving rise to such Tag-Along Right is also a Clawback Determination Event, the number of shares of WC Common Stock that such IMC Stockholder shall be entitled to Transfer shall be calculated after giving effect to the Clawback Rights and any calculations set forth in SECTION 2.5.
In the event any Apollo Stockholder proposes to make a Transfer giving rise to the Tag-Along Right, such Apollo Stockholder shall notify the other Stockholders (the "SALE NOTICE") at least ten (10) Business Days prior to the date on which such Apollo Stockholder expects to consummate such Transfer. Each Sale Notice shall set forth the Third Party Terms applicable to the proposed Transfer. The terms and conditions applicable to such purchase and sale of any shares of Common Stock purchased from the Tag-Along Stockholders pursuant to this SECTION 4 shall otherwise be the same as the terms and conditions applicable to the Apollo Stockholder proposing to make the Transfer giving rise to the Tag-Along Right. If, prior to the Exit Event, any IMC Stockholder is entitled to Transfer shares of Common Stock pursuant to this SECTION 4 and such IMC Stockholder properly delivers a Tag-Along Notice, the Apollo Investors shall deliver, within two (2) Business Days of receiving such Tag-Along Notice, a written notice to the Escrow Agent attaching both the Sale Notice and such Tag-Along Notice and instructing the Escrow Agent to release such number of shares of IMC Common Stock as are entitled to be Transferred by such IMC Stockholder under this SECTION 4; PROVIDED that such notice shall state, and the IMC Stockholders hereby agree, that the Securities Proceeds from the Transfer of any such Common Stock shall be remitted directly to the Escrow Agent to be held in accordance with the terms of the Escrow Agreement.
The Tag-Along Right may be exercised by any Tag-Along Stockholder by delivery of a written notice to such Apollo Stockholder proposing to Transfer shares of Common Stock (the "TAG-ALONG NOTICE") within five (5) Business Days following receipt of a Sale Notice from such Apollo Stockholder. The Tag-Along Notice shall state the number of shares of Common Stock (not to exceed the amount determined in accordance with the first paragraph of this SECTION 4) that such Tag-Along Stockholder proposes to include in such Transfer to the Third Party Purchaser. In the event that the Third Party Purchaser does not purchase the specified number of shares of Common Stock from the Tag-Along Stockholders on the same terms and conditions as specified in the Sale Notice, then such Apollo Stockholder shall not be entitled under this SECTION 4 to Transfer any shares of Common Stock to the proposed Third Party Purchaser in the proposed Transfer.
At the closing of the Transfer to any Third Party Purchaser pursuant to this SECTION 4, if the Exit Event has not yet occurred, (i) each Tag-Along Stockholder who is an IMC Stockholder shall instruct the Third Party Purchaser to remit directly to the Escrow Agent the Securities Proceeds for the shares of IMC Common Stock to be Transferred by such Tag-Along Stockholder (less any portion of the consideration to be escrowed or otherwise held back in accordance with the Third Party Terms; PROVIDED, HOWEVER, that such escrow or hold back is pro rata among all Stockholders Transferring shares of Common Stock), against delivery by such Tag Along Stockholder of the certificates (if any) representing such shares of Common Stock, duly endorsed for Transfer or with duly executed stock powers or similar instruments, in each case, as may be reasonably requested by the Third Party Purchaser and the Company, and the compliance by such Tag-Along Stockholder or the Escrow Agent with any other conditions to closing generally applicable to all Stockholders Transferring shares of Common Stock in such transaction, and (ii) all such Securities Proceeds shall remain subject to the Clawback Rights.
SECTION 5 VOTING OF IMC COMMON STOCK
(a) With respect to any matters to which holders of Common Stock are entitled to vote or consent ("VOTE"), the Escrow Agent shall follow the written instructions of the Vote Directing Party with respect to all of the shares of IMC Common Stock. The Apollo Stockholders shall be the Vote Directing Party during the Majority Period. Following the Majority Period and until the Clawback Termination Date, the IMC Stockholders shall be the Vote Directing Party.
(b) For purposes hereof, (i) the "VOTE DIRECTING PARTY" shall mean the parry who is entitled, in accordance with SECTION 5(a), to direct the Vote with respect to all of the shares of IMC Common Stock at any given time and (ii) the "MAJORITY PERIOD" shall mean the period during which the Apollo Stockholders own a majority of the shares of Common Stock then outstanding and shall terminate on such date that the Apollo Stockholders no longer own a majority of the shares of Common Stock then outstanding. The Apollo Stockholders shall give the Escrow Agent written notice promptly following the termination of the Majority Period indicating that the IMC Stockholders have become the Vote Directing Party and the Escrow Agent shall not have any liability for acting as if the Apollo Stockholders are the Voting Directing Party until the Escrow Agent receives such notice.
(c) For the avoidance of doubt, (i) shares of IMC Registered Stock shall not be subject to the provisions of this SECTION 5 and IMC shall have the right to Vote and exercise all Voting and related rights with respect to all such shares and (ii) any shares of Common Stock that are released in accordance with Section 2 of the Escrow Agreement shall no longer be considered shares of IMC Common Stock; PROVIDED that any shares of Common Stock that are redeposited with the Escrow Agent in accordance with Section 2(b) or Section 2(c) of the Escrow Agreement shall once again be considered shares of IMC Common Stock until such shares are once again released in accordance with Section 2 of the Escrow Agreement.
SECTION 6 REGISTRATION RIGHTS
6.1 DEMAND REGISTRATION. At any time and from time to time after the IPO Date, if the Company shall receive a written request from one or more Apollo Investors (a "REQUESTING STOCKHOLDER"), that the Company file a registration statement under the Securities Act (including a "shelf" registration statement on Form S-3 or any successor form pursuant to Rule 415) covering the registration of Registrable Common Stock pursuant to this SECTION 6.1 (a "DEMAND NOTICE"), then the Company shall, within ten (10) business days of the receipt of such written request, give written notice of such request
("REQUEST NOTICE") to all Stockholders and, in addition to any obligations under
SECTION 8, use its best efforts to effect, as soon as practicable, the
registration under the Securities Act of all Registrable Common Stock that the
Requesting Stockholder requests to be registered in the Demand Notice together
with the Registrable Common Stock of other Registering Stockholders pursuant to
SECTION 7, subject only to the limitations of this SECTION 6 and the rights of
other Stockholders pursuant to SECTION 7: PROVIDED that the Company shall not be
obligated to effect any such registration until 180 days after the IPO Date;
PROVIDED, FURTHER, that the IMC Stockholders may not register any shares of IMC
Common Stock until after the Exit Event unless such shares are being registered
such that the Securities Proceeds derived therefrom will be used to satisfy, in
whole or in part, a Clawback Right.
6.2 UNDERWRITING. If the Requesting Stockholder intends to distribute the
Registrable Common Stock covered by its request by means of an underwritten
offering, then it shall so advise the Company as a part of the Demand Notice,
and the Company shall include such information in the Request Notice. In such
event, the right of any Stockholder to include his Registrable Common Stock in
such registration shall be conditioned upon such Stockholder's participation in
such underwriting and the inclusion of such Stockholder's Registrable Common
Stock in the underwriting (unless otherwise mutually agreed by the Requesting
Stockholder and such Stockholder) as provided herein. The Company and all
Stockholders proposing to distribute their securities through such underwriting
shall enter into an underwriting agreement in customary form with the managing
underwriter or underwriters selected for such underwriting by the Requesting
Stockholder. Notwithstanding any other provision of this SECTION 6.2 or
SECTION 7, if the managing underwriter(s) determine(s) in good faith that
marketing factors require a limitation of the number of securities to be
underwritten, then the Company shall so advise all Stockholders that would
otherwise be registered and underwritten pursuant hereto, and the managing
underwriter(s) may exclude shares of the Registrable Common Stock from the
registration and the underwriting, and the number of shares that will be
included in the registration and the underwriting shall be allocated, first to
the Requesting Stockholder's Common Stock and to each of the Stockholders
requesting inclusion of their Registrable Common Stock in such registration
statement pursuant to SECTION 7 on a pro rata basis based on the total number of
Registrable Common Stock requested for inclusion in the registration by the
Requesting Stockholder and each such Stockholder, and second to the Company. No
other shares may be included (other than by the Company or by the Stockholders
pursuant to SECTION 7 without the Requesting Stockholder's consent.
6.3 DEFERRAL. Notwithstanding the foregoing, if the Company shall furnish to the Requesting Stockholder a certificate signed by the President or Chief Executive Officer of the Company stating that, in the good faith judgment of the Board, it would be materially detrimental to the Company and its stockholders for such registration statement then to be filed, the Company shall have the right to defer such filings and, by notice to the Requesting Stockholder, to require the Requesting Stockholder to withdraw its Demand Notice and to refrain from delivering another Demand Notice for a period of not more than ninety (90) days after receipt of the request of the initial Demand Notice; PROVIDED, HOWEVER, that the Company may not utilize this right more than twice in any twelve (12) month period.
6.4 SURVIVAL This SECTION 6 shall remain in full force and effect following any Exit Event.
6.6 IMC TRANSACTION STOCK. For purposes of this SECTION 6 and SECTIONS 7 AND 8, if the referred to Stockholder is an IMC Stockholder, references to "'Common Stock" shall mean "IMC Transaction Stock" with respect to such IMC Stockholder.
SECTION 7 PIGGYBACK REGISTRATION RIGHTS
7.1 If the Company at any time proposes to register under the Securities Act any Common Stock or any security convertible into or exchangeable or exercisable for Common Stock, whether or not for sale for its own account, on a form and in a manner which would permit registration of the Common Stock held by a Stockholder for sale to the public under the Securities Act (other than pursuant to Form S-4 or Form S-8 or successor or similar forms), the Company shall give written notice of the proposed registration to each Stockholder not later than thirty (30) days prior to the filing thereof. Each Stockholder shall have the right to request that all or any part of his or its Registrable Common Stock be included in such registration. Any such registration that the Company proposes for its own account shall be referred to as a "PRIMARY REGISTRATION" and any such registration that the Company proposes that is not for its own account shall be referred to as a "SECONDARY REGISTRATION." Each Stockholder can make such a request by giving written notice to the Company within ten (10) Business Days after the giving of such notice by the Company (any Stockholder giving the Company a notice requesting that the Registrable Common Stock owned by it be included in such proposed registration being hereinafter referred to in this SECTION 7 as a "REGISTERING STOCKHOLDER"); PROVIDED, HOWEVER, that if the Company or the managing underwriters of such offering determine that the aggregate amount of securities of the Company which the Company, all Registering Stockholders and all other Stockholders of the Company entitled to register securities in connection with any offering ("OTHER REGISTERING HOLDERS") propose to include in such registration statement exceeds the maximum amount of securities that may be sold without having a material adverse effect on the success of the offering, including without limitation the selling price and other terms of such offering, the Company will include in such registration, first, the securities which the Company proposes to sell in a Primary Registration, second, the Registrable Common Stock of such Registering Stockholders who are Apollo Stockholders, and third, the Registrable Common Stock to be sold for the account of Other Registering Holders (including the IMC Stockholders) and shares to be registered for the account of the Company in a Secondary Registration, pro rata among all such Registering Stockholders and such Other Registering Holders, taken together, on the basis of the relative percentage of Registrable Common Stock owned by all such Registering Stockholders and such Other Registering Holders who have requested that securities owned by them be so included. Registrable Common Stock proposed to be registered and sold pursuant to an underwritten offering for the account of any Registering Stockholder shall be sold to the prospective underwriters selected or approved by the Company and on the terms and subject to the conditions of one or more underwriting agreements negotiated between the Company and the prospective underwriters. Any Registering Stockholder who holds Registrable Common Stock being registered in any offering shall have the right to receive a copy of the form of underwriting agreement and shall have an opportunity to hold discussions with the lead underwriter of the terms of such underwriting agreement. The Company may withdraw any registration statement at any time before it becomes effective, or postpone or terminate the offering of securities, without obligation or liability to any Registering Stockholder. If, prior to the Exit Event, the IMC Stockholders are entitled to register Registrable Common Stock pursuant to this SECTION 7, with respect to any IMC Stockholder who properly requests that all or any part of its Registrable Common Stock be included in such registration, the Apollo Investors shall deliver, promptly (and in any event within such time as is necessary to permit shares of IMC Common Stock to be disposed of to the underwriters in connection with such offering), a written notice to the Escrow Agent instructing the Escrow Agent to release such number of shares of IMC Common Stock as are entitled to be registered and sold under this SECTION 7 upon effectiveness of the applicable Registration Statement; provided that such notice shall state, and the IMC Stockholders hereby agree, that the Securities Proceeds from the sale of any such IMC
Common Stock shall be remitted directly to the Escrow Agent to be held in accordance with the terms of the Escrow Agreement.
SECTION 8 REGISTRATION PROCEDURES
8.1 HOLDBACK AGREEMENTS. Notwithstanding any other provision of SECTION 6 or SECTION 7, each Stockholder agrees that (if so required by the underwriters in an underwritten offering) he, she or it will not (and it shall be a condition to the rights of each Stockholder under of SECTION 6 and SECTION 7 that such Stockholder does not) offer for public sale any Common Stock during a period not to exceed sixty (60) days prior to and one-hundred and eighty (180) days after the effective date of any registration statement filed by the Company in connection with an underwritten public offering (except as part of such underwritten registration or as otherwise permitted by such underwriters). The IMC Stockholders shall not be required to agree to any such holdback period that is longer than the shortest period applicable to any Apollo Investor so long as the Apollo Investors beneficially own at least as much as or more than the outstanding Common Stock beneficially owned by the IMC Stockholders.
8.2 EXPENSES. Except as otherwise required by state securities or blue sky laws or the rules and regulations promulgated thereunder, all expenses, disbursements and fees incurred by the Company and the Stockholders in connection with any registration under SECTION 6 or under SECTION 7 shall be borne by the Company, except that the following expenses shall be borne by the Stockholder incurring the same: (1) the costs and expenses of counsel to such Stockholder to the extent such Stockholder retains counsel; (ii) discounts, commissions, fees or similar compensation owing to underwriters, selling brokers, dealer managers or other industry professionals, to the extent relating to the distribution or sale of such Stockholder's securities; (iii) transfer taxes with respect to the securities sold by such Stockholder; and (iv) other expenses incurred by such Stockholder and incidental to the sale and delivery of the securities to be sold by such Stockholder.
8.3 REGISTRATION PROCEDURES. In connection with any registration of Registrable Common Stock under the Securities Act pursuant to this Agreement, the Company will consult with each Registering Stockholder whose Common Stock is to be included in any such registration concerning the form of underwriting agreement, shall provide to such Registering Stockholder the form of underwriting agreement prior to the Company's execution thereof and shall provide to such Registering Stockholder and its representatives such other documents (including comments by the Securities and Exchange Commission (the "COMMISSION") on the registration statement) as such Registering Stockholder shall reasonably request in connection with its participation in such registration. The Company will furnish each Registering Stockholder whose shares of Registrable Common Stock are registered thereunder and each underwriter, if any, with a copy of the registration statement and all amendments thereto and will supply each such Registering Stockholder and each underwriter, if any, with copies of any prospectus included therein (including a preliminary prospectus and all amendments and supplements thereto), in such quantities as may be reasonably necessary for the purposes of the proposed sale or distribution covered by such registration. In the event that the Company prepares and files with the Commission a registration statement on any appropriate form under the Securities Act (a "REGISTRATION STATEMENT") providing for the sale of Registrable Common Stock held by any Registering Stockholder pursuant to its obligations under SECTION 6 or SECTION 7, the Company will:
(a) upon filing a Registration Statement or any prospectus related thereto (a "PROSPECTUS") or any amendments or supplements thereto, furnish to the Registering Stockholders
whose Registrable Common Stock are covered by such Registration Statement and the underwriters, if any, copies of all such documents;
(b) prepare and file with the Commission such amendments and post-effective amendments to the Registration Statement as may be necessary to keep such Registration Statement effective for the ninety (90) day period referenced in paragraph (a) above; cause the related Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Securities Act; and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement during the applicable period in accordance with the intended methods of disposition by the sellers thereof set forth in such Registration Statement or supplement to such Prospectus;
(c) promptly notify the Registering Stockholders and the managing underwriters, if any, and (if requested by any such Person) confirm such advice in writing, (i) when a Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to a Registration Statement or any post-effective amendment, when the same has become effective, (ii) of any request by the Commission or any state securities commission for amendments or supplements to a Registration Statement or related Prospectus or for additional information, (iii) of the issuance by the Commission or any state securities commission of any stop order suspending the effectiveness of a Registration Statement or the initiation of any proceedings for that purpose, (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification of any of the Registrable Common Stock for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose, and (v) of the existence of any fact which results in a Registration Statement, a Prospectus or any document incorporated therein by reference containing an untrue statement of a material fact or omitting to state a material fact required to be stated therein or necessary to make the statements therein not misleading;
(d) use its reasonable best efforts to obtain the withdrawal of any order suspending the effectiveness of a Registration Statement;
(e) if requested by the managing underwriters or a Registering Stockholder, promptly incorporate in a Prospectus supplement or post-effective amendment such information as the managing underwriters or the Registering Stockholders holding a majority of the Registrable Common Stock being sold by Registering Stockholders agree should be included therein relating to the sale of such Registrable Common Stock, 22 including without limitation information with respect to the amount of Registrable Common Stock being sold to such underwriters, the purchase price being paid therefor by such underwriters and with respect to any other terms of the underwritten (or best efforts underwritten) offering of the Registrable Common Stock to be sold in such offering; and make all required filings of such Prospectus supplement or post-effective amendment as soon as notified of the matters to be incorporated in such Prospectus supplement or post effective amendment;
(f) furnish to such Registering Stockholder and each managing underwriter at least one signed copy of the Registration Statement and any post-effective amendment thereto, including financial statements and schedules, all documents incorporated therein by reference and all exhibits (including those incorporated by reference);
(g) deliver to such Registering Stockholders and the underwriters, if any, as many copies of the Prospectus (including each preliminary prospectus) and any amendment or supplement thereto as such persons or entities may reasonably request;
(h) prior to any public offering of Registrable Common Stock, register or qualify or cooperate with the Registering Stockholders, the underwriters, if any, and their respective counsel in connection with the registration or qualification of such Registrable Common Stock for offer and sale under the securities or blue sky laws of such jurisdictions within the United States as any Registering Stockholder or underwriter reasonably requests in writing and do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Registrable Common Stock covered by the applicable Registration Statement; provided, however, that the Company will not be required to qualify generally to do business in any jurisdiction where it is not then so qualified or to take any action which would subject it to general service of process or taxation in any such jurisdiction where it is not then so subject;
(i) cooperate with the Registering Stockholders and the managing underwriters, if any, to facilitate the timely preparation and delivery of certificates representing Registrable Common Stock to be sold pursuant to such Registration Statement and not bearing any restrictive legends, and enable such Registrable Common Stock to be in such denominations and registered in such names as the managing underwriters may request at least two Business Days prior to any sale of Registrable Common Stock to the underwriters;
(j) if any fact described in paragraph (c)(v) above exists, prepare a supplement or post-effective amendment to the applicable Registration Statement or the related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Common Stock being sold thereunder, such Prospectus will not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading;
(k) cause all Registrable Common Stock covered by the Registration Statement to be listed on each securities exchange on which similar securities issued by the Company are then listed;
(l) provide a CUSIP number for all Registrable Common Stock included in such Registration Statement, not later than the effective date of the applicable Registration Statement;
(m) make available for inspection by a representative of the Registering Stockholders the Registrable Common Stock being sold pursuant to such Registration Statement, any underwriter participating in any disposition pursuant to a Registration Statement, and any attorney or accountant retained by such Registering Stockholders or underwriter, all financial and other records, any pertinent corporate documents and properties of the Company reasonably requested by such representative, underwriter, attorney or accountant in connection with such Registration Statement; PROVIDED, HOWEVER, that any records, information or documents that are designated by the Company in writing as confidential shall be kept confidential by such persons or entities unless disclosure of such records, information or documents is required by court or administrative order;
(n) otherwise use his, her or its reasonable best efforts to comply
with all applicable rules and regulations of the Commission and relevant
state securities commissions, and make generally available to the
Registering Stockholders earning statements satisfying the provisions of
SECTION 10(a) of the Securities Act no later than forty-five (45) days after
the end of any 12-month period (or ninety (90) days, if such period is a
fiscal year) commencing at the end of any fiscal quarter in which
Registrable Common Stock of such Registering Stockholder is sold to
underwriters in an underwritten offering, or, if not sold to underwriters in
such an offering, beginning with the first month of the Company's first
fiscal quarter commencing after the effective date of a Registration
Statement, which statements shall cover said 12-month periods;
(o) furnish to each underwriter, if an underwritten offering, customary "comfort" letters from its independent auditors, legal opinions from counsel to the Company on customary matters, and such other certificates, instruments or other matters reasonably requested by the underwriters;
(p) cause the Company's executive officers, including its chief executive officer and chief financial officer, to be available to meet with potential investors and to participate in any "roadshow" requested by the underwriters and which in the underwriters' judgment is reasonably necessary or appropriate for the sale of the Registrable Common Stock; and
(q) enter into such agreements (including an underwriting agreement in form reasonably satisfactory to the Company) aid take all such other reasonable actions in connection with the sale of Registrable Common Stock
8.4 CONDITIONS TO STOCKHOLDER RIGHTS; INDEMNIFICATION BY STOCKHOLDER. It shall be a condition of each Registering Stockholder's rights hereunder to have Registrable Common Stock owned by it registered that:
(a) such Registering Stockholder shall cooperate with the Company in all reasonable respects by supplying information and executing documents relating to such Registering Stockholder or the securities of the Company owned by such Registering Stockholder in connection with such registration;
(b) such Registering Stockholder shall enter into such undertakings and take such other action relating to the conduct of the proposed offering which the Company or the underwriters may reasonably request as being necessary to ensure compliance with federal and state securities laws and the rules or other requirements of the NASD or otherwise to effectuate the offering; and
(c) such Registering Stockholder shall execute and deliver an agreement to indemnify and hold harmless the Company and each underwriter (as defined in the Securities Act), and each person or entity, if any, who controls such underwriter within the meaning of the Securities Act, against such losses, claims, damages or liabilities (including reimbursement for legal and other expenses) to which such underwriter or controlling person or entity may become subject under the Securities Act or otherwise, in such manner as is customary for registrations of the type then proposed and, in any event, at least equivalent in scope to indemnities given by the Company in connection with such registration, but only with respect to information furnished by such Registering Stockholder specifically for use in the Registration Statement or Prospectus in connection with such registration and with respect to such Registering Stockholder's failure to deliver Prospectuses as required under the Securities Act; but such
indemnification shall not extend to any amounts beyond the proceeds of the sale of the Securities received by such indemnitor.
8.5 INDEMNIFICATION BY COMPANY. In the event of any registration under the Securities Act of any Registrable Common Stock of Registering Stockholders pursuant to this SECTION 8.5, the Company shall execute and deliver an agreement to indemnify and hold harmless each Registering Stockholder and any underwriter disposing of such Registrable Common Stock and any underwriter in connection with such disposition against such losses, claims, damages or liabilities (including reimbursement for legal and other expenses) to which such Registering Stockholder may become subject under the Securities Act or otherwise, in such manner as is customary in underwriting agreements for registrations of the type then proposed.
SECTION 9 ADDITIONAL COMPANY EQUITY ISSUANCES TO APOLLO STOCKHOLDERS
Prior to a Qualified IPO, the Company shall not issue any Securities to any Apollo Stockholder unless the Company shall offer to each of the IMC Stockholders an opportunity to acquire the Securities, in an amount up to the Pre-Emptive Percentage of the total amount of such Securities to be issued, on the same terms and conditions as the Apollo Stockholders, PROVIDED that such opportunity must be offered to the IMC Stockholders no later than 30 days after the acquisition of any such Securities by any Apollo Stockholder and any IMC Stockholder must determine whether to participate within ten days of such offer (which determination may be conditioned upon the participation of any of the Apollo Stockholders); PROVIDED HOWEVER, during the period beginning on the date that the Apollo Stockholders acquire such Securities and ending on the earliest of the dates on which (A) the IMC Stockholders' right to participate lapses, (B) the IMC Stockholders purchase Securities following an election to participate, or (C) the IMC Stockholders notify the Company that they will not participate, the Company shall not (x) set a record date for payment of dividends, (y) seek stockholder approval for any matter (unless, taking into account the total amount of Securities that the IMC Stockholders are entitled to purchase if the IMC Stockholders elect to participate, the vote of the IMC Stockholders would not alter the outcome of the sought after approval and the act of voting or refraining from voting would not give rise to specific rights, including dissenters rights) or (z) enter into or effect, or agree to enter into or effect, a merger, consolidation, sale recapitalization, or similar transaction, unless, in any case contemplated by clauses (x), (y) and (z), the IMC Stockholders receive the same benefits and rights and are subject to the same obligations as if the IMC Stockholders had purchased the Securities on the same date as the Apollo Stockholders. Any Securities so acquired by the IMC Stockholders shall not be subject to the Clawback Rights under SECTION 2.4 AND 2.5.
SECTION 10 TRANSACTIONS WITH AFFILIATES AND OTHERS
(a) Prior to a Qualified 1P0, so long as the IMC Stockholders remain Stockholders of the Company, without the prior written consent of IMC Global, the Company shall not enter into any transaction with an Apollo Stockholder unless such transaction is on arms' length terms; PROVIDED, HOWEVER, that the following shall be deemed to be on arms' length terms: (A) any transaction authorized, based in part on a determination that such transaction is fair as to the Company as of the time of authorization, by a majority of the members of the Board of Directors who do not have a financial interest in such transaction within the meaning of the General Corporation Law of the State of Delaware, (B) any amendment or modification to the terms of the Preferred Stock or the Note Securities that treats all outstanding shares of Preferred Stock or all outstanding Note Securities similarly, (C) any agreements to be entered into by the Company regarding tax reporting on IRS Form 1099-DIV (or any successor form)
with respect to the Series A Preferred Stock, (D) the Management Consulting Agreement and the transactions and payments thereunder, and (E) any reasonable and customary fees, stock options, reasonable out-of-pocket expense reimbursements, coverage under directors and officers insurance and indemnification protection for officers and directors received by or covering any Apollo Stockholder.
(b) Prior to a Qualified IPO, so long as the IMC Stockholders remain Stockholders of the Company, without the prior written consent of WC Global, the Company shall not repurchase any shares of Apollo Preferred Stock from any Apollo Affiliate without offering to repurchase a pro rata amount of IMC Preferred Stock from the WC Stockholders.
(c) The Apollo Stockholders shall not enter into any refinancing agreement, amendment, modification or waiver ("AMENDMENT") in connection with the Senior Credit Documents (as such term is defined in the IMC Notes) or the Senior Subordinated Debt Documents (as such term is defined in the IMC Notes) with respect to (i) any redemption, repurchase or payment of dividends or any portion of the liquidation preference on the Preferred Stock, which Amendment treats the Preferred Stock held by the Apollo Stockholders in a manner disproportionate to the manner in which such Amendment treats the Preferred Stock held by the IMC Stockholders with respect to any such redemption, repurchase or payment; (ii) any redemption, repurchase or payment of interest or principal on the Note Securities, which Amendment treats the Note Securities held by the Apollo Stockholders in a manner disproportionate to the manner in which such Amendment treats the Notes Securities held by the IMC Stockholders with respect to any such redemption, repurchase or payment; or (iii) any redemption, repurchase or payment of interest or principal on the Note Securities, which Amendment treats the Note Securities held by the Apollo Stockholders in a manner disproportionate to the manner in which such Amendment treats the IMC Notes held by the IMC Stockholders, as maybe applicable.
SECTION 11 MISCELLANEOUS
11.1 TERMINATION. Notwithstanding any other provision contained herein, the rights and obligations of all Parties under SECTIONS 3 AND 4 shall terminate upon the date on which a Qualified IPO is consummated.
11.2 LEGENDS. Each certificate representing shares of Common Stock held by the Stockholders shall bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND SUCH LAWS OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREOF."
"THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER AND CERTAIN OTHER AGREEMENTS SET FORTH IN A STOCK RIGHTS AGREEMENT BETWEEN THE ISSUER AND THE INITIAL HOLDER HEREOF DATED AS OF NOVEMBER 28, 2001. A COPY OF SUCH AGREEMENT SHALL BE FURNISHED WITHOUT CHARGE BY THE ISSUER TO THE HOLDER HEREOF UPON WRITTEN REQUEST."
11.3 SUCCESSORS, ASSIGNS AND TRANSFEREES. This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective legal representatives, heirs, legatees, successors, and assigns and any other transferee of the Common Stock, Preferred Stock or IMC Notes and shall also apply to any Common Stock, Preferred Stock or IMC Notes acquired by Stockholders after the date hereof.
11.4 SPECIFIC PERFORMANCE. Each Party, in addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, shall be entitled to specific performance of each other Party's obligations under this Agreement. The Parties agree that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by any of them of the provisions of this Agreement and each hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate.
11.5 GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the internal laws, and not the law of conflicts, of the State of New York.
11.6 SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS STOCK RIGHTS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH PARTY HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS STOCK RIGHTS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
11.7 INTERPRETATION. The headings of the Sections contained in this Agreement are solely for the purpose of reference, are not part of the agreement of the Parties and shall not affect the meaning or interpretation of this Agreement.
11.8 REPRESENTATION. Apollo Management shall represent each of the Apollo Stockholders for the purposes of this Agreement, including with respect to any waivers, consent or notices and it has the requisite authority to represent each of the entities comprising the Apollo Stockholders. Any notice, including any Clawback Notice, given by Apollo Management shall be deemed to also have been given by the Apollo Investors or the Apollo Stockholders, as the case may be, and shall be binding on all of the Apollo Investors and Apollo Stockholders. IMC Global shall represent each of the IMC Stockholders for the purposes of this Agreement, including with respect to any waivers, consent or notices and it has the requisite authority to represent each of the entities comprising the IMC Stockholders.
11.9 NOTICES. All notices and other communications provided for or permitted hereunder shall be in writing and shall be deemed to have been duly given and received when delivered by overnight courier or hand delivery, when sent by telecopy, or five days after mailing if sent by registered or certified mail (return receipt requested) postage prepaid, to the Parties at the following addresses (or at such other
address for any Party as shall be specified by like notices, PROVIDED that notices of a change of address shall be effective only upon receipt thereof).
If to the Company, at:
Salt Holdings Corporation
8300 College Park Boulevard
Overland Park, Kansas 66210
Attention: Chief Executive Officer
With a copy to Apollo, at the address given below, and a
copy to:
Latham & Watkins
885 Third Avenue
New York, N.Y. 10022
Attention: Raymond Y. Lin
Facsimile: (212) 751-4864
If to Apollo, at:
Apollo Management, L.P.
1301 Avenue of the Americas
New York, NY 10019
Attention: Scott Kleinman
Facsimile: (212) 515-3232
With a copy to Latham & Watkins, at the address given above.
If to IMC Global Inc., to:
IMC Global Inc.
100 South Saunders Road, Suite 300
Lake Forest, IL 60045
Attention: General Counsel
Facsimile: (847) 739-1606
with a copy to:
Skadden Arps Slate Meagher & Flom LLP
4 Times Square
New York, N.Y. 10036
Attention: Stephen Arcano
Facsimile: (212) 735-2000
If to any other Stockholder, to the address set forth on the signature pages hereto.
11.10 RECAPITALIZATION, EXCHANGE, ETC. Affecting the Company's Equity Securities. The provisions of this Agreement shall apply, to the full extent set forth herein, with respect to any and all
Securities or any successor or assign of the Company (whether by merger, consolidation, sale of assets, conversion to a corporation or otherwise) that may be issued in respect of, in exchange for, or in substitution of, the Securities and shall be appropriately adjusted for any dividends, splits, reverse splits, combinations, recapitalizations, and the like occurring after the date hereof.
11.11 COUNTERPARTS. This Agreement maybe executed in two or more counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to constitute one and the same agreement.
11.12 SEVERABILITY. In the event that anyone or more of the provisions contained herein, or the application thereof in any circumstances, is held invalid, illegal, or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be in any way impaired thereby.
11.13 AMENDMENT. This Agreement maybe amended only by written agreement signed by each of the parties hereto. Notwithstanding the foregoing, at any time hereafter, any Persons acquiring shares of Common Stock in accordance with the terms hereof may be made parties hereto by executing a signature page in the form attached as EXHIBIT A hereto, which signature page shall be countersigned by the Company and shall be attached to this Agreement and become a part hereof without any further action of any other Party hereto.
IN WITNESS WHEREOF, the Parties have executed this Stock Rights Agreement as of the date first above written.
SALT HOLDINGS CORPORATION
Title
APOLLO MANAGEMENT V L.P.
YBR HOLDINGS LLC
Title
IMC GLOBAL INC.
Title
SCHEDULE A
Number of Shares Number of Shares
Name of Stockholder of Common Stock of Preferred Stock
-------------------- ----------------------- ------------------------
YBR Holdings LLC 5,600,000 - Management 59,000 - Management
Rollover Common Share Rollover Preferred Share
Number (as such term is Number (as such term is
defined in the Merger defined in the Merger
Agreement) Agreement)
|
EXHIBIT A
SIGNATURE PAGE
TO THE
STOCK RIGHTS AGREEMENT
By execution of this signature page, _______________________________ hereby agrees to become a party to, be bound by the obligations of and receive the benefits of that certain Stock Rights Agreement dated as of [___________], 2001 by and among Salt Holdings Corporation, a Delaware corporation, Apollo Management V L.P., a Delaware limited partnership, each of the stockholders of the Company listed on Schedule A attached thereto, IMC Global Inc., a Delaware corporation, and certain other parties named therein, as amended from time to time thereafter.
Title
Notice Address:
Accepted:
SALT HOLDINGS CORPORATION
EXHIBIT 10.14
MANAGEMENT CONSULTING AGREEMENT
This MANAGEMENT CONSULTING AGREEMENT ("AGREEMENT") is entered into as of November 28, 2001 by and between Salt Holdings Corporation, a Delaware corporation (the "COMPANY"), and Apollo Management V L.P., a Delaware limited partnership ("APOLLO").
RECITALS
WHEREAS, the Company and its subsidiaries desire to avail themselves of Apollo's expertise and consequently has requested Apollo to make such expertise available from time to time in rendering certain management consulting and advisory services related to the business and affairs of the Company and its respective subsidiaries and affiliates and the review and analysis of certain financial and other transactions.
WHEREAS, Apollo and the Company agree that it is in their respective best interests to enter into this Agreement whereby, for the consideration specified herein, Apollo has provided and shall provide such services as an independent consultant to the Company and its subsidiaries.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, and the mutual agreements set forth herein and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:
Section 1. RETENTION OF APOLLO. The Company hereby retains Apollo, and Apollo accepts such retention, upon the terms and conditions set forth in this Agreement.
Section 2. TERM. This Agreement shall commence on the date
hereof and, unless otherwise extended pursuant to the final sentence of this
Section 2, shall terminate on the tenth anniversary of the date hereof (the
"TERM"). Upon the fifth anniversary of the date hereof, and at the end of each
year thereafter (each of such fifth anniversary and the end of each year
thereafter being a "YEAR END"), the Term shall automatically be extended for an
additional year unless notice to the contrary is given by either party at least
30, but no more than 60, days prior to such Year End, as applicable. The
provisions of Sections 3(d), 5 and 7 through 13 shall survive the termination of
this Agreement.
Section 3. MANAGEMENT CONSULTING SERVICES.
(a) Apollo shall advise the Company and the Company's subsidiaries concerning such management matters that relate to proposed financial transactions, acquisitions and other senior management matters related to the business, administration and policies of the Company and its subsidiaries and affiliates, in each case as the Company shall reasonably and
specifically request by way of written notice to Apollo, which notice shall specify the services required of Apollo and shall include all background material necessary for Apollo to complete such services. Apollo shall devote such time to any such written request as Apollo shall deem, in its discretion, necessary. Such consulting services, in Apollo's discretion, shall be rendered in person or by telephone or other communication. Apollo shall have no obligation to the Company and its subsidiaries as to the manner and time of rendering its services hereunder, and the Company and its subsidiaries shall not have any right to dictate or direct the details of the services rendered hereunder.
(b) The Company acknowledges and agrees that Apollo (i) has structured the transactions contemplated by that certain Agreement and Plan of Merger (the "MERGER AGREEMENT"), dated as of October 13, 2001, by and among IMC Global, Inc., a Delaware corporation ("SELLER"), Salt Holdings Corporation, a Delaware corporation and a wholly owned subsidiary of Seller, on the one hand, and on the other hand, YBR Holdings LLC, a Delaware limited liability company ("PURCHASER") and YBR Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of Purchaser, (ii) has arranged for financing for the Company and (iii) has provided other services in connection with the transactions contemplated by the Merger Agreement. Apollo agrees to continue to provide services to the Company and its subsidiaries in connection with the consummation of the transactions contemplated by the Merger Agreement.
(c) Apollo shall perform all services to be provided hereunder as an independent contractor to the Company (or the Company's subsidiaries) and not as an employee, agent or representative of the Company. Apollo shall have no authority to act for or to bind the Company, without its prior written consent.
(d) This Agreement shall in no way prohibit Apollo or any of its partners or affiliates or any director, officer, partner or employee of Apollo or any of its partners or affiliates from engaging in other activities, whether or not competitive with any business of the Company or any of its respective subsidiaries or affiliates.
Section 4. COMPENSATION. As consideration for Apollo's agreement to render the services set forth in Section 3(a) of this Agreement and as compensation for any such services rendered by Apollo, the Company agrees to pay, or cause its subsidiaries to pay, to Apollo an annual fee of $1,000,000, payable in equal quarterly installments of $250,000 each on the first day of each fiscal quarter (or, if such date is not a business day, on the next business day thereafter).
As consideration for services rendered and Apollo's agreement to render services as set forth in Section 3(b), the Company agrees to pay, or cause its subsidiaries to pay, to Apollo a fee of $7,000,000, which shall be earned upon consummation of the transactions contemplated by the Merger Agreement.
Upon presentation by Apollo to the Company of such documentation as may be reasonably requested by the Company, the Company shall reimburse, or cause its subsidiaries to reimburse, Apollo for all out-of-pocket expenses, including, without limitation, legal fees and expenses, and other disbursements incurred by Apollo, its affiliates or any of its affiliates' directors, officers, employees or agents in the performance of Apollo's obligations hereunder,
whether incurred on, after or prior to the date hereof, including, without limitation, out-of-pocket expenses incurred in connection with the transactions contemplated by the Merger Agreement and each of the documents referred to therein.
Nothing in this Agreement shall have the effect of prohibiting Apollo or any of its affiliates from receiving from the Company or any of its subsidiaries or affiliates any other fees, including any fee payable pursuant to Section 6.
Section 5. INDEMNIFICATION. The Company agrees that it shall, or it shall cause its subsidiaries to, indemnify and hold harmless Apollo, its affiliates and its affiliates' directors, officers, employees and agents (collectively, the "INDEMNIFIED PERSONS") on demand from and against any and all liabilities, costs, expenses and disbursements (collectively, "Claims") of any kind with respect to or arising from this Agreement or the performance by any Indemnified Person of any services in connection herewith. Notwithstanding the foregoing provision, the Company shall not be liable for any Claim under this Section 5 arising from the willful misconduct of any Indemnified Person.
Section 6. OTHER SERVICES. If the Company or any of its subsidiaries shall determine that it is advisable for the Company or such subsidiaries to hire a financial advisor, consultant investment banker or any similar agent in connection with any merger, acquisition, disposition, recapitalization, issuance of securities, financing or any similar transaction, it shall notify Apollo of such determination in writing. Promptly thereafter, upon the request of Apollo, the parties shall negotiate in good faith to agree upon appropriate services, compensation and indemnification for the Company or such subsidiary to hire Apollo or its affiliates for such services. The Company and its subsidiaries may not hire any person, other than Apollo or its affiliates, for any services, unless all of the following conditions have been satisfied: (a) the parties are unable to agree after 30 days following receipt by Apollo of such written notice, (b) such other person has a reputation that is at least equal to the reputation of Apollo in respect of such services, (c) ten business days shall have elapsed after the Company or such subsidiary provides a written notice to Apollo of its intention to hire such other person, which notice shall identify such other person and shall describe in reasonable detail the nature of the services to be provided, the compensation to be paid and the indemnification to be provided (d) the compensation to be paid is not more than Apollo was willing to accept in the negotiations described above, and (e) the indemnification to be provided is not more favorable to the Company or the applicable subsidiary than the indemnification that Apollo was willing to accept in the negotiations described above. In the absence of an express agreement to the contrary, at the closing of any merger, acquisition or similar transaction, Apollo shall receive a fee equal to 1% of the aggregate enterprise value paid or provided by the Company (including the aggregate value of (x) equity securities, warrants, rights and options acquired or retained, (y) indebtedness acquired, assumed or refinanced and (z) any other consideration or compensation paid in connection with such transaction).
Section 7. NOTICES. All notices, requests, consents and other communications hereunder shall be in writing and shall be deemed sufficient if personally delivered, sent by nationally-recognized overnight courier, by telecopy, or by registered or certified mail, return receipt requested and postage prepaid, addressed as follows:
if to Apollo, to:
Apollo Management V L.P.
1301 Avenue of the Americas
38th Floor
New York, New York 10019
Attention: Scott Kleinman Telecopier: (212) 515-3232;
if to the Company:
Salt Holdings Corporation
8300 College Park Boulevard
Overland Park, Kansas 66210
Attention: Chief Executive Officer
or to such other address as the party to whom notice is to be given may have furnished to each other party in writing in accordance herewith. Any such notice or communication shall be deemed to have been received (a) in the case of personal delivery, on the date of such delivery, (b) in the case of nationally-recognized overnight courier, on the next business day after the date when sent, (c) in the case of telecopy transmission, when received, and (d) in the case of mailing, on the third business day following that on which the piece of mail containing such communication is posted.
Section 8. BENEFITS OF AGREEMENT. This Agreement shall bind and inure to the benefit of Apollo, the Company, the Company's subsidiaries, the Indemnified Persons and any successors to or assigns of Apollo and the Company; PROVIDED, HOWEVER, that other than any assignment to an affiliate of Apollo, this Agreement may not be assigned by either party hereto without the prior written consent of the other party, which consent will not be unreasonably withheld in the case of any assignment by Apollo. Upon Apollo's request, the Company shall cause its subsidiaries to become parties hereto directly in order to avail themselves of the services hereunder.
Section 9. GOVERNING LAW. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York (without giving effect to principles of conflicts of laws).
Section 10. HEADINGS. Section headings are used for convenience only and shall in no way affect the construction of this Agreement.
Section 11. ENTIRE AGREEMENT; AMENDMENTS. This Agreement contains the entire understanding of the parties with respect to its subject matter, and neither it nor any part of it may in any way be altered, amended, extended, waived, discharged or terminated except by a written agreement signed by each of the parties hereto.
Section 12. COUNTERPARTS. This Agreement may be executed in counterparts, and each such counterpart shall be deemed to be an original instrument, but all such counterparts together shall constitute but one agreement.
Section 13. WAIVERS. Any party to this Agreement may, by written notice to the other party, waive any provision of this Agreement. The waiver by any party of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach.
IN WITNESS WHEREOF, the parties have duly executed this Management Consulting Agreement as of the date first above written.
SALT HOLDINGS CORPORATION
Title:
APOLLO MANAGEMENT V L.P.
Title:
Exhibit 10.15
EXECUTION COPY
MASTER ASSIGNMENT AGREEMENT dated as of April
10, 2002 (this "MASTER ASSIGNMENT AGREEMENT"), among
COMPASS MINERALS GROUP, INC., a Delaware corporation
(the "US BORROWER"), the lenders party hereto and
JPMORGAN CHASE BANK, as administrative agent (in such
capacity, the "ADMINISTRATIVE AGENT") for the Existing
Lenders (as defined below).
A. Reference is made to the Credit Agreement dated as of November 28, 2001 (the "EXISTING CREDIT AGREEMENT"), among Salt Holdings Corporation ("HOLDINGS"), the US Borrower, Sifto Canada Inc. (the "CANADIAN BORROWER"), Salt Union Limited (the "UK BORROWER; together with the US Borrower and the Canadian Borrower, the "BORROWERS"), the lenders party thereto (the "EXISTING LENDERS"), the Administrative Agent, J.P. Morgan Bank Canada, as Canadian Agent, and Chase Manhattan International Limited, as UK Agent.
B. Reference is made to the Existing Credit Agreement, as amended and restated as of the date hereof (the "AMENDED AND RESTATED CREDIT AGREEMENT"), among Holdings, the Borrowers, the Continuing Lenders (as defined below), the New Term Lenders (as defined below), the Administrative Agent, J.P. Morgan Bank Canada, as Canadian Agent, and Chase Manhattan International Limited, as UK Agent.
C. Pursuant to the Existing Credit Agreement, the Existing Lenders and the Letter of Credit Issuers have extended, and have agreed to extend, credit to the Borrowers.
D. The parties hereto have agreed, upon the terms and subject to the conditions set forth or referred to herein, that the Decreasing Term Lenders (as defined below) shall sell and assign to the Increasing Term Lenders (as defined below), and the Increasing Term Lenders shall purchase and assume from the Decreasing Term Lenders, the interests in and to certain of the Decreasing Term Lenders' rights and obligations under the Existing Credit Agreement with respect to the Term Loans of the Decreasing Term Lenders.
E. Capitalized terms used and not otherwise defined herein shall have the meanings assigned to them in the Amended and Restated Credit Agreement.
F. Accordingly, in consideration of the mutual agreements herein contained and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, and subject to the conditions set forth herein, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS. As used herein, the following terms shall have the meanings herein specified unless the context otherwise requires:
"CONTINUING LENDERS" shall mean all Existing Lenders other than Departing Lenders.
"DECREASING TERM LENDERS" shall mean all Term Lenders with outstanding Term Loans under the Existing Credit Agreement that (A) are Departing Lenders or (B) consent to the amendment and restatement of the Existing Credit Agreement pursuant to the Amended and Restated Credit Agreement after reducing by an amount specified by such Term Lenders the aggregate principal amount of such Term Lenders' outstanding Term Loans by means of a combination of prepayments of such Term Lenders' outstanding Term Loans pursuant to the Permitted Transactions (as defined in Section 6 below) and assignments of a portion of such Term Lenders' outstanding Term Loans to one or more Increasing Term Lenders pursuant to this Master Assignment Agreement, as specified on Schedule I hereto.
"DEPARTING LENDERS" shall mean all Term Lenders with outstanding Term Loans under the Existing Credit Agreement that do not consent to the amendment and restatement of the Existing Credit Agreement pursuant to the Amended and Restated Credit Agreement.
"INCREASING TERM LENDERS" shall mean the lenders, which may include Existing Lenders, identified on Schedule I hereto as "Increasing Term Lenders".
SECTION 2. MASTER ASSIGNMENT DATE. (a) The transactions provided for in Sections 3, 4 and 5 hereof shall be consummated at a closing to be held on the Master Assignment Date (as defined below) at the offices of Latham & Watkins, New York City, New York, or at such other time and place as the parties shall agree.
(b) The "MASTER ASSIGNMENT DATE" shall be April 10, 2002, PROVIDED that all the conditions set forth or referred to in Section 6 hereof shall have been satisfied.
SECTION 3. DELIVERY OF OLD TERM NOTES. On or prior to the Master Assignment Date, each Decreasing Term Lender, if any, and each Increasing Term Lender, if any, holding a promissory note evidencing Term Loans shall deliver to the Administrative Agent, for delivery to and cancelation by the US Borrower as provided below, all such notes then held by such Decreasing Term Lender and Increasing Term Lender (collectively, the "OLD TERM NOTES"). Each Decreasing Term Lender and Increasing Term Lender holding an Old Term Note that fails so to deliver any of its Old Term Notes hereby agrees to indemnify the US Borrower for any loss, cost or expense resulting from such failure. Upon the effectiveness of the Master Assignment Agreement, the Administrative Agent shall release and deliver the Old Term Notes to the US Borrower for cancelation. Upon cancelation of the Old Term Notes, new Term Notes will be issued, at the US Borrower's expense, to any Decreasing Term Lender that is not a Departing Lender and any Increasing Term Lender (in the case of each such Decreasing Term Lender and Increasing Term Lender that did not hold any Old Term Notes, if requested by such Decreasing Term Lender or Increasing Term Lender), to reflect the principal amount of such Decreasing Term Lender's or Increasing Term Lender's outstanding Term Loans (after giving effect to the assignments of the Assigned Interests (as defined below) pursuant to Section 5 below).
SECTION 4. FEES AND EXPENSES. On the Master Assignment Date, the US Borrower shall pay by wire transfer of immediately available funds not later than 12:00 Noon (New York City time) to the Administrative Agent (a) for the account of each Decreasing Term Lender, all amounts payable to such Decreasing Term Lender under the Existing Credit Agreement and (b) for the account of each applicable payee, all reasonable fees and expenses required (with respect to the Term Loans assigned by each Decreasing Term Lender pursuant to Section 5 below) to be paid or reimbursed by any Credit Party under or in connection with this Master Assignment Agreement, the Amended and Restated Credit Agreement or any other Credit Document and (in the case of expenses to be reimbursed, including reasonable fees, charges and disbursements of counsel) invoiced in writing to any Credit Party on or prior to the Master Assignment Date.
SECTION 5. ASSIGNMENTS. (a) On the Master Assignment Date, subject to the terms and conditions set forth herein, each of the Decreasing Term Lenders shall be deemed to have sold and assigned to the Increasing Term Lenders, and each of the Increasing Term Lenders shall be deemed to have purchased and assumed from the Decreasing Term Lenders, at the principal amount thereof plus all unpaid interest accrued to but excluding the Master Assignment Date in respect thereof, such interests, rights and obligations with respect to the Term Loans of the Decreasing Term Lenders outstanding on the Master Assignment Date (such interests, rights and obligations to be referred to herein as the "ASSIGNED INTERESTS") as shall be necessary in order that, after giving effect to all such sales and assignments and purchases and assumptions and the prepayment of Term Loans pursuant to the Permitted Transactions, (i) the Decreasing Term Lenders will hold the principal amount of Term Loans set forth under the heading "Decreasing Term Lenders" in the second column on Schedule I hereto, (ii) the Increasing Term Lenders will hold the principal amount of Term Loans set forth under the heading "Increasing Term Lenders" in the second column on Schedule I hereto and (iii) the Term Lenders that are neither Decreasing Term Lenders nor Increasing Term Lenders (the "UNCHANGED TERM LENDERS") will hold the principal amount of Term Loans set forth under the heading "Unchanged Term Lenders" in the second column on Schedule I hereto. Such sales and assignments and purchases and assumptions shall be without recourse or representation or warranty, except that each Decreasing Term Lender shall be deemed to have represented and warranted that it is the legal and beneficial owner of the interests assigned by it hereunder free and clear of any adverse claim. The Decreasing Term Lenders (a) make no representation or warranty and assume no responsibility with respect to any statements, warranties or representations made in or in connection with the Existing Credit Agreement or the other Credit Documents or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Existing Credit Agreement or the other Credit Documents or any other instrument or document furnished pursuant thereto and (b) make no representation or warranty and assume no responsibility with respect to the financial condition of Holdings or any of its Subsidiaries or the performance or observance by Holdings or any of its Subsidiaries of any of its obligations under the Existing Credit Agreement or the other Credit Documents or any other instrument or document furnished pursuant thereto.
(b) On the Master Assignment Date, subject to the terms and conditions set forth herein, (i) each Increasing Term Lender purchasing and assuming the Assigned Interests pursuant to paragraph (a) above shall pay the purchase price for the Assigned Interests purchased by it pursuant to such paragraph (a) by wire transfer of immediately available funds to the Administrative Agent not later than 12:00 Noon (New York City time) and (ii) the Administrative Agent shall pay to each Decreasing Term Lender selling and assigning the Assigned Interests pursuant to paragraph (a) above, out of the amounts received by the Administrative Agent pursuant to clause (i) of this paragraph (b) and pursuant to Section 4 hereof, the purchase price for the Assigned Interests assigned by such Decreasing Term Lender pursuant to such paragraph (a) and the other amounts then owed to such Decreasing Term Lender under the Existing Credit Agreement (with respect to the Term Loans assigned by such Decreasing Term Lender pursuant to this Section 5) by wire transfer of immediately available funds to the account designated by such Decreasing Term Lender to the Administrative Agent not later than 5:00 p.m. (New York City time); PROVIDED, HOWEVER that the execution, delivery or effectiveness of this Master Assignment Agreement shall not affect the US Borrower's obligations accrued in respect of any principal, interest, fees or other amounts under the Existing Credit Agreement or discharge or release the Lien or priority of any pledge agreement or any other security therefor.
(c) Each Increasing Term Lender hereby (i) represents and warrants that it is duly authorized to enter into and perform the terms of this Master Assignment Agreement, (ii) confirms that it has received a copy of the Amended and Restated Credit Agreement and the other Credit Documents, together with copies of the financial statements referred to therein and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Master Assignment Agreement, (iii) agrees that it will, independently and without reliance upon any Agent, the Decreasing Term Lenders or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Amended and Restated Credit Agreement, (iv) appoints and authorizes the Administrative Agent and the Collateral Agent to take such action as agent on its behalf and to exercise such powers under the Amended and Restated Credit Agreement and the other Credit Documents as are delegated to the Administrative Agent and the Collateral Agent by the terms thereof, together with such powers as are reasonable and incidental thereto, (v) confirms that it is an Eligible Transferee, (vi) agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Amended and Restated Credit Agreement are required to be performed by it as a Term Lender, and (vii) agrees to deliver to the Administrative Agent on or prior to the Master Assignment Date the forms described in Section 10.04(b) of the Amended and Restated Credit Agreement (to the extent required by such Section).
(d) Concurrently with the sales and assignments and purchases and assumptions contemplated by paragraphs (a) and (b) of this Section 5, the Decreasing Term Lenders shall cease to be parties to the Existing Credit Agreement and shall be released from all further obligations thereunder and shall have no further rights to or interest in any of the Collateral, except to the extent that such Decreasing Term Lenders continue to be Lenders under the Amended and Restated Credit Agreement; PROVIDED, HOWEVER, that the Decreasing Term Lenders shall continue to be entitled to the benefits of all expense reimbursement (until paid in full) and indemnity provisions contained in the Existing Credit Agreement as in effect immediately prior to the Master Assignment Date and shall continue to be bound by Section 10.14 of the Existing Credit Agreement as in effect at such time.
(e) Each of the parties hereto hereby consents to the sales, assignments, purchases and assumptions provided for in paragraphs (a) and (b) above, notwithstanding any failure to comply with the requirement of Section 10.04(b) of the Existing Credit Agreement for the execution of an Assignment and Assumption Agreement, and agrees that each Increasing Term Lender shall be a party to the Amended and Restated Credit Agreement and, to the extent of the interests purchased by such Increasing Term Lender pursuant to such paragraphs or held by such Increasing Term Lender prior to the Master Assignment Date, shall have the rights and obligations of a Term Lender under the Amended and Restated Credit Agreement.
(f) If the Master Assignment Date shall not occur on the date specified therefor pursuant hereto, the US Borrower shall indemnify each Lender for any loss or expense incurred by such Lender as a result of the transactions to have been consummated by such Lender on such proposed Master Assignment Date (except that the US Borrower shall not be required so to indemnify such Lender if the Master Assignment Date shall not occur due to the failure of such Lender to comply with its obligations hereunder), in each case determined as set forth in Section 2.17 of the Amended and Restated Credit Agreement in respect of any failure to borrow or prepay any Term Loan (it being understood and agreed that the nonoccurrence of the sales and assignments and purchases and assumptions contemplated by paragraphs (a) and (b) of this Section shall be treated for purposes of such Section 2.17 as the failure by the US Borrower to repay the Term Loans of the Decreasing Term Lenders and to borrow from the Increasing Term Lenders).
(g) The prepayment of Term Loans pursuant to the Permitted Transactions shall be allocated among the Term Lenders with outstanding Term Loans under the Existing Credit Agreement so as to achieve the result described in the first sentence of paragraph (a) of this Section.
SECTION 6. CONDITIONS TO EFFECTIVENESS. This Master Assignment Agreement shall be effective as of the Master Assignment Date when the following conditions precedent are satisfied:
(a) The Administrative Agent shall have received duly executed counterparts of this Master Assignment Agreement that, when taken together, bear the signatures of the US Borrower, the Increasing Term Lenders and the Decreasing Term Lenders that are not Departing Lenders.
(b) The Administrative Agent shall have received duly executed counterparts of the Amended and Restated Credit Agreement that, when taken together, bear the signatures of Holdings, the Borrowers, the Required Lenders and each Term Lender (after giving effect to the assignments of the Assigned Interests pursuant to Section 5 hereof), and the Amended and Restated Credit Agreement shall have become effective simultaneously with or immediately after the assignment of the Assigned Interests hereunder on the Master Assignment Date.
(c) Prior to or simultaneously with the assignment of the
Assigned Interests hereunder on the Master Assignment Date, pursuant
to Section 7.04(p) of the Existing Credit Agreement as amended and
restated by the Amendment, the US Borrower shall have (a) issued at
least $75,000,000 in aggregate principal amount of Additional Senior
Subordinated Notes for gross cash proceeds (prior to deduction of
underwriting discounts and commissions) of at least $75,000,000 and
(b) used $74,437,500 of Net Cash Proceeds from the issuance of such
Additional Senior Subordinated Notes to prepay the Term Loans
(together, the "PERMITTED TRANSACTIONS").
(d) (i) The representations and warranties of each Credit Party set forth in the Credit Documents shall have been true and correct in all material respects on and as of the Master Assignment Date with the same effect as though made on and as of the Master Assignment Date, except to the extent that such representations and warranties expressly relate to an earlier date, in which case such representations and warranties shall have been, to such extent, true and correct in all material respects as of such earlier date and (ii) at the time of and immediately after giving effect to the transactions contemplated by this Master Assignment Agreement, no Default or Event of Default shall have occurred and be continuing, and the Administrative Agent shall have received a certificate, dated the Master Assignment Date and signed by an Authorized Officer of the US Borrower, to the effect of clauses (i) and (ii) of this sentence.
(e) The Administrative Agent shall have received all reasonable fees and expenses required to be paid or reimbursed by any Credit Party under or in connection with this Master Assignment Agreement, the Amended and Restated Credit Agreement or any other Credit Document and (in the case of expenses to be reimbursed, including reasonable fees, charges and disbursements of counsel) invoiced in writing to any Credit Party on or prior to the Master Assignment Date.
SECTION 7. CONSENTS. Each Departing Lender hereby shall be deemed to have expressly consented to the consummation of the transactions set forth in Sections 3, 4 and 5 of this Master Assignment Agreement.
SECTION 8. REPRESENTATIONS AND WARRANTIES. The US Borrower hereby represents and warrants to the Administrative Agent, the Increasing Term Lenders and the Decreasing Term Lenders that are not Departing Lenders that:
(a) This Master Assignment Agreement has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law;
(b) After giving effect to the Amended and Restated Credit Agreement, the representations and warranties set forth in the Credit Documents are true and correct in all material respects on and as of the date hereof with the same effect as though made on and as of the date hereof, except to the extent such representations and warranties expressly relate to an earlier date, in which case such representations and warranties shall be true and correct in all material respects as of such earlier date; and
(c) After giving effect to the Amended and Restated Credit Agreement, no Default or Event of Default shall have occurred and be continuing.
SECTION 9. EFFECT OF MASTER ASSIGNMENT AGREEMENT. Except as expressly set forth in this Master Assignment Agreement, this Master Assignment Agreement shall not by implication or otherwise limit, impair, constitute a waiver of, or otherwise affect the rights and remedies of the Existing Lenders, the Increasing Term Lenders, the Letter of Credit Issuer, the Administrative Agent, Holdings or the Borrowers under the Amended and Restated Credit Agreement or any other Credit Document, and shall not alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Existing Credit Agreement or any other Credit Document, all of which are ratified and affirmed in all respects and continue in full force and effect. Nothing herein shall be deemed to entitle Holdings or the Borrowers to a consent to, or a waiver, amendment, modification or other change of, any of the terms, conditions, obligations, covenants or agreements contained in the Amended and Restated Credit Agreement or any other Credit Document in similar or different circumstances.
SECTION 10. EXPENSES. The US Borrower agrees to pay the reasonable out-of-pocket costs and expenses incurred by the Administrative Agent in connection with the preparation of this Master Assignment Agreement (whether or not the transactions hereby contemplated shall be consummated), including the reasonable fees, charges and disbursements of Cravath, Swaine & Moore, counsel for the Administrative Agent. The provisions of this Section 10 shall survive and remain operative and in full force and effect regardless of whether or not the transactions contemplated hereby are consummated.
SECTION 11. APPLICABLE LAW. THIS MASTER ASSIGNMENT AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 12. NOTICES. All notices hereunder shall be given in accordance with the provisions of Section 10.03 of the Amended and Restated Credit Agreement.
SECTION 13. COUNTERPARTS. This Master Assignment Agreement may be executed by one or more of the parties to this Master Assignment Agreement on any number of separate counterparts (including by facsimile transmission), and all of said counterparts taken together shall be deemed to constitute one and the same instrument, and shall become effective as provided in Section 6 hereof.
SECTION 14. HEADINGS. The headings of this Master Assignment Agreement are for purposes of reference only and shall not limit or otherwise affect the meaning hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Master Assignment Agreement to be duly executed by their duly authorized officers, all as of the date and year first above written.
COMPASS MINERALS GROUP, INC.,
Title:
JPMORGAN CHASE BANK, as
Administrative Agent,
Title:
SIGNATURE PAGE OF
INCREASING TERM LENDERS
TO THE MASTER
ASSIGNMENT AGREEMENT
DATED AS OF APRIL 10, 2002
Name of Institution
JP Morgan Chase Bank
Title:
Name of Institution
Bankers Trust Company
Title:
Name of Institution
Natexis Banques Populaires
Title:
Name of Institution
Pinehurst Trading, Inc.
Title:
Name of Institution
Harbour Town Funding LLC
Title:
SIGNATURE PAGE OF
INCREASING TERM LENDERS
TO THE MASTER
ASSIGNMENT AGREEMENT
DATED AS OF APRIL 10, 2002
Name of Institution
Black Diamond International Funding, LTD.
Title:
Name of Institution
Blackrock Senior Loan Trust
Title:
Name of Institution
Carlyle High Yield Partners III, Ltd.
Title:
Name of Institution
Jupiter Funding Trust
Title:
Name of Institution
Rosemont CLO, Ltd.
By: Deerfield Capital Management LLC as its
Collateral Manager
Title:
SIGNATURE PAGE OF
INCREASING TERM LENDERS
TO THE MASTER
ASSIGNMENT AGREEMENT
DATED AS OF APRIL 10, 2002
Name of Institution
KZH Waterside LLC
Title:
Name of Institution
Nemean CLO, Ltd.
By: ING Capital Advisors LLC, as Investment
Manager
Title:
Name of Institution
Oryx CLO, Ltd.
By: ING Capital Advisors LLC, as Collateral
Manager
Title:
Name of Institution
Katonah I, Ltd.
Title:
Name of Institution
Katonah II, Ltd.
Title:
SIGNATURE PAGE OF
INCREASING TERM LENDERS
TO THE MASTER
ASSIGNMENT AGREEMENT
DATED AS OF APRIL 10, 2002
Name of Institution
Katonah III, Ltd.
Title:
Name of Institution
ELF Funding Trust III
By: New York Life Investment Management, LLC,
as Attorney-in-fact
Title:
Name of Institution
Oak Hill Credit Partners I, Limited
By: Oak Hill CLO Management, LLC as
Investment Manager
Title:
Name of Institution
Oak Hill Credit Partners II, Limited
By: Oak Hill CLO Management II, LLC as
Investment Manager
Title:
Name of Institution
Delano Campany
By Pacific Investment Management Company LLC,
as its Investment Advisor
Title:
SIGNATURE PAGE OF
INCREASING TERM LENDERS
TO THE MASTER
ASSIGNMENT AGREEMENT
DATED AS OF APRIL 10, 2002
Name of Institution
Jissekikun Funding, Ltd.
By Pacific Investment Management Company LLC,
as its Investment Advisor
Title:
Name of Institution
PPM Shadow Creek Funding LLC
Title:
Name of Institution
Travelers Corporate Loan Fund Inc.
By Travelers Asset Management International
Company, LLC
Title:
Name of Institution
Columbus Loan Funding Ltd.
By Travelers Asset Management International
Company, LLC
Title:
Name of Institution
Credit Lyonnais New York Branch
Title:
SIGNATURE PAGE OF
DECREASING TERM LENDERS (OTHER THAN
DEPARTING LENDERS) TO THE MASTER
ASSIGNMENT AGREEMENT
DATED AS OF APRIL 10, 2002
Name of Institution
Fortis Capital Corp.
Title:
Name of Institution
Nationwide Mutual Insurance Company
Title:
Name of Institution
Nationwide Life Insurance Company
Title:
Name of Institution
General Electric Capital Corporation
Title:
Name of Institution
AIB Debt Management Ltd.
Title:
SIGNATURE PAGE OF
DECREASING TERM LENDERS (OTHER THAN
DEPARTING LENDERS) TO THE MASTER
ASSIGNMENT AGREEMENT
DATED AS OF APRIL 10, 2002
Name of Institution
Protective Life Insurance Company
Title:
Name of Institution
The Sumitomo Trust & Banking Co., Ltd.
New York Branch
Title:
Name of Institution
Allstate Life Insurance Company
Title:
Name of Institution
AIMCO CLO Series 2001-A
Title:
Name of Institution
Centurion CDO II, Ltd.
By: American Express Asset Management Group
Inc. as Collateral Manager
Title:
SIGNATURE PAGE OF
DECREASING TERM LENDERS (OTHER THAN
DEPARTING LENDERS) TO THE MASTER
ASSIGNMENT AGREEMENT
DATED AS OF APRIL 10, 2002
Name of Institution
SEQUILS Centurion V, Ltd.
American Express Asset Management Group Inc.
as Collateral Manager
Title:
Name of Institution
KZH Sterling LLC
Title:
Name of Institution
KZH Cypress Tree-1 LLC
Title:
Name of Institution
ARES III CLO Ltd.
By ARES CLO Management LLC, Investment
Manager
Title:
Name of Institution
ARES IV CLO Ltd.
By: ARES CLO Management IV, LP, Investment
Manager
By: ARES CLO GP IV, LLC, its Managing Member
Title:
SIGNATURE PAGE OF
DECREASING TERM LENDERS (OTHER THAN
DEPARTING LENDERS) TO THE MASTER
ASSIGNMENT AGREEMENT
DATED AS OF APRIL 10, 2002
Name of Institution
ARES V CLO Ltd.
By: ARES CLO Management V, LP, Investment
Manager
By: ARES CLO GP V, LLC, its Managing Member
Title:
Name of Institution
Sankaty Advisors, LLC as Collateral Manager
for Race Point CLO, Limited, as Term Lender
Title:
Name of Institution
Sankaty High Yield Partners III, L.P
Title:
Name of Institution
Caisse de Depot et Placement du Quebec
Title:
Name of Institution
Denali Capital LLC, managing member of DC
Funding Partners LLC, portfolio manager for
DENALI CAPITAL CLO I LTD.
Title:
SIGNATURE PAGE OF
DECREASING TERM LENDERS (OTHER THAN
DEPARTING LENDERS) TO THE MASTER
ASSIGNMENT AGREEMENT
DATED AS OF APRIL 10, 2002
Name of Institution
Constantinus Eaton Vance CDO V, Ltd.
By: Eaton Vance Management as Investment
Advisor
Title:
Name of Institution
Eaton Vance CDO III, Ltd.
By: Eaton Vance Management as Investment
Advisor
Title:
Name of Institution
Eaton Vance CDO IV. Ltd.
By: Eaton Vance Management as Investment
Advisor
Title:
Name of Institution
Eaton Vance Institutional Senior Loan Fund
By: Easton Vance Management as Investment
Advisor
Title:
Name of Institution
Eaton Vance Senior Income Trust
By: Eaton Vance Management as Investment
Advisor
Title:
SIGNATURE PAGE OF
DECREASING TERM LENDERS (OTHER THAN
DEPARTING LENDERS) TO THE MASTER
ASSIGNMENT AGREEMENT
DATED AS OF APRIL 10, 2002
Name of Institution
Grayson & CO.
By: Boston Management and Research as
Investment Advisor
Title:
Name of Institution
Oxford Strategic Income Fund
By: Eaton Vance Management
as Investment Advisor
Title:
Name of Institution
Senior Debt Portfolio
By: Boston Management and Research
as Investment Advisor
Title:
Name of Institution
Ballyrock CDO I Limited
By: Ballyrock Investment Advisors LLC, as
Collateral Manager
Title:
Name of Institution
Tryon CLO Ltd. 2000-1
Title:
SIGNATURE PAGE OF
DECREASING TERM LENDERS (OTHER THAN
DEPARTING LENDERS) TO THE MASTER
ASSIGNMENT AGREEMENT
DATED AS OF APRIL 10, 2002
Name of Institution
APEX (IDM) CDO I, Ltd.
Title:
Name of Institution
Riviera Funding LLC
Title:
Name of Institution
AIM Floating Rate Fund
By: INVESCO Senior Secured Management, Inc.
As Attorney in fact
Title:
Name of Institution
AMARA-1 FINANCE LTD.
By: INVESCO Senior Secured Management, Inc.
As Sub-advisor
Title:
Name of Institution
AVALON CAPITAL LTD.
By: INVESCO Senior Secured Management, Inc.
As Portfolio Advisor
Title:
SIGNATURE PAGE OF
DECREASING TERM LENDERS (OTHER THAN
DEPARTING LENDERS) TO THE MASTER
ASSIGNMENT AGREEMENT
DATED AS OF APRIL 10, 2002
Name of Institution
AVALON CAPITAL LTD. 2
By: INVESCO Senior Secured Management, Inc.
As Portfolio Advisor
Title:
Name of Institution
CERES II FINANCE LTD.
By: INVESCO Senior Secured Management, Inc.
As Sub-Managing Agent (Financial)
Title:
Name of Institution
CHARTER VIEW PORTFOLIO
By: INVESCO Senior Secured Management, Inc.
As Investment Advisor
Title:
Name of Institution
DIVERSIFIED CREDIT PORTFOLIO LTD.
By: INVESCO Senior Secured Management, Inc.
as Investment Advisor
Title:
Name of Institution
OASIS COLLATERALIZED HIGH INCOME PORTFOLIOS-1
LTD.
By: INVESCO Senior Secured Management, Inc.
As Subadvisor
Title:
SIGNATURE PAGE OF
DECREASING TERM LENDERS (OTHER THAN
DEPARTING LENDERS) TO THE MASTER
ASSIGNMENT AGREEMENT
DATED AS OF APRIL 10, 2002
Name of Institution
SEQUILS-LIBERTY, LTD.
By: INVESCO Senior Secured Management, Inc.
As Collateral Manager
Title:
Name of Institution
Metropolitan Life Insurance Company
Title:
Name of Institution
OAK HILL SECURITIES FUND, LP
By: Oak Hill Securities GenPar, LP
Its General Partner
By: Oak Hill Securities MGP, Inc.
Its General Partner
Title:
Name of Institution
OAK HILL SECURITIES FUND, LP
By: Oak Hill Securities GenPar II, LP
Its General Partner
By: Oak Hill Securities MGP II, Inc.
Its General Partner
Title:
Name of Institution
CAPTIVA III Finance, LTD.
as advised by Pacific Investment Management
Company LLC
Title:
SIGNATURE PAGE OF
DECREASING TERM LENDERS (OTHER THAN
DEPARTING LENDERS) TO THE MASTER
ASSIGNMENT AGREEMENT
DATED AS OF APRIL 10, 2002
Name of Institution
CAPTIVA IV FINANCE, LTD.,
as advised by Pacific Investment Management
Company LLC
Title:
Name of Institution
SEQUILS-MAGNUM, LTD.,
By: Pacific Investment Management Company
LLC, as its Investment Advisor
Title:
Name of Institution
Dryden Leverage Loan CDO 2002-II
By: Prudential Investment Management, Inc.
its attorney in fact.
Title:
Name of Institution
Putnam Diversified Income Trust
Title:
Name of Institution
TCW SELECT LOAN FUND, LIMITED
By: TWC Advisors, Inc. as its Collateral
Manager
Title:
SIGNATURE PAGE OF
DEPARTING LENDERS TO THE MASTER
ASSIGNMENT AGREEMENT DATED AS OF
APRIL 10, 2002
Acknowledged and Agreed Solely
as to Sections 3, 4, 5 and 6:
Name of Institution
New Alliance Global CDO, Limited
By: Alliance Capital Management L.P., as
Sub-advisor
By: Alliance Capital Management Corporation,
as General Partner
Title:
Acknowledged and Agreed Solely
as to Sections 3, 4, 5 and 6:
Name of Institution
HARBOUR TOWN FUNDING TRUST
Title:
SIGNATURE PAGE OF
DEPARTING LENDERS TO THE MASTER
ASSIGNMENT AGREEMENT DATED AS OF
APRIL 10, 2002
Acknowledged and Agreed Solely
as to Sections 3, 4, 5 and 6:
Name of Institution
Archimedes Funding IV (Cayman), Ltd.
By: ING Capital Advisors LLC, as
Collateral Manager
Title:
Acknowledged and Agreed Solely
as to Sections 3, 4, 5 and 6:
Name of Institution
Endurance CLO I, Ltd.
c/o ING Capital Advisors LLC, as Portfolio
Manager
Title:
Acknowledged and Agreed Solely
as to Sections 3, 4, 5 and 6:
Name of Institution
KZH ING-3 LLC
Title:
SIGNATURE PAGE OF
DEPARTING LENDERS TO THE MASTER
ASSIGNMENT AGREEMENT DATED AS OF
APRIL 10, 2002
Acknowledged and Agreed Solely
as to Sections 3, 4, 5 and 6:
Name of Institution
Sequils-ING I (HBDGM), Ltd.
By: ING Capital Advisors LLC, as Collateral
Manager
Title:
Acknowledged and Agreed Solely
as to Sections 3, 4, 5 and 6:
Name of Institution
SKM - LIBERTY VIEW CBO I, LTD.
Title:
Acknowledged and Agreed Solely
as to Sections 3, 4, 5 and 6:
Name of Institution
Longhorn CDO II, LTD.
By: Merrill Lynch Investment Managers, L.P.
as Investment Advisor
Title:
Acknowledged and Agreed Solely
as to Sections 3, 4, 5 and 6:
Name of Institution
Longhorn CDO (Cayman) LTD
By: Merrill Lynch Investment Managers, L.P.
as Investment Advisor
Title:
Acknowledged and Agreed Solely
as to Sections 3, 4, 5 and 6:
Name of Institution
OCTAGON INVESTMENT PARTNERS II, LLC
By: Octagon Credit Investors, LLC
as sub-investment manager
Title:
SIGNATURE PAGE OF
DEPARTING LENDERS TO THE MASTER
ASSIGNMENT AGREEMENT DATED AS OF
APRIL 10, 2002
Acknowledged and Agreed Solely
as to Sections 3, 4, 5 and 6:
Name of Institution
OCTAGON INVESTMENT PARTNERS III, LTD.
By: Octagon Credit Investors, LLC as
Portfolio Manager
Title:
Acknowledged and Agreed Solely
as to Sections 3, 4, 5 and 6:
Name of Institution
OCTAGON INVESTMENT PARTNERS IV, LTD.
By: Octagon Credit Investors, LLC as
collateral manager
Title:
Acknowledged and Agreed Solely
as to Sections 3, 4, 5 and 6:
Name of Institution
PPM SHADOW CREEK FUNDING TRUST
Title:
Acknowledged and Agreed Solely
as to Sections 3, 4, 5 and 6:
Name of Institution
PPM SPYGLASS FUNDING TRUST
Title:
Acknowledged and Agreed Solely
as to Sections 3, 4, 5 and 6:
Name of Institution
NORSE CBO, LTD.
By: Regiment Capital Management, LLC
as its Investment Advisor
By: Regiment Capital Advisors, LLC its
Manager and pursuant to delegated authority
Title:
SCHEDULE I
TERM LENDERS AND TERM LOANS
DECREASING TERM LENDERS
Principal Amount of Term Loans
Name of Institution After Assignment of Assigned Interests
------------------- --------------------------------------
Allied Irish Bank $ 5,000,000.00
Credit Lyonnais $ 8,000,000.00
Fortis $ 5,000,000.00
General Electric Capital Corporation II $ 3,000,000.00
Nationwide Life Insurance Co. $ 2,333,333.33
Nationwide Mutual Insurance Company $ 4,666,666.67
Sumitomo $ 3,000,000.00
AIMCO CLO Series 2001-A $ 1,666,666.67
Allstate Life Insurance Company $ 2,333,333.33
Centurion CDO II, Ltd. $ 750,000.00
KZH Cypress Tree-1 LLC $ 750,000.00
KZH Sterling LLC $ 750,000.00
SEQUILS Centurion V Ltd. $ 750,000.00
ARES III CLO Ltd. $ 2,400,000.00
ARES IV CLO Ltd. $ 2,400,000.00
ARES V CLO Ltd. $ 3,200,000.00
Caisse de Depot et Placement du Quebec $ 3,500,000.00
Protective Life Insurance Company $ 2,500,000.00
Denali Capital CLO I, Ltd. $ 3,500,000.00
Costantinus Eaton Vance CDO V Ltd. $ 1,597,222.22
Eaton Vance CDO III, Ltd. $ 958,333.33
Eaton Vance CDO IV, Ltd. $ 1,277,777.78
Eaton Vance Inst. Senior Loan Fund $ 1,277,777.78
Eaton Vance Senor Income Trust $ 1,597,222.22
Grayson & Co. $ 3,194,444.44
Oxford Strategic Income Fund $ 319,444.45
Senior Debt Portfolio $ 1,277,777.78
Fidelity Advisor Floating Rate High Income Fund $ 750,000.00
Ballyrock CDO I Limited $ 2,250,000.00
Emerald Orchard Limited $ 3,500,000.00
Apex (IDM) CDO I, Ltd. $ 1,500,000.00
Tryon CLO Ltd. 2000-1 $ 1,500,000.00
Riviera Funding LLC $ 3,500,000.00
AIM Floating Rate Fund $ 571,428.58
AMARA-1 Finance $ 380,952.39
Avalon Capital Ltd. $ 952,380.95
|
Avalon Capital Ltd. II $ 1,333,333.33 Ceres II Finance $ 571,428.57 Charter View Portfolio $ 1,714,285.71 Diversified Credit Portfolio $ 380,952.38 Oasis Collateralized High Income Portfolio $ 380,952.38 SEQUILS Liberty Ltd. $ 1,714,285.71 Metropolitan Life Insurance Company $ 8,000,000.00 Oakhill Securities Fund, L.P. $ 2,000,000.00 Oakhill Securities Fund II, L.P. $ 2,000,000.00 Captiva III Finance Ltd. $ 1,000,000.00 Captiva IV Finance Ltd. $ 2,000,000.00 Sequils-Magnum Ltd. $ 2,000,000.00 Dryden Leveraged Loan CDO 2002-II $ 2,500,000.00 Putnam Diversified Income Trust $ 2,500,000.00 TCW Select Loan Fund $ 3,000,000.00 General Electric Capital Corporation I $ 0 New Alliance Global CDO, Ltd. $ 0 Harbour Town Funding Trust $ 0 Goldman Sachs Credit Partners $ 0 Archimedes Funding IV, Ltd. $ 0 Endurance CLO 1 Ltd. $ 0 KZH ING-3 LLC $ 0 SEQUILS ING-I HBDGM $ 0 SKM-Libertyview CBO I Limited $ 0 Longhorn CDO (Cayman) Ltd. $ 0 Longhon CDO II, Ltd. $ 0 Octagon Investment Partners II, LLC $ 0 Octagon Investment Partners III, Ltd. $ 0 Octagon Investment Partners IV, Ltd. $ 0 PPM Shadow Creek Funding Trust $ 0 PPM Spyglass Funding Trust $ 0 Norse CBO, Ltd. $ 0 Salomon Brothers Holding Company $ 0 |
INCREASING TERM LENDERS
Principal Amount of Term Loans
Name of Institution After Assignment of Assigned Interests
------------------- --------------------------------------
JPMorgan Chase Bank $ 500,000.00
Deutsche Bank/Bankers Trust Company $ 500,000.00
Natexis Banques Populaires $ 3,500,000.00
Pinehurst Trading, Inc. $ 1,000,000.00
Harbour Town Funding LLC $ 666,666.66
Race Point CLO, Limited $ 666,666.67
Sankaty High Yield Partners III, LP $ 666,666.67
Black Diamond International Funding Inc. $ 1,000,000.00
Black Rock Senior Loan Trust $ 1,000,000.00
Carlyle High Yield Partners III, Ltd. $ 1,000,000.00
Jupiter Funding Trust $ 1,000,000.00
Rosemont CLO, Ltd. $ 2,000,000.00
Delano Company $ 2,000,000.00
|
Jissekikun Funding Ltd. $ 1,000,000.00 KZH Waterside LLC $ 1,000,000.00 Nemean CLO Ltd. $ 2,500,000.00 Oryx CLO, Ltd. $ 3,000,000.00 Katonah I, Ltd. $ 500,000.00 Katonah II, Ltd. $ 500,000.00 Katonah III, Ltd. $ 1,000,000.00 ELF Funding Trust III $ 2,000,000.00 Oakhill Credit Partners I, Ltd. $ 3,000,000.00 Oakhill Credit Partners II, Ltd. $ 1,000,000.00 PPM Shadow Creek Funding LLC $ 2,666,666.67 Travelers Corporate Loan Fund Inc. $ 1,000,000.00 Columbus Loan Funding Ltd. $ 1,000,000.00 |
UNCHANGED TERM LENDERS
Principal Amount of Term Loans
Name of Institution After Assignment of Assigned Interests
------------------- --------------------------------------
None.
|
EXHIBIT 10.16
Compass Minerals Group, Inc.
8300 College Boulevard
Overland Park, Kansas 66210
March 12, 2002
Mr. Michael E. Ducey
26 Victorian Gate Way
Columbus, Ohio 43215
Re: EMPLOYMENT TERMS
Dear Mike:
This Letter Agreement confirms the understanding reached between you and Compass Minerals Group, Inc. (the "Company") regarding the terms of your employment with the Company.
1. Your employment will commence as of April 1, 2002 (the "Effective Date").
2. You will serve as Chief Executive Officer of the Company, reporting to the Company's Board of Directors (the "Board"). In addition, you will be nominated for a seat on the Board. You will devote your best efforts and full business time to the Company.
3. You will be based in the Company's Overland Park, Kansas offices and in connection with your employment by the Company you will be required to maintain your primary residence in the Kansas City metropolitan area.
4. You will be paid a base salary at the rate of $350,000 per year, which will be payable in accordance with the Company's customary payroll practices.
5. You will be eligible to receive a signing bonus in an amount equal to 33% of the amount of base salary paid to you during calendar year 2002. The signing bonus will be payable to you as of the date 2002 bonuses are eligible to be paid under the Company's annual incentive compensation program (as described in paragraph 6), subject to your continued employment by the Company through such date.
6. You will be eligible to receive a bonus pursuant to an annual
incentive compensation program to be established by the Board. Pursuant to the
annual incentive compensation program, each calendar year (including without
limitation 2002) you will be eligible to receive a bonus in an amount equal to
66% of the amount of base salary paid to you during such calendar year if the
Company's EBITDA or other financial metrics established under the annual
incentive program (the "Financial Metrics") with respect to such year equal 100%
of the Financial Metrics target for such year. In the event that the Financial
Metrics exceed 100% of the Financial Metrics target for any calendar year, you
will receive an additional bonus payment in an amount equal to the product of
(1) the number of whole percentage points by which the Financial Metrics exceed
100% of the Financial Metrics target and (2) the amount equal to 2% of base
salary paid to you during such calendar year; provided that in no event will
such additional bonus payment exceed 30% of the base salary paid to you during
such calendar year. The amount of any bonus payable to you pursuant to the
annual incentive compensation program with respect to calendar year 2002 will be
offset by the amount of the signing bonus you receive in accordance with
paragraph 5. Payment of any bonus described in this paragraph 6 will be subject
to your continued
employment by the Company through the date the bonus is paid pursuant to the annual incentive compensation program.
7. As of the Effective Date, you will be granted an option to purchase 75,565 shares of Salt Holdings Corporation common stock pursuant to the Salt Holdings Corporation 2001 Stock Option Plan.
8. As of the Effective Date, you will purchase shares of Salt Holdings Corporation common stock and preferred stock with an aggregate value of $1,000,000. In order to help facilitate your investment, as of the Effective Date the Company will loan you $500,000 on similar terms as those the Company has provided to other senior executives of the Company and its affiliates with an interest rate equal to the prime rate. As a condition to receiving the option grant and investment opportunity, you will be required to become a party to the Company's Investor Rights Agreement as entered into by other senior executives of the Company.
9. You will be eligible to participate in all Company employee benefits plans and programs and to receive any other fringe benefits made available to senior executives of the Company.
10. You will be required to enter into a Non-Competition, Non-Solicitation and Confidentiality Agreement in the form provided by the Company.
11. If at any time your employment is terminated by the Company without "Cause" or you resign for "Good Reason" (each of which as defined in your Non-Qualified Stock Option Agreement), the Company will continue to pay you your base salary in accordance with the Company's customary payroll practices until the earliest of (1) the first anniversary of your termination date, (2) the date that you accept employment with any person or entity other than the Company or (3) the date you violate the terms of this Letter Agreement or the Non-Competition, Non-Solicitation and Confidentiality Agreement. If your employment is terminated for any other reason, you will not be entitled to any severance payments. In order to effectuate this paragraph 11, you agree that, following any termination of employment without "Cause" or for "Good Reason," you will provide the Company with prompt notice of your acceptance of employment with any other person or entity.
Please indicate your acceptance of the terms and provisions of this Letter Agreement by signing both copies of this Letter Agreement and returning one copy to me. The other copy is for your files. By signing below, you acknowledge and agree that you have carefully read this Letter Agreement in its entirety; fully understand and agree to its terms and provisions; and intend and agree that it be final and legally binding on you and the Company. This Letter Agreement shall be governed and construed under the internal laws of the State of New York and may be executed in several counterparts.
Very truly yours,
Agreed and Accepted:
EXHIBIT 10.17
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 01:11 PM 11/28/2001
010602404 - 2364448
CERTIFICATE OF DESIGNATION, PREFERENCES
AND RELATIVE, PARTICIPATING, OPTIONAL AND
OTHER SPECIAL RIGHTS OF PREFERRED
STOCK AND QUALIFICATIONS, LIMITATIONS
AND RESTRICTIONS THEREOF
OF
13 3/4% SERIES A CUMULATIVE SENIOR REDEEMABLE EXCHANGEABLE
PREFERRED STOCK
OF
SALT HOLDINGS CORPORATION
PURSUANT TO SECTION 151 OF THE
GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
Salt Holdings Corporation (the "COMPANY"), a corporation organized and existing under the General Corporation Law of the State of Delaware, certifies that pursuant to the authority contained in Article Fourth of its Certificate of Incorporation (the "CERTIFICATE OF INCORPORATION") and in accordance with the provisions of Section 151 of the General Corporation Law of the State of Delaware, the Board of Directors of the Company, by unanimous consent dated October 13, 2001 duly approved and adopted the following resolution (this "CERTIFICATE OF DESIGNATION") which resolution remains in full force and effect on the date hereof:
RESOLVED, that the Board of Directors does hereby designate, create, authorize and provide for the issue of 13 3/4% Series A Cumulative Senior Redeemable Exchangeable Preferred Stock due 2013 (the "SERIES A PREFERRED STOCK"), par value $0.01 per share, with a liquidation preference of $1,000 per share at the time of initial issuance (subject to adjustment as set forth in this Certificate of Designation), consisting of 100,000 shares, having the following voting powers, preferences and relative, participating, optional and other special rights, and qualifications, limitations and restrictions thereof as follows:
1. CERTAIN DEFINITIONS.
Unless the context otherwise requires, the terms defined in this
Section 1 shall have, for all purposes of this resolution, the meanings herein
specified (with terms defined in the singular having comparable meanings when
used in the plural).
"BOARD OF DIRECTORS" means the Board of Directors of the Company or any authorized committee of the Board of Directors.
"BUSINESS DAY" means any day other than a Legal Holiday.
"CAPITAL STOCK" means (i) in the case of a corporation, corporate stock, (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock, (iii) in the case of a partnership, partnership interests (whether general or limited) and (iv) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person.
"CLASS A COMMON STOCK" means the Class A common stock, par value $0.01 per share, of the Company, or if the Class A Common Stock is no longer outstanding, the class of Capital Stock issued in exchange for, or in lieu of, Class A Common Stock.
"CLASS B COMMON STOCK" means the Class B common stock, par value $0.01 per share, of the Company, or if the Class B Common Stock is no longer outstanding, the class of Capital Stock issued in exchange for, or in lieu of, Class B Common Stock.
"COMMON STOCK" means the Class A Common Stock and the Class B Common Stock.
"DEBENTURES" means the 13 3/4% Debentures issued on the Debenture Exchange Date and any and all additional 13 3/4% Debentures of the Company issued after the Debenture Exchange Date as payment of interest.
"DEBENTURE EXCHANGE DATE" means the date on which the Company exchanges all but not less than all of the Series A Preferred Stock for Debentures.
"DGCL" has the meaning set forth in Section 2(b) below.
"DIVIDEND PAYMENT DATE" has the meaning set forth in Section 2(a) below.
"DIVIDEND RATE" means 13 3/4% per annum, compounded quarterly and calculated on the basis of a 360-day year comprised of 12 months of 30 days each, and shall be deemed to accrue on a daily basis.
"EXIT EVENT" has the meaning ascribed to it in the Stock Rights Agreement.
"HOLDER" means the record holder of one or more shares of Series A Preferred Stock, as shown on the books and records of the Company.
"INDENTURE" means the indenture under which the company will issue the Debentures.
"JUNIOR SECURITIES" means any class or series of Common Stock and any other class or series of Capital Stock ranking junior to the Series A Preferred Stock as to the payment
of dividends or as to rights in liquidation, dissolution or winding up of the affairs of the Company and shall not include Senior Securities.
"LEGAL HOLIDAY" means a Saturday, a Sunday or a day on which banking institutions in the City of New York or at a place of payment are authorized by law, regulation or executive order to remain closed.
"LIQUIDATION DATE" has the meaning set forth in Section 3 below.
"LIQUIDATION PREFERENCE" means $1,000 per share of Series A Preferred Stock.
"MANDATORY REDEMPTION DATE" has the meaning set forth in Section 4(a) below.
"MAJORITY VOTE" has the meaning set forth in Section 6(a) below.
"PARITY SECURITIES" means any class or series of Capital Stock of the Company, if any, ranking on a parity with the Series A Preferred Stock as to the payment of dividends and as to rights in liquidation, dissolution or winding up of the affairs of the Company.
"PARTIAL DIVIDEND PERIOD AMOUNT" means, as of any Liquidation Date, Redemption Date, Company Initiated Exchange Date or Transferee Initiated Exchange Date, as the case may be, with respect to any Series A Preferred Stock, an amount equal to the amount of dividends that have accrued at the Dividend Rate on the sum of the Liquidation Preference of such Series A Preferred Stock and the accrued and unpaid dividends through the last Dividend Payment Date, from the last Dividend Payment Date to and including such Liquidation Date, Redemption Date, Company Initiated Exchange Date or Transferee Initiated Exchange Date, as the case may be.
"PERSON" means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization or government or agency or political subdivision thereof (including any subdivision or ongoing business of any such entity or substantially all of the assets of any such entity, subdivision or business).
"RECORD DATE" has the meaning set forth in Section 2(a) below.
"REDEMPTION DATE" has the meaning set forth in Section 4(d) below.
"REDEMPTION PRICE" means the sum of (a) the Liquidation Preference of
the Series A Preferred Stock, (b) all accrued and unpaid dividends thereon, and
(c) the Partial Dividend Period Amount, if any.
"SENIOR CREDIT DOCUMENTS" means the Credit Agreement, dated as of November 28, 2001, among the Company, IMC Inorganic Chemicals, Inc., the lenders party thereto, The Chase Manhattan Bank, as administrative agent, collateral agent and issuing bank, and Credit Suisse First Boston, as documentation agent, together with any other guarantee or collateral documents or other agreements or instruments now or hereafter entered into pursuant thereto or in connection therewith, in each case, as the same may be amended, restated, supplemented,
waived, replaced, refunded, refinanced or otherwise modified from time to time (whether or not upon termination, whether with the same or different lenders and whether with the same or different borrowers or guarantors), in whole or in part, including any agreement extending the maturity thereof, increasing the amount of loans or letters of credit available thereunder or otherwise restructuring all or any portion of the indebtedness thereunder.
"SENIOR SECURITIES" means any class or series of Capital Stock, if any, ranking senior to the Series A Preferred Stock as to the payment of dividends or as to rights in liquidation, dissolution or winding up of the affairs of the Company.
"STOCK RIGHTS AGREEMENT" means that certain Stock Rights Agreement, dated as of November 28, 2001, by and among the Company, Apollo Management L.P., a Delaware limited partnership, each of the parties listed on Schedule A thereto, IMC Global, Inc., a Delaware corporation and such other stockholders of the Company as may, from time to time, become parties to the Stock Rights Agreement in accordance with the terms thereof.
"SUBSIDIARY" means, with respect to any Person, (i) any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person (or a combination thereof) and (ii) any partnership (a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are such Person or of one or more Subsidiaries of such Person (or any combination thereof).
2. DIVIDENDS.
(a) DIVIDENDS. The Holders of the Series A Preferred Stock shall be entitled to receive, when, as and if dividends are declared by the Board of Directors out of funds of the Company legally available therefor, cumulative preferred dividends at the Dividend Rate on the sum of (i) the Liquidation Preference plus (ii) accrued and unpaid dividends. Such cumulative preferred dividends shall be payable quarterly in arrears on each February 28, May 28, August 28 and November 28, or if any such date is not a Business Day, on the next succeeding Business Day (each a "DIVIDEND PAYMENT DATE"), to the holders of record as of the next preceding February 15, May 15, August 15 and November 15 (each a "RECORD DATE"). Cash dividends paid by the Company from time to time will be applied to unpaid dividends in the order in which such dividends accrued. Accrued and unpaid dividends, if any, will not bear interest or, except to the extent included in clause (ii) of the preceding sentence, bear dividends thereon.
(b) To the extent not paid pursuant to Section 2(a) above, dividends on the Series A Preferred Stock shall accumulate whether or not the Company has sufficient cash, earnings or profits, whether or not there are funds legally available for the payment of such dividends and whether or not dividends are declared. On any Dividend Payment Date, the liquidation preference of any Senior Securities or Parity Securities shall not be included in "total liabilities" in connection with determining "surplus" under the Delaware General Corporation Law (the "DGCL").
(c) Unless full cumulative preferred dividends on all outstanding shares of Series A Preferred Stock for all past dividend periods (including all accrued and unpaid dividends) shall have been declared and paid in cash, or declared and a sufficient sum for the payment thereof set apart, then: (i) no dividend (other than a dividend payable solely in Junior Securities) shall be declared or paid upon, or any sum set apart for the payment of dividends upon, any shares of Junior Securities; (ii) no other distribution shall be declared or made upon, or any sum set apart for the payment of any distribution upon, any shares of Junior Securities, other than a distribution consisting solely of Junior Securities; (iii) no shares of Junior Securities shall be purchased, redeemed or otherwise acquired or retired for value (excluding an exchange or conversion for shares of other Junior Securities (or purchases, redemptions or other acquisitions of Junior Securities of former employees)) by the Company or any of its Subsidiaries; and (iv) no monies shall be paid into or set apart or made available for a sinking or other like fund for the purchase, redemption or other acquisition or retirement for value of any shares of Junior Securities. Upon the occurrence of an Exit Event which is an asset sale or a distribution or dividend, no other distribution shall be declared or made upon, or any sum set apart for the payment of any distribution upon, any shares of Junior Securities unless the Series A Preferred Stock shall have been redeemed in full.
3. DISTRIBUTIONS UPON LIQUIDATION, DISSOLUTION OR WINDING UP.
Upon any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company (the date of such occurrence, the "LIQUIDATION DATE"), the Company shall, out of the assets of the Company available for distribution in respect of its Capital Stock, make the following payments in respect of its Capital Stock:
(a) FIRST, payments due in connection with the Senior Securities on the Liquidation Date, including any accrued and unpaid dividends, if any, on such Senior Securities, to the Liquidation Date;
(b) SECOND, on a PRO RATA basis, payments (i) on shares of the Series A Preferred Stock equal to the Liquidation Preference per share of Series A Preferred Stock, PLUS, without duplication, all accrued and unpaid dividends, PLUS the Partial Dividend Period Amount, if any, and (ii) due on Parity Securities; and
(c) THIRD, payments on any Junior Securities, including, without limitation, the Common Stock of the Company.
After payment in full in cash of the Liquidation Preference and all accrued and unpaid dividends, if any, to which Holders of Series A Preferred Stock are entitled, such Holders shall not be entitled to any further participation in any distribution of assets of the Company. If, upon any voluntary or involuntary liquidation, dissolution or winding up of the Company, the amounts payable with respect to the Series A Preferred Stock and all other Parity Securities are not paid in full, the Holders and holders of the Parity Securities shall share equally and ratably in any distribution of assets of the Company in proportion to the full liquidation preference and accrued and unpaid dividends, if any, to which each is entitled. However, neither the voluntary sale, conveyance, exchange or transfer (for cash, shares of stock, securities or other consideration) of all or substantially all of the property or assets of the Company nor the consolidation or merger
of the Company with or into one or more corporations shall be deemed to be a voluntary or involuntary liquidation, dissolution or winding up of the Company or reduction or decrease in Capital Stock, unless such sale, conveyance, exchange or transfer shall be in connection with a liquidation, dissolution, winding up of the business of the Company or reduction or decrease in Capital Stock.
4. REDEMPTION BY THE COMPANY.
(a) On the earlier of November 28, 2013 (the "MANDATORY REDEMPTION
DATE") or on the date of an Exit Event, the Company shall, subject to
Section 4(g), be required to redeem (subject to the legal availability of funds
therefor) all outstanding shares of Series A Preferred Stock at a price in cash
equal to the Redemption Price. The Company shall take all actions required or
permitted under the DGCL to permit such redemption of the Series A Preferred
Stock. On the Mandatory Redemption Date, the liquidation preference of any
Senior Securities or Parity Securities shall not be included in "total
liabilities" in connection with determining "surplus" under the DGCL.
(b) The Series A Preferred Stock may, subject to Section 4(g), be redeemed, in whole or in part, at the option of the Company at any time prior to the Mandatory Redemption Date at a price in cash equal to the Redemption Price. On any such Redemption Date, the liquidation preference of any Senior Securities or any Parity Securities shall not be included in "total liabilities" in connection with determining "surplus" under the DGCL.
(c) In case of redemption of less than all of the shares of Series A Preferred Stock at the time outstanding, the shares to be redeemed shall be selected PRO RATA or by lot as determined by the Company in its sole discretion.
(d) Notice of any redemption shall be sent by or on behalf of the Company not less than 30 nor more than 60 days prior to the date specified for redemption in such notice (the "REDEMPTION DATE"), by first class mail, postage prepaid, to all Holders of record of the Series A Preferred Stock at their last addresses as they shall appear on the books of the Company; PROVIDED, HOWEVER, that no failure to give such notice or any defect therein or in the mailing thereof shall affect the validity of the proceedings for the redemption of any shares of Series A Preferred Stock except as to the Holder to whom the Company has failed to give notice or except as to the Holder to whom notice was defective. In addition to any information required by law, such notice shall state: (i) whether such redemption is being made pursuant to the optional or the mandatory redemption provisions hereof; (ii) the Redemption Date; (iii) the aggregate number of shares of Series A Preferred Stock to be redeemed and, if less than all shares held by such Holder are to be redeemed, the number of such shares to be redeemed; (iv) the Redemption Price; (v) the place or places where certificates for such shares are to be surrendered for payment of the Redemption Price; and (vi) that dividends on the shares to be redeemed will cease to accumulate on the Redemption Date. Upon the mailing of any such notice of redemption, the Company shall, subject to Section 4(g), become obligated to redeem at the time of redemption specified thereon all shares called for redemption.
(e) If notice has been mailed in accordance with Section 4(d) above and provided that on or before the Redemption Date specified in such notice, all funds necessary for
such redemption shall have been set aside by the Company, separate and apart from its other funds in trust for the PRO RATA benefit of the Holders of the shares so called for redemption, so as to be, and to continue to be available therefor, then, from and after the Redemption Date, dividends on the shares of the Series A Preferred Stock so called for redemption shall cease to accumulate, and said shares shall no longer be deemed to be outstanding and shall not have the status of shares of Series A Preferred Stock, and all rights of the Holders thereof as stockholders of the Company (except the right to receive from the Company the Redemption Price) shall cease. Upon surrender, in accordance with said notice, of the certificates for any shares so redeemed (properly endorsed or assigned for transfer, if the Company shall so require and the notice shall so state), such shares shall be redeemed by the Company at the Redemption Price. In case fewer than all the shares represented by any such certificates are redeemed, a new certificate or certificates shall be issued representing the unredeemed shares without cost to the Holder thereof.
(f) Any deposit of funds with a bank or trust company for the purpose of redeeming Series A Preferred Stock shall be irrevocable except that any balance of monies so deposited by the Company and unclaimed by the Holders of the Series A Preferred Stock entitled thereto at the expiration of two years from the applicable Redemption Date shall be repaid, together with any interest or other earnings earned thereon, to the Company, and after any such repayment, the Holders of the shares entitled to the funds so repaid to the Company shall look only to the Company for payment without interest or other earnings.
(g) Notwithstanding anything to the contrary contained herein, at any time to the extent the terms of any Senior Credit Documents prohibit the Company's redeeming or offering to redeem shares of Series A Preferred Stock, or to the extent that the consummation by the Company of such a redemption or offer to redeem would constitute or result in a default or event of default under any Senior Credit Document, the Company shall not be entitled to and shall have no obligation to, and the holders of shares of Series A Preferred Stock shall not have any right to require the Company to, redeem or offer to redeem any shares of Series A Preferred Stock or make any payment in respect of the Redemption Price at such time.
5. EXCHANGE.
(a) (i) The Company may, at its option, at any time, exchange, in whole but not in part, the then outstanding shares of Series A Preferred Stock for Debentures; PROVIDED, HOWEVER, that the Company will not have such option if at the time there is an existing and continuing default or event of default under any Senior Credit Document.
(ii) Upon the transfer by a Holder to an unaffiliated transferee who is not a stockholder of the Company, such transferee shall have the option, exercisable within 10 business days of such transfer, to notify the Company as provided in subsection (d) below of its desire to exchange, in whole or in part, its shares of Series A Preferred Stock for Debentures; PROVIDED, HOWEVER, that such transferee will not have such option if at the time there is an existing and continuing default or event of default under any Senior Credit Document.
(b) Upon any exchange pursuant to subsection (a) above, and subject to the following sentence, Holders shall be entitled to receive $1.00 initial accreted value of Debentures
for each $1.00 of the aggregate Liquidation Preference PLUS, without duplication, all accrued and unpaid dividends through the last Dividend Payment Date, PLUS the Partial Dividend Period Amount, if any, which shall be payable in the form of cash (if permitted by the terms of the Senior Credit Documents at the time) or additional Debentures, at the option of the Company. The Debentures shall be issuable in principal amounts of $1,000 and integral multiples thereof to the extent possible, and shall also be issuable in principal amounts less than $1,000 so that each holder of Series A Preferred Stock will receive certificates representing the entire amount of Debentures to which such holder's shares of Series A Preferred Stock entitle such holder; PROVIDED that the Company may pay cash in lieu of issuing any Debentures having a principal amount less than $1,000.
(c) Notice of the intention to exchange pursuant to subsection (a)(i) above shall be sent by or on behalf of the Company not more than 60 days nor less than 30 days prior to the date fixed for the exchange (the "COMPANY INITIATED EXCHANGE Date"), by first class mail, postage prepaid, to each holder of record of Series A Preferred Stock at its registered address. In addition to any information required by law or by the applicable rules of any exchange upon which the Series A Preferred Stock may be listed or admitted to trading, such notice shall state: (i) the Company Initiated Exchange Date; (ii) the place or places where certificates for such shares are to be surrendered for exchange, including any procedures applicable to exchanges to be accomplished through book-entry transfers; and (iii) that dividends on the shares of Series A Preferred Stock to be exchanged will cease to accumulate on the Company Initiated Exchange Date.
(d) Notice of the intention to exchange pursuant to subsection (a)(ii) above shall be sent by or on behalf of the transferee of Series A Preferred Stock not more than 10 business days after the consummation of the transaction pursuant to which such transferee acquired such Series A Preferred Stock (the "TRANSFEREE INITIATED EXCHANGE"), by first class mail, postage prepaid, to the Company at the address set forth under the Company's signature to this Certificate of Designation. As soon as practicable upon receipt of such notice by the Company, the Company shall send such transferee a response notice, by first class mail, postage prepaid, to such transferee at its registered address or at the address set forth in the notice sent by the transferee to the Company. In addition to any information required by law or by the applicable rules of any exchange upon which the Series A Preferred Stock may be listed or admitted to trading, such notice shall state: (i) the date fixed for the Transferee Initiated Exchange (the "TRANSFEREE INITIATED EXCHANGE DATE"); (ii) the place or places where certificates for such shares are to be surrendered for exchange, including any procedures applicable to exchanges to be accomplished through book-entry transfers; and (iii) that dividends on the shares of Series A Preferred Stock to be exchanged will cease to accumulate on the Transferee Initiated Exchange Date.
(e) A holder delivering Series A Preferred Stock for exchange shall not be required to pay any taxes or duties in respect of the issue or delivery of Debentures on exchange but shall be required to pay any tax or duty that may be payable in respect of any transfer involved in the issue or delivery of the Debentures in a name other than that of the holder of the Series A Preferred Stock. Certificates representing Debentures shall not be issued or delivered unless all taxes and duties, if any, payable by the holder have been paid.
(f) If notice of any exchange has been properly given, and if on or before the Company Initiated Exchange Date or the Transferee Initiated Exchange Date, as the case may be, the Debentures have been duly executed and authenticated and have been deposited with the transfer agent selected by the Company to serve in such capacity, then on and after the close of business on the Company Initiated Exchange Date or the Transferee Initiated Exchange Date, as the case may be, the shares of Series A Preferred Stock to be exchanged shall no longer be deemed to be outstanding and may thereafter be issued in the same manner as the other authorized but unissued preferred stock, but not as Series A Preferred Stock, and all rights of the holders thereof as stockholders of the Company shall cease, except the right of the holders to receive upon surrender of their certificates the Debentures and all accrued interest, if any, thereon to the Company Initiated Exchange Date or the Transferee Initiated Exchange Date, as the case may be.
6. VOTING RIGHTS.
(a) The Holders shall have no voting rights except as required by law and except that the Company shall not, without the affirmative vote or consent of the Holders of a majority of the shares of Series A Preferred Stock then outstanding (a "MAJORITY VOTE") and the Company may, with a Majority Vote:
(i) amend or otherwise alter its Certificate of Incorporation in any manner that adversely affects the rights of any of the Holders of Series A Preferred Stock; PROVIDED, that the creation, authorization or issuance of Senior Securities or Parity Securities shall not be deemed to adversely affect the rights of Holders of Series A Preferred Stock;
(ii) amend or otherwise alter this Certificate of Designation in any manner;
(iii) waive any compliance with any provision of this Certificate of Designation; or
(iv) with respect to any Debentures not yet issued in exchange for the Series A Preferred Stock, alter, amend or modify any of the terms of such Debentures and the Indenture with respect to such Debentures.
(b) Notwithstanding subsection (a) above, without the consent of each Holder affected, an amendment or waiver of the Company's Certificate of Incorporation or of this Certificate of Designation may not (with respect to any shares of Series A Preferred Stock held by a non-consenting Holder):
(i) alter the voting rights with respect to the Series A Preferred Stock or reduce the percentage of the number of shares of Series A Preferred Stock whose Holders must consent to an amendment, supplement or waiver;
(ii) reduce the Liquidation Preference of or change the Mandatory Redemption Date of any share of Series A Preferred Stock or alter the provisions with respect to the redemption of the Series A Preferred Stock;
(iii) reduce the rate of or change the time for payment of dividends on any share of Series A Preferred Stock;
(iv) waive the consequences of any failure to pay dividends on the Series A Preferred Stock;
(v) make any share of Series A Preferred Stock payable in any form other than that stated in this Certificate of Designation;
(vi) make any change in the provisions of this Certificate of Designation relating to waivers of the rights of Holders of Series A Preferred Stock to receive the Liquidation Preference and dividends on the Series A Preferred Stock;
(vii) waive a redemption payment with respect to any share of Series A Preferred Stock; or
(viii) make any change in the foregoing amendment and waiver provisions.
(c) Notwithstanding subsection (a) above, without the consent of each Holder affected, an amendment or waiver of the Company's Certificate of Incorporation or of this Certificate of Designation may not (with respect to any Debentures issuable, but not yet issued, in exchange for the shares of Preferred Stock of such Holder):
(i) alter the voting rights with respect to such Debentures or reduce the percentage of the number of amount of such Debentures whose holders must consent to an amendment, supplement or waiver;
(ii) reduce the principal amount or accreted value of or change the stated maturity of any such Debentures or alter the provisions with respect to the redemption of such Debentures;
(iii) reduce the rate of interest below the applicable federal rate plus 499 basis points per annum or change the time for payment of interest or principal on any such Debentures;
(iv) waive the consequences of any failure to pay interest or principal on such Debentures;
(v) make any such Debenture payable in any form other than that stated in the Indenture;
(vi) make any change in the provisions of the Indenture or such Debentures relating to waivers of the rights of holders of Debentures to receive the principal and interest on such Debentures;
(vii) waive a redemption payment with respect to any such Debentures; or
(viii) make any change in the foregoing amendment and waiver provisions.
(d) The Company in its sole discretion may without the vote or consent of any Holders of the Series A Preferred Stock amend or supplement this Certificate of Designation:
(i) to cure any ambiguity, defect or inconsistency; or
to make any change that would provide any additional rights or benefits to the Holders of the Series A Preferred Stock or that does not adversely affect the legal or economic rights under this Certificate of Designation of any such Holder.
7. PAYMENT.
(a) All amounts payable in cash with respect to the Series A Preferred Stock shall be payable in United States dollars at the principal executive office of the Company or, at the option of the Holder, payment of dividends (if any) may be made by check mailed to such Holder of the Series A Preferred Stock at its address set forth in the register of Holders of Series A Preferred Stock maintained by the Company.
(b) Any payment on the Series A Preferred Stock due on any day that is not a Business Day need not be made on such day, but may be made on the next succeeding Business Day with the same force and effect as if made on such due date.
(c) Dividends payable on the Series A Preferred Stock on any Redemption Date or repurchase date that is a Dividend Payment Date shall be paid to the Holders of record as of the immediately preceding Record Date.
8. EXCLUSION OF OTHER RIGHTS.
Except as may otherwise be required by law, the shares of Series A Preferred Stock shall not have any voting powers, preferences and relative, participating, optional or other special rights, other than those specifically set forth in this Certificate of Designation (as such Certificate of Designation may be amended from time to time) and in the Certificate of Incorporation. The shares of Series A Preferred Stock shall have no preemptive or subscription rights.
9. HEADINGS OF SUBDIVISIONS.
The headings of the various subdivisions hereof are for convenience of reference only and shall not affect the interpretation of any of the provisions hereof.
10. SEVERABILITY OF PROVISIONS.
If any voting powers, preferences and relative, participating, optional and other special rights of the Series A Preferred Stock and qualifications, limitations and restrictions thereof set forth in this Certificate of Designation (as it may be amended from time to time) is invalid, unlawful or incapable of being enforced by reason of any rule of law or public policy, all
other voting powers, preferences and relative, participating, optional and other
special rights of Series A Preferred Stock and qualifications, limitations and
restrictions thereof set forth in this Certificate of Designation (as so
amended) which can be given effect without the invalid, unlawful or
unenforceable voting powers, preferences and relative, participating, optional
and other special rights of Series A Preferred Stock and qualifications,
limitations and restrictions thereof shall, nevertheless, remain in full force
and effect, and no voting powers, preferences and relative, participating,
optional or other special rights of Series A Preferred Stock and qualifications,
limitations and restrictions thereof herein set forth shall be deemed dependent
upon any other such voting powers, preferences and relative, participating,
optional or other special rights of Series A Preferred Stock and qualifications,
limitations and restrictions thereof unless so expressed herein; PROVIDED,
HOWEVER, if any qualification, limitation or other restriction contained in (i)
Section 4(g) shall be held invalid, unlawful or incapable of being enforced for
any reason, then no effect shall be given to the Company's obligation pursuant
to Section 4 to redeem or offer to redeem any shares of Series A Preferred Stock
or make any payment in respect of the Redemption Price or (ii) the final proviso
to Section 5(a)(ii) shall be held invalid, unlawful or incapable of being
enforced for any reason, then no effect shall be given to the Company's
obligation pursuant to Section 5 to exchange any shares of Series A Preferred
Stock for Debentures.
11. FORM OF SECURITIES. The Series A Preferred Stock shall be issued in the form of definitive certificates in the form on file with the Secretary of the Company.
[signature page follows]
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 01:11 PM 11/28/2001
010602404 - 2364448
IN WITNESS WHEREOF, the Company has caused this certificate to be duly executed this 28th day of November, 2001.
SALT HOLDINGS CORPORATION
Salt Holdings Corporation
8300 College Park Boulevard
Overland Park, Kansas 66210
Attention: Chief Executive Officer
EXHIBIT 12.1
Salt Holdings Corporation
Computation of Ratios of Earnings to Fixed Charges
(in millions)
Year Ended December 31,
--------------------------------
2002 2001 2000
--------- -------- ---------
Earnings:
Income (loss) before income taxes....... $ 30.3 $ 45.8 $ (571.4)
Plus fixed charges...................... 45.1 16.7 18.4
Less capitalized interest............... -- (1.0) (1.1)
--------- -------- ---------
$ 75.4 $ 61.5 $ (554.1)
========= ======== =========
Fixed Charges:
Interest charges........................ $ 42.4 $ 14.4 $ 16.4
Plus interest factor in operating rent
expense................................. 2.7 2.3 2.0
--------- -------- ---------
$ 45.1 $ 16.7 $ 18.4
========= ======== =========
Ratio of earnings to fixed charges (excess
of fixed charges over earnings)........... 1.67x 3.69x $ (572.5)
========= ======== =========
|
EXHIBIT 21.1
COMPANY NAME JURISDICTION OF INCORPORATION ----------------------------------------- ----------------------------- GSL Corporation Delaware NAMSCO Inc. Delaware North American Salt Company Delaware Great Salt Lake Minerals Corporation Delaware Carey Salt Company Delaware Minosus Limited United Kingdom Salt Union Limited U.K. United Kingdom Direct Salt Supplies Limited (U.K.) United Kingdom London Salt Limited (U.K.) United Kingdom Compass Minerals (Europe) Limited United Kingdom Compass Minerals (UK) Limited United Kingdom Northern Salt, LLP Kansas Sifto Canada Inc. Ontario, Canada J.T. Lunt & Co. (Nantwich) Limited (U.K.) United Kingdom Compass Resources, Inc. Delaware Compass Minerals Group, Inc. Delaware Salt Notes Holding Corporation Delaware |
EXHIBIT 23.2
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" and to the use of our report dated December 9, 2002, in the Registration Statement on Form S-4 and the related Prospectus of Salt Holdings Corporation dated April 17, 2003.
/s/ Ernst & Young LLP
Kansas City, Missouri
April 16, 2003
|
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in this Registration Statement on Form S-4 of Salt Holdings Corporation of our report dated April 7, 2003 relating to the financial statements and financial statement schedule of Salt Holdings Corporation, which appears in such Registration Statement. We also consent to the references to us under the heading "Experts" and in such Registration Statement.
PricewaterhouseCoopers LLP
Kansas City, Missouri
April 16, 2003
EXHIBIT 25.1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) _______
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
NEW YORK 13-5160382
(State of incorporation (I.R.S. employer
if not a national bank) identification no.)
ONE WALL STREET, NEW YORK, N.Y. 10286
(Address of principal executive offices) (Zip Code)
----------
SALT HOLDINGS CORPORATION
DELAWARE 36-3972986
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8300 COLLEGE BLVD.
OVERLAND PARK, KS 66210
(Address of principal executive offices) (Zip Code)
|
12 3/4% SENIOR DISCOUNT NOTES DUE 2012
(Title of the indenture securities)
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT.
Name Address
---------------------------------------------------------------------------
Superintendent of Banks of the 2 Rector Street,
State of New York New York, N.Y. 10006, and
Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza,
New York, N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
|
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH THE OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7a-29 UNDER THE TRUST INDENTURE ACT OF 1939 AND RULE 24 OF THE COMMISSION'S RULES OF PRACTICE.
1. A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1, filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-Laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 33-31019).
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements of its supervising or examining authority.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the Trustee, The Bank of New York, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of New York, and State of New York, on the 3rd day of February, 2003.
THE BANK OF NEW YORK
/pg
EXHIBIT 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of One Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business September 30, 2002, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts
In Thousands
ASSETS
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin ........ $ 3,735,469
Interest-bearing balances ................................. 3,791,026
Securities:
Held-to-maturity securities ............................... 1,140,688
Available-for-sale securities ............................. 15,232,384
Federal funds sold in domestic offices ....................... 1,286,657
Securities purchased under agreements to resell .............. 1,035,718
Loans and lease financing receivables:
Loans and leases held for sale ............................ 869,285
Loans and leases, net of unearned income...................34,695,130
LESS: Allowance for loan and lease losses.....................645,382
Loans and leases, net of unearned income and allowance .... 34,049,748
Trading Assets ............................................... 9,044,881
Premises and fixed assets (including capitalized leases) ..... 823,722
Other real estate owned ...................................... 778
Investments in unconsolidated subsidiaries and associated
companies ................................................. 226,274
Customers' liability to this bank on acceptances
outstanding ............................................... 249,803
Intangible assets
Goodwill .................................................. 1,852,232
Other intangible assets ................................... 54,714
Other assets ................................................. 4,961,572
---------------
|
Total assets ................................................. $ 78,354,951
===============
LIABILITIES
Deposits:
In domestic offices ....................................... $ 32,962,289
Noninterest-bearing........................................12,792,415
Interest-bearing...........................................20,169,874
In foreign offices, Edge and Agreement
subsidiaries, and IBFs .................................. 24,148,516
Noninterest-bearing...........................................445,725
Interest-bearing...........................................23,702,791
Federal funds purchased in domestic
offices .................................................... 959,287
Securities sold under agreements to repurchase ............... 491,806
Trading liabilities .......................................... 2,916,377
Other borrowed money:
(includes mortgage indebtedness and obligations
under capitalized leases) ................................. 1,691,634
Bank's liability on acceptances executed and
outstanding ............................................... 251,701
Subordinated notes and debentures ............................ 2,090,000
Other liabilities ............................................ 5,815,688
---------------
Total liabilities ............................................ $ 71,327,298
===============
Minority interest in consolidated subsidiaries ............... 500,019
EQUITY CAPITAL
Perpetual preferred stock and related surplus ................ 0
Common stock ................................................. 1,135,284
Surplus ...................................................... 1,056,724
Retained earnings ............................................ 4,218,003
Accumulated other comprehensive income ....................... (117,623)
Other equity capital components .............................. 0
---------------
Total equity capital ......................................... 6,527,634
---------------
Total liabilities minority interest and equity capital ....... $ 78,354,951
===============
|
I, Thomas J. Mastro, Senior Vice President and Comptroller of the above-named bank do hereby declare that this Report of Condition is true and correct to the best of my knowledge and belief.
Thomas J. Mastro, Senior Vice President and Comptroller
We, the undersigned directors, attest to the correctness of this statement of resources and liabilities. We declare that it has been examined by us, and to the best of our knowledge and belief has been prepared in conformance with the instructions and is true and correct.
Thomas A. Renyi
Gerald L. Hassell Directors
Alan R. Griffith
LETTER OF TRANSMITTAL
TO TENDER FOR EXCHANGE
12 3/4% SENIOR DISCOUNT NOTES DUE 2012
OF
SALT HOLDINGS CORPORATION
PURSUANT TO THE PROSPECTUS DATED , 2003
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
THE BANK OF NEW YORK
BY MAIL: BY FACSIMILE TRANSMISSION: BY HAND/OVERNIGHT DELIVERY:
The Bank of New York (for eligible institutions The Bank of New York
Corporate Trust Operations only) Corporate Trust Operations
Reorganization Unit (212) 298-1915 Reorganization Unit
101 Barclay Street--7 East Attn: Sirojni Dindial 101 Barclay Street--7 East
New York, New York 10286 Confirm by Telephone: New York, New York 10286
Attn: Carolle Montreuil (212) 815-5920 Attn: Carolle Montreuil
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DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF THIS LETTER OF TRANSMITTAL VIA A FACSIMILE TRANSMISSION TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
The undersigned hereby acknowledges receipt of the prospectus, dated , 2003, of Salt Holdings Corporation, a Delaware corporation ("Salt Holdings"), which, together with this letter of transmittal, constitute Salt Holdings' offer to exchange $1,000 principal amount at maturity of its 12 3/4% Series B Senior Discount Notes due 2012, which have been registered under the Securities Act of 1933, as amended, for each $1,000 principal amount at maturity of its outstanding 12 3/4% Series A Senior Discount Notes due 2012, of which $123,500,000 aggregate principal amount at maturity is outstanding.
IF YOU DESIRE TO EXCHANGE YOUR 12 3/4% SERIES A SENIOR DISCOUNT NOTES DUE 2012 FOR AN EQUAL AGGREGATE PRINCIPAL AMOUNT AT MATURITY OF 12 3/4% SERIES B SENIOR DISCOUNT NOTES DUE 2012, YOU MUST VALIDLY TENDER (AND NOT VALIDLY WITHDRAW) YOUR NOTES TO THE EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE.
YOU MUST SIGN THIS LETTER OF TRANSMITTAL WHERE INDICATED BELOW. PLEASE READ THE INSTRUCTIONS SET FORTH BELOW CAREFULLY BEFORE COMPLETING THIS LETTER OF TRANSMITTAL.
This letter of transmittal is to be completed by holders of Salt Holdings' outstanding notes either if certificates representing such notes are to be forwarded herewith or, unless an agent's message is utilized, tenders of such notes are to be made by book-entry transfer to an account maintained by the exchange agent at The Depository Trust Company pursuant to the procedures set forth in the prospectus under the heading "The Exchange Offer--Book-Entry Transfer."
The undersigned has completed, executed and delivered this letter of transmittal to indicate the action the undersigned desires to take with respect to the exchange offer.
Holders that are tendering by book-entry transfer to the exchange agent's account at DTC can execute the tender though the DTC Automated Tender Offer Program, for which the exchange offer is eligible. DTC participants that are tendering pursuant to the exchange offer must transmit their acceptance through the Automated Tender Offer Program to DTC, which will edit and verify the acceptance and send an agent's message to the exchange agent for its acceptance.
In order to properly complete this letter of transmittal, a holder of outstanding notes must:
- complete the box entitled "Description of Notes,"
- if appropriate, check and complete the boxes relating to guaranteed delivery, Special Issuance Instructions and Special Delivery Instructions,
- sign the letter of transmittal, and
- complete Substitute Form W-9.
If a holder desires to tender notes pursuant to the exchange offer and
(1) certificates representing such notes are not immediately available,
(2) time will not permit this letter of transmittal, certificates representing
such notes or other required documents to reach the exchange agent on or prior
to the expiration date, or (3) the procedures for book-entry transfer (including
delivery of an agent's message) cannot be completed on or prior to the
expiration date, such holder may nevertheless tender such notes with the effect
that such tender will be deemed to have been received on or prior to the
expiration date if the guaranteed delivery procedures described in the
prospectus under "The Exchange Offer--Guaranteed Delivery Procedures" are
followed. See Instruction 1 below.
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL, INCLUDING THE INSTRUCTIONS, AND THE PROSPECTUS CAREFULLY BEFORE COMPLETING THIS LETTER OF TRANSMITTAL OR CHECKING ANY BOX BELOW. The instructions included with this letter of transmittal must be followed. Questions and requests for assistance or for additional copies of the prospectus and this letter of transmittal, the Notice of Guaranteed Delivery and related documents may be directed to The Bank of New York, at the address and telephone number set forth on the cover page of this letter of transmittal. See instruction 11 below.
List below the outstanding notes to which this letter of transmittal relates. If the space provided is inadequate, list the certificate numbers and principal amounts at maturity on a separately executed schedule and affix the schedule to this letter of transmittal. Tenders of outstanding notes will be accepted only in principal amounts at maturity equal to $1,000 or integral multiples of $1,000.
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DESCRIPTION OF NOTES
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AGGREGATE
PRINCIPAL PRINCIPAL
AMOUNT AT AMOUNT AT
NAME(S) AND ADDRESS(ES) OF REGISTERED CERTIFICATE MATURITY MATURITY
HOLDER(S) (PLEASE FILL IN) NUMBER(S)* REPRESENTED** TENDERED**
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TOTAL PRINCIPAL
AMOUNT AT MATURITY
OF NOTES..................................
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* Need not be completed by holders delivering by book-entry transfer (see below).
** Unless otherwise indicated in the column "Principal Amount At Maturity Tendered" and subject to the terms and conditions of the exchange offer, the holder will be deemed to have tendered the entire aggregate principal amount at maturity represented by each note listed above and delivered to the exchange agent. See Instruction 4.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING THE BOXES BELOW
/ / CHECK HERE IF CERTIFICATES FOR TENDERED OUTSTANDING NOTES ARE ENCLOSED HEREWITH.
/ / CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED BY BOOK- ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE DTC AND COMPLETE THE FOLLOWING:
Name of Tendering Institution: _____________________________________________
Account Number with DTC: ___________________________________________________
Transaction Code Number: ___________________________________________________
/ / CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED DELIVERY IF TENDERED NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s): ___________________________________________
Window Ticket Number(s) (if any): __________________________________________
Date of Execution of the Notice of Guaranteed Delivery: ____________________
Name of Eligible Institution that Guaranteed Delivery: _____________________
IF DELIVERED BY BOOK-ENTRY TRANSFER, COMPLETE THE FOLLOWING: _______________
Name of Tendering Institution: _____________________________________________
Account Number at DTC: _____________________________________________________
Transaction Code Number: ___________________________________________________
/ / CHECK HERE IF YOU ARE A BROKER-DEALER THAT ACQUIRED YOUR TENDERED NOTES FOR
YOUR OWN ACCOUNT AS A RESULT OF MARKET-MA KING ACTIVITIES OR OTHER TRADING
ACTIVITIES AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10
COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.
Name: ______________________________________________________________________
Address: ___________________________________________________________________
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the exchange offer, the undersigned hereby tenders to Salt Holdings the principal amount at maturity of outstanding notes described above. Subject to, and effective upon, the acceptance for exchange of the outstanding notes tendered herewith, the undersigned hereby sells, assigns and transfers to, or upon the order of, Salt Holdings all right, title and interest in and to such outstanding notes.
The undersigned hereby irrevocably constitutes and appoints the exchange agent as the true and lawful agent and attorney-in-fact of the undersigned (with full knowledge that the exchange agent also acts as the agent of Salt Holdings and as trustee under the indenture relating to the outstanding notes) with respect to such tendered notes, with full power of substitution and resubstitution (such power of attorney being deemed to be an irrevocable power coupled with an interest), subject only to the right of withdrawal described in the prospectus, to (1) deliver certificates representing such tendered notes, or transfer ownership of such notes, on the account books maintained by DTC, and to deliver all accompanying evidence of transfer and authenticity to, or upon the order of, Salt Holdings upon receipt by the exchange agent, as the undersigned's agent, of the exchange notes to which the undersigned is entitled upon the acceptance by Salt Holdings of such outstanding notes for exchange pursuant to the exchange offer, (2) receive all benefits and otherwise to exercise all rights of beneficial ownership of such outstanding notes, all in accordance with the terms and conditions of the exchange offer, and (3) present such outstanding notes for transfer, and transfer such outstanding notes, on the relevant security register.
The undersigned hereby represents and warrants that the undersigned
(1) owns the notes tendered and is entitled to tender such notes and (2) has
full power and authority to tender, sell, exchange, assign and transfer the
outstanding notes and to acquire exchange notes issuable upon the exchange of
such tendered notes, and that, when the same are accepted for exchange, Salt
Holdings will acquire good, marketable and unencumbered title to the tendered
notes, free and clear of all liens, restrictions, charges and encumbrances and
not subject to any adverse claim or right or restriction or proxy of any kind.
The undersigned also warrants that it will, upon request, execute and deliver
any additional documents deemed by the exchange agent or Salt Holdings to be
necessary or desirable to complete the sale, exchange, assignment and transfer
of tendered notes or to transfer ownership of such notes on the account books
maintained by DTC. The undersigned has read and agrees to all of the terms of
the exchange offer.
The undersigned understands that tenders of the outstanding notes pursuant to any one of the procedures described in the prospectus under the caption "The Exchange Offer--Procedures for Tendering Outstanding Notes" and in the instructions to this letter of transmittal will, upon "Salt Holdings' acceptance of the notes for exchange, constitute a binding agreement between the undersigned and Salt Holdings in accordance with the terms and subject to the conditions of the exchange offer.
The exchange offer is subject to the conditions set forth in the prospectus under the caption "The Exchange Offer--Conditions to the Exchange Offer." The undersigned recognizes that as a result of these conditions (which may be waived, in whole or in part, by Salt Holdings) as more particularly set forth in the prospectus, Salt Holdings may not be required to exchange any of the outstanding notes tendered by this letter of transmittal and, in such event, the outstanding notes not exchanged will be returned to the undersigned at the address shown below the signature of the undersigned.
Unless a box under the heading "Special Issuance Instructions" is checked, by tendering outstanding notes and executing this letter of transmittal, the undersigned hereby represents and warrants that:
(i) the undersigned or any beneficial owner of the outstanding notes is acquiring the offered notes in the ordinary course of business of the undersigned (or such other beneficial owner);
(ii) neither the undersigned nor any beneficial owner is engaging in or intends to engage in a distribution of the offered notes within the meaning of the federal securities laws;
(iii) neither the undersigned nor any beneficial owner has an arrangement or understanding with any person or entity to participate in a distribution of the offered notes;
(iv) neither the undersigned nor any beneficial owner is an "affiliate," as such term is defined under Rule 405 promulgated under the Securities Act of 1933, of Salt Holdings. Upon request by Salt Holdings, the undersigned or such beneficial owner will deliver to Salt Holdings a legal opinion confirming it is not such an affiliate;
(v) if the undersigned or any beneficial owner is a resident of the State of California, if falls under the self-executing institutional investor exemption set forth under Section 25102(i) of the Corporate Securities Law of 1968 and Rules 260.102.10 and 260.105.14 of the California Blue Sky Regulations;
(vi) if the undersigned or any beneficial owner is a resident of the
Commonwealth of Pennsylvania, it falls under the self-executing
institutional investor exemption set forth under Sections 203(c), 102(d) and
(k) of the Pennsylvania Securities Act of 1972, Section 102.111 of the
Pennsylvania Blue Sky Regulations and an interpretive opinion dated
November 16, 1985;
(vii) the undersigned and each beneficial owner acknowledges and agrees that any person who is a broker-dealer registered under the Securities Exchange Act of 1934, as amended, or is participating in the exchange offer for the purpose of disturbing the exchange notes, must comply with the registration and delivery requirements of the Securities Act in connection with a secondary resale transaction of the exchange notes or interests therein acquired by such person and cannot rely on the position of the staff of the Securities and Exchange Commission (the "SEC") set forth in certain no-action letters;
(viii)the undersigned and each beneficial owner understands that a secondary resale transaction described in clause (vii) above and any resales of exchange notes or interests therein obtained by such holder in exchange for outstanding notes or interests therein originally acquired by such holder directly from Salt Holdings should be covered by an effective registration statement containing the selling security holder information required by Item 507 or Item 508, as applicable, of Regulation S-K or the SEC; and
(ix) the undersigned is not acting on behalf of any person or entity who could not truthfully make the foregoing representations.
The undersigned may, IF AND ONLY IF UNABLE TO MAKE ALL OF THE REPRESENTATIONS AND WARRANTIES CONTAINED IN (i)-(ix) ABOVE, elect to have its outstanding notes registered in the shelf registration described in the Registration Rights Agreement, dated as of December 20, 2002, by and among Salt Holdings and Credit Suisse First Boston Corporation, J.P. Morgan Securities Inc. and Deutsche Bank Securities Inc., in the form filed as an exhibit to the registration statement of which the prospectus is a part. Such election may be made by checking a box under "Special Issuance Instructions" below. By making such election, the undersigned agrees, jointly and severally, as a holder of transfer restricted securities participating in a shelf registration, to indemnify and hold harmless Salt Holdings, its respective agents, employees, directors and officers and each Person who controls Salt Holdings, within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Securities Exchange Act of 1934, as amended, against any and all losses, claims, judgments, damages and liabilities whatsoever (including, without limitation, the reasonable legal and other expenses incurred in connection with any matter, including any action that could give rise to such losses, claims, judgments, damages or liabilities) arising out of or based upon (i) any untrue statement or alleged untrue statement of any material fact contained in the shelf registration statement filed with respect to such outstanding notes or the prospectus or in any amendment thereof or supplement thereto or (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that any such loss, claim, damage or liability arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made therein based on information relating to the undersigned furnished to Salt Holdings in writing by or on behalf of the undersigned expressly for use therein. Any such indemnification shall be governed by the terms and subject to the conditions set forth in the Registration Rights Agreement, including, without limitation, the provisions regarding notice, retention of counsel, contribution and payment of expenses set forth therein. The above summary of the indemnification provision of the Registration Rights Agreement is not intended to be exhaustive and is qualified in its entirety by reference to the Registration Rights Agreement.
If the undersigned is a broker-dealer that will receive offered notes for its own account in exchange for outstanding notes that were acquired as a result of market-making activities or other trading activities, it acknowledges that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of such offered notes, however, by so acknowledging and delivering a prospectus, the undersigned will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. If the undersigned is a broker-dealer and outstanding notes held for its own account were not acquired as a result of market-making or other trading activities, such outstanding notes cannot be exchange pursuant to the exchange offer.
All authority herein conferred or agreed to be conferred shall not be affected by, and shall survive the death, bankruptcy or incapacity of the undersigned and every obligation of the undersigned hereunder shall be binding upon the heirs, personal representatives, executors, administrators, successors, assigns, trustees in bankruptcy and other legal representatives of the undersigned.
Tendered outstanding notes may be withdrawn at any time prior to 5:00 p.m., New York City time on , 2003 or on such later date or time to which Salt Holdings may extend the exchange offer.
Unless otherwise indicated herein under the box entitled "Special Issuance Instructions" below, exchange notes, and outstanding notes not tendered or accepted for exchange, will be issued in the name of the undersigned. Similarly, unless otherwise indicated under the box entitled "Special Delivery Instructions" below, exchange notes, and outstanding notes not tendered or accepted for exchange, will be delivered to the undersigned at the address shown below the signature of the undersigned. In the case of a book-entry delivery of notes, the exchange agent will credit the account maintained by DTC with any notes not tendered. The undersigned recognizes that Salt Holdings has no obligation pursuant to the "Special Issuance Instructions" to transfer any outstanding notes from the name of the registered holder thereof if Salt Holdings does not accept for exchange any of the principal amount at maturity of such outstanding notes so tendered.
The exchange notes will bear interest from the most recent interest payment date to which interest has been paid on the notes, or if no interest has been paid, from December 20, 2002. Interest on the outstanding notes accepted for exchange will cease to accrue upon the issuance of the exchange notes.
PLEASE SIGN HERE
(To Be Completed By All Tendering Holders of Outstanding Notes)
This letter of transmittal must be signed by the registered holder(s) of outstanding notes exactly as their name(s) appear(s) on certificate(s) for outstanding notes or on a security position listing, or by person(s) authorized to become registered holder(s) by endorsements and documents transmitted with this letter of transmittal, including such opinions of counsel, certifications and other information as may be required by Salt Holdings or the trustee for the outstanding notes to comply with the restrictions on transfer applicable to the outstanding notes. If the signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer or other person acting in a fiduciary or representative capacity, such person must set forth his or her full title below under "Capacity" and submit evidence satisfactory to the exchange agent of such person's authority to so act. See Instruction 5 below. If the signature appearing below is not of the registered holder(s) of the outstanding notes, then the registered holder(s) must sign a valid power of attorney.
X __________________________________________________________________________
X __________________________________________________________________________
Signature(s) of Holder(s) or Authorized Signatory
Dated: __________________, 2003
Name(s): ___________________________________________________________________
Capacity: __________________________________________________________________
Address: ___________________________________________________________________
Area Code and Telephone No.: _______________________________________________
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED--SEE INSTRUCTIONS 2 AND 5 BELOW)
Certain Signatures Must be Guaranteed by a Signature Guarantor
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 4 THROUGH 7)
To be completed ONLY if (i) certificates for outstanding notes in a principal amount at maturity not tendered are to be issued in the name of, or exchange notes issued pursuant to the exchange offer are to be issued in the name of, someone other than the person or persons whose name(s) appear(s) within this letter of transmittal or issued to an address different from that shown in the box entitled "Description of Notes" within this letter of transmittal, (ii) outstanding notes not tendered, but represented by certificates tendered by this letter of transmittal, are to be returned by credit to an account maintained at DTC other than the account indicated above or (iii) exchange notes issued pursuant to the exchange offer are to be issued by book-entry transfer to an account maintained at DTC other than the account indicated above.
Issue:
/ / Exchange Notes, to:
/ / Outstanding Notes, to:
Name(s):____________________________________________________________________
Address:____________________________________________________________________
Telephone Number:___________________________________________________________
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 4 THROUGH 7)
To be completed ONLY if certificates for outstanding notes in a principal amount at maturity not tendered, or exchange notes, are to be sent to someone other than the person or persons whose name(s) appear(s) within this letter of transmittal to an address different from that shown in the box entitled "Description of Notes" within this letter of transmittal.
Deliver:
/ / Exchange Notes, to:
/ / Outstanding Notes, to:
Name(s): ___________________________________________________________________
Address: ___________________________________________________________________
Telephone Number: __________________________________________________________
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER)
Is this a permanent address change? (check one box)
Yes/ / No/ /
INSTRUCTIONS TO LETTER OF TRANSMITTAL
(FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER)
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND NOTES. This letter of transmittal is to be completed by holders of outstanding notes if certificates representing such notes are to be forwarded herewith, or, unless an agent's message is utilized, if tender is to be made by book-entry transfer to the account maintained by DTC, pursuant to the procedures set forth in the prospectus under "The Exchange Offer--Procedures for Tendering Outstanding Notes." For a holder to properly tender notes pursuant to the exchange offer, a properly completed and duly executed letter of transmittal (or a manually signed facsimile thereof), together with any signature guarantees and any other documents required by these Instructions, or a properly transmitted agent's message in the case of a book-entry transfer, must be received by the exchange agent at its address set forth herein on or prior to the expiration date, and either (1) certificates representing such notes must be received by the exchange agent at its address, or (2) such notes must be transferred pursuant to the procedures for book-entry transfer described in the prospectus under "The Exchange Offer--Book-Entry Transfer" and a book-entry confirmation must be received by the exchange agent on or prior to the expiration date. A holder who desires to tender notes and who cannot comply with procedures set forth herein for tender on a timely basis or whose notes are not immediately available must comply with the guaranteed delivery procedures discussed below.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE OUTSTANDING NOTES AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND SOLE RISK OF THE HOLDER AND DELIVERY WILL BE DEEMED TO BE MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT. INSTEAD OF DELIVERY BY MAIL, HOLDERS SHOULD USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, HOLDERS SHOULD ALLOW FOR SUFFICIENT TIME TO ENSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION OF THE EXCHANGE OFFER AND PROPER INSURANCE SHOULD BE OBTAINED. HOLDERS MAY REQUEST THEIR BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR NOMINEE TO EFFECT THESE TRANSACTIONS FOR SUCH HOLDER. HOLDERS SHOULD NOT SEND ANY NOTE, LETTER OF TRANSMITTAL OR OTHER REQUIRED DOCUMENT TO SALT HOLDINGS.
If a holder desires to tender notes pursuant to the exchange offer and
(1) certificates representing such notes are not immediately available,
(2) time will not permit such holder's letter of transmittal, certificates
representing such notes or other required documents to reach the exchange agent
on or prior to the expiration date, or (3) the procedures for book-entry
transfer (including delivery of an agent's message) cannot be completed on or
prior to the expiration date, such holder may nevertheless tender such notes
with the effect that such tender will be deemed to have been received on or
prior to the expiration date if the guaranteed delivery procedures set forth in
the prospectus under "The Exchange Offer--Guaranteed Delivery Procedures" are
followed. Pursuant to such procedures, (1) the tender must be made by or through
an eligible guarantor institution (as defined below), (2) a properly completed
and duly executed notice of guaranteed delivery, substantially in the form
provided by Salt Holdings herewith, or an agent's message with respect to a
guaranteed delivery that is accepted by Salt Holdings, must be received by the
exchange agent on or prior to the expiration date, and (3) the certificates for
the tendered notes, in proper form for transfer (or a book-entry confirmation of
the transfer of such notes into the exchange agent's account at DTC as described
in the prospectus) together with a letter of transmittal (or manually signed
facsimile thereof) properly completed and duly executed, with any required
signature guarantees and any other documents required by the letter of
transmittal, or a properly transmitted agent's message, must be received by the
exchange agent within three New York Stock Exchange, Inc. trading days after the
execution of the notice of guaranteed delivery.
The notice of guaranteed delivery may be delivered by hand or transmitted by facsimile or mail to the exchange agent and must include a guarantee by an eligible guarantor institution in the form set forth in the notice of guaranteed delivery. For outstanding notes to be properly tendered pursuant to the guaranteed delivery procedure, the exchange agent must receive a notice of guaranteed delivery prior to the expiration date. As used herein and in the prospectus, "eligible guarantor institution" means a firm or other entity identified in Rule 17Ad-15 under the Exchange Act as "an eligible guarantor institution," including (as such terms are defined therein): (i) a bank; (ii) a broker, dealer, municipal securities broker or dealer or government securities broker or dealer; (iii) a credit union; (iv) a national securities exchange, registered securities association or clearing agency; or (v) a savings association that is a participant in a Securities Transfer Association.
2. GUARANTEE OF SIGNATURES. Signatures on this letter of transmittal must be guaranteed by a member of or participant in the Securities Transfer Agents Medallion Program, the New York Stock Exchange, Inc. Medallion Signature Program or the Stock Exchange Medallion Program or by an eligible guarantor institution unless the notes tendered hereby are tendered (1) by a registered holder of notes (or by a participant in DTC whose name appears on a security position listing as the owner of such notes) who has signed this letter of transmittal and who has not completed any of the boxes entitled "Special Issuance Instructions" or "Special Delivery Instructions," on the letter of transmittal, or (2) for the account of an eligible guarantor institution. If the notes are registered in the name of a person other than the signer of the letter of transmittal or if notes not tendered are to be returned to, or are to be issued to the order of, a person other than the registered holder or if notes not tendered are to be sent to someone other than the registered holder, then the signature on this letter of transmittal accompanying the tendered notes must be guaranteed as described above. Beneficial owners whose notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee must contact such broker, dealer, commercial bank, trust company or other nominee if they desire to tender notes. See "The Exchange Offer--Procedures for Tendering Outstanding Notes," in the prospectus.
3. WITHDRAWAL OF TENDERS. Except as otherwise provided in the prospectus, tenders of notes may be withdrawn at any time on or prior to the expiration date. For a withdrawal of tendered notes to be effective, a written, telegraphic or facsimile transmission notice of withdrawal must be received by the exchange agent on or prior to the expiration date at its address set forth on the cover of this letter of transmittal. Any such notice of withdrawal must (1) specify the name of the person who tendered the notes to be withdrawn, (2) identify the notes to be withdrawn, including the certificate number or numbers shown on the particular certificates evidencing such notes (unless such notes were tendered by book-entry transfer), the aggregate principal amount at maturity represented by such notes and the name of the registered holder of such notes, if different from that of the person who tendered such notes, (3) be signed by the holder of such notes in the same manner as the original signature on the letter of transmittal by which such notes were tendered (including any required signature guarantees), or be accompanied by (i) documents of transfer sufficient to have the trustee register the transfer of the notes into the name of the person withdrawing such notes, and (ii) a properly completed irrevocable proxy authorizing such person to effect such withdrawal on behalf of such holder (unless the notes were tendered by book-entry transfer), and (4) specify the name in which any such notes are to be registered, if different from that of the registered holder. If the notes were tendered pursuant to the procedures for book-entry transfer sent forth in "The Exchange Offer--Procedures for Tendering Outstanding Notes," the notice of withdrawal must specify the name and number of the account at DTC to be credited with the withdrawal of outstanding notes and must otherwise comply with the procedures of DTC. If the notes to be withdrawn have been delivered or otherwise identified to the exchange agent, a signed notice of withdrawal is effective immediately upon written or facsimile notice of such withdrawal even if physical release is not yet effected.
Any permitted withdrawal of notes may not be rescinded. Any notes properly withdrawn will thereafter be deemed not validly tendered for purposes of the exchange offer. However, properly withdrawn notes may be retendered by following one of the procedures described in the prospectus under the caption "The Exchange Offer--Procedures for Tendering Outstanding Notes" at any time prior to the expiration date.
All questions as to the validity, form and eligibility (including time of receipt) of such withdrawal notices will be determined by Salt Holdings, in its sole discretion, which determination shall be final and binding on all parties. None of Salt Holdings, any affiliates of Salt Holdings, the exchange agent or any other person shall be under any duty to give any notification of any defects or irregularities in any notice of withdrawal or incur any liability for failure to give any such notification.
4. PARTIAL TENDERS. Tenders of notes pursuant to the exchange offer will be
accepted only in principal amounts at maturity equal to $1,000 or integral
multiples of $1,000. If less than the entire principal amount at maturity of any
notes evidenced by a submitted certificate is tendered, the tendering holder
must fill in the principal amount at maturity tendered in the last column of the
box entitled "Description of Notes" herein. The entire principal amount at
maturity represented by the certificates for all notes delivered to the exchange
agent will be deemed to have been tendered unless otherwise indicated. If the
entire principal amount at maturity of all notes held by the holder is not
tendered, new certificates for the principal amount at maturity of notes not
tendered and exchange notes issued in exchange for any notes tendered and
accepted will be sent (or, if tendered by book-entry transfer, returned by
credit to the account at DTC designated herein) to the holder unless otherwise
provided in the appropriate box on this letter of transmittal (see Instruction
6), as soon as practicable following the expiration date.
5. SIGNATURE ON THIS LETTER OF TRANSMITTAL; BOND POWERS AND ENDORSEMENTS; GUARANTEE OF SIGNATURES. If this letter of transmittal is signed by the registered holder(s) of the outstanding notes tendered hereby, the signature must correspond exactly with the name(s) as written on the face of certificates without alteration, enlargement or change whatsoever. If this letter of transmittal is signed by a participant in DTC whose name is shown as the owner of the notes tendered hereby, the signature must correspond with the name shown on the security position listing the owner of the notes.
If any of the notes tendered hereby are owned of record by two or more joint owners, all such owners must sign this letter of transmittal.
If any tendered notes are registered in different names on several certificates, it will be necessary to complete, sign and submit as many copies of this letter of transmittal and any necessary accompanying documents as there are different names in which certificates are held.
If this letter of transmittal is signed by the holder, and the certificates for any principal amount at maturity of notes not tendered are to be issued (or if any principal amount at maturity of notes that is not tendered is to be reissued or returned) to or, if tendered by book-entry transfer, credited to the account of DTC of the registered holder, and exchange notes exchanged for outstanding notes in connection with the exchange offer are to be issued to the order of the registered holder, then the registered holder need not endorse any certificates for tendered notes nor provide a separate bond power. In any other case (including if this letter of transmittal is not signed by the registered holder), the registered holder must either properly endorse the certificates for notes tendered or transmit a separate properly completed bond power with this letter of transmittal (in either case, executed exactly as the name(s) of the registered holder(s) appear(s) on such notes, and, with respect to a participant in DTC whose name appears on a security position listing as the owner of notes, exactly as the name(s) of the participant(s) appear(s) on such security position listing), with the signature on the endorsement or bond power guaranteed by a signature guarantor or an eligible guarantor institution, unless such certificates or bond powers are executed by an eligible guarantor institution, and must also be
accompanied by such opinions of counsel, certifications and other information as Salt Holdings or the trustee for the original notes may require in accordance with the restrictions on transfer applicable to the outstanding notes. See Instruction 2.
Endorsements on certificates for notes and signatures on bond powers provided in accordance with this Instruction 5 by registered holders not executing this letter of transmittal must be guaranteed by an eligible institution. See Instruction 2.
If this letter of transmittal or any certificates representing notes or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and proper evidence satisfactory to the exchange agent, in its sole discretion, of their authority so to act must be submitted with this letter of transmittal.
6. SPECIAL ISSUANCE AND SPECIAL DELIVERY INSTRUCTIONS. Tendering holders should indicate in the applicable box or boxes the name and address to which notes for principal amounts at maturity not tendered or exchange notes exchanged for outstanding notes in connection with the exchange offer are to be issued or sent, if different from the name and address of the holder signing this letter of transmittal. In the case of issuance in a different name, the taxpayer-identification number of the person named must also be indicated. Holders tendering by book-entry transfer may request that outstanding notes not exchanged be credited to such accounted maintained at DTC as such holder may designate. If no instructions are given, notes not tendered will be returned to the registered holder of the notes tendered. For holders of notes tendered by book-entry transfer, notes not tendered will be returned by crediting the account at DTC designated above.
7. TAXPAYER IDENTIFICATION NUMBER AND SUBSTITUTE FORM W-9. Federal income tax law generally requires that each tendering holder is required to provide the exchange agent with its correct taxpayer identification number, which, in the case of a holder who is an individual, is his or her social security number. If the exchange agent is not provided with the correct taxpayer identification number or an adequate basis for an exemption, the holder may be subject to backup withholding in an amount equal to up to 31% of the reportable payments made with respect to the notes and a $50 penalty imposed by the Internal Revenue Service. If withholding results in an over-payment of taxes, a refund may be obtained. Certain holders (including, among others, all corporations and certain foreign individuals) are not subject to these backup withholding and reporting requirements. See the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for additional instructions.
To prevent backup withholding, each holder tendering outstanding notes must provide such holder's correct taxpayer identification number by completing the Substitute Form W-9 set forth herein, certifying that the taxpayer identification number provided is correct (or that such holder is awaiting a taxpayer identification number) and that (i) such holder is exempt from backup withholding, (ii) the holder has not been notified by the Internal Revenue Service that such holder is subject to backup withholding as a result of failure to report all interest or dividends, or (iii) the Internal Revenue Service has notified the holder that such holder is no longer subject to backup withholding.
If the holder tendering outstanding notes does not have a taxpayer identification number, such holder should consult the "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for instructions on applying for a taxpayer identification number, write "Applied For" in the space for the taxpayer identification number in Part 1 of the Substitute Form W-9 and sign and date the Substitute Form W-9 and the Certification of Awaiting Taxpayer Identification Number set forth herein. If the holder tendering outstanding notes does not provide such holder's taxpayer identification number to the exchange agent within 60 days, backup withholding will begin and continue until such holder furnishes such holder's taxpayer identification number to the exchange agent. NOTE: Writing
"Applied For" on the form means that the holder tendering outstanding notes has already applied for a taxpayer identification number or that such holder intends to apply for one in the near future.
If the outstanding notes are registered in more than one name or are not in the name of the actual owner, consult the "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for information on which tax payer identification number to report.
Exempt holders tendering outstanding notes (including, among others, all corporations and certain foreign individuals) are not subject to these backup withholding and reporting requirements. To prevent possible erroneous backup withholding, an exempt holder tendering outstanding notes must enter its correct taxpayer identification number in Part I of the Substitute Form W-9, write "Exempt" in Part 2 of such form and sign and date the form. See the "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for additional instructions. In order for a nonresident alien or foreign entity to qualify as exempt, such person must submit a completed Form W-8, "Certificate of Foreign Status," signed under penalty of perjury attesting to such exempt status. Such form may be obtained from the exchange agent.
Salt Holdings reserves the right in its sole discretion to take whatever steps are necessary to comply with its obligation regarding backup withholding.
8. TRANSFER TAXES. Salt Holdings will pay all transfer taxes, if any, required to be paid by Salt Holdings in connection with the exchange of the outstanding notes for the exchange notes. If, however, exchange notes, or outstanding notes for principal amounts at maturity not tendered or accepted for exchange, are to be delivered to, or are to be issued in the name of, any person other than the registered holder of the outstanding notes tendered, or if a transfer tax is imposed for any reason other than the exchange of the outstanding notes in connection with the exchange offer, then the amount of any transfer tax (whether imposed on the registered holder or any other persons) will be payable by the tendering holder. If satisfactory evidence of payment of the transfer taxes or exemption therefrom is not submitted with the letter of transmittal, the amount of such transfer taxes will be billed directly to the tendering holder.
9. MUTILATED, LOST, STOLEN OR DESTROYED OUTSTANDING NOTES. If any certificate representing outstanding notes has been mutilated, lost, stolen or destroyed, the holder should promptly contact the exchange agent at the address indicated above. The holder will then be instructed as to the steps that must be taken in order to replace the certificate. This letter of transmittal and related documents cannot be processed until the procedures for replacing mutilated, lost, stolen or destroyed certificates have been followed.
10. IRREGULARITIES. All questions as to the validity, form, eligibility, time of receipt, acceptance and withdrawal of any tenders of notes pursuant to the procedures described in the prospectus and the form and validity of all documents will be determined by Salt Holdings, in its sole discretion, which determination shall be final and binding on all parties. Salt Holdings reserves the absolute right, in its sole and absolute discretion, to reject any or all tenders of any notes determined by it not to be in proper form or the acceptance of which may, in the opinion of Salt Holdings' counsel, be unlawful. Salt Holdings also reserves the absolute right, in its sole discretion subject to applicable law, to waive or amend any of the conditions of the exchange offer or to waive any defect or irregularity in the tender of any particular notes, whether or not similar defects or irregularities are waived in the case of other tenders. Salt Holdings' interpretations of the terms and conditions of the exchange offer (including, without limitation, the instructions in this letter of transmittal) shall be final and binding. No alternative, conditional or contingent tenders will be accepted. Unless waived, any irregularities in connection with tenders must be cured within such time as Salt Holdings shall determine. Each tendering holder, by execution of a letter of transmittal (or a manually signed facsimile thereof), waives any right to receive any notice of the acceptance of such tender. Tenders of such notes shall not be deemed to have been made until such irregularities have been cured or waived.
Any notes received by the exchange agent that are not properly tendered and as to which the irregularities have not been cured or waived will be returned by the exchange agent to the tendering holders, unless such holders have otherwise provided herein, promptly following the expiration date. None of Salt Holdings, any of its affiliates, the exchange agent or any other person will be under any duty to give notification of any defects or irregularities in such tenders or will incur any liability to holders for failure to give such notification.
11. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions relating to the procedure for tendering, as well as requests for assistance or additional copies of the prospectus, this letter of transmittal and the notice of guaranteed delivery may be directed to the exchange agent at the address and telephone number set forth above. Holders may also contact their broker, dealer, commercial bank, trust company or other nominee for assistance concerning the exchange offer.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A FACSIMILE THEREOF (TOGETHER WITH CERTIFICATES FOR OUTSTANDING NOTES OR A BOOK-ENTRY-CONFIRMATION AND ALL OTHER REQUIRED DOCUMENTS) OR A NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE EXCHANGE AGENT ON OR PRIOR TO 5:00 P.M., NEW YORK CITY TIME ON THE EXPIRATION DATE.
PAYOR'S NAME: THE BANK OF NEW YORK
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SUBSTITUTE PART I--PLEASE TIN ------------------------
FORM W-9 PROVIDE YOUR TIN IN (Social Security Number(s)
THE BOX AT RIGHT AND or Employer Identification Number(s)
CERTIFY BY SIGNING
AND DATING BELOW
------------------------------------------------------------------
PART 2--FOR PAYEES EXEMPT FROM BACKUP
WITHHOLDING PLEASE WRITE "EXEMPT" HERE (SEE
INSTRUCTIONS) ------------------------------------------------
------------------------------------------------------------------
PART 3--CERTIFICATION--UNDER PENALTIES OF PERJURY, I CERTIFY THAT
DEPARTMENT OF (1) The number shown on this form is my correct taxpayer
THE TREASURY identification number (or I am waiting for a number to be issued
INTERNAL to me), (2) I am not subject to backup withholding because: (a) I
REVENUE SERVICE am exempt from backup withholding, (b) I have not been notified by
PAYOR'S REQUEST FOR the Internal Revenue Service (the "IRS") that I am subject to
TAXPAYER IDENTIFICATION backup withholding as a result of a failure to report all interest
NUMBER ("TIN") or dividends, or (c) the IRS has notified me that I am no longer
subject to backup withholding, and (3) I am a U.S. person
(including a U.S. resident alien).
THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT TO ANY
PROVISION OF THIS DOCUMENT OTHER THAN THE CERTIFICATIONS REQUIRED
TO AVOID BACKUP WITHHOLDING.
SIGNATURE: ------------------------ DATE: ---------------, 2003
---------------------------------------------------------------------------------------------------------------
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You must cross out item (2) of Part 3 above if you have been notified by the IRS that you are currently subject to backup withholding because of underreporting interest or dividends on your tax return.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU WROTE "APPLIED FOR" IN PART 1
OF THE SUBSTITUTE FORM W-9.
------------------------------------------------------------ CERTIFICATION OF AWAITING TAXPAYER IDENTIFICATION NUMBER I CERTIFY UNDER PENALTIES OF PERJURY THAT A TAXPAYER IDENTIFICATION NUMBER HAS NOT BEEN ISSUED TO ME, AND EITHER (1) I HAVE MAILED OR DELIVERED AN APPLICATION TO RECEIVE A TAXPAYER IDENTIFICATION NUMBER TO THE APPROPRIATE INTERNAL REVENUE SERVICE CENTER OR SOCIAL SECURITY ADMINISTRATION OFFICE, OR (2) I INTEND TO MAIL OR DELIVER AN APPLICATION IN THE NEAR FUTURE. I UNDERSTAND THAT IF I DO NOT PROVIDE A TAXPAYER IDENTIFICATION NUMBER WITHIN SIXTY DAYS, THE PAYOR IS REQUIRED TO WITHHOLD UP TO 31% OF ALL CASH PAYMENTS MADE TO ME THEREAFTER UNTIL I PROVIDE A NUMBER. Signature: Date: ------------------------------------------------------------ |
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM W-9 MAY RESULT IN BACKUP WITHHOLDING OF UP TO 31 PERCENT OF ANY CASH PAYMENTS. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
NOTICE OF GUARANTEED DELIVERY
FOR TENDER OF ANY AND ALL OUTSTANDING
SERIES A 12 3/4% SENIOR DISCOUNT NOTES DUE 2012
OF
SALT HOLDINGS CORPORATION
PURSUANT TO THE PROSPECTUS DATED , 2003
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
5:00 P.M., NEW YORK CITY TIME, ON , 2003, UNLESS
EXTENDED (THE "EXPIRATION DATE").
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THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
THE BANK OF NEW YORK
BY MAIL: BY FACSIMILE TRANSMISSION: BY HAND/OVERNIGHT DELIVERY:
The Bank of New York (for eligible institutions The Bank of New York
Corporate Trust Operations only) Corporate Trust Operations
Reorganization Unit (212) 298-1915 Reorganization Unit
101 Barclay Street--7 East Attn: Sirojni Dindial 101 Barclay Street--7 East
New York, New York 10286 Confirm by Telephone: New York, New York 10286
Attn: Carolle Montreuil (212) 815-5920 Attn: Carolle Montreuil
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DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF THIS NOTICE OF GUARANTEED DELIVERY VIA A FACSIMILE TRANSMISSION TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
As set forth in the prospectus, dated , 2003, of Salt Holdings Corporation, a Delaware corporation ("Salt Holdings"), under "The Exchange Offer--Guaranteed Delivery Procedures," and in the accompanying letter of transmittal and instructions thereto, this form or one substantially equivalent hereto or an agent's message relating to guaranteed delivery must be used to accept Salt Holdings' offer to exchange $1,000 principal amount at maturity of its 12 3/4% Series B Senior Discount Notes due 2012, which have been registered under the Securities Act of 1933, as amended, for each $1,000 principal amount at maturity of its outstanding 12 3/4% Series A Senior Discount Notes due 2012, if certificates representing such notes are not immediately available, time will not permit the letter of transmittal, certificates representing such notes or other required documents to reach the exchange agent, or the procedures for book-entry transfer (including a properly transmitted agent's message with respect thereto) cannot be completed, on or prior to the expiration date.
This form is not to be used to guarantee signatures. If a signature on the letter of transmittal is required to be guaranteed by signature guarantor under the instructions thereto, such signature guarantee must appear in the applicable space provided in the letter of transmittal.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to Salt Holdings, upon the terms and subject to the conditions set forth in the prospectus and the letter of transmittal, receipt of which is hereby acknowledged, the aggregate principal amount at maturity of outstanding notes set forth below pursuant to the guaranteed delivery procedures set forth in the prospectus under the caption "The Exchange Offer--Guaranteed Delivery Procedures." The undersigned hereby authorizes the exchange agent to deliver this notice of guaranteed delivery to Salt Holdings with respect to the outstanding notes tendered pursuant to the exchange offer.
The undersigned understands that tenders of the outstanding notes will be accepted only in principal amounts at maturity equal to $1,000 or integral multiples thereof. The undersigned also understands that tenders of the outstanding notes pursuant to the exchange offer may be withdrawn at any time prior to the expiration date. For a withdrawal of a tender of notes to be effective, it must be made in accordance with the procedures set forth in the prospectus under "The Exchange Offer--Withdrawal Rights."
The undersigned understands that the exchange of any exchange notes for outstanding notes will be made only after timely receipt by the exchange agent of (i) the certificates of the tendered notes, in proper form for transfer (or a book-entry confirmation of the transfer of such notes into the exchange agent's account at The Depository Trust Company), and (ii) a letter of transmittal (or a manually signed facsimile thereof) properly completed and duly executed with any required signature guarantees, together with any other documents required by the letter of transmittal (or a properly transmitted agent's message), within three New York Stock Exchange, Inc. trading days after the execution hereof.
All authority herein conferred or agreed to be conferred by this notice of guaranteed delivery shall not be affected by, and shall survive, the death or incapacity of the undersigned, and every obligation of the undersigned under this notice of guaranteed delivery shall be binding upon the heirs, personal representatives, executors, administrators, successors, assigns, trustees in bankruptcy and other legal representatives of the undersigned.
PLEASE SIGN AND COMPLETE
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X Date:
X Address:
Signature(s) of Registered Holder(s) or
Authorized Signatory Area Code and Telephone No.:
Name(s) of Registered Holder(s):
If Notes will be delivered by book-entry
Principal Amount of Notes Tendered*: transfer,
provide information below:
Name of Tendering Institution:
Certificate No.(s) of Notes (if available): Depositary Account No. with DTC:
Transaction Code Number:
* Must be in denominations of $1,000 and any
integral multiple thereof.
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DO NOT SEND NOTES WITH THIS FORM. NOTES SHOULD BE SENT TO THE EXCHANGE AGENT TOGETHER WITH A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL OR PROPERLY TRANSMITTED AGENT'S MESSAGE.
This notice of guaranteed delivery must be signed by the holder(s) exactly as their name(s) appear(s) on certificate(s) for notes or on a security position listing as the owner of notes, or by person(s) authorized to become holder(s) by endorsements and documents transmitted with this notice of guaranteed delivery. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer or other person acting in a fiduciary or representative capacity, such person must provide the following information:
PLEASE PRINT NAME(S) AND ADDRESS(ES)
THE GUARANTEE BELOW MUST BE COMPLETED
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or a correspondent in the United States or an "eligible guarantor institution" within the meaning of Rule 17Ad-15 promulgated under the Securities Exchange Act of 1934, as amended, hereby guarantees that the notes to be tendered hereby are in proper form for transfer (pursuant to the procedures set forth in the prospectus under "The Exchange Offer--Guaranteed Delivery Procedures"), and that the exchange agent will receive (a) such notes, or a book-entry confirmation of the transfer of such notes into the exchange agent's account at The Depository Trust Company, and (b) a properly completed and duly executed letter of transmittal (or facsimile thereof) with any required signature guarantees and any other documents required by the letter of transmittal, or a properly transmitted agent's message, within three New York Stock Exchange, Inc. trading days after the date of execution hereof.
The eligible guarantor institution that completes this form must communicate the guarantee to the exchange agent and must deliver the letter of transmittal, or a properly transmitted agent's message, and notes, or a book-entry confirmation in the case of a book-entry transfer, to the exchange agent within the time period described above. Failure to do so could result in a financial loss to such eligible guarantor institution.
LETTER TO REGISTERED HOLDERS AND DTC PARTICIPANTS
REGARDING THE TENDER OF ANY AND ALL OUTSTANDING
SERIES A 12 3/4% SENIOR DISCOUNT NOTES DUE 2012
OF
SALT HOLDINGS CORPORATION
PURSUANT TO THE PROSPECTUS DATED , 2003
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
5:00 P.M., NEW YORK CITY TIME, ON , 2003, UNLESS
EXTENDED (THE "EXPIRATION DATE").
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, 2003
To Registered Holders and DTC Participants:
Salt Holdings Corporation, a Delaware corporation ("Salt Holdings"), is offering to exchange, upon and subject to the terms and conditions set forth in the prospectus, dated , 2003, and the letter of transmittal, $1,000 principal amount at maturity of its 12 3/4% Series B Senior Discount Notes due 2012, which have been registered under the Securities Act of 1933, as amended, for each $1,000 principal amount at maturity of its outstanding 12 3/4% Series A Senior Discount Notes due 2012, of which $123,500,000 aggregate principal amount at maturity is outstanding.
In connection with the exchange offer, we are requesting that you contact your clients for whom you hold outstanding notes registered in your name or in the name of your nominee, or who hold outstanding notes registered in their own names. Salt Holdings will not pay any fees or commissions to any broker, dealer or other person in connection with the solicitation of tenders pursuant to the exchange offer. However, you will, upon request, be reimbursed for reasonable out-of-pocket expenses incurred in connection with soliciting acceptances of the exchange offer. Salt Holdings will pay or cause to be paid all transfer taxes applicable to the exchange of outstanding notes pursuant to the exchange offer, except as set forth in the prospectus and the letter of transmittal.
For your information and for forwarding to your clients, we are enclosing the following documents:
1. The prospectus dated , 2003;
2. The letter of transmittal for your use in connection with the tender of the outstanding notes and for the information of your clients;
3. The notice of guaranteed delivery to be used to accept the exchange offer if the outstanding notes and all other required documents cannot be delivered to the exchange agent prior to the Expiration Date; and
4. A form of letter which may be sent to your clients for whose account you hold outstanding notes registered in your name or the name of your nominee, with space provided for obtaining such clients' instructions with regard to the exchange offer.
To participate in the exchange offer, a beneficial holder must either:
- cause to be delivered to The Bank of New York (the "exchange agent"), at the address set forth in the letter of transmittal, definitive certificated notes representing outstanding notes in proper form for transfer together with a duly executed and properly completed letter of transmittal, with any required signature guarantees and any other required documents; or
- cause a DTC Participant to tender such holder's outstanding notes to the Exchange Agent's account maintained at the Depository Trust Company ("DTC") for the benefit of the Exchange Agent through DTC's Automated Tender Offer Program ("ATOP"), including transmission of a
computer-generated message that acknowledges and agrees to be bound by the terms of the letter of transmittal.
By complying with DTC's ATOP procedures with respect to the exchange offer, the DTC Participant confirms on behalf of itself and the beneficial owners of tendered outstanding notes all provisions of the letter of transmittal applicable to it and such beneficial owners as fully as if it completed, executed and returned the letter of transmittal to the exchange agent.
You will need to contact those of your clients for whose account you hold definitive certificated notes or book-entry interests representing outstanding notes and seek their instructions regarding the exchange offer.
If holders of outstanding notes wish to tender, but it is impracticable for them to forward their certificates for outstanding notes prior to the expiration of the exchange offer or to comply with the book-entry transfer procedures on a timely basis, a tender may be effected by following the guaranteed delivery procedures described in the prospectus and the letter of transmittal.
Any inquiries you may have with respect to the exchange offer, or requests for additional copies of the enclosed materials, should be directed to the exchange agent for the outstanding notes, at its address and telephone number set forth on the front of the letter of transmittal.
Very truly yours, Salt Holdings Corporation
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY OTHER PERSON AS AN AGENT OF SALT HOLDINGS OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON BEHALF OF EITHER OF THEM WITH RESPECT TO THE EXCHANGE OFFER, EXCEPT FOR STATEMENTS EXPRESSLY MADE IN THE PROSPECTUS OR THE LETTER OF TRANSMITTAL.
INSTRUCTION TO REGISTERED HOLDERS AND
DTC PARTICIPANTS
FROM BENEFICIAL OWNER OF
SERIES A 12 3/4% SENIOR DISCOUNT NOTES DUE 2012
OF
SALT HOLDINGS CORPORATION
The undersigned hereby acknowledges receipt of the prospectus, dated , 2003, of Salt Holdings Corporation, a Delaware corporation ("Salt Holdings"), and the letter of transmittal, that together constitute Salt Holdings' offer to exchange $1,000 principal amount at maturity of its Series B 12 3/4% Senior Discount Notes due 2012, which have been registered under the Securities Act of 1933, as amended, for each $1,000 principal amount at maturity of its outstanding Series A 12 3/4% Senior Discount Notes due 2012, of which $123,500,000 aggregate principal amount at maturity is outstanding.
This will instruct you, the registered holder and/or book-entry transfer facility participant, as to the action to be taken by you relating to the exchange offer with respect to the outstanding notes held by you for the account of the undersigned, upon and subject to the terms and conditions set forth in the prospectus and the letter of transmittal.
The aggregate face amount of the outstanding notes held by you for the account of the undersigned is (FILL IN AMOUNT):
$ of Series A 12 3/4% Senior Discount Notes due 2012.
With respect to the exchange offer, the undersigned hereby instructs you (check appropriate box):
/ / To TENDER ALL of the outstanding notes held by you for the
account of the undersigned.
/ / To TENDER the following outstanding notes held by you for
the account of the undersigned (INSERT PRINCIPAL AMOUNT OF
OUTSTANDING NOTES TO BE TENDERED, IF ANY):
$ of Series A 12 3/4% Senior Discount Notes due
2012.
/ / NOT to TENDER any outstanding notes held by you for the
account of the undersigned.
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If the undersigned instructs you to tender outstanding notes held by you for the account of the undersigned, it is understood that you are authorized:
- to make, on behalf of the undersigned (and the undersigned, by its signature below, hereby makes to you), the representations and warranties and agreements contained in the letter of transmittal that are to be made with respect to the undersigned as a beneficial owner, including but not limited to the representations, that:
- the exchange notes acquired pursuant to the exchange offer are being acquired in the ordinary course of business of the undersigned;
- the undersigned is not engaging in and does not intend to engage in a distribution of the exchange notes;
- the undersigned does not have an arrangement or understanding with any person to participate in the distribution of such exchange notes;
- the undersigned is not an "affiliate" of Salt Holdings within the meaning of Rule 405 under the Securities Act of 1933, as amended;
- if the undersigned is a resident of the State of California, if falls
under the self-executing institutional investor exemption set forth under
Section 25102(i) of the Corporate Securities Law of 1968 and
Rules 260.102.10 and 260.105.14 of the California Blue Sky Regulations;
- if the undersigned is a resident of the Commonwealth of Pennsylvania, it falls under the self-executing institutional investor exemption set forth under Sections 203(c), 102(d) and (k) of the Pennsylvania Securities Act of 1972, Section 102.111 of the Pennsylvania Blue Sky Regulations and an interpretive opinion dated November 16, 1985;
- the undersigned acknowledges and agrees that any person who is a broker-dealer registered under the Securities Exchange Act of 1934, as amended, or is participating in the exchange offer for the purpose of disturbing the exchange notes, must comply with the registration and delivery requirements of the Securities Act in connection with a secondary resale transaction of the exchange notes or interests therein acquired by such person and cannot rely on the position of the staff of the Securities and Exchange Commission (the "SEC") set forth in certain no-action letters;
- the undersigned and each beneficial owner understands that a secondary resale transaction described in the previous bullet point and any resales of exchange notes or interests therein obtained by such holder in exchange for outstanding notes or interests therein originally acquired by such holder directly from Salt Holdings should be covered by an effective registration statement containing the selling security holder information required by Item 507 or Item 508, as applicable, of Regulation S-K or the SEC;
- if the undersigned is a broker-dealer that will receive exchange notes for its own account in exchange for outstanding notes that were acquired as a result of market-making activities or other trading activities, it acknowledges that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of such exchange notes. By acknowledging that it will deliver and by delivering a prospectus meeting the requirements of the Securities Act in connection with any resale of such exchange notes, the undersigned is not deemed to admit that it is an "underwriter" within the meaning of the Securities Act; and
- the undersigned is not acting on behalf of any person who could not truthfully make the foregoing representations;
- to agree, on behalf of the undersigned, as set forth in the letter of transmittal; and
- to take such other action as necessary under the prospectus or the letter of transmittal to effect the valid tender of outstanding notes.
The undersigned acknowledges that if an executed copy of this letter of transmittal is returned, the entire principal amount of outstanding notes held for the undersigned's account will be tendered unless otherwise specified above.
The undersigned hereby represents and warrants that the undersigned
(1) owns the notes tendered and is entitled to tender such notes, and (2) has
full power and authority to tender, sell, exchange, assign and transfer the
outstanding notes and to acquire exchange notes issuable upon the exchange of
such tendered notes, and that, when the same are accepted for exchange, Salt
Holdings will acquire good, marketable and unencumbered title to the tendered
notes, free and clear of all liens, restrictions, charges and encumbrances and
not subject to any adverse claim or right or restriction or proxy of any kind.
SIGN HERE
Name of Beneficial Owner(s) (please print): ___________________________________
Signature(s): _________________________________________________________________
Address: ______________________________________________________________________
Telephone Number: _____________________________________________________________
Taxpayer Identification Number or Social Security Number: _____________________
Date: _________________________________________________________________________
LETTER TO BENEFICIAL HOLDERS REGARDING THE OFFER TO EXCHANGE
ANY AND ALL OUTSTANDING SERIES A 12 3/4% SENIOR DISCOUNT NOTES DUE 2012
OF
SALT HOLDINGS CORPORATION
PURSUANT TO THE PROSPECTUS DATED , 2003
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
5:00 P.M., NEW YORK CITY TIME, ON , 2003, UNLESS
EXTENDED (THE "EXPIRATION DATE").
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, 2003
To Our Clients:
Enclosed for your consideration is a prospectus, dated , 2003, of Salt Holdings Corporation, a Delaware corporation ("Salt Holdings"), and a letter of transmittal, that together constitute Salt Holdings' offer to exchange $1,000 principal amount at maturity of its 12 3/4% Series B Senior Discount Notes due 2012, which have been registered under the Securities Act of 1933, as amended, for each $1,000 principal amount at maturity of its outstanding 12 3/4% Series A Senior Discount Notes due 2012, of which $123,500,000 aggregate principal amount at maturity is outstanding.
The materials relating to the exchange offer are being forwarded to you as the beneficial owner of outstanding notes carried by us for your account or benefit but not registered in your name. A tender of any outstanding notes may only be made by us as the registered holder and pursuant to your instructions. Therefore, we urge beneficial owners of outstanding notes registered in the name of a broker, dealer, commercial bank, trust company or any other nominee to contact such registered holder promptly if they wish to tender outstanding notes in the exchange offer.
Accordingly, we request instructions as to whether you wish us to tender any or all such outstanding notes held by us for your account or benefit pursuant to the terms and conditions set forth in the prospectus and the letter of transmittal. We urge you to read carefully the prospectus and the letter of transmittal and other material provided herewith before instructing us to tender your outstanding notes.
THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO EXCHANGE OUTSTANDING NOTES HELD BY US FOR YOUR ACCOUNT OR BENEFIT.
Your instructions to us should be forwarded as promptly as possible in order to permit us to outstanding tender notes on your behalf in accordance with the provisions of the exchange offer.
Your attention is directed to the following:
1. The exchange offer will expire at 5:00 p.m., New York City time, on , 2003, unless extended. Tendered outstanding notes may be withdrawn, subject to the procedures described in the prospectus, at any time prior to 5:00 p.m. New York City time, on the Expiration Date.
2. The outstanding notes will be exchanged for the exchange notes at the rate of $1,000 principal amount at maturity of exchange notes for each $1,000 principal amount at maturity of outstanding notes validly tendered and not validly withdrawn prior to the expiration date. The exchange notes will bear interest from the most recent interest payment date to which interest has been paid on the outstanding notes or, if no interest has been paid, from December 20, 2002. The form and terms of the exchange notes are identical in all material respects to the form and terms of the outstanding notes, except that the exchange notes have been registered under the Securities Act of 1933, as amended.
3. Notwithstanding any other term of the exchange offer, Salt Holdings may terminate or amend the exchange offer as provided in the prospectus and will not be required to accept for exchange, or exchange any exchange notes for, any outstanding notes not accepted for exchange prior to such termination.
4. Any transfer taxes applicable to the exchange of the outstanding notes pursuant to the exchange offer will be paid by Salt Holdings, except as otherwise provided in the prospectus and in Instruction 8 of the letter of transmittal.
5. Based on an interpretation of the Securities Act by the staff of the Securities and Exchange Commission, Salt Holdings believes that exchange notes issued pursuant to the exchange offer in exchange for outstanding notes may be offered for resale, resold and otherwise transferred by holders thereof without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that the holder:
(a) is acquiring exchange notes in its ordinary course of business;
(b) is not engaging in and does not intend to engage in a distribution of the exchange notes;
(c) is not participating, and has no arrangement or understanding with any person to participate, in a distribution of the exchange notes;
(d) is not an "affiliate" of Salt Holdings, as such term is defined under Rule 405 of the Securities Act; and
(e) the holder is not acting on behalf of any person who could not truthfully make these statements.
To participate in the exchange offer, holders must represent to Salt Holdings that each of these statements is true. If the holder is a broker-dealer that will receive exchange notes for its own account in exchange for outstanding notes that were acquired as a result of market-making activities or other trading activities, it must acknowledge that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of such exchange notes.
If you wish to have us tender any or all of your outstanding notes, please so instruct us by completing and returning to us the form entitled "Instruction to Registered Holders and DTC Participants From Beneficial Owner" that appears below. An envelope to return your instructions is enclosed. If you authorize a tender of your outstanding notes, the entire principal amount of outstanding notes held for your account will be tendered unless otherwise specified on the instruction form. Your instructions should be forwarded to us in ample time to permit us to submit a tender on your behalf by the Expiration Date.
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER--Social Security Numbers have nine digits separated by two hyphens: i.e., 000-00-0000. Employer Identification Numbers have nine digits separated by only one hyphen: i.e., 00-0000000. The table below will help determine the type of number to give the payer.
GIVE THE
GIVE THE EMPLOYER
FOR THIS TYPE OF SOCIAL SECURITY FOR THIS TYPE OF IDENTIFICATION
ACCOUNT: NUMBER OF-- ACCOUNT: NUMBER OF--
--------------------------------- ----------------------- ---------------------------- -----------------------
1. An individual's account The individual 8. Sole proprietorship The owner(4)
account
2. Two or more individuals The actual owner of the 9. A valid trust, estate The legal entity (Do
(joint account) account or, if combined or pension trust not furnish the
funds, any one of the identifying number of
individuals(1) the personal
representative or
trustee unless the
legal entity itself is
not designated in the
account title)(5)
3. Husband and wife (joint The actual owner of the 10. Corporate account The corporation
account) account or, if joint
funds, either person(1)
4. Custodian account of a minor The minor(2) 11. Religious, charitable, The organization
(Uniform Gift to Minors Act) or educational
organization account
5. Adult and minor (joint The adult or, if the 12. Partnership account The partnership
account) minor is the only held in the name of the
contributor, the business
minor(1)
6. Account in the name of The ward, minor or 13. Association, club, or The organization
guardian or committee for a incompetent person(3) other tax-exempt
designated ward, minor or organization
incompetent person
7. a. The usual revocable The grantor-trustee(1) 14. A broker or registered The broker or nominee
savings trust account nominee
(grantor is also
trustee)
b. So-called trust account The actual owner(1) 15. Account with the The public entity
that is not a legal or Department of
valid trust under State Agriculture in the name
law of a public entity
(such as a State or
local government,
school district or
prison) that receives
agricultural program
payments
|
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such person's social security number.
(4) You must show your individual name, but you may also enter your business or "doing business" name. You may use either your Social Security Number or Employer Identification Number.
(5) List first and circle the name of the legal trust, estate or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be considered to be that of the first name listed.
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 PAGE 2
OBTAINING A NUMBER
If you do not have a taxpayer identification number or if you do not know your number, obtain Form SS-5, Application for Social Security Number Card (for individuals), or Form SS-4, Application for Employer Identification Number, at the local office of the Social Security Administration or the Internal Revenue Service (the "IRS") and apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments by brokers include the following:
- A corporation.
- A financial institution.
- An organization exempt from a tax under Section 501(a), or an individual retirement plan or a custodial account under Section 403(b)(7) if the account satisfies the requirements of Section 401(F)(2).
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States or any subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government or any agency or instrumentality thereof.
- An international organization or any agency or instrumentality thereof.
- A registered dealer in securities or commodities registered in the U.S. or a possession of the U.S.
- A real estate investment trust.
- A common trust fund operated by a bank under Section 584(a).
- An entity registered at all times under the Investment Company Act of 1940.
- A foreign central bank of issue.
- A futures commission merchant registered with the Commodity Futures Trading Commission.
- A person registered under the Investment Advisors Act of 1940 who regularly acts as a broker.
Payments of dividends and patronage dividends not generally subject to backup withholding include the following:
- Payments to nonresident aliens subject to withholding under Section 1441.
- Payments to partnerships not engaged in a trade or business in the U.S. and which have at least one nonresident partner.
- Payments of patronage dividends where the amount received is not paid in money.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the following:
- Payments of interest on obligations issued by individuals. Note: You may be subject to backup withholding if this interest is $600 or more and is paid in the course of the payer's trade or business and you have not provided your correct taxpayer identification number to the payer.
- Payments of tax-exempt interest (including exempt-interest dividends under
Section 852).
- Payments described in Section 6049(b)(5) to nonresident aliens.
- Payments on tax-free covenant bonds under Section 1451.
- Payments made by certain foreign corporations.
- Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, CHECK "EXEMPT" IN PART II OF THE FORM, SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER.
Certain payments other than interest, dividends and patronage dividends, that are not subject to information reporting are also not subject to backup withholding. For details, see the regulations under Section 6041, 6041(A)(a), 6045, and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend, interest, or other payments to give taxpayer identification numbers to payers who must report the payments to the IRS. The IRS uses the numbers for identification purposes. Payers must be given the numbers whether or not recipients are required to file tax returns. Payers must generally withhold up to [ 30/31]% of taxable interest, dividend, and certain other payments to a payee who does not furnish a taxpayer identification number to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail to furnish your taxpayer identification number to a payer, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS.--If you fail to include any portion of an includible payment for interest, dividends, or patronage dividends in gross income, such failure will be treated as being due to negligence and will be subject to a penalty of 5% on any portion of an under-payment attributable to that failure unless there is clear and convincing evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you make a false statement with no reasonable basis which results in no imposition of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE.